NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Through its global satellite network, Globalstar, Inc. (“Globalstar” or the “Company”) provides Mobile Satellite Services (“MSS”) including voice and data communications services to retail, business and governmental customers as well as wholesale satellite capacity services. The Company’s only reportable segment is its MSS business. Thermo Companies, through commonly controlled affiliates (collectively, “Thermo”), is the principal owner and largest stockholder of Globalstar. The Executive Chairman of the Company's Board of Directors (the "Board") controls Thermo.
Globalstar currently provides communications products and services, wholesale capacity services, terrestrial spectrum and network solutions and government services. The Company provides communications products and services to its subscribers, including data transmissions and voice communications (Commercial IoT, SPOT and Duplex). Wholesale capacity services include satellite network access and related services using the Company's network of in-orbit satellites and ground stations ("gateways") pursuant to the Company's spectrum licenses, which the Company refers to collectively as the Globalstar System. The Company also utilizes the Globalstar System for terrestrial spectrum and network solutions. Government services include strategic partnerships as well as hardware and software designs to develop specific applications operating over the Globalstar System.
Use of Estimates in Preparation of Financial Statements
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. The Company evaluates estimates on an ongoing basis. Certain reclassifications have been made to prior year Consolidated Financial Statements to conform to current year presentation.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Globalstar and all its subsidiaries. All significant intercompany transactions and balances have been eliminated in the consolidation.
In connection with the Updated Services Agreements, the Company concluded that its special purpose entity ("SPE") is a variable interest entity ("VIE") and Globalstar is the primary beneficiary of the entity. Amounts for the Globalstar SPE (as defined herein) are consolidated. Amounts pertaining to the non-controlling interest of the Globalstar SPE are reported as a non-current liability in the Company's consolidated balance sheet. Refer to Note 2: Special Purpose Entity for further discussion.
Reverse Stock Split
On November 7, 2024, the Company's Strategic Review Committee of the Board approved a reverse stock split of the Company's issued and outstanding common stock. The reverse stock split was effectuated on February 10, 2025 at a 1-for-15 ratio. All issued and outstanding common stock, warrants, stock-based compensation awards and per share amounts included in the Consolidated Financial Statements and applicable notes thereto in Part II, Item 8 of this Report and elsewhere in this Report have been retrospectively restated to reflect the change in capital structure for the periods prior to the completion of the reverse stock split, as applicable. Refer to Note 17: Common Stock for further discussion.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. Cash deposited in institutional money market funds, regular interest-bearing depository accounts and non-interest-bearing depository accounts are classified as cash and cash equivalents on the accompanying consolidated balance sheet.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. Cash and cash equivalents consists primarily of highly liquid short-term investments deposited with financial institutions that are of high credit quality.
The Company performs credit evaluations of its customers’ financial condition and records reserves to provide for estimated credit losses. For the year ended December 31, 2025, the Company's wholesale capacity customer under the Updated Services Agreements was responsible for 63% of the Company's revenue and 21% of the Company's total receivable balance. Additionally, one of the Company's Commercial IoT value added resellers was responsible for 23% of the Company's total receivable balance; however, this customer was responsible for less than 10% of the Company's revenue. No other customers were responsible for more than 10% of the Company's revenue or accounts receivable balance.
Accounts Receivable
The Company records trade accounts receivable from its customers when it has a contractual right to receive payment either on demand or on fixed or determinable dates in the future. Receivables are recorded when the right to consideration from the customer becomes unconditional, which is generally upon billing or upon satisfaction of a performance obligation, whichever is earlier. Accounts receivable are uncollateralized, without interest, and consist of receivables from the sale of services and equipment. The Company also may act as an agent to procure goods and perform services under the Updated Services Agreements. Payment is generally due within 45 days of the invoice date for this customer. For service, payment is generally due from subscribers within thirty days of the invoice date and for equipment customers, payment is generally due within thirty to sixty days of the invoice date, or, for some customers, may be made in advance of shipment.
The Company performs ongoing credit evaluations of its customers and impairs receivable balances by recording specific allowances for credit losses based on factors such as customer credit ratings, supportable and reasonable current trends, the length of time the receivables are past due and historical collection experience. The Company believes that historical collection experience is the most reasonable basis for predicting future performance. The estimate of the allowance for subscriber credit losses is computed using aging schedules by type of revenue (service and subscriber equipment), by product (Commercial IoT, SPOT, Duplex and XCOM RAN) and by country. As discussed above, accounts receivable are considered past due in accordance with the contractual terms of the applicable arrangements. The Company applies a loss rate to its portfolio of subscriber trade receivables based on past-due status and records an allowance for credit losses, which represents the expected losses of those trade receivables over their estimated contractual life. The estimated life varies by service and product type. Allowances are generally recorded for all aging categories of outstanding receivables, including those in the current category. Accounts receivable balances that are determined likely to be uncollectible are included in the allowance for credit losses. After attempts to collect a receivable have failed, the receivable is written off against the allowance. The estimate of the allowance for credit losses on wholesale capacity receivables is based primarily on customer payment history and credit rating. The Company believes that the risk of loss is extremely remote for this category of outstanding receivables.
The following is a summary of the activity in the allowance for credit losses (in thousands):
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Balance at beginning of period | $ | 1,504 | | | $ | 2,312 | | | $ | 2,892 | |
| Provision, net of recoveries | (56) | | | (419) | | | 519 | |
| Write-offs and other adjustments | 20 | | | (389) | | | (1,099) | |
| Balance at end of period | $ | 1,468 | | | $ | 1,504 | | | $ | 2,312 | |
Inventory
Inventory consists primarily of purchased products, including subscriber equipment devices, which work on the Company’s network, as well as component parts and other chips used in the manufacture of subscriber equipment devices. Inventory is stated at the lower of cost or net realizable value. Cost is computed using the first-in, first-out (FIFO) method. Inventory write downs are evaluated at the product level and measured as the difference between the cost of inventory and the net realizable value. Write downs are recorded as a "cost of subscriber equipment sales - reduction in the value of inventory" in the Company’s Consolidated Financial Statements. Product sales and returns from the previous 12 months and future demand forecasts are reviewed and excess and obsolete inventory is written off, as applicable.
The Company did not record write downs of inventory for the years ended December 31, 2025 and 2023. The Company wrote down the value of inventory by $0.3 million for the year ended December 31, 2024 primarily resulting from obsolete inventory for component parts that can no longer be used in production of current devices.
The following is a summary of the components of the Company's inventory balance (in thousands):
| | | | | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
| Finished goods | | $ | 5,977 | | | $ | 7,254 | |
Raw materials | | 3,667 | | | 3,785 | |
| Inventory reserve | | (30) | | | (298) | |
| Total | | $ | 9,614 | | | $ | 10,741 | |
Property and Equipment
The Globalstar System includes costs for the design, manufacture, test and launch of a constellation of low earth orbit satellites (the “Space Component”), primary and backup control centers, gateways (the “Ground Component”) and spectrum licenses. Property and equipment is stated at cost, net of accumulated depreciation.
Costs associated with the Company’s Space and Ground Components are capitalized and include direct costs of third party suppliers and contractors, internal personnel as well as equipment and materials. Capitalized costs associated with the Company’s Space Component, Ground Component, and other assets are tracked by fixed asset category and are allocated to each asset as it comes into service. Generally, when a satellite is incorporated into the constellation, the Company begins depreciation on the date the satellite is placed into service, which typically is the point that the satellite reaches its orbital altitude, over its estimated depreciable life. In June 2022, the Company launched an on-ground spare satellite. The costs associated with the construction and launch of this spare satellite were considered placed into service after its successful launch since this satellite was expected to remain as an in-orbit spare and only to be raised to its operational orbit at a future date if needed. Following the anomaly during first quarter 2025, the Company conducted additional testing and opted to switch over to the in-orbit spare in third quarter 2025 to replace an additional satellite at the end of its useful life.
The Company capitalizes interest costs associated with the costs of assets in progress. Capitalized interest is added to the cost of the underlying asset and is amortized over the depreciable life of the asset after it is placed into service. As the Company’s construction in progress increases, the Company capitalizes more interest, resulting in a lower amount of net interest expense recognized under U.S. GAAP.
In general, depreciation is provided using the straight-line method over the estimated useful lives of the respective assets as follows:
Space Component (Second-Generation Satellites) - 15 years from the commencement of service
Ground Component - 7 to 15 years from commencement of service
Software, Facilities & Equipment - 3 to 10 years
Buildings - 25 years
Leasehold Improvements - Shorter of lease term or the estimated useful lives of the improvements
The estimated useful lives of the Company's Space and Ground Components were based on estimated design life, information from the Company's engineering department and overall Company strategy for the use of these assets. The Company evaluates and revises the estimated depreciable lives assigned to property and equipment based on changes in facts and circumstances. When changes are made to estimated useful lives, the remaining carrying amounts are depreciated prospectively over the remaining useful lives.
For assets that are sold or retired, including satellites that are de-orbited and no longer providing services, the estimated cost and accumulated depreciation is removed from property and equipment. See Note 5: Property and Equipment for discussion of the satellite that was disposed of in 2025.
The Company assesses the impairment of property and equipment whenever events or changes in circumstances indicate that the recorded value may not be recoverable. Recoverability of assets is measured by comparing the carrying amounts of the assets to the estimated future undiscounted cash flows, excluding financing costs. If the asset is not recoverable, its carrying value would be adjusted down to fair value and an impairment loss would be recorded. Additionally, the Company routinely
performs profitability analyses to determine if investments in certain products and/or services remain viable. In the event the Company decides not to support a product or service, or determines that an asset is not expected to generate future benefit, the asset may be abandoned and an impairment loss may be recorded on the associated assets.
Leases
The Company has operating and finance leases for facilities and equipment around the world, including corporate offices, satellite control centers, ground control centers, gateways and certain equipment.
Upon inception of a contract, the Company evaluates if the contract, or part of the contract, contains a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases include both a right-of-use asset and a lease liability. The right-of-use asset represents the Company’s right to use the underlying asset in the lease. Certain initial direct costs associated with consummating a lease are included in the initial measurement of the right-of-use asset. The right-of-use asset also includes prepaid lease payments and lease incentives. The lease liability represents the present value of the remaining lease payments discounted using the implicit rate in the lease on the lease commencement date. For leases in which the implicit rate is not readily determinable, an estimated incremental borrowing rate is used, which represents a rate of interest that the Company would pay to borrow on a collateralized basis over a similar term. The Company has elected to combine lease and non-lease components, if applicable.
For operating leases, the Company records lease expense on a straight-line basis over the lease term in either marketing, general and administrative expense or cost of services, depending on the nature of the underlying asset. For finance leases, the Company records the amortization of the right-of-use asset through depreciation, amortization and accretion expense and records the interest expense on the lease liability through interest expense, net, using the effective interest method.
Variable lease payments are payments made to a lessor due to changes in circumstances occurring after the commencement date. Variable lease payments dependent upon an index or rate are included in the measurement of the lease liability; all other variable lease payments are not included in the measurement of the lease liability and recognized when incurred. Variable lease payments excluded from the measurement of the lease liability are uncommon and, when incurred, are immaterial for the Company.
The Company’s existing leases have remaining lease terms of less than 1 year to 49 years. Lease terms include renewal or termination options that the Company is reasonably certain to exercise. For leases with a term of twelve months or less, the Company does not record a right-of-use asset and associated lease liability on its consolidated balance sheet.
The Company reviews the carrying value of its right-of-use assets for impairment whenever events or changes in circumstances indicate that the recorded value may not be recoverable. Recoverability of assets is measured by comparing the carrying amounts of the assets to the estimated future undiscounted cash flows, excluding financing costs. If a right-of-use asset is not recoverable, its carrying value would be adjusted down to fair value and an impairment loss would be recorded.
Derivative Instruments
Upon inception of a contract, the Company reviews the features within the contract to evaluate if they contain an embedded derivative. The Company has financing arrangements that are hybrid instruments that contain embedded derivative features. If the embedded derivative requires bifurcation from the host, the derivative instrument is recognized as either an asset or a liability in the consolidated balance sheet and is measured at fair value with gains or losses recognized in earnings. The Company determines the fair value of derivative instruments based on available market data and assumptions developed by management using appropriate valuation models.
Deferred Financing Costs
Deferred financing costs are those costs directly incurred in issuing long-term debt or equity financing. Costs associated with obtaining long-term debt are amortized as additional interest expense over the expected term of the corresponding instrument and are recorded on the Company's consolidated balance sheet as a reduction in the carrying amount of the related debt liability. The Company classifies deferred financing costs consistent with the classification of the related debt outstanding at the end of the reporting period.
Fair Value of Financial Instruments
The carrying amount of the Company's long-term debt approximates its fair value as the debt was recently issued and current market rates for instruments with similar terms, credit characteristics, and remaining maturities are not significantly different from the contractual rates of the Company's outstanding debt. When the Company makes draws on the 2023 Funding Agreement, each draw is recorded at fair value based on market rates at the time of the draw.
Litigation, Commitments and Contingencies
The Company is subject to various claims and lawsuits that arise in the ordinary course of business. Estimating liabilities and costs associated with these matters requires judgment and assessment based on professional knowledge and experience of our management and legal counsel. When a loss is considered probable and reasonably estimable, a liability is recorded for the Company's best estimate. If there is a range of loss, the Company will record a reserve based on the low end of the range, unless facts and circumstances can support a different point in the range. When a loss is probable, but not reasonably estimable, disclosure is provided, as considered necessary. Reserves for potential claims or lawsuits may be relieved if the loss is no longer considered probable.
