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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2025
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation |
15. | Stock-Based Compensation
Equity Incentive Plan In March 2025, the Board of Directors adopted, and the stockholders approved, the AIRO Group Holdings, Inc. 2025 Equity Incentive Plan (the “2025 Plan”). The 2025 Plan provides for the grant of incentive stock options (“ISOs”) to employees, including employees of any parent or subsidiary, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other forms of stock awards to employees, directors, and consultants, including employees and consultants of the Company’s affiliates. The 2025 Plan is a successor to and continuation of the Legacy Plan (referred to in the 2025 Plan as the Prior Plan) and will become effective on the execution of the underwriting agreement related to the IPO. Initially, the maximum number of shares of the Company’s common stock that may be issued under the 2025 Plan after it becomes effective will not exceed 1.9 million shares of the Company’s common stock (the “Share Reserve”). In addition, the number of shares of the Company’s common stock reserved for issuance under the 2025 Plan will automatically increase on January 1 of each year, starting on January 1, 2026, through and including January 1, 2035, in an amount equal to (1) 3% of the total number of shares of the Company’s common stock outstanding on the last day of the preceding calendar year, or (2) a lesser number of shares of the Company’s common stock determined by the Board of Directors prior to the date of the increase. The maximum number of shares of the Company’s common stock that may be issued upon the exercise of ISOs under the 2025 Plan will be three times the Share Reserve. During the year ended December 31, 2025, there were 0.1 million of stock awards, 0.2 million stock units, and zero options, respectively, granted under the 2025 Plan. During the year ended December 31, 2025, the Company incurred $19.9 million in stock-based compensation expense, which comprised $14.1 million from restricted stock awards and units, $0.3 million in shares issued to NGA, and $5.5 million in shares issued to Dangroup. Restricted Stock Awards In May 2022, the Company granted restricted stock awards for 0.3 million shares of common stock with performance-based vesting criteria with a grant date fair value of $41.95 per share. The recognition of vesting on the restricted stock awards can vary by reporting period as the recognition of vesting expense is based on the probable outcome of the performance threshold condition and the cumulative progress to those performance conditions. The Company reassesses at each reporting date whether the achievement of the performance threshold condition is probable and accrues compensation expense if and when achievement of the performance threshold condition is probable and the expected achievement and vesting date for the performance tranche. The restricted stock awards granted in May 2022 were granted with three separate performance thresholds with specific amounts of restricted shares attached that vest based on the probable achievement of those performance thresholds. The performance thresholds are attached to contract dollar volumes on Adversary Air task orders from the United States Department of Defense. The restricted stock awards vest ratably at each performance tranche level of aggregate amounts of (1) $25.0 million, (2) $50.0 million, and (3) $75.0 million. As of December 31, 2022, the Company had concluded that the achievement of the performance thresholds within the measurement period was not probable. Accordingly, during the period from the grant date to December 31, 2022, no compensation expense was recognized. On August 2, 2023, the terms of the restricted stock awards were modified whereby the vesting of the 0.3 million shares of common stock became contingent upon the Company’s common stock being publicly traded. As this contingency was not probable as of the modification date, no charge was recorded as a result of the modification. This contingency was resolved upon the completion of the Company’s initial public offering, at which time the modified vesting condition was satisfied. The Company recorded stock-based compensation expense of $10.1 million associated with the vesting of these contingent restricted stock awards. As of December 31, 2024, there was no compensation expense recognized as the contingency was not probable. During the year ended December 31, 2025, the Company granted and delivered 0.1 million restricted stock awards with a weighted-average grant date fair value of $16.55 and recorded $1.3 million of stock-based compensation expense for these awards. Restricted Stock Units During the year ended December 31, 2025, the Company granted 0.2 million restricted stock units and recorded $0.9 million of stock-based compensation expense for these units. The majority of these restricted stock units will be delivered in 2026. A summary of restricted stock unit activity under the Plan for the year ended December 31, 2025: Schedule of Restricted Stock Unit Activity
(Shares In Thousands) |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value (Per Unit) |
Unvested restricted stock units outstanding, January 1, 2025 |  |  | - |  |  |  | - |
Granted |  |  | 233 |  |  | $ | 8.91 |
Vested 1 |  |  | (61 | ) |  | $ | 12.67 |
Forfeited |  |  | - |  |  |  | - |
Unvested restricted stock units outstanding, December 31, 2025 |  |  | 172 |  |  | $ | 7.57 |
1 | Total vested shares include 51,832 shares that vested during the year ended December 31, 2025 and for which, delivery was deferred until March 11, 2026, as permitted under the terms of the Equity Incentive Plan.
Option Plan On April 1, 2022, as part of the reverse acquisition with Holdings, the Company adopted the AIRO Group Holdings, Inc. Option Plan (the “Plan”) and assumed the outstanding options previously granted prior to the acquisition. The option agreements provide for the purchase of a total of 0.4 million shares of the Company’s common stock with an exercise price of $8.59 per share. There were no additional common shares available for future grants under the Plan. The options’ vesting periods range from immediate to four years and expire as determined by the Board of Directors, but not more than 10 years from the date of grant. The exercise price and grant amounts are determined in accordance with the provisions of the Plan and by the Board of Directors. The total stock-based compensation expense for the Plan during the years ended December 31, 2025 and 2024 was $0.2 million and $0.7 million, respectively. As of December 31, 2025, there was no unrecognized stock-based compensation cost related to options under the Plan. A summary of option activity under the Plan for the years ended December 31, 2025 and 2024: Summary of Option Activity
(Shares In Thousands) |  | Number of Shares |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term (Years) |
Options outstanding, January 1, 2024 |  |  | 356 |  |  | $ | 8.59 |  |  |  | 6.4 |
Options forfeited |  |  | (51 | ) |  | $ | 8.59 |  |  |  |  |
Options outstanding, December 31, 2024 |  |  | 305 |  |  | $ | 8.59 |  |  |  | 6.6 |
Options exercised |  |  | (68 | ) |  | $ | 8.59 |  |  |  |  |
Options outstanding, December 31, 2025 |  |  | 237 |  |  | $ | 8.59 |  |  |  | 5.6 |
Vested and exercisable, December 31, 2025 |  |  | 237 |  |  | $ | 8.59 |  |  |  | 5.6 |
Vested and exercisable and expected to vest, December 31, 2025 |  |  | 237 |  |  | $ | 8.59 |  |  |  | 5.6 |
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the use of a number of complex assumptions including expected volatility, expected term, risk-free interest rate, and expected dividends of the option. The expected volatility assumption used in the Black-Scholes option pricing model are based on estimates derived from both historical and implied volatility from a group of comparable public companies operating in the same or similar lines of business as the Company. The expected term of employee options represents the weighted-average period the options are expected to remain outstanding and was derived using the simplified method for awards that qualify as “plain-vanilla” options. All awards that are outstanding are qualified as “plain-vanilla” options. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option. The dividend yield is set to zero as the Company has never paid cash dividends and has no present intention to pay cash dividends.

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