913665--3/12/2009--TERRESTAR

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{debt, indebtedness, cash}

{product, candidate, development}

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{acquisition, growth, future}

{stock, price, share}

{property, intellectual, protect}

{control, financial, internal}

{capital, credit, financial}

{condition, economic, financial}

{financial, litigation, operation}

{personnel, key, retain}

{interest, director, officer}

{stock, price, operating}

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Risks Related to Our Significant Indebtedness We Have A Significant Amount Of Debt And May Incur Significant Additional Debt, Including Secured Debt, In The Future, Which Could Adversely Affect Our Financial Health And Our Ability To React To Changes In Our Business. The Agreements And Instruments Governing Our Debt Contain Restrictions And Limitations That Could Significantly Affect Our Ability To Operate Our Business, As Well As Significantly Affect Our Liquidity, And Adversely Affect You, As A Shareholder. Our Debt and Equity Is Subject To Change Of Control Provisions. We May Not Have The Ability To Raise The Funds Necessary To Fulfill Our Obligations Under Our Indebtedness Following A Change Of Control, Which Would Place Us In Default. Risks Related to our Business TerreStar Networks Is A Development Stage Company With No Operating Revenues. We Are Not Cash Flow Positive, And We Will Need Additional Liquidity To Fund Our Operations And Fully Fund All Of Our Necessary Capital Expenditures. We Will Continue To Incur Significant Losses. TerreStar Networks will Require Significant Funding to Finance the Execution of its Business Strategy, Including Funds for the Construction and Launch of Satellites and for the Terrestrial Network Buildout. We May Not Obtain The Financing Needed To Develop And Construct Our Network And Meet Our Funding Obligations. Funding Requirements For TerreStar Networks May Jeopardize Our Investment In, And Control Over, TerreStar Networks. Our Business Is Subject To A High Degree Of Government Regulation. Our Network Will Depend On The Development And Integration Of Complex And Untested Technologies. Our Success Will Depend On Market Acceptance Of New And Unproven Technology, Which May Never Occur. We May Be Unable To Achieve Our Business And Financial Objectives Because The Communications Industry Is Highly Competitive. Our Satellites Are Subject To Construction, Delivery And Launch Delays. Our Satellites Could Be Damaged Or Destroyed During Launch Or Deployment Or Could Fail To Achieve Their Designated Orbital Location. Satellites Have A Limited Useful Life And Premature Failure Of Our Satellites Could Damage Our Business. Damage To, Or Caused By, Our Satellites May Not Be Fully Covered By Insurance. We Depend On A Limited Number Of Suppliers And Service Providers To Design, Construct And Maintain Our Network. Failure To Develop, Manufacture And Supply Handsets And Other Devices That Incorporate Our Universal Chipset Architecture In A Timely Manner, Or At All, Will Delay Or Materially Reduce Our Revenues. We May Rely On Third Parties To Identify, Develop And Market Products Using Our Network. We May Not Be Able To Identify, Develop And Market Innovative Products And Therefore We May Not Be Able To Compete Effectively. We Plan To Execute Our Initial Development Through A Relationship With A Significant Customer, And The Failure To Establish, Or Impairment Of, This Relationship Could Have Severe Consequences On Our Business. We May Depend On The U.S. Government For A Significant Portion Of Our Revenues, And The Impairment Of This Relationship Or Changes In Government Spending Could Have Severe Consequences On Our Business. The Current Weakening of U.S. and Canadian Economic Conditions As Well As Any Future Downturns Or Changes In Consumer Spending Could Adversely Affect Our Financial Condition. We Depend On Licenses Of Critical Intellectual Property From ATC Technologies, A Wholly-Owned Subsidiary Of MSV. We May Incur Costs, And May Not Be Successful, Defending Our Rights To Intellectual Property Upon Which We Depend. Third Parties May Claim That Our Products Or Services Infringe Their Intellectual Property Rights. Wireless Devices May, Or May Be Perceived To, Pose Health And Safety Risks And, As A Result, We May Be Subject To New Regulations, Demand For Our Services May Decrease And We Could Face Liability Or Reputational Harm Based On Alleged Health Risks. We May Be Negatively Affected By Industry Consolidation. Future Acquisitions May Be Costly And Difficult To Integrate And May Divert And Dilute Management Resources. If We Are Unable To Manage Our Growth, We May Not Be Able To Execute Our Business Plan And Achieve Profitability. We Must Attract, Integrate and Retain Key Personnel. We Are Involved In Ongoing Litigation, Which Could Have A Negative Impact on Us. We Do Not Expect To Pay Any Cash Dividends On Our Common Stock For The Foreseeable Future. Future Sales Of Our Common Stock Could Adversely Affect Its Price And/Or Our Ability To Raise Capital. Funds Affiliated With Harbinger Capital Partners Own A Significant Percentage Of Our Voting Shares And Have A Significant Economic Interest In Several Of Our Competitors. Failure to Achieve and Maintain Effective Internal Control Over Financial Reporting in Accordance With Rules of the Securities and Exchange Commission Promulgated Under Section 404 of the Sarbanes-Oxley Act. Our common stock is currently trading below $1.00 per share. Nasdaq has suspended its rules requiring its listed companies to maintain a closing bid price of at least $1.00 until April 20, 2009. In the event the closing bid price of our common stock is below $1.00 per share for more than 30 consecutive trading days following the lifting of this suspension, our stock could be at risk of being delisted from The Nasdaq Global Market. We Could Lose Our FCC Authorization And Industry Canada Approval In Principle And Be Subject To Fines Or Other Penalties. If We Fail To Secure Or Maintain Certain Approvals, We Will Default Under Our Credit Agreement. We Have Not Yet Applied For, And May Not Receive, Certain Regulatory Approvals That Are Necessary To Our Business Plan. The Industry Canada Approval In Principle To Construct And Operate A Satellite In A Canadian Orbital Slot Is Held, And Upon The Launch Thereof Will Be Held, By A Canadian Entity Over Which Neither We Nor TerreStar Exercises Control. FCC And Industry Canada Decisions Affecting The Amount Of 2GHz MSS S-band Spectrum Assigned To Us Are Subject To Reconsideration And Review. Our Use Of The 2GHz MSS S-band Is Subject To Successful Relocation Of Existing Users. Our Service May Cause Or Be Subject To Interference. ATC Spectrum Access Is Limited By Technological Factors. Technical Challenges Or Regulatory Requirements May Limit The Attractiveness Of Our Spectrum For Providing Mobile Services. We May Face Unforeseen Regulations With Which We Find It Difficult, Costly Or Impossible To Comply. Export Control And Embargo Laws May Preclude Us From Obtaining Necessary Satellites, Parts Or Data Or Providing Certain Services In The Future. Our Strategic Relationships Will Be Subject To Government Regulations. FCC And Industry Canada Regulations And Approval Processes Could Delay Or Impede A Transfer Of Control Of TerreStar Corporation. Rules Relating To Canadian Ownership And Control Of TerreStar Canada Are Subject To Interpretation And Change. Litigation Adverse to Highland Capital Management and James Dondero

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913665--3/12/2009--TERRESTAR_CORP