Gain/Loss on Extinguishment of Debt
Gain or loss on extinguishment of debt generally is recorded upon an extinguishment of a debt instrument or early payment of debt. Gain or loss on extinguishment of debt is calculated as the difference between the reacquisition price and net carrying amount of the debt, which includes unamortized debt financing costs, debt discount and any derivative instruments, and is recorded as an extinguishment gain or loss in the Company’s consolidated statement of operations.
Revenue Recognition and Deferred Revenue
Revenue consists primarily of revenue generated from providing satellite network access and related services utilizing the Globalstar System, satellite voice and data service revenue, revenue generated from the sale of fixed and mobile devices, and revenue from providing engineering and other communication services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. Each type of revenue has a separate performance obligation with distinct deliverables and is therefore accounted for discretely. Revenue is measured based on the consideration specified in a contract with a customer, adjusted for credits and discounts, as applicable, and is recognized when the Company satisfies a performance obligation by transferring control over a product or service to a customer.
Generally, service revenue is recognized over a period of time and revenue from the sale of subscriber equipment is recognized at a point in time. The recognition of revenue for service is over time as the customer simultaneously receives and consumes the benefits of the Company’s performance over the contract term. The recognition of revenue for subscriber equipment is at a point in time as the risks and rewards of ownership of the hardware transfer to the customer generally upon shipment, which is when legal title of the product transfers to the customer, among other things (as discussed further below).
The Company does not record sales taxes, telecommunication taxes or other governmental fees collected from customers in revenue. The Company excludes these taxes from the measurement of contract transaction prices.
The Company receives payment from customers in accordance with billing statements or invoices for customer contracts; these payments may be in advance or arrears of services provided to the customer by the Company. Customer payments received in advance of the corresponding service period are recorded as deferred revenue.
Upon activation of a Globalstar device, subscribers are generally charged an activation fee, which is recognized over the term of the expected customer life. Credits granted to customers are expensed or charged against revenue or accounts receivable over the remaining term of the contract.
The Company issued warrants to the Customer (the "Warrants") to purchase shares of Globalstar common stock which are exercisable in accordance with the amended terms in the Updated Services Agreements; the Warrants were recorded at the estimated fair value of the consideration granted based on a Black-Scholes pricing model. The fair value of the Warrants is noncash consideration payable to a customer which represents a reduction of the transaction price and, therefore, of revenue. As of December 31, 2025 and 2024, this contract asset was $40.9 million and $43.0 million, respectively, and is netted against the associated contract liability, which is recorded in short-term and long-term deferred revenue on the Company's consolidated balance sheet. The value of the contract asset is amortized as a reduction to revenue over the period in which the Company commences its performance obligations through the estimated completion of the contract term, consistent with the period in which the customer benefits from the services provided. For the year ended December 31, 2025 and 2024, the Company reduced revenue by $2.1 million and $2.4 million, respectively, associated with the amortization of the fair value of the noncash consideration.
Estimates related to earned but unbilled service revenue are calculated primarily using current subscriber data, including plan subscriptions and usage between the end of the billing cycle and the end of the period, or in accordance with the terms of the customer contract for satellite network access services. The recognition of service revenue related to amounts allocated to performance obligations that were satisfied (or partially satisfied) in a previous period is not material to the Company’s financial statements. Amounts related to earned but unbilled revenue from the sale of subscriber equipment are recognized if hardware is shipped prior to the invoice being generated. This situation may result from multi-deliverable contracts, whereby equipment and service revenue are bundled and billed over time to a single customer.
Provisions for estimated future warranty costs, returns and rebates are recorded as a cost of sale, or a reduction to revenue, as applicable. These costs are based on historical trends and the provision is reviewed regularly and periodically adjusted to reflect changes in estimates.
Certain contracts with customers may contain a financing component. Under ASC 606, an entity should adjust the promised amount of the consideration for the effects of time value of money if the timing of the payments agreed upon by the parties to the contract provides the customer or the entity with a significant benefit of financing for the transfer of goods or services to the customer. For certain payments associated with services provided under the Updated Services Agreements, the length of time between receipt of payment by the Customer and transfer of services by the Company was greater than one year. Accordingly, certain payments made by the Customer included a significant financing component. The Company accreted interest expense using the effective interest rate method over the period in which these advance payments were outstanding. The rate in which interest is computed is based on rates implicit in the Updated Services Agreements. For the Company's subscriber contracts, transactions with a significant financing component are infrequent as the time between cash collection and performance is generally less than one year.
The following describes the principal activities from which the Company generates its revenue.
Wholesale Capacity Service Revenue. The Company provides wholesale capacity services. The Company allocates the transaction price under the Updated Services Agreements to each performance obligation generally in proportion to their relative stand-alone selling prices. Revenue is recognized when the performance obligations are performed, the timing of which may involve complex judgments by management. For certain performance obligations, the Company recognizes revenue using the percentage of completion method, measured as the percentage of costs incurred to total estimated costs for such performance obligation. Although the Updated Services Agreements have no expiration date, the Company estimated its contract term based on the useful life of its existing satellite network and the expected useful life of the new satellite network under construction.
Commercial IoT Service Revenue. The Company sells Commercial IoT services as monthly or annual plans and recognizes revenue ratably over the service term or as service is used, beginning when the service is activated by the customer.
SPOT Service Revenue. The Company sells SPOT services as monthly or annual plans and recognizes revenue on a straight-line basis over the service term, beginning when the service is activated by the customer.
Duplex Service Revenue. The Company recognizes revenue for monthly access fees in the period services are rendered. The Company offers annual plans whereby a customer prepays for a predetermined amount of minutes and data. In these cases, revenue is recognized consistent with a customer's expected pattern of usage based on historical experience because the Company believes that this method most accurately depicts the satisfaction of the Company's obligation to the customer. This usage pattern is typically seasonal and highest in the second and third calendar quarters of the year. The Company also offers annual plans whereby the customer is charged an annual fee to access the Company’s system with an unlimited amount of usage. Annual fees for unlimited plans are recognized on a straight-line basis over the contract term.
Equipment Revenue. Equipment revenue represents primarily subscriber device sales. The Company recognizes revenue upon shipment provided control has transferred to the customer. Indicators of transfer of control include, but are not limited to; 1) the Company’s right to payment, 2) the customer has legal title of the equipment, 3) the Company has transferred physical possession of the equipment to the customer or carrier, and 4) the customer has significant risks and rewards of ownership of the equipment. The Company sells equipment designed to work on its network through various channels, including through partners as well as direct to consumers or other businesses by its global sales team and through its e-commerce website. The sales channel depends primarily on the type of equipment and geographic region. Promotional rebates are offered from time to time. A reduction to revenue is recorded to reflect the lower transaction price based on an estimate of the customer take rate at the time of the sale using primarily historical data. This estimate is adjusted periodically to reflect actual rebates given to the Company’s customers. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of subscriber equipment sales.
Government and Other Service Revenue. Government and other service revenue includes revenue generated primarily from terrestrial spectrum and network solutions as well as certain governmental and engineering service contracts. The revenue associated with these engineering services is generally recorded over time as the services are rendered, and the Company's obligation to the customer is satisfied.
Multiple-Element Arrangement Contracts. At times, the Company will sell subscriber equipment through multiple-element arrangement contracts with services. When the Company sells subscriber equipment and services in bundled arrangements and determines that it has separate performance obligations, the Company allocates the bundled contract price among the various performance obligations based on relative stand-alone selling prices at contract inception of the distinct goods or services underlying each performance obligation and recognizes revenue when, or as, each performance obligation is satisfied.
Stock-Based Compensation
The Company recognizes compensation expense in the financial statements for both employee and non-employee share-based awards based on the grant date fair value of those awards and accounts for forfeitures as they occur. Restricted stock awards and units are valued using the stock price on the grant date. Market-based awards are valued using a Monte-Carlo simulation model on the grant date.
Compensation cost associated with awards with market-based vesting conditions is recognized on a straight-line basis over the requisite service period for each stock price target within the grant, which is the lesser of the derived service period or the explicit service period if one is present. If the market condition is satisfied prior to the end of the requisite service period, the Company will accelerate all remaining expense to be recognized. Compensation cost associated with share-based awards with a performance condition that affects vesting is recorded if and when the performance condition is probable of achievement.
Foreign Currency
The functional currency of the Company’s foreign consolidated subsidiaries is generally their local currency, except in certain scenarios, including when the subsidiary operates in a hyperinflationary economy, such as Argentina. Assets and liabilities of its foreign subsidiaries are translated into United States dollars based on exchange rates at the end of the reporting period. Income and expense items are translated at the average exchange rates prevailing during the reporting period. Translation adjustments are accumulated in a separate component of stockholders’ equity. For 2025, 2024 and 2023, the foreign currency translation adjustments were net losses of $10.2 million, net gains of $8.4 million and net losses of $4.2 million, respectively. Foreign currency transaction gains/losses were net gains of $15.7 million, net losses of $16.6 million and net gains of $4.9 million for each of 2025, 2024, and 2023, respectively.
Asset Retirement Obligation
Liabilities arising from legal obligations associated with the retirement of the Company's gateway long-lived assets are measured at fair value and recorded as a liability. As of December 31, 2025 and 2024, the Company had accrued approximately $3.1 million and $2.9 million, respectively, for asset retirement obligations. During 2025, the Company continued the expansion of its gateway footprint in connection with the Updated Service Agreements, which resulted in the commencement of new and expanded leases and the installation of new equipment; as a result of this expansion, the Company established a new asset retirement obligation in Spain increasing the liability by $0.1 million during 2025. There were no significant settlements during 2025. The Company believes this estimate will be sufficient to satisfy the Company’s obligation under site leases to remove its gateway equipment and restore the lease sites to their original condition.
Warranty Expense
Warranty terms extend from 90 days on equipment accessories to one year for fixed and mobile user terminals. A provision for estimated future warranty costs is recorded as cost of sales when products are shipped. Warranty costs are based on historical trends in warranty charges as a percentage of gross product shipments.
Research and Development Expenses
Research and development costs were $6.1 million, $6.5 million and $1.4 million for 2025, 2024 and 2023, respectively. During 2025 and 2024, research and development costs were elevated resulting from costs incurred pursuant to the SSA under the License Agreement. Research and development costs are expensed as incurred as cost of services and include primarily the cost of new product development, chip set design and other engineering work.
Income Taxes
The Company is taxed as a C corporation for U.S. tax purposes. The Company recognizes deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, operating losses and tax credit carryforwards. The Company measures deferred tax assets and liabilities using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognizes the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date; however, as the Company has a full valuation allowance on its deferred tax assets, there is no impact to the consolidated statements of operations and balance sheets.
The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carry-back year(s) if carry-back is permitted under applicable tax law; and (iv) tax planning strategies.
Comprehensive Income (Loss)
All components of comprehensive income (loss), including the foreign currency translation adjustment, are reported in the financial statements in the period in which they are recognized. Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. For each of the years ended December 31, 2025 and 2024, the change in "Accumulated other comprehensive income" resulted from foreign currency translation adjustments; no amounts were reclassified out of "Accumulated other comprehensive income" during these periods.
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Pursuant to the Company's 2006 Equity Incentive Plan, as amended and restated, certain individuals with performance-based restricted stock units may elect to defer vested shares. As these deferred performance share units are fully vested, the shares are included in basic earnings per share as the issuance of the shares are no longer subject to a contingency. In periods of net income, the numerator used to calculate diluted EPS includes the effect of dividends attributable to preferred shareholders. Common stock equivalents are included in the calculation of diluted earnings per share only when the effect of their inclusion would be dilutive. Generally, for all other potentially dilutive common shares, the effect is calculated using the treasury stock method.
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair values of identifiable assets and liabilities acquired. Goodwill is not amortized in accordance with the requirements of ASC 350. Goodwill is required to be allocated amongst reporting units and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. All of the Company's goodwill is assigned to Globalstar's MSS business, its only reportable segment.
Goodwill is tested for impairment on an annual basis and whenever events or circumstances indicate that the asset may be impaired. The Company completed its annual goodwill impairment test on November 30, 2025 and determined there was no impairment as of that date. Additionally, the Company is not aware of any triggering events. The Company's goodwill impairment test is prepared using a qualitative assessment and, if necessary, a quantitative goodwill impairment test. The Company considers significant unfavorable industry or economic trends as factors in deciding when to perform an impairment test. If the qualitative assessment indicates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to measure and record an impairment loss. If a goodwill impairment test is necessary, the fair value of the reporting unit, which is determined using an income approach based on the present value of discounted cash flows, is compared to its carrying value, which includes goodwill. If the carrying value of the reporting unit exceeds its fair value, the difference is recognized as an impairment loss.
