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Article by DailyStocks_admin    (06-02-08 10:06 AM)

Globalstar, Inc. CEO Richard J. Thompson bought 100,000 shares on 5-21-2008 at 2.69.

BUSINESS OVERVIEW

Overview

Globalstar, Inc. (the "Company") is a leading provider of mobile voice and data communications services via satellite. By providing wireless services in areas not served or underserved by terrestrial wireless and wireline networks, we seek to address our customers' increasing desire for connectivity. Using, at any given time, approximately 48 in-orbit satellites and 25 ground stations, which we refer to as gateways, we offer voice and data communications services in over 120 countries. Sixteen of these gateways are operated by unaffiliated companies (including three gateways in Brazil which we have agreed to acquire), which we refer to as independent gateway operators and which purchase communications services from us on a wholesale basis for resale to their customers.

Our network, originally owned by Globalstar, L.P. ("Old Globalstar") was designed, built and launched in the late 1990s by a technology partnership led by Loral Space and Communications and Qualcomm Incorporated, or QUALCOMM. On February 15, 2002, Old Globalstar and three of its subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code. In 2004, we completed the second stage of a two stage acquisition of the business and assets of Old Globalstar. The first stage was completed on December 5, 2003, when Thermo Capital Partners LLC was deemed to obtain operational control of the business, as well as certain ownership rights and risks. The second stage was completed in 2004 when we received final approval from the U.S. Federal Communications Commission, or the FCC. Thermo Capital Partners LLC, which owns and operates companies in diverse business sectors and is referred to in this Report, together with its affiliates, as "Thermo," became our principal owner in this transaction. We refer to this transaction as the "Reorganization."

We were formed as a Delaware limited liability company in November 2003, and were converted into a Delaware corporation on March 17, 2006. Unless we specifically state otherwise, all information in this Report is presented as if we were a corporation throughout the relevant periods.

In anticipation of our initial public offering, which was completed on November 2, 2006, our certificate of incorporation was amended on October 25, 2006 to combine our three series of common stock into one class and our board of directors approved a six-for-one stock split. Unless we specifically state otherwise, all information in this Report is presented as if these corporate events had occurred at the beginning of the relevant periods.

We currently provide the following telecommunications services:

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two-way voice communication between mobile or fixed handsets or user terminals and other mobile and fixed devices;

•
two-way data transmissions (which we call duplex) between mobile and fixed data modems; and

•
one-way data transmissions (which we call Simplex) between a mobile or fixed device that transmits its location or other telemetry information and a central monitoring station.

In most of the world, we have authority to operate a wireless communications network via satellite over 27.85 MHz of radio spectrum, which is comprised of two blocks of contiguous global radio frequencies. In the United States, the FCC has authorized us to use 25.225 MHz. We refer to our licensed radio frequencies as our "spectrum." We are also licensed by the FCC to use 11MHz of our spectrum to provide an ancillary terrestrial component, known as ATC, in the United States in combination with our existing satellite communications service. On November 9, 2007, the FCC requested comment on whether we should be authorized to provide ATC service over an aggregate 19.275 MHz (an additional 8.275 MHz), of our licensed spectrum. ATC services enable the integration of a satellite-based service with terrestrial wireless service, resulting in a hybrid network designed to provide customers with advanced service and broad coverage.

Our services are available only with equipment designed to work on our network. The equipment we offer to our customers consists principally of:

•
mobile telephones;

•
fixed telephones;

•
telephone accessories, such as car kits and chargers; and

•
data modems.

At December 31, 2007, we served approximately 284,000 subscribers. We increased our net subscribers by approximately 8% from December 31, 2006 to December 31, 2007. We count "subscribers" based on the number of devices that are subject to agreements which entitle them to use our voice or data communications services rather than the number of persons or entities who own or lease those devices.

Our satellite constellation was launched in the late 1990s. To supplement our existing satellite constellation, we launched eight spare satellites in 2007. We expect these newly-launched satellites to provide two-way communications service through the deployment of our second-generation constellation. A number of our satellites have experienced various anomalies over time, one of which is a degradation in the performance of the solid-state power amplifiers of the S-band communications antenna subsystem. The S-band antenna provides the downlink from the satellite to a subscriber's phone or data terminal. Degraded performance of an S-band antenna amplifier reduces the availability of two-way voice and data communication between the affected satellite and the subscriber. If the S-band antenna on a satellite ceases to function, two-way communication is impossible over that satellite, but not necessarily over the constellation as a whole. Subscriber service will continue to be available as long as some satellites are functional, but at certain times in any given location it may take longer to establish calls and the average duration of calls may be reduced.

This S-band antenna amplifier degradation does not adversely affect our one-way Simplex data transmission services, which use only the L-band uplink from a subscriber's Simplex terminal to our satellites. We intend to exploit our ability to provide uninterrupted Simplex services with the introduction of new products and services, including the introduction of a consumer-oriented, hand-held tracking and emergency messaging device, the SPOT ™ satellite messenger, made commercially available in November 2007. The SPOT satellite messenger uses both the GPS satellite network to determine a customer's location and the SPOT network to transmit that information to friends, family or an emergency service center.

On November 30, 2006, we and Thales Alenia Space entered into a contract for the construction of 48 low-earth-orbit satellites for our second-generation satellite constellation, which we expect to extend the life of our network until at least 2025. The contract requires Thales Alenia Space to commence delivery of the satellites in the third quarter of 2009. At our request, Thales Alenia Space has presented a four-part sequential plan for accelerating delivery of the initial 24 satellites by up to four months. We have accepted the first two portions of this plan. We cannot assure you that any or all of this acceleration will occur. On September 5, 2007, we entered into a contract with Arianespace, our "Launch Provider," for the launch of our second-generation satellites and certain pre- and post-launch services. Pursuant to the contract, our Launch Provider will make four launches of six satellites each, and we have the option to require our Launch Provider to make four additional launches of six satellites each. The total contract price for the procurement of our second-generation satellite constellation and related launch services is approximately $1.16 billion (the majority of which is denominated in Euros).

Our revenue for the years ended December 31, 2007, 2006 and 2005 was $98.4 million, $136.7 million and $127.1 million, respectively. Our net income (loss) for the years ended December 31, 2007, 2006 and 2005 was $(27.9) million, $23.6 million and $18.7 million, respectively.

Industry

We compete in the mobile satellite services sector of the global communications industry. Mobile satellite services operators provide voice and data services using a network of one or more satellites and associated ground facilities. Mobile satellite services are usually complementary to, and interconnected with, other forms of terrestrial communications services and infrastructure and are intended to respond to users' desires for connectivity at all times and locations. Customers typically use satellite voice and data communications in situations where existing terrestrial wireline and wireless communications networks are impaired or do not exist.

Worldwide, government organizations, military and intelligence agencies, natural disaster aid associations, event-driven response agencies and corporate security teams depend on mobile and fixed voice and data communications services on a regular basis. Businesses with global operating scope require communications services when operating in remote locations around the world. Mobile satellite services users span the forestry, maritime, government, oil and gas, mining, leisure, emergency services, construction and transportation sectors, among others. We believe many existing customers increasingly view satellite communications services as critical to their daily operations.

Over the past two decades, the global mobile satellite services market has experienced significant growth. Increasingly, better-tailored, improved-technology products and services are creating new channels of demand for mobile satellite services. Growth in demand for mobile satellite voice services is driven by the declining cost of these services, the diminishing size and lower costs of the handsets, as well as heightened demand by governments, businesses and individuals for ubiquitous global voice coverage. Growth in mobile satellite data services is driven by the rollout of new applications requiring higher bandwidth, as well as low cost data collection and asset tracking devices.

Communications industry sectors that are relevant to our business include:

•
mobile satellite services, which provide customers with connectivity to mobile and fixed devices using a network of satellites and ground facilities;

•
fixed satellite services, which use geostationary satellites to provide customers with voice and broadband communications links between fixed points on the earth's surface; and

•
terrestrial services, which use a terrestrial network to provide wireless or wireline connectivity and are complementary to satellite services.

Within the major satellite sectors, fixed satellite services and mobile satellite services operators differ significantly from each other. Fixed satellite services providers, such as Intelsat Ltd., Eutelsat Communications ("Eutelsat") and SES Global, and very small aperture terminals companies, such as Hughes Networks and Gilat Satellite Networks, are characterized by large, often stationary or "fixed," ground terminals that send and receive high-bandwidth signals to and from the satellite network for video and high speed data customers and international telephone markets. On the other hand, mobile satellite services providers, such as Globalstar, Inmarsat P.L.C. ("Inmarsat") and Iridium Satellite L.L.C. ("Iridium"), focus more on voice and data services (including data services which track the location of remote assets such as shipping containers), where mobility or small sized terminals are essential. As mobile satellite terminals begin to offer higher bandwidth to support a wider range of applications, we expect mobile satellite services operators will increasingly compete with fixed satellite services operators.

Low earth orbit ("LEO") systems, such as the systems we and Iridium currently operate, reduce transmission delay compared to a geosynchronous system due to the shorter distance signals have to travel. In addition, LEO systems are less prone to signal blockage and, consequently, can provide a better overall quality of service.

