What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-14 compared with 2024-02-28 · 536 added, 389 removed, 769 unchanged (55% of the section changed)

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Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Gogo Inc.

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with the accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2025, expressed an adverse opinion on the Company's internal control over financial reporting because of material weaknesses.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Deferred Income Tax Assets — Realizability of certain deferred tax assets and the release of certain valuation allowances — Refer to Notes 1 and 13 to the financial statements

Acquisition of Satcom Direct, LLC and certain of its affiliates and subsidiaries (collectively, “Satcom Direct”) — Refer to Note 1 and Note 2 to the financial statements

Critical Audit Matter Description

The Company recognizes deferred income tax assets and liabilities for tax attributes and are based on the differences between the financial statement and tax basis of assets and liabilities, applying enacted statutory tax rates in effect for the year in which the tax differences are expected to reverse.

The Company regularly assesses the need for a valuation allowance related to deferred income tax assets to determine, based on the weight of all available positive and negative evidence, whether it is more likely than not that some or all of such deferred assets will not be realized.

The Company’s assessment considers recent financial operating results, the scheduled expiration of its net operating losses, potential sources of future taxable income, the reversal of existing taxable differences, taxable income in prior carryback years, if permitted under tax law, and tax planning strategies.

Based on the Company’s assessment for the year ended December 31, 2023, the Company released valuation allowances related to its Section 163(j) interest limitation carryforward and certain state net operating losses (“NOLs”) and state credits.

We identified management’s determination that it is more likely than not that sufficient taxable income will be generated in the future to realize deferred income tax assets, excluding capital losses and foreign NOL deferred income tax assets, and the release of certain valuation allowances as a critical audit matter because of the significant judgments and estimates management makes related to projected future taxable income.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the reasonableness of management’s projected future taxable income.

The Company completed the acquisition of Satcom Direct for $440.7 million on December 3, 2024.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including software of $55.2 million and service customer relationships of $144.6 million (the "acquired intangible assets").

Management estimated the fair value of the software using the relief from royalty method.

Management estimated the fair value of the service customer relationships using the multi-period excess earnings method, which is a discounted cash flow method.

The fair value determination of software and service customer relationships required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rates.

We identified the fair value of acquired software and service customer relationships from the Satcom Direct acquisition as a critical audit matter because of the significant assumptions and estimates used in the valuation of the acquired intangible assets that possess higher degrees of complexity and sensitivity to the valuations.

This required a high degree of audit judgment and an increased extent of effort, including the need to involve our internal fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s assumptions.

The significant assumptions and estimates management makes to fair value the acquired intangible assets primarily relate to the future projected revenue and the discount rates applied to the future cash flows.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination that it is more likely than not that sufficient taxable income will be generated in the future to realize certain deferred income tax assets and the release of certain valuation allowances included the following, among others, which were performed with the assistance of our income tax specialists:

• We tested the effectiveness of controls over the valuation allowance for income taxes, including management’s controls over the estimates of future taxable income and the determination of whether it is more likely than not that the deferred tax assets will be realized.

• We compared the three-year historical taxable income to the amounts disclosed in the Company’s historical financial statements.

• We evaluated the reasonableness of the methods, assumptions, and judgments used by management to determine whether it was more likely than not that certain deferred income tax assets could be realized.

• We evaluated whether the sources of management’s projected future taxable income were of the appropriate character and sufficient to utilize certain deferred income tax assets under the relevant tax law.

This included evaluating management’s assessment of the scheduling of the reversal of existing temporary taxable differences and carryforward lives of certain deferred income tax assets, and the availability of tax planning strategies as a source of future taxable income.

• We evaluated management’s ability to accurately project future taxable income by comparing actual results to management’s historical estimates and evaluating whether there have been any changes that would affect management’s ability to continue accurately projecting future taxable income.

We tested the reasonableness of management’s projections of future taxable income by comparing the projections to:

▪ Internal budgets

▪ Historical pre-tax income

▪ Internal communications to management and the Board of Directors

▪ Forecasted information included in Company press releases as well as in analyst reports for the Company

• We evaluated whether the projections used to estimate future taxable income were consistent with evidence obtained in other areas of the audit.

Our audit procedures related to future projected revenue and the selection of the discount rates applied to the future cash flows for the acquired intangible assets included the following, among others:

• We assessed the reasonableness of management’s future projected revenue by comparing the projections to historical results, certain peer companies, industry data, and Board of Directors presentations.

• We evaluated whether the future projected revenue was consistent with evidence obtained in other areas of the audit.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rates by:

• Testing the source information underlying the determination of the discount rates and testing the mathematical accuracy of the calculation.

• Developing a range of independent estimates and comparing those to the discount rates selected by management.

/s/ Deloitte & Touche, LLP

Chicago, Illinois

February 28, 2024

March 14, 2025

We have served as the Company’s auditor since 2007.

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Cash and cash equivalents

Short-term investments

Total cash, cash-equivalents and short-term investments

Accounts receivable, net of allowances of $ 4,467 and $ 2,091 , respectively

Assets held for sale

Prepaid expenses and other current assets

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Operating lease right-of-use assets

Investment in convertible note

Other non-current assets, net of allowances of $ 861 and $ 591 , respectively

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Total non-current assets

Liabilities and stockholders’ equity (deficit)

Liabilities and stockholders’ equity

Current liabilities:

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Commitments and contingencies (Note 17)

Stockholders’ equity (deficit)

Stockholders’ equity

Common stock, par value $ 0.0001 per share;

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Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

See the Notes to Consolidated Financial Statements

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Interest expense

Loss on extinguishment of debt and settlement of convertible notes

Loss on extinguishment of debt

Other (income) expense, net

Total other expense

Income (loss) from continuing operations before income taxes

Income tax (benefit) provision

Net income from continuing operations

Net loss from discontinued operations, net of tax

Net income (loss) attributable to common stock per share—basic:

Continuing operations

Discontinued operations

Net income attributable to common stock per share—basic

Net income attributable to common stock per share—diluted:

Continuing operations

Discontinued operations

Net income attributable to common stock per share—diluted

Income before income taxes

Income tax provision (benefit)

Net income attributable to common stock per share:

Weighted average number of shares

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Amount recognized in other comprehensive income

income (loss) realized and reclassified to earnings

income realized and reclassified to earnings

Changes in fair value of cash flow hedges

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For the Years Ended December 31,

Operating activities from continuing operations:

Operating activities:

Adjustments to reconcile net income to cash provided by operating activities:

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Accretion of debt discount

Gain on sale of equity investment

Loss on extinguishment of debt and settlement of convertible notes

Change in fair value of convertible note and gain on sale of equity investment

Loss on extinguishment of debt

Changes in operating assets and liabilities:

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Other non-current assets and liabilities

Net cash provided by operating activities from continuing operations

Investing activities from continuing operations:

Proceeds from sale of property and equipment

Net cash provided by operating activities

Investing activities:

Purchases of property and equipment

Acquisition of intangible assets—capitalized software

Acquisition of Satcom Direct, net of cash acquired

Proceeds from FCC Reimbursement Program for property, equipment and intangibles

Proceeds from (purchase of) interest rate caps

Proceeds from interest rate caps

Redemptions of short-term investments

Purchases of short-term investments

Purchase of equity investment

Purchases of convertible note and equity investment

Proceeds from sale of equity investment

Net cash provided by (used in) investing activities from continuing operations

Financing activities from continuing operations:

Redemption of senior secured notes

Net cash (used in) provided by investing activities

Financing activities:

Proceeds from term loan, net of discount

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Stock-based compensation activity

Net cash used in financing activities from continuing operations

Cash flows from discontinued operations:

Net cash used in operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash used in discontinued operations

Net cash provided by (used in) financing activities

Effect of foreign exchange rate changes on cash

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Cash paid for interest

Cash paid for taxes

Cash paid for taxes, net

Non-cash investing activities:

Fair value of shares issued in acquisition of Satcom Direct

Purchases of property and equipment in current liabilities

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Treasury Stock

Income (Loss)

Balance at January 1, 2022

Currency translation adjustments, net of tax

Fair value adjustments of cash flow hedge, net of tax

Fair value adjustments of cash flow hedges, net of tax

Stock-based compensation expense

Issuance of common stock upon exercise of stock options

Issuance of common stock upon vesting of restricted stock units and restricted stock awards

Issuance of common stock upon vesting of restricted stock units

Tax withholding related to vesting of restricted stock units

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Settlement of prepaid forward shares

Impact of the adoption of ASU 2020-06

Repurchase of common stock

Balance at December 31, 2022

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Issuance of common stock in connection with employee stock purchase plan

Settlement of convertible notes

Settlement of prepaid forward shares

Repurchase of common stock

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Issuance of common stock in connection with employee stock purchase plan

Shares issued in acquisition of Satcom Direct

Repurchase of common stock

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All intercompany transactions and account balances have been eliminated.

Unless otherwise noted, discussion in these Notes to Consolidated Financial Statements refers to our continuing operations.

Refer to Note 19, “Discontinued Operations,” for further information.

We operate in a single distinct business segment, Business Aviation, for which operating performance is measured and resources are allocated on a consolidated basis, consistent with the financial information regularly reviewed by the chief operating decision maker, our CEO.

Therefore, we report one business segment, comprised of our continuing operations.

As we do not have multiple segments, we do not present segment information in this Annual Report on Form 10-K.

As a result of the Company’s acquisition of Satcom Direct on December 3, 2024, as described in Note 2, “Acquisition of Satcom Direct,” the Company has two reportable segments as of December 31, 2024:

the legacy pre-acquisition operations of the Company, (“Gogo BA”) and the acquired entities, Satcom Direct.

The Gogo BA segment provides in-flight connectivity for business aviation via air-to-ground and satellite networks.

The Satcom Direct segment provides global satellite-based communication solutions primarily for business, military and government aircraft.

Satcom Direct is managed as a separate reportable segment, but in the future, we may realign our reportable segments after integrating the Satcom Direct business.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

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However, actual results could differ materially from those estimates.

As a result of our determination to participate in the FCC Reimbursement Program (as defined below), we reassessed and shortened the estimated useful lives of affected network equipment to be consistent with our estimated date to complete the program.

This change in accounting estimate was effective beginning the second quarter of 2023 and resulted in increased depreciation expense of $ 5.7 million for the year ended December 31, 2023.

Net income per basic and diluted share decreased by $ 0.04 for the year ended December 31, 2023.

See Note 6, “Composition of Certain Reserves and Allowances,” for further details.

Significant Risks and Uncertainties - Our operations are subject to certain risks and uncertainties, including without limitation those associated with fluctuations in operating results, implementation of our technology roadmap, strategic alliances, relationships with customers, suppliers and dealers, supply chain disruptions, funding of our growth, financing terms that may restrict operations, regulatory issues, competition, the economy, te chnology trends, evolving industry standards and other events that may impact the demand for air travel.

Reclassifications - Certain reclassification adjustments and updates have been made to the prior periods’ financial statements and notes to conform to the current period’s presentation.

Cash, Cash Equivalents and Short-Term Investments - We consider cash and cash equivalents to be short-term, highly liquid investments that have the following characteristics:

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We consider short-term investments to be investments with maturities of twelve months or less (but greater than three months).

Allowance for Credit Losses - We regularly evaluate our accounts receivable and contract assets for expected credit losses.

Our expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of each customer’s trade accounts receivables.

Allowance for Credit Losses - We regularly evaluate our accounts receivable, contract assets and other receivables within the scope of ASC 326, Financial Instruments - Credit Losses , for expected credit losses.

Our current expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of each customer’s trade accounts receivables.

Due to the short-term nature of such receivables, the estimated amount of accounts receivable that may not be collected is based on the aging of the accounts receivable balances and the financial condition of customers.

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However, due to the inherent additional risk associated with a long-term receivable, an additional provision for credit loss is applied to contract asset balances that will diminish over time as the contract nears its expiration date.

We also record an estimate of expected credit loss associated with the New Revolving Credit Facility, as defined and described in Note 17, “Commitments and Contingencies.” The current expected credit loss allowance methodology is developed using an estimate of future borrowings under the agreement and specific credit risk profile of the borrow.

While the New Revolving Credit Facility is undrawn as of December 31, 2024, the current expected credit allowance is included in Accrued liabilities on the Consolidated Balance Sheets.

Upon drawdown of the revolver, the liability will be classified as an allowance against the loan receivable.

Estimates are used to determine the expected loss allowances.

