What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-05 · 240 added, 133 removed, 464 unchanged (45% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended

2023 March 31,

Three Months Ended Six Months Ended

2023 June 30,

2022 June 30,

2023 June 30,

Service revenue $ 48,648 $ 33,048 $ 101,602 $ 62,392

5 unchanged sentences

Marketing, general and administrative 12,654 9,693 26,045 19,034

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

Depreciation, amortization and accretion 21,890 24,130 43,823 47,913

4 unchanged sentences

Interest income and expense, net of amounts capitalized ( 5,070 ) ( 7,187 ) ( 7,102 ) ( 16,717 )

Derivative loss — ( 486 )

Foreign currency gain 1,907 3,232

Derivative gain (loss) 299 ( 1,242 ) 299 ( 1,728 )

Foreign currency gain (loss) 2,038 ( 7,123 ) 3,945 ( 3,891 )

Other 148 272 49 389

Total other expense ( 2,585 ) ( 15,280 ) ( 13,212 ) ( 21,947 )

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

Income (loss) before income taxes 35 ( 26,636 ) ( 3,401 ) ( 47,015 )

Income tax expense 26 121 70 204

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

Net income (loss) $ 9 $ ( 26,757 ) $ ( 3,471 ) $ ( 47,219 )

Other comprehensive loss:

13 unchanged sentences

(In thousands, except par value and share data)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets:

7 unchanged sentences

Operating lease right of use assets, net 32,557 30,859

Prepaid satellite construction costs and related customer receivable 135,229 122,496

Prepaid satellite construction costs and customer receivable 24,188 27,570

Intangible and other assets, net of accumulated amortization of $ 11,660 and $ 10,908 , respectively

3 unchanged sentences

Current liabilities:

Current portion of long-term debt $ 29,800 $ —

Accounts payable 3,022 3,843

1 unchanged sentence

Accrued expenses 29,718 22,554

Accrued satellite construction costs 54,228 36,139

Payables to affiliates 284 326

Deferred revenue 80,873 74,639

Deferred revenue, net 56,724 74,639

Total current liabilities 173,776 197,076

7 unchanged sentences

Preferred Stock of $ 0.0001 par value;

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

99,700,000 shares authorized and none issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Series A Preferred Convertible Stock of $ 0.0001 par value;

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

300,000 shares authorized and 149,425 issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Voting Common Stock of $ 0.0001 par value;

2,150,000,000 shares authorized;

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

1,813,971,721 and 1,811,074,696 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,352,414 2,345,612

19 unchanged sentences

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 — — 363 — 1,874 — — 1,874

Contribution of services — — — — 47 — — 47

Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation — — 497 — 636 — — 636

Series A Preferred Stock Dividends — — — — ( 2,644 ) — — ( 2,644 )

Fair value of Thermo guarantee associated with the 2023 Funding Agreement — — — — 6,897 — — 6,897

Other comprehensive loss — — — — — ( 1,307 ) — ( 1,307 )

Net income — — — — — — 9 9

Balances – June 30, 2023 149 $ — 1,813,972 $ 181 $ 2,352,414 $ 6,506 $ ( 2,043,735 ) $ 315,366

Preferred Stock Common Stock Additional

11 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

See accompanying notes to unaudited interim condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

2023 March 31,

Six Months Ended

2023 June 30,

Cash flows provided by operating activities:

2 unchanged sentences

Depreciation, amortization and accretion 43,823 47,913

Change in fair value of derivatives — 486

Stock-based compensation expense 6,292 2,380

Noncash consideration, net, associated with wholesale capacity contract ( 1,203 ) —

Amortization of deferred financing costs 25 166

Provision for credit losses 249 332

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

Noncash interest and accretion expense 9,760 16,522

Unrealized foreign currency (gain) loss ( 4,008 ) 4,139

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

Write off of debt discount and deferred financing costs upon extinguishment of debt 10,194 —

Other, net ( 487 ) ( 424 )

11 unchanged sentences

Payments under the satellite procurement agreement ( 108,664 ) —

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

Other network upgrades to support the Service Agreements ( 6,898 ) ( 18,511 )

