Globalstar(GSAT) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Cautionary Statement About Forward-Looking Statements This section outlines the nature of forward-looking statements, identifying key terms and factors that could cause actual results to differ from projections - Forward-looking statements include estimates, projections, business plans, expected operating results, anticipated financial resources, satellite performance, regulatory outcomes, and growth prospects[10] - Important factors that may cause actual results to differ materially include the ability to meet obligations under Updated Services Agreements, satellite operational performance, commercial acceptance of products, capacity needs, technological innovation, competition, geopolitical conditions, capital raising, cost management, spectrum rights, regulatory compliance, financing arrangements, cyber attacks, insurance, tax changes, litigation, strategic transactions, and business interruptions[11] Item 1. Financial Statements. This section presents Globalstar, Inc.'s unaudited interim condensed consolidated financial statements, including statements of operations, balance sheets, stockholders' equity, and cash flows, with explanatory notes Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - Net income significantly improved from a loss of $(9,683) thousand in Q2 2024 to a profit of $19,208 thousand in Q2 2025, and from a loss of $(22,879) thousand in H1 2024 to a profit of $1,877 thousand in H1 2025[15] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $67,148 | $60,385 | $127,180 | $116,865 | | Income (loss) from operations | $6,146 | $(1,422) | $(2,355) | $(6,134) | | Net income (loss) | $19,208 | $(9,683) | $1,877 | $(22,879) | | Net income (loss) per common share: Basic | $0.13 | $(0.10) | $(0.03) | $(0.22) | | Net income (loss) per common share: Diluted | $0.13 | $(0.10) | $(0.03) | $(0.22) | Consolidated Balance Sheets - Total assets increased by approximately $198.9 million from December 31, 2024, to June 30, 2025, primarily driven by increases in property and equipment, and prepaid network costs[18] Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total assets | $1,909,149 | $1,710,237 | | Total liabilities | $1,548,269 | $1,351,354 | | Total stockholders' equity | $360,880 | $358,883 | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity saw a slight increase of $1,997 thousand in the first six months of 2025, primarily due to net income, partially offset by other comprehensive loss and preferred stock dividends[22] Changes in Total Stockholders' Equity (in thousands) | Period | Balances – January 1, 2025 | Balances – June 30, 2025 | Balances – January 1, 2024 | Balances – June 30, 2024 | | :----- | :------------------------- | :----------------------- | :------------------------- | :----------------------- | | Total Stockholders' Equity | $358,883 | $360,880 | $378,979 | $382,975 | Condensed Consolidated Statements of Cash Flows - Operating cash flow significantly increased in H1 2025 to $209.7 million, but this was more than offset by a substantial increase in cash used for investing activities, leading to a net decrease in cash and cash equivalents of $82.9 million[27] Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $209,741 | $66,486 | | Net cash used in investing activities | $(271,788) | $(74,458) | | Net cash (used in) provided by financing activities | $(22,024) | $16,244 | | Net (decrease) increase in cash and cash equivalents | $(82,938) | $7,590 | Notes to Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed explanatory notes on Globalstar's accounting policies, significant transactions, and financial instrument specifics, supporting the interim condensed consolidated financial statements 1. Basis of Presentation This note outlines the basis for preparing the interim condensed consolidated financial statements, confirming adherence to U.S. GAAP, detailing consolidation principles, and explaining retroactive adjustments - Globalstar, Inc. provides Mobile Satellite Services (MSS) through its global satellite network, with Thermo Companies as the principal owner and largest stockholder[29] - A 1-for-15 reverse stock split was effectuated on February 10, 2025, retroactively adjusting all historical share and per share amounts in the report[33] - The company adopted ASU 2023-09 (Income Taxes) effective January 1, 2025, and plans to adopt ASU 2024-03 (Expense Disaggregation Disclosures) on January 1, 2027[34][35] 2. Special Purpose Entity This note details the Globalstar SPE, a variable interest entity established to manage the Extended MSS Network, primarily funded by Apple Inc. through prepayments and an equity interest - Globalstar provides wholesale capacity services to Apple Inc. ('Customer') under Updated Services Agreements, including for the new Extended MSS Network[36][37] - The Globalstar SPE, a variable interest entity, owns the Extended MSS Network assets; the Customer holds a 20% equity interest (400,000 Class B Units for $400 million), and Globalstar holds an 80% equity ownership, consolidating the SPE into its financial statements[40][41] - The Customer made an Infrastructure Prepayment of up to $1.1 billion and a $235 million 2024 Debt Repayment to fund the Extended MSS Network and retire existing debt[43][44][45] 3. Revenue This note disaggregates revenue by product and service, showing an increase in wholesale capacity and subscriber equipment sales, alongside declines in SPOT and Duplex services - Wholesale capacity services revenue increased by 24% for the three months ended June 30, 2025, and 21% for the six months ended June 30, 2025, compared to the same periods in 2024, primarily due to the Updated Services Agreements[48][148] - Total contract liabilities (deferred revenue) increased from $349.4 million at December 31, 2024, to $524.5 million at June 30, 2025, largely driven by advanced payments under the Infrastructure Prepayment[52][55] Revenue Disaggregation (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Wholesale capacity services | $42,385 | $34,075 | $79,094 | $65,287 | | Commercial IoT | $7,051 | $6,716 | $13,631 | $13,