What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-10 compared with 2025-03-10 · 99 added, 105 removed, 124 unchanged (62% of the section changed)

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Risk Factors” and elsewhere in this annual report.

We are a leading global provider of innovative and technology-driven connectivity solutions to primarily maritime commercial, leisure, and military/government customers.

We are a leading global provider of innovative and technology-driven connectivity solutions to primarily maritime commercial and leisure customers.

We provide global high-speed Internet and Voice over Internet Protocol (VoIP) services via satellite to mobile users at sea and on land.

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We generate a substantial majority of our revenues from sales of satellite Internet airtime services.

We provide, for monthly fixed fees and per-usage fees, satellite connectivity encompassing broadband Internet, data and VoIP services, to customers via our global HTS network.

Sales of our airtime services accounted for 79% and 81% of our consolidated net sales for 2024 and 2023, respectively.

In mid-2022, we launched our KVH ONE hybrid network, which integrates global satellite service (including Ku-band VSAT using the Intelsat HTS network along with Starlink, Iridium, and other satellite services), KVH-provided cellular service in more than 150 countries, and shore-based Wi-Fi access.

Revenue from our cellular airtime service has supplemented, and we expect will continue to supplement, our satellite-only airtime revenue.

In addition, we earn monthly usage fees from sales of third-party satellite connectivity for VoIP, data and Internet services to our Inmarsat, Iridium, and Starlink customers who choose to activate their subscriptions with us.

In March 2023, we began selling Starlink terminals and, in September 2023, we became a Starlink authorized hardware and airtime reseller offering Mobile Priority data plans for maritime use.

In October 2024, we expanded our portfolio to include Starlink Business Priority data plans, which will primarily be used for stationary commercial use on land.

In December 2024, we introduced our TracNet Coastal and TracNet Coastal Pro terminals, expanding our extensive multi-channel portfolio of maritime products and services with a 5G/cellular and Wi-Fi system.

We expect to earn usage fees from our offering of OneWeb service, which we launched in January 2025.

We provide, for monthly fixed fees and per-usage fees, satellite connectivity encompassing broadband Internet, data and VoIP services, to customers via our KVH ONE hybrid network, which integrates global satellite service (including Starlink, Ku-band VSAT using the SES HTS network, Eutelsat OneWeb, Iridium, and other satellite services), KVH-provided cellular service in more than 130 countries, and shore-based Wi-Fi access.

Sales of our low-earth-orbit (LEO) and global high-throughput satellite (HTS) airtime services accounted for 82% and 80% of our consolidated net sales for 2025 and 2024, respectively.

In March 2023, we began selling Starlink terminals and, in September 2023, we became a Starlink authorized hardware and airtime reseller offering Global Priority data plans for maritime use.

In October 2024, we expanded our portfolio to include Starlink Local Priority data plans, which is suitable for fixed and mobile uses on land and inland waterways, including lakes and rivers.

In 2025, Starlink products and services were our fastest growing products and services.

We are also now earning usage fees from our offering of Eutelsat OneWeb maritime service, which we launched in January 2025.

Revenue from our cellular airtime service supplements our satellite-only airtime revenue.

In addition, we earn monthly usage fees from sales of third-party satellite connectivity for VoIP and supplemental services to our Inmarsat, Iridium, Starlink and Eutelsat OneWeb customers.

We also generate service revenue from product repairs and extended warranty sales.

Our service sales also include the distribution of entertainment, including movies, television programming, news and music, to commercial customers in the maritime market through KVH Media Group, along with supplemental value-added services.

Sales of content services accounted for 3% of our consolidated net revenues for both 2024 and 2023.

Historically, our Ku-band VSAT communications service has been the primary driver of revenue growth.

However, these services represent a declining percentage of our revenues in the face of competition from emerging LEO services.

Our satellite-only and hybrid products enable marine customers to receive data, VoIP, and value-added services via satellite, cellular, and shore-based Wi-Fi networks onboard commercial, leisure, and military/government vessels.

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

Sales of content services accounted for 4% and 3% of our consolidated net revenues for 2025 and 2024, respectively.

