UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~September~~June 30, ~~2016~~2017



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

For the transition period from to

Commission file number 001-33117

GLOBALSTAR, INC.

(Exact Name of Registrant as Specified in Its Charter)



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

300 Holiday Square Blvd.

Covington, Louisiana 70433

(Address of principal executive offices and zip code)

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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



Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐
(Do not check if a smaller reporting company)		Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ☒

As of ~~October~~July 28, ~~2016, 947,666,353~~2017, 1,025,397,826 shares of voting common stock and 134,008,656 shares of nonvoting common stock were outstanding. Unless the context otherwise requires, references to common stock in this Report mean the Registrant’s voting common stock.

FORM 10-Q

GLOBALSTAR, INC.

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3026

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	4035

Item 4.	Controls and Procedures.	4135

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	4136

Item 1A.	Risk Factors.	4136

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	4136

Item 3.	Defaults Upon Senior Securities.	4136

Item 4.	Mine Safety Disclosures.	4236

Item 5.	Other Information.	4236

Item 6.	Exhibits.	4237

Signatures		4338

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015			June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Revenue:
Service revenues	$	21,952		$	19,644		$	61,671		$	55,367		$	24,301		$	20,970		$	45,782		$	39,719
Subscriber equipment sales	3,592			4,034			10,795			12,356			3,822			4,116			6,993			7,203
Total revenue	25,544			23,678			72,466			67,723			28,123			25,086			52,775			46,922
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	8,373			7,761			23,901			23,222			9,036			7,937			18,010			15,528
Cost of subscriber equipment sales	2,411			2,914			7,475			9,028			2,778			2,886			4,874			5,064
Marketing, general and administrative	10,077			9,675			30,137			28,430			9,544			11,450			19,034			20,060
Depreciation, amortization, and accretion	19,446			19,417			57,825			57,734
Depreciation, amortization and accretion													19,275			19,224			38,569			38,379
Total operating expenses	40,307			39,767			119,338			118,414			40,633			41,497			80,487			79,031
Loss from operations	(14,763		)	(16,089		)	(46,872		)	(50,691		)	(12,510		)	(16,411		)	(27,712		)	(32,109		)
Other income (expense):
Loss on extinguishment of debt	—			—			—			(2,254		)
Gain (loss) on equity issuance	4,272			(2,920		)	2,349			(5,832		)	1,964			(2,075		)	2,670			(1,923		)
Interest income and expense, net of amounts capitalized	(8,866		)	(9,019		)	(27,020		)	(26,780		)	(8,850		)	(9,049		)	(17,678		)	(18,154		)
Derivative gain	10,982			54,194			50,137			183,416
Derivative gain (loss)													(77,130		)	40,499			(73,907		)	39,155
Other	(505		)	(1,953		)	(581		)	1,728			(2,102		)	685			(2,126		)	(76		)
Total other income (expense)	5,883			40,302			24,885			150,278			(86,118		)	30,060			(91,041		)	19,002
Income (loss) before income taxes	(8,880		)	24,213			(21,987		)	99,587			(98,628		)	13,649			(118,753		)	(13,107		)
Income tax expense (benefit)	(6,303		)	115			(6,562		)	449			106			(450		)	142			(259		)
Net income (loss)	$	(2,577	)	$	24,098		$	(15,425	)	$	99,138		$	(98,734	)	$	14,099		$	(118,895	)	$	(12,848	)

Other comprehensive income (loss):
Foreign currency translation adjustments	84			(615		)	(1,492		)	(1,458		)	(45		)	(925		)	(865		)	(1,576		)
Total comprehensive income (loss)	$	(2,493	)	$	23,483		$	(16,917	)	$	97,680		$	(98,779	)	$	13,174		$	(119,760	)	$	(14,424	)

Net income (loss) per common share:
Basic	$	0.00		$	0.02		$	(0.01	)	$	0.10		$	(0.09	)	$	0.01		$	(0.11	)	$	(0.01	)
Diluted	0.00			0.02			(0.01		)	0.09			(0.09		)	0.01			(0.11		)	(0.01		)
Weighted-average shares outstanding:
Basic	1,080,313			1,031,398			1,056,993			1,014,165			1,128,985			1,049,381			1,121,518			1,045,205
Diluted	1,080,313			1,234,551			1,056,993			1,221,287			1,128,985			1,249,672			1,121,518			1,045,205

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share data)

(Unaudited)


	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	12,910		$	7,476		$	8,838		$	10,230
Accounts receivable, net of allowance of $4,099 and $5,270, respectively	16,585			14,536
Accounts receivable, net of allowance of $4,116 and $3,966, respectively							15,369			15,219
Inventory	9,731			12,023			8,814			8,093
Prepaid expenses and other current assets	5,571			4,456			5,189			4,588
Total current assets	44,797			38,491			38,210			38,130
Property and equipment, net	1,048,322			1,077,560			1,013,798			1,039,719
Restricted cash	37,959			37,918			37,915			37,983
Prepaid second-generation ground costs	2,579			8,929
Intangible and other assets, net of accumulated amortization of $6,943 and $6,315, respectively	15,106			12,117
Intangible and other assets, net of accumulated amortization of $7,137 and $7,021, respectively							20,046			16,782
Total assets	$	1,148,763		$	1,175,015		$	1,109,969		$	1,132,614
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	38,112		$	32,835		$	108,720		$	75,755
Debt restructuring fees							—			20,795
Accounts payable	6,570			8,118			7,624			7,499
Accrued contract termination charge	19,654			19,121			20,026			18,451
Accrued expenses	28,066			22,439			20,664			23,162
Derivative liabilities							36,860			—
Payables to affiliates	243			616			304			309
Deferred revenue	27,354			23,902			29,476			26,479
Total current liabilities	119,999			107,031			223,674			172,450
Long-term debt, less current portion	547,311			548,286			459,966			500,524
Employee benefit obligations	4,911			4,810			4,944			4,883
Derivative liabilities	189,500			239,642			318,215			281,171
Deferred revenue	6,068			6,413			5,866			5,877
Debt restructuring fees	20,795			20,795
Other non-current liabilities	5,477			10,907			5,830			5,890
Total non-current liabilities	774,062			830,853			794,821			798,345
Commitments and contingent liabilities (Notes 7 and 8)

Commitments and contingencies (Note 6)

Stockholders’ equity:
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at September 30, 2016 and December 31, 2015, respectively	—			—
Series A Preferred Convertible Stock of $0.0001 par value; one share authorized and none issued and outstanding at September 30, 2016 and December 31, 2015, respectively	—			—
Voting Common Stock of $0.0001 par value; 1,200,000,000 shares authorized; 946,322,913 and 904,448,226 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	95			90
Nonvoting Common Stock of $0.0001 par value; 400,000,000 shares authorized; 134,008,656 shares issued and outstanding at September 30, 2016 and December 31, 2015	13			13
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at June 30, 2017 and December 31, 2016, respectively							—			—
Series A Preferred Convertible Stock of $0.0001 par value; one share authorized and none issued and outstanding at June 30, 2017 and December 31, 2016, respectively							—			—
Voting Common Stock of $0.0001 par value; 1,500,000,000 and 1,200,000,000 shares authorized; 1,025,388,954 and 972,602,824 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively							103			97
Nonvoting Common Stock of $0.0001 par value; 400,000,000 shares authorized; 134,008,656 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively							13			13
Additional paid-in capital	1,625,926			1,591,443			1,698,724			1,649,315
Accumulated other comprehensive loss	(6,325		)	(4,833		)	(6,243		)	(5,378		)
Retained deficit	(1,365,007		)	(1,349,582		)	(1,601,123		)	(1,482,228		)
Total stockholders’ equity	254,702			237,131			91,474			161,819
Total liabilities and stockholders’ equity	$	1,148,763		$	1,175,015		$	1,109,969		$	1,132,614

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended
September 30,
2016 September 30,
2015
Cash flows provided by (used in) operating activities:

Net income (loss) $ (15,425 ) $ 99,138
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation, amortization and accretion 57,825
57,734
Change in fair value of derivative assets and liabilities (50,137 ) (183,416 )
Stock-based compensation expense 2,963
2,073
Amortization of deferred financing costs 6,932
7,110
Provision for bad debts 860
3,035
Noncash interest and accretion expense 8,320
8,381
Loss on extinguishment of debt —
2,254
Change in fair value related to equity issuance (2,349 ) 5,832
Noncash expense related to legal settlement 1,094
—
Reversal of uncertain tax position (6,317 ) —
Unrealized foreign currency (gain) loss 357
(2,150 )
Other, net 114
424
Changes in operating assets and liabilities:

Accounts receivable (3,066 ) (2,532 )
Inventory 2,972
2,045
Prepaid expenses and other current assets (1,276 ) 749
Other assets (476 ) (648 )
Accounts payable and accrued expenses 2,714
4,534
Payables to affiliates (374 ) 55
Other non-current liabilities 82
(904 )
Deferred revenue 2,891
3,600
Net cash provided by operating activities 7,704
7,314
Cash flows used in investing activities:

Second-generation network costs (including interest) (8,472 ) (15,484 )
Property and equipment additions (7,646 ) (4,222 )
Purchase of intangible assets (1,327 ) (1,840 )
Change in restricted cash (41 ) —
Net cash used in investing activities (17,486 ) (21,546 )
Cash flows provided by (used in) financing activities:

Principal payments of the Facility Agreement (16,418 ) (3,225 )
Proceeds from issuance of stock to Terrapin 28,500
39,000
Proceeds from issuance of common stock and exercise of options and warrants 3,001
426
Net cash provided by financing activities 15,083
36,201
Effect of exchange rate changes on cash 133
(1,117 )
Net increase in cash and cash equivalents 5,434
20,852
Cash and cash equivalents, beginning of period 7,476
7,121
Cash and cash equivalents, end of period $ 12,910
$ 27,973
Supplemental disclosure of cash flow information:

Cash paid for:

Interest $ 11,409
$ 9,746
Income taxes 152
5

Nine Months Ended
September 30,
2016 September 30,
2015
Supplemental disclosure of non-cash financing and investing activities:

Increase in capitalized accrued interest for second-generation ground costs 2,340
1,574
Increase in accrued second-generation network costs —
2,392
Capitalized accretion of debt discount and amortization of prepaid financing costs 3,225
2,416
Payments made in convertible notes and common stock —
735
Principal amount of debt converted into common stock —
6,491
Reduction of debt discount and issuance costs due to note conversions —
2,085
Increase of principal amount of Thermo Loan Agreement —
6,000
Fair value of common stock issued upon conversion of debt —
26,669
Reduction in derivative liability due to conversion of debt —
20,008
Fair value of common stock issued to vendor for payment of invoices —
16,684



	Six Months Ended
	June 30, 2017			June 30, 2016
Cash flows provided by (used in) operating activities:
Net loss	$	(118,895	)	$	(12,848	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion	38,569			38,379
Change in fair value of derivative assets and liabilities	73,907			(39,155		)
Stock-based compensation expense	2,488			1,848
Amortization of deferred financing costs	4,158			4,672
Provision for bad debts	808			396
Noncash interest and accretion expense	5,688			5,487
Change in fair value related to equity issuance	(2,670		)	1,923
Noncash expense related to legal settlement	—			1,094
Unrealized foreign currency (gain) loss	1,571			(77		)
Other, net	660			262
Changes in operating assets and liabilities:
Accounts receivable	(823		)	(2,144		)
Inventory	(622		)	2,924
Prepaid expenses and other current assets	(990		)	(868		)
Other assets	(792		)	104
Accounts payable and accrued expenses	529			(1,474		)
Payables to affiliates	(5		)	(377		)
Other non-current liabilities	24			50
Deferred revenue	2,651			805
Net cash provided by operating activities	6,256			1,001
Cash flows used in investing activities:
Second-generation network costs (including interest)	(6,530		)	(5,307		)
Property and equipment additions	(2,116		)	(6,345		)
Purchase of intangible assets	(2,044		)	(806		)
Net cash used in investing activities	(10,690		)	(12,458		)
Cash flows provided by (used in) financing activities:
Principal payments of the Facility Agreement	(21,695		)	(16,418		)
Proceeds from Thermo Common Stock Purchase Agreement	33,000			—
Payment of debt restructuring fee	(20,795		)	—
Payment of debt amendment fee	(255		)	—
Proceeds from issuance of stock to Terrapin	12,000			28,500
Proceeds from issuance of common stock and exercise of options and warrants	635			3,016
Net cash provided by financing activities	2,890			15,098
Effect of exchange rate changes on cash	84			152
Net increase (decrease) in cash, cash equivalents and restricted cash	(1,460		)	3,793
Cash, cash equivalents and restricted cash, beginning of period	48,213			45,394
Cash, cash equivalents and restricted cash, end of period	$	46,753		$	49,187




	As of:
	June 30, 2017			December 31, 2016
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	8,838		$	10,230
Restricted cash (See Note 3 for further discussion on restrictions)	37,915			37,983
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	46,753		$	48,213

	Six Months Ended
	June 30, 2017			June 30, 2016
Supplemental disclosure of cash flow information:
Cash paid for interest	$	11,659		$	10,922

Supplemental disclosure of non-cash financing and investing activities:
Increase in capitalized accrued interest for second-generation network costs	$	2,003		$	1,500
Capitalized accretion of debt discount and amortization of prepaid financing costs	2,510			2,099
Issuance of common stock for legal settlement	453			—

See accompanying notes to unaudited interim condensed consolidated financial statements.

GLOBALSTAR, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Globalstar, Inc. (“Globalstar” or the “Company”) provides Mobile Satellite Services (“MSS”) including voice and data communications services through its global satellite network. Thermo Capital Partners LLC, through its affiliates (collectively, “Thermo”), is the principal owner and largest stockholder of Globalstar. The Company’s Chairman and Chief Executive Officer controls Thermo. Two other members of the Company's Board of Directors are also directors, officers or minority equity owners of various Thermo entities.

The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and footnote disclosures normally in financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"); however, management believes the disclosures made are adequate to make the information presented not misleading. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Globalstar Annual Report on Form 10-K for the year ended December 31, ~~2015,~~2016, as filed with the SEC on February ~~26, 2016~~23, 2017 (the ~~"2015~~"2016 Annual Report"), and Management's Discussion and Analysis of Financial Condition and Results of Operations herein.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. The Company evaluates estimates on an ongoing basis. Significant estimates include the value of derivative instruments, the allowance for doubtful accounts, the net realizable value of inventory, the useful life and value of property and equipment, the value of stock-based compensation and income taxes. The Company has made certain reclassifications to prior period condensed consolidated financial statements to conform to current period presentation.

These unaudited interim condensed consolidated financial statements include the accounts of Globalstar and all its subsidiaries. All significant intercompany transactions and balances have been eliminated in the consolidation. In the opinion of management, the information included herein includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, condensed consolidated balance sheets, and condensed consolidated statements of cash flows for the periods presented. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ~~(the "FASB"~~("FASB") issued Accounting Standards ~~Update~~Updates ("ASU") No. 2014-09,Revenue from Contracts with Customers. ASU ~~No.~~ 2014-09 has been modified ~~four~~multiple times since its initial release. This ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09, as amended, becomes effective for annual reporting periods beginning after December 15, 2017. Early adoption is ~~permitted.~~permitted; however, the Company plans on adopting this standard when it becomes effective on January 1, 2018. The Company has an internal project team that is ~~currently~~ evaluating the impact ~~that these standards~~this standard will have on its financial statements, accounting systems and related ~~disclosures and believes~~disclosures. Currently, the Company expects that the most significant changes to the Company's revenue recognition accounting policies will be related to the following: 1) the allocation and timing of revenue recognized between service revenue and subscriber equipment ~~sales. This ASU also requires~~sales, 2) the timing of service revenue recognized for breakage during certain customer's prepaid contracts and 3) the deferment of certain contract acquisition costs and the recognition of these costs over the expected life of a customer's ~~contract period~~contract. The standard permits the use of either the retrospective or ~~over a customer's expected life.~~cumulative effect transition method. The Company ~~has not yet selected a transition~~expects to follow the cumulative effect method ~~nor has it determined the effect~~ of ~~these standards on its ongoing reporting.~~adoption.

~~In July 2015, the FASB issued ASU No. 2015-11,~~ ~~Simplifying the Measurement of Inventory~~. ASU No. 2015-11 requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and retail inventory method (RIM) are excluded from this new guidance. This ASU replaces the concept of market with the single measurement of net realizable value and is intended to create efficiencies for preparers and more closely align U.S. GAAP with IFRS. This ASU is effective for public business entities in fiscal years, and interim periods within those years, beginning after December 15, 2016. Prospective application is required and early adoption is permitted as of the beginning of an interim or annual reporting period. This ASU will not have a material effect on the Company's consolidated financial statements and related disclosures.

~~In November 2015, the FASB issued ASU. No. 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~. ASU No. 2015-17 simplifies the presentation of deferred taxes on the balance sheet by requiring classification of all deferred tax items as noncurrent including valuation allowances by jurisdiction. The ASU is effective for public entities for annual and interim periods beginning after December 15, 2016. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company is currently evaluating the impact this standard will have on its financial statements and related disclosures, but does not expect the effect to be material.

In March 2016, the FASB issued ASU No. 2016-02, Leases. The main difference between the provisions of ASU No. 2016-02 and previous U.S. GAAP is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU No. 2016-02 retains a distinction between finance leases and operating leases, and the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous U.S. GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right-of-use assets and lease liabilities. The accounting applied by a lessor is largely unchanged from that applied under previous U.S. GAAP. In transition, lessees and lessors are required to recognize and

measure leases at the beginning of the earliest period presented using a modified retrospective approach. This ASU is effective for public business entities in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company ~~has not yet determined~~is currently evaluating the ~~effect of the~~impact this standard will have on its ~~ongoing reporting.~~

~~In March 2016, the FASB issued ASU No. 2016-04,~~ ~~Liabilities-Extinguishment of Liabilities: Recognition of Breakage for Certain Prepaid Stored-Value Products~~. ASU No. 2016-04 contains specific guidance for the derecognition of prepaid stored-value product liabilities within the scope of this ASU. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect this ASU to have a material effect on its consolidated financial statements and related disclosures.

~~In March 2016, the FASB issued ASU. No. 2016-06,~~ ~~Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments~~. ASU No. 2016-06 clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2016. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements and related disclosures.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation-Stock Compensation~~. ASU No. 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for public business entities for annual and interim periods beginning after December 15, 2016. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company has not yet determined the effect of this standard on its ongoing reporting.

In June 2016, the FASB issued ASU No. 2016-13, Credit Losses, Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s incurred loss approach with an expected loss model for instruments measured at amortized cost. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. The Company has not yet determined the ~~effect of~~impact this standard will have on its ~~ongoing reporting.~~financial statements and related disclosures.

In ~~August 2016,~~January 2017, the FASB issued ASU No. ~~2016-15,~~2017-01, ~~Statement~~Business Combinations: Clarifying the Definition of ~~Cash Flows - Classification of Certain Cash Receipts and Cash Payments~~a Business. ASU ~~No. 2016-15 is intended~~2017-01 most significantly revises guidance specific to ~~reduce diversity in how certain cash receipts and cash payments are presented in~~ the ~~statement~~definition of ~~cash flows. The new guidance clarifies the classification of cash activity~~a business related to ~~debt prepayment or debt extinguishment costs, settlement~~accounting for acquisitions. Additionally, ASU 2017-01 also affects other areas of ~~zero-coupon debt instruments, contingent consideration payments made after~~US GAAP, such as the definition of a business ~~combination, proceeds~~related to the consolidation of variable interest entities, the consolidation of a subsidiary or group of assets, components of an operating segment, and disposals of reporting units and the impact on goodwill. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect it to have a material effect on the Company's condensed consolidated financial statements and related disclosures.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the ~~settlement~~Derecognition of ~~insurance claims, proceeds~~Nonfinancial Assets: Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-06 was issued to provide clarity on the scope and application for recognizing gains and losses from the ~~settlement~~sale or transfer of ~~corporate~~nonfinancial assets, and bank-owned life insurance policies, distributions received from equity-method investments, and beneficial interests in securitization transactions. The guidance also describes a predominance principle pursuant to which cash flows with aspects of more than one class that cannot be separated should be ~~classified based on the activity that is likely to be the predominant source or use of cash flow.~~adopted concurrently with ASU 2014-09: Revenue from Contracts with Customers. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company is currently evaluating the impact this standard will have on its financial statements and related ~~disclosures, but~~disclosures.

In February 2017, the FASB issued ASU 2017-07: Compensation—Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires sponsors of benefit plans to present the service cost component of net periodic benefit cost in the same income statement line or items as other employee costs and present the remaining components of net periodic benefit cost in one or more separate line items outside of income from operations. This ASU also limits the capitalization of benefit costs to only the service cost component. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect it to have a material effect on the Company's condensed consolidated financial statements and related disclosures.

In March 2017, the FASB issued ASU 2017-08: Receivables—Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities. This ASU amends current US GAAP to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2018. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect it to have a material effect on the Company's condensed consolidated financial statements and related disclosures.

