Financial Performance - Q3 2025 net revenues were $1.2 million, with a gross profit of $0.6 million and a gross margin of 51%[4] - Operating loss for the quarter was $2.9 million, primarily due to increased investments in sales and marketing[4] - Net income for Q3 2025 was $6.4 million, or $0.20 per basic share, mainly from noncash income of $8.8 million[4] - Net revenues for the nine months ended September 30, 2025, were $6,360,807, compared to a net loss of $7,288,520 for the same period in 2024[20] - Gross profit for the nine months ended September 30, 2025, was $4,371,357, while total operating expenses were $10,974,376, resulting in an operating loss of $6,603,019[18] - Basic net income per share for the nine months ended September 30, 2025, was $0.20, while diluted net income per share was $0.15[18] - The total comprehensive income for the nine months ended September 30, 2025, was $6,353,398, compared to a loss of $7,279,182 in 2024[18] Cash and Cash Equivalents - Cash and cash equivalents stood at $5.8 million as of September 30, 2025, with an additional $9.7 million raised from warrant exercises post-quarter[4] - Cash and cash equivalents at the end of the period were $5,755,661, down from $11,414,830 at the beginning of the period[21] - The company experienced a net decrease in cash and cash equivalents of $5,651,760 for the nine months ended September 30, 2025[21] - The net cash used in operating activities for the nine months ended September 30, 2025, was $4,502,421, compared to $4,398,285 in 2024[21] Business Development and Opportunities - The validated pipeline at the end of Q3 2025 was approximately $166 million, with expected awards over the next 18-24 months[4] - Backlog as of September 30, 2025, was $11 million, representing firm contracts to be shipped and invoiced through 2025 and early 2026[4] - The company closed approximately $11 million in new opportunities by the end of Q3 2025, most scheduled for shipment in Q4 2025 and early 2026[6] - The transition to a partner-driven sales model is showing progress, with ongoing pilots and success in flagship accounts across multiple verticals[9] Research and Development - Research and development expenses for the nine months ended September 30, 2025, were $2,213,182, compared to $2,471,872 for the same period in 2024[18] - The company plans to release new Outpost AI product offerings and expand custom trained AI models for emerging edge analytic workflows[8] Other Income and Expenses - The company reported a total other income of $12,963,826 for the nine months ended September 30, 2025, compared to a loss of $5,274,818 in 2024[18] - The company reported a gain from the change in fair value of earnout liability of $6,414,894 for the nine months ended September 30, 2025[18] Legislative and Funding Context - The Big Beautiful Bill includes over $70 billion in supplemental funding for U.S. Customs and Border Protection, with $6.2 billion earmarked for border security technology[6]

Financial Performance - For the three months ended September 30, 2025, net revenues decreased by $1,691,000 to $1,177,000, a decline of 59.0% compared to $2,868,000 in the same period of 2024 [182]. - Gross profit for the same period was $603,000, down 72.0% from $2,154,000 in Q3 2024 [182]. - Operating loss for the three months ended September 30, 2025, was $2,867,000, an increase of 80.7% compared to a loss of $1,587,000 in Q3 2024 [182]. - Net revenues for the nine months ended September 30, 2025 decreased by $11,017,000 to $8,827,000, a decline of 55.5% compared to $19,844,000 for the same period in 2024 [192]. - Operating loss for the nine months ended September 30, 2025 was $6,603,000, compared to an operating loss of $2,014,000 for the same period in 2024, an increase of $4,589,000 [193]. - Net income for the nine months ended September 30, 2025 was $6,361,000, compared to a net loss of $7,289,000 for the same period in 2024, representing a turnaround of $13,650,000 [201]. - Other income for the nine months ended September 30, 2025 was $12,964,000, compared to other expense of $5,275,000 for the same period in 2024, an increase of $18,239,000 [199]. Expenses - Research and development expenses for the three months ended September 30, 2025, were $753,000, a 29.9% decrease from $1,074,000 in the same period of 2024 [182]. - Research and development expenses for the nine months ended September 30, 2025 decreased by $259,000 to $2,213,000, a decline of 10.5% compared to $2,472,000 for the same period in 2024 [197]. - Selling, general and administrative expenses for the nine months ended September 30, 2025 increased by $69,000 to $8,761,000, a slight increase of 0.8% compared to $8,830,000 for the same period in 2024 [198]. Backlog and Pipeline - As of October 6, 2025, the backlog was approximately $11 million, representing firm fixed price contracts awarded in Q3 2025 [157]. - The total validated pipeline as of September 30, 2025, was $166 million, consisting of opportunities for AI-driven edge, video, and sensor and data management platforms [158]. Cash Flow and Liquidity - Net cash used in operating activities for the nine months ended September 30, 2025 was $4,502,000, primarily related to net income of $6,361,000 and noncash items of $11,339,000 [204]. - Liquidity assessment indicates no substantial doubt about the company's