Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Aerkomm Inc. | |
Entity Central Index Key | 0001590496 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 9,540,891 | |
Entity File Number | 000-55925 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Incorporation State Country Code | NV |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 2,808,023 | $ 88,309 |
Accounts receivable | 649,939 | 1,745,000 |
Inventories | 2,380,364 | 895,014 |
Prepaid expenses | 2,507,069 | 1,533,748 |
Other receivable - related party | 111,111 | |
Other receivable - others | 1,461 | 2,616 |
Temporary deposit - related party | 100,067 | |
Other current assets | 13,975 | 11,336 |
Total Current Assets | 8,471,942 | 4,376,090 |
Property and Equipment | ||
Cost | 2,715,998 | 2,710,543 |
Accumulated depreciation | (731,806) | (322,049) |
Property and equipment | 1,984,192 | 2,388,494 |
Prepayment for land | 35,861,589 | 35,237,127 |
Construction in progress | 416,231 | |
Net Property and Equipment | 37,845,781 | 38,041,852 |
Other Assets | ||
Intangible asset, net | 3,011,250 | 3,382,500 |
Goodwill | 1,475,334 | 1,475,334 |
Operating lease right-of-use assets, net | 364,832 | |
Deposits | 108,161 | 107,909 |
Total Other Assets | 4,959,577 | 4,965,743 |
Total Assets | 51,277,300 | 47,383,685 |
Current Liabilities | ||
Accounts payable | 809,908 | 1,650,000 |
Accrued expenses | 345,864 | 412,165 |
Other payable - related parties | 112,192 | 173,854 |
Other payable - others | 2,203,028 | 3,726,932 |
Long-term loan - current | 8,150 | |
Operating lease liability - current - related party | 33,478 | |
Operating lease liability - current - others | 352,523 | |
Total Current Liabilities | 3,865,143 | 5,962,951 |
Long-term Liabilities | ||
Long-term loan - non-current | 37,615 | |
Operating lease liability - non-current | 19,900 | |
Restricted stock deposit liability | 1,000 | 1,000 |
Total Liabilities | 3,923,658 | 5,963,951 |
Stockholders' Equity | ||
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding as of September 30, 2019 and December 31, 2018 | ||
Common stock, $0.001 par value, 90,000,000 shares authorized, 9,391,709 shares (excluding 149,162 unvested restricted shares) issued and outstanding as of September 30, 2019; 9,098,090 shares (excluding 149,162 unvested restricted shares) issued and outstanding as of December 31, 2018 | 9,392 | 9,098 |
Additional paid in capital | 68,872,096 | 56,582,800 |
Accumulated deficits | (22,172,341) | (15,292,128) |
Accumulated other comprehensive income | 644,495 | 119,964 |
Total Stockholders' Equity | 47,353,642 | 41,419,734 |
Total Liabilities and Stockholders' Equity | $ 51,277,300 | $ 47,383,685 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Stockholders' Equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 50,000,000 | 50,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 90,000,000 | 90,000,000 |
Common stock, issued | 9,391,709 | 9,098,090 |
Common stock, outstanding | 9,391,709 | 9,098,090 |
Unvested restricted shares | 149,162 | 149,162 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 1,730,000 | $ 1,599,864 | $ 1,730,000 | |
Service income | 15,000 | 15,000 | ||
Total revenue | 1,745,000 | 1,599,864 | 1,745,000 | |
Cost of sales | 1,650,000 | 1,587,222 | 1,650,000 | |
Operating expenses | 2,733,350 | 2,594,500 | 6,356,161 | 6,180,984 |
Total Cost and Expenses | 2,733,350 | 4,244,500 | 7,943,383 | 7,830,984 |
Loss from Operations | (2,733,350) | (2,499,500) | (6,343,519) | (6,085,984) |
Non-Operating Income (Loss) | ||||
Foreign currency exchange gain (loss) | (77,047) | 1,425 | (528,748) | 5,847 |
Other income (loss), net | (1,386) | 2 | (4,711) | (3,188) |
Net Non-Operating Income (Loss) | (78,433) | 1,427 | (533,459) | 2,659 |
Loss before Income Taxes | (2,811,783) | (2,498,073) | (6,876,978) | (6,083,325) |
Income Tax Expense | 3,235 | 4,062 | ||
Net Loss | (2,811,783) | (2,498,073) | (6,880,213) | (6,087,387) |
Other Comprehensive Income (Loss) | ||||
Change in foreign currency translation adjustments | 59,237 | 2,474 | 524,531 | (1,208) |
Total Comprehensive Loss | $ (2,752,546) | $ (2,495,599) | $ (6,355,682) | $ (6,088,595) |
Net Loss Per Common Share: | ||||
Basic | $ (0.2967) | $ (0.2691) | $ (0.7377) | $ (0.7007) |
Diluted | $ (0.2967) | $ (0.2691) | $ (0.7377) | $ (0.7007) |
Weighted Average Shares Outstanding - Basic | 9,475,413 | 9,284,047 | 9,326,382 | 8,687,947 |
Weighted Average Shares Outstanding - Diluted | 9,475,413 | 9,284,047 | 9,326,382 | 8,687,947 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows from Operating Activities | ||
Net loss | $ (6,880,213) | $ (6,087,387) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Depreciation and amortization | 1,126,090 | 458,316 |
Stock-based compensation expense | 1,394,669 | 1,062,140 |
R&D expenses transferred from inventory and construction in progress | 416,231 | 439,296 |
Consulting expense adjustment from change in fair value of warrants | 255,900 | |
Reversal of consulting expense and interest expense on warrants | (121,733) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,095,061 | (1,745,000) |
Inventories | (1,485,350) | |
Prepaid expenses | (973,321) | (1,205,910) |
Other receivable - related party | (111,111) | 46,743 |
Other receivable - others | 1,155 | (6,804) |
Temporary deposit - related party | 100,067 | |
Other current assets | (2,639) | (3,145) |
Deposits - related party | 2,462 | (7,403) |
Deposits - others | (2,714) | 101,610 |
Accounts payable | (840,092) | 1,650,000 |
Accrued expenses | (66,301) | (481,763) |
Other payable - related parties | (61,662) | (214,316) |
Other payable - others | (1,577,838) | (1,253,797) |
Operating lease liability | (304,014) | |
Net Cash Used for Operating Activities | (8,035,353) | (7,247,420) |
Cash Flows from Investing Activities | ||
Prepayment on land and satellite equipment | (624,462) | (33,850,000) |
Purchase of property and equipment | (6,455) | (241,169) |
Net Cash Used for Investing Activities | (630,917) | (34,091,169) |
Cash Flows from Financing Activities | ||
Repayment of short-term bank loan | (10,000) | |
Proceeds from long-term loan | 45,765 | |
Proceeds from issuance of common stock | 10,810,688 | 41,262,899 |
Proceeds from subscribed capital | 56,000 | |
Issuance of stock warrants | 5,000 | 906,167 |
Net Cash Provided by Financing Activities | 10,861,453 | 42,215,066 |
Net Increase in Cash | 2,195,183 | 876,477 |
Cash, Beginning of Period | 88,309 | 21,504 |
Foreign Currency Translation Effect on Cash | 524,531 | (1,208) |
Cash, End of Period | 2,808,023 | 896,773 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for income taxes | 4,000 | |
Cash paid during the period for interest | 338 | 2,121 |
Non-cash Operating and Financing Activities: | ||
Restricted stock deposit liability transferred to common stock | $ (1,644) |
Organization
Organization | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | NOTE 1 - Organization Aerkomm Inc. (formerly Maple Tree Kids Inc.) ("Aerkomm") was incorporated on August 14, 2013 in the State of Nevada. Aerkomm was a retail distribution company selling all of its products over the internet in the United States, operating in the infant and toddler products business market. Aerkomm's common stock is quoted for trading on the OTC Markets Group Inc. OTCQX Best Market under the symbol "AKOM." On July 17, 2019, the French Autorité des Marchés Financiers On December 28, 2016, Aircom Pacific Inc. ("Aircom") purchased 140,000 shares of Aerkomm's common stock, representing approximately 86.3% of Aerkomm's issued and outstanding common stock as of the closing date of purchase. As a result of the transaction, Aircom became the controlling shareholder of Aerkomm. Aircom was incorporated on September 29, 2014 under the laws of the State of California. On February 13, 2017, Aerkomm entered into a share exchange agreement ("Exchange Agreement") with Aircom and its shareholders, pursuant to which Aerkomm acquired 100% of the issued and outstanding capital stock of Aircom in exchange for approximately 99.7% of the issued and outstanding capital stock of Aerkomm (or 87.81% on a fully-diluted basis). As a result of the share exchange, Aircom became a wholly-owned subsidiary of Aerkomm, and the former shareholders of Aircom became the holders of approximately 99.7% of Aerkomm's issued and outstanding capital stock. On December 31, 2014, Aircom acquired a newly incorporated subsidiary, Aircom Pacific Ltd. ("Aircom Seychelles"), a corporation formed under the laws of the Republic of Seychelles. Aircom Seychelles was formed to facilitate Aircom's global corporate structure for both business operations and tax planning. Presently, Aircom Seychelles has no operations. Aircom is working with corporate and tax advisers in finalizing its global corporate structure and has not yet concluded its final plan. On October 17, 2016, Aircom acquired a wholly owned subsidiary, Aircom Pacific Inc. Limited ("Aircom HK"), a corporation formed under the laws of Hong Kong. The purpose of Aircom HK is to conduct Aircom's business and operations in Hong Kong. Presently, its primary function is business development, both with respect to airlines as well as content providers and advertisement partners based in Hong Kong. Aircom HK is also actively seeking strategic partnerships whom Aircom may leverage in order to provide more and better services to its customers. Aircom also plans to provide local supports to Hong Kong-based airlines via Aircom HK and teleports located in Hong Kong. On December 15, 2016, Aircom acquired a wholly owned subsidiary, Aircom Japan, Inc. ("Aircom Japan"), a corporation formed under the laws of Japan. The purpose of Aircom Japan is to conduct business development and operations located within Japan. Aircom Japan is in the process of applying for, and will be the holder of, Satellite Communication Blanket License in Japan, which is necessary for Aircom to provide services within Japan. Aircom Japan will also provide local supports to airlines operating within the territory of Japan. Aircom Telecom LLC ("Aircom Taiwan"), which became a wholly owned subsidiary of Aircom in December 2017, was organized under the laws of Taiwan on June 29, 2016. Aircom Taiwan is responsible for Aircom's business development efforts and general operations within Taiwan. On June 13, 2018, Aerkomm established a new wholly owned subsidiary, Aerkomm Taiwan Inc. ("Aerkomm Taiwan"), a corporation formed under the laws of Taiwan. The purpose of Aerkomm Taiwan is to purchase a parcel of land and raise sufficient fund for ground station building and operate the ground station for data processing (although that cannot be guaranteed). On November 15, 2018, Aircom Taiwan acquired a wholly owned subsidiary, Beijing Yatai Communication Co., Ltd. ("Aircom Beijing"), a corporation formed under the laws of China. The purpose of Aircom Beijing is to conduct Aircom's business and operations in China. Presently, its primary function is business development, both with respect to airlines as well as content providers and advertisement partners based in China as most business conducted in China requires a local registered company. Aircom Beijing is also actively seeking strategic partnerships whom Aircom may leverage in order to provide more and better services to its customers. Aircom also plans to provide local supports to China-based airlines via Aircom Beijing and teleports located in China. On October 31, 2019, Aircom Seychelles established a new a wholly owned subsidiary, Aerkomm Pacific Limited ("Aerkomm Malta"), a corporation formed under the laws of Malta. The purpose of Aerkomm Malta is to conduct Aircom's business and operations to engage with suppliers and potential airlines customers in the European Union. Aircom and its subsidiaries are full-service, development stage providers of in-flight entertainment and connectivity ("IFEC") solutions with their initial market in the Asia Pacific region. Aerkomm and its subsidiaries (the "Company") have not generated significant revenues, excluding non-recurring revenues from affiliates in the second quarter of fiscal 2018, and will incur additional expenses as a result of being a public reporting company. Currently, the Company has taken measures that management believes will improve its financial position by financing activities, including through ongoing public offerings, short-term borrowings and equity contributions. On April 23, 2019, the Company filed a post-effective amendment No. 2 ("POS AM No.2") with the Securities and Exchange Commission (the "SEC"), to extend the public offering to attempt to raise the then remaining $16.44 million of the originally registered public offering amount, as well as the $9 million over-subscription option amount (see Note 11). On May 17, 2019, the Company filed a post-effective amendment No. 3 with the SEC to further amend POS AM No. 2 and which was declared effective by the SEC on May 23, 2019. Furthermore, two of the Company's current shareholders (the "Lenders") each committed to provide to the Company a $10 million bridge loan (together, the "Loans") for an aggregate principal amount of $20 million, to bridge the Company's cash flow needs prior to its obtaining a mortgage loan to be secured by a parcel of land (the "Land") the Company intends to purchase in Taiwan. The Lenders also agreed to an earlier closing of up to 25% of the principal amounts of the Loans upon the Company's request prior to the time that title to the Land is vested in the Company's subsidiary, Aerkomm Taiwan, to pay the outstanding payable to the Company's vendors. As of September 30, 2019, the Company completed two closings in the aggregate gross amount of $11,459,998, or net amount of $10,715,758, and issued 269,647 shares of common stock. With the $4.98 million to be raised in the remainder of the Company's ongoing public offering, the $20 million in Loans committed by the Lenders and future capital raising, the Company believes its working capital will be adequate to sustain its operations for the next twelve months. On January 16, 2019, the Company completed a 1-for-5 reverse split of the Company's authorized, issued and outstanding shares of common stock, which was completed by the filing of a Certificate of Change Pursuant to NRS 78.209 with the Nevada Secretary of State on December 26, 2018 (see Note 11). All of the references in these financial statements to authorized common stock and issued and outstanding common stock have been adjusted to reflect this reverse split. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - Summary of Significant Accounting Policies Changes in Fiscal Year On March 18, 2018, the Company's Board of Directors approved a change in the Company's fiscal year end from December 31 to March 31. On February 12, 2019, the Company's Board of Directors approved a change in the Company's fiscal year end from March 31 to December 31. Year-over-year quarterly financial data continue to be comparative to prior periods as the three months that comprise each fiscal quarter in the new fiscal year are the same as those in the Company's historical financial statements. Unaudited Interim Financial Information The accompanying consolidated balance sheet as of September 30, 2019, and the consolidated statements of operations and comprehensive loss and cash flows for the three and nine months ended September 30, 2019 and 2018 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position as of September 30, 2019 and the results of operations and cash flows for the three and nine months ended September 30, 2019 and 2018. The financial data and other information disclosed in these notes to the consolidated financial statements related to these three- and nine-month periods are unaudited. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period or other future year. Principle of Consolidation Aerkomm consolidates the accounts of its subsidiaries, Aircom, Aircom Seychelles, Aircom HK, Aircom Japan, Aircom Taiwan, Aerkomm Taiwan and Aircom Beijing. All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassifications of Prior Period Presentation Certain prior period balance sheet and income statement amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from these estimates. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash in banks. As of September 30, 2019 and December 31, 2018, the total balance of cash in bank exceeding the amount insured by Federal Deposit Insurance Corporation ("FDIC") for the Company was approximately $2,060,000 and $0, respectively. The balance of cash deposited in foreign financial institutions exceeding the amount insured by local deposit insurance is approximately $75,000. The Company performs ongoing credit evaluation of its customers and requires no collateral. An allowance for doubtful accounts is provided based on a review of the collectability of accounts receivable. The Company determines the amount of allowance for doubtful accounts by examining its historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies. Actual credit losses may differ from management's estimates. Inventories Inventories are recorded at the lower of weighted-average cost or net realizable value. The Company assesses the impact of changing technology on its inventory on hand and writes off inventories that are considered obsolete. Estimated losses on scrap and slow-moving items are recognized in the allowance for losses. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. When value impairment is determined, the related assets are stated at the lower of fair value or book value. Significant additions, renewals and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed by using the straight-line and double declining methods over the following estimated service lives: ground station equipment – 5 years, computer equipment - 3 to 5 years, furniture and fixtures - 5 years, satellite equipment – 5 years, vehicles – 5 years and lease improvement – 5 years. Upon sale or disposal of property and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts, with any gain or loss credited or charged to income in the period of sale or disposal. The Company reviews the carrying amount of property and equipment for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. It determined that there was no impairment loss for the three-month and nine-month periods ended September 30, 2019. Right-of-Use Asset and Lease Liability In February 2016, the FASB issued ASU No. 2016-02, "Leases" (Topic 842) ("ASU 2016-02"), which modifies lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. A lessee should recognize the lease liability to make lease payments and the right-of-use asset representing its right to use the underlying asset for the lease term. For operating leases, a right-of-use asset and a lease liability are initially measured at the present value of the lease payments. The amortization of the right-of-use asset is allocated over the lease term generally on a straight-line basis. For the lease within a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Company adopted ASU 2016-02 effective January 1, 2019. Goodwill and Purchased Intangible Assets The Company's goodwill represents the amount by which the total purchase price paid exceeded the estimated fair value of net assets acquired from acquisition of subsidiaries. The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment. Purchased intangible assets with finite life are amortized on the straight-line basis over the estimated useful lives of respective assets. Purchased intangible assets with indefinite life are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Purchased intangible asset consists of satellite system software and is amortized over 10 years. Fair Value of Financial Instruments The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. Level 3 - Inputs to the valuation methodology are unobservable inputs based upon management's best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions. The carrying amounts of the Company's cash, accounts receivable, other receivable, short-term loan and other payable approximated their fair value due to the short-term nature of these financial instruments. The Company's long-term loan approximated the carrying amount as its interest rate is considered as approximate to the current rate for comparable loans. There were no outstanding derivative financial instruments as of September 30, 2019. Revenue Recognition The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs upon the transfer of control in accordance with the contractual terms and conditions of the sale. The Company's major revenue for the nine-month period ended September 30, 2019 was the sales of compact adaptor for smartphone that allows users to turn their smartphone into a satellite smartphone to provide reliable connectivity beyond the coverage of traditional networks. The majority of the Company's revenue is recognized at a point in time when product is shipped or service is provided to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimates for variable consideration. Research and Development Costs Research and development costs are charged to operating expenses as incurred. For the nine-month periods ended September 30, 2019 and 2018, the Company incurred $416,231 (unaudited) and $765,750 (unaudited) of research and development costs, respectively. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Adjustments to prior period's income tax liabilities are added to or deducted from the current period's tax provision. The Company follows FASB guidance on uncertain tax positions and has analyzed its filing positions in all the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in those jurisdictions. The Company files income tax returns in the US federal, state and foreign jurisdictions where it conducts business. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on its consolidated financial position, results of operations, or cash flows. Therefore, no reserves for uncertain tax positions have been recorded. The Company does not expect its unrecognized tax benefits to change significantly over the next twelve months. The Company's policy for recording interest and penalties associated with any uncertain tax positions is to record such items as a component of income before taxes. Penalties and interest paid or received, if any, are recorded as part of other operating expenses in the consolidated statement of operations. Foreign Currency Transactions Foreign currency transactions are recorded in U.S. dollars at the exchange rates in effect when the transactions occur. Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in current income. At the end of each period, assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates with the resulting gains or losses recognized in income for the period. Translation Adjustments If a foreign subsidiary's functional currency is the local currency, translation adjustments will result from the process of translating the subsidiary's financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported under other comprehensive income (loss) as a separate component of stockholders' equity. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include stock warrants and outstanding stock options, shares to be purchased by employees under the Company's employee stock purchase plan. Subsequent Events The Company has evaluated events and transactions after the reported period up to November 11, 2019, the date on which these consolidated financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2019 have been included in these consolidated financial statements. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | NOTE 3 - Recent Accounting Pronouncements Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"), which modifies the measurement of expected credit losses of certain financial instruments. ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements. Intangibles In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other" (Topic 350): Simplifying the Test for Goodwill Impairment, which goodwill shall be tested at least annually for impairment at a level of reporting referred to as a reporting unit. ASU 2017-04 will be effective for annual periods beginning after December 15, 2019. The Company is currently evaluating the impact of adopting ASU 2017-04 on its consolidated financial statements. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 4 - Inventories As of September 30, 2019 and December 31, 2018, inventories consisted of the following: September 30, December 31, (Unaudited) Satellite equipment for sale under construction $ 2,380,364 $ 895,014 Supplies 5,215 5,273 2,385,579 900,287 Allowance for inventory loss (5,215 ) (5,273 ) Net $ 2,380,364 $ 895,014 As of December 31, 2018, the Company transferred inventories in the amount of $11,029 to R&D expenses. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 - Property and Equipment As of September 30, 2019 and December 31, 2018, the balances of property and equipment were as follows: September 30, December 31, (Unaudited) Ground station equipment $ 1,854,027 $ 1,854,027 Computer software and equipment 324,487 321,070 Satellite equipment 275,410 275,410 Vehicle 141,971 141,971 Leasehold improvement 83,721 84,721 Furniture and fixture 36,382 33,344 2,715,998 2,710,543 Accumulated depreciation (731,806 ) (322,049 ) Net 1,984,192 2,388,494 Prepayments - land 35,861,589 35,237,127 Construction in progress - 416,231 Net $ 37,845,781 $ 38,041,852 As of September 30, 2019, the balance of construction in progress was $0 after the Company transferred $416,231 (unaudited) to R&D expenses. On May 1, 2018, the Company and Aerkomm Taiwan entered into a binding memorandum of understanding with Tsai Ming-Yin (the "Seller") with respect to the acquisition by Aerkomm Taiwan of a parcel of land located in Taiwan. The land is expected to be used to build a satellite ground station and data center. On July 10, 2018, the Company, Aerkomm Taiwan and the Seller entered into a certain real estate sales contract regarding this acquisition. Pursuant to the terms of the contract, and subsequent amendments on July 30, 2018, September 4, 2018, November 2, 2018 and January 3, 2019, the Company paid to the seller in installments refundable prepayment of $33.85 million as of December 31, 2018. On July 2, 2019, the Company paid the remaining purchase price of $624,462. As of September 30, 2019, the estimated commission payable for the land purchase in the amount of $1,360,770 (unaudited) was recorded to the cost of land and the payment to be paid after the full payment of the Land acquisition price until no later than December 31, 2020. Depreciation expense was $136,449 (unaudited) and $42,895 (unaudited) for the three-month periods ended September 30, 2019 and 2018 and $409,757 (unaudited) and $87,030 (unaudited) for the nine-month periods ended September 30, 2019 and 2018, respectively. |
Intangible Asset, Net
