Globalstar, Inc 10-K for FY2020

Globalstar, Inc. (GSAT)

10-K 2021-03-04 For: 2020-12-31

Added on April 09, 2026

About this 10-K

Globalstar, Inc filed this 10-K on March 4, 2021, covering the fiscal year ended December 31, 2020 (FY2020).

Headline figures

Fiscal year ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $128.49M; down 2.5% from $131.72M a year earlier
Net loss: $109.64M; compared with net income of $15.32M a year earlier
Diluted EPS: -$0.07; compared with -$0.07 a year earlier

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


		Page
	PART I
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	27
Item 2.	Properties	28
Item 3.	Legal Proceedings	28
Item 4.	Mine Safety Disclosures	28
	PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6.	Selected Financial Data	30
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 8.	Financial Statements and Supplementary Data	45
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	94
Item 9A.	Controls and Procedures	94
Item 9B.	Other Information	95
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	95
Item 11.	Executive Compensation	95
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	95
Item 13.	Certain Relationships and Related Transactions, and Director Independence	95
Item 14.	Principal Accounting Fees and Services	95
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	96
Item 16.	Form 10-K Summary	97
Signatures		97


	Year Ended December 31, 2020				Year Ended December 31, 2019
	Revenue		% of Total Revenue		Revenue		% of Total Revenue
Service Revenue:
Duplex (1)	$	33,878	27	%	$	39,794	31	%
SPOT	46,417		36	%	50,461		40	%
Commercial IoT	17,174		13	%	16,972		13	%
Engineering and Other	15,722		12	%	2,274		1	%
Total Service Revenue	$	113,191	88	%	$	109,501	85	%


	Year Ended December 31, 2020				Year Ended December 31, 2019
	Revenue		% of Total Revenue		Revenue		% of Total Revenue
Equipment Revenue:
Duplex	$	1,883	1	%	$	1,325	2	%
SPOT	8,176		7	%	7,617		6	%
Commercial IoT	5,140		4	%	9,300		7	%
Other	97		—	%	90		—	%
Total Equipment Revenue	$	15,296	12	%	$	18,332	15	%


	December 31,
	2020		2019
Average number of subscribers for the year ended:
Duplex	50,116		56,856
SPOT	267,816		281,584
Commercial IoT	414,452		399,960
IGO and Other	27,264		27,481
Total	759,648		765,881

ARPU (monthly):
Duplex (1)	$	56.33	$	58.33
SPOT	14.44		14.93
Commercial IoT	3.45		3.54


(Mark One)
☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


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


	Year Ended December 31,
Statements of Cash Flows	2020		2019		2018
Net cash provided by operating activities	$	22,215	$	3,048	$	5,920
Net cash used in investing activities	(14,536)		(11,491)		(17,401)
Net cash provided by (used in) financing activities	1,164		(7,923)		(18,196)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	52		4		(112)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	8,895	$	(16,362)	$	(29,789)


Contractual Obligations:	2021		2022		2023		2024		2025		Thereafter		Total
Debt obligations (1)	$	57,468	$	129,520	$	1,455	$	—	$	—	$	446,782	$	635,225
Interest on long-term debt (2)	8,996		7,030		41		—		—		—		16,067
Purchase obligations (3)	1,585		4,220		2,280		—		—		—		8,085
Inventory purchase obligations (4)	6,430		—		—		—		—		—		6,430
Operating lease obligations (5)	2,597		2,479		2,510		2,383		2,405		8,802		21,176
Pension obligations	502		505		497		510		526		2,604		5,144
Total	$	77,578	$	143,754	$	6,783	$	2,893	$	2,931	$	458,188	$	692,127


			Page
Audited Consolidated Financial Statements of Globalstar, Inc.			46
Report of Ernst & Young LLP, independent registered public accounting firm			46
Consolidated balance sheets at December 31, 2020 and 2019			50
Consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018			51
Consolidated statements of comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018			52
Consolidated statements of stockholders’ equity for the years ended December 31, 2020, 2019 and 2018			53
Consolidated statements of cash flows for the years ended December 31, 2020, 2019 and 2018			54
Notes to Consolidated Financial Statements			55


