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June 20, 2024
Surendra Ajjarapu
Chief Executive Officer
AIRO Group, Inc.
515 Madison Avenue, 8th Floor, Suite 8078
New York, NY 10022
Re:AIRO Group, Inc.
Amendment No. 5 to Registration Statement on Form S-4
Filed April 10, 2024
File No. 333-272402
Dear Surendra Ajjarapu:
            We have reviewed your amended registration statement and have the following
comment(s).
            Please respond to this letter by amending your registration statement and providing the
requested information. If you do not believe a comment applies to your facts and circumstances
or do not believe an amendment is appropriate, please tell us why in your response.
            After reviewing any amendment to your registration statement and the information you
provide in response to this letter, we may have additional comments. Unless we note otherwise,
any references to prior comments are to comments in our March 13, 2024 letter.
Amendment No. 5 to Registration Statement on Form S-4 filed April 10, 2024
Earnout Shares, page 126
1.We note your response to comment 4. To assist us with our review of the accounting
treatment for your sponsor earnout, please address the following items:

•You indicate that you determined the sponsor earnout arrangement was not within the
scope of ASC 718 since "the primary business purpose is related to the financing the
Sponsor provided to Kernel prior to the business combination, which is unrelated to
the grantor’s operations." Since the sponsor will be compensated for providing
extension loans to Kernel prior to the business combination in the form of additional
shares of common stock, as noted in Section 2.7(e) of the Business Combination
Agreement and your disclosures on page 131, tell us the reasons why you believe the
primary purpose of the sponsor earnout shares is for providing financing.

 FirstName LastNameSurendra Ajjarapu
 Comapany NameAIRO Group, Inc.
 June 20, 2024 Page 2
 FirstName LastName
Surendra Ajjarapu
AIRO Group, Inc.
June 20, 2024
Page 2

•Tell us how much of the financing provided by the sponsor is derived from Kernel
employees versus passive investors in the sponsor. Additionally, tell us what
percentage of the total sponsor earnout would ultimately be distributed to former
Kernel employees versus passive investors in the sponsor.

•To the extent the sponsor earnout were to be reflected as an expense, tell us which
entity’s financial statements would reflect the expense, the period(s) in which the
expense would be recorded, and how you reached your conclusions.
AIRO's Management's Discussion and Analysis of Financial Condition and Results of
Operations, page 187
2.Pursuant to Item 303(b)(3) of Regulation S-K, please revise your filing to provide critical
accounting estimate disclosures for Airo Group Holdings ("Holdings"). We would expect
such disclosures to include, but not necessarily be limited to, critical accounting policies
for business combinations, the valuation of your common stock, and the impairment of
goodwill and intangible assets. Such disclosures should include qualitative and
quantitative information necessary to understand the estimation uncertainty and the impact
your critical accounting estimates have had or are reasonably likely to have on
your financial condition and results of operations. In addition, discuss how much each
estimate and/or assumption has changed over a relevant period and the sensitivity of
reported amounts to the underlying methods, assumptions and estimates
used. The disclosures should supplement, not duplicate, the description of accounting
policies or other disclosures in the notes to the financial statements. To the extent your
disclosures in response to the comments under this header do not materially comply with
the guidance in Regulation S-K and SEC Release No. 33-8350, we may have further
substantive comments.
3.As noted in the preceding comment, please include a critical accounting policy for the
valuation of your common stock. Thoroughly describe the methodologies and key
inputs and assumptions used in the valuations of your common stock issued as business
combination consideration. In doing so, clearly disclose, as previously communicated to
us, that your valuations were based on the revenue and EBITDA projections disclosed on
page 99 under the "Projected Financial Information" header and ensure you discuss in
sufficient detail the estimates, assumptions, and underlying support utilized in developing
and validating such projections. Also ensure you include any pertinent information
provided in response to prior comments, including the second bullet of comment 6.

 FirstName LastNameSurendra Ajjarapu
 Comapany NameAIRO Group, Inc.
 June 20, 2024 Page 3
 FirstName LastName
Surendra Ajjarapu
AIRO Group, Inc.
June 20, 2024
Page 3
4.Considering goodwill and intangible assets represent the vast majority of your total assets,
ensure that you include a critical accounting policy addressing how you assess such assets
for impairment. Your disclosures should include, but not necessarily be limited to the
following:

•Provide a thorough discussion of your impairment testing policies, including a
description of the key assumptions used to estimate the fair value of the reporting
units for your goodwill impairment analysis, how the key assumptions were
determined, the degree of uncertainty associated with the key assumptions, and any
material changes in the key assumptions during the periods presented.

•Discuss how goodwill and other intangible assets were tested during 2023, including
whether you performed a qualitative and/or quantitative test.

•Indicate how you determine your reporting units for goodwill impairment testing
purposes and identify your reporting units.

•State whether or not the fair values of your reporting units “substantially exceed” the
respective carrying values. To the extent any reporting unit fair values are not
substantially in excess of carrying values, disclose the name(s) of the reporting
unit(s), the percentage by which the estimated fair value of the reporting unit(s)
exceeded the carrying value, the amount of goodwill allocated to the reporting
unit(s), and whether the related goodwill is at risk of impairment. Also provide
a description of potential events and/or changes in circumstances that could
reasonably be expected to negatively affect the key assumptions.

•Given the significant goodwill recorded in your Electric Air Mobility ("EAM")
segment and the negative EBITDA and minimal revenues projected for EAM through
fiscal 2026 per your disclosures on page 99, ensure you specifically and
comprehensively address the recoverability of intangible assets related to EAM.
AIRO Group Holdings, Inc. - Audited Financial Statements
2. Business Combinations, page F-52
5.We note your response to prior comment 5. Please tell us in sufficient detail how you
determined Aspen Avionics ("Aspen") was the accounting acquirer in the reverse
acquisition with Holdings. In doing so, provide us with a comprehensive accounting
analysis that specifically addresses each determinative factor discussed in ASC 805-10-
55-10 through 55-15. Ensure that your analysis addresses the following items:

•Tell us in sufficient detail how you concluded Aspen was the accounting acquirer
despite Holdings retaining 89% of the shares of the combined company.

•Tell us the specific composition of the board of directors of the combined entity upon

 FirstName LastNameSurendra Ajjarapu
 Comapany NameAIRO Group, Inc.
 June 20, 2024 Page 4
 FirstName LastName
Surendra Ajjarapu
AIRO Group, Inc.
June 20, 2024
Page 4
consummation of the acquisition, including how many members of the board were
representatives of Aspen versus Holdings.

•We understand that the CEO and COO of the combined entity at the acquisition
date were board members of Aspen. Please tell us the composition of senior
management upon consummation of the acquisition, including how many members of
management were representative of Aspen versus Holdings.

•Explain why there appears to be a significant disparity between shareholder
ownership percentages and the composition of the board of directors and senior
management of the combined entity.

•Provide us with relevant financial statement amounts of Aspen and Holdings at the
time of acquisition, such as total assets, revenues, and earnings.

 FirstName LastNameSurendra Ajjarapu
 Comapany NameAIRO Group, Inc.
 June 20, 2024 Page 5
 FirstName LastName
Surendra Ajjarapu
AIRO Group, Inc.
June 20, 2024
Page 5
            Please contact Dale Welcome at 202-551-3865 or Andrew Blume at 202-551-3254 if you
have questions regarding comments on the financial statements and related matters. Please
contact Patrick Fullem at 202-551-8337 or Jay Ingram at 202-551-3397 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Manufacturing
cc:       Kate Bechen