What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-01 · 164 added, 134 removed, 431 unchanged (41% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

ASSETS (unaudited)

2 unchanged sentences

Marketable securities 35,369 58,477

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

Accounts receivable, net of allowance for credit losses of $ 1,035 and $ 1,168 as of September 30, 2024 and December 31, 2023, respectively

24,757 25,670

1 unchanged sentence

Prepaid expenses and other current assets 20,531 4,331

Current assets held for sale 11,410 —

Total current assets 131,666 118,818

27 unchanged sentences

Authorized 30,000,000 shares;

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

21,255,231 and 21,066,899 shares issued at September 30, 2024 and December 31, 2023, respectively;

and 19,799,122 and 19,610,790 shares outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 166,874 165,140

2 unchanged sentences

154,788 159,462

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

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

( 12,090 ) ( 12,090 )

6 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

8 unchanged sentences

General and administrative 3,789 4,367 13,214 13,139

Goodwill impairment charge — 5,333 — 5,333

Long-lived assets impairment charge 1,137 657 1,137 657

Total costs and expenses 30,962 38,345 95,589 106,071

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

Loss from operations ( 1,991 ) ( 5,150 ) ( 8,678 ) ( 5,147 )

Interest income 629 997 2,416 2,660

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

(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

Net (loss) income per common share

Interest expense 2 — 2 —

Other income (expense), net 216 ( 121 ) ( 348 ) ( 583 )

Loss before income tax expense ( 1,148 ) ( 4,274 ) ( 6,612 ) ( 3,070 )

Income tax expense 51 95 126 159

Net loss $ ( 1,199 ) $ ( 4,369 ) $ ( 6,738 ) $ ( 3,229 )

Net loss per common share

Basic $ ( 0.06 ) $ ( 0.23 ) $ ( 0.35 ) $ ( 0.17 )

6 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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

Other comprehensive income, net of tax:

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

Net loss $ ( 1,199 ) $ ( 4,369 ) $ ( 6,738 ) $ ( 3,229 )

Other comprehensive loss, net of tax:

Unrealized gain on available-for-sale securities — — — 12

Foreign currency translation adjustment 134 ( 267 ) 328 ( 124 )

Other comprehensive income, net of tax (1)

Other comprehensive income (loss), net of tax (1)

134 ( 267 ) 328 ( 112 )

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

Total comprehensive loss $ ( 1,065 ) $ ( 4,636 ) $ ( 6,410 ) $ ( 3,341 )

(1) Tax impact was nominal for all periods.

6 unchanged sentences

Capital Retained Deficit Accumulated

Comprehensive

Loss Treasury Stock Total

Comprehensive Loss Treasury Stock Total

Stockholders’

Shares Amount Shares Amount

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

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

Net loss — — — ( 1,199 ) — — — ( 1,199 )

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

Other comprehensive income — — — — 134 — — 134

Stock-based compensation — — 385 — — — — 385

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 85 1 ( 1 ) — — — — —

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

Balance at September 30, 2024 21,255 $ 213 $ 166,874 $ ( 8,442 ) $ ( 3,857 ) ( 1,456 ) $ ( 12,090 ) $ 142,698

Common Stock Additional

Capital Retained Deficit Accumulated

Comprehensive

Loss Treasury Stock Total

Comprehensive Loss Treasury Stock Total

Stockholders’

6 unchanged sentences

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 164 2 10 — — — — 12

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

Balance at September 30, 2024 21,255 $ 213 $ 166,874 $ ( 8,442 ) $ ( 3,857 ) ( 1,456 ) $ ( 12,090 ) $ 142,698

Common Stock Additional

3 unchanged sentences

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

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

Net loss — — — ( 4,369 ) — — — ( 4,369 )

Other comprehensive loss — — — — ( 267 ) — — ( 267 )

