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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.13pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.06pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.20pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
loss+4
anomaly+3
delays+2
unfavorable+2
interference+2
Positive rising
able+3
successfully+1
opportunities+1
adequately+1
successful+1
Risk Factors (Item 1A)
13,140 words
Item 1A. Risk Factors
Investing in our securities involves a high degree of risk and uncertainties. You should carefully consider the risks described below, as well as all of the information in this Report, including but not limited to Item 1. “Business”, Item 1C. “Cybersecurity”, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” and Item 3. “Legal Proceedings", and our other filings with the SEC, in evaluating and understanding us and our business. If any of the following risks occur, they may have a material adverse impact on our business, financial condition, stock price, results of operations, reputation, prospects, costs or liabilities and you could lose part or all of your investment. The summary and risks that follow are organized under headings as determined to be most applicable, but such risks also may be relevant to other headings. Additional risks not presently known or that we currently deem immaterial or general risks that apply to all companies operating in the U.S. and globally, which may emerge or become material, may also impact our business and the risks identified in this Report may adversely affect our business in ways we do not currently anticipate. See "Cautionary Statement About Forward-Looking Statements" at the beginning of this Report.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
losses+2
damages+2
loss+1
decline+1
failure+1
Positive rising
gains+2
gain+2
achievement+2
effective+1
satisfaction+1
MD&A (Item 7)
6,657 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and applicable notes to our Consolidated Financial Statements and other information included elsewhere in this Report, including risk factors disclosed in Part I, Item IA. Risk Factors. The following information contains forward-looking statements, which are not guarantees of future performance and are not necessarily indicative of future results and are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, our actual results may differ from those express or implied by the forward-looking statements. See “ Cautionary Statement About Forward-Looking Statements ” at the beginning of this Report for further information.
This Item generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussion of our results of operations for the years ended December 31, 2024 and 2023 can be found in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Globalstar’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025.
Reverse Stock Split and Listing on the Nasdaq Stock Market LLC
Effective following the close of trading on February 10, 2025, we voluntarily withdrew the listing of our common stock from the NYSE American, effected a reverse stock split at a ratio of 1 to 15 shares of common stock and amended our certificate of incorporation to reduce the number of authorized shares of common stock that we may issue from 2,150,000,000 shares to 143,333,334 shares of common stock. at the start of trading on February 11, 2025, our common stock began trading on a post-split basis under the symbol “GSAT” on the Nasdaq Stock Market LLC.
Our business is subject to numerous risks and uncertainties, including, but not limited to, the following:
Risks Related to Our Business
• Ability to meet our obligations and attain anticipated benefits under the Updated Services Agreements (which constitutes a substantial portion of our current revenue);
• Disruptions to our ground facilities;
• Shorter than expected orbital lives of our satellites;
• Damage to or failure of our satellites;
• Operational performance of our satellite network;
• Failure to successfully or timely launch new satellites;
• Lack of demand for wireless communications services via satellite and terrestrial mobile broadband networks (as well as other factors that impact our business plan, including the ability to attract and retain qualified employees);
• Inadequate satellite network capacity;
• Ability to service, upgrade and replace our equipment for technological changes;
• Ability to effectively compete;
• Global macro-economic and political conditions;
• Availability and costs of equipment, component parts and other materials;
• Reliance on key suppliers;
• Ability to raise adequate capital on reasonable terms;
• Failure to develop, acquire, maintain and protect proprietary information and intellectual property rights;
• Operational risks inherent in doing business in international and developing markets;
• Less flexibility due to our financing arrangements and ability to comply with related restrictive covenants;
• Vulnerability to cyber-attacks and other security breaches;
• Ability to obtain and maintain adequate insurance coverages;
• Volatility of spectrum values;
• Changes in tax rates or adverse results of tax examinations;
• Trade credit risk;
• Litigation and investigations; and
• Health and safety risks relating to wireless devices' radio frequency emissions.
Risks Related to Government Regulations
• Compliance with extensive government regulatory framework across jurisdictions and potential changes in such laws and regulations;
• Exposure to trade and other regulatory restrictions, liabilities and penalties in various jurisdictions;
• Ability to maintain and expand our spectrum rights and reliance on third parties to monetize;
• Reduction of spectrum allocation or mandatory additional spectrum sharing agreements;
• Revocation, modification or non-renewal of licenses;
• Changes in international trade regulations; and
• Changes in and interpretation of data privacy laws.
Risks Related to Our Common Stock
• Restriction on ability to pay dividends;
• Limited trading market and market price volatility for our common stock;
• Future dilution through issuances of our common stock;
• Future issuances of preferred stock or debt securities with rights superior to our common stock;
• Interests of our controlling stockholder; and
• Impact of anti-takeover provisions in our charter documents and under Delaware law.
Risks Related to Our Business
Revenue under the Updated Services Agreements constitutes a majority of our current revenue, and there is no assurance that we will receive the revenue expected under the Updated Services Agreements.
Consideration received under the Updated Services Agreements constituted approximately 63% of our revenue for the year ended December 31, 2025. The Updated Services Agreements impose a number of substantial obligations on us, provide for certain of our fees to be payable only upon satisfaction of the conditions therein and are terminable by the Customer at any time upon advance notice or force majeure event, or by either party upon the occurrence of certain events of default. It is possible that we may fail to meet these obligations, that the conditions to the payment of such fees may not be satisfied, that the Customer's products that employ the services rendered will not succeed or that the Updated Services Agreements may be terminated. If any of these events were to occur, we would not receive the revenue we currently expect to receive under the Updated Services Agreements, which may adversely affect our business and results of operations. Further, the Updated Services Agreements do not prevent the Customer from allowing their devices to use another network provider's satellite services, which could also negatively impact our revenues that we currently expect to receive under the Updated Services Agreements.
If we experience disruptions with respect to our gateways or operations centers, we may not be able to provide service to our customers.
Our satellite network traffic is supported by our gateways located around the globe. We operate our satellite constellation from our ground and space operations control centers (referred to as Network Operations Control Centers) at three locations (France, Texas and Louisiana) to provide geo-redundancy and ongoing coverage. Our gateway facilities are subject to the risk of significant malfunctions or catastrophicloss due to unanticipated events, such as natural disasters, extreme weather events or terrorist attack, and could be difficult to replace or repair and could require substantial lead-time to do so. In North America, we have implemented contingency coverage which allows neighboring gateways to provide services in the event of a gateway failure. Material changes in the operation of these facilities may be subject to prior FCC approval, and the FCC might not give such approval or may subject the approval to other conditions that could be unfavorable to our business. Our gateways and operations centers may also experience service shutdowns or periods of reduced service as a result of equipment failure, delays in deliveries of material, equipment or component parts, regulatory issues or routine system testing, any of which may impede our ability to provide service to our customers, which could have a material impact on our business results and business reputation.
The actual orbital lives of our satellites may be shorter than we anticipate, and we may be required to reduce available capacity on our satellite network.
Although our second-generation satellites are expected to provide commercial service over a 15-year design life, we can provide no assurance as to whether any or all of them will continue in operation for their full design life. A number of factors will affect the actual commercial service lives of each satellite, including:
• the amount of propellant used in maintaining the satellite's orbital location or relocating the satellite to a new orbital location;
• the durability and quality of its construction;
• the performance of its components;
• hazards and conditions in space such as solar flares and space debris;
• operational failures and other anomalies; and
• changes in technology which may make all or a portion of our satellite fleet obsolete.
From time to time, our satellites have become partially or completely inoperable, especially as they have approached the end of their estimated useful lives. In the past, we have been able to address these events by reconfiguring our satellites to provide continued service to our customers. We can provide no assurance, however, that we would be able to successfully reconfigure our satellites or network if we were to experience the failure of multiple satellites.
