Use of Terms





Except as otherwise indicated by the context and for the purposes of this report
only, references in this report to "we," "us," "our," or "our company" are to
the combined business of Aerkomm Inc., a Nevada corporation, and its
consolidated subsidiaries, including Aircom Pacific, Inc., a California
corporation and wholly-owned subsidiary, or Aircom; Aerkomm SY Ltd., a Republic
of Seychelles company and wholly-owned subsidiary of Aerkomm, or Aerkomm SY;
Aerkomm Taiwan Inc., a Taiwanese company and wholly-owned company of Aerkomm, or
Aerkomm Taiwan; Aerkomm Pacific Limited, a Malta company and wholly owned
subsidiary of Aerkomm SY Ltd., or Aerkomm Malta; Aerkomm Hong Kong Limited, a
Hong Kong company and wholly-owned subsidiary of Aerkomm, or Aerkomm HK; Aerkomm
Japan, Inc., a Japanese company and wholly-owned subsidiary of Aerkomm, or
Aerkomm Japan; and Aircom Telecom LLC, a Taiwanese company and wholly-owned
subsidiary of Aircom, or Aircom Taiwan; MEPA Lab Inc., a California company and
wholly-owned subsidiary of Aerkomm, or MEPA; or Beijing Yatai Communication Co.,
Ltd., a Chinese company and wholly -owned subsidiary of Aerkomm Taiwan, or
Beijing Yatai.

Special Note Regarding Forward Looking Statements





Certain information contained in this report includes forward-looking
statements. The statements herein which are not historical reflect our current
expectations and projections about our future results, performance, liquidity,
financial condition, prospects and opportunities and are based upon information
currently available to us and our interpretation of what is believed to be
significant factors affecting the businesses, including many assumptions
regarding future events. The following factors, among others, may affect our
forward-looking statements:



  ? our future financial and operating results;

? our intentions, expectations and beliefs regarding anticipated growth, market


    penetration and trends in our business;

? the impact and effects of the global outbreak of the coronavirus (COVID-19)

pandemic, and other potential pandemics or contagious diseases or fear of such

outbreaks, on the global airline and tourist industries, especially in the

Asia Pacific region;




  ? our ability to attract and retain customers;




  ? our dependence on growth in our customers' businesses;




  ? the effects of changing customer needs in our market;

? the effects of market conditions on our stock price and operating results;

? our ability to successfully complete the development, testing and initial


    implementation of our product offerings;

? our ability to maintain our competitive advantages against competitors in our


    industry;

? our ability to timely and effectively adapt our existing technology and have


    our technology solutions gain market acceptance;

? our ability to introduce new product offerings and bring them to market in a


    timely manner;

? our ability to obtain required telecommunications, aviation and other licenses


    and approvals necessary for our operations




  ? our ability to maintain, protect and enhance our intellectual property;

? the effects of increased competition in our market and our ability to compete


    effectively;




  ? our expectations concerning relationship with customers and other third
    parties;




  ? the attraction and retention of qualified employees and key personnel;




  ? future acquisitions of our investments in complementary companies or
    technologies; and




  ? our ability to comply with evolving legal standards and regulations.




                                       31





Forward-looking statements, which involve assumptions and describe our future
plans, strategies, and expectations, are generally identifiable by use of the
words "may," "should," "expect," "anticipate," "estimate," "believe," "intend,"
or "project" or the negative of these words or other variations on these words
or comparable terminology. Actual results, performance, liquidity, financial
condition, prospects and opportunities could differ materially from those
expressed in, or implied by, these forward-looking statements as a result of
various risks, uncertainties and other factors, including the ability to raise
sufficient capital to continue our operations. Actual events or results may
differ materially from those discussed in forward-looking statements as a result
of various factors, including, without limitation, the risks outlined under
"Risk Factors" included in our Annual Report on Form 10-K for the year ended
December 31, 2021, and matters described in this report generally. In light of
these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this report will in fact occur.



Potential investors should not place undue reliance on any forward-looking
statements. Except as expressly required by the federal securities laws, there
is no undertaking to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, changed circumstances or
any other reason.



The specific discussions herein about our company include financial projections
and future estimates and expectations about our business. The projections,
estimates and expectations are presented in this report only as a guide about
future possibilities and do not represent actual amounts or assured events. All
the projections and estimates are based exclusively on our management's own
assessment of our business, the industry in which we work and the economy at
large and other operational factors, including capital resources and liquidity,
financial condition, fulfillment of contracts and opportunities. The actual
results may differ significantly from the projections.

Potential investors should not make an investment decision based solely on our company's projections, estimates or expectations.





Overview



Aerkomm Inc., is a development stage Non-Geostationary Orbit NGSO Low Earth
Orbit and Medium Earth Orbit (LEO/MEO) satellite communication technology
provider, focusing on B5G / 6G communications. With our advanced technology, we
intend to provide our partners the benefits of E / V / Ka / Ku and X band unique
solutions that encompasses a wide range of service options. Such options include
connectivity solutions (IVI) on Vehicles (RVs, EVs…. etc.), Internet of Things
(IOT) scenarios, internet in rural and remote sites to complement mobile
communication weakness, maritime market and aviation market, including
Government UAVs, as well as the provision of in-flight broadband entertainment
and connectivity (IFEC) for commercial airlines and corporate jets.

Our technology will have several uses including:

1. Aviation: Target customers will be Government UAVs, commercial airlines and

corporate jet operators. For Government UAVs we plan to generate revenue from

the product price and monthly subscription fee for satellite bandwidth. We

plan to generate revenue from e-commerce and monthly subscription fee for

satellite bandwidth from commercial airlines. From corporate jet operators we

plan to generate revenue from the product price and monthly subscription fee


    for satellite bandwidth.

2. Vehicles and Autopilot Trucks: Target customers will be all autopilot

vehicles, using B5G, LEO satellites. We plan to generate revenue from the


    product price and monthly subscription fee for satellite bandwidth.

3. Trains and Fixed Infrastructure: Target customers will be train operators and

associated infrastructure. We plan to generate revenue from the product price


    and monthly subscription fee for satellite bandwidth.

