What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-06 · 157 added, 94 removed, 408 unchanged (38% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

ASSETS (unaudited)

2 unchanged sentences

Marketable securities 38,903 58,477

Accounts receivable, net of allowance for credit losses of $ 1,138 and $ 1,168 as of March 31, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 1,131 and $ 1,168 as of June 30, 2024 and December 31, 2023, respectively

27,326 25,670

30 unchanged sentences

Authorized 30,000,000 shares;

21,205,364 and 21,066,899 shares issued at March 31, 2024 and December 31, 2023, respectively;

and 19,749,255 and 19,610,790 shares outstanding at March 31, 2024 and December 31, 2023, respectively

21,170,195 and 21,066,899 shares issued at June 30, 2024 and December 31, 2023, respectively;

and 19,714,086 and 19,610,790 shares outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 166,490 165,140

2 unchanged sentences

155,468 159,462

treasury stock at cost, common stock, 1,456,109 and 1,456,109 shares as of March 31, 2024 and December 31, 2023, respectively.

treasury stock at cost, common stock, 1,456,109 shares as of June 30, 2024 and December 31, 2023

( 12,090 ) ( 12,090 )

6 unchanged sentences

(in thousands, except earnings per share amounts, unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Service $ 24,674 $ 28,746 $ 49,712 $ 57,486

8 unchanged sentences

Total costs and expenses 31,562 33,414 64,627 67,726

Loss from operations ( 3,798 ) ( 169 )

(Loss) income from operations ( 2,889 ) 172 ( 6,687 ) 3

Interest income 876 885 1,787 1,663

Other expense, net ( 366 ) ( 238 ) ( 564 ) ( 462 )

(Loss) income before income tax expense ( 3,085 ) 385

Income tax expense 78 18

(Loss) income before income tax (benefit) expense ( 2,379 ) 819 ( 5,464 ) 1,204

Income tax (benefit) expense ( 3 ) 46 75 64

Net (loss) income $ ( 2,376 ) $ 773 $ ( 5,539 ) $ 1,140

10 unchanged sentences

(in thousands, unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Net (loss) income $ ( 2,376 ) $ 773 $ ( 5,539 ) $ 1,140

Other comprehensive income, net of tax:

Unrealized gain on available-for-sale securities — 13

Unrealized (loss) gain on available-for-sale securities — ( 1 ) — 12

Foreign currency translation adjustment ( 35 ) 77 194 143

Other comprehensive income, net of tax (1)

( 35 ) 76 194 155

Total comprehensive (loss) income $ ( 2,411 ) $ 849 $ ( 5,345 ) $ 1,295

11 unchanged sentences

Shares Amount Shares Amount

Balance at March 31, 2024 21,205 $ 212 $ 165,768 $ ( 4,867 ) $ ( 3,956 ) ( 1,456 ) $ ( 12,090 ) $ 145,067

Net loss — — — ( 2,376 ) — — — ( 2,376 )

Other comprehensive loss — — — — ( 35 ) — — ( 35 )

Stock-based compensation — — 722 — — — — 722

Exercise of stock options and issuance of restricted stock awards, net of forfeitures ( 35 ) — — — — — — —

Balance at June 30, 2024 21,170 $ 212 $ 166,490 $ ( 7,243 ) $ ( 3,991 ) ( 1,456 ) $ ( 12,090 ) $ 143,378

Common Stock Additional

Capital Retained Deficit Accumulated

Comprehensive

Loss Treasury Stock Total

Stockholders’

Shares Amount Shares Amount

Balance at December 31, 2023 21,067 $ 211 $ 165,140 $ ( 1,704 ) $ ( 4,185 ) ( 1,456 ) $ ( 12,090 ) $ 147,372

4 unchanged sentences

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 79 1 11 — — — — 12

Balance at June 30, 2024 21,170 $ 212 $ 166,490 $ ( 7,243 ) $ ( 3,991 ) ( 1,456 ) $ ( 12,090 ) $ 143,378

Common Stock Additional

Capital Retained Earnings Accumulated

Comprehensive Loss Treasury Stock Total

Stockholders’

Shares Amount Shares Amount

Balance at March 31, 2023 20,826 $ 208 $ 161,779 $ 14,085 $ ( 4,031 ) ( 1,456 ) $ ( 12,090 ) $ 159,951

