Globalstar, Inc.

Previous wording

For the six months ended June 30, 2026 and 2025, the Customer under the Updated Services Agreements was responsible for 64% and 62%, 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.

Current wording

For the nine months ended September 30, 2026 and 2025, the Customer under the Updated Services Agreements was responsible for 64% and 63%, 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.

Previous wording

As of June 30, 2026, we had approximately 811,000 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.

Current wording

As of September 30, 2026, we had approximately 806,000 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.

Previous wording

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.

Current wording

We have an exclusive partnership with Parsons Corporation ("Parsons"), 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.

Previous wording

We have terrestrial licenses in 12 countries, resulting in approximately 12.1 billion MHz-POPs (megahertz of our terrestrial spectrum authority in each country multiplied by a total population of approximately 968 million over the covered area) as of June 30, 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.

Current wording

We have terrestrial licenses in 13 countries, resulting in approximately 12.1 billion MHz-POPs (megahertz of our terrestrial spectrum authority in each country multiplied by a total population of approximately 971 million over the covered area) as of September 30, 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.

Previous wording

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 after certain repairs redelivered in July 2026. The second set is scheduled for delivery later in 2026. These replacement satellites are expected to complement our existing second-generation constellation to ensure continuous service delivery. In February 2025, we entered into another agreement with MDA Space pursuant to which we expect to acquire more than 50 third-generation C-3 System (defined below) satellites related to the Extended MSS Network.

Current wording

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 after certain repairs redelivered in July 2026 for launch. The second set is scheduled for delivery in December 2026. These replacement satellites are expected to complement our existing second-generation constellation to ensure continuous service delivery. In February 2025, we entered into another agreement with MDA Space pursuant to which we expect to acquire more than 50 third-generation C-3 System (defined below) satellites related to the Extended MSS Network.

Previous wording

In each of August 2023 and June 2025, we entered into a Launch Services Agreement with Space Exploration Technologies Corp. ("SpaceX") and certain related ancillary agreements (collectively, the "Launch Services Agreements"), providing for two launches of the replacement satellites that we are acquiring pursuant to the 2022 satellite procurement agreement with MDA Space. We currently expect to complete both launches during 2026, with the launch of the first set of replacement satellites scheduled for August 2026 and the launch of the second set of replacement satellites expected to occur later in 2026. In October 2024, we entered into agreements with SpaceX for the launch of the new C-3 System third-generation satellites to support the Extended MSS Network.

Current wording

In each of August 2023 and June 2025, we entered into a Launch Services Agreement with Space Exploration Technologies Corp. ("SpaceX") and certain related ancillary agreements (collectively, the "Launch Services Agreements"), providing for two launches of the replacement satellites that we are acquiring pursuant to the 2022 satellite procurement agreement with MDA Space. The launch of the first set of replacement satellites occurred in August 2026, and the launch of the second set of replacement satellites is scheduled in December 2026. In October 2024, we entered into agreements with SpaceX for the launch of the new C-3 System third-generation satellites to support the Extended MSS Network.

Previous wording

Our satellites communicate with our global network of gateways, each of which serves an area of up to 1,000,000 square miles. Each gateway consists of multiple 6-meter tracking antennas, spaced at least 50 meters apart with associated electronics and other infrastructure. A gateway must be within line-of-sight of a satellite and the satellite must be within line-of-sight of the subscriber to provide services. We locate our gateways to maximize coverage over most of the Earth's land and human population and provide redundancy in the unlikely event that a tracking antenna or gateway is offline for any reason. We continue to evaluate and, as deemed necessary, expand our global network of gateways to meet market demand and optimize coverage and service quality. We have announced plans to expand our ground networks to support the Extended MSS Network with construction underway at critical sites around the globe. We continue to progress our infrastructure expansion with construction underway at most sites around the globe, including certain sites in North America, Asia and Europe where construction is complete. This global expansion initiative is expected to include approximately 90 new antennas across 35 ground stations in 25 countries.

