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What changed in Anterix Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Anterix Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+335 added−341 removedSource: 10-K (2023-06-14) vs 10-K (2022-05-26)

Top changes in Anterix Inc.'s 2023 10-K

335 paragraphs added · 341 removed · 253 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

105 edited+30 added−30 removed81 unchanged
Biggest changeIn exchange for the customer transfer, the LLC agreed to pay us a certain portion of the recurring revenues from these customers. Motorola Lease In 2014, we entered into an agreement with Motorola to lease a portion of our 900 MHz licenses in exchange for an upfront, fully paid lease fee of $7.5 million.
Biggest changeMotorola Lease In 2014, we entered into an agreement with Motorola (the “2014 Motorola Spectrum Agreement”) to lease a portion of our 900 MHz licenses in exchange for an upfront, fully paid lease fee of $7.5 million and a $10 million investment in our subsidiary, PDV Spectrum Holding Company, LLC (the “Subsidiary”), which we formed to hold our 900 MHz spectrum licenses.
Our efforts are ongoing to facilitate continued adoption of 900 MHz Band 8 radio access network (“RAN”) equipment and end-user devices in the U.S. by working with chipmakers and module and device vendors to help ensure that customers who employ 900MHz for PLTE have timely access to 3GPP standards-compliant Band 8 devices that meet the technical operating specifications established in the FCC’s Report and Order.
Our efforts are ongoing to facilitate continued adoption of 900 MHz Band 8 radio access network equipment and end-user devices in the U.S. by working with chipmakers and module and device vendors to help ensure that customers who employ 900MHz for PLTE have timely access to 3GPP standards-compliant Band 8 devices that meet the technical operating specifications established in the FCC’s Report and Order.
Some of these requirements and pending proceedings (of which the previous examples are not an exhaustive list) pose technical and operational challenges which we, and the industry as a whole, have not yet developed clear solutions. We are unable to predict how these pending or future FCC proceedings may affect our business, financial condition, or results of operations.
Some of these requirements and pending proceedings (of which the previous examples are not an exhaustive list) pose technical and operational challenges for which we, and the industry as a whole, have not yet developed clear solutions. We are unable to predict how these pending or future FCC proceedings may affect our business, financial condition, or results of operations.
The Report and Order also provides that the FCC will credit us for our cancelled licenses for purposes of determining our eligibility to secure broadband licenses and the calculation of any Anti-Windfall Payments. Broadband Licensing Process In May 2021, the Wireless Telecommunication Bureau released a Public Notice detailing the application requirements and timeline for obtaining broadband licenses.
The Report and Order also provides that the FCC will credit us for our cancelled licenses for purposes of determining our eligibility to secure broadband licenses and the calculation of any Anti-Windfall Payments. Broadband Licensing Process In May 2021, the FCC’s Wireless Telecommunication Bureau released a Public Notice detailing the application requirements and timeline for obtaining broadband licenses.
Motorola is not entitled to any profits, dividends, or other distribution from the operations of our subsidiary. Under the terms of this lease agreement with Motorola, Motorola can use the leased channels to provide narrowband services to certain qualified end-users. The end-users can only use the leased channels for their internal communication purposes.
Motorola is not entitled to any profits, dividends, or other distribution from the operations of the Subsidiary. Under the terms of this lease agreement with Motorola, Motorola can use the leased channels to provide narrowband services to certain qualified end-users. The end-users can only use the leased channels for their internal communication purposes.
Our licensed 900 MHz spectrum offers the assurance of absolute control over access to and use of that spectrum, allowing our spectrum to be utilized to provide customers with guaranteed levels of service and the ability to prescribe and enforce purpose-built “rules of the road” for the provision of those services.
Our licensed 900 MHz Broadband Spectrum offers the assurance of absolute control over access to and use of that spectrum, allowing our spectrum to be utilized to provide customers with guaranteed levels of service and the ability for customers to prescribe and enforce purpose-built “rules of the road” for the provision of those services.
Our future customers who deploy broadband networks may be required to comply with potential federal, state and local regulations that govern elements of the electric grid. Report and Order The FCC regulates the issuance of broadband licenses in the 900 MHz band in accordance with the Report and Order.
Our current and future customers who deploy broadband networks may be required to comply with potential federal, state and local regulations that govern elements of the electric grid. Report and Order The FCC regulates the issuance of broadband licenses in the 900 MHz band in accordance with the Report and Order.
In contrast to legacy systems, the wireless broadband networks, technologies and solutions that can be deployed by utilizing our spectrum assets can address the communication demands of the modern grid, both now and in the future.
In contrast to legacy systems, the wireless broadband networks, technologies and solutions that can be deployed utilizing our spectrum assets can address the communication demands of the modern grid, both now and in the future.
For example, the federal government created and funded the First Responder Network Authority (“FRNA”), which the federal government authorized to help accomplish, fund, and oversee the deployment of a dedicated Nationwide Public Safety Broadband Network (“NPSBN”), which is marketed as “FirstNet.” The NPSBN may provide an additional source of competition to utilizing our 900 MHz spectrum assets by our targeted utility and critical infrastructure enterprises.
For example, the federal government created and funded the First Responder Network Authority (“FRNA”), which the federal government authorized to help accomplish, fund, and oversee the deployment of a dedicated Nationwide Public Safety Broadband Network (“NPSBN”), which is marketed as “FirstNet.” The NPSBN is an additional source of competition to utilizing our 900 MHz spectrum assets by our targeted utility and critical infrastructure enterprises.
Only after the 50% Licensed Spectrum Test and the 90% Broadband Segment Test are satisfied will the FCC issue to the broadband applicant a broadband license and commence the “Mandatory Retuning” period.
