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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One) 
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                  to                

Commission file number 001-33117 
GLOBALSTAR, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 41-2116508
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)  
 
1351 Holiday Square Blvd.
Covington, Louisiana 70433
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (985) 335-1500
Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common Stock, par value $0.0001 per shareGSATNYSE American
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x  No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting company) Emerging growth company
 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x
 
As of October 28, 2022, 1,801 million shares of voting common stock were outstanding, and no shares of nonvoting common stock were authorized or outstanding. Unless the context otherwise requires, references to common stock in this Report mean the Registrant’s voting common stock.



FORM 10-Q

GLOBALSTAR, INC.
TABLE OF CONTENTS
 
 




PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements.
 
GLOBALSTAR, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
(Unaudited) 
 Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Revenue:  
Service revenue$33,301 $27,848 $95,693 $76,551 
Subscriber equipment sales4,325 4,766 11,505 13,271 
Total revenue37,626 32,614 107,198 89,822 
Operating expenses:  
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)11,294 9,648 32,783 27,848 
Cost of subscriber equipment sales3,490 4,099 9,153 9,856 
Cost of subscriber equipment sales - reduction in the value of inventory8,537 71 8,553 853 
Marketing, general and administrative10,707 9,196 29,741 28,974 
Reduction in value of long-lived assets166,001 242 166,526 242 
Depreciation, amortization and accretion24,238 24,072 72,151 72,031 
Total operating expenses224,267 47,328 318,907 139,804 
Loss from operations(186,641)(14,714)(211,709)(49,982)
Other (expense) income:  
(Loss) gain on extinguishment of debt (829) 1,835 
Interest income and expense, net of amounts capitalized(7,583)(11,406)(24,300)(33,758)
Derivative gain (loss)662 229 (1,066)(2,210)
Foreign currency loss(9,406)(4,752)(13,297)(4,642)
Pension settlement loss(1,501) (1,501) 
Other(45)473 344 407 
Total other (expense) income(17,873)(16,285)(39,820)(38,368)
Loss before income taxes(204,514)(30,999)(251,529)(88,350)
Income tax (benefit) expense(153)(114)51 317 
Net loss$(204,361)$(30,885)$(251,580)$(88,667)
Other comprehensive loss:
Foreign currency translation adjustments6,613 3,185 11,249 3,269 
Defined benefit pension plan liability adjustment2,073 $ $2,073 $ 
Comprehensive loss$(195,675)$(27,700)$(238,258)$(85,398)
Net loss per common share:  
Basic$(0.11)$(0.02)$(0.14)$(0.05)
Diluted(0.11)(0.02)(0.14)(0.05)
Weighted-average shares outstanding:  
Basic1,800,504 1,793,144 1,799,364 1,755,362 
Diluted1,800,504 1,793,144 1,799,364 1,755,362 
See accompanying notes to unaudited interim condensed consolidated financial statements.
1


GLOBALSTAR, INC.  
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share data)  
(Unaudited) 
 September 30, 2022December 31, 2021
ASSETS
Current assets:  
Cash and cash equivalents$14,749 $14,304 
Accounts receivable, net of allowance for credit losses of $2,923 and $2,962, respectively
29,594 21,182 
Inventory8,563 13,829 
Prepaid expenses and other current assets13,085 19,558 
Total current assets65,991 68,873 
Property and equipment, net532,680 672,156 
Operating lease right of use assets, net28,396 32,041 
Prepaid satellite construction costs and related customer receivable83,178  
Intangible and other assets, net of accumulated amortization of $10,633 and $11,189, respectively
36,293 41,036 
Total assets$746,538 $814,106 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$1,867 $6,247 
Vendor financing63,765  
Accrued expenses28,048 28,947 
Payables to affiliates142 444 
Deferred revenue53,121 25,927 
Total current liabilities146,943 61,565 
Long-term debt262,175 237,932 
Operating lease liabilities25,796 29,237 
Deferred revenue, net171,651 112,054 
Other non-current liabilities4,393 7,887 
Total non-current liabilities464,015 387,110 
Commitments and contingencies (Note 8)
Stockholders’ equity:  
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at September 30, 2022 and December 31, 2021, respectively
  
Series A Preferred Convertible Stock of $0.0001 par value; one share authorized and none issued and outstanding at September 30, 2022 and December 31, 2021, respectively
  
Voting Common Stock of $0.0001 par value; 2,150,000,000 shares authorized; 1,800,523,430 and 1,796,528,871 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
180 180 
Nonvoting Common Stock of $0.0001 par value; no shares authorized and none issued and outstanding at September 30, 2022 and December 31, 2021, respectively
  