Current wording

Our satellites communicate with our global network of gateways, each of which serves an area of up to 1,000,000 square miles. Each gateway consists of multiple 6-meter tracking antennas, spaced at least 50 meters apart with associated electronics and other infrastructure. A gateway must be within line-of-sight of a satellite and the satellite must be within line-of-sight of the subscriber to provide services. We locate our gateways to maximize coverage over most of the Earth's land and human population and provide redundancy in the unlikely event that a tracking antenna or gateway is offline for any reason. We continue to evaluate and, as deemed necessary, expand our global network of gateways to meet market demand and optimize coverage and service quality. We have announced plans to expand our ground networks to support the Extended MSS Network with construction underway at critical sites around the globe. We continue to progress our infrastructure expansion with construction underway at all identified sites around the globe, including certain sites in North America, Asia and Europe where construction is complete. This global expansion initiative is expected to include approximately 90 new antennas across 35 ground stations in 25 countries.

Previous wording

We have acquired the operational rights to the AST-NG-C-3 system filing made by the Republic of France with the ITU. This filing will enable us to commercialize our third-generation MSS network (the "C-3 System") to support the Services (as defined herein) provided over the Extended MSS Network. We have applied to the French government to secure the necessary authorizations to launch and operate the C-3 System. We are also pursuing market access approvals from multiple countries, including the United States. In February 2025, we filed a petition with the FCC requesting U.S. market access for the C-3 System. The FCC Space Bureau has accepted our petition for filing and published it for public comment.

Current wording

We have acquired the operational rights to the AST-NG-C-3 system filing made by the Republic of France with the ITU. This filing will enable us to commercialize our third-generation MSS network (the "C-3 System") to support the Services (as defined herein) provided over the Extended MSS Network. We have applied to the French government to secure the necessary authorizations to launch and operate the C-3 System. We are also pursuing market access approvals from multiple countries, including the United States. In October 2026, the FCC issued an order granting us nationwide authority to operate our C-3 System; with this authorization, our C-3 System will be able to communicate with hundreds of millions of mobile earth terminals located in the United States, including direct-to-device connectivity to smartphones. This authorization also permits our ground station antennas located in Alaska, Hawaii, Nevada, Texas, Florida and Puerto Rico to communicate with our C-3 satellites.

Previous wording

Comparison of the Results of Operations for the three and six months ended June 30, 2026 and 2025

Current wording

Comparison of the Results of Operations for the three and nine months ended September 30, 2026 and 2025

Previous wording

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 three months ended June 30, 2026, total revenue decreased 3% to $64.8 million from $67.1 million for the same period in 2025. For the six months ended June 30, 2026, total revenue increased 6% to $134.8 million from $127.2 million for the same period in 2025. Both the decrease and increase in total revenue for the three and six month periods ended June 30, 2026 resulted primarily from the variability in revenue from wholesale capacity services. See below for a discussion of the main drivers of the revenue variances.

Current wording

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 three months ended September 30, 2026, total revenue decreased 4% to $70.9 million from $73.8 million for the same period in 2025. For the nine months ended September 30, 2026, total revenue increased 2% to $205.7 million from $201.0 million for the same period in 2025. Both the decrease and increase in total revenue for the three and nine month periods ended September 30, 2026 resulted primarily from the variability in revenue from wholesale capacity services. See below for a discussion of the main drivers of the revenue variances.

Previous wording

(1)The remaining portion of our total revenue for the three and six months ended June 30, 2026 and 2025, 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.

Current wording

(1)The remaining portion of our total revenue for the three and nine months ended September 30, 2026 and 2025, 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.

Previous wording

The following table sets forth our average number of subscribers and ARPU by type of subscriber services revenue:

Current wording

The following table sets forth our average number of subscribers and ARPU by type of subscriber service revenue:

Previous wording

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.

Current wording

Wholesale capacity services revenue reflects revenue from providing satellite network access and related services to the Customer under the Updated Services Agreements. 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.

Previous wording

Wholesale capacity services revenue decreased 5% and increased 9%, respectively, for the three and six months ended June 30, 2026, compared to the same periods in 2025. Wholesale capacity services revenue reflects revenue from the Customer under the Updated Services Agreements. The fluctuations in revenue during these three and six month periods related primarily to the timing and amount of service fees associated with the reimbursement of network-related costs.

