Certain statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q (this "Report"), other than purely historical information, including, but not limited to, estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements, such as the statements regarding our ability to develop and expand our business (including our ability to monetize our spectrum rights), our anticipated capital spending, our ability to manage costs, our ability to exploit and respond to technological innovation, the effects of laws and regulations (including tax laws and regulations) and legal and regulatory changes (including regulation related to the use of our spectrum), the opportunities for strategic business combinations and the effects of consolidation in our industry on us and our competitors, our anticipated future revenues, our anticipated financial resources, our expectations about the future operational performance of our satellites (including their projected operational lives), the expected strength of and growth prospects for our existing customers and the markets that we serve, commercial acceptance of new products, problems relating to the ground-based facilities operated by us or by independent gateway operators, worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis, business interruptions due to natural disasters, unexpected events or public health crises, including viral pandemics such as the COVID-19 coronavirus, and other statements contained in this Report regarding matters that are not historical facts, involve predictions. Risks and uncertainties that could cause or contribute to such differences include, without limitation, those in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 , as filed with theSecurities and Exchange Commission (the "SEC") onFebruary 25, 2022 (the "2021 Annual Report"). We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this Report to reflect actual results or future events or circumstances. New risk factors emerge from time to time, and it is not possible for us to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. This "Management's Discussion and Analysis of Financial Condition" should be read in conjunction with the "Management's Discussion and Analysis of Financial Condition" and information included in our 2021 Annual Report.
Overview
Mobile Satellite Services Business
Globalstar, Inc. ("we", "us" or the "Company") provides Mobile Satellite Services ("MSS") including voice and data communications services globally via satellite. We offer these services over our network of in-orbit satellites and our active ground stations ("gateways"), which we refer to collectively as the Globalstar System. In addition to supporting Internet of Things ("IoT") data transmissions in a variety of applications, we provide reliable connectivity in areas not served or underserved by terrestrial wireless and wireline networks and in circumstances where terrestrial networks are not operational due to natural or man-made disasters. By providing wireless communications services across the globe, we meet our customers' increasing desire for connectivity.
We currently provide the following communications services:
•two-way voice communication and data transmissions via our GSP-1600 and GSP-1700 phone ("Duplex")? •one-way or two-way communication and data transmissions using mobile devices, including our SPOT family of products, such as SPOT X®, SPOT Gen4™ and SPOT Trace®, that transmit messages and the location of the device ("SPOT"); •one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station, including our commercial IoT products, such as our battery- and solar-powered SmartOne, STX-3 and ST100 ("Commercial IoT"); and 17 -------------------------------------------------------------------------------- •engineering services to assist certain customers (including our customer under the Terms Agreement (discussed in Note 8: Commitments and Contingencies to our Condensed Consolidated Financial Statements)) in developing new applications to operate on our network, making enhancements to our ground network, and providing other communication services using our MSS and terrestrial spectrum licenses ("Engineering and Other"). Our constellation of Low Earth Orbit ("LEO") satellites includes second-generation satellites and certain first-generation satellites. We also have one on-ground spare second-generation satellite that we plan to launch in the near future. We designed our satellite network to maximize the probability that at least one satellite is visible from any point on the Earth's surface between the latitudes 70° north and 70° south. We designed our second-generation satellites to last twice as long in space, have 40% greater capacity and be built at a significantly lower cost compared to our first-generation satellites. Our goal is to provide service levels and call or message success rates equal to or better than our MSS competitors so our products and services are attractive to potential customers. We believe that our system outperforms geostationary ("GEO") satellites used by some of our competitors. GEO satellite signals must travel approximately 42,000 additional miles on average, which introduces considerable delay and signal degradation to GEO calls. InFebruary 2022 , we entered into a satellite procurement agreement (the "Procurement Agreement") withMacdonald, Dettwiler and Associates Corporation (the "Vendor") pursuant to which we will acquire 17 satellites that will replenish our existing constellation and ensure long-term continuity of our mobile satellite services. We are acquiring the satellites to provide continuous satellite services to the potential customer under the Terms Agreement (defined below), as well as services to our current and future customers. We have committed to purchase these new satellites for a total contract price of$327.0 million and have the option to purchase additional satellites at a lower per unit cost, subject to certain conditions. The technical specifications and design of these new satellites are similar to our current second-generation satellites. Rocket Lab USA, Inc. is the Vendor's satellite bus subcontractor under the Procurement Agreement. The agreement requires the Vendor to deliver the initial 17 new satellites by 2025, all of which are expected to be launched by the end of 2025. Under the Terms Agreement, the counterparty is required to reimburse 95% of the capital expenditures and certain other costs incurred for the new satellites.