			Useful life of Space component assets
Description of the Matter			At December 31, 2020, the Company had $1.2 billion of Space component assets recorded as property and equipment. As discussed in Note 1 to the consolidated financial statements, the Company’s Space component assets are depreciated on a straight-line basis over their estimated useful life, which is currently estimated to be 15 years. Management’s estimate of the useful life of its Space component assets was based on estimated design life, information from the Company’s engineering department and overall Company strategy for the use of the assets.
			Auditing the Company’s estimate of the useful life of its Space component assets involved a high degree of subjectivity due to the application of management’s judgment when evaluating the available information to determine the estimated useful life. The resulting estimated useful life has a significant effect on the timing of recognition of depreciation expense given the magnitude of the carrying amount of the Space component assets.


How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to determine the estimate useful life of its Space component assets, including controls over management’s evaluation of the available information to determine the estimated useful life.
			Our testing of the Company's estimated useful life of the Space component assets included, among other procedures, evaluating the application of available information to determine their estimated useful life. We compared management’s useful life to the manufacturer’s estimated design life, publicly available information on the estimated useful life of similar assets, operation and performance of the assets per the Company’s engineering group, and the life of its first-generation satellite constellation. Additionally, we evaluated the effect of changes, if any, in the Company’s long-term strategy for use of the assets on the useful life estimate.


	Common Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total
Balances – December 31, 2017	1,261,949	$	126	$	1,869,339	$	(6,939)	$	(1,571,302)	$	291,224
Net issuance of restricted stock awards and recognition of stock-based compensation	11,892	2		7,726		—		—		7,728
Contribution of services	—	—		428		—		—		428
Issuance and recognition of stock-based compensation of employee stock purchase plan	1,514	—		1,047		—		—		1,047
Issuance of stock for public offering	171,429	17		59,083		—		—		59,100
Stock offering issuance costs	—	—		(259)		—		—		(259)
Other comprehensive income	—	—		—		3,100		—		3,100
Impact of adoption of ASC 606	—	—		—		—		3,093		3,093
Net loss	—	—		—		—		(6,516)		(6,516)
Balances – December 31, 2018	1,446,784	$	145	$	1,937,364	$	(3,839)	$	(1,574,725)	$	358,945
Net issuance of restricted stock awards and recognition of stock-based compensation	6,003	—		4,118		—		—		4,118
Contribution of services	—	—		338		—		—		338
Issuance and recognition of stock-based compensation of employee stock purchase plan	2,257	—		1,096		—		—		1,096
Stock offering issuance costs	—	—		(195)		—		—		(195)
Investment in business	—	—		155		—		—		155
Fair value of warrants issued in connection with Second Lien Facility Agreement	—	—		23,562		—		—		23,562
Issuance of stock for warrant exercises	9,500	1		3,609		—		—		3,610
Other comprehensive income	—	—		—		390		—		390
Net income	—	—		—		—		15,324		15,324
Balances – December 31, 2019	1,464,544	$	146	$	1,970,047	$	(3,449)	$	(1,559,401)	$	407,343
Net issuance of restricted stock awards and recognition of stock-based compensation	7,637	1		4,766		—		—		4,767
Contribution of services	—	—		232		—		—		232
Issuance and recognition of stock-based compensation of employee stock purchase plan	2,253	—		1,048		—		—		1,048
Common stock issued in connection with conversion of Loan Agreement with Thermo	200,140	20		120,441		—		—		120,461
Common stock issued in connection with conversion of 2013 8.00% Notes	95	—		32		—		—		32
Impact of adoption of Credit Loss Standard	—	—		—		—		(1,684)		(1,684)
Other comprehensive income	—	—		—		505		—		505
Net loss	—	—		—		—		(109,639)		(109,639)
Balances – December 31, 2020	1,674,669	$	167	$	2,096,566	$	(2,944)	$	(1,670,724)	$	423,065


	Year Ended
	December 31, 2020		December 31, 2019		December 31, 2018
Service revenue:
Duplex	$	33,878	$	43,679	$	41,223
SPOT	46,417		50,461		52,363
Commercial IoT	17,174		16,972		13,459
Engineering and Other	15,722		2,274		4,044
Total service revenue	113,191		113,386		111,089

