KVHI 10-K & 10-Q changes, risk factors and insider trading

We recorded substantial losses in each of the last fivesix fiscal years (notwithstanding the income we recognized in 2025 from the sale of 50 Enterprise Center and 75 Enterprise Center, in 2022 from the sale of the inertial navigation business and in 2021 from the forgiveness of a PPP loan). Although our business was profitable in the fourth quarter of 2022 and second quarter of 2023, weWe may continue to incur losses as we face increasingly stiff competition. Our recent restructuring, workforce reductions and other cost-reduction measures may be insufficient to offset recent and accelerating reductions in our revenues.revenues, which are continuing. Recent inflation in the prices of goods and services, including wages, has also hampered our ability to improve profitability. In order to maintain and improve our competitive position, generate revenue and achieve sustained profitability, we must continue to grow our airtime subscriber base, reduce our bandwidth and other costs, and continue to introduce new and improved solutions. Our inability to accomplish any of these goals could have a material adverse effect on our revenues, profitability and cash flow, and we cannot assureprovide youassurances as to when, or whether, we will achieve sustained profitability. Our agreements to purchase VSAT airtime contain certain minimum fixed annual expenditure requirements through the end of 2027. Our bandwidth consumption was below those minimums for 2025, resulting in the purchase of $1.5 million of VSAT airtime in excess of usage. Future failures to meet contractual minimums could cause us to incur expenses in excess of our needs, reducing our margins, perhaps substantially.

Our losses may continue to increase substantially if we are unable to effectively adapt to changes in our business and industry.

The traditional geosynchronous satellite communications industry is experiencing significant disruption arising from customers’ rapid transition to less expensive LEO services, including Starlink,Starlink and Eutelsat OneWeb, as well as increased reliance on other forms of data transmission, including Wi-Fi and cellular data services. Like others in our industry, we are experiencing significantly reduced demand for our traditional satellite communications services and products, which we expect will continue. Although we are adapting to this transition by becoming an authorized reseller of Starlink, Eutelsat OneWeb, and cellular data services and related products, there can be no assurance that we will generate the same level of revenue or gross margin from these sources that we previously derived from sales of VSAT airtime and related products. Moreover, our VSAT services require a separate infrastructure, which generates certain costs that are relatively fixed for a period of time.time, including certain minimum annual purchase obligations for VSAT airtime services through 2027. As customers transition away from VSAT services, our remaining VSAT services become less profitable and may eventually become insufficiently profitable to continue.continue, especially considering our fixed commitments. If we are unable to efficiently operate both VSAT and LEO services and cost-effectively manage the ongoing transition to the latter, the expenses we incur maywill continue to exceed associatedour revenues and thereby increase our losses.

Our quarterly net sales and results of operations could continue to vary significantly for various reasons, many of which are outside our control. For example, service sales declined 19.5%6.6% in the second quarter of 2025 compared to the second quarter of 2024, and product sales decreased 52.3% in the fourth quarter of 20242025 compared to the fourth quarter of 2023, and product sales increased 23.6% in the fourth quarter of 2024 compared to the fourth quarter of 2023.2024. You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance. Our net sales or results of operations in a quarter may fall below the expectations of securities analysts or investors. If this occurs, the market price of our common stock could fall significantly. Our results of operations can fluctuate for many reasons, including the impact of competition and resulting changes in demand for our products and services; the impact of tariffs on goods and services we purchase; delays in order fulfillment, including as a result of shortages of components and raw materials; the mix of services and products we sell, including the mix of fixed rate and metered contracts for airtime services; our ability to manufacture, test and deliver products in a timely and cost-effective manner; the timing of new service and product introductions by us or our competitors; the scope and success of our investments in research and development; the expenses associated with relocating our facilities from Middletown, Rhode Island to Bristol, Rhode Island; expenses incurred in pursuing acquisitions and investments; expenses incurred in expanding, maintaining, or improving our global HTS network; market and competitive pricing pressures; unanticipated charges or expenses, such as the aggregate $6.0 million impairment charges to goodwill and long-lived assets we recorded in the third quarter of 2023; the $1.1$5.5 million impairmentcharge chargesrelated to long-livedan assetsinventory we recordedwrite-down in the third quarter of 20242025; the $5.2 million charge related to an inventory write-down,write-down in the fourth quarter of 2023; the $3.6 million provision for excess purchase order obligations and; the $2.1 million charge for the discontinuation of a project for implementing a new manufacturing-centric accounting system that we recorded in the fourth quarter of 2023 and the $1.1 million impairment charges to long-lived assets we recorded in the third quarter of 2024; expenses incurred in responding to stockholder activism; general economic climate; seasonality of pleasure boat and recreational vehicle usage; and the impact of supply chain disruptions.

The gross margin percentage from our VSAT airtime services in some cases exceeds the gross margin percentage from other third-party products and airtime services. To the extent that the mix of airtime services we sell shiftscontinues to shift away from VSAT services, our gross profit dollars willmay decline,continue perhapsto materially,decline materially if we are unable to significantly increase revenue on non-VSAT airtime services, which will reduce our profitability.

In February 2024, we announced a staged wind-down of our product manufacturing operations, which was driven by reduced demand for our hardware products in the face of intensifying competition. We plan to discontinue oursubstantially capital-intensiveall manufacturing activities by the end of 20252026 and concentrate instead on growing sales of our multi-orbit, multi-channel, integrated communications solutions, including a transition to rely increasingly, and eventually exclusively,increasingly on third-party hardware compatible with our solutions. This multi-year strategy entails significant risks, including the loss of competitive differentiation as a leading manufacturer of award-winning products, the potentially irreversible loss of manufacturing expertise and know-how, increased dependence on third-party manufacturers and suppliers, the loss of control over technological innovations and improvements, significantly lower profit margins on third-party product resales, potential technological incompatibility with third-party hardware, potential additional significant provisions for excess and obsolete inventory and other charges,charges (such as our $5.5 million charge related to an inventory write-down in the third quarter of 2025), unanticipated expenses, and increased competition for service customers from product manufacturers. If we were to experience aan unexpected resurgence in demand for our products, we may be unable to restart internal production or to engage a third party to reliably manufacture and deliver them on time and at an affordable cost. Accordingly, this strategic transition entails meaningful execution risk, particularly in light of our reductions-in-force in 2024 and the resulting loss of experienced employees. The failure to implement a successful transition to a new business model based upon third-party hardware would have a material adverse effect on our business, revenues and results of operations.

