NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
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 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.
The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”); however, management believes the disclosures made are adequate to make the information presented in this Report not misleading. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025 (the “2024 Annual Report”).
The preparation of condensed consolidated financial statements in conformity with 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 period condensed consolidated financial statements to conform to current period presentation.
These unaudited interim condensed consolidated financial statements include the accounts of Globalstar and all its subsidiaries. The Company's consolidated financial statements include results and amounts for the Globalstar SPE (as defined below), which is a variable interest entity further described in Note 2, of which Globalstar is the primary beneficiary. Intercompany transactions and balances have been eliminated in the consolidation. In the opinion of management, the information included herein includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, consolidated balance sheets, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full year or any future period.
Reverse Stock Split
On February 10, 2025, the Company effectuated a reverse stock split of its common stock at a 1-for-15 ratio.
All issued and outstanding common stock, options and warrants to purchase common stock and per share amounts contained in this Report have been adjusted retroactively to reflect the change in capital structure for the periods prior to the completion of the reverse stock split, as applicable. Refer to Note 13: Common Stock for additional information.
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("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 were effective for fiscal years beginning after December 15, 2024. The amendments should be applied prospectively; however, retrospective application is also permitted. The Company adopted this standard when it became effective on January 1, 2025. We expect that this standard will increase the tax disclosures in the Company's annual report on Form 10-K for the year ended December 31, 2025.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued 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.
2. SPECIAL PURPOSE ENTITY
The Company provides wholesale capacity 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 variable interest entity, 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’s end users 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 the fourth quarter of 2025, and 3) future Services provided over the Extended MSS Network.
The table below includes the assets of the Globalstar SPE as of June 30, 2025 (amounts in thousands):
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| | As of June 30, 2025 |
Assets | | |
Cash and cash equivalents | | $ | 34,550 | |
Property and equipment, net | | 293,826 | |
| Prepaid network costs | | 284,412 | |
Intangibles and other asset, net | | 12,121 | |
Total Assets | | $ | 624,909 | |
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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 the Company 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.
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 prepayment 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 $124.7 million 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 remaining amount of the Infrastructure Prepayment does not and will not accrue fees. Refer to Note 3: Revenue for further discussion.
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. Refer to Note 6: Long-Term Debt and Other Financing Arrangements for further information.
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.
Other
In connection with the Updated Services Agreements, in October 2024, the Company entered into a launch services agreement with Space Exploration Technologies Corp. ("SpaceX") for the new satellites that will be procured for the Extended MSS Network. Refer to Note 9: Commitments and Contingencies for further information.
3. REVENUE
Disaggregation of Revenue
The following table discloses revenue disaggregated by type of product and service (amounts in thousands):
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| Three Months Ended | | Six Months Ended |
| June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 |
| Service revenue: | | | | | | | |
| Wholesale capacity services | $ | 42,385 | | | $ | 34,075 | | | $ | 79,094 | | | $ | 65,287 | |
| Subscriber services | | | | | | | |
| Commercial IoT | 7,051 | | | 6,716 | | | 13,631 | | | 13,153 | |
| SPOT | 9,224 | | | 10,379 | | | 18,595 | | | 20,622 | |
| Duplex | 3,677 | | | 4,965 | | | 7,129 | | | 9,720 | |
| Government and other services | 879 | | | 1,500 | | | 1,834 | | | 2,318 | |
| Total service revenue | 63,216 | | | 57,635 | | | 120,283 | | | 111,100 | |
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| Total subscriber equipment sales | 3,932 | | | 2,750 | | | 6,897 | | | 5,765 | |
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| Total revenue | $ | 67,148 | | | $ | 60,385 | | | $ | 127,180 | | | $ | 116,865 | |
"Wholesale capacity services" revenue in the above table includes revenue associated with the Updated Services Agreements. 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.
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 (amounts in thousands):
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| | As of: |
| | June 30, 2025 | | December 31, 2024 |
| Accounts receivable, net of allowance for credit losses | | | | |
Subscriber and other accounts receivable | | $ | 14,559 | | | $ | 14,829 | |
| Wholesale capacity accounts receivable | | 10,216 | | | 12,123 | |
| Total accounts receivable, net of allowance for credit losses | | $ | 24,775 | | | $ | 26,952 | |
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The Company has entered into a satellite procurement agreement and two launch services agreements to support the Phase 2 Service Period, with the second launch services agreement entered into in June 2025. The new 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 once the first set of new satellites are successfully utilized to provide services for the Phase 2 Service Period. Based on construction in progress through June 30, 2025, the Company expects to bill $257.2 million associated with the Phase 2 Service Period. Refer to Note 9: 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 (amounts in thousands).