Net income — — — 773 — — — 773

Other comprehensive income — — — — 76 — — 76

Stock-based compensation — — 578 — — — — 578

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 143 2 1,333 — — — — 1,335

Balance at June 30, 2023 20,969 $ 210 $ 163,690 $ 14,858 $ ( 3,955 ) ( 1,456 ) $ ( 12,090 ) $ 162,713

Common Stock Additional

9 unchanged sentences

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 338 4 2,341 — — — — 2,345

Balance at March 31, 2023 20,826 $ 208 $ 161,779 $ 14,085 $ ( 4,031 ) ( 1,456 ) $ ( 12,090 ) $ 159,951

Balance at June 30, 2023 20,969 $ 210 $ 163,690 $ 14,858 $ ( 3,955 ) ( 1,456 ) $ ( 12,090 ) $ 162,713

See accompanying Notes to Unaudited Consolidated Financial Statements.

3 unchanged sentences

(in thousands, unaudited)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

6 unchanged sentences

Compensation expense related to stock-based awards and employee stock purchase plan

Unrealized currency translation loss (gain) 241 ( 1 )

Unrealized currency translation loss 208 19

Changes in operating assets and liabilities:

19 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 24 ) 74

Net increase (decrease) in cash and cash equivalents 147 ( 8,681 )

Net decrease in cash and cash equivalents ( 937 ) ( 7,048 )

Cash and cash equivalents at beginning of period 11,294 21,056

12 unchanged sentences

KVH provides, for monthly fixed and per-usage fees, satellite connectivity encompassing broadband Internet and VoIP services, to its TracNet H-series and TracPhone V-HTS series customers via KVH’s global high-throughput satellite (HTS) network.

Revenue from our cellular airtime service increasingly supplements KVH’s satellite-only airtime revenue following the July 2022 launch of the KVH ONE hybrid network and TracNet H-series terminals.

Revenue from our cellular airtime service supplements KVH’s satellite-only airtime revenue following the July 2022 launch of the KVH ONE hybrid network and TracNet H-series terminals.

This service and product combination integrates global satellite service with KVH-provided cellular service in more than 150 countries, along with shore-based Wi-Fi access.

In March 2023, KVH began selling Starlink terminals and in September 2023 became a Starlink authorized hardware and airtime reseller.

The May 2023 introduction of the KVH ONE OpenNet Program expanded access to KVH's global HTS network and airtime services to non-KVH terminals for the first time.

AgilePlans, KVH’s connectivity as a service offering, is a monthly subscription model that provides global connectivity to commercial maritime customers.

The subscription includes the choice of satellite-only and hybrid terminals, airtime data service, VoIP, daily news, subsidized shipping and installation, and global support for a monthly fee with no minimum contract commitment.

The subscription can include KVH VSAT terminals and data service, Starlink terminals and data service, KVH’s CommBox™ Edge Communications Gateway and associated service licensing, VoIP, daily news, subsidized shipping and installation, and global support for a monthly fee with no minimum contract commitment.

KVH offers AgilePlans subscribers a variety of airtime data plans with varying data speeds and fixed data usage levels with per megabyte overage charges.

3 unchanged sentences

Because KVH does not sell the hardware under AgilePlans, the Company does not recognize any product revenue when the hardware is deployed to an AgilePlans customer.

KVH records the cost of the hardware used by AgilePlans customers as revenue-generating assets and depreciates the cost over an estimated useful life of five years .

Since the Company is retaining ownership of the hardware, it does not accrue any warranty costs for AgilePlans hardware;

KVH records the cost of the hardware used by AgilePlans customers as revenue-generating assets and depreciates the cost over an estimated useful life of two to five years .

Since the Company retains ownership of the hardware, it does not accrue any warranty costs for AgilePlans hardware;

however, any maintenance costs on the hardware are expensed in the period these costs are incurred.

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KVH also sells and leases products to service providers and end users.

KVH's marine leisure business is highly seasonal, and seasonality can also impact the Company's commercial marine business, although typically to a lesser degree.

KVH's marine leisure business is highly seasonal.

Seasonality can also impact the Company's commercial marine business, although typically to a lesser degree.

Temporary suspensions of the Company's airtime services typically increase in the fourth and first quarters of each year as boats are placed out of service during the winter months.

19 unchanged sentences

These consolidated interim financial statements do not include all disclosures associated with annual financial statements and accordingly should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2023 filed on March 15, 2024 with the Securities and Exchange Commission.

The results for the three months ended March 31, 2024 are not necessarily indicative of operating results for the remainder of the year.

The results for the three and six months ended June 30, 2024 are not necessarily indicative of operating results for the remainder of the year.