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Cash amounts with restrictions of twelve months or less are included in Prepaid expenses and other current assets and amounts restricted for greater than twelve months are included in Other non-current assets in our consolidated balance sheets.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Our restricted cash balances were $ 0.3 million as of both December 31, 2023 and 2022 , and consisted primarily of a letter of credit issued for the benefit of the landlord of our office location in Chicago, IL.

Our restricted cash balances were $ 0.5 million and $ 0.3 million as of December 31, 2024 and 2023 , respectively, and consisted of letters of credit issued for the benefit of the landlord of our office location in Chicago, IL and the tower operator for certain of our cell sites in Canada.

Concentrations of Credit Risk - Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents.

All cash and cash equivalents are invested with creditworthy financial institutions.

Our revenue from customers domiciled outside of the United States accounted for less than 10% of our total revenue for the years ended December 31, 2023, 2022 and 2021.

Our long-lived assets outside of the United States were less than 10% of our consolidated long-lived assets as of December 31, 2023 and 2022 .

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Income Tax - We use an asset- and liability-based approach in accounting for income taxes.

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Network equipment consists of switching equipment, antennas, base transceiver stations, site preparation costs, and other related equipment used in the operation of our network.

Depreciation expense totaled $ 14.7 million for the year ended December 31, 2023 and $ 7.9 million for both of the years ended December 31, 2022 and 2021.

Depreciation expense totaled $ 15.1 million , $ 14.7 million and $ 7.9 million for the years ended December 31, 2024, 2023 and 2022.

Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives for owned assets, which are as follows:

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Such capitalized software costs are included in Intangible assets, net, in our consolidated balance sheets and amortized on a product-by-product basis over the remaining estimated economic life of the product, based on the greater of the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method.

Intangible Assets - Intangible assets with indefinite lives are not amortized but are reviewed for impairment at least annually or whenever events or circumstances indicate the carrying value of the asset may not be recoverable.

Our FCC Licenses, as defined in Note 7, “Intangible Assets,” are our only material indefinite-lived intangible assets.

We perform our annual impairment test of our FCC Licenses during the fourth quarter of each fiscal year.

Goodwill and Other Intangible Assets - Intangible assets with indefinite lives are not amortized but are reviewed for impairment at least annually or whenever events or circumstances indicate the carrying value of the asset may not be recoverable.

Our FCC Licenses, as defined in Note 8, “Intangible Assets,” and the goodwill related to the acquisition of Satcom Direct are our only material indefinite-lived intangible assets.

We perform our annual impairment tests during the fourth quarter of each fiscal year.

We assess qualitative factors to determine the likelihood of impairment.

Our qualitative analysis includes, but is not limited to, assessing the changes in macroeconomic conditions, regulatory environment,

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

industry and market conditions, financial performance versus budget and any other events or circumstances specific to the FCC Licenses.

If it is more likely than not that the fair value of the FCC Licenses is greater than the carrying value, no further testing is required.

Our qualitative analysis includes, but is not limited to, assessing the changes in macroeconomic conditions, regulatory environment, industry and market conditions, financial performance versus budget and any other events or circumstances specific to the indefinite-lived intangible assets.

If it is more likely than not that the fair value of the indefinite-lived intangible assets is greater than the carrying value, no further testing is required.

If our qualitative analysis indicates more testing is required, or if we elect not to perform a qualitative analysis, we will apply the quantitative impairment test method.

Our quantitative impairment testing of the FCC Licenses uses the Greenfield method, an income-based approach.

When performing this quantitative impairment testing, we estimate the value of our FCC spectrum licenses by calculating the present value of the cash flows of a hypothetical new market participant whose only assets are such licenses to determine the fair value of the FCC licenses.

The estimate takes into account all costs and expenses necessary to build the Company’s infrastructure during the start-up period, projected revenue, and cash flows once the infrastructure is completed.

Since there is limited corroborating data available in the marketplace that would demonstrate a market participant’s experience in establishing an “air-to-ground” business, we utilize our historic results and future projections as the underlying basis for the application of the Greenfield method.

We follow the traditional discounted cash flow method, calculating the present value of a new market participant’s estimated debt free cash flows, based on our historical weighted average cost of capital, adjusted to reflect the cost of capital for a new market participant.

Although we believe our projected future operating results and cash flows and related estimates regarding fair values are based on reasonable assumptions, projected operating results and cash flows may not always be achieved.

The failure to achieve one or more of our assumptions regarding projected operating results and cash flows in the near term or long term could reduce the estimated fair value below carrying value and result in the recognition of an impairment charge.

The results of our annual indefinite-lived intangible asset impairment assessments for 2024, 2023 and 2022 indicated no impairment.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Intangible assets that are deemed to have a finite life are amortized over their useful lives as follows:

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Service customer relationships

Other intangible assets

Tradename and other intangible assets

See Note 8, “Intangible Assets,” for further details.

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There were no impairments of long-lived assets in 2024, 2023 or 2022 .

Business Combinations - The Company uses its best estimates and assumptions to determine the fair value of tangible and intangible assets acquired and liabilities assumed, as well as the uncertain tax positions and tax-related valuation allowances that are initially recorded in connection with a business combination.

These estimates and assumptions are uncertain and may require adjustment.

During the measurement period of one year from the acquisition date, the Company continues to collect information and reevaluates these estimates and assumptions, and records adjustments to these estimates to goodwill.

Any adjustments to the acquired assets and liabilities assumed that are identified subsequent to the measurement period are recorded in earnings.

See Note 2, “Acquisition of Satcom Direct,” for further information.

Revenue Recognition - Our revenue is primarily earned from providing connectivity and entertainment services and through sales of equipment.

The Company has three main connectivity solutions, each with its own equipment solution:

Satellite Broadband, ATG and Narrowband.

We determine revenue recognition through the following steps:

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• Recognition of revenue as we satisfy the performance obligations.

Service revenue primarily consists of monthly subscription and usage fees paid by aircraft owners and operators for telecommunication, data, and in-flight entertainment services and is recognized as the services are provided to the customer.

Equipment revenue primarily consists of proceeds from the sale of ATG and narrowband satellite connectivity equipment and is recognized when control of the equipment is transferred to OEMs and dealers, which generally occurs when the equipment is shipped.

Service revenue primarily consists of subscription and usage fees paid by aircraft owners and operators for telecommunication, data, and in-flight entertainment services and is recognized as the services are provided to the customer.

Equipment revenue primarily consists of proceeds from the sale of ATG and satellite connectivity equipment and is recognized when control of the equipment is transferred to the customer, which generally occurs when the equipment is shipped.

In all cases, we evaluate whether a contract exists as it relates to collectability of the contract.

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See Note 4, “Revenue Recognition,” for further information.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Government Assistance - In July 2023, the Company elected to participate in the Federal Communications Commission (“FCC”) Secure and Trusted Communications Networks Reimbursement Program (the “FCC Reimbursement Program”).

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See Note 5, “Government Assistance,” for additional information.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Research and Development Costs - Expenditures for research and development are charged to expense as incurred and totaled $ 44.8 million , $ 36.7 million and $ 29.6 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

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Fair Value of Financial Instruments - We group financial assets and financial liabilities measured at fair value into three levels of hierarchy based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

A three-tier fair value hierarchy has been established which prioritizes the inputs used in measuring fair value.

These tiers include:

• Level 1 - defined as observable inputs such as quoted prices for identical assets or liabilities in active markets;

• Level 2 - defined as observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

• Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

See Note 12, “Fair Value of Financial Assets and Liabilities,” for further information.

Derivatives - We are exposed to interest rate risk on our variable rate borrowings.

We currently use interest rate caps to manage our exposure to interest rate changes, and have designated these interest rate caps as cash flow hedges for accounting purposes.

We currently use interest rate caps to manage a portion of our exposure to interest rate changes, and have designated these interest rate caps as cash flow hedges for accounting purposes.

We account for these interest rate caps in accordance with ASC 815, Derivatives and Hedging , which requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet.

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See Note 3, “Earnings Per Share,” for further information.

Stock-Based Compensation Expense - Compensation cost is measured and recognized at fair value for all stock-based payments, including stock options.

Stock-Based Compensation Expense - Compensation cost is measured and recognized at fair value for all stock-based payments, including stock options and performance share units (“PSUs”).

For time-based vesting stock options, we estimate fair value using the Black-Scholes option-pricing model, which requires assumptions such as expected volatility, risk-free interest rate, expected life, and dividends.

The fair value of PSUs are determined using a Monte Carlo simulation, which requires assumptions such as expected term, volatility, risk-free interest rate and dividends.

Forfeitures are recognized when they occur.

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See Note 14, “Stock-Based Compensation and 401(k) Plan,” for further information.

Leases – We have operating lease agreements for which w e have recorded lease liabilities and right-of-use assets for leases primarily related to cell sites and office buildings.

Leases – We have operating lease agreements for which w e have recorded lease liabilities and right-of-use assets for leases primarily related to cell sites, data centers and office buildings.

We determine whether a contract contains a lease at contract inception and calculate the lease liability and right-of-use asset using our incremental borrowing rate.

Our cell site leases generally have terms of five to ten years , with renewal options for an additional five to 25 years .

For certain cell sites, the renewal options are deemed to be reasonably certain to be exercised.

Our building leases have original terms of ten years , with renewal options for an additional five years .

For certain cell sites, the renewal options are deemed to be

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

recogni ze operating lease expense on a straight-line basis over the lease term.

reasonably certain to be exercised.

Our data center leases have original terms between one to four years with unlimited one-year renewal options, some of which are reasonably certain to be exercised.

Our building leases have original terms of ten years , with renewal options for an additional five years .

We recogni ze operating lease expense on a straight-line basis over the lease term.

We have finance leases for computer and office equipment.

Covenants within the Term Loan Facility contain certain restrictions on our ability to enter into new finance lease arrangements.

Covenants within the Facilities contain certain restrictions on our ability to enter into new finance lease arrangements.

See Note 16, “Leases,” for further information.

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Debt Issuance Costs - We defer loan origination fees and financing costs related to our various debt offerings as deferred financing costs.

Additionally, we defer fees paid directly to the lenders related to amendments of our various debt offerings as deferred financing costs.

Additionally, we defer fees paid directly to the lenders related to amendments of our debt offerings as deferred financing costs.

We amortize these costs over the term of the underlying debt obligation using the effective interest method and include them in interest expense in the consolidated statement of operations.

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ASUs not listed below were assessed and determined to be either not applicable or expected to have minimal impact on our consolidated financial statements and related notes.

Accounting standards not yet adopted:

Accounting standards adopted:

In November 2023, the FASB issued ASU No.

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This guidance is effective retrospectively for fiscal years beginning after December 15, 2023 and interim periods after December 15, 2024.

Early adoption is permitted.

We are currently evaluating the impact that this guidance will have upon our consolidated financial statements and related notes.

We adopted this standard for the annual period ended December 31, 2024 using a retrospective method.

See Note 13, “Business Segments,” for further information.

Accounting standards not yet adopted:

In December 2023, the FASB issued ASU No.

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Early adoption is permitted and the amendments should be applied on a prospective basis, however, retrospective application is permitted.

As this guidance only impacts disclosures, we do not expect the adoption to have a material impact on our consolidated financial statements.

In November 2024, the FASB issues ASU No.

2024-03, Income Statement - Reporting Comprehensive Income (Subtopic 220-40):

Disaggregation of Income Statement Expenses which requires disclosure about specific types of expenses included in the expense captions presented in the Consolidated Statements of Operations.

This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted and the amendments should be applied on a prospective basis, however, retrospective application is permitted.

We are currently evaluating the impact that this guidance will have upon our consolidated financial statements and related notes.

Acquisition of Satcom Direct

On December 3, 2024 (the “Closing”), the Company completed the previously announced acquisition of 100 % of the issued and outstanding equity interests in Satcom Direct , LLC, a Delaware limited liability company (f/k/a Satcom Direct, Inc., a Florida corporation) and certain of its affiliates and their collective subsidiaries (collectively, “Satcom Direct”), pursuant to the terms of the purchase agreement, dated as of September 29, 2024 (the “Purchase Agreement”).

Founded in 1997, Satcom Direct primarily engages in providing business, military and government in-flight connectivity services as a value-added reseller of satellite services.

Satcom Direct operates worldwide with an international sales and service team based in nine countries.

Satcom Direct sells services and equipment globally through their international sales force to OEMs, governments, military, and private fleet companies among others.

Satcom Direct manages a network operating center and maintains their own data center in Melbourne, Florida with licensed data sites strategically placed around the world.