Stock-based compensation — — 559 — — — — 559

Issuance of common stock under employee stock purchase plan 17 — 123 — — — — 123

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 81 1 133 — — — — 134

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

Balance at September 30, 2023 21,067 $ 211 $ 164,505 $ 10,489 $ ( 4,222 ) ( 1,456 ) $ ( 12,090 ) $ 158,893

Common Stock Additional

4 unchanged sentences

Balance at December 31, 2022 20,631 $ 206 $ 160,475 $ 13,718 $ ( 4,110 ) ( 1,433 ) $ ( 11,851 ) $ 158,438

Net income — — — 1,140 — — — 1,140

Other comprehensive income — — — — 155 — — 155

Net loss — — — ( 3,229 ) — — — ( 3,229 )

Other comprehensive loss — — — — ( 112 ) — — ( 112 )

Stock-based compensation — — 1,433 — — — — 1,433

Issuance of common stock under employee stock purchase plan 17 — 123 — — — — 123

Acquisition of treasury stock — — — — — ( 23 ) ( 239 ) ( 239 )

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 419 5 2,474 — — — — 2,479

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

Balance at September 30, 2023 21,067 $ 211 $ 164,505 $ 10,489 $ ( 4,222 ) ( 1,456 ) $ ( 12,090 ) $ 158,893

See accompanying Notes to Unaudited Consolidated Financial Statements.

3 unchanged sentences

(in thousands, unaudited)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net (loss) income $ ( 5,539 ) $ 1,140

Net loss $ ( 6,738 ) $ ( 3,229 )

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Depreciation and amortization 10,250 10,119

Impairment charge to goodwill and long-lived assets 1,137 5,990

Deferred income taxes 36 1

1 unchanged sentence

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

Unrealized currency translation loss 208 19

Unrealized currency translation loss (gain) 280 ( 150 )

Changes in operating assets and liabilities:

19 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 72 ( 13 )

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

Net increase (decrease) in cash and cash equivalents 3,102 ( 9,572 )

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

26 unchanged sentences

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

Service sales also include the distribution of commercially licensed entertainment, including news, sports, and movies to commercial customers in the maritime and hotel markets through the KVH Media Group, along with supplemental value-added cybersecurity, email, and crew internet services.

Service sales also include the distribution of commercially licensed entertainment, including news, sports, and movies to commercial customers in the maritime market through the KVH Media Group, along with supplemental value-added cybersecurity, email, and crew internet services.

In addition, KVH earns monthly usage fees from third-party satellite connectivity services, including VoIP, data and Internet services, provided to its Inmarsat and Iridium customers who choose to activate their subscriptions with KVH.

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

The results for the three and nine months ended September 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

4 unchanged sentences

The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Asset Held for Sale

The Company classifies an asset as held for sale when management, having the authority to approve the action, commits to a plan to sell the asset, the sale is probable within one year and the asset is available for immediate sale in its present condition.

The Company also considers whether an active program to locate a buyer has been initiated, whether the asset is marketed actively for sale at a price that is reasonable in relation to its current fair value and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

The Company initially measures an asset that is classified as held for sale at the lower of its carrying amount or fair value less

costs to sell.

Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met.

Conversely, gains are not recognized until the date of sale.

The Company assesses the fair value of an asset less costs to sell for each reporting period that it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying amount of the asset, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale.

Assets are not depreciated or amortized while they are classified as held for sale.

Foreign Currency Translation

3 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 $( 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 Company recorded net foreign currency exchange gains and losses, which are comprised of both realized and unrealized foreign currency exchange gains and losses, in its accompanying consolidated statements of operations of $( 48 ) and $ 92 for the three months ended September 30, 2024 and 2023, respectively, and $( 317 ) and $( 18 ) for the nine months ended September 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 June 30, 2024 and December 31, 2023 consisted of the following:

June 30, 2024 Amortized

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

September 30, 2024 Amortized

Money market mutual funds $ 35,369 $ — $ — $ 35,369

3 unchanged sentences

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

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.

