# Globalstar, Inc. (GSAT) Informational only - not investment advice. CIK: 0001366868 SIC: 4899 Communications Services, NEC SIC breadcrumb: [Transportation, Communications, Electric, Gas, And Sanitary Services](/division/E/) > [Communications](/major-group/48/) > [SIC 4899 Communications Services, NEC](/industry/4899/) Latest 10-K filed: 2026-02-27 SEC page: https://www.sec.gov/edgar/browse/?CIK=1366868 Filing source: https://www.sec.gov/Archives/edgar/data/1366868/000136686826000012/gsat-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 272986000 | USD | 2025 | 2026-02-27 | | Net income | -8651000 | USD | 2025 | 2026-02-27 | | Assets | 2326265000 | USD | 2025 | 2026-02-27 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001366868.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | 96,861,000 | 112,660,000 | 130,113,000 | 131,718,000 | 128,487,000 | 124,297,000 | 148,504,000 | 223,808,000 | 250,349,000 | 272,986,000 | | Net income | -132,646,000 | -89,074,000 | -6,516,000 | 15,324,000 | -109,639,000 | -112,625,000 | -256,915,000 | -24,718,000 | -63,164,000 | -8,651,000 | | Operating income | -63,253,000 | -68,446,000 | -47,379,000 | -64,046,000 | -59,163,000 | -65,503,000 | -221,029,000 | -165,000 | -949,000 | 7,430,000 | | Diluted EPS | -0.12 | -0.08 | -0.01 | -0.07 | -0.07 | -0.06 | -2.15 | -0.29 | -0.59 | -0.15 | | Operating cash flow | 8,813,000 | 13,857,000 | 5,920,000 | 3,048,000 | 22,215,000 | 131,881,000 | 63,800,000 | 74,341,000 | 439,192,000 | 621,650,000 | | Dividends paid | | | | | | 0.00 | 0.00 | 11,942,000 | 10,634,000 | 10,605,000 | | Assets | 1,132,614,000 | 1,129,265,000 | 1,045,482,000 | 965,590,000 | 888,093,000 | 814,106,000 | 738,469,000 | 924,309,000 | 1,710,237,000 | 2,326,265,000 | | Liabilities | | | | | | | | 545,330,000 | 1,351,354,000 | 1,970,536,000 | | Stockholders' equity | 161,819,000 | 291,224,000 | 358,945,000 | 407,343,000 | 423,065,000 | 365,431,000 | 314,771,000 | 378,979,000 | 358,883,000 | 355,729,000 | | Cash and cash equivalents | 10,230,000 | 41,644,000 | 15,212,000 | 7,606,000 | 13,330,000 | 14,304,000 | 32,082,000 | 56,744,000 | 391,164,000 | 447,471,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | -136.94% | -79.06% | -5.01% | 11.63% | -85.33% | -90.61% | | -11.04% | -25.23% | -3.17% | | Operating margin | -65.30% | -60.75% | -36.41% | -48.62% | -46.05% | -52.70% | -148.84% | -0.07% | -0.38% | 2.72% | | Return on equity | -81.97% | -30.59% | -1.82% | 3.76% | -25.92% | -30.82% | -81.62% | -6.52% | -17.60% | -2.43% | | Return on assets | -11.71% | -7.89% | -0.62% | 1.59% | -12.35% | -13.83% | -34.79% | -2.67% | -3.69% | -0.37% | | Liabilities / equity | | | | | | | | 1.44 | 3.77 | 5.54 | | Current ratio | 0.22 | 0.85 | 0.77 | 1.00 | 0.60 | 1.12 | 0.41 | 0.81 | 3.16 | 2.42 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001366868.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q2 | 2022-06-30 | | | -0.01 | reported discrete quarter | | 2022-Q3 | 2022-09-30 | | | -0.11 | reported discrete quarter | | 2023-Q1 | 2023-03-31 | | | 0.00 | reported discrete quarter | | 2023-Q2 | 2023-03-31 | | -3,480,000 | | reported discrete quarter | | 2023-Q2 | 2023-06-30 | 55,072,000 | | 0.00 | reported discrete quarter | | 2023-Q3 | 2023-06-30 | | 9,000 | | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 57,683,000 | | 0.00 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 52,409,000 | -15,078,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 56,480,000 | -13,196,000 | -0.01 | reported discrete quarter | | 2024-Q2 | 2024-03-31 | | -13,196,000 | | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 60,385,000 | | -0.01 | reported discrete quarter | | 2024-Q3 | 2024-06-30 | | -9,683,000 | | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 72,307,000 | | 0.00 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 61,177,000 | -50,219,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 60,032,000 | -17,331,000 | -0.16 | reported discrete quarter | | 2025-Q2 | 2025-03-31 | | -17,331,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 67,148,000 | | 0.13 | reported discrete quarter | | 2025-Q3 | 2025-06-30 | | 19,208,000 | | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 73,845,000 | | -0.01 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 71,961,000 | -11,618,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 70,064,000 | -17,420,000 | -0.16 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1366868/000136686826000029/gsat-20260331.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-05-07 Report date: 2026-03-31 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.  The following discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and applicable notes thereto included in Part I, Item 1 of this Report, together with "Management's Discussion and Analysis of Financial Condition and Results of Operation" included in our 2025 Annual Report. 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, including the risk factors set forth in Part I, Item 1A of our 2025 Annual Report, as updated in Part II, Item 1A of this Report. 