PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents AIRO Group Holdings, Inc.'s unaudited condensed consolidated financial statements for periods ending June 30, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $40.3M | $20.7M | | Total Current Assets | $79.2M | $42.6M | | Goodwill | $572.0M | $557.5M | | **Total Assets** | **$747.8M** | **$701.0M** | | **Liabilities & Equity** | | | | Total Current Liabilities | $66.5M | $96.6M | | **Total Liabilities** | **$68.3M** | **$152.3M** | | **Total Stockholders' Equity** | **$679.6M** | **$548.7M** | - Total assets increased to **$747.8 million** from **$701.0 million** at year-end 2024, driven by a significant rise in cash following the IPO[11](index=11&type=chunk) - Total liabilities saw a substantial decrease to **$68.3 million** from **$152.3 million**, primarily due to the settlement of contingent consideration and other borrowings post-IPO[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $24.6M | $9.8M | +151.0% | | Gross Profit | $15.0M | $5.8M | +160.3% | | Loss from Operations | ($19.7M) | ($2.7M) | +631.1% | | Net Income (Loss) | $5.9M | ($5.6M) | Turnaround | | Basic EPS | $0.32 | ($0.34) | Turnaround | - The company achieved net income of **$5.9 million** in Q2 2025, a significant **Turnaround** from a net loss of **($5.6 million)** in Q2 2024, primarily driven by a **$15.6 million** gain on debt extinguishment and **$20.1 million** in other income, offsetting a higher loss from operations[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (Unaudited, Six Months Ended June 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($30.8M) | ($7.8M) | | Net cash used in investing activities | ($1.1M) | ($0.5M) | | Net cash provided by financing activities | $49.6M | $0.7M | | **Net increase (decrease) in cash** | **$19.6M** | **($7.8M)** | - Net cash provided by financing activities was **$49.6 million** for the first six months of 2025, primarily due to **$61.5 million** in net proceeds from the sale of common stock in the IPO[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company completed its Initial Public Offering (IPO) on June 16, 2025, raising net proceeds of **$61.5 million**, which management believes are sufficient to meet obligations and fund operations for at least the next twelve months, alleviating previous substantial doubt about its ability to continue as a going concern[33](index=33&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - As a result of the IPO, contingencies on certain liabilities were resolved, leading to **$17.5 million** in recorded income, with the settlement involving issuing **1.4 million** shares and paying **$3.3 million** in cash during the quarter[61](index=61&type=chunk) - In September 2024, the company recorded goodwill impairment charges of **$17.0 million** for the Electric Air Mobility segment and **$21.0 million** for the Training segment, triggered by the termination of a planned Business Combination Agreement and delays in securing financing[164](index=164&type=chunk)[165](index=165&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, IPO impact, and liquidity for periods ending June 30, 2025 and 2024 [Overview](index=59&type=section&id=Overview) - AIRO Group operates as a technologically differentiated aerospace, autonomy, and air mobility platform organized into four segments: Drones, Avionics, Training, and Electric Air Mobility[251](index=251&type=chunk)[252](index=252&type=chunk) - The company completed its IPO on June 16, 2025, raising net proceeds of **$61.5 million**, which is expected to fund future operations and growth[259](index=259&type=chunk) [Results of Operations](index=67&type=section&id=Results%20of%20Operations) Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 ($) | Q2 2024 ($) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $24.6M | $9.8M | +151.0% | | Gross Profit | $15.0M | $5.8M | +160.3% | | General & Administrative Expense | $28.9M | $3.9M | +640.5% | | Net Income (Loss) | $5.9M | ($5.6M) | Turnaround | - The **151%** YoY revenue growth in Q2 2025 was primarily driven by a **$15.0 million** increase in the Drones segment, attributed to successful market entry strategies targeting NATO member countries[296](index=296&type=chunk) - General and administrative expenses increased by **$25.0 million**, largely due to **$13.3 million** in corporate costs contingent upon the IPO, including equity compensation, bonuses, and legal settlement accruals[301](index=301&type=chunk) [Liquidity and Capital Resources](index=71&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had cash and restricted cash of **$40.5 million** and working capital of **$12.6 million**[309](index=309&type=chunk) - Management believes that the proceeds from the IPO and existing cash are sufficient to fund operations for at least the next 12 months[309](index=309&type=chunk) - For the six months ended June 30, 2025, net cash provided by financing activities was **$49.6 million**, mainly from the IPO proceeds, while net cash used in operating activities was **$30.8 million**[314](index=314&type=chunk)[315](index=315&type=chunk)[317](index=317&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is foreign