Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2017 | |
Document And Entity Information | |
Entity Registrant Name | AERKOMM INC. |
Entity Central Index Key | 1,590,496 |
Document Type | S1 |
Document Period End Date | Mar. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets | |||
Cash | $ 490,840 | $ 312,173 | $ 19,498 |
Accounts receivable - related party | 3,478,900 | ||
Inventories | 209,904 | 209,729 | 111,000 |
Prepaid expenses | 270,855 | 11,784 | 125,327 |
Prepaid investment - related parties | 600,000 | ||
Prepaid investment - others | 360,000 | 100,000 | |
Other receivable - related parties | 116,180 | ||
Other receivable - others | 182,487 | 891 | |
Total Current Assets | 1,514,086 | 534,577 | 4,550,905 |
Property and Equipment | |||
Cost | 128,917 | 128,917 | 95,678 |
Accumulated depreciation | (50,031) | (43,825) | (12,365) |
Total | 78,886 | 85,092 | 83,313 |
Construction in progress | 3,660,000 | 3,660,000 | |
Net Property and Equipment | 3,738,886 | 3,745,092 | 83,313 |
Other Assets | |||
Intangible asset, net | 4,248,750 | 4,372,500 | 4,867,500 |
Goodwill | 1,105,942 | 1,105,942 | |
Deposits - related party | 2,311 | 2,483 | |
Deposits - others | 808,001 | 803,888 | 397,912 |
Total Other Assets | 6,165,004 | 6,284,813 | 5,265,412 |
Total Assets | 11,417,976 | 10,564,482 | 9,899,630 |
Current Liabilities | |||
Accrued expenses | 114,903 | 58,500 | 131,918 |
Income tax payable | 3,185 | 3,141 | 884,800 |
Other payable - related parties | 918,807 | 2,969,053 | 5,224,263 |
Other payable - others | 1,843,438 | 1,668,128 | 138,937 |
Total Current Liabilities | 2,880,333 | 4,698,822 | 6,379,918 |
Restricted stock deposit liability | 2,371 | 3,342 | 8,292 |
Total Liabilities | 2,882,704 | 4,702,164 | 6,388,210 |
Commitments and Contingency | |||
Stockholders' Equity | |||
Preferred stock, no par value Authorized - 10,000,000 shares. Issued and outstanding - none as of December 31, 2015 and 2016 | |||
Preferred stock, $0.001 par value Authorized - 50,000,000 shares. Issued and outstanding - none as of March 31, 2017 | |||
Common stock, no par value Authorized - 20,000,000 shares. Issued and outstanding - 7,575,340 (excluding restricted stock of 1,658,333 shares) shares as of December 31, 2015. | 866,160 | ||
Common stock, no par value Authorized - 210,000,000 shares. Issued and outstanding - 98,720,060 (excluding restricted stock of 6,683,340 shares) shares as of December 31, 2016. | 4,470,839 | ||
Common stock, $0.001 par value Authorized - 450,000,000 shares. Issued and outstanding - 38,842,659 (excluding restricted stock of 1,768,191 shares) shares as of March 31, 2017. | 38,842 | ||
Additional paid in capital | 7,374,771 | 80,000 | 20,000 |
Subscribed capital | 2,027,400 | 1,862,643 | |
Retained Earnings (Accumulated deficits) | (902,384) | (551,204) | 2,625,260 |
Accumulated other comprehensive loss | (3,357) | (10) | |
Total Stockholders' Equity | 8,535,272 | 5,862,268 | 3,511,420 |
Non-controlling interest in subsidiary | 50 | ||
Total Equity | 8,535,272 | 5,862,318 | 3,511,420 |
Total Liabilities and Equity | $ 11,417,976 | $ 10,564,482 | $ 9,899,630 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholder's equity: | |||
Preferred stock, par value | $ 0.001 | $ 0 | $ 0 |
Preferred stock, Authorized | 50,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, Issued | 0 | 0 | 0 |
Preferred stock, Outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0 | $ 0 |
Common stock, Authorized | 450,000,000 | 210,000,000 | 20,000,000 |
Common stock, Issued | 40,610,850 | 105,403,400 | 9,233,673 |
Common stock, Outstanding | 40,610,850 | 105,403,400 | 9,233,673 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements Of Operations And Comprehensive Loss | |||||
Net Sales | $ 6,128,900 | ||||
Cost and Expenses | |||||
Cost of sales | 1,337,905 | ||||
Operating expenses | 914,204 | 1,351,502 | 3,970,105 | 1,235,796 | 45,154 |
Total Cost and Expenses | 914,204 | 1,351,502 | 3,970,105 | 2,573,701 | 45,154 |
Income (Loss) from Operations | (914,204) | (1,351,502) | (3,970,105) | 3,555,199 | (45,154) |
Net Non-Operating Income (Loss) | 25,529 | (11,848) | (89,559) | 15 | |
Income (Loss) before Income Taxes | (888,675) | (1,363,350) | (4,059,664) | 3,555,214 | (45,154) |
Income Tax Expense (Benefit) | 2,385 | (504,000) | (883,200) | 884,800 | |
Net Income (Loss) | (891,060) | (859,350) | (3,176,464) | 2,670,414 | (45,154) |
Less: Income (Loss) Attributed to Non-Controlling Interest | |||||
Net Income (Loss) Attributable to the Company | (891,060) | (859,350) | (3,176,464) | 2,670,414 | (45,154) |
Other Comprehensive Loss | |||||
Change in foreign currency translation adjustments | (3,347) | (10) | |||
Total Comprehensive Income (Loss) | $ (894,407) | $ (859,350) | $ (3,176,474) | $ 2,670,414 | $ (45,154) |
Net Income (Loss) Per Common Share: | |||||
Basic | $ (0.0221) | $ (0.0218) | $ (0.0808) | $ 0.0841 | $ (0.002) |
Diluted | $ (0.0221) | $ (0.0218) | $ (0.0808) | $ 0.0759 | $ (0.002) |
Weighted Average Shares Outstanding - Basic | 40,277,517 | 39,424,188 | 39,335,796 | 31,752,318 | 22,374,276 |
Weighted Average Shares Outstanding - Diluted | 40,277,517 | 39,424,188 | 39,335,796 | 35,190,235 | 22,374,276 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Common Stock | Additional Paid-In Capital | Subscribed Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | Noncontrolling Interest Subsidiary | Total |
Beginning Balance, Shares at Sep. 23, 2014 | ||||||||
Beginning Balance, Amount at Sep. 23, 2014 | ||||||||
Issuance of common stock, Shares | 10,000 | |||||||
Issuance of common stock, Amount | $ 10,000 | 10,000 | 10,000 | |||||
Additional shares issued on stock split, Shares | 5,990,000 | |||||||
Additional shares issued on stock split, Amount | ||||||||
Net income (loss) | (45,154) | (45,154) | (45,154) | |||||
Ending Balance, Shares at Dec. 31, 2014 | 6,000,000 | |||||||
Ending Balance, Amount at Dec. 31, 2014 | $ 10,000 | (45,154) | (35,154) | (35,154) | ||||
Issuance of common stock, Shares | 343,673 | |||||||
Issuance of common stock, Amount | $ 850,001 | 850,001 | 850,001 | |||||
Issuance of stock warrant | 20,000 | 20,000 | 20,000 | |||||
Restricted stock vested and transferred to common stock, Shares | 1,231,667 | |||||||
Restricted stock vested and transferred to common stock, Amount | $ 6,159 | 6,159 | 6,159 | |||||
Stock compensation expense | ||||||||
Net income (loss) | 2,670,414 | 2,670,414 | 2,670,414 | |||||
Ending Balance, Shares at Dec. 31, 2015 | 7,575,340 | |||||||
Ending Balance, Amount at Dec. 31, 2015 | $ 866,160 | 20,000 | 2,625,260 | 3,511,420 | 3,511,420 | |||
Issuance of common stock, Shares | 1,440,000 | |||||||
Issuance of common stock, Amount | $ 3,600,395 | 3,600,395 | 3,600,395 | |||||
Additional shares issued on stock split, Shares | 81,138,060 | |||||||
Additional shares issued on stock split, Amount | ||||||||
Issuance of stock warrant | 40,000 | 40,000 | 40,000 | |||||
Restricted stock vested and transferred to common stock, Shares | 8,566,660 | |||||||
Restricted stock vested and transferred to common stock, Amount | $ 4,284 | 4,284 | 4,284 | |||||
Subscribed capital | 1,862,643 | 1,862,643 | 1,862,643 | |||||
Stock compensation expense | 20,000 | 20,000 | 20,000 | |||||
Other comprehensive loss | (10) | (10) | (10) | |||||
Non-controlling interest in subsidiary | 50 | 50 | ||||||
Net income (loss) | (3,176,464) | (3,176,464) | (3,176,464) | |||||
Ending Balance, Shares at Dec. 31, 2016 | 98,720,060 | |||||||
Ending Balance, Amount at Dec. 31, 2016 | $ 4,470,839 | 80,000 | 1,862,643 | (551,204) | (10) | 5,862,268 | 50 | 5,862,318 |
Issuance of common stock, Shares | 500,000 | |||||||
Issuance of common stock, Amount | $ 500 | 1,500,000 | 1,500,000 | |||||
Issuance of stock warrant | 30,000 | 30,000 | ||||||
Restricted stock vested and transferred to common stock, Shares | 724,057 | |||||||
Restricted stock vested and transferred to common stock, Amount | $ 724 | 971 | 971 | |||||
Subscribed capital | 2,027,400 | 2,027,400 | 2,027,400 | |||||
Stock compensation expense | 9,000 | 9,000 | ||||||
Other comprehensive loss | (3,357) | (3,357) | (3,357) | |||||
Reversal acquisition, Shares | (61,101,458) | |||||||
