BYTE Acquisition, Airship AI announce letter of intent for a business combination - The EE

BYTE Acquisition, Airship AI announce letter of intent for a business combination

BYTE Acquisition Corp., a publicly traded special purpose acquisition company, and Airship AI Holdings, Inc., have announced the signing of a non-binding letter of intent 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:

  • Large and growing size of addressable market
    • $7 billion (€6.59 billion) edge AI software and hardware addressable market today, projected to grow to over $40 billion (€37.66 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 capitalise 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 (€13.65 million) revenue, 57.9% growth margin, positive EBITDA
    • Opportunity for margin expansion with recently launched Edge products
  • Visible and healthy pipeline
    • $162 million (€152.52 million) pipeline in addition to a largely untapped opportunity within the commercial space

Airship AI leverages Artificial Intelligence 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,” says Airship AI Company president Paul Allen. “Being a public company will bolster credibility as a financially strong partner with customers by demonstrating our financial stability and transparency.” Allen continues.

“We believe that Airship AI is an exceptional company with which to complete a business combination,” says BYTE chief executive officer and chief financial officer Sam Gloor. “The company is operating in government and commercial end markets utilising 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.” Gloor continues.

The proposed business combination values Airship AI at a $290 million (€273.04 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 (€11.77), 50% 2nd tranche at $15.00 (€15.00), both within five years
  2. Operating performance milestones: 50% of 1st tranche on achievement of $30 million (€28.25 million) of revenue and $6 million (€5.65 million) of EBITDA in 2023, balance earned on achievement of $100 million (€94.15 million) of revenue and $25 million (€23.54 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 (€3.77 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.

“I would also like to remind our shareholders that BYTE is seeking shareholder approval of an extension of time to complete our initial business combination from March 23, 2023 to September 25, 2023 (the ‘Extension’),” says Sam Gloor, chief executive officer and chief financial officer of BYTE. “This Extension will give us time to progress towards a business combination with the target. If you are a shareholder of record as of February 21, 2023, the record date for the shareholder meeting, I urge you to vote in favor of the Extension.”

Shareholders who wish to withdraw their previously submitted redemption request may do so prior to the shareholder meeting by requesting that our transfer agent return such shares. You may make such request by contacting our transfer agent, Continental Stock Transfer & Trust Company, at 1 State Street, 30th Floor, New York, New York 10004, Attn: Mark Zimkind (e-mail: mzimkind@continentalstock.com).

You are encouraged to submit your vote for the Extension as soon as possible to ensure it is represented at the shareholder meeting. Please note that if your shares are held at a brokerage firm or bank, your broker will not vote your shares for you. You must instruct your bank or broker to cast the vote. For assistance with voting your shares please contact Morrow Sodali LLC, toll free at 1-800-662-5200, collect at 1-203-658-9400 or by email to BYTS.info@investor.morrowsodali.com.

Completion of a business combination with Airship AI is subject to, among other matters, the completion of due diligence, the negotiation of an agreement providing for the transaction, satisfaction of the conditions negotiated therein and approval of the transaction by the board of d

irectors and the shareholders of both BYTE and Airship AI. There can be no assurance that a definitive agreement will be entered into or that the proposed business combination will be consummated on the terms or timeframe currently contemplated, or at all.

Roth Capital Partners is advising Airship AI in connection with the potential business combination.

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