What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-10 compared with 2024-03-15 · 320 added, 456 removed, 926 unchanged (46% of the section changed)

7 unchanged sentences

Our internal control over financial reporting is the process designed by and under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America.

Management has evaluated the effectiveness of our internal control over financial reporting using the criteria

set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Management has evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 and concluded that it was effective.

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Consolidated Statements of Operations for the years ended December 31, 202 4 and 202 3

Consolidated S ta tem ents of Com prehensive (Loss) Income for the years ended December 31, 202 3 and 202 2

Consolidated Statements of Comprehensive Loss for the years ended December 31, 202 4 and 202 3

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 4 and 202 3

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Specimen certificate for the common stock 10-K March 2, 2018 4.1

Description of Capital Stock X

Description of Capital Stock 10-K March 15, 2024 4.2

Amended and Restated 1996 Employee Stock Purchase Plan DEF 14A April 25, 2016 App.

5 unchanged sentences

Form of Restricted Stock Agreement granted under the 2016 Equity and Incentive Plan 10-K March 9, 2017 10.7

Policy Regarding Automatic Grants to Non-Employee Directors X

Policies Regarding Non-Employee Director Compensation and Stock Ownership Guidelines 10-K March 15, 2024 10.6

Description Filed with

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Deckoff and the Investor Group Designees (as defined therein) 8-K February 3, 2023 10.1

Form of Indemnification Agreement for directors and executive officers X

KVH Compensation Recovery Policy X

Form of Indemnification Agreement for directors and executive officers 10-K March 15, 2024 10.13

Purchase and Sale Agreement dated December 5, 2024 between KVH Industries, Inc.

and Knight Capital LLC regarding 75 Enterprise Center X

Securities Trading Policy X

List of Subsidiaries X

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Rule 1350 certification X

101.1 Interactive Data File regarding (a) our Consolidated Balance Sheets as of December 31, 2023 and 2022, (b) our Consolidated Statements of Operations for the years ended December 31, 2023 and 2022, (c) our Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2023 and 2022, (d) our Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023 and 2022, (e) our Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022, and (e) the Notes to such Consolidated Financial Statements X

KVH Compensation Recovery Policy 10-K March 15, 2024 97.1

101.1 Interactive Data File regarding (a) our Consolidated Balance Sheets as of December 31, 2024 and 2023, (b) our Consolidated Statements of Operations for the years ended December 31, 2024 and 2023, (c) our Consolidated Statements of Comprehensive Loss for the years ended December 31, 2024 and 2023, (d) our Consolidated Statements of Stockholders' Equity for the years ended December 31, 2024 and 2023, (e) our Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023, and (f) the Notes to such Consolidated Financial Statements X

104.1 Cover Page Interactive Data File (embedded within the Inline XBRL document) X

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BRUUN President, Chief Executive Officer and Director (Principal Executive Officer) March 7, 2025

KUEBEL Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) March 15, 2024

/S/ ANTHONY F.

PIKE Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) March 7, 2025

TOLLEY Chairman of the Board of Directors March 7, 2025

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DECKOFF Director March 7, 2025

HERNANDEZ Director March 15, 2024

KAGAN Director March 7, 2025

/S/ CATHY-ANN MARTINE-DOLECKI Director March 15, 2024

Cathy-Ann Martine-Dolecki

/S/ CHARLES R.

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We have audited the accompanying consolidated balance sheets of KVH Industries, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the two 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 two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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Basis for opinion

These financial statements are the responsibility of the Company’s management.

T hese financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

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We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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.

Impairment analysis for the mobile broadband asset group

As described further in notes 1 and 8 to the financial statements, long-lived assets, which include finite-lived intangible assets and property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

In the third quarter of 2023, management identified indicators of potential impairment of its mobile broadband (MBB) asset group.

As a result, management performed an impairment analysis for its MBB asset group and concluded that the carrying value of the MBB asset group can be recovered through the future undiscounted cash flows expected from the use and eventual disposition of the asset group.

We identified the impairment analysis for the MBB asset group as a critical audit matter.

The principal consideration for our determination that the impairment analysis for the MBB asset group is a critical audit matter is that the analysis requires management to use significant inputs and assumptions in developing the MBB asset group’s future undiscounted cash flows, including but not limited to revenue growth rates, cost projections, and disposition values of assets within the asset group.

Evaluating the reasonableness of these inputs and assumptions requires significant auditor judgment.

Our audit procedures related to the impairment analysis for the MBB asset group included the following, among others:

• We tested the design and operating effectiveness of relevant controls, including controls over management’s identification of indicators of impairment and determination of inputs and assumptions used to develop the asset group’s future undiscounted cash flows.

• We evaluated the reasonableness of the inputs and assumptions used to develop the asset group’s future undiscounted cash flows by comparing them to historical amounts, and industry and economic trends and by tracing them to underlying source information.

• We performed sensitivity analyses around the inputs and assumptions underlying management’s impairment analysis.

• We involved valuation professionals, with specialized skills and knowledge, to assist in assessing the reasonableness of the undiscounted cash flow model used in the impairment analysis.

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

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(in thousands, except share and per share data)

2023 2022 (revised)

Current assets:

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Prepaid expenses and other current assets 16,016 4,331

Current assets held for sale 11,410 —

Total current assets 122,575 118,818

1 unchanged sentence

Intangible assets, net 828 1,194

Goodwill — 5,308

Right of use assets 1,361 1,068

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Additional paid-in capital 167,287 165,140

(Accumulated deficit) retained earnings ( 1,704 ) 13,718

Accumulated deficit ( 12,752 ) ( 1,704 )

Accumulated other comprehensive loss ( 4,032 ) ( 4,185 )

150,715 159,462

treasury stock at cost, common stock, 1,456,109 and 1,432,694 shares as of December 31, 2023 and December 31, 2022, respectively

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

( 12,090 ) ( 12,090 )

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Year Ended December 31,

2023 2022 (revised)

Product $ 17,757 $ 26,842

Service $ 96,446 $ 114,622

Product 17,382 17,757

Net sales 113,828 132,379

Costs and expenses:

Costs of product sales 29,149 25,158

Costs of service sales 60,002 65,362

Costs of product sales 18,607 29,149

Research and development 8,439 9,399

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Interest expense 2 1

Other (expense) income, net ( 1,404 ) 772

Loss from continuing operations before income tax expense ( 15,104 ) ( 3,449 )

Income tax expense from continuing operations 318 546

Net loss from continuing operations ( 15,422 ) ( 3,995 )

Income from discontinued operations, net of tax — 28,025

Net (loss) income $ ( 15,422 ) $ 24,030

Net loss from continuing operations per common share

Basic $ ( 0.81 ) $ ( 0.21 )

Diluted $ ( 0.81 ) $ ( 0.21 )

Net income from discontinued operations per common share

Basic $ 0.00 $ 1.50

Diluted $ 0.00 $ 1.50

Net (loss) income per common share

Other expense, net ( 1,781 ) ( 1,404 )

Loss before income tax expense ( 10,627 ) ( 15,104 )

Income tax expense 421 318

Net loss $ ( 11,048 ) $ ( 15,422 )

Net loss per common share

Basic $ ( 0.57 ) $ ( 0.81 )

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

Year Ended December 31,

2023 2022 (revised)

Net (loss) income $ ( 15,422 ) $ 24,030

Other comprehensive loss, net of tax:

Unrealized income (loss) on available-for-sale securities 12 ( 12 )

Net loss $ ( 11,048 ) $ ( 15,422 )

Other comprehensive income (loss), net of tax:

Unrealized gain on available-for-sale securities — 12

Foreign currency translation adjustment 153 ( 87 )

Other comprehensive loss, net of tax (1)

( 75 ) ( 701 )

Total comprehensive (loss) income $ ( 15,497 ) $ 23,329

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

Total comprehensive loss $ ( 10,895 ) $ ( 15,497 )

(1) Tax impact was nominal for all periods.