In May 2017, the FASB issued ASU 2017-09: Compensation—Stock Compensation: Scope of Modification Accounting. This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, a company will apply modification accounting only if the fair value, vesting conditions or classification of the award change due to a modification in the terms or conditions of the share-based payment award. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company does not expect it to have a material effect on the Company's condensed consolidated financial statements and related disclosures.

In July 2017, the FASB issued ASU 2017-11: I. Accounting for Certain Financial Instruments With Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception. Part I of this ASU reduces the complexity associated with accounting for certain financial instruments with down round features. Part II of this ASU recharacterizes the indefinite deferral provisions described in Topic 480: Distinguishing Liabilities from Equity. It does not have an accounting effect.

This ASU is effective for public entities for annual and interim periods beginning after December 15, 2018. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company is currently evaluating the impact this standard will have on its financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows - Restricted Cash. ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet is required. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company adopted this standard effective with reporting periods beginning on January 1, 2017 and reflected the impact of this standard using a retrospective transition method for each period presented. Additionally, the Company added required disclosures pursuant to ASC 2016-18 to its condensed consolidated statements of cash flows.

2. PROPERTY AND EQUIPMENT

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


	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Globalstar System:
Space component
First and second-generation satellites in service	$	1,211,090		$	1,211,768		$	1,195,180		$	1,211,090
Prepaid long-lead items	17,040			17,040			17,040			17,040
Second-generation satellite, on-ground spare	32,481			32,481			32,481			32,481
Ground component	48,382			46,870			48,562			48,400
Construction in progress:
Space component	81			81			463			81
Ground component	197,712			177,780			217,199			207,127
Next-generation software upgrades	9,552			3,440			11,091			10,223
Other	2,517			2,153			1,917			2,299
Total Globalstar System	1,518,855			1,491,613			1,523,933			1,528,741
Internally developed and purchased software	14,702			14,492			16,530			15,005
Equipment	11,959			10,802			10,153			9,875
Land and buildings	3,333			3,151			3,319			3,330
Leasehold improvements	1,732			1,671			1,940			1,893
Total property and equipment	1,550,581			1,521,729			1,555,875			1,558,844
Accumulated depreciation	(502,259		)	(444,169		)	(542,077		)	(519,125		)
Total property and equipment, net	$	1,048,322		$	1,077,560		$	1,013,798		$	1,039,719

Amounts in the above table consist primarily of costs incurred related to the construction of the Company’s second-generation constellation and ground upgrades. The ground component of construction in progress represents costs (including capitalized interest) associated with the Company's contracts with Hughes Network Systems, LLC ("Hughes") and Ericsson Inc. (“Ericsson”) related to ~~complete next-generation~~the second-generation upgrades to the Company's ground infrastructure. The Company ~~expects to~~will begin depreciating this asset inwhen the ~~near future.~~second-generation gateways are placed into commercial service. See Note 7:6: Commitments and Contingencies for further discussion of these contracts.

Amounts included in the Company’s second-generation satellite, on-ground spare balance as of ~~September~~June 30, ~~2016~~2017 consist primarily of costs related to a spare second-generation satellite that has not been placed in orbit, but is capable of being included in a future launch. As of ~~September~~June 30, ~~2016,~~2017, this satellite and the prepaid long-lead items ("LLI") have not been placed into service; therefore, the Company has not started to record depreciation expense for these items.

Pursuant to the Amended and Restated Contract for the construction of Globalstar Satellites for the Second Generation Constellation between the Company and Thales Alenia Space France ("Thales"), dated and executed in June 2009 (the "2009

Contract"), the Company paid €12 million in purchase price plus an additional €3.1 million in procurement costs for the LLI to be procured by Thales on the Company's behalf. The LLI were to be used in the construction of the Phase 3 satellites for the Company. As reflected on the Company's condensed consolidated balance sheets and in the above table, the Company believes that it owns the LLI and that title to ~~them~~the LLI transferred to the Company upon payment. The Company has asked Thales to turn over the LLI. Despite historical statements to the contrary, Thales currently disputes the Company's ownership of the LLI and has asserted that the Company released its title to the LLI pursuant to that certain Release Agreement, dated as of June 24, 2012, which is described more fully in Note 8:6: Commitments and Contingencies. Thales further asserts that the LLI belong to Thales and that Thales has no obligation to turn over possession of the LLI to the Company. The Company disputes Thales' assertions and is ~~currently~~ considering its rights and remedies to recover the LLI. At this time, the Company cannot predict the outcome related to this dispute, including, without limitation, the likelihood of any settlement or the probability of success with respect to any litigation that the Company may determine to commence with respect to the LLI.

~~Capitalized Interest and Depreciation Expense~~

~~The following table summarizes capitalized interest (in thousands):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2016 2015 2016 2015
Interest costs eligible to be capitalized $ 12,092
$ 10,935
$ 35,884
$ 31,640
Interest costs recorded in interest income (expense), net (8,504 ) (8,292 ) (25,649 ) (24,400 )
Net interest capitalized $ 3,588
$ 2,643
$ 10,235
$ 7,240

~~The following table summarizes depreciation expense (in thousands):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2016 2015 2016 2015
Depreciation expense $ 19,341
$ 19,299
$ 57,508
$ 57,330

3. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

~~As required by U.S. GAAP, the Company adopted the provisions of ASU No. 2015-03,~~ ~~Interest - Imputation of Interest - Simplifying the Presentation of Debt Issue Costs~~ during the quarter ended March 31, 2016. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the condensed consolidated balance sheets as a reduction in the carrying amount of the related debt liability, consistent with debt discounts. The Company has applied the provisions of this ASU on a retrospective basis, and therefore, the Company has reduced long-term debt on its condensed consolidated balance sheet as of December 31, 2015 by $57.9 million of deferred financing costs previously reported as assets.

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


	September 30, 2016						December 31, 2015						June 30, 2017						December 31, 2016
	Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value		Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value		Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value		Principal Amount		Unamortized Discount and Deferred Financing Costs		Carrying Value
Facility Agreement	$	559,429	$	48,677	$	510,752	$	575,846	$	57,829	$	518,017	$	521,317	$	40,098	$	481,219	$	543,011	$	45,651	$	497,360
Thermo Loan Agreement	91,139		30,387		60,752		83,222		32,558		50,664		99,776		28,035		71,741		93,962		29,615		64,347
8.00% Convertible Senior Notes Issued in 2013	16,936		3,017		13,919		16,747		4,307		12,440		17,319		1,593		15,726		17,126		2,554		14,572
Total Debt	667,504		82,081		585,423		675,815		94,694		581,121		638,412		69,726		568,686		654,099		77,820		576,279
Less: Current Portion	38,112		—		38,112		32,835		—		32,835		110,313		1,593		108,720		75,755		—		75,755
Long-Term Debt	$	629,392	$	82,081	$	547,311	$	642,980	$	94,694	$	548,286	$	528,099	$	68,133	$	459,966	$	578,344	$	77,820	$	500,524

The principal amounts shown above include payment of in-kind interest, as applicable. The carrying value is net of deferred financing costs and any discounts to the loan amounts at issuance, including accretion, as further described below. The current portion of long-term debt represents the scheduled principal repayments under the Facility Agreement due within one year of the balance sheet ~~date.~~date and the total outstanding balance of the Company's 2013 8.00% Notes (as defined below) as the first put date of the notes is April 1, 2018. These short-term debt obligations are significant and the Company believes these obligations will be in excess of its cash flows from operations. The Company intends to raise funds in sufficient amounts to make these payments; however, the source of funds has not yet been fully arranged.

Facility Agreement

~~On July 31, 2013,~~In 2009, the Company entered into ~~a Global Deed of Amendment and Restatement~~the Facility Agreement with ~~Thermo, the Company's domestic subsidiaries,~~ a syndicate of bank lenders, including BNP Paribas, Société Générale, Natixis, ~~Credit~~Crédit Agricole Corporate and Investment Bank (formerly Calyon) and ~~Credit Industrial~~Crédit Industriel et Commercial, as arrangers, and BNP Paribas, as the security ~~agent and COFACE Agent, providing for the amendment and restatement of its former facility agreement and certain related credit documents effective August 22, 2013 (the~~agent. The Facility Agreement was amended and restated ~~facility agreement is herein referred to as the "Facility Agreement"). On~~in July 2013, August 7, 2015 ~~the Company, Thermo, the lenders~~ and ~~their agent entered into a Second Global Amendment and Restatement Agreement (the "2015 GARA").~~June 2017.

The Facility Agreement is scheduled to mature in December 2022. As of ~~September~~June 30, ~~2016,~~2017, the Facility Agreement was fully drawn. Semi-annual principal repayments began in December 2014. ~~The~~Indebtedness under the facility bears interest at a floating rate of LIBOR plus 2.75% through June 2017, increasing by an additional 0.5% each year thereafter to a maximum rate of LIBOR plus 5.75%. Interest on the Facility Agreement is payable semi-annually in arrears on June 30 and December 31 of each calendar year. Ninety-five percent of the Company’s obligations under the Facility Agreement are guaranteed by ~~COFACE,~~Bpifrance Assurance Export S.A.S. ("BPIFAE") (formerly COFACE), the French export credit agency. The Company’s obligations under the Facility Agreement are guaranteed on a senior secured basis by all of its domestic subsidiaries and are secured by a first priority lien on substantially all of the assets of the Company and its domestic subsidiaries (other than their FCC licenses), including patents and trademarks, 100% of the equity of the Company’s domestic subsidiaries and 65% of the equity of certain foreign subsidiaries.

The Facility Agreement contains customary events of default and requires that the Company satisfy various financial and non-financial covenants. Pursuant to the terms of the Facility Agreement, the Company has the ability to cure noncompliance with financial covenants with Equity Cure Contributions (as described below) through a date as late as June 2019. If the Company violates any of these covenants and is unable to make a sufficient Equity Cure Contribution or obtain a waiver, it would be in default under the agreement and payment of the indebtedness could be accelerated. The acceleration of the Company's indebtedness under one agreement may permit acceleration of indebtedness under other agreements that contain cross-acceleration provisions. The covenants in the Facility Agreement limit the Company's ability to, among other things, incur or guarantee additional indebtedness; make certain investments, acquisitions or capital expenditures above certain agreed levels; pay dividends

or repurchase or redeem capital stock or subordinated indebtedness; grant liens on its assets; incur restrictions on the ability of its subsidiaries to pay dividends or to make other payments to the Company; enter into transactions with its affiliates; merge or consolidate with other entities or transfer all or substantially all of its assets; and transfer or sell assets. ~~As of September 30, 2016, the Company was in compliance with respect to the covenants of the Facility Agreement.~~

~~The~~In calculating compliance ~~calculations of~~with the financial covenants of the Facility Agreement, ~~permit inclusion of~~the Company may include certain cash funds contributed to the Company from the issuance of the Company's common stock and/or subordinated indebtedness. These funds are referred to as "Equity Cure Contributions" and may be used to achieve compliance with financial covenants ~~subject~~through December 2019. If the Company violates any covenants and is unable to ~~the conditions set forth in the Facility Agreement. Each~~obtain a sufficient Equity Cure Contribution ~~must be made in~~or obtain a ~~minimum amount of $10 million for each measurement period~~waiver, or ~~in the aggregate for all periods until the date that such funding~~ is ~~no longer allowed by the Facility Agreement. In August 2015, February 2016, and June 2016, the Company drew $15 million, $6.5 million, and $22.0 million, respectively, under~~unable to make payments to satisfy its ~~common stock purchase agreement with Terrapin Opportunity, L.P. ("Terrapin") (the "August 2015 Terrapin Agreement"). The Company used these funds as Equity Cure Contributions~~debt obligations under the Facility Agreement and is unable to obtain a waiver, it would be in default under the Facility Agreement and payment of the indebtedness could be accelerated. The acceleration of the Company's indebtedness under one agreement may permit acceleration of indebtedness under other agreements that contain cross-acceleration provisions. As of June 30, 2017, the Company was in compliance with respect to the ~~calculation~~covenants of compliance with financial covenants for the measurement periods ended December 31, 2015 and June 30, 2016. The Company anticipates that it will continue to use Equity Cure Contributions to maintain compliance with certain financial covenants under the Facility ~~Agreement for the measurement periods ending December 31, 2016 and June 30, 2017, including, but not limited to, the remaining amounts available under the August 2015 Terrapin~~ Agreement.

The Facility Agreement also requires the Company to maintain ~~a total of $37.9 million in~~ a debt service reserve account, which is pledged to secure all of the Company's obligations under the Facility Agreement. The use of these funds is restricted to making principal and interest payments under the Facility Agreement. AsPrior to October 30, 2017, the Company must maintain a total of ~~September~~$37.9 million in a debt service reserve account. On October 30, ~~2016,~~2017, the balance in the debt service reserve account ~~which~~must equal the total amount of principal and interest payable by the Company on the next payment date. As of June 30, 2017, the balance in the debt service reserve account was ~~established with the proceeds of the loan agreement with Thermo discussed below, was $38.0~~$37.9 million and classified as restricted cash on the Company's condensed consolidated balance sheets.

On June 30, 2017, the Company, Thermo, the lenders and the BPIFAE and Security Agent entered into a Third Global Amendment and Restatement Agreement (the “2017 GARA”). Pursuant to the 2017 GARA, the Facility Agreement was amended and restated and the Company, Thermo and the lenders agreed to the following:

The amendments to the Facility Agreement defer most financial covenants until the measurement period ending December 31, 2018; extend to the measurement period ending December 31, 2019 the date through which Equity Cure Contributions can be made; eliminate the requirement of the Company to redeem in full the 2013 8.00% Notes (as defined below); defer mandatory prepayments from qualifying equity raises until January 1, 2020; and revise the definition of the debt service reserve account required balance after October 30, 2017 to mean an amount equal to the Debt Service (as defined in the 2017 GARA) amount due on the next payment date.

The Company agreed to raise at least $159.0 million in equity, which includes $12.0 million previously raised from its common stock purchase agreement with Terrapin Opportunity, L.P. ("Terrapin") in January 2017. The Company was required to raise a portion of the total $159.0 million by June 30, 2017 and the remaining amount no later than October 30, 2017. The Company was required to raise approximately $33.0 million as of June 30, 2017, which included amounts for the Company's outstanding restructuring fees, insurance premiums to BPIFAE and principal and interest due under the Facility Agreement as of June 30, 2017. If the Company does not raise the remaining funds by October 30, 2017, it would constitute an event of default under the Facility Agreement. The Company is required to deposit 80% of any equity proceeds raised through December 31, 2019 (including those funds required to be raised in 2017) into a restricted account, separate from the debt service reserve account discussed above, that may only be used to pay obligations under the Facility Agreement.

The 2017 GARA required Thermo to fund or backstop the amounts required to be raised as of June 30, 2017. The total $33.0 million was raised pursuant to the Common Stock Purchase Agreement with Thermo, discussed further below.

The Company agreed to limit capital expenditures in connection with its spectrum rights to be the lesser of (1) $20.0 million and (2) 20% of the proceeds of the aggregate of any equity the Company raises from January 1, 2017 through December 31, 2019.

The Company agreed to pay an amendment fee to the agent and lenders in the aggregate amount of $255,000 and accelerated the payment of the restructuring fee and insurance premium of approximately $20.8 million, which was previously due December 31, 2017 and accrued as a current liability on the Company's condensed consolidated balance sheet.

The amendment and restatement of the Facility Agreement was considered a debt modification pursuant to applicable accounting guidance. As such, fees paid to the creditors were capitalized on the Company's condensed consolidated balance sheet as deferred financing costs and fees paid to the Company's advisors and other third parties were expensed in the Company's statement of operations for the period ended June 30, 2017.

Thermo Loan Agreement

In connection with the amendment and restatement of the Facility Agreement in July 2013, the Company amended and restated its loan agreement with Thermo ~~(as amended and restated, the~~(the “Loan Agreement”). All obligations of the Company to Thermo under the Loan Agreement are subordinated to ~~all of~~ the Company’s obligations under the Facility Agreement.

The Loan Agreement accrues interest at 12% per annum, which is capitalized and added to the outstanding principal in lieu of cash payments. The Company will make payments to Thermo only when permitted by the Facility Agreement. Principal and interest under the Loan Agreement become due and payable six months after the obligations under the Facility Agreement have been paid in full, or earlier if the Company has a change in control or if any acceleration of the maturity of the loans under the Facility Agreement occurs. As of ~~September~~June 30, ~~2016, $47.6~~2017, $56.3 million of interest had accrued since 2009 with respect to the Loan Agreement; the Loan Agreement is included in long-term debt on the Company’s condensed consolidated balance sheets.

The Company evaluated the various embedded derivatives within the Loan Agreement (See Note 5: Fair Value Measurements for additional information about the embedded derivative in the Loan Agreement). The Company determined that the conversion option and the contingent put feature upon a fundamental change required bifurcation from the Loan Agreement. The conversion option and the contingent put feature were not deemed clearly and closely related to the Loan Agreement and were separately accounted for as a standalone derivative. The Company recorded this compound embedded derivative liability as a non-current liability on its condensed consolidated balance sheets with a corresponding debt discount, which is netted against the face value of the Loan Agreement.

The Company is accreting the debt discount associated with the compound embedded derivative liability to interest expense through the maturity of the Loan Agreement using an effective interest rate method. The fair value of the compound embedded derivative liability is marked-to-market at the end of each reporting period, with any changes in value reported in the condensed consolidated statements of operations. The Company determines the fair value of the compound embedded derivative using a blend of a Monte Carlo simulation model and market prices.

InThe amount by which the if-converted value of the Thermo Loan Agreement exceeds the principal amount at June 30, 2017, assuming conversion at the closing price of the Company's common stock on that date of $2.13 per share, is approximately $190.7 million.

As discussed above, in connection with ~~and as a condition to~~ the ~~effectiveness of, the 2015~~2017 GARA, Thermo and certain of its affiliates ~~executed and delivered~~agreed to ~~the agent under the Facility Agreement an undertaking (the “Second Thermo Group Undertaking Letter”)~~fund or backstop approximately $33.0 million in which they agreed that, during the period commencing on the effective date of the 2015 GARA and ending on the later of March 31, 2018 and, if the Company's 2013 8.00% Notes shall have been redeemed in full, September 30, 2019 (the “Commitment Period”), under certain circumstances, they will make, or cause to be made, availablefunding to the Company ~~cash equity financing in the aggregate~~by June 30, 2017. The total amount ~~of up to $30.0 million.~~

The balance of this commitment is reduced by any cash equity financing received by the Company during the Commitment Period from Thermo or an external equity funding source, including Terrapin, if the Company uses the funds as an Equity Cure Contribution.

Simultaneously with the execution of the 2015 GARA and the Second Thermo Group Undertaking Letter, the Company entered into an Equity Commitment Agreement (the “Equity Agreement”) and the Loan Agreement.

Pursuant to the Equity Agreement, Thermo agreed to make, or cause to be made, available to the Company up to $30.0 million in additional cash equity investments as contemplated by the 2015 GARA and the Second Thermo Group Undertaking Letter. The price per share that Thermo will pay to purchase any shares of the Company's common stock pursuant to this equity commitment will be established using the same method as used to establish the price per share under the August 2015 Terrapin Agreement. If the issuance of shares of voting common stock to Thermowas raised pursuant to the ~~Equity~~Common Stock Purchase Agreement ~~would constitute a “Change of Control,” “Default” or “Event of Default” under any applicable agreement, the Company will issue instead an equal number of shares of non-voting common stock.~~

Since the inception of the 2015 GARA, the Company has received cash equity financing in excess of Thermo's equity commitment. This cash equity financing primarily includes draws under the August 2015 Terrapin Agreement in August 2015, February 2016, and June 2016 for $15.0 million, $6.5 million, and $22.0 million, respectively. As a result, Thermo has no remaining cash equity commitment under the Equity Agreement as of September 30, 2016.

~~All of the transactions~~entered into between the Company and Thermo ~~and its affiliates were reviewed and approved~~ on June 30, 2017. According to the terms of the Common Stock Purchase Agreement, Thermo purchased 17.8 million shares of the Company's ~~behalf~~voting common stock for $33.0 million at a purchase price of $1.85, which represented a 10% discount to the closing price of the Company's voting common stock on June 29, 2017. The terms of the Common Stock Purchase Agreement were approved by a ~~Special Committee~~special committee of ~~its~~ independent directors of the Board of Directors, who were represented by independent legal counsel.

8.00% Convertible Senior Notes Issued in 2013

The 8.00% Convertible Senior Notes Issued in 2013 (the "2013 8.00% Notes") ~~initially were~~are convertible into shares of common stock at a conversion price of ~~$0.80~~$0.73 (as adjusted) per share of common ~~stock, or 1,250 shares of the Company’s common stock per $1,000 principal amount of the 2013 8.00% Notes, subject to adjustment.~~stock. The conversion price of the 2013 8.00% Notes is adjusted in the event of certain stock splits or extraordinary share distributions, or as a reset of the base conversion and exercise price pursuant to the terms of the Fourth Supplemental Indenture between the Company and U.S. Bank National Association, as Trustee, dated May 20, 2013 (the "Indenture"). Due to common stock issuances by the Company since May 20, 2013 at prices below the then effective conversion rate, the base conversion price (rounded to the nearest cent) has been reduced to $0.73 per share of common stock as of September 30, 2016.