Our ground network includes our ground equipment, which uses patented CDMA technology to permit communication to multiple satellites. Our system architecture provides full frequency re-use. This maximizes satellite diversity (which maximizes quality) and network capacity as we can reuse the assigned spectrum in every satellite beam in every satellite. In addition, we have developed a proprietary technology for our SPOT and Commercial IoT services.
We compete aggressively on price. We offer a range of price-competitive products to the industrial, governmental and consumer markets. We expect to retain our position as a cost-effective, high quality leader in the MSS industry. As technological advancements are made, we continue to explore opportunities to develop new products and provide new services over our network to meet the needs of our existing and prospective customers. We are currently pursuing initiatives that we expect will expand our satellite communications business and more effectively utilize the capacity of our network assets. These initiatives include evaluating our product and service offerings in light of the shift in demand across the MSS industry from full Duplex voice and data services to IoT-enabled devices. To align our business model with this evolution, we have temporarily ceased sales of and services to subscribers for certain Duplex devices, such as Sat-Fi2®. We are currently evaluating opportunities for these devices relative to other product and service offerings as well as the capacity required to support these devices relative to other possible uses for the capacity. Integrated with this assessment is the development of a two-way reference design module to expand our Commercial IoT offerings, which is among our other current initiatives. Our Commercial IoT use cases continue to expand, including deployments that support environmentally friendly initiatives. Recent deployments include remote monitoring of fluid levels and tanks, which replaces the need for motor vehicles to access these assets, as well as asset monitoring solutions for solar lighting and other renewable energy sources. 18 --------------------------------------------------------------------------------
Customers
The specialized needs of our global customers span many industries. As ofMarch 31, 2022 , we had approximately 747,000 subscribers worldwide, principally within the following markets: recreation and personal; government; public safety and disaster relief; oil and gas; maritime and fishing; natural resources, mining and forestry; construction; utilities; animal tracking and transportation. In response toRussia's invasion ofUkraine , during the first quarter of 2022, we disconnected satellite services to gateways inRussia that were operated by an independent gateway operator. Accordingly, approximately 25,000 subscribers that previously received satellite services through these gateways were removed from our subscriber count. Our system is able to offer our customers cost-effective communications solutions completely independent of cellular coverage. Although traditional users of wireless telephony and broadband data services have access to these services in developed locations, our customers often operate, travel or live in remote regions or regions with under-developed telecommunications infrastructure where these services are not readily available or are not provided on a reliable basis.
Spectrum and Regulatory Structure
We benefit from a worldwide allocation of radio frequency spectrum in the
international radio frequency tables administered by the
InAugust 2017 , theFCC modified our MSS licenses, granting us authority to provide terrestrial broadband services over the 11.5 MHz portion of our licensed MSS spectrum. Specifically, theFCC modified our space station authorization and our blanket mobile earth station license to permit a terrestrial network using 11.5 MHz of our licensed mobile-satellite service spectrum. InDecember 2018 , we successfully completed theThird Generation Partnership Project ("3GPP") standardization process for the 11.5 MHz of our licensed MSS spectrum terrestrially authorized by theFCC . The 3GPP designated the band as Band 53. Additionally, inMarch 2020 , we announced that the 3GPP approved the 5G variant of our Band 53, which is known as n53. This new band class provides a pathway for our terrestrial spectrum to be integrated into handset and infrastructure ecosystems. Additional follow-on 3GPP specifications and approvals are expected in the future. During 2019, we executed a spectrum manager lease agreement with Nokia in order to permit Nokia to utilize Band 53 within its equipment domestically and have such equipment type-certified for sale and deployment. InFebruary 2021 , Qualcomm Technologies announced its new Snapdragon X65 modem-RF