Cover
Cover | 3 Months Ended |
Mar. 31, 2024 | |
Document Information Line Items | |
Entity Registrant Name | Airship AI Holdings, Inc. |
Entity Central Index Key | 0001842566 |
Document Type | S-1/A |
Amendment Flag | true |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Filer Category | Non-accelerated Filer |
Entity Ex Transition Period | false |
Entity Incorporation State Country Code | DE |
Entity Tax Identification Number | 93-4974766 |
Entity Address Address Line 1 | 8210 154th Ave NE |
Entity Address City Or Town | Redmond |
Entity Address State Or Province | WA |
Entity Address Postal Zip Code | 98052 |
City Area Code | 877 |
Local Phone Number | 462-4250 |
Amendment Description | The information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
Business Contact [Member] | |
Document Information Line Items | |
Entity Address Address Line 1 | 8210 154th Ave NE |
Entity Address City Or Town | Redmond |
Entity Address State Or Province | WA |
Entity Address Postal Zip Code | 98052 |
City Area Code | 877 |
Local Phone Number | 462-4250 |
Contact Personnel Name | Victor Huang |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 1,725,817 | $ 3,124,413 | $ 298,614 |
Accounts receivable, net of provision for credit losses of $0 | 1,704,429 | 1,648,904 | 705,752 |
Prepaid expenses and other | 16,358 | 18,368 | 16,039 |
Payroll and income tax receivable | 9,640 | 7,230 | 967,613 |
Total current assets | 3,456,244 | 4,798,915 | 1,988,018 |
OTHER ASSETS | |||
PROPERTY AND EQUIPMENT, NET | 0 | 1,861 | 16,740 |
Advances to founders | 0 | 1,100,000 | |
Other assets | 180,432 | 182,333 | 0 |
Operating lease right of use asset | 1,024,513 | 1,104,804 | 804,338 |
TOTAL ASSETS | 4,661,189 | 6,087,913 | 3,909,096 |
CURRENT LIABILITIES: | |||
Accounts payable - trade | 3,356,700 | 2,908,472 | 216,718 |
Advances from founders | 1,750,000 | 1,750,000 | 600,000 |
Accrued expenses | 168,902 | 200,531 | 120,662 |
Current portion of Small Business Loan | 0 | 292,932 | |
Senior Secured Convertible Promissory Note | 4,204,743 | 2,825,366 | 0 |
Current portion of operating lease liability | 180,875 | 174,876 | 628,371 |
Deferred revenue- current portion | 3,742,145 | 4,008,654 | 4,168,016 |
Total current liabilities | 13,403,365 | 11,867,899 | 6,026,699 |
NON-CURRENT LIABILITIES: | |||
Payable to founders | 0 | 1,100,000 | |
Small Business Loan- non-current | 0 | 131,608 | |
Operating lease liability, net of current portion | 870,492 | 943,702 | 203,769 |
Warrant liability | 7,515,076 | 667,985 | 0 |
Earnout liability | 26,618,278 | 5,133,428 | 0 |
Deferred revenue- non-current | 4,304,587 | 4,962,126 | 4,805,431 |
Total liabilities | 52,711,798 | 23,575,140 | 12,267,507 |
STOCKHOLDERS' DEFICIT: | |||
Preferred stock - no par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2023 and 2022 | 0 | 0 | 0 |
Common stock - $0.0001 par value, 200,000,000 shares authorized, 22,812,048 and 13,387,344 shares issued and outstanding as of December 31, 2023 and 2022 | 2,314 | 2,281 | 1,339 |
Additional paid-in capital | 1,397,815 | 0 | 1,964,669 |
Accumulated deficit | (49,441,169) | (17,476,700) | (10,314,313) |
Accumulated other comprehensive loss | (9,569) | (12,808) | (10,106) |
Total stockholders' deficit | (48,050,609) | (17,487,227) | (8,358,411) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 4,661,189 | $ 6,087,913 | $ 3,909,096 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | |||
Accounts receivable, net of provision | $ 0 | $ 0 | $ 0 |
Preferred stock, par value | $ 0 | $ 0 | |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0 | $ 0 | |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value | $ 5.96 | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, issued | 23,159,119 | 22,812,048 | 13,387,344 |
Common stock, outstanding | 23,159,119 | 22,812,048 | 13,387,344 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
NET REVENUES: | ||||
Product | $ 9,398,776 | $ 1,699,782 | $ 7,439,045 | $ 9,376,465 |
Post contract support | 1,176,239 | 1,238,815 | 4,692,487 | 5,008,328 |
Other services | 168,052 | 164,348 | ||
Total Revenues | 10,575,015 | 2,938,597 | 12,299,584 | 14,549,141 |
COST OF NET REVENUES: | ||||
Product | 4,767,159 | 4,554,340 | ||
Cost of Sales | 7,789,409 | 1,578,166 | ||
Post contract support one | 157,479 | 556,152 | 1,681,267 | 1,494,583 |
Other services | 86,841 | 79,205 | ||
Total cost of revenues | 7,946,888 | 2,134,318 | 6,535,267 | 6,128,128 |
GROSS PROFIT | 2,628,127 | 804,279 | 5,764,317 | 8,421,013 |
RESEARCH AND DEVELOPMENT EXPENSES | 695,366 | 674,080 | 2,729,492 | 3,614,814 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 3,335,294 | 1,832,370 | 9,675,190 | 7,630,012 |
TOTAL OPERATING EXPENSES | 4,030,660 | 2,506,450 | 12,404,682 | 11,244,826 |
OPERATING LOSS | (1,402,533) | (1,702,171) | (6,640,365) | (2,823,813) |
OTHER INCOME (EXPENSE): | ||||
Loss from change in fair value of warrant liability | (6,847,091) | 0 | (1,341,120) | 0 |
Loss from change in fair value of earnout liability | (21,484,850) | 0 | 21,976,349 | 0 |
Loss from change in fair value of convertible debt | (2,039,377) | 0 | (240,784) | 0 |
Interest income | 0 | 42,565 | ||
Interest expense | (31,824) | (5,064) | (55,685) | (75,256) |
Other expense | 0 | (4,941) | (9,501) | 0 |
Other income- PPP loan forgiveness | 0 | 1,146,235 | ||
Other income- employee retention tax credit | 0 | 1,232,776 | ||
Total other expense, net | (30,561,936) | (10,005) | 23,011,499 | 2,346,320 |
LOSS BEFORE PROVISON FOR INCOME TAXES | (31,964,469) | (1,712,176) | 16,371,134 | (477,493) |
Provision for income taxes | 0 | 0 | 0 | (10,000) |
NET LOSS | (31,964,469) | (1,712,176) | 16,371,134 | (487,493) |
OTHER COMPREHENSIVE LOSS | ||||
Foreign currency translation gain, net | 3,239 | 0 | (2,702) | (10,106) |
Loss on note conversion | (158,794) | 0 | ||
TOTAL COMPREHENSIVE LOSS | $ (31,961,230) | $ (1,712,176) | $ 16,368,432 | $ (497,599) |
NET INCOME (LOSS) PER SHARE: | ||||
Basic | $ 1.20 | $ (0.04) | ||
Diluted | $ 0.80 | $ (0.04) | ||
Weighted average shares of common stock outstanding | ||||
Basic | 13,671,376 | 13,387,344 | ||
Diluted | 20,390,663 | 13,387,344 | ||
Basic and diluted loss per share | $ (1.40) | $ (0.08) | ||
Weighted average shares of common stock outstanding- basic and diluted | 22,898,487 | 22,812,048 | 13,387,344 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Total | Additional Paid-In Capital | Accumulated Deficit | Other Comprehensive Loss | Common Stock |
Balance, shares at Dec. 31, 2021 | 13,387,344 | ||||
Balance, amount at Dec. 31, 2021 | $ (8,407,272) | $ 1,418,209 | $ (9,826,820) | $ 0 | $ 1,339 |
Stock-based compensation | 546,460 | 546,460 | 0 | 0 | 0 |
Foreign currency translation loss | (10,106) | 0 | 0 | (10,106) | 0 |
Net income/loss | (487,493) | 0 | (487,493) | 0 | 0 |
Balance, amount at Dec. 31, 2022 | (8,358,411) | 1,964,669 | (10,314,313) | (10,106) | $ 1,339 |
Balance, shares at Dec. 31, 2022 | 13,387,344 | ||||
Stock-based compensation | 136,709 | 136,709 | 0 | 0 | $ 0 |
Foreign currency translation loss | 0 | ||||
Net income/loss | (1,712,176) | 0 | (1,712,176) | 0 | 0 |
Balance, amount at Mar. 31, 2023 | (9,933,878) | 2,100,436 | (12,026,489) | (10,106) | $ 2,281 |
Balance, shares at Mar. 31, 2023 | 22,812,048 | ||||
Balance, shares at Dec. 31, 2022 | 13,387,344 | ||||
Balance, amount at Dec. 31, 2022 | (8,358,411) | 1,964,669 | (10,314,313) | (10,106) | $ 1,339 |
Stock-based compensation | 715,727 | 715,727 | 0 | 0 | 0 |
Foreign currency translation loss | (2,702) | 0 | 0 | (2,702) | 0 |
Net income/loss | 16,371,134 | 0 | 16,371,134 | 0 | 0 |
Stock-based compensation- warrants | 2,136,115 | 2,136,115 | 0 | 0 | $ 0 |
Reverse recapitalization on December 21, 2023, shares | 9,424,704 | ||||
Reverse recapitalization on December 21, 2023, amount | (27,454,428) | (4,816,511) | (22,638,859) | 0 | $ 942 |
Balance, amount at Dec. 31, 2023 | (17,487,227) | 0 | (17,476,700) | (12,808) | $ 2,281 |
Balance, shares at Dec. 31, 2023 | 22,812,048 | ||||
Stock-based compensation | 268,989 | 268,989 | 0 | 0 | $ 0 |
Foreign currency translation loss | 3,239 | 0 | 0 | 3,239 | 0 |
Net income/loss | (31,964,469) | 0 | (31,964,469) | 0 | 0 |
Issuance of common stock for exercise of warrants, amount | 293,249 | 293,233 | 0 | 0 | 16 |
Issuance of common stock for prior period services, amount | 0 | 0 | 0 | 0 | $ 0 |
Issuance of common stock for prior period services, shares | 15,000 | ||||
Issuance of common stock for conversion of debt, shares | 169,204 | ||||
Issuance of common stock for conversion of debt, amount | 835,610 | 835,593 | 0 | 0 | $ 17 |
Issuance of common stock for exercise of warrants, shares | 162,867 | ||||
Balance, amount at Mar. 31, 2024 | $ (48,050,609) | $ 1,397,815 | $ (49,441,169) | $ (9,569) | $ 2,314 |
Balance, shares at Mar. 31, 2024 | 23,159,119 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net loss | $ (31,964,469) | $ (1,712,176) | $ (16,371,134) | $ 487,493 |
Adjustments to reconcile net loss to net cash used in operating activities | ||||
Depreciation and amortization | 1,861 | 3,720 | 14,879 | 14,879 |
Stock-based compensation- stock option grants | 268,989 | 136,709 | 715,727 | 546,460 |
Stock-based compensation- warrants | 2,136,115 | 0 | ||
Amortization of operating lease right of use asset | 80,291 | 205,906 | 596,556 | 517,232 |
Gain on forgiveness of note payable - PPP | 0 | (1,146,235) | ||
Loss from change in fair value of warrant liability | 6,847,091 | 0 | ||
Loss from change in fair value of earnout liability | 21,484,850 | 0 | ||
Loss from change in fair value of convertible note | 2,039,377 | 0 | 240,784 | |
Loss on note conversions | 158,794 | 0 | ||
Accelerated amortization of ROU asset - lease termination | 265,130 | 0 | ||
Gain from lease liability termination | (344,093) | 0 | ||
Accounts receivable | (55,525) | (1,636,283) | (943,152) | 125,601 |
Loss from change in fair value of warrant liability | (1,341,120) | 0 | ||
Prepaid expenses and other | 2,010 | (460) | (2,329) | 14,063 |
Loss from change in fair value of earnout liability | (21,976,349) | 0 | ||
Other assets | 1,901 | 0 | ||
Operating lease liability | (67,211) | (148,920) | (531,621) | (560,435) |
Non cash interest, net | 65,487 | 17,181 | ||
Payroll and income tax receivable | (2,410) | 939,850 | 960,383 | (939,850) |
Changes in operating assets and liabilities: | ||||
Accounts payable - trade and accrued expenses | 433,415 | 1,150,141 | 666,136 | (88,784) |
Deferred revenue | (924,048) | 71,400 | (2,667) | (915,278) |
Other assets | (182,333) | 0 | ||
Proceeds from convertible promissory note | 0 | 950,000 | 2,584,582 | 0 |
Proceeds from warrant exercise | 293,249 | 0 | ||
Repayment of small business loan and line of credit | 0 | (84,471) | (424,540) | (140,510) |
NET CASH USED IN OPERATING ACTIVITIES | (1,695,084) | (990,113) | (3,291,333) | (2,902,659) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Effect from exchange rate on cash | 3,239 | 0 | (2,702) | (10,106) |
Advances from founders, net | 1,150,000 | 600,000 | ||
Proceeds from reverse recapitalization | 2,809,792 | 0 | ||
Proceeds from small business loan and line of credit | 0 | 565,050 | ||
Proceeds from notes receivable - related parties | 0 | 841,917 | ||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 293,249 | 865,529 | 6,119,834 | 1,866,457 |
CASH AND CASH EQUIVALENTS, end of period | 1,725,817 | 174,030 | 3,124,413 | 298,614 |
CASH AND CASH EQUIVALENTS, beginning of period | 3,124,413 | 298,614 | 298,614 | 1,344,922 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,401,835) | (124,584) | 2,828,501 | (1,036,202) |
Noncash investing and financing | ||||
Elimination of advances to founders in connection with contribution of Zeppelin by shareholders | 0 | 1,100,000 | 1,100,000 | 0 |
Interest paid | 0 | 5,064 | 21,438 | 19,950 |
Taxes paid | 2,410 | 17,247 | 17,247 | 0 |
Elimination of payables to founders in connection with contribution of Zeppelin by shareholders | 0 | 1,100,000 | 1,100,000 | 0 |
Issuance of common stock for debt conversion | $ 835,610 | $ 0 | ||
Supplemental disclosures of cash flow information: | ||||
Warrants issued in connection with debt | 15,418 | 0 | ||
Recognition of right-of-use asset | 1,162,152 | 1,321,570 | ||
Recognition of operating lease liability | 1,162,152 | 1,392,575 | ||
Deferred rent write off | 0 | 71,005 | ||
Noncash activity related to Merger | ||||
Recognition of warrant liability | 2,009,105 | 0 | ||
Recognition of earnout liability | 27,109,777 | 0 | ||
Recognition of prepaid assets | 894,662 | 0 | ||
Recognition of accounts payable | $ 1,500,000 | $ 0 |
Organization
Organization | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Organization | ||
Organization | 1. Organization On March 7, 2023, Airship AI Holdings, Inc. changed its name from Super Simple AI, Inc. Airship AI Holdings, Inc. (the “Company” or “Airship”) is a holding company that executes business through its wholly owned subsidiary, Airship AI, Inc. (“Airship AI”). Prior to the formation of Super Simple AI, Inc. in 2022, the Company operated as Airship AI, Inc. (formerly known as JDL Digital Systems, Inc.). Super Simple AI, Inc. was formed in January 2022 through a share exchange with JDL Digital Systems, Inc. JDL Digital Systems, Inc. was incorporated under the laws of the State of Washington on June 30, 2003. On December 21, 2023, the Company completed the merger contemplated by the Merger Agreement, dated as of June 27, 2023 and amended on September 22, 2023, by and among BYTE Acquisition Corp. (“BYTS”), BYTE Merger Sub, Inc., a Washington corporation and a direct, wholly-owned subsidiary of BYTS (“Merger Sub”), and Airship AI. Effective December 21, 2023, Merger Sub merged with and into Airship AI with Airship AI as the surviving corporation. Thus, Airship AI became a wholly-owned subsidiary of the Company. In connection with the merger, Airship AI changed its name to “Airship AI, Inc.” See Note 13 —Reverse Recapitalization for additional information. Fair Value Transactions As a result of the merger, the Company entered into the following transactions that were measured at fair value and vary quarterly with the share price and other items. Any change is non-cash and is recorded as a gain or loss in other income (expense). See Note 14– Fair Value Measurements for more information. Liability as of March 31, 2024 Earnout liability $ 26,618,278 Senior Secured Convertible Promissory Notes 4,204,743 Warrant liability (Public Warrants)- exerciseable at $11.50 per share 7,311,998 Warrant liability (Private Warrants)- exerciseable at $11.50 per share 203,078 Total liabilities measured at fair value $ 38,338,097 Other expense related to instruments recorded at fair value during the three months ended March 31, 2024 $ 30,371,318 Private Placement and Public Warrants At the merger closing, the Company assumed 515,000 private placement warrants and 16,184,612 public warrants. As of March 31, 2024, there were 515,000 private placement warrants and 16,159,112 public warrants outstanding. The warrants are exerciseable at $11.50 per share. See Note 12– Private Placement and Public Warrants for more information. Business The Company is 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. The Company solves these challenges by structuring “dark” or unstructured data at the edge, the location at which the data is generated and collected, and leveraging purpose-built AI models. Unstructured, or “dark” data, which is typically categorized as qualitative data, cannot be processed and analyzed via conventional data tools and methods. Conversely, structured data, typically categorized as quantitative data, is highly organized and easily decipherable by machine learning algorithms. Structuring and then analyzing data using AI models at the edge, versus transmitting the data from the edge back to a central processing location for structuring and analysis, enables real-time decision making and data-driven operational efficiency. The Company specializes 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. Data generated by these edge-based sensors, including video, can then be run through the Company’s trained AI models to detect objects present within the video frame. Once an object is detected, for example an automobile, additional identifying characteristics of the object can be extracted from the image including the license plate characters and the make, model, and color of the automobile. This process of analyzing, logging and categorizing ingested data is referred to as “structuring” the data. Airship AI’s software allows customers to view structured data both in real-time as well as to conduct searches on the structured data at a later point in time. Real-time structured data use includes, for example, alarms on a specific license plate or a specific make, model or color of automobile. Non-real-time structured data use includes, for example, searching a database of video data that has been previously ingested and stored to find instances of a particular license plate being visible, along with other logged vehicle characteristics such as make, model and color of an automobile. Additional edge deployed AI models enable similar object detection and recognition of common and custom trained objects, such as an aircraft, boat, person, animal, bag, or weapon. Airship AI’s models provide similar data points for these object types allowing analysts the ability to be notified in real-time of the detection of a specified object and similarly search for historically detected objects. Examples include detecting aircrafts and boats along with their respective tail numbers and hull registration numbers. The Company’s AI modelling process starts with pre-trained AI models from its technology ecosystem partners which the Company then customizes using proprietary datasets tailored towards its customers’ unique workflow requirements. Where customers have pre-existing AI models or engines, the Company integrates those models or engines into its edge platform allowing customers to leverage proprietary models within the Airship AI software ecosystem. The Company’s primary offerings include Outpost AI, Acropolis, and Airship Command. Its 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. The Company employed fifty-one employees as of March 31, 2024. The employees are headquartered in Redmond, WA and are supported by a growing team at its Customer Center of Excellence located in Charlotte, NC. The Company employed eight research and development personnel in Taiwan as of March 31, 2024. Liquidity The Company has incurred losses from operations the past few years and had an accumulated deficit of $49,441,000 as of March 31, 2024. The Company also had at March 31, 2024 a working capital deficit of approximately $9,947,000. The net working capital deficit includes a couple of items that are expected to require limited cash outlays in the future including the current deferred revenue totaling $3,742,000 and convertible debt totaling $4,205,000, which the Company expects to be converted to equity. The Company has received purchase orders from various federal government agency customers totaling over $13 million from which it shipped and started receiving cash in the first quarter of 2024. Mr. Huang, the Company’s CEO, has committed to providing additional temporary funding if it is necessary. Based on the Company’s actions undertaken during 2023 and 2024 to close customer deals, build sales pipeline, manage operating expenses and opportunities to raise additional capital after the merger, management believes that the Company’s current cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months from the issuance of these consolidated financial statements. The Company’s assessment of the period of time through which its financial resources will be adequate to support its operations is a forward-looking statement and involves risks and uncertainties. The Company’s actual results could vary as a result of its near and long-term future capital requirements that will depend on many factors. | 1. Organization On March 7, 2023, the Company changed its name to Airship AI Holdings, Inc. from Super Simple AI, Inc. Airship AI Holdings, Inc. (the “Company” or “Airship”) is a holding company that executes business through its wholly owned subsidiary, Airship AI, Inc. Prior to the formation of Super Simple AI, Inc. in 2022, the Company operated as Airship AI, Inc. (formerly known as JDL Digital Systems, Inc.) Super Simple AI, Inc. was formed in January 2022 through a share exchange with JDL Digital System. JDL Digital Systems, Inc. was incorporated under the laws of the State of Washington on June 30, 2003. The Company has historically enabled government and commercial customers, through a combination of hardware, software, including artificial intelligence (“AI”) and service offerings to manage existing and emerging physical security challenges through a secure single-pane-of-glass Common Operational Picture (COP), connecting a wide range of sensors and edge Internet of Things (“IoT”) devices across disparate networks, environments, and geographic locations to a single consolidated location. The Company employed forty seven employees as of December 31, 2023. The employees are headquartered in Redmond, WA and are supported by a growing team at our Customer Center of Excellence located in Charlotte, NC. The Company employed eight research and development personnel in Taiwan as of December 31, 2023. The Company’s products appeal to customers whose business operations are geographically diverse, providing essential goods and services, requiring physical security solutions that are tailored to their unique physical security requirements. Airship further appeals to customers who want to choose the right tool for the job (or tailor the tool to fit the job), rather than have to operate based on the tools that are commercially available to them. The Company has historically promoted its goods and services through very select marketing and advertising channels, most of which are closed to the general public and or are limited in their focus to customers specifically looking for solutions in the physical security and video surveillance arena. The Company’s initial software application is now further evolving into an enterprise grade solution addressing a broadened data management lifecycle, starting at the edge. Edge Cloud Computing is being increasingly viewed as a key enabler and technology necessity. In 2020, the Company’s two main owners started a new business, Zeppelin Worldwide, Inc. and its subsidiary, Zeppelin Taiwan, Ltd. (together “Zeppelin”). Zeppelin’s focus is on the development of cloud-based products. Zeppelin was considered a variable interest entity (VIE) and was consolidated with the Company. On February 28, 2023, the Founders transferred their interest in Zeppelin to the Company and Zeppelin became a wholly-owned subsidiary. The transaction had no impact on the consolidated financial statements, other than $1.1 million Advance to Founders and the $1.1 million Payable to Founders are now eliminated. Merger with BYTE Acquisition Corp. (“BYTE”) On December 21, 2023, the Company completed the merger (the “Merger”) contemplated by the Merger Agreement, dated as of June 27, 2023 (as amended on September 22, 2023 and as may be further amended and/or restated from time to time, the “Merger Agreement”) by and among BYTS, BYTE Merger Sub, Inc., a Washington corporation and a direct, wholly-owned subsidiary of BYTS (“Merger Sub”), and Airship AI. Effective December 21, 2023, following the filing of Articles of Merger with the Secretary of State of the State of Washington, Merger Sub merged with and into Airship AI with Airship AI as the surviving corporation. Thus, Airship AI became a wholly-owned subsidiary of the Company. In connection with the Merger, Airship AI changed its name to “Airship AI, Inc.” See Note 13 —Reverse Recapitalization for additional information. Liquidity The Company has incurred losses from operations the past few years and had an accumulated deficit of $16,582,038 as of December 31, 2023. The Company also has at December 31, 2023 a working capital deficit of approximately $6,174,000. The net working capital deficit includes a couple of items that are expected to require limited cash outlays in the future including the current deferred revenue totaling $4,009,000 and convertible debt totaling $2,825,000, which we expect to be converted to equity. The Company has primarily funded its operations with proceeds from debt borrowings, advances from founders, and proceeds from the Merger. The Company has recently received purchase orders from various government agency customers totaling over $13 million from which we expect to start receiving cash in the first quarter of 2024. Mr. Huang has committed to providing $2.5 million in additional temporary funding if it is necessary. Based on the Company’s actions undertaken during 2023 and 2024 to close customer deals, manage operating expenses and opportunities to raise additional capital after the Merger, Management believes that the Company’s current cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months from the issuance of these consolidated financial statements. The Company’s assessment of the period of time through which its financial resources will be adequate to support its operations is a forward-looking statement and involves risks and uncertainties. The Company’s actual results could vary as a result of its near and long-term future capital requirements that will depend on many factors. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Summary of Significant Accounting Policies | ||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. The preparation of these consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). For periods prior to the merger, the reported share and per share amounts have been retroactively converted by the applicable exchange ratio with the exception of the authorized shares and shares reserved for issuance. See Note 11—Reverse Recapitalization for additional information. Functional Currency The Company’s consolidated functional currency is the U.S. Dollar. The operations of Zeppelin Worldwide, Inc. and its subsidiary, Zeppelin Taiwan, Ltd. (together “Zeppelin”) use the Taiwan Dollar as its functional currency. At each period end, Zeppelin’s balance sheet is translated into U.S. Dollars based upon the period end exchange rate, while their statements of operations and comprehensive loss and statements of cash flows are translated into U.S. Dollars based upon an average exchange rate during the period. Cash and Cash Equivalents The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit. Revenue Recognition and Deferred Revenue The Company primarily generates revenue from sales of systems and products and the related post contract support to customers. The Company’s primary systems and products include Outpost AI, Acropolis and Airship Command. To date, the majority of the Company’s product revenue that has been recognized consists primarily of a bundled offering of hardware and software which delivers on premise solutions to its customers. Separate limited software subscription services have been delivered to customers including those customers that are able to operate in a cloud based environment. The transaction price recognized as revenue represents the amount the Company expects to be entitled to and is primarily comprised of product revenue, net of returns and variable consideration, including sales incentives provided to customers. Payment is typically due within 30 to 90 calendar days of the invoice date. The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below. Product Revenue Product revenue is derived primarily from sales of the Company’s system offerings, Outpost AI, Acropolis and Airship Command. The Company recognizes product revenue at a point in time when title transfers, when the products are shipped, or when control of the system is transferred to the customer, which usually is upon delivery of the system and when contractual performance obligations have been satisfied. Post Contract Support Revenue Post Contract Support (“PCS”) revenue is derived primarily from the Company’s support and software maintenance agreements (“SMA”). The Company’s PCS includes the right to receive, on a when and if available basis, future unspecified firmware upgrades and features as well as bug fixes, and email and telephone support. The Company allocates a portion of the transaction price to the PCS performance obligation based on a cost-plus methodology and recognizes the associated revenue on a straight-line basis over the estimated term of the support period. The Company’s support contracts are typically one to five years with an average of four years, payment is due within 30 to 90 calendars days of the invoice date and may include options to renew. For the three months ended March 31, 2024 and 2023, the Company recognized revenue of $59,361 and $47,104, respectively, related to one-year support contracts. For the three months ended March 31, 2024 and 2023, the Company recognized revenue of $1,116,893 and $1,191,711, respectively, related to multi-year support contracts. Other Services The Company earns other service revenues from installation services, training and licensing which are short-term in nature and revenue for these services are recognized at the time of performance when the service is provided. Contracts with Multiple Performance Obligations The Company’s contracts with customers often contain multiple performance obligations that can include three separate obligations: (i) a hardware component (which may be bundled with hardware accessories) and the embedded firmware essential to the functionality of the hardware component delivered at the time of sale; (ii) the right to the Company’s downloadable free application and software solutions, and (iii) the right for the customer to receive post contract support (“PCS”) after the initial sale. The Company’s products and PCS offerings have significant standalone functionalities and capabilities. Accordingly, the products are distinct from the Company’s PCS services as customers can benefit from the products without the PCS services and such PCS services are separately identifiable within the contracts. The Company accounts for multiple agreements with a single customer as a single contract if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract. The amount of consideration the Company expects to receive in exchange for delivering on the contract is allocated to each performance obligation based on its relative standalone selling price. The Company establishes the standalone selling price using the prices charged for a deliverable when sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price based on its pricing model and offering type (products or PCS services). The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year. The Company sells its products primarily through a direct sales force. The Company considers revenue to be earned when all of the following criteria are met: · The Company has a contract with a customer that creates enforceable rights and obligations, · Promised performance obligations are identified, · The transaction price, or the amount the Company expects to receive, is determinable and · The Company has satisfied the performance obligations to the customer. Transfer of control is evidenced upon passage of title and risk of loss to the customer unless the Company is required to provide additional services. The Company’s short-term and long-term deferred revenue balances totaled $3,742,145 and $4,304,587 as of March 31, 2024.The Company’s short-term and long-term deferred revenue balances totaled $4,008,654 and $4,962,126 as of December 31, 2023. Of the deferred revenue balance of $8,970,780 as of January 1, 2024, the Company recognized approximately $1,176,239 during the three months ended March 31, 2024. Accounts Receivable and Provision for Credit Losses The Company generally sells its products to large governmental entities and large corporations in the United States. Accounts receivable are recorded at invoiced amounts and are non-interest bearing. The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (codified as Accounting Standards Codification (“ASC”) 326) on January 1, 2023. ASC 326 adds to U.S. GAAP the current expected credit loss (“CECL”) model, a measurement model based on expected losses rather than incurred losses. Prior to the adoption of ASC 326, the Company evaluated receivables regularly and adjusted the allowance for doubtful accounts accordingly. The Company determined estimates of uncollectible accounts receivable based primarily on actual historical bad debt and sales return trends, customers financial condition and general economic conditions. Under the application of ASC 326, the Company’s historical credit loss experience provides the basis for the estimation of expected credit losses, as well as current economic and business conditions, and anticipated future economic events that may impact collectability. In developing its expected credit loss estimate, the Company evaluated the appropriate grouping of financial assets based upon its evaluation of risk characteristics, including consideration of the types of products and services sold. Account balances are written off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Occasionally certain long-standing customers, who routinely place large orders, will have unusually large receivables balances relative to the total gross receivables. Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders. As of March 31, 2024 and December 31, 2023, the Company did not have a reserve for credit losses as all accounts receivable are considered collectible. Accounts receivable balances as of March 31, 2024 and December 31, 2023 were $1,704,429 and $1,648,904, respectively. Concentration of Credit and Sales Risk The Company sells its product to commercial and government customers under agreements that are normally paid within 30 days of contract completion. For the three months ended March 31, 2024, the Company had revenue from 17 customers and one customer represented 78% of total revenue, although such a high level of customer concentration is not typical. The primary reason for the increase in reliance on a single customer for the three months ended March 31, 2024 was due to one large order received in late 2023 which was fulfilled in the three months ended March 31, 2024. As of March 31, 2024, two customers represent approximately 52% and 27% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is estimated to be minimal. For the three months ended March 31, 2023, two customers represented 56% and 23% of total revenue from 23 customers, although such a high level of customer concentration is not typical. The primary reason for the increase in reliance on a single customer for the quarter ended March 31, 2023 was due to the lag-time in delivering on a large order received in late 2022 from one division of a customer which was not fulfilled until 2023. As of December 31, 2023, three customers represent approximately 51%, 26% and 17% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is estimated to be minimal. Inventory The Company’s purchase of inventory, primarily computer servers, is undertaken to match purchase orders received from customers. Upon receipt of inventory, the Company generally configures the servers and loads proprietary software onto the servers before shipping out. The Company holds inventory for a short period of time and as of March 31, 2024 and December 31, 2023, it had no inventory in stock. Inventory value is primarily material costs and is valued at the lower of cost (first in, first out method) or net realizable value. Long-Lived Assets The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results. The Company recorded impairment losses of $0 for the three months ended March 31, 2024 and 2023. Research and Development Expenses Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes. The Company’s current research and development efforts are primarily focused on improving the Company’s products. The Company is also actively involved in identifying new applications. The Company’s current internal team along with outside consultants has considerable experience working with the application of the Company’s technologies and their applications. The Company engages third party experts as required to supplement the Company’s internal team. The Company believes that continued development of new and enhanced technologies is essential to the Company’s future success. The Company incurred research and development expenses of $695,366 and $674,080 for the three months ended March 31, 2024 and 2023, respectively, on development activities. Software Development Costs Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. No software development costs have been capitalized as of March 31, 2024 and December 31, 2023. Cost of Net Revenues Cost of net revenues for products includes components and freight. Cost of net revenues for post contract support and other services includes primarily the cost of personnel and personnel-related expenses to conduct implementations and ongoing client support. Advertising Advertising costs are charged to selling, general and administrative expenses as incurred. Advertising and marketing costs for the three months ended March 31, 2024 and 2023 were $22,458 and $49,828, respectively. Shipping and Handling of Products Amounts billed to customers for shipping and handling of products are included in net revenues. Costs incurred related to shipping and handling of products are included in cost of revenues. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 Level 2 Level 3 The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of March 31, 2024 and December 31, 2023 are based upon the short-term nature of the assets and liabilities. The Company recorded its Senior Secured Convertible Promissory Note, earnout liability, and the warrants that were issued with the Convertible Promissory Note at fair value, remeasured on a recurring basis and considered them as Level 3 instruments. The public and private warrants were considered Level 1 and 2 instruments, respectively. The method of determining the fair value of the Senior Secured Convertible Promissory Note and attached warrants is described below. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). Accounting for Senior Secured Convertible Promissory Notes at Fair Value The Company has elected the fair value option to account for the senior secured convertible note that was issued on June 22, 2023 and the convertible notes that were issued in October and November 2023 and record them at fair value with changes in fair value recorded in the Consolidated Statements of Operations and Comprehensive Loss. As a result of applying the fair value option, direct costs and fees related to the convertible notes are recognized in earnings as incurred and not deferred. Values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the liability. Considerable judgment is necessary to interpret market data and determine an estimated fair value. The use of different market assumptions or valuation methods may have a material effect on the estimated fair values. As of March 31, 2024, the Company has used a Monte Carlo simulation pricing model that factors in potential outcomes being consummated, such as the convertible notes being repaid in cash and the convertible notes being converted to common stock. All of these scenarios take into consideration the terms and conditions of the underlying convertible notes plus potential changes in the underlying value of the common stock. For the three months ended March 31, 2024, the Company recognized an unrealized loss of $2,039,377 for the change in fair value of the notes and is included in the Consolidated Statements of Operations and Comprehensive Loss. The Company believes accounting for the convertible notes at fair value better aligns the measurement methodologies of assets and liabilities, which may mitigate certain earnings volatility. Derivative Liabilities and Earnout Liabilities The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants and earnout shares to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). At the closing of the merger, the Company assumed 515,000 private placement warrants and 16,184,612 public warrants. As of March 31, 2024, there were 515,000 private placement warrants and 16,159,112 public warrants outstanding. Upon consummation of the merger, the Company evaluated the warrants and concluded that they did not meet the criteria to be classified within the stockholders’ deficit. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The initial estimated fair value of the warrants was measured using a Monte Carlo simulation. The subsequent estimated fair value of the public warrants is based on the listed price in an active market for such warrants while the fair value of the private placement warrants continues to be measured using a Monte Carlo simulation with the key inputs being directly or indirectly observable public warrants listed price. Since the public and private warrants meet the definition of a derivative, the Company recorded the public and private warrants as liabilities on the consolidated balance sheet at fair value upon the merger closing, with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date. At the closing of the merger, the Airship AI securityholders that hold shares of common stock of Airship AI, Airship AI options, Airship AI earnout warrants or Airship AI SARs have the contingent right to receive up to 5.0 million additional shares of common stock, subject to certain contingencies. These earnout shares have been categorized into two components: (i) the vested shares that are associated with stockholders with vested equity at the closing of the merger that will be earned upon achievement of the earnout milestones and (ii) the unvested shares associated with stockholders with unvested equity at the closing of the merger that will be earned over the remaining service period with the Company on their unvested equity shares and upon achievement of the earnout milestones. The earnout shares associated with vested shares are recognized as derivative liabilities in accordance with ASC 815-40, as the events that determine the number of earnout shares required to be released or issued, as the case may be, include events that were not solely indexed to the fair value of common stock of the Company. The earnout shares were measured at the merger closing and subsequently measured at each reporting date until settled or when they met the criteria for equity classification. Accordingly, the Company recognizes the earnout shares as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The earnout shares were valued using a Monte Carlo analysis. At the closing of the merger, the unvested earnout shares were considered to be equity instruments and valued at approximately $2,675,000. This amount will be recognized as stock-based compensation going forward over the five-year vesting period. Derivative warrant and earnout shares liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of significant current assets or require the creation of current liabilities. Stock-Based Compensation The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, stock appreciation rights, incentive stock options, nonqualified stock options, unvested earnout shares and warrants to purchase shares of common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date and the fair value of the award is recognized as an expense, over the requisite service period which is generally the vesting period. The Company adjusts stock-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. Income Taxes Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The Company’s ability to realize deferred tax assets depends upon future taxable income, as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. The Company considers historical and future taxable income, future reversals of existing taxable temporary differences, taxable income in prior carryback years, and ongoing tax planning strategies in assessing the need for valuation. Comprehensive Gain (Loss) Comprehensive gain (loss) is defined as the change in equity of a business during a period from non-owner sources. There was other comprehensive gain of $3,239 and $0 related foreign exchange translation for the three months ended March 31, 2024 and 2023, respectively. Going Concern Assessment The Company applies Accounting Standards Codification 205-40 (“ASC 205-40”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern Use of Estimates In preparing these consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the calculation of revenue recognition, stock-based compensation, valuation of common stock, valuation of senior secured convertible notes, warrant liability, earnout share liabilities, accruals for potential liabilities including income taxes, valuation of deferred tax assets and valuation assumptions related to share-based compensation. Net Loss per Share As of March 31, 2024, the Company had 23,159,119 shares of common stock issued and outstanding. As of March 31, 2024, there were (i) options outstanding for the purchase of 5,114,589 shares of the Company’s common stock; (ii) SARs for the purchase of 1,758,105 shares of Company’s common stock; (iii) warrants for the purchase of 19,364,014 shares of the Company’s common stock; and (iv) 931,794 shares of the Company’s common stock reserved and are issuable upon conversion of convertible debentures. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the March 31, 2024, calculation of net loss per share because the impact is antidilutive. As of March 31, 2023, the Company had 22,812,048 shares of common stock issued and outstanding. As of March 31, 2023, there were (i) options outstanding for the purchase of 4,257,151 shares of the Company’s common stock; and (ii) SARs for the purchase of 1,758,105 shares of Company’s common stock. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the March 31, 2023, calculation of net loss per share because the impact is antidilutive. Reportable Segments The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting Recent Accounting Pronouncements All recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements. | 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. The preparation of these consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). For periods prior to the Merger, the reported share and per share amounts have been retroactively converted by the applicable exchange ratio with the exception of the authorized shares and shares reserved for issuance. See Note 13—Reverse Recapitalization for additional information. Functional Currency The Company’s consolidated functional currency is the U.S. Dollar. The operations of Zeppelin use the Taiwan Dollar as its functional currency. At each period end, Zeppelin’s balance sheet is translated into U.S. Dollars based upon the period end exchange rate, while their statements of operations and comprehensive loss and statements of cash flows are translated into U.S. Dollars based upon an average exchange rate during the period. Consolidation of Variable Interest Entities A VIE is a legal entity that has either a total equity investment that is insufficient to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. The Company’s variable interest arises from contractual, ownership or other monetary interests in the entity, which change with fluctuations in the fair value of the entity’s net assets. A VIE is consolidated by its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates a VIE when it is deemed to be the primary beneficiary. The Company assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis. As of and for the year ended December 31, 2022 the Company was considered to be the primary beneficiary of Zeppelin. On February 28, 2023, the Founders transferred their interest in Zeppelin to the Company and Zeppelin became a wholly owned subsidiary. Cash and Cash Equivalents The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit. Revenue Recognition and Deferred Revenue The Company primarily generates revenue from sales of systems and products and the related post contract support to customers. The Company’s primary systems and products include Outpost AI, Acropolis and Airship Command. To date, the majority of the Company’s product revenue that has been recognized consists primarily of a bundled offering of hardware and software which delivers on premise solutions to its customers. Separate limited software subscription services have been delivered to customers including those customers that are able to operate in a cloud based environment. The transaction price recognized as revenue represents the amount the Company expects to be entitled to and is primarily comprised of product revenue, net of returns and variable consideration, including sales incentives provided to customers. Payment is typically due within 30 to 90 calendar days of the invoice date. The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below. Product Revenue Product revenue is derived primarily from sales of the Company’s system offerings, Outpost AI, Acropolis and Airship Command. The Company recognizes product revenue at a point in time when title transfers, when the products are shipped, or when control of the system is transferred to the customer, which usually is upon delivery of the system and when contractual performance obligations have been satisfied. Post Contract Support Revenue Post Contract Support (“PCS”) revenue is derived primarily from the Company’s support and software maintenance agreements (“SMA”). The Company’s PCS includes the right to receive, on a when and if available basis, future unspecified firmware upgrades and features as well as bug fixes, and email and telephone support. The Company allocates a portion of the transaction price to the PCS performance obligation based on a cost-plus methodology and recognizes the associated revenue on a straight-line basis over the estimated term of the support period. The Company’s support contracts are typically one to five years with an average of four years, payment is due within 30 to 90 calendars days of the invoice date and may include options to renew. For the twelve months ended December 31, 2023 and 2022, the Company recognized revenue of $196,739 and $80,929, respectively, related to one-year support contracts. For the years ended December 31, 2023 and 2022, the Company recognized revenue of $4,495,748 and $4,912,258, respectively, related to multi-year support contracts. Other Services The Company earns other service revenues from installation services, training and licensing which are short-term in nature and revenue for these services are recognized at the time of performance when the service is provided. Contracts with Multiple Performance Obligations The Company’s contracts with customers often contain multiple performance obligations that can include three separate obligations: (i) a hardware component (which may be bundled with hardware accessories) and the embedded firmware essential to the functionality of the hardware component delivered at the time of sale; (ii) the right to the Company’s downloadable free application and software solutions, and (iii) the right for the customer to receive post contract support (“PCS”) after the initial sale. The Company’s products and PCS offerings have significant standalone functionalities and capabilities. Accordingly, the products are distinct from the Company’s PCS services as customers can benefit from the products without the PCS services and such PCS services are separately identifiable within the contracts. The Company accounts for multiple agreements with a single customer as a single contract if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract. The amount of consideration the Company expects to receive in exchange for delivering on the contract is allocated to each performance obligation based on its relative standalone selling price. The Company establishes the standalone selling price using the prices charged for a deliverable when sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price based on its pricing model and offering type (products or PCS services). The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year. The Company sells its products primarily through a direct sales force. The Company considers revenue to be earned when all of the following criteria are met: · The Company has a contract with a customer that creates enforceable rights and obligations, · Promised performance obligations are identified, · The transaction price, or the amount the Company expects to receive, is determinable and · The Company has satisfied the performance obligations to the customer. Transfer of control is evidenced upon passage of title and risk of loss to the customer unless the Company is required to provide additional services. The Company’s short-term and long-term deferred revenue balances totaled $4,008,654 and $4,962,126 as of December 31, 2023. The Company’s short-term and long-term deferred revenue balances totaled $4,168,016 and $4,805,431 as of December 31, 2022. Of the deferred revenue balance of $8,973,447 and $9,888,275 as of January 1, 2023 and 2022, the Company recognized approximately $4,168,016 and $4,593,794 during the years ended December 31, 2023 and 2022. Accounts Receivable and Provision for Credit Losses The Company generally sells its products to large governmental entities and large corporations in the United States. Accounts receivable are recorded at invoiced amounts and are non-interest bearing. The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (codified as Accounting Standards Codification (“ASC”) 326) on January 1, 2023. ASC 326 adds to U.S. GAAP the current expected credit loss (“CECL”) model, a measurement model based on expected losses rather than incurred losses. Prior to the adoption of ASC 326, the Company evaluated receivables regularly and adjusted the allowance for doubtful accounts accordingly. The Company determined estimates of uncollectible accounts receivable based primarily on actual historical bad debt and sales return trends, customers financial condition and general economic conditions. Under the application of ASC 326, the Company’s historical credit loss experience provides the basis for the estimation of expected credit losses, as well as current economic and business conditions, and anticipated future economic events that may impact collectability. In developing its expected credit loss estimate, the Company evaluated the appropriate grouping of financial assets based upon its evaluation of risk characteristics, including consideration of the types of products and services sold. Account balances are written off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Occasionally certain long-standing customers, who routinely place large orders, will have unusually large receivables balances relative to the total gross receivables. Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders. As of December 31, 2023 and 2022, the Company did not have a reserve for credit losses as all accounts receivable are considered collectible. Accounts receivable balances as of January 1, 2022, December 31, 2022 and December 31 2023 were $831,353, 705,752 and $1,648,904, respectively. Concentration of Credit and Sales Risk The Company sells its product to commercial and government customers under agreements that are normally paid within 30 days of contract completion. For the year ended December 31, 2023, three customers represented 34%, 21% and 12% of total revenue from 58 customers, although such a high level of 50% customer concentration is not typical. The primary reason for the increase in reliance on a single customer for the year ended December 31, 2023 was due to the lag-time in delivering on a large order received in late 2022 from one division of a customer which was not fulfilled until 2023. As of December 31, 2023, three customers represent approximately 51%, 26% and 17% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is minimal. For the year ended December 31, 2022, two customers represented 28% and 17% of total revenue from 45 customers, which is more representative of our typical customer concentration. As of December 31, 2022, four customers represent approximately 42%, 19%, 14% and 10% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is minimal. Inventory The Company’s purchase of inventory, primarily computer servers, is undertaken to match purchase orders received from customers. Upon receipt of inventory, the Company generally configures the servers and loads proprietary software onto the servers before shipping out. The Company holds inventory for a short period of time and as of December 31, 2023 and 2022, it had no inventory in stock. Inventory value is primarily material costs and is valued at the lower of cost (first in, first out method) or net realizable value. Property and Equipment Property and Equipment consists of vehicles, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset. Computer equipment is expensed to research and development or selling, general and administrative expense and any furniture and computer equipment is either fully depreciated or immaterial to the consolidated financial statements. Long-Lived Assets The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results. The Company recorded impairment losses of $0 for the years ended December 31, 2023 and 2022. Research and Development Expenses Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes. The Company’s current research and development efforts are primarily focused on improving the Company’s products. The Company is also actively involved in identifying new applications. The Company’s current internal team along with outside consultants has considerable experience working with the application of the Company’s technologies and their applications. The Company engages third party experts as required to supplement the Company’s internal team. The Company believes that continued development of new and enhanced technologies is essential to the Company’s future success. The Company incurred expenses of $2,729,492 and $3,614,814 for the years ended December 31, 2023 and 2022, respectively, on development activities. Software Development Costs Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. No software development costs have been capitalized as of December 31, 2023 and 2022. Cost of Net Revenues Cost of net revenues for products includes components and freight. Cost of net revenues for post contract support and other services includes primarily the cost of personnel and personnel-related expenses to conduct implementations and ongoing client support. Advertising Advertising costs are charged to selling, general and administrative expenses as incurred. Advertising and marketing costs for the years ended December 31, 2023 and 2022 were $94,272 and $69,975, respectively. Shipping and Handling of Products Amounts billed to customers for shipping and handling of products are included in net revenues. Costs incurred related to shipping and handling of products are included in cost of revenues. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 Quoted prices in active markets for identical assets and liabilities; Level 2 Inputs other than level one inputs that are either directly or indirectly observable; and Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of December 31, 2023 and 2022 are based upon the short-term nature of the assets and liabilities. The Company recorded its Senior Secured Convertible Promissory Note, earnout liability, Private Warrants and the warrants that were issued with this Note at fair value, remeasured on a recurring basis and considered them as Level 3 instruments. The method of determining the fair value of the Senior Secured Convertible Promissory Note and warrants are described below. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). Accounting for Senior Secured Convertible Promissory Notes at Fair Value The Company has elected the fair value option to account for the Senior Secured Convertible Note that was issued on June 22, 2023 and the convertible notes that were issued in October and November 2023 and record them at fair value with changes in fair value recorded in the Consolidated Statements of Operations and Comprehensive Loss. As a result of applying the fair value option, direct costs and fees related to the convertible notes are recognized in earnings as incurred and not deferred. Values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the liability. Considerable judgment is necessary to interpret market data and determine an estimated fair value. The use of different market assumptions or valuation methods may have a material effect on the estimated fair values. As of December 31, 2023, the Company has used a Monte Carlo simulation pricing model that factors in potential outcomes being consummated, such as the convertible notes being repaid in cash and the convertible notes being converted to common stock. All of these scenarios take into consideration the terms and conditions of the underlying convertible notes plus potential changes in the underlying value of the common stock. For the twelve months ended December 31, 2023, the Company recognized an unrealized loss of $240,784 for the change in fair value of the notes and is included in the Consolidated Statements of Operations and Comprehensive Loss. The Company believes accounting for the convertible notes at fair value better aligns the measurement methodologies of assets and liabilities, which may mitigate certain earnings volatility. Derivative Liabilities and Earnout Liabilities The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants and earnout shares to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). At Closing, the Company assumed 515,000 private placement warrants (“Private Warrants”) and 16,184,612 Public Warrants (together the “BYTE Warrants”). Upon consummation of the Merger, the Company evaluated the BYTE Warrants and concluded that they did not meet the criteria to be classified within the stockholders’ deficit. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The initial estimated fair value of the warrants was measured using a Monte Carlo simulation. The subsequent estimated fair value of the Public Warrants is based on the listed price in an active market for such warrants while the fair value of the Private Placement Warrants continues to be measured using a Monte Carlo simulation with the key inputs being directly or indirectly observable from the Public Warrants listed price. Since the Public and Private Warrants meet the definition of a derivative, the Company recorded the Public and Private Warrants as liabilities on the consolidated balance sheet at fair value upon the Closing, with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date. At Closing, the Airship AI security holders that hold shares of common stock of Airship AI (“Airship Common Stock”), Airship Options, Airship Earnout Warrants or Airship SARs (the “Airship Earnout Holders”) have the contingent right to receive up to 5.0 million additional shares of Airship Pubco Common Stock (the “Earnout Shares”), subject to certain contingencies. These earnout shares have been categorized into two components: (i) the “Vested Shares” - those associated with stockholders with vested equity at the closing of the Merger that will be earned upon achievement of the Earnout Milestones and (ii) the “Unvested Shares” - those associated with stockholders with unvested equity at the closing of the Merger that will be earned over the remaining service period with the Company on their unvested equity shares and upon achievement of the Earnout Milestones. The earnout shares associated with vested shares are recognized as derivative liabilities in accordance with ASC 815-40, as the events that determine the number of Earnout Shares required to be released or issued, as the case may be, include events that were not solely indexed to the fair value of common stock of the Company. The Earnout Shares were measured at Closing and subsequently measured at each reporting date until settled or when they met the criteria for equity classification. Accordingly, the Company recognizes the earnout shares as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The Earnout shares were valued using a Monte Carlo analysis. At closing, the unvested earnout shares were considered to be equity instruments and valued at approximately $2,675,000. This amount will be recognized as stock-based compensation going forward over the five-year vesting period. Derivative warrant and earnout shares liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of significant current assets or require the creation of current liabilities. Stock-Based Compensation The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, stock appreciation rights, incentive stock options, nonqualified stock options, unvested earnout shares and warrants to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date and the fair value of the award is recognized as an expense, over the requisite service period which is generally the vesting period. Income Taxes Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The Company’s ability to realize deferred tax assets depends upon future taxable income, as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. The Company considers historical and future taxable income, future reversals of existing taxable temporary differences, taxable income in prior carryback years, and ongoing tax planning strategies in assessing the need for valuation. Advances due to Founders and Advances due from Founders During the year ended December 31, 2022, Mr. Huang and Mr. Xu advanced Airship AI $1,900,000 and were repaid $1,300,000, with $600,000 recorded as advances from founders as of December 31, 2022. In the year ended December 31, 2023, Mr. Huang and Mr. Xu advanced Airship AI $1,350,000 and were repaid $200,000, with $1,750,000 recorded as advances from founders as of December 31, 2023.The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period. During 2024, Mr. Huang advanced Airship AI $900,000 and was repaid $900,000, with $1,750,000 recorded as advances from founders as of March 29, 2024. The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period. Comprehensive Loss Comprehensive loss is defined as the change in equity of a business during a period from non-owner sources. There was other comprehensive loss of $2,702 and $10,106 related foreign exchange translation for the year ended December 31, 2023 and 2022, respectively. Going Concern Assessment The Company applies Accounting Standards Codification 205-40 (“ASC 205-40”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern Use of Estimates In preparing these consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the calculation of revenue recognition, stock-based compensation, valuation of common stock, valuation of Senior Secured Convertible Notes, warrant liability, earnout share liabilities, accruals for potential liabilities including income taxes, valuation of deferred tax assets and valuation assumptions related to share-based compensation. Income (Loss) Per Share Basic income (loss) per share is based upon the net income (loss) for the year divided by the weighted average shares of common stock outstanding. Diluted net income per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, warrants, convertible notes payable and stock appreciation rights) outstanding during the period using the treasury stock method. Common stock equivalents for the year ended December 31, 2022 are not included in the calculation of diluted earnings (loss) per share given the Company incurred a loss and they are anti-dilutive. Reportable Segments The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting Recent Accounting Pronouncements In October 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which clarifies and improves disclosure or presentation requirements of a variety of Codification Topics. ASU 2023-06 aligns disclosure and presentation requirements under US Generally Accepted Accounting Principles (“US GAAP”) with the Securities and Exchange Commission’s (the “SEC”) regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years after the date of such removal. Future adoption of the new standard is not expected to have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which improves segment disclosure requirements primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within reported measures of segment profit or loss. ASU 2023-07 also requires disclosure of the title and position of the CODM, how the CODM assesses segment performance, and additional detail around other segment items. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023. Future adoption of the new standard is not expected to have a material impact on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which addresses investor requests for more transparency around income tax information. ASU 2023-09 requires additional information within the disclosures related to income tax rate reconciliations and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Future adoption of the new standard is not expected to have a material impact on our consolidated financial statements. All other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
Advances due to and from Founde
Advances due to and from Founders | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Advances due to and from Founders | ||
Advances due to and from Founders | 3. Advances due to and from Founders Prior to 2023, the founders had advanced a net $600,000 to the Company. In the year ended December 31, 2023, Mr. Huang and Mr. Xu advanced Airship AI a total of $1,350,000 and were repaid a total of $200,000, with $1,750,000 recorded as advances from founders as of December 31, 2023. During 2024, Mr. Huang advanced Airship AI $1,000,000 and was repaid $1,000,000, with $1,750,000 recorded as advances from founders as of March 31, 2024. The advances are non-interest bearing and the Company expects to pay the balance off within a one year period. | 3. Advances due to and from Founders and Transactions with Zeppelin Worldwide LLC In 2020, Victor Huang and Derek Xu, the Founders, officers and directors of the Company, borrowed $3,000,000 (“shareholder advances”) from Airship. As of December 31, 2022 the Company was owed $1,100,000 by the Founders. Due to the lack of certainty over the payment of interest, the Company will record when received. Due to the uncertainty of the timing of payment, the advances will be treated as a long-term asset. The shareholders advances bear interest at 5% and during the year ended December 31, 2023 and 2022 no interest was paid. On February 28, 2023, the Founders transferred their interest in Zeppelin to the Company and the $1,100,000 and related interest owed by the Founders to the Company was eliminated. As of December 31, 2022, Zeppelin had received from the Company $1,095,000 in cash advances to fund operations which commenced in 2021. These advances between the companies are eliminated in the consolidated balance sheet. As of December 31, 2022 Zeppelin owes the Founders $1,100,000 for funds they have provided for the commencement of operations in 2021. The balance was not expected to be paid in the next year and was treated as long-term liabilities. On February 28, 2023, in connection with the transfer of the Zeppelin ownership from the shareholders to the Company, the $1,100,000 Payable to the founders was eliminated. As of December 31, 2022, Zeppelin had approximately $73,000 in assets which is primarily cash, and accrued liabilities of approximately $60,000. As of December 31, 2022, Zeppelin's liability to the Company and shareholders for advances totals $2,254,000. Zeppelin advances from the Company at December 31, 2022 totaling approximately $1,150,000 are eliminated in consolidation. As of December 31, 2022 the Zeppelin stockholder’s deficit totaled approximately $2,181,000. During the year ended December 31, 2022, Mr. Huang and Mr. Xu advanced Airship AI $1,900,000 and were repaid $1,300,000, with $600,000 recorded as advances from founders as of December 31, 2022. In the year ended December 31, 2023, Mr. Huang and Mr. Xu advanced Airship AI $1,350,000 and were repaid $200,000, with $1,750,000 recorded as advances from founders as of December 31, 2023. The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period. During 2024, Mr. Huang advanced Airship AI $900,000 and was repaid $900,000, with $1,750,000 recorded as advances from founders as of March 29, 2024. The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period. Mr. Huang and Mr. Xu originally owned all the Zeppelin membership units. When Zeppelin started, their intent was exploring the technology in-development and determine value for external customers by providing cloud based back-end products. After a period of time for Zeppelin’s development it became apparent these efforts would be of value and accretive to the Company. In 2022, the Company began utilizing Zeppelin’s research and development personnel to develop the Company’s products. On February 28, 2023, the Founders transferred their interest in Zeppelin to the Company. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment, Net | |