The 2013 8.00% Notes are senior unsecured debt obligations of the Company with no sinking fund. The 2013 8.00% Notes will mature on April 1, 2028, subject to various call and put features, and bear interest at a rate of 8.00% per annum. Interest on the 2013 8.00% Notes is payable semi-annually in arrears on April 1 and October 1 of each year. Interest is paid in cash at a rate of 5.75% per annum and in additional notes at a rate of 2.25% per annum. The Indenture for the 2013 8.00% Notes provides for customary events of default. As of ~~September~~June 30, ~~2016,~~2017, the Company was in compliance with respect to the terms of the 2013 8.00% Notes and the Indenture.

Subject to certain conditions set forth in the Indenture, the Company may redeem the 2013 8.00% Notes, with the prior approval of the majority lenders under the Facility Agreement, in whole or in part, at any time on or after April 1, 2018, at a price equal to the principal amount of the 2013 8.00% Notes to be redeemed plus all accrued and unpaid interest thereon.

A holder of the 2013 8.00% Notes has the right, at the holder’s option, to require the Company to purchase some or all of the 2013 8.00% Notes held by it on each of April 1, 2018 and April 1, 2023 at a price equal to the principal amount of the 2013 8.00% Notes to be purchased plus accrued and unpaid interest.

Subject to the procedures for conversion and other terms and conditions of the Indenture, a holder may convert its 2013 8.00% Notes at its option at any time prior to the close of business on the business day immediately preceding April 1, 2028, into shares of common stock (or, at the option of the Company, cash in lieu of all or a portion thereof, provided that, under the Facility Agreement, the Company may pay cash only with the consent of the Majority Lenders).

As of ~~September~~June 30, ~~2016,~~2017, holders had converted a total of $39.4 million principal amount of the 2013 8.00% Notes, resulting in the issuance of approximately 72.1 million shares of voting common stock. There were no conversions during the three and ~~nine-month~~six-month periods ~~ended September~~ending June 30, 2016. There were no conversions during the three-month period ended September 30, 2015. During the nine-month period ended September 30, 2015, holders converted a total of $6.5 million principal amount of the 2013 8.00% Notes, resulting in the issuance of approximately 10.9 million shares of voting common stock, and recognition of a loss on extinguishment of debt of $2.3 million.2017.

Holders who convert 2013 8.00% Notes receive conversion shares over a 40-consecutive trading day settlement period. Accordingly, the portion of converted debt is extinguished on an incremental basis over the 40-day settlement period, reducing the Company's outstanding debt balance. As of ~~September~~June 30, ~~2016,~~2017, no conversions had been initiated but not yet fully settled.

The Company evaluated the various embedded derivatives within the Indenture for the 2013 8.00% Notes. The Company determined that the conversion option and the contingent put feature within the Indenture required bifurcation from the 2013 8.00% Notes. The Company did not deem the conversion option and the contingent put feature to be clearly and closely related to the 2013 8.00% Notes and separately accounted for them as a standalone derivative. The Company recorded this compound embedded derivative liability as a non-current liability on its condensed consolidated balance sheets with a corresponding debt discount which is netted against the face value of the 2013 8.00% Notes.

The Company is accreting the debt discount associated with the compound embedded derivative liability to interest expense through the first put date of the 2013 8.00% Notes (April 1, 2018) using an effective interest rate method. The Company is marking to market the fair value of the compound embedded derivative liability at the end of each reporting period, with any changes in value reported in the condensed consolidated statements of operations. The Company determines the fair value of the compound embedded derivative using a blend of a Monte Carlo simulation model and market prices.

The amount by which the if-converted value of the 2013 8.00% Notes exceeded the principal amount at June 30, 2017, assuming conversion at the closing price of the Company's common stock on that date of $2.13 per share, is approximately $33.1 million.

Warrants Outstanding

~~Warrants are outstanding~~Pursuant to the terms of the Contingent Equity Agreement with Thermo (See Note 9: Related Party Transactions in the Consolidated Financial Statements in the 2016 Annual Report for a description of the Contingent Equity Agreement), the Company issued to Thermo 41.5 million warrants at a strike price of $0.01 to purchase shares of common stock ~~as shown~~pursuant to the annual availability fee and subsequent reset provisions in the ~~table below:~~ Contingent Equity Agreement. These warrants were issued between June 2009 and June 2012 and have a five-year exercise period from issuance. In May 2017, Thermo exercised the remaining 24.6 million of the total 41.5 million warrants issued, resulting in the issuance of 24.6 million shares of the Company's common stock. As of June 30, 2017, no warrants remain outstanding under this agreement.

Outstanding Warrants Strike Price
September 30,
2016 December 31,
2015 September 30,
2016 December 31,
2015
Contingent Equity Agreement ⁽¹⁾
24,571,428
30,191,866
$ 0.01
$ 0.01
5.0% Warrants ⁽²⁾
—
8,000,000
—
0.32
24,571,428
38,191,866

~~(1)~~

Pursuant to the terms of the Contingent Equity Agreement with Thermo (See Note 9: Related Party Transactions in the Consolidated Financial Statements in the 2015 Annual Report for a description of the Contingent Equity Agreement), the Company issued to Thermo warrants to purchase shares of common stock pursuant to the annual availability fee and subsequent reset provisions in the Contingent Equity Agreement. These warrants were issued between June 2009 and June 2012 and have a five-year exercise period from issuance. As of September 30, 2016, Thermo had exercised warrants to purchase approximately 16.9 million of these shares prior to the expiration of the associated warrants. In June 2016, Thermo exercised warrants to purchase 5.6 million shares of voting common stock for a total purchase price of $0.1 million. The exercise period for the remaining outstanding warrants expires in June 2017.

~~(2)~~

In June 2011, the Company issued warrants (the “5.0% Warrants”) to purchase 15.2 million shares of its voting common stock in connection with the issuance of its 5.0% Convertible Senior Unsecured Notes. In June 2016, Thermo exercised all of the remaining warrants outstanding to purchase 8.0 million shares of voting common stock for a total purchase price of $2.5 million. See Note 3: Long-Term Debt and Other Financing Arrangements in the Consolidated Financial Statements in the 2015 Annual Report for a complete description of the 5.0% Warrants.

Terrapin Opportunity, L.P. Common Stock Purchase Agreement

~~On December 28, 2012~~In August 2015, the Company entered into a common stock purchase agreement with Terrapin pursuant to which the Company ~~subject to certain conditions,~~ could require Terrapin to purchase up to $30.0 million of shares of voting common stock over the 24-month term following the effectiveness of a resale registration statement, which became effective on August 2, 2013. When the Company made a draw under this Terrapin common stock purchase agreement, it issued Terrapin shares of common stock at a price per share calculated as specified in the agreement. During the nine months ended September 30, 2015, the Company drew $24.0 million under the agreement and issued 11.1 million shares of voting common stock to Terrapin at an average price of $2.18 per share. Through the term of this agreement, Terrapin purchased a total of 17.2 million shares of voting common stock at a total purchase price of $30.0 million. No funds remain available under this agreement.

In conjunction with the amendment of the Facility Agreement in August 2015 (as discussed above), the Company entered into a new common stock purchase agreement with Terrapin pursuant to which the Company may require Terrapin to purchase up to $75.0 million of shares of the Company’s voting common stock over the 24-month term following the date of the agreement. ~~From time to time over~~Through the ~~24-month~~ term ~~in the Company’s discretion, the Company may present~~of this agreement, Terrapin ~~with up to 24 draw notices requiring Terrapin to purchase~~purchased a ~~specified dollar amount~~total of shares of voting common stock, based on the price per share per day over ten consecutive trading days (a "Draw Down Period"). The per share purchase price for these shares of voting common stock will equal the daily volume weighted average price of the common stock on each date during the Draw Down Period on which shares are purchased by Terrapin, but not less than a minimum price specified by the Company (a “Threshold Price”), less a discount ranging from 2.75% to 4.00% based on the Threshold Price. In addition, in the Company’s discretion, but subject to certain limitations, the Company may grant to Terrapin the option to purchase additional shares during a Draw Down Period. The Company has agreed not to sell to Terrapin a number of shares of voting common stock that, when aggregated with all other shares of voting common stock then beneficially owned by Terrapin and its affiliates, would result in their beneficial ownership of more than 9.9% of the then issued and outstanding shares of voting common stock. As discussed above in this Note 3: Long-Term Debt and Other Financing Arrangements and in Note 9: Related Party Transactions, Thermo committed, under certain conditions, to purchase equity securities of the Company on the same pricing terms as the August 2015 Terrapin Agreement.

~~In August 2015, the Company drew $15.0 million under the August 2015 Terrapin Agreement and issued 9.3~~67.3 million shares of voting common stock ~~to Terrapin at an average~~for a total purchase price of ~~$1.61 per share.~~$75.0 million. In ~~February 2016,~~January 2017, the Company drew ~~$6.5~~$12.0 million ~~under the August 2015 Terrapin Agreement~~ and issued ~~6.4~~to Terrapin 8.9 million shares of voting common stock to Terrapin at an average price of $1.02 per share. In June 2016, the Company drew $22.0 million under the August 2015 Terrapin Agreement and issued 19.5 million shares of voting common stock to Terrapin at an average price of $1.13 per share. As of September 30, 2016, $31.5 million remainedstock. No funds remain available under ~~the August 2015 Terrapin Agreement.~~this agreement.

4. DERIVATIVES

In connection with certain existing ~~and past~~ borrowing arrangements, the Company was required to record derivative instruments on its condensed consolidated balance sheets. None of these derivative instruments is designated as a hedge. The following ~~tables disclose~~table discloses the fair values of the derivative instruments on the Company’s condensed consolidated balance sheets (in thousands):


	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Derivative assets:
Interest rate cap	$	1		$	6		$	1		$	4
Total derivative assets	$	1		$	6		$	1		$	4
Derivative liabilities:
Compound embedded derivative with 2013 8.00% Notes	$	(18,779	)	$	(26,203	)
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement	(170,721		)	(213,439		)
Compound embedded derivative with the 2013 8.00% Notes							$	(36,860	)	$	(26,664	)
Compound embedded derivative with the Thermo Loan Agreement							(318,215		)	(254,507		)
Total derivative liabilities	$	(189,500	)	$	(239,642	)	$	(355,075	)	$	(281,171	)

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

Three Months Ended Nine Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015
Interest rate cap $ —
$ (11 ) $ (5 ) $ (38 )
Compound embedded derivative with 2013 8.00% Notes 1,641
11,475
7,424
30,367
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement 9,341
42,730
42,718
153,087
Total derivative gain $ 10,982
$ 54,194
$ 50,137
$ 183,416



	Three Months Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Interest rate cap	$	(1	)	$	(1	)	$	(3	)	$	(5	)
Compound embedded derivative with the 2013 8.00% Notes	(11,354		)	5,335			(10,196		)	5,783
Compound embedded derivative with the Thermo Loan Agreement	(65,775		)	35,165			(63,708		)	33,377
Total derivative gain (loss)	$	(77,130	)	$	40,499		$	(73,907	)	$	39,155

Intangible and Other Assets

Interest Rate Cap

In June 2009, in connection with entering into the Facility Agreement, under which interest accrues at a variable rate, the Company entered into five ten-year interest rate cap agreements. The interest rate cap agreements reflect a variable notional amount at interest rates that provide coverage to the Company for exposure resulting from escalating interest rates over the term of the Facility Agreement. The interest rate cap provides limits on the six-month Libor rate (“Base Rate”) used to calculate the coupon interest on outstanding amounts on the Facility Agreement and is capped at 5.50% should the Base Rate not exceed 6.5%. Should the Base Rate exceed 6.5%, the Company’s Base Rate will be 1% less than the then six-month Libor rate. The Company paid an approximately $12.4 million upfront fee for the interest rate cap agreements. The interest rate cap did not qualify for hedge accounting treatment, and changes in the fair value of the agreements are included in the condensed consolidated statements of operations.

Derivative Liabilities

The Company has identified various embedded derivatives resulting from certain features in the Company’s debt ~~instruments.~~instruments, including the conversion option and the contingent put feature within both the 2013 8.00% Notes and the Thermo Loan Agreement. These embedded derivatives required bifurcation from the debt host ~~agreement. All embedded derivatives that required bifurcation~~agreement and are recorded as a derivative liability on the Company’s condensed consolidated balance sheets with a corresponding debt discount netted against the principal amount of the related debt instrument. The Company accretes the debt discount associated with each derivative liability to interest expense over the term of the related debt instrument using an effective interest rate method. The fair value of each embedded derivative liability is marked-to-market at the end of each reporting period with any changes in value reported in its condensed consolidated statements of operations. ~~Each liability and the features embedded in the debt instrument, which required the Company to account for the instrument as a derivative, are described below.~~

~~Compound Embedded Derivative with the 2013 8.00% Notes~~

As a result of the conversion option and the contingent put feature within the 2013 8.00% Notes, the Company recorded a compound embedded derivative liability on its condensed consolidated balance sheets with a corresponding debt discount that is netted against the face value of the 2013 8.00% Notes. The Company determined the fair value of ~~the~~its compound embedded derivative ~~liability~~liabilities using a blend of a Monte Carlo simulation model and market prices.

~~Compound Embedded Derivative with~~See Note 5: Fair Value Measurements for further discussion. As the ~~Amended and Restated Thermo Loan Agreement~~

~~As a result of~~first put date for the ~~conversion option and the contingent put feature within the Thermo Loan Agreement,~~2013 8.00% Notes is on April 1, 2018, the Company ~~recorded a compound embedded~~has classified this derivative liability as current on its condensed consolidated balance sheets with a corresponding debt discount that is netted against the face value of the Amended and Restated Loan Agreement. The Company determined the fair value of the compound embedded derivative liability using a blend of a Monte Carlo simulation model and market prices.sheet at June 30, 2017.

5. FAIR VALUE MEASUREMENTS

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

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

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

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

Recurring Fair Value Measurements

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


	September 30, 2016											June 30, 2017
	(Level 1)		(Level 2)			(Level 3)			Total Balance			(Level 1)		(Level 2)		(Level 3)			Total Balance
Assets:
Interest rate cap	$	—	$	1		$	—		$	1		$	—	$	1	$	—		$	1
Total assets measured at fair value	$	—	$	1		$	—		$	1		$	—	$	1	$	—		$	1

Liabilities:
Liability for potential stock issuance to Hughes	$	—	$	(3,146	)	$	—		$	(3,146	)
Compound embedded derivative with 2013 8.00% Notes	—		—			(18,779		)	(18,779		)	—		—		(36,860		)	(36,860		)
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement	—		—			(170,721		)	(170,721		)
Compound embedded derivative with the Thermo Loan Agreement												—		—		(318,215		)	(318,215		)
Total liabilities measured at fair value	$	—	$	(3,146	)	$	(189,500	)	$	(192,646	)	$	—	$	—	$	(355,075	)	$	(355,075	)


	December 31, 2015											December 31, 2016
	(Level 1)		(Level 2)			(Level 3)			Total Balance			(Level 1)		(Level 2)			(Level 3)			Total Balance
Assets:
Interest rate cap	$	—	$	6		$	—		$	6		$	—	$	4		$	—		$	4
Total assets measured at fair value	$	—	$	6		$	—		$	6		$	—	$	4		$	—		$	4

Liabilities:
Liability for potential stock issuance to Hughes	$	—	$	(5,495	)	$	—		$	(5,495	)	$	—	$	(2,706	)	$	—		$	(2,706	)
Liability for stock issuance due to legal settlement												—		(389		)	—			(389		)
Compound embedded derivative with 2013 8.00% Notes	—		—			(26,203		)	(26,203		)	—		—			(26,664		)	(26,664		)
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement	—		—			(213,439		)	(213,439		)
Compound embedded derivative with the Thermo Loan Agreement												—		—			(254,507		)	(254,507		)
Total liabilities measured at fair value	$	—	$	(5,495	)	$	(239,642	)	$	(245,137	)	$	—	$	(3,095	)	$	(281,171	)	$	(284,266	)

Assets

Interest Rate Cap

The fair value of the interest rate cap is determined using observable pricing inputs including benchmark yields, reported trades, and broker/dealer quotes at the reporting date. See Note 4: Derivatives for further discussion.

Liabilities

Liability for potential stock issuance to Hughes

~~The Company has one liability classified as Level 2.~~ As described in Note 7:6: Commitments and Contingencies, the Company agreed to provide downside protection after the issuance of shares of common stock to Hughes in lieu of cash for contract payments in June 2015. This feature ~~requires~~required the Company to issue to Hughes additional shares of common stock equal to the difference, if any, between the initial consideration of $15.5 million and the total amount of gross proceeds Hughes ~~receives~~received from the sale of any shares plus the market value of any shares still held by Hughes as of the close of trading on ~~December~~June 30, ~~2016.~~2017. In April 2017, Hughes sold all remaining shares of Globalstar common stock and the Company was not required to issue additional shares. Prior to settlement, this liability was recorded on the Company's condensed consolidated balance sheet in accrued expenses and was marked-to-market at each balance sheet date. The value of this option iswas calculated using a Black-Scholes pricing model. ~~This~~The Company recorded gains and losses resulting from changes in the value of this liability ~~is marked-to-market at each balance sheet date~~in its condensed consolidated statement of operations. As of June 30, 2017, this liability was no longer outstanding.

Liability for future stock issuance due to legal settlement

As described in Note 6: Commitments and Contingencies, the Company settled litigation related to its Brazilian subsidiary in October 2016 through the payment of Globalstar common stock. In connection with this settlement, ~~date.~~the Company agreed to provide downside protection for the difference between the total settlement amount and the total amount of gross proceeds the counterparty receives from the sale of these shares. An estimate of $0.4 million for this liability was recorded in accrued expenses in the Company's condensed consolidated financial statements as of December 31, 2016. In March 2017, the Company settled this liability through the final payment of approximately 0.3 million shares of Globalstar common stock.

Derivative Liabilities

The Company has two derivative liabilities classified as Level 3. The Company marks-to-market these liabilities at each reporting date with the changes in fair value recognized in the Company’s condensed consolidated statements of operations. See Note 4: Derivatives for further discussion.

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


	September 30, 2016							June 30, 2017
	Stock Price Volatility	Risk-Free Interest Rate		Note Conversion Price		Market Price of Common Stock		Stock Price Volatility	Risk-Free Interest Rate		Note Conversion Price		Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	100% - 125%	0.7	%	$	0.73	$	1.21	90%	1.2	%	$	0.73	26	%	$	2.13
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement	40% - 125%	1.4	%	$	0.73	$	1.21
Compound embedded derivative with the Thermo Loan Agreement								40% - 85%	2.0	%	$	0.73	26	%	$	2.13

December 31, 2015

Stock Price
Volatility

Risk-Free
Interest
Rate

Note
Conversion
Price
Market Price of Common Stock
Compound embedded derivative with 2013 8.00% Notes 75% - 90% 1.1 % $ 0.73
$ 1.44
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement 50% - 90% 2.1 % $ 0.73
$ 1.44



	December 31, 2016
	Stock Price Volatility	Risk-Free Interest Rate		Note Conversion Price		Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	100% - 110%	1.0	%	$	0.73	25	%	$	1.58
Compound embedded derivative with the Thermo Loan Agreement	40% - 110%	2.2	%	$	0.73	25	%	$	1.58

Fluctuation in the Company’s stock price is the primary driver for the changes in the derivative valuations during each reporting period. As the stock price ~~decreases towards~~increases away from the current conversion price for each of the related derivative instruments, the value to the holder of the instrument generally ~~decreases,~~increases, thereby ~~decreasing~~increasing the liability on the Company’s condensed consolidated balance sheets. These valuations are sensitive to the weighting applied to each of the simulated values. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative

instruments. The simulated fair value of these liabilities is sensitive to changes in the expected volatility of the Company's stock price. Decreases in expected volatility would generally result in a lower fair value measurement.

Probability of a change of control is another significant unobservable input used in the fair value measurement of the Company’s derivative instruments. Subject to certain restrictions in each indenture, the Company’s debt instruments contain certain provisions whereby holders may require the Company to purchase all or any portion of the convertible debt instrument upon a change of control. A change of control will occur upon certain changes in the ownership of the Company or certain events relating to the trading of the Company’s common stock. The simulated fair value of the derivative liabilities above is sensitive to changes in the assumed probabilities of a change of control. Decreases in the assumed probability of a change of control would generally result in a lower fair value measurement.

