KVH Industries(KVHI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2025 ITEM 1. INTERIM FINANCIAL STATEMENTS This section presents the unaudited consolidated financial statements of KVH Industries, Inc. and its subsidiaries for the quarter ended March 31, 2025, compared to prior periods, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, business operations, and financial changes Consolidated Balance Sheets This section presents the unaudited consolidated balance sheets of KVH Industries, Inc. as of March 31, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Total assets | $151,434 | $155,081 | $(3,647) | (2.3)% | | Total liabilities | $13,623 | $16,456 | $(2,833) | (17.2)% | | Total stockholders' equity | $137,811 | $138,625 | $(814) | (0.6)% | Consolidated Statements of Operations This section details the unaudited consolidated statements of operations for the three months ended March 31, 2025 and 2024, highlighting net sales, costs, and net loss Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---|\n| Net sales | $25,414 | $29,267 | $(3,853) | (13.2)% | | Total costs and expenses | $27,657 | $33,065 | $(5,408) | (16.4)% | | Loss from operations | $(2,243) | $(3,798) | $1,555 | 40.9% | | Net loss | $(1,710) | $(3,163) | $1,453 | 45.9% | | Net loss per common share - Basic | $(0.09) | $(0.16) | $0.07 | 43.8% | | Net loss per common share - Diluted | $(0.09) | $(0.16) | $0.07 | 43.8% | Consolidated Statements of Comprehensive Loss This section presents the unaudited consolidated statements of comprehensive loss for the three months ended March 31, 2025 and 2024, including net loss and other comprehensive income components Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---|\n| Net loss | $(1,710) | $(3,163) | $1,453 | 45.9% | | Foreign currency translation adjustment | $722 | $229 | $493 | 215.3% | | Total comprehensive loss | $(988) | $(2,934) | $1,946 | 66.3% | Consolidated Statements of Stockholders' Equity This section outlines the changes in stockholders' equity for the three months ended March 31, 2025 and 2024, reflecting net loss, comprehensive income, and stock-based compensation Changes in Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2024 | Net Loss | Other Comprehensive Income | Stock-based Compensation | Acquisition of Treasury Stock | Balance at Mar 31, 2025 | |:---|:---|:---|:---|:---|:---|:---|\n| Total Stockholders' Equity | $138,625 | $(1,710) | $722 | $337 | $(163) | $137,811 | Consolidated Statements of Cash Flows This section provides the unaudited consolidated statements of cash flows for the three months ended March 31, 2025 and 2024, detailing cash movements from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | |:---|:---|:---|:---|\n| Net cash used in operating activities | $(1,277) | $(792) | $(485) | | Net cash (used in) provided by investing activities | $(557) | $871 | $(1,428) | | Net cash (used in) provided by financing activities | $(162) | $96 | $(258) | | Net (decrease) increase in cash and cash equivalents | $(1,972) | $147 | $(2,119) | | Cash and cash equivalents at end of period | $48,600 | $11,441 | $37,159 | Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements, covering accounting policies, business operations, and specific financial components (1) Description of Business KVH Industries designs, develops, manufactures, and markets mobile connectivity services and products for marine and land markets, primarily generating revenue from satellite Internet airtime services, including its KVH ONE hybrid network and reseller agreements for Starlink and OneWeb, and is undergoing a staged wind-down of its product manufacturing operations by the end of 2025 to focus on integrated communications solutions - KVH's core business involves mobile connectivity services and products for marine and land markets, with primary revenue from satellite Internet airtime services[26][27] - The Company has expanded its service offerings to include the KVH ONE® hybrid network, Starlink, and OneWeb services, and offers 'AgilePlans' as a connectivity-as-a-service model[27][28] - A staged wind-down of product manufacturing operations at its Middletown, RI facility is expected to cease substantially by the end of 2025, shifting focus to integrated communications solutions[33][34] (2) Summary of Significant Accounting Policies This note outlines the accounting principles used in preparing the interim financial statements, emphasizing the basis of presentation, the necessity of management estimates and assumptions, and the policies for classifying assets held for sale and foreign currency