Intangible Asset, Net | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Asset, Net | NOTE 6 - Intangible Asset, Net As of September 30, 2019 and December 31, 2018, the cost and accumulated amortization for intangible asset were as follows: September 30, 2019 December 31, (Unaudited) Satellite system software $ 4,950,000 $ 4,950,000 Accumulated amortization (1,938,750 ) (1,567,500 ) Net $ 3,011,250 $ 3,382,500 Amortization expense was $123,750 (unaudited) and $123,750 (unaudited) for the three-month periods ended September 30, 2019 and 2018 and $371,250 (unaudited) and $371,250 (unaudited) for the nine-month periods ended September 30, 2019 and 2018, respectively. |
Operating Lease Right-of-Use As
Operating Lease Right-of-Use Asset | 9 Months Ended |
Sep. 30, 2019 | |
Operating Lease Right-of-Use Asset [Abstract] | |
Operating Lease Right-of-Use Asset | NOTE 7 - Operating Lease Right-of-Use Asset As of September 30, 2019, the cost and accumulated amortization for operating lease right-of-use asset were as follows: September 30, 2019 (Unaudited) Right-of-use asset $ 669,602 Accumulated amortization (304,770 ) Net $ 364,832 Amortization expense of right-of-use asset was $101,088 (unaudited) and $345,083 (unaudited) for the three months and nine months ended September 30, 2019. On June 15, 2019, the lease agreement in Aircom Taiwan was terminated, so the Company disposed the fully amortized right-of-use asset $40,313 (unaudited). |
Long-Term Loan
Long-Term Loan | 9 Months Ended |
Sep. 30, 2019 | |
Long-term Loan [Abstract] | |
Long-term Loan | NOTE 8 - Long-term Loan The Company has a car loan credit line of NT$1,500,000 (approximately US$48,371), which matures on May 21, 2024, from a Taiwan financing company with annual interest rate of 9.7%. The installment payment plan is 60 months to pay off the balance on the 21 st Twelve months ending September 30, (Unaudited) 2020 $ 12,232 2021 12,232 2022 12,232 2023 12,232 2024 8,154 Total installment payments 57,082 Less: Imputed interest (11,317 ) Present value of long-term loan 45,765 Current portion 8,150 Non-current portion $ 37,615 |
Lease Liability
Lease Liability | 9 Months Ended |
Sep. 30, 2019 | |
Lease Liability [Abstract] | |
Lease Liability | NOTE 9 - Lease Liability A. Lease term and discount rate The weighted-average remaining lease term (in years) and discount rate related to the operating leases were as follows: Nine Months (Unaudited) Weighted-average remaining lease term 0.58 year Weighted-average discount rate 6.00 % As most of our leases do not provide an implicit rate, we use the prime rate based on the information available at the lease commencement date to determine the present value of lease payments. B. Maturity of lease liabilities Related Party Others Total (Unaudited) (Unaudited) (Unaudited) 10/1/2019-9/30/2020 $ 34,321 $ 363,265 $ 397,586 10/1/2020-9/30/2021 - 20,000 20,000 Total lease payments 34,321 383,265 417,586 Less: Imputed interest (843 ) (10,842 ) (11,685 ) Present value of lease liabilities 33,478 372,423 405,901 Current portion 33,478 352,523 386,001 Non-current portion $ - $ 19,900 $ 19,900 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10 - Income Taxes Income tax expense for the three-month and nine-month periods ended September 30, 2019 and 2018 consisted of the following: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Current: (Unaudited) (Unaudited) (Unaudited) (Unaudited) Federal $ - $ - $ - $ - State - - 1,600 2,400 Foreign - - 1,635 1,662 Total $ - $ - $ 3,235 $ 4,062 The following table presents a reconciliation of the Company's income tax at statutory tax rate and income tax at effective tax rate for the three-month and nine-month periods ended September 30, 2019 and 2018. Three Months Ended Nine Months Ended 2019 2018 2019 2018 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Tax benefit at statutory rate $ (688,749 ) $ (524,572 ) $ (1,703,699 ) $ (1,266,726 ) Net operating loss carryforwards (NOLs) 543,562 574,508 1,235,409 1,287,325 Foreign investment losses 107,200 34,551 290,900 49,200 Stock-based compensation expense 154,400 84,574 292,900 223,019 Amortization expense 58,700 (62,700 ) 33,100 (66,100 ) Accrued R&D expense - - - (168,000 ) Accrued payroll 900 - (40,900 ) - Accrued professional expense - (47,900 ) - (47,900 ) Accrued consulting expense (122,300 ) - (122,300 ) - Others (53,713 ) (58,461 ) 17,825 (6,756 ) Tax expense at effective tax rate $ - $ - $ 3,235 $ 4,062 Deferred tax assets (liability) as of September 30, 2019 and December 31, 2018 consist approximately of: September 30, December 31, 2018 (Unaudited) Net operating loss carryforwards (NOLs) $ 6,234,000 $ 5,632,000 Stock-based compensation expense 1,283,000 893,000 Accrued expenses and unpaid expense payable 52,000 184,000 Tax credit carryforwards 68,000 68,000 Excess of tax amortization over book amortization (629,000 ) (818,000 ) Others 357,000 131,000 Gross 7,365,000 6,090,000 Valuation allowance (7,365,000 ) (6,090,000 ) Net $ - $ - Management does not believe the deferred tax assets will be utilized in the near future; therefore, a full valuation allowance is provided. The net change in deferred tax assets valuation allowance was an increase of approximately $1,275,000 (unaudited) for the nine months ended September 30, 2019. As of September 30, 2019 and December 31, 2018, the Company had federal NOLs of approximately $8,243,000 available to reduce future federal taxable income, expiring in 2037, and additional federal NOLs of approximately $10,443,000 (unaudited) and $5,743,000, respectively, were generated and will be carried forward indefinitely to reduce future federal taxable income. As of September 30, 2019 and December 31, 2018, the Company had State NOLs of approximately $24,328,000 (unaudited) and $21,049,000 respectively, available to reduce future state taxable income, expiring in 2039. As of September 30, 2019 and December 31, 2018, the Company has Japan NOLs of approximately $337,000 (unaudited) and $319,000, respectively, available to reduce future Japan taxable income, expiring in 2029. As of September 30, 2019 and December 31, 2018, the Company has Taiwan NOLs of approximately $2,189,000 (unaudited) and $879,000, respectively, available to reduce future Taiwan taxable income, expiring in 2029. As of September 30, 2019 and December 31, 2018, the Company had approximately $37,000 (unaudited) and $37,000 of federal research and development tax credit, available to offset future federal income tax. The credit begins to expire in 2034 if not utilized. As of September 30, 2019 and December 31, 2018, the Company had approximately $39,000 (unaudited) and $39,000 of California state research and development tax credit available to offset future California state income tax. The credit can be carried forward indefinitely. The Company's ability to utilize its federal and state NOLs to offset future income taxes is subject to restrictions resulting from its prior change in ownership as defined by Internal Revenue Code Section 382. The Company does not expect to incur the limitation on NOLs utilization in future annual usage. |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | NOTE 11 - Capital Stock 1) Preferred Stock: The Company is authorized to issue 50,000,000 shares of preferred stock, with par value of $0.001. As of September 30, 2019, there were no preferred stock shares outstanding. The Board of Directors has the authority to issue preferred stock in one or more series, and in connection with the creation of any such series, by resolutions providing for the issuance of the shares thereof, to determine dividends, voting rights, conversion rights, redemption privileges and liquidation preferences. 2) Common Stock: The Company is authorized to issue 90,000,000 shares of common stock, reflecting a reverse split in the ratio of 1 for 5 effective January 16, 2019, with par value of $0.001. On February 13, 2017, all of Aircom's 5,513,334 restricted shares were converted to 2,055,947 shares of Aerkomm's restricted stock at the ratio of 2.681651 to 1, pursuant to the Exchange Agreement (see Note 1). As of September 30, 2019 and December 31, 2018, the restricted shares consisted of the following: September 30, December 31, (Unaudited) Restricted stock - vested 1,802,373 1,802,373 Restricted stock - unvested 149,162 149,162 Total restricted stock 1,951,535 1,951,535 The unvested shares of restricted stock were recorded under a deposit liability account awaiting future conversion to common stock when they become vested. On December 21, 2018, the Company repurchased and cancelled an aggregate of 104,413 On May 14, 2018, the Company entered into an underwriting agreement (the "Underwriting Agreement") with Boustead Securities, LLC ("Boustead") in connection with the public offering (the "Offering"), issuance and sale of up to 1,411,782 shares of the Company's common stock on a best efforts basis, with a minimum requirement of 117,647 shares, at the public offering price of $42.50 per share (originally $8.5 per share before the 1-to-5 reverse split), less underwriting discounts, for minimum gross proceeds of $5,000,000 and up to a maximum of $60,000,000. As of December 31, 2018, pursuant to the Underwriting Agreement, the Company had issued an aggregate of 1,024,980 shares of common stock (including 19 shares that were added as a result of rounding in connection with the one-for-five reverse split concluded on January 16, 2019) for gross proceeds of $43,560,894, or net proceeds of $39,810,204. On April 23, 2019, the Company filed a post-effective amendment No. 2 with the Securities and Exchange Commission (the "SEC") to extend the Offering to attempt to raise the then remaining $16.44 million of the amount that was originally registered in the Offering, as well as a $9 million over-subscription option amount. On May 17, 2019, the Company filed a post-effective amendment No. 3 with the Securities and Exchange Commission (the "SEC") to extend the Offering subsequently and which was declared effective by the SEC on May 23. 2019. As of September 30, 2019, the Company completed two closings in the aggregate gross amount of $11,459,998, or net amount of $10,715,758, and issued 269,647 shares of common stock. On July 2, 2019, the board of directors approved a supplement to the engagement agreement with one of the Company's service providers pursuant to which the Company agreed to issue to the service provider 23,972 restricted shares of the Company's common stock in consideration of that service provider's agreement to defer the receipt of payment of certain accrued fees due to the service provider. 3) Stock Warrant: The Company has entered into a service agreement which provides for the issuance of warrants to purchase shares of its common stock to a service provider as payment for services. The warrants allow the service provider to purchase a number of shares of Aerkomm common stock equal to the service fee value divided by 85% of the share price paid by investors for Aerkomm's common stock in the first subsequent qualifying equity financing event, at an exercise price of $0.05 per share. For the nine-month periods ended September 30, 2019 and 2018, Aerkomm has issued additional stock warrants exercisable for $0 and $26,667, respectively, in value of Aerkomm common stock to the service provider as payment for additional services. As of June 28, 2019, these warrants are equivalent to 4,891 shares of the Company's common stock. On June 29, 2019, the Company settled with the service provider to cancel all these warrants with $75,000 in three installments payable on July 3, August 1, and September 1, 2019 and all three installments were paid on schedule. In connection with the Underwriting Agreement with Boustead, the Company agreed to issue to Boustead warrants to purchase a number of the Company's shares equal to 6% of the gross proceeds of the public offering, which shall be exercisable, in whole or in part, commencing on April 13, 2018 and expiring on the five-year anniversary at an initial exercise price of $53.125 per share, which is equal to 125% of the offering price paid by investors. As of September 30, 2019 and 2018, the Company has issued warrants to Boustead to purchase 77,680 and 61,498 shares, respectively, of the Company's stock and the total warrant value is $454,600 (unaudited) and $849,500, respectively. |
Major Customer
Major Customer | 9 Months Ended |
Sep. 30, 2019 | |
Major Customer [Abstract] | |
Major Customer | NOTE 12 - Major Customer The Company has one major customer, which represents 10% or more of the total sales of the Company for the period. Sales to and account receivable from the customer for the nine months ended and as of September 30, 2019 were $1,599,864 (unaudited) and $649,939 (unaudited), respectively. |
Major Vendor
Major Vendor | 9 Months Ended |
Sep. 30, 2019 | |
Major Vendor [Abstract] | |