Only after the 50% Licensed Spectrum Test and the 90% Broadband Segment Test are both satisfied will the FCC issue to the broadband applicant a broadband license and commence the “Mandatory Retuning” period.
Term is calculated based on the expected delivery date, which correlates to the period of time the revenue will be recognized for the associated milestone.
Term is calculated based on the expected delivery date, which correlates to the period of time the revenue is expected to be recognized for the associated milestone.
Sale of 900 MHz Broadband Spectrum SDG&E Agreement In February 2021, we entered into an agreement with SDG&E to sell 900 MHz broadband spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County (the “SDG&E Agreement”) for a total payment of $50.0 million.
Sales of 900 MHz Broadband Spectrum SDG&E Agreement In February 2021, we entered into an agreement with SDG&E to sell 900 MHz Broadband Spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County (the “SDG&E Agreement”) for a total payment of $50.0 million.
As of the date of this filing, we alone satisfy the 50% Licensed Spectrum Test in approximately 3,200 counties of the 3,233 counties in the United States and its territories. MAP 2 below illustrates our licensed channels by county in the entire 900 MHz band segment created by the Report and Order.
As of the date of this filing, we alone satisfy the 50% Licensed Spectrum Test in approximately 3,200 counties of the 3,233 counties in the United States and its territories. MAP 2 below illustrates our licensed channels by county in the entire 900 MHz band segment created by the Report and Order. 2. 90% Broadband Segment Test .
In addition, the FCC never auctioned the 20 blocks of B/ILT spectrum in some parts of the United States, therefore no users acquired site-based licenses utilizing this spectrum. As a result, the FCC is currently holding limited 900 MHz narrowband spectrum in its inventory in most counties throughout the United States.
In addition, the FCC never auctioned the 20 blocks of B/ILT spectrum in some parts of the United States, therefore no users acquired site-based licenses utilizing this spectrum. As a result, the FCC is currently holding over 20% of 900 MHz narrowband spectrum in its inventory in most counties throughout the United States.
The Evergy Agreement is subject to customary provisions regarding remedies for non-delivery, including refund of amounts paid and termination rights, if Anterix fails to perform its contractual obligations, including failure to deliver the relevant cleared 900 MHz broadband spectrum, in accordance with the terms of the Evergy Agreement.
The LCRA Agreement is subject to customary provisions regarding remedies for non-delivery, including refund of amounts paid and termination rights if Anterix fails to perform its contractual obligations, including failure to deliver the relevant cleared 900 MHz Broadband Spectrum in accordance with the terms of the LCRA Agreement.
While we intend to build our existing and future business strategies around our 900 MHz licensed spectrum, the ability of our critical infrastructure and enterprise customers to combine our licensed 900 MHz spectrum with additional spectrum in one or more licensed, shared and/or unlicensed bands can provide them with an advantageous solution.
While we intend to build our existing and future business strategies around our 900 MHz licensed spectrum, the ability for our critical infrastructure and enterprise customers to combine our licensed 900 MHz spectrum with additional spectrum in one or more licensed, shared and/or unlicensed bands can provide them with an advantageous solution.
As proof of the potential demand for our spectrum assets, two recent FCC spectrum auctions exceeded consensus valuation estimates and brought in the first and third highest auction proceeds for the U.S. Treasury which we believe demonstrates the continued demand for licensed broadband spectrum.
As proof of the potential demand for and value of our spectrum assets, two recent FCC spectrum auctions exceeded consensus valuation estimates and brought in the first and third highest auction proceeds ever for the U.S. Treasury, which we believe demonstrates the continued demand for licensed broadband spectrum.
In the NPRM, the FCC set to determine (i) what mechanism and requirements should be imposed before a broadband applicant can acquire the FCC’s inventory of spectrum, including how to mitigate a windfall that might be attributed to the broadband applicant by the FCC’s action; (ii) what mechanism should be used to enable the broadband applicant to clear sufficient Page 8 Table of Contents spectrum to qualify for a broadband license, including how to prevent potential holdouts; (iii) what size systems being operated by incumbents should be deemed to be “Complex Systems” and exempt from any Mandatory Retuning requirements; and (v) what approaches, including potential overlay auctions, should be used in counties where the broadband segment cannot be cleared of incumbents.
In the NPRM, the FCC set to determine (i) what mechanism and requirements should be imposed before a broadband applicant can acquire the FCC’s inventory of spectrum, including how to mitigate a windfall that might be attributed to the broadband applicant by the FCC’s action; (ii) what mechanism should be used to enable the broadband applicant to clear sufficient spectrum to qualify for a broadband license, including how to prevent potential holdouts; (iii) what size systems being operated by incumbents should be deemed to be “Complex Systems” and exempt from any Mandatory Retuning requirements; and (v) what approaches, including potential overlay auctions, should be used in counties where the broadband segment cannot be cleared of incumbents.
We are performing due diligence to determine how best to meet these customer needs, including using our internal expertise, collaborating with strategic partners and working with specific service providers. Enable the Anterix Active Ecosystem with U.S.
We are performing due diligence to determine how best to meet these customer needs, including using our internal expertise, collaborating with industry partners and working with specific service providers. Enable the Anterix Active Ecosystem with U.S.
Accordingly, our approach to driving the second key prong of our strategy includes: 1) advancing our potential customers through the pipeline by assisting them with their decisions and evaluation process of private wireless networks; 2) encouraging federal and state agencies to support the investment and deployment of private LTE solutions in the 900 MHz band by utilities and critical infrastructure companies; 3) participating in demonstrations and tests with laboratories such as National Renewable Energy Lab (“NREL”) and National Institute of Standards and Technology (“NIST”); 4) developing expanded value-added business offerings; 5) enabling and growing the AAEP; 6) participating in UBBA and other relevant industry associations to promote our solution; and 7) continually evaluating potential opportunities to expand the application of private wireless broadband networks built on 900 MHz.