Subscriber equipment sales:
Duplex	$	1,883	$	1,325	$	2,021
SPOT	8,176		7,617		8,425
Commercial IoT	5,140		9,300		8,444
Other	97		90		134
Total subscriber equipment sales	15,296		18,332		19,024

Total revenue	$	128,487	$	131,718	$	130,113


	As of:		As of:
	December 31, 2020		December 31, 2019
Operating leases:
Right-of-use asset, net	$	14,400	$	15,871

Short-term lease liability (recorded in accrued expenses)	1,330		1,634
Long-term lease liability	13,726		14,747
Total operating lease liabilities	$	15,056	$	16,381

Finance leases:
Right-of-use asset, net (recorded in intangible and other current assets, net)	$	19	$	95

Short-term lease liability (recorded in accrued expenses)	11		68
Long-term lease liability (recorded in non-current liabilities)	9		19
Total finance lease liabilities	$	20	$	87


	December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	13,330	$	7,606
Restricted cash	3,625		622
Accounts receivable, net of allowance for credit losses of $4,352 and $2,952, respectively	22,147		21,760
Inventory	13,736		16,341
Prepaid expenses and other current assets	15,649		16,931
Total current assets	68,487		63,260
Property and equipment, net	715,909		799,914
Restricted cash	51,068		50,900
Operating lease right of use assets, net	14,400		15,871
Intangible and other assets, net of accumulated amortization of $9,998 and $9,009, respectively	38,229		35,645
Total assets	$	888,093	$	965,590
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	58,824	$	—
Accounts payable	2,917		8,015

Accrued expenses	25,916		24,874
Payables to affiliates	581		261

Deferred revenue	25,977		29,910
Total current liabilities	114,215		63,060
Long-term debt, less current portion	326,586		464,176
Lease liabilities	13,726		14,747
Employee benefit obligations	3,650		4,128
Derivative liabilities	123		3,792
Deferred revenue	3,280		5,273
Other non-current liabilities	3,448		3,071
Total non-current liabilities	350,813		495,187

Commitments and contingent liabilities (Note 9)

Stockholders’ equity:
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at December 31, 2020 and 2019, respectively	—		—
Series A Preferred Convertible Stock of $0.0001 par value; one share authorized and none issued and outstanding at December 31, 2020 and 2019, respectively	—		—
Voting Common Stock of $0.0001 par value; 1,900,000,000 shares authorized; 1,674,668,617 shares and 1,464,544,144 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively	167		146


	Year Ended December 31,
	2020		2019		2018
Revenue:
Service revenue	$	113,191	$	113,386	$	111,089
Subscriber equipment sales	15,296		18,332		19,024
Total revenue	128,487		131,718		130,113
Operating expenses:
Cost of services (exclusive of depreciation, amortization and accretion shown separately below)	34,751		37,456		37,648
Cost of subscriber equipment sales	13,268		15,763		14,441
Cost of subscriber equipment sales - reduction in the value of inventory	662		416		—
Marketing, general and administrative	41,738		45,233		55,443
Reduction in the value of long-lived assets	416		1,124		—
Revision to contract termination charge	—		—		(20,478)
Depreciation, amortization and accretion	96,815		95,772		90,438
Total operating expenses	187,650		195,764		177,492
Loss from operations	(59,163)		(64,046)		(47,379)
Other (expense) income:


Interest income and expense, net of amounts capitalized	(48,429)		(62,464)		(43,612)
Derivative gain	2,897		145,073		81,120
Gain on legal settlement	—		120		6,779
Foreign currency (loss) gain	(727)		64		(3,070)
Other	(3,555)		(2,878)		(229)
Total other (expense) income	(49,814)		79,915		40,988
(Loss) income before income taxes	(108,977)		15,869		(6,391)
Income tax expense	662		545		125
Net (loss) income	$	(109,639)	$	15,324	$	(6,516)
Net (loss) income per common share:
Basic	$	(0.07)	$	0.01	$	(0.01)
Diluted	(0.07)		(0.07)		(0.01)
Weighted-average shares outstanding:
Basic	1,642,359		1,450,768		1,269,548
Diluted	1,642,359		1,655,191		1,269,548