Intangible and Other Assets
Intangible Assets Not Subject to Amortization
A significant portion of the Company's intangible assets are licenses that provide the Company the exclusive right to provide MSS services over the Globalstar System or to utilize designated radio frequency spectrum to provide terrestrial wireless communication services in a particular region of the world. While licenses are issued for only a fixed time, such licenses are subject to renewal by the Federal Communications Commission ("FCC") or equivalent international regulatory authorities. These license renewals are expected to occur routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of its wireless licenses. As a result, the Company treats the wireless licenses as an indefinite-lived intangible asset. The Company re-evaluates the useful life determination for wireless licenses annually, or more frequently if needed, to determine whether events and circumstances continue to support an indefinite useful life. The Company assesses these intangible assets for impairment annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. In assessing whether it is more likely than not that such an asset is impaired, the Company assesses relevant events and circumstances that could affect the significant inputs used to determine the fair value of the asset. If the Company determines that an impairment exists, any related loss is estimated based on fair values.
Intangible Assets Subject to Amortization
The Company's intangible assets that do not have indefinite lives are amortized over their estimated useful lives. For information related to each major class of intangible assets, including accumulated amortization and estimated average useful lives, see Note 6: Intangible and Other Assets to the Consolidated Financials. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an indicator is present, the Company would measure recoverability by comparing the carrying amount to the future undiscounted cash flows the asset is expected to generate. If the asset is not recoverable, the undiscounted cash flows do not exceed the carrying amount and the carrying amount would be adjusted down to its fair value.
Software Costs to be Leased, Sold or Marketed
In connection with the research and development of new software products and adding functionality to existing software products, the Company capitalizes costs, including external vendor costs and internal labor costs, in accordance with ASC 985-20. Costs incurred prior to technological feasibility are expensed as research and development expense. The Company's unamortized capitalized software costs associated with subscriber device product development and XCOM RAN product development totaled $11.3 million and $7.4 million as of as of December 31, 2025 and 2024, respectively, and are recorded in intangibles and other assets. These costs will be placed into service once the products are available for sale or when the new functionality is available for use by customers.
Capitalized software costs are amortized over the estimated economic life of the related product, which generally ranges from 5 to 10 years, using the greater of (i) the ratio of current period revenues to the total of current and anticipated future revenues for the product or (ii) the straight-line method. The Company evaluates capitalized software costs for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the years ended December 31, 2025, 2024 and 2023, amortization was $3.6 million, $2.9 million and $0.7 million. Refer to Note 6: Intangible and Other Assets for further information about the balances associated with in-service developed technology assets.
Assets Recognized from the Costs to Obtain and Fulfill Contracts
The Company capitalizes incremental costs to obtain and/or fulfill a contract to the extent it expects to recover them. If a contract terminates prior to the end of its expected life, the remaining capitalized contract costs associated with it becomes impaired and the amount is expensed.
For subscriber-driven revenue, total contract acquisition costs were $1.0 million and $0.9 million as of December 31, 2025 and 2024, respectively, and are recorded in "Intangible and other assets" on the Company's consolidated balance sheet. These costs are amortized to marketing, general and administrative expenses over the estimated completion of the contract term, which is three years and considers anticipated contract renewals. For the years ended December 31, 2025, 2024 and 2023, the amount of amortization related to contract acquisition costs was $0.6 million, $0.6 million and $0.7 million, respectively.
For wholesale capacity services, the Company capitalizes certain costs incurred by the Company prior to the customer benefiting from the service. Total costs to fulfill the customer contract associated with the Updated Services Agreements were $5.1 million and $5.3 million as of December 31, 2025 and 2024, respectively, and are recorded in "Intangible and other assets" on the Company's consolidated balance sheet. These costs are amortized to cost of services and marketing, general and administrative expenses over the estimated completion of the contract term, consistent with the period in which the customer benefits from the services provided. For the years ended December 31, 2025, 2024 and 2023, the amount of amortization related to costs to fulfill a contract was $0.3 million, $0.3 million and $0.4 million, respectively.
Advertising Expenses
Advertising costs were $3.6 million, $3.0 million and $2.8 million for 2025, 2024, and 2023, respectively. These costs are expensed as incurred as marketing, general and administrative expenses.
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures. This ASU requires public companies to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items. The amendments should be applied prospectively; however, retrospective application is also permitted. The Company plans to adopt this standard when it becomes effective on January 1, 2027. The Company is evaluating the impact this ASU may have on its financial statement disclosures.
In September 2025, the FASB issued ASU 2025-07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Non-cash Consideration from a Customer in a Revenue Contract." This ASU exclude from the scope of derivative accounting certain contracts with underlyings that are based on the operations or activities of one of the parties to the contract. This ASU also clarifies that an entity receiving share-based noncash consideration from a customer that is consideration for the transfer of goods or services in a revenue contract is required to apply the guidance on noncash consideration in ASC 606. The standard is effective for annual and interim reporting periods beginning after December 16, 2026, with early adoption permitted. The standard may be applied
using a prospective or modified retrospective transition approach. The Company is evaluating the impact this ASU may have on accounting for embedded derivatives and the related financial statement disclosures.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates qualitative and quantitative disclosures for the rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. The Company adopted this standard prospectively when it became effective on January 1, 2025. The adoption of this standard increased the tax disclosures in this Report.
2. SPECIAL PURPOSE ENTITY
The Company provides wholesale capacity services over its mobile satellite system (the "Services") to its customer, Apple Inc. (the "Customer"), pursuant to a service agreement and certain related ancillary agreements (collectively, the “Service Agreements”) for the Phase 1 Service Period and Phase 2 Service Period (as defined below). The Service Agreements generally require Globalstar to allocate network capacity to support the Services, which launched in November 2022.
Effective November 5, 2024, ("the Closing Date") the Company and the Customer amended the Service Agreements and entered into other related agreements (the Service Agreements as amended, collectively, the “Updated Services Agreements”) for Globalstar to deliver expanded services to the Customer over a new MSS network, including a new satellite constellation, expanded ground infrastructure, and increased global MSS licensing (the “Extended MSS Network”) for the Services provided over the Extended MSS Network. The Extended MSS Network will be (i) owned by Globalstar Licensee, LLC, together with its subsidiaries (collectively, the “Globalstar SPE”), a VIE, and (ii) operated by the Company. The Customer (i) has prepaid, and is required, subject to certain conditions, to continue to prepay for, certain services to be delivered by the Company to the Customer who will utilize the Extended MSS Network under the Updated Services Agreements and (ii) is a passive equity holder in Globalstar SPE.
The Company's allocated capacity supports the following phases of the Services: 1) current Services provided over the Company's existing network of in-orbit satellites and ground stations ("gateways") pursuant to its spectrum licenses (the "Globalstar System") ("Phase 1 Service Period"), 2) future Services provided over the new replacement satellites ("Phase 2 Service Period"), of which such Services are expected to commence following the anticipated launch of the first set of such replacement satellites in 2026 (refer to Note 10: Commitments and Contingencies for further discussion), and 3) future Services provided over the Extended MSS Network.
The table below includes the assets of the Globalstar SPE as of December 31, 2025 (in thousands):
| | | | | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
Assets | | | | |
Cash and cash equivalents | | $ | 720 | | | $ | 45,776 | |
Property and equipment, net | | 653,668 | | | 58,917 | |
| Prepaid network costs | | 158,547 | | | 289,639 | |
Intangibles and other asset, net | | 11,684 | | | 11,674 | |
Total Assets | | $ | 824,619 | | | $ | 406,006 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Customer Class B Units
On the Closing Date, the Customer purchased 400,000 Class B Units in the Globalstar SPE (the “Customer Class B Units”) for $400 million, representing a 20% equity interest in the Globalstar SPE. The Globalstar SPE holds and administers, or will administer in the future, certain spectrum licenses, satellites, ground stations and other network assets for use and operation by the Company and to enable and provide services to the Customer pursuant to the Updated Services Agreements. The Globalstar SPE does not have commercial operations.
The Company holds 1,600,000 Class A Units in the Globalstar SPE, representing an 80% equity ownership in the Globalstar SPE. The Company's 80% ownership in the Globalstar SPE exposes it to residual profit or loss of the Globalstar SPE and
Globalstar will absorb any expense variability of the Globalstar SPE. The Company has power over the most significant activity of the Globalstar SPE and is exposed to losses and benefits of the Globalstar SPE through its equity interest. The Company assessed the accounting considerations pursuant to ASC 810: Consolidation, and concluded that it is the primary beneficiary of the Globalstar SPE and consolidated the Globalstar SPE into the financial statements appearing in this Report. Based on the redemption provision and other characteristics of the arrangement, the Company recorded the total equity contributions from the Customer of $400 million as equity on the Globalstar SPE financial statements and a non-current liability on the Company's consolidated balance sheet. The initial minority investment in the Globalstar SPE included $224 million of in-kind contributions from the Customer and $176 million in cash contributions. The in-kind contributions included long-lead items, satellite construction in progress assets, ground network construction in progress assets, and intangible licensing work in progress assets.
Extended MSS Network Prepayments and 2024 Debt Repayment
The Updated Services Agreements provide, among other things, that the Customer will make cash payments to the Company for capital expenditures in connection with the Extended MSS Network. The payments required by the Updated Services Agreements consist of: (1) an infrastructure prepayment (the “Infrastructure Prepayment”) of up to $1.1 billion, which is to be funded quarterly (as needed) over the construction period of the satellites to be used in the Extended MSS Network, the proceeds of which the Globalstar SPE will use, together with the proceeds from the sale of the Customer Class B Units to pay amounts due for the Extended MSS Network (including, but not limited to, construction and launch costs) and (2) the amount that was necessary for the Company to fully retire on the Closing Date its 2023 13% Notes (the "2024 Debt Repayment"), as described further herein. The terms of the Infrastructure Prepayment and the 2024 Debt Repayment are contained within one agreement (the “2024 Prepayment Agreement”). The Company expects to fully payoff amounts owed under the 2024 Prepayment Agreement and to redeem the Customer Class B Units within the design useful life of the new satellites. The Company expects that such amounts payable to the Customer will be fully offset by amounts payable by the Customer under the Updated Services Agreements.
Infrastructure Prepayment
During 2025 and 2024, the Company received $430.6 million, including $131.0 million during the fourth quarter of 2025, and $278.0 million, respectively, from the Customer pursuant to the Infrastructure Prepayment. The Company recorded these prepayments as deferred revenue as they represent the Company’s obligation to provide future services to the Customer. The deferred revenue associated with the Infrastructure Prepayment will be earned as revenue as services are performed. $225.0 million of the Infrastructure Prepayment accrues fees payable to the Customer that will be reduced or eliminated entirely if the Company meets certain defined milestones associated with the completion of the Extended MSS Network. The remainder of the Infrastructure Prepayment does not accrue fees.
2024 Debt Repayment
On the Closing Date, the Company received $235 million from the Customer pursuant to the 2024 Debt Repayment, representing the amount necessary to retire the Company's outstanding 2023 13% Notes.
Service Fees
As consideration for the satellite services provided for in the Updated Services Agreements, the incremental service fees payable by the Customer to the Company include fees tied to the cost of the Extended MSS Network, fees for providing additional related services, fees tied to expenses incurred by the Company for the provision of such services, and performance bonuses. Payment of a portion of these fees is subject to the satisfaction of certain licensing, service levels and milestone achievements. Additionally, the Updated Services Agreements also provide for annual service fees of $30 million to be accelerated. Such accelerated payments began in the first quarter of 2025.
3. REVENUE
Disaggregation of Revenue
The following table discloses revenue disaggregated by type of product and service (in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Service revenue: | | | | | |
| Wholesale capacity services | $ | 172,731 | | | $ | 145,299 | | | $ | 109,067 | |
| Subscriber services | | | | | |
| Commercial IoT | 27,263 | | | 26,245 | | | 22,867 | |
| SPOT | 37,311 | | | 41,140 | | | 44,184 | |
| Duplex | 15,238 | | | 20,156 | | | 25,932 | |
Government and other services | 4,766 | | | 4,849 | | | 2,146 | |
| Total service revenue | 257,309 | | | 237,689 | | | 204,196 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Total subscriber equipment sales | 15,677 | | | 12,660 | | | 19,612 | |
| | | | | |
| Total revenue | $ | 272,986 | | | $ | 250,349 | | | $ | 223,808 | |
| | | | | |
"Wholesale capacity services" revenue in the above table includes revenue associated with the Updated Services Agreements and Service Agreements, as applicable. As consideration for the services provided by Globalstar, payments include a fixed service fee, payments relating to certain service-related operating expenses and capital expenditures, additional fees related to expanded services, and potential bonus payments subject to satisfaction of certain licensing, service and other related criteria. For a discussion of the Updated Services Agreements, see Note 2: Special Purpose Entity.
"Government and other services" revenue in the table above includes revenue associated with engineering and other communication services, such as terrestrial spectrum and network services, government service contracts and teleport lease arrangements. The Company's largest network services agreement is with Parsons Corporation, a leading technology provider in the national security and global infrastructure markets, to utilize the Company's satellite network for a mission critical service for government applications.
The Company attributes equipment revenue to various countries based on the location where equipment is sold. Service revenue is generally attributed to the various countries based on the Globalstar entity that holds the customer contract. Revenue does not reflect our intercompany transactions; such intercompany transactions reflect globally accepted transfer pricing principles and align profits with the business operations and functions of the various legal entities in our international business.