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Common Stock Additional

Capital (Accumulated Deficit) Retained Earnings Accumulated

Capital Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive

Loss (revised) Treasury Stock Total

Loss Treasury Stock Total

Stockholders’

Shares Amount Shares Amount

Balance at December 31, 2021 (revised)

Balance at December 31, 2022

20,631 $ 206 $ 160,475 $ 13,718 $ ( 4,110 ) ( 1,433 ) $ ( 11,851 ) $ 158,438

Net income (revised) — — — 24,030 — — — 24,030

Net loss — — — ( 15,422 ) — — — ( 15,422 )

Other comprehensive loss — — — — ( 75 ) — — ( 75 )

Taxes for net share settlement of options — — ( 131 ) — — — — ( 131 )

Stock-based compensation — — 2,078 — — — — 2,078

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 2,464 — — — — 2,469

Balance at December 31, 2022 (revised)

Balance at December 31, 2023

21,067 $ 211 $ 165,140 $ ( 1,704 ) $ ( 4,185 ) ( 1,456 ) $ ( 12,090 ) $ 147,372

Net loss — — — ( 11,048 ) — — — ( 11,048 )

Other comprehensive loss — — — — ( 75 ) — — ( 75 )

Other comprehensive income — — — — 153 — — 153

Stock-based compensation — — 2,027 — — — — 2,027

Issuance of common stock under employee stock purchase plan 27 — 109 — — — — 109

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

Exercise of stock options and issuance of restricted stock awards, net of forfeitures 147 1 11 — — — — 12

6 unchanged sentences

Year Ended December 31,

2023 2022 (revised)

Cash flows from operating activities:

Net (loss) income $ ( 15,422 ) $ 24,030

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net loss $ ( 11,048 ) $ ( 15,422 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Provision for credit losses 217 64

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Deferred income taxes

( 51 ) ( 363 )

Loss on disposals of fixed assets 1,220 2,476

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

Unrealized currency translation gain ( 179 ) ( 399 )

Gain on sale of KVH Media Group Entertainment Limited — ( 682 )

Gain on sale of inertial navigation business — ( 30,763 )

Unrealized currency translation loss (gain) 188 ( 179 )

Changes in operating assets and liabilities:

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( 3,908 ) 3,686

Prepaid expenses, other current assets, and current contract assets

( 1,231 ) ( 1,083 )

Other non-current assets and non-current contract assets

Prepaid expenses and other current assets ( 11,661 ) ( 1,231 )

Other non-current assets 333 1,425

Accounts payable

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Accrued compensation, product warranty and other ( 7,724 ) 3,808

Net cash provided by operating activities $ 2,530 $ 8,893

Net cash (used in) provided by operating activities $ ( 13,170 ) $ 2,530

Cash flows from investing activities:

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Cash paid for acquisition of intangible assets ( 74 ) ( 1,296 )

Proceeds from the sale of KVH Media Group Entertainment Limited, net of cash sold — 2,378

Proceeds from the sale of inertial navigation business — 55,000

Proceeds from the sale of fixed assets 1,403 —

Purchases of marketable securities ( 1,990 ) ( 18,207 )

Maturities and sales of marketable securities 60,467 15,422

Net cash (used in) provided by investing activities $ ( 14,714 ) $ 375

Net cash provided by (used in) investing activities $ 52,389 $ ( 14,714 )

Cash flows from financing activities:

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Effect of exchange rate changes on cash and cash equivalents ( 51 ) 79

Net (decrease) increase in cash and cash equivalents ( 9,762 ) 9,680

Net increase (decrease) in cash and cash equivalents 39,278 ( 9,762 )

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

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(1) Summary of Significant Accounting Policies

(a) Revision for Correction of Immaterial Errors

KVH Industries, Inc.

(together with its subsidiaries, the Company or KVH) corrected for errors that were immaterial to its previously reported consolidated financial statements for the year ended December 31, 2022.

These errors were identified in connection with the preparation of the financial statements for the year ended December 31, 2023, and related primarily to the adoption and implementation of Accounting Standards Codification (“ASC”) No.

606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018, specifically the assessment of performance obligations associated with the sales of antennas and airtime-related equipment.

The Company evaluated the materiality of these errors both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No.

99, Materiality, and SAB No.

108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements, and determined that the effect of these corrections was not material to the previously issued financial statements.

Therefore, the amounts in the previous period have been revised to reflect the correction of these errors.

Additionally, the Company revised its stockholder’s equity as of January 1, 2022, to correct these errors as of the beginning of the earliest year presented in these consolidated financial statements, resulting in a $ 1.9 million increase in stockholder's equity from the previously reported amount of $ 129.0 million to the corrected amount of $ 130.8 million.

There was no significant impact from these revisions on income taxes or earnings per share.

The consolidated Statement of Stockholders’ Equity for the year ended December 31, 2022 has also been revised to include the changes to net income as noted below.

The following table presents the effect of the error correction on the Company’s consolidated balance sheet as of December 31, 2022:

As of December 31, 2022

As Reported Adjustment As Corrected

Current contract assets $ 1,243 $ ( 1,243 ) $ —

Total current assets 131,203 ( 1,243 ) 129,960

Non-current contract assets 3,033 ( 3,033 ) —

Total assets 200,530 ( 4,276 ) 196,254

Contract liabilities 3,108 ( 1,743 ) 1,365

Total current liabilities 38,868 ( 1,743 ) 37,125

Long-term contract liabilities 4,315 ( 4,315 ) —

Total liabilities 43,874 ( 6,058 ) 37,816

Retained earnings (accumulated deficit) 11,936 1,782 13,718

Total stockholders’ equity 156,656 1,782 158,438

Total liabilities and stockholders’ equity 200,530 ( 4,276 ) 196,254

The following table presents the effect of the error corrections on the consolidated statement of income for the year ended December 31, 2022:

Year Ended December 31, 2022

As Reported Adjustment As Corrected

Net sales $ 138,878 $ ( 128 ) $ 138,750

Cost of product sales 25,184 ( 26 ) 25,158

Sales, marketing and support 23,229 ( 31 ) 23,198

Net loss from continuing operations ( 3,924 ) ( 71 ) ( 3,995 )

Net income (loss) 24,101 ( 71 ) 24,030

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2023 and 2022

(in thousands, except per share amounts)

The following table presents the effect of the error corrections on the consolidated statement of cash flows for the year ended December 31, 2022:

Year Ended December 31, 2022

As Reported Adjustment As Corrected

Net income (loss) $ 24,101 $ ( 71 ) $ 24,030

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Prepaid expenses, other current assets, and current contract assets ( 1,096 ) 13 ( 1,083 )

Other non-current assets and non-current contract assets 1,731 ( 71 ) 1,660

Contract liabilities and long-term contract liabilities ( 580 ) 128 ( 452 )

Net cash provided by operating activities 8,894 ( 1 ) 8,893

Effect of exchange rate changes on cash and cash equivalents (297) 1 (296)

The impact of these error corrections on relevant quarterly financial information is presented in Note 16 to these consolidated financial statements.

(b) Description of Business

(a) Description of Business

KVH designs, develops, manufactures and markets mobile connectivity services and products for the marine and land markets.

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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.

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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;

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.

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.

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 or refurbishment costs on the hardware are expensed in the period these costs are incurred.

Service sales also include the distribution of commercially licensed entertainment, including movies, television programming, news, and music, 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 Viasat/Inmarsat and Iridium customers who choose to activate their subscriptions with KVH.

Service sales also include sales from product repairs and extended warranty sales.

KVH’s satellite-only and hybrid products enable marine customers to receive data, Voice over Internet Protocol (VoIP), and value-added services via satellite, cellular, and shore-based Wi-Fi networks onboard commercial, leisure, and military/

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2023 and 2022

(in thousands, except per share amounts)

government vessels.

In addition, the Company’s in-motion television terminals permit customers to receive live digital television via regional satellite services in marine vessels, recreational vehicles, buses and automobiles.

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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.

Historically, the Company has generated the majority of its marine leisure product revenues during the first and second quarters of each year, and these revenues typically decline in the third and fourth quarters of each year, compared to the first two quarters.

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2024 and 2023

(in thousands, except per share amounts)

In February 2024, the Company announced a staged wind-down of its product manufacturing operations at its Middletown, Rhode Island location.

The Company expects that it will continue its product manufacturing activities in order to generate a targeted amount of inventory of maritime satellite connectivity and satellite television terminals to meet anticipated demand and that it will cease substantially all manufacturing activity by the end of the second quarter of 2024.

The Company expects to continue to facilitate customer transition to third-party hardware products compatible with its mobile satellite communications services.

Please see Note 14 for additional details surrounding the wind-down of the Company's manufacturing activities.

On August 9, 2022, the Company sold its inertial navigation business to EMCORE Corporation for net proceeds of $ 54,904 , less specified deductions.

On August 9, 2022, the Company also entered into a Transition Services Agreement with EMCORE, pursuant to which the Company agreed to provide certain transition services to support the continued operation of the inertial navigation business for six months following the sale with two extension options of three months each.

The fee comprised both fixed monthly fees of approximately $ 100 as well as variable amounts for certain additional services with escalation increases on the fixed and variable rates for each extension option.

