Overview

Aerwins Technologies is redesigning its single-seat flying vehicle to meet US flight regulations. It recently discontinued non-core operations carried out by its Japanese subsidiary A.L.I. Technologies, which filed for bankruptcy.

Aerwins was originally founded as a special purpose acquisition company called Pono Capital in 2021. In February 2023, it merged with Aerwins Inc and took over its air mobility technology business.

Business Overview

Aerwins aims to build flying vehicles for an “Air Mobility Society” allowing cars and drones to fly freely. It is redesigning its single-seat vehicle to meet Federal Aviation Administration (FAA) safety rules for low-altitude flight.

Aerwins established a US subsidiary, Aerwin Development Company in Los Angeles, to lead this effort through a partnership with Helicopter Technology Company.

Discontinued Operations

In mid-2023, Aerwins discontinued non-core drone services to focus solely on developing FAA-compliant vehicles.

On December 27, 2023, Aerwins discontinued A.L.I. Technologies and its Japanese operations. A.L.I. filed for bankruptcy soon after.

Key Factors Affecting Results

Aerwins’ results depend on its ability to:

• Complete development and manufacture of its planned Manned Air Vehicle (MAV)
• Develop a dealer network and successfully market and sell MAVs
• Control costs and improve operating efficiency

Financial Results

	Q1 2024	Q1 2023	Change
Revenue	$0	$0	-
Operating Expenses	$620,380	$3,574,882	-82.6%
Operating Loss	$(620,380)	$(3,574,882)	+82.6%
Other Income	$9,546,911	$86,251	+10,968.8%
Net Income (Loss)	$8,926,531	$(3,488,631)	+355.9%

Expenses

General and administrative expenses decreased 83% from $3.6 million in Q1 2023 to $620,380 in Q1 2024, mainly due to lower consulting/professional fees related to the Pono merger.

Other income rose from $86,251 to $9.5 million due to a $10 million gain on A.L.I. deconsolidation.

As a result, Aerwins swung from a $3.5 million net loss in Q1 2023 to $8.9 million net income in Q1 2024.

Discontinued Operations

The bankruptcy and discontinuation of A.L.I. resulted in a $4.3 million loss from discontinued operations in Q1 2023.

Deconsolidation of A.L.I.

With A.L.I. entering bankruptcy on January 10, 2024, Aerwins lost control and deconsolidated A.L.I.’s $11.1 million in net liabilities from its balance sheet, resulting in a $10 million gain.

Liquidity and Capital Resources

• Aerwins used $380,797 in operating activities in Q1 2024 and has a working capital deficit of $4.3 million as of March 31, 2024
• It is seeking to raise capital to fund its MAV development and path to profitability
• Aerwins raised $542,000 selling shares in February/March 2024
• The A.L.I. bankruptcy triggers default on $4.2 million of secured notes held by Lind Global
• Continued operating losses and debts raise doubt about Aerwins’ ability to continue as going concern

Outlook

Aerwins aims to complete development and commence production of its MAV by 2027 to generate revenue. But its financial position remains strained due to past losses, debts, and the A.L.I. bankruptcy.

Aerwins continues seeking additional capital and striving for operational stability to support its FAA certification and MAV commercialization efforts. Its future remains uncertain. Achieving profitability will depend on controlling costs and successfully marketing and selling its MAV after completing development.