The following table discloses revenue disaggregated by geographical market (in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Service revenue: | | | | | |
| United States | $ | 228,661 | | | $ | 206,402 | | | $ | 170,621 | |
| Canada | 10,430 | | | 12,873 | | | 16,058 | |
| Europe | 7,041 | | | 6,529 | | | 6,856 | |
| Central and South America | 10,588 | | | 11,329 | | | 9,978 | |
| Others | 589 | | | 556 | | | 683 | |
| Total service revenue | 257,309 | | | 237,689 | | | 204,196 | |
| | | | | |
| Subscriber equipment sales: | | | | | |
| United States | $ | 9,479 | | | $ | 6,654 | | | $ | 8,599 | |
| Canada | 1,119 | | | 1,077 | | | 5,153 | |
| Europe | 3,347 | | | 3,292 | | | 2,985 | |
| Central and South America | 1,730 | | | 1,633 | | | 2,863 | |
| Others | 2 | | | 4 | | | 12 | |
| Total subscriber equipment sales | 15,677 | | | 12,660 | | | 19,612 | |
| | | | | |
| Total revenue | $ | 272,986 | | | $ | 250,349 | | | $ | 223,808 | |
Accounts Receivable
The Company records trade accounts receivable from its customers when it has a contractual right to receive payment either on demand or on fixed or determinable dates in the future. The Company's receivable balances by type and classification are presented in the table below, net of allowance for credit losses, and may include amounts related to earned but unbilled receivables (in thousands):
| | | | | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
| Accounts receivable, net of allowance for credit losses | | | | |
Subscriber and other accounts receivable | | $ | 15,070 | | | $ | 14,829 | |
| Wholesale capacity accounts receivable | | 4,906 | | | 12,123 | |
Total accounts receivable, net of allowance for credit losses | | $ | 19,976 | | | $ | 26,952 | |
The Company has entered into a satellite procurement agreement for the replacement satellites and two launch services agreements to launch the replacement satellites to support the Phase 2 Service Period. The replacement satellites purchased under the satellite procurement agreement are intended to replace the Company's HIBLEO-4 U.S.-licensed system. Pursuant to the Service Agreements, payments are expected to be made to the Company by the Customer on a straight-line basis over the design life of the replacement satellites beginning with the initiation of service for the Phase 2 Service Period. Based on construction in progress recorded through December 31, 2025, the Company expects to bill $316.7 million associated with the Phase 2 Service Period. Refer to Note 10: Commitments and Contingencies for additional information regarding these agreements.
Contract Liabilities
Contract liabilities, which are included in deferred revenue on the Company’s consolidated balance sheet, represent the Company’s obligation to transfer service or equipment to a customer from whom the Company has previously received consideration. The Company's contract liabilities by type and classification are presented in the table below (in thousands):
| | | | | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
| Short-term contract liabilities | | | | |
Subscriber and other contract liabilities | | $ | 17,091 | | | $ | 19,710 | |
Wholesale capacity contract liabilities, net of contract asset | | 44,929 | | | 41,491 | |
| Total short-term contract liabilities | | $ | 62,020 | | | $ | 61,201 | |
| Long-term contract liabilities | | | | |
Subscriber and other contract liabilities | | $ | 1,296 | | | $ | 1,431 | |
| Wholesale capacity contract liabilities, net of contract asset | | 805,634 | | | 286,740 | |
| Total long-term contract liabilities | | $ | 806,930 | | | $ | 288,171 | |
| Total contract liabilities | | $ | 868,950 | | | $ | 349,372 | |
For subscriber and other contract liabilities, the amount of revenue recognized during the years ended December 31, 2025 and 2024 from performance obligations included in the total contract liability balance at the beginning of these periods was $15.6 million and $17.4 million, respectively. For wholesale capacity contract liabilities, the amount of revenue recognized during the years ended December 31, 2025 and 2024 from performance obligations included in the total contract liability balance at the beginning of these periods was $38.5 million and $34.1 million, respectively.
The duration of the Company’s contracts with subscribers is generally one year or less. The Updated Services Agreements have no expiration date; therefore, the related contract liabilities may be recognized as revenue over various periods according to when the related performance obligation is satisfied.
The components of wholesale capacity contract liabilities are presented in the table below (in thousands):
| | | | | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
| Wholesale capacity contract liabilities, net: | | | | |
Additional consideration associated with the 2021 and 2023 Funding Agreements (1) | | $ | 6,920 | | | $ | 12,247 | |
Advanced payments for services expected to be performed with the ground spare satellite launched in June 2022 | | 20,155 | | | 21,914 | |
| Advanced payments contractually owed for services expected to be performed with the replacement satellite constellation prior to the Phase 2 Service Period | | 3,924 | | | 8,950 | |
Advanced payments for the quarterly access fee, service-related operating and capital expenditures and other services
| | 37,682 | | | 27,664 | |
| Advanced payments under the Infrastructure Prepayment (See Note 2: Special Purpose Entity) | | 708,593 | | | 278,043 | |
Additional consideration associated with the Updated Services Agreements (2) | | 53,504 | | | 7,288 | |
Other advanced payments associated with future performance obligations (3) | | 60,674 | | | 15,795 | |
Contract asset (4) | | (40,889) | | | (43,670) | |
| Wholesale capacity contract liabilities, net | | $ | 850,563 | | | $ | 328,231 | |
(1)Includes additional consideration associated with the below-market interest rates within the 2021 Funding Agreement and 2023 Funding Agreement (in each case, as defined below). This consideration will be recognized over the estimated Phase 1 and Phase 2 Service Periods.
(2)Includes additional consideration representing the implied economic benefit to Globalstar for receiving payments in advance of service. This consideration primarily includes an estimate of the significant financing component totaling $49.2 million related primarily to the Infrastructure Prepayment. The Company expects to recognize this consideration over the estimated Extended MSS Network service period.
(3)Includes primarily: a) advanced service payments received during 2025 totaling $45.0 million based on the timing of payments from the Customer pursuant to the Updated Services Agreements, which provide for a portion of annual service fees to be accelerated and b) $13.3 million of make whole fees paid by Customer for the extinguishment of the 2023 13% Notes in 2024. These advanced payments will be recognized during the Extended MSS Network service period.
(4)Primarily includes warrants with an initial fair value at the time of issuance of $48.3 million which was recorded in equity with an offset to a contract asset on the Company's consolidated balance sheets. The fair value of the warrants is recorded as a reduction to revenue over time and totaled $40.9 million as of December 31, 2025.
4. LEASES
As discussed in Note 1: Summary of Significant Accounting Policies, the Company has operating and finance leases for facilities and equipment around the world, including corporate offices, satellite control centers, ground control centers, gateways and certain equipment. Overall, finance leases are not significant to the Company and are not included in the disclosures below.
The following tables disclose the components of the Company’s operating leases (in thousands):
| | | | | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
| Operating leases: | | | | |
| Right-of-use asset, net | | $ | 66,698 | | | $ | 31,835 | |
| | | | |
| Short-term lease liability (recorded in accrued expenses) | | 7,998 | | | 4,251 | |
| Long-term lease liability | | 54,549 | | | 26,256 | |
| Total operating lease liabilities | | $ | 62,547 | | | $ | 30,507 | |
Lease Cost
The components of lease cost are reflected in the table below (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| | | | | | |
Operating lease cost (1) | | $ | 8,385 | | | $ | 6,360 | | | $ | 5,576 | |
| Short-term lease cost | | 859 | | | 315 | | | 862 | |
| Total lease cost | | $ | 9,244 | | | $ | 6,675 | | | $ | 6,438 | |
(1)Includes sublease income.
Weighted-Average Remaining Lease Term and Discount Rate
The following table discloses the weighted-average remaining lease term and discount rate for operating leases:
| | | | | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
| | | | |
| | | | |
| | | | |
| Weighted-average lease term | | 15.7 years | | 8.3 years |
| | | | |
| | | | |
| | | | |
| Weighted-average discount rate | | 8.3 | % | | 8.7 | % |
Supplemental Cash Flow Information
The below table discloses supplemental cash flow information for operating leases (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | |
| Operating cash flows for operating leases | | $ | 8,888 | | | $ | 6,388 | | | $ | 5,853 | |
Maturity Analysis
The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of December 31, 2025 (in thousands):
| | | | | | | | | | |
| | | | |
| | | | |
| 2026 | | $ | 12,776 | | | |
| 2027 | | 9,057 | | | |
| 2028 | | 8,526 | | | |
| 2029 | | 6,422 | | | |
| 2030 | | 6,026 | | | |
| Thereafter | | 67,319 | | | |
| Total lease payments | | $ | 110,126 | | | |
| Imputed interest | | (47,579) | | | |
| Discounted lease liability | | $ | 62,547 | | | |
In connection with the Extended MSS Network, the Company will likely enter into additional operating leases in the future, the amount and timing of which are unknown and excluded from the table above.
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
| | | | | | | | | | | |
| As of December 31, |
| 2025 | | 2024 |
| Globalstar System: | | | |
| Space component | $ | 1,078,242 | | | $ | 1,167,332 | |
| Ground component | 107,536 | | | 102,717 | |
| Construction in progress: | | | |
| Space component | 998,215 | | | 357,825 | |
| Ground component | 90,132 | | | 20,545 | |
| Other | 8,694 | | | 8,727 | |
| Total Globalstar System | 2,282,819 | | | 1,657,146 | |
| Internally developed and purchased software | 26,033 | | | 24,309 | |
| Equipment | 20,649 | | | 14,904 | |
| Land and buildings | 3,845 | | | 3,222 | |
| Leasehold improvements | 2,458 | | | 2,180 | |
| Total property and equipment | 2,335,804 | | | 1,701,761 | |
| Accumulated depreciation | (1,030,346) | | | (1,028,129) | |
| Total property and equipment, net | $ | 1,305,458 | | | $ | 673,632 | |
During the first quarter of 2025, the Company recorded a loss on disposal of assets of $7.0 million on its consolidated statements of operations. This loss reflects the net book value of one of the Company's second-generation satellites that experienced a power control anomaly which rendered the satellite inoperable.
The Company has agreements with Macdonald, Dettwiler and Associates Corporation ("MDA Space") and Space Exploration Technologies Corp. ("SpaceX") for 1) the purchase and launch of the satellites that are intended to replace the Company's HIBLEO-4 U.S.-licensed system and 2) the purchase and launch of third-generation satellites to support the Extended MSS Network. Refer to Note 10: Commitments and Contingencies for additional information regarding these agreements.
As of December 31, 2025, in connection with the construction and launch preparation of the replacement satellites, the Company has incurred $258.3 million and $72.9 million in capital expenditures for milestones completed under the related agreements with MDA Space and SpaceX, respectively. After launch, the replacement satellites will be placed into service and begin depreciating once they are operational.
As of December 31, 2025, in connection with the construction and launch preparation of the third-generation satellites to support the Extended MSS Network, the Company has incurred $470.5 million and $85.6 million for milestones completed under the related agreements with MDA Space and SpaceX, respectively.
The costs referred to above related to the replacement and third-generation satellites, as well as the associated personnel costs and capitalized interest, are reflected in the "space component" of construction in progress in the table above.
In connection with the Extended MSS Network, the Company has procured ground equipment and other network assets to upgrade existing and build new ground stations globally. The costs to support this effort, such as construction, equipment, personnel and capitalized interest, are reflected in the "ground component" of construction in progress in the table above.
Capitalized Interest and Depreciation Expense
The following table summarizes capitalized interest for the periods indicated below (in thousands):
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
Interest costs eligible to be capitalized | $ | 21,722 | | | $ | 46,527 | | | $ | 39,143 | |
Interest costs recorded in interest income (expense), net | (976) | | | (14,388) | | | (15,271) | |
| Net interest capitalized | $ | 20,746 | | | $ | 32,139 | | | $ | 23,872 | |
The following table summarizes depreciation expense for the periods indicated below (in thousands):
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Depreciation Expense | $ | 86,098 | | | $ | 87,917 | | | $ | 87,213 | |
The following table summarizes amortization expense for the periods indicated below (in thousands):
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Amortization Expense | $ | 1,304 | | | $ | 1,068 | | | $ | 978 | |
Geographic Location of Property and Equipment
Long-lived assets consist primarily of property and equipment and are attributed to various countries based on the physical location of the asset, except for the Company’s satellites which are included in the long-lived assets of the United States. The Company’s information by geographic area is as follows (in thousands):
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 |
| Property and equipment: | | | |
| North America | $ | 1,256,823 | | | $ | 636,816 | |
| Central and South America | 14,805 | | | 13,629 | |
| Africa | 6,184 | | | 10,736 | |
| Asia Pacific | 17,538 | | | 10,468 | |
| Europe | 10,108 | | | 1,983 | |
| Total property and equipment | $ | 1,305,458 | | | $ | 673,632 | |
6. INTANGIBLE AND OTHER ASSETS
Intangible Assets
The Company has intangible assets not subject to amortization, which include certain costs to obtain or defend regulatory authorizations. These costs include primarily efforts related to the enhancement of the Company's licensed MSS spectrum to provide terrestrial wireless services as well as costs with international regulatory agencies to obtain similar terrestrial authorizations outside of the United States. The Company also has intangible assets subject to amortization, which primarily include developed technology and definite lived MSS licenses.