currency exchange rate exposure from international operations and sales, subject to global political and economic factors - The company's primary market risk is foreign currency exchange rate risk, as a majority of its sales are to international customers and it has operations in Canada and Denmark[361](index=361&type=chunk) - International sales are subject to numerous political and economic factors, including changes in foreign government budgets, global economic conditions, trade sanctions, and regulatory requirements[361](index=361&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025, due to identified material weaknesses in internal financial reporting controls - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[363](index=363&type=chunk) - The ineffectiveness is attributed to material weaknesses in internal control over financial reporting[363](index=363&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) Details several legal actions, including settlements with Robert Perrin and First Citizens Community Bank, and an accrued **$0.8 million** for litigation as of June 30, 2025 - In March 2025, the company agreed to settle a lawsuit with stockholder Robert Perrin for **$0.8 million**, to be paid over six quarters starting in Q3 2025[368](index=368&type=chunk) - A legal action from First Citizens Community Bank (FCCB) was settled, and all payment obligations of approximately **$0.2 million** were fulfilled as of April 30, 2025[367](index=367&type=chunk) - As of June 30, 2025, the company had accrued **$0.8 million** related to litigation[369](index=369&type=chunk) [Item 1A. Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) Outlines key investment risks including limited operating history, recurring losses, supplier dependency, regulatory hurdles for eVTOL, government contract reliance, and internal control weaknesses - The company has a limited operating history, a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future[371](index=371&type=chunk)[375](index=375&type=chunk)[377](index=377&type=chunk) - Material weaknesses in internal control over financial reporting have been identified, which could affect the ability to accurately and timely report financial results[373](index=373&type=chunk)[493](index=493&type=chunk) - The business is highly dependent on sales to the U.S. government, particularly the Department of Defense, making it vulnerable to budget cuts, funding changes, or contract terminations[373](index=373&type=chunk)[457](index=457&type=chunk) - The market for eVTOL aircraft is still emerging and unproven, and the company's eVTOL aircraft is still in development and has not yet obtained FAA certification[373](index=373&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=126&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - None reported for the period[539](index=539&type=chunk) [Item 3. Defaults Upon Senior Securities](index=126&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - None reported for the period[540](index=540&type=chunk) [Item 4. Mine Safety Disclosures](index=126&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[541](index=541&type=chunk) [Item 5. Other Information](index=126&type=section&id=Item%205.%20Other%20Information) Discloses new employment agreements for key executives and a five-year lease agreement in Phoenix, Arizona, for drone innovation expansion - On August 11, 2025, the company entered into new employment agreements with CEO Joseph Burns (**$700k** base salary, **$350k** IPO bonus), President John Uczekaj (**$500k** base salary), and Executive Chairman Chirinjeev Kathuria (**$400k** base salary, **$100k** IPO bonus)[543](index=543&type=chunk)[544](index=544&type=chunk) - On August 12, 2025, the company entered into a five-year lease in Phoenix, Arizona, to expand its U.S. drone innovation footprint, with total expected rent payments of approximately **$2.3 million**[545](index=545&type=chunk)[546](index=546&type=chunk) [Item 6. Exhibits](index=128&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including corporate governance documents, equity incentive plans, and new agreements - The report includes several exhibits, such as the Amended and Restated Certificate of Incorporation, the 2025 Equity Incentive Plan, and new employment agreements for key executives[547](index=547&type=chunk)

Group 1 - Gabelli Funds, LLC is hosting the annual Aerospace & Defense Symposium on September 4, 2025, at The Harvard Club in New York City, focusing on strong demand outlook and high barriers to entry in the industry [1] - The symposium will feature top executives from over ten companies, discussing themes such as large aftermarket opportunities, growth exceeding GDP, defense spending, and M&A potential [1] - Attendees will have the opportunity for one-on-one meetings with management, enhancing networking and investment insights [1] Group 2 - Featured companies at the symposium include AIRO Group Holdings, Elbit Systems, Albany International, Graham Corporation, and several others, indicating a diverse representation within the Aerospace and Defense sector [2] - The event is set to start at 8:30 am, providing a structured schedule for discussions and networking [3]