[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 [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) Globalstar presents unaudited condensed consolidated financial statements, including operations, balance sheets, equity, and cash flows, with detailed notes [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20(LOSS)) For the three and six months ended June 30, 2022, Globalstar reported an increased net loss, primarily driven by higher operating expenses and foreign currency losses, despite increased total revenue | Metric | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total Revenue | $36,800 | $30,279 | $69,572 | $57,208 | | Loss from operations | $(11,356) | $(16,008) | $(25,068) | $(35,268) | | Total other (expense) income | $(15,280) | $(5,087) | $(21,947) | $(22,083) | | Net loss | $(26,757) | $(21,449) | $(47,219) | $(57,782) | | Basic Net loss per common share | $(0.01) | $(0.01) | $(0.03) | $(0.03) | [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2022, Globalstar's total assets increased to **$944.2 million** from **$814.1 million** at December 31, 2021, primarily due to property and equipment and prepaid satellite construction costs, with total liabilities also increasing due to vendor financing and deferred revenue | Metric | June 30, 2022 (USD thousands) | December 31, 2021 (USD thousands) | | :------------------------------------------ | :----------------------------- | :------------------------------- | | Total current assets | $69,731 | $68,873 | | Property and equipment, net | $708,005 | $672,156 | | Prepaid satellite construction costs and related customer receivable | $94,164 | — | | Total assets | $944,151 | $814,106 | | Total current liabilities | $139,980 | $61,565 | | Long-term debt | $257,451 | $237,932 | | Deferred revenue, net | $182,376 | $112,054 | | Total liabilities and stockholders' equity | $944,151 | $814,106 | | Total stockholders' equity | $329,333 | $365,431 | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) Stockholders' equity decreased from **$365.4 million** at January 1, 2022, to **$329.3 million** at June 30, 2022, primarily due to a net loss and other comprehensive loss, partially offset by restricted stock awards and stock-based compensation | Metric | Balances – January 1, 2022 (USD thousands) | Balances – June 30, 2022 (USD thousands) | | :------------------------------------------------------------------------------------------------ | :---------------------------------------- | :-------------------------------------- | | Total Stockholders' Equity | $365,431 | $329,333 | | Net loss (for the six months ended June 30, 2022) | N/A | $(47,219) | | Other comprehensive income (for the six months ended June 30, 2022) | N/A | $4,636 | | Additional paid-in capital (increase from Jan 1 to June 30, 2022) | $2,146,710 | $2,153,195 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash provided by operating activities significantly decreased to **$20.8 million** for the six months ended June 30, 2022, from **$55.9 million** in the prior year, mainly due to unfavorable working capital changes, while investing activities used more cash and financing activities shifted to a net provision | Metric | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $20,771 | $55,920 | | Net cash used in investing activities | $(22,392) | $(11,998) | | Net cash provided by (used in) financing activities | $449 | $(45,228) | | Net decrease in cash, cash equivalents and restricted cash | $(1,163) | $(1,315) | | Cash, cash equivalents and restricted cash, end of period | $13,141 | $66,708 | - Non-cash financing and investing activities for the six months ended June 30, 2022, included **$73.6 million** for satellite construction assets acquired through a vendor financing arrangement[19](index=19&type=chunk) [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20UNAUDITED%20INTERIM%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes detail accounting policies, estimates, and financial statement line items, covering revenue, leases, property and equipment, long-term debt, derivatives, fair value, commitments, related party transactions, and loss per share [1. Basis of Presentation](index=8&type=section&id=1.%20Basis%20of%20Presentation) Globalstar operates as a single Mobile Satellite Services (MSS) segment, providing global voice and data communications, with interim financial statements prepared under U.S. GAAP - Globalstar's sole reportable segment is its Mobile Satellite Services (MSS) business, offering global voice and data communications[22](index=22&type=chunk) - **Thermo Companies**, through commonly controlled affiliates, is the principal owner and largest stockholder of Globalstar[22](index=22&type=chunk) [2. Revenue](index=9&type=section&id=2.%20Revenue) Total revenue increased for both the three and six months ended June 30, 2022, driven by a significant rise in Engineering and other service revenue, largely from the Terms Agreement, while subscriber equipment sales declined due to inventory shortages | Revenue Type | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :-------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Duplex Service | $6,936 | $7,243 | $13,082 | $13,898 | | SPOT Service | $11,536 | $11,139 | $22,791 | $22,123 | | Commercial IoT Service | $5,038 | $4,504 | $9,708 | $8,985 | | Engineering and other Service | $9,538 | $2,731 | $16,811 | $3,697 | | Total Service Revenue | $33,048 | $25,617 | $62,392 | $48,703 | | Total Subscriber Equipment Sales | $3,752 | $4,662 | $7,180 | $8,505 | | Total Revenue | $36,800 | $30,279 | $69,572 | $57,208 | - Revenue from the Terms Agreement for certain costs incurred by the Company was **$8.8 million** and **$15.7 million** for the three and six months ended June 30, 2022, respectively, significantly higher than the prior year[27](index=27&type=chunk) | Geographical Market | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :-------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | US Service Revenue | $24,875 | $18,228 | $47,163 | $34,671 | | Canada Service Revenue | $4,128 | $4,376 | $7,817 | $8,206 | | Central and South America Service Revenue | $2,248 | $815 | $3,984 | $1,596 | | US Equipment Sales | $2,227 | $2,438 | $3,783 | $4,610 | | Canada Equipment Sales | $879 | $1,118 | $1,677 | $1,867 | - As of June 30, 2022, the Company recorded **$83.4 million** in receivables related to performance obligations under the Terms Agreement, with **$74.8 million** classified as non-current[30](index=30&type=chunk) - Contract liabilities (deferred revenue) totaled **$199.8 million** as of June 30, 2022, including **$75.0 million** for advance payments and **$124.8 million** for network upgrades and satellite construction costs under the Terms Agreement[33](index=33&type=chunk) [3. Leases](index=11&type=section&id=3.