What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-03-01 · 601 added, 698 removed, 859 unchanged (60% of the section changed)

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

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022 and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023 and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 1, 2023, expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Useful life of Space component assets

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Additionally, we evaluated the effect of changes, if any, in the Company’s long-term strategy for use of the assets on the useful life estimate.

Classification and valuation of the 2021 and 2023 Funding Agreements

Description of the Matter As described in Note 7, in February 2023, the Company entered into the 2023 Funding Agreement and amended the terms of the 2021 Funding Agreement (collectively “the Funding Agreements”).

We identified the assessment of the Funding Agreements as a critical audit matter, primarily due to significant judgments by management related to the determination that advances under the Funding Agreements were debt, as determined for financial reporting purposes, and the estimation of the fair value to be assigned to the debt and other components.

The fair value of the debt, which was determined using a discounted cash flow method, is dependent on significant assumptions such as the discount rate.

Auditing of these classification and valuation considerations involved challenging and complex auditor judgment, including the need to involve valuation specialists.

How We Addressed the Matter in Our Audit We tested the effectiveness of controls over the Company’s assessment of the Funding Agreements, including controls related to classification and valuation.

We evaluated the Company’s accounting analysis for the Funding Agreements, including the determination that advances were debt.

We evaluated the Company’s estimate of the fair value of the debt and other components by involving valuation specialists to assess the reasonableness of the (1) valuation methodology and (2) valuation assumptions applied including the discount rate by developing a range of independent estimates and comparing our estimates to those used by management.

We tested the source information underlying the significant assumptions and estimates and the mathematical accuracy of the calculation.

/s/ Ernst & Young LLP

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New Orleans, Louisiana

March 1, 2023

February 29, 2024

Report of Independent Registered Public Accounting Firm

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, statements of comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated March 1, 2023, expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 29, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

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New Orleans, Louisiana

March 1, 2023

February 29, 2024

GLOBALSTAR, INC.

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Operating lease right of use assets, net 34,164 30,859

Prepaid satellite construction costs and related customer receivable 122,496 —

Prepaid satellite costs and customer receivable 12,443 27,570

Intangible and other assets, net of accumulated amortization of $ 12,385 and $ 10,908 , respectively

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Current liabilities:

Current portion of long-term debt $ 34,600 $ —

Accounts payable 2,027 3,843

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Accrued expenses 26,958 22,554

Accrued satellite construction costs 58,187 36,139

Payables to affiliates 459 326

Deferred revenue 74,639 25,927

Deferred revenue, net 53,677 74,639

Total current liabilities 175,908 197,076

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Total non-current liabilities 369,422 226,622

Commitments and contingent liabilities (Note 9)

Commitments and contingencies (Note 10)

Stockholders’ equity:

Preferred Stock of $ 0.0001 par value;

99,700,000 and 100,000,000 shares authorized and none issued and outstanding at December 31, 2022 and 2021, respectively

Series A Preferred Stock of $ 0.0001 par value;

300,000 shares authorized and 149,425 issued and outstanding at December 31, 2022;

no shares authorized and none issued and outstanding as of December 31, 2021

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

Series A Perpetual Preferred Stock of $ 0.0001 par value;

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

Voting Common Stock of $ 0.0001 par value;

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Marketing, general and administrative 43,458 33,349 34,629

Stock-based compensation 22,489 10,754 6,729

Reduction in the value of long-lived assets 363 166,526 242

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Other (expense) income:

Gain on extinguishment of debt 2,790 3,098 —

(Loss) gain on extinguishment of debt ( 10,403 ) 2,790 3,098

Loss on equity issuance ( 5,010 ) — —

Interest income and expense, net of amounts capitalized ( 14,609 ) ( 30,168 ) ( 43,536 )

Derivative (loss) gain ( 805 ) ( 1,043 ) 2,897

Foreign currency loss ( 6,592 ) ( 6,308 ) ( 727 )

Pension settlement loss ( 1,501 ) — ( 2,075 )

Other 463 368 ( 1,480 )

Foreign currency gain (loss) 4,862 ( 6,592 ) ( 6,308 )

Derivative gain (loss) and other 1,730 ( 1,843 ) ( 675 )

Total other expense ( 23,430 ) ( 35,813 ) ( 47,421 )

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Net loss $ ( 24,718 ) $ ( 256,915 ) $ ( 112,625 )

Other comprehensive income:

Other comprehensive (loss) income:

Defined benefit pension plan liability adjustment — 2,073 410

Net foreign currency translation adjustment ( 4,172 ) 5,279 4,424

Total other comprehensive income 7,352 4,834 505

Total other comprehensive (loss) income ( 4,172 ) 7,352 4,834

Total comprehensive loss $ ( 28,890 ) $ ( 249,563 ) $ ( 107,791 )

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

Net issuance of restricted stock awards and recognition of stock-based compensation — — 7,637 1 4,766 — — 4,767

Contribution of services — — — — 232 — — 232

Issuance and recognition of stock-based compensation of employee stock purchase plan — — 2,253 — 1,048 — — 1,048

Common stock issued in connection with conversion of Loan Agreement with Thermo — — 200,140 20 120,441 — — 120,461

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

— — 95 — 32 — — 32

Impact of adoption of Credit Loss Standard — — — — — — ( 1,684 ) ( 1,684 )

Other comprehensive income — — — — — 505 — 505

Net loss — — — — — — ( 109,639 ) ( 109,639 )

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

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

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— — 2,253 — 2,548 — — 2,548

Fair value of Warrants granted to Partner — — — — 48,337 — — 48,337

Fair value of Warrants issued in connection with the Service Agreements — — — — 48,337 — — 48,337

Issuance of Series A Preferred Stock 149 — — — 105,342 — — 105,342

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Balances – December 31, 2022 149 $ — 1,811,075 $ 181 $ 2,345,612 $ 9,242 $ ( 2,040,264 ) $ 314,771

Net issuance of restricted stock awards and employee stock options and recognition of stock-based compensation — — 9,256 1 19,286 — — 19,287

Contribution of services — — — — 188 — — 188

Issuance and recognition of stock-based compensation of employee stock purchase plan — — 887 — 1,270 — — 1,270

Series A Preferred Dividends — — — — ( 11,942 ) — — ( 11,942 )

Fair value of Thermo guarantees associated with 2023 Funding Agreement — — — — 8,864 — — 8,864

Issuance of warrants to Thermo for its guarantee associated with the 2023 Funding Agreement — — — — 5,010 — — 5,010

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

Other comprehensive loss — — — — — ( 4,172 ) — ( 4,172 )

Net loss — — — — — — ( 24,718 ) ( 24,718 )

Balances – December 31, 2023 149 $ — 1,881,195 $ 188 $ 2,438,703 $ 5,070 $ ( 2,064,982 ) $ 378,979

See accompanying notes to Consolidated Financial Statements.

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Depreciation, amortization and accretion 88,191 93,884 96,237

Change in fair value of derivatives 805 1,043 ( 2,897 )

Stock-based compensation expense 22,489 10,754 6,729

Noncash consideration, net, associated with wholesale capacity contract ( 3,210 ) ( 292 ) —

Amortization of deferred financing costs 520 2,562 4,243

Reduction in the value of long-lived assets and inventory 363 175,079 1,246

Provision for credit losses 1,087 936 1,656

Noncash interest and accretion expense 14,739 30,231 38,459

Gain on extinguishment of debt ( 2,790 ) ( 3,098 ) —

Loss on pension settlement 1,501 — 2,075

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

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

Unrealized foreign currency loss 6,615 6,394 1,362

Noncash portion of loss (gain) on extinguishment of debt 10,194 ( 2,790 ) ( 3,098 )

Loss on equity issuance 5,010 — —

Noncash expenses associated with SSA, net of amortization 3,070 — —

Unrealized foreign currency (gain) loss ( 4,972 ) 6,615 6,394

Other, net ( 816 ) 762 ( 464 )

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Cash flows used in investing activities:

Network upgrades (including capitalized interest) ( 18,233 ) ( 37,432 ) ( 7,317 )

Satellite construction costs ( 14,000 ) — —

Property and equipment additions ( 7,076 ) ( 6,307 ) ( 5,157 )

Payments under the satellite procurement agreement ( 135,939 ) ( 14,000 ) —

Payments for other network upgrades to support the Service Agreements ( 22,859 ) ( 18,233 ) ( 37,037 )

Payments of capitalized interest ( 8,810 ) — ( 395 )

Payments for network upgrades to support product development ( 6,907 ) ( 7,076 ) ( 6,307 )

Sale of property and equipment — — 350

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Net cash used in investing activities ( 175,612 ) ( 39,952 ) ( 45,186 )

Cash flows (used in) provided by financing activities:

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

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

Cash flows provided by (used in) financing activities:

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

Proceeds from 2023 13 % Notes

Proceeds from 2023 Funding Agreement 117,253 — —

Principal payments of 2021 Funding Agreement ( 12,500 ) — —

Dividends paid on Series A Preferred Stock ( 11,942 ) — —

Payments for debt and equity issuance costs ( 8,556 ) ( 626 ) ( 286 )

Proceeds from issuance of common stock and exercise of options 919 747 638

Net proceeds from equity plan transactions ( 181 ) 919 747

Principal payments of the 2009 Facility Agreement — — ( 186,990 )

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

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

Proceeds from PPP Loan — — 4,973

Net cash (used in) provided by financing activities ( 6,048 ) ( 140,282 ) 1,164

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 22 ) ( 132 ) 52

Net increase (decrease) in cash, cash equivalents and restricted cash 17,778 ( 53,719 ) 8,895

Cash, cash equivalents and restricted cash, beginning of period 14,304 68,023 59,128

Cash, cash equivalents and restricted cash, end of period $ 32,082 $ 14,304 $ 68,023

As of December 31,

Net cash provided (used in) by financing activities 125,793 ( 6,048 ) ( 140,282 )

Effect of exchange rate changes on cash and cash equivalents 140 ( 22 ) ( 132 )

Net increase (decrease) in cash and cash equivalents 24,662 17,778 ( 53,719 )

Cash and cash equivalents, beginning of period 32,082 14,304 68,023

Cash and cash equivalents, end of period (1)

$ 56,744 $ 32,082 $ 14,304

Reconciliation of cash, cash equivalents and restricted cash

Cash and cash equivalents $ 32,082 $ 14,304 $ 13,330

Restricted cash (See Note 6 for further discussion on restrictions)

Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 32,082 $ 14,304 $ 68,023

Year Ended December 31,

2023 2022 2021

Supplemental disclosure of cash flow information:

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Income taxes 333 197 188

Year Ended December 31,

2022 2021 2020

Supplemental disclosure of non-cash financing and investing activities:

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Capitalized accretion of debt discount and amortization of prepaid financing costs 5,429 1,830 612

Satellite construction costs (including prepaid amounts) acquired through vendor financing arrangement 59,822 — —

Satellite construction assets acquired through vendor financing arrangement — 59,822 —

Satellite construction assets in accrued expenses

58,187 36,139 —

Principal amount of 2019 Facility Agreement converted into preferred equity — 149,425 —

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

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

Reduction of debt discount and issuance costs due to conversion of Loan Agreement with Thermo — — 17,963

Fair value of common stock issued upon conversion of Loan Agreement with Thermo — — 84,059

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

Re-characterization of 2021 Funding Agreement to debt due to 2023 amendment 87,950 — —

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

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

Construction in progress assets acquired through XCOM SSA 2,776 — —

Fair value of warrants issued to Thermo for the guarantee associated with the 2023 Funding Agreement 5,010 — —

(1) Cash and cash equivalents on the consolidated balance sheet is equal to cash and cash equivalents on the statement of cash flows

See accompanying notes to Consolidated Financial Statements.

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Thermo Companies, through commonly controlled affiliates, (collectively, “Thermo”) is the principal owner and largest stockholder of Globalstar.