It is also possible that the total available payload capacity of a satellite may need to be reduced prior to the satellite reaching its end-of-orbital life. A reduction in the orbital life of any of our satellites could result in a reduction of revenue, the recognition of an impairmentloss and an acceleration of capital expenditures, as well as reputational harm. The potential impact on our revenue from a reduction in the orbital life of one or more satellites may vary depending on the satellite's orbital location as well as the type of device and service a customer is using. If a satellite fails prior to the end of its estimated useful life, we would record an impairment charge in our statement of operations equal to the satellite's remaining net book value, which would depress our net income (or increase our net loss) for the period in which the failure occurs. For example, during the first quarter of 2025, we recorded a loss on disposal of assets of $7.0 million on our consolidated statements of operations. This loss reflected the net book value of one of the our second-generation satellites that experienced a power control anomaly which rendered the satellite inoperable.
Our satellites are exposed to a wide and unique range of risks, including collisions with space debris and other LEO satellites, natural disasters and other extreme space weather events, all of which could adversely affect the performance of our constellation.
Our ability to maneuver our satellites to avoid potential collisions with space debris is limited by, among other factors, uncertainties and inaccuracies in the projected orbit location of, and predicted conjunctions with, debris objects tracked and cataloged by the U.S. government. Some space debris is too small to be tracked; therefore, its orbital location is completely unknown. Debris that cannot be tracked can still be large enough to potentially cause severedamage to or failure of one of our satellites should a collision occur. If our satellites experience collisions with space debris, our service could be impaired. Any such collision could potentially expose us to significant losses. Additionally, over the past few years, the increase in LEO constellations has resulted in a higher volume of satellites in orbit. More LEO satellites in orbit could increase the risk of potential collision.
Space weather, including coronal mass ejections and solar flares, have the potential to impact the performance of our in-orbit satellites. If we experience operational disruptions due to a space weather event, we may be unable to provide service to our customers in the affected area, either temporarily or indefinitely. Additionally, there are inherent dangers and risk associated with our satellite operations, including the risk of equipment damage caused by increased radiation and any such failures or service disruptions could harm our business and results of operations.
The implementation of our business plan and our ability to generate income from operations assume we are able to maintain a satellite network capable of providing commercially acceptable levels of coverage and service quality, which are contingent on a number of factors, many of which are out of our control.
Our products and services are subject to the risks inherent in relying on a large-scale, complex telecommunications system employing advanced technology. Any disruption to our satellites, services, information systems or telecommunications infrastructure could result in degrading or disrupting services to our customers for an indeterminate period of time. These customers may include government agencies conducting mission-critical work throughout the world, as well as consumers and businesses located in remote areas of the world and operating under harsh environmental conditions where traditional telecommunication services may not be readily available.
Satellites utilize highly complex technology and operate in the harsh environment of space and therefore are subject to significant operational risks while in orbit. Our satellites may experience temporary outages or otherwise may not be fully functioning at any given time. There are some remote tools we use to remedy certain types of problems affecting the performance of our satellites, but the physical repair of satellites in space is not feasible. We do not insure our second-generation satellites against in-orbit failures after an initial period of six months, whether the failures are caused by internal or external factors. In-orbit failure may result from various causes, including component failure, solar array failures, telemetry transmitter failures, loss of power or fuel, inability to control positioning of the satellite, solar or other astronomical events, including solar radiation, wind and flares, and collision with space debris or other satellites. Additionally, human operators may
execute improper implementation commands that may negatively impact a satellite's performance. These failures are commonly referred to as anomalies. Some of our satellites have had anomalies (like malfunctions) in the past and may have anomalies in the future, for reasons described above or arising from the failure of other systems or components, and intrasatellite redundancy may not be available upon the occurrence of any anomalies. For example, during the first quarter of 2025 one of our second-generation satellites experienced a power control anomaly, rendering the satellite inoperable. There can be no assurance that, in these cases, it will be possible to restore normal operations, especially without an in-orbit spare available. Where service cannot be restored, the failure could cause the satellite to have less capacity available for service, to suffer performance degradation or to cease operating prematurely. Any disruption to service or extended periods of reduced capacity could cause loss of customers or revenue, litigation, unexpected costs, reputational harm or failure to attract customers.
We may not be able to successfully or timely launch satellites, including due to construction and delivery delays, to support the Phase 2 Service Period or Services provided over the Extended MSS Network under the Updated Services Agreements.
Delays in the delivery or launch of new satellites could negatively impact our future operations and financial results, including the obligations under the Updated Services Agreements, which could result in a decrease in expected revenue or termination. For example, as a result of delivery delays of the replacement satellites to support the Phase 2 Service Period, we were unable to timely launch the first set of replacement satellites that we are acquiring pursuant to the 2022 satellite procurement agreement with MDA Space. We are working to establish an updated launch window for the first set of replacement satellites and expect the launch of such satellites to occur in the first half of 2026; however, we may not be able to do so timely, if at all. Refer to Note 10: Commitments and Contingencies to our Consolidated Financial Statements and Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commitments for further discussion.
When we launch satellites, we may experience launch or deployment failures, which subject us to additional risks and losses. Satellites are particularly vulnerable to loss and malfunction at the time they are launched and deployed into orbit, and some of our competitors have experienced catastrophiclosses of substantial numbers of satellites in connection with launch and deployment. While we may obtain launch insurance to mitigate the risk of such a loss, such insurance would not cover all our economic losses if we experienced such an event, and there would be a substantial delay before we could obtain satellites to replace any we lost. Accordingly, a loss of a significant number of our new satellites at launch or deployment could adversely affect our ability to continue to provide satellite services and may cause us to loseopportunities to use our constellation to provide new or expanded services.
The implementation of our business plan depends on increased demand for wireless communications services via satellite and terrestrial mobile broadband networks, both for existing and new services and products.
We plan to introduce new products and services that work over our network as well as terrestrial mobile broadband services. However, demand for wireless communication services may not grow, or may decrease, either generally or in particular geographic markets, for particular types of services or products or during particular time periods. A lack of demand could impair our ability to sell our services or products, could exert downward pressure on prices, or both. This, in turn, could decrease our revenue and profitability and adversely affect our ability to increase our revenue and profitability over time.
The success of our business plan will depend on a number of factors, including but not limited to:
• our ability to maintain the health, capacity and control of our satellites, and expand our network to meet demand;
• our ability to maintain the health of our ground network and expand to support the network;
• our ability to realize the expected benefits from the XCOM transaction or realize a satisfactory return on our investment in the XCOM assets or increase our revenue;
• our ability to introduce new products and services that meet current and projected market demand, including adequately differentiating our products and services from competing products and services like direct-to-cellular;
• our ability to retain current customers and attract new customers, including through exploiting our existing and future spectrum authority both in the United States and internationally;
• our ability to control the costs of developing an integrated network providing related products and services, as well as our future terrestrial mobile broadband services;
• our ability to market successfully, and the level of market acceptance and demand for our products and services;
• our ability to maintain and expand innovative network management techniques to permit mobile devices to transition between satellite and terrestrial modes;
• the cost and availability of user equipment that operates on our network;
• the effectiveness of our competitors in developing and offering similar products and services;
• our ability to hire and retain qualified executives, managers, technicians and employees; and
• our ability to provide attractive service offerings at competitive prices to our target markets.
Our business will be negatively impacted if we fail to adequately anticipate our satellite capacity needs or are unable to obtain satellite network capacity.
In February 2022, we entered into a satellite procurement agreement with MDA Space pursuant to which we expect to acquire at least 17 and up to 26 satellites that will replace our HIBLEO-4 U.S.-licensed system and provide long-term continuity of our MSS. As noted above, the delivery of the replacement satellites has been delayed. In February 2025, we entered into another agreement with MDA Space pursuant to which we expect to acquire more than 50 third-generation satellites related to the Extended MSS Network. We are acquiring the satellites to provide continuous satellite services and meet our obligations under the Updated Services Agreements, as well as to provide services to our current and future customers. We may not have sufficient satellite capacity available to meet demand, and we may not be able to quickly or easily adjust our capacity to any increases in demand. In addition, satellites represent a significant capital expenditure, and, notwithstanding our Funding Agreements and the Infrastructure Prepayment, we may not have the necessary capital available or be able to raise additional capital to fund such capital expenditures. See our risk factors below regarding our ability to fund all our capital expenditures and raise additional capital. Our business could be adversely affected if we are not able to anticipate or adapt to consumer demands for satellite capacity.