The Company did not have any continuing involvement in these operations other than the transition services, which were recorded as an offset to general and administrative expenses in continuing operations.

As of December 31, 2023, the Company is no longer providing transition services.

For the years ended December 31, 2023 and 2022, the Company recognized an offset to general and administrative expenses associated with the Transition Services Agreement of $ 710 and $ 923 , respectively.

The Company determined that the sale met the requirements for reporting as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20.

Please see Note 14 for the discontinued operations disclosures.

As a result of the sale of its inertial navigation business, the Company operates as one reportable segment.

(b) Principles of Consolidation

The accompanying consolidated financial statements of KVH Industries, Inc.

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All significant intercompany accounts and transactions have been eliminated in consolidation.

The 2022 consolidated financial statements reflect the sale of the inertial navigation business as discontinued operations.

See Note 14 for further information on the sale of the inertial navigation business.

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2023 and 2022

(in thousands, except per share amounts)

(d) Significant Estimates and Assumptions and Other Significant Non-Recurring Transactions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of sales and expenses during the reporting periods.

The estimates and assumptions used by management affect the Company’s revenue recognition, valuation of accounts receivable, valuation of inventory, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets and goodwill, estimated fair values of long-lived assets, including goodwill, amortization methods and periods, certain accrued expenses and other related charges, stock-based compensation, contingent liabilities, forfeitures and key valuation assumptions for its share-based awards, estimated fulfillment costs for warranty obligations, tax reserves and recoverability of the Company’s net deferred tax assets and related valuation allowance, and the valuation of right-of-use assets and lease liabilities.

The estimates and assumptions used by management affect the Company’s revenue recognition, valuation of accounts receivable, valuation of inventory, valuation of prepaid assets, expected future cash flows (including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets and goodwill), estimated fair values of long-lived assets (including goodwill, amortization methods and amortization periods), certain accrued expenses and other related charges, stock-based compensation, contingent liabilities, forfeitures and key valuation assumptions for its share-based awards, estimated fulfillment costs for warranty obligations, tax reserves and recoverability of the Company’s net deferred tax assets and related valuation allowance, and the valuation of right-of-use assets and lease liabilities.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates.

1 unchanged sentence

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

CEO Executive Employment Agreement

In May 2022, the Company entered into an executive employment agreement with Brent C.

Bruun in order to retain his services and provide him with certain benefits in the event that the Company terminated his employment without cause (as defined in the agreement) or Mr.

Bruun terminated his employment for good reason (as defined in the agreement) (either such termination, a “Qualifying Termination”), including following a change in control.

The agreement provided that, if Mr.

Bruun continued to serve as an employee through December 31, 2022 (the “Retention Date”), the Company would pay him a retention bonus equal to 75 % of his base salary on the agreement date, and the Company would accelerate the vesting of his equity awards that would otherwise have vested in the twelve months after the Retention Date.

In October 2022, the Company entered into an amendment to the employment agreement with Mr.

Bruun that, among other things, increased his annual base salary to $ 448 per year, retroactive to July 1, 2022, increased his target annual incentive compensation for the second half of 2022 to 80 % of his base salary (without changing his target annual incentive compensation for the first half of 2022), extended his Retention Date from December 31, 2022 to December 31, 2023, which effectively extended the period during which Mr.

Bruun needed to remain employed by the Company in order to earn his retention bonus, and modified the amount of the retention bonus from 75 % of his base salary in effect on May 2, 2022 to 75 % of the highest base salary in effect for Mr.

Bruun on or before the date he became entitled to receive the retention bonus.

The amendment did not modify the terms of the employment agreement relating to acceleration of vesting of certain equity awards if Mr.

Bruun remained employed by the Company through December 31, 2022.

As of December 31, 2023, the Company accrued approximately $ 381 for the retention bonus payable to Mr.

In January 2024, we paid Mr.

Bruun the full amount of his retention bonus as the applicable conditions of his agreement were satisfied on December 31, 2023.

Contemporaneously with the amendment to Mr.

Bruun’s employment agreement, the Compensation Committee also granted Mr.

Bruun a restricted stock award and a non-statutory stock option, which together had an aggregate grant date fair value of approximately $ 100 .

The restricted stock award and the non-statutory stock option have terms that are materially consistent with the previously disclosed terms of similar grants to the Company’s executive officers.

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

(e) Concentration of Credit Risk and Single Source Suppliers

(d) Concentration of Credit Risk and Single Source Suppliers

Cash, cash equivalents and marketable securities.

1 unchanged sentence

To mitigate these risks the Company maintains cash, cash equivalents and marketable securities with reputable and nationally recognized financial institutions.

As of December 31, 2023, $ 58,477 classified as marketable securities was held by Wells Fargo and substantially all of the cash and cash equivalents were held by Bank of America, N.A.

As of December 31, 2024, substantially all of the cash and cash equivalents were held by Bank of America, N.A.

In the fourth quarter of 2024, the balance of our marketable securities held by Wells Fargo was liquidated and transferred to an interest-bearing account held by Bank of America, N.A.

See Note 2 for a description of marketable securities.

12 unchanged sentences

The failure of a supplier, including a subcontractor, to deliver on schedule could delay or interrupt the Company’s delivery of products and thereby materially adversely affect the Company’s revenues and operating results.

(f) Revenue Recognition

(e) Revenue Recognition

In accordance with Accounting Standards Codification (ASC) 606, revenue is recognized when a customer obtains control of promised products and services.

4 unchanged sentences

The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors, including the customer’s historical payment pattern or, in the case of a new customer, published credit and financial information pertaining to the customer.

2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the product or service is separately identifiable from other promises in the contract.

To the extent a contract includes multiple promised products and services, the Company must apply judgment to determine whether promised products and services are capable of being distinct and distinct in the context of the contract.

If these criteria are not met, the promised products and services are accounted for as a combined performance obligation.

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

2) Identify the performance obligations in the contract

If these criteria are not met, the promised products and services are accounted for as a combined performance obligation.

3) Determine the transaction price

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products and services to the customer.

Amounts collected from customers for sales taxes are excluded from the transaction price.

To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration.

18 unchanged sentences

The Company classifies any billings in excess of revenue recognized as deferred revenue as current or non-current based on the timing of when revenue is expected to be recognized.

Satellite connectivity and media content service sales

Directly sold and re-sold satellite connectivity service for VoIP, data and Internet is recognized monthly based primarily on contracted fixed-fee schedules as well as any overages for minutes or megabytes of traffic processed.

The Company has evaluated whether it obtains control of the services that are being transferred to the customer in assessing gross revenue reporting as principal versus net revenue reporting as agent for its satellite connectivity service sales and its payments to the applicable service providers.

Based on the Company's assessment of the indicators, the Company has determined that gross revenue reporting as a principal is appropriate.

The applicable indicators of gross revenue reporting include, but are not limited to, the following:

Revenue recognized during 2024 and 2023 from amounts included in deferred revenue at the beginning of the period was $ 1,527 and $ 1,127 , respectively.

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

Satellite connectivity and media content service sales

Based on the Company’s assessment of the indicators, the Company has determined that gross revenue reporting as a principal is appropriate.

The applicable indicators of gross revenue reporting include, but are not limited to, the following:

• The Company is the primary obligor in its arrangements with its subscribers.

The Company manages all interactions with the subscribers, while satellite connectivity service providers do not interact with the subscribers.

In addition, the Company assumes the entire performance risk under its arrangements with the subscribers and in the event of a performance issue, the Company may incur reductions in fees without regard for any recourse that the Company may have with the applicable satellite connective service providers.

• The Company has discretion in establishing pricing, as the pricing under its arrangements with the subscribers is negotiated through a contracting process.

2 unchanged sentences

As a result, the Company has determined that it earns revenue (as a principal) from the delivery of satellite connectivity services to its subscribers and records all satellite connectivity service sales to subscribers as gross sales.

All associated regulatory service fees and costs are recorded net in the consolidated financial statements.

The Company sells prepaid airtime services in the form of prepaid cards.

A liability is established upon purchase equal to the cash paid for the prepaid card.

The Company recognizes revenue from the prepaid services upon the use of the prepaid card by the customer.

The Company does not offer refunds for unused prepaid services.

Prepaid airtime services have not been a significant portion of the Company’s total sales.

Media content sales include the Company's distribution of commercially licensed news, sports, movies and music content for commercial and leisure customers in the maritime, hotel, and retail markets.