Accordingly, our approach to driving the second key prong of our strategy includes: 1) advancing our potential customers through the pipeline by assisting them with their decisions and evaluation process of private wireless networks; 2) encouraging federal and state agencies to support the investment and deployment of PLTE solutions in the 900 MHz band by utilities and critical infrastructure companies; 3) participating in demonstrations and tests with laboratories such as National Renewable Energy Lab (“NREL”) and National Institute of Standards and Technology (“NIST”) to validate the benefits of PLTE systems; 4) developing expanded value-added business offerings; 5) enabling and growing the AAEP; 6) participating in UBBA and other relevant industry associations to promote our solution; and 7) continually evaluating potential opportunities to expand the application of private wireless broadband networks built on 900 MHz spectrum.
Our spectrum assets can also serve as the foundational element to allow our critical infrastructure and enterprise customers to implement LTE capabilities and evolve to 5G when there is a need. Recent FCC actions, including various auctions, have created significant opportunities for blocks of shared, unlicensed spectrum and/or licensed spectrum in the mid and high spectrum bands.
Our spectrum assets can also serve as the foundational element to allow customers to implement LTE capabilities and evolve to 5G when there is a need. Recent FCC actions, including various auctions, have created significant opportunities for blocks of shared, unlicensed spectrum and/or licensed spectrum in the mid and high spectrum bands.
Business Development We have invested in building our business development, sales and marketing teams, which include both external and internal resources, to help foster our evolving customer relationships in furtherance of growing and maturing our pipeline.
Business Development We have invested in building our business development, sales, marketing and other supporting teams, which include both external and internal resources, to help foster our evolving customer relationships in furtherance of growing and maturing our pipeline.
To achieve this conversion, we are focused on intentionally clearing incumbents out of the broadband license segment and obtaining broadband licenses in those counties in which we have customer contracts, where we believe we have near-term commercial prospects, or we may be strategically advantageous to achieve optimum costs for broadband licenses over time.
To achieve this conversion, we are focused on intentionally clearing incumbents out of the broadband license segment and obtaining broadband licenses in those counties (i) in which we have customer contracts, (ii) where we believe we have near-term commercial prospects, or (iii) may be strategically advantageous to achieve optimum costs for broadband licenses over time.
MAP 3 below illustrates our licensed holdings and licensed holdings we have under contract by county in the 6 MHz broadband segment created by the Report and Order. This map does not reflect licenses that may meet the protection criteria as that is evaluated on a county basis as each broadband transition plan is prepared.
MAP 3 below illustrates our licensed holdings and licensed holdings we have under contract by county in the 6 MHz broadband segment created by the Report and Order. This map does not reflect licenses that may meet the protection criteria as that is evaluated on a county basis as each broadband transition plan is prepared. 3. 240 Channel Requirement.
The Report and Order was published in the Federal Register on July 16, 2020, and became effective on August 17, 2020. We are now engaged in qualifying for and securing broadband licenses from the FCC. At the same time, we are actively pursuing opportunities to lease the broadband spectrum we secure to our targeted utility and critical infrastructure customers.
The Report and Order was published in the Federal Register on July 16, 2020 and became effective on August 17, 2020. We are now engaged in qualifying for and securing broadband licenses from the FCC. At the same time, we are pursuing opportunities to monetize the broadband spectrum we secure to our targeted utility and critical infrastructure customers.
Band 8 Our spectrum assets are located in the international 3GPP global standard Band 8 channel which is a frequency duplex (“FDD”) pair assigned to the 880 - 915 / 925 - 960 MHz spectrum bands.
Band 8 Our spectrum assets are located in the international 3GPP global standard Band 8 channel which is a frequency division duplex pair assigned to the 880 - 915 / 925 - 960 MHz spectrum bands.
A gain or loss on the sale of spectrum will be recognized for each county once we deliver the cleared 900 MHz broadband spectrum and the associated broadband licenses to SDG&E.
A gain or loss on the sale of spectrum will be recognized for each county once we deliver the cleared 900 MHz Broadband Spectrum and the associated broadband licenses to SDG&E in full.
However, we may be subject to other FCC regulations that impose obligations on wireless providers, such as Federal Universal Service Fund obligations, which require communications providers to contribute to a fund that supports subsidized communications services to underserved areas and users; rules governing billing, subscriber privacy and customer proprietary network information; roaming obligations; rules that require wireless service providers to configure their networks to facilitate electronic surveillance by law enforcement officials; rules governing spam, telemarketing and truth-in-billing and rules requiring us to offer equipment and services that are accessible to and usable by persons with disabilities, among others.
However, we may be subject to other FCC regulations that impose obligations on wireless providers, such as Federal Universal Service Fund obligations, which require communications providers to contribute to a fund that supports subsidized communications services to underserved areas and users; rules governing billing, subscriber privacy and customer proprietary network information; roaming obligations; Page 15 Table of Contents rules that require wireless service providers to configure their networks to facilitate electronic surveillance by law enforcement officials; rules governing spam, telemarketing and truth-in-billing and rules requiring us to offer equipment and services that are accessible to and usable by persons with disabilities, among others.
Our Broadband Market Opportunity We have identified utility and critical infrastructure enterprises as the primary customers for our future broadband spectrum assets. We have identified the electric utility industry as our initial focused customer group.