Historically, our Ku-band VSAT communications service was the primary driver of revenue growth.

However, in recent years these services have represented a declining percentage of our revenues in the face of increased demand for and competition from emerging LEO services.

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

We sell our products through an extensive international network of dealers and distributors.

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We concluded that we should discontinue our capital-intensive manufacturing activities and concentrate our efforts on growing sales of our multi-orbit, multi-channel, integrated communications solutions.

We expect that we will continue our product manufacturing activities in order to generate a targeted

amount of inventory of maritime satellite connectivity and satellite television terminals to meet anticipated demand through 2025 and potentially into 2026 and that we will cease substantially all manufacturing activity by the end of 2025.

We expect that we will continue our 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 we will cease substantially all manufacturing activity by the end of 2026.

This wind-down has been extended because our reduced workforce has been prioritizing fulfilling LEO product orders and refurbishing AgilePlans terminals over manufacturing new units.

We expect to continue to facilitate customer transition to third-party hardware products compatible with our mobile satellite communications services.

We also plan to continue to conduct maintenance, service, warehousing, shipping and receiving activities at the Middletown, Rhode Island location.

We also plan to continue to conduct maintenance, service, warehousing, shipping and receiving activities at the Middletown, Rhode Island location until our anticipated relocation in the spring of 2026.

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

As of June 30, 2024, all employee terminations had been completed.

During 2024, we incurred an aggregate of $3.9 million of severance charges for this and other restructurings.

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

During 2024, we incurred $3.9 million of severance charges for this and other restructurings.

The $3.9 million of severance charges incurred during the year consisted 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 equity compensation awards.

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

Under the agreement, we prepaid $17.0 million for access to a large block of Starlink Mobile Priority data at favorable rates.

The new agreement offers us increased flexibility in the development and sale of custom airtime plans using Starlink’s Mobile Priority service.

Under the agreement, we prepaid $17.0 million for access to a large block of Starlink Global Priority data at favorable rates.

The agreement provided us flexibility in the development and sale of custom airtime plans using Starlink’s Global Priority service.

We began drawing from this prepaid pooled data in the third quarter of 2024 and this data was fully consumed by the end of 2025.

In the fourth quarter of 2025, we entered into an agreement to purchase a substantially larger block of Starlink Global Priority data.

We made a prepayment of $5.0 million related to this agreement in the fourth quarter of 2025, an additional $10.0 million in January 2026 and an additional $6.0 million in February 2026.

We must pay the remaining balance of $24.0 million in periodic payments through the first quarter of 2027.

Assets Held for Sale

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In December 2024, we entered into an agreement to sell 75 Enterprise Center for $8.5 million.

Consummation of the transaction is subject to customary closing conditions.

Under the purchase agreement, the buyer has six months to obtain specified zoning approvals, with up to three 30-day extensions, as well as a 60-day inspection period, subject to potential extension.

The buyer may terminate the agreement at any time before the expiration of the inspection period and may also terminate the agreement if the specified zoning approvals are denied before the expiration of the zoning approval period.

Upon consummation of the sale, we will remain in possession of the property as a tenant under a triple-net lease having an initial term of six months, which we can extend for up to an additional three months.

Rent during the initial term is approximately $25,000 per month, which would increase to approximately $44,000 per month during any extension.

The sale was completed in September 2025, resulting in a loss of $0.3 million, which is included in other income (expense), net in our consolidated statement of operations for 2025.

The sale generated $7.8 million of net cash.

In September 2025, we also entered into an agreement with the buyer to lease this property until the end of March 2026 for approximately $0.1 million.

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

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We 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.

The estimated fair value of 50 Enterprise Center at that date exceeded its carrying value.

In December 2024, we 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, we received notice of termination from the buyer.

50 Enterprise Center remains held for sale as we continue to search for a suitable buyer.

Our marine leisure business has been highly seasonal, and seasonality can also impact our commercial marine business.

In March 2025, we entered into an agreement with another buyer to sell 50 Enterprise Center for $5.3 million.

The sale was completed in June 2025, resulting in a gain of $1.3 million, which is included in other income (expense), net in our consolidated statement of operations for 2025.