The acquisition will create the only in-flight connectivity provider able to satisfy the performance and cost needs of every segment of the global business aviation and military/government mobility markets.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

In accordance with the terms of the Purchase Agreement, on the Closing the Company purchased all of the issued and outstanding equity interests in Satcom Direct in exchange for:

(i) an aggregate cash purchase amount of $ 375 million, subject to customary post-closing adjustments (the “Cash Consideration”), (ii) five million restricted shares (the “Stock Consideration”) of the Company’s common stock, par value of $ 0.0001 per share (“Common Stock”), and (iii) up to an additional $ 225 million in potential earnout payments of cash and/or Common Stock tied to realizing certain financial performance milestones over the next four years (the “Earnout Consideration” and, together with the Cash Consideration and Stock Consideration, the “Acquisition Consideration”).

The Cash Consideration was financed via the Company’s $ 250 million HPS Credit Agreement (as defined below) and the remainder with cash on hand.

The Earnout Consideration has an estimated fair value of $ 53 million and is included in Other non-current liabilities on the Consolidated Balance Sheets as of December 31, 2024.

The fair value of the Earnout Consideration was calculated using a Monte Carlo simulation based on future gross profit projections of Satcom Direct, gross profit volatility rates of comparable companies and a risk adjusted discount rate.

The fair value measurement was based on significant unobservable inputs and thus represents a Level 3 measurement.

The following table summarizes Closing fair value of the Acquisition Consideration ( in thousands ):

Estimated Aggregate Acquisition Consideration

Share consideration

Common Stock issued per the Purchase Agreement

Share price on December 2, 2024

Stock Consideration

Cash Consideration

Settlement of pre-existing relationship

Estimated fair value of Earnout Consideration

Preliminary fair value of estimated aggregate Acquisition Consideration

The Company allocated the purchase price to the net identifiable tangible and intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the date of acquisition using the acquisition method of accounting for business combinations.

The excess of the purchase price over the estimated fair value of the net assets and liabilities was allocated to goodwill.

The Company determined the preliminary estimated fair values after review and consideration of relevant information as of the acquisition date, including discounted cash flows, quoted market prices and estimates made by management.

The fair values assigned to tangible and intangible assets acquired and liabilities assumed are preliminary based on management's estimates and assumptions and may be subject to change as additional information is received.

The Company expects to finalize the valuation as soon as practicable, but not later than one year from the Closing.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the Closing based on the preliminary purchase price allocation ( in thousands ):

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Preliminary Aggregate Purchase Price Allocation

Preliminary fair value of estimated total Acquisition Consideration

Assets acquired

Cash and cash equivalents

Accounts receivable, net of allowances

Prepaid expenses and other current assets

Assets held for sale

Property and equipment, net

Intangible assets, net

Operating lease right-of-use assets

Other non-current assets, net of allowances

Deferred income taxes

Total assets acquired

Liabilities assumed

Accounts payable

Accrued liabilities

Deferred revenue

Non-current operating lease liabilities

Other non-current liabilities

Total liabilities assumed

Net assets acquired

The allocation of the purchase price presented above was based on management's preliminary estimate of the fair values of the acquired assets and assumed liabilities using valuation techniques including income, cost and market approaches.

These valuation techniques incorporate the use of future projected revenues and cash flows as well as estimated discount rates.

Current and noncurrent assets and liabilities are valued at historical carrying values, which approximate fair value, except as described below.

The fair value measurements discussed below were based on significant inputs that are not observable and thus represent a Level 3 measurement.

Inventories were valued using a combination of the comparative sales method, which estimated the expected sales price of the products, reduced by all costs expected to be incurred to complete the inventory, as well as a profit on the sale and estimated replacement cost.

Assets held for sale represent the main corporate facility of Satcom Direct and associated land in Melbourne, Florida.

The Company engaged a broker and expects to sell the assets within the next twelve months.

Assets held for sale were valued using the income approach less the direct costs associated with selling the assets.

Property and equipment, net were valued using a combination of the cost and market approaches.

Customer relationships represent the fair value of future projected revenue that will be derived from sales of connectivity services and equipment to existing customers of Satcom Direct.

Customer relationships were valued using the multi-period excess earnings method.

This method of valuation reflects the present value of the projected cash flows that are expected to be generated by these existing customers less charges representing the contribution of other assets to those cash flows.

Software and the tradename were valued under the relief from royalty method, which is equal to the present value of the after-tax royalty savings attributable to owning the software or tradename as opposed to paying a third party for its use.

The estimated fair value of operating leases was determined based on current market terms, which resulted in a net unfavorable adjustment to the right-of-use asset.

After assessing the preliminary fair value of the net assets acquired and liabilities assumed, the Company recorded goodwill of $ 184.2 million .

Of the total goodwill amount, $ 173.8 million is attributable to the U.S.

entities and is deductible for U.S.

income tax purposes.

The goodwill is attributable to the assembled workforce, synergies, and economies of scale.

The following table summarizes the key information underlying identifiable finite lived intangible assets related to the Satcom Direct acquisition ( in thousands ):

Weighted Average Estimated Useful Life (In Years)

Estimated Fair Value

Service customer relationships

OEM customer relationships

Total intangible assets

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

The amounts of revenue and loss before income taxes of Satcom Direct since the Closing included in the Consolidated Statements of Operations for the year ended December 31, 2024 are $ 40.2 million and $ 21.5 million, respectively.

Transaction costs for the year ended December 31, 2024 were $ 19.8 million and were recorded in General and Administrative expense on the Consolidated Statements of Operations.

Additionally, pre-existing change of control bonuses with the Satcom Direct seller were modified during negotiations of the Purchase Agreement in favor of the Company.

The modification resulted in certain change of control bonus payments at closing, which were expensed.

The remainder of the change in control bonus payments relating to certain senior leaders of the Company vest over a two-year period post-closing.

The change of control bonus payments made at closing were $ 29.7 million and included in General and Administrative expense on the Consolidated Statements of Operations.

Supplemental Pro-Forma Information (Unaudited)

The following table presents supplemental pro-forma information for the years ended December 31, 2024 and 2023 as if the acquisition of Satcom Direct had occurred on January 1, 2023 ( in thousands ).

The amounts have been calculated after applying the Company’s accounting policies and are based upon currently available information.

The unaudited pro-forma information for all periods presented includes the following adjustments, where applicable, for business combination accounting effects resulting from the acquisition:

(i) the change in Cost of Equipment to reflect the fair value change in inventory, (ii) incremental stock compensation expense, and adjustments for change in control bonuses that vest after close as post-combination compensation expense, (iii) additional Depreciation and amortization expense related to the step up in fair value for finite-lived intangible assets and property and equipment acquired, (iv) removal of historical interest expense associated with Satcom Direct’s historical indebtedness which was extinguished upon consummation of the acquisition and additional interest expense related to financing the acquisition (refer to Note 9, “Long-Term Debt and Other Liabilities,” for additional information), and (v) the related tax effects assuming the acquisition occurred on January 1, 2023.

Pre-acquisition revenue and net income amounts for Satcom Direct were derived from the books and records prepared prior to the acquisition and are presented for informational purposes only and do not purport to be indicative of the results of future operations or of the results that would have occurred had the acquisition taken place as of the dates noted below.

For the Year Ended December 31,

(in thousands)

Total revenue

Earnings Per Share

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Diluted earnings per share was computed using the treasury stock method for stock-based compensation and the if-converted method for the 2022 Convertible Notes.

Contingently issuable shares are only included in the diluted earnings per share computation once all necessary conditions have been satisfied.

The shares of common stock effectively repurchased in connection with the Forward Transactions (as defined and described in Note 9, “Long-Term Debt and Other Liabilities”) were considered participating securities requiring the two-class method to calculate basic and diluted earnings per share.

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Refer to Note 9, “Long-Term Debt and Other Liabilities,” for further information.

The diluted earnings (loss) per share calculations exclude the effect of stock options, deferred stock units, restricted stock units and convertible notes when the computation is anti-dilutive.

The diluted earnings per share calculations exclude the effect of stock options, deferred stock units, RSUs, PSUs, convertible notes and the potential Earnout Consideration when the computation is anti-dilutive.

For the years ended December 31, 2024, 2023 and 2022, the weighted average number of shares excluded from the computation was 4.6 million , 1.8 million and 0.5 million shares, respectively.

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Per Share Amount

Net income from continuing operations

Participation rights on Forward Transactions allocated to continuing operations

Basic Earnings Per Share from Continuing Operations

Undistributed income from continuing operations

Effect of Dilutive Securities from Continuing Operations

Stock-based compensation

2022 Convertible Notes

Diluted Earnings Per Share from Continuing Operations

Undistributed income from continuing operations and assumed conversions

Net loss from discontinued operations

Participation rights on Forward Transactions allocated to discontinued operations

Basic Loss Per Share from Discontinued Operations

Undistributed loss from discontinued operations

Effect of Dilutive Securities from Discontinued Operations

Participation rights on Forward Transactions

Basic Earnings Per Share

Undistributed income

Effect of Dilutive Securities

Stock-based compensation

2022 Convertible Notes

Diluted Loss Per Share from Discontinued Operations

Undistributed loss from discontinued operations and assumed conversions

Diluted Earnings Per Share

Undistributed income and assumed conversions

Earnings per share - basic

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Our contracts vary in length and generally have terms of two to ten years .

The remaining $ 19 million of the RPO represents future equipment revenue that is expected to be recognized primarily within the next three years.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

We expect to recognize approximately 44 % of our connectivity and entertainment service RPO within the next year, approximately 42 % in one to five years and the remaining 14 % in five to ten years .

The remaining $ 16 million of the RPO represents future equipment revenue that is expected to be recognized primarily within the next three years as equipment is shipped.

Disaggregation of revenue

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For the Year Ended December 31,

Satcom Direct

Service revenue

Entertainment and other

Satellite broadband

ATG broadband

Narrowband and other

Total service revenue

Equipment revenue

Narrowband satellite

Satellite broadband

ATG broadband

Narrowband and other

Total equipment revenue

Customer type

Aircraft owner/operator/service provider

OEM and aftermarket dealer

Total revenue

Contract balances

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Contract assets represent the aggregate amount of revenue recognized in excess of billings and recoverable contract costs primarily for certain sales programs.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Our current and non-current deferred revenue balances totaled $ 41.3 million and $ 1.0 million as of December 31, 2024 and 2023 , respectively.

Deferred revenue includes, among other things, prepayments for equipment and subscription connectivity products.

Major Customers

No customer accounted for more than 10 % of total revenue for the years ended December 31, 2023, 2022 and 2021 and no customer accounted for more than 10 % of accounts receivable as of December 31, 2023 or 2022 .

Government Assistance

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networks and replace such equipment and (ii) remove and replace certain equipment installed on aircraft operated by the Company’s ATG customers that is not compatible with the terrestrial equipment that will replace ZTE equipment.

Due to a shortfall in the amount appropriated by Congress to fund the FCC Reimbursement Program, approximately $ 132 million of the approved amount is currently allocated to the Company under the program.

If Congress appropriates additional funds for this purpose, the allocations of the Company and other approved applicants will be increased pro rata .

Due to an initial shortfall in the amount appropriated by Congress to fund the FCC Reimbursement Program, approximately $ 132 million of the approved amount is currently allocated to the Company under the program.

Following passage of the FY 2025 NDAA, the Company expects to be allocated its full approved amount of approximately $ 334 million.

Program participants are subject to a number of conditions and requirements under the FCC’s rules including a requirement that they submit their first reimbursement request by July 17, 2023 and certify that they have developed a plan to permanently remove, replace and dispose of covered equipment or services within one year following the first reimbursement request.

The rules permit participants to petition the FCC for one or more six-month extensions of the completion deadline.

The Company, with the assistance of an advisor we engaged to help administer the program, submitted and received its first reimbursement claim in July 2023.

The Company’s one year term to complete the program is set for July 21, 2024, however, based on discussions with our vendors supporting the program regarding lead times for network equipment, we plan to petition the FCC for multiple extensions, as outlined in our application for the FCC Reimbursement Program.

As of December 31, 2023, we have recorded a $ 18.3 million receivable from the FCC, which is included in Prepaid expenses and other current assets in our Consolidated Balance Sheets.

The Company, with the assistance of an advisor engaged to help administer the program, submitted and received its first reimbursement claim in July 2023.

Due to a number of factors, including supply chain disruptions, the insufficiency of FCC funding prior to the passage of the FY 2025 NDAA, and the operational and logistical complexity of replacing airborne equipment, the Company was unable to complete the program by July 21, 2024.

As a result, the Company sought and has been granted two six-month extensions by the FCC, currently extending the program completion deadline to July 21, 2025, but the Company expects to require additional extensions past that date.

