Welcome to the Q3 2013 Globalstar Inc. Earnings Conference Call. My name is Robert and I will be your operator for today's call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Kathryn Singer. Ms. Singer, you may begin.

Thank you, operator. Good afternoon, everyone. Thank you for joining us for today’s conference call to discuss Globalstar’s three months results for the period ended September 30, 2013. Before we begin, please note the following. This call may contain forward-looking statements within the meaning of federal securities laws. Factors that could cause results to differ materially are described in the Safe Harbor section of recent press releases and in Globalstar’s SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. The press release, this conference call and the associated slide presentation, which is available on the Investor Relations page of Globalstar’s website, include discussions of certain non-GAAP financial measures, as defined under SEC rules. The press release provides a reconciliation of each of those non-GAAP measures to the most comparable GAAP measure. Please note that the information in this call is accurate only as of today, Wednesday, November 13, 2013. The third quarter 2013 press release that was issued this afternoon, which contains financial information is available on the company website at www.globalstar.com. Later today an audio recording of this conference call will also be available via telephone dial-in and a webcast recording, along with a copy of the slide presentation will also be made available on the company website. Today’s call is being presented by Mr. Jay Monroe, Chairman and CEO; and Rebecca Clary, Chief Accounting Officer and Corporate Controller. Joining Jay and Rebecca for the question-and-answer session will be Tim Taylor, Vice President of Finance. Now it's my pleasure to turn the call over to Jay Monroe.

Good afternoon, everyone and thank you for joining us. In the third quarter and in the weeks following the close of the quarter Globalstar made tremendous progress with regard to a host of operational, financial and regulatory efforts. Over the past year we have consistently communicated that the company is at an inflection point. In this quarter we will able to produce material results along this path. The past few months have arguably been the most productive in the company’s history as we have been able to announce the SEC’s release of our notice of proposed rulemaking, fully restore the satellite network in late August, complete our senior debt facility amendment process and secure Thermo’s $85 million backstop. Thermo has continued to owner its promise to support the company and to-date has invested over $550 million including $51 million in connection with the recent round of financings. The balance sheet activities provide the company the required runway to build the business and are structured to allow us the flexibility to make the appropriate long term operating and network related investments. I am pleased to report that although only one month in Q3 had fully restored duplex service all major Duplex data points including ARPU service revenue, equipment revenues and subscriber editions are rebounding and strong support for our 2014 and beyond financial performance. As compared to the year ago quarter Duplex ARPU is up 29% well service and equipment revenue increased 25% and 80% respectively. Importantly as our competitive offering has improved we are beginning to win new subscribers with Duplex gross adds increasing 129% to 4,600 the highest quarterly level in five years. It’s been a long time since Globalstar’s witnessed such success and I want to give special thanks to our investor base that has believed in Globalstar’s potential and stuck with us through an extended turnaround period. We have weathered a global financial crisis, network degradation, liquidity challenges, significant constellation replenishment delays and related legal disputes and sitting here today, we have navigated our way through all of these changes. Today, we have emerged as a stronger and more resilient company, we have in place now an attractive debt facility, a committed equity financing, a fully restored state-of-the-art satellite network, a growing revenue base across the diverse product suite, an expansive consumer distribution network, a host of newly introduced and pipeline products and of course just two weeks ago, the initiation of a spectrum proceeding that will allow us to deliver innovative terrestrial mobile broadband services. We have been unwavering in the phase of great obstacles and our constant belief in the underlying fundamentals of the business has set the foundation for the opportunities before us today. Before I expand on these issues, I will turn the call over to Rebecca Clary to summarize the Q3 financial performance. Rebecca?

