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AIRO Group, Inc. – ‘S-4/A’ on 2/12/24

On:  Monday, 2/12/24, at 9:01am ET   ·   Accession #:  1493152-24-5823   ·   File #:  333-272402

Previous ‘S-4’:  ‘S-4/A’ on 11/28/23   ·   Next & Latest:  ‘S-4/A’ on 4/10/24   ·   14 References:   By:  AIRO Group, Inc. – Next & Latest ‘S-4/A’ on 4/10/24 To:  Kernel Group Holdings, Inc. – ‘8-K’ on 2/6/24 for 2/1/24 To:  Kernel Group Holdings, Inc. – ‘8-K’ on / for 1/16/24 To:  AIRO Group, Inc. – Previous ‘S-4/A’ on 11/28/23 To:  AIRO Group, Inc. – ‘S-4/A’ on 8/31/23 To:  Kernel Group Holdings, Inc. – ‘8-K’ on 8/30/23 for 8/29/23 To:  Kernel Group Holdings, Inc. – ‘8-K’ on 8/4/23 for 8/3/23 To:  AIRO Group, Inc. – ‘S-4/A’ on 6/30/23 To:  Kernel Group Holdings, Inc. – ‘8-K’ on 3/6/23 for 2/28/23 To:  Kernel Group Holdings, Inc. – ‘8-K’ on 1/3/23 for 12/28/22 To:  Kernel Group Holdings, Inc. – ‘10-K’ on 3/31/22 for 12/31/21 To:  Kernel Group Holdings, Inc. – ‘8-K’ on / for 2/5/21 To:  Kernel Group Holdings, Inc. – ‘S-1/A’ on 1/26/21 To:  Kernel Group Holdings, Inc. – ‘S-1’ on 1/14/21 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/12/24  AIRO Group, Inc.                  S-4/A                 10:8.8M                                   M2 Compliance LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Pre-Effective Amendment to Registration Statement   HTML   8.13M 
                - Securities for a Merger                                        
 2: EX-23.1     Consent of Expert or Counsel                        HTML      7K 
 3: EX-23.2     Consent of Expert or Counsel                        HTML      6K 
 4: EX-99.1     Miscellaneous Exhibit                               HTML      7K 
 5: EX-99.2     Miscellaneous Exhibit                               HTML      7K 
 6: EX-99.3     Miscellaneous Exhibit                               HTML      7K 
 7: EX-99.4     Miscellaneous Exhibit                               HTML      7K 
 8: EX-99.5     Miscellaneous Exhibit                               HTML      7K 
 9: EX-99.6     Miscellaneous Exhibit                               HTML      7K 
10: EX-99.7     Miscellaneous Exhibit                               HTML      7K 

As filed with the Securities and Exchange Commission on February 12, 2024.

No. 333-272402

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 4

TO

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

AIRO Group, Inc.
(Exact name of registrant as specified in its charter)

515 Madison Avenue, 8th Floor – Suite 8078

New York, New York 10022

(646) 908-2659
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Surendra Ajjarapu
President
515 Madison Avenue, 8^th Floor – Suite 8078

New York, New York 10022

(646) 908-2659
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer) ☒

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in the preliminary proxy statement/prospectus is not complete and may be changed. The registrant may not sell the securities described in the preliminary proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is declared effective. The preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY — SUBJECT TO COMPLETION, DATED FEBRUARY 12, 2024

PROXY STATEMENT FOR
EXTRAORDINARY GENERAL MEETING OF

KERNEL GROUP HOLDINGS, INC.

(A CAYMAN ISLANDS EXEMPTED COMPANY)

PROSPECTUS FOR
[●] SHARES OF COMMON STOCK AND

[●] WARRANTS

OF

AIRO GROUP, INC.

The board of directors of Kernel Group Holdings, Inc., a Cayman Islands exempted company (“Kernel”) has unanimously approved the transactions (collectively, the “Business Combination”) contemplated by that certain Agreement and Plan of Merger, dated March 3, 2023 (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among Kernel, AIRO Group, Inc., a Delaware corporation (“ParentCo”), Kernel Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of ParentCo (“Kernel Merger Sub”), AIRO Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of ParentCo (“AIRO Merger Sub”), VKSS Capital, LLC, in the capacity as the representative from and after the First Effective Time (as defined below) for the stockholders of Kernel and ParentCo (the “ParentCo Representative”) and also in its capacity as Kernel’s sponsor (“Sponsor”), Dr. Chirinjeev Kathuria, in the capacity as the representative from and after the Second Effective Time for the AIRO stockholders as of immediately prior to the Second Effective Time (the “Seller Representative”), and AIRO Group Holdings, Inc., a Delaware corporation (“AIRO”), a copy of which is attached to this proxy statement/prospectus as Annex A, including the deregistration of Kernel under the Cayman Islands Companies Act (As Revised) and the domestication under Part XII of the Delaware General Corporation Law, pursuant to which Kernel’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”). As described in this proxy statement/prospectus, Kernel’s shareholders are being asked to consider a vote upon each of the Domestication and the Business Combination, among other items.

In connection with the Domestication, each issued and outstanding Kernel Class A Ordinary Share, each issued and outstanding Kernel Class B Ordinary Share, each issued and outstanding Kernel Private Placement Warrant, each issued and outstanding Kernel Public Warrant, and each issued and outstanding Kernel Unit shall convert automatically, on a one-for-one basis, into one share of Kernel Class A common stock, one share of Kernel Class B common stock, one Kernel private warrant, one Kernel public warrant and one Kernel public unit, respectively, and (ii) immediately following the Domestication, (a) each share of Kernel Class B common stock shall convert automatically, on a one-for-one basis, into one share of Kernel Class A common stock, (b) the Kernel Class A common stock will be reclassified as Kernel common stock, and (c) each Kernel public unit will be separated into one share of Kernel common stock and one Kernel Public Warrant.

On the Closing Date, Kernel Merger Sub will merge with and into Kernel (the “First Merger”), with Kernel surviving the First Merger as a wholly owned subsidiary of ParentCo. In accordance with the terms and subject to the conditions of the Business Combination Agreement and the Proposed ParentCo Charter, (i) each share of Kernel common stock, each Kernel Private Placement Warrant, and each Kernel Public Warrant issued and outstanding immediately prior to the First Effective Time shall automatically be converted into and exchanged for one validly issued, fully paid and nonassessable share of ParentCo Common Stock, one ParentCo Private Placement Warrant or one ParentCo Public Warrant, respectively (“Kernel Merger Consideration”), (ii) each share of ParentCo Common Stock held by Kernel issued and outstanding immediately prior to the First Effective Time shall automatically be cancelled and shall cease to exist as of the First Effective Time, (iii) each share of Kernel Merger Sub Common Stock issued and outstanding as of immediately prior to the First Effective Time shall automatically be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock of the company surviving the First Merger. Immediately following the First Merger, AIRO Merger Sub will merge with and into AIRO (the “Second Merger”) with AIRO surviving the Second Merger as a wholly-owned subsidiary of ParentCo. In accordance with the terms and subject to the conditions of the Business Combination Agreement, the holders of AIRO’s 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 (a) $770,000,000 minus (b) the amount, if any, by which the net working capital is less than $(5,500,000) by more than $500,000, plus (c) the amount, if any, by which the net working capital is greater than $(5,500,000) by more than $500,000 (but not less than zero), minus (d) the amount, if any, by which the closing net debt exceeds $75,000,000 by more than $500,000 (but not less than zero), plus (e) the amount, if any, by which the closing net debt is less than $75,000,000, minus (f) the amount, if any, by which the company transaction expenses exceed $14,000,000 (such resulting amount, the “AIRO Merger Consideration”).

It is anticipated that, upon completion of the Business Combination, (i) Kernel’s Public Shareholders will retain an ownership interest of approximately [●] of the outstanding shares of ParentCo Common Stock, (ii) the AIRO stockholders (as defined in the accompanying proxy statement/prospectus) will own, collectively, approximately [●]% of the outstanding shares of ParentCo Common Stock, and (iii) Kernel’s Sponsor will own approximately [●]% of the outstanding shares of ParentCo Common Stock, in each case, assuming that none of Kernel’s outstanding Public Shares are redeemed in connection with the Business Combination, or approximately [●]%, [●]%, and [●]%, respectively, assuming that all of Kernel’s outstanding Public Shares are redeemed in connection with the Business Combination. See “Shareholder Proposal No. 1: The Business Combination Proposal — Post-Business Combination Ownership of ParentCo” for more details.

The number of shares of ParentCo Common Stock that this proxy statement/prospectus covers is the maximum number of shares that may be issued to AIRO stockholders and the maximum number of shares issued or issuable to the existing shareholders and warrant holders of Kernel, in each case, in connection with the Business Combination. The number of Warrants that this proxy statement/prospectus covers is the number of redeemable warrants issued by Kernel in its IPO, plus the Private Placement Warrants that were issued in a private placement simultaneously with Kernel’s IPO.

Kernel’s Units, Public Share and Public Warrants are currently listed on Nasdaq Capital Market (“Nasdaq”) under the symbols “KRNLU,” “KRNL,” and “KRNLW,” respectively. Kernel will apply for listing, to be effective at the time of the Business Combination, of ParentCo Common Stock and warrants on Nasdaq under the proposed symbols “AIRO” and “AIROW,” respectively. It is a condition of the consummation of the Business Combination that Kernel receive confirmation from Nasdaq that ParentCo Common Stock has been conditionally approved for listing on Nasdaq, but there can be no assurance such listing condition will be met or that Kernel will obtain such confirmation from Nasdaq, and you may not know whether the listing condition has been met at the time of the Extraordinary General Meeting (as defined below). If such listing condition is not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the Nasdaq condition set forth in the Business Combination Agreement is waived by ParentCo.

Kernel will hold an extraordinary general meeting (the “Extraordinary General Meeting”) to consider matters relating to the Business Combination at [●], Eastern Time, on [●], 2024. For the purposes of Cayman Islands Companies Law and the Second Amended and Restated Memorandum and Articles of Association of Kernel, the physical location of the Extraordinary General Meeting shall be [●], or you or your proxyholder will be able to attend and vote at the Extraordinary General Meeting online by visiting [●] and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the Extraordinary General Meeting, registered shareholders and beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the accompanying proxy statement/prospectus.

Kernel is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and has elected to take advantage of certain reduced public company reporting requirements.

If you have any questions or need assistance voting your ordinary shares, please contact Issuer Direct Corporation, our proxy solicitor, by calling (919) 481-4000, or banks and brokers can call collect at (919) 481-4000, or by emailing proxy@issuerdirct.com. The notice of the Extraordinary General Meeting and the proxy statement/prospectus relating to the Business Combination will be available at https:// [●].

The accompanying proxy statement/prospectus provides shareholders of Kernel with detailed information about the Business Combination and other matters to be considered at the Extraordinary General Meeting of Kernel. We encourage you to read the entire accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in their entirety. In particular, when you consider the recommendation of the board of directors of Kernel to vote in favor of the proposals described in this proxy statement/prospectus, you should keep in mind that Kernel’s directors and officers have interests in the Business Combination that are different from, in addition to or may conflict with your interests as a shareholder. For instance, the Sponsor, and the officers and directors of Kernel who have invested in the Sponsor entity, will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders rather than liquidate. See the section entitled “Interests of Kernel’s Directors and Officers and Others in the Business Combination” for a further discussion. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 37 of the accompanying proxy statement/prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/prospectus is dated [●], 2024, and is first being mailed to Kernel’s shareholders on or about [●], 2024.

Kernel Group Holdings, Inc.

515 Madison 8th Floor – Suite 8078

New York, New York 10022

(646) 908-2659

NOTICE OF EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS OF

KERNEL GROUP HOLDINGS, INC.

TO BE HELD ON [ ● ], 2024

To the Stockholders of Kernel Group Holdings, Inc.:

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the shareholders (the “Extraordinary General Meeting”) of Kernel Group Holdings, Inc. (“Kernel”), a Cayman Islands exempted company, will be held at [●], Eastern Time, on [●], 2024, at [●]. You will also be able to attend the Extraordinary General Meeting online, vote and submit your questions during the Extraordinary General Meeting by visiting https:// [●].

At the Extraordinary General Meeting, Kernel shareholders will be asked to consider and vote upon the following proposals (each, a “Proposal” and collectively, the “Proposals”), as more fully described in the accompanying proxy statement/prospectus:

Kernel’s board of directors (the “Kernel Board”) has adopted and approved the Business Combination Agreement and recommends a vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal “FOR” the ParentCo Charter Amendment Proposal, “FOR” the Nasdaq Proposal, “FOR” the Incentive Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal, “FOR” the Election of Directors Proposal, and “FOR” the NTA Proposal, and “FOR” the Adjournment Proposal. Kernel does not expect a vote to be taken on any other matters at the Extraordinary General Meeting or any adjournment or postponement thereof. When you consider the recommendation of these proposals by the Kernel Board, you should keep in mind that the Sponsor and certain of Kernel’s directors and officers and others have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Interests of Kernel’s Directors and Officers and Others in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations.

Holders of record of Kernel’s Class A Ordinary Shares, par value $0.0001 per share, and Kernel’s Class B Ordinary Shares, par value $0.0001 per share (also referred to herein as “Founder Shares”) (collectively, the “Kernel Ordinary Shares”) at the close of business on [●], 2024 (the “Record Date”) will be entitled to notice of and to vote at the Extraordinary General Meeting or any adjournment or postponement thereof. Each Kernel Ordinary Share entitles the holder thereof to one vote. The holders of the Founder Shares (the “Kernel Restricted Shareholders”) are parties to the Kernel Support Agreement pursuant to which they have agreed to vote their Founder Shares and any Class A Ordinary Shares purchased during or after our IPO in favor of the Business Combination. As of [●], 2024, our Kernel Restricted Shareholders own approximately [●]% of our issued and outstanding Kernel Ordinary Shares.