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| | As of: |
| | June 30, 2025 | | December 31, 2024 |
| Short-term contract liabilities | | | | |
Subscriber and other contract liabilities | | $ | 18,455 | | | $ | 19,710 | |
Wholesale capacity contract liabilities, net of contract asset | | 32,777 | | | 41,491 | |
| Total short-term contract liabilities | | $ | 51,232 | | | $ | 61,201 | |
| Long-term contract liabilities | | | | |
Subscriber and other contract liabilities | | $ | 1,250 | | | $ | 1,431 | |
| Wholesale capacity contract liabilities, net of contract asset | | 472,056 | | | 286,740 | |
| Total long-term contract liabilities | | $ | 473,306 | | | $ | 288,171 | |
| Total contract liabilities | | $ | 524,538 | | | $ | 349,372 | |
For subscriber and other contract liabilities, the amount of revenue recognized during the six months ended June 30, 2025 and 2024 from performance obligations included in the contract liability balance at the beginning of these periods was $11.4 million and $12.8 million, respectively. For wholesale capacity contract liabilities, the amount of revenue recognized during the six months ended June 30, 2025 and 2024 from performance obligations included in the contract liability balance at the beginning of these periods was $31.3 million and $25.9 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 (amounts in thousands).
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| | As of: |
| | June 30, 2025 | | December 31, 2024 |
| Wholesale capacity contract liabilities, net: | | | | |
Additional consideration associated with the 2021 and 2023 Funding Agreements (1) | | $ | 10,032 | | | $ | 12,247 | |
| Advanced payments for services expected to be performed with the ground spare satellite launched in June 2022 | | 21,034 | | | 21,914 | |
| Advanced payments contractually owed for services expected to be performed with the next-generation satellite constellation prior to the Phase 2 Service Period | | 7,351 | | | 8,950 | |
Advanced payments for the Phase 1 Service Period fixed fee, service-related operating and capital expenditures and other services | | 23,778 | | | 25,170 | |
Advanced payments under the Infrastructure Prepayment (See Note 2: Special Purpose Entity) | | 402,733 | | | 278,043 | |
Additional consideration associated with the Updated Services Agreements (2) | | 38,456 | | | 7,288 | |
Other advanced payments associated with future performance obligations (3) | | 48,232 | | | 18,284 | |
Contract asset (4) | | (46,783) | | | (43,665) | |
| Wholesale capacity contract liabilities, net | | $ | 504,833 | | | $ | 328,231 | |
(1)Includes additional consideration associated with the below-market interest rates within the 2021 Funding Agreement and 2023 Funding Agreement. 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 these payments in advance of service. This consideration includes: a) $19.0 million associated with the fee reduction mechanism embedded in the 2024 Debt Repayment and a portion of the Infrastructure Prepayment, and b) an estimate of the significant financing component totaling $19.5 million within these agreements. It is anticipated that this consideration will be recognized over the estimated Extended MSS Network service period.
(3)Includes primarily: a) advanced service payments received during 2025 totaling $30.0 million related to the Updated Services Agreements, which provide for annual service fees of $30 million 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. This consideration 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 $41.9 million as of June 30, 2025.
4. LEASES
The following tables disclose the components of the Company’s operating leases (amounts in thousands):
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| | As of: |
| | June 30, 2025 | | December 31, 2024 |
| Operating leases: | | | | |
| Right-of-use asset, net | | $ | 60,483 | | | $ | 31,835 | |
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| Short-term lease liability (recorded in accrued expenses) | | 5,273 | | | 4,251 | |
| Long-term lease liability | | 51,406 | | | 26,256 | |
| Total operating lease liabilities | | $ | 56,679 | | | $ | 30,507 | |
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During 2025, the Company modified its leases in Mexico, Spain and Singapore, resulting in increases to the right-of-use assets totaling $9.0 million, $10.0 million and $12.3 million, respectively. These modifications were made in connection with the Updated Services Agreements and for certain locations, extend the lease term and/or expand the leased footprint.