4. Remote Locations: Target customers will be remote islands and mountain


    regions. We plan to generate revenue from the product price and monthly
    subscription fee for satellite bandwidth.

5. Maritime: Target customers will be cruise liners, freighters, tankers, ferry

boats, yachts, and oilrigs. We plan to generate revenue from the product price


    and monthly subscription fee for satellite bandwidth.




With our advanced technologies and a unique business model, our initial focus
has been to become a service provider of IFEC solutions through which we intend
to provide airline passengers with a broadband in-flight experience that
encompasses a wide range of service options. Such options include Wi-Fi,
cellular, movies, gaming, live TV, and music. We plan to offer these core
services, which we are currently still developing, through both built-in
in-flight entertainment systems, such as seat-back display, as well as on
passengers' own personal devices. We also expect to provide content management
services and e-commerce solutions related to our IFEC solutions.



                                       32





Traditionally, providers of in-flight connectivity have focused primarily on the
profit margin derived from the sale of hardware to airlines and of bandwidth to
passengers. Both airlines and passengers must "pay to play," which results in
low participation and usage rates.



We break away from this model and expect to set a new trend with our innovative
business approach which, we believe, will set us apart from our competitors by
our partnering with airlines and other strategic partners, such as online
advertisers and content providers. We plan to offer a choice of different
business models of our IFEC system to commercial airlines. We plan to offer the
choice of free hardware while the airline will pay for the monthly connectivity
cost. We will also offer the option of the airline paying for the hardware while
we pay for the connectivity cost. Airlines will potentially be able to generate
new revenues through participating in our different revenue sharing model
depending on which model they select, while passengers will not be required to
pay for connectivity. That is, for passengers, connectivity will be free. We
believe that, taken together, this novel approach will create an incentive for
airlines to work with us, and this collaboration should act to drive up
passenger usage rates. We believe that this is an innovative approach that will
differentiate us from most existing market players.



Our main source of revenue is expected to be derived from fees related to the
content channeled through our IFEC network from selected partners including
internet companies, content providers, advertisers, telecom service providers,
e-commerce participants, and premium sponsors. In other words, we plan to use
connectivity as a tool rather than as a commodity for sale, which we believe
will allow us to achieve a greater return.



To complement and facilitate our planned IFEC service offerings, we intend to
build satellite ground stations and related data centers within the geographic
regions where we expect to be providing IFEC airline services. We expect that
our first such ground station will be built in Taiwan, on land that we have
acquired, to service our East Asia market.



Additionally, we have developed and begun to market two internet connectivity
systems, one for hotels primarily located in remote regions and the other for
maritime use. Both systems operate through LEO/MEO satellite connectivity. We
also expect to develop a remote connectivity system that will be applicable

to
the highspeed rail industry.

Our total sales were $2,953 and $0 for the nine months ended September 30, 2022 and the year ended December 31, 2021.





Business Development




We are actively working with prospective airline customers to provide them with
the Airbus to-be-certified AERKOMM K++ system. We have entered into non-binding
memoranda of understanding, or MOUs, including, most recently, with Thai Smile
which operates a fleet of 20 Airbus A320 aircrafts. There can be no assurances,
however, that any MOUs we entered into will lead to actual purchase agreements.



In view of the increasing demand by the airlines for a bigger data throughput,
during the course of discussions between us and Airbus, we have revised our
strategy to focus primarily on LEO/MEO connectivity IFEC solutions for airlines
and have suspended work on our dual band (Ka/Ku) satellite inflight connectivity
solution.




In connection with the Airbus project, we also identified owners of Airbus
Corporate Jet, or ACJ, aircraft, as potential customers of our AERKOMM K++
system. ACJ customers, however, would not generate enough internet traffic to
make our free-service business model viable. To capitalize on this additional
market, we plan to sell our AERKOMM K++ system hardware for installation on ACJ
corporate jets and provide connectivity through subscription-based plans. This
new corporate jet market could generate additional revenue and income for our
company.



Our AERKOMM K++ System

Our proprietary IFEC system, which is called the AERKOMM K++ system, will contain an ultra-low-profile radome (that is, a dome or similar structure protecting our radio equipment) containing two antennas, one for transmitting and the other for receiving, and will comply with the ARINC 791 standard of Aeronautical Radio, Incorporated. Our AERKOMM K++ system also meets Airbus Design Organisation Approval.





                                       33

GEO (Geostationary Earth Orbiting) and NGSO (Non-Stationary Orbit) MEO (Medium Earth Orbiting) / LEO (Low Earth Orbiting) Satellites


Our initial AERKOMM K++ system will work with geostationary earth orbiting, or
GEO satellites. Performance of GEO satellites diminishes greatly in the areas
near the Earth's poles. One of the main advantages of NGSO satellites over GEO
satellites is considerably lower latency as well as worldwide coverage,
particularly over the poles. Whereas GEO satellites have roughly 550
milliseconds of round-trip latency time, LEO satellites boast a latency of 240
milliseconds, signifying a distinct advantage in the sphere of real-time
applications. Only LEO satellites can collect high quality data over the North
and South poles. We are developing technologies to work with MEO/LEO satellites
and plans to partner with Airbus to develop aircraft installation solutions. As
new MEO and LEO satellites are being regularly launched over the next few years,
which, we expect, will enable the provision of worldwide aircraft coverage, we
plan to have the necessary technology ready to take advantage of this new trend
in MEO/LEO satellite connectivity, although it cannot assure you that it will be
successful in this new area of endeavor. We have two cooperation agreements in
place with LEO/MEO satellite providers. On June 23, 2020, we entered into a
cooperation agreement with Telesat LEO Inc., a wholly owned subsidiary of
Telesat Canada. Telesat is one of the world's largest and most successful
satellite operators providing critical connectivity solutions that tackle
complex communications challenges. Through this agreement, Aircom and Telesat
will jointly collaborate to develop a test program for the Telesat
low-Earth-orbit (LEO) Network, Telesat's network of low-earth orbit satellites
for aircraft connectivity, to assess the technical and commercial viability of
incorporating the Telesat LEO Network capacity into Aircom's IFEC product
portfolio and network. Aircom and Telesat will collaborate in both technical and
commercial activity. On January 10, 2022, Aerkomm entered into a cooperation
agreement with New Skies Satellites B.V., a Dutch company with its principal
offices located at Rooseveltplantsoen The Hague, Netherlands ("SES"). SES is one
of the world leaders in satellite operations and is operating a constellation of
satellites in medium-earth orbit (MEO) and geostationary-earth orbit (GEO) with
a multi-terabit, high-throughput, low-latency network infrastructure (the "SES
Satellite Network"), used for the global mobility market, including aviation,
maritime, and the global fixed location market, including equipment, mobile back
haul, teleport and data center co-location. SES has launched SES-17, a GEO
satellite, and a series of MEO satellites (O3b), and will launch additional MEO
satellites ("O3b mPOWER") as part of the SES Satellite Network. Through this
agreement, Aerkomm and SES will jointly collaborate both technically and
commercially.