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

Globalstar currently provides the following communications services:

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

• one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station, including commercial IoT products, such as the battery- and solar-powered SmartOne, STX-3, Integrity 150, ST-150 and ST100 ("Commercial IoT");

• one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station, including commercial IoT products, such as the battery- and solar-powered SmartOne, STX-3, ST100, ST-150 and Integrity 150 ("Commercial IoT");

• satellite network access and related services utilizing our satellite spectrum and network of satellites and gateways ("Wholesale Capacity Services");

• engineering and other communication services using the Company's MSS and terrestrial spectrum licenses ("Engineering and Other").

Recent Developments

Service Agreements

On September 7, 2022, Apple Inc.

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

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

Since execution of the Service Agreements in 2020, the parties have completed several milestones including (i) a feasibility phase, (ii) material upgrades to Globalstar’s ground network, (iii) construction of 11 new gateways around the world, (iv) the successful launch of the ground spare satellite, and (v) rigorous in-field system testing.

The Service Agreements generally require Globalstar to allocate network capacity (as described below) to support the Services, and Partner to enable Band 53/n53 for use in cellular-enabled devices designated by Partner for use with the Services.

Partner made Services available to its customers in November 2022 (the “Service Launch”).

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

The Company plans to use the proceeds of the Prepayment to pay amounts currently due and payable, as well as other amounts as they become due and payable, under the satellite procurement agreement with Macdonald, Dettwiler and Associates Corporation ("MDA"), as well as launch, insurance and ancillary costs incurred for the construction and launch of these satellites .

The Prepayment replaces the Company's obligation to seek third-party financing for these costs as previously required under the Service Agreements and will be funded as needed on a quarterly basis subject to the terms in the agreement.

The remaining amount of the satellite costs is expected to be funded through the Company's operating cash flows.

The amount of the Prepayment and fees payable thereon will be recouped from amounts payable by Partner for services provided by the Company under the Service Agreements.

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

The Prepayment 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 portion of the Prepayment 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.

Amounts payable by the Company in connection with the Prepayment will be guaranteed by Thermo, subject to applicable shareholder approval.

Prior to such shareholder approval, 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.

As conditions precedent to Prepayment funding, the Company must (i) convert or refinance the remaining loans outstanding under the 2019 Facility Agreement by March 13, 2023 and (ii) grant Partner a first-priority lien in the Company’s assets to secure its obligations under the Service Agreements.

Discontinuation of Second-Generation Duplex Products and Services

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

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

however, such termination was considered temporary unless or until Partner announced its intent to proceed with launch of the Services.

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

As a result of this shift in strategy, the Company recorded reductions in the value of equipment and long-lived assets totaling $ 174.3 million during the third quarter of 2022 (refer to Note 8:

Fair Value Measurements for further discussion).

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

Refer to Note 2:

Revenue, Note 3:

Leases, Note 4:

Property and Equipment and Note 9:

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

• engineering and other communication services using the Globalstar System ("Engineering and Other").

Use of Estimates in Preparation of Financial Statements

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All significant intercompany transactions and balances have been eliminated in the consolidation.

Business Combinations

The Company accounts for business combinations in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations (“ASC 805”), which requires most identifiable assets, liabilities, and goodwill acquired in a business combination to be recorded at fair value at the acquisition date.

Additionally, ASC 805 requires transaction-related costs to be expensed in the period incurred.

The determination of fair value of assets acquired and liabilities assumed requires estimates and assumptions that can change as a result of new information obtained about facts and circumstances that existed as of the acquisition date.

As such, the Company will make any necessary adjustments to goodwill in the period identified within one year of the acquisition date.

Adjustments outside of that range are recognized currently in earnings.

Refer to Note 2:

License Agreement of the consolidated financial statements for further details.

Cash and Cash Equivalents

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Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and restricted cash.

Cash and cash equivalents and restricted cash consist primarily of highly liquid short-term investments deposited with financial institutions that are of high credit quality.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents.

Cash and cash equivalents consists primarily of highly liquid short-term investments deposited with financial institutions that are of high credit quality.

The Company performs credit evaluations of its customers’ financial condition and records reserves to provide for estimated credit losses .

For the year ended December 31, 2022, our Partner under the Service Agreements was responsible for 24 % of our revenue and 86 % of our receivable balance with no other customer responsible for more than 10% of our revenue or accounts receivable balance.

Accounts and Notes Receivable

The Company records trade accounts receivable from its customers when it has a contractual right to receive payment either on demand or on fixed or determinable dates in the future.

For the year ended December 31, 2023, the Company's wholesale capacity customer under the Service Agreements was responsible for 49 % of the Company's revenue and 69 % of the Company's receivable balance.

Additionally, one of the Company's value added resellers was responsible for 15 % of the Company's receivable balance;

however, this customer was responsible for less than 10% of the Company's revenue.

No other customers were responsible for more than 10% of the Company's revenue or accounts receivable balance.

Accounts Receivable

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.

Receivables are recorded when the right to consideration from the customer becomes unconditional, which is generally upon billing or upon satisfaction of a performance obligation, whichever is earlier.

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

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

The Company also may act as an agent to procure goods and perform services under the Service Agreements.

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

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Balance at beginning of period $ 2,892 $ 2,962 $ 4,352

Impact of adoption of ASU 2016-13 — — 1,684

Provision, net of recoveries 519 1,087 409

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Balance at end of period $ 2,312 $ 2,892 $ 2,962

Inventory consists primarily of purchased products, including subscriber equipment devices, which work on the Company’s network, as well as component parts and other chips used in the manufacture of subscriber equipment devices, of approximately $ 9.0 million and $ 9.6 million as of December 31, 2022 and 2021, respectively, as well as ground infrastructure assets expected to be used as spare parts of approximately $ 0.3 million and $ 4.2 million as of December 31, 2022 and 2021, respectively.

Inventory is stated at the lower of cost or net realizable value.

Cost is computed using the first-in, first-out (FIFO) method.

Inventory write downs are measured as the difference between the cost of inventory and the net realizable value and are recorded as a cost of subscriber equipment sales - reduction in the value of inventory in the Company’s Consolidated Financial Statements.

Inventory write downs are evaluated at the product level and measured as the difference between the cost of inventory and the net realizable.

Write downs are recorded as a cost of subscriber equipment sales - reduction in the value of inventory in the Company’s Consolidated Financial Statements.

Product sales and returns from the previous 12 months and future demand forecasts are reviewed and excess and obsolete inventory is written off, as applicable.

For each the years ended December 31, 2022, 2021 and 2020, the Company wrote down the value of inventory by $ 8.6 million, $ 1.0 million and $ 0.7 million, respectively, after adjusting for changes in net realizable value.

For each of the years ended December 31, 2022 and 2021, the Company wrote down the value of inventory by $ 8.6 million and $ 1.0 million , respectively, after adjusting for changes in net realizable value.

The Company did no t write down the value of inventory for the year ended December 31, 2023.

In 2022, the Company wrote down the value of equipment consisting of second-generation Duplex assets, including finished goods, chips and component parts to be used in manufacturing such devices as well as second-generation Duplex gateway spare parts, totaling $ 6.9 million.

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

$ 1.6 million.

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

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

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

The remaining reduction in value of inventory recorded during 2020 was driven by an evaluation of excess or obsolete inventory related to end of life products and technology.

Property and Equipment

The Globalstar System includes costs for the design, manufacture, test and launch of a constellation of low earth orbit satellites (the “Space Component”), and primary and backup control centers and gateways (the “Ground Component”).

The Globalstar System includes costs for the design, manufacture, test and launch of a constellation of low earth orbit satellites (the “Space Component”), primary and backup control centers, gateways (the “Ground Component”) and spectrum licenses.

Property and equipment is stated at cost, net of accumulated depreciation.

Costs associated with the design, manufacture, test and launch of the Company’s Space and Ground Components are capitalized.

Costs associated with the design, manufacture, test and launch of the Company’s Space and Ground Components are capitalized and include direct costs of third party suppliers and contractors, internal personnel as well as equipment and materials.

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

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Deferred Financing Costs

Deferred financing costs are those costs directly incurred in issuing long-term debt or equity.

Deferred financing costs are those costs directly incurred in issuing long-term debt or equity financing.

Costs associated with obtaining long-term debt are amortized as additional interest expense over the expected term of the corresponding instrument and are recorded on the Company's consolidated balance sheets as a reduction in the carrying amount of the related debt liability.

The Company classifies deferred financing costs consistent with the classification of the related debt outstanding at the end of the reporting period.

As of December 31, 2022 and 2021, the Company had net deferred financing costs of $ 11.1 million and $ 27.3 million, respectively.

Fair Value of Financial Instruments

The Company believes it is not practicable to determine the fair value of the 2019 Facility Agreement.

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

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

Prior to conversion in the first quarter of 2022, the fair value of the Company’s 8.00 % Convertible Senior Notes Issued in 2013 (“2013 8.00 % Notes”) was calculated using inputs consistent with those used to calculate the fair value of the derivatives embedded in these instruments.

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 its debt agreements are not readily available and generally involve a variety of factors, including due diligence by the debt holders.

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

Litigation, Commitments and Contingencies

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Gain/Loss on Extinguishment of Debt

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

Gain or loss on extinguishment of debt generally is recorded upon an extinguishment of a debt instrument or early payment of debt.

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

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The recognition of revenue for service is over time as the customer simultaneously receives and consumes the benefits of the Company’s performance over the contract term.

The recognition of revenue for subscriber equipment is at a point in time as the risks and rewards of ownership of the hardware transfer to the customer generally upon shipment, which is when legal title of the product transfers to the customer, among other things (as discussed further below).

The recognition of revenue for subscriber

equipment is at a point in time as the risks and rewards of ownership of the hardware transfer to the customer generally upon shipment, which is when legal title of the product transfers to the customer, among other things (as discussed further below).

The Company does not record sales taxes, telecommunication taxes or other governmental fees collected from customers in revenue.

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Customer payments received in advance of the corresponding service period are recorded as deferred revenue.

Upon activation of a Globalstar device, certain customers are charged an activation fee, which is recognized over the term of the expected customer life.

Upon activation of a Globalstar device, subscribers are generally charged an activation fee, which is recognized over the term of the expected customer life.

Credits granted to customers are expensed or charged against revenue or accounts receivable over the remaining term of the contract.

Under the Service Agreements, the Company issued Partner the Warrants to purchase shares of Globalstar common stock;

Under the Service Agreements, the Company issued warrants to Partner (as defined in Note 3) (the "Warrants") to purchase shares of Globalstar common stock;

the Warrants were recorded at the estimated fair value of the consideration granted based on a Black-Scholes pricing model.

The fair value of the Warrants was capitalized as a contract asset and will be recognized as a reduction of the transaction price over the estimated term of the Service Agreements.

The fair value of the Warrants was capitalized as a contract asset and is being recognized as a reduction of the transaction price over the estimated term of the Service Agreements.

As of December 31, 2023 and 2022, this contract asset was $ 46.7 million and $ 52.7 million, respectively, and is netted against the associated contract liability, which is recorded in short-term and long-term deferred revenue on the Company's consolidated balance sheet.

The value of the contract asset is amortized as a reduction to revenue over the period in which the Company commences its performance obligations through the estimated completion of the contract term, consistent with the period in which the customer benefits from the services provided.

For the year ended December 31, 2023 and 2022, the Company reduced revenue by $ 2.6 million and $ 0.2 million, respectively, associated with the amortization of the fair value of the noncash consideration.

The Company did not amortize any of the contract asset during 2021.

Estimates related to earned but unbilled service revenue are calculated primarily using current subscriber data, including plan subscriptions and usage between the end of the billing cycle and the end of the period, or in accordance with the terms of the customer contract for satellite network access services.

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

For certain payments associated with services provided under the Service Agreements, the length of time between receipt of payment by the customer and transfer of services by the Company is greater than one year.

Accordingly, payments made by Partner include a significant financing component.

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

Accordingly, payments made by this customer included a significant financing component.

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

The rate in which interest is computed is based on rates implicit in the Service Agreements.