Our Broadband Market Opportunity We have currently identified utility and critical infrastructure enterprises as the primary customers for our current and future broadband spectrum assets. We have identified the electric utility industry as our initial focused customer group.
The legacy communications systems utilized by many utilities cannot handle this new data load, have increasing interference and/or higher cyber threats, are inefficient and costly to maintain, and, in many cases, have associated equipment that is approaching end of life.
The legacy communications systems utilized by many utilities have increasing interference and/or higher cyber threats, are not designed to handle this new data load, are inefficient and costly to maintain, and, in many cases, have associated equipment that is approaching end of life.
FIGURE I The Role of the County Under the Report and Order, the FCC established the “county” as the base unit of measure in determining whether a broadband applicant is eligible to secure a broadband license. There are 3,233 counties in the United States, including Puerto Rico and other U.S. territories.
FIGURE I Page 10 Table of Contents The Role of the County Under the Report and Order, the FCC established the “county” as the base unit of measure in determining whether a broadband applicant is eligible to secure a broadband license. There are 3,233 counties in the United States, including Puerto Rico and other U.S. territories.
Our Historical FCC Initiatives Joint Petition While our current licensed spectrum can support narrowband and wideband wireless services, the most significant business opportunities we identified require contiguous spectrum that allows for greater bandwidth than allowed by the original configuration of the 900 MHz band.
Page 9 Table of Contents Our Historical FCC Initiatives Joint Petition While our current licensed spectrum can support narrowband and wideband wireless services, the most significant business opportunities we identified require contiguous spectrum that allows for greater bandwidth than allowed by the original configuration of the 900 MHz band.
This test requires the broadband applicant to hold or have agreements with Covered Incumbents for 90% of the licensed channels in the broadband segment in a particular county and within 70 miles of the county’s boundaries before the FCC will issue a broadband license and therefore commence the mandatory retuning period.
This test requires the broadband applicant to hold, have agreements with or protect Covered Incumbents equal to 90% or more of the licensed channels in the broadband segment in a particular county and within 70 miles of the county’s boundaries before the FCC will issue a broadband license and therefore commence the mandatory retuning period.
Our Intellectual Property We rely on a combination of patent, copyright, trademark and trade-secret laws, as well as confidentiality provisions in our contracts, to protect our intellectual property. We have several trademarks and service marks to protect our current and Page 14 Table of Contents future corporate name, services offerings, goodwill and brand.
Our Intellectual Property We rely on a combination of patent, copyright, trademark and trade-secret laws, as well as confidentiality provisions in our contracts, to protect our intellectual property. We have several trademarks and service marks to protect our current and future corporate name, services offerings, goodwill and brand.
For purposes of our broadband license eligibility, any potential acquisitions we negotiate in the 900 MHz band may be included as part of our broadband application, but the acquisition does not need to be consummated at the time we submit our broadband license application. 2. Spectrum Retuning.
For purposes of our broadband Page 14 Table of Contents license eligibility, any potential acquisitions we negotiate in the 900 MHz band may be included as part of our broadband application, but the acquisition does not need to be consummated at the time we submit our broadband license application. 2. Spectrum Retuning.
Participation from the broad range of technology innovators will bring extensive value to utilities and other critical infrastructure providers who deploy private LTE (“PLTE”). The primary intent of our business is to lease the broadband licenses we secure to customers for long term leases (generally 20 years or longer), and additional long-term renewal options.
Participation from the broad range of technology innovators will bring extensive value to utilities and other critical infrastructure providers who deploy PLTE. The primary intent of our business is to lease the broadband licenses we secure to customers for long term-leases (generally 20 years or longer) containing additional long-term renewal options.
Global standards also provide a long-term evolution path for the technology chosen by our customers. Identify and Evaluate New Opportunities for Our Spectrum The wireless communications industry is highly competitive and subject to rapid regulatory, technological and market changes.
Global standards also provide a long-term evolution path for the technology chosen by our customers including forward and backward compatibility. Identify and Evaluate New Opportunities for Our Spectrum The wireless communications industry is highly competitive and subject to rapid regulatory, technological and market changes.
The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments.
The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for an initial term of 20 years with two 10-year renewal options for additional payments.
Human Capital Management We believe we have an experienced, talented, motivated and dedicated team. We are committed to supporting the development of all of our employees and to continuing to build on our strong culture. As of March 31, 2022, we had seventy-three full-time employees. We engage consultants and contract workers on an as-needed basis.
Human Capital Management We believe we have an experienced, talented, motivated and dedicated team. We are committed to supporting the development of all our employees and to continuing to build on our strong culture. As of March 31, 2023, we had 82 full-time employees. We engage consultants and contract workers on an as-needed basis.
Costs of Securing Broadband Licenses As discussed above, to obtain a broadband license in a county, the broadband applicant must satisfy (i) the 50% Licensed Spectrum Test, (ii) the 90% Broadband Segment Test and (iii) the 240 Channel Requirement.
Page 13 Table of Contents Costs of Securing Broadband Licenses As discussed above, to obtain a broadband license in a county, the broadband applicant must satisfy (i) the 50% Licensed Spectrum Test, (ii) the 90% Broadband Segment Test and (iii) the 240 Channel Requirement.
Page 4 Table of Contents Develop a Roadmap for Expanded Services Through our day-to-day interactions with prospective utility and critical infrastructure customers, and our responses and subsequent discussions related to RFIs and RFPs, we have identified additional areas of opportunity to support our prospective customers in the implementation and operation of PLTE networks.
Develop a Roadmap for Expanded Services Through our day-to-day interactions with prospective utility and critical infrastructure customers, and our responses and subsequent discussions related to RFIs and RFPs, we have identified additional areas of opportunity to support our current and prospective customers in the implementation and operation of PLTE networks.
