Financial Data and Key Metrics - Total revenue for 2023 was $224 million, a 51% increase YoY, driven by higher wholesale capacity service revenue [51] - Adjusted EBITDA for 2023 was $117 million, a 100%+ increase YoY, with a margin of 52%, up from 39% in 2022 [17] - Cash at year-end 2023 was $56.7 million, a 77% YoY increase, with net leverage under 3x [18] - 2024 revenue guidance is between $225 million and $250 million, with an adjusted EBITDA margin of approximately 50% [53] Business Line Data and Key Metrics - Wholesale satellite business saw significant growth, with new partnerships and a $20 million annual revenue commitment from a government services company [11][27] - Commercial IoT revenue grew 17% in 2023, with gross subscriber activations up 8% and ARPU increasing due to higher usage and unlimited plans [78][79] - Terrestrial spectrum initiatives, including a $1.5 million order from a major U.S. retailer, are expected to drive future growth [15][55] Market Data and Key Metrics - The total addressable market (TAM) for LEO capacity is increasing, driven by demand for new consumer capabilities and IoT applications [9] - The IoT B2B TAM is expected to grow to $10.4 billion annually by 2035, presenting a significant opportunity for the company [78] Company Strategy and Industry Competition - The company is leveraging its bent-pipe architecture to upgrade technologies on the ground without significant CapEx, providing flexibility to respond to market changes [12] - Strategic focus on four pillars: wholesale satellite, legacy products, IoT, and terrestrial spectrum, with a strong emphasis on innovation and differentiation [26][27][29] - Partnerships with Nokia and XCOM Labs are driving new opportunities in terrestrial spectrum and 5G technology [14][32] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about 2024 and beyond, with new satellites under construction to enhance the constellation and drive capacity growth [9][70] - The company is investing in new initiatives, including IoT and terrestrial spectrum, to create a virtuous cycle of innovation and differentiation [25][37] - The company expects to continue growing its wholesale business and expanding its IoT capabilities, supported by a strong financial position [16][18] Other Important Information - The company has a new government services partnership with a minimum revenue commitment of $20 million annually over a 5-year term [11] - The first commercial order for XCOM RAN systems from a major U.S. retailer is expected to be fulfilled in 2024, with potential for material commercial scale [15] Q&A Session Summary Question: Initial deployment for a major U.S.-based retailer and Band 53 spectrum [38] - The company is working on multi-band radio units to support Band 53, which will be a competitive differentiator for private network customers [55] - The value of the spectrum will be demonstrated through its integration with XCOM RAN technology, creating significant opportunities [57] Question: Terrestrial spectrum lease and Nokia radios [44] - The Nokia deployment is mission-critical, with a focus on reliability in complex environments, and future potential for increased throughput [45] - No incremental CapEx is required for the network services agreement, as the existing satellite constellation can support the growth [64] Question: Future weighting of the four pillars of value [48] - Management is particularly excited about the terrestrial and IoT opportunities, with the potential to scale significantly in the IoT space [66][67] Question: FCC's initial proposal on satellite-to-ground spectrum [49] - The company is monitoring the FCC's proposal and sees potential for new services, leveraging its global spectrum and relationships with cellular operators [69] Question: Reporting of spectrum lease revenue and stock compensation [58] - Spectrum lease revenue will initially be reported in other service revenues and broken out if it becomes material [58] - Stock compensation is elevated in 2023 and will remain so for the next two years due to performance-based restricted stock units [43]

[Overall Performance & Outlook](index=1&type=section&id=Overall%20Performance%20%26%20Outlook) [2023 Performance Overview](index=1&type=section&id=2023%20Performance%20Overview) Globalstar achieved a record year in 2023 with total revenue exceeding $224 million, a 50%+ increase from 2022, driven by wholesale capacity services and Commercial IoT. Operating income and Adjusted EBITDA also significantly improved, enabling funding for growth initiatives and key operational achievements - Globalstar achieved a record year in 2023, with total revenue of **$224 million**, an increase of over **50% from 2022**[3](index=3&type=chunk)[6](index=6&type=chunk) - Revenue growth was primarily driven by increases in wholesale capacity services and Commercial IoT[3](index=3&type=chunk) - Operational achievements include receiving an order for multiple XCOM RAN systems, generating revenue from a Band 53 deployment, executing a new government services contract, and remaining on track for new satellite launches in 2025[6](index=6&type=chunk) [2024 Financial Outlook](index=1&type=section&id=2024%20Financial%20Outlook) Globalstar projects continued revenue growth for 2024, with total revenue expected to be between $225 million and $250 million, and an Adjusted EBITDA margin of approximately 50% 2024 Financial Outlook | Metric | 2024 Guidance | | :------------------ | :------------------- | | Total revenue | $225 million - $250 million | | Adjusted EBITDA margin | Approximately 50% | [Operational Highlights](index=1&type=section&id=OPERATIONAL%20HIGHLIGHTS) [Terrestrial Spectrum Agreement](index=1&type=section&id=Terrestrial%20Spectrum%20Agreement) In 2023, Globalstar supported a Band 53 spectrum deployment with Nokia, securing an annual reservation fee from an end-user prior to build-out, which is expected to convert into a long-term lease arrangement - Supported a Band 53 spectrum deployment opportunity with Nokia in 2023[4](index=4&type=chunk) - The end user is paying to reserve the spectrum prior to planned build-out, with the agreement expected to convert into a long-term lease[4](index=4&type=chunk) - **$0.6 million** recognized in Q4 2023 as an annual reservation fee associated with this spectrum manager lease agreement[10](index=10&type=chunk) [Network Services Agreement](index=1&type=section&id=Network%20Services%20Agreement) Globalstar executed a five-year agreement with a government services company for mission-critical satellite network services, following a one-year $2.5 million proof of concept. The agreement includes escalating annual minimum revenue commitments up to $20 million by the fifth year, with potential for significant upside - Executed a five-year agreement with a government services company to utilize Globalstar's satellite network for a mission-critical service[5](index=5&type=chunk) - The agreement includes a one-year **$2.5 million** proof of concept phase, which commenced in February 2024[5](index=5&type=chunk) - If implemented, the agreement contains annual minimum revenue commitments escalating to **$20 million** during the fifth year, with potential for significant upside through a revenue share arrangement[5](index=5&type=chunk) [XCOM RAN System Deployment](index=1&type=section&id=XCOM%20RAN%20System%20Deployment) Globalstar received its first commercial order for multiple XCOM RAN systems from a major U.S. retailer for warehouse automation, validating the technology's importance in demanding environments. This initial $1.5 million order has potential for material commercial scale - Received the first customer order for delivery of multiple XCOM RAN systems to support warehouse automation for a major U.S. retailer[6](index=6&type=chunk) - The initial customer order is valued at **$1.5 million** and has the potential for material commercial scale[6](index=6&type=chunk) - The XCOM technology, licensed by Globalstar in 2023, enhances wireless performance, including spectral efficiency, and expands the ability to develop commercial applications utilizing Band 53[7](index=7&type=chunk) [Fourth Quarter 2023 Financial Review](index=2&type=section&id=FOURTH%20QUARTER%20FINANCIAL%20REVIEW) [Total Revenue (Q4)](index=2&type=section&id=Total%20Revenue%20(Q4)) Total revenue for Q4 2023 increased by $11.1 million, or 27%, to $52.4 million compared to Q4 2022, primarily driven by higher service revenue Q4 Total Revenue | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :----------- | :-------------------- | :-------------------- | :--------- | :--------- | | Total Revenue | $52.4 | $41.3 | +$11.1 | +27% | [Service Revenue (Q4)](index=2&type=section&id=Service%20Revenue%20(Q4)) Service revenue grew by $12.6 million, or 35%, in Q4 2023, mainly due to a significant increase in wholesale capacity service revenue, alongside growth in Commercial IoT, while legacy services declined Q4 Service Revenue Breakdown | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :---------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Service Revenue | $49.0 | $36.4 | +$12.6 | +35% | | Wholesale capacity | $25.7 | $12.3 | +$13.4 | >100% | | Commercial IoT | $6.0 | $5.1 | +$0.9 | +17% | | Legacy services | N/A | N/A | N/A | -11% | - Commercial IoT service revenue increased **17%** due to growth in both subscribers and ARPU, with gross subscriber activations up **8%** over the last twelve months[11](index=11&type=chunk) - Service revenue associated with legacy services was down **11%** due to fewer subscribers, although SPOT gross activations were up nearly **18%** in Q4 2023[12](index=12&type=chunk) [Subscriber Equipment Sales (Q4)](index=2&type=section&id=Subscriber%20Equipment%20Sales%20(Q4)) Revenue from subscriber equipment sales decreased by 30% in Q4 2023 due to lower Commercial IoT equipment volume compared to a prior-year backlog fulfillment, though SPOT equipment sales volume saw a substantial increase Q4 Subscriber Equipment Sales | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :--------- | | Subscriber Equipment Sales | $3.5 | $4.9 | -30% | - Decrease was due to a lower volume of Commercial IoT equipment, as Q4 2022 included a large backlog of orders fulfilled[13](index=13&type=chunk) - SPOT equipment sales volume increased over **90%** from Q4 2022[14](index=14&type=chunk) [Loss from Operations (Q4)](index=2&type=section&id=Loss%20from%20Operations%20(Q4)) Loss from operations increased by 29%, or $2.7 million, in Q4 2023, primarily due to higher operating expenses, including stock-based compensation, cost of services, and MG&A, partially offset by increased revenue Q4 Loss from Operations | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :------------------ | :-------------------- | :-------------------- | :--------- | :--------- | | Loss from Operations | $(12.0) | $(9.3) | $(2.7) | +29% | - Higher operating expenses were driven by increased stock-based compensation (XCOM License Agreement), cost of services (gateway operating costs, non-cash SSA costs), and MG&A (SSA, legal/professional fees, XCOM executive hires)[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) [Net Loss (Q4)](index=4&type=section&id=Net%20Loss%20(Q4)) Net loss for Q4 2023 was $15.1 million, an increase from $5.3 million in Q4 2022, influenced by higher operating losses, the absence of a prior-year debt extinguishment gain, and other non-operating factors Q4 Net Loss | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | | :------- | :-------------------- | :-------------------- | | Net Loss | $(15.1) | $(5.3) | - Impacted by increased operating losses, the absence of a prior-year gain on extinguishment of debt, higher income tax expense, unfavorable changes in exchange rates, and a loss on equity issuance, partially offset by lower interest expense[19](index=19&type=chunk) [Adjusted EBITDA (Q4)](index=4&type=section&id=Adjusted%20EBITDA%20(Q4)) Adjusted EBITDA increased by 37% to $25.1 million for Q4 2023, driven by higher revenue partially offset by an increase in operating expenses (excluding non-cash or non-recurring items) Q4 Adjusted EBITDA | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | Change ($) | Change (%) | | :-------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Adjusted EBITDA | $25.1 | $18.3 | +$6.8 | +37% | [Full Year 2023 Financial Review](index=4&type=section&id=ANNUAL%20FINANCIAL%20REVIEW) [Total Revenue (FY)](index=4&type=section&id=Total%20Revenue%20(FY)) Total revenue for FY 2023 increased by $75.3 million, or 51%, to $223.8 million, primarily driven by significant growth in service revenue and, to a lesser extent, subscriber equipment sales FY Total Revenue | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change ($) | Change (%) | | :----------- | :-------------------- | :-------------------- | :--------- | :--------- | | Total Revenue | $223.8 | $148.5 | +$75.3 | +51% | - The increase was driven by higher service revenue (**+$72.1 million**) and higher revenue from subscriber equipment sales (**+$3.2 million**)[21](index=21&type=chunk) [Service Revenue (FY)](index=4&type=section&id=Service%20Revenue%20(FY)) Service revenue significantly improved in FY 2023, increasing by $74.2 million year-over-year, mainly due to the strong performance of wholesale capacity services and continued growth in Commercial IoT FY Service Revenue | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change ($) | | :-------------- | :-------------------- | :-------------------- | :--------- | | Service Revenue | $204.2 | $132.1 | +$72.1 | - Wholesale capacity services increased **$74.2 million** year over year, following the launch of services in November 2022, including **$6.5 million** in nonrecurring revenue[22](index=22&type=chunk) - Commercial IoT service revenue increased **$3.4 million**, or **17%**, due to increases in average subscribers and ARPU[23](index=23&type=chunk) [Subscriber Equipment Sales (FY)](index=4&type=section&id=Subscriber%20Equipment%20Sales%20(FY)) Revenue from subscriber equipment sales increased by 19% in FY 2023, driven by higher sales volumes of both Commercial IoT (17%) and SPOT products (77%) FY Subscriber Equipment Sales | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :--------- | | Subscriber Equipment Sales | $19.6 | $16.4 | +19% | - Sales volume of Commercial IoT products increased **17%** and SPOT products increased **77%**[24](index=24&type=chunk) [Loss from Operations (FY)](index=4&type=section&id=Loss%20from%20Operations%20(FY)) Loss from operations substantially improved to $0.2 million in FY 2023 from $221.0 million in FY 2022, primarily due to the absence of large non-cash impairment charges recorded in the prior year FY Loss from Operations | Metric | FY 2023 (in millions) | FY 2022 (in millions) | | :------------------ | :-------------------- | :-------------------- | | Loss from Operations | $(0.2) | $(221.0) | - Improvement was due to non-cash impairment charges recorded in 2022 that did not recur in 2023 (e.g., **$166.5 million** reduction in value of long-lived assets in 2022)[25](index=25&type=chunk)[41](index=41&type=chunk) - Excluding non-cash charges, loss from operations improved due to higher revenue partially offset by higher operating expenses (cost of services, stock-based compensation, MG&A, cost of subscriber equipment)[25](index=25&type=chunk)[26](index=26&type=chunk) [Net Loss (FY)](index=5&type=section&id=Net%20Loss%20(FY)) Net loss significantly decreased to $24.7 million in FY 2023 from $256.9 million in FY 2022, mainly due to the improved operating loss, lower interest expense, and favorable foreign currency fluctuations FY Net Loss | Metric | FY 2023 (in millions) | FY 2022 (in millions) | | :------- | :-------------------- | :-------------------- | | Net Loss | $(24.7) | $(256.9) | - Variance primarily due to improvement in loss from operations, lower interest expense (payoff of 2019 Facility Agreement, higher capitalized interest), and favorable foreign currency fluctuations[27](index=27&type=chunk) - Offsetting factors included a loss on extinguishment of debt and a loss on equity issuance[27](index=27&type=chunk) [Adjusted EBITDA (FY)](index=5&type=section&id=Adjusted%20EBITDA%20(FY)) Adjusted EBITDA more than doubled in FY 2023, increasing by $59.3 million, or 103%, to $116.7 million, primarily driven by the substantial increase in total revenue FY Adjusted EBITDA | Metric | FY 2023 (in millions) | FY 2022 (in millions) | Change ($) | Change (%) | | :-------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Adjusted EBITDA | $116.7 | $57.4 | +$59.3 | +103% | [Liquidity and Capital Structure](index=5&type=section&id=Liquidity%20and%20Capital%20Structure) [Liquidity Overview](index=5&type=section&id=Liquidity%20Overview) Globalstar's cash and cash equivalents increased to $56.7 million at year-end 2023, with operating and financing cash flows funding significant capital expenditures for network upgrades and new satellites Cash and Cash Equivalents | Metric | Dec 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :------------------------ | :------------------------- | :------------------------- | | Cash and cash equivalents | $56.7 | $32.1 | - Net cash flows generated from operations were **$74.3 million** in 2023, and net cash flows from financing activities were **$125.8 million**[29](index=29&type=chunk) - Capital expenditures totaled **$175.6 million** in 2023, primarily for network upgrades and new satellites[29](index=29&type=chunk)[30](index=30&type=chunk) [Debt Structure](index=5&type=section&id=Debt%20Structure) Total principal debt increased to $398.7 million at year-end 2023, reflecting strategic changes in capital structure including new funding agreements and note issuances, partially offset by debt payoffs Total Principal Debt | Metric | Dec 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :-------------------- | :------------------------- | :------------------------- | | Total principal debt | $398.7 | $202.8 | - Increase due to proceeds under the 2023 Funding Agreement, changes in the classification of the 2021 Funding Agreement, and issuance of 13% Notes[32](index=32&type=chunk) - Offset by the payoff of the 2019 Facility Agreement and vendor financing amounts[32](index=32&type=chunk) [Company Information & Disclosures](index=6&type=section&id=Company%20Information%20%26%20Disclosures) [About Globalstar, Inc.](index=7&type=section&id=About%20Globalstar%2C%20Inc.) Globalstar is an international telecom infrastructure provider offering reliable satellite and terrestrial connectivity services, leveraging its LEO satellite constellation, Band 53/n53 terrestrial spectrum, and XCOM RAN products for various applications including secure data transmission, private networks, and IoT solutions - Globalstar is an international telecom infrastructure provider offering reliable satellite and terrestrial connectivity services[35](index=35&type=chunk) - Key assets include its LEO satellite constellation for secure data transmission and its Band 53/n53 terrestrial spectrum for private networks[35](index=35&type=chunk) - Offers XCOM RAN products for significant capacity gains in dense wireless deployments and next-generation IoT hardware and software products[35](index=35&type=chunk) [Conference Call Details](index=6&type=section&id=CONFERENCE%20CALL%20INFORMATION) Globalstar will host a conference call on February 28, 2024, at 9:00 a.m. ET to discuss its results, with webcast and teleconference options available via registration - Conference call to discuss results will be held on Wednesday, February 28, 2024, at **9:00 a.m. Eastern Time (ET)**[34](index=34&type=chunk) - Available via webcast and teleconference, with registration required for live Q&A participation[34](index=34&type=chunk) [Safe Harbor Statement](index=7&type=section&id=Safe%20Harbor%20Language%20for%20Globalstar%20Releases) The press release contains forward-looking statements subject to inherent risks and uncertainties that may cause actual results to differ materially, and Globalstar disclaims any obligation to update these statements, advising readers to consult SEC filings for additional risk factors - The press release contains "forward-looking statements" subject to risks and uncertainties that may cause actual results to differ materially[38](index=38&type=chunk) - Globalstar undertakes no obligation to update any such statements[38](index=38&type=chunk) - Additional information on factors that could influence financial results is included in SEC filings (Form 10-K, 10-Q, 8-K)[38](index=38&type=chunk) [Consolidated Financial Statements & Metrics](index=8&type=section&id=Consolidated%20Financial%20Statements%20%26%20Metrics) [Consolidated Statements of Operations](index=8&type=section&id=GLOBALSTAR%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents Globalstar's unaudited consolidated statements of operations for the three and twelve months ended December 31, 2023 and 2022, detailing key revenue, expense, and net loss figures - Unaudited consolidated statements of operations for the three and twelve months ended December 31, 2023 and 2022[40](index=40&type=chunk)[41](index=41&type=chunk) Consolidated Statements of Operations (Key Figures) | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | FY 2023 (in thousands) | FY 2022 (in thousands) | | :------------------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Service revenue | $48,951 | $36,375 | $204,196 | $132,068 | | Subscriber equipment sales | $3,458 | $4,931 | $19,612 | $16,436 | | **Total revenue** | **$52,409** | **$41,306** | **$223,808** | **$148,504** | | Loss from operations | $(11,993) | $(9,320) | $(165) | $(221,029) | | Net loss | $(15,078) | $(5,335) | $(24,718) | $(256,915) | | Loss per common share (Basic) | $(0.01) | $0.00 | $(0.02) | $(0.14) | [Consolidated Balance Sheets](index=9&type=section&id=GLOBALSTAR%2C%20INC.%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides Globalstar's unaudited consolidated balance sheets as of December 31, 2023 and 2022, outlining the company's assets, liabilities, and stockholders' equity - Unaudited consolidated balance sheets as of December 31, 2023 and 2022[42](index=42&type=chunk)[43](index=43&type=chunk) Consolidated Balance Sheets (Key Figures) | Metric | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------------------------------------ | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $56,744 | $32,082 | | Total current assets | $142,653 | $81,244 | | Property and equipment, net | $624,002 | $560,371 | | Total assets | $924,309 | $738,469 | | Total current liabilities | $175,908 | $197,076 | | Long-term debt | $325,700 | $132,115 | | Total stockholders' equity | $378,979 | $314,771 | | Total liabilities and stockholders' equity | $924,309 | $738,469 | [Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA](index=10&type=section&id=GLOBALSTAR%2C%20INC.%20RECONCILIATION%20OF%20GAAP%20NET%20INCOME%20(LOSS)%20TO%20NON-GAAP%20ADJUSTED%20EBITDA) This section provides a reconciliation of GAAP net income (loss) to non-GAAP Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022, along with definitions and management's rationale for using this supplemental performance measure - Unaudited reconciliation of GAAP net income (loss) to non-GAAP Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022[45](index=45&type=chunk)[46](index=46&type=chunk) - Adjusted EBITDA excludes non-cash compensation expense, reduction in the value of assets, foreign exchange (gains)/losses, and certain other non-cash or non-recurring charges[46](index=46&type=chunk) Adjusted EBITDA Reconciliation (Key Figures) | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | FY 2023 (in thousands) | FY 2022 (in thousands) | | :------------------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net loss | $(15,078) | $(5,335) | $(24,718) | $(256,915) | | EBITDA | $10,580 | $22,027 | $77,617 | $(131,985) | | **Adjusted EBITDA** | **$25,095** | **$18,301** | **$116,717** | **$57,396** | [Schedule of Selected Operating Metrics](index=11&type=section&id=GLOBALSTAR%2C%20INC.%20SCHEDULE%20OF%20SELECTED%20OPERATING%20METRICS) This section presents selected unaudited operating metrics, including revenue by service type, average subscribers, and average monthly revenue per user (ARPU) for Duplex, SPOT, and Commercial IoT services for the three and twelve months ended December 31, 2023 and 2022 - Unaudited schedule of selected operating metrics for the three and twelve months ended December 31, 2023 and 2022[49](index=49&type=chunk)[50](index=50&type=chunk) Average Subscribers | Service | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------- | :-------- | :-------- | :-------- | :-------- | | Duplex | 31,338 | 38,822 | 33,884 | 40,913 | | SPOT | 254,464 | 271,658 | 260,141 | 272,088 | | Commercial IoT | 492,143 | 454,805 | 481,859 | 442,060 | Average Monthly Revenue Per User (ARPU) | Service | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------- | :------ | :------ | :------ | :------ | | Duplex | $62.16 | $61.13 | $63.78 | $59.52 | | SPOT | $13.73 | $13.65 | $14.15 | $13.99 | | Commercial IoT | $4.05 | $3.76 | $3.95 | $3.68 |