Finance leases are not significant to the Company's financial statements as of June 30, 2025 and December 31, 2024.
Lease Cost
The components of lease cost are reflected in the table below (amounts in thousands):
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| | Three Months Ended | | Six Months Ended |
| | June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 |
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Operating lease cost (1) | | $ | 2,050 | | | $ | 1,630 | | | $ | 3,702 | | | $ | 3,124 | |
| Short-term lease cost | | 27 | | | 113 | | | 109 | | | 277 | |
| Total lease cost | | $ | 2,077 | | | $ | 1,743 | | | $ | 3,811 | | | $ | 3,401 | |
(1) Includes sublease income.
Amortization and interest associated with finance leases were less than $0.1 million in total for each of the three and six month periods ended June 30, 2025 and 2024; accordingly, these amounts are not shown in the table above.
Weighted-Average Remaining Lease Term and Discount Rate
The following table discloses the weighted-average remaining lease term and discount rate for operating leases.
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| | As of: |
| | June 30, 2025 | | December 31, 2024 |
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| Weighted-average lease term | | | | |
| Finance leases | | 2.9 years | | 3.4 years |
| Operating Leases | | 17.0 years | | 8.3 years |
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| Weighted-average discount rate | | | | |
| Finance leases | | 9.5 | % | | 9.5 | % |
| Operating leases | | 8.3 | % | | 8.7 | % |
Supplemental Cash Flow Information
The below table discloses supplemental cash flow information for operating leases (in thousands):
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| | Six Months Ended |
| | June 30, 2025 | | June 30, 2024 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | |
| Operating cash flows for operating leases | | $ | 5,155 | | | $ | 3,047 | |
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Operating and financing cash flows from finance leases were each less than $0.1 million for each of the three and six month periods ended June 30, 2025 and 2024; accordingly, these cash flows are not shown in the table above.
Maturity Analysis
The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of June 30, 2025 (amounts in thousands):
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| | Operating Leases | | Finance Leases |
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| 2025 (remaining) | | $ | 4,916 | | | $ | 20 | |
| 2026 | | 9,109 | | | 39 | |
| 2027 | | 7,644 | | | 32 | |
| 2028 | | 7,540 | | | 16 | |
| 2029 | | 5,780 | | | 1 | |
| Thereafter | | 68,865 | | | — | |
| Total lease payments | | $ | 103,854 | | | $ | 108 | |
| Imputed interest | | (47,175) | | | (13) | |
| Discounted lease liability | | $ | 56,679 | | | $ | 95 | |
In connection with the Extended MSS Network, the Company will likely enter into additional operating leases in the future, the amount and timing of such leases is unknown and excluded from the table above.
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
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| As of: |
| June 30,
2025 | | December 31,
2024 |
| Globalstar System: | | | |
| Space component | $ | 1,121,662 | | | $ | 1,167,332 | |
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| Ground component | 107,278 | | | 102,717 | |
| Construction in progress: | | | |
| Space component | 605,781 | | | 357,825 | |
| Ground component | 43,923 | | | 20,545 | |
| Other | 9,910 | | | 8,727 | |
| Total Globalstar System | 1,888,554 | | | 1,657,146 | |
| Internally developed and purchased software | 25,537 | | | 24,309 | |
| Equipment | 17,208 | | | 14,904 | |
| Land and buildings | 3,596 | | | 3,222 | |
| Leasehold improvements | 2,285 | | | 2,180 | |
| Total property and equipment | 1,937,180 | | | 1,701,761 | |
| Accumulated depreciation | (1,036,338) | | | (1,028,129) | |
| Total property and equipment, net | $ | 900,842 | | | $ | 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") and SpaceX for 1) the purchase and launch of the satellites that are intended to replace the Company's current HIBLEO-4 U.S.-licensed system and 2) the purchase and launch of additional satellites to support the Extended MSS Network. Refer to Note 9: Commitments and Contingencies for additional information regarding these agreements.