The sale generated $4.9 million of net cash.

Our marine leisure business has been highly seasonal, and seasonality can also impact our commercial marine business, particularly in the commercial fishing market.

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

Historically, we have generated the majority of our 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.

Impairment Charge

In 2023, aggregate impairment charges of $6.0 million were taken against goodwill and long-lived assets for the Mobile Broadband reporting unit and the KVH Media Group reporting unit.

The $6.0 million impairment charges were driven by the

significant decline in our stock price that followed the August 9, 2023 announcement of our financial results for the second quarter of 2023.

Under applicable accounting rules, this circumstance required us to evaluate our goodwill and long-lived assets for impairment.

Given the sustained decline in the market value of our outstanding equity and the uncertain impact of ongoing competition, we concluded that this impairment charge was appropriate as of September 30, 2023.

Excess and Obsolete Inventory and Excess Purchase Orders

In 2023, we recorded a $5.2 million charge related to the inventory write-down and a $3.6 million charge for excess purchase order obligations, both relating to the reduced demand for our hardware products, which led to the staged wind-down of our manufacturing activities at our facility in Middletown, Rhode Island noted above.

Please see Note 14 of our accompanying financial statements for additional details surrounding the wind-down of our manufacturing activities.

During 2023, we continued to experience delays in the availability and delivery of certain raw material components.

We also experienced increased raw material costs.

We are continuing to monitor global developments, including the impact of inflation, and are prepared to implement actions that we determine to be necessary to sustain our business.

Excess and Obsolete Inventory

During 2025, we recorded a $5.5 million inventory write-down related to further reduced demand for certain of our hardware products as well as a reduction in the prices we charge for certain TracNet H-series terminals.

We implemented this price reduction at the end of the third quarter of 2025 and, as a result, reduced the value of our remaining inventory of those products to net realizable value based on lower customer pricing.

If demand continues to decline, we may need to record additional inventory write-downs.

Business Combination

On October 8, 2025, we purchased the maritime satellite service business of a satellite services provider operating in the Asia-Pacific region.

The aggregate purchase price consideration transferred from us to the seller totaled $4.7 million, which consisted of cash payments at closing totaling $3.8 million and non-cash consideration in form of the settlement of certain receivables owed to us by the seller and valued at $0.9 million.

As a result of the business combination, we recognized intangible assets of $3.4 million and goodwill of $0.7 million.

Please see Note 18 of our accompanying financial statements for additional details surrounding the business combination.

We plan to continue to explore additional opportunities to increase our revenue through strategic customer acquisition transactions.

These transactions may take the form of purchases of individual customer contracts, purchases of multiple customer contracts, larger asset acquisitions, or other business combination transactions.

Results of Operations

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General and administrative 13.8 14.5

Goodwill impairment charge — 4.0

Long-lived assets impairment charge — 1.0

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Interest expense — —

Other expense, net (1.6) (1.1)

Loss before income taxes expense (9.3) (11.4)

Income tax expense 0.4 0.2

Other income (expense), net 1.0 (1.6)

Loss before income tax (benefit) expense (6.8) (9.3)

Income tax (benefit) expense (0.1) 0.4

Net loss (6.7) % (9.7) %

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Net sales decreased by $2.8 million, or 2%, in 2025 as compared to 2024.

Service sales decreased by $18.2 million, or 16%, to $96.4 million in 2024 from $114.6 million in 2023.

The decrease in service sales was primarily due to a $17.1 million decrease in our airtime service sales, driven primarily by a decrease in VSAT-only subscribers, partially offset by an increase in LEO service sales.

$2.7 million of this decrease was related to the U.S.

Coast Guard contract downgrade.

Alternative solutions offered by recent low-earth-orbit (LEO) entrants have heightened competition in the global leisure segment and in commercial and government markets.

Service sales increased by $2.0 million, or 2%, to $98.4 million in 2025 from $96.4 million in 2024.

The increase in service sales was primarily due to a $0.9 million increase in CommBox Edge service sales, a $0.6 million increase in our content services sales, and a $0.5 million increase in our airtime service sales.

