Financial Analysis

NOTE 23 - Commitments and contingencies As of March 31, 2026, the Companys significant commitment is summarized as follows: Contingencies Legal From time to time, the Company is party to certain legal proceedings, as well as certain asserted and un-asserted claims. Commitment 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 retrofit solution allowing the installation of the Companys 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 the Companys behalf a Supplemental Type Certificate (STC) from the European Aviation Safety Agency (EASA), as well as from the U.S. Federal Aviation Administration (FAA), for the retrofit AERKOMM K++ system. The EU-China Bilateral Aviation Safety Agreement, or BASA, went into effect on September 3, 2020, giving a boost to the regions aviation manufacturers by simplifying the process of gaining product approvals from the European Union Aviation Safety Agency, or EASA, and the Civil Aviation Administration of China, or CAAC, while also ensuring high safety and environment standards will continue to be met. Pursuant to the terms of our Airbus agreement, Airbus agreed to provide the Company with a retrofit solu …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 22 - Stock Based Compensation In March 2014, Aircoms 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 issue options for an aggregate of 1,088,882 shares to Aircoms stock option holders. One-third of stock option shares will be vested as of the first anniversary of the time the option shares are granted or the employees acceptance to serve the Company, and 1/36th of the shares will be vested each month thereafter. Option price is determined by the 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 2014 Plan, the Plans) and the reservation of 1,000,000 shares of common stock for issuance under the Aerkomm 2017 Plan. 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. On June 23, 2017, the Board of Directors voted to increase the number of shares of common stock reserved fo …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

NOTE 19 - Income Taxes U.S. While the Company consolidates its entities under Aerkomm, a Nevada entity as described in Note 1, Organization, management has determined that U.S. represents the Companys primary tax jurisdiction. The statutory income tax rate in U.S. is 21.0%. The difference between the Companys domestic statutory income tax rate and its income tax (expense) benefit is primarily attributable to the effect of tax rates in other jurisdictions in which the Company operates, as well as certain non-taxable income and non-deductible expenses. Taiwan The Companys subsidiary incorporated in Taiwan is governed by the income tax laws of Taiwan, and the income tax provision related to operations in Taiwan is calculated at the applicable statutory tax rates on taxable income for the periods based on existing legislation, interpretations, and practices. The statutory corporate income tax rate in Taiwan is 20.0% and a tax on undistributed earnings at 5%, with additional local taxes, including enterprise tax and inhabitants tax, resulting in a higher effective tax rate that may vary depending on the level of taxable income and applicable local tax rates. Japan The Companys subsidiary incorporated in Japan is governed by the income tax laws of Japan, and the income tax provision related to operations in Japan is calculated at the applicable statutory tax rates on taxable income for the periods based on existing legislation, interpretations, and practices. The statutory corporat …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 15 - Convertible Long-term Bonds Payable On December 3, 2020, the Company closed a private placement offering consisting of US$10,000,000 in aggregate principal amount of its Credit Enhanced Zero Coupon Convertible Bonds (the Zero Coupon Bonds) and US$200,000 in aggregate principal amount of its 7.5% convertible bonds (the Coupon Bonds), both due on December 2, 2025 (collectively the Bonds). Unless previously redeemed, converted or repurchased and cancelled, the Zero-Coupon Bonds will be redeemed on December 2, 2025 at 105.11% of their principal amount and the Coupon Bonds will be redeemed on December 2, 2025 at 100% of their principal amount plus any accrued and unpaid interest. The Coupon Bonds will bear interest from and including December 2, 2020 at the rate of 7.5% per annum. Interest on the Coupon Bonds is payable semi-annually in arrears on June 1 and December 1 each year, commencing on June 1, 2021. The Company has the option to redeem the Bonds at a redemption amount equal to the Early Redemption Amount, as defined in the Offering Memorandum, at any time on or after December 2, 2023 and prior to the Maturity Date, if the Closing Price of the Companys Common Stock listed on the Euronext Paris for 20 trading days in any period of 30 consecutive trading days, the last day of which occurs not more than fifteen trading days prior to the date on which notice of such redemption is given, is greater than 130% of the Conversion Price on each applicable trading day or (ii …

