Core Viewpoint - AIRO Group's stock has declined over 16% from recent highs, contrasting with strong operational results and a consensus Buy rating from analysts, indicating a potential upside of over 60% based on an average price target of $30.67 [1][12]. Group 1: Business Structure and Strategy - AIRO Group operates as a multifaceted aerospace and defense platform, providing multiple revenue streams and mitigating sector-specific risks through four distinct segments: Drones, Avionics, Training, and Electric Air Mobility (eVTOL) [2][4]. - The Drones segment is the primary revenue driver, supplying NATO allies with technology capable of operating in GPS-denied environments [4]. - The Avionics division specializes in upgrading aging aircraft fleets, while the Training segment has shown strong momentum with a 91% year-over-year revenue growth [4]. - The eVTOL segment, under the Jaunt brand, focuses on developing electric vertical take-off and landing technology for the middle-mile cargo and logistics market [4]. Group 2: Financial Performance - AIRO Group's second-quarter 2025 financial results showed a 151% year-over-year revenue increase to $24.6 million, alongside a shift from a $5.6 million net loss to a $5.9 million net income [5]. - Gross margin improved to 61.2% from 59.0% in the prior year, driven by enhancements in the Training and Avionics segments [6]. - Adjusted EBITDA surged 710% to $4.7 million for the quarter, indicating strong core operational profitability [6]. Group 3: Capital and Growth Initiatives - The company ended the second quarter with $40.3 million in cash and raised an additional $89.4 million through a public offering, earmarked for growth initiatives, potential acquisitions, and a share repurchase program [7]. - The share repurchase plan aligns with recent insider selling activity, indicating a structured corporate action rather than a lack of executive confidence [8]. Group 4: Future Catalysts - AIRO's inclusion in the Russell 2000 and 3000 Indexes effective September 22, 2025, is expected to increase stock visibility and attract institutional investors [10]. - A non-binding letter of intent to form a joint venture with Ukraine's Nord Drone Group provides access to scalable production and battlefield-tested technology, positioning AIRO to meet urgent defense demands [11]. Group 5: Analyst Sentiment - Analysts maintain a unanimous Buy rating for AIRO Group, highlighting significant operational momentum and a compelling long-term outlook despite recent stock price declines [13].

Company Overview - Airo Group (AIRO) is a drone and aerospace systems firm based in Reston, Virginia, specializing in unmanned aerial systems and associated defense products for both commercial and government customers [3] - The company has a market capitalization of approximately $552 million and operates in the emerging technology space of aerospace and defense [3] Recent Performance - Airo Group delivered a surprise earnings beat in its last quarter, impressing investors and indicating a key breakthrough for the new drone producer [1] - The stock price has been volatile since going public on Nasdaq, currently trading at $20, which is about 50% below its 52-week high of $39.07 [1][3] - Analysts predict a potential upside of up to 60% from the current stock price, driven by growing demand for unmanned aerial systems and a commitment to scaling production [1] Market Context - The broader aerospace and defense market has regained momentum in 2025 due to increased government expenditure, supply chain diversification, and the adoption of unmanned technology [2] - Speculative-defense stocks like Airo have lagged behind the S&P 500's steady double-digit rises this year, but there may be a favorable entry point for investors looking towards the growth of drones and high-end aerospace systems [2] Financial Metrics - Airo's EV/Sales ratio is 5.5 times, which is considered high compared to traditional defense contractors that trade around 2 times [5] - The company is currently loss-making, with a trailing 12-month profit margin of -44.5% and no positive earnings ratio, indicating that investors are paying a premium for potential growth rather than current earnings [5] - Airo has no reported debt, providing balance-sheet flexibility as it scales operations [5] Investment Strategy - Airo does not pay dividends, focusing instead on reinvesting in product development, certification, and scaling contracts [5]

Core Viewpoint - AIRO Group Holdings, Inc. has successfully closed an upsized underwritten public offering of 4,830,000 shares of its common stock, indicating strong investor interest and confidence in the company's aerospace and defense technologies [1] Summary by Relevant Sections - **Offering Details** - The offering included the full exercise of the underwriters' option to purchase an additional 630,000 shares, demonstrating robust demand [1] - The gross proceeds from the offering, before deducting underwriting discounts and other expenses, highlight the financial strength of the company [1] - **Company Profile** - AIRO Group Holdings, Inc. specializes in advanced aerospace and defense technologies, positioning itself in a critical and growing industry [1]