%20Leases) Globalstar's operating lease right-of-use assets and liabilities decreased slightly, while finance lease assets and liabilities remained minimal, with total lease cost increasing due to higher operating lease costs | Metric | June 30, 2022 (USD thousands) | December 31, 2021 (USD thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Operating lease right-of-use asset, net | $29,964 | $32,041 | | Total operating lease liabilities | $29,576 | $31,738 | | Total finance lease liabilities | $6 | $9 | | Metric | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :-------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total lease cost | $1,137 | $1,098 | $2,325 | $1,952 | - The weighted-average remaining lease term for operating leases was **10.2 years** at June 30, 2022, with a weighted-average discount rate of **8.4%**[39](index=39&type=chunk) - The Company executed additional operating leases for new gateway locations, not yet commenced, with an expected increase of lease liabilities of approximately **$4.7 million**[41](index=41&type=chunk) [4. Property and Equipment](index=13&type=section&id=4.%20Property%20and%20Equipment) Total property and equipment, net, increased to **$708.0 million** at June 30, 2022, from **$672.2 million** at December 31, 2021, driven by a spare satellite launch and initial costs for new satellite procurement, largely reimbursed by a customer | Metric | June 30, 2022 (USD thousands) | December 31, 2021 (USD thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | First and second-generation satellites in service | $1,261,793 | $1,195,509 | | Construction in progress: Space component | $57,542 | $16,394 | | Total property and equipment, net | $708,005 | $672,156 | - During Q2 2022, **$65.1 million** in costs for the construction and launch of a spare satellite were placed into service, with **85%** reimbursed by the customer under the Terms Agreement[42](index=42&type=chunk) - The Company entered an agreement in February 2022 to purchase new satellites, recording **$19.4 million** as prepaid construction costs and **$54.2 million** in construction in progress, with **95%** of these capital expenditures to be reimbursed by the customer[43](index=43&type=chunk) [5. Long-Term Debt and Other Financing Arrangements](index=14&type=section&id=5.%20Long-Term%20Debt%20and%20Other%20Financing%20Arrangements) Long-term debt increased to **$257.5 million** at June 30, 2022, primarily due to the 2019 Facility Agreement, while the 2013 8.00% Convertible Senior Notes were fully converted into common stock, and new vendor financing of **$73.6 million** was recorded for satellite procurement | Debt Instrument | June 30, 2022 Carrying Value (USD thousands) | December 31, 2021 Carrying Value (USD thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | 2019 Facility Agreement | $257,451 | $236,525 | | 8.00% Convertible Senior Notes Issued in 2013 | — | $1,407 | | Total Debt | $257,451 | $237,932 | - The 2019 Facility Agreement, with a principal amount of **$282.0 million** at June 30, 2022, bears **13.5% PIK interest** and requires a **$6.0 million** prepayment in August 2022 due to excess cash flow[46](index=46&type=chunk)[47](index=47&type=chunk) - The remaining **$1.4 million** principal of the 2013 8.00% Notes was converted into **2.3 million shares** of common stock in Q1 2022, resulting in a net gain on extinguishment of less than **$0.1 million**[49](index=49&type=chunk)[50](index=50&type=chunk) - Vendor financing of **$73.6 million** was recorded for satellite procurement, with payment deferrals through August 2022 at **0% interest**, and the Company plans to seek an extension[52](index=52&type=chunk) - The Paycheck Protection Program (PPP) loan of **$5.0 million**, including accrued interest, was forgiven in June 2021, resulting in a gain on extinguishment of debt[54](index=54&type=chunk) [6. Derivatives](index=16&type=section&id=6.%20Derivatives) Globalstar recognized derivative losses of **$1.2 million** and **$1.7 million** for the three and six months ended June 30, 2022, respectively, primarily due to changes in the fair value of the compound embedded derivative with the 2019 Facility Agreement, while the 2013 8.00% Notes derivative is no longer outstanding | Derivative Instrument | June 30, 2022 Fair Value (USD thousands) | December 31, 2021 Fair Value (USD thousands) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Compound embedded derivative with the 2019 Facility Agreement | $(1,460) | $484 | | Compound embedded derivative with the 2013 8.00% Notes | — | $(1,364) | | Derivative Loss | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Compound embedded derivative with the 2013 8.00% Notes | — | $(1,077) | $216 | $(2,821) | | Compound embedded derivative with the 2019 Facility Agreement | $(1,242) | $(233) | $(1,944) | $382 | | Total derivative loss | $(1,242) | $(1,310) | $(1,728) | $(2,439) | [7. Fair Value Measurements](index=16&type=section&id=7.%20Fair%20Value%20Measurements) The Company's derivatives are classified as Level 3 fair value measurements, requiring significant unobservable inputs, with the 2019 Facility Agreement derivative shifting to a liability due to an increased discount yield, and the 2013 8.00% Notes derivative written off upon conversion - All of Globalstar's derivative instruments are classified as **Level 3 fair value measurements**, indicating reliance on significant unobservable inputs[60](index=60&type=chunk) | Derivative Instrument | June 30, 2022 (Level 3, USD thousands) | December 31, 2021 (Level 3, USD thousands) | | :------------------------------------------ | :------------------------------------ | :---------------------------------------- | | Compound embedded derivative with the 2019 Facility Agreement | $(1,460) | $484 | | Compound embedded derivative with the 2013 8.00% Notes | — | $(1,364) | - The discount yield for the 2019 Facility Agreement derivative increased from **13%** at December 31, 2021, to **20%** at June 30, 2022, causing the derivative to become a liability[64](index=64&type=chunk) - During Q2 2022, the Company wrote off **$0.5 million** of work in progress related to spectrum intangible assets, as efforts to obtain licensing authority in certain countries were discontinued[71](index=71&type=chunk) [8. Commitments and Contingencies](index=19&type=section&id=8.