If we cannot adjust expenses in response to changes in our operations, our results of operations may be harmed. For example, the relatively fixed costs associated with our manufacturing operations preventedsometimes prevent us from reducing those costs quickly in response to recent, rapid reductions in demand, resulting in negative product margins. To manage changes in our business effectively, we must, among other things, successfully complete the wind-down of our manufacturing operations, including correctly estimating the number of units to produce; secure appropriate satellite capacity to match demand for airtime services; manage our inventory more effectively, particularly in light of the substantial provision for excess and obsolete inventory that we recorded in the third quarter of 2025 and the fourth quarter of 2023; effectively manage our working capital; ensure robust cybersecurity protection of KVH and customer data and systems; and ensure that our procedures and internal controls are revised and updated to remain effective for our smaller workforce and the reduced size and scale of our business operations. We currently plan to relocate our operations to a new facility in early 2026. There can be no assurance that the relocation will not materially disrupt our operations and adversely affect our business, financial condition and results of operations.

We are highly dependent on qualified personnel at all levels, including our senior management team and other key technical, operational, managerial and sales and marketing personnel, each of whom would be difficult to replace. Our reductions-in-force in 2024 increased our dependence on continuing personnel. If we fail to retain and attract the necessary personnel, we may be unable to achieve our business objectives and may lose our competitive position, which could lead to a significant decline in net sales. The current job market for personnel is very competitive, resulting in increased compensation. We face challenges retaining our personnel and attracting new personnel to fulfill our unmet needs, particularly in light of our recent reductions-in-force. Our decision to relocate our facilities from Middletown, Rhode Island to Bristol, Rhode Island may cause us to lose employees, which may impact our business operations. Replacing key personnel may be difficult and may take an extended period of time because of the limited number of individuals with the skills and experience to execute our business strategy. We may be unable to identify or employ qualified personnel for any such position on acceptable terms, if at all. We may also need to pay higher compensation than we expect, which would make it more difficult to achieve our goal of sustained profitability.

In response to increasing competitive pressure, we may take additional measures intended to increase profitability and align our business more closely with our current strategic and financial objectives, including engagement with new suppliers, further modifications to our manufacturing arrangements and other cost-reduction efforts. For example, in February 2024 we announced a staged wind-down of our manufacturing operations and a related reduction-in-force of 75 employees, as a result of which we have incurred aggregate charges of approximately $14.8 million, consisting of a $5.2 million non-cash charge related to an inventory write-down,write-down in 2023, approximately $3.9 million of severance charges, a $3.6 million provision for excess purchase order obligations, approximately $3.9 million of severance charges, and a $2.1 million charge for the discontinuation of a project for implementing a new manufacturing-centric accounting system. We may also choose to dispose of assets or make strategic divestitures, such as the sale of our inertial navigation business in August 2022. DuringIn the third quarter of 2024,2025, we commencedcompleted plansthe tosale sellof the warehouse building and surface parking lot located at 75 Enterprise Center in Middletown, Rhode Island,Island. andIn the second quarter of 2025, we completed the sale of the property, building, improvements, and land located at 50 Enterprise Center in Middletown, Rhode Island. These efforts may not succeed in improving profitability. Any ofchanges such as these changes could be disruptive to our business and could result in significant expense, including losses on any asset disposition or divestiture,divestiture (such as the $0.3 million loss on the sale of 75 Enterprise Center), accounting charges for any inventory or technology-related write-offs or any workforce reduction costs, such as those described elsewhere in risk factors. We could incur significant transaction costs, including for potential transactions that do not proceed. Substantial expense or charges resulting from restructuring activities, the relocation of our facilities, dispositions of assets or divestitures could adversely affect our results of operations and use of cash in the periods in which we take these actions. Any disposition of assets or divestiture could also result in the retention of liabilities and expenses that are not assumed by the buyer or the loss of operating income from the divested assets or operations, either of which could negatively impact profitability after any divestiture.

As a result of our global satellite network infrastructure, we incur certain costs that generally do not vary directly in proportion to the volume of service sales, and we have limited ability to reduce these fixed costs. If service sales, including through our AgilePlans subscription model, continue to decline, our service gross margins will also continue to decline.decline, particularly if the contractual minimum expenditure requirements of our VSAT airtime supply agreements, referred to above, continue to require us to make payments in excess of our needs. The failure to improve our global HTSVSAT service gross margins and unit sales would have a material adverse effect on our overall profitability.

DuringIn the secondfourth quarter of 2024,2025, we prepaidentered $17.0into millionan for accessagreement to purchase a large block of Starlink Mobile Priority data at favorable rates. We prepaid $5.0 million of this amount during 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. If the volume of services sales is not significant enough to consume this pooled data within the applicable period, our gross margins will suffer. While we currently expect to consume all of this pooled data within the contract period, if at any time we were to determine that it is more likely than not that we would not consume a portion of the pooled data, we maywould expect to expense the applicable portion at the time of each such determination.

We currently offer our global HTS VSAT service and LEO services in the Americas, Europe, the Middle East, Africa, Asia-Pacific, Indian, and Australian and New Zealand waters.waters, as permitted by local regulatory authorities and licensing. We may need to maintain or expand capacity in existing coverage areas to support our subscriber base. If we are unable to reach economical agreements with third-party satellite providers to support our global satellite services and its technology or if transponder capacity is unavailable to meet growing demand in a given region, our ability to provide airtime services will be at risk and could reduce the attractiveness of our products and services.

Our leisure marine business is highly seasonal, and seasonality can also impact our commercial marine business.business, particularly in the commercial fishing market. Historically, we have generated the majority of our leisure marine 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. TemporaryHistorically, we have generated the majority of our leisure marine service revenues during the second and third quarters of each year, as temporary suspensions of our airtime services typically increase in the fourth and first quarters of each year as boats are placed out of service during winter months. Our leisure marine business is also significantly affected by the weather. Unseasonably cool weather, prolonged winter conditions, hurricanes, unusual amounts of rain, and natural and other disasters may decrease boating, which could reduce our revenues. Specifically, we may encounter a decrease in new airtime activations as well as an increase in the number of cancellations or temporary suspensions of our airtime service.

We manufacture all of our products at our manufacturing facility in Middletown, Rhode Island, and we have begun to wind down our manufacturing operations at that facility. We currently plan to discontinue thesubstantially majority of our capital-intensiveall manufacturing activities by the end of 2025.2026. Some of our production processes are complex, and we may be unable to respond rapidly to the loss of the use of our production facility. For example, we use some specialized equipment that may take time to replace if it is damaged or becomes unusable for any reason. In that event, shipments would be delayed, which could result in customer or dealer dissatisfaction, loss of sales and damage to our reputation. In light of the wind-down, we may elect to halt production rather than to incur significant expenses to repair or replace manufacturing equipment, which may limit our production and accelerate the loss of product sales.