Significant Estimates and Assumptions and Other Significant Non-Recurring Transactions

9 unchanged sentences

Foreign currency exchange gains and losses are recognized within “other expense, net” in the accompanying consolidated statements of operations.

The Company recorded net foreign currency exchange losses, which are comprised of both realized and unrealized foreign currency exchange gains and losses, in its accompanying consolidated statements of operations of $( 21 ) and $( 54 ) for the three months ended March 31, 2024 and 2023, respectively.

The Company recorded net foreign currency exchange losses, which are comprised of both realized and unrealized foreign currency exchange gains and losses, in its accompanying consolidated statements of operations of $( 248 ) and $( 56 ) for the three months ended June 30, 2024 and 2023, respectively, and $( 269 ) and $( 110 ) for the six months ended June 30, 2024 and 2023, respectively.

The financial statements of the Company’s foreign subsidiaries located in the United Kingdom, Brazil, Norway, India and Japan use the foreign subsidiaries’ respective local currencies as the functional currency.

5 unchanged sentences

(4) Marketable Securities

Marketable securities as of March 31, 2024 and December 31, 2023 consisted of the following:

March 31, 2024 Amortized

Marketable securities as of June 30, 2024 and December 31, 2023 consisted of the following:

June 30, 2024 Amortized

Money market mutual funds $ 38,903 $ — $ — $ 38,903

3 unchanged sentences

Total marketable securities designated as available-for-sale $ 58,477 $ — $ — $ 58,477

Interest income from marketable securities was $ 720 and $ 588 during the three months ended March 31, 2024 and 2023, respectively.

Interest income from marketable securities was $ 706 and $ 687 during the three months ended June 30, 2024 and 2023, respectively, and $ 1,426 and $ 1,275 during the six months ended June 30, 2024 and 2023, respectively.

(5) Stockholder's Equity

1 unchanged sentence

The Company recognizes stock-based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation .

On June 8, 2022, at the Company's 2022 Annual Meeting of Stockholders, the stockholders of the Company approved an amendment and restatement of the Company’s current equity compensation plan to increase the number of shares of common stock reserved for issuance under the plan by 1,280 shares, from 4,800 shares to 6,080 shares (excluding rollover shares).

Stock-based compensation expense was $ 517 and $ 284 , excluding $ 5 and $ 12 of compensation expense related to our Amended and Restated 1996 Employee Stock Purchase Plan, or the ESPP, for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there was $ 1,918 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.68 years.

As of March 31, 2024, there was $ 2,399 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.65 years.

Stock-based compensation expense was $ 721 and $ 566 , excluding $ 1 and $ 12 of compensation charges related to our Amended and Restated 1996 Employee Stock Purchase Plan, or the ESPP, for the three months ended June 30, 2024 and 2023, respectively, and $ 1,238 and $ 850 , excluding $ 6 and $ 24 of compensation shares related to the ESPP, for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, there was $ 1,614 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.68 years.

As of June 30, 2024, there was $ 1,881 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.76 years.

Stock Options

During the three months ended March 31, 2024, no shares of common stock were issued upon the exercise of stock options.

Additionally, during the three months ended March 31, 2024, 266 stock options were granted and 14 stock options expired, were canceled or were forfeited.

During the three months ended March 31, 2023, 317 stock options were granted.

During the three months ended June 30, 2024, no shares of common stock were issued upon the exercise of stock options.

No shares were surrendered to the Company to satisfy minimum tax withholding obligations.

Additionally, during the three months ended June 30, 2024, no stock options were granted and 257 stock options expired, were canceled or were forfeited.

During the six months ended June 30, 2024, no shares of common stock were issued upon the exercise of stock options.

No shares were surrendered to the Company to satisfy minimum tax withholding obligations.

Additionally, during the six months ended June 30, 2024, 266 stock options were granted and 271 stock options expired, were canceled or were forfeited.

During the six months ended June 30, 2023, 317 stock options were granted.

The Company has historically estimated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model.

The weighted average assumptions utilized to determine the fair value of options granted during the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended March 31,

The weighted average assumptions utilized to determine the fair value of options granted during the six months ended June 30, 2024 and 2023 are as follows:

Six Months Ended June 30,

Risk-free interest rate 4.36 % 4.49 %

2 unchanged sentences

Dividend yield 0 % 0 %

As of March 31, 2024, there were 1,482 options outstanding with a weighted average exercise price of $ 8.75 per share and 641 options exercisable with a weighted average exercise price of $ 9.86 per share.

