10-K – 2026-02-27 – gsat-20251231.htm

SPOT service revenue decreased $3.8 million in 2025 due to fewer subscribers, and to a lesser extent, a slight decrease in ARPU. The decline in average subscribers is due to continued competitive pressure; however, product engineering efforts are underway to develop a new consumer SPOT device, which we believe could potentially increase demand for such services from our subscribers.
 
Duplex service revenue decreased $4.9 million in 2025 due to fewer average subscribers resulting from our decision to discontinue the manufacture and sale of Duplex devices to increase our focus on maximizing other sources of revenue.
 
Government and other services revenue decreased 2% in 2025. Government and other services revenue includes fees earned from various governmental service contracts as well as services associated with XCOM RAN sales. We have a network services agreement with Parsons Corporation, a leading technology provider in the national security and global infrastructure markets, to utilize our satellite network for a mission critical service for government applications. Revenue associated with this agreement increased in 2025 as we moved from the proof of concept phase into the first year of services provided under the agreement. This increase was more than offset by a decrease in revenue associated with the timing of XCOM RAN system sales.

Subscriber Equipment Sales
 
Revenue generated from subscriber equipment sales increased $3.0 million during 2025 due to a 50% increase in Commercial IoT device sales compared to 2024.

Operating Expenses :
 
Total operating expenses increased 6% to $265.6 million in 2025 from $251.3 million in 2024, which is primarily related to an increase in cost of services and marketing, general and administrative expenses, offset partially by lower stock-based compensation. A noncash loss on disposal of assets also contributed to the increase in operating expenses during 2025. The main contributors to the variances in operating expenses are explained in detail below.

During 2025, we received employee retention credits as a result of our eligibility under the provisions of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") for the second and third quarters of 2021. The refunds totaled $3.9 million and reduced operating expenses in 2025 compared to 2024. Based on the employee costs incurred during the eligible periods, $2.7 million was allocated to cost of services and $1.2 million was allocated to marketing, general and administrative expense.
 
Cost of Services
 
Cost of services increased $10.0 million, or 14%, to $83.2 million in 2025 from $73.2 million in 2024. We continue to incur higher network operating costs relating to our new and upgraded global ground infrastructure and network-related personnel. In connection with services provided under the Updated Services Agreements, a substantial portion of these costs are reimbursed thereunder and such consideration is recognized as revenue in accordance with the terms of the Updated Services Agreements. During 2025, personnel costs that support the Globalstar System increased $4.9 million. Ground network costs, such as occupancy and maintenance charges, increased $2.7 million during 2025.

During 2025, the increase in cost of services was also due to expenses to support XCOM technology development, including the amortization of certain non-cash costs beginning in May 2024. XCOM-related costs increased $3.0 million during 2025.

Costs to support new MSS product development, including research and development as well as personnel, also contributed to the increase in operating expenses during 2025.

These expense increases were partially offset by the CARES Act tax credits discussed above.

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Cost of Subscriber Equipment Sales

Cost of subscriber equipment sales increased 39% in 2025. During the fourth quarter of 2025, we recognized $1.1 million in expense associated with tariffs on equipment imported by our U.S. entity and re-exported to our foreign subsidiaries that were previously recorded recoverable duty drawbacks but are no longer deemed probable of being refunded. The remaining increase in expense is generally consistent with the increase in revenue generated from subscriber equipment sales during the year.

Marketing, General and Administrative

Marketing, general and administrative expenses increased $8.0 million, or 18%, to $51.4 million in 2025 from $43.4 million in 2024. During 2025, higher personnel costs of $2.1 million and franchise taxes of $0.6 million associated with the Globalstar SPE (as defined herein) increased operating expenses. Costs for legal and professional fees increased by $3.8 million during the year. Other smaller items, such as higher advertising costs, XCOM administrative expenses and sales commissions, also increased expenses during 2025.

These expense increases were partially offset by the CARES Act tax credits discussed above.

Stock-Based Compensation

Stock-based compensation expense decreased $12.1 million to $23.4 million in 2025 from $35.5 million in 2024. The decrease was due primarily to restricted stock units ("RSUs") granted to certain executives in connection with the License Agreement in 2023, the majority of the cost of which was recognized in 2024. During 2023, we granted 3.0 million RSUs, which are earned over a four-year performance period and vest upon Globalstar common stock trading at various price levels throughout the performance period. The total fair value of the RSUs was $39.5 million and is being recognized over the derived service period of 2.6 years; with 17%, 59% and 23% of the compensation cost for these RSUs being recognized during 2023, 2024 and 2025, respectively.

Reduction in Value and Loss on Disposal of Assets

During the first quarter of 2025, we recorded a loss on disposal of assets totaling $7.0 million, which is the net book value of one of our second-generation satellites that experienced a power control anomaly which rendered the satellite inoperable. Based on our recent and historical testing, we currently believe that our constellation of other second-generation satellites will generally operate free of similar anomalies during their projected remaining useful lives. Similar activity did not occur at this level during 2024.

Other (Expense) Income:
 
Loss on extinguishment of debt

We recorded a loss on extinguishment of debt of $27.4 million during 2024. In November 2024, we refinanced the 2023 13% Notes, resulting in a loss on extinguishment of debt due to the unamortized debt discount and deferred financing costs remaining prior to extinguishment as well as the make-whole fees at pay down. Similar activity did not recur in 2025.

Interest Income and Expense
 
Interest income and expense, net, increased $27.3 million to $40.9 million for 2025 compared to $13.6 million for 2024.