As the broadband applicant, we can satisfy these channel requirements by including our existing licensed channels in the 900 MHz band and by Page 12 Table of Contents acquiring or clearing additional channels when necessary, through (i) spectrum purchases, (ii) spectrum retuning and/or (iii) by making Anti-Windfall Payments.
As the broadband applicant, we can satisfy these channel requirements by including our existing licensed channels in the 900 MHz band and by acquiring or clearing additional channels when necessary, through (i) spectrum purchases, (ii) spectrum retuning and/or (iii) by making Anti-Windfall Payments.
Page 15 Table of Contents Tower Siting Our future customers who deploy broadband networks will be required to comply with various federal, state and local regulations that govern the siting, lighting and construction of transmitter towers and antennas, including requirements imposed by the FCC and the Federal Aviation Administration (“FAA”).
Tower Siting Our current and future customers who deploy broadband networks will be required to comply with various federal, state and local regulations that govern the siting, lighting and construction of transmitter towers and antennas, including requirements imposed by the FCC and the Federal Aviation Administration (“FAA”).
Item 1. Business Overview Anterix Inc (“Anterix,” “we,” “our,” or the “Company”) is a wireless communications company focused on commercializing our spectrum assets to enable our targeted utility and critical infrastructure customers to deploy private broadband networks, technologies and solutions.
Item 1. Business Overview Anterix Inc (“Anterix,” “we,” “our,” or the “Company”) is a wireless communications company focused on commercializing our spectrum assets to enable our targeted utility and critical infrastructure customers to deploy private broadband networks and on offering innovative broadband solutions to the same target customers.
The Report and Order provides that the FCC will make the channels associated with these licenses available to the AAR to enable the AAR to relocate their current operations.
The Report and Order provides that the FCC will make the channels associated with these licenses available to the AAR to enable the AAR to relocate their current operations within five years.
We intend to enhance these efforts with sales and marketing partnerships with a variety of third parties, such as integrators and technology and equipment vendors, with whom we will seek active promotion of our broadband spectrum assets and support for our broadband spectrum assets with their products, technologies, solutions and services.
These efforts are enhanced with sales and marketing partnerships with a variety of third parties, such as integrators and technology and equipment vendors, with whom we will seek active promotion of our broadband spectrum assets and support for our broadband spectrum assets with their products, technologies, solutions and services.
Before filing for a broadband license, the broadband applicant must satisfy the 90% Broadband Segment Test by utilizing its channel holdings and negotiating with Covered Incumbents on a purely voluntary basis for any additional channels it requires to satisfy this test.
Page 12 Table of Contents Before filing for a broadband license, the broadband applicant must satisfy the 90% Broadband Segment Test by utilizing its channel holdings and negotiating with Covered Incumbents on a purely voluntary basis for any additional channels it requires to satisfy this test.
Converting our Nationwide Narrowband 900 MHz Spectrum Position to Broadband Converting our spectrum from narrowband to broadband licenses nationwide is a foundational component of our two-pronged strategy as it provides the platform for growing our business.
Converting our Nationwide Narrowband 900 MHz Spectrum Position to Broadband Converting our spectrum from narrowband to broadband licenses nationwide is a foundational component of our two-pronged strategy as it provides the underpinning for achieving our business strategy.
Subsequently, the FCC conducted overlay auctions on the SMR designated blocks that awarded geographic-based licenses on a Major Trading Area (“MTA”) basis while affording operational protection to incumbent, site-based licensees in those areas. Certain MTA licenses were not purchased at auction or have been returned to the FCC.
Subsequently, the FCC conducted overlay auctions on the SMR designated blocks that awarded geographic-based licenses on an MTA basis while affording operational protection to incumbent, site-based licensees in those areas. Certain MTA licenses were not purchased at auction or have been returned to the FCC.
On May 13, 2020, the FCC made a historic approval of the Report and Order to modernize and realign the 900 MHz band to increase its usability and capacity by allowing it to be utilized for the deployment of broadband networks, technologies and solutions.
On May 13, 2020, the FCC approved the Report and Order to modernize and realign the 900 MHz band to increase its usability and capacity by allowing it to be utilized for the deployment of broadband networks, technologies and solutions.
The second test, the 90% Broadband Segment Test, addresses the balance between a voluntary market process to clear any “Covered Incumbent” (i.e., holders of licenses in the broadband segment) and the Mandatory Retuning process established by the FCC in the Report and Order (which applies to all Covered Incumbents, except for those Covered Incumbents operating “Complex Systems” as defined above).
The second test, the 90% Broadband Segment Test, addresses the balance between a voluntary market process to clear any “Covered Incumbent” (i.e., holders of licenses in the broadband segment) and the Mandatory Retuning process established by the FCC in the Report and Order (which applies to all Covered Incumbents, except for those Covered Incumbents operating Complex Systems.
And while we intend to continue to prioritize our spectrum transactions in areas where we have customer opportunities, we also plan to pursue spectrum transactions opportunistically to recognize a positive return on our investments in spectrum clearing costs.
And while we intend to continue to Page 3 Table of Contents prioritize our spectrum transactions in areas where we have customer opportunities, we also plan to pursue spectrum transactions opportunistically to recognize a positive return on our investments in spectrum clearing costs.
We believe that security, priority access, latency, redundancy, private ownership, control and unique coverage requirements are just some of the reasons utility and critical infrastructure enterprises would be interested in obtaining rights to deploy the private wireless broadband networks, technologies and solutions that can be enabled through use of our spectrum. The electric utility industry is undergoing a fundamental transformation.
