gsat-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33117

GLOBALSTAR, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						41-2116508
(State or Other Jurisdiction of						(I.R.S. Employer Identification No.)
Incorporation or Organization)

1351 Holiday Square Blvd.

Covington, Louisiana 70433

(Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code: (985) 335-1500

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, par value $0.0001 per share

GSAT

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

(Do not check if a smaller reporting company)

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of November 1, 2024, 1,892,373,380 shares of voting common stock were outstanding and 149,425 shares of preferred stock were outstanding. Unless the context otherwise requires, references to common stock in this Report mean the Registrant’s voting common stock.

FORM 10-Q

GLOBALSTAR, INC.

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	23

Item 4.	Controls and Procedures.	24

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	25

Item 1A.	Risk Factors.	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 3.	Defaults Upon Senior Securities.	25

Item 4.	Mine Safety Disclosures.	25

Item 5.	Other Information.	25

Item 6.	Exhibits.	26

Signatures		27

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Revenue:
Service revenue	$	68,908	$	53,643	$	180,008	$	155,245
Subscriber equipment sales	3,399		4,040		9,164		16,154
Total revenue	72,307		57,683		189,172		171,399
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	19,185		13,872		54,058		37,938
Cost of subscriber equipment sales	2,515		3,458		6,739		13,429

Marketing, general and administrative	10,439		12,090		31,438		31,843
Stock-based compensation	8,254		4,346		26,645		10,638
Reduction in the value of long-lived assets	231		35		536		35
Depreciation, amortization and accretion	22,249		21,865		66,456		65,688
Total operating expenses	62,873		55,666		185,872		159,571
Income from operations	9,434		2,017		3,300		11,828
Other income (expense):
Loss on extinguishment of debt	—		—		—		(10,403)
Interest income and expense, net of amounts capitalized	(2,872)		(3,945)		(10,301)		(11,047)
Foreign currency gain (loss)	4,918		(4,151)		(3,417)		(206)
Other	186		25		(605)		373
Total other income (expense)	2,232		(8,071)		(14,323)		(21,283)
Income (loss) before income taxes	11,666		(6,054)		(11,023)		(9,455)
Income tax expense	1,732		115		1,922		185
Net income (loss)	$	9,934	$	(6,169)	$	(12,945)	$	(9,640)

Other comprehensive income (loss):
Foreign currency translation adjustments	(3,775)		2,503		482		(233)
Comprehensive income (loss)	$	6,159	$	(3,666)	$	(12,463)	$	(9,873)

Net income (loss) attributable to common shareholders (Note 7:)	7,261		(8,842)		(20,906)		(17,572)

Net income (loss) per common share:
Basic	$	0.00	$	0.00	$	(0.01)	$	(0.01)
Diluted	0.00		0.00		(0.01)		(0.01)
Weighted-average shares outstanding:
Basic	1,892,253		1,836,251		1,886,377		1,820,582
Diluted	1,910,061		1,836,251		1,886,377		1,820,582

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share data)

(Unaudited)


	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	51,916	$	56,744
Accounts receivable, net of allowance for credit losses of $1,446 and $2,312, respectively	43,021		48,743
Inventory	11,877		14,582
Prepaid expenses and other current assets	20,638		22,584
Total current assets	127,452		142,653
Property and equipment, net	617,064		624,002
Operating lease right of use assets, net	34,364		34,164
Intangible and other assets, net of accumulated amortization of $14,742 and $12,385, respectively	138,681		123,490
Total assets	$	917,561	$	924,309
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	34,600	$	34,600
Accounts payable and accrued expenses	34,417		28,985
Accrued satellite construction costs	1,015		58,187
Payables to affiliates	274		459
Deferred revenue, net	46,548		53,677
Total current liabilities	116,854		175,908
Long-term debt	359,759		325,700
Operating lease liabilities	28,554		29,244
Other non-current liabilities	18,301		14,478
Total non-current liabilities	406,614		369,422

Commitments and contingencies (Note 5)

Stockholders’ equity:

Series A Perpetual Preferred Stock of $0.0001 par value; 300,000 shares authorized and 149,425 issued and outstanding at September 30, 2024 and December 31, 2023, respectively	—		—
Voting Common Stock of $0.0001 par value; 2,150,000,000 shares authorized; 1,892,348,276 and 1,881,194,682 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	189		188
Additional paid-in capital	2,466,279		2,438,703
Accumulated other comprehensive income	5,552		5,070
Retained deficit	(2,077,927)		(2,064,982)
Total stockholders’ equity	394,093		378,979
Total liabilities and stockholders’ equity	$	917,561	$	924,309