Ground-based Satellite System Sales


Since our acquisition of Aircom Taiwan in December 2017, this wholly owned
subsidiary has been developing ground-based satellite connectivity components
which have an application in remote regions that lack regular affordable
ground-based communications. In September 2018, Aircom Taiwan consummated its
first sale of such a component, a small cell server terminal, in the amount of
$1,730,000. This server terminal will be utilized by the purchaser in the
construction of a satellite-based ground communication system which will act as
a multicast service extension of existing networks. The system is designed to
extend local existing networks, such as ISPs and mobile operators, into rural
areas and create better coverage and affordable connectivity in these areas.
Aircom Taiwan expects to sell additional satellite connectivity components,
systems and services to be used in ground mobile units in the future, although
there can be no assurances that it will be successful in these endeavors.



In addition, in September 2018, Aircom Taiwan provided installation and testing
services of a satellite-based ground connectivity system to a remote island
resort and received service income related to this project in the amount of
$15,000. Upon the completion of this system's testing phase, and assuming that
the system operates satisfactorily, Aircom Taiwan expects to begin to sell this
system to multiple, remotely located resorts. We can make no assurances at this
time however, that this system will operate satisfactorily, that we will be
successful in introducing this system as a viable product offering or that we
will be able to generate any additional revenue from the sale and deployment of
this system.



                                       34





Recent Events

Termination of Joint Venture Agreement


On January 10, 2022, we entered into a joint venture (the "Joint Venture")
agreement with Sakai Display Products Corporation, a company incorporated under
the laws of Japan ("SDPJ"), and PanelSemi Corporation, a company incorporated
under the laws of Taiwan, to develop and commercialize a tile antenna. The Joint
Venture was operated through MEPA Labs Inc., a California corporation ("MEPA")
wholly owned by SDPJ. On September 4, 2022, we entered into a stock purchase
agreement with SDPJ to acquire 100% of the outstanding capital stock of MEPA for
a purchase price of $100,000. We closed this acquisition on September 4, 2022,
and, as of that date, the Joint Venture terminated and MEPA became our wholly
owned subsidiary.

Changes in our Executive Officers


On August 29, 2022, Y. Tristan Kuo resigned from his position as our Chief
Financial Officer. Mr. Kuo's resignation was not the result of any disagreement
with us on any matter relating to its operation, policies (including accounting
or financial policies) or practices. On that same day, we entered into an
independent contractor agreement with Mr. Kuo pursuant to which he agreed to
assist and advise us, until the earlier of February 28, 2023 and our hiring of a
new chief financial officer. Mr. Kuo will be assisting us with the following
matters: SEC reporting, financial, accounting and SOX issues, and public
offering and financing issues. We agreed to pay Mr. Kuo a fee of $15,000 per
month with a one-time $15,000 signing bonus and will reimburse Mr. Kuo for
certain out-of-pocket expenses. On September 1, 2022, our board of directors
appointed Louis Giordimaina, our Chief Executive Officer, as Interim Chief
Financial Officer.

Impact of the COVID-19 Pandemic





The COVID-19 pandemic was unprecedented notably because of the policy response
which involved the shutdown of much economic activity including the halt to
airline traffic. It produced the sharpest global recession since the Great
Depression. However, in its wake, the macro-economic performance has generally
speaking been less dire than initially feared. It produced the shortest
recession in US history, for instance, limited to two months. US unemployment
spiked to 14.7% in April 2020 and few expected the rate to drop as swiftly as
has been the case; the unemployment rate declined to 3.6% in May 2022 and thus
basically back to the pre-crises low.



                                       35

Principal Factors Affecting Financial Performance





We believe that our operating and business performance will be driven by various
factors that affect the commercial airline industry, including trends affecting
the travel industry and trends affecting the customer bases that we target, as
well as factors that affect wireless Internet service providers and general
macroeconomic factors. Key factors that may affect our future performance
include:

? our ability to enter into and maintain long-term business arrangements with

airline partners, which depends on numerous factors including the real or

perceived availability, quality and price of our services and product

offerings as compared to those offered by our competitors;

? the extent of the adoption of our products and services by airline partners

and customers;

? costs associated with implementing, and our ability to implement on a timely

basis, our technology, upgrades and installation technologies;

? costs associated with and our ability to execute our expansion, including

modification to our network to accommodate satellite technology, development

and implementation of new satellite-based technologies, the availability of

satellite capacity, costs of satellite capacity to which we may have to commit


    well in advance, and compliance with regulations;

  ? costs associated with managing a rapidly growing company;

? the impact and effects of the global outbreak of the coronavirus (COVID-19)

pandemic, and other potential pandemics or contagious diseases or fear of such

outbreaks, on the global airline and tourist industries, especially in the

Asia Pacific region;

? the number of aircraft in service in our markets, including consolidation of

the airline industry or changes in fleet size by one or more of our commercial


    airline partners;

  ? the economic environment and other trends that affect both business and
    leisure travel;

? continued demand for connectivity and proliferation of Wi-Fi enabled devices,

including smartphones, tablets and laptops;

? our ability to obtain required telecommunications, aviation and other licenses

and approvals necessary for our operations; and

? changes in laws, regulations and interpretations affecting telecommunications

services and aviation, including, in particular, changes that impact the

design of our equipment and our ability to obtain required certifications for


    our equipment.