We believe that security, priority access, latency, redundancy, private ownership, control and unique coverage requirements are just some of the reasons utility and critical infrastructure enterprises would be interested in obtaining rights to deploy the private wireless broadband networks, technologies and solutions that can be enabled through use of our licensed spectrum.
A retune or swap adds to the number of channels we hold for computational purposes of the 90% Broadband Segment Test. We began retuning or swapping channels with interested Covered Incumbents in 2015 in anticipation of the Report and Order. We have continued retuning and swapping channels with Covered Incumbents since that time.
An agreement to retune adds to the number of channels we hold for computational purposes of the 90% Broadband Segment Test. We began retuning channels with interested Covered Incumbents in 2015 in anticipation of the Report and Order. We have continued retuning channels with Covered Incumbents since that time.
For purposes of broadband license eligibility, any potential spectrum retuning or swapping agreements we negotiate in the 900 MHz band will be included as part of our broadband application, but we are not required to complete the retune or swap before we submit our broadband license application. 3. Anti-Windfall Payment.
For purposes of broadband license eligibility, any potential spectrum retuning agreements we negotiate in the 900 MHz band will be included as part of our broadband application, but the retune is not required to be completed before we submit our broadband license application. 3. Anti-Windfall Payment.
In 2021, we invited all employees to participate in a culture assessment by completing an anonymous survey. Eighty percent of our employees participated in the cultural survey providing a good basis to gauge employee sentiment. Our management team reviewed the feedback and shared the survey results with employees at a quarterly Town Hall meeting.
In 2021, we invited all employees to participate in an initial Employee Engagement by completing an anonymous survey. Eighty percent of our employees participated in the cultural survey providing a good basis to gauge employee sentiment. Our management team reviewed the feedback and shared the Page 16 Table of Contents survey results with employees at a quarterly Town Hall meeting.
However, due to the general unavailability of low band spectrum (i.e., below 1 GHz), Page 5 Table of Contents these entities have had limited opportunities to license or acquire the spectrum required to deploy cost-effective wireless broadband or other advanced technologies on their own.
However, due to the general unavailability of low band spectrum (i.e., below 1 GHz), these entities have had limited opportunities to license or acquire the spectrum required to deploy cost-effective wireless broadband or other advanced technologies.
More specifically, these teams are working in coordination with representatives from our target customers, LTE infrastructure vendors, end-user device manufacturers, system integrators and other technology companies in addition to responding to Requests for Information (“RFIs”), Requests for Proposals (“RFPs”) and requests to support technology trials related to using our 900 MHz spectrum for broadband services.
More specifically, these teams are working in coordination with representatives from our target customers, long-term evolution (“LTE”) infrastructure vendors, end-user device manufacturers, system integrators and other technology companies in addition to responding to Requests for Information (“RFI”), Requests for Proposals (“RFP”) and requests to support technology trials related to using our 900 MHz spectrum for broadband services.
Evergy Milestone Total allocated value (in millions)* Expected start of revenue recognition** Term** Delivery of 1.4 x 1.4 spectrum $ 0.9 Q2 FY23 1 year Delivery of 3 x 3 spectrum 29.3 Q2 FY24 19 years * Total allocated value is subject to change based on final delivery date of the broadband licenses for the associated milestone, which may include penalties associated with delayed deliveries. ** Revenue recognition occurs upon delivery of broadband licenses for the associated milestone.
Evergy Milestone Total allocated value (in millions)* Start of revenue recognition** Term** Milestone 1 $ 0.9 Q2 FY23 1 year Milestone 2 29.3 Q2 FY24 19 years * Total allocated value is subject to change based on final delivery date of the broadband licenses for the associated milestone, which may include penalties associated with delayed deliveries. ** Revenue recognition occurs upon delivery of broadband licenses for the associated milestone which may differ from the estimates noted above.
Ameren Milestone Total allocated value (in millions)* Expected start of revenue recognition** Term** Upfront deposit $ 0.3 Q3 FY22 30 years Delivery of area 1 1.4 x 1.4 spectrum 1.7 Q3 FY22 3 years Delivery of area 1 3 x 3 spectrum 21.0 Q1 FY25 27 years Delivery of area 2 3 x 3 spectrum 1.9 Q1 FY25 27 years Delivery of area 3 3 x 3 spectrum 22.8 Q1 FY27 25 years * Total allocated value is subject to change based on final delivery date of the broadband licenses for the associated milestone, which may include penalties associated with delayed deliveries. ** Revenue recognition occurs upon delivery of broadband licenses for the associated milestone, which may be delayed at Ameren’s request.
Ameren Milestone Total allocated value (in millions)* Start of revenue recognition** Term** Upfront deposit $ 0.3 Q3 FY22 30 years Milestone 1 1.7 Q3 FY22 3 years Milestone 2 21.0 Q1 FY25 27 years Milestone 3 1.9 Q1 FY25 27 years Milestone 4 22.8 Q1 FY27 25 years * Total allocated value is subject to change based on final delivery date of the broadband licenses for the associated milestone, which may include penalties associated with delayed deliveries. ** Revenue recognition occurs upon delivery of broadband licenses for the associated milestone, which may differ from the estimates noted above.
Since the FCC’s issuance of the Report and Order, our sales and marketing efforts have been focused on pursuing spectrum lease arrangements with our targeted utility and critical infrastructure customers.
Since the FCC’s issuance of the Report and Order, our sales and marketing efforts have been focused on pursuing spectrum lease arrangements and introducing our integrated platform solutions to our targeted utility and critical infrastructure customers.
Utilities, however, need wireless communication networks, technologies and solutions that can move the large volumes of data generated by these sensors and smart devices to their control systems for decision making, analytics and responsiveness to market demand and emergencies.
