Globalstar, Inc.GSAT
Globalstar, Inc. Income Taxes Disclosure
13. TAXES
As discussed in Note 1: Summary of Significant Accounting Policies, the Company prospectively adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures effective January 1, 2025. As a result, disclosures for the years ended December 31, 2024 and 2023 are presented under the prior format, while disclosures for the year ended December 31, 2025 reflect the new required format.
The components of income tax expense were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal tax | $ | — | $ | — | $ | — | |||||||||||
| State tax | 3,419 | 60 | 240 | ||||||||||||||
| Foreign tax | 2,390 | 1,693 | 850 | ||||||||||||||
| Total | 5,809 | 1,753 | 1,090 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal and state tax | 292 | 316 | 33 | ||||||||||||||
Foreign (benefit) tax | (223) | 66 | — | ||||||||||||||
| Total | 69 | 382 | 33 | ||||||||||||||
Income tax expense | $ | 5,878 | $ | 2,135 | $ | 1,123 | |||||||||||
U.S. and foreign components of income (loss) before income taxes are presented below (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. loss | $ | (23,093) | $ | (46,851) | $ | (30,086) | |||||||||||
Foreign income (loss) | 20,320 | (14,178) | 6,491 | ||||||||||||||
| Total loss before income taxes | $ | (2,773) | $ | (61,029) | $ | (23,595) | |||||||||||
The Company recorded foreign currency gains of $15.3 million in 2025 and foreign currency losses of $16.6 million in 2024, both of which are reflected within the foreign component of income (loss) before income taxes in the table above. Many of its 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.
As of December 31, 2025 and 2024, the Company had cumulative U.S., state and foreign net operating loss ("NOL") carryforwards for income tax reporting purposes of approximately $1.5 billion and $1.8 billion, respectively. The vast majority of these NOL carryforwards were generated prior to 2018 and expire through 2041 (with less than 1% expiring prior to 2028) and the remaining NOL carryforwards do not expire.
Income taxes paid (net of refunds), disclosed pursuant to the requirements of ASU 2023-09, for the year presented below (in thousands):
| Year Ended December 31, | |||||
| 2025 | |||||
| U.S. Federal | $ | — | |||
| U.S. State and Local | |||||
| California | 1,198 | ||||
| Other | 729 | ||||
| Total U.S. state and local | 1,927 | ||||
| Foreign | |||||
| Canada | 4,124 | ||||
| Other foreign jurisdictions | 425 | ||||
| Total foreign taxes paid | 4,549 | ||||
| Total taxes paid | $ | 6,476 | |||
Total income taxes paid, net of refunds received, were $1.9 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.
The components of net deferred income tax assets (liabilities) were as follows (in thousands):
As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets | |||||||||||
| Operating loss and credit carryforwards | $ | 332,891 | $ | 436,670 | |||||||
| Deferred revenue | 73,463 | 17,242 | |||||||||
| Accruals and reserves | 1,649 | 1,721 | |||||||||
| Stock-based compensation expense | 3,843 | 3,502 | |||||||||
| Lease liabilities | 9,653 | 5,408 | |||||||||
| Interest and interest carryforwards | 12,156 | 4,972 | |||||||||
| Other deferred tax assets | 822 | 1,064 | |||||||||
| Deferred tax assets before valuation allowance | 434,477 | 470,579 | |||||||||
| Valuation allowance | (383,519) | (421,883) | |||||||||
Total deferred tax assets | 50,958 | 48,696 | |||||||||
Deferred tax liabilities | |||||||||||
| Property and equipment | (24,445) | (42,913) | |||||||||
Right-of-use assets | (10,181) | (5,768) | |||||||||
| Intangibles | (11,746) | (606) | |||||||||
| Other deferred tax liabilities | (5,472) | (120) | |||||||||
Total deferred tax liabilities | (51,844) | (49,407) | |||||||||
| Net deferred income tax liability | $ | (886) | $ | (711) | |||||||
The deferred revenue tax asset in the table above is related to a portion of the prepayments made under the Updated Services Agreements (see Note 3: Revenue for further discussion).
The change in the valuation allowance during 2025 of $38.4 million was due primarily to uncertain tax positions, which reduced deferred tax assets related to NOL carryforwards and the current year NOL utilization as a result of increased taxable income from deferred revenue recognition in the U.S. The Company recorded net deferred tax liabilities of $0.9 million as of December 31, 2025 and $0.7 million as of December 31, 2024 related to the limitation on utilization of state NOLs and utilization of federal deferred tax assets surrounding the Company’s indefinite lived intangible assets.