The primary items increasing interest income and expense, net, during 2025 are discussed below:

• Infrastructure Prepayment: Interest costs increased due primarily to a non-cash significant financing component ($40.6 million) in accordance with ASC 606 and, to a lesser extent, accrued fees on a portion (up to $225.0 million) of the Infrastructure Prepayment.
• 2024 Debt Repayment: Interest costs increased by $9.4 million due to accrued fees ($20.3 million) offset partially by debt premium amortization (net of debt discount) ($10.9 million).
• Capitalized Interest: Capitalized interest costs were lower by $11.4 million due in part to the decrease in interest costs eligible for capitalization, which increased "interest income and expense, net".

The primary items partially offsetting the increase in interest income and expense, net, during 2025 are discussed below:

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• 2023 13% Notes: Interest costs decreased by $25.5 million following the retirement of these notes in November 2024.
• Interest Income: Interest income increased by $6.7 million due to a higher cash balance.

Foreign Currency Gain (Loss)

Changes in foreign currency gains and losses are driven by the remeasurement of financial statement items, which are denominated in various currencies, at the end of each reporting period.

We recorded foreign currency gains of $15.7 million in 2025. We recorded foreign currency losses of $16.6 million in 2024. Many of our 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.

Derivative Gain (Loss) and Other Income (Expense)

During 2025, derivative gain (loss) and other income (expense) fluctuated by $17.5 million to a gain of $15.0 million in 2025 from a loss of $2.5 million in 2024. Derivative gains and losses primarily include the mark-to-market adjustments associated with the embedded derivative within the 2024 Debt Repayment. The fluctuation in the value of this embedded derivative is due to certain significant inputs used in the fair value measurement, specifically the discount yield and the estimated achievement of project milestones. 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. Also, as the probability of reaching the relevant milestones increases, the fair value of the embedded derivative also increases.

Income Tax Expense (Benefit)

Income tax expense (benefit) fluctuated by $3.8 million to an expense of $5.9 million in 2025 from an expense of $2.1 million in 2024. The increase was primarily driven by $1.4 million of state current tax expense as a result of increased taxable income, $2.0 million related to state tax impacts of a new uncertain tax position in the U.S. and $1.1 million of tax expense associated with income from operations of our Mexican subsidiary. The tax expense in 2024 was primarily due to an uncertain tax position associated with interest and withholdings tax related to the Canadian audit. See Note 13: Taxes to our Consolidated Financial Statements for further information on the Canadian tax audit.

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Liquidity and Capital Resources
 
Overview

Our principal sources of liquidity include cash on hand, cash flows from operations and proceeds from the 2023 Funding Agreement and Infrastructure Prepayment (each term defined below). We expect these liquidity sources to meet our short-term and long-term liquidity needs for funding our operating costs, capital expenditures, including related to the Extended MSS Network and other growth opportunities, and financing obligations, including scheduled recoupments under the 2021 and 2023 Funding Agreements and 2024 Debt Repayment as well as dividends on our Series A Preferred Stock. In addition, we have issued warrants to the Customer that are exercisable in accordance with the Updated Services Agreements and to Thermo in connection with its guarantee of the 2023 Funding Agreement. These warrants would become a source of liquidity if exercised.

As of December 31, 2025 and December 31, 2024, we held cash and cash equivalents of $447.5 million and $391.2 million, respectively. This increase in cash and cash equivalents during 2025 was due primarily to cash received pursuant to the Infrastructure Prepayment of $430.6 million (of which $131.0 million was received during the fourth quarter) and pursuant to the 2023 Funding Agreement of $27.1 million, offset by capital expenditures associated with our commitments under the Updated Services Agreements, including network expansion and upgrades.

The principal amount of our debt outstanding was $410.0 million at December 31, 2025, compared to $417.5 million at December 31, 2024. This decrease was due to scheduled recoupments of $34.6 million under the 2021 Funding Agreement offset by the issuance of debt under the 2023 Funding Agreement totaling $27.1 million during the third quarter 2025.

Cash Flows for the years ended December 31, 2025, 2024 and 2023
 
The following table shows our cash flows from operating, investing and financing activities (in thousands):
  

  Year Ended December 31,

2025 2024 2023
Net cash provided by operating activities $ 621,650  $ 439,192  $ 74,341 
Net cash used in investing activities (550,383) (260,570) (175,612)
Net cash (used in) provided by financing activities
(16,180) 157,181  125,793 
Effect of exchange rate changes on cash and cash equivalents
1,220  (1,383) 140 
Net increase in cash and cash equivalents
$ 56,307  $ 334,420  $ 24,662 

 
Cash Flows Provided by Operating Activities
 
Net cash provided by operating activities includes primarily cash received from our customers from the sale of products and services, including the performance of wholesale capacity services as well as related to the purchase of equipment and satellite voice and data services. We use cash in operating activities primarily for network costs, personnel costs, inventory purchases and other general corporate expenditures.