Media content sales include the Company’s distribution of commercially licensed movies, television programming, news, and music content for commercial and leisure customers in the maritime market.

The Company typically recognizes revenue from media content sales ratably over the period of the service contract.

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The Company recognizes the subscription fee monthly as service revenue over the service delivery period.

On occasion, a customer may opt to purchase previously deployed AgilePlans hardware from the Company.

In these instances, the gain or loss on disposal of this revenue generating long-lived asset is recognized within other income/expense in the Company's consolidated statement of operations as per ASC 360-10-45-5.

The Company applies the practical expedient to not adjust the transaction price for a significant financing component if the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service is one year or less.

The Company also applies the optional exemption to not disclose the transaction price allocated to remaining performance obligations with an original expected duration of one year or less or those where revenue is recognized over time using the right to invoice practical expedient.

Product service sales

Product service sales other than under development contracts are recognized when completed services are delivered to the customer.

The Company also sells extended warranty contracts on mobile connectivity and inertial navigation products.

The Company also sells extended warranty contracts.

Sales under these contracts are recognized ratably over the contract term.

Product service sales including extended warranties are not a significant portion of the Company’s total sales.

Revenue related to product service sales is recognized in service sales in the Company's consolidated statement of operations.

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2024 and 2023

(in thousands, except per share amounts)

Sales-type leases

6 unchanged sentences

Many of our lease agreements contain renewal options which are recognized if it is determined that the Company is reasonably certain to renew the lease at inception or when a triggering event occurs.

Some of our lease agreements contain rent

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2023 and 2022

(in thousands, except per share amounts)

escalation clauses, rent holidays, capital improvement funding or other lease concessions.

Some of our lease agreements contain rent escalation clauses, rent holidays, capital improvement funding or other lease concessions.

The Company recognizes operating lease costs on a straight-line basis based on the fixed components of a lease arrangement and amortize such expense over the term of the lease beginning with the commencement date.

3 unchanged sentences

Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when reasonably certain to be exercised.

The present value of lease payments is determined using the incremental borrowing rate based on the information available at the lease commencement date.

(h) Fair Value of Financial Instruments

The present value of lease payments is determined using an incremental borrowing rate of 5.5 %.

(g) Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, which include cash equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to the short maturity of these instruments.

1 unchanged sentence

The carrying amount of finance leases approximate fair value based on currently available quoted rates of similarly structured debt facilities.

See Note 13 for the Company's finance lease.

(i) Cash, Cash Equivalents, and Marketable Securities

In accordance with the Company’s investment policy, cash in excess of operational needs is invested in money market mutual funds, government agency bonds, United States treasuries, municipal bonds, corporate notes, or certificates of deposit.

All highly liquid investments with a maturity date of three months or less at the date of purchase are classified as cash equivalents.

The Company determines the appropriate classification of marketable securities at each balance sheet date.

As of December 31, 2023 and 2022, all of the Company’s marketable securities have been designated as available-for-sale and are carried at their fair value with unrealized gains and losses included in accumulated other comprehensive loss in the accompanying consolidated balance sheets.

The Company reviews investments in debt securities for other than temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time.

To determine whether an impairment is other-than-temporary, the Company considers whether it intends to sell the security, whether it expects to recover the credit loss, and if it is more likely than not that the Company will be required to sell the security prior to recovery.

Evidence considered in this assessment includes the reasons for the impairment, compliance with the Company’s investment policy, the severity and duration of the impairment, changes in value subsequent to year-end and forecasted performance of the investee.

The Company has reviewed its securities with unrealized losses as of December 31, 2023 and 2022 and has concluded that no other-than-temporary impairments exist.

(j) Inventories

See Note 13 for the Company's finance leases.

(h) Cash, Cash Equivalents, and Marketable Securities

In the fourth quarter of 2024, the balance of our marketable securities held by Wells Fargo was liquidated and transferred to an interest-bearing account held by Bank of America, N.A.

Previously, cash in excess of operational needs was invested in money market mutual funds, government agency bonds, United States treasuries, municipal bonds, corporate notes, or certificates of deposit.

All highly liquid investments with a maturity date of three months or less at the date of purchase were classified as cash equivalents.

The Company determined the appropriate classification of marketable securities at each balance sheet date.

As of December 31, 2023, all of the Company’s marketable securities were designated as available-for-sale and were carried at their fair value with unrealized gains and losses included in accumulated other comprehensive loss in the accompanying consolidated balance sheet.

The Company reviewed investments in debt securities for other than temporary impairment whenever the fair value of an investment was less than amortized cost and evidence indicated that an investment’s carrying amount was not recoverable within a reasonable period of time.

To determine whether an impairment was other-than-temporary, the Company considered whether it intended to sell the security, whether it expected to recover the credit loss, and whether it was more likely than not that the Company would be required to sell the security prior to recovery.

Evidence considered in this assessment included the reasons for the impairment, compliance with the Company’s investment policy, the severity and duration of the impairment, changes in value subsequent to year-end and forecasted performance of the investee.

The Company had reviewed its securities with unrealized losses as of December 31, 2023 and had concluded that no other-than-temporary impairments exist.

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2024 and 2023

(in thousands, except per share amounts)

(i) Inventories

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

1 unchanged sentence

The Company records inventory charges to costs of product sales.

(k) Property and Equipment

(j) Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization.

6 unchanged sentences

and motor vehicles, 5 years.

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2023 and 2022

(in thousands, except per share amounts)

(l) Goodwill, Intangible Assets and other Long-Lived Assets

(k) Intangible Assets and other Long-Lived Assets

As of December 31, 2024, the Company's intangible assets are primarily associated with the purchase of distribution rights from Kognitive Networks Inc.

in October 2023 and the purchase of Virtek Communication (now known as KVH Industries Norway AS) in September 2010.

Prior to the fourth quarter of 2023, the Company’s goodwill and intangible assets were also associated with the purchase of Headland Media Limited (now known as the KVH Media Group) in May 2013.

In accordance with ASC Update No.

2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test of Goodwill Impairment (ASC 350), the Company performs a goodwill impairment test at least annually, or more frequently if certain events occur, or circumstances change, that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount (frequently referred to as impairment indicators or triggering events).

A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

in October 2023 and the purchase of Virtek Communications (now known as KVH Industries Norway AS) in September 2010.

Intangible assets with finite lives and other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

2 unchanged sentences

If these comparisons indicate that an asset is not recoverable, the Company will recognize an impairment loss for the amount by which the carrying value of the asset or asset group exceeds the related estimated fair value.

(m) Other Non-Current Assets

The Company has determined that the assets within each of the Company's reporting units (Mobile Broadband (MBB) and KVH Media Group (Media)) are highly interrelated and interdependent on each other to generate revenues, and thus independent cash flows are not identifiable at a level lower than that of these reporting units.

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

(l) Other Non-Current Assets

Other non-current assets are primarily comprised of long-term lease receivables, prepaid expenses, and deposits.

(n) Product Warranty

(m) Product Warranty

The Company’s products carry standard limited warranties that range from one to two years and vary by product.

The warranty period begins on the date of retail purchase or lease by the original purchaser.

The Company also offers extended warranties on its products for up to five years .

The Company accrues estimated product warranty costs at the time of sale and any additional amounts are recorded when such costs are probable and can be reasonably estimated.

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Ending balance $ 607 $ 828

(o) Shipping and Handling Costs

Shipping and handling costs are expensed as incurred and included in cost of sales.

Billings for shipping and handling are reflected within net sales in the accompanying consolidated statements of operations.

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

(p) Research and Development

(n) Shipping and Handling Costs

Shipping and handling costs are expensed as incurred and included in cost of sales.

Billings for shipping and handling are reflected within net sales in the accompanying consolidated statements of operations.

(o) Research and Development

Expenditures for research and development are expensed as incurred.

(q) Advertising Costs

(p) Advertising Costs

Costs related to advertising are expensed as incurred.

Advertising expense was $ 491 and $ 580 for the years ended December 31, 2024 and 2023, respectively, and is included in sales, marketing, and support expense in the accompanying consolidated statements of operations.

(r) Foreign Currency Translation and Transaction

(q) Foreign Currency Translation and Transaction

The financial statements of the Company’s foreign subsidiaries located in Denmark, Singapore and Cyprus are maintained using the United States dollar as the functional currency.

1 unchanged sentence

Revenue and other expense elements are recorded at rates that approximate the rates in effect on the transaction dates.

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

For the years ended December 31, 2023 and 2022, the Company recorded a total of net foreign currency exchange (losses) gains, which are comprised of both realized and unrealized foreign currency exchange losses and gains, in its accompanying consolidated statements of operations $( 33 ) and $ 517 , respectively.