Core Viewpoint - AIRO Group Holdings, Inc. has announced the pricing of its upsized underwritten public offering of 4,200,000 shares at a price of $18.50 per share, indicating strong market interest and potential for capital raising [1] Company Summary - AIRO Group specializes in advanced aerospace and defense technologies, positioning itself in a growing sector with increasing demand for innovative solutions [1] - The gross proceeds from the offering are expected to be significant, although the exact amount after deducting underwriting discounts and commissions has not been specified [1]

Core Viewpoint - AIRO Group Holdings, Inc. has initiated an underwritten public offering of 3,500,000 shares of its common stock, with an option for underwriters to purchase an additional 525,000 shares to cover over-allotments [1] Company Summary - AIRO Group specializes in advanced aerospace and defense technologies [1] - The public offering aims to raise capital for the company's operations and growth initiatives [1]

Core Insights - 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 Aerospace and Defense industry [1] - The symposium will feature top executives from over ten companies, discussing themes such as defense spending, aftermarket opportunities, and M&A potential [1] Agenda Highlights - The event will start at 7:30 AM with a welcome and introduction by the Gabelli Funds Team [2] - Notable companies participating include Astronics Corporation, Textron Inc., Moog Inc., HEICO Corporation, and Elbit Systems Ltd., among others, with scheduled presentations throughout the day [2][3] - The agenda includes one-on-one meetings with management, providing attendees with networking opportunities [1]

Financial Data and Key Metrics Changes - For Q2 2025, revenue was $24.6 million, an increase of 151% compared to $9.8 million in the prior year period, driven by execution across core segments [32] - Gross profit for the quarter was $15 million, up from $5.8 million last year, with a gross margin of 61.2% reflecting a favorable product mix [32] - Net income was $5.9 million compared to a net loss of $5.6 million in Q2 2024, with Q2 EBITDA reaching a record $18.9 million [33] Business Line Data and Key Metrics Changes - Drone segment revenue reached over $75 million in 2024, representing 167% growth, with a robust backlog [20][33] - Training segment saw high revenues due to specific government contracts, with opportunities for growth by acquiring additional aircraft [34] - Avionics experienced softer sales due to strategic delays in R&D investments, but is expected to resume investments post-IPO [34] Market Data and Key Metrics Changes - The total addressable market is estimated at $315 billion, spanning ISR drones, pilot training, avionics upgrades, and air mobility solutions [26] - NATO defense spending is increasing, with a focus on autonomy and unmanned systems, creating a long-term multi-billion dollar opportunity [25][26] Company Strategy and Development Direction - The company aims to expand its U.S. footprint with a new manufacturing and engineering facility dedicated to the RQ35 Hedron drone [28] - Focus on Blue UAS certification to enable manufacturing and sales to the Department of Defense [29] - Strategic partnerships in training and air mobility are prioritized to enhance growth and market presence [38] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong momentum and rising demand across core markets, particularly in NATO defense spending and U.S. domestic solutions [24] - The company is positioned to grow all segments, driven by geopolitical factors and increased defense budgets [62] - Expectations for positive momentum in the second half of the year due to increased global defense spending, particularly for drones [35] Other Important Information - The company reported $200 million in bookings in progress, expected to convert to revenue over the next 18 months [36] - The recent IPO enhances financial flexibility and positions the company for accelerated execution across its pipeline [16] Q&A Session Summary Question: Demand shaping in the U.S. vs. Europe - Management noted that demand for small and medium tactical drones is highest in Europe, but U.S. demand is accelerating with strong interest from NATO aligned nations [43][44] Question: Growth in avionics and partnerships - Avionics growth is driven by OEM integration and retrofit programs, with partnerships like Joby Aviation positioning the company as a trusted outsourcing partner [48] Question: Working capital consumption and production outlook - Working capital needs are expected to increase due to higher receivables and inventory buildup for drone and avionics production [50] Question: Outlook for the remainder of the year - Management indicated targeted CapEx for the new manufacturing facility and investments in R&D and training to qualify for more IDIQ contracts [55] Question: Update on nations being sold to - The company is currently selling to approximately 20-25 NATO countries, with ongoing efforts to increase demand in Asia Pacific and North America [64]