Attention is directed to the proxy statement/prospectus accompanying this notice (including the financial statements and annexes attached thereto) for a more complete description of the proposed Business Combination and related transactions and each of our Proposals. We encourage you to read the accompanying proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Issuer Direct Corporation at (919) 481-4000 or email Issuer Direct Corporation at proxy@issuerdirect.com.

All Kernel shareholders are cordially invited to attend the Extraordinary General Meeting in virtual format. Kernel shareholders may attend, vote and examine the list of Kernel shareholders entitled to vote at the Extraordinary General Meeting by visiting https:// [●] and using the conference ID number listed on the proxy card. To ensure your representation at the Extraordinary General Meeting, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. To vote online, please have your proxy card available and visit www. [●] and follow the prompts to vote your shares. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Extraordinary General Meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you sold or transferred your shares after the record date, it is still important that you vote. Each of the Business Combination Proposal, the Domestication Proposal, the ParentCo Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Election of Directors Proposal, and NTA Proposal is interdependent upon the others and must be approved in order for Kernel to complete the Business Combination as contemplated by the Business Combination Agreement. The Business Combination Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, and the Adjournment Proposal all require the affirmative vote of a majority of the issued and outstanding Kernel Ordinary Shares cast by the shareholders represented in person (which would include presence at a virtual meeting) or by proxy at the Extraordinary General Meeting and entitled to vote thereon, voting as a single class. Each of the Domestication Proposal, the ParentCo Charter Amendment Proposal, and the NTA Proposal requires the affirmative vote of at least a two-thirds (2/3) majority of the issued and outstanding Kernel Ordinary Shares cast by the shareholders represented in person (which could include presence at a virtual meeting) or by proxy at the Extraordinary General Meeting and entitled to vote thereon, voting as a single class. The election of directors under the Election of Directors Proposal requires a majority vote of the Class B Ordinary Shares present in person (which would include presence at a virtual meeting) or represented by proxy and entitled to vote at the Extraordinary General Meeting.

TABLE OF CONTENTS

ADDITIONAL INFORMATION

You may request copies of this proxy statement/prospectus and any other publicly available information concerning Kernel, without charge, by written request to Kernel Group Holdings, Inc., 515 Madison Avenue, Suite 8133, New York, New York 10022, or by telephone request at (646) 908-2659; or Issuer Direct Corporation, our proxy solicitor, by calling (919) 481-4000, or banks and brokers can call collect at (919) 481-4000, or by emailing proxy@issuerdirect.com or from the SEC through the SEC website sec.gov.

In order for Kernel’s shareholders to receive timely delivery of the documents in advance of the Extraordinary General Meeting of Kernel to be held on [●], 2024, you must request the information no later than five business days prior to the date of the Extraordinary General Meeting, by [●], 2024.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

No person has been authorized to give any information or any representation concerning us or the Business Combination (other than as contained in this proxy statement/prospectus) and we take no responsibility for, nor can we provide any assurance as to the reliability of, any other information that others may give you. You should not assume that the information contained or incorporated by reference in this proxy statement/prospectus is accurate as of any date other than the date on the front cover of this proxy statement/prospectus or the date of the incorporated document, as applicable.

In making an investment decision, prospective investors must rely on their own examination of us, and the terms of the Business Combination, including the merits and risks involved. Prospective investors should not construe anything in this proxy statement/prospectus as legal, business, or tax advice.

This proxy statement/prospectus contains summaries believed to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All such summaries are qualified in their entirety by such reference.

TRADEMARKS

This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ^® or ^TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

SUMMARY TERM SHEET

This summary term sheet, together with the sections entitled “Questions and Answers About the Proposals for Shareholders” and “Summary of the Proxy Statement,” summarizes certain information contained in this proxy statement/prospectus, but does not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus, including the attached Annexes, for a more complete understanding of the matters to be considered at the Extraordinary General Meeting. In addition, for definitions used commonly throughout this proxy statement/prospectus, including this summary term sheet, please see the section entitled “Frequently Used Terms.”

FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and the “Company” refer to Kernel Group Holdings, Inc. (which prior to the Domestication is an exempted company incorporated under the laws of the Cayman Islands and thereafter a corporation incorporated under the laws of the State of Delaware). In this proxy statement/prospectus:

“Accounting Principles” means in accordance with GAAP as in effect at the date of the financial statement to which it refers or if there is no such financial statement, then as of the Closing Date, using and applying the same accounting principles, practices, procedures, policies and methods (with consistent classifications, judgments, elections, inclusions, exclusions and valuation and estimation methodologies) used and applied by the Target Companies in the preparation of the latest audited Company Financials (as defined in the Business Combination Agreement).

“AIRO” shall mean AIRO Group Holdings, Inc., a Delaware corporation.

“AIRO Merger Consideration” shall mean a number of shares of ParentCo Common Stock with an aggregate value equal to (a) $770,000,000 minus (b) the amount, if any, by which the Target Net Working Capital Amount exceeds the Net Working Capital by more than $500,000, plus (c) the amount, if any, by which the Net Working Capital exceeds the Target Net Working Capital Amount by more than $500,000 (but not less than zero), minus (d) the amount, if any, by which the Closing Net Debt exceeds the Target Net Debt, by more than $500,000 (but not less than zero), plus (e) the amount, if any, by which the Target Net Debt exceeds Closing Net Debt, minus (f) the amount, if any, by which the Company Transaction Expenses exceed the Target Company Transaction Expenses (but not less than zero), with each share of ParentCo Common Stock valued at the Per Share Price.

“AIRO Merger Sub” shall mean AIRO Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ParentCo.

“AIRO Warrants” shall mean, collectively, that Warrant to Purchase Equity dated March 10, 2022 by and between AIRO and Stephenson Management Inc. and that Warrant to Purchase Equity dated March 10, 2022 by and between AIRO and Scarsdale Capital Inc. The term “AIRO Warrants” shall include the replacement warrants to purchase shares of ParentCo common stock that will be issued to Stephenson Management Inc. and Scarsdale Capital Inc. upon Closing of the Business Combination.

“Amended and Restated Memorandum and Articles of Association” means the amended and restated memorandum and articles of association of Kernel.

“Business Combination” shall mean the transactions contemplated by the Business Combination Agreement, whereby, among other things, Kernel will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware, following which, (i) Kernel Merger Sub will merge with and into Kernel, with Kernel continuing as the surviving entity as a wholly owned subsidiary of ParentCo (the “First Merger”), and (ii) AIRO Merger Sub will merge with and into AIRO, with AIRO continuing as the surviving entity as a wholly-owned subsidiary of ParentCo (the “Second Merger”).

“Business Combination Agreement” means that certain Agreement and Plan of Merger dated March 3, 2023 by and among Kernel, ParentCo, Kernel Merger Sub, AIRO Merger Sub, Sponsor, Seller Representative, and AIRO.

“Cayman Islands Companies Law” means the Companies Act (As Revised) of the Cayman Islands as the same may be amended from time to time.

“Citigroup” shall mean Citigroup Global Markets Inc., the representative of the underwriters in the IPO.

“Class A Ordinary Shares” shall mean the Class A ordinary shares, par value $0.0001 per share, of Kernel.

“Class B Ordinary Shares” shall mean the Class B ordinary shares, par value $0.0001 per share, of Kernel.

“Closing” shall mean the closing of the Business Combination.

“Closing Company Cash” means, as of the Reference Time, the aggregate cash and cash equivalents of the Target Companies on hand or in bank accounts, including deposits in transit, minus the aggregate amount of outstanding and unpaid checks issued by or on behalf of the Target Companies as of such time.

“Closing Date” shall mean the date and time at which the Closing is actually being held.

“Closing Net Debt” means, as of the Reference Time, (a) the aggregate amount of all Indebtedness of the Target Companies, less (b) the Closing Company Cash, in each case of clauses (a) and (b), on a consolidated basis and as determined in accordance with the Accounting Principles.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Company Transaction Expenses” means all fees and expenses of any of the Target Companies incurred or payable as of the Closing and not paid prior to the Closing (i) in connection with the consummation of the transactions contemplated hereby, including any amounts payable to professionals (including investment bankers, brokers, finders, attorneys, accountants and other consultants and advisors) retained by or on behalf of any Target Company, (ii) any change in control bonus, accrued but unpaid salary, transaction bonus, retention bonus, termination or severance payment or payment relating to terminated options, warrants or other equity appreciation, phantom equity, profit participation or similar rights, in any case, to be made to any current or former employee, independent contractor, director or officer of any Target Company at or after the Closing pursuant to any agreement to which any Target Company is a party prior to the Closing which become payable (including if subject to continued employment) as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby, (iii) any sales, use, real property transfer, stamp, stock transfer or other similar transfer Taxes imposed on Target Company in connection with the Business Combination or the other transactions contemplated by this Agreement, and (iv) in connection with the Company’s prior attempt at completing an initial public offering or SPAC transaction, including any amounts payable to professionals (including investment bankers, brokers, finders, attorneys, accountants and other consultants and advisors) retained by or on behalf of any Target Company in connection with the Company’s attempted initial public offering or SPAC transaction.

“Continental” shall mean Continental Stock Transfer & Trust Company, the transfer agent.

“DGCL” shall mean the Delaware General Corporation Law, as amended.

“Definitive Proxy Statement” shall mean Kernel’s definitive proxy statement on Schedule 14A filed with the SEC on January 17, 2024.

“Earnout Eligibility Period” shall mean the period commencing on the Closing Date and ending on December 31, 2026.

“Earnout Shares” shall mean the 36,300,000 shares of ParentCo Common Stock, (i) 33,000,000 shares of ParentCo Common Stock which are comprised of three different tranches, issuable to AIRO stockholders during the Earnout Eligibility Period as additional consideration from ParentCo based on ParentCo’s revenue performance, and 3,300,000 shares of ParentCo Common Stock which are comprised of three different tranches, issuable to the Sponsor during the Earnout Eligibility Period as additional consideration from ParentCo based on ParentCo’s revenue performance.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Existing Kernel Governing Documents” means Kernel’s Amended and Restated Memorandum and Articles of Association, as subsequently amended by that Amendment to the Amended and Restated Articles of Association dated February 3, 2023.

“Existing ParentCo Governing Documents” means ParentCo’s certificate of incorporation dated February 27, 2023 and ParentCo’s bylaws adopted February 27, 2023.

“Extension Meeting” means the Kernel extraordinary general meeting of shareholders held on February 3, 2023, at which shareholders voted upon, among other items, a proposal to amend Kernel’s amended and restated memorandum and articles of association to extend the date by which Kernel must consummate an initial business combination.

“Extension Meeting - Second” means the Kernel extraordinary general meeting of shareholders held on August 3, 2023, at which shareholders voted upon, among other items, a proposal to amend Kernel’s amended and restated memorandum and articles of association to extend the date by which Kernel must consummate an initial business combination.

“Extension Meeting - Third” means the Kernel extraordinary general meeting of shareholders to be held on February 1, 2024, at which shareholders will vote upon, among other items, the Extension Amendment Proposal.

“Extension Redemption” means the redemption of 22,848,122 Class A Ordinary Shares in connection with the Extension Meeting.

“Extension Redemption - Second” means the redemption of 1,310,929 Class A Ordinary Shares in connection with the Extension Meeting - Second.

“Extension Redemption - Third” means the redemption of Class A Ordinary Shares in connection with the Extension Meeting - Third.

“Extraordinary General Meeting” shall mean the Extraordinary General Meeting of the shareholders of Kernel, to be held on [●], 2024 at [●] Eastern Time, which will be a virtual meeting conducted via live webcast.

“First Amendment to the Business Combination Agreement” shall mean that certain First Amendment to the Business Combination Agreement, dated August 29, 2023.

“First Effective Time” shall mean the time when the First Merger is consummated, upon the filing of the Certificate of Merger for the merger of Kernel Merger Sub with and into Kernel with the Delaware Secretary of State in accordance with the relevant provisions of the DGCL.

“First Merger” shall mean the merger of Kernel Merger Sub with and into Kernel, with Kernel surviving as a wholly owned subsidiary of ParentCo.

“Founder Shares” shall mean the 7,618,750 Kernel Class B Ordinary Shares, par value $0.0001 per share, owned by the Sponsor and Kernel’s directors.

“HSR Act” shall mean the Hart Scott Rodino Antitrust Act.

“Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP, (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (f) all obligations of such Person in respect of acceptances issued or created, (g) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (h) all obligations secured by an Lien (as defined in the Business Combination Agreement) on any property of such Person, (i) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person and (j) all obligation described in clauses (a) through (i) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.

“IPO” shall mean Kernel’s Initial Public Offering of Units, consummated on February 5, 2021.

“Kernel” shall mean Kernel Group Holdings, Inc., a Cayman Islands exempted company.

“Kernel Board” shall mean the board of directors of Kernel.

“Kernel Merger Consideration” shall mean the shares of ParentCo Common Stock, into which each share of Kernel common stock issued and outstanding immediately prior to the First Effective Time shall automatically convert.

“Kernel Merger Sub” shall mean Kernel Merger Sub, Inc., a Delaware corporation, and a wholly-owned subsidiary of ParentCo.

“Kernel Ordinary Shares” shall mean the Class A Ordinary Shares and Class B Ordinary Shares, par value $0.0001 per share, of Kernel.

“Kernel Restricted Shareholders” shall mean the holders of the Founder Shares.

“Kernel Support Agreement” shall mean the agreement by and among Kernel, Sponsor and certain shareholders of Kernel to, among other things, vote their shares of Kernel Ordinary Shares in favor of the adoption and approval of the Business Combination Agreement and the transactions contemplated thereby.

“Lock-Up Agreements” shall mean the agreements entered into by Kernel with the Sponsor and agreements entered into by ParentCo with the Sponsor and certain AIRO stockholders in form and substance mutually acceptable to the parties thereto.

“Net Working Capital” means, as of the Reference Time, (i) all current assets of the Target Companies (excluding, without duplication, Closing Company Cash), on a consolidated basis, minus (ii) all current liabilities of the Target Companies (excluding, without duplication, Indebtedness and unpaid Company Transaction Expenses), on a consolidated basis and as determined in accordance with the Accounting Principles; provided, that, for purposes of this definition, whether or not the following is consistent with the Accounting Principles, “current assets” will exclude any receivable from an AIRO stockholder.