In addition to the inputs described above, the valuation model used to calculate the fair value measurement of the compound embedded derivatives within the Company’s 2013 8.00% Notes and Thermo Loan Agreement included the following inputs and features: discount rate, payment in kind interest payments, make whole premiums, a 40-day stock issuance settlement period upon conversion, automatic conversions, estimated maturity date, and the principal balance of each loan at the balance sheet date. There are also certain put and call features within the 2013 8.00% Notes that impact the valuation model. The trading activity in the market provides the Company with additional valuation support. The Company uses a weight factor to calculate the fair value of the embedded derivatives to align the fair value produced from the Monte Carlo simulation model with the market value of the 2013 8.00% Notes. Due to the similarities of the debt instruments, the Company applies a similar weight to the embedded derivative in the Thermo Loan Agreement. These valuations are sensitive to the weighting applied to each of the simulated values.

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


	Three months ended September 30,						Nine months ended September 30,						Three Months Ended June 30,						Six months ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Balance at beginning of period	$	(200,482	)	$	(292,293	)	$	(239,642	)	$	(441,550	)	$	(277,946	)	$	(240,982	)	$	(281,171	)	$	(239,642	)
Derivative adjustment related to conversions	—			—			—			20,008
Unrealized gain, included in derivative gain	10,982			54,206			50,142			183,455
Unrealized gain (loss), included in derivative gain (loss)													(77,129		)	40,500			(73,904		)	39,160
Balance at end of period	$	(189,500	)	$	(238,087	)	$	(189,500	)	$	(238,087	)	$	(355,075	)	$	(200,482	)	$	(355,075	)	$	(200,482	)

Fair Value of Debt Instruments

The Company believes it is not practicable to determine the fair value of the Facility ~~Agreement.~~Agreement without incurring significant additional costs. Unlike typical long-term debt, interest rates and other terms for the Facility Agreement are not readily available and generally involve a variety of factors, including due diligence by the debt holders. ~~As such, it is not practicable to determine the fair value of the Facility Agreement without incurring significant additional costs.~~ The following table sets forth the carrying values and estimated fair values of the Company's other debt instruments, which are classified as Level 3 financial instruments (in thousands):


	September 30, 2016				December 31, 2015				June 30, 2017				December 31, 2016
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Thermo Loan Agreement	$	60,752	$	38,552	$	50,664	$	17,244	$	71,741	$	51,045	$	64,347	$	47,874
2013 8.00% Notes	13,919		13,247		12,440		9,831		15,726		15,459		14,572		14,350

6. ~~ACCRUED EXPENSES~~COMMITMENTS AND ~~OTHER NON-CURRENT LIABILITIES~~ CONTINGENCIES

~~Accrued expenses consist of the following (in thousands):~~

September 30,
2016 December 31,
2015
Accrued interest $ 5,776
$ 317
Accrued compensation and benefits 3,562
2,098
Accrued property and other taxes 4,213
4,125
Accrued customer liabilities and deposits 3,477
3,216
Accrued professional and other service provider fees 2,860
1,830
Accrued commissions 715
1,216
Accrued telecommunications expenses 618
1,487
Accrued inventory 62
502
Accrued liability for potential stock issuance to Hughes 3,146
5,495
Accrued liability for legal settlement 1,411
328
Other accrued expenses 2,226
1,825
Total accrued expenses $ 28,066
$ 22,439

Accrued liability for potential stock issuance to Hughes includes the estimated value at September 30, 2016 of the downside protection that the Company provided to Hughes in connection with its April 2015 agreement (as amended). See Note 5: Fair Value Measurements and Note 7: Commitments for further discussion.

Other accrued expenses include primarily capital lease obligations, warranty reserve, occupancy costs, advertising costs, payments to independent gateway operators ("IGOs") and estimated payroll shortfall under the Cooperative Endeavor Agreement with the Louisiana Department of Economic Development.

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

September 30,
2016 December 31,
2015
Long-term accrued interest $ 194
$ 96
Asset retirement obligation 1,408
1,302
Deferred rent and other deferred expense 517
593
Liability related to the Cooperative Endeavor Agreement with the State of Louisiana 573
716
Uncertain income tax positions —
5,795
Foreign tax contingencies 2,624
2,311
Capital lease obligations 161
94
Total other non-current liabilities $ 5,477
$ 10,907

As a result of the expiration of the statute of limitations associated with the tax position of one of the Company's foreign subsidiaries, the Company removed the total unrecognized tax position of $6.3 million, inclusive of cumulative interest and penalties, from its non-current liabilities and recorded a $6.3 million tax benefit in its condensed consolidated financial statements during the quarter ended September 30, 2016.

~~7. COMMITMENTS~~

Contractual Obligations -~~Second-Generation Satellites,~~ Next-Generation Gateways and Other Ground Facilities

As of ~~September~~June 30, ~~2016,~~2017, the Company had purchase commitments with Thales, Hughes and Ericsson related to the procurement, deployment and maintenance of the second-generation network. The Company is obligated to make payments under these purchase commitments totaling approximately $1.1 million during 2017, all of which are owed to Ericsson and were accrued on its condensed consolidated balance sheet in accrued expenses as of June 30, 2017.

~~Second-Generation Satellites~~

~~As of September 30, 2016, the Company had a contract with Thales for the construction of the Company’s second-generation low-earth orbit satellites~~Hughes designed, supplied and related services. The Company has successfully launched all of these second-generation satellites, excluding one on-ground spare. The Company and Thales have discussed the ownership of certain deliverables under this contract, but have been unable to reach an agreement.

Effective October 24, 2014, the Company entered into a contract with Thales for in-orbit support services for the second-generation satellites delivered under the 2009 contract described in Note 2: Property and Equipment. These services will be performed over a three-year period for a total cost of approximately €1.9 million. A credit of €0.6 million was applied to the total cost, reducing the first annual payment to €0. This credit results from a settlement of amounts previously paid in conjunction with the 2009 contract.

~~Next-Generation Gateways and Other Ground Facilities~~

~~Hughes Network Systems~~

~~In May 2008, the Company entered into a contract with Hughes under which Hughes will design, supply and implement~~implemented the Radio Access Network ~~(RAN)~~("RAN") ground network equipment and software upgrades for installation at a number of the Company’s ~~satellite gateway ground stations and~~gateways. Hughes also provided the satellite interface chips to be used in various second-generation Globalstar devices.

Ericsson developed, implemented and installed the Company's ground interface, or core network system, at certain of the Company's gateways. The second-generation Ericsson core links the Hughes RANs to the public-switched telephone network (“PSTN”), cellular networks and Internet. In ~~March 2015,~~December 2016, the Company ~~entered into an agreement with~~formally accepted all contract deliverables under the core contracts for both Hughes ~~for the design, development, build, testing~~ and ~~delivery~~Ericsson necessary to deploy its second-generation ground infrastructure. The Company intends to complete certain add-ons outside of ~~four custom test equipment units for a total of $1.9 million. This test equipment was delivered during the fourth quarter of 2015. In April 2015, the Company extended~~ the scope of ~~work for delivery~~the core contracts, which include certain punch list items with Ericsson and the installation of ~~two~~second-generation RANs at certain additional RANs for a total of $4.0 million. These RANs were delivered in February 2016. As of September 30, 2016, the Company had purchase commitments due under this contract of $0.8 million, which will be payable upon final acceptance.gateways.

In April 2015, Hughes exercised an option to be paid in shares of the Company's common stock (at a price 7% below market) in lieu of cash for certain of its remaining contract payments, ~~including those related to the 2015 work mentioned above,~~ totaling approximately $15.5 million. In June 2015, the Company issued 7.4 million shares of freely tradable common stock at the 7% discount pursuant to this option. The portion of these contract payments related to future milestone work is included in Prepaid second-generation ground costs on the condensed consolidated balance sheets as of September 30, 2016. As the contract milestones are achieved, the Company reclassifies the related costs from Prepaid second-generation ground costs to construction in progress within Property and equipment. In the April 2015 agreement (as amended), the Company agreed to provide downside protection through ~~December~~June 30, ~~2016.~~2017. This feature ~~requires~~required that the Company issue additional shares of common stock equal to the difference, if any, between the initial consideration of $15.5 million and the total amount of gross proceeds Hughes ~~receives~~received from the sale of any shares plus the market value of any shares still held by Hughes as of the close of trading on ~~December~~June 30, ~~2016. Pursuant to this agreement, the Company recorded a liability~~2017. In April 2017, Hughes sold all remaining shares of ~~$3.1 million as of September 30, 2016 and $5.5 million as of December 31, 2015, respectively.~~Globalstar common stock. The Company ~~calculated these estimates~~was not required to issue additional shares. See Note 5: Fair Value Measurements for further discussion of the fair value of this option using a Black-Scholes pricing model and an estimate of the number of shares of common stock held by Hughes as of the balance sheet dates. This liability is marked-to-market at each balance sheet date and through the settlement date. The Company records gains and losses resulting from changes in the value of this liability in its condensed consolidated statement of operations.

~~Ericsson~~

In October 2008, the Company entered into a contract with Ericsson to develop, implement and maintain a ground interface, or core network system, which will be installed at a number of the Company’s satellite gateway ground stations. In July 2014, the parties signed an amended and restated contract to specify the remaining contract value and a new milestone schedule to reflect a revised program timeline. Prior to the amended and restated contract being finalized, Ericsson and the Company agreed to defer certain milestone payments previously due under the 2008 contract to 2014 and beyond. The deferred payments were incurring interest at a rate of 6.5% per annum. In April 2015, the Company signed an amendment to the 2014 contract to incorporate certain changes in scope and timing identified as necessary by the parties. In conjunction with signing this amendment, the parties executed a new letter agreement under which Ericsson waived the remaining $1.0 million in deferred milestone payments and $0.4 million in interest accrued on the milestone payments under the 2008 contract. In the first quarter of 2015, the Company reversed these amounts from accounts payable, accrued expenses and construction in progress on the Company's condensed consolidated balance sheet. In August 2015, the Company and Ericsson executed a second amendment to the 2014 contract which incorporated revised payment and pricing schedules. This amendment also reflected an accelerated timeline for the project providing that the work was estimated to be completed in the second quarter, instead of the third quarter, of 2016. During the second quarter of 2016, the Company took possession of the final Ericsson hardware for the Company's global deployment. As of September 30, 2016, the Company had purchase commitments due under this contract of $2.9 million, which is related to the final acceptance of all contract deliverables.

~~Other Second-Generation Commitments~~

Various maintenance, licensing and royalty agreements are necessary for the use of proprietary, third-party technology embedded in its second-generation ground infrastructure and products. The fees due under these maintenance and license agreements are projected to be approximately $3.6 million per year and will be recognized in the Company's condensed consolidated statement of operations over the maintenance and license terms, which are expected to begin at various times during 2017. The fees due under the royalty agreements will fluctuate based on product sales and will be recognized in the Company's condensed consolidated statement of operations on a per unit basis as second-generation products are manufactured, sold or activated. As of September 30, 2016, a portion of these fees have been paid and are recorded as a prepaid asset in the Company's condensed consolidated balance sheets.

~~8. CONTINGENCIES~~liability.

Arbitration

On June 3, 2011, Globalstar filed a demand for arbitration against Thales before the American Arbitration Association to enforce certain rights to order additional satellites under the 2009 Contract. The Company did not include within its demand any claims that it had against Thales for work previously performed under the contract to design, manufacture and timely deliver the first 25 second-generation satellites. On May 10, 2012, the arbitration tribunal issued its award in which it determined that the Company had terminated the 2009 Contract "for convenience" and had materially breached the contract by failing to pay to Thales the €51.3 million in termination charges required under the contract. The tribunal additionally determined that absent further agreement between the parties, Thales had no further obligation to manufacture or deliver satellites under Phase 3 of the 2009 Contract. Based on these determinations, the tribunal directed the Company to pay Thales approximately €53 million in termination charges, plus interest by June 9, 2012. On May 23, 2012, Thales commenced an action in the United States District Court for the Southern District of New York by filing a petition to confirm the arbitration award (the “New York Proceeding”). Thales and the Company entered into a tolling agreement as of June 13, 2013, under which Thales dismissed the New York Proceeding without prejudice. The tolling agreement has expired. Thales may refile the petition at a later date and pursue the confirmation of the arbitration award, which the Company would oppose. Should Thales be successful in confirming the arbitration award, this would have a material adverse effect on the Company's financial condition, results of operations and liquidity.

On June 24, 2012, the Company and Thales agreed to settle their prior commercial disputes, including those disputes that were the subject of the arbitration award. In order to effectuate this settlement, the Company and Thales entered into a Release Agreement, a Settlement Agreement and a Submission Agreement. Under the terms of the Release Agreement, Thales agreed unconditionally and irrevocably to release and forever discharge the Company from any and all claims and obligations (with the exception of those items payable under the Settlement Agreement or in connection with a new contract for the purchase of any additional second-generation satellites), including, without limitation, a full release from paying €35.6 million of the termination charges awarded in the arbitration together with all interest on the award amount effective upon the earlier of December 31, 2012, and the effective date of the financing for the purchase of any additional second-generation satellites. Under the terms of the Release Agreement, the Company agreed unconditionally and irrevocably to release and forever discharge Thales from any and all claims (with limited exceptions), including, without limitation, claims related to Thales’ work under the 2009 satellite construction contract, including

any obligation to pay liquidated damages, effective upon the earlier of December 31, 2012, and the effective date of the financing for the purchase of any additional second-generation satellites. In connection with the Release Agreement and the Settlement Agreement, the Company recorded a contract termination charge of approximately €17.5 million which is recorded in the

Company’s condensed consolidated balance sheets as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015.~~2016. The releases became effective on December 31, 2012.

Under the terms of the Settlement Agreement, the Company agreed to pay €17.5 million to Thales, representing one-third of the termination charges awarded to Thales in the arbitration, subject to certain conditions, on the later of the effective date of the new contract for the purchase of any additional second-generation satellites and the effective date of the financing for the purchase of these satellites. As of ~~September~~June 30, ~~2016,~~2017, this condition had not been satisfied. Because the effective date of the new contract for the purchase of additional second-generation satellites did not occur on or prior to February 28, 2013, any party may terminate the Settlement Agreement. If any party terminates the Settlement Agreement, all parties’ rights and obligations under the Settlement Agreement shall terminate. The Release Agreement is a separate and independent agreement from the Settlement Agreement and provides that it supersedes all prior understandings, commitments and representations between the parties with respect to the subject matter thereof; therefore it would survive any termination of the Settlement Agreement. As of ~~September~~June 30, ~~2016,~~2017, no party had terminated the Settlement Agreement.

Litigation

Due to the nature of the Company's business, the Company is involved, from time to time, in various litigation matters or subject to disputes or routine claims regarding its business activities. Legal costs related to these matters are expensed as incurred. ~~During the second quarter of~~In 2016, the Company ~~increased an accrual related to the settlement of~~settled litigation incurred on behalf of the Company's Brazilian subsidiary. The Company paid the total settlement of 4.5 million reais, or $1.4 million, by issuing approximately 1.3 million shares of Globalstar common stock onin October ~~24,~~ 2016. The Company agreed to provide downside protection for the difference between the total settlement amount of 4.5 million reais and the total gross proceeds received by the third party upon sale of these shares. In March 2017, the Company paid 0.3 million shares of Globalstar common stock related to this downside protection, valued at 1.4 million reais, or $0.5 million.

In management's opinion, there is no pending litigation, dispute or claim, other than those described in this report, which could be expected to have a material adverse effect on the Company's financial condition, results of operations or liquidity.

9.7. RELATED PARTY TRANSACTIONS

Payables to Thermo and other affiliates related to normal purchase transactions were ~~$0.2~~$0.3 million ~~and $0.6 million at each~~as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

Transactions with Thermo

~~Expenses~~General and administrative expenses are related to non-cash expenses and those expenses incurred by Thermo on behalf of the Company ~~including non-cash expenses and those expenses~~which are charged to the Company, were $0.2 million and $0.4 million during the three months ended September 30, 2016 and 2015, respectively and were $0.5 million and $0.7 million during the nine months ended September 30, 2016 and 2015, respectively.Company. Non-cash expenses, which the Company accounts for as a contribution to capital, relate to services provided by two executive officers of Thermo (who are also directors of the ~~Company~~Company) and receive no cash compensation from the ~~Company).~~Company. The Thermo expense charges are based on actual amounts (with no mark-up) incurred or upon allocated employee time. Those expenses charged to the Company were $0.2 million during the three months ended June 30, 2017 and 2016 and $0.4 million and $0.3 million for the six months ended June 30, 2017 and 2016, respectively.

As of ~~September~~June 30, ~~2016,~~2017, the principal amount outstanding under the Loan Agreement with Thermo was ~~$91.1~~$99.8 million, and the fair value of the compound embedded derivative liability associated with the Loan Agreement was ~~$170.7~~$318.2 million. During the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, interest accrued on the Loan Agreement was approximately ~~$2.7~~$3.0 million and ~~$2.4~~$2.6 million, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, interest accrued on the Loan Agreement was approximately ~~$7.9~~and $5.8 million and ~~$6.6~~$5.2 million, respectively.

In ~~addition, as of September 30, 2016,~~May 2017, Thermo exercised all remaining warrants to purchase approximately 24.6 million shares issued under the Contingent Equity Agreement ~~remain outstanding, all~~for a purchase price of which are held by Thermo and are scheduled to expire in June 2017. In June 2016, Thermo exercised warrants to purchase 5.6 million and 8.0 million shares of voting common stock related to the Contingent Equity Agreement and the Company's 5.0% Warrants, respectively. As a result of these warrant exercises, the Company received aggregate proceeds of $2.6 million in June 2016.$0.2 million.

In ~~August 2015,~~June 2017, the Company and Thermo entered into ~~an Equity~~a Common Stock Purchase Agreement in connection with ~~Thermo. Thermo agreed to purchase up to $30.0 million in equity securities~~the amendment and restatement of the ~~Company if the Company so requests or if an event of default is continuing under the~~Company's Facility ~~Agreement and funds are not available under the August 2015 Terrapin~~ Agreement. The Company has received cash equity financing in excess of Thermo's equity commitment. This cash equity financing primarily includes draws under the August 2015 Terrapin Agreement in August 2015, February 2016, and June 2016 for $15.0 million, $6.5 million, and $22.0 million, respectively. As a result, Thermo had no remaining cash equity commitment under the Equity Agreement as of September 30, 2016.

The Facility Agreement requires Thermo to maintain minimum and maximum ownership levels in the Company's common stock. Thermo may convert shares of nonvoting common stock into shares of voting common stock as needed to comply with these ownership limitations.

In 2013, the Company's Board of Directors formed a special committee consisting solely of independent directors of the Company, represented by independent legal counsel. This special committee serves as an independent board to review and approve certain transactions between the Company and Thermo.

See Note 3: Long-Term Debt and Other Financing Arrangements ~~and Note 4: Derivatives~~ for further discussion of the Company's debt and financing transactions with Thermo.

~~10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)~~

~~Accumulated other comprehensive income (loss) includes all changes in equity during a period from non-owner sources.~~

~~The components of accumulated other comprehensive income (loss) were as follows (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Accumulated other comprehensive loss, beginning of period $ (6,409 ) $ (3,741 ) $ (4,833 ) $ (2,898 )
Other comprehensive income (loss):

Foreign currency translation adjustments 84
(615 ) (1,492 ) (1,458 )
Accumulated other comprehensive loss, end of period $ (6,325 ) $ (4,356 ) $ (6,325 ) $ (4,356 )

~~No amounts were reclassified out of accumulated other comprehensive loss for the periods shown above.~~

~~11. GEOGRAPHIC INFORMATION~~

The Company attributes subscriber equipment sales to various countries based on the location where equipment is sold. Service revenue is generally attributed to the various countries based on the Globalstar entity that holds the customer contract. Property and equipment is attributed to the various countries based on the physical location of the asset at the end of a given period, except for the Company's satellites that are included in the property and equipment of the United States. The Company’s information by geographic area is as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Revenues:

Service revenue:

United States $ 14,703
$ 13,506
$ 42,379
$ 37,689
Canada 4,512
3,863
11,822
11,067
Europe 1,785
1,634
5,048
4,377
Central and South America 824
486
2,012
1,788
Others 128
155
410
446
Total service revenue $ 21,952
$ 19,644
$ 61,671
$ 55,367
Subscriber equipment sales:

United States 2,150
2,304
5,680
5,883
Canada 689
962
2,502
3,401
Europe 242
313
1,198
1,299
Central and South America 505
409
1,172
1,465
Others 6
46
243
308
Total subscriber equipment sales $ 3,592
$ 4,034
$ 10,795
$ 12,356
Total revenue $ 25,544
$ 23,678
$ 72,466
$ 67,723

September 30,
2016 December 31,
2015
Property and equipment, net:

United States $ 1,043,827
$ 1,073,327
Canada 675
510
Europe 435
484
Central and South America 3,147
2,782
Others 238
457
Total property and equipment, net $ 1,048,322
$ 1,077,560

~~12.~~8. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share are computed based on the weighted average number of shares of common stock outstanding during the period. Common stock equivalents are included in the calculation of diluted earnings per share only when the effect of their inclusion would be dilutive.

