What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-25 compared with 2021-03-04 · 381 added, 445 removed, 1100 unchanged (43% of the section changed)

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Audited Consolidated Financial Statements of Globalstar, Inc.

Report of Ernst & Young LLP, independent registered public accounting firm 46

Report of Ernst & Young LLP, independent registered public accounting firm (PCAOB ID 42 )

Report of Crowe LLP, independent registered public accounting firm (PCAOB ID 173 )

Consolidated balance sheets at December 31, 2021 and 2020

Consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019

Consolidated statements of comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018

Consolidated statements of comprehensive (loss) income for the years ended December 31, 2021, 2020 and 2019

Consolidated statements of stockholders’ equity for the years ended December 31, 2021, 2020 and 2019

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Globalstar, Inc.

The Board of Directors and Stockholders of Globalstar, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Globalstar, Inc.

(the Company) as of December 31, 2020, and the related consolidated statement of operations, comprehensive loss, stockholders’ equity, and cash flows for the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Globalstar, Inc.

(the Company) as of December 31, 2021 and 2020 and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021 and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 4, 2021, expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2022, expressed an unqualified opinion thereon.

Basis for Opinion

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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New Orleans, Louisiana

March 4, 2021

February 25, 2022

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders Globalstar, Inc.

The Board of Directors and Stockholders of Globalstar, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Globalstar, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

We have audited Globalstar, Inc.’s (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Globalstar, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the year ended December 31, 2020, and the related notes and our report dated March 4, 2021, expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, and the related consolidated statements of operations, statements of comprehensive (loss) income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021, and the related notes and our report dated February 25, 2022, expressed an unqualified opinion thereon.

Basis for Opinion

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New Orleans, Louisiana

March 4, 2021

February 25, 2022

Report of Independent Registered Public Accounting Firm

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Globalstar, Inc.

(the "Company") as of December 31, 2019, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for the year ended December 31, 2019, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements referred to above present fairly, in all material respects, the Company's results of operations and cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Crowe LLP

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Long-term debt, less current portion 237,932 326,586

Lease liabilities 13,726 14,747

Employee benefit obligations 3,650 4,128

Derivative liabilities 123 3,792

Deferred revenue 3,280 5,273

Operating lease liabilities 29,237 13,726

Deferred revenue, net 112,054 3,280

Other non-current liabilities 7,887 7,221

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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

2,150,000,000 and 1,900,000,000 shares authorized at December 31, 2021 and 2020, respectively;

1,796,528,871 shares and 1,674,668,617 shares issued and outstanding at December 31, 2021 and 2020, respectively

Nonvoting Common Stock of $ 0.0001 par value;

no sh ares authorized and no ne issued and outstanding at December 31, 2020 and December 31, 2019, respectively

no sh ares authorized and no ne issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid-in capital 2,146,710 2,096,566

Accumulated other comprehensive loss ( 2,944 ) ( 3,449 )

Accumulated other comprehensive income (loss) 1,890 ( 2,944 )

Retained deficit ( 1,783,349 ) ( 1,670,724 )

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Reduction in the value of long-lived assets 242 416 1,124

Revision to contract termination charge — — ( 20,478 )

Depreciation, amortization and accretion 96,237 96,815 95,772

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Other (expense) income:

Gain on extinguishment of debt 3,098 — —

Interest income and expense, net of amounts capitalized ( 43,536 ) ( 48,429 ) ( 62,464 )

Derivative gain 2,897 145,073 81,120

Gain on legal settlement — 120 6,779

Derivative (loss) gain ( 1,043 ) 2,897 145,073

Foreign currency (loss) gain ( 6,308 ) ( 727 ) 64

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(Loss) income before income taxes ( 112,924 ) ( 108,977 ) 15,869

Income tax expense 662 545 125

Income tax (benefit) expense ( 299 ) 662 545

Net (loss) income $ ( 112,625 ) $ ( 109,639 ) $ 15,324

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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 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

Net issuance of restricted stock awards and employee stock options and recognition of stock-based compensation 6,003 — 4,118 — — 4,118

Contribution of services — — 338 — — 338

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Investment in business — — 155 — — 155

Fair value of warrants issued in connection with Second Lien Facility Agreement — — 23,562 — — 23,562

Fair value of warrants issued in connection with 2019 Facility Agreement — — 23,562 — — 23,562

Issuance of stock for warrant exercises 9,500 1 3,609 — — 3,610

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Balances – December 31, 2020 1,674,669 $ 167 $ 2,096,566 $ ( 2,944 ) $ ( 1,670,724 ) $ 423,065

Net issuance of restricted stock awards and employee stock options and recognition of stock-based compensation 4,937 1 5,543 — — 5,544

Contribution of services — 188 — — 188

Issuance and recognition of stock-based compensation of employee stock purchase plan 1,887 — 747 — — 747

Issuance of stock for warrant exercises 115,036 12 43,666 — — 43,678

Other comprehensive income — — — 4,834 — 4,834

Net loss — — — — ( 112,625 ) ( 112,625 )

Balances – December 31, 2021 1,796,529 $ 180 $ 2,146,710 $ 1,890 $ ( 1,783,349 ) $ 365,431

See accompanying notes to Consolidated Financial Statements.

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Depreciation, amortization and accretion 96,237 96,815 95,772

Change in fair value of derivative liabilities ( 2,897 ) ( 145,073 ) ( 81,120 )

Change in fair value of derivatives 1,043 ( 2,897 ) ( 145,073 )

Stock-based compensation expense 6,541 5,670 5,700

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Noncash interest and accretion expense 35,897 33,847 21,453

Revision to contract termination charge — — ( 20,478 )

Gain on extinguishment of debt ( 3,098 ) — —

Change to estimated impact upon adoption of ASC 606 — — ( 3,885 )

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Noncash revenue recognized from terminated contract — ( 2,916 ) —

Noncash reversal of tariff accrual ( 1,023 ) — —

Unrealized foreign currency loss (gain) 6,394 1,362 ( 192 )

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Cash flows used in investing activities:

Second-generation network costs (including interest) ( 7,317 ) ( 3,342 ) ( 7,032 )

Network upgrades (including interest) ( 37,432 ) ( 7,317 ) ( 3,342 )

Property and equipment additions ( 6,307 ) ( 5,157 ) ( 4,594 )

Sale of property and equipment 350 — —

Purchase of intangible assets ( 1,797 ) ( 2,062 ) ( 3,555 )

Net cash used in investing activities ( 45,186 ) ( 14,536 ) ( 11,491 )

Cash flows provided by (used in) financing activities:

Principal payments of the First Lien Facility Agreement ( 3,373 ) ( 199,029 ) ( 77,866 )

Proceeds from PPP Loan 4,973 — —

Net proceeds from common stock offering and exercise of warrants — 3,610 59,100

Cash flows (used in) provided by financing activities:

Principal payments of the 2009 Facility Agreement ( 186,990 ) ( 3,373 ) ( 199,029 )

Payments for debt and equity issuance costs ( 286 ) ( 1,074 ) ( 6,166 )

Proceeds from issuance of common stock and exercise of options 747 638 672

Net proceeds from common stock offering and exercise of warrants 43,678 — 3,610

Premium refund from the 2009 Facility Agreement 2,569 — —

Proceeds from PPP Loan — 4,973 —

Proceeds from Subordinated Loan Agreement — — 62,000

Payoff of Subordinated Loan Agreement — — ( 62,000 )

Proceeds from Second Lien Facility Agreement — 192,990 —

Proceeds from issuance of common stock and exercise of options 638 672 846

Net cash provided by (used in) financing activities 1,164 ( 7,923 ) ( 18,196 )

Proceeds from 2019 Facility Agreement — — 192,990

Net cash (used in) provided by financing activities ( 140,282 ) 1,164 ( 7,923 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 132 ) 52 4

Net increase (decrease) in cash, cash equivalents and restricted cash 8,895 ( 16,362 ) ( 29,789 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 53,719 ) 8,895 ( 16,362 )

Cash, cash equivalents and restricted cash, beginning of period 68,023 59,128 75,490

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Supplemental disclosure of non-cash financing and investing activities:

Increase in capitalized accrued interest for second-generation network costs $ 1,638 $ 434 $ 2,093

Increase in capitalized accrued interest for network upgrades $ 2,973 $ 1,638 $ 434

Capitalized accretion of debt discount and amortization of prepaid financing costs 612 447 501

Forgiveness of principal and interest of PPP Loan 5,030 — —

Principal amount of Loan Agreement with Thermo converted into common stock — 137,366 —

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Reduction in derivative liability due to conversion of Loan Agreement with Thermo — 1,058 —

Fair value of warrants issued with Second Lien Facility Agreement — 23,562 —

Fair value of warrants issued with 2019 Facility Agreement — — 23,562

See accompanying notes to Consolidated Financial Statements.

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Two other members of the Company's Board of Directors are also directors, officers or minority equity owners of various Thermo entities.

The Company’s satellite communications business, by providing critical mobile communications to subscribers, serves principally the following markets:

The Company’s satellite communications business supports Internet of Things ("IoT") data transmissions in a variety of applications and provides 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.

These communication services serve principally the following markets:

recreation and personal;

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Globalstar currently provides the following communications services:

• two-way voice communication and data transmissions using mobile or fixed devices, including the GSP-1700 phone, two generations of the Sat-Fi ® and other fixed and data-only devices ("Duplex");

• two-way voice communication and data transmissions via the GSP-1600 and GSP-1700 phones ("Duplex");

• one-way or two-way communication and data transmissions using mobile devices, including the SPOT family of products, such as SPOT X ® , SPOT Gen4 TM and SPOT Trace ® , that transmit messages and the location of the device ("SPOT");

• one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station, including commercial IoT products, such as the battery- and solar-powered SmartOne, STX-3 and ST100 ("Commercial IoT");

• engineering services to assist certain customers in developing new applications to operate on the Company's network, enhancements to the Company's ground network and other communication services using the Company's MSS and terrestrial spectrum licenses ("Engineering and Other").

Globalstar provides Duplex, SPOT and Commercial IoT products and services to customers directly and through a variety of independent agents, dealers, resellers and independent gateway operators (“IGOs”).

• engineering services to assist certain customers (including its customer under the Terms Agreement (defined below)) in developing new applications to operate on the Company's network, enhancements to the Company's ground network and other communication services using the Company's MSS and terrestrial spectrum licenses ("Engineering and Other").

Globalstar provides Duplex, SPOT and Commercial IoT products and services to customers directly and through a variety of partners.

COVID-19 Risks and Uncertainties

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) a global pandemic.

The impact caused by COVID-19 for the period ended December 31, 2020 and through the release date of these consolidated financial statements included, among other effects, the accommodation of certain pricing concessions requested by customers and experienced lower demand for its products and services, particularly from its customers that operate in the oil and gas market.

While the full extent and duration of the impact is unknown, the Company expects a continuation of this lower demand at least until this industry fully recovers.

While the Company also initially experienced a reduction in demand from its customers that operate in the retail industry, this demand has recovered, due in part to the re-opening of most retailer store locations.

Additionally, the Company began and expects to continue to operate with a remote workforce, manage a supply chain sourcing predominantly from China, and engage with international regulators remotely to advance the terrestrial spectrum authorization process.

There are a number of uncertainties that could impact the Company's future results of operations, including the effectiveness of COVID-19 mitigation measures;

the duration of the pandemic;

There are a number of uncertainties that could impact the Company's future results of operations, including the duration of the COVID-19 pandemic;

the effectiveness of mitigation measures;

global economic conditions;

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and the sustainability of supply chains.

In accordance with the Company's accounting policies disclosed in this Report, the Company reviews the carrying value of long-lived assets, amortizable intangible assets and inventory when circumstances warrant an assessment in order to evaluate whether indicators of impairment exist.

No indicators of impairment of long-lived assets or intangible assets were identified;

furthermore, the reduction in cash flows from the areas of the business impacted by COVID-19 are expected to be temporary.

For inventory associated with the areas of the business impacted by COVID-19, the carrying value of inventory on hand was already lower than its expected net realizable value;

accordingly, no impairment has been necessary in connection with

For accounts receivable, the Company increased its loss rate for certain receivables as discussed in more detail in this Note 1:

Summary of Significant Accounting Policies.

Revised internal cash flow and financial projections have also been evaluated in light of financial covenant requirements in the Company's facility agreements.

This liquidity assessment considers relief granted to the Company under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES" Act), including a $ 5.0 million loan the Company received in April 2020 under the payroll protection program, which the Company expects to be forgiven, and the deferral of the payment of certain payroll taxes.

Additionally, the Company evaluated tax law changes pursuant to the CARES Act and revised its net operating loss carryforwards and other estimates, as necessary.