We evaluate opportunities to acquire other businesses and assets and pursue other strategic relationships as they arise. For example, in October 2025, we acquired the maritime satellite service business of a satellite services provider operating in the Asia-Pacific region for a purchase price of approximately $4.7 million. The expenses we incur evaluating and pursuing acquisitions and strategic relationships could have a material adverse effect on our results of operations. If we acquire a business, we may be unable to manage it profitably or successfully integrate its operations with our own. Moreover, we may be unable to realize the strategic, financial, operational and other benefits we anticipate, and any acquisition or strategic relationship may increase our operating expenses. Further, our approach to acquisitions and strategic relationships may involve a number of special financial and business risks, such as entry into new and unfamiliar lines of business or markets, which may present challenges or risks that we did not anticipate; entry into new or unfamiliar geographic regions, including exposure to additional tax and regulatory regimes; increased expenses associated with the amortization of acquired intangible assets; increased exposure to fluctuations in foreign currency exchange rates; charges related to any abandoned acquisition; diversion of our management’s time, attention, and resources; loss of key personnel; loss or termination of acquired contracts; increased reliance on third parties; increased costs to improve or coordinate managerial, operational, financial, and administrative systems, including internal control over financial reporting; dilutive issuances of equity securities; the assumption of legal liabilities; and losses arising from impairment charges associated with goodwill or intangible assets. In the case of our October 2025 acquisition, we recorded goodwill and intangible assets related to this acquisition and unanticipated early terminations and/or non-renewals of a material portion of the acquired agreements could result in the recognition of impairment charges that would adversely affect our results of operations, perhaps materially.

The mobile connectivity market is intensely competitive, and we expect the intensity of competition to continue to increase in the future. We may not be able to compete successfully against current and future competitors, which would impair our ability to sell our products and services. We are facing significant competition from companies that seek to compete primarily on price asand wellfrom asboth new, emergingcurrent LEO services, such as SpaceX's Starlink and Eutelsat OneWeb, as well asand future LEO servicesservices, such as Kuiper,Amazon Leo (previously Kuiper), Telesat, and others. Competition from these sources increased dramatically in 2023the andlast 2024three years and continues in 2025,2026, leading to material and ongoing reductions in our VSAT subscriber base. These companies may continue to implement price reductions and discounts for both products and services, which have required us to reduce our prices or offer discounts in an effort to preventmitigate erosion of our market share. Additional price reductions or discounts may cause us to record additional write-downs to the value of our inventory. The majority of our customers have no long-term commitment and can switch providers without penalty. For example, AgilePlans customers are on month-to-month agreements. 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. Coast Guard. For example, revenue from the U.S. Coast Guard declined from approximately $2.4 million in the third quarter of 2024 to approximately $0.6$0.1 million in the fourth quarter of 2024.2025.

Many current and future competitors have greater financial resources than we do, enabling them to operate at lower margins to gain market share. We believe increased competition contributed to the decreasesdecrease in both our service sales and our product sales in 2024, including unit sales of our VSAT products,2025, and we expect that this trend will continue in future periods.

Some of our VSAT competitors have already leveraged partnerships amongst themselves in order to capture larger combined market share. Further, some of the companies that we depend on to supply us with capacity on satellite communications networks may vertically integrate by introducing their own products and services to compete with ours, which might motivate them to stop providing satellite network capacity to us, or to make it available on less favorable terms.

Although KVH is a tierTier 1 reseller of Starlink terminals and services, we continue to face competitive challenges both from Starlink direct sales as well as from an expanding network of other Starlink retailers.resellers. A significant number of leisure customers have adopted Starlink systems for both two-way communications as well as streaming, which has impacted both our VSAT Broadband and TracVision satellite TV businesses. Although our leisure business accounts for less than 15% of our total revenue, competition from Starlink from various sources has had somean adverse impact on our commercial business as well, particularly our growth in that segment and our overall VSAT subscriber base. While we did increase our subscriber count in every quarter of 2025 and the second, third and fourth quarters of 2024, spurred by an increase in subscribers for Starlink service provided by KVH, the total number of our subscribers declined in the third and fourth quarter of 2023 and the first quarter of 2024. If we are unable to sustain growth, it would have a material adverse effect on our revenue, profitability, and cash flow.

In the marine market for high-speed Internet, voice, and data services, we have historically competed primarily with Marlink, Navarino, Speedcast, Viasat/Inmarsat, and Network Innovations, along with smaller, single-hub regional services to deliver VSAT service. Additionally, we are facing meaningful competition from new LEO-focused providers such as SpaceX’s Starlink and Eutelsat OneWeb and an emerging group of smaller providers, such as Clarus, PivotelPivotel, Elcome and Elcome.Station Satcom. We also face competition from providers of low-speed data services, which include Viasat/Inmarsat and Iridium Satellite LLC.Iridium. In the marine market for satellite TV equipment, we compete primarily with Intellian, Cobham satcom and Raymarine (Intellian-made). In the marine market for two-way communications equipment, we compete primarily with Intellian and Cobham satcom.Cobham. In the markets for media content, the KVH Media Group competes primarily with Swank Motion Pictures, Baze Technology, FrontM and PressReader. Some of our competitors are well-established companies that have substantially greater financial, managerial, technical, marketing, personnel, and other resources than we do, which may help them to compete more effectively against us.

We depend on sole or limited source suppliers, and any disruption in supply could impair our ability to deliver our products on time or at expected cost.

From time to time, we have recorded significant inventory charges and/or inventory write-offs as a result of substantial declines in customer demand. For example, in the third quarter of 2025, we recorded a $5.5 million inventory write-down charge due to further reduction in demand for certain of our hardware products as well as a reduction in the prices we charge for certain TracNet H-series terminals. In 2023, we recorded a $5.2 million inventory write-down charge 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 that we began in 2024. We have also recorded significant losses on the disposal of AgilePlans revenue-generating fixed assets due to the decline in customer demand of VSAT Broadband AgilePlans units. For example, in 2024 we recorded a non-cash $0.9 million loss related to the disposal of AgilePlans revenue-generating fixed assets in which no proceeds were received. Market or competitive changes, such as a continuation of the decline in demand for our hardware products that we experiencedhave inbeen 2023experiencing andfor 2024,the last three years, could lead to futureadditional charges for excess or obsolete inventory or losses on fixed assets, especially if we are unable to appropriately adjust the supply of material from our vendors, as we were unable to do in 2023.