“Original Sponsor” shall mean Kernel Capital Holdings, LLC.

“ParentCo” shall mean AIRO Group, Inc., a Delaware corporation.

“ParentCo Board” shall mean the board of directors of ParentCo.

‘ParentCo Common Stock” shall mean the common stock, par value $0.0001 per share, of the ParentCo.

“ParentCo Representative” shall mean VKSS Capital, LLC.

“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.

“Private Placement Warrants” shall mean the warrants to purchase Class A Ordinary Shares purchased in a private placement in connection with the IPO, or the ParentCo warrants issued in exchange for Kernel Private Placement Warrants.

“Proposals” shall mean the Business Combination Proposal, the Domestication Proposal, the ParentCo Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Director Election Proposal, and the Adjournment Proposal.

“Proposed Kernel Bylaws” means the proposed bylaws of the Kernel to be in effect as of the Closing of the Business Combination, a form of which is attached as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

“Proposed Kernel Charter” means the proposed certificate of incorporation of the Kernel to be in effect as of the Closing of the Business Combination, a form of which is attached as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

“Proposed Kernel Governing Documents” means the Proposed Kernel Charter and Proposed Kernel Bylaws.

“Proposed ParentCo Bylaws” means the proposed bylaws of ParentCo to be in effect as of the Closing of the Business Combination, a form of which is attached as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

“Proposed ParentCo Charter” means the proposed certificate of incorporation of ParentCo to be in effect as of the Closing of the Business Combination, a form of which is attached as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

“Proposed ParentCo Governing Documents” means the Proposed ParentCo Charter and Proposed ParentCo Bylaws.

“Pro Rata Share” shall mean (a) with respect to each AIRO stockholder, a fraction expressed as a percentage equal to (i) the portion of the AIRO Merger Consideration payable by ParentCo to such AIRO stockholder in accordance with the terms of the Business Combination Agreement, divided by (ii) the total AIRO Merger Consideration payable by ParentCo to all AIRO stockholders in accordance with the terms of the Business Combination Agreement, and (b) with respect to each Kernel shareholder, a fraction expressed as a percentage equal to (i) the portion of the Kernel Merger Consideration payable by ParentCo to such Kernel shareholder in accordance with the terms of the Business Combination Agreement, divided by (ii) the total Kernel Merger Consideration payable by ParentCo to all Kernel shareholders in accordance with the terms of the Business Combination Agreement.

“Public Shares” shall mean the Class A Ordinary Shares included in the Units sold in the IPO.

“Public Shareholders” shall mean the persons who own the Public Shares.

“Public Warrants” shall mean the warrants underlying the Public Units issued in the IPO, and after the Closing, shall mean the converted Public Warrants, with an exercise price of $11.50 per share of ParentCo Common Stock.

“Record Date” shall mean [●], 2024.

“Redeemable” shall mean, in respect of the Public Warrants, the ability of ParentCo to redeem such Public Warrants after the closing of the proposed Business Combination, provided that certain other conditions as set forth in the Warrant Agreement are met.

“Redemption” shall mean the right of Kernel shareholders to have their Public Shares redeemed in accordance with the procedures set forth in this proxy statement/prospectus.

“Reference Time” means the close of business of AIRO on the Closing Date (but without giving effect to the transactions contemplated by the Business Combination Agreement, including any payments by ParentCo hereunder to occur at the Closing, but treating any obligations in respect of Indebtedness, Transaction Expenses or other liabilities that are contingent upon the consummation of the Closing as currently due and owing without contingency as of the Reference Time).

“Registration Rights Agreement” shall mean the Registration Rights Agreement by and among Kernel and significant AIRO stockholders required as a closing condition in the Business Combination Agreement.

“SEC” shall mean the U.S. Securities and Exchange Commission.

“Second Effective Time” shall mean the time when the Second Merger is consummated, upon the filing of the Certificate of Merger for the merger of AIRO Merger Sub with and into AIRO with the Delaware Secretary of State in accordance with the relevant provisions of the DGCL.

“Second Merger” shall mean the merger of AIRO Merger Sub with and into AIRO, with AIRO surviving as a wholly owned subsidiary of ParentCo.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Seller Representative” shall mean Dr. Chirinjeev Kathuria.

“Sponsor” shall mean VKSS Capital, LLC, a Delaware limited liability company.

“Target Company” means each of AIRO and its direct and indirect subsidiaries.

“Target Company Transaction Expenses” shall mean $14,000,000.

“Target Net Debt” shall mean $75,000,000.

“Target Net Working Capital Amount” shall mean an amount equal to $(5,500,000).

“Transfer Agent” shall mean Continental.

“Trust Account” shall mean the trust account of Kernel, which holds the net proceeds of the IPO, together with interest earned thereon, less amounts released to pay franchise and income tax obligations.

“Units” shall mean units consisting of a Class A Ordinary Share and a warrant to purchase a Class A Ordinary Share, sold together as a unit in the IPO.

“Warrants” shall mean the Private Placement Warrants, the Public Warrants, the AIRO Warrants, and any other warrants to purchase capital stock of Kernel, ParentCo or AIRO.

“Warrant Agreement” shall mean the warrant agreement by and between Kernel and Continental Stock Transfer & Trust Company, dated February 5, 2021 (and, after the Closing, shall mean the Warrant Agreement as assumed by ParentCo).

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR SHAREHOLDERS

The following questions and answers briefly address some commonly asked questions about the Proposals to be presented at the Extraordinary General Meeting of Kernel shareholders. The following questions and answers do not include all the information that is important to shareholders of Kernel. We urge the shareholders of Kernel to carefully read this entire proxy statement/prospectus, including the annexes and other documents referred to herein. Capitalized terms not otherwise defined in these questions and answers shall have the meanings ascribed to them in the Business Combination Agreement, which is attached to the Proxy Statement as Annex A.

Why am I receiving this proxy statement/prospectus?

This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Extraordinary General Meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its annexes.

Below are proposals on which Kernel shareholders are being asked to vote.

Are the Proposals conditioned on one another?

Unless the Business Combination Proposal is approved, the Domestication Proposal, the ParentCo Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Election of Directors Proposal, and the NTA Proposal will not be presented to the shareholders of Kernel at the Extraordinary General Meeting. The Adjournment Proposal is not conditioned on the approval of any other Proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the Business Combination Proposal does not receive the requisite vote for approval, then we will not consummate the Business Combination. If Kernel does not consummate the Business Combination and fails to complete an initial business combination by August 5, 2024, Kernel will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to its Public Shareholders. The approval of the Business Combination, the Domestication Proposal, the Nasdaq Proposal, the ParentCo Charter Amendment Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Election of Directors Proposal, and the NTA Proposal are preconditions to the consummation of the Business Combination.

What will happen in the Business Combination?

At the Closing, Kernel Merger Sub shall be merged with and into Kernel (the “First Merger”), following which the separate corporate existence of Kernel Merger Sub shall cease and Kernel shall continue as the surviving corporation and a wholly owned subsidiary of ParentCo. Immediately thereafter, AIRO Merger Sub shall be merged with and into AIRO (the “Second Merger”, following which the separate corporate existence of AIRO Merger Sub shall cease and AIRO shall continue as the surviving corporation and a wholly owned subsidiary of ParentCo. In connection with the Business Combination, the cash held in the Trust Account will be used to fund redemptions by Kernel shareholders, and for working capital and general corporate purposes. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A.

What equity stake will current shareholders of Kernel and AIRO hold in ParentCo after the Closing?

It is anticipated that, upon the completion of the Business Combination, Kernel’s Public Shareholders will retain an ownership interest of approximately [●]% of the outstanding capital stock of ParentCo, the Sponsor will retain an aggregate ownership interest of approximately [●]% of the outstanding capital stock of ParentCo and the AIRO stockholders will own approximately [●]% of the outstanding capital stock of ParentCo. The foregoing ownership percentages with respect to ParentCo following the Business Combination excludes any outstanding Warrants and assumes that there are no redemptions of any shares by Kernel’s Public Shareholders in connection with the Business Combination and Kernel does not engage in any kind of additional equity financing prior to the Closing. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Kernel’s existing shareholders in ParentCo will be different.

If any of Kernel’s Public Shareholders exercise their redemption rights, the percentage of ParentCo’s outstanding common stock held by ParentCo’s Public Shareholders will decrease and the percentages of ParentCo’s outstanding common stock held by the Sponsor and by the AIRO stockholders will increase, in each case, relative to the percentage held if none of the Public Shares are redeemed.

If any of Kernel’s Public Shareholders as of the Record Date redeem their Public Shares at Closing in accordance with the Existing Kernel Governing Documents but continue to hold Public Warrants after the Closing, the aggregate value of the Public Warrants that may be retained by them, based on the closing trading price per Public Warrant of [●] as of [●], would be $[●] regardless of the amount of redemptions by the Public Shareholders. Upon the issuance of ParentCo common stock in connection with the Business Combination, the percentage ownership of ParentCo by Kernel’s Public Shareholders who do not redeem their Public Shares will be diluted. Kernel Public Shareholders that do not redeem their Public Shares in connection with the Business Combination will experience further dilution upon the exercise of Public Warrants that are retained after the Closing by redeeming Kernel Public Shareholders. The percentage of the total number of outstanding shares of ParentCo common stock that will be owned by Kernel Public Shareholders as a group will vary based on the number of Public Shares for which the holders thereof request redemption in connection with the Business Combination.

The table below shows the issued and outstanding shares under each of the Scenarios set forth above following the closing of the Business Combination based on the varying levels of redemptions by the Public Shareholders on a fully diluted basis, as well as potential sources of dilution. As further described herein under “Notes to Unaudited Pro Forma Condensed Combined Financial Information - Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet”, the Business Combination will not close under any scenario unless AIRO waives the Unencumbered Cash closing condition and the NTA Proposal is approved.

● Scenario 1: Assuming No Redemptions: This presentation assumes that no Kernel Public Shareholders exercise redemption rights with respect to their Public Shares of 509,341 which were outstanding as of the date of this filing. Public Shares are based on a total of 30,475,000 redeemable Public Shares pursuant to the Kernel Charter less the 22,848,122 Public Shares redeemed in February 2023, 1,310,929 Public Shares redeemed in August 2023 and 5,806,608 Public Shares redeemed in February 2024.

● Scenario 2: Assuming 50% Redemptions: This presentation assumes that 50% of Kernel Public Shareholders holding 254,671 Public Shares will exercise their redemption rights for approximately $2.75 million of funds in Kernel’s Trust Account.

● Scenario 3: Assuming Maximum Redemptions: This presentation assumes that 100% of Kernel public shareholders holding 509,341 Public Shares will exercise their redemption rights for approximately $5.5 million of funds in Kernel’s Trust Account.

(i) In the event ParentCo’s revenue for the fiscal year that includes the Closing Date is greater than or equal to $50,000,000, ParentCo shall issue to each of the AIRO stockholders such AIRO stockholder’s Pro Rata Share of 11,000,000 Earnout Shares and Sponsor shall be issued 1,100,000 Earnout Shares.

(ii) In the event ParentCo’s revenue for the first full fiscal year following the Closing Date is greater than or equal to $62,500,000, ParentCo shall issue to each of the AIRO stockholders such AIRO stockholder’s Pro Rata Share of 11,000,000 Earnout Shares and Sponsor shall be issued 1,100,000 Earnout Shares.

(iii) In the event ParentCo’s revenue for the second full fiscal year following the Closing Date is greater than or equal to $78,100,000, ParentCo shall issue to each of the AIRO stockholders such AIRO stockholder’s Pro Rata Share of 11,000,000 Earnout Shares and Sponsor shall be issued 1,100,000 Earnout Shares.

See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

How much consideration will AIRO stockholders receive in connection with the Business Combination?

As consideration for the Second Merger, the AIRO stockholders 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 (a) $770,000,000 minus (b) the amount, if any, by which the net working capital is less than negative $5,500,000 by more than $500,000, plus (c) the amount, if any, by which the net working capital is greater than negative $5,500,000 by more than $500,000 (but not less than zero), minus (d) the amount, if any, by which the closing net debt exceeds the target net debt of $75,000,000 by more than $500,000 (but not less than zero), plus (e) the amount, if any, by which the target net debt of $75,000,000 is less than closing net debt, minus (f) the amount, if any, by which the company transaction expenses exceed the target company transaction expenses of $14,000,000 (such resulting amount, the “AIRO Merger Consideration”).

In addition, AIRO stockholders shall also be entitled to receive from ParentCo up to 33,000,000 additional shares of ParentCo common stock based on ParentCo’s achievement of certain revenue thresholds, as follows:

(a) if ParentCo’s revenue for the fiscal year that includes the Closing Date is greater than or equal to $50,000,000, then ParentCo shall issue to each of the AIRO stockholders such stockholder’s pro rata share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares;

(b) if ParentCo’s revenue for the first full fiscal year following the Closing Date is greater than or equal to $62,500,000, then ParentCo shall issue to each of the AIRO stockholders such stockholder’s pro rata share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares; and

(c) if ParentCo’s revenue for the second full fiscal year following the Closing Date is greater than or equal to $78,100,000, then ParentCo shall issue to each of the AIRO stockholders such stockholder’s pro rata share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares.

What conditions must be satisfied to complete the Business Combination?