As of June 30, 2024, there were 1,225 options outstanding with a weighted average exercise price of $ 8.64 per share and 599 options exercisable with a weighted average exercise price of $ 9.84 per share.

Restricted Stock

During the three months ended March 31, 2024, 122 shares of restricted stock were granted with a weighted average grant date fair value of $ 5.03 per share and 8 shares of restricted stock were forfeited.

Additionally, during the three months ended March 31, 2024, 66 shares of restricted stock vested, of which no shares of common stock were surrendered to the Company as payment by employees in lieu of cash to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock.

As of March 31, 2024, the Company had no unvested outstanding options and no outstanding shares of restricted stock that were subject to performance-based or market-based vesting conditions.

During the three months ended June 30, 2024, no shares of restricted stock were granted and 35 shares of restricted stock were forfeited.

Additionally, during the three months ended June 30, 2024, 76 shares of restricted stock vested.

During the six months ended June 30, 2024, 122 shares of restricted stock were granted with a weighted average grant date fair value of $ 5.03 per share and 43 shares of restricted stock were forfeited.

Additionally, during the six months ended June 30, 2024, 142 shares of restricted stock vested.

As of June 30, 2024, the Company had no unvested outstanding options and no outstanding shares of restricted stock that were subject to performance-based or market-based vesting conditions.

(b) Employee Stock Purchase Plan

The Company's ESPP affords eligible employees the right to purchase common stock, via payroll deductions, through various offering periods at a purchase price equal to 85 % of the fair market value of the common stock on the first or last day of the offering period, whichever is lower.

During the three months ended March 31, 2024 and 2023, 24 and 0 shares were issued under the ESPP plan, respectively.

The Company recorded compensation charges related to the ESPP of $ 5 and $ 12 for the three months ended March 31, 2024 and 2023, respectively.

During the three months ended June 30, 2024 and 2023, no shares were issued under the ESPP plan.

During the six months ended June 30, 2024 and 2023, 24 and 0 shares were issued under the ESPP plan, respectively.

The Company recorded compensation charges related to the ESPP of $ 1 and $ 12 for the three months ended June 30, 2024 and 2023, respectively, and $ 6 and $ 24 for the six months ended June 30, 2024 and 2023, respectively.

The following table presents stock-based compensation expense, including expense for the ESPP, in the Company's consolidated statements of operations for the three months ended March 31, 2024 and 2023, respectively:

Three Months Ended March 31,

The following table presents stock-based compensation expense, including expense for the ESPP, in the Company's consolidated statements of operations for the six months ended June 30, 2024 and 2023, respectively:

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Cost of service sales 7 5 $ 14 $ 9

3 unchanged sentences

General and administrative 462 356 808 515

$ 722 $ 578 $ 1,244 $ 874

(d) Accumulated Other Comprehensive Loss (AOCL)

1 unchanged sentence

The components of the Company’s comprehensive income (loss) and the effect on earnings for the periods presented are detailed in the accompanying consolidated statements of comprehensive (loss) income.

The balances for the three months ended March 31, 2024 and 2023 are as follows:

Foreign Currency Translation Unrealized (Loss) Gain on Available for Sale Marketable Securities Total Accumulated Other Comprehensive Loss

The balances for the three months ended June 30, 2024 and 2023 are as follows:

Foreign Currency Translation Unrealized Gain (Loss) on Available for Sale Marketable Securities Total Accumulated Other Comprehensive Loss

Balance, March 31, 2024 $ ( 3,956 ) $ — $ ( 3,956 )

Other comprehensive loss ( 35 ) — ( 35 )

Net other comprehensive loss ( 35 ) — ( 35 )

Balance, June 30, 2024 $ ( 3,991 ) $ — $ ( 3,991 )

Foreign Currency Translation Unrealized Gain (Loss) on Available for Sale Marketable Securities Total Accumulated Other Comprehensive Loss

Balance, March 31, 2023 $ ( 4,032 ) $ 1 $ ( 4,031 )

Other comprehensive income (loss) 77 ( 1 ) 76

Net other comprehensive income (loss) 77 ( 1 ) 76

Balance, June 30, 2023 $ ( 3,955 ) $ — $ ( 3,955 )

The balances for the six months ended June 30, 2024 and 2023 are as follows:

Foreign Currency Translation Unrealized Gain (Loss) on Available for Sale Marketable Securities Total Accumulated Other Comprehensive Loss