Thank you, Jay, and good afternoon, everyone. As shown on slide three, total revenue was $22.5 million in the third quarter of 2013, compared to $20.5 million in the third quarter of 2012. This 10% increase was driven by growth in both service and equipment revenue. Service revenue increased $1.7 million to $17 million during the third quarter of 2013, and equipment revenue decreased $0.3 million to $5.5 million over the same period. Our Duplex business continued to improve substantially, as we work to our fully deployed constellation. We are adjusting in pricing plans to be concurrent with the improved network performance and are increasing the base by garnering new subscriber activations in traditional markets, while expanding our Duplex service offering into our consumer distribution network. While service revenue from all of our core lines of business improved quarter-over-quarter from 2012, almost 75% of the increase was driven by our Duplex business. The increase in Duplex service revenue resulted from a 29% increase in ARPU which grew from $19 in the third quarter of 2012 to over $24 in the third quarter of 2013. Driving this improvement over the past 12 months were the conversions of over 20,000 loyal subscribers to higher rate plan, the addition of nearly 14,000 new subscribers at rate plans higher than our current ARPU levels and churn of low revenue generating subscribers as we execute a win back campaign to actively encourage these subscribers to transition to our primary service plans. The improving quality of our subscriber base is being driven by the expansion of network reliability, which has allowed us to regain subscribers more effectively and also rate plans that are aligned with the expanded coverage. The increases in SPOT and Simplex service revenue were driven by growth in our subscriber base for these…

Thanks Rebecca. Operationally over the past several years, while awaiting the return of healthy two-way service, we focused on the build out of our SPOT consumer business and related retail distribution network. With the limited two-way service offering, beginning in 2007, we significantly lowered pricing and year-after-year we experienced negative net ads to our duplex subscriber base. While price reductions allow the company to retain as many as subs as possible, lower ARPU on a smaller subscriber base reduced our revenue and our cash flow. However, after years of decline, I'm pleased to report that these declines are now a thing of the past. As outlined earlier, all of the principal data points of our duplex business are experiencing increases that have exceeded our expectations so quickly after satellite service was restored. Key vertical market business is returning in sectors such as oil and gas, mining, forestry and one-by-one we are winning customers back. The recent rollout of the SPOT global phone, while only in the market for a few months has received a very positive initial reception that includes not only qualitatively positive reviews, but it's also producing strong incremental equipment revenue and gross ads by leveraging our existing consumer network in the brand equity in the SPOT business. When choosing a satellite service provider, potential subscribers analyze three primary factors; price, voice quality and network performance. Although we have the industry’s most attractive pricing and voice quality that is unquestionably superior to the competition, for only a few weeks have we been able to round up the three pillars this was fully restored network coverage. As I mentioned at the outset, the subscriber base has responded well to the service improvement as ARPU and minutes of use have increased 29% and 23% respectively for the third quarter versus…

(Operator Instructions). Our first question is from Jim McIlree from Chardan Capital. Please go ahead.

The cost of service has increased fairly substantially over the past fourth quarters. Can you point to why that is and when you think it will level off?

Sure, Jim. So we’ve seen a couple of things going on in cost of services. One is gateway work that we referenced on the call and just repairs and maintenance needed as some of different gateways around the world, just more strategically trying to expand the market and then we’re also seeing capitalized salaries go down. So as our satellites have been placed into service the ability to capitalize the salaries also decreases, so that’s an increase in expense.

And so does that imply that it levels off soon? How much longer does the gateway work continue, because there seems like the capitalized salary if you should sort of worn off by now right?

Right, that's correct. And the gateway work was really concentrated in the third quarter.

Okay. So I think I get it. And then Jay, you talked about entering new international markets, on a couple of different ways you are going to go after new international markets. Can you put a timeframe on that and comment on how large those markets might be relative to North American markets? And then finally just on that issue, when you are going into these international markets, I’m assuming you are going with a full array of products and services that you have. Is that true or are you just targeting, I don’t know just one or two select products and services?