Major Vendor | NOTE 13 - Major Vendor The Company has one major vendor, which represents 10% or more of the total purchases of the Company for the period. Purchases from and account payable to the vendor for the nine months ended and as of September 30, 2019 were $1,587,222 (unaudited) and $506,308 (unaudited), respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 14 - Related Party Transactions A. Name of related parties and relationships with the Company: Related Party Relationship Dmedia Holding LP ("Dmedia") Major stockholder Bummy Wu Shareholder Jeffrey Wun Shareholder and CEO of Aerkomm and Aircom Yih Lieh (Giretsu) Shih President of Aircom Japan Chien Ming Tseng President of Aircom Taiwan Hao Wei Peng Employee of Aircom Taiwan and founding owner of Aircom Taiwan prior to 12/19/2017 Louis Giordimaina COO - Aviation of Aircom Wealth Wide Int'l Ltd. ("WWI") Bummy Wu, a shareholder, is the Chairman WISD Intellectual Property Agency, Ltd. ("WISD") Patrick Li, Director of Aircom, is the Chairman; Chih-Ming (Albert) Hsu, Director of the Company, is a Director B. Significant related party transactions: The Company has extensive transactions with its related parties. It is possible that the terms of these transactions are not the same as those which would result from transactions among wholly unrelated parties. a. As of September 30, 2019 and December 31, 2018: September 30, December 31, (Unaudited) Other receivable from Chien Ming Tseng 1 $ 111,111 $ - Temporary deposit to Bummy Wu 2 $ - $ 100,067 Operating lease liability to WWI 3 $ 33,478 $ - Other payable to: Hao Wei Peng 4 $ 47,201 $ - WWI 3 39,179 39,224 Jeffrey Wun 4 12,807 46,236 Louis Giordimaina 4 3,019 6,071 Yih Lieh (Giretsu) Shih 4 - 15,497 Others 4 9,986 66,826 Total $ 112,192 $ 173,854 1. Represents temporary advances to employees for payments of previously accrued expenses for regular operating activities, to be offset with the Company's accrued expenses pending official receipts. 2. In November 2018, Aircom HK's bank account was temporarily frozen by its local bank in Hong Kong (the "HK bank") due to Aircom HK's failure to timely submit to the HK bank corporate documentation relating to the corporate organization and goodstanding of Aircom HK's parent company, Aircom, and Aircom's parent company, Aerkomm. To avoid a potential cash flow issue resulting from this temporary account freeze, Aircom HK withdrew $100,067 in cash from the HK bank and temporarily deposited it in an existing related party's bank account at a different bank for safe keeping. The Aircom HK's bank account with the HK bank was reactivated by the HK bank subsequently and the cash that was transferred to the related party's account was redeposited into Aircom HK's bank account at the HK bank in February 2019. 3. Represents rent for a warehouse in Hong Kong to store the Company's hardware, which ended in May 2018, and rent for another Hong Kong office starting June 28, 2018. 4. Represents payable to employees as a result of regular operating activities. b. For the three-month and nine-month periods ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Consulting expense paid to Louis Giordimaina $ - $ - $ - $ 222,246 Legal expense paid to WISD - 9,387 - 10,779 Amortization expense of right-of-use asset charged by WWI 11,456 - 34,328 - Rental expense charged by WWI - 14,706 - 17,840 Interest expense charged by Dmedia - - 1,744 3,116 On May 25, 2018, Mr. Louis Giordimaina was converted from a consultant to a full-time employee and was appointed as Chief Operating Officer – Aviation. The consulting expense paid for the nine-month period ended September 30, 2018 in the amount of $222,246 represents the consulting services provided prior to the conversion. Aircom engaged WISD to handle its filing of patent and trademark applications. The Company had a lease agreement with WWI with a monthly rental cost of $450 that expired on May 31, 2018 and was not renewed. The Company has another lease agreement with WWI for its office space in Hong Kong with a monthly rental cost of HKD 30,000. The lease term is from June 28, 2018 to June 27, 2020. Effective January 1, 2019, the Company adopted ASU2016-02, "Leases" (Topic 842) ("ASU 2016-02"), and accounted for these leases under amortization of the lease payment under Note 9, Lease Liabilities. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | NOTE 15 - Stock Based Compensation In March 2014, Aircom's Board of Directors adopted the 2014 Stock Option Plan (the "Aircom 2014 Plan"). The Aircom 2014 Plan provided for the granting of incentive stock options and non-statutory stock options to employees, consultants and outside directors of Aircom. On February 13, 2017, pursuant to the Exchange Agreement, Aerkomm assumed the options of Aircom 2014 Plan and agreed to grant options to purchase an aggregate of 1,088,882 shares of the Company's common stock to Aircom's stock option holders. One-third of stock option shares vested on the first anniversary of the grant date or the employee's acceptance to serve the Company, and the remainder of the grant vested and will vest in 36 equal monthly installments thereafter, subject to the grantee's continuous service through the applicable vesting date. Option prices for such options were determined by Aircom's Board of Directors. The Aircom 2014 Plan became effective upon its adoption by the Board and shall continue in effect for a term of 10 years unless sooner terminated under the terms of Aircom 2014 Plan. On May 5, 2017, the Board of Directors of Aerkomm adopted the Aerkomm Inc. 2017 Equity Incentive Plan (the "Aerkomm 2017 Plan" and together with the Aircom 2015 Plan, the "Plans") and the reservation of 1,000,000 shares of the Company's common stock for future grant or issuance under the Aerkomm 2017 Plan. On June 23, 2017, the Board of Directors voted to increase the number of shares of common stock reserved for future grant or issuance under the Aerkomm 2017 Plan to 2,000,000 shares. The Aerkomm 2017 Plan provides for the granting of incentive stock options and non-statutory stock options to employees, consultants and outside directors of the Company, as determined by the Compensation Committee of the Board of Directors (or, prior to the establishment of the Compensation Committee on January 23, 2018, the Board of Directors). On June 23, 2017, the Board of Directors approved the grant of options to purchase an aggregate of 291,000 shares under the Aerkomm 2017 Plan to certain officers and directors of the Company. The option agreements are classified into three types of vesting schedules, which include, 1) 1/6 of the shares subject to the option shall vest commencing on the vesting start date and the remaining shares shall vest at the rate of 1/60 for the next 60 months on the same day of the month as the vesting start date; 2) 1/4 of the shares subject to the option shall vest commencing on the vesting start date and the remaining shares shall vest at the rate of 1/36 for the next 36 months on the same day of the month as the vesting start date; 3) 1/3 of the shares subject to the option shall vest commencing on the first anniversary of vesting start date and the remaining shares shall vest at the rate of 50% each year for the next two years on the same day of the month as the vesting start date. On July 31, 2017, the Board of Directors approved the grant of options to purchase an aggregate of 109,000 shares under the Aerkomm 2017 Plan to 11 of its employees. One-third of these shares subject to the options vested on the first anniversary of the grant date, one-third of the shares vested on the second anniversary of the grant date, and the remaining shares shall vest on the third anniversary of the grant date. On December 29, 2017, the Board of Directors approved the grant of options to purchase 4,000 shares under the Aerkomm 2017 Plan to each of three of the Company's independent directors for an aggregate of 12,000 shares. All of these options vested immediately upon grant. On June 19, 2018, the Compensation Committee approved the grant of options to purchase 32,000 and 30,000 shares under the Aerkomm 2017 Plan to two of the Company executives. One-fourth of the 32,000 shares subject to the option vested on May 1, 2019, and the remaining shares shall vest in three equal yearly installments thereafter. One-third of the 30,000 shares subject to the option vested on May 29, 2019, and the remaining shares shall vest in two equal yearly installments thereafter. On September 16, 2018 and December 29, 2018, the Compensation Committee approved the grant of options to purchase 4,000 shares under the Aerkomm 2017 Plan to each of four of the Company's independent directors for an aggregate of 16,000 shares. All of these options vested immediately upon grant. On July 2, 2019, the Board of Directors approved the grant of options to purchase an aggregate of 339,000 shares under the Aerkomm 2017 Plan to 22 of its directors, officers and employees. 25% of the shares vested on the grant date, 25% of the shares vested on July 17, 2019, 25% of the shares will vest on the first anniversary of the grant date, and 25% of the shares will vest upon the second anniversary of the grant date. On October 4, 2019, the Board of Directors approved the grant of options to purchase an aggregate of 85,400 shares under the Aerkomm 2017 Plan to three (3) of its employees. 25% of the shares vested on the grant date, and 25% of the shares will vest on each of October 4, 2020, October 4, 2021 and October 4, 2022, respectively. Option price is determined by the Compensation Committee. The Aerkomm 2017 Plan has been adopted by the Board and shall continue in effect for a term of 10 years unless sooner terminated under the terms of Aerkomm 2017 Plan. The Aerkomm 2017 Plan was approved by the Company's stockholders on March 28, 2018. Valuation and Expense Information Measurement and recognition of compensation expense based on estimated fair values is required for all share-based payment awards made to its employees and directors including employee stock options. The Company recognized compensation expense of $1,394,670 and $1,062,140 for the nine-month periods ended September 30, 2019 and 2018, respectively, related to such employee stock options. Determining Fair Value Valuation and amortization method The Company uses the Black-Scholes option-pricing-model to estimate the fair value of stock options granted on the date of grant or modification and amortizes the fair value of stock-based compensation at the date of grant on a straight-line basis for recognizing stock compensation expense over the vesting period of the option. Expected term The expected term is the period of time that granted options are expected to be outstanding. The Company uses the SEC's simplified method for determining the option expected term based on the Company's historical data to estimate employee termination and options exercised. Expected dividends The Company does not plan to pay cash dividends before the options are expired. Therefore, the expected dividend yield used in the Black-Scholes option valuation model is zero. Expected volatility Since the Company has no historical volatility, it used the calculated value method which substitutes the historical volatility of a public company in the same industry to estimate the expected volatility of the Company's share price to measure the fair value of options granted under the Plans. Risk-free interest rate The Company based the risk-free interest rate used in the Black-Scholes option valuation model on the market yield in effect at the time of option grant provided in the Federal Reserve Board's Statistical Releases and historical publications on the Treasury constant maturities rates for the equivalent remaining terms for the Plans. Forfeitures The Company is required to estimate forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate option forfeitures and records share-based compensation expense only for those awards that are expected to vest. The Company used the following assumptions to estimate the fair value of options granted in 2018 and 2019 under the Plans as follows: Assumptions Expected term 10 years Expected volatility 59.83% - 61.91 % Expected dividends 0 % Risk-free interest rate 1.98% - 2.99 % Forfeiture rate 0% - 10 % Aircom 2014 Plan A summary of the number of shares, weighted average exercise price and estimated fair value of options for Aircom 2014 Plan as of December 31, 2018 and September 30, 2019 is as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Fair Value Per Share Options outstanding at January 1, 2018 932,262 $ 0.4081 $ 0.1282 Granted - - - Exercised - - - Forfeited/Cancelled - - - Options outstanding at December 31, 2018 932,262 0.4081 0.1282 Granted - - - Exercised - - - Forfeited/Cancelled - - - Options outstanding at September 30, 2019 932,262 0.4081 0.1282 Options exercisable at December 31, 2018 846,287 0.2892 0.0908 Options exercisable at September 30, 2019 932,262 0.4081 0.1282 A summary of the status of nonvested shares under Aircom 2014 Plan as of December 31, 2018 and September 30, 2019 is as follows: Number of Shares Weighted Options nonvested at January 1, 2018 302,467 $ 0.8315 Granted - - Vested (216,492 ) 0.5349 Forfeited/Cancelled - - Options nonvested at December 31, 2018 85,975 1.5786 Granted - - Vested (85,975 ) 1.5715 Forfeited/Cancelled - - Options nonvested at September 30, 2019 - - Aerkomm 2017 Plan A summary of the number of shares, weighted average exercise price and estimated fair value of options under Aerkomm 2017 Plan as of December 31, 2018 and September 30, 2019 is as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Fair Value Per Share Options outstanding at January 1, 2018 253,000 $ 30.8824 $ 18.4796 Granted 78,000 19.7462 9.2500 Exercised - - - Forfeited/Cancelled (48,000 ) 27.5000 16.4610 Options outstanding at December 31, 2018 283,000 28.3867 16.2781 Granted 339,000 3.9600 2.0301 Exercised - - - Forfeited/Cancelled - - - Options outstanding at September 30, 2019 (unaudited) 622,000 15.0738 8.5127 Options exercisable at December 31, 2018 111,589 28.7052 16.5968 Options exercisable at September 30, 2019 (unaudited) 353,797 17.0242 9.6884 A summary of the status of nonvested shares under Aerkomm 2017 Plan as of September 30, 2019 and December 31, 2018 is as follows: Number of Shares Weighted Options nonvested at January 1, 2018 168,250 $ 32.4079 Granted 78,000 19.7462 Vested (74,839 ) 28.8962 Forfeited/Cancelled - - Options nonvested at December 31, 2018 171,411 28.1794 Granted 339,000 3.9600 Vested (242,208 ) 11.6426 Forfeited/Cancelled - - Options nonvested at September 30, 2019 (unaudited) 268,203 12.5008 As of September 30, 2019 and December 31, 2018, there were approximately $1,519,000 (unaudited) and $2,174,000, respectively, of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. The Company expects to recognize that cost over a weighted average period of 1 - 5 years. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | NOTE 16 - Commitments As of September 30, 2019, the Company's significant commitment is summarized as follows: Yihe Culture Media Agreement : On June 20, 2018, the Company entered into a Cooperation Framework Agreement with Shenzhen Yihe Culture Media Co., Ltd. ("Yihe"), the authorized agent of Guangdong Tengnan Internet, pursuant to which Yihe will promote the development of strategic cooperation between the Company and Guangdong Tengnan Internet. Specifically, Yihe agreed to assist the Company with public relations and advertising, such as market and brand promotion, as well as brand recognition in China (excluding Hong Kong, Macao and Taiwan), including but not limited to news dissemination, creative planning and support of campaigns, financial public relations and internet advertising. More specifically, Yihe will help the Company develop a working application of the WeChat Pay payment solution as well as WeChat applets applicable for Chinese users and relating to cell phone and WiFi connectivity on airplanes, and Yihe will assist the Company in integrating other Tencent internet-based original product offerings. As compensation, the Company agreed to pay Yihe RMB 8 million (approximately US$1.2 million), RMB 2,000,000 (approximately US$309,000) of which the Company paid on June 29, 2018 and the remaining RMB 6,000,000 (approximately US$927,000) of which was to be paid by August 15, 2018. On July 19, 2019, Yihe and the Company agreed to extend the expiration date of the agreement to June 20, 2022. The Company had paid the remaining RMB 6,000,000 on August 12, 2019. Airbus SAS Agreement |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Changes in Fiscal Year | Changes in Fiscal Year On March 18, 2018, the Company's Board of Directors approved a change in the Company's fiscal year end from December 31 to March 31. On February 12, 2019, the Company's Board of Directors approved a change in the Company's fiscal year end from March 31 to December 31. Year-over-year quarterly financial data continue to be comparative to prior periods as the three months that comprise each fiscal quarter in the new fiscal year are the same as those in the Company's historical financial statements. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying consolidated balance sheet as of September 30, 2019, and the consolidated statements of operations and comprehensive loss and cash flows for the three and nine months ended September 30, 2019 and 2018 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position as of September 30, 2019 and the results of operations and cash flows for the three and nine months ended September 30, 2019 and 2018. The financial data and other information disclosed in these notes to the consolidated financial statements related to these three- and nine-month periods are unaudited. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period or other future year. |
Principle of Consolidation | Principle of Consolidation Aerkomm consolidates the accounts of its subsidiaries, Aircom, Aircom Seychelles, Aircom HK, Aircom Japan, Aircom Taiwan, Aerkomm Taiwan and Aircom Beijing. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassifications of Prior Period Presentation | Reclassifications of Prior Period Presentation Certain prior period balance sheet and income statement amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from these estimates. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash in banks. As of September 30, 2019 and December 31, 2018, the total balance of cash in bank exceeding the amount insured by Federal Deposit Insurance Corporation ("FDIC") for the Company was approximately $2,060,000 and $0, respectively. The balance of cash deposited in foreign financial institutions exceeding the amount insured by local deposit insurance is approximately $75,000. The Company performs ongoing credit evaluation of its customers and requires no collateral. An allowance for doubtful accounts is provided based on a review of the collectability of accounts receivable. The Company determines the amount of allowance for doubtful accounts by examining its historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies. Actual credit losses may differ from management's estimates. |
Inventories | Inventories Inventories are recorded at the lower of weighted-average cost or net realizable value. The Company assesses the impact of changing technology on its inventory on hand and writes off inventories that are considered obsolete. Estimated losses on scrap and slow-moving items are recognized in the allowance for losses. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. When value impairment is determined, the related assets are stated at the lower of fair value or book value. Significant additions, renewals and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed by using the straight-line and double declining methods over the following estimated service lives: ground station equipment – 5 years, computer equipment - 3 to 5 years, furniture and fixtures - 5 years, satellite equipment – 5 years, vehicles – 5 years and lease improvement – 5 years. Upon sale or disposal of property and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts, with any gain or loss credited or charged to income in the period of sale or disposal. The Company reviews the carrying amount of property and equipment for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. It determined that there was no impairment loss for the three-month and nine-month periods ended September 30, 2019. |
Right-of-Use Asset and Lease Liability | Right-of-Use Asset and Lease Liability In February 2016, the FASB issued ASU No. 2016-02, "Leases" (Topic 842) ("ASU 2016-02"), which modifies lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. A lessee should recognize the lease liability to make lease payments and the right-of-use asset representing its right to use the underlying asset for the lease term. For operating leases, a right-of-use asset and a lease liability are initially measured at the present value of the lease payments. The amortization of the right-of-use asset is allocated over the lease term generally on a straight-line basis. For the lease within a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Company adopted ASU 2016-02 effective January 1, 2019. |
Goodwill and Purchased Intangible Assets | Goodwill and Purchased Intangible Assets The Company's goodwill represents the amount by which the total purchase price paid exceeded the estimated fair value of net assets acquired from acquisition of subsidiaries. The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment. Purchased intangible assets with finite life are amortized on the straight-line basis over the estimated useful lives of respective assets. Purchased intangible assets with indefinite life are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Purchased intangible asset consists of satellite system software and is amortized over 10 years. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. Level 3 - Inputs to the valuation methodology are unobservable inputs based upon management's best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions. The carrying amounts of the Company's cash, accounts receivable, other receivable, short-term loan and other payable approximated their fair value due to the short-term nature of these financial instruments. The Company's long-term loan approximated the carrying amount as its interest rate is considered as approximate to the current rate for comparable loans. There were no outstanding derivative financial instruments as of September 30, 2019. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs upon the transfer of control in accordance with the contractual terms and conditions of the sale. The Company's major revenue for the nine-month period ended September 30, 2019 was the sales of compact adaptor for smartphone that allows users to turn their smartphone into a satellite smartphone to provide reliable connectivity beyond the coverage of traditional networks. The majority of the Company's revenue is recognized at a point in time when product is shipped or service is provided to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimates for variable consideration. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to operating expenses as incurred. For the nine-month periods ended September 30, 2019 and 2018, the Company incurred $416,231 (unaudited) and $765,750 (unaudited) of research and development costs, respectively. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Adjustments to prior period's income tax liabilities are added to or deducted from the current period's tax provision. The Company follows FASB guidance on uncertain tax positions and has analyzed its filing positions in all the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in those jurisdictions. The Company files income tax returns in the US federal, state and foreign jurisdictions where it conducts business. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on its consolidated financial position, results of operations, or cash flows. Therefore, no reserves for uncertain tax positions have been recorded. The Company does not expect its unrecognized tax benefits to change significantly over the next twelve months. The Company's policy for recording interest and penalties associated with any uncertain tax positions is to record such items as a component of income before taxes. Penalties and interest paid or received, if any, are recorded as part of other operating expenses in the consolidated statement of operations. |
Foreign Currency Transactions | Foreign Currency Transactions Foreign currency transactions are recorded in U.S. dollars at the exchange rates in effect when the transactions occur. Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in current income. At the end of each period, assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates with the resulting gains or losses recognized in income for the period. |
Translation Adjustments | Translation Adjustments If a foreign subsidiary's functional currency is the local currency, translation adjustments will result from the process of translating the subsidiary's financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported under other comprehensive income (loss) as a separate component of stockholders' equity. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include stock warrants and outstanding stock options, shares to be purchased by employees under the Company's employee stock purchase plan. |
Subsequent Events | Subsequent Events The Company has evaluated events and transactions after the reported period up to November 11, 2019, the date on which these consolidated financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2019 have been included in these consolidated financial statements. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | September 30, December 31, (Unaudited) Satellite equipment for sale under construction $ 2,380,364 $ 895,014 Supplies 5,215 5,273 2,385,579 900,287 Allowance for inventory loss (5,215 ) (5,273 ) Net $ 2,380,364 $ 895,014 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | September 30, December 31, (Unaudited) Ground station equipment $ 1,854,027 $ 1,854,027 Computer software and equipment 324,487 321,070 Satellite equipment 275,410 275,410 Vehicle 141,971 141,971 Leasehold improvement 83,721 84,721 Furniture and fixture 36,382 33,344 2,715,998 2,710,543 Accumulated depreciation (731,806 ) (322,049 ) Net 1,984,192 2,388,494 Prepayments - land 35,861,589 35,237,127 Construction in progress - 416,231 Net $ 37,845,781 $ 38,041,852 |
Intangible Asset, Net (Tables)
Intangible Asset, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of cost and accumulated amortization for intangible asset | September 30, 2019 December 31, (Unaudited) Satellite system software $ 4,950,000 $ 4,950,000 Accumulated amortization (1,938,750 ) (1,567,500 ) Net $ 3,011,250 $ 3,382,500 |
Operating Lease Right-of-Use _2
Operating Lease Right-of-Use Asset (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Operating Lease Right-of-Use Asset [Abstract] | |
Schedule of operating lease right-of-use asset | September 30, 2019 (Unaudited) Right-of-use asset $ 669,602 Accumulated amortization (304,770 ) Net $ 364,832 |
Long-Term Loan (Tables)
Long-Term Loan (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Long-term Loan [Abstract] | |
Schedule of future installment payments of long term loan | Twelve months ending September 30, (Unaudited) 2020 $ 12,232 2021 12,232 2022 12,232 2023 12,232 2024 8,154 Total installment payments 57,082 Less: Imputed interest (11,317 ) Present value of long-term loan 45,765 Current portion 8,150 Non-current portion $ 37,615 |
Lease Liability (Tables)
Lease Liability (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Lease Liability [Abstract] | |
Schedule of lease term and discount rate | Nine Months (Unaudited) Weighted-average remaining lease term 0.58 year Weighted-average discount rate 6.00 % |
