8-KLeadership ChangesMaterial AgreementsSecurities & Listing+2

Globalstar, Inc. 8-K Report, Material Agreement (Aug 31, 2023)

Filed August 31, 2023For Securities:GSAT

Summary

Globalstar, Inc. has entered into a significant Intellectual Property License Agreement with XCOM Labs, Inc., acquiring exclusive, perpetual, and royalty-free rights to XCOM's novel wireless spectrum innovation technologies, including the XCOMP system. This technology is designed to enhance capacity in challenging wireless environments, particularly in sub-7 GHz spectrum. In exchange for these intellectual property rights and related agreements, Globalstar issued approximately 60.6 million shares of its common stock, valued at around $68.7 million, in a private placement. Notably, a portion of these shares were used to settle debts owed by XCOM to certain lenders, including affiliates of Thermo Companies, which is controlled by Globalstar's Executive Chairman, Jay Monroe. Additionally, Dr. Paul Jacobs, a key figure at XCOM, also received a substantial number of shares through a trust. To facilitate XCOM's operations, a significant portion of these newly issued shares are being resold to existing investors of both companies, including Thermo. In conjunction with this IP acquisition, Globalstar announced a leadership change: Dr. Paul Jacobs has been appointed as the new Chief Executive Officer, succeeding David Kagan. Dr. Jacobs, with extensive experience at Qualcomm and XCOM, will also join the Board of Directors. His compensation package includes a base salary, bonus eligibility, and performance-based restricted stock awards tied to sustained stock price targets. The company has also amended its bylaws to increase the size of its Board of Directors.

Key Highlights

  • 1Acquisition of exclusive, perpetual, and royalty-free license to XCOM Labs' wireless spectrum innovation technologies, including XCOMP, for approximately $68.7 million in stock.
  • 2Dr. Paul Jacobs appointed as the new CEO of Globalstar and joins the Board of Directors.
  • 3Dr. Jacobs' compensation includes a $500,000 base salary, bonus potential, and significant performance-based restricted stock awards vesting upon achieving sustained stock prices between $2.00 and $10.00.
  • 4Globalstar issued approximately 60.6 million shares of common stock as consideration for the IP license, with a portion used to settle XCOM's debts to related parties.
  • 5XCOM is reselling a substantial portion of the issued shares to facilitate its ongoing operations and to certain long-term investors, including Thermo Companies.
  • 6Board of Directors size increased from seven to nine members to accommodate new appointments.
  • 7Globalstar will file a registration statement for the resale of shares acquired by certain purchasers and held by XCOM.

Frequently Asked Questions

Globalstar has acquired an exclusive, perpetual, and royalty-free license to use, modify, and commercialize XCOM Labs' novel wireless spectrum innovation technologies, including their XCOMP system. This technology is designed to significantly improve wireless capacity in challenging environments, particularly within the sub-7 GHz spectrum, which could be a key driver for Globalstar's future services.

The acquisition was primarily funded by issuing approximately 60.6 million shares of Globalstar's common stock, valued at about $68.7 million. This represents a significant increase in the outstanding share count, which investors should consider regarding dilution. A portion of these shares were used to settle XCOM's debts, and another portion is being resold by XCOM.

Dr. Paul Jacobs brings extensive experience from his leadership roles at Qualcomm and XCOM Labs. His appointment as CEO, alongside his directorship on Globalstar's Board, suggests a strategic focus on leveraging the newly acquired technologies and potentially driving innovation in wireless communication. His compensation package, including performance-based stock awards tied to stock price appreciation, indicates alignment with shareholder value creation.

Yes, the transaction involves related parties. Shares issued as consideration were used to settle debts owed by XCOM to affiliates of Thermo Companies, which is controlled by Globalstar's Executive Chairman, Jay Monroe. Additionally, Dr. Paul Jacobs, the new CEO, has a beneficial interest through a trust in XCOM and will receive a significant number of shares. These relationships and the stock issuances to them are detailed within the filing.