Net cash provided by operating activities was $621.7 million during 2025 compared to $439.2 million during 2024. This improvement was due primarily to favorable working capital changes, specifically resulting from receipts pursuant to the Infrastructure Prepayment of $430.6 million during 2025 compared to $278.0 million during 2024; these receipts are recorded as deferred revenue and used to fund capital expenditures for the Extended MSS Network, typically in the quarter following the receipt of funds. During 2025, $45.0 million in accelerated fees were paid to us pursuant to the Updated Services Agreements, which also increased deferred revenue. Other smaller items, such as higher net income, after adjusting for noncash items, was offset by other unfavorable working capital changes during the period.
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Cash Flows Used in Investing Activities
 
Net cash used in investing activities was $550.4 million during 2025, compared to $260.6 million during 2024. Net cash used in investing activities during both periods included primarily network upgrades associated with the Updated Services Agreements. The increase during 2025 was principally due to milestone payments made to MDA Space and SpaceX totaling $316.2 million and $33.0 million, respectively, associated with the Extended MSS Network; no payments associated with the Extended MSS Network were made to MDA Space in 2024 and $129.6 million were paid to SpaceX in 2024. Other vendor payments associated with the Extended MSS Network ground network build out also increased cash used in investing activities during 2025.

Cash Flows (Used in) Provided by Financing Activities
 
Net cash used in financing activities was $16.2 million in 2025 compared to net cash provided by financing activities of $157.2 million in 2024. In February 2024 and August 2025, we received proceeds from the 2023 Funding Agreement totaling $37.7 million and $27.1 million, respectively, which was used to pay amounts owed to vendors for network purchases pursuant to the Updated Services Agreements. During 2025 and 2024, we made payments for the scheduled recoupments pursuant to the terms of the 2021 Funding Agreement and also paid cash dividends to holders of the Series A Preferred Stock. During 2024, we received cash to fund the paydown of the outstanding principal balance (including a make-whole payment at paydown) due under the 2023 13% Notes of $234.9 million. We also received cash of $176.0 million for the sale of the Customer Class B Units in the Globalstar SPE (as defined herein); a portion of these funds was used (and the remaining amount will be used) to fund capital expenditures for the Extended MSS Network.

Indebtedness and Other Financing Arrangements

At December 31, 2025, the principal amount of our debt totaled $410.0 million, which accrues fees at a weighted average stated rate up to 9%.

At December 31, 2025, our deferred revenue, net, totaled $869.0 million, of which the majority is expected to be earned over a period in excess of five years as we perform services under the Updated Services Agreements.

For more information regarding our 2024 Debt Repayment, 2021 and 2023 Funding Agreements, dividends paid to holders of the Series A Preferred Stock and Infrastructure Prepayment, see Note 7: Long-Term Debt and Other Financing Arrangements and Note 2: Special Purpose Entity to our Consolidated Financial Statements.

Contractual Obligations and Commitments

Contractual obligations arising in the normal course of business consist primarily of debt and financing obligations (as discussed above), purchase commitments with vendors related to the procurement, deployment and maintenance of the Globalstar System (discussed below), obligations for non-cancellable purchase orders for inventory ($9.1 million, which we expect to be fulfilled in line with current forecasted equipment sales) and operating lease obligations (see Note 4: Leases to our Consolidated Financial Statements for further discussion). For further discussion of the satellite procurement agreements and launch services agreements, refer to Note 10: Commitments and Contingencies to our Consolidated Financial Statements.

Satellite Procurement Agreements

In 2022, we entered into a satellite procurement agreement with MDA Space pursuant to which we expect to acquire at least 17 satellites to replace our 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 in 2026 are later than the dates specified in the satellite procurement agreement. We are 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.

Pursuant to the 2022 satellite procurement agreement, as of December 31, 2025, the parties have accepted milestones totaling $258.3 million associated with the new satellites and related infrastructure. We have paid to MDA Space a total of $236.5 million under the 2022 satellite procurement agreement, of which $19.5 million was paid in 2025. We expect to continue to fund a portion of the future milestone payments under the 2022 satellite procurement agreement using the 2023 Funding Agreement.
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In February 2025, we entered into another satellite procurement agreement with MDA Space pursuant to which we 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. Pursuant to the 2025 satellite procurement agreement, to date, the parties have accepted milestones totaling $470.5 million. During 2025, we paid to MDA Space a total of $316.2 million under the 2025 satellite procurement agreement. We expect to continue to fund future milestone payments under the 2025 satellite procurement agreement using the Infrastructure Prepayment.

The 2022 and 2025 satellite procurement agreements with MDA Space contain customary termination provisions including our right to terminate the contract for convenience at any time, subject to certain conditions and payment obligations.

Launch Services Agreements

In each of August 2023 and June 2025, we 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 we are 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. Globalstar expects the launch of the first and second sets of satellites during the first half and second half of 2026, respectively.

As of December 31, 2025, the parties have accepted milestones totaling $72.9 million associated with the Launch Services Agreements. We have paid to SpaceX a total of $108.5 million under the Launch Services Agreements, of which $69.2 million was paid in 2025.

In October 2024, we entered into a separate agreement with SpaceX for the launch of third-generation satellites related to the Extended MSS Network. To date, the parties have accepted milestones totaling $85.6 million associated with this agreement. We paid to SpaceX a total of $162.6 million to SpaceX under this agreement, of which $33.0 million was paid in 2025. A portion of the amounts paid to SpaceX were prepayment for future milestones, totaling $77.0 million.

The Launch Services Agreements and the October 2024 agreement with SpaceX contain customary termination provisions including our right to terminate the contract for convenience at any time, subject to certain conditions, including SpaceX retaining certain amounts of the contract value.

Funding for Phase 2 Service Period Asset Procurement

Under the Service Agreements, subject to certain terms and conditions, we expect 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 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 to our Consolidated Financial Statements, 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, we have incurred $708.6 million of the $1.5 billion projected spend for the Extended MSS Network, all of which to date has been funded with prepayments from the Customer. We will continue to incur these costs until we complete construction and begin providing services over the Extended MSS Network.

