UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33117

GLOBALSTAR, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						41-2116508
(State or Other Jurisdiction of						(I.R.S. Employer Identification No.)
Incorporation or Organization)

1351 Holiday Square Blvd.

Covington, Louisiana 70433

(Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code: (985) 335-1500

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, par value $0.0001 per share

GSAT

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

(Do not check if a smaller reporting company)

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of ~~July 29, 2022, 1,801~~May 1, 2023, 1.8 billion shares of voting common stock were outstanding, 0.1 million shares of ~~voting common~~preferred stock were outstanding, and no shares of nonvoting common stock were authorized or outstanding. Unless the context otherwise requires, references to common stock in this Report mean the Registrant’s voting common stock.

FORM 10-Q

GLOBALSTAR, INC.

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1819

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2728

Item 4.	Controls and Procedures.	2829

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	2930

Item 1A.	Risk Factors.	2930

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2930

Item 3.	Defaults Upon Senior Securities.	2930

Item 4.	Mine Safety Disclosures.	2930

Item 5.	Other Information.	2930

Item 6.	Exhibits.	3031

Signatures		3132

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended
		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Revenue:	Revenue:									Revenue:
Service revenue	Service revenue	$	33,048	$	25,617	$	62,392	$	48,703	Service revenue	$	52,954	$	29,344
Subscriber equipment sales	Subscriber equipment sales	3,752		4,662		7,180		8,505		Subscriber equipment sales	5,690		3,428
Total revenue	Total revenue	36,800		30,279		69,572		57,208		Total revenue	58,644		32,772
Operating expenses:	Operating expenses:									Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	10,695		9,123		21,489		18,200		Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	11,820		10,794
Cost of subscriber equipment sales	Cost of subscriber equipment sales	3,097		2,858		5,663		5,757		Cost of subscriber equipment sales	4,309		2,566
Cost of subscriber equipment sales - reduction in the value of inventory		16		782		16		782

Marketing, general and administrative	Marketing, general and administrative	9,693		9,681		19,034		19,778		Marketing, general and administrative	13,391		9,341
Reduction in value of long-lived assets		525		—		525		—

Depreciation, amortization and accretion	Depreciation, amortization and accretion	24,130		23,843		47,913		47,959		Depreciation, amortization and accretion	21,933		23,783
Total operating expenses	Total operating expenses	48,156		46,287		94,640		92,476		Total operating expenses	51,453		46,484
Loss from operations		(11,356)		(16,008)		(25,068)		(35,268)
Income (loss) from operations										Income (loss) from operations	7,191		(13,712)
Other (expense) income:	Other (expense) income:									Other (expense) income:
Gain on extinguishment of debt		—		2,664		—		2,664
Loss on extinguishment of debt										Loss on extinguishment of debt	(10,403)		—
Interest income and expense, net of amounts capitalized	Interest income and expense, net of amounts capitalized	(7,187)		(10,778)		(16,717)		(22,352)		Interest income and expense, net of amounts capitalized	(2,032)		(9,530)
Derivative loss	Derivative loss	(1,242)		(1,310)		(1,728)		(2,439)		Derivative loss	—		(486)
Foreign currency (loss) gain		(7,123)		4,425		(3,891)		110
Foreign currency gain										Foreign currency gain	1,907		3,232
Other	Other	272		(88)		389		(66)		Other	(99)		117
Total other (expense) income		(15,280)		(5,087)		(21,947)		(22,083)
Total other expense										Total other expense	(10,627)		(6,667)
Loss before income taxes	Loss before income taxes	(26,636)		(21,095)		(47,015)		(57,351)		Loss before income taxes	(3,436)		(20,379)
Income tax expense	Income tax expense	121		354		204		431		Income tax expense	44		83
Net loss	Net loss	$	(26,757)	$	(21,449)	$	(47,219)	$	(57,782)	Net loss	$	(3,480)	$	(20,462)

Other comprehensive loss:	Other comprehensive loss:									Other comprehensive loss:
Foreign currency translation adjustments	Foreign currency translation adjustments	5,315		(3,158)		4,636		84		Foreign currency translation adjustments	(1,429)		(679)
Comprehensive loss	Comprehensive loss	$	(21,442)	$	(24,607)	$	(42,583)	$	(57,698)	Comprehensive loss	$	(4,909)	$	(21,141)

Net loss attributable to common shareholders (Note 10)										Net loss attributable to common shareholders (Note 10)	(6,095)		(20,462)

Net loss per common share:	Net loss per common share:									Net loss per common share:
Basic	Basic	$	(0.01)	$	(0.01)	$	(0.03)	$	(0.03)	Basic	$	0.00	$	(0.01)
Diluted	Diluted	(0.01)		(0.01)		(0.03)		(0.03)		Diluted	0.00		(0.01)
Weighted-average shares outstanding:	Weighted-average shares outstanding:									Weighted-average shares outstanding:
Basic	Basic	1,799,886		1,791,943		1,798,784		1,736,158		Basic	1,811,831		1,797,671
Diluted	Diluted	1,799,886		1,791,943		1,798,784		1,736,158		Diluted	1,811,831		1,797,671

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share data)

(Unaudited)


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	13,141	$	14,304	Cash and cash equivalents	$	20,487	$	32,082
Accounts receivable, net of allowance for credit losses of $2,986 and $2,962, respectively		24,117		21,182
Accounts receivable, net of allowance for credit losses of $2,156 and $2,892, respectively						Accounts receivable, net of allowance for credit losses of $2,156 and $2,892, respectively	28,007		26,329
Inventory	Inventory	15,887		13,829		Inventory	10,095		9,264
Prepaid expenses and other current assets	Prepaid expenses and other current assets	16,586		19,558		Prepaid expenses and other current assets	14,126		13,569
Total current assets	Total current assets	69,731		68,873		Total current assets	72,715		81,244
Property and equipment, net	Property and equipment, net	708,005		672,156		Property and equipment, net	564,427		560,371
Operating lease right of use assets, net	Operating lease right of use assets, net	29,964		32,041		Operating lease right of use assets, net	33,583		30,859
Prepaid satellite construction costs and related customer receivable	Prepaid satellite construction costs and related customer receivable	94,164		—		Prepaid satellite construction costs and related customer receivable	135,229		122,496
Intangible and other assets, net of accumulated amortization of $11,836 and $11,189, respectively		42,287		41,036
Intangible and other assets, net of accumulated amortization of $11,194 and $10,908, respectively						Intangible and other assets, net of accumulated amortization of $11,194 and $10,908, respectively	38,601		38,425
Total assets	Total assets	$	944,151	$	814,106	Total assets	$	844,555	$	833,395
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	2,548	$	6,247	Accounts payable	$	10,750	$	3,843
Vendor financing	Vendor financing	73,575		—		Vendor financing	—		59,575
Accrued expenses	Accrued expenses	23,574		28,947		Accrued expenses	70,929		58,693
Payables to affiliates	Payables to affiliates	411		444		Payables to affiliates	142		326
Deferred revenue	Deferred revenue	39,872		25,927		Deferred revenue	80,873		74,639
Total current liabilities	Total current liabilities	139,980		61,565		Total current liabilities	162,694		197,076
Long-term debt	Long-term debt	257,451		237,932		Long-term debt	182,243		132,115
Operating lease liabilities	Operating lease liabilities	27,134		29,237		Operating lease liabilities	28,788		27,635
Deferred revenue, net	Deferred revenue, net	182,376		112,054		Deferred revenue, net	157,095		157,803
Other non-current liabilities	Other non-current liabilities	7,877		7,887		Other non-current liabilities	3,881		3,995
Total non-current liabilities	Total non-current liabilities	474,838		387,110		Total non-current liabilities	372,007		321,548

Commitments and contingencies (Note 8)	Commitments and contingencies (Note 8)	0		0		Commitments and contingencies (Note 8)

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and NaN issued and outstanding at June 30, 2022 and December 31, 2021, respectively		—		—
Series A Preferred Convertible Stock of $0.0001 par value; 1 share authorized and NaN issued and outstanding at June 30, 2022 and December 31, 2021, respectively		—		—
Voting Common Stock of $0.0001 par value; 2,150,000,000 shares authorized; 1,800,477,322 and 1,796,528,871 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		180		180
Nonvoting Common Stock of $0.0001 par value; no shares authorized and none issued and outstanding at June 30, 2022 and December 31, 2021, respectively		—		—
Preferred Stock of $0.0001 par value; 99,700,000 shares authorized and none issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Preferred Stock of $0.0001 par value; 99,700,000 shares authorized and none issued and outstanding at March 31, 2023 and December 31, 2022, respectively	—		—
Series A Preferred Convertible Stock of $0.0001 par value; 300,000 shares authorized and 149,425 issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Series A Preferred Convertible Stock of $0.0001 par value; 300,000 shares authorized and 149,425 issued and outstanding at March 31, 2023 and December 31, 2022, respectively	—		—
Voting Common Stock of $0.0001 par value; 2,150,000,000 shares authorized; 1,813,111,673 and 1,811,074,696 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Voting Common Stock of $0.0001 par value; 2,150,000,000 shares authorized; 1,813,111,673 and 1,811,074,696 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	181		181
Additional paid-in capital	Additional paid-in capital	2,153,195		2,146,710		Additional paid-in capital	2,345,604		2,345,612
Accumulated other comprehensive income	Accumulated other comprehensive income	6,526		1,890		Accumulated other comprehensive income	7,813		9,242
Retained deficit	Retained deficit	(1,830,568)		(1,783,349)		Retained deficit	(2,043,744)		(2,040,264)
Total stockholders’ equity	Total stockholders’ equity	329,333		365,431		Total stockholders’ equity	309,854		314,771
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	944,151	$	814,106	Total liabilities and stockholders’ equity	$	844,555	$	833,395

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)
Common
Shares Common
Stock
Amount Additional
Paid-In
Capital Accumulated Other Comprehensive Income (Loss) Retained
Deficit Total
Balances – January 1, 2022 1,796,529 $ 180 $ 2,146,710 $ 1,890 $ (1,783,349) $ 365,431
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 703 — 2,230 — — 2,230
Contribution of services — — 47 47
Recognition of stock-based compensation of employee stock purchase plan — — 117 — — 117
Common stock issued in connection with conversion of 2013 8.00% Notes 2,253 — 2,548 — — 2,548
Other comprehensive loss — — — (679) — (679)
Net loss — — — — (20,462) (20,462)
Balances – March 31, 2022 1,799,485 $ 180 $ 2,151,652 $ 1,211 $ (1,803,811) $ 349,232
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation 546 — 879 — — 879
Contribution of services — — 47 — — 47
Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation 446 — 617 — — 617
Other comprehensive income — — — 5,315 — 5,315
Net loss — — — — (26,757) (26,757)
Balances – June 30, 2022 1,800,477 $ 180 $ 2,153,195 $ 6,526 $ (1,830,568) $ 329,333


	Preferred Stock		Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total
	Shares	Amount	Shares	Amount
Balances – January 1, 2023	149	—	1,811,075	$	181	$	2,345,612	$	9,242	$	(2,040,264)	$	314,771
Net issuance of restricted stock awards and employee stock options and recognition of stock-based compensation	—	—	2,037			3,795						3,795
Contribution of services	—	—				47						47
Issuance and recognition of stock-based compensation of employee stock purchase plan	—	—				102						102
Series A Preferred Stock Dividends	—	—				(3,952)						(3,952)
Other comprehensive loss	—	—						(1,429)				(1,429)
Net loss	—	—								(3,480)		(3,480)
Balances – March 31, 2023	149	—	1,813,112	$	181	$	2,345,604	$	7,813	$	(2,043,744)	$	309,854


		Common Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total			Preferred Stock		Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total
Balances – January 1, 2021		1,674,669	$	167	$	2,096,566	$	(2,944)	$	(1,670,724)	$	423,065
														Shares	Amount	Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total
Balances – January 1, 2022													Balances – January 1, 2022			1,796,529	$	180
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation	Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation	1,998	—		1,932		—		—		1,932		Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation	—	—	703	—		2,230		—		—		2,230
Contribution of services	Contribution of services	—	—		47		—		—		47		Contribution of services	—	—	—	—		47						47
Recognition of stock-based compensation of employee stock purchase plan	Recognition of stock-based compensation of employee stock purchase plan	—	—		79		—		—		79		Recognition of stock-based compensation of employee stock purchase plan	—	—	—	—		117		—		—		117
Issuance of stock for warrant exercises		115,036	12		43,666		—		—		43,678
Other comprehensive income		—	—		—		3,242		—		3,242
Net loss		—	—		—		—		(36,333)		(36,333)
Balances – March 31, 2021		1,791,703	$	179	$	2,142,290	$	298	$	(1,707,057)	$	435,710
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation		173	—		576		—		—		576
Contribution of services		—	—		47		—		—		47
Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation		1,187	—		406		—		—		406
Common stock issued in connection with conversion of 2013 8.00% Notes													Common stock issued in connection with conversion of 2013 8.00% Notes	—	—	2,253	—		2,548		—		—		2,548
Other comprehensive loss	Other comprehensive loss	—	—		—		(3,158)		—		(3,158)		Other comprehensive loss	—	—	—	—		—		(679)		—		(679)
Net loss	Net loss	—	—		—		—		(21,449)		(21,449)		Net loss	—	—	—	—		—		—		(20,462)		(20,462)
Balances – June 30, 2021		1,793,063	$	179	$	2,143,319	$	(2,860)	$	(1,728,506)	$	412,132
Balances – March 31, 2022													Balances – March 31, 2022	—	—	1,799,485	$	180	$	2,151,652	$	1,211	$	(1,803,811)	$	349,232

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended					Three Months Ended
		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Cash flows provided by operating activities:	Cash flows provided by operating activities:					Cash flows provided by operating activities:
Net loss	Net loss	$	(47,219)	$	(57,782)	Net loss	$	(3,480)	$	(20,462)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion	Depreciation, amortization and accretion	47,913		47,959		Depreciation, amortization and accretion	21,933		23,783
Change in fair value of derivatives	Change in fair value of derivatives	1,728		2,439		Change in fair value of derivatives	—		486
Stock-based compensation expense	Stock-based compensation expense	2,380		2,186		Stock-based compensation expense	3,760		1,233
Noncash consideration, net, associated with wholesale capacity contract						Noncash consideration, net, associated with wholesale capacity contract	(310)		—
Amortization of deferred financing costs	Amortization of deferred financing costs	287		1,841		Amortization of deferred financing costs	25		166
Reduction in value of long-lived assets and inventory		541		782

Provision for credit losses	Provision for credit losses	558		696		Provision for credit losses	249		332
Noncash interest and accretion expense	Noncash interest and accretion expense	16,235		16,939		Noncash interest and accretion expense	6,362		9,406
Gain on extinguishment of debt		—		(2,664)
Unrealized foreign currency loss (gain)		4,139		(245)
Noncash reversal of tariff accrual		—		(912)
Unrealized foreign currency (gain) loss						Unrealized foreign currency (gain) loss	(1,958)		(3,084)