Our communications solutions utilize third-party satellite services and other communication networks. We do not own the satellites that provide two-way satellite communications, the terrestrial networks that interconnect our facilities with the satellite teleports that communicate with the satellites, or any other communication network. IntelsatSpaceX's Starlink provides the data services for Starlink LEO services, while Eutelsat OneWeb and SES provide the data connectivity for Eutelsat OneWeb LEO services, which we began providing for maritime use in January 2025. SES and SKY Perfect JSAT currently provide the satellite capacity to support our global high-throughput satellite (HTS) broadband service, our TracNet H-series and TracPhone V-HTS series products and third-party products compatible with our services. Vodafone currently provides the 5G/LTE services used by our TracNet H-series terminals and compatible third-party products to provide cellular service in 150+ countries. For our TracNet Coastal products launched in December 2024, we purchase 5G/LTE cellular data from T-Mobile for service in the U.S. and VodaphoneVodafone for service globally. Additionally, we purchase cellular data from Flexiroam, a Mobile Virtual Network Operator (MVNO) with connectivity in over 200 countries. Starlink provides the data services for Starlink LEO services, while Eutelsat OneWeb provides the data connectivity for OneWeb LEO service, which we began providing for maritime use in the January 2025. We rely on Viasat/Inmarsat for satellite communications services for our FleetBroadband-compatibleFleetBroadband-compatible, FleetOne-compatible, Global Xpress-compatible and FleetOne-compatibleBGAN-compatible products, as well as our handheld products. We also have an arrangement with Iridium for additional satellite communications services for handheld devices, as well as services that we make available to our customers as a backup option to provide communications redundancy with our primary service offerings.

We exercise little or no control over these third-party providers of satellite, teleport, and terrestrial network services, which increases our vulnerability to problems with the services and coverage they provide. Due to our reliance on these service providers, when problems occur, it may be difficult to identify the source of the problem. Service disruption or outages, regardless of whether they are caused by our service, the equipment or services of our third-party service providers, or our customers’ or their equipment and systems, may result in loss of market acceptance of our service, and any necessary repairs or other remedial actions may cause us to incur significant costs and expenses. Any failure on the part of third-party service providers to achieve or maintain expected performance levels, stability, security, or adequate data service coverage in key regions could harm our relationships with our customers, result in claims for credits or damages, damage our reputation, significantly reduce customer demand for our solutionsolutions and seriously harm our financial condition and operating results.

If customers become dissatisfied with the pricing, service, availability, programming or other aspects of any of these satellite services, or if any one or more of these services becomes unavailable for any reason, we could suffer a substantial decline in sales of the satellite services or products we offer. There may be no alternative satellite service provider available to us in a particular geographic area, and the modem or other technology our customers use may not be compatible with the technology of any alternative service provider that may be available. Even if available, delays caused by switching our systems to another service provider, if available,provider and qualifying this new service provider could materially harm our customer relationships, business, financial condition, and operating results. In addition, the unexpected failure of a satellite could disrupt the availability of programming and services, which could reduce the demand for, or customer satisfaction with, the services or products we offer.

We are highly dependent on information technology networks and systems, including the Internet and third-party systems, to securely process, transmit and store electronic information, including personal information of our customers. We also retain sensitive data, including intellectual property, proprietary business information, personally identifiable information, credit card information, and usage data of our employees and customers on our computer networks and those of third parties. Although we take certain protective measures and endeavor to modify them as we believe circumstances warrant, invasive technologies and techniques continue to evolve rapidly, and increasingly sophisticated hacking organizations are targeting business systems.systems, including ours. As a result, the computer systems, software and networks that we use are vulnerable to disruption, shutdown, unauthorized access, misuse, erasure, alteration, employee error, phishing, computer viruses, ransomware or other malicious code, and other events that could have a material security impact. Some cyberattacks, such as phishing, exploit human vulnerabilities that cannot necessarily be addressed through protective technology. The protective measures on which we relyrely, including training of our personnel, may be inadequate to prevent or detect all material cybersecurity breaches or determine the extent of any material breach, and there can be no assurance that material undetected breaches have not already occurred. If any material cybersecurity event were to occur, it could disrupt our operations, distract our management, cause us to lose existing customers and fail to attract new customers, as well as subject us to regulatory actions, litigation, fines, damage to our reputation or competitive position, or orders or decrees requiring us to modify our business practices, any of which could have a material adverse effect on our financial position, results of operations or cash flows.

Economic and political conditions in the geographic markets we serve have experienced significant turmoil over the last several years, including significant disruptions to long-standing international relationships, government shutdowns, U.S. military strikes on seafaring vessels, the capture and imprisonment of a foreign head of state, U.S. military operations in international waters, recent and ongoing changes in U.S. geopolitical priorities, a potential global recession, slow economic activity, war and refugee crises in the Middle East and Europe, tight credit markets, inflation and deflation concerns, increasedchanging interest rates, low consumer confidence, limited capital spending, adverse business conditions, terrorist attacks, changes in government priorities, trade wars, anti-globalization movements, efforts to combat climate change, restrictions on commercial fishing, a government shutdown, gridlock from a dividedpolarized Congress, and liquidity concerns. These factors vary in intensity by region. For example, the warconflict in the Middle East has resulted in periodic disruptions to global shipping, which could intensify and result in significant delays in shipments of products or supplies, materially increased shipping costs and loss of revenues. Further, recent tax reform legislation is predicted to substantially increase borrowing by the federal government, which could lead to both increased interest rates and increased inflation. We cannot predict the timing, duration, or ultimate impact of turmoil on our markets or our suppliers. We expect our business would be adversely impacted by any significant turmoil, to varying degrees and for varying amounts of time, in all our geographic markets.

Changes in U.S. trade policy, including changesthe toongoing existing trade agreementsthreat and anyimposition of significant tariffs and resulting changes in international trade relations, may have a material adverse effect on us.

The newcurrent presidential administration has introduced dramatic changes to the United States’ approach to international trade, which mayis adversely impactdisrupting existing bilateral orand multi-lateral trade agreements and treaties with foreignother countries. These disruptions appear to be intensifying. The U.S. has imposedimposed, suspended, reinstated, reduced, increased or otherwise modified significant tariffs on a wide range of foreign goods and may continue to increasedo tariffsso. or impose new ones, and certainCertain foreign governments have retaliated and may continue to do so. We derive a majority of our revenues from international sales, which makes us especially vulnerable to increased tariffs. Unpredictable and frequently shifting priorities in U.S. trade policy are generating significant turmoil in international trade relations, and it is unclear what future actions governments will or will not take with respect to tariffs or other international trade agreements and policies. For example, President Trump recentlypreviously imposed tariffs ranging from 10% to 25%145% on an array of imports from Canada, MexicoMexico, China and China.other countries. Many of those tariffs remain in place, often with modifications. In response, these countries have imposed or announcedare intentionsconsidering to imposeimposing retaliatory tariffs on U.S. exports and other restrictions on trade with the U.S. It is unclear what further action the presidential administration will take with respect to tariffs.tariffs, but future tariff rates may be substantially higher than historical averages. Ongoing or new trade wars or other governmental action related to tariffs or international trade agreements or policies could substantially reduce demand for our services and products, increase our costs, materially reduce our profitability, adversely impact our supply chain or otherwise have a material adverse effect on our business and results of operations.