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

For the Company's subscriber contracts, transactions with a significant financing component are infrequent as the time between cash collection and performance is generally less than one year.

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

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The Company offers other annual plans whereby the customer is charged an annual fee to access the Company’s system with an unlimited amount of usage.

Annual fees for unlimited plans are recognized on a straight-line basis over the term of the plans.

Annual fees for unlimited plans are recognized on a straight-line basis over the contract term.

SPOT Service Revenue.

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Wholesale Capacity Service Revenue.

The Company provides wholesale capacity services to Partner under the Service Agreements.

The Company provides wholesale capacity services.

The Company allocates the transaction price under the Service Agreements to each performance obligation generally in proportion to their relative stand-alone selling prices.

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Equipment Revenue.

Subscriber equipment revenue represents the sale of fixed and mobile user terminals, SPOT and Commercial IoT products, and accessories.

Equipment revenue represents subscriber device sales, including fixed and mobile user terminals, SPOT and Commercial IoT products, and accessories.

The Company recognizes revenue upon shipment provided control has transferred to the customer.

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Stock-Based Compensation

The Company recognizes compensation expense in the financial statements for both employee and non-employee share-based awards based on the grant date fair value of those awards.

The Company recognizes compensation expense in the financial statements for both employee and non-employee share-based awards based on the grant date fair value of those awards and accounts for forfeitures as they occur.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards on the date of grant.

For restricted stock awards and units, the fair value is determined from the stock price on the grant date.

The Company's estimate of the forfeiture rate of its share-based awards also impacts the timing of expense recorded over the vesting period of the award.

The Company's estimate for pre-vesting forfeitures is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term.

For existing market-based awards, the fair value was determined using a Monte-Carlo simulation model on the grant date.

For share-based awards with a performance condition that affects vesting, the Company recognizes compensation cost for awards if and when the performance condition is probable of achievement.

Expense associated with awards with market-based vesting conditions is recognized on a straight-line basis over the requisite service period, which is the lesser of the derived service period or the explicit service period if one is present.

If the market condition is satisfied prior to the end of the requisite service period, the Company will accelerate all remaining expense to be recognized.

Foreign Currency

The functional currency of the Company’s foreign consolidated subsidiaries is generally their local currency, except in certain scenarios, including when the subsidiary operates in a hyperinflationary economy, such as Venezuela and Argentina.

Assets and liabilities of its foreign subsidiaries are translated into United States dollars based on exchange rates at the end of the reporting period.

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

For 2022, 2021 and 2020, the foreign currency translation adjustments were net gains of $ 5.3 million, net gains of $ 4.4 million and net losses of $ 1.5 million, respectively.

Foreign currency transaction gains/losses were approximately net losses of $ 6.6 million, net losses of $ 6.3 million and net losses of $ 0.7 million for each of 2022, 2021, and 2020, respectively.

Translation adjustments are accumulated in a separate component of stockholders’ equity.

For 2023, 2022 and 2021, the foreign currency translation adjustments were net losses of $ 4.2 million, net gains of $ 5.3 million and net gains of $ 4.4 million, respectively.

Foreign currency transaction gains/losses were approximately net gains of $ 4.9 million, net losses of $ 6.6 million and net losses of $ 6.3 million for each of 2023, 2022, and 2021, respectively.

Asset Retirement Obligation

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

As of December 31, 2022 and 2021, the Company had accrued approximately $ 3.0 million and $ 2.5 million, respectively, for asset retirement obligations.

During 2022, the Company continued the expansion of its gateway footprint in connection with the Service Agreements, which resulted in the commencement of new leases and the installation of new equipment;

as a result of this expansion, the Company established new asset retirement obligations resulting in a total increase to the liability of $ 0.5 million during 2022.

There were no settlements during 2022.

As of December 31, 2023 and 2022, the Company had accrued approximately $ 3.0 million, respectively, for asset retirement obligations.

There were no new asset retirement obligations established and no settlements during 2023.

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

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Warranty costs are based on historical trends in warranty charges as a percentage of gross product shipments.

The resulting accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates.

Research and Development Expenses

Research and development costs were $ 1.4 million, $ 0.5 million and $ 1.0 million for 2023, 2022 and 2021, respectively.

These costs are expensed as incurred as cost of services and include primarily the cost of new product development, chip set design and other engineering work.

The majority of increase in research and development costs are associated with costs incurred pursuant to the SSA under the License Agreement (as defined and discussed further in Note 2:

License Agreement).

Research and development costs are expensed as incurred as cost of services and include primarily the cost of new product development, chip set design and other engineering work.

The Company is taxed as a C corporation for U.S.

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and (iv) tax planning strategies.

Comprehensive (Loss) Income

All components of comprehensive (loss) income, including the minimum pension liability adjustment and foreign currency translation adjustment, are reported in the financial statements in the period in which they are recognized.

Comprehensive (loss) income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.

Comprehensive Income (Loss)

All components of comprehensive income (loss), including the foreign currency translation adjustment, are reported in the financial statements in the period in which they are recognized.

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.

For each of the years ended December 31, 2023 and 2022, the change in Accumulated other comprehensive income resulted from foreign currency translation adjustments;

no amounts were reclassified out of Accumulated other comprehensive income during these periods.

Earnings (Loss) Per Share

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

For acquisitions accounted for as business combinations, goodwill represents the excess of the purchase price over the estimated fair values of identifiable assets and liabilities acquired as of the acquisition date.

Goodwill is not amortized in accordance with the requirements of ASC 350.

Goodwill is required to be allocated amongst reporting units and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.

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

Goodwill is tested for impairment on an annual basis on November 30 of each fiscal year and whenever events or circumstances indicate that the asset may be impaired.

The Company completed its annual goodwill impairment test on November 30, 2023 and determined there was no impairment as of that date.

Additionally, the Company is not aware of any additional triggering events.

The Company's goodwill impairment test is prepared using a qualitative assessment, and if necessary, a quantitative goodwill impairment test.

The Company considers significant unfavorable industry or economic trends as factors in deciding when to perform an impairment test.

If the qualitative assessment indicates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to measure and record an impairment loss.

If a goodwill impairment test is necessary, the fair value of the reporting unit, which is determined using an income approach based on the present value of discounted cash flows, is compared to its carrying value, which includes goodwill.

If the carrying value of the reporting unit exceeds its fair value, the difference is recognized as an impairment loss.

Intangible and Other Assets

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If the asset is not recoverable, the undiscounted cash flows do not exceed the carrying amount and the carrying amount would be adjusted down to its fair value.

Refer to Note 8:

Fair Value Measurements for further discussion on the impairment recorded for intangible assets for the year ended December 31, 2022.

Contract Costs

Assets Recognized from the Costs to Obtain and Fulfill Contracts

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

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

For wholesale capacity services provided to Partner, contract costs include certain expenses incurred by the Company prior to the customer benefiting from the service as well as noncash consideration issued to Partner under the Service Agreements.

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

For subscriber driven revenue, total contract acquisition costs were $ 1.0 million and $ 1.7 million as of December 31, 2022 and 2021, respectively, and are recorded in other assets on the Company's consolidated balance sheet.

For wholesale capacity services, the Company capitalizes costs incurred by the Company prior to the customer benefiting from the service.

If a contract terminates prior to the end of its expected life, the remaining capitalized contract costs associated with it becomes impaired and the amount is expensed.

For subscriber driven revenue, total contract acquisition costs were $ 1.2 million and $ 1.0 million as of December 31, 2023 and 2022, respectively, and are recorded in "Intangible and other assets" on the Company's consolidated balance sheet.

These costs are typically amortized to marketing, general and administrative expenses over three years , which considers anticipated contract renewals.

For the years ended December 31, 2023, 2022 and 2021, the amount of amortization related to contract acquisition costs was $ 0.7 million, $ 1.2 million and $ 2.1 million, respectively.

For wholesale capacity services, total costs to fulfill a contract were $ 52.7 million and $ 2.1 million as of December 31, 2022 and 2021, respectively, and are netted against the associated contract liability, which is recorded in deferred revenue on the Company's consolidated balance sheet.

The majority of the increase in costs to fulfill a contract during 2022 was due to noncash consideration issued to Partner in the form of warrants to purchase shares of Globalstar common stock totaling $ 48.3 million at the issuance date (see Note 15:

Stock Compensation for further discussion).

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

For the year ended December 31, 2022, the amount of amortization expense related to costs to fulfill a contract was $ 0.1 million.

For the year ended December 31, 2022, the Company reduced revenue by $ 0.2 million associated with the amortization of the fair value of the noncash consideration issued to Partner.

The Company did not amortize any costs to fulfill a contract during 2021 or 2020.

For wholesale capacity services, total costs to fulfill the customer contract associated with the Service Agreements were $ 5.7 million and $ 4.5 million as of December 31, 2023 and 2022, respectively, and are recorded in "Intangible and other assets" on the Company's consolidated balance sheet.

These costs are typically amortized to cost of services and marketing, general and administrative expenses over the estimated completion of the contract term, consistent with the period in which the customer benefits from the services provided.

For the years ended December 31, 2023 and 2022, the amount of amortization related to costs to fulfill a contract was $ 0.4 million and $ 0.1 million, respectively.

There was no amortization related to costs to fulfill a contract in 2021.

Advertising Expenses

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Recently Issued Accounting Pronouncements

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

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others.

This ASU also explicitly requires public entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new disclosures in this ASU.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the amendments should be applied retrospectively.

The Company adopted this standard when it became effective on January 1, 2024.

The Company is evaluating the impact this ASU may have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which updates qualitative and quantitative disclosures for the rate reconciliation and income taxes paid.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied prospectively;

however, retrospective application is also permitted.

The Company will adopt this standard when it becomes effective on January 1, 2025.

The Company is evaluating the impact this ASU may have on its financial statement disclosures.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU No.

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 in Note 2:

License Agreement) 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.

In September 2022, the FASB issued ASU No.

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

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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.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No.

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

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

Among other things, ASU No.

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

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

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

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

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

LICENSE AGREEMENT

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 (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.

For the period August 29, 2023 through December 31, 2023, no measurement period adjustments were made.

The fair value of the consideration (paid in Globalstar common stock) totaled $ 70.4 million.

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 9:

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) $ 25,980

Total identifiable assets acquired

Goodwill (included in intangible assets) 30,624

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.

Refer to Note 6:

Intangible and Other Assets for further discussion on goodwill.

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 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.

During the year ended December 31, 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 consolidated statements of operations.

Disaggregation of Revenue

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Subscriber equipment sales:

Duplex $ 319 $ 1,011 $ 1,883

SPOT 7,724 5,888 9,427

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Total revenue $ 223,808 $ 148,504 $ 124,297

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 consideration related to performance obligations completed in prior periods.

The Company expects to recognize revenue in 2023 when payment is realized.

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, 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 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.

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.

Revenue does not reflect our intercompany transactions;

such intercompany transactions reflect globally accepted transfer pricing principles and align profits with the business operations and functions of the various legal entities in our international business.

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

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Accounts Receivable

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".

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 as of December 31, 2022, which was 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):

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Total accounts receivable (short-term and long-term), net of allowance for credit losses $ 48,743 $ 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 constellation.

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.

As the Company incurs construction in progress associated with the MDA contract, 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 $ 111.0 million is recorded in "Long-term wholesale capacity accounts receivable" in the table above.

During 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 were $ 197.1 million as of December 31, 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.

Contract Liabilities

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

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

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For subscriber contract liabilities, the amount of revenue recognized during the years ended December 31, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 19.6 million and $ 23.4 million, respectively.

For wholesale capacity contract liabilities, the amount of revenue recognized during the years ended December 31, 2022 and 2021 from performance obligations included in the contract liability balance at the beginning of these periods was $ 0.8 million and zero , respectively.

For wholesale capacity contract liabilities, the amount of revenue recognized during the years ended December 31, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $ 44.1 million and $ 0.8 million, respectively.

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

As of December 31, 2022, the Company expects to recognize $ 22.0 million, or approximately 93 %, of its remaining performance obligations during the next twelve months .

The Service Agreements have no expiration date;

As of December 31, 2023, the Company expects to recognize $ 22.8 million of its remaining performance obligations to its subscribers during the next twelve months .

The Service Agreements do not have a termination 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 December 31, 2022, the Company expects to recognize $ 52.7 million, or approximately 25 %, of its remaining performance obligations during the next twelve months .

As of December 31, 2023, the Company expects to recognize $ 30.9 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).

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$ 5,219 $ 99,671

Advanced payments for services expected to be performed with the recently launched ground spare satellite during Phases 1 and 2 25,438 16,981

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

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

23,673 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

14,204 22,540

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

19,907 18,872

Contract asset (1)

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Wholesale capacity contract liabilities, net $ 32,442 $ 113,825

(1) In accordance with applicable accounting guidance, the Company records imputed interest associated with the significant financing component, totaling $ 5.3 million and $ 1.9 million as of December 31, 2022 and 2021, respectively, which is included in deferred revenue and represents the remaining amount to be recognized over the Company's performance obligations.

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

Stock Compensation for further discussion).

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

The fair value of the Warrants is recorded as a reduction to revenue over the period in which the Company commences its performance obligations

through the estimated completion of the contract term, consistent with the period in which the customer benefits from the services provided.

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

(1) In November 2022, the Company issued Warrants with an initial fair value at the time of issuance of $ 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.

(2) 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, 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.

(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 operating leases (amounts in thousands):

As of December 31,

4 unchanged sentences

Total operating lease liabilities $ 32,248 $ 30,382

Finance leases:

Right-of-use asset, net (recorded in intangible and other current assets, net) $ 104 $ 8

Short-term lease liability (recorded in accrued expenses) 16 6

Long-term lease liability (recorded in non-current liabilities) 71 3

Total finance lease liabilities $ 87 $ 9

In connection with the Company's gateway expansion project related to the Service Agreements, the Company commenced one operating lease during 2022 for a new gateway site totaling $ 2.1 million.

Finance leases are not significant to the Company's financial statements as of December 31, 2023 and 2022.

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

2 unchanged sentences

Operating lease cost:

Amortization of right-of-use assets $ 2,605 $ 2,601 $ 1,880

Interest on lease liabilities 2,524 1,948 1,320

Capitalized lease cost ( 823 ) ( 615 ) —

Finance lease cost:

Amortization of right-of-use assets 12 11 76

Amortization of right-of-use assets, net

$ 2,930 $ 1,782 $ 1,986

Interest on lease liabilities 2,646 2,524 1,948

1 unchanged sentence

Total lease cost $ 6,438 $ 4,804 $ 4,147

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.

Amortization and interest associated with finance leases were less than $ 0.1 million in total for the years ended December 31, 2023, 2022 and 2021;

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

Weighted-Average Remaining Lease Term and Discount Rate

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Weighted-average lease term

Finance leases 4.6 years 1.6 years

Operating Leases 10.1 years 10.6 years

Finance leases 3.7 years

Operating Leases 9.8 years

Weighted-average discount rate

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Supplemental Cash Flow Information

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

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

Year Ended December 31,

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

Operating cash flows from operating leases $ 5,299 $ 5,445 $ 3,055

Operating cash flows from finance leases 3 1 4

Financing cash flows from finance leases 30 10 68

Operating cash flows for operating leases

$ 5,853 $ 5,299 $ 5,445

Operating and financing cash flows from finance leases were each less than $ 0.1 million for each of the years ended December 31, 2023, 2022 and 2021;

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

Maturity Analysis

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2027 5,593 15

2026 4,862 23

2027 4,740 15

Thereafter 19,028 —

2 unchanged sentences

Discounted lease liability $ 32,248 $ 70

As of December 31, 2022, the Company had executed an additional operating lease for a new gateway location, which has not yet commenced since the lessor is continuing to ready the site for use.

Accordingly, this lease is not reflected on the balance sheet as of December 31, 2022 or in the maturity table above.

The Company is in the process of evaluating this lease obligation and expects it to be approximately $ 2.3 million.

In connection with the License Agreement previously disclosed, the office lease agreement between XCOM Labs, Inc.

and its lessor is expected to be assigned to the Company during 2024.

PROPERTY AND EQUIPMENT

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Space component $ 1,230,975 $ 1,246,343

First and second-generation satellites in service $ 1,246,343 $ 1,195,509

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

Ground component 106,757 102,567

11 unchanged sentences

Total property and equipment, net $ 624,002 $ 560,371

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

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

During 2022, $ 66.7 million in costs associated with the construction and launch of this spare satellite (including capitalized interest) were placed into service.

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

In February 2022, the Company entered into an agreement with an initial contract price of $ 327 million for the purchase of new satellites that will replenish the Company's existing satellite constellation.

As of December 31, 2022, the Company recorded $ 11.5 million as prepaid satellite construction costs associated with the upfront milestone payment due upon signing and $ 98.5 million in construction in progress on its consolidated balance sheet.

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

During 2022, the Company placed $ 28.9 million of costs into service associated with these antennas (including capitalized interest), which are included in ground component in the table above.

These capital expenditures relate primarily to gateway upgrade work in connection with the Service Agreements.

As discussed in Note 1:

Summary of Significant Accounting Policies and Note 8:

Fair Value Measurements, the Company evaluated the recoverability of its second-generation Duplex assets in September 2022.

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

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

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

Three months ended September 30, 2022

Property and equipment, net

Ground component $ 154,144

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.

In 2023, the Company entered into an agreement with SpaceX providing for the launch of the first set of satellites under the agreement with MDA.

Refer to Note 10:

Commitments and Contingencies for further discussion of these agreements.

The table below reflects the amounts recorded on the Company's consolidated balance sheet (amounts in thousands).

As of December 31,

Satellite Procurement Agreement

Construction in progress

ground component 5,545

Equipment 202

Total property and equipment, net $ 159,891

Intangible and other assets, net $ 1,271

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

$ 198,884 $ 98,491

Vendor financing liability

Accrued construction costs

55,627 36,386

Prepaid construction costs

Launch Services Agreement

Construction in progress

Accrued construction costs

Prepaid construction costs

Construction in progress costs are recorded in the "space component" of construction in progress in the table above.

These costs include milestones completed under the Satellite Procurement Agreement and Launch Services Agreement as well as associated personnel costs and capitalized interest.

Accrued construction costs reflect work completed, but not yet invoiced under the agreements.

Prepaid construction costs reflect costs for milestone payments not yet completed and are recorded in Prepaid satellite costs and customer receivable on the Company's consolidated balance sheets.

Capitalized Interest and Depreciation Expense

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Amortization Expense $ 978 $ 8,409 $ 12,012

During 2022, the Company wrote down the value of certain second-generation ground assets, including intangible assets.

Accordingly the amortization expense decreased during 2023 associated with these assets.

Geographic Location of Property and Equipment

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Property and equipment:

United States $ 519,752 $ 621,474

North America $ 581,535 $ 524,880

Central and South America 16,122 12,678

Canada 2,582 13,921

Africa 12,379 11,507

Asia Pacific 11,411 8,913

Europe 2,555 2,393

Asia 4,410 2,752

Australia 4,503 421

Total property and equipment $ 624,002 $ 560,371

1 unchanged sentence

Intangible Assets

The Company has intangible assets not subject to amortization, which include certain costs to obtain or defend regulatory authorizations and a portion of capitalized interest associated with these assets.

The Company has intangible assets not subject to amortization, which include certain costs to obtain or defend regulatory authorizations.

These costs primarily include efforts related to the enhancement of the Company's licensed MSS spectrum to provide terrestrial wireless services as well as costs with international regulatory agencies to obtain similar terrestrial authorizations outside of the United States.

This category includes work in progress assets as well as indefinite lived assets already placed into service.

The Company also has intangible assets subject to amortization, which primarily include developed technology and definite lived MSS licenses.

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Regulatory authorizations 5,370 ( 1,850 ) 3,520 3,722 ( 1,316 ) 2,406

Intellectual property assets in progress 25,980 — 25,980 — — —

Other intangible assets in progress 10,289 — 10,289 9,377 — 9,377

$ 53,809 $ ( 10,085 ) $ 43,724 $ 22,212 $ ( 8,608 ) $ 13,604

Total $ 70,738 $ ( 10,085 ) $ 60,653 $ 39,015 $ ( 8,608 ) $ 30,407

For the twelve months ended December 31, 2022, the Company recorded amortization expense on these intangible assets of $ 1.2 million.

During 2023, intellectual property assets in progress were assumed in the License Agreement (discussed further in Note 2:

License Agreement).

As of December 31, 2023, these assets were still in the development phase and will be amortized over their useful lives once placed into service.

For the year ended December 31, 2023, the Company recorded amortization expense on these intangible assets of $ 1.4 million.

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

For the year ended December 31, 2022, the Company recorded a reduction in value of assets associated with intangible assets totaling $ 0.7 million on its consolidated statements of operations (refer to Note 8:

Fair Value Measurements for further discussion).

Excluding the effects of any acquisitions, dispositions or write-downs subsequent to December 31, 2023, total estimated annual amortization of intangible assets is as follows (in thousands):

1 unchanged sentence

Total $ 7,455

As of December 31, 2023, the carrying amount of goodwill was $ 30.6 million and is associated with the Company's only operating segment, its MSS business.

Goodwill is deductible for tax purposes.

This goodwill was recorded during 2023 in connection with the License Agreement (refer to Note 2:

License Agreement for further discussion) and represented the excess of the purchase price of the net identifiable assets acquired.

At the transaction date, the goodwill was attributable to the workforce of the acquired entity and significant synergies.

There were no material changes to the value of goodwill between the initial purchase date, August 29, 2023, and December 31, 2023.

The Company's annual goodwill impairment test was completed on November 30, 2023 and the qualitative assessment indicated that it was more likely-than-not that the estimated fair value of the reporting unit exceeded the carrying value of goodwill.

Other assets consist of the following (in thousands):

1 unchanged sentence

$ 6,886 $ 1,770

Long-term prepaid licenses and royalties (Note 8) — 4,380

Long-term accounts receivable

International tax receivables (Note 13)

Compound embedded derivative with the 2019 Facility Agreement (Note 7 and Note 8)

ERP software costs 1,131 919

Embedded derivative assets within the 2023 Funding Agreement (Note 8)

Other long-term assets 3,703 2,696

Total other assets $ 19,769 $ 8,018

Long-term accounts receivable represents an unconditional right to consideration for equipment delivered to one customer that will be billed over the next five years ;

the long-term portion represents the amount that will be billed beyond the next twelve months.

Other long-term assets include primarily ERP implementation costs, recoverable tariffs and other long-term deposits.

LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

4 unchanged sentences

Amount Unamortized Discount and Deferred Financing Costs Carrying

2023 Funding Agreement $ 117,253 $ 15,433 $ 101,820 $ — $ — $ —

2021 Funding Agreement 75,450 6,888 68,562 — — —

2023 13 % Notes

205,958 16,040 189,918 — — —

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

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

8.00 % Convertible Senior Notes Issued in 2013

— — 1,407 — 1,407

Total debt and vendor financing 398,661 38,361 360,300 202,788 11,098 191,690

3 unchanged sentences

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

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

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

As of December 31, 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 Service Agreements were amended 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 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, as needed and 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.

Through December 31, 2023, payments under the 2023 Funding Agreement totaled $ 117.3 million.

In February 2024, the Company received proceeds of $ 37.7 million.

The total amount paid to the Company under the 2023 Funding Agreement, including fees, is expected to be recouped from amounts payable 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.

The Company’s obligations under the 2023 Funding Agreement is also secured by a first priority lien over substantially all of the assets of the Company and its domestic subsidiaries.

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

Entry into this guarantee agreement received shareholder approval in June 2023 and became effective in December 2023.

See further discussion regarding Thermo's guarantee and the associated accounting conclusions in Note 12:

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 records the embedded derivative liability or asset as a non-current liability or asset on its consolidated balance sheet with a corresponding debt discount or premium, which is netted against the face value of the 2023 Funding Agreement.

The debt discount or premium is accreted or amortized to interest expense or income through the maturity date using an effective interest rate method.

Refer to Note 8:

Derivatives and Note 9:

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 draws made under the 2023 Funding Agreement at funding (amounts in thousands):

April 2023 November 2023

Principal $ 87,730 $ 29,523

Debt Discount - Thermo Guarantee ( 6,897 ) ( 1,967 )

Debt Discount - Customer Relationship ( 4,509 ) ( 3,290 )

Debt (Discount) Premium - Embedded Derivative

Fair Value at Issuance $ 75,983 $ 24,315

2021 Funding Agreement

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 previously recorded deferred revenue being re-characterized as debt.

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.

During 2023, $ 12.5 million was recouped pursuant to the terms of the 2021 Funding Agreement, which reduced the principal amount outstanding under the agreement.

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

Principal $ 94,200

Amount Repaid Prior to Amendment

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”) among the Company, as issuer, the subsidiary guarantors party thereto (each, a “Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”), an affiliate of Värde Partners and the other purchasers party thereto (collectively, the “Purchasers”).

The 2023 13 % Notes were issued pursuant to an indenture, dated as of March 31, 2023 (the “Indenture”), among the Company, the Subsidiary Guarantors, as guarantors, and Wilmington Trust, National Association, as trustee.

The 2023 13 % Notes are senior, unsecured obligations of the Company and have a stated maturity of September 15, 2029.

The 2023 13 % Notes were sold at an issue price of 95 % of the principal amount of the 2023 13 % Notes.

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

The 2023 13 % Notes bear interest initially at a rate of 13.00 % per annum payable semi-annually in arrears.

The Company is required to pay interest (i) at a rate per annum of 4.00 % which must be paid in cash and (ii) at a rate per annum of 9.00 % which may be paid either (a) in-kind (“PIK”) by increasing the principal amount of the 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.

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.

Among other things, prior to March 15, 2025 (the “First Call Date”), the Company will be permitted to redeem the 2023 13 % Notes in whole or in part at the redemption price equal to 100 % of the principal amount of the 2023 13 % Notes redeemed plus a premium based on the net present value of the remaining interest payments through the First Call Date.

Beginning on the First Call Date, the 2023 13 % Notes may be redeemed at a redemption price equal to 103 % of the principal amount, declining to 100 % of the principal amount after March 15, 2027, in each case, together with accrued and unpaid interest.

Additionally, in the event of a Change of Control (as such term is defined in the Indenture) or certain other events, holders of the 2023 13 % Notes have the right to require the Company to repurchase all or a portion of their 2023 13 % Notes at a price (as calculated by the Company) in cash equal to 101 % of the aggregate principal amount thereof plus accrued and unpaid interest and certain tax payments.

The Indenture includes customary terms and covenants, including restrictions on the Company’s and the Subsidiary Guarantors’ ability to incur indebtedness, make guarantees, sell equity interests, and customary events of default after which the holders may accelerate the maturity of the 2023 13 % Notes and become due and payable immediately.

2019 Facility Agreement

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

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

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

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

A portion was refinanced in November 2022 and the remaining portion is to be refinanced by March 13, 2023 (as amended).

On February 13, 2023, the Company provided notice, as required under the 2019 Facility Agreement, to the remaining lender of its intent to voluntarily prepay all remaining amounts due under the 2019 Facility Agreement.

In connection with our Partner's launch of Services on November 15, 2022, the Company was obligated to complete the Thermo Debt Conversion (as described in our Current Report on Form 8-K filed September 7, 2022).

To satisfy this obligation, the Company entered into an Exchange Agreement dated as of November 15, 2022 (the “Exchange Agreement”) with affiliates of Thermo and certain other lenders (collectively, the “Exchanging Lenders”) providing for the exchange of $ 149.4 million outstanding principal amount of, and accrued and unpaid interest on, the Exchanging Lenders’ loans under the 2019 Facility Agreement for 149,425 shares of 7.0 % Perpetual Preferred Stock, Series A, liquidation preference $ 1,000 per share (the “Series A Preferred Stock”).

The Company recorded the debt extinguishment in the fourth quarter of 2022 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.

In accordance with accounting guidance for debt extinguishment with related parties, the Company recorded the portion exchanged by Thermo of $ 30.8 million as a contribution to capital through equity on its consolidated balance sheets.

For the portion exchanged by other lenders, the Company recorded a gain on extinguishment of debt totaling $ 2.8 million on its consolidated statements of operations.

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

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

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

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

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

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

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

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

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

The 2019 Facility Agreement contains customary events of default and requires that the Company satisfy various financial and non-financial covenants, including the following items that were in place as of December 31, 2022:

• The Company's capital expenditures do not exceed $ 25.0 million for 2021 or 2022, excluding capital expenditures for the replacement satellites and network upgrades associated with the Service Agreements;

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

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

• The Company achieves minimum adjusted consolidated EBITDA (as defined in the 2019 Facility Agreement) of $ 21.1 million and $ 27.1 million for the six-month periods ended June 30, 2022 and December 31, 2022, respectively;

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

• The Company maintains a maximum net debt to adjusted consolidated EBITDA ratio of 2.75 :1;

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

The Company received waivers from its senior lenders to permit certain transactions during 2022.

including capital expenditures associated with our obligations under the Service Agreements, vendor financing associated with the MDA agreement, termination of the Globalstar pension plan, and redemption of the 2013 8.00 % Notes.

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

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

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

This payment reduced future principal payment obligations.

The Company generated excess cash flow for the six-month measurement period ended December 31, 2022 and will be required to pay approximately $ 2.0 million if the debt remains outstanding on March 16, 2023.

The 2019 Facility Agreement was

scheduled to mature in November 2025.

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

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

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

Using a portion of the proceeds from the sale of the 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.

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

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

The Company initially recorded the compound embedded derivative liability as a non-current liability on its consolidated balance sheets with a corresponding debt discount, which is netted against the face value of the 2019 Facility Agreement.

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

The Company initially recorded the compound embedded derivative liability as a non-current liability on its consolidated balance sheets with a corresponding debt discount, which was netted against the face value of the 2019 Facility Agreement.

The Company accreted the debt discount associated with the compound embedded derivative liability to interest expense through the maturity date, prior to its extinguishment, using an effective interest rate method.

Refer to Note 8:

1 unchanged sentence

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

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

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

Vendor Financing

1 unchanged sentence

Commitments and Contingencies for further discussion).

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

The Company received a waiver from its senior lenders to permit this vendor financing as subordinated indebtedness, The Company has made $ 34 million in payments to MDA under this agreement, including $ 14 million during the fourth quarter 2022 and $ 20 million in January 2023.

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

As of December 31, 2022, the Company had recorded $ 59.8 million in short-term vendor financing and total accrued interest of $ 1.3 million on its consolidated balance sheet associated with this agreement.

The Company has also accrued $ 36.1 million on its consolidated balance sheet associated with work performed but not yet billed.

As discussed in the Recent Developments section of Note 1:

Summary of Significant Accounting Policies, in February 2023, Globalstar and its Partner under the Service Agreements agreed to amend the Service Agreements to provide for, among other things, Partner’s prepayment of $ 252 million to pay amounts currently due and payable, as well as other amounts as they become due and payable, under the satellite procurement agreement.

This agreement (as amended), which had original payment terms within 45 days, provided for deferrals of milestone payments through March 15, 2023.

Deferred amounts represented approximately 23 % of the initial contract price.

Invoices to MDA were generally paid within six months of the due date.

The Company paid the remaining balance during the first quarter of 2023.

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

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

Invoices confirmed during the periods — 73,575

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

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

Series A Preferred Stock

As discussed above, on November 15, 2022, the Company issued 149,425 shares of Series A Preferred Stock in exchange for $ 149.4 million outstanding principal amount of its 2019 Facility Agreement, and recorded the fair value of the shares totaling $ 105.3 million on the Company's consolidated balance sheet.

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 the fair value of the shares totaling $ 105.3 million on the Company's consolidated balance sheet.

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.

Holders of Series A Preferred Stock will be entitled to receive, when, as and if declared by our 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, beginning on January 1, 2023.

In January 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 these dividends have been paid.

During 2023, the Company paid dividends approved by the Company's Board of Directors totaling $ 11.9 million.

No dividends were paid in 2022.

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

1 unchanged sentence

The holders of the Series A Preferred stock have customary liquidation preferences.

Refer to Note 8:

Fair Value Measurements for further discussion on the valuation of the preferred stock.

8.00 % Convertible Senior Notes Issued in 2013

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

During 2022, the holders converted the remaining principal amount outstanding of $ 1.4 million into 2.3 million shares of Globalstar common stock at a conversion price of $ 0.69 per share.

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

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

Refer to Note 7:

Derivatives and Note 8:

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

2009 Facility Agreement

In 2009, the Company entered into a facility agreement with a syndicate of bank lenders (the "2009 Facility Agreement").

In 2021, the Company fully repaid the 2009 Facility Agreement prior to its scheduled maturity in December 2022.

In connection with the debt prepayments and final payoff made during 2021, the Company recorded net losses on extinguishment of debt totaling $ 1.9 million on its consolidated statements of operations representing the difference between the net carrying amount prior to extinguishment (including unamortized deferred financing costs) and the reacquisition price of the debt (primarily including of the partial refund of premiums).

Paycheck Protection Program Loan

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

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

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

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

Debt maturities

Annual debt maturities for each of the five years following December 31, 2023 and thereafter are as follows (in thousands):

2024 $ 34,600

Thereafter 208,872

Total $ 398,661

Amounts in the above table are calculated based on amounts outstanding at December 31, 2022, and therefore exclude paid-in-kind interest payments that will be made in future periods.

Additionally, amounts in the table above exclude the Company's vendor financing arrangement, of which $ 59.8 million was outstanding as of December 31, 2022 and future recoupment amounts due under the Service Agreements.

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

Amounts in the above table are calculated based on amounts outstanding at December 31, 2023, and therefore exclude future paid-in-kind interest payments and future draws pursuant to the 2023 Funding Agreement and assume recoupments as scheduled under the 2021 and 2023 Funding Agreements.

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

None of these derivative instruments are designated as a hedge.

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

Derivative (liabilities) assets:

Compound embedded derivative with the 2019 Facility Agreement $ ( 122 ) $ 484

Compound embedded derivative with the 2013 8.00 % Notes

$ — $ ( 1,364 )

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

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

accordingly, the associated derivative is no longer outstanding.

Prior to this conversion, the derivative liability associated with the 2013 8.00 % Notes was included in Other non-current liabilities on the Company's consolidated balance sheets.

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

Year Ended December 31,

2022 2021 2020

Compound embedded derivative with the 2013 8.00 % Notes

$ 216 $ ( 1,241 ) $ 399

Compound embedded derivative with the Loan Agreement with Thermo — — 212

Compound embedded derivative with the 2019 Facility Agreement ( 1,021 ) 198 2,286

Total derivative (loss) gain $ ( 805 ) $ ( 1,043 ) $ 2,897

Derivative liabilities are recorded in "Other non-current liabilities" or "Intangible and other assets" on the Company's consolidated balance sheet.

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 consolidated statements of operations and consolidated statements of cash flows as a non-cash operating activity.

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

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.

Each liability or asset and the features embedded in the debt instrument, which required the Company to account for the instrument as a derivative, are described below.

Compound Embedded Derivative with the 2019 Facility Agreement

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

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

Embedded Derivatives within the 2023 Funding Agreement

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

As the Company makes a draw on the 2023 Funding Agreement, an associated embedded derivative is bifurcated and recorded.

The Company determines the fair value of the embedded derivatives using a discounted cash flow model.

As the discount yield and the effective interest rate of the loan fluctuates based on projected cash flows, the derivative may result in either a liability or an asset to the Company.