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

Other, net	Other, net	(2,710)		(430)		Other, net	(592)		186
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	3,737		(7,750)		Accounts receivable	(3,794)		(213)
Inventory	Inventory	(1,840)		1,118		Inventory	101		(441)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(227)		(665)		Prepaid expenses and other current assets	(518)		(265)
Other assets	Other assets	605		(2,770)		Other assets	287		460
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(8,106)		4,416		Accounts payable and accrued expenses	(3,208)		(1,643)
Payables to affiliates	Payables to affiliates	(33)		(162)		Payables to affiliates	(184)		(178)
Other non-current liabilities	Other non-current liabilities	(370)		(87)		Other non-current liabilities	67		(64)
Deferred revenue	Deferred revenue	3,153		51,011		Deferred revenue	(6,129)		(2,133)
Net cash provided by operating activities	Net cash provided by operating activities	20,771		55,920		Net cash provided by operating activities	22,805		7,569
Cash flows used in investing activities:	Cash flows used in investing activities:					Cash flows used in investing activities:
Network upgrades (including capitalized interest)		(18,511)		(8,832)
Property and equipment additions		(3,198)		(2,288)
Sale of property and equipment		—		350
Payments under the satellite procurement agreement						Payments under the satellite procurement agreement	(59,575)		—
Other network upgrades						Other network upgrades	(3,561)		(8,712)
Payments of capitalized interest						Payments of capitalized interest	(5,263)		—
Additions of other property and equipment						Additions of other property and equipment	(2,925)		(1,301)

Purchase of intangible assets	Purchase of intangible assets	(683)		(1,228)		Purchase of intangible assets	(251)		(438)
Net cash used in investing activities	Net cash used in investing activities	(22,392)		(11,998)		Net cash used in investing activities	(71,575)		(10,451)
Cash flows provided by (used in) financing activities:	Cash flows provided by (used in) financing activities:					Cash flows provided by (used in) financing activities:
Principal payments of the 2009 Facility Agreement		—		(89,164)
Proceeds from exercise of warrants		—		43,678
Payments for debt and equity issuance costs		—		(133)
Principal and Interest payments of the 2019 Facility Agreement						Principal and Interest payments of the 2019 Facility Agreement	(148,281)		—
Proceeds from 13% Notes Agreement						Proceeds from 13% Notes Agreement	190,000		—

Dividends paid on Series A Preferred Stock						Dividends paid on Series A Preferred Stock	(3,951)		—
Payments for debt issuance costs						Payments for debt issuance costs	(620)		—
Proceeds from issuance of common stock and exercise of options	Proceeds from issuance of common stock and exercise of options	449		391		Proceeds from issuance of common stock and exercise of options	—		8
Net cash provided by (used in) financing activities		449		(45,228)
Net cash provided by financing activities						Net cash provided by financing activities	37,148		8
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	9		(9)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	27		89
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(1,163)		(1,315)		Net decrease in cash, cash equivalents and restricted cash	(11,595)		(2,785)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	14,304		68,023		Cash, cash equivalents and restricted cash, beginning of period	32,082		14,304
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	13,141	$	66,708	Cash, cash equivalents and restricted cash, end of period	$	20,487	$	11,519


		As of:					As of:
		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Reconciliation of cash and cash equivalents	Reconciliation of cash and cash equivalents					Reconciliation of cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	13,141	$	14,304	Cash and cash equivalents	$	20,487	$	32,082
Total cash and cash equivalents cash shown in the statement of cash flows	Total cash and cash equivalents cash shown in the statement of cash flows	$	13,141	$	14,304	Total cash and cash equivalents cash shown in the statement of cash flows	$	20,487	$	32,082

		Six Months Ended					Three Months Ended
		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for interest	Cash paid for interest	$	—	$	3,977	Cash paid for interest	$	7,554	$	—

Supplemental disclosure of non-cash financing and investing activities:	Supplemental disclosure of non-cash financing and investing activities:					Supplemental disclosure of non-cash financing and investing activities:
Increase in capitalized accrued interest for network upgrades	Increase in capitalized accrued interest for network upgrades	$	5,059	$	1,041	Increase in capitalized accrued interest for network upgrades	$	—	$	1,301
Capitalized accretion of debt discount and amortization of prepaid financing costs	Capitalized accretion of debt discount and amortization of prepaid financing costs	754		251		Capitalized accretion of debt discount and amortization of prepaid financing costs	658		194
Satellite construction assets acquired through vendor financing arrangement	Satellite construction assets acquired through vendor financing arrangement	73,575		—		Satellite construction assets acquired through vendor financing arrangement	—		32,700
Forgiveness of principal and interest of Paycheck Protection Program loan		—		5,030

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Globalstar, Inc. (“Globalstar” or the “Company”) provides Mobile Satellite Services (“MSS”) including voice and data communications and wholesale capacity services through its global satellite network. The Company’s only reportable segment is its MSS business. 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. ~~Two other members of the Company's Board of Directors are also directors, officers or minority equity owners of various Thermo entities.~~

The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”); however, management believes the disclosures made are adequate to make the information presented not misleading. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Globalstar Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the SEC on ~~February 25, 2022~~March 1, 2023 (the ~~“2021~~“2022 Annual Report”).

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. The Company evaluates estimates on an ongoing basis. The Company has made certain reclassifications to prior period condensed consolidated financial statements to conform to current period presentation.

These unaudited interim condensed consolidated financial statements include the accounts of Globalstar and all its subsidiaries. Intercompany transactions and balances have been eliminated in the consolidation. In the opinion of management, the information included herein includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, ~~condensed~~ consolidated balance sheets, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the periods presented. The results of operations for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recently Issued Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2022-04: Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. ASU 2022-04 added certain disclosure requirements for buyers in supplier finance programs. The amendments in the update require that buyers disclose qualitative and quantitative information about their supplier finance programs. Interim and annual requirements include disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a rollforward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs. This update is effective for annual periods beginning after December 15, 2022, and interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted this standard when it became effective on January 1, 2023 and expects this will impact future disclosures.

2. REVENUE

Disaggregation of Revenue

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

Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Service revenue:
Duplex $ 6,936 $ 7,243 $ 13,082 $ 13,898
SPOT 11,536 11,139 22,791 22,123
Commercial IoT 5,038 4,504 9,708 8,985
Engineering and other 9,538 2,731 16,811 3,697
Total service revenue 33,048 25,617 62,392 48,703
Subscriber equipment sales:
Duplex $ 143 $ 331 $ 273 $ 624
SPOT 1,674 2,230 3,149 4,145
Commercial IoT 1,908 2,090 3,714 3,611
Other 27 11 44 125
Total subscriber equipment sales 3,752 4,662 7,180 8,505
Total revenue $ 36,800 $ 30,279 $ 69,572 $ 57,208


	Three Months Ended
	March 31, 2023		March 31, 2022
Service revenue:
Subscriber services
Duplex	$	5,751	$	6,146
SPOT	11,314		11,255
Commercial IoT	5,178		4,670
Wholesale capacity services	30,411		6,843
Engineering and other services	300		430
Total service revenue	52,954		29,344

Subscriber equipment sales:
Duplex	$	19	$	130
SPOT	1,926		1,475
Commercial IoT	3,812		1,806
Other	(67)		17
Total subscriber equipment sales	5,690		3,428

Total revenue	$	58,644	$	32,772

In September 2022, Apple Inc. (“Partner”) announced new satellite-enabled services for certain of its products (the “Services”). The Company is ~~reimbursed by~~ the ~~customer under~~satellite operator for these Services pursuant to the ~~Terms~~agreement (the “Service Agreement”) and certain related ancillary agreements (such agreements, together with the Service Agreement, ~~for certain costs incurred by~~ the ~~Company as it completes its performance obligations under~~“Service Agreements”). The Service Agreements generally require Globalstar to allocate network capacity to support the contract. During the three and six months ended June 30, 2022, the Company recognized revenue associated with these services of $8.8 million and $15.7 million, respectively. During the three and six months ended June 30, 2021, the Company recognized revenue associated with other performance obligationsServices, which launched in November 2022. Revenue associated with the ~~Terms Agreement of $2.2 million and $2.7 million, respectively; this revenue~~Service Agreements is included in ~~Engineering and other service revenue~~"Wholesale capacity services" in the table above.

As consideration for the services provided by Globalstar under the Service Agreements, Partner makes payments to Globalstar, including a recurring service fee, payments relating to certain service-related operating expenses and capital expenditures, and potential bonus payments subject to satisfaction of certain licensing, service and other related criteria. In connection with the amendment of the Service Agreements in February 2023, Partner agreed to pay the Company $6.5 million as consideration related to performance obligations completed in prior periods. The Company recognized this revenue during the first quarter of 2023.

The Company attributes equipment revenue to various countries based on the location where equipment is sold. Service revenue is generally attributed to the various countries based on the Globalstar entity that holds the customer contract. The following table discloses revenue disaggregated by geographical market (amounts in thousands):

Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Service revenue:
United States $ 24,875 $ 18,228 $ 47,163 $ 34,671
Canada 4,128 4,376 7,817 8,206
Europe 1,671 1,857 3,154 3,568
Central and South America 2,248 815 3,984 1,596
Others 126 341 274 662
Total service revenue 33,048 25,617 62,392 48,703
Subscriber equipment sales:
United States $ 2,227 $ 2,438 $ 3,783 $ 4,610
Canada 879 1,118 1,677 1,867
Europe 309 527 945 1,006
Central and South America 328 571 757 992
Others 9 8 18 30
Total subscriber equipment sales 3,752 4,662 7,180 8,505
Total revenue $ 36,800 $ 30,279 $ 69,572 $ 57,208


	Three Months Ended
	March 31, 2023		March 31, 2022
Service revenue:
United States	$	45,061	$	22,288
Canada	3,829		3,689
Europe	1,513		1,483
Central and South America	2,367		1,736
Others	184		148
Total service revenue	$	52,954	$	29,344

Subscriber equipment sales:
United States	$	1,983	$	1,556
Canada	2,306		798
Europe	820		636
Central and South America	577		429
Others	4		9
Total subscriber equipment sales	$	5,690	$	3,428

Total revenue	$	58,644	$	32,772

Accounts Receivable

The Company records trade accounts receivable from its customers, including MSS subscribers and Partner under the Service Agreements, when it has ~~agreements~~a contractual right to receive payment either on demand or on fixed or determinable dates in the future. In addition to receivables arising from the sale of goods or services, the Company also has certain arrangements whereby it acts as an agent to procure goods and perform services on behalf of ~~the customer~~Partner under the ~~Terms Agreement. As of June 30, 2022 and December 31, 2021, the Company recorded $3.3 million and $6.5 million, respectively, in accounts receivable related to these arrangements.~~Service Agreements.

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


	As of:
	March 31, 2023		December 31, 2022
Accounts receivable, net of allowance for credit losses
Subscriber accounts receivable	$	15,460	$	14,850
Wholesale capacity accounts receivable	11,204		7,234
Agency agreement accounts receivable	1,343		4,245
Total accounts receivable, net of allowance for credit losses	$	28,007	$	26,329
Long-term wholesale capacity accounts receivable	124,386		111,026
Total accounts receivable (short-term and long-term), net of allowance for credit losses	$	152,393	$	137,355

In ~~connection~~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 may be adjusted pursuant to the Service Agreements, beginning with the ~~Company's performance under the Terms Agreement,~~Phase 2 Service Period. As the Company incurs construction in progress associated with the contract with Macdonald, Dettwiler and Associates Corporation ("MDA"), it earns the right to receive certain payments from Partner associated with this phase of the Service Agreements. In accordance with the

expected timing of payment from Partner, $7.2 million is recorded ~~receivables totaling $83.4~~in "Wholesale capacity accounts receivable" and $124.4 million ~~which represents amounts owed by~~is recorded as in "Long-term wholesale capacity accounts receivable" in the ~~customer~~table above. The remaining amount recorded in "Wholesale capacity accounts receivable" as of March 31, 2023 consists of invoices for ~~the Company's completion of~~ performance obligations ~~under~~completed as of the ~~contract. As of June 30, 2022, $8.6 million and $74.8 million were recorded as current and non-current receivables, respectively, in line with~~balance sheet date that are due within the ~~expected service periods under the Terms Agreement.~~next twelve months.

Contract Liabilities

Contract liabilities, which are included in deferred revenue on the Company’s ~~condensed~~ consolidated balance sheet, represent the Company’s obligation to transfer service or equipment to a customer from whom it has previously received consideration. Contract liabilities reflect balances from its customers, including MSS subscribers and the Partner under the Service Agreements. The Company's contract liabilities by type and classification are presented in the table below (amounts in thousands).


	As of:
	March 31, 2023		December 31, 2022
Short-term contract liabilities
Subscriber contract liabilities	$	20,981	$	21,987
Wholesale capacity contract liabilities	59,892		52,652
Total short-term contract liabilities	$	80,873	$	74,639
Long-term contract liabilities
Subscriber contract liabilities	$	1,981	$	1,704
Wholesale capacity contract liabilities, net of contract asset	155,114		156,099
Total long-term contract liabilities	$	157,095	$	157,803
Total contract liabilities	$	237,968	$	232,442

For subscriber contract liabilities, the amount of revenue recognized during the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ from performance obligations included in the contract liability balance at the beginning of these periods was ~~$18.3~~$8.4 million and ~~$18.8~~$9.9 million, respectively. For wholesale capacity contract liabilities, the amount of revenue recognized during the three months ended March 31, 2023 and 2022 from performance obligations included in the contract liability balance at the beginning of these periods was $22.0 million and less than $0.1 million, respectively.

The duration of the Company’s contracts with subscribers is generally one year or less. As of ~~June 30, 2022,~~March 31, 2023, the Company expects to recognize ~~$39.9~~$21.0 million, or approximately ~~18%~~91%, of its remaining performance obligations to its subscribers during the next twelve months. The Service Agreements have no expiration date; therefore, the related contract liabilities may be recognized into revenue over various periods driven by the expected related service or recoupment periods. As of March 31, 2023, the Company expects to recognize $59.9 million, or approximately 28%, of its remaining performance obligations to this customer during the next twelve months.

~~Contract~~

The components of wholesale capacity contract liabilities ~~also include deferred revenue associated with the Terms Agreement. The Company recorded deferred revenue for advance payments received from the customer for services expected to be performed~~are presented in the ~~future, totaling $75.0 million as of June 30, 2022. The Company also records deferred revenue for the reimbursement (and anticipated reimbursement) of costs incurred~~table below (amounts in connection with ongoing network upgrades, construction costs under the satellite procurement agreement and other performance obligations under the Terms Agreement, totaling $124.8 million as of June 30, 2022. thousands).


	March 31, 2023		December 31, 2022
Wholesale capacity contract liabilities, net:
Advanced payments for services expected to be performed with the second-generation satellite constellation during Phase 1 (1)	$	94,323	$	99,671
Advanced payments for services expected to be performed with the recently launched ground spare satellite during Phases 1 and 2	24,992		25,438
Advanced payments (both received and contractually owed) for services expected to be performed with the next-generation satellite constellation during Phase 2	129,147		117,466
Advanced payments for the Phase 1 service fee and service-related operating expenses and capital expenditures	19,871		18,872
Contract asset (2)	(53,327)		(52,696)
Wholesale capacity contract liabilities, net	$	215,006	$	208,751

(1)In accordance with applicable accounting guidance, the Company records imputed interest associated with the significant financing component, totaling ~~$3.9~~$5.3 million as of ~~June 30,~~March 31, 2023 and December 31, 2022, respectively, which is ~~related to and~~ included in deferred revenue and represents the ~~balances associated with certain~~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 ~~items~~Warrants at the time of issuance was $48.3 million and recorded in equity with an offset to ~~deferred~~a contract asset on the Company's consolidated balance sheets. The fair value of the Warrants is recorded as a reduction to revenue ~~discussed above. Deferred revenue is classified as either short-term or long-term~~over the period in which the Company performs its performance obligations through the estimated completion of the contract term, consistent with the ~~expected timing of the Company's obligation to provide services to~~period in which the customer orbenefits from the recoupment period defined in the Terms Agreement. As of June 30, 2022, the Company has recorded $15.9 million and $180.7 million as short-term and long-term deferred revenue, respectively. The total amount of deferred revenue associated with this customer is also reflected net of a contract asset of $3.1 million in the Company's condensed consolidated balance sheet as of June 30, 2022.services provided.