Balance, December 31, 2023 $ ( 4,185 ) $ — $ ( 4,185 )

1 unchanged sentence

Net other comprehensive income 194 — 194

Balance, March 31, 2024 $ ( 3,956 ) $ — $ ( 3,956 )

Balance, June 30, 2024 $ ( 3,991 ) $ — $ ( 3,991 )

Foreign Currency Translation Unrealized (Loss) Gain on Available for Sale Marketable Securities Total Accumulated Other Comprehensive Loss

2 unchanged sentences

Net other comprehensive income 143 12 155

Balance, March 31, 2023 $ ( 4,032 ) $ 1 $ ( 4,031 )

Balance, June 30, 2023 $ ( 3,955 ) $ — $ ( 3,955 )

(6) Net (Loss) Income per Common Share

1 unchanged sentence

Diluted net income per share incorporates the dilutive effect of common stock equivalent options, warrants and other convertible securities, if any, as determined with the treasury stock accounting method.

For the three months ended March 31, 2024, since there was a net loss, the Company excluded 1,584 shares underlying outstanding stock options and non-vested restricted shares from its diluted loss per share calculation, as inclusion of these convertible securities would have reduced the net loss per share.

For the three and six months ended June 30, 2024, since there was a net loss, the company excluded all 1,375 and 1,297 , respectively, in outstanding stock options and non-vested restricted shares from its diluted loss per share calculation, as inclusion of these convertible securities would have reduced the net loss per share.

A reconciliation of the basic and diluted weighted average common shares outstanding is as follows:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Weighted average common shares outstanding—basic 19,381 19,153 19,333 19,018

3 unchanged sentences

Inventories are stated at the lower of cost or net realizable value using the first-in first-out costing method.

Inventories as of March 31, 2024 and December 31, 2023 include the costs of material, labor, and factory overhead.

Inventories as of June 30, 2024 and December 31, 2023 include the costs of material, labor, and factory overhead.

Components of inventories consist of the following:

4 unchanged sentences

$ 22,715 $ 19,046

(8) Prepaid Expenses and Other Current Assets

2024 December 31,

Prepaid Starlink pooled data $ 16,950 $ —

Other prepaid expenses and other current assets 2,241 4,331

$ 19,191 $ 4,331

During the second quarter of 2024, KVH expanded its relationship with Starlink through a bulk data distribution agreement.

Under the agreement, KVH prepaid for access to a large block of Starlink Mobile Priority data at favorable rates.

The new agreement offers KVH increased flexibility in the development and sales of custom, cost-effective airtime plans using Starlink’s Mobile Priority service.

KVH began drawing from this prepaid pooled data in the third quarter of 2024.

(9) Property and Equipment

Property and equipment, net, as of March 31, 2024 and December 31, 2023 consist of the following:

Property and equipment, net, as of June 30, 2024 and December 31, 2023 consist of the following:

2024 December 31,

9 unchanged sentences

$ 44,784 $ 47,680

Depreciation expense was $ 3,147 and $ 3,368 for the three months ended March 31, 2024 and 2023, respectively.

Depreciation expense was $ 3,637 and $ 3,404 for the three months ended June 30, 2024 and 2023, respectively, and $ 6,784 and $ 6,772 for the six months ended June 30, 2024 and 2023, respectively.

Certain revenue-generating hardware assets are utilized by the Company in the delivery of the Company's airtime services, media and other content.

As of March 31, 2024 and December 31, 2023, the long-lived tangible assets related to the Company’s international subsidiaries were less than 10% of the Company’s long-lived tangible assets.

As of June 30, 2024 and December 31, 2023, the long-lived tangible assets related to the Company’s international subsidiaries were less than 10% of the Company’s long-lived tangible assets.

(10) Product Warranty

4 unchanged sentences

Warranty and related costs are reflected within sales, marketing and support in the accompanying consolidated statements of operations.

As of March 31, 2024 and December 31, 2023, the Company had accrued product warranty costs of $ 726 and $ 828 , respectively.

As of June 30, 2024 and December 31, 2023, the Company had accrued product warranty costs of $ 636 and $ 828 , respectively.

The following table summarizes product warranty activity during 2024 and 2023:

Three Months Ended

Six Months Ended

Beginning balance $ 828 $ 1,287

18 unchanged sentences

Assets and liabilities measured at fair value are based on the valuation techniques identified in the table below.

