What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 239 added, 198 removed, 506 unchanged (46% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

2023 June 30,

2022 June 30,

2023 June 30,

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Service revenue $ 53,643 $ 33,301 $ 155,245 $ 95,693

4 unchanged sentences

Cost of subscriber equipment sales 3,458 3,490 13,429 9,153

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

Marketing, general and administrative 12,090 8,607 31,843 25,166

Stock-based compensation

4,346 2,100 10,638 4,575

Reduction in the value of long-lived assets 35 166,001 35 166,526

5 unchanged sentences

Interest income and expense, net of amounts capitalized ( 3,945 ) ( 7,583 ) ( 11,047 ) ( 24,300 )

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

Foreign currency loss ( 4,151 ) ( 9,406 ) ( 206 ) ( 13,297 )

Derivative gain (loss) and other 25 ( 884 ) 373 ( 2,223 )

Total other expense ( 8,071 ) ( 17,873 ) ( 21,283 ) ( 39,820 )

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

Income tax expense 26 121 70 204

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

Loss before income taxes ( 6,054 ) ( 204,514 ) ( 9,455 ) ( 251,529 )

Income tax expense (benefit) 115 ( 153 ) 185 51

Net loss $ ( 6,169 ) $ ( 204,361 ) $ ( 9,640 ) $ ( 251,580 )

Other comprehensive loss:

Foreign currency translation adjustments 2,503 6,613 ( 233 ) 11,249

Defined benefit pension plan liability adjustment

$ — $ 2,073 $ — $ 2,073

Comprehensive loss $ ( 3,666 ) $ ( 195,675 ) $ ( 9,873 ) $ ( 238,258 )

11 unchanged sentences

(In thousands, except par value and share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

7 unchanged sentences

Operating lease right of use assets, net 34,273 30,859

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

Prepaid satellite costs and customer receivable 13,600 27,570

Intangible and other assets, net of accumulated amortization of $ 12,060 and $ 10,908 , respectively

19 unchanged sentences

Preferred Stock of $ 0.0001 par value;

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

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

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

Voting Common Stock of $ 0.0001 par value;

2,150,000,000 shares authorized;

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

1,876,120,002 and 1,811,074,696 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,424,073 2,345,612

27 unchanged sentences

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

Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation — — 2,171 1 3,870 — — 3,871

Contribution of services — — — — 47 — — 47

Series A Preferred Stock Dividends — — — — ( 2,673 ) — — ( 2,673 )

Issuance of stock in connection with License Agreement with XCOM — — 59,977 6 70,415 — — 70,421

Other comprehensive income — — — — — 2,503 — 2,503

Net loss — — — — — — ( 6,169 ) ( 6,169 )

Balances – September 30, 2023 149 — 1,876,120 $ 188 $ 2,424,073 $ 9,009 $ ( 2,049,904 ) $ 383,366

Preferred Stock Common Stock Additional

17 unchanged sentences

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

See accompanying notes to unaudited interim condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended

2023 June 30,

Nine Months Ended

September 30,

2023 September 30,

Cash flows provided by operating activities:

6 unchanged sentences

Noncash interest and accretion expense 12,304 23,788

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

Unrealized foreign currency loss 131 13,399

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

Noncash expenses associated with SSA, net of amortization 892 —

Other, net ( 477 ) 738

16 unchanged sentences

Net cash used in investing activities ( 142,385 ) ( 25,306 )

Cash flows provided by financing activities:

Cash flows provided by (used in) financing activities:

Principal and interest payments of the 2019 Facility Agreement ( 148,281 ) ( 6,341 )

1 unchanged sentence

Proceeds from 2023 Funding Agreement 87,730 —

Principal payment of 2021 Funding Agreement ( 6,250 ) —

Dividends paid on Series A Preferred Stock ( 9,269 ) —

1 unchanged sentence

Proceeds from issuance of common stock and exercise of options 528 455

Net cash provided by financing activities 114,822 449

Net cash provided by (used in) financing activities 105,902 ( 5,886 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 19 ) ( 68 )

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

Net increase in cash, cash equivalents and restricted cash 32,054 445

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

Cash, cash equivalents and restricted cash, end of period $ 64,136 $ 14,749

September 30,

2023 December 31,

2 unchanged sentences

Total cash and cash equivalents cash shown in the statement of cash flows $ 64,136 $ 32,082

Six Months Ended

2023 June 30,

Nine Months Ended

September 30,

2023 September 30,

Supplemental disclosure of cash flow information:

5 unchanged sentences

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

Fair value of common stock issued for License Agreement 58,534 —

Fair value of common stock issued for SSA 11,887 —

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 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.