Unless waived by the applicable party or parties to the Business Combination Agreement, and subject to applicable law, the completion of the Business Combination is subject to a number of conditions set forth in the Business Combination Agreement, including, among others, with respect to the obligations of all of the parties to the Business Combination Agreement:

In addition, unless waived by AIRO, the obligations of AIRO to consummate the Business Combination are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (a) the representations and warranties of Kernel being true and correct as of the date of the Business Combination Agreement and as of the Closing, except for those representations and warranties addressing matters only as of a particular date, and any failures to be true and correct that have not and would not reasonably be expected to have a Material Adverse Effect with respect to Kernel; (b) Kernel, ParentCo, Kernel Merger Sub, and AIRO Merger Sub having performed in all material respects their respective obligations and complied in all material respects with their respective covenants and agreements under the Business Combination Agreement required to be performed or complied with on or prior the date of the Closing; (c) absence of any Material Adverse Effect with respect to Kernel since the date of the Business Combination Agreement which is continuing and uncured; and (d) at the Closing, Kernel having $50,000,000 in Unencumbered Cash, including funds remaining in the trust account (after giving effect to the completion and payment of any redemptions and any Transaction Expenses) and the proceeds of the PIPE/Convertible Note Investment, fifty percent (50%) of any net cash proceeds of any capital investment raise and/or convertible debt raise conducted by the Company during the period beginning on the date of the Business Combination Agreement and ending on the Closing Date, and any net cash proceeds of any executed agreements regarding a capital investment raise and/or convertible debt raise conducted by Kernel or ParentCo in which such cash proceeds are required to be paid to ParentCo during the thirty (30) day period beginning on the Closing Date.

Unless waived by Kernel, the obligations of Kernel, ParentCo, Kernel Merger Sub and AIRO Merger Sub to consummate the Business Combination are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (a) the representations and warranties of AIRO being true and correct as of the date of the Business Combination Agreement and as of the Closing, except for those representations and warranties addressing matters only as of a particular date, and any failures to be true and correct that have not and would not reasonably be expected to have a Material Adverse Effect with respect to AIRO; (b) AIRO having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Business Combination Agreement required to be performed or complied with on or prior the date of the Closing; and (c) absence of any Material Adverse Effect with respect to AIRO as a whole since the date of the Business Combination Agreement which is continuing and uncured; (d) delivery of AIRO’s 2022 Audited Financials within 60 days of the Business Combination Agreement’s signing; (e) the completion of Kernel’s legal due diligence of AIRO and its subsidiaries to Kernel’s reasonable satisfaction; (f) the delivery of the Replacement Warrants and Replacement Options; and (g) the aggregate amount of all Indebtedness of the Target Companies due earlier than 180 days after the Closing (net of Company cash at Closing) is less than Fifty Million U.S. Dollars ($50,000,000).

For a summary of the conditions that must be satisfied or waived prior to the Closing of the Business Combination, see the section entitled “Shareholder Proposal No. 1: The Business Combination Proposal — Conditions to the Closing.”

Why is Kernel providing shareholders with the opportunity to vote on the Business Combination?

Under the Existing Kernel Governing Documents, Kernel must provide all holders of its Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of Kernel’s initial business combination either in conjunction with a tender offer or in conjunction with a shareholder vote. For business and other reasons, Kernel has elected to provide its shareholders with the opportunity to have their Public Shares redeemed in connection with a shareholder vote rather than a tender offer. Therefore, Kernel is seeking to obtain the approval of its shareholders of the Business Combination in order to allow its Public Shareholders to effectuate redemptions of their Public Shares in connection with the Closing of the Business Combination.

How many votes do I have at the Extraordinary General Meeting?

Kernel shareholders are entitled to one vote at the Extraordinary General Meeting for each Kernel Ordinary Share held of record as of [●], 2024, the record date for the Extraordinary General Meeting (the “Record Date”). As of the close of business on the Record Date, there were [●] outstanding Kernel Ordinary Shares.

What vote is required to approve the Proposals presented at the Extraordinary General Meeting?

As of the record date, Kernel had [●] Ordinary Shares issued and outstanding. Kernel shareholders are entitled to one vote at the Extraordinary General Meeting for each Ordinary Share held of record as of the record date. [●] Ordinary Shares are subject to the Kernel Support Agreement, pursuant to which the Sponsor have agreed to vote all of their shares in favor of the Business Combination.

Assuming all holders that are entitled to vote on such matter vote all of their Ordinary Shares in person or by proxy, [●] shares, of which [●] shares are not subject to the Kernel Support Agreement, will need to be voted in favor of each of the Business Combination Proposal, the Domestication Proposal, the ParentCo Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Election of Directors Proposal, the NTA Proposal, and the Adjournment Proposal in order to approve each of the Business Combination Proposal, the Domestication Proposal, the ParentCo Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Election of Directors Proposal, the NTA Proposal, and the Adjournment Proposal.

Holders of Kernel Class B Ordinary Shares will have the right to elect all of Kernel’s directors prior to the closing of the Business Combination and holders of Kernel Class A Ordinary Shares will not have the right to vote on the election of directors during such time. A majority of the Kernel Class B Ordinary Shares will need to vote in favor of the Election of Directors Proposal.

If the Business Combination is not approved, the Domestication Proposal, the ParentCo Charter Amendment Proposal, Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Election of Directors Proposal will not be presented to Kernel’s shareholders for a vote. The approval of the Business Combination Proposal, the Domestication Proposal, the ParentCo Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Election of Directors Proposal, and the NTA Proposal are preconditions to the consummation of the Business Combination.

May Kernel, the Sponsor or Kernel’s directors, officers, advisors or their affiliates purchase shares in connection with the Business Combination?

In connection with the shareholder vote to approve Proposals, including the Business Combination Proposal, Kernel and its affiliates may purchase shares prior to the Closing from shareholders who would have otherwise elected to have their shares redeemed for a pro rata portion of the Trust Account upon consummation of the Business Combination. Such a purchase would in a privately negotiated purchase arrangement include a contractual acknowledgement that such shareholder, although still the record holder of such shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. While they have no current plans to do so, the Sponsor, Kernel’s directors, officers or advisors, or their affiliates reserve the right to purchase shares from holders of Kernel Ordinary Shares who have already elected to exercise their redemption rights, in which event such selling shareholders would be required to revoke their prior elections to redeem their shares. Any such transaction would be separately negotiated at the time of the transaction. The consideration for any such transaction would consist of cash and/or Kernel Ordinary Shares owned by the Sponsor and/or Kernel’s directors, officers, advisors, or their affiliates.

None of Kernel, the Sponsor or Kernel’s directors, officers or advisors, or their respective affiliates, will make any such purchases when they are in possession of any material non-public information not disclosed to the seller. Any Kernel Ordinary Shares purchased by the Sponsor or Kernel’s directors, officers or advisors, or their respective affiliates will not (i) be purchased at a price higher than the price offered through the redemption process in the Redemption, (ii) be voted in favor of the Business Combination or (iii) have redemption rights, and if such Kernel Ordinary Shares do have redemption rights, then such rights will be waived by each of the Sponsor, or Kernel’s directors, officers or advisors, or their respective affiliates. The Sponsor and each of Kernel’s directors, officers or advisors, or their respective affiliates received no additional consideration in exchange for the agreement to waive their redemption rights. The purpose of these purchases could be to increase the amount of cash available to Kernel for use in the Business Combination to satisfy the closing condition that requires Kernel to have a minimum amount of cash upon the consummation of the Business Combination, where it appears that such requirement would otherwise not be met. The purpose of these purchases would be to increase the amount of cash available to Kernel for use in the Business Combination.

As of the date of this proxy statement/prospectus, no agreements with respect to the private purchase of Public Shares by the persons described above have been entered into with any such investor or holder. In the event of any such newly purchased shares (i) the Sponsor or its affiliates will purchase the Kernel Public Shares at a price no higher than the price offered through the redemption process; (ii) any such purchases by Sponsor or its affiliates will not be voted in favor of approving the Business Combination; and (iii) the Sponsor and its affiliates have waived their redemption rights to such shares. Prior to the special meeting to approve the Business Combination, Kernel will disclose in a Form 8-K (i) the amount of Public Shares purchased outside of the redemption offer by the Sponsor or its affiliates, along with the purchase price; (ii) the purpose of the purchases by the Sponsor or its affiliates; (iii) the impact, if any, of the purchases by the Sponsor or its affiliates on the likelihood that the Business Combination transaction will be approved; (iv) the identities of shareholders who sold to the Sponsor or its affiliates (if not purchased on the open market) or the nature of shareholders (e.g., 5% security holders) who sold to the Sponsor or its affiliates; and (v) the number of Public Shares for which Kernel has received redemption requests pursuant to its redemption offer.

Unlike our Sponsor’s and Kernel Initial Shareholders’ holdings currently, such newly purchased shares (if any) by those purchasers would not be subject to a lock-up period under the terms of our Sponsor Support Agreement. However, these newly purchased shares would be subject to limitations on resale under Rule 144 of the Securities Act as “control securities”, to the extent those shares were acquired by an affiliate of Kernel, unless they are registered on a subsequent registration statement filed under the Securities Act. Limitations on resale would require those affiliated purchasers of such newly purchased shares to hold them for at least one year (from the date ParentCo files certain information on Form 8-K following the Closing in accordance with rules applicable to special purpose acquisition companies), assuming they are not registered on a registration statement following the Closing and ParentCo has fully complied with its reporting requirements and other requirements under Rule 144. When eligible to be sold, such securities if not registered under such a registration statement would be limited by applicable requirements of Rule 144, including limitations in their manner of sale and to the volume of sales eligible under Rule 144.

Entering into any such incentive arrangements may have an effect lowering the price of Kernel Ordinary Shares or possibly reducing the public float of ParentCo Ordinary Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the Special Meeting. In addition, if such purchases are made, the public float of Kernel Ordinary Shares and the number of its beneficial holders may be reduced, possibly making it difficult to maintain the quotation, listing or trading of ParentCo Ordinary Shares on a national securities exchange.

What constitutes a quorum at the Extraordinary General Meeting?

Holders of a majority of Kernel Ordinary Shares being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy shall be a quorum. If a quorum is not present within half an hour from the time appointed for the meeting to commence, the meeting shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the directors may determine. As of the Record Date, [●] Kernel Ordinary Shares would be required to achieve a quorum.

How will Kernel’s Sponsor, directors and officers vote?

The Sponsor has agreed to vote its Founder Shares (as well as any Public Shares purchased during or after the IPO) in favor of the Business Combination. Accordingly, if Kernel seeks shareholder approval of the Business Combination, it is more likely that the necessary shareholder approval will be received than would be the case if the Sponsor agreed to vote their Founder Shares in accordance with the majority of the votes cast by Kernel’s Public Shareholders.

What interests do Kernel’s current officers and directors have in the Business Combination?

The Sponsor (including certain equity holders of the Sponsor), and certain of Kernel’s directors and executive officers (including Suren Ajjarapu who is Kernel’s chief executive officer and the Sponsor’s controlling equity holder) may have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. These interests include:

Kernel’s Board considered these interests when reviewing the proposed terms of the Business Combination and how they might impact the identification of and negotiations with AIRO and how they might impact the ParentCo if the Business Combination were to be completed. In reviewing these interests, and others deemed relevant by the Kernel Board, the Board concluded that, on the whole, these interests provided an alignment between the interests of Kernel’s officers and directors, on the one hand, and those of Kernel’s shareholders, on the other hand. See the section entitled “Interests of Kernel’s Directors and Officers and Others in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations.

These interests may influence Kernel’s directors and executive officers in making their recommendation that you vote in favor of the approval of the Business Combination.

What happens if I sell my Class A Ordinary Shares before the Extraordinary General Meeting?

The Record Date is earlier than the date of the Extraordinary General Meeting. If you transfer your Class A Ordinary Shares after the Record Date, but before the Extraordinary General Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Extraordinary General Meeting. However, you will not be able to seek redemption of your shares because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your Class A Ordinary Shares prior to the Record Date, you will have no right to vote those shares at the Extraordinary General Meeting or redeem those shares for a pro rata portion of the proceeds held in our Trust Account.

What happens if I vote against the Business Combination Proposal?

Pursuant to the Existing Kernel Governing Documents, if the Business Combination Proposal is not approved and Kernel does not otherwise consummate an alternative business combination by August 5, 2024, Kernel will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to the Public Shareholders.

Do I have redemption rights?

Pursuant to the Existing Kernel Governing Documents holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Existing Kernel Governing Documents. For illustrative purposes, based on approximately $5.5 million of funds in the Trust Account and 509,341 shares subject to possible redemption, in each case, following the Extension Redemption, this would have amounted to approximately $10.80 per issued and outstanding Public Share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Kernel Ordinary Shares for cash. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Kernel’s Transfer Agent prior to the Extraordinary General Meeting. See the section entitled “Extraordinary General Meeting of Kernel Shareholders — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.

Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 15% of the Kernel Ordinary Shares without the consent of Kernel. Accordingly, all Public Shares in excess of 15% held by a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed without the consent of Kernel.

Will how I vote affect my ability to exercise redemption rights?

No. You may exercise your redemption rights whether you vote your shares of Kernel Ordinary Shares “FOR” or “AGAINST” the Business Combination Proposal or abstain from a vote on the Business Combination Proposal or any other Proposal described by this proxy statement/prospectus. As a result, the Business Combination Agreement can be approved by shareholders who will redeem their shares and no longer remain shareholders, leaving shareholders who choose not to redeem their shares holding shares in a company with a potentially less liquid trading market, fewer shareholders, potentially less cash and the potential inability to meet the listing standards of Nasdaq.

Why is Kernel Proposing the NTA Proposal?

The adoption of the proposed amendments to remove the net asset test limitation from Kernel’s Amended and Restated Memorandum and Articles of Association is being proposed in the NTA Proposal in order to facilitate the consummation of the Business Combination, by removing the limitation on its ability to consummate an initial business combination if Kernel would have less than $5,000,001 in net tangible assets prior to or upon consummation of such initial business combination. The purpose of the net asset test limitation was initially to ensure that Kernel’s Ordinary Shares are not deemed to be a “penny stock” pursuant to Rule 3a51-1 under the Exchange Act. Because the Kernel Ordinary Shares and ParentCo Ordinary Shares would not be deemed to be a “penny stock” pursuant to other applicable provisions of Rule 3a51-1 under the Exchange Act, Kernel is presenting the NTA Proposal so that the parties may consummate the Business Combination even if Kernel does not have at least $5,000,001 in net tangible assets prior to or upon consummation of the Business Combination.

How do I exercise my redemption rights?

