AIRO Group Holdings, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”) and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding required disclosure. Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), with assistance from other members of management, have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025, and based on their evaluation, have concluded that our disclosure controls and procedures were not effective as of such date due to material weaknesses in internal control over financial reporting, described below. Background and Remediation of Material Weaknesses In connection with the preparation of our consolidated financial statements for the years ended December 31, 2025 and 2024, material weaknesses were identified in the design and operating effectiveness of our internal control over financial reporting. In 2024, we identified material weaknesses due to ineffective and information and communication controls, resulting in lack of timely identification and accounting for certain key debt and other agreements. Since fiscal year 2023, there have been misstatements that, individually and in the aggregate, were material to the consolidated financial statements that were identified due to deficiencies related to technical accounting. More specifically, the review controls over the transactions that gave rise to these misstatements lacked sufficient precision and the Company lacked a sufficient complement of personnel with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately. Due to the delays we experienced in securing funding during 2024 and 2025, we were not able to hire and train sufficient staff to remediate the previously identified material weaknesses in our internal control over financial reporting. As such, these material weaknesses were not remediated and continued to be present as of December 31, 2025. We have initiated, and continue to implement, measures intended to remediate the material weaknesses described above and to strengthen our internal control over financial reporting. These measures include: (i) hiring additional experienced accounting and SEC reporting personnel at the corporate and subsidiary levels and enhancing segregation of duties; (ii) engaging an independent internal auditor and establishing an internal audit plan focused on revenue recognition, complex financing arrangements, and acquisition accounting, with periodic reporting to the Audit Committee; (iii) implementing formal contract-review controls including documented technical accounting reviews for new or amended agreements; (iv) standardizing and documenting our monthly and quarterly close processes, including review and approval controls, checklists, and enhanced management review controls over significant estimates and judgments; and (v) deploying certain technology solutions, including a cloud-based planning and reporting system to reduce manual processes and improve data integrity and transparency. While we believe these actions represent important steps toward remediation, the material weaknesses will not be considered remediated until the applicable controls are designed, implemented, and operate effectively for a sufficient period of time and management has concluded, through testing, that they are operating effectively. We can provide no assurance that the measures described above will fully remediate the identified material weaknesses. We also may incur significant costs to execute costs to execute various aspects of our remediation plan. Changes in Internal Control over Financial Reporting Except for the material weakness remediation efforts described above, there were no other changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control Over Financial Reporting. This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies. Attestation Report of the Registered Public Accounting Firm. This Annual Report does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. 79 Inherent Limitations on the Effectiveness of Disclosure Controls and Procedures Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. ITEM 9B. OTHER INFORMATION Adoption, Modification and Termination of Rule 10b5-1 Plans and Certain Other Trading Arrangements During the quarter ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III Certain information required by Part III is omitted from this report because we intend to file with the SEC a definitive proxy statement pursuant to Regulation 14A related to our 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”) no later than 120 days after the end of our fiscal year, and certain information included therein is incorporated herein by reference. Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated herein by reference to the information that will be set forth in the sections entitled “Election of Directors,” “Executive Officers,” “Corporate Governance and Board Matters” and “Delinquent Section 16(a) Reports” in our 2026 Proxy Statement. Code of Ethics We have adopted a written Code of Business Conduct and Ethics that applies to all directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder, which is available via the “Governance – Governance Documents – Code of Business Conducts and Ethics” link at https://investor.theairogroup.com. We intend to promptly disclose on our website or in a Current Report on Form 8-K in the future (i) the date and nature of any amendment (other than technical, administrative or other non-substantive amendments) to the Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions and relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K and (ii) the nature of any waiver, including an implicit waiver, from a provision of the Code of Business Conduct and Ethics that is granted to one of these specified individuals that relates to one or more of the elements of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, the name of such person who is granted the waiver and the date of the waiver. Item 11. Executive Compensation The information required by this item is incorporated herein by reference to the information that will be set forth in the sections entitled “Executive Compensation” and “Director Compensation” in our 2026 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated herein by reference to the information that will be set forth in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation—Equity Compensation Plan Information” in our 2026 Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated herein by reference to the information that will be set forth in the sections entitled “Transactions with Related Persons and Indemnification” and “Corporate Governance and Board Matters—Independence of the Board of Directors” in our 2026 Proxy Statement. Item 14. Principal AccountANT Fees and Services The information required by this item is incorporated herein by reference to the information that will be set forth in the section entitled “Ratification of Selection of Independent Registered Public Accounting Firm” in our 2026 Proxy Statement. 