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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2022

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

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


	Fair Value Measurements at December 31, 2022:
	(Level 1)		(Level 2)		(Level 3)		Total Balance
Liabilities:
Compound embedded derivative with the 2019 Facility Agreement	$	—	$	—	$	(122)	$	(122)
Total liabilities measured at fair value	$	—	$	—	$	(122)	$	(122)


	Fair Value Measurements at December 31, 2021:
	(Level 1)		(Level 2)		(Level 3)		Total Balance
Assets:
Compound embedded derivative with the 2019 Facility Agreement	$	—	$	—	$	484	$	484
Total assets measured at fair value	$	—	$	—	$	484	$	484

Liabilities:
Compound embedded derivative with the 2013 8.00% Notes	$	—	$	—	$	(1,364)	$	(1,364)
Total liabilities measured at fair value	$	—	$	—	$	(1,364)	$	(1,364)

Schedule of Significant Quantitative Level 3 Inputs Utilized

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


	December 31, 2021:
	Stock Price Volatility	Risk-Free Interest Rate	Note Conversion Price	Discount Rate	Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	120 - 139%	0.5%	$0.69	18%	$1.16

The significant quantitative Level 3 inputs utilized in the valuation models as of the conversion date are shown in the table below:


	February 17, 2022
	Risk-Free Interest Rate		Note Conversion Price	Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	0.06	%	$0.69	18	%	$1.00


	March 9, 2022
	Risk-Free Interest Rate		Note Conversion Price	Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	0.18	%	$0.69	19	%	$1.21

Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation

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


	Year Ended December 31,
	2022		2021
Balances at beginning of period	$	(880)	$	163
Derivative adjustment related to debt conversions and extinguishments	1,563		—
Unrealized loss, included in derivative (loss) gain	(805)		(1,043)
Balances at end of period	$	(122)	$	(880)

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The following table sets forth the carrying value and estimated fair value of the Company's Level 3 financial instruments (in thousands):


	December 31, 2022				December 31, 2021
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value

2013 8.00% Notes	$	—	$	—	$	1,407	$	1,265

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

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


	December 31, 2021:
	Stock Price Volatility	Risk-Free Interest Rate	Note Conversion Price	Discount Rate	Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	120 - 139%	0.5%	$0.69	18%	$1.16

The significant quantitative Level 3 inputs utilized in the valuation models as of the conversion date are shown in the table below:


	February 17, 2022
	Risk-Free Interest Rate		Note Conversion Price	Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	0.06	%	$0.69	18	%	$1.00


	March 9, 2022
	Risk-Free Interest Rate		Note Conversion Price	Discount Rate		Market Price of Common Stock
Compound embedded derivative with the 2013 8.00% Notes	0.18	%	$0.69	19	%	$1.21

Asset Impairment Charges, Including Prepaid Licenses and Royalties

During 2022, the Company wrote down the value of certain assets as reflected in the table below (in thousands).


Prepaid and other current assets
Prepaid licenses and royalties (1)	$	183
Intangible and other assets, net
Prepaid licenses and royalties (1)	4,514
Internally developed technology and software (2)	1,271
Spectrum intangible assets (3)	667
Property and equipment, net (2)	159,891
Grand Total	$	166,526

(1)While developing its second-generation Duplex technology that supported the Sat-Fi2® device, the Company signed various licensing and royalty agreements necessary for the manufacture and distribution of such products and services. Prepayments associated with these agreements were classified as either current or non-current based on the estimated portion of expense to be recognized over the next twelve months. As of September 7, 2022, approximately $0.2 million and $4.5 million, respectively, was recorded in Prepaid and other current assets and Intangible and other assets, net, on the Company's consolidated balance sheets. On September 7, 2022, these prepaid assets were no longer considered recoverable. The Company recorded a reduction in value of long-lived assets on its consolidated statements of operations for the amount shown in the table above during the third quarter of 2022.

(2)During 2018 and 2019, the Company placed into service second-generation ground Duplex assets (including associated developed technology and software upgrades) capable of providing commercial traffic to support Sat-Fi2®.

Additionally, the Company recorded certain costs in construction in progress for spare software associated with the second-generation Duplex assets. On September 7, 2022, the Company re-assessed its asset grouping for long-lived assets and determined that the second-generation Duplex assets are no longer part of the Company's overall satellite and ground network. These second-generation Duplex assets will no longer provide future cash flows to the Company. Note that our first-generation Duplex assets (i.e. handsets and related ground infrastructure) were not impacted. As of September 7, 2022, approximately $1.3 million was recorded in Intangible and other assets, net, and $159.9 million was recorded in Property and equipment, net. The Company recorded a reduction in value of long-lived assets on its consolidated statements of operations for this amount during 2022.

(3)During 2022, the Company wrote off approximately $0.7 million of work in progress associated with its spectrum intangible assets, previously recorded in Intangible and other assets, net, on its consolidated balance sheets. The work in progress was related to efforts to obtain spectrum licensing authority in certain countries around the world; during 2022, the Company determined that it would not continue pursing such authorities in these countries.