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. 25 Overview  Mobile Satellite Services Business Through its global satellite network, Globalstar, Inc. ("we", "us" or the "Company") provides Mobile Satellite Services ("MSS"), including voice and data communications services to retail, business and governmental customers as well as wholesale satellite capacity services. We offer these services over our network of in-orbit satellites and ground stations ("gateways") pursuant to our spectrum licenses, which we refer to collectively as the Globalstar System. In addition to supporting Internet of Things ("IoT") data transmissions in a variety of applications, we provide reliable connectivity in areas not served or underserved by terrestrial wireless and wireline networks and in circumstances where terrestrial networks are not operational due to natural or man-made disasters. By providing global mobile satellite communications services, we aim to meet our customers' increasing desire for connectivity. Pending Mergers with Amazon.com, Inc. On April 13, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Amazon.com, Inc., a Delaware corporation (“Amazon”), Grapefruit Acquisition Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of Amazon (“Acquisition Sub I”), and Grapefruit Acquisition Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Amazon (“Acquisition Sub II” and, together with Amazon and Acquisition Sub I, the “Buyer Parties”), pursuant to which and subject to the terms and conditions of the Merger Agreement, the Buyer Parties have agreed to acquire us (the "Mergers"). The Mergers are expected to close in 2027, subject to satisfaction of certain closing conditions in the Merger Agreement, including required regulatory approvals; however, no assurance can be given as to when, or if, the Mergers will occur. Refer to Note 14: Subsequent Events to our consolidated financial statements for further discussion on the Mergers. Business Strategy Our competitive advantages are leveraged through our ability to deliver communications products and services, wholesale satellite capacity services, government services, and terrestrial spectrum and network solutions. These core competencies are outlined below. Wholesale Satellite Capacity Services Wholesale satellite capacity services include satellite network access and related services over the Globalstar System. We provide certain services to Apple Inc. (the "Customer") pursuant to a service agreement and certain related ancillary agreements (collectively, the "Service Agreements"). In October 2024, we agreed to make certain amendments to the Service Agreements and entered into other related agreements with the Customer (the Service Agreements, as amended, collectively, the "Updated Services Agreements") to deliver expanded services over a new MSS network, including a new satellite constellation, expanded ground infrastructure, and increased global MSS licensing (collectively the "Extended MSS Network"). The Updated Services Agreements generally require us to allocate network capacity to support the services we provide to the Customer and for the Customer to enable Band 53/n53 for use in cellular-enabled devices designated by the Customer for use with our services. For additional information about the Updated Services Agreements, including the recent SOW Amendment, see Note 2: Special Purpose Entity and Note 14: Subsequent Events to our condensed consolidated financial statements. As consideration for the services provided by us to the Customer under the Updated Services Agreements, payments to us 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 related criteria. We retain 15% of our current and future network capacity to support our other customers, including our existing and future Commercial IoT, SPOT and Duplex subscribers. We believe that this capacity can support a substantial increase in our own subscriber base. This retained satellite capacity can be used by us directly or through additional wholesale customer opportunities. For the three months ended March 31, 2026 and 2025, the Customer under the Updated Services Agreements was responsible for 66% and 61%, respectively, of our total revenue. No other customer was responsible for more than 10% of our revenue. The loss of the Customer may have an adverse impact on our financial condition, results of operations and cash flows. 