ability to continue as a going concern, with an accumulated deficit of $68.6 million as of September 30, 2025 [203]. Leases and Commitments - The company entered into a lease for 15,567 square feet of office and warehouse space in Redmond, WA, with a monthly payment of $25,000, expiring on October 31, 2027 [208]. - The company entered into an office lease in Mooresville, North Carolina, for 5,240 square feet with a net monthly payment of $9,105, expiring on January 31, 2028, with a 3% increase in payment starting February 1, 2026 [209]. Accounting and Reporting - The consolidated financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that could differ materially from actual results due to economic uncertainties [212]. - The significant accounting policies have not materially changed from those discussed in the Annual Report for the year ended December 31, 2024 [213]. - The company does not have applicable quantitative and qualitative disclosures about market risk as it is classified as a smaller reporting company [214]. Strategic Focus - The company has historically evaluated its business based on revenue generated from customers and plans to develop more advanced performance indicators as it grows [175]. - The company aims to expand its operational footprint and increase sales of lower margin solutions while focusing on AI-driven software applications [177]. Fair Value Adjustments - The company reported a gain from the change in fair value of the earnout liability of $3,893,000, a decrease of 29.4% from $5,512,000 in the previous year [182]. - The gain from the change in fair value of warrant liability was $5,331,000, an increase of 115.7% compared to $2,471,000 in Q3 2024 [182].

Financial Performance - Net revenues for the three months ended June 30, 2025, decreased by $4,254,000 to $2,147,000, a decline of 66.5% compared to $6,401,000 for the same period in 2024, primarily due to the shipment of over $13 million in purchase orders from federal government agency customers in the prior year [166]. - Gross profit for the three months ended June 30, 2025, was $1,533,000, down 66.0% from $4,506,000 in the same period of 2024 [164]. - Net loss for the three months ended June 30, 2025 was $23,757,000 compared to a net income of $18,462,000 for the same period in 2024, primarily due to noncash expenses of $22,264,000 [27]. - Net revenues for the six months ended June 30, 2025 decreased by $9,326,000 to $7,650,000, a decline of 54.9% compared to $16,976,000 for the same period in 2024, attributed to lower purchase orders from federal government agencies [175]. - Gross profit for the six months ended June 30, 2025 was $3,768,000, down 47.2% from $7,134,000 in 2024 [175]. - Other income for the six months ended June 30, 2025 was $3,687,000, a significant improvement from an expense of $13,076,000 in 2024, primarily due to gains from changes in fair value of earnout and warrant liabilities [181]. - The accumulated deficit as of June 30, 2025 was $75.0 million, reflecting the company's ongoing financial challenges [186]. Expenses - Cost of net revenues decreased by $1,281,000 to $614,000, a reduction of 67.6% compared to $1,895,000 for the three months ended June 30, 2024, attributed to lower sales and decreased equipment purchases [168]. - Other expense for the three months ended June 30, 2025, was $21,735,000, compared to other income of $17,486,000 in 2024, reflecting a negative variance of 224.3% [166]. - Research and development expenses increased by $38,000 to $741,000 for the three months ended June 30, 2025, compared to $703,000 in 2024, due to higher product development costs [169]. - Selling, general and administrative expenses decreased slightly by $13,000 to $2,814,000 for the three months ended June 30, 2025 [169]. - Cost of net revenues for the six months ended June 30, 2025 decreased by $5,960,000 to $3,882,000, a reduction of 60.6% compared to $9,842,000 for the same period in 2024 [178]. - Research and development expenses for the six months ended June 30, 2025 increased by $62,000 to $1,460,000, driven by product development efforts in the U.S. and Taiwan [179]. - Selling, general and administrative expenses for the six months ended June 30, 2025 decreased by $118,000 to $6,044,000, showing cost control measures [180]. Future Outlook - The company anticipates a shift towards cloud-based software solutions, which is expected to create additional subscription revenue in the future [158]. - The company is focused on expanding its edge AI-based solutions, which began sales in late 2022, to drive efficiency and cost savings for customers [160]. - The company has no substantial doubt about its ability to continue as a going concern, based on its current cash position and operations projected through August 2026 [186]. Operational Challenges - The company faces challenges from geopolitical supply-chain constraints, particularly regarding timely production and delivery of products from Taiwan [165]. - Operating loss for the three months ended June 30, 2025, was $(2,022,000), a significant increase in loss of 307.2% compared to a profit of $976,000 in 2024 [164]. - Net cash used in operating activities for the six months ended June 30, 2025 was $3,919,000, compared to $4,147,000 for the same period in 2024, indicating improved cash management despite ongoing losses [187].