During the year ended December 31, 2023, the Company recorded a derivative gain of $ 1.6 million, which is reflected in "Derivative gain (loss) and other" in the Company’s consolidated statement of operations.

As of December 31, 2023, the fair value of the embedded derivatives within the 2023 Funding Agreement were assets totaling $ 1.3 million.

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.

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

During the years ended December 31, 2022 and 2021, the Company recorded derivative losses of $ 1.0 million and gains of $ 0.2 million, respectively, which is reflected in Derivative gain (loss) and other in the Company’s 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.

As a result of this exchange, the Company wrote off a portion of the embedded derivative associated with the 2019 Facility Agreement during the fourth quarter of 2022.

In March 2023, the Company refinanced the remaining principal outstanding under the 2019 Facility Agreement with proceeds from the issuance of its 2023 13 % Notes.

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

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

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

Compound Embedded Derivative with 2013 8.00 % Notes

As a result of the conversion option and the contingent put feature within the 2013 8.00 % Notes, the Company recorded a compound embedded derivative liability on its consolidated balance sheets with a corresponding debt discount that was netted against the face value of the 2013 8.00 % Notes.

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

The Company classified this derivative liability consistent with the classification of the 2013 8.00 % Notes on the Company's consolidated balance sheet.

During the first quarter of 2022, the compound embedded derivative with the 2013 8.00 % Notes was extinguished.

Compound Embedded Derivative with the Loan Agreement with Thermo

As a result of the conversion option and the contingent put feature within the Loan Agreement with Thermo as amended and restated in 2013, the Company recorded a compound embedded derivative liability on its consolidated balance sheets with a corresponding debt discount that was netted against the face value of the Loan Agreement.

Compound Embedded Derivative within the 2013 8.00 % Notes

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

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

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

During the years ended December 31, 2022 and 2021, the Company recorded derivative gains of $ 0.2 million and losses of $ 1.2 million, respectively, which is reflected in "Derivative gain (loss) and other" in the Company’s consolidated statement of operations.

During 2022, the compound embedded derivative with the 2013 8.00 % Notes was extinguished;

therefore no balance remained as of December 31, 2022.

FAIR VALUE MEASUREMENTS

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Recurring Fair Value Measurements

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

Fair Value Measurements at December 31, 2022:

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

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

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

Fair Value Measurements at December 31, 2021:

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

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

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

Compound embedded derivative with the 2013 8.00 % Notes

$ — $ — $ ( 1,364 ) $ ( 1,364 )

Total liabilities measured at fair value $ — $ — $ ( 1,364 ) $ ( 1,364 )

All of the Company's derivative assets and liabilities are classified as Level 3.

The Company marks-to-market these assets and liabilities 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.

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.

Derivatives for further discussion.

2013 8.00 % Notes

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

December 31, 2021:

Volatility Risk-Free Interest Rate Note Conversion

Price Discount

Rate Market Price of Common Stock

Compound embedded derivative with the 2013 8.00 % Notes

0.5 % $ 0.69 18 % $ 1.16

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

Increases in these inputs resulted in a higher fair value measurement.

2019 Facility Agreement

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

The most significant observable input used in the fair value measurement is the discount yield, which was 21 % and 13 % at December 31, 2022 and 2021, respectively.

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

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

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

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

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

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

Embedded Derivatives within the 2023 Funding Agreement

The embedded derivatives within the 2023 Funding Agreement are valued using a discounted cash flow model.

The most significant observable input used in the fair value measurement is the discount yield, which was 6.51 % at December 31, 2023.

The discount yield at issuance for the first and second draws was 8.52 % and 9.14 %, respectively.

The decrease in the discount yield as of December 31, 2023 compared to discount yield upon issuance was due primarily to the effectiveness of Thermo's guaranty of the 2023 Funding Agreement, which occurred in December 2023.

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 increase, the fair value of the embedded derivative increases.

As of December 31, 2023, the embedded derivatives within the 2023 Funding Agreement were categorized as a Level 3 fair value and was recorded as an asset of $ 1.3 million.

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.

The most significant observable input was the discount yield.

The unobservable inputs included the probability of change of control and the estimated timing and amounts of cash flows.

As of December 31, 2022, this compound embedded derivative liability was categorized as a Level 3 fair value and was $ 0.1 million.

In 2023, the Company refinanced the remaining principal balance outstanding and wrote off the associated embedded derivative balance;

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

Rollforward of Recurring Level 3 Assets and Liabilities

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Balances at beginning of period $ ( 122 ) $ ( 880 )

Derivative adjustment related to debt conversions and extinguishments 1,563 —

Unrealized loss, included in derivative (loss) gain ( 805 ) ( 1,043 )

Issuance of embedded derivatives within the 2023 Funding Agreement ( 292 ) —

Derivative adjustment related to debt conversions — 1,148

Derivative adjustment related to extinguishment of debt 122 415

Unrealized gain (loss), included in derivative gain (loss) and other 1,587 ( 805 )

Balances at end of period $ 1,295 $ ( 122 )

Fair Value of Debt Instruments and Vendor Financing

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

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

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

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

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

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

December 31, 2022 December 31, 2021

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

2013 8.00 % Notes

$ — $ — $ 1,407 $ 1,265

Fair Value of Debt Instruments and Other Financing Arrangements

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.

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

Nonrecurring Fair Value Measurements

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

Derivative Liabilities

During 2022, the remaining principal balance of the 2013 8.00 % Notes was converted into shares of Globalstar common stock, eliminating the principal balance outstanding.

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

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

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

February 17, 2022

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

Compound embedded derivative with the 2013 8.00 % Notes

0.06 % $ 0.69 18 % $ 1.00

March 9, 2022

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

Compound embedded derivative with the 2013 8.00 % Notes

2023 Funding Agreement

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 draw dates.

Amounts payable under the 2023 Funding Agreement are guaranteed by Thermo.

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 %.

For the fair value associated with the guarantee by Thermo, the Company recorded $ 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.

The Company's second draw under the 2023 Funding Agreement occurred in November 2023 with a total fair value of $ 24.3 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 9.14 %.

For the fair value associated with the guarantee by Thermo, the Company recorded $ 2.0 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 6.72 % and 9.14 %, 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 consolidated balance 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 %

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

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

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

Prepaid and other current assets

Prepaid licenses and royalties (1)

Intangible and other assets, net

Prepaid licenses and royalties (1)

Internally developed technology and software (2)

Spectrum intangible assets (3)

Property and equipment, net (2)

Grand Total $ 166,526

(1) While developing its second-generation Duplex technology that supported the Sat-Fi2® device, the Company signed various licensing and royalty agreements necessary for the manufacture and distribution of such products and services.

Prepayments associated with these agreements were classified as either current or non-current based on the estimated portion of expense to be recognized over the next twelve months.

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

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

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

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

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

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

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

Note that our first-generation Duplex assets (i.e.

handsets and related ground infrastructure) were not impacted.

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

The Company recorded a reduction in value of long-lived assets on its consolidated statements of operations for this amount during 2022.

(3) During 2022, the Company wrote off approximately $ 0.7 million of work in progress associated with its spectrum intangible assets, previously recorded in Intangible and other assets, net, on its consolidated balance sheets.

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

during 2022, the Company determined that it would not continue pursing such authorities in these countries.

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

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

Series A Preferred Stock

As discussed further in Note 6:

Long-Term Debt and Other Financing Arrangements, on November 15, 2022, the Company issued 149,425 shares of Series A Preferred Stock.

The total fair value of the Series A Preferred Stock on the issuance date was $ 105.3 million, which was determined using a discounted cash flow model and a perpetuity formula for various scenarios.

The most significant observable input used in the fair value measurement is the discount yield, which was 32 % on the valuation date.

The most significant unobservable inputs used in the fair value measurement include the probability of redemption of the preferred stock by the Company as well as the assumed method of payment (cash or accrual) of dividends.

Warrants Issued in Connection with the Thermo Guaranty

As discussed in Note 6:

Long-Term Debt and Other Financing Arrangements and Note 12:

Related Party Transactions, the Company issued to Thermo a warrant to purchase 10.0 million shares of the Company’s common stock.

The fair value of 5.0 million of the warrants, which is the portion that vested immediately on the effective date of the agreement, was estimated using the Black-Scholes option pricing model with the following assumptions on the valuation date of December 7, 2023.

Number of warrants (in millions)

Grant date December 7, 2023

Exercise price $ 2.00

Expected term (years) 5

Risk-free interest rate 4.11 %

Volatility 92.14 %

Black-Scholes fair value per share $ 1.00

Total fair value (in millions)

The fair value of the warrants that vest if and when Thermo advances aggregate funds of $ 25.0 million or more to the Company was assigned a fair value of zero based on the low probability of the need for the funding over the term of the 2023 Funding Agreement.

COMMITMENTS AND CONTINGENCIES

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.

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 $ 10.0 million;

• 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 require the Company (i) upon commencement of the Services, to refinance all loans outstanding under the 2019 Facility Agreement that are held by affiliates of the Thermo and (ii) to refinance all loans outstanding under the 2019 Facility Agreement that are held by persons other than Thermo by March 13, 2023 (as amended).

The required refinancing of the Thermo portion of the 2019 Facility Agreement was complete in November 2022.

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

Refer to Note 1:

Summary of Significant Accounting Policies, Note 2:

Revenue, Note 3:

Leases, Note 4:

Property and Equipment, Note 6:

Long-Term Debt and Other Financing Arrangements and Note 15:

Stock Compensation 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 maintains the option to acquire additional satellites under the contract.

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

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

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

The satellites are expected to be launched in 2025.

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

Refer to Note 6:

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

Network Obligations

The Company has purchase commitments with certain vendors related to the procurement, deployment and maintenance of the Company's network (beyond the satellite procurement agreement with MDA discussed above).

As of December 31, 2022, the Company's remaining purchase obligations under these noncancelable commitments are approximately $ 4.1 million;

the timing of payments is driven by work performed under the contracts over the remaining contract periods, which is expected to be complete during 2023.

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

Satellite Procurement Agreement and Launch Services Agreement

In February 2022, the Company entered into a satellite procurement agreement with MDA pursuant to which Globalstar will acquire at least 17 satellites (and up to 26 satellites) with an amended contract price of $ 329.5 million, with initial delivery expected to occur in 2025.

In addition, MDA will procure a satellite operations control center for $ 4.9 million as well as other equipment for $ 3.7 million.

As more fully described in our Current Report on Form 8-K filed with the Commission on August 31, 2023, in August 2023, the Company entered into a Launch Services Agreement by and between the Company and Space Exploration Technologies Corp.

(“SpaceX”) and certain related ancillary agreements (the “Launch Services Agreements”), providing for the launch of the first set of the satellites the Company is acquiring pursuant to the satellite procurement agreement with MDA.

The Launch Services Agreements provide a launch window from April to September 2025.

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

Inventory Purchase Commitments

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The Company estimates that its open inventory purchase commitments as of December 31, 2023 were approximately $ 14.2 million.

Credit Card Processor Reserve

The Company is required to maintain a reserve of $ 5.0 million with its credit card processor to address any liability arising from potential charge-backs.

The balance at December 31, 2022 was $ 5.0 million and is recorded in prepaid expenses and other current assets on the Company's consolidated balance sheet as the required reserve is held with the credit card processor.

Due to the nature of the Company's business, the Company is involved, from time to time, in various litigation matters or subject to disputes or routine claims regarding its business activities.

4 unchanged sentences

Accrued compensation and benefits $ 4,307 $ 4,967

Accrued satellite and ground costs 36,500 6,195

Accrued property and other taxes 5,586 3,293

1 unchanged sentence

Accrued professional and other service provider fees 2,010 1,190

Accrued commissions 470 601

Accrued telecommunications expenses 657 705

Accrued inventory 1,210 874

3 unchanged sentences

Total accrued expenses $ 26,958 $ 22,554

Accrued satellite and ground costs in the table above includes $ 36.1 million of milestone work partially incurred, but not yet accepted, under the Company's satellite agreement with MDA.