Payments of capitalized interest ( 5,263 ) —

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

Network upgrades to support product development ( 3,422 ) ( 3,198 )

Purchase of intangible assets ( 389 ) ( 683 )

Net cash used in investing activities ( 124,636 ) ( 22,392 )

Cash flows provided by (used in) financing activities:

Cash flows provided by financing activities:

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

Proceeds from 13% Notes Agreement 190,000 —

Proceeds from 2023 13 % Notes

Proceeds from 2023 Funding Agreement 87,730 —

Dividends paid on Series A Preferred Stock ( 6,595 ) —

3 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash 73 9

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

Net increase (decrease) in cash, cash equivalents and restricted cash 33,252 ( 1,163 )

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

4 unchanged sentences

Total cash and cash equivalents cash shown in the statement of cash flows $ 65,334 $ 32,082

Three Months Ended

2023 March 31,

Six Months Ended

2023 June 30,

Supplemental disclosure of cash flow information:

4 unchanged sentences

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

Re-characterization of 2021 Funding Agreement to debt 87,950 —

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, 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, 2023 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, 2023 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recently Issued Accounting Pronouncements

6 unchanged sentences

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.

The Company adopted this standard when it became effective on January 1, 2023 and revised its disclosures pursuant to ASU 2022-04.

Disaggregation of Revenue

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

Three Months Ended

March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Service revenue:

19 unchanged sentences

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.

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.

2 unchanged sentences

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

Three Months Ended

March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Service revenue:

10 unchanged sentences

Central and South America 825 328 1,402 757

Others 1 9 5 18

Total subscriber equipment sales $ 6,424 $ 3,752 $ 12,114 $ 7,180

1 unchanged sentence

Accounts Receivable

The Company records trade accounts receivable from its customers, including MSS subscribers and Partner under the Service Agreements, when it has a contractual right to receive payment either on demand or on fixed or determinable dates in the future.

The Company records trade accounts receivable from its customers, including MSS subscribers and its Partner under the Service Agreements, when it has a contractual right to receive payment either on demand or on fixed or determinable dates in the future.

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 receivables (amounts in thousands).

March 31, 2023 December 31, 2022

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 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).

June 30, 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 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.

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 with Macdonald, Dettwiler and Associates Corporation ("MDA") and certain other costs incurred for the new satellites;

these payments are expected to be paid on a straight-line basis commencing with the launch of these satellites through their estimated useful life ("Phase 2 Service Period").

Based on construction in progress incurred by the Company, amounts expected to be billed to Partner associated with this phase of the Service Agreements were $ 162.5 million a s of June 30, 2023 .

In prior filings, the Company recorded a long-term unbilled receivable and related long-term deferred revenue reflecting its Partner’s obligation to fund 95 % of the construction costs associated with the satellites that are being constructed to provide service during the Phase 2 Service Period.

During the second quarter 2023, the Company revised this presentation and applied this change to its December 31, 2022 balance sheet.

This change in accounting presentation has no impact on Partner’s obligation to provide funding for the satellite construction costs nor the expected revenue the Company will recognize during the Phase 2 Service Period.

Contract Liabilities

2 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Short-term contract liabilities

7 unchanged sentences

Total contract liabilities $ 61,644 $ 137,516

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.

For subscriber contract liabilities, the amount of revenue recognized during the six months ended June 30, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 14.0 million and $ 18.3 million, respectively.

For wholesale capacity contract liabilities, the amount of revenue recognized during the six months ended June 30, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 33.5 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 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 .

As of June 30, 2023, the Company expects to recognize $ 24.1 million 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 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 .

As of June 30, 2023, the Company expects to recognize $ 32.7 million of its remaining performance obligations to its Partner during the next twelve months .