3. LEASES

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

As of: As of:
June 30, 2022 December 31, 2021
Operating leases:
Right-of-use asset, net $ 29,964 $ 32,041
Short-term lease liability (recorded in accrued expenses) 2,442 2,501
Long-term lease liability 27,134 29,237
Total operating lease liabilities $ 29,576 $ 31,738
Finance leases:
Right-of-use asset, net (recorded in intangible and other current assets, net) $ 5 $ 8
Short-term lease liability (recorded in accrued expenses) 4 6
Long-term lease liability (recorded in non-current liabilities) 2 3
Total finance lease liabilities $ 6 $ 9


	As of:
	March 31, 2023		December 31, 2022
Operating leases:
Right-of-use asset, net	$	33,583	$	30,859

Short-term lease liability (recorded in accrued expenses)	2,731		2,747
Long-term lease liability	28,788		27,635
Total operating lease liabilities	$	31,519	$	30,382

Finance leases:
Right-of-use asset, net (recorded in intangible and other current assets, net)	$	99	$	104

Short-term lease liability (recorded in accrued expenses)	16		16
Long-term lease liability (recorded in non-current liabilities)	67		71
Total finance lease liabilities	$	83	$	87

Lease Cost

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

Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Operating lease cost:
Amortization of right-of-use assets $ 604 $ 663 $ 1,324 $ 1,154
Interest on lease liabilities 632 393 1,277 711
Capitalized lease cost (244) — (487) —
Finance lease cost:
Amortization of right-of-use assets 1 1 3 8
Short-term lease cost 144 41 208 79
Total lease cost $ 1,137 $ 1,098 $ 2,325 $ 1,952


	Three Months Ended
	March 31, 2023		March 31, 2022
Operating lease cost:
Amortization of right-of-use assets	$	684	$	733
Interest on lease liabilities	615		660
Capitalized lease cost	—		(536)
Finance lease cost:
Amortization of right-of-use assets	5		1
Short-term lease cost	241		80
Total lease cost	$	1,545	$	938

In accordance with the Service Agreements, the Company has capitalized certain costs to fulfill this contract, including lease expense, as shown in the table above. These capitalized lease costs will be amortized over the expected term of the related performance obligation.

Interest on finance lease liabilities was less than $0.1 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021;~~2022; accordingly, these amounts are not shown in the table above.

Weighted-Average Remaining Lease Term and Discount Rate

The following table discloses the weighted-average remaining lease term and discount rate for finance and operating leases.
As of: As of:
June 30, 2022 December 31, 2021
Weighted-average lease term
Finance leases 1.2 years 1.6 years
Operating Leases 10.2 years 10.6 years
Weighted-average discount rate
Finance leases 7.6 % 7.0 %
Operating leases 8.4 % 8.4 %

As of:

March 31, 2023

December 31, 2022

Weighted-average lease term

Finance leases

4.4 years

4.6 years

Operating Leases

10.3 years

10.1 years

Weighted-average discount rate

Finance leases

10.2

Operating leases

8.6

8.5

Supplemental Cash Flow Information

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

Six Months Ended
June 30, 2022 June 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 2,536 $ 2,080


	Three Months Ended
	March 31, 2023		March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,712	$	1,357

Operating and financing cash flows from finance leases were each less than $0.1 million for each of the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 and ~~2021;~~2022; accordingly, these cash flows are not shown in the table above.

Maturity Analysis

The following table reflects undiscounted cash flows on an annual basis for the Company’s lease liabilities as of ~~June 30, 2022~~March 31, 2023 (amounts in thousands):

Operating Leases Finance Leases
2022 (remaining) $ 2,421 $ 3
2023 4,876 3
2024 4,749 —
2025 4,778 —
2026 4,825 —
Thereafter 22,322 —
Total lease payments $ 43,971 $ 6
Imputed interest (14,395) —
Discounted lease liability $ 29,576 $ 6

As of June 30, 2022, the Company executed additional operating leases for new gateway locations. These leases have not yet commenced as of June 30, 2022 since the lessors are continuing to ready the sites for use. Accordingly, these leases are not included on the balance sheet as of June 30, 2022, or in the maturity table above. The Company is in the process of evaluating these lease obligations and expects the impact of these leases to be an increase of lease liabilities of approximately $4.7 million.

910


	Operating Leases		Finance Leases

2023 (remaining)	$	4,040	$	19
2024	5,253		23
2025	5,281		23
2026	5,328		23
2027	5,207		15
Thereafter	22,364		—
Total lease payments	$	47,473	$	103
Imputed interest	(15,954)		(20)
Discounted lease liability	$	31,519	$	83

4. PROPERTY AND EQUIPMENT

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

June 30,
2022 December 31,
2021
Globalstar System:
Space component
First and second-generation satellites in service $ 1,261,793 $ 1,195,509
Second-generation satellite, on-ground spare — 32,442
Ground component 293,465 282,268
Construction in progress:
Space component 57,542 16,394
Ground component 25,756 33,998
Other 7,429 4,123
Total Globalstar System 1,645,985 1,564,734
Internally developed and purchased software 22,000 20,823
Equipment 8,691 8,590
Land and buildings 1,694 1,149
Leasehold improvements 2,081 2,088
Total property and equipment 1,680,451 1,597,384
Accumulated depreciation (972,446) (925,228)
Total property and equipment, net $ 708,005 $ 672,156

Amounts included in "second-generation satellite, on-ground spare" in the table above consist of costs related to one of the Company's second-generation satellites that was stored as an on-ground spare satellite until its launch in June 2022. The costs to prepare this satellite for launch were included in "construction in progress - space component" in the table above prior to its launch in June 2022. During the second quarter of 2022, $65.1 million in costs associated with the construction and launch of this spare satellite (including capitalized interest) were placed into service. Since this satellite is expected to remain as an in-orbit spare and will only be raised to its operational orbit at a future date if needed, it was placed into service following its successful launch. ~~The customer under the Terms Agreement has reimbursed 85% of the~~ ~~costs incurred to prepare and launch this satellite. These reimbursements are recorded in deferred revenue on the Company's consolidated balance sheet as of~~ ~~June 30, 2022 and are expected to be recognized in service revenue as performance obligations are completed in accordance with the Terms Agreement. See Note 2: Revenue for further discussion~~.


	March 31, 2023		December 31, 2022
Globalstar System:
Space component	$	1,246,343	$	1,246,343

Ground component	98,328		98,128
Construction in progress:
Space component	129,320		110,068
Ground component	9,427		5,316
Other	10,261		9,167
Total Globalstar System	1,493,679		1,469,022
Internally developed and purchased software	22,868		22,509
Equipment	8,622		8,042
Land and buildings	1,704		1,681
Leasehold improvements	2,085		2,083
Total property and equipment	1,528,958		1,503,337
Accumulated depreciation	(964,531)		(942,966)
Total property and equipment, net	$	564,427	$	560,371

In ~~February~~ 2022, the Company entered into an agreement with MDA for the purchase of new satellites that will replenish the Company's existing satellite constellation. This agreement has an initial contract price of $327 million, of which $110.6 million had been incurred as of March 31, 2023 and $98.5 million as of December 31, 2022. The "space component" of construction in progress in the table above includes costs incurred under the MDA contract as well as associated personnel costs and capitalized interest. Accrued expenses on the Company's condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022 included $48.6 million and $36.1 million, respectively, of work completed under the satellite procurement agreement. Nearly all of this amount was paid in April 2023 using proceeds from the Prepayment Agreement with its Partner under the Service Agreements (refer to Note 5 for further discussion). As of ~~June 30,~~March 31, 2023 and December 31, 2022, the Company also recorded ~~$19.4~~$10.8 million and $11.5 million as prepaid satellite construction costs ~~and $54.2 million in construction in progress on its balance sheet reflecting~~for the first milestone work completed under this agreement. The customer under the Terms Agreement will reimburse 95% of these capital expenditures. In accordance with the expected timing of reimbursement, $4.4 million is recorded in Accounts receivable and $74.8 million is recorded as a non-current receivable in Prepaid satellite construction costs and related customer receivable. The satellite construction assets acquired through this vendor financing arrangement are included in the supplemental sectionpayment made upon signing of the Company's condensed consolidated statement of cash flows as non-cash financing and investing activities. See further discussion in Note 2: Revenue, Note 5: Long-Term Debt and Other Financing Arrangements and Note 8: Commitments and Contingencies.

The ground component of construction in progress includes costs incurred for assets to upgrade the Company's ground infrastructure, including costs associated with the procurement of new gateway antennas. During 2022, the Company placed ~~$11.2 million o~~f costs into service associated with these antennas (including capitalized interest), which are included in ground component in the table above. These capital expenditures relate primarily to gateway upgrade work in connection with the Terms Agreement.

contract.

1011

5. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

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

June 30, 2022 December 31, 2021
Principal
Amount Unamortized Discount and Deferred Financing Costs Carrying
Value Principal
Amount Unamortized Discount and Deferred Financing Costs Carrying
Value
2019 Facility Agreement 282,023 24,572 257,451 263,812 27,287 236,525
8.00% Convertible Senior Notes Issued in 2013 — — — 1,407 — 1,407
Total Debt 282,023 24,572 257,451 265,219 27,287 237,932


	March 31, 2023						December 31, 2022
	Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value		Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value
13% Senior Notes	$	200,000	$	17,757	$	182,243	$	—	$	—	$	—
2019 Facility Agreement	—		—		—		143,213		11,098		132,115
Vendor financing	—		—		—		59,575		—		59,575
Total debt and vendor financing	$	200,000	$	17,757	$	182,243	$	202,788	$	11,098	$	191,690
Less: current portion	—		—		—		59,575		—		59,575
Long-term debt and vendor financing	$	200,000	$	17,757	$	182,243	$	143,213	$	11,098	$	132,115

The principal amounts shown above include payment of in-kind ~~interest.~~interest, as applicable. The carrying value is net of deferred financing costs and any discounts to the loan amounts at issuance, including accretion. ~~Excluded from~~All amounts outstanding associated with the ~~table are obligations related to a~~Company's vendor financing arrangement ~~discussed below.~~were due in March 2023 and, therefore, were reflected as a current liability on the Company's consolidated balance sheet as of December 31, 2022.

13% Senior Notes

On March 31, 2023, Globalstar, Inc. (the “Company”) completed the sale of $200.0 million in aggregate principal amount of the Company’s non-convertible 13% Senior Notes due 2029 (the “Notes”). The Notes were sold pursuant to a Purchase Agreement (the “Purchase Agreement”) dated March 28, 2023 among the Company, as issuer, the subsidiary guarantors party thereto (each, a “Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”), an affiliate of Värde Partners and the other purchasers party thereto (collectively, the “Purchasers”).

The Notes were issued pursuant to an indenture, dated as of March 31, 2023 (the “Indenture”), among the Company, the Subsidiary Guarantors, as guarantors, and Wilmington Trust, National Association, as trustee. The Notes are senior, unsecured obligations of the Company and have a stated maturity of September 15, 2029. The Notes were sold at an issue price of 95% of the principal amount of the Notes. The Company used a portion of the net proceeds to pay financing costs of $7.8 million, which were recorded on the Company's condensed consolidated balance sheet as a reduction in the carrying amount of the debt. The Notes bear interest initially at a rate of 13.00% per annum payable semi-annually in arrears. The Company is required to pay interest (i) at a rate per annum of 4.00% which must be paid in cash and (ii) at a rate per annum of 9.00% which may be paid either (a) in-kind (“PIK”) by increasing the principal amount of the Notes outstanding or (b) in cash, in such proportion as the Company may choose, with a step up in the PIK component of the interest if any Notes remain outstanding after March 15, 2028. The Company has agreed with its Partner under the Service Agreements to pay cash interest on the Notes at a rate of 6.5% per annum and PIK interest at a rate of 6.5% per annum.

The Notes may be redeemed at the option of the Company at any time, subject to the conditions of the Indenture. Among other things, prior to March 15, 2025 (the “First Call Date”), the Company will be permitted to redeem the Notes in whole or in part at the redemption price equal to 100% of the principal amount of the Notes redeemed plus a premium based on the net present value of the remaining interest payments through the First Call Date. Beginning on the First Call Date, the Notes may be redeemed at a redemption price equal to 103% of the principal amount, declining to 100% of the principal amount after March 15, 2027, in each case, together with accrued and unpaid interest.

Additionally, in the event of a Change of Control (as such term is defined in the Indenture) or certain other events, holders of the Notes have the right to require the Company to repurchase all or a portion of their Notes at a price (as calculated by the Company) in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and certain tax payments. The Indenture includes customary terms and covenants, including restrictions on the Company’s and the Subsidiary Guarantors’ ability to incur indebtedness, make guarantees, sell equity interests, and customary events of default after which the holders may accelerate the maturity of the Notes and become due and payable immediately.

2019 Facility Agreement

In November 2019, the Company entered into a $199.0 million facility agreement with Thermo, an affiliate of EchoStar Corporation and certain other unaffiliated lenders (the "2019 Facility Agreement"). The 2019 Facility Agreement iswas scheduled to mature in November 2025. The loans under the 2019 Facility Agreement ~~bear~~bore interest at a ~~blended~~ rate of ~~13.5%~~14.0% per annum to be paid in kind (or in cash at the option of the Company). ~~As of June 30, 2022,~~

The Service Agreements required the Company to refinance all loans outstanding under the 2019 Facility Agreement. A portion was refinanced in ~~compliance with~~November 2022 and the ~~covenants~~remaining portion was refinanced in March 2023. Using a portion of the proceeds from the sale of the 13% Senior Notes, the Company repaid all of its outstanding obligations under the 2019 Facility Agreement ~~except as it relates to capital expenditures. In August 2022, the Company received a waiver letter from its lenders increasing permitted capital expenditures for 2022.~~of approximately $148 million.

The ~~2019 Facility Agreement requires mandatory prepayments~~Company recorded a loss on extinguishment of ~~principal with any Excess Cash Flow (as defined and calculated~~debt of $10.4 million in the ~~2019 Facility Agreement) on a semi-annual basis. The Company generated excess cash flow for~~first quarter of 2023 representing the ~~six-month measurement period ended June 30, 2022~~difference between the net carrying amount prior to extinguishment (including unamortized deferred financing costs, debt discounts and ~~expects to make a prepayment~~derivatives) and the reacquisition price of ~~approximately $6.0 million in August 2022.~~

the debt. Refer to Note 6: Derivatives and Note 7: Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2019 Facility Agreement.

~~8.00% Convertible Senior Notes Issued in 2013~~

In May 2013, the Company issued $54.6 million aggregate principal amount of its 2013 8.00% Notes Interest was paid in cash at a rate of 5.75% and in additional notes at a rate of 2.25%. In February 2022, the Company notified the holders of the 8.00% Notes of its intention to redeem all of the outstanding amount of principal and interest in March 2022. Prior to the Company's intended redemption of the 8.00% Notes, the holders converted the remaining principal amount outstanding of $1.4 million into 2.3 million shares of Globalstar common stock in February and March 2022. The 2013 8.00% Notes were converted into shares of common stock at a conversion price of $0.69 per share of common stock.

As a result of the conversions during the first quarter of 2022, the Company recorded gains and losses on extinguishment of debt resulting from the difference between the fair value of shares of Globalstar common stock issued to the holders and the principal amount of the notes that converted as well as the write-offs of the embedded derivative associated with the 2013 8.00% Notes. The net impact to the Company's condensed consolidated statement of operations for the first quarter of 2022 was a gain of less than $0.1 million.