PART I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) Globalstar's unaudited interim condensed consolidated financial statements for Q3 2023 include operations, balance sheets, cash flows, and detailed notes on key accounting events [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Globalstar achieved a significant turnaround in Q3 2023, moving from a **$186.6 million** operating loss to a **$2.0 million** operating income, driven by a **53%** revenue increase and reduced net loss Q3 & Nine Months 2023 vs 2022 Statement of Operations Highlights (In thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$57,683** | **$37,626** | **$171,399** | **$107,198** | | Service Revenue | $53,643 | $33,301 | $155,245 | $95,693 | | Income (loss) from operations | $2,017 | $(186,641) | $11,828 | $(211,709) | | Net loss | $(6,169) | $(204,361) | $(9,640) | $(251,580) | | Net loss per common share (Basic & Diluted) | $0.00 | $(0.11) | $(0.01) | $(0.14) | - The significant improvement in operating income for both the three and nine-month periods in 2023 is largely attributable to the absence of the **$166 million** reduction in the value of long-lived assets recorded in Q3 2022[11](index=11&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$910.6 million** and total liabilities grew to **$527.2 million** by September 30, 2023, driven by property, equipment, and increased long-term debt Balance Sheet Highlights (In thousands) | Metric | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $64,136 | $32,082 | | Total current assets | $143,638 | $81,244 | | Property and equipment, net | $612,911 | $560,371 | | **Total assets** | **$910,612** | **$738,469** | | Current portion of long-term debt | $32,200 | $0 | | Long-term debt | $307,130 | $132,115 | | **Total liabilities** | **$527,246** | **$423,698** | | **Total stockholders' equity** | **$383,366** | **$314,771** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities more than doubled to **$68.6 million**, while investing activities used **$142.4 million** and financing activities provided **$105.9 million**, reflecting debt issuances and satellite procurement Cash Flow Summary (In thousands) | Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,556 | $31,705 | | Net cash used in investing activities | $(142,385) | $(25,306) | | Net cash provided by (used in) financing activities | $105,902 | $(5,886) | | **Net increase in cash** | **$32,054** | **$445** | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Financial%20Statements) Notes detail the August 2023 XCOM License Agreement, resulting in **$30.6 million** goodwill, a surge in wholesale capacity revenue, and major debt restructuring including **$200 million** in Senior Notes - In August 2023, the Company entered into an Intellectual Property License Agreement with XCOM Labs, Inc., acquiring an exclusive license and other assets for **60.6 million shares** of common stock, valued at approximately **$68.7 million**; the transaction was accounted for as a business combination, resulting in the recognition of **$26.0 million** in developed intellectual property and **$30.6 million** in goodwill[30](index=30&type=chunk)[31](index=31&type=chunk)[35](index=35&type=chunk) Disaggregation of Revenue (In thousands) | Revenue Source | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Service Revenue** | **$53,643** | **$33,301** | **$155,245** | **$95,693** | | *Subscriber services* | *$25,675* | *$25,447* | *$70,672* | *$71,028* | | *Wholesale capacity services* | *$27,517* | *$6,972* | *$83,406* | *$22,640* | | **Total Subscriber Equipment Sales** | **$4,040** | **$4,325** | **$16,154** | **$11,505** | | **Total Revenue** | **$57,683** | **$37,626** | **$171,399** | **$107,198** | - The company completed significant debt restructuring in 2023, including: issuing **$200 million** of **13% Senior Notes** due 2029, entering a new 2023 Funding Agreement for up to **$252 million**, and fully repaying its 2019 Facility Agreement, which resulted in a **$10.4 million** loss on extinguishment of debt[63](index=63&type=chunk)[74](index=74&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - Thermo, the company's principal owner, provides significant support, including guaranteeing the 2023 Funding Agreement, holding **$136.7 million** of the Series A Preferred Stock, and leasing the company its headquarters[113](index=113&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) MD&A discusses significant revenue growth from wholesale capacity services, the strategic XCOM Labs acquisition, and major debt restructuring impacting liquidity and capital resources [Overview and Recent Developments](index=27&type=section&id=Overview%20and%20Recent%20Developments) Globalstar focuses on MSS, Commercial IoT, and terrestrial spectrum monetization, with the August 2023 XCOM Labs license agreement being a key development for wireless spectrum technologies - In August 2023, the company entered into a significant Intellectual Property License Agreement with XCOM Labs to acquire exclusive rights to its technologies for wireless spectrum innovations, including its coordinated multi-point radio system (XCOMP)[131](index=131&type=chunk) - The company is actively pursuing international terrestrial authorizations for its 2.4 GHz spectrum, having already received them in countries like Brazil, Canada, South Africa, and Spain[144](index=144&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q3 2023 total revenue increased **53%** due to a **$20.5 million** surge in wholesale capacity services, while operating expenses decreased significantly due to the absence of a **$166.0 million** asset impairment charge - Wholesale capacity service revenue was the primary growth driver, increasing by **$20.5 million** in Q3 2023 and **$60.8 million** in the first nine months of 2023 compared to the same periods in 2022, due to consideration earned under Service Agreements which commenced in November 2022[158](index=158&type=chunk) - Duplex service revenue continued to decline (down **12%** in Q3) as the company no longer manufactures Duplex devices and focuses on IoT and wholesale services; SPOT service revenue also saw a slight decrease (**3%** in Q3) due to fewer average subscribers[155](index=155&type=chunk)[156](index=156&type=chunk) - Commercial IoT service revenue grew **36%** in Q3 2023, driven by a **26%** increase in gross subscriber activations over the preceding twelve months and higher ARPU[157](index=157&type=chunk) - Total operating expenses decreased mainly because of a one-time **$166.0 million** reduction in the value of long-lived Duplex assets and an **$8.5 million** inventory write-down recorded in Q3 2022, which were not repeated in 2023[161](index=161&type=chunk)[165](index=165&type=chunk)[169](index=169&type=chunk) - A loss on extinguishment of debt of **$10.4 million** was recorded in Q1 2023 following the full repayment of the 2019 Facility Agreement[172](index=172&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with cash at **$64.1 million**, capital structure altered by **$200 million** Senior Notes and **$87.7 million** from a new funding agreement, used for debt repayment and satellite construction Change in Debt and Vendor Financing (In millions) | Date | Principal Amount | | :--- | :--- | | December 31, 2022 | $202.8 | | September 30, 2023 | $375.4 | - Key financing activities in 2023 included issuing **$200 million** of 2023 **13% Notes**, establishing a 2023 Funding Agreement for up to **$252 million** (with an initial draw of **$87.7 million**), and reclassifying the 2021 Funding Agreement to debt[181](index=181&type=chunk)[184](index=184&type=chunk)[187](index=187&type=chunk)[189](index=189&type=chunk) - Cash used in investing activities increased to **$142.4 million** from **$25.3 million** year-over-year, primarily due to **$110.5 million** in payments to MDA for the new satellite constellation[181](index=181&type=chunk) - The company is now paying quarterly cash dividends on its Series A Preferred Stock, totaling **$7.9 million** in the first nine months of 2023[123](index=123&type=chunk)[195](index=195&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Globalstar faces foreign currency exchange risk from international sales in Canadian dollars, Brazilian reais, and euros, but does not use hedging instruments - The company's primary market risk is foreign currency exchange risk from sales denominated in Canadian dollars, Brazilian reais, and euros[199](index=199&type=chunk) - Globalstar does not currently use derivative hedging instruments to manage its foreign currency exposure[199](index=199&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting identified - Management concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level[203](index=203&type=chunk) - No changes occurred during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[205](index=205&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings.) No material legal proceedings were reported during the period - There are no legal proceedings to report[207](index=207&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors.) A new risk factor highlights potential failure to achieve strategic objectives from the XCOM Labs transaction and the new CEO's integration - A new risk factor was added concerning the potential failure to achieve strategic objectives from the XCOM transaction and the integration of the new CEO, which could harm growth and profitability[208](index=208&type=chunk) [Other Information](index=40&type=section&id=Item%205.%20Other%20Information.) Board member Timothy E. Taylor entered a new Rule 10b5-1 trading plan on September 28, 2023, for the sale of **3.16 million** common shares - On September 28, 2023, board member Timothy E. Taylor entered into a Rule 10b5-1 trading plan for the sale of **3.16 million shares** of common stock, terminating in September 2025[210](index=210&type=chunk) [Exhibits](index=41&type=section&id=Item%206.%20Exhibits.) Exhibits include CEO/CFO certifications, XBRL data, and incorporated key corporate documents like the CEO's employment agreement and the XCOM License Agreement - Exhibits filed include CEO/CFO certifications and XBRL data; key agreements like the CEO's employment contract and the XCOM License Agreement are incorporated by reference[212](index=212&type=chunk)

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents Globalstar's unaudited interim condensed consolidated financial statements and management's analysis of financial condition and results of operations [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents Globalstar, Inc.'s unaudited interim condensed consolidated financial statements, including statements of operations, balance sheets, stockholders' equity, and cash flows for the periods ended June 30, 2023, along with accompanying notes. Key financial highlights include significant revenue growth, a shift from operating loss to income, and a substantial increase in cash and long-term debt due to new financing agreements and satellite procurement [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20(LOSS)) This statement details Globalstar's financial performance, including revenue, operating income, and net income (loss) for the specified periods Three Months Ended June 30, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change | | :-------------------------------- | :----- | :----- | :----- | | Total Revenue | $55,072 | $36,800 | +$18,272 | | Service Revenue | $48,648 | $33,048 | +$15,600 | | Subscriber Equipment Sales | $6,424 | $3,752 | +$2,672 | | Income (loss) from operations | $2,620 | $(11,356) | +$13,976 | | Net income (loss) | $9 | $(26,757) | +$26,766 | | Basic Net loss per common share | $0.00 | $(0.01) | +$0.01 | Six Months Ended June 30, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change | | :-------------------------------- | :----- | :----- | :----- | | Total Revenue | $113,716 | $69,572 | +$44,144 | | Service Revenue | $101,602 | $62,392 | +$39,210 | | Subscriber Equipment Sales | $12,114 | $7,180 | +$4,934 | | Income (loss) from operations | $9,811 | $(25,068) | +$34,879 | | Net income (loss) | $(3,471) | $(47,219) | +$43,748 | | Basic Net loss per common share | $0.00 | $(0.03) | +$0.03 | [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This statement provides a snapshot of Globalstar's assets, liabilities, and equity as of the specified dates As of June 30, 2023 vs December 31, 2022 (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $65,334 | $32,082 | +$33,252 | | Total current assets | $121,002 | $81,244 | +$39,758 | | Property and equipment, net | $605,502 | $560,371 | +$45,131 | | Total assets | $832,439 | $738,469 | +$93,970 | | Current portion of long-term debt | $29,800 | $— | +$29,800 | | Vendor financing | $— | $59,575 | -$59,575 | | Total current liabilities | $173,776 | $197,076 | -$23,300 | | Long-term debt | $306,786 | $132,115 | +$174,671 | | Total liabilities and stockholders' equity | $832,439 | $738,469 | +$93,970 | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) This statement outlines changes in Globalstar's stockholders' equity, including capital and retained deficit, for the specified period Changes in Stockholders' Equity (January 1, 2023 to June 30, 2023, in thousands) | Metric | Balance Jan 1, 2023 | Balance Jun 30, 2023 | Change | | :-------------------------------- | :------------------ | :------------------- | :----- | | Total Stockholders' Equity | $314,771 | $315,366 | +$595 | | Additional Paid-In Capital | $2,345,612 | $2,352,414 | +$6,802 | | Retained Deficit | $(2,040,264) | $(2,043,735) | -$3,471 | | Accumulated Other Comprehensive Income | $9,242 | $6,506 | -$2,736 | - The company recognized **$6,897 thousand** in additional paid-in capital related to the fair value of the Thermo guarantee associated with the 2023 Funding Agreement during the second quarter of 2023[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This statement details Globalstar's cash flows from operating, investing, and financing activities for the specified periods Six Months Ended June 30, 2023 vs 2022 (in thousands) | Cash Flow Activity | 2023 | 2022 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net cash provided by operating activities | $42,993 | $20,771 | +$22,222 | | Net cash used in investing activities | $(124,636) | $(22,392) | -$102,244 | | Net cash provided by financing activities | $114,822 | $449 | +$114,373 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $33,252 | $(1,163) | +$34,415 | - Significant increase in cash used in investing activities primarily due to **$108.7 million** in payments under the satellite procurement agreement in 2023, compared to no such payments in 2022[23](index=23&type=chunk) - Net cash provided by financing activities surged due to proceeds from the **2023 13% Notes ($190 million)** and the **2023 Funding Agreement ($87.7 million)**, partially offset by debt repayments and dividends[23](index=23&type=chunk) [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20UNAUDITED%20INTERIM%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures supporting Globalstar's interim condensed consolidated financial statements [1. BASIS OF PRESENTATION](index=9&type=section&id=1.%20BASIS%20OF%20PRESENTATION) This note describes Globalstar's business operations and the accounting principles applied in preparing the financial statements - Globalstar, Inc. operates as a Mobile Satellite Services (MSS) business, providing voice, data, and wholesale capacity services through its global satellite network[27](index=27&type=chunk) - The Company adopted ASU 2022-04 (Liabilities — Supplier Finance Programs) effective January 1, 2023, revising disclosures for supplier finance program obligations[31](index=31&type=chunk) [2. REVENUE](index=10&type=section&id=2.%20REVENUE) This note disaggregates Globalstar's revenue by service and equipment type, highlighting key drivers of change Service Revenue Disaggregation (in thousands) | Service Type | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :------------------------ | :------ | :------ | :------- | :------- | | Duplex | $6,359 | $6,936 | $12,110 | $13,082 | | SPOT | $11,039 | $11,536 | $22,353 | $22,791 | | Commercial IoT | $5,356 | $5,038 | $10,534 | $9,708 | | Wholesale capacity services | $25,478 | $8,825 | $55,889 | $15,668 | | Engineering and other services | $416 | $713 | $716 | $1,143 | | **Total service revenue** | **$48,648** | **$33,048** | **$101,602** | **$62,392** | Subscriber Equipment Sales Disaggregation (in thousands) | Equipment Type | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :------------------------ | :------ | :------ | :------- | :------- | | Duplex | $17 | $143 | $36 | $273 | | SPOT | $2,513 | $1,674 | $4,439 | $3,149 | | Commercial IoT | $3,901 | $1,908 | $7,713 | $3,714 | | Other | $(7) | $27 | $(74) | $44 | | **Total subscriber equipment sales** | **$6,424** | **$3,752** | **$12,114** | **$7,180** | - Wholesale capacity services revenue significantly increased by **$16.7 million (QoQ)** and **$40.2 million (YoY)** due to service fees under the Service Agreement with Apple, which commenced in November 2022, and revenue recognized for satellite construction[32](index=32&type=chunk)[33](index=33&type=chunk)[146](index=146&type=chunk) - In February 2023, Partner (Apple) agreed to pay Globalstar **$6.5 million** for performance obligations completed in prior periods, recognized as revenue in Q1 2023[33](index=33&type=chunk)[147](index=147&type=chunk) Accounts Receivable, net of allowance for credit losses (in thousands) | Type | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Subscriber accounts receivable | $20,816 | $14,850 | | Wholesale capacity accounts receivable | $7,481 | $7,234 | | Agency agreement accounts receivable | $1,891 | $4,245 | | **Total accounts receivable (short-term)** | **$30,188** | **$26,329** | | Long-term wholesale capacity accounts receivable | $16,100 | $16,100 | | **Total accounts receivable (short-term and long-term)** | **$46,288** | **$42,429** | - The Company re-characterized **$88.0 million** previously recorded as deferred revenue from the 2021 Funding Agreement to debt during Q2 2023, following an amendment to the Service Agreements[43](index=43&type=chunk)[44](index=44&type=chunk) [3. LEASES](index=14&type=section&id=3.%20LEASES) This note provides details on Globalstar's operating and finance lease liabilities, terms, and discount rates Lease Liabilities (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Total operating lease liabilities | $30,447 | $30,382 | | Total finance lease liabilities | $809 | $87 | Weighted-Average Lease Term and Discount Rate | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Finance leases (term) | 0.6 years | 4.6 years | | Operating Leases (term) | 10.2 years | 10.1 years | | Finance leases (discount rate) | 8.7 % | 10.2 % | | Operating leases (discount rate) | 8.6 % | 8.5 % | - Total lease cost increased to **$3.143 million** for the six months ended June 30, 2023, from **$2.325 million** in the prior year, driven by higher operating lease costs[46](index=46&type=chunk) [4. PROPERTY AND EQUIPMENT](index=16&type=section&id=4.%20PROPERTY%20AND%20EQUIPMENT) This note details the composition of Globalstar's property and equipment, including space and ground components, and construction in progress Property and Equipment (in thousands) | Component | June 30, 2023 | December 31, 2022 | | :------------------------ | :------------ | :---------------- | | Space component | $1,246,343 | $1,246,343 | | Ground component | $99,585 | $102,567 | | Construction in progress (Space component) | $190,611 | $110,068 | | **Total property and equipment, net** | **$605,502** | **$560,371** | - Construction in progress for the space component increased significantly, reflecting costs incurred under the **$327 million** satellite procurement agreement with MDA, with **$166.0 million** incurred as of June 30, 2023[53](index=53&type=chunk) [5. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS](index=17&type=section&id=5.%20LONG-TERM%20DEBT%20AND%20OTHER%20FINANCING%20ARRANGEMENTS) This note outlines Globalstar's debt structure, including new funding agreements, notes, and repayments Debt and Vendor Financing (in thousands) | Debt Type | Principal Amount (Jun 30, 2023) | Carrying Value (Jun 30, 2023) | Principal Amount (Dec 31, 2022) | Carrying Value (Dec 31, 2022) | | :------------------------ | :------------------------------ | :---------------------------- | :------------------------------ | :---------------------------- | | 2023 Funding Agreement | $87,729 | $75,838 | $— | $— | | 2021 Funding Agreement | $87,950 | $77,935 | $— | $— | | 2023 13% Notes | $200,000 | $182,813 | $— | $— | | 2019 Facility Agreement | $— | $— | $143,213 | $132,115 | | Vendor financing | $— | $— | $59,575 | $59,575 | | **Total debt and vendor financing** | **$375,679** | **$336,586** | **$202,788** | **$191,690** | | Less: current portion | $29,800 | $29,800 | $59,575 | $59,575 | | **Long-term debt and vendor financing** | **$345,879** | **$306,786** | **$143,213** | **$132,115** | - The 2023 Funding Agreement provides up to **$252 million** from Partner to fund **50%** of satellite costs, with the first payment of **$87.7 million** received in April 2023. This agreement includes covenants and a guarantee from Thermo[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - The 2021 Funding Agreement, totaling **$94.2 million**, was re-characterized from deferred revenue to debt in Q2 2023, granting Partner a first-priority lien on Company assets[64](index=64&type=chunk)[177](index=177&type=chunk) - Globalstar issued **$200.0 million** in **13% Senior Notes due 2029** in March 2023, with interest payable **4% cash** and **9% PIK**. Proceeds were used to repay the 2019 Facility Agreement[67](index=67&type=chunk)[68](index=68&type=chunk)[72](index=72&type=chunk) - The 2019 Facility Agreement was fully repaid in March 2023, resulting in a **$10.4 million loss on extinguishment of debt**[72](index=72&type=chunk)[73](index=73&type=chunk) - Vendor financing with MDA, totaling **$59.6 million** at December 31, 2022, was fully repaid in Q1 2023[75](index=75&type=chunk)[76](index=76&type=chunk) - The Company issued **149,425 shares of 7.0% Series A Preferred Stock** in November 2022, with a fair value of **$105.3 million**, in exchange for outstanding 2019 Facility Agreement loans[77](index=77&type=chunk) [6. DERIVATIVES](index=21&type=section&id=6.%20DERIVATIVES) This note details Globalstar's derivative instruments, including embedded derivatives, and their fair value and gain/loss impact Derivative Liabilities (in thousands) | Derivative Type | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Embedded derivative within 2023 Funding Agreement | $(42) | $— | | Compound embedded derivative within 2019 Facility Agreement | $— | $(122) | Derivative Gain (Loss) (in thousands) | Derivative Type | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Embedded derivative within 2023 Funding Agreement | $299 | $— | $299 | $— | | Compound embedded derivative within 2019 Facility Agreement | $— | $(1,242) | $— | $(1,944) | | **Total derivative gain (loss)** | **$299** | **$(1,242)** | **$299** | **$(1,728)** | - The embedded derivative associated with the 2019 Facility Agreement was written off in March 2023 due to its refinancing, while a new embedded derivative from the 2023 Funding Agreement was recognized[84](index=84&type=chunk)[85](index=85&type=chunk) [7. FAIR VALUE MEASUREMENTS](index=22&type=section&id=7.%20FAIR%20VALUE%20MEASUREMENTS) This note describes the valuation methodologies and inputs used for Globalstar's liabilities measured at fair value Liabilities Measured at Fair Value (Level 3, in thousands) | Liability | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Embedded derivative within 2023 Funding Agreement | $(42) | $— | | Compound embedded derivative within 2019 Facility Agreement | $— | $(122) | - The embedded derivative within the 2023 Funding Agreement is valued using a discounted cash flow model, with a discount yield of **8.21%** at June 30, 2023[91](index=91&type=chunk) - The 2023 Funding Agreement's first draw had a fair value of **$76.0 million**, and the Thermo guarantee embedded feature was valued at **$6.9 million**[93](index=93&type=chunk)[94](index=94&type=chunk) [8. COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines Globalstar's significant contractual obligations, including network capacity allocation and satellite procurement - The Service Agreements require Globalstar to allocate **85%** of network capacity to Partner, provide all necessary resources, prioritize services, maintain quality standards, and maintain minimum liquidity of **$30 million**[102](index=102&type=chunk) - Globalstar entered into a satellite procurement agreement with MDA for **17 new satellites** at an initial contract price of **$327 million**, expected to launch by 2025, with Partner funding **95%** of approved capital expenditures[101](index=101&type=chunk) [9. RELATED PARTY TRANSACTIONS](index=25&type=section&id=9.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses Globalstar's transactions and relationships with related parties, including Thermo Companies - Thermo Companies, controlled by Globalstar's Executive Chairman, is the principal owner and largest stockholder[103](index=103&type=chunk) - Thermo guarantees certain obligations under the 2023 Funding Agreement, for which Globalstar will issue **10.0 million warrants** to Thermo[108](index=108&type=chunk) - Globalstar paid Thermo dividends of **$1.2 million** (Nov 15-Dec 31, 2022) and **$2.4 million** for each of Q1 and Q2 2023 on Series A Preferred Stock[106](index=106&type=chunk) [10. NET LOSS PER SHARE](index=26&type=section&id=10.