In connection with the Business Combination, holders of Public Shares may seek to redeem their Public Shares regardless of whether such Public Shareholder votes “FOR” or “AGAINST” the Business Combination Proposal.

To exercise your redemption rights, you must demand that Kernel redeem your Public Shares. In connection with tendering your shares for redemption, you must elect either to physically tender your share certificates to Continental, at Continental Stock Transfer & Trust Company, One State Street Plaza, 30th Floor, New York, New York 10004-1561, Attn: SPAC Administration Team, at least two (2) business days prior to the Extraordinary General Meeting or deliver your shares to Continental electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, which election would likely be determined based on the manner in which you hold your shares.

Certificates that have not been tendered in accordance with these procedures at least two (2) business days prior to the Extraordinary General Meeting will not be redeemed for cash. In the event that a Public Shareholder tenders its shares and decides that it does not want to redeem its Public Shares, such shareholder may withdraw the tender. If you delivered your Public Shares for redemption to Continental and decide prior to the Extraordinary General Meeting not to redeem your Public Shares, you may request that Continental return the shares (physically or electronically). You may make such request by contacting Continental at the address listed below:

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004-1561

Attn: SPAC Administration Team

Email: SPACredemptions@continentalstock.com

Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 15% of the Kernel Ordinary Shares without the consent of Kernel. Accordingly, all Public Shares in excess of 15% held by a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed without the consent of Kernel.

Shareholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. It is Kernel’s understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, Kernel does not have any control over this process and it may take longer than two weeks. Shareholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with Kernel’s consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to Kernel’s Transfer Agent and decide within the required timeframe not to exercise your redemption rights, you may request that Kernel’s Transfer Agent return the shares (physically or electronically). You may make such request by contacting Kernel’s Transfer Agent at the phone number or address listed under the question “Who can help answer my questions?” below.

What are the federal income tax consequences of exercising my redemption rights?

Kernel shareholders who exercise their redemption rights to receive cash in exchange for their Ordinary Shares generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the Ordinary Shares redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. The redemption, however, may be treated as a distribution to a redeeming shareholder for U.S. federal income tax purposes if the redemption does not effect a sufficient reduction (as determined under applicable federal income tax law) in the redeeming shareholder’s percentage ownership in us (whether such ownership is direct or through the application of certain attribution and constructive ownership rules). Any amounts treated as such a distribution will constitute a dividend to the extent not in excess of our current and accumulated earnings and profits as measured for U.S. federal income tax purposes. Any amounts treated as a distribution and that are in excess of our current and accumulated earnings and profits will reduce the redeeming shareholder’s basis in his or her redeemed Ordinary Shares, and any remaining amount will be treated as gain realized on the sale or other disposition of our Ordinary Shares. These tax consequences are described in more detail in the section entitled “Shareholder Proposal No. 1: The Business Combination Proposal — Certain Material U.S. Federal Income Tax Considerations of the Redemption.” The discussion in the section entitled “Shareholder Proposal No. 1: The Business Combination Proposal — Certain Material U.S. Federal Income Tax Considerations of the Redemption,” insofar as it relates to matters of United States federal tax law and regulations or legal conclusions with respect thereto, reflects the opinion of Nelson Mullins Riley & Scarborough LLP, counsel to Kernel, as to the material U.S. federal income tax consequences of the Business Combination. We urge you to consult your tax advisor regarding the tax consequences of exercising your redemption rights.

If I am a holder of Warrants, can I exercise redemption rights with respect to my Warrants?

No. The holders of Warrants have no redemption rights with respect to such Warrants.

If I am a Unit holder, can I exercise redemption rights with respect to my Units?

No. Holders of outstanding Units must separate the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares.

If you hold Units registered in your own name, you must deliver the certificate for such Units to Continental, with written instructions to separate such Units into Public Shares and Public Warrants. This must be completed far enough in advance to permit the mailing of the Public Share certificates back to you so that you may then exercise your redemption rights upon the separation of the Public Shares from the Units. See “How do I exercise my redemption rights?” above. The address of Continental is listed under the question “Who can help answer my questions?” below.

If a broker, dealer, commercial bank, trust company or other nominee holds your Units, you must instruct such nominee to separate your Units. Your nominee must send written instructions by facsimile to Continental. Such written instructions must include the number of Units to be split and the nominee holding such Units. Your nominee must also initiate electronically, using DTC’s deposit withdrawal at custodian (“DWAC”) system, a withdrawal of the relevant Units and a deposit of an equal number of Public Shares, and Public Warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights upon the separation of the Public Shares from the Units. While this is typically done electronically the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your Public Shares to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

Do I have appraisal rights if I object to the proposed Business Combination?

No. There are no appraisal rights available to holders of Kernel Ordinary Shares in connection with the Business Combination.

What happens to the funds held in the Trust Account upon consummation of the Business Combination?

If the Business Combination is consummated, the funds held in the Trust Account will be released to pay:

What happens if a substantial number of the Public Shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

The Public Shareholders are not required to vote “FOR” the Business Combination or vote at all in order to exercise their redemption rights and Public Shareholders who vote in favor of the Business Combination my also nevertheless exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of Public Shareholders are reduced as a result of redemptions by Public Shareholders.

On February 3, 2023, Kernel held an extraordinary general meeting of shareholders, at which shareholders voted upon, among other items, a proposal (the “Extension Amendment Proposal”) to amend Kernel’s governing documents (the “Charter Amendment”) to extend the date by which Kernel must consummate an initial business combination from February 5, 2023 by up to six (6) one-month Extensions (defined below) to August 5, 2023 (the “Extension Meeting”). At the Extension Meeting, Kernel’s shareholders also approved a proposal to amend the Trust Agreement, as defined below (the “Trust Amendment Proposal”) to conform the procedures in the Trust Agreement by which the Company may extend the date on which the Trust Account must be liquidated if the Company has not completed its initial Business Combination to the procedures in the Charter Amendment.

In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Extension Meeting, a total of 200 Kernel shareholders elected to redeem an aggregate of 22,848,122 Public Shares. Following the payment of redemptions, Kernel had approximately $77.6 million left in its Trust Account.

On August 3, 2023, Kernel held an extraordinary general meeting of shareholders, at which shareholders voted upon, among other items, a proposal (the “Second Extension Amendment Proposal”) to amend Kernel’s governing documents (the “Second Charter Amendment”) to extend the date by which Kernel must consummate an initial business combination from August 5, 2023 by up to six (6) one-month Extensions to February 5, 2024 (the “Extension Meeting - Second”). At the Extension Meeting - Second, Kernel’s shareholders also approved a proposal to amend the Trust Agreement, as defined below (the “Second Trust Amendment Proposal”) to conform the procedures in the Trust Agreement by which the Company may extend the date on which the Trust Account must be liquidated if the Company has not completed its initial Business Combination to the procedures in the Second Charter Amendment.

In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Extension Meeting - Second, holders of 1,310,929 of the Company’s Public Shares exercised their right to redeem those shares for cash at an approximate price of $10.44 per share, for an aggregate of approximately $13.7 million. Following the payment of the redemptions, the Trust Account had a balance of approximately $65.9 million.

On February 1, 2024, Kernel held an extraordinary general meeting of its shareholders (the “Extension Meeting - Third”). At the Extension Meeting - Third, the Company’s shareholders entitled to vote at the meeting cast their votes and approved a proposal (the “Third Extension Amendment Proposal”) to amend the Kernel’s Amended and Restated Memorandum and Articles of Association (the “Third Charter Amendment”) to extend the date (the “Termination Date”) by which Kernel must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving Kernel and one or more businesses (a “business combination”), (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of Kernel’s Class A Ordinary Shares included as part of the Units sold in Kernel’s IPO. The Third Charter Amendment allows Kernel to extend the Termination Date by up to six (6) one-month extensions to August 5, 2024 (each of which we refer to as an “Extension”, and such later date, the “Extended Deadline”), unless the closing of Kernel’s initial business combination shall have occurred. At the Extension Meeting - Third, Kernel’s shareholders also approved a proposal to amend the Trust Agreement, as defined below (the “Third Trust Amendment Proposal”) to conform the procedures in the Trust Agreement by which the Company may extend the date on which the Trust Account must be liquidated if the Company has not completed its initial Business Combination to the procedures in the Third Charter Amendment.

In connection with the approval of the Third Extension Amendment Proposal and the Third Trust Amendment Proposal at the Extension Meeting - Third, holders of 5,806,608 of the Kernel’s Public Shares exercised their right to redeem those shares for cash at an approximate price of $10.80 per share, for an aggregate of approximately $62.7 million. Following the payment of the redemptions, the Trust Account will have a balance of approximately $5.5 million.

The table below presents the trust value per share to a Public Shareholder that elects not to redeem across a range of redemptions scenarios. For purposes of calculating the redemption scenarios, the trust value date as of September 30, 2023 is used because such date is the date the redemption requests in connection with the Extension Meeting - Second were effectuated.

● Scenario 1: Assuming No Redemptions: This presentation assumes that no Kernel Public Shareholders exercise redemption rights with respect to their Public Shares of 509,341 which were outstanding as of the date of this filing. Public Shares are based on a total of 30,475,000 redeemable Public Shares pursuant to the Kernel Charter less the 22,848,122 Public Shares redeemed in February 2023, 1,310,929 Public Shares redeemed in August 2023 and 5,806,608 Public Shares redeemed in February 2024.

● Scenario 2: Assuming 50% Redemptions: This presentation assumes that 50% of Kernel Public Shareholders holding 254,671 Public Shares will exercise their redemption rights for approximately $2.75 million of funds in Kernel’s Trust Account.

● Scenario 3: Assuming Maximum Redemptions: This presentation assumes that 100% of Kernel public shareholders holding 509,341 Public Shares will exercise their redemption rights for approximately $5.5 million of funds in Kernel’s Trust Account.

(i) In the event ParentCo’s revenue for the fiscal year that includes the Closing Date is greater than or equal to $50,000,000, ParentCo shall issue to each of the AIRO stockholders such AIRO stockholder’s Pro Rata Share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares.

(ii) In the event ParentCo’s revenue for the first full fiscal year following the Closing Date is greater than or equal to $62,500,000, ParentCo shall issue to each of the AIRO stockholders such AIRO stockholder’s Pro Rata Share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares.

(iii) In the event ParentCo’s revenue for the second full fiscal year following the Closing Date is greater than or equal to $78,100,000, ParentCo shall issue to each of the AIRO stockholders such AIRO stockholder’s Pro Rata Share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares.

The following table illustrates the potential impact of redemptions on the per share value of the shares owned by non-redeeming shareholders at the following redemption levels:

What happens if the Business Combination is not consummated?

There are certain circumstances under which the Business Combination Agreement may be terminated. See the section entitled “Shareholder Proposal No. 1: The Business Combination Proposal — Conditions to the Closing” for information regarding the parties’ specific termination rights.

If, as a result of the termination of the Business Combination Agreement or otherwise, Kernel is unable to complete the Business Combination or another initial business combination transaction by August 5, 2024, the Existing Kernel Governing Documents provide that it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, subject to lawfully available funds therefor, redeem 100% of the Public Shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to it to pay franchise and income taxes payable, by (B) the total number of then outstanding Public Shares, which redemption will completely extinguish rights of the Public Shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemptions, subject to the approval of Kernel’s remaining shareholders and the Kernel Board in accordance with applicable law, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under the Cayman Islands Companies Law to provide for claims of creditors and other requirements of applicable law.

Kernel expects that the amount of any distribution its Public Shareholders will be entitled to receive upon its dissolution will be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Business Combination, subject in each case to Kernel’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law. Holders of Founder Shares have waived any right to any liquidation distribution with respect to those shares.

In the event of liquidation, there will be no distribution with respect to Kernel’s outstanding Public Warrants. Accordingly, the Public Warrants will expire worthless.

When is the Business Combination expected to be completed?

The Closing is expected to take place (a) the second business day following the satisfaction or waiver of the conditions described below under the section entitled “Shareholder Proposal No. 1: The Business Combination Proposal —Conditions to the Closing” or (b) such other date as agreed to by the parties to the Business Combination Agreement in writing, in each case, subject to the satisfaction or waiver of the Closing conditions. The Business Combination Agreement may be terminated by either Kernel or AIRO if the Closing has not occurred by August 5, 2024, subject to certain exceptions. For a description of the conditions to the completion of the Business Combination, see the section entitled “Shareholder Proposal No. 1: The Business Combination Proposal – Conditions to the Closing.”

What do I need to do now?

You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

How do I vote?

If you were a holder of record of Kernel Ordinary Shares on [●], 2024, the Record Date, you may vote with respect to the Proposals virtually at the Extraordinary General Meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to virtually attend the Extraordinary General Meeting and vote, obtain a proxy from your broker, bank or nominee.

What will happen if I abstain from voting or fail to vote at the Extraordinary General Meeting?

At the Extraordinary General Meeting, Kernel will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as present for purposes of determining whether a quorum is present. Abstentions will have the same effect as a vote “AGAINST” the Business Combination Proposal, the Domestication Proposal and the ParentCo Charter Amendment Proposal. Broker non-votes will not be counted as present for the purposes of establishing a quorum and will have no effect on any of the Proposals.

What will happen if I sign and return my proxy card without indicating how I wish to vote?

Signed and dated proxies received by Kernel without an indication of how the shareholder intends to vote on a Proposal will be voted “FOR” each Proposal presented to the shareholders. The proxyholders may use their discretion to vote on any other matters which properly come before the Extraordinary General Meeting. If you fail to indicate how you vote, you will not be able to exercise your redemption rights.

If I am not going to attend the Extraordinary General Meeting, should I return my proxy card instead?

Yes. Whether you plan to attend the Extraordinary General Meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Kernel believes the Proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

May I change my vote after I have mailed my signed proxy card?

Yes. You may change your vote by sending a later-dated, signed proxy card to Kernel’s secretary at the address listed below so that it is received by Kernel’s secretary prior to the Extraordinary General Meeting or attend the Extraordinary General Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Kernel’s secretary, which must be received by Kernel’s secretary prior to the Extraordinary General Meeting.

