v3.25.4
Stockholders Deficit
 12 Months Ended
Dec. 31, 2025
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.

 

Preferred Stock

 

As of December 31, 2025 and 2024, there were no shares of preferred stock outstanding.

 

Common Stock 

 

As of December 31, 2025 and 2024, there were 34,368,162 and 30,588,413 shares of common stock outstanding, respectively.

 

Year Ended December 31, 2025

 

During the year ended December 31, 2025, the Company had the following issuances of equity securities:

 

As of September 30, 2024, the Company determined the First Operating Performance Milestone of the earnout shares was achieved resulting in the vesting of 1,250,000 shares, of which 1,160,906 shares of the Company’s common stock were issued to applicable personnel on January 7, 2025.

 

During the year ended December 31, 2025, investors exercised public warrants for 13,502 shares of the Company’s common stock at $4.50 per share, and the Company received proceeds of $60,759.

 

On October 8, 2025, the Company entered into warrant exercise inducement offer letter with the holder of its existing common stock warrants and issued 2,162,162 shares of its common stock  to exercise its existing warrants at the existing exercise price of $4.50 per share, in exchange for our agreement to issue new common stock warrants to purchase 2,702,702 shares of common stock at an exercise price per share of $6.20. The aggregate gross proceeds from the exercise of the existing warrants were approximately $9,729,729, before deducting financial advisory fees of $231,593.

 

During the year ended December 31, 2025, the Company issued an aggregate of 443,179 shares of common stock and received $149,288 upon the exercise of stock options at a weighted average exercise price of $0.34 per share.

 

Year Ended December 31, 2024

 

During the year ended December 31, 2024, the Company had the following 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.

 

On May 16, 2024, the Company issued 50,000 shares of common stock to Pamria LLC for consulting and investor relations services.

 

On June 22, 2024, the Company entered into an extension agreement with Platinum Capital Partners Inc. to extend the maturity date of the Platinum convertible note to June 22, 2025. In consideration for entering into the extension agreement, the Company issued to Platinum 232,360 shares of common stock in payment of all interest and extension fees through June 22, 2025.

 

On September 3, 2024, the Company issued 2,882,883 shares of common stock at a combined price of $2.775 per share related to the closing of a public offering.

 

On September 13, 2024, the Company issued an additional 86,198 shares of common stock related to the conversion of notes at $2.65 per share.

 

During the year ended December 31, 2024, the Company issued 879,051 shares of common stock related to the conversion of $2,000,000 of the Platinum senior secured convertible promissory note at $2.275 per share.

 

During the year ended December 31, 2024, the Company issued an aggregate of 415,218 shares of common stock upon the exercise of stock options at $0.58 weighted average price per share.

 

During the year ended December 31, 2024, the Company issued an aggregate of 163,669 shares of common stock upon the exercise of various warrants at $4.92 weighted average price per share.

 

On December 24, 2024, the Company issued 2,882,883 shares of common stock upon the exercise of warrants at an exercise price of $2.65 per share related to a warrant inducement agreement.

 

2023 Equity Incentive Plan 

 

The Company has adopted the 2023 Equity Incentive Plan (the “2023 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 2022 Combined Incentive and Non-Qualified Stock Option Plan (the “2022 Plan”) is no longer 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.

 

On December 11, 2025, the Company’s shareholders approved the Airship AI Holdings, Inc. 2023 Amended and Restated Equity Incentive Plan and increased the number of shares of the Company’s common stock authorized for issuance pursuant to awards granted under the plan by 2,000,000 shares.

 

The aggregate number of shares of common stock initially reserved and available for grant and issuance under the 2023 Plan is 4,000,000. 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 aggregate number of shares of common stock reserved for grant and issuance under the 2023 Plan is 4,768,585  as of December 31, 2025. The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost is recognized over the period which an employee is required to provide service in exchange for the award-the requisite service period.

 

The Company had the following stock option activity during the years ended December 31, 2025 and 2024:

 

Year Ended December 31, 2025

 

During the year ended December 31, 2025, the Company granted stock options to employees to purchase an aggregate of 1,816,000 shares of common stock with a weighted average exercise price of $3.39 per share, which vest primarily quarterly over four years and expire by December 2035.