~~Refer to Note 6: Derivatives and Note 7: Fair Value Measurements for further discussion on the compound embedded derivative bifurcated from the 2013 8.00% Notes.~~

Vendor Financing

In February 2022, the Company entered into a satellite procurement agreement with MDA (see Note 8: Commitments and Contingencies for further discussion). This agreement ~~provides~~(as amended in October 2022 and January 2023) provided for ~~payment~~ deferrals of milestone payments through ~~August~~March 15, 2023. Interest accrued on the amount outstanding at an annual rate of 7%, which increased to 10.5% on balances between December 2022 ~~at a 0% interest rate.~~and March 2023. The Company has made payments totaling $76.1 million to MDA under this vendor financing arrangement, of which $62.1 million (including $2.5 million of interest) was paid during the first quarter of 2023. As of ~~June 30, 2022,~~March 31, 2023, the Company ~~had recorded $73.6 million in short-term~~has fully repaid the outstanding vendor financing balance.

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


	As of
	March 31, 2023		December 31, 2022
Confirmed obligations outstanding, January 1, 2023 and 2022, respectively	$	59,575	$	—
Invoices confirmed during the periods	—		73,575
Confirmed invoices paid during the periods	(59,575)		(14,000)
Confirmed obligations outstanding, March 31, 2023 and December 31, 2022, respectively	$	—	$	59,575

Prepayment Agreement

On February 27, 2023, the Company and its Partner agreed to amend its previously disclosed Service Agreements to provide for, among other things, the Partner’s prepayment of $252 million to the Company (the “Prepayment Agreement”). The Company will use the proceeds from the Prepayment Agreement to pay amounts due under its Satellite Procurement Agreement with MDA, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of these satellites. The Prepayment Agreement replaces the Company’s requirement to raise third-party financing for such costs as previously required under the Service Agreements and will be funded on ~~its condensed consolidated~~a quarterly basis, subject to certain conditions in the agreement. The remaining amount of the satellite costs is expected to be funded from Globalstar’s operating cash flows. Partner made the first payment under the Prepayment Agreement to the Company in April 2023 in the amount of $87.7 million. These proceeds were used to pay amounts owed to MDA for milestones completed as of the payment date, with $39.6 million reimbursing the Company for a payment made to MDA on March 31, 2023 and the remaining $48.1 million paid to MDA in April 2023.

The total amount paid to the Company under the Prepayment Agreement, including fees, will be recouped from amounts payable by the Partner for services provided by the Company under the Service Agreements. The total balance ~~sheet associated with this agreement. Deferred payments are due~~is expected to be recouped in ~~August 2022~~installments for a period of 16 quarters beginning no later than the third quarter of 2025. The prepayment balance may also be repaid over time through excess cash flow sweeps or voluntary prepayments, as provided under the terms of the ~~agreement. The~~Prepayment Agreement. For as long as any amount funded under the Prepayment Agreement is outstanding, the Company ~~intends~~will be subject to ~~seek an extension~~certain covenants, including (i) maintenance of a minimum cash balance of $30 million, (ii) interest coverage and

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

Subject to applicable shareholder approval, amounts payable by the Company in connection with the Prepayment Agreement would be guaranteed by Thermo under a guaranty agreement among Thermo, the Company and the Partner. In addition, Thermo has agreed directly with Partner to provide support of certain of the ~~maturity date while it pursues debt financing for~~Company’s obligations under the ~~funding of~~Service Agreements, the ~~construction~~Satellite Procurement Agreement, and ~~launch costs for these satellites.~~certain related contracts.

~~2009 Facility Agreement~~Series A Preferred Stock

~~In 2009,~~On November 15, 2022, the Company ~~entered into a facility agreement with a syndicate~~issued 149,425 shares of bank lenders, including BNP Paribas, Société Générale, Natixis, Crédit Agricole Corporate and Investment Bank and Crédit Industriel et Commercial, as arrangers, and BNP Paribas, as the security agentits 7.0% Perpetual Preferred Stock, Series A, liquidation preference $1,000 per share (the ~~"2009 Facility Agreement"~~“Series A Preferred Stock”)~~. The 2009~~ in exchange for $149.4 million outstanding principal amount of its 2019 Facility Agreement ~~was fully repaid~~held by affiliates of Thermo and certain other lenders. The Company recorded the Series A Preferred Stock at fair value of the shares totaling $105.3 million on its consolidated balance sheet.

Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by the Company's Board of Directors or a committee thereof, cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock, at a fixed rate equal to 7.00% per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. In January and April 2023, the Company's Board of Directors approved the payment of dividends totaling $1.3 million for the period November ~~2021. As a result of prepayments made under~~15, 2022 through December 31, 2022 and $2.6 million for the ~~2009 Facility Agreement during the second~~first quarter of ~~2021,~~2023; these dividends have been paid.

The shares of Series A Preferred Stock do not possess voting rights, other than certain matters specifically affecting the ~~Company wrote off $2.3 million in deferred financing costs, which represents~~rights and obligations of the ~~portion of debt prepaid~~Series A Preferred. Series A Preferred Stock may be redeemed by the Company, in whole or in part, at any time. The holders of the ~~second quarter of 2021, and which was recorded as a loss on extinguishment of debt on its condensed consolidated statements of operations.~~Series A Preferred Stock do not have any rights to convert or require the Company to redeem such stock.

~~Paycheck Protection Program Loan~~

In April 2020, the Company sought relief under the CARES Act and received a $5.0 million loan under the Paycheck Protection Program ("PPP"), (the "PPP Loan"). In June 2021, the Small Business Administration ("SBA") approved the Company's request for forgiveness of all amounts outstanding under the PPP Loan, including accrued interest. The Company evaluated the applicable accounting guidance relative to the PPP Loan and accounted for the proceeds of the PPP Loan as debt under ASC 470. As the entire principal balance, including accrued interest, was forgiven in June 2021, the Company recorded a gain on extinguishment of debt totaling $5.0 million on its condensed consolidated statements of operations for the period ended June 30, 2021.

6. DERIVATIVES

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

June 30, 2022 December 31, 2021
Derivative (liabilities) assets:
Compound embedded derivative with the 2019 Facility Agreement $ (1,460) $ 484
Compound embedded derivative with the 2013 8.00% Notes $ — (1,364)


	March 31, 2023		December 31, 2022
Derivative liabilities:
Compound embedded derivative with the 2019 Facility Agreement	$	—	(122)

As of ~~June 30, 2022 and~~ December 31, ~~2021,~~2022, the derivative ~~(liability) asset~~liability recorded for the ~~Compound~~compound embedded derivative with the 2019 Facility Agreement was reflected in ~~Other~~"Other non-current ~~liabilities and Intangible and other assets, net, respectively,~~liabilities" on the Company's ~~condensed~~ consolidated balance sheets. During the first quarter of 2022, the remaining principal amount of the 2013 8.00% Notes was converted into shares of Globalstar common stock; accordingly, the associated derivative is no longer outstanding.sheet.

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

Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Compound embedded derivative with the 2013 8.00% Notes $ — $ (1,077) $ 216 $ (2,821)
Compound embedded derivative with the 2019 Facility Agreement (1,242) (233) (1,944) 382
Total derivative loss $ (1,242) $ (1,310) $ (1,728) $ (2,439)


	Three Months Ended
	March 31, 2023		March 31, 2022
Compound embedded derivative with the 2013 8.00% Notes	$	—	$	216
Compound embedded derivative with the 2019 Facility Agreement	—		(702)
Total derivative loss	$	—	$	(486)

The fair value of each embedded derivative is marked-to-market at the end of each reporting period, or more frequently as deemed necessary, with any changes in value reported in ~~its~~the Company's condensed consolidated statements of operations and its condensed consolidated statements of cash flows as ana non-cash operating activity. ~~The Company classifies its derivatives consistent with the classification of the underlying debt on the Company's condensed consolidated balance sheet.~~ See Note 7: Fair Value Measurements for further discussion.

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

Compound Embedded Derivative with 2013 8.00% Notes

The 2013 8.00% Notes contained a conversion option and contingent put feature that were required to be bifurcated and recorded as a compound embedded derivative. The Company determined the fair value of the compound embedded derivative liability using a Monte Carlo simulation model. During the first quarter of 2022, the remaining principal amount of the 2013 8.00% Notes was converted into shares of Globalstar common stock; accordingly, the associated derivative was extinguished and is no longer outstanding.

Compound embedded derivative with the 2019 Facility Agreement

The 2019 Facility Agreement contained certain contingently exercisable put features that were required to be bifurcated and recorded as a compound embedded derivative. The Company determined the fair value of this derivative using a probability weighted discounted cash flow model. In November 2022, the Company exchanged a portion of the 2019 Facility Agreement into Series A Preferred Stock. In March 2023, the Company refinanced the remaining principal outstanding under the 2019 Facility Agreement with proceeds from the issuance of its Notes. As a result of this activity, the Company wrote off the embedded derivative associated with the 2019 Facility Agreement, which is included in "Loss on extinguishment of debt" on the condensed consolidated statement of operations; therefore, no balance remains as of March 31, 2023. See Note 5: Long-Term Debt and Other Financing Arrangements for further discussion.

7. FAIR VALUE MEASUREMENTS

The Company follows the authoritative guidance for fair value measurements relating to financial and non-financial assets and liabilities, including presentation of required disclosures herein. This guidance establishes a fair value framework requiring the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Recurring Fair Value Measurements

The ~~Company's derivatives are classified as Level 3.~~ following tables provide a summary of the liabilities measured at fair value on a recurring basis (in thousands):


	December 31, 2022
	(Level 1)		(Level 2)		(Level 3)		Total Balance





Compound embedded derivative with the 2019 Facility Agreement	—		—		(122)		(122)
Total liabilities measured at fair value	$	—	$	—	$	(122)	$	(122)

The Company marks-to-market its derivatives at each reporting date, or more frequently as deemed necessary, with the changes in fair value recognized in the Company’s ~~condensed~~ consolidated statements of operations. ~~During~~In March 2023, the ~~first quarter of 2022,~~Company refinanced the remaining principal ~~amount of~~balance outstanding under the ~~2013 8.00% Notes was converted into shares of Globalstar common stock; accordingly,~~2019 Facility Agreement and wrote off the associated embedded derivative isbalance; therefore, no ~~longer outstanding~~balance remains as of March 31, 2023. See ~~Note 5: Long-Term Debt and Other Financing Arrangements and~~ Note 6: Derivatives for further discussion.

~~Recurring Fair Value Measurements~~

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

June 30, 2022
(Level 1) (Level 2) (Level 3) Total
Balance
Liabilities:
Compound embedded derivative with the 2019 Facility Agreement $ — $ — $ (1,460) $ (1,460)
Total liabilities measured at fair value $ — $ — $ (1,460) $ (1,460)

December 31, 2021
(Level 1) (Level 2) (Level 3) Total
Balance
Assets:
Compound embedded derivative with the 2019 Facility Agreement $ — $ — $ 484 $ 484
Total assets measured at fair value $ — $ — $ 484 $ 484
Liabilities:
Compound embedded derivative with the 2013 8.00% Notes $ — $ — $ (1,364) $ (1,364)
Total liabilities measured at fair value $ — $ — $ (1,364) $ (1,364)

~~2013 8.00% Notes~~

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

December 31, 2021
Stock Price
Volatility Risk-Free
Interest
Rate Note
Conversion
Price Discount Rate Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes 120% - 139% 0.5 % $0.69 18 % $1.16

1415

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~~within the 2019 Facility Agreement iswas valued using a probability weighted discounted cash flow model. The most significant observable input used in the fair value measurement iswas the discount yield, which was 20% and 13% at June 30, 2022 and December 31, 2021, respectively. When the discount yield utilized in the valuation is higher than the blended interest rate of the underlying debt, the features embedded in the underlying debt result in a liability for the Company. 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.yield. The unobservable inputs used in the fair value measurement ~~include~~included the probability of change of control and the estimated timing and amounts of cash flows associated with certain mandatory prepayments within the debt agreement. See Note 5: Long-Term Debt and Other Financing Arrangements for further discussion.

Rollforward of Recurring Level 3 Assets and Liabilities

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


Balance at beginning of period, January 1, 2022 and 2021, respectively		$	(880)	$	163
							Three Months Ended March 31, 2023		Twelve Months Ended December 31, 2022
Balance at beginning of period, January 1, 2023 and 2022, respectively						Balance at beginning of period, January 1, 2023 and 2022, respectively	$	(122)	$	(880)
Derivative adjustment related to conversions	Derivative adjustment related to conversions	1,148		—		Derivative adjustment related to conversions	—		1,563
Derivative adjustment related to extinguishment of debt						Derivative adjustment related to extinguishment of debt	122		—
Unrealized loss, included in derivative loss	Unrealized loss, included in derivative loss	(1,728)		(1,043)		Unrealized loss, included in derivative loss	—		(805)
Balance at end of period, June 30, 2022 and December 31, 2021, respectively		$	(1,460)	$	(880)
Balance at end of period, March 31, 2023 and December 31, 2022, respectively						Balance at end of period, March 31, 2023 and December 31, 2022, respectively	$	—	$	(122)

Fair Value of Debt ~~Instruments~~and Other Financing Arrangements

The Company believes it is not practicable to determine the fair value of its Notes or the 2019 Facility Agreement without incurring significant additional costs. Unlike typical long-term debt, certain terms for ~~this instrument~~these instruments are not readily available and generally involve a variety of factors, including due diligence by the debt holders. ~~As previously disclosed, the remaining principal amount of the 2013 8.00% Notes~~The Company's vendor financing arrangement was ~~converted into shares of Globalstar common stock during the first quarter of 2022; accordingly, there is no value in the table below as of June 30, 2022. The following table sets forth the~~recorded at net carrying value, ~~and estimated~~which approximated fair ~~value of the Company's Level 3 financial instrument (in thousands):~~

June 30, 2022 December 31, 2021
Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value
2013 8.00% Notes $ — $ — $ 1,407 $ 1,265
value.

See Note 5: Long-Term Debt and Other Financing Arrangements for further discussion of the Company's debt instruments.

~~Nonrecurring Fair Value Measurements~~

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

~~Derivative Liabilities~~

On February 17, 2022 and March 9, 2022, the remaining principal balance of the 2013 8.00% Notes was converted into shares of Globalstar common stock, eliminating the principal balance outstanding. See further discussion in Note 5: Long-Term Debt and Other Financing Arrangements. As a result of the conversion, the Company wrote off the proportionate fair value of the compound embedded derivative liability with the 2013 8.00% Notes based on the value of the derivative on each conversion date. As of each conversion date, the fair value of the compound embedded derivative liability with the 2013 8.00% Notes was $0.8 million. The significant quantitative Level 3 inputs utilized in the valuation models as of the conversion date are shown in the table below:

February 17, 2022
Risk-Free Interest Rate Note Conversion Price Discount Rate Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes 0.06 % $0.69 18 % $1.00
March 9, 2022
Risk-Free Interest Rate Note Conversion Price Discount Rate Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes 0.18 % $0.69 19 % $1.21

~~Intangible and Other Assets, net~~

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

During the second quarter of 2022, the Company wrote off approximately $0.5 million of work in progress associated with its spectrum intangible assets. The work in progress was related to efforts to obtain spectrum licensing authority in certain countries around the world; during the second quarter of 2022, the Company determined that it would not continue pursing such authorities in these countries and recorded a reduction in the value of long-lived assets in its condensed consolidated statements of operations for the six months ended June 30, 2022.

8. COMMITMENTS AND CONTINGENCIES

~~Terms Agreement~~Service Agreements

The ~~Terms Agreement sets~~Service Agreements set forth the primary terms for the Company to provide services to ~~the customer~~Partner and incur costs related primarily to new gateways and upgrades at existing gateways as well as satellite construction and launch costs. ~~Under this agreement, the customer has made advance payments~~The Service Agreements have an indefinite term but provide that either party may terminate subject to ~~the Company for services expected to be delivered under the Terms Agreement. To the extent the Company does not~~certain notice requirements and, in some cases, other conditions. The Service Agreements also provide ~~such services, it will be required to refund the amounts to the customer. The Terms Agreement also provides~~ for various commitments with which the Company must comply, 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, increasing to $30 million once funding under the Prepayment Agreement commences in the second quarter of 2023;

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

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

The Service Agreements also required the Company (i) upon commencement of the Services, to refinance all loans outstanding under the ~~agreement continue.~~2019 Facility Agreement that are held by affiliates of the Thermo and (ii) to refinance all loans outstanding under the 2019 Facility Agreement that are held by persons other than Thermo by March 13, 2023. The required refinancings have been completed as of March 31, 2023.

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

Refer to Note 1: Basis of Presentation, Note 2: Revenue, Note 3: Leases, ~~and~~ Note 4: Property and Equipment and Note 5: Long-Term Debt and Other Financing Arrangements for further discussion.

Satellite Procurement Agreement

In February 2022, the Company entered into a satellite procurement agreement with ~~Macdonald, Dettwiler and Associates Corporation ("MDA")~~MDA pursuant to which Globalstar will acquire 17 satellites that will replenish Globalstar's existing constellation of satellites and ensure long-term continuity of its mobile satellite services. Globalstar is acquiring the satellites to provide continuous satellite services to ~~the potential customer~~Partner under the ~~Terms Agreement,~~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 ~~total~~initial contract price for ~~the initial~~ 17 satellites is ~~$327.0 million;~~$327 million; Globalstar has the option to purchase additional satellites at a lower per unit cost, subject to certain conditions. The satellites are expected to be ~~manufactured during the next three years.~~launched in 2025. In addition, MDA will procure a satellite operations control center for $4.9 million. Under the ~~Terms Agreement,~~Service Agreements, subject to certain terms and conditions, ~~the counterparty is required~~Partner has agreed to ~~reimburse~~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 ~~this contract.~~the new satellites, as adjusted based on certain provisions, beginning with the Phase 2 Service Period.

~~The current terms~~Refer to Note 5: Long-Term Debt and Other Financing Arrangements for further discussion of the ~~agreement~~vendor financing arrangement with MDA provide for the deferral of milestone payments through August 2022. As of June 30, 2022, the total amount of deferred payments is approximately $74.0 million. The Company intends to seek an extension of the maturity date while it pursues a broader financing. This financing is expected to provide sufficient proceeds for the construction and launch of the satellites.MDA.

9. RELATED PARTY TRANSACTIONS

Thermo is the principal owner and largest stockholder of Globalstar. The Company's Executive Chairman of the Board controls Thermo. Two other members of the Company's Board of Directors are also directors, officers or minority equity owners of various Thermo entities.

Payables to Thermo ~~and other affiliates~~ related to normal purchase transactions were ~~$0.4~~$0.1 million and ~~$0.4~~$0.3 million as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Transactions with Thermo

Certain general and administrative expenses are incurred by Thermo on behalf of the Company. These expenses ~~which include~~include: i) non-cash expenses, ~~that the Company accounts for~~such as stock compensation costs as well as costs recorded as a contribution to capital ~~related~~as they relate to services provided by certain executive officers of Thermo, and ii) expenses incurred by Thermo on behalf of the Company that are charged to the ~~Company. The expenses charged~~Company; these charges are based on actual amounts (with no mark-up) incurred by Thermo or upon allocated employee time.

The Company has a lease agreement with Thermo Covington, LLC for the Company's headquarters office. Annual lease payments started at $1.4 million per year ~~in 2019 and increase~~increasing at a rate of 2.5% per year, for a lease term of ten years. During each of the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company incurred lease expense of ~~$0.8~~$0.4 million under this lease agreement.

To fulfill its obligations under the Service Agreements, in November ~~2019,~~2022, the Company entered into an Exchange Agreement with Thermo and certain other Exchanging Lenders providing for the ~~2019 Facility Agreement. Thermo's participation in~~exchange of all the outstanding principal amount of, and accrued and unpaid interest on, the Exchanging Lenders’ loans under the 2019 Facility Agreement ~~was $95.1~~for shares of the Company's Series A Preferred Stock. The terms of the Exchange Agreement were reviewed and approved by the Company's Board of Directors and Audit Committee. Thermo's ownership portion in the Series A Preferred Stock is $136.7 million. ~~This principal balance earns paid-in-kind interest~~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 ~~13% per annum. Interest accrued since inception~~each year. The Company paid Thermo dividends of $1.2 million for the period November 15, 2022 through December 31, 2022 and $2.4 million for the first quarter of 2023.

Also in connection with ~~respect~~the Service Agreements, Partner and Thermo entered into a lock-up and right of first offer agreement that generally (i) requires Thermo to ~~Thermo's portion~~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 ~~debt~~ outstanding oncommon stock of the ~~2019 Facility~~Company for a period of five years from the launch of Services in November 2022.

Subject to applicable shareholder approval, amounts payable by the Company in connection with the 2023 Prepayment with Partner would be guaranteed by Thermo. In addition, Thermo has agreed to provide support of certain of the Company’s obligations under the Service Agreements, the Satellite Procurement Agreement, ~~was approximately $38.0 million, of which $8.3 million was accrued during~~and certain related contracts directly to the ~~six months ended June 30, 2022.~~Partner.

See Note 5: Long-Term Debt and Other Financing Arrangements for further discussion of the Company's debt and financing transactions with Thermo.

10. LOSS PER SHARE

Loss per share is computed by dividing loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. In periods of net income, the numerator used to calculate diluted EPS includes the effect of dilutive securities, including interest expense, net, and derivative gains or losses reflected in net income. Common stock equivalents are included in the calculation of diluted earnings per share only when the effect of their inclusion would be dilutive. When outstanding, the effect of potentially dilutive common shares for the Company's convertible notes is calculated using the if-converted method. Generally, for all other potentially dilutive common shares, the effect is calculated using the treasury stock method.

The following table sets forth the computation of basic and diluted loss per common share during each of the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (amounts in thousands, except per share data):


		Three Months Ended				Six Months Ended					Three Months Ended
		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Net loss	Net loss	$	(26,757)	$	(21,449)	$	(47,219)	$	(57,782)	Net loss	$	(3,480)	$	(20,462)
Effect of Series A Preferred Stock dividends										Effect of Series A Preferred Stock dividends	(2,615)		—
Adjusted net loss attributable to common shareholders										Adjusted net loss attributable to common shareholders	$	(6,095)	$	(20,462)

Weighted average shares outstanding	Weighted average shares outstanding	1,799,886		1,791,943		1,798,784		1,736,158		Weighted average shares outstanding	1,811,831		1,797,671
Net loss per common share - basic and diluted	Net loss per common share - basic and diluted	$	(0.01)	$	(0.01)	$	(0.03)	$	(0.03)	Net loss per common share - basic and diluted	$	0.00	$	(0.01)

For the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, 7.8~~19.7 million and ~~7.3~~7.4 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of potentially dilutive securities would be anti-dilutive. ~~For~~Included in these shares as of March 31, 2023 is a portion of the ~~six months June 30,~~49.1 million Warrants issued to Partner under the Service Agreements in 2022, ~~and 2021, 7.6 million and 7.1 million shares, respectively,~~which was determined after considering the exercise price of ~~potential common stock were excluded from diluted shares outstanding because~~each tranch relative to the ~~effects of potentially dilutive securities would be anti-dilutive.~~average market price during the period.

As discussed in Note 5: Long-Term Debt and Other Financing Arrangements, the Company's Board of Directors approved the payment of dividends totaling $2.6 million for the three months ended March 31, 2023 on its Series A Preferred Stock. This amount adjusts the numerator used to calculate loss per share.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Certain statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q (this "Report"), other than purely historical information, including, but not limited to, estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements, such as the statements regarding our ability to develop and expand our business (including our ability to monetize our spectrum rights), our anticipated capital spending, our ability to manage costs, our ability to exploit and respond to technological innovation, the effects of laws and regulations (including tax laws and regulations) and legal and regulatory changes (including regulation related to the use of our spectrum), the opportunities for strategic business combinations and the effects of consolidation in our industry on us and our competitors, our anticipated future revenues, our anticipated financial resources, our expectations about the future operational performance of our satellites (including their projected operational lives), our expectations for future increases in our revenue and profitability, our performance and financial results under the Service Agreements, the expected strength of and growth prospects for our existing customers and the markets that we serve, commercial acceptance of new products, problems relating to the ground-based facilities operated by us or by independent gateway operators, worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis, business interruptions due to natural disasters, unexpected events or public health crises, including viral pandemics such as the COVID-19 coronavirus, and other statements contained in this Report regarding matters that are not historical facts, involve predictions. Risks and uncertainties that could cause or contribute to such differences include, without limitation, those in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, as filed with the Securities and Exchange Commission (the "SEC") on ~~February 25, 2022~~March 1, 2023 (the ~~"2021~~"2022 Annual Report"). We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this Report to reflect actual results or future events or circumstances.

New risk factors emerge from time to time, and it is not possible for us to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

This "Management's Discussion and Analysis of Financial Condition" should be read in conjunction with the "Management's Discussion and Analysis of Financial Condition" and information included in our ~~2021~~2022 Annual Report.

Overview

Mobile Satellite Services Business

Globalstar, Inc. ("we", "us" or the "Company") provides Mobile Satellite Services (“MSS”) including voice and data communications services ~~globally via satellite.~~as well as wholesale capacity services through its global satellite network. We offer these services over our network of in-orbit satellites and our active ground stations (“gateways”), which we refer to collectively as the Globalstar System. In addition to supporting Internet of Things ("IoT") data transmissions in a variety of applications, we provide reliable connectivity in areas not served or underserved by terrestrial wireless and wireline networks and in circumstances where terrestrial networks are not operational due to natural or man-made disasters. By providing wireless communications services across the globe, we meet our customers' increasing desire for connectivity.

18Communications Products and Services

We currently provide the following communications services:

•two-way voice communication and data transmissions via our GSP-1600 and GSP-1700 phone ("Duplex");

•one-way or two-way communication and data transmissions using mobile devices, including our SPOT family of products, such as SPOT X®, SPOT Gen4™ 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 our commercial IoT products, such as our battery- and solar-powered SmartOne, STX-3, ST100, ST-150 and ~~ST100~~Integrity 150 ("Commercial IoT");

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

•engineering ~~services to assist certain customers (including our customer under the Terms Agreement (discussed in Note 8: Commitments~~ and ~~Contingencies to our Condensed Consolidated Financial Statements)) in developing new applications to operate on our network, making enhancements to our ground network, and providing~~ other communication services using our MSS and terrestrial spectrum licenses ("Engineering and Other").

Our Commercial IoT use cases continue to expand. In 2022, we introduced the Realm Enablement Suite, an innovative portfolio of satellite asset tracking hardware and software solutions featuring a powerful application enablement platform for processing smart data at the edge. With Realm, partners can accelerate new solutions to market with smart applications that generate an advanced level of telematics data. The Realm Enablement Suite includes Integrity 150, the first solar-powered, deployment-ready satellite asset tracking device with an application enablement platform; ST150M, a satellite modem module that drastically simplifies product development; and the Realm application enablement platform, which will offer tools and an extensive library for quickly accessing and developing smart applications at the edge for vertical-specific solutions.

Globalstar System

Our constellation of Low Earth Orbit ("LEO") satellites includes second-generation satellites and certain first-generation satellites. We designed our satellite network to maximize the probability that at least one satellite is visible from any point on the Earth's surface between the latitudes 70° north and 70° south. We designed our second-generation satellites to last twice as long in space, have 40% greater capacity and be built at a significantly lower cost compared to our first-generation satellites.

Our goal is to provide service levels and call or message success rates equal to or better than our MSS competitors so our products and services are attractive to potential customers. We believe that our system outperforms geostationary (“GEO”) satellites used by some of our competitors. GEO satellite signals must travel approximately 42,000 additional miles on average, which introduces considerable delay and signal degradation to GEO calls.

Our ground network includes our ground equipment, which uses patented CDMA technology to permit communication to multiple satellites. Our system architecture provides full frequency re-use. This maximizes satellite diversity (which maximizes quality) and network capacity as we can reuse the assigned spectrum in every satellite beam in every satellite. In addition, we have developed a proprietary technology for our SPOT and Commercial IoT services.

In February 2022, we entered into a satellite procurement agreement ~~(the "Procurement Agreement")~~ with Macdonald, Dettwiler and Associates Corporation ~~(the "Vendor"~~("MDA") pursuant to which we ~~will~~expect to acquire 17 satellites that will replenish our existing constellation and ensure long-term continuity of our mobile satellite services. We are acquiring the satellites to provide continuous satellite services to ~~the potential customer~~Partner under the ~~Terms Agreement (defined below),~~Service Agreements, as well as services to our current and future customers. We have committed to purchase these new satellites for a total contract price of $327.0 million and have the option to purchase additional satellites at a lower per unit cost, subject to certain conditions. The technical specifications and design of these new satellites are similar to our current second-generation satellites. Rocket Lab USA, Inc. is the Vendor’s satellite bus ~~subcontractor under the Procurement Agreement.~~subcontractor. The satellite procurement agreement requires the Vendor to deliver ~~the initial~~ 17 new satellites by 2025, all of which are expected to be launched by the end of 2025. In addition, MDA will procure a satellite operations control center for $4.9 million. Under the ~~Terms Agreement, the counterparty is required~~Service Agreements, subject to ~~reimburse~~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.~~

~~In June 2022, we successfully launched our on-ground spare second-generation satellite. This satellite is expected to remain~~satellites, as ~~an in-orbit spare and will only be raised to its operational orbit at a future date if needed.~~

Our ground network includes our ground equipment, which uses patented CDMA technology to permit communication to multiple satellites. Our system architecture provides full frequency re-use. This maximizes satellite diversity (which maximizes quality) and network capacity as we can reuseadjusted based on certain provisions, beginning with the ~~assigned spectrum in every satellite beam in every satellite. In addition, we have developed a proprietary technology for our SPOT and Commercial IoT services.~~

We compete aggressively on price. We offer a range of price-competitive products to the industrial, governmental and consumer markets. We expect to retain our position as a cost-effective, high quality leader in the MSS industry.

As technological advancements are made, we continue to explore opportunities to develop new products and provide new services over our network to meet the needs of our existing and prospective customers. We are currently pursuing initiatives that we expect will expand our satellite communications business and more effectively utilize the capacity of our network assets. These initiatives include evaluating our product and service offerings in light of the shift in demand across the MSS industry from full Duplex voice and data services to IoT-enabled devices. To align our business model with this evolution, we have temporarily ceased sales of and services to subscribers for certain Duplex devices, such as Sat-Fi2®. We are currently evaluating opportunities for these devices relative to other product and service offerings as well as the capacity required to support these devices relative to other possible uses for the capacity. Integrated with this assessment is the development of a two-way reference design module to expand our Commercial IoT offerings, which is among our other current initiatives.

Our Commercial IoT use cases continue to expand. In June 2022, we introduced the Realm Enablement Suite, an innovative portfolio of satellite asset tracking hardware and software solutions featuring a powerful application enablement platform for processing smart data at the edge. With Realm, partners can accelerate new solutions to market with smartPhase 2 Service Period.

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applications that generate an advanced level of telematics data. Realm Enablement Suite introduces Integrity 150, the first solar-powered, deployment-ready satellite asset tracking device with an application enablement platform; ST150M satellite modem module that drastically simplifies product development; and Realm application enablement platform, offering tools and an extensive library for quickly accessing and developing smart applications at the edge for vertical-specific solutions. We also continue to expand deployments that support environmentally friendly initiatives. Recent deployments include remote monitoring of fluid levels and tanks, which replaces the need for motor vehicles to access these assets, as well as asset monitoring solutions for solar lighting and other renewable energy sources.