Based on discussions with our vendors supporting the program regarding lead times for network equipment, we plan to petition the FCC for multiple extensions, as outlined in our application for the FCC Reimbursement Program.

As of December 31, 2024 and 2023, we have recorded a $ 9.7 million and $ 18.3 million receivable from the FCC, respectively, which is included in Prepaid expenses and other current assets in our Consolidated Balance Sheets.

See Note 1, “Summary of Significant Accounting Policies,” for additional information on our accounting policy for government grants.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

The following are the deductions to the carrying value of asset balances in our Consolidated Balance Sheets as of December 31, 2023 (in thousands):

The following are the deductions to the carrying value of asset balances in our Consolidated Balance Sheets as of December 31, 2024 and 2023 (in thousands):

As of December 31,

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Other non-current assets

The following are the increases to Net income in our Consolidated Statements of Operations for the year ended December 31, 2023 (in thousands) :

The following are the increases to Net income in our Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 (in thousands) :

For the year ended December 31,

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Cost of equipment revenue

Engineering, design and development

General and administrative

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Composition of Certain Balance Sheet Accounts

4 unchanged sentences

(1) See Note 5, “Government Assistance,” for additional information.

As a result of our determination to participate in the FCC Reimbursement Program (as defined and described in Note 1, “Summary of Significant Accounting Policies” ), the Company wrote down the net realizable value of certain inventory by approximately $ 1.3 million for the year ended December 31, 2023.

The write-off charge is included in Cost of equipment revenue in our Consolidated Statements of Operations.

Prepaid expenses and other current assets as of December 31, 2024 and 2023 were as follows ( in thousands ):

3 unchanged sentences

Prepaid inventories

Tax indemnification receivable (2)

Total prepaid expenses and other current assets

(1) See Note 5, “Government Assistance,” for additional information.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

(2) See Note 17, “Commitments and Contingencies,” for additional information.

Property and equipment as of December 31, 2024 and 2023 were as follows ( in thousands ):

1 unchanged sentence

Leasehold improvements

Land and buildings

Network equipment (1)

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Accrued liabilities as of December 31, 2024 and 2023 were as follows ( in thousands ):

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Employee compensation and benefits

3 unchanged sentences

Warranty reserve

Gogo Galileo development costs

Accrued interest

14 unchanged sentences

Credit Losses — Changes in our allowances for credit losses for the years ended December 31, 2024 and 2023 were as follows ( in thousands ):

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Balance at January 1, 2023

2 unchanged sentences

Balance at December 31, 2023

Additions from acquisition

Provision for expected credit losses

2 unchanged sentences

Warranties — Changes in our warranty reserve for the years ended December 31, 2024 and 2023 were as follows ( in thousands ):

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Balance – January 1, 2023

2 unchanged sentences

Balance – December 31, 2023

Additions from acquisition

Accruals for warranties issued

1 unchanged sentence

Balance – December 31, 2024

Intangible Assets

Goodwill and Other Intangible Assets

Our intangible assets are comprised of indefinite- and finite-lived intangible assets and goodwill.

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Software also includes software embedded in the equipment that we sell to our customers.

Our goodwill balance was $ 0.6 million as of December 31, 2023 and 2022.

Our intangible assets, other than goodwill, as of December 31, 2023 and 2022 were as follows ( in thousands, except for weighted average remaining useful life ):

Changes in the carrying value of goodwill by reportable segment during the years ended December 31, 2024 and 2023 were as follows ( in thousands ):

Satcom Direct

Balance at January 1, 2023

Activity in 2023

Balance at December 31, 2023

Activity in 2024

Balance at December 31, 2024

Our goodwill balance was $ 184.8 million and $ 0.6 million as of December 31, 2024 and 2023, respectively.

Refer to Note 2, “Acquisition of Satcom Direct,” for further information on the 2024 change in goodwill.

We have preliminarily allocated goodwill to segments of the Company.

As the Company finalizes the estimation of the fair value of assets acquired and liabilities assumed, additional adjustments to the amount of goodwill and the allocation to each segment may be necessary.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Our intangible assets, other than goodwill, as of December 31, 2024 and 2023 were as follows ( in thousands ):

As of December 31, 2024

1 unchanged sentence

Amortized intangible assets (1) :

Other intangible assets

Tradename and other intangible assets

Service customer relationships

3 unchanged sentences

Total intangible assets

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

(1) See Note 5, “Government Assistance,” for additional information .

Amortization expense for the years ended December 31, 2024, 2023 and 2022 was $ 3.9 million , $ 2.0 million and $ 4.7 million , respectively.

5 unchanged sentences

2021 Term Loan Facility

HPS Term Loan Facility

deferred financing costs

3 unchanged sentences

On April 30, 2021, Gogo and Gogo Intermediate Holdings LLC (“GIH”) (a wholly owned subsidiary of Gogo) entered into a credit agreement (the “Original 2021 Credit Agreement,” and, as it may be amended, supplemented or otherwise modified from time to time , the “2021 Credit Agreement”) among Gogo, GIH, the lenders and issuing banks party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent, which provides for (i) a term loan credit facility (the “2021 Term Loan Facility”) in an aggregate principal amount of $ 725.0 million, issued with a discount of 0.5 %, and (ii) a revolving credit facility (the “Revolving Facility” and together with the 2021 Term Loan Facility, the “2021 Facilities”) of up to $ 100.0 million, which includes a letter of credit sub-facility.

On February 2, 2023, Gogo and GIH entered into an amendment to the Original 2021 Credit Agreement with Morgan Stanley Senior Funding, Inc., as administrative agent, which replaced all references in the Original 2021 Credit Agreement to LIBOR in respect of the applicable interest rates for the Facilities with an adjusted term secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”), plus a credit spread adjustment recommended by the Alternative Reference Rates Committee.

We elected to apply the optional expedient within ASC 848, Facilitation of the Effects of Reference Rate Reform on Financial Reporting , to conclude that this modification was not substantial and did not have a material impact to our consolidated financial statements.

The Term Loan Facility amortizes in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the Term Loan Facility on April 30, 2028 .

There are no amortization payments under the Revolving Facility, and all borrowings under the Revolving Facility mature on April 30, 2026 .

The Term Loan Facility bears annual interest at a floating rate measured by reference to, at GIH’s option, either (i) an adjusted term SOFR rate (subject to a floor of 0.75 %) plus an applicable margin of 3.75 % and a credit spread adjustment recommended by the Alternative Reference Rates Committee of 0.11%, 0.26% or 0.43% per annum based on 1-month, 3-month or 6-month term SOFR, respectively or (ii) an alternate base rate plus an applicable margin of 2.75 %.

Loans outstanding under the Revolving Facility bear annual interest at a floating rate measured by reference to, at GIH’s option, either (i) an adjusted term SOFR rate (subject to a floor of 0.00 %) plus an applicable margin ranging from 3.25 % to 3.75 % per annum depending on GIH’s senior secured first lien net leverage ratio and a credit spread adjustment recommended by the Alternative Reference Rates Committee of 0.11 %, 0.26 % or 0.43 % per annum based on 1-month, 3-month or 6-month term SOFR, respectively or (ii) an alternate base rate plus an applicable margin ranging from 2.25 % to 2.75 % per annum depending on GIH’s senior secured first lien net leverage ratio.

Additionally, unused commitments under the Revolving Facility are subject to a fee ranging from 0.25 % to 0.50 % per annum depending on GIH’s senior secured first lien net leverage ratio.

As of December 31, 2023 , the fee for the unused commitments under the Revolving Facility was 0.25 % and the applicable margin was 3.25 %.

The 2021 Term Loan Facility matures on April 30, 2028.

On December 3, 2024, Gogo and GIH entered into a second amendment to the 2021 Credit Agreement, by and among, Gogo, GIH, guarantors party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, and the lenders party thereto, among other purposes, (a) increase the aggregate principal amount of revolving commitments available under the 2021 Credit Agreement to an aggregate amount of revolving commitments equal to $ 122 million and (b) extend the maturity date of the revolving facility to December 3, 2029 (subject to such maturity date springing to the date that is 90 days prior to the then-current maturity date of (a) the

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

2021 Term Loan Facility under the 2021 Credit Agreement and (b) the HPS Term Loan Facility under the HPS Credit Agreement under certain conditions).

The 2021 Term Loan Facility amortizes in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the 2021 Term Loan Facility.

There are no amortization payments under the Revolving Facility.

The 2021 Term Loan Facility bears annual interest at a floating rate measured by reference to, at GIH’s option, either (i) an adjusted term secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) (subject to a floor of 0.75 %) plus an applicable margin of 3.75 % and a credit spread adjustment of approximately 0.11%, 0.26% or 0.43% per annum based on 1-month, 3-month or 6-month term SOFR, respectively or (ii) an alternate base rate plus an applicable margin of 2.75 %.

Loans outstanding under the Revolving Facility bear annual interest at a floating rate measured by reference to, at GIH’s option, either (i) an adjusted term SOFR rate (subject to a floor of 0.00 %) plus an applicable margin ranging from 3.50 % to 4.00 % per annum depending on GIH’s senior secured first lien net leverage ratio or (ii) an alternate base rate plus an applicable margin ranging from 2.50 % to 3.00 % per annum depending on GIH’s senior secured first lien net leverage ratio.

Additionally, unused commitments under the Revolving Facility are subject to a fee ranging from 0.25 % to 0.50 % per annum depending on GIH’s senior secured first lien net leverage ratio.

As of December 31, 2024 , the fee for unused commitments under the Revolving Facility was 0.25 % and the applicable margin was 4.00 % for SOFR rate loans and 3.00 % for alternate base rate loans.

The 2021 Facilities may be prepaid at GIH’s option at any time without premium or penalty (other than customary breakage costs), subject to minimum principal payment amount requirements.

On May 3, 2023, the Company prepaid $ 100 million of the outstanding principal amount of the 2021 Term Loan Facility.

As a result, we wrote off $ 2.2 million of the deferred financing costs and unaccreted debt discount, which are included in Loss on extinguishment of debt and settlement of convertible notes in our Consolidated Statements of Operations for the year ended December 31, 2023.

As a result, we wrote off $ 2.2 million of the deferred financing costs and unaccreted debt discount, which are included in Loss on extinguishment of debt in our Consolidated Statements of Operations for the year ended December 31, 2023.

This prepayment satisfied the required amortization payments for the remaining term of the 2021 Term Loan Facility.

Subject to certain exceptions and de minimis thresholds, the 2021 Term Loan Facility is subject to mandatory prepayments in an amount equal to:

17 unchanged sentences

The 2021 Credit Agreement contains customary events of default, which, if any of them occurred, would permit or require the principal, premium, if any, and interest on all of the then outstanding obligations under the 2021 Facilities to be due and payable immediately and the commitments under the Revolving Facility to be terminated.

The Revolving Facility is available for working capital and general corporate purposes of GIH and its subsidiaries and was undrawn as of December 31, 2024 and 2023.

As of December 31, 2024 and 2023, the outstanding principal amount of the 2021 Term Loan Facility was $ 601.4 million and $ 606.9 million, respectively, the unaccreted debt discount was $ 1.7 million and $ 2.1 million, respectively, and the net carrying amount was $ 599.8 million and $ 604.8 million, respectively.

We paid approximately $ 19.7 million of loan origination and financing costs related to the Facilities which are being accounted for as deferred financing costs on our consolidated balance sheets and are amortized over the terms of the Facilities.

We paid approximately $ 21.6 million of loan origination and financing costs related to the 2021 Facilities, of which $ 1.9 million related to the second amendment to the 2021 Credit Agreement, which are being accounted for as deferred financing costs on our

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

consolidated balance sheets and are amortized over the terms of the 2021 Facilities.

Total amortization expense was $ 2.5 million , $ 2.4 million and $ 2.6 million, respectively, for the years ended December 31, 2024, 2023 and 2022 and is included in interest expense in our consolidated statements of operations.

4 unchanged sentences

subsidiary held directly by GIH or any Guarantor), subject to certain exceptions, to secure the obligations under the 2021 Facilities and certain other secured obligations as set forth in the Collateral Agreement.

The liens granted under the 2021 Term Loan Facility are subject to an intercreditor agreement and are pari passu with the liens granted under the HPS Term Loan Facility (as defined below).

HPS Credit Agreement

On December 3, 2024, the Company and GIH entered into a credit agreement (the “HPS Credit Agreement” and together with the 2021 Credit Agreement, the “Credit Agreements”) with HPS Investment Partners, LLC, as the administrative agent, and the lenders party thereto, which provides for a term loan credit facility (the “HPS Term Loan Facility”) in an aggregate principal amount of $ 250 million.