Property and Equipment, Net | 4. Property and Equipment, Net Property and equipment, net as of December 31, 2023 and 2022 was comprised of the following: Estimated Useful Lives December 31, 2023 December 31, 2022 Vehicles 5 years $ 74,398 $ 199,502 Less: accumulated depreciation (72,537 ) (182,762 ) $ 1,861 $ 16,740 Total depreciation expense was $14,879 for the years ended December 31, 2023 and 2022. During the year ended December 31, 2023, the Company retired fully depreciated assets with a cost basis of $125,104. All equipment is used for selling, general and administrative purposes and accordingly all depreciation is classified in selling, general and administrative expenses. |
Revenues
Revenues | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
NET REVENUES: | ||
Revenues | 4. Revenues Disaggregation of Revenue The Company’s net revenues for the three months ended March 31, 2024 and 2023 consisted of approximately $9.4 million and $1.7 million, respectively, of hardware and software bundled systems for which revenue is transferred at a point in time. The Company’s remaining net revenue of approximately $1.2 million and $1.2 million relates to PCS revenue and other services which are transferred over time. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing, and uncertainty around revenue recognition and cash flow are substantially similar. Contract Balances A receivable is recognized in the period the Company delivers goods or provides services or when the Company’s right to consideration is unconditional. The Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset. Receivables are generally paid within thirty days and there is no financing element to the customer contracts. As of March 31, 2024 and December 31, 2023, there are no unbilled receivable balances. The Company’s short-term and long-term deferred revenue balances totaled $3,742,145 and $4,304,587 as of March 31, 2024. The Company’s short-term and long-term deferred revenue balances totaled $4,008,654 and $4,962,126 as of December 31, 2023. Of the deferred revenue balance of $8,970,780 as of January 1, 2024, the Company recognized approximately $1,176,239 during the three months ended March 31, 2024. Remaining Performance Obligations As of March 31, 2024, the Company had approximately $8.0 million of remaining performance obligations, which were comprised of deferred service contracts not yet delivered. The Company expects to recognize approximately 36% of its remaining performance obligations as revenue in fiscal 2024 and the remaining 64% in fiscal 2025 and years thereafter. Costs to Obtain or Fulfill a Contract The Company does not pay any material variable compensation to obtain a customer contract. Additionally, the majority of the Company’s cost of fulfillment as a seller of products is classified as inventory and then cost of revenue when the product is sold. Other costs of contract fulfillment such as software maintenance are expensed in the period incurred and align with when the revenue is amortized. | 5. Revenues Disaggregation of Revenue The Company’s net revenues for the years ended December 31, 2023 and 2022 consisted of approximately $7.4 million and $9.4 million of hardware and software bundled systems for which revenue is transferred at a point in time. The Company’s remaining net revenue of approximately $4.9 million and $5.2 million relates to PCS revenue and other services which are transferred over time. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing, and uncertainty around revenue recognition and cash flow are substantially similar. Contract Balances A receivable is recognized in the period the Company delivers goods or provides services or when the Company’s right to consideration is unconditional. The Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset. Receivables are generally paid within thirty days and there is no financing element to the customer contracts. As of December 31, 2023 and 2022, there are no unbilled receivable balances. The Company’s short-term and long-term deferred revenue balances totaled $4,008,654 and $4,962,126 as of December 31, 2023. The Company’s short-term and long-term deferred revenue balances totaled $4,168,016 and $4,805,431 as of December 31, 2022. Of the deferred revenue balance of $8,973,447 and $9,888,275 as of January 1, 2023 and 2022, the Company recognized approximately $4,168,016 and $4,593,794 during the years ended December 31, 2023 and 2022. Remaining Performance Obligations As of December 31, 2023, the Company had approximately $9.0 million of remaining performance obligations, which were comprised of deferred service contracts not yet delivered. The Company expects to recognize approximately 45% of its remaining performance obligations as revenue in fiscal 2024 and the remaining 55% in fiscal 2025 and years thereafter. Costs to Obtain or Fulfill a Contract The Company does not pay any material variable compensation to obtain a customer contract. Additionally, the majority of the Company’s cost of fulfillment as a seller of products is classified as inventory and then cost of revenue when the product is sold. Other costs of contract fulfillment such as software maintenance are expensed in the period incurred and align with when the revenue is amortized. |
Notes Payable, Line of Credit a
Notes Payable, Line of Credit and Convertible Notes Payable | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Notes Payable, Line of Credit and Convertible Notes Payable | ||
Notes Payable, Line of Credit and Convertible Notes Payable | 5. Notes Payable, Line of Credit and Convertible Notes Payable On June 22, 2023, the Company issued a $2,000,000 senior secured convertible promissory note to Platinum Capital Partner, Inc. As a condition of funding, the Company paid off three small notes and accounts payable totaling $374,000. At the option of the holder, the note is convertible into cash, common stock or a combination of cash and stock. The conversion into the Company’s common stock was $6.50 per share as of December 31, 2023. The repayment amount of the note is 110% ($2,200,000) and matures on June 22, 2024. Interest on the note is 6% per annum calculated on 360 days. In connection with the convertible notes transaction, the Company issued warrants to purchase 53,800 shares of common stock with an exercise price of $6.50 upon the conclusion of the BYTS merger. The value of the warrants totaled $15,418 and reduced the fair value of the convertible promissory notes. On February 2, 2024, the Company issued in a private placement an amended and restated senior secured convertible promissory note to Platinum in the principal amount of $2,000,000. The Platinum convertible note amends and restates in its entirety the senior secured convertible promissory note issued to Platinum in the principal amount of $2,000,000 on June 22, 2023. The repayment amount of the Platinum convertible note is 110% of the principal amount ($2,200,000) and matures in full on June 22, 2024. Interest accrues on the Platinum convertible note at the rate of 6% per annum calculated on the basis of 360 days. At the option of Platinum, the principal amount of the Platinum convertible note plus any accrued but unpaid interest is convertible into shares of common stock at a conversion price per share equal to the lower of (i) $3.69717, subject to appropriate adjustment as provided in the Platinum convertible note, and (ii) 65% of the VWAP for the common stock for the preceding five trading days immediately prior to any conversion, but in no event below $2.27518, subject to appropriate adjustment as provided in the Platinum convertible note. The Platinum convertible note contains “weighted average” anti-dilution protection for issuances of shares of common stock or common stock equivalents at a price less than the conversion price then in effect. In connection with the issuance of the Platinum convertible note, the Company also issued to Platinum an amended and restated common stock purchase warrant dated February 2, 2024 to purchase 189,334 shares of common stock at an exercise price per share of $3.69717. The term of the Platinum warrant expires on June 22, 2028. The Platinum convertible note may not be converted, and the Platinum warrant may not be exercised, to the extent that after giving effect to such conversion and/or exercise, Platinum (together with its affiliates) would beneficially own in excess of 4.99% of the common stock outstanding immediately after giving effect to such conversion and/or exercise. On March 18, 2024, Platinum exercised the Platinum warrant and received 137,367 shares of common stock. Platinum forfeited 51,967 shares. On October 3, 2023, the Company issued senior secured convertible promissory notes for $600,000 to two private investors. At the option of the holders, the notes are convertible into cash, common stock or a combination of cash and stock. The repayment amount of the notes is 110% ($660,000) and mature on September 30, 2024. Interest on the notes is 6% per annum calculated on 360 days. On March 5, 2024, the two private investors converted senior secured convertible promissory notes with a face value of $600,000 and interest into 169,204 shares of the Company’s common stock valued at $835,610. The Company recognized a loss on debt conversion of $158,794 during the three months ended March 31, 2024. The Company accounts for the notes under the fair value method of accounting and as of March 31, 2024 and December 31, 2023, the notes were recorded at $4,204,743 and $2,825,366. During the three months ended March 31, 2024, the Company recorded an increase in the fair value of the convertible notes payable totaling $2,039,377 which was recorded as loss from change in fair value of convertible debt on the statement of operations and comprehensive loss. See Note 13 – Fair Value Measurements for more information. | 6. Notes Payable, Line of Credit and Convertible Notes Payable On January 25, 2021, the Company received $1,131,878 under the Paycheck Protection Program of the U.S. Small Business Administration’s (SBA) 7(a) Loan Program pursuant to the Coronavirus, Aid, Relief and Economic Security Act (CARES Act), Pub. Law 116-136, 134 Stat. 281 (2020). The Note Payable bears interest at 1% and is due January 23, 2026. The Company accrued interest of $9,845 as of December 31, 2021. The Company has used the funds in accordance with the legal requirements and has applied for forgiveness. No payments are due unless the Company receives notification that their application for forgiveness is not approved at which time monthly payments through January 2026 would be required to repay the balance. In May 2022, the entire unpaid balance was forgiven and approximately $1,146,000 recognized as other income. On July 8, 2022, the Company entered into a Business Loan with Funding Circle of Denver, Colorado for $500,000. The Company received $480,050. The $500,000 plus interest at 6.99% is being repaid at $22,384 per month over twenty-four months. The Business Loan is secured by the assets of the Company and is guaranteed by the founders. The balance as of December 31, 2023 and 2022 was $0 and $424,540, respectively. As of December 31 2022, $292,932 was due in 2023 and $131,608 in 2024. The Company recorded interest expense of $5,064 and $0 during the year ended December 31, 2023 and 2022. On June 21, 2023, the Company paid the remaining balance of $256,541 to pay off the Loan. The Company had an $85,000 revolving line of credit agreement with no stated expiration date. The Company owed $0 as of December 31, 2023 and 2022. The line of credit totaling $85,300 was paid off on June 20, 2023 and was terminated. On June 22, 2023, the Company issued a $2,000,000 senior secured convertible promissory note to Platinum Capital Partner, Inc. As a condition of funding, the Company paid off three small notes and accounts payable totaling $374,000. At the option of the holder, the note is convertible into cash, common stock or a combination of cash and stock. The conversion into the Company’s common stock was $6.50 per share as of December 31, 2023. The repayment amount of the note is 110% ($2,200,000) and matures on June 22, 2024. The number of common shares issuable equals 452,240 if fully converted into common stock, including accrued interest. Interest on the note is 6% per annum calculated on 360 days. If, at any time while the note is outstanding, the effective time of the merger between BYTE and the Company pursuant to the Merger Agreement dated on June 22, 2023 occurs, then, any subsequent conversion of the note, the holder has the right to receive, for each conversion share that would had been issuable upon conversion immediately prior to the BYTE merger, at the option of the holder, the same kind of securities, cash or property as it would have been entitled to receive on the occurrence of the BYTE merger if it had been, immediately prior to the BYTE merger, the holder of one share of common stock (“BYTE alternate consideration”). The BYTE alternate consideration conversion price for purposes of any conversion following the BYTE merger, the conversion price is the lower of (A) $6.50 for each unit and (B) 65% of the volume weighted average price for the BYTE alternate consideration for the preceding five trading days immediately prior to any conversion by the holder, but (C) in no event will the conversion price be below $4.00, subject to anti-dilution provisions. The note was amended and restated on February 2, 2024. See Note 18 – Subsequent Events. On October 3, 2023, the Company issued senior secured convertible promissory notes for $600,000 to two private investors. At the option of the holders, the notes are convertible into cash, common stock or a combination of cash and stock. The Conversion Price shall be the lower of (A) $6.50 for each unit or share of BYTE Alternate Consideration, subject to appropriate adjustment and (B) 65% of the VWAP for the BYTE Alternate consideration for the preceding five (5) Trading Days immediately prior to any conversion by the Holder, but (C) in no event shall the Conversion Price be below $4.00, subject to appropriate adjustment. The repayment amount of the notes is 110% ($660,000) and mature on September 30, 2024. Interest on the notes is 6% per annum calculated on 360 days. The Company accounts for the notes under the fair value method of accounting and as of December 31, 2023 the notes are recorded at $2,825,366. During the year ended December 31, 2023, the Company recorded an increase in the fair value of the convertible note payable totaling $240,784 which was recorded as loss from change in fair value of convertible debt on the statement of operations and comprehensive loss. In connection with the convertible notes transaction, the Company issued warrants to purchase 53,800 shares of common stock with an exercise price of $6.50 upon the conclusion of the BYTE merger. The value of the warrants totaled $15,418 and reduced the fair value of the convertible promissory notes. See Note 16 – Fair Value Measurements for more information. |
Stockholders Deficit
Stockholders Deficit | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Stockholders Deficit | ||
Stockholders' Deficit | 6. Stockholders’ Deficit Authorized and Outstanding Stock The Company is a Delaware company and its affairs are governed by its certificate of incorporation, its bylaws and the Delaware General Corporation Law and the common law of the State of Delaware. The Company’s charter authorizes the issuance of 205,000,000 shares, consisting of 200,000,000 shares of common stock and 5,000,000 shares of preferred stock, par value $0.0001 per share. Details on the common stock, preferred stock and equity incentive plans were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and filed with the SEC on April 1, 2024. Common Stock As of March 31, 2024, there were 23,159,119 shares of common stock outstanding. Three Months Ended March 31, 2024 During the three months ended March 31, 2024, the Company had the following sales of unregistered sales of equity securities: On March 5, 2024, a private investor converted a senior secured convertible promissory note for $250,000 and interest into 70,502 shares of the Company’s common stock. On March 5, 2024, a private investor converted a senior secured convertible promissory note for $350,000 and interest into 98,702 shares of the Company’s common stock. On March 21, 2024, the Company issued 15,000 shares of common stock for services performed as of December 31, 2023 to MZHCI, LLC related to an investor relations consulting agreement. 2023 Equity Incentive Plan The Company has adopted the 2023 Equity Incentive Plan, which plan was approved by stockholders at the extraordinary general meeting held in December 2023. Details on the equity incentive plan were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and filed with the SEC on April 1, 2024. The aggregate number of shares of common stock initially reserved and available for grant and issuance under the equity incentive plan is 4,080,000 as of March 31, 2024. Such aggregate number of shares of stock will automatically increase on January 1 of each year for a period of ten years commencing on January 1, 2024 and ending on January 1, 2033, in an amount equal to 2.0% of the total number of shares of common stock outstanding on December 31 of the preceding year. The Company had the following stock option activity during the three months ended March 31, 2024: On March 5, 2024, the Company granted stock options to purchase an aggregate of 200,000 shares of common stock with an exercise price of $1.65, and which vest over four years and expire on March 31, 2029. During the three months ended March 31, 2024, the Company granted stock options to four employees to purchase an aggregate of 250,000 shares of common stock with an exercise price of $6.08 and which vest primarily quarterly over four years and expire on March 31, 2034. Stock option activity for the three months ended March 31, 2024 was as follows: Options Weighted Average Shares Exercise Price Outstanding as of December 31, 2023 4,664,589 $ 0.55 Granted 450,000 4.11 Outstanding as of March 31, 2024 5,114,589 $ 0.86 The following table summarizes information about stock options outstanding and exercisable as of March 31, 2024: Weighted Weighted Average Average Weighted Average Remaining Life Range of Number Remaining Life Average Number Exercise Price In Years - Vested Exercise Prices Outstanding In Years Exercise Price Exerciseable Exerciseable and Exercisable $ 0.12 2,646,410 4.13 $ 0.12 2,646,410 $ 0.12 4.13 0.57 1,022,963 4.22 0.57 1,022,963 0.57 4.22 1.49-1.65 1,170,403 8.19 1.64 449,625 1.64 8.19 1.90 49,813 3.73 1.90 3,113 1.90 3.73 6.59 225,000 9.99 6.59 - - 9.99 5,114,589 5.33 $ 0.86 4,122,111 $ 0.40 5.33 There are 5,114,589 options to purchase common stock at an average exercise price of $0.86 per share outstanding as of March 31, 2024 under the 2023 Equity Incentive Plan. The Company recorded $135,227 and $136,709 of compensation expense, net of related tax effects, relative to stock options for the three months ended March 31, 2024 and 2023, respectively, in accordance with ASC 718. As of March 31, 2024, there is $1,390,715 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately 5.33 years. The significant weighted-average assumptions relating to the valuation of the Company’s stock option grants for the three months ended March 31, 2024 were as follows: Assumptions 3/31/2024 Estimated stock price $1.49-$6.59 Exercise price $1.49-$6.59 Dividend yield 0% Expected life 5-10 years Expected volatility 69% Risk free interest rate 4.23% There were stock incentive plan awards outstanding at March 31, 2024 totaling 5,114,589 shares with an aggregate intrinsic value of $29,301,777. As of March 31, 2024 and December 31, 2023 there were 1,758,000 SARs outstanding. There were no SAR grants in the three months ended March 31, 2024 or the year ended December 31, 2023. Warrants to Purchase Common Stock See Note 12 for public and private placement warrants assumed after the merger. The Company had the following warrant activity during the three months ended March 31, 2024: In connection with the issuance of the Platinum convertible note, the Company also issued to Platinum an amended and restated common stock purchase warrant dated February 2, 2024 to purchase 189,334 shares of common stock at an exercise price per share of $3.69717. The term of the Platinum warrant expires on June 22, 2028. The Platinum convertible note may not be converted, and the Platinum warrant may not be exercised, to the extent that after giving effect to such conversion and/or exercise, Platinum (together with its affiliates) would beneficially own in excess of 4.99% of the common stock outstanding immediately after giving effect to such conversion and/or exercise. On March 18, 2024, Platinum exercised the Platinum warrant and received 137,367 shares of common stock. Platinum forfeited 51,967 shares. A summary of the warrants outstanding as of March 31, 2024 were as follows: March 31, 2024 Weighted Average Exercise Shares Price Outstanding January 1, 2024 19,443,314 $ 10.16 Issued 135,534 3.70 Exercised (162,867 ) (4.92 ) Forfeited (51,967 ) (3.70 ) Expired - - Outstanding at March 31, 2024 19,364,014 $ 10.15 Exercisable at March 31, 2024 19,364,014 The following table summarizes information about warrants outstanding and exercisable as of March 31, 2024: March 31, 2024 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exercisable Price 2,689,902 4.10 $ 1.770 2,689,902 $ 1.77 515,000 4.72 11.500 515,000 11.50 16,159,112 4.72 11.500 16,159,112 11.50 19,364,014 4.70 $ 10.148 19,364,014 $ 10.15 The significant weighted average assumptions relating to the valuation of the Company’s warrants issued for the three months ended March 31, 2024 were as follows: Assumptions Dividend yield 0% Expected life 3-5 years Expected volatility 69% Risk free interest rate 4.23% There were vested warrants of 19,364,014 with an aggregate intrinsic value of $12,965,328. Earnout Liability See Note 13 for common stock shares related to earnout liability. In addition, a portion of the earnout shares may be issued to individuals with unvested equity awards. While the payout of these shares requires the achievement of the earnout milestones, the individuals must complete the remaining service period associated with these unvested equity awards to be eligible to receive the earnout shares. As a result, these unvested earn-out shares are equity-classified awards and have an aggregated grant date fair value of $2,675,223 (or $5.96 per share). During the three months ended March 31, 2024, the Company stock-based compensation expense for the vesting of earnout shares was $133,762. As of March 31, 2024, unrecognized compensation cost related to unvested earnout shares totaled $2,541,461. The weighted average period over which this remaining compensation cost is expected to be recognized is 4.6 years. | 7. Stockholders’ Deficit Authorized and Outstanding Stock We are a Delaware company and our affairs are governed by our certificate of incorporation, our bylaws and the Delaware General Corporation Law, which we refer to as the “DGCL” or “Delaware Law” below, and the common law of the State of Delaware. The Charter authorizes the issuance of 205,000,000 shares, consisting of 200,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”). Common Stock As of December 31, 2023, there were 22,812,048 shares of Common Stock outstanding. Voting rights. Dividend Rights. Liquidation Rights. Other rights. Preferred Stock There are no shares of Preferred Stock issued or outstanding. The Charter authorizes the Board to establish one or more series of Preferred Stock. Unless required by law or any stock exchange, the authorized shares of Preferred Stock will be available for issuance without further action by the holders of Common Stock. The Board has the discretion to determine the powers, preferences and relative, participating, optional and other special rights, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of Preferred Stock. The issuance of Preferred Stock may have the effect of delaying, deferring or preventing a change in control of the Company without further action by the stockholders. Additionally, the issuance of Preferred Stock may adversely affect the holders of Common Stock by restricting dividends on the Common Stock, diluting the voting power of the Common Stock or subordinating the liquidation rights of the Common Stock. As a result of these or other factors, the issuance of Preferred Stock could have an adverse impact on the market price of the Common Stock, restricting dividends on the Company’s capital stock, diluting the voting power of Common Stock, impairing the liquidation rights of the Company’s capital stock, or delaying or preventing a change in control of the Company. At present, there are no plans to issue any Preferred Stock. 2022 Combined Incentive and Non-Qualified Stock Option Plan Related to the Share Exchange Agreement with Super Simple AI, Inc., on February 17, 2022, the Company’s Board of Directors approved the 2022 Combined Incentive and Non-Qualified Stock Option Plan (the “2022 Plan”) to issue options to acquire a maximum of 3,000,000 common stock shares. Effective upon the Closing, the 2022 Plan will no longer be available for use for the grant of future awards. The 2022 Plan will continue to govern the terms of awards that have been granted under the 2022 Plan before, and that are still outstanding following, the Merger. The 2022 Plan provides for the grant of stock options, including options that are intended to qualify as “incentive stock options” under Section 422 of the Code, as well as non-qualified stock options. Each award is set forth in a separate agreement with the person who received the award which indicates the type, terms and conditions of the award. Certain Transactions If as a result of any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar change in our capital stock, the outstanding shares of common stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company without the receipt of consideration by the Company, or, if, as a result of any merger or consolidation, or sale of all or substantially all of the assets of the Company, the outstanding shares are converted into or exchanged for other securities of the Company. or any successor entity, the administrator shall make an appropriate and proportionate adjustment in (i) the maximum number of shares reserved for issuance under the 2022 Plan, (ii) the number and kind of shares or other securities subject to any then outstanding awards under the 2022 Plan, (iii) the repurchase price, if any, per share subject to each outstanding award, and (iv) the exercise price for each share subject to any then outstanding options under the 2022 Plan. Amendment and Termination Our board of directors may terminate or amend the 2022 Plan at any time, but no such action shall adversely affect rights under any outstanding award without the holder’s consent. However, we must generally obtain stockholder approval for any such amendments to the extent required by applicable law. The administrator may exercise its discretion to reduce the exercise price of outstanding stock options to the then current fair market value if the fair market value of the common stock covered by such option has declined since the date the option was granted, without the approval of the Company’s stockholders. Upon consummation of the Merger, each outstanding option under the 2022 Plan that was outstanding as of immediately prior to the Effective Time converted into (i) an option (each, a “Converted Stock Option”), on substantially the same terms and conditions as are in effect with respect to such award immediately prior to the Effective Time, to purchase the number of shares of Common Stock, determined by multiplying the number of shares of common stock subject to such award as of immediately prior to the Effective Time by the Conversion Ratio, at an exercise price per share of Common Stock equal to (A) the exercise price per share of common stock of such award divided by (B) the Conversion Ratio, and (ii) the right to receive a number of Earnout Shares in accordance with, and subject to, the contingencies set forth in the Merger Agreement. Stock Appreciation Rights Plan Related to the Share Exchange Agreement with Super Simple AI, Inc., on February 17, 2022, the Company’s Board of Directors approved the 2022 Stock Appreciation Rights Plan (the “SAR Plan”) to issue a maximum of 1,500,000, which was later adjusted to 2,637,150 stock appreciation rights (“SAR”) after the Merger closed. As of December 31, 2023, after adjusting for the Merger, there were one 1,758,100 SARs outstanding with a base value of $0.12 and January 2028 expiration. The SARs were fully vested and expensed at the grant date on January 16, 2018. Payment of Appreciation Amount The appreciation distribution in respect to a SAR may be paid in cash, in common stock of the Company, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the stock appreciation rights agreement evidencing such SAR. Amendment and Termination Our board of directors may terminate or amend the SAR Plan at any time, but no such action shall adversely affect rights under any outstanding award without the holder’s consent. Upon consummation of the Merger, each SAR granted under the SAR Plan that was outstanding immediately prior to the Effective Time converted into a stock appreciation right denominated in shares of Common Stock (each, a “Converted SAR”). Each Converted SAR will continue to have and be subject to substantially the same terms and conditions as were applicable to such SAR immediately prior to the Effective Time, except that (i) each Converted SAR will cover that number of shares of Common Stock equal to (A) the product of (1) the number of shares of common stock subject to such SAR immediately prior to the Effective Time and (2) the Conversion Ratio and (B) a number of Earnout Shares in accordance with, and subject to, the contingencies set forth in the Merger Agreement, and (ii) the per share base value for each share of Common Stock covered by the Converted SAR will be equal to the quotient obtained by dividing (A) the base value per share of common stock of such SAR immediately prior to the Effective Time by (B) the Conversion Ratio. 2023 Equity Incentive Plan The Company has adopted the Equity Incentive Plan, which plan was approved by stockholders at the extraordinary general meeting. This section summarizes certain principal features of the Equity Incentive Plan. The Equity Incentive Plan is a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to its officers, employees, directors, consultants and advisers. The purpose of the Equity Incentive Plan is to help the Company attract, motivate and retain such persons with awards under the Equity Incentive Plan and thereby enhance shareholder value. Administration. Grant of Awards; Shares Available for Awards. th Following the Closing, it is expected that all of our employees, consultants, advisors and service providers and all of our non-executive officer directors will be eligible to participate in the Equity Incentive Plan. Future new hires and additional non-employee directors and/or consultants would be eligible to participate in the Equity Incentive Plan as well. The number of stock options and/or shares of restricted stock to be granted to executives and directors cannot be determined at this time as the grant of stock options and/or shares of restricted stock is dependent upon various factors such as hiring requirements and job performance. Non-Employee Director Compensation Limit. Stock Options Stock Appreciation Rights. Performance Shares and Performance Unit Awards. th rd Distribution Equivalent Right Awards Restricted Stock Awards. Restricted Stock Unit Awards. th rd Unrestricted Stock Awards. Adjustment to Shares. Change-in-Control Provisions. Transferability. Amendment and Termination. Determining Fair Value under ASC 718 The Company records stock-based compensation expense associated with stock options, SAR’s and other equity-based compensation using the Black-Scholes-Merton option valuation model for estimating fair value of stock options granted under the plan. The Company amortizes the fair value of stock options on a ratable basis over the requisite service periods, which are generally the vesting periods. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company estimates the volatility of its common stock based on the historical volatility of publicly traded peer companies over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. The Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton valuation model and adjusts stock-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. The Company recorded stock-based compensation of $715,727 and $546,460 for the years ended December 31, 2023 and 2022, respectively. Stock Incentive Plans Activity (Excluding SAR) As of December 31, 2023, there are 4,664,589 options outstanding under various stock option plans to acquire common stock at an average exercise price of $0.55 per share. As of December 31, 2023, there is $635,351 of total unrecognized stock-based compensation related to employee granted stock options that are not vested. During the year ended December 31, 2023, the Company issued stock option grants to employees for 502,522 shares at an average exercise price of $1.67 per share. During the year ended December 31, 2022, the Company issued stock option grants to employees for 492,695 shares at an average exercise price of $1.64 per share. During the year ended December 31, 2022, stock option grants to employees for 143,581 shares at an exercise price of $1.00 per share were forfeited. The stock option grants vest over various terms and expire in five to ten years. Activity in the stock incentive plans for the years ended December 31, 2023 and 2022 was as follows: Options Weighted Average Potential Shares Exercise Price Proceeds Outstanding as of December 31, 2021 3,812,953 $ 0.26 $ 982,326 Granted 492,695 1.64 808,020 Forfeitures (143,581 ) (1.00 ) (81,668 ) Outstanding as of December 31, 2022 4,162,067 0.411 1,708,677 Granted 502,522 1.67 837,087 Exercised - - - Forfeitures - - - Outstanding as of December 31, 2023 4,664,589 $ 0.55 $ 2,545,765 The following table summarizes information about stock options outstanding and exercisable as of December 31, 2023: Weighted Average Weighted Weighted Remaining Life Range of Number Average Remaining Life Weighted Average Number Average Exercise Price In Years - Vested Exercise Prices Outstanding In Years Exercise Price Exercisable Exercisable and Exercisable $ 0.12 2,646,410 4.38 $ 0.12 2,646,410 $ 0.12 4.38 0.57 1,022,963 4.47 0.57 1,022,963 0.57 4.47 1.64 945,403 9.08 1.64 386,806 1.64 9.08 1.90 49,813 3.98 1.90 - 1.90 3.98 4,664,589 5.35 $ 0.55 4,056,179 $ 0.38 5.35 The significant weighted-average assumptions relating to the valuation of the Company’s stock option grants for the years ended December 31, 2023 and 2022 were as follows: Assumptions 12/31/2023 12/31/2022 Estimated stock price 1.89 1.64 Exercise price 1.64 1.64 Dividend yield 0 % 0 % Expected life 5-10 years 5 years Expected volatility 39 % 70 % Risk free interest rate 0.00 % 4.06 % There were stock incentive plan awards outstanding at December 31, 2023 totaling 4,664,589 shares with an aggregate intrinsic value of $5,394,000. There were no SAR grants in 2023. Warrants to Purchase Common Stock See Note 14 for Public Warrants and Private Warrants assumed after the Merger. On May 8, 2023, the Company issued equity classified warrants to purchase common to Victor Huang and Derek Xu for 1,344,951 shares to each of the founders. The warrants were valued at $2,136,115 based on the exercise price of $1.77, the fair market stock price of $1.89, a five year term, a volatility of 39.4% and interest risk-free rate of 3.41%. The warrants were recorded as stock-based compensation expense and as additional paid in capital. All warrants are fully vested as they were issued for services performed and. In connection with the convertible notes transaction, the Company issued warrants to purchase 53,800 shares of common stock with an exercise price of $6.50 upon the conclusion of the BYTE merger. The warrants were initially valued using a Black-Scholes Model at $15,418 based on the exercise price of $13.18, stock price per share of $1.77, a five-year expected term, volatility of 39.4% and risk-free rate of 3.41%. The warrants are classified as a liability, included in accrued expenses in the consolidated balance sheet. There was no significant change in fair value of these warrants during the year ended December 31, 2023. Unvested Earnout Shares A portion of the earnout shares may be issued to individuals with unvested equity awards. While the payout of these shares requires the achievement of the Earn-out Milestones, the individuals must complete the remaining service period associated with these unvested equity awards to be eligible to receive the earnout shares. As a result, these unvested earn-out shares are equity-classified awards and have an aggregated grant date fair value of $2,675,223 (or $5.96 per share). During the year ended December 31, 2023, the Company stock-based compensation expense for the vesting of earnout shares was immaterial. As of December 31, 2023, unrecognized compensation cost related to unvested earnout shares totaled $2,675,223. The weighted average period over which this remaining compensation cost is expected to be recognized is five years. |