translation - Interim financial statements are prepared in accordance with GAAP and include management's estimates and assumptions affecting various financial statement items[35][37] - Assets are classified as held for sale when specific criteria are met, measured at the lower of carrying amount or fair value less costs to sell, and are not depreciated[39] - Foreign currency translation policies vary based on the functional currency of foreign subsidiaries, impacting where gains and losses are recognized (income statement or OCI)[40][41] (3) Recently Issued Accounting Standards and Accounting Standards Not yet Adopted The Company reviewed recently issued accounting standards, specifically ASU No. 2023-09 (Income Taxes) and ASU No. 2024-03 (Expense Disaggregation Disclosures), and expects no material impact on its financial statements from their adoption, with ASU 2024-03 only resulting in disclosure changes - ASU No. 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024, and is not expected to have a material impact[42] - ASU No. 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and will result in disclosure changes only[43] (4) Marketable Securities The Company liquidated its marketable securities in Q4 2024, transferring the balance to an interest-bearing account, and held no marketable securities as of March 31, 2025, resulting in no interest income from marketable securities for the current quarter - The balance of marketable securities was liquidated in the fourth quarter of 2024 and transferred to an interest-bearing account[45] - No marketable securities were held as of March 31, 2025, or December 31, 2024[46] - Interest income from marketable securities was $0 for the three months ended March 31, 2025, compared to $720 thousand for the same period in 2024[45] (5) Stockholder's Equity This note details stock-based compensation expenses, activity related to stock options and restricted stock awards, and the Employee Stock Purchase Plan (ESPP), along with the components of Accumulated Other Comprehensive Loss (AOCL) Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---|:---|:---|\n| Cost of service sales | $7 | $7 | | Cost of product sales | $5 | $9 | | Research and development | $(49) | $89 | | Sales, marketing and support | $77 | $71 | | General and administrative | $297 | $346 | | Total | $337 | $522 | - Unrecognized compensation expense as of March 31, 2025, was $2.005 million for stock options (over 3.20 years) and $1.227 million for restricted stock awards (over 1.83 years)[47] - Accumulated Other Comprehensive Loss improved from $(4.032) million at December 31, 2024, to $(3.310) million at March 31, 2025, primarily due to a $722 thousand foreign currency translation adjustment[54] (6) Net Loss per Common Share This note explains the calculation of basic and diluted net loss per common share, noting that potential dilutive securities were excluded from the diluted EPS calculation for both periods due to the net loss, as their inclusion would have been anti-dilutive - Basic and diluted net loss per common share was $(0.09) for the three months ended March 31, 2025, an improvement from $(0.16) in the prior year[13] - 1,141 thousand (2025) and 1,584 thousand (2024) outstanding stock options and non-vested restricted shares were excluded from diluted EPS calculation as their inclusion would have been anti-dilutive due to the net loss[55] (7) Inventories Inventories are valued at the lower of cost or net realizable value using the first-in first-out method, and the total inventory balance decreased slightly from December 31, 2024, to March 31, 2025, with reductions across raw materials, work in process, and finished goods Inventory Components (in thousands) | Component | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---|\n| Raw materials | $14,954 | $15,379 | $(425) | (2.8)% | | Work in process | $2,066 | $2,469 | $(403) | (16.3)% | | Finished goods | $4,962 | $5,105 | $(143) | (2.8)% | | Total Inventories | $21,982 | $22,953 | $(971) | (4.2)% | (8) Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets increased slightly, primarily due to a significant rise in 'other prepaid expenses,' partially offset by a decrease in prepaid Starlink pooled data as the Company began drawing from its bulk data distribution agreement Prepaid Expenses and Other Current Assets (in thousands) | Component | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---|\n| Prepaid Starlink pooled data | $11,897 | $14,137 | $(2,240) | (15.8)% | | Other prepaid expenses and other current assets | $4,493 | $1,879 | $2,614 | 139.1% | | Total | $16,390 | $16,016 | $374 | 2.3% | - KVH expanded its relationship with Starlink in Q2 2024 through a bulk data distribution agreement, prepaying for Global Priority data at favorable rates, and began drawing from this pooled data in Q3 2024[58] (9) Property and Equipment Net property and equipment decreased, primarily due to accumulated depreciation, while the Company continued plans to sell two properties in Middletown, Rhode Island, with one sale agreement signed in March 2025 Property and Equipment, Net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---|\n| Gross property and equipment | $77,710 | $78,329 | $(619) | (0.8)% | | Less accumulated depreciation | $(52,892) | $(51,315) | $(1,577) | (3.1)% | | Property and equipment, net | $24,818 | $27,014 | $(2,196) | (8.1)% | - Depreciation expense was $2.784 million for Q1 2025, down from $3.147 million for Q1 2024[59] - The Company plans to sell 75 Enterprise Center and 50 Enterprise Center in Middletown, Rhode Island; an agreement to sell 50 Enterprise Center for $5.3 million was entered into in March 2025[61][62] (10) Product Warranty The Company's product warranty liability increased slightly for the three months ended March 31, 2025, reflecting new charges to expense partially offset by costs incurred for repairs Product Warranty Activity (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---|:---|:---|\n| Beginning balance | $607 | $828 | | Charges to expense | $232 | $264 | | Costs incurred | $(132) | $(366) | | Ending balance | $707 | $726 | - Accrued product warranty costs increased by $100 thousand (16.5%) from $607 thousand at December 31, 2024, to $707 thousand at March 31, 2025[10][64] (11) Legal Matters The Company is involved in routine inquiries, legal proceedings, and claims in the ordinary course of business but does not anticipate any of these matters will materially harm its business, results of operations, financial condition, or cash flows - The Company is not a party to any lawsuit or proceeding that is likely to materially harm its business, results of operations, financial condition, or cash flows[66] (12) Fair Value Measurements This note clarifies that no financial assets or liabilities were measured at fair value using the ASC 820 hierarchy as of March 31, 2025, or December 31, 2024, as the carrying amounts of most financial instruments approximate fair value due to their short-term nature, and no impairment of non-financial assets was noted - No financial assets or liabilities were measured at fair value based on the ASC 820 fair value hierarchy as of March 31, 2025, or December 31, 2024[68] - The carrying amounts of certain financial instruments (cash, receivables, payables, accrued expenses, lease liabilities) approximate fair value due to their short-term, highly liquid nature or quoted rates[69] - No impairment of non-financial assets was noted during the three months ended March 31, 2025, or 2024[71] (13) Intangible Assets The net carrying amount of intangible assets decreased due to amortization, with the remaining assets primarily consisting of distribution rights and subscriber relationships, which are amortized over finite lives Acquired Intangible Assets (in thousands) | Asset Type | Gross Carrying Amount (Mar 31, 2025) | Accumulated Amortization (Mar 31, 2025) | Net Carrying Value (Mar 31, 2025) | |:---|:---|:---|:---|\n| Subscriber relationships | $60 | $18 | $42 | | Distribution rights | $1,250 | $559 | $691 | | Intellectual property | $2,284 | $2,284 | $— | | Total | $3,594 | $2,861 | $733 | - Net carrying amount of intangible assets decreased by $95 thousand (11.5%) from $828 thousand at December 31, 2024, to $733 thousand at March 31, 2025[10][73] - Amortization expense was $104 thousand for Q1 2025, and the total weighted average remaining useful life of definite-lived intangible assets was 1.8 years[76][77] (14) Revenue from Contracts with Customers Net sales decreased for the three months ended March 31, 2025, with service sales continuing to be the predominant revenue source, and international sales, particularly to Singapore, representing a significant portion of consolidated net sales Net Sales from Contracts with Customers (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---|\n| Service - over time | $21,642 | $25,038 | $(3,396) | (13.6)% | | Product - point in time | $3,772 | $4,229 | $(457) | (10.8)% | | Total net sales | $25,414 | $29,267 | $(3,853) | (13.2)% | - Service sales accounted for approximately 85.2% of consolidated net sales in Q1 2025 (85.6% in Q1 2024)[81] - International revenues represented 80% of