Okay. Let me break this down a couple of different ways Jim. First, in areas where we already have gateways have built them or acquired them during the last several years which would include in parts of Africa and South America predominantly, we have done the gateway work necessary in order to begin to sell in those areas aggressively going forward, our focus right now is on Brazil. There we will sell all services Duplex, Simplex, SPOT and the new SPOT products, although the distribution channels there are somewhat different than they are in the United States and each country is somewhat different than the United States. So we have to tailor it for those marketplaces, but we do intend to sell the entire array of products. So if you were looking for markets that will pick up earliest, I would look in South America for us. When you look at other areas where there are gateways on the ground that need to be restarted, some of these are gateways that had been in disrepair for a period of time and so will require work. And so the exact timeframe for those I really can’t judge, we’re certainly working on them now, but I wouldn’t expect much in 2014 that we would come out of those geographies. But they are important to us long term and with a new constellation obviously we want to get the benefit of the use of the satellites in those areas as well as other areas. Historically Globalstar’s revenue from North America was 80% to 90% unless you go back to the period in 2006 and before when that was probably a lower percent overall, but we hope that percentage will decrease in North America not because anything goes down in North America but because revenue goes up in other parts of the world.

Okay. But the South American generally in Brazilian markets specifically is something that you do hope to get revenue contribution from in 2014?

We hope to get larger and larger revenue participation out of them in 2014, they operate, now there are certain number of subscribers there, but we are staffing up to salesforce in those areas in order to grow them as rapidly as possible.

Right. I am sorry, thank you. And then just one more thing on the NPRM, as you have molded that over, have you thought anyways that it might change the potential partnering that you do with the business models that you pursue as one thing lot more or less attractive now that you have had time to digest it and as you talk to some perspective partners?

No, I don’t think anything has changed, we are more optimistic than ever that opportunity is as large as we imagined that. I mean think about it from several different perspective. We have the ability to transact on a lease basis with people and companies that are interested in utilizing the spectrum. You also have the opportunity to do creative revenue sharing arrangements with parties that have ideas for the utilization of that spectrum. The good news to us is that the people that we are dealing with are all large companies, well healed and able to make a difference in the marketplace. And so when you have a conversation with them, part of the balancing act for us is to recognize how to get the most out of the spectrum, operationally at the earliest possible time. And so, as you can imagine it's a very, very interesting process for us right now. But just an enormous amount of upside in how we carry on those conversations with various parties, each of which have very, very different business models for the use of TLPS.

Alright. Okay, great. Thanks a lot. I'll get back in line.

Okay. Thank you Jim.

Our next question comes from Vikas Tandon from Bastogne Capital. Please go ahead.

Hey guys. Thanks for taking the question. Couple of quick questions, one on the numbers, one on TLPS. On the numbers, as we look at the marketing spend, you said you kind of incurred an additional $1.6 million. Was that sort of, I don't want to say onetime in nature, but was that related to kind of relaunching the service and should we expect to see the marketing G&A kind of go back to traditional levels or will this increase spend continue for a little bit?

I think you should look at it as continuing. We'll be disciplined about not having the marketing spend too far out in front of the revenue generation. But we have a new constellation and everyday that it's up there and not full as a wasted day. And so we have to spend more on marketing and we have to drive substantially more sales overtime. That said, we will be disciplined about it. And it's very, very important to us, that we do those things in walk step. So that we see td results of whatever it is that we're proposing in terms of marketing plans and whatever regions of the world of we're rolling them out and that we get results. And if we're not getting the results that we want we have to adjust the plan, adjust the spend and so we can make sure that we are operating correctly in various regions of the world. Each of these regions as I mentioned before are different. And so you have to be careful to not just spend all of your money with a pre-set plan that it does not develop the results that you want, I am more comfortable doing that but I would not expect the marketing spend to go down.

Okay. Just I am assuming that this sort of increase in marketing spend that was part of your plan when you renegotiated the covenants in the business plan with the COFACE guys?

Yes, absolutely.

And then on the TLPS side, you talked on the call when the news first came out, you talked today about the lack of build out requirements how that’s a significant properties, then you sort of referenced that potential partners you've been talking to would be pleased with that. I know you can’t get in the too much specificity, but can you give some as to since the announcement of the NPRM the tender of those discussions, have they accelerated what is the reaction been from the guys that you've been talking to?