Currently, our principal mobile satellite services global competitors are Inmarsat and Iridium. United Kingdom-based Inmarsat owns and operates a geostationary satellite network and U.S.-based Iridium owns and operates a low earth orbit satellite network. Inmarsat provides communications services, such as telephony, fax, video, email and high-speed data services. Iridium offers narrow-band data, fax and voice communications services. We also compete with several regional mobile satellite services providers that operate geostationary satellites, such as Thuraya Satellite Communications Company ("Thuraya"), principally in the Middle East and Africa; Mobile Satellite Ventures ("MSV") and Mobile Satellite Ventures Canada in the Americas; and Asia Cellular Satellite in Asia.

Sales and Marketing

We sell our products and services through a variety of retail and wholesale channels depending on the nature of the product and the targeted market. Our sales and marketing efforts are tailored to each of our geographic regions and targeted markets. In the past, we did not conduct mass consumer marketing campaigns. Rather, our sales professionals targeted specific commercial vertical markets and customers with face-to-face meetings, product trials, advertising in specific publications for those markets and direct mailings. However, with the introduction of our SPOT satellite messenger, we will be targeting our marketing campaigns towards mass audiences. This may include television, print and other means of addressing a wider audience. We also focus a large amount of our marketing activity on tradeshows. In 2007, we attended approximately 35 different corporate tradeshows, where we sponsored booths and demonstrated our products. Our dealers and resellers attended additional tradeshows where they showcased our products.

Direct Sales, Dealers and Resellers

Our distribution managers are responsible for conducting direct sales with key accounts and for managing agent, dealer and reseller relationships in assigned territories in over 25 countries. They conduct direct sales with key customers and manage approximately 800 distribution outlets. We also distribute our services and products indirectly through approximately 20 major resellers and value added resellers in the United States and through 10 independent gateway operators that employ their own salespeople to sell the full range of our voice and data products and services, directly and indirectly, in over 60 countries. Wholesale sales to independent gateway operators represented approximately 5% of our service revenue for the year ended December 31, 2007. No agent, dealer or reseller represented more than 10% of our revenue for the year ended December 31, 2007.

The reseller channel is comprised primarily of communications equipment retailers companies and commercial communications equipment rental companies that retain and bill clients directly, outside of our billing system. Many of our resellers specialize in niche vertical markets where high-use customers are concentrated. We have productive sales arrangements with major resellers to market our services, including some value added resellers that integrate our products into their proprietary end products or applications.

Our typical dealer is a communications services equipment retailer. We offer competitive service and equipment commissions to our network of dealers to encourage increased sales. Since the Reorganization, we have terminated our relationship with numerous underperforming dealers and agents and replaced them with better performing new dealers and agents. We believe our more stringent dealer and agent requirements and our incentive programs position us to continue to experience growing dealer and agent sales due to a better-trained, focused and motivated sales network.

In addition to sales through our distribution managers, agents, dealers and resellers, customers can place orders through our website at www.globalstar.com or by calling our customer sales office at (877) 728-7466. To encourage internet sales, our website includes special promotional offers that are unavailable elsewhere. We believe that, as awareness of our services grows and our brand name becomes more recognizable, we will experience an increase in our direct internet and phone order sales. Because we do not need to pay an agent commission, sell our services at reduced margins or provide a reseller discount, our internet and phone sales channels carry the greatest margins. Our website and call center provide a user-friendly interface with consumers looking for a simple transaction or customer support.

SPOT Satellite Messenger

We are distributing and selling our new SPOT satellite messenger through a variety of existing and new distribution channels. We have signed distribution agreements with a number of "Big Box" retailers and other similar distribution channels including Bass Pro Shops, Big 5 Sporting Goods, Big Rock Sports, Boater's World, Cabela's, Campmor, Joe's Sport, Outdoor and More, Orvis, REI, Rescue Source 3, Sportsman's Warehouse, West Marine and Wynit. Our objective is to sell our SPOT satellite messenger through approximately 5,000 distribution points by the end of the second quarter of 2008 and 10,000 in 2009. Currently, the SPOT satellite messenger is being sold through approximately 2,000 distribution points. We also intend to sell SPOT products and services directly using our existing salesforce into key vertical markets and through our direct e-commerce website ( www.findmespot.com ).

Independent Gateway Operators

Our wholesale operations encompass primarily bulk sales of wholesale minutes to the independent gateway operators around the globe. These independent gateway operators maintain their own subscriber bases that are exclusive to us and promote their own service plans. The independent gateway operator system has allowed us to expand in regions that hold significant growth potential but are harder to serve without sufficient operational scale or where local regulatory requirements or business or cultural norms do not permit us to operate directly. Our wholesale efforts also include our Simplex and duplex data tracking devices.

We do not own or control these independent gateway operators nor do we operate their gateways. We own and operate directly gateways in the United States, Canada, Venezuela, Nicaragua, Puerto Rico and France. See "Item 2. Properties."

Services and Products

Our principal services are satellite communications services, including mobile and fixed voice and data services and asset tracking and monitoring services. We introduced our asset tracking and monitoring services in late 2003, and demand for these services has grown rapidly since then. Sales of all services accounted for approximately 80%, 67% and 64% of our total revenues for the years ended December 31, 2007, 2006 and 2005, respectively. We also sell the related voice and data equipment to our customers, which accounted for approximately 20%, 33% and 36% of our total revenues for the years ended December 31, 2007, 2006 and 2005, respectively.

Our Services

Mobile Voice and Data Satellite Communications Services

We offer our mobile voice and data services to customers via numerous monthly plans at price levels that vary depending upon expected usage. Except for our asset tracking and remote monitoring service, which we refer to as our Simplex service, subscribers under these plans typically pay an initial activation fee to the agent or dealer, as well as a monthly usage fee to us that entitles the customer to a fixed number of minutes in addition to services such as voicemail, call forwarding, short messaging, email, data compression and internet access. We receive both an activation fee and monthly fee for Simplex services. Extra fees may apply for non-voice services, roaming and long-distance.

We regularly innovate our service offerings. We have introduced a number of innovative pricing plans such as "bundled minutes," Annual Plans and Unlimited Plans.

Fixed Voice and Data Satellite Communications Services

We provide fixed voice and data services in rural villages, at remote industrial, commercial and residential sites and on ships at sea, among other places. Fixed voice and data satellite communications services are in many cases an attractive alternative to mobile satellite communications services in situations where multiple users will access the service within a defined geographic area and cellular or ground phone service is not available. Our fixed units also may be mounted on vehicles, barges and construction equipment and benefit from the ability to have higher gain antennas. Our fixed voice and data service plans are similar to our mobile voice and data plans and offer similar flexibility. In addition to offering monthly service plans, our fixed phones can be configured as pay phones (installed at a central location, for example, in a rural village) that accept tokens, debit cards, prepaid usage cards, or credit cards.

Satellite Data Modem Services

In addition to data utilization through fixed and mobile services described above, we also offer data-only services. Our principal competitor providing these services is Orbcomm Inc., which describes its market as two-way machine-to-machine communications and which reported about 318,000 subscribers at September 30, 2007. Our system is well-suited to handle duplex data transmission. Duplex devices have two-way transmission capabilities; for asset-tracking applications, this enables customers to control directly their remote assets and perform more complicated monitoring activities. We offer asynchronous and packet data service in all of our territories. Customers can use our products to access the internet, corporate virtual private networks and other customer specific data centers. Satellite data modems are sold principally through integrators and value added resellers, who developed innovative end-market solutions, such as the Safety Star product, designed to address lone worker safety concerns, and the Skyhawk product, designed for maritime use. Our satellite data modems can be activated under any one of our current pricing plans. Satellite data modems are a fast growing product group that provide solutions that are accessible in every region we serve. The revenue that flows from these products provides an important and growing source of recurring service revenue and subscriber equipment sales for us.

Additionally, we offer a data acceleration and compression service to the satellite data modem market. This service increases web-browsing, email and other data transmission speeds without any special equipment or hardware.

Personal Asset Tracking and Remote Monitoring (Simplex)

Our Simplex service is designed to address the market need for a small and cost-effective solution for sending data (such as location) from assets in remote locations to a central monitoring station.

Our services are available for use only with equipment designed to work on our network, which is typically sold to users in conjunction with an initial service plan. Our mobile phones, similar to ordinary cellular phones, are simple to use. In the fourth quarter of 2006, we began offering a new satellite-only GSP-1700 phone, which is an update to the GSP-1600. The new phone includes a user-friendly color LCD screen and a rugged, water resistant case available in multiple colors. The phones represent a significant improvement over earlier-generation equipment, and we believe that the advantages will drive increased adoption from prospective users as well as increased revenue from our existing subscribers. We also believe that the GSP-1700 is among the smallest, lightest and least-expensive satellite phones available. We are the only satellite network operator currently using the patented QUALCOMM CDMA technology that permits the selection of the strongest signal available.

Currently, QUALCOMM manufactures all of our mobile phones and most of our accessories. In addition to the GSP-1700, we continue to offer our remaining inventories of GSP-1600 tri-mode units that work on AMPS (the North American analog cellular standard) and CDMA digital cellular networks, as well as on our satellite system.

In May 2005, we entered into an agreement with QUALCOMM to manufacture next-generation mobile and fixed devices. Under this agreement, QUALCOMM agreed to supply us with what we project will be a supply of advanced mobile phone units and accessories and advanced data products sufficient to meet our expected demand through 2011.

In addition to our principal products described above, we offer a large selection of related accessories for our line of phones, including car kits, cigarette lighter adapters, wall chargers, travel chargers and remote antennas. Under our agreement with QUALCOMM, it also will produce for us second-generation car kits and other accessories. We believe that sales of these high-margin accessories, especially of car kits, also drive additional product usage, which in turn results in higher service revenue.

In addition to traditional satellite handsets, we sell multiple specialized products designed to address the specific needs of certain attractive end-user markets including the emergency response and maritime markets. These products include:

Emergency Response. Our Globalstar Emergency Management Communications System (GEMCOMS) is comprised of five of our fixed phones conveniently mounted in a container allowing for quick deployment, set-up and operation in an emergency situation. GEMCOMS can operate as a standalone unit (allowing up to five simultaneous Globalstar phone calls) or be combined with a small and relatively inexpensive "picocell" to provide an almost instantaneous local cellular capability in areas where the infrastructure has been damaged or destroyed. GEMCOMS operates like stand-alone cellular phone sites. Prototypes of this system were made available to FEMA for use in support of the disaster relief efforts for Hurricanes Katrina, Rita and Wilma.

Maritime. We provide mobile satellite services specialized for the maritime market through equipment manufactured and sold by SeaTel Wavecall. SeaTel Wavecall currently produces two maritime products: the Wavecall 3000 and the Wavecall MCM3. The Wavecall 3000 provides a voice and data capability for maritime users with up to 9.6 Kbps (with compressed speeds of up to 38.4 Kbps) data throughput while the MCM3 provides voice and data with a throughput of up to 28.8 Kbps (with compressed speeds of up to 144 Kbps). The omni directional antenna (available on all our products) and small physical package provides a significant savings in both equipment and airtime costs compared to competitive systems. Key users of the WaveCall 3000 include the United States Coast Guard and commercial fishermen.

Data-Only Equipment

The satellite data modem model GSP-1620 duplex data device developed and manufactured by QUALCOMM provides packet data and data processing capability over our network. The satellite data modem model GSP-1620 has compressed speeds of up to 38.4 Kbps and is highly programmable to meet multiple applications.

During the second half of 2007, our integrators continued to introduce new and innovative products using our Simplex services. Guardian Mobility Corporation introduced a new group of satellite data modems known as the Tracer 3 Product Family. The data modems are designed to communicate via our Simplex network and are capable of providing data monitoring and GPS-based asset tracking information to customers from remote regions. The Tracer 3 Product Family joined Guardian Mobility's suite of Simplex data products, which includes its Skytrax family of general aviation automated flight following solutions. In addition, Numerex Orbit One, another of our integrators, announced the introduction of its SX-1 as the world's smallest asset tracking modem.

Multi-Channel Modem. In the first half of 2006, we introduced our multi-channel modem to the market. We offer the multi-channel modem with four modem boards ("MCM4") or up to 16 modem boards. Each MCM4 has a single remote antenna and facilitates data rates up to 38.4 Kbps (with compressed speeds of between 144 and 256 Kbps).

QUALCOMM GSP-1720 Satellite Voice and Data Modem. Under our May 2005 agreement, QUALCOMM is manufacturing an updated satellite voice and data modem known as the GSP-1720 that is based on the same technology used in the GSP-1700 phone. We introduced the GSP-1720 modem in the first half of 2007. The GSP-1720 is a new satellite voice and data modem board with multiple antenna configurations and an enlarged set of commands for modem control and is smaller, less expensive and easier to operate than our current product. We expect this new board will be attractive to integrators because it will have more user interfaces that are easily programmable, which will make it easier for value added resellers to integrate the satellite modem processing with the specific application (e.g., monitoring and controlling oil and gas pumps, monitoring and controlling

electric power plants and more economically facilitating security and control monitoring of remote facilities).

SPOT Satellite Messenger

In the fourth quarter of 2007, we introduced the SPOT satellite messenger, aimed at attracting both the recreational and commercial markets that require personal tracking, emergency location and messaging solutions for users that require these services beyond the range of traditional terrestrial and wireless communications. Using the Globalstar Simplex network and web-based mapping software, we expect this new Globalstar device to provide consumers with the capability to geographically trace or map the location of individuals. The product will also enable users to transmit messages to a specific preprogrammed email address, phone or data device, including a request for assistance in the event of an emergency.

•
SPOT Addressable Market

We believe the addressable market for our SPOT products and services in North America alone is approximately 50 million units. Our objective is to capture 2-3% of that market by the end of 2010. The reach of our Simplex System, on which our SPOT products and services relies, covers approximately 50% of the world population. We intend to market our SPOT product and services aggressively in our overseas markets including South and Central America, Western Europe, and through independent gateway operators in their respective territories.

•
SPOT Pricing

The pricing for SPOT products and services is intended to be extremely competitive. Annual service fees currently range from $99.99 for our basic level plan to $149.98 for additional tracking capability. The maximum suggested retail price for the equipment is $169.99 per unit.

We began commercial sales of SPOT products and services only recently, and its commercial success can not be assured.

Customers

The specialized needs of our global customers span many markets. Our system is able to offer our customers cost-effective communications solutions in areas underserved or unserved by existing telecommunications infrastructures. Although traditional users of wireless telephony and broadband data services have access to these services in developed locations, our targeted customers often operate or live in remote or under-developed regions where these services are not readily available or are not provided on a reliable basis.

Our top revenue generating markets in the United States and Canada, are (i) government (including federal, state and local agencies), public safety and disaster relief, (ii) recreation and personal and (iii) maritime and fishing, comprising 26%, 16% and 9%, respectively, of our total subscribers in those regions at December 31, 2007. We also serve customers in the markets of telecommunications, oil and gas, natural resources (mining and forestry), and construction and utilities, which together comprised approximately 23% of our total subscribers in the United States and Canada at December 31, 2007. We focus our attention on obtaining customers who will be long-term users of our services and products and who will generate high average revenue per user and, therefore, higher revenue growth.

None of our customers were responsible for more than 10% of our revenue in 2006 or 2007.

Our Spectrum

In most of the world, we are authorized to operate a wireless communications network via satellite over 27.85 MHz of radio spectrum comprised of two blocks of contiguous global radio frequencies. In the United States, the FCC has authorized us to use 25.225 MHz. Most of our competitors only have access to spectrum frequencies regionally. Access to this global spectrum enables us to design satellites, network and terrestrial infrastructure enhancements cost effectively because the products and services can be deployed and sold worldwide. This broad spectrum assignment enhances our ability to capitalize on existing and emerging wireless and broadcast applications.

Because most of the desirable spectrum below 3GHz has already been allocated by the FCC or will be auctioned by the FCC for terrestrial wireless services, we believe there are limited options for new spectrum allocations. Utilization of existing spectrum is growing quickly. Our spectrum location near the PCS bands should allow us to deploy cost effectively the terrestrial component of an ATC network by leveraging existing terrestrial wireless infrastructures and by adopting off-the-shelf infrastructure equipment to our spectrum bands. Further, we believe the ability of our current network to support ATC services will allow us to introduce new services and capabilities before our competitors. To that end, we are considering a range of options for rollout of our ATC services. We are exploring selective opportunities with a variety of media and communication companies to capture the full potential of our spectrum and U.S. ATC license. See "Ancillary Terrestrial Component (ATC)."

The FCC has allocated a total of 40 MHz of spectrum at 2 GHz for mobile satellite services. This augments the mobile satellite services spectrum allocation at 1.6 and 2.4 GHz and 1.5 and 1.6 GHz. In 2001, we received a license to use a portion of this 2 GHz spectrum. In February 2003, the FCC's International Bureau cancelled our authorization based upon our alleged inability to meet future construction milestones and, in June 2004, the FCC affirmed this cancellation. We have asked for reconsideration of the cancellation although there can be no assurance that the FCC will reconsider it. See "Regulation—2 GHz Spectrum" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview."

Domestic and Foreign Revenue

We supply services and products to a number of foreign customers. Although most of our sales are denominated in U.S. dollars, we are exposed to currency risk for sales in Canada and Europe. In 2007, approximately 37% of our sales were denominated in foreign currencies. For information on our revenue from sales to foreign and domestic customers, see Note 10 to our consolidated financial statements in Item 8 of this Report.

Our Network

Our satellite network includes, at any given time approximately 48 in-orbit operational low earth orbit satellites, plus in-orbit spares. The design of our orbital planes and the positioning of our ground stations ensure that generally at least one satellite is visible to subscribers for certain services, from any point on the earth's surface between 70 o north latitude to 70 o south latitude, covering most of the world's population. However, because of the S-band antenna amplifier degradation in some of our satellites, as described below, not all subscribers can access a satellite for their two-way communications services at all times in all locations. Our satellite configuration combines two different orbital configurations. 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. Our ability to reconfigure the orbital location of each satellite provides us with operating flexibility and continuity of service. The design of our space and ground control system facilitates the real time intervention and management of the satellite constellation and service upgrades via hardware and software enhancements.

CEO BACKGROUND
Mr. Jones has served as Chairman of Globe Wireless, Inc., a maritime communications business, since 2004. From January 1994 to August 2004, he served as Globe's chief executive officer. Mr. Jones is also a director of Landec Corp.

Mr. Lynch has been Managing Director of Thermo Capital Partners, L.L.C., a private equity investment firm, since October 2001. Mr. Lynch also served as Chairman of Xspedius Communications, LLC, a competitive local telephone exchange carrier, from January 2005 until its acquisition by Time Warner Telecom in October 2006 and as Chief Executive Officer of Xspedius from August 2005 to March 2006. Prior to joining Thermo Capital Partners, Mr. Lynch was a Managing Director of Bear Stearns & Co., an investment banking and brokerage firm. Mr. Lynch is a limited partner of Globalstar Satellite, LP.

Mr. Roberts has served as Secretary of the Company since April 2004 and as Vice President and General Counsel of Thermo Development Inc., the management company of many Thermo businesses, since June 2002. Prior to that he was a partner of Taft Stettinius & Hollister LLP, a law firm whose principal office is located in Cincinnati, Ohio, for over 20 years. Mr. Roberts is a limited partner of Globalstar Satellite, LP.

Mr. McIntyre has, since February 2007, served as President and Chief Operating Officer of Lauridsen Group Incorporated, a privately owned holding company that owns and operates numerous businesses involved in the global development, manufacturing and selling of functional proteins to the animal health and nutrition, human health and nutrition, food, diagnostic, life science research, biopharmaceutical, and veterinary vaccine industries. From June 2003 until December 2006, he was Chief Executive Officer of Pure Fishing, a global producer of sport fishing equipment, and Worldwide Managing Director of Pure Fishing from February 1996 until his promotion to Chief Executive Officer.

Mr. Dalton has served as chief executive officer of Dalton Partners, Inc., a turnaround management firm, since January 1989. As chief executive officer of Dalton Partners, Inc., Mr. Dalton also has served as chief executive officer and director of a number of its clients. From November 2001 to September 2004, Mr. Dalton served as chief executive officer of Clickhome Reality, Inc., a discount real estate and mortgage company.


Mr. Monroe has served as Chairman of the Board of the Company since April 2004. He was elected Chief Executive Officer in January 2005. Since 1984, Mr. Monroe has been the majority owner of a diverse group of privately owned businesses that has operated in the fields of telecommunications, real estate, power generation, industrial equipment distribution, financial services and leasing services and that are sometimes referred to collectively in this proxy statement as "Thermo." Thermo controls directly or indirectly Globalstar Holdings, LLC, Globalstar Satellite, LP and Thermo Funding Company LLC.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview

We are a provider of mobile voice and data communication services via satellite. Our communications platform extends telecommunications beyond the boundaries of terrestrial wireline and wireless telecommunications networks to serve our customer's desire for connectivity. Using in-orbit satellites and ground stations, which we call gateways, we offer voice and data communications services to government agencies, businesses and other customers in over 120 countries.

In early 2002, Old Globalstar and three of its subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code. We were formed in Delaware in November 2003 for the purpose of acquiring substantially all the assets of Old Globalstar and its subsidiaries. With Bankruptcy Court approval, we acquired Old Globalstar's assets and assumed certain of its liabilities in a two-step transaction, with the first step completed on December 5, 2003, and the second step on April 14, 2004 (the "Reorganization"). On January 1, 2006, we elected to be taxed as a C corporation, and on March 17, 2006, we converted from a Delaware limited liability company to a Delaware corporation.

Material Trends and Uncertainties. Our satellite communications business, by providing critical mobile communications to our subscribers, serves principally the following markets: government, public safety and disaster relief; recreation and personal; oil and gas; maritime and fishing; natural resources, mining and forestry; construction; utilities; and transportation. Our industry has been growing as a result of:

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favorable market reaction to new pricing plans with lower service charges;

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awareness of the need for remote communication services;

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increased demand for communication services by disaster and relief agencies and emergency first responders;

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improved voice and data transmission quality; and

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a general reduction in prices of user equipment.

In addition, our industry as a whole has benefited from the improved financial condition of most industry participants following their financial reorganizations.

Nonetheless, as further described under "Risk Factors," we face a number of challenges and uncertainties, including:

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Constellation life and health. Our current satellite constellation is aging. We successfully launched our eight spare satellites in 2007. A number of our satellites launched prior to 2007 have experienced various anomalies over time, one of which is a degradation in the performance of the solid-state power amplifiers of the S-band communications antenna subsystem (our "two-way communication issues"). The S-band antenna provides the downlink from the satellite to a subscriber's phone or data terminal. Degraded performance of the S-band antenna amplifiers reduces the availability of two-way voice and data communication between the affected satellites and the subscriber and may reduce the duration of a call. If the S-band antenna on a satellite ceases to be commercially functional, two-way communication is impossible over that satellite, but not necessarily over the constellation as a whole. Subscriber service will continue to be available, but at certain times in any given location it may take longer to establish calls and the average duration of calls may be impacted adversely. There are periods of time each day during which no two-way voice and data service is available at any particular location. The root cause of
our two-way communication issues is unknown, although we believe it may result from irradiation of the satellites in orbit caused by the space environment at the altitude that our satellites operate.

The decline in the quality of two-way communication does not affect adversely our one-way Simplex data transmission services, including our new SPOT products and services, which utilize only the L-band uplink from a subscriber's Simplex terminal to the satellites.

To date, we have managed the two-way communication issue in various technical ways, including moving less impaired satellites to key orbital positions and launching eight spare satellites. Nonetheless, we have been unable to correct our two-way communication issues.

Although the rate of degradation of the S-band anternnas has slowed in recent months, we continue to believe that, the quality of two-way communication services will continue to decline, and by some time in 2008 substantially all of our satellites launched between 1998 and 2000, but not those satellites launched in 2007, will cease to be able to support two-way communications. Simplex data services, including our new SPOT products and services, will not be affected.

We continue to work on plans, including new products and services and pricing programs to mitigate the effects of reduced service availability upon our customers and operations. Among other things, we requested Thales Alenia Space to present a four-part sequential plan for accelerating delivery of the initial 24 satellites of our second-generation constellation by up to four months. In 2007, we accepted the first two portions of this plan. See "Part I, Item 1A. Risk Factors—Our satellites have a limited life and some have failed, which causes our network to be compromised and which materially and adversely affects our business, prospects and profitability."

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Competition and pricing pressures. We face increased competition from both the expansion of terrestrial-based cellular phone systems and from other mobile satellite service providers. For example, Inmarsat plans to commence offering satellite services to handheld devices in the United States around 2008, and several competitors, such as ICO Global Communications Company, are constructing geostationary satellites that may provide mobile satellite service. Increased numbers of competitors, and the introduction of new services and products by competitors, increases competition for subscribers and pressures all providers, including us, to reduce prices. Increased competition may result in loss of subscribers, decreased revenue, decreased gross margins, higher churn rates, and, ultimately, decreased profitability and cash.

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Technological changes. It is difficult for us to respond promptly to major technological innovations by our competitors because substantially modifying or replacing our basic technology, satellites or gateways is time-consuming and very expensive. Approximately 57% of our total assets at December 31, 2007 represented fixed assets. Although we plan to procure and deploy our second-generation satellite constellation and upgrade our gateways and other ground facilities, we may nevertheless become vulnerable to the successful introduction of superior technology by our competitors.

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Capital expenditures. We have incurred significant capital expenditures during 2006 and 2007 and we expect to incur additional significant expenditures through 2013 under the following commitments:

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We estimate that procuring and deploying our second-generation satellite constellation and upgrading our gateways and other ground facilities will cost approximately $1.25 billion, which we expect will be reflected in capital expenditures through 2013. The following obligations are included in this amount:

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On November 30, 2006, we entered into a contract with Thales Alenia Space for the construction of our second-generation constellation. The total contract price, including subsequent additions, will be approximately €667.6 million (approximately $953.1 million at a weighted average conversion rate of €1.00 = $1.4276 at December 31, 2007, including approximately €146.3 million which will be paid by us in U.S. dollars at a fixed conversion rate of €1.00 = $1.294). We have made payments in the amount of approximately €100.5 million (approximately $130.3 million) through December 31, 2007 under this contract. At our request, Thales Alenia Space has presented to us a four-part sequential plan for accelerating delivery of the initial 24 satellites by up to four months. The expected cost of this acceleration will range from approximately €6.7 million to €13.4 million ($9.9 million to $19.7 million at € 1.00 = $1.4729). In 2007, we accepted the first two portions of this plan with an additional cost of €4.1 million ($6.0 million at €1.00 = $1.4729). We cannot assure you that any of the remaining acceleration will occur.

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In March 2007, we entered into a €9.0 million (approximately $13.3 million at a conversion rate of €1.00 = $1.4729) agreement with Thales Alenia Space for the construction of the Satellite Operations Control Centers, Telemetry Command Units and In Orbit Test Equipment (collectively, the "Control Network Facility") for our second-generation satellite constellation. We have made payments in the amount of approximately €2.9 million (approximately $3.9 million) through December 31, 2007.

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On September 5, 2007, we entered into a contract with our Launch Provider for the launch of our second-generation satellites and certain pre and post-launch services. Pursuant to the contract, our Launch Provider will make four launches of six satellites each, and we have the option to require our Launch Provider to make four additional launches of six satellites each. The total contract price for the first four launches is $210.0 million. We have made payments in the amount of approximately $10.5 million through December 31, 2007.

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We have begun construction of a gateway in Singapore at a total cost of approximately $4.0 million. This gateway is expected to be fully operational in the second half of 2008.

See "Liquidity and Capital Resources" for a discussion of our requirements for funding these capital expenditures.

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Introduction of new products. We work continuously with the manufacturers of the products we sell to offer our customers innovative and improved products. Virtually all engineering, research and development costs of these new products are paid by the manufacturers. However, to the extent the costs are reflected in increased inventory costs to us, and we are unable to raise our prices to our subscribers correspondingly, our margins and profitability would be reduced.

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Fluctuations in interest and currency rates. Debt under our credit agreement bears interest at a floating rate. Therefore, increases in interest rates will increase our interest costs if debt is outstanding. A substantial portion of our revenue (37% for the year ended December 31, 2007) is denominated in foreign currencies. In addition, a substantial majority of our obligations under the contracts for our second-generation constellation and related control network facility are denominated in Euros. Any decline in the relative value of the U.S. dollar may adversely affect our revenues and increase our capital expenditures. See "Item 7A. Quantitative and Qualitative Disclosures about Market Risk" for additional information.

Simplex Products (Personal Tracking Services and Emergency Messaging). In early November 2007, we introduced the SPOT satellite messenger, aimed at attracting both the recreational and commercial markets that require personal tracking, emergency location and messaging solutions for users that require these services beyond the range of traditional terrestrial and wireless communications. Using the Globalstar Simplex network and web-based mapping software, this device provides consumers with the capability to trace or map the location of the user on Google Maps™. The product enables users to transmit messages to specific preprogrammed email addresses, phone or data devices, and to request assistance in the event of an emergency. We are starting to work on second-generation SPOT-like applications.

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SPOT Addressable Market

We believe the addressable market for our SPOT products and services in North America alone is approximately 50 million units. Our objective is to capture 2-3% of that market by the end of 2010. The reach of our Simplex System, on which our SPOT products and services relies, covers approximately 50% of the world population. We intend to market our SPOT products and services aggressively in our overseas markets including South and Central America, Western Europe, and through independent gateway operators in their respective territories.

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SPOT Pricing

The pricing for SPOT products and services and equipment is intended to be extremely competitive. Annual service fees currently range from $99.99 for our basic level plan to $149.98 for additional tracking capability. We expect the equipment will be sold to end users at $169.99 per unit.

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SPOT Distribution

We are distributing and selling our new SPOT satellite messenger through a variety of existing and new distribution channels. We have signed distribution agreements with a number of "Big Box" retailers and other similar distribution channels including Bass Pro Shops, Big 5 Sporting Goods, Big Rock Sports, Boater's World, Cabela's, Campmor, Joe's Sport, Outdoor and More, Orvis, REI, Rescue Source 3, Sportsman's Warehouse, West Marine and Wynit. Our objective is to sell SPOT products through approximately 5,000 distribution points by the end of the second quarter of 2008 and 10,000 in 2009. Currently, the SPOT satellite messenger is being sold in approximately 2,000 distribution points. We also intend to sell directly using our existing salesforce into key vertical markets and through our direct e-commerce website ( www.findmespot.com ).

SPOT products and services have been introduced only recently and their commercial introduction and their commercial success cannot be assured.

Ancillary Terrestrial Component (ATC). ATC is the integration of a satellite-based service with a terrestrial wireless service resulting in a hybrid mobile satellite service. The ATC network would extend our services to urban areas and inside buildings in both urban and rural areas where satellite services currently are impractical. We believe we are at the forefront of ATC development and are actively working to be among the first market entrants. To that end, we are considering a range of options for rollout of our ATC services. We are exploring selective opportunities with a variety of media and communication companies to capture the full potential of our spectrum and U.S. ATC license.

In addition to our agreement with Open Range Communications, Inc. (See "Item 1.—Ancillary Terrestrial Component—ATC Opportunities"), we hope to exploit additional ATC opportunities in urban markets or in suburban areas that are not the subject of our agreement with Open Range. Our system is flexible enough to allow us to use different technologies and network architectures in different geographic areas.

As described in "Item 1—Business: ATC Opportunities," the FCC has opened a rulemaking proceeding to consider expanding the amount of spectrum in which we may provide ATC from 11.5 MHz to as much as 19.275 MHz. We and other interested parties have filed comments and reply comments, and we expect a decision in 2008. Implementation of our agreement with Open Range Communications is contingent upon our receiving substantially more ATC spectrum in our S-band than the 5.5 MHz we currently have. We believe that we have made a convincing case for 6 MHz additional in the S-band; however, we cannot predict whether the FCC will agree with us in its final decision. Operating Income (Loss). We realized an operating loss of $24.6 million for the year ended December 31, 2007 compared to operating income of $15.7 million in 2006. This decrease can be attributed primarily to a $19.1 million charge for impairment of assets caused by a write down of our first-generation product inventory recognized in 2007. We recognized these impairment charges after assessing our inventory and current and projected sales. Lower service revenue and a decline in equipment sales as a result of degradation of our two-way communication service during the year ended December 31, 2007 compared to last year also contributed to the decline in operating results. Lower usage also resulted in lower retail Average Revenue Per Unit (ARPU) on our monthly service plans. Moreover, concerns over the long term viability of, and service issues related to, our first generation constellation's voice service contributed to lower subscriber equipment sales for the year ended December 31, 2007.

Results of Operations

Comparison of Results of Operations for the Years Ended December 31, 2007 and 2006

Revenue. Total revenue decreased by $38.3 million, or approximately 28.0%, to $98.4 million for the year ended December 31, 2007, from $136.7 million for 2006. This decrease is attributable in part to lower service revenues as a result of our two-way communication issues. Our service revenue was lower primarily due to price reductions aimed at maintaining our subscriber base despite our two-way communication issues. Our subscriber equipment sales also decreased significantly during the year ended December 31, 2007 as compared to 2006 as a result of our two-way communications issues. Our retail ARPU during the year ended December 31, 2007, decreased by 21.5% to $46.26 from $58.91 for 2006. We added approximately 21,000 subscribers in 2007 compared to 67,000 net subscriber additions in 2006.

Service Revenue. Service revenue decreased $13.7 million, or approximately 14.9%, to $78.3 million for the year ended December 31, 2007, from $92.0 million for 2006. Although our subscriber base grew 8.0% to approximately 284,000 over the year ended December 31, 2007, we experienced decreased retail ARPU resulting in lower service revenue. We believe that the primary reason for this decrease in our service revenue was the reduction of our prices in response to our two-way communication issues.

Subscriber Equipment Sales. Subscriber equipment sales decreased by $24.5 million, or approximately 55.0%, to $20.1 million for the year ended December 31, 2007, from $44.6 million for 2006. The decrease was due primarily to concerns over our two-way communications issues.

Operating Expenses. Total operating expenses increased $2.0 million, or approximately 1.7%, to $123.0 million for the year ended December 31, 2007, from $121.0 million for the year ended December 31, 2006. This increase was due primarily to a net asset impairment charge to our first-generation phone and accessory inventory of $19.1 million as a result of our assessment of inventory quantities and higher depreciation expense which was partially offset by the lower cost of subscriber equipment consistent with lower equipment sales for the year ended December 31, 2007.

Cost of Services. Our cost of services for the years ended December 31, 2007 and 2006 were $27.8 million and $28.1 million, respectively. Our cost of services is comprised primarily of network operating costs, which are generally fixed in nature. These costs declined as a result of lower telecom costs and reductions in certain labor costs offset partially by an increase in non-cash executive incentive compensation as compared to 2006.

Cost of Subscriber Equipment Sales. Cost of subscriber equipment sales decreased $26.5 million, or approximately 65.7%, to $13.9 million for the year ended December 31, 2007, from $40.4 million for 2006. This decrease was due primarily to lower equipment sales as a result of our two-way communication issues and lower equipment cost basis as a result of a net asset impairment charge to our first-generation inventory.

Marketing, General and Administrative. Marketing, general and administrative expenses increased $5.2 million, or approximately 12.0%, to $49.1 million for the year ended December 31, 2007, from $43.9 million for 2006. This increase was due primarily to higher professional fees related to operating as a public company and non-cash stock compensation expense of $9.6 million resulting from the change in the Executive Incentive Compensation Plan offset partially by lower dealer commissions as a consequence of lower sales. Additionally, advertising expenses were higher as a result of the introduction of our new SPOT products and services in the fourth quarter of 2007.

Depreciation and Amortization. Depreciation and amortization expense increased $6.4 million, or 96.7%, to $13.1 million for the year ended December 31, 2007, from $6.7 million for 2006. This increase was due primarily to the additional depreciation associated with placing five of our recently-launched spare satellites into service and as a result of reducing the remaining useful life of our satellite system and related assets from 39 months to 27 months, beginning in the fourth quarter of 2006.

Impairment of assets. In 2007, we recorded a net impairment charge of $19.1 million representing a write down on our first-generation phone and accessory inventory. This charge was taken after our assessment of inventory quantities and recent and projected equipment sales. The asset impairment charge in 2006 was $1.9 million.

