**GLOBALSTAR, L.P., ADEBTOR-IN-POSSESSION**
**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**
**1. Organization and Business**
     Globalstar, L.P. (“Globalstar”), aDelaware limited partnership, was formed in November 1993,remaining inactive until March 23, 1994, when it receivedcapital subscriptions for $275 million and commencedoperations.
     The governing body of Globalstar is the GeneralPartners’ Committee. The Committee may have up to sevenmembers, five of whom may be appointed by the managing generalpartner of Globalstar, Loral/ QUALCOMM Satellite Services, L.P.(“LQSS”). The general partner of LQSS is Loral/QUALCOMM Partnership, L.P. (“LQP”), a Delaware limitedpartnership comprised of subsidiaries of Loral Space &Communications Ltd., a Bermuda company (and with itssubsidiaries “Loral”) and QUALCOMM Incorporated(“QUALCOMM”). The managing general partner of LQP isLoral General Partner, Inc. (“LGP”), a subsidiary ofLoral. As of December 31, 2002, Loral owned, directly orindirectly, 25,163,207 (approximately 38.2%) of the ordinarypartnership interests of Globalstar, including interestsattributable to 9,902,990 shares of GlobalstarTelecommunications Limited (“GTL”) outstanding commonstock.
     Globalstar was founded to design, construct andoperate a worldwide, low-earth orbit satellite-based wirelessdigital telecommunications system (the “GlobalstarSystem”). The Globalstar System’s worldwide coverageis designed to enable its service providers to extend moderntelecommunications services to millions of people who currentlylack basic telephone service and to enhance wirelesscommunications in areas underserved or not served by existing orfuture cellular systems, providing a telecommunications solutionin parts of the world where the build-out of terrestrial systemscannot be economically justified. In 1995, the United StatesFederal Communications Commission (the “FCC”) grantedthe necessary license to a wholly-owned subsidiary of LQP toconstruct, launch and operate the Globalstar System. LQP hasagreed to use such license for the exclusive benefit ofGlobalstar.
     GTL was incorporated in 1994 as an exemptedcompany under the Companies Act 1981 of Bermuda. GTL’s solebusiness is acting as a general partner of Globalstar and itssole assets consist of its equity interests in Globalstar. As ofDecember 31, 2002, GTL owned 27,911,240 (42.4%) ofGlobalstar’s outstanding ordinary partnership interests and100% of the outstanding 8% and 9% convertible redeemablepreferred partnership interests (the “RPPIs”).
     Globalstar operates in one industry segment,satellite telecommunications, providing global mobile and fixedwireless voice and data services.
**2. Basis of Presentation**
     On February 15, 2002 (the “PetitionDate”), Globalstar and certain of its subsidiaries filedvoluntary petitions under Chapter 11 of Title 11 ofthe United States Code (the “Bankruptcy Code”), in theUnited States Bankruptcy Court (“Bankruptcy Court”)for the District of Delaware (Case Nos. 02-10499, 02-10501,02-10503 and 02-10504). Globalstar and its debtor subsidiariesremain in possession of their assets and properties and continueto operate their businesses as debtors-in-possession. Also, onFebruary 15, 2002, the managing general partner ofGlobalstar, LQSS, filed a voluntary petition in Delaware underChapter 11 of the Bankruptcy Code in the Bankruptcy Court.These factors, among others, raise substantial doubt aboutGlobalstar’s ability to continue as a going concern. Theconsolidated financial statements do not include any adjustmentsthat might result from the outcome of this uncertainty.
     Under Chapter 11, substantially allunsecured liabilities as of the Petition Date are subject tocompromise or other treatment under a plan of reorganization,which must be approved and confirmed by the Bankruptcy Court.For financial reporting purposes, those liabilities andobligations whose treatment and satisfaction are dependent onthe outcome of the Chapter 11 case have been segregated inthe condensed consolidated balance sheet as liabilities subjectto compromise. Generally, all actions to enforce or otherwiserequire repayment of Globalstar’s pre-petition liabilitiesare stayed under Section 362(a) of the Bankruptcy Codewhile Globalstar
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