The Company considers all undistributed earnings of its foreign subsidiaries to be reinvested indefinitely as of December 31, 2025. Should these earnings be distributed in the future, the Company may be subject to foreign withholding taxes, additional U.S. federal taxes, and state income taxes, including the effects of any foreign currency translation.
Effective income tax rate (after adoption of ASU 2023-09) (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| Amount | Percent | ||||||||||
| Provision at U.S. statutory rate of 21% | $ | (582) | 21 | % | |||||||
State and local tax effects (1) | |||||||||||
| State income taxes, net of federal benefit | (1,327) | 48 | % | ||||||||
| Adjustment to state deferred rate | (705) | 25 | % | ||||||||
| State adjustment for filed returns | 1,135 | (41) | % | ||||||||
| State increase in valuation allowance | 2,425 | (87) | % | ||||||||
| Foreign tax effects | |||||||||||
| Canada | |||||||||||
| Effect of foreign income tax at various rates | (282) | 10 | % | ||||||||
| Adjustment to reserved deferred assets | 393 | (14) | % | ||||||||
| Other | (51) | 2 | % | ||||||||
| Change in valuation allowance | (1,048) | 38 | % | ||||||||
| Canadian Provincial | |||||||||||
| Effect of foreign income tax at various rates | 508 | (18) | % | ||||||||
| Adjustment to reserved deferred assets | 48 | (2) | % | ||||||||
| Change in valuation allowance | (556) | 20 | % | ||||||||
| Brazil | |||||||||||
| Effect of foreign income tax at various rates | 528 | (19) | % | ||||||||
| Foreign rate change | (5,728) | 207 | % | ||||||||
| Other | 98 | (4) | % | ||||||||
| Withholding tax | 153 | (6) | % | ||||||||
| Change in valuation allowance | 4,617 | (166) | % | ||||||||
| Ireland | |||||||||||
| Effect of foreign income tax at various rates | (527) | 19 | % | ||||||||
| Other | (43) | 2 | % | ||||||||
| Change in valuation allowance | (732) | 26 | % | ||||||||
| Mexico | |||||||||||
| Adjustment for filed returns | 432 | (16) | % | ||||||||
| Other | 212 | (8) | % | ||||||||
| Change in valuation allowance | (158) | 6 | % | ||||||||
| Other foreign jurisdictions | |||||||||||
| Other foreign jurisdictions | (42) | 2 | % | ||||||||
| Change in valuation allowance | |||||||||||
Decrease in valuation allowance (3) | (46,978) | 1694 | % | ||||||||
| Non-taxable or non-deductible items | |||||||||||
| Permanent differences | 643 | (23) | % | ||||||||
| Excess tax benefits on stock-based compensation | (3,992) | 144 | % | ||||||||
| Section 162(m) compensation limitation | 3,018 | (109) | % | ||||||||
| Imputed interest | 2,432 | (88) | % | ||||||||
| State current tax deduction | (304) | 11 | % | ||||||||
| Change in unrecognized tax benefits | |||||||||||
Uncertain tax positions (2) | 51,013 | (1840) | % | ||||||||
| Other adjustments | |||||||||||
| Adjustment to reserved deferred assets | 208 | (8) | % | ||||||||
| Stock compensation deduction limitation | 671 | (24) | % | ||||||||
| Adjustment to reserved deferred assets - R&D | 563 | (20) | % | ||||||||
| Adjustment to reserved deferred assets - intangibles | (445) | 16 | % | ||||||||
| Adjustment for filed returns | 326 | (12) | % | ||||||||
| Other | (45) | 2 | % | ||||||||
| Effective tax rate | $ | 5,878 | (212) | % | |||||||
(1) The tax effect in this category primarily reflects state and local taxes in California and Illinois.
(2) Relates primarily to a new uncertain tax position in the U.S. and its related state impacts.
(3) Relates primarily to impacts associated with a new uncertain tax position in the U.S. and its related state impacts.
Effective income tax rate (prior to adoption of ASU 2023-09) (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Provision at U.S. statutory rate of 21% | $ | (12,816) | $ | (4,967) | |||||||
| State income taxes, net of federal benefit | (1,142) | (771) | |||||||||
Change in valuation allowance | (9,740) | (969) | |||||||||
| Effect of foreign income tax at various rates | 185 | (131) | |||||||||
| Permanent differences | 2,408 | 5,923 | |||||||||
| Net change in permanent items due to provision to tax return | (13) | (731) | |||||||||
| Adjustment to reserved deferred assets | 6,204 | 2,104 | |||||||||
| Adjustment to state deferred rate | 4,049 | 170 | |||||||||
| Withholding tax | 421 | 502 | |||||||||
Uncertain tax positions | 12,527 | — | |||||||||
| Other | 52 | (7) | |||||||||
| Total | $ | 2,135 | $ | 1,123 | |||||||
Uncertain Income Tax Positions
The Company is subject to income taxes in U.S. and foreign jurisdictions and it may recognize uncertain income tax positions if it is more likely than not that the position would be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense.