Rapid and significant technological changes in the satellite communications industry and our ability to service, upgrade and replace our equipment when needed may impair our competitive position and require us to make significant capital expenditures.
The space and communications industries are subject to rapid advances and innovations in technology. New technology could render our system obsolete or less competitive by satisfying consumer demand in more attractive ways or through the introduction of incompatible standards. Particular technological developments that could adversely affect us include the deployment by our competitors of new satellites with greater power, flexibility, efficiency or capabilities, as well as continuing improvements in terrestrial wireless technologies. We must continue to keep up with technological changes to remain competitive. Customer acceptance of the services and products that we offer will continually be affected by the technology in our offerings relative to competitors. New technologies may be protected by patents and therefore may not be available to us.
Some of the hardware and software we use in operating our gateways are significantly customized and tailored to meet our requirements and specifications and could be difficult and expensive to service, upgrade or replace. Although we maintain inventories of some spare parts, it nonetheless may be difficult, expensive or impossible to obtain replacement parts for our hardware due to a limited number of parts being manufactured to our requirements and specifications. In addition, our business plan contemplates updating or replacing some of the hardware and software in our network as technology advances, but the complexity of our requirements and specifications may present us with technical and operational challenges that complicate or otherwise make it expensive or infeasible to carry out such upgrades and replacements. If we are not able to suitably service, upgrade or replace our equipment, it could harm our ability to provide our services and generate revenue.
We face intense competition in all of our markets, which could result in a loss of customers, lower revenues and difficulty entering new markets.
We face competition from a wide range of competitors. Many of these companies have greater resources, more name recognition and newer technologies than we do.
Satellite-based Competitors
There are other MSS operators providing services similar to ours on a global or regional basis: Iridium, Thuraya, Viasat (through its acquisition of Inmarsat) and ORBCOMM Inc. The provision of satellite-based products and services is subject to downward price pressure when capacity exceeds demand, including when new competitors enter the marketplace. We also face competition with respect to network coverage and market share in specialized industries, such as maritime and governmental.
Our direct-to-cellular service provided pursuant to the Updated Services Agreements faces competition from other satellite service providers that are expected to provide similar satellite services. For instance, SpaceX has launched its Starlink constellation and has announced a partnership with a major U.S. wireless network operator to provide direct-to-cellular service. Other satellite providers have established partnerships and network capabilities to offer additional service alternatives, which could further increase competition and pricing pressures.
Additionally, other providers of satellite-based products could introduce their own products similar to our MSS products, which may materially adversely affect our business plan and sales volume. In addition, we may face competition from new competitors or new technologies. Many companies target the same customers, and we may not be able to successfully retain our existing customers or attract new customers.
Terrestrial Competitors
In addition to our satellite-based competitors, terrestrial wireless data service providers are continuing to expand into rural and remote areas, particularly in less developed countries. Industry consolidation could adversely affect us by increasing the scale or scope of our competitors and thereby make it more difficult for us to compete for customers for our services. For example, recent spectrum transactions, such as between EchoStar and SpaceX and EchoStar and AT&T, may increase competition for our current and future products and services. We could lose market share and revenue for such products as a result of increasing competition from land-based communication service providers.
Although satellite communications services and ground-based communications services differ, the two compete in similar markets with similar services. Consumers may perceive cellular communication products and services as cheaper and more convenient than satellite-based products and services.
Terrestrial Broadband Network Competitors and Other Spectrum Owners
We also expect to compete with a number of other satellite companies that plan to develop terrestrial networks that utilize their MSS spectrum. For instance, DISH Network received FCC approval in 2012 to offer terrestrial wireless services over the MSS spectrum that previously belonged to TerreStar and ICO Global. Competitors could deploy terrestrial mobile broadband networks before we do, could combine with existing terrestrial networks that provide them with greater financial or operational flexibility than we have, or could offer wireless services, including mobile broadband services, that customers prefer over ours.
In the United States, our terrestrial spectrum efforts will also compete with other terrestrial spectrum holders including Anterix, Nextwave and holders of CBRS licenses. Further, the government may unlock new spectrum bands which could result in additional competition.
Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition.
Our results of operations are materially affected by economic and political conditions in the United States and internationally, including inflation, deflation, interest rates, tariffs, recession, availability of capital, energy and commodity prices, trade laws and the effects of governmental initiatives to manage economic conditions. Such impacts may affect us or our current or potential customers, including delaying or decreasing our customers' spending on our products and services, creating an inability of our customers to pay us for our products and services or increasing our costs of services or equipment, any of which may adversely affect our earnings and cash flows. In addition, deterioration of conditions in worldwide credit markets could limit our ability to obtain financing to fund our operations and capital expenditures. See our risk factor below regarding our ability to raise capital.
Certain geopolitical tensions and global conflicts could have an adverse impact on our current operations and financial performance. Such conflicts may lead to market or network disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions for equipment.
Lack of availability and increased costs of equipment, component parts, and other materials required to operate our business could delay or adversely impact our operations.
We rely upon the availability of equipment, component parts and other materials from the electronics industry and other suppliers. The electronics industry is subject to occasional shortages in availability of such materials depending on fluctuations in supply and demand. Industry shortages may result in delayed shipments of such materials, or increased prices (including due to tariffs), or both. As a consequence, elements of our operation which use materials from the electronics industry, such as our retail products, gateways and satellites, could be subject to disruptions, cost increases (including due to tariffs) or both. Disruptions in the global supply chain and unfavorable changes in trade policies (including increased tariffs) have limited, and may in the future limit, our ability to procure component parts timely and at reasonable prices. Supply chain disruptions, increased costs and production issues have negatively impacted, and may in the future negatively impact, our ability to sell our most popular SPOT and Commercial IoT products. The future impact of global shortages or increased costs of materials from the electronics industry is unknown and may adversely impact our business, financial condition and results of operations.
We are materially reliant on a limited number of key suppliers.
We depend on a limited number of suppliers and vendors to construct and launch our satellites and provide us, directly or through other suppliers, with equipment, component parts and other materials required to operate our business and services relating to our operations, some of which are competitors. We also rely on software and service vendors or other parties to assist us with operating, maintaining and administering our business. Our operations could be adversely affected in the future if any of these vendors are unable or unwilling for any reason to continue to deliver their products or services on terms acceptable to us, including due to business interruptions, unfavorable tariffs or trade policies, geopolitical tensions or global conflicts, litigation, financial distress, bankruptcy or changes in their operations or business strategies.
Our business is capital intensive. We may not be able to raise adequate capital on reasonable terms to finance our business strategies, or we may be able to do so only on terms that significantly restrict our ability to operate our business.
Implementation of our longer-term business strategy requires a substantial outlay of capital. Although the funding arrangements under our Updated Services Agreements have enhanced our ability to fund the replacement of our current satellites and a new satellite constellation, expanded ground infrastructure and increased MSS licensing, we may require additional capital to fund other initiatives. In addition, we may experience funding shortfalls if we experience unanticipated network failures, a cancellation of the Updated Services Agreements or other unexpected events increasing our cash needs. For these reasons, there can be no assurance that we will be able to satisfy our capital requirements in the future.
To the extent we are required to raise additional financing, turmoil in the capital markets, including the tightening of credit and increased interest rates, may impact our ability to raise financing on terms and at a cost favorable to the Company. We may be required to raise capital during a weak economy, and have little flexibility to wait for more favorable terms or economic conditions. We are likely to face higher borrowing costs, less available capital, more stringent terms and tighter covenants. Such unfavorable market conditions could have an adverse impact on our ability to fund our operations and capital expenditures in the future. Any adverse change in the terms of our financing, including increased costs, could have a negative impact on our financial condition.
If we do not develop, acquire, maintain and protect proprietary information and intellectual property rights, it could limit the growth of our business and reduce our market share.
Our business depends on technical knowledge, and we base our business plan in part on our ability to keep up with new technological developments and incorporate them in our products and services. We own or have the right to use our patents, work products, inventions, designs, software, systems and similar know-how.
Our success depends, in part, on our ability to protect our proprietary intellectual property rights, including certain methodologies, practices, tools, technologies and technical expertise we utilize in designing, developing, implementing and maintaining our technologies. The steps we take to protect our intellectual property may be inadequate, or we may choose not to pursue or maintain protection for our intellectual property. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to copy our technology and use information that we regard as proprietary to create technology that competes with ours. In addition, others may independently develop technology similar to ours.
Protection of our information, systems and know-how may result in litigation, the cost of which could be substantial. Third parties may assert claims that our products or services infringe on their proprietary rights. Any such claims, if made, may prevent or limit our sales of products or services or increase our costs. Defending intellectual property suits is both costly and time-consuming and, even if ultimately successful, may divert management's attention from other business concerns. An adverse determination in litigation to which we may become a party could, among other things:
• subject us to significant liabilities to third parties, including treble damages;
• require disputed rights to be licensed from a third party for royalties that may be substantial;
• require us to cease using technology that is important to our business; or
• prohibit us from selling some or all of our products or offering some or all of our services.
We face special risks by doing business in international markets and developing markets, including currency and expropriation risks, which could increase our costs or reduce our revenues in these areas.
Although our most economically important geographic markets currently are the United States and Canada, we have substantial markets for our MSS in, and our business plan includes, developing countries or regions that are underserved by existing telecommunications systems, such as rural Brazil. Developing countries are more likely than industrialized countries to experience market, currency and interest rate fluctuations and high inflation. In addition, these countries present risks relating to government policy, price, wage and exchange controls, social instability, expropriation and other adverse economic, political and diplomatic conditions.
Conducting operations outside the United States involves numerous special risks and expanding our international operations would increase these risks. These risks include, but are not limited to:
• difficulties in penetrating new markets due to established and entrenched competitors;
• difficulties in developing products and services that are tailored to the needs of local customers;
• lack of local acceptance or knowledge of our products and services;
• unavailability of or difficulties in establishing relationships with distributors;
• significant investments, including the development and deployment of gateways in countries that require them to connect the traffic coming to and from their territory;
• instability of international economies and governments;
• changes in laws and policies affecting trade and investment in other jurisdictions;
• noncompliance with the Foreign Corrupt Practices Act ("FCPA"), UK Bribery Act, sanctions laws and export controls;
• violation by employees or suppliers in regards to our code of conduct and business ethics;
• exposure to varying legal standards in other jurisdictions, including intellectual property protection and other similar laws and regulations;
• difficulties in obtaining required regulatory authorizations;
• difficulties in enforcing legal rights in other jurisdictions;
• variations in local domestic ownership requirements;
• requirements that operational activities be performed in-country;
• changing and conflicting national and local regulatory requirements; and
• uncertainty or changes in foreign currency exchange rates and exchange controls.
These risks could affect our ability to compete successfully and expand internationally. To the extent that the prices for our products and services are denominated in U.S. dollars, any appreciation of the U.S. dollar against other currencies will increase the cost of our products and services to our international customers and, as a result, may reduce the competitiveness of our international offerings and make it more difficult for us to grow internationally. Limited availability of U.S. currency in some local markets or governmental controls on the export of currency may prevent our customers from making payments in U.S. dollars or delay the availability of payment due to foreign bank currency processing and controls.
Our operations involve transactions in a variety of currencies. Sales denominated in foreign currencies involve primarily the Canadian dollar, the euro and the Brazilian real. Accordingly, our operating results may be significantly affected by fluctuations in the exchange rates for these currencies. Approximately 13% and 15% of our total revenue was derived from customers primarily located in Canada, Europe, Central America, and South America during 2025 and 2024, respectively. Our results of operations for 2025 and 2024 included net gains of $15.7 million and net losses of $16.6 million, respectively, on foreign currency transactions. We may be unable to offset unfavorable currency movements as they adversely affect our revenue and expenses. Our inability to do so could have a substantial negative impact on our operating results and cash flows.
Our financing arrangements may adversely affect our cash flow and our ability to operate our business, including our ability to incur additional indebtedness.
On a near-term and longer-term basis, principal liquidity requirements include primarily funding our operating costs, capital expenditures, including related to the Extended MSS Network and other growth opportunities, and financing arrangements, including recoupments under the 2021 and 2023 Funding Agreements and 2024 Prepayment Agreement, Customer Class B Units as well as dividends on our Series A Preferred Stock. Our principal sources of liquidity include cash on hand ($447.5 million at December 31, 2025), cash flows from operations and proceeds from the 2023 Funding Agreement and the Infrastructure Prepayment. Another source of liquidity may include proceeds from the exercise of warrants issued to the Customer in accordance with the Updated Services Agreements and to Thermo in accordance with the Amended Thermo Guaranty (as defined below).
Our operating expenses for the year ended December 31, 2025 were $265.6 million, which included noncash items such as stock-based compensation of $23.4 million, depreciation, amortization and accretion of $87.4 million and a loss on disposal of assets of $7.2 million. Certain of our operating expenses are associated with network-related costs that support the Updated
Services Agreements, a substantial portion of which are reimbursed to us.
As of December 31, 2025, the principal balance of our debt obligations was $410.0 million, consisting of $221.6 million under the 2024 Debt Repayment, $182.1 million under the 2023 Funding Agreement and $6.3 million under the 2021 Funding Agreement. We also have $708.6 million outstanding under the Infrastructure Prepayment and $149.4 million held by the holders of our Series A Preferred Stock.
Refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resource s below for further discussion.
By requiring us to dedicate a substantial portion of our cash flow to debt service, our financing arrangements could hinder our ability to pursue strategic acquisitions or capitalize on other business opportunities, and limit our flexibility in planning for, or reacting to, changes in our business or industry, placing us at a competitive disadvantage compared to competitors who may be able to take advantage of opportunities that our leverage prevents us from exploiting. Additionally, even though our current debt agreements place limits on our ability to incur additional debt, in the future we may incur additional debt which could further exacerbate these risks.
Further, the Globalstar SPE (as defined herein) owns the primary assets and licensing associated with the Extended MSS Network and the Customer owns 20% of the outstanding units of the Globalstar SPE. For additional information regarding the Globalstar SPE, the Extended MSS Network and the Updated Services Agreement see Note 2: Special Purpose Entity to our Consolidated Financial Statements. Such assets associated with the Extended MSS Network will be used to provide the extended services under the Updated Services Agreement. In connection with certain events of default under the Updated Services Agreement, the Company's ability to recognize the full benefits of owning such assets may be limited. Under these circumstances, we may not be able to continue to conduct our business in the same manner, which would negatively impact our financial results.
We may also access equity and debt capital markets from time to time or refinance our debt obligations with the intent to improve the terms of our indebtedness. The availability of such financing may be unavailable on terms and conditions we determine favorable to us or at all.
Restrictive covenants in our financing arrangements may limit our operating and financial flexibility and our inability to comply with these covenants could have significant implications.
Our Funding Agreements and 2024 Prepayment Agreement contain a number of significant restrictions and covenants. See Note 7: Long-Term Debt and Other Financing Arrangements to our Consolidated Financial Statements in Part II, Item 8 of this Report for further discussion of our debt covenants. Complying with these restrictive covenants, including financial and non-financial covenants, as well as those that may be contained in any agreements governing future indebtedness, may impair our ability to finance our operations or capital needs or to take advantage of favorable business opportunities. Our financing arrangements include limitations on expenditures in connection with the incurrence of certain operating expenses and capital expenditures, which may prohibit us from making certain expenditures that we consider accretive to our business and would otherwise make. Our ability to comply with these covenants will depend on our future performance, which may be affected by events beyond our control. Our failure to comply with these covenants would be an event of default. An event of default under the financing arrangements would permit the lender to accelerate the indebtedness under these agreements.
Our networks and those of our third-party service providers and customers may be vulnerable to cyber-attacks and other security breaches, which could have significant negative consequences.
Our business depends on our ability to limit and mitigate interruptions to or degradation of the security of our network. Our network and those of our third-party service providers and our customers may be vulnerable to unauthorized access, computer viruses, cyber-attacks, malware, data breaches, distributed denial of services and other security breaches. Persons who circumvent our security measures could wrongfully obtain or use information from such networks or cause interruptions, delays or malfunctions in our operations. An attack on, or security breach of, our network could result in (i) theft of trade secrets, intellectual property, or other company confidential information, (ii) the interruption, degradation, or cessation of services, (iii) an inability to meet our service requirements under our customer agreements (including the Updated Services Agreements), and (iv) potentially compromise sensitive customer data stored on or transmitted over our network.
We believe the importance of our satellite network to global communications makes it a potential target to a wide range of threat actors, including potentially nation state actors. Moreover, the risk of security breaches is likely to continue to increase due to several factors, including (i) the increasing use of machine learning, artificial intelligence ("AI") and other sophisticated
techniques to initiate cyber and phishing attacks, (ii) the wider accessibility of cyber-attack tools that can circumvent security controls and evade detection, (iii) growing threats from Chinese, Russian and other state actors due to heightened geopolitical tensions and rivalries and (iv) the increase in users on the Globalstar System by virtue of our wholesale capacity services. There can be no assurance that defenses against cyber-attacks currently available to us and others will prevent attempted intrusions by highly-determined, highly-sophisticated threat actors. We may be required to expend significant resources to protect against the threat of security breaches or to alleviate problems, including reputational harm and litigation, caused by any breaches, and we may experience a reduction in revenues, litigation and a diminution of goodwill, caused by a compromise of our systems. In addition, our customer contracts may not adequately protect us against liability to third parties with whom our customers conduct business. We cannot assure you that any measures we implement to protect againstbreaches will provide security, that we will be able to react in a timely manner, or that our remediation efforts following any attacks will be successful. For all these reasons, we cannot provide assurance that our security measures will be sufficient, or that any future breaches of our systems will not result in a material adverse effect on our business, financial condition, operational results or prospects.
We may be unable to obtain and maintain our insurance coverages, and the insurance we obtain may not cover all risks for which we have exposure. As a result, we may incur material uninsured or under-insured losses.
The price, terms and availability of insurance have fluctuated significantly since we began offering commercial satellite services. The cost of obtaining insurance can vary as a result of either satellite failures or general conditions in the insurance industry. Rising premiums on insurance policies could increase our costs. In addition to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods and additional policy exclusions. Our insurance could become more expensive and difficult to maintain and may not be available in the future on commercially reasonable terms, if at all. Our insurance may not adequately cover losses incurred arising from claims brought against us or otherwise, which could be material.
Product Liability Insurance and Product Replacement or Recall Costs
We may be subject to product liability and product recallclaims if any of our products and services are alleged to have caused injury to persons or damage to property. If any of our products prove to be defective, we may need to recall and redesign them. In addition, any claim or product recall that results in significant adverse publicity may negatively affect our business, financial condition or results of operations. We do not maintain any product recall insurance, so any product recall we are required to initiate could have a significant impact on our financial position, results of operations or cash flows.
Because consumers may use SPOT products and services in isolated or dangerous locations, users of our devices who sufferinjury or death may seek to assert claimsagainst us allegingfailure of the device to facilitate timely emergency response. We cannot assure investors that any legal disclaimers will be effective or insurance coverage will be sufficient to protect us from material losses incurred as a result of such claims.
General Liability Insurance In-Orbit Exposures
Our liability policy covers up to $90 million per occurrence (with a $90 million annual limit) that we and other specified parties may become liable to pay for bodily injury and property damages to third parties related to maintaining and operating our satellite constellation. Our current policy has a one-year term, which expires in October 2026. Our current in-orbit liability insurance policy contains, and we expect any future policies would likewise contain, specified exclusions and material change limitations customary in the industry. These exclusions may relate to, among other things, losses resulting from in-orbit collisions, acts of war, insurrection, terrorism, military action, government confiscation, strikes, riots, civil commotions, labor disturbances, sabotage, unauthorized use of the satellites and nuclear or radioactive contamination, as well as claims directly or indirectly occasioned as a result of noise, pollution, electrical and electromagnetic interference or interference with the use of property.
Our in-orbit insurance does not cover losses that might arise as a result of a satellite failure, certain operational problems affecting our constellation, or damage resulting from de-orbiting a satellite. See our risk factor above regarding risk of collisions, natural disasters and extreme space weather events for a discussion of risks to our in-orbit satellites. As a result, a failure of one or more of our satellites or the occurrence of equipment failures, collisiondamage, or other problems that may result during the de-orbiting process could constitute an uninsuredloss and could materially harm our financial condition. For example, during the first quarter of 2025 one of our second-generation satellites experienced a power control anomaly, rendering the satellite inoperable, and we recorded a loss on disposal of assets of $7.0 million on our consolidated statements of operations, which was uninsurable.
Spectrum values historically have been volatile, and may again be volatile in the future, which could cause the value of our business to fluctuate.
Our business plan includes forming strategic partnerships to maximize the use and value of our spectrum, network assets and combined service offerings in the United States and internationally. Value that we may be able to realize from these partnerships may depend in part on the value ascribed to our spectrum. Historically, valuations of spectrum in other frequency bands have been volatile, and we cannot predict the future value that we may be able to realize for our spectrum and other assets. Recent spectrum transactions, such as by EchoStar, have increased the value of spectrum; however, such transactions may not result in the same valuation of our spectrum assets. In addition, to the extent that the FCC makes additional spectrum available or promotes the more flexible use or greater availability (such as through spectrum leasing or new spectrum sales) of existing satellite or terrestrial spectrum allocations, the availability of such additional spectrum could reduce the value that we are able to realize for our spectrum.
We operate in many tax jurisdictions, and changes in tax rates or adverse results of tax examinations could materially increase our costs.
We operate in various U.S. and foreign tax jurisdictions. The process of determining our anticipated tax liabilities involves many calculations and estimates which are inherently complex. Our tax obligations are subject to review and possible challenge by the taxing authorities of these jurisdictions, such as the ongoing income tax return audits being conducted by the Canada Revenue Agency of our Canadian subsidiary. See Note 13: Taxes to our Consolidated Financial Statements for additional information regarding such audits. If taxing authorities were to successfullychallenge our current tax positions, or if we changed the manner in which we conduct certain activities, we could become subject to material, unanticipated tax liabilities. We may also become subject to additional tax liabilities as a result of changes to tax laws in any of our applicable tax jurisdictions, which in certain circumstances could have a retroactive effect.
We are exposed to trade credit risk in the ordinary course of our business activities.
We are exposed to risk of loss in the event of nonperformance by our customers of their obligations to us. Some of our customers may be highly leveraged or subject to their own operating and regulatory risks. Many of our customers finance their activities through cash flows from operations, the incurrence of debt or the issuance of equity. From time to time, credit is less available or available on more restrictive terms. The combination of reduction of cash flow resulting from operational setbacks or the lack of availability of access to capital may result in a reduction in our customers' liquidity and ability to make payments or perform on their obligations to us. Any increase in the nonpayment or nonperformance by our customers could reduce our cash flows.
We have been in the past from time to time, and may be in the future, subject to litigation and investigations that could have a substantial, adverse impact on our business.
From time to time we are subject to litigation, including claims related to our business activities. We have also been in the past, and may be in the future, subject to investigations by regulators and governmental agencies, including the United States Department of the Treasury's Office of Foreign Assets Control, the United States Department of Commerce, Bureau of Industry and Security and the United States Immigration and Customs Enforcement. Irrespective of their merits, litigation and investigations may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. At this time, we are not aware of any pending litigation, investigation, dispute or claim that would likely have a material adverse effect on our financial condition, results of operations or liquidity. However, we may be wrong in this assessment, or could in the future become subject to additional litigation that could have a material adverse effect on our financial position and operating results, on the trading price of our securities and on our ability to access the capital markets.
Wireless devices' radio frequency emissions are the subject of regulation and litigation concerning their environmental effects, which includes alleged health and safety risks. As a result, we may be subject to new regulations, demand for our services may decrease, and we could face liability based on alleged health risks.