%20Commitments%20and%20Contingencies) Globalstar's primary commitments include obligations under the Terms Agreement for services and network upgrades, and a satellite procurement agreement to acquire **17 new satellites** for **$327.0 million**, with **95%** of these capital expenditures to be reimbursed by the counterparty - The Terms Agreement outlines commitments for Globalstar to provide services and incur costs for new and upgraded gateways, as well as satellite construction and launch[72](index=72&type=chunk) - In February 2022, Globalstar entered a satellite procurement agreement for **17 new satellites** totaling **$327.0 million**, with an option for additional satellites. The counterparty to the Terms Agreement will reimburse **95%** of these capital expenditures[74](index=74&type=chunk)[75](index=75&type=chunk) - Deferred milestone payments of approximately **$74.0 million** under the satellite procurement agreement are due in August 2022, and the Company intends to seek an extension[76](index=76&type=chunk) [9. Related Party Transactions](index=20&type=section&id=9.%20Related%20Party%20Transactions) Globalstar has ongoing related party transactions with Thermo, its principal owner, including payables for normal purchases, reimbursement for general and administrative expenses, a lease agreement for its headquarters, and Thermo's participation in the 2019 Facility Agreement - Payables to Thermo and other affiliates for normal purchase transactions were **$0.4 million** as of June 30, 2022, and December 31, 2021[77](index=77&type=chunk) - Globalstar incurred **$0.8 million** in lease expense for its headquarters from Thermo Covington, LLC during each of the six months ended June 30, 2022 and 2021[79](index=79&type=chunk) - Thermo's participation in the 2019 Facility Agreement was **$95.1 million**, with **$8.3 million** in PIK interest accrued during the six months ended June 30, 2022[80](index=80&type=chunk) [10. Loss Per Share](index=20&type=section&id=10.%20Loss%20Per%20Share) Globalstar reported a basic and diluted net loss per common share of **$(0.01)** for the three months and **$(0.03)** for the six months ended June 30, 2022, consistent with the prior year, as potential common stock was anti-dilutive due to net losses | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss (USD thousands) | $(26,757) | $(21,449) | $(47,219) | $(57,782) | | Weighted average shares outstanding (thousands) | 1,799,886 | 1,791,943 | 1,798,784 | 1,736,158 | | Net loss per common share - basic and diluted (USD) | $(0.01) | $(0.01) | $(0.03) | $(0.03) | - Approximately **7.8 million** and **7.6 million shares** of potential common stock were excluded from diluted shares outstanding for the three and six months ended June 30, 2022, respectively, because their inclusion would be anti-dilutive[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Globalstar's Q2 2022 financial performance, condition, and liquidity, covering MSS, KPIs, revenue, expenses, and capital resources [Overview](index=21&type=section&id=Overview) Globalstar provides global Mobile Satellite Services (MSS) through its LEO satellite network, expanding its constellation with **17 new satellites** and developing new IoT products like the Realm Enablement Suite, while also pursuing terrestrial broadband services using its licensed 2.4GHz spectrum - Globalstar provides Mobile Satellite Services (MSS) including voice and data communications via its global satellite network, which includes LEO second-generation and certain first-generation satellites[88](index=88&type=chunk)[89](index=89&type=chunk) - The company entered a satellite procurement agreement in February 2022 to acquire **17 new satellites** for **$327.0 million** to replenish its constellation, with **95%** of capital expenditures to be reimbursed by a customer under the Terms Agreement[91](index=91&type=chunk) - Globalstar introduced the **Realm Enablement Suite** in June 2022, an innovative portfolio of satellite asset tracking hardware and software solutions, including the **Integrity 150** solar-powered device and **ST150M** satellite modem module[96](index=96&type=chunk)[97](index=97&type=chunk) - The FCC granted Globalstar authority to provide terrestrial broadband services over **11.5 MHz** of its licensed MSS spectrum (**Band 53/n53**), with Qualcomm Technologies' Snapdragon X65 modem-RF System supporting Band n53, expanding the potential device ecosystem[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - As of June 30, 2022, Globalstar had approximately **762,000 subscribers** worldwide, with **25,000 subscribers** in Russia disconnected due to the invasion of Ukraine[98](index=98&type=chunk) [Performance Indicators](index=24&type=section&id=Performance%20Indicators) Management monitors key performance indicators such as total revenue, subscriber growth and churn rate, average monthly revenue per user (ARPU) for Duplex, SPOT, and Commercial IoT, operating income, adjusted EBITDA, and capital expenditures to assess business growth, customer satisfaction, financial performance, and future revenue potential - Key performance indicators include total revenue, subscriber growth and churn rate, ARPU (Duplex, SPOT, Commercial IoT), operating income, adjusted EBITDA, and capital expenditures[106](index=106&type=chunk) [Comparison of the Results of Operations for the three and six months ended June 30, 2022 and 2021](index=24&type=section&id=Comparison%20of%20the%20Results%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030,%202022%20and%202021) Globalstar experienced a **21%** and **22%** increase in total revenue for the three and six months ended June 30, 2022, respectively, primarily driven by a significant rise in Engineering and other service revenue, while operating expenses increased due to higher cost of services and asset reductions, and other expenses were impacted by derivative losses and foreign currency fluctuations [Revenue](index=24&type=section&id=Revenue) Total revenue increased by **21%** to **$36.8 million** and **22%** to **$69.6 million** for the three and six months ended June 30, 2022, respectively, largely fueled by a substantial increase in