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Wholesale capacity contract liabilities, net:

1 unchanged sentence

$ 6,426 $ 99,671

Advanced payments for services expected to be performed with the recently launched ground spare satellite during Phases 1 and 2 24,992 25,438

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

Additional consideration associated with the 2021 Funding Agreement (4)

Advanced payments for services expected to be performed with the ground spare satellite launched in June 2022 during Phases 1 and 2 24,552 25,438

Advanced payments contractually owed for services expected to be performed with the next-generation satellite constellation prior to the Phase 2 Service Period 16,602 22,540

Additional consideration associated with the 2023 Funding Agreement (5)

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

3 unchanged sentences

Wholesale capacity contract liabilities, net $ 35,800 $ 113,825

(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).

(1) In accordance with applicable accounting guidance, the Company records imputed interest associated with the significant financing component, totaling $ 4.8 million and $ 5.3 million as of June 30, 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 to Partner (the "Warrants").

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.

(3) During 2021, the Company received payments from Partner totaling $ 94.2 million (the "2021 Funding Agreement").

In February 2023, the Service Agreements were amended.

This amendment, which was effective in April 2023, changed certain terms in the 2021 Funding Agreement, including granting Partner a first lien security interest in substantially all of the assets of the Company and its domestic subsidiaries.

This amendment resulted in $ 88.0 million previously recorded as deferred revenue to be re-characterized as debt during the second quarter of 2023.

See further discussion in Note 5:

Long-Term Debt and Other Financing Arrangements.

(4) In connection with the Company recording the fair value of the financial obligations in the amended 2021 Funding Agreement, it recorded a debt discount of $ 11.6 million, representing the difference between the present value of the future principal payments discounted using the prevailing market rate at the date of issuance of the debt and the effective rate.

The offset was recorded to deferred revenue and is being recognized into revenue over the Phase 1 Service Period.

(5) In connection with the Company recording the fair value of the financial obligations in the 2023 Funding Agreement (as defined in Note 5:

Long-Term Debt and Other Financing Arrangements), it recorded a debt discount of $ 4.5 million, representing the difference between the present value of the future principal payments discounted using the prevailing market rate at the date of issuance of the debt and the effective rate.

The offset was recorded to deferred revenue and will be recognized into revenue over the Phase 2 Service Period.

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

March 31, 2023 December 31, 2022

June 30, 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

March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Operating lease cost:

6 unchanged sentences

Total lease cost $ 1,597 $ 1,137 $ 3,143 $ 2,325

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 months ended March 31, 2023 and 2022;

In accordance with the Service Agreements, prior to the launch of Phase 1 services in November 2022, the Company capitalized certain costs to fulfill this contract, including lease expense, as shown in the table above.

These capitalized lease costs are 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 six months ended June 30, 2023 and 2022;

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

1 unchanged sentence

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Weighted-average lease term

6 unchanged sentences

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

Three Months Ended

March 31, 2023 March 31, 2022

Six Months Ended

June 30, 2023 June 30, 2022

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

Operating cash flows for operating leases $ 2,988 $ 2,536

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;

Operating and financing cash flows from finance leases were each less than $ 0.1 million for each of the six months ended June 30, 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 March 31, 2023 (amounts in thousands):

The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of June 30, 2023 (amounts in thousands):

Operating Leases Finance Leases

27 unchanged sentences

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.

This agreement has an initial contract price of $ 327 million, of which $ 166.0 million had been incurred as of June 30, 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.

Accrued satellite construction costs on the Company's condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 included $ 54.2 million and $ 36.1 million, respectively, of work completed, but not yet invoiced, under the satellite procurement agreement.

As of June 30, 2023 and December 31, 2022, the Company also recorded $ 8.1 million and $ 11.5 million, respectively, as prepaid satellite construction costs for the first milestone payment made upon signing of the contract;

these costs are recorded in Prepaid satellite construction costs and customer receivable on the Company's condensed consolidated balance sheets.

LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Amount Unamortized Discount and Deferred Financing Costs Carrying

1 unchanged sentence

Amount Unamortized Discount and Deferred Financing Costs Carrying

13 % Senior Notes

2023 Funding Agreement $ 87,729 $ 11,891 $ 75,838 $ — $ — $ —

2021 Funding Agreement 87,950 10,015 77,935 — — —

2023 13 % Notes

200,000 17,187 182,813 — — —

7 unchanged sentences

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”).

As of June 30, 2023, the current portion of long-term debt is associated with the 2021 Funding Agreement and represents the amounts to be paid to Partner under the Service Agreements during the next twelve months.

2023 Funding Agreement

In February 2023, the Company and its Partner agreed to amend its Service Agreements to provide for, among other things, the Partner’s payment of up to $ 252 million to the Company (the “2023 Funding Agreement”) to fund 50 % of the amounts due under its agreement with MDA, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of these satellites.

The 2023 Funding 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 2023 Funding 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.

The total amount paid to the Company under the 2023 Funding Agreement, including fees, is expected to 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 balance may also be repaid over time through excess cash flow sweeps or voluntary prepayments, as provided under the terms of the 2023 Funding Agreement.

For as long as any amount funded under the 2023 Funding 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.

Thermo has agreed to provide support of certain of the Company’s obligations under the 2023 Funding Agreement.

Currently, this support agreement is directly between Thermo and Partner, and the parties have agreed to replace it with agreement between Thermo, the Company and the Partner.

Entry into this guarantee agreement received shareholder approval in June 2023, and it is expected to be effective during the third quarter of 2023.

See further discussion regarding Thermo's guarantee in Note 9:

Related Party Transactions.

The Company recorded the fair value of the 2023 Funding Agreement using a discounted cash flow model.

The Company recorded debt discounts for the difference between the fair value of the debt and the proceeds received.

This difference is attributed to the fair value of the Thermo guarantee (recorded as additional paid in capital) and the fair value of the economic

benefit received due to the existing customer relationship (recorded as deferred revenue);

both of these debt discounts are netted against the face value of the 2023 Funding Agreement.

The Company is accreting the debt discounts to interest expense through the maturity date using an effective interest rate method.

Additionally, the prepayment features included in the 2023 Funding Agreement required bifurcation from the debt and were valued separately.

The Company recorded the embedded derivative liability as a non-current liability on its condensed consolidated balance sheet with a corresponding debt discount, which is netted against the face value of the 2023 Funding Agreement.

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

Refer to Note 6:

Derivatives and Note 7:

Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2023 Funding Agreement.

As the Company makes additional draws under the 2023 Funding Agreement, the amount of each draw will be recorded at fair value and the Company will assess the fair value of embedded features within the debt.

The table below outlines the components of the first draw under the 2023 Funding Agreement at funding (amounts in thousands):

Principal $ 87,729

Debt Discount - Thermo Guarantee ( 6,897 )

Debt Discount - Customer Relationship ( 4,509 )

Debt Discount - Embedded Derivative ( 341 )

Fair Value at Issuance $ 75,982

2021 Funding Agreement

During 2021, the Company received payments from Partner under the 2021 Funding Agreement totaling $ 94.2 million.

In connection with the February 2023 amendment of the Service Agreements (discussed above), certain terms of the 2021 Funding Agreement with Partner were amended to align with the terms of the 2023 Funding Agreement, including granting Partner a first-priority lien in substantially all of the assets of the Company and its domestic subsidiaries to secure the Company's repayment of amounts funded by Partner.

This amendment resulted in the Company re-characterizing the previously recorded deferred revenue to debt.

The Company recorded the funding under the 2021 Funding Agreement at fair value, net of a debt discount.

The Company is accreting the debt discount to interest expense through the maturity date using an effective interest rate method.

The table below outlines the components of the 2021 Funding Agreement (amounts in thousands):

Principal $ 94,200

Amount Repaid ( 6,250 )

Debt Discount - Customer Relationship ( 11,626 )

Fair Value at Issuance $ 76,324

2023 13 % Notes

In March 2023, the Company completed the sale of $ 200.0 million in aggregate principal amount of non-convertible 13 % Senior Notes due 2029 (the “2023 13 % Notes”).

The 2023 13 % 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”).

17 unchanged sentences

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.

Using a portion of the proceeds from the sale of the 2023 13 % 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.

7 unchanged sentences

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

June 30, 2023 December 31, 2022

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

1 unchanged sentence

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.

Confirmed obligations outstanding, June 30, 2023 and December 31, 2022, respectively

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.

In November 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 table below reflects the dividends approved by the Company's Board of Directors (amounts in thousands):

Payment Period Payment Date Payment Amount

November 15, 2022 - December 31, 2022 January 2023 $ 1,337

January 1, 2023 - March 31, 2023 April 2023 2,615

April 1, 2023 - June 30, 2023 June 2023 2,644

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.

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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

June 30, 2023 December 31, 2022

Derivative liabilities:

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

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

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

Total derivative loss $ — $ ( 486 )

Embedded derivative within 2023 Funding Agreement $ ( 42 ) $ —

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

Derivative liabilities are recorded in "Other non-current liabilities" on the Company's consolidated balance sheet.

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 Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Embedded derivative within 2023 Funding Agreement $ 299 $ — $ 299 $ —

Compound embedded derivative within the 2013 8.00 % Notes

Compound embedded derivative within the 2019 Facility Agreement — ( 1,242 ) — ( 1,944 )

Total derivative gain (loss) $ 299 $ ( 1,242 ) $ 299 $ ( 1,728 )

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.

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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

Compound Embedded Derivative within 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.

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

Compound embedded derivative with the 2019 Facility Agreement

Compound embedded derivative within 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.

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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.

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

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

2023 Funding Agreement

The 2023 Funding Agreement contains certain prepayment features that are required to be bifurcated and recorded as an embedded derivative liability on the Company's condensed consolidated balance sheet with a corresponding debt discount that is netted against the principal amount of the draws under the 2023 Funding Agreement.

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

FAIR VALUE MEASUREMENTS

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

June 30, 2023

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

Embedded derivative within 2023 Funding Agreement $ — $ — $ ( 42 ) $ ( 42 )

Total liabilities measured at fair value $ — $ — $ ( 42 ) $ ( 42 )

December 31, 2022

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

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

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

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

1 unchanged sentence

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.

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

Compound Embedded Derivative within the 2019 Facility Agreement

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

2 unchanged sentences

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

Embedded Derivative within the 2023 Funding Agreement

The embedded derivative associated with the 2023 Funding Agreement is valued using a discounted cash flow model.

The most significant observable input used in the fair value measurement is the discount yield, which was 8.21 % at June 30, 2023 and 8.52 % at issuance.

As the discount yield used in the valuation decreases, the fair value of the embedded derivative decreases.

The significant unobservable input used in the fair value measurement includes estimated timing and amounts of cash flows associated with the prepayment features within the debt agreement.

As projected cash flows decrease, the fair value of the embedded derivative decreases.

Derivatives for further discussion.

Rollforward of Recurring Level 3 Assets and Liabilities

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

Six Months Ended

June 30, 2023 Twelve Months Ended December 31, 2022

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

Issuance of embedded derivative within the 2023 Funding Agreement ( 341 ) —

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, March 31, 2023 and December 31, 2022, respectively

Unrealized gain (loss), included in derivative gain (loss) 299 ( 805 )

Balance at end of period, June 30, 2023 and December 31, 2022, respectively

$ ( 42 ) $ ( 122 )

Nonrecurring Fair Value Measurements

2023 Funding Agreement

As previously discussed, the Company entered into the 2023 Funding Agreement with its Partner in February 2023.

Significant quantitative Level 3 inputs were utilized in the valuation model as of the first draw date on April 18, 2023.

The Company's first draw under the 2023 Funding Agreement occurred in April 2023 with a total fair value of $ 76.0 million calculated as the projected future cash flows discounted using the prevailing market rate of interest for a similar transaction.

The discount yield used for this calculation was 8.52 %.

Amounts payable to Partner under the 2023 Funding Agreement, are expected to be guaranteed by Thermo under a guarantee agreement among Thermo, the Company and the Partner.

The Company recorded a total fair value of $ 6.9 million for this embedded feature, which was calculated as the difference in projected cash flows with and without the guarantee agreement discounted using calculated rates of 6.22 % and 8.52 %, respectively.

2021 Funding Agreement

In connection with the re-characterization of the 2021 Funding Agreement from deferred revenue to debt, the Company recorded the fair value of the debt calculated as the projected cash flows discounted using the prevailing market rate of interest for a similar transaction.