Additional paid-in capital2,155,117 2,146,710 
Accumulated other comprehensive income15,212 1,890 
Retained deficit(2,034,929)(1,783,349)
Total stockholders’ equity135,580 365,431 
Total liabilities and stockholders’ equity$746,538 $814,106 
 See accompanying notes to unaudited interim condensed consolidated financial statements.  
2


GLOBALSTAR, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)  
(Unaudited) 
 Common
Shares
Common
Stock
Amount
Additional
Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)Retained
Deficit
Total
Balances – January 1, 20221,796,529 $180 $2,146,710 $1,890 $(1,783,349)$365,431 
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation703 — 2,230 — — 2,230 
Contribution of services— — 47 47 
Recognition of stock-based compensation of employee stock purchase plan— — 117 — — 117 
Common stock issued in connection with conversion of 2013 8.00% Notes
2,253 — 2,548 — — 2,548 
Other comprehensive loss— — — (679)— (679)
Net loss— — — — (20,462)(20,462)
Balances – March 31, 20221,799,485 $180 $2,151,652 $1,211 $(1,803,811)$349,232 
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation546 — 879 — — 879 
Contribution of services— — 47 — — 47 
Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation446 — 617 — — 617 
Other comprehensive income— — — 5,315 — 5,315 
Net loss— — — — (26,757)(26,757)
Balances – June 30, 20221,800,477 $180 $2,153,195 $6,526 $(1,830,568)$329,333 
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation46 — 1,815 — — 1,815 
Contribution of services— — 47 — — 47 
Recognition of stock-based compensation of employee stock purchase plan— — 60 — — 60 
Other comprehensive income— — — 8,686 — 8,686 
Net loss— — — — (204,361)(204,361)
Balances – September 30, 20221,800,523 $180 $2,155,117 $15,212 $(2,034,929)$135,580 

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Common
Shares
Common
Stock
Amount
Additional
Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)Retained
Deficit
Total
Balances – January 1, 20211,674,669 $167 $2,096,566 $(2,944)$(1,670,724)$423,065 
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation1,998 — 1,932 — — 1,932 
Contribution of services— — 47 — — 47 
Recognition of stock-based compensation of employee stock purchase plan— — 79 — — 79 
Issuance of stock for warrant exercises115,036 12 43,666 — — 43,678 
Other comprehensive income— — — 3,242 — 3,242 
Net loss— — — — (36,333)(36,333)
Balances – March 31, 20211,791,703 $179 $2,142,290 $298 $(1,707,057)$435,710 
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation173 — 576 — — 576 
Contribution of services— — 47 — — 47 
Net issuance of stock through employee stock purchase plan and recognition of stock-based compensation1,187 — 406 — — 406 
Other comprehensive loss— — — (3,158)— (3,158)
Net loss— — — — (21,449)(21,449)
Balances – June 30, 20211,793,063 $179 $2,143,319 $(2,860)$(1,728,506)$412,132 
Net issuance of restricted stock awards and stock for employee stock options and recognition of stock-based compensation244 — 544 — — 544 
Contribution of services— — 47 — — 47 
Recognition of stock-based compensation of employee stock purchase plan— — 102 — — 102 
Other comprehensive income— — — 3,185 — 3,185 
Net loss— — — — (30,885)(30,885)
Balances – September 30, 20211,793,307 $179 $2,144,012 $325 $(1,759,391)$385,125 
See accompanying notes to unaudited interim condensed consolidated financial statements.
4


GLOBALSTAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended
 September 30,
2022
September 30,
2021
Cash flows provided by operating activities:  
Net loss$(251,580)$(88,667)
Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation, amortization and accretion72,151 72,031 
Change in fair value of derivatives1,066 2,210 
Stock-based compensation expense4,433 3,044 
Amortization of deferred financing costs419 2,341 
Reduction in value of long-lived assets and inventory175,079 1,095 
Provision for credit losses754 1,029 
Noncash interest and accretion expense23,788 26,537 
Unrealized foreign currency loss13,399 4,639 
Loss on pension settlement1,501  
Gain on extinguishment of debt (1,835)
Noncash reversal of tariff accrual (912)
Other, net(3,002)(625)
Changes in operating assets and liabilities:  
Accounts receivable(952)(7,013)
Inventory(1,295)276 
Prepaid expenses and other current assets1,788 (1,595)
Other assets352 (1,883)
Accounts payable and accrued expenses(10,272)15,197 
Payables to affiliates(303)(309)
Other non-current liabilities(2,602)(259)
Deferred revenue6,981 81,865 
Net cash provided by operating activities31,705 107,166 
Cash flows used in investing activities:  
Network upgrades (including capitalized interest)(18,604)(24,766)
Property and equipment additions(5,839)(4,209)
Sale of property and equipment 350 
Purchase of intangible assets(863)(1,408)
Net cash used in investing activities(25,306)(30,033)
Cash flows used in financing activities:  
Principal payments of the 2019 Facility Agreement(6,341) 
Principal payments of the 2009 Facility Agreement (126,664)
Proceeds from exercise of warrants 43,678 
Payments for debt and equity issuance costs (133)
Proceeds from issuance of common stock and exercise of options455 394 
Net cash used in financing activities(5,886)(82,725)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(68)(57)
Net increase (decrease) in cash, cash equivalents and restricted cash445 (5,649)
Cash, cash equivalents and restricted cash, beginning of period14,304 68,023 
Cash, cash equivalents and restricted cash, end of period$14,749 $62,374 