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)


	Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total
	Shares	Amount		Shares	Amount
Balances – January 1, 2024	149	$	—	1,881,195	$	188	$	2,438,703	$	5,070	$	(2,064,982)	$	378,979
Net issuance of restricted stock awards and employee stock options and recognition of stock-based compensation	—	—		2,739	—		11,794		—		—		11,794
Series A Preferred Stock Dividends	—	—		—	—		(2,644)		—		—		(2,644)
Other	—	—		—	—		(272)		—		—		(272)
Other comprehensive income	—	—		—	—		—		2,393		—		2,393
Net loss	—	—		—	—		—		—		(13,196)		(13,196)
Balances – March 31, 2024	149	$	—	1,883,934	$	188	$	2,447,581	$	7,463	$	(2,078,178)	$	377,054
Net issuance of restricted stock awards, stock for employee stock options and stock for employee stock purchase plan and recognition of stock-based compensation	—	—		568	—		8,844		—		—		8,844
Series A Preferred Stock Dividends	—	—		—	—		(2,644)		—		—		(2,644)
Issuance of stock in connection with License Agreement with XCOM	—	—		7,654	1		7,500		—		—		7,501
Other	—	—		—	—		39		—		—		39
Other comprehensive income	—	—		—	—		—		1,864		—		1,864
Net loss	—	—		—	—		—		—		(9,683)		(9,683)
Balances – June 30, 2024	149	$	—	1,892,156	$	189	$	2,461,320	$	9,327	$	(2,087,861)	$	382,975
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation	—	—		192			7,566		—		—		7,566
Series A Preferred Stock Dividends	—	—		—	—		(2,673)		—		—		(2,673)
Other	—	—		—	—		66		—		—		66
Other comprehensive loss	—	—		—	—		—		(3,775)		—		(3,775)
Net income	—	—		—	—		—		—		9,934		9,934
Balances – September 30, 2024	149	—		1,892,348	$	189	$	2,466,279	$	5,552	$	(2,077,927)	$	394,093


	Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total
	Shares	Amount		Shares	Amount
Balances – January 1, 2023	149	$	—	1,811,075	$	181	$	2,345,612	$	9,242	$	(2,040,264)	$	314,771
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation	—	—		2,037	—		3,897		—		—		3,897
Series A Preferred Stock Dividends	—	—		—	—		(3,952)		—		—		(3,952)
Other	—	—		—	—		47		—		—		47
Other comprehensive loss	—	—		—	—		—		(1,429)		—		(1,429)
Net loss	—	—		—	—		—		—		(3,480)		(3,480)
Balances – March 31, 2023	149	$	—	1,813,112	$	181	$	2,345,604	$	7,813	$	(2,043,744)	$	309,854
Net issuance of restricted stock awards, stock for employee stock options and stock for employee stock purchase plan and recognition of stock-based compensation	—	—		860	—		2,510		—		—		2,510
Series A Preferred Stock Dividends	—	—		—	—		(2,644)		—		—		(2,644)
Fair value of Thermo guarantee associated with the 2023 Funding Agreement	—	—		—	—		6,897		—		—		6,897
Other	—	—		—	—		47		—		—		47
Other comprehensive loss	—	—		—	—		—		(1,307)		—		(1,307)
Net income	—	—		—	—		—		—		9		9
Balances – June 30, 2023	149	$	—	1,813,972	$	181	$	2,352,414	$	6,506	$	(2,043,735)	$	315,366
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation	—	—		2,171	1		3,870		—		—		3,871
Series A Preferred Stock Dividends	—	—		—	—		(2,673)		—		—		(2,673)
Issuance of stock in connection with License Agreement with XCOM	—	—		59,977	6		70,415		—		—		70,421
Other	—	—		—	—		47		—		—		47
Other comprehensive income	—	—		—	—		—		2,503		—		2,503
Net loss	—	—		—	—		—		—		(6,169)		(6,169)
Balances – September 30, 2023	149	—		1,876,120	$	188	$	2,424,073	$	9,009	$	(2,049,904)	$	383,366