Reversal acquisition, Amount | $ (4,433,221) | (1,862,643) | 539,880 | 10 | 50 | (50) | ||
Net income (loss) | (891,060) | (891,060) | (891,060) | |||||
Ending Balance, Shares at Mar. 31, 2017 | 38,842,659 | |||||||
Ending Balance, Amount at Mar. 31, 2017 | $ 38,842 | $ 7,374,771 | $ 2,027,400 | $ (902,384) | $ (3,357) | $ 8,535,272 | $ 8,535,272 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash Flows From Operating Activities | |||||
Net income (loss) | $ (891,060) | $ (859,350) | $ (3,176,464) | $ 2,670,414 | $ (45,154) |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||
Depreciation and amortization | 129,956 | 128,982 | 526,460 | 94,444 | 421 |
Stock-based compensation | 9,000 | 20,000 | |||
Issuance of stock warrant | 30,000 | 20,000 | 40,000 | ||
Changes in operating assets and liabilities: | |||||
Accounts receivable - related party | 3,478,900 | (3,478,900) | |||
Inventories | (175) | (97,674) | (97,674) | (111,000) | |
Prepaid expenses | (259,071) | 116,327 | 25,066 | (150,393) | |
Prepaid investment - related party | (600,000) | ||||
Prepaid investment - others | (360,000) | (100,000) | |||
Other receivable - related party | 116,180 | 116,180 | (116,180) | ||
Other receivable - others | (181,596) | 11,258 | |||
Deposits - related party | (2,483) | (2,483) | |||
Deposits - others | (3,941) | (385,017) | (385,017) | (389,320) | (8,592) |
Accrued expenses | 56,403 | 107,552 | (73,418) | 131,918 | |
Income tax payable | 44 | (504,000) | (883,200) | 884,800 | |
Other payable - related parties | (22,846) | (866,327) | (2,387,412) | 3,224,263 | 2,000,000 |
Other payable - others | 175,310 | 2,450,468 | 1,511,441 | 158,937 | |
Net Cash Provided by (Used for) Operating Activities | (1,317,976) | 108,331 | (1,185,102) | 2,394,442 | 1,796,282 |
Cash Flows From Investing Activities | |||||
Purchase of property and equipment | (3,675,633) | (3,686,597) | (78,508) | (17,170) | |
Acquisitions of Intangible assets | (4,950,000) | ||||
Acquisitions of goodwill | (319,688) | ||||
Net Cash Used for Investing Activities | (3,675,633) | (4,006,285) | (5,028,508) | (17,170) | |
Cash Flows From Financing Activities | |||||
Proceeds from issuance of common stock | 1,500,000 | 3,550,395 | 3,600,395 | 864,452 | 10,000 |
Proceeds from subscribed capital | 1,862,643 | ||||
Payments on repurchase of unvested restricted stocks | (666) | ||||
Contribution from non-controlling interest in subsidiary | 50 | ||||
Net Cash Provided by Financing Activities | 1,500,000 | 3,550,395 | 5,462,422 | 864,452 | 10,000 |
Net Increase (Decrease) in Cash | 182,024 | (16,907) | 271,035 | (1,769,614) | 1,789,112 |
Cash from acquired subsidiaries | 21,650 | ||||
Cash, Beginning of Period | 312,173 | 19,498 | 19,498 | 1,789,112 | |
Foreign currency translation effect on cash | (3,357) | (10) | |||
Cash, End of Period | 490,840 | 2,591 | 312,173 | 19,498 | 1,789,112 |
Non-cash operating and financing activities: | |||||
Restricted stock deposit liability transferred to common stock | 971 | 2,582 | 4,950 | 8,292 | |
Other payable to related parties transferred to subscribed capital | 2,027,400 | ||||
Net payment for acquisition of subsidiaries during the period ended December 31, 2016: | |||||
Cash | 21,650 | ||||
Inventories | 1,055 | ||||
Prepaid expenses | 2,784 | ||||
Other receivable | 12,149 | ||||
Property and equipment, net | 6,642 | ||||
Goodwill | 1,105,942 | ||||
Other assets | 20,959 | ||||
Other payable | (151,131) | ||||
Non-controlling interest | (50) | ||||
Total payment for acquisition of subsidiaries | 1,020,000 | ||||
Transferred from prepaid investment | (700,000) | ||||
Net payment for acquisition of subsidiaries | $ 320,000 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
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. On December 28, 2016, Aircom Pacific Inc. (“Aircom”) purchased 700,000 shares of Aerkomm’s common stock represented approximately 86.3% of Aerkomm’s issued and outstanding common stock as of the closing. As a result of the transaction, Aircom became the controlling shareholder of Aerkomm. On February 13, 2017, Aerkomm entered into a share exchange agreement (“the 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. 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. Aircom Pacific Inc. (“Aircom”) was incorporated on September 29, 2014 under the laws of the State of California. 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. 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. On December 15, 2016, Aircom acquired a wholly owned subsidiary, Aircom Japan, Inc. (“Aircom Japan”), a corporation formed under the laws of Japan. Aircom and its subsidiaries are full service providers of in-flight connectivity and entertainment solutions with their primary market in the Asian Pacific region. Aerkomm and its subsidiaries (“the Company”) have not generated significant revenues and will incur additional expenses as a result of being a public reporting company. If the Company is unable to obtain additional working capital, the Company’s business may fail. As of December 31, 2016, the Company generated a net loss of $3,176,464 and had working capital deficiency of $4,164,245, which raises substantial doubt about its ability to continue as a going concern. Currently, the Company has taken measures that management believes will improve its financial position by financing activities, short-term borrowings and equity contributions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 2 - Summary of Significant Accounting Policies | Reverse Acquisition On February 13, 2017, Aerkomm completed the reverse acquisition of Aircom pursuant to the Exchange Agreement. As a result of the reverse acquisition, Aircom became Aerkomm’s wholly-owned subsidiary. For accounting purposes, the share transaction with Aircom was treated as a reverse acquisition, with Aircom as the acquirer and Aerkomm as the acquired party. Unless the context suggests otherwise, “the Company” referred for the periods prior to the consummation of the reverse acquisition is Aircom and its consolidated subsidiaries. Unaudited Interim Financial Information The accompanying consolidated balance sheet as of March 31, 2017, the consolidated statements of operations and comprehensive loss and cash flows for the three-month periods ended March 31, 2016 and 2017 and the consolidated statement of changes in equity for the three-month period ended March 31, 2017 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 March 31, 2017 and results of operations and cash flows for the three-month periods ended March 31, 2016 and 2017. The financial data and the other information disclosed in these notes to the consolidated financial statements related to these three-month periods are unaudited. The results of the three-month periods ended March 31, 2016 and 2017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 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 and Aircom Japan. All significant intercompany accounts and transactions have been eliminated in consolidation. All of the entities in these consolidated financial statements have adopted fiscal year end of December 31. Reclassifications of Prior Year Presentation Certain prior year balance sheet amounts have been reclassified for consistency with the current year 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 and accounts receivable. As of December 31, 2016 and 2015, the total balances of cash in bank were insured by the Federal Deposit Insurance Corporation (FDIC) and foreign financial institution deposits insurance. As of March 31, 2017 the total balance of cash in bank exceeded the amount insured by FDIC and foreign financial institution insurance for the Company by approximately $217,000. 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 the historical collection experience as well as its internal credit policies. The Company conducts extensive transactions with its related parties. Revenue for the year ended December 31, 2015 was solely from related parties. Inventories Inventories are recorded at the lower of weighted-average cost or market. 