The following table sets forth the calculation of basic and diluted earnings (loss) per share for the periods indicated (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015		2017			2016		2017			2016
Net income (loss)	$	(2,577	)	$	24,098	$	(15,425	)	$	99,138	$	(98,734	)	$	14,099	$	(118,895	)	$	(12,848	)
Effect of dilutive securities:
2013 8.00% Notes	550			547		1,625			1,860		—			537		—			—
Thermo Loan Agreement	2,453			2,291		7,211			6,542		—			2,401		—			—
Income (loss) to common stockholders plus assumed conversions	$	426		$	26,936	$	(6,589	)	$	107,540	$	(98,734	)	$	17,037	$	(118,895	)	$	(12,848	)
Weighted average common shares outstanding:
Basic shares outstanding	1,080,313			1,031,398		1,056,993			1,014,165		1,128,985			1,049,381		1,121,518			1,045,205
Incremental shares from assumed exercises, conversions and other issuances:
Stock options, restricted stock, restricted stock units and ESPP	—			7,111		—			8,550		—			5,793		—			—
2013 8.00% Notes	—			27,475		—			27,778		—			27,164		—			—
Thermo Loan Agreement	—			130,375		—			132,602		—			139,709		—			—
Warrants and other	—			38,192		—			38,192		—			27,625		—			—
Diluted shares outstanding	1,080,313			1,234,551		1,056,993			1,221,287		1,128,985			1,249,672		1,121,518			1,045,205
Income (loss) per share:
Net income (loss) per common share:
Basic	—			0.02		(0.01		)	0.10		$	(0.09	)	$	0.01	(0.11		)	(0.01		)
Diluted	—			0.02		(0.01		)	0.09		(0.09		)	0.01		(0.11		)	(0.01		)

For the ~~three and nine~~six months ended ~~September~~June 30, 2017 and 2016, ~~195.8~~191.6 million and ~~199.7~~197.0 million shares, respectively, of potential common stock were excluded from diluted shares outstanding because the effects of assuming issuance of these potentially dilutive securities would be anti-dilutive. For the three months ended June 30, 2017, the number of shares excluded from diluted shares outstanding was 190.5 million.

~~13.~~9. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In connection with the Company’s issuance of the 2013 8.00% Notes, certain of the Company’s 100% owned domestic subsidiaries (the “Guarantor Subsidiaries”), fully, unconditionally, jointly, and severally guaranteed the payment obligations under the 2013 8.00% Notes. The following financial information sets forth, on a consolidating basis, the balance sheets, statements of operations and statements of cash flows for Globalstar, Inc. (the “Parent Company”), for the Guarantor Subsidiaries and for the Parent Company’s other subsidiaries (the “Non-Guarantor Subsidiaries”).

The condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include disclosures included in annual financial statements. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses.

Globalstar, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended ~~September~~June 30, ~~2016~~2017

(Unaudited)


	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)															(In thousands)
Revenue:
Service revenues	$	23,996		$	7,529		$	11,501		$	(21,074	)	$	21,952		$	18,685		$	9,846		$	13,096		$	(17,326	)	$	24,301
Subscriber equipment sales	84			2,833			1,559			(884		)	3,592			60			3,702			1,491			(1,431		)	3,822
Total revenue	24,080			10,362			13,060			(21,958		)	25,544			18,745			13,548			14,587			(18,757		)	28,123
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	5,178			2,538			8,442			(7,785		)	8,373			6,415			1,403			1,974			(756		)	9,036
Cost of subscriber equipment sales	(18		)	2,108			1,203			(882		)	2,411			32			3,106			1,525			(1,885		)	2,778
Marketing, general and administrative	5,229			1,504			15,497			(12,153		)	10,077			5,312			997			19,357			(16,122		)	9,544
Depreciation, amortization, and accretion	19,083			194			291			(122		)	19,446
Depreciation, amortization and accretion																19,101			120			54			—			19,275
Total operating expenses	29,472			6,344			25,433			(20,942		)	40,307			30,860			5,626			22,910			(18,763		)	40,633
Income (loss) from operations	(5,392		)	4,018			(12,373		)	(1,016		)	(14,763		)	(12,115		)	7,922			(8,323		)	6			(12,510		)
Other income (expense):
Gain on equity issuance	4,272			—			—			—			4,272			1,964			—			—			—			1,964
Interest income and expense, net of amounts capitalized	(8,894		)	(9		)	36			1			(8,866		)	(8,829		)	7			(32		)	4			(8,850		)
Derivative gain	10,982			—			—			—			10,982
Derivative loss																(77,130		)	—			—			—			(77,130		)
Equity in subsidiary earnings (loss)	(2,743		)	(12,794		)	—			15,537			—			(1,282		)	(4,076		)	—			5,358			—
Other	(802		)	(80		)	284			93			(505		)	(1,342		)	(337		)	(418		)	(5		)	(2,102		)
Total other income (expense)	2,815			(12,883		)	320			15,631			5,883			(86,619		)	(4,406		)	(450		)	5,357			(86,118		)
Income (loss) before income taxes	(2,577		)	(8,865		)	(12,053		)	14,615			(8,880		)	(98,734		)	3,516			(8,773		)	5,363			(98,628		)
Income tax benefit	—			—			(6,303		)	—			(6,303		)
Income tax expense																—			4			102			—			106
Net income (loss)	$	(2,577	)	$	(8,865	)	$	(5,750	)	$	14,615		$	(2,577	)	$	(98,734	)	$	3,512		$	(8,875	)	$	5,363		$	(98,734	)
Comprehensive income (loss)	$	(2,577	)	$	(8,865	)	$	(5,659	)	$	14,608		$	(2,493	)	$	(98,734	)	$	3,512		$	(8,911	)	$	5,354		$	(98,779	)

Globalstar, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended ~~September~~June 30, ~~2015~~2016

(Unaudited)



	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenue:
Service revenues	$	10,944		$	10,863		$	10,689		$	(11,526	)	$	20,970
Subscriber equipment sales	96			2,774			1,997			(751		)	4,116
Total revenue	11,040			13,637			12,686			(12,277		)	25,086
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	5,135			1,034			2,702			(934		)	7,937
Cost of subscriber equipment sales	43			2,112			1,478			(747		)	2,886
Marketing, general and administrative	5,430			1,322			16,219			(11,521		)	11,450
Depreciation, amortization and accretion	18,851			206			288			(121		)	19,224
Total operating expenses	29,459			4,674			20,687			(13,323		)	41,497
Income (loss) from operations	(18,419		)	8,963			(8,001		)	1,046			(16,411		)
Other income (expense):
Loss on equity issuance	(2,075		)	—			—			—			(2,075		)
Interest income and expense, net of amounts capitalized	(9,000		)	(3		)	(47		)	1			(9,049		)
Derivative gain	40,499			—			—			—			40,499
Equity in subsidiary earnings (loss)	2,924			(968		)	—			(1,956		)	—
Other	170			92			328			95			685
Total other income (expense)	32,518			(879		)	281			(1,860		)	30,060
Income (loss) before income taxes	14,099			8,084			(7,720		)	(814		)	13,649
Income tax benefit	—			—			(450		)	—			(450		)
Net income (loss)	$	14,099		$	8,084		$	(7,270	)	$	(814	)	$	14,099
Comprehensive income (loss)	$	14,099		$	8,084		$	(8,195	)	$	(814	)	$	13,174

Parent
Company

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
(In thousands)
Revenue:

Service revenues $ 14,830
$ 8,426
$ 8,251
$ (11,863 ) $ 19,644
Subscriber equipment sales 219
2,853
889
73
4,034
Total revenue 15,049
11,279
9,140
(11,790 ) 23,678
Operating expenses:

Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) 4,723
1,694
3,809
(2,465 ) 7,761
Cost of subscriber equipment sales (52 ) 2,365
(1,641 ) 2,242
2,914
Marketing, general and administrative 5,282
1,486
14,411
(11,504 ) 9,675
Depreciation, amortization, and accretion 18,955
291
282
(111 ) 19,417
Total operating expenses 28,908
5,836
16,861
(11,838 ) 39,767
Income (loss) from operations (13,859 ) 5,443
(7,721 ) 48
(16,089 )
Other income (expense):

Loss on equity issuance (2,920 ) —
—
—
(2,920 )
Interest income and expense, net of amounts capitalized (8,872 ) (8 ) (140 ) 1
(9,019 )
Derivative gain 54,194
—
—
—
54,194
Equity in subsidiary earnings (loss) (3,559 ) (18,162 ) —
21,721
—
Other (886 ) (60 ) 3,800
(4,807 ) (1,953 )
Total other income (expense) 37,957
(18,230 ) 3,660
16,915
40,302
Income (loss) before income taxes 24,098
(12,787 ) (4,061 ) 16,963
24,213
Income tax expense —
1
114
—
115
Net income (loss) $ 24,098
$ (12,788 ) $ (4,175 ) $ 16,963
$ 24,098
Comprehensive income (loss) $ 24,098
$ 20,357
$ (12,258 ) $ (8,714 ) $ 23,483

Globalstar, Inc.

Condensed Consolidating Statement of Operations

~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017

(Unaudited)



	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenue:
Service revenues	$	36,297		$	19,202		$	24,097		$	(33,814	)	$	45,782
Subscriber equipment sales	127			5,993			2,841			(1,968		)	6,993
Total revenue	36,424			25,195			26,938			(35,782		)	52,775
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	12,543			2,828			5,147			(2,508		)	18,010
Cost of subscriber equipment sales	66			4,823			1,952			(1,967		)	4,874
Marketing, general and administrative	10,971			2,116			37,265			(31,318		)	19,034
Depreciation, amortization and accretion	38,052			402			115			—			38,569
Total operating expenses	61,632			10,169			44,479			(35,793		)	80,487
Income (loss) from operations	(25,208		)	15,026			(17,541		)	11			(27,712		)
Other income (expense):
Gain (loss) on equity issuance	2,706			—			(36		)	—			2,670
Interest income and expense, net of amounts capitalized	(17,584		)	(1		)	(101		)	8			(17,678		)
Derivative loss	(73,907		)	—			—			—			(73,907		)
Equity in subsidiary earnings (loss)	(3,215		)	(7,510		)	—			10,725			—
Other	(1,687		)	(437		)	5			(7		)	(2,126		)
Total other income (expense)	(93,687		)	(7,948		)	(132		)	10,726			(91,041		)
Income (loss) before income taxes	(118,895		)	7,078			(17,673		)	10,737			(118,753		)
Income tax expense	—			9			133			—			142
Net income (loss)	$	(118,895	)	$	7,069		$	(17,806	)	$	10,737		$	(118,895	)
Comprehensive income (loss)	$	(118,895	)	$	7,069		$	(18,662	)	$	10,728		$	(119,760	)

Parent
Company Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(In thousands)
Revenue:

Service revenues $ 51,878
$ 25,887
$ 31,615
$ (47,709 ) $ 61,671
Subscriber equipment sales 508
7,299
5,232
(2,244 ) 10,795
Total revenue 52,386
33,186
36,847
(49,953 ) 72,466
Operating expenses:

Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) 15,126
4,608
14,039
(9,872 ) 23,901
Cost of subscriber equipment sales 169
5,648
3,896
(2,238 ) 7,475
Marketing, general and administrative 15,833
3,358
48,561
(37,615 ) 30,137
Depreciation, amortization, and accretion 56,706
620
860
(361 ) 57,825
Total operating expenses 87,834
14,234
67,356
(50,086 ) 119,338
Income (loss) from operations (35,448 ) 18,952
(30,509 ) 133
(46,872 )
Other income (expense):

Gain on equity issuance 2,349
—
—
—
2,349
Interest income and expense, net of amounts capitalized (26,875 ) (21 ) (116 ) (8 ) (27,020 )
Derivative gain 50,137
—
—
—
50,137
Equity in subsidiary earnings (loss) (4,170 ) (10,715 ) —
14,885
—
Other (1,418 ) (192 ) 888
141
(581 )
Total other income (expense) 20,023
(10,928 ) 772
15,018
24,885
Income (loss) before income taxes (15,425 ) 8,024
(29,737 ) 15,151
(21,987 )
Income tax benefit —
—
(6,562 ) —
(6,562 )
Net income (loss) $ (15,425 ) $ 8,024
$ (23,175 ) $ 15,151
$ (15,425 )
Comprehensive income (loss) $ (15,425 ) $ 8,024
$ (24,662 ) $ 15,146
$ (16,917 )

Globalstar, Inc.

Condensed Consolidating Statement of Operations

~~Nine~~Six Months Ended ~~September~~June 30, ~~2015~~2016

(Unaudited)

Parent
Company Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(In thousands)
Revenue:

Service revenues $ 47,005
$ 22,969
$ 28,271
$ (42,878 ) $ 55,367
Subscriber equipment sales 573
8,917
6,380
(3,514 ) 12,356
Total revenue 47,578
31,886
34,651
(46,392 ) 67,723
Operating expenses:

Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) 14,227
4,871
10,098
(5,974 ) 23,222
Cost of subscriber equipment sales 8
7,808
4,091
(2,879 ) 9,028
Marketing, general and administrative 14,731
4,477
46,716
(37,494 ) 28,430
Depreciation, amortization, and accretion 56,282
882
934
(364 ) 57,734
Total operating expenses 85,248
18,038
61,839
(46,711 ) 118,414
Income (loss) from operations (37,670 ) 13,848
(27,188 ) 319
(50,691 )
Other income (expense):

Loss on extinguishment of debt (2,254 ) —
—
—
(2,254 )
Loss on equity issuance (5,832 ) —
—
—
(5,832 )
Interest income and expense, net of amounts capitalized (26,315 ) (23 ) (449 ) 7
(26,780 )
Derivative gain 183,416
—
—
—
183,416
Equity in subsidiary earnings (loss) (12,508 ) (12,736 ) —
25,244
—
Other 246
334
5,902
(4,754 ) 1,728
Total other income (expense) 136,753
(12,425 ) 5,453
20,497
150,278
Income (loss) before income taxes 99,083
1,423
(21,735 ) 20,816
99,587
Income tax expense (benefit) (55 ) 16
488
—
449
Net income (loss) $ 99,138
$ 1,407
$ (22,223 ) $ 20,816
$ 99,138
Comprehensive income (loss) $ 99,138
$ 1,407
$ (23,702 ) $ 20,837
$ 97,680



	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenue:
Service revenues	$	27,882		$	18,358		$	20,114		$	(26,635	)	$	39,719
Subscriber equipment sales	424			4,466			3,674			(1,361		)	7,203
Total revenue	28,306			22,824			23,788			(27,996		)	46,922
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	9,948			2,070			5,597			(2,087		)	15,528
Cost of subscriber equipment sales	187			3,540			2,693			(1,356		)	5,064
Marketing, general and administrative	10,604			1,854			33,064			(25,462		)	20,060
Depreciation, amortization and accretion	37,623			426			569			(239		)	38,379
Total operating expenses	58,362			7,890			41,923			(29,144		)	79,031
Income (loss) from operations	(30,056		)	14,934			(18,135		)	1,148			(32,109		)
Other income (expense):
Loss on equity issuance	(1,923		)	—			—			—			(1,923		)
Interest income and expense, net of amounts capitalized	(17,981		)	(12		)	(152		)	(9		)	(18,154		)
Derivative gain	39,155			—			—			—			39,155
Equity in subsidiary earnings (loss)	(1,427		)	2,079			—			(652		)	—
Other	(616		)	(112		)	604			48			(76		)
Total other income (expense)	17,208			1,955			452			(613		)	19,002
Income (loss) before income taxes	(12,848		)	16,889			(17,683		)	535			(13,107		)
Income tax benefit	—			—			(259		)	—			(259		)
Net income (loss)	$	(12,848	)	$	16,889		$	(17,424	)	$	535		$	(12,848	)
Comprehensive income (loss)	$	(12,848	)	$	16,889		$	(19,000	)	$	535		$	(14,424	)

Globalstar, Inc.

Condensed Consolidating Balance Sheet

As of ~~September~~June 30, ~~2016~~2017

(Unaudited)


	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated		Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)														(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	6,281		$	2,337		$	4,292		$	—		$	12,910	$	4,538		$	1,975	$	2,325		$	—		$	8,838
Accounts receivable	6,133			6,776			3,676			—			16,585		5,806			6,135		3,428			—			15,369
Intercompany receivables	881,227			661,824			25,362			(1,568,413		)	—		938,139			717,066		46,098			(1,701,303		)	—
Inventory	2,268			5,299			2,164			—			9,731		2,208			4,621		1,985			—			8,814
Prepaid expenses and other current assets	2,950			345			2,276			—			5,571		1,738			1,830		1,621			—			5,189
Total current assets	898,859			676,581			37,770			(1,568,413		)	44,797		952,429			731,627		55,457			(1,701,303		)	38,210
Property and equipment, net	1,040,091			3,735			4,492			4			1,048,322		1,005,671			3,751		4,371			5			1,013,798
Restricted cash	37,959			—			—			—			37,959		37,915			—		—			—			37,915
Intercompany notes receivable	10,086			—			6,436			(16,522		)	—		7,447			—		6,436			(13,883		)	—
Investment in subsidiaries	(277,528		)	59,947			35,042			182,539			—		(282,248		)	78,753		37,502			165,993			—
Prepaid second-generation ground costs	2,579			—			—			—			2,579
Intangible and other assets, net	14,270			164			682			(10		)	15,106		17,321			87		2,650			(12		)	20,046
Total assets	$	1,726,316		$	740,427		$	84,422		$	(1,402,402	)	$	1,148,763	$	1,738,535		$	814,218	$	106,416		$	(1,549,200	)	$	1,109,969
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	38,112		$	—		$	—		$	—		$	38,112	$	108,720		$	—	$	—		$	—		$	108,720
Accounts payable	2,030			3,473			1,067			—			6,570		2,925			3,487		1,212			—			7,624
Accrued contract termination charge	19,654			—			—			—			19,654		20,026			—		—			—			20,026
Accrued expenses	14,919			5,710			7,437			—			28,066		7,713			6,097		6,854			—			20,664
Derivative Liabilities															36,860			—		—			—			36,860
Intercompany payables	619,104			740,464			208,735			(1,568,303		)	—		673,426			773,216		254,622			(1,701,264		)	—
Payables to affiliates	243			—			—			—			243		304			—		—			—			304
Deferred revenue	1,390			20,123			5,841			—			27,354		1,130			21,247		7,099			—			29,476
Total current liabilities	695,452			769,770			223,080			(1,568,303		)	119,999		851,104			804,047		269,787			(1,701,264		)	223,674
Long-term debt, less current portion	547,311			—			—			—			547,311		459,966			—		—			—			459,966
Employee benefit obligations	4,911			—			—			—			4,911		4,944			—		—			—			4,944
Intercompany notes payable	6,435			—			10,086			(16,521		)	—		6,436			—		7,447			(13,883		)	—
Derivative liabilities	189,500			—			—			—			189,500		318,215			—		—			—			318,215
Deferred revenue	5,751			317			—			—			6,068		5,468			384		14			—			5,866
Debt restructuring fees	20,795			—			—			—			20,795
Other non-current liabilities	1,459			320			3,698			—			5,477		928			325		4,577			—			5,830
Total non-current liabilities	776,162			637			13,784			(16,521		)	774,062		795,957			709		12,038			(13,883		)	794,821
Stockholders’ equity (deficit)	254,702			(29,980		)	(152,442		)	182,422			254,702		91,474			9,462		(175,409		)	165,947			91,474
Total liabilities and stockholders’ equity	$	1,726,316		$	740,427		$	84,422		$	(1,402,402	)	$	1,148,763	$	1,738,535		$	814,218	$	106,416		$	(1,549,200	)	$	1,109,969

Globalstar, Inc.

Condensed Consolidating Balance Sheet

As of December 31, ~~2015~~2016

(Unaudited)


	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated		Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)														(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	3,530		$	719		$	3,227		$	—		$	7,476	$	7,259		$	1,327		$	1,644		$	—		$	10,230
Accounts receivable	4,860			5,215			4,461			—			14,536		5,938			6,340			2,941			—			15,219
Intercompany receivables	839,215			609,500			54,507			(1,503,222		)	—		897,691			678,707			32,040			(1,608,438		)	—
Inventory	2,148			6,321			3,554			—			12,023		2,266			4,354			1,473			—			8,093
Prepaid expenses and other current assets	2,399			291			1,766			—			4,456		1,570			955			2,063			—			4,588
Total current assets	852,152			622,046			67,515			(1,503,222		)	38,491		914,724			691,683			40,161			(1,608,438		)	38,130
Property and equipment, net	1,069,605			3,722			4,587			(354		)	1,077,560		1,031,623			3,708			4,384			4			1,039,719
Restricted cash	37,918			—			—			—			37,918		37,983			—			—			—			37,983
Intercompany notes receivable	12,037			—			5,355			(17,392		)	—		8,901			—			6,436			(15,337		)	—
Investment in subsidiaries	(274,453		)	58,686			32,945			182,822			—		(280,557		)	73,029			36,146			171,382			—
Prepaid second-generation ground costs	8,929			—			—			—			8,929
Intangible and other assets, net	11,384			280			464			(11		)	12,117		15,259			128			1,407			(12		)	16,782
Total assets	$	1,717,572		$	684,734		$	110,866		$	(1,338,157	)	$	1,175,015	$	1,727,933		$	768,548		$	88,534		$	(1,452,401	)	$	1,132,614
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	32,835		$	—		$	—		$	—		$	32,835	$	75,755		$	—		$	—		$	—		$	75,755
Debt restructuring fees															20,795			—			—			—			20,795
Accounts payable	4,292			2,439			1,387			—			8,118		2,624			3,490			1,385			—			7,499
Accrued contract termination charge	19,121			—			—			—			19,121		18,451			—			—			—			18,451
Accrued expenses	9,816			6,949			5,674			—			22,439		10,573			5,884			6,705			—			23,162
Intercompany payables	585,091			706,913			211,188			(1,503,192		)	—		636,336			750,084			221,980			(1,608,400		)	—
Payables to affiliates	616			—			—			—			616		309			—			—			—			309
Deferred revenue	1,980			17,722			4,200			—			23,902		1,576			19,304			5,599			—			26,479
Total current liabilities	653,751			734,023			222,449			(1,503,192		)	107,031		766,419			778,762			235,669			(1,608,400		)	172,450
Long-term debt, less current portion	548,286			—			—			—			548,286		500,524			—			—			—			500,524
Employee benefit obligations	4,810			—			—			—			4,810		4,883			—			—			—			4,883
Intercompany notes payable	5,563			—			11,818			(17,381		)	—		6,435			—			8,901			(15,336		)	—
Derivative liabilities	239,642			—			—			—			239,642		281,171			—			—			—			281,171
Deferred revenue	6,027			386			—			—			6,413		5,567			299			11			—			5,877
Debt restructuring fees	20,795			—			—			—			20,795
Other non-current liabilities	1,567			305			9,035			—			10,907		1,115			325			4,450			—			5,890
Total non-current liabilities	826,690			691			20,853			(17,381		)	830,853		799,695			624			13,362			(15,336		)	798,345
Stockholders’ equity (deficit)	237,131			(49,980		)	(132,436		)	182,416			237,131		161,819			(10,838		)	(160,497		)	171,335			161,819
Total liabilities and stockholders’ equity	$	1,717,572		$	684,734		$	110,866		$	(1,338,157	)	$	1,175,015	$	1,727,933		$	768,548		$	88,534		$	(1,452,401	)	$	1,132,614

Globalstar, Inc.

Condensed Consolidating Statement of Cash Flows

~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017

(Unaudited)


	Parent Company			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations		Consolidated			Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated
	(In thousands)													(In thousands)
Cash flows provided by (used in) operating activities	$	4,785		$	1,618	$	1,301		$	—	$	7,704
Cash flows provided by operating activities														$	4,008		$	1,068		$	1,180		$	—	$	6,256
Cash flows used in investing activities:
Second-generation network costs (including interest)	(8,272		)	—		(200		)	—		(8,472		)	(6,498		)	—			(32		)	—		(6,530		)
Property and equipment additions	(7,477		)	—		(169		)	—		(7,646		)	(1,637		)	(420		)	(59		)	—		(2,116		)
Purchase of intangible assets	(1,327		)	—		—			—		(1,327		)	(1,552		)	—			(492		)	—		(2,044		)
Change in restricted cash	(41		)								(41		)
Net cash used in investing activities	(17,117		)	—		(369		)	—		(17,486		)	(9,687		)	(420		)	(583		)	—		(10,690		)
Cash flows provided by (used in) financing activities:
Principal payments of the Facility Agreement	(16,418		)	—		—			—		(16,418		)	(21,695		)	—			—			—		(21,695		)
Proceeds from Thermo Common Stock Purchase Agreement														33,000			—			—			—		33,000
Payment of debt restructuring fee														(20,795		)	—			—			—		(20,795		)
Payment of debt amendment fee														(255		)	—			—			—		(255		)
Proceeds from issuance of stock to Terrapin	28,500			—		—			—		28,500			12,000			—			—			—		12,000
Proceeds from issuance of common stock and exercise of options and warrants	3,001			—		—			—		3,001			635			—			—			—		635
Net cash provided by financing activities	15,083			—		—			—		15,083			2,890			—			—			—		2,890
Effect of exchange rate changes on cash	—			—		133			—		133			—			—			84			—		84
Net increase (decrease) in cash and cash equivalents	2,751			1,618		1,065			—		5,434
Cash and cash equivalents, beginning of period	3,530			719		3,227			—		7,476
Cash and cash equivalents, end of period	$	6,281		$	2,337	$	4,292		$	—	$	12,910
Net increase (decrease) in cash, cash equivalents and restricted cash														(2,789		)	648			681			—		(1,460		)
Cash, cash equivalents and restricted cash, beginning of period														45,242			1,327			1,644			—		48,213
Cash, cash equivalents and restricted cash, end of period														$	42,453		$	1,975		$	2,325		$	—	$	46,753

Globalstar, Inc.

Condensed Consolidating Statement of Cash Flows

~~Nine~~Six Months Ended ~~September~~June 30, ~~2015~~2016

(Unaudited)


	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated			Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated
	(In thousands)														(In thousands)
Cash flows provided by (used in) operating activities	$	2,869		$	2,901		$	1,544		$	—	$	7,314		$	916		$	255		$	(170	)	$	—	$	1,001
Cash flows used in investing activities:
Second-generation network costs (including interest)	(15,484		)	—			—			—		(15,484		)	(5,161		)	—			(146		)	—		(5,307		)
Property and equipment additions	(1,587		)	(1,967		)	(668		)	—		(4,222		)	(5,937		)	(167		)	(241		)	—		(6,345		)
Purchase of intangible assets	(1,840		)									(1,840		)	(806		)	—			—			—		(806		)
Net cash used in investing activities	(18,911		)	(1,967		)	(668		)	—		(21,546		)	(11,904		)	(167		)	(387		)	—		(12,458		)
Cash flows provided by (used in) financing activities:
Principal payments of the Facility Agreement	(3,225		)									(3,225		)	(16,418		)	—			—			—		(16,418		)
Proceeds from issuance of stock to Terrapin	39,000			—			—			—		39,000			28,500			—			—			—		28,500
Proceeds from issuance of common stock and exercise of options and warrants	426			—			—			—		426			3,016			—			—			—		3,016
Net cash provided by financing activities	36,201			—			—			—		36,201			15,098			—			—			—		15,098
Effect of exchange rate changes on cash	—			—			(1,117		)	—		(1,117		)	—			—			152			—		152
Net increase (decrease) in cash and cash equivalents	20,159			934			(241		)	—		20,852
Cash and cash equivalents, beginning of period	3,166			672			3,283			—		7,121
Cash and cash equivalents, end of period	$	23,325		$	1,606		$	3,042		$	—	$	27,973
Net increase (decrease) in cash, cash equivalents and restricted cash															4,110			88			(405		)	—		3,793
Cash, cash equivalents and restricted cash, beginning of period															41,448			719			3,227			—		45,394
Cash, cash equivalents and restricted cash, end of period															$	45,558		$	807		$	2,822		$	—	$	49,187

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements.

Certain statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q (the "Report"), other than purely historical information, including, but not limited to, estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements, such as the statements regarding our ability to develop and expand our business (including our ability to monetize our spectrum rights), our anticipated capital spending, our ability to manage costs, our ability to exploit and respond to technological innovation, the effects of laws and regulations (including tax laws and regulations) and legal and regulatory changes (including regulation related to the use of our spectrum), the opportunities for strategic business combinations and the effects of consolidation in our industry on us and our competitors, our anticipated future revenues, our anticipated financial resources, our expectations about the future operational performance of our satellites (including their projected operational lives), the expected strength of and growth prospects for our existing customers and the markets that we serve, commercial acceptance of new products, problems relating to the ground-based facilities operated by us or by independent gateway operators, worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis and other statements contained in this Report regarding matters that are not historical facts, involve predictions. Risks and uncertainties that could cause or contribute to such differences include, without limitation, those in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015,~~2016, as filed with the Securities and Exchange Commission (the "SEC") on February ~~26, 2016~~23, 2017 (the ~~"2015~~"2016 Annual Report") ~~and in Item 1A.Risk Factors of Part II in this Report.~~. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this Report to reflect actual results or future events or circumstances.

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

This "Management's Discussion and Analysis of Financial Condition" should be read in conjunction with the "Management's Discussion and Analysis of Financial Condition" and information included in our ~~2015~~2016 Annual Report.

Overview

Mobile Satellite Services Business

Globalstar, Inc. (“we,” “us” or the “Company”) provides Mobile Satellite Services (“MSS”) including voice and data communications services globally via satellite. By providing wireless communications services in areas not served or underserved by terrestrial wireless and wireline networks and in circumstances where terrestrial networks are not operational due to natural or man-made disasters, we seek to meet our customers' increasing desire for connectivity. We offer voice and data communication services over our network of in-orbit satellites and our active ground stations ~~(or “gateways”~~(“gateways”), which we refer to collectively as the Globalstar System.

We currently provide the following communications services via satellite. These services are available only with equipment designed to work on our network:

two-way voice communication and data transmissions ~~(“Duplex”)~~ using mobile or fixed ~~devices;~~devices, which we refer to as Duplex; and

one-way data transmissions ~~("Simplex")~~ using a mobile or fixed device that transmits its location and other information to a central monitoring station, ~~which includes~~including certain SPOT and Simplex products.

~~We have integrated our second-generation satellites with our first-generation satellites to form our second-generation~~Our constellation of Low Earth Orbit ~~(“LEO”~~("LEO") satellites includes second-generation satellites, which were launched and placed into service during the years 2010 through 2013, and certain first-generation satellites. The restoration of our constellation’s Duplex capabilities was complete in August 2013 forming the world's most modern satellite network. This restoration of Duplex capabilities resulted in a substantial increase in service levels, making our products and services more desirable to existing and potential customers. We offer a range of price-competitive products to the industrial, governmental and consumer markets. Due to the unique design of the Globalstar System (and based on customer input), we believe that we offer the best voice quality among our peer group.

We designed our second-generation satellites to last twice as long in space, have 40% greater capacity and be built at a significantly lower cost compared to our first-generation satellites. We achieved this longer life by increasing the solar array and battery capacity, using a larger fuel tank, adding redundancy for key satellite equipment, and improving radiation specifications and additional lot level testing for all susceptible electronic components, in order to account for the accumulated dosage of radiation encountered during a 15-year mission at the operational altitude of the satellites. The second-generation satellites use passive S-band antennas on the body of the spacecraft providing additional shielding for the active amplifiers which are located inside the spacecraft, unlike the first-generation amplifiers that were located on the outside as part of the active antenna array. Each satellite has a high degree of on-board subsystem redundancy, an on-board fault detection system and isolation and recovery for safe and quick risk mitigation.

Due to the unique design of the Globalstar System (and based on customer input), we believe that we offer the best voice quality among our peer group. We define a successful level of service for our customers asby their ability to make uninterrupted calls of average duration for a system-wide average number of minutes per month. Our goal is to provide service levels and call success rates equal to or better than our MSS competitors so our products and services are attractive to potential customers. We define voice quality as the ability to easily hear, recognize and understand callers with imperceptible delay in the transmission. Due to the unique design of the Globalstar System, by this measure our system outperforms geostationary (“GEO”) satellites used by some of our competitors. Due to the difference in signal travel distance, GEO satellite signals must travel approximately 42,000 additional nautical miles, which introduces considerable delay and signal degradation to GEO calls. For our competitors using cross-linked satellite architectures, which require multiple inter-satellite connections to complete a call, signal degradation and delay can result in compromised call quality as compared to that experienced over the Globalstar System.

We ~~also~~ compete aggressively on price. ~~Our MSS handsets are priced lower than those of our main MSS competitors, providing access to MSS services to~~We offer a ~~broader~~ range of ~~subscribers.~~price-competitive products to the industrial, governmental and consumer markets. We expect to retain our position as the low cost, high quality leader in the MSS industry.

Our satellite communications business, by providing critical mobile communications to our subscribers, serves principally the following markets: recreation and personal; government; public safety and disaster relief; oil and gas; maritime and fishing; natural resources, mining and forestry; construction; utilities; and transportation.

Our products and services are sold through a variety of independent agents, dealers and resellers, and IGOs. We also have distribution relationships with a number of "Big Box" and online retailers and other similar distribution ~~channels which expands the diversification of our distribution~~ channels.

At September 30, 2016, we served approximately 694,000 subscribers. We count "subscribers" based on the number of devices that are subject to agreements that entitle them to use our voice or data communications services rather than the number of persons or entities who own or lease those devices. With the release of new product and service offerings and expansion in new and legacy markets, we anticipate further growth in our subscriber base.

Regulatory Reform for Terrestrial Spectrum Authority

In ~~November 2013,~~December 2016, the Federal Communications Commission (the "FCC") ~~proposed rules that, if~~ adopted ~~would~~a Report and Order which will enable us to offer ~~low power~~ terrestrial broadband services over ~~a portion~~our 11.5 MHz band of ~~our~~ licensed ~~MSS~~2.4 GHz spectrum. ~~We have termed these services Terrestrial Low Power Service ("TLPS"). We believe TLPS represents a differentiated, premium,~~The Report and ~~immediate solution to existing Wi-Fi congestion. Through~~Order was published in the ~~two TLPS deployments held during 2015,~~Federal Register on January 31, 2017 and became effective on March 2, 2017. In April 2017, we ~~demonstrated a material increase in user throughput and network levels. These deployments also provided additional data confirming the successful coexistence of TLPS~~filed an application with ~~other existing services. With these real world deployments of our TLPS operations, we have shown~~ the FCC ~~the dramatic consumer benefits that are achievable. The proposed rules would substantially revise the gating criteria for terrestrial use of~~to modify our ~~spectrum and would allow us to provide TLPS over our licensed spectrum together~~mobile satellite services licenses consistent with the ~~non-exclusive use of adjacent unlicensed spectrum. On~~Report and Order. The FCC placed our application on public notice in May ~~13, 2016,~~and established a comment cycle. The comment period closed July 11, 2017. We expect the FCC ~~circulated an order containing~~to issue our requested modified licenses in the ~~proposed rules. If~~near future.

Shortly after receiving this ruling from the FCC, ~~adopts the proposed order,~~ we ~~plan to establish one or more partnerships to deploy commercial service promptly as well as to seek~~began seeking similar terrestrial authority in ~~certain~~several international jurisdictions. We expect this effort to continue for the foreseeable future.

Performance Indicators

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

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

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

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

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

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

Comparison of the Results of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016

Revenue

Total revenue increased by $1.9 million, or approximately 8%, to $25.6 million for the three months ended September 30, 2016 from $23.7 million for the three months ended September 30, 2015. This increase was driven by a $2.3 million increase in service revenue resulting from a 2% increase in our average subscriber base and increases in ARPU for most types of revenue. This increase in service revenue was offset partially by a decrease in revenue from subscriber equipment sales due primarily to a lower volume of core Simplex units sold during the three months ended September 30, 2016.

Total revenue increased by ~~$4.8~~$3.0 million, or approximately 7%12%, to ~~$72.5~~$28.1 million for the ~~nine~~three months ended ~~September~~June 30, ~~2016~~2017 from ~~$67.7~~$25.1 million for the ~~nine months ended September 30, 2015.~~same period in 2016. This increase was driven primarily by a ~~$6.3~~$3.3 million increase in service revenue ~~resulting from~~due primarily to a 4%23% increase in ~~our average subscriber base~~Duplex ARPU and ~~increases~~a 14% increase in ~~ARPU~~SPOT ARPU. A decline in equipment revenue slightly offset this growth in service revenue.

Total revenue increased by $5.9 million, or approximately 13%, to $52.8 million for ~~all types of revenue.~~the six months ended June 30, 2017 from $46.9 million for the same period in 2016. This increase was driven primarily by a $6.1 million increase in service revenue ~~was offset partially by a $1.6 million decrease in revenue from subscriber equipment sales. This decrease was~~ due primarily to a ~~lower volume of~~23% increase in Duplex ARPU and ~~Simplex units sold,~~a 12% increase in SPOT ARPU. A decline in equipment revenue slightly offset ~~partially by a higher volume of SPOT equipment sales.~~this growth in service revenue.

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


	Three Months Ended September 30, 2016				Three Months Ended September 30, 2015				Nine Months Ended September 30, 2016				Nine Months Ended September 30, 2015				Three Months Ended June 30, 2017				Three Months Ended June 30, 2016				Six Months Ended June 30, 2017				Six Months Ended June 30, 2016
	Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue
Service revenue:
Duplex	$	9,303	36	%	$	7,409	31	%	$	23,730	33	%	$	20,572	30	%	$	9,322	33	%	$	8,093	32	%	$	16,920	32	%	$	14,427	31	%
SPOT	9,662		38		8,794		37		28,252		39		24,655		36		11,193		40		9,489		38		21,590		41		18,590		39
Simplex	2,294		9		2,363		10		7,303		10		6,898		10		2,526		9		2,644		11		4,942		9		5,009		11
IGO	238		1		189		1		654		1		576		1		376		1		172		1		587		1		416		1
Other	455		2		889		4		1,732		2		2,666		5		884		3		572		2		1,743		3		1,277		3
Total	$	21,952	86	%	$	19,644	83	%	$	61,671	85	%	$	55,367	82	%	$	24,301	86	%	$	20,970	84	%	$	45,782	86	%	$	39,719	85	%

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


	Three Months Ended September 30, 2016				Three Months Ended September 30, 2015					Nine Months Ended September 30, 2016				Nine Months Ended September 30, 2015				Three Months Ended June 30, 2017					Three Months Ended June 30, 2016					Six Months Ended June 30, 2017					Six Months Ended June 30, 2016
	Revenue		% of Total Revenue		Revenue			% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue			% of Total Revenue		Revenue			% of Total Revenue		Revenue			% of Total Revenue		Revenue		% of Total Revenue
Subscriber equipment sales:	Subscriber equipment sales:																	Subscriber equipment sales:
Duplex	$	1,125	4	%	$	1,122		5	%	$	3,144	4	%	$	3,947	6	%	$	612		2	%	$	1,171		4	%	$	1,511		3	%	$	2,019	4	%
SPOT	1,436		6		1,414			6		4,051		6		3,941		6		1,815			7		1,654			7		3,051			6		2,615		6
Simplex	832		3		1,265			5		2,837		4		3,661		5		1,072			4		1,072			4		1,979			4		2,006		4
IGO	175		1		272			1		706		1		745		1		330			1		229			1		469			1		531		1
Other	24		—		(39		)	—		57		—		62		—		(7		)	—		(10		)	—		(17		)	—		32		—
Total	$	3,592	14	%	$	4,034		17	%	$	10,795	15	%	$	12,356	18	%	$	3,822		14	%	$	4,116		16	%	$	6,993		14	%	$	7,203	15	%

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Average number of subscribers for the period:
Duplex	77,485		75,303		77,378		71,477		72,290		77,479		73,650		77,154
SPOT	276,384		258,812		271,209		251,169		282,826		272,698		282,149		271,073
Simplex	298,186		302,460		301,216		297,271		300,459		297,945		301,433		300,529
IGO	39,318		38,725		39,226		38,697		37,162		39,091		37,596		39,127
Other	2,185		4,364		2,270		4,304		1,483		2,662		1,543		2,703
Total	693,558		679,664		691,299		662,918		694,220		689,875		696,371		690,586

ARPU (monthly):
Duplex	$	40.02	$	32.80	$	34.08	$	31.98	$	42.98	$	34.82	$	38.29	$	31.16
SPOT	11.65		11.33		11.57		10.91		13.19		11.60		12.75		11.43
Simplex	2.56		2.60		2.69		2.58		2.80		2.96		2.73		2.78
IGO	2.02		1.63		1.85		1.65		3.37		1.46		2.60		1.77

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

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

Other service revenue includes revenue generated primarily from engineering services and third party sources, which are not subscriber driven. Accordingly, we do not present ARPU for other service revenue in the table above. Effective April 1, 2016, we began classifying activation fees with the service revenue to which they relate.

Service Revenue

Duplex service revenue increased ~~26%~~15% and ~~15%~~17% for the three and ~~nine~~six months ended ~~September~~June 30, 2017, respectively, compared to the same period in 2016 ~~respectively,~~ due primarily to increases in ARPU. ARPU increased 23% for both the ~~average subscriber base~~three and ~~ARPU~~six months ended June 30, 2017 compared to the same periods in ~~2015. The average Duplex subscriber base increased 3%~~2016. These ARPU increases contributed $1.8 million and ~~8% and ARPU increased 22% and 7% for the three and nine months ended September 30, 2016, respectively, compared~~$3.2 million to the ~~same periods~~total Duplex service revenue increases in ~~2015.~~the respective periods. Higher ARPU was due primarily to rate plan changes, increased revenue from ~~annual,~~prepaid, usage-based ~~plans. Over the past several quarters, the popularity~~plans, and a higher number of revenue-generating subscribers. We increased prices for certain of our ~~annual,~~legacy rate plans beginning in 2016 to align our rate plans with our service levels and prospective rate plans for future products. Additionally, approximately half of our new subscribers select our prepaid, usage-based ~~plans has increased substantially.~~plans. These plans result in higher service revenue recognized ~~in seasonally stronger months due to increased usage and expiration of~~when unused minutes expire on the anniversary date of the customer's contract.