Financial Performance - Q1 2025 net revenues were $5.5 million, with a gross profit of $2.2 million and a gross margin of 40%[4] - Operating loss for the quarter was $1.7 million, attributed to increased stock-based compensation and investments in sales and marketing[4] - Net income for Q1 2025 was $23.7 million, or $0.75 per basic share, primarily due to non-cash income of $25.4 million[4] - Net revenues for the three months ended March 31, 2025, were $5,503,028, a decrease of 48.0% compared to $10,575,015 for the same period in 2024[22] - Gross profit for the three months ended March 31, 2025, was $2,235,004, down from $2,628,127 in the prior year, reflecting a gross margin of 40.5%[22] - Operating loss increased to $(1,714,357) for the three months ended March 31, 2025, compared to $(1,402,533) in the same period of 2024[22] - Net income for the three months ended March 31, 2025, was $23,707,985, a significant improvement from a net loss of $(31,964,469) in the prior year[22] - Basic net income per share for the three months ended March 31, 2025, was $0.75, compared to a loss of $(1.40) per share in the same period of 2024[22] - Total other income for the three months ended March 31, 2025, was $25,422,342, compared to an expense of $(30,561,936) in the same period of 2024[22] Cash and Liquidity - Cash and cash equivalents were $8.8 million as of March 31, 2025, down from $11.4 million at the end of 2024[19] - Cash and cash equivalents at the end of the period were $8,812,178, down from $1,725,817 at the end of the same period in 2024[24] - Net cash used in operating activities for the three months ended March 31, 2025, was $(2,097,844), compared to $(1,695,084) in the prior year[24] Business Outlook and Strategy - The total validated pipeline at the end of the quarter was approximately $135 million, with expected award timeframes throughout the next 18-24 months[4] - The company anticipates 30% revenue growth and positive cash flow for calendar year 2025, supported by a strong pipeline and improving gross profit margins[7] - New product offerings, including Outpost AI and advanced computer vision analytics, are expected to launch in 2025[11] - The company is focused on expanding into commercial and retail markets, particularly against organized retail crime[7] - Backlog as of March 31, 2025, was $2.0 million, representing firm fixed-price contracts awarded recently[4] - The company entered into an At the Market Offering Agreement to sell shares of common stock up to a maximum of $25 million[7] Expenses - Research and development expenses increased to $719,382 for the three months ended March 31, 2025, from $695,366 in the prior year[22] - Selling, general and administrative expenses decreased slightly to $3,229,979 for the three months ended March 31, 2025, from $3,335,294 in the same period of 2024[22]

Financial Performance - For the three months ended March 31, 2025, net revenues decreased by $5,072,000 to $5,503,000, a decline of 48.0% compared to $10,575,000 for the same period in 2024, primarily due to significant shipments of over $13 million to federal government agency customers in the prior year [170]. - Gross profit for the three months ended March 31, 2025, was $2,235,000, down 15.0% from $2,628,000 in 2024 [170]. - The company reported an operating loss of $1,714,000 for the three months ended March 31, 2025, which is a 22.3% increase in loss compared to $1,402,000 in 2024 [170]. - Net income for the period was $23,708,000, a turnaround from a net loss of $31,964,000 in the same quarter of the previous year, representing a 174.2% improvement [170]. - Net income for the three months ended March 31, 2025 was $23,708,000, a significant improvement compared to a net loss of $31,964,000 for the same period in 2024 [177]. Expenses - Cost of net revenues for the same period decreased by $4,679,000 to $3,268,000, a reduction of 58.9% compared to $7,947,000 in 2024, attributed to lower sales and decreased equipment purchases [172]. - Research and development expenses increased by $24,000 to $719,000, reflecting higher product development costs compared to $695,000 in the previous year [173]. - Selling, general and administrative expenses decreased by $105,000 to $3,230,000, influenced by reduced professional service and insurance expenses, offset by increased stock-based compensation and sales and marketing expenses [174]. Other Income and Gains - Other income for the period included a gain from the change in fair value of earnout liability of $9,824,000, compared to a loss of $21,485,000 in the prior year, marking a 145.7% improvement [170]. - The total income (other expense), net for the three months ended March 31, 2025, was $25,422,000, a significant increase of 183.2% from a loss of $30,562,000 in 2024 [170]. - Other income for the three months ended March 31, 2025 was $25,422,000, compared to other expense of $30,562,000 for the same period in 2024, primarily due to gains from changes in fair value of financial instruments [175]. - Noncash items contributing to net income in Q1 2025 included a gain from change in warrant liability of $15,521,000 and a gain from change in earnout liability of $9,824,000 [177]. Cash Flow and Financing - Net cash used in operating activities for the three months ended March 31, 2025 was $2,098,000, influenced by net income and reductions in working capital [180]. - Net cash used in financing activities for the three months ended March 31, 2025 was $497,000, primarily due to repayment of advances by founders [182]. - The company closed an $8 million public offering in September 2024, generating approximately $7.3 million in net proceeds [179]. Liquidity and Deficits - The company had an accumulated deficit of $8.8 million as of March 31, 2025, indicating ongoing challenges in achieving profitability [179]. - The company evaluated its liquidity and cash position in May 2025, concluding no substantial doubt about its ability to continue as a going concern [179]. Lease and Operational Changes - The company entered into a new lease for 15,567 square feet of office and warehouse space in Redmond, WA, starting October 1, 2023, with a monthly payment of $25,000 [183]. Noncash Charges - Noncash charges for the three months ended March 31, 2024 totaled $30,881,000, significantly impacting the net loss for that period [178].

Stock Performance and Market Conditions - Airship AI's common stock was last reported at $4.48, while the exercise price of public warrants is $4.50, indicating potential challenges for warrant holders to exercise their options [187]. - The stock market for Airship AI's securities may experience significant volatility, which could lead to substantial fluctuations in market price [186]. - The company has limited liquidity in its stock market, which may hinder investors' ability to sell their securities [174]. - The company may become subject to penny stock rules if its common stock price falls below $5.00, which could reduce trading activity and make it difficult for shareholders to sell their shares [191]. - The reduced reporting requirements for smaller reporting companies may make the company's common stock less attractive to investors [193]. Ownership and Control - The concentration of ownership among key stockholders, who control approximately 49.5% of voting power, may limit public investors' influence and could adversely affect stock price [175]. - Anti-takeover provisions in the company's charter could delay or prevent undesirable acquisitions, potentially limiting stockholder opportunities to receive a premium for their shares [196]. - The company’s charter requires that certain stockholder litigation matters be brought in the Court of Chancery of the State of Delaware, which may limit stockholders' ability to obtain a favorable judicial forum [197]. - The board of directors has the ability to issue preferred stock without stockholder approval, which could significantly dilute the ownership of a hostile acquirer [198]. - A special meeting of stockholders can only be called by the board of directors or the chairman, potentially delaying stockholder actions [198]. Financial Performance and Liabilities - The company has not capitalized any software development costs for the years ended December 31, 2024, and 2023, indicating a focus on operational expenses until technological feasibility is established [173]. - Airship AI is subject to significant tax liabilities, with potential volatility in tax provisions due to changes in operating structures and tax laws, which could adversely impact financial results [170]. - Changes in tax laws, particularly those enacted by the 2017 Tax Cuts and Jobs Act, may require capitalization of research and experimental expenditures, impacting financial reporting [172]. - The company does not intend to pay cash dividends in the foreseeable future, meaning returns for investors will rely on increases in stock value [185]. Regulatory and Compliance Risks - Compliance with public company regulations may strain resources and divert management's attention from core business activities, affecting overall performance [178]. - The company may incur additional costs if a court finds its choice of forum provision inapplicable, which could harm its business and financial condition [199]. - The company is subject to various risks including loss of strategic relationships, variations in operating results, and competitive pricing pressures [192]. Company Status and Growth Potential - The company will remain a smaller reporting company until the market value of its common stock held by non-affiliates exceeds $250 million or annual revenues exceed $100 million and market value exceeds $700 million [194]. - The company will remain an emerging growth company until it has total annual gross revenue of at least $1.23 billion or issues more than $1.00 billion in non-convertible debt securities during the prior three-year period [195].