consolidated net sales in Q1 2025 (72% in Q1 2024), with Singapore customers accounting for 23% (22% in Q1 2024)[83] (15) Income Taxes The Company's effective tax rate for the three months ended March 31, 2025, was negative, primarily due to a valuation allowance on U.S. deferred tax assets and the composition of income from foreign jurisdictions taxed at lower rates, while the reserve for uncertain tax positions remained stable - The effective tax rate was (1.5)% for Q1 2025, compared to (2.5)% for Q1 2024[87] - The effective tax rate differed from the statutory rate primarily due to a valuation allowance on U.S. deferred tax assets and income composition from foreign jurisdictions taxed at lower rates[88] - Reserves for uncertain tax positions were $745 thousand at March 31, 2025, with a reasonably possible decrease of $15 thousand in the next twelve months[89] (16) Leases This note details the Company's operating leases as a lessee for facilities and equipment, and its sales-type and operating leases as a lessor for VSAT systems, outlining lease expenses, liabilities, and future cash flows - Lease expense as a lessee was $271 thousand for Q1 2025, down from $353 thousand for Q1 2024[91] Lessee Operating Lease Liabilities (in thousands) as of March 31, 2025 | Period | Minimum Lease Payments | |:---|:---|\n| Remainder of 2025 | $460 | | 2026 | $292 | | 2027 | $204 | | 2028 and thereafter | $154 | | Total minimum lease payments | $1,110 | | Less amount representing interest | $(78) | | Present value of net minimum operating lease payments | $1,032 | - Interest income from sales-type leases as a lessor was $102 thousand for Q1 2025, down from $129 thousand for Q1 2024[94] (17) Restructuring The Company initiated a staged wind-down of its manufacturing activities in February 2024, driven by reduced demand and competition, aiming to cease substantially all manufacturing by the end of 2025 and focus on integrated communications solutions, which involved a headcount reduction of approximately 75 employees and incurred $3.9 million in severance charges in 2024 - The Board of Directors voted on February 9, 2024, to implement a staged wind-down of manufacturing activities at its Middletown, Rhode Island facility[99] - The wind-down was driven by reduced demand for hardware products and intensifying competition, with the goal to cease substantially all manufacturing by the end of 2025[99][100] - Approximately 75 employees (20% of the total workforce) were reduced, incurring aggregate severance charges of $3.9 million in 2024[101] (18) Segment Information KVH Industries manages its operations as a single operating segment, with the CEO serving as the Chief Operating Decision Maker (CODM) who reviews consolidated net income (loss) to assess performance and allocate resources, and the majority of the Company's long-lived assets are located outside the United States, with a significant portion in Singapore - The Company manages its operations as a single operating segment, with the CEO as the Chief Operating Decision Maker (CODM)[102] Geographic Location of Long-Lived Assets (in thousands) as of March 31, 2025 | Location | Amount | |:---|:---|\n| Inside United States | $4,719 | | Outside United States | $21,229 | | Of which, Singapore | $7,128 | | Total | $25,948 | (19) Share Buyback Program The Board of Directors authorized a share repurchase program of up to $10 million on December 9, 2024, allowing for repurchases through various means, and during the three months ended March 31, 2025, the Company repurchased 30,818 shares for approximately $163 thousand - The Board of Directors authorized a share repurchase program for up to $10 million on December 9, 2024[106] - During the three months ended March 31, 2025, the Company repurchased 30,818 shares of common stock at a cost of approximately $163 thousand[108] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis provides an overview of KVH Industries' business, recent strategic initiatives including the manufacturing wind-down and expansion into LEO services, and a detailed review of financial performance for the three months ended March 31, 2025, compared to the prior year, highlighting changes in sales, costs, operating expenses, and liquidity Introduction This introduction highlights the forward-looking nature of the report and advises reading it in conjunction with the consolidated interim financial statements and annual report - The report contains forward-looking statements regarding future financial results, operating results, business strategies, and product development, which are