Engineering and other service revenue, while Duplex service revenue declined and subscriber equipment sales were negatively impacted by supply chain disruptions | Metric | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $36,800 | $30,279 | $69,572 | $57,208 | | Duplex Service Revenue | $6,936 (19% of Total) | $7,243 (24% of Total) | $13,082 (19% of Total) | $13,898 (24% of Total) | | SPOT Service Revenue | $11,536 (31% of Total) | $11,139 (37% of Total) | $22,791 (33% of Total) | $22,123 (39% of Total) | | Commercial IoT Service Revenue | $5,038 (14% of Total) | $4,504 (15% of Total) | $9,708 (14% of Total) | $8,985 (16% of Total) | | Engineering and other Service Revenue | $9,538 (26% of Total) | $2,731 (9% of Total) | $16,811 (24% of Total) | $3,697 (6% of Total) | | Total Service Revenue | $33,048 (90% of Total) | $25,617 (85% of Total) | $62,392 (90% of Total) | $48,703 (85% of Total) | | Total Equipment Revenue | $3,752 (10% of Total) | $4,662 (15% of Total) | $7,180 (10% of Total) | $8,505 (15% of Total) | | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Average Duplex Subscribers | 42,723 | 44,160 | 43,295 | 45,913 | | Duplex ARPU (monthly USD) | $54.12 | $54.67 | $50.36 | $50.45 | | Average SPOT Subscribers | 277,815 | 264,508 | 276,633 | 265,127 | | SPOT ARPU (monthly USD) | $13.84 | $14.04 | $13.73 | $13.91 | | Average Commercial IoT Subscribers | 433,578 | 409,346 | 431,652 | 408,043 | | Commercial IoT ARPU (monthly USD) | $3.87 | $3.67 | $3.75 | $3.67 | | Total Average Subscribers | 754,553 | 745,617 | 764,920 | 746,678 | - Duplex service revenue decreased by **4%** and **6%** for the three and six months ended June 30, 2022, respectively, due to a decline in average subscribers, a trend expected to continue as the company shifts investment to IoT[114](index=114&type=chunk) - SPOT service revenue increased by **4%** and **3%** for the three and six months ended June 30, 2022, respectively, driven by a **5%** and **4%** increase in average subscribers, despite supply chain disruptions impacting equipment sales[115](index=115&type=chunk) - Commercial IoT service revenue increased by **12%** and **8%** for the three and six months ended June 30, 2022, respectively, due to a **6%** increase in average subscribers, despite component part shortages impacting equipment production[116](index=116&type=chunk)[120](index=120&type=chunk) - Engineering and other service revenue significantly increased by **$6.8 million** and **$13.1 million** for the three and six months ended June 30, 2022, primarily due to revenue recognized from the Terms Agreement for gateway expansion and satellite procurement[117](index=117&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) Total operating expenses increased for both the three and six months ended June 30, 2022, primarily due to higher cost of services (personnel, new teleport leases, ERP implementation) and a reduction in the value of long-lived assets, partially offset by a reduction in inventory value and lower Marketing, General and Administrative (MG&A) expenses | Metric | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total operating expenses | $48,156 | $46,287 | $94,640 | $92,476 | | Cost of services | $10,695 | $9,123 | $21,489 | $18,200 | | Cost of subscriber equipment sales | $3,097 | $2,858 | $5,663 | $5,757 | | Cost of subscriber equipment sales - reduction in the value of inventory | $16 | $782 | $16 | $782 | | Marketing, general and administrative | $9,693 | $9,681 | $19,034 | $19,778 | | Reduction in value of long-lived assets | $525 | — | $525 | — | - Cost of services increased by **$1.6 million** and **$3.3 million** for the three and six months ended June 30, 2022, respectively, due to higher personnel costs, new teleport leases, and professional fees for ERP system implementation[122](index=122&type=chunk) - MG&A expenses decreased by **$0.7 million** for the six months ended June 30, 2022, due to lower subscriber acquisition costs, termination of the dealer program, reduced advertising for Duplex products, and a reversal of a litigation accrual, partially offset by higher personnel costs[125](index=125&type=chunk) - A **$0.5 million** reduction in the value of intangible and other assets was recorded in Q2 2022 due to discontinuing spectrum licensing efforts in certain countries[126](index=126&type=chunk) [Other (Expense) Income](index=27&type=section&id=Other%20(Expense)%20Income) Other (expense) income shifted to a net expense for the three and six months ended June 30, 2022, primarily due to a significant foreign currency loss and derivative losses, while interest expense decreased due to higher capitalized interest, and the prior year included a gain on extinguishment of debt | Metric | Three Months Ended June 30, 2022 (USD thousands) | Three Months Ended June 30, 2021 (USD thousands) | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Gain on extinguishment of debt | — | $2,664 | — | $2,664 | | Interest income and expense, net | $(7,187) | $(10,778) | $(16,717) | $(22,352) | | Derivative loss | $(1,242) | $(1,310) | $(1,728) | $(2,439) | | Foreign currency (loss) gain | $(7,123) | $4,425 | $(3,891) | $110 | | Total other (expense) income | $(15,280) | $(5,087) | $(21,947) | $(22,083) | - The **$2.7 million** gain on extinguishment of debt in Q2 2021 was due to the forgiveness of the **$5.0 million** PPP loan, partially offset by a **$2.3 million** write-off of deferred financing costs from 2009 Facility Agreement prepayments[127](index=127&type=chunk) - Net interest expense decreased by **$3.6 million** and **$5.6 million** for the three and six months ended June 30, 2022, respectively, primarily due to higher capitalized interest[128](index=128&type=chunk) - Foreign currency loss of **$7.1 million** for the three months and **$3.9 million** for the six months ended June 30, 2022, was driven by the weakening of the Canadian dollar, Euro, and Brazilian real against the U.S. dollar[132](index=132&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Globalstar's liquidity requirements include operating costs, capital expenditures, and repayment of vendor financing for satellite procurement, with the company actively pursuing new debt financing and expecting current liquidity sources to be sufficient for the next twelve months, despite a slight decrease in cash and an increase in total debt - Principal near-term liquidity requirements include funding operating costs, capital expenditures, and repayment of vendor financing under the satellite Procurement Agreement[133](index=133&type=chunk) - Globalstar is actively pursuing a new debt financing arrangement to repay and fund amounts due under the Procurement Agreement, expecting current liquidity sources to be sufficient for the next twelve months[133](index=133&type=chunk) | Metric | June 30, 2022 (USD thousands) | December 31, 2021 (USD thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $13,141 | $14,304 | | Total carrying amount of debt outstanding | $257,451 | $237,932 | - The **$19.5 million** increase in debt carrying value was due to the 2019 Facility Agreement's PIK interest and debt discount accretion, partially offset by the conversion of the 2013 8.00% Notes[135](index=135&type=chunk) [Cash Flows for the six months ended June 30, 2022 and 2021](index=29&type=section&id=Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030,%202022%20and%202021) Net cash provided by operating activities decreased significantly to **$20.8 million** in 2022 from **$55.9 million** in 2021, primarily due to unfavorable working capital changes, while net cash used in investing activities increased to **$22.4 million** mainly for network upgrades and satellite launch costs, and financing activities provided **$0.4 million** in 2022 compared to a **$45.2 million** use in 2021 | Cash Flow Activity | Six Months Ended June 30, 2022 (USD thousands) | Six Months Ended June 30, 2021 (USD thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $20,771 | $55,920 | | Net cash used in investing activities | $(22,392) | $(11,998) | | Net cash provided by (used in) financing activities | $449 | $(45,228) | | Net decrease in cash and cash equivalents | $(1,163) | $(1,315) | - The decrease in operating cash flow was primarily due to unfavorable working capital changes, including **$51.6 million** in customer prepayments recorded as deferred revenue in 2021[137](index=137&type=chunk) - Investing cash flow increased due to costs for the spare satellite launch and network upgrades, partially offset by lower gateway upgrade costs as the project nears completion[138](index=138&type=chunk) [Indebtedness](index=29&type=section&id=Indebtedness) Globalstar's indebtedness primarily consists of the 2019 Facility Agreement, with **$282.0 million** principal outstanding at June 30, 2022, and new vendor financing of **$73.6 million** for satellite procurement, while the 2013 8.00% Convertible Senior Notes were fully converted into common stock in Q1 2022 - The 2019 Facility Agreement had **$282.0 million** principal outstanding at June 30, 2022, with a **13.5% PIK interest rate**, and the company expects a **$6.0 million** prepayment in August 2022[141](index=141&type=chunk)[142](index=142&type=chunk) - The remaining principal of the 2013 8.00% Notes was converted into **2.3 million shares** of common stock in February 2022, prior to its scheduled redemption[143](index=143&type=chunk) - Vendor financing for satellite procurement, with deferred payments of approximately **$74.0 million** due in August 2022, is being pursued for extension and broader debt financing[144](index=144&type=chunk) [Off-Balance Sheet Transactions](index=30&type=section&id=Off-Balance%20Sheet%20Transactions) Globalstar reported no material off-balance sheet transactions - The Company has no material off-balance sheet transactions[145](index=145&type=chunk) [Recently Issued Accounting Pronouncements](index=30&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Globalstar reviews new accounting guidance but has not identified any standards that will materially impact its condensed consolidated financial statements - Globalstar has not identified any recently issued accounting standards that will have a material impact on its condensed consolidated financial statements[146](index=146&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Globalstar is exposed to foreign currency exchange risk from international sales denominated in Canadian dollars, Brazilian reais, and euros, but currently does not use hedging instruments, and may face interest rate risk if future borrowings bear floating rates - Globalstar's international sales are primarily denominated in Canadian dollars, Brazilian reais, and euros, exposing the company to currency exchange risk[147](index=147&type=chunk) - The company does not currently purchase hedging instruments for foreign currencies but is obligated to enter currency hedges with 2019 Facility Agreement lenders if over **25%** of revenues are in a single non-U.S./Canadian dollar currency[147](index=147&type=chunk) - Globalstar may be exposed to rising interest rates if future borrowings, including the refinancing of vendor financing, bear floating rates[148](index=148&type=chunk) [Item 4. Controls and Procedures.](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that Globalstar's disclosure controls and procedures were effective as of June 30, 2022, and the implementation of a new ERP system in Q1 2022 resulted in anticipated changes to internal control over financial reporting, but these changes did not adversely affect the company's controls - As of June 30, 2022, Globalstar's disclosure controls and procedures were deemed effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[151](index=151&type=chunk) - The implementation of a new ERP system in Q1 2022 led to changes in reporting processes and internal control over financial reporting, but these changes did not adversely affect the company's controls[153](index=153&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings.](index=32&type=section&id=Item%201.%20Legal%20Proceedings.) Globalstar reported no legal proceedings - Globalstar has no legal proceedings to report[155](index=155&type=chunk) [Item 1A. Risk Factors.](index=32&type=section&id=Item%201A.%20Risk%20Factors.) Globalstar highlights risks from uncertain global macroeconomic and political conditions, including inflation, interest rates, and the impact of the Russia-Ukraine conflict on operations, financial performance, and supply chains, advising careful consideration of these and other risks disclosed in its 2021 Annual Report - Globalstar's results are materially affected by global economic and political conditions, including inflation, interest rates, and the availability of capital[156](index=156&type=chunk) - The invasion of Ukraine by Russia and resulting sanctions could adversely impact Globalstar's operations, financial performance, and supply chains[157](index=157&type=chunk)[158](index=158&type=chunk) - No material changes to risk factors were disclosed other than those related to global macro-economic and political conditions[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This item is not applicable to Globalstar for the reporting period - This item is not applicable[160](index=160&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) Globalstar reported no defaults upon senior securities - Globalstar has no defaults upon senior securities[160](index=160&type=chunk) [Item 4. Mine Safety Disclosures.](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Globalstar for the reporting period - This item is not applicable[160](index=160&type=chunk) [Item 5. Other Information.](index=32&type=section&id=Item%205.%20Other%20Information.) Globalstar reported no other information - Globalstar has no other information to report[160](index=160&type=chunk) [Item 6. Exhibits.](index=33&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including the company's Certificate of Incorporation, Bylaws, Section 302 and 906 Certifications, and XBRL Taxonomy documents - Exhibits include the Third Amended and Restated Certificate of Incorporation, Fourth Amended and Restated Bylaws, Section 302 and 906 Certifications, and XBRL Taxonomy documents[161](index=161&type=chunk) [Signatures](index=34&type=section&id=Signatures) The report is duly signed on behalf of Globalstar, Inc. by its Chief Executive Officer, David B. Kagan, and Chief Financial Officer, Rebecca S. Clary, on August 9, 2022 - The report was signed by David B. Kagan, Chief Executive Officer, and Rebecca S. Clary, Chief Financial Officer, on August 9, 2022[166](index=166&type=chunk)

Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Globalstar provides global Mobile Satellite Services through its LEO constellation and is actively pursuing monetization of its 2.4 GHz spectrum [Business Overview and COVID-19 Impact](index=4&type=section&id=Business%20Overview%20and%20COVID-19%20Impact) Globalstar offers Mobile Satellite Services globally, with its business negatively impacted by the COVID-19 pandemic - Globalstar provides Mobile Satellite Services (MSS) for voice and data communications, specializing in areas with poor or no terrestrial network coverage[16](index=16&type=chunk) - The COVID-19 pandemic has led to reduced equipment sales, particularly from oil and gas customers, and requests for pricing concessions[17](index=17&type=chunk) - To mitigate the pandemic's impact, Globalstar secured a **$5.0 million** forgivable PPP loan and deferred certain payroll taxes under the CARES Act[17](index=17&type=chunk)[23](index=23&type=chunk) [Network Infrastructure](index=5&type=section&id=Network%20Infrastructure) The company's network comprises second-generation LEO satellites and a global ground network utilizing patented CDMA technology for enhanced services - The satellite network is comprised of second-generation Low Earth Orbit (LEO) satellites designed for a **15-year** mission life, offering **40%** greater capacity than the first generation[18](index=18&type=chunk) - The ground network consists of multiple gateways that use patented CDMA technology, which the company believes provides superior call clarity and lower latency compared to competitors[22](index=22&type=chunk)[23](index=23&type=chunk) - The second-generation ground network is an IMS-based solution designed to provide enhanced services with data speeds up to **72 kbps**[23](index=23&type=chunk)[24](index=24&type=chunk) [Products, Services, and Customers](index=6&type=section&id=Products%2C%20Services%2C%20and%20Customers) Globalstar offers Duplex, SPOT, and Commercial IoT services to approximately 745,000 subscribers across diverse markets Communication Service Offerings | Service Category | Description | | :--- | :--- | | **Duplex** | Two-way voice and data transmissions using devices like the GSP-1700 phone and Sat-Fi® | | **SPOT** | One-way or two-way communication and data transmissions for personal tracking and messaging, including SPOT X® and SPOT Gen4™ | | **Commercial IoT** | One-way data transmissions for asset tracking and monitoring, using products like SmartOne and ST100 | | **Engineering and Other** | Custom engineering services for developing new applications on the Globalstar network | - As of December 31, 2020, Globalstar had approximately **745,000** subscribers worldwide[27](index=27&type=chunk) - The SPOT product family has facilitated approximately **7,500** rescues since its launch in 2007, averaging nearly two rescues per day[35](index=35&type=chunk) - In February 2020, the company entered into a Terms Agreement with a potential customer for non-recurring engineering (NRE) services to assess a potential new service utilizing company assets[48](index=48&type=chunk) [Spectrum and Regulatory Structure](index=10&type=section&id=Spectrum%20and%20Regulatory%20Structure) Globalstar holds worldwide spectrum allocation, with its 2.4 GHz S-band spectrum standardized by 3GPP for terrestrial broadband services in the U.S - The FCC granted Globalstar authority to provide terrestrial broadband services over **11.5 MHz** of its licensed satellite spectrum (**2483.5 to 2495 MHz**)[58](index=58&type=chunk) - The 3GPP has designated this spectrum as Band 53 for LTE and n53 for 5G, creating a pathway for integration into handset and infrastructure ecosystems[59](index=59&type=chunk) - In February 2021, Qualcomm Technologies announced support for Band n53 in its new Snapdragon X65 modem, significantly expanding the potential device ecosystem[59](index=59&type=chunk) - Globalstar is seeking additional terrestrial approvals in various international jurisdictions to harmonize its S-band spectrum globally[62](index=62&type=chunk) [Industry, Competition, and Human Capital](index=12&type=section&id=Industry%2C%20Competition%2C%20and%20Human%20Capital) Globalstar operates in a highly competitive MSS market with significant entry barriers, employing 346 people worldwide as of December 31, 2020 - The company's most direct competitors in the global MSS market are Iridium, Inmarsat, and ORBCOMM[72](index=72&type=chunk) - Competition is primarily based on coverage, quality, portability, and pricing of services and products[72](index=72&type=chunk) - The MSS industry has significant barriers to entry, including the high cost and difficulty of obtaining spectrum licenses and building a satellite network[79](index=79&type=chunk) - As of December 31, 2020, Globalstar had **346** employees worldwide[85](index=85&type=chunk) [Item 1A. Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, network reliability, substantial indebtedness, intense competition, and regulatory hurdles - The COVID-19 pandemic has caused a reduction in equipment sales and challenges in collecting receivables, which could negatively impact financial results and debt covenant compliance[93](index=93&type=chunk)[96](index=96&type=chunk) - The business relies on a healthy satellite constellation and ground network; any disruptions, satellite failures, or shorter-than-anticipated orbital lives could degrade service and harm the business[100](index=100&type=chunk)[106](index=106&type=chunk) - The company has significant indebtedness (**$423.9 million** as of Dec 31, 2020) with restrictive covenants that may limit operational and financial flexibility[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - The business is subject to extensive government regulation (FCC, ITU, etc.), and failure to maintain licenses or obtain new authorizations for terrestrial services could curtail operations[151](index=151&type=chunk)[157](index=157&type=chunk) - As of December 31, 2020, Thermo owned approximately **62%** of outstanding common stock, giving it control over shareholder votes and creating potential conflicts of interest with other stockholders[178](index=178&type=chunk) [Item 2. Properties](index=30&type=section&id=Item%202.%20Properties) Globalstar's principal headquarters are leased in Covington, Louisiana, with a global network of owned and leased facilities for its operations - The company's main headquarters are located in a **69,365 sq. ft.** leased facility in Covington, Louisiana[182](index=182&type=chunk) - Globalstar owns and leases a network of properties worldwide for gateways and control centers, including key sites in Texas, Florida, Alaska, Canada, and France[182](index=182&type=chunk) - The company intends to further expand the number of ground stations it operates globally and has executed agreements for new gateway locations expected to commence in 2021[183](index=183&type=chunk) [Item 3. Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal and regulatory proceedings, with details provided in Note 9 of the Consolidated Financial Statements - For details on material legal and regulatory proceedings, the report directs readers to Note 9 of the Consolidated Financial Statements[184](index=184&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Globalstar's common stock trades on the NYSE American, with **1.68 billion** shares outstanding as of February 26, 2021, and no history or expectation of cash dividends - The company's common stock trades on the NYSE American under the ticker symbol "GSAT"[186](index=186&type=chunk) - As of February 26, 2021, there were **1,677,878,734** shares of common stock outstanding[187](index=187&type=chunk) - The company has never paid cash dividends and is prohibited from doing so by its First and Second Lien Facility Agreements[188](index=188&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, total revenue slightly decreased to **$128.5 million**, operating expenses fell, and the company focused on managing its **$423.9 million** debt and maintaining liquidity [Results of Operations (2020 vs. 2019)](index=32&type=section&id=Results%20of%20Operations%20(2020%20vs.%202019)) In 2020, total revenue decreased to **$128.5 million** due to lower service and IoT equipment sales, partially offset by increased engineering revenue, while operating expenses declined Revenue by Type (2020 vs. 2019, in thousands) | Revenue Type | 2020 | 2019 | | :--- | :--- | :--- | | **Service Revenue** | | | | Duplex | $33,878 | $39,794 | | SPOT | $46,417 | $50,461 | | Commercial IoT | $17,174 | $16,972 | | Engineering and Other | $15,722 | $2,274 | | **Total Service Revenue** | **$113,191** | **$109,501** | | **Equipment Revenue** | | | | Duplex | $1,883 | $1,325 | | SPOT | $8,176 | $7,617 | | Commercial IoT | $5,140 | $9,300 | | **Total Equipment Revenue** | **$15,296** | **$18,332** | | **Total Revenue** | **$128,487** | **$131,718** | - Engineering and other service revenue increased by **$13.4 million** in 2020, primarily due to engineering services contracts, including one that generated **$10.0 million** from milestone completion[204](index=204&type=chunk) - Commercial IoT equipment sales decreased by **$4.2 million** (**45%**) in 2020, largely due to lower demand from customers in the oil and gas industry following the COVID-19 pandemic[206](index=206&type=chunk) - Total operating expenses decreased **4%** to **$187.7 million** in 2020, driven by lower cost of services, reduced equipment sales costs, and lower marketing, general & administrative expenses[207](index=207&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2020, Globalstar had **$13.3 million** in cash and **$54.7 million** in restricted cash, with total debt reduced to **$385.4 million** due to the Thermo loan conversion Cash and Debt Position (as of Dec 31, 2020) | Metric | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $13.3 | | Restricted cash | $54.7 | | Long-term debt (carrying amount) | $385.4 | | Long-term debt (principal balance) | $423.9 | Cash Flow Summary (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,215 | $3,048 | | Net cash used in investing activities | ($14,536) | ($11,491) | | Net cash provided by (used in) financing activities | $1,164 | ($7,923) | - The First Lien Facility Agreement requires the company to raise no less than **$45.0 million** from the sale of equity prior to March 30, 2021, which it expects to fulfill via warrant exercises[240](index=240&type=chunk)[430](index=430&type=chunk) - In February 2020, Thermo converted the entire **$137.4 million** principal balance of its loan agreement into **200.1 million** shares of common stock, significantly reducing debt[248](index=248&type=chunk)[442](index=442&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant judgments in revenue recognition, asset useful life estimation, deferred tax asset valuation, and derivative instrument valuation - Revenue recognition requires judgment, especially in allocating prices for bundled equipment and service arrangements and estimating usage patterns for prepaid annual plans[264](index=264&type=chunk)[266](index=266&type=chunk) - Estimating the useful life of assets, particularly the **15-year** life of second-generation satellites, is a critical estimate; a one-year reduction would increase annual depreciation expense by **$5.2 million**[268](index=268&type=chunk)[288](index=288&type=chunk) - The company maintains a full valuation allowance against its deferred tax assets due to a history of financial reporting losses, as it is not more likely than not that these assets will be realized[272](index=272&type=chunk) - Valuation of derivative instruments embedded in debt requires significant and subjective estimates using models like Monte Carlo simulations, and changes in these estimates can materially affect financial results[274](index=274&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Globalstar is exposed to market risks from foreign currency exchange rates and interest rate fluctuations on its variable rate debt - The company faces foreign currency risk from sales denominated in Canadian dollars, Brazilian reais, and euros, but does not currently use hedging instruments[275](index=275&type=chunk) - The company is exposed to interest rate risk due to its variable rate debt under the First Lien Facility Agreement, which is tied to LIBOR[277](index=277&type=chunk) - A **1.0%** change in interest rates would result in an approximate **$1.9 million** annual change in interest expense on the **$187.0 million** of principal outstanding under the First Lien Facility Agreement[277](index=277&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=47&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Globalstar's audited consolidated financial statements for 2020, including the independent auditor's report and detailed notes - The financial statements for the year ended December 31, 2020 were audited by Ernst & Young LLP, who provided an unqualified opinion[283](index=283&type=chunk)[284](index=284&type=chunk) - The critical audit matter identified was the estimation of the useful life of Space component assets, which involves a high degree of subjectivity and has a significant effect on depreciation expense[287](index=287&type=chunk)[289](index=289&type=chunk) [Consolidated Financial Statements](index=52&type=section&id=Consolidated%20Financial%20Statements) As of December 31, 2020, Globalstar reported total assets of **$888.1 million**, total liabilities of **$465.0 million**, and a net loss of **$109.6 million** for the year Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $68,487 | $63,260 | | Property and equipment, net | $715,909 | $799,914 | | **Total Assets** | **$888,093** | **$965,590** | | Total Current Liabilities | $114,215 | $63,060 | | Long-term debt, less current portion | $326,586 | $464,176 | | **Total Liabilities** | **$465,028** | **$558,247** | | **Total Stockholders' Equity** | **$423,065** | **$407,343** | Consolidated Statement of Operations Highlights (in thousands) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Total Revenue | $128,487 | $131,718 | | Total Operating Expenses | $187,650 | $195,764 | | Loss from Operations | ($59,163) | ($64,046) | | **Net (Loss) Income** | **($109,639)** | **$15,324** | [Notes to Consolidated Financial Statements](index=58&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, revenue, debt agreements, leases, derivatives, and other financial matters, including the impact of COVID-19 - Note 2 disaggregates revenue by product/service and geography, showing the United States as the largest market for both service and equipment revenue in 2020[398](index=398&type=chunk) - Note 6 details the company's significant debt instruments, including the First Lien Facility Agreement (**$187.0M** principal) and Second Lien Facility Agreement (**$230.6M** principal) as of Dec 31, 2020[419](index=419&type=chunk)[235](index=235&type=chunk)[244](index=244&type=chunk) - Note 7 explains that the company has various embedded derivatives in its debt instruments that are measured at fair value, resulting in a derivative gain of **$2.9 million** in 2020[453](index=453&type=chunk)[454](index=454&type=chunk) - Note 13 discloses that the company has a full valuation allowance of **$381.1 million** against its deferred tax assets due to a history of losses[502](index=502&type=chunk) [Item 9A. Controls and Procedures](index=99&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020, with no material changes to internal controls during the year - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[534](index=534&type=chunk) - The company's internal control over financial reporting as of December 31, 2020, was audited by Ernst & Young LLP, who concluded it was effective[539](index=539&type=chunk) - No changes in internal control over financial reporting occurred during the year that materially affected, or are likely to materially affect, internal controls, despite the implementation of a new billing system and remote work due to COVID-19[536](index=536&type=chunk) Part III [Items 10-14](index=100&type=section&id=Items%2010-14) Information for these items, including corporate governance, executive compensation, and security ownership, is incorporated by reference from the company's 2021 Proxy Statement - Information regarding Directors, Executive Officers, and Corporate Governance is incorporated by reference from the 2021 Proxy Statement[541](index=541&type=chunk) - Details on Executive Compensation are incorporated by reference from the 2021 Proxy Statement[542](index=542&type=chunk) - Security Ownership, Related Transactions, and Principal Accounting Fees information is incorporated by reference from the 2021 Proxy Statement[543](index=543&type=chunk)[544](index=544&type=chunk)[545](index=545&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=101&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This item lists the financial statements and exhibits filed with the report, noting the omission of financial statement schedules as information is already provided - This section lists the financial statements and exhibits filed as part of the annual report[547](index=547&type=chunk) - All financial statement schedules are omitted as they are not applicable or the required information is already present in the financial statements or notes[548](index=548&type=chunk) [Item 16. Form 10-K Summary](index=102&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K summary is provided in this report - No Form 10-K summary is provided[550](index=550&type=chunk)