Employee 401(k) Plan
Employee 401(k) Plan | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Employee 401(k) Plan | ||
Employee 401(k) Plan | 7. Employee 401(k) Plan The Company has a 401(k) plan for its employees. The plan provides for a 3.5% match on up to 6% of deferred salary. The Company expensed $50,102 and $45,996 of contributions during the three months ended March 31, 2024 and 2023, respectively. | 9. Employee 401(k) Plan The Company has a 401(k) plan for its employees. The plan provides for a 3.5% match on up to 6% of deferred salary. The Company expensed $182,446 and $198,534 of contributions during the years ended December 31, 2023 and 2022, respectively. |
Related Party Transactions
Related Party Transactions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Related Party Transactions | ||
Related Party Transactions | 8. Related Party Transactions Advances due to Founders Prior to 2023, the founders had advanced the Company a net $600,000. In the year ended December 31, 2023, Mr. Huang and Mr. Xu advanced Airship AI a total of $1,350,000 and were repaid a total of $200,000, with $1,750,000 recorded as advances from founders as of December 31, 2023. During 2024, Mr. Huang advanced Airship AI $1,000,000 and was repaid $1,000,000, with $1,750,000 recorded as advances from founders as of March 31, 2024. The advances are non-interest bearing and the Company expects to pay the balance off within a one year period. | 10. Related Party Transactions In 2020, Victor Huang and Derek Xu, the Founders, officers and directors of the Company, borrowed $3,000,000 (“shareholder advances”) from Airship. As of December 31, 2022, the Company was owed $1,100,000 by the Founders. Due to the lack of certainty over the payment of interest, the Company will record when received. Due to the uncertainty of the timing of payment, the advances will be treated as a long-term asset. The shareholders’ advances bear interest at 5% and during the year ended December 31, 2023 and 2022 no interest was paid. On February 28, 2023, the Founders transferred their interest in Zeppelin to the Company and the $1,100,000 and related interest owed by the Founders to the Company was eliminated. As of December 31, 2022, Zeppelin had received from the Company $1,095,000 in cash advances to fund operations which commenced in 2021. These advances between the companies are eliminated in the consolidated balance sheet. As of December 31, 2022, Zeppelin owes the Founders $1,100,000 for funds they have provided for the commencement of operations in 2021. The balance was not expected to be paid in the next year and was treated as long term liabilities. On February 28, 2023 in connection with the transfer of the Zeppelin ownership from the shareholders to the Company, the $1,100,000 Payable to the founders was eliminated. Mr. Huang and Mr. Xu originally owned all the Zeppelin membership units. When Zeppelin started, their intent was exploring the technology in-development and determining value for external customers by providing cloud based back-end products. After a period of time for Zeppelin’s development it became apparent these efforts would be of value and accretive to the Company. In 2022, the Company began utilizing research and development personnel to further develop the Company’s products. On February 28, 2023, the Founders transferred its interest in Zeppelin to the Company The Company sold a vehicle to a founder on March 30, 2021 for a promissory note in the amount of $80,000. The note has a simple interest rate of 4%, compounded annually, computed daily based on a 360-day year with principal and interest due in March 2023. Interest payments are due annually. The promissory note and interest of $84,844 was repaid during the year ended December 31, 2022. A condominium in Juanita Beach, Washington was sold to a founder on May 5, 2021 for a secured promissory note in the amount of $750,000. The note has interest of 4% per annum, computed on the diminishing principal balance. Interest commenced on the closing with the first payment due on the first of each month after closing. The note is to be paid in full on or before 24 months from the date of the note. Interest payments are due annually. The promissory note and interest of $794,917 was repaid during the year ended December 31, 2022. The Company sold the vehicle and the condominium to the founders and recorded a loss of $31,721 on the date of the sale. The Company recorded notes receivable-related parties of $830,000 and accrued interest at 4% of $24,585 as of December 31, 2021. The Company had previously acquired these assets for which the founders were using for a combination of business and personal use. Advances due to Founders and Advances due from Founders The Company accounted for advances made to founders as a contra equity balance unless payment has been received subsequent to period end or such amounts can be offset with amounts due to the Founders. As of December 31, 2022 the Company has $1,100,000 of advances due from the Founders and advances due to the Founders. The transactions were entered into separately by Airship and Zeppelin and thus are reported separately on the accompanying consolidated balance sheets. In February, 2023 these balances were eliminated in a transaction involving the shareholders. See Note 3. Warrants to Purchase Common Stock On May 8, 2023, the Company issued equity classified warrants to purchase common to Victor Huang and Derek Xu for 1,344,951 shares to each of the founders. The warrants were valued at $2,136,115 based on the exercise price of $1.77, the fair market stock price of $1.89, a five year term, a volatility of 39.4% and interest of 3.41%. The warrants were recorded as stock-based compensation expense and as additional paid in capital. All warrants are fully vested as they were issued for services performed. |
Commitments, Contingencies and
Commitments, Contingencies and Legal Proceedings | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Commitments, Contingencies and Legal Proceedings | ||
Commitments, Contingencies and Legal Proceedings | 9. Commitments, Contingencies and Legal Proceedings Legal Proceedings The Company may from time to time become a party to various legal proceedings arising in the ordinary course of its business. The Company is currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to its business. Properties and Operating Leases-Right of Use Asset and Lease Liability Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases On May 1, 2019, the Company leased 31,765 square feet for its executive offices in Redmond, Washington. The Company’s net monthly payment was $44,440. The monthly payment increased approximately 3% each year and the lease was set to expire on April 30, 2024. The Company had two five-year renewal options. In April 2023, the Company and its landlord entered into an agreement whereby the Company’s office lease was terminated on September 30, 2023. On July 13, 2023, the Company entered into a new lease in Redmond, WA for 15,567 square feet of office and warehouse space which starts October 1, 2023. The monthly payment is $25,000 per month. The lease expires October 31, 2027 and the monthly payment increases 3% on July 31, 2024 and each year thereafter. There is a one three year option to extend based on the fair market rate on October 31, 2027. On January 1, 2021, the Company leased offices located in Moorestown, North Carolina. The Company leases 3,621 square feet and the net monthly payment was $4,828. The monthly payment increases approximately 3%-6% annually thereafter. The lease expired on February 28, 2024. On February 29, 2024, the Company extended the lease and the net monthly payment is $6,488. The lease expires on July 29, 2024. The Company has entered into operating leases for office and development facilities for four years and include options to renew. The Company determines whether an arrangement is or contains a lease based upon the unique facts and circumstances at the inception of the lease. Operating lease liabilities and their corresponding right-of-use assets are recorded based upon the present value of the lease payments over the expected lease term. As of March 31, 2024 and December 31, 2023, total operating lease liabilities was approximately $1,051,367 and $1,118,578, respectively. Right of use assets totaled approximately $1,024,513 and $1,104,804 at March 31, 2024 and December 31, 2023, respectively. Current lease liabilities were $180,875 and $174,876 at March 31, 2024 and December 31, 2023, respectively. In the three months ended March 31, 2024 and 2023, the Company recognized $98,943 and $162,414 in total lease costs for the leases, respectively. Because the rate implicit in each lease is not readily determinable, the Company uses its estimated incremental borrowing rate to determine the present value of the lease payments. The weighted average remaining lease term for the operating leases was forty three months at March 31, 2024 and the weighted average discount rate was 7%. The minimum future lease payments as of March 31, 2024 are as follows: Years Ended March 31, 2025 $ 247,970 2026 362,224 2027 373,108 2028 222,591 Total remaining payments 1,205,893 Less Imputed Interest (154,526 ) Total lease liability $ 1,051,367 Employment Agreement On March 1, 2024, the Company entered into an employment agreement with Mark E. Scott, the Company’s Chief Financial Officer, which provides for a base salary of $250,000 annually. Mr. Scott is also eligible to participate in annual performance-based bonus programs established by the board or compensation committee, subject to the achievement of applicable performance criteria established by the board or compensation committee, which shall be determined in good faith by the board or compensation committee. Mr. Scott was also granted options to purchase up to twenty five thousand (25,000) shares of common stock with an exercise price equal to $1.49, which options vested in full on the date of issuance. | 11. Commitments, Contingencies and Legal Proceedings Legal Proceedings The Company may from time to time become a party to various legal proceedings arising in the ordinary course of its business. The Company is currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to its business. Properties and Operating Leases-Right of Use Asset and Lease Liability Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases On May 1, 2019, the Company leased 31,765 square feet for its executive offices in Redmond, Washington. The Company’s net monthly payment was $44,440. The monthly payment increased approximately 3% each year and the lease was set to expire on April 30, 2024. The Company had two five-year renewal options. In April 2023, the Company and its landlord entered into an agreement whereby the Company’s office lease was terminated on September 30, 2023. During the year ended December 31, 2023, the Company recorded a net gain on lease termination of $78,963 as an offset to selling general and administrative expenses on the consolidated statements of operations and comprehensive loss. The gain is comprised of a $344,093 gain from lease liability termination and a loss of $265,130 for accelerated amortization of right-of-use asset. On July 13, 2023, the Company entered into a new lease in Redmond, WA for 15,567 square feet of office and warehouse space which starts October 1, 2023. The monthly payment is $25,000 per month. The lease expires October 31, 2027 and the monthly payment increases 3% on July 31, 2024 and each year thereafter. There is a one three year option to extend based on the fair market rate on October 31, 2027. On January 1, 2021, the Company leased offices located in Moorestown, North Carolina. The Company leases 3,621 square feet and the net monthly payment is $4,828. The monthly payment increases approximately 3%-6% annually thereafter. The lease expired on February 28, 2024 and can be extended for one three-year term. On February 29, 2024, the Company extended a lease leased in Moorestown, North Carolina. The Company leases 3,621 square feet and the net monthly payment is $6,488. The lease expires on July 29, 2024. The Company has entered into operating leases for office and development facilities for four years and include options to renew. The Company determines whether an arrangement is or contains a lease based upon the unique facts and circumstances at the inception of the lease. Operating lease liabilities and their corresponding right-of-use asses are recorded based upon the present value of the lease payments over the expected lease term. As of December 31, 2023 and 2022, total operating lease liabilities was approximately $1,118,578 and $832,140, respectively. Right of use assets totaled approximately $1,104,804 and $804,338 at December 31, 2023 and 2022, respectively. All of the lease Current lease liabilities were $174,876 and $628,371 at December 31, 2023 and 2022, respectively. In the years ended December 31, 2023 and 2022, the Company recognized $591,442 and $649,655 in total lease costs for the leases, respectively. Because the rate implicit in each lease is not readily determinable, the Company uses its estimated incremental borrowing rate to determine the present value of the lease payments. The weighted average remaining lease term for the operating leases was forty four months at December 31, 2023 and the weighted average discount rate was 7%. The minimum future lease payments as of December 31, 2023 are as follows: Years Ended December 31, 2024 $ 245,051 2025 359,563 2026 370,357 2027 316,785 Total remaining payments 1,291,756 Less Imputed Interest (173,178 ) Total lease liability $ 1,118,578 |
Income Taxes
Income Taxes | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Income Taxes | ||
Income Taxes | 10. Income Taxes The Company recorded a provision for income taxes of $0 for the three months ended March 31, 2024 and 2023. The Company’s effective tax rate was 0% for the three months ended March 31, 2024 and 2023. The difference between the effective tax rate and the federal statutory tax rate for the three months ended March 31, 2024 and 2023 primarily relates to the valuation allowance on the Company’s deferred tax assets. For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company also computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur. As of March 31, 2024 and December 31, 2023, the Company retains a full valuation allowance on its deferred tax assets. The realization of the Company’s deferred tax assets depends primarily on its ability to generate taxable income in future periods. The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income. | 12. Income Taxes and Employee Retention Tax Credits The Company’s provision for income tax for 2023 and 2022 includes the results of operations for Zeppelin which was contributed to the Company on February 28, 2023. Prior to the contribution Zeppelin was structured as a limited liability corporation with the profits and losses flowing directly to the owners who were responsible for any taxes. For the years ended December 31, 2023 and 2022, Zeppelin incurred losses of approximately $560,000 and $1,254,000, respectively. The Company is subject to possible tax examination for the years 2014 through 2023.The Company is also subject to examination with respect to federal net operating loss carryforwards generated and carried forward from those years. There are currently no federal or state income tax audits in process. For the years ended December 31, 2023 and 2022, the Company’s effective tax rate differs from the federal statutory rate principally due to research and development credit carry-forward, research and experimental expenditures, deferred revenue and certain items such loan forgiveness, tax credits and stock-based compensation expense being excluded from the determination of taxable income (loss). The components of the provision for income taxes for the years ended December 31, 2023 and 2022 consisted of the following: 2023 2022 Current: Federal $ - $ 10,000 State - - Foreign - - Total current provision - 10,000 Deferred: Federal - - State - - Foreign - - Total deferred income taxes - - Total provision for income taxes $ - $ 10,000 A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the years ended December 31, 2023 and 2022 are as follows: 2023 2022 Federal statutory tax rate 21 % 21 % R&D credit, net impact 0 % 30 % Nontaxable variable interest loss 0 % (53 )% Share based compensation 5 % (23 )% Nontaxable revaluation of fair value instruments (32 )% - % Nontaxable PPP loan forgiveness 0 % 48 % Nontaxable ERTC credits 0 % 51 % True-up to prior year valuation allowance 0 % (50 )% Change in valuation allowance 6 % (26 )% Effective tax rate 0 % (2 )% The components of net deferred tax assets as of December 31, 2023 and 2022 consisted of the following: Deferred tax assets 2023 2022 Tax credit carryforward $ 1,286,195 $ 1,286,195 Deferred revenue 1,009,141 1,112,003 Capitalized research and development costs 951,497 620,791 Net operating loss carryforward 898,302 318,302 Capital loss carry-forward 52,560 52,560 Operating lease liability 234,901 - Property and equipment 4,920 29,971 4,437,516 3,419,822 Valuation allowance (4,205,507 ) (3,419,822 ) Net deferred tax assets $ 232,009 $ - Deferred tax liabilities Right-of-use assets (232,009 ) - Total net deferred tax $ - $ - Deferred income taxes are recorded to reflect the tax consequences in future years of differences between the financial reporting and tax bases of assets and liabilities. Income tax expense is the sum of the tax currently payable and the change in the deferred tax assets and liabilities during the period. Valuation allowances are established when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company assesses the realizability of its deferred tax assets and the need for a valuation allowance based on all positive and negative evidence. The Company has significant deferred tax assets as a result of temporary differences between the taxable income on our tax returns and GAAP income, R&D tax credit carry forwards. A deferred tax asset generally represents future tax benefits to be received when temporary differences previously reported in our consolidated financial statements become deductible for income tax purposes, or when tax credit carry forwards are utilized on our tax returns. The Company assesses the realizability of our deferred tax assets and the need for a valuation allowance based on the guidance provided in current financial accounting standards. Significant judgment is required in determining the realizability of our deferred tax assets. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of any current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, our experience with loss carry forwards not expiring unused and tax planning alternatives. In analyzing the need for valuation allowances, the Company first considered our history of cumulative operating results for income tax purposes over the past three years in each of the tax jurisdictions in which we operate, our financial performance in recent quarters, statutory carry forward periods and tax planning alternatives. In addition, the Company considered both its near-term and long-term financial outlook. After considering all available evidence (both positive and negative), the Company concluded that recognition of a valuation allowance for all of its deferred tax assets was required at December 31, 2023 and 2022. The valuation allowance increased by approximately $786,000 and $128,000 in 2023 and 2022, respectively. The increase during the current year is primarily related to capitalized research and development expenditures and net operating losses. As of December 31, 2023 and 2022, the Company has a federal net operating loss carryforward totaling approximately $3,800,000 and $1,500,000. The federal net operating loss carryforward generated from the years ended after December 31, 2017 may be carried forward indefinitely. As of December 31, 2023 and 2022, R&D tax credit carryforwards total approximately $1,513,000 and $1,513,000, respectively, and begin to expire in 2036. Realization of the carryforwards is dependent on the Company generating sufficient taxable income and may also be subject to usage limitations to the extent there are changes in the Company’s ownership. Pursuant to Sections 382 and 383 of the Internal Revenue Code, or IRC, annual use of the Company's net operating losses and tax credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The amount of annual limitation is determined based on the value of the Company immediately prior to the ownership changes. The Company is in process of performing an assessment of whether a change in ownership has occurred or whether there have been multiple changes in ownership, within the meaning of Section 382. Based on preliminary assessment, these ownership changes are not expected to materially limit the net operating loss carryforward and research and development credits available to offset the Company’s tax liabilities. The Company expects to finalize this assessment in 2024. The Company evaluates uncertain tax positions using the “more likely than not” threshold (i.e., a likelihood of occurrence greater than fifty percent). The recognition threshold is met when an entity concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are classified as a gross unrecognized tax benefit until they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. As of December 31, 2023, the unrecognized tax benefit totals approximately $227,000. As of December 31, 2022, the unrecognized tax benefit totals approximately $227,000 which was an increase of approximately $11,000 from the beginning of 2022. The gross unrecognized tax benefits, if recognized, would not affect the effective tax rate as these unrecognized tax benefits would increase deferred tax assets that would be subject to a full valuation allowance. No material changes in the gross unrecognized tax benefits are expected over the next twelve months. Interest and penalties related to unrecognized tax benefits, if any, will be recognized as a component of income tax expense.. Employee Retention Tax Credits The CARES Act allowed eligible employers to claim employee retention tax credits (“ERTC”) for qualified wages paid after March 12, 2020 and before January 1, 2021. The ERTC was extended to June 30, 2021 under the passage of the Taxpayer Certainty and Disaster Relief Act of 2020 (“ACT”) which was signed into law on December 27, 2020. We qualified for credits under the provisions of the CARES Act for the entire period subsequent to March 12, 2020 through January 1, 2021 and for the entire period subsequent to January 1, 2021 through June 30, 2021. On September 8, 2021, the Company applied for ERTC credits for qualifying 2020 wages. The Company filed amended payroll tax returns to claim the credit it believed it was entitled to, $99,132 and $190,983, respectively. On April 4, 2022, the Company received $99,826 and $192,793, including interest. The Company accounted for this in the year they believed collectability was assured. Considering the length of time after year-end and the lack of certainty over the government’s handling of ERTC claims, the Company deemed it appropriate and conservative to not record this transaction in the year ended December 31, 2021 but rather in 2022 when the cash received. On May 25, 2022, the Company applied for ERTC credits for qualifying 2021 wages. The Company filed amended payroll tax returns to claim the credit it believed it was entitled to, $461,043 and $459,614, respectively. The Company received two refunds in January 2023 for $468,880 and $470,970, including interest. The Company recorded the amounts in payroll tax receivable as of December 31, 2022. |
Reverse Recapitalization
Reverse Recapitalization | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Reverse Recapitalization | ||
Reverse Recapitalization | 11. Reverse Recapitalization On December 21, 2023, the Company completed the merger and received net proceeds of $2.8 million, net of transaction costs of $6.6 million. The merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, BYTS, who was the legal acquirer, was treated as the “acquired” company for accounting purposes and Airship AI was treated as the accounting acquirer. Accordingly, the merger was treated as the equivalent of Airship AI issuing shares at the closing of the merger for the net assets of BYTS as of the closing date, accompanied by a recapitalization. The net assets of BYTS was stated at historical cost, with no goodwill or other intangible assets recorded. Airship AI was determined to be the accounting acquirer based on evaluation of the following facts and circumstances: · Airship AI’s stockholders have the majority voting interest in the combined company; · The board of the post-merger company is composed of one (1) director designated by BYTS and four (4) directors designated by Airship AI; · Airship AI’s senior management is the senior management of the post-merger company; · The business of Airship AI comprises the ongoing operations of post-merger company; and · Airship AI is the larger entity, in terms of substantive assets. The table below summarizes the shares of common stock issued immediately after the closing of the merger as well as the impact on the consolidated statement of stockholders’ equity as of December 21, 2023: Additional Accumulated Shares Par Amount Common Stock Paid in Capital Deficit SPAC Financing 8,891,718 $ 0.0001 $ 889 $ 8,315,186 $ - Transaction expenses (1) 532,986 0.0001 53 (6,651,674 ) (894,662 ) Earnout liability (4,470,918 ) (22,638,859 ) Warrants liability (2,009,105 ) - Reverse capitalization on December 21, 2023 (1) 9,424,704 $ 942 $ (4,816,511 ) $ (23,533,521 ) (1) Adjusted for correction of transaction expense discussed below. Immaterial Revision of Prior Period Financial Information In connection with the preparation of its consolidated financial statements, the Company identified an immaterial error related to the classification of prepaid expenses and transaction expenses (classified in accumulated deficit as reverse recapitalization). In accordance with SAB No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company evaluated the error and determined that the impact was not material to its financial statements for the prior annual and current interim period, accordingly the Company revised the prior period financial information for comparative purposes. The revision does not impact the consolidated statements of operations and comprehensive loss. A summary of the revision to the Company’s previously reported consolidated balance sheets is included below for comparative purposes: As of December 31, 2023 As Reported Adjustment As Revised Prepaid expenses and other $ 913,030 $ (894,662 ) $ 18,368 Total current assets 5,693,577 (894,662 ) 4,798,915 Total assets 6,982,575 (894,662 ) 6,087,913 Accumulated deficit (16,582,038 ) (894,662 ) (17,476,700 ) Total stockholders' deficit (16,592,565 ) (894,662 ) (17,487,227 ) The revision had no impact to cash provided by operating activities in such period. | 13. Reverse Recapitalization On December 21, 2023, the Company completed the Merger and received net proceeds of $2.8 million, net of transaction costs of $6.6 million. The Merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, BYTS, who was the legal acquirer, was treated as the “acquired” company for accounting purposes and Airship AI was treated as the accounting acquirer. Accordingly, the Merger was treated as the equivalent of Airship AI issuing shares at the closing of the Merger for the net assets of BYTS as of the closing date, accompanied by a recapitalization. The net assets of BYTS was stated at historical cost, with no goodwill or other intangible assets recorded. Airship AI was determined to be the accounting acquirer based on evaluation of the following facts and circumstances: · Airship AI’s stockholders have the majority voting interest in the combined company; · The Airship Pubco Board is composed of one (1) director designated by BYTS and four (4) directors designated by Airship AI; · Airship AI’s senior management is the senior management of Airship Pubco; · The business of Airship AI comprises the ongoing operations of Airship Pubco; and · Airship AI is the larger entity, in terms of substantive assets. The table below summarizes the shares of common stock issued immediately after the closing of the Merger as well as the impact on the consolidated statement of stockholders’ equity as of December 21, 2023: Additional Accumulated Shares Par Amount Common Stock Paid in Capital Deficit SPAC Financing 8,891,718 $ 0.0001 $ 889 $ 8,315,186 $ - Transaction expenses 532,986 0.0001 53 (6,651,674 ) - Earnout liability (4,470,918 ) (22,638,859 ) Warrants liability (2,009,105 ) - Reverse capitalization on December 21, 2023 9,424,704 $ 942 $ (4,816,511 ) $ (22,638,859 ) |
Warrants
Warrants | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Warrants | ||