Financial Performance - Net revenues for the three months ended September 30, 2024, increased by $484,000 to $2,868,000 compared to $2,384,000 for the same period in 2023, driven by increased product sales[191] - Gross profit for the three months ended September 30, 2024, was $2,154,000, representing a 34.5% increase from $1,602,000 in the same period of 2023[191] - The company reported a net income of $6,214,000 for the three months ended September 30, 2024, compared to a net loss of $1,667,000 in the same period of 2023, marking a 472.8% improvement[191] - Net revenues for the nine months ended September 30, 2024 increased by $11,751,000 to $19,844,000, a growth of 145.2% compared to $8,093,000 for the same period in 2023, driven by increased product sales[198] - Gross profit for the nine months ended September 30, 2024 was $9,288,000, up 127.6% from $4,080,000 in the same period of 2023[198] - Other income for the three months ended September 30, 2024 was $7,801,000, a significant increase from other expense of $438,000 in the same period of 2023[195] Expenses - Research and development expenses decreased by 55.9% to $1,074,000 for the three months ended September 30, 2024, compared to $689,000 in the prior year[191] - Total operating expenses for the three months ended September 30, 2024, were $3,741,000, a decrease of 32.1% from $2,831,000 in the same period of 2023[191] - Research and development expenses for the nine months ended September 30, 2024 increased by $444,000 to $2,472,000, a rise of 21.9% compared to $2,028,000 for the same period in 2023[200] - Selling, general and administrative expenses for the nine months ended September 30, 2024 increased by $762,000 to $8,830,000, a 9.4% increase from $8,068,000 in the prior year[201] Cash Flow and Financing - Net cash used in operating activities for the nine months ended September 30, 2024 was $4,398,000, primarily due to a net loss of $7,289,000[207] - Net cash provided by financing activities for the nine months ended September 30, 2024 was $7,780,000, consisting mainly of proceeds from an offering[209] - The company entered into a Master Loan Agreement providing for additional funding of up to $1,500,000, with an interest rate of 6%[178] Liabilities and Obligations - The fair value of earnout liability increased by $5,512,000 during the three months ended September 30, 2024, compared to no prior gain in the same period[191] - The fair value of warrant liability increased by $2,471,000 during the three months ended September 30, 2024, compared to no prior gain in the same period[191] - The company had an accumulated deficit of $24.8 million as of September 30, 2024, but determined it has no substantial doubt about its ability to continue as a going concern[206] - The company has total contractual cash obligations of $1,138,331, with $359,746 due within one year[215] Lease Agreements - A new lease for 15,567 square feet of office and warehouse space in Redmond, WA, commenced on October 1, 2023, with a monthly payment of $25,000, increasing by 3% annually[215] - The company extended an office lease in Moorestown, North Carolina, for 3,621 square feet, with a net monthly payment of $6,488, extended to February 28, 2025[216] Accounting and Reporting - The company's consolidated financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that could differ materially from actual results[218] - Significant accounting policies have not materially changed from those discussed in the Annual Report for the year ended December 31, 2023[220] - The company does not have applicable quantitative and qualitative disclosures about market risk as it is classified as a smaller reporting company[221]

Financial Performance - Second quarter 2024 net revenues reached $6.4 million, with a gross profit of $4.5 million and a gross margin of 70%[2] - Operating income for the second quarter was $1.0 million, indicating progress towards achieving cash flow positivity for the full year[2] - First half 2024 combined net revenue totaled $17.0 million, representing 128% of the company's total revenue for the full year 2023[1] - Total net revenues for the three months ended June 30, 2024, reached $6,401,031, a significant increase from $2,770,018 in the same period of 2023, representing a growth of approximately 131%[19] - Gross profit for the six months ended June 30, 2024, was $7,134,334, compared to $2,477,616 for the same period in 2023, indicating a year-over-year increase of about 187%[19] - Operating income for the three months ended June 30, 2024, was $976,316, a turnaround from an operating loss of $3,084,512 in the same period of 2023[19] - The company reported a net income of $18,461,995 for the three months ended June 30, 2024, compared to a net loss of $3,103,279 in the same period of 2023[19] Revenue Growth and Pipeline - The total validated pipeline increased to approximately $150 million, including $30 million in new opportunities from a successful pilot for a federal agency[4] - The company anticipates triple-digit revenue growth and positive cash flow for calendar year 2024, supported by a strong pipeline and improving gross profit margins[6] Expenses and Liabilities - Total liabilities increased to $33,271,809 as of June 30, 2024, up from $23,575,140 at the end of 2023, reflecting a rise of approximately 41%[17] - Cash and cash equivalents decreased to $226,750 as of June 30, 2024, from $3,124,413 at the end of 2023, indicating a decline of about 93%[17] - Research and development expenses for the six months ended June 30, 2024, were $1,398,137, slightly higher than $1,339,283 for the same period in 2023[19] - Selling, general, and administrative expenses decreased to $6,162,414 for the six months ended June 30, 2024, down from $5,925,016 in the same period of 2023[19] - The company’s total stockholders' deficit increased to $(27,966,537) as of June 30, 2024, compared to $(17,487,227) at the end of 2023[17] Cash Flow and Financing Activities - Net cash used in operating activities amounted to $(4,146,868) with a decrease of $(737,102) compared to the previous period[21] - Net cash provided by financing activities was $1,240,221, a decrease of $1,419,821 from the previous period[21] - Cash and cash equivalents at the end of the period totaled $226,750, down from $3,124,413 at the beginning of the period[21] - The company recognized a loss from the change in fair value of warrant liability amounting to $5,304,744[21] - The company reported a loss from the change in fair value of earnout liability of $6,607,923[21] - The issuance of common stock for debt conversion was $835,610[21] - The company had a tax payment of $2,410 during the period[21] - The proceeds from convertible promissory notes were $1,984,582[21] - Advances from founders, net, were $800,000, a decrease from $1,100,000 in the previous period[21] - The effect from exchange rate on cash was $8,984[21] Product Development and Partnerships - A new Outpost AI Edge Appliance was announced, featuring an integrated 5G modem for secure data transmission and analytics[5] - Airship AI has onboarded over 25 new law enforcement agencies for its Acropolis software ecosystem, with several in the acquisition or testing phase[5] - The company entered a partnership with T-Mobile U.S. to enhance secure data transmission capabilities for its Outpost AI platform[5] Backlog and Contracts - Backlog as of June 30, 2024, was approximately $2.0 million, expected to be invoiced in the latter half of 2024[3] - The company completed delivery of contracts worth $10.9 million for advanced integrated solutions supporting real-time intelligence operations along U.S. borders[4]

Financial Performance - Net revenues for the three months ended June 30, 2024, increased by $3,631,000 to $6,401,000 compared to $2,770,000 for the same period in 2023, driven by increased product sales [139]. - Gross profit for the three months ended June 30, 2024, increased by 169.3% to $4,506,000 compared to $1,673,000 for the same period in 2023 [139]. - Operating income for the three months ended June 30, 2024, was $976,000, a significant improvement from a loss of $3,084,000 in the same period in 2023, representing a variance of 131.6% [139]. - The company reported a net income of $18,462,000 for the three months ended June 30, 2024, compared to a net loss of $3,103,000 for the same period in 2023, reflecting a variance of 695.0% [139]. - Net revenues for the six months ended June 30, 2024 increased by $11,267,000 to $16,976,000, a 197.4% increase compared to $5,709,000 for the same period in 2023 [143]. - Gross profit for the six months ended June 30, 2024 was $7,134,000, up 187.9% from $2,478,000 in 2023 [144]. - Other income for the three months ended June 30, 2024 was $17,486,000, a significant increase from other expense of $19,000 in 2023 [141]. Expenses - Research and development expenses for the three months ended June 30, 2024, increased by $38,000 to $703,000 compared to $665,000 for the same period in 2023 [140]. - Research and development expenses for the six months ended June 30, 2024 increased by $59,000 to $1,398,000 compared to $1,339,000 in 2023 [144]. - Selling, general and administrative expenses for the six months ended June 30, 2024 increased by $237,000 to $6,162,000 compared to $5,925,000 in 2023 [144]. Liabilities and Cash Position - Total liabilities measured at fair value as of June 30, 2024, amounted to $20,389,999, compared to $8,626,779 as of December 31, 2023 [130]. - Net cash used in operating activities