There has been adverse publicity concerning alleged health risks associated with radio frequency transmissions from portable hand-held telephones and other telecommunications devices that have transmitting antennas. Lawsuits have been filed against participants in the wireless communications industry alleging a number of adverse health consequences as a result of wireless phone usage. Other claimsallege consumer harm from failures to disclose information about radio frequency emissions or aspects of the regulatory regimes governing those emissions. Although we have not been party to any such lawsuits, we may be exposed to such litigation in the future. Courts or governmental agencies could determine that we do not
comply with applicable standards for radio frequency emissions and power or that there is valid scientific evidence that use of our devices poses a health risk. Any such finding could reduce our revenue and profitability and expose us and other communications service providers or device sellers to litigation, which, even if frivolous or unsuccessful, could be costly to defend. Furthermore, any actual or perceived risk from radio frequency emissions could reduce the number of our subscribers and demand for our products and services.
Risks Related to Government Regulations
Our business is subject to extensive government regulation that are subject to change and interpretation, compliance with which will impact our future success.
The regulatory obligations we must meet are complex, vary greatly from country to country, and are subject to interpretation. We cannot give any assurance that the governments will agree with or accept our compliance efforts. The government approvals required for us to operate our MSS system need to be periodically renewed and renewal is not guaranteed. Our MSS system is subject to significant regulation by the FCC in the United States, by the ARCEP, CNES and ANFR in France and by similar authorities in other foreign jurisdictions where we do business. Additionally, the availability of globally harmonized spectrum on which our MSS system depends is managed by the ITU and, to a certain extent, sovereign nations. The rules and regulations of these regulatory authorities are subject to change and may not continue to permit our operations as currently conducted or as we plan to conduct them. The approvals are also subject to revocation, and we may be subject to fines, forfeitures, penalties or other sanctions if any issuing authority were to find that we are not in compliance with the applicable rules, regulations or policies. Further, certain regulatory authorities may decide to allow additional uses within our ITU-allocation of spectrum that may be incompatible with our continued provision of MSS.
Our MSS system requires licenses or other regulatory authorization in each of the jurisdictions in which we provide service. From time to time, other operators or third parties challenge our right to receive or hold licenses. For these and other reasons, we may not be able to obtain or retain all regulatory approvals needed for current and future operations. Failure to obtain the authorizations necessary to use our assigned radio frequency spectrum and to distribute our products in certain countries could have a material adverse effect on our ability to generate revenue and on our overall competitive position. Failure to operate our satellites, ground stations, mobile earth terminals or other facilities as required by our licenses and applicable government regulations could result in the imposition of government sanctions against us, up to and including cancellation of our licenses.
The Company must apply for and obtain additional licensing and authorizations from multiple regulators in order to operate and provide service over the Extended MSS Network, including the new satellite constellation and expanded ground infrastructure as provided in the Updated Services Agreement. We cannot provide any assurance that we will be able to obtain all such licenses and authorizations required for the Extended MSS Network.
Our operations are subject to certain regulations of the United States State Department's Directorate of Defense Trade Controls (the export of satellites and related technical data), United States Treasury Department's Office of Foreign Assets Control (financial transactions and transactions with sanctioned persons or countries) and the United States Commerce Department's Bureau of Industry and Security (export of satellites and related technical data, our gateways and phones) and other similar foreign regulators. These U.S. and foreign obligations and regulations may limit or delay our ability to offer products and services in a particular country. We may be required to provide U.S. and foreign government law enforcement and security agencies with call interception services and related government assistance, in respect of which we face legal obligations and restrictions in various jurisdictions. These regulations may limit or delay our ability to operate in a particular country or engage in transactions with certain parties and may impose significant compliance costs.
Regulatory changes, such as those resulting from new treaties, statutes or regulations or judicial decisions, may significantly impact our business or require us to modify our business plans or operations. Our failure to comply with these evolving regulations could subject us to sanctions that could materially and adversely affect our ability to operate.
Additionally, we face risks with maintaining our exclusivity within our licensed frequencies, defendingagainstinterference into our system caused by competing operators, and meeting evolving requirements for orbital debris mitigation and space sustainability. Increasing regulation and more burdensome requirements may impact our future business plans.
Our global operations expose us to trade and economic sanctions, other restrictions, liabilities and exposure to penalties imposed by the United States, the European Union and other governments and organizations.
We are required to comply with a wide range of laws and regulations in the countries where we operate or do business. For example, the U.S. Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminalpenalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, FCPA and other federal statutes and regulations, including those established by the Office of Foreign Assets Control ("OFAC"). Further, various government agencies require export licenses, which could impact our sales of Commercial IoT, SPOT and Duplex products, and the importation of equipment into various countries, if not timely obtained and maintained. Such governmental agencies may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase compliance costs, and may subject us to fines, penalties and other sanctions. A violation of these laws or regulations could adversely impact our business, results of operations and financial condition.
Although we have implemented policies and procedures in these areas, we cannot assure you that our policies and procedures will prevent or detect all potential breaches of law or governance practices or that directors, officers, employees, representatives, distributors, consultants, other partners, vendors, customers or subscribers have not engaged and will not engage in conduct for which we may be held responsible. We cannot assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or result in us being held liable for such conduct. Violations of the FCPA, OFAC restrictions or other export control, anti-corruption, anti-money-laundering and anti-terrorism laws or regulations may result in severecriminal or civil sanctions, litigation or regulatory action or inquiries or other enforcement actions, shareholder activism (such as to stop using a certain business partner), termination of contracts, loss of licenses and damage to our reputation, and we may be subject to other liabilities, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
Our business plan to use our licensed MSS spectrum to provide terrestrial wireless services depends upon our ability to maintain and expand our terrestrial authority as well as certain actions by third parties, which we cannot control.
Our business plan includes utilizing our licensed MSS spectrum to provide terrestrial wireless services, including mobile broadband applications, around the world. Our MSS licenses, including our terrestrial authority, are valid through various specified terms, which we intend to renew. In addition, we will need to comply with certain conditions in order to provide terrestrial broadband service under our MSS licenses, including obtaining FCC certifications for our equipment that will utilize this spectrum authority in the U.S. We are seeking similar approvals in various foreign jurisdictions. We cannot guarantee that such efforts will be successful.
We have entered into agreements with multiple third parties to develop an ecosystem of radios and devices using our terrestrially authorized spectrum. These third parties intend to use our terrestrially authorized spectrum to offer wireless services to their respective customers. Our anticipated future revenues and profitability are dependent upon the commercial success of their offerings.
Other future regulatory decisions could reduce our existing spectrum allocation or impose additional spectrum sharing agreements on us, which could adversely affect our services and operations.
The FCC, or other international regulatory authorities, may permit additional operators to provide competing MSS in our frequency bands in the future. While China's Beidou system is currently the only other operator of which we are aware, other regulatory authorities may require us to share spectrum with other systems that are not currently licensed by the United States or any other jurisdiction. From time to time, other operators have applied to use our licensed spectrum, which if granted could increase competition for satellite communication services and decrease the capacity available to us on such spectrum.
We registered our second-generation constellation with the ITU through France rather than the United States. The French radio frequency spectrum regulatory agency, ANFR, submitted the technical papers filing to the ITU on our behalf in July 2009. As with the first-generation constellation, the ITU requires us to coordinate our spectrum assignments with other administrators and operators that use any portion of our spectrum frequency bands. We are actively engaged in the coordination process but cannot predict how long this process will take; however, we are able to use the frequencies during the coordination process in accordance with our licenses.
We have acquired the operational rights to the AST-NG-C-3 system filing at the ITU. This filing will enable us to commercialize our third-generation MSS network (the "C-3 System") to support the Services provided over the Extended MSS Network. We are actively working with the French government to secure the necessary authorizations to launch and operate the C-3 System. We are also pursuing market access approvals from multiple countries, including the United States. In February 2025, we filed a petition with the FCC requesting U.S. market access for the C-3 System. The FCC Space Bureau has accepted our petition for filing and published it for public comment. We cannot guarantee that such efforts will be successful.