The following tables present financial assets and liabilities at March 31, 2024 and December 31, 2023 for which the Company measures fair value on a recurring basis, by level, within the fair value hierarchy:

March 31, 2024 Total Level 1 Level 2 Level 3 Valuation

The following tables present financial assets and liabilities at June 30, 2024 and December 31, 2023 for which the Company measures fair value on a recurring basis, by level, within the fair value hierarchy:

June 30, 2024 Total Level 1 Level 2 Level 3 Valuation

Money market mutual funds $ 38,903 $ 38,903 $ — $ — (a)

7 unchanged sentences

The Company's non-financial assets, such as intangible assets, and other long-lived assets resulting from business combinations, are measured at fair value using income approach valuation methodologies at the date of acquisition and subsequently re-measured if indications of impairment exist.

There was no impairment of the Company's non-financial assets noted during the three months ended March 31, 2024 or 2023.

There was no impairment of the Company's non-financial assets noted during the six months ended June 30, 2024 or 2023.

The Company does not have any liabilities that are recorded at fair value on a non-recurring basis.

5 unchanged sentences

Accordingly, the Company's asset groups were determined to be its reporting units (MBB and Media).

The changes in the carrying amount of intangible assets during the three months ended March 31, 2024 are as follows:

The changes in the carrying amount of intangible assets during the six months ended June 30, 2024 are as follows:

Balance at December 31, 2023

1 unchanged sentence

Intangible assets acquired in asset acquisition 21

Foreign currency translation adjustment 1

Balance at March 31, 2024

Balance at June 30, 2024

Intangible assets arose from the purchase of distribution rights from Kognitive Networks Inc.

8 unchanged sentences

Acquired intangible assets are subject to amortization.

The following table summarizes acquired intangible assets at March 31, 2024 and December 31, 2023, respectively:

The following table summarizes acquired intangible assets at June 30, 2024 and December 31, 2023, respectively:

Gross Carrying Amount Accumulated Amortization Net Carrying Value

March 31, 2024

June 30, 2024

Subscriber relationships $ 32 $ 5 $ 27

7 unchanged sentences

$ 3,545 $ 2,351 $ 1,194

Amortization expense related to intangible assets was $ 100 and $ 93 for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense related to intangible assets was $ 101 and $ 55 for the three months ended June 30, 2024 and 2023, respectively, and $ 201 and $ 148 for the six months ended June 30, 2024 and 2023, respectively.

Amortization expense was categorized as general and administrative expense.

As of March 31, 2024, the total weighted average remaining useful lives of the definite-lived intangible assets was 3.0 .

Estimated future amortization expense for intangible assets recorded by the Company at March 31, 2024 is as follows:

As of June 30, 2024, the total weighted average remaining useful lives of the definite-lived intangible assets was 2.5 years.

Estimated future amortization expense for intangible assets recorded by the Company at June 30, 2024 is as follows:

Years ending December 31, Amortization

4 unchanged sentences

Disaggregation of Revenue

The following table summarizes net sales from contracts with customers for the three months ended March 31, 2024 and 2023:

Three Months Ended

The following table summarizes net sales from contracts with customers for the six months ended June 30, 2024 and 2023:

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Service - over time 24,674 28,746 $ 49,712 $ 57,486

7 unchanged sentences

The Company offers a comprehensive family of mobile satellite antenna services and products that provide access to the Internet, television, and VoIP services while on the move.

Product sales accounted for 14 % and 16 % of the Company's consolidated net sales for the three months ended March 31, 2024 and 2023, respectively.

Service sales of VSAT Broadband airtime service accounted for 78 % and 79 % of the Company's consolidated net sales for the three months ended March 31, 2024 and 2023, respectively.

Product sales accounted for 14 % of the Company's consolidated net sales for both the three months ended June 30, 2024 and 2023 and 14 % and 15 % of the Company's consolidated net sales for the six months ended June 30, 2024 and 2023, respectively.

Service sales of VSAT Broadband airtime service accounted for 74 % and 80 % of the Company's consolidated net sales for the three months ended June 30, 2024 and 2023, respectively, and 76 % and 80 % of the Company's consolidated net sales for the six months ended June 30, 2024 and 2023, respectively.

The balance of service sales is comprised of distribution of commercially licensed entertainment and news, product repairs, and extended warranty sales.

2 unchanged sentences

Revenues from international locations primarily include Singapore, Canada, South American countries, European Union countries and other European countries, and countries in Africa, the Middle East and Asia/Pacific, including India.

Revenues are based upon customer location, and revenues from international locations represented 72 % and 65 % of consolidated net sales for the three months ended March 31, 2024 and 2023, respectively.