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 method over the following estimated service lives: computer equipment – 3 to 5 years and furniture and fixtures – 5 years. Construction costs for on-flight entertainment equipment not yet in service are recorded under construction in progress. 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 non-operating 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 each of the years in the three-year period ended December 31, 2016 and the three-month periods ended March 31, 2016 and 2017. 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. As of December 31, 2015 and 2016, and March 31, 2017, 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 and other payable approximated their fair value due to the short-term nature of these financial instruments. Revenue Recognition The Company recognizes sales when the earning process is completed, as evidenced by an arrangement with the customer, transfer of title and acceptance, if applicable, has occurred, as well as the price is fixed or determinable, and collection is reasonably assured. Research and Development Costs Research and development costs are charged to operating expenses as incurred. For the years ended December 31, 2014, 2015 and 2016, the Company incurred approximately $0, $25,000 and $1,597,000 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. 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 as a separate component of stockholder’s 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, shared to be purchased by employees under the Company’s employee stock purchase plan. Diluted earnings (loss) per common share presented for the year ended December 31, 2014, 2015 and 2016, and the three-month period ended March 31, 2016 and 2017 have taken into account the stock split in June 2016 and share exchange for reverse acquisition on February 13, 2017 (see Note 1). Subsequent Events The Company has evaluated events and transactions after the reported year-end up to May 19, 2017, the date on which these consolidated financial statements were available to be issued. All subsequent events requiring recognition as of December 31, 2016 have been incorporated into these consolidated financial statements. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 3. Recent Accounting Pronouncements | Financial Instruments In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for fiscal years beginning after March 15, 2017, including interim periods within those fiscal years and for the Company in its first quarter of 2018. The Company does not believe the adoption of ASU 2016-01 will have a material impact on its consolidated financial statements. 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 March 15, 2020, including interim periods within those fiscal years and for the Company in its first quarter of 2021, and early adoption is permitted. The Company does not believe the adoption of ASU 2016-13 will have a material impact 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 March 15, 2019, and interim periods within annual periods beginning after March 15, 2020, and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2017-04 on its consolidated financial statements. Stock Compensation In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplifies certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification on the statement of cash flows. ASU 2016-09 will be effective for annual periods beginning after March 15, 2017, and interim periods within annual periods beginning after March 15, 2018 and for the Company in its first quarter of 2019, and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2016-09 on its consolidated financial statements. Leases 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. ASU 2016-02 will be effective for fiscal years beginning after March 15, 2018, including interim periods within those fiscal years and for the Company in its first quarter of 2019, and early adoption is permitted. The Company is currently evaluating the timing of its adoption and the impact of adopting ASU 2016-02 on its consolidated financial statements. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for annual periods beginning after March 15, 2017, and interim periods within annual periods beginning after March 15, 2018 and for the Company in its first quarter of 2019, and early adoption is permitted. Subsequently, the FASB issued the following standards related to ASU 2014-09: ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”); ASU No. 2016-10, “Revenue from Contracts with Customers” (Topic 606): Identifying “Performance Obligations and Licensing” (“ASU 2016-10”); and ASU No. 2016-12, “Revenue from Contracts with Customers” (Topic 606): “Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”). The new revenue standards may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company currently expects to adopt the new revenue standards in its first quarter of 2019 utilizing the full retrospective transition method. The Company does not expect adoption of the new revenue standards to have a material impact on its consolidated financial statements. Income Taxes In October 2016, FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory” (“ASU 2016-16”), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for annual reporting periods beginning after March 15, 2017 and for the Company in its first quarter of 2018. The Company is currently evaluating the impact of adopting ASU 2016-16 on its consolidated financial statements. Business Combinations In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations” (Topic 805): Clarifying the Definition of a Business, which a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. ASU 2017-01 will be effective for annual periods beginning after March 15, 2017, and interim periods within annual periods beginning after March 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2017-01 on its consolidated financial statements. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 4. Inventories | As of December 31, 2016 and 2015 and March 31, 2017, inventories consisted of the following: December 31, March 31, 2015 2016 2017 (Unaudited) Satellite equipment for sale under construction $ 99,971 $ 197,645 $ 197,645 Parts 11,029 11,029 11,029 Supplies - 6,437 6,612 111,000 215,111 215,286 Allowance for inventory loss - (5,382 ) (5,382 ) Net $ 111,000 $ 209,729 $ 209,904 |
Prepaid Investment
Prepaid Investment | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 5. Prepaid Investment | On December 30, 2014, the Company signed a stock purchase agreement to acquire 100% ownership of a Japanese company, Dadny Japan Inc, which is 100% owned by one of the CompanyÂ’s shareholders. The price for the acquisition is $600,000. In November 2016, Dadny Japan Inc. changed its name to Aircom Japan, Inc. In December 2016, the acquisition was completed. On May 15, 2015, the Company signed a stock purchase agreement to acquire 100% ownership of a Hong Kong company, Aircom Pacific Inc Limited, for $100,000 in total. In October 2016, the acquisition process was completed. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 6. Property and Equipment | For the years ended December 31, 2016 and 2015 and the three-month period ended March 31, 2017, the changes in cost of property and equipment were as follows: Computer software and equipment Furniture and fixture Total January 1, 2015 $ 17,170 $ - $ 17,170 Addition 75,115 3,393 78,508 December 31, 2015 92,285 3,393 95,678 Addition 33,239 - 33,239 December 31, 2016 125,524 3,393 128,917 Addition - - - March 31, 2017 (Unaudited) $ 125,524 $ 3,393 $ 128,917 As December 31, 2016 and March 31, 2017, construction in progress of $3,660,000 is the payment for the construction of ground station equipment relating to satellite communication system and in-flight system for the CompanyÂ’s internal use. As of March 31, 2017, the projects were still in progress. For the years ended December 31, 2016 and 2015 and three-month period ended March 31, 2017, the changes in accumulated depreciation for property and equipment were as follows: Computer software and equipment Furniture and fixture Total January 1, 2015 $ 421 $ - $ 421 Addition 11,661 283 11,944 December 31, 2015 12,082 283 12,365 Addition 30,781 679 31,460 December 31, 2016 42,863 962 43,825 Addition 6,037 169 6,206 March 31, 2017 (Unaudited) $ 48,900 $ 1,131 $ 50,031 |