The increase in our airtime services sales reflected a substantial increase in LEO service sales driven by an increase in subscribers for both Starlink and Eutelsat OneWeb.

This increase in LEO service sales was largely offset by a substantial decrease in VSAT service sales, which was driven primarily by a decrease in VSAT subscribers, as well as a $7.7 million reduction in sales related to the U.S.

Coast Guard contract downgrade in the third quarter of 2024.

For 2025, LEO services sales represented over 30% of airtime services sales, as compared to less than 15% for 2024.

The increase in LEO service sales as a percentage of total airtime sales resulted from both the substantial increase in LEO service sales and the substantial decrease in VSAT service sales.

LEO service providers have continued to expand their product and service offerings, further heightening competition in the global commercial markets and in the leisure segment.

We expect that the trend of intensifying competition from LEO satellite service providers will continue and that our revenues from VSAT service sales will continue to decline on a year-over-year basis.

It is possible that the rate of reduction will continue to accelerate.

It is possible that the rate of reduction will accelerate.

Product sales decreased by $4.8 million, or 27%, to $12.6 million in 2025 from $17.4 million in 2024.

The decrease in product sales was primarily the result of a $2.2 million decrease in VSAT Broadband product sales, a $2.0 million decrease in TracVision product sales and a $1.3 million decrease in accessory and service product sales, partially offset by a $5.0 million increase in Starlink product sales and a $0.5 million increase in CommBox Edge product sales.

The decline in product sales was primarily driven by product sales mix.

Competition from low-cost alternatives to VSAT, which include streaming capabilities, has had a significant impact on sales of both TracVision and VSAT Broadband products.

In the first quarter of 2024, the U.S.

Coast Guard, which accounted for approximately $11 million of our service sales in 2023, advised us that it intended to transition its primary satellite service relationship on the vessels we served to SpaceX Starshield.

In the third quarter of 2024, we received and processed the anticipated service downgrade request from the U.S.

Coast Guard, which reduces anticipated revenue from this customer for 2025 through 2027 by approximately 95%.

As a result, we expect to generate substantially less revenue from the U.S.

The decrease in product sales was primarily due to a $2.2 million decrease in Starlink product sales, a $1.6 million decrease in TracVision product sales, a $1.1 million decrease in VSAT Broadband product sales and a $0.8 million decrease in accessory and service parts product sales, partially offset by a $1.0 million increase in Eutelsat OneWeb product sales.

The decline in Starlink product sales was primarily driven by discounted pricing, whereas declines in other product sales was primarily driven by product mix and discounted pricing on VSAT Broadband products.

Competition from low-cost alternatives to VSAT, which include streaming capabilities, has had a significant impact on sales of our TracVision products.

Costs of Sales

Costs of sales consists of costs of product sales and costs of service sales.

Costs of sales decreased by $15.9 million, or 17%, in 2024 to $78.6 million from $94.5 million in 2023.

The decrease in costs of sales was driven by a $5.4 million decrease in costs of service sales and a $10.5 million decrease in costs of product sales.

Costs of sales consists of costs of service sales and costs of product sales.

Costs of sales increased by $4.4 million, or 6%, in 2025 to $83.0 million from $78.6 million in 2024.

The increase in costs of sales was driven by a $3.7 million increase in costs of service sales and a $0.7 million increase in costs of product sales.

As a percentage of net sales, costs of sales were 75% and 69% for 2025 and 2024, respectively.

Our costs of service sales consist primarily of satellite service capacity, depreciation, service network overhead expense associated with our VSAT Broadband network infrastructure, direct network service labor, product installation costs, media distribution costs, and service repair materials.

For 2024, costs of service sales decreased by $5.4 million, or 8%, to $60.0 million from $65.4 million in 2023.

Costs of service sales decreased primarily due to a $5.5 million decrease in airtime costs of service sales.

Our costs of service sales consist primarily of satellite service capacity, depreciation, service network overhead expense associated with our HTS Broadband network infrastructure, direct network service labor, product installation costs, media materials and distribution costs, and service repair materials.