Sales to Singapore customers represented 22 % and 18 % of the Company's consolidated net sales for the three months ended March 31, 2024 and 2023, respectively.

No other individual foreign country represented 10% or more of the Company's consolidated net sales for the three months ended March 31, 2024 or 2023.

Revenues are based upon customer location, and revenues from international locations represented 71 % and 67 % of consolidated net sales for the three months ended June 30, 2024 and 2023, respectively, and 72 % and 66 % of consolidated net sales for the six months ended June 30, 2024 and 2023, respectively.

Sales to Singapore customers represented 20 % and 19 % of the Company's consolidated net sales for the three months ended June 30, 2024 and 2023, respectively.

No other individual foreign country represented 10% or more of the Company's consolidated net sales for the three months ended June 30, 2024 or 2023.

Sales to Singapore customers represented 21 % and 18 % of the Company's consolidated net sales for the six months ended June 30, 2024 and 2023, respectively.

No other individual foreign country represented 10% or more of the Company's consolidated net sales for the six months ended June 30, 2024 or 2023.

Business and Credit Concentrations

2 unchanged sentences

The Company establishes allowances for credit losses and evaluates, on a monthly basis, the adequacy of those reserves based upon expected losses, historical experience and its expectation for future collectability concerns.

No single customer accounted for 10% or more of consolidated net sales for the three months ended March 31, 2024 or 2023.

One customer accounted for approximately 20 % and 23 % of accounts receivable at March 31, 2024 and December 31, 2023, respectively.

One customer accounted for 61 % and 62 % of long-term accounts receivable included in other non-current assets on the consolidated balance sheets related to sales-type leases at March 31, 2024 and December 31, 2023, respectively.

No single customer accounted for 10% or more of consolidated net sales for the six months ended June 30, 2024 or 2023.

One customer accounted for approximately 21 % and 23 % of accounts receivable at June 30, 2024 and December 31, 2023, respectively.

One customer accounted for 57 % and 62 % of long-term accounts receivable included in other non-current assets on the consolidated balance sheets related to sales-type leases at June 30, 2024 and December 31, 2023, respectively.

Certain components from third parties used in the Company’s products are procured from single sources of supply.

1 unchanged sentence

(15) Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2024 was ( 2.5 )% compared with 4.7 % for the corresponding periods in the prior year.

The Company’s effective tax rate for the three and six months ended June 30, 2024 was 0.1 % and ( 1.4 )%, respectively, compared with 5.6 % and 5.3 %, for the corresponding periods in the prior year.

The effective income tax rate is based on estimated income for the year, the estimated composition of the income in different jurisdictions and discrete adjustments, if any, in the applicable periods, including retroactive changes in tax legislation, settlements of tax audits or assessments, and the resolution or identification of tax position uncertainties.

For the three months ended March 31, 2024 and 2023, the effective tax rates differed from the statutory tax rate primarily due to the Company maintaining a valuation allowance reserve on its U.S.

For the three and six months ended June 30, 2024 and 2023, the effective tax rates differed from the statutory tax rate primarily due to the Company maintaining a valuation allowance reserve on its U.S.

deferred tax assets, discrete tax adjustments and the composition of income from foreign jurisdictions taxed at lower rates.

As of March 31, 2024 and December 31, 2023, the Company had reserves for uncertain tax positions of $ 693 and $ 673 , respectively.

There were no material changes during the three months ended March 31, 2024 to the Company’s reserve for uncertain tax positions.

The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of March 31, 2024 may decrease $ 27 in the next twelve months as a result of a lapse of statutes of limitations and settlements with taxing authorities.

As of June 30, 2024 and December 31, 2023, the Company had reserves for uncertain tax positions of $ 712 and $ 673 , respectively.

There were no material changes during the six months ended June 30, 2024 to the Company’s reserve for uncertain tax positions.

The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of June 30, 2024 may decrease $ 27 in the next twelve months as a result of a lapse of statutes of limitations and settlements with taxing authorities.

The Company’s tax jurisdictions include the United States, the United Kingdom, Denmark, Cyprus, Norway, Brazil, Singapore, Japan and India.

2 unchanged sentences

The Company has operating leases for office facilities, equipment, and satellite service capacity and related equipment.

Lease expense was $ 353 and $ 452 for the three months ended March 31, 2024 and 2023, respectively.

Short-term operating lease costs were $ 19 and $ 25 for the three months ended March 31, 2024 and 2023, respectively.