We face significant exposure to movements in exchange rates for foreign currencies, particularly the pound sterling and the euro.sterling. When the U.S. dollar strengthens against certain foreign currencies, this adversely affects revenues reported in U.S. dollars and decreases the reported value of our assets in foreign countries. Conversely, when the U.S. dollar weakens against certain foreign currencies, this positively affects revenues reported in U.S. dollars and increases the reported value of our assets in foreign countries. We also have intragroup receivables and liabilities, such as loans, that can generate significant foreign currency effects. Changes in exchange rates, particularly the U.S. dollar against the pound sterling, could lead to the recognition of unrealized foreign exchange losses.

The market for mobile connectivity solutions is characterized by rapid technological change, frequent new product innovations, changes in customer requirements and expectations, and evolving industry standards. For example, weour aretraditional VSAT service business is facing significant competition from new LEO networks such as SpaceX's Starlink and Eutelsat OneWeb. In addition, the barrier to entry to the sale of services like Starlink is relatively low for other providers. If we fail to make innovations in our existing services and products, reduce the costs of our services and products, or successfully integrate ancillary or third-party services and products into our portfolio,portfolio to differentiate our service offerings, our market share will likely continue to decline. Services or products using these or other new technologies, or emerging industry standards, could render our services and products obsolete. If our competitors’ new or enhanced services or products either outperform our services or products or offer greater value, or are perceived as doing so, our sales may continue to decline.

Research and development is inherently complex and uncertain, and our current and anticipated research and development projects may not achieve the results we seek. The financial resources that we can devote to our research and development efforts mayhave bebeen insufficientdecreasing to achieve our goals.significantly. Our efforts may not result in any viable service or product offerings or may result in service or product offerings whose performance, features, price or availability may not be attractive to customers or that we cannot sell profitably.

Historically, sales to customers outside the United States have accounted for an increasingly significant portion of our net sales. We derived 73%78% and 68%73% of our revenues in 20242025 and 2023,2024, respectively, from sales to these foreign customers. We have foreign offices in Denmark, the United Kingdom, Singapore, Japan, NorwayNorway, the Philippines and the Philippines, as well as a subsidiary in Brazil that manages local sales.Brazil. Nonetheless, substantially all of our operations and a significant number of our key personnel are located in the United States. Our limited international operations may impair our ability to compete successfully in international markets and to meet the service and support needs of our customers in countries where we have little to no infrastructure. Risks associated with our international business activities may increase our costs and require significant management attention. These risks include restrictions on international travel, which may restrict our ability to grow and service our business; international shipping delays; tariffs; sanctions or other trade restrictions that preclude or restrict doing business with particular foreign governments, companies or individuals; technical challenges we may face in adapting our solutions to function with different satellite services and technology in use in various regions around the world; satisfaction of international regulatory requirements and delays and costs associated with procurement of any necessary licenses or permits; the potential unavailability of content licenses covering international waters and foreign locations; increased costs of providing customer support in multiple languages; increased costs of managing operations that are international in scope; potentially adverse tax consequences, including restrictions on the repatriation of earnings; protectionist laws and business practices that favor local competitors, which could slow our growth in international markets; potentially longer sales cycles; potentially longer accounts receivable payment cycles and difficulties in collecting accounts receivable; and economic and political instability in some international markets.

We are a leading global provider of innovative and technology-driven connectivity solutions to primarily maritime commercial, leisure,commercial and military/governmentleisure customers. We provide global high-speed Internet and Voice over Internet Protocol (VoIP) services via satellite to mobile users at sea and on land. We are also a leading provider of commercially licensed entertainment, including movies, television programming, news, and music, to commercial customers in the maritime market, along with supplemental value-added cybersecurity, email, and crew internet services.

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 Starlink, Ku-band VSAT using the IntelsatSES HTS networknetwork, alongEutelsat with Starlink,OneWeb, Iridium, and other satellite services), KVH-provided cellular service in more than 150130 countries, and shore-based Wi-Fi access. RevenueSales fromof our cellularlow-earth-orbit (LEO) and global high-throughput satellite (HTS) airtime serviceservices hasaccounted supplemented,for 82% and we80% expect will continue to supplement,of our satellite-onlyconsolidated airtime revenue. In addition, we earn monthly usage fees fromnet sales of third-party satellite connectivity for VoIP, data2025 and Internet2024, services to our Inmarsat, Iridium, and Starlink customers who choose to activate their subscriptions with us.respectively. In March 2023, we began selling Starlink terminals and, in September 2023, we became a Starlink authorized hardware and airtime reseller offering MobileGlobal Priority data plans for maritime use. In October 2024, we expanded our portfolio to include Starlink BusinessLocal Priority data plans, which willis primarily be usedsuitable for stationaryfixed commercialand usemobile uses on land.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. 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 standalone 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 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 4% and 3% of our consolidated net revenues for both 20242025 and 2023.2024, respectively.

Historically, our Ku-band VSAT communications service has beenwas the primary driver of revenue growth. However, in recent years these services representhave represented a declining percentage of our revenues in the face of increased demand for and 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,commercial and military/governmentleisure vessels. In addition, our in-motion television terminals permit customers to receive live digital television via regional satellite services inon marine vessels,vessels and on recreational vehicles, buses and automobiles. We sell our products through an extensive international network of dealers and distributors. We also sell and lease products to service providers and end users. Product sales accounted for 15%11% and 13%15% of our consolidated net sales for 20242025 and 2023,2024, respectively.

In February 2024, we announced a staged wind-down of our product manufacturing operations at our Middletown, Rhode Island location. The wind-down was driven by reduced demand for our hardware products in the face of intensifying competition in the third and fourth quarters of 2023. 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 2025.2026. 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.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 beenwere completed. During 2024, we incurred an aggregate of $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.

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 MobileGlobal Priority data at favorable rates. The new agreement offersprovided us increased flexibility in the development and sale of custom airtime plans using Starlink’s MobileGlobal 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.