The gross carrying amount and accumulated amortization of the Company's intangible assets consist of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 | | December 31, 2024 |
| Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
| Intangible Assets Not Subject to Amortization | $ | 17,548 | | | $ | — | | | $ | 17,548 | | | $ | 17,070 | | | $ | — | | | $ | 17,070 | |
| | | | | | | | | | | |
| Intangible Assets Subject to Amortization: | | | | | | | | | | | |
| Developed technology | $ | 38,440 | | | $ | (9,276) | | | $ | 29,164 | | | $ | 35,798 | | | $ | (5,552) | | | $ | 30,246 | |
| Regulatory authorizations | 10,559 | | | (3,235) | | | 7,324 | | | 9,384 | | | (2,073) | | | 7,311 | |
| Trade names and trademarks | 560 | | | — | | | 560 | | | 560 | | | — | | | 560 | |
| Developed technology assets in progress | 11,320 | | | — | | | 11,320 | | | 7,406 | | | — | | | 7,406 | |
| Other intangible assets in progress | 26,380 | | | — | | | 26,380 | | | 22,612 | | | — | | | 22,612 | |
| $ | 87,259 | | | $ | (12,511) | | | $ | 74,748 | | | $ | 75,760 | | | $ | (7,625) | | | $ | 68,135 | |
| | | | | | | | | | | |
| Total | $ | 104,807 | | | $ | (12,511) | | | $ | 92,296 | | | $ | 92,830 | | | $ | (7,625) | | | $ | 85,205 | |
Other intangible assets in progress in the table above primarily include regulatory authorizations in progress. For the years ended December 31, 2025 and 2024, the Company recorded amortization expense on these intangible assets of $4.7 million and $3.6 million, respectively. Amortization expense is recorded in operating expenses in the Company’s consolidated statements of operations. During 2025, additions to intangible assets included primarily efforts associated with the development of XCOM technology as well as efforts to obtain regulatory authorizations for Globalstar and licensing work associated with the Globalstar SPE.
Excluding the effects of any acquisitions, dispositions or write-downs subsequent to December 31, 2025, total estimated annual amortization of intangible assets is as follows (in thousands):
| | | | | |
| 2026 | $ | 5,145 | |
| 2027 | 4,940 | |
| 2028 | 4,417 | |
| 2029 | 4,179 | |
| 2030 | 4,028 | |
| Thereafter | 14,339 | |
| Total | $ | 37,048 | |
Goodwill
As of December 31, 2025, the carrying amount of goodwill was $30.6 million and is associated with the Company's only operating segment, its MSS business. Goodwill is deductible for tax purposes. This goodwill was recorded during 2023 in connection with entering into the intellectual property license agreement with XCOM Labs, Inc. and represented the excess of the purchase price of the net identifiable assets acquired. The Company's annual goodwill impairment test during 2025 indicated that it was more likely-than-not that the estimated fair value of the reporting unit exceeded the carrying value of goodwill.
Other Assets
Other assets consist of the following (in thousands):
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
Costs to obtain and fulfill a contract (Note 1) | $ | 6,193 | | | $ | 6,271 | |
Long-term accounts receivable | 3,225 | | | 3,517 | |
International tax receivables (Note 13) | 9,654 | | | 6,666 | |
| Other long-term assets | 2,552 | | | 4,208 | |
| Total other assets | $ | 21,624 | | | $ | 20,662 | |
Long-term accounts receivable represents an unconditional right to consideration for equipment delivered to one customer that will be billed over the next five years; the long-term portion represents the amount that will be billed beyond the next twelve months. Other long-term assets include primarily recoverable tariffs and long-term deposits.
7. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS
Long-term debt consists of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2025 | | December 31, 2024 |
| Principal
Amount | | Unamortized Debt Premium (Discount) and Deferred Financing Costs | | Carrying
Value | | Principal
Amount | | Unamortized Debt Premium (Discount) and Deferred Financing Costs | | Carrying
Value |
| 2024 Debt Repayment | $ | 221,625 | | | $ | 86,045 | | | $ | 307,670 | | | $ | 221,625 | | | $ | 107,176 | | | $ | 328,801 | |
| 2023 Funding Agreement | 182,147 | | | (12,164) | | | 169,983 | | | 155,000 | | | (11,031) | | | 143,969 | |
| 2021 Funding Agreement | 6,250 | | | (115) | | | 6,135 | | | 40,850 | | | (2,198) | | | 38,652 | |
| Total debt | 410,022 | | | 73,766 | | | 483,788 | | | 417,475 | | | 93,947 | | | 511,422 | |
| Less: current portion | 31,950 | | | (115) | | | 31,835 | | | 34,600 | | | — | | | 34,600 | |
| Long-term debt | $ | 378,072 | | | $ | 73,881 | | | $ | 451,953 | | | $ | 382,875 | | | $ | 93,947 | | | $ | 476,822 | |
The carrying value of debt reflected above is net of deferred financing costs and any premium or discount to the loan amount at issuance, including accretion. As of December 31, 2025, the current portion of long-term debt relates to the 2021 Funding Agreement and the 2023 Funding Agreement; these amounts are expected to be paid under the Updated Services Agreements through service fee offsets from the Customer during the next twelve months. The Company's obligations under its debt agreements included in the table above are secured by a first-priority lien over substantially all of the assets of the Company and its domestic subsidiaries.
2024 Debt Repayment
As discussed in Note 2: Special Purpose Entity, pursuant to the Updated Services Agreements, the Customer funded $235 million (including $13.3 million of make whole premium payments, which were recorded to deferred revenue) for the Company to retire its outstanding 2023 13% Notes. The 2024 Debt Repayment is expected to be fully repaid by offsetting against amounts payable by the Customer to the Company on a quarterly basis over a period of 32 quarters commencing on a fixed repayment date in the future that is not tied to the launch of services. The 2024 Debt Repayment is classified as debt because the Company's repayment obligations will commence on such date regardless of when services are provided under the
Updated Services Agreements. The 2024 Debt Repayment accrues annual fees, which would be reduced or eliminated entirely if the Company meets certain defined milestones associated with the completion of the Extended MSS Network, at which time prior accruals will be reduced or eliminated. These accrued fees are included in other noncurrent liabilities on the Company's balance sheet. As of December 31, 2025, the outstanding principal balance of the 2024 Debt Repayment was $221.6 million.
On the issuance date, the Company recorded the 2024 Debt Repayment at fair value. The difference between the principal amount of the 2024 Debt Repayment and the fair value was recorded as a debt premium. Additionally, the Company was required to bifurcate the fair value of the interest reduction mechanism and record a derivative asset upon issuance equal to the debt premium. The debt premium is amortized as an offset to interest expense using the effective interest rate method. Refer to Note 8: Derivatives and Note 9: Fair Value Measurements for further information.
2023 Funding Agreement
In 2023, the Service Agreements were amended to provide for, among other things, payment of up to $252 million to the Company (the “2023 Funding Agreement”), which the Company has used and intends to use to fund 50% of the amounts due under its 2022 agreement with MDA Space, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of replacement satellites purchased under such agreement. As of December 31, 2025, the outstanding principal balance under the 2023 Funding Agreement was $182.1 million, which increased by $27.1 million from December 31, 2024 due to the Company's receipt of additional funds under the 2023 Funding Agreement during the third quarter of 2025.
The total amount paid to the Company under the 2023 Funding Agreement, including fees, is expected to be fully repaid by offsetting against amounts payable by the Customer pursuant to the Service Agreements beginning in the third quarter of 2026 and continuing for no longer than 16 consecutive quarters. Compounded fees are accrued at a fixed rate based on the average outstanding balance of the 2023 Funding Agreement. The balance accrued for these fees was $24.2 million as of December 31, 2025, of which $8.3 million is included in "Accounts payable and accrued expenses" and $15.9 million is included in "Other non-current liabilities" on the Company's balance sheet.
For as long as any amount funded under the 2023 Funding Agreement is outstanding, the Company will be subject to certain covenants, including (i) maintenance of a minimum cash balance of $30 million, (ii) interest coverage and leverage ratios, and (iii) other customary negative covenants, including limitations on certain asset transfers, expenditures and investments. Thermo guaranteed certain of the Company’s obligations under the 2023 Funding Agreement and Service Agreements. See Note 12: Related Party Transactions for further information regarding Thermo's guarantee.
As the Company makes draws under the 2023 Funding Agreement, the amount of each draw is recorded at fair value using a discounted cash flow model. The Company records a debt discount or premium for the difference between the fair value of the debt and the proceeds received and accretes the debt discount or amortizes the debt premium with an offset to interest expense through the maturity date using the effective interest rate method. The total proceeds of the draw made in the third quarter of 2025 were $27.1 million with a fair value of $28.6 million. The Company attributed this difference to the timing of cash flows for the draws and interest payments to be made pursuant to the 2023 Funding Agreement, resulting in an internal rate of return higher than the discount yield utilized in the valuation. Refer to Note 9: Fair Value Measurements for further discussion on the fair value of this draw.
2021 Funding Agreement
During 2021, the Company received payments totaling $94.2 million (as amended, the "2021 Funding Agreement"). This funding is being repaid by offsetting against amounts payable as services are performed by the Company. The last recoupment is expected to be made in March 2026. The debt discount associated with the 2021 Funding Agreement is accreting to interest expense through the maturity date using the effective interest rate method. No interest accrues on amounts outstanding under the 2021 Funding Agreement. During 2025, $34.6 million was recouped pursuant to the terms of the 2021 Funding Agreement. As of December 31, 2025, the outstanding principal balance under the 2021 Funding Agreement was $6.3 million.
Series A Preferred Stock
In 2022, the Company issued 149,425 shares of its 7.0% Perpetual Preferred Stock, Series A, liquidation preference $1,000 per share (the “Series A Preferred Stock”) with a fair value of $105.3 million. The shares of Series A Preferred Stock do not possess voting rights, other than with respect to certain matters specifically affecting the rights and obligations of the Series A Preferred Stock.
Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by the Board or a committee thereof, cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock, at a fixed rate equal to 7.00% per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. During 2025, the Company
made dividend payments to the holders of the Series A Preferred Stock, which were approved by the Board totaling $10.6 million.
The Series A Preferred Stock may be redeemed by the Company, in whole or in part, at any time. The holders of the Series A Preferred Stock do not have any rights to convert or require the Company to redeem such stock. The holders of the Series A Preferred stock have customary liquidation preferences.
Debt maturities
Annual debt maturities for each of the five years following December 31, 2025 and thereafter are as follows (in thousands):
| | | | | |
| 2026 | $ | 31,950 | |
| 2027 | 73,726 | |
| 2028 | 94,503 | |
| 2029 | 50,550 | |
| 2030 | 27,703 | |
| Thereafter | 131,590 | |
| Total | $ | 410,022 | |
Amounts in the above table are calculated based on amounts outstanding at December 31, 2025, and therefore exclude future draws pursuant to the 2023 Funding Agreement and assume recoupments as scheduled under the 2021 and 2023 Funding Agreements and the 2024 Debt Repayment.
8. DERIVATIVES
The Company reflected on its balance sheet an embedded derivative resulting from certain features in the Company’s 2024 Debt Repayment. This derivative instrument is not designated as a hedge. The fair value of the embedded derivative is marked-to-market at the end of each reporting period, or more frequently as deemed necessary, with any changes in value reported in the consolidated statements of operations and consolidated statements of cash flows as a non-cash operating activity.
The instruments and related features embedded in the debt instruments that are required to be accounted for as derivatives are described below. See Note 9: Fair Value Measurements to the Consolidated Financial Statements for further discussion.
The terms of the 2024 Debt Repayment contain an interest reduction mechanism that is required to be bifurcated and was recorded as an embedded derivative on the Company's consolidated balance sheet with a corresponding debt premium that was added to the principal amount of the 2024 Debt Repayment. The Company determined the fair value of the embedded derivatives using a discounted cash flow model. As the discount yield and the effective interest rate of the loan fluctuate based on projected cash flows, the derivative value is adjusted. When project milestones are achieved, the Company removes associated future cash flows from the total interest savings projections used to fair value the embedded derivative. The majority of the present value of the cash flows removed from the derivative asset is recorded as a debt discount, while the remaining portion relieves the balance of accrued interest associated with that milestone on the Company's consolidated balance sheet.
As of December 31, 2025 and 2024, the Company recorded the fair value of the embedded derivative, totaling $114.5 million and $108.8 million, respectively. The Company records a derivative gain or loss resulting from mark-to-market adjustments, which is reflected in "Derivative gain (loss) and other income (expense)" in the Company’s consolidated statement of operations.
9. FAIR VALUE MEASUREMENTS
The Company follows the authoritative guidance for fair value measurements relating to financial and non-financial assets and liabilities, including presentation of required disclosures herein. This guidance establishes a fair value framework requiring the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Recurring Fair Value Measurements
The Company marks-to-market its derivatives at each reporting date, or more frequently as deemed necessary, with the changes in fair value recognized in the Company’s consolidated statements of operations. See Note 8: Derivatives for further information.
Embedded Derivative within the 2024 Debt Repayment
The embedded derivative relating to the 2024 Debt Repayment is valued using a discounted cash flow model. The most significant input used in the fair value measurement was the discount yield, which was 6.05% and 7.58% at December 31, 2025 and 2024, respectively. As the discount yield used in the valuation process decreases, the fair value of the embedded derivative increases. Similarly, as the length of time between the reporting date and the start date of the interest payments decreases, the present value of the projected interest savings increases, resulting in a higher derivative asset value. The significant unobservable input that drives the cash flows used in the fair value measurement includes the estimated achievement of project milestones. As the probability of reaching the relevant milestones increases, the fair value of the embedded derivative would also increase.
