AIRO Group Holdings (AIRO) risk factors, FY2025 10-K

Risks Related to Our Limited Operating History, Financial Position and Need for Additional Capital

1. 01We have a limited operating history in new and evolving markets, which may make it difficult to evaluate our current business and future prospects and increase the risk of your investment
2. 02We have incurred significant net losses since inception including net losses of $4.1 million and $38.7 million for the year ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $210.6 million
3. 03In addition, as a newly public company, we expect to continue to incur increased legal, accounting and compliance costs

Risks Related to Our Business

1. 04We do not have long-term commitments from our customers, and end customers may cease purchasing our products at any time
2. 05We have made and may in the future make acquisitions and investments, which involve numerous risks
3. 06We may not be able to successfully integrate the businesses and personnel of acquired companies and businesses, and may not realize the anticipated synergies and benefits of such acquisitions
4. 07We face significant competition from other companies, many of which have substantially greater resources than we do
5. 08We may not be able to keep pace with technological advances and we depend on advances in technology by other companies
6. 09We may be unable to acquire additional aircraft to support our Training segment on acceptable terms or at all
7. 10Due to the nature of our products and services, a product safety failure, quality issue or other failure affecting our or our customers’ or suppliers’ products or systems could seriously harm our business
8. 11Our customers may experience service failures or interruptions due to defects in the software, infrastructure, components or engineering system that compromise our products and services, or due to errors in product installation, any of which could harm our business
9. 12Our future success depends on the continuing efforts of our key personnel and on our ability to attract and retain highly skilled personnel and senior management
10. 13We rely on independent dealers and distributors to sell our Avionics products, and disruption to these channels would harm our business
11. 14We currently, and may in the future, use and develop generative AI technologies throughout our business, which may expose us to certain regulatory and other risks that could adversely affect our results of operations and financial condition
12. 15In the ordinary course of our business, we and the third parties with whom we work may process proprietary, confidential, and sensitive data, including personal data, intellectual property, and trade secrets
13. 16Our commercial aviation products, systems and services businesses are affected by global demand and economic factors that could negatively impact our financial results
14. 17Extreme weather, natural disasters and other adverse events could have a material adverse effect on our business, results of operations and financial condition
15. 18The sizes of the markets for our current and future solutions may be smaller than we estimate
16. 19The market for eVTOL aircraft and electric air mobility has not been clearly defined, is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected, which may harm our business, financial condition, and results of operations
17. 20We are still developing our eVTOL aircraft, have not yet obtained FAA certification of our eVTOL aircraft under development and we have yet to manufacture or deliver any aircraft to customers, which makes evaluating our business and future prospects difficult and increases the risk of investment
18. 21There may be reluctance by consumers to adopt a new form of mobility, or an unwillingness to pay aircraft operators’ projected prices
19. 22Operators of our aircraft may be unable to reduce end-user pricing over time at rates sufficient to stimulate demand for our aircraft, drive expected growth and accomplish planned production
20. 23Our aircraft may not perform at the level we expect, and may have design or manufacturing deficiencies, such as higher than expected noise profiles, lower payloads than initially estimated, shorter ranges and/or shorter useful lives than we anticipate
21. 24Accidents or safety incidents involving eVTOL aircraft, us or our competitors could have a material adverse effect on our business, financial condition, and results of operations
22. 25If we experience harm to our reputation and brand by customers, employees or operators, our business, financial condition, and results of operations could be adversely affected
23. 26In order to reach production for our aircraft, we need to develop complex software and technology systems in coordination with our partners and suppliers, and there can be no assurance such systems will be successfully developed
24. 27We may not be able to produce aircraft in the volumes or on the timelines that we anticipate

Risks Related to Our U.S. Government Contracts

1. 28We are subject to extensive government regulation, and our failure to comply with applicable regulations may subject us to significant financial liability, penalties, and other government actions that restrict our ability to conduct our business
2. 29U.S. government contracts are subject to a competitive bidding process, are generally not fully funded at inception, and contain certain terms that may be unfavorable to us, which could result in contracts and opportunities consuming significant resources without generating revenue or profit
3. 30The U.S. government may modify, curtail or terminate one or more of our contracts
4. 31Our business may benefit in part from government funding, and our inability to receive such financial support could harm our business
5. 32Shutdowns of the U.S. federal government could materially impair our business and financial condition
6. 33For the Avionics segment, we anticipate that a shutdown could impact the FAA’s processing of certain approvals for engine instruments, both during and following the end of any shutdown, which could delay revenues from future new product launches

Risks Related to Legal and Regulatory Requirements

1. 34Many of our products and services are subject to local, state, federal and international regulatory frameworks that are costly to comply with, are subject to interpretation, may be dependent on political pressures and factors and/or are subject to change
2. 35Our business is highly regulated and our ability to generate revenues and profit may be limited by regulatory restrictions and/or changes and the speed with which such restrictions and/or changes occur
3. 36We are subject to the risks associated with conducting international business operations
4. 37We may be unable to source and sell our products profitably or at all if new trade protections are imposed or existing protections become more burdensome

Risks Related to Our Intellectual Property

1. 38If we fail to protect, or incur significant costs in defending or enforcing, our intellectual property and other proprietary rights, our business, financial condition, and results of operations could be materially harmed
2. 39We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly, time-consuming and limit our ability to use certain technologies in the future

Risks Related to Tax and Accounting Matters

1. 40Our ability to use our net operating loss carryforwards and certain tax credit carryforwards may be subject to limitation
2. 41A failure to establish and maintain an effective system of disclosure controls and internal control over financial reporting, could adversely affect our ability to produce timely and accurate financial statements or comply with applicable regulations
3. 42Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, which are subject to change, and we could be obligated to pay additional taxes, which would harm our results of operations
4. 43Future changes in financial accounting standards or practices may cause adverse and unexpected revenue fluctuations and adversely affect our reported results of operations
5. 44An active trading market for our common stock may not continue to develop or be sustained
6. 45The trading price of our common stock may be volatile, and you could lose all or part of your investment
7. 46We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock
8. 47Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval
9. 48Our management team has limited experience managing a public company
10. 49Future issuances of debt or equity securities may adversely affect us, including the market price of our common stock, and may be dilutive to existing stockholders
11. 50Any issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plan or otherwise will dilute all other stockholders
12. 51Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our common stock to decline
13. 52We are an emerging growth company and a smaller reporting company and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors
14. 53Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock
15. 54The amendment of any of these provisions, with the exception of the ability of our board of directors to issue shares of preferred stock and designate any rights, preferences and privileges thereto, requires approval by the holders of at least 66-2/3% of our then-outstanding common stock
16. 55If securities analysts do not publish research or reports about our business or if they downgrade our common stock or our sector, our common stock price and trading volume could decline
17. 56We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices
18. 57Our business and financial performance could be adversely affected by inflation
19. 58We cannot predict the consequences of future macroeconomic conditions or geopolitical events, but they may adversely affect market and economic conditions, the markets in which we operate, our ability to insure against risks, our operations or our profitability
20. 59We expect our quarterly results of operations to continue to fluctuate due to a number of factors, including as a result of supply chain issues, product introduction schedules, competitive products entering the market and the seasonality and uneven sales patterns of our OEM customers