System, which includes support for Band n53. By having global 5G band support for n53 in Qualcomm Technologies' 5G solutions, our potential device ecosystem expands significantly to include the most popular smartphones, laptops, tablets, automated equipment and other IoT modules. We believe our MSS spectrum position provides potential for harmonized terrestrial authority across many international regulatory domains and have been seeking approvals in various international jurisdictions. To date, we have received additional terrestrial authorizations in various countries, includingBrazil ,Canada , andSouth Africa , among others. We expect this global effort to continue for the foreseeable future while we seek additional terrestrial approvals to internationally harmonize our S-band spectrum across the entire 16.5 MHz authority for terrestrial mobile broadband services. We expect our terrestrial authority will allow future partners to develop high-density dedicated networks using the TD-LTE and 5G protocols for private networks as well as the densification of cellular networks. We believe that our offering has competitive advantages over other conventional commercial spectrum allocations. Such other allocations must meet minimum population coverage requirements, which effectively prohibit the exclusive use of most carrier spectrum for dedicated small cell deployments. In addition, low frequency carrier spectrum is not physically well suited to high-density small cell topologies, and mmWave spectrum is subject to range and attenuation limitations. We believe that our licensed 2.4 GHz band holds physical, regulatory and ecosystem qualities that distinguishes it from other current and anticipated allocations, and that it is well positioned to balance favorable range, capacity and attenuation characteristics. 19 --------------------------------------------------------------------------------
Performance Indicators
Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our earnings and cash flows. These key performance indicators include: •total revenue, which is an indicator of our overall business growth; •subscriber growth and churn rate, which are both indicators of the satisfaction of our customers; •average monthly revenue per user, or ARPU, which is an indicator of our pricing and ability to obtain effectively long-term, high-value customers. We calculate ARPU separately for each type of our subscriber-driven revenue, including Duplex, Commercial IoT and SPOT; •operating income and adjusted EBITDA, both of which are indicators of our financial performance; and •capital expenditures, which are an indicator of future revenue growth potential and cash requirements.
Comparison of the Results of Operations for the three months ended
Revenue Our revenue is categorized as service revenue and equipment revenue. We provide services to customers using technology from our satellite and ground network. Equipment revenue is generated from the sale of devices that work over our network. For the three months endedMarch 31, 2022 , total revenue increased 22% to$32.8 million from$26.9 million for the same period in 2021. See below for a further discussion of the fluctuations in revenue.
The following table sets forth amounts and percentages of our revenue by type of service (dollars in thousands).
Three Months Ended Three Months Ended March 31, 2022 March 31, 2021 % of Total % of Total Revenue Revenue Revenue Revenue Service Revenue: Duplex $ 6,146 19 % $ 6,655 25 % SPOT 11,255 34 10,984 41 Commercial IoT 4,670 14 4,481 17 Engineering and other 7,273 22 966 3 Total Service Revenue $ 29,344 89 % $ 23,086 86 %
The following table sets forth amounts and percentages of our revenue generated from equipment sales (dollars in thousands).
Three Months Ended Three Months Ended March 31, 2022 March 31, 2021 % of Total % of Total Revenue Revenue Revenue Revenue Equipment Revenue: Duplex $ 130 - % $ 293 1 % SPOT 1,475 5 1,915 7 Commercial IoT 1,806 6 1,521 6 Other 17 - 114 - Total Equipment Revenue $ 3,428 11 % $ 3,843 14 % 20
-------------------------------------------------------------------------------- The following table sets forth our average number of subscribers and ARPU by type of revenue. Three Months Ended March 31, 2022 2021 Average number of subscribers for the period: Duplex 43,565 45,687 SPOT 276,863 261,171 Commercial IoT 423,519 409,089 Other 13,346 27,487 Total 757,293 743,434 ARPU (monthly): Duplex$ 47.03 $ 48.56 SPOT 13.55 14.02 Commercial IoT 3.68 3.65
The numbers reported in the above table are subject to immaterial rounding inherent in calculating averages.
We count "subscribers" based on the number of devices that are subject to agreements that entitle them to use our voice or data communications services rather than the number of persons or entities who own or lease those devices.