Operating Income (Loss). Operating income decreased $40.3 million, to an operating loss of $24.6 million for the year ended December 31, 2007, from operating income of $15.7 million for 2006. The decrease was due to the asset impairment charge described above and lower service and subscriber equipment revenues partially offset by lower cost of equipment sales.

Interest Income. Interest income increased by $2.0 million to $3.2 million for the year ended December 31, 2007, from $1.2 million for the same period in 2006. This increase was due to increased average cash balances on hand.

Interest Expense. Interest expense increased by $8.4 million, to $9.0 million for the year ended December 31, 2007 from $0.6 million for 2006. This increase was due primarily to the expensing of our deferred debt issuance costs of $8.1 million as a result of Thermo Funding assuming all of the obligations of the administrative agent and the lenders under our credit agreement with Wachovia Investment Holdings, LLC and the other lenders parties thereto.

Interest Rate Derivative Loss. For the year ended December 31, 2007, interest rate derivative loss was $3.2 million compared to $2.7 million in 2006. This increase was due to the decrease in the fair value of our interest rate swap agreement.

Other Income (Expense). Other income (expense) generally consists of foreign exchange transaction gains and losses. Other income increased by $12.6 million for the year ended December 31, 2007 as compared to 2006 due to a favorable exchange rate on the Euro denominated escrow account during 2007.

Income Tax Expense (Benefit). Income tax expense for the year ended December 31, 2007 was $2.9 million compared to a net income tax benefit of $14.1 million during 2006. The change between periods was primarily a result of a $21.4 million deferred tax benefit recorded on January 1, 2006 upon our election to be taxed as a C Corporation.

Net Income (Loss). Our net income decreased $51.5 million to a loss of $27.9 million for the year ended December 31, 2007, from net income of $23.6 million for the year ended December 31, 2006. This decrease was due primarily to the $19.1 million asset impairment charge related to our inventory recognized in 2007, the non-cash charges relating to the compensation and debt issuance costs discussed above, lower operating income in 2007 and the $14.1 million net deferred tax benefit recognized in 2006.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Results of Operations

Comparison of Results of Operations for the Three Months Ended March 31, 2008 and 2007

Revenue. Total revenue decreased by $1.0 million, or approximately 4%, to $22.1 million for the three months ended March 31, 2008, from $23.2 million for the three months ended March 31, 2007. This decrease is attributable primarily to lower service revenue which, we believe, stems from lower price service plans introduced in order to maintain our subscriber base despite our two-way communication issues. This resulted in a reduction in our retail ARPU during the three months ended March 31, 2008, which decreased by 11% to $38.14 from $42.71 for the three months ended March 31, 2007.



Service Revenue. Service revenue decreased $1.5 million, or approximately 8%, to $16.0 million for the three months ended March 31, 2008, from $17.5 million for the three months ended March 31, 2007. Although our subscriber base grew 8% to approximately 293,300 (including retail subscribers and those served through independent gateways) over the twelve-month period from March 31, 2007 to March 31, 2008, we experienced decreased retail ARPU. At March 31, 2008, approximately 40% of the number of our subscribers consisted of retail subscribers. We believe that the two-way communication issues we first reported in February 2007 and related price reductions were the primary reasons for this reduction.



Subscriber Equipment Sales. Subscriber equipment sales increased by $0.4 million, or approximately 8%, to $6.1 million for the three months ended March 31, 2008, from $5.7 million for the three months ended March 31, 2007. This increase is attributable to the sales of our SPOT satellite messenger product.



Operating Expenses. Total operating expenses increased $9.9 million, or approximately 42%, to $33.7 million for the three months ended March 31, 2008, from $23.7 million for the three months ended March 31, 2007. This increase was due to costs related to the launch of our new SPOT satellite messenger product and services, higher non-cash stock compensation expense and higher depreciation expense as a result of placing six of our recently launched spare satellites into service. Consistent with higher subscriber equipment sales, higher costs of subscriber equipment also contributed to the increase in operating expenses for the three months ended March 31, 2008.

Cost of Services. Our cost of services for the three months ended March 31, 2008 and 2007 were $7.5 million and $6.4 million, respectively. Our cost of services is comprised primarily of network operating costs, which are generally fixed in nature. The increase in the cost of services during the three months ended March 31, 2008 is due to higher non-cash executive incentive compensation costs resulting from the change in our Executive Incentive Compensation Plan in August 2007.



Cost of Subscriber Equipment Sales. Cost of subscriber equipment sales increased approximately $1.5 million, or 46%, to $5.0 million for the three months ended March 31, 2008, from $3.5 million for the three months ended March 31, 2007. This increase was due primarily to higher equipment sales in the three months ended March 31, 2008 as compared to the same period in 2007 resulting from the introduction of our new SPOT satellite messenger product.



Marketing, General and Administrative. Marketing, general and administrative expenses increased approximately $4.2 million, or 37%, to $15.7 million for the three months ended March 31, 2008, from $11.5 million for the three months ended March 31, 2007. This increase was due primarily to higher non-cash executive compensation costs resulting from the change in the Executive Incentive Compensation Plan as well as increased advertising and marketing costs related to the launch of our new SPOT satellite messenger product and service.



Depreciation and Amortization. Depreciation and amortization expense increased approximately $3.0 million, or 124%, to $5.4 million for the three months ended March 31, 2008, from $2.4 million for the three months ended March 31, 2007. This increase was due primarily to the additional depreciation associated with placing six of our recently-launched spare satellites into service.



Operating Loss. Our operating loss of $11.6 million for the three months ended March 31, 2008, increased $11.0 million from an operating loss of $0.6 million for the three months ended March 31, 2007. The increase was due primarily to lower retail ARPU as a consequence of our two-way communication issues. Additionally, higher non-cash executive incentive compensation, higher advertising and marketing costs and higher depreciation expense associated with placing six of our recently-launched spare satellites into service also contributed to the decrease in our operating income during the three months ended March 31, 2008.



Interest Income. Interest income increased by $0.5 million for the three months ended March 31, 2008. This increase was due to increased cash balances on hand.



Interest Expense. Interest expense increased by $0.7 million, to $1.0 million for the three months ended March 31, 2008 from $0.3 million for the three months ended March 31, 2007. This increase was primarily due to higher levels of debt outstanding during the first quarter of 2008.



Interest Rate Derivative Loss . Interest rate derivative loss increased by $3.2 million for the three months ended March 31, 2008 from a loss of $0.4 million for three months ended March 31, 2007. This increase was due to a decline in the fair value of our interest rate swap agreement.



Other Income (Expense). Other income (expense) generally consists of foreign exchange transaction gains and losses. Other income increased by $7.0 million for the three months ended March 31, 2008 as compared to the same period in 2007 primarily as a result of the favorable exchange rate on the Euro denominated escrow account for our second-generation constellation procurement contract resulting from the decline of the U.S. dollar vis-Ă -vis the Euro.



Income Tax Expense. Income tax expense for the three months ended March 31, 2008 was $0.2 million compared to $0.4 million during the same period in 2007. This was due primarily to lower revenues during the three months ended March 31, 2008.



Net Income (Loss). Our net income decreased approximately $7.0 million to a loss of $6.6 million for the three months ended March 31, 2008, from net income of $0.4 million for the three months ended March 31, 2007. This decrease was due primarily to the lower retail ARPU as a consequence of our two-way communication issues and higher non-cash executive incentive compensation, advertising, marketing and depreciation expenses during the three months ended March 31, 2008.

Currently, our principal sources of liquidity are our credit agreement with Thermo Funding and our existing cash and internally generated cash flow from operations.



At April 1, 2008, our principal short-term liquidity needs were:



• to make payments to procure our second-generation satellite constellation, construct the Control Network Facility and launch related costs, in a total amount not yet determined, but which will include approximately €118.1 million (approximately $223.8 million at a weighted average conversion rate of €1.00 = $1.5240 at March 31, 2008, including approximately €28.8 million which will be paid by us in U.S. dollars at a fixed conversion rate of €1.00 = $1.2940) payable to Thales Alenia Space by March 2009 under the purchase contract for our second-generation satellites. The amount payable to Thales Alenia Space by March 2009 under the contract for construction of the Control Network Facility is approximately €5.7 million (approximately $9.0 million at €1.00 = $1.5800); and



• to fund our working capital ($40.9 million at March 31, 2008, which our management believes is sufficient for our present requirements).

We expect to fund our short-term liquidity requirements from the following sources:



• net proceeds of approximately $145.6 million from our Convertible Senior Notes offering which closed on April 15, 2008, ($14.6 million was related to Convertible Senior Notes sold under the over-allotment option which closed on May 8, 2008). Of this amount, approximately $25.5 million is held in an escrow account which may be used for making the first six semi-annual interest payments on the Convertible Senior Notes;



• cash on hand ($14.5 million at March 31, 2008); and



• cash in our escrow account, which will be used periodically to pay down our obligation to Thales Alenia Space.



Our principal long-term liquidity needs are:



• to pay the costs of procuring and deploying our second-generation satellite constellation and upgrading our gateways and other ground facilities;



• to fund our working capital, including any growth in working capital required by growth in our business; and



• to fund the cash requirements of our independent gateway operator acquisition strategy, in an amount not determinable at this time.



We expect to fund our long-term capital needs with cash flow from operations, which we expect will be generated primarily from sales of our Simplex products and services, including our new SPOT products and services, and, if necessary, the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds. See “Capital Expenditures” below and “Part I, Item 1A. Risk Factors—We must generate significant cash flow from operations and have to raise additional capital in order to complete our second-generation satellite constellation” in our Annual Report on Form 10-K for the year ended December 31, 2007. See Note 13 to the unaudited interim consolidated financial statements.



Our liquidity and our ability to fund these needs will depend to a significant extent on our future financial performance, which will be subject in part to general economic, financial, regulatory and other factors that are beyond our control, including our ability to achieve positive cash flow from operations despite the problems with our satellite constellation described elsewhere, the willingness of others to invest in us and trends in our industry and technology discussed elsewhere in this Report. In addition to these general and economic and industry factors, the principal factors affecting our cash flows will be our ability to continue to provide attractive and competitive services and products, successfully manage our two-way communication issues until we can deploy our second-generation satellite constellation, increase our number of subscribers and retail average revenue per unit, control our costs, and maintain our margins and profitability. If those factors change significantly or other unexpected factors adversely affect us, our business may not generate sufficient cash flow from operations and future financings may not be available on terms acceptable to us or at all to meet our liquidity needs. In assessing our liquidity, our management reviews and analyzes our current cash on-hand, the average number of days our accounts receivable are outstanding, the contractual rates that we have established with our vendors, inventory turns, foreign exchange rates, capital expenditure commitments and income tax rates.


CONF CALLS

Dean Hirasawa

Thank you for joining us for today’s conference call to discuss the results for Globalstar, Inc. for the quarter ended March 31, 2008. Before we begin please note the following.

This call may contain forward-looking statements within the meaning of Federal securities law. Factors that could cause results to differ materially are described in the Safe Harbor section of today’s press release and in Globalstar’s SEC filings including the quarterly report on form 10-Q for the three months ended March 31, 2008 which will be filed in the next few days.

Both the press release and this conference call include discussions of certain non-GAAP financial measures as defined under SEC rules. We have provided a reconciliation of each of those non-GAAP measures to the most comparable GAAP measure in the press release. Please note that the information in this call is accurate only as of the date of this live teleconference which is Wednesday, May 7, 2008. Today’s press release containing certain financial information is available on the company’s website at www.GlobalStar.com.

Later this afternoon an audio recording of this conference call will be available via telephone dial in and a web cast recording will also be made available on the company’s website.

On the call we are joined today by Jay Monroe, Chairman and CEO of Globalstar, Inc.; Tony Navarra, President of Global Operations; and Fuad Ahmad, Vice President and CFO. Each of these gentlemen will be presenting this afternoon and all three will be available following the prepared remarks to take questions as time allows.

At this time I would like to turn the call over to Jay Monroe.

Jay Monroe

Thank you for joining Globalstar’s quarterly earnings call. Before beginning I’d like to welcome our new stockholders and thank all investors for their long-term commitment to Globalstar.

We completed the quarter with about 22,000 more subscribers than we had at the end of the same period in 2007. With this net increase we finished the month of March with just over 293,000 subscribers and maintained our position as the largest North American provider of mobile satellite voice and data services.

During the first three months of the year Globalstar’s average monthly retail churn rate decreased from 2% in the fourth quarter of 2007 to 1.3% in this quarter. Fuad will go through our detailed three-month financials shortly.

Following the quarter we completed a convertible note offer which combined with the over allotment options exercised by the underwriters has provided a total of $150 million in funding before offering expenses. Despite being pleased by the completion of this financing and the fact that our business financials remain strong as a stockholder I must also acknowledge my dissatisfaction with the company’s current stock price, more about this later.

As I stated before, during the next year I will update four areas which are key to Globalstar’s long-term business success. First, the design, manufacture and launch of the Second gen Satellite Constellation. Second, the utilization of our spectrum for the provision of ATC services in the United States and abroad. Third, new Simplex data products and services including the progress of the award-winning SPOT satellite Messenger. Fourth, Globalstar’s numerous international initiatives.

Here are the latest updates regarding our Second generation space segment. During the first quarter we continued prep for the launch of the Second generation Constellation. The initial assembly and test of the first of our Second gen satellites is now less than a year away and we remain on schedule to begin launching the Second generation satellites in the second half of next year.

Thales Alenia Space and Arianespace continue to complete their design, testing and delivery of major subsystems to meet this launch schedule. We mentioned in previous calls that six of the new eight satellites which were launched in 2007 were now in service. The seventh satellite has just gone into service with the eighth expected to become operational very shortly. Tony will provide a more complete update regarding our space segment in a few seconds.

The second key area of our business which I update quarterly concerns ATC Spectrum and our worldwide spectrum opportunity. On March 10, the FCC granted Globalstar expanded authority to use up to approximately 20 MHz of our L and S-band spectrums for ATC in the U.S. This expanded ATC capability enables Globalstar to partner with a number of industry service providers for a broad range of new communications services to unserved or underserved customers.

In its decision, the FCC specifically acknowledged that this action will allow greater capacity and flexibility for MSS ATC and will allow Globalstar to provide improved service to customers particularly in urban and under-served rural market areas of the United States. This decision provides potential Globalstar ATC partners with both the ability and the incentive to proceed with plans to develop and offer innovative ATC wireless services in conjunction with our satellite system.

We will also continue our ATC leadership by establishing with open-range communications the first rural mobile broadband and satellite service and by continuing to develop other products using hybrid satellite and terrestrial networks. In late March it was announced that Open Range had secured approval for a $267 million broadband loan from the Department of Agriculture’s Rural Utilities program. This is an important announcement because the financing moves Open Range one step closer to offering a service to over 500 American rural communities initially covering 6 million people using our satellite spectrum.

The structure of our agreement with Open Range provides both fixed and variable revenue streams to Globalstar. The fixed payment is augmented by a variable per subscriber per month payment. Using Open Range’s cost of capital and the subscriber growth rates embedded in their business plan which was provided to the RUS for their loan application, we calculate the combined payment to be between $0.30 and $0.40 per Mhz top.

Although Open Range’s business initially covers only 6 million people they have options to increase to 50 million outside of the 150 largest U.S. cities. We expect these two revenue streams to contribute meaningful additional revenue to Globalstar’s long-term earnings potential.

On a worldwide basis other regulators are implementing or considering ATC-like proceedings and we believe opportunities will exist for us to obtain ATC rulings in Europe, Canada and elsewhere internationally in the relatively near future pending appropriate regulatory approval. There exists no other company in the world which is similarly situated to Globalstar in this way.

Now that we have purchased the independent gateway operations in Brazil we can begin discussions with potential partners about developing ATC solutions for the nearly two million people in that country. ATC in Brazil is compelling because the country is already rolling out [inaudible] systems and we could offer a terrestrial and satellite infrastructure similar to Open Range there.

Also, through the relationship with SingTel, discussed in more detail below, SingTel and Globalstar could offer satellite and terrestrial hybrid services in areas of southeast Asia where SingTel has a strong historical presence.

The third area of quarterly focus relates to our core business offering of enhanced Simplex data solutions including the SPOT satellite Messenger. Our customers use Simplex data products and services for a number of asset, personal tracking, fleet management and data monitoring applications. The Globalstar Simplex data network continues to provide greater than 99% messaging reliability for all customers within the primary Simplex coverage area. During the first quarter Globalstar started the Hard Launch campaign for the SPOT satellite Messenger resulting in expanded distribution and sales.

SPOT is a personal safety device using our Simplex network which represents a whole new class of affordable, mobile, satellite based consumer products. SPOT provides customers with the ability to send a message from virtually anywhere with the push of a button and because it contains a GPS receiver it can let rescue workers know where to pinpoint a person in trouble.

Subscribers can also track their location and permit friends, family or employers to track their locations using Google Maps. No other GPS technology can offer these return-path services. Not Garmand. Not TomTom. Not Magellan. No one else can. SPOT is becoming more widely available as we more deeply penetrate consumer retail outlets.

Since the beginning of the year we have increased our distribution to approximately 3,000 points of retail presence and this number continues to grow each month. We have already received orders for over 40,000 SPOT units. I’m also pleased to announce that SPOT satellite Messenger is now available on both the WalMart and Amazon online retail websites.

We plan to continue filling out the distribution network throughout the year. SPOT’s addressable market is difficult to calculate on a worldwide basis, however we have already signed distribution agreements in Latin America, Europe and Canada and we will begin selling SPOT in Brazil in June. Brazil could be a huge market for this product.

We also expect to finalize agreements with a select number of our Independent Gateway Operators (IGO) allowing them to initiate distribution of SPOT later this quarter. At this moment it looks as if Mexico and Australia will be the first two to offer the product.

Other Globalstar Simplex integrators will introduce additional data solutions to the marketplace in 2008 and we are working with several of these companies to launch these new products. I am pleased to announce today that we have also signed a Simplex distribution agreement with SkyBitz.

SkyBitz is a North American leader in providing asset tracking and management solutions to the transportation, energy, construction and agricultural industries. The agreement calls for SkyBitz to purchase and activate up to 100,000 Simplex data modems over the next 30 months.

SkyBitz and Globalstar are providing a worldwide data platform allowing assets to be tracked using the same equipment and the same back office wherever they are around the globe. We are extremely excited about working with SkyBitz and look forward to many years of collaboration with them.