Current wording

Wholesale capacity services revenue decreased 6% and increased 4%, respectively, for the three and nine months ended September 30, 2026, compared to the same periods in 2025. Wholesale capacity services revenue includes revenue from the Customer under the Updated Services Agreements. The fluctuations in wholesale capacity services revenue during these three and nine month periods related primarily to the timing and amount of service fees associated with the reimbursement of cash network-related costs.

Previous wording

Commercial IoT service revenue increased 7% and 10%, respectively, for the three and six months ended June 30, 2026, compared to the same periods in 2025. Average subscribers increased 9% in both the three and six months ended June 30, 2026, compared to the same periods in 2025, due to higher subscriber activations on a last twelve month basis, including record high quarterly subscribers activations during the second quarter of 2026.

Current wording

Commercial IoT service revenue increased 12% and 11%, respectively, for the three and nine months ended September 30, 2026, compared to the same periods in 2025. Average subscribers increased 9% and 8% for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025, due to higher subscriber activations on a last twelve month basis, including record high subscriber activations for the past two quarters.

Previous wording

SPOT service revenue decreased 7% for both the three and six months ended June 30, 2026, compared to the same periods in 2025, due to fewer subscribers. The decline in average subscribers is due to continued competitive pressure.

Current wording

SPOT service revenue decreased 9% and 8%, respectively, for the three and nine months ended September 30, 2026, compared to the same periods in 2025, due to fewer subscribers. The decline in average subscribers is due to continued competitive pressure resulting in fewer gross subscriber activations.

Previous wording

Duplex service revenue decreased 26% for both the three and six months ended June 30, 2026, compared to the same periods 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.

Current wording

Duplex service revenue decreased 31% and 28%, respectively, for the three and nine months ended September 30, 2026, compared to the same periods 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.

Previous wording

Government and other services revenue increased 20% and 53%, respectively, for the three and six months ended June 30, 2026, compared to the same periods 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 during the third quarter of 2025 as we moved from the proof of concept phase into the first year of services provided under the agreement. The increase in government and other services revenue during both the three and six months ended June 30, 2026 compared to the same periods in 2025 was primarily due in part to revenue associated with the contract with Parsons as we moved beyond the proof of concept phase and into the first year of service.

Current wording

Government and other services revenue was generally flat for the three months ended September 30, 2026, compared to the same period in 2025, and increased 31% for the nine months ended September 30, 2026, compared to the same period 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, 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 during the third quarter of 2025 as we moved from the proof of concept phase into the first year of services provided under the agreement. The increase in government and other services revenue during the nine months ended September 30, 2026 compared to the same period in 2025 was in part due to revenue associated with the contract with Parsons.

Previous wording

Revenue generated from subscriber equipment sales increased $0.8 million and $1.2 million, respectively, for the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to an increase in the volume of Commercial IoT device sales.

Current wording

Revenue generated from subscriber equipment sales increased $1.3 million and $2.5 million, respectively, for the three and nine months ended September 30, 2026, compared to the same periods in 2025, primarily due to an increase in the volume of Commercial IoT device sales.

Previous wording

Total operating expenses increased to $69.5 million from $61.0 million and increased to $131.4 million from $129.5 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. For both periods, higher cost of services and marketing, general and administrative expenses were partially offset by lower stock-based compensation and depreciation, amortization and accretion expense. For the six months ended June 30, 2026, the change in total operating expenses was also impacted by a noncash loss on disposal of assets recorded during the first quarter of 2025 that did not recur in 2026. The main contributors to the variances in operating expenses are explained in detail below.

Current wording

Total operating expenses decreased to $63.3 million from $63.7 million and increased to $194.7 million from $193.2 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. For both periods, expenses were higher due to increases in cost of services and marketing, general and administrative. Additionally, for both periods, expenses were lower due to decreases in stock-based compensation and depreciation, amortization and accretion expense. For the three months ended September 30, 2026, these decreases more than offset the increases previously discussed. For the nine months ended September 30, 2026, the change in total operating expenses was also impacted by a noncash loss on disposal of assets recorded during the first quarter of 2025 that did not recur in 2026.