The discount yield used for this calculation was 8.52 %.

The total fair value of the 2021 Funding Agreement was $ 76.3 million and was recorded on the Company's condensed consolidated balances sheet during the second quarter of 2023 when the amendment was effective.

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.

The Company believes it is not practicable to determine the fair value of its debt agreements on a recurring basis 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.

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Service Agreements

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

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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;

• Maintain minimum liquidity of $ 30 million;

• Use best efforts to obtain a standby letter of credit by December 31, 2023 (or such future date as determined by Partner) in the aggregate outstanding amounts of the 2021 and 2023 Funding Agreements;

• 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 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.

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

The required refinancings have been completed.

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 2:

Basis of Presentation, Note 2:

Revenue, Note 3:

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Globalstar is acquiring the satellites to provide continuous satellite services to Partner under the Service Agreements, 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.

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

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.

Payables to Thermo related to normal purchase transactions were $ 0.3 million and $ 0.3 million as of June 30, 2023 and December 31, 2022, respectively.

Transactions with Thermo

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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 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.

Annual lease payments started at $ 1.4 million per year and increase at a rate of 2.5 % per year.

2023 lease payments will be $ 1.6 million.

The lease term is ten years and will expire in January 2029.

During each of the six months ended June 30, 2023 and 2022, the Company incurred lease expense of $ 0.8 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.

2 unchanged sentences

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.

During 2023, the Company paid Thermo dividends of $ 1.2 million for the period November 15, 2022 through December 31, 2022 and $ 2.4 million for each of the first and second quarters 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.

Amounts payable by the Company in connection with the 2023 Funding Agreement are expected to be guaranteed by Thermo under a guarantee agreement among Thermo, the Company and the Partner.

Thermo has agreed to provide support of certain of the Company’s obligations under the 2023 Funding Agreement.

Currently this support agreement is directly between Thermo and Partner, and the parties have agreed to replace it with an agreement between Thermo, the Company and the Partner.

Entry into this guarantee agreement received shareholder approval in June 2023, and it is expected to be effective during the third quarter of 2023.

As consideration for Thermo's guarantee, the Company will issue to Thermo warrants to purchase 10.0 million shares of the Company’s common stock at an exercise price of equal to $ 2.00 (as calculated pursuant to the agreement).

5.0 million of these warrants vest immediately upon effectiveness of Thermo's guarantee, which is expected to occur during the third quarter of 2023, and the remaining 5.0 million warrants vest if and when Thermo advances aggregate funds of $ 25.0 million or more to the Company or a permitted third party pursuant to the terms of Thermo's guarantee.

These warrants expire five years after the date of issuance.

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

LOSS PER SHARE

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 )

NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per common share during each of the three and six months ended June 30, 2023 and 2022 (amounts in thousands, except per share data):

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Net income (loss) $ 9 $ ( 26,757 ) $ ( 3,471 ) $ ( 47,219 )

Effect of Series A Preferred Stock dividends ( 2,644 ) — ( 5,259 ) —

Adjusted net loss attributable to common shareholders $ ( 2,635 ) $ ( 26,757 ) ( 8,730 ) ( 47,219 )

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

Weighted average shares outstanding - basic and diluted 1,813,393 1,799,886 1,812,617 1,798,784

Net loss per common share - basic and diluted $ 0.00 $ ( 0.01 ) $ 0.00 $ ( 0.03 )

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.

For the three months ended June 30, 2023 and 2022, 18.2 million and 7.8 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 ended June 30, 2023 and 2022, 19.0 million and 7.6 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 June 30, 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 tranche relative to the average market price during the period.

Excluded from the amounts above are warrants expected to be issued to Thermo for its guarantee of the 2023 Funding Agreement totaling 10.0 million;

the guarantee is expected to become effective during the third quarter of 2023.

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.

Long-Term Debt and Other Financing Arrangements, the Company's Board of Directors approved the payment of dividends totaling $ 2.6 million and $ 5.3 million for the three and six months ended June 30, 2023, respectively, 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