Smaller Reporting Company



Although we no longer qualify as an Emerging Growth Company, or EGC, we continue
to qualify as a smaller reporting company, which allows us to take advantage of
many of the same exemptions from disclosure requirements, including reduced
disclosure obligations regarding executive compensation that are available to an
EGC. In addition, as a smaller reporting company with less than $100 million in
annual revenue, we are not required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002. In reliance on
these exemptions, we have taken advantage of reduced reporting obligations in
this quarterly report on Form 10-Q.



                                       36





Results of Operations

Comparison of Three Months Ended September 30, 2022 and 2021

The following table sets forth key components of our results of operations during the three-month periods ended September 30, 2022 and 2021.





                                                Three Months Ended
                                                   September 30,                       Change
                                               2022             2021              $               %
Revenue                                    $      2,855     $  1,810,000     $ (1,807,145 )        (99.8 )%
Cost of revenue                                       -        1,807,100       (1,807,100 )       (100.0 )%
Operating expenses                            2,380,851        1,676,214          704,637           42.0 %
Loss from operations                         (2,377,996 )     (1,673,314 )       (704,682 )         42.1 %

Net non-operating income (loss)              (1,428,543 )      3,374,616       (4,803,159 )       (142.3 )%
Loss before income taxes                     (3,806,539 )      1,701,302   

   (5,507,841 )       (323.7 )%
Income tax expense                                    -              (12 )             12         (100.0 )%
Net Loss                                     (3,806,539 )      1,701,314       (5,507,853 )       (323.7 )%

Other comprehensive income (loss)             1,290,912          (30,294 )      1,321,206       (4,361.3 )%
Total comprehensive loss                   $ (2,515,627 )   $  1,671,020 ) 
$ (4,186,647 )       (250.5 )%




Revenue. Our total revenue was $2,855 and $1,810,000 for the three months
periods ended September 30, 2022 and 2021, respectively. Our total revenue was
$2,855 for the three months ended September 30, 2022 for providing satellite
service to one of our related parties. Our total revenue of $1,810,000 for the
three months ended September 30, 2021 due to our sale of network hardware to a
non-related party.



Cost of revenue. Our cost of revenue was $0 and $1,807,100 for the three-month
periods ended September 30, 2022 and 2021, respectively. The cost of revenue for
the three months ended September 30, 2022 was $0 as it was a small service
provided to one of our related parties. The cost of sales for the three months
ended September 30, 2021 of $1,807,100 was the costs of our sale of network
hardware to a non-related party.



Operating expenses. Our operating expenses consist primarily of compensation and
benefits, professional advisor fees, research and development expenses, cost of
promotion, business development, business travel, transportation costs, and
other expenses incurred in connection with general operations. Our operating
expenses increased by $704,637, or 42.0%, to $2,380,851 for the three-month
period ended September 30, 2022, from $1,676,214 for the three months ended
September 30, 2021. The increase was mainly due to the increase in professional
services, payroll and related expenses and amortization expense of $619,688,
$344,004, and $79,000, respectively, which was offset by the decrease in
equipment leasing, stock-based compensation expense and insurance expense of
$210,000, $101,624 and $94,533, respectively. The increases in payroll and
related expenses and professional fee were partially related to the
consolidation of newly acquired subsidiary, MEPA.



                                       37






Net non-operating loss. We had $1,428,543 in net non-operating loss for the
three months ended September 30, 2022, as compared to net non-operating income
of $3,374,616 for the three months ended September 30, 2021. Net non-operating
loss in the three months ended September 30, 2022 represents a loss of
$1,318,614 in foreign exchange translation and financing cost of $121,703 from
the amortization of bond issuing costs, which was offset by a net other income
of $11,799. Net non-operating income in the three months ended September 30,
2021 represents a gain of $27,402 in foreign exchange translation, financing
cost of $47,775 from the amortization of bond issuing costs, unrealized gain in
investment of $3,375,049 and a net other income of $19,940.



Loss before income taxes. Our loss before income taxes increased by $5,507841,
or 323.7%, to $3,806,539 for the three months ended September 30, 2022, from an
income of $1,701,314 for the three months ended September 30, 2021, as a result
of the factors described above.

Total comprehensive loss. As a result of the cumulative effect of the factors described above, our total comprehensive loss increased by $4,186,647 to $,2515,627 for the three months ended September 30, 2022, from the total comprehensive income of $1,671,020 for the three months ended September 30, 2021.

Comparison of Nine months ended September 30, 2022 and 2021

The following table sets forth key components of our results of operations during the nine-month periods ended September 30, 2022 and 2021.





                                                 Nine Months Ended
                                                   September 30,                       Change
                                               2022             2021              $               %
Revenue - related party                    $      6,073     $  1,882,000
 $ (1,875,927 )        (99.7 )%
Cost of revenue                                       -        1,850,978       (1,850,978 )       (100.0 )%
Operating expenses                            6,075,775        6,843,728         (767,953 )        (11.2 )%
Loss from operations                         (6,069,702 )     (6,812,706 )        743,004          (10.9 )%

Net non-operating loss                       (2,949,378 )      2,753,250       (5,702,628 )       (207.1 )%
Loss before income taxes                     (9,019,080 )     (4,059,456 ) 

   (4,959,624 )        122.2 %
Income tax expense                                1,600            3,257           (1,657 )        (50.9 )%
Net Loss                                     (9,020,680 )     (4,062,713 )     (4,957,967 )       (122.0 )%

Other comprehensive income (loss)             2,482,003         (160,708 )      2,642,711       (1,644.4 )%
Total comprehensive loss                   $ (6,538,677 )   $ (4,223,421 )
 $ (2,315,256 )         54.8 %




Revenue. Our total revenue was $6,073 and $1,882,000 for the nine months periods
ended September 30, 2022 and 2021, respectively. Our total revenue was $6,073
for the nine months period ended September 30, 2022 represents an income from
providing satellite service to one of our related parties. Our total revenue of
$1,882,000 for the nine months period ended September 30, 2021 composed of the
sales of ground antenna units to one of our related parties and sales of network
hardware to a non-related party.