As of:
September 30,
2022
December 31,
2021
Reconciliation of cash and cash equivalents
Cash and cash equivalents$14,749 $14,304 
Total cash and cash equivalents cash shown in the statement of cash flows$14,749 $14,304 
 Nine Months Ended
 September 30,
2022
September 30,
2021
Supplemental disclosure of cash flow information:  
Cash paid for interest$ $4,017 
Supplemental disclosure of non-cash financing and investing activities:  
Increase in capitalized accrued interest for network upgrades$8,615 $1,703 
Capitalized accretion of debt discount and amortization of prepaid financing costs1,305 379 
Satellite construction assets acquired through vendor financing arrangement69,896  
Forgiveness of principal and interest of Paycheck Protection Program loan 5,030 

See accompanying notes to unaudited interim condensed consolidated financial statements.
5


GLOBALSTAR, INC.  
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
1. BASIS OF PRESENTATION

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

The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”); however, management believes the disclosures made are adequate to make the information presented not misleading. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Globalstar Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 25, 2022 (the “2021 Annual Report”). 

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. The Company evaluates estimates on an ongoing basis. The Company has made certain reclassifications to prior period condensed consolidated financial statements to conform to current period presentation.

These unaudited interim condensed consolidated financial statements include the accounts of Globalstar and all its subsidiaries. Intercompany transactions and balances have been eliminated in the consolidation. In the opinion of management, the information included herein includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, consolidated balance sheets, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recent Developments

Service Agreements

On September 7, 2022, Apple Inc. (“Partner”) announced new satellite-enabled services for certain of its products (the “Services”). The Company will be the satellite operator for these Services pursuant to the agreement (the “Service Agreement”) first disclosed in the Company’s Form 10-K for the year ended December 31, 2019, and certain related ancillary agreements (such agreements, together with the Service Agreement, the “Service Agreements”). The Services constitute the potential service which was previously described and disclosed as the Terms Agreement.

Since execution of the Service Agreements in 2020, the parties have completed several milestones including (i) a feasibility phase, (ii) material upgrades to Globalstar’s ground network, (iii) construction of 10 new gateways around the world, (iv) the successful launch of the ground spare satellite, and (v) rigorous in-field system testing.

The Service Agreements generally require Globalstar to allocate network capacity (as described below) to support the Services and provide for the inclusion of Globalstar’s Band 53/n53 in Partner’s cellular-enabled devices that use the Services, for use by third parties, subject to certain terms and conditions.

It is currently expected that Partner will make the Services available to customers during the fourth quarter of 2022 (the “Service Launch”).

Discontinuation of Second-Generation Duplex Products and Services

The Company has been evaluating the continuation of second-generation Duplex services in light of other potential uses for the Company’s capacity, such as those within the Service Agreements. In early 2021, the Company terminated its second-generation Duplex services, which supported approximately 1,800 subscribers, to allow extended testing of the Services to Partner; however, such termination was considered temporary unless or until Partner announced its intent to proceed with
6


launch of the Services. Due to this shift in strategy triggered by Partner's September announcement, the Company evaluated the recoverability of its second-generation Duplex assets, including gateway property, prepaid licenses and royalties, and inventory during the third quarter of 2022. As a result of this shift in strategy, the Company recorded reductions in the value of equipment and long-lived assets totaling $174.3 million during the third quarter of 2022 (refer to Note 7: Fair Value Measurements for further discussion). The Company will continue to support first-generation Duplex services, including voice communications and data transmissions.