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”). As of September 30, 2024, 50 Enterprise Center had a carrying value of approximately $3.6 million. 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 exceedsat 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. In March 2025, we entered into an agreement with another buyer to sell 50 Enterprise Center remainsfor held$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 asgenerated we$4.9 continuemillion toof searchnet for a suitable buyer.cash.

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

Excess and Obsolete Inventory and Excess Purchase Orders

Product sales decreased by $0.4$4.8 million, or 2%,27%, to $12.6 million in 2025 from $17.4 million in 2024 from $17.8 million in 2023.2024. The decrease in product sales was primarily thedue result ofto 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, a $2.0 million decrease in TracVision product sales and a $1.3$0.8 million decrease in accessory and service parts product sales, partially offset by a $5.0$1.0 million increase in StarlinkEutelsat product sales and a $0.5 million increase in CommBox EdgeOneWeb 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 salesmix 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 bothour TracVision and VSAT Broadband products.

Costs of sales consists of costs of productservice sales and costs of serviceproduct sales. Costs of sales decreasedincreased by $15.9$4.4 million, or 17%,6%, in 20242025 to $83.0 million from $78.6 million from $94.5 million in 2023.2024. The decreaseincrease in costs of sales was driven by a $5.4$3.7 million decreaseincrease in costs of service sales and a $10.5$0.7 million decreaseincrease in costs of product sales. As a percentage of net sales, costs of sales were 69%75% and 71%69% for 20242025 and 2023,2024, respectively.

Our costs of product sales consist primarily of materials, manufacturing overhead, and direct labor used to produce our products. For 2024,2025, costs of product sales decreasedincreased by $10.5$0.7 million, or 36%,4%, to $19.3 million from $18.6 million from $29.1 million in 2023,2024, primarily due to ana $8.7$4.3 million decreaseincrease in various manufacturing and other unabsorbed expenses,expenses and a $3.6$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 excessStarlink purchasecost orderof obligations,product sales, a $1.5$1.2 million decrease in TracVision cost of product sales, a $0.9$0.8 million decrease in VSAT Broadband cost of product sales and a $0.3$0.5 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. As a percentage of product sales, costs of product sales were 107%153% and 164%107% for 20242025 and 2023,2024, respectively. Cost of product sales decreasedincreased as a percentage of product sales primarily due to the decreaseincrease 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.

Research and development expense consists of direct labor, materials, external consultants, and related overhead costs that support our internally funded product development and product sustaining engineering activities. Research and development expense for 20242025 decreased by $1.0$5.0 million, or 10%,59%, to $3.5 million from $8.4 million from $9.4 million in 2023.2024. The decrease in research and development expense resulted primarily from a $1.6$4.3 million decrease in salaries, benefits and taxes, excludingafter costsgiving relatedeffect 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 during 2024 related to the reduction in our workforce.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 both 20242025 and 2023.2024, 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 increaseddecreased by $0.1$0.6 million, or less than 1%,3%, to $20.4 million in 2025 from $21.0 million in 20242024. The decrease in sales, marketing and support expense resulted primarily from $20.9a $0.9 million decrease in 2023.facilities Inexpense 2024,allocated weto incurredour $0.7sales, marketing and support operation and a $0.4 million decrease in costs incurred related to the reduction in our workforce, which was partially offset by a $0.4 million decreaseincrease in externalprofessional commissions.fees. As a percentage of net sales, sales, marketing and support expense was 18% and 16% in 2024both 2025 and 2023, respectively. This increase resulted primarily from a reduction in net sales.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 20242025 decreased by $2.4$1.2 million, or 13%,7%, to $15.3 million from $16.5 million from $18.9 million for 2023.2024. 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$0.9 million decrease in salaries, benefits and taxes, excludingafter costsgiving relatedeffect to the previously mentioned reduction in workforce, and a $0.4$0.6 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$0.5 million reductiondecrease in reimbursementsdues madeand bysubscriptions EMCORE for expenses incurred under the transition services agreement relating to the sale of the inertial navigation business in August 2022,expense and a $0.4 million decrease in depreciation expense, partially offset by a $1.0 million increase in facilityfacilities expenses.expense allocated to our general and administrative operations. As a percentage of net sales, general and administrative expense was 15%14% and 14%15% for 20242025 and 2023,2024, respectively. This increase resulted primarily from a reduction in net sales.

Interest and Other Expense,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$0.5 million to $3.0$2.6 million from $3.6$3.0 million for 2023.2024, 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 $3.0$2.6 million, $2.6$2.2 million is attributable to interest earned on cash and cash equivalents, whileand the remaining $0.5$0.4 million was attributable to interest from lease receivables. Interest declined primarily due to lower cash balances. Other expense,income (expense), net increasedchanged by $0.4$2.9 million to other income, net of $1.1 million for 2025 from other expense, net of $1.8 million for 20242024. fromThis otherchange expense,was netdriven primarily by a $1.3 million gain on the sale of $1.450 Enterprise Center in June 2025, a $1.3 million fordecrease 2023.in Thenon-cash increaselosses was primarily duerelated to the disposal of AgilePlans revenue-generating fixed assets, a $0.5 million increasedecrease in foreign exchange losseslosses, 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 2023September on an unfavorable future contract2025 and a $0.1$0.3 million decrease in the loss on the disposal of fixed assets. The Company incurred a non-cashdiscontinued $0.9 million loss and a non-cash $0.7 million lossproject 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.2025.

Income Tax (Benefit) Expense

Income tax (benefit) expense for 20242025 and 20232024 was $0.4$(0.1) million and $0.3$0.4 million, respectively, and related to taxes on income earned in foreign jurisdictions.

The effective tax rate for 20242025 and 20232024 was (4.0)%1.7% and (2.14.0)%, respectively. For 20242025 and 2023,2024, the effective tax rates differed from the statutory tax rate primarily due to our maintaining a valuation allowance reserve on our U.S. deferred tax assets, impairment of goodwill, discrete tax adjustments and the composition of income from foreign jurisdictions taxed at varying rates.

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure at the date of our financial statements. Our significant accounting policies are summarized in Note 1 to our accompanying audited consolidated financial statements. 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 goodwill, intangible assets and other long-lived assets are the only estimates critical to an understanding and evaluation of our financial results for 2024,2025, as discussed below.

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 a50 businessEnterprise inCenter, 2019,the asale PPPof loan,75 Enterprise Center, cash flows from operations, bank financingsoperations and proceeds received from exercises of stock options and the issuance of stock.

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. If our operating results fail to meet our expectations, we could be required to seek additional funding through public or private financings or other arrangements. In that event, adequate funds may not be available when needed or may be available only on terms which could have a negative impact on our business and results of operations. In addition, if we raise funds by issuing equity securities, our stockholders may experience dilution.