Interest income from marketable securities was $ 466 and $ 744 during the three months ended September 30, 2024 and 2023, respectively, and $ 1,892 and $ 2,019 during the nine months ended September 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 .

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-based compensation expense was $ 384 and $ 558 , excluding $ 1 and $ 1 of compensation charges related to our Amended and Restated 1996 Employee Stock Purchase Plan, or the ESPP, for the three months ended September 30, 2024 and 2023, respectively, and $ 1,622 and $ 1,408 , excluding $ 7 and $ 25 of compensation shares related to the ESPP, for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, there was $ 1,428 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.61 years.

As of September 30, 2024, there was $ 2,002 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.22 years.

Stock Options

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

During the three months ended September 30, 2024, the company issued no shares of common stock 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.

Additionally, during the three months ended September 30, 2024, no stock options were granted and 230 stock options expired, were canceled or were forfeited.

During the nine months ended September 30, 2024, the Company issued no shares of common stock 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.

Additionally, during the nine months ended September 30, 2024, 266 stock options were granted and 501 stock options expired, were canceled or were forfeited.

During the nine months ended September 30, 2023, 317 stock options were granted and 564 stock options expired, were canceled or were forfeited.

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 six months ended June 30, 2024 and 2023 are as follows:

Six Months Ended June 30,

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

Nine Months Ended September 30,

Risk-free interest rate 4.36 % 4.49 %

2 unchanged sentences

Dividend yield 0 % 0 %

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.

As of September 30, 2024, there were 995 options outstanding with a weighted average exercise price of $ 8.23 per share and 410 options exercisable with a weighted average exercise price of $ 9.32 per share.

Restricted Stock

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.

During the three months ended September 30, 2024, 85 shares of restricted stock were granted with a weighted average grant date fair value of $ 4.51 per share, and no shares of restricted stock were forfeited.

Additionally, during the three months ended September 30, 2024, 16 shares of restricted stock vested.

During the nine months ended September 30, 2024, 207 shares of restricted stock were granted with a weighted average grant date fair value of $ 4.82 per share, and 43 shares of restricted stock were forfeited.

Additionally, during the nine months ended September 30, 2024, 158 shares of restricted stock vested.

As of September 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 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.

During the three months ended September 30, 2024 and 2023, 0 and 17 shares were issued under the ESPP plan, respectively.

During the nine months ended September 30, 2024 and 2023, 24 and 17 shares were issued under the ESPP plan, respectively.

The Company recorded compensation charges related to the ESPP of $ 1 for both the three months ended September 30, 2024 and 2023, and $ 7 and $ 25 for the nine months ended September 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 six months ended June 30, 2024 and 2023, respectively:

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

(d) Accumulated Other Comprehensive Loss (AOCL)

Comprehensive income (loss) includes net income (loss), unrealized gains and losses from foreign currency translation, and unrealized gains and losses on available for sale marketable securities.

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 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 )

Comprehensive loss includes net loss, unrealized gains and losses from foreign currency translation, and unrealized gains and losses on available for sale marketable securities.

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

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

Foreign Currency Translation Total Accumulated Other Comprehensive Loss

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

Other comprehensive income 134 134

Net other comprehensive income 134 134

Balance, September 30, 2024 $ ( 3,857 ) $ ( 3,857 )

Foreign Currency Translation Total Accumulated Other Comprehensive Loss

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

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

Other comprehensive loss ( 267 ) ( 267 )

Net other comprehensive loss ( 267 ) ( 267 )

Balance, September 30, 2023 $ ( 4,222 ) $ ( 4,222 )

The balances for the nine months ended September 30, 2024 and 2023 are as follows:

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

2 unchanged sentences

Net other comprehensive income 328 — 328

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

Balance, September 30, 2024 $ ( 3,857 ) $ — $ ( 3,857 )

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

Balance, December 31, 2022 $ ( 4,098 ) $ ( 12 ) $ ( 4,110 )

Other comprehensive income 143 12 155

Net other comprehensive income 143 12 155

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

(6) Net (Loss) Income per Common Share

Basic net (loss) income per share is calculated based on the weighted average number of common shares outstanding during the period.

