What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-03 · 240 added, 376 removed, 357 unchanged (63% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 30,

2022 September 30,

2021 September 30,

2022 September 30,

Three Months Ended

2023 March 31,

Service revenue $ 52,954 $ 29,344

4 unchanged sentences

Cost of subscriber equipment sales 4,309 2,566

Cost of subscriber equipment sales - reduction in the value of inventory 8,537 71 8,553 853

Marketing, general and administrative 13,391 9,341

Reduction in value of long-lived assets 166,001 242 166,526 242

Depreciation, amortization and accretion 21,933 23,783

Total operating expenses 51,453 46,484

Loss from operations ( 186,641 ) ( 14,714 ) ( 211,709 ) ( 49,982 )

Income (loss) from operations 7,191 ( 13,712 )

Other (expense) income:

(Loss) gain on extinguishment of debt — ( 829 ) — 1,835

Loss on extinguishment of debt ( 10,403 ) —

Interest income and expense, net of amounts capitalized ( 2,032 ) ( 9,530 )

Derivative gain (loss) 662 229 ( 1,066 ) ( 2,210 )

Foreign currency loss ( 9,406 ) ( 4,752 ) ( 13,297 ) ( 4,642 )

Pension settlement loss ( 1,501 ) — ( 1,501 ) —

Derivative loss — ( 486 )

Foreign currency gain 1,907 3,232

Other ( 99 ) 117

Total other (expense) income ( 17,873 ) ( 16,285 ) ( 39,820 ) ( 38,368 )

Total other expense ( 10,627 ) ( 6,667 )

Loss before income taxes ( 3,436 ) ( 20,379 )

Income tax (benefit) expense ( 153 ) ( 114 ) 51 317

Income tax expense 44 83

Net loss $ ( 3,480 ) $ ( 20,462 )

1 unchanged sentence

Foreign currency translation adjustments ( 1,429 ) ( 679 )

Defined benefit pension plan liability adjustment 2,073 $ — $ 2,073 $ —

Comprehensive loss $ ( 4,909 ) $ ( 21,141 )

Net loss attributable to common shareholders (Note 10)

( 6,095 ) ( 20,462 )

Net loss per common share:

8 unchanged sentences

(In thousands, except par value and share data)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets:

27 unchanged sentences

Preferred Stock of $ 0.0001 par value;

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

99,700,000 shares authorized and none issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Series A Preferred Convertible Stock of $ 0.0001 par value;

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

300,000 shares authorized and 149,425 issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Voting Common Stock of $ 0.0001 par value;

2,150,000,000 shares authorized;

1,800,523,430 and 1,796,528,871 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Nonvoting Common Stock of $ 0.0001 par value;

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

1,813,111,673 and 1,811,074,696 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,345,604 2,345,612

7 unchanged sentences

(In thousands)

Shares Common

Amount Additional

Preferred Stock Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Retained

Deficit Total

Shares Amount Shares Amount

Balances – January 1, 2023 149 — 1,811,075 $ 181 $ 2,345,612 $ 9,242 $ ( 2,040,264 ) $ 314,771

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 703 — 2,230 — — 2,230

Net issuance of restricted stock awards and employee stock options and recognition of stock-based compensation — — 2,037 3,795 3,795

Contribution of services — — 47 47

Recognition of stock-based compensation of employee stock purchase plan — — 117 — — 117

Common stock issued in connection with conversion of 2013 8.00 % Notes

2,253 — 2,548 — — 2,548

Issuance and recognition of stock-based compensation of employee stock purchase plan — — 102 102

Series A Preferred Stock Dividends — — ( 3,952 ) ( 3,952 )

Other comprehensive loss — — ( 1,429 ) ( 1,429 )

1 unchanged sentence

Balances – March 31, 2023 149 — 1,813,112 $ 181 $ 2,345,604 $ 7,813 $ ( 2,043,744 ) $ 309,854

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

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 46 — 1,815 — — 1,815

Contribution of services — — 47 — — 47

Recognition of stock-based compensation of employee stock purchase plan — — 60 — — 60

Other comprehensive income — — — 8,686 — 8,686

Net loss — — — — ( 204,361 ) ( 204,361 )

Balances – September 30, 2022 1,800,523 $ 180 $ 2,155,117 $ 15,212 $ ( 2,034,929 ) $ 135,580

Shares Common

Amount Additional

Preferred Stock Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Retained

Deficit Total

Shares Amount Shares Amount

Balances – January 1, 2022 1,796,529 $ 180 $ 2,146,710 $ 1,890 $ ( 1,783,349 ) $ 365,431

2 unchanged sentences

Recognition of stock-based compensation of employee stock purchase plan — — — — 117 — — 117

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

Other comprehensive income — — — 3,242 — 3,242

Net loss — — — — ( 36,333 ) ( 36,333 )

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

Common stock issued in connection with conversion of 2013 8.00 % Notes

— — 2,253 — 2,548 — — 2,548

Other comprehensive loss — — — — — ( 679 ) — ( 679 )

Net loss — — — — — — ( 20,462 ) ( 20,462 )

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

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 244 — 544 — — 544

Contribution of services — — 47 — — 47

Recognition of stock-based compensation of employee stock purchase plan — — 102 — — 102

Other comprehensive income — — — 3,185 — 3,185

Net loss — — — — ( 30,885 ) ( 30,885 )

Balances – September 30, 2021 1,793,307 $ 179 $ 2,144,012 $ 325 $ ( 1,759,391 ) $ 385,125

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

See accompanying notes to unaudited interim condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

2022 September 30,

Three Months Ended

2023 March 31,

Cash flows provided by operating activities:

4 unchanged sentences

Stock-based compensation expense 3,760 1,233

Noncash consideration, net, associated with wholesale capacity contract ( 310 ) —

Amortization of deferred financing costs 25 166

Reduction in value of long-lived assets and inventory 175,079 1,095

Provision for credit losses 249 332

Noncash interest and accretion expense 6,362 9,406

Unrealized foreign currency loss 13,399 4,639

Loss on pension settlement 1,501 —

Gain on extinguishment of debt — ( 1,835 )

Noncash reversal of tariff accrual — ( 912 )

Unrealized foreign currency (gain) loss ( 1,958 ) ( 3,084 )

Write off of debt discount and DFC upon extinguishment of debt 10,194 —

Other, net ( 592 ) 186

10 unchanged sentences

Cash flows used in investing activities:

Network upgrades (including capitalized interest) ( 18,604 ) ( 24,766 )

Property and equipment additions ( 5,839 ) ( 4,209 )

Sale of property and equipment — 350

Payments under the satellite procurement agreement ( 59,575 ) —

Other network upgrades ( 3,561 ) ( 8,712 )

Payments of capitalized interest ( 5,263 ) —

Additions of other property and equipment ( 2,925 ) ( 1,301 )

Purchase of intangible assets ( 251 ) ( 438 )

Net cash used in investing activities ( 71,575 ) ( 10,451 )

Cash flows used in financing activities:

Principal payments of the 2019 Facility Agreement ( 6,341 ) —

Principal payments of the 2009 Facility Agreement — ( 126,664 )

Proceeds from exercise of warrants — 43,678

Payments for debt and equity issuance costs — ( 133 )

Cash flows provided by (used in) financing activities:

Principal and Interest payments of the 2019 Facility Agreement ( 148,281 ) —

Proceeds from 13% Notes Agreement 190,000 —

Dividends paid on Series A Preferred Stock ( 3,951 ) —

Payments for debt issuance costs ( 620 ) —

Proceeds from issuance of common stock and exercise of options — 8

Net cash used in financing activities ( 5,886 ) ( 82,725 )

Net cash provided by financing activities 37,148 8

Effect of exchange rate changes on cash, cash equivalents and restricted cash 27 89

Net increase (decrease) in cash, cash equivalents and restricted cash 445 ( 5,649 )

Net decrease in cash, cash equivalents and restricted cash ( 11,595 ) ( 2,785 )

Cash, cash equivalents and restricted cash, beginning of period 32,082 14,304

Cash, cash equivalents and restricted cash, end of period $ 20,487 $ 11,519

September 30,

2023 December 31,

2 unchanged sentences

Total cash and cash equivalents cash shown in the statement of cash flows $ 20,487 $ 32,082

Nine Months Ended

September 30,

2022 September 30,

Three Months Ended

2023 March 31,

Supplemental disclosure of cash flow information:

4 unchanged sentences

Satellite construction assets acquired through vendor financing arrangement — 32,700

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

See accompanying notes to unaudited interim condensed consolidated financial statements.

7 unchanged sentences

The Company’s Executive Chairman of the Board controls Thermo.

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

The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S.

2 unchanged sentences

however, management believes the disclosures made are adequate to make the information presented not misleading.

These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Globalstar Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 25, 2022 (the “2021 Annual Report”).

These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Globalstar Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 1, 2023 (the “2022 Annual Report”).

The preparation of condensed consolidated financial statements in conformity with U.S.

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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, 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 and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recent Developments

Service Agreements

On September 7, 2022, Apple Inc.

(“Partner”) announced new satellite-enabled services for certain of its products (the “Services”).

The Company will be the satellite operator for these Services pursuant to the agreement (the “Service Agreement”) first disclosed in the Company’s Form 10-K for the year ended December 31, 2019, and certain related ancillary agreements (such agreements, together with the Service Agreement, the “Service Agreements”).

The Services constitute the potential service which was previously described and disclosed as the Terms Agreement.

Since execution of the Service Agreements in 2020, the parties have completed several milestones including (i) a feasibility phase, (ii) material upgrades to Globalstar’s ground network, (iii) construction of 10 new gateways around the world, (iv) the successful launch of the ground spare satellite, and (v) rigorous in-field system testing.

The Service Agreements generally require Globalstar to allocate network capacity (as described below) to support the Services and provide for the inclusion of Globalstar’s Band 53/n53 in Partner’s cellular-enabled devices that use the Services, for use by third parties, subject to certain terms and conditions.

It is currently expected that Partner will make the Services available to customers during the fourth quarter of 2022 (the “Service Launch”).

Discontinuation of Second-Generation Duplex Products and Services

The Company has been evaluating the continuation of second-generation Duplex services in light of other potential uses for the Company’s capacity, such as those within the Service Agreements.

In early 2021, the Company terminated its second-generation Duplex services, which supported approximately 1,800 subscribers, to allow extended testing of the Services to Partner;

however, such termination was considered temporary unless or until Partner announced its intent to proceed with

launch of the Services.

Due to this shift in strategy triggered by Partner's September announcement, the Company evaluated the recoverability of its second-generation Duplex assets, including gateway property, prepaid licenses and royalties, and inventory during the third quarter of 2022.

As a result of this shift in strategy, the Company recorded reductions in the value of equipment and long-lived assets totaling $ 174.3 million during the third quarter of 2022 (refer to Note 7:

Fair Value Measurements for further discussion).

The Company will continue to support first-generation Duplex services, including voice communications and data transmissions.

Refer to Note 2:

Revenue, Note 3:

Leases, Note 4:

Property and Equipment and Note 8:

Commitments and Contingencies for further discussion of the financial statement impact of the Service Agreements.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recently Issued Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No.

Liabilities — Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations .

ASU 2022-04 added certain disclosure requirements for buyers in supplier finance programs.

The amendments in the update require that buyers disclose qualitative and quantitative information about their supplier finance programs.

Interim and annual requirements include disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a rollforward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs.

This update is effective for annual periods beginning after December 15, 2022, and interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective for fiscal years beginning after December 15, 2023.

The Company adopted this standard when it became effective on January 1, 2023 and expects this will impact future disclosures.

Disaggregation of Revenue

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

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

Service revenue:

4 unchanged sentences

Wholesale capacity services 30,411 6,843

6,972 1,301 22,640 3,999

Engineering and other services 300 430

7 unchanged sentences

Total revenue $ 58,644 $ 32,772

(1) Prior to the third quarter of 2022, revenue from Wholesale capacity services was included in Engineering and other services in the table above.

Wholesale capacity services include satellite network access and related services utilizing our satellite spectrum and network of satellites and gateways under the Service Agreements with Partner.

As consideration for the services to be provided by Globalstar after the Service Launch, Partner will make payments to Globalstar under the Service Agreements, including a recurring service fee, payments relating to certain service-related operating expenses and capital expenditures, and potential bonus payments subject to satisfaction of certain licensing, service and related criteria.

Additionally, following the launch of the next-generation satellites being constructed pursuant to the satellite procurement agreement, Partner has agreed to make additional service payments equal to (i) 95 % of the approved capital expenditures under the satellite procurement agreement and related launch costs (to be paid on a straight-line basis over the useful life of the satellites);

(ii) certain costs of the Company’s borrowings related to the new satellites;

and (iii) other approved costs.

In September 2022, Apple Inc.

(“Partner”) announced new satellite-enabled services for certain of its products (the “Services”).

The Company is the satellite operator for these Services pursuant to the agreement (the “Service Agreement”) and certain related ancillary agreements (such agreements, together with the Service Agreement, the “Service Agreements”).

The Service Agreements generally require Globalstar to allocate network capacity to support the Services, which launched in November 2022.

Revenue associated with the Service Agreements is included in "Wholesale capacity services" in the table above.

As consideration for the services provided by Globalstar under the Service Agreements, Partner makes payments to Globalstar, including a recurring service fee, payments relating to certain service-related operating expenses and capital expenditures, and potential bonus payments subject to satisfaction of certain licensing, service and other related criteria.

In connection with the amendment of the Service Agreements in February 2023, Partner agreed to pay the Company $ 6.5 million as consideration related to performance obligations completed in prior periods.

The Company recognized this revenue during the first quarter of 2023.

The Company attributes equipment revenue to various countries based on the location where equipment is sold.

1 unchanged sentence

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

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

Service revenue:

10 unchanged sentences

Central and South America 577 429

Others 6 22 24 52

Total subscriber equipment sales $ 5,690 $ 3,428

3 unchanged sentences

In addition to receivables arising from the sale of goods or services, the Company also has certain arrangements whereby it acts as an agent to procure goods and perform services on behalf of Partner under the Service Agreements.

Receivables are included in Accounts receivable, net of allowance for credit losses, on the Company's consolidated balance sheets except for the long-term portion of the wholesale capacity accounts receivable, which is included in Prepaid satellite construction costs and related customer receivable.

The Company's receivable balances by type and classification are presented in the table below net of allowance for credit losses and may include amounts related to earned but unbilled revenue (amounts in thousands).

September 30, 2022 December 31, 2021

Receivables are included in "Accounts receivable, net of allowance for credit losses," on the Company's consolidated balance sheets except for the long-term portion of the wholesale capacity accounts receivable, which is included in "Prepaid satellite construction costs and related customer receivable." The Company's receivable balances by type and classification are presented in the table below net of allowance for credit losses and may include amounts related to earned but unbilled receivables (amounts in thousands).

March 31, 2023 December 31, 2022

Accounts receivable, net of allowance for credit losses

6 unchanged sentences

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.

Under the Service Agreements, subject to certain conditions, Partner is required to reimburse 95 % of the capital expenditures and certain other costs incurred for this contract.

In accordance with the expected timing of payment from Partner, $ 11.6 million is recorded in Wholesale capacity accounts receivable and $ 69.6 million is recorded as in Long-term wholesale capacity accounts receivable in the table above.

Under the Service Agreements, subject to certain terms and conditions, Partner has agreed to make service payments equal to 95 % of the approved capita l expenditures under the satellite procurement agreement (to be paid on a straight-line basis over the useful life of the satellites) and certain other costs incurred for the new satellites, as may be adjusted pursuant to the Service Agreements, beginning with the Phase 2 Service Period.

As the Company incurs construction in progress associated with the contract with Macdonald, Dettwiler and Associates Corporation ("MDA"), it earns the right to receive certain payments from Partner associated with this phase of the Service Agreements.

In accordance with the

expected timing of payment from Partner, $ 7.2 million is recorded in "Wholesale capacity accounts receivable" and $ 124.4 million is recorded as in "Long-term wholesale capacity accounts receivable" in the table above.

The remaining amount recorded in "Wholesale capacity accounts receivable" as of March 31, 2023 consists of invoices for performance obligations completed as of the balance sheet date that are due within the next twelve months.

Contract Liabilities

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

Contract liabilities reflect balances from its customers, including MSS subscribers and the Partner under the Service

Contract liabilities reflect balances from its customers, including MSS subscribers and the Partner under the Service Agreements.

The Company's contract liabilities by type and classification are presented in the table below (amounts in thousands).

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Short-term contract liabilities

7 unchanged sentences

Total contract liabilities $ 237,968 $ 232,442

For subscriber contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2022 and 2021 from performance obligations included in the contract liability balance at the beginning of these periods was $ 22.8 million and $ 23.8 million, respectively.

For wholesale capacity contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2022 and 2021 from performance obligations included in the contract liability balance at the beginning of these periods was less than $ 0.1 million and zero , respectively.

For subscriber contract liabilities, the amount of revenue recognized during the three months ended March 31, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 8.4 million and $ 9.9 million, respectively.

For wholesale capacity contract liabilities, the amount of revenue recognized during the three months ended March 31, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 22.0 million and less than $ 0.1 million, respectively.

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

As of September 30, 2022, the Company expects to recognize $ 23.2 million, or approximately 93 %, of its remaining performance obligations during the next twelve months .

The term of the Company's wholesale capacity contract with its Partner under the Service Agreements is indefinite;

As of March 31, 2023, the Company expects to recognize $ 21.0 million, or approximately 91 %, of its remaining performance obligations to its subscribers during the next twelve months .

The Service Agreements have no expiration date;

therefore, the related contract liabilities may be recognized into revenue over various periods driven by the expected related service or recoupment periods.

As of September 30, 2022, the Company expects to recognize $ 29.9 million, or approximately 15 %, of its remaining performance obligations during the next twelve months .

As of March 31, 2023, the Company expects to recognize $ 59.9 million, or approximately 28 %, of its remaining performance obligations to this customer during the next twelve months .

The components of wholesale capacity contract liabilities are presented in the table below (amounts in thousands).

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Wholesale capacity contract liabilities, net:

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Advanced payments (both received and contractually owed) for services expected to be performed with the next-generation satellite constellation during Phase 2 129,147 117,466

Advanced payments for the Phase 1 service fee and service-related operating expenses and capital expenditures

19,871 18,872

Contract asset (2)

( 53,327 ) ( 52,696 )

Wholesale capacity contract liabilities, net $ 215,006 $ 208,751

(1) In accordance with applicable accounting guidance, the Company records imputed interest associated with the significant financing component, totaling $ 4.9 million and $ 1.9 million as of September 30, 2022 and December 31, 2021, respectively, which is included in deferred revenue.

(1) In accordance with applicable accounting guidance, the Company records imputed interest associated with the significant financing component, totaling $ 5.3 million as of March 31, 2023 and December 31, 2022, respectively, which is included in deferred revenue and represents the remaining amount to be recognized over the Company's performance obligations.

(2) In November 2022, the Company issued Warrants (as defined) to Partner (see Note 15:

Stock Compensation for further discussion).

The initial fair value of the Warrants at the time of issuance was $ 48.3 million and recorded in equity with an offset to a contract asset on the Company's consolidated balance sheets.

The fair value of the Warrants is recorded as a reduction to revenue over the period in which the Company performs 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 following tables disclose the components of the Company’s finance and operating leases (amounts in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Operating leases:

9 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

Operating lease cost:

6 unchanged sentences

Total lease cost $ 1,545 $ 938

In accordance with the Service Agreements, the Company began capitalizing certain costs to fulfill this contract during the fourth quarter of 2021, including lease expense, as shown in the table above.

In accordance with the Service Agreements, the Company has capitalized certain costs to fulfill this contract, 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 finance lease liabilities was less than $ 0.1 million for the three and nine months ended September 30, 2022 and 2021;

Interest on finance lease liabilities was less than $ 0.1 million for the three months ended March 31, 2023 and 2022;

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

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Weighted-average lease term

6 unchanged sentences

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

Nine Months Ended

September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

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

Operating cash flows for operating leases $ 1,712 $ 1,357

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

Operating and financing cash flows from finance leases were each less than $ 0.1 million for each of the three months ended March 31, 2023 and 2022;

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 September 30, 2022 (amounts in thousands):

The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of March 31, 2023 (amounts in thousands):

Operating Leases Finance Leases

8 unchanged sentences

Discounted lease liability $ 31,519 $ 83

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

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

Accordingly, these leases are not included on the consolidated balance sheet as of September 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 right of use assets and lease liabilities of approximately $ 4.7 million.

PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

September 30,

2023 December 31,

1 unchanged sentence

Space component $ 1,246,343 $ 1,246,343

First and second-generation satellites in service $ 1,262,254 $ 1,195,509

Second-generation satellite, on-ground spare — 32,442

Ground component 98,328 98,128

11 unchanged sentences

Total property and equipment, net $ 564,427 $ 560,371

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.

During 2022, $ 66.7 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.

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 September 30, 2022, the Company recorded $ 13.5 million as prepaid satellite construction costs and $ 56.4 million in construction in progress on its consolidated balance sheet.

As the Company incurs this construction in progress, it earns the right to receive certain payments from Partner associated with this phase of the Service Agreements as well as certain associated advanced payments under the Service Agreements.

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 $ 16.8 million of 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 Service Agreements.

As discussed in Note 1:

Basis of Presentation and Note 7:

Fair Value Measurements, t he Company evaluated the recoverability of its second-gener ation Duplex assets on September 7, 2022.

This evaluation resulted in the removal of the second-generation Duplex assets from the Company's long-lived asset grouping.

The reduction in value of long-lived assets recorded during the third quarter of 2022 totaled $ 161.2 million.

The table below reflects the reduction in value of long-lived assets by each component of Property and equipment, net, and Intangible and other assets, net, previously recorded on the Company's consolidated balance sheets (amounts in thousands, reflected net of accumulated depreciation and amortization, as applicable, prior to their write downs).

Three months ended September 30, 2022

Property and equipment, net

Ground component $ 154,144

Construction in progress:

ground component 5,545

Equipment 202

Total property and equipment, net $ 159,891

Intangible and other assets, net $ 1,271

Total reduction in value of long-lived assets $ 161,162

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

This agreement has an initial contract price of $ 327 million, of which $ 110.6 million had been incurred as of March 31, 2023 and $ 98.5 million as of December 31, 2022.

The "space component" of construction in progress in the table above includes costs incurred under the MDA contract as well as associated personnel costs and capitalized interest.

Accrued expenses on the Company's condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022 included $ 48.6 million and $ 36.1 million, respectively, of work completed under the satellite procurement agreement.

Nearly all of this amount was paid in April 2023 using proceeds from the Prepayment Agreement with its Partner under the Service Agreements (refer to Note 5 for further discussion).

As of March 31, 2023 and December 31, 2022, the Company also recorded $ 10.8 million and $ 11.5 million as prepaid satellite construction costs for the first milestone payment made upon signing of the contract.

LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Amount Unamortized Discount and Deferred Financing Costs Carrying

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Amount Unamortized Discount and Deferred Financing Costs Carrying

13 % Senior Notes

$ 200,000 $ 17,757 $ 182,243 $ — $ — $ —

2019 Facility Agreement — — — 143,213 11,098 132,115

Vendor financing — — — 59,575 — 59,575

8.00 % Convertible Senior Notes Issued in 2013

— — — 1,407 — 1,407

Total debt and vendor financing $ 200,000 $ 17,757 $ 182,243 $ 202,788 $ 11,098 $ 191,690

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Long-term debt and vendor financing $ 200,000 $ 17,757 $ 182,243 $ 143,213 $ 11,098 $ 132,115

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

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.

All amounts outstanding associated with the Company's vendor financing arrangement are due within the next twelve months and, therefore, are reflected as a current liability on the Company's consolidated balance sheets.

All amounts outstanding associated with the Company's vendor financing arrangement were due in March 2023 and, therefore, were reflected as a current liability on the Company's consolidated balance sheet as of December 31, 2022.

13% Senior Notes

On March 31, 2023, Globalstar, Inc.

(the “Company”) completed the sale of $ 200.0 million in aggregate principal amount of the Company’s non-convertible 13 % Senior Notes due 2029 (the “Notes”).

The Notes were sold pursuant to a Purchase Agreement (the “Purchase Agreement”) dated March 28, 2023 among the Company, as issuer, the subsidiary guarantors party thereto (each, a “Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”), an affiliate of Värde Partners and the other purchasers party thereto (collectively, the “Purchasers”).

The Notes were issued pursuant to an indenture, dated as of March 31, 2023 (the “Indenture”), among the Company, the Subsidiary Guarantors, as guarantors, and Wilmington Trust, National Association, as trustee.

The Notes are senior, unsecured obligations of the Company and have a stated maturity of September 15, 2029.

The Notes were sold at an issue price of 95 % of the principal amount of the Notes.

The Company used a portion of the net proceeds to pay financing costs of $ 7.8 million, which were recorded on the Company's condensed consolidated balance sheet as a reduction in the carrying amount of the debt.

The Notes bear interest initially at a rate of 13.00 % per annum payable semi-annually in arrears.

The Company is required to pay interest (i) at a rate per annum of 4.00 % which must be paid in cash and (ii) at a rate per annum of 9.00 % which may be paid either (a) in-kind (“PIK”) by increasing the principal amount of the Notes outstanding or (b) in cash, in such proportion as the Company may choose, with a step up in the PIK component of the interest if any Notes remain outstanding after March 15, 2028.

The Company has agreed with its Partner under the Service Agreements to pay cash interest on the Notes at a rate of 6.5 % per annum and PIK interest at a rate of 6.5 % per annum.

The Notes may be redeemed at the option of the Company at any time, subject to the conditions of the Indenture.

Among other things, prior to March 15, 2025 (the “First Call Date”), the Company will be permitted to redeem the Notes in whole or in part at the redemption price equal to 100 % of the principal amount of the Notes redeemed plus a premium based on the net present value of the remaining interest payments through the First Call Date.

Beginning on the First Call Date, the Notes may be redeemed at a redemption price equal to 103 % of the principal amount, declining to 100 % of the principal amount after March 15, 2027, in each case, together with accrued and unpaid interest.

Additionally, in the event of a Change of Control (as such term is defined in the Indenture) or certain other events, holders of the Notes have the right to require the Company to repurchase all or a portion of their Notes at a price (as calculated by the Company) in cash equal to 101 % of the aggregate principal amount thereof plus accrued and unpaid interest and certain tax payments.

The Indenture includes customary terms and covenants, including restrictions on the Company’s and the Subsidiary Guarantors’ ability to incur indebtedness, make guarantees, sell equity interests, and customary events of default after which the holders may accelerate the maturity of the Notes and become due and payable immediately.

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).

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

As of September 30, 2022, 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.

The Company generated excess cash flow for the six-month measurement period ended June 30, 2022 and was required to pay $ 6.3 million to its lenders in August 2022.

This payment reduced future principal payment obligations.

The Service Agreements require the Company to refinance all loans outstanding under the 2019 Facility Agreement;

the portion held by Thermo is to be refinanced upon commencement of Services (expected to be November 2022) and the remaining portion is to be refinanced within 90 days of the commencement of Services.

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

The loans under the 2019 Facility Agreement bore interest at a rate of 14.0 % per annum to be paid in kind (or in cash at the option of the Company).

The Service Agreements required the Company to refinance all loans outstanding under the 2019 Facility Agreement.

A portion was refinanced in November 2022 and the remaining portion was refinanced in March 2023.

Using a portion of the proceeds from the sale of the 13 % Senior Notes, the Company repaid all of its outstanding obligations under the 2019 Facility Agreement of approximately $ 148 million.

The Company recorded a loss on extinguishment of debt of $ 10.4 million in the first quarter of 2023 representing the difference between the net carrying amount prior to extinguishment (including unamortized deferred financing costs, debt discounts and derivatives) and the reacquisition price of the debt.

Refer to Note 6:

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Vendor Financing

In February 2022, the Company entered into a satellite procurement agreement with Macdonald, Dettwiler and Associates Corporation (“MDA”) (see Note 8:

In February 2022, the Company entered into a satellite procurement agreement with MDA (see Note 8:

Commitments and Contingencies for further discussion).

As of September 30, 2022, the Company had recorded $ 63.8 million in short-term vendor financing on its consolidated balance sheet associated with this agreement.

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

On October 28, 2022, the Company executed an amendment to extend this payment deferral date and allow for other related changes in terms, including two $ 7.0 million payments (one of which was made on October 31, 2022 and the second is required to be made in November 2022) and interest that will accrue on the amount outstanding at an annual rate of 7 %.

The total interest accrued was $ 0.2 million as of September 30, 2022.

All remaining amounts outstanding are required to be paid in December 2022.

Concurrently, the Company continues to pursue debt financing for the funding of the construction and launch costs for these satellites (discussed below).

New Satellite Construction Financing

As discussed in Note 4:

Property and Equipment and Note 8:

Commitments and Contingencies, the Company entered into a contract with MDA to construct new satellites.

Under the Service Agreements, the Company is required to raise additional debt capital for the construction and launch of the new satellites and targets to complete such financing during the fourth quarter of 2022.

8.00 % Convertible Senior Notes Issued in 2013

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

Interest was paid in cash at a rate of 5.75 % and in additional notes at a rate of 2.25 %.

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 in March 2022.

Prior to the Company's intended redemption of the 8.00 % Notes, the holders converted the remaining principal amount outstanding of $ 1.4 million into 2.3 million shares of Globalstar common stock in February and March 2022.

The 2013 8.00 % Notes were converted into shares of common stock at a conversion price of $ 0.69 per share of common stock.

As a result of the conversions during 2022, the Company recorded gains and losses on extinguishment of debt resulting from the difference between the fair value of shares of Globalstar common stock issued to the holders and the principal amount of the notes that converted as well as the write-offs of the embedded derivative associated with the 2013 8.00 % Notes.

The net impact to the Company's condensed consolidated statement of operations in 2022 was a gain of less than $0.1 million.

Refer to Note 6:

Derivatives and Note 7:

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

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 fully repaid in November 2021.

As a result of prepayments made under the 2009 Facility Agreement during the second and third quarters of 2021, the Company wrote off $ 2.3 million and $ 0.8 million, respectively, in deferred financing costs, which represented the portion of debt prepaid by the Company in the second and third quarters of 2021, and were 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 consolidated balance sheets.

This agreement (as amended in October 2022 and January 2023) provided for deferrals of milestone payments through March 15, 2023.

Interest accrued on the amount outstanding at an annual rate of 7 %, which increased to 10.5 % on balances between December 2022 and March 2023.

The Company has made payments totaling $ 76.1 million to MDA under this vendor financing arrangement, of which $ 62.1 million (including $ 2.5 million of interest) was paid during the first quarter of 2023.

As of March 31, 2023, the Company has fully repaid the outstanding vendor financing balance.

Reflected in the table below is a rollforward of the Company's obligations under its vendor financing arrangement with MDA (amounts in thousands):

March 31, 2023 December 31, 2022

Confirmed obligations outstanding, January 1, 2023 and 2022, respectively $ 59,575 $ —

Invoices confirmed during the periods — 73,575

Confirmed invoices paid during the periods ( 59,575 ) ( 14,000 )

Confirmed obligations outstanding, March 31, 2023 and December 31, 2022, respectively $ — $ 59,575

Prepayment Agreement

On February 27, 2023, the Company and its Partner agreed to amend its previously disclosed Service Agreements to provide for, among other things, the Partner’s prepayment of $ 252 million to the Company (the “Prepayment Agreement”).

The Company will use the proceeds from the Prepayment Agreement to pay amounts due under its Satellite Procurement Agreement with MDA, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of these satellites.

The Prepayment Agreement replaces the Company’s requirement to raise third-party financing for such costs as previously required under the Service Agreements and will be funded on a quarterly basis, subject to certain conditions in the agreement.

The remaining amount of the satellite costs is expected to be funded from Globalstar’s operating cash flows.

Partner made the first payment under the Prepayment Agreement to the Company in April 2023 in the amount of $ 87.7 million.

These proceeds were used to pay amounts owed to MDA for milestones completed as of the payment date, with $ 39.6 million reimbursing the Company for a payment made to MDA on March 31, 2023 and the remaining $ 48.1 million paid to MDA in April 2023.

The total amount paid to the Company under the Prepayment Agreement, including fees, will be recouped from amounts payable by the Partner for services provided by the Company under the Service Agreements.

The total balance is expected to be recouped in installments for a period of 16 quarters beginning no later than the third quarter of 2025.

The prepayment balance may also be repaid over time through excess cash flow sweeps or voluntary prepayments, as provided under the terms of the Prepayment Agreement.

For as long as any amount funded under the Prepayment Agreement is outstanding, the Company will be subject to certain covenants, including (i) maintenance of a minimum cash balance of $ 30 million, (ii) interest coverage and

leverage ratios, and (iii) other customary negative covenants, including limitations on certain asset transfers, expenditures and investments.

Subject to applicable shareholder approval, amounts payable by the Company in connection with the Prepayment Agreement would be guaranteed by Thermo under a guaranty agreement among Thermo, the Company and the Partner.

In addition, Thermo has agreed directly with Partner to provide support of certain of the Company’s obligations under the Service Agreements, the Satellite Procurement Agreement, and certain related contracts.

Series A Preferred Stock

On November 15, 2022, the Company issued 149,425 shares of its 7.0 % Perpetual Preferred Stock, Series A, liquidation preference $ 1,000 per share (the “Series A Preferred Stock”) in exchange for $ 149.4 million outstanding principal amount of its 2019 Facility Agreement held by affiliates of Thermo and certain other lenders.

The Company recorded the Series A Preferred Stock at fair value of the shares totaling $ 105.3 million on its consolidated balance sheet.

Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by the Company's Board of Directors or a committee thereof, cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock, at a fixed rate equal to 7.00 % per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year.

In January and April 2023, the Company's Board of Directors approved the payment of dividends totaling $ 1.3 million for the period November 15, 2022 through December 31, 2022 and $ 2.6 million for the first quarter of 2023;

these dividends have been paid.

The shares of Series A Preferred Stock do not possess voting rights, other than certain matters specifically affecting the rights and obligations of the Series A Preferred.

Series A Preferred Stock may be redeemed by the Company, in whole or in part, at any time.

The holders of the Series A Preferred Stock do not have any rights to convert or require the Company to redeem such stock.

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

None of these derivative instruments are designated as a hedge.

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

September 30, 2022 December 31, 2021

Derivative (liabilities) assets:

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

March 31, 2023 December 31, 2022

Derivative liabilities:

Compound embedded derivative with the 2019 Facility Agreement $ — ( 122 )

Compound embedded derivative with the 2013 8.00 % Notes

$ — ( 1,364 )

As of September 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 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;

accordingly, the associated derivative is no longer outstanding.

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

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

As of December 31, 2022, the derivative liability recorded for the compound embedded derivative with the 2019 Facility Agreement was reflected in "Other non-current liabilities" on the Company's consolidated balance sheet.

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, 2023 March 31, 2022

Compound embedded derivative with the 2013 8.00 % Notes

$ — $ 284 $ 216 $ ( 2,537 )

Compound embedded derivative with the 2019 Facility Agreement — ( 702 )

Total derivative gain (loss) $ 662 $ 229 $ ( 1,066 ) $ ( 2,210 )

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 condensed consolidated statements of operations and its condensed consolidated statements of cash flows as an operating activity.

The Company classifies its derivatives consistent with the classification of the underlying debt on the Company's consolidated balance sheet.

Total derivative loss $ — $ ( 486 )

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 the Company's condensed consolidated statements of operations and its condensed consolidated statements of cash flows as a non-cash operating activity.

Fair Value Measurements for further discussion.

The instruments and related features embedded in the debt instruments that are required to be accounted for as derivatives are described below.

Compound Embedded Derivative with 2013 8.00 % Notes

The 2013 8.00 % Notes contained a conversion option and contingent put feature that were required to be bifurcated and recorded as a compound embedded derivative.

The Company determined the fair value of the compound embedded derivative liability using a Monte Carlo simulation model.

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

accordingly, the associated derivative was extinguished and is no longer outstanding.

Compound embedded derivative with the 2019 Facility Agreement

The 2019 Facility Agreement contained certain contingently exercisable put features that were required to be bifurcated and recorded as a compound embedded derivative.

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

In November 2022, the Company exchanged a portion of the 2019 Facility Agreement into Series A Preferred Stock.

In March 2023, the Company refinanced the remaining principal outstanding under the 2019 Facility Agreement with proceeds from the issuance of its Notes.

As a result of this activity, the Company wrote off the embedded derivative associated with the 2019 Facility Agreement, which is included in "Loss on extinguishment of debt" on the condensed consolidated statement of operations;

therefore, no balance remains as of March 31, 2023.

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

FAIR VALUE MEASUREMENTS

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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).

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;

accordingly, the associated derivative is no longer outstanding See Note 5:

Long-Term Debt and Other Financing Arrangements and Note 6:

Derivatives for further discussion.

Recurring Fair Value Measurements

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

September 30, 2022

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

Compound embedded derivative with the 2019 Facility Agreement $ — $ — $ ( 798 ) $ ( 798 )

Total liabilities measured at fair value $ — $ — $ ( 798 ) $ ( 798 )

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

December 31, 2022

1 unchanged sentence

Compound embedded derivative with the 2019 Facility Agreement — — ( 122 ) ( 122 )

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

Compound embedded derivative with the 2013 8.00 % Notes

$ — $ — $ ( 1,364 ) $ ( 1,364 )

Total liabilities measured at fair value $ — $ — $ ( 122 ) $ ( 122 )

2013 8.00 % Notes

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

December 31, 2021

Volatility Risk-Free

Price Discount Rate Market Price of Common Stock

Compound embedded derivative with the 2013 8.00 % Notes

120 % - 139 %

0.5 % $ 0.69 18 % $ 1.16

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 22 % and 13 % at September 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.

Conversely, when the discount yield is lower than the blended interest rate of the underlying debt, the features embedded in the underlying debt result in an asset for the Company.

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.

As the expected timing and amount of prepayments decrease, the fair value of the embedded derivative also decrease.

During the third quarter of 2022, the Company's expected probability of refinancing the 2019 Facility Agreement increased and therefore the fair value of the embedded derivative reduced.

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 consolidated statements of operations.

In March 2023, the Company refinanced the remaining principal balance outstanding under the 2019 Facility Agreement and wrote off the associated embedded derivative balance;

therefore, no balance remains as of March 31, 2023.

Derivatives for further discussion.

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

The most significant observable input used in the fair value measurement was the discount yield.

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

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

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The following table presents a rollforward for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

Three Months Ended March 31, 2023 Twelve Months Ended December 31, 2022

Balance at beginning of period, January 1, 2023 and 2022, respectively $ ( 122 ) $ ( 880 )

Derivative adjustment related to conversions — 1,563

Derivative adjustment related to extinguishment of debt 122 —

Unrealized loss, included in derivative loss — ( 805 )

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

$ ( 798 ) $ ( 880 )

Fair Value of Debt Instruments and Vendor Financing

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

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

The Company's vendor financing arrangement is recorded at net carrying value, which approximates fair value.

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

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

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

September 30, 2022 December 31, 2021

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

2013 8.00 % Notes

Balance at end of period, March 31, 2023 and December 31, 2022, respectively

$ — $ ( 122 )

Fair Value of Debt and Other Financing Arrangements

The Company believes it is not practicable to determine the fair value of its Notes or the 2019 Facility Agreement 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 Company's vendor financing arrangement was recorded at net carrying value, which approximated fair value.

Long-Term Debt and Other Financing Arrangements for further discussion of the Company's debt instruments.

Nonrecurring Fair Value Measurements

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

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:

Long-Term Debt and Other Financing Arrangements.

As a result of the conversion, the Company wrote off the proportionate fair value of the compound embedded derivative liability with the 2013 8.00 % Notes based on the value of the derivative on each conversion date.

As of each conversion date, the fair value of the compound embedded derivative liability with the 2013 8.00 % Notes was $ 0.8 million.