Cost of revenue. Our cost of sales was $0 and $1,850,978 for the nine-month
periods ended September 30, 2022 and 2021, respectively. The cost of sales for
the nine months ended September 30, 2022 was $0 as there is no cost directly
associated with providing satellite service to one of our related parties. The
cost of sales for the nine months ended September 30, 2021 of $1,850,978 was for
the sales of ground antenna units to one of our related parties and sales of
network hardware to a non-related party.



Operating expenses. Our operating expenses consist primarily of compensation and
benefits, professional advisor fees, research and development expenses, cost of
promotion, business development, business travel, transportation costs, and
other expenses incurred in connection with general operations. Our operating
expenses decreased by $767,953, or 11.2%, to $6,075,775 for the nine months
ended September 30, 2022, from $6,843,728 for the nine months ended September
30, 2021. This decrease was mainly due to the decrease in non-cash stock-based
compensation expense, insurance expense, legal expense, equipment leasing and
accounting and audit fees of $1,001,979, $314387, $217,181, $210,000 and
$148,129, respectively, which was offset by the increase in professional
services, consulting fee and payroll and related expenses as the result of
warrant re-valuation of $900,407, $118,327 and $120,442.



                                       38






Net non-operating loss. We had $2,949,378 in net non-operating loss for the nine
months ended September 30, 2022, as compared to net non-operating income of
$2,753,250 for the nine months ended September 30, 2021. Net non-operating
income in the nine months ended September 30, 2022 represents loss on foreign
exchange translation of $2,602,872, amortization of financing cost of $360,089,
unrealized loss in investment of $21,157 and net other income of $34,740. Net
non-operating expense in the nine months ended September 30, 2021 represents an
unrealized gain in investment of $2,731,569, amortization of financing cost of
$143,434 from bond issuing, gain in foreign exchange translation of $169,316 and
net other loss of $4,201.



Loss before income taxes. Our loss before income taxes decreased by $4,959,624,
or 122.2%, to $9,019,080 for the nine months ended September 30, 2022, from a
loss of $4,059,456 for the nine months ended September 30, 2021, as a result of
the factors described above.

Income tax expense. Income tax expense was $1,600 and $3,257 for the nine-month periods ended September 30, 2022 and 2021, respectively, mainly due to a California franchise tax and foreign subsidiary's income tax expenses.





Total comprehensive loss. As a result of the cumulative effect of the factors
described above, our total comprehensive loss increased by $2,315,256, or 54.8%,
to $6,538,677 for the nine months ended September 30, 2022, from $4,223,421 for
the nine months ended September 30, 2021.

Liquidity and Capital Resources

As of September 30, 2022, we had cash and cash equivalents of $5,966,294. To date, we have financed our operations primarily through cash proceeds from financing activities, including through our completed public offering, short-term borrowings and equity contributions by our stockholders.


The following table provides detailed information about our net cash flow:




                                   Cash Flow



                                                    Nine Months Ended
                                                      September 30,
                                                  2022             2021

Net cash used for operating activities $ (7,379,758 ) $ (1,415,507 ) Net cash used for investing activity

            (1,419,781 )        (63,010 )

Net cash provided by financing activity 8,995,017 1,152,769 Net decrease in cash and cash equivalents 195,478 (325,748 ) Cash at beginning of year

                        3,288,813        3,794,591
Foreign currency translation effect on cash      2,482,003         (160,708 )
Cash at end of the periods                    $  5,966,294     $  3,308,135




Operating Activities



Net cash used for operating activities was $7,379,758 for the nine months ended
September 30, 2022, as compared to $1,415,507 for the nine months ended
September 30, 2021. In addition to the net loss of $9,020,680, the increase in
net cash used for operating activities during the nine months ended September
30, 2022 was mainly due to an increase in prepaid expenses and other current
assets of $2,216,352 and a decrease in operating lease liability of $195,544,
which was offset by a decrease in accounts receivable of $75,180, increase in
accounts payable of $262,419 and increase in accrued expense and other current
liabilities of $1,526,171. In addition to the net loss of $4,062,713, the
increase in net cash used for operating activities during the nine-month period
ended September 30, 2021 was mainly due to decrease in accounts payable and
increase of prepaid expenses and other current assets of $309,712 and $46,248,
respectively, offset by the increase in accrued expenses and other current
liabilities, prepayment from customer and operating lease liability of
$1,903,246, $1,231,200 and $43,464, respectively, and decrease in inventory

of
$50,332.



Investing Activities




Net cash used for investing activities for the nine months ended September 30,
2022 was $1,419,781 as compared to net cash used for investing activities of
$63,010 for the nine months ended September 30, 2021. The net cash used for
investing activities for the nine months ended September 30, 2022 was mainly due
to the acquisition of short-term investment of $1,416,142 and acquisition of
property and equipment of $11,462, which was offset by proceeds from disposal of
trading security of $7,823. The net cash used for investing activities for the
nine months ended September 30, 2021 was mainly due to the purchase of property
and equipment of $85,628, which was offset by the proceeds from disposal of
property and equipment of $26,063.



                                       39





Financing Activities



Net cash provided by financing activities for the nine months ended September
30, 2022 and 2021 was $8,995,017 and $1,152,769, respectively. Net cash provided
by financing activities for the nine months ended September 30, 2022 was mainly
attributable to net proceeds from short-term loans of $9,015,361, which was
offset by the repayment on long-term loan and finance lease liability of $11,065
and $9,279, respectively. Net cash provided by financing activities for the nine
months ended September 30, 2021 was mainly attributable to the proceeds from
short-term loans of $1,169,561.