The FCC and other foreign regulatory agencies are permitting expanded unlicensed use of the 5 GHz band including within our C-band forward feeder link (earth station to satellite), which operates at 5091-5250 MHz, and expanded licensed and unlicensed use of the 7 GHz band including within our C-band return feeder link (satellite to earth) utilized by our gateway antennas globally. Such uses may have a significant adverse impact on our ability to provide MSS. Additionally, we are experiencing harmfulinterference into our system from a competing Chinese system over certain parts of Asia. We can provide no assurance regarding our ability to eliminate such interference.
If the FCC, our French regulator, or any other regulator, revokes, modifies or fails to renew or amend our licenses, our ability to operate may be limited.
We hold FCC licenses for the operation of our satellites, our U.S. gateways and other ground facilities and our mobile earth terminals that are subject to revocation if we fail to satisfy specified conditions or meet prescribed milestones. The FCC licenses are also subject to renewal and modification by the FCC.
We hold licenses issued by, and subject to the continued regulatory jurisdiction of, ANFR, the French Ministry in charge of Space and the ARCEP, the French independent administrative authority of post and electronic communications regulations, for the operation of our second-generation satellites. These licenses are subject to revocation if we fail to satisfy specified conditions or meet prescribed milestones. These licenses are also subject to modification by the French regulators.
There can be no assurance that the FCC or our French regulators will renew the licenses we hold. If the FCC, the French Ministry, ARCEP or any other regulators revoke, modify or fail to renew or amend the licenses we hold or if we fail to satisfy any of the conditions of our respective licenses, we may not be able to continue to provide mobile satellite communications services, which would have a material adverse effect on our business and operations.
Furthermore, if we operate in any country without a valid license, we could face regulatory fines and criminal sanctions. We hold certain licenses in each country where our ground infrastructure is located. If we fail to maintain such licenses within any particular country, we may not be able to continue to operate the ground infrastructure located within that country, which could prevent us from continuing to provide mobile satellite communications services within that region.
Changes in international trade regulations and other risks associated with foreign trade could adversely affect our sourcing from foreign manufacturers .
We source our products from both domestic and foreign contract manufacturers. The adoption of regulations related to the importation of products, including quotas, duties, tariffs, taxes and other charges or restrictions on imported goods, and changes in U.S. customs procedures could result in an increase in the cost of our products. For example, throughout 2025 and continuing into 2026, there have been recent and ongoing changes to the tariff policies in the U.S., generally resulting in higher tariffs on products and equipment imported from foreign countries. Volatility in tariff rates has resulted in, and may continue to result in, lower gross margins on certain of our products manufactured outside of the U.S.
Additionally, delays in goods clearing customs or the disruption of international transportation lines used by us could result in our inability to deliver goods to customers in a timely manner or the loss of sales altogether. Any delay or interruption to our manufacturing process or in shipping our products could result in lost revenue, which would adversely affect our business, financial condition or results of operations.
Emerging and unsettled data privacy laws expose us to substantial risks.
We collect and store data, including our customers' personal information. In jurisdictions around the world, personal information is increasingly becoming the subject of extensive legislation and regulations to protect consumers’ privacy and security, such as the EU's General Data Protection Regulation and similar laws enacted by certain U.S. states. The interpretation of privacy and data protection laws and regulations regarding the collection, storage, transmission, use and disclosure of such information in some jurisdictions is unclear and ever evolving. These laws may be interpreted and applied differently from country to country and in a manner that presents a challenge to our current data protection practices. Complying with these varying international requirements could cause us to incur additional costs or change our business practices. Our services are accessible in many foreign jurisdictions, and some of these jurisdictions may claim that we are required to comply with their laws, even where we have no local entity, employees or infrastructure. We could be forced to incur significant expenses if we were required to modify our products, services or existing security and privacy procedures in order to comply with new or expanded regulations across numerous jurisdictions. In addition, we could face liability to end users alleging that their personal information is not collected, stored, transmitted, used or disclosed appropriately or in accordance with our privacy policies or
applicable laws, including claims and litigation resulting from such allegations. Any failure on our part to protect information pursuant to applicable regulations could result in a loss of user confidence, reputational harm and a loss of customers, which could materially impact our results of operations and cash flows.
Risks Related to Our Common Stock
Restrictive covenants in our financing arrangements restrict our ability to pay dividends on our common stock for the foreseeable future, which may affect the market for our shares.
We do not expect to pay cash dividends on our common stock. Our financing arrangements restrict our ability to pay cash dividends on our common stock. Further, our Series A Preferred Stock provides for the payment of cumulative cash dividends at a rate of 7% per annum, subject to certain terms and conditions. If such dividends are not declared by our board of directors, the dividends will accrue and cumulative payment will be made on the next dividend payment date or upon liquidation. Such dividends limit our cash flows that would otherwise be available to pay dividends on our common stock.
Any future dividend payments with respect to our Series A Preferred Stock are within the discretion of our board of directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, contractual restrictions, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant.
There is a limited market for our common stock and our stock price may be volatile or may be subject to short selling.
The trading price of our common stock is subject to wide fluctuations. There are a wide variety of factors, some of which may be outside of our control, that could affect the trading price of our common stock, including our operating and financial performance and prospects, our quarterly or annual earnings compared to market expectations, announcements or press coverage concerning our business and other factors described elsewhere in this “Risk Factors” section. The trading price of our common stock may also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. Our stockholders may be unable to resell their shares of our common stock at or above the initial purchase price. Because we are a controlled company, there is a limited market for our common stock. In periods of low trading volume, sales of significant amounts of shares of our common stock in the public market could lower the market price of our stock.
Additionally, selling short is a technique used by a stockholder to take advantage of an anticipated decline in the price of a security. A significant number of short sales or a large volume of other sales within a relatively short period of time can create downward pressure on the market price of a security. Further sales of common stock could cause even greaterdeclines in the price of our common stock due to the number of additional shares available in the market, which could encourage short sales that could further undermine the value of our common stock. Holders of our securities could, therefore, experience a decline in the value of their investment as a result of short sales of our common stock.
The future issuance of additional shares of our common stock could cause dilution of ownership interests and adversely affect our stock price.
We may issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of our current stockholders. We are authorized to issue 143.3 million shares of common stock and 100 million shares of preferred stock, of which 0.3 million shares are designated as Series A Preferred Stock. As of December 31, 2025, approximately 128 million shares of common stock were issued and outstanding and 0.1 million shares of Series A Preferred Stock were issued and outstanding. As of December 31, 2025, there were 15.3 million shares of common stock available for issuance, of which 6.3 million shares were contingently issuable. These shares include approximately: (i) 0.4 million shares that are contingently issuable upon the exercise of outstanding stock options and vesting of outstanding restricted stock awards and units, (ii) 1.9 million shares that are contingently issuable upon the achievement of stock price targets and vesting of outstanding performance-based restricted stock units, (iii) 0.1 million shares that are contingently issuable upon the achievement of performance targets and vesting of performance-based restricted stock units, (iv) 0.3 million shares that are issuable to Thermo if they exercise their purchase right under the warrant issued to them as consideration for their guarantee under the 2023 Funding Agreement, (v) 3.3 million shares may be issued if the warrants issued to the Customer are exercised in accordance with the Updated Services Agreements and (vi) the right to acquire an additional 0.3 million shares under the warrant that may vest if and when Thermo advances aggregate funds of $25.0 million or more to us or a permitted third party pursuant to the terms of the Amended Thermo Guaranty. In the event Thermo is required to advance funds pursuant to its guarantee with us, we will also be required to issue it shares in respect of such advance. In addition, we may issue additional shares of our common stock or other securities that are convertible into, or exercisable for, common stock for raising capital or other business purposes. As of December 31, 2025, there were 99.9 million shares of preferred stock available for issuance. Future sales of
substantial amounts of common stock, or the perception that such sales could occur, may have a material adverse effect on the price of our common stock.
We have issued and may issue shares of preferred stock or debt securities with greater rights than our common stock.