The significant quantitative Level 3 inputs utilized in the valuation models as of the conversion date are shown in the table below:

February 17, 2022

Risk-Free Interest Rate Note Conversion Price Discount Rate Market Price of Common Stock

Compound embedded derivative with the 2013 8.00 % Notes

0.06 % $ 0.69 18 % $ 1.00

March 9, 2022

Risk-Free Interest Rate Note Conversion Price Discount Rate Market Price of Common Stock

Compound embedded derivative with the 2013 8.00 % Notes

0.18 % $ 0.69 19 % $ 1.21

Prepaid and Other Current Assets, Intangible and Other Assets and Long-Lived Assets

Prepaid and other current assets, intangible and other assets and long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

During 2022, the Company wrote down the value of certain assets as reflected in the table below (in thousands).

Reduction in the Value of Assets

Three Months Ended Nine Months Ended

September 30, 2022

Prepaid and other current assets

Prepaid licenses and royalties (1)

Intangible and other assets, net

Prepaid licenses and royalties (1)

Internally developed technology and software (2)

Spectrum intangible assets (3)

Property and equipment, net (2)

159,891 159,891

Grand Total $ 166,001 $ 166,526

While developing its second-generation Duplex products and services, the Company signed various licensing and royalty agreements necessary for the manufacture and distribution of such products and services.

These prepayments were classified as either current or non-current based on the estimated portion of expense to be recognized over the next twelve months.

As of September 7, 2022, approximately $ 0.2 million and $ 4.5 million, respectively, was recorded in Prepaid and other current assets and Intangible and other assets, net, on the Company's consolidated balance sheets.

On September 7, 2022, these prepaid assets were no longer considered recoverable.

The Company recorded a reduction in value of long-lived assets on its condensed consolidated statements of operations for the amount shown in the table above during the third quarter of 2022.

During 2018 and 2019, the Company placed into service second-generation ground Duplex assets (including associated developed technology and software upgrades) which represented the gateways capable of providing commercial traffic to support Sat-Fi2®.

Additionally, the Company recorded certain costs in construction in progress for spare software associated with the second-generation Duplex assets.

On September 7, 2022, the Company re-assessed its asset grouping for long-lived assets and determined that the second-generation Duplex assets are no longer part of the Company's overall satellite and ground network.

These second-generation Duplex assets will no longer provide future cash flows to the Company.

As of September 7, 2022, approximately $ 1.3 million was recorded in Intangible and other assets, net, and $ 159.9 million was recorded in Property and equipment, net.

The Company recorded a reduction in value of long-lived assets on its condensed consolidated statements of operations for the amount shown in the table above during the third quarter of 2022.

During the second and third quarters of 2022, the Company wrote off approximately $ 0.5 million and $ 0.1 million, respectively, of work in progress associated with its spectrum intangible assets, previously recorded in Intangible and other assets, net, on its consolidated balance sheets.

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

during the second and third quarters 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 during the nine months ended September 30, 2022.

In addition to the items discussed above relative to the Company's second-generation Duplex assets, the Company wrote down the value of equipment held in inventory during the third quarter of 2022.

Included in the Company's inventory balance were second-generation Duplex assets, including finished goods, chips and component parts to be used in manufacturing such devices as well as second-generation Duplex gateway spare parts, totaling $ 6.9 million.

Additionally, the Company recorded amounts prepaid to its product manufacturer related to second-generation Duplex products, previously included in Prepaid and other current assets on its consolidated balance sheets totaling $ 1.6 million.

The Company concluded that there was no remaining net realizable value of its second-generation Duplex inventory including prepayments to its product manufacturer.

Accordingly, during the third quarter of 2022, the Company recorded a reduction in the value of inventory and prepaid and other current assets totaling $ 8.5 million on its condensed consolidated statements of operations, representing the carrying value of these assets on September 7, 2022.

COMMITMENTS AND CONTINGENCIES

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The Service Agreements set forth the primary terms for the Company to provide services to Partner and incur costs related primarily to new gateways and upgrades at existing gateways as well as satellite construction and launch costs.

The Service Agreements have no expiration date but provide that each party may terminate subject to certain notice requirements and, in some cases, other conditions.

In the event Partner terminates the agreements or the deliverables for the second phase of the contract, Partner will reimburse the Company for the cost of materials purchased or manufactured through the date of such termination notice, subject to certain conditions.

The Service Agreements have an indefinite term but provide that either party may terminate subject to certain notice requirements and, in some cases, other conditions.

The Service Agreements also provide for various commitments with which the Company must comply, including to:

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• Maintain minimum quality and coverage standards and provide continuity of service;

• Maintain minimum liquidity of $ 10.0 million, increasing to $30 million once funding under the Prepayment Agreement commences in the second quarter of 2023;

• Allow Partner to recoup advance payments made to Globalstar from future service fees or, to the extent recoupment is not possible, to repay such amounts in cash;

• Provide the Resource Protections as defined in the Service Agreements.

The Service Agreements require the Company to raise additional debt capital for the construction and launch of the new satellites, which the Company targets to be complete during the fourth quarter of 2022.

The Service Agreements require the Company (i) upon commencement of the Services, to refinance all loans outstanding under the 2019 Facility Agreement that are held by affiliates of the Thermo and (ii) within 90 days of the commencement of the Services, to refinance all loans outstanding under the 2019 Facility Agreement that are held by persons other than Thermo.

The Service Agreements also provide that Partner may elect to receive warrants (the "Warrants") to purchase up to 2.64 % of the Company’s outstanding common stock (see further discussion in Note 11:

Loss Per Share).

In addition, Partner has the right, but not the obligation, to participate in certain issuances of the Company’s equity securities, in order to maintain its percentage interest in the Company (determined on a fully diluted basis, assuming exercise of all the Warrants).

The Service Agreements also required the Company (i) upon commencement of the Services, to refinance all loans outstanding under the 2019 Facility Agreement that are held by affiliates of the Thermo and (ii) to refinance all loans outstanding under the 2019 Facility Agreement that are held by persons other than Thermo by March 13, 2023.

The required refinancings have been completed as of March 31, 2023.

Partner has the right, but not the obligation, to participate in certain issuances of the Company’s equity securities, in order to maintain its percentage interest in the Company (determined on a fully diluted basis, assuming exercise of all the Warrants).

Refer to Note 1:

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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;

The initial contract price for 17 satellites is $ 327 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 Service Agreements, subject to certain conditions, Partner is required to reimburse 95 % of the capital expenditures and certain other costs incurred for this contract.

The satellites are expected to be launched in 2025.

In addition, MDA will procure a satellite operations control center for $ 4.9 million.

Under the Service Agreements, subject to certain terms and conditions, Partner has agreed to make service payments equal to 95 % of the approved capital expenditures under the satellite procurement agreement (to be paid on a straight-line basis over the useful life of the satellites) and certain other costs incurred for the new satellites, as adjusted based on certain provisions, beginning with the Phase 2 Service Period.