The HPS Term Loan Facility amortizes in quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the HPS Term Loan Facility on April 30, 2028.

The HPS Term Loan Facility bears annual interest at a floating rate measured by reference to, at the Company’s option, either (i) an adjusted term SOFR (subject to a floor of 1.00 %) plus an initial applicable margin of 6.00 %, which is subject to two leverage-based step-downs of up to 0.25 % each or (ii) an alternate base rate plus an applicable margin of 5.00 %, which is subject to two leverage-based step-downs of up to 0.25 % each.

The HPS Term Loan Facility may be prepaid at the Company’s option, at any time, without premium or penalty (other than customary breakage costs, and except that (a) during the first 12 months following the closing of the HPS Credit Agreement, certain prepayments of the HPS Term Loan Facility are subject to a 3.00% prepayment premium and (b) during the period from 12 months to 24 months following the closing of the HPS Credit Agreement, certain prepayments of the HPS Term Loan Facility are subject to a 1.00% prepayment premium), subject to minimum principal repayment amount requirements.

Subject to certain exceptions and de minimis thresholds, the HPS Term Loan Facility is subject to mandatory prepayments in an amount equal to:

• 100 % of the net cash proceeds of certain asset sales, insurance recovery and condemnation events;

• 100 % of the net cash proceeds of certain debt offerings;

• 75 % of annual excess cash flow (as defined in the HPS Credit Agreement), subject to reduction to 50 % if specified senior secured first lien net leverage ratio targets are met.

The HPS Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants.

The negative covenants include restrictions on, among other things:

the incurrence of indebtedness or issuance of disqualified equity interests;

the incurrence or existence of liens;

consolidations or mergers;

activities of the Company;

the making of investments, loans, advances, guarantees or acquisitions;

the making of dividends or other distributions on equity;

the purchase, redemption or retirement of capital stock;

payment or redemption of certain junior indebtedness;

activities of Federal Communications Commission license holders;

entry into other agreements that restrict the ability to incur liens securing the HPS Term Loan Facility.

The HPS Credit Agreement contains customary events of default, which, if any of them occurred, would permit or require the principal, premium, if any, and interest on all of the then outstanding obligations under the HPS Term Loan Facility to be due and payable immediately.

As of December 31, 2024, the outstanding principal amount of the HPS Term Loan Facility was $ 249.4 million , the unaccreted debt discount was $ 4.9 million and the net carrying amount was $ 244.5 million .

We paid approximately $ 2.2 million of loan origination and financing costs related to the HPS Credit Agreement which are being accounted for as deferred financing costs on our consolidated balance sheets and are amortized over the term of the HPS Credit Agreement.

Total amortization expense was less than $ 0.1 million for the year ended December 31, 2024 and is included in interest

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

expense in our consolidated statements of operations.

As of December 31, 2024, the balance of unamortized deferred financing costs related to the HPS Credit Agreement was $ 2.1 million .

On December 3, 2024, Gogo, GIH, and the Guarantors entered into a guarantee agreement (the “HPS Guarantee Agreement”) in favor of HPS Investment Partners, LLC, as collateral agent (the “HPS Collateral Agent”), whereby GIH and the Guarantors guarantee the obligations under the HPS Term Loan Facility and certain other secured obligations as set forth in the HPS Guarantee Agreement, and GIH and the Guarantors entered into a collateral agreement (the “HPS Collateral Agreement”), in favor of the Collateral Agent, whereby GIH and the Guarantors grant a security interest in substantially all of their respective tangible and intangible assets (including the equity interests in each direct material wholly-owned U.S.

restricted subsidiary owned by GIH or any Guarantor, and 65% of the equity interests in any non-U.S.

subsidiary held directly by GIH or any Guarantor), subject to certain exceptions, to secure the obligations under the HPS Term Loan Facility and certain other secured obligations as set forth in the HPS Collateral Agreement.

The liens granted under the HPS Term Loan Facility are subject to an intercreditor agreement and are pari passu with the liens granted under the 2021 Term Loan Facility.

2022 Convertible Notes

In 2018, we issued $ 237.8 million aggregate principal amount of 6.00 % Convertible Senior Notes due 2022 (the “2022 Convertible Notes”) in private offerings to qualified institutional buyers, including pursuant to Rule 144A under the Securities Act, and in concurrent private placements.

In 2021, $ 135.0 million aggregate principal amount of 2022 Convertible Notes was converted by holders and settled through the issuance of 24,353,006 shares of common stock.

In May 2022, the remaining $ 102.8 aggregate principal amount of 2022 Convertible Notes was converted by holders into 17,131,332 shares of common stock.

Thorndale Farm Private Equity Fund 2, LLC, an entity affiliated with our Chair of the Board and

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Chief Executive Officer, held $ 8.0 aggregate principal amount of 2022 Convertible Notes that was converted into 1,333,333 shares of common stock.

Thorndale Farm Private Equity Fund 2, LLC, an entity affiliated with our Executive Chair of the Board, held $ 8.0 aggregate principal amount of 2022 Convertible Notes that was converted into 1,333,333 shares of common stock.

We incurred approximately $ 8.1 million of issuance costs related to the issuance of the 2022 Convertible Notes that were amortized over the term of the 2022 Convertible Notes using the effective interest method.

Total amortization expense was $ 0.4 million and, $ 1.4 million , respectively, for the years ended December 31, 2022 and 2021 and is included in Interest expense in the consolidated statements of operations.

Total amortization expense was $ 0.4 million for the year ended December 31, 2022 and is included in Interest expense in the consolidated statements of operations.

See Note 11, “Interest Costs,” for additional information.

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There are no longer any additional prepaid forward stock repurchase transactions outstanding.

2024 Senior Secured Notes

On April 25, 2019, GIH and Gogo Finance Co.

(a wholly owned subsidiary of GIH) (“Gogo Finance” and, together with GIH, the “Issuers”) issued $ 905.0 million aggregate principal amount of 9.875 % senior secured notes due 2024 (the “2024 Senior Secured Notes”), at a price equal to 99.512 % of their face value, under an indenture, dated as of April 25, 2019, among the Issuers, Gogo, the subsidiary guarantors party thereto and U.S.

Bank National Association, as trustee.

On May 7, 2019, the Issuers issued an additional $ 20.0 million of 2024 Senior Secured notes, which were issued at a price equal to 100.5 % of their face value, and $ 50.0 million of 2024 Senior Secured Notes on November 13, 2020, which were issued at a price equal to 103.5 % of their face value.

The 2024 Senior Secured Notes were guaranteed on a senior secured basis by Gogo and all of GIH’s existing and future restricted subsidiaries (other than Gogo Finance), subject to certain exceptions.

The 2024 Senior Secured Notes and the related guarantees were secured by certain liens on the Company’s collateral, which were released upon the closing of the Transaction.

We paid approximately $ 22.6 million of origination fees and financing costs related to the issuance of the 2024 Senior Secured Notes, which were accounted for as deferred financing costs on our consolidated balance sheets and were being amortized over the contractual term of the 2024 Senior Secured Notes using the effective interest method.

Total amortization expense was $ 1.4 million for the year ended December 31, 2021.

Amortization expense is included in Interest expense in the consolidated statements of operations.

The 2024 Senior Secured Notes were redeemed on May 1, 2021 (the “Redemption Date”) at a redemption price equal to 104.938 % of the principal amount of the 2024 Senior Secured Notes redeemed, plus accrued and unpaid interest to (but not including) the Redemption Date.

The make-whole premium paid in connection with the redemption was $ 48.1 million.

We wrote off the remaining unamortized deferred financing costs of $ 15.2 million and the remaining debt discount of $ 1.3 million, which together are included in Loss on extinguishment of debt and settlement of convertible notes in our consolidated statements of operations for the year ended December 31, 2021.

ABL Credit Facility

On August 26, 2019, Gogo, GIH and Gogo Finance entered into a credit agreement (the “ABL Credit Agreement”) with the other loan parties party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Morgan Stanley

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Senior Funding, Inc., as syndication agent, which provided for an asset-based revolving credit facility (the “ABL Credit Facility”) of up to $ 30.0 million, subject to borrowing base availability, and includes letter of credit and swingline sub-facilities.

The obligations under the ABL Credit Agreement were guaranteed by Gogo and all of its existing and future subsidiaries, subject to certain exceptions and secured by collateral of the Company.

On April 30, 2021, the ABL Credit Agreement and all commitments thereunder were terminated.

As a result of the termination, the remaining unamortized deferred financing costs of $ 0.3 million were written off as of May 1, 2021 and included in Loss on extinguishment of debt and settlement of convertible notes in our consolidated statements of operations for the year ended December 31, 2021.

Derivative Instruments and Hedging Activities

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Accordingly, the earnings impact of the derivatives designated as cash flow hedges is recorded upon the recognition of the variable interest payments related to the hedged debt.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

In May 2021, we purchased interest rate caps with an aggregate notional amount of $ 650.0 million for $ 8.6 million.

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We assess the effectiveness of the hedges on an ongoing basis, and the remaining outstanding caps are still considered to be highly effective, and remain designated as a cash flow hedge.

Cash flows from interest rate caps are classified in the consolidated statements of cash flows as investing activities from continuing operations.

Cash flows from interest rate caps are classified in the consolidated statements of cash flows as investing activities.

For the year ended December 31, 2024, we recorded a decrease in fair value on the interest rate caps of $ 12.0 million, net of tax of $ 3.0 million.

For the year ended December 31, 2022, we recorded an increase in fair value on the interest rate caps of $ 28.4 million, net of tax of $ 9.3 million.

For the year ended December 31, 2023, we recorded a decrease in fair value on the interest rate caps of $ 16.1 million, net of tax of $ 4.8 million.

Increases and decreases in fair value on interest rate caps above exclude amortization of the purchase price paid for the interest rate caps.

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Fair Value Measurement

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Our derivative assets and liabilities consist principally of interest rate caps, which are carried at fair value based on significant observable inputs (Level 2 inputs).

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These models take into account a variety of factors including, where applicable, maturity, interest rate yield curves, and counterparty credit risks.

Reference Rate Reform

In March 2020, the FASB issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

ASU 2020-04, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

The amendments in ASU 2021-01 provide optional expedients to the current guidance on contract modification and hedge accounting from the expected market transition from LIBOR and other interbank offered rates to alternative reference rates.

The guidance generally can be applied to applicable contract modifications through December 31, 2024.

The Company evaluated the impact of ASU 2020-04 and 2021-01, both of which were previously adopted by the Company, and has made necessary changes to its affected contracts in order to capture the market transition from LIBOR to SOFR.

On February 2, 2023 the Company modified its 2021 Credit Agreement to use the Secured Overnight Financing Rate (“SOFR”) as a reference rate rather than LIBOR (see Note 8, “Long-Term Debt and Other Liabilities”).

In conjunction with the amendment of the debt, the Company’s derivative positions automatically transitioned to SOFR, the designated fallback as determined by the International Swaps and Derivatives Association on July 31, 2023.

Concurrently, the Company updated its hedge documentation to reflect the changing of the benchmark index, which changed solely as a result of reference rate reform.

Under ASC 848, Reference Rate Reform, hedge accounting may continue without de-designation if certain criteria are met.

For cash flow hedges in which the designated hedged risk is LIBOR (or another rate that is expected to be discontinued), the guidance allows an entity to assert that it remains probable that the hedged forecasted transaction will occur.

The Company has assessed the effectiveness of the amended hedge relationship and concluded that the hedge relationship remains highly effective.

The Company applied the optional expedient within ASC 848 to conclude the updates to the hedge relationship due to reference rate reform did not have a material impact on the Company's consolidated financial statements .

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

Interest Costs

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Total interest costs

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Notes to Consolidated Financial Statements – (Continued)

Fair Value of Financial Assets and Liabilities

A three-tier fair value hierarchy has been established which prioritizes the inputs used in measuring fair value.

These tiers include:

• Level 1 - defined as observable inputs such as quoted prices for identical assets or liabilities in active markets;

• Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Refer to Note 2, “Acquisition of Satcom Direct,” for fair value information relating to the Satcom Direct acquisition.

Refer to Note 10, “Derivative Instruments and Hedging Activities,” for fair value information relating to our interest rate caps.

Investment in Convertible Note:

On February 26, 2024, Gogo invested $ 5 million in a convertible note offering (“Investment in Convertible Note”).

The Investment in Convertible Note accrues interest at 5 % per annum, payable upon maturity of the note or upon conversion, and matures two years after the date of issuance.