Wireless communication networks, technologies and solutions can help utilities move the large volumes of data generated by these sensors and smart devices to their control systems for decision making, analytics and responsiveness to Page 5 Table of Contents market demand and emergencies.
The survey showed that we have a highly engaged workforce that overwhelmingly views our work environment favorably. Where our employees identified areas for improvement, we worked with various functional areas to create and implement action plans to address any issues.
The survey showed that we have a highly engaged workforce that overwhelmingly views our work environment favorably. Where our employees identified areas for improvement, we worked with various functional areas to create and implement action plans to address any issues. Our second Employee Engagement survey is set to launch in Fall 2023.
Broadband licenses During the year ended March 31, 2022, we applied for, and were granted by the FCC, broadband licenses for 21 counties. As a result, we relinquished to the FCC our narrowband licenses and made the necessary Anti-Windfall payments for the same 21 counties as required by the Report and Order.
Broadband licenses As of March 31, 2023 and 2022, we were granted by the FCC broadband licenses for 105 and 21 counties, respectively. As a result, we relinquished to the FCC our narrowband licenses and made the necessary Anti-Windfall Payments for the same 105 and 21 counties, respectively, as required by the Report and Order.
Electrical utilities, for example, may be regulated by the Federal Energy Regulatory Commission, the Public Utilities Commissions within the states they serve and/or other state and municipal governance or regulatory bodies. Other agencies that guide utility regulations include the Department of Energy, the Department of Homeland Security, and NIST.
Electric utilities, for example, may be regulated by the Federal Energy Regulatory Commission, the Public Utilities Commissions within the states they serve and/or other state and municipal governance or regulatory bodies. Other agencies that guide utility regulations include the Department of Energy, the Department of Homeland Security, and NIST, as well as regional transmission organizations and independent system operators.
The remaining prepayments of $24.8 million, excluding potential penalties, for the 30-year initial term are due by mid-2026, per the terms of the Ameren Agreements and as we deliver the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses. We are working with incumbents to clear the 900 MHz Broadband Spectrum allocation in Ameren’s service territory.
The remaining prepayments of $24.8 million, excluding potential penalties, for the 30-year initial term are due by mid-2026, per the terms of the Ameren Agreements and as we deliver the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses.
Page 11 Table of Contents 3. 240 Channel Requirement. The Report and Order requires the broadband applicant to surrender 6 MHz of narrowband spectrum (or 240 channels) in the applicable county to the FCC in exchange for a broadband license.
The Report and Order requires the broadband applicant to surrender 6 MHz of narrowband spectrum (or 240 channels) in the applicable county to the FCC in exchange for a broadband license.
Our business development, sales and marketing organizations have the following three key focus areas: (i) direct account-based sales and marketing efforts to our targeted customers; (ii) regulatory outreach and support; and (iii) industry trade organization collaboration.
Our business development, sales and marketing organizations exercise the following three key methods to grow and mature our pipeline: (i) direct account-based sales and marketing efforts to our targeted customers; (ii) regulatory outreach and support; and (iii) industry trade organization collaboration.
Our dedicated clearing teams are focused on negotiating agreements to move Covered Incumbents from the recently allocated broadband segment of the 900 MHz spectrum band to the segments allocated for continued narrowband operations within the 900 MHz band or out of 900 MHz band entirely. Our team has established contact with nearly all of the Covered Incumbents throughout the country.
Our dedicated clearing teams are focused on negotiating agreements to move Covered Incumbents from the broadband segment of the 900 MHz spectrum band to the segments allocated for continued narrowband operations within the 900 MHz band or out of 900 MHz band entirely.
We have been proactive in this effort and to date have completed, and intend to continue to pursue, spectrum transactions to support our efforts to satisfy the broadband license eligibility requirements.
We have been proactive in this effort and to date have completed, and intend to continue to pursue, spectrum transactions to support our efforts to satisfy the broadband license eligibility requirements. Clear Covered Incumbents We have been proactive in our clearing efforts in preparation for the broadband licensing process.
AAEP currently has 80 leading technology companies that will provide deployment and application solutions for private broadband among our Nation’s electric grid innovators. We recently launched the AAEP to foster, strengthen, and expand the landscape of 900 MHz devices, services and solutions.
The AAEP includes participation of over 100 leading technology companies that provide deployment and application solutions for private broadband targeting our Nation’s electric grid innovators. We launched the AAEP to foster, strengthen, and expand the landscape of 900 MHz devices, services and solutions.
Additionally, our marketing team supports our sales efforts through collateral, product demonstrations, presentations and branded participation through sponsorships and speaking engagements at major trade events, associations and organizations and customer meetings, to expand our brand awareness.
Additionally, our senior executives, engineering, technology, commercial sales operations and marketing teams support our sales efforts through presentations, branded participation through sponsorships and speaking engagements at major trade events, associations and organizations, customer meetings, collateral, and product demonstrations to expand our reach and brand awareness.
Competition Our competitors include the Tier 1 carriers (Verizon, AT&T and T-Mobile), private radio operators and other public and private companies who own spectrum, supply communication networks, technologies, products and solutions to our targeted utility and critical infrastructure enterprises.
Competition Our competitors include retail wireless network providers, such as Verizon, AT&T, T-Mobile, Dish and UScellular, private radio operators and other public and private companies who own spectrum, supply communication networks, technologies, products and solutions to our targeted utility and critical infrastructure enterprises.
Diversity, Equity and Inclusion We are committed to hiring inclusively, providing training and development opportunities, fostering an inclusive culture, ensuring equitable pay for employees, and focusing on attracting and retaining diverse representation at every level within the Company.