26 Communications Products and Services We currently provide the following communications products and services to our MSS subscribers:  •data transmissions using a mobile or fixed device that transmits the location of the devices and other information to a central monitoring station, including our commercial IoT products ("Commercial IoT"); •communication and data transmissions using our SPOT family of mobile devices that transmit messages and the location of the device ("SPOT"); and •voice communication and data transmissions ("Duplex"). As of March 31, 2026, we had approximately 797,000 MSS subscribers worldwide. Our subscriber count only includes our MSS subscribers who have an active Globalstar contract. For our subscriber driven revenue, the specialized needs of our global customers span many industries. The Globalstar System is able to offer our customers cost-effective communications solutions completely independent of cellular coverage. Although traditional users of wireless telephone and broadband data services have access to such services in developed locations, our MSS customers often operate, travel and/or live in remote regions or regions with under-developed telecommunications infrastructure where such services are not readily available or are not provided on a reliable basis. We compete aggressively on price and strive to differentiate the products and solutions that we offer to our customers. As technological advancements are made, we continue to explore opportunities to develop new products and provide new services over the Globalstar System to meet the needs of our existing and prospective customers. In October 2025, we released the RM200M two-way module, designed to integrate into IoT and industrial solutions. Our current initiatives are focused in part on further investment and development of Commercial IoT-enabled devices, including a two-way reference design module and finished products with satellite only and multimode capabilities. Government Services We have an exclusive partnership with Parsons Corporation, a governmental services company, to utilize the Globalstar System to provide an innovative solution design to enhance resilience against disrupted communication pathways. We also provide engineering services to assist certain governmental and other customers in developing new applications to operate on our network and to enhance our ground network. These services include hardware and software designs to develop specific applications operating over our satellite network, as well as the installation of gateways and antennas. Terrestrial Spectrum and Network Solutions We are authorized to provide terrestrial broadband services over 11.5 MHz of our licensed MSS spectrum at 2483.5 to 2495 MHz (S-Band) throughout the United States and its territories. The Third Generation Partnership Project ("3GPP"), an organization that produces technical specifications and reports for 3GPP technologies, has designated the 11.5 MHz terrestrial band as Band 53 with the 5G variant of our Band 53, known as n53 (collectively "Band 53/n53"). We have terrestrial licenses in 12 countries, resulting in approximately 12.0 billion MHz-POPs (megahertz of our terrestrial spectrum authority in each country multiplied by a total population of approximately 967 million over the covered area) as of March 31, 2026. Prospective spectrum partners, including cable companies, wireless carriers, system integrators, utilities and other infrastructure operators, are able to benefit from access to uniform and increasingly "borderless" spectrum working across geographies. We believe our portfolio of terrestrial spectrum represents a substantial opportunity for us. The Updated Services Agreements significantly enhanced the device ecosystem for Band 53/n53 by enabling access to our terrestrial spectrum band in certain of the Customer's devices. In January 2026, we exercised our right under the Intellectual Property License Agreement (the "License Agreement") with XCOM Labs, Inc. (now known as Virewirx, Inc.) ("XCOM") to purchase intellectual property assets relating to the development and commercialization of XCOM’s technologies for wireless spectrum innovations, including XCOM RAN systems, which is XCOM’s commercially available coordinated multi-point radio system. XCOM RAN systems deliver substantial capacity gains in dense, complex, challenging wireless environments in sub 7 GHz spectrum. We also now own XCOM’s peer-to-peer connectivity technologies that could have applications across cellular and satellite devices. Certain former XCOM employees, who developed these technologies are employed by Globalstar and continuing to further commercialize the technology. We believe bringing together Globalstar’s terrestrial spectrum and relationships with leading partners around the world with XCOM’s differentiated technology creates a significant opportunity to deliver private networks for mission-critical needs of customers. 27 Globalstar System Satellite and Ground Network Our constellation of Low Earth Orbit ("LEO") satellites is designed to maximize the probability that at least one satellite is visible from any point on the Earth's surface between the latitudes 70° north and 70° south. Our goal is to provide service levels and call or message success rates equal to or better than our MSS competitors, so our products and services are attractive to potential customers. In 2022, we entered into a satellite procurement agreement with Macdonald, Dettwiler and Associates Corporation ("MDA Space") pursuant to which we expect to acquire 17 satellites to replace our HIBLEO-4 U.S.-licensed system. In August 2024, the Federal Communications Commission (the "FCC") Space Bureau granted our application to replace our HIBLEO-4 U.S.