For further discussion relating to the matters discussed above, see Note 6:

Long-Term Debt and Other Financing Arrangements and Note 13:

As a result of COVID-19, the Company experienced an initial reduction in the volume of sales of subscriber equipment, received requests for service pricing concessions from certain customers, and was impacted by certain of its customers not being able to pay outstanding balances.

The Company has pursued various opportunities to mitigate the risks and uncertainties resulting from COVID-19, including, but not limited to, the receipt of a $ 5.0 million loan under the Paycheck Protection Program ("PPP") and the evaluation of its eligibility for the Employee Retention Tax Credit program as well as seeking relief under the American Rescue Plan Act.

In June 2021, the Small Business Administration ("SBA") fully approved the Company's request for forgiveness of all amounts outstanding, including accrued interest, under its PPP loan.

Use of Estimates in Preparation of Financial Statements

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Restricted Cash

Restricted cash is comprised of funds held in escrow by the agent for the Company’s senior secured facility agreement (the “First Lien Facility Agreement”) to secure the Company’s principal and interest payment obligations related to its First Lien Facility Agreement.

Restricted cash is classified as either a current or non-current asset on the Company's Consolidated Balance Sheet based on when these funds are expected to be used to pay principal and interest due under the First Lien Facility Agreement.

There was no balance in restricted cash as of December 31, 2021.

As of December 31, 2020, restricted cash was comprised of funds held in escrow by the agent for the Company’s facility agreement entered into in 2009 (the “2009 Facility Agreement”) to secure the Company’s principal and interest payment obligations related to its 2009 Facility Agreement.

Restricted cash was classified as either a current or non-current asset on the Company's Consolidated Balance Sheet based on when these funds were expected to be used to pay principal and interest due under the 2009 Facility Agreement.

As disclosed in Note 6:

Long-Term Debt and Other Financing Arrangements, the Company fully paid down the 2009 Facility Agreement during 2021.

Concentration of Credit Risk

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On January 1, 2020, the Company adopted the provisions of ASU No.

2016-13, Credit Losses, Measurement of Credit Losses on Financial Instruments , and recognized the cumulative effect of initially applying the guidance as an adjustment to the opening balance of retained deficit.

As a result of adopting ASU No.

2016-13, the Company recorded a net decrease to stockholders' equity of $ 1.7 million, which resulted in an increase to the opening retained deficit balance as of January 1, 2020.

2016-13, Credit Losses, Measurement of Credit Losses on Financial Instruments .

The most significant driver of this adjustment was the Company’s change in accounting policy related to expected losses (rather than incurred losses) from trade receivables applied to its portfolio based on historical and future performance.

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Accounts receivable are uncollateralized, without interest, and consist primarily of receivables from the sale of Globalstar services and equipment.

For service customers,

payment is generally due within thirty days of the invoice date and for equipment customers, payment is generally due within thirty to sixty days of the invoice date, or, for some customers, may be made in advance of shipment.

For service customers, payment is generally due within thirty days of the invoice date and for equipment customers, payment is generally due within thirty to sixty days of the invoice date, or, for some customers, may be made in advance of shipment.

The Company has agreements with certain customers whereby the parties net settle outstanding payables and receivables between the respective entities on a periodic basis.

The Company also has agreements whereby it acts as an agent to procure goods and perform services on behalf of the customer;

payment is generally due within 45 days of the invoice date for this customer.

The Company performs ongoing credit evaluations of its customers and impairs receivable balances by recording specific allowances for credit losses based on factors such as supportable and reasonable current trends, the length of time the receivables are past due and historical collection experience.

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The Company applies a loss rate to its portfolio of trade receivables based on past-due status and records an allowance for credit losses, which represents the expected losses of those trade receivables over their estimated contractual life.

The estimated life may vary by service and product type, but is generally less than one year.

Allowances are generally recorded for all aging categories of outstanding receivables, including those in the current category (which is a change from legacy GAAP).

The estimated life may vary by service and product type, but is generally less

than one year.

Allowances are generally recorded for all aging categories of outstanding receivables, including those in the current category.

Accounts receivable balances that are determined likely to be uncollectible are included in the allowance for credit losses.

After attempts to collect a receivable have failed, the receivable is written off against the allowance.

In March 2020, after the Company adopted ASU No.

2016-13, the World Health Organization declared the outbreak COVID-19 a global pandemic.

COVID-19 has resulted in some disruption to the Company, primarily as it relates to the volume of equipment sales and uncertainties impacting the collection of certain outstanding receivables.

Although the Company expects this disruption to be temporary, it has considered the potential impact of COVID-19 on its portfolio of trade receivables and has increased its loss rate for such receivables for the year ended December 31, 2020, in limited circumstances.

The Company considered the potential impact of COVID-19 on its portfolio of trade receivables and increased its loss rate for certain receivables, in limited circumstances.

The Company will continue to reassess its sales and collections of receivables each reporting period to support its allowance across its portfolio.

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For the years ended December 31, 2021 and 2020, the Company wrote down the value of inventory by $ 1.0 million and $ 0.7 million, respectively, after adjusting for changes in net realizable value.

In 2021, the Company wrote off certain Sat-Fi2 ® materials that were not likely to be used in production as well as defective inventory units that were no longer saleable.

In 2020, the Company discontinued production of a second-generation Duplex device, which was the majority of the write down recorded.

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In 2019, the Company reduced the carrying value of gateway spare parts due to excess hardware parts.

During the year ended December 31, 2018, no write down of inventory was recorded.

Property and Equipment

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Capitalized costs associated with the Company’s Space Component, Ground Component, and other assets are tracked by fixed asset category and are allocated to each asset as it comes into service.

When a second-generation satellite was incorporated into the second-generation constellation, the Company began depreciation on the date the satellite was placed into service, which was the point that the satellite reached its orbital altitude, over its estimated depreciable life.

When a second-generation satellite is incorporated into the second-generation constellation, the Company begins depreciation on the date the satellite is placed into service, which was the point that the satellite reaches its orbital altitude, over its estimated depreciable life.

The Company capitalizes interest costs associated with the costs of assets in progress.

Capitalized interest is added to the cost of the underlying asset and is amortized over the depreciable life of the asset after it is placed into service.

As the Company’s construction in progress decreases, the Company capitalizes less interest, resulting in a higher amount of net interest expense recognized under U.S.

As the Company’s construction in progress increases, the Company capitalizes more interest, resulting in a lower amount of net interest expense recognized under U.S.

Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets as follows:

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these assets are generally classified as current on the Company's consolidated balance sheets as the disposal of these assets is expected within one year.

As of December 31, 2020 and 2019, the Company had approximately $ 0.3 million and $ 0.5 million, respectively, of assets classified as held for sale due to the anticipated disposal of its former gateway location in Nicaragua.

The change in classification from held and used to held for sale resulted in an initial impairment of long-lived assets of $ 1.1 million during 2019, which was recorded in the Company's consolidated statement of operations.

As of December 31, 2020, the Company had approximately $ 0.3 million of assets classified as held for sale.

During 2021, the Company sold the property of its former gateway location in Nicaragua.

For this former gateway location, the change in classification from held and used to held for sale resulted in an initial impairment of long-lived assets of $ 1.1 million during 2019, which was recorded in the Company's consolidated statement of operations.

In the fourth quarter of 2020, the Company signed a contract for the sale of this property;

the final selling price (net of estimated costs to sell) is $ 0.3 million and, as a result, the Company recorded an additional impairment totaling $ 0.2 million.

The Company has operating and finance leases for facilities and equipment throughout the United States and around the world, including corporate offices, satellite control centers, ground control centers, gateways and certain equipment.

The Company has operating and finance leases for facilities and equipment around the world, including corporate offices, satellite control centers, ground control centers, gateways and certain equipment.

Upon inception of a contract, the Company evaluates if the contract, or part of the contract, contains a lease.

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For leases in which the implicit rate is not readily determinable, an estimated incremental borrowing rate is used, which represents a rate of interest that the Company would pay to borrow on a collateralized basis over a similar term.

The Company has elected to combine lease and nonlease components, if applicable.

The Company has elected to combine lease and non-lease components, if applicable.

For operating leases, the Company records lease expense on a straight-line basis over the lease term in either marketing, general and administrative expense or cost of services, depending on the nature of the underlying asset.

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Fair Value of Financial Instruments

The Company believes it is not practicable to determine the fair value of the First Lien Facility Agreement, the Second Lien Facility Agreement and the Payroll Protection Program Loan ("PPP Loan").

The Company believes it is not practicable to determine the fair value of the 2019 Facility Agreement, the 2009 Facility Agreement and the PPP Loan.

Interest rates and other terms for long-term debt are not readily available and generally involve a variety of factors, including due diligence by the debt holders.

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Gain or loss on extinguishment of debt generally is recorded upon an extinguishment of a debt instrument or the conversion of certain of the Company’s convertible notes.

Gain or loss on extinguishment of debt is calculated as the difference between the reacquisition price and net carrying amount of the debt and is recorded as an extinguishment gain or loss in the Company’s consolidated statement of operations.

Gain or loss on extinguishment of debt is calculated as the difference between the reacquisition price and net carrying amount of the debt, which includes unamortized debt issuance costs, and is recorded as an extinguishment gain or loss in the Company’s consolidated statement of operations.

Revenue Recognition and Deferred Revenue

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Each type of revenue is a separate performance obligation with distinct deliverables and is therefore accounted for discretely.

Revenue is measured based on the consideration specified in a contract with a customer, adjusted for credits and discounts, as applicable, and is recognized when the Company satisfies a performance obligation by transferring control over a product or service to a customer.

Revenue is measured based on the consideration specified in a contract

with a customer, adjusted for credits and discounts, as applicable, and is recognized when the Company satisfies a performance obligation by transferring control over a product or service to a customer.

Generally, service revenue is recognized over a period of time and revenue from the sale of subscriber equipment is recognized at a point in time.

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Under ASC 606, an entity should adjust the promised amount of the consideration for the effects of time value of money if the timing of the payments agreed upon by the parties to the contract provides the customer or the entity with a significant benefit of financing for the transfer of goods or services to the customer.

This type of transaction is infrequent and not considered material to the Company.

Additionally, in connection with the adoption of ASC 606, the Company has applied the practical expedient related to the existence of a significant financing component as it expects at contract inception that the period between payment by the customer and transfer of the promised goods or services will be one year or less.

For certain engineering services provided pursuant to the Company's previously disclosed Terms Agreement (which is defined and discussed in more detail below in Engineering and Other Service Revenue ), the length of time between receipt of payment by the customer and transfer of services by the Company is greater than one year.

Accordingly, payments made by the customer pursuant to the Terms Agreement includes a significant financing component.

The Company accretes interest expense using the effective interest rate method over the period in which these advance payments are outstanding.

The rate in which interest is computed is based on rates implicit in the Terms Agreement.

For the Company's subscriber contracts, transactions with a significant financing component are infrequent and not considered material to the Company as the time between cash collection and performance is generally less than one year.

The following describes the principal activities from which the Company generates its revenue.

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1) the Company’s right to payment, 2) the customer has legal title of the equipment, 3) the Company has transferred physical possession of the equipment to the customer or carrier, and 4) the customer has significant risks and rewards of ownership of the equipment.

The Company sells equipment designed to work on its network through various channels, including through dealers, retailers and resellers (including IGOs) as well as direct to consumers or other businesses by its global sales team and through its e-commerce website.

The Company sells equipment designed to work on its network through various channels, including through partners as well as direct to consumers or other businesses by its global sales team and through its e-commerce website.

The sales channel depends primarily on the type of equipment and geographic region.

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The revenue associated with these engineering services is generally recorded over time as the services are rendered, and the Company's obligation to the customer is satisfied.

Additionally, the Company owns and operates its satellite constellation and earns a portion of its revenues through the sale of airtime minutes or data on a wholesale basis to IGOs.

Revenue from services provided to IGOs is recognized based upon airtime minutes or data packages used by customers of the IGOs and in accordance with contractual fee arrangements.

In February 2020, the Company entered into an agreement (i) providing for a customer to pay the Company for non-recurring engineering (NRE) services in connection with the assessment of a potential service utilizing certain of the Company's assets and capacity, and (ii) setting forth the primary terms for the potential development and operation of the service (the “Terms Agreement”).

In connection with the Terms Agreement, the Company has incurred certain costs to fulfill this contract.

In accordance with applicable accounting guidance, the Company nets these costs against the deferred revenue balance associated with this customer.

See further discussion below in Intangible and Other Assets .

Multiple-Element Arrangement Contracts.

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Income and expense items are translated at the average exchange rates prevailing during the reporting period.