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30, 2024		September 30, 2023
Cash flows provided by operating activities:
Net loss	$	(12,945)	$	(9,640)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion	66,456		65,688
Stock-based compensation expense	26,645		10,638
Noncash interest and accretion expense	6,422		12,304
Unrealized foreign currency loss	3,441		131
Write off of debt discount and deferred financing costs upon extinguishment of debt	—		10,194
Other, net	3,712		(1,766)
Changes in operating assets and liabilities:
Accounts receivable	8,283		2,082
Inventory	2,008		(2,029)
Prepaid expenses and other current assets	413		(145)
Other assets	1,711		(515)
Accounts payable and accrued expenses	(1,703)		(5,435)
Payables to affiliates	(185)		(173)
Other non-current liabilities	2,924		45
Deferred revenue	(8,647)		(12,823)
Net cash provided by operating activities	98,535		68,556
Cash flows used in investing activities:
Payments under the satellite procurement agreement	(66,962)		(110,215)
Payments under the launch services agreement	(18,050)		(6,400)
Payments for other network upgrades to support the Service Agreements	(6,741)		(11,685)
Payments of capitalized interest	(8,592)		(8,810)
Payments for network upgrades to support product development	(5,648)		(4,960)
Purchase of intangible assets	(1,726)		(315)
Net cash used in investing activities	(107,719)		(142,385)
Cash flows provided by financing activities:
Principal and interest payments of the 2019 Facility Agreement	—		(148,281)
Proceeds from 2023 13% Notes	—		190,000
Proceeds from 2023 Funding Agreement	37,747		87,730
Principal payment of 2021 Funding Agreement	(25,950)		(6,250)
Dividends paid on Series A Preferred Stock	(7,961)		(9,269)
Payments for debt issuance costs	—		(8,556)
Proceeds from issuance of common stock and exercise of options	1,078		528
Net cash provided by financing activities	4,914		105,902
Effect of exchange rate changes on cash and cash equivalents	(558)		(19)
Net (decrease) increase in cash and cash equivalents	(4,828)		32,054
Cash and cash equivalents, beginning of period	56,744		32,082
Cash and cash equivalents, end of period (1)	$	51,916	$	64,136


	Nine Months Ended
	September 30, 2024		September 30, 2023
Supplemental disclosure of cash flow information:
Cash paid for interest	$	13,605	$	13,512

Supplemental disclosure of non-cash financing and investing activities:
Increase in capitalized accrued interest for network upgrades	$	6,911	$	3,547
Capitalized accretion of debt discount and amortization of prepaid financing costs	6,194		3,620
Accrued satellite construction assets	1,015		65,744
Re-characterization of 2021 Funding Agreement to debt	—		87,950
Fair value of common stock issued for License Agreement	—		58,534
Fair value of common stock issued for XCOM SSA	7,500		11,887
Construction in progress assets acquired through XCOM SSA	4,250		624

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

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Globalstar, Inc. (“Globalstar” or the “Company”) provides Mobile Satellite Services (“MSS”), including voice and data communications and wholesale capacity services through its global satellite network. The Company’s only reportable segment is its MSS business. Thermo Companies, through commonly controlled affiliates (collectively, “Thermo”), is the principal owner and largest stockholder of Globalstar. The Company’s Executive Chairman of the Board controls Thermo.

The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”); however, management believes the disclosures made are adequate to make the information presented not misleading. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Globalstar Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 29, 2024 (the “2023 Annual Report”).

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. The Company evaluates estimates on an ongoing basis. The Company has made certain reclassifications to prior period condensed consolidated financial statements to conform to current period presentation.

These unaudited interim condensed consolidated financial statements include the accounts of Globalstar and all its subsidiaries. Intercompany transactions and balances have been eliminated in the consolidation. In the opinion of management, the information included herein includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, consolidated balance sheets, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates qualitative and quantitative disclosures for the rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. The Company plans to adopt this standard when it becomes effective on January 1, 2025. The Company is evaluating the impact this ASU may have on its financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others. This ASU also explicitly requires public entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new disclosures in this ASU. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments should be applied retrospectively. The Company plans to adopt this ASU for its fiscal year end December 31, 2024 disclosures. The Company is evaluating the impact this ASU may have on its financial statement disclosures.

2. REVENUE

Disaggregation of Revenue

The following table discloses revenue disaggregated by type of product and service (amounts in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Service revenue:
Subscriber services
Duplex	$	5,955	$	7,978	$	15,675	$	20,088
SPOT	10,444		11,350		31,066		33,703
Commercial IoT	6,650		6,347		19,803		16,881
Wholesale capacity services	43,861		27,517		109,149		83,406
Government and other services	1,998		451		4,315		1,167
Total service revenue	68,908		53,643		180,008		155,245