Intangible Asset, Net
Intangible Asset, Net | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 7. Intangible Asset, Net | For the years ended December 31, 2016 and 2015 and three-month period ended March 31, 2017, the changes in cost and accumulated amortization for intangible asset were as follows: Satellite System software Accumulated amortization Net January 1, 2015 $ - $ - $ - Addition 4,950,000 82,500 4,867,500 December 31, 2015 4,950,000 82,500 4,867,500 Addition - 495,000 (495,000 ) December 31, 2016 4,950,000 577,500 4,372,500 Addition - 123,750 (123,750 ) March 31, 2017 (Unaudited) $ 4,950,000 $ 701,250 $ 4,248,750 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 8. Income Taxes | Income tax expense (benefit) for the years ended December 31, 2014, 2015 and 2016 consisted of the following: 2014 2015 2016 Current: Federal $ - $ 884,000 $ (884,000 ) State - 800 800 Total $ - $ 884,800 $ (883,200 ) The following table presents a reconciliation of the income tax at statutory tax rate and the CompanyÂ’s income tax at effective tax rate for the years ended December 31, 2016, 2015 and 2014. 2014 2015 2016 Tax expense (benefit) at statutory rate $ (15,000 ) $ 987,000 $ (1,158,300 ) Prepayment from related parties - 286,300 (286,300 ) Net operating loss carryforwards (NOLs) 15,000 (345,000 ) 717,600 Amortization expense - (28,100 ) (168,300 ) Others - (15,400 ) 12,100 Tax at effective tax rate $ - $ 884,800 $ (883,200 ) Deferred tax assets (liability) as of December 31, 2015 and 2016 consist of: 2015 2016 Prepayment from related parties $ 335,000 $ - Net operating loss carryforwards (NOLs) 59,000 519,000 Tax credit carryforwards 26,000 63,000 Excess of tax amortization over book amortization (34,000 ) (230,000 ) Others - 43,000 386,000 395,000 Valuation allowance (386,000 ) (395,000 ) 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 $15,000, $371,000 and $9,000 for the years ended December 31, 2014, 2015 and 2016, respectively. As of December 31, 2016, the Company had federal NOLs and State NOLs of approximately $843,000 and $1,836,000, respectively, available to reduce future federal and State taxable income, expiring in 2036. As of December 31, 2016, the Company has Japan NOLs of approximately $406,000 available to reduce future Japan taxable income, expiring in 2019. As of December 31, 2016, the Company had approximately $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 December 31, 2016 and 2015, the Company had approximately $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 CompanyÂ’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 | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 9. 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, 2017, there were no Preferred stock shares outstanding. 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 450,000,000 shares of common stock, with par value of $0.001. Aircom had restricted stock purchase agreement with certain employees or consultants granted on February 2, 2015. The restricted shares were issued at fair values determined by the board of directors at the grant date. According to the agreement, in the event of the voluntary termination of purchaser’s continuous service status, Aircom shall have the exclusive option to repurchase all or any portion of the unvested shares held by purchaser at the original purchase price per share and the vested shares held by purchaser at the fair market value per share as of the termination date. On February 13, 2017, all of Aircom’s restricted stocks of 27,566,670 shares were converted to Aerkomm’s restricted stock of 10,279,738 shares at the ratio of 2.681651 to 1, pursuant to the Exchange Agreement (see Note 1). The re-purchase price was adjusted from $0.0005 to $0.00134 per share. As of December 31, 2015 and 2016 and March 31, 2017, the restricted stocks shares (after share exchange) consisted of the following: 2) Common Stock - continued: December 31, March 31, 2015 2016 2017 (Unaudited) Restricted stock - vested 4,592,943 7,787,490 8,511,547 Restricted stock - unvested 6,184,000 2,492,248 1,768,191 Total restricted stock 10,776,943 10,279,738 10,279,738 The unvested shares of restricted stock were recorded under deposit liability account awaiting future conversion to common stock when they become vested. On March 31, 2017, the Company completed its private placement offering of 500,000 common shares at a price of $3 per share for the aggregate amount of $1,500,000. At a special meeting of the Board of Directors of the Company held on May 5, 2017, the Board of Directors of the Company approved the adoption of the Aerkomm, Inc. 2017 Equity Incentive Plan (the “Aerkomm Plan”), and the reservation of 5,000,000 shares of the Company’s common stock for future issuance under the Aerkomm Plan. 3) Stock Warrant: As of December 31, 2016, Aircom had issued stock warrants of $60,000 to a service provider as payment for service. The stock warrants allow the service provider to purchase a number of shares of common stock equal to 85% of the of the share price of its common stock in the first subsequent qualifying equity financing event, up to $60,000 in total, with exercise price of $0.01 per share. On February 13, 2017, these stock warrants were converted to Aerkomm’s stock warrants pursuant to the Exchange Agreement (see Note 1). For the three-month period ended on March 31, 2017, Aerkomm issued stock warrants of $30,000 to the service provider as payment for service. The Company recorded the $90,000 aggregated total as additional paid-in capital. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 10. Related Party Transactions | A. Name of related parties and relationships with the Company: Related Party Relationship Daniel Shih (Daniel) Shareholder, AircomÂ’s CEO and CFO as of March 31, 2017; Shareholder as of the date of this report Jan Yung Lin (Jan) Secretary, shareholder and AircomÂ’s Secretary Felix Fong Shareholder Jeffrey Wun Shareholder as of March 31, 2017; Shareholder and AircomÂ’s CEO as of the date of this report Jiun Sheuan Yang Shareholder Tzu-Ling Hsu Shareholder Bunny Wu Shareholder Giretsu Shih President of Aircom Japan Capricorn Union Limited (Capricorn) 100% owned by Daniel Dadny Japan 100% owned by Capricorn before the acquisition dMobile System Co. Ltd. (dMobile) 100% owned by Daniel Klingon Aerospace, Inc. (Klingon) Daniel was the chairman Law Office of Jan Yung Lin 100% owned by Jan Priceplay.com, Inc. (PPUS) Daniel is the chairman 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 December 31, 2016 and 2015 and March 31, 2017, December 31, March 31, 2015 2016 2017 (Unaudited) Accounts receivable from dMobile $ 3,478,900 $ - $ - Prepayment to Capricorn for acquisition of Dadny Japan $ 600,000 $ - $ - Other receivable from PPUS $ 80,500 $ - $ - Daniel 35,680 - - Total $ 116,180 $ - $ - Deposit to Daniel $ - $ 2,483 $ 2,311 Other payable to: dMobile $ 3,950,000 $ - $ - Klingon 762,000 762,000 762,000 PPUS 387,500 737,000 - PPTW 80,000 819,300 - Jeffrey Wun 13,399 3,594 7,712 Law Office of Jan Yung Lin 10,000 - - Tzu-Ling Hsu 5,929 6,844 9,695 Jiun Sheuan Yang 4,848 2,491 4,983 Jan 275 - - dMobile - 471,100 - Giretsu Shih - 80,346 16,803 Daniel 10,312 52,018 113,743 Bunny Wu - 32,148 - Felix Fong - 2,212 3,871 Total $ 5,224,263 $ 2,969,053 $ 918,807 Subscribed capital: PPTW $ - $ - $ 819,300 PPUS - - 737,000 dMobile - - 471,100 Total $ - $ - $ 2,027,400 As of March 31, 2017, these related parties converted their receivable from the Company to subscribed capital. The issuance of stock shares is subject to the approval of the Board of Directors. b. For the year ended December 31, 2014, 2015 and 2016 and three-month periods ended March 31, 2016 and 2017, Three-Month Period Ended March 31, Year Ended December 31, (Unaudited) 2014 2015 2016 2016 2017 Sales to dMobile $ - $ 5,478,900 $ - $ - $ - PPUS - 650,000 - - - Total $ - $ 6,128,900 $ - $ - $ - 100% of the CompanyÂ’s sales for the year ended December 31, 2015 were to related parties. Three-Month Period Ended March 31, Year Ended December 31, (Unaudited) 2014 2015 2016 2016 2017 Intangible purchase from dMobile $ - $ 4,950,000 $ - $ - $ - Legal expenses paid to Law Office of Jan Yung Lin $ - $ 51,431 $ 10,000 $ 10,000 $ - Rent expenses paid to Daniel $ - $ - $ - $ - $ 3,566 |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 11. 