I don’t I can comment on any specific conversations. And perhaps you weren’t asking that. But to answer specifically the build out question, if you think about getting to market with a fully usable 22 megahertz of spectrum and you think about using it in a Wi-Fi like environments, that spectrum can handle an enormous amount of capacity and it can do so because there are so many atlas point around and addressing the network. As a result the amount of traffic totally over 22 megahertz can be enormous, I mean just enormous, so the conversations we’re having with people involve ways to maximize that use. So when you look the total cost to a party of operating there are really three elements of it, there is the cost of the infrastructure, there is the cost of the spectrum and marketing. In our case, the cost of the infrastructure is almost, well, I won’t say zero, but it’s exceedingly low when compared to the build out cost of any comparable cellular network, which can possibly handle that much capacity because of the nature of what a cellular is. So the balance between costs and potential revenue is tilted very much in favor of TLPS and therefore the conversations are as I said, interesting, they are ongoing, they are multi-faceted and it will take a little while before, I believe that they come to fruition so stay tuned.

Okay. No, I know this and I was just sort of trying to ask more generally if you can speak during, [when that facility] -- just you guys have expressed a real excitement about the NPRM and kind of how the FCC structured it, generally speaking has that excitement has been shared by the guys you've been talking to?

Yes, absolutely.

Okay, perfect. Thank you very much.

Welcome.

(Operator Instructions). And our next question comes from Steve Watts, Private Investor. Please go ahead.

Yeah. Hey guys. Question regarding the stock price, are you able to provide some kind of guidance of roadmap as to when you will begin to consider relisting?

Yes I think I can tell you what the standards are for relisting. It is you must be for a company of Globalstar’s size over $2 for 90 days and if you are over $2 for 90 days you can petition and be relisted by NASDAQ if you chose to go back to NASDAQ. In the alternative if the stock price is over $3 for five days you can also be relisted on NASDAQ. If you chose to go to the NYSE, the process is a little bit different and one that I am not quite as passive with right now, but it’s not a simple relisting, it’s a new listing. And that process is one that would for us would involve having to do a stock reverse and that is something that we have not determined as a company that we’re willing to do at this time.

Okay great. Thanks a lot and congratulations again on the -.

Thank you.

Our next question comes from Michael Rindos from Midtown Partners. Please go ahead.

Hey guys nice quarter.

Thanks Michael.

Wanted to talk a little bit about subscribers and you mentioned that you had a good number of underperforming subs churning off the network. I was hoping that you could comment on the case of which that might continue and the obvious impact on ARPU for the next few quarters?

Sure Michael. So if you look at the performance in terms of net ads per quarter going back the last couple of years, you can see a continued degradation in the total number of ending subs for our duplex space. And historically going back to 2006, the total sub [days] was over a 120,000 and ad spend decrease. We ended the year last year at 84,000 and today have about 85,000. But I think importantly, just about every quarter over the last couple of years, we have lost on a net basis 1,000, 2,000 sometimes even 3,000 or more. For the first time in a long time, Q2 of this year we experienced a rebound where on a net basis we began to add subs. We did that again for Q3 of this year. So if you are looking at year-over-year performance, you see a decline in the total number of subs. You see an increase however, a significant increase in the total number of paying subs. So probably not the best comparison to look year-over-year all together we speak to probably next couple of quarters and couple of years, we are going to play out. But I think we have passed them and are no longer going to experience negative net ads and we are in the positive territory again. But right now we’re at about 60% paying duplex subs bad debt from about 50%. We have ongoing initiatives to convert both low value subs and subs that are on reasonable plans, $40 and $30 plans. And moving them to more attractive plans that match their usage pattern and that of course increase ARPU for us, ARPU got below $15 just two years or so ago and now we are above $24, I think that trend should continue and we should be approaching over the next four quarters, six quarters back-up to $40 plus, which is our main targeted plan at least for now. So it’s an exciting time as Jay talked about, just about every major data point for our high value duplex subs has been very positive ARPU, net adds, gross ads. I think the releases of the SPOT going to help drive those numbers. So you can see overall what we're looking at on the top-line going back to the 8-K from August. And the duplex growth is going to be a major contributor to the overall revenue uptick over the next couple of years.

That's great. Thanks.

And we have a follow up question from Jim McIlree from Chardan Capital. Please go ahead.