For 2025, costs of service sales increased by $3.7 million, or 6%, to $63.7 million from $60.0 million in 2024.

Costs of service sales increased primarily due to a $3.1 million increase in airtime costs of service sales and a $0.6 million increase in content services cost of services sales.

Airtime costs of service sales included $1.5 million of costs associated with providing airtime services to customers acquired from the business combination that took place in October 2025.

As a percentage of service sales, costs of service sales were 65% and 62% for 2025 and 2024, respectively.

During the second quarter of 2024, we purchased from Starlink access to a large block of data at favorable rates.

As a result of this purchase, our gross margin percentage on Starlink airtime services improved.

The increase in gross margin on Starlink airtime services was higher than previously anticipated, but we may be unable to maintain this higher gross margin percentage in future periods.

Despite this higher gross margin on Starlink airtime services, the overall gross margin on service sales was negatively impacted by fixed costs associated with the VSAT Broadband network.

The increase in cost of service sales as a percentage of service sales was primarily due to the $1.5 million purchase during the fourth quarter of 2025 of VSAT airtime in excess of usage in order to meet our contractual minimum purchase obligations for VSAT airtime in 2025, and the increased rates of Starlink airtime data usage by customers prior to expiration of that data.

Our costs of product sales consist primarily of materials, manufacturing overhead, and direct labor used to produce our products.

For 2024, costs of product sales decreased by $10.5 million, or 36%, to $18.6 million from $29.1 million in 2023, primarily due to an $8.7 million decrease in various manufacturing and other unabsorbed expenses, a $3.6 million decrease in excess purchase order obligations, a $1.5 million decrease in TracVision cost of product sales, a $0.9 million decrease in VSAT Broadband cost of product sales and a $0.3 million decrease in accessory cost of product sales, partially offset by a $4.5 million increase in LEO cost of product sales and a $0.4 million increase in CommBox Edge cost of product sales.

The decrease in manufacturing and other unabsorbed costs was primarily due to additional expenses taken in 2023 as a result of the wind-down of our manufacturing activities, which included a $6.6 million inventory write-down, as well as lower unit volume, resulting in reduced absorption of overhead.

The excess purchase order obligations related to unconditional purchase orders outstanding as of December 31, 2023 that we determined would exceed our anticipated needs.

Please see Note 14 to our accompanying audited financial statements for further information.

For 2025, costs of product sales increased by $0.7 million, or 4%, to $19.3 million from $18.6 million in 2024, primarily due to a $4.3 million increase in various manufacturing and other unabsorbed expenses and a $0.9 million increase in Eutelsat OneWeb cost of product sales.

The manufacturing and other unabsorbed costs included a $5.5 million inventory writedown related primarily to further reduced demand for certain of our hardware products as well as a reduction in the prices we charge for certain TracNet H-series terminals.

These increases were partially offset by a $1.9 million decrease in Starlink cost of product sales, a $1.2 million decrease in TracVision cost of product sales, a $0.8 million decrease in VSAT Broadband cost of product sales and a $0.5 million decrease in accessory cost of product sales.

As a percentage of product sales, costs of product sales were 153% and 107% for 2025 and 2024, respectively.

Cost of product sales decreased as a percentage of product sales primarily due to the decrease in various manufacturing and other unabsorbed expenses.

This decrease resulted primarily from the additional expenses incurred in 2023 related to the wind-down of the Company's manufacturing activities, as well as the 2024 reduction in headcount of manufacturing employees.

Cost of product sales increased as a percentage of product sales primarily due to the increase in various manufacturing and other unabsorbed expenses.

Operating Expenses

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Research and development expense for 2025 decreased by $5.0 million, or 59%, to $3.5 million from $8.4 million in 2024.

The decrease in research and development expense resulted primarily from a $1.6 million decrease in salaries, benefits and taxes, excluding costs related to the previously mentioned reduction in workforce, and a $0.3 million decrease in expensed materials.

These decreases were partially offset by $1.4 million in costs incurred related to the reduction in our workforce.

As a percentage of net sales, research and development expense was 7% in both 2024 and 2023.

