KVH Receives $1.7M in Orders, Awards For TACNAV Systems and New Development.

MIDDLETOWN, R.I.--(BUSINESS WIRE)--July 10, 1998--The U.S. Army has ordered about $772,000 in additional TACNAV(tm) systems from KVH Industries, Inc. (NASDAQ:KVHI), bringing total purchases under an existing contract to nearly $11 million. This latest option exercise represents the first use of the KVH tactical navigation system by the U.S. Army National Guard, a move that is notable because it extends TACNAV employment beyond initial Army application parameters for the first time. The company expects to begin shipping in the 1998 third quarter.

"We are gratified by the continuing demand for our TACNAV systems in such a large market as the U.S. military," said Martin Kits van Heyningen, president and CEO. "The combination of our system's success in the field and its reasonable cost is eliciting a growing consensus within the Army and among congressional representatives that TACNAV offers a navigation solution for a broad range of military needs. We believe the result of this positive response may be a ten-fold increase in TACNAV sales to the U.S. military."

With the aid of $916,000 in Small Business Innovation Research (SBIR) grants that have been awarded to KVH, the company also is developing fiber-optic components with demonstrated capabilities for enhancing TACNAV performance. A next-generation fiber-optic upgrade to TACNAV, ToFOG(tm) Navigator, is advancing through development under a Phase II SBIR grant for $747,000, including options. ToFOG Navigator will offer the benefit of a quantum leap in pointing and targeting accuracy from the basic TACNAV system. In addition, ToFOG Navigator will solve the problem of Global Positioning System (GPS) jamming, which the military has identified as an existing and growing problem with potentially serious consequences for U.S. forces.

A $70,000 Phase I grant from the Navy has just been awarded to KVH to develop a Global Positioning fiber optic gyroscope sensor system that consistently delivers reliable, highly accurate navigation and targeting capabilities in mobile environments. The company's three-axis, non-magnetic system is an integration of GPS, FOGs and accelerometer sensors. The KVH system will increase bandwidth, improve accuracy and ensure the continuous delivery of attitude and azimuth functions even when GPS is blocked, all at a fraction of the cost of traditional inertial systems. Potential applications include military land targeting, training systems, fire direction, merchant vessel navigation, aviation flight control, positive train control and precision agriculture.

The benefits of using fiber optic gyroscopes in military applications were described by Mark Hewish in the April 1998 issue of Jane's International Defense Review: -0-

     The all-solid-state nature of fiber-optic gyros (FOGs) gives them
     several advantages over their mechanical counterparts or ring
     laser gyros in military applications. These include low cost,
     long shelf life, rapid start-up, small size, low weight, rugged
     construction and an inherent immunity to electromagnetic
     interference.

-0-

FOGs also have the potential to provide highly precise, sustainable satellite pointing, and KVH has been awarded a Phase I grant of nearly $100,000 from the Army to develop antennas for high-bandwidth communications on the move. The company is combining its FOG and TracVision(R) II control system to enable sub-0.5 degree pointing for the next generation of X-, K- or Ka-band communications systems for ultra-high data rate transmission.

There are potential applications for a KVH high-accuracy communications system in both the military and commercial sectors. The Global Broadcast System (GBS) used by the military for worldwide, high data rate digital communications requires precision antennas with minimal drift so that vehicles or vessels on the move can maintain satellite contact. As demands increase for mobile high data rate capabilities in business and leisure venues, there are corresponding opportunities for KVH precision antennas in mobile applications.

"SBIR grants are assisting KVH in developing fiber-optic products for a range of military, OEM and commercial applications," said Kits van Heyningen. "We believe this technology will significantly enhance products in both our navigation and communications sectors where demand is escalating for some advanced features that can best be provided through fiber optics."

KVH Industries utilizes its proprietary fiber optic, autocalibration and sensor technologies to produce navigation and mobile satellite communications systems for commercial, military and marine applications. The company has headquarters in Middletown, RI, (USA) with offices in Illinois, Florida and Denmark.

This press release contains certain forward looking statements that involve risks and uncertainties. The actual results realized by the Company could differ materially from the statements made herein. Factors that might cause such differences include, but are not limited to: competing products and technologies; implementation of mobile satellite communications technology; market potential and penetration; reliability of outside vendors, service providers and products; regulatory issues; maintaining appropriate inventory levels; disparities between forecast and realized sales; and design delays and defects. Additional factors are discussed in the company's Annual Report on Form 10K filed with the Securities and Exchange Commission on March 25, 1998. Copies are available from the company's Corporate Communications Department.

CONTACT: KVH Industries, Inc.

Alice Andrews, 401-847-3327