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 provides for the granting of incentive stock options and non-statutory stock options to employees, consultants and outside directors of Aircom. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an Option. 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 5,444,407 shares to Aircom’s stock option holders. One-third of Aircom 2014 Plan stock option shares will be vested as of the first anniversary of the time the option shares are granted or the employee’s 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 Plan shall become 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. 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 $0 and $20,000 for the years ended December 31, 2015 and 2016, respectively, and $0 and $9,000 for the three-month periods ended March 31, 2016 and 2017, 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 The Company used the calculated value method which substitutes the historical volatility of a public company in the same industry of the Company to estimate the expected volatility of the Company’s share price to measure the fair value of options granted under Aircom 2014 Plan. 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 Aircom 2014 Plan. 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 2015 and 2016 under Aircom 2014 Plan as follows: Assumptions Expected term 3 years Expected volatility 40.11% - 45.58% Expected dividends 0% Risk-free interest rate 0.71 – 1.08% Forfeiture rate 5% 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, 2015 and 2016 and March 31, 2017 was as follows: Number of shares Weighted Average Exercise Price Per Share Weighted Average Fair Value Per Share Options outstanding at January 1, 2015 - $ - $ - Granted 4,139,241 0.0013 0.0004 Exercised - - - Forfeited/Cancelled - - - Options outstanding at January 1, 2016 4,139,241 0.0013 0.0004 Granted 1,305,166 0.6704 0.2108 Exercised - - - Forfeited/Cancelled - - - Options outstanding at December 31, 2016 5,444,407 0.1617 0.0508 Granted - - - Exercised - - - Forfeited/Cancelled (763,418 ) 0.6550 0.2059 Options outstanding at March 31, 2017 (unaudited) 4,680,989 0.0813 0.0255 Options exercisable at December 31, 2015 - - - Options exercisable at December 31, 2016 2,524,357 0.0013 0.0004 Options exercisable at March 31, 2017 (unaudited) 2,868,258 0.0013 0.0004 A summary of the status of nonvested shares under Aircom 2014 Plan as of March 31, 2017 and December 31, 2016 was as follows: Number of Shares Weighted Average Fair Value Per Share Options nonvested at January1, 2015 - $ - Granted 4,139,241 0.0004 Vested - - Forfeited/Cancelled - - Options nonvested at January1, 2016 4,139,241 0.0004 Granted 1,305,166 0.2108 Vested (2,524,357 ) 0.0004 Forfeited/Cancelled - - Options nonvested at December 31, 2016 2,920,050 0.0944 Granted - - Vested (343,901 ) 0.0004 Forfeited/Cancelled (763,418 ) 0.2059 Options nonvested at March 31, 2017 (unaudited) 1,812,731 0.0653 As of December 31, 2015 and 2016 and March 31, 2017, there were approximately $2,000, $94,000 and $85,000, respectively, of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under Aircom 2014 Plan. 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 - 3 years. |
Commitments and Contingency
Commitments and Contingency | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 12. Commitments and Contingency | As of March 31, 2017, the Company’s significant commitments and contingency are summarized as follows: Commitments 1) The Company has one lease for its Fremont, California office expiring in May 2017, which was renewed and will expire in May 2020. Rental expense was $0, $39,045 and $62,472 for the years ended December 31, 2014, 2015 and 2016, respectively, and $15,618 and $15,618 for three-month periods ended March 31, 2016 and 2017, respectively. As of March 31, 2017, future minimum lease payment obligation is $74,872 for the next twelve-month period ending March 31, 2018. The company has another lease for its Japan office expiring July 2018. Rental expense was approximately $8,587 for the three-month period ended March 31, 2017. As of March 31, 2017, future minimum lease payment obligation is $35,014, including the 8% Japan consumption tax, for the next twelve-month ending March 31, 2018. 2) The Company has a sales agreement with dMobile, a related party, for satellite ground station equipment. Future additional revenue receivable as of March 31, 2017 is $1,501,100 for the next twelve-month period ending March 31, 2018. In March 2017, the Company entered into a satellites service agreement (the Agreement) with a Japanese company (Company J). The agreement is effective on March 15, 2017 and will expire three years from the effective date. However, the agreement shall continue to be effective so long as any service is still effective. According to the Agreement, the Company shall prepay the total amount of $285,300 and the deposit of $95,100 on April 15, 2017. The prepayment of $285,300 shall be applied to monthly service charge by Company J based on the terms defined in the Agreement. Contingency The Company entered into a 3-year digital transmission service agreement with Asia Satellite Telecommunication Company Limited (“Asia Sat”) on July 25, 2015. As of March 31, 2017, Asia Sat stipulates that the Company is in debt of $8,013,495 to Asia Sat, which includes unpaid service fees, a default payment in the form of liquidated sum and interest. The default payment includes total future payments of $7,411,616 due through March 31, 2018, subtracting the deposit of $775,000 made to Asia Sat. The Company disagreed with the payable balance of $8,013,495 and had recorded $1,376,879 payable to Asia Sat as of March 31, 2017. On July 25, 2016, Asia Sat commenced arbitration against the Company. The Company’s present intention is to make an attempt at settlement. On November 21, 2016, the Hong Kong International Arbitration Centre (“HKIAC”) appointed a sole arbitrator to hear the dispute. On January 12, 2017, the Company introduced a counterclaim for misrepresentations made to induce entry into the Agreement. The oral hearing has been scheduled for September 26 and 27, 2017. The outcome is still uncertain as of the date of this report. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Reverse Acquisition | On February 13, 2017, Aerkomm completed the reverse acquisition of Aircom pursuant to the Exchange Agreement. As a result of the reverse acquisition, Aircom became Aerkomm’s wholly-owned subsidiary. For accounting purposes, the share transaction with Aircom was treated as a reverse acquisition, with Aircom as the acquirer and Aerkomm as the acquired party. Unless the context suggests otherwise, “the Company” referred for the periods prior to the consummation of the reverse acquisition is Aircom and its consolidated subsidiaries. |
Unaudited Interim Financial Information | The accompanying consolidated balance sheet as of March 31, 2017, the consolidated statements of operations and comprehensive loss and cash flows for the three-month periods ended March 31, 2016 and 2017 and the consolidated statement of changes in equity for the three-month period ended March 31, 2017 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 CompanyÂ’s financial position as of March 31, 2017 and results of operations and cash flows for the three-month periods ended March 31, 2016 and 2017. The financial data and the other information disclosed in these notes to the consolidated financial statements related to these three-month periods are unaudited. The results of the three-month periods ended March 31, 2016 and 2017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 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 and Aircom Japan. All significant intercompany accounts and transactions have been eliminated in consolidation. All of the entities in these consolidated financial statements have adopted fiscal year end of December 31. |