for the six months ended June 30, 2024 was $4,147,000, primarily due to a net loss of $13,502,000 [151]. - As of June 30, 2024, the company had cash of approximately $227,000 and accounts receivable of approximately $3,440,000 [150]. - The accumulated deficit as of June 30, 2024 was $30,979,000, with a working capital deficit of approximately $6,712,000 [150]. Business Developments - The merger with BYTS closed on December 21, 2023, with Airship AI Holdings, Inc. becoming the accounting acquiror under the ticker symbol "AISP" [128]. - The company has begun selling AI-based solutions since late 2022, focusing on transitioning data management and analysis workloads to the edge [134]. - The company plans to modify and develop more advanced performance indicators as it grows and increases its product offerings and customer base [132]. Lease Agreements - The company entered into a lease for 15,567 square feet of office and warehouse space in Redmond, WA, starting October 1, 2023, with a monthly payment of $25,000, expiring on October 31, 2027, and a 3% increase in payment each year thereafter [157]. - A lease extension was made for 3,621 square feet in Moorestown, North Carolina, with a net monthly payment of $6,488, expiring on August 29, 2024 [157]. Accounting Policies - The company does not have any off-balance sheet arrangements that could materially affect its financial condition, revenue, or expenses [158]. - The consolidated financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that may differ from actual results due to economic uncertainties [159]. - Significant accounting policies have not materially changed from those discussed in the Annual Report for the year ended December 31, 2023 [160].

Financial Performance - First Quarter 2024 net revenues reached $10.6 million, representing 84.5% of the Company's full year revenue in 2023[10] - Gross profits for Q1 2024 were $2.6 million, with a gross margin percentage of 25%[11] - The Company reported an operating loss of $1.4 million for Q1 2024, attributed to increased insurance costs and professional fees related to the merger and Nasdaq listing[11] - For Q1 2024, Airship AI reported a net loss of $31,964,469, compared to a net loss of $1,712,176 in Q1 2023, indicating a significant increase in losses year-over-year[32] - The company achieved gross profit of $2,628,127 in Q1 2024, up from $804,279 in Q1 2023, reflecting a gross profit margin improvement[32] - Operating loss for Q1 2024 was $1,402,533, an improvement from an operating loss of $1,702,171 in Q1 2023, despite higher operating expenses[32] - Airship AI's total operating expenses increased to $4,030,660 in Q1 2024 from $2,506,450 in Q1 2023, driven by higher selling, general, and administrative expenses[32] Contracts and Opportunities - Backlog stood at approximately $3.4 million, with a validated pipeline of around $120 million for AI-driven edge, video, and sensor data management solutions[12] - The Company was awarded a $2.35 million contract by the DOJ for the Outpost AI appliance, enhancing public safety and investigative capabilities[12] - Airship AI aims for triple-digit revenue growth and positive cash flow objectives in 2024, supported by strong orders from DHS and DOJ[13] - The company expects triple-digit revenue growth for the full year 2024, supported by ongoing contract momentum and a robust pipeline of opportunities[26] - Airship AI has secured contracts with U.S. and foreign governments for its AI-driven solutions, highlighting strong demand in the homeland security and law enforcement sectors[26] - Airship AI has been awarded a contract by a Singapore government agency, indicating expansion opportunities in the Asia-Pacific region[27] Cash and Liabilities - Cash and cash equivalents were $1.7 million as of March 31, 2024, down from $3.1 million at the end of 2023[20] - Total liabilities increased to approximately $52.7 million as of March 31, 2024, compared to $23.6 million at the end of 2023[20] - Cash and cash equivalents at the end of Q1 2024 were $1,725,817, down from $3,124,413 at the beginning of the period, reflecting a net decrease of $1,401,835[33] Research and Development - Research and development expenses for Q1 2024 were $695,366, slightly up from $674,080 in Q1 2023, indicating continued investment in innovation[32] Events and Engagements - The Company hosted a customer technology week in April 2024, attracting over 65 attendees from DOJ and DHS, leading to new opportunities[4] - The Company plans to release new Outpost AI product offerings and expand custom trained AI models for edge analytic workflows[13] - The company anticipates increased activity around pilot programs initiated in 2023, following the approval of the 2024 federal budget[28]