BYTE Acquisition Corp. and Airship AI Holdings, Announce Letter of Intent for a Business Combination

BYTE Acquisition Corp. a publicly traded special purpose acquisition company (“BYTE”), and Airship AI Holdings,(“Airship AI”), a robust AI-driven edge video, sensor and data management platform for government agencies and enterprises that gathers unstructured data from surveillance cameras and sensors, applies artificial intelligence (“AI”) analytics, and provides visualization tools to improve decision making in mission critical environments, announced today the signing of a non-binding letter of intent (“LOI”) for a potential business combination. Simultaneously with the issuance of this press release, BYTE has filed an investor presentation outlining Airship AI’s business and the proposed business combination, including the following investment highlights:

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“Being a public company will bolster credibility as a financially strong partner with customers by demonstrating our financial stability and transparency.”

• Large and Rapidly Growing Size of Addressable Market
  • $7 billion edge AI software and hardware addressable market today, projected to grow to over $40 billion in 2030
  • This growth is expected to be driven by strong demand for AI solutions in public safety, industrial, and logistics settings
• Provides Differentiated End-to-End Solution
  • Solutions capitalize on rapidly growing use of AI to create efficiency, increase speed, reduce costs, and improve decision making
• Blue-Chip Customer Base
  • Previous relationships with the Department of Homeland Security, the Department of Justice, and Other Government Agencies as well as two Fortune 500 companies, FedEx, and Home Depot
• Strong Growth with Software Margin
  • 2022E: Airship AI expects approximately ~$14.5 million revenue, 57.9% growth margin, positive EBITDA
  • Opportunity for margin expansion with recently launched Edge products
• Visible and Robust Pipeline
  • $162 million pipeline in addition to a largely untapped opportunity within the commercial space

Airship AI leverages Artificial Intelligence (“AI”) at the edge to help improve public safety and operational efficiency for public sector and commercial customers by providing predictive analysis of events before they occur and provide meaningful intelligence to decision makers.

“We’re excited to partner with the BYTE team which brings substantial software and business expertise,” said Airship AI Company President Paul Allen. Mr. Allen continues, “Being a public company will bolster credibility as a financially strong partner with customers by demonstrating our financial stability and transparency.”

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“We believe that Airship AI is an exceptional company with which to complete a business combination,” said BYTE Chief Executive Officer and Chief Financial Officer Sam Gloor. Mr. Gloor continued, “The company is operating in attractive government and commercial end markets utilizing AI technology to help improve safety and operational efficiency. Airship AI’s Outpost edge device, Acropolis operating system, and Command Nexus viewing client provide a differentiated end-to-end solution which we believe adds value for customers and that will propel Airship AI’s continued growth going forward. We believe a public listing will provide Airship AI with enhanced visibility, selling opportunities and financial flexibility to perform to its business plan and broaden its customer base. We look forward to working with Airship AI’s management team to consummate the proposed business combination.”

Transaction Overview

The proposed business combination values Airship AI at a $290 million pro forma enterprise value (assuming 98% redemptions by BYTE public shareholders), excluding a 5 million share performance-based Airship AI management earnout based upon Airship AI’s achievement of the earlier of:

1. Share performance milestones: 50% 1st tranche at $12.50, 50% 2nd tranche at $15.00, both within five years
2. Operating performance milestones: 50% of 1st tranche on achievement of $30 million of revenue and $6 million of EBITDA in 2023, balance earned on achievement of $100 million of revenue and $25 million of EBITDA within three years

Under the terms of the proposed business combination, Airship AI shareholders would roll 100% of their equity into the combined company. BYTE has agreed to secure a $4 million pre-transaction bridge. BYTE and Airship AI intend to jointly raise additional capital via a private investment in public equity (PIPE). BYTE and Airship AI expect to announce additional details regarding the proposed business combination when a definitive merger agreement is executed.

As previously announced, BYTE is holding its extraordinary general meeting on March 16, 2023 to vote to amend BYTE’s amended and restated memorandum and articles of association to extend the date by which BYTE has to consummate an initial business combination from March 23, 2023 to September 25, 2023.

On March 8, 2023, BYTE entered into non-redemption agreements with certain of its existing shareholders holding Class A ordinary shares in support of BYTE’s extension.

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