Other comprehensive (loss) income ( 124 ) 12 ( 112 )

Net other comprehensive (loss) income ( 124 ) 12 ( 112 )

Balance, September 30, 2023 $ ( 4,222 ) $ — $ ( 4,222 )

(6) Net Loss per Common Share

Basic net loss per share is calculated based on the weighted average number of common shares outstanding during the period.

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 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.

For the three and nine months ended September 30, 2024, since there was a net loss, the company excluded all 1,165 and 1,088 , 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.

For the three and nine months ended September 30, 2023, since there was a net loss, the company excluded all 1,572 and 1,053 , 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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

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

Components of inventories consist of the following:

September 30,

2024 December 31,

4 unchanged sentences

(8) Prepaid Expenses and Other Current Assets

September 30,

2024 December 31,

7 unchanged sentences

(9) Property and Equipment

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

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

September 30,

2024 December 31,

9 unchanged sentences

$ 29,894 $ 47,680

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.

Depreciation expense was $ 3,163 and $ 3,180 for the three months ended September 30, 2024 and 2023, respectively, and $ 9,947 and $ 9,952 for the nine months ended September 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 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.

As of September 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.

In the third quarter of 2024, the Company commenced its plan to sell the warehouse building and surface parking lot located at 75 Enterprise Center in Middletown, RI (“75 Enterprise Center”).

As of September 30, 2024, 75 Enterprise Center had a carrying value of approximately $ 7.8 million.

The Company determined that all of the criteria to classify 75 Enterprise Center as held for sale had been met as of September 30, 2024.

The estimated fair value was determined based upon the anticipated sales price of these assets based on current market conditions and assumptions made by management, less selling costs.

The Company recorded an impairment charge of $ 1.1 million during the three and nine months ended September 30, 2024, as the carrying value of 75 Enterprise Center at the time the asset for sale criteria were met exceeded the fair value less costs to sell.

Additionally, in the third quarter of 2024, the Company commenced its plan to sell the property, building, improvements, and land located at 50 Enterprise Center in Middletown, RI (“50 Enterprise Center”).

As of September 30, 2024, 50 Enterprise Center had a carrying value of approximately $ 3.6 million.

The Company determined that all of the criteria to classify 50 Enterprise Center as held for sale had been met as of September 30, 2024.

The estimated fair value of 50 Enterprise Center exceeds its carrying value.

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

As of September 30, 2024 and December 31, 2023, the Company had accrued product warranty costs of $ 584 and $ 828 , respectively.

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

Six Months Ended

Nine Months Ended

September 30,

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 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

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

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

Money market mutual funds $ 35,369 $ 35,369 $ — $ — (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 six months ended June 30, 2024 or 2023.

There was a $ 1.1 million impairment of the Company's long-lived assets during the nine months ended September 30, 2024 and none during the nine months ended September 30, 2023.

See note 9 for further discussion.

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 six months ended June 30, 2024 are as follows:

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

Balance at December 31, 2023

1 unchanged sentence

Intangible assets acquired in asset acquisition 31

Balance at June 30, 2024

Balance at September 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 June 30, 2024 and December 31, 2023, respectively:

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

Gross Carrying Amount Accumulated Amortization Net Carrying Value

June 30, 2024

September 30, 2024

Subscriber relationships $ 42 $ 8 $ 34

7 unchanged sentences

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

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 related to intangible assets was $ 102 and $ 19 for the three months ended September 30, 2024 and 2023, respectively, and $ 303 and $ 167 for the nine months ended September 30, 2024 and 2023, respectively.

Amortization expense was categorized as general and administrative expense.