Maturities of lease liabilities as of March 31, 2024 under operating leases having an initial or remaining non-cancelable term of one year or more are as follows:

Lease expense was $ 366 and $ 422 for the three months ended June 30, 2024 and 2023, respectively, and $ 719 and $ 874 for the six months ended June 30, 2024 and 2023, respectively.

Short-term operating lease costs were $ 20 and $ 15 for the three months ended June 30, 2024 and 2023, respectively, and $ 39 and $ 40 for the six months ended June 30, 2024 and 2023, respectively.

Maturities of lease liabilities as of June 30, 2024 under operating leases having an initial or remaining non-cancelable term of one year or more are as follows:

Remainder of 2024 $ 687

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The practical expedient also allows a lessor to account for the combined lease and non-lease components under ASC 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component.

The current portion of the net investment in these leases was $ 3,284 as of March 31, 2024 and the non-current portion of the net investment in these leases was $ 3,269 as of March 31, 2024.

The current portion of the net investment in these leases was $ 3,326 as of June 30, 2024 and the non-current portion of the net investment in these leases was $ 2,995 as of June 30, 2024.

The current portion of the net investment in the leases is included in accounts receivable, net of allowance for doubtful accounts on the accompanying consolidated balance sheets, and the non-current portion of the net investment in these leases is included in other non-current assets on the accompanying consolidated balance sheets.

Interest income from sales-type leases was $ 129 and $ 168 during the three months ended March 31, 2024 and 2023, respectively.

The future undiscounted cash flows from these leases as of March 31, 2024 are:

Interest income from sales-type leases was $ 117 and $ 174 during the three months ended June 30, 2024 and 2023, respectively, and $ 246 and $ 342 during the six months ended June 30, 2024 and 2023, respectively.

The future undiscounted cash flows from these leases as of June 30, 2024 are:

Remainder of 2024 $ 2,360

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As a result, and in light of other factors indicated in ASC 842, these leases are classified as operating leases.

As of March 31, 2024, the gross costs and accumulated depreciation associated with these operating leases are included in revenue generating assets and amounted to $ 1,861 and $ 975 , respectively.

As of June 30, 2024, the gross costs and accumulated depreciation associated with these operating leases are included in revenue generating assets and amounted to $ 1,861 and $ 1,080 , respectively.

They are depreciated on a straight-line basis over a five-year estimated useful life.

Depreciation expense for these assets was $ 93 for the three months ended March 31, 2024, respectively.

Lease revenue recognized was $ 125 for the three months ended March 31, 2024, respectively, in service sales in the consolidated statements of operations.

As of March 31, 2024, minimum future lease payments to be recognized on the operating leases are as follows:

Depreciation expense for these assets was $ 94 and $ 188 for the three and six months ended June 30, 2024, respectively.

Lease revenue recognized was $ 91 and $ 217 for the three and six months ended June 30, 2024, respectively, in service sales in the consolidated statements of operations.

As of June 30, 2024, minimum future lease payments to be recognized on the operating leases are as follows:

Remainder of 2024 $ 125

6 unchanged sentences

The Company also plans to continue to conduct maintenance, service, warehousing, shipping and receiving activities at the Middletown location.

As part of this restructuring, the Company will reduce its headcount by approximately 75 employees, or approximately 20 % of its total workforce as of the time the Company announced the restructuring.

Approximately one-half of the employee terminations have been completed, and the remaining terminations are expected to be completed by the end of the second quarter of 2024.

Approximately $ 2.2 million of severance charges were incurred in the three months ended March 31, 2024.

The Company expects to incur aggregate severance charges for this restructuring of approximately $ 3.3 million, consisting of approximately $ 3.0 million of cash charges and approximately $ 0.3 million of non-cash charges arising from pre-existing contractual obligations to accelerate vesting of certain outstanding equity compensation awards.

As part of this restructuring, the Company reduced its headcount by approximately 75 employees, or approximately 20 % of its total workforce as of the time the Company announced the restructuring.

As of June 30, 2024, all employee terminations were completed.

During the three and six months ended June 30, 2024, the Company incurred $ 1.2 million and $ 3.4 million, respectively, of severance charges for this restructuring.

The $ 3.4 million of severance charges incurred during the six months ended June 30, 2024 consisted of approximately $ 3.0 million of cash charges and approximately $ 0.3 million of non-cash charges arising from pre-existing contractual obligations to accelerate vesting of certain outstanding equity compensation awards.

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-Q

Item 1. Financial Statements