What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

Who will solicit and pay the cost of soliciting proxies?

Kernel will pay the cost of soliciting proxies for the Extraordinary General Meeting. Kernel has engaged Issuer Direct Corporation (“Issuer Direct”) to assist in the solicitation of proxies for the Extraordinary General Meeting. Kernel has agreed to pay Issuer Direct its customary fee, plus disbursements. Kernel will reimburse Issuer Direct for reasonable out-of-pocket expenses and will indemnify Issuer Direct and its affiliates against certain claims, liabilities, losses, damages and expenses. Kernel will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Kernel Ordinary Shares for their expenses in forwarding soliciting materials to beneficial owners of Kernel’s Ordinary Shares and in obtaining voting instructions from those owners. Kernel’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Who can help answer my questions?

If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:

Kernel Group Holdings, Inc.

515 Madison Avenue, Suite 8078

New York, New York 10022

Attn: Suren Ajjarapu

Telephone No.: (646) 908-2659

You may also contact our proxy solicitor at:

Issuer Direct Corporation

One Glenwood Ave, Suite 1001

Raleigh, NC 27603

Telephone No.: (919) 481-4000

Email: proxy@issuerdirect.com

To obtain timely delivery, Kernel shareholders must request the materials no later than 15 business days prior to the Extraordinary General Meeting.

You may also obtain additional information about Kernel from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to Kernel’s Transfer Agent prior to the Extraordinary General Meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004-1561

Attn: SPAC Administration Team

Email: SPACredemptions@continentalstock.com

SUMMARY OF THE PROXY STATEMENT

This Summary of the Proxy Statement, together with the sections entitled “Summary Term Sheet” and “Questions and Answers About the Proposals for Shareholders” summarize information contained in this proxy statement/prospectus, but do not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus, including the attached annexes, for a more complete understanding of the matters to be considered at the Extraordinary General Meeting. In addition, for definitions of terms commonly used throughout this proxy statement/prospectus, including in this Summary of the Proxy Statement, see the section entitled “Frequently Used Terms.” Capitalized terms not otherwise defined in the Proxy Statement shall have the meanings ascribed to them in the Business Combination Agreement, which is attached to the Proxy Statement as Annex A. Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and the “Company” refer to Kernel Group Holdings, Inc.

Kernel

Kernel is a blank check company incorporated as a Cayman Islands exempted company on November 10, 2020 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. Kernel’s Units, Class A Ordinary Shares and warrants are trading on Nasdaq under the symbols “KRNL,” “KRNLU,” and “KRNLW,” respectively. The mailing address of Kernel’s principal executive office is 515 Madison Avenue, Suite 8078, New York, New York 10022. The telephone number is (646) 908-2659.

On February 3, 2023, Kernel held an extraordinary general meeting of shareholders, at which shareholders voted upon, among other items, a proposal (the “Extension Amendment Proposal”) to amend Kernel’s governing documents (the “Charter Amendment”) to extend the date by which Kernel must consummate an initial business combination from February 5, 2023 by up to six (6) one-month Extensions (defined below) to August 5, 2023 (the “Extension Meeting”). At the Extension Meeting, Kernel’s shareholders also approved a proposal to amend the Trust Agreement, as defined below (the “Trust Amendment Proposal”) to conform the procedures in the Trust Agreement by which the Company may extend the date on which the Trust Account must be liquidated if the Company has not completed its initial Business Combination to the procedures in the Charter Amendment.

In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Extension Meeting, a total of 200 Kernel shareholders elected to redeem an aggregate of 22,848,122 Public Shares. Following the payment of redemptions, Kernel had approximately $77.6 million left in its Trust Account.

On August 3, 2023, Kernel held an extraordinary general meeting of shareholders, at which shareholders voted upon, among other items, a proposal (the “Second Extension Amendment Proposal”) to amend Kernel’s governing documents (the “Second Charter Amendment”) to extend the date by which Kernel must consummate an initial business combination from August 5, 2023 by up to six (6) one-month Extensions to February 5, 2024 (the “Extension Meeting - Second”). At the Extension Meeting - Second, Kernel’s shareholders also approved a proposal to amend the Trust Agreement, as defined below (the “Second Trust Amendment Proposal”) to conform the procedures in the Trust Agreement by which the Company may extend the date on which the Trust Account must be liquidated if the Company has not completed its initial Business Combination to the procedures in the Second Charter Amendment.

In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Extension Meeting - Second, holders of 1,310,929 of the Company’s Public Shares exercised their right to redeem those shares for cash at an approximate price of $10.44 per share, for an aggregate of approximately $13.7 million. Following the payment of the redemptions, the Trust Account had a balance of approximately $65.9 million.

On February 1, 2024, Kernel held an extraordinary general meeting of its shareholders (the “Extension Meeting - Third”). At the Extension Meeting - Third, the Company’s shareholders entitled to vote at the meeting cast their votes and approved a proposal (the “Third Extension Amendment Proposal”) to amend the Kernel’s Amended and Restated Memorandum and Articles of Association (the “Third Charter Amendment”) to extend the date (the “Termination Date”) by which Kernel must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving Kernel and one or more businesses (a “business combination”), (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of Kernel’s Class A Ordinary Shares included as part of the Units sold in Kernel’s IPO. The Third Charter Amendment allows Kernel to extend the Termination Date by up to six (6) one-month extensions to August 5, 2024 (each of which we refer to as an “Extension”, and such later date, the “Extended Deadline”), unless the closing of Kernel’s initial business combination shall have occurred. At the Extension Meeting - Third, Kernel’s shareholders also approved a proposal to amend the Trust Agreement, as defined below (the “Third Trust Amendment Proposal”) to conform the procedures in the Trust Agreement by which the Company may extend the date on which the Trust Account must be liquidated if the Company has not completed its initial Business Combination to the procedures in the Third Charter Amendment.

In connection with the approval of the Third Extension Amendment Proposal and the Third Trust Amendment Proposal at the Extension Meeting - Third, holders of 5,806,608 of the Kernel’s Public Shares exercised their right to redeem those shares for cash at an approximate price of $10.80 per share, for an aggregate of approximately $62.7 million. Following the payment of the redemptions, the Trust Account will have a balance of approximately $5.5 million.

On February 5, 2024, Kernel received a notice from the staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, unless Kernel timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”), Kernel’s securities would be subject to suspension and delisting from The Nasdaq Capital Market at the opening of business on February 14, 2024, due to Kernel’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company must complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. Since Kernel’s registration statement for its initial public offering became effective on February 2, 2021, it was required by this rule to complete its initial business combination by no later than February 2, 2024. Kernel intends to timely request a hearing before the Panel to request sufficient time to complete the Business Combination with AIRO Group Holdings. The hearing request will result in a stay of any suspension or delisting action pending the hearing. There can be no assurance that Kernel will be able to satisfy Nasdaq’s continued listing requirements, regain compliance with Nasdaq IM-5101-2, and maintain compliance with other Nasdaq listing requirements.

Kernel Merger Sub

Kernel Merger Sub is a wholly-owned subsidiary of ParentCo, formed on January 25, 2023, to consummate the Business Combination. On the Closing Date, Kernel Merger Sub will merge with and into Kernel, with Kernel surviving the First Merger as a wholly-owned subsidiary of ParentCo. The mailing address of Kernel Merger Sub’s principal executive office is 515 Madison Avenue, Suite 8078 New York, New York 10022. Its telephone number is (646) 908-2659. After the consummation of the First Merger, Kernel Merger Sub will cease to exist as a separate legal entity.

AIRO Merger Sub

AIRO Merger Sub is a wholly-owned subsidiary of ParentCo, formed on February 27, 2023, to consummate the Business Combination. On the Closing Date, immediately following the First Merger, AIRO Merger Sub will merge with and into AIRO, with AIRO surviving the Second Merger as a wholly-owned subsidiary of ParentCo. The mailing address of AIRO Merger Sub’s principal executive office is 515 Madison Avenue, Suite 8078 New York, New York 10022. Its telephone number is (646) 908-2659. After the consummation of the Second Merger, AIRO Merger Sub will cease to exist as a separate legal entity.

AIRO Group, Inc.

AIRO Group, Inc., a Delaware corporation (“ParentCo”), was formed on February 27, 2023 for the purpose of facilitating the Business Combination. As a result of the Domestication and Mergers, ParentCo will succeed Kernel as registrant and public company pursuant to the federal securities laws. Prior to the Business Combination, ParentCo has had no business activity or operations other than in preparation for the Business Combination.

The mailing address of ParentCo’s principal executive office is 515 Madison Avenue, Suite 8078 New York, New York 10022. Its telephone number is (646) 908-2659.

AIRO

AIRO Group, Inc. n/k/a Old AGI, Inc., a Delaware corporation (“Legacy AIRO”), was formed on March 16, 2020 for the purpose of acquiring and integrating various companies engaged in the aerospace and defense industry, including those that are discussed in this prospectus as having been acquired by AIRO. AIRO was formed on August 30, 2021, and Legacy AIRO became a wholly owned subsidiary of AIRO through a reorganization effective as of October 5, 2021. AIRO then entered into a series of transactions to develop its business across four primary divisions, as further discussed below: (i) Advanced Avionics; (ii) Training; (iii) Uncrewed Air Systems; and (iv) Electric Air Mobility.

The Business Combination Proposal

On March 6, 2023, Kernel entered into the Business Combination Agreement, pursuant to which at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), Kernel Merger Sub will merge with and into Kernel (the “First Merger”), with Kernel continuing as the surviving corporation and wholly-owned subsidiary of ParentCo. Immediately following the First Merger, AIRO Merger Sub will merge with and into AIRO (the “Second Merger”), with AIRO continuing as the surviving corporation and wholly-owned subsidiary of ParentCo.

On August 29, 2023, the Company, ParentCo, Kernel Merger Sub, AIRO Merger Sub, Seller Representative, AIRO Group Holdings, and the Sponsor entered into the First Amendment to the Business Combination Agreement (the “First Amendment”). The First Amendment amends the Business Combination Agreement to make certain changes to the earnout provisions to fix the number of Earnout Shares that can be granted in each Earnout Period based on a $10.00 per share price.

On January 16, 2024, the Company, ParentCo, Kernel Merger Sub, AIRO Merger Sub, Seller Representative, AIRO Group Holdings, and the Sponsor entered into the Second Amendment to the Business Combination Agreement (the “Second Amendment”). The Second Amendment amends the Business Combination Agreement to change the terms under which the AIRO Group Holdings stockholders and the Sponsor shall have a contingent right to receive the Earnout Shares as additional consideration based on ParentCo’s achievement of certain revenue thresholds. The Second Amendment also changes the “Outside Date” from August 2, 2023 to August 5, 2024.

On February 5, 2024, the Company, ParentCo, Kernel Merger Sub, AIRO Merger Sub, Seller Representative, AIRO Group Holdings, and the Sponsor entered into the Third Amendment to the Business Combination Agreement (the “Third Amendment”). The Third Amendment amends the Business Combination Agreement to remove the requirement that Kernel have net tangible assets of at least $5,000,001 at Closing.

Merger Consideration

As consideration for the Second Merger, the AIRO stockholders 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 (a) $770,000,000 minus (b) the amount, if any, by which the net working capital is less than negative $5,500,000 by more than $500,000, plus (c) the amount, if any, by which the net working capital is greater than negative $5,500,000 by more than $500,000 (but not less than zero), minus (d) the amount, if any, by which the closing net debt exceeds the target net debt of $75,000,000 by more than $500,000 (but not less than zero), plus (e) the amount, if any, by which the target net debt of $75,000,000 is less than closing net debt, minus (f) the amount, if any, by which the company transaction expenses exceed the target company transaction expenses of $14,000,000 (such resulting amount, the “AIRO Merger Consideration”).

In addition, AIRO stockholders shall also be entitled to receive from ParentCo up to 33,000,000 additional shares of ParentCo common stock, and Sponsor shall be entitled to receive from ParentCo up to 3,300,000 additional shares of ParentCo common stock, as additional consideration based on ParentCo’s achievement of certain revenue thresholds during the Earnout Eligibility Period, as follows:

(a) if ParentCo’s revenue for the fiscal year that includes the Closing Date is greater than or equal to $50,000,000, then ParentCo shall issue to each of the AIRO stockholders such stockholder’s pro rata share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares;

(b) if ParentCo’s revenue for the first full fiscal year following the Closing Date is greater than or equal to $62,500,000, then ParentCo shall issue to each of the AIRO stockholders such stockholder’s pro rata share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares; and

(c) if ParentCo’s revenue for the second full fiscal year following the Closing Date is greater than or equal to $78,100,000, then ParentCo shall issue to each of the AIRO stockholders such stockholder’s pro rata share of 11,000,000 Earnout Shares and the Sponsor shall be issued 1,100,000 Earnout Shares.

For more information, see the section entitled “Shareholder Proposal No. 1: The Business Combination Proposal – Merger Consideration.”

Representations and Warranties

The Business Combination Agreement contains customary representations and warranties by each of Kernel, ParentCo, Kernel Merger Sub, AIRO Merger Sub, and AIRO. Certain of the representations are subject to specified exceptions and qualifications contained in the Business Combination Agreement or in information provided pursuant to certain disclosure schedules to the Business Combination Agreement.