Recently Issued Accounting Pronouncements
 
For a discussion of recent accounting guidance and the expected impact that the guidance could have on our Consolidated Financial Statements, see Note 1: Summary of Significant Accounting Policies to our Consolidated Financial Statements.
 
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Critical Accounting Policies and Estimates
 
Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. Note 1: Summary of Significant Accounting Policies in our Consolidated Financial Statements contains a description of the accounting policies used in the preparation of our financial statements as well as the consideration of recently issued accounting standards and the estimated impact these standards will have on our financial statements. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, property and equipment, income taxes and the valuation of the embedded derivative associated with the 2024 Debt Repayment. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual amounts could differ significantly from these estimates under different assumptions and conditions.
 
We define a critical accounting policy or estimate as one that is both important to our financial condition and results of operations and requires us to make difficult, subjective or complex judgments or estimates about matters that are uncertain. We believe that the following are the critical accounting policies and estimates used in the preparation of our Consolidated Financial Statements. In addition, there are other items within our Consolidated Financial Statements that require estimates but are not deemed critical as defined in this paragraph.

Revenue Recognition
 
Our primary types of revenue include (i) wholesale capacity service revenue from providing satellite network access and related services over the Globalstar System, (ii) service revenue from MSS data transmissions and voice communications, (iii) subscriber equipment revenue from the sale of devices as well as other products and accessories and (iv) service revenue from providing engineering and communication services using our MSS and terrestrial spectrum licenses. The complexities or judgments involved in revenue recognition are discussed below.

If a contract includes more than one performance obligation, such as under the Updated Services Agreements or when subscriber equipment is bundled with services in a multiple-element arrangement, we allocate the transaction price to each performance obligation in proportion to their standalone selling prices at contract inception and recognize them when, or as, each performance obligation is satisfied. Determination of the relative stand-alone selling prices is complex and involves judgment, as prices may vary based on many factors, such as promotions, customer, volume and/or type of equipment sold.

Service revenue is generally recognized over a period of time (consistent with the customer's receipt and consumption of the benefits of our performance) and revenue from the sale of subscriber equipment is recognized at a point in time (consistent with the transfer of risks and rewards of ownership of the product).

We record customer payments received in advance of the corresponding service period as deferred revenue. We assess the timing of services to a customer as compared to the timing of payments made to us to determine whether a significant financing component exists. In general, our subscriber-driven contracts are paid monthly or annually and the time between cash collection and performance is less than one year. For certain payments made under the Updated Services Agreements, the length of time between receipt of payment and the transfer of services by us is greater than twelve months. Accordingly, such payments include a significant financing component.

For Duplex service revenue, we recognize revenue for monthly access fees in the period services are rendered. For annual plans whereby a customer prepays for a predetermined amount of minutes and data, revenue is recognized consistent with the customer's expected pattern of usage, based on historical experience because we believe that this method most accurately depicts the satisfaction of our obligation to the customer. For annual plans where the customer is charged an annual fee to access our system, we recognize revenue on a straight-line basis over the term of the plan.

For our subscriber-driven contracts, subscriber acquisition costs primarily include internal sales commissions and certain other costs, including but not limited to, promotional costs, cooperative marketing credits and shipping and fulfillment costs. We capitalize incremental costs to obtain a contract to the extent we expect to recover such costs. All other subscriber acquisitions costs are expensed at the time of the related sale.

As considerations for services provided by us pursuant to the Updated Services Agreements, payments include a fixed service fee, fees 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.
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The recognition of revenue associated with certain payments involves judgment, including variable consideration associated with the reimbursement of network-related costs as well the recognition of bonus payments. The reimbursement of network-related costs is recorded as revenue as the costs are incurred by us and the receipt of bonus payments are generally recognized as payments are received, unless there is historical data to support recognition of revenue over the period in which the bonus is earned.

Under the Updated Services Agreements, we issued warrants to purchase shares of Globalstar common stock, which were recorded at the estimated fair value of the consideration granted based on a Black-Scholes pricing model. The fair value of the warrants was capitalized as a contract asset and is being recognized as a reduction of the transaction price over the estimated term of the Phase 1 Service Period and Phase 2 Service Period under the Updated Services Agreements.
 
Property and Equipment
 
The vast majority of our property and equipment costs are incurred related to the construction of our satellites and ground station upgrades. We capitalize costs associated with the design, manufacture, test and launch of our LEO satellites. We also capitalize costs associated with the design, manufacture and test of our gateways and other capital assets. For assets that are sold or retired, including satellites that are de-orbited and no longer providing services, we remove the estimated cost and accumulated depreciation. We recognize a loss from an in-orbit failure of a satellite equal to its net book value, if any, in the period it is determined that the satellite is not recoverable.
 
Estimating the useful life of our assets is complex and involves judgment. We evaluate the appropriateness of estimated depreciable lives assigned to our property and equipment and revise such lives to the extent warranted by changing facts and circumstances. If the useful life of our significant assets changes, this change could impact our operating results. The estimated useful lives of our assets is based on many factors, including estimated design life, information from our engineering department and our overall strategy for the use of the assets. A one year reduction in the estimated useful life of our second-generation satellites would result in an annual increase to depreciation expense of $5.1 million.