~~SPOT~~ Higher revenue from prepaid plans contributed $0.7 million and $1.5 million, respectively, to the total service revenue ~~increased 10%~~increases during the three and ~~15%~~six-month periods ended June 30, 2017. A decrease in average subscribers of 7% and 5% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively, compared to the same periods in ~~2015,~~2016 offset partially the increases in ARPU. This decrease was due to slower activations and more aggressive collections procedures as we more promptly deactivate non-paying subscribers. The decline in the average subscriber base negatively impacted Duplex service revenue by $0.6 million and $0.7 million in the respective periods.

SPOT service revenue increased 18% and 16% for the three and six months ended June 30, 2017, respectively, compared to the same periods in 2016 due to increases in both ARPU and the average subscriber ~~base~~base. ARPU increased 14% and ~~ARPU.~~12% for the three and six months ended June 30, 2017 compared to the same periods in 2016. These ARPU increases resulted in higher SPOT service revenue of $1.3 million and $2.2 million in the respective periods. Higher ARPU was primarily driven by rate plan increases beginning in 2016. The average number of SPOT subscribers increased 7%4% for both the three and 8%six months ended June 30, 2017 compared to the same periods in 2016. These increases contributed $0.4 million and ~~ARPU increased 3%~~$0.8 million to the total SPOT service revenue increases in the respective periods.

Simplex service revenue decreased 4% and 6%1% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively, compared to the same periods in ~~2015.The ARPU increase was driven primarily by rate plans increases and the significant number of SPOT Gen3~~^TM ~~sales over the past 12 months. We sell SPOT Gen3~~^TM ~~with a higher annual rate plan compared to other SPOT products due to its enhanced tracking features.~~

~~Simplex service revenue decreased 3% for the three months ended September 30,~~ 2016 ~~compared to the same period in 2015,~~ due to slight ~~declines~~fluctuations in ~~both the average subscriber base~~ARPU and ARPU, reflecting the impact of the oil and gas industry downturn on some of our largest customers. Average Simplex subscribers decreased 1% and ARPU decreased 2% for the three months ended September 30, 2016, compared to the same period in 2015. Comparing the nine months ended September 30, 2016 to the same period in 2015, Simplex service revenue increased 6% due to a 1% increase in average subscribers ~~and a 4% increase~~ in ~~ARPU. Our reclassification of activation fees from other revenue to Simplex service revenue in 2016, which contributed $0.5 million to~~ the ~~Simplex service revenue variance during the nine months ended September 30, 2016, was the principal reason for this increase.~~respective periods.

Other revenue ~~decreased approximately $0.4~~increased $0.3 million, or ~~49%~~55%, and ~~$0.9~~$0.5 million, or ~~35%~~36%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively, compared to the same periods in ~~2015.~~2016. The ~~decrease~~increases in other revenue iswere due primarily to ahigher revenue generated from government contracts, which increased by $0.3 million and $0.8 million during the respective periods. The increase from government contracts for the year to date period was offset partially by the reclassification of activation fees from other revenue to Simplex and Duplex service revenue beginning inApril 1, 2016, which contributed $0.3 million ~~and $0.5 million~~ to the total ~~decrease for the three and nine months ended September 30, 2016 compared to the same periods in 2015.~~variance.

Subscriber Equipment Sales

Revenue from Duplex equipment sales ~~was flat~~decreased $0.6 million and $0.5 million for the three and six months ended ~~September~~June 30, ~~2016 and decreased 20% for the nine months ended September 30, 2016~~2017, respectively, compared to the same periods in 2015. This decrease was driven primarily by a sales promotion introduced in March 2015, which reduced the selling price of our Duplex handsets, thereby lowering the revenue generated from these equipment sales, and drove2016. We experienced higher demand ~~following~~in 2016 due to lower service plan prices in effect and a change in sales promotions in 2017 as we manage phone inventory levels prior to the ~~initial~~ launch ~~resulting in~~of a ~~higher volume of phones sold in 2015.~~second-generation device.

Revenue from SPOT equipment sales increased 2%10% and 3%17% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively, compared to the same ~~periods~~period in ~~2015~~2016 due to an increase in the volume of units sold during the respective periods. The success of our SPOT products continues, as evidenced by our increased subscriber base.

Revenue from Simplex equipment sales ~~decreased by approximately 34% and 23%~~was flat for the three ~~and nine~~ months ended ~~September~~June 30, ~~2016, respectively,~~2017 and decreased 1% for the six months ended June 30, 2017 compared to the same periods in ~~2015. The downturn~~2016. Slight changes in pricing and the ~~oil and gas industry has negatively impacted our Simplex business due~~mix of products sold during the periods contributed to the ~~concentration of Simplex customers who operate in this industry.~~variances.

Operating Expenses

Total operating expenses ~~increased $0.5~~decreased $0.9 million, or ~~approximately 1%~~2%, to ~~$40.3~~$40.6 million for the three months ended ~~September~~June 30, ~~2016~~2017 from ~~$39.8~~$41.5 million for the same period in ~~2015, and~~2016. Total operating expenses increased ~~$0.9~~$1.5 million, or ~~approximately 1%~~2%, to ~~$119.3~~$80.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017 from ~~$118.4~~$79.0 million for the same period in ~~2015. Increases in both periods were due to higher~~2016. Higher cost of services and lower marketing, general and administrative ~~costs and cost of services, offset by lower cost of subscriber equipment sales.~~expenses during the respective periods contributed to the variances.

Cost of Services

Cost of services increased ~~$0.6~~$1.1 million ~~or approximately 8%,~~and $2.5 million for the three and six months ended ~~September~~June 30, ~~2016~~2017, respectively, from the same ~~period~~periods in ~~2015 and increased $0.7 million, or approximately 3%, for the nine months ended September 30, 2016 from the same period in 2015. For both periods, the~~2016. These increases were due primarily to support costs related to our ground network, which increased $0.5 million and $0.9 million, respectively, from the comparable periods in 2016 and higher personnel costs of $0.5 million and $0.6 million due to an increased headcount and the timing of capital projects, which increased net payroll expense when compared to 2016. Additionally, higher research and development costs ~~related to~~of $0.2 million and $1.0 million were driven by new products and ~~personnel costs.~~technology being developed internally and through external partners.

Cost of Subscriber Equipment Sales

Cost of subscriber equipment sales decreased ~~$0.5~~$0.1 million and ~~$1.5~~$0.2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, respectively,~~2017 from the same periods in ~~2015.~~2016. These decreases are in line with the ~~decreases~~decline in revenue from subscriber equipment sales ~~over the same periods. However, the consolidated equipment margin increased due to changes in the volume and mix of products sold~~as margins generated from hardware sales are consistent during the respective ~~periods and price variations across our worldwide markets and product portfolio.~~periods.

Marketing, General and Administrative

Marketing, general and administrative expenses ~~increased approximately $0.4~~decreased $2.0 million and $1.1 million for three and six months ended ~~September~~June 30, ~~2016 and increased $1.7 million for the nine months ended September 30, 2016~~2017 compared to the same periods in ~~2015.~~

~~The increase for the three months ended September 30, 2016 is~~2016. These decreases are due primarily to ~~increases in stock compensation cost of $0.5 million, subscriber acquisition costs of $0.4 million,~~lower professional fees and personnel costs of $0.3 million. These increases were offset by a reduction in bad debt expense of $0.7 million due to a reserve recorded on a specific customer's receivable balance during the three months ended September 30, 2015, which did not recur in 2016.

~~The increase for the nine months ended September 30, 2016 is due primarily to~~legal expenses, including a $1.1 million ~~increase~~accrual recorded in the ~~accrual~~second quarter of 2016 for the settlement of litigation related to one of our international operations. WeThis settlement was paid through the ~~total settlement~~issuance of ~~4.5 million reais, or $1.4 million, by issuing approximately 1.3 million~~ shares of our common stock onin October ~~24,~~ 2016. ~~Also contributing~~See Note 6: Commitments and Contingencies to our condensed consolidated financial statements for further discussion. Additionally, subscriber acquisition costs were down $0.8 million and $1.0 million due to changes in sales strategies during the ~~increase in~~respective periods, including lower rebates and co-op marketing ~~general and administrative expenses~~credits given to our resellers. These decreases were offset partially by higher stock compensation costs ~~personnel costs, subscriber acquisition costs~~of $0.2 million and ~~professional and consulting fees, which increased $0.9 million, $0.9 million,~~ $0.7 million, ~~and $0.4 million, respectively. These increases were offset partially by a reduction in bad debt expense of $2.2 million during~~respectively, compared to the ~~nine-month period, which was driven primarily by an accounts receivable balance that we reserved during the nine months ended September 30, 2015 and recovered during the first quarter of 2016.~~2016 periods.

Depreciation, Amortization and Accretion

Depreciation, amortization and accretion expense ~~was flat~~increased $0.1 million for the three months ended ~~September~~June 30, ~~2016~~2017 and increased $0.2 million for the six months ended June 30, 2017 from the same ~~period~~periods in ~~2015 and increased $0.1 million for the nine months ended September 30, 2016 from the same period in 2015.~~2016.

As of ~~September~~June 30, ~~2016,~~2017, we had ~~$197.7~~$217.2 million in construction in progress related to costs (including capitalized interest) associated with our contracts with Hughes and Ericsson to complete next-generation upgrades to our ground infrastructure. We ~~expect to~~will begin depreciating ~~this asset in~~these assets when the ~~near future.~~second-generation gateways are placed into commercial service.

Other Income (Expense)

~~Loss on Extinguishment of Debt~~

We did not incur losses on extinguishment of debt during 2016 or for the three months ended September 30, 2015. We incurred a loss of $2.3 million for the nine months ended September 30, 2015. During the first and second quarters of 2015, holders of $6.5 million principal amount of our 2013 8.00% Notes converted their notes into common stock, resulting in a loss of $2.3 million on the issuance of 10.9 million shares of voting common stock. These losses resulted from the fair value of the shares issued to the holders upon conversion exceeding the carrying value of the debt and derivative liability written off due to these conversions.

Gain (Loss) on Equity Issuance

For the three ~~and nine~~ months ended ~~September~~June 30, 2017 and 2016, gain (loss) on equity issuance ~~fluctuated to~~was a gain of ~~$4.3~~$2.0 million and ~~$2.3 million, respectively, from~~ a loss of ~~$2.9~~$2.1 million, respectively. For the six months ended June 30, 2017 and 2016, gain (loss) on equity issuance was a gain of $2.7 million and ~~$5.8~~a loss of $1.9 million, ~~respectively, compared~~respectively. These changes were driven primarily by downside protection features included in certain of our contracts relating to ~~the same periods~~payment of consideration with our common stock in ~~2015. In June 2015,~~lieu of cash.

As discussed in Note 6: Commitments and Contingencies to our condensed consolidated financial statements, we had an agreement with Hughes whereby it exercised its right to receive a pre-payment of certain payment milestones in shares of our common stock at a 7% discount to the market value in lieu of cash. As previously discussed in Note 7: Commitments Contractual Obligations - Next-Generation Gateways and Other Ground Facilities to our condensed consolidated financial statements, in valuing the shares issued to Hughes at the 7% discount and the related liability for the potential issuance of additional shares, we initially recorded a non-cash loss of approximately $2.9 million in loss on equity issuance in our condensed consolidated statements of operations for the second quarter of 2015. In ~~conjunction~~connection with this agreement, we ~~also~~ provided Hughes downside protection through ~~December~~June 30, ~~2016. This agreement generally would require us to issue additional~~2017. In April 2017, Hughes sold all remaining shares ~~to Hughes if the market value~~ of our common stock atrecognizing the ~~end~~required proceeds under the agreement. As a result of changes in the ~~downside protection period is less than the price at issuance. We mark~~estimated value of this option between initial issuance and settlement in April 2017, we recorded non-cash gains and losses during each reporting period. As of June 30, 2017, this liability ~~to market at each balance sheet date through the settlement date.~~was no longer outstanding.

Interest Income and Expense

Interest income and expense, net, decreased $0.1 million ~~to an expense of $8.9~~and $0.5 million ~~for~~during the three and six months ended ~~September~~June 30, ~~2016 from an expense of $9.0~~2017, respectively, compared to the same periods in 2016.

Gross interest costs increased $0.8 million ~~for~~and $1.3 million during the three and six months ended June 30, 2017 compared to the same period in ~~2015. This variance is due to higher capitalized interest, offset partially by an increase in interest costs during 2016.~~

~~Interest income and expense, net, increased $0.2 million to an expense of $27.0 million for the nine months ended September 30,~~ 2016, ~~from an expense of $26.8 million for the same period in 2015. Higher capitalized interest during 2016 partially offset an increase in interest costs~~respectively, resulting primarily from a higher LIBOR-based interest rate on our Facility Agreement and a higher principal balance outstanding on our Thermo Loan ~~Agreement~~Agreement. The increase in gross interest expense was offset by an increase in capitalized interest of $0.9 million and ~~a make-whole~~$1.7 million during the same periods, respectively, due primarily to an increase in our construction in progress balances related to our ground network, which results in higher interest ~~payment made in the second quarter of 2015, which did not recur in 2016.~~

eligible to be capitalized.

Derivative Gain (Loss)

Derivative gain ~~decreased~~(loss) fluctuated by ~~$43.2~~$117.6 million to ~~$11.0~~a loss of $77.1 million for the three months ended ~~September~~June 30, ~~2016,~~2017, compared to ~~$54.2~~a gain of $40.5 million for the same period in ~~2015~~2016 and fluctuated by ~~$133.3~~$113.1 million to ~~$50.1~~a loss of $73.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, compared to ~~$183.4~~a gain of $39.2 million for the same period in ~~2015.~~ 2016.

We recognize gains or losses due to the change in the value of certain embedded features within our debt instruments that require standalone derivative accounting. ~~While~~Although fluctuation in our stock price is the most significant cause for the change in value of these derivative instruments, other inputs can impact the value including volatility, discount rate, maturity date and changes in the principal amount of notes outstanding. Although our stock price did not fluctuate significantly during the first and third quarters of 2016, it did fluctuate significantly during the second quarter of 2016. Our stock price fluctuated even more significantly during the three and nine month periods ended September 30, 2015, resulting in the material non-cash derivative gains in those periods. See Note 5: Fair Value Measurements to our condensed consolidated financial statements for further discussion of computation of the fair value ~~computations~~ of our derivatives.

Other

Other income (loss) fluctuated ~~$1.5~~$2.8 million to expense of ~~$0.5~~$2.1 million for the three months ended ~~September~~June 30, ~~2016~~2017 from ~~expense~~income of ~~$2.0~~$0.7 million for the same period in ~~2015. Other income (loss)~~2016 and fluctuated ~~$2.3~~$2 million to expense of ~~$0.6~~$2.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 from ~~income~~expense of ~~$1.7~~$0.1 million for the same period in ~~2015. This fluctuation is~~2016. Changes in other income (loss) are due primarily to foreign currency gains and losses we recognized during the respective periods given the significant financial statement items we have denominated in foreign currencies, including primarily the Brazilian real, euro and Canadian dollar. Additionally, in March 2016, the Venezuelan government introduced the DICOM rate, which is published by the Central Bank of Venezuela and replaced the SIMADI rate. We use the DICOM exchange rate to remeasure our Venezuelan subsidiary's bolivar-based transactions and net monetary assets in U.S. dollars.

~~Income Tax Benefit (Expense)~~

Income tax benefit (expense) fluctuated $6.4 million to a benefit of $6.3 million for the three months ended September 30, 2016 from expense of $0.1 million for the same period in 2015. Income tax benefit (expense) fluctuated $7.0 million to a benefit of $6.6 million for the nine months ended September 30, 2016 from expense of $0.4 million for the same period in 2015. As disclosed in Note 6: Accrued Expenses and Other Non-Current Liabilities to our condensed consolidated financial statements, as a result of the expiration of the statute of limitations associated with the tax position of one of our foreign subsidiaries, we removed $6.3 million in unrecognized tax positions, inclusive of cumulative interest and penalties, from our non-current liabilities resulting in a corresponding tax benefit.

In October 2016, the U.S. Department of the Treasury released final and temporary regulations under Section 385 of the U.S. Internal Revenue Code. The final regulations strengthen the tax rules distinguishing between debt and equity specific to related party transactions. We are currently evaluating the impact this regulation will have on our current accounting and tax policies and procedures.

Liquidity and Capital Resources

Overview

Our principal liquidity requirements include paying our debt service obligations and funding our operating ~~costs and paying amounts related to our capital projects.~~costs. Our principal sources of liquidity include cash on hand and cash flows from ~~operations and funds available under our common stock purchase agreement with Terrapin.~~operations. We ~~also~~ expect sources of liquidity to also include funds from other debt or equity financings that have not yet been arranged. See Part I, Item 1A. Risk Factors in our ~~2015~~2016 Annual Report for a description of risks, some of which are beyond our control, affecting our ability to fulfill our liquidity requirements.

As of ~~September~~June 30, ~~2016,~~2017, we held cash and cash equivalents of ~~$12.9~~$8.8 million. We also had ~~$38.0~~$37.9 million in restricted cash, ~~which is~~consisting of the balance in our debt service reserve ~~account.~~account under the Facility Agreement. The Facility Agreement (as defined below) ~~requires us to maintain $37.9 million in a debt service reserve account and~~ restricts the use of these funds to making principal and interest payments under the Facility Agreement. In August 2015, we entered into a new $75.0 million common stock purchase agreement with Terrapin (the "August 2015 Terrapin Agreement"), which is available to be drawn over a 24-month period. As of September 30, 2016, $31.5 million remained available under this agreement. We anticipate that we will draw all or substantially all of the remaining amounts available under the August 2015 Terrapin Agreement to achieve compliance with certain financial covenants in our Facility Agreement for the measurement period ending December 31, 2016 and to pay our debt service obligations.

As of December 31, ~~2015,~~2016, we held cash and cash equivalents of ~~$7.5~~$10.2 million and ~~$60.0~~had $38.0 million ~~was available under the August 2015 Terrapin Agreement.~~in restricted cash.

The carrying amount of our current and long-term debt outstanding was ~~$38.1~~$108.7 million and ~~$547.3~~$460.0 million, respectively, at ~~September~~June 30, ~~2016,~~2017, compared to ~~$32.8~~$75.8 million and ~~$548.3~~$500.5 million, respectively, at December 31, ~~2015.~~2016. The current portion of our ~~long-term~~ debt outstanding at these dates represents principal payments under our Facility Agreement scheduled to occur within 12 months. At June 30, 2017, this current debt balance also included the total outstanding amount of our 2013 8.00% Notes as the first put date of the notes is April 1, 2018. The decrease in our total debt balance was due primarily to a principal payment ~~on our~~of $21.7 million made for the Facility Agreement in June 2017. This decrease was offset partially by a higher carrying value of the Thermo Loan Agreement due to interest accruing on that debt and ~~amortization~~a higher carrying value of the Facility Agreement and convertible notes due to accretion of the debt discounts and debt financing ~~costs related to our Facility Agreement and convertible notes.~~costs.

Indebtedness and Available Credit

Facility Agreement

~~On August 7, 2015, we~~We entered into ~~a Second Global Amendment and Restatement~~the Facility Agreement ~~(the "2015 GARA") providing for the amendment and restatement of our former senior credit facility and certain related credit documents (this~~in 2009, which was amended and restated ~~senior secured credit facility agreement is herein referred to as the "Facility Agreement").~~in July 2013, August 2015 and June 2017. The ~~indebtedness under the~~ Facility Agreement is scheduled to mature in December 2022. As of September 30, 2016, we had fully drawn all funds available under the Facility Agreement and the principal amount outstanding was $559.4 million. Semi-annual principal repayments began in December 2014.

The Facility Agreement contains customary events of default and requires that we satisfy various financial and non-financial covenants. ~~Pursuant to~~The compliance calculations of the ~~terms~~financial covenants of the Facility Agreement permit us to include certain cash funds we receive from the issuance of our common stock and/or subordinated indebtedness before or immediately after the calculation date. We refer to these funds as "Equity Cure Contributions" and we may ~~cure noncompliance~~include them in calculating compliance with ~~certain~~ financial covenants through ~~Equity Cure Contributions (as described below) through a date as late as June 2019.~~December 2019, subject to the conditions set forth in the Facility Agreement. If we ~~were to~~ violate any ~~of these~~ covenants and ~~were~~are unable to obtain a sufficient Equity Cure Contribution or a waiver, or are unable to make payments to satisfy our debt obligations under the Facility Agreement and are unable to obtain a waiver, we would be in default under the Facility Agreement, and the lenders could accelerate payment of the indebtedness. The acceleration of our indebtedness under one agreement may permit acceleration of indebtedness under other agreements that contain cross-acceleration provisions. As of ~~September~~June 30, ~~2016,~~2017, we were in compliance with respect to the covenants of the Facility Agreement.