-licensed system with up to 26 satellites and operate them under a renewed 15-year license term to provide long-term continuity of our MSS. The technical specifications and design of these replacement satellites are similar to our current satellites. The first set of replacement satellites was delivered in April 2026 and we currently expect the second set to be delivered in mid-2026. These replacement satellites are expected to complement our existing second-g [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high 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. Effective 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. 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. 32 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 $ 172,731  63  % $ 145,299  58  % Subscriber services Commercial IoT 27,263  10  % 26,245  11  % SPOT 37,311  14  % 41,140  16  % Duplex 15,238  6  % 20,156  8  % Government and other services 4,766  1  % 4,849  2  % Total service revenue $ 257,309  94  % (1) $ 237,689  95  % (1) (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, 2025 2024 Average number of subscribers for the year ended: Commercial IoT 539,283  509,452  SPOT 222,534  241,980  Duplex 20,684  27,033  Other 235  288  Total 782,736  778,753  ARPU (monthly): Commercial IoT $ 4.21  $ 4.29  SPOT 13.97  14.17  Duplex 61.39  62.14  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. 33 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. 34 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: 35 •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. 36 Liquidity and Capital Resources Overview Our principal sources of liquidity include cash on hand, cash flows from operations and proceeds from the 2023 Funding Agreement and Infrastructure Prepayment (each term defined below). We expect these liquidity sources to meet our short-term and long-term liquidity needs for funding our operating costs, capital expenditures, including related to the Extended MSS Network and other growth opportunities, and financing obligations, including scheduled recoupments under the 2021 and 2023 Funding Agreements and 2024 Debt Repayment as well as dividends on our Series A Preferred Stock. In addition, we have issued warrants to the Customer that are exercisable in accordance with the Updated Services Agreements and to Thermo in connection with its guarantee of the 2023 Funding Agreement. These warrants would become a source of liquidity if exercised. As of December 31, 2025 and December 31, 2024, we held cash and cash equivalents of $447.5 million and $391.2 million, respectively. This increase in cash and cash equivalents during 2025 was due primarily to cash received pursuant to the Infrastructure Prepayment of $430.6 million (of which $131.0 million was received during the fourth quarter) and pursuant to the 2023 Funding Agreement of $27.1 million, offset by capital expenditures associated with our commitments under the Updated Services Agreements, including network expansion and upgrades. The principal amount of our debt outstanding was $410.0 million at December 31, 2025, compared to $417.5 million at December 31, 2024. This decrease was due to scheduled recoupments of $34.6 million under the 2021 Funding Agreement offset by the issuance of debt under the 2023 Funding Agreement totaling $27.1 million during the third quarter 2025. Cash Flows for the years ended December 31, 2025, 2024 and 2023 The following table shows our cash flows from operating, investing and financing activities (in thousands): Year Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 621,650  $ 439,192  $ 74,341  Net cash used in investing activities (550,383) (260,570) (175,612) Net cash (used in) provided by financing activities (16,180) 157,181  125,793  Effect of exchange rate changes on cash and cash equivalents 1,220  (1,383) 140  Net increase in cash and cash equivalents $ 56,307  $ 334,420  $ 24,662  Cash Flows Provided by Operating Activities Net cash provided by operating activities includes primarily cash received from our customers from the sale of products and services, including the performance of wholesale capacity services as well as related to the purchase of equipment and satellite voice and data services. We use cash in operating activities primarily for network costs, personnel costs, inventory purchases and other general corporate expenditures. Net cash provided by operating activities was $621.7 million during 2025 compared to $439.2 million during 2024. This improvement was due primarily to favorable working capital changes, specifically resulting from receipts pursuant to the Infrastructure Prepayment of $430.6 million during 2025 compared to $278.0 million during 2024; these receipts are recorded as deferred revenue and used to fund capital expenditures for the Extended MSS Network, typically in the quarter following the receipt of funds. During 2025, $45.0 million in accelerated fees were paid to us pursuant to the Updated Services Agreements, which also increased deferred revenue. Other smaller items, such as higher net income, after adjusting for noncash items, was offset by other unfavorable working capital changes during the period. 