During the quarter we also continued with plan to expand our global Simplex data coverage. The completion of the purchase of the Brazilian gateways paved the way for us to immediately install a Simplex appliqué in Petrolina, Brazil. Service was initiated last month and we are now providing expanded coverage throughout all of Brazil into parts of northeastern Argentina and the Atlantic coastal maritime region. With this expansion we are now able to offer customers seamless Simplex data coverage in North and South America stretching from Alaska south to Peru.

Finally, I’d like to update you on our global initiatives. We sell our satellite voice and data products in over 120 countries. We intend to continue the strategy of constructing new Globalstar facilities in order to expand the geographical area to which we can market these products. As mentioned we have initiated discussions with a number of our IGO’s concerning the distribution of the SPOT satellite Messenger. These arrangements are being finalized now and the product will likely be shipped sometime during the current quarter.

Gateway hardware and Simplex appliqué installation has been completed at our new gateway in Singapore. This gateway will be operated by Singapore Telecommunications and will serve significant parts of southeast Asia. Commissioning and system operations testing will begin later this month with both Simplex and SPOT friendly user trials expected in June. Southeast Asia represents a large opportunity for all Simplex products including SPOT. This gateway is on schedule for commercial service in September.

Late last month our Nigerian gateway operator began construction of its gateway in Kaduna, Nigeria. They expect to become operational during the first half of 2009. Nigeria is a market that can benefit from Simplex asset tracking as well as from SPOT for both personal security and personal tracking applications. Tony will provide additional details on these two gateways shortly.

Now I’d like to turn the call over to our Chief Financial Officer, Fuad Ahmad.

Fuad Ahmad

Let me start by reiterating that our aggressive focus on subscriber retention and sequentially stable revenues remains on track. We ended the first quarter of 2008 with 293,300 total customers in our system, an increase of 9,100 customers from December 31, 2007. For the first quarter of 2008 we had $22.1 million of total revenue and $23 million of total adjusted revenue. This compared to total revenue and total adjusted revenue for the fourth quarter of 2007 of $23.7 million and $24.4 million respectively.

For the three months ended March 31, 2008 equipment revenue was $6.1 million compared to $4.1 million for the fourth quarter of 2007. This increase is attributable primarily to the sales of our new SPOT product.

Total operating expenses for the first quarter ending March 31, 2008 were $33.7 million compared to $31.5 million for the fourth quarter of 2007. This increase was due primarily to the higher cost of subscriber equipment sales of $2.6 million related to the higher equipment sales, increased MG&A costs of $0.8 million and higher depreciation and amortization expense of $.05 million.

The fourth quarter of 2007 also included an asset impairment charge of $1.9 million related to certain first generation product inventories.

For the quarter ended March 31, 2008 we recorded an adjusted EBITDA loss of $1.5 million compared to an adjusted EBITDA of $3.9 million for the fourth quarter of 2007. It is important to note that the first quarter of 2008 included SPOT product launch and related costs of approximately $4.3 million.

We recorded retail [RCU] of $38.14 and adjusted retail [RCU] of $40.28 for the quarter ended March 31, 2008 compared to $46.45 and $47.78 respectively for the fourth quarter of 2007. The reduction in [RCU] is the result of our proactive approach to pricing to retain customers and keep our churn historically low. Churn for the first quarter of 2008 was 1.3% compared to 2% for the fourth quarter of 2007.

Cash capital expenditures for the first quarter of 2008 were approximately $70.2 million which included approximately $65.1 million for the second generation satellite procurement and approximately $2.4 million for the launch of our spare satellite. We ended the first quarter of 2008 with available liquidity of approximately $150.2 million. Our liquidity position was augmented by recently completed convertible debt offering of $150 million.

With that I’ll turn it over to Tony.

Anthony Navarra

In the first quarter we have continued to optimize our constellation performance. Our ground infrastructure is performing reliably as expected and I’m pleased to say that the third satellite of four from our October launch began service on May 1. Therefore seven of the eight satellites we launched in 2007 are now operational and providing service.

Our customers continue to see service and availability improvements due to the addition of these satellites and through the use of our optimum satellite availability tool (OSAP). When using the information provided by the OSAP tool users are experiencing 95% certainty that their voice and data calls will be processed. In March we received over 10,000 requests to run this OSAP tool.

Regarding out network performance and features, Globalstar continues to enhance its web-based features for our Simplex asset tracking; location and status back office services. The newest SPOT web-based features allow users to share their location and status with approved individuals or the public and allow businesses to mass-activate their SPOT devices.

We will continue to analyze our constellation and network operations and report on the performance as the last satellite from our October 2007 launch joins the constellation. Our satellite launch contracts progress on schedule and on budget.

Thales remains on schedule to begin assembly, integration and testing of our second generation satellites. The engineering qualification test satellite and the prototype production validation satellite are being produced. Only one year from now we will be assembling and testing production satellites in Rome.

Arianespace remains on schedule for our first launch in the third quarter of 2009. Our sixth satellite dispenser design is on schedule and being finalized with long lead items purchased in the first quarter of this year.

Later this fall we will make the decision whether to launch out of the new Karu launch facility in French Guyana or from the Baikonur Cosmodrome where we have previously launched 32 of our satellites successfully.

We are in the final selection process of choosing our second generation ground radio access network and core infrastructure contractor. In the second quarter we expect to select a gateway upgrade manufacturer and finalize the newest service offerings for Globalstar. We expect these to include push-to-talk duplex SMS messaging and IP based network. We expect data speeds of up to 256 kb from the subscriber handset to the satellites and 1 mb from the satellites to the subscriber’s handset.

Such throughput is capable of supporting a number of broadband applications including mobile video. Of course our network will continue to offer backwards compatibility and support our current voice and data products. Globalstar’s network architecture is unique as all the features and services are housed in our gateways on the ground providing us maximum flexibility to upgrade capabilities over time easily facilitating the future ATC solutions for companies like Open Range Communications to offer [inaudible] service.

We believe this is a competitive advantage relative to the more limited suites of services that our principle competitors will be able to offer. Our second generation network is designed to provide an expected 40% increase in capacity translating to at least 15 times greater use than our current base of North American customers and even greater increase of international usage.

We are pleased to describe the construction of the Singapore gateway ground station continues on schedule with hardware installation, testing and certification scheduled to be completed this summer. SingTel Communications is finalizing its marketing and sales plans as we speak. SingTel will initiate sales of Simplex products for asset tracking and security application solutions as well as our SPOT satellite Messenger in the third quarter of this year.

As we replenish our constellation beginning in 2009 SingTel will market duplex voice and data products and services. SingTel will provide Globalstar service in key areas of southeast Asia and expand Globalstar’s coverage between our service providers DayCom in Korea and Vivatel Satellite in Australia.

Globaltouch, our newest independent service provider, has made significant progress in Nigeria. Within the last 60 days civil works contractors have been selected, the site has been readied for building construction and excavation has begun for laying the antenna pads. We remain on schedule to go into service in the first quarter of 2009.

With that let me pass the call back to Jay for some closing comments.

Jay Monroe

As mentioned last month we completed a convertible note offering which combined with the exercised over allotment raised a total $150 million before offering expenses. This is great news for the company especially considering the adverse state of the capital markets when we did the deal. It demonstrates our continued access to capital in the public markets.

This financing is required for the procurement and launch of our second generation constellation and all of the enhanced products and services it will bring especially given our newly expanded ATC authority.

Yet despite this good news Globalstar’s stock has recently dropped to disappointing levels and we feel the price does not fairly represent the intrinsic value of the company. Since we last reported to you, only 60 days ago, our company has more liquidity on the balance sheet, it has been granted expanded ATC authority, it has very successfully launched a new consumer product and with almost 300,000 subscribers remains the largest North American provider of satellite voice and data services. So the drop in the stock price is troubling. My personal belief is that the offering structure is not fully understood yet and the borrow facility that we employed which was to give our technical convertible purchasers the ability to hedge their positions is being equated to an increase in traditional short interest.

This may be causing an unwarranted drop in the stock price. I would like to remind you that our business fundamentals remain solid. To reiterate, we are positioning additional satellites into the current constellation and we are on schedule and on budget to begin second gen satellites in the second half of next year.

We continue to expand the domestic and international distribution for SPOT and other Simplex products. We control unique, expanded, coveted and valuable global spectrum and we have a signed ATC agreement to make use of initial amount of that asset. Designers are already working on our next generation of handsets and a host of future satellite only as well as ATC hybrid solutions all now being conceived.

We are managing the near term negative impact of our aging constellation with innovative technical solutions and creative sales and marketing programs. Sure we understand that in the short term we face some challenges but relatively speaking these pale in comparison to the enormous financial, technical and engineering hurdles Globalstar has successfully overcome before to conceive, design and implement a system such as ours.

In fact, this tremendous technical achievement is being recognized by the Mobile Satellite Users Association at its annual international conference next week as Globalstar’s former Vice President of Engineering, the inventor of the Globalstar concept, is being honored as a pioneer in the industry. Today we have a group of brilliant and resourceful employees, a financial sponsor who has demonstrated its commitment to unlocking the potential as we take Globalstar into the next decade. This is a marathon, it is not a sprint. We are in it for the long term.

We thank you again for joining the call today. We look forward to speaking with you again in about three months.


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