%20NET%20LOSS%20PER%20SHARE) This note presents the calculation of Globalstar's basic and diluted net loss per common share, considering preferred stock dividends Net Loss Per Common Share (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Net income (loss) | $9 | $(26,757) | $(3,471) | $(47,219) | | Effect of Series A Preferred Stock dividends | $(2,644) | $— | $(5,259) | $— | | Adjusted net loss attributable to common shareholders | $(2,635) | $(26,757) | $(8,730) | $(47,219) | | Weighted average shares outstanding - basic and diluted | 1,813,393 | 1,799,886 | 1,812,617 | 1,798,784 | | **Net loss per common share - basic and diluted** | **$0.00** | **$(0.01)** | **$0.00** | **$(0.03)** | - Potential common stock of **18.2 million (Q2 2023)** and **19.0 million (YTD 2023)** shares were excluded from diluted EPS calculation due to their anti-dilutive effect, including a portion of **49.1 million warrants** issued to Partner[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on Globalstar's financial condition and operational results, highlighting significant revenue growth driven by wholesale capacity services, strategic investments in IoT and satellite replenishment, and changes in debt structure. The company experienced improved operating income and reduced net loss, while managing liquidity through new financing agreements and cash flow generation [Overview](index=27&type=section&id=Overview) This section provides an overview of Globalstar's business model, strategic investments, subscriber base, and terrestrial broadband capabilities - Globalstar provides Mobile Satellite Services (MSS) including voice, data, and wholesale capacity services through its global satellite network, supporting IoT data transmissions and connectivity in remote areas[117](index=117&type=chunk) - The company is investing in IoT-enabled devices, including the Realm Enablement Suite, and is acquiring **17 new satellites** for **$327 million** from MDA, expected to launch by 2025, with Partner funding **95%** of approved capital expenditures[119](index=119&type=chunk)[120](index=120&type=chunk)[124](index=124&type=chunk) - As of June 30, 2023, Globalstar had approximately **766,000 subscribers**, with Commercial IoT devices increasing significantly. The Partner under Service Agreements accounted for **49% of revenue** for the six months ended June 30, 2023[126](index=126&type=chunk)[127](index=127&type=chunk) - Globalstar has terrestrial broadband authority for its licensed **2.4 GHz spectrum (Band 53/n53)**, which has been integrated into 3GPP standards and supported by partners like Apple and Qualcomm, enhancing its device ecosystem[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Performance Indicators](index=30&type=section&id=Performance%20Indicators) This section analyzes key financial performance metrics, including revenue disaggregation, subscriber trends, operating expenses, and non-operating items Total Revenue (in thousands) | Period | 2023 | 2022 | Change | | :------------------------ | :----- | :----- | :----- | | Three Months Ended June 30 | $55,072 | $36,800 | +50% | | Six Months Ended June 30 | $113,716 | $69,572 | +63% | - Wholesale capacity service revenue increased significantly by **$16.7 million (QoQ)** and **$40.2 million (YoY)** due to service fees from the Service Agreement with Apple and revenue from satellite construction[146](index=146&type=chunk) - Commercial IoT service revenue increased **6% (QoQ)** and **9% (YoY)** driven by a **21% increase** in gross subscriber activations, while Duplex and SPOT service revenues decreased due to lower subscriber counts[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - Subscriber equipment sales for SPOT and Commercial IoT increased by **50% and 50% (QoQ)**, and **41% and 109% (YoY)** respectively, as production delays from component shortages in 2022 were resolved[149](index=149&type=chunk)[150](index=150&type=chunk) Average Number of Subscribers and Monthly ARPU (Q2 2023 vs Q2 2022) | Metric | Q2 2023 | Q2 2022 | Change (Subscribers) | Change (ARPU) | | :------------------------ | :------ | :------ | :------------------- | :------------ | | Duplex Subscribers | 34,974 | 42,723 | -18.1% | +12.0% | | Duplex ARPU | $60.61 | $54.12 | | | | SPOT Subscribers | 261,734 | 277,815 | -5.8% | +1.6% | | SPOT ARPU | $14.06 | $13.84 | | | | Commercial IoT Subscribers | 466,609 | 433,578 | +7.6% | -1.0% | | Commercial IoT ARPU | $3.83 | $3.87 | | | - Total operating expenses increased to **$52.5 million (QoQ)** and **$103.9 million (YoY)** due to higher cost of services (new gateway leases, IT maintenance, personnel), increased subscriber equipment sales costs, and higher MG&A (stock-based compensation, legal fees)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[155](index=155&type=chunk) - Depreciation, amortization, and accretion expenses decreased by **$2.2 million (QoQ)** and **$4.1 million (YoY)** due to a net reduction in property and equipment following the re-assessment and write-down of second-generation Duplex assets in September 2022[156](index=156&type=chunk) - A **$10.4 million loss on extinguishment of debt** was recorded in Q1 2023 due to the full repayment of the 2019 Facility Agreement[157](index=157&type=chunk) - Net interest expense decreased by **$2.1 million (QoQ)** and **$9.6 million (YoY)** due to lower gross interest costs from the 2019 Facility Agreement repayment, partially offset by new interest from the 2023 13% Notes and Funding Agreements[158](index=158&type=chunk)[159](index=159&type=chunk) - Derivative gains of **$0.3 million** were recorded in Q2 and YTD 2023, compared to losses of **$1.2 million (QoQ)** and **$1.7 million (YoY)** in 2022, primarily due to changes in discount rates and cash flow timing for the 2023 Funding Agreement derivative[160](index=160&type=chunk)[161](index=161&type=chunk) - Foreign currency gains of **$2.0 million (QoQ)** and **$3.9 million (YoY)** were recorded in 2023 due to the weakening of the U.S. dollar[164](index=164&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, changes in debt structure, and cash flow movements from operating, investing, and financing activities - Principal liquidity sources include cash on hand (**$65.3 million** as of June 30, 2023), cash flows from operations, and proceeds from the 2023 Funding Agreement[165](index=165&type=chunk)[166](index=166&type=chunk) - Total debt and vendor financing increased by **$144.9 million** to **$336.6 million** at June 30, 2023, driven by the issuance of **$200.0 million** in 2023 13% Notes and the recognition of the 2021 and 2023 Funding Agreements as debt, offset by repayments of the 2019 Facility Agreement and vendor financing[167](index=167&type=chunk) Cash Flows for the six months ended June 30, 2023 vs 2022 (in thousands) | Activity | 2023 | 2022 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net cash provided by operating activities | $42,993 | $20,771 | +$22,222 | | Net cash used in investing activities | $(124,636) | $(22,392) | -$102,244 | | Net cash provided by financing activities | $114,822 | $449 | +$114,373 | | Net increase (decrease) in cash | $33,252 | $(1,163) | +$34,415 | - Operating cash flow increased due to higher wholesale capacity service fees. Investing cash flow increased significantly due to **$108.7 million** in payments for satellite procurement. Financing cash flow surged from new debt issuances, partially offset by debt repayments and **$6.6 million** in Series A Preferred Stock dividends[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) [Off-Balance Sheet Transactions](index=37&type=section&id=Off-Balance%20Sheet%20Transactions) This section confirms the absence of material off-balance sheet transactions impacting the company's financial position - The Company has no material off-balance sheet transactions[186](index=186&type=chunk) [Recently Issued Accounting Pronouncements](index=37&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section addresses the company's review of new accounting standards and their anticipated impact on financial statements - The Company reviews new accounting standards but has not identified any that will have a material impact on its condensed consolidated financial statements[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Globalstar is exposed to foreign currency exchange risk due to international sales denominated in various currencies, primarily Canadian dollars, Brazilian reais, and euros. The company mitigates this risk by seeking U.S. dollar payments and spot market foreign currency purchases, but does not currently use hedging instruments. Operations in highly inflationary economies like Argentina are not considered significant - Globalstar's international sales are primarily denominated in Canadian dollars, Brazilian reais, and euros, exposing the company to currency exchange risk[188](index=188&type=chunk) - The Company manages foreign currency risk by requiring U.S. dollar payments when possible and purchasing foreign currencies on the spot market, but does not currently use hedging instruments[188](index=188&type=chunk) - Operations in Argentina, a highly inflationary economy, are not significant to consolidated operations[189](index=189&type=chunk) [Item 4. Controls and Procedures.](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2023, concluding they were effective. No material changes to internal control over financial reporting occurred during the quarter - As of June 30, 2023, management concluded that the Company's disclosure controls and procedures were effective, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[191](index=191&type=chunk)[192](index=192&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the quarter ended June 30, 2023[194](index=194&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings.](index=39&type=section&id=Item%201.%20Legal%20Proceedings.) There are no legal proceedings to report - The Company reported no legal proceedings[196](index=196&type=chunk) [Item 1A. Risk Factors.](index=39&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors previously disclosed in the Company's 2022 Annual Report on Form 10-K - No material changes to the risk factors disclosed in Part I. Item 1A. 'Risk Factors' of the 2022 Annual Report[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This item is not applicable for the reporting period - This item is not applicable[198](index=198&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) There are no defaults upon senior securities to report - The Company reported no defaults upon senior securities[198](index=198&type=chunk) [Item 4. Mine Safety Disclosures.](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable for the reporting period - This item is not applicable[198](index=198&type=chunk) [Item 5. Other Information.](index=39&type=section&id=Item%205.%20Other%20Information.) Rebecca S. Clary, VP and CFO, entered into a Rule 10b5-1 trading plan on June 28, 2023, for the sale of 300,000 shares of common stock, terminating on September 3, 2024. No other directors or executive officers adopted or terminated such plans during the quarter - Rebecca S. Clary, VP and CFO, adopted a Rule 10b5-1 trading plan on June 28, 2023, to sell **300,000 shares** of common stock, effective until September 3, 2024[198](index=198&type=chunk) - No other directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the fiscal quarter ended June 30, 2023[198](index=198&type=chunk) [Item 6. Exhibits.](index=40&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL taxonomy documents Key Exhibits Filed | Exhibit Number | Description | | :------------- | :---------- | | 3.1* | Third Amended and Restated Certificate of Incorporation | | 3.2* | Fourth Amended and Restated Bylaws | | 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 | [Signatures](index=41&type=section&id=Signatures) The report was duly signed on August 3, 2023, by David B. Kagan, Chief Executive Officer, and Rebecca S. Clary, Chief Financial Officer - The report was signed by David B. Kagan, Chief Executive Officer, and Rebecca S. Clary, Chief Financial Officer, on August 3, 2023[205](index=205&type=chunk)

Globalstar, Inc. (NYSE:GSAT) Q2 2023 Earnings Conference Call August 3, 2023 9:00 AM ET Company Participants James Monroe - Executive Chairman Timothy Taylor - VP, Finance, Business Operations & Strategy and Director Rebecca Clary - VP & CFO David Kagan - CEO Kyle Pickens - VP, Strategy and Communications Conference Call Participants Simon Flannery - Morgan Stanley George Sutton - Craig-Hallum Michael Crawford - B. Riley Securities Operator Good morning, and welcome to the Globalstar Second Quarter 2023 Ear ...