We have elected to measure our Investment in Convertible Note using the fair value option and record changes in fair value, including accrued interest, in Other (income) expense, net on the Consolidated Statements of Operations.

The Company elected the fair value option for the Investment in Convertible Note to eliminate complexities of applying certain accounting models.

The fair value of the Investment in Convertible Note is measured using Level 3 (unobservable) inputs.

The Company, with the assistance of a third-party valuation specialist, determined the fair value using a binomial lattice model.

The significant assumptions used in the model include the yield, equity volatility, outstanding principal, remaining term, stated interest rate, risk-free interest rate and the current publicly available stock price.

The yield is estimated using similar security yields for companies with similar credit ratings.

Equity volatility is estimated based on observed equity volatility for similar companies.

The outstanding principal, remaining term and stated interest rate are all determined based on contractually defined terms and the risk-free interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of measurement for time periods approximately equal to the remaining time to maturity.

The reconciliation of beginning and ending balances of the Investment in Convertible Note as of December 31, 2024 were as follows (in thousands) :

For the Year Ended December 31,

Balance at beginning of period

Change in fair value

Balance at end of period

Long-Term Debt:

As of December 31, 2023 and 2022, our only financial asset and liability disclosed but not measured at fair value is the Term Loan Facility, which is reflected on the consolidated balance sheets at cost.

The fair value measurement is classified as Level 2 within the fair value hierarchy since it is based on quoted market prices of our instrument in markets that are not active.

We estimated the fair value of the Term Loan Facility by calculating the upfront cash payment a market participant would require to assume this obligation.

The upfront cash payment used in the calculation of fair value on our consolidated balance sheets, excluding any issuance costs, is the amount that a market participant would be willing to lend at such date to an entity with a credit rating similar to ours and that would allow such an entity to achieve sufficient cash inflows to cover the scheduled cash outflows under the Term Loan Facility.

As of December 31, 2024, our only financial assets and liabilities disclosed but not measured at fair value are the 2021 Term Loan Facility and the HPS Term Loan Facility, which are reflected on the consolidated balance sheets at cost.

As of December 31, 2023, only the 2021 Term Loan Facility was disclosed but not measured at fair value.

The fair value measurements are classified as Level 2 within the fair value hierarchy since they are based on quoted market prices of our instruments in markets that are not active.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

We estimated the fair values of the 2021 Term Loan Facility and the HPS Term Loan Facility by calculating the upfront cash payments a market participant would require to assume these obligations.

The upfront cash payments used in the calculations of fair values on our consolidated balance sheets, excluding any issuance costs, are the amounts that a market participant would be willing to lend at such date to an entity with a credit rating similar to ours and that would allow such an entity to achieve sufficient cash inflows to cover the scheduled cash outflows under the 2021 Term Loan Facility and HPS Term Loan Facility.

The fair value and carrying value of long-term debt as of December 31, 2024 and 2023 was as follows (in thousands) :

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2021 Term Loan Facility

HPS Term Loan Facility

(1) Fair value amounts are rounded to the nearest million.

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See Note 9, “Long-Term Debt and Other Liabilities,” for further information.

(3) Carrying value of the HPS Term Loan Facility reflects the unaccreted debt discount of $ 4.9 million as of December 31, 2024.

See Note 9, “Long-Term Debt and Other Liabilities,” for further information.

Business Segments

As a result of the Company’s acquisition of Satcom Direct, as described in Note 2, “Acquisition of Satcom Direct,” the Company has two reportable segments as of December 31, 2024:

Gogo BA and Satcom Direct.

The Gogo BA segment provides in-flight connectivity for business aviation via air-to-ground and satellite networks.

The Satcom Direct segment provides global satellite-based communication solutions primarily for business, military and government aircraft.

Corporate costs are primarily included within the Gogo BA segment.

The accounting policies of the operating segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.” Intercompany transactions between segments are excluded as they are not included in management’s performance review of the segments.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer (“CEO”).

The CODM makes resource and operating decisions by evaluating performance and business results of the segments’ net income (loss).

Results attributable to the Satcom Direct segment are for the period beginning on the Closing through December 31, 2024.

Information regarding our reportable segments is as follows ( in thousands ):

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Notes to Consolidated Financial Statements – (Continued)

For the Years Ended December 31,

Satcom Direct

Service revenue

Equipment revenue

Total revenue

Operating expenses:

Cost of service revenue (exclusive of items shown below)

Cost of equipment - product

Cost of equipment - other

Total cost of equipment revenue (exclusive of items shown below)

Engineering, design and development

Sales and marketing

General and administrative

Depreciation and amortization

Total operating expenses

Operating income (loss)

Other expense (income):

Interest income

Interest expense

Loss on extinguishment of debt

Other (income) expense, net

Total other expense

Income (loss) before income taxes

Income tax provision (benefit)

Net income (loss)

Other segment disclosures:

Consolidated capital expenditures

Information regarding consolidated revenues by geographic area is as follows (in thousands) :

For the Years Ended December 31,

United States

International

Information regarding consolidated long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets is as follows (in thousands) :

As of December 31,

United States

International

No customer accounted for more than 10 % of total revenue for the years ended December 31, 2024, 2023 and 2022 and no customer accounted for more than 10 % of accounts receivable as of December 31, 2024 or 2023 .

Stock-Based Compensation and 401(k) Plan

As of December 31, 2023, we maintained the Second Amended and Restated Gogo Inc.

2016 Omnibus Incentive Plan (the “2016 Omnibus Plan”).

The 2016 Omnibus Plan provides for the grant of both equity and cash awards, including non-qualified stock options, incentive stock options, stock appreciation rights, performance awards (shares and units), restricted stock, RSUs, deferred share units (“DSUs”) and other stock-based awards and dividend equivalents to eligible employees, directors and consultants, as determined by the Compensation Committee of our Board of Directors (the “Compensation Committee”).

The Gogo Inc.

2013 Omnibus Incentive Plan (the “2013 Omnibus Plan”), The Aircell Holdings Inc.

Stock Option Plan, and the Employee Stock Purchase Plan (“ESPP”) have all expired.

Under the 2016 Omnibus Plan, 33,234,128 shares of common stock were reserved for issuance.

As of December 31, 2023 , 4,432,317 shares remained available for grant under the 2016 Omnibus Plan.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

As of December 31, 2024, we maintained the 2024 Omnibus Equity Incentive Plan (the “2024 Plan”), which replaced the Second Amended and Restated Gogo Inc.

2016 Omnibus Incentive Plan (the “2016 Plan”).

The 2024 Plan provides for the grant of both equity and cash awards, including non-qualified stock options, incentive stock options, stock appreciation rights, performance awards (shares and units), restricted stock, RSUs, deferred share units (“DSUs”) and other stock-based awards and dividend equivalents to eligible employees, directors and consultants, as determined by the Compensation Committee of our Board of Directors (the “Compensation Committee”).

Concurrent with the effectiveness of the 2024 Plan on June 4, 2024, no further grants are being made under the 2016 Plan.

The 2016 Plan remains in effect for all awards outstanding thereunder on or after June 4, 2024.

The majority of our equity grants are awarded on an annual basis.

Additionally, in connection with the Company’s acquisition of Satcom Direct on December 3, 2024, 2,275,000 shares were granted, consisting of a combination of RSUs and performance-based restricted stock units (“PSUs”) (together, the “Inducement Awards”) by the Compensation Committee.

The RSUs will vest in equal annual installments over the five-year period following the grant date.

The PSUs are subject to performance-based vesting and will vest when the performance-based vesting conditions are met.

Though not awarded pursuant to the 2024 Plan, the Inducement Awards have been issued subject to the terms and conditions of the 2024 Plan.

Upon effectiveness of the 2024 Plan on June 4, 2024 , 6,940,644 shares of common stock were reserved for issuance.

As of December 31, 2024 , 6,934,107 shares remained available for grant under the 2024 Plan.

The contractual life of granted options is 10 years .

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Beginning in 2013, we granted RSUs, which generally vest in equal annual increments over a four-year period.

Vested RSUs will be settled, at the discretion of the Compensation Committee, in shares of our common stock or in cash equal to the value of the

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Notes to Consolidated Financial Statements – (Continued)

applicable number of shares of our common stock on the vesting date.

Vested RSUs will be settled, at the discretion of the Compensation Committee, in shares of our common stock or in cash equal to the value of the applicable number of shares of our common stock on the vesting date.

We also granted DSUs to directors, some of which vest on the grant date and others on the first anniversary of the grant date.

DSUs will be settled in shares of our common stock after the director ceases to serve as a director.

We intend to settle RSU and DSU awards in stock and we have the shares available to do so.

The following is a summary of our stock-based compensation expense included in the consolidated statements of operations, excluding the stock-based compensation expense for discontinued operations, for the years December 31, 2023, 2022 and 2021 (in thousands) :

We intend to settle RSU and DSU awards in stock.

The following is a summary of our stock-based compensation expense included in the consolidated statements of operations, for the years December 31, 2024, 2023 and 2022 (in thousands) :

For the Years Ended December 31,

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Options exercisable – December 31, 2024

As of December 31, 2023, total unrecognized compensation costs related to unvested stock options were immaterial.

The total grant date fair value of stock options vested in 2023, 2022 and 2021 was approximately $ 0.3 million , $ 18 million and $ 10 million, respectively.

We estimate the fair value of stock options using the Black-Scholes option-pricing model.

No stock options were granted during the years ended December 31, 2023 and 2022.

Weighted average assumptions used and weighted average grant date fair value of stock options granted for the years ended December 31, 2021 were as follows:

For the Years Ended December 31,

Approximate risk-free interest rate

Average expected life (years)

Dividend yield

Weighted average grant date fair value of common

stock underlying options granted

Weighted average grant date fair value of stock

options granted

The risk-free interest rate assumptions were based on the U.S.

Treasury yield curve for the term that mirrored the expected term in effect at the time of grant.

The expected life of our stock options was determined based upon a simplified assumption that the stock options will be exercised evenly from vesting to expiration, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected life.

The dividend yield was based on expected dividends at the time of grant.

Beginning in 2020, we calculated volatility based exclusively on our common stock.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

The following table summarizes the activities for our unvested RSUs and DSUs for the year ended December 31, 2023:

The total grant date fair value of stock options vested in 2024, 2023 and 2022 was approximately $ 0.1 million, $ 0.3 million and $ 18 million, respectively.

The following table summarizes the activities for our unvested RSUs, PSUs and DSUs for the year ended December 31, 2024:

Unvested – January 1, 2024

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Unvested – December 31, 2024

As of December 31, 2023, there was approximately $ 37 million of unrecognized compensation cost related to unvested employee RSUs.

As of December 31, 2024, there was approximately $ 47 million of unrecognized compensation cost related to unvested employee RSUs and PSUs.

This amount is expected to be recognized over a weighted-average period of approximately 2.6 years.

The total grant date fair value of RSUs and DSUs vested in 2024 was approximately $ 22 million .

ESPP - We had an ESPP which expired during 2023.

The ESPP allowed eligible employees to purchase a limited number of shares of common stock during pre-specified offering periods at a discount established by the Compensation Committee which could not exceed 15 % of the fair market value of the common stock at the beginning or end of the offering period (whichever was lower).

Under the ESPP, 2,200,000 shares were reserved for issuance and 29,257 shares of common stock were issued during the year ended December 31, 2023.

In connection with the acquisition of Satcom Direct discussed in Note 2, “Acquisition of Satcom Direct,” the Company issued PSUs to certain executives that vest upon the achievement of pre-established metrics tied to the price of the Company’s common stock.

The PSUs have an indefinite contractual life and are expensed over the estimated expected life of the award.

We estimate the fair value of PSUs using a Monte Carlo simulation.

The significant assumptions used in the Monte Carlo simulation were as follows:

For the Years Ended December 31,

Approximate risk-free interest rate

Average expected life (years)

Dividend yield

Weighted average grant date fair value of PSUs granted

The risk-free interest rate assumption was based on the U.S.

Treasury yield curve for the term that mirrored the Monte Carlo simulation term.

The expected life of the PSUs represents the derived service period that is inferred from the median of the distribution of share price paths on which the PSU conditions are satisfied.

The dividend yield was based on expected dividends at the time of grant.

Volatility was calculated using the historical volatility of the Company’s common stock.

ESPP - In 2024, the Board of Directors and stockholders approved the 2024 Employee Stock Purchase Plan (the “ESPP”), which became effective June 4, 2024.

The prior ESPP expired during 2023.