Covenants of the Parties

Each party agreed in the Business Combination Agreement to use its commercially reasonable efforts to effect the Closing and consummate the transactions contemplated by the Business Combination Agreement. The Business Combination Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Business Combination Agreement and the earlier of the Closing or the termination of the Business Combination Agreement in accordance with its terms (the “Interim Period”), including, among other things, those relating to: (i) the provision of access to their properties, books and personnel; (ii) the operation of their respective businesses in the ordinary course of business; (iii) the provision by AIRO to Kernel of unaudited financial statements on a monthly, quarterly and annual basis and audited financial statements as of December 31, 2022 within 60 days of the Business Combination Agreement’s signing (“AIRO’s 2022 Audited Financials”); (iv) Kernel’s public filings; (v) use of Kernel’s Unencumbered Cash; (vi) no insider trading; (vii) notifications of certain breaches, consent requirements or other matters; (viii) the preparation and filing of the Registration Statement as described in more detail below, (ix) public announcements; and (x) confidentiality. Each party also agreed during the Interim Period not to solicit or enter into any inquiry, proposal or offer, or any indication of interest in making an offer or proposal for an alternative competing transactions, to notify the others as promptly as practicable in writing of the receipt of any inquiries, proposals or offers, requests for information or requests relating to an alternative competing transaction or any requests for non-public information relating to such transaction, and to keep the other party informed of the status of any such inquiries, proposals, offers or requests for information. The Business Combination Agreement also contains certain customary post-Closing covenants regarding (a) maintenance of books and records; (b) tax matters; and (c) indemnification of directors and officers and the purchase of tail directors’ and officers’ liability insurance.

In addition, AIRO agreed to obtain its required shareholder approvals in the manner required under its governing documents and applicable law for the execution, delivery and performance of the Business Combination Agreement and each of the ancillary documents to the Business Combination Agreement to which AIRO is or is required to be a party or bound, and the consummation of the transactions contemplated thereby, including the Business Combination.

In the Business Combination Agreement the parties made customary covenants regarding the registration statement on Form S-4 to be filed by ParentCo with SEC under the Securities Act.

Kernel will distribute a proxy statement to seek the consent of Kernel’s shareholders to, among other things, (i) adopt and approve the Business Combination Agreement and the Transaction; (ii) approve, to the extent necessary, the issuance of any shares in connection with any PIPE/Convertible Note Investment; (iii) approve the certificate of incorporation of Kernel in connection with the Merger; (iv) the appointment of the members of ParentCo’s post-Closing board of directors (the “Post-Closing Board”); (v) such other matters as Kernel and AIRO shall hereafter mutually determine to be necessary or appropriate in order to effect the Transaction and (vi) the adjournment of the Extraordinary General Meeting, if necessary or desirable in the reasonable determination of Kernel.

The parties agreed that the Post-Closing Board will consist of nine directors, comprised of (i) two directors designated prior to the Closing by Kernel, at least one of whom will be required to qualify as an independent director under Nasdaq rules, and (ii) seven designated by AIRO, at least four of whom will be required to qualify as an independent director under Nasdaq rules.

The parties further agreed to take all action necessary so that the individuals serving as the chief executive officer and chief financial officer, respectively, of ParentCo immediately after the Closing will be the same individuals (in the same office) as that of AIRO immediately prior to the Closing.

Conditions to Consummation of the Merger

The Business Combination Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless waived): (i) approval of the shareholders of Kernel and AIRO of the Transaction and the other matters requiring shareholder approval; (ii) approvals of any required governmental authorities and completion of any antitrust expiration periods; (iii) receipt of specified third party consents; (iv) no law or order preventing the Transaction; (v) the Registration Statement having been declared effective by the SEC; (vi) no material uncured breach by the other party; (vii) no occurrence of a Material Adverse Effect with respect to the other party; (viii) the satisfaction of the $5,000,001 minimum net tangible asset test by Kernel (not waivable); (ix) approval from Nasdaq for the listing of the shares of ParentCo’s common to be issued in connection with the Transaction; and (x) reconstitution of the Post-Closing Board as contemplated under the Business Combination Agreement.

In addition, unless waived by AIRO, the obligations of AIRO to consummate the Transaction are subject to the satisfaction of the following additional Closing conditions, in addition to the delivery by Kernel of the Related Agreements (as defined and described in greater detail below), customary certificates and other Closing deliverables: (i) the representations and warranties of Kernel being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to customary exceptions, including materiality qualifiers); (ii) Kernel, ParentCo, Kernel Merger Sub, and AIRO Merger Sub having performed in all material respects their respective obligations and complied in all material respects with their respective covenants and agreements under the Business Combination Agreement required to be performed or complied with by them on or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to Kernel since the date of the Business Combination Agreement which is continuing and uncured; (iv) the replacement of the Replacement Warrants and Replacement Options; (v) at the Closing, Kernel having $50,000,000 in Unencumbered Cash, including funds remaining in the trust account (after giving effect to the completion and payment of any redemptions and any Transaction Expenses) and the proceeds of the PIPE/Convertible Note Investment, fifty percent (50%) of any net cash proceeds of any capital investment raise and/or convertible debt raise conducted by the Company during the period beginning on the date of the Business Combination Agreement and ending on the Closing Date, and any net cash proceeds of any executed agreements regarding a capital investment raise and/or convertible debt raise conducted by Kernel or ParentCo in which such cash proceeds are required to be paid to ParentCo during the thirty (30) day period beginning on the Closing Date.

Finally, unless waived by Kernel, the obligations of Kernel to consummate the Transaction are subject to the satisfaction of the following additional Closing conditions, in addition to the delivery by AIRO of the Related Agreements (as defined and described in greater detail below), customary certificates and other Closing deliverables: (i) the representations and warranties of AIRO being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to customary exceptions, including materiality qualifiers); (ii) AIRO having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Business Combination Agreement required to be performed or complied with by it on or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to AIRO and its subsidiaries on a consolidated basis since the date of the Business Combination Agreement which is continuing and uncured; (iv) delivery of AIRO’s 2022 Audited Financials within 60 days of the Business Combination Agreement’s signing; (v) the completion of Kernel’s legal due diligence of AIRO and its subsidiaries to Kernel’s reasonable satisfaction; (vi) the delivery of the Replacement Warrants and Replacement Options; and (vii) the aggregate amount of all Indebtedness of the Target Companies due earlier than 180 days after the Closing (net of AIRO cash at Closing) is less than Fifty Million U.S. Dollars ($50,000,000).

Termination

The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including: (i) by mutual written consent of Kernel and AIRO; (ii) by either Kernel and AIRO if any of the conditions to Closing have not been satisfied or waived by August 5, 2024 (the “Outside Date”), provided that any breach or violation of any representation, warranty or covenant of the party seeking termination is not the cause of the failure of the Closing to occur by the Outside Date; (iii) by either Kernel or AIRO if a governmental authority of competent jurisdiction has issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transaction, and such order or other action has become final and non-appealable; (iv) by either Kernel or AIRO in the event of the other party’s uncured breach, if such breach would result in the failure of a closing condition (and so long as the terminating party is not also in breach under the Business Combination Agreement); (v) by Kernel if there has been a Material Adverse Effect on AIRO and its subsidiaries on a consolidated basis following the date of the Business Combination Agreement that is uncured and continuing; and (vi) by either Kernel or AIRO if Kernel and AIRO holds a special meeting of its shareholders to approve the Business Combination Agreement and the Transaction, and the required approvals related to the Business Combination Agreement and the Transaction of either Kernel’s shareholders or AIRO’s shareholders is not obtained.

If the Business Combination Agreement is terminated, all further obligations of the parties under the Business Combination Agreement (except for certain obligations related to publicity, confidentiality, fees and expenses, trust fund waiver, no recourse, termination and general provisions) will terminate, and no party to the Business Combination Agreement will have any further liability to any other party thereto except for liability for fraud. The Business Combination Agreement does not provide for any termination fees.

Trust Account Waiver

AIRO agrees that it and its affiliates will not have any right, title, interest or claim of any kind in or to any monies in Kernel’s Trust Account held for its Public Shareholders, and agrees not to, and waives any right to, make any claim against the Trust Account (including any distributions therefrom).

Management

The following persons are expected to serve as executive officers and directors of ParentCo following the Business Combination. For biographical information concerning AIRO’s executive officers and AIRO’s designees to the Post-Closing Board, see “Management After the Business Combination – Executive Officers and Directors after the Business Combination.” For biographical information concerning the Kernel designees to the Post-Closing Board, see “Information About Kernel — Directors and Executive Officers.”

Pursuant to the Existing Kernel Governing Documents, in connection with the Business Combination, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Existing Kernel Governing Documents. For illustrative purposes, based on approximately $77.6 million of funds in the Trust Account and 7,626,878 shares subject to possible redemption, in each case, following the Extension Redemption, this would have amounted to approximately $10.17 per issued and outstanding Public Share. If a holder of Public Shares exercises his, her or its redemption rights in connection with the Business Combination, such holder will be exchanging his, her or its Public Shares for cash. Such a holder will be entitled to receive cash for its Public Shares only if he, she or it properly demands redemption and delivers its Public Shares (either physically or electronically) to Kernel’s Transfer Agent at least two (2) business days prior to the Extraordinary General Meeting. Holders of Public Shares may elect to redeem their shares whether or not such shares are voted at the Extraordinary General Meeting. See the section entitled “Extraordinary General Meeting of Kernel shareholders — Redemption Rights.”

The Business Combination involves numerous risks. For more information about these risks, see the section entitled “Risk Factors.”

The Domestication Proposal

Kernel is proposing that its shareholders approve the Domestication Proposal to change Kernel’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Please see the section entitled “Shareholder Proposal No. 2 – The Domestication Proposal.”

The ParentCo Charter Amendment Proposal

Kernel is proposing that its shareholders vote to approve the amendment and restatement of the Existing ParentCo Governing Documents by their deletion and replacement with the proposed new certificate of incorporation and bylaws. Please see the section entitled “Shareholder Proposal No. 3 – The ParentCo Charter Amendment Proposal.”

The Nasdaq Proposal

Kernel is proposing that its shareholders vote to approve, for purposes of complying with Nasdaq Listing Rules 5635(a) and (b), the issuance of more than 20% of issued and outstanding Class A Ordinary Shares in connection with the Business Combination. Please see the section entitled “Shareholder Proposal No. 4 – The Nasdaq Proposal.”

The Incentive Plan Proposal

Kernel is proposing that its shareholders approve and adopt the Equity Incentive Plan, which will become effective upon the Closing of the Business Combination. Please see the section entitled “Shareholder Proposal No. 5 – The Incentive Plan Proposal.”

The Employee Stock Purchase Plan Proposal

Kernel is proposing that its shareholders approve and adopt the Employee Stock Purchase Plan, which will become effective upon the Closing of the Business Combination. Please see the section entitled “Shareholder Proposal No. 6 – The Employee Stock Purchase Plan Proposal”.

The Election of Directors Proposal

Kernel is proposing that its shareholders vote to elect nine (9) directors to serve staggered terms on the ParentCo Board until the 2024, 2025 and 2026 annual meeting of stockholders of ParentCo, respectively, and until their respective successors are duly elected and qualified. Please see the section entitled “Shareholder Proposal No. 7 — The Election of Directors Proposal.”

The NTA Proposal

Kernel is proposing that its shareholders vote to approve amendments to Kernel’s Amended and Restated Memorandum and Articles of Association, which amendments shall be effective, if adopted and implemented by Kernel, immediately prior to the consummation of the Business Combination, to remove the requirements limiting Kernel’s ability to consummate an initial business combination if Kernel would have less than $5,000,001 in net tangible assets prior to or upon consummation of such initial business combination. Please see the section entitled “Shareholder Proposal No. 8 — The NTA Proposal.”

The Adjournment Proposal

Kernel shareholders will be asked to consider and vote upon a proposal to adjourn the Extraordinary General Meeting to a later date or dates if, based upon the tabulated vote at the time of the Extraordinary General Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Domestication Proposal, the ParentCo Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal. Please see the section entitled “Shareholder Proposal No. 9 — The Adjournment Proposal.”

Interests of Kernel’s Directors and Officers and Others in the Business Combination.

The Kernel Board has adopted and approved the Business Combination Agreement. In arriving at its recommendations, the Kernel Board carefully considered a number of factors described in this proxy statement/prospectus. Please see section entitled “Shareholder Proposal No. 1: The Business Combination Proposal.”

When you consider the recommendation of the Kernel Board in favor of approval of the Proposals, you should keep in mind that the Sponsor (including certain equity holders of the Sponsor) and certain of Kernel’s directors and executive officers (including Suren Ajjarapu who is Kernel’s chief executive officer) may have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests as a shareholder. These interests include, among other things:

Kernel’s Board considered these interests, among other matters when reviewing and evaluating the proposed terms of the Business Combination, how they might impact the identification of and negotiations with AIRO, and how they might impact the ParentCo if the Business Combination were to be completed. In reviewing these interests, and others deemed relevant by the Kernel Board, the Kernel Board concluded that, on the whole, these interests provided an alignment between the interests of Kernel’s officers and directors, on the one hand, and those of Kernel’s shareholders, on the other hand.

The Existing Kernel Governing Documents provide that the doctrine of corporate opportunity will not apply with respect to any of its officers or directors in circumstances where the application of the doctrine would conflict with any fiduciary duties or contractual obligations they may have, except as set forth in the Existing Kernel Governing Documents. Certain of Kernel’s officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities, including entities that are affiliates of the Sponsor, pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he has then-current fiduciary or contractual obligations, he will honor his fiduciary or contractual obligations to present such business combination opportunity to such entity, subject to their fiduciary duties under applicable law. Kernel’s Board evaluated and considered three (3) potential target companies as candidates for a possible business combination transaction with Kernel, and Kernel’s Board did not believe that the other fiduciary duties or contractual obligations of its officers and directors materially affected Kernel’s ability to source a potential business combination. Kernel’s Board considered the factors supporting, and risks and uncertainties related to, a business combination with AIRO as set forth above under “Recommendation of the Kernel Board and Reasons for the Business Combination,” and did not believe that such other fiduciary duties or contractual obligations impacted such consideration.

Risk Factors

In evaluating the Proposals set forth in this proxy statement/prospectus, you should carefully read this proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors.”

Risks Related to ParentCo and its Common Stock Following the Business Combination

Risks Related to Kernel and the Business Combination

SELECTED HISTORICAL FINANCIAL INFORMATION OF KERNEL 

We are providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination. Kernel’s condensed balance sheet data as of September 30, 2023 and the condensed statement of operations data for the nine months ended September 30, 2023 are derived from Kernel’s unaudited condensed financial statements included elsewhere in this registration statement. Kernel’s balance sheet data as of December 31, 2022 and the statement of operations data for the year ended December 31, 2022 is derived from Kernel’s audited financial statements included elsewhere in this registration statement.

