Executive Summary / Key Takeaways

• Aerkomm Inc. is transforming into an advanced defense and aerospace communications company, leveraging its software-defined, multi-orbit satellite technology to address critical needs in contested and infrastructure-limited environments.
• The company's proprietary electronically steered antenna (ESA) and software-defined modem offer significant technological advantages, including over 50% higher throughput per square inch than conventional designs, positioning it for growth in defense, commercial aviation, and civilian telecommunications.
• Despite reporting $0 in sales for Q1 2025 and a working capital deficit of approximately $60 million, Aerkomm is actively fortifying its financial position through a planned merger with IX Acquisition Corp. (IXAQ), securing $35 million in PIPE commitments, and targeting an additional $100 million capital raise.
• Aerkomm anticipates a significant ramp-up in recurring revenues starting in Q4 2025, driven by a OneWeb distribution partnership and initial deliveries of a classified radar system to a governmental defense customer, with an opportunity pipeline exceeding $150 million.
• The company operates in a dynamic competitive landscape, facing established players like Gogo, Viasat, and EchoStar, but aims to differentiate through regional specialization, integrated solutions, and advanced technology in the high-growth Asia-Pacific market, which is seeing substantial investment in network resilience.

Aerkomm's Strategic Pivot: From Retail to Resilient Communications

Aerkomm Inc., incorporated in Nevada in 2013, has undergone a profound transformation from its origins as an online retail distributor of infant products. Today, it stands as an advanced defense and aerospace communications company, strategically focused on delivering carrier-neutral and software-defined infrastructure for multi-orbit satellite broadband connectivity across public and private sectors. This strategic pivot, solidified through key acquisitions like Aircom Pacific, Aircom Japan, and Mixnet Technology, has positioned Aerkomm at the forefront of critical communication solutions. The company operates under an asset-light model, maintaining regional satellite licensing and acting as a value-added reseller of satellite bandwidth, which enables scalable offerings and new revenue opportunities.

Aerkomm's common stock trades on the OTCQX Market under the symbol AKOM and on Euronext Paris, reflecting its international presence. The company's current strategy emphasizes converting strategic defense engagements into long-term contracts while leveraging its dual-use technologies for commercial aviation and civilian telecommunications markets, particularly within the high-growth Asia-Pacific region.

Technological Edge: Powering the Next Generation of Connectivity

At the core of Aerkomm's investment thesis lies its differentiated technology, designed for performance in contested, infrastructure-limited, and multi-domain environments. The company's platform integrates software-defined modems, multi-orbit satellite terminals, and over-the-horizon (OTH) systems to support unmanned, autonomous, and Intelligence, Surveillance, and Reconnaissance (ISR) platforms. This carrier-neutral, software-defined architecture ensures seamless integration of various communication pathways, fostering interoperability, modular scalability, and persistent resiliency.

A significant technological differentiator is Aerkomm's advanced electronically steered antenna (ESA). This proprietary system leverages a glass semiconductor substrate to deliver over 50% higher throughput per square inch than conventional designs. These ESAs are engineered for seamless operation across Geostationary Earth Orbit (GEO), Medium Earth Orbit (MEO), and Low Earth Orbit (LEO) networks, ensuring consistent, resilient performance. Furthermore, the company's software-defined modem architecture supports real-time satellite selection, waveform agility, and military-grade security. Aerkomm is also actively developing custom-developed RF chipsets, beamforming ASICs, and high-speed analog-to-digital converters (ADCs) to further enhance its system capabilities. For investors, these technological advancements represent a significant competitive moat, enabling Aerkomm to offer superior performance and adaptability in critical communication scenarios, potentially leading to higher adoption rates and stronger margins as its solutions gain market traction.

A Contested Arena: Aerkomm's Competitive Stance

Aerkomm operates within a dynamic and increasingly competitive landscape, facing both established direct competitors and evolving indirect threats. Key direct rivals in the broader in-flight connectivity (IFC) and satellite communications market include Gogo Inc. (GOGO), Viasat Inc. (VSAT), and EchoStar Corporation (SATS). These companies offer similar broadband services and integrated systems, often with a more established global footprint and extensive network infrastructure.

Aerkomm's market positioning is currently niche, particularly in the Asia-Pacific region, where it focuses on integrated connectivity and entertainment solutions. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Aerkomm is positioned as a challenger. Its proprietary AERKOMM K++ system, regional specialization, and integrated e-commerce features offer distinct advantages. For instance, the ultra-low-profile antenna system provides aerodynamic benefits, reducing drag and fuel consumption for aircraft, a tangible benefit that differentiates it from conventional designs. This could lead to improved capital efficiency for airlines and potentially higher average selling prices for Aerkomm's solutions.

However, Aerkomm faces challenges in overall market penetration and network reliability compared to Gogo's established brand in business aviation. Against Viasat, with its advanced satellite infrastructure, Aerkomm lags in technological breadth, though its focus on specific, high-throughput antenna design aims to carve out a performance edge. EchoStar, with its extensive satellite fleet, presents a formidable competitor in terms of global reach and diversified revenue streams. Aerkomm's financial performance, characterized by significant losses and limited revenue, trails these more mature competitors, which generally exhibit more consistent revenue streams and stronger cash flow generation. Indirect competitors, such such as terrestrial 5G networks and streaming services, also pose a threat by offering alternative connectivity and entertainment options that could impact demand for satellite-dependent solutions.