The ~~compliance calculations of the financial covenants of the~~ Facility Agreement permit inclusion of certain cash funds contributed to us from the issuance of our common stock and/or subordinated indebtedness. We refer to these funds as "Equity Cure Contributions," and we use them to achieve compliance with financial covenants, subject to the conditions set forth in the Facility Agreement. Each Equity Cure Contribution must be in a minimum amount of $10 million for each measurement period or in the aggregate for all periods until the date that such funding is no longer allowed by the Facility Agreement. In August 2015, February 2016 and June 2016, we drew $15 million, $6.5 million and $22 million, respectively, under the August 2015 Terrapin Agreement. We used these funds as Equity Cure Contributions under the Facility Agreement in the calculation of our compliance with financial covenants for the measurement periods ended December 31, 2015 and June 30, 2016. We anticipate continuing to use Equity Cure Contributions to maintain compliance with certain financial covenants under the Facility Agreement for the measurement periods ending December 31, 2016 and June 30, 2017, including, but not limited to, the remaining amounts available under the August 2015 Terrapin Agreement.

~~The Facility Agreement~~also requires that we maintain ~~a total of $37.9 million in~~ a debt service reserve account that is pledged to secure all of our obligations under the Facility Agreement. We may use these funds only to make principal and interest payments under the Facility Agreement. AsPrior to October 30, 2017, we must maintain a total of ~~September~~$37.9 million in a debt service reserve account. After October 30, ~~2016,~~2017, the balance in the debt service reserve account ~~which~~must equal the total amount of principal and interest payable on the next payment date. As of June 30, 2017, the balance in the debt service reserve account was ~~established with the proceeds of the loan agreement with Thermo discussed below, was $38.0~~$37.9 million and classified as restricted cash on our condensed consolidated balance sheets.

~~The~~Our indebtedness under the Facility Agreement bears interest at a floating rate of LIBOR plus 2.75% through June 2017, increasing by an additional 0.5% each year thereafter to a maximum rate of LIBOR plus 5.75%. Interest on the Facility Agreement is payable semi-annual in arrears in June and December of each calendar year. Ninety-five percent of our obligations under the Facility Agreement are guaranteed by ~~COFACE, the French export credit agency.~~Bpifrance Assurance Export S.A.S. ("BPIFAE") (formerly COFACE). Our obligations under the Facility Agreement are guaranteed on a senior secured basis by all of our domestic subsidiaries and are secured by a first priority lien on substantially all of our assets and our domestic subsidiaries (other than their FCC licenses), including patents and trademarks, 100% of the equity of our domestic subsidiaries and 65% of the equity of certain foreign subsidiaries.

In June 2017, we amended and restated the Facility Agreement and entered into a Third Global Amendment and Restatement Agreement (the “2017 GARA”). The 2017 GARA, among other things, deferred certain financial covenants until the measurement

period ending December 31, 2018; extended to the measurement period ending December 31, 2019 the date through which Equity Cure Contributions can be made; and requires the Company to raise a total of $159.0 million no later than October 30, 2017, of which $12.0 million was raised in January 2017 under a common stock purchase agreement with Terrapin Opportunity, L.P. ("Terrapin") and $33.0 million was raised in June 2017 under a common stock purchase agreement with Thermo. The funds raised from Thermo were used to pay outstanding restructuring fees, insurance premiums to BPIFAE and principal and interest due under the Facility Agreement as of June 30, 2017. If we do not raise the remaining funds by October 30, 2017, it would constitute an event of default under the Facility Agreement.

See ~~discussion in~~ Note 3: Long-Term Debt and Other Financing Arrangements to our condensed consolidated financial statements for further discussion of the Facility Agreement.

Thermo ~~Loan Agreement~~Agreements

We ~~also~~ have an amended and restated loan agreement with Thermo (the “Loan Agreement”). Our obligations to Thermo under the Loan Agreement are subordinated to all of our obligations under the Facility Agreement. Amounts outstanding under the Loan Agreement accrue interest at 12% per annum, which we capitalize and add to the outstanding principal in lieu of cash payments. We will make payments to Thermo only when permitted by the Facility Agreement. Principal and interest under the Loan Agreement become due and payable six months after the obligations under the Facility Agreement have been paid in full, or earlier if a change in control or any acceleration of the maturity of the loans under the Facility Agreement occurs. As of ~~September~~June 30, ~~2016,~~2017, the principal amount outstanding was ~~$91.1~~$99.8 million, including ~~$47.6~~$56.3 million of interest that had accrued since 2009 with respect to the Thermo ~~Loan Agreement.~~Agreements.

In connection with the ~~2015~~2017 GARA, Thermo and certain of its affiliates ~~executed and delivered~~agreed to fund or backstop approximately $33.0 million to us by June 30, 2017. The total amount was raised pursuant to the ~~agent under the Facility~~Common Stock Purchase Agreement ~~the Second~~entered into between us and Thermo ~~Group Undertaking Letter in which they agreed that, during the period commencing~~ on ~~the effective date of the 2015 GARA and ending on the later of March 31, 2018 and, if our 2013 8.00% Notes have been redeemed in full, September~~June 30, ~~2019, they would make, or cause to be made, available to us cash equity financing in the aggregate amount of $30.0 million.~~2017. Thermo ~~was obligated to provide these funds if we requested the funds or an event of default occurred under the Facility Agreement, and Terrapin failed to purchase~~purchased 17.8 million shares of our voting common stock for $33.0 million at a purchase price of $1.85, which represents a 10% discount to ~~provide us with cash proceeds requested under~~ the ~~August 2015 Terrapin Agreement.~~closing price of our voting common stock on June 29, 2017. The balance of this commitment was reduced by any cash equity financing that we received during the Commitment Period from Thermo or an external equity funding source, including Terrapin, and which we used as an Equity Cure Contribution. In August 2015, February 2016 and June 2016, we drew $15 million, $6.5 million and $22.0 million, respectively, under the August 2015 Terrapin Agreement. As a result, Thermo had no remaining cash equity commitment as of September 30, 2016 under this letter. Allterms of the ~~transactions between us and Thermo and its affiliates~~Common Stock Purchase Agreement were ~~reviewed and~~ approved ~~on our behalf~~ by a ~~Special Committee~~special committee of ~~our~~ independent directors of the Board of Directors, who were represented by independent legal counsel.

See ~~discussion in~~ Note 3: Long-Term Debt and Other Financing Arrangements to our condensed consolidated financial statements for further discussion of the ~~Second~~ Thermo ~~Group Undertaking Letter, the Equity Agreement, and the Thermo Loan Agreement.~~Agreements.

8.00% Convertible Senior Notes Issued in 2013

Our 2013 8.00% Notes ~~initially were~~are convertible into shares of our common stock at a conversion price of ~~$0.80~~$0.73 (as adjusted) per share of common stock, or 1,250 shares of our common stock per $1,000 principal amount of 2013 8.00% Notes, subject to adjustment. Due to common stock issuances by us since May 20, 2013 at prices below the then effective conversion rate, the base conversion rate was $0.73 per share of common stock as of September 30, 2016.

stock. As of ~~September~~June 30, ~~2016,~~2017, the principal amount outstanding of the 2013 8.00% Notes was ~~$16.9~~$17.3 million. Interest on the 2013 8.00% Notes is payable semi-annually in arrears on April 1 and October 1 of each year. We pay interest in cash at a rate of 5.75% per annum and by issuing additional 2013 8.00% Notes at a rate of 2.25% per annum.

A holder of 2013 8.00% Notes has the right, at the holder’s option, to require us to purchase some or all of the 2013 8.00% Notes on each of April 1, 2018 and April 1, 2023 at a price equal to the principal amount of the 2013 8.00% Notes to be purchased plus accrued and unpaid interest.

The indenture governing the 2013 8.00% Notes provides for customary events of default. If there is an event of default, the Trustee may, at the direction of the holders of 25% or more in aggregate principal amount of the 2013 8.00% Notes, accelerate the maturity of the 2013 8.00% Notes. As of ~~September~~June 30, ~~2016,~~2017, we were in compliance with respect to the terms of the 2013 8.00% Notes and the Indenture.

See Note 3: Long-Term Debt and Other Financing Arrangements to our ~~Consolidated Financial Statements in Part II, Item 8~~condensed consolidated financial statements for further discussion of ~~our 2015 Annual Report for a complete description of our~~the 2013 8.00% Notes.

Terrapin Opportunity, L.P. Common Stock Purchase Agreement

In conjunction with the amendment to the Facility Agreement in August 2015, ~~(as discussed above),~~ we entered into the August 2015 Terrapin Agreement pursuant to which we ~~may~~were entitled to require Terrapin to purchase up to $75.0 million of shares of our voting common stock over the 24-month term following the date of the agreement. ~~Over~~Through the ~~24-month~~ term ~~in our discretion, we may present~~of this agreement, Terrapin ~~with up to 24 draw notices requiring Terrapin to purchase~~purchased a ~~specified dollar amount~~total of shares of our voting common stock, based on the price per share per day over ten consecutive trading days (a "Draw Down Period"). The per share purchase price for these shares will equal the daily volume weighted average price of common stock on each date during the Draw Down Period on which shares are purchased by Terrapin (but not less than a minimum price specified by us (a “Threshold Price”)), less a discount ranging from 2.75% to 4.00% based on the amount of the Threshold Price. In addition, in our discretion, but subject to certain limitations, we may grant to Terrapin the option to purchase additional shares during a Draw Down Period. We have agreed not to sell to Terrapin a number of shares of voting common stock that, when aggregated with all other shares of voting common stock then beneficially owned by Terrapin and its affiliates, would result in their beneficial ownership of more than 9.9% of the number of our shares of voting common stock issued and outstanding at the date of the sale.

~~In August 2015, we drew $15.0 million under the August 2015 Terrapin Agreement and issued 9.3~~67.3 million shares of voting common stock for a total purchase price of $75.0 million. In January 2017, we drew $12.0 million and issued to Terrapin ~~at an average price of $1.61 per share. In February 2016, we drew $6.5 million under the August 2015 Terrapin Agreement and issued 6.4~~8.9 million shares of voting common stock to Terrapin at an average price of $1.02 per share. In June 2016, we drew $22.0 million under the August 2015 Terrapin Agreement and issued 19.5 million shares of voting common stock to Terrapin at an average price of $1.13 per share. As of September 30, 2016, $31.5 million remainedstock. No funds remain available under ~~the August 2015 Terrapin Agreement.~~this agreement.

~~Contractual Obligations~~

For the nine months ended September 30, 2016, our capital expenditures, excluding interest, totaled approximately $12.9 million, of which $4.7 million were under our contractual agreements with Ericsson and Hughes related to the procurement and deployment of our second-generation gateways and other ground facilities and related products. As of September 30, 2016, the remaining contractual obligations under our agreements with Ericsson and Hughes were $2.9 million and $0.8 million, respectively.

Various maintenance, licensing and royalty agreements are necessary for the use of proprietary, third-party technology embedded in our second-generation ground infrastructure and products. We project the fees due under these maintenance and license agreements to be approximately $3.6 million per year and will recognize them in our condensed consolidated statement of operations over the maintenance and license terms, which we expect to begin at various times during 2017. The fees due under the royalty agreements will fluctuate based on product sales, and we will recognize them in our condensed consolidated statement of operations on a per unit basis as second-generation products are manufactured, sold or activated. As of September 30, 2016, we have paid a portion of these fees have recorded them as a prepaid asset in our condensed consolidated balance sheets.

Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016

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


	Nine Months Ended						Six Months Ended
	September 30, 2016			September 30, 2015			June 30, 2017			June 30, 2016
Net cash provided by operating activities	$	7,704		$	7,314		$	6,256		$	1,001
Net cash used in investing activities	(17,486		)	(21,546		)	(10,690		)	(12,458		)
Net cash provided by financing activities	15,083			36,201			2,890			15,098
Effect of exchange rate changes on cash	133			(1,117		)	84			152
Net increase in cash and cash equivalents	$	5,434		$	20,852
Net increase (decrease) in cash, cash equivalents and restricted cash							$	(1,460	)	$	3,793

Cash Flows Provided by Operating Activities

Cash provided by operations includes primarily cash receipts from subscribers related to the purchase of equipment and satellite voice and data services. ~~Uses of~~We use cash ~~from~~in operating activities ~~include~~ primarily for personnel costs, inventory purchases and other general corporate expenditures. Net cash provided by operating activities during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 was ~~$7.7~~$6.3 million compared to ~~$7.3~~$1.0 million during the same period in ~~2015.~~2016. The increase was due primarily to higher cash receipts from service contracts and a ~~lower net loss after adjusting for non-cash items, offset partially by unfavorable changes~~favorable change in working capital.

Cash Flows Used in Investing Activities

~~Net cash~~Cash used in investing activities was ~~$17.5~~$10.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to ~~$21.5~~$12.5 million for the same period in ~~2015. We used less cash for our second-generation network costs as we are approaching the final acceptance of our contracts with Hughes and Ericsson.~~2016. This decrease was ~~offset partially~~driven primarily by ~~an increase in other~~higher property and equipment additions ~~related to software and other back office expenditures to prepare for~~in the ~~rollout of new products.~~prior year.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities was ~~$15.1~~$2.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to ~~$36.2~~$15.1 million for the same period in ~~2015.~~2016. This decrease was due to a higher ~~principal~~amount of debt service payments ~~and lower cash~~during 2017, offset partially by higher proceeds from equity financings, including the ~~sale of equity during the nine months ended September 30, 2016 compared to the prior year period. Principal payments made under our Facility~~Common Stock Purchase Agreement with Thermo in June 2016 and 2015 were $16.4 million and $3.2 million, respectively. Additionally, we received proceeds from the sale of our common stock to Terrapin of $28.5 million and $39.0 million during the first nine months of 2016 and 2015, respectively. We also received cash of $2.6 million from Thermo related to warrants exercised in June 2016.2017.

Contractual Obligations and Commitments

There have been no significant changes to our contractual obligations and commitments since December 31, ~~2015.~~2016.

Off-Balance Sheet Transactions

We have no material off-balance sheet transactions.

Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting guidance and the expected impact that the guidance could have on our ~~Condensed Consolidated Financial Statements,~~condensed consolidated financial statements, see Recently Issued Accounting Pronouncements in Note 1: Basis of Presentation to our condensed consolidated financial statements in Part 1, Item 1 of this Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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

We also have operations in Venezuela. Since 2010, the Venezuelan government's frequent modifications to its currency laws have caused the bolivar to devalue significantly and resulted in Venezuela being considered a highly inflationary economy. At the end of each accounting period through June 30, 2015, we remeasured our Venezuelan subsidiary from the bolivar to the U.S. dollar at the official government rate of 6.3 bolivars per U.S. dollar. Effective July 1, 2015 we began using the SIMADI exchange rate published by the Central Bank of Venezuela to remeasure our Venezuelan subsidiary's bolivar based transactions and net monetary assets in U.S. dollars. We determined, based upon our specific facts and circumstances, that the SIMADI rate (renamed the DICOM rate in March 2016) is the most appropriate rate for financial reporting purposes, instead of the official exchange rate we previously used. We continue to monitor the significant uncertainty surrounding current Venezuela exchange mechanisms.

Our interest rate risk arises from our variable rate debt under our Facility Agreement, under which loans bear interest at a floating rate based on the LIBOR. In order to reduce the interest rate risk, we completed an arrangement with the lenders under the Facility Agreement to limit the interest to which we are exposed. The interest rate cap provides limits on the 6-month Libor rate (Base Rate) used to calculate the coupon interest on outstanding amounts on the Facility Agreement to be capped at 5.50% should the Base Rate not exceed 6.5%. Should the Base Rate exceed 6.5%, our Base Rate will be 1% less than the then 6-month LIBOR rate. We have ~~$559.4~~$521.3 million in principal outstanding under the Facility Agreement. A 1.0% change in interest rates would result in a change to interest expense of approximately ~~$5.6~~$5.2 million annually.

See Note 5: Fair Value Measurements to our condensed consolidated financial statements for discussion of our financial assets and liabilities measured at fair market value and the market factors affecting changes in fair market value of each.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 as of ~~September~~June 30, ~~2016,~~2017, the end of the period covered by this Report. This evaluation was based on the guidelines established in Internal Control - Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that as of ~~September~~June 30, ~~2016~~2017 our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We believe that the condensed consolidated financial statements included in this Report fairly present, in all material respects, our condensed consolidated financial position and results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

(b) Changes in internal control over financial reporting.

As of ~~September~~June 30, ~~2016,~~2017, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated our internal control over financial reporting. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that no changes in our internal control over financial reporting occurred during the quarter ended ~~September~~June 30, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

For a description of our material pending legal and regulatory proceedings and settlements, see Note 8:6: Commitments and Contingencies in our Condensed Consolidated Financial Statements in Part I, Item 1 of this Report.

Item 1A. Risk Factors.

You should carefully consider the risks described in this Report and all of the other reports that we file from time to time with the SEC, in evaluating and understanding us and our business. Additional risks not presently known or that we currently deem immaterial may also impact our business operations and the risks identified in this Report may adversely affect our business in ways we do not currently anticipate. Our financial condition or results of operations also could be materially adversely affected by any of these risks. There have been no material changes to our risk factors disclosed in Part I. Item 1A.~~"Risk Factors" of our 2015 Annual Report, as amended by Part II, Item 1A.~~ "Risk Factors" of our ~~Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.~~2016 Annual Report.

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

None

Item 3. Defaults upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information.

None.

Item 6. Exhibits.



Exhibit Number		Description

~~10.1~~3.1		Amendment #3 to ~~Letter Agreement regarding equity payment by~~the Amended and Restated Certificate of Incorporation of Globalstar, Inc.

10.1†		Amendment No.15 to Contract between Globalstar, Inc. and Hughes Network Systems LLC dated as of ~~September 21, 2016~~June 1, 2017

10.2*		Third Global Amendment and Restatement Agreement dated as of June 30, 2017 between Globalstar, Inc., Thermo Funding Company LLC, BNP Paribas and the other lenders thereto (Exhibit 10.1 to Current Report on Form 8-K filed July 7, 2017)

10.3*		Third Amended and Restated Facility Agreement dated as of June 30, 2017 among Globalstar, Inc., BNP Paribas and the other lenders thereto (Exhibit 10.2 to Current Report on Form 8-K filed July 7, 2017)

10.4*		Common Stock Purchase Agreement dated as of June 30, 2017 between Globalstar, Inc. and Thermo Funding II LLC (Exhibit 10.3 to Current Report on Form 8-K filed July 7, 2017)

31.1		Section 302 Certification of the Principal Executive Officer

31.2		Section 302 Certification of the Principal Financial Officer

32.1		Section 906 Certification of the Principal Executive Officer

32.2		Section 906 Certification of the Principal Financial Officer

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

*		Incorporated by reference

†	†	Portions of the exhibit have been omitted pursuant to a request for confidential treatment filed with the Commission. The omitted portions have been filed with the Commission.

SIGNATURES

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



			GLOBALSTAR, INC.

Date:	~~November~~August 3, ~~2016~~2017	By:	/s/ James Monroe III
			James Monroe III
			Chairman and Chief Executive Officer (Principal Executive Officer)

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

4338



	Outstanding Warrants		Strike Price
	September 30, 2016	December 31, 2015	September 30, 2016		December 31, 2015
Contingent Equity Agreement ⁽¹⁾	24,571,428	30,191,866	$	0.01	$	0.01
5.0% Warrants ⁽²⁾	—	8,000,000	—		0.32
	24,571,428	38,191,866



	September 30, 2016		December 31, 2015
Accrued interest	$	5,776	$	317
Accrued compensation and benefits	3,562		2,098
Accrued property and other taxes	4,213		4,125
Accrued customer liabilities and deposits	3,477		3,216
Accrued professional and other service provider fees	2,860		1,830
Accrued commissions	715		1,216
Accrued telecommunications expenses	618		1,487
Accrued inventory	62		502
Accrued liability for potential stock issuance to Hughes	3,146		5,495
Accrued liability for legal settlement	1,411		328
Other accrued expenses	2,226		1,825
Total accrued expenses	$	28,066	$	22,439



	September 30, 2016		December 31, 2015
Long-term accrued interest	$	194	$	96
Asset retirement obligation	1,408		1,302
Deferred rent and other deferred expense	517		593
Liability related to the Cooperative Endeavor Agreement with the State of Louisiana	573		716
Uncertain income tax positions	—		5,795
Foreign tax contingencies	2,624		2,311
Capital lease obligations	161		94
Total other non-current liabilities	$	5,477	$	10,907



	September 30, 2016		December 31, 2015
Property and equipment, net:
United States	$	1,043,827	$	1,073,327
Canada	675		510
Europe	435		484
Central and South America	3,147		2,782
Others	238		457
Total property and equipment, net	$	1,048,322	$	1,077,560