The information is only a summary and should be read in conjunction with the Company’s financial statements and related notes and “Kernel’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this registration statement. Kernel’s historical results are not necessarily indicative of future results, and the results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

SELECTED HISTORICAL FINANCIAL INFORMATION OF AIRO 

We are providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination. AIRO’s condensed consolidated balance sheet data as of September 30, 2023 and the condensed consolidated statement of operations data for the nine months ended September 30, 2023 are derived from AIRO’s unaudited condensed consolidated financial statements included elsewhere in this registration statement. AIRO’s consolidated balance sheet data as of December 31, 2022 and the consolidated statement of operations data for the year ended December 31, 2022 is derived from AIRO’s audited consolidated financial statements included elsewhere in this registration statement. Subsequent to the issuance of AIRO’s condensed consolidated financial statements for the nine months ended September 30, 2023, AIRO identified errors in its accounting and reporting for its acquisitions of six of its subsidiaries in 2022 and restated its unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2023 and its audited consolidated financial statements as of and for the year ended December 31, 2022.

The information is only a summary and should be read in conjunction with AIRO’s consolidated financial statements and related notes and “AIRO’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this registration statement. AIRO’s historical results are not necessarily indicative of future results, and the results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Defined terms included below shall have the same meaning as terms defined and included elsewhere in this registration statement.

The following summary unaudited pro forma condensed combined financial data (the “Summary Pro Forma Information”) gives effect to the transactions contemplated by the Business Combination (the “Transaction”). The Business Combination will be accounted for as a reverse recapitalization, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Under this method of accounting, although ParentCo is the legal acquirer, Kernel will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be reflected as the equivalent of AIRO issuing shares for the net assets of Kernel, followed by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of AIRO. There will be no accounting effect or change in the carrying amount of the assets and liabilities as a result of the reverse recapitalization.

The summary unaudited pro forma condensed combined balance sheet as of September 30, 2023 gives effect to the Transaction as if it had occurred on September 30, 2023.

The summary unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2023 and the year ended December 31, 2022 gives effect to the Transaction as if it had occurred on January 1, 2022.

The Summary Pro Forma Information has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” in this registration statement and the accompanying notes thereto. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical financial statements and related notes of Kernel and AIRO for the applicable periods included in this registration statement.

The Summary Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what the ParentCo’s financial position or results of operations actually would have been had the Business Combination been completed as of the dates indicated. In addition, the Summary Pro Forma Information does not purport to project the future financial position or operating results of the ParentCo following the reverse recapitalization.

The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption into cash of Kernel Class A Ordinary:

● Scenario 1: Assuming No Redemptions: This presentation assumes that no Kernel Public Shareholders exercise redemption rights with respect to their Public Shares of 509,341 which were outstanding as of the date of this filing. Public Shares are based on a total of 30,475,000 redeemable Public Shares pursuant to the Kernel Charter less the 22,848,122 Public Shares redeemed in February 2023, 1,310,929 Public Shares redeemed in August 2023 and 5,806,608 Public Shares redeemed in February 2024.

● Scenario 2: Assuming 50% Redemptions: This presentation assumes that 50% of Kernel Public Shareholders holding 254,671 Public Shares will exercise their redemption rights for approximately $2.75 million of funds in Kernel’s Trust Account.

● Scenario 3: Assuming Maximum Redemptions: This presentation assumes that 100% of Kernel public shareholders holding 509,341 Public Shares will exercise their redemption rights for approximately $5.5 million of funds in Kernel’s Trust Account.

The Business Combination will not close under any scenario unless AIRO waives the Unencumbered Cash closing condition and the NTA Proposal is approved.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented. Significant assumptions include conversions of debt to equity as further described in the notes to the unaudited pro forma condensed combined financial information. These conversion agreements have been executed but do not take effect until no later than two days prior to closing of the Business Combination. The pro forma adjustments also do not include additional Unencumbered Cash provided by Kernel beyond funds remaining in its trust account in each redemption scenario though, pursuant to the Business Combination Agreement, it is required to deliver $50 million in Unencumbered Cash at Closing unless such condition is waived by AIRO. While Kernel is pursuing various avenues of financing to meet such closing condition, no definitive agreements have been executed, so no proceeds from such efforts are reflected in the pro forma adjustments. The AIRO financial statements as of and for the year ended December 31, 2022 reflect the results of operations for twelve months of Aspen Avionics, Inc., AIRO’s predecessor and accounting acquirer, and the operating activity for Agile Defense, LLC, AIRO Drone, LLC, Jaunt Air Mobility LLC, Coastal Defense, Inc. and Sky-Watch A/S from their respective closing dates with AIRO as further described in “Business of AIRO”. As part of the pro forma adjustments, AIRO included adjustments to recognize interest, contingent consideration expense related to Jaunt Air Mobility LLC, and additional sales and marketing expense related to the Aspen Management Carveout Plan.

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination. The pro forma adjustments reflecting the consummation of the Business Combination are based on certain available information as of the date of these unaudited pro forma condensed combined financial statements and certain assumptions and methodologies that Kernel believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. Kernel believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of ParentCo. They should be read in conjunction with the historical financial statements and notes thereto of Kernel and AIRO.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this proxy statement/prospectus are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and are being made pursuant to the safe harbor provisions contained therein. These forward-looking statements relate to current expectations and strategies, future operations, future financial positioning, future revenue, projected costs, prospects, current plans, current objectives of management and expected market growth, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from expectations, estimates, and projections expressed or implied by these forward-looking statements and, consequently, you should not rely on these forward-looking statements as a guarantee, an assurance, a prediction or a definitive statement of fact or probability of future events. In some cases, you can identify forward-looking statements through the use of words or phrases such as “may”, “should”, “could”, “predict”, “potential”, “plan”, “seeks”, “believe”, “will likely result”, “expect”, “continue”, “will continue”, “will”, “will be”, “anticipate”, “seek”, “estimate”, “intend”, “project”, “would”, “outlook”, “intend”, “strive”, and similar expressions, or the negative version of those words or phrases or other comparable words or phrases of a future or forward-looking nature, but the absence of such words does not mean that a statement is not forward-looking. These forward-looking statements are not historical facts, but instead they are predictions, projections and other statements about future events are based upon estimates and assumptions that, while considered reasonable by Kernel and its management, and AIRO and its management, as the case may be, are inherently uncertain. These forward-looking statements are provided for illustrative purposes only and actual events and circumstances are difficult or impossible to predict and will differ from assumptions.

Forward-looking statements in this proxy statement/prospectus include, but are not limited to, statements about the:

Many factors may cause actual results to differ materially from these forward-looking statements including, but not limited to:

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that will be described in the “Risk Factors” section of this proxy statement/prospectus and the amendments hereto, and other documents to be filed by us from time to time with the SEC, which are publicly available on the SEC’s website at www.sec.gov. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and while we may elect to update these forward-looking statements at some point in the future, they assume no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. We are not giving any assurance that we will achieve our expectations. These forward-looking statements should not be relied upon as representing our assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

RISK FACTORS

You should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements,” before deciding how to vote your shares of Kernel Ordinary Shares. Please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination and may have a material adverse effect on the business, financial condition and operating results of AIRO and ParentCo following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by Kernel and AIRO that later may prove to be incorrect or incomplete. Kernel and AIRO may face additional risks and uncertainties that are not presently known to Kernel or AIRO or that Kernel and AIRO currently deem immaterial, which may also impair ParentCo’s business, financial condition or results of operations. The following discussion should be read in conjunction with the financial statements of AIRO and the financial statements of Kernel and the notes thereto included elsewhere in this proxy statement/prospectus.

Risks Related to AIRO’s Business

The following risk factors will apply to the business and operations of ParentCo following the Closing. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to the business, financial condition and operating results of AIRO and the business, financial condition and operating results of ParentCo following the completion of the Business Combination.

Unless the context requires otherwise, references to “AIRO,” in this section are to the business and operations of AIRO prior to the Business Combination which will be the business of ParentCo after the Business Combination, and references to “ParentCo” “we”, “us” or “our” in this section are to the business and operations of ParentCo as directly or indirectly affected by AIRO by virtue of ParentCo’s ownership of the business of AIRO after the Business Combination. Following the Business Combination, ParentCo will be a holding company with no direct operations or material assets, other than the operations and assets of AIRO. Accordingly, ParentCo’s stockholders and warrant holders will be subject to all of the risks of the business of AIRO following the Business Combination.

Our limited operating history as a combined company and our evolving business make it difficult to evaluate our current business and future prospects and increase the risk of your investment.

We were organized on August 30, 2021 for the purpose of acquiring and integrating various companies in the aerospace and defense industry. See “Business of AIRO – Formation of AIRO Group Holdings, Inc.” Our limited operating history and rapidly evolving business make it difficult to evaluate our current business, future prospects and plan for growth. We will continue to encounter significant risks and uncertainties frequently experienced by growing companies in rapidly changing and heavily regulated industries, such as attracting new customers to our products and services; retaining customers and encouraging them to utilize new products and services that we make available; competition from other companies; hiring, integrating, training and retaining skilled personnel; developing new solutions; determining prices for our solutions; unforeseen expenses; challenges in forecasting accuracy; and new or adverse regulatory developments affecting aspects of the aerospace and defense industry. Further, because we depend, in part, on market acceptance of our newer and future products and services, it is difficult to evaluate trends that may affect our business and whether our expansion will be profitable. If we have difficulty launching new products or services, then our reputation may be harmed and our business, financial condition and results of operations may be adversely affected. If our assumptions regarding these and other similar risks and uncertainties that relate to our business, which we use to plan our business, are incorrect or change as we gain more experience operating as a combined company, or if we do not address these challenges successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

We have identified a material weakness in our internal control over financial reporting. We have made and continue to make changes to our internal controls to remediate this material weakness. However, if we are unable to effectively remediate this material weakness, identify additional material weaknesses in the future, or otherwise fail to maintain effective internal control over financial reporting, then we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Any failure to maintain effective internal control over financial reporting could cause us to fail to accurately or timely report our financial condition or results of operations to meet our reporting obligations.

We have identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

As further discussed in “Business of AIRO”, AIRO acquired six subsidiaries during the first two fiscal quarters of 2022. Several of AIRO’s recently-acquired subsidiaries did not have adequate personnel to manage their accounting functions and did not maintain a segregation of duties between different roles at their organizations. In addition, in the course of preparing its consolidated financial statements for the periods in which the acquisitions occurred, AIRO did not have an effective risk assessment process that successfully identified and assessed risks of material misstatement to ensure controls were designed and implemented to respond to those risks, and it did not have an effective monitoring process to assess the consistent operation of internal control over financial reporting and remediate known control deficiencies. As a result of these deficiencies, AIRO did not effectively implement and operate process-level control activities related to the accounting and reporting for the six acquisitions, including the fair value of its common stock issued in certain of the transactions, resulting in the restatement of its consolidated financial statements as of and for the year ended December 31, 2022, as well as its unaudited condensed consolidated financial statements for the six month period ended June 30, 2022, the nine month period ended September 30, 2022, the three month period ended March 31, 2023, the six month period ended June 30, 2023 and the nine month period ended September 30, 2023. These restatements are further described in Note 15, “Restatement of Previously Issued Audited and Unaudited Financial Statements,” to AIRO’s Condensed Consolidated Financial Statements as of and for the nine months ended September 30, 2023 and Note 22, “Restatement of Previously Issued Audited and Unaudited Financial Statements,” to AIRO’s consolidated financial statements as of and for the year ended December 31, 2022.

While we have made changes to our accounting processes and other internal controls as a combined company and have engaged additional accounting personnel, we cannot assure that the measures we have taken to date, actions we continue to take, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to this material weakness and restatement of our consolidated financial statements.

We are a relatively small company with limited accounting staff. Our limited staff and resources may affect our internal controls over financial reporting. Our failure to implement measures that will ensure adequate controls over our financial and other reporting processes could cause us to fail to meet our financial and other reporting obligations.

We are a relatively small company with limited accounting staff. The limited staff may not allow for effective internal controls over financial reporting due to the lack of adequate segregation of duties and insufficient secondary review of GAAP. Due to our current staffing limitations, we cannot be certain that the measures we implement in the future will ensure that we design, undertake, and maintain adequate controls over our financial processes and reporting. Any failure by us to hire and retain experienced accounting and financial reporting personnel, implement required new or improved controls, or any difficulties we encounter in their implementation, could cause us to fail to meet our reporting obligations.

Our or our subsidiaries’ failure to comply with covenants under debt instruments could adversely affect our business and financial condition.

The agreements governing our and our subsidiaries’ indebtedness contain restrictive covenants that will limit our and our subsidiaries’ ability to engage in activities that may be in our and their long-term best interests. The creditors who hold our debt could accelerate amounts due in the event that we default on these covenants, which could potentially trigger a default or acceleration of the maturity of our other debt. If we are unable to comply with any covenant, we may need to obtain waivers from the required creditors under our debt instruments to avoid default.

Our failure to comply with the terms of certain promissory notes entered into with former stockholders of several of AIRO’s wholly-owned subsidiaries could adversely affect our business, financial condition, results of operations or liquidity.

As discussed below in “Business of AIRO - Formation of AIRO Group Holdings, Inc.,” in connection with the Put-Together Transaction (as defined in the notes to AIRO’s financial statements below), AIRO entered into promissory notes with the equity holders (the “Note Holders”) of Agile Defense, CDI, Sky-Watch and AIRO Drone (all as defined below under “Business of AIRO”) (the “AIRO Subsidiaries”). The promissory notes become payable within five (5) business days after the common stock of ParentCo begins public trading. Each promissory note is secured by all of the shares of AIRO’s interest in the respective AIRO Subsidiary (the “Collateral”). If we are unable to repay the principal amount of one or more of the promissory notes when due, then the associated Note Holders may take possession of and exercise control over the Collateral, resulting in our loss of all or partial ownership of such AIRO Subsidiary, which could adversely affect our business and financial condition.