The AIRO Group, Inc. entered into a non-binding letter of intent to acquire Kernel Group Holdings, Inc. (NasdaqCM:KRNL) from a group of shareholders in a reverse merger transaction on January 10, 2023. The AIRO Group, Inc. entered into a definitive business combination agreement to acquire Kernel Group Holdings, Inc. from a group of shareholders for $1.1 billion in a reverse merger transaction on March 3, 2023. Holders of AIRO Group securities collectively shall be entitled to receive from ParentCo, in the aggregate, a number of shares of ParentCo common stock with an aggregate value equal to $770,000,000, subject to certain adjustments. In addition, holders of AIRO Group securities shall also be entitled to receive from ParentCo, in the aggregate, an additional shares of ParentCo common stock with an aggregate value of up to $330,000,000 in the event that for any full 12-month period (each an “Earnout Period”) commencing on or after the Closing Date (the “Earnout Start Date”) and ending on or before the last day of the thirteenth full calendar quarter following the Closing Date based on achievement of Revenue and EBITDA performance. Additionally, the proposed Transaction includes a contingent earnout payable to the AIRO stockholders and the sponsor. The Merger Agreement provides AIRO with a path to becoming a publicly listed company through a new Delaware holding company, AIRO Group, Inc. (“PubCo”) that will acquire both Kernel and AIRO. Upon closing of the merger transaction (the “Transaction”), AIRO and Kernel will be wholly-owned subsidiaries of PubCo. PubCo common stock and warrants are expected to be listed on Nasdaq, under the symbols “AIRO” and “AIROW,” respectively. The combined company will be renamed AIRO Group, Inc. Following the closing of the proposed transaction, Chirinjeev Kathuria will serve as the Chairman of the Board of Directors. The Board will consist of nine members including Joe Burns, John Uczekaj, Suren Ajjarapu, and Michael Peterson (current member of the Kernel Board of Directors.)

The proposed Transaction is subject to, among other things, the approval by Kernel and AIRO Group stockholders; governmental, regulatory and third party approvals; the Registration Statement having been declared effective by the SEC; the satisfaction of the $5,000,001 minimum net tangible asset test by Kernel; at the Closing, Kernel having $50,000,000 in Unencumbered Cash; the completion of Kernel's legal due diligence of AIRO Group; Any waiting period applicable to the consummation of this Agreement under any Antitrust Laws shall have expired or been terminated; approval from Nasdaq for the listing of the shares of ParentCo's common to be issued in connection with the Transaction; each Lock-Up Agreement and Non-Competition Agreement shall be in full force and effect in accordance with the terms thereof as of the Closing; Kernel shall have received employment agreements and the satisfaction or waiver of other customary closing conditions. The proposed Transaction was unanimously approved by the boards of directors of all parties. As of April 11, 2023, the confidential draft of a registration statement Form S-4 (“S-4”) in connection with the proposed business combination has submitted with the U.S. Securities and Exchange Commission. As of June 5, 2023, Kernel Group Holdings deposited $0.3 million into the Company's Trust account for its public shareholders, representing $0.04 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from June 5, 2023 to July 5, 2023. The proposed business combination expected to be completed in Q3 2023.

Citibank and Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC are serving as lead capital markets advisors to Kernel. Andrew M. Tucker of Nelson Mullins Riley & Scarborough LLP is serving as legal counsel to Kernel and VKSS Capital, LLC. Malone Bailey, LLP is serving as auditors to Kernel. Kate Bechen of Dykema Gossett PLLC is serving as legal counsel to AIRO and BPM LLP is serving as auditors to AIRO. Kernel has hired Alliance Advisors, LLC to assist in the proxy solicitation process. Kernel has paid Mentor a fee of $90,000 in connection with delivery of its Opinion. Nelson Mullins Riley & Scarborough LLP acted as due diligence provider to Kernel.