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

For the years ended December 31, 2024 and 2023, the Company recorded a total of net foreign currency exchange losses, which are comprised of both realized and unrealized foreign currency exchange losses and gains, in its accompanying consolidated statements of operations $( 493 ) and $( 33 ), 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.

2 unchanged sentences

Gains and losses from foreign currency translation are credited or charged to accumulated other comprehensive loss included in stockholders' equity in the accompanying consolidated balance sheets.

(s) Income Taxes

(r) Income Taxes

The Company is subject to income taxes in the U.S.

10 unchanged sentences

See Note 7 for further discussion of income taxes.

(t) 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 in accordance with the treasury stock accounting method.

For the years ended December 31, 2023 and 2022 since there was a net loss from continuing operations, the Company excluded all 1,419 and 1,359 shares, respectively, in outstanding stock options and non-vested restricted shares from its diluted loss per share calculation, as inclusion of these securities would have reduced the net loss per share.

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

(s) 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.

For the years ended December 31, 2024 and 2023 since there was a net loss, the Company excluded all 987 and 1,419 shares, respectively, in outstanding stock options and non-vested restricted shares from its diluted loss per share calculation, as inclusion of these securities would have reduced the net loss per share.

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

2 unchanged sentences

Weighted average common shares outstanding—diluted 19,389 19,130

(u) Contingent Liabilities

(t) Contingent Liabilities

The Company estimates the amount of potential exposure it may have with respect to claims, assessments and litigation in accordance with ASC 450, Contingencies .

2 unchanged sentences

Additionally, it is not always possible for management to make meaningful estimates of the potential loss or range of loss associated with such litigation.

(v) Operating Segments

The Company operates in one reportable segment as a result of the sale of its inertial navigation business on August 9, 2022.

(u) Operating Segments

The Company operates in one reportable segment.

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance.

2 unchanged sentences

Revenues are generated from international locations, primarily consisting of Singapore, Canada, South American countries, European Union countries and other European countries, and countries in Africa, the Middle East and Asia/Pacific, including India (see Note 10, “ Revenue from Contracts with Customers ”).

(w) Recently Issued Accounting Standards

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2024 and 2023

(in thousands, except per share amounts)

(v) Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies.

1 unchanged sentence

Prior to their effective date, the Company evaluates the pronouncements to determine the potential effects of adoption on our consolidated financial statements.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities.

Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses.

ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842):

Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies.

The Company adopted ASU 2016-13 as of January 1, 2023.

The adoption did not have a material impact on the Company’s financial statements.

There are no recent accounting pronouncements that have been issued by the FASB that are not yet effective and that the Company expects would have a material impact on the Company's financial statements.

Standards Implemented

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires a public entity to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”).

The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments.

The Company adopted ASU No.

2023-07 as of December 31, 2024.

The adoption did not have a material impact on the Company’s financial statements, including disclosures.

Standards to be Implemented

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The amendments in this ASU apply to all entities that are subject to Topic 740, Income Taxes.

The amendments require public business entities to disclose specific categories in their tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

These amendments also require all entities to disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions in which income taxes paid, net of refunds received, are equal to or greater than five percent of total income taxes paid.

For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024.

The amendments in this ASU should be applied on a prospective basis.

The adoption of ASU No.

2023-09 is not expected to have a material impact on the Company’s financial statements, including disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The standard requires public business entities to provide further disaggregated information of relevant expense captions within its consolidated statements of operations.

The standard is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027.

The standard may be applied prospectively or retrospectively.

The adoption will result in disclosure changes only.

There are no other recent accounting pronouncements that have been issued by the FASB that are not yet effective that the Company expects would have a material impact on the Company’s financial statements, including disclosures.

KVH INDUSTRIES, INC.

4 unchanged sentences

(2) Marketable Securities

In the fourth quarter of 2024, the balance of our marketable securities held by Wells Fargo was liquidated and transferred to an interest-bearing account held by Bank of America, N.A.

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

4 unchanged sentences

Money market mutual funds $ 58,477 $ — $ — $ 58,477

United States treasuries 24,715 — ( 12 ) 24,703

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

The effective maturity date of the United States treasuries is less than one year.

Interest income from marketable securities was $ 1,990 and $ 2,785 for the years ended December 31, 2024 and 2023, respectively.

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As of December 31, 2024 and 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 part of the Company's impairment testing during the third quarter of 2023, an internally developed software asset was deemed the primary asset of the asset group known as KVH Media Group.

The $ 383 net asset value was determined to be fully impaired as a result of the review.

The movement associated with the impairment is reflected as a component of the office and computer equipment.

Please see Note 8 for additional details surrounding the impairment.

In 2023, there was a $ 1,534 disposal of property and equipment related to the discontinuation of a project for implementing a new manufacturing-centric accounting system.

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, Rhode Island (“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 year ended December 31, 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, Rhode Island (“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.

In December 2024, the Company entered into an agreement to sell 50 Enterprise Center, subject to the buyer’s right to terminate the agreement during an inspection period.

In January 2025, before the end of the inspection period, the Company received notice of termination from the buyer.

50 Enterprise Center remains held for sale as the Company continues to search for a suitable buyer.

KVH INDUSTRIES, INC.

4 unchanged sentences

(5) Commitments and Contingencies

The Company has certain operating leases and other commitments for satellite capacity, various equipment, and facilities.

The Company has certain operating leases and other commitments for satellite capacity, inventory, equipment, facilities, software and technology.

The following reflects future minimum payments under operating leases and other commitments that have initial or remaining non-cancelable terms at December 31, 2024:

2 unchanged sentences

Total minimum payments $ 46,251

(a) Includes the future minimum lease payments for the Company's operating leases as seen in Note 13.

(a) Includes the future minimum lease payments for the Company’s operating leases as described in Note 13.

Total rent expense incurred under facility operating leases for the years ended December 31, 2024 and 2023 amounted to $ 627 and $ 730 , respectively.

1 unchanged sentence

In the normal course of business, the Company enters into unconditional purchase order obligations with its suppliers for inventory and other operational purchases.

Outstanding and unconditional purchase order obligations were $ 8,363 as of December 31, 2023.

The Company has determined that $ 3,569 of these obligations relate to excess purchase orders and the Company has recorded a purchase obligation accrual which has been charged to costs of product sales, net as of December 31, 2023.

Outstanding and unconditional purchase order obligations were $ 2,270 as of December 31, 2024, all of which the Company expects to fulfill in 2025.

The Company has determined that $ 919 of these obligations relate to excess purchase orders and the Company has recorded a purchase obligation accrual which had been charged to costs of product sales, net as of December 31, 2023.

As of December 31, 2024, the Company had certain satellite service capacity obligations that were not considered operating or financing leases under ASC 842.

The Company did not have any off-balance sheet arrangements, guarantees, or standby repurchase obligations as of December 31, 2023.

The Company did not have any other off-balance sheet arrangements, guarantees, or standby repurchase obligations as of December 31, 2024.

KVH INDUSTRIES, INC.

15 unchanged sentences

The Compensation Committee of the Board of Directors administers the equity compensation plans, approves the individuals to whom awards will be granted and determines the number of shares and other terms of each award.

Outstanding options under the Company's equity compensation plans at December 31, 2023 expire from April 2024 through March 2028.

Outstanding options under the Company’s equity compensation plans at December 31, 2024 expire from August 2025 through February 2029.

None of the Company’s outstanding options includes performance-based or market-based vesting conditions as of December 31, 2024.

17 unchanged sentences

(in thousands, except per share amounts)

The changes in outstanding stock options for the year ended December 31, 2023 and 2022 are as follows:

The changes in outstanding stock options for the years ended December 31, 2024 and 2023 are as follows:

Number of Options Weighted Average

26 unchanged sentences

1,230 $ 9.57 2.67 $ —

The total aggregate intrinsic value of options exercised was $ 542 and $ 387 in 2023 and 2022, respectively.

No options were exercised during 2024.

The total aggregate intrinsic value of options exercised in 2023 was $ 542 .

As of December 31, 2024, there was $ 1,174 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.34 years.

17 unchanged sentences

In 2024 and 2023, the Company recorded compensation charges of $ 1,310 and $ 1,270 , respectively, related to restricted stock awards.