subject to risks and uncertainties[109] - The discussion and analysis should be read in conjunction with the consolidated interim financial statements and the annual report on Form 10-K[109] Overview This overview describes KVH's core business in mobile connectivity solutions, its strategic shift to integrated communications, and the ongoing manufacturing wind-down and property sales - KVH is a leading global provider of innovative and technology-driven connectivity solutions, primarily for maritime commercial, leisure, and military/government customers[110] - The Company generates a substantial majority of revenues from satellite Internet airtime services, including its KVH ONE hybrid network and reseller services for Starlink and OneWeb[111][112] - A staged wind-down of product manufacturing operations was announced in February 2024, driven by reduced demand and competition, with a focus on integrated communications solutions and an expected cessation of manufacturing by the end of 2025[115] - The restructuring included a headcount reduction of approximately 75 employees and incurred $3.9 million in severance charges during 2024[116] - The Company is actively selling properties in Middletown, Rhode Island, including 75 Enterprise Center and 50 Enterprise Center, with agreements in place for both[118][120] Critical Accounting Estimates This section identifies critical accounting estimates, particularly for intangible and other long-lived assets, due to their inherent estimation uncertainty and potential financial impact - The Company identifies accounting estimates for intangible assets and other long-lived assets as critical due to significant estimation uncertainty and their potential impact on financial results[123] Results of Operations This section analyzes the Company's financial performance for the three months ended March 31, 2025, detailing changes in net sales, costs of sales, and operating expenses Financial Data as a Percentage of Net Sales | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---|:---|:---|\n| Net sales | 100.0% | 100.0% | | Costs of service sales | 56.0% | 48.0% | | Costs of product sales | 14.7% | 18.1% | | Research and development | 4.7% | 10.4% | | Sales, marketing and support | 19.5% | 18.4% | | General and administrative | 13.9% | 18.1% | | Total costs and expenses | 108.8% | 113.0% | | Loss from operations | (8.8)% | (13.0)% | | Net loss | (6.7)% | (10.9)% | Net Sales Net sales declined by 13% year-over-year, primarily due to a decrease in airtime service sales, particularly from a U.S. Coast Guard contract downgrade and reduced VSAT-only subscribers, alongside a decrease in TracVision and accessory product sales, partially offset by growth in LEO and Starlink product sales Net Sales Performance (in thousands) | Category | Q1 2025 | Q1 2024 | Change ($) | Change (%) | |:---|:---|:---|:---|:---|\n| Service | $21,642 | $25,038 | $(3,396) | (14)% | | Product | $3,772 | $4,229 | $(457) | (11)% | | Total Net Sales | $25,414 | $29,267 | $(3,853) | (13)% | - Service sales decreased primarily due to a $3.5 million decrease in airtime service sales, including a $2.5 million impact from a U.S. Coast Guard contract downgrade and a decline in VSAT-only subscribers[127] - Product sales decreased mainly due to a $0.5 million decrease in TracVision sales and a $0.2 million decrease in accessory and land mobile connectivity product sales, partially offset by increases in Starlink and CommBox Edge product sales[128] Costs of Sales Total costs of sales decreased by 7% year-over-year, primarily driven by a significant reduction in product sales costs due to lower manufacturing and unabsorbed expenses, despite a slight increase in service sales costs - Total costs of sales decreased by $1.4 million (7%) to $18.0 million in Q1 2025 from $19.4 million in Q1 2024[129] - Costs of service sales increased by $0.2 million (1%) to $14.2 million, primarily due to a $0.2 million increase in content services cost, leading to an increase from 56% to 66% as a percentage of service sales[130] - Costs of product sales decreased by $1.6 million (30%) to $3.7 million, mainly due to a $1.2 million decrease in manufacturing and unabsorbed expenses, improving from 126% to 99% as a percentage of product sales[131] Operating Expenses Operating expenses significantly decreased across all categories for Q1 2025 compared to Q1 2024, primarily driven by reductions in salaries, benefits, and taxes following the workforce reduction, as well as lower depreciation expense - Research and development expense decreased by $1.9 million (61%) to $1.2 