LongTermDebtTextBlock · excerpt; the full note is in the filing

NOTE 21 - Significant Related Party Transactions In addition to the information disclosed in other notes, the Company has significant related party transactions as follows: A. Name of related parties and relationships with the Company: Related Party Relationship Well Thrive Limited (WTL) Major stockholder STAR JEC INC. (StarJec) Stockholder; Albert Hsu, a Director of Aerkomm, is the Chairman AA Twin Associates Ltd. (AATWIN) Georges Caldironi, COO of Aerkomm, is sole owner EESquare Japan (EESquare JP) Yih Lieh (Giretsu) Shih, President of Aerkomm Japan, is the Director Yih Lieh (Giretsu) Shih President of Aerkomm Japan Louis Giordimaina Chief Executive Officer, Interim Chief Financial Officer and Director of the Company Aerkomm Taiwan, Inc (Aerkomm Taiwan) 48.65% investee of the Company B. Significant related party transactions: The Company has extensive transactions with its related parties. It is possible that the terms of these transactions are different from those which would result from transactions among wholly unrelated parties. a. As of March 31, 2026 and December 31, 2025: March 31, 2026 December 31, 2025 (Unaudited) Other receivable from: - Loan: EESquare JP 1 $ 66,005 $ 62,500 WTL 4 2,118,728 4,002,727 - Others: Aerkomm Taiwan, formerly known as Ejectt Inc., before it merged into Aerkomm Taiwan 3 512 520 Others 6 79,027 58,333 Total $ 2,264,272 $ 4,124,080 Prepayment to Aerkomm Taiwan, formerly known as Ejectt Inc., before it merged into Aerkomm Taiwan 3 $ 736,027 $ …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 18 - Contract Liability On March 9, 2015, the Company entered into a 10-year purchase agreement with Klingon Aerospace, Inc. (Klingon), which was formerly named as Luxe Electronic Co., Ltd. In accordance with the terms of this agreement, Klingon agreed to purchase from the Company an initial order of onboard equipment comprising an onboard system for a purchase price of $909,000, with payments to be made in accordance with a specific milestones schedule. As of March 31, 2026 and December 31, 2025, the Company received $762,000 from Klingon in milestone payments towards the equipment purchase price. As of March 31, 2026, the project remains ongoing, and since the related performance obligations have not yet been fully satisfied, the balance continues to be classified as a contract liability until Klingons acceptance. The contract liability represents an advance payment of $762,000 received from Klingon Aerospace under an agreement entered into in 2015. The Company has delivered and installed the ground equipment at the customers site; the corresponding satellite was successfully launched on April 29, 2026; the Company is awaiting final customer acceptance upon successful activation of the satellite signal and completion of customary contractual acceptance procedures. As of March 31, 2026, final customer acceptance had yet to be completed; accordingly, the Company had not satisfied all the terms under the contract to meet its performance obligation to recognize revenue. Ma …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

NOTE 24 - Segment Information The Company conducts business as a single operating segment which is based upon the Companys organizational and management structure, as well as information used by the CODM to allocate resources and other factors. The accounting policies of the segment are the same as those described in Note 2. The key measure of segment profitability that the CODM, which is the Companys CEO , uses to allocate resources and assess performance is consolidated net loss, as reported on the consolidated statements of operations. The following table presents the significant revenue and expense categories of the Companys single operating segment For the Three Months Ended March 31, 2026 2025 (Unaudited) (Unaudited) Other operating expense $ 626,214 $ 461,975 Research and development expenses 628 - Salaries expenses 1,179,389 1,091,685 Professional fee 253,233 360,319 Amortization and depreciation expense 599,128 573,922 Foreign currency exchange loss 37,192 50,614 Interest expense 255,823 267,229 Change in SAFE liabilities (120,000 ) 50,000 Stock based compensation 217,876 591,575 Loss from deconsolidation of subsidiaries 393,452 234,454 Gain on remeasurement of retained investment upon deconsolidation (8,332,715 ) - Loss from long-term investment 89,127 - Other loss (income), net 10,346 (3,041 ) Income (loss) before income tax 4,790,307 (3,678,732 ) Income tax expense - - Net income (loss) $ 4,790,307 (3,678,732 ) …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 2 - Summary of Significant Accounting Policies Unaudited Interim Financial Information The accompanying unaudited condensed consolidated balance sheet as of March 31, 2026, and the condensed consolidated statements of operations and comprehensive loss and cash flows for the three months ended March 31, 2026 and 2025 are unaudited. The unaudited interim condensed 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 Companys unaudited financial position as of March 31, 2026 and the results of operations and cash flows for the three months ended March 31, 2026 and 2025. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these three months periods are unaudited. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any other interim period or other future year. Principle of Consolidation Aerkomm consolidates the accounts of its subsidiaries, Aircom, Aircom Seychelles, Aerkomm Japan, Aircom Taiwan, Aerkomm Malta, MEPA Labs, and Mesh Technology Taiwan. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

NOTE 20 - 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 March 31, 2026 and December 31, 2025, 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 as of March 31, 2026 and December 31, 2025. March 31, 2026 December 31, 2025 (Unaudited) Restricted stock vested 5,133,696 5,133,696 Total restricted stock 5,133,696 5,133,696 On February 2, 2024, the Company issued 175,000 shares of common stock to one new subscriber for a total of $1,050,000 capital injection. On March 8, 2024, the Company issued 84,000 shares of common stock to one new subscriber for a total of $504,000 capital injection. On April 24, 2024, the Company issued 390,000 shares of common stock to one new subscriber for a total of $2,340,000 capital injection. In March 2025, the Company issued an aggregate of 109,280 shares of its common stock to new shareholders in connection with the share subscription proceeds of $527,783 received from April to May 2024. In March 2025, the Company issued an aggregate of 1,176,956 shares of its …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 25 - Subsequent Events The Company evaluated all events and transactions that from March 31, 2026 up through July 29, 2026, which is the date that these unaudited condensed consolidated financial statements are available to be issued, other than disclosed events below, there were no any material subsequent events that require disclosure in these unaudited condensed consolidated financial statements. On April 29, 2026, the Company entered into a Co-Development and Collaboration General Agreement with a Japan-based defense prime contractor and trusted service provider to the Japan Ministry of Defense. Pursuant to the General Agreement, the parties will collaborate on the development, manufacturing, and commercialization of Unmanned Aerial Systems (UAS) related products. On May 26, 2026, the Company entered into a Master Services Agreement (MSA) with a global U.S.-based satellite communications provider offering broadband, mobility, and satellite networking services across maritime, aviation, and land-based markets. Pursuant to the agreement, the provider authorized the Company to provide satellite communications products and related services for the maritime, aviation, and land sectors in Japan and Taiwan, including user terminals and Ka-band and L-band airtime products. On July 20, 2026, the Company entered into a SAFE agreement with G-Tech Optoelectronics Corp. for $2,502,800. The terms of this SAFE agreement are substantially the same as those described in Note 17. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing