The following discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and applicable notes thereto included in Part I, Item 1 of this Report, together with "Management's Discussion and Analysis of Financial Condition and Results of Operation" included in our 2025 Annual Report. The following information contains forward-looking statements, which are not guarantees of future performance, are not necessarily indicative of future results and are subject to risks and uncertainties, including the risk factors set forth in Part I, Item 1A of our 2025 Annual Report, as updated under "Risk Factors" in Part II, Item 1A of this Report. Should one or more of these risks or uncertainties materialize, our actual results may differ from those expressed or implied by the forward-looking statements. See "Cautionary Statement About Forward-Looking Statements" at the beginning of this Report for further information. Overview Mobile Satellite Services Business Through its global satellite network, Globalstar, Inc. ("we", "us" or the "Company") provides Mobile Satellite Services ("MSS"), including voice and data communications services to retail, business and governmental customers as well as wholesale satellite capacity services. We offer these services over our network of in-orbit satellites and ground stations ("gateways") pursuant to our spectrum licenses, which we refer to collectively as the Globalstar System. In addition to supporting Internet of Things ("IoT") data transmissions in a variety of applications, we provide reliable connectivity in areas not served or underserved by terrestrial wireless and wireline networks and in circumstances where terrestrial networks are not operational due to natural or man-made disasters. By providing global mobile satellite communications services, we aim to meet our customers' increasing desire for connectivity. Pending Mergers with Amazon.com, Inc. On April 13, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Amazon.com, Inc., a Delaware corporation (“Amazon”), Grapefruit Acquisition Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of Amazon (“Acquisition Sub I”), and Grapefruit Acquisition Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Amazon (“Acquisition Sub II” and, together with Amazon and Acquisition Sub I, the “Buyer Parties”), pursuant to which and subject to the terms and conditions of the Merger Agreement, the Buyer Parties have agreed to acquire us (the "Mergers"). The Mergers are expected to close in 2027, subject to satisfaction of certain closing conditions in the Merger Agreement, including required regulatory approvals; however, no assurance can be given as to when, or if, the Mergers will occur. Refer to Note 2: The Merger Agreement to our consolidated financial statements for further discussion on the Mergers. Business Strategy Our competitive advantages are leveraged through our ability to deliver communications products and services, wholesale satellite capacity services, government services, and terrestrial spectrum and network solutions. These core competencies are outlined below. Wholesale Satellite Capacity Services Wholesale satellite capacity services include satellite network access and related services over the Globalstar System. We provide certain services to Apple Inc. (the "Customer") pursuant to a service agreement and certain related ancillary agreements (collectively, the "Service Agreements"). In October 2024, we agreed to make certain amendments to the Service Agreements and entered into other related agreements with the Customer (the Service Agreements, as amended, collectively, the "Updated Services Agreements") to deliver expanded services over a new MSS network, including a new satellite constellation, expanded ground infrastructure, and increased global MSS licensing (collectively the "Extended MSS Network"). The Updated Services Agreements generally require us to allocate network capacity to support the services we provide to the Customer and for the Customer to enable Band 53/n53 for use in cellular-enabled devices designated by the Customer for use with our services. For additional information about the Updated Services Agreements, including the SOW Amendment, see Note 2: The Merger Agreement and Note 3: Special Purpose Entity to our condensed consolidated financial statements. As consideration for the services provided by us to the Customer under the Updated Services Agreements, payments to us include a fixed service fee, fees relating to certain service-related operating expenses and capital expenditures, additional fees 29 related to expanded services, and potential bonus payments subject to satisfaction of certain licensing, service and related criteria. We retain 15% of our current and future network capacity to support our other customers, including our existing and future Commercial IoT, SPOT and Duplex subscribers. We believe that this capacity can support a substantial increase in our own subscriber base. This retained satellite capacity can be used by us directly or through additional wholesale customer opportunities. For the 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. Communications Products and Services We currently provide the following communications products and services to our MSS subscribers: •data transmissions using a mobile or fixed device that transmits the location of the devices and other information to a central monitoring station, including our commercial IoT products ("Commercial IoT"); •communication and data transmissions using our SPOT family of mobile devices that transmit messages and the location of the device ("SPOT"); and •voice communication and data transmissions ("Duplex"). As of 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. We compete aggressively on price and strive to differentiate the products and solutions that we offer to our customers. As technological advancements are made, we continue to explore opportunities to develop new products and provide new services over the Globalstar System to meet the needs of our existing and prospective customers. Government Services We have an exclusive partnership with Parsons Corporation, a governmental services company, to utilize the Globalstar System to provide an innovative solution design to enhance resilience against disrupted communication pathways. We also provide engineering services to assist certain governmental and other customers in developing new applications to operate on our network and to enhance our ground network. These services include hardware and software designs to develop specific applications operating over our satellite network, as well as the installation of gateways and antennas. Terrestrial Spectrum and Network Solutions We are authorized to provide terrestrial broadband services over 11.5 MHz of our licensed MSS spectrum at 2483.5 to 2495 MHz (S-Band) throughout the United States and its territories. The Third Generation Partnership Project ("3GPP"), an organization that produces technical specifications and reports for 3GPP technologies, has designated the 11.5 MHz terrestrial band as Band 53 with the 5G variant of our Band 53, known as n53 (collectively "Band 53/n53"). We have terrestrial licenses in 12 countries, resulting in approximately 12.1 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. 30 In January 2026, we exercised our right under the Intellectual Property License Agreement (the "License Agreement") with XCOM Labs, Inc. (now known as Virewirx, Inc.) ("XCOM") to purchase intellectual property assets relating to the development and commercialization of XCOM’s technologies for wireless spectrum innovations, including XCOM RAN systems, which is XCOM’s commercially available coordinated multi-point radio system. XCOM RAN systems deliver substantial capacity gains in dense, complex, challenging wireless environments in sub 7 GHz spectrum. We also now own XCOM’s peer-to-peer connectivity technologies that could have applications across cellular and satellite devices. Certain former XCOM employees, who developed these technologies are employed by Globalstar and continuing to further commercialize the technology. We believe bringing together Globalstar’s terrestrial spectrum and relationships with leading partners around the world with XCOM’s differentiated technology creates a significant opportunity to deliver private networks for mission-critical needs of customers. Globalstar System Satellite and Ground Network Our constellation of Low Earth Orbit ("LEO") satellites is designed to maximize the probability that at least one satellite is visible from any point on the Earth's surface between the latitudes 70° north and 70° south. Our goal is to provide service levels and call or message success rates equal to or better than our MSS competitors, so our products and services are attractive to potential customers. In 2022, we entered into a satellite procurement agreement with Macdonald, Dettwiler and Associates Corporation ("MDA Space") pursuant to which we expect to acquire 17 satellites to replace our HIBLEO-4 U.S.-licensed system. In August 2024, the Federal Communications Commission (the "FCC") Space Bureau granted our application to replace our HIBLEO-4 U.S.-licensed system with up to 26 satellites and operate them under a renewed 15-year license term to provide long-term continuity of our MSS. The technical specifications and design of these replacement satellites are similar to our current satellites. The first set of replacement satellites was delivered in April 2026 and 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. 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. 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. Each of our gateways has multiple antennas that communicate with our satellites and pass communications seamlessly between antenna beams and satellites as the satellites traverse the gateways, thereby reflecting the signals from our users' terminals to our gateways. Once a satellite acquires a signal from an end-user, the Globalstar System authenticates the user and establishes the voice or data channel to complete the call to a device connected to the public switched telephone network ("PSTN"), a cellular or another wireless network or the internet for data communications including Commercial IoT communication services. 31 We believe that the design of the Globalstar System enables faster and more cost-effective maintenance and upgrades because the software and much of the hardware are located on the ground and thus readily accessible. Our multiple gateways allow us to reconfigure the Globalstar System quickly to extend another gateway's coverage to make up for lost coverage from a disabled gateway or to increase capacity resulting from surges in demand. Our ground network includes our ground equipment, which uses technology permitting communication to multiple satellites. The architecture of the Globalstar System provides full frequency re-use. This maximizes satellite diversity (which maximizes quality) and network capacity as we can reuse the assigned spectrum in every satellite beam in every satellite. In addition, we have developed a proprietary technology for our SPOT and Commercial IoT communication services. Spectrum and Regulatory Structure We benefit from a worldwide allocation of radio frequency spectrum in the international radio frequency tables administered by the International Telecommunications Union ("ITU"). Access to this globally harmonized spectrum enables us to design satellites, networks and terrestrial infrastructure enhancements more cost effectively because the products and services supported by the ITU can be deployed and sold worldwide. In addition, this broad spectrum allocation enhances our ability to capitalize on existing and emerging wireless and broadband applications. 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. We believe our MSS spectrum position provides potential for harmonized terrestrial authority across many international regulatory domains and have received and continue to seek approvals in various international jurisdictions. Performance Indicators Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our earnings and cash flows. These key performance indicators include: •total revenue, which is an indicator of our overall business growth; •subscriber growth and churn rate, which are both indicators of the satisfaction of our customers; •average monthly revenue per user, or ARPU, which is an indicator of our pricing and ability to obtain effectively long-term, high-value customers. We calculate ARPU separately for each type of our subscriber-driven revenue, including Commercial IoT, SPOT and Duplex; •operating income and adjusted EBITDA, both of which are indicators of our financial performance; and •capital expenditures, which are an indicator of future revenue growth potential and cash requirements. Comparison of the Results of Operations for the three and six months ended June 30, 2026 and 2025 Revenue Our revenue is categorized as service revenue and subscriber equipment sales. Service revenue is generated by the MSS services we provide to customers using the Globalstar System. Subscriber equipment sales are generated from the sale of MSS devices that work over the Globalstar System. We also generate service and equipment revenue from the sale of XCOM RAN systems and associated services that support such systems. For the 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. 32 The following table sets forth amounts and percentages of our revenue by type of service for customers using the Globalstar System (in thousands): Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Revenue % of Total Revenue Revenue % of Total Revenue Revenue % of Total Revenue Revenue % of Total Revenue Service revenue: Wholesale capacity services $ 40,114 62 % $ 42,385 63 % $ 86,381 64 % $ 79,094 62 % Subscriber services Commercial IoT 7,512 12 7,051 11 14,962 11 13,631 10 SPOT 8,604 13 9,224 14 17,259 13 18,595 15 Duplex 2,715 4 3,677 5 5,291 4 7,129 6 Government and other services 1,053 2 879 1 2,806 2 1,834 1 Total service revenue (1) $ 59,998 93 % $ 63,216 94 % $ 126,699 94 % $ 120,283 94 % (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. The following table sets forth our average number of subscribers and ARPU by type of subscriber services revenue: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Average number of subscribers for the period: Commercial IoT 580,427 534,505 575,436 528,869 SPOT 207,606 224,885 209,387 227,546 Duplex 15,755 21,841 16,351 22,638 Other 192 239 199 248 Total 803,980 781,470 801,373 779,301 ARPU (monthly): Commercial IoT $ 4.31 $ 4.40 $ 4.33 $ 4.30 SPOT 13.81 13.67 13.74 13.62 Duplex 57.44 56.12 53.93 52.49 We count "subscribers" based on the number of devices that are subject to agreements that entitle them to use our data or voice communications services rather than the number of persons or entities who own or lease those devices. Other providers of comparable services may count their subscribers differently. Wholesale capacity services revenue reflects revenue from providing satellite network access and related services to the Customer under the Updated Services Agreement. Government and other services revenue includes revenue generated primarily from terrestrial spectrum and network solutions as well as governmental and engineering service contracts. None of these service revenue items are subscriber driven. Accordingly, we do not present ARPU for wholesale capacity services revenue or government and other services revenue in the table above. 33 Service Revenue 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. 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. 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. 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. 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. Subscriber Equipment Sales 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. Operating Expenses 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. 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. 34 Cost of Services 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. 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). Cost of Subscriber Equipment Sales 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. Marketing, General and Administrative 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). 35 Stock-Based Compensation 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. Reduction in Value and Loss on Disposal of Assets During the first quarter of 2025, we recorded a loss on disposal of assets totaling $7.0 million, which is the net book value of one of our second-generation satellites that experienced a power control anomaly which rendered the satellite inoperable. Based on our 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. Depreciation, amortization and accretion 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. Other (Expense) Income Interest Income and Expense 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. 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. 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. 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. 36 Foreign Currency Gain (Loss) Changes in foreign currency gains and losses are driven by the remeasurement of financial statement items, which are denominated in various currencies, at the end of each reporting period. We recorded foreign currency 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. Gain on Contingent Interest Feature Within the 2024 Debt Repayment 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. Derivative Gain and Other Income During the three months ended June 30, 2026, there was no activity for derivative gain and other income compared to a gain of $6.7 million for the same period in 2025. For the six months ended June 30, 2026 derivative gain and other income fluctuated by $6.2 million to a gain of less than $0.1 million in 2026 from a gain of $6.3 million for the same period in 2025. Upon adoption of ASU 2025-07 on January 1, 2026, the embedded derivative within the 2024 Debt Repayment no longer required mark-to-market adjustments. The $2.6 million loss recorded during the first quarter of 2026 was reclassified back to the derivative asset and was included in the cumulative retained earnings adjustment in connection with the adoption of this standard. 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. Income Tax Expense 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. 37 Liquidity and Capital Resources Overview Our principal sources of liquidity include cash on hand, cash flows from operations and proceeds from the 2023 Funding Agreement and Infrastructure Prepayment. We expect these liquidity sources to meet our short-term and long-term liquidity needs for funding our operating costs, capital expenditures, including related to the Extended MSS Network and other growth opportunities, and financing obligations, including scheduled recoupments under the 2023 Funding Agreement and 2024 Debt Repayment as well as dividends on our Series A Preferred Stock. In addition, we have issued warrants to the Customer that are exercisable in accordance with the Updated Services Agreements and to Thermo in connection with its guarantee of the 2023 Funding Agreement. These warrants would become a source of liquidity if exercised. As of 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. 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. Refer to Note 2: The Merger Agreement to our consolidated financial statements for discussion of the Mergers and (i) the related amendment to the 2024 Prepayment Agreement, (ii) related amendments to the warrants issued to the Customer and to Thermo to provide for the automatic cashless exercise of any vested and unexercised warrants immediately prior to the consummation of the Mergers, and (iii) the proposed cancellation of the Series A Preferred Stock in exchange for the liquidation preference upon consummation of the Mergers. Cash Flows for the six months ended June 30, 2026 and 2025 The following table shows our cash flows from operating, investing and financing activities (in thousands): Six Months Ended June 30, 2026 June 30, 2025 Net cash provided by operating activities $ 159,767 $ 209,741 Net cash used in investing activities (208,326) (271,788) Net cash provided by (used in) financing activities 10,570 (22,024) Effect of exchange rate changes on cash and cash equivalents 289 1,133 Net decrease in cash and cash equivalents $ (37,700) $ (82,938) 38 Cash Flows Provided by Operating Activities Net cash provided by operating activities includes primarily cash received from our customers from the sale of products and services, including the performance of wholesale capacity services as well as related to the purchase of equipment and satellite voice and data services. We use cash in operating activities primarily for network costs, personnel costs, inventory purchases and other general corporate expenditures. Net cash provided by operating activities 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. Cash Flows Used in Investing Activities Net cash used in investing activities was $208.3 million for the six months ended June 30, 2026, compared to $271.8 million for the same period in 2025. Net cash used in investing activities during both periods included primarily network upgrades associated with the Updated Services Agreements. The decrease during the first six months of 2026 compared to the same period in 2025 was due primarily to the timing of milestone payments made to MDA Space and SpaceX. Cash Flows Provided by (Used in) Financing Activities Net cash provided by financing activities was $10.6 million during the six month period ended June 30, 2026, compared to net cash used in financing activities of $22.0 million for the same period in 2025. In June 2026, we received