Refer to Note 5:

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RELATED PARTY TRANSACTIONS

Payables to Thermo and other affiliates related to normal purchase transactions were $ 0.1 million and $ 0.4 million as of September 30, 2022 and December 31, 2021, respectively.

Thermo is the principal owner and largest stockholder of Globalstar.

The Company's Executive Chairman of the Board controls Thermo.

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

Payables to Thermo related to normal purchase transactions were $ 0.1 million and $ 0.3 million as of March 31, 2023 and December 31, 2022, respectively.

Transactions with Thermo

Certain general and administrative expenses are incurred by Thermo on behalf of the Company.

These expenses, which include non-cash expenses that the Company accounts for as a contribution to capital, related to services provided by certain executive officers of Thermo, and expenses incurred by Thermo on behalf of the Company that are charged to the Company.

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

These expenses include:

i) non-cash expenses, such as stock compensation costs as well as costs recorded as a contribution to capital as they relate to services provided by certain executive officers of Thermo, and ii) expenses incurred by Thermo on behalf of the Company that are charged to the Company;

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

The Company has a lease agreement with Thermo Covington, LLC for the Company's headquarters office.

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 nine months ended September 30, 2022 and 2021, the Company incurred lease expense of $ 1.2 million under 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 2019 Facility Agreement was approximately $ 39.4 million, of which $ 9.7 million was accrued during the nine months ended September 30, 2022.

As discussed in Note 8:

Commitments and Contingencies, the Service Agreements require the Company to refinance all loans outstanding under the 2019 Facility Agreement;

the portion associated with Thermo is required to be refinanced upon commencement of Services, which is expected to be during the fourth quarter of 2022.

In connection with the Service Agreements, in September 2022, Partner and Thermo entered into a lock-up and right of first offer agreement that generally (i) requires Thermo to offer any shares of Globalstar common stock to Partner before transferring them to any other Person other than affiliates of Thermo and (ii) prohibits Thermo from transferring shares of Globalstar common stock if such transfer would cause Thermo to hold less than 51.00 % of the outstanding common stock of the Company for a period of 5 years from the Service Launch (as defined in Note 1:

Basis of Presentation).

This agreement does not prohibit the Company from entering into a change of control transaction at any time.

Additionally, upon commencement of the Services, the Service Agreements require the Company to refinance all loans outstanding under the 2019 Facility Agreement that are held by Thermo.

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 each of the three months ended March 31, 2023 and 2022, the Company incurred lease expense of $ 0.4 million under this lease agreement.

To fulfill its obligations under the Service Agreements, in November 2022, the Company entered into an Exchange Agreement with Thermo and certain other Exchanging Lenders providing for the exchange of all the outstanding principal amount of, and accrued and unpaid interest on, the Exchanging Lenders’ loans under the 2019 Facility Agreement for shares of the Company's Series A Preferred Stock.

The terms of the Exchange Agreement were reviewed and approved by the Company's Board of Directors and Audit Committee.

Thermo's ownership portion in the Series A Preferred Stock is $ 136.7 million.

Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by our Board of Directors, cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock, at a fixed rate equal to 7.00 % per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year.

The Company paid Thermo dividends of $ 1.2 million for the period November 15, 2022 through December 31, 2022 and $ 2.4 million for the first quarter of 2023.

Also in connection with the Service Agreements, Partner and Thermo entered into a lock-up and right of first offer agreement that generally (i) requires Thermo to offer any shares of Globalstar common stock to Partner before transferring them to any other Person other than affiliates of Thermo and (ii) prohibits Thermo from transferring shares of Globalstar common stock if such transfer would cause Thermo to hold less than 51.00 % of the outstanding common stock of the Company for a period of five years from the launch of Services in November 2022.

Subject to applicable shareholder approval, amounts payable by the Company in connection with the 2023 Prepayment with Partner would be guaranteed by Thermo.

In addition, Thermo has agreed to provide support of certain of the Company’s obligations under the Service Agreements, the Satellite Procurement Agreement, and certain related contracts directly to the Partner.

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

PENSIONS AND OTHER EMPLOYEE BENEFITS

Defined Benefit Plan

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

(the "Pension Plan").

The Pension Plan was frozen, effective October 23, 2003, for participation and benefit accrual purposes.

The Pension Plan was settled in August 2022, which resulted in the Company no longer have any remaining pension plan obligations as of September 30, 2022.

The total settlement of $ 7.7 million was paid out through assets held in the Pension Plan and cash, totaling $ 5.0 million and $ 2.7 million, respectively,

Upon settlement, the Company recorded a pension settlement loss totaling $ 1.5 million, reflected in Other income (expense) on the Company's condensed consolidated statements of operations during the nine months ended September 30, 2022.

LOSS PER SHARE

Loss per share is computed by dividing loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

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 income.

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

When outstanding, the effect of potentially dilutive common shares for the Company's convertible notes is 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 computation of basic and diluted loss per common share during each of the three and nine months ended September 30, 2022 and 2021 (amounts in thousands, except per share data):

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

The following table sets forth the computation of basic and diluted loss per common share during each of the three months ended March 31, 2023 and 2022 (amounts in thousands, except per share data):

Three Months Ended

March 31, 2023 March 31, 2022

Net loss $ ( 3,480 ) $ ( 20,462 )

Effect of Series A Preferred Stock dividends ( 2,615 ) —

Adjusted net loss attributable to common shareholders $ ( 6,095 ) $ ( 20,462 )

Weighted average shares outstanding 1,811,831 1,797,671

Net loss per common share - basic and diluted $ 0.00 $ ( 0.01 )

For the three months ended September 30, 2022 and 2021, 9.4 million and 11.0 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 nine months September 30, 2022 and 2021, 8.8 million and 10.2 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

The Service Agreements also provide that Partner may elect to receive warrants (the "Warrants") to purchase up to 2.64 % of the Company’s outstanding common stock, to be calculated on a fully diluted basis on the date Partner begins providing the Services (estimated to be November 2022), at a blended exercise price of $ 1.01 , which is based on the price of Globalstar common stock on the dates of certain past milestones provided under the Service Agreements.

As of September 30, 2022, the estimated Warrants to purchase shares of Globalstar common stock is 49.1 million with estimated proceeds to the Company totaling $ 49.8 million.

Partner is under no obligation to receive the Warrants or to exercise them.

For the three months ended March 31, 2023 and 2022, 19.7 million and 7.4 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

Included in these shares as of March 31, 2023 is a portion of the 49.1 million Warrants issued to Partner under the Service Agreements in 2022, which was determined after considering the exercise price of each tranch relative to the average market price during the period.

As discussed in Note 5:

Long-Term Debt and Other Financing Arrangements, the Company's Board of Directors approved the payment of dividends totaling $ 2.6 million for the three months ended March 31, 2023 on its Series A Preferred Stock.

This amount adjusts the numerator used to calculate loss per share.

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