	Year Ended December 31,
	2020		2019		2018
Balance at beginning of period	$	2,952	$	3,382	$	3,610
Impact of adoption of ASU 2016-13	1,684		—		—
Provision, net of recoveries	1,656		1,747		1,398
Write-offs and other adjustments	(1,940)		(2,177)		(1,626)
Balance at end of period	$	4,352	$	2,952	$	3,382


	Year Ended
	December 31, 2020		December 31, 2019		December 31, 2018
Service revenue:
United States	$	84,290	$	80,704	$	78,918
Canada	18,217		20,709		20,186
Europe	7,040		8,628		9,190
Central and South America	2,717		2,513		2,183
Others	927		832		612
Total service revenue	113,191		113,386		111,089

Subscriber equipment sales:
United States	$	8,226	$	9,937	$	11,756
Canada	3,741		4,632		3,051
Europe	1,639		1,707		2,487
Central and South America	1,674		1,946		1,472
Others	16		110		258
Total subscriber equipment sales	15,296		18,332		19,024

Total revenue	$	128,487	$	131,718	$	130,113


	Twelve Months Ended December 31, 2020		Twelve Months Ended December 31, 2019

Operating lease cost:
Amortization of right-of-use assets	$	1,880	$	1,719
Interest on lease liabilities	1,320		1,098
Finance lease cost:
Amortization of right-of-use assets	76		105
Interest on lease liabilities	4		11
Short-term lease cost	100		180
Total lease cost	$	3,380	$	3,113


	Twelve Months Ended December 31, 2020		Twelve Months Ended December 31, 2019


Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,055	$	2,647
Operating cash flows from finance leases	4		11
Financing cash flows from finance leases	68		103


	Operating Leases		Finance Leases

2021	$	2,597	$	11
2022	2,478		6
2023	2,510		4
2024	2,383		—
2025	2,405		—
Thereafter	8,803		—
Total lease payments	$	21,176	$	21
Imputed interest	(6,120)		(1)
Discounted lease liability	$	15,056	$	20


	December 31, 2020		December 31, 2019
Globalstar System:
Space component
First and second-generation satellites in service	$	1,195,509	$	1,195,509
Second-generation satellite, on-ground spare	32,443		32,443
Ground component	272,492		269,547
Construction in progress:
Ground component	19,327		16,040
Other	3,298		5,132
Total Globalstar System	1,523,069		1,518,671
Internally developed and purchased software	23,984		18,922
Equipment	9,679		8,731
Land and buildings	3,110		3,287
Leasehold improvements	1,655		1,633
Total property and equipment	1,561,497		1,551,244
Accumulated depreciation	(845,588)		(751,330)
Total property and equipment, net	$	715,909	$	799,914


	December 31, 2020						December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets Not Subject to Amortization	$	21,496	$	—	$	21,496	$	18,288	$	—	$	18,288

Intangible Assets Subject to Amortization:
Developed technology	$	11,856	$	(7,016)	$	4,840	$	11,692	$	(6,232)	$	5,460
Regulatory authorizations	1,866		(682)		1,184		1,937		(477)		1,460
	$	13,722	$	(7,698)	$	6,024	$	13,629	$	(6,709)	$	6,920

Total	$	35,218	$	(7,698)	$	27,520	$	31,917	$	(6,709)	$	25,208


2021	$	1,110
2022	1,108
2023	840
2024	594
2025	416
Thereafter	1,956
Total	$	6,024


	December 31, 2020						December 31, 2019
	Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value		Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value
First Lien Facility Agreement	$	186,988	$	6,373	$	180,615	$	190,361	$	10,185	$	180,176
Second Lien Facility Agreement	230,597		32,125		198,472		201,495		35,448		166,047
Loan Agreement with Thermo	—		—		—		135,105		18,562		116,543
8.00% Convertible Senior Notes Issued in 2013	1,376		—		1,376		1,410		—		1,410
Payroll Protection Program Loan	4,973		26		4,947		—		—		—
Total Debt	423,934		38,524		385,410		528,371		64,195		464,176
Less: Current Portion	58,824		—		58,824		—		—		—
Long-Term Debt	$	365,110	$	38,524	$	326,586	$	528,371	$	64,195	$	464,176