37 Cash Flows Used in Investing Activities Net cash used in investing activities was $550.4 million during 2025, compared to $260.6 million during 2024. Net cash used in investing activities during both periods included primarily network upgrades associated with the Updated Services Agreements. The increase during 2025 was principally due to milestone payments made to MDA Space and SpaceX totaling $316.2 million and $33.0 million, respectively, associated with the Extended MSS Network; no payments associated with the Extended MSS Network were made to MDA Space in 2024 and $129.6 million were paid to SpaceX in 2024. Other vendor payments associated with the Extended MSS Network ground network build out also increased cash used in investing activities during 2025. Cash Flows (Used in) Provided by Financing Activities Net cash used in financing activities was $16.2 million in 2025 compared to net cash provided by financing activities of $157.2 million in 2024. In February 2024 and August 2025, we received proceeds from the 2023 Funding Agreement totaling $37.7 million and $27.1 million, respectively, which was used to pay amounts owed to vendors for network purchases pursuant to the Updated Services Agreements. During 2025 and 2024, we made payments for the scheduled recoupments pursuant to the terms of the 2021 Funding Agreement and also paid cash dividends to holders of the Series A Preferred Stock. During 2024, we received cash to fund the paydown of the outstanding principal balance (including a make-whole payment at paydown) due under the 2023 13% Notes of $234.9 million. We also received cash of $176.0 million for the sale of the Customer Class B Units in the Globalstar SPE (as defined herein); a portion of these funds was used (and the remaining amount will be used) to fund capital expenditures for the Extended MSS Network. Indebtedness and Other Financing Arrangements At December 31, 2025, the principal amount of our debt totaled $410.0 million, which accrues fees at a weighted average stated rate up to 9%. At December 31, 2025, our deferred revenue, net, totaled $869.0 million, of which the majority is expected to be earned over a period in excess of five years as we perform services under the Updated Services Agreements. For more information regarding our 2024 Debt Repayment, 2021 and 2023 Funding Agreements, dividends paid to holders of the Series A Preferred Stock and Infrastructure Prepayment, see Note 7: Long-Term Debt and Other Financing Arrangements and Note 2: Special Purpose Entity to our Consolidated Financial Statements. Contractual Obligations and Commitments Contractual obligations arising in the normal course of business consist primarily of debt and financing obligations (as discussed above), purchase commitments with vendors related to the procurement, deployment and maintenance of the Globalstar System (discussed below), obligations for non-cancellable purchase orders for inventory ($9.1 million, which we expect to be fulfilled in line with current forecasted equipment sales) and operating lease obligations (see Note 4: Leases to our Consolidated Financial Statements for further discussion). For further discussion of the satellite procurement agreements and launch services agreements, refer to Note 10: Commitments and Contingencies to our Consolidated Financial Statements. Satellite Procurement Agreements In 2022, we entered into a satellite procurement agreement with MDA Space pursuant to which we expect to acquire at least 17 satellites to replace our HIBLEO-4 U.S.-licensed system with an amended contract price of $329.3 million for 17 of the replacement satellites. In addition, MDA Space will provide a satellite operations control center for $5.0 million as well as other equipment for $4.2 million. The projected delivery dates in 2026 are later than the dates specified in the satellite procurement agreement. We are contractually entitled to receive liquidated damages from MDA Space based upon the terms of the satellite procurement agreement due to MDA Space's failure to meet delivery milestones and the parties are discussing this matter. Any damages would reduce amounts owed to MDA Space when realized or realizable. Pursuant to the 2022 satellite procurement agreement, as of December 31, 2025, the parties have accepted milestones totaling $258.3 million associated with the new satellites and related infrastructure. We have paid to MDA Space a total of $236.5 million under the 2022 satellite procurement agreement, of which $19.5 million was paid in 2025. We expect to continue to fund a portion of the future milestone payments under the 2022 satellite procurement agreement using the 2023 Funding Agreement. 38 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. 39 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. 