The results of operations for the three and nine months ended September 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

7 unchanged sentences

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

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill, eliminating Step 2 from the goodwill impairment test.

Under ASU 2017-04, goodwill impairment will be tested by comparing the fair value of a reporting unit with its carrying amount, and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

ASU 2017-04 should be applied prospectively and is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted.

Prior to August 2023, the Company did not have any recorded goodwill on its consolidated balance sheets.

In connection with the License Agreement (discussed below) entered into in August 2023, the Company recorded goodwill and is now subject to the guidance pursuant to ASU 2017-04.

The Company adopted ASU 2017-04 effective July 1, 2023.

The adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.

LICENSE AGREEMENT

As more fully described in the Company’s Current Report on Form 8-K filed with the Commission on August 31, 2023, on August 29, 2023, the Company entered into an Intellectual Property License Agreement (the “License Agreement”) with XCOM Labs, Inc.

(“Licensor” or “XCOM”).

Under the License Agreement, the Company purchased an exclusive (subject to the qualifications set forth in the license agreement) right and license (the “License”) as well as Intellectual Property Assets (as defined in the License Agreement) relating to the development and commercialization of XCOM’s technologies for wireless spectrum innovations.

As consideration for the License and other agreements of Licensor in the License Agreement, the Company issued 60.6 million shares of its common stock, par value $ 0.0001 per share (the “Stock Consideration”), representing a transaction value of approximately $ 68.7 million, subject to adjustment and a holdback to provide for certain liabilities related to the Intellectual Property Assets.

The number of shares issued as Stock Consideration was calculated using the volume-weighted average market price of the Common Stock on the NYSE American for the 20 trading days immediately preceding August 29, 2023.

In connection with the License Agreement, the Company also entered into a Support Services Agreement (the “SSA”) with XCOM.

Pursuant to the SSA, XCOM is required to provide services to the Company assisting with certain operations of the business relating to the Intellectual Property Assets and to make available to the Company certain employees and facilities associated with the foregoing.

Fees payable by Globalstar pursuant to the SSA will be based on costs incurred to provide the services and will be paid in shares of Globalstar common stock or cash at its option.

The Company accounted for the License Agreement under ASC 805, Business Combinations and allocated the preliminary purchase price based on the fair value of tangible and intangible assets acquired.

If, prior to the end of the one-year measurement period for finalizing the purchase price allocation, information becomes available about facts and circumstances that existed as of the transaction date, which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

As discussed above, the fair value of the consideration transferred totaled $ 70.4 million and was paid in Globalstar common stock.

Approximately 18.8 million shares transferred were subject to legal trading restrictions.

These shares were valued using a Black-Scholes pricing model (refer to Note 8:

Fair Value Measurements for further discussion) and the fair value on the transaction date was $ 19.0 million.

Approximately 41.8 million shares transferred were not subject to legal trading restrictions and, pursuant to applicable accounting guidance and the Company's accounting policy election, were valued using the low price on the transaction date with a fair value of $ 51.4 million.

The fair value of the consideration transferred included $ 58.5 million associated with the purchase price and the reimbursement of the seller's transaction costs as well as $ 11.9 million associated with the initial service period under the SSA.

The Company recorded this amount as a prepaid asset on its consolidated balance sheets and will amortize the prepayment to cost of services and management, general and administrative expenses over the initial service period of nine months .

The allocation of the purchase price on August 29, 2023 is reflected in the tables below (amounts in thousands):

Identifiable assets acquired

Developed intellectual property (included in intangible assets)

Total identifiable assets acquired

Goodwill (included in intangible assets)

Net assets acquired

There were no liabilities assumed by the Company at the time of the License Agreement.

Other items in the table above include primarily equipment, inventory and the fair value of the trade name.