On May 9, 2019, two of our current shareholders, whom we refer to as the
Lenders, each committed to provide us with a $10 million bridge loan, or
together, the Loans, for an aggregate principal amount of $20 million, to bridge
our cash flow needs prior to our obtaining a mortgage loan to be secured by our
Taiwan land parcel which we recently purchased. The Taiwan land parcel consists
of approximately 6.36 acres of undeveloped land located at the Taishui Grottoes
in the Xinyi District of Keelung City, Taiwan. Aerkomm Taiwan contracted to
purchase the Taiwan land parcel for NT$1,056,297,507, or US$34,474,462, and as
of July 3, 2019 we completed payment of the purchase price for the Taiwan land
parcel in full. We are now waiting for title to the Taiwan land parcel to be
transferred to us pending the completion of our satellite ground station
licensing process. The Loans will be secured by the Taiwan land parcel with the
initial closing date of the Loans to be a date, designated by us, within 30 days
following the date that the title for the Taiwan land parcel is fully
transferred to and vested in our subsidiary, Aerkomm Taiwan. The Loans will bear
interest, non-compounding, at the Bank of America Prime Rate plus 1%, annually,
calculated on the actual number of days the Loans are outstanding and based on a
365-day year and will be due and payable upon the earlier of (1) the date of our
obtaining a mortgage loan secured by the Taiwan land parcel with a principal
amount of not less than $20 million and (2) one year following the initial
closing date of the Loans. The Lenders also agreed to an earlier closing of up
to 25% of the principal amounts of the Loans upon our request prior to the time
that title to the Taiwan land parcel is transferred to our subsidiary, Aerkomm
Taiwan, provided that we provide adequate evidence to the Lenders that the
proceeds of such an earlier closing would be applied to pay our vendors. We, of
course, cannot provide any assurances that we will be able to obtain a mortgage
on the Taiwan land parcel once the acquisition is completed. On April 25, 2022,
the Lenders amended the commitment and agreed to increase the percentage of
earlier closing amount from 25% to 100%. As of the date of this report, we don't
have any outstanding balance under the Loans from the Lenders.



On July 10, 2018, in conjunction with our agreement to acquire the Taiwan land
parcel, we entered into a binding letter of commitment with Metro Investment
Group Limited, or MIGL, pursuant to which we agreed to pay MIGL an agent
commission of four percent (4%) of the full purchase price of the Taiwan land
parcel, equivalent to approximately US$1,387,127, for MIGL's services provided
with respect to the acquisition. Under the terms of the initial agreement with
MIGL, we agreed to pay this commission no later than 90 days following payment
in full of the Taiwan land parcel purchase price. On May 2019 and December 2021,
we amended the binding letter of commitment with MIGL to extend the payment to
be paid after the full payment of the Land acquisition price until no later than
June 30, 2022. If there is a delay in payment, we shall be responsible for
punitive liquidated damages at the rate of one tenth of one percent (0.1%) of
the commission per day of delay with a maximum cap to these damages of five
percent (5%). Under applicable Taiwanese law, the commission was due and payable
upon signing of the letter of commitment even if the contract is cancelled for
any reason and the acquisition is not completed. We have recorded the estimated
commission to the cost of land and will be paying the amount no later than June
30, 2022. We are currently negotiating with MIGL to amend the agreement to
further extend the payment term.



We have not generated significant revenues, excluding non-recurring revenues in
2021 and 2019, and will incur additional expenses as a result of being a public
reporting company. Currently, we have taken measures that management believes
will improve our financial position by financing activities, including, in 2022,
having successfully completed short-term borrowings and other private loan
commitments, including the Loans from our investors, discussed above. With our
current available cash, the $20 million in loan commitments from the Lenders and
our expectations for our ability to raise funds in the near term, we believe our
working capital will be adequate to sustain our operations for the next twelve
months.



However, even if we successfully raise sufficient capital to satisfy our needs
over the next twelve months, following that period we will require additional
cash resources for the implementation of our strategy to expand our business or
for other investments or acquisitions we may decide to pursue. If our internal
financial resources are insufficient to satisfy our capital requirements, we
will need seek to sell additional equity or debt securities or obtain additional
credit facilities, although there can be no assurances that we will be
successful in these efforts. The sale of additional equity securities could
result in dilution to our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could require us to agree to
operating and financial covenants that would restrict our operations. Financing
may not be available in amounts or on terms acceptable to us, if at all. Any
failure by us to raise additional funds on terms favorable to us, or at all,
could limit our ability to expand our business operations and could harm our
overall business prospects.



                                       40






On June 28, 2022, we entered into a subscription agreement with an investor who
agreed to purchase 516,666 shares of our common stock for 6.00 Euros per share
for an aggregate purchase price of 3,100,000 Euros (the "Purchase Price"). On
June 29, 2022, we received the first installment of the Purchase Price of
$3,175,200, equivalent to 3,000,000 Euros, from this investor. Despite the fact
that we have received the investor's funds, the subscription agreement, as
amended on July 29, 2022, is subject to a cooling off period pursuant to which
it may be terminated prior to December 31, 2022 by either party at any time and
for any reason. If the subscription agreement is terminated by the investor, we
will be required to return the Purchase Price funds to the investor, without
interest. Additionally, if the final installment on the Euro 3,100,000
subscription amount is not received by us by December 31, 2022, as that date may
be further extended by mutual agreement of the parties, the subscription
agreement will terminate and we will be required to return all Purchase Price
funds received to the investor. Because of the wording of the subscription
agreement, we cannot assure you at this time that we will not be required to
return the Purchase Price funds to the investor.



On July 29,2022, MEPA Lab. entered into an additional subscription agreement
with the investor who agreed to purchase 4,400,000 shares of MEPA Lab's common
stock for an aggregate purchase price of $4,400,000. To date, the investor has
paid the Company $4,324,000 against the purchase price. Despite the fact that we
have received a substantial portion of the subscribed for investment, the
subscription agreement is subject to a cooling off period pursuant to which it
may be terminated prior to December 31, 2022 by either party at any time and for
any reason. If the subscription agreement is terminated by the investor, we will
be required to return the funds paid by the investor against the subscription
amount to the investor, without interest. Additionally, if the final installment
on the subscription amount is not received by us by December 31, 2022, as that
date may be further extended by mutual agreement of the parties, the
subscription agreement will terminate and we will be required to return all
funds received to the investor. Because of the wording of the subscription
agreement, we cannot assure you at this time that we will not be required to
return the invested funds to the investor.