80 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) List of Documents filed as part of this Report (1) Consolidated Financial Statements The consolidated financial statements and related notes, together with the reports of our independent auditor, are included in Item 8 under Part II of this Annual Report on Form 10-K. (2) Financial Statement Schedules All financial statement schedules have been omitted, as they are either inapplicable, or are insignificant, or the required information is shown in the consolidated financial statements or notes thereto. (3) Exhibits The exhibits listed below are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K: Exhibit Incorporated by Reference Number Description Form File No. Exhibit Filing Date 3.1 Amended and Restated Certificate of Incorporation of the Company 8-K 001-38529 3.1 June 16, 2025 3.2 Amended and Restated Bylaws of the Company S-1/A 333-285149 3.4 April 10, 2025 4.1† Description of Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934 4.2 Form of Common Stock Certificate S-1/A 333-285149 4.1 April 10, 2025 10.1+ Form of Indemnification Agreement by and between the Company and its directors and officers S-1/A 333-285149 10.1 April 10, 2025 10.2+ AIRO Group Holdings, Inc. Option Plan S-1/A 333-285149 10.9 April 10, 2025 10.3+ AIRO Group Holdings, Inc. 2025 Equity Incentive Plan S-1/A 333-285149 10.10 April 10, 2025 10.4+ Forms of Stock Option Grant Notice, Option Agreement and Notice of Exercise under the AIRO Group Holdings, Inc. 2025 Equity Incentive Plan S-1/A 333-285149 10.11 April 10, 2025 10.5+ Forms of Restricted Stock Unit Grant Notice and Award Agreement under the AIRO Group Holdings, Inc. 2025 Equity Incentive Plan S-1/A 333-285149 10.12 April 10, 2025 10.6+†^ Employment Agreement, dated June 4, 2025, by and between AIRO Group Holdings, Inc. and Mariya Pylypiv 10.7+†^ Employment Agreement, dated August 11, 2025, by and between AIRO Group Holdings, Inc. and Joseph Burns 10.8+†^ Employment Agreement, dated August 11, 2025, by and between AIRO Group Holdings, Inc. and John Uczekaj 10.9+†^ Employment Agreement, dated August 11, 2025, by and between AIRO Group Holdings, Inc. and Chirinjeev Kathuria 10.10+† Advisor Agreement, dated June 4, 2025, by and between AIRO Group Holdings, Inc. and Mariya Pylypiv 10.11+† Employment Contract, dated January 16, 2026, by and between AIRO Group Holdings, Inc. and Edvard Per Erik Svehag 10.12+† Variable Compensation Agreement, dated February 27, 2026, by and between AIRO Group Holdings, Inc. and Edvard Per Erik Svehag 10.13+† Non-Employee Director Compensation Policy 10.14 Lease Agreement between 15 North LLC, as landlord, and AIRO Group Holdings, Inc., as tenant, dated August 12, 2025 (Phoenix lease) 10-Q 001-42600 10.8 August 13, 2025 10.15 Deed of Lease, dated October 14, 2025, between Westpark Corporate Center, L.L.C. and AIRO Group Holdings, Inc. 8-K 001-42600 10.1 October 17, 2025 19.1† Insider Trading Policy 81 21.1† List of Subsidiaries of AIRO Group Holdings, Inc. 23.1† Consent of BPM LLP, Independent Registered Public Accounting Firm 24.1 Power of Attorney (included in Signatures page) 31.1† Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. 31.2† Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. 32.1* Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1† Incentive Compensation Recoupment Policy 101.INS* XBRL Instance Document – The instance document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101 + Indicates a management contract or compensatory plan, contract, or arrangement. † Filed herewith * Furnished herewith. ^ Pursuant to Item 601(a)(5) of Regulation S-K promulgated by the SEC, certain exhibits and schedules to this agreement have been omitted. The Company hereby agrees to furnish supplementally to the SEC, upon its request, any or all of such omitted exhibits or schedules. ITEM 16. FORM 10-K SUMMARY None. 82 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AIRO GROUP HOLDINGS, INC. By: /s/ Captain Joseph D. Burns Captain Joseph D. Burns Chief Executive Officer By: /s/ Dr. Mariya Pylpiv Dr. Mariya Pylpiv Chief Financial Officer Dated: March 31, 2026 POWER OF ATTORNEY KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Captain Joseph D. Burns and Mariya Pylypiv and each of them, as his or her true and lawful attorneys-in-fact and agents, and each of them, with the full power of substitution, for him or her and in his or her name, place or stead, in any and all capacities, to sign the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, to sign any and all amendments to such Annual Report (including post-effective amendment), and to file the same, together with all exhibits thereto and any other documents in connection therewith, with the Securities and Exchange Commission. The undersigned hereby grants to such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection with such filings, as fully to all intents and purposes as the undersigned might or could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents, or their substitutes or resubstitutes, may lawfully do or cause to be done by virtue hereof. This Power of Attorney shall remain in full force and effect until revoked in writing by the undersigned or superseded by a subsequently filed power of attorney. SIGNATURE TITLE DATE /s/ Captain Joseph D. Burns Chief Executive Officer and Director March 31, 2026 Captain Joseph D. Burns ( Principal Executive Officer) /s/ Dr. Mariya Pylypiv Chief Financial Officer March 31, 2026 Dr. Mariya Pylypiv ( Principal Financial and Accounting Officer) /s/ John Uczekaj President, Chief Operating Officer and Director March 31, 2026 John Uczekaj /s/ Dr. Chirinjeev Kathuria Executive Chairman and Director March 31, 2026 Dr. Chirinjeev Kathuria /s/ John Belcher Director March 31, 2026 John Belcher /s/ Elizabeth Ng Director March 31, 2026 Elizabeth Ng /s/ Edvard Per Erik Svehag Director March 31, 2026 Edvard Per Erik Svehag /s/ Brian Nelson Director March 31, 2026 Brian Nelson /s/ Gregory Winfree Director March 31, 2026 Gregory Winfree /s/ Sherrie McCandless Director March 31, 2026 Sherrie McCandless 83