Company Overview

Aerkomm is an innovative satellite communication technology company providing carrier-neutral broadband connectivity solutions for the public and private sectors. The company offers next-generation technologies to deliver high-performance satellite communications without needing to operate its own satellite fleet. This allows Aerkomm to have an asset-light, less capital-intensive model compared to most other companies in the space industry.

Aerkomm partners with satellite operators and acts as a value-added reseller of satellite bandwidth, bringing new use cases and revenue streams to its partners. It also integrates partner technologies into end-to-end solutions tailored for clients. Aerkomm aims to be at the forefront of implementing virtualization for satellite communications to enhance flexibility, scalability and efficiency.

Key Developments

• Aerkomm was recently awarded a regional satellite service spectrum usage permit in Taiwan. This allows the company to provide satellite services to the civilian telecommunications and aerospace/defense markets.

• The company is developing proprietary technologies like flat panel antennas, custom beamformer chips and software-defined modems. These aim to optimize performance and enable seamless multi-orbit connectivity.

• In March 2024, Aerkomm entered a merger agreement with IX Acquisition Corp, which will make Aerkomm a publicly-listed company on completion. The merger is expected to be completed by October 2024.

Financial Performance

• Revenue dropped significantly as the company is still developing its core business. Prior year revenue was from one-time equipment sales to a related party.

• Higher operating expenses were mainly due to increases in salaries, stock compensation, professional fees and amortization costs.

• Increased net loss was primarily attributed to the above factors.

Cash Flows and Liquidity

• Aerkomm had $104,000 of cash on hand at the end of Q1 2024 and $16,000 of restricted cash.

• Cash outflows were primarily funding operating losses. This was partially offset by a land prepayment refund.

• Cash inflows were mainly from $6.6 million of proceeds from issuing new shares. This helped offset bond repayments of $7.3 million.

• The company expects capital expenditures to range from $3-10 million in 2024 to advance product development and network expansion. It aims to raise these funds via the planned merger.

Business Environment

• Increasing geopolitical tensions and events like the Ukraine war are driving more countries to improve security and boost defense spending. This raises demand for certain Aerkomm products.

• The commercial aviation industry continues recovering towards pre-pandemic levels. Airline profitability is improving as travel demand remains resilient. This bodes well for demand growth over the long term.

• The global mobile industry keeps expanding, with 5G as the next big driver. This presents opportunities to supply connectivity gear to mobile network operators.

Outlook

With its new satellite services permit, Aerkomm is expanding beyond equipment supply to also provide satellite bandwidth services in Taiwan. As it grows into a satellite service provider, the company sees attractive new opportunities in markets like civilian telecoms and aerospace/defense.

If the merger successfully closes as planned, the resulting cash injection will support Aerkomm’s initiatives to establish a leading position at the forefront of satellite communications innovation.