Previous wording

In February and May 2025, we received employee retention credits of $2.0 million and $1.9 million, respectively, under the provisions of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). These credits were recognized as reductions to operating expenses during the first and second quarters of 2025, respectively, with $1.4 million and $1.3 million allocated to cost of services and $0.6 million for each period allocated to marketing, general and administrative expense, based on the employee costs during the eligible periods.

Current wording

Additionally, in February and May 2025, we received employee retention credits of $2.0 million and $1.9 million, respectively, under the provisions of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). These credits were recognized as reductions to operating expenses during the first and second quarters of 2025, respectively, with $1.4 million and $1.3 million allocated to cost of services and $0.6 million for each period allocated to marketing, general and administrative expense, based on the employee costs during the eligible periods.

Previous wording

Cost of services increased $4.1 million and $8.9 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. 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 this consideration is recognized as revenue in accordance with the terms of the Updated Services Agreements. For the three and six months ended June 30, 2026, personnel costs that support the Globalstar System increased $1.1 million and $2.9 million, respectively. Ground network costs, such as occupancy and maintenance charges increased $0.6 million and $1.9 million, respectively, and IT costs increased $0.8 million and $1.4 million, respectively, for the three and six months ended June 30, 2026 compared to the same periods in 2025.

Current wording

Cost of services increased $2.7 million and $11.7 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. We continue to incur higher network operating costs relating primarily to our new and upgraded global ground infrastructure. In connection with services provided under the Updated Services Agreements, a substantial portion of these costs are reimbursed thereunder and this consideration is recognized as revenue in accordance with the terms of the Updated Services Agreements. For the three and nine months ended September 30, 2026, ground network costs, such as occupancy and maintenance charges increased $0.8 million and $2.6 million, respectively, and IT costs increased $1.6 million and $2.9 million, respectively, for the three and nine months ended September 30, 2026 compared to the same periods in 2025. For the nine months ended September 30, 2026, personnel costs that support the Globalstar System increased $1.9 million.

Previous wording

The increase in cost of services was also due to expenses to support XCOM technology development, which increased $0.6 million and $0.8 million, respectively, for the three and six months ended June 30, 2026 compared to the same periods in 2025, as well as the non-recurring employee retention credits received under the CARES Act during 2025 (discussed above).

Current wording

The increase in cost of services was also due to expenses to support XCOM technology development, which increased $1.1 million and $2.0 million, respectively, for the three and nine months ended September 30, 2026 compared to the same periods in 2025, and for the nine month period, the non-recurring employee retention credits received under the CARES Act during 2025 (discussed above).

Previous wording

Cost of subscriber equipment sales increased 18% and 19% for the three and six months ended June 30, 2026 compared to the same periods in 2025. This increase is generally consistent with the increase in revenue generated from subscriber equipment sales during the periods.

Current wording

Cost of subscriber equipment sales increased 22% and 20% for the three and nine months ended September 30, 2026 compared to the same periods in 2025. This increase is generally consistent with the increase in revenue generated from subscriber equipment sales during the periods.

Previous wording

Marketing, general and administrative ("MG&A") expenses increased $13.3 million and $16.6 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. This increase was due to higher legal and professional fees as well as higher personnel costs. For the three and six months ended June 30, 2026 compared to the same periods in 2025, legal and professional fees increased $10.4 million and $11.7 million, respectively, due primarily to transaction costs related to the Mergers; for the six month period, these costs were partially offset by nonrecurring costs associated with the Globalstar SPE that were incurred during the first quarter of 2025. Personnel costs increased $1.8 million and $3.0 million, respectively, for the three and six months ended June 30, 2026 compared to the same periods in 2025 due primarily to additional fringe costs for employee taxes associated with equity vestings during 2026 as well as the non-recurring employee retention credits received under the CARES Act during 2025 (discussed above).