Period	Minimum Amount
1/1/20-6/30/20	$	18,245
7/1/20-12/31/20	$	23,755
1/1/21-6/30/21	$	20,524
7/1/21-12/31/21	$	26,780


	December 31, 2020		December 31, 2019
Derivative assets:
Compound embedded derivative with the Second Lien Facility Agreement	$	286	$	—
Total derivative assets	$	286	$	—

Derivative liabilities:
Compound embedded derivative with the 2013 8.00% Notes	$	(123)	$	(522)
Compound embedded derivative with the Loan Agreement with Thermo	—		(1,270)
Compound embedded derivative with the Second Lien Facility Agreement	—		(2,000)
Total derivative liabilities	$	(123)	$	(3,792)


	Fair Value Measurements at December 31, 2020:
	(Level 1)		(Level 2)		(Level 3)		Total Balance
Assets:
Compound embedded derivative with the Second Lien Facility Agreement	$	—	$	—	$	286	$	286
Total assets measured at fair value	$	—	$	—	$	286	$	286

Liabilities:
Compound embedded derivative with the 2013 8.00% Notes	$	—	$	—	$	(123)	$	(123)

Total liabilities measured at fair value	$	—	$	—	$	(123)	$	(123)


	December 31, 2020:
	Stock Price Volatility	Risk-Free Interest Rate	Note Conversion Price	Discount Rate	Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	40 - 85%	0.1%	$0.69	19%	$0.34


	December 31, 2019:
	Stock Price Volatility	Risk-Free Interest Rate	Note Conversion Price	Discount Rate	Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	70 - 130%	1.6%	$0.69	27%	$0.52
Compound embedded derivative with the Loan Agreement with Thermo	70 - 130%	1.6%	$0.69	27%	$0.52


	December 31, 2020				December 31, 2019
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Loan Agreement with Thermo	$	—	$	—	$	116,543	$	88,886
2013 8.00% Notes	1,376		1,122		1,410		875


	February 19, 2020
	Stock Price Volatility	Risk-Free Interest Rate		Note Conversion Price		Discount Rate		Market Price of Common Stock
Compound embedded derivative with the Loan Agreement with Thermo	70 - 130%	1.4	%	$	0.69	27	%	$	0.42


	For the Year Ended December 31,
	2020		2019		2018
Benefit obligation assumptions:
Discount rate	2.50	%	3.28	%	4.25	%
Rate of compensation increase	N/A		N/A		N/A
Net periodic benefit cost assumptions:
Discount rate	3.28	%	4.25	%	3.63	%
Expected rate of return on plan assets	6.50	%	6.50	%	6.50	%
Rate of compensation increase	N/A		N/A		N/A


	December 31, 2020
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
United States equity securities	$	2,426	$	—	$	2,426	$	—
International equity securities	619		—		619		—
Fixed income securities	1,553		—		1,553		—
Other	931		—		931		—
Total	$	5,529	$	—	$	5,529	$	—


	Shares	Weighted Average Exercise Price
Outstanding at January 1, 2020	7,827,464	$	1.42
Granted	700,000	0.54

Forfeited or expired	(543,296)	1.34
Outstanding at December 31, 2020	7,984,168	1.35

Exercisable at December 31, 2020	6,918,029	$	1.45


	Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2020	9,292,800	$	0.56
Granted	7,894,009	0.36
Vested	(9,344,341)	0.48
Forfeited	(106,860)	0.41
Nonvested at December 31, 2020	7,735,608	$	0.46


Report of Independent Registered Public Accounting Firm
Consolidated balance sheets at December 31, 2020 and 2019
Consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018
Consolidated statements of comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018
Consolidated statements of stockholders’ equity for the years ended December 31, 2020, 2019 and 2018
Consolidated statements of cash flows for the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements


			GLOBALSTAR, INC.

		By:	/s/ David B. Kagan
Date:	March 4, 2021		David B. Kagan
			Chief Executive Officer