Macro Tailwinds and Geopolitical Imperatives

The demand for Aerkomm's resilient communication solutions is significantly bolstered by several powerful macro trends and geopolitical imperatives. Global events have underscored the vulnerability of subsea communications infrastructure, prompting defense and civilian agencies worldwide to accelerate the adoption of space-based solutions.

In the United States, the defense budget remains the largest globally, with President Biden's FY 2025 request including $895 billion for national defense. A key focus is the Collaborative Combat Aircraft (CCA) program, which has seen over $1.70 billion appropriated for R&D since FY 2023 and an additional $559 million requested for FY 2025. This initiative, anticipating the procurement of at least 1,000 CCA units, directly aligns with Aerkomm's expertise in unmanned systems and resilient communications. Similarly, the Next Generation Air Dominance (NGAD) program is projected to receive approximately $28.50 billion in funding over the next five years. The increasing integration of artificial intelligence (AI) in defense operations further amplifies the need for secure, low-latency, and persistent communications infrastructure, which Aerkomm's advanced technologies are designed to provide.

Europe is also witnessing a significant increase in defense spending, with the "ReArm Europe" initiative aiming to mobilize up to $800 billion in defense investments by 2030. The EU's $10.60 billion IRIS² program for a sovereign satellite constellation further highlights the strategic importance of resilient space-based communications.

The Asia-Pacific region, Aerkomm's primary focus, is experiencing robust growth in defense spending due to escalating geopolitical tensions. China's defense budget increased by 7.20% in 2025, while Japan approved a record defense budget of approximately $55.10 billion for FY 2025, a 9.40% increase, with a strategic emphasis on unmanned systems and drone warfare. Taiwan, facing continuous threats, has launched a comprehensive 10-year plan with an initial budget of $790 million to establish an independent, resilient satellite internet system, complemented by a targeted NT$2.5 billion (approximately $80 million) subsidy program for Business Continuity Planning (BCP) deployments between 2024 and 2027. Japan's Ministry of Internal Affairs and Communications has also allocated over 25 billion yen (approximately $170 million) in fiscal support between 2024 and 2026 for BCP-related technologies. These regional investments directly support Aerkomm's strategic initiatives and its role as a distribution partner for Eutelsat (ETLTF) OneWeb's LEO satellite services.

In commercial aviation, global air traffic in 2024 surpassed pre-pandemic levels by 3.80% in revenue passenger-kilometers, with the International Air Transport Association (IATA) projecting a combined net profit of $36 billion for the airline industry in 2025. This recovery, coupled with the global adoption of 5G and the emergence of 6G technologies, creates a growing market for advanced in-flight and civilian telecommunications connectivity. The global Business Continuity Management (BCM) market, valued at approximately $6.28 billion in 2025, is projected to grow at a CAGR of 16.33% through 2032, further underscoring the demand for Aerkomm's resilience solutions.

Financial Performance: A Development-Stage Enterprise

Aerkomm's financial performance reflects its current stage as an advanced research and development company transitioning to commercialization. For the three months ended March 31, 2025, the company reported $0 in sales, a significant decrease from $53,255 for the same period in 2024. This decline is attributed to the ongoing development of its core in-flight entertainment and connectivity business and limited equipment sales to a related party. Operating expenses saw a notable decrease, falling by $2.03 million to $3.08 million in Q1 2025 from $5.11 million in Q1 2024. This reduction was primarily due to lower salaries expense, professional fees, and stock-based compensation, partially offset by increased amortization and depreciation.

The net non-operating loss for Q1 2025 was $599,248, which included a foreign currency exchange loss of $50,614, interest expense of $267,229, a loss from the change in fair value of SAFE liabilities of $50,000, and a loss on the disposal of subsidiaries of $234,454. The deconsolidation of Aerkomm HK and Beijing Yatai in January 2025, a direct consequence of Chinese sanctions, resulted in this recognized loss but did not materially impact the company's overall operations. Ultimately, Aerkomm reported a net loss of $3.68 million for the three months ended March 31, 2025, a 39.50% improvement from the $6.08 million net loss in the prior-year period. The total comprehensive loss also decreased by 41.80% to $4.23 million.

Despite these improvements in loss figures, the company's profitability ratios remain significantly negative, with a TTM Gross Profit Margin of 14.16%, Operating Profit Margin of -1698.57%, and Net Profit Margin of -2077.34%. These figures underscore the company's pre-revenue commercialization phase and its substantial investment in R&D and operational infrastructure.

A significant portion of accrued expenses, $7.23 million out of $8.31 million as of March 31, 2025, relates to unpaid salaries, though approximately $3.10 million of these were settled through the accelerated vesting and exercise of stock options.