Operating activities provided net cash of $17.1 million in 2025 and used net cash of $13.2 million of net cash in 2024 and provided $2.5 million of net cash in 2023,2024, an increase in net cash usedprovided by operating activities of $15.7$30.3 million. The $15.7$30.3 million increase in net cash usedprovided by operations was primarily the result of a $11.5$19.7 million increasedecrease 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 $10.4$3.7 million decrease in net loss, a $0.8 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$0.7 million increase in cash outflowsinflows relating to other non-current assets.assets, Partially offsetting these items wereand a $15.2$0.6 million decrease in cash outflows related to accounts payable, apartially $4.4offset by an $8.1 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.receivable and a $7.9 million reduction in non-cash items.

Net cash provided by investing activities for 20242025 was $52.4$3.9 million as compared to net cash usedprovided by investing activities of $14.7$52.4 million for 2023.2024. The $67.1$48.5 million increasedecrease in net cash provided by investing activities was primarily the result of a $61.3$58.5 million decrease in proceeds from net investmentsales inof marketable securities, which was driven by the liquidation of our marketable securities held by Wells Fargo,Fargo in 2024, $3.8 million of cash paid for a $3.2business decreasecombination in capital2025, expenditures,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 $1.4$0.9 million increase inof proceeds from the sale of fixed assets and a $1.2$0.1 million decrease in cashcapital paid for the acquisition of intangible assets.expenditures.

Net cash providedused byin financing activities for 20242025 was $0.1$1.7 million as compared to net cash provided by financing activities in 20232024 of $2.3$0.1 million. The $2.2$1.8 million decreaseincrease in net cash providedused byin financing activities is primarily attributable to a $2.5$1.7 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 decreaseincrease in cash outflows related to the repurchasepurchase of commontreasury stock to satisfy specific tax withholding obligations arising from accelerated vesting of executive stock grants in 2023.stock.

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 blockblocks of mobile data at favorable rates. These agreements can involve millions of dollars.

The statements included in this quarterly report on Form 10-Q, other than statements of historical fact, are forward-looking statements. Examples of forward-looking statements include statements regarding our future financial results, operating results, business strategies, projected costs, products and services, competitive positions and plans, customer preferences, consumer trends, anticipated product development, and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in the section entitled “Risk Factors” in Item 1A of Part I of our annual report on Form 10-K for the year ended December 31, 2025. These and many other factors could affect our future financial and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by us or on our behalf. For example, our expectations regarding certain items as a percentage of sales assume that we will achieve our anticipated sales goals. The following discussion and analysis should be read in conjunction with our consolidated interim financial statements and related notes appearing elsewhere in this report.

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. Our satellite-only and hybrid products enable maritime customers to receive data, VoIP, and value-added services via satellite, cellular, and shore-based Wi-Fi networks onboard commercial and leisure vessels. In addition, our in-motion television terminals permit customers to receive live digital television via regional satellite services on maritime vessels and on recreational vehicles, buses and automobiles.vessels. We sell our products through an extensive international network of dealers and distributors. We also sell and lease products to service providers and end users.

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 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, andan additional paymentspayment of $10.0 million in January 2026 and payments of $6.0 million in each of February 2026 and May 2026. We must pay the remaining balance of $24.0$18.0 million in periodicthree quarterly payments through the first quarter of 2027.

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 goodwill, intangible assets and other long-lived assets are the only estimates critical to an understanding and evaluation of our financial results for the threesix months ended MarchJune 31,30, 2026, as discussed below.

Three months ended MarchJune 31,30, 2026 and 2025

Our net sales for the three months ended MarchJune 31,30, 2026 and 2025 were as follows:

Net sales increased by $6.9$7.1 million, or 27%, for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025. Service sales increased by $6.5$6.7 million, or 30%,29%, to $28.2$29.7 million for the three months ended MarchJune 31,30, 2026 from $21.6$23.0 million for the three months ended MarchJune 31,30, 2025. The increase in service sales was primarily due to a $6.2$6.6 million increase in our airtime service sales, which reflected a substantial increase in LEO service sales driven by an increase in subscribers for both Starlink and OneWeb. This increase in LEO service sales was partially offset by a substantial decrease in VSAT service sales, which was driven primarily by a decrease in VSAT subscribers. For the three months ended MarchJune 31,30, 2026, LEO services sales represented over 45%55% of airtime services sales, as compared to less than 30%32% for the three months ended MarchJune 31,30, 2025. 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. Competing LEO service providers have continued to expand their product and service offerings, further heightening competition in the global leisure segment and in commercial markets.

Product sales increased by $0.4 million, or 10%,12%, to $4.2$4.0 million for the three months ended MarchJune 31,30, 2026 from $3.8$3.6 million for the three months ended MarchJune 31,30, 2025. The increase in product sales was primarily due to a $0.7 million increase in OneWebStarlink product sales and a $0.3 million increase in StarlinkOneWeb product sales, partially offset by a $0.5 million decrease in TracVision product sales and a $0.3$0.2 million decrease in VSAT Broadband product sales. 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 consists of costs of service sales and costs of product sales. Costs of sales increased by $4.8$5.9 million, or 27%,34%, in the three months ended MarchJune 31,30, 2026 to $22.8$23.4 million from $18.0$17.5 million in the three months ended MarchJune 31,30, 2025. The increase in costs of sales was driven by a $0.7$1.0 million increase in costs of product sales and a $4.1$4.9 million increase in costs of service sales. As a percentage of net sales, costs of sales were 70%69% and 71%66% for the three months ended MarchJune 31,30, 2026 and 2025, 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 materials and distribution costs, and service repair materials. For the three months ended MarchJune 31,30, 2026, costs of service sales increased by $4.1$4.9 million, or 29%,34%, to $18.4$19.1 million from $14.2 million in the three months ended MarchJune 31,30, 2025, primarily due to a $3.8$4.6 million increase in airtime costs of service sales. As a percentage of service sales, costs of service sales were 65%64% and 66%62% for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Our costs of product sales consist primarily of materials, manufacturing overhead, and direct labor used to produce our products. For the three months ended MarchJune 31,30, 2026, costs of product sales increased by $0.7$1.0 million, or 18%,31%, to $4.4$4.3 million from $3.7$3.3 million in the three months ended MarchJune 31,30, 2025, primarily due to a $0.5$0.7 million increase in various manufacturing and other unabsorbed expensesexpenses, a $0.7 million increase in Starlink cost of product sales and a $0.6$0.2 million increase in OneWeb cost of product sales, partially offset by a $0.3$0.4 million decrease in TracVision cost of product sales and a $0.2$0.1 million decrease in VSATaccessories Broadbandand other cost of product sales. As a percentage of product sales, costs of product sales were 106%107% and 99%92% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Cost of product sales increased as a percentage of product sales primarily due to the increase in various manufacturing and other unabsorbed expenses.