Diversity, Equity and Inclusion We are committed to hiring inclusively, providing training and development opportunities, fostering an inclusive culture, ensuring equitable pay for employees, and focusing on attracting and retaining diverse representation at every level within the Company. Anterix GROW was launched in February 2023. The focus of GROW is to embed inclusion into everyday life, personally and professionally.
To that end, we are pursuing a two-pronged strategy focused on: 1) converting our nationwide narrowband 900 MHz spectrum position into valuable broadband spectrum; and 2) adoption of our principal commercial business offering, the long-term leasing of our broadband spectrum by utility and critical infrastructure enterprises nationwide.
To that end, we are pursuing a two-pronged strategy focused on: 1) converting our nationwide narrowband 900 MHz spectrum position into valuable broadband spectrum; and 2) offering long-term leasing of broadband spectrum or other creative solutions in complex system areas to monetize spectrum and platform services and solutions to utility and critical infrastructure enterprises nationwide.
We are implementing this strategy through targeted outreach and education by our sales and marketing organization, by participating in the Utilities Broadband Alliance (“UBBA”) and attracting vendors to the Anterix Active Ecosystem Program (“AAEP”). UBBA membership includes twelve electric utilities among its nearly sixty members.
We are implementing this strategy through targeted outreach and education by our sales, marketing, business development, commercial sales operations and industry government affairs organizations, by participating in the Utilities Broadband Alliance (“UBBA”) along with other industry associations, and by attracting vendors to the Anterix Active Ecosystem Program (“AAEP”). UBBA membership currently includes 30 electric utilities among its nearly 100 members.
Delivery of the relevant 900 MHz broadband spectrum and the associated broadband licenses by county is expected to commence in fiscal year Page 7 Table of Contents 2023 and is scheduled for completion before the end of fiscal year 2024.
We commenced delivery to SDG&E of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses by county in the fiscal year ended 2023 (“Fiscal 2023”) and delivery is scheduled for completion before the end of fiscal year 2024.
In August 2021, the FCC granted the first 900 MHz broadband licenses to us for several counties in Ameren’s service territory, for which the Ameren Agreements were also subsequently approved by the FCC.
Each Ameren Agreement is for an initial term of 30 years with a 10-year renewal option for an additional payment. In August 2021, the FCC granted the first 900 MHz broadband licenses to us for several counties in Ameren’s service territory, for which the Ameren Agreements were also subsequently approved by the FCC.
Grid modernization efforts and the drive to reduce carbon emissions have disrupted the need for utilities to build new large-scale, centralized facilities. Today, power is generated by smaller, more geographically distributed facilities that can switch from a power producer to a recipient of power generated by a variety of other disparate sources, including wind and solar installations.
Today, power is generated by smaller, more geographically distributed facilities that can switch from a power producer to a recipient of power generated by a variety of other disparate sources, including wind and solar installations.
To obtain a 6 MHz broadband license, we must surrender 240 licensed channels in the county. As this band has been underutilized historically, most counties in the United States do not have 240 outstanding licensed channels. To make up the difference, we may effectively pay for channels from the FCC’s spectrum inventory by making an Anti-Windfall Payment.
To obtain a 6 MHz broadband license, we must surrender 240 licensed channels in the county. As this band has been underutilized historically, most counties in the United States do not have 240 outstanding licensed channels that can be surrendered.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe NPSBN, which is marketed as “FirstNet”, may provide an additional source of competition to utilizing our 900 MHz spectrum assets by our targeted utility and critical infrastructure enterprises. Some of our competitors, including the Tier 1 carriers, have significantly greater pricing flexibility, have taken steps and may decide to compete against us more aggressively.
Biggest changeFor example, the federal government created and funded the FRNA, which the federal government authorized to help accomplish, fund, and oversee the deployment of a dedicated NPSBN. The NPSBN, which is marketed as “FirstNet”, may provide an additional source of competition to utilizing our 900 MHz spectrum assets by our targeted utility and critical infrastructure enterprises.
Our potential customers, however, are large organizations and a decision to implement private broadband networks, technologies and solutions is an involved decision and will require significant capital outlays. Any negotiation and contract process with these potential customers has taken, and likely will continue to take, a significant amount of time and effort to work through their approval and funding processes.
Our potential customers, however, are large organizations and their decision to implement private broadband networks, technologies and solutions is an involved decision and will require significant capital outlays. Any negotiation and contract process with these potential customers has taken, and likely will continue to take, a significant amount of time and effort to work through their approval and funding processes.
These factors include: • the cost and time required to obtain broadband licenses, including the costs to clear the 900 MHz band and to acquire additional spectrum from incumbents and/or to make Anti-Windfall Payments; • our ability to qualify for and utilize the Mandatory Retuning process established by the Report and Order; • our ability to negotiate agreements with the operators of Complex Systems; • the cost and time to promote, market and commercialize our spectrum assets, including the long sales cycle required to enter long-term lease arrangements with our targeted utility and critical infrastructure customers; • the commercial terms, including the length of the lease and the timing of payments, in our future commercial arrangements with our targeted customers; • the costs associated with increasing the size of our organization, including the costs to attract and retain personnel with the skills required to support our business plans; • adverse economic conditions, including as a result of inflation, that delay or otherwise hinder our commercialization efforts; and • the funds we return to stockholders through our share repurchase program.
These factors include: • the cost and time required to obtain broadband licenses, including the costs to clear the 900 MHz band and to acquire additional spectrum from incumbents and/or to make Anti-Windfall Payments; • our ability to qualify for and utilize the Mandatory Retuning process established by the Report