Warrants | 12. Private Placement and Public Warrants At the merger closing, the Company assumed 515,000 private placement warrants and 16,184,612 public warrants. As of March 31, 2024, there were 515,000 private placement warrants and 16,159,112 public warrants outstanding. Details on the warrants were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and filed with the SEC on April 1, 2024. The public warrants will expire on December 21, 2028. The following table is a summary of the number of shares of the Company’s common stock issuable upon exercise of the public and private warrants outstanding as of March 31, 2024: Number of Shares Exercise Price Expiration Date Fair Value Public Warrants 16,159,112 $ 11.50 December 21, 2028 $ 7,311,998 Private Warrants 515,000 $ 11.50 December 21, 2028 203,078 $ 7,515,076 | 14. Warrants At Closing on December 21, 2023, the Company assumed 515,000 Private Placement Warrants (“Private Warrants”) and 16,184,612 public warrants (“Public Warrants”). The 515,000 Private Warrants and 16,184,626 Public Warrants were outstanding as of December 31, 2023. Each whole Public Warrant will entitle the registered holder to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the Closing, provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis under the circumstances specified in the Warrant Agreement) and such shares of Common Stock are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the Warrant Agreement, a warrant holder may exercise its Public Warrants only for a whole number of shares of Common Stock. This means only a whole Public Warrants may be exercised at a given time by a warrant holder. The Public Warrants will expire five years after the Closing, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No Public Warrants will be exercisable and the Company will not be obligated to issue a share of Common Stock upon exercise of a Public Warrant unless the Common Stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Public Warrant, the holder of such Public Warrant will not be entitled to exercise such Public Warrant and such Public Warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any Public Warrant. The Company is registering the Common Stock issuable upon exercise of the Public Warrants in a registration statement on Form S-1. In order to comply with the requirements of Section 10(a)(3) of the Securities Act following the Closing, under the terms of the Warrant Agreement, the Company has agreed that, as soon as practicable, but in no event later than 15 business days, after the Closing, the Company will use its best efforts to file with the SEC a post-effective amendment or a new registration statement covering the registration under the Securities Act of the Common Stock issuable upon exercise of the Public Warrants and thereafter the Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such post-effective amendment or registration statement, and a current prospectus relating thereto, until the expiration or redemption of the Public Warrants in accordance with the provisions of the Warrant Agreement. If such post-effective amendment or registration statement covering the Common Stock issuable upon exercise of the Public Warrants is not effective by the sixtieth (60th) business day after the Closing, warrant holders may, until such time as there is an effective post-effective amendment or registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise Public Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Common Stock is at the time of any exercise of a Public Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, the Company will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the Public Warrants for that number of shares of Common Stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Public Warrants, multiplied by the excess of the “fair market value” (as defined below) over the exercise price of the Public Warrants by (y) the fair market value and (B) 0.361. The “fair market value” as used in this paragraph shall mean the average reported closing price of the Common Stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent. Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants: · in whole and not in part; · at a price of $0.01 per warrant; · upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and · if, and only if, the closing price of the shares of Common Stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant as described under the heading “— Warrants — Public Warrants — Anti-Dilution Adjustments”) for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders (which we refer to as the “Reference Value”). The Company will not redeem the Public Warrants as described above unless a registration statement under the Securities Act covering the issuance of the Common Stock issuable upon exercise of the Public Warrants is then effective and a current prospectus relating to those shares of Common Stock is available throughout the 30-day redemption period. If and when the Public Warrants become redeemable, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws. We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the Public Warrants, each warrant holder will be entitled to exercise his, her or its Public Warrant prior to the scheduled redemption date. However, the price of the Common Stock may fall below the $18.00 redemption trigger price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant described under the heading “— Anti-dilution Adjustments”) as well as the $11.50 warrant exercise price after the redemption notice is issued. Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $10.00. Once the Public Warrants become exercisable, the Company may redeem the outstanding warrants: · in whole and not in part; · at a price of $0.10 per warrant; · upon not less than 30 days’ prior written notice of redemption, provided that holders will be able to exercise their Public Warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” (as defined below) of Common Stock except as otherwise described below; · if, and only if, the Reference Value equals or exceeds $10.00 per Public Share (as adjusted for adjustments to the number of shares issuable upon exercise) or the exercise price of a warrant as described under the heading “— Anti-dilution Adjustments”; and · if the Reference Value is less than $18.00 per share, the Private Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. Beginning on the date the notice of redemption is given until the Public Warrants are redeemed or exercised, holders may elect to exercise their Public Warrants on a cashless basis. The numbers in the table below represent the number of shares of Common Stock that a warrant holder will receive upon such cashless exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of Common Stock on the corresponding redemption date (assuming holders elect to exercise their Public Warrants and such warrants are not redeemed for $0.10 per warrant), determined for these purposes based on the volume weighted average price of the Common Stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the warrants, each as set forth in the table below. the Company will provide warrant holders with the final fair market value no later than one business day after the 10-trading day period described above ends. The Private Warrants (including shares of Common Stock issuable upon exercise of such warrants) will not be transferable, assignable or salable until 30 days after the Closing (except, among other limited exceptions, to BYTS’ officers and directors and other persons or entities affiliated with the Sponsor) and they will not be redeemable by the Company so long as they are held by the Sponsor, members of the Sponsor or their permitted transferees (except as set forth under “— Warrants — Public Warrants — Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $10.00”). The Sponsor or its permitted transferees have the option to exercise the Private Warrants on a cashless basis. Except as described below, the Private Warrants have terms and provisions that are identical to those of the warrants sold as part of the Units in BYTS’ IPO. If the Private Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the Units sold in BYTS’s IPO. Except as described above under “— Public Warrants — Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $10.00,” if holders of the Private Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares underlying the Private Warrants, multiplied by the excess of the “fair market value” of the Common Stock (as defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” means the average reported closing price of the Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees is because it was not known at the time of the IPO whether the Sponsor would be affiliated with us following a business combination. If the Sponsor remains affiliated with the Company, its ability to sell the Company’s securities in the open market will be significantly limited. The Company has policies in place that prohibit insiders from selling securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell the Company’s securities, an insider cannot trade in the Company’s securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could exercise their Public Warrants and sell the shares received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. The Company has reviewed the terms of the Public and Private Warrants to determine whether warrants should be classified as liabilities or stockholders’ equity in its consolidated balance sheet. In order for a warrant to be classified in stockholders’ equity, the warrant must be (a)indexed to the Company’s equity and (b) meet the conditions for equity classification in ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Equity. If a warrant does not meet the conditions for equity classification, it is carried on the consolidated balance sheet as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in the statement of operations as change in fair value of warrants. The Company determined that all warrants are required to be carried as a liability in the consolidated balance sheet at fair value, with changes in fair value recorded in the consolidated statement of operations. At the closing of the Merger on December 21, 2023, the warrants had an initial fair value of $2,009,105, which was recorded as liability and a reduction to additional paid in capital in the consolidated balance sheet. As of December 31, 2023, the Private and Public Warrants had an aggregate fair value of $667,985, which resulted in a gain of $1,341,120 due to decrease in the fair value of the warrant liability subsequent to the closing date. See Note 16 – Fair Value Measurements for more information. The following table is a summary of the number of shares of the Company’s common stock issuable upon exercise of the Public and Private Warrants outstanding as of December 31, 2023: Exercise Number of Shares Price Expiration Date Initial Fair Value Public Warrants 16,184,612 $ 11.50 December 21, 2028 1,942,153 Private Warrants 515,000 $ 11.50 December 21, 2028 66,952 |
Earnout Liability
Earnout Liability | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Earnout Liability | ||
Earnout Liability | 13. Earnout Liability Certain of the Company’s stockholders are entitled to receive up to 5,000,000 earnout shares of the Company’s common stock if the following earnout milestones are met. (A) 25% of the earnout shares if, for the period starting on the closing date and ending on the last day of the full calendar quarter immediately following the first anniversary of the closing date, (1) Company Revenue (as defined below) is at least $39 million, or (2) the aggregate value of new contract awards (including awards obtained through purchase orders) with federal law enforcement agencies (whether such awards are obtained directly or through intermediaries) has grown by at least 100% as compared to the year-over-year amount for the twelve-month period ending on the date of the Merger Agreement (the “First Operating Performance Milestone”); F-20 Table of Contents (B) 75% of the earnout shares if, for the period starting on the closing date and ending on the last day of the full calendar quarter immediately following the third anniversary of the closing date, Company Revenue is at least $100 million (the “Second Operating Performance Milestone”); (C) 50% of the earnout shares if, at any time during the period starting on the closing date and ending on the fifth anniversary of the closing date, over any twenty (20) trading days within any thirty (30) trading day period the volume weighted average price (“VWAP”) of the common stock is greater than or equal to $12.50 per share (the “First Share Price Performance Milestone”); and (D) 50% of the earnout shares if, at any time during the period starting on the closing date and ending on the fifth anniversary of the closing date, over any twenty (20) trading days within any thirty (30) trading day period the VWAP of the common stock is greater than or equal to $15.00 per share (the “Second Share Price Performance Milestone”). Further, the earnout milestones are also considered to be met if the Company undergoes a change of control. A change of control is defined as (i) any transaction or series of related transactions that results in any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring equity interests that represent more than 50% of the total voting power of the Company or (ii) a sale or disposition of all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis. Notwithstanding anything in the Merger Agreement to the contrary, any earnout shares issuable under the Merger Agreement to a Airship AI securityholder in respect of each Airship AI option or Airship AI SAR held by such holder as of immediately prior to the effective time of the merger shall be earned by such holder on the later of (i) the occurrence of the applicable earnout milestone, and (ii) the date on which the option in respect of such Airship AI option or SAR in respect of such Airship AI SAR, as applicable, becomes vested pursuant to its applicable vesting schedule, but only if such holder continues to provide services (whether as an employee, director or individual independent contractor) to the Company or one of its subsidiaries through such date. Notwithstanding the foregoing, any earnout shares that are not earned by a Airship AI securityholder in respect of its options or SARs on or before the fifth anniversary of the closing date of the merger shall be forfeited without any consideration. Any earnout shares that are forfeited pursuant to the Merger Agreement shall be reallocated to the other Airship AI securityholders who remain entitled to receive earnout shares in accordance with their respective earnout pro rata shares. These earnout shares have been categorized into two components: (i) the “Vested Shares” - those associated with earnout holders with vested equity at the closing of the merger that will be earned upon achievement of the earnout milestones and (ii) the “Unvested Shares” - those associated with earnout holders with unvested equity at the closing of the merger that will be earned over the remaining service period with the Company on their unvested equity shares and upon achievement of the earnout milestones. The Vested Shares, which represent 95% of the total earnout shares are classified as liabilities in the consolidated balance sheet at fair value with changes in fair value recognized in the consolidated statements of operations due to the variability in the number of earnout shares at settlement which could change upon a change of control event. The earnout arrangement contains a settlement provision that violates the indexation guidance under ASC 815-40. The Unvested Shares are equity-classified share-based compensation to be recognized over time under ASC 718 due to the service component. At the closing of the merger on December 21, 2023, the earnout liability had an initial fair value of $27,109,777, which was recorded as a long-term liability and a reduction to additional paid in capital in the consolidated balance sheet. As of December 31, 2023, the earnout liability had decreased to $5,133,428 as a result of the decline in the Company’s share price since the closing of the merger. As of March 31, 2024, the estimated fair value of the earnout liability increased to $26,618,278 primarily due to the increase in the Company’s share price, which resulted in a loss due to the change in fair value of the earnout liability of $21,484,850 and is recorded on the consolidated statements of operations and comprehensive loss. See Note 14– Fair Value Measurements for more information. As of March 31, 2024, the earnout shares were not earned as none of the earnout milestones have been met. | 15. Earnout Liability Certain of the Company’s stockholders are entitled to receive up to 5,000,000 Earnout Shares of the Company’s common stock if the following Earnout Milestones are met. (A) 25% of the Earnout Shares if, for the period starting on the Closing Date and ending on the last day of the full calendar quarter immediately following the first anniversary of the Closing Date, (1) Company Revenue (as defined below) is at least $39 million, or (2) the aggregate value of new contract awards (including awards obtained through purchase orders) with federal law enforcement agencies (whether such awards are obtained directly or through intermediaries) has grown by at least 100% as compared to the year-over-year amount for the twelve-month period ending on the date of the Merger Agreement (the “First Operating Performance Milestone”); (B) 75% of the Earnout Shares if, for the period starting on the Closing Date and ending on the last day of the full calendar quarter immediately following the third anniversary of the Closing Date, Company Revenue is at least $100 million (the “Second Operating Performance Milestone”); (C) 50% of the Earnout Shares if, at any time during the period starting on the Closing Date and ending on the fifth anniversary of the Closing Date, over any twenty (20) trading days within any thirty (30) trading day period the volume weighted average price (“VWAP”) of the Airship Pubco Common Stock is greater than or equal to $12.50 per share (the “First Share Price Performance Milestone”); and (D) 50% of the Earnout Shares if, at any time during the period starting on the Closing Date and ending on the fifth anniversary of the Closing Date, over any twenty (20) trading days within any thirty (30) trading day period the VWAP of the Airship Pubco Common Stock is greater than or equal to $15.00 per share (the “Second Share Price Performance Milestone”). Further, the Earnout Milestones are also considered to be met if the Company undergoes a change of control. A change of control is defined as (i) any transaction or series of related transactions that results in any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring equity interests that represent more than 50% of the total voting power of Parent or (ii) a sale or disposition of all or substantially all of the assets of Parent and its Subsidiaries on a consolidated basis. Notwithstanding anything in the Merger Agreement to the contrary, any Earnout Shares issuable under the Merger Agreement to a Company Earnout Holder in respect of each Company Option or Company SAR held by such Company Earnout Holder as of immediately prior to the Effective Time shall be earned by such Company Earnout Holder on the later of (i) the occurrence of the applicable Earnout Milestone, and (ii) the date on which the Converted Stock Option in respect of such Company Option or Converted SAR in respect of such Company SAR becomes vested pursuant to its applicable vesting schedule, but only if such Company Earnout Holder continues to provide services (whether as an employee, director or individual independent contractor) to Parent or one of its Subsidiaries through such date. Notwithstanding the foregoing, any Earnout Shares that are not earned by a Company Earnout Holder in respect of its Company Options or Company SARs on or before the fifth anniversary of the Closing Date shall be forfeited without any consideration. Any Earnout Shares that are forfeited pursuant to the Merger Agreement shall be reallocated to the other Company Earnout Holders who remain entitled to receive Earnout Shares in accordance with their respective Earnout Pro Rata Shares. These earnout shares have been categorized into two components: (i) the “Vested Shares” - those associated with Earnout Holders with vested equity at the closing of the Merger that will be earned upon achievement of the Earnout Milestones and (ii) the “Unvested Shares” - those associated with Earnout Holders with unvested equity at the closing of the Merger that will be earned over the remaining service period with the Company on their unvested equity shares and upon achievement of the Earnout Milestones. The Vested Shares, which represent 95% of the total Earnout Shares are classified as liabilities in the consolidated balance sheet at fair value with changes in fair value recognized in the consolidated statements of operations due to the variability in the number of Earnout Shares at settlement which could change upon a change of control event. The Earnout arrangement contains a settlement provision that violates the indexation guidance under ASC 815-40. The Unvested Shares are equity-classified share-based compensation to be recognized over time under ASC 718 due to the service component. At the closing of the Merger on December 21, 2023, the earnout liability had an initial fair value of $27,109,777, which was recorded as a long-term liability and a reduction to additional paid in capital in the consolidated balance sheet. As of December 31, 2023, the earnout liability had decreased to $5,133,428 as a result of the decline in our share price since the closing of the Merger, which resulted in a gain due to the change in fair value of the earnout liability of $21,976,349 and is recorded on the consolidated statements of operations and comprehensive loss. See Note 16 – Fair Value Measurements for more information. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Fair Value Measurements | ||
Fair Value Measurements | 14. Fair Value Measurements The following table sets forth by level within the ASC 820, Fair Value Measurement, fair value hierarchy of the Company’s liabilities that are measured at fair value on a recurring basis as of March 31, 2024: March 31, 2024 Level 1 Level 2 Level 3 Total Liabilities Earnout liability $ - $ - $ 26,618,278 $ 26,618,278 Senior Secured Convertible Promissory Notes - - 4,204,743 4,204,743 Warrant liability (Public Warrants) 7,311,998 - - 7,311,998 Warrant liability (Private Warrants) - 203,078 - 203,078 Total liabilities measured at fair value $ 7,311,998 $ 203,078 $ 30,823,021 $ 38,338,097 The following table sets forth by level within the ASC 820, Fair Value Measurement, fair value hierarchy of the Company’s liabilities that are measured at fair value on a recurring basis as of December 31, 2023: December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities Earnout liability $ - $ - $ 5,133,428 $ 5,133,428 Senior Secured Convertible Promissory Notes - - 2,825,366 2,825,366 Warrant liability (Public Warrants) 646,428 - - 646,428 Warrant liability (Private Warrants) - 21,557 - 21,557 Total liabilities measured at fair value $ 646,428 $ 21,557 $ 7,958,794 $ 8,626,779 The estimated fair value of the earnout liability was determined using a Monte Carlo Model. The assumptions utilized in the calculation are based on the achievement of certain stock price milestones including projected stock price, volatility, probability of meeting the federal law enforcement agency growth and risk-free rate. The following assumptions were used in the simulation at each valuation date: March 31, 2024 December 31, 2023 Stock price $ 6.59 $ 1.70 Risk-free interest rate 4.23 % 3.84 % Expected term (in years) 4.8 5 Expected volatility 69.3 % 75.9 % Dividend yield 0 % 0 % The assumptions also included the probability of meeting the federal law enforcement agency growth milestone at 100%. The initial estimated fair value of the private warrants was measured using a Monte Carlo simulation. The estimated fair value of the public warrants is based on the listed price in an active market for such warrants and the fair value of the private placement warrants continues to be measured based on the public warrants listed price. The estimated fair value of the senior secured convertible promissory notes was measured using a Monte Carlo simulation pricing model that factors in potential outcomes being consummated, such as the convertible notes being repaid in cash and the convertible notes being converted to common stock. All of these scenarios take into consideration the terms and conditions of the underlying convertible notes plus potential changes in the underlying value of the common stock. The following assumptions were used in the simulation: March 31, 2024 December 31, 2023 Stock price $ 6.59 1.70 Effective discount rate 13.07 % 12.95 % Expected term (in years) 0.23 0.48 to 0.75 Expected volatility 53.7 % 62.5 % Dividend yield 0 % 0 % There were no transfers of financial instruments between valuation levels during the three months ended March 31, 2024 and the year ended December 31, 2023. | 16. Fair Value Measurements The following table sets forth by level within the ASC 820, Fair Value Measurement, fair value hierarchy of the Company’s liabilities that are measured at fair value on a recurring basis: December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities Earnout liability $ - $ - $ 5,133,428 $ 5,133,428 Senior Secured Convertible Promissory Notes - - 2,825,366 2,825,366 Warrant liability (Public Warrants) 646,428 - - 646,428 Warrant liability (Private Warrants) - 21,557 - 21,557 Total liabilities measured at fair value $ 646,428 $ 21,557 $ 7,958,794 $ 8,626,779 The estimated fair value of the earnout liability was determined using a Monte Carlo Model. The assumptions utilized in the calculation are based on the achievement of certain stock price milestones including projected stock price, volatility, probability of meeting the federal law enforcement agency growth and risk-free rate. The following assumptions were used in the simulation at each valuation date: December 21, 2023 December 31, 2023 Stock price $ 6.49 $ 1.70 Risk-free interest rate 3.87 % 3.84 % Expected term (in years) 5 5 Expected volatility 76.40 % 75.90 % Dividend yield 0 % 0 % The assumptions also included the probability of meeting the federal law enforcement agency growth milestone at 100%. The initial estimated fair value of the Private Warrants was measured using a Monte Carlo simulation. The estimated fair value of the Public Warrants is based on the listed price in an active market for such warrants while the fair value of the Private Placement Warrants continues to be measured using a Monte Carlo simulation with the key inputs being directly or indirectly observable from the Public Warrants listed price. The estimated fair value of the Private Warrants was determined using the following assumptions at each valuation date: December 21, 2023 December 31, 2023 Stock price $ 6.49 $ 1.70 Risk-free interest rate 3.87 % 3.84 % Expected term (in years) 5.01 4.98 Expected volatility 13.90 % 41.50 % Dividend yield 0 % 0 % The estimated fair value of the Senior Secured Convertible Promissory Notes was measured using a Monte Carlo simulation pricing model that factors in potential outcomes being consummated, such as the convertible notes being repaid in cash and the convertible notes being converted to common stock. All of these scenarios take into consideration the terms and conditions of the underlying convertible notes plus potential changes in the underlying value of the common stock. The following assumptions were used in the simulation: December 31, 2023 Stock price $ 1.70 Effective discount rate 12.95 % Expected term (in years) 0.48 to 0.75 Expected volatility 62.50 % Dividend yield 0 % There were no transfers of financial instruments between valuation levels during the years ended December 31, 2023 and 2022. |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2023 | |
Earnings per Share | |
Earnings per Share | 17. Earnings per Share The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common stockholders: December 31, 2023 December 31, 2022 Net Income (loss) $ 16,371,134 $ (487,493 ) Weighted average shares outstanding: Basic 13,671,376 13,387,344 Add: dilutive effect of stock options, SARs and Airship warrants 6,719,287 - Diluted 20,390,663 13,387,344 Income (loss) per share Basic $ 1.20 $ (0.04 ) Diluted $ 0.80 $ (0.04 ) The following potentially dilutive shares were not included in the calculation of diluted shares outstanding for the periods presented as the effect would have been anti-dilutive: December 31, 2023 December 31, 2022 Public Warrants 16,184,612 - Private Warrants 515,000 - Convertible debt 452,240 - Warrants 53,800 - Outstanding stock options - 4,162,067 SARs - 1,758,100 17,205,652 5,920,167 The 5,000,000 Earnout Shares are excluded from basic and diluted net loss per share as such shares are contingently issuable until the Company exceeds certain milestone thresholds that have not been achieved as of December 31, 2023. As a result of the Merger, the weighted-average number of shares of Common Stock used in the calculation of net income (loss) per share have been retroactively converted by applying the conversion ratio. |
Private Placement and Public Wa
Private Placement and Public Warrants | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Private Placement and Public Warrants | ||
Private Placement and Public Warrants | 12. Private Placement and Public Warrants At the merger closing, the Company assumed 515,000 private placement warrants and 16,184,612 public warrants. As of March 31, 2024, there were 515,000 private placement warrants and 16,159,112 public warrants outstanding. Details on the warrants were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and filed with the SEC on April 1, 2024. The public warrants will expire on December 21, 2028. The following table is a summary of the number of shares of the Company’s common stock issuable upon exercise of the public and private warrants outstanding as of March 31, 2024: Number of Shares Exercise Price Expiration Date Fair Value Public Warrants 16,159,112 $ 11.50 December 21, 2028 $ 7,311,998 Private Warrants 515,000 $ 11.50 December 21, 2028 203,078 $ 7,515,076 | 14. Warrants At Closing on December 21, 2023, the Company assumed 515,000 Private Placement Warrants (“Private Warrants”) and 16,184,612 public warrants (“Public Warrants”). The 515,000 Private Warrants and 16,184,626 Public Warrants were outstanding as of December 31, 2023. Each whole Public Warrant will entitle the registered holder to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the Closing, provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis under the circumstances specified in the Warrant Agreement) and such shares of Common Stock are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the Warrant Agreement, a warrant holder may exercise its Public Warrants only for a whole number of shares of Common Stock. This means only a whole Public Warrants may be exercised at a given time by a warrant holder. The Public Warrants will expire five years after the Closing, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No Public Warrants will be exercisable and the Company will not be obligated to issue a share of Common Stock upon exercise of a Public Warrant unless the Common Stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Public Warrant, the holder of such Public Warrant will not be entitled to exercise such Public Warrant and such Public Warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any Public Warrant. The Company is registering the Common Stock issuable upon exercise of the Public Warrants in a registration statement on Form S-1. In order to comply with the requirements of Section 10(a)(3) of the Securities Act following the Closing, under the terms of the Warrant Agreement, the Company has agreed that, as soon as practicable, but in no event later than 15 business days, after the Closing, the Company will use its best efforts to file with the SEC a post-effective amendment or a new registration statement covering the registration under the Securities Act of the Common Stock issuable upon exercise of the Public Warrants and thereafter the Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such post-effective amendment or registration statement, and a current prospectus relating thereto, until the expiration or redemption of the Public Warrants in accordance with the provisions of the Warrant Agreement. If such post-effective amendment or registration statement covering the Common Stock issuable upon exercise of the Public Warrants is not effective by the sixtieth (60th) business day after the Closing, warrant holders may, until such time as there is an effective post-effective amendment or registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise Public Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Common Stock is at the time of any exercise of a Public Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, the Company will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the Public Warrants for that number of shares of Common Stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Public Warrants, multiplied by the excess of the “fair market value” (as defined below) over the exercise price of the Public Warrants by (y) the fair market value and (B) 0.361. The “fair market value” as used in this paragraph shall mean the average reported closing price of the Common Stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent. Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants: · in whole and not in part; · at a price of $0.01 per warrant; · upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and · if, and only if, the closing price of the shares of Common Stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant as described under the heading “— Warrants — Public Warrants — Anti-Dilution Adjustments”) for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders (which we refer to as the “Reference Value”). The Company will not redeem the Public Warrants as described above unless a registration statement under the Securities Act covering the issuance of the Common Stock issuable upon exercise of the Public Warrants is then effective and a current prospectus relating to those shares of Common Stock is available throughout the 30-day redemption period. If and when the Public Warrants become redeemable, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws. We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the Public Warrants, each warrant holder will be entitled to exercise his, her or its Public Warrant prior to the scheduled redemption date. However, the price of the Common Stock may fall below the $18.00 redemption trigger price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant described under the heading “— Anti-dilution Adjustments”) as well as the $11.50 warrant exercise price after the redemption notice is issued. Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $10.00. Once the Public Warrants become exercisable, the Company may redeem the outstanding warrants: · in whole and not in part; · at a price of $0.10 per warrant; · upon not less than 30 days’ prior written notice of redemption, provided that holders will be able to exercise their Public Warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” (as defined below) of Common Stock except as otherwise described below; · if, and only if, the Reference Value equals or exceeds $10.00 per Public Share (as adjusted for adjustments to the number of shares issuable upon exercise) or the exercise price of a warrant as described under the heading “— Anti-dilution Adjustments”; and · if the Reference Value is less than $18.00 per share, the Private Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. Beginning on the date the notice of redemption is given until the Public Warrants are redeemed or exercised, holders may elect to exercise their Public Warrants on a cashless basis. The numbers in the table below represent the number of shares of Common Stock that a warrant holder will receive upon such cashless exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of Common Stock on the corresponding redemption date (assuming holders elect to exercise their Public Warrants and such warrants are not redeemed for $0.10 per warrant), determined for these purposes based on the volume weighted average price of the Common Stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the warrants, each as set forth in the table below. the Company will provide warrant holders with the final fair market value no later than one business day after the 10-trading day period described above ends. The Private Warrants (including shares of Common Stock issuable upon exercise of such warrants) will not be transferable, assignable or salable until 30 days after the Closing (except, among other limited exceptions, to BYTS’ officers and directors and other persons or entities affiliated with the Sponsor) and they will not be redeemable by the Company so long as they are held by the Sponsor, members of the Sponsor or their permitted transferees (except as set forth under “— Warrants — Public Warrants — Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $10.00”). The Sponsor or its permitted transferees have the option to exercise the Private Warrants on a cashless basis. Except as described below, the Private Warrants have terms and provisions that are identical to those of the warrants sold as part of the Units in BYTS’ IPO. If the Private Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the Units sold in BYTS’s IPO. Except as described above under “— Public Warrants — Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $10.00,” if holders of the Private Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares underlying the Private Warrants, multiplied by the excess of the “fair market value” of the Common Stock (as defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” means the average reported closing price of the Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees is because it was not known at the time of the IPO whether the Sponsor would be affiliated with us following a business combination. If the Sponsor remains affiliated with the Company, its ability to sell the Company’s securities in the open market will be significantly limited. The Company has policies in place that prohibit insiders from selling securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell the Company’s securities, an insider cannot trade in the Company’s securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could exercise their Public Warrants and sell the shares received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. The Company has reviewed the terms of the Public and Private Warrants to determine whether warrants should be classified as liabilities or stockholders’ equity in its consolidated balance sheet. In order for a warrant to be classified in stockholders’ equity, the warrant must be (a)indexed to the Company’s equity and (b) meet the conditions for equity classification in ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Equity. If a warrant does not meet the conditions for equity classification, it is carried on the consolidated balance sheet as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in the statement of operations as change in fair value of warrants. The Company determined that all warrants are required to be carried as a liability in the consolidated balance sheet at fair value, with changes in fair value recorded in the consolidated statement of operations. At the closing of the Merger on December 21, 2023, the warrants had an initial fair value of $2,009,105, which was recorded as liability and a reduction to additional paid in capital in the consolidated balance sheet. As of December 31, 2023, the Private and Public Warrants had an aggregate fair value of $667,985, which resulted in a gain of $1,341,120 due to decrease in the fair value of the warrant liability subsequent to the closing date. See Note 16 – Fair Value Measurements for more information. The following table is a summary of the number of shares of the Company’s common stock issuable upon exercise of the Public and Private Warrants outstanding as of December 31, 2023: Exercise Number of Shares Price Expiration Date Initial Fair Value Public Warrants 16,184,612 $ 11.50 December 21, 2028 1,942,153 Private Warrants 515,000 $ 11.50 December 21, 2028 66,952 |