As of June 30, 2025, in connection with constructing and preparing for the launch of the HIBLEO-4 replacement satellites, the Company has incurred $244.8 million and $23.6 million for milestones completed under these agreements with MDA and SpaceX, respectively. As of June 30, 2025, in connection with the constructing and preparing for the launch of the Extended MSS Network, the Company has incurred $209.6 million and $44.6 million for milestones completed under these agreements with MDA and SpaceX, respectively. These costs, as well as the associated personnel costs and capitalized interest, are reflected in the "space component" of construction in progress in the table above.
6. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS
Long-term debt consists of the following (in thousands):
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| As of: |
| | June 30, 2025 | | December 31, 2024 |
| | Principal
Amount | | Unamortized Premium (Discount) and Deferred Financing Costs | | Carrying
Value | | Principal
Amount | | Unamortized Premium (Discount) and Deferred Financing Costs | | Carrying
Value |
| 2024 Debt Repayment | $ | 221,625 | | | $ | 101,630 | | | $ | 323,255 | | | $ | 221,625 | | | $ | 107,176 | | | $ | 328,801 | |
| 2023 Funding Agreement | 155,000 | | | (9,456) | | | 145,544 | | | 155,000 | | | (11,031) | | | 143,969 | |
| 2021 Funding Agreement | 23,550 | | | (842) | | | 22,708 | | | 40,850 | | | (2,198) | | | 38,652 | |
| Total debt | $ | 400,175 | | | $ | 91,332 | | | $ | 491,507 | | | $ | 417,475 | | | $ | 93,947 | | | $ | 511,422 | |
| Less: current portion | 23,550 | | | (842) | | | 22,708 | | | 34,600 | | | — | | | 34,600 | |
| Long-term debt | $ | 376,625 | | | $ | 92,174 | | | $ | 468,799 | | | $ | 382,875 | | | $ | 93,947 | | | $ | 476,822 | |
The carrying value of our debt reflected above is net of deferred financing costs and any premium or discount to the loan amount at issuance, including accretion. As of June 30, 2025, the current portion of long-term debt relates to the 2021 Funding Agreement and represents the amounts expected to be paid under the Updated Services Agreements (as previously defined) through service fee offsets from the Customer during the next twelve months.
2024 Debt Repayment
As discussed in Note 2: Special Purpose Entity, pursuant to the Updated Services Agreements, the Customer funded $235 million (including $13.3 million of make whole premium payments, which were recorded to deferred revenue) for the Company to retire its outstanding 2023 13% Notes. The 2024 Debt Repayment is expected to be fully repaid by offsetting against amounts payable by the Customer to the Company on a quarterly basis over a period of 32 quarters commencing on a fixed repayment date in the future that is not tied to the launch of services. The 2024 Debt Repayment is classified as debt because the Company's repayment obligations will commence on such date regardless of when services are provided under the Updated Services Agreements. The 2024 Debt Repayment accrues annual fees, which would be reduced or eliminated entirely if the Company meets certain defined milestones associated with the completion of the Extended MSS Network, at which time prior accruals will be reduced or eliminated. The balance accrued for these fees is included primarily in long-term deferred revenue on the Company's balance sheet (refer to Note 3: Revenue for further information). As of June 30, 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 Company will amortize the premium as an offset to interest expense over the loan term using the effective interest rate method. Refer to Note 7: Derivatives and Note 8: Fair Value Measurements for further information on the embedded derivative bifurcated from the 2024 Debt Repayment.
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, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of satellites purchased under such agreement. As of June 30, 2025, the Company received aggregate payments under the 2023 Funding Agreement of $155 million, with no amounts received during the first six months of 2025. As of June 30, 2025, the outstanding principal balance under the 2023 Funding Agreement was $155.0 million.
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 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, which totaled $18.2 million as of June 30, 2025, 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. The Company’s obligations under the 2023 Funding Agreement are secured by a first-priority lien over substantially all of the assets of the Company and its domestic subsidiaries. Thermo guaranteed certain of the Company’s obligations under the 2023 Funding Agreement and Service Agreements. See Note 10: 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, which is netted against the face value of the 2023 Funding Agreement, for the difference between the fair value of the debt and the proceeds received and accretes this debt discount to interest expense through the maturity date using an effective interest rate method.