On September 15, 2022, we entered into an additional subscription agreement with
the investor referenced above who agreed to purchase 966,669 shares of our
common stock for 6.00 Euros per share for an aggregate purchase price of
5,800,000 Euros ($5,810,458 at the agreed upon exchange rate of EUR/USD 0.9982).
To date, this investor has paid us $5,000,000 against the purchase price.
Despite the fact that we have received a substantial portion of the subscribed
for investment, the subscription agreement is subject to a cooling off period
pursuant to which it may be terminated prior to December 31, 2022 by either
party at any time and for any reason. If the subscription agreement is
terminated by the investor, we will be required to return the funds paid by the
investor against the subscription amount to the investor, without interest.
Additionally, if the final installment on the subscription amount is not
received by us by December 31, 2022, as that date may be further extended by
mutual agreement of the parties, the subscription agreement will terminate and
we will be required to return all funds received to the investor. Because of the
wording of the subscription agreement, we cannot assure you at this time that we
will not be required to return the invested funds to the investor.

We have not issued any shares to the investor for either of these two subscriptions and we are temporarily accounting for these investment as short-term loans to us.





Capital Expenditures



Our operations continue to require significant capital expenditures primarily
for technology development, equipment and capacity expansion. Capital
expenditures are associated with the supply of airborne equipment to our
prospective airline partners, which correlates directly to the roll out and/or
upgrade of service to our prospective airline partners' fleets. Capital spending
is also associated with the expansion of our network, ground stations and data
centers and includes design, permitting, network equipment and installation
costs.

Capital expenditures for the nine months ended September 30, 2022 and 2021 were $11,462 and $62,298, respectively.





We anticipate an increase in capital spending in our fiscal year ended December
31, 2022 and estimate that capital expenditures will range from $10 million to
$50 million as we begin airborne equipment installations and continue to execute
our expansion strategy. We expect to raise these funds through our planned
public offering, the registration statement for which is currently under review
by the SEC, and/or through other sources of equity or debt financings. There can
be no assurance, however, that our planned public offering will proceed
successfully, if at all, or that we will be able to raise the required funds
through other means on acceptable terms to us, if at all.



Inflation



Inflation and changing prices have not had a material effect on our business and
we do not expect that inflation or changing prices will materially affect our
business in the foreseeable future. However, our management will closely monitor
price changes in our industry and continually maintain effective cost control in
operations.

Off Balance Sheet Arrangements





We do not have any off balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity or
capital expenditures or capital resources that is material to an investor in our
securities.



                                       41





Seasonality

Our operating results and operating cash flows historically have not been subject to significant seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introductions.





Critical Accounting Policies



The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires our management to make
assumptions, estimates and judgments that affect the amounts reported, including
the notes thereto, and related disclosures of commitments and contingencies, if
any. We have identified certain accounting policies that are significant to the
preparation of our financial statements. These accounting policies are important
for an understanding of our financial condition and results of operation.
Critical accounting policies are those that are most important to the portrayal
of our financial condition and results of operations and require management's
difficult, subjective, or complex judgment, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods. Certain accounting estimates are particularly
sensitive because of their significance to financial statements and because of
the possibility that future events affecting the estimate may differ
significantly from management's current judgments. We believe the following
critical accounting policies involve the most significant estimates and
judgments used in the preparation of our financial statements:



Concentrations of Credit Risk. Financial instruments that potentially subject to
significant concentrations of credit risk consist primarily of cash in banks. As
of December 31, 2021 and 2020, the total balance of cash in bank exceeding the
amount insured by the Federal Deposit Insurance Corporation (FDIC) for the
Company was approximately $2,134,000 and $0, respectively. The balance of cash
deposited in foreign financial institutions exceeding the amount insured by
local insurance is approximately $3,265,000 and $3,106,000 as of September 30,
2022 and December 31, 2021, respectively. We perform 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. We
determine the amount of allowance for doubtful accounts by examining its
historical collection experience and current trends in the credit quality of its
customers as well as its internal credit policies. Actual credit losses may
differ from our estimates.



Inventories. Inventories are recorded at the lower of weighted-average cost or
net realizable value. We assess the impact of changing technology on our
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.




Research and Development Costs. Research and development costs are charged to
operating expenses as incurred. For the nine months ended September 30, 2022 and
2021, we incurred approximately $0 and $0 of research and development costs,
respectively.



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, furniture and fixtures - 5 years, satellite equipment
- 5 years, vehicles - 5 years and lease improvement - 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 income in the period of
sale or disposal. We review 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. We determined that there was no
impairment loss for the nine months ended September 30, 2022 and 2021.



Right-of-Use Asset and Lease Liability. In February 2016, the FASB issued ASU
No. 2016-02, "Leases" (Topic 842) ("ASU 2016-02"), which modifies lease
accounting for both lessees and lessors to increase transparency and
comparability by recognizing lease assets and lease liabilities by lessees for
those leases classified as operating leases and finance leases under previous
accounting standards and disclosing key information about leasing arrangements.
A lessee should recognize the lease liability to make lease payments and the
right-of-use asset representing its right to use the underlying asset for the
lease term. For operating leases and finance leases, a right-of-use asset and a
lease liability are initially measured at the present value of the lease
payments by discount rates. The Company's lease discount rates are generally
based on its incremental borrowing rate, as the discount rates implicit in the
Company's leases is readily determinable. Operating leases are included in
operating lease right-of-use assets and lease liabilities in the consolidated
balance sheets. Finance leases are included in property and equipment and lease
liability in our consolidated balance sheets. Lease expense for operating
expense payments is recognized on a straight-line basis over the lease term.
Interest and amortization expenses are recognized for finance leases on a
straight-line basis over the lease term. For the leases with a term of twelve
months or less, a lessee is permitted to make an accounting policy election by
class of underlying asset not to recognize lease assets and lease liabilities.
If a lessee makes this election, it should recognize lease expense for such
leases generally on a straight-line basis over the lease term. We adopted ASU
2016-02 effective January 1, 2019.



                                       42





Goodwill and Purchased Intangible Assets. Goodwill represents the amount by
which the total purchase price paid exceeded the estimated fair value of net
assets acquired from acquisition of subsidiaries. We test goodwill for
impairment on an annual basis, or more often if events or circumstances indicate
that there may be impairment. Purchased intangible assets with finite life are
amortized on the straight-line basis over the estimated useful lives of
respective assets. Purchased intangible assets with indefinite life are
evaluated for impairment when events or changes in circumstances indicate that
the carrying amount of such assets may not be recoverable. Purchased intangible
asset consists of satellite system software and is amortized over 10 years.



