What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-09 compared with 2022-05-05 · 139 added, 103 removed, 427 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended

2022 March 31,

Three Months Ended Six Months Ended

2022 June 30,

2021 June 30,

2022 June 30,

Service revenue $ 33,048 $ 25,617 $ 62,392 $ 48,703

4 unchanged sentences

Cost of subscriber equipment sales 3,097 2,858 5,663 5,757

Cost of subscriber equipment sales - reduction in the value of inventory 16 782 16 782

Marketing, general and administrative 9,693 9,681 19,034 19,778

Reduction in value of long-lived assets 525 — 525 —

Depreciation, amortization and accretion 24,130 23,843 47,913 47,959

2 unchanged sentences

Other (expense) income:

Gain on extinguishment of debt — 2,664 — 2,664

Interest income and expense, net of amounts capitalized ( 7,187 ) ( 10,778 ) ( 16,717 ) ( 22,352 )

Derivative loss ( 1,242 ) ( 1,310 ) ( 1,728 ) ( 2,439 )

Foreign currency gain (loss) 3,232 ( 4,315 )

Foreign currency (loss) gain ( 7,123 ) 4,425 ( 3,891 ) 110

Other 272 ( 88 ) 389 ( 66 )

Total other (expense) income ( 15,280 ) ( 5,087 ) ( 21,947 ) ( 22,083 )

2 unchanged sentences

Net loss $ ( 26,757 ) $ ( 21,449 ) $ ( 47,219 ) $ ( 57,782 )

Other comprehensive (loss) income:

Other comprehensive loss:

Foreign currency translation adjustments 5,315 ( 3,158 ) 4,636 84

10 unchanged sentences

(In thousands, except par value and share data)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

27 unchanged sentences

Preferred Stock of $ 0.0001 par value;

100,000,000 shares authorized and none issued and outstanding at March 31, 2022 and December 31, 2021, respectively

100,000,000 shares authorized and none issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Series A Preferred Convertible Stock of $ 0.0001 par value;

one share authorized and none issued and outstanding at March 31, 2022 and December 31, 2021, respectively

one share authorized and none issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Voting Common Stock of $ 0.0001 par value;

2,150,000,000 shares authorized;

1,799,484,939 and 1,796,528,871 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

1,800,477,322 and 1,796,528,871 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Nonvoting Common Stock of $ 0.0001 par value;

no shares authorized and none issued and outstanding at March 31, 2022 and December 31, 2021, respectively

no shares authorized and no ne issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 2,153,195 2,146,710

20 unchanged sentences

Balances – March 31, 2022 1,799,485 $ 180 $ 2,151,652 $ 1,211 $ ( 1,803,811 ) $ 349,232

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 546 — 879 — — 879

Contribution of services — — 47 — — 47

Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation 446 — 617 — — 617

Other comprehensive income — — — 5,315 — 5,315

Net loss — — — — ( 26,757 ) ( 26,757 )

Balances – June 30, 2022 1,800,477 $ 180 $ 2,153,195 $ 6,526 $ ( 1,830,568 ) $ 329,333

Shares Common

10 unchanged sentences

Balances – March 31, 2021 1,791,703 $ 179 $ 2,142,290 $ 298 $ ( 1,707,057 ) $ 435,710

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 173 — 576 — — 576

Contribution of services — — 47 — — 47

Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation 1,187 — 406 — — 406

Other comprehensive loss — — — ( 3,158 ) — ( 3,158 )

Net loss — — — — ( 21,449 ) ( 21,449 )

Balances – June 30, 2021 1,793,063 $ 179 $ 2,143,319 $ ( 2,860 ) $ ( 1,728,506 ) $ 412,132

See accompanying notes to unaudited interim condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

2022 March 31,

Six Months Ended

2022 June 30,

Cash flows provided by operating activities:

5 unchanged sentences

Amortization of deferred financing costs 287 1,841

Reduction in value of long-lived assets and inventory 541 782

Provision for credit losses 558 696

Noncash interest and accretion expense 16,235 16,939

Unrealized foreign currency (gain) loss ( 3,084 ) 4,270

Gain on extinguishment of debt — ( 2,664 )

Unrealized foreign currency loss (gain) 4,139 ( 245 )

Noncash reversal of tariff accrual — ( 912 )

Other, net ( 2,710 ) ( 430 )

12 unchanged sentences

Property and equipment additions ( 3,198 ) ( 2,288 )

Sale of property and equipment — 350

Purchase of intangible assets ( 683 ) ( 1,228 )

Net cash used in investing activities ( 22,392 ) ( 11,998 )

Cash flows provided by financing activities:

Cash flows provided by (used in) financing activities:

Principal payments of the 2009 Facility Agreement — ( 89,164 )

2 unchanged sentences

Proceeds from issuance of common stock and exercise of options 449 391

Net cash provided by financing activities 8 39,245

Net cash provided by (used in) financing activities 449 ( 45,228 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 9 ( 9 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 2,785 ) 38,717

Net decrease in cash, cash equivalents and restricted cash ( 1,163 ) ( 1,315 )

Cash, cash equivalents and restricted cash, beginning of period 14,304 68,023

4 unchanged sentences

Total cash and cash equivalents cash shown in the statement of cash flows $ 13,141 $ 14,304

Three Months Ended

2022 March 31,

Six Months Ended

2022 June 30,

Supplemental disclosure of cash flow information:

4 unchanged sentences

Satellite construction assets acquired through vendor financing arrangement 73,575 —

Forgiveness of principal and interest of Paycheck Protection Program loan — 5,030

See accompanying notes to unaudited interim condensed consolidated financial statements.

20 unchanged sentences

In the opinion of management, the information included herein includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, condensed consolidated balance sheets, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the periods presented.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year or any future period.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year or any future period.

Disaggregation of Revenue

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

Three Months Ended

March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Service revenue:

8 unchanged sentences

Commercial IoT 1,908 2,090 3,714 3,611

Other 27 11 44 125

Total subscriber equipment sales 3,752 4,662 7,180 8,505

1 unchanged sentence

The Company is reimbursed by the customer under the Terms Agreement for certain costs incurred by the Company as it completes its performance obligations under the contract.

During the first quarter of 2022, the Company recognized revenue of $ 6.8 million associated with these services;

During the three and six months ended June 30, 2022, the Company recognized revenue associated with these services of $ 8.8 million and $ 15.7 million, respectively.

During the three and six months ended June 30, 2021, the Company recognized revenue associated with other performance obligations associated with the Terms Agreement of $ 2.2 million and $ 2.7 million, respectively;

this revenue is included in Engineering and other service revenue in the table above.

2 unchanged sentences

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

Three Months Ended

March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Service revenue:

10 unchanged sentences

Central and South America 328 571 757 992

Others 9 8 18 30

Total subscriber equipment sales 3,752 4,662 7,180 8,505

1 unchanged sentence

Accounts Receivable

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 March 31, 2022 and December 31, 2021, $ 1.1 million and $ 0.7 million, respectively, related to these agreements was included in accounts receivable on the Company’s condensed consolidated balance sheet.

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

As of March 31, 2022 and December 31, 2021, the Company recorded $ 7.0 million and $ 6.5 million, respectively, in accounts receivable related to these arrangements.

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

As of June 30, 2022 and December 31, 2021, the Company recorded $ 3.3 million and $ 6.5 million, respectively, in accounts receivable related to these arrangements.

In connection with the Company's performance under the Terms Agreement, the Company recorded receivables totaling $ 83.4 million, which represents amounts owed by the customer for the Company's completion of performance obligations under the contract.

As of March 31, 2022, $ 5.3 million and $ 10.3 million were recorded as current and non-current receivables, respectively.

As of June 30, 2022, $ 8.6 million and $ 74.8 million were recorded as current and non-current receivables, respectively, in line with the expected service periods under the Terms Agreement.

Contract Liabilities

Contract liabilities, which are included in deferred revenue on the Company’s condensed consolidated balance sheet, represent the Company’s obligation to transfer service or equipment to a customer from whom it has previously received consideration.

The amount of revenue recognized during the three months ended March 31, 2022 and 2021 from performance obligations included in the contract liability balance at the beginning of these periods was $ 9.9 million and $ 10.5 million, respectively.

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

As of March 31, 2022, the Company expects to recognize $ 37.2 million, or approximately 24 %, 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.

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

These advance 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 March 31, 2022, the Company has recorded $ 13.1 million and $ 115.9 million as short-term and long-term deferred revenue, respectively, which reflects the advance payments previously described, as well as additional deferred revenue in connection with ongoing network upgrades and the satellite procurement agreement.

Reflected in the deferred revenue balance is $ 2.9 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 is also reflected net of a contract asset of $ 2.4 million in the Company's condensed consolidated balance sheet as of March 31, 2022.

The amount of revenue recognized during the six months ended June 30, 2022 and 2021 from performance obligations included in the contract liability balance at the beginning of these periods was $ 18.3 million and $ 18.8 million, respectively.

The duration of the Company’s contracts with subscribers is generally one year or less.

As of June 30, 2022, the Company expects to recognize $ 39.9 million, or approximately 18 %, of its remaining performance obligations during the next twelve months .

Contract liabilities also include deferred revenue associated with the Terms Agreement.

The Company recorded deferred revenue for advance payments received from the customer for services expected to be performed in the future, totaling $ 75.0 million as of June 30, 2022.

The Company also records deferred revenue for the reimbursement (and anticipated reimbursement) of costs incurred in connection with ongoing network upgrades, construction costs under the satellite procurement agreement and other performance obligations under the Terms Agreement, totaling $ 124.8 million as of June 30, 2022.

In accordance with applicable accounting guidance, the Company records imputed interest associated with the significant financing component, totaling $ 3.9 million as of June 30, 2022, which is related to and included in the balances associated with certain of the items recorded to deferred revenue discussed above.

Deferred revenue is classified as either short-term or long-term consistent with the expected timing of the Company's obligation to provide services to the customer or the recoupment period defined in the Terms Agreement.

As of June 30, 2022, the Company has recorded $ 15.9 million and $ 180.7 million as short-term and long-term deferred revenue, respectively.

The total amount of deferred revenue associated with this customer is also reflected net of a contract asset of $ 3.1 million in the Company's condensed consolidated balance sheet as of June 30, 2022.

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Operating leases:

9 unchanged sentences

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

Three Months Ended

March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Operating lease cost:

6 unchanged sentences

Total lease cost $ 1,137 $ 1,098 $ 2,325 $ 1,952

In accordance with the Terms Agreement, the Company began capitalization of certain costs to fulfill this contract starting in the second quarter of 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.

Interest on lease liabilities was less than $ 0.1 million for each of the three months ended March 31, 2022 and 2021;

accordingly, this interest is not shown in the table above.

Interest on finance lease liabilities was less than $ 0.1 million for the three and six months ended June 30, 2022 and 2021;

accordingly, these amounts are not shown in the table above.

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.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Weighted-average lease term

6 unchanged sentences

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

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

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

Operating cash flows for operating leases $ 2,536 $ 2,080

Financing cash flows for finance leases 2 6

Operating cash flows from finance leases were less than $ 0.1 million for each of the three months ended March 31, 2022 and 2021;

Operating and financing cash flows from finance leases were each less than $ 0.1 million for each of the six months ended June 30, 2022 and 2021;

accordingly, these cash flows are not shown in the table above.

Maturity Analysis

The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of March 31, 2022 (amounts in thousands):

The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of June 30, 2022 (amounts in thousands):

Operating Leases Finance Leases

4 unchanged sentences

Discounted lease liability $ 29,576 $ 6

As of March 31, 2022, the Company executed additional operating leases for new gateway locations.

These leases have not yet commenced as of March 31, 2022 since the lessors are continuing to ready the sites for use.

Accordingly, these leases are not included on the balance sheet as of March 31, 2022 or in the maturity table above.

The Company is in the process of evaluating these lease obligations and expects both leases to be approximately $ 4.7 million.

As of June 30, 2022, the Company executed additional operating leases for new gateway locations.

These leases have not yet commenced as of June 30, 2022 since the lessors are continuing to ready the sites for use.

Accordingly, these leases are not included on the balance sheet as of June 30, 2022, or in the maturity table above.

The Company is in the process of evaluating these lease obligations and expects the impact of these leases to be an increase of lease liabilities of approximately $ 4.7 million.

PROPERTY AND EQUIPMENT

18 unchanged sentences

Total property and equipment, net $ 708,005 $ 672,156

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 March 31, 2022 and are discussed in Note 2:

Amounts included in "second-generation satellite, on-ground spare" in the table above consist of costs related to one of the Company's second-generation satellites that was stored as an on-ground spare satellite until its launch in June 2022.

The costs to prepare this satellite for launch were included in "construction in progress - space component" in the table above prior to its launch in June 2022.

During the second quarter of 2022, $ 65.1 million in costs associated with the construction and launch of this spare satellite (including capitalized interest) were placed into service.

Since this satellite is expected to remain as an in-orbit spare and will only be raised to its operational orbit at a future date if needed, it was placed into service following its successful launch.

The customer under the Terms Agreement has reimbursed 85 % of the costs incurred to prepare and launch this satellite.

These reimbursements are recorded in deferred revenue on the Company's consolidated balance sheet as of June 30, 2022 and are expected to be recognized in service revenue as performance obligations are completed in accordance with the Terms Agreement.

Revenue for further discussion .

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

As of March 31, 2022, the Company recorded $ 17.2 million as prepaid satellite construction costs and $ 15.5 million in construction in progress on its balance sheet reflecting the milestone work completed under this agreement.

As of June 30, 2022, the Company recorded $ 19.4 million as prepaid satellite construction costs and $ 54.2 million in construction in progress on its balance sheet reflecting the milestone work completed under this agreement.

The customer under the Terms Agreement will reimburse 95 % of these capital expenditures.

Accordingly, as of March 31, 2022, the Company recorded $ 14.7 million in receivables on its condensed consolidated balance sheet.

In accordance with the expected timing of reimbursement, $ 4.4 million is recorded in Accounts receivable and $ 74.8 million is recorded as a non-current receivable in Prepaid satellite construction costs and related customer receivable.

The satellite construction assets acquired through this vendor financing arrangement are included in the supplemental section of the Company's condensed consolidated statement of cash flows as non-cash financing and investing activity.

See further discussion in Note 2:

2 unchanged sentences

Commitments and Contingencies.

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 the first quarter of 2022, the Company placed $ 16.6 million o f costs into service associated with these antennas, which are included in ground component in the table above.

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

During 2022, the Company placed $ 11.2 million o f costs into service associated with these antennas (including capitalized interest), 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.

1 unchanged sentence

Long-term debt consists of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amount Unamortized Discount and Deferred Financing Costs Carrying

12 unchanged sentences

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 of March 31, 2022, the Company was in compliance with the covenants of the 2019 Facility Agreement.

As of June 30, 2022, the Company was in compliance with the covenants of the 2019 Facility Agreement, except as it relates to capital expenditures.

In August 2022, the Company received a waiver letter from its lenders increasing permitted capital expenditures for 2022.

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, it will be required to make such prepayments.

These payments would reduce future principal payment obligations.

The Company generated excess cash flow for the six-month measurement period ended June 30, 2022 and expects to make a prepayment of approximately $6.0 million in August 2022.

Refer to Note 6:

15 unchanged sentences

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

As of March 31, 2022, the Company recorded $ 32.7 million in short-term vendor financing on its condensed consolidated balance sheet associated with this agreement.

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

This financing is intended to provide sufficient proceeds for the construction and launch of the satellites.

As of June 30, 2022, the Company had recorded $ 73.6 million in short-term vendor financing on its condensed consolidated balance sheet associated with this agreement.

Deferred payments are due in August 2022 under the terms of the agreement.

The Company intends to seek an extension of the maturity date while it pursues debt financing for the funding of the construction and launch costs for these satellites.

2009 Facility Agreement

1 unchanged sentence

The 2009 Facility Agreement was fully repaid in November 2021.

As a result of prepayments made under the 2009 Facility Agreement during the second quarter of 2021, the Company wrote off $ 2.3 million in deferred financing costs, which represents the portion of debt prepaid by the Company in the second quarter of 2021, and which was recorded as a loss on extinguishment of debt on its condensed consolidated statements of operations.

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.

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.

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 condensed consolidated statements of operations for the period ended June 30, 2021.

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

1 unchanged sentence

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Derivative (liabilities) assets:

2 unchanged sentences

$ — ( 1,364 )

As of March 31, 2022 and December 31, 2021, the derivative (liability) asset recorded for the Compound embedded derivative with the 2019 Facility Agreement was reflected in Other non-current liabilities and Intangible and other assets, net, respectively, on the Company's condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, the derivative (liability) asset recorded for the Compound embedded derivative with the 2019 Facility Agreement was reflected in Other non-current liabilities and Intangible and other assets, net, respectively, on the Company's condensed consolidated balance sheets.

During the first quarter of 2022, the remaining principal amount of the 2013 8.00 % Notes was converted into shares of Globalstar common stock;

1 unchanged sentence

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

Three Months Ended

March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Compound embedded derivative with the 2013 8.00 % Notes

13 unchanged sentences

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

All of the Company's derivatives are classified as Level 3.

The Company marks-to-market these derivatives at each reporting date, or more frequently as deemed necessary, with the changes in fair value recognized in the Company’s condensed consolidated statements of operations.

The Company's derivatives are classified as Level 3.

The Company marks-to-market its derivatives at each reporting date, or more frequently as deemed necessary, with the changes in fair value recognized in the Company’s condensed consolidated statements of operations.

During the first quarter of 2022, the remaining principal amount of the 2013 8.00 % Notes was converted into shares of Globalstar common stock;

4 unchanged sentences

The following tables provide a summary of the assets and liabilities measured at fair value on a recurring basis (in thousands):

March 31, 2022

June 30, 2022

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

9 unchanged sentences

2013 8.00 % Notes

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

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

December 31, 2021

4 unchanged sentences

0.5 % $ 0.69 18 % $ 1.16

Fluctuation in the Company’s stock price was 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 increased, the value to the holder of the instrument generally increased, thereby increasing the liability on the Company’s condensed consolidated balance sheet.

Stock price volatility was 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 was sensitive to changes in the expected volatility of the Company's stock price.

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

Fluctuation in the Company’s stock price and stock price volatility were significant drivers of the change in the compound embedded derivative with the 2013 8.00 % Notes.

Increases in these inputs resulted 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 15 % and 13 % at March 31, 2022 and December 31, 2021, respectively.

The most significant observable input used in the fair value measurement is the discount yield, which was 20 % and 13 % at June 30, 2022 and December 31, 2021, respectively.

When the discount yield utilized in the valuation is higher than the blended interest rate of the underlying debt, the features embedded in the underlying debt result in a liability for the Company.

6 unchanged sentences

Unrealized loss, included in derivative loss ( 1,728 ) ( 1,043 )

Balance at end of period, March 31, 2022 and December 31, 2021, respectively

Balance at end of period, June 30, 2022 and December 31, 2021, respectively

$ ( 1,460 ) $ ( 880 )

3 unchanged sentences

As previously disclosed, the remaining principal amount of the 2013 8.00 % Notes was converted into shares of Globalstar common stock during the first quarter of 2022;

accordingly, there is no value in the table below as of March 31, 2022.

accordingly, there is no value in the table below as of June 30, 2022.

The following table sets forth the carrying value and estimated fair value of the Company's Level 3 financial instrument (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

4 unchanged sentences

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

On February 17, 2022 and March 9, 2022, the remaining principal balance of the 2013 8.00 % Notes was converted into shares of Globalstar common stock, eliminating the entire principal balance outstanding.

Derivative Liabilities

On February 17, 2022 and March 9, 2022, the remaining principal balance of the 2013 8.00 % Notes was converted into shares of Globalstar common stock, eliminating the principal balance outstanding.

See further discussion in Note 5:

11 unchanged sentences

0.18 % $ 0.69 19 % $ 1.21

Intangible and Other Assets, net

Intangible and other assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

During the second quarter of 2022, the Company wrote off approximately $ 0.5 million of work in progress associated with its spectrum intangible assets.

The work in progress was related to efforts to obtain spectrum licensing authority in certain countries around the world;

during the second quarter of 2022, the Company determined that it would not continue pursing such authorities in these countries and recorded a reduction in the value of long-lived assets in its condensed consolidated statements of operations for the six months ended June 30, 2022.

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.

Under this agreement, the customer has made advance payments to the Company for 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.

The Terms Agreement also provides for various commitments with which the Company must comply to the extent that services under the agreement continue.

Refer to Note 2:

3 unchanged sentences

Satellite Procurement Agreement

In February 2022, the Company entered into a satellite 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.

In February 2022, the Company entered into a satellite procurement agreement with Macdonald, Dettwiler and Associates Corporation ("MDA") 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.

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;

2 unchanged sentences

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.

This agreement provides for payment deferrals of milestone payments through August 2022, at which time all deferred payments estimated to be approximately $ 74.0 million will become due, by which time the Company intends to complete a senior secured financing.

This financing is intended to provide sufficient proceeds for the construction and launch of the satellites.

The Company also expects to refinance its current 2019 Facility Agreement in the coming months.

The current terms of the agreement with MDA provide for the deferral of milestone payments through August 2022.

As of June 30, 2022, the total amount of deferred payments is approximately $ 74.0 million.

The Company intends to seek an extension of the maturity date while it pursues a broader financing.

This financing is expected to provide sufficient proceeds for the construction and launch of the satellites.

RELATED PARTY TRANSACTIONS

Payables to Thermo and other affiliates related to normal purchase transactions were $ 0.3 million and $ 0.4 million as of March 31, 2022 and December 31, 2021, respectively.

Payables to Thermo and other affiliates related to normal purchase transactions were $ 0.4 million and $ 0.4 million as of June 30, 2022 and December 31, 2021, respectively.

Transactions with Thermo

4 unchanged sentences

Annual lease payments started at $ 1.4 million per year in 2019 and increase at a rate of 2.5 % per year, for a lease term of ten years .

During each of the three months ended March 31, 2022 and 2021, the Company incurred lease expense of $ 0.4 million under this lease agreement.

During each of the six months ended June 30, 2022 and 2021, the Company incurred lease expense of $ 0.8 million under this lease agreement.

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

1 unchanged sentence

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 2019 Facility Agreement was approximately $ 33.8 million, of which $ 4.1 million was accrued during the three months ended March 31, 2022.

Interest accrued since inception with respect to Thermo's portion of the debt outstanding on the 2019 Facility Agreement was approximately $ 38.0 million, of which $ 8.3 million was accrued during the six months ended June 30, 2022.

Long-Term Debt and Other Financing Arrangements for further discussion of the Company's debt and financing transactions with Thermo.

5 unchanged sentences

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

The following table sets forth the computation of basic and diluted loss per common share during each of the three months ended March 31, 2022 and 2021 (amounts in thousands, except per share data):

Three Months Ended

March 31, 2022 March 31, 2021

The following table sets forth the computation of basic and diluted loss per common share during each of the six months ended June 30, 2022 and 2021 (amounts in thousands, except per share data):

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net loss $ ( 26,757 ) $ ( 21,449 ) $ ( 47,219 ) $ ( 57,782 )

1 unchanged sentence

Net loss per common share - basic and diluted $ ( 0.01 ) $ ( 0.01 ) $ ( 0.03 ) $ ( 0.03 )

For the three months ended March 31, 2022 and 2021, 7.4 million and 5.5 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

For the three months ended June 30, 2022 and 2021, 7.8 million and 7.3 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

For the six months June 30, 2022 and 2021, 7.6 million and 7.1 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

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-Q

Item 1. Financial Statements