Current wording

Marketing, general and administrative ("MG&A") expenses increased $3.4 million and $20.0 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. These increases were primarily due to higher legal and professional fees. For the three and nine months ended September 30, 2026 compared to the same periods in 2025, legal and professional fees increased $3.2 million and $14.9 million, respectively, due primarily to transaction costs related to the Mergers; for the nine month period, these costs were partially offset by nonrecurring costs associated with the Globalstar SPE that were incurred during the first quarter of 2025. Personnel costs increased $2.6 million for the nine months ended September 30, 2026 compared to the same period in 2025; the increase year over year was due primarily to additional fringe costs for employee taxes associated with equity vestings during 2026 as well as the non-recurring employee retention credits received under the CARES Act during 2025 (discussed above).

Previous wording

Stock-based compensation expense decreased $3.2 million and $7.5 million, respectively, for the three and six months ended June 30, 2026, compared to the same periods in 2025. The decrease was due primarily to restricted stock units ("RSUs") granted to certain executives in connection with the License Agreement in 2023. During 2023, we granted 3.0 million performance-based RSUs ("PSUs"), 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 PSUs was $39.5 million and was being recognized over the derived service period of 2.6 years; with 17%, 59%, 23% and 1% of the compensation cost for these PSUs being recognized during 2023, 2024, 2025 and 2026, respectively. This award was fully recognized at the end of the second quarter of 2026.

Current wording

Stock-based compensation expense decreased $2.4 million and $9.9 million, respectively, for the three and nine months ended September 30, 2026, compared to the same periods in 2025. The decrease was due primarily to restricted stock units ("RSUs") granted to certain executives in connection with the License Agreement in 2023. During 2023, we granted 3.0 million performance-based RSUs ("PSUs"), 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 PSUs was $39.5 million and was recognized over the derived service period of 2.6 years; with 17%, 59%, 23% and 1% of the compensation cost for these PSUs being recognized during 2023, 2024, 2025 and 2026, respectively. This award was fully recognized at the end of the second quarter of 2026.

Previous wording

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 testing conducted in 2025 and historical testing, we 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 2026.

Current wording

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 testing conducted in 2025 and historical testing, we continue to 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 during 2026.

Previous wording

Depreciation, amortization and accretion expense decreased $6.2 million and $10.1 million, respectively, for the three and six months ended June 30, 2026, compared to the same periods in 2025. During the years 2010 through 2013, we launched our second-generation satellites. The estimated useful lives of these satellites is 15 years; accordingly, during the past twelve months, several of these satellites were fully depreciated, resulting in a decrease in depreciation expense during the three and six months ended June 30, 2026.

Current wording

Depreciation, amortization and accretion expense decreased $4.8 million and $14.8 million, respectively, for the three and nine months ended September 30, 2026, compared to the same periods in 2025. During the years 2010 through 2013, we launched our second-generation satellites. The estimated useful lives of these satellites is 15 years; accordingly, during the past twelve months, several of these satellites were fully depreciated, resulting in a decrease in depreciation expense during the three and nine months ended September 30, 2026.

Previous wording

Interest income and expense, net, increased $13.2 million and $25.1 million, respectively, during the three and six months ended June 30, 2026, compared to the same periods in 2025.

Current wording

Interest income and expense, net, increased $12.9 million and $38.0 million, respectively, during the three and nine months ended September 30, 2026, compared to the same periods in 2025. The primary components of interest income and expense, net, are discussed below.

Previous wording

Interest costs associated with the Infrastructure Prepayment and accelerated services fees paid pursuant to the Updated Services Agreements increased $12.1 million and $26.6 million, respectively, for the three and six months ended June 30, 2026, representing a non-cash significant financing component in accordance with ASC 606.

Current wording

Interest costs associated with the Infrastructure Prepayment and accelerated services fees paid pursuant to the Updated Services Agreements increased $12.0 million and $38.5 million, respectively, for the three and nine months ended September 30, 2026, representing a non-cash significant financing component in accordance with ASC 606.