Fair Value of Financial Instruments. We utilize 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 we have 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 and restricted cash, accounts
payable, short-term loan and other payable approximated their fair value due to
the short-term nature of these financial instruments. The Company's short-term
investment and long-term investment are classified within Level 1 of the fair
value hierarchy on September 30, 2022. The Company's long-term bonds payable,
long-term loan and lease payable approximated the carrying amount as its
interest rate is considered as approximate to the current rate for comparable
loans and leases, respectively. There were no outstanding derivative financial
instruments as of September 30, 2022.



Revenue Recognition. We recognize revenue when performance obligations
identified under the terms of contracts with our customers are satisfied, which
generally occurs upon the transfer of control in accordance with the contractual
terms and conditions of the sale. Our revenue for the nine months ended
September 30, 2022 composed of the service income to one of our related parties.
The majority of our revenue is recognized at a point in time when product is
shipped or service is provided to the customer. Revenue is measured as the
amount of consideration we expect to receive in exchange for transferring goods,
which includes estimates for variable consideration. We adopted the provisions
of ASU 2014-09 Revenue from Contract with Customers (Topic 606) and the
principal versus agent guidance within the new revenue standard. As such, the
Company identifies a contract with a customer, identifies the performance
obligations in the contract, determines the transaction price, allocates the
transaction price to each performance obligation in the contract and recognizes
revenue when (or as) we satisfy a performance obligation. Customers may make
payments to the Company either in advance or in arrears. If payment is made in
advance, the Company will recognize a contract liability under prepayments from
customers until which point the Company has satisfied the requisite performance
obligations to recognize revenue.



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. It is not subject to
income tax examinations by US federal, state and local tax authorities for years
before 2017. 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.



                                       43





Foreign Currency Transactions. Foreign currency transactions are recorded in
U.S. dollars at the exchange rates in effect when the transactions occur.
Exchange gains or losses derived from foreign currency transactions or monetary
assets and liabilities denominated in foreign currencies are recognized in
current income. At the end of each period, assets and liabilities denominated in
foreign currencies are revalued at the prevailing exchange rates with the
resulting gains or losses recognized in income for the period.



Translation Adjustments. If a foreign subsidiary's functional currency is the
local currency, translation adjustments will result from the process of
translating the subsidiary's financial statements into the reporting currency of
our company. Such adjustments are accumulated and reported under other
comprehensive income (loss) as a separate component of stockholders' equity.



Earnings (Loss) Per Share. Basic earnings (loss) per share is computed by
dividing income available to common shareholders by the weighted average number
of shares of common stock outstanding during the period. Diluted earnings per
share is computed by dividing income available to common shareholders by the
weighted-average number of shares of common outstanding during the period
increased to include the number of additional shares of common stock that would
have been outstanding if the potentially dilutive securities had been issued.
Potentially dilutive securities include stock warrants and outstanding stock
options, shares to be purchased by employees under the Company's employee stock
purchase plan.




Subsequent Events. The Company has evaluated events and transactions after the
reported period up to August 17, 2022, the date on which these unaudited
condensed consolidated financial statements were available to be issued. All
subsequent events requiring recognition as of September 30, 2022 have been
included in these consolidated financial statements.

Recent Accounting Pronouncements

Simplifying the Accounting for Debt with Conversion and Other Options.


In June 2020, the FASB issued ASU 2020-06 to simplify the accounting in ASC 470,
Debt with Conversion and Other Options and ASC 815, Contracts in Equity's Own
Entity. The guidance simplifies the current guidance for convertible instruments
and the derivatives scope exception for contracts in an entity's own equity.
Additionally, the amendments affect the diluted EPS calculation for instruments
that may be settled in cash or shares and for convertible instruments. This ASU
will be effective beginning in the first quarter of the Company's fiscal year
2022. Early adoption is permitted. The amendments in this update must be applied
on either full retrospective basis or modified retrospective basis through a
cumulative-effect adjustment to retained earnings/(deficit) in the period of
adoption. We adopted ASU 2020-06 as of September 30, 2022 and the adoption does
not have significant impact on our consolidated financial statements and related
disclosures as of and for the nine months ended September 30, 2022.



Financial Instruments



In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU
2016-13"), which modifies the measurement of expected credit losses of certain
financial instruments. In February 2020, the FASB issued ASU 2020-02 and delayed
the effective date of ASU 2016-13 until fiscal year beginning after December 15,
2022. We are currently evaluating the impact of adopting ASU 2016-13 on our
unaudited condensed consolidated financial statements.

Simplifying the Accounting for Income Taxes


In December 2019, the FASB issued ASU 2019-12 to simplify the accounting in ASC
740, Income Taxes. This guidance removes certain exceptions related to the
approach for intra-period tax allocation, the methodology for calculating income
taxes in an interim period, and the recognition of deferred tax liabilities for
outside basis differences. This guidance also clarifies and simplifies other
areas of ASC 740. This ASU will be effective beginning in the first quarter of
the Company's fiscal year 2021. Early adoption is permitted. Certain amendments
in this update must be applied on a prospective basis, certain amendments must
be applied on a retrospective basis, and certain amendments must be applied on a
modified retrospective basis through a cumulative-effect adjustment to retained
earnings/(deficit) in the period of adoption. The adoption of ASU 2019-12 does
not have a significant impact on our unaudited condensed consolidated financial
statements as of and for the nine months ended September 30, 2022.



Earnings Per Share



In April 2021, the FASB issued ASU 2021-04, which included Topic 260 "Earnings
Per Share". This guidance clarifies and reduces diversity in an issuer's
accounting for modifications or exchanges of freestanding equity-classified
written call options due to a lack of explicit guidance in the FASB
Codification. The ASU 2021-04 is effective for all entities for fiscal years
beginning after December 15, 2021. Early adoption is permitted. we adopted ASU
2021-04 as of September 30, 2022 and the adoption does not have significant
impact on our condensed consolidated financial statements as of and for the nine
months ended September 30, 2022.



                                       44

© Edgar Online, source Glimpses