The decrease in research and development expense resulted primarily from a $4.3 million decrease in salaries, benefits and taxes, after giving effect to $1.4 million in costs incurred during 2024 related to the reduction in our workforce, and a $0.4 million decrease in

facilities expense allocated to our research and development operations.

As a percentage of net sales, research and development expense was 3% and 7% in 2025 and 2024, respectively.

Sales, marketing, and support expense consists primarily of salaries and related expenses for sales and marketing personnel, commissions for both in-house and third-party representatives, costs related to the co-development of certain content, other sales and marketing support costs such as advertising, literature and promotional materials, product service personnel and support costs, warranty-related costs and bad debt expense.

Sales, marketing and support expense also includes the operating expenses of our sales office subsidiaries in Denmark, Singapore, Brazil, and Japan.

Sales, marketing, and support expense increased by $0.1 million, or less than 1%, to $21.0 million in 2024 from $20.9 million in 2023.

In 2024, we incurred $0.7 million in costs related to the reduction in our workforce, which was partially offset by a $0.4 million decrease in external commissions.

As a percentage of net sales, sales, marketing and support expense was 18% and 16% in 2024 and 2023, respectively.

This increase resulted primarily from a reduction in net sales.

Sales, marketing, and support expense decreased by $0.6 million, or 3%, to $20.4 million in 2025 from $21.0 million in 2024.

The decrease in sales, marketing and support expense resulted primarily from a $0.9 million decrease in facilities expense allocated to our sales, marketing and support operation and a $0.4 million decrease in costs incurred related to the reduction in our workforce, partially offset by a $0.4 million increase in professional fees.

As a percentage of net sales, sales, marketing and support expense was 18% in both 2025 and 2024.

General and administrative expense consists of costs attributable to management, finance and accounting, information technology, human resources, certain outside professional services, and other administrative costs.

General and administrative expense for 2025 decreased by $1.2 million, or 7%, to $15.3 million from $16.5 million for 2024.

The decrease in general and administrative expense resulted primarily from the $2.1 million charge incurred in 2023 for the discontinuation of a project for implementing a new manufacturing-centric accounting system, a $1.0 million decrease in professional fees, driven by additional accounting and consulting costs incurred in 2023 to prepare our 2022 annual filings, a $0.6 million decrease in salaries, benefits and taxes, excluding costs related to the previously mentioned reduction in workforce, and a $0.4 million decrease in computer expenses.

Partially offsetting these items were $0.8 million in costs incurred related to the reduction in our workforce, a $0.7 million reduction in reimbursements made by EMCORE for expenses incurred under the transition services agreement relating to the sale of the inertial navigation business in August 2022, and a $0.4 million increase in facility expenses.

The decrease in general and administrative expense resulted primarily from a $0.9 million decrease in salaries, benefits and taxes, after giving effect to a $0.6 million decrease in costs incurred related to the reduction in our workforce, a $0.5 million decrease in dues and subscriptions expense and a $0.4 million decrease in depreciation expense, partially offset by a $1.0 million increase in facilities expense allocated to our general and administrative operations.

As a percentage of net sales, general and administrative expense was 14% and 15% for 2025 and 2024, respectively.

This increase resulted primarily from a reduction in net sales.

Interest and Other Expense, Net

Interest and Other Income (Expense), Net

Interest income represents interest earned on our cash and cash equivalents, as well as from investments and our sale-type lease receivables.

Interest income decreased by $0.6 million to $3.0 million from $3.6 million for 2023.

Of the current period interest income of $3.0 million, $2.6 million is attributable to interest earned on cash and cash equivalents, while the remaining $0.5 million was attributable to interest from lease receivables.

Interest declined primarily due to lower cash balances.

Other expense, net increased by $0.4 million to other expense, net of $1.8 million for 2024 from other expense, net of $1.4 million for 2023.

The increase was primarily due to a $0.5 million increase in foreign exchange losses and a $0.4 million expense incurred in 2024 for a prior period Brazil tax settlement, partially offset by a $0.3 million loss in 2023 on an unfavorable future contract and a $0.1 million decrease in the loss on the disposal of fixed assets.