Rollforward of Recurring Level 3 Assets and Liabilities
The following table presents a rollforward for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| Balance at beginning of period | $ | 108,799 | | | $ | 1,295 | |
Issuance of embedded derivative within the 2024 Debt Repayment | 2,480 | | | 109,601 | |
| Settlement of a portion of the derivative asset for project milestone achieved | (11,337) | | | — | |
| Unrealized gain (loss), included in derivative and other | 14,519 | | | (2,097) | |
| Balance at end of period | $ | 114,461 | | | $ | 108,799 | |
Nonrecurring Fair Value Measurements
The Company follows the authoritative guidance regarding non-financial assets and liabilities that are remeasured at fair value on a nonrecurring basis.
2023 Funding Agreement
The Company's August 2025 draw on the 2023 Funding Agreement had a fair value of $28.6 million and was calculated using projected future cash flows discounted using the prevailing market rate of interest for a similar transaction. The discount yield used for this calculation was 5.98%. Due to the significant unobservable inputs utilized in the valuation of the August 2025 draw, the fair value of the draw was classified as a Level 3 fair value measurement.
10. COMMITMENTS AND CONTINGENCIES
Updated Services Agreements
The Updated Services Agreements set forth the primary terms for the Company to provide expanded services to the Customer and incur costs related to the Extended MSS Network, which primarily relate to the construction of new gateways and the upgrade of existing gateways as well as new satellite construction and launch services, including both the replacement satellites related to the Phase 2 Services Period and the third generation satellites related to the Extended MSS Network. The Updated Services Agreements have an indefinite term but are terminable by the Customer at any time upon advance notice or a force majeure event, or by either party upon the occurrence of certain events of default. The Updated Services Agreements obligate the Company to comply with various commitments.
Satellite Procurement Agreements
In February 2022, the Company entered into a satellite procurement agreement with MDA Space pursuant to which the Company will acquire at least 17 satellites (and up to 26 satellites) to replace its HIBLEO-4 U.S.-licensed system with an amended contract price of $329.3 million for 17 of the replacement satellites. In addition, MDA Space will provide a satellite operations control center for $5.0 million as well as other equipment for $4.2 million. The projected delivery dates are later than the dates specified in the satellite procurement agreement. The Company is contractually entitled to receive liquidated damages from MDA Space based upon the terms of the satellite procurement agreement due to MDA Space's failure to meet delivery milestones and the parties are discussing this matter. Any damages would reduce amounts owed to MDA Space when realized or realizable.
In February 2025, the Company entered into another agreement with MDA Space pursuant to which the Company will acquire more than 50 third-generation satellites related to the Extended MSS Network. The total contract price for these satellites is $775.0 million.
Launch Services Agreements
In each of August 2023 and June 2025, Globalstar entered into a Launch Services Agreement with SpaceX and certain related ancillary agreements (collectively, the “Launch Services Agreements”), providing for the launch of the first and second sets, respectively, of the 17 replacement satellites that the Company is acquiring pursuant to the 2022 satellite procurement agreement with MDA Space. As a result of the delivery delays of the replacement satellites (discussed above), Globalstar and SpaceX are working to establish an updated launch window for the first set of replacement satellites. The launch of the second set of satellites has not been adjusted.
In October 2024, the Company entered into a separate agreement with SpaceX for the launch of the third-generation satellites related to the Extended MSS Network.
Expanded Ground Infrastructure
The Company has ground infrastructure purchase commitments with its third party antenna and other equipment manufacturers to support the Extended MSS Network. Outstanding purchase commitments to support the Extended MSS Network ground infrastructure as of December 31, 2025 were approximately $149.3 million.
Funding for Phase 2 Service Period Asset Procurement
Under the Service Agreements, subject to certain terms and conditions, the Company expects to receive payments equal to 95% of the approved capital expenditures under the satellite procurement agreement for the replacement satellites, launch services agreements for such replacement satellites and other ancillary equipment and launch costs (to be paid on a straight-line basis over the design life of such replacement satellites) beginning with the commencement of the Phase 2 Service Period.
Funding for Extended MSS Network Asset Procurement
As discussed in more detail in Note 2: Special Purpose Entity, the Updated Services Agreements provide for prepayments from the Customer for approved capital expenditures associated with the Extended MSS Network.
As of December 31, 2025, the Company incurred $0.7 billion of the $1.5 billion projected spend for the Extended MSS Network. The Company will continue to incur these costs until these assets are placed into service.
Inventory Purchase Commitments
The Company has inventory purchase commitments with its third party product manufacturers in the normal course of business. These commitments are generally noncancellable and the order quantities are based on sales forecasts. The Company estimates that its open inventory purchase commitments as of December 31, 2025 were approximately $9.1 million.
Litigation
Due to the nature of the Company's business, the Company is involved, from time to time, in various litigation matters or subject to disputes or routine claims regarding its business activities. Legal costs related to these matters are expensed as incurred. In management's opinion, there is no pending litigation, dispute or claim, which could be expected to have a material adverse effect on the Company's financial condition, results of operations or liquidity.
11. ACCRUED EXPENSES AND OTHER NON-CURRENT LIABILITIES
Accrued expenses consist of the following (in thousands):
| | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| Accrued compensation and benefits | $ | 5,907 | | | $ | 5,203 | |
| Accrued property and other taxes | 7,531 | | | 7,550 | |
| Accrued customer liabilities and deposits | 5,939 | | | 3,600 | |
Short-term lease liability (Note 4) | 7,998 | | | 4,251 | |
Accrued fees (Note 7) | 8,250 | | | — | |
| Other accrued expenses | 7,965 | | | 4,096 | |
| Total accrued expenses | $ | 43,590 | | | $ | 24,700 | |
Accrued fees includes fees on the outstanding balance of the 2023 Funding Agreement. Other accrued expenses include primarily vendor services, inventory, warranty reserve and occupancy costs.
Other non-current liabilities consist of the following (in thousands):
| | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| Asset retirement obligations (Note 1) | $ | 3,080 | | | $ | 2,903 | |
Accrued fees (Note 7) | 43,630 | | | 13,079 | |
| Deferred tax liability (Note 13) | 1,044 | | | 711 | |
| Uncertain income tax positions and contingencies | 3,820 | | | 1,847 | |
Customer Class B Units Redemption (Note 2) | 400,000 | | | 400,000 | |
| Other | 44 | | | 80 | |
| Total other non-current liabilities | $ | 451,618 | | | $ | 418,620 | |
Accrued fees primarily include fees on the outstanding balance under the 2024 Debt Repayment and the 2023 Funding Agreement. Uncertain income tax positions and contingencies include primarily uncertain tax positions on long-term U.S. state tax due and liabilities associated with the Company's Canadian subsidiary.
12. RELATED PARTY TRANSACTIONS
Transactions with Thermo
Thermo is the principal owner and largest stockholder of Globalstar. The Company's Executive Chairman of the Board controls Thermo. Two other members of the Board are also directors, officers or minority equity owners of various Thermo entities.
Payables to Thermo related to arm's length transactions were $0.4 million as of December 31, 2025 and 2024, respectively.
Certain general and administrative expenses are incurred by Thermo on behalf of the Company. These expenses include: i) non-cash expenses, such as stock compensation costs as well as costs recorded as a contribution to capital, and ii) expenses incurred by Thermo on behalf of the Company that are charged to the Company; these charges are based on actual amounts (with no mark-up) incurred by Thermo or upon allocated employee time.
Lease Agreement
The Company has a lease agreement with Thermo Covington, LLC for the Company's headquarters office. Annual lease payments increase at a rate of 2.5% per year. 2025 lease payments were $1.7 million. The lease term is ten years and is scheduled to expire in January 2029. During each of the fiscal years ended December 31, 2025, 2024 and 2023, the Company incurred lease expense of $1.6 million under this lease agreement.
Series A Preferred Stock
Thermo owns $136.7 million of the Series A Preferred Stock, based upon the shares' liquidation preference. Holders of the Series A Preferred Stock are entitled to receive, when, as and if declared by the Board, cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock, at a fixed rate equal to 7.00% per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. During 2025, the Company made dividend payments to Thermo which were approved by the Board totaling $9.7 million.
Service Agreements
In connection with the Service Agreements, the Customer and Thermo entered into a lock-up and right of first offer agreement that generally (i) requires Thermo to offer any shares of Globalstar common stock to the Customer before transferring them to any other person, other than affiliates of Thermo and (ii) prohibits Thermo from transferring shares of Globalstar common stock if such transfer would cause Thermo to hold less than 51.00% of the outstanding common stock of the Company for a period of five years from the launch of Services in November 2022.
Certain amounts payable by the Company in connection with the 2023 Funding Agreement and certain other obligations under the Service Agreements are guaranteed by Thermo pursuant to a guaranty agreement (the "Thermo Guaranty"). As consideration for Thermo's guarantee, the Company issued to Thermo a warrant to purchase 666,668 shares of the Company’s common stock at an exercise price equal to $30.00 per share (as calculated pursuant to the Thermo Guaranty). The right to purchase 333,334 shares under the warrant vested immediately upon effectiveness of Thermo's guarantee, which occurred in December 2023, and the right to purchase the remaining 333,334 shares under the warrant would vest if and when Thermo advances aggregate funds of $25.0 million or more to the Company or a permitted third party pursuant to the terms of the Thermo Guaranty. The warrant expires in December 2028.
The right to purchase the remaining 333,000 shares under the warrant, which may vest if and when Thermo advances aggregate funds of $25.0 million, was assigned a fair value of zero based on the Company's future cash flows and the low probability of the need for funding from Thermo under the 2023 Funding Agreement. The Company reassesses the probability of vesting at each reporting period and, if the probability of vesting increases, it will record the fair value as a liability pursuant to applicable accounting guidance.
In connection with the Updated Services Agreements, the Company, the Customer and Thermo amended the Thermo Guaranty to lower the amount of Guaranteed Obligations (as defined in the Thermo Guaranty) to $100 million (collectively
with the Thermo Guaranty, the "Amended Thermo Guaranty"). The entry into the Amended Thermo Guaranty required approval of the Company's stockholders (other than Thermo, including its affiliates), which was received at the Company's 2025 annual meeting of stockholders on May 20, 2025. No changes were made to the existing outstanding warrants associated with the Thermo Guaranty and no additional warrants or rights to purchase additional shares of the Company's common stock were issued to Thermo in connection with the entry into the Amended Thermo Guaranty.
To the extent Thermo is required to advance amounts under the Amended Thermo Guaranty, the Company is required to issue shares of its common stock to Thermo in respect of such advance in an amount equal to the amount of such payment divided by the average of the volume weighted average price of the Company’s common stock for the five trading days immediately preceding such payment.
Governance
The Company has a Strategic Review Committee that is required to remain in existence for as long as Thermo and its affiliates beneficially own forty-five percent (45%) or more of Globalstar’s outstanding common stock. To the extent permitted by applicable law, the Strategic Review Committee has exclusive responsibility for the oversight, review and approval of, among other things and subject to certain exceptions, any acquisition by Thermo and its affiliates of additional newly-issued securities of the Company and any transaction between the Company and Thermo and its affiliates with a value in excess of $250,000.
Agreements with XCOM Labs, Inc.
Dr. Paul E. Jacobs is the Chief Executive Officer of Globalstar and also serves as the Executive Chairman of XCOM Labs, Inc. (now known as Virewirx, Inc.) ("XCOM") and is the controlling stockholder of XCOM. In connection with the entry into the Company's former Intellectual Property License Agreement with XCOM (the "License Agreement"), which was terminated in January 2026, Globalstar issued to XCOM 4.0 million shares of its common stock, representing a transaction value of approximately $68.7 million on the date of issuance. Of the consideration paid for the License Agreement, an additional 1.1 million shares were issued to Dr. Jacobs. In January 2026, the Company exercised its option to purchase certain intellectual property assets pursuant to the License Agreement.
The Company and XCOM also had a Support Services Agreement ("SSA"), which was terminated during the second quarter of 2025. Under the SSA, XCOM was required to provide certain services to the Company. In August 2023 and June 2024, Globalstar issued 0.7 million shares and 0.5 million shares of its common stock, respectively, to XCOM as payment for costs incurred under the SSA and the release of holdback shares under the License Agreement. In June 2024 and March 2025, XCOM sold 0.3 million shares and 0.2 million shares of the Company's common stock, respectively, in a private placement transaction to an affiliate of Thermo. Effective during the first quarter of 2025, costs that support the XCOM technology development were directly incurred by Globalstar and paid through the Company's operating cash flows. Fees payable by Globalstar pursuant to the SSA were based on costs incurred plus a 15% margin for costs incurred between January 1, 2025 and March 31, 2025. No fees were payable by Globalstar pursuant to the SSA after March 31, 2025.
Certain general and administrative expenses are incurred by Virewirx, Inc. on behalf of the Company. These expenses include costs incurred by Virewirx, Inc. on behalf of the Company that are charged to the Company; these charges are based on actual amounts (with no mark-up) incurred by Virewirx, Inc. or upon allocated employee time.
Payables to Virewirx, Inc. related to arm's length transactions were less than $0.1 million as of December 31, 2025; no amounts were outstanding as of December 31, 2024.
Dr. Jacobs does not have any family relationships with any director or executive officer of the Company and has not been directly or indirectly involved in any related party transactions with the Company, except for transactions related to the License Agreement and the SSA.