Restricted stock activity under the 2016 Plan for 2023 is as follows:

Restricted stock activity under the 2016 Plan for 2024 and 2023 are as follows:

Shares Weighted-

4 unchanged sentences

Outstanding at December 31, 2024, unvested

Shares Weighted-

Outstanding at December 31, 2022, unvested

Granted 217 9.49

Vested ( 116 ) 9.21

Forfeited ( 72 ) 9.80

Outstanding at December 31, 2023, unvested

During the twelve months ended December 31, 2023, the Company’s Board of Directors authorized the repurchase of a portion of executive common stock.

During 2024, no shares of common stock were repurchased .

During 2023, the Company’s Board of Directors authorized the repurchase of a portion of executive common stock.

The company repurchased 23 shares of common stock held by executives at the Company to satisfy minimum tax withholding obligations in lieu of cash payment.

No shares of common stock were repurchased during the twelve months ended December 31, 2022.

(d) Employee Stock Purchase Plan

15 unchanged sentences

The following presents stock-based compensation expense, including expense for the ESPP, in the Company’s consolidated statements of operations for the years ended December 31, 2024 and 2023.

Cost of product sales $ 34 $ 415

Cost of service sales $ 29 $ 21

Cost of product sales 23 34

Research and development 378 567

3 unchanged sentences

(f) Accumulated Other Comprehensive Loss (AOCL)

Comprehensive income (loss) includes net income (loss) and unrealized gains and losses from foreign currency translation.

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 income (loss).

Comprehensive loss includes net loss and unrealized gains and losses from foreign currency translation.

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.

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

1 unchanged sentence

$ ( 4,098 ) $ ( 12 ) $ ( 4,110 )

Other comprehensive loss ( 689 ) ( 12 ) ( 701 )

Net other comprehensive loss ( 689 ) ( 12 ) ( 701 )

Balance, December 31, 2022

( 4,098 ) ( 12 ) ( 4,110 )

Other comprehensive (loss) income ( 87 ) 12 ( 75 )

2 unchanged sentences

( 4,185 ) — ( 4,185 )

Other comprehensive income 153 — 153

Net other comprehensive income 153 — 153

Balance, December 31, 2024

$ ( 4,032 ) $ — $ ( 4,032 )

KVH INDUSTRIES, INC.

4 unchanged sentences

(7) Income Taxes

Income tax expense (benefit) for the years ended December 31, 2023 and 2022 attributable to loss from continuing operations is presented below.

Income tax expense for the years ended December 31, 2024 and 2023 attributable to loss from operations is presented below.

Current Deferred Total

1 unchanged sentence

Federal $ 23 $ — $ 23

State 12 — 12

Foreign 274 117 391

5 unchanged sentences

$ 360 $ ( 42 ) $ 318

Actual income tax expense (benefit) differs from the “expected” income tax expense (benefit) computed by applying the United States Federal statutory income tax rate of 21% for both 2023 and 2022 to loss from continuing operations before income tax expense, as follows:

Actual income tax expense differs from the “expected” income tax expense computed by applying the United States Federal statutory income tax rate of 21% for both 2024 and 2023 to loss before income tax expense, as follows:

Year Ended December 31,

1 unchanged sentence

Increase (decrease) in income taxes resulting from:

State income tax benefit (expense), net of federal benefit 971 ( 17 )

State income tax (expense) benefit, net of federal benefit ( 48 ) 971

State research and development, investment credits 423 291

2 unchanged sentences

Non-deductible compensation under 162(m) — 49

Prior period prepaid tax — 276

Foreign withholding taxes — 139

Foreign exchange loss 110 —

Foreign tax rate differential 102 106

4 unchanged sentences

Goodwill impairment — 1,157

Sale of KVH Media Group Entertainment Limited — ( 206 )

Non-deductible foreign transaction taxes 110 —

Other 66 ( 13 )

5 unchanged sentences

(in thousands, except per share amounts)

Loss from continuing operations before income tax expense determined by tax jurisdiction, are as follows:

Loss before income tax expense determined by tax jurisdiction, are as follows:

Year Ended December 31,

20 unchanged sentences

Deferred tax liabilities:

Purchased intangible assets — ( 39 )

Property and equipment, due to differences in depreciation ( 2,430 ) ( 3,386 )

19 unchanged sentences

In assessing the realizability of its net deferred tax assets, the Company considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

As of December 31, 2023, the valuation decreased by $ 682 .

The change was primarily the result of the current year loss, the expiration of stock compensation deferred assets, the reduction in the state effective tax rate and the expiration of state loss carryforwards.

As of December 31, 2024, the valuation increased by $ 1,343 .

The change was primarily the result of the current year loss and an increase in the inventory valuation reserve.

As part of the Company’s analysis, the Company evaluated, among other factors, its recent history of generating tax losses and its near-term forecasts of future taxable income or losses.

8 unchanged sentences

Gross decrease in unrecognized tax benefits - prior year tax positions — ( 418 )

Gross decrease in unrecognized tax benefits due to currency fluctuations - prior year tax positions ( 159 ) —

Lapse of statute of limitations ( 14 ) ( 20 )

14 unchanged sentences

(in thousands, except per share amounts)

(8) Goodwill and Other Long-Lived Assets

As of December 31, 2023, the Company's intangible assets are primarily associated with the purchase of distribution rights from Kognitive Networks Inc.

in October 2023 and the purchase of Virtek Communication (now known as KVH Industries Norway AS) in September 2010.

Prior to the fourth quarter of 2023, the Company’s goodwill and intangible assets were also associated with the purchase of Headland Media Limited (now known as the KVH Media Group) in May 2013.

In the third quarter of 2023, the Company observed a sustained stock price decline resulting in a significant shortfall in market capitalization when compared to the aggregate carrying value of our net assets.

These circumstances led us to conclude that quantitative goodwill impairment assessments of the Mobile Broadband (MBB) and KVH Media Group (Media) reporting units were required.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors.

Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding future plans, as well as industry and economic conditions.

These assumptions and estimates include estimated future cash flows, income tax rates, discount rates, growth rates, and other market factors.

In performing the quantitative assessment, the Company estimated the fair value of its reporting units using the income approach, also known as the discounted cash flow ("DCF") method, which utilizes the present value of estimated future cash flows to estimate fair value.

The DCF method involves estimating the discounted cash flows of a reporting unit by forecasting cash flows each year, calculating a terminal value, and discounting all of the cash flows to present value at an appropriate discount rate (in consideration of the time value of money, the risk inherent in the cash flow stream, and in the context of current rates of return for equity and debt capital).

The final determination of fair value was based on a probability-weighted approach comparing management’s forecasts with a market expectation forecast.

As of September 30, 2023, the determined fair values of the MBB and Media reporting units were lower than their carrying values.

After recognition of a long-lived asset impairment charge (as discussed below), the Company recognized goodwill impairment charges equal to the total amount of goodwill attributed to the MBB and Media reporting units, which were approximately $ 4,400 and $ 900 , respectively.

The Company also determined that the sustained decrease in stock price and shortfall in market capitalization indicated that the carrying amounts of our asset groups (MBB and Media) may not be recoverable.

The Company therefore performed impairment tests on the long-lived assets in each asset group, including definite-lived intangible assets using an undiscounted cash flow analysis over the estimated remaining useful life of the primary asset, to determine whether the carrying amounts of each asset group were recoverable.

As of September 30, 2023, our analysis indicated that the carrying amount of the MBB asset group was recoverable, and therefore no fair value estimate was required.

The Media asset group failed the undiscounted cash flow recoverability test and therefore the Company estimated the fair value of the asset group to determine whether any asset impairment was present.

Our estimation of the fair value of the long-lived assets included the use of discounted cash flow and cost analyses, reflecting estimates of future revenues, cost factors, cash flows, discount rates, and obsolescence.

Based on these analyses, the Company concluded that the fair values of certain assets were lower than their carrying amounts.

As of September 30, 2023, the Company recognized long-lived asset impairment charges totaling approximately $ 400 and $ 300 for the KVH Media Group’s internally developed software assets and acquired subscriber relationships, respectively, reducing the carrying amounts to zero.

(8) Intangible Assets

Intangible assets arose from the purchase of distribution rights from Kognitive Networks Inc., the purchase of KVH Industries Norway AS and the acquisition of KVH Media Group.

The assets related to the distribution rights with Kognitive Networks are being amortized on a straight-line basis over the estimated useful life of 3 years.

The assets related to the purchase of KVH Industries Norway AS for acquired intellectual property are fully amortized, while the assets related to acquisition of KVH Media Group were previously being amortized on a straight-line basis over the estimated useful life of 10 years.