The Company incurred a non-cash $0.9 million loss and a non-cash $0.7 million loss in 2024 and 2023, respectively, related to the disposal of AgilePlans revenue-generating fixed assets due to the decline in customer demand of VSAT Broadband AgilePlans units.

Income Tax Expense

Income tax expense for 2024 and 2023 was $0.4 million and $0.3 million, respectively, and related to taxes on income earned in foreign jurisdictions.

Interest income decreased by $0.5 million to $2.6 million from $3.0 million for 2024, primarily as a result of lower cash balances in 2025 as a result of the $17.0 million prepayment in June 2024 for access to a large block of Starlink Mobile Priority data at favorable rates.

Of the current period interest income of $2.6 million, $2.2 million is attributable to interest earned on cash and cash equivalents, and $0.4 million was attributable to interest from lease receivables.

Other income (expense), net changed by $2.9 million to other income, net of $1.1 million for 2025 from other expense, net of $1.8 million for 2024.

This change was driven primarily by a $1.3 million gain on the sale of 50 Enterprise Center in June 2025, a $1.3 million decrease in non-cash losses related to the disposal of AgilePlans revenue-generating fixed assets, a $0.5 million decrease in foreign exchange losses, and a $0.4 million expense incurred in 2024 for a prior period Brazil tax settlement, partially offset by a $0.3 million loss on the sale of 75 Enterprise Center in September 2025 and a $0.3 million loss on the disposal of a discontinued project in 2025.

Income Tax (Benefit) Expense

Income tax (benefit) expense for 2025 and 2024 was $(0.1) million and $0.4 million, respectively, and related to taxes on income earned in foreign jurisdictions.

The effective tax rate for 2025 and 2024 was 1.7% and (4.0)%, respectively.

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Critical accounting estimates are those estimates made that involve a significant level of estimation uncertainty and have had or are reasonably likely to have an impact on our statement of operations.

We believe that our accounting estimates for intangible assets and other long-lived assets are the only estimates critical to an understanding and evaluation of our financial results for 2024, as discussed below.

We believe that our accounting estimates for goodwill, intangible assets and other long-lived assets are the only estimates critical to an understanding and evaluation of our financial results for 2025, as discussed below.

Intangible Assets and other Long-Lived Assets

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Our primary liquidity needs have been to fund general business requirements, including working capital requirements and capital expenditures.

In recent years, we have funded our operations primarily from the sale of two businesses in 2022, the sale of a business in 2019, a PPP loan, cash flows from operations, bank financings and proceeds received from exercises of stock options and the issuance of stock.

In recent years, we have funded our operations primarily from the sale of two businesses in 2022, the sale of 50 Enterprise Center, the sale of 75 Enterprise Center, cash flows from operations and proceeds received from exercises of stock options and the issuance of stock.

On August 9, 2022, we sold our inertial navigation business to EMCORE Corporation for net proceeds of $54.9 million, less specified deductions.

As of December 31, 2025, we had $69.9 million in cash and cash equivalents, of which $3.6 million in cash equivalents was held in local currencies by our foreign subsidiaries.

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Based upon our current working capital position, current operating plans and expected business conditions, we expect to have sufficient funds, through at least twelve months from the date that this report is filed with the SEC, to fund our short-term and long-term working capital requirements, including capital expenditures and contractual obligations.

In recognition of the substantial growth of Starlink airtime services as a percentage of our revenue since the second quarter of 2024 and in an effort to increase margins, we entered an agreement in the fourth quarter of 2025 to purchase a substantial block of Starlink Global Priority data for $45.0 million.

We made an upfront payment of $5.0 million upon entry into the agreement, a payment of $10.0 million in January 2026 and a payment of $6.0 million in February 2026.

Periodic payments of the balance owed will continue over the course of the contract period, which runs through the first quarter of 2027.

Our funding plans for our working capital needs and other commitments may be adversely impacted if our underlying assumptions regarding our anticipated revenues and expenses are not realized.

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Operating Activities

Operating activities used $13.2 million of net cash in 2024 and provided $2.5 million of net cash in 2023, an increase in net cash used by operating activities of $15.7 million.