Customers

~~The~~For our subscriber driven revenue, the specialized needs of our global customers span many industries. As of ~~June 30, 2022,~~March 31, 2023, we had approximately ~~762,000~~761,000 subscribers worldwide, principally within the following markets: recreation and personal; government; public safety and disaster relief; oil and gas; maritime and fishing; natural resources, mining and forestry; construction; utilities; animal tracking and transportation. In response to Russia's invasion of Ukraine, during the first quarter of 2022, we disconnected satellite services to gateways in Russia that were operated by an independent gateway operator. Accordingly, approximately 25,000 subscribers that previously received satellite services through these gateways were removed fromOur subscriber count does not include our ~~subscriber count.~~Partner's subscribers. Our system is able to offer our customers cost-effective communications solutions completely independent of cellular coverage. Although traditional users of wireless telephony and broadband data services have access to these services in developed locations, our customers often operate, travel and/or live in remote regions or regions with under-developed telecommunications infrastructure where these services are not readily available or are not provided on a reliable basis. Our top revenue-generating markets in the United States and Canada are government (including federal, state and local agencies), public safety and disaster relief, oil and gas, recreation and personal telecommunications. In recent years, the number of Commercial IoT devices on our network has increased significantly.

In addition to our subscribers, we also provide services to our Partner under the Service Agreements. Our FCC license allows us to provide service over our network to up to 250 million users in the United States.

For the three months ended March 31, 2023 and March 31, 2022, our Partner under the Service Agreements was responsible for 52% and 21%, respectively. of our revenue; no other customer was responsible for more than 10%.

Spectrum and Regulatory Structure

We benefit from a worldwide allocation of radio frequency spectrum in the international radio frequency tables administered by the International Telecommunications Union ("ITU"). Access to this globally harmonized spectrum enables us to design satellites, networks and terrestrial infrastructure enhancements more cost effectively because the products and services can be deployed and sold worldwide. In addition, this broad spectrum assignment enhances our ability to capitalize on existing and emerging wireless and broadband applications.

Terrestrial Authority for Globalstar's Licensed ~~2.4GHz~~2.4 GHz Spectrum

~~In August 2017, the FCC modified our MSS licenses, granting us authority~~We are authorized to provide terrestrial broadband services over the 11.5 MHz portion of our licensed MSS spectrum. Specifically, the FCC modified our space station authorization and our blanket mobile earth station license to permit a terrestrial network using 11.5 MHz of our licensed mobile-satellite service spectrum.

~~In December 2018, we~~We have successfully completed the Third Generation Partnership Project (“3GPP”) standardization process for the 11.5 MHz of our licensed MSS spectrum terrestrially authorized by the FCC. The 3GPP designated the band as Band ~~53. Additionally, in March 2020, we announced that the 3GPP approved~~53 with the 5G variant of our Band 53 ~~which is~~ known as n53. This new band class provides a pathway for our terrestrial spectrum to be integrated into handset and infrastructure ecosystems. Additional follow-on 3GPP specifications and approvals are expected in the future. ~~During~~

We have executed agreements with partners that we believe allow our potential device ecosystem to expand significantly to include the most popular smartphones, laptops, tablets, automated equipment and other IoT modules. Most recently, in September 2022, we announced the Service Agreements, which provide for the enablement of Band 53/n53 use in cellular-enabled devices designated by Partner in connection with the Services, subject to certain terms and conditions; we believe this inclusion significantly enhances the device ecosystem for Band 53/n53. Prior to that, in 2019, we executed a spectrum manager lease agreement with Nokia in order to permit Nokia to utilize Band 53 within its equipment domestically and have such equipment type-certified for sale and deployment.

In February 2021, Qualcomm Technologies announced its new Snapdragon X65 modem-RF System, which includes support for Band n53. By having global 5G band support for n53 in Qualcomm Technologies’ 5G solutions, our potential device ecosystem expands significantly to include the most popular smartphones, laptops, tablets, automated equipment and other IoT modules.

We believe our MSS spectrum position provides potential for harmonized terrestrial authority across many international regulatory domains and have been seeking approvals in various international jurisdictions. To date, we have received additional terrestrial authorizations in various countries, including Brazil, Canada, ~~and~~ South Africa and Spain, among others. We expect this global effort to continue for the foreseeable future while we seek additional terrestrial approvals to internationally harmonize our S-band spectrum across the entire 16.5 MHz authority for terrestrial mobile broadband services.

We expect our terrestrial authority will allow future partners to develop high-density dedicated networks using the TD-LTE and 5G protocols for private networks as well as the densification of cellular networks. We believe that our offering has competitive advantages over other conventional commercial spectrum allocations. Such other allocations must meet minimum population coverage requirements, which effectively prohibit the exclusive use of most carrier spectrum for dedicated small cell deployments. In addition, low frequency carrier spectrum is not physically well suited to high-density small cell topologies, and mmWave spectrum is subject to range and attenuation limitations. We believe that our licensed 2.4 GHz band holds physical,

regulatory and ecosystem qualities that distinguishes it from other current and anticipated allocations, and that it is well positioned to balance favorable range, capacity and attenuation characteristics.

Performance Indicators

Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our earnings and cash flows. These key performance indicators include:

•total revenue, which is an indicator of our overall business growth;

•subscriber growth and churn rate, which are both indicators of the satisfaction of our customers;

•average monthly revenue per user, or ARPU, which is an indicator of our pricing and ability to obtain effectively long-term, high-value customers. We calculate ARPU separately for each type of our subscriber-driven revenue, including Duplex, ~~SPOT~~Commercial IoT, and ~~Commercial IoT;~~SPOT;

•operating income and adjusted EBITDA, both of which are indicators of our financial performance; and

•capital expenditures, which are an indicator of future revenue growth potential and cash requirements.

Comparison of the Results of Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~

Revenue

Our revenue is categorized as service revenue and equipment revenue. We provide services to customers using technology from our satellite and ground network. Equipment revenue is generated from the sale of devices that work over our network. For the three months ended ~~June 30, 2022,~~March 31, 2023, total revenue increased ~~21%~~79% to ~~$36.8~~$58.6 million from ~~$30.3~~$32.8 million for the same period in ~~2021. For the six months ended June 30, 2022, total revenue increased 22% to $69.6 million from $57.2 million for the same period in 2021.~~2022. See below for a further discussion of the fluctuations in revenue.

The following table sets forth amounts and percentages of our revenue by type of service (dollars in thousands).


		Three Months Ended June 30, 2022				Three Months Ended June 30, 2021				Six Months Ended June 30, 2022				Six Months Ended June 30, 2021					Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue			Revenue		% of Total Revenue		Revenue		% of Total Revenue
Service Revenue:	Service Revenue:																	Service Revenue:
Subscriber services																		Subscriber services
Duplex	Duplex	$	6,936	19	%	$	7,243	24	%	$	13,082	19	%	$	13,898	24	%	Duplex	$	5,751	10	%	$	6,146	19	%
SPOT	SPOT	11,536		31		11,139		37		22,791		33		22,123		39		SPOT	11,314		19		11,255		34
Commercial IoT	Commercial IoT	5,038		14		4,504		15		9,708		14		8,985		16		Commercial IoT	5,178		9		4,670		14
Engineering and other		9,538		26		2,731		9		16,811		24		3,697		6
Wholesale capacity services (1)																		Wholesale capacity services (1)	30,411		51		6,843		21
Engineering and other services																		Engineering and other services	300		1		430		1
Total Service Revenue	Total Service Revenue	$	33,048	90	%	$	25,617	85	%	$	62,392	90	%	$	48,703	85	%	Total Service Revenue	$	52,954	90	%	$	29,344	89	%

The following table sets forth amounts and percentages of our revenue generated from equipment sales (dollars in thousands).


		Three Months Ended June 30, 2022				Three Months Ended June 30, 2021				Six Months Ended June 30, 2022				Six Months Ended June 30, 2021					Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue			Revenue		% of Total Revenue		Revenue		% of Total Revenue
Equipment Revenue:	Equipment Revenue:																	Equipment Revenue:
Duplex	Duplex	$	143	—	%	$	331	1	%	$	273	—	%	$	624	1	%	Duplex	$	19	—	%	$	130	—	%
SPOT	SPOT	1,674		5		2,230		7		3,149		5		4,145		7		SPOT	1,926		3		1,475		5
Commercial IoT	Commercial IoT	1,908		5		2,090		7		3,714		5		3,611		7		Commercial IoT	3,812		7		1,806		6
Other	Other	27		—		11		—		44		—		125		—		Other	(67)		—		17		—
Total Equipment Revenue	Total Equipment Revenue	$	3,752	10	%	$	4,662	15	%	$	7,180	10	%	$	8,505	15	%	Total Equipment Revenue	$	5,690	10	%	$	3,428	11	%

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The following table sets forth our average number of subscribers and ARPU by type of revenue.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Average number of subscribers for the period:	Average number of subscribers for the period:									Average number of subscribers for the period:
Duplex	Duplex	42,723		44,160		43,295		45,913		Duplex	36,616		43,565
SPOT	SPOT	277,815		264,508		276,633		265,127		SPOT	266,067		276,863
Commercial IoT	Commercial IoT	433,578		409,346		431,652		408,043		Commercial IoT	462,077		423,519
Other	Other	437		27,603		13,340		27,595		Other	400		13,346
Total	Total	754,553		745,617		764,920		746,678		Total	765,160		757,293

ARPU (monthly):	ARPU (monthly):									ARPU (monthly):
Duplex	Duplex	$	54.12	$	54.67	$	50.36	$	50.45	Duplex	$	52.35	$	47.03
SPOT	SPOT	13.84		14.04		13.73		13.91		SPOT	14.17		13.55
Commercial IoT	Commercial IoT	3.87		3.67		3.75		3.67		Commercial IoT	3.74		3.68

The numbers reported in the above table are subject to immaterial rounding inherent in calculating averages.

We count "subscribers" based on the number of devices that are subject to agreements that entitle them to use our voice or data communications services rather than the number of persons or entities who own or lease those devices.

~~Engineering~~Wholesale capacity service revenue includes revenue generated from satellite network access and related services under the Service Agreements and engineering and other service revenue includes revenue generated primarily from certain governmental and engineering service ~~contracts which are not~~contracts; neither of these service revenue items is subscriber driven. Accordingly, we do not present ARPU for wholesale capacity service revenue and engineering and other service revenue in the table above.

~~As previously discussed,~~In response to Russia's invasion of Ukraine, during the first quarter of 2022, we disconnected satellite services to gateways in Russia that were operated by an independent gateway operator. Accordingly, approximately 25,000 subscribers that previously ~~recorded in Other in the table above~~received satellite services through these gateways were removed from our subscriber ~~count.~~count; these subscribers were included in "Other" in the table above.

Service Revenue

Duplex service revenue decreased ~~4% and 6%, respectively,~~$0.4 million for the three ~~and six months~~month period ended ~~June 30, 2022~~March 31, 2023 due primarily to a decrease in average subscribers, ~~of 3% and 6%, respectively.~~offset partially by higher ARPU. The decrease in average subscribers is due to ~~fewer~~churn exceeding gross ~~subscriber~~ activations over the last twelve ~~months. In line with the shift in demand across the MSS industry from full~~months as we no longer manufacture and sell Duplex ~~voice~~devices, and ~~data services to IoT-enabled devices, we expect the decline in our Duplex subscriber base to continue as we~~instead focus our investments on IoT-enabled devices and wholesale capacity services.

SPOT service revenue increased ~~4% and 3%, respectively,~~1% for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 due ~~primarily~~ to ~~an increase~~offsetting variances in ARPU and average ~~subscribers of~~subscribers. ARPU increased 5% and 4%, respectively. Lower churn during 2022 has positively contributed to the increase in average subscribers, while gross activations are down slightly compared to the prior twelve month period. Supply chain disruptions over the past few quarters (discussed further below) have reduced equipment sales, and therefore activations, during 2022. However, we have recently experienced growth in our Latin American subscriber base; average subscribers for this region increased 13% and 3% for the three and six month periods respectively, and represents 10% and 3% of our average subscriber growth in total over the same periods. ARPU decreased by 1% for both the three and six months ended June 30, 2022 due to the mix of ~~subscriber~~subscribers on various rate plans ~~including~~compared to the ~~continued popularity~~prior period. Average subscribers were impacted by lower equipment sales, and therefore gross subscriber activations, over the last twelve months due to supply chain issues that lowered the number of ~~our flex plans which carry lower rates than our traditional prepaid unlimited plans.~~devices available in the sales channel.

Commercial IoT service revenue increased ~~12% and 8%, respectively,~~11% for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 due to ~~a 6% increase~~positive variances in both average subscribers ~~for both periods. The increase in average subscribers is driven by higher gross~~and ARPU, which increased 9% and 2%, respectively. Gross subscriber activations ~~of 25%~~have increased 74% when comparing the preceding twelve month periods. Our average subscriber base has grown and ~~lower churn over~~we have fulfilled the ~~last twelve months. Despite supply chain issues causing significant~~back orders that accumulated in 2022 following production delays ~~in 2022,~~for certain of our Commercial IoT ~~equipment sales increased over the last twelve months compared to the prior year period~~products (discussed further below), which contributed to higher subscriber activations. Similar to SPOT, we have recently experienced steady growth in our Latin American subscriber base; average subscribers for this region increased 63% and 55% for the three and six month periods, respectively, and represent 9% and 7% of our average subscriber growth in total. For the three and six month periods, ARPU increased 6% and 2%, respectively, driven by the favorable mix of subscribers on various rate plans.

~~Engineering and other~~Wholesale capacity service revenue increased ~~$6.8 million and $13.1~~$23.6 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021.~~2022. Fluctuations in ~~engineering and other~~wholesale capacity service revenue are due primarily to the timing and amount of revenue recognized associated with the ~~Terms Agreement.~~Service Agreements. The increase in revenue recognized during ~~2022~~2023 is due primarily to consideration received for service fees under the Service Agreement which commenced after service launch in November 2022. Additionally, in connection with the amendment of the Service Agreements in February 2023, Partner agreed to pay us

$6.5 million as consideration related to performance obligations ~~associated with our work to expand and upgrade our gateways around~~completed in prior periods. The Company recognized this revenue during the globe and under the satellite procurement agreement. As previously discussed, we disconnected service to approximately 25,000 subscribers in Russia. During 2021, we billed less than $0.3 million to these subscribers and the revenue associated with these subscribers was recorded in Engineering and other service revenue.first quarter of 2023.

Subscriber Equipment Sales

Revenue from Duplex equipment sales decreased ~~$0.2 million and $0.4~~$0.1 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021.~~2022. These decreases were driven primarily by a lower sales volume of phones and accessories due to a lack of available inventory since these devices are no longer being manufactured.

Revenue from SPOT equipment sales ~~decreased $0.6 million and $1.0~~increased $0.5 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021. These decreases resulted from a lower~~2022. This increase is primarily attributable to sales ~~volume. Two~~ of our ~~core~~ SPOT ~~products are on back order~~Trace® device due to inventory shortages, which delayed the fulfillment of orders during the first half of 2022. We continue to see demand exceeding supply resulting from supply chain disruptions caused by component part shortages. We are actively working to address this issue and expect production to resumean over 80% increase in ~~the third~~units sold quarter ~~of 2022.~~over quarter.

