5. 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, 2025 and filed with the SEC on February 17, 2026.

Preferred Stock

As of June 30, 2026 and December 31, 2025, there were no shares of preferred stock outstanding.

Common Stock 

As of June 30, 2026 and December 31, 2025, there were 34,439,562 and 34,368,162 shares of common stock outstanding, respectively.

Six months Ended June 30, 2026

During the six months ended June 30, 2026, the Company had the following issuances of equity securities:

During the six months ended June 30, 2026, investors exercised warrants for two shares of the Company’s common stock at $4.50 per share, and the Company received proceeds of $10.

During the six months ended June 30, 2026, the Company issued an aggregate of 71,398 shares of common stock and received $56,447 upon the exercise of stock options at exercise prices ranging from $0.12 to $1.64 per share.

Six Months Ended June 30, 2025

During the six months ended June 30, 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 six months ended June 30, 2025, investors exercised warrants for 13,300 shares of the Company’s common stock at $4.50 per share, and the Company received proceeds of $59,850.

During the six months ended June 30, 2025, the Company issued an aggregate of 146,477 shares of common stock and received $57,822 upon the exercise of stock options at exercise prices ranging from $0.12 to $2.64 per share.

2023 Amended and Restated Equity Incentive Plan 

On December 4, 2023, the Company adopted the Airship AI Holdings, Inc. 2023 Equity Incentive Plan, which plan was approved by stockholders at the extraordinary general meeting held on December 19, 2023 in connection with the Merger. On October 15, 2025, the Company adopted the Airship AI Holdings, Inc. 2023 Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”), which increased the number of shares of common stock authorized for issuance pursuant to awards granted thereunder by 2,000,000 shares. The Equity Incentive Plan was approved by the Company’s stockholders at its annual meeting held on December 11, 2025.

The aggregate number of shares of common stock issued under the  Equity Incentive Plan is 7,340,382. 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, 2023 and ending on (and including) January 1, 2032, in an amount equal to 2.0% of the total number of shares of common stock outstanding on December 31 of the preceding year; provided, however, that the Company’s Board of Directors may act prior to January 1 of a given year to provide that the increase for such year will be a lesser number of shares of common stock. The aggregate number of shares of common stock reserved for grant and issuance under the Equity Incentive Plan is 4,149,684 as of June 30, 2026. 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 six months ended June 30, 2026:

During the six months ended June 30, 2026, the Company granted stock options to eight employees and consultants to purchase an aggregate of 619,000 shares of common stock with an exercise price of $2.55 of which 509,000 vest  quarterly over four years and 110,000 were vested immediately. The 619,000 stock options granted expire during 2033.

On April 20, 2026, the Company modified 4,860,197 previously issued stock options held by four employees and a director by extending the contractual term by five years. The Company recorded incremental stock-based compensation of $379,045 related to this modification.

The following table summarizes information about stock options outstanding and exercisable as of June 30, 2026:

There were 7,340,382 options to purchase common stock at an average exercise price of $1.76 per share outstanding as of June 30, 2026 under the Equity Incentive Plan. The Company recorded $970,113 and $800,425 of compensation expense, net of related tax effects, relative to stock options for the six months ended June 30, 2026 and 2025, respectively, in accordance with ASC 718.

As of June 30, 2026, there were $3,600,228 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 2-3 years.

The significant weighted-average assumptions relating to the valuation of the Company’s stock option grants were as follows for the three months ended June 30, 2026:

There were stock incentive plan awards outstanding at June 30, 2026 totaling 7,340,382 shares with an aggregate intrinsic value of $6,993,856.

Stock Appreciation Rights Plan

On February 17, 2022, in connection with the Share Exchange Agreement with Super Simple AI, Inc., , 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 number was later adjusted to 2,637,150 SARs after the Merger.

As of June 30, 2026 and December 31, 2025, 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 three months ended June 30, 2026 or the year ended December 31, 2025.

Warrants to Purchase Common Stock

See Note 10 for public and private placement warrants assumed after the Merger.

The Company had the following warrant activity during the three months ended June 30, 2026:

During the three months ended June 30, 2026, investors exercised warrants for two shares of the Company’s common stock and the Company received proceeds of $10.

Warrant activity for the six months ended June 30, 2026 was as follows:

A summary of the warrants outstanding as of June 30, 2026 were as follows:

There were warrants outstanding at June 30, 2026 totaling 22,488,826 shares with an aggregate intrinsic value of $1,674,339. 

Earnout Liability

See Note 11 for shares of common stock related to earnout liability.