We review the carrying value of our assets for impairment whenever events or changes in circumstances indicate that the recorded value may not be recoverable. If indicators of impairment exist, we compare future undiscounted cash flows to the carrying value of the asset group. If an asset is not recoverable, its carrying value would be adjusted down to fair value and an impairment loss would be recorded. Key assumptions in our impairment tests include projected future cash flows, the timing of network upgrades and current discount rates. Additionally, from time to time, we perform profitability analyses to determine if investments in certain products and/or services remain viable. In the event we determine to no longer support a product or service, or that an asset is not expected to generate future benefit, the asset may be abandoned and an impairment loss may be recorded.

Income Taxes
 
We use the asset and liability method of accounting for income taxes. This method takes into account the differences between financial statement treatment and tax treatment of certain transactions. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Our deferred tax calculation requires us to make certain estimates about our future operations. Changes in state, federal and foreign tax laws, as well as changes in our financial condition or the carrying value of existing assets and liabilities, could affect these estimates. We recognize the effect of a change in tax rates as income or expense in the period that the rate is enacted.
 
GAAP requires us to assess whether it is more likely than not that we will be able to realize some or all of our deferred tax assets. If we cannot determine that deferred tax assets are more likely than not to be recoverable, GAAP requires us to provide a valuation allowance against those assets. This assessment takes into account factors including: (a) the nature, frequency, and severity of current and cumulative financial reporting losses; (b) sources of estimated future taxable income; and (c) tax planning strategies. We must weigh heavily our recent financial reporting losses as a source of negative evidence when determining our ability to realize deferred tax assets. Projections of estimated future taxable income (exclusive of reversing temporary differences) are a source of positive evidence only when the projections are combined with a history of recent profitable operations and can be reasonably estimated. Otherwise, GAAP requires that we consider projections inherently subjective and generally insufficient to overcome negative evidence that includes cumulative losses in recent years. If necessary and available, we would implement tax planning strategies to accelerate taxable amounts to utilize expiring carryforwards. These strategies would be a source of additional positive evidence supporting the realization of deferred tax assets.
 
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Embedded Derivative within the 2024 Debt Repayment

In connection with our financing arrangements, we review the features within the instruments to evaluate if they contain an embedded derivative. If an instrument contains an embedded derivative, the derivative is bifurcated from the debt host contract and initially recorded at fair value with the difference between the basis of the debt host contract and the fair value of the embedded derivative recorded as the carrying value of the host contract. The fair value of the embedded derivative is measured at fair value on a quarterly basis, or more often if deemed necessary, with gains or losses recognized in earnings. We determine the fair value of derivative instruments based on available market data and assumptions developed by management using appropriate valuation models.

The terms of the 2024 Debt Repayment contain an interest reduction mechanism if we meet certain defined milestones associated with the completion of the Extended MSS Network. At issuance, this feature was identified as an embedded derivative and resulted in a debt premium being added to the principal amount of the 2024 Debt Repayment. We are amortizing the debt premium as an offset to interest expense over the loan term using the effective interest rate method. 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.

The fair value of this embedded derivative is valued using a discounted cash flow model. The most significant input used in the fair value measurement is the discount rate. As the discount yield used in the valuation process decreases, the fair value of the embedded derivative increases. Also impacting the fair value measurement is the length of time between the reporting period and the start of interest payments; as the length of time decreases, the present value of the projected interest savings increases, resulting in a higher derivative asset value. The most 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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 
Our services and products are sold, distributed or available in numerous countries globally. Our international sales are denominated primarily in Canadian dollars, Brazilian reais and euros. In some cases, insufficient supplies of U.S. currency may require us to accept payment in other foreign currencies. We reduce our currency exchange risk from revenues in currencies other than the U.S. dollar by requiring payment in U.S. dollars whenever possible and purchasing foreign currencies on the spot market when rates are favorable. We currently do not purchase hedging instruments to hedge foreign currencies.

We also have operations in Argentina, which is considered to have a highly inflationary economy. Operations in this country are not considered significant to our consolidated operations.

We may be subject to concentrations of credit risk for certain financial instruments, including cash and cash equivalents and accounts receivable. Cash and cash equivalents consists primarily of highly liquid short-term investments deposited with financial institutions that are of high credit quality. We record trade accounts receivable when we have a contractual right to receive payment on demand or on a fixed or determinable date in the future. We perform ongoing credit evaluations of our customers.

See Note 9: Fair Value Measurements to our Consolidated Financial Statements for discussion of our financial assets and liabilities measured at fair market value and the market factors affecting changes in fair market value of each.

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Item 8. Financial Statements and Supplementary Data
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 

  Page
Audited Consolidated Financial Statements of Globalstar, Inc. 44

Report of Ernst & Young LLP, independent registered public accounting firm (PCAOB ID 42 )
44

Consolidated balance sheets at December 31, 2025 and 2024
47

Consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023
48

Consolidated statements of comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023
49

Consolidated statements of stockholders’ equity for the years ended December 31, 2025, 2024 and 2023
50

Consolidated statements of cash flows for the years ended December 31, 2025, 2024 and 2023
51

Notes to Consolidated Financial Statements 52

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Globalstar, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Globalstar, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2026, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Useful life of Space component assets
Description of the Matter At December 31, 2025, the Company had $1.1 billion of Space component assets recorded as property and equipment. As discussed in Note 1 to the consolidated financial statements, the Company’s Space component assets are depreciated on a straight-line basis over their estimated useful life, which currently is 15 years. Management’s estimate of the useful life of its Space component assets was based on estimated design life, information from the Company’s strategy for the use of the assets and its engineering department.