Reclassifications of Prior Year Presentation | Certain prior year balance sheet amounts have been reclassified for consistency with the current year 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 and accounts receivable. As of December 31, 2016 and 2015, the total balances of cash in bank were insured by the Federal Deposit Insurance Corporation (FDIC) and foreign financial institution deposits insurance. As of March 31, 2017 the total balance of cash in bank exceeded the amount insured by FDIC and foreign financial institution insurance for the Company by approximately $217,000. 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 the historical collection experience as well as its internal credit policies. The Company conducts extensive transactions with its related parties. Revenue for the year ended December 31, 2015 was solely from related parties. |
Inventories | Inventories are recorded at the lower of weighted-average cost or market. 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 method over the following estimated service lives: computer equipment – 3 to 5 years and furniture and fixtures – 5 years. Construction costs for on-flight entertainment equipment not yet in service are recorded under construction in progress. 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 non-operating 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 each of the years in the three-year period ended December 31, 2016 and the three-month periods ended March 31, 2016 and 2017. |
Goodwill and Purchased Intangible Assets | The CompanyÂ’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. As of December 31, 2015 and 2016, and March 31, 2017, 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 and other payable approximated their fair value due to the short-term nature of these financial instruments. |
Revenue Recognition | The Company recognizes sales when the earning process is completed, as evidenced by an arrangement with the customer, transfer of title and acceptance, if applicable, has occurred, as well as the price is fixed or determinable, and collection is reasonably assured. |
Research and Development Costs | Research and development costs are charged to operating expenses as incurred. For the years ended December 31, 2014, 2015 and 2016, the Company incurred approximately $0, $25,000 and $1,597,000 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 periodÂ’s income tax liabilities are added to or deducted from the current periodÂ’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 CompanyÂ’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. |
Translation Adjustments | If a foreign subsidiaryÂ’s functional currency is the local currency, translation adjustments will result from the process of translating the subsidiaryÂ’s financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported under other comprehensive income as a separate component of stockholderÂ’s 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, shared to be purchased by employees under the CompanyÂ’s employee stock purchase plan. Diluted earnings (loss) per common share presented for the year ended December 31, 2014, 2015 and 2016, and the three-month period ended March 31, 2016 and 2017 have taken into account the stock split in June 2016 and share exchange for reverse acquisition on February 13, 2017 (see Note 1). |
Subsequent Events | The Company has evaluated events and transactions after the reported year-end up to May 19, 2017, the date on which these consolidated financial statements were available to be issued. All subsequent events requiring recognition as of December 31, 2016 have been incorporated into these consolidated financial statements. |
Inventories (Table)
Inventories (Table) | 3 Months Ended |
Mar. 31, 2017 | |
Inventories Table | |
Schedule of Inventories | As of December 31, 2016 and 2015 and March 31, 2017, inventories consisted of the following: December 31, March 31, 2015 2016 2017 (Unaudited) Satellite equipment for sale under construction $ 99,971 $ 197,645 $ 197,645 Parts 11,029 11,029 11,029 Supplies - 6,437 6,612 111,000 215,111 215,286 Allowance for inventory loss - (5,382 ) (5,382 ) Net $ 111,000 $ 209,729 $ 209,904 |
Property and Equipment (Table)
Property and Equipment (Table) | 3 Months Ended |
Mar. 31, 2017 | |
Property And Equipment Table | |
Changes in cost of property and equipment | For the years ended December 31, 2016 and 2015 and the three-month period ended March 31, 2017, the changes in cost of property and equipment were as follows: Computer software and equipment Furniture and fixture Total January 1, 2015 $ 17,170 $ - $ 17,170 Addition 75,115 3,393 78,508 December 31, 2015 92,285 3,393 95,678 Addition 33,239 - 33,239 December 31, 2016 125,524 3,393 128,917 Addition - - - March 31, 2017 (Unaudited) $ 125,524 $ 3,393 $ 128,917 |
Changes in accumulated depreciation for property and equipment | For the years ended December 31, 2016 and 2015 and three-month period ended March 31, 2017, the changes in accumulated depreciation for property and equipment were as follows: Computer software and equipment Furniture and fixture Total January 1, 2015 $ 421 $ - $ 421 Addition 11,661 283 11,944 December 31, 2015 12,082 283 12,365 Addition 30,781 679 31,460 December 31, 2016 42,863 962 43,825 Addition 6,037 169 6,206 March 31, 2017 (Unaudited) $ 48,900 $ 1,131 $ 50,031 |
Intangible Asset Net (Table)
Intangible Asset Net (Table) | 3 Months Ended |
Mar. 31, 2017 | |
Intangible Asset Net Table | |
Intangible Asset, Net | For the years ended December 31, 2016 and 2015 and three-month period ended March 31, 2017, the changes in cost and accumulated amortization for intangible asset were as follows: Satellite System software Accumulated amortization Net January 1, 2015 $ - $ - $ - Addition 4,950,000 82,500 4,867,500 December 31, 2015 4,950,000 82,500 4,867,500 Addition - 495,000 (495,000 ) December 31, 2016 4,950,000 577,500 4,372,500 Addition - 123,750 (123,750 ) March 31, 2017 (Unaudited) $ 4,950,000 $ 701,250 $ 4,248,750 |
Income Taxes (Table)
Income Taxes (Table) | 3 Months Ended |
Mar. 31, 2017 | |
Income Taxes Table | |
Income tax expense (benefit) | 2014 2015 2016 Current: Federal $ - $ 884,000 $ (884,000 ) State - 800 800 Total $ - $ 884,800 $ (883,200 ) |
Reconciliation of the income tax at statutory tax rate | 2014 2015 2016 Tax expense (benefit) at statutory rate $ (15,000 ) $ 987,000 $ (1,158,300 ) Prepayment from related parties - 286,300 (286,300 ) Net operating loss carryforwards (NOLs) 15,000 (345,000 ) 717,600 Amortization expense - (28,100 ) (168,300 ) Others - (15,400 ) 12,100 Tax at effective tax rate $ - $ 884,800 $ (883,200 ) |
Deferred tax assets (liability) | 2015 2016 Prepayment from related parties $ 335,000 $ - Net operating loss carryforwards (NOLs) 59,000 519,000 Tax credit carryforwards 26,000 63,000 Excess of tax amortization over book amortization (34,000 ) (230,000 ) Others - 43,000 386,000 395,000 Valuation allowance (386,000 ) (395,000 ) Net $ - $ - |
Capital Stock (Table)
Capital Stock (Table) | 3 Months Ended |
Mar. 31, 2017 | |
Capital Stock Table | |
Common Stock - continued | December 31, March 31, 2015 2016 2017 (Unaudited) Restricted stock - vested 4,592,943 7,787,490 8,511,547 Restricted stock - unvested 6,184,000 2,492,248 1,768,191 Total restricted stock 10,776,943 10,279,738 10,279,738 |
Related Party Transactions (Tab
Related Party Transactions (Table) | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions Table | |
Related Party Transactions | Related Party Relationship Daniel Shih (Daniel) Shareholder, AircomÂ’s CEO and CFO as of March 31, 2017; Shareholder as of the date of this report Jan Yung Lin (Jan) Secretary, shareholder and AircomÂ’s Secretary Felix Fong Shareholder Jeffrey Wun Shareholder as of March 31, 2017; Shareholder and AircomÂ’s CEO as of the date of this report Jiun Sheuan Yang Shareholder Tzu-Ling Hsu Shareholder Bunny Wu Shareholder Giretsu Shih President of Aircom Japan Capricorn Union Limited (Capricorn) 100% owned by Daniel Dadny Japan 100% owned by Capricorn before the acquisition dMobile System Co. Ltd. (dMobile) 100% owned by Daniel Klingon Aerospace, Inc. (Klingon) Daniel was the chairman Law Office of Jan Yung Lin 100% owned by Jan Priceplay.com, Inc. (PPUS) Daniel is the chairman |