Engineering and other service revenue includes revenue generated primarily from certain governmental and engineering service contracts which are not subscriber driven. Accordingly, we do not present ARPU for engineering and other service revenue in the table above. As previously discussed, during the first quarter of 2022, approximately 25,000 subscribers previously recorded in Other in the table above were removed from our subscriber count. Service Revenue Duplex service revenue decreased 8% for the three months endedMarch 31, 2022 due primarily to a decrease in average subscribers of 5%. The decrease in average subscribers is due to fewer gross subscriber activations over the last twelve months. In line with the shift in demand across the MSS industry from full Duplex voice and data services to IoT-enabled devices, we expect the decline in our Duplex subscriber base to continue as we focus our investments on IoT-enabled devices and services. SPOT service revenue increased 2% for the three months endedMarch 31, 2022 due primarily to an increase in average subscribers of 6%, resulting from higher gross subscriber activations of 10% and lower subscriber churn over the last twelve months. ARPU decreased by 4% due to the mix of subscribers on various rate plans compared to the prior period, including the continued popularity of subscribers activating on our flex plans. These flex plans drive more seasonality in SPOT ARPU since subscribers can suspend their service when they are not using their device. Commercial IoT service revenue increased 4% for the three months endedMarch 31, 2022 due to a 4% increase in average subscribers. The increase in average subscribers is driven by higher gross subscriber activations of 19% and lower churn over the last twelve months. Importantly, Commercial IoT equipment sales increased nearly 70% over the last twelve months compared to the prior year period (discussed further below), which we believe is an indication that Commercial IoT service revenue is likely to continue to grow in the future. 21 -------------------------------------------------------------------------------- Engineering and other service revenue increased$6.3 million for the three months endedMarch 31, 2022 compared to the same period in 2021. Fluctuations in engineering and other service revenue are due primarily to the timing and amount of revenue recognized associated with the Terms Agreement. During the first quarter of 2022, we recognized revenue primarily for consideration received for performance obligations associated with our work to expand and upgrade our gateways around the globe and under the satellite procurement agreement. As previously discussed, we disconnected service to approximately 25,000 subscribers inRussia . During 2021, we billed less than$0.3 million to these subscribers and the revenue associated with these subscribers was recorded in Engineering and other service revenue.
Subscriber Equipment Sales
Revenue from Duplex equipment sales decreased$0.2 million for the three months endedMarch 31, 2022 compared to the same period in 2021. This decrease was driven primarily by a lower sales volume of phones and accessories due to a lack of available inventory since these devices are no longer being manufactured. Revenue from SPOT equipment sales decreased$0.4 million for the three months endedMarch 31, 2022 compared to the same period in 2021. This decrease resulted from a lower sales volume since two of our core SPOT products are on back order due to inventory shortages, which delayed the fulfillment of certain orders during the first quarter of 2022. We continue to see demand exceeding supply resulting from supply chain disruptions caused by component part shortages. We are actively working to address this issue, but expect this trend to continue through at least the second quarter of 2022. Revenue from Commercial IoT equipment sales increased$0.3 million for the three months endedMarch 31, 2022 compared to the same period in 2021. This increase resulted from a higher sales volume of all of our IoT devices, primarily driven by our SmartOne devices and modules. Sales were higher than the prior quarter despite the same component part shortage issues discussed above, which resulted in sales orders exceeding available inventory supply during the first quarter of 2022. Many of our IoT devices were on back order atMarch 31, 2022 . We are actively working to address this issue and expect to resume production of our SmartOne products in the coming weeks.
Operating Expenses
Total operating expenses increased to$46.5 million from$46.2 million for the three months endedMarch 31, 2022 compared to the same periods in 2021. Higher cost of services was offset by lower management, general and administrative ("MG&A") costs, depreciation, amortization and accretion expense and cost of subscriber equipment sales. The main contributors to the variance in operating expenses are explained in further detail below.
Cost of Services
Cost of services increased$1.7 million for the three months endedMarch 31, 2022 compared to the same period in 2021. Higher personnel costs contributed to$0.9 million of the total increase, of which$0.7 million was related to annual cash bonuses and non-recurring separation pay during the first quarter of 2022. Higher lease expense associated with new teleport leases, which commenced throughout the second half of 2021, contributed to$0.6 million of the total increase. These leases were executed in connection with the gateway expansion project associated with the Terms Agreement; these lease and related costs are being reimbursed to us, and this consideration is being recognized as revenue (as further discussed above in Engineering and other service revenue). Higher professional fees and licensing costs related to our implementation of a new enterprise resource planning ("ERP") system, which went liveJanuary 2022 , as well as other costs for information technology security and maintenance contributed$0.5 million to the total increase.
Cost of Subscriber Equipment Sales
Cost of subscriber equipment sales decreased$0.3 million for the three months endedMarch 31, 2022 from the same period in 2021. Cost of subscriber equipment sales decreased, which is generally consistent with the decrease in total revenue from subscriber equipment sales. 22 --------------------------------------------------------------------------------
Marketing, General and Administrative
MG&A expenses decreased$0.8 million for the three months endedMarch 31, 2022 , compared to the same period in 2021. During the first quarter, and consistent with our accounting policy, we assessed the likelihood of payment of a$1.0 million accrual related to professional services associated with the 2018 shareholder litigation. Based on our assessment and considering the passage of time, we concluded it was appropriate to release the accrual, which resulted in an offsetting reduction of MG&A expense in the first quarter. Additionally, subscriber acquisition costs were lower by$0.4 million , which was due to the one-time deactivation of all Sat-Fi2 subscribers during the first quarter of 2021. Advertising costs and sales and dealer commissions decreased$0.5 million in total driven in part by the termination of our dealer program and reduction in advertising spend associated with our Duplex products and services. Offsetting these decreases was an increase in personnel costs totaling$1.1 million . Approximately$0.9 million of this increase was related to annual cash bonuses and non-recurring separation pay during the first quarter of 2022.