Financial Performance - AIRO's Q2 2025 revenue increased by 151% to $246 million, compared to $98 million in Q2 2024[38] - Gross profit increased by 1603% to $150 million in Q2 2025, with gross profit margin at 612%, a 219 bps increase[38] - Net income was $59 million in Q2 2025, a 2048% increase from a net loss of $56 million in Q2 2024[38] - Adjusted EBITDA increased by 710% to $47 million in Q2 2025, with an Adjusted EBITDA margin of 191%, a 1321 bps increase[38] - The company's cash and cash equivalents significantly increased to $403 million in Q2 2025[41] Business Highlights - AIRO is targeting a combined aerospace and defense Total Addressable Market (TAM) of approximately $315 billion by 2030, with a composite 2024-2030 Compound Annual Growth Rate (CAGR) of 148%[20] - The company unveiled a next-generation cargo drone capable of transporting 250-500 lbs over 200 miles[30] - AIRO has secured $16 billion+ in available Close Air Support (CAS) Indefinite Delivery/Indefinite Quantity (IDIQ) contracts for training[44] - AIRO has $200M+ bookings in process for Drones[44] Strategic Initiatives - AIRO plans to establish a new US manufacturing and engineering facility to support increased demand for drones[30] - The company is in the process of manufacturing the RQ-35 Heidrun in the US to obtain Blue UAS certification, requiring at least 51% of the vehicle to be manufactured in the US[35] - NATO countries are projected to increase their defense spending benchmark from the current 2% of GDP target to 35% of GDP after the June 2025 summit[31]