Auditing the Company’s estimate of the useful life of its Space component assets involved a high degree of subjectivity due to the application of management’s judgment when evaluating the available information and whether to adjust the useful life. Management’s assessment has a significant effect on the timing of recognition of depreciation expense given the magnitude of the carrying amount of the Space component assets.

44

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to assess the useful life of its Space component assets, including controls over management’s evaluation of the available information used in the assessment.

Our testing of the Company's useful life of the Space component assets included, among other procedures, evaluating the application of available information. We compared management’s useful life to the manufacturer’s estimated design life, publicly available information on the estimated useful life of similar assets, operation and performance of the assets as evaluated by the Company’s engineering department, and the life of its first-generation satellite constellation. Additionally, we evaluated the effect of changes, if any, in the Company’s long-term strategy for use of the assets on the useful life estimate as well as certain activities implemented by the Company that indirectly monitor satellite performance.

Valuation of the Embedded Derivative

Description of the Matter At December 31, 2025, the Company recorded a derivative asset totaling $114.5 million. As discussed in Notes 8 and 9 to the consolidated financial statements, the terms of the Company’s 2024 Debt Repayment contain an interest reduction mechanism which was bifurcated and recorded as an embedded derivative. The fair value of the embedded derivative, which was determined using a discounted cash flow model, was dependent on significant inputs such as the discount yield and the estimated achievement of project milestones.

Auditing management’s valuation of the embedded derivative was complex as estimating fair value involves subjective assumptions, such as the estimated achievement of project milestones. The project milestone achievement assumptions are forward looking and a change in these assumptions can have a material effect on the determination of fair value. The Company also engaged an external valuation specialist to assist with the valuation of the derivative asset.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s derivative valuation. Our procedures included testing controls over management’s review of the expected achievement of the milestones.

Our audit procedures to test management’s valuation of the embedded derivative included, among others, assessing the valuation methodology and significant assumptions discussed above and the underlying data used to develop such assumptions. We tested the source information underlying the significant assumptions including management’s assessment of the probability of achieving the milestones. Where appropriate, we evaluated whether changes to the Company’s business and other factors would affect the significant assumptions. We involved our valuation specialists to assist us in evaluating the valuation approach used to calculate the fair value of the derivative.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2020.

New Orleans, Louisiana
February 27, 2026

45

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Globalstar, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Globalstar, Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Globalstar, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 27, 2026, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

New Orleans, Louisiana
February 27, 2026
46

GLOBALSTAR, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share data)

  December 31,
  2025 2024
ASSETS    
Current assets:    
Cash and cash equivalents $ 447,471   $ 391,164  
Accounts receivable, net of allowance for credit losses of $ 1,468 and $ 1,504 , respectively
19,976   26,952  
Inventory 9,614   10,741  
Prepaid expenses and other current assets 19,667   18,714  
Total current assets 496,728   447,571  
Property and equipment, net 1,305,458   673,632  
Operating lease right of use assets, net 66,698   31,835  
Prepaid network costs 198,375   312,342  
Derivative asset 114,461   108,799  
Intangible and other assets, net of accumulated amortization of $ 12,511 and $ 7,625 , respectively
144,545   136,058  
Total assets $ 2,326,265   $ 1,710,237  
LIABILITIES AND STOCKHOLDERS’ EQUITY
   
Current liabilities:    
Current portion of long-term debt $ 31,835   $ 34,600  
Accounts payable and accrued expenses 56,022   29,677  
Accrued network construction costs 55,218   15,613  
Payables to affiliates 391   394  
Deferred revenue, net 62,020   61,201  
Total current liabilities 205,486   141,485  
Long-term debt 451,953   476,822  
Operating lease liabilities 54,549   26,256  
Deferred revenue, net 806,930   288,171  
Other non-current liabilities 451,618   418,620  
Total non-current liabilities 1,765,050   1,209,869  

Total liabilities
1,970,536   1,351,354  

Commitments and contingencies (Note 10)

Stockholders’ equity:    
Series A Perpetual Preferred Stock of $ 0.0001 par value; 300,000 shares authorized and 149,425 issued and outstanding at December 31, 2025 and 2024, respectively
—   —  
Voting Common Stock of $ 0.0001 par value; 143,333,334 shares authorized; 128,050,400 and 126,424,799 shares issued and outstanding at December 31, 2025 and 2024, respectively (1)
13   13  
Additional paid-in capital (1)
2,489,227   2,473,564  
Accumulated other comprehensive income 3,286   13,452  
Retained deficit ( 2,136,797 ) ( 2,128,146 )
Total stockholders’ equity 355,729   358,883  
Total liabilities and stockholders’ equity $ 2,326,265   $ 1,710,237  

(1) The number of shares as of December 31, 2024 have been restated to reflect the 1:15 reverse stock split effectuated on February 10, 2025. All historical share and per share amounts for the periods prior to the completion of the reverse stock split reflected in this Report have been adjusted to reflect the reverse stock split. Refer to Note 17: Common Stock.