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

Accrued interest includes interest associated with the cash portion of the 13 % Notes due in March 2024.

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

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

Year Ended December 31,

2022 2021 2020

Balance at beginning of period $ 162 $ 212 $ 186

Provision 93 361 543

Utilization ( 151 ) ( 411 ) ( 517 )

Balance at end of period $ 104 $ 162 $ 212

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

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

Asset retirement obligations (Note 1) $ 2,951 $ 2,953

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

Accrued interest 7,429 —

Compound embedded derivative with the 2019 Facility Agreement (Note 8 and Note 9) — 122

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Total other non-current liabilities $ 11,265 $ 3,995

Accrued interest includes interest associated with the PIK portion of the 13 % Notes and the 2023 Funding Agreement.

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

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

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

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

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

Payables to Thermo related to normal purchase transactions were $ 0.5 million and $ 0.3 million as of December 31, 2023 and 2022, respectively.

Transactions with Thermo

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

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

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

These expenses include:

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

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

Lease Agreement

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 .

Annual lease payments increase at a rate of 2.5 % per year.

2023 lease payments were $ 1.6 million.

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

During each of the twelve months ended December 31, 2023, 2022 and 2021, the Company incurred lease expense of $ 1.6 million, respectively, associated with this lease agreement.

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

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

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

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

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

Prior to the exchange, interest accrued since inception with respect to Thermo's portion of the debt outstanding on the 2019 Facility Agreement was approximately $ 44.6 million, of which $ 14.9 million was accrued during the twelve months ended December 31, 2022.

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 Service Launch in November 2022.

Amounts payable by the Company in connection with the 2023 Prepayment with Partner will be guaranteed by Thermo, subject to applicable shareholder approval.

Perpetual Preferred Stock

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

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

During 2023, the Company made dividend payments to Thermo which were approved by the Company's Board of Directors totaling $ 10.9 million.

Service Agreements

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.

Guaranty with 2023 Funding Agreement

Amounts payable by the Company in connection with the 2023 Funding Agreement and certain other obligations under the Service Agreements are guaranteed by Thermo.

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

This guarantee agreement received shareholder approval in June 2023 and became effective in December 2023.

As consideration for Thermo's guarantee, the Company has issued 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 vested immediately upon effectiveness of Thermo's guarantee, which occurred in December 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.

Upon effectiveness of Thermo's guarantee, the Company recorded the fair value of the vested warrants, which was accounted for as a credit enhancement for the guarantee and totaled $ 5.0 million at issuance, to additional paid-in-capital on the Company's consolidated balance sheet.

with an offset to "Loss on equity issuance" on the Company's consolidated statement of operations.

The second tranche of warrants, which vests if and when Thermo advances aggregate funds of $ 25.0 million, was assigned a fair value of zero based on the Company's future cash flows and the low probability of the need for funding from Thermo as required under the 2023 Funding Agreement.

The Company will reassess the probably of vesting at each reporting period and, if the probability of vesting increases, it will record the fair value as a liability pursuant to applicable accounting guidance with an offsetting expense to derivative gain or loss in that period.

To the extent Thermo is required to advance amounts under the guarantee, the Company is required to issue shares of Common Stock of the Company in respect of such advance in an amount equal to the amount of such payment divided by the average of the volume weighted average price of the Company’s common stock on the five trading days immediately preceding such payment.

Refer to Note 9:

Fair Value Measurements for further discussion on the fair value of the vested warrants issued to Thermo.

License Agreement

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.

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

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

PENSIONS AND OTHER EMPLOYEE BENEFITS

Defined Benefit Plan

In August 2022, the Company terminated its defined benefit pension plan, which had been frozen since 2003.

As such, there are no remaining pension plan obligations as of December 31, 2022.

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

Defined Benefit Pension Obligation and Funded Status

The Company's funding policy was to fund its defined benefit pension plan in accordance with the Internal Revenue Code and regulations.

Below is a reconciliation of projected benefit obligation, plan assets and the funded status of the Company’s defined benefit plan (in thousands):

Year Ended December 31,

Change in projected benefit obligation:

Projected benefit obligation, beginning of year $ 9,051 $ 9,179

Service cost 117 174

Interest cost 168 225

Actuarial (gain) loss ( 1,340 ) ( 45 )

Settlement ( 7,663 ) —

Benefits paid ( 333 ) ( 482 )

Projected benefit obligation, end of year $ — $ 9,051

Change in fair value of plan assets:

Fair value of plan assets, beginning of year $ 5,762 $ 5,529

Return on plan assets ( 643 ) 485

Employer contributions 2,877 230

Settlement ( 7,663 ) —

Benefits paid ( 333 ) ( 482 )

Fair value of plan assets, end of year $ — $ 5,762

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

Net Benefit Cost and Amounts Recognized

Components of the net periodic benefit cost of the Company’s defined benefit pension plan were as follows (in thousands):

Year Ended December 31,

2022 2021 2020

Net periodic benefit cost:

Service cost $ 117 $ 174 $ 176

Interest cost 168 225 521

Expected return on plan assets ( 216 ) ( 309 ) ( 793 )

Amortization of unrecognized net actuarial loss 91 189 300

Settlement 1,501 — 2,075

Total net periodic benefit cost $ 1,661 $ 279 $ 2,279

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

In August 2022, the remaining obligations were fully settled.

In accordance with ASC 715 Compensation — Retirement Benefits , the Company recognized losses totaling $ 1.5 million and $ 2.1 million, respectively.

These losses are included in other (expense) income in its consolidated statement of operations during the periods associated with these settlements.

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

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

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

Amounts recognized:

Funded status recognized in other non-current liabilities $ — $ ( 3,289 )

Net actuarial loss recognized in accumulated other comprehensive loss — 2,073

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

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

Year Ended December 31,

2022 2021 2020

Benefit obligation assumptions:

Discount rate N/A 2.84 % 2.50 %

Rate of compensation increase N/A N/A N/A

Net periodic benefit cost assumptions:

Discount rate 2.84 % 2.50 % 3.28 %

Expected rate of return on plan assets 5.75 % 5.75 % 6.50 %

Rate of compensation increase N/A N/A N/A

The assumptions, investment policies and strategies for the Globalstar Plan were determined by the Globalstar Plan Committee.

The Globalstar Plan Committee was responsible for ensuring the investments of the plans were managed in a prudent and effective manner.

Amounts related to the pension plan were derived from actuarial and other assumptions, including discount rates, mortality, expected rate of return, participant data and termination.

The Company reviewed assumptions on an annual basis and made adjustments as considered necessary.

The expected rate of return on pension plan assets was selected by taking into account the expected duration of the projected benefit obligation for the plan, the asset mix of the plan and the fact that the plan assets were actively managed to mitigate risk.

Discount rates were determined annually based on the Plan administrator’s yield curve index, which considered expected benefit payments and was discounted with rates from the yield curve to determine a single equivalent discount rate.

Plan Assets and Investment Policies and Strategies

The plan assets were invested in various mutual funds which had quoted prices.

The plan had a target allocation.

On a weighted-average basis, target allocations for equity securities ranged from 50 % to 60 %, for debt securities 25 % to 50 % and for other investments 0 % to 15 %.

The defined benefit pension plan asset allocations as of the measurement date presented as a percentage of total plan assets were as follows:

Equity securities N/A 55 %

Debt securities N/A 45

Total N/A 100 %

The fair values of the Company’s pension plan assets by asset category were as follows (in thousands):

December 31, 2021

Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

United States equity securities $ 2,542 $ — $ 2,542 $ —

International equity securities 631 — 631 —

Fixed income securities 1,693 — 1,693 —

Other 896 — 896 —

Total $ 5,762 $ — $ 5,762 $ —

Accumulated Benefit Obligation

The accumulated benefit obligation of the defined benefit pension plan was zero and $ 9.1 million at December 31, 2022 and 2021, respectively.

Benefits Payments and Contributions

For 2022 and 2021, the Company contributed $ 2.9 million and $ 0.2 million, respectively, to its defined benefit pension plan.

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

Under this plan, the matching contributions were approximately $ 0.5 million for 2022 and $ 0.6 million for each of 2021 and 2020.

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

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

Year Ended December 31,

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Total 33 — ( 459 )

Income tax (benefit) expense $ 73 $ ( 299 ) $ 662

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

Income tax expense (benefit)

$ 1,123 $ 73 $ ( 299 )

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

Year Ended December 31,

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loss $ ( 30,086 ) $ ( 232,148 ) $ ( 79,452 )

Foreign loss ( 24,694 ) ( 33,472 ) ( 26,237 )

Foreign income (loss)

6,491 ( 24,694 ) ( 33,472 )

Total loss before income taxes $ ( 23,595 ) $ ( 256,842 ) $ ( 112,924 )

As of December 31, 2023 and 2022, the Company had cumulative U.S., state and foreign net operating loss ("NOL") carryforwards for income tax reporting purposes of approximately $ 1.9 billion and $ 2.0 billion, respectively.

The vast majority

of these NOL carryforwards were generated prior to 2018 and expire through 2042 (with less than 1 % expiring prior to 2026) and the remaining NOL carryforwards do not expire.

The vast majority of these NOL carryforwards were generated prior to 2018 and expire through 2041 (with less than 1 % expiring prior to 2027) and the remaining NOL carryforwards do not expire.

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

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Net deferred income tax liability $ ( 329 ) $ ( 296 )

The deferred revenue tax asset in the table above is related to a portion of the prepayments made by Partner under the Service Agreements, which were recorded as deferred revenue on the Company’s balance sheet as of December 31, 2022 (see Note 2:

The deferred revenue tax asset in the table above is related to a portion of the prepayments made under the Service Agreements (see Note 3:

Revenue to our Consolidated Financial Statements for further discussion).

The change in the valuation allowance during 2022 of $ 42.3 million was due to a net decrease in property and equipment and other long-term assets driven primarily by an impairment of these assets (refer to Note 8:

Fair Value Measurements for further information), offset partially by depreciation due to the difference between tax and book depreciable lives.

The change in the valuation allowance during 2023 of $ 1.2 million was due to depreciation driven to the difference between tax and book depreciable lives.

Due to the limitation on utilization of state NOLs, the Company recorded deferred tax liabilities of $ 0.3 million as of both December 31, 2023 and 2022.

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State income taxes, net of federal benefit ( 771 ) ( 4,065 ) ( 867 )

Change in valuation allowance (excluding impact of foreign exchange rates) 43,500 15,991 61,540

Change in valuation allowance

( 969 ) 43,500 15,991

Effect of foreign income tax at various rates ( 131 ) ( 133 ) 176

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Adjustment to state deferred rate 170 136 775

Withholding tax 502 — —

Other ( 7 ) ( 105 ) 947

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It may also become subject to additional tax liabilities as a result of changes in tax laws, which could in certain circumstances have a retroactive effect.

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

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

The CRA has completed its audit for the year ended October 31, 2016 and assessed the Company for an additional tax liability, which the Company is appealing.

The Company's

NOL in Canada would largely offset this tax liability to the extent that the Company is unsuccessful in its appeal.

The years ended October 31, 2017 and 2018 remain under examination.

The Company's Canadian subsidiary is under audit for multiple tax years.

The Company is working with the Canada Revenue Agency ("CRA") to complete the audits.

The CRA has completed its audit for the years ended October 31, 2016 and 2017 and assessed the Company for additional tax liabilities, which the Company is appealing.

The Company's NOL in Canada would largely offset this tax liability to the extent that the Company is unsuccessful in its appeal.

The years ended October 31, 2018 through December 31, 2022 remain under examination.

Except for the audit noted above, neither the Company nor any of its subsidiaries is currently under audit by the IRS or by any state income tax jurisdiction in the United States.

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The Company elected to account for GILTI tax in the period in which it is incurred and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended December 31, 2023 and 2022.

As of December 31, 2022 and 2021, the Company recorded a value added tax ("VAT") recoverable, of which the short term portion is included in prepaid and other current assets on its consolidated balance sheet totaling $ 1.7 million and $ 5.6 million, respectively, and the long-term portion is included in intangible and other assets, net, on its consolidated balance sheet totaling $ 3.1 million and $ 0.3 million, respectively.