2021 Funding Agreement
During 2021, the Company received payments totaling $94.2 million (as amended, the "2021 Funding Agreement"). The Company's obligations under the 2021 Funding Agreement are secured by a first-priority lien over substantially all of the assets of the Company and its domestic subsidiaries. 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 the first quarter of 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 the six months ended June 30, 2025, a total of $17.3 million was recouped pursuant to the terms of the 2021 Funding Agreement. As of June 30, 2025, the outstanding principal balance under the 2021 Funding Agreement was $23.6 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 and total outstanding amount of $149.4 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 the Series A Preferred Stock are entitled to receive, when, as and if declared by the Company's Board of Directors 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 the six months ended June 30, 2025, the Company paid dividends approved by the Company's Board of Directors totaling $5.3 million.
7. DERIVATIVES
The Company reflected on its balance sheet an embedded derivative resulting from certain features in the Company’s 2024 Debt Repayment. This derivative instrument is not designated as a hedge. The fair value of the embedded derivative is marked-to-market at the end of each reporting period, or more frequently as deemed necessary, with any changes in value reported in the consolidated statements of operations and consolidated statements of cash flows as a non-cash operating activity.
This derivative and related features embedded in the debt instrument that is required to be accounted for as a derivative is described below. See Note 8: Fair Value Measurements for further information.
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.
As of June 30, 2025 and December 31, 2024, the Company recorded the fair value of the embedded derivative, totaling $117.2 million and $108.8 million, respectively, as a derivative asset. The Company records a derivative gain or loss resulting from mark-to-market adjustments, which is reflected in "Other" in the Company’s consolidated statement of operations.
8. FAIR VALUE MEASUREMENTS
The Company follows the authoritative guidance for fair value measurements relating to financial and non-financial assets and liabilities, including presentation of required disclosures herein. This guidance establishes a fair value framework requiring the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Recurring Fair Value Measurements
The Company marks-to-market its derivatives at each reporting date, or more frequently as deemed necessary, with the changes in fair value recognized in the Company’s consolidated statements of operations. See Note 7: 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 7.32% and 7.58%, at June 30, 2025 and December 31, 2024, respectively. As the discount yield used in the valuation process increases, the fair value of the embedded derivative decreases. Conversely, as the length of time between the reporting date and the projected milestone deadlines decreases, the present value of the projected interest savings increases, resulting in a higher derivative asset value.
The significant unobservable input used in the fair value measurement included estimated timing of completing certain project milestones associated with the interest fee reduction mechanism. 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):
| | | | | | | | | | | |
| Six Months Ended June 30, 2025 | | Twelve Months Ended December 31, 2024 |
| Balance at beginning of period | $ | 108,799 | | | $ | 1,295 | |
| Issuance of embedded derivative within the 2024 Debt Repayment | 2,480 | | | 109,601 | |
Unrealized gain (loss), included in derivative and other | 5,905 | | | (2,097) | |
| Balance at end of period | $ | 117,184 | | | $ | 108,799 | |
Fair Value of Debt Instruments and Other Financing Arrangements
The Company believes it is not practicable to determine the fair value of its debt agreements on a recurring basis without incurring significant additional costs. Unlike typical long-term debt, certain terms for these instruments cannot be readily compared to other debt instruments and their valuation generally involve a variety of complex factors, including due diligence by the debt holders.
9. 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. 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 Agreement
In February 2022, the Company entered into a satellite procurement agreement with MDA 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 the initial 17 replacement satellites, with delivery expected to occur later in 2025. In addition, MDA will provide a satellite operations control center for $5.0 million as well as other equipment for $4.2 million.
In February 2025, the Company entered into another agreement with MDA pursuant to which the Company will acquire more than 50 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. In June 2025, the Company and SpaceX extended the launch timeframe and selected a launch window under the August 2023 launch services agreement for the first set of replacement satellites during the fourth quarter of 2025.
In October 2024, the Company entered into a separate agreement with SpaceX for the launch of satellites related to the Extended MSS Network.
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 HIBLEO-4 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. The Phase 2 Service Period is expected to begin when the first set of the new replacement satellites are successfully utilized to provide Services.
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 June 30, 2025, the Company has outstanding purchase orders for this project approximately $800.0 million to vendors for various satellite and ground components of the Extended MSS Network, which are expected to be paid with funds from the Infrastructure Prepayment. The Company will continue to incur these costs over the next few years until it completes construction and begins providing Services over the Extended MSS Network.