Refer to Note 2: Revenue, Note 3: Leases, Note 4: Property and Equipment and Note 8: Commitments and Contingencies for further discussion of the financial statement impact of the Service Agreements.

2. REVENUE

Disaggregation of Revenue

The following table discloses revenue disaggregated by type of product and service (amounts in thousands):

Three Months EndedNine Months Ended
September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Service revenue:
Subscriber services
Duplex$9,021 $9,632 $22,103 $23,530 
SPOT11,753 11,873 34,544 33,996 
Commercial IoT4,673 4,458 14,381 13,443 
Wholesale capacity services (1)
6,972 1,301 22,640 3,999 
Engineering and other services882 584 2,025 1,583 
Total service revenue33,301 27,848 95,693 76,551 
Subscriber equipment sales:
Duplex$15 $265 $288 $889 
SPOT1,558 2,619 4,707 6,764 
Commercial IoT2,713 1,841 6,427 5,452 
Other39 41 83 166 
Total subscriber equipment sales4,325 4,766 11,505 13,271 
Total revenue$37,626 $32,614 $107,198 $89,822 

(1) Prior to the third quarter of 2022, revenue from Wholesale capacity services was included in Engineering and other services in the table above. Wholesale capacity services include satellite network access and related services utilizing our satellite spectrum and network of satellites and gateways under the Service Agreements with Partner.

As consideration for the services to be provided by Globalstar after the Service Launch, Partner will make payments to Globalstar under the Service Agreements, including a recurring service fee, payments relating to certain service-related operating expenses and capital expenditures, and potential bonus payments subject to satisfaction of certain licensing, service and related criteria. Additionally, following the launch of the next-generation satellites being constructed pursuant to the satellite procurement agreement, Partner has agreed to make additional service payments equal to (i) 95% of the approved capital expenditures under the satellite procurement agreement and related launch costs (to be paid on a straight-line basis over the useful life of the satellites); (ii) certain costs of the Company’s borrowings related to the new satellites; and (iii) other approved costs.

The Company attributes equipment revenue to various countries based on the location where equipment is sold. Service revenue is generally attributed to the various countries based on the Globalstar entity that holds the customer contract. The following table discloses revenue disaggregated by geographical market (amounts in thousands):

7


Three Months EndedNine Months Ended
September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Service revenue:
United States$24,250 $19,677 $71,413 $54,348 
Canada5,288 5,236 13,105 13,442 
Europe1,737 2,039 4,891 5,607 
Central and South America1,898 996 5,882 2,592 
Others128 (100)402 562 
Total service revenue$33,301 $27,848 $95,693 $76,551 
Subscriber equipment sales:
United States$2,034 $3,130 $5,817 $7,740 
Canada1,634 563 3,311 2,430 
Europe231 505 1,176 1,511 
Central and South America420 546 1,177 1,538 
Others6 22 24 52 
Total subscriber equipment sales$4,325 $4,766 $11,505 $13,271 
Total revenue$37,626 $32,614 $107,198 $89,822 

Accounts Receivable

The Company records trade accounts receivable from its customers, including MSS subscribers and Partner under the Service Agreements, when it has a contractual right to receive payment either on demand or on fixed or determinable dates in the future. In addition to receivables arising from the sale of goods or services, the Company also has certain arrangements whereby it acts as an agent to procure goods and perform services on behalf of Partner under the Service Agreements.

Receivables are included in Accounts receivable, net of allowance for credit losses, on the Company's consolidated balance sheets except for the long-term portion of the wholesale capacity accounts receivable, which is included in Prepaid satellite construction costs and related customer receivable. The Company's receivable balances by type and classification are presented in the table below net of allowance for credit losses and may include amounts related to earned but unbilled revenue (amounts in thousands).

As of:
September 30, 2022December 31, 2021
Accounts receivable, net of allowance for credit losses
Subscriber accounts receivable$13,954 $12,825 
Wholesale capacity accounts receivable12,727 1,861 
Agency agreement accounts receivable2,913 6,496 
Total accounts receivable, net of allowance for credit losses$29,594 $21,182 
Long-term wholesale capacity accounts receivable69,646  
Total accounts receivable (short-term and long-term), net of allowance for credit losses$99,240 $21,182 

In February 2022, the Company entered into an agreement for the purchase of new satellites that will replenish the Company's existing satellite constellation. Under the Service Agreements, subject to certain conditions, Partner is required to reimburse 95% of the capital expenditures and certain other costs incurred for this contract. In accordance with the expected timing of payment from Partner, $11.6 million is recorded in Wholesale capacity accounts receivable and $69.6 million is recorded as in Long-term wholesale capacity accounts receivable in the table above.