The table below reflects the intangible assets acquired and weighted-average useful lives (amounts in thousands):

Intangible Asset

Initial Fair Value

Weighted-Average Useful Life

Trade name (included in Other in the table above) $ 560 5

Developed intellectual property 25,980 10

The fair values of the intangible assets are provisional pending receipt of the final valuations for those assets.

The trade name was valued using an income approach, specifically a relief from royalty method.

The developed intellectual property was valued using the income approach, specifically a discounted cash flow method.

Goodwill represents the excess of the purchase price of the net identifiable tangible assets acquired.

At the transaction date, the goodwill of $ 30.6 million is attributable to the workforce of the acquired entity and significant synergies.

All of the goodwill was assigned to Globalstar's MSS business, its only reportable segment.

The total goodwill is expected to be deductible for income tax purposes.

During the three months ended September 30, 2023, the Company incurred $ 2.9 million of acquisition-related costs, which primarily consisted of transaction fees as well as legal, accounting and other professional fees.

These costs are recorded in management, general and administrative expenses on the Company's condensed consolidated statements of operations.

Disaggregation of Revenue

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Service revenue:

7 unchanged sentences

Subscriber equipment sales:

Duplex $ 17 $ 143 $ 36 $ 273

SPOT 1,746 1,558 6,185 4,707

3 unchanged sentences

Total revenue $ 57,683 $ 37,626 $ 171,399 $ 107,198

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 Company is the operator for certain satellite-enabled services offered by Apple ("Partner") (the "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 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.

Service revenue is generally attributed to the various countries based on the Globalstar entity that holds the customer contract.

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

Three Months Ended Six Months Ended

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

Service revenue:

United States $ 40,643 $ 24,875 $ 85,704 $ 47,163

Canada 3,640 4,128 7,469 7,817

Europe 1,706 1,671 3,219 3,154

Central and South America 2,477 2,248 4,844 3,984

Others 182 126 366 274

Total service revenue $ 48,648 $ 33,048 $ 101,602 $ 62,392

Subscriber equipment sales:

United States $ 2,562 $ 2,227 $ 4,545 $ 3,783

Canada 2,129 879 4,435 1,677

Europe 907 309 1,727 945

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

Total revenue $ 55,072 $ 36,800 $ 113,716 $ 69,572

As consideration for the services provided by Globalstar under the Service Agreements, payments include 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.

During the third quarter of 2023, revenue recognized in connection with the Service Agreements included approximately $ 4.4 million for a bonus earned for the

maintenance of the Company's global MSS authorizations.

During the first quarter of 2023, revenue recognized included $ 6.5 million received in connection with the amendment of the Service Agreements in February 2023 as consideration related to performance obligations completed in prior periods.

Accounts Receivable

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 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

The Company records trade accounts receivable from its customers, including MSS subscribers and its wholesale capacity customer, 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 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 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).

September 30, 2023 December 31, 2022

Accounts receivable, net of allowance for credit losses

5 unchanged sentences

Total accounts receivable (short-term and long-term), net of allowance for credit losses $ 43,218 $ 42,429

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 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.

During the third quarter of 2023, the Company reclassified $ 16.1 million of accounts receivable associated with the Service Agreements from long-term accounts receivable to short-term accounts receivable.

This balance is associated with amounts that are contractually owed to the Company for meeting performance obligations related to the next-generation satellite constellation prior to the Phase 2 Service Period.

The Company expects that this amount will be paid during the next twelve months.

In February 2022, the Company entered into an agreement for the purchase of new satellites that will replenish the Company's HIBLEO-4 U.S.-licensed system under the satellite procurement agreement, as amended, with Macdonald, Dettwiler and Associates Corporation ("MDA") and certain other costs incurred for the new satellites;

these payments are expected to be paid to the Company 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 Globalstar, amounts expected to be billed by the Company associated with this phase of the Service Agreements wer e $ 177.7 million a s of September 30, 2023 .

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

During 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.

1 unchanged sentence

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 Agreements.

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

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Short-term contract liabilities

7 unchanged sentences

Total contract liabilities $ 60,111 $ 137,516

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.

For subscriber contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 18.9 million and $ 22.8 million, respectively.

For wholesale capacity contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 41.6 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 June 30, 2023, the Company expects to recognize $ 24.1 million of its remaining performance obligations to its subscribers during the next twelve months .

As of September 30, 2023, the Company expects to recognize $ 24.3 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 June 30, 2023, the Company expects to recognize $ 32.7 million of its remaining performance obligations to its Partner during the next twelve months .

As of September 30, 2023, the Company expects to recognize $ 33.8 million of its remaining performance obligations during the next twelve months .

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Wholesale capacity contract liabilities, net:

1 unchanged sentence

$ 6,079 $ 99,671

Additional consideration associated with the 2021 Funding Agreement (4)

Additional consideration associated with the 2021 and 2023 Funding Agreements (3)

Advanced payments for services expected to be performed with the ground spare satellite launched in June 2022 during Phases 1 and 2 24,113 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 15,700 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 $ 34,225 $ 113,825

(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.

(1) In November 2022, the Company issued warrants to Partner (the "Warrants").

3 unchanged sentences

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.

This amendment, which was effective in April 2023, changed certain terms in the 2021 Funding Agreement, resulting in $ 88.0 million previously recorded as deferred revenue being re-characterized as debt.

See further discussion in Note 6:

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.

(3) In connection with the Company recording the fair value of its financial obligations in the amended 2021 and 2023 Funding Agreements, it recorded a debt discount of $ 11.6 million and $ 4.5 million, respectively, 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 and 2 Service Periods, respectively.

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

June 30, 2023 December 31, 2022

September 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 Six Months Ended

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

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Operating lease cost:

Amortization of right-of-use assets $ 693 $ 604 $ 1,375 $ 1,324

Amortization of right-of-use assets, net

$ 769 $ 369 $ 2,144 $ 1,206

Interest on lease liabilities 707 571 1,954 1,848

Capitalized lease cost — ( 244 ) — ( 487 )

Finance lease cost:

2 unchanged sentences

Total lease cost $ 1,651 $ 1,149 $ 4,794 $ 3,474

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;

Interest on finance lease liabilities was less than $ 0.1 million for the three and nine months ended September 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.

June 30, 2023 December 31, 2022

September 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):

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

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

Operating cash flows for operating leases $ 4,420 $ 3,675

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;

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

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

Operating Leases Finance Leases

10 unchanged sentences

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

September 30,

2023 December 31,

14 unchanged sentences

Total property and equipment, net $ 612,911 $ 560,371

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 $ 166.0 million had been incurred as of June 30, 2023 and $ 98.5 million as of December 31, 2022.

In 2022, the Company entered into an agreement with MDA for the purchase of new satellites that will replenish the Company's HIBLEO-4 U.S.-licensed system .

This agreement had an initial contract price of $ 327 million, of which $ 182.5 million had been incurred as of September 30, 2023.

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 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.

Accrued satellite construction costs on the Company's condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 included $ 65.7 million and $ 36.1 million, respectively, of work completed, but not yet invoiced, under the satellite procurement agreement.

As of September 30, 2023 and December 31, 2022, the Company also recorded $ 7.4 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 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):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Amount Unamortized Discount and Deferred Financing Costs Carrying

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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.

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.

As of September 30, 2023, the current portion of long-term debt is associated with the 2021 Funding Agreement and represents the amounts to be paid 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.

In February 2023, the Company and its Partner agreed to amend its Service Agreements to provide for, among other things, payment of up to $ 252 million to the Company (the “2023 Funding Agreement”), which the Company will use 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 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.

The first payment under the 2023 Funding Agreement was made 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.

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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.

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

See further discussion regarding Thermo's guarantee in Note 10:

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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);

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.

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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.

During 2021, the Company received payments 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 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.

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.

On the amendment date, 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.

1 unchanged sentence

Principal $ 94,200

Amount Repaid ( 6,250 )

Amount Repaid Prior to Amendment

Debt Discount - Customer Relationship ( 11,626 )

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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 2023 13 % 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 2023 13 % Notes remain outstanding after March 15, 2028.

The Company has agreed with its Partner under the Service Agreements to pay cash interest on the 2023 13 % Notes at a rate of 6.5 % per annum and PIK interest at a rate of 6.5 % per annum.

Pursuant to the Service Agreements, the Company has agreed to pay cash interest on the 2023 13 % Notes at a rate of 6.5 % per annum and PIK interest at a rate of 6.5 % per annum.

The 2023 13 % Notes may be redeemed at the option of the Company at any time, subject to the conditions of the Indenture.

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

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, June 30, 2023 and December 31, 2022, respectively

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

Series A Preferred Stock

7 unchanged sentences

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

July 1, 2023 - September 30, 2023

September 2023 2,673

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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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 sheet (in thousands):

June 30, 2023 December 31, 2022

Derivative liabilities:

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.

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.

Fair Value Measurements 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.

During the three and nine months ended September 30, 2023, the Company recorded a derivative loss of $ 0.1 million and a derivative gain of $ 0.2 million, respectively, which is reflected in derivative gain (loss) and other in the Company’s condensed consolidated statement of operations.

As of September 30, 2023, the fair value of the embedded derivative within the 2023 Funding Agreement was $ 0.1 million.

Compound Embedded Derivative within 2013 8.00 % Notes

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

During the nine months ended September 30, 2022, the Company recorded a derivative gain totaling $ 0.2 million, which is reflected in derivative gain (loss) and other in the Company’s condensed consolidated statement 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;

3 unchanged sentences

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

During the three and nine months ended September 30, 2022, the Company recorded a derivative gain totaling $ 0.7 million and a derivative loss totaling $ 1.3 million, respectively, which is reflected in derivative gain (loss) and other in the Company’s condensed consolidated statement of operations.

As of December 31, 2022, the fair value of the compound embedded derivative within the 2019 Facility Agreement was $ 0.1 million.

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

3 unchanged sentences

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

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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Recurring Fair Value Measurements

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 within the 2019 Facility Agreement — — ( 122 ) ( 122 )

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

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 remained as of March 31, 2023.

Derivatives for further discussion.

Embedded Derivative within the 2023 Funding Agreement

The embedded derivative associated within 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 8.73 % at September 30, 2023 and 8.52 % at issuance.

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

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 increase, the fair value of the embedded derivative increases.

As of September 30, 2023, the embedded derivative within the 2023 Funding Agreement was categorized as a Level 3 fair value and was $ 0.1 million.

Compound Embedded Derivative within the 2019 Facility Agreement

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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.

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.

As of December 31, 2022, the compound embedded derivative within the 2019 Facility Agreement was categorized as a Level 3 fair value and was $ 0.1 million.

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 remained as of March 31, 2023.

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):

Six Months Ended

June 30, 2023 Twelve Months Ended December 31, 2022

Nine Months Ended September 30, 2023 Twelve Months Ended December 31, 2022

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

2 unchanged sentences

Derivative adjustment related to extinguishment of debt 122 —

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

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

Unrealized gain (loss), included in derivative gain (loss) and other 243 ( 805 )

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

$ ( 98 ) $ ( 122 )

1 unchanged sentence

2023 Funding Agreement

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

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

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

1 unchanged sentence

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.

Amounts payable 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.

3 unchanged sentences

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.

License Agreement

In connection with the License Agreement discussed in Note 2:

License Agreement, the consideration paid was in the form of Globalstar common stock.

Approximately 41.8 million shares were not subject to legal trading restrictions and were valued using the low stock price on the transaction date, which was $ 1.23 per share.

The total fair value of these shares was $ 51.4 million on the transaction date.

The remaining shares, totaling 18.8 million, were subject to legal trading restrictions and were valued using a Black-Scholes pricing model on the transaction date.

The total fair value of these shares was $ 19.0 million and computed using the following assumptions on the transaction date:

Underlying Stock Price and

Exercise Price

Risk-Free Interest Rate

Fair Value of Consideration

$ 1.13 0.5 74.5 % 5.52 %

Performance Share Units

During the third quarter of 2023, the Company granted 44.5 million restricted stock units ("RSUs") to certain employees which are earned over a four-year performance period.

The RSUs vest upon the Company's common stock trading at various price levels throughout the performance period.

The RSUs were valued using a Monte Carlo simulation model.

As of the grant date, September 25, 2023, the fair value of the RSUs was $ 39.5 million.

This total fair value will be recognized over the derived service period for each tranche within the grant.