Globalstar, Inc. (NYSE:GSAT) Q1 2023 Earnings Call Transcript May 5, 2023 9:00 AM ET Company Participants Jay Monroe - Executive Chairman Rebecca Clary - Vice President and Chief Financial Officer David Kagan - Chief Executive Officer Timothy Taylor - Vice President, Finance, Business Operations and Strategy Kyle Pickens - Vice President of Strategy and Communications Conference Call Participants Mike Crawford - B. Riley Securities Landon Park - Morgan Stanley George Sutton - Craig Hallum Capital Lyman Dela ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) The financial statements reveal Globalstar's significant revenue growth and operational turnaround in Q1 2023, alongside balance sheet shifts and cash flow impacts from strategic investments and debt refinancing [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Globalstar's Q1 2023 operations show a significant revenue surge to $58.6 million, transforming an operating loss into income despite a one-time debt extinguishment loss Q1 2023 vs Q1 2022 Statement of Operations (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Total Revenue** | **$58,644** | **$32,772** | | Service Revenue | $52,954 | $29,344 | | Subscriber Equipment Sales | $5,690 | $3,428 | | **Income (Loss) from Operations** | **$7,191** | **($13,712)** | | Loss on Extinguishment of Debt | ($10,403) | - | | **Net Loss** | **($3,480)** | **($20,462)** | | Net Loss per Common Share (Basic & Diluted) | $0.00 | ($0.01) | - Total revenue increased by **79%** year-over-year, driven by a substantial **80%** growth in service revenue[13](index=13&type=chunk) - The company achieved a significant operational turnaround, posting an income from operations of **$7.2 million** compared to a loss of **$13.7 million** in the same period last year[13](index=13&type=chunk) - A one-time loss on debt extinguishment of **$10.4 million** significantly impacted the bottom line, leading to a net loss despite positive operating income[13](index=13&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Globalstar's balance sheet as of March 31, 2023, shows total assets increasing to $844.6 million, driven by property and prepaid satellite costs, while liabilities grew due to new long-term debt Balance Sheet Summary (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | **$72,715** | **$81,244** | | Cash and cash equivalents | $20,487 | $32,082 | | **Total Assets** | **$844,555** | **$833,395** | | **Total Current Liabilities** | **$162,694** | **$197,076** | | Vendor financing | $0 | $59,575 | | **Long-Term Debt** | **$182,243** | **$132,115** | | **Total Liabilities** | **$534,701** | **$518,624** | | **Total Stockholders' Equity** | **$309,854** | **$314,771** | - Cash and cash equivalents decreased by **$11.6 million** during the quarter to **$20.5 million**[16](index=16&type=chunk) - The company eliminated its **$59.6 million** in vendor financing, but long-term debt increased by **$50.1 million** due to the issuance of new **13%** Senior Notes[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Globalstar's Q1 2023 cash flows show strong operating cash generation, offset by significant investing outflows for satellite procurement and financing activities from debt refinancing Cash Flow Summary (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$22,805** | **$7,569** | | **Net cash used in investing activities** | **($71,575)** | **($10,451)** | | Payments under satellite procurement agreement | ($59,575) | - | | **Net cash provided by financing activities** | **$37,148** | **$8** | | Proceeds from 13% Notes Agreement | $190,000 | - | | Principal and Interest payments of 2019 Facility | ($148,281) | - | | **Net decrease in cash** | **($11,595)** | **($2,785)** | - Investing activities saw a significant cash outflow of **$71.6 million**, dominated by a **$59.6 million** payment related to the satellite procurement agreement[21](index=21&type=chunk) - Financing activities were marked by a major refinancing, with **$190 million** in proceeds from new notes used to repay approximately **$148.3 million** of the 2019 Facility Agreement[21](index=21&type=chunk) [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) The notes detail a surge in wholesale capacity revenue, major debt refinancing, a new $252 million prepayment agreement for satellite construction, and commitments under service agreements - Revenue from Wholesale capacity services, associated with the Apple Inc. Service Agreements, increased dramatically to **$30.4 million** in Q1 2023 from **$6.8 million** in Q1 2022[29](index=29&type=chunk) - The company entered into a satellite procurement agreement with MDA for **17** new satellites at an initial contract price of **$327 million**, with launches expected in 2025[52](index=52&type=chunk)[87](index=87&type=chunk) - On March 31, 2023, the company issued **$200 million** of **13%** Senior Notes due 2029 and used the proceeds to repay all outstanding obligations under its 2019 Facility Agreement[55](index=55&type=chunk)[60](index=60&type=chunk) - A Prepayment Agreement was established with its key partner, providing **$252 million** to fund the new satellite construction and launch costs, replacing the need for third-party financing[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Globalstar's Q1 2023 revenue growth driven by the Apple partnership, improved operating income, and strengthened liquidity through a new prepayment agreement and debt refinancing [Overview](index=22&type=section&id=Overview) Globalstar's overview highlights its MSS offerings, strategic procurement of 17 new satellites for $327 million, and advancements in terrestrial spectrum use, with a key partner driving 52% of Q1 2023 revenue - The company's key partner under the Service Agreements (identified as Apple in Note 2) accounted for **52%** of total revenue in Q1 2023, up from **21%** in Q1 2022[113](index=113&type=chunk) - Globalstar is acquiring **17** new satellites from MDA for **$327 million** to replenish its constellation, with launches expected by the end of 2025. Its partner has agreed to make service payments equal to **95%** of these approved capital expenditures[110](index=110&type=chunk) - The company is pursuing terrestrial use of its licensed spectrum, designated as **5G Band n53**, which is supported by partners like Nokia and Qualcomm and is enabled in certain cellular devices[116](index=116&type=chunk)[117](index=117&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Globalstar's Q1 2023 results show a 79% revenue increase to $58.6 million, primarily from wholesale capacity services, leading to a positive operating income despite higher expenses and a debt extinguishment loss Revenue by Type (in thousands) | Revenue Type | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Total Service Revenue** | **$52,954** | **$29,344** | | Subscriber services | $22,243 | $22,071 | | Wholesale capacity services | $30,411 | $6,843 | | **Total Equipment Revenue** | **$5,690** | **$3,428** | | **Total Revenue** | **$58,644** | **$32,772** | Subscriber & ARPU Data | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Total Average Subscribers** | **765,160** | **757,293** | | Duplex Subscribers | 36,616 | 43,565 | | SPOT Subscribers | 266,067 | 276,863 | | Commercial IoT Subscribers | 462,077 | 423,519 | | **ARPU (monthly)** | | | | Duplex | $52.35 | $47.03 | | SPOT | $14.17 | $13.55 | | Commercial IoT | $3.74 | $3.68 | - Wholesale capacity service revenue increased by **$23.6 million**, primarily due to service fees under the Service Agreement which commenced in November 2022 and a one-time **$6.5 million** payment recognized in Q1 2023[132](index=132&type=chunk)[133](index=133&type=chunk) - MG&A expenses increased by **$4.1 million**, partly due to a **$1.0 million** accrual reversal in Q1 2022 that lowered the prior year's expense base, as well as higher personnel and legal fees in Q1 2023[139](index=139&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Globalstar's liquidity is supported by operating cash flow and a new $252 million prepayment agreement for satellite construction, following a major debt refinancing that impacted cash balances - The company's cash position decreased from **$32.1 million** at year-end 2022 to **$20.5 million** at the end of Q1 2023[149](index=149&type=chunk) - A Prepayment Agreement with its partner will provide **$252 million** to fund satellite procurement, launch, and insurance costs, replacing the previous requirement to raise third-party financing. The first payment of **$87.7 million** was received in April 2023[163](index=163&type=chunk) Q1 2023 Cash Flow Summary (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,805 | $7,569 | | Net cash used in investing activities | ($71,575) | ($10,451) | | Net cash provided by financing activities | $37,148 | $8 | | **Net decrease in cash** | **($11,595)** | **($2,785)** | - The company completed a major refinancing, issuing **$200 million** of **13%** Senior Notes and using the proceeds to fully repay its 2019 Facility Agreement and its vendor financing arrangement[157](index=157&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Globalstar faces foreign currency exchange risk from international sales in various currencies, mitigating it by prioritizing U.S. dollar payments and spot market purchases without hedging instruments - The company's primary market risk is foreign currency exchange risk from sales denominated in Canadian dollars, Brazilian reais, and euros[171](index=171&type=chunk) - Globalstar mitigates currency risk by requiring U.S. dollar payments where feasible and does not currently use derivative hedging instruments[171](index=171&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that Globalstar's disclosure controls and procedures were effective as of March 31, 2023, despite changes from a new ERP system - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level[175](index=175&type=chunk) - The implementation of a new ERP system in Q1 2022 resulted in changes to internal controls, but management concluded these changes did not materially affect, or were not reasonably likely to materially affect, the company's internal control over financial reporting[177](index=177&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings.) The company reported no legal proceedings for the period - There were no legal proceedings to report[179](index=179&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to the company's risk factors were reported since the filing of the 2022 Annual Report - No material changes to the company's risk factors were reported since the filing of the 2022 Annual Report[180](index=180&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits.) Key exhibits filed include the Purchase Agreement and Indenture for the March 2023 note issuance, a Prepayment Agreement, and an amendment to the Key Terms Agreement - Key exhibits filed include the Purchase Agreement and Indenture for the March 2023 note issuance, a Prepayment Agreement, and an amendment to the Key Terms Agreement[184](index=184&type=chunk)

Globalstar, Inc. (NYSE:GSAT) Q4 2022 Earnings Conference Call March 7, 2022 9:00 AM ET Company Participants Jay Monroe - Executive Chairman Rebecca Clary - Vice President and Chief Financial Officer David Kagan - Chief Executive Officer Timothy Taylor - Vice President, Finance, Business Operations and Strategy Kyle Pickens - Vice President of Strategy and Communications Conference Call Participants Simon Flannery - Morgan Stanley George Sutton - Craig-Hallum Capital Mike Crawford - B. Riley Securities Jaso ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 OR ☐ 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) (State or Other Jurisdiction of Incorporation or Organi ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) Presents Globalstar's unaudited interim consolidated financial statements, detailing operations, balance sheets, equity, cash flows, and key notes [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20%28LOSS%29) Consolidated Statements of Operations (Three Months Ended September 30) | Metric (in thousands) | 2022 | 2021 | YoY Change (%) | | :-------------------- | :--- | :--- | :------------- | | Service revenue | $33,301 | $27,848 | 19.6% | | Subscriber equipment sales | $4,325 | $4,766 | -9.3% | | Total revenue | $37,626 | $32,614 | 15.4% | | Total operating expenses | $224,267 | $47,328 | 373.9% | | Loss from operations | $(186,641) | $(14,714) | 1168.5% | | Net loss | $(204,361) | $(30,885) | 561.6% | | Basic Net loss per common share | $(0.11) | $(0.02) | 450.0% | Consolidated Statements of Operations (Nine Months Ended September 30) | Metric (in thousands) | 2022 | 2021 | YoY Change (%) | | :-------------------- | :--- | :--- | :------------- | | Service revenue | $95,693 | $76,551 | 25.0% | | Subscriber equipment sales | $11,505 | $13,271 | -13.3% | | Total revenue | $107,198 | $89,822 | 19.3% | | Total operating expenses | $318,907 | $139,804 | 128.1% | | Loss from operations | $(211,709) | $(49,982) | 323.6% | | Net loss | $(251,580) | $(88,667) | 183.7% | | Basic Net loss per common share | $(0.14) | $(0.05) | 180.0% | [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Consolidated Balance Sheet (as of September 30, 2022 vs. December 31, 2021) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total assets | $746,538 | $814,106 | $(67,568) | | Total current liabilities | $146,943 | $61,565 | $85,378 | | Long-term debt | $262,175 | $237,932 | $24,243 | | Total stockholders' equity | $135,580 | $365,431 | $(229,851) | - Prepaid satellite construction costs and related customer receivable increased significantly from $0 to **$83.2 million**, reflecting new satellite procurement activities[14](index=14&type=chunk) - Deferred revenue (current and non-current) increased substantially from **$25.9 million** to **$53.1 million** (current) and **$112.1 million** to **$171.7 million** (non-current), primarily due to advanced payments for wholesale capacity services under the Service Agreements[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY) Changes in Stockholders' Equity (Nine Months Ended September 30, 2022) | Metric (in thousands) | January 1, 2022 | September 30, 2022 | Change | | :-------------------- | :-------------- | :----------------- | :----- | | Total Stockholders' Equity | $365,431 | $135,580 | $(229,851) | | Net loss | $(1,783,349) (Retained Deficit) | $(2,034,929) (Retained Deficit) | $(251,580) | | Additional Paid-In Capital | $2,146,710 | $2,155,117 | $8,407 | | Accumulated Other Comprehensive Income | $1,890 | $15,212 | $13,322 | - The significant decrease in total stockholders' equity is primarily driven by the net loss of **$204.4 million** for the three months ended September 30, 2022, and **$251.6 million** for the nine months ended September 30, 2022[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Activity (in thousands) | 2022 | 2021 | Change | | :---------------------- | :--- | :--- | :----- | | Net cash provided by operating activities | $31,705 | $107,166 | $(75,461) | | Net cash used in investing activities | $(25,306) | $(30,033) | $4,727 | | Net cash used in financing activities | $(5,886) | $(82,725) | $76,839 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $445 | $(5,649) | $6,094 | - Operating cash flow decreased significantly due to unfavorable working capital changes, despite higher net income after non-cash adjustments. In 2021, working capital was favorably impacted by **$95.5 million** in prepayments from the Partner[180](index=180&type=chunk) - Investing activities saw lower cash usage in 2022 due to gateway upgrades nearing completion, while still funding network upgrades and the launch of the on-ground spare satellite[181](index=181&type=chunk) - Financing activities in 2022 primarily included a **$6.3 million** principal repayment of the 2019 Facility Agreement, a significant reduction compared to 2021 which included **$126.7 million** in 2009 Facility Agreement payments offset by **$43.7 million** from warrant exercises[182](index=182&type=chunk) [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20UNAUDITED%20INTERIM%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [1. Basis of Presentation](index=9&type=section&id=1.%20BASIS%20OF%20PRESENTATION) - Globalstar provides Mobile Satellite Services (MSS) including voice, data, and wholesale capacity through its global satellite network, with Thermo Companies as the principal owner[25](index=25&type=chunk) - Apple Inc. (Partner) announced new satellite-enabled services in September 2022, for which Globalstar will be the satellite operator. The Services are expected to launch in Q4 2022[29](index=29&type=chunk)[31](index=31&type=chunk) - Globalstar terminated second-generation Duplex services in early 2021, making it permanent after the Partner's announcement, leading to a **$174.3 million** reduction in value of related assets in Q3 2022[32](index=32&type=chunk)[33](index=33&type=chunk) [2. Revenue](index=10&type=section&id=2.%20REVENUE) Revenue Disaggregation by Type (Three Months Ended September 30) | Revenue Type (in thousands) | 2022 | 2021 | YoY Change (%) | | :-------------------------- | :--- | :--- | :------------- | | Duplex service | $9,021 | $9,632 | -6.3% | | SPOT service | $11,753 | $11,873 | -1.0% | | Commercial IoT service | $4,673 | $4,458 | 4.8% | | Wholesale capacity services | $6,972 | $1,301 | 435.9% | | Total service revenue | $33,301 | $27,848 | 19.6% | | Total subscriber equipment sales | $4,325 | $4,766 | -9.3% | | Total revenue | $37,626 | $32,614 | 15.4% | Revenue Disaggregation by Type (Nine Months Ended September 30) | Revenue Type (in thousands) | 2022 | 2021 | YoY Change (%) | | :-------------------------- | :--- | :--- | :------------- | | Duplex service | $22,103 | $23,530 | -6.0% | | SPOT service | $34,544 | $33,996 | 1.6% | | Commercial IoT service | $14,381 | $13,443 | 6.9% | | Wholesale capacity services | $22,640 | $3,999 | 466.1% | | Total service revenue | $95,693 | $76,551 | 25.0% | | Total subscriber equipment sales | $11,505 | $13,271 | -13.3% | | Total revenue | $107,198 | $89,822 | 19.3% | - Wholesale capacity services revenue saw a substantial increase, driven by satellite network access and related services under the Service Agreements with Apple Inc.[35](index=35&type=chunk)[150](index=150&type=chunk) Accounts Receivable (as of September 30, 2022 vs. December 31, 2021) | Receivable Type (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | | :----------------------------- | :----------- | :----------- | :----- | | Subscriber accounts receivable | $13,954 | $12,825 | $1,129 | | Wholesale capacity accounts receivable | $12,727 | $1,861 | $10,866 | | Agency agreement accounts receivable | $2,913 | $6,496 | $(3,583) | | Long-term wholesale capacity accounts receivable | $69,646 | $0 | $69,646 | | Total accounts receivable | $99,240 | $21,182 | $78,058 | Contract Liabilities (as of September 30, 2022 vs. December 31, 2021) | Liability Type (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | | :---------------------------- | :----------- | :----------- | :----- | | Short-term contract liabilities | $53,121 | $25,927 | $27,194 | | Long-term contract liabilities | $171,651 | $112,054 | $59,597 | | Total contract liabilities | $224,772 | $137,981 | $86,791 | - Wholesale capacity contract liabilities, particularly advanced payments for services, significantly increased from **$111.3 million** to **$199.9 million**, reflecting ongoing work under the Service Agreements[46](index=46&type=chunk) [3. Leases](index=12&type=section&id=3.%20LEASES) Operating Lease Liabilities (as of September 30, 2022 vs. December 31, 2021) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | | :-------------------- | :----------- | :----------- | :----- | | Right-of-use asset, net | $28,396 | $32,041 | $(3,645) | | Total operating lease liabilities | $28,260 | $31,738 | $(3,478) | - The Company began capitalizing certain lease costs related to the Service Agreements in Q4 2021, which will be amortized over the related performance obligation term[49](index=49&type=chunk) - Additional operating leases for new gateway locations, with an expected impact of approximately **$4.7 million** in right-of-use assets and lease liabilities, were executed but not yet commenced as of September 30, 2022[55](index=55&type=chunk) [4. Property and Equipment](index=15&type=section&id=4.%20PROPERTY%20AND%20EQUIPMENT) Property and Equipment, Net (as of September 30, 2022 vs. December 31, 2021) | Component (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | | :----------------------- | :----------- | :----------- | :----- | | First and second-generation satellites in service | $1,262,254 | $1,195,509 | $66,745 | | Second-generation satellite, on-ground spare | $0 | $32,442 | $(32,442) | | Ground component | $79,848 | $282,268 | $(202,420) | | Construction in progress: Space component | $63,504 | $16,394 | $47,110 | | Construction in progress: Ground component | $16,303 | $33,998 | $(17,695) | | Total property and equipment, net | $532,680 | $672,156 | $(139,476) | - A second-generation on-ground spare satellite was successfully launched in June 2022 and placed into service, contributing **$66.7 million** in costs[56](index=56&type=chunk) - The Company recorded **$161.2 million** in reduction in value of long-lived assets (primarily ground component and construction in progress) during Q3 2022 due to the discontinuation of second-generation Duplex services[59](index=59&type=chunk)[60](index=60&type=chunk) - New satellite construction costs totaled **$13.5 million** in prepaid costs and **$56.4 million** in construction in progress as of September 30, 2022, with **95%** expected to be reimbursed by the Partner[57](index=57&type=chunk) [5. Long-Term Debt and Other Financing Arrangements](index=16&type=section&id=5.%20LONG-TERM%20DEBT%20AND%20OTHER%20FINANCING%20ARRANGEMENTS) Long-Term Debt and Vendor Financing (in thousands) | Debt Type | Sep 30, 2022 (Carrying Value) | Dec 31, 2021 (Carrying Value) | Change | | :-------------------------- | :---------------------------- | :---------------------------- | :----- | | 2019 Facility Agreement | $262,175 | $236,525 | $25,650 | | Vendor financing | $63,765 | $0 | $63,765 | | 8.00% Convertible Senior Notes Issued in 2013 | $0 | $1,407 | $(1,407) | | Total debt and vendor financing | $325,940 | $237,932 | $88,008 | - The 2019 Facility Agreement, maturing in November 2025, had a principal outstanding of **$285.3 million** as of September 30, 2022, and requires mandatory prepayments based on excess cash flow[62](index=62&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - Vendor financing of **$63.8 million** was recorded for the new satellite procurement agreement with MDA, with an amendment in October 2022 extending payment deferrals and introducing **7%** annual interest[65](index=65&type=chunk)[66](index=66&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - The remaining **$1.4 million** principal of the 2013 **8.00%** Convertible Senior Notes was converted into **2.3 million** shares of common stock in Q1 2022, resulting in a net gain of less than **$0.1 million** on extinguishment[68](index=68&type=chunk)[69](index=69&type=chunk) - The Company is actively pursuing new debt financing in Q4 2022 to fund the construction and launch costs for the new satellites, as required by the Service Agreements[67](index=67&type=chunk)[190](index=190&type=chunk) [6. Derivatives](index=18&type=section&id=6.%20DERIVATIVES) Fair Values of Derivative Instruments (in thousands) | Derivative Instrument | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Compound embedded derivative with the 2019 Facility Agreement | $(798) | $484 | | Compound embedded derivative with the 2013 8.00% Notes | $0 | $(1,364) | Derivative Gain (Loss) (in thousands) | Period | 2022 (in thousands) | 2021 (in thousands) | | :----- | :------------------ | :------------------ | | Three Months Ended Sep 30 | $662 | $229 | | Nine Months Ended Sep 30 | $(1,066) | $(2,210) | - The 2013 **8.00%** Notes derivative is no longer outstanding after conversion in Q1 2022. The 2019 Facility Agreement derivative's fair value changed from an asset to a liability, driven by increased probability of refinancing[73](index=73&type=chunk)[78](index=78&type=chunk)[82](index=82&type=chunk) [7. Fair Value Measurements](index=18&type=section&id=7.%20FAIR%20VALUE%20MEASUREMENTS) - The Company's derivatives are classified as Level 3 fair value measurements, requiring significant unobservable inputs[78](index=78&type=chunk) Reduction in the Value of Assets (in thousands) | Asset Type | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :----------------------------- | | Prepaid licenses and royalties (current) | $183 | $183 | | Prepaid licenses and royalties (non-current) | $4,514 | $4,514 | | Internally developed technology and software | $1,271 | $1,271 | | Spectrum intangible assets | $142 | $667 | | Property and equipment, net | $159,891 | $159,891 | | Grand Total | $166,001 | $166,526 | - A reduction in the value of inventory totaling **$8.5 million** was recorded in Q3 2022 due to the discontinuation of second-generation Duplex products and related prepayments[90](index=90&type=chunk) [8. Commitments and Contingencies](index=21&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) - The Service Agreements with Apple Inc. require Globalstar to allocate **85%** of its network capacity, provide and maintain required resources, prioritize services, and maintain quality standards[93](index=93&type=chunk) - Globalstar is required to refinance all outstanding loans under the 2019 Facility Agreement upon (Thermo's portion) and within **90 days** (other lenders' portion) of the Services commencement[94](index=94&type=chunk) - The Partner may elect to receive warrants to purchase up to **2.64%** of Globalstar's common stock, with an estimated **49.1 million** shares and **$49.8 million** in proceeds[95](index=95&type=chunk)[110](index=110&type=chunk) - The Satellite Procurement Agreement with MDA for **17** new satellites has a total contract price of **$327.0 million**, with **95%** of capital expenditures and certain other costs to be reimbursed by the Partner[97](index=97&type=chunk) [9. Related Party Transactions](index=23&type=section&id=9.%20RELATED%20PARTY%20TRANSACTIONS) - Payables to Thermo and other affiliates were **$0.1 million** as of September 30, 2022, down from **$0.4 million** at December 31, 2021[99](index=99&type=chunk) - Thermo's participation in the 2019 Facility Agreement was **$95.1 million**, with **$9.7 million** in paid-in-kind interest accrued during the nine months ended September 30, 2022[103](index=103&type=chunk) - A lock-up and right of first offer agreement between Partner and Thermo restricts Thermo from transferring Globalstar common stock if it would reduce their holding below **51%** for **5 years** from Service Launch[104](index=104&type=chunk) [10. Pensions and Other Employee Benefits](index=24&type=section&id=10.%20PENSIONS%20AND%20OTHER%20EMPLOYEE%20BENEFITS) - The Company's Retirement Plan was terminated and settled in August 2022, resulting in a **$1.5 million** pension settlement loss[106](index=106&type=chunk)[173](index=173&type=chunk) [11. Loss Per Share](index=24&type=section&id=11.