See accompanying notes to Consolidated Financial Statements.
47

(GLOBALSTAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 

  Year Ended December 31,
  2025 2024 2023
Revenue:      
Service revenue $ 257,309   $ 237,689   $ 204,196  
Subscriber equipment sales 15,677   12,660   19,612  
Total revenue 272,986   250,349   223,808  
Operating expenses:      
Cost of services (exclusive of depreciation, amortization and accretion shown separately below) 83,181   73,160   53,499  
Cost of subscriber equipment sales 12,905   9,287   15,973  
Cost of subscriber equipment sales - reduction in the value of inventory —   327   —  
Marketing, general and administrative 51,428   43,434   43,458  
Stock-based compensation 23,413   35,548   22,489  
Reduction in the value and disposal of long-lived assets 7,228   556   363  
Depreciation, amortization and accretion 87,401   88,986   88,191  
Total operating expenses 265,556   251,298   223,973  
Income (loss) from operations 7,430   ( 949 ) ( 165 )
Other income (expense):      
Loss on extinguishment of debt —   ( 27,378 ) ( 10,403 )
Loss on equity issuance —   —   ( 5,010 )
Interest income and expense, net of amounts capitalized ( 40,920 ) ( 13,562 ) ( 14,609 )
Foreign currency gain (loss) 15,748   ( 16,609 ) 4,862  
Derivative gain (loss) and other income (expense) 14,969   ( 2,531 ) 1,730  
Total other expense ( 10,203 ) ( 60,080 ) ( 23,430 )
Loss before income taxes ( 2,773 ) ( 61,029 ) ( 23,595 )
Income tax expense 5,878   2,135   1,123  
Net loss $ ( 8,651 ) $ ( 63,164 ) $ ( 24,718 )

Net loss attributable to common shareholders (Note 14)
$ ( 19,256 ) $ ( 73,798 ) $ ( 35,323 )
Net loss per common share:      
Basic (1)
$ ( 0.15 ) $ ( 0.59 ) $ ( 0.29 )
Diluted (1)
( 0.15 ) ( 0.59 ) ( 0.29 )
Weighted-average shares outstanding:      
Basic (1)
126,757   125,877   122,334  
Diluted (1)
126,757   125,877   122,334  

(1) The number of shares for the years ended December 31, 2024 and 2023 have been restated to reflect the 1:15 reverse stock split effectuated on February 10, 2025. All historical share and per share amounts for the periods prior to the completion of the reverse stock split reflected in this Report have been adjusted to reflect the reverse stock split. Refer to Note 17: Common Stock.

See accompanying notes to Consolidated Financial Statements.
 

48

GLOBALSTAR, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)

  Year Ended December 31,
  2025 2024 2023
Net loss $ ( 8,651 ) $ ( 63,164 ) $ ( 24,718 )
Other comprehensive (loss) income:      
Net foreign currency translation adjustment ( 10,166 ) 8,382   ( 4,172 )
Total other comprehensive (loss) income ( 10,166 ) 8,382   ( 4,172 )
Total comprehensive loss $ ( 18,817 ) $ ( 54,782 ) $ ( 28,890 )

   
See accompanying notes to Consolidated Financial Statements.
 

49

GLOBALSTAR, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)

Preferred Stock Common Stock (1)
Additional
Paid-In
  (1)
Accumulated Other Comprehensive Income (Loss) Retained
Deficit Total
  Shares Amount Shares Amount
Balances – December 31, 2022 149   $ —   120,738   $ 12   $ 2,345,781   $ 9,242   $ ( 2,040,264 ) $ 314,771  
Net issuance of restricted stock awards, stock for employee stock options and stock for employee stock purchase plan and recognition of stock-based compensation —  —  677   —  20,557   —  —  20,557  
Series A Preferred Dividends —  —  —  —  ( 11,942 ) —  —  ( 11,942 )
Fair value of Thermo guarantees associated with 2023 Funding Agreement —  —  —  —  8,864   —  —  8,864  
Issuance of the warrant to Thermo for its guarantee associated with the 2023 Funding Agreement —  —  —  —  5,010   —  —  5,010  
Issuance of stock in connection with XCOM License Agreement —  —  3,998   1   70,420   —  —  70,421  
Other —  —  —  —  188   —  —  188  
Other comprehensive loss —  —  —  —  —  ( 4,172 ) —  ( 4,172 )
Net loss —  —  —  —  —  —  ( 24,718 ) ( 24,718 )
Balances – December 31, 2023 149   $ —   125,413   $ 13   $ 2,438,878   $ 5,070   $ ( 2,064,982 ) $ 378,979  
Net issuance of restricted stock awards, stock for employee stock options and stock for employee stock purchase plan and recognition of stock-based compensation —  —  502   —  38,011   —  —  38,011  
Series A Preferred Dividends —  —  —  —  ( 10,634 ) —  —  ( 10,634 )
Issuance of stock in connection with XCOM License Agreement —  —  510   —  7,501   —  —  7,501  
Other —  —  ( 192 ) ( 192 )
Other comprehensive income —  —  —  —  —  8,382   —  8,382  
Net loss —  —  —  —  —  —  ( 63,164 ) ( 63,164 )
Balances – December 31, 2024 149   $ —   126,425   $ 13   $ 2,473,564   $ 13,452   $ ( 2,128,146 ) $ 358,883  
Net issuance of restricted stock awards, stock for employee stock options and stock for employee stock purchase plan and recognition of stock-based compensation —  —  1,625   —  25,482   —  —  25,482  
Series A Preferred Dividends —  —  —  —  ( 10,605 ) —  —  ( 10,605 )
Other
—  —  786   786  
Other comprehensive loss —  —  —  —  —  ( 10,166 ) —  ( 10,166 )
Net loss —  —  —  —  —  —  ( 8,651 ) ( 8,651 )
Balances – December 31, 2025 149   $ —   128,050   $ 13   $ 2,489,227   $ 3,286   $ ( 2,136,797 ) $ 355,729  

(1) The number of shares as of December 31, 2024, 2023 and 2022 have been restated to reflect the 1:15 reverse stock split effectuated on February 10, 2025. All historical share and per share amounts for the periods prior to the completion of the reverse stock split reflected in this Report have been adjusted to reflect the reverse stock split. Refer to Note 17: Common Stock.