13. TAXES
As discussed in Note 1: Summary of Significant Accounting Policies, the Company prospectively adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures effective January 1, 2025. As a result, disclosures for the years ended December 31, 2024 and 2023 are presented under the prior format, while disclosures for the year ended December 31, 2025 reflect the new required format.
The components of income tax expense were as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Current: | | | | | |
| Federal tax | $ | — | | | $ | — | | | $ | — | |
| State tax | 3,419 | | | 60 | | | 240 | |
| Foreign tax | 2,390 | | | 1,693 | | | 850 | |
| Total | 5,809 | | | 1,753 | | | 1,090 | |
| Deferred: | | | | | |
| Federal and state tax | 292 | | | 316 | | | 33 | |
Foreign (benefit) tax | (223) | | | 66 | | | — | |
| Total | 69 | | | 382 | | | 33 | |
Income tax expense | $ | 5,878 | | | $ | 2,135 | | | $ | 1,123 | |
U.S. and foreign components of income (loss) before income taxes are presented below (in thousands):
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| U.S. loss | $ | (23,093) | | | $ | (46,851) | | | $ | (30,086) | |
Foreign income (loss) | 20,320 | | | (14,178) | | | 6,491 | |
| Total loss before income taxes | $ | (2,773) | | | $ | (61,029) | | | $ | (23,595) | |
The Company recorded foreign currency gains of $15.3 million in 2025 and foreign currency losses of $16.6 million in 2024, both of which are reflected within the foreign component of income (loss) before income taxes in the table above. Many of its foreign subsidiaries have USD-denominated intercompany payable balances, which impact the foreign currency gains and losses recorded each reporting period. In these instances, foreign currency gains result from other currencies strengthening relative to the U.S. dollar; inversely, foreign currency losses result from the U.S. dollar strengthening relative to other currencies.
As of December 31, 2025 and 2024, the Company had cumulative U.S., state and foreign net operating loss ("NOL") carryforwards for income tax reporting purposes of approximately $1.5 billion and $1.8 billion, respectively. The vast majority of these NOL carryforwards were generated prior to 2018 and expire through 2041 (with less than 1% expiring prior to 2028) and the remaining NOL carryforwards do not expire.
Income taxes paid (net of refunds), disclosed pursuant to the requirements of ASU 2023-09, for the year presented below (in thousands):
| | | | | | | | | |
| Year Ended December 31, |
| 2025 | | | | |
| U.S. Federal | $ | — | | | | | |
| | | | | |
| U.S. State and Local | | | | | |
| California | 1,198 | | | | | |
| Other | 729 | | | | | |
| Total U.S. state and local | 1,927 | | | | | |
| | | | | |
| Foreign | | | | | |
| Canada | 4,124 | | | | | |
| Other foreign jurisdictions | 425 | | | | | |
| Total foreign taxes paid | 4,549 | | | | | |
| Total taxes paid | $ | 6,476 | | | | | |
Total income taxes paid, net of refunds received, were $1.9 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.
The components of net deferred income tax assets (liabilities) were as follows (in thousands):
| | | | | | | | | | | |
| | As of December 31, |
| | 2025 | | 2024 |
Deferred tax assets | | | |
| Operating loss and credit carryforwards | $ | 332,891 | | | $ | 436,670 | |
| Deferred revenue | 73,463 | | | 17,242 | |
| Accruals and reserves | 1,649 | | | 1,721 | |
| Stock-based compensation expense | 3,843 | | | 3,502 | |
| Lease liabilities | 9,653 | | | 5,408 | |
| Interest and interest carryforwards | 12,156 | | | 4,972 | |
| Other deferred tax assets | 822 | | | 1,064 | |
| Deferred tax assets before valuation allowance | 434,477 | | | 470,579 | |
| Valuation allowance | (383,519) | | | (421,883) | |
Total deferred tax assets | 50,958 | | | 48,696 | |
Deferred tax liabilities | | | |
| Property and equipment | (24,445) | | | (42,913) | |
Right-of-use assets | (10,181) | | | (5,768) | |
| Intangibles | (11,746) | | | (606) | |
| Other deferred tax liabilities | (5,472) | | | (120) | |
Total deferred tax liabilities | (51,844) | | | (49,407) | |
| Net deferred income tax liability | $ | (886) | | | $ | (711) | |
The deferred revenue tax asset in the table above is related to a portion of the prepayments made under the Updated Services Agreements (see Note 3: Revenue for further discussion).
The change in the valuation allowance during 2025 of $38.4 million was due primarily to uncertain tax positions, which reduced deferred tax assets related to NOL carryforwards and the current year NOL utilization as a result of increased taxable income from deferred revenue recognition in the U.S. The Company recorded net deferred tax liabilities of $0.9 million as of December 31, 2025 and $0.7 million as of December 31, 2024 related to the limitation on utilization of state NOLs and utilization of federal deferred tax assets surrounding the Company’s indefinite lived intangible assets.
The Company considers all undistributed earnings of its foreign subsidiaries to be reinvested indefinitely as of December 31, 2025. Should these earnings be distributed in the future, the Company may be subject to foreign withholding taxes, additional U.S. federal taxes, and state income taxes, including the effects of any foreign currency translation.
Effective income tax rate (after adoption of ASU 2023-09) (in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | | | |
| Amount | | Percent | | | | | | |
| Provision at U.S. statutory rate of 21% | $ | (582) | | | 21 | % | | | | | | |
State and local tax effects (1) | | | | | | | | | |
| State income taxes, net of federal benefit | (1,327) | | | 48 | % | | | | | | |
| Adjustment to state deferred rate | (705) | | | 25 | % | | | | | | |
| State adjustment for filed returns | 1,135 | | | (41) | % | | | | | | |
| State increase in valuation allowance | 2,425 | | | (87) | % | | | | | | |
| Foreign tax effects | | | | | | | | | |
| Canada | | | | | | | | | |
| Effect of foreign income tax at various rates | (282) | | | 10 | % | | | | | | |
| Adjustment to reserved deferred assets | 393 | | | (14) | % | | | | | | |
| Other | (51) | | | 2 | % | | | | | | |
| Change in valuation allowance | (1,048) | | | 38 | % | | | | | | |
| Canadian Provincial | | | | | | | | | |
| Effect of foreign income tax at various rates | 508 | | | (18) | % | | | | | | |
| Adjustment to reserved deferred assets | 48 | | | (2) | % | | | | | | |
| Change in valuation allowance | (556) | | | 20 | % | | | | | | |
| Brazil | | | | | | | | | |
| Effect of foreign income tax at various rates | 528 | | | (19) | % | | | | | | |
| Foreign rate change | (5,728) | | | 207 | % | | | | | | |
| Other | 98 | | | (4) | % | | | | | | |
| Withholding tax | 153 | | | (6) | % | | | | | | |
| Change in valuation allowance | 4,617 | | | (166) | % | | | | | | |
| Ireland | | | | | | | | | |
| Effect of foreign income tax at various rates | (527) | | | 19 | % | | | | | | |
| Other | (43) | | | 2 | % | | | | | | |
| Change in valuation allowance | (732) | | | 26 | % | | | | | | |
| Mexico | | | | | | | | | |
| Adjustment for filed returns | 432 | | | (16) | % | | | | | | |
| Other | 212 | | | (8) | % | | | | | | |
| Change in valuation allowance | (158) | | | 6 | % | | | | | | |
| Other foreign jurisdictions | | | | | | | | | |
| Other foreign jurisdictions | (42) | | | 2 | % | | | | | | |
| Change in valuation allowance | | | | | | | | | |
Decrease in valuation allowance (3) | (46,978) | | | 1694 | % | | | | | | |
| Non-taxable or non-deductible items | | | | | | | | | |
| Permanent differences | 643 | | | (23) | % | | | | | | |
| Excess tax benefits on stock-based compensation | (3,992) | | | 144 | % | | | | | | |
| Section 162(m) compensation limitation | 3,018 | | | (109) | % | | | | | | |
| Imputed interest | 2,432 | | | (88) | % | | | | | | |
| State current tax deduction | (304) | | | 11 | % | | | | | | |
| Change in unrecognized tax benefits | | | | | | | | | |
Uncertain tax positions (2) | 51,013 | | | (1840) | % | | | | | | |
| | | | | | | | | | | | | | | | | |
| Other adjustments | | | | | | | | | |
| Adjustment to reserved deferred assets | 208 | | | (8) | % | | | | | | |
| Stock compensation deduction limitation | 671 | | | (24) | % | | | | | | |
| Adjustment to reserved deferred assets - R&D | 563 | | | (20) | % | | | | | | |
| Adjustment to reserved deferred assets - intangibles | (445) | | | 16 | % | | | | | | |
| Adjustment for filed returns | 326 | | | (12) | % | | | | | | |
| Other | (45) | | | 2 | % | | | | | | |
| Effective tax rate | $ | 5,878 | | | (212) | % | | | | | | |
(1) The tax effect in this category primarily reflects state and local taxes in California and Illinois.
(2) Relates primarily to a new uncertain tax position in the U.S. and its related state impacts.
(3) Relates primarily to impacts associated with a new uncertain tax position in the U.S. and its related state impacts.
Effective income tax rate (prior to adoption of ASU 2023-09) (in thousands):
| | | | | | | | | | | | | |
| | Year Ended December 31, | | |
| | 2024 | | 2023 | | |
| Provision at U.S. statutory rate of 21% | $ | (12,816) | | | $ | (4,967) | | | |
| State income taxes, net of federal benefit | (1,142) | | | (771) | | | |
Change in valuation allowance | (9,740) | | | (969) | | | |
| Effect of foreign income tax at various rates | 185 | | | (131) | | | |
| Permanent differences | 2,408 | | | 5,923 | | | |
| Net change in permanent items due to provision to tax return | (13) | | | (731) | | | |
| Adjustment to reserved deferred assets | 6,204 | | | 2,104 | | | |
| Adjustment to state deferred rate | 4,049 | | | 170 | | | |
| Withholding tax | 421 | | | 502 | | | |
Uncertain tax positions | 12,527 | | | — | | | |
| Other | 52 | | | (7) | | | |
| Total | $ | 2,135 | | | $ | 1,123 | | | |
Uncertain Income Tax Positions
The Company is subject to income taxes in U.S. and foreign jurisdictions and it may recognize uncertain income tax positions if it is more likely than not that the position would be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense.
The following table presents a reconciliation of the Company’s beginning and ending balances of unrecognized tax benefits for the periods indicated (in thousands):
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| Beginning balance | $ | 14,067 | | | $ | — | |
| Increases related to tax positions of the current year | 50,962 | | | — | |
| Increases related to tax position of prior years | 602 | | | 14,067 | |
| Reductions for tax positions of prior years | (59) | | | — | |
| Audit settlements | (1,482) | | | — | |
Ending balance | $ | 64,090 | | | $ | 14,067 | |
The table above does not include accrued interest and penalties of $0.4 million and $1.2 million as of December 31, 2025 and 2024, respectively. The Company recognizes accrued interest and/or penalties related to income tax matters within income tax expense.
As of December 31, 2025, the Company recorded $6.4 million in long-term tax receivables on its consolidated balance sheet associated with the Canada income tax audit. Additionally, the Company recorded $3.6 million in long-term uncertain tax position liabilities, of which $2.0 million relates to the state tax impact of a new uncertain tax position in the U.S. and $1.6 million relates to the Canada income tax audit. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.5 million for the year ended December 31, 2025. Further discussion is below regarding the Company's uncertain income tax positions associated with the Company's Canadian subsidiary.
Tax Audits
The Company operates in various U.S. and foreign tax jurisdictions. The process of determining its anticipated tax liabilities involves many calculations and estimates which are inherently complex. The Company believes that it has complied in all material respects with its obligations to pay taxes in these jurisdictions. However, its position is subject to review and possible challenge by the taxing authorities of these jurisdictions. If the applicable taxing authorities were to challenge successfully its current tax positions, or if there were changes in the manner in which the Company conducts its activities, the Company could become subject to material unanticipated tax liabilities. It may also become subject to additional tax liabilities as a result of changes in tax laws, which could in certain circumstances have a retroactive effect.
The Company nor any of its subsidiaries are currently under audit by the IRS. The Company's corporate U.S. tax returns are generally subject to examination for three years after the later of the return due date or the date filed. To the extent the Company utilizes net operating loss carryforwards generated in earlier years, the IRS retains the right to examine the amount of such losses as part of any audit of an open tax year, notwithstanding that the years in which the losses were generated may otherwise be closed. The Company has U.S. federal NOL carryforwards originating prior to 2010.
State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.
In the Company's international tax jurisdictions, numerous tax years remain subject to examination by tax authorities, including tax returns for 2015 and subsequent years in most of the Company's international tax jurisdictions.
Canadian Tax Audits
The Canada Revenue Agency ("CRA") is conducting audits of the Company's Canadian subsidiary for several tax years and the Company is working with the CRA to complete such audits. The CRA has completed its audit for the tax years 2016 through 2018 and assessed the Company for additional tax liabilities and audit adjustments, which the Company is appealing. The tax years 2019 through 2022 remain under examination.
The Company's NOL carryforwards for income tax reporting purposes in Canada would largely offset the expected final income tax settlement after appeal. Additionally, withholding tax, penalties and interest have been and are expected to be assessed for audit periods under examination. The Company expects that any assessed withholding tax and penalties will be refunded at the end of the audit process; however, interest assessed on the withholding tax is not recoverable.