The ESPP allows eligible employees to purchase a limited number of shares of common stock during pre-specified offering periods at a discount established by the Compensation Committee which may not exceed 15 % of the fair market value of the common stock at the beginning or end of the offering period (whichever was lower).

Under the ESPP, 700,000 shares were reserved for issua nce and 36,704 shares of common stock were issued during the year ended December 31, 2024.

As of December 31, 2024 , 663,296 sh ares remained available for purchase under the ESPP.

401(k) Plan - Under our 401(k) plan, all employees who are eligible to participate are entitled to make tax-deferred contributions, subject to Internal Revenue Service limitations.

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Our matching contributions were $ 2.8 million , $ 2.3 million, and $ 2.1 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

For financial reporting purposes, the income (loss) from continuing operations before income taxes included the following components for the years ended December 31, 2023, 2022, and 2021 ( in thousands ):

For financial reporting purposes, the income before income taxes included the following components for the years ended December 31, 2024, 2023, and 2022 ( in thousands ):

For the Years Ended December 31,

United States

Income (loss) before income taxes

Significant components of the provision (benefit) for income taxes from continuing operations for the years ended December 31, 2023, 2022, and 2021 are as follows ( in thousands ):

For the Years Ended December 31,

Income before income taxes

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

The provision (benefit) for income taxes from continuing operations differs from income taxes computed at the federal statutory tax rates for the years ended December 31, 2023, 2022, and 2021 as a result of the following items:

Significant components of the provision (benefit) for income taxes for the years ended December 31, 2024, 2023, and 2022 are as follows ( in thousands ):

For the Years Ended December 31,

The provision (benefit) for income taxes differs from income taxes computed at the federal statutory tax rates for the years ended December 31, 2024, 2023, and 2022 as a result of the following items:

For the Years Ended December 31,

Federal statutory rate

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Excess tax benefits on stock-based compensation

Loss on settlement of 2022 Convertible Notes

Foreign branch income (loss)

Basis adjustment

Effective tax rate

In addition to the Deferred income taxes on the consolidated balance sheets, the Company has a deferred tax liability of $ 4.7 million related to foreign entities included in Other non-current liabilities as of December 31, 2024.

Components of the net deferred income tax asset as of December 31, 2024 and 2023 are as follows ( in thousands ):

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Operating lease liability

Section 174 costs

Total deferred income tax assets

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Net deferred income tax asset

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

We regularly assess the need for a valuation allowance related to our deferred income tax assets to determine, based on the weight of all available positive and negative evidence, whether it is more likely than not that some or all of such deferred assets will not be realized.

In our assessments, the Company considers recent financial operating results, the scheduled expiration of our net operating losses, future taxable income, the reversal of existing taxable differences, and tax planning strategies.

Based on our most recent assessment, for the year ended December 31, 2023, we released $ 72.8 million of the valuation allowance for the portion of our deferred income tax assets that we expect will ultimately be more likely than not to be realized.

As of December 31, 2023, we can demonstrate an estimate of objectively verifiable future income based on the prior three years of pre-tax income from continuing operations.

This estimate of future income, along with our assessment of the other available positive and negative evidence considered, supports the release of a portion of the valuation allowance.

The remaining valuation allowance is still required for deferred tax assets related to certain state credits, foreign NOLs and capital loss carryforwards as it is more likely than not as of December 31, 2023 that these deferred tax assets will not be realized.

Based on our most recent assessment, as of December 31, 2024 and 2023 , the Company had valuation allowances of $ 23.2 million and $ 25.6 million, respectively, against its deferred tax assets.

The Company’s valuation allowance decreased by $ 2.4 million.

The decrease primarily related to the expiration of an unused state tax attribute and a reduction in certain foreign net operating losses.

This decrease was partially offset by valuation allowances established through the opening balance sheet for Canadian deferred tax assets acquired from Satcom Direct of $ 3.7 million.

Refer to Note 2, “Acquisition of Satcom Direct,” for further information.

Management believes the remaining deferred tax assets are more likely than not to be realized based on the weight of available positive and negative evidence.

The valuation allowances pertain to certain state tax credits, foreign net operating losses (NOLs), and capital loss carryforwards.

Management believes it is more likely than not that these deferred tax assets will not be realized as of December 31, 2024.

If our current operating performance continues, further reversals of our valuation allowance could occur within the next twelve months.

As of December 31, 2024, the federal net operating loss (“NOL”) carryforward, state NOL carryforward and Canadian NOL carryforward were approximately $ 363 million , $ 356 million , and $ 44 million , respectively.

We have recorded a deferred tax asset of $ 93.6 million , $ 22.2 million , and $ 14.2 million for federal NOLs, state NOLs, and Canadian NOLs, respectively, reflecting the benefit of these loss carryforwards.

Certain of the federal and state NOLs begin to expire in 2034 and 2024, respectively.

We have recorded a deferred tax asset of $ 76.2 million , $ 20.7 million , and $ 11.6 million for federal NOLs, state NOLs, and foreign NOLs, respectively, reflecting the benefit of these loss carryforwards.

The foreign NOLs are primarily comprised of Canadian NOLs of $ 43.6 million.

The federal and state NOLs begin to expire in 2035 and 2025, respectively.

The Canadian NOL carryforward begins to expire in 2034.

The interest carryforward arises from the Tax Cuts and Jobs Act and generally limits the interest expense deduction to 30 % of income (loss) attributable to common stock before interest expense, interest income, income taxes and depreciation and amortization for tax years 2018 to 2021 and 30 % of income (loss) attributable to common stock before interest expense, interest income and income taxes for 2022 and subsequent years.

The interest carryforward will not expire as it may be carried forward indefinitely.

and Subsidiaries

Notes to Consolidated Financial Statements – (Continued)

On December 3, 2024, Gogo Direct Holdings LLC completed its acquisition of Satcom Direct.

See Note 2, “Acquisition of Satcom Direct,” for further information on the Purchase Agreement.

income tax purposes, the acquisition of the U.S group was treated as a deemed asset acquisition whereby the Company received a step up in basis of the acquired assets and liabilities.

The acquisition of the foreign operations was treated as a stock acquisition for local income tax purposes, whereby the Company acquired the carryover tax basis in the foreign operations' assets and liabilities.

The Company recorded a net deferred tax liability of $ 3.8 million through the opening balance sheet related to this acquisition.

Uncertain Tax Positions - As of December 31, 2024, the total amount of gross unrecognized tax benefits was $ 1.7 million.

As of December 31, 2023 , the total amount of gross unrecognized tax benefits was $ 1.9 million.

We do not expect a change in the unrecognized tax benefits within the next 12 months.

The aggregate change in the balance of gross unrecognized tax benefits, which excludes interest and penalties for the years ended December 31, 2024 and 2023 is as follows (in thousands) :

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Ending balances

We are subject to taxation and file income tax returns in the United States federal jurisdiction and many states and Canada.

We are subject to taxation and file income tax returns in the United States federal jurisdiction, various states and several foreign jurisdictions including, but not limited to, Canada, Switzerland, United Kingdom, Australia, Brazil and Singapore.

With few exceptions, as of December 31, 2024, we are no longer subject to U.S.

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We do no t expect a change in the unrecognized tax benefits within the next 12 months.

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Notes to Consolidated Financial Statements – (Continued)

The following is a summary of our lease expense included in the consolidated statement of operations (in thousands) :

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Finance leases

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Notes to Consolidated Financial Statements – (Continued)

Annual future minimum lease payments as of December 31, 2024 (in thousands) :

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Such commitments will become payable as we receive the hardware components or as development services are provided.

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Notes to Consolidated Financial Statements – (Continued)

On September 18, 2024, we entered into an amendment (the “Amendment”) to that certain OneWeb Distribution Partner Agreement by and between Gogo Business Aviation LLC and Network Access Associates Limited (“Eutelsat OneWeb”), dated as of May 19, 2022 and as previously amended on October 5, 2022 (the “Original Agreement”).

Pursuant to the Original Agreement, Gogo partners with Eutelsat OneWeb to utilize its global low earth orbit satellite network.

Pursuant to the Amendment, Gogo has made a total guaranteed minimum commitment of $ 52.5 million over a four-year term, with an option to extend.

Following the initial term, the Amendment will automatically renew for successive one-year periods unless one party provides written notice of its intent not to renew, and either party may terminate the Amendment for breach or for insolvency rights.

The Amendment also contains customary terms regarding confidentiality, indemnification and limitation of liability.

On May 17, 2024, Airspan Networks Holdings Inc.

(“Airspan”) filed a plan supplement to its Joint Prepackaged Chapter 11 Plan of Reorganization, Case No.

24-10621 (the “Plan”), whereby the Company and Fortress Credit Corp.

(“Fortress”) agreed in principle to each provide fifty percent (50%) of a new first lien revolving facility in an aggregate committed principal amount of $ 20.0 million (the “New Revolving Credit Facility”).

Unless otherwise extended by the parties, any amounts outstanding under the New Revolving Credit Facility shall be due and payable in full on the first anniversary of the closing date of the New Revolving Credit Facility.

The Plan, including the Company’s participation in the New Revolving Credit Facility, was approved by the Bankruptcy Court for the District of Delaware on June 28, 2024.

On June 27, 2024, Airspan and the Company amended the Master Service Agreement, dated November 25, 2019.

Further, on October 11, 2024, in connection with Airspan becoming a private company, the Company, Airspan and Fortress executed the necessary documents for the New Revolving Credit Facility to become effective .

The New Revolving Credit Facility was undrawn as of December 31, 2024.

On January 23, 2025, Airspan borrowed $ 5.0 million under the New Revolving Credit Facility, of which $ 2.5 million was the Company’s obligation.

In June 2022, we entered into a supply and product support agreement (the “SPSA”) with Hughes Network Systems, LLC (“Hughes”), providing for our purchase from Hughes of airborne half duplex (“HDX”) antennas for use on a LEO satellite network, and the performance by Hughes of services related thereto.

Under the SPSA, we commit to purchase, over a seven-year period that will begin on completion of a project milestone currently expected to occur in the second half of 2024, HDX antennas with an estimated aggregate purchase price of approximately $ 170 million.

Under the SPSA, we commit to purchase, over a seven-year period that began on completion of a project milestone that occurred in the second half of 2024, HDX antennas with an estimated aggregate purchase price of approximately $ 170 million.

During the contractual seven-year period, Hughes may not sell substantially similar equipment to other purchasers in our primary target market.

In March 2023, we amended the SPSA, pursuant to which, we committed to purchase, over a seven-year period that will begin on completion of a project milestone currently expected to occur in mid-2025, full duplex (“FDX”) antennas with an estimated aggregate purchase price of approximately $ 102 million.

On February 26, 2024, Gogo invested $ 5 million in a convertible note offering issued by one of our suppliers.

Derivative Litigation – On September 25, 2018 and September 26, 2018 , two purported stockholders of the Company filed substantively identical derivative lawsuits in the Court, styled Nanduri v.

and Hutsenpiller v.

Gogo Inc., respectively.

Both lawsuits were purportedly brought derivatively on behalf of us and name us as a nominal defendant and name as defendants each then-current member of the Company’s Board of Directors, its former Chief Executive Officer and Chief Financial Officer, its then-current President, Commercial Aviation, and its current Chief Executive Officer and Chief Financial Officer.

On January 5, 2023, following mediation, the Company entered into a Stipulation and Agreement of Settlement (the “Derivative Settlement”) with the plaintiffs named in the foregoing derivative lawsuits and a stockholder that made substantially the same allegations via a letter sent to the Company’s then-Board of Directors, dated June 21, 2021 (collectively, the “Stockholders”).

Pursuant to the terms of the Derivative Settlement, the Company implemented certain corporate governance initiatives (the “Governance Initiatives”) and caused its D&O insurance carrier to pay the attorneys’ fees for the Stockholders in consideration of dismissal of the two derivative lawsuits with prejudice and a release of all claims asserted against the Company and the individual defendants named in the derivative lawsuits.

Under the terms of the Derivative Settlement, the defendants were not required to pay any damages.

We had accrued a liability for attorneys’ fees within Accrued liabilities and a corresponding receivable in Prepaid expenses and other current assets in the consolidated balance sheets as of December 21, 2022.

On April 11, 2023, the Court issued final judgment approving the Derivative Settlement.

The Company released the accrued liability and corresponding receivable for attorneys’ fees as of March 31, 2023 and pursuant to the terms of the Derivative Settlement, has implemented the Governance Initiatives.