proceeds from the 2023 Funding Agreement totaling $19.9 million, which were used to pay amounts owed to vendors for network purchases pursuant to the Updated Services Agreements. During both periods, we paid cash dividends to holders of the Series A Preferred Stock. Additionally, during both periods, we made payments for the scheduled recoupments pursuant to the terms of the 2021 Funding Agreement, with the final recoupment made in March 2026. Indebtedness and Other Financing Arrangements At June 30, 2026, the principal amount of our debt totaled $423.7 million, which accrues fees at a weighted average stated rate up to 9%. At June 30, 2026, our deferred revenue, net, totaled $1.1 billion, of which the majority is expected to be earned over a period in excess of five years as we perform services under the Updated Services Agreements. For more information regarding our 2024 Debt Repayment, 2023 Funding Agreement, Infrastructure Prepayment and dividends paid to holders of the Series A Preferred Stock, see Note 7: Long-Term Debt and Other Financing Arrangements and Note 3: Special Purpose Entity to our condensed consolidated financial statements. For more information regarding the amendments to certain of these agreements in connection with the Mergers, refer to Note 2: The Merger Agreement to our consolidated financial statements. Off-Balance Sheet Transactions We have no material off-balance sheet transactions. Recently Issued Accounting Pronouncements For a discussion of recent accounting guidance and the expected impact that the guidance could have on our condensed consolidated financial statements, see Recently Issued Accounting Pronouncement in Note 1: Basis of Presentation to our condensed consolidated financial statements in Part I, Item 1 of this Report. Critical Accounting Policies and Estimates 39 Except as set forth below, there have been no material changes in our Critical Accounting Policies and Estimates from the information provided in the "Critical Accounting Policies and Estimates" section of Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report. Embedded Derivative within the 2024 Debt Repayment In connection with our financing arrangements, we review the features within the instruments to evaluate if they contain an embedded derivative. If an instrument contains an embedded derivative, the derivative is bifurcated from the debt host contract and initially recorded at fair value with the difference between the basis of the debt host contract and the fair value of the embedded derivative recorded as the carrying value of the host contract. The fair value of the embedded derivative is measured at fair value on a quarterly basis, or more often if deemed necessary, with gains or losses recognized in earnings. We determine the fair value of derivative instruments based on available market data and assumptions developed by management using appropriate valuation models. The terms of the 2024 Debt Repayment contain an interest reduction mechanism if we meet certain defined milestones (as amended in April 2026, refer to Note 2: The Merger Agreement to our consolidated financial statements for further discussion) associated with the completion of the Extended MSS Network. At issuance, this feature was identified as an embedded derivative and resulted in a debt premium being added to the principal amount of the 2024 Debt Repayment. Effective January 1, 2026, we adopted ASU 2025-07 on a modified retrospective basis, with the cumulative effect of adoption recorded as an adjustment to retained earnings as of the adoption date. The interest reduction mechanism within the 2024 Debt Repayment is an underlying to this agreement, which is now included in the scope exceptions permitted under ASC 815 and no longer requires bifurcation. Upon adoption, the previously recognized derivative asset and associated debt premium, net of accretion, was derecognized. Prior period financial statements are presented under the previously applicable guidance and are not directly comparable to the current period amounts. Prior to adoption of ASU 2025-07, we amortized the debt premium as an offset to interest expense over the loan term using the effective interest rate method. When project milestones were achieved, we removed the associated future cash flows from the total interest savings projections used to fair value the embedded derivative. The majority of the present value of the cash flows removed from the derivative asset was recorded as a debt discount, while the remaining portion relieved the balance of accrued interest associated with that milestone on our consolidated balance sheet. The fair value of this embedded derivative was valued using a discounted cash flow model. The most significant input used in the fair value measurement was the discount rate. As the discount yield used in the valuation process decreased, the fair value of the embedded derivative increased. Also impacting the fair value measurement was the length of time between the reporting period and the start of interest payments; as the length of time decreased, the present value of the projected interest savings increased, resulting in a higher derivative asset value. The most significant unobservable input that drove the cash flows used in the fair value measurement included the estimated achievement of project milestones. As the probability of reaching the relevant milestones increased, the fair value of the embedded derivative would also increase.