 

During the year ended December 31, 2025, two employees forfeited stock options to purchase an aggregate of 107,500 shares of common stock with a weighted average exercise price of $2.95 per share.

 

During the year ended December 31, 2025, the Company issued an aggregate of 443,179 shares of common stock and received $149,288 upon the exercise of stock options at a weighted average exercise price of $0.34 per share.

 

Year Ended December 31, 2024

 

During the year ended December 31, 2024, the Company granted stock options to employees to purchase an aggregate of 1,590,000 shares of common stock with a weighted average exercise price of $3.47 per share and which vest primarily quarterly over four years and expire March to August 2034.

 

During the year ended December 31, 2024, five employees voluntarily cancelled stock options to purchase an aggregate of 300,000 shares of common stock with a weighted average exercise price of $6.85 per share. Another employee forfeited 11,812 stock options with an exercise price of $1.64 per share.

 

During the year ended December 31, 2024, the Company issued an aggregate of 415,218 shares of common stock and received $240,567 upon the exercise of stock options at a weighted average exercise prices of $0.58 per share.

 

Stock option activity for the years ended December 31, 2025 and 2024 were as follows:

 

 

 

Options

 

 

Weighted Average

 

 

 

Shares

 

 

Exercise Price

 

Outstanding as of January 1, 2024

 

 

4,664,589

 

 

$0.54

 

Granted

 

 

1,590,000

 

 

 

3.47

 

Exercised

 

 

(415,218)

 

 

(0.58)

Forfeited

 

 

(311,812)

 

 

(6.65)

Outstanding as of January 1, 2025

 

 

5,527,559

 

 

 

1.04

 

Granted

 

 

1,816,000

 

 

 

3.39

 

Exercised

 

 

(443,179)

 

 

(0.34)

Forfeited

 

 

(107,500)

 

 

(2.95)

Outstanding as of December 31, 2025

 

 

6,792,880

 

 

$1.68

 

 

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2025:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

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

 

 

 

2,067,033

 

 

 

2.04

 

 

$0.12

 

 

 

2,067,033

 

 

$0.12

 

 

 

2.04

 

 

0.57

 

 

 

879,011

 

 

 

1.29

 

 

 

0.57

 

 

 

879,011

 

 

 

0.57

 

 

 

1.29

 

 1.49-1.65

 

 

 

1,086,086

 

 

 

6.53

 

 

 

1.64

 

 

 

739,376

 

 

 

1.64

 

 

 

6.78

 

 2.86-3.06

 

 

 

1,789,750

 

 

 

9.36

 

 

 

2.98

 

 

 

377,070

 

 

 

2.93

 

 

 

9.05

 

 3.27-4.47

 

 

 

971,000

 

 

 

9.51

 

 

 

3.68

 

 

 

242,560

 

 

 

3.48

 

 

 

9.31

 

 

 

 

 

 

6,792,880

 

 

 

5.66

 

 

$1.68

 

 

 

4,305,050

 

 

$0.91

 

 

 

3.73

 

 

There were 6,792,880 options to purchase common stock at a weighted average exercise price of $1.68 per share outstanding as of December 31, 2025 under the 2023 Plan and the 2022 Plan. The Company recorded $1,103,325 and $570,614 of compensation expense, net of related tax effects, relative to stock options for the years ended December 31, 2025 and 2024, respectively, in accordance with ASC 718. As of December 31, 2025, there was $3,824,252 of total unrecognized costs related to employee granted stock options that were not vested. These costs are expected to be recognized over a period of approximately 3 years.

 

In August 2024, the Company cancelled out-of-the money options to exercise 300,000 shares held by current employees and replaced them with 525,000 options at lower exercise prices. The new options were subject to the same service-based vesting schedule as the original options. The Company accounted for the replacement options as a modification of the terms of the cancelled option awards and in accordance with ASC 718-20-35-2A, the Company will recognize additional $205,879 stock compensation expense over the remaining vesting period as the incremental cost measured as the excess of the fair value of the replaced options on the grant date using the Black-Scholes-Merton option pricing model over the fair value of the cancelled option award at the cancellation date.