Schedule of maturity of lease liabilities | Related Party Others Total (Unaudited) (Unaudited) (Unaudited) 10/1/2019-9/30/2020 $ 34,321 $ 363,265 $ 397,586 10/1/2020-9/30/2021 - 20,000 20,000 Total lease payments 34,321 383,265 417,586 Less: Imputed interest (843 ) (10,842 ) (11,685 ) Present value of lease liabilities 33,478 372,423 405,901 Current portion 33,478 352,523 386,001 Non-current portion $ - $ 19,900 $ 19,900 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | Three Months Ended Nine Months Ended 2019 2018 2019 2018 Current: (Unaudited) (Unaudited) (Unaudited) (Unaudited) Federal $ - $ - $ - $ - State - - 1,600 2,400 Foreign - - 1,635 1,662 Total $ - $ - $ 3,235 $ 4,062 |
Schedule of reconciliation of the income tax at statutory tax rate | Three Months Ended Nine Months Ended 2019 2018 2019 2018 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Tax benefit at statutory rate $ (688,749 ) $ (524,572 ) $ (1,703,699 ) $ (1,266,726 ) Net operating loss carryforwards (NOLs) 543,562 574,508 1,235,409 1,287,325 Foreign investment losses 107,200 34,551 290,900 49,200 Stock-based compensation expense 154,400 84,574 292,900 223,019 Amortization expense 58,700 (62,700 ) 33,100 (66,100 ) Accrued R&D expense - - - (168,000 ) Accrued payroll 900 - (40,900 ) - Accrued professional expense - (47,900 ) - (47,900 ) Accrued consulting expense (122,300 ) - (122,300 ) - Others (53,713 ) (58,461 ) 17,825 (6,756 ) Tax expense at effective tax rate $ - $ - $ 3,235 $ 4,062 |
Schedule of deferred tax assets (liability) | September 30, December 31, 2018 (Unaudited) Net operating loss carryforwards (NOLs) $ 6,234,000 $ 5,632,000 Stock-based compensation expense 1,283,000 893,000 Accrued expenses and unpaid expense payable 52,000 184,000 Tax credit carryforwards 68,000 68,000 Excess of tax amortization over book amortization (629,000 ) (818,000 ) Others 357,000 131,000 Gross 7,365,000 6,090,000 Valuation allowance (7,365,000 ) (6,090,000 ) Net $ - $ - |
Capital Stock (Tables)
Capital Stock (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of restricted shares | September 30, December 31, (Unaudited) Restricted stock - vested 1,802,373 1,802,373 Restricted stock - unvested 149,162 149,162 Total restricted stock 1,951,535 1,951,535 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of name of related parties and relationships | Related Party Relationship Dmedia Holding LP ("Dmedia") Major stockholder Bummy Wu Shareholder Jeffrey Wun Shareholder and CEO of Aerkomm and Aircom Yih Lieh (Giretsu) Shih President of Aircom Japan Chien Ming Tseng President of Aircom Taiwan Hao Wei Peng Employee of Aircom Taiwan and founding owner of Aircom Taiwan prior to 12/19/2017 Louis Giordimaina COO - Aviation of Aircom Wealth Wide Int'l Ltd. ("WWI") Bummy Wu, a shareholder, is the Chairman WISD Intellectual Property Agency, Ltd. ("WISD") Patrick Li, Director of Aircom, is the Chairman; Chih-Ming (Albert) Hsu, Director of the Company, is a Director |
Schedule of significant related party transactions | September 30, December 31, (Unaudited) Other receivable from Chien Ming Tseng 1 $ 111,111 $ - Temporary deposit to Bummy Wu 2 $ - $ 100,067 Operating lease liability to WWI 3 $ 33,478 $ - Other payable to: Hao Wei Peng 4 $ 47,201 $ - WWI 3 39,179 39,224 Jeffrey Wun 4 12,807 46,236 Louis Giordimaina 4 3,019 6,071 Yih Lieh (Giretsu) Shih 4 - 15,497 Others 4 9,986 66,826 Total $ 112,192 $ 173,854 1. Represents temporary advances to employees for payments of previously accrued expenses for regular operating activities, to be offset with the Company's accrued expenses pending official receipts. 2. In November 2018, Aircom HK's bank account was temporarily frozen by its local bank in Hong Kong (the "HK bank") due to Aircom HK's failure to timely submit to the HK bank corporate documentation relating to the corporate organization and goodstanding of Aircom HK's parent company, Aircom, and Aircom's parent company, Aerkomm. To avoid a potential cash flow issue resulting from this temporary account freeze, Aircom HK withdrew $100,067 in cash from the HK bank and temporarily deposited it in an existing related party's bank account at a different bank for safe keeping. The Aircom HK's bank account with the HK bank was reactivated by the HK bank subsequently and the cash that was transferred to the related party's account was redeposited into Aircom HK's bank account at the HK bank in February 2019. 3. Represents rent for a warehouse in Hong Kong to store the Company's hardware, which ended in May 2018, and rent for another Hong Kong office starting June 28, 2018. 4. Represents payable to employees as a result of regular operating activities. |
Schedule of expenses paid by related party | Three Months Ended Nine Months Ended 2019 2018 2019 2018 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Consulting expense paid to Louis Giordimaina $ - $ - $ - $ 222,246 Legal expense paid to WISD - 9,387 - 10,779 Amortization expense of right-of-use asset charged by WWI 11,456 - 34,328 - Rental expense charged by WWI - 14,706 - 17,840 Interest expense charged by Dmedia - - 1,744 3,116 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of estimate the fair value of options granted | Assumptions Expected term 10 years Expected volatility 59.83% - 61.91 % Expected dividends 0 % Risk-free interest rate 1.98% - 2.99 % Forfeiture rate 0% - 10 % |
Aircom 2014 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of weighted average exercise price and estimated fair value of options | Number of Shares Weighted Average Exercise Price Per Share Weighted Average Fair Value Per Share Options outstanding at January 1, 2018 932,262 $ 0.4081 $ 0.1282 Granted - - - Exercised - - - Forfeited/Cancelled - - - Options outstanding at December 31, 2018 932,262 0.4081 0.1282 Granted - - - Exercised - - - Forfeited/Cancelled - - - Options outstanding at September 30, 2019 932,262 0.4081 0.1282 Options exercisable at December 31, 2018 846,287 0.2892 0.0908 Options exercisable at September 30, 2019 932,262 0.4081 0.1282 |
Schedule of nonvested shares | Number of Shares Weighted Options nonvested at January 1, 2018 302,467 $ 0.8315 Granted - - Vested (216,492 ) 0.5349 Forfeited/Cancelled - - Options nonvested at December 31, 2018 85,975 1.5786 Granted - - Vested (85,975 ) 1.5715 Forfeited/Cancelled - - Options nonvested at September 30, 2019 - - |
Aerkomm 2017 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of weighted average exercise price and estimated fair value of options | Number of Shares Weighted Average Exercise Price Per Share Weighted Average Fair Value Per Share Options outstanding at January 1, 2018 253,000 $ 30.8824 $ 18.4796 Granted 78,000 19.7462 9.2500 Exercised - - - Forfeited/Cancelled (48,000 ) 27.5000 16.4610 Options outstanding at December 31, 2018 283,000 28.3867 16.2781 Granted 339,000 3.9600 2.0301 Exercised - - - Forfeited/Cancelled - - - Options outstanding at September 30, 2019 (unaudited) 622,000 15.0738 8.5127 Options exercisable at December 31, 2018 111,589 28.7052 16.5968 Options exercisable at September 30, 2019 (unaudited) 353,797 17.0242 9.6884 |
Schedule of nonvested shares | Number of Shares Weighted Options nonvested at January 1, 2018 168,250 $ 32.4079 Granted 78,000 19.7462 Vested (74,839 ) 28.8962 Forfeited/Cancelled - - Options nonvested at December 31, 2018 171,411 28.1794 Granted 339,000 3.9600 Vested (242,208 ) 11.6426 Forfeited/Cancelled - - Options nonvested at September 30, 2019 (unaudited) 268,203 12.5008 |
Organization (Details)
Organization (Details) - shares | Jan. 16, 2019 | May 14, 2018 | Apr. 23, 2019 | Feb. 13, 2017 | Dec. 28, 2016 |
Organization (Textual) | |||||
Stock purchase agreement | 140,000 | ||||
Common stock shares | 99.70% | 86.30% | |||
Reverse split | 1-for-5 | 1-for-5 | |||
Aircom [Member] | |||||
Organization (Textual) | |||||
Common stock shares | 99.70% | ||||
Aerkomm [Member] | |||||
Organization (Textual) | |||||
Acquisition, description | The Company filed a post-effective amendment No. 2 ("POS AM No.2") with the Securities and Exchange Commission (the "SEC"), to extend the public offering to attempt to raise the then remaining $16.44 million of the originally registered public offering amount, as well as the $9 million over-subscription option amount (see Note 11). On May 17, 2019, the Company filed a post-effective amendment No. 3 with the SEC to further amend POS AM No. 2 and which was declared effective by the SEC on May 23, 2019. Furthermore, two of the Company's current shareholders (the "Lenders") each committed to provide to the Company a $10 million bridge loan (together, the "Loans") for an aggregate principal amount of $20 million, to bridge the Company's cash flow needs prior to its obtaining a mortgage loan to be secured by a parcel of land (the "Land") the Company intends to purchase in Taiwan. The Lenders also agreed to an earlier closing of up to 25% of the principal amounts of the Loans upon the Company's request prior to the time that title to the Land is vested in the Company's subsidiary, Aerkomm Taiwan, to pay the outstanding payable to the Company's vendors. As of September 30, 2019, the Company completed two closings in the aggregate gross amount of $11,459,998, or net amount of $10,715,758, and issued 269,647 shares of common stock. With the $4.98 million to be raised in the remainder of the Company's ongoing public offering, the $20 million in Loans committed by the Lenders and future capital raising, the Company believes its working capital will be adequate to sustain its operations for the next twelve months. | On February 13, 2017, Aerkomm entered into a share exchange agreement ("Exchange Agreement") with Aircom and its shareholders, pursuant to which Aerkomm acquired 100% of the issued and outstanding capital stock of Aircom in exchange for approximately 99.7% of the issued and outstanding capital stock of Aerkomm (or 87.81% on a fully-diluted basis). As a result of the share exchange, Aircom became a wholly-owned subsidiary of Aerkomm, and the former shareholders of Aircom became the holders of approximately 99.7% of Aerkomm's issued and outstanding capital stock. | |||
Common stock shares | 100.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Purchased intangible asset consists of satellite system software and is amortized, useful life | 10 years | ||
Research and development costs | $ 416,231 | $ 765,750 | |
Total balance of cash in bank exceeding the amount insured by Federal Deposit Insurance Corporation | 2,060,000 | $ 0 | |
Foreign bank deposit insurance | $ 75,000 | ||
Vehicles [Member] | |||
Property and equipment, useful life | 5 years | ||
Computer Equipment [Member] | Minimum [Member] | |||
Property and equipment, useful life | 3 years | ||
Computer Equipment [Member] | Maximum [Member] | |||
Property and equipment, useful life | 5 years | ||
Furniture and Fixtures [Member] | |||
Property and equipment, useful life | 5 years | ||
Satellite Equipment [Member] | |||
Property and equipment, useful life | 5 years | ||
Lease improvement [Member] | |||
Property and equipment, useful life | 5 years | ||
Ground Station Equipment [Member] | |||
Property and equipment, useful life | 5 years |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Satellite equipment for sale under construction | $ 2,380,364 | $ 895,014 |
Supplies | 5,215 | 5,273 |
Gross | 2,385,579 | 900,287 |
Allowance for inventory loss | (5,215) | (5,273) |
Net | $ 2,380,364 | $ 895,014 |
Inventories (Details Textual)
Inventories (Details Textual) | Dec. 31, 2018USD ($) |
Inventories (Textual) | |
Transferred inventories amount to R&D expenses | $ 11,029 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment cost | $ 2,715,998 | $ 2,710,543 |
Accumulated depreciation | (731,806) | (322,049) |
Net | 1,984,192 | 2,388,494 |
Prepayments - land | 35,861,589 | 35,237,127 |
Construction in progress | 416,231 | |
Net | 37,845,781 | 38,041,852 |
Ground station equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment cost | 1,854,027 | 1,854,027 |
Computer software and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment cost | 324,487 | 321,070 |
Satellite equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment cost | 275,410 | 275,410 |
Vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment cost | 141,971 | 141,971 |
Leasehold improvement [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment cost | 83,721 | 84,721 |
Furniture and fixture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment cost | $ 36,382 | $ 33,344 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
May 01, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Property and Equipment (Textual) | ||||||
Transferred construction in progress amount to R&D expenses | $ 416,231 | $ 416,231 | ||||
Construction in progress | $ 416,231 | |||||
Property plant and equipment cost | 2,715,998 | 2,715,998 | $ 2,710,543 | |||
Transferred construction amount to inventories | 895,014 | 895,014 | ||||
Depreciation expense | $ 136,449 | $ 42,895 | $ 409,757 | $ 87,030 | ||
Tsai Ming-Yin [Member] | ||||||
Property and Equipment (Textual) | ||||||
Acquisition, description | The land is expected to be used to build a satellite ground station and data center. On July 10, 2018, the Company, Aerkomm Taiwan and the Seller entered into a certain real estate sales contract regarding this acquisition. Pursuant to the terms of the contract, and subsequent amendments on July 30, 2018, September 4, 2018, November 2, 2018 and January 3, 2019, the Company paid to the seller in installments refundable prepayment of $33.85 million as of December 31, 2018. On July 2, 2019, the Company paid the remaining purchase price of $624,462. As of September 30, 2019, the estimated commission payable for the land purchase in the amount of $1,360,770 (unaudited) was recorded to the cost of land and the payment to be paid after the full payment of the Land acquisition price until no later than December 31, 2020. |