Subsequent Events
Subsequent Events | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Subsequent Events | ||
Subsequent Events | 15. Subsequent Events The Company evaluated subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements were issued. Subsequent to March 31, 2024, there were no material transactions that require disclosure. | 18. Subsequent Events On February 2, 2024, the Company issued in a private placement an Amended and Restated Senior Secured Convertible Promissory Note to Platinum Capital Partners Inc. (“Platinum”) in the principal amount of $2,000,000 (the “Platinum Convertible Note”). The Platinum Convertible Note amends and restates in its entirety the Senior Secured Convertible Promissory Note issued to Platinum in the principal amount of $2,000,000 on June 22, 2023. The repayment amount of the Platinum Convertible Note is 110% of the principal amount ($2,200,000) and matures in full on June 22, 2024. Interest accrues on the Platinum Convertible Note at the rate of 6% per annum calculated on the basis of 360 days. At the option of Platinum, the principal amount of the Platinum Convertible Note plus any accrued but unpaid interest is convertible into shares of Common Stock at a conversion price per share equal to the lower of (i) $3.69717, subject to appropriate adjustment as provided in the Platinum Convertible Note, and (ii) 65% of the VWAP for the Common Stock for the preceding five trading days immediately prior to any conversion, but in no event below $2.27518, subject to appropriate adjustment as provided in the Platinum Convertible Note. The Platinum Convertible Note contains “weighted average” anti-dilution protection for issuances of shares of Common Stock or Common Stock equivalents at a price less than the conversion price then in effect. In connection with the issuance of the Platinum Convertible Note, the Company also issued to Platinum an Amended and Restated Common Stock Purchase Warrant (the “Platinum Warrant”) dated February 2, 2024 to purchase 189,334 shares of Common Stock at an exercise price per share of $3.69717. The term of the Platinum Warrant expires on June 22, 2028. The Platinum Convertible Note may not be converted, and the Platinum Warrant may not be exercised, to the extent that after giving effect to such conversion and/or exercise, Platinum (together with its affiliates) would beneficially own in excess of 4.99% of the Common Stock outstanding immediately after giving effect to such conversion and/or exercise. On March 18, 2024, Platinum exercised the Platinum Warrant and received 137,367 shares of the Company’s common stock. Platinum forfeited 51,967 shares. On February 29, 2024, the Company extended a lease in Moorestown, North Carolina. The Company leases 3,621 square feet and the net monthly payment is $6,488. The lease expires on July 29, 2024. On March 1, 2024, the Company entered into an employment agreement with Mark E. Scott, the Company’s Chief Financial Officer, which provides for a base salary of $250,000 annually. Mr. Scott is also eligible to participate in annual performance-based bonus programs established by the Board or Compensation Committee, subject to the achievement of applicable performance criteria established by the Board or Compensation Committee, which shall be determined in good faith by the Board or Compensation Committee. Mr. Scott was also granted options to purchase up to twenty five thousand (25,000) shares of Common Stock with an exercise price equal to $1.49, which options vested in full on the date of issuance. On March 3, 2024, the Company granted a stock option to a director to purchase two hundred thousand shares (200,000) shares of Common Stock with an exercise price equal to $1.65, which options vest quarterly over four years and which expire on March 3, 2029. On March 5, 2024, a private investor converted a senior secured convertible promissory note for $250,000 and interest into 70,502 shares of the Company’s common stock. On March 5, 2024, a private investor converted a senior secured convertible promissory note for $350,000 and interest into 98,702 shares of the Company’s common stock. On March 21, 2024, the Company issued 15,000 shares of common stock valued at $25,500 as of December 31, 2023 to MZHCI, LLC related to an investor relations consulting agreement. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies(Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Summary of Significant Accounting Policies | ||
Basis of Presentation and Consolidation | The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. The preparation of these consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). For periods prior to the merger, the reported share and per share amounts have been retroactively converted by the applicable exchange ratio with the exception of the authorized shares and shares reserved for issuance. See Note 11—Reverse Recapitalization for additional information. | The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. The preparation of these consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). For periods prior to the Merger, the reported share and per share amounts have been retroactively converted by the applicable exchange ratio with the exception of the authorized shares and shares reserved for issuance. See Note 13—Reverse Recapitalization for additional information. |
Functional Currency | The Company’s consolidated functional currency is the U.S. Dollar. The operations of Zeppelin Worldwide, Inc. and its subsidiary, Zeppelin Taiwan, Ltd. (together “Zeppelin”) use the Taiwan Dollar as its functional currency. At each period end, Zeppelin’s balance sheet is translated into U.S. Dollars based upon the period end exchange rate, while their statements of operations and comprehensive loss and statements of cash flows are translated into U.S. Dollars based upon an average exchange rate during the period. | The Company’s consolidated functional currency is the U.S. Dollar. The operations of Zeppelin use the Taiwan Dollar as its functional currency. At each period end, Zeppelin’s balance sheet is translated into U.S. Dollars based upon the period end exchange rate, while their statements of operations and comprehensive loss and statements of cash flows are translated into U.S. Dollars based upon an average exchange rate during the period. |
Consolidation of Variable Interest Entities | A VIE is a legal entity that has either a total equity investment that is insufficient to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. The Company’s variable interest arises from contractual, ownership or other monetary interests in the entity, which change with fluctuations in the fair value of the entity’s net assets. A VIE is consolidated by its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates a VIE when it is deemed to be the primary beneficiary. The Company assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis. As of and for the year ended December 31, 2022 the Company was considered to be the primary beneficiary of Zeppelin. On February 28, 2023, the Founders transferred their interest in Zeppelin to the Company and Zeppelin became a wholly owned subsidiary. | |
Cash and Cash Equivalents | The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit. | The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit. |
Revenue Recognition and Deferred Revenue | The Company primarily generates revenue from sales of systems and products and the related post contract support to customers. The Company’s primary systems and products include Outpost AI, Acropolis and Airship Command. To date, the majority of the Company’s product revenue that has been recognized consists primarily of a bundled offering of hardware and software which delivers on premise solutions to its customers. Separate limited software subscription services have been delivered to customers including those customers that are able to operate in a cloud based environment. The transaction price recognized as revenue represents the amount the Company expects to be entitled to and is primarily comprised of product revenue, net of returns and variable consideration, including sales incentives provided to customers. Payment is typically due within 30 to 90 calendar days of the invoice date. The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below. | The Company primarily generates revenue from sales of systems and products and the related post contract support to customers. The Company’s primary systems and products include Outpost AI, Acropolis and Airship Command. To date, the majority of the Company’s product revenue that has been recognized consists primarily of a bundled offering of hardware and software which delivers on premise solutions to its customers. Separate limited software subscription services have been delivered to customers including those customers that are able to operate in a cloud based environment. The transaction price recognized as revenue represents the amount the Company expects to be entitled to and is primarily comprised of product revenue, net of returns and variable consideration, including sales incentives provided to customers. Payment is typically due within 30 to 90 calendar days of the invoice date. The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below. |
Product Revenue | Product revenue is derived primarily from sales of the Company’s system offerings, Outpost AI, Acropolis and Airship Command. The Company recognizes product revenue at a point in time when title transfers, when the products are shipped, or when control of the system is transferred to the customer, which usually is upon delivery of the system and when contractual performance obligations have been satisfied. | Product revenue is derived primarily from sales of the Company’s system offerings, Outpost AI, Acropolis and Airship Command. The Company recognizes product revenue at a point in time when title transfers, when the products are shipped, or when control of the system is transferred to the customer, which usually is upon delivery of the system and when contractual performance obligations have been satisfied. |
Post Contract Support Revenue | Post Contract Support (“PCS”) revenue is derived primarily from the Company’s support and software maintenance agreements (“SMA”). The Company’s PCS includes the right to receive, on a when and if available basis, future unspecified firmware upgrades and features as well as bug fixes, and email and telephone support. The Company allocates a portion of the transaction price to the PCS performance obligation based on a cost-plus methodology and recognizes the associated revenue on a straight-line basis over the estimated term of the support period. The Company’s support contracts are typically one to five years with an average of four years, payment is due within 30 to 90 calendars days of the invoice date and may include options to renew. For the three months ended March 31, 2024 and 2023, the Company recognized revenue of $59,361 and $47,104, respectively, related to one-year support contracts. For the three months ended March 31, 2024 and 2023, the Company recognized revenue of $1,116,893 and $1,191,711, respectively, related to multi-year support contracts. | Post Contract Support (“PCS”) revenue is derived primarily from the Company’s support and software maintenance agreements (“SMA”). The Company’s PCS includes the right to receive, on a when and if available basis, future unspecified firmware upgrades and features as well as bug fixes, and email and telephone support. The Company allocates a portion of the transaction price to the PCS performance obligation based on a cost-plus methodology and recognizes the associated revenue on a straight-line basis over the estimated term of the support period. The Company’s support contracts are typically one to five years with an average of four years, payment is due within 30 to 90 calendars days of the invoice date and may include options to renew. For the twelve months ended December 31, 2023 and 2022, the Company recognized revenue of $196,739 and $80,929, respectively, related to one-year support contracts. For the years ended December 31, 2023 and 2022, the Company recognized revenue of $4,495,748 and $4,912,258, respectively, related to multi-year support contracts. |
Other Services | The Company earns other service revenues from installation services, training and licensing which are short-term in nature and revenue for these services are recognized at the time of performance when the service is provided. | The Company earns other service revenues from installation services, training and licensing which are short-term in nature and revenue for these services are recognized at the time of performance when the service is provided. |
Contracts with Multiple Performance Obligations | The Company’s contracts with customers often contain multiple performance obligations that can include three separate obligations: (i) a hardware component (which may be bundled with hardware accessories) and the embedded firmware essential to the functionality of the hardware component delivered at the time of sale; (ii) the right to the Company’s downloadable free application and software solutions, and (iii) the right for the customer to receive post contract support (“PCS”) after the initial sale. The Company’s products and PCS offerings have significant standalone functionalities and capabilities. Accordingly, the products are distinct from the Company’s PCS services as customers can benefit from the products without the PCS services and such PCS services are separately identifiable within the contracts. The Company accounts for multiple agreements with a single customer as a single contract if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract. The amount of consideration the Company expects to receive in exchange for delivering on the contract is allocated to each performance obligation based on its relative standalone selling price. The Company establishes the standalone selling price using the prices charged for a deliverable when sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price based on its pricing model and offering type (products or PCS services). The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year. The Company sells its products primarily through a direct sales force. The Company considers revenue to be earned when all of the following criteria are met: · The Company has a contract with a customer that creates enforceable rights and obligations, · Promised performance obligations are identified, · The transaction price, or the amount the Company expects to receive, is determinable and · The Company has satisfied the performance obligations to the customer. Transfer of control is evidenced upon passage of title and risk of loss to the customer unless the Company is required to provide additional services. The Company’s short-term and long-term deferred revenue balances totaled $3,742,145 and $4,304,587 as of March 31, 2024.The Company’s short-term and long-term deferred revenue balances totaled $4,008,654 and $4,962,126 as of December 31, 2023. Of the deferred revenue balance of $8,970,780 as of January 1, 2024, the Company recognized approximately $1,176,239 during the three months ended March 31, 2024. | The Company’s contracts with customers often contain multiple performance obligations that can include three separate obligations: (i) a hardware component (which may be bundled with hardware accessories) and the embedded firmware essential to the functionality of the hardware component delivered at the time of sale; (ii) the right to the Company’s downloadable free application and software solutions, and (iii) the right for the customer to receive post contract support (“PCS”) after the initial sale. The Company’s products and PCS offerings have significant standalone functionalities and capabilities. Accordingly, the products are distinct from the Company’s PCS services as customers can benefit from the products without the PCS services and such PCS services are separately identifiable within the contracts. The Company accounts for multiple agreements with a single customer as a single contract if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract. The amount of consideration the Company expects to receive in exchange for delivering on the contract is allocated to each performance obligation based on its relative standalone selling price. The Company establishes the standalone selling price using the prices charged for a deliverable when sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price based on its pricing model and offering type (products or PCS services). The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year. The Company sells its products primarily through a direct sales force. The Company considers revenue to be earned when all of the following criteria are met: · The Company has a contract with a customer that creates enforceable rights and obligations, · Promised performance obligations are identified, · The transaction price, or the amount the Company expects to receive, is determinable and · The Company has satisfied the performance obligations to the customer. Transfer of control is evidenced upon passage of title and risk of loss to the customer unless the Company is required to provide additional services. The Company’s short-term and long-term deferred revenue balances totaled $4,008,654 and $4,962,126 as of December 31, 2023. The Company’s short-term and long-term deferred revenue balances totaled $4,168,016 and $4,805,431 as of December 31, 2022. Of the deferred revenue balance of $8,973,447 and $9,888,275 as of January 1, 2023 and 2022, the Company recognized approximately $4,168,016 and $4,593,794 during the years ended December 31, 2023 and 2022. |
Accounts Receivable and Provision for Credit Losses | The Company generally sells its products to large governmental entities and large corporations in the United States. Accounts receivable are recorded at invoiced amounts and are non-interest bearing. The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (codified as Accounting Standards Codification (“ASC”) 326) on January 1, 2023. ASC 326 adds to U.S. GAAP the current expected credit loss (“CECL”) model, a measurement model based on expected losses rather than incurred losses. Prior to the adoption of ASC 326, the Company evaluated receivables regularly and adjusted the allowance for doubtful accounts accordingly. The Company determined estimates of uncollectible accounts receivable based primarily on actual historical bad debt and sales return trends, customers financial condition and general economic conditions. Under the application of ASC 326, the Company’s historical credit loss experience provides the basis for the estimation of expected credit losses, as well as current economic and business conditions, and anticipated future economic events that may impact collectability. In developing its expected credit loss estimate, the Company evaluated the appropriate grouping of financial assets based upon its evaluation of risk characteristics, including consideration of the types of products and services sold. Account balances are written off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Occasionally certain long-standing customers, who routinely place large orders, will have unusually large receivables balances relative to the total gross receivables. Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders. As of March 31, 2024 and December 31, 2023, the Company did not have a reserve for credit losses as all accounts receivable are considered collectible. Accounts receivable balances as of March 31, 2024 and December 31, 2023 were $1,704,429 and $1,648,904, respectively. | The Company generally sells its products to large governmental entities and large corporations in the United States. Accounts receivable are recorded at invoiced amounts and are non-interest bearing. The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (codified as Accounting Standards Codification (“ASC”) 326) on January 1, 2023. ASC 326 adds to U.S. GAAP the current expected credit loss (“CECL”) model, a measurement model based on expected losses rather than incurred losses. Prior to the adoption of ASC 326, the Company evaluated receivables regularly and adjusted the allowance for doubtful accounts accordingly. The Company determined estimates of uncollectible accounts receivable based primarily on actual historical bad debt and sales return trends, customers financial condition and general economic conditions. Under the application of ASC 326, the Company’s historical credit loss experience provides the basis for the estimation of expected credit losses, as well as current economic and business conditions, and anticipated future economic events that may impact collectability. In developing its expected credit loss estimate, the Company evaluated the appropriate grouping of financial assets based upon its evaluation of risk characteristics, including consideration of the types of products and services sold. Account balances are written off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Occasionally certain long-standing customers, who routinely place large orders, will have unusually large receivables balances relative to the total gross receivables. Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders. As of December 31, 2023 and 2022, the Company did not have a reserve for credit losses as all accounts receivable are considered collectible. Accounts receivable balances as of January 1, 2022, December 31, 2022 and December 31 2023 were $831,353, 705,752 and $1,648,904, respectively. |
Concentration of Credit and Sales Risk | The Company sells its product to commercial and government customers under agreements that are normally paid within 30 days of contract completion. For the three months ended March 31, 2024, the Company had revenue from 17 customers and one customer represented 78% of total revenue, although such a high level of customer concentration is not typical. The primary reason for the increase in reliance on a single customer for the three months ended March 31, 2024 was due to one large order received in late 2023 which was fulfilled in the three months ended March 31, 2024. As of March 31, 2024, two customers represent approximately 52% and 27% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is estimated to be minimal. For the three months ended March 31, 2023, two customers represented 56% and 23% of total revenue from 23 customers, although such a high level of customer concentration is not typical. The primary reason for the increase in reliance on a single customer for the quarter ended March 31, 2023 was due to the lag-time in delivering on a large order received in late 2022 from one division of a customer which was not fulfilled until 2023. As of December 31, 2023, three customers represent approximately 51%, 26% and 17% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is estimated to be minimal. | The Company sells its product to commercial and government customers under agreements that are normally paid within 30 days of contract completion. For the year ended December 31, 2023, three customers represented 34%, 21% and 12% of total revenue from 58 customers, although such a high level of 50% customer concentration is not typical. The primary reason for the increase in reliance on a single customer for the year ended December 31, 2023 was due to the lag-time in delivering on a large order received in late 2022 from one division of a customer which was not fulfilled until 2023. As of December 31, 2023, three customers represent approximately 51%, 26% and 17% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is minimal. For the year ended December 31, 2022, two customers represented 28% and 17% of total revenue from 45 customers, which is more representative of our typical customer concentration. As of December 31, 2022, four customers represent approximately 42%, 19%, 14% and 10% of outstanding account receivables. Due to the nature of the customers and timely payment history, customer concentration and credit risk in account receivables is minimal. |
Inventory | The Company’s purchase of inventory, primarily computer servers, is undertaken to match purchase orders received from customers. Upon receipt of inventory, the Company generally configures the servers and loads proprietary software onto the servers before shipping out. The Company holds inventory for a short period of time and as of March 31, 2024 and December 31, 2023, it had no inventory in stock. Inventory value is primarily material costs and is valued at the lower of cost (first in, first out method) or net realizable value. | The Company’s purchase of inventory, primarily computer servers, is undertaken to match purchase orders received from customers. Upon receipt of inventory, the Company generally configures the servers and loads proprietary software onto the servers before shipping out. The Company holds inventory for a short period of time and as of December 31, 2023 and 2022, it had no inventory in stock. Inventory value is primarily material costs and is valued at the lower of cost (first in, first out method) or net realizable value. |
Long-Lived Assets | The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results. The Company recorded impairment losses of $0 for the three months ended March 31, 2024 and 2023. | The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results. The Company recorded impairment losses of $0 for the years ended December 31, 2023 and 2022. |
Research and Development Expenses | Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes. The Company’s current research and development efforts are primarily focused on improving the Company’s products. The Company is also actively involved in identifying new applications. The Company’s current internal team along with outside consultants has considerable experience working with the application of the Company’s technologies and their applications. The Company engages third party experts as required to supplement the Company’s internal team. The Company believes that continued development of new and enhanced technologies is essential to the Company’s future success. The Company incurred research and development expenses of $695,366 and $674,080 for the three months ended March 31, 2024 and 2023, respectively, on development activities. | Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes. The Company’s current research and development efforts are primarily focused on improving the Company’s products. The Company is also actively involved in identifying new applications. The Company’s current internal team along with outside consultants has considerable experience working with the application of the Company’s technologies and their applications. The Company engages third party experts as required to supplement the Company’s internal team. The Company believes that continued development of new and enhanced technologies is essential to the Company’s future success. The Company incurred expenses of $2,729,492 and $3,614,814 for the years ended December 31, 2023 and 2022, respectively, on development activities. |
Software Development Costs | Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. No software development costs have been capitalized as of March 31, 2024 and December 31, 2023. | Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. No software development costs have been capitalized as of December 31, 2023 and 2022. |
Cost of Net Revenues | Cost of net revenues for products includes components and freight. Cost of net revenues for post contract support and other services includes primarily the cost of personnel and personnel-related expenses to conduct implementations and ongoing client support. | Cost of net revenues for products includes components and freight. Cost of net revenues for post contract support and other services includes primarily the cost of personnel and personnel-related expenses to conduct implementations and ongoing client support. |
Advertising | Advertising costs are charged to selling, general and administrative expenses as incurred. Advertising and marketing costs for the three months ended March 31, 2024 and 2023 were $22,458 and $49,828, respectively. | Advertising costs are charged to selling, general and administrative expenses as incurred. Advertising and marketing costs for the years ended December 31, 2023 and 2022 were $94,272 and $69,975, respectively. |
Shipping and Handling of Products | Amounts billed to customers for shipping and handling of products are included in net revenues. Costs incurred related to shipping and handling of products are included in cost of revenues. | Amounts billed to customers for shipping and handling of products are included in net revenues. Costs incurred related to shipping and handling of products are included in cost of revenues. |
Fair Value Measurements | Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 Level 2 Level 3 The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of March 31, 2024 and December 31, 2023 are based upon the short-term nature of the assets and liabilities. The Company recorded its Senior Secured Convertible Promissory Note, earnout liability, and the warrants that were issued with the Convertible Promissory Note at fair value, remeasured on a recurring basis and considered them as Level 3 instruments. The public and private warrants were considered Level 1 and 2 instruments, respectively. The method of determining the fair value of the Senior Secured Convertible Promissory Note and attached warrants is described below. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). | Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 Quoted prices in active markets for identical assets and liabilities; Level 2 Inputs other than level one inputs that are either directly or indirectly observable; and Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities as of December 31, 2023 and 2022 are based upon the short-term nature of the assets and liabilities. The Company recorded its Senior Secured Convertible Promissory Note, earnout liability, Private Warrants and the warrants that were issued with this Note at fair value, remeasured on a recurring basis and considered them as Level 3 instruments. The method of determining the fair value of the Senior Secured Convertible Promissory Note and warrants are described below. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). |
Accounting for Senior Secured Convertible Promissory Notes at Fair Value | The Company has elected the fair value option to account for the senior secured convertible note that was issued on June 22, 2023 and the convertible notes that were issued in October and November 2023 and record them at fair value with changes in fair value recorded in the Consolidated Statements of Operations and Comprehensive Loss. As a result of applying the fair value option, direct costs and fees related to the convertible notes are recognized in earnings as incurred and not deferred. Values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the liability. Considerable judgment is necessary to interpret market data and determine an estimated fair value. The use of different market assumptions or valuation methods may have a material effect on the estimated fair values. As of March 31, 2024, the Company has used a Monte Carlo simulation pricing model that factors in potential outcomes being consummated, such as the convertible notes being repaid in cash and the convertible notes being converted to common stock. All of these scenarios take into consideration the terms and conditions of the underlying convertible notes plus potential changes in the underlying value of the common stock. For the three months ended March 31, 2024, the Company recognized an unrealized loss of $2,039,377 for the change in fair value of the notes and is included in the Consolidated Statements of Operations and Comprehensive Loss. The Company believes accounting for the convertible notes at fair value better aligns the measurement methodologies of assets and liabilities, which may mitigate certain earnings volatility. | The Company has elected the fair value option to account for the Senior Secured Convertible Note that was issued on June 22, 2023 and the convertible notes that were issued in October and November 2023 and record them at fair value with changes in fair value recorded in the Consolidated Statements of Operations and Comprehensive Loss. As a result of applying the fair value option, direct costs and fees related to the convertible notes are recognized in earnings as incurred and not deferred. Values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the liability. Considerable judgment is necessary to interpret market data and determine an estimated fair value. The use of different market assumptions or valuation methods may have a material effect on the estimated fair values. As of December 31, 2023, the Company has used a Monte Carlo simulation pricing model that factors in potential outcomes being consummated, such as the convertible notes being repaid in cash and the convertible notes being converted to common stock. All of these scenarios take into consideration the terms and conditions of the underlying convertible notes plus potential changes in the underlying value of the common stock. For the twelve months ended December 31, 2023, the Company recognized an unrealized loss of $240,784 for the change in fair value of the notes and is included in the Consolidated Statements of Operations and Comprehensive Loss. The Company believes accounting for the convertible notes at fair value better aligns the measurement methodologies of assets and liabilities, which may mitigate certain earnings volatility. |