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 December 31, 2016 and 2015 and March 31, 2017, December 31, March 31, 2015 2016 2017 (Unaudited) Accounts receivable from dMobile $ 3,478,900 $ - $ - Prepayment to Capricorn for acquisition of Dadny Japan $ 600,000 $ - $ - Other receivable from PPUS $ 80,500 $ - $ - Daniel 35,680 - - Total $ 116,180 $ - $ - Deposit to Daniel $ - $ 2,483 $ 2,311 Other payable to: dMobile $ 3,950,000 $ - $ - Klingon 762,000 762,000 762,000 PPUS 387,500 737,000 - PPTW 80,000 819,300 - Jeffrey Wun 13,399 3,594 7,712 Law Office of Jan Yung Lin 10,000 - - Tzu-Ling Hsu 5,929 6,844 9,695 Jiun Sheuan Yang 4,848 2,491 4,983 Jan 275 - - dMobile - 471,100 - Giretsu Shih - 80,346 16,803 Daniel 10,312 52,018 113,743 Bunny Wu - 32,148 - Felix Fong - 2,212 3,871 Total $ 5,224,263 $ 2,969,053 $ 918,807 Subscribed capital: PPTW $ - $ - $ 819,300 PPUS - - 737,000 dMobile - - 471,100 Total $ - $ - $ 2,027,400 As of March 31, 2017, these related parties converted their receivable from the Company to subscribed capital. The issuance of stock shares is subject to the approval of the Board of Directors. b. For the year ended December 31, 2014, 2015 and 2016 and three-month periods ended March 31, 2016 and 2017, Three-Month Period Ended March 31, Year Ended December 31, (Unaudited) 2014 2015 2016 2016 2017 Sales to dMobile $ - $ 5,478,900 $ - $ - $ - PPUS - 650,000 - - - Total $ - $ 6,128,900 $ - $ - $ - 100% of the CompanyÂ’s sales for the year ended December 31, 2015 were to related parties. Three-Month Period Ended March 31, Year Ended December 31, (Unaudited) 2014 2015 2016 2016 2017 Intangible purchase from dMobile $ - $ 4,950,000 $ - $ - $ - Legal expenses paid to Law Office of Jan Yung Lin $ - $ 51,431 $ 10,000 $ 10,000 $ - Rent expenses paid to Daniel $ - $ - $ - $ - $ 3,566 |
Stock Based Compensation (Table
Stock Based Compensation (Table) | 3 Months Ended |
Mar. 31, 2017 | |
Stock Based Compensation Table | |
estimate the fair value assumptions | Assumptions Expected term 3 years Expected volatility 40.11% - 45.58% Expected dividends 0% Risk-free interest rate 0.71 – 1.08% Forfeiture rate 5% |
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, 2015 - $ - $ - Granted 4,139,241 0.0013 0.0004 Exercised - - - Forfeited/Cancelled - - - Options outstanding at January 1, 2016 4,139,241 0.0013 0.0004 Granted 1,305,166 0.6704 0.2108 Exercised - - - Forfeited/Cancelled - - - Options outstanding at December 31, 2016 5,444,407 0.1617 0.0508 Granted - - - Exercised - - - Forfeited/Cancelled (763,418 ) 0.6550 0.2059 Options outstanding at March 31, 2017 (unaudited) 4,680,989 0.0813 0.0255 Options exercisable at December 31, 2015 - - - Options exercisable at December 31, 2016 2,524,357 0.0013 0.0004 Options exercisable at March 31, 2017 (unaudited) 2,868,258 0.0013 0.0004 |
Summary of nonvested shares | Number of Shares Weighted Average Fair Value Per Share Options nonvested at January1, 2015 - $ - Granted 4,139,241 0.0004 Vested - - Forfeited/Cancelled - - Options nonvested at January1, 2016 4,139,241 0.0004 Granted 1,305,166 0.2108 Vested (2,524,357 ) 0.0004 Forfeited/Cancelled - - Options nonvested at December 31, 2016 2,920,050 0.0944 Granted - - Vested (343,901 ) 0.0004 Forfeited/Cancelled (763,418 ) 0.2059 Options nonvested at March 31, 2017 (unaudited) 1,812,731 0.0653 |
Organization (Details Narrative
Organization (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Feb. 13, 2017 | Dec. 28, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
State of incorporation | State of Nevada | ||||||
Date of incorporation | Aug. 14, 2013 | ||||||
Net income (loss) | $ (891,060) | $ (859,350) | $ (3,176,464) | $ 2,670,414 | $ (45,154) | ||
Working capital deficiency | $ 4,164,245 | ||||||
Aircom Pacific Inc Limited [Member] | |||||||
Stock purchase agreement | 700,000 | ||||||
Share Exchange Agreement [Member] | Aircom Pacific Inc Limited [Member] | |||||||
Issued and outstanding capital stock, description | On February 13, 2017, Aerkomm entered into a share exchange agreement ( "the 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. 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. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash, FDIC uninsured amount | $ 217,000 | |||
Useful life of finite-lived intangible assets | 10 years | 10 years | 10 years | |
Research and development costs | $ 1,597,000 | $ 25,000 | $ 0 | |
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 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Inventories Details Narrative | |||
Satellite equipment for sale under construction | $ 197,645 | $ 197,645 | $ 99,971 |
Parts | 11,029 | 11,029 | 11,029 |
Supplies | 6,612 | 6,437 | |
Inventory gross | 215,286 | 215,111 | 111,000 |
Allowance for inventory loss | (5,382) | (5,382) | |
Net | $ 209,904 | $ 209,729 | $ 111,000 |
Prepaid Investment (Details Nar
Prepaid Investment (Details Narrative) - Stock Purchase Agreement [Member] - USD ($) | May 15, 2015 | Dec. 30, 2014 |
Dadny Japan Inc [Member] | ||
Ownership percentage | 100.00% | |
Acquisition cost | $ 600,000 | |
Aircom Pacific Inc Limited [Member] | ||
Ownership percentage | 100.00% | |
Acquisition cost | $ 100,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Beginning balance | $ 128,917 | $ 95,678 | $ 17,170 |
Addition | 33,239 | 78,508 | |
Ending balance | 128,917 | 128,917 | 95,678 |
Computer software and Equipment [Member] | |||
Beginning balance | 125,524 | 92,285 | 17,170 |
Addition | 33,239 | 75,115 | |
Ending balance | 125,524 | 125,524 | 92,285 |
Furniture and Fixtures [Member] | |||
Beginning balance | 3,393 | 3,393 | |
Addition | 3,393 | ||
Ending balance | $ 3,393 | $ 3,393 | $ 3,393 |
Property and Equipment (Detai32
Property and Equipment (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Beginning balance | $ 43,825 | $ 12,365 | $ 421 |
Addition | 6,206 | 31,460 | 11,944 |
Ending balance | 50,031 | 43,825 | 12,365 |
Computer software and Equipment [Member] | |||
Beginning balance | 42,863 | 12,082 | 421 |
Addition | 6,037 | 30,781 | 11,661 |
Ending balance | 48,900 | 42,863 | 12,082 |
Furniture and Fixtures [Member] | |||
Beginning balance | 962 | 283 | |
Addition | 169 | 679 | 283 |
Ending balance | $ 1,131 | $ 962 | $ 283 |
Property and Equipment (Detai33
Property and Equipment (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Property And Equipment Details Narrative | |||
Construction in progress | $ 3,660,000 | $ 3,660,000 |
Intangible Asset, Net (Details)
Intangible Asset, Net (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Beginning balance | $ 4,372,500 | $ 4,867,500 | |
Addition | (123,750) | (495,000) | 4,867,500 |
Ending balance | 4,248,750 | 4,372,500 | 4,867,500 |
Satellite System software [Member] | |||
Beginning balance | 4,950,000 | 4,950,000 | |
Addition | 4,950,000 | ||
Ending balance | 4,950,000 | 4,950,000 | 4,950,000 |
Accumulated amortization [Member] | |||
Beginning balance | 577,500 | 82,500 | |
Addition | 123,750 | 495,000 | 82,500 |
Ending balance | $ 701,250 | $ 577,500 | $ 82,500 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | |||||
Federal | $ (884,000) | $ 884,000 | |||
State | 800 | 800 | |||
Total | $ 2,385 | $ (504,000) | $ (883,200) | $ 884,800 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details 1 | |||||
Tax expense (benefit) at statutory rate | $ (1,158,300) | $ 987,000 | $ (15,000) | ||
Prepayment from related parties | (286,300) | 286,300 | |||
Net operating loss carryforwards (NOLs) | 717,600 | (345,000) | 15,000 | ||
Amortization expense | (168,300) | (28,100) | |||
Others | 12,100 | (15,400) | |||
Tax at effective tax rate | $ 2,385 | $ (504,000) | $ (883,200) | $ 884,800 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Taxes Details 2 | ||
Prepayment from related parties | $ 335,000 | |
Net operating loss carryforwards (NOLs) | 519,000 | 59,000 |
Tax credit carryforwards | 63,000 | 26,000 |
Excess of tax amortization over book amortization | (230,000) | (34,000) |
Others | 43,000 | |
Total | 395,000 | 386,000 |
Valuation allowance | (395,000) | (386,000) |