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2023 and 2022

(in thousands, except per share amounts)

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

in October 2023 and the purchase of KVH Industries Norway AS in September 2010.

The assets that are related to the distribution rights from Kognitive Networks are being amortized on a straight-line basis over the estimated useful life of 3 years.

The assets related to the purchase of KVH Industries Norway AS for acquired intellectual property are fully amortized as of December 31, 2024.

In January 2017, the Company completed the acquisition of certain subscriber relationships from a third party.

9 unchanged sentences

Distribution rights 1,250 460 790

Internally developed software — — —

Proprietary content — — —

Intellectual property 2,284 2,284 —

3 unchanged sentences

Distribution rights 1,250 66 1,184

Internally developed software 446 446 —

Proprietary content 153 153 —

Intellectual property 2,284 2,284 —

1 unchanged sentence

Amortization expense related to intangible assets was $ 407 and $ 234 for years ended December 31, 2024 and 2023, respectively, and was categorized as general and administrative expense.

As of December 31, 2023, the total weighted average remaining useful lives of the definite-lived intangible assets was 3.0 .

As of December 31, 2024, the total weighted average remaining useful lives of the definite-lived intangible assets was 2.0 years.

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

10 unchanged sentences

Intangible assets acquired in asset acquisition 40

Impairment ( 274 )

Foreign currency translation adjustment 1

Balance at December 31, 2024

Goodwill is recorded when the consideration for an acquisition exceeds the fair value of net tangible and identifiable intangible assets acquired.

No ne of the Company's goodwill is deductible for tax purposes.

The changes in the carrying amount of goodwill during the year ended December 31, 2023 is as follows:

Balance at December 31, 2022 $ 5,308

Impairment ( 5,333 )

Foreign currency translation adjustment 25

Balance at December 31, 2023 $ —

(9) 401(k) Plan

7 unchanged sentences

There were no discretionary contributions in 2024 and 2023.

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2023 and 2022

(in thousands, except per share amounts)

(10) Revenue from Contracts with Customers

1 unchanged sentence

The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these products and services.

Disaggregation of Revenue for Continuing Operations

Disaggregation of Revenue

The following table summarizes net sales from contracts with customers for the years ended December 31, 2024 and 2023:

Product - point in time $ 17,757 $ 26,842

Service - over time 96,446 114,622

Product - point in time 17,382 17,757

Total net sales $ 113,828 $ 132,379

4 unchanged sentences

Performance in any particular period could be impacted by the timing of sales to certain large customers.

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

Product sales accounted for 13 % and 19 % of the Company's consolidated net sales for 2023 and 2022, respectively.

Service sales of VSAT Broadband airtime service accounted for approximately 81 % and 75 % of the Company's consolidated net sales for 2023 and 2022, respectively.

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.

Service sales of airtime service accounted for approximately 79 % and 81 % of the Company's consolidated net sales for 2024 and 2023, respectively.

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

Product sales accounted for 15 % and 13 % of the Company’s consolidated net sales for 2024 and 2023, respectively.

No other single product class accounts for 10% or more of consolidated net sales.

The Company operates in a number of major geographic areas, including internationally.

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 68 % and 63 % of consolidated net sales for 2023 and 2022, respectively.

Sales to Singapore customers represented 19 % of the Company's consolidated net sales for 2023.

No other individual foreign country represented 10% or more of the Company's consolidated net sales for 2023.

Sales to Singapore customers represented 16 % of the Company's consolidated net sales for 2022.

No other individual foreign country represented 10% or more of the Company's consolidated net sales for 2022.

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

The Company operates in a number of major geographic areas, including internationally.

Revenues are based upon customer location and revenues from international locations represented 73 % and 68 % of the Company’s consolidated net sales for 2024 and 2023, respectively.

Sales to Singapore customers represented 21 % and 19 % of the Company’s consolidated net sales for 2024 and 2023, respectively.

No other individual foreign country represented 10% or more of the Company’s consolidated net sales for 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 years ended December 31, 2023 or 2022.

One customer accounted for approximately 23 % of accounts receivable at December 31, 2023.

Two customers accounted for approximately 16 % and 12 % of accounts receivable at December 31, 2022.

One customer accounted for 62 % and 66 % of long-term accounts receivable included in other non-current assets on the consolidated balance sheets related to sales-type leases at December 31, 2023 and December 31, 2022, respectively.

One customer accounted for 10% or more of consolidated net sales for the year ended December 31, 2024.

No single customer accounted for 10% or more of consolidated net sales for the year ended December 31, 2023.

One customer accounted for approximately 19 % and 23 % of accounts receivable at December 31, 2024 and 2023, respectively.

One customer accounted for 45 % and 62 % of long-term accounts receivable included in other non-current assets on the consolidated balance sheets related to sales-type leases at December 31, 2024 and 2023, respectively.

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

6 unchanged sentences

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

The Company’s Level 1 assets are investments in money market mutual funds and United States treasuries.

The Company’s Level 1 assets are investments in money market mutual funds.

Quoted prices for similar assets or liabilities in active markets;

3 unchanged sentences

The Company has no Level 3 assets.

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

The following table presents financial assets and liabilities at December 31, 2023 and December 31, 2022 for which the Company measures fair value on a recurring basis, by level, within the fair value hierarchy:

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

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

KVH INDUSTRIES, INC.

7 unchanged sentences

Money market mutual funds $ 58,477 $ 58,477 $ — $ — (a)

United States treasuries $ 24,703 $ 24,703 $ — $ — (a)

(a) Market approach—prices and other relevant information generated by market transactions involving identical or comparable assets.

4 unchanged sentences

The Company’s non-financial assets, such as goodwill, 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.

During the twelve months prior to December 31, 2023, the Company recorded an impairment charge of $ 5,990 to goodwill and long-lived assets.

See Note 1(l) and Note 8 for additional details.

During 2024, the Company recorded an impairment charge of $ 1,137 to long-lived assets.

See Note 4 for additional details.

During 2023, the Company recorded an impairment charge of $ 5,990 to goodwill and long-lived assets.

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

8 unchanged sentences

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

Lease expense was $ 1,702 and $ 2,103 for the year ended December 31, 2023 and 2022, respectively.

Lease expense was $ 1,297 and $ 1,702 for the years ended December 31, 2024 and 2023, respectively.

Short-term operating lease costs were $ 95 and $ 130 for the years ended December 31, 2024 and 2023, respectively.

9 unchanged sentences

Weighted-average discount rate - operating leases 5.50 %

The Company enters into leases with certain customers primarily for the TracPhone VSAT systems.

The Company enters into leases with certain customers primarily for the TracPhone and TracNet VSAT systems.

These leases are classified as sales-type leases because title to the equipment transfers to the customer at the end of the lease term.

7 unchanged sentences

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 $ 644 and $ 764 during the year ended December 31, 2023 and 2022, respectively.

Interest income from sales-type leases was $ 463 and $ 644 during the years ended December 31, 2024 and 2023, respectively.

KVH INDUSTRIES, INC.

11 unchanged sentences

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

Depreciation expense for these assets was $ 376 and $ 360 for the year ended December 31, 2023 and 2022, respectively.

Lease revenue recognized was $ 553 and $ 537 for the year ended December 31, 2023 and 2022, respectively, in service sales in the statements of operations.

Depreciation expense for these assets was $ 371 and $ 376 for the years ended December 31, 2024 and 2023, respectively.

Lease revenue recognized was $ 341 and $ 553 for the years ended December 31, 2024 and 2023, respectively, in service sales in the statements of operations.

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

(14) Restructuring

On February 9, 2024, the Board of Directors of the Company voted to implement a staged wind-down of the Company’s manufacturing activities at its facility in Middletown, Rhode Island.

The Board made this determination following a strategic review of the Company’s manufacturing operations, driven by reduced demand for the Company’s hardware products in the face of intensifying competition during the third and fourth quarters of 2023.

The Board concluded that the Company should discontinue its capital-intensive manufacturing activities and concentrate its efforts on growing sales of its multi-orbit, multi-channel, integrated communications solutions, which in recent years have constituted the largest portion of the Company’s overall revenues.

The Company expects that it will continue its product manufacturing activities for a period of time in order to generate a targeted amount of inventory of maritime satellite connectivity and satellite television terminals to meet anticipated demand and that it will cease substantially all manufacturing activity at the Middletown, Rhode Island facility by the end of 2025.

The Company expects to continue to facilitate customer transition to third-party hardware products compatible with the Company’s mobile satellite communications services.

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

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.