The following table presents a reconciliation of the Company’s beginning and ending balances of unrecognized tax benefits for the periods indicated (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | 14,067 | $ | — | |||||||
| Increases related to tax positions of the current year | 50,962 | — | |||||||||
| Increases related to tax position of prior years | 602 | 14,067 | |||||||||
| Reductions for tax positions of prior years | (59) | — | |||||||||
| Audit settlements | (1,482) | — | |||||||||
Ending balance | $ | 64,090 | $ | 14,067 | |||||||
The table above does not include accrued interest and penalties of $0.4 million and $1.2 million as of December 31, 2025 and 2024, respectively. The Company recognizes accrued interest and/or penalties related to income tax matters within income tax expense.
As of December 31, 2025, the Company recorded $6.4 million in long-term tax receivables on its consolidated balance sheet associated with the Canada income tax audit. Additionally, the Company recorded $3.6 million in long-term uncertain tax position liabilities, of which $2.0 million relates to the state tax impact of a new uncertain tax position in the U.S. and $1.6 million relates to the Canada income tax audit. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.5 million for the year ended December 31, 2025. Further discussion is below regarding the Company's uncertain income tax positions associated with the Company's Canadian subsidiary.
Tax Audits
The Company operates in various U.S. and foreign tax jurisdictions. The process of determining its anticipated tax liabilities involves many calculations and estimates which are inherently complex. The Company believes that it has complied in all material respects with its obligations to pay taxes in these jurisdictions. However, its position is subject to review and possible challenge by the taxing authorities of these jurisdictions. If the applicable taxing authorities were to challenge successfully its current tax positions, or if there were changes in the manner in which the Company conducts its activities, the Company could become subject to material unanticipated tax liabilities. It may also become subject to additional tax liabilities as a result of changes in tax laws, which could in certain circumstances have a retroactive effect.
The Company nor any of its subsidiaries are currently under audit by the IRS. The Company's corporate U.S. tax returns are generally subject to examination for three years after the later of the return due date or the date filed. To the extent the Company utilizes net operating loss carryforwards generated in earlier years, the IRS retains the right to examine the amount of such losses as part of any audit of an open tax year, notwithstanding that the years in which the losses were generated may otherwise be closed. The Company has U.S. federal NOL carryforwards originating prior to 2010.
State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.
In the Company's international tax jurisdictions, numerous tax years remain subject to examination by tax authorities, including tax returns for 2015 and subsequent years in most of the Company's international tax jurisdictions.
Canadian Tax Audits
The Canada Revenue Agency ("CRA") is conducting audits of the Company's Canadian subsidiary for several tax years and the Company is working with the CRA to complete such audits. The CRA has completed its audit for the tax years 2016 through 2018 and assessed the Company for additional tax liabilities and audit adjustments, which the Company is appealing. The tax years 2019 through 2022 remain under examination.
The Company's NOL carryforwards for income tax reporting purposes in Canada would largely offset the expected final income tax settlement after appeal. Additionally, withholding tax, penalties and interest have been and are expected to be assessed for audit periods under examination. The Company expects that any assessed withholding tax and penalties will be refunded at the end of the audit process; however, interest assessed on the withholding tax is not recoverable.
As a result of these audits, during 2025, the Company recorded $0.1 million of expense for uncertain tax positions associated with interest on withholding tax. As of December 31, 2025, the Company recorded $6.4 million in long-term tax receivables and $1.6 million in long-term uncertain tax position liabilities on its consolidated balance sheet associated with potential taxes, penalties and interest.
Other
The tax related to global intangible low-taxed income ("GILTI") is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company records GILTI tax in the period in which it is incurred and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended December 31, 2025 and 2024.
As of December 31, 2025 and 2024, the Company recorded a value added tax ("VAT") recoverable, of which the short term portion is included in prepaid and other current assets on its consolidated balance sheet totaling $2.0 million and $2.5 million, respectively, and the long-term portion is included in intangible and other assets, net, on its consolidated balance sheet totaling $3.0 million and $1.8 million, respectively. This VAT recoverable is related primarily to certain payments for the purchase and importation of gateway equipment in various international jurisdictions in connection with the Company's network upgrade work.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation did not have a material impact on the Company's effective tax rate or consolidated financial statements for the year ended December 31, 2025. However, certain provisions of the OBBBA become effective for tax years beginning after December 31, 2025, and the Company is continuing to evaluate the impact of these provisions on its future consolidated financial statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 4, 2021 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.