The $15.7 million increase in net cash used by operations was primarily the result of a $11.5 million increase in cash outflows relating to accrued compensation, product warranty and other expenses, a $10.4 million increase in cash outflows relating to prepaid expenses and other current assets, a $7.6 million increase in cash outflows relating to inventories, a change of $5.6 million related to non-cash items, a $1.1 million decrease in cash inflows relating to deferred revenue, and a $1.1 million increase in cash outflows relating to other non-current assets.

Partially offsetting these items were a $15.2 million decrease in cash outflows related to accounts payable, a $4.4 million decrease in net loss (which included impairment charges of $1.1 million and $6.0 million in 2024 and 2023, respectively), and a $2.1 million increase in cash inflows relating to accounts receivable.

Operating activities provided net cash of $17.1 million in 2025 and used net cash of $13.2 million in 2024, an increase in net cash provided by operating activities of $30.3 million.

The $30.3 million increase in net cash provided by operations was primarily the result of a $19.7 million decrease in cash outflows related to prepaid expenses and other current assets, which reflected the $5.0 million and $17.0 million purchases of Starlink pooled data in 2025 and 2024, respectively, a $12.6 million decrease in cash outflows relating to inventories, an $8.2 million decrease in cash outflows relating to accrued compensation, product warranty and other expenses, a $3.7 million decrease in net loss, a $0.8 million increase in cash inflows relating to deferred revenue, a $0.7 million increase in cash inflows relating to other non-current assets, and a $0.6 million decrease in cash outflows related to accounts payable, partially offset by an $8.1 million decrease in cash inflows relating to accounts receivable and a $7.9 million reduction in non-cash items.

Investing Activities

Net cash provided by investing activities for 2024 was $52.4 million as compared to net cash used by investing activities of $14.7 million for 2023.

The $67.1 million increase in net cash provided by investing activities was primarily the result of a $61.3 million decrease in net investment in marketable securities, which was driven by the liquidation of our marketable securities held by Wells Fargo, a $3.2 decrease in capital expenditures, a $1.4 million increase in proceeds from the sale of fixed assets and a $1.2 million decrease in cash paid for the acquisition of intangible assets.

Net cash provided by investing activities for 2025 was $3.9 million as compared to net cash provided by investing activities of $52.4 million for 2024.

The $48.5 million decrease in net cash provided by investing activities was primarily the result of a $58.5 million decrease in proceeds from net sales of marketable securities, which was driven by the liquidation of our marketable securities held by Wells Fargo in 2024, $3.8 million of cash paid for a business combination in 2025, partially offset by proceeds of $7.8 million for the sale of 75 Enterprise Center, proceeds of $4.9 million for the sale of 50 Enterprise Center, a $0.9 million increase of proceeds from the sale of fixed assets and a $0.1 million decrease in capital expenditures.

Financing Activities

Net cash provided by financing activities for 2024 was $0.1 million as compared to net cash provided by financing activities in 2023 of $2.3 million.

The $2.2 million decrease in net cash provided by financing activities is primarily attributable to a $2.5 million decrease in cash inflows relating to proceeds from the exercise of stock options and purchases under our employee stock purchase plan, partially offset by a $0.2 million decrease in cash outflows related to the repurchase of common stock to satisfy specific tax withholding obligations arising from accelerated vesting of executive stock grants in 2023.

Net cash used in financing activities for 2025 was $1.7 million as compared to net cash provided by financing activities in 2024 of $0.1 million.

The $1.8 million increase in net cash used in financing activities is primarily attributable to a $1.7 million increase in cash outflows related to the purchase of treasury stock.

Other Matters

We intend to continue to invest in our global networks on a worldwide basis.

From time to time, we have entered into multi-year agreements to lease satellite capacity, as well as prepaid for access to a large block of mobile data at favorable rates.

From time to time, we have entered into multi-year agreements to lease satellite capacity, as well as prepaid for access to large blocks of mobile data at favorable rates.

These agreements can involve millions of dollars.

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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 7. Management’s Discussion and Analysis