Net |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Change in deferred tax assets valuation allowance | $ 9,000 | $ 371,000 | $ 15,000 |
Federal [Member] | |||
Net operating loss | $ 843,000 | ||
Net operating loss carryforward, expiration dates | 2,036 | ||
Research and development tax credit | $ 37,000 | ||
Research and development tax credit expiration dates | 2,034 | ||
Japan [Member] | |||
Net operating loss | $ 406,000 | ||
Net operating loss carryforward, expiration dates | 2,019 | ||
State [Member] | |||
Net operating loss | $ 1,836,000 | ||
Research and development tax credit | $ 39,000 | $ 39,000 |
Capital Stock (Details)
Capital Stock (Details) - shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Capital Stock Details | |||
Restricted stock - vested | 8,511,547 | 7,787,490 | 4,592,943 |
Restricted stock - unvested | 1,768,191 | 2,492,248 | 6,184,000 |
Total restricted stock | 10,279,738 | 10,279,738 | 10,776,943 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Feb. 13, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0 | $ 0 | |||
Preferred stock, Authorized | 50,000,000 | 50,000,000 | 10,000,000 | 10,000,000 | |||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0 | $ 0 | |||
Common stock, Authorized | 450,000,000 | 450,000,000 | 210,000,000 | 20,000,000 | |||
Converted restricted stock, shares | 27,566,670 | ||||||
Stock warrants issued, value | $ 30,000 | $ 20,000 | $ 40,000 | ||||
Private Placement [Member] | |||||||
Common stock, shares | 500,000 | ||||||
Aggregate amount | $ 1,500,000 | ||||||
Common stock price per share | $ 3 | $ 3 | |||||
Restricted Stock [Member] | |||||||
Converted restricted stock, shares | 10,279,738 | ||||||
Conversion ratio | 2.681651 to1 | ||||||
Minimum [Member] | |||||||
Per shares price of unvested shares | $ 0.0005 | ||||||
Maximum [Member] | |||||||
Per shares price of unvested shares | $ 0.00134 | ||||||
Stock Warrant [Member] | |||||||
Stock warrants issued, value | $ 30,000 | $ 60,000 | |||||
Description for conversion terms | The stock warrants allow the service provider to purchase a number of shares of common stock equal to 85% of the of the share price of its common stock in the first subsequent qualifying equity financing event, up to $60,000 in total, with exercise price of $0.01 per share | ||||||
Exercise price | $ 0.01 | ||||||
Stock Warrant [Member] | Additional Paid-In Capital | |||||||
Stock warrants issued, value | $ 90,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Other receivable from | $ 116,180 | ||||
Other payable to: | 918,807 | 2,969,053 | 5,224,263 | ||
Subscribed capital: | 2,027,400 | ||||
PPUS [Member] | |||||
Other receivable from | 80,500 | ||||
Other payable to: | 737,000 | 387,500 | |||
Subscribed capital: | 737,000 | ||||
Daniel [Member] | |||||
Other receivable from | 35,680 | ||||
Deposit to | 2,311 | 2,483 | |||
Other payable to: | 113,743 | 52,018 | 10,312 | ||
PPTW [Member] | |||||
Other payable to: | 819,300 | 80,000 | |||
Subscribed capital: | 819,300 | ||||
Klingon [Member] | |||||
Other payable to: | 762,000 | 762,000 | 762,000 | ||
Subscribed capital: | |||||
D Mobile [Member] | |||||
Other payable to: | 471,100 | ||||
Subscribed capital: | 471,100 | ||||
Giretsu Shih [Member] | |||||
Other payable to: | 16,803 | 80,346 | |||
Bunny Wu [Member] | |||||
Other payable to: | 32,148 | ||||
Tzu-Ling Hsu [Member] | |||||
Other payable to: | 9,695 | 6,844 | 5,929 | ||
Jeffrey Wun [Member] | |||||
Other payable to: | 7,712 | 3,594 | 13,399 | ||
Law Office of Jan Yung Lin [Member] | |||||
Other payable to: | $ 10,000 | ||||
Jiun Sheuan Yang [Member] | |||||
Other payable to: | 4,983 | 2,491 | 4,848 | ||
Jan [Member] | |||||
Other payable to: | 275 | ||||
Felix Fong [Member] | |||||
Other payable to: | 3,871 | 2,212 | |||
D Mobile [Member] | |||||
Accounts receivable | 3,478,900 | ||||
Other payable to: | 3,950,000 | ||||
Capricorn [Member] | |||||
Prepayment to Capricorn for acquisition | $ 600,000 |
Related Party Transactions (D42
Related Party Transactions (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Sales to | $ 6,128,900 | ||||
D Mobile [Member] | |||||
Sales to | 5,478,900 | ||||
PPUS [Member] | |||||
Sales to | $ 650,000 |
Related Party Transactions (D43
Related Party Transactions (Details 2) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
D Mobile [Member] | |||||
Intangible purchase | $ 4,950,000 | ||||
Law Office of Jan Yung Lin [Member] | |||||
Legal expenses paid | 10,000 | 10,000 | 51,431 | ||
Daniel [Member] | |||||
Rent expenses paid | $ 3,566 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Expected term | 3 years |
Expected dividends | 0.00% |
Forfeiture rate | 5.00% |
Minimum [Member] | |
Expected volatility | 40.11% |
Risk-free interest rate | 0.71% |
Maximum [Member] | |
Expected volatility | 45.58% |
Risk-free interest rate | 1.08% |
Stock Based Compensation (Det45
Stock Based Compensation (Details 1) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares | |||
Outstanding, Beginning | 5,444,407 | 4,139,241 | |
Granted | 1,305,166 | 4,139,241 | |
Exercised | |||
Forfeited/Cancelled | (763,418) | ||
Outstanding, Ending | 4,680,989 | 5,444,407 | 4,139,241 |
Exercisable, Ending | 2,868,258 | 2,524,357 | |
Weighted Average Exercise Price per Share | |||
Outstanding, Beginning | $ 0.1617 | $ 0.0013 | |
Granted | 0.6704 | 0.0013 | |
Exercised | |||
Forfeited/Cancelled | 0.6550 | ||
Outstanding, Ending | 0.0813 | 0.1617 | 0.0013 |
Exercisable, Ending | 0.0013 | 0.0013 | |
Weighted Average Fair Value Per Share | |||
Outstanding, Beginning | 0.0508 | 0.0004 | |
Granted | 0.2108 | 0.0004 | |
Exercised | |||
Forfeited/Cancelled | 0.2059 | ||
Outstanding, Ending | 0.0255 | 0.0508 | 0.0004 |
Exercisable, Ending | $ 0.0004 | $ 0.0004 |
Stock Based Compensation (Det46
Stock Based Compensation (Details 2) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares | |||
Granted | 1,305,166 | 4,139,241 | |
Forfeited/Cancelled | (763,418) | ||
Weighted Average Fair Value Per Share | |||
Outstanding, Beginning | $ 0.0508 | $ 0.0004 | |
Granted | 0.2108 | 0.0004 | |
Forfeited/Cancelled | 0.2059 | ||
Outstanding, Ending | $ 0.0255 | $ 0.0508 | $ 0.0004 |
Nonvested Shares [Member] | |||
Number of Shares | |||
Outstanding, Beginning | 2,920,050 | 4,139,241 | |
Granted | 1,305,166 | 4,139,241 | |
Vested | (343,901) | (2,524,357) | |
Forfeited/Cancelled | (763,418) | ||
Outstanding, Ending | 1,812,731 | 2,920,050 | 4,139,241 |
Weighted Average Fair Value Per Share | |||
Outstanding, Beginning | $ 0.0944 | $ 0.0004 | |
Granted | 0.2108 | 0.0004 | |
Vested | 0.0004 | 0.0004 | |
Forfeited/Cancelled | 0.2059 | ||
Outstanding, Ending | $ 0.0653 | $ 0.0944 | $ 0.0004 |
Stock Based Compensation (Det47
Stock Based Compensation (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Feb. 13, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock option aggregate shares | 5,444,407 | |||||
Stock-based compensation | $ 9,000 | $ 20,000 | ||||
Unrecognized compensation cost | $ 85,000 | $ 94,000 | $ 2,000 | |||
Minimum [Member] | ||||||
Weighted average period | 1 year | |||||
Maximum [Member] | ||||||
Weighted average period | 3 years |
Commitments and Contingency (De
Commitments and Contingency (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
D Mobile [Member] | |||||
Revenue receivable for next twelve-month | $ 1,501,100 | ||||
Satellites Service Agreements [Member] | |||||
Lease effective date | Mar. 15, 2017 | ||||
Lease expiration date | Sep. 30, 2018 | ||||
Prepay outstanding amount | $ 285,300 | ||||
Deposit | 95,100 | ||||
Digital Transmission Service Agreement [Member] | Asia Satellite Telecommunication Company Limited [Member] | |||||
Total future service fee payments | 7,411,616 | ||||
Deposit | $ 775,000 | ||||
Agreement date | July 25, 2015 | ||||
Debt | $ 8,013,495 | ||||
Payable balance | $ 1,376,879 | ||||
Japan [Member] | |||||
Lease expiration year | expiring July 2018 | ||||
Lease rental expenses | $ 8,587 | ||||
Future minimum lease payment, 2018 | $ 35,014 | ||||
Consumption tax | 8.00% | ||||
California [Member] | |||||
Lease expiration year | expiring in 2017. | ||||
Lease rental expenses | $ 15,618 | $ 15,618 | $ 62,472 | $ 39,045 | $ 0 |
Future minimum lease payment, 2018 | $ 74,872 |