million, primarily due to a $1.7 million decrease in salaries, benefits, and taxes following workforce reduction[132] - Sales, marketing, and support expense decreased by $0.4 million (8%) to $5.0 million, mainly due to a $0.4 million decrease in salaries, benefits, and taxes[133] - General and administrative expense decreased by $1.8 million (33%) to $3.5 million, driven by a $1.6 million decrease in salaries, benefits, and taxes and a $0.3 million decrease in depreciation expense[134] Interest and Other Expense, Net Interest income decreased due to the liquidation of marketable securities, while other expense, net, significantly improved, primarily driven by a reduction in loss on disposal of fixed assets - Interest income decreased by $0.3 million to $0.6 million in Q1 2025, with $0.5 million from cash/cash equivalents and $0.1 million from lease receivables[135] - Other expense, net, decreased by $0.2 million to less than $0.1 million in Q1 2025, driven by a $0.2 million decrease in the loss on disposal of fixed assets[135] Income Tax Expense Income tax expense remained low for Q1 2025, primarily related to state taxes and foreign jurisdictions, consistent with the prior year - Income tax expense for Q1 2025 was less than $0.1 million, related to state taxes and taxes on income earned in foreign jurisdictions[136] - Income tax expense for Q1 2024 was $0.1 million, related to taxes on income earned in foreign jurisdictions[136] Liquidity and Capital Resources This section assesses the Company's financial liquidity and capital resources, analyzing cash and working capital positions and cash flow changes from operating, investing, and financing activities - Cash and cash equivalents were $48.6 million as of March 31, 2025, with $3.5 million held by foreign subsidiaries[138] - Working capital was $108.5 million as of March 31, 2025[138] - Net cash used in operating activities increased by $0.5 million to $(1.3) million in Q1 2025, primarily due to increased cash outflows related to accounts payable and accounts receivable[140] - Net cash used in investing activities was $(0.6) million in Q1 2025, a $1.4 million change from $0.9 million provided in Q1 2024, mainly due to decreased proceeds from marketable securities sales[141] - Net cash used in financing activities was $(0.2) million in Q1 2025, a $0.3 million change from $0.1 million provided in Q1 2024, primarily due to increased cash outflows for treasury stock repurchases[142] Other Matters This section discusses other significant financial matters, including the Board's authorization of a share repurchase program and the shares repurchased during the quarter - The Board of Directors authorized a share repurchase program for up to $10 million on December 9, 2024[143] - During the three months ended March 31, 2025, the Company repurchased 30,818 shares of common stock at a cost of $0.2 million[145] ITEM 4. CONTROLS AND PROCEDURES This section confirms that KVH Industries' management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures and internal control over financial reporting as of March 31, 2025, concluding they were effective and that no material changes occurred during the quarter - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were effective as of March 31, 2025[147] - No material changes in internal control over financial reporting were identified during the first quarter of 2025[148] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including details on equity security sales and a list of filed exhibits ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the Company's share repurchase program, authorized for up to $10 million, and reports the actual repurchases made during the three months ended March 31, 2025 - The Board of Directors authorized a share repurchase program for up to $10 million on December 9, 2024[151] Share Repurchase Activity (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | |:---|:---|:---|:---|:---|\n| January 1 - January 31 | — | — | — | $10,000,000 | | February 1 - February 29 | — | — | — | $10,000,000 | | March 1 - March 31 | 30,818 | $5.25 | 30,818 | $9,837,220 | | Total | 30,818 | $5.25 | 30,818 | — | ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and financial information formatted in Inline XBRL - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Specimen common stock certificate, Rule 13a-14(a)/15d-14(a) certifications, Section 1350 certifications, and Inline XBRL financial information[156] SIGNATURE This section contains the required signatures for the filing, certifying the accuracy and completeness of the report