Contract Liabilities

Contract liabilities, which are included in deferred revenue on the Company’s consolidated balance sheet, represent the Company’s obligation to transfer service or equipment to a customer from whom it has previously received consideration. Contract liabilities reflect balances from its customers, including MSS subscribers and the Partner under the Service
8


Agreements. The Company's contract liabilities by type and classification are presented in the table below (amounts in thousands).

As of:
September 30, 2022December 31, 2021
Short-term contract liabilities
Subscriber contract liabilities$23,212 $24,940 
Wholesale capacity contract liabilities29,909 987 
Total short-term contract liabilities$53,121 $25,927 
Long-term contract liabilities
Subscriber contract liabilities$1,669 $1,783 
Wholesale capacity contract liabilities, net of contract asset169,982 110,271 
Total long-term contract liabilities$171,651 $112,054 
Total contract liabilities$224,772 $137,981 

For subscriber contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2022 and 2021 from performance obligations included in the contract liability balance at the beginning of these periods was $22.8 million and $23.8 million, respectively. For wholesale capacity contract liabilities, the amount of revenue recognized during the nine months ended September 30, 2022 and 2021 from performance obligations included in the contract liability balance at the beginning of these periods was less than $0.1 million and zero, respectively.

The duration of the Company’s contracts with subscribers is generally one year or less. As of September 30, 2022, the Company expects to recognize $23.2 million, or approximately 93%, of its remaining performance obligations during the next twelve months. The term of the Company's wholesale capacity contract with its Partner under the Service Agreements is indefinite; therefore, the related contract liabilities may be recognized into revenue over various periods driven by the expected related service or recoupment periods. As of September 30, 2022, the Company expects to recognize $29.9 million, or approximately 15%, of its remaining performance obligations during the next twelve months.

The components of wholesale capacity contract liabilities are presented in the table below (amounts in thousands).

As of:
September 30, 2022December 31, 2021
Wholesale capacity contract liabilities, net:
Advanced payments for services expected to be performed with the second-generation satellite constellation during Phase 1 (1)
$99,405 $96,362 
Advanced payments for services expected to be performed with the recently launched ground spare satellite during Phases 1 and 225,652 16,981 
Advanced payments (both received and contractually owed) for services expected to be performed with the next-generation satellite constellation during Phase 278,151  
Contract asset(3,317)(2,085)
Wholesale capacity contract liabilities, net$199,891 $111,258 

(1) In accordance with applicable accounting guidance, the Company records imputed interest associated with the significant financing component, totaling $4.9 million and $1.9 million as of September 30, 2022 and December 31, 2021, respectively, which is included in deferred revenue.

3. LEASES

9


The following tables disclose the components of the Company’s finance and operating leases (amounts in thousands):

As of:
September 30, 2022December 31, 2021
Operating leases:
Right-of-use asset, net$28,396 $32,041 
Short-term lease liability (recorded in accrued expenses)2,464 2,501 
Long-term lease liability25,796 29,237 
Total operating lease liabilities$28,260 $31,738 
Finance leases:
Right-of-use asset, net (recorded in intangible and other current assets, net)$109 $8 
Short-term lease liability (recorded in accrued expenses)17 6 
Long-term lease liability (recorded in non-current liabilities)75 3 
Total finance lease liabilities$92 $9 

Lease Cost

The components of lease cost are reflected in the table below (amounts in thousands):

Three Months EndedNine Months Ended
September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Operating lease cost:
Amortization of right-of-use assets$584 $661 $1,908 $1,815 
Interest on lease liabilities571 545 1,848 1,256 
Capitalized lease cost(215) (702) 
Finance lease cost:
Amortization of right-of-use assets4 1 7 9 
Short-term lease cost205 38 413 117 
Total lease cost$1,149 $1,245 $3,474 $3,197 

In accordance with the Service Agreements, the Company began capitalizing certain costs to fulfill this contract during the fourth quarter of 2021, including lease expense, as shown in the table above. These capitalized lease costs will be amortized over the expected term of the related performance obligation.

Interest on finance lease liabilities was less than $0.1 million for the three and nine months ended September 30, 2022 and 2021; accordingly, these amounts are not shown in the table above.

Weighted-Average Remaining Lease Term and Discount Rate

The following table discloses the weighted-average remaining lease term and discount rate for finance and operating leases.
10


As of:
September 30, 2022December 31, 2021
Weighted-average lease term
Finance leases4.8 years1.6 years
Operating Leases9.9 years10.6 years
Weighted-average discount rate
Finance leases10.2 %