Our certificate of incorporation authorizes our board of directors to issue one or more series of preferred stock and set the terms of the preferred stock without seeking any further approval from holders of our common stock. Currently, there are 100 million shares of preferred stock authorized, of which 0.1 million shares of Series A Preferred Stock are issued and outstanding. Any preferred stock that is issued may rank ahead of our common stock in terms of dividends, priorities and liquidation premiums and could have other preferential voting rights to those held by the holders of our common stock.
We are controlled by Thermo, whose interests may conflict with yours.
As of December 31, 2025, Thermo owned approximately 58% of our outstanding common stock, which excludes shares issuable to Thermo upon the exercise of purchase rights under the warrant issued to them in connection with the 2023 Funding Agreement that have vested or may vest upon the occurrence of certain events, as well as its ownership of perpetual preferred stock. We have depended substantially on Thermo to provide capital to finance our business.
Although extraordinary corporate transactions, material sales of assets and certain transactions with related parties currently must be approved by our Strategic Review Committee, to the extent these and other matters are also subject to a vote of our shareholders, Thermo is able to control such vote. Currently, these other matters include the election of a majority of the members of our board of directors and numerous other matters, including changes of control and other significant corporate transactions, so long as these transactions are not between Thermo and Globalstar. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other stockholders do not support. This concentrated control could also discourage potential investors from investing in us.
In addition, Thermo has guaranteed certain of our obligations related to the Updated Services Agreements and has received the right to purchase shares of our common stock under the warrant issued to them as consideration for providing such guarantee.
Thermo is controlled by James Monroe III, our Executive Chairman. Through Thermo, Mr. Monroe holds equity interests in, and serves as an executive officer or director of, a diverse group of privately-owned businesses not otherwise related to us. We reimburse Thermo and Mr. Monroe for certain third party, documented, out-of-pocket expenses they incur in connection with our business.
The interests of Thermo may conflict with the interests of our other stockholders. Thermo may take actions it believes will benefit its equity investment in us or in connection with its guarantees of our obligations even though such actions might not be in your best interests as a holder of our common stock.
Provisions in our charter documents, financing arrangements, customer contracts and Delaware corporate law may discourage takeovers, which could affect the rights of holders of our common stock.
Provisions of Delaware law and our amended and restated certificate of incorporation, amended and restated bylaws, certain customer contracts and our debt agreements could hamper a third party's acquisition of us or discourage a third party from attempting to acquire control of us. These provisions include:
• the election of our Minority Directors by a plurality of the vote of our stockholders other than Thermo;
• the above-described requirement that (i) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries and (ii) any sale or transfer of a material amount of assets of Globalstar or any sale or transfer of assets of any of our subsidiaries which are material to us has to be approved by our Strategic Review Committee until such time as Thermo no longer beneficially owns at least 45% of our common stock;
• the ability of our board of directors to issue preferred stock with voting rights or with rights senior to those of the common stock without any further vote or action by the holders of our common stock;
• the division of our board of directors into three separate classes serving staggered three-year terms;
• the fact that if Thermo does not own a majority of our outstanding capital stock entitled to vote in the election of directors, our directors will be able to be removed for cause only with the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of capital stock entitled to vote in the election of directors;
• prohibitions, at such time when Thermo does not own a majority of our outstanding capital stock entitled to vote in the election of directors, on our stockholders acting by written consent;
• prohibitions on our stockholders calling special meetings of stockholders or filling vacancies on our board of directors;
• the requirement, at such time when Thermo does not own a majority of our outstanding capital stock entitled to vote in the election of directors, that our stockholders must obtain a super-majority vote to amend or repeal our amended and restated certificate of incorporation or bylaws;
• change of control provisions under our financing arrangements, which provide that a change of control will constitute a default and exercise remedies thereunder, and certain notice and consent requirements in the event of an assignment or change of control under certain of our customer contracts; and
• change of control provisions in our 2006 Equity Incentive Plan, which provide that a change of control may accelerate the vesting of all outstanding stock options, stock appreciation rights and restricted stock.
We also are subject to Section 203 of the Delaware General Corporation Law, which, subject to certain exceptions, prohibits us from engaging in any business combination with any interested stockholder, as defined in that section, for a period of three years following the date on which that stockholder became an interested stockholder. This provision does not apply to Thermo, which became our principal stockholder prior to our initial public offering.
As noted above, Thermo's ownership position could also discourage a third party from attempting to acquire control of us. These provisions also could make it more difficult for our stockholders to take certain corporate actions, and could limit the price that investors might be willing to pay in the future for shares of our common stock.
Effective
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.
Performance Indicators
Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our earnings and cash flows. These key performance indicators include:
• total revenue, which is an indicator of our overall business growth;
• subscriber growth and churn rate, which are both indicators of the satisfaction of our customers;
• average monthly revenue per user, or ARPU, which is an indicator of our pricing and ability to obtain effectively long-term, high-value customers. We calculate ARPU separately for each type of our subscriber-driven revenue, including Commercial IoT, SPOT and Duplex;
• operating income and adjusted EBITDA, both of which are indicators of our financial performance; and
• capital expenditures, which are an indicator of future revenue growth potential and cash requirements.
Comparison of the Results of Operations for the years ended December 31, 2025 and 2024
Revenue :
Our revenue is categorized as service revenue and subscriber equipment sales. Service revenue is generated by the MSS services we provide to customers using the Globalstar System. Subscriber equipment sales are generated from the sale of MSS devices that work over the Globalstar System. We also generate service and equipment revenue from the sale of XCOM RAN systems and associated services that support such systems. For the twelve months ended December 31, 2025, total revenue increased $22.6 million, or 9%, to $273.0 million from $250.3 million in 2024 primarily related to an increase in wholesale capacity services revenue and higher volume of Commercial IoT device sales, partially offset by a decline in SPOT and Duplex subscriber services revenue and equipment sales revenue.
The following table sets forth amounts and percentages of our revenue by type of service for customers using the Globalstar System (in thousands):
Year Ended
December 31, 2025
Year Ended
December 31, 2024
Revenue
% of Total
Revenue
Revenue
% of Total
Revenue
Service revenue:
Wholesale capacity services
Subscriber services
Commercial IoT
SPOT
Duplex
Government and other services
Total service revenue
(1) The remaining 6% and 5% of our total revenue for the years ended December 31, 2025 and 2024, respectively, is attributable to subscriber equipment sales from the sale of MSS devices that work over the Globalstar System and equipment revenue from the sale of XCOM RAN systems.
The following table sets forth our average number of subscribers and ARPU by type of subscriber services revenue:
December 31,
Average number of subscribers for the year ended:
Commercial IoT
SPOT
Duplex
Other
Total
ARPU (monthly):
Commercial IoT
SPOT
Duplex
We count "subscribers" based on the number of devices that are subject to agreements that entitle them to use our data or voice communications services rather than the number of persons or entities who own or lease those devices. Other providers of comparable services may count their subscribers differently.
Wholesale capacity services revenue reflects revenue from providing satellite network access and related services to the Customer under the Updated Services Agreement. Government and other services revenue includes revenue generated primarily from terrestrial spectrum and network solutions as well as governmental and engineering service contracts. None of these service revenue items are subscriber driven. Accordingly, we do not present ARPU for wholesale capacity services revenue or government and other services revenue in the table above.
Service Revenue
Wholesale capacity services revenue increased $27.4 million (or 19%) in 2025. Wholesale capacity services revenue reflects revenue from the Customer under the Updated Services Agreements. The majority of the increase during 2025 related to the timing and amount of service fees associated with the reimbursement of network-related costs as well as for fees related to certain expanded services.
Commercial IoT service revenue increased $1.0 million (or 4%) in 2025 due to a 6% increase in average subscribers offset partially by a slight decrease in ARPU. Gross subscriber activations were up over 50% year over year, reaching a record high for annual gross activations since our Commercial IoT devices were first introduced. We expect activations to continue to increase in 2026 due to commercial sales of our recently-launched two-way reference design module.
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.
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:
• 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.
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,
Net cash provided by operating activities
Net cash used in investing activities
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
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.
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 liquidateddamages 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.
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.
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.
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 impairmentloss 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 impairmentloss 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 overcomenegative 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.
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.