Subscriber equipment sales	3,399		4,040		9,164		16,154

Total revenue	$	72,307	$	57,683	$	189,172	$	171,399

The Company is the operator for certain satellite-enabled services offered by Apple ("Customer") (the "Services") pursuant to the agreement (the “Service Agreement”) and certain related ancillary agreements (such agreements, together with the Service Agreement, the “Service Agreements”). The Service Agreements generally require Globalstar to allocate network capacity to support the Services, which launched in November 2022. Revenue associated with the Service Agreements is included in "Wholesale capacity services" in the table above. As consideration for the services provided by Globalstar under the Service Agreements, payments include a fixed service fee, payments relating to certain service-related operating expenses and capital expenditures, additional fees related to expanded services, and potential bonus payments subject to satisfaction of certain licensing, service and other related criteria. For a discussion of the Updated Services Agreements, see Note 8: Subsequent Events.

"Government and other services" reflect revenue for engineering and other communication services, such as terrestrial spectrum and network services, government service contracts and teleport lease arrangements. The Company's largest network services agreement is with a government services company to utilize the Company's satellite network for a mission critical service for government applications.

Accounts Receivable

The Company records trade accounts receivable from its customers when it has a contractual right to receive payment either on demand or on fixed or determinable dates in the future. The Company's receivable balances by type and classification are presented in the table below net of allowance for credit losses and may include amounts related to earned but unbilled receivables (amounts in thousands).


	As of:
	September 30, 2024		December 31, 2023
Accounts receivable, net of allowance for credit losses
Subscriber and other accounts receivable	$	15,309	$	14,474
Wholesale capacity accounts receivable	27,712		34,269
Total accounts receivable, net of allowance for credit losses	$	43,021	$	48,743

As discussed in Note 5: Commitments and Contingencies, the Company entered into a satellite procurement agreement and a launch services agreement. The new satellites purchased under the satellite procurement agreement will replenish the Company's HIBLEO-4 U.S.-licensed system. Pursuant to the Service Agreements, payments are expected to be paid to the Company on a straight-line basis commencing with the launch of these new satellites through their estimated useful life ("Phase 2 Service Period"). Based on construction in progress incurred by Globalstar, amounts expected to be billed by the Company associated with this phase of the Service Agreements were $224.6 million as of September 30, 2024.

Contract Liabilities

Contract liabilities, which are included in deferred revenue and other non-current liabilities on the Company’s consolidated balance sheet, represent the Company’s obligation to transfer service or equipment to a customer from whom it has previously received consideration. The Company's contract liabilities by type and classification are presented in the table below (amounts in thousands).


	As of:
	September 30, 2024		December 31, 2023
Short-term contract liabilities
Subscriber and other contract liabilities	$	21,542	$	22,816
Wholesale capacity contract liabilities, net of contract asset	25,006		30,861
Total short-term contract liabilities	$	46,548	$	53,677
Long-term contract liabilities
Subscriber and other contract liabilities	$	1,446	$	1,632
Wholesale capacity contract liabilities, net of contract asset	—		1,581
Total long-term contract liabilities	$	1,446	$	3,213
Total contract liabilities	$	47,994	$	56,890

For subscriber contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2024 and 2023 from performance obligations included in the contract liability balance at the beginning of these periods was $16.4 million and $18.9 million, respectively. For wholesale capacity contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2024 and 2023 from performance obligations included in the contract liability balance at the beginning of these periods was $29.9 million and $41.6 million, respectively.

The duration of the Company’s contracts with subscribers is generally one year or less. The Service Agreements have no expiration date; therefore, the related contract liabilities may be recognized into revenue over various periods driven by when the customer is expected to benefit from the related performance obligation.

The components of wholesale capacity contract liabilities are presented in the table below (amounts in thousands).


	As of:
	September 30, 2024		December 31, 2023
Wholesale capacity contract liabilities, net:
Additional consideration associated with the 2021 and 2023 Funding Agreements (1)	$	13,354	$	16,104
Advanced payments for services expected to be performed with the ground spare satellite launched in June 2022	22,354		23,673
Advanced payments contractually owed for services expected to be performed with the next-generation satellite constellation prior to the Phase 2 Service Period	10,867		14,204
Advanced payments for the Phase 1 Service Period fee, service-related operating and capital expenditures and other services	28,277		19,907
Other advanced payments associated with future performance obligations	3,195		5,219
Contract asset (2)	(53,041)		(46,665)
Wholesale capacity contract liabilities, net	$	25,006	$	32,442

(1)Includes debt discounts associated with the amended 2021 and 2023 Funding Agreements; the offset was recorded to deferred revenue.

(2)

SEC Form 10-Q filed by Globalstar Inc.