As of December 31, 2023 and 2022, the Company recorded a value added tax ("VAT") recoverable, of which the short term portion is included in prepaid and other current assets on its consolidated balance sheet totaling $ 2.2 million and $ 1.7 million,

respectively, and the long-term portion is included in intangible and other assets, net, on its consolidated balance sheet totaling $ 2.3 million and $ 3.1 million, respectively.

This VAT recoverable is related primarily to certain payments for the purchase and importation of gateway equipment in various international jurisdictions in connection with the Company's network upgrade work.

In December 2022, the Company received a refund check totaling $ 1.8 million as a result of its eligibility for the employee retention credit under the provisions of the Coronavirus Aid, Relief and Economic Security Act for the first quarter of 2021.

The Company evaluated this refund as well as its eligibility for future refunds under ASC 450 and accounts for the gain in the period in which the payment was received.

Consistent with the classification of the employment taxes on qualified wages for which this credit relates, the refund was recorded as a reduction to operating expenses during the fourth quarter of 2022 on its consolidated statements of operations.

LOSS PER SHARE

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For the years ended December 31, 2023, 2022 and 2021, 18.8 million shares, 7.7 million shares and 10.1 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive.

Included in the potential common stock excluded from diluted shares outstanding as of December 31, 2022 are a portion of the 49.1 million Warrants issued to Partner under the Service Agreements, which was determined after considering the exercise price of each Warrant tranch relative to the average market price during the period and weighting for the period outstanding during 2022 (see Note 15:

Stock Compensation for further discussion).

Included in these shares as of December 31, 2023 and 2022 is a portion of the 49.1 million Warrants issued under the Service Agreements in 2022 based on the treasury stock method.

During 2023, 5.0 million of the warrants that were issued to Thermo for its guarantee of the 2023 Funding Agreement vested;

none of these warrants are included in the potentially dilutive securities for the period due to the consideration of the exercise price of the warrants relative to the average market price during the period.

Also excluded from the amounts above are 5.0 million unvested warrants associated with Thermo's guarantee of the 2023 Funding Agreement;

these 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.

As discussed in Note 6:

Long-Term Debt and Other Financing Arrangements, 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 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 $ 10.6 million and $ 1.3 million, respectively, for the twelve months ended December 31, 2023 and 2022 on its Series A Preferred Stock.

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

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These options have various vesting terms, but generally vest in equal installments over three years and expire in ten years .

Non-vested options are generally forfeited upon termination of employment.

The Company recognizes compensation expense for stock option grants over the employee's requisite service period, which is generally based on the vesting period and the fair value at the date of grant using the Black-Scholes option pricing model.

The Company uses historical data, among other factors, to estimate the expected stock price volatility, the expected option life and the expected forfeiture rate.

The market price of the Company's common stock has been volatile at times.

The Company makes judgmental adjustments to projected volatility during the expected term of the options, considering, among other things, historical volatility of the share prices of its peer group and expectations with regard to business conditions that may impact stock price fluctuations or stability.

The Company estimates the expected term considering factors such as historical exercise patterns and the recipients of the options granted.

The risk-free rate is based on the United States Treasury Department yield curve in effect at the time of grant for the expected life of the option.

The Company assumes an expected dividend yield of zero for all periods.

The Company recognizes compensation expense for stock option grants over the Eligible Participants' requisite service period, which is generally based on the vesting period and the fair value at the date of grant using the Black-Scholes option pricing model.

The table below summarizes the assumptions for the indicated periods:

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The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.

For the years ended December 31, 2022 and 2021, the total intrinsic value of all stock options exercised was $ 0.4 million and $ 0.7 million, respectively.

There were no options exercised during 2020.

For the years ended December 31, 2023, 2022 and 2021, the total intrinsic value of all stock options exercised was less than $ 0.1 million, $ 0.4 million and $ 0.7 million, respectively.

The aggregate intrinsic value of all outstanding stock options at December 31, 2023 was $ 6.9 million with a remaining contractual life of 5.3 years.

The aggregate intrinsic value of all vested stock options that were exercisable at December 31, 2023 was $ 5.7 million based on a per grant calculation with a remaining contractual life of 4.7 years.

Net cash proceeds during the year ended December 31, 2022 from the exercise of stock options was $ 0.2 million.

Net cash proceeds during the year ended December 31, 2023 from the exercise of stock options was less than $ 0.1 million.

For each of the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 0.5 million of compensation expense related to stock options.

As of December 31, 2023, unrecognized compensation expense related to non-vested stock options outstanding was approximately $ 0.6 million to be recognized over a weighted-average period of 1.6 years.

The Company adjusts its estimates of expected forfeitures of equity awards based upon its review of recent forfeiture activity and expected future employee turnover.

The Company considers the impact of both pre-vesting forfeitures and post-vesting cancellations for purposes of evaluating forfeiture estimates.

The effect of adjusting the forfeiture rate is recognized in the period in which the forfeiture estimate is changed.

Restricted Stock

Shares of restricted stock generally vest immediately, one year from the grant date, in equal annual installments over three years or based on performance criteria.

Grants of restricted stock have varying vesting criteria, including immediate, one year from the grant date, in equal annual installments over three years or based on performance criteria.

Non-vested shares are generally forfeited upon the termination of employment.

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Nonvested at December 31, 2023

Included in the non-vested balance at December 31, 2022 are approximately 3.9 million performance-based restricted stock awards that will vest upon the achievement of certain milestones.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 10.4 million, $ 5.6 million and $ 4.5 million, respectively, of compensation expense related to restricted stock.

The increase in compensation expense during 2022 was driven by performance grants to certain employees associated with their efforts under the Service Agreements.

8,836,081 $ 1.56

Included in the vested balance during the year ended December 31, 2023 were approximately 3.4 million performance-based restricted stock awards that vested upon the achievement of certain milestones during the year.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 13.1 million, $ 10.4 million and $ 5.6 million, respectively, of compensation expense related to restricted stock awards.

The increase in compensation expense during 2023 was driven primarily by performance grants to certain employees associated with their efforts under the Service Agreements as well as other performance criteria.

The total fair value, as calculated on the day of vesting, of restricted stock awards that vested during 2023, 2022 and 2021 was $ 11.6 million, $ 14.6 million, and $ 8.6 million, respectively.

As of December 31, 2023, unrecognized compensation expense related to unvested restricted stock outstanding was approximately $ 10.2 million to be recognized over a weighted-average period of 1.7 years.

Market-Based Restricted Stock Units

During 2023, the Company granted 44.5 million restricted stock units ("RSUs") to certain executives 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, estimated to be 2.6 years.

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

For the year ended December 31, 2023, the Company recognized $ 6.7 million of compensation cost related to these awards.

As of December 31, 2023, unrecognized compensation expense related to unvested market-based RSUs was approximately $ 32.8 million to be recognized over a weighted-average period of 1.5 years.

No market-based RSUs vested, expired or were forfeited during 2023.

Key Employee Bonus Plan

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The Company has an Employee Stock Purchase Plan (the “Plan”) which provides eligible employees of the Company with an opportunity to acquire shares of its common stock at a discount.

The maximum aggregate number of shares of common stock that may be purchased through the Plan was 20.0 million shares as of December 31, 2022;

this total includes an increase approved by the Company's Board of Directors in February 2022 totaling 6.0 million shares.

The number of shares that may be purchased through the Plan will be subject to proportionate adjustments to reflect stock splits, stock dividends, or other changes in the Company’s capital stock.

The Plan permits eligible employees to purchase shares of common stock during two semi-annual offering periods beginning on June 15 and December 15 (the “Offering Periods”).

Eligible employees may purchase shares of up to 15 % of their total compensation per pay period, but may purchase in any calendar year no more than the lesser of $ 25,000 in fair market value of common stock or 500,000 shares of common stock, as measured as of the first day of each applicable Offering Period.

The price an employee pays is 85 % of the fair market value of common stock.

Fair market value is equal to the lesser of the closing price of a share of common stock on either the first day or the last day of the Offering Period.

As of December 31, 2023, the maximum aggregate number of shares of common stock that may be purchased through the Plan was 20.0 million shares (subject to adjustment as allowed in the Plan) and the Company has issued approximately 13.6 million shares.

For 2023 and 2022, the Company received $ 0.9 million and $ 0.7 million, respectively, in proceeds related to shares issued under the Plan.

For each of the years ended December 31, 2023, 2022 and 2021, the Company recorded compensation expense of approximately $ 0.4 million, which is reflected in marketing, general and administrative expenses.

Additionally, the Company has issued approximately 12.7 million shares through December 31, 2022 related to the Plan.

The fair value of the employees’ stock purchase rights granted under the ESPP was estimated using the Black-Scholes option pricing model with the following assumptions for the following years:

Year Ended December 31,

Risk-free interest rate 1.2 % 0.1 %

Expected term (months) 6 6

Volatility 100 % 110 %

Weighted average grant-date fair value per share $ 0.58 $ 0.23

Share-Based Payment Arrangements with Customers

The Company may issue noncash consideration to customers.

The only share-based payment arrangement currently outstanding is the warrants under the Service Agreements (the "Warrants") to purchase up to 2.64 % of the Company’s outstanding common stock.

The Warrants are subdivided into two tranches.

Each tranche represents one half of the total

number of Warrants issued, with the primary difference between the tranches being the exercise price (and therefore the grant dates).

The Company evaluated the issuance of the Warrants under ASC 606 and ASC 718 and determined that the Warrants are not a payment for a distinct good or service and, accordingly, are accounted for as a reduction to the transaction price under ASC 606.

The classification and measurement of the consideration paid to Partner was evaluated under ASC 718.

The Company determined that the Warrants contained a performance condition upon issuance, which was contingent upon commencement of service under the Service Agreements.

As Service Launch was November 15, 2022, the performance condition was met and the Warrants vested.

On November 15, 2022, the Company recorded the total fair value of the Warrants totaling $ 48.3 million in accumulated paid-in-capital on its consolidated balance sheet with a corresponding offset to a contract asset, which was netted against the deferred revenue balance associated with Partner.

As of December 31, 2022, no warrants have been exercised by Partner.

The fair value of the Warrants issued to Partner was estimated using the Black-Scholes option pricing model with the following assumptions on the valuation date of November 15, 2022.

Tranche 1 Tranche 2

Number of Warrants (in millions) 24.6 24.6

Grant date 2/24/2020 5/28/2021

Exercise price $ 0.43 $ 1.60

Expected term (years) 17.73 16.47

Risk-free interest rate 1.63 % 1.92 %

Volatility 97.29 % 97.29 %

Black-Scholes fair value per share $ 0.42 $ 1.54

Total fair value $ 10,429,763 $ 37,907,181

The expected term of the Warrants is consistent with the expected term of the Company's performance obligations under the Service Agreements measured as the period beginning with Phase 1 service launch through the design life of the satellites that will support Phase 2 service.

The Company allocated the fair value of the Warrants amongst the stand alone selling price for each phase of service under the Service Agreements and records a reduction to revenue over the estimated term of the Service Agreements.

ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss includes all changes in equity during a period from non-owner sources.

The change in accumulated other comprehensive loss for all periods presented resulted from foreign currency translation adjustments and minimum pension liability adjustments.

The components of accumulated other comprehensive loss were as follows (in thousands):

Accumulated minimum pension liability adjustment $ — $ ( 2,073 )

Accumulated net foreign currency translation adjustment 9,242 3,963

Total accumulated other comprehensive income $ 9,242 $ 1,890

During 2022, the Company settled the remaining obligations under the pension plan;

accordingly, no amounts are reflected in the table above.

See further discussion in Note 12:

Pensions and Other Employee Benefits.

No amounts were reclassified out of accumulated other comprehensive loss for the periods shown above.

The fair value of the employees’ stock purchase rights granted under the ESPP is estimated using the Black-Scholes option pricing model.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data