Derivative Liabilities and Earnout Liabilities | The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants and earnout shares to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). At the closing of the merger, the Company assumed 515,000 private placement warrants and 16,184,612 public warrants. As of March 31, 2024, there were 515,000 private placement warrants and 16,159,112 public warrants outstanding. Upon consummation of the merger, the Company evaluated the warrants and concluded that they did not meet the criteria to be classified within the stockholders’ deficit. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The initial estimated fair value of the warrants was measured using a Monte Carlo simulation. The subsequent estimated fair value of the public warrants is based on the listed price in an active market for such warrants while the fair value of the private placement warrants continues to be measured using a Monte Carlo simulation with the key inputs being directly or indirectly observable public warrants listed price. Since the public and private warrants meet the definition of a derivative, the Company recorded the public and private warrants as liabilities on the consolidated balance sheet at fair value upon the merger closing, with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date. At the closing of the merger, the Airship AI securityholders that hold shares of common stock of Airship AI, Airship AI options, Airship AI earnout warrants or Airship AI SARs have the contingent right to receive up to 5.0 million additional shares of common stock, subject to certain contingencies. These earnout shares have been categorized into two components: (i) the vested shares that are associated with stockholders with vested equity at the closing of the merger that will be earned upon achievement of the earnout milestones and (ii) the unvested shares associated with stockholders with unvested equity at the closing of the merger that will be earned over the remaining service period with the Company on their unvested equity shares and upon achievement of the earnout milestones. The earnout shares associated with vested shares are recognized as derivative liabilities in accordance with ASC 815-40, as the events that determine the number of earnout shares required to be released or issued, as the case may be, include events that were not solely indexed to the fair value of common stock of the Company. The earnout shares were measured at the merger closing and subsequently measured at each reporting date until settled or when they met the criteria for equity classification. Accordingly, the Company recognizes the earnout shares as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The earnout shares were valued using a Monte Carlo analysis. At the closing of the merger, the unvested earnout shares were considered to be equity instruments and valued at approximately $2,675,000. This amount will be recognized as stock-based compensation going forward over the five-year vesting period. Derivative warrant and earnout shares liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of significant current assets or require the creation of current liabilities. | The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants and earnout shares to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net- cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). At Closing, the Company assumed 515,000 private placement warrants (“Private Warrants”) and 16,184,612 Public Warrants (together the “BYTE Warrants”). Upon consummation of the Merger, the Company evaluated the BYTE Warrants and concluded that they did not meet the criteria to be classified within the stockholders’ deficit. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The initial estimated fair value of the warrants was measured using a Monte Carlo simulation. The subsequent estimated fair value of the Public Warrants is based on the listed price in an active market for such warrants while the fair value of the Private Placement Warrants continues to be measured using a Monte Carlo simulation with the key inputs being directly or indirectly observable from the Public Warrants listed price. Since the Public and Private Warrants meet the definition of a derivative, the Company recorded the Public and Private Warrants as liabilities on the consolidated balance sheet at fair value upon the Closing, with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date. At Closing, the Airship AI security holders that hold shares of common stock of Airship AI (“Airship Common Stock”), Airship Options, Airship Earnout Warrants or Airship SARs (the “Airship Earnout Holders”) have the contingent right to receive up to 5.0 million additional shares of Airship Pubco Common Stock (the “Earnout Shares”), subject to certain contingencies. These earnout shares have been categorized into two components: (i) the “Vested Shares” - those associated with stockholders with vested equity at the closing of the Merger that will be earned upon achievement of the Earnout Milestones and (ii) the “Unvested Shares” - those associated with stockholders with unvested equity at the closing of the Merger that will be earned over the remaining service period with the Company on their unvested equity shares and upon achievement of the Earnout Milestones. The earnout shares associated with vested shares are recognized as derivative liabilities in accordance with ASC 815-40, as the events that determine the number of Earnout Shares required to be released or issued, as the case may be, include events that were not solely indexed to the fair value of common stock of the Company. The Earnout Shares were measured at Closing and subsequently measured at each reporting date until settled or when they met the criteria for equity classification. Accordingly, the Company recognizes the earnout shares as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The Earnout shares were valued using a Monte Carlo analysis. At closing, the unvested earnout shares were considered to be equity instruments and valued at approximately $2,675,000. This amount will be recognized as stock-based compensation going forward over the five-year vesting period. Derivative warrant and earnout shares liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of significant current assets or require the creation of current liabilities. |
Stock-Based Compensation | The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, stock appreciation rights, incentive stock options, nonqualified stock options, unvested earnout shares and warrants to purchase shares of common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date and the fair value of the award is recognized as an expense, over the requisite service period which is generally the vesting period. The Company adjusts stock-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. | The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, stock appreciation rights, incentive stock options, nonqualified stock options, unvested earnout shares and warrants to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date and the fair value of the award is recognized as an expense, over the requisite service period which is generally the vesting period. |
Income Taxes | Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The Company’s ability to realize deferred tax assets depends upon future taxable income, as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. The Company considers historical and future taxable income, future reversals of existing taxable temporary differences, taxable income in prior carryback years, and ongoing tax planning strategies in assessing the need for valuation. | Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The Company’s ability to realize deferred tax assets depends upon future taxable income, as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. The Company considers historical and future taxable income, future reversals of existing taxable temporary differences, taxable income in prior carryback years, and ongoing tax planning strategies in assessing the need for valuation. |
Comprehensive Gain (Loss) | Comprehensive gain (loss) is defined as the change in equity of a business during a period from non-owner sources. There was other comprehensive gain of $3,239 and $0 related foreign exchange translation for the three months ended March 31, 2024 and 2023, respectively. | Comprehensive loss is defined as the change in equity of a business during a period from non-owner sources. There was other comprehensive loss of $2,702 and $10,106 related foreign exchange translation for the year ended December 31, 2023 and 2022, respectively. |
Going Concern Assessment | The Company applies Accounting Standards Codification 205-40 (“ASC 205-40”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern | The Company applies Accounting Standards Codification 205-40 (“ASC 205-40”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern |
Use of Estimates | In preparing these consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the calculation of revenue recognition, stock-based compensation, valuation of common stock, valuation of senior secured convertible notes, warrant liability, earnout share liabilities, accruals for potential liabilities including income taxes, valuation of deferred tax assets and valuation assumptions related to share-based compensation. | In preparing these consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the calculation of revenue recognition, stock-based compensation, valuation of common stock, valuation of Senior Secured Convertible Notes, warrant liability, earnout share liabilities, accruals for potential liabilities including income taxes, valuation of deferred tax assets and valuation assumptions related to share-based compensation. |
Net Loss per Share | Net Loss per Share As of March 31, 2024, the Company had 23,159,119 shares of common stock issued and outstanding. As of March 31, 2024, there were (i) options outstanding for the purchase of 5,114,589 shares of the Company’s common stock; (ii) SARs for the purchase of 1,758,105 shares of Company’s common stock; (iii) warrants for the purchase of 19,364,014 shares of the Company’s common stock; and (iv) 931,794 shares of the Company’s common stock reserved and are issuable upon conversion of convertible debentures. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the March 31, 2024, calculation of net loss per share because the impact is antidilutive. As of March 31, 2023, the Company had 22,812,048 shares of common stock issued and outstanding. As of March 31, 2023, there were (i) options outstanding for the purchase of 4,257,151 shares of the Company’s common stock; and (ii) SARs for the purchase of 1,758,105 shares of Company’s common stock. All of the foregoing shares could potentially dilute future earnings per share but are excluded from the March 31, 2023, calculation of net loss per share because the impact is antidilutive. | Basic income (loss) per share is based upon the net income (loss) for the year divided by the weighted average shares of common stock outstanding. Diluted net income per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, warrants, convertible notes payable and stock appreciation rights) outstanding during the period using the treasury stock method. Common stock equivalents for the year ended December 31, 2022 are not included in the calculation of diluted earnings (loss) per share given the Company incurred a loss and they are anti-dilutive. |
Reportable Segments | The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting | The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 280, Segment Reporting |
Recent Accounting Pronouncements | All recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements. | In October 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which clarifies and improves disclosure or presentation requirements of a variety of Codification Topics. ASU 2023-06 aligns disclosure and presentation requirements under US Generally Accepted Accounting Principles (“US GAAP”) with the Securities and Exchange Commission’s (the “SEC”) regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years after the date of such removal. Future adoption of the new standard is not expected to have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which improves segment disclosure requirements primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within reported measures of segment profit or loss. ASU 2023-07 also requires disclosure of the title and position of the CODM, how the CODM assesses segment performance, and additional detail around other segment items. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023. Future adoption of the new standard is not expected to have a material impact on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which addresses investor requests for more transparency around income tax information. ASU 2023-09 requires additional information within the disclosures related to income tax rate reconciliations and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Future adoption of the new standard is not expected to have a material impact on our consolidated financial statements. All other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
Property and Equipment | Property and Equipment consists of vehicles, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset. Computer equipment is expensed to research and development or selling, general and administrative expense and any furniture and computer equipment is either fully depreciated or immaterial to the consolidated financial statements. | |
Advances due to Founders and Advances due from Founders | The Company accounts for advances made to founders as a contra equity balance unless payment has been received subsequent to period end or such amounts can be offset with amounts due to the Founders. As of December 31, 2022 the Company has $1,100,000 of advances due from the Founders and advances due to the Founders. The transactions were entered into separately by Airship and Zeppelin and thus are reported separately on the accompanying consolidated balance sheets. In February 2023, these balances were eliminated in a transaction involving the shareholders. See Notes 3 and 10. During the year ended December 31, 2022, Mr. Huang and Mr. Xu advanced Airship AI $1,900,000 and were repaid $1,300,000, with $600,000 recorded as advances from founders as of December 31, 2022. In the year ended December 31, 2023, Mr. Huang and Mr. Xu advanced Airship AI $1,350,000 and were repaid $200,000, with $1,750,000 recorded as advances from founders as of December 31, 2023.The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period. During 2024, Mr. Huang advanced Airship AI $900,000 and was repaid $900,000, with $1,750,000 recorded as advances from founders as of March 29, 2024. The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period. |
Organization (Tables)
Organization (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Organization | |
Schedule of fair value transactions | Liability as of March 31, 2024 Earnout liability $ 26,618,278 Senior Secured Convertible Promissory Notes 4,204,743 Warrant liability (Public Warrants)- exerciseable at $11.50 per share 7,311,998 Warrant liability (Private Warrants)- exerciseable at $11.50 per share 203,078 Total liabilities measured at fair value $ 38,338,097 Other expense related to instruments recorded at fair value during the three months ended March 31, 2024 $ 30,371,318 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment, Net | |
Schedule of Property and Equipment, Net | Estimated Useful Lives December 31, 2023 December 31, 2022 Vehicles 5 years $ 74,398 $ 199,502 Less: accumulated depreciation (72,537 ) (182,762 ) $ 1,861 $ 16,740 |
Stockholders Deficit (Tables)
Stockholders Deficit (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Stockholders Deficit | ||
Schedule of stock incentive plans | Options Weighted Average Shares Exercise Price Outstanding as of December 31, 2023 4,664,589 $ 0.55 Granted 450,000 4.11 Outstanding as of March 31, 2024 5,114,589 $ 0.86 | Options Weighted Average Potential Shares Exercise Price Proceeds Outstanding as of December 31, 2021 3,812,953 $ 0.26 $ 982,326 Granted 492,695 1.64 808,020 Forfeitures (143,581 ) (1.00 ) (81,668 ) Outstanding as of December 31, 2022 4,162,067 0.411 1,708,677 Granted 502,522 1.67 837,087 Exercised - - - Forfeitures - - - Outstanding as of December 31, 2023 4,664,589 $ 0.55 $ 2,545,765 |
Schedule information of stock options outstanding and exercisable | Weighted Weighted Average Average Weighted Average Remaining Life Range of Number Remaining Life Average Number Exercise Price In Years - Vested Exercise Prices Outstanding In Years Exercise Price Exerciseable Exerciseable and Exercisable $ 0.12 2,646,410 4.13 $ 0.12 2,646,410 $ 0.12 4.13 0.57 1,022,963 4.22 0.57 1,022,963 0.57 4.22 1.49-1.65 1,170,403 8.19 1.64 449,625 1.64 8.19 1.90 49,813 3.73 1.90 3,113 1.90 3.73 6.59 225,000 9.99 6.59 - - 9.99 5,114,589 5.33 $ 0.86 4,122,111 $ 0.40 5.33 | Weighted Average Weighted Weighted Remaining Life Range of Number Average Remaining Life Weighted Average Number Average Exercise Price In Years - Vested Exercise Prices Outstanding In Years Exercise Price Exercisable Exercisable and Exercisable $ 0.12 2,646,410 4.38 $ 0.12 2,646,410 $ 0.12 4.38 0.57 1,022,963 4.47 0.57 1,022,963 0.57 4.47 1.64 945,403 9.08 1.64 386,806 1.64 9.08 1.90 49,813 3.98 1.90 - 1.90 3.98 4,664,589 5.35 $ 0.55 4,056,179 $ 0.38 5.35 |
Schedule of significant weighted-average assumptions | Assumptions 3/31/2024 Estimated stock price $1.49-$6.59 Exercise price $1.49-$6.59 Dividend yield 0% Expected life 5-10 years Expected volatility 69% Risk free interest rate 4.23% | Assumptions 12/31/2023 12/31/2022 Estimated stock price 1.89 1.64 Exercise price 1.64 1.64 Dividend yield 0 % 0 % Expected life 5-10 years 5 years Expected volatility 39 % 70 % Risk free interest rate 0.00 % 4.06 % |
Summary of warrants outstanding | March 31, 2024 Weighted Average Exercise Shares Price Outstanding January 1, 2024 19,443,314 $ 10.16 Issued 135,534 3.70 Exercised (162,867 ) (4.92 ) Forfeited (51,967 ) (3.70 ) Expired - - Outstanding at March 31, 2024 19,364,014 $ 10.15 Exercisable at March 31, 2024 19,364,014 | |
Summary of warrants outstanding and exercisable | March 31, 2024 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exercisable Price 2,689,902 4.10 $ 1.770 2,689,902 $ 1.77 515,000 4.72 11.500 515,000 11.50 16,159,112 4.72 11.500 16,159,112 11.50 19,364,014 4.70 $ 10.148 19,364,014 $ 10.15 | |
Schedule of warrants weighted average assumptions | Assumptions Dividend yield 0% Expected life 3-5 years Expected volatility 69% Risk free interest rate 4.23% |
Commitments, Contingencies an_2
Commitments, Contingencies and Legal Proceedings (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Commitments, Contingencies and Legal Proceedings | ||
Schedule of minimum future lease payments | Years Ended March 31, 2025 $ 247,970 2026 362,224 2027 373,108 2028 222,591 Total remaining payments 1,205,893 Less Imputed Interest (154,526 ) Total lease liability $ 1,051,367 | Years Ended December 31, 2024 $ 245,051 2025 359,563 2026 370,357 2027 316,785 Total remaining payments 1,291,756 Less Imputed Interest (173,178 ) Total lease liability $ 1,118,578 |
Income Taxes and Employee Reten
Income Taxes and Employee Retention Tax Credits (Tables) | 12 Months Ended |
Dec. 21, 2023 | |
Income Taxes | |
Components of the provision for income taxes | 2023 2022 Current: Federal $ - $ 10,000 State - - Foreign - - Total current provision - 10,000 Deferred: Federal - - State - - Foreign - - Total deferred income taxes - - Total provision for income taxes $ - $ 10,000 |
Schedule of reconciliation of effective tax rate | 2023 2022 Federal statutory tax rate 21 % 21 % R&D credit, net impact 0 % 30 % Nontaxable variable interest loss 0 % (53 )% Share based compensation 5 % (23 )% Nontaxable revaluation of fair value instruments (32 )% - % Nontaxable PPP loan forgiveness 0 % 48 % Nontaxable ERTC credits 0 % 51 % True-up to prior year valuation allowance 0 % (50 )% Change in valuation allowance 6 % (26 )% Effective tax rate 0 % (2 )% |
Components of deferred tax assets | Deferred tax assets 2023 2022 Tax credit carryforward $ 1,286,195 $ 1,286,195 Deferred revenue 1,009,141 1,112,003 Capitalized research and development costs 951,497 620,791 Net operating loss carryforward 898,302 318,302 Capital loss carry-forward 52,560 52,560 Operating lease liability 234,901 - Property and equipment 4,920 29,971 4,437,516 3,419,822 Valuation allowance (4,205,507 ) (3,419,822 ) Net deferred tax assets $ 232,009 $ - Deferred tax liabilities Right-of-use assets (232,009 ) - Total net deferred tax $ - $ - |
Reverse Recapitalization (Table
Reverse Recapitalization (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Reverse Recapitalization | ||
Schedule of Reverse Recapitalization | Additional Accumulated Shares Par Amount Common Stock Paid in Capital Deficit SPAC Financing 8,891,718 $ 0.0001 $ 889 $ 8,315,186 $ - Transaction expenses (1) 532,986 0.0001 53 (6,651,674 ) (894,662 ) Earnout liability (4,470,918 ) (22,638,859 ) Warrants liability (2,009,105 ) - Reverse capitalization on December 21, 2023 (1) 9,424,704 $ 942 $ (4,816,511 ) $ (23,533,521 ) | Additional Accumulated Shares Par Amount Common Stock Paid in Capital Deficit SPAC Financing 8,891,718 $ 0.0001 $ 889 $ 8,315,186 $ - Transaction expenses 532,986 0.0001 53 (6,651,674 ) - Earnout liability (4,470,918 ) (22,638,859 ) Warrants liability (2,009,105 ) - Reverse capitalization on December 21, 2023 9,424,704 $ 942 $ (4,816,511 ) $ (22,638,859 ) |
Schedule of revision of prior period financial information | As of December 31, 2023 As Reported Adjustment As Revised Prepaid expenses and other $ 913,030 $ (894,662 ) $ 18,368 Total current assets 5,693,577 (894,662 ) 4,798,915 Total assets 6,982,575 (894,662 ) 6,087,913 Accumulated deficit (16,582,038 ) (894,662 ) (17,476,700 ) Total stockholders' deficit (16,592,565 ) (894,662 ) (17,487,227 ) |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Warrants | ||
Schedule of the Public and Private Warrants outstanding | Number of Shares Exercise Price Expiration Date Fair Value Public Warrants 16,159,112 $ 11.50 December 21, 2028 $ 7,311,998 Private Warrants 515,000 $ 11.50 December 21, 2028 203,078 $ 7,515,076 | Exercise Number of Shares Price Expiration Date Initial Fair Value Public Warrants 16,184,612 $ 11.50 December 21, 2028 1,942,153 Private Warrants 515,000 $ 11.50 December 21, 2028 66,952 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Fair Value Measurements | ||
Schedule of Assets and Liabilities that are Measured at Fair value on a Recurring Basis | March 31, 2024 Level 1 Level 2 Level 3 Total Liabilities Earnout liability $ - $ - $ 26,618,278 $ 26,618,278 Senior Secured Convertible Promissory Notes - - 4,204,743 4,204,743 Warrant liability (Public Warrants) 7,311,998 - - 7,311,998 Warrant liability (Private Warrants) - 203,078 - 203,078 Total liabilities measured at fair value $ 7,311,998 $ 203,078 $ 30,823,021 $ 38,338,097 December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities Earnout liability $ - $ - $ 5,133,428 $ 5,133,428 Senior Secured Convertible Promissory Notes - - 2,825,366 2,825,366 Warrant liability (Public Warrants) 646,428 - - 646,428 Warrant liability (Private Warrants) - 21,557 - 21,557 Total liabilities measured at fair value $ 646,428 $ 21,557 $ 7,958,794 $ 8,626,779 | December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities Earnout liability $ - $ - $ 5,133,428 $ 5,133,428 Senior Secured Convertible Promissory Notes - - 2,825,366 2,825,366 Warrant liability (Public Warrants) 646,428 - - 646,428 Warrant liability (Private Warrants) - 21,557 - 21,557 Total liabilities measured at fair value $ 646,428 $ 21,557 $ 7,958,794 $ 8,626,779 |
Schedule of the estimated fair value of the earnout liability | March 31, 2024 December 31, 2023 Stock price $ 6.59 $ 1.70 Risk-free interest rate 4.23 % 3.84 % Expected term (in years) 4.8 5 Expected volatility 69.3 % 75.9 % Dividend yield 0 % 0 % | December 21, 2023 December 31, 2023 Stock price $ 6.49 $ 1.70 Risk-free interest rate 3.87 % 3.84 % Expected term (in years) 5 5 Expected volatility 76.40 % 75.90 % Dividend yield 0 % 0 % |
Schedule of the initial estimated fair value of the Private Warrants | December 21, 2023 December 31, 2023 Stock price $ 6.49 $ 1.70 Risk-free interest rate 3.87 % 3.84 % Expected term (in years) 5.01 4.98 Expected volatility 13.90 % 41.50 % Dividend yield 0 % 0 % | |
Schedule of the estimated fair value of the Senior Secured Convertible Promissory Notes | March 31, 2024 December 31, 2023 Stock price $ 6.59 1.70 Effective discount rate 13.07 % 12.95 % Expected term (in years) 0.23 0.48 to 0.75 Expected volatility 53.7 % 62.5 % Dividend yield 0 % 0 % | December 31, 2023 Stock price $ 1.70 Effective discount rate 12.95 % Expected term (in years) 0.48 to 0.75 Expected volatility 62.50 % Dividend yield 0 % |
Private Placement and Public _2
Private Placement and Public Warrants (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Private Placement and Public Warrants | ||
Schedule of the Public and Private Warrants outstanding | Number of Shares Exercise Price Expiration Date Fair Value Public Warrants 16,159,112 $ 11.50 December 21, 2028 $ 7,311,998 Private Warrants 515,000 $ 11.50 December 21, 2028 203,078 $ 7,515,076 | Exercise Number of Shares Price Expiration Date Initial Fair Value Public Warrants 16,184,612 $ 11.50 December 21, 2028 1,942,153 Private Warrants 515,000 $ 11.50 December 21, 2028 66,952 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings per Share | |
Schedule of the computation of basic and diluted net income (loss) per share attributable | December 31, 2023 December 31, 2022 Net Income (loss) $ 16,371,134 $ (487,493 ) Weighted average shares outstanding: Basic 13,671,376 13,387,344 Add: dilutive effect of stock options, SARs and Airship warrants 6,719,287 - Diluted 20,390,663 13,387,344 Income (loss) per share Basic $ 1.20 $ (0.04 ) Diluted $ 0.80 $ (0.04 ) |
Schedule of the potentially dilutive shares were not included in the calculation of diluted shares outstanding | December 31, 2023 December 31, 2022 Public Warrants 16,184,612 - Private Warrants 515,000 - Convertible debt 452,240 - Warrants 53,800 - Outstanding stock options - 4,162,067 SARs - 1,758,100 17,205,652 5,920,167 |
Organization (Details)
Organization (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Organization | |||
Earnout liability | $ 26,618,278 | $ 5,133,428 | $ 0 |
Senior Secured Convertible Promissory Notes | 4,204,743 | ||
Warrant liability (Public Warrants) | 7,311,998 | 646,428 | |
Warrant liability (Private Warrants) | 203,078 | $ 21,557 | |
Total liabilities measured at fair value | 38,338,097 | ||
Other expense related to instruments recorded at fair value | $ 30,371,318 |
Organization (Details Narrative
Organization (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Organization | ||
Advance to Founders | $ 1,100,000 | |
Private placement warrants shares outstanding | 51,500,000,000 | |
Public warrants shares outstanding | 1,618,461,200,000 | |
Warrants exercise price | $ 11.50 | |
Current deferred revenue | $ 3,742,145 | 4,009,000 |
Convertible debt | 4,204,723 | 2,825,000 |
Payable to Founders | 1,100,000 | |
Accumulated deficit | 49,441,169 | 16,582,038 |
Working capital deficit | 9,947,000 | 6,174,000 |
Additional temporary funding | 2,500,000 | |
Accumulated deficit noncash charges | $ 30,881,253 | $ 19,626,884 |
Number of private placement warrants | 515,000 | |
Number of Public Warrants | 16,159,112 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||||
Accumulated deficit | $ 49,441,000 | |||
Working capital deficit | 9,947,000 | $ 6,174,000 | ||
Federal depository insurance coverage amount | 250,000 | 250,000 | ||
Recognized revenue to one-year support contracts | 196,739 | $ 80,929 | ||
Recognized revenue to multi-year support contracts | 1,116,893 | $ 1,191,711 | 4,495,748 | 4,912,258 |
Short-term deferred revenue | 3,742,145 | 4,008,654 | 4,168,016 | |
Long-term deferred revenue | 4,304,587 | 4,962,126 | 4,805,431 | |
Deferred revenues | 8,970,780 | 8,973,447 | 9,888,275 | |
Deferred revenue recognized | 1,176,239 | 4,168,016 | 4,593,794 | |
Impairment losses | 0 | 0 | 0 | 0 |
Expenses | 695,366 | 674,080 | 2,729,492 | 3,614,814 |
Advertising and marketing costs | 22,458 | 49,828 | 94,272 | 69,975 |
Recognized an unrealized loss | 2,039,377 | $ 240,784 | ||
Private placement warrants | 515,000 | |||
Public Warrants | 16,184,612 | |||
Equity instruments valued | $ 2,675,000 | |||
Advances due from the Founders | 1,100,000 | |||
Other comprehensive loss | 3,239 | $ 0 | 2,702 | 10,106 |
Deferred revenue, curret | 3,742,000 | |||
Convertible debt | $ 4,205,000 | |||
Private placement warrants shares outstanding | 51,500,000,000 | |||
Public warrants shares outstanding | 16,159,112 | |||
Additional shares of common stock | $ 5,000,000 | |||
Accounts receivable | 1,704,429 | $ 1,648,904 | $ 705,752 | |
Advances due to Founders and Advances due from Founders Description | Mr. Huang and Mr. Xu advanced Airship AI $1,900,000 and were repaid $1,300,000, with $600,000 recorded as advances from founders as of December 31, 2022. In the year ended December 31, 2023, Mr. Huang and Mr. Xu advanced Airship AI $1,350,000 and were repaid $200,000, with $1,750,000 recorded as advances from founders as of December 31, 2023.The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period. During 2024, Mr. Huang advanced Airship AI $900,000 and was repaid $900,000, with $1,750,000 recorded as advances from founders as of March 29, 2024. The advances are non-interest bearing and Airship AI expects to pay the balance off within a one year period | |||
Equity instruments | $ 2,675,000 | |||
Common stock, issued | 23,159,119 | 22,812,048 | 13,387,344 | |
Common stock, outstanding | 23,159,119 | 22,812,048 | 13,387,344 | |
Private placement warrants | 515,000 | |||
Public Warrants | 16,184,612 | |||
Description of shares | (i) options outstanding for the purchase of 5,114,589 shares of the Company’s common stock; (ii) SARs for the purchase of 1,758,105 shares of Company’s common stock; (iii) warrants for the purchase of 19,364,014 shares of the Company’s common stock; and (iv) 931,794 shares of the Company’s common stock reserved and are issuable upon conversion of convertible debentures | (i) options outstanding for the purchase of 4,257,151 shares of the Company’s common stock; and (ii) SARs for the purchase of 1,758,105 shares of Company’s common stock |
Advances due to and from Foun_2
Advances due to and from Founders (Details narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Feb. 28, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Advanced to company | $ 1,100,000 | ||||
Additional non interesting fund | $ 1,397,815 | $ 0 | $ 1,964,669 | ||
Mr Huang [Member] | |||||
Repaid | 1,350,000 | 1,900,000 | |||
Victor Huang and Derek Xu | |||||
Loan Borrow | 3,000,000 | ||||
Capital | $ 1,100,000 | ||||
Interest | 5% | ||||
Additional Cash | 900,000 | $ 900,000 | $ 1,750,000 | ||
Zeppelin [Member] | |||||
Additional Cash | 1,095,000 | ||||
Operations Expenses | 1,100,000 | ||||
Primarily cash | 73,000 | ||||
Accrued liabilities | 60,000 | ||||
Advance Liabilities | 1,150,000 | ||||
Shareholders Advances | 2,254,000 | $ 600,000 | |||
Additional non interesting fund | 1,100,000 | ||||
Stockholder's deficit | 2,181,000 | ||||
Mr Xu [Member] | |||||
Repaid | 200,000 | 1,300,000 | |||
Founder [Member] | |||||
Advanced to company | 600,000 | ||||
Repaid | 1,750,000 | $ 1,100,000 | |||
Airship AI [Member] | |||||
Proceeds from advances | 1,000,000 | 1,350,000 | |||
Repaid | $ 1,000,000 | $ 200,000 |
Property and Equipment Net (Det
Property and Equipment Net (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property and Equipment, Net | ||
Vehicles | $ 74,398 | $ 199,502 |
Less: accumulated depreciation | (72,537) | (182,762) |
Total Property Plant And Equipment | $ 1,861 | $ 16,740 |
Estimated useful life | 5 years |
Property and Equipment Net (D_2
Property and Equipment Net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property and Equipment, Net | ||
Depreciation expense | $ 14,879 | $ 14,879 |
Depreciated assets | $ 125,104 |
Revenues (Details Narrative)
Revenues (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Net revenues | $ 9,400,000 | $ 1,700,000 | $ 7,400,000 | $ 9,400,000 |
Net revenues | 1,009,141 | 1,112,003 | ||
Deferred revenue service | $ 3,742,145 | $ 4,008,654 | 4,168,016 | |
2024 | 36% | 45% | ||
2025 | 64% | 55% | ||
Deferred Revenue Recognized | $ 8,000,000 | $ 9,000,000 | ||
Revenue | ||||
Short term deferred revenue | 3,742,145 | 4,008,654 | 4,168,016 | |
Deferred revenue carry forward | 8,970,780 | 8,973,447 | 9,888,275 | |
Long term deferred revenue | 4,304,587 | 4,962,126 | 4,962,126 | |
Net revenues | 1,176,239 | 4,168,016 | 4,593,794 | |
Deferred revenue service | $ 1,200,000 | $ 4,900,000 | $ 1,200,000 |
Notes Payable and Line of Credi
Notes Payable and Line of Credit (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Oct. 03, 2023 | Jul. 08, 2022 | Mar. 18, 2024 | Feb. 02, 2024 | Jun. 22, 2023 | Jun. 21, 2023 | Jun. 20, 2023 | Jan. 25, 2021 | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Convertible promissory note | $ 2,000,000 | ||||||||||
Interest Rate | 110% | 110% | 110% | ||||||||
warrants | $ 2,009,105 | ||||||||||
Shares Issued, Shares, Share-Based Payment Arrangement, Forfeited | 51,967 | ||||||||||
Common stock value | $ 2,314 | 2,281 | $ 1,339 | ||||||||
Business Loan with Funding Circle of Denver | |||||||||||
Business Loan | $ 500,000 | ||||||||||
Business Loan discription | Company issued senior secured convertible promissory notes for $600,000 to two private investors. At the option of the holders, the notes are convertible into cash, common stock or a combination of cash and stock. The Conversion Price shall be the lower of (A) $6.50 for each unit or share of BYTE Alternate Consideration, subject to appropriate adjustment and (B) 65% of the VWAP for the BYTE Alternate consideration for the preceding five (5) Trading Days immediately prior to any conversion by the Holder, but (C) in no event shall the Conversion Price be below $4.00, subject to appropriate adjustment. The repayment amount of the notes is 110% ($660,000) and mature on September 30, 2024 | The Company received $480,050. The $500,000 plus interest at 6.99% is being repaid at $22,384 per month over twenty-four months. The Business Loan is secured by the assets of the Company and is guaranteed by the founders. The balance as of December 31, 2023 and 2022 was $0 and $424,540, respectively. As of December 31 2022, $292,932 was due in 2023 and $131,608 in 2024 | |||||||||
Interest Rate | 110% | ||||||||||
Revolving credit | $ 85,000 | ||||||||||
Line Credit Paid Off | $ 85,300 | ||||||||||
U.S. Small Business Administration's | |||||||||||
Interest Rate | 1% | ||||||||||
Matures Date | Jan. 23, 2026 | ||||||||||
Paycheck Loan | $ 1,131,878 | ||||||||||
Other income | $ 1,146,000 | ||||||||||
Platinum Capital Partner, Inc. | |||||||||||
Convertible promissory note | $ 660,000 | $ 2,039,377 | $ 2,000,000 | $ 2,000,000 | $ 240,784 | ||||||
Accounts payable amount | 374,000 | $ 4,204,743 | 2,825,366 | ||||||||
Interest expense | $ 5,064 | $ 0 | |||||||||
Pay off loan | $ 256,541 | ||||||||||
Interest Rate | 6% | 4.99% | 6% | 6% | |||||||
Common Stock per value | $ 6.50 | ||||||||||
repayment note amount | $ 2,200,000 | $ 2,200,000 | |||||||||
Matures Date | Jun. 22, 2002 | Jun. 22, 2024 | |||||||||
Common shares issued | 169,204 | 189,334 | 53,800 | 452,240 | |||||||
warrants | $ 15,418 | $ 15,418 | |||||||||
Warant Received | 137,367 | ||||||||||
Shares Issued, Shares, Share-Based Payment Arrangement, Forfeited | 51,967 | ||||||||||
Promissory notes with a face value | $ 600,000 | ||||||||||
Common stock value | $ 835,610 | ||||||||||
Loss on debt conversion | $ 158,794 | ||||||||||
Exercise price | $ 3.6 | $ 6.50 | $ 6.50 | ||||||||
Conversion price | $ 2.27 |
Stockholders Deficit (Details)
Stockholders Deficit (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Number of shares, Options Outstanding, Beginning | 4,664,589 | 4,162,067 | 3,812,953 |
Number of shares, Options Outstanding, granted | 502,522 | 492,695 | |
Number of shares, Options Outstanding, exercised | 0 | 0 | |
Number of shares, Options Outstanding, cancelled/forfeited | 0 | (143,581) | |
Number of shares, Options Outstanding, Ending Balance | 4,664,589 | 4,162,067 | |
Weighted average exercise price, option outstanding, Beginning Balance | $ 0.55 | $ 0.411 | $ 0.26 |
Warrants, weighted average exercise price, options granted | $ 4.92 | 1.67 | 1.64 |