Fortifying the Balance Sheet: Liquidity and Capital Initiatives

Aerkomm's ability to continue as a going concern is subject to substantial doubt, primarily due to a working capital deficit of approximately $60 million and a cash outflow from operating activities of $0.60 million as of March 31, 2025, with only $0.10 million in cash on hand. To address these liquidity challenges, management has implemented several strategic initiatives.

Two current shareholders have committed to providing $20 million in bridge loans, with $15.89 million of this commitment remaining available as of March 31, 2025. Furthermore, in connection with its planned merger with IX Acquisition Corp. (IXAQ), Aerkomm has secured $35 million in private investment in public equity (PIPE) commitments and anticipates an additional $2 million from Simple Agreement for Future Equity (SAFE) investments before the merger's close. The company is targeting a further $100 million capital raise post-merger, supplemented by an expected $19.20 million in cash from IXAQ. Approximately $28.80 million in outstanding convertible notes and SAFE liabilities are also expected to convert into equity upon the merger's consummation, which would significantly strengthen Aerkomm's capital resources and reduce cash obligations. In June and July 2025, the company further bolstered its capital with approximately $2 million from new SAFE agreements. Management believes these measures will provide sufficient liquidity for at least the next twelve months, contingent on the successful execution of these plans.

Outlook and Strategic Milestones: A Path to Commercialization

Aerkomm's outlook is heavily tied to the successful execution of its strategic initiatives and the commercialization of its advanced technologies. The merger with IXAQ is a pivotal event, expected to close prior to October 12, 2025, which should enhance Aerkomm's access to public capital markets and institutional investors.

The company anticipates a significant ramp-up in recurring revenues starting in the fourth quarter of 2025. This expectation is underpinned by the OneWeb Distribution Partner Agreement, which appointed Aerkomm Japan as a distributor for OneWeb in Japan and Taiwan as of October 1, 2024. Additionally, Aerkomm made its first delivery of a classified radar system to a governmental defense customer on October 24, 2024, signaling a crucial step towards revenue generation in its core defense segment. The company's aggregate opportunity pipeline, exceeding $150 million across over 25 government agencies, defense integrators, and commercial primes, is expected to yield initial award decisions during 2025.

Capital expenditures for fiscal year 2025 are estimated to range from $6 million to $10 million, reflecting ongoing investments in semiconductor designs, software-defined platforms, and network expansion. The planned merger of Aerkomm Taiwan with Ejectt Inc. is also a strategic move to create synergies, though it remains subject to approval from the Taiwan Department of Investment Review. Furthermore, the recent appointment as the Asia-Pacific Distribution Partner for VolitionRF airborne multi-band Satcom terminals on September 17, 2025, expands Aerkomm's product offerings and market reach in a critical region.

Investment Risks: A High-Growth, High-Stakes Environment

Investing in Aerkomm Inc. carries significant risks commensurate with its early-stage commercialization and ambitious growth strategy. The substantial doubt regarding its ability to continue as a going concern, stemming from its working capital deficit and reliance on future capital raises, is a primary concern. The successful closing of the IXAQ merger and the subsequent capital raise are critical to alleviating this doubt.

Geopolitical risks, particularly the Chinese sanctions imposed in December 2024, have already led to the deconsolidation of Aerkomm HK and Beijing Yatai, highlighting the volatility of operating in politically sensitive regions. Delays in obtaining necessary regulatory approvals, such as the satellite license in Taiwan for its ground station or the Taiwan Department of Investment Review's approval for the Ejectt merger, could impede strategic initiatives. Furthermore, the company's transition from development to revenue generation means its results will remain volatile, and the timing of contract execution is a critical variable. Supply chain pressures in semiconductors and RF components, coupled with inflationary pressures and elevated interest rates, could impact production scalability, lead times, and profit margins. While Aerkomm's technological differentiators are strong, the competitive landscape is intense, with established players and new entrants like Starlink vying for market share. There is no assurance that Aerkomm's extensive opportunity pipeline will convert into binding agreements or sustained revenue.

Conclusion

Aerkomm Inc. is a company in the midst of a transformative journey, pivoting from its historical roots to become a significant player in the advanced defense and aerospace communications sector. Its core investment thesis is anchored in its innovative, software-defined, multi-orbit satellite technology, which promises superior performance and resilience in an increasingly complex global environment. The company's proprietary electronically steered antenna, offering over 50% higher throughput, alongside its strategic focus on unmanned systems and critical infrastructure, positions it to capitalize on substantial macro tailwinds driven by escalating geopolitical tensions and rising defense spending in key regions like the Indo-Pacific and Europe.

While Aerkomm faces considerable financial hurdles, including a significant working capital deficit and a reliance on external capital, its aggressive fundraising efforts, including the impending IXAQ merger and substantial PIPE commitments, signal a determined path toward financial stability and commercialization. The anticipated ramp-up in recurring revenues from Q4 2025, fueled by strategic partnerships and initial product deliveries, marks a crucial inflection point. For discerning investors, Aerkomm represents a high-potential, high-risk opportunity. Its ability to translate its technological leadership and strategic market positioning into sustained revenue and profitability, particularly in the competitive and geopolitically charged landscape of resilient communications, will be the ultimate determinant of its long-term success.