For 2020, 2019 and 2018, the foreign currency translation adjustments were net losses of $ 1.5 million, net losses of $ 0.7 million and net gains of $ 3.2 million, respectively.

Foreign currency transaction gains/losses were approximately net losses of $ 0.7 million, net gains of $ 0.1 million and net losses of $ 3.1 million for each of 2020, 2019, and 2018, respectively.

These were classified as other (expense) income on the consolidated statement of operations.

For 2021, 2020 and 2019, the foreign currency translation adjustments were net gains of $ 4.4 million, net losses of $ 1.5 million and net losses of $ 0.7 million, respectively.

Foreign currency transaction gains/losses were approximately net losses of $ 6.3 million, net losses of $ 0.7 million and net gains of $ 0.1 million for each of 2021, 2020, and 2019, respectively.

Asset Retirement Obligation

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Accretion of the asset retirement obligation liability and depreciation of the related assets are included in depreciation, amortization and accretion in the accompanying consolidated statements of operations.

As of both December 31, 2020 and 2019, the Company had accrued approximately $ 1.6 million and $ 1.5 million, respectively, for asset retirement obligations.

As of December 31, 2021 and 2020, the Company had accrued approximately $ 2.5 million and $ 1.6 million, respectively, for asset retirement obligations.

During 2021, the Company continued the expansion of its gateway footprint in connection with the Terms Agreement, which resulted in the commencement of new leases and the installation of new equipment;

as a result of this expansion, the Company established new asset retirement obligations for six gateways resulting in a total increase to the liability of $ 0.8 million during 2021.

There were no settlements during 2021.

The Company believes this estimate will be sufficient to satisfy the Company’s obligation under site leases to remove the gateway equipment and restore the lease sites to their original condition.

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(Loss) Earnings Per Share

The Company is required to present basic and diluted (loss) earnings per share.

Basic (loss) earnings per share is computed by dividing (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

The numerator used to calculate diluted EPS includes the effect of dilutive securities, including interest expense, net, and derivative gains or losses reflected in net (loss) income.

In periods of net income, the numerator used to calculate diluted EPS includes the effect of dilutive securities, including interest expense, net, and derivative gains or losses reflected in net (loss) income.

Common stock equivalents are included in the calculation of diluted earnings per share only when the effect of their inclusion would be dilutive.

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Intangible Assets Subject to Amortization

Our intangible assets that do not have indefinite lives (primarily developed technology and customer relationships) are amortized over their estimated useful lives.

Our intangible assets that do not have indefinite lives are amortized over their estimated useful lives.

For information related to each major class of intangible assets, including accumulated amortization and estimated average useful lives, see Note 5:

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Prepaid Licenses and Royalties

The Company has signed various licensing and royalty agreements necessary for the manufacture and distribution of its second-generation products.

The Company has signed various licensing and royalty agreements necessary for the manufacture and distribution of its products.

Amounts that are prepaid are recorded primarily in noncurrent assets on the Company's consolidated balance sheet.

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The Company will expense these amounts through depreciation expense over the life of the gateway, maintenance expense over the term of the services, or cost of goods sold on a per unit basis as these units are manufactured, sold, or activated.

Business Economic Loss Claim Receivable

In accordance with ASC 450, the Company believes that the recognition of a gain is appropriate at the earlier of when the gain is realizable or realized.

A realized gain is one where cash (or other assets, such as claims to cash) has already been received without expectation of repayment.

A gain is realizable when assets are readily convertible to known amounts of cash or claims to cash.

In May 2018, the Company entered into a settlement agreement related a business economic loss claim.

The Company received proceeds of $ 7.4 million, net of legal fees, related to this settlement.

The Company received the two installments of $ 3.7 million each in January 2019 and January 2020.

As part of the Company's assessment, it considered that the terms of the settlement agreement are final (e.g.

not subject to appeal) and the counterparty has the ability to pay the amount.

Therefore, the Company recorded a receivable and non-operating income for the amount of the settlement.

When this receivable was recorded in 2018, the Company imputed interest in accordance with ASC 835-30-15-2 as it represented a contractual right to receive money on fixed or determinable dates.

The difference between the present value and the face amount was treated as a discount and was amortized as interest income over the life of the claim using the interest method.

Contract Acquisition Costs

The Company also capitalizes incremental costs to obtain a contract, or contract acquisition costs, to the extent it expects to recover them.

These capitalized costs primarily include deferred subscriber acquisition costs and are amortized consistently with the pattern of transfer of the good or delivery of the service to which the asset relates.

Contract Costs

The Company also capitalizes incremental costs to obtain and/or fulfill a contract to the extent it expects to recover them.

For subscriber-driven contracts, these capitalized contract acquisition costs primarily include deferred subscriber acquisition costs and are amortized consistently with the pattern of transfer of the good or delivery of the service to which the asset relates.

For engineering and support service contracts, these contract costs may include certain expenses incurred by the Company prior to the customer benefiting from the service.

When a contract terminates prior to the end of its expected life, the remaining contract acquisition cost associated with it becomes impaired and the amount is expensed.

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For the years ended December 31, 2021, 2020 and 2019, the amount of amortization related to contract acquisition costs was $ 2.1 million, $ 2.1 million and $ 1.4 million, respectively.

Total costs to fulfill a contract were $ 2.1 million and zero as of December 31, 2021 and 2020, respectively, and are netted against the associated contract liability, which is recorded in deferred revenue on the Company's consolidated balance sheet.

As of December 31, 2021, costs to fulfill a contract are associated with one customer contract and are netted against this customer's contract liability balance in accordance with ASC 606.

These costs are amortized to cost of services or marketing, general and administrative expense over the period in which the Company commences its performance obligations through the estimated completion of the contract term, consistent with the period in which the customer benefits from the services provided.

The Company did not amortize any costs to fulfill a contract during 2021.

Impairment of Intangible and Other Assets

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Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

Among other things, ASU No.

2020-06 simplifies the guidance in ASC 470 by eliminating two of the three models that require separating embedded conversion features from convertible instruments.

This ASU is effective for public entities for annual and interim periods beginning after December 15, 2021.

The Company adopted this standard when it became effective on January 1, 2022.

For existing debt instruments, this standard will not have a material impact to its consolidated financial statements or related disclosures.

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No.

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The Company adopted this standard when it became effective on January 1, 2021.

The adoption of this standard will impact certain of the Company's disclosures in future filings.

The adoption of this standard impacted certain of the Company's disclosures in this Report.

In December 2019, the FASB issued ASU No.

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The adoption of this standard did not have a material effect on the Company's financial statements or related disclosures.

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

Among other things, ASU No.

2020-06 simplifies the guidance in ASC 470 by eliminating two of the three models that require separating embedded conversion features from convertible instruments.

This ASU is effective for public entities for annual and interim periods beginning after December 15, 2021.

Early adoption is permitted as of the beginning of any interim or annual reporting period, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

For existing debt instruments, the Company does not expect this standard will have a material impact to its consolidated financial statements or related disclosures.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Credit Losses, Measurement of Credit Losses on Financial Instruments .

2016-13, as amended, significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The standard replaced the incurred loss approach with an expected loss model for instruments measured at amortized cost.

Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

This ASU became effective for public entities for annual and interim periods beginning after December 15, 2019.

The Company adopted this standard when it became effective on January 1, 2020.

See further discussion above in " Accounts and Notes Receivable " in this Note for a discussion of the impact to the Company's consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement .

As part of the FASB's disclosure framework project, it has eliminated, amended and added disclosure requirements for fair value measurements.

Entities are no longer required to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy, the policy of timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements.

Public companies are required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

This ASU is effective for public entities for annual and interim periods beginning after December 15, 2019.

The Company adopted this standard when it became effective on January 1, 2020.

The adoption of this standard impacted certain of the Company's disclosures included in Note 8:

Fair Value Measurements.

Disaggregation of Revenue

The following table discloses revenue disaggregated by type of product and service (amounts in thousands):

December 31, 2020 December 31, 2019 December 31, 2018

Twelve Months Ended December 31,

2021 2020 2019

Service revenue:

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The following table discloses revenue disaggregated by geographical market (amounts in thousands):

December 31, 2020 December 31, 2019 December 31, 2018

Twelve Months Ended December 31,

2021 2020 2019

Service revenue:

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Total revenue $ 124,297 $ 128,487 $ 131,718

During the third quarter of 2019, the Company revised its calculation of the estimated impact from the initial adoption of ASC 606 to recognize additional revenue that should have been recognized under ASC 606 for contracts that were open at the adoption date.

The adjustment, which totaled $ 3.9 million, was recorded to Duplex service revenue and was deemed immaterial to the Company’s financial statements for each period since January 1, 2018;

this was reflected as an out-of-period amount.

Accounts Receivable

The Company has agreements with certain of its IGOs whereby the parties net settle outstanding payables and receivables between the respective entities on a periodic basis.

The Company has agreements with certain customers whereby the parties net settle outstanding payables and receivables between the respective entities on a periodic basis.

As of December 31, 2021 and 2020, $ 0.7 million and $ 1.9 million, respectively, related to these agreements was included in accounts receivable on the Company’s consolidated balance sheet.

The decrease in this balance from December 31, 2019 to 2020 was due to a net settlement with one of the Company's IGOs that reduced outstanding accounts receivable and accounts payable balances during the fiscal year end December 31, 2020.

During 2021, the Company net settled certain of the balances, resulting in a decrease in accounts receivable.

The Company also has agreements whereby it acts as an agent to procure goods and perform services on behalf of the customer.

As of December 31, 2021 and 2020, the Company recorded $ 6.5 million and $ 4.7 million, respectively, in accounts receivable related to these arrangements.

Contract Liabilities

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Additionally, during the fourth quarter of 2020, the Company recognized $ 2.9 million of revenue previously included in non-current deferred revenue related to a contract executed in 2007 for the construction of a gateway in Nigeria, upon its termination due to a lack of performance by the partner, and the Company's performance of all obligations in accordance with the terms of the contract.

In general, the duration of the Company’s contracts is one year or less;

however, from time to time, the Company offers multi-year contracts.

In general, the duration of the Company’s contracts with subscribers is one year or less.

As of December 31, 2021, the Company expects to recognize $ 25.9 million, or approximately 19 %, of its remaining performance obligations during the next twelve months .

Contract liabilities also includes advance payments from a customer pursuant to an agreement related to the Terms Agreement discussed in Note 1:

Summary of Significant Accounting Policies.

The Company received two advance payments of $ 37.5 million each from this customer in June and September 2021.

These advanced payments are recorded in deferred revenue and classified as either short-term or long-term deferred revenue consistent with the expected timing of the Company's obligation to provide services to the customer over the recoupment period defined in the Terms Agreement.

As of December 31, 2021, the Company has recorded $ 1.0 million and $ 112.4 million as short-term and long-term deferred revenue, respectively, which reflects the advanced payments previously described as well as additional advance payments in connection with ongoing network upgrades.

Reflected in the deferred revenue balance is $ 1.9 million of imputed interest associated with the significant financing component related to these advance payments.

The total amount of deferred revenue associated with this customer also is reflected net of a contract asset of $ 2.1 million on its consolidated balance sheet as of December 31, 2021.

The following tables disclose the components of the Company’s finance and operating leases (amounts in thousands):

December 31, 2020 December 31, 2019

As of December 31,

Operating leases:

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Total finance lease liabilities $ 9 $ 20

In connection with the Company's gateway expansion project related to the Terms Agreement, the Company has entered into various operating leases, predominately for new gateway sites, totaling $ 19.7 million during 2021.

The tables in this footnote reflect the relevant terms of these new leases.

The components of lease cost are reflected in the table below (amounts in thousands):

For the years ended December 31, 2020 and 2019, the Company has presented financial results and applied its accounting policies under ASC 842;

for the year ended December 31, 2018, financial results and accounting policies have not been adjusted and are reflected under legacy GAAP pursuant to ASC 840.

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

Twelve Months Ended December 31,

2021 2020 2019

Operating lease cost:

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Interest on lease liabilities 1,948 1,320 1,098

Capitalized lease cost ( 615 ) — —

Finance lease cost:

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Total lease cost $ 4,159 $ 3,380 $ 3,113

As reported under legacy GAAP, total rent expense for 2018 was approximately $ 1.4 million.

The increase in lease expense from 2018 to 2019 was due primarily to the lease entered into in February 2019 with Thermo Covington, LLC for the Company's new headquarters office.

In accordance with the Terms Agreement, the Company began capitalization of certain costs to fulfill this contract during 2021, including lease expense, as shown in the table above.

These capitalized lease costs will be amortized over the expected term of the related performance obligation.

Weighted-Average Remaining Lease Term and Discount Rate

The following table discloses the weighted-average remaining lease term and discount rate for finance and operating leases:

December 31, 2020 December 31, 2019

As of December 31,

Weighted-average lease term

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The below table discloses supplemental cash flow information for finance and operating leases (in thousands):

As noted above, presentation for the year ended December 31, 2018 has not been adjusted under the modified retrospective method of adoption.

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

Twelve Months Ended December 31,

2021 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

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Discounted lease liability $ 31,738 $ 9

As of December 31, 2020, the Company had executed additional operating leases, primarily for new gateway locations, that are expected to commence during 2021.

Accordingly, these leases are not included on the balance sheet as of December 31, 2020 or in the maturity table above.

The Company is in the process of evaluating these lease obligations.

As of December 31, 2021, the Company had executed an additional operating lease for a new gateway location.

This lease has not yet commenced as of December 31, 2021 since the lessor is continuing to ready the site for use.

Accordingly, this lease is not reflected on the balance sheet as of December 31, 2021 or in the maturity table above.

The Company is in the process of evaluating this lease obligation and expects it to be approximately $ 2.5 million.

PROPERTY AND EQUIPMENT

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Construction in progress:

Space component 16,394 398

Ground component 33,998 19,327

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Total property and equipment, net $ 672,156 $ 715,909

Amounts in the above table consist primarily of costs incurred related to the construction of the Company’s second-generation constellation and ground upgrades.

The remaining ground component of construction in progress represents costs (including capitalized interest) incurred for assets to upgrade the Company's ground infrastructure in certain regions around the world.

These gateway assets will be deployed based on coverage optimization.

The ground component of construction in progress also includes costs (including capitalized interest) associated with the Company's contract for the procurement and production of new gateway antennas.

As of December 31, 2020, approximately $ 7.9 million of the ground component of CIP

includes costs associated with new antennas for certain of the Company's gateways around the world.

The Company expects these assets to be placed into service in the near future.

Amounts included in the Company’s second-generation satellite, on-ground spare balance as of December 31, 2020 and 2019, consist primarily of costs related to a spare second-generation satellite that has not been placed in orbit, but is capable of being included in a future launch.

As of December 31, 2020, this satellite has not been placed into service;

therefore, the Company has not started to record depreciation expense.

The ground component of construction in progress includes costs (including capitalized interest) incurred for assets to upgrade the Company's ground infrastructure, including costs associated with the procurement of new gateway antennas.

During 2021, the Company placed $ 15.1 million of costs into service associated with these antennas, which are included in

ground component in the table above.

These capital expenditures relate primarily to gateway upgrade work in connection with the Terms Agreement.

Amounts included in the Company’s second-generation satellite, on-ground spare in the table above consist of costs related to a spare second-generation satellite that has not been placed in orbit.

The Company has entered into certain contracts for the preparation and launch of this spare satellite, which is expected to occur in 2022.

Costs to support these efforts are included in the space component of construction in progress in the table above;

the vast majority of these costs are being reimbursed by the customer under the Terms Agreement.

These reimbursements are recorded in deferred revenue on the Company's consolidated balance sheet as of December 31, 2021 and are discussed in Note 2:

In February 2022, the Company entered into an agreement for the purchase of new satellites that will replenish the Company's existing satellite constellation.

The agreement is described in more detail in Note 9:

Commitments and Contingencies.

Capitalized Interest and Depreciation Expense

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Amortization Expense $ 12,012 $ 11,962 $ 12,197

During 2018, the Company placed into service developed technology associated with the launch of its next generation of products.

The amortization expense in the table above reflects primarily the 15-year life of these assets from the in-service date.

Geographic Location of Property and Equipment

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United States $ 621,470 $ 687,302

Central and South America 22,981 13,614

Canada 13,921 11,814

Africa 5,471 6

Europe 5,136 3,170

Central and South America 13,614 11,786

Total property and equipment $ 672,156 $ 715,909

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Total $ 39,875 $ ( 8,889 ) $ 30,986 $ 35,218 $ ( 7,698 ) $ 27,520

As of December 31, 2020 and 2019, customer relationships totaling $ 2.1 million and trade names totaling $ 0.2 million were fully amortized and have been removed from the table above.

For the twelve months ended December 31, 2021, the Company recorded amortization expense on these intangible assets of $ 1.2 million.

Amortization expense is recorded in operating expenses in the Company’s consolidated statements of operations.

During 2021, the Company acquired the remaining ownership of its joint venture in South Korea and assumed ownership of the gateway and MSS licenses.

The Company recorded $ 1.3 million of intangible assets on its consolidated balance sheet during the year ended December 31, 2021.

These licenses are indefinite-lived and not subject to amortization.

Excluding the effects of any acquisitions, dispositions or write-downs subsequent to December 31, 2021, total estimated annual amortization of intangible assets is as follows (in thousands):

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Investments in businesses 240 1,589

Compound embedded derivative with the Second Lien Facility Agreement 286 —

Compound embedded derivative with the 2019 Facility Agreement 484 286

ERP software costs 919 64

Other long-term assets 1,725 1,068

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Amount Unamortized Discount and Deferred Financing Costs Carrying

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

2019 Facility Agreement $ 263,812 $ 27,287 $ 236,525 $ 230,597 $ 32,125 $ 198,472

8.00 % Convertible Senior Notes Issued in 2013

1,407 — 1,407 1,376 — 1,376

Payroll Protection Program Loan 4,973 26 4,947 — — —

2009 Facility Agreement

— — — 186,988 6,373 180,615

Paycheck Protection Program Loan — — — 4,973 26 4,947

Total Debt 265,219 27,287 237,932 423,934 38,524 385,410

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The principal amounts shown above include payment of in-kind interest, as applicable.

The carrying value is net of deferred financing costs and any discounts to the loan amounts at issuance, including accretion, as further described below.

As of December 31, 2020, the current portion of long-term debt represents the scheduled principal repayments under the First Lien Facility Agreement and the PPP Loan due within one year of the balance sheet date.

First Lien Facility Agreement

In 2009, the Company entered into the First Lien Facility Agreement with a syndicate of bank lenders, including BNP Paribas, Société Générale, Natixis, Crédit Agricole Corporate and Investment Bank and Crédit Industriel et Commercial, as arrangers, and BNP Paribas, as the security agent.

The First Lien Facility Agreement was amended and restated in July 2013, August 2015, June 2017 and November 2019.

The First Lien Facility Agreement is scheduled to mature in December 2022.

Indebtedness under the First Lien Facility Agreement bears interest at a floating rate of LIBOR plus a margin that increases by 0.5 % each year to a maximum rate of LIBOR plus 5.75 %.

The current interest rate is LIBOR plus 4.75 %.

Interest on the First Lien Facility Agreement is payable semi-annually in arrears on June 30 and December 31 of each calendar year.

Ninety-five percent of the Company's obligations under the First Lien Facility Agreement are guaranteed by Bpifrance Assurance Export S.A.S.

("BPIFAE"), the French export credit agency.

The Company's obligations under the First Lien Facility Agreement are guaranteed on a senior secured basis by all of its domestic subsidiaries and are secured by a first priority lien on substantially all of the assets of the Company and its domestic subsidiaries (other than their FCC licenses), including patents and trademarks, 100 % of the equity of the Company's domestic subsidiaries and 65 % of the equity of certain foreign subsidiaries.

As previously discussed, the Company received a loan under the CARES Act in April 2020.

Due to restrictions limiting the Company's ability to incur indebtedness, the execution of this loan required a waiver under the First Lien Facility Agreement, which was approved by the Company's senior lenders.

The First Lien Facility Agreement contains customary events of default and requires that the Company satisfy various financial and non-financial covenants, including the following:

• The Company's capital expenditures do not exceed $ 15.0 million per year;

The carrying value is net of deferred financing costs and any discounts to the loan amounts at issuance, including accretion.

2019 Facility Agreement

In November 2019, the Company entered into a $ 199.0 million facility agreement with Thermo, an affiliate of EchoStar Corporation and certain other unaffiliated lenders (the "2019 Facility Agreement").

The 2019 Facility Agreement is scheduled to mature in November 2025.

The loans under the 2019 Facility Agreement bear interest at a blended rate of 13.5 % per annum to be paid in kind (or in cash, at the option of the Company).

As previously disclosed, the Company fully paid down the remaining balance of the 2009 Facility Agreement.

As a result of this pay down, the lenders of the 2019 Facility Agreement are now senior lenders.

The Company's obligations under the 2019 Facility Agreement are guaranteed on a senior secured basis by all of its domestic subsidiaries' assets and are secured by a first priority lien on substantially all of the assets of the Company and its domestic subsidiaries (other than their FCC licenses), including patents and trademarks, 100 % of the equity of the Company's domestic subsidiaries and 65 % of the equity of certain foreign subsidiaries.

The cash proceeds from this loan were net of a 3 %, or $ 6.0 million, original issue discount (the "OID").

A portion of this OID was recorded as a debt discount of $ 4.0 million.

This debt discount was netted against the principal amount of the loan and is being accreted using an effective interest method to interest expense over the term of the loan.

As additional consideration for the loan, the Company issued the lenders warrants to purchase 124.5 million shares of voting common stock at an exercise price of $ 0.38 per share.

The Company determined that the warrants were equity instruments and recorded them as a part of stockholders’ equity.

A portion of the fair value of the warrants was recorded as a debt discount of $ 15.8 million.

This debt discount was netted against the principal amount of the loan and is being accreted using an effective interest method to interest expense over the term of the loan.

All of the warrants issued to the lenders were exercised before their expiration date on March 31, 2021;

115.0 million of the warrants were exercised during 2021.

The proceeds to the Company for these warrants totaled $ 47.3 million.

The 2019 Facility Agreement contains customary events of default and requires that the Company satisfy various financial and non-financial covenants, including the following:

• The Company's capital expenditures do not exceed $ 25.0 million for 2021 and $ 15.0 million for 2022, excluding capital expenditures for network upgrades associated with the Terms Agreement;

• The Company's expenditures in connection with its spectrum rights do not exceed $ 20.0 million;

• The Company maintains at all times a minimum liquidity balance of $ 3.6 million;

• The Company achieves for each period the following minimum adjusted consolidated EBITDA (as defined in the First Lien Facility Agreement) (amounts in thousands):

• The Company achieves for each period the following minimum adjusted consolidated EBITDA (as defined in the 2019 Facility Agreement) (amounts in thousands):

Period Minimum Amount

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• The Company maintains a minimum debt service coverage ratio of 0.90 :1;

• The Company maintains a maximum net debt to adjusted consolidated EBITDA ratio of 3.96 :1 for the December 31, 2020 measurement period and 2.50 :1 for the four semi-annual measurement periods leading up to December 31, 2022;

• The Company maintains a minimum interest coverage ratio of 3.63 :1 for the December 31, 2020 measurement period, increasing gradually each semi-annual period until the requirement equals 5.25 :1 for the two semi-annual measurement periods leading up to December 31, 2022;

• The Company maintains a maximum net debt to adjusted consolidated EBITDA ratio of 2.75 ;

• The Company maintains a minimum interest coverage ratio of 3.94 :1 for the December 31, 2021 measurement period and 4.73 :1 for the two semi-annual measurement periods leading up to December 31, 2022;

• The Company makes mandatory prepayments in specified circumstances and amounts, including if the Company generates excess cash flow, monetizes its spectrum rights, receives the proceeds of certain asset dispositions or receives more than $ 145.0 million from the sale of additional debt or equity securities.

Additionally, the covenants in the First Lien Facility Agreement limit the Company's ability to, among other things, incur or guarantee additional indebtedness;

Additionally, the covenants in the 2019 Facility Agreement limit the Company's ability to, among other things, incur or guarantee additional indebtedness;

make certain investments, acquisitions or capital expenditures above certain agreed levels;

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and transfer or sell assets.

In calculating compliance with the financial covenants of the First Lien Facility Agreement, the Company may include certain cash funds contributed to the Company from the issuance of the Company's common stock and/or subordinated indebtedness.

In anticipation of business strategies related to projected capital expenditures and potential vendor financing in connection with fulfilling our obligations under the Terms Agreement, as well as the termination of the Globalstar pension plan and expected redemption of the 2013 8.00 % Notes, the Company received waivers from its senior lenders in August 2021 and January 2022 to permit such transactions.

In calculating compliance with the financial covenants of the 2019 Facility Agreement, the Company may include certain cash funds contributed to the Company from the issuance of the Company's common stock and/or subordinated indebtedness.

These funds are referred to as “Equity Cure Contributions” and may be used to achieve compliance with financial covenants through maturity.

If the Company violates any financial covenants and is unable to obtain a sufficient Equity Cure Contribution or obtain a waiver, it would be in default under the First Lien Facility Agreement and payment of the indebtedness could be accelerated.

The acceleration of the Company's indebtedness under one agreement may permit acceleration of indebtedness under other agreements that contain cross-acceleration provisions.

As of December 31, 2020, the Company was in compliance with respect to the covenants of the First Lien Facility Agreement.

The First Lien Facility Agreement requires mandatory prepayments of principal with any Excess Cash Flow (as defined and calculated in the First Lien Facility Agreement) on a semi-annual basis.

During 2020, the Company was required to pay $ 0.3 million and $ 3.1 million to its first lien lenders resulting from the Excess Cash Flow calculations as of December 31, 2019 and June 30, 2020, respectively.

The Company expects to make another prepayment in 2021 from Excess Cash Flow as of December 31, 2020.

These payments reduce future principal payment obligations.

The First Lien Facility Agreement also requires the Company to maintain a debt service reserve account, which is pledged to secure all of the Company's obligations under the First Lien Facility Agreement.

The required balance in the debt service reserve account is fixed and must equal at least $ 50.9 million.

As of December 31, 2020, the balance in the debt service reserve

account was approximately $ 51.1 million and is classified as non-current restricted cash on the Company's consolidated balance sheet as it will be used towards the final scheduled payment due upon maturity of the First Lien Facility Agreement in December 2022.

The amended and restated First Lien Facility Agreement includes a requirement that the Company raise no less than $ 45.0 million from the sale of equity prior to March 30, 2021.

These proceeds will be applied towards the principal payment due on June 30, 2021 and then, if applicable, to the next scheduled principal payments.

The Company currently expects to fulfill this requirement with proceeds from the exercise of the remaining warrants issued to the Second Lien Facility Agreement lenders in November 2019.

The Company will access equity and debt capital markets, if necessary to fund any remaining requirements not satisfied through warrant proceeds.

In December 2019, the Company received proceeds of $ 3.6 million from the exercise of a portion of warrants issued to the Second Lien Facility Agreement lenders, which is retained in the equity proceeds account under the First Lien Facility Agreement and is recorded in current restricted cash on the Company's consolidated balance sheet as of December 31, 2020.

Since December 31, 2020, certain of the Second Lien Facility Agreement lenders exercised approximately 5.5 million warrants at a price of $ 0.38 per share, the proceeds of which will be used to fulfill a portion of the $ 45.0 million requirement discussed above.

Subordinated Loan Agreement

In July 2019, the Company entered into a Subordinated Loan Agreement (the “Subordinated Loan Agreement”) with Thermo Funding Company LLC (an affiliated entity to Thermo), and certain unaffiliated parties.

Under the Subordinated Loan Agreement, the Company received $ 62.0 million to fund the June 30, 2019 payment of interest and principal under the Company’s First Lien Facility Agreement and for certain other purposes.

The Subordinated Loan Agreement accrued interest at 15 % per annum, which was capitalized and added to the outstanding principal in lieu of cash payments.

Prior to repayment, the Subordinated Loan Agreement had accrued a total of $ 4.0 million.

In November 2019, the Subordinated Loan Agreement was paid in full from a portion of the proceeds from the Second Lien Facility Agreement (see further discussion below).

For further discussion on the accounting treatment of the Subordinated Loan Agreement, refer to the Globalstar Annual Report on Form 10-K for the year ended December 31, 2019.

Second Lien Facility Agreement

In November 2019, the Company entered into a $ 199.0 million Second Lien Facility Agreement with Thermo, EchoStar Corporation and certain other unaffiliated lenders.

The Second Lien Facility Agreement is scheduled to mature in November 2025.

The loans under the Second Lien Facility Agreement bear interest at a blended rate of 13.5 % per annum to be paid in kind (or in cash at the option of the Company, subject to restrictions in the First Lien Facility Agreement).

The cash proceeds from this loan were net of a 3 %, or $ 6.0 million, original issue discount (the "OID").

A portion of this OID was recorded as a debt discount of $ 4.0 million.

This debt discount was netted against the principal amount of the loan and is being accreted using an effective interest method to interest expense over the term of the loan.

As additional consideration for the loan, the Company issued the lenders warrants to purchase 124.5 million shares of voting common stock at an exercise price of $ 0.38 per share.

These warrants expire on March 31, 2021.

As of December 31, 2020, approximately 115.0 million warrants remain outstanding.

Since December 31, 2020, an additional 5.5 million warrants were exercised at a price of $ 0.38 per share.

The Company determined that the warrants were equity instruments and recorded them as a part of stockholders’ equity.

A portion of the warrants fair value was recorded as a debt discount of $ 15.8 million.

This debt discount was netted against the principal amount of the loan and is being accreted using an effective interest method to interest expense over the term of the loan.

As previously discussed, the Company received a loan under the CARES Act in April 2020.

Due to restrictions limiting the Company's ability to incur indebtedness, the execution of this loan required a waiver under the Second Lien Facility Agreement, which was approved by the Company's second lien lenders.

The Second Lien Facility Agreement contains customary events of default and requires that the Company satisfy various financial and non-financial covenants.

Unless shown below, covenants under the Second Lien Facility Agreement are consistent with the covenants under the Company's First Lien Facility Agreement (discussed above).

The financial covenants in the Second Lien Facility Agreement require the Company to:

• maintain at all times a minimum liquidity balance of $ 3.6 million;

• achieve for each period the following minimum adjusted consolidated EBITDA (as defined in the Second Lien Facility Agreement) (amounts in thousands):

Period Minimum Amount

1/1/20-6/30/20 $ 16,400

7/1/20-12/31/20 $ 21,400

1/1/21-6/30/21 $ 18,500

7/1/21-12/31/21 $ 24,100

• maintain a minimum debt service coverage ratio of 0.90 :1;

• maintain a maximum net debt to adjusted consolidated EBITDA ratio of 4.36 :1 for the December 31, 2020 measurement period and 2.75 :1 for the four semi-annual measurement periods leading up to December 31, 2022;

• maintain a minimum interest coverage ratio of 3.27 :1 for the December 31, 2020 measurement period, increasing gradually each semi-annual period until the requirement equals 4.73 :1 for the two semi-annual measurement periods leading up to December 31, 2022.

As of December 31, 2020, the Company was in compliance with the covenants of the Second Lien Facility Agreement.

The portion of the Second Lien Facility Agreement proceeds that was used to repay the Subordinated Loan Agreement was considered a debt extinguishment pursuant to applicable accounting guidance.

See discussion in the Subordinated Loan Agreement section above for further information.

The remaining Second Lien Facility Agreement was recorded at its carrying value at inception.

The Company evaluated the various embedded derivatives within the Second Lien Facility Agreement related to certain contingently exercisable put options.

If the Company violates any financial covenants and is unable to obtain a sufficient Equity Cure Contribution or obtain a waiver, it would be in default under the 2019 Facility Agreement and payment of the indebtedness could be accelerated.

As of December 31, 2021, the Company was in compliance with the covenants of the 2019 Facility Agreement.

The 2019 Facility Agreement requires mandatory prepayments of principal with any Excess Cash Flow (as defined and calculated in the 2019 Facility Agreement) on a semi-annual basis.

If the Company generates Excess Cash Flow in 2022, we will be required to make such prepayments.

These payments would reduce future principal payment obligations.

The Company evaluated the various embedded derivatives within the 2019 Facility Agreement related to certain contingently exercisable put options.

Due to the substantial discount upon issuance, as calculated under applicable accounting guidance, these prepayment features were required to be bifurcated and separately valued.

The Company initially recorded the compound embedded derivative liability as a non-current liability on its consolidated balance sheets with a corresponding debt discount, which is netted against the face value of the Second Lien Facility Agreement.

The Company is accreting the debt discount associated with the compound embedded derivative liability to interest expense through the maturity date using an effective interest rate method.

Thermo's participation in the Second Lien Facility Agreement was reviewed and approved on the Company's behalf by the Strategic Review Committee, which is a committee of disinterested and independent directors who are represented by independent legal counsel.

Refer to Note 7:

Derivatives and Note 8:

Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2019 Facility Agreement.

Thermo's participation in the 2019 Facility Agreement was reviewed and approved by the Company's Strategic Review Committee, which is a committee of disinterested and independent directors who are represented by independent legal counsel.

Related Party Transactions for further information on the role and responsibility of the Strategic Review Committee.

Thermo Loan Agreement

In connection with the amendment and restatement of the First Lien Facility Agreement in July 2013, the Company amended and restated its loan agreement with Thermo (the “Loan Agreement”).

The Loan Agreement was convertible into shares of common stock at a conversion price of $ 0.69 (as adjusted) per share of common stock.

The Loan Agreement accrued interest at 12 % per annum, which was capitalized and added to the outstanding principal in lieu of cash payments.

On February 19, 2020, Thermo converted the entire principal balance outstanding under the Loan Agreement, which totaled $ 137.4 million and included accrued interest since inception of $ 93.9 million.

This conversion resulted in the issuance of 200.1 million shares of common stock.

In accordance with applicable accounting guidance for debt extinguishment with related parties, upon conversion, the remaining debt discount was written off and recorded as a contribution to capital though equity and the associated derivative liability was marked to market at the conversion date and then extinguished through equity as a contribution to capital.

The Company evaluated the various embedded derivatives within the Loan Agreement (See Note 8:

Fair Value Measurements for additional information about the embedded derivative in the Loan Agreement).

The Company determined that the conversion option and the contingent put feature upon a fundamental change required bifurcation from the Loan Agreement.

The Company recorded this compound embedded derivative liability as a non-current liability on its consolidated balance sheets with a corresponding debt discount, which was netted against the face value of the Loan Agreement.

Prior to conversion in February 2020, the Company was accreting the debt discount associated with the compound embedded derivative

liability to interest expense through the maturity of the Loan Agreement using an effective interest rate method.

The stated maturity was used as the expected term for purposes of amortizing the debt discount, despite the Company's expectation of an earlier conversion, based on the applicable accounting rules.

8.00 % Convertible Senior Notes Issued in 2013

In 2013, the Company issued $ 54.6 million aggregate principal amount of its 2013 8.00 % Notes.

The 2013 8.00 % Notes are convertible into shares of common stock at a conversion price of $ 0.69 per share of common stock, as adjusted pursuant to the terms of the indenture (the “Indenture”).

In May 2013, the Company issued $ 54.6 million aggregate principal amount of its 2013 8.00 % Notes.

The 2013 8.00 % Notes are convertible into shares of common stock at a conversion price of $ 0.69 per share of common stock, as adjusted pursuant to the terms of the Fourth Supplemental Indenture between the Company and U.S.

Bank National Association, as Trustee (the “Indenture”).

The 2013 8.00 % Notes are senior unsecured debt obligations that mature on April 1, 2028, subject to various call and put features, and bear interest at a rate of 8.00 % per annum.

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Since issuance, $ 55.5 million of principal amount of the 2013 8.00 % Notes have been converted resulting in the issuance of 98.6 million shares of Globalstar common stock.

The Company may redeem the 2013 8.00 % Notes, with the prior approval of the majority lenders under the First Lien Facility Agreement and the Second Lien Facility Agreement, in whole or in part, at a price equal to the principal amount of the 2013 8.00 % Notes to be redeemed plus all accrued and unpaid interest thereon.

The Company expects to redeem the 2013 8.00 % Notes, in whole or in part, at a price equal to the principal amount of the 2013 8.00 % Notes to be redeemed plus all accrued and unpaid interest thereon.

A holder of the 2013 8.00 % Notes has the right to require the Company to purchase some or all of the 2013 8.00 % Notes held by it on April 1, 2023, or at any time if there is a Fundamental Change (as defined in the Indenture), at a price equal to the principal amount of the 2013 8.00 % Notes to be purchased plus accrued and unpaid interest.

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The debt discount has been fully accreted as of September 30, 2017.

Payroll Protection Program Loan

In April 2020, the Company sought relief under the CARES Act and received a $ 5.0 million loan under the PPP.

The PPP Loan is an unsecured debt obligation and is scheduled to mature in April 2022.

As permitted under the CARES Act, the Company applied for loan forgiveness in December 2020, inclusive of both principal and accrued interest, in accordance with the terms of the CARES Act, based on payroll costs incurred since disbursement of the PPP Loan.

Any amount not forgiven by the Small Business Administration (the "SBA") is subject to an interest rate of 1.00% per annum commencing on the date of the PPP Loan.

Principal and interest payments due under the PPP Loan are generally deferred until the review and approval of any forgiveness is made by the SBA, subject to the PPP rules.

Furthermore, the Company's first and second lien lenders would require the Company to accelerate the repayment of any portion of the loan amount that is not forgiven.

Refer to Note 7:

Derivatives and Note 8:

Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2013 8.00 % Notes.

The amount by which the if-converted value of the 2013 8.00 % Notes exceeded the principal amount at December 31, 2021, assuming conversion at the closing price of the Company's common stock on that date of $ 1.16 per share, is approximately $ 1.2 million.

In February 2022, the Company notified the holders of the 8.00 % Notes of its intention to redeem all of the outstanding amount of principal and interest, totaling $ 1.5 million.

This redemption is expected to occur in March 2022 and be paid in cash if the holders do not convert their 8.00 % Notes prior to the redemption date.

2009 Facility Agreement

In 2009, the Company entered into a facility agreement with a syndicate of bank lenders, including BNP Paribas, Société Générale, Natixis, Crédit Agricole Corporate and Investment Bank and Crédit Industriel et Commercial, as arrangers, and BNP Paribas, as the security agent (the "2009 Facility Agreement").

The 2009 Facility Agreement was amended and restated in July 2013, August 2015, June 2017 and November 2019.

The 2009 Facility Agreement was fully repaid in November 2021 prior to its scheduled maturity in December 2022.

Indebtedness under the 2009 Facility Agreement bore interest at a floating rate of LIBOR plus a margin as defined in the 2009 Facility Agreement.

The 2009 Facility Agreement required mandatory prepayments of principal with any Excess Cash Flow (as defined and calculated in the 2009 Facility Agreement) on a semi-annual basis.

During 2021, the Company was required to pay $ 4.4 million to the lenders resulting from the Excess Cash Flow calculation as of December 31, 2020.

This payment reduced future principal payment obligations.

The amended and restated 2009 Facility Agreement included a requirement that the Company raise no less than $ 45.0 million from the sale of equity prior to March 30, 2021.

The Company fulfilled this requirement in March 2021 with proceeds from the exercise of all the warrants issued to the 2019 Facility Agreement lenders in November 2019.

The Company received proceeds totaling $ 47.3 million, of which $ 3.6 million was received in December 2019 and the remaining $ 43.7 million was received during the first quarter of 2021.

In April 2021, these proceeds were used to pay the remaining scheduled principal payments due in each of June 2021 and December 2021.

In June and September 2021, the Company received two advance payments of $ 37.5 million each from a customer (see further discussion in Note 2:

The Company used these proceeds to pay a portion of the remaining amount due under the 2009 Facility Agreement.

In November 2021, the Company repaid the final outstanding amount under the 2009 Facility Agreement totaling $ 60.3 million using cash on hand and restricted cash;

the 2009 Facility Agreement required the Company to maintain a debt service reserve account, which was pledged to secure all of the Company's obligations under the 2009 Facility Agreement, and was previously classified as restricted cash on its consolidated balance sheet.

In connection with the debt prepayments and final payoff made during 2021, the Company wrote off $ 4.3 million in deferred financing costs, representing the portion of debt prepaid during 2021.

For the final pay off in November 2021, the Company recorded a gain on extinguishment of debt totaling $ 1.3 million on its consolidated statements of operations representing the difference between the net carrying amount prior to extinguishment (including unamortized deferred financing costs) and the reacquisition price of the debt (primarily including of the partial refund of premiums).

As a result of the early pay off of the 2009 Facility Agreement, in December 2021, the Company received a partial refund of premiums previously paid totaling $ 2.6 million.

Paycheck Protection Program Loan

In April 2020, the Company sought relief under the CARES Act and received a $ 5.0 million loan under the Paycheck Protection Program ("PPP"), (the "PPP Loan").

In June 2021, the Small Business Administration ("SBA") approved the Company's request for forgiveness of all amounts outstanding under the PPP Loan, including accrued interest.

Prior to forgiveness, the PPP Loan was an unsecured debt obligation and was scheduled to mature in April 2022.

Any amount not forgiven by the Small Business Administration (the "SBA") was subject to an interest rate of 1.00% per annum commencing on the date of the PPP Loan.

The Company evaluated the applicable accounting guidance relative to the PPP Loan and accounted for the proceeds of the PPP Loan as debt under ASC 470.

The Company expects the PPP Loan to be forgiven, but cannot provide assurance of such forgiveness until it has been approved by the Company's lender and the SBA.

Any portion of the PPP Loan that is forgiven will be recorded in the Company's condensed consolidated statement of operations as a gain on extinguishment of debt in the period of forgiveness.

As the entire principal balance, including accrued interest, was forgiven in June 2021, the Company recorded a gain on extinguishment of debt totaling $ 5.0 million on its consolidated statements of operations for the period ended June 30, 2021.

Debt maturities

Annual debt maturities for each of the five years following December 31, 2021 and thereafter are as follows (in thousands):

2021 $ 58,824

Total $ 265,219

Amounts in the above table are calculated based on amounts outstanding at December 31, 2021, and therefore exclude paid-in-kind interest payments that will be made in future periods.

Subsequent Event

In February 2022, the Company entered into a satellite procurement agreement (see Note 9:

Commitments and Contingencies for further discussion).

This agreement provides for payment deferrals of milestone payments from February 2022 through August 2022, at a 0 % interest rate.

In August 2022 all deferred payments will become due by which time Globalstar intends to complete a senior secured financing.

This financing is intended to provide sufficient proceeds for the construction and launch of the satellites and the Company expects to refinance its current 2019 Facility Agreement concurrent with or after the financing.

The Company has identified various embedded derivatives resulting from certain features in the Company’s existing borrowing arrangements, requiring recognition on its consolidated balance sheets.

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The following table discloses the fair values of the derivative instruments on the Company’s consolidated balance sheets (in thousands):

December 31, 2020 December 31, 2019

Derivative assets:

Compound embedded derivative with the Second Lien Facility Agreement $ 286 $ —

Compound embedded derivative with the 2019 Facility Agreement $ 484 $ 286

Total derivative assets $ 484 $ 286

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$ ( 1,364 ) $ ( 123 )

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 $ ( 1,364 ) $ ( 123 )

As of December 31, 2020, the derivative asset recorded for the Compound embedded derivative with the Second Lien Facility Agreement was included in Intangible and other assets, net on the Company's consolidated balance sheets.

The following table discloses the changes in value recorded as derivative gain in the Company’s consolidated statement of operations (in thousands):

The derivative asset recorded for the Compound embedded derivative with the 2019 Facility Agreement and the derivative liability recorded for the Compound embedded derivative with the 2013 8.00 % Notes are included in Intangible and other assets, net and other non-current liabilities, respectively, on the Company's consolidated balance sheets.

The following table discloses the changes in value recorded as derivative (loss) gain in the Company’s consolidated statement of operations (in thousands):

Year ended December 31,

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Compound embedded derivative with the 2013 8.00 % Notes

$ ( 1,241 ) $ 399 $ 235

Compound embedded derivative with the Loan Agreement with Thermo — 212 144,838

Compound embedded derivative with the Second Lien Facility Agreement 2,286 — —

Total derivative gain $ 2,897 $ 145,073 $ 81,120

Compound embedded derivative with the 2019 Facility Agreement 198 2,286 —

Total derivative (loss) gain $ ( 1,043 ) $ 2,897 $ 145,073

The fair value of each embedded derivative is marked-to-market at the end of each reporting period, or more frequently as deemed necessary, with any changes in value reported in its consolidated statements of operations and its consolidated statements of cash flows as an operating activity.

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During the first quarter of 2020, the compound embedded derivative with the Loan Agreement with Thermo was extinguished.

Long-Term Debt and Other Financing Arrangements for further discussion.

Compound Embedded Derivative with the Second Lien Facility Agreement

As a result of certain contingently exercisable put features within the Second Lien Facility Agreement, the Company initially recorded a compound embedded derivative liability on its consolidated balance sheet with a corresponding debt discount that is netted against the face value of the Second Lien Facility Agreement.

Compound Embedded Derivative with the 2019 Facility Agreement

As a result of certain contingently exercisable put features within the 2019 Facility Agreement, the Company initially recorded a compound embedded derivative liability on its consolidated balance sheet with a corresponding debt discount that is netted against the face value of the 2019 Facility Agreement.

The Company determined the fair value of the compound embedded derivative liability using a probability weighted discounted cash flow model.

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(Level 1) (Level 2) (Level 3) Total

Compound embedded derivative with the Second Lien Facility Agreement $ — $ — $ 286 $ 286

Compound embedded derivative with the 2019 Facility Agreement $ — $ — $ 484 $ 484

Total assets measured at fair value $ — $ — $ 484 $ 484

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(Level 1) (Level 2) (Level 3) Total

Compound embedded derivative with 8.00 % Notes Issued in 2013

Compound embedded derivative with the 2019 Facility Agreement $ — $ — $ 286 $ 286

Total assets measured at fair value $ — $ — $ 286 $ 286

Compound embedded derivative with the 2013 8.00 % Notes

$ — $ — $ ( 123 ) $ ( 123 )

Compound embedded derivative with the Loan Agreement with Thermo — — ( 1,270 ) ( 1,270 )

Compound embedded derivative with the Second Lien Facility Agreement — — ( 2,000 ) ( 2,000 )

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

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Derivatives for further discussion.

2013 8.00 % Notes and Loan Agreement with Thermo

2013 8.00 % Notes

The significant quantitative Level 3 inputs utilized in the valuation models are shown in the tables below:

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0.5 % $ 0.69 18 % $ 1.16

During the first quarter of 2020, the compound embedded derivative with the Loan Agreement with Thermo was extinguished and, therefore, as of December 31, 2020, the value was zero .

Long-Term Debt and Other Financing Arrangements and Note 7:

Derivatives for further discussion.

December 31, 2020:

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0.1 % $ 0.69 19 % $ 0.34

Compound embedded derivative with the Loan Agreement with Thermo 70 - 130 %

1.6 % $ 0.69 27 % $ 0.52

Second Lien Facility Agreement

The compound embedded derivative with the Second Lien Facility Agreement is valued using a probability weighted discounted cash flow model.

The most significant observable input used in the fair value measurement is the discount yield, which was 13 % and 18 % at December 31, 2020 and 2019, respectively.

Fluctuation in the Company’s stock price is a significant driver of the changes in the compound embedded derivative with the 2013 8.00 % Notes during each reporting period.

As the stock price increases, the value to the holder of the instrument generally increases, thereby increasing the liability on the Company’s consolidated balance sheet.

The Company's stock price increased over 200 % from December 31, 2020 to December 31, 2021, driving a significant increase in the liability at December 31, 2021.

Stock price volatility is also a significant input used in the fair value measurement of the compound embedded derivative with the 2013 8.00 % Notes.

The simulated fair value of this liability is sensitive to changes in the expected volatility of the Company's stock price.

Increases in expected volatility generally result in a higher fair value measurement.

2019 Facility Agreement

The compound embedded derivative with the 2019 Facility Agreement is valued using a probability weighted discounted cash flow model.

The most significant observable input used in the fair value measurement is the discount yield, which was 13 % at December 31, 2021 and 2020, respectively.

As of December 31, 2021, the discount yield utilized in the valuation was lower than the blended interest rate of the underlying debt.

As a result, the features embedded in the underlying debt resulted in an asset for the Company.

Decreases in the discount yield generally will result in a lower fair value measurement in the model.

When the discount yield decreases and is lower than the blended interest rate of the underlying debt, the fair value of the derivative asset increases.

The unobservable inputs used in the fair value measurement include the probability of change of control and the estimated timing and amounts of cash flows associated with certain mandatory prepayments within the debt agreement.

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Derivative adjustment related to conversions — 1,058

Issuance of compound embedded derivative with the Second Lien Facility Agreement — ( 2,000 )

Unrealized gain, included in derivative gain 2,897 145,073

Unrealized (loss) gain, included in derivative (loss) gain ( 1,043 ) 2,897

Balances at end of period $ ( 880 ) $ 163

Fair Value of Debt Instruments

The Company believes it is not practicable to determine the fair value of the First Lien Facility Agreement, the Second Lien Facility Agreement and the PPP Loan without incurring significant additional costs.

Unlike typical long-term debt, interest rates and other terms for these instruments are not readily available and generally involve a variety of factors, including due diligence by the debt holders.

The following table sets forth the carrying values and estimated fair values of the Company's other debt instruments, which are classified as Level 3 financial instruments (in thousands):

The Company believes it is not practicable to determine the fair value of the 2019 Facility Agreement, the 2009 Facility Agreement and the PPP Loan without incurring significant additional costs.

Unlike typical long-term debt, certain terms for these instruments are not readily available and generally involve a variety of factors, including due diligence by the debt holders.

The following table sets forth the carrying values and estimated fair values of the Company's other debt instrument, which is classified as Level 3 financial instruments (in thousands):

December 31, 2021 December 31, 2020

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

Loan Agreement with Thermo $ — $ — $ 116,543 $ 88,886

2013 8.00 % Notes

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Nonrecurring Fair Value Measurements

Compound Embedded Derivative with the Loan Agreement with Thermo

The Company follows the authoritative guidance regarding non-financial assets and liabilities that are remeasured at fair value on a nonrecurring basis.

On February 19, 2020, Thermo converted the entire principal balance outstanding under the Loan Agreement with Thermo into shares of common stock.

See further discussion in Note 6:

Long-Term Debt and Other Financing Arrangements.

As a result of the conversion, the Company wrote off the total fair value of the compound embedded derivative liability with the Loan Agreement with Thermo based on the derivative value on the conversion date of $ 1.1 million.

This embedded derivative was classified as a Level 3 fair value measurement on the Company's consolidated balance sheet.

The significant quantitative Level 3 inputs utilized in the valuation model are shown in the table below:

February 19, 2020

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

Long-Lived Assets

Long-lived assets and intangible and other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

During 2019, the Company reclassified its former gateway location in Nicaragua from held and used to held for sale.

This asset was originally recorded at a total fair value of $ 1.6 million prior to the reduction in its value, resulting in a total loss of $ 1.1 million during 2019.

As of December 31, 2019, the fair value less estimated cost to sell was $ 0.5 million.

During the fourth quarter of 2020, the Company signed a contract for the sale of this property;

the final selling price (net of estimated cost to sell) is $ 0.3 million and, accordingly, the Company recorded an additional impairment totaling $ 0.2 million during 2020.

During the third quarter of 2021, the Company wrote off approximately $ 0.2 million of construction in progress related to unsatisfactory work that did not meet internal testing requirements and could not be used for its intended purpose.

The fair value of the assets included internal and external direct costs associated with the construction in progress balance.

As of December 31, 2020, the Company's former gateway location in Nicaragua was classified as held for sale.

During the fourth quarter of 2020, the Company signed a contract for the sale of this property and the Company wrote down the value of the asset by $ 0.2 million, bringing the value to be the final selling price (net of estimated cost to sell).

Additionally, during the fourth quarter of 2020, the Company wrote down $ 0.2 million related to of the ground portion of construction in progress for one of its gateways resulting from an analysis made over these balances.

COMMITMENTS AND CONTINGENCIES

Terms Agreement

The Terms Agreement sets forth the primary terms for the Company to provide services to the customer and incur costs related primarily to new gateways and upgrades at existing gateways, satellite launch costs and lease costs.

Under this agreement, the customer has made advance payments to the Company for the services expected to be delivered under the Terms Agreement.

To the extent the Company does not provide such services, it will be required to refund the amounts to the customer.

Refer to Note 2:

Revenue, Note 3:

Leases and Note 4:

Property and Equipment for further discussion.

Satellite Procurement Agreement

In February 2022, the Company entered into a satellite procurement agreement (the "Procurement Agreement") with Macdonald, Dettwiler and Associates Corporation pursuant to which Globalstar will acquire 17 satellites that will replenish Globalstar's existing constellation of satellites and ensure long-term continuity of its mobile satellite services.

Globalstar is acquiring the satellites to provide continuous satellite services to the potential customer under the Terms Agreement, as well as services to Globalstar’s current and future customers.

Globalstar maintains the option to acquire additional satellites under the contract.

Globalstar plans to contract separately for launch services and launch insurance for the new satellites.

The total contract price for the initial 17 satellites is $ 327.0 million;

Globalstar has the option to purchase additional satellites at a lower per unit cost, subject to certain conditions.

The satellites are expected to be manufactured during the next three years Under the Terms Agreement, subject to certain conditions, the counterparty is required to reimburse 95 % of the capital expenditures and certain other costs incurred for this contract.

Network Obligations

The Company has purchase commitments with certain vendors related to the procurement, deployment and maintenance of the Company's network.

As of December 31, 2020, the Company's remaining purchase obligations under certain of these noncancellable commitments are approximately $ 8.1 million;

the timing of payments is driven by work performed under the contracts over the remaining contract periods, which range from approximately one to three years .

As of December 31, 2021, the Company's remaining purchase obligations under certain of these noncancelable commitments are approximately $ 6.8 million;

the timing of payments is driven by work performed under the contracts over the remaining contract periods, which range from approximately one to two years .

Inventory Purchase Commitments

The Company has inventory purchase commitments with its third party product manufacturers in the normal course of business.

These commitments are generally non-cancelable and are based on sales forecasts.

These commitments are generally noncancelable and are based on sales forecasts.

The Company estimates that its open inventory purchase commitments as of December 31, 2021 were approximately $ 17.3 million.

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The balance at December 31, 2021 was $ 5.0 million and is recorded in prepaid expenses and other current assets on the Company's consolidated balance sheet as the required reserve is held with the credit card processor.

Business Economic Loss Claim

In May 2018, the Company concluded the settlement of a business economic loss claim in which it was an absent member in a tort class action lawsuit.

The Company received proceeds of $ 7.4 million, net of legal fees, related to this settlement.

The Company received the two installments of $ 3.7 million each in January 2019 and January 2020.

Customer Bankruptcy Claim

During 2020, one of the Company's customers filed for Chapter 11 of the United States Bankruptcy Code resulting in the Company reserving all open receivables due from the customer.

This customer's plan of reorganization was confirmed by the bankruptcy court and the order was issued in January 2021.

The cure payment is expected to be made to Globalstar in early 2021 totaling $ 0.3 million.

As of December 31, 2020, the confirmation was not yet made and accordingly the Company is accounting for this matter as a gain contingency and has recorded such gain in 2021, when the contingency was resolved and payment was made.

Other Litigation

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Accrued compensation and benefits $ 4,687 $ 4,270

Accrued satellite and ground costs 6,195 69

Accrued property and other taxes 4,053 4,702

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Accrued telecommunications expenses 705 1,284

Accrued inventory 499 702

Accrued tariffs 1,795 1,795

Accrued inventory and tariffs 1,474 2,294

Short-term lease liability 2,501 1,330

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Accrued compensation and benefits include primarily accrued vacation, payroll, benefits and taxes.

The increase in this balance from December 31, 2019 to 2020 is due primarily to higher accrued vacation balances as well as deferred payroll taxes (as discussed below).

Accrued tariffs represent amounts payable to U.S Customs and Border Protection for a ruling issued in September 2019 related to the classification of certain of the Company's core products imported from China.

The Company plans on filing a protest against this ruling to challenge the classification and reduce the amounts owed.

Other accrued expenses include primarily vendor services, warranty reserve, occupancy costs and accrued network costs.

For the year ended December 31, 2019, other accrued expenses also included the estimated payroll shortfall under the Cooperative Endeavor Agreement with the Louisiana Department of Economic Development.

Accrued inventory and tariffs includes amounts payable to U.S Customs and Border Protection for a ruling issued in September 2019 related to the classification of certain of the Company's core products imported from China.

During 2021, pursuant to regulatory developments, the Company reversed a portion of this accrual for potential tariffs owed on imports from China made prior to a ruling by the U.S Customs and Border Protection in September 2019 that are no longer due.

Other accrued expenses include primarily vendor services, warranty reserve and occupancy costs.

The following is a summary of the activity in the warranty reserve account, which is included in other accrued expenses above (in thousands):

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Other non-current liabilities consist of the following (in thousands):

Asset retirement obligation $ 1,629 $ 1,467

Deferred tax liability 755 395

Deferred payroll taxes under CARES Act 423 —

Employee benefit obligations (Note 12) $ 3,289 $ 3,650

Asset retirement obligations (Note 1) 2,461 1,629

Compound embedded derivative with the 2013 8.00 % Notes (Note 7 and Note 8)

Deferred tax liability (Note 13) 296 755

Foreign tax contingencies 474 633

Deferred payroll taxes under CARES Act — 423

Total other non-current liabilities $ 7,887 $ 7,221

Asset retirement obligations reflect the estimated liability arising from legal obligations associated with the retirement of certain long-lived assets;

for further discussion, refer to Note 1:

Summary of Significant Accounting Policies.

Deferred payroll taxes under the CARES Act reflect the Company's employer share of social security taxes that were originally due during a portion of 2020.

The Company expects these amounts will be repaid in two installments in December 2021 and December 2022;

amounts in the table above reflect the portion due in December 2022.

The first installment was repaid in December 2021 and the remaining installment will be paid in December 2022 and classified as a current liability on the Company's consolidated balance sheet at December 31, 2021.

Foreign tax contingencies reflect primarily amounts owed by the Company's Brazilian subsidiary pursuant to refinancing programs in country.

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The expenses charged are based on actual amounts (with no mark-up) incurred by Thermo or upon allocated employee time.

The expenses charged to the Company were $ 0.6 million, $ 0.5 million, and $ 1.5 million for the periods ended December 31, 2020, 2019 and 2018, respectively.

In February 2019, the Company entered into a lease agreement with Thermo Covington, LLC for the Company's headquarters office.

Annual lease payments started at $ 1.4 million per year, increasing at a rate of 2.5 % per year, for a lease term of ten years .

During the twelve months ended December 31, 2020 and 2019, the Company incurred lease expense of $ 1.6 million and $ 1.5 million, respectively, due to Thermo under this lease agreement.

On February 19, 2020, Thermo converted the entire principal balance outstanding under the Loan Agreement resulting in the issuance of 200.1 million shares of common stock.

In July 2019, the Company entered into a Subordinated Loan Agreement, effective June 28, 2019, with Thermo and certain unaffiliated parties.

Thermo's participation in the Subordinated Loan Agreement was $ 53.8 million and $ 3.4 million of interest had accrued prior to its pay down.

In November 2019, the Company entered into the Second Lien Facility Agreement.

Thermo's participation in the Second Lien Facility Agreement was $ 95.1 million.

During the twelve months ended December 31, 2021 and 2020, the Company incurred lease expense of $ 1.6 million, respectively, associated with this lease agreement.

In November 2019, the Company entered into the 2019 Facility Agreement.

Thermo's participation in the 2019 Facility Agreement was $ 95.1 million.

This principal balance earns paid-in-kind interest at a rate of 13 % per annum.

Interest accrued since inception with respect to Thermo's portion of the debt outstanding on the Second Lien Facility Agreement was approximately $ 14.5 million, of which $ 13.4 million was accrued during the twelve months ended December 31, 2020.

In connection with the issuance of the Second Lien Facility Agreement, the holders received warrants to purchase shares of voting common stock, of which Thermo received 59.5 million warrants with an exercise price of $ 0.38 per share.

As of December 31, 2020, approximately 50.0 million warrants remain outstanding and expire on March 31, 2021.

Additionally, the First Lien Facility Agreement requires Thermo to maintain minimum and maximum ownership levels in the Company's common stock.

Interest accrued since inception with respect to Thermo's portion of the debt outstanding on the 2019 Facility Agreement was approximately $ 29.7 million, of which $ 15.2 million was accrued during the twelve months ended December 31, 2021.

In connection with the issuance of the 2019 Facility Agreement, the holders received warrants to purchase shares of voting common stock, of which Thermo received 59.5 million warrants with an exercise price of $ 0.38 per share.

Thermo exercised 9.5 million warrants in 2019 and the remaining warrants, totaling 50.0 million, during the first quarter of 2021.

No warrants were outstanding as of December 31, 2021.

Additionally, the 2019 Facility Agreement requires Thermo to maintain minimum and maximum ownership levels in the

Company's common stock.

The Company has a Strategic Review Committee that is required to remain in existence for as long as Thermo and its affiliates beneficially own forty-five percent ( 45 %) or more of Globalstar’s outstanding common stock.

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The Company's funding policy is to fund the Globalstar Plan in accordance with the Internal Revenue Code and regulations.

In each of December 2020 and 2019, the Company settled a portion of the pension liability related to retirees and terminated vested employees in the Globalstar Plan as a de-risking strategy.

The total settlements for 2020 and 2019 were $ 7.7 million and $ 1.7 million, respectively, and were paid out through the assets held in the Globalstar Plan.

The settlements resulted in a reduction to the projected benefit obligation and a corresponding decrease to plan assets as of both December 31, 2020 and 2019.

Additionally, in accordance with ASC 715 Compensation — Retirement Benefits , the Company recognized losses totaling $ 2.1 million and $ 0.5 million, respectively, and these losses are included in other income (expense) in its consolidated statement of operations during the twelve-month periods ended December 31, 2020 and 2019 associated with these settlements.

The losses represent the pro rata portion of actuarial losses that were previously deferred in other comprehensive income.

In January 2022, the Company received consent from its senior lenders to terminate the Globalstar Plan.

The Company has not yet initiated the process to terminate the Globalstar Plan, but expects to do so during 2022.

Defined Benefit Pension Obligation and Funded Status

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Interest cost 225 521

Actuarial loss 671 1,147

Actuarial (gain) loss ( 45 ) 671

Settlement — ( 7,669 )

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Funded status, end of year-net liability $ ( 3,289 ) $ ( 3,650 )

In December 2020, the Company settled a portion of the pension liability related to retirees and terminated vested employees in the Globalstar Plan as a de-risking strategy.

The total settlement for 2020 was $ 7.7 million and was paid out

through the assets held in the Globalstar Plan.

The settlement resulted in a reduction to the projected benefit obligation and a corresponding decrease to plan assets as of December 31, 2020.

Net Benefit Cost and Amounts Recognized

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Total net periodic benefit cost $ 279 $ 2,279 $ 966

In December 2020 and 2019, the Company settled a portion of the pension liability.

In accordance with ASC 715 Compensation — Retirement Benefits , the Company recognized losses totaling $ 2.1 million and $ 0.5 million, respectively, and these losses are included in other income (expense) in its consolidated statement of operations during the twelve-month periods ended December 31, 2020 and 2019 associated with these settlements.

The losses represent the pro rata portion of actuarial losses that were previously deferred in other comprehensive income.

Components of net periodic benefit cost other than the service cost component are recorded in other income (expense) in the consolidated statement of operations.

Amounts recognized in the consolidated balance sheet were as follows (in thousands):

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Net amount recognized in retained deficit $ ( 1,216 ) $ ( 1,167 )

The estimated net actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2021 is $ 0.2 million.

No amounts are expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2021 related to prior service costs or net transition obligations.

The weighted-average assumptions used to determine the benefit obligation and net periodic benefit cost were as follows:

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For 2022, the Company's expected contributions to the Globalstar Plan will be $ 0.3 million.

During 2021, the Company sought relief under the American Rescue Plan Act of 2021.

The Company elected to apply all available prefunding balances to the 2021 plan year and deferred payments for the July 15, 2021, October 15, 2021 and January 15, 2022 contributions.

The Company has a defined contribution employee savings plan, or “401(k),” which provides that the Company may match the contributions of participating employees up to a designated level.

Under this plan, the matching contributions were approximately $ 0.6 million for each of 2021, 2020, and 2019.

The components of income tax expense were as follows (in thousands):

The components of income tax (benefit) expense were as follows (in thousands):

Year Ended December 31,

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Total ( 459 ) 360 395

Income tax expense $ 662 $ 545 $ 125

and foreign components of income (loss) before income taxes are presented below (in thousands):

Income tax (benefit) expense $ ( 299 ) $ 662 $ 545

and foreign components of (loss) income before income taxes are presented below (in thousands):

Year Ended December 31,

2021 2020 2019

income (loss) $ ( 82,740 ) $ 47,545 $ 28,699

Foreign income (loss), net ( 26,237 ) ( 31,676 ) ( 35,090 )

Total income (loss) before income taxes $ ( 108,977 ) $ 15,869 $ ( 6,391 )

As of December 31, 2020 and 2019, the Company had cumulative U.S.

and foreign net operating loss ("NOL") carryforwards for income tax reporting purposes of approximately $ 1.8 billion and $ 0.2 billion, respectively.

(loss) income $ ( 79,452 ) $ ( 82,740 ) $ 47,545

Foreign loss ( 33,472 ) ( 26,237 ) ( 31,676 )

Total (loss) income before income taxes $ ( 112,924 ) $ ( 108,977 ) $ 15,869

As of December 31, 2021 and 2020, the Company had cumulative U.S., state and foreign net operating loss ("NOL") carryforwards for income tax reporting purposes of approximately $ 1.8 billion, $ 1.1 billion and $ 0.2 billion, respectively.

The vast majority of these NOL carryforwards were generated prior to 2018 and expire from 2022 through 2040, with less than 1 % expiring prior to 2025, and the remaining NOL carryforwards do not expire.

The components of net deferred income tax assets were as follows (in thousands):

Federal and foreign NOL and credit carry-forwards $ 507,105 $ 475,171

The components of net deferred income tax assets (liabilities) were as follows (in thousands):

Federal and foreign NOL and credit carryforwards $ 498,882 $ 507,105

Property and equipment and other long-term assets ( 114,722 ) ( 133,086 )

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Net deferred income tax liability $ ( 296 ) $ ( 755 )

The change in the valuation allowance during 2020 of $ 56.3 million was due to the Company providing valuation allowances against all of the tax benefit generated from its consolidated net losses.

Due to the remeasurement of the state impact on U.S.

deferred tax assets and the Company’s reconciliation of various deferred tax assets to reflect the remaining cumulative differences, the Company has remeasured all U.S.

deferred tax assets resulting in an increase in both the deferred tax asset and the associated valuation allowance.

The change in property and equipment and other long-term assets was driven primarily by depreciation due to the difference between tax and book depreciable lives.

Due to the limitation on utilization of state NOLs, the Company recorded deferred tax liabilities of $ 0.8 million and $ 0.4 million as of December 31, 2020 and 2019.

The change in the valuation allowance during 2021 of $ 13.5 million was due to changes in property and equipment and long-term assets driven primarily by depreciation due to the difference between tax and book depreciable lives.

Due to the limitation on utilization of state NOLs, the Company recorded deferred tax liabilities of $ 0.3 million and $ 0.8 million as of December 31, 2021 and 2020, respectively.

The actual provision for income taxes differs from the statutory U.S.

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Adjustment to state deferred rate 775 4,200 13,639

Other (including amounts related to prior year tax matters) 8 98 205

Other 947 8 98

Total $ ( 299 ) $ 662 $ 545

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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.

In July 2018, the Company's Canadian subsidiary was notified that its income tax returns for the years ended October 31, 2015 and 2016 had been selected for audit.

In July 2018, the Company's Canadian subsidiary was notified that its income tax returns for the years ended October 31, 2015 through 2018 had been selected for audit.

The Company has provided all requested information to the Canada Revenue Agency ("CRA") and is working with the CRA to complete the audit.

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In the Company's international tax jurisdictions, numerous tax years remain subject to examination by tax authorities, including tax returns for 2013 and subsequent years in most of the Company's international tax jurisdictions.

There are no unrecognized tax benefits as of December 31, 2020 and December 31, 2019.

There are no unrecognized tax benefits as of December 31, 2021 and 2020.

As of December 31, 2021, the Company had not provided foreign withholding taxes on approximately $ 2.5 million of undistributed earnings from certain foreign subsidiaries indefinitely invested outside the U.S.

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The Company elected to account for 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, 2021 and 2020.

As previously discussed in Note 1:

Summary of Significant Accounting Policies, the CARES Act was enacted in March 2020 to provide economic relief to eligible business and individuals impacted by COVID-19.

The Company evaluated the impact the CARES Act legislation has on its liquidity and tax positions.

The net impact to the Company's NOL carryforwards as of December 31, 2019 was $ 14.8 million due to the change in the interest limitations permitted under the CARES Act.

As of December 31, 2021 and 2020, the Company recorded a value added tax ("VAT") recoverable, which is included in Prepaid and other current assets on its consolidated balance sheet totaling $ 5.6 million and $ 2.3 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.

(LOSS) EARNINGS PER SHARE

Basic (loss) earnings per share is computed by dividing (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

The numerator used to calculate diluted EPS includes the effect of dilutive securities, including interest expense, net, and derivative gains or losses reflected in net (loss) income.

Common stock equivalents are included in the calculation of diluted earnings per share only when the effect of their inclusion would be dilutive.

The effect of potentially dilutive common shares for the Company's convertible notes are calculated using the if-converted method.

Generally, for all other potentially dilutive common shares, the effect is calculated using the treasury stock method.

The following table sets forth the calculation of basic and diluted (loss) earnings per share and reconciles basic weighted average shares to diluted weighted average shares of common stock outstanding for the periods indicated (in thousands):

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Loan Agreement with Thermo — — 195,805

Warrants issued in connection with Second Lien Facility Agreement — 1,831 —

Warrants issued in connection with 2019 Facility Agreement — — 1,831

Diluted shares outstanding 1,765,139 1,642,359 1,655,191

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Diluted $ ( 0.06 ) $ ( 0.07 ) $ ( 0.07 )

For the years ended December 31, 2020 and 2018, 4.2 million shares and 201.7 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

Additionally, as of December 31, 2020, 115.0 million warrants issued to the lenders of the Second Lien Facility Agreement were outstanding and not reflected in the 4.2 million potentially dilutive security amount above as they were out of the money as of December 31, 2020.

For the year ended December 31, 2021 and 2020, 10.1 million shares and 4.2 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

Additionally, as of December 31, 2020, 115.0 million warrants issued to the lenders of the 2019 Facility Agreement were outstanding and not reflected in the 4.2 million potentially dilutive security amount above as they were out of the money as of December 31, 2020.

For further discussion on (loss) earnings per share, refer to Note 1:

Summary of Significant Accounting Policies.

STOCK COMPENSATION

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The Company uses historical data, among other factors, to estimate the expected stock price volatility, the expected option life and the expected forfeiture rate.

The market price of common stock has been volatile at times in recent years.

The market price of the Company's common stock has been volatile at times.

The Company makes judgmental adjustments to project volatility during the expected term of the options, considering, among other things, historical volatility of the share prices of its peer group and expectations with regard to business conditions that may impact stock price fluctuations or stability.

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Granted 700,000 0.34

Exercised ( 478,800 ) 0.50

Forfeited or expired ( 281,100 ) 1.66

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6,620,099 $ 1.44

No stock options were exercised during 2020, accordingly, no amounts are shown in the table above.

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.

The aggregate intrinsic value of all outstanding stock options at December 31, 2020 was nearly zero with a remaining contractual life of 6.0 years.

The aggregate intrinsic value of all vested stock options at December 31, 2020 was nearly zero with a remaining contractual life of 6.2 years.

For the years ended December 31, 2020, 2019 and 2018, the Company recognized $ 0.3 million, $ 0.3 million and $ 1.1 million, respectively, of compensation expense related to stock options.

As of December 31, 2020, unrecognized compensation expense related to nonvested stock options outstanding was approximately $ 0.4 million to be recognized over a weighted-average period of 1.4 years.

For the years ended December 31, 2021 and 2019, the total intrinsic value of all stock options exercised was $ 0.7 million and less than $ 0.1 million, respectively, There were no options exercised during 2020.

The aggregate intrinsic value of all outstanding stock options at December 31, 2021 was $ 2.3 million with a remaining contractual life of 6.0 years.

The aggregate intrinsic value of all vested stock options that were exercisable at December 31, 2021 was $ 1.4 million with a remaining contractual life of 5.7 years.

Net cash proceeds during the year ended December 31, 2021 from the exercise of stock options was $ 0.2 million.

For each of the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 0.3 million of compensation expense related to stock options.

As of December 31, 2021, unrecognized compensation expense related to non-vested stock options outstanding was approximately $ 0.2 million to be recognized over a weighted-average period of 1.5 years.

The Company adjusts its estimates of expected forfeitures of equity awards based upon its review of recent forfeiture activity and expected future employee turnover.

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Nonvested at December 31, 2021

7,735,608 $ 0.46

Included in the non-vested balance at December 31, 2021 are approximately 5.8 million performance-based restricted stock awards that will vest upon the achievement of certain milestones.

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The Company has an Employee Stock Purchase Plan (the “Plan”) which provides eligible employees of the Company with an opportunity to acquire shares of its common stock at a discount.

The maximum aggregate number of shares of common stock that may be purchased through the Plan is 14.0 million shares.

The maximum aggregate number of shares of common stock that may be purchased through the Plan was 14.0 million shares as of December 31, 2021.

In February 2022, the Company's Board of Directors approved an increase to the number of shares for the Plan of 6.0 million.

The number of shares that may be purchased through the Plan will be subject to proportionate adjustments to reflect stock splits, stock dividends, or other changes in the Company’s capital stock.

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Accumulated net foreign currency translation adjustment 3,963 ( 461 )

Total accumulated other comprehensive loss $ ( 2,944 ) $ ( 3,449 )

For each of the periods ended December 31, 2020 and 2019, the minimum pension liability adjustment in the table above includes a settlement loss of $ 2.1 million and $ 0.5 million, respectively.

Total accumulated other comprehensive income (loss) $ 1,890 $ ( 2,944 )

For the year ended December 31, 2020, the minimum pension liability adjustment in the table above includes a settlement loss of $ 2.1 million.

See further discussion in Note 12:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data