As a result of these audits, during 2025, the Company recorded $0.1 million of expense for uncertain tax positions associated with interest on withholding tax. As of December 31, 2025, the Company recorded $6.4 million in long-term tax receivables and $1.6 million in long-term uncertain tax position liabilities on its consolidated balance sheet associated with potential taxes, penalties and interest.
Other
The tax related to global intangible low-taxed income ("GILTI") is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company records GILTI tax in the period in which it is incurred and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended December 31, 2025 and 2024.
As of December 31, 2025 and 2024, the Company recorded a value added tax ("VAT") recoverable, of which the short term portion is included in prepaid and other current assets on its consolidated balance sheet totaling $2.0 million and $2.5 million, respectively, and the long-term portion is included in intangible and other assets, net, on its consolidated balance sheet totaling $3.0 million and $1.8 million, respectively. This VAT recoverable is related primarily to certain payments for the purchase and importation of gateway equipment in various international jurisdictions in connection with the Company's network upgrade work.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation did not have a material impact on the Company's effective tax rate or consolidated financial statements for the year ended December 31, 2025. However, certain provisions of the OBBBA become effective for tax years beginning after December 31, 2025, and the Company is continuing to evaluate the impact of these provisions on its future consolidated financial statements.
14. LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss per common share for the periods indicated (in thousands). The number of shares have been restated to reflect the 1:15 reverse stock split effectuated on February 10, 2025. All historical share and per share amounts reflected in this Report have been retrospectively restated to reflect the change in capital structure for the periods prior to the completion of the reverse stock split, as applicable. Refer to Note 17: Common Stock for further discussion.
| | | | | | | | | | | | | | | | | |
| | | | | |
| Year ended December 31, |
| 2025 | | 2024 | | 2023 |
Numerator: | | | | | |
| Net loss | $ | (8,651) | | | $ | (63,164) | | | $ | (24,718) | |
| Effect of Series A Preferred Stock dividends | (10,605) | | | (10,634) | | | (10,605) | |
| Net loss attributable to common shareholders | $ | (19,256) | | | $ | (73,798) | | | $ | (35,323) | |
| | | | | |
Denominator: | | | | | |
| Weighted average common shares outstanding | 126,757 | | | 125,877 | | | 122,334 | |
| | | | | |
| Net loss per common share: | | | | | |
| Basic | $ | (0.15) | | | $ | (0.59) | | | $ | (0.29) | |
| Diluted | $ | (0.15) | | | $ | (0.59) | | | $ | (0.29) | |
For the years ended December 31, 2025, 2024 and 2023, 1.8 million shares, 1.3 million shares and 1.3 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of such securities would be anti-dilutive.
Included in these shares for all periods presented is a portion of the outstanding equity awards under the Equity Plan (as defined herein) (refer to Note 15: Stock Compensation for further discussion of amounts unvested and outstanding under the Equity Plan). Also included is 3.3 million shares that may be purchased by the Customer pursuant to the warrants issued under the Service Agreements in 2022 based on the treasury stock method. During 2023, the right to purchase 0.3 million shares of common stock vested pursuant to the warrant issued to Thermo for its guarantee of the 2023 Funding Agreement. For 2025, a portion of these shares are included in potentially dilutive shares based on the treasury stock method; for 2024 and 2023, none of these shares are included in the potentially dilutive securities for the applicable periods presented because the exercise price of the warrants exceeded the average market price of Globalstar common stock during the periods.
Excluded from the amounts above are an additional 0.3 million shares that may be purchased by Thermo pursuant to the warrant issued in connection with its guarantee of the 2023 Funding Agreement; the right to purchase these shares vests only if Thermo advances aggregate funds of $25.0 million or more to the Company or a permitted third party pursuant to the terms of Thermo's guarantee. Also excluded are unvested PSUs (as defined herein) that are subject to market and performance conditions as the condition for achievement was not met. The total unvested PSUs as of December 31, 2025 totaled 2.1 million shares.
15. STOCK COMPENSATION
Share-Based Payment Arrangements with Employees
The Company’s 2006 Equity Incentive Plan, as amended and restated (“Equity Plan”), provides for the grant of long-term incentives to the Company’s key employees, including officers, directors, consultants and advisers (“Eligible Participants”), and is designed to align stockholder and employee interests. Under the Equity Plan, the Company may grant incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, and other stock-based awards or any combination thereof to Eligible Participants. The Compensation Committee of the Board establishes the terms and conditions of any awards granted under the plans. At the time of grant, the Company takes into consideration the timing of the stock-based award and evaluates for conditions that could result in the award to be considered spring loaded. The number of shares have been restated to reflect the 1:15 reverse stock split effectuated on February 10, 2025. All historical share and per share amounts reflected in this Report have been retrospectively restated to reflect the change in capital structure for the periods prior to the completion of the reverse stock split, as applicable. Refer to Note 17: Common Stock for further discussion.
In October 2025, the Compensation Committee of the Board approved the ability of recipients to defer payout of performance-based restricted stock unit awards granted pursuant to the Equity Plan. As of December 31, 2025, receipt of approximately 941,358 shares have been deferred pursuant to the Equity Plan; the deferred amount reflects fully vested shares to be issued, which are included in basic earnings per share as the issuance of the shares is no longer subject to a contingency.
As of December 31, 2025, the number of shares of common stock that was authorized and remained available for issuance under the Equity Plan was 4.4 million. During 2025, the number of authorized shares available for issuance increased 2.5 million shares, which was approved by the Company's Board in 2024 in accordance with the annual increase provision set forth in the Equity Plan.
Restricted Awards
Grants of restricted awards (including restricted stock and restricted stock units) have varying vesting criteria, including immediate, one year from the grant date, in equal annual installments (generally over three years) or based on performance criteria. Non-vested restricted awards are generally forfeited upon the termination of employment. Holders of restricted stock are entitled to all rights of a stockholder of the Company with respect to the awards, including the right to vote the shares and receive any dividends or other distributions. Compensation expense associated with restricted awards is measured based on the grant date fair value of the common stock and is recognized on a straight line basis over the vesting period. The table below summarizes the weighted average grant date fair value of restricted awards for the indicated periods:
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Weighted average grant date fair value | $ | 33.55 | | | $ | 24.11 | | | $ | 20.40 | |
The following is a rollforward of the activity in restricted awards for the year ended December 31, 2025:
| | | | | | | | | | | |
| Shares | | Weighted Average
Grant Date
Fair Value |
Nonvested at January 1, 2025 | 438,101 | | | $ | 24.96 | |
| Granted | 321,084 | | | 33.55 | |
| Vested | (497,940) | | | 26.57 | |
| Forfeited | (17,804) | | | 24.40 | |
Nonvested at December 31, 2025 | 243,441 | | | $ | 33.04 | |
For the years ended December 31, 2025, 2024 and 2023, the Company recognized $11.1 million, $11.6 million and $13.1 million, respectively, of compensation expense related to restricted awards. The total fair value, as calculated on the day of vesting, of restricted awards that vested during 2025, 2024 and 2023 was $23.2 million, $13.1 million, and $11.6 million, respectively. As of December 31, 2025, unrecognized compensation expense related to unvested restricted awards outstanding was approximately $6.4 million to be recognized over a weighted-average period of 1.5 years.
Performance-Based Restricted Stock Units (PSUs)
Grants of PSUs may contain either a market condition or a performance condition. All of the Company's outstanding market-conditioned PSUs vest upon the Company's common stock trading at various price levels throughout the performance period. Market-conditioned PSUs are valued using a Monte Carlo simulation model. The Company has also granted performance-conditioned PSUs that vest upon the achievement of internal sales targets and/or project milestones during the performance period. Performance-conditioned PSUs are valued using the stock price on the grant date. All of the outstanding market-conditioned PSUs and performance-conditioned PSUs may be earned over a four-year performance period from the grant date.
The following is a rollforward of the activity in PSUs for the year ended December 31, 2025:
| | | | | | | | | | | |
| Shares | | Weighted Average
Grant Date
Fair Value |
Nonvested at January 1, 2025 | 3,121,284 | | | $ | 13.31 | |
| Granted | 145,404 | | | 16.46 | |
| Vested | (1,214,600) | | | 15.38 | |
Nonvested at December 31, 2025 | 2,052,088 | | | $ | 12.31 | |
For the year ended December 31, 2025, 2024 and 2023, the Company recognized $11.2 million, $23.5 million and $6.7 million, respectively, of compensation cost related to these awards. The total fair value, as calculated on the day of vesting, of PSUs that vested during 2025 was $67.7 million. No PSUs vested during 2024 and 2023. As of December 31, 2025, unrecognized compensation expense related to unvested PSUs was approximately $1.8 million to be recognized over a weighted-average derived service period of 2.0 years. No PSUs expired or were forfeited during 2025.
During 2025, the Company granted market-conditioned PSUs in each of March and May with a fair value of $1.1 million and $0.5 million, respectively, which will be recognized over the derived service period, estimated to be 2.0 years and 2.2 years, respectively. The Monte Carlo simulation was computed using the following assumptions:
| | | | | | | | | | | | | | | | | | | | | | | |
| Shares Granted | | Risk-Free Interest Rate | | Stock Price Volatility | | Market Price of Common Stock |
March 2025 PSUs | 66,667 | | 4.05 | % | | 70.00 | % | | $ | 22.52 | |
May 2025 PSUs | 39,368 | | 4.03 | % | | 70.00 | % | | $ | 19.05 | |
Additionally, the Company granted 39,369 performance-conditioned PSUs during 2025 with a total fair value using the stock price on the grant date of $0.8 million.
Key Employee Bonus Plan
The Company has an annual bonus plan designed to reward designated key employees' efforts to exceed the Company's financial performance goals for the designated calendar year ("Plan Year"). The bonus pool available for distribution is determined based on the Company's adjusted EBITDA performance during the Plan Year. The bonus may be paid in cash or the Company's common stock, subject to certain approvals.
For the 2025 Plan Year, the Company's adjusted EBITDA performance was within the bonus payout threshold according to the plan document. As of December 31, 2025, $3.4 million was accrued on the Company's consolidated balance sheet related to this bonus payment, which is expected to be paid in a mix of cash and common stock during the first quarter of 2026.
16. SEGMENT REPORTING
An operating segment is defined as a component of an enterprise which has discrete financial information that is evaluated regularly by the Company’s Chief Operating Decision Maker ("CODM") to decide how to allocate resources and assess performance. In accordance with ASC 280, Segment Reporting, the Company’s only reportable segment is its MSS business. The Company's Chief Executive Officer, Dr. Paul E. Jacobs, is the Company's CODM. Dr. Jacobs manages the consolidated entity and uses net income (loss) as the measure of profit or loss to assess performance and allocate resources. Dr. Jacobs does not review total assets. Dr. Jacobs reviews revenue and certain operating expenses to determine resource allocations. Revenue is reviewed at a disaggregated level, consistent with the Company’s disclosures in Note 3: Revenue. Expenses are reviewed by the nature of the cost (Cost of Services, Marketing, General and Administrative and Cost of Subscriber Equipment Sales), consistent with the Company’s presentation on its Consolidated Statements of Operations. Other operating segment expenses may include stock-based compensation, depreciation, amortization and accretion, the reduction in the value of assets and inventory, interest income and expense, foreign currency gains and losses, gains and losses on extinguishment of debt as well as other smaller items.
17. COMMON STOCK
On December 17, 2024, by written consent, following the approval and recommendation of the board of directors and its Strategic Review Committee, Thermo, which collectively owns a majority of the Company's issued and outstanding shares of common stock, approved proposals to amend the Company's certificate of incorporation to (i) conduct a reverse stock split of its issued and outstanding shares of common stock at a ratio between 1 for 10 and 1 for 25, and (ii) reduce the authorized number of shares of common stock that the Company can issue in proportion to the reverse stock split.
Effective following the close of trading on February 10, 2025, the Company voluntarily withdrew the listing of its common stock from the NYSE American, effected a reverse stock split at a ratio of 1 to 15 shares of its common stock and amended its certificate of incorporation to reduce the number of authorized shares of common stock that it may issue from 2,150,000,000 shares to 143,333,334 shares of common stock. Effective at the start of trading on February 11, 2025, the Company's common stock began trading on a post-split basis under the symbol “GSAT” on the Nasdaq Stock Market LLC. Upon the effectiveness of the reverse stock split, the number of shares of the Company's common stock outstanding was reduced from 1,896,635,805 to 126,442,583.
No fractional shares were issued as a result of the reverse stock split and it did not impact the par value of the Company's common stock. Any fractional shares that would otherwise have resulted from the reverse stock split were rounded up to the next whole share at the DTC participant level, except that any fractional shares resulting from the reverse stock split for any outstanding awards adjustments pursuant to the terms and conditions of the Company's 2006 Equity Incentive Plan and the award or agreement governing such awards were rounded down to the next whole share. Neither the reverse stock split nor the related amendments to the Company's certificate of incorporation had any impact on the number of shares of preferred stock it is authorized to issue under its certificate of incorporation or the number of issued and outstanding shares of its Series A Preferred Stock.
All shares of common stock, warrants, stock-based compensation awards and per share amounts included in the Consolidated Financial Statements and applicable notes thereto in Part II, Item 8 of this Report and elsewhere in this Report have been retrospectively restated to reflect the effect of the reverse stock split and related amendments to our certificate of incorporation.