 

The significant weighted-average assumptions relating to the valuation of the Company’s stock option grants were as follows for the years ended December 31, 2025 and 2024:

 

Assumptions

 

12/31/2025

 

 

12/31/2024

 

Exercise price

 

$

 3.06-3.28

 

 

$

 1.49-7.61

 

Dividend yield

 

 

0%

 

 

0%

Expected life

 

4 years

 

 

4 years

 

Expected volatility

 

57.1%-61.2

%

 

57.1%-69.3

%

Risk free interest rate

 

3.605%-3.635

%

 

4.16%-4.31

%

 

There were stock incentive plan awards outstanding at December 31, 2025 totaling 6,792,880 shares with an aggregate intrinsic value of $9,124,344.

 

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 stock appreciation rights (“SARs”), which was later adjusted to 2,637,150 SARs after the Merger.

 

As of December 31, 2025 and 2024, there were 1,758,000 SARs outstanding with a base value of $0.12 and January 2028 expiration. There were no SAR grants during the years ended December 31, 2025 and 2024.

 

Warrants to Purchase Common Stock

 

See Note 11 for public and private placement warrants assumed after the Merger. The summary table below of outstanding warrants as of December 31, 2024 and 2023 include public and private placement warrants in Note 11.

 

Year Ended December 31, 2025

 

The Company had the following warrant activity during the year ended December 31, 2025:

 

During the year ended December 31, 2025, investors exercised public warrants for 13,502 shares of the Company’s common stock at $4.50 per share, and the Company received proceeds of $60,759.

 

On October 8, 2025, the Company entered into warrant exercise inducement offer letter with the holder of its existing common stock warrants and issued 2,162,162 shares of its common stock to exercise its existing warrants at the existing exercise price of $4.50 per share, in exchange for our agreement to issue new common stock warrants (“Inducement Warrants”) to purchase 2,702,702 shares of common stock at an exercise price per share of $6.20. The aggregate gross proceeds from the exercise of the existing warrants were approximately $9,729,729, before deducting financial advisory fees. The Inducement Warrants are immediately exercisable and will be exercisable for five years from the date of issuance.

 

In accordance with ASC Topic 815 guidance on equity classified warrant modifications, the modification is consistent with the equity issuance classification under that guidance as the reason for the modification was to induce the holders of the warrants to cash exercise their warrants, which raised equity capital and generated gross proceeds of approximately $9.7 million. As the existing warrants and the Inducement Warrants issued on October 8, 2025 were classified as equity instruments before and after the exchange, and as the exchange is directly attributable to an equity offering, the Company recognized the effect of the modification of approximately $6.2 million (fair value of Inducement Warrants) as an equity issuance cost. The Company determined the fair value using the Black-Scholes-Morton pricing model with the following assumptions: stock price $5.14, volatility of 61.2%, risk-free interest rate of 3.74% and expected term of four years.

 

Year Ended December 31, 2024

 

The Company had the following warrant activity during the year ended December 31, 2024:

 

In connection with the issuance of the Platinum convertible note, the Company 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. On March 18, 2024, Platinum exercised the Platinum warrant and received 137,367 shares of common stock. Platinum forfeited 51,967 shares.

 

On September 3, 2024 the Company issued warrants to purchase up to 2,882,883 shares of its common stock. The warrants have an exercise price of $2.65 per share, are exercisable immediately upon issuance and will expire five years following the date of issuance. On December 24, 2024, the 2,882,883 warrants were exercised.

 

On September 3, 2024 the Company issued warrants to purchase up to 216,216 shares of its common stock. The warrants have an exercise price of $3.47 per share, are exercisable immediately upon issuance and will expire five years following the date of issuance.

 

On September 27, 2024, the Company issued warrants to purchase up to 220,000 shares of common stock. The warrants have an exercise price of $2.36 per share, are exercisable immediately upon issuance and will expire in five years following the date of issuance.