Research and development expense consists of direct labor, materials, external consultants, and related overhead costs that support our internally funded product development and product sustaining engineering activities. Research and development expense for the three months ended MarchJune 31,30, 2026 decreased by $0.5$0.1 million, or 39%,12%, to $0.7$0.8 million from $1.2$0.9 million for the three months ended MarchJune 31,30, 2025. The decrease in research and development expense resulted primarily from a $0.4$0.2 million decrease in salaries, benefits and taxes. As a percentage of net sales, research and development expense was 2% and 5%3% for the three months ended MarchJune 31,30, 2026 and 2025, 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 for the three months ended MarchJune 31,30, 2026 were $5.1$5.2 million, an increase of $0.1$0.2 million, or 2%,5%, from $5.0 million for the three months ended MarchJune 31,30, 2025. The increase in sales, marketing and support expense resulted primarily from a $0.4$0.2 million increase in salaries, benefits and taxes, a $0.2 million increase in finance and insurance expense, and a $0.1 million increase in facilities expense, partially offset by a $0.2 million decrease in facilities expense and a $0.1$0.3 million decrease in warranty expense. As a percentage of net sales, sales, marketing and support expense was 16% and 20%19% for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

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 the three months ended MarchJune 31,30, 2026 increased by $0.3$0.8 million, or 10%,22%, to $3.9$4.4 million from $3.5$3.6 million for the three months ended MarchJune 31,30, 2025. The increase in general and administrative expense resulted primarily from a $0.2$0.4 million increase in professional fees, a $0.3 million increase in salaries, benefits and taxes and a $0.2$0.1 million increase in computer software and maintenance expenses, partially offset by a $0.1$0.2 million decrease in dues and subscriptionsfacilities expense. As a percentage of net sales, general and administrative expense was 12% and 14%13% for each of the three months ended MarchJune 31,30, 2026 and 2025, respectively.2025.

Interest income represents interest earned on our cash and cash equivalents, as well as from investments and our sale-type lease receivables. Interest income remaineddecreased flatslightly atto $0.6$0.5 million for the three months ended MarchJune 31,30, 2026 from $0.6 million for the three months ended MarchJune 31,30, 2025. Of the current period interest income of $0.6$0.5 million, $0.5 million is attributable to interest earned on cash and cash equivalents, while the remaining $0.1 million was attributable to interest from lease receivables. Other income,expense, net increasedchanged by $0.2$0.9 million to other income, net of $0.2 million for the three months ended March 31, 2026 from other expense, net of less than $0.1 million for the three months ended MarchJune 31,30, 2026 from other income, net of $0.8 million for the three months ended June 30, 2025. This decreasechange was driven primarily by a $0.1 million gain on foreign exchange as well as a $0.1$1.3 million gain on the salessale of fixed50 assets.Enterprise Center in June 2025, partially offset by $0.4 million of relocation-related costs.

Income tax expense for the three months ended MarchJune 31,30, 2026 was $0.1$0.2 million and primarily related to foreign income taxes and withholding taxes imposed in foreign jurisdictions. Income tax expense for the three months ended MarchJune 31,30, 2025 was less than $0.1 million and primarily related to statewithholding taxes and taxes on income earnedimposed in foreign jurisdictions.

As of MarchJune 31,30, 2026, we had $59.2$57.7 million in cash and cash equivalents, of which $3.0$2.8 million in cash equivalents was held in local currencies by our foreign subsidiaries. As of MarchJune 31,30, 2026, we had $101.7$101.3 million in working capital.

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 20262026, and a paymentpayments of $6.0 million in each of February 2026 and May 2026. PeriodicThe remaining $18.0 million obligation will be paid in three quarterly 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. If our operating results fail to meet our expectations, we could be required to seek additional funding through public or private financings or other arrangements. In that event, adequate funds may not be available when needed or may be available only on terms which could have a negative impact on our business and results of operations. In addition, if we raise funds by issuing equity securities, our stockholders may experience dilution.

Net cash used in operations was $8.3$6.4 million for the threesix months ended MarchJune 31,30, 2026 compared to net cash usedprovided inby operations of $1.3$3.8 million for the threesix months ended MarchJune 31,30, 2025. The $7.0$10.2 million increase in net cash used in operations was primarily the result of a $11.6$14.3 million increase in cash outflows related to prepaid expenses and other current assets, which reflected the $16.0$22.0 million purchase of Starlink pooled data in 2026, a $2.2 million decrease in cash inflows relating to accounts receivable, a $1.4 million reduction in non-cash items, and a $0.2$0.5 million increase in cash outflows relating to accrued compensation, product warranty and other expenses, a $0.4 million reduction in non-cash items and a $0.2 million decrease in cash inflows relating to accounts receivable, partially offset by a $5.4$3.6 million decrease in cash outflows related to accounts payable, a $2.3$1.5 million decrease in net loss, and a $0.7$0.3 million decrease in cash outflows relating to inventories.

Net cash used in investing activities was $2.4$3.9 million for the threesix months ended MarchJune 31,30, 2026 compared to net cash usedprovided inby investing activities of $0.6$2.6 million for the threesix months ended MarchJune 31,30, 2025. The $1.8$6.5 million increase in net cash used in investing activities was primarily the result of the proceeds of $4.9 million from the sale of 50 Enterprise Center received in the six months ended June 30, 2025 as compared to no such proceeds in the six months ended June 30, 2026, a $1.4$0.6 million increase in capitalacquisition expenditures,of partiallyintangible offset byassets, a $0.4$0.6 million decrease of proceeds from the sale of fixed assets.assets and a $0.3 million increase in capital expenditures.

Net cash used in financing activities was $0.1$1.9 million for the threesix months ended MarchJune 31,30, 2026 compared to net cash used in financing activities of $0.2$1.2 million for the threesix months ended MarchJune 31,30, 2025. The $0.1$0.7 million decreaseincrease in net cash used in financing activities is the result of a $0.1$1.3 million increase in cash outflows related to the repurchase of common stock, offset by a $0.6 million increase in cash inflows related to the proceeds from stock options exercised.

During the three months ended MarchJune 31,30, 2026, we repurchased 34254 thousand shares of common stock in open market transactions at a cost of approximately $0.2$2.3 million. During the six months ended June 30, 2026, we repurchased 288 thousand shares of common stock in open market transactions at a cost of approximately $2.5 million. Except as noted above, there were no other repurchase programs outstanding.