Previous wording

During the second quarter of 2026, additional interest was recorded in connection with a new debt discount associated with the 2024 Debt Repayment upon adoption of ASU 2025-07. Also in connection with the adoption of ASU 2025-07, the prior debt premium associated with the 2024 Debt Repayment was derecognized, resulting in an increase in expense when comparing 2026 to 2025. For the three and six months ended June 30, 2026, $11.8 million and $12.5 million, respectively, of interest recorded associated with these items was not present during 2025 and was eligible for capitalization.

Current wording

During the second quarter of 2026, additional interest was recorded in connection with a new debt discount associated with the 2024 Debt Repayment upon adoption of ASU 2025-07. Also in connection with the adoption of ASU 2025-07, the prior debt premium associated with the 2024 Debt Repayment was derecognized, resulting in an increase in expense when comparing 2026 to 2025. For the three and nine months ended September 30, 2026, $6.2 million and $18.7 million, respectively, of interest recorded associated with these items was not present during 2025 and was eligible for capitalization.

Previous wording

Capitalized interest costs were higher by $13.8 million and $15.7 million, respectively, for the three and six months ended June 30, 2026, due to higher gross interest costs eligible for capitalization, which decreased "interest income and expense, net". Other smaller items contributed to the remaining variance for the period.

Current wording

Capitalized interest costs were higher by $5.9 million and $21.6 million, respectively, for the three and nine months ended September 30, 2026, due to higher gross interest costs eligible for capitalization, which decreased "interest income and expense, net". Other smaller items contributed to the remaining variance for the period.

Previous wording

We recorded foreign currency losses of $1.4 million and $3.0 million, respectively, during the three and six months ended June 30, 2026, compared to foreign currency gains of $12.0 million and $16.1 million during the three and six months ended June 30, 2025. 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.

Current wording

We recorded foreign currency losses of $1.8 million and $4.8 million, respectively, during the three and nine months ended September 30, 2026, compared to foreign currency losses of $0.6 million and gains of $15.5 million during the three and nine months ended September 30, 2025. 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.

Previous wording

During the second quarter of 2026, we recorded a gain of $4.2 million representing the elimination of a portion of previously accrued interest associated with milestones achieved in connection with the 2024 Debt Repayment. The 2024 Debt Repayment contains an interest rate reduction mechanism whereby fees may be reduced or eliminated entirely if we meet certain defined milestones (as amended in April 2026) associated with the completion of the Extended MSS Network. Similar activity did not occur in 2025.

Current wording

During the three and nine months ended September 30, 2026, we recorded gains of $3.8 million and $8.0 million, respectively, representing the elimination of a portion of previously accrued interest associated with milestones achieved in connection with the 2024 Debt Repayment. The 2024 Debt Repayment contains an interest rate reduction mechanism whereby fees may be reduced or eliminated entirely if we meet certain defined milestones (as amended in April 2026) associated with the completion of the Extended MSS Network. Similar activity did not occur in 2025.

Previous wording

Prior to the adoption of ASU 2025-07, derivative gains and losses primarily included the mark-to-market adjustments associated with the embedded derivative within the 2024 Debt Repayment. The fluctuation in the value of this embedded derivative was due to certain significant inputs used in the fair value measurement, specifically the discount yield and the estimated achievement of project milestones (as amended in April 2026). As the discount yield used in the valuation process increased, the fair value of the embedded derivative decreased. Similarly, as the length of time between the reporting date and the start date of the interest payments decreased, the present value of the projected interest savings increased, resulting in a higher derivative asset value. Also, as the probability of reaching the relevant milestones increased, the fair value of the embedded derivative also increased.

Current wording

Prior to the adoption of ASU 2025-07, derivative gains and losses primarily included the mark-to-market adjustments associated with the embedded derivative within the 2024 Debt Repayment. The fluctuation in the value of this embedded derivative was 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 increased, the fair value of the embedded derivative decreased. Similarly, as the length of time between the reporting date and the start date of the interest payments decreased, the present value of the projected interest savings increased, resulting in a higher derivative asset value. Also, as the probability of reaching the relevant milestones increased, the fair value of the embedded derivative also increased.