Executive Summary & Company Overview AIRO Group Holdings, Inc. reported strong Q2 2025 results following a successful IPO, highlighting significant financial and operational advancements [Introduction & IPO](index=1&type=section&id=Introduction%20%26%20IPO) AIRO Group Holdings, Inc. announced its second quarter 2025 financial results following a successful initial public offering (IPO) on June 16, 2025. The IPO raised $69.0 million in gross proceeds, which the Company intends to use for growth initiatives, debt repayment, and general corporate purposes - AIRO Group Holdings, Inc. announced financial results for the second quarter ended June 30, 2025[2](index=2&type=chunk) - The Company successfully completed its IPO of **6,900,000 shares** of common stock on June 16, 2025[3](index=3&type=chunk) - The IPO raised **$69.0 million** in gross proceeds, intended to support growth initiatives, repay debt, and for general corporate purposes[3](index=3&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) AIRO reported strong financial and operational performance in Q2 2025, marked by significant revenue growth, a shift to net income, and strategic advancements in drone production, defense contracts, and electric air mobility [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Key financial metrics for Q2 2025 demonstrate significant year-over-year growth in revenue, gross margin, and a shift to positive net income and EBITDA Selected Financial Highlights | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Revenue | $24.6 million | $9.8 million | +151% | | Gross margin | 61.2% | 59.0% | +2.2 ppts | | Net income | $5.9 million | ($5.6 million) | Shift to profit | | EBITDA | $18.9 million | ($1.1 million) | Shift to positive | | Adjusted EBITDA | $4.7 million | $0.6 million | +710% | [Operational Highlights](index=1&type=section&id=Operational%20Highlights) Operational achievements in Q2 2025 include manufacturing expansion for drones and securing substantial defense contracts - Announced U.S. Manufacturing Expansion to scale RQ-35 Heidrun ISR drone production, enhancing capacity and fostering innovation in autonomous unmanned systems[6](index=6&type=chunk) - Completed Naval Special Warfare Training Mission and secured **over $30 million** in defense contracts to date, reinforcing leadership in military training[6](index=6&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO Joe Burns highlighted the successful IPO and strong commercial traction in the Drone segment, positioning AIRO for accelerated investments. Executive Chairman Dr. Chirinjeev Kathuria emphasized the company's strengthened capital base and focus on unlocking long-term value through innovation and strategic execution - CEO Joe Burns: IPO positions AIRO to accelerate investments in next-generation aerospace capabilities across all four strategic segments, with strong commercial traction and technology milestones in the Drone segment[7](index=7&type=chunk) - Executive Chairman Dr. Chirinjeev Kathuria: The IPO strengthened AIRO's capital base, and the focus is now on unlocking long-term value through innovation and strategic execution[7](index=7&type=chunk) - Introduced a next-generation, medium-lift cargo drone capable of transporting **250–500 lbs**. over **200+ miles**, expanding into Quebec's YMX Innovation Zone for electric air mobility solutions[7](index=7&type=chunk) Financial Performance AIRO's Q2 2025 financial performance shows substantial revenue growth and a shift to net income, driven by key segment contributions [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) AIRO's Q2 2025 financial results demonstrate substantial revenue growth, primarily driven by the Drones segment, and a significant shift from net loss to net income, boosted by a gain on debt extinguishment and favorable fair value adjustments [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Revenue analysis for Q2 2025 reveals substantial growth, primarily driven by the Drones and Training segments Selected Revenue Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Total Revenue | $24.6 million | $9.8 million | +151% | | Drone Revenue | $22.0 million | N/A | +216% | | Training Revenue | $1.1 million | N/A | +91% | - The increase in revenue was primarily driven by a **216% increase** in Drone revenue (due to deferred Q1 orders) and a **91% increase** in Training segment revenue (due to increased activity under IDIQ contracts), partially offset by decreased revenue in the Avionics segment[8](index=8&type=chunk) [Profitability (Gross Profit, Net Income, EBITDA)](index=2&type=section&id=Profitability%20(Gross%20Profit%2C%20Net%20Income%2C%20EBITDA)) Profitability metrics for Q2 2025 show improved gross margin and a significant shift to positive net income and EBITDA Selected Profitability Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Gross Profit | $15.0 million | $5.8 million | +158.6% | | Gross Margin | 61.2% | 59.0% | +2.2 ppts | - Gross margin improvement was driven by increases in the Training and Avionics segments, partially offset by a decrease in gross margin within the Drones segment due to product discounting and product mix[9](index=9&type=chunk) Selected Profitability Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change YoY | | :---------------- | :---------- | :---------- | :--------- | | Net Income (Loss) | $5.9 million | ($5.6 million) | Shift to profit | | EBITDA | $18.9 million | ($1.1 million) | Shift to positive | | Adjusted EBITDA | $4.7 million | $0.6 million | +710% | | Adjusted EBITDA Margin | 19.1% | 5.9% | +13.2 ppts | - Net income benefited from a **gain on the extinguishment of debt** and **favorable fair value adjustments** to the Company's contingent liabilities[10](index=10&type=chunk) [Cash Position](index=3&type=section&id=Cash%20Position) The company's cash and cash equivalents position as of June 30, 2025, is detailed - Cash and cash equivalents totaled **$40.3 million** as of June 30, 2025[12](index=12&type=chunk) Company Information & Disclosures This section provides details on AIRO's conference call, company profile, forward-looking statements, non-GAAP measures, and investor contact [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) AIRO will host a conference call on August 14, 2025, at 8:00 AM ET to discuss its second quarter 2025 results and business outlook, with a live webcast and replay available on the Company's investor relations website - Conference call to discuss Q2 2025 results and business outlook on August 14, 2025, at 8:00 AM ET[13](index=13&type=chunk) - A live webcast and accompanying presentation will be available on investor.theairogroup.com, with a replay available for 12 months[13](index=13&type=chunk) [About AIRO](index=3&type=section&id=About%20AIRO) AIRO is a technologically differentiated aerospace, autonomy, and air mobility platform targeting 21st-century aerospace and defense opportunities, organized into four critical growth segments: Drones, Avionics, Training, and