Weighted average exercise price, option outstanding, Ending Balance | 0.55 | 0.411 | |
Warrants,Weighted average exercise price, Options cancelled/forfeited | $ 0 | $ 1 | |
Number of shares, Options Outstanding, Beginning | $ 2,545,765 | $ 1,708,677 | $ 982,326 |
Number of shares, Options Outstanding, granted | 837,087 | 808,020 | |
Number of shares, options outstanding, exercised | 0 | 0 | |
Number of shares, Options Outstanding, forfeitures | 0 | (81,668) | |
Number of shares, Options Outstanding, Ending | $ 2,545,765 | $ 1,708,677 | |
Stock Option | |||
Number of shares, Options Outstanding, Beginning | 4,664,589 | ||
Number of shares, Options Outstanding, granted | 450,000 | ||
Number of shares, Options Outstanding, Ending Balance | 5,114,589 | ||
Weighted average exercise price, option outstanding, Beginning Balance | $ 0.55 | ||
Warrants, weighted average exercise price, options granted | 4.11 | ||
Weighted average exercise price, option outstanding, Ending Balance | $ 0.86 |
Stockholders Deficit (Details 1
Stockholders Deficit (Details 1) - $ / shares | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Number of shares, Options Outstanding | 5,114,589 | 4,664,589 | 2,624,869 | 4,162,067 | 3,812,953 |
Weighted average remaining life in years | 5 years 3 months 29 days | 5 years 4 months 6 days | |||
Weighted average exercise price, option outstanding | $ 0.86 | $ 0.55 | $ 0.926 | $ 0.411 | $ 0.26 |
Number of shares, Options exercisable | 4,122,111 | 4,056,179 | |||
Weighted average exercise price, option exercisable | $ 0.40 | $ 0.38 | |||
Weighted average remaining life in years- vested and exercisable | 5 years 3 months 29 days | 5 years 4 months 6 days | |||
Range 0.12 | |||||
Number of shares, Options Outstanding | 2,646,410 | 2,646,410 | |||
Weighted average remaining life in years | 4 years 1 month 17 days | 4 years 4 months 17 days | |||
Weighted average exercise price, option outstanding | $ 0.12 | $ 0.12 | |||
Number of shares, Options exercisable | 2,646,410 | 2,646,410 | |||
Weighted average exercise price, option exercisable | $ 0.12 | $ 0.12 | |||
Weighted average remaining life in years- vested and exercisable | 4 years 1 month 17 days | 4 years 4 months 17 days | |||
Range 0.57 | |||||
Number of shares, Options Outstanding | 1,022,963 | 1,022,963 | |||
Weighted average remaining life in years | 4 years 2 months 19 days | 4 years 5 months 19 days | |||
Weighted average exercise price, option outstanding | $ 0.57 | $ 0.57 | |||
Number of shares, Options exercisable | 1,022,963 | 1,022,963 | |||
Weighted average exercise price, option exercisable | $ 0.57 | $ 0.57 | |||
Weighted average remaining life in years- vested and exercisable | 4 years 2 months 19 days | 4 years 5 months 19 days | |||
Range 1.64 | |||||
Number of shares, Options Outstanding | 1,170,403 | 945,403 | |||
Weighted average remaining life in years | 8 years 2 months 8 days | 9 years 29 days | |||
Weighted average exercise price, option outstanding | $ 1.64 | $ 1.64 | |||
Number of shares, Options exercisable | 449,625 | 386,806 | |||
Weighted average exercise price, option exercisable | $ 1.64 | $ 1.64 | |||
Weighted average remaining life in years- vested and exercisable | 8 years 2 months 8 days | 9 years 29 days | |||
Range 1.90 | |||||
Number of shares, Options Outstanding | 49,813 | 49,813 | |||
Weighted average remaining life in years | 3 years 8 months 23 days | 3 years 11 months 23 days | |||
Weighted average exercise price, option outstanding | $ 1.90 | $ 1.90 | |||
Number of shares, Options exercisable | 3,113 | 0 | |||
Weighted average exercise price, option exercisable | $ 1.90 | $ 1.90 | |||
Weighted average remaining life in years- vested and exercisable | 3 years 8 months 23 days | 3 years 11 months 23 days | |||
Range 6.59 [Member] | |||||
Number of shares, Options Outstanding | 225,000 | ||||
Weighted average remaining life in years | 9 years 11 months 26 days | ||||
Weighted average exercise price, option outstanding | $ 6.59 | ||||
Weighted average exercise price, option exercisable | $ 0 | ||||
Weighted average remaining life in years- vested and exercisable | 9 years 11 months 26 days |
Stockholders Deficit (Details 2
Stockholders Deficit (Details 2) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Estimated stock price | $ 1.89 | $ 1.64 | |
Exercise price | $ 1.64 | $ 1.64 | |
Dividend yield | 0% | 0% | 0% |
Expected life | 5 years | ||
Expected Volatility | 69% | 39% | 70% |
Risk free interest rate | 4.23% | 0% | 4.06% |
Minimum [Member] | |||
Estimated stock price | $ 1.49 | ||
Exercise price | $ 1.49 | ||
Expected life | 5 years | 5 years | |
Maximum [Member] | |||
Estimated stock price | $ 6.59 | ||
Exercise price | $ 6.59 | ||
Expected life | 10 years | 10 years |
Stockholders Deficit (Details 3
Stockholders Deficit (Details 3) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Stockholders Deficit | |||
Warrants outstanding , Beginning | 19,443,314 | ||
Warrants issued | 135,534 | ||
Warrants Exercised | (162,867) | ||
Warrants Forfeited | (51,967) | ||
Warrants outstanding , ending | 19,364,014 | 19,443,314 | |
Warrants Exercisable | 19,364,014 | ||
Weighted average exercise price, option outstanding, Beginning Balance | $ 10.16 | ||
Warrants, weighted average exercise price, Issued | 3.70 | ||
Warrants, weighted average exercise price, Exercised | (4.92) | $ (1.67) | $ (1.64) |
Warrants, weighted average exercise price, Forfeited | (3.70) | ||
Warrants, weighted average exercise price, Expired | 0 | ||
Weighted average exercise price, option outstanding, Ending Balance | $ 10.15 | $ 10.16 |
Stockholders Deficit (Details 4
Stockholders Deficit (Details 4) - $ / shares | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 01, 2024 | Feb. 02, 2024 | |
Number of Warrants | 19,364,014 | 25,000 | |
Weighted average remaining life in years | 4 years 8 months 12 days | ||
Weighted average exercise price, Warrants | $ 10.148 | $ 3.69717 | |
Number of shares, Warrants exercisable | 19,364,014 | ||
Weighted average exercise price, Warrants exercisable | $ 10.15 | ||
Warrants [Member] | |||
Number of Warrants | 2,689,902 | ||
Weighted average remaining life in years | 4 years 1 month 6 days | ||
Weighted average exercise price, Warrants | $ 1.770 | ||
Number of shares, Warrants exercisable | 2,689,902 | ||
Weighted average exercise price, Warrants exercisable | $ 1.77 | ||
Warrants 1 [Member] | |||
Number of Warrants | 515,000 | ||
Weighted average remaining life in years | 4 years 8 months 19 days | ||
Weighted average exercise price, Warrants | $ 11.500 | ||
Number of shares, Warrants exercisable | 515,000 | ||
Weighted average exercise price, Warrants exercisable | $ 11.50 | ||
Warrants 2 [Member] | |||
Number of Warrants | 16,159,112 | ||
Weighted average remaining life in years | 4 years 8 months 19 days | ||
Weighted average exercise price, Warrants | $ 11.500 | ||
Number of shares, Warrants exercisable | 16,159,112 | ||
Weighted average exercise price, Warrants exercisable | $ 11.50 |
Stockholders Deficit (Details 5
Stockholders Deficit (Details 5) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Dividend yield | 0% | 0% | 0% |
Expected life | 5 years | ||
Expected Volatility | 69% | 39% | 70% |
Risk free interest rate | 4.23% | 0% | 4.06% |
Minimum [Member] | |||
Expected life | 5 years | 5 years | |
Maximum [Member] | |||
Expected life | 10 years | 10 years | |
Warrant To Purchase Of Common Stock [Member] | |||
Dividend yield | 0% | ||
Expected Volatility | 69% | ||
Risk free interest rate | 4.23% | ||
Warrant To Purchase Of Common Stock [Member] | Minimum [Member] | |||
Expected life | 3 years | ||
Warrant To Purchase Of Common Stock [Member] | Maximum [Member] | |||
Expected life | 5 years |
Stockholders Deficit (Details N
Stockholders Deficit (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 05, 2024 | May 08, 2023 | Mar. 18, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Feb. 02, 2024 | |
Preference shares, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 | |||||
Stock options grants to employees | 143,581 | |||||||
Stock based compensation expense | $ 268,989 | $ 136,709 | $ 715,727 | $ 546,460 | ||||
Stock option exercise price | $ 1 | |||||||
Stock options exercised | 3,000,000 | |||||||
Common stock shares par value | $ 0.0001 | $ 0.0001 | ||||||
Common stock shares issued | 23,159,119 | 22,812,048 | 13,387,344 | |||||
Common stock shares issued | 200,000,000 | 200,000,000 | ||||||
Common stock shares, outstanding | 23,159,119 | 22,812,048 | 13,387,344 | |||||
Vested warrants Shares | 19,364,014 | |||||||
Common share per value | $ 5.96 | $ 0.0001 | $ 0.0001 | |||||
Common forfeited shares | 51,967 | |||||||
Common shares received | 137,367 | |||||||
Aggregated grant date fair value | $ 2,675,223 | |||||||
Stock based compensation | $ 133,762 | $ 715,727 | $ 546,460 | |||||
Ownership percentage | 4.99% | |||||||
Unrecognized Stock based compensation | $ 2,675,223 | |||||||
Common Stock, Shares Authorized | 205,000,000 | 205,000,000 | ||||||
Warrants to Purchase Common Stock by each founders | 189,334 | |||||||
Warrants exercise price | $ 10.148 | $ 3.69717 | ||||||
Invester [Member] | Common Stock [Member] | ||||||||
Secured convertible promissory note issued | $ 250,000 | |||||||
converted a senior secured convertible shares of common stock | 70,502 | |||||||
Investor 1 [Member] | Common Stock [Member] | ||||||||
Secured convertible promissory note issued | $ 350,000 | |||||||
converted a senior secured convertible shares of common stock | 98,702 | |||||||
Common stock shares issued | 15,000 | |||||||
Mr Huang [Member] | Chief Executive Officer | ||||||||
Stock granted | 100,000 | |||||||
Victor Hauang and Derek Xu | ||||||||
Common stock exercise price per share | $ 1.89 | $ 1.77 | ||||||
Warrants to Purchase Common Stock by each founders | 1,344,951 | 53,800 | ||||||
Warrants exercise price | $ 1.77 | $ 6.50 | ||||||
Purchased warrants value | $ 2,136,115 | $ 15,418 | ||||||
Warrants interest rate | 3.41% | 3.41% | ||||||
Volatility | 39.40% | 39.40% | ||||||
Stock Incentive Plan | ||||||||
Stock options outstanding | 5,114,589 | 4,664,589 | ||||||
Average stocks exercise price | $ 0.55 | |||||||
Stock options grants to employees | 502,522 | 492,695 | ||||||
Purchase shares of common stock | 200,000 | 250,000 | ||||||
Stock based compensation expense | $ 135,227 | $ 136,709 | ||||||
Stock option exercise price | $ 0.86 | $ 1.67 | $ 1.64 | |||||
Common stock exercise price per share | $ 1.65 | $ 6.08 | ||||||
Forfeited common stock per value | $ 5.96 | |||||||
Common stock shares issued | 4,080,000 | |||||||
Stock option granted | 2,675,223 | |||||||
Costs expected period in years | 5 years 3 months 29 days | |||||||
Amount payment for stock option | $ 250,000 | |||||||
Common stock shares issued | 2,637,150 | |||||||
Unrecognized Stock based compensation | $ 2,541,461 | $ 635,351 | ||||||
Common Stock, Shares Authorized | 1,500,000 | |||||||
Common Stock SARs outstanding | 1,758,000 | 1,758,000 | ||||||
Stock awards outstanding | 5,114,589 | |||||||
Aggregate intrinsic value | $ 29,301,777 | $ 4,664,589 | $ 5,394,000 | |||||
Super Simple AI, Inc | ||||||||
Common share per value | $ 0.12 | |||||||
Common shares outstanding | 1,758,100 |
Employee 401(k) Plan (Details N
Employee 401(k) Plan (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Employee 401(k) Plan | |||
Contributions expense | $ 50,102 | $ 182,446 | $ 198,534 |
Description | The plan provides for a 3.5% match on up to 6% of deferred salary | The plan provides for a 3.5% match on up to 6% of deferred salary |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
May 08, 2023 | May 05, 2021 | Feb. 28, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 02, 2024 | Dec. 31, 2020 | |
Owed by related party | $ 60,000,000 | |||||||||
Debt and interest due date | March 2023 | |||||||||
Net loss | $ (31,964,469) | $ (1,712,176) | $ (16,371,134) | $ 487,493 | ||||||
Payments for advances of related party | $ 1,100,000 | |||||||||
Promissory note and interest paid | 84,844 | |||||||||
Exercise price of warrants | $ 10.148 | $ 3.69717 | ||||||||
Advance from related party | 1,095,000 | |||||||||
Advance to related party | $ 1,100,000 | $ 1,100,000 | ||||||||
Victor Huang and Derek Xu | ||||||||||
Warrants shares issued | 1,344,951 | |||||||||
Proceeds from warrants shares | $ 3,000,000 | |||||||||
Exercise price of warrants | $ 1.77 | |||||||||
Fair market stock price | $ 1.89 | |||||||||
Volatility rate | 39.40% | |||||||||
Interest rate | 3.41% | |||||||||
Intrinsic value of warrants | $ 2,136,115 | |||||||||
Officers And Director [Member] | ||||||||||
Bearing interest rate | 5% | 5% | ||||||||
Owed by related party | $ 110,000,000 | $ 110,000,000 | ||||||||
Assets sales | $ 75,000,000 | |||||||||
Interest rate on notes | 4% | |||||||||
Debt and interest due period | 24 years | |||||||||
Borrowings amount | $ 3,000,000 | |||||||||
Promissory note and interest paid | $ 794,917 | |||||||||
Founder Vehicle [Member] | ||||||||||
Bearing interest rate | 4% | 4% | ||||||||
Assets sales | $ 8,000,000 | |||||||||
Net loss | $ 31,721 | |||||||||
Notes receivable-related parties | 83,000,000 | |||||||||
Accrued interest amount | $ 2,458,500 | |||||||||
Mr Huang and Mr Xu [Member] | ||||||||||
Advance from related party | $ 1,750,000 | 1,750,000 | ||||||||
Advance received from related party | 1,000,000 | 1,350,000 | ||||||||
Payments for advances of related party | $ 1,000,000 | $ 200,000 |
Commitments Contingencies and L
Commitments Contingencies and Legal Proceedings (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Commitments, Contingencies and Legal Proceedings | ||
2024 | $ 247,970 | $ 245,051 |
2026 | 362,224 | 359,563 |
2026 | 373,108 | 370,357 |
2027 | 222,591 | 316,785 |
Total remaining payments | 1,205,893 | 1,291,756 |
Less Imputed Interest | (154,526) | (173,178) |
Total lease liability | $ 1,051,367 | $ 1,118,578 |
Commitments Contingencies and_2
Commitments Contingencies and Legal Proceedings (Details Narrative) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Jul. 13, 2023 USD ($) ft² | Jan. 02, 2021 USD ($) ft² | May 02, 2019 USD ($) ft² | Feb. 29, 2024 USD ($) ft² | Mar. 31, 2024 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) $ / shares | Dec. 31, 2022 USD ($) $ / shares | |
Area of lease agreement | ft² | 15,567 | 3,621 | 31,765 | 3,621 | ||||
Monthly payment increases in percentage | 3% | 3% | ||||||
Operating lease liabilities | $ 1,051,367 | $ 1,118,578 | $ 832,140 | |||||
Right of use assets | 1,024,513 | 1,104,804 | 804,338 | |||||
Lease costs for the leases | $ 98,943 | $ 162,414 | $ 591,442 | 649,655 | ||||
Weighted average discount rate | 7% | 7% | ||||||
Lease obligations- current liabilities | $ 180,875 | $ 174,876 | $ 628,371 | |||||
Common stock exercise price per shares | $ / shares | $ 5.96 | $ 0.0001 | $ 0.0001 | |||||
Accelerated amortization of ROU asset - lease termination | $ 265,130 | |||||||
Gain from lease termination | (344,093) | |||||||
Net gain on lease termination | $ 78,963 | |||||||
Net monthly payment | $ 25,000 | $ 4,828 | $ 44,440 | $ 6,488 | ||||
Lease expires date | Oct. 31, 2027 | Feb. 28, 2024 | Apr. 30, 2024 | Jul. 29, 2024 | ||||
Employment Agreement [Member] | ||||||||
Base salary | $ 250,000 | |||||||
Granted options to purchase of common stock | shares | (25,000) | |||||||
Common stock exercise price per shares | $ / shares | $ 1.49 | |||||||
Minimum [Member] | ||||||||
Monthly payment increases in percentage | 3% | |||||||
Maximum [Member] | ||||||||
Monthly payment increases in percentage | 6% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current | ||
Federal | $ 0 | $ 10,000 |
State | 0 | 0 |
Foreign | 0 | 0 |
Total current provision | 0 | 10,000 |
Deferred | ||
Federal | 0 | 0 |
State and other | 0 | 0 |
Foreign deferred | 0 | 0 |
Total deferred income taxes | 0 | 0 |
Provision for income taxes | $ 0 | $ 10,000 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||||
Federal statutory tax rate | 21% | 21% | ||
R&D credit, net impact | 0% | 30% | ||
Nontaxable variable interest loss | 0% | (53.00%) | ||
Share based compensation | 5% | (23.00%) | ||
Nontaxable revaluation of fair value instruments | (32.00%) | 0% | ||
Nontaxable PPP loan forgiveness | 0% | 48% | ||
Nontaxable ERTC credits | 0% | 51% | ||
True up prior year valuation allowance | 0% | (50.00%) | ||
Change in valuation allowance | 6% | (26.00%) | ||
Effective tax rate | 0% | 0% | 0% | (2.00%) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Income Taxes | ||
Research and development credit, net | $ 1,286,195 | $ 1,286,195 |
Deferred revenue | 1,009,141 | 1,112,003 |
Capitalized research and development costs | 951,497 | 620,791 |
Net operating loss carry-forward | 898,302 | 318,302 |
Capital loss carry-forward | 52,560 | 52,560 |
Operating lease liability | 234,901 | 0 |
Property and equipment and other | 4,920 | 29,971 |
Total | 4,437,516 | 3,419,822 |
Valuation allowance | (4,205,507) | (3,419,822) |
Net deferred tax liability | 232,009 | 0 |
Right-of-use assets | (232,009) | 0 |
Total net deferred tax | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Jan. 31, 2023 | May 25, 2022 | Apr. 04, 2022 | Sep. 08, 2021 | |
Income Taxes | ||||||||
Incurred losses | $ 560,000 | $ 1,254,000 | ||||||
Provision for income taxes | $ 0 | $ 0 | ||||||
Effective tax rate | 0% | 0% | 0% | (2.00%) | ||||
Unrecognized tax benefit | $ 227,000 | $ 227,000 | ||||||
Incresae in unrecognized tax benefit | 11,000 | |||||||
Federal net operating loss carryover | 3,800,000 | 1,500,000 | ||||||
Federal valuation allowance | 786,000 | 128,000 | ||||||
R&D tax credit carryovers | $ 1,513,000 | $ 1,513,000 | ||||||
ERTC credits | $ 461,043 | $ 99,132 | ||||||
ERTC credits one | $ 459,614 | $ 190,983 | ||||||
ERTC credits with interest | $ 468,880 | $ 99,826 | ||||||
ERTC credits with interest one | $ 470,970 | $ 192,793 |
Reverse Recapitalization (Detai
Reverse Recapitalization (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Issued shares of common stock, value | $ 2,314 | $ 2,281 | $ 1,339 |
Common stock shares issued | 23,159,119 | 22,812,048 | 13,387,344 |
Issued shares of common stock, value | $ (2,314) | $ (2,281) | $ (1,339) |
Common stock exercise price per shares | $ 5.96 | $ 0.0001 | $ 0.0001 |
Accumulated Deficits [Member] | |||
Issued shares of common stock, value | $ 22,638,859 | ||
Issued shares of common stock, value | (22,638,859) | ||
Accumulated Deficits [Member] | SPAC Financing [Member] | |||
Issued shares of common stock, value | $ 0 | 0 | |
Issued shares of common stock, value | 0 | 0 | |
Accumulated Deficits [Member] | Transaction expenses [Member] | |||
Issued shares of common stock, value | 894,662 | 0 | |
Issued shares of common stock, value | (894,662) | 0 | |
Accumulated Deficits [Member] | Earnout liability [Member] | |||
Issued shares of common stock, value | 22,638,859 | 22,638,859 | |
Issued shares of common stock, value | (22,638,859) | (22,638,859) | |
Accumulated Deficits [Member] | Warrants liability [Member] | |||
Issued shares of common stock, value | 0 | 0 | |
Issued shares of common stock, value | 0 | 0 | |
Common Stocks [Member] | |||
Issued shares of common stock, value | $ 942 | $ 942 | |
Common stock shares issued | 9,424,704 | 9,424,704 | |
Issued shares of common stock, value | $ (942) | $ (942) | |
Common Stocks [Member] | SPAC Financing [Member] | |||
Issued shares of common stock, value | $ 889 | $ 889 | |
Common stock shares issued | 8,891,718 | 8,891,718 | |
Issued shares of common stock, value | $ (889) | $ (889) | |
Common stock exercise price per shares | $ 0.0001 | $ 0.0001 | |
Common Stocks [Member] | Transaction expenses [Member] | |||
Issued shares of common stock, value | $ 53 | $ 53 | |
Common stock shares issued | 532,986 | 532,986 | |
Issued shares of common stock, value | $ (53) | $ (53) | |
Common stock exercise price per shares | $ 0.0001 | $ 0.0001 | |
Additional Paid In Capitals [Member] | |||
Issued shares of common stock, value | $ 4,816,511 | $ 4,816,511 | |
Issued shares of common stock, value | (4,816,511) | (4,816,511) | |
Additional Paid In Capitals [Member] | SPAC Financing [Member] | |||
Issued shares of common stock, value | 8,315,186 | 8,315,186 | |
Issued shares of common stock, value | (8,315,186) | (8,315,186) | |
Additional Paid In Capitals [Member] | Transaction expenses [Member] | |||
Issued shares of common stock, value | 6,651,674 | 6,651,674 | |
Issued shares of common stock, value | (6,651,674) | (6,651,674) | |
Additional Paid In Capitals [Member] | Earnout liability [Member] | |||
Issued shares of common stock, value | 4,470,918 | 4,470,918 | |
Issued shares of common stock, value | (4,470,918) | (4,470,918) | |
Additional Paid In Capitals [Member] | Warrants liability [Member] | |||
Issued shares of common stock, value | 2,009,105 | 2,009,105 | |
Issued shares of common stock, value | $ (2,009,105) | $ (2,009,105) |
Reverse Recapitalization (Det_2
Reverse Recapitalization (Details 1) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Total assets | $ 4,661,189 | $ 6,087,913 | $ 3,909,096 | ||
Accumulated deficit | (49,441,169) | (17,476,700) | (10,314,313) | ||
Total stockholders' deficit | $ (48,050,609) | (17,487,227) | $ (9,933,878) | $ (8,358,411) | $ (8,407,272) |
As Reported [Member] | |||||
Prepaid expenses and other | 913,030 | ||||
Total current assets | 5,693,577 | ||||
Total assets | 6,982,575 | ||||
Accumulated deficit | (16,582,038) | ||||
Total stockholders' deficit | (16,592,565) | ||||
Adjustment [Member] | |||||
Prepaid expenses and other | 894,662 | ||||
Total current assets | 894,662 | ||||
Total assets | 894,662 | ||||
Accumulated deficit | (894,662) | ||||
Total stockholders' deficit | (894,662) | ||||
As Revised [Member] | |||||
Prepaid expenses and other | 18,368 | ||||
Total current assets | 4,798,915 | ||||
Total assets | 6,087,913 | ||||
Accumulated deficit | (17,476,700) | ||||
Total stockholders' deficit | $ (17,487,227) |
Warrants (Details)
Warrants (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Feb. 02, 2024 | |
Exercise price of warrants | $ 10.148 | $ 3.69717 | |
Warrant, Outstanding (in Shares) | 19,364,014 | 19,443,314 | |
Warrant, Initial Fair Value | $ 7,515,076 | ||
Private Placement [Member] | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | |
Warrant, Expiration date | Dec. 21, 2028 | Dec. 21, 2028 | |
Warrant, Outstanding (in Shares) | 515,000 | 515,000 | |
Warrant, Initial Fair Value | $ 203,078 | $ 66,952 | |
Public Warrant [Member] | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | |
Warrant, Expiration date | Dec. 21, 2028 | Dec. 21, 2028 | |
Warrant, Outstanding (in Shares) | 16,159,112 | 16,184,612 | |
Warrant, Initial Fair Value | $ 7,311,998 | $ 1,942,153 |
Warrants (Details Narrative)
Warrants (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2023 USD ($) integer $ / shares shares | Mar. 31, 2024 $ / shares shares | Dec. 31, 2022 $ / shares | |
Fair value of warrants | $ | $ 2,009,105 | ||
Net gain of warratis | $ | $ 1,341,120 | ||
Warrant outstanding (in Shares) | shares | 19,443,314 | 19,364,014 | |
Warrant received (in Shares) | shares | 515,000 | ||
Common stock exercise price per shares | $ / shares | $ 0.0001 | $ 5.96 | $ 0.0001 |
Private Placement [Member] | |||
Warrant outstanding (in Shares) | shares | 515,000 | 515,000 | |
Warrant received (in Shares) | shares | 515,000 | ||
Warrant outstanding (in Shares) | shares | 16,184,626 | ||
Threshold consecutive trading days for redemption of public warrants (in Days) | integer | 30 | ||
Public Warrant [Member] | |||
Fair value of warrants | $ | $ 667,985 | ||
Warrant outstanding (in Shares) | shares | 16,184,612 | 16,159,112 | |
Warrant received (in Shares) | shares | 515,000 | 515,000 | |
Common stock exercise price per shares | $ / shares | $ 11.50 | ||
Stock price trigger for redemption of public warrants | $ / shares | 10 | ||
Exercise Price 18.00 [Member] | |||
Redemption price per public warrant | $ / shares | $ 0.01 | ||
Warrants and Rights Outstanding Exercisable Term After Business Combination | 30 years | ||
Stock price trigger for redemption of public warrants | $ / shares | $ 18 | ||
Class Of Warrant Or Right Redemption Of Warrants Or Rights Threshold Trading Days (in Days) | integer | 20 | ||
Threshold consecutive trading days for redemption of public warrants (in Days) | integer | 30 | ||
Exercise Price 10.00 [Member] | |||
Redemption price per public warrant | $ / shares | $ 0.10 | ||
Stock price trigger for redemption of public warrants | $ / shares | $ 10 | ||
Class Of Warrant Or Right Minimum Threshold Written Notice Period For Redemption Of Warrants | 30 years |
Earnout Liability (Details Narr
Earnout Liability (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Earnout liability decreased | $ 5,133,428 | |
Initial fair value of earnout liability | 27,109,777 | |
Change in fair value of the earnout liability | $ 21,976,349 | |
Change in fair value of the earnout liability | $ 21,484,850 | |
Estimated fair value of the earnout liability | $ 26,618,278 | |
Earnout Shares receival | 5,000,000 | 5,000,000 |
25 Percent Earnout Shares [Member] | ||
Earnout Shares description | 25% of the earnout shares if, for the period starting on the closing date and ending on the last day of the full calendar quarter immediately following the first anniversary of the closing date, (1) Company Revenue (as defined below) is at least $39 million, or (2) the aggregate value of new contract awards (including awards obtained through purchase orders) with federal law enforcement agencies (whether such awards are obtained directly or through intermediaries) has grown by at least 100% as compared to the year-over-year amount for the twelve-month period ending on the date of the Merger Agreement (the “First Operating Performance Milestone”); | 25% of the Earnout Shares if, for the period starting on the Closing Date and ending on the last day of the full calendar quarter immediately following the first anniversary of the Closing Date, (1) Company Revenue (as defined below) is at least $39 million, or (2) the aggregate value of new contract awards (including awards obtained through purchase orders) with federal law enforcement agencies (whether such awards are obtained directly or through intermediaries) has grown by at least 100% as compared to the year-over-year amount for the twelve-month period ending on the date of the Merger Agreement (the “First Operating Performance Milestone”); |
75 Percent Earnout Shares [Member] | ||
Earnout Shares description | 75% of the earnout shares if, for the period starting on the closing date and ending on the last day of the full calendar quarter immediately following the third anniversary of the closing date, Company Revenue is at least $100 million (the “Second Operating Performance Milestone”); | 75% of the Earnout Shares if, for the period starting on the Closing Date and ending on the last day of the full calendar quarter immediately following the third anniversary of the Closing Date, Company Revenue is at least $100 million (the “Second Operating Performance Milestone”); |
50 Percent Earnout Shares [Member] | ||
Earnout Shares description | 50% of the earnout shares if, at any time during the period starting on the closing date and ending on the fifth anniversary of the closing date, over any twenty (20) trading days within any thirty (30) trading day period the volume weighted average price (“VWAP”) of the common stock is greater than or equal to $12.50 per share (the “First Share Price Performance Milestone”); | 50% of the Earnout Shares if, at any time during the period starting on the Closing Date and ending on the fifth anniversary of the Closing Date, over any twenty (20) trading days within any thirty (30) trading day period the volume weighted average price (“VWAP”) of the Airship Pubco Common Stock is greater than or equal to $12.50 per share (the “First Share Price Performance Milestone”); and |
50 Percent One Earnout Shares [Member] | ||
Earnout Shares description | 50% of the earnout shares if, at any time during the period starting on the closing date and ending on the fifth anniversary of the closing date, over any twenty (20) trading days within any thirty (30) trading day period the VWAP of the common stock is greater than or equal to $15.00 per share (the “Second Share Price Performance Milestone”). | 50% of the Earnout Shares if, at any time during the period starting on the Closing Date and ending on the fifth anniversary of the Closing Date, over any twenty (20) trading days within any thirty (30) trading day period the VWAP of the Airship Pubco Common Stock is greater than or equal to $15.00 per share (the “Second Share Price Performance Milestone”). |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Earnout liability | $ 26,618,278 | $ 5,133,428 | $ 0 |
Total liabilities measured at fair value | 38,338,097 | 8,626,779 | |
Warrant liability (Private Warrants) | 203,078 | 21,557 | |
Senior Secured Convertible Promissory Notes | 4,204,743 | 2,825,366 | $ 0 |
Warrant liability (Public Warrants) | 7,311,998 | 646,428 | |
Fair Value Inputs Level 2 [Member] | |||
Earnout liability | 0 | 0 | |
Total liabilities measured at fair value | 203,078 | 21,557 | |
Warrant liability (Private Warrants) | 203,078 | 21,557 | |
Senior Secured Convertible Promissory Notes | 0 | 0 | |
Warrant liability (Public Warrants) | 0 | 0 | |
Fair Value Inputs Level 1 [Member] | |||
Earnout liability | 0 | 0 | |
Total liabilities measured at fair value | 7,311,998 | 646,428 | |
Warrant liability (Private Warrants) | 0 | 0 | |
Senior Secured Convertible Promissory Notes | 0 | 0 | |
Warrant liability (Public Warrants) | 7,311,998 | 646,428 | |
Fair Value Inputs Level 3 [Member] | |||
Earnout liability | 26,618,278 | 5,133,428 | |
Total liabilities measured at fair value | 30,823,021 | 7,958,794 | |
Warrant liability (Private Warrants) | 0 | 0 | |
Senior Secured Convertible Promissory Notes | 4,204,743 | 2,825,366 | |
Warrant liability (Public Warrants) | $ 0 | $ 0 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 21, 2023 | |
Expected term (in years) | 7 days | ||
Dividend yield | 0% | 0% | |
Expected volatility | 53.70% | 62.50% | |
Monte Carlo Simulation [Member] | |||
Stock price | $ 1.70 | $ 6.49 | |
Expected term (in years) | 4 years 11 months 23 days | 5 years 3 days | |
Dividend yield | 0% | 0% | |
Expected volatility | 41.50% | 13.90% | |
Risk-free interest rate | 3.84% | 3.87% | |
Monte Carlo Models [Member] | |||
Stock price | $ 6.59 | $ 1.70 | $ 1.70 |
Expected term (in years) | 4 years 9 months 18 days | 5 years | 5 years |
Dividend yield | 0% | 0% | 0% |
Expected volatility | 69.30% | 75.90% | 76.40% |
Risk-free interest rate | 4.23% | 3.84% | 3.87% |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 2) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Dec. 21, 2023 | |
Effective discount rate | 13.07% | 12.95% | |
Expected volatility | 53.70% | 62.50% | |
Stock price | $ 6.59 | $ 1.70 | |
Dividend yield | 0% | 0% | |
Expected term (in years) | 7 days | ||
Minimum [Member] | |||
Expected term (in years) | 5 months 23 days | 14 days | |
Maximum [Member] | |||
Expected term (in years) | 9 months | 22 days |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 21, 2023 | Dec. 31, 2022 | |
Earnings per Share | |||||
Net Income (loss) | $ (31,964,469) | $ (1,712,176) | $ 16,371,134 | $ 16,371,134 | $ (487,493) |
Weighted average shares outstanding basic | 22,898,487 | 22,812,048 | 13,671,376 | 13,387,344 | |
Add: dilutive effect of stock options, SARs and Airship warrants | 6,719,287 | ||||
Weighted average shares outstanding diluted | 20,390,663 | 13,387,344 | |||
Income (loss) per share basic | $ 1.20 | $ (0.04) | |||
Income (loss) per share Diluted | $ 0.80 | $ (0.04) |
Earnings per Share (Details 1)
Earnings per Share (Details 1) - shares | Dec. 31, 2023 | Dec. 21, 2022 |
Earnings per Share | ||
Public Warrants | 16,184,612 | |
Private Warrants | 515,000 | |
Convertible debt | 452,240 | |
Warrants | 53,800 | |
Outstanding stock options | 4,162,067 | |
SARs | 1,758,100 | |
Diluted shares outstanding | 17,205,652 | 5,920,167 |
Earnings per Share (Details Nar
Earnings per Share (Details Narrative) | Dec. 31, 2023 shares |
Earnings per Share | |
Earnout Shares are excluded | 5,000,000 |
Reverse Recapitalization (Det_3
Reverse Recapitalization (Details Narrative) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Reverse Recapitalization | |
Net proceeds | $ 2.8 |
Net of transaction costs | $ 6.6 |
Private Placement and Public _3
Private Placement and Public Warrants (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | Feb. 02, 2024 | |
Exercise price of warrants | $ 10.148 | $ 3.69717 | |
Warrant outstanding (in Shares) | 19,364,014 | 19,443,314 | |
Warrant, Initial Fair Value | $ 7,515,076 | ||
Public Warrant [Member] | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | |
Warrant, Expiration date | Dec. 21, 2028 | Dec. 21, 2028 | |
Warrant outstanding (in Shares) | 16,159,112 | 16,184,612 | |
Warrant, Initial Fair Value | $ 7,311,998 | $ 1,942,153 | |
Private Placement [Member] | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | |
Warrant, Expiration date | Dec. 21, 2028 | Dec. 21, 2028 | |
Warrant outstanding (in Shares) | 515,000 | 515,000 | |
Warrant, Initial Fair Value | $ 203,078 | $ 66,952 |
Private Placement and Public _4
Private Placement and Public Warrants (Details Narrative) - shares | Mar. 31, 2024 | Dec. 31, 2023 |
Warrant outstanding (in Shares) | 16,159,112 | |
Warrant received (in Shares) | 515,000 | |
Public Warrant [Member] | ||
Warrant outstanding (in Shares) | 16,159,112 | |
Warrant received (in Shares) | 515,000 | 515,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | 1 Months Ended | |||||||||
Mar. 05, 2024 USD ($) shares | Mar. 03, 2024 USD ($) $ / shares shares | Feb. 02, 2024 USD ($) $ / shares shares | Jul. 13, 2023 | Jan. 02, 2021 | May 02, 2019 | Mar. 21, 2024 USD ($) shares | Feb. 29, 2024 USD ($) ft² shares | Mar. 31, 2024 shares | Mar. 01, 2024 $ / shares shares | |
Subsequent Event, Description | Platinum in the principal amount of $2,000,000 on June 22, 2023. The repayment amount of the Platinum Convertible Note is 110% of the principal amount ($2,200,000) and matures in full on June 22, 2024. Interest accrues on the Platinum Convertible Note at the rate of 6% per annum calculated on the basis of 360 days. At the option of Platinum, the principal amount of the Platinum Convertible Note plus any accrued but unpaid interest is convertible into shares of Common Stock at a conversion price per share equal to the lower of (i) $3.69717, subject to appropriate adjustment as provided in the Platinum Convertible Note, and (ii) 65% of the VWAP for the Common Stock for the preceding five trading days immediately prior to any conversion, but in no event below $2.27518, subject to appropriate adjustment as provided in the Platinum Convertible Note | |||||||||
Proceeds from issuance of senior secured convertible promissory notes | $ 350,000 | |||||||||
Repayment amount of note | $ 250,000 | $ 25,500 | ||||||||
Maturity date of note | Mar. 03, 2029 | Jun. 22, 2028 | ||||||||
Options to purchase shares of Common Stock | shares | 19,364,014 | 25,000 | ||||||||
Lease expiration date | Oct. 31, 2027 | Feb. 28, 2024 | Apr. 30, 2024 | Jul. 29, 2024 | ||||||
Convertible common shares | shares | 70,502 | 189,334 | 15,000 | 137,367 | ||||||
Common Stock outstanding beneficial percentage rate | 4.99% | |||||||||
Convertible promissory note principal amount | $ 2,000,000 | |||||||||
Convertible promissory note principal percentage | 110% | |||||||||
Platinum forfeited shares | shares | 51,967 | |||||||||
Granted stock option | shares | 98,702 | 200,000 | ||||||||
Exercise price for shares issued | $ / shares | $ 1.65 | $ 3.69717 | ||||||||
Lease area | ft² | 3,621 | |||||||||
Lease monthly payment | $ 6,488 | |||||||||
Mr. Scott [Member] | ||||||||||
Exercise price for shares issued | $ / shares | $ 1.49 | |||||||||
Base salary annually | $ 250,000 |