Revenue from Commercial IoT equipment sales ~~decreased $0.2 million and~~ increased ~~$0.1~~$2.0 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in 2021. IoT equipment sales continue to be negatively impacted by component part shortages, which has impacted our ability to produce inventory at sufficient quantities to fulfill sales orders. This situation has resulted in significant back orders of two of our most profitable products. We expect these production issues to be resolved during the third quarter of 2022. ~~Despite these challenges, sales~~The volume of our SmartOne Solar ~~was up 11% year~~device sales increased over ~~year~~180% from the first quarter of 2022 and ~~up 10%~~revenue from this product increased over $1.8 million during the ~~last twelve months.~~same period. Devices sales have improved significantly in 2023 as we have largely resolved the supply chain disruptions that negatively impacted sales during 2022.

Operating Expenses

Total operating expenses increased to ~~$48.2~~$51.5 million from ~~$46.3~~$46.5 million ~~and increased to $94.6 million from $92.5 million, respectively,~~ for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021. For both the three and six month periods, higher~~2022. Higher cost of services, ~~and a reduction in value of long-lived assets were offset by a reduction in the value of inventory. For the six month period, lower~~ management, general and administrative ("MG&A") costs, and subscriber equipment sales were partially offset ~~the increases noted above.~~by lower depreciation, amortization, and accretion expense. The main contributors to the variance in operating expenses are explained in further detail below.

Cost of Services

Cost of services increased ~~$1.6 million and $3.3~~$1.0 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021. For the three and six month periods, personnel costs increased $0.4 million and $1.3 million, respectively; the year~~2022 due primarily to ~~date variance included $0.7 million related to annual cash bonuses and non-recurring separation pay during the first quarter of 2022. Higher~~higher lease expense associated with new ~~teleport leases (including associated occupancy costs, such as utilities and other building services),~~gateway sites, which ~~commenced throughout the second half of 2021,~~ contributed ~~to $0.5~~$0.8 million ~~and $1.0 million, respectively, of~~to the total increase. These leases were executed in connection with the gateway expansion project associated with the ~~Terms Agreement;~~Service Agreements; these lease and related costs are being reimbursed to us, and this consideration is being recognized as revenue (as further discussed above in ~~Engineering and other service revenue)~~"Wholesale Capacity Service Revenue"). Higher ~~professional fees and licensing costs related to our implementation of a new enterprise resource planning ("ERP") system, which went live in January 2022, as well as other costs for~~ information technology ~~security and~~ maintenance also contributed ~~$0.3 million and $0.8 million, respectively,~~ to the total increase. Personnel costs were flat year-over-year due to the offsetting impact of merit and headcount increases in 2023, offset by non-recurring personnel costs from the first quarter of 2022 related to annual cash bonuses and separation pay.

Cost of Subscriber Equipment Sales

Cost of subscriber equipment sales increased ~~$0.2 million and decreased $0.1~~$1.7 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 from the same ~~periods~~period in ~~2021. These fluctuations are~~2022. This increase is generally consistent with the ~~fluctuations~~increase in total revenue from subscriber equipment sales, and were also impacted by the reversal of a prior year accrual for tariffs during the second quarter 2021. Pursuant to regulatory developments, we reversed this accrual for potential tariffs owed on imports from China made prior to a ruling by the U.S Customs and Border Protection in September 2019 that we no longer believe will be due, resulting in an expense reduction of $0.9 million.

~~Cost of Subscriber Equipment Sales - Reduction in the Value of Inventory~~

During the second quarter of 2021, we recorded a reduction in the value of inventory totaling $0.8 million. We wrote off certain Sat-Fi2 materials that are not likely to be used in production as well as defective inventory units that are not saleable. Similar activity did not occur at a significant level in 2022.sales.

Marketing, General and Administrative

MG&A expenses ~~were flat~~increased $4.1 million for the three ~~month period and decreased $0.7 million for the six month period~~months ended ~~June 30, 2022,~~March 31, 2023 compared to the same ~~periods~~period in ~~2021. MG&A expense for both periods~~2022. This increase was ~~impacted~~partially driven by certain non-recurring items, including lower subscriber acquisition costs of $0.5 million and $0.9 million, respectively, which was due primarily to the one-time deactivation of all Sat-Fi2 subscribers during the first half of 2021. Additionally, during 2021, we terminated our dealer program and reduced advertising spend for Duplex products and services; these items contributed $0.5 million anda $1.0 million ~~respectively, to the decrease~~accrual reversal in ~~MG&A expense for the three and six month periods. Finally, during~~ the first quarter of 2022 ~~we reversed a $1.0 million accrual related~~ to professional services associated with the 2018 shareholder ~~litigation based~~litigation. Based on our assessment and considering the passage of time, we concluded it was appropriate to release the ~~likelihood~~accrual, which resulted in a decrease in MG&A expense in the first quarter of ~~payment. Offsetting these decreases was an~~2022. An increase in net personnel costs ~~totaling~~of $2.1 million included non-recurring stock based compensation. Also contributing to the MG&A increase were higher legal fees of $0.6 million for various efforts, including defense of our spectrum assets and negotiation of new commercial arrangements, An increase in advertising costs of $0.4 million also contributed to the increase.

Depreciation, Amortization, and ~~$1.6~~Accretion

Depreciation, amortization, and accretion expenses decreased $1.9 million for the three ~~and six month periods; of which $0.3 million and $1.2 million, respectively were related to annual cash bonuses and non-recurring separation pay. Other smaller items contributed~~months ended March 31, 2023, compared to the ~~remaining variance~~same period in ~~expense for both periods.~~

~~Reduction in Value of Long-Lived Assets~~

~~During the second quarter of~~ 2022 ~~we recorded~~due to a net reduction in total property and equipment. In connection with Partner's announcement concerning the ~~value of intangible~~Services in September 2022, our strategy relative to our second-generation Duplex assets shifted. Due to this shift in strategy, we re-assessed our asset grouping for long-lived assets and ~~other assets totaling $0.5 million. We wrote off work in progress associated with spectrum licensing efforts in certain countries around the world. We~~ determined that ~~attainment~~the second-generation Duplex assets (including the gateways and related technology capable of ~~such licenses was~~providing commercial traffic to support Sat-Fi2®) were no longer ~~probable based on discussions with regulators~~part of our overall satellite and ~~other circumstances.~~ground network. These assets totaled approximately $161.2 million prior to their write down in September 2022. Our first-generation Duplex assets (i.e. handsets and related ground infrastructure) were not impacted. Offsetting this decrease is depreciation expense from the on-ground spare satellite that was launched and placed into service in June 2022.

Other (Expense) Income

~~Gain~~Loss on Extinguishment of Debt

~~Gain~~We recorded a loss on extinguishment of debt ~~for the three and six months ended June 30, 2021 was $2.7 million. In June 2021, the Small Business Administration ("SBA") approved our request for forgiveness~~ of ~~amounts outstanding under the Paycheck Protection Program ("PPP") loan. Accordingly, we recorded a gain on extinguishment of debt totaling $5.0~~$10.4 million during the ~~second~~first quarter of ~~2021. Offsetting this gain~~2023 following the full pay-off of the 2019 Facility Agreement in March 2023. The extinguishment loss was ~~a $2.3 million write-off of a portion of~~recognized due to the remaining deferred financing costs ~~resulting from unscheduled principal repayments~~and debt discount associated with the instrument at the time of ~~the First Lien Facility Agreement during the second quarter of 2021.~~repayment. Similar activity did not occur in 2022.

Interest Income and Expense

Interest income and expense, net, decreased ~~$3.6 million and $5.6~~$7.5 million during the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023, compared to the same ~~periods~~period in ~~2021.~~2022. The decrease ~~for both periods~~ was ~~primarily~~ driven by higher capitalized interest (which decreases interest expense) of ~~$3.9~~$4.3 million and ~~$4.8 million, respectively. Lower~~lower gross interest costs totaling ~~$1.0 million also contributed to the decrease in expense for the six month period.~~$3.2 million.

Gross interest costs were ~~generally flat for the three month periods and down $1.0~~lower due to $4.4 million ~~for the six month period. For the three month period, lower~~less in interest ~~of $2.2 million associated with the 2009 Facility Agreement was offset by higher interest of $1.3 million on~~under the 2019 Facility Agreement ~~and imputed~~due to the partial paydown in November 2022, offset partly by interest ~~associated with the significant financing component related~~of $1.2 million due to ~~advance payments from the customer~~MDA under the ~~Terms Agreement~~vendor financing arrangement that was not in place during the first quarter of $0.8 million. For the six month period, lower interest of $5.6 million associated with the 2009 Facility Agreement was offset by higher interest of $2.6 million on the 2019 Facility Agreement and imputed interest associated with the significant financing component related to advance payments from the customer under the Terms Agreement of $1.8 million.2022.

Derivative Loss

We recorded a derivative ~~losses~~loss of ~~$1.2 million and $1.3~~$0.5 million for the three months ended ~~June 30, 2022 and 2021, respectively.~~March 31, 2022. We ~~recorded derivative losses of $1.7 million and $2.4 million for the six months ended June 30, 2022 and 2021, respectively. We~~ recognize ~~derivative~~ gains or losses due to the change in the value of certain embedded features within our debt instruments that require standalone derivative accounting. The ~~losses~~loss recorded during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 ~~were~~was impacted primarily by an increase in the discount rate used in the valuation of the derivative associated with our 2019 Facility Agreement. ~~For the six month period, the~~Partially offsetting this loss was ~~offset partially by~~ a gain on the valuation adjustment of the embedded derivative associated with our 2013 8.00% Notes. ~~During the first quarter~~There were no derivatives outstanding as of 2022, the remaining holders of our 2013 8.00% Notes converted the principal balance into shares of Globalstar common stock. As a result of these conversions, we marked-to-market the embedded derivative and recorded a net gain due to a decrease in our stock price and a shorter term to maturity.

The losses recorded during the three and six months ended June 30, 2021 were primarily impacted by increases in our stock price and stock price volatility, which are significant inputs used in the valuation of the embedded derivative associated with our 2013 8.00% Notes.March 31, 2023.

See Note 7: Fair Value Measurements to our condensed consolidated financial statements for further discussion of the computation of the fair value of our derivatives.

Foreign Currency ~~(Loss)~~ Gain

Foreign currency ~~(loss)~~ gain ~~fluctuated by $11.5 million to a loss of $7.1~~decreased $1.3 million for the three months ended ~~June 30, 2022 from a gain of $4.4 million for~~March 31, 2023, compared to the same period in ~~2021. Foreign currency (loss) gain fluctuated by $4.0 million to a loss of $3.9 million for the six months ended June 30, 2022 from a gain of $0.1 million for the same period in 2021.~~2022. Changes in foreign currency gains and losses are driven by the remeasurement of financial statement items, which are denominated in various currencies, at the end of each reporting period. For ~~the three months ended June 30, 2022,~~both periods presented, the foreign currency ~~loss was~~gains were due to the weakening of the ~~Canadian~~U.S. dollar ~~the Euro and the Brazilian real~~ relative to the U.S. dollar. For the three months ended June 30, 2021, the foreign currency gain was due to the strengthening of the Canadian dollar, Euro and Brazilian real relative to the U.S. dollar. For the six months ended June 30, 2022, the foreign currency loss was due to the weakening of the Canadian dollar and the Euro real relative to the U.S. dollar. For the six months ended June 30, 2021, the foreign currency gain was due to the strengthening of the Canadian dollar and Brazilian real relative to the U.S. dollar largely offset by the weakening of the Euro relative to the U.S. dollar.other currencies.

Liquidity and Capital Resources

Overview

Our principal near-term liquidity requirements include funding our operating costs and capital ~~expenditures, and repayment of amounts being financed through our satellite vendor under the Procurement Agreement.~~expenditures. Our principal sources of liquidity include cash on hand, cash flows from operations and vendor financing. We also expect sources of liquidity to include funds from other debt or equity financings that have not yet been arranged; we are actively pursuing a new debt financing arrangement to repay and fund amounts dueproceeds under the ~~Procurement Agreement. With this financing, we expect that~~prepayment agreement with our ~~current sources of liquidity over~~Partner under the ~~next twelve months will be sufficient for us to cover our obligations.~~ Service Agreements.

Beyond the next twelve months, our liquidity requirements also include paying our debt service obligations.

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we held cash and cash equivalents of ~~$13.1~~$20.5 million and ~~$14.3~~$32.1 million, respectively, on our ~~condensed~~ consolidated balance sheet.

The total carrying amount of our debt and vendor financing outstanding was ~~$257.5~~$182.2 million at ~~June 30, 2022,~~March 31, 2023, compared to ~~$237.9~~$191.7 million at December 31, ~~2021.~~

2022. The ~~$19.5~~$9.5 million ~~increase in carrying value~~decrease was driven by the payoff of ~~our debt was~~the remaining balances due ~~to a higher carrying value of~~under the 2019 Facility Agreement ~~of $20.9 million due to the accrual of PIK interest~~ and the ~~accretion~~vendor financing arrangement of ~~debt discount~~$132.1 million and $59.6 million, respectively, offset partially by ~~a reduction~~the sale of $200.0 million in ~~the remaining~~aggregate principal ~~balance~~amount of ~~the 2013 8.00%~~non-convertible 13% Senior Notes ~~totaling $1.4 million,~~due 2029 (the “Notes”), which were ~~converted into shares~~issued net of ~~Globalstar common stock during the first quarter~~a 5% OID of ~~2022.~~$10 million and $7.8 million in financing costs.

Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~

The following table shows our cash flows from operating, investing and financing activities (in thousands):


		Six Months Ended					Three Months Ended
		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Net cash provided by operating activities	Net cash provided by operating activities	$	20,771	$	55,920	Net cash provided by operating activities	$	22,805	$	7,569
Net cash used in investing activities	Net cash used in investing activities	(22,392)		(11,998)		Net cash used in investing activities	(71,575)		(10,451)
Net cash provided by (used in) financing activities		449		(45,228)
Net cash provided by financing activities						Net cash provided by financing activities	37,148		8
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	9		(9)		Effect of exchange rate changes on cash and cash equivalents	27		89
Net decrease in cash and cash equivalents		$	(1,163)	$	(1,315)
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	$	(11,595)	$	(2,785)

Cash Flows Provided by Operating Activities

Net cash provided by operations includes primarily cash receipts from subscribers related to the purchase of equipment and satellite voice and data services as well as cash received from the performance of ~~engineering and other service contracts.~~wholesale capacity services. We use cash in operating activities primarily for network expenditures, personnel costs, inventory purchases and other general corporate expenditures. Net cash provided by operating activities during the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~$20.8~~$22.8 million compared to ~~$55.9~~$7.6 million during the same period in ~~2021.~~2022. The primary driver for the ~~decrease~~increase was ~~due to unfavorable working capital changes offset partially by~~ higher net income after adjusting for noncash ~~items. During 2021, working capital changes were favorably impacted by prepayments made by~~items due primarily to wholesale capacity service fees under the ~~customer to the Terms~~Service Agreement ~~totaling $51.6 million,~~ which ~~were recorded as deferred revenue~~commenced after service launch in November 2022. (see Note 2: Revenue to our condensed consolidated financial statements for further discussion). ~~The timing of vendor payments also impacted the~~This activity was offset partially by an unfavorable change in working capital due primarily to a ~~lesser extent.~~larger decrease in deferred revenue during the first quarter 2023 related to the timing and amount of customer payments in each period.

Cash Flows Used in Investing Activities

Net cash used in investing activities was ~~$22.4~~$71.6 million for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$12.0~~$10.5 million for the same period in ~~2021.~~2022. Net cash used in investing activities during both periods ~~was related primarily to~~included network upgrades associated with the ~~Terms Agreement, including higher costs associated with~~Service Agreements. The increase is primarily due to payments to MDA during the ~~procurement and deployment~~first quarter of ~~new antennas for our gateways and~~2023 under the preparation and launch of our on-ground spare satellite, which occurred in June 2022. Cash used in investing activities increased in 2022 due primarily to costs to support the spare satellite launch, offset partially by lower costs associated with gateway upgrades as that portion of the project nears completion. Purchases of intangible assets related to our MSS and terrestrial spectrum licensing initiatives were also uses of cash during both periods.vendor financing arrangement totaling $59.6 million (excluding capitalized interest).

Cash Flows Provided by ~~(Used in)~~ Financing Activities

Net cash ~~used in~~provided by financing activities was ~~$45.2~~$37.1 million during the ~~six~~three month period ended ~~June 30, 2021, including principal payments of the 2009 Facility Agreement totaling $89.2 million and $43.7~~March 31, 2023. This activity resulted from $190.0 million received in proceeds (net of OID) from the ~~exercise~~sale of our Notes, which were used to pay the ~~warrants issued with our~~remaining principal amount due under the 2019 Facility ~~Agreement. There were no meaningful cash flows from~~Agreement of $148.3 million and financing ~~activities~~costs of $0.6 million (with additional amounts paid in April 2023 due to timing). We also paid dividends of $4.0 million to our preferred stockholders during the first ~~six months~~quarter of ~~2022.~~2023.

Indebtedness

For further discussion on all of our debt and other financing arrangements, see Note 5: Long-Term Debt and Other Financing Arrangements to our condensed consolidated financial statements.

13% Senior Notes

On March 31, 2023, we completed the sale of $200.0 million in aggregate principal amount of our Notes, non-convertible 13% Senior Notes due 2029. The Notes are senior, unsecured obligations of the Company and have a stated maturity of September 15, 2029. The Notes were sold at an issue price of 95% of the principal amount and bear interest at a rate of 13.00% per annum payable semi-annually in arrears. The Company has agreed with its Partner under the Service Agreements to pay cash interest on the Notes at a rate of 6.5% per annum and paid-in-kind ("PIK") interest at a rate of 6.5% per annum.

The Notes may be redeemed at the option of the Company at any time, subject to the conditions of the Indenture. Additionally, in the event of a Change of Control (as such term is defined in the Indenture) or certain other events, holders of the Notes have the right to require the Company to repurchase all or a portion of their Notes at a price (as calculated by the Company) in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and certain tax payments. The Indenture includes customary terms and covenants, including restrictions on the Company’s and the Subsidiary Guarantors’ ability to incur indebtedness, make guarantees, sell equity interests, and customary events of default.

2019 Facility Agreement

In 2019, we 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 iswas scheduled to mature in November 2025. The loans under the 2019 Facility Agreement ~~bear~~bore interest at a ~~blended~~ rate of ~~13.5%~~14.0% per ~~annum~~annum.

The Service Agreements required us to ~~be paid-in-kind (or in cash at our option, subject to restrictions in the Facility Agreement). As of June 30, 2022, the principal amount~~refinance all loans outstanding under the 2019 Facility ~~Agreement~~Agreement. A portion was ~~$282.0 million. As~~refinanced in November 2022 and the remaining portion was refinanced in March 2023. Using a portion of ~~June 30, 2022,~~the proceeds from the sale of the 13% Senior Notes, we ~~were in compliance with~~repaid all ~~the covenants~~ of our outstanding obligations under the 2019 Facility Agreement ~~except as it relates to capital expenditures. In August 2022, we received a waiver letter from our lenders increasing permitted capital expenditures for 2022.~~of approximately $148 million.

~~The 2019 Facility Agreement requires mandatory prepayments~~We recorded a loss on extinguishment of ~~principal with any Excess Cash Flow (as defined~~debt of $10.4 million during the first quarter of 2023 representing the difference between the net carrying amount prior to extinguishment (including unamortized deferred financing costs, debt discounts and ~~calculated in~~derivatives) and the 2019 Facility Agreement) on a semi-annual basis. We generated excess cash flow for the six-month measurement period ended June 30, 2022 and expect to make a prepayment of approximately $6.0 million in August 2022.

~~8.00% Convertible Senior Notes Issued in 2013~~

~~In May 2013, we issued $54.6 million aggregate principal amount of its 2013 8.00% Notes. In February 2022, we notified the holders~~reacquisition price of the 8.00% Notes of our intention to redeem all of the outstanding amount of principal and interest in March 2022. Prior to our intended redemption of the 8.00% Notes in March 2022, the holders converted the remaining principal amount outstanding into 2.3 million shares of Globalstar common stock at a conversion price of $0.69 (as adjusted) per share of common stock. The 2013 8.00% Notes were scheduled to mature on April 1, 2028, subject to various call and put features. Interest on the 2013 8.00% Notes was payable semi-annually in arrears on April 1 and October 1 of each year. We paid interest in cash at a rate of 5.75% per annum and issued additional 2013 8.00% Notes at a rate of 2.25% per annum.debt.

Vendor Financing

In February 2022, we entered into a satellite procurement agreement with MDA (see Note 8: Commitments and Contingencies ~~to our condensed consolidated financial statements~~ for further discussion). This agreement ~~provides~~(as amended in October 2022 and January 2023) provided for ~~payment~~ deferrals of milestone payments through March 15, 2023. Interest accrued on the amount outstanding at an annual rate of 7%, which increased to 10.5% on balances between December 2022 and March 2023. We have made payments totaling $76.1 million to MDA under this vendor financing arrangement, of which $62.1 million (including $2.5 million of interest) was paid during the first quarter of 2023. As of March 31, 2023, we fully repaid the outstanding vendor financing balance.

Prepayment Agreement

On February 27, 2023, Globalstar and Partner agreed to amend the Service Agreements to provide for, among other things, Partner’s prepayment of $252 million to us (the “Prepayment Agreement”). We plan to use the proceeds of the Prepayment to pay future amounts due under our previously disclosed Satellite Procurement Agreement with MDA, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of these satellites. The Prepayment Agreement replaces our requirement to raise third-party financing for such costs as previously required under the Service Agreements and will be funded on a quarterly basis, subject to certain conditions in the agreement. The remaining amount of the satellite costs is expected to be funded from ~~February 2022~~our operating cash flows. Partner made the first payment under the Prepayment Agreement in April 2023 in an amount of $87.7 million. These proceeds were used to pay amounts owed to MDA for milestones completed as of the payment date, with $39.6 million reimbursing us for a payment made on March 31, 2023 and the remaining $48.1 million paid to MDA in April 2023.

The amount of the Prepayment and fees payable thereon will be recouped from amounts payable by our Partner for services provided by us 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 ~~August 2022 at a 0% interest rate. Deferred payments are due in August 2022~~excess cash flow sweeps or voluntary prepayments, as provided under the terms of the prepayment agreement. ~~We intend to seek an extension~~For as long as any portion of the ~~maturity date while~~Prepayment is outstanding, we ~~pursue~~will be subject to certain covenants including (i) minimum cash balance of $30 million, (ii) interest coverage and leverage ratios, and (iii) limitations on certain asset transfers, expenditures and investments.

Subject to applicable shareholder approval, amounts payable by us in connection with the Prepayment would be guaranteed by Thermo under a ~~new debt financing~~guaranty agreement among Thermo, Globalstar and Partner. In addition, Thermo has agreed directly with Partner to provide support of certain of our obligations under the Service Agreements, the Satellite Procurement Agreement, and certain related contracts.

Series A Preferred Stock

On November 15, 2022, we issued 149,425 shares of 7.0% Perpetual Preferred Stock, Series A, with a liquidation preference of $1,000 per share (the “Series A Preferred Stock”). The Company recorded the Series A Preferred Stock at fair value of the shares totaling $105.3 million on its consolidated balance sheet.

Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by 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. In January and April 2023, our Board of Directors approved the payment of dividends totaling $1.3 million for the ~~funding~~period November 15, 2022 through December 31, 2022 and $2.6 million for the first quarter of 2023; these dividends have been paid.

The shares of Series A Preferred Stock do not possess voting rights, other than certain matters specifically affecting the rights and obligations of the ~~construction and launch costs for these satellites.~~Series A Preferred. Series A Preferred Stock may be redeemed by us, in whole or in part, at any time. The holders of the Series A Preferred Stock do not have any rights to convert or require us to redeem such stock.

Off-Balance Sheet Transactions

We have no material off-balance sheet transactions.

Recently Issued Accounting Pronouncements

We review recently issued accounting guidance as new standards are issued. Certain accounting standards issued or effective may be applicable to us; however, we have not identified any standards that will have a material impact on our condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our services and products are sold, distributed or available in over 120 countries. Our international sales are denominated primarily in Canadian dollars, Brazilian reais and euros. In some cases, insufficient supplies of U.S. currency may require us to accept payment in other foreign currencies. We reduce our currency exchange risk from revenues in currencies other than the U.S. dollar by requiring payment in U.S. dollars whenever possible and purchasing foreign currencies on the spot market when rates are favorable. We currently do not purchase hedging instruments to hedge foreign currencies. We are obligated to enter into currency hedges with the lenders to the 2019 Facility Agreement no later than 90 days after any fiscal quarter during which more than 25% of revenues is denominated in a single currency other than U.S. or Canadian dollars. Otherwise, we cannot enter into hedging agreements other than interest rate cap agreements or other hedges described above without the consent of the agent for the Facility Agreement, and with that consent the counterparties may only be the lenders to the 2019 Facility Agreement.

~~We expect to refinance our vendor financing in the future and may be exposed to the risk of rising interest rates if this or other future borrowings bear interest at a floating rate.~~

We also have operations in Argentina, which is considered to have a highly inflationary economy. We continue to monitor the significant uncertainty surrounding current Argentinian exchange mechanisms. Operations in this country are not considered significant to our consolidated operations.

See Note 7: Fair Value Measurements in our condensed consolidated financial statements for discussion of our financial assets and liabilities measured at fair market value and the market factors affecting changes in fair market value of each.

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Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 as of ~~June 30, 2022,~~March 31, 2023, the end of the period covered by this Report. This evaluation was based on the guidelines established in Internal Control - Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based on this evaluation, each of our Principal Executive Officer and Principal Financial Officer concluded that as of ~~June 30, 2022~~March 31, 2023 our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We believe that the condensed consolidated financial statements included in this Report fairly present, in all material respects, our condensed consolidated financial position and results of operations for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

(b) Changes in internal control over financial reporting.

As of ~~June 30, 2022,~~March 31, 2023, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated our internal control over financial reporting. During the first quarter of 2022, we implemented a new enterprise resource planning ("ERP") system, which replaced our existing financial systems. The implementation and transition to the new ERP system resulted in changes to our reporting processes and our internal control over financial reporting, by automating certain manual procedures and standardizing business processes and reporting across the organization. As a result of this implementation, there were anticipated changes to our internal control over financial reporting, none of which adversely affected the Company's internal control over financial reporting. We will continue to monitor our internal control over financial reporting under the new system, including evaluating the operating effectiveness of related key controls. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that no changes in our internal control over financial reporting occurred during the quarter ended ~~June 30, 2022~~March 31, 2023 have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

~~Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and~~

~~financial condition.~~

Our results of operations are materially affected by economic and political conditions in the United States and internationally, including inflation, deflation, interest rates, recession, availability of capital, energy and commodity prices, trade laws and the effects of governmental initiatives to manage economic conditions. Current or potential customers may delay or decrease spending on our products and services as their business and/or budgets are impacted by economic conditions. The inability of current and potential customers to pay us for our products and services may adversely affect our earnings and cash flows. In addition, deterioration of conditions in worldwide credit markets could limit our ability to obtain financing to fund our operations and capital expenditures.

The current invasion of Ukraine by Russia has escalated tensions among the United States, the North Atlantic Treaty Organization (“NATO”) and Russia. The United States and other NATO member states, as well as non-member states, have announced new sanctions against Russia and certain Russian banks, enterprises and individuals. These and any future additional sanctions and any resulting conflict between Russia, the United States and NATO countries could have an adverse impact on our current operations.

Further, such invasion, ongoing military conflict, resulting sanctions and related countermeasures by NATO states, the United States and other countries are likely to lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions for equipment, which could have an adverse impact on our operations and financial performance.

You should carefully consider the risks described in this Report and all of the other reports that we file from time to time with the SEC, in evaluating and understanding us and our business. Additional risks not presently known or that we currently deem immaterial may also impact our business operations and the risks identified in this Report may adversely affect our business in ways we do not currently anticipate. Our financial condition or results of operations also could be materially adversely affected by any of these risks. ~~Other than as set forth above, there~~There have been no material changes to our risk factors disclosed in Part I. Item 1A. "Risk Factors" of our ~~2021~~2022 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not Applicable

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information.

~~None.~~None

2930

Item 6. Exhibits.


Exhibit Number			Description
3.1*			Third Amended and Restated Certificate of Incorporation of Globalstar, Inc. (Appendix A to DEF 14A filed April 12, 2021)
3.2*			Fourth Amended and Restated Bylaws of Globalstar, Inc. (Exhibit 3.1 to Form 8-K filed on April 15, 2019)
10.1*			Second Forbearance Agreement among Globalstar, Inc., Macdonald, Dettwiler and Associates Corporation and Rocket Lab USA, Inc. dated January 31, 2023
10.2*			Purchase Agreement, dated March 28, 2023, by and among Globalstar, Inc., the Subsidiary Guarantors party thereto and the Purchasers party thereto
10.3*			Indenture (including form of Note) dated March 31, 2023, by and among Globalstar, Inc., the Subsidiary Guarantors party thereto and Wilmington Trust, National Association
10.4*			Collateral Agreement dated April 6, 2023 by and among Globalstar, Inc. the grantors and guarantors party thereto and Partner
10.5†			2023 Key Employee Bonus Plan
10.6†			Prepayment Agreement
10.7†			Amendment No. 4 to the Key Terms Agreement
31.1			Section 302 Certification of the Principal Executive Officer
31.2			Section 302 Certification of the Principal Financial Officer
32.1			Section 906 Certification of the Principal Executive Officer
32.2			Section 906 Certification of the Principal Financial Officer
101.INS			XBRL Instance Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document

*			Incorporated by reference.

†			Portions of the exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

* Incorporated by reference.

3031

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		��	GLOBALSTAR, INC.

Date:	~~August 9, 2022~~May 5, 2023	By:	/s/ David B. Kagan
			David B. Kagan
			Chief Executive Officer (Principal Executive Officer)

			/s/ Rebecca S. Clary
			Rebecca S. Clary
			Chief Financial Officer (Principal Financial Officer)

3132


	Operating Leases		Finance Leases

2022 (remaining)	$	2,421	$	3
2023	4,876		3
2024	4,749		—
2025	4,778		—
2026	4,825		—
Thereafter	22,322		—
Total lease payments	$	43,971	$	6
Imputed interest	(14,395)		—
Discounted lease liability	$	29,576	$	6


	June 30, 2022		December 31, 2021
Derivative (liabilities) assets:
Compound embedded derivative with the 2019 Facility Agreement	$	(1,460)	$	484
Compound embedded derivative with the 2013 8.00% Notes	$	—	(1,364)


	December 31, 2021
	Stock Price Volatility	Risk-Free Interest Rate		Note Conversion Price	Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	120% - 139%	0.5	%	$0.69	18	%	$1.16


	June 30, 2022				December 31, 2021
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value

2013 8.00% Notes	$	—	$	—	$	1,407	$	1,265


	February 17, 2022
	Risk-Free Interest Rate		Note Conversion Price	Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	0.06	%	$0.69	18	%	$1.00


	March 9, 2022
	Risk-Free Interest Rate		Note Conversion Price	Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	0.18	%	$0.69	19	%	$1.21