The Company accrued a contingent liability of $ 5.0 million in Accrued liabilities in the Consolidated Balance Sheets as of December 31, 2024 for state and local taxes in a variety of jurisdictions for periods between 2010 and 2023 related to Satcom Direct’s pre-acquisition business activities.

While the Company believes that the reserve represents the best current estimate of any potential liability in the area of state and local taxes, there can be no assurance that the outcome of discussions with any state taxing authority will not result in the payment of state sales taxes for prior periods, or that the amount of any such payments will not be materially different than the liability currently recorded.

Pursuant to the terms of the Purchase Agreement, the Company has accrued a $ 5.0 million indemnification receivable in Prepaid expenses and other current assets in the Consolidated Balance Sheets as of December 31, 2024.

See Note 2, “Acquisition of Satcom Direct,” for further information on the Purchase Agreement.

SmartSky Litigation – On February 28, 2022 , SmartSky Networks, LLC brought suit against Gogo Inc.

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On February 21, 2023, the plaintiff amended its complaint to allege that Gogo 5G infringes two additional patents recently issued to the plaintiff.

The suit seeks an unspecified amount of compensatory damages as well as treble

The suit seeks compensatory damages as well as treble damages for alleged willful infringement and reimbursement of plaintiff's costs, disbursements and attorneys' fees.

On May 29, 2024, Gogo Inc.

and its subsidiary Gogo Business Aviation LLC amended its answer and counterclaims in the same suit, alleging that three of the six patents asserted by SmartSky are unenforceable due to inequitable conduct before the U.S.

Patent Office.

A trial date has been scheduled for November 17, 2025.

Claim construction proceedings, fact discovery and expert discovery are completed.

Dispositive motions were filed on October 25, 2024 and await resolution.

We continue to vigorously defend our position in the infringement suit.

The outcome of the underlying litigation is inherently uncertain.

No amounts have been accrued for any potential losses under this matter, as we cannot reasonably predict the outcome of the litigation or any potential losses.

On March 5, 2024, Gogo Inc.

and its subsidiary Gogo Business Aviation LLC filed counterclaims in the same suit, alleging that SmartSky’s ATG network, Flagship equipment, and LITE ATG equipment infringe three patents owned by Gogo.

Gogo’s counterclaim suit seeks an unspecified amount of compensatory damages as well as reimbursement of Gogo's costs and attorneys' fees.

On April 10, 2024, the Court held that Gogo's counterclaims would proceed under a separate schedule and would be tried separately from SmartSky's claims.

The court entered a scheduling order for Gogo’s counterclaims on January 14, 2025 with a trial date of March 8, 2027.

On December 16, 2024, SmartSky Networks, LLC sued Gogo Inc.

and its subsidiaries alleging that Gogo maintains an illegal monopoly over air-to-ground broadband inflight connectivity products and services and has blocked SmartSky from entering the market in violation of antitrust laws.

SmartSky also alleges claims of false advertising, unfair and deceptive trade practices, and tortious interference.

The suit seeks actual damages, treble damages, punitive damages, disgorgement of profits, reimbursement of plaintiff's

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Notes to Consolidated Financial Statements – (Continued)

damages for alleged willful infringement and reimbursement of plaintiff's costs, disbursements and attorneys' fees.

Under a schedule agreed upon by the parties, fact discovery and claim construction proceedings will be substantially completed by early 2024, and expert discovery by early-to-mid 2024, with dispositive motions to follow.

A trial date has been scheduled for April 14, 2025.

Also on February 28, 2022, the plaintiff filed a motion (the “PI Motion”) requesting that the Court preliminarily enjoin the Company from making, using, offering to sell or selling the Gogo 5G system.

On September 26, 2022, the Court issued an order denying the PI Motion.

The plaintiff appealed the denial to the U.S.

Court of Appeals for the Federal Circuit.

Briefing for the appeal is complete and the appellate court heard oral arguments on June 5, 2023.

On January 31, 2024, the U.S.

Court of Appeals for the Federal Circuit affirmed the decision of the Court to deny the PI Motion.

We intend to continue to vigorously defend our position in the infringement suit and defend against the appeal.

The outcomes of the appeal and the underlying litigation are inherently uncertain.

costs, attorneys' fees, pre- and post-judgment interest, and interest on actual damages.

We will vigorously defend our position in this lawsuit.

The outcome of the litigation is inherently uncertain.

No amounts have been accrued for any potential losses under this matter, as we cannot reasonably predict the outcome of the litigation or any potential losses.

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We cannot predict with certainty the outcome of any litigation or the potential for future litigation.

With respect to such legal proceedings, we accrue a loss when it is probable and its amount can be reasonably estimated.

Regardless of the outcome of any particular litigation and the merits of any particular claim, litigation can have a material adverse impact on our Company due to, among other reasons, any injunctive relief granted, which could inhibit our ability to operate our business, amounts paid as damages or in settlement of any such matter, diversion of management resources and defense costs.

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Balance at January 1, 2022

Other comprehensive income before reclassifications

loss realized and reclassified to earnings

Net current period comprehensive income

Balance at December 31, 2021

Other comprehensive income (loss) before reclassifications

income realized and reclassified to earnings

Net current period comprehensive income

Net current period comprehensive income (loss)

Balance at December 31, 2022

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Balance at December 31, 2023

Other comprehensive income (loss) before reclassifications

income realized and reclassified to earnings

Net current period comprehensive income (loss)

Balance at December 31, 2024

Common Stock and Preferred Stock

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Share Repurchases – On September 5, 2023, we announced a share repurchase program that grants the Company authority to repurchase up to $ 50 million of shares of the Company’s common stock.

Repurchases may be made at management's discretion from time to time on the open market, through privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act, as amended, in accordance with applicable securities laws and other restrictions.

Repurchases may be made at management's discretion from time to time on the open market, through privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.

The repurchase program has no time limit and may be suspended for periods or discontinued at any time and does not obligate us to purchase any shares of our common stock.

The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other

The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations.

We do not expect to incur debt to fund the share repurchase program.

During the years ended December 31, 2024 and 2023 , we repurchased an aggregate 4.0 million shares and 0.5 million shares, respectively, of our common stock for $ 33.2 million and $ 4.8 million, respectively.

As of December 31, 2024, approximately $ 12.1 million remains available under the share repurchase program.

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Notes to Consolidated Financial Statements – (Continued)

considerations.

We do not expect to incur debt to fund the share repurchase program.

During the year ended December 31, 2023 , we repurchased an aggregate 0.5 million shares of our common stock for $ 4.8 million.

During September 2022, we repurchased 1.5 million shares of common stock in a private transaction for an aggregate purchase price of $ 18.3 million.

Shareholder Rights Plan – On September 23, 2020, our Board of Directors adopted a Section 382 Rights Agreement (as amended, the “Rights Agreement”), between the Company and Computershare Trust Company, N.A., as rights agent.

The Rights Agreement was intended to reduce the likelihood of an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended, by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the shares of the Company’s common stock then-outstanding .

The Rights Agreement expired on September 23, 2023 and the Board of Directors voted not to renew the agreement.

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Deferred income taxes

Liabilities and stockholders’ deficit:

Liabilities and stockholders’ equity:

Other current liabilities

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Total liabilities

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ deficit

Condensed Statements of Operations and Comprehensive Income (Loss)

Total stockholders’ equity

Total liabilities and stockholders’ equity

Condensed Statements of Operations and Comprehensive Income

(in thousands)

For the Years Ended December 31,

Total operating expenses

Other (income) expense

Interest income

Interest expense

Loss on extinguishment of debt and settlement of convertible notes

Total other expense

Total other (income) expense

Income (loss) before income taxes

Income tax (benefit) provision

Income tax provision (benefit)

Equity (gains) losses of subsidiaries

Net income (loss)

Comprehensive income (loss)

Comprehensive income

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Amortization of deferred financing costs

Settlement of convertible notes

Subsidiary equity (gains) losses

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Other operating activities

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Investing activities:

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Net cash used in financing activities

Increase (decrease) in cash, cash equivalents and restricted cash

Decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

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Cash and cash equivalents at end of period

Discontinued Operations

On December 1, 2020, we completed the previously announced sale of our commercial aviation (“CA”) business to a subsidiary of Intelsat Jackson Holdings S.A.

(“Intelsat”) for a purchase price of $ 400.0 million in cash, subject to certain adjustments (the “Transaction”).

At the closing of the Transaction, the parties entered into certain ancillary agreements, including a transition services agreement, an intellectual property license agreement and commercial agreements.

The transition services agreement has been terminated.

The commercial agreements include an ATG network sharing agreement with a 10-year term, pursuant to which we provide certain in-flight connectivity services on our current ATG network and, when available, our Gogo 5G network, subject to certain revenue sharing obligations.

Under the ATG network sharing agreement, Intelsat has exclusive access to the ATG network for commercial aviation in North America, subject to minimum revenue guarantees.

As a result of the Transaction, financial results related to the CA business were reported as discontinued operations for the year ended December 31, 2021.

There was no discontinued operations activity for the CA business after December 31, 2021.

We report the financial results of discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations.

Discontinued operations reporting occurs only when the disposal of a component or a group of components (i) meets the held-for-sale classification criteria or is disposed of by sale or other than by sale, and (ii) represents a strategic shift that will have a major effect on our operations and financial results.

The following table summarizes the results of discontinued operations which are presented as Net loss from discontinued operations, net of tax, in our consolidated statements of operations (in thousands) :

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Notes to Consolidated Financial Statements – (Continued)

For the Year Ended December 31,

Operating expenses:

General and administrative

Total operating expenses

Operating loss

Other income:

Gain on sale of CA business

Total other income:

Loss before income taxes

Income tax benefit

Net loss from discontinued operations, net of tax

The following discussion relates entirely to discontinued operations.

Gain on Sale – Upon the closing of the Transaction on December 1, 2020, we received initial gross proceeds of $ 386.3 million, which reflects the $ 400.0 million purchase price, adjusted for cash, debt, transaction expenses and working capital.

The final purchase price was subject to change due to customary post-closing purchase price adjustment procedures set forth in the purchase and sale agreement between Gogo and Intelsat, that were not yet complete.

As the post-closing purchase price adjustment was not yet finalized and therefore represented a contingent gain, $ 9.4 million was recorded as a deferred gain on sale included within Accrued liabilities as of December 31, 2020.

During December 2020, we recognized within Gain on sale of CA business a pretax gain on sale of $ 38.0 million, computed as the $ 386.3 million of initial gross proceeds less (i) the potential $ 9.4 million post-closing purchase price adjustment not yet finalized, (ii) the carrying value of the assets and liabilities transferred in the Transaction and (iii) Transaction-related costs.

In October 2021, the independent accounting firm engaged to resolve a dispute between the parties regarding the working capital matter determined the final amount of the working capital adjustments to be $ 7.8 million.

In the fourth quarter of 2021, Gogo paid Intelsat the $ 7.8 million and recognized an additional Gain on sale of CA business of $ 1.6 million.

Stock-Based Compensation – In August 2020, the Compensation Committee approved modifications to the vesting conditions and exercise periods of outstanding equity compensation awards held by certain of our then-current employees who became employees of Intelsat in the Transaction.

These modifications became effective upon the consummation of the Transaction.

Pursuant to such modifications, the options and restricted stock units (“RSUs”) held by Intelsat employees generally vested on the earlier of (i) the original vesting date and (ii) December 1, 2021;

provided that the employee did not voluntarily resign from and was not terminated for cause by Intelsat prior to such date.

Certain of these awards vested based on conditions that are not classified as a service, market or performance condition and as a result such awards were classified as a liability.

Other than mark-to-market adjustments, a ll costs related to stock-based compensation for our prior employees who became employees of Intelsat in the Transaction were recognized as of December 31, 2020.

For the year ended December 31, 2021, $ 24.0 million was reclassified from Accrued liabilities to Additional paid-in capital as the awards vested during the period.

As of December 31, 2021, there were no remaining liability-classified awards.

The following is a summary of our stock-based compensation expense by operating expense line contained within the results of discontinued operations for the years December 31, 2023, 2022 and 2021 (in thousands) :

Cost of service revenue

Cost of equipment revenue

Engineering, design and development

Sales and marketing

General and administrative

Total stock-based compensation expense

See Note 12, “Stock-Based Compensation and 401(k) Plan,” for additional information on our stock-based compensation plans.

Other Costs Classified to Discontinued Operations – During the year ended December 31, 2021, we incurred $ 1.5 million of additional costs (exclusive of the gain on sale, stock-based compensation expense noted above and income tax benefit) primarily due to employer-paid taxes arising from the exercise of stock options by former employees then employed by Intelsat.

Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data