Electric Air Mobility - AIRO is an aerospace, autonomy, and air mobility platform targeting 21st-century aerospace and defense opportunities[14](index=14&type=chunk) - The Company is organized into four operating segments: Drones, Avionics, Training, and Electric Air Mobility[14](index=14&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future performance, IPO proceeds use, product development, market demand, and other non-historical facts, which are subject to risks, uncertainties, and assumptions detailed in SEC filings. AIRO undertakes no obligation to update these statements except as required by law - Statements in the press release that are not historical facts are forward-looking statements, identifiable by words such as 'believes,' 'expects,' 'may,' 'will,' 'should,' etc[15](index=15&type=chunk) - Forward-looking statements are subject to risks, uncertainties, assumptions, or changes in circumstances, including those described in AIRO's Form 10-Q[15](index=15&type=chunk) - AIRO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of the press release, except as required by law[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) AIRO utilizes non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin, to analyze financial trends and for internal planning. The Company provides definitions for these measures and acknowledges their inherent limitations compared to GAAP measures - AIRO uses non-GAAP financial measures (EBITDA, Adjusted EBITDA, Adjusted EBITDA margin) to analyze financial and business trends and for internal planning[16](index=16&type=chunk) - Definitions: EBITDA is net income (loss) before interest, tax, depreciation, and amortization. Adjusted EBITDA further adjusts for gain on debt extinguishment, stock-based compensation, contingent consideration, warrant fair value adjustments, and IPO-related one-time adjustments. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue[16](index=16&type=chunk) - Limitations: These non-GAAP measures should not be considered alternatives to GAAP performance measures and may differ from similarly titled measures used by other companies[17](index=17&type=chunk) [Investor Relations Contact](index=4&type=section&id=Investor%20Relations%20Contact) Provides contact information for investor relations inquiries - Investor Relations Contact: Dan Johnson, InvestorRelations@theairogroup.com, media@theairogroup.com[18](index=18&type=chunk) Condensed Consolidated Financial Statements (Unaudited) Unaudited consolidated financial statements present AIRO's balance sheets, statements of operations, and Adjusted EBITDA reconciliation for Q2 2025 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets for AIRO Group Holdings, Inc. as of June 30, 2025, and December 31, 2024, show an increase in total assets and stockholders' equity, alongside a significant decrease in total liabilities, primarily due to the elimination of contingent consideration and reduced debt Selected Balance Sheet Data | Metric | June 30, 2025 (in $) | December 31, 2024 (in $) | | :-------------------------------- | :-------------- | :---------------- | | Total assets | $747,849,810 | $700,998,787 | | Total liabilities | $68,290,214 | $152,269,358 | | Total stockholders' equity | $679,559,596 | $548,729,429 | | Cash | $40,341,555 | $20,740,590 | | Accounts receivable, net | $23,655,866 | $8,960,705 | | Goodwill | $572,031,507 | $557,508,331 | | Total current liabilities | $66,517,428 | $96,606,536 | | Current maturities of debt | $8,079,126 | $27,992,450 | | Contingent consideration | $- | $42,782,276 | - **Total assets increased by approximately $46.8 million**, driven by increases in cash and accounts receivable[20](index=20&type=chunk) - **Total liabilities decreased significantly by approximately $84.0 million**, primarily due to the elimination of contingent consideration and a reduction in current maturities of debt[20](index=20&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The unaudited condensed consolidated statements of operations highlight a substantial increase in revenue and a shift from a net loss to net income for both the three and six months ended June 30, 2025, primarily driven by significant other income Selected Income Statement Data (Three Months Ended June 30) | Metric | 2025 (in $) | 2024 (in $) | | :-------------------------------- | :---------- | :---------- | | Revenue | $24,550,193 | $9,780,336 | | Gross profit | $15,034,567 | $5,775,085 | | Loss from operations | ($19,689,341) | ($2,693,556) | | Total other income (expense) | $27,617,077 | ($2,467,276) | | Net income (loss) | $5,870,429 | ($5,599,841) | | Net income (loss) per share – basic | $0.32 | ($0.34) | Selected Income Statement Data (Six Months Ended June 30) | Metric | 2025 (in $) | 2024 (in $) | | :-------------------------------- | :---------- | :---------- | | Revenue | $36,344,878 | $23,520,272 | | Gross profit | $21,967,092 | $14,262,166 | | Loss from operations | ($22,770,090) | ($3,157,030) | | Total other income (expense) | $29,012,043 | ($3,023,913) | | Net income (loss) | $3,897,674 | ($7,609,530) | | Net income (loss) per share – basic | $0.22 | ($0.46) | - For the three months ended June 30, 2025, revenue **increased by 151%** year-over-year, and net income **shifted from a loss of $5.6 million to a profit of $5.9 million**, largely due to a significant increase in 'Total other income (expense)'[22](index=22&type=chunk) [Adjusted EBITDA Reconciliation](index=7&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation details the adjustments from net income (loss) to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, highlighting the impact of non-recurring items like gain on debt extinguishment, stock-based compensation, and fair value adjustments Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net income (loss) | $5,871 | ($5,600) | | EBITDA | $18,926 | ($1,099) | | Gain on extinguishment of debt | ($15,559) | $- | | Stock-based compensation | $18,638 | $179 | | Contingent consideration fair value adjustments | ($17,534) | $1,500 | | Warrant fair value adjustment | ($1,843) | $- | | IPO contingencies | $2,070 | $- | | Adjusted EBITDA | $4,698 | $580 | | Adjusted EBITDA Margin | 19.1% | 5.9% | Adjusted EBITDA Reconciliation (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net income (loss) | $3,898 | ($7,610) | | EBITDA | $21,645 | $1,405 | | Gain on extinguishment of debt | ($15,559) | $- | | Stock-based compensation | $18,763 | $471 | | Contingent consideration fair value adjustments | ($20,272) | $1,700 | | Warrant fair value adjustment | ($1,843) | $- | | IPO contingencies | $2,070 | $- | | Adjusted EBITDA | $4,804 | $3,576 | | Adjusted EBITDA Margin | 13.2% | 15.2% | - Key adjustments for Q2 2025 include a **$15.6 million gain** on extinguishment of debt, **$18.6 million in stock-based compensation**, and favorable **contingent consideration fair value adjustments of $17.5 million**[24](index=24&type=chunk)

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)