 

On December 24, 2024, the Company entered into a warrant exercise inducement agreement with a holder of existing common stock warrants exercisable for an aggregate of 2,882,883 shares of common stock at the existing exercise price of $2.65 per share, in exchange for the issuance of new common stock warrants to purchase 2,162,162 shares of common stock at an exercise price per share of $4.50. The investor agreed to exercise the existing 2,882,883 for cash resulting in aggregate gross proceeds of approximately $7.6 million with approximately $7.4 million in net proceeds after deducting advisory fees.  The Inducement Warrants are immediately exercisable and will be exercisable for five years from the date of issuance.

 

In accordance with ASC Topic 815 guidance on equity classified warrant modifications, the modification is consistent with the equity issuance classification under that guidance as the reason for the modification was to induce the holders of the September 3, 2024 existing warrants to cash exercise their warrants, which raised equity capital and generated net proceeds of approximately $7.4 million. As the warrants issued on September 3, 2024 and December 24, 2024 were classified as equity instruments before and after the exchange, and as the exchange is directly attributable to an equity offering, the Company recognized the effect of the modification of approximately $6.5 million (fair value of Inducement Warrants) as an equity issuance cost. The Company determined the fair value using the Black-Scholes-Morton pricing model with the following assumptions: stock price $5.54, volatility of 69%, risk-free interest rate of 4.36% and expected term of three years.

 

During the year ended December 31, 2024, various investors exercised warrants for 3,046,552 shares of the Company’s common stock at a weighted average exercise price of $2.77 per share, and the Company received net proceeds of $7,704,540.

 

Warrant activity for the years ended December 31, 2025 and 2024 was as follows:

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Average

 

 

 

 

 

 

Exercise

 

 

 

Warrants

 

 

Price

 

Outstanding January 1, 2024

 

 

19,443,314

 

 

$4.15

 

Issued

 

 

5,616,795

 

 

 

3.41

 

Exercised

 

 

(3,046,552)

 

 

(2.77)

Forfeited

 

 

(51,867)

 

 

(3.70)

Outstanding January 1, 2025

 

 

21,961,690

 

 

 

4.13

 

Issued

 

 

2,702,702

 

 

 

6.20

 

Exercised

 

 

(2,175,564)

 

 

(4.50)

Forfeited

 

 

-

 

 

 

-

 

Outstanding at December 31, 2025

 

 

22,488,828

 

 

$4.35

 

 

A summary of the warrants outstanding as of December 31, 2025 were as follows:

  

 

 

 

December 31, 2025

 

 

 

 

Weighted

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

Average

 

 

Average

 

 

 

 

 

Average

 

Number of

 

 

Remaining

 

 

Exercise

 

 

Shares

 

 

Exercise

 

Warrants

 

 

Life (In Years)

 

 

Price

 

 

Exercisable

 

 

Price

 

 

2,689,902

 

 

 

2.45

 

 

$1.77

 

 

 

2,689,902

 

 

$1.77

 

 

220,000

 

 

 

3.75

 

 

 

2.36

 

 

 

220,000

 

 

 

2.36

 

 

216,216

 

 

 

3.62

 

 

 

3.47

 

 

 

216,216

 

 

 

3.47

 

 

16,660,008

 

 

 

2.98

 

 

 

4.50

 

 

 

16,660,008

 

 

 

4.50

 

 

2,702,702

 

 

 

4.63

 

 

 

6.20

 

 

 

2,702,702

 

 

 

6.20

 

 

22,488,828

 

 

 

3.25

 

 

$4.35

 

 

 

22,488,828

 

 

$4.35

 

 

The significant weighted average assumptions relating to the valuation of the Company’s warrants issued for the years ended December 31, 2025 and 2024 were as follows:  

  

 

 

12/31/2025

 

 

12/31/2024

 

Dividend yield

 

 

0%

 

 

0%

Exercise price

 

$6.20

 

 

 2.36 - 4.50

 

Expected life

 

4 years

 

 

4 -5 years

 

Expected volatility

 

 

61.2%

 

 

69%

Risk free interest rate

 

 

3.74%

 

3.77% - 4.36

%

 

There were warrants outstanding and exercisable at December 31, 2025 totaling 22,488,828 shares with an aggregate intrinsic value of $3,129,290.

 

Earnout Liability

 

See Note 13 for common stock shares related to earnout liability.