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:

As of September 30, 2024, the total weighted average remaining useful lives of the definite-lived intangible assets was 2.3 years.

Estimated future amortization expense for intangible assets recorded by the Company at September 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 six months ended June 30, 2024 and 2023:

Three Months Ended Six Months Ended

June 30, June 30,

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

8 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 % 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.

Product sales accounted for 16 % and 11 % of the Company's consolidated net sales for the three months ended September 30, 2024 and 2023, respectively, and 15 % and 14 % of the Company's consolidated net sales for the nine months ended September 30, 2024 and 2023, respectively.

Service sales of VSAT Broadband airtime service accounted for 69 % and 83 % of the Company's consolidated net sales for the three months ended September 30, 2024 and 2023, respectively, and 74 % and 81 % of the Company's consolidated net sales for the nine months ended September 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 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.

Revenues are based upon customer location, and revenues from international locations represented 71 % and 70 % of consolidated net sales for the three months ended September 30, 2024 and 2023, respectively, and 72 % and 67 % of consolidated net sales for the nine months ended September 30, 2024 and 2023, respectively.

Sales to Singapore customers represented 20 % and 18 % of the Company's consolidated net sales for the three months ended September 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 September 30, 2024 or 2023.

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

No other individual foreign country represented 10% or more of the Company's consolidated net sales for the nine months ended September 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 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.

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

One customer accounted for approximately 24 % and 23 % of accounts receivable at September 30, 2024 and December 31, 2023, respectively.

One customer accounted for 52 % and 62 % of long-term accounts receivable included in other non-current assets on the consolidated balance sheets related to sales-type leases at September 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 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 Company’s effective tax rate for the three and nine months ended September 30, 2024 was ( 4.4 )% and ( 1.9 )%, respectively, compared with ( 2.2 )% and ( 5.2 )%, 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 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.

For the three and nine months ended September 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 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.

As of September 30, 2024 and December 31, 2023, the Company had reserves for uncertain tax positions of $ 733 and $ 673 , respectively.

There were no material changes during the nine months ended September 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 September 30, 2024 may decrease $ 28 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 $ 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:

Lease expense was $ 376 and $ 417 for the three months ended September 30, 2024 and 2023, respectively, and $ 1,095 and $ 1,291 for the nine months ended September 30, 2024 and 2023, respectively.

Short-term operating lease costs were $ 20 and $ 15 for the three months ended September 30, 2024 and 2023, respectively, and $ 59 and $ 55 for the nine months ended September 30, 2024 and 2023, respectively.

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

Remainder of 2024 $ 336

15 unchanged sentences

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 $ 3,326 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 these leases was $ 3,011 as of September 30, 2024 and the non-current portion of the net investment in these leases was $ 2,913 as of September 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 $ 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:

Interest income from sales-type leases was $ 108 and $ 159 during the three months ended September 30, 2024 and 2023, respectively, and $ 354 and $ 501 during the nine months ended September 30, 2024 and 2023, respectively.

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

Remainder of 2024 $ 1,320

4 unchanged sentences

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

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.

As of September 30, 2024, the gross costs and accumulated depreciation associated with these operating leases are included in revenue generating assets and amounted to $ 1,824 and $ 1,174 , respectively.

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

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:

Depreciation expense for these assets was $ 95 and $ 282 for the three and nine months ended September 30, 2024, respectively.

Lease revenue recognized was $ 79 and $ 295 for the three and nine months ended September 30, 2024, respectively, in service sales in the consolidated statements of operations.

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

Remainder of 2024 $ 47

8 unchanged sentences

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.

During the nine months ended September 30, 2024, the Company incurred $ 2.9 million of severance charges for this restructuring, which amount reflects a favorable $ 0.4 million correction in the three months ended September 30, 2024.

The $ 2.9 million of severance charges incurred during the nine months ended September 30, 2024 consisted of approximately $ 2.6 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