In 2024, the Company incurred aggregate severance charges of approximately $ 3.9 million, consisting of approximately $ 3.6 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

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

(14) Discontinued Operations

During the third quarter of 2022, the Company sold its inertial navigation business.

The Company determined that the sale met the requirements for reporting as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20.

There were no assets or liabilities of the inertial navigation business as of December 31, 2023 or 2022.

Please see Note 1 for further discussion.

The following table presents a reconciliation of the major financial line items constituting the results for discontinued operations to the net income from discontinued operations, net of tax, presented separately in the Company's consolidated statement of operations for the year ended December 31, 2022:

December 31, 2022

Product $ 16,042

Net sales 16,721

Costs, expenses and other income, net:

Costs of product sales 12,732

Costs of service sales 457

Research & development 3,147

Sales, marketing and support 3,035

Other income, net 81

Loss from discontinued operations before income tax expense ( 2,569 )

Gain on sale of discontinued operations before tax expense 30,763

Total income from discontinued operations before tax expense $ 28,194

Income tax expense on discontinued operations 169

Net income from discontinued operations, net of taxes $ 28,025

Net income from discontinued operations per common share

Basic and diluted $ 1.50

Weighted average number of common shares outstanding:

Basic and diluted $ 18,632

The following table presents supplemental cash flow information of the discontinued operations:

December 31, 2022

Cash used in operating activities—discontinued operations $ ( 3,853 )

Cash used in investing activities—discontinued operations $ ( 307 )

equity compensation awards.

For the aggregate severance charges of approximately $ 3.9 million, the Company recorded in its consolidated statement of operations $ 0.9 million in cost of product sales, $ 1.4 million in research and development, $ 0.7 million in sales, marketing and support, and $ 0.8 million in general and administrative.

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

The following table presents non-cash expenses from discontinued operations:

Depreciation $ 622

Compensation expense related to stock-based awards and employee stock purchase plan $ 475

Provision for doubtful accounts $ 47

(15) Subsequent Events

On February 9, 2024, the Board of Directors of the Company voted to implement a staged wind-down of the Company’s manufacturing activities at its facility in Middletown, Rhode Island.

The Company expects to continue to facilitate customer transition to third-party hardware products compatible with the Company’s mobile satellite communications services.

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

As part of the restructuring, the Company expects to reduce its headcount by approximately 75 employees, or approximately 20 % of its total workforce at the time of the Board's determination.

Approximately one-third of the employee terminations are expected to take place by mid-March, and the remaining terminations are expected to be completed by the end of the second quarter of 2024.

The Company expects to incur aggregate severance charges 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.

(15) Segment Information

The Company manages its operations as a single operating segment for the purpose of assessing performance and making operating decisions, resulting in a single reportable segment.

The Company has determined that its CODM is its Chief Executive Officer.

The CODM reviews the Company’s financial information on a consolidated basis for the purpose of allocating resources and assessing financial performance.

The key measure of segment profit or loss that the CODM uses to allocate resources and assess performance is the Company’s consolidated net income (loss).

This is reviewed against budgeted expectations to assess segment performance and allocate resources.

The Company’s segment net income for 2024 and 2023 consisted of the following:

KVH INDUSTRIES, INC.

3 unchanged sentences

(in thousands, except per share amounts)

(16) Quarterly Financial Results (Unaudited)

The quarterly financial information provided below for each of the quarters in the years ended December 31, 2023 and 2022 reflects the corrections described in Note 1(a) - Summary of Significant Accounting Policies - Revision for Correction of Immaterial Errors.

As a result of the immaterial errors discussed in Note 1(a), net sales, cost of product sales, and sales, marketing and support expense were each corrected from those amounts reported in the respective Form 10-Q as follows:

First Quarter Second Quarter Third Quarter Fourth Quarter

Year Ended December 31,

Service $ 96,446 $ 114,622

Product 17,382 17,757

Net Sales 113,828 132,379

Cost of service sales

VSAT airtime 52,980 63,274

LEO airtime 4,883 75

Other (1) 2,139 2,013

60,002 65,362

Cost of product sales

VSAT 2,565 3,441

LEO 6,120 1,668

TracVision & land mobile

Other (2) 6,621 19,092

18,607 29,149

Research and development

Personnel costs 7,109 7,319

Professional fees 191 310

Other (3) 1,139 1,770

Sales, marketing and support

Personnel costs 14,400 13,541

Professional fees 852 741

Other (4) 5,761 6,643

21,013 20,925

General and administrative

Personnel costs 9,448 9,246

Professional fees 2,475 3,494

Other (5) 4,590 6,159

16,513 18,899

Goodwill impairment charge — 5,333

Long-lived asset impairment charge 1,137 657

Other segment items (6) ( 835 ) ( 1,923 )

Net loss $ ( 11,048 ) $ ( 15,422 )

(1) Includes costs related to Inmarsat, service activations, content service, CommBox Edge and other miscellaneous

(2) Includes costs related to obsolete inventory write-off, excess purchase order obligations and other miscellaneous

(3) Includes facilities and other less significant expenses

KVH INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

December 31, 2024 and 2023

(in thousands, except per share amounts)

Net sales - as originally reported $ 33,689 $ 34,171 $ 33,549 (n/a)

Net sales - adjustment (1) 454 ( 585 ) ( 354 )

Net sales - as corrected (1) 34,143 33,586 33,195

Cost of product sales - as originally reported 5,234 6,633 4,729

Cost of product sales - adjustment (1) 79 ( 415 ) ( 218 )

Cost of product sales - as corrected (1) 5,313 6,218 4,511

Sales, marketing and support - as originally reported 5,712 5,142 4,854

Sales, marketing and support - adjustment (1) ( 4 ) ( 18 ) ( 13 )

Sales, marketing and support - as corrected (1) 5,708 5,124 4,841

Net (loss) income from continuing operations - as originally reported ( 12 ) 925 ( 4,246 )

Net income (loss) from continuing operations - adjustment (1) 379 ( 152 ) ( 123 )

Net income (loss) from continuing operations - as corrected (1) 367 773 ( 4,369 )

Net (loss) income - as originally reported ( 12 ) 925 ( 4,246 )

Net income (loss) - adjustment (1) 379 ( 152 ) ( 123 )

Net income (loss) - as corrected (1) 367 773 ( 4,369 )

Net sales - as originally reported $ 33,151 $ 34,553 $ 35,169 $ 36,005

Net sales - adjustment (1) 9 ( 216 ) 93 ( 14 )

Net sales - as corrected (1) 33,160 34,337 35,262 35,991

Cost of product sales - as originally reported 5,418 5,198 6,747 7,821

Cost of product sales - adjustment (1) 58 ( 124 ) 204 ( 164 )

Cost of product sales - as corrected (1) 5,476 5,074 6,951 7,657

Sales, marketing and support - as originally reported 6,969 5,676 5,710 4,874

Sales, marketing and support - adjustment (1) ( 2 ) ( 8 ) ( 10 ) ( 11 )

Sales, marketing and support - as corrected (1) 6,967 5,668 5,700 4,863

Net (loss) income from continuing operations - as originally reported ( 4,267 ) ( 189 ) ( 95 ) 627

Net (loss) income from continuing operations - adjustment (1) ( 47 ) ( 84 ) ( 101 ) 161

Net (loss) income from continuing operations - as corrected (1) ( 4,314 ) ( 273 ) ( 196 ) 788

Net (loss) income - as originally reported ( 4,692 ) ( 1,444 ) 29,646 591

Net (loss) income - adjustment (1) ( 47 ) ( 84 ) ( 101 ) 161

Net (loss) income - as corrected (1) ( 4,739 ) ( 1,528 ) 29,545 752

(1) The Company has adjusted certain prior period amounts for the correction of immaterial errors.

See Note 1 — Summary of Significant Accounting Policies — Revision for Correction of Immaterial Errors.

(4) Includes marketing expenses, external commissions, travel and entertainment, facilities expense, warranty expense and other less significant expenses

(5) Includes the discontinuation of a construction-in-progress project, TSA reimbursements, financing fees, facilities expense, computer expenses, depreciation and amortization and other less significant expenses

(6) Other segment items includes interest income (expense), net;

other expense, net;

and income tax expense line items on the face of the income statement

Regarding the Company's long-lived assets of $ 28,375 , $ 4,516 of these assets are located inside of the United States, while the remaining $ 23,859 are located outside of the United States.

Regarding the assets located outside of the United States, $ 7,643 are located in Singapore.

The geographic location of the Company's AgilePlans revenue-generating assets has been determined based upon the customer shipping address.

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 9A. Controls and Procedures