40 The recognition of revenue associated with certain payments involves judgment, including variable consideration associated with the reimbursement of network-related costs as well the recognition of bonus payments. The reimbursement of network-related costs is recorded as revenue as the costs are incurred by us and the receipt of bonus payments are generally recognized as payments are received, unless there is historical data to support recognition of revenue over the period in which the bonus is earned. Under the Updated Services Agreements, we issued warrants to purchase shares of Globalstar common stock, which were recorded at the estimated fair value of the consideration granted based on a Black-Scholes pricing model. The fair value of the warrants was capitalized as a contract asset and is being recognized as a reduction of the transaction price over the estimated term of the Phase 1 Service Period and Phase 2 Service Period under the Updated Services Agreements. Property and Equipment The vast majority of our property and equipment costs are incurred related to the construction of our satellites and ground station upgrades. We capitalize costs associated with the design, manufacture, test and launch of our LEO satellites. We also capitalize costs associated with the design, manufacture and test of our gateways and other capital assets. For assets that are sold or retired, including satellites that are de-orbited and no longer providing services, we remove the estimated cost and accumulated depreciation. We recognize a loss from an in-orbit failure of a satellite equal to its net book value, if any, in the period it is determined that the satellite is not recoverable. Estimating the useful life of our assets is complex and involves judgment. We evaluate the appropriateness of estimated depreciable lives assigned to our property and equipment and revise such lives to the extent warranted by changing facts and circumstances. If the useful life of our significant assets changes, this change could impact our operating results. The estimated useful lives of our assets is based on many factors, including estimated design life, information from our engineering department and our overall strategy for the use of the assets. A one year reduction in the estimated useful life of our second-generation satellites would result in an annual increase to depreciation expense of $5.1 million. We review the carrying value of our assets for impairment whenever events or changes in circumstances indicate that the recorded value may not be recoverable. If indicators of impairment exist, we compare future undiscounted cash flows to the carrying value of the asset group. If an asset is not recoverable, its carrying value would be adjusted down to fair value and an impairment loss would be recorded. Key assumptions in our impairment tests include projected future cash flows, the timing of network upgrades and current discount rates. Additionally, from time to time, we perform profitability analyses to determine if investments in certain products and/or services remain viable. In the event we determine to no longer support a product or service, or that an asset is not expected to generate future benefit, the asset may be abandoned and an impairment loss may be recorded. Income Taxes We use the asset and liability method of accounting for income taxes. This method takes into account the differences between financial statement treatment and tax treatment of certain transactions. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Our deferred tax calculation requires us to make certain estimates about our future operations. Changes in state, federal and foreign tax laws, as well as changes in our financial condition or the carrying value of existing assets and liabilities, could affect these estimates. We recognize the effect of a change in tax rates as income or expense in the period that the rate is enacted. GAAP requires us to assess whether it is more likely than not that we will be able to realize some or all of our deferred tax assets. If we cannot determine that deferred tax assets are more likely than not to be recoverable, GAAP requires us to provide a valuation allowance against those assets. This assessment takes into account factors including: (a) the nature, frequency, and severity of current and cumulative financial reporting losses; (b) sources of estimated future taxable income; and (c) tax planning strategies. We must weigh heavily our recent financial reporting losses as a source of negative evidence when determining our ability to realize deferred tax assets. Projections of estimated future taxable income (exclusive of reversing temporary differences) are a source of positive evidence only when the projections are combined with a history of recent profitable operations and can be reasonably estimated. Otherwise, GAAP requires that we consider projections inherently subjective and generally insufficient to overcome negative evidence that includes cumulative losses in recent years. If necessary and available, we would implement tax planning strategies to accelerate taxable amounts to utilize expiring carryforwards. These strategies would be a source of additional positive evidence supporting the realization of deferred tax assets. 41 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.