Intangible Asset, Net (Details)
Intangible Asset, Net (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Intangible Asset Net [Abstract] | ||
Satellite system software | $ 4,950,000 | $ 4,950,000 |
Accumulated amortization | (1,938,750) | (1,567,500) |
Net | $ 3,011,250 | $ 3,382,500 |
Intangible Asset, Net (Details
Intangible Asset, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Intangible Asset, Net (Textual) | ||||
Amortization expense | $ 123,750 | $ 123,750 | $ 371,250 | $ 371,250 |
Operating Lease Right-of-Use _3
Operating Lease Right-of-Use Asset (Details) | Sep. 30, 2019USD ($) |
Operating Lease Right-of-Use Asset [Abstract] | |
Right-of-use asset | $ 669,602 |
Accumulated amortization | (304,770) |
Net | $ 364,832 |
Operating Lease Right-of-Use _4
Operating Lease Right-of-Use Asset (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Jun. 15, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | |
Operating Lease Right-of-Use Asset (Textual) | |||
Amortization expense of right-of-use asset | $ 101,088 | $ 345,083 | |
Description of lease agreement | The lease agreement in Aircom Taiwan was terminated, so the Company disposed the fully amortized right-of-use asset $40,313 (unaudited). |
Long-Term Loan (Details)
Long-Term Loan (Details) | Sep. 30, 2019USD ($) |
Long-term Loan [Abstract] | |
2020 | $ 12,232 |
2021 | 12,232 |
2022 | 12,232 |
2023 | 12,232 |
2024 | 8,154 |
Total installment payments | 57,082 |
Less: Imputed interest | (11,317) |
Present value of long-term loan | 45,765 |
Current portion | 8,150 |
Non-current portion | $ 37,615 |
Long-Term Loan (Details Textual
Long-Term Loan (Details Textual) - 9 months ended Sep. 30, 2019 | USD ($) | TWD ($) |
Long-term Loan (Textual) | ||
Maturity date | May 21, 2024 | May 21, 2024 |
Amount of loan credit line | $ 48,371 | |
Annual interest rate | 9.70% | 9.70% |
Installment payment, description | The installment payment plan is 60 months to pay off the balance on the 21st of each month. | |
NTD [Member] | ||
Long-term Loan (Textual) | ||
Amount of loan credit line | $ 1,500,000 |
Lease Liability (Details)
Lease Liability (Details) | Sep. 30, 2019 |
Lease Liability [Abstract] | |
Weighted-average remaining lease term | 6 months 29 days |
Weighted-average discount rate | 6.00% |
Lease Liability (Details 1)
Lease Liability (Details 1) | Sep. 30, 2019USD ($) |
10/1/2019-9/30/2020 | $ 397,586 |
10/1/2020-9/30/2021 | 20,000 |
Total lease payments | 417,586 |
Less: Imputed interest | (11,685) |
Present value of lease liabilities | 405,901 |
Current portion | 386,001 |
Non-current portion | 19,900 |
Related Party [Member] | |
10/1/2019-9/30/2020 | 34,321 |
10/1/2020-9/30/2021 | |
Total lease payments | 34,321 |
Less: Imputed interest | (843) |
Present value of lease liabilities | 33,478 |
Current portion | 33,478 |
Non-current portion | |
Others [Member] | |
10/1/2019-9/30/2020 | 363,265 |
10/1/2020-9/30/2021 | 20,000 |
Total lease payments | 383,265 |
Less: Imputed interest | (10,842) |
Present value of lease liabilities | 372,423 |
Current portion | 352,523 |
Non-current portion | $ 19,900 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Current: | ||||
Federal | ||||
State | 1,600 | 2,400 | ||
Foreign | 1,635 | 1,662 | ||
Total | $ 3,235 | $ 4,062 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Tax benefit at statutory rate | $ (688,749) | $ (524,572) | $ (1,703,699) | $ (1,266,726) |
Net operating loss carryforwards (NOLs) | 543,562 | 574,508 | 1,235,409 | 1,287,325 |
Foreign investment losses | 107,200 | 34,551 | 290,900 | 49,200 |
Stock-based compensation expense | 154,400 | 84,574 | 292,900 | 223,019 |
Amortization expense | 58,700 | (62,700) | 33,100 | (66,100) |
Accrued R&D expense | (168,000) | |||
Accrued payroll | 900 | (40,900) | ||
Accrued professional expense | (47,900) | (47,900) | ||
Accrued consulting expense | (122,300) | (122,300) | ||
Others | (53,713) | (58,461) | 17,825 | (6,756) |
Tax expense at effective tax rate | $ 3,235 | $ 4,062 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Income Taxes (Textual) | ||
Change in deferred tax assets valuation allowance | $ 1,275,000 | |
Federal [Member] | ||
Income Taxes (Textual) | ||
Net operating loss | 8,243,000 | $ 8,243,000 |
Additional federal NOLs | 10,443,000 | 5,743,000 |
State [Member] | ||
Income Taxes (Textual) | ||
Net operating loss | $ 24,328,000 | $ 21,049,000 |
Expiring date, description | expiring in 2039. | expiring in 2039. |
Japan [Member] | ||
Income Taxes (Textual) | ||
Net operating loss | $ 337,000 | $ 319,000 |
Expiring date, description | expiring in 2029. | expiring in 2029. |
Taiwan [Member] | ||
Income Taxes (Textual) | ||
Net operating loss | $ 2,189,000 | $ 879,000 |
Expiring date, description | expiring in 2029. | expiring in 2029. |
Federal Research and Development Tax Credit [Member] | ||
Income Taxes (Textual) | ||
Research and development tax credit | $ 37,000 | $ 37,000 |
Expiring date, description | The credit begins to expire in 2034 if not utilized. | |
California State Research and Development Tax Credit [Member] | ||
Income Taxes (Textual) | ||
Research and development tax credit | $ 39,000 | $ 39,000 |
Capital Stock (Details)
Capital Stock (Details) - Restricted Stock [Member] - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Restricted stock - vested | 1,802,373 | 1,802,373 |
Restricted stock - unvested | 149,162 | 149,162 |
Total restricted stock | 1,951,535 | 1,951,535 |
Capital Stock (Details Textual)
Capital Stock (Details Textual) - USD ($) | Jun. 29, 2019 | Jan. 16, 2019 | May 14, 2018 | Jul. 02, 2019 | Jun. 28, 2019 | Dec. 21, 2018 | Feb. 13, 2017 | Sep. 30, 2019 | Dec. 31, 2018 |
Capital Stock (Textual) | |||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||||
Preferred stock, authorized | 50,000,000 | 50,000,000 | |||||||
Preferred stock, outstanding | |||||||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||||
Common stock, authorized | 90,000,000 | 90,000,000 | |||||||
Unvested per shares of restricted stock repurchased and cancelled | $ 0.0067 | ||||||||
Conversion of restricted stock, description | All of Aircom's 5,513,334 restricted shares were converted to 2,055,947 shares of Aerkomm's restricted stock at the ratio of 2.681651 to 1, pursuant to the Exchange Agreement (see Note 1). | ||||||||
Issuance of common shares | 269,647 | ||||||||
Common stock for gross proceeds | $ 11,459,998 | ||||||||
Common stock for net proceeds | $ 10,715,758 | ||||||||
Common stock price per shares | $ 8.5 | ||||||||
Restricted shares of common stock | 23,972 | ||||||||
Warrant installment payment, description | The Company settled with the service provider to cancel all these warrants with $75,000 in three installments payable on July 3, August 1, and September 1, 2019. | ||||||||
Reverse split | 1-for-5 | 1-for-5 | |||||||
Post-effective amendment, description | On April 23, 2019, the Company filed a post-effective amendment No. 2 with the Securities and Exchange Commission (the "SEC") to extend the Offering to attempt to raise the then remaining $16.44 million of the amount that was originally registered in the Offering, as well as a $9 million over-subscription option amount. | ||||||||
Warrant [Member] | |||||||||
Capital Stock (Textual) | |||||||||
Conversion of restricted stock, description | The warrants allow the service provider to purchase a number of shares of Aerkomm common stock equal to the service fee value divided by 85% of the share price paid by investors for Aerkomm's common stock in the first subsequent qualifying equity financing event, at an exercise price of $0.05 per share. | ||||||||
Minimum shares to be issued under public offering | 4,891 | ||||||||
Additional stock warrants exercisable | $ 0 | $ 26,667 | |||||||
Common stock [Member] | |||||||||
Capital Stock (Textual) | |||||||||
Unvested shares of restricted stock adjustment | 104,413 | ||||||||
IPO [Member] | |||||||||
Capital Stock (Textual) | |||||||||
Issuance of common shares | 1,024,980 | ||||||||
Common stock for gross proceeds | $ 43,560,894 | ||||||||
Common stock for net proceeds | $ 39,810,204 | ||||||||
Common stock price per shares | $ 42.50 | ||||||||
IPO [Member] | Minimum [Member] | |||||||||
Capital Stock (Textual) | |||||||||
Underwriting discounts for maximum gross proceeds | $ 5,000,000 | ||||||||
IPO [Member] | Maximum [Member] | |||||||||
Capital Stock (Textual) | |||||||||
Underwriting discounts for maximum gross proceeds | $ 60,000,000 | ||||||||
Boustead Securities, LLC [Member] | |||||||||
Capital Stock (Textual) | |||||||||
Minimum shares to be issued under public offering | 117,647 | ||||||||
Minimum shares to be sold under public offering | 1,411,782 | ||||||||
Boustead Securities, LLC [Member] | Warrant [Member] | |||||||||
Capital Stock (Textual) | |||||||||
Stock warrants, description | The Company agreed to issue to Boustead warrants to purchase a number of the Company's shares equal to 6% of the gross proceeds of the public offering, which shall be exercisable, in whole or in part, commencing on April 13, 2018 and expiring on the five-year anniversary at an initial exercise price of $53.125 per share, which is equal to 125% of the offering price paid by investors. As of September 30, 2019 and 2018, the Company has issued warrants to Boustead to purchase 77,680 and 61,498 shares, respectively, of the Company's stock and the total warrant value is $454,600 (unaudited) and $849,500, respectively. For the nine-month period ended September 30, 2019 and 2018, the Company recorded $260,900 (unaudited) and $171,300 (unaudited), respectively, of consulting fee with the corresponding account of additional paid-in capital as the adjustment for the issuance costs of these stock warrants. |
Major Customer (Details)
Major Customer (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Major Customer (Textual) | |||||
Net sales | $ 1,730,000 | $ 1,599,864 | $ 1,730,000 | ||
Account receivable | $ 649,939 | $ 649,939 | $ 1,745,000 | ||
Major customer one [Member] | |||||
Major Customer (Textual) | |||||
Percentage of total sales | 10.00% | ||||
Major customer one [Member] | Accounts Receivable [Member] | |||||
Major Customer (Textual) | |||||
Net sales | $ 1,599,864 |
Major Vendor (Details)
Major Vendor (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Major Vendor (Textual) | |||||
Purchases | $ 1,650,000 | $ 1,587,222 | $ 1,650,000 | ||
Account payable | 809,908 | $ 809,908 | $ 1,650,000 | ||
One Major Vendor [Member] | |||||
Major Vendor (Textual) | |||||
Percentage of total purchases | 10.00% | ||||
One Major Vendor [Member] | Accounts Payable [Member] | |||||
Major Vendor (Textual) | |||||
Purchases | $ 1,587,222 | ||||
Account payable | $ 506,308 | $ 506,308 |
Related Party Transactions (Det
Related Party Transactions (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Dmedia Holding LP ("Dmedia") [Member] | |
Related Party Transaction [Line Items] | |
Relationship | Major stockholder |
Bummy Wu [Member] | |
Related Party Transaction [Line Items] | |
Relationship | Shareholder |
Jeffrey Wun [Member] | |
Related Party Transaction [Line Items] | |
Relationship | Shareholder and CEO of Aerkomm and Aircom |
Yih Lieh (Giretsu) Shih [Member] | |
Related Party Transaction [Line Items] | |
Relationship | President of Aircom Japan |
Chien Ming Tseng [Member] | |
Related Party Transaction [Line Items] | |
Relationship | President of Aircom Taiwan |
Hao Wei Peng [Member] | |
Related Party Transaction [Line Items] | |
Relationship | Employee of Aircom Taiwan and founding owner of Aircom Taiwan prior to 12/19/2017 |
Louis Giordimaina [Member] | |
Related Party Transaction [Line Items] | |
Relationship | COO - Aviation of Aircom |
Wealth Wide Int'l Ltd. ("WWI") [Member] | |
Related Party Transaction [Line Items] | |
Relationship | Bummy Wu, a shareholder, is the Chairman |
WISD Intellectual Property Agency, Ltd. ("WISD") [Member] | |
Related Party Transaction [Line Items] | |
Relationship | Patrick Li, Director of Aircom, is the Chairman; Chih-Ming (Albert) Hsu, Director of the Company, is a Director |
Related Party Transactions (D_2
Related Party Transactions (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |||
Other receivable | $ 111,111 | ||
Chien Ming Tseng [Member] | |||
Related Party Transaction [Line Items] | |||
Other receivable | [1] | 111,111 | |
Bummy Wu [Member] | |||
Related Party Transaction [Line Items] | |||
Temporary deposit | [2] | 100,067 | |
WWI [Member] | |||
Related Party Transaction [Line Items] | |||
Operating lease liability | [3] | 33,478 | |
Other payable to: | [3] | 39,179 | 39,224 |
Hao Wei Peng [Member] | |||
Related Party Transaction [Line Items] | |||
Other payable to: | [4] | 47,201 | |
Jeffrey Wun [Member] | |||
Related Party Transaction [Line Items] | |||
Other payable to: | [4] | 12,087 | 46,236 |
Louis Giordimaina [Member] | |||
Related Party Transaction [Line Items] | |||
Other payable to: | [4] | 3,019 | 6,071 |
Yih Lieh (Giretsu) Shih [Member] | |||
Related Party Transaction [Line Items] | |||
Other payable to: | [3] | 15,497 | |
Others [Member] | |||
Related Party Transaction [Line Items] | |||
Other payable to: | [4] | 9,986 | 66,826 |
Consolidated Related Party [Member] | |||
Related Party Transaction [Line Items] | |||
Other payable to: | $ 112,192 | $ 173,854 | |
[1] | Represents temporary advances to employees for payments of previously accrued expenses for regular operating activities, to be offset with the Company's accrued expenses pending official receipts. | ||