See accompanying notes to Consolidated Financial Statements.
50

GLOBALSTAR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

  Year Ended December 31,
  2025 2024 2023
Cash flows provided by operating activities:      
Net loss $ ( 8,651 ) $ ( 63,164 ) $ ( 24,718 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation, amortization and accretion 87,401   88,986   88,191  
Stock-based compensation expense 23,413   35,548   22,489  
Reduction in the value and disposal of long-lived assets and inventory 7,228   883   363  
Noncash interest and accretion expense 49,913   6,468   14,739  
Noncash portion of loss on extinguishment of debt —   14,008   10,194  
Loss on equity issuance —   —   5,010  
Noncash expenses associated with SSA, net of amortization 4,054   7,671   3,070  
Unrealized foreign currency (gain) loss ( 15,797 ) 16,663   ( 4,972 )
Other, net ( 17,294 ) ( 657 ) ( 4,026 )
Changes in operating assets and liabilities:      
Accounts receivable 7,485   26,661   12,693  
Inventory 1,519   2,796   ( 4,154 )
Prepaid expenses and other current assets ( 1,514 ) ( 856 ) ( 3,235 )
Other assets ( 1,131 ) 294   610  
Accounts payable and accrued expenses 1,054   ( 1,378 ) ( 3,408 )
Payables to affiliates ( 3 ) ( 65 ) 133  
Other non-current liabilities 2,431   3,561   ( 53 )
Deferred revenue 481,542   301,773   ( 38,585 )
Net cash provided by operating activities 621,650   439,192   74,341  
Cash flows used in investing activities:      
Payments for network upgrades to support the Phase 1 and Phase 2 Service Period ( 97,061 ) ( 105,315 ) ( 158,798 )
Payments for network upgrades to support the Extended MSS Network
( 442,289 ) ( 131,683 ) —  
Payments of capitalized interest —   ( 9,981 ) ( 8,810 )
Payments for network upgrades to support product development ( 5,509 ) ( 6,823 ) ( 6,907 )
Purchase of intangible assets ( 5,524 ) ( 6,768 ) ( 1,097 )
Net cash used in investing activities ( 550,383 ) ( 260,570 ) ( 175,612 )
Cash flows (used in) provided by financing activities:      
Proceeds from 2023 Funding Agreement 27,147   37,747   117,253  
Principal payments of 2021 Funding Agreement ( 34,600 ) ( 34,600 ) ( 12,500 )
Dividends paid on Series A Preferred Stock ( 10,605 ) ( 10,634 ) ( 11,942 )
Proceeds from issuance of Customer Class B units —   176,189   —  
Proceeds from issuance of 2024 Debt Repayment —   221,625   —  
Principal and make-whole payment of 2023 13 % Notes
—   ( 234,927 ) —  
Principal and interest payments of the 2019 Facility Agreement —   —   ( 148,281 )
Proceeds from 2023 13 % Notes
—   —   190,000  
Payments for debt and equity issuance costs —   —   ( 8,556 )
Proceeds from issuance of common stock and exercise of options 1,878   1,781   ( 181 )
Net cash (used in) provided by financing activities ( 16,180 ) 157,181   125,793  
Effect of exchange rate changes on cash and cash equivalents 1,220   ( 1,383 ) 140  
Net increase in cash and cash equivalents 56,307   334,420   24,662  
Cash and cash equivalents, beginning of period 391,164   56,744   32,082  
Cash and cash equivalents, end of period (1)
$ 447,471   $ 391,164   $ 56,744  

Year Ended December 31,
2025 2024 2023
Supplemental disclosure of cash flow information:      
Cash paid for:      
Interest $ —   $ 15,666   $ 13,512  

Supplemental disclosure of non-cash financing and investing activities:
Increase in capitalized accrued interest including in accrued expenses and deferred revenue $ 33,984   $ 8,113   $ 5,603  
Network construction assets included in accrued expenses 55,218   15,613   58,187  
Fair value of common stock issued for XCOM SSA —   7,500   11,887  
Construction in progress assets acquired through XCOM SSA 1,810   6,065   2,776  
Extended MSS Network assets acquired through Globalstar SPE —   223,811   —  
Re-characterization of 2021 Funding Agreement to debt due to 2023 amendment —   —   87,950  
Fair value of common stock issued for XCOM License Agreement —   —   58,534  
Fair value of the warrant issued to Thermo for the guarantee associated with the 2023 Funding Agreement —   —   5,010  

(1) Cash and cash equivalents on the consolidated balance sheet is equal to cash and cash equivalents on the statement of cash flows 

See accompanying notes to Consolidated Financial Statements.
 
51

GLOBALSTAR, INC.
 
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.
52

 
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.

53

The Company did no t 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
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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.
 
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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.

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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.
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  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.
 
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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.
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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.

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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
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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
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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.

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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.

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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):
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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.
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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
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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.

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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  

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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  

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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
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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
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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. T he 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.
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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.

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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.

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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  

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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
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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.

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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):

79

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.
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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 ) %

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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  

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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.