The Monte Carlo simulation was computed using the following assumptions:

Risk-Free Interest Rate

Stock Price Volatility

Market Price of Common Stock

Fair Value of RSUs

4.73 % 80.00 % $ 1.29

Fair Value of Debt and Other Financing Arrangements

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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:

• Allocate 85 % of its current and future network capacity to support the Services;

• Provide and maintain all resources, including personnel, software, satellite, gateways, satellite spectrum and regulatory rights necessary to provide the Services (the “Required Resources”);

• Prioritize the Services and provide Partner with priority access to the Required Resources, including the Company’s licensed satellite spectrum;

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

• 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 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:

Revenue, Note 3:

Leases, Note 4:

Property and Equipment and Note 5:

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

Satellite Procurement Agreement

In February 2022, the Company entered into a satellite procurement agreement with MDA pursuant to which Globalstar will acquire 17 satellites that will replenish Globalstar's existing constellation of satellites and ensure long-term continuity of its mobile satellite services.

Globalstar is acquiring the satellites to provide continuous satellite services to Partner under the Service Agreements, as well as services to Globalstar’s current and future customers.

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

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 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:

Long-Term Debt and Other Financing Arrangements for further discussion of the vendor financing arrangement with MDA.

The Service Agreements also provide for various commitments with which the Company must comply.

Satellite Procurement Agreement and Launch Services Agreement

As previously disclosed, the Company’s satellite procurement agreement provides for the Company to acquire at least 17 and up to 26 satellites at an initial contract price of $ 327 million, with initial delivery expected to occur in 2025.

As more fully described in our Current Report on Form 8-K filed with the Commission on August 31, 2023, the Company’s Launch Services Agreement provides for the launch of the first set of these satellites.

The Service Agreements provide for the Company to receive service payments equal to 95 % of the approved capital expenditures under each contract.

RELATED PARTY TRANSACTIONS

2 unchanged sentences

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 $ 0.3 million and $ 0.3 million as of June 30, 2023 and December 31, 2022, respectively.

Payables to Thermo related to normal purchase transactions were $ 0.2 million and $ 0.3 million as of September 30, 2023 and December 31, 2022, respectively.

Transactions with Thermo

4 unchanged sentences

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 and increase at a rate of 2.5 % per year.

Annual lease payments 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.

During each of the nine months ended September 30, 2023 and 2022, the Company incurred lease expense of $ 1.2 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.

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.

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, second and third 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.

2 unchanged sentences

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.

Entry into this guarantee agreement received shareholder approval in June 2023, and it is expected to be effective during the fourth 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 equal to $ 2.00 per share (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 fourth 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.

In connection with the XCOM transaction, a portion of the Stock Consideration was resold by XCOM to certain long-term investors of Globalstar and XCOM (the “Resale Purchasers”), including Thermo, in private resale transactions exempt from registration under the Securities Act.

Together with shares it received for release of debt owed to it by Licensor, Thermo acquired 4.2 million total shares.

License Agreement for further discussion.

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 )

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, 2023 and 2022 (amounts in thousands, except per share data):

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

$ ( 6,169 ) $ ( 204,361 ) $ ( 9,640 ) $ ( 251,580 )

Effect of Series A Preferred Stock dividends ( 2,673 ) — ( 7,932 ) —

2 unchanged sentences

Net loss per common share - basic and diluted $ 0.00 $ ( 0.11 ) $ ( 0.01 ) $ ( 0.14 )

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.

For the three months ended September 30, 2023 and 2022, 17.8 million and 9.4 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

For the nine months ended September 30, 2023 and 2022, 17.5 million and 8.8 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

Included in these shares as of September 30, 2023 is a portion of the 49.1 million Warrants issued 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.

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

In the third quarter of 2023, the Company granted 44.5 million restricted stock units containing market conditions determined by the Company's stock price.

As calculated in accordance with applicable accounting guidance, these shares are excluded from the basic and dilutive share count above for the three and nine months ended September 30, 2023.

As discussed in Note 6:

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.

Long-Term Debt and Other Financing Arrangements, the Company's Board of Directors approved the payment of dividends totaling $ 2.7 million and $ 7.9 million for the three and nine months ended September 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