Yeah, thanks. Jim, I think you just answered the question I was going to ask, duplex ARPU and as trajectory. But it sounds like you are expecting the same kind of steady increases in the coming quarters that you've seen in the past couple of quarters in terms of ARPU. Is that fair enough to model it that way?

Yeah. I think that's right. The efforts are a couple of quarters old at this point and we started earlier this year to convert the low value subs to high value paying subs. That resulted in two things as expected, significant increase in ARPU, but also slight increase in churn. But we're also churning off low value subs. High value subs that we're paying and have been paying, they are staying very wrong and historically and [NMSS] not just us, but our other competitor’s churn is very low. And so the increase in churn that we've seen this quarter is just churning off the low value subs. So I think certainly over the next couple of quarters we're going to see the impact from the conversion of the low value subs, but then also you’ll see an impact of the core plan that we offer which is at a minimum $40 before any excessive usages is plied which increases ARPU. You’ll see as new subs come on and become a greater portion of the overall subscriber base that will continue to increase ARPU at the same time as we continue the efforts to do the conversions on the historical base. So I think those two overall efforts are going to continue to drive duplex ARPU. Long-term I don’t believe that we're going to be back up to the $70 level that we were seven and eight years ago. But I think getting to a number like 45 or 55 long-term is where we're currently targeting. But I think you’ll see the continued growth quarter-after-quarter certainly on the same path that we’re on now over the next four quarters.

Okay. And you have a substantial inventory of handsets is that enough, how long do you expect that to last?

So I mean certainly it depends on these tick up in the market. We've had as Jay mentioned, 4,600 gross ads for this past quarter and we have about 45,000, 1,700 our core duplex equipment that we have on the balance sheet today. So on top of that, we have additional boards that are available to us up to 200,000 from Qualcomm. So a 250,000 total potential and core 1,700 units certainly should last us for the next three years and take us into the conversion from a Qualcomm-based system to the Hughes network which will be done and fully completed before the end of 2015. So I would love to say that we’d be able to fully deplete 250,000 handsets and maybe that's a possibility. But inventory using any kind of reasonable case is not going to be experiencing any kind of shortage as we make the transition from Qualcomm to Hughes in the next couple of years.

And that inventory has held at the original cost, is it or has it been written down?

It’s been written-down some over the years.

Okay. So from a margin perspective, as well as the cash flow perspective there will be a highly favorable transition as that inventory gets depleted?

That's right. The margin is essentially at zero because the cost is essentially the selling price, but 100% cash inflow.

Right.

Jim, I think that's an important component of potential liquidity over the next couple of years had the duplex balance is reduced we have a total inventory balance of about $38 million today. Our target long-term is about $10 million. So over the next two years, I think that's potential to draw in excess of $28 million or so that have I’m sure you’re modeling that in your forecast, but certainly a substantial component of our total liquidity availability over the next couple of years.

All right. Well, I am confused now. So are the Qualcomm handsets and chipsets they do have a positive value in your inventory or they’ve been, they didn’t written down substantially, but not fully is that what you are saying?

They have been written down to what essentially we’re able to generate from per unit, on a per unit basis the amount of revenue that we achieved. So essentially every 1,700 the core phone is selling at our take which is $360 that’s on our books for about $360. So from EBITDA income statement hit the contribution is zero, but every unit that we sell is essentially $360 of incremental cash flow for us. And again that’s about $38 million of total and that will wind down overtime. So it doesn’t look like it’s very profitable or helpful from income statement hit, but certainly very helpful for us in terms of cash sources.

Okay, good. I got it. Although I’m not going to guarantee I won’t ask it again.

No problem.

No problem.

Al right. Thank you.

Thank you.

And we have no further questions at this time.

Hey operator. Thank you. And thanks to everybody for joining this afternoon. With the recent accomplishments in completing the second generation constellation and the financial flexibility through the financings, new product rollouts and positive developments to provide terrestrial broadband services we’re poised to take advantage of these transformative opportunities. And appreciate you all listening today and look forward to speaking to you again soon.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you all for participating. You may now disconnect.