%20LOSS%20PER%20SHARE) Net Loss Per Common Share | Period | Basic & Diluted EPS (2022) | Basic & Diluted EPS (2021) | | :----- | :------------------------- | :------------------------- | | Three Months Ended Sep 30 | $(0.11) | $(0.02) | | Nine Months Ended Sep 30 | $(0.14) | $(0.05) | - Approximately **9.4 million** and **8.8 million** shares of potential common stock were excluded from diluted EPS calculations for the three and nine months ended September 30, 2022, respectively, due to their anti-dilutive effect[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Globalstar's financial condition, operations, and strategic shift towards IoT and wholesale capacity services [Overview](index=26&type=section&id=Overview) - Globalstar provides Mobile Satellite Services (MSS) including voice, data, and wholesale capacity through its global satellite network[115](index=115&type=chunk) - The Company entered a **$327.0 million** agreement to acquire **17** new satellites by 2025, with **95%** of capital expenditures to be reimbursed by Apple Inc. (Partner) under the Service Agreements[116](index=116&type=chunk) - Apple Inc. announced new satellite-enabled services in September 2022, for which Globalstar will be the satellite operator, expected to launch in Q4 2022[118](index=118&type=chunk) [Communications Products and Services](index=26&type=section&id=Communications%20Products%20and%20Services) - Globalstar offers Duplex (two-way voice/data), SPOT (one/two-way messaging/location), Commercial IoT (one-way data), Wholesale Capacity Services (satellite network access for Partner), and Engineering and Other services[119](index=119&type=chunk) - The Company terminated second-generation Duplex services in early 2021, permanently abandoning related assets in Q3 2022 due to a strategic shift towards IoT-enabled devices and the Service Agreements[121](index=121&type=chunk) - New Commercial IoT offerings include the Realm Enablement Suite, featuring Integrity 150 (solar-powered asset tracking) and ST150M (satellite modem module), expanding environmentally friendly initiatives[122](index=122&type=chunk) [Globalstar System](index=27&type=section&id=Globalstar%20System) - The Globalstar System comprises a constellation of Low Earth Orbit (LEO) satellites (second-generation and first-generation) and active ground stations (gateways)[123](index=123&type=chunk)[115](index=115&type=chunk) - Second-generation satellites are designed for longer lifespan, **40%** greater capacity, and lower cost compared to first-generation satellites[123](index=123&type=chunk) - The system utilizes patented CDMA technology for ground network communication and proprietary technology for SPOT and Commercial IoT services, aiming for superior service levels compared to geostationary (GEO) satellites[124](index=124&type=chunk)[125](index=125&type=chunk) [Customers](index=27&type=section&id=Customers) - As of September 30, 2022, Globalstar had approximately **762,000** subscribers across various markets, including recreation, government, oil and gas, and maritime[126](index=126&type=chunk) - Approximately **25,000** subscribers in Russia were removed from the count in Q1 2022 due to service disconnection following the invasion of Ukraine[126](index=126&type=chunk)[146](index=146&type=chunk) - Wholesale capacity revenue is primarily derived from the Partner (Apple Inc.), with intentions to offer remaining satellite capacity to other commercial customers for IoT and other initiatives[127](index=127&type=chunk) [Spectrum and Regulatory Structure](index=28&type=section&id=Spectrum%20and%20Regulatory%20Structure) - Globalstar benefits from a worldwide allocation of radio frequency spectrum, enabling cost-effective global deployment of products and services[128](index=128&type=chunk) - The FCC granted authority in 2017 for terrestrial broadband services over **11.5 MHz** of licensed MSS spectrum, designated as Band 53 by 3GPP, with a 5G variant known as n53 approved in 2020[129](index=129&type=chunk)[130](index=130&type=chunk) - Qualcomm Technologies' Snapdragon X65 modem-RF System includes support for Band n53, significantly expanding the potential device ecosystem, further enhanced by its inclusion in Partner's cellular-enabled devices[131](index=131&type=chunk) [Performance Indicators](index=29&type=section&id=Performance%20Indicators) - Key performance indicators include total revenue, subscriber growth and churn rate, average monthly revenue per user (ARPU), operating income, adjusted EBITDA, and capital expenditures[137](index=137&type=chunk) Average Number of Subscribers and ARPU (Monthly) | Metric | Sep 30, 2022 (Avg Subscribers) | Sep 30, 2021 (Avg Subscribers) | Sep 30, 2022 (ARPU) | Sep 30, 2021 (ARPU) | | :---------------- | :----------------------------- | :----------------------------- | :------------------ | :------------------ | | Duplex | 41,204 | 45,004 | $72.98 | $71.34 | | SPOT | 276,203 | 271,843 | $14.18 | $14.56 | | Commercial IoT | 444,397 | 410,630 | $3.51 | $3.62 | | Total | 762,232 | 754,325 | | | [Revenue Analysis](index=29&type=section&id=Revenue%20Analysis) - Total revenue increased **15%** to **$37.6 million** for the three months and **19%** to **$107.2 million** for the nine months ended September 30, 2022, primarily driven by wholesale capacity services[135](index=135&type=chunk) - Duplex service revenue decreased **6%** for both periods due to an **8-10%** decrease in average subscribers, a trend expected to continue as investments shift to IoT[147](index=147&type=chunk) - Commercial IoT service revenue increased **5-7%** due to an increase in average subscribers (**8%** for three months, **6%** for nine months), despite production delays from component shortages[149](index=149&type=chunk) - Wholesale capacity service revenue surged by **$5.7 million** (three months) and **$18.6 million** (nine months), driven by performance obligations under the Service Agreements, including gateway expansion and Procurement Agreement work[150](index=150&type=chunk) - SPOT equipment sales decreased by **$1.1 million** (three months) and **$2.1 million** (nine months) due to lower sales volume and inventory shortages, with back orders for core products[153](index=153&type=chunk) [Operating Expenses Analysis](index=32&type=section&id=Operating%20Expenses%20Analysis) - Total operating expenses significantly increased to **$224.3 million** (three months) and **$318.9 million** (nine months) in 2022, primarily due to reductions in the value of inventory and long-lived assets[155](index=155&type=chunk) - Cost of services increased by **$1.6 million** (three months) and **$4.9 million** (nine months), driven by higher personnel costs, lease expenses for new teleport leases related to Service Agreements, and professional fees for ERP system implementation[157](index=157&type=chunk) - A reduction in the value of inventory of **$8.5 million** was recorded in Q3 2022 due to the strategic shift away from second-generation Duplex assets[159](index=159&type=chunk) - Marketing, General and Administrative (MG&A) expenses increased by **$1.5 million** (three months) and **$0.8 million** (nine months), mainly due to higher personnel costs (including stock-based compensation and bonuses) and professional/legal fees, partially offset by lower subscriber acquisition costs[161](index=161&type=chunk) - A **$166.0 million** reduction in the value of long-lived assets was recorded in Q3 2022, primarily for second-generation Duplex assets (gateways, related technology, prepaid licenses, and royalties) deemed no longer recoverable[164](index=164&type=chunk) [Other (Expense) Income Analysis](index=34&type=section&id=Other%20%28Expense%29%20Income%20Analysis) - In 2021, a **$5.0 million** gain on extinguishment of debt was recorded from the forgiveness of the Paycheck Protection Program (PPP) loan, with no similar activity in 2022[166](index=166&type=chunk) - Net interest income and expense decreased by **$3.8 million** (three months) and **$9.5 million** (nine months) in 2022, primarily due to higher capitalized interest[167](index=167&type=chunk) - Derivative gains of **$0.7 million** (three months) and losses of **$1.1 million** (nine months) were recorded in 2022, driven by changes in the valuation of embedded features in debt instruments, particularly the 2019 Facility Agreement[169](index=169&type=chunk) - Foreign currency losses increased by **$4.6 million** (three months) and **$8.7 million** (nine months) in 2022, due to the strengthening of the U.S. dollar[172](index=172&type=chunk) - A **$1.5 million** pension settlement loss was recorded in August 2022 upon the settlement of the Company's remaining pension liability[173](index=173&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - Principal near-term liquidity requirements include operating costs, capital expenditures, and repayment of vendor financing for satellite procurement[174](index=174&type=chunk) - Primary liquidity sources are cash on hand, cash flows from operations, and vendor financing, with potential future sources including warrant exercises and new debt/equity financings[175](index=175&type=chunk) - Cash and cash equivalents were **$14.7 million** as of September 30, 2022, slightly up from **$14.3 million** at December 31, 2021[176](index=176&type=chunk) - Total debt and vendor financing increased by **$88.0 million** to **$325.9 million** as of September 30, 2022, mainly due to **$63.8 million** in vendor financing draws and a higher carrying value of the 2019 Facility Agreement[176](index=176&type=chunk)[177](index=177&type=chunk) - The Company is required to maintain minimum liquidity of **$10.0 million** under the Service Agreements[175](index=175&type=chunk) [Off-Balance Sheet Transactions](index=37&type=section&id=Off-Balance%20Sheet%20Transactions) - The Company has no material off-balance sheet transactions[192](index=192&type=chunk) [Recently Issued Accounting Pronouncements](index=37&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - The Company has not identified any recently issued accounting standards that will have a material impact on its condensed consolidated financial statements[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Discusses Globalstar's exposure to foreign currency and interest rate risks, and its management strategies - Globalstar's international sales are primarily denominated in Canadian dollars, Brazilian reais, and euros, exposing it to foreign currency exchange risk[195](index=195&type=chunk) - The Company reduces currency risk by requiring USD payments and purchasing foreign currencies on the spot market, but does not currently use hedging instruments[195](index=195&type=chunk) - Future refinancing of vendor financing may expose the Company to the risk of rising interest rates if borrowings bear floating rates[196](index=196&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management evaluated disclosure controls and procedures, confirming effectiveness despite ERP system changes - As of September 30, 2022, the Company's disclosure controls and procedures were deemed effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[199](index=199&type=chunk) - The implementation of a new ERP system in Q1 2022 led to changes in reporting processes and internal control over financial reporting, automating procedures and standardizing business processes, with no adverse effects[201](index=201&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings.) No legal proceedings to report - The Company has no legal proceedings to disclose[202](index=202&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors.) Outlines key risks from global macro-economic conditions, Apple Service Launch uncertainty, and financing challenges - Uncertain global macro-economic and political conditions, including inflation, interest rates, and the Russia-Ukraine conflict, could materially adversely affect the Company's operations and financial condition[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - There is no assurance that the Service Launch with Apple Inc. will occur or that expected revenues will be received, as the agreements impose substantial obligations and are terminable[207](index=207&type=chunk) - Volatility in financial markets may impede the Company's ability to access capital markets for required financing (for Service Agreements and Procurement Agreement) during Q4 2022, potentially leading to higher borrowing costs and more stringent terms[208](index=208&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities or use of proceeds to report - This item is not applicable[209](index=209&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) No defaults upon senior securities to report - The Company has no defaults upon senior securities to disclose[209](index=209&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) No mine safety disclosures to report - This item is not applicable[209](index=209&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information.) Updates on vendor financing arrangement, including an October 2022 amendment for payment deferrals and interest - On October 28, 2022, the Company amended its satellite procurement agreement with MDA, extending payment deferral dates and introducing a **7%** annual interest rate on outstanding amounts, with two **$7.0 million** payments due in October and November 2022, and remaining amounts due in December 2022[209](index=209&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits.) Lists exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL taxonomy - Exhibits include the Third Amended and Restated Certificate of Incorporation, Fourth Amended and Restated Bylaws, Section 302 and 906 Certifications, and XBRL Instance and Taxonomy documents[210](index=210&type=chunk) [Signatures](index=41&type=section&id=Signatures) Contains signatures of the Principal Executive Officer and Principal Financial Officer, certifying the report - The report is signed by David B. Kagan, Chief Executive Officer, and Rebecca S. Clary, Chief Financial Officer, on November 3, 2022[215](index=215&type=chunk)