Other (Expense) Income
Interest Income and Expense
Interest income and expense, net, decreased$2.0 million during the three months endedMarch 31, 2022 , compared to the same period in 2021. This decrease was primarily driven by lower gross interest costs totaling$1.2 million as well as an increase to capitalized interest of$0.9 million (which decreases interest expense). Gross interest costs were impacted by lower interest associated with the 2009 Facility Agreement ($3.4 million ). This decrease was offset by higher interest on the 2019 Facility Agreement ($1.3 million ) and imputed interest associated with the significant financing component related to advance payments from a customer under the Terms Agreement ($1.0 million ). Interest costs for the 2009 Facility Agreement were favorably impacted by reductions in the principal balance during 2021, including the final paydown inNovember 2021 .
Derivative Loss
We recorded derivative losses of$0.5 million and$1.1 million for the three months endedMarch 31, 2022 and 2021, respectively. We recognize derivative gains or losses due to the change in the value of certain embedded features within our debt instruments that require standalone derivative accounting. The loss recorded during the three months endedMarch 31, 2022 was impacted primarily by an increase in the discount rate used in the valuation of the derivative associated with our 2019 Facility Agreement. Partially offsetting this loss was a gain on the valuation adjustment of the embedded derivative associated with our 2013 8.00% Notes. During the first quarter of 2022, the remaining holders of our 2013 8.00% Notes converted the principal balance into shares ofGlobalstar common stock. As a result of these conversions, we marked-to-market the embedded derivative and recorded a net gain due to a decrease in our stock price and a shorter term to maturity. The loss recorded during the three months endedMarch 31, 2021 was impacted primarily by an increase in our stock price and stock price volatility, which increased the value of the underlying instrument to the holder and, therefore, our derivative liability.
See Note 7: Fair Value Measurements to our condensed consolidated financial statements for further discussion of the computation of the fair value of our derivatives.
Foreign Currency Gain (Loss) Foreign currency gain (loss) fluctuated by$7.5 million to a gain of$3.2 million for the three months endedMarch 31, 2022 from a loss of$4.3 million for the same period in 2021. Changes in foreign currency gains and losses are driven by the remeasurement of financial statement items, which are denominated in various currencies, at the end of each reporting period. For the three months endedMarch 31, 2022 , the foreign currency gain was due to the strengthening of the Canadian Dollar and the Brazilian real relative to theU.S. dollar. For the three months endedMarch 31, 2021 , the foreign currency loss was due to the weakening of the Euro and Brazilian real relative to theU.S. dollar. 23 --------------------------------------------------------------------------------
Liquidity and Capital Resources
Overview
Our principal near-term liquidity requirements include funding our operating costs, capital expenditures, and repayment of amounts being financed through our satellite vendor under the Procurement Agreement. Our principal sources of liquidity include cash on hand, cash flows from operations, and vendor financing. Beyond the next twelve months, our liquidity requirements also include paying our debt service obligations. We expect that our current sources of liquidity over the next twelve months will be sufficient for us to cover our obligations. We may also access equity and debt capital markets from time to time or refinance our debt obligations to improve the terms of our indebtedness. As ofMarch 31, 2022 andDecember 31, 2021 , we held cash and cash equivalents of$11.5 million and$14.3 million , respectively, on our condensed consolidated balance sheet.
The total carrying amount of our debt outstanding was
The$8.8 million increase in carrying value of our debt was due to a higher carrying value of the 2019 Facility Agreement of$10.2 million due to the accrual of PIK interest and the accretion of debt discount offset by a reduction in the remaining principal balance of the 2013 8.00% Notes totaling$1.4 million , which were converted into shares ofGlobalstar common stock during the first quarter of 2022.
Cash Flows for the three months ended
The following table shows our cash flows from operating, investing and financing activities (in thousands): Three Months Ended March 31, March 31, 2022 2021 Net cash provided by operating activities$ 7,569 $ 4,512 Net cash used in investing activities (10,451)
(4,974)
Net cash provided by financing activities 8
39,245
Effect of exchange rate changes on cash and cash equivalents 89
(66)
Net (decrease) increase in cash and cash equivalents$ (2,785)
Cash Flows Provided by Operating Activities
Net cash provided by operations includes primarily cash receipts from subscribers related to the purchase of equipment and satellite voice and data services as well as cash received from the performance of engineering and other service contracts. We use cash in operating activities primarily for personnel costs, inventory purchases and other general corporate expenditures. Net cash provided by operating activities during the three months endedMarch 31, 2022 was$7.6 million compared to$4.5 million during the same period in 2021. The primary driver for the increase was higher net income after adjusting for noncash items, offset partially by unfavorable working capital changes.
Cash Flows Used in Investing Activities
Net cash used in investing activities was$10.5 million for the three months endedMarch 31, 2022 compared to$5.0 million for the same period in 2021. Net cash used in investing activities during the first quarter of 2022 and 2021 was related primarily to network upgrades associated with the Terms Agreement, including higher costs associated with the procurement and deployment of new antennas for our gateways and the preparation and launch of our on-ground spare satellite.
Cash Flows Provided by Financing Activities
Net cash provided by financing activities was$39.2 million during the three month period endedMarch 31, 2021 . In 2021, we received$43.7 million in proceeds from the exercise of the warrants issued with our 2019 Facility Agreement. Offsetting these proceeds was an unscheduled principal payment of$4.4 million towards the 2009 Facility Agreement. There were no meaningful cash flows from financing activities during the first quarter of 2022. 24 --------------------------------------------------------------------------------
Indebtedness
2019 Facility Agreement
In 2019, we entered into a$199.0 million facility agreement with Thermo, an affiliate of EchoStar Corporation and certain other unaffiliated lenders (the "2019 Facility Agreement"). The 2019 Facility Agreement is scheduled to mature inNovember 2025 . The loans under the 2019 Facility Agreement bear interest at a blended rate of 13.5% per annum to be paid-in-kind (or in cash at our option, subject to restrictions in the Facility Agreement). As ofMarch 31, 2022 , the principal amount outstanding under the 2019 Facility Agreement was$272.7 million . As ofMarch 31, 2022 , we were in compliance with all the covenants of the 2019 Facility Agreement. The 2019 Facility Agreement requires mandatory prepayments of principal with any Excess Cash Flow (as defined and calculated in the 2019 Facility Agreement) on a semi-annual basis. If we generate Excess Cash Flow in 2022, we will be required to make such prepayments. These payments would reduce future principal payment obligations. See Note 5: Long-Term Debt and Other Financing Arrangements to our condensed consolidated financial statements for further discussion of the 2019 Facility Agreement.
8.00% Convertible Senior Notes Issued in 2013
InMay 2013 , we issued$54.6 million aggregate principal amount of its 2013 8.00% Notes. InFebruary 2022 , we notified the holders of the 8.00% Notes of our intention to redeem all of the outstanding amount of principal and interest inMarch 2022 . Prior to our intended redemption of the 8.00% Notes inMarch 2022 , the holders converted the remaining principal amount outstanding into 2.3 million shares ofGlobalstar common stock at a conversion price of$0.69 (as adjusted) per share of common stock. The 2013 8.00% Notes were scheduled to mature onApril 1, 2028 , subject to various call and put features. Interest on the 2013 8.00% Notes was payable semi-annually in arrears onApril 1 andOctober 1 of each year. We paid interest in cash at a rate of 5.75% per annum and issued additional 2013 8.00% Notes at a rate of 2.25% per annum.
See Note 5: Long-Term Debt and Other Financing Arrangements to our condensed consolidated financial statements for further discussion of the 2013 8.00% Notes.
Vendor Financing
InFebruary 2022 , we entered into a satellite procurement agreement (see Note 8: Commitments and Contingencies to our condensed consolidated financial statements for further discussion). This agreement provides for payment deferrals of milestone payments fromFebruary 2022 throughAugust 2022 , at a 0% interest rate. InAugust 2022 , all deferred payments will become due by which time we intend to complete a senior secured financing. This financing is intended to provide sufficient proceeds for the construction and launch of the satellites. We also expect to refinance our current 2019 Facility Agreement concurrent with or after the financing.
Off-Balance Sheet Transactions
We have no material off-balance sheet transactions.
Recently Issued Accounting Pronouncements
We review recently issued accounting guidance as new standards are issued. Certain accounting standards issued or effective may be applicable to us; however, we have not identified any standards that will have a material impact on our condensed consolidated financial statements.
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