Previous wording

Income tax expense increased $5.7 million and $2.7 million, respectively, during the three and six months ended June 30, 2026, compared to the same periods in 2025. In both periods, the increase in tax expense is primarily due to state current tax expense, reflecting higher forecasted state taxable income and the corresponding utilization of state net operating loss carryforwards, which reduced the amount of losses available to offset current period state tax. The three months ended June 30, 2025 reflected additional tax benefits recognized to adjust year-to-date results with the estimated annual effective tax rate.

Current wording

Income tax expense increased $0.3 million and $3.0 million, respectively, during the three and nine months ended September 30, 2026, compared to the same periods in 2025. In both periods, the increase in tax expense is primarily due to state current tax expense as a result of higher forecasted state taxable income and the corresponding utilization of state net operating loss carryforwards, which reduced the amount of losses available to offset current period state tax.

Previous wording

As of June 30, 2026 and December 31, 2025, we held cash and cash equivalents of $409.8 million and $447.5 million, respectively. Capital expenditures associated with our commitments under the Updated Services Agreements, including network expansion and upgrades, more than offset cash received during the first half of 2026, including the receipt of $104.8 million pursuant to the Infrastructure Prepayment and $19.9 million pursuant to the 2023 Funding Agreement.

Current wording

As of September 30, 2026 and December 31, 2025, we held cash and cash equivalents of $329.9 million and $447.5 million, respectively. Capital expenditures associated with our commitments under the Updated Services Agreements, including network expansion and upgrades, more than offset cash received from the Customer during the first nine months of 2026, including the receipt of $209.6 million pursuant to the Infrastructure Prepayment and $19.9 million pursuant to the 2023 Funding Agreement.

Previous wording

The principal amount of our debt outstanding was $423.7 million at June 30, 2026, compared to $410.0 million at December 31, 2025. This increase was due to the issuance of debt under the 2023 Funding Agreement totaling $19.9 million during the second quarter of 2026 offset by the final scheduled recoupment of $6.3 million under the 2021 Funding Agreement.

Current wording

The principal amount of our debt outstanding was $414.7 million at September 30, 2026, compared to $410.0 million at December 31, 2025. This increase was due to the issuance of debt under the 2023 Funding Agreement totaling $19.9 million during the second quarter of 2026 offset by the first scheduled recoupment during the third quarter of 2026 of $9.0 million under the 2023 Funding Agreement and the final scheduled recoupment during the first quarter of 2026 of $6.3 million under the 2021 Funding Agreement.

Previous wording

Cash Flows for the six months ended June 30, 2026 and 2025

Current wording

Cash Flows for the nine months ended September 30, 2026 and 2025

Previous wording

Net cash provided by operating activities during the six months ended June 30, 2026 was approximately $159.7 million, compared to net cash provided by operating activities of $209.7 million during the same period in 2025. This decrease was due to working capital changes, specifically resulting from receipts pursuant to the Infrastructure Prepayment of $104.8 million during the first six months of 2026 compared to $124.7 million during the same period in 2025; 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. The timing of cash receipts pursuant to the Updated Services Agreements contributed to the decrease in cash flows provided by operating activities. During the six months ended June 30, 2026, $15.0 million in accelerated fees were paid to us pursuant to the Updated Services Agreement compared to $30.0 million paid during the same period in 2025. Finally, lower net income, after adjusting for noncash items, also contributed to the decrease.

Current wording

Net cash provided by operating activities during the nine months ended September 30, 2026 was approximately $296.9 million, compared to net cash provided by operating activities of $445.8 million during the same period in 2025. This decrease was due to working capital changes, specifically resulting from receipts pursuant to the Infrastructure Prepayment of $209.6 million during the first nine months of 2026 compared to $299.6 million during the same period in 2025; 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. The timing of cash receipts pursuant to the Updated Services Agreements contributed to the decrease in cash flows provided by operating activities. During the nine months ended September 30, 2026, $22.5 million in accelerated fees were paid to us pursuant to the Updated Services Agreements compared to $37.5 million paid during the same period in 2025. Finally, lower net income resulting from higher operating expenses, after adjusting for noncash items, also contributed to the decrease.