[2] | In November 2018, Aircom HK's bank account was temporarily frozen by its local bank in Hong Kong (the "HK bank") due to Aircom HK's failure to timely submit to the HK bank corporate documentation relating to the corporate organization and goodstanding of Aircom HK's parent company, Aircom, and Aircom's parent company, Aerkomm. To avoid a potential cash flow issue resulting from this temporary account freeze, Aircom HK withdrew $100,067 in cash from the HK bank and temporarily deposited it in an existing related party's bank account at a different bank for safe keeping. The Aircom HK's bank account with the HK bank was reactivated by the HK bank subsequently and the cash that was transferred to the related party's account was redeposited into Aircom HK's bank account at the HK bank in February 2019. | ||
[3] | Represents rent for a warehouse in Hong Kong to store the Company's hardware, which ended in May 2018, and rent for another Hong Kong office starting June 28, 2018. | ||
[4] | Represents payable to employees as a result of regular operating activities. |
Related Party Transactions (D_3
Related Party Transactions (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Related Party Transactions [Abstract] | ||||
Consulting expense paid to Louis Giordimaina | $ 222,246 | |||
Legal expense paid to WISD | 9,387 | 10,779 | ||
Amortization expense of right-of-use asset charged by WWI | 11,456 | 34,328 | ||
Rental expense charged by WWI | 14,706 | 17,840 | ||
Interest expense charged by Dmedia | $ 1,744 | $ 3,116 |
Related Party Transactions (D_4
Related Party Transactions (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | |
Nov. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Related Party Transactions (Textual) | |||
Consulting services | $ 222,246 | ||
Cash withdrew from HK bank | $ 100,067 | ||
WWI [Member] | |||
Related Party Transactions (Textual) | |||
Lease agreement, description | The Company had a lease agreement with WWI with a monthly rental cost of $450 that expired on May 31, 2018 and was not renewed. The Company has another lease agreement with WWI for its office space in Hong Kong with a monthly rental cost of HKD 30,000. The lease term is from June 28, 2018 to June 27, 2020. Effective January 1, 2019, the Company adopted ASU2016-02, "Leases" (Topic 842) ("ASU 2016-02"), and accounted for these leases under amortization of the lease payment under Note 9, Lease Liabilities. |
Stock Based Compensation (Detai
Stock Based Compensation (Details) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term | 10 years | 10 years |
Expected dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 59.83% | 59.83% |
Risk-free interest rate | 1.98% | 1.98% |
Forfeiture rate | 0.00% | 0.00% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 61.91% | 61.91% |
Risk-free interest rate | 2.99% | 2.99% |
Forfeiture rate | 10.00% | 10.00% |
Stock Based Compensation (Det_2
Stock Based Compensation (Details 1) - Aircom 2014 Plan [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Options outstanding, Beginning | 932,262 | 932,262 |
Granted | ||
Exercised | ||
Forfeited/Cancelled | ||
Options outstanding, Ending | 932,262 | 932,262 |
Exercisable, Ending | 932,262 | 846,287 |
Weighted Average Exercise Price Per Share | ||
Options outstanding, Beginning | $ 0.4081 | $ 0.4081 |
Granted | ||
Exercised | ||
Forfeited/Cancelled | ||
Options outstanding, Ending | 0.4081 | 0.4081 |
Exercisable, Ending | 0.4081 | 0.2892 |
Weighted Average Fair Value Per Share | ||
Options outstanding, beginning | 0.1282 | 0.1282 |
Granted | ||
Exercised | ||
Forfeited/Cancelled | ||
Options outstanding, Ending | 0.1282 | 0.1282 |
Exercisable, Ending | $ 0.1282 | $ 0.0908 |
Stock Based Compensation (Det_3
Stock Based Compensation (Details 2) - Nonvested Shares [Member] - Aircom 2014 [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Outstanding, Beginning | 85,975 | 302,467 |
Granted | ||
Vested | (85,975) | (216,492) |
Forfeited/Cancelled | ||
Outstanding, Ending | 85,975 | |
Weighted Average Exercise Price Per Share | ||
Options outstanding, beginning | $ 1.5786 | $ 0.8315 |
Granted | ||
Vested | 1.5715 | 0.5349 |
Forfeited/Cancelled | ||
Options outstanding, Ending | $ 1.5786 |
Stock Based Compensation (Det_4
Stock Based Compensation (Details 3) - Aerkomm 2017 [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Outstanding, Beginning | 283,000 | 253,000 |
Granted | 339,000 | 78,000 |
Exercised | ||
Forfeited/Cancelled | (48,000) | |
Outstanding, Ending | 622,000 | 283,000 |
Exercisable, Ending | 353,797 | 111,589 |
Weighted Average Exercise Price Per Share | ||
Options outstanding, Beginning | $ 28.3867 | $ 30.8824 |
Granted | 3.9600 | 19.7462 |
Exercised | ||
Forfeited/Cancelled | 27.5000 | |
Options outstanding, Ending | 15.0738 | 28.3867 |
Exercisable, Ending | 17.0242 | 28.7052 |
Weighted Average Fair Value Per Share | ||
Options outstanding, beginning | 16.2781 | 18.4796 |
Granted | 2.0301 | 9.2500 |
Exercised | ||
Forfeited/Cancelled | 16.4610 | |
Options outstanding, Ending | 8.5127 | 16.2781 |
Exercisable, Ending | $ 9.6884 | $ 16.5968 |
Stock Based Compensation (Det_5
Stock Based Compensation (Details 4) - Nonvested Shares [Member] - Aerkomm 2017 [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Outstanding, Beginning | 171,411 | 168,250 |
Granted | 339,000 | 78,000 |
Vested | (242,208) | (74,839) |
Forfeited/Cancelled | ||
Outstanding, Ending | 268,203 | 171,411 |
Weighted Average Exercise Price Per Share | ||
Options outstanding, beginning | $ 28.1794 | $ 32.4079 |
Granted | 3.9600 | 19.7462 |
Vested | 11.6426 | 28.8962 |
Forfeited/Cancelled | ||
Options outstanding, Ending | $ 12.5008 | $ 28.1794 |
Stock Based Compensation (Det_6
Stock Based Compensation (Details Textual) - USD ($) | Oct. 04, 2019 | Sep. 16, 2018 | Dec. 29, 2017 | Jul. 02, 2019 | Dec. 29, 2018 | Jun. 19, 2018 | Jul. 31, 2017 | Jun. 23, 2017 | Feb. 13, 2017 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | May 05, 2017 |
Stock Based Compensation (Textual) | |||||||||||||
Stock option aggregate shares | 1,088,882 | ||||||||||||
Share-based Compensation | $ 1,394,670 | $ 1,062,140 | |||||||||||
Unrecognized compensation cost | $ 1,519,000 | $ 2,174,000 | |||||||||||
Minimum [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Recognize weighted average period | 1 year | ||||||||||||
Maximum [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Recognize weighted average period | 5 years | ||||||||||||
Board of Directors [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Stock option aggregate shares | 339,000 | ||||||||||||
Description of plan agreements | Aerkomm 2017 Plan to 22 of its directors, officers and employees. 25% of the shares vested on the grant date, 25% of the shares vested on July 17, 2019, 25% of the shares will vest on the first anniversary of the grant date, and 25% of the shares will vest upon the second anniversary of the grant date. | ||||||||||||
Board of Directors [Member] | Subsequent Event [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Stock option aggregate shares | 85,400 | ||||||||||||
Description of plan agreements | Aerkomm 2017 Plan to three (3) of its employees. 25% of the shares vested on the grant date, and 25% of the shares will vest on each of October 4, 2020, October 4, 2021 and October 4, 2022, respectively. | ||||||||||||
Aerkomm 2017 [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Description of plan agreements | Which include, 1) 1/6 of the shares subject to the option shall vest commencing on the vesting start date and the remaining shares shall vest at the rate of 1/60 for the next 60 months on the same day of the month as the vesting start date; 2) 1/4 of the shares subject to the option shall vest commencing on the vesting start date and the remaining shares shall vest at the rate of 1/36 for the next 36 months on the same day of the month as the vesting start date; 3) 1/3 of the shares subject to the option shall vest commencing on the first anniversary of vesting start date and the remaining shares shall vest at the rate of 50% each year for the next two years on the same day of the month as the vesting start date. | The Aerkomm 2017 Plan has been adopted by the Board and shall continue in effect for a term of 10 years unless sooner terminated under the terms of Aerkomm 2017 Plan. The Aerkomm 2017 Plan was approved by the Company's stockholders on March 28, 2018. | |||||||||||
Aerkomm 2017 [Member] | Compensation Committee [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Stock option aggregate shares | 16,000 | 12,000 | 16,000 | ||||||||||
Aerkomm 2017 [Member] | Board of Directors [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Stock option aggregate shares | 109,000 | ||||||||||||
Issuance shares of common stock | 2,000,000 | 1,000,000 | |||||||||||
Aggregate shares issue | 291,000 | ||||||||||||
Description of plan agreements | The Aerkomm 2017 Plan to two of the Company executives. One-fourth of the 32,000 shares subject to the option vested on May 1, 2019, and the remaining shares shall vest in three equal yearly installments thereafter. One-third of the 30,000 shares subject to the option vested on May 29, 2019, and the remaining shares shall vest in two equal yearly installments thereafter. | The Aerkomm 2017 Plan to 11 of its employees. One-third of these shares subject to the options vested on the first anniversary of the grant date, one-third of the shares vested on the second anniversary of the grant date, and the remaining shares shall vest on the third anniversary of the grant date. | |||||||||||
Aerkomm 2017 [Member] | Board of Directors [Member] | Minimum [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Stock option aggregate shares | 30,000 | ||||||||||||
Aerkomm 2017 [Member] | Board of Directors [Member] | Maximum [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Stock option aggregate shares | 32,000 | ||||||||||||
Options [Member] | Aerkomm 2014 Plan [Member] | |||||||||||||
Stock Based Compensation (Textual) | |||||||||||||
Description of plan agreements | The Company, and the remainder of the grant vested and will vest in 36 equal monthly installments thereafter, subject to the grantee's continuous service through the applicable vesting date. Option prices for such options were determined by Aircom's Board of Directors. The Aircom 2014 Plan became effective upon its adoption by the Board and shall continue in effect for a term of 10 years unless sooner terminated under the terms of Aircom 2014 Plan. |
Commitments (Details)
Commitments (Details) | 1 Months Ended |
Jun. 20, 2018 | |
Commitments (Textual) | |
Commitments, description | Yihe Culture Media Agreement: On June 20, 2018, the Company entered into a Cooperation Framework Agreement with Shenzhen Yihe Culture Media Co., Ltd. ("Yihe"), the authorized agent of Guangdong Tengnan Internet, pursuant to which Yihe will promote the development of strategic cooperation between the Company and Guangdong Tengnan Internet. Specifically, Yihe agreed to assist the Company with public relations and advertising, such as market and brand promotion, as well as brand recognition in China (excluding Hong Kong, Macao and Taiwan), including but not limited to news dissemination, creative planning and support of campaigns, financial public relations and internet advertising. More specifically, Yihe will help the Company develop a working application of the WeChat Pay payment solution as well as WeChat applets applicable for Chinese users and relating to cell phone and WiFi connectivity on airplanes, and Yihe will assist the Company in integrating other Tencent internet-based original product offerings. As compensation, the Company agreed to pay Yihe RMB 8 million (approximately US$1.2 million), RMB 2,000,000 (approximately US$309,000) of which the Company paid on June 29, 2018 and the remaining RMB 6,000,000 (approximately US$927,000) of which was to be paid by August 15, 2018. On July 19, 2019, Yihe and the Company agreed to extend the expiration date of the agreement to June 20, 2022. The Company had paid the remaining RMB 6,000,000 on August 12, 2019. Airbus SAS Agreement: On November 30, 2018, in furtherance of a memorandum of understanding signed in March 2018, the Company entered into an agreement with Airbus SAS ("Airbus"), pursuant to which Airbus will develop and certify a complete solution allowing the installation of our "AERKOMM K++" system on Airbus' single aisle aircraft family including the Airbus A319/320/321, for both Current Engine Option (CEO) and New Engine Option (NEO) models. Airbus will also apply for and obtain on our behalf a Supplemental Type Certificate (STC) from the European Aviation Safety Agency, or EASA, as well as from the U.S. Federal Aviation Administration or FAA, for the retrofit system. It is anticipated that the Bilateral Aviation Safety Agreement between EASA and the Civil Aviation Administration of China, or CAAC, will be finalized and go into effect in 2019. Pursuant to the terms of our Airbus agreement, The Company agreed to pay the service fees that Airbus provides the Company with the retrofit solution which will include the Service Bulletin and the material kits including the update of technical and operating manuals pertaining to the aircraft and provision of aircraft configuration control. The timeframe for the completion and testing of this retrofit solution, including the certification, is approximately 16 months from the purchase order issued in August 2018, although there is no guarantee that the project will be successfully completed in the projected timeframe. |