10. 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 arms' length transactions were $0.3 million and $0.4 million as of June 30, 2025 and December 31, 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 will total $1.7 million. The lease term is ten years and is scheduled to expire in January 2029. During each of the six months ended June 30, 2025 and 2024, the Company incurred lease expense of $0.8 million under this lease agreement.
Series A Preferred Stock
Thermo owns $136.7 million of the Company's Series A Preferred Stock (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 the six months ended June 30, 2025, the Company made dividend payments to Thermo, which were approved by the Board, totaling $4.8 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 may 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.
In connection with the Updated Services Agreements, the Company, the Customer and Thermo amended the Thermo Guaranty to lower the amount of Guaranteed Obligations (as defined in the Thermo Guaranty) to $100 million (collectively with the Thermo Guaranty, the "Amended Thermo Guaranty"). The entry into the Amended Thermo Guaranty required approval of the Company's stockholders (other than Thermo, including its affiliates), which was received at the Company's 2025 annual meeting of stockholders on May 20, 2025. No changes were made to the existing outstanding warrants associated with the Thermo Guaranty and no additional warrants or rights to purchase additional shares of the Company's common stock were issued to Thermo in connection with the entry into the Amended Thermo Guaranty.
To the extent Thermo is required to advance amounts under the Amended Thermo Guaranty, the Company is required to issue shares of its common stock to Thermo in respect of such advance in an amount equal to the amount of such payment divided by the average of the volume weighted average price of the Company’s common stock for the five trading days immediately preceding such payment.
Governance
The Company has a Strategic Review Committee that is required to remain in existence for as long as Thermo and its affiliates beneficially own forty-five percent (45%) or more of Globalstar’s outstanding common stock. To the extent permitted by applicable law, the Strategic Review Committee has exclusive responsibility for the oversight, review and approval of, among other things and subject to certain exceptions, any acquisition by Thermo and its affiliates of additional newly-issued securities of the Company and any transaction between the Company and Thermo and its affiliates with a value in excess of $250,000.
Agreements with XCOM
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.) ("Licensor" or "XCOM") and is the controlling stockholder of XCOM. In connection with the Company's Intellectual Property License Agreement with XCOM (the "License Agreement"), Globalstar issued to XCOM 4.0 million shares of Globalstar common stock, representing a transaction value of approximately $68.7 million on the date of issuance. Of the consideration paid for the License Agreement, 1.1 million shares were issued to Dr. Jacobs.
The Company and XCOM 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 during the second quarter of 2025.
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.
11. NET INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted income (loss) per common share for the periods indicated (amounts in thousands, except per share data):
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 |
| Numerator: | | | | | | | |
Net income (loss) | $ | 19,208 | | | $ | (9,683) | | | $ | 1,877 | | | $ | (22,879) | |
| Effect of Series A Preferred Stock dividends | (2,644) | | | (2,644) | | | (5,259) | | | (5,288) | |
| Net income (loss) attributable to common shareholders | $ | 16,564 | | | $ | (12,327) | | | $ | (3,382) | | | $ | (28,167) | |
| | | | | | | |
| Denominator: | | | | | | | |
Weighted average shares outstanding - basic | 126,614 | | | 125,614 | | | 126,545 | | | 125,560 | |
| Dilutive effect of stock-based compensation plans | 127 | | | — | | | — | | | — | |
| Dilutive effect of warrants issued under the Service Agreements | 1,113 | | | — | | | — | | | — | |
Weighted average common shares outstanding - dilutive | 127,854 | | | 125,614 | | | 126,545 | | | 125,560 | |
| | | | | | | |
Net income (loss) | | | | | | | |
Basic | $ | 0.13 | | | $ | (0.10) | | | $ | (0.03) | | | $ | (0.22) | |
Diluted | $ | 0.13 | | | $ | (0.10) | | | $ | (0.03) | | | $ | (0.22) | |
For the six months ended June 30, 2025, 1.3 million shares of potential common stock were excluded from diluted shares outstanding because the effects of such securities would be anti-dilutive. For the three and six months ended June 30, 2024, 1.2 million shares and 1.3 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of such securities would be anti-dilutive. Included in these shares for all periods presented is a portion of the 3.3 million shares that may be purchased by the Customer pursuant to the warrants issued under the Service Agreements in 2022 based on the treasury stock method. During 2023, the right to purchase 0.3 million shares of common stock vested pursuant to the warrant issued to Thermo for its guarantee of the 2023 Funding Agreement. None of these shares are included in the potentially dilutive securities for the applicable periods presented because the exercise price of the warrants exceeded the average market price of Globalstar common stock during the periods.
12. SEGMENT REPORTING
An operating segment is defined as a component of an enterprise which has discrete financial information that is evaluated regularly by the Company’s Chief Operating Decision Maker ("CODM") to decide how to allocate resources and assess performance. In accordance with ASC 280, Segment Reporting, the Company’s only reportable segment is its MSS business. The Company's Chief Executive Officer, Dr. Paul E. Jacobs, is the Company's CODM. Dr. Jacobs manages the consolidated entity and uses net income (loss) as the measure of profit or loss to assess our performance and allocate resources. Dr. Jacobs does not review total assets. Dr. Jacobs reviews revenue and certain operating expenses to determine resource allocations. Revenue is reviewed at a disaggregated level, consistent with the Company’s disclosures in Note 3: Revenue. Expenses are reviewed by the nature of the cost (Cost of Services, Marketing, General and Administrative and Cost of Subscriber Equipment Sales), consistent with the Company’s presentation in its statements of operations. Other operating segment expenses may include stock-based compensation, depreciation, amortization and accretion, the reduction in the value of assets and inventory, interest income and expense, foreign currency gains and losses, gains and losses on extinguishment of debt as well as other smaller items.
13. COMMON STOCK
Effective following the close of trading on February 10, 2025, the Company voluntarily withdrew the listing of its common stock from the NYSE American, effected a reverse stock split at a ratio of 1 to 15 shares of its common stock and amended its certificate of incorporation to reduce the number of authorized shares of common stock that it may issue from 2,150,000,000 shares to 143,333,334 shares of common stock. Effective at the start of trading on February 11, 2025, the Company's common stock began trading on a post-split basis under the symbol “GSAT” on the Nasdaq Stock Market LLC. Upon the effectiveness of the reverse stock split, the number of shares of the Company's common stock outstanding was reduced from 1,896,635,805 to 126,442,583.
No fractional shares were issued as a result of the reverse stock split and it did not impact the par value of the Company's common stock. Any fractional shares that would otherwise have resulted from the reverse stock split were rounded up to the next whole share at the DTC participant level, except that any fractional shares resulting from the reverse stock split for any outstanding awards adjustments pursuant to the terms and conditions of the Company's 2006 Equity Incentive Plan and the award or agreement governing such awards were rounded down to the next whole share. Neither the reverse stock split nor the related amendments to the Company's certificate of incorporation had any impact on the number of shares of preferred stock it is authorized to issue under its certificate of incorporation or the number of issued and outstanding shares of the Series A Preferred Stock.
14. INCOME TAXES
The change in the Company’s effective tax rate when comparing the six months ended June 30, 2025 to the same period in 2024 was driven by current state tax expense as a result of (i) increased forecasted taxable income, (ii) net operating loss utilization in various states and (iii) an increase in the provision for uncertain tax positions. For the three months ended June 30, 2025, the change in the Company's effective tax rate reflects additional tax benefits to adjust prior quarters' results to the annual effective tax rate. Specifically, the forecasted 2025 tax provision as estimated at June 30, 2025 remained relatively consistent with that estimated in the first quarter 2025, despite various jurisdictional fluctuations in forecasted pre-tax income/loss as result of second quarter unrealized foreign currency gains. This resulted in a corresponding change in the annualized effective tax rate during the three months ended June 30, 2025.
The Company monitors the realizability of its deferred tax assets considering all relevant factors at each reporting period. As of June 30, 2025, based on the relevant weight of positive and negative evidence, including its ability to forecast future operating results, historical tax losses and its ability to utilize deferred tax assets within the requisite carryforward periods, the Company maintains a valuation allowance on the majority of its U.S. federal, state and foreign deferred tax assets.
15. SUBSEQUENT EVENTS
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted and includes tax reform provisions that amend, eliminate and extend tax rules under the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017 and makes other changes to the Internal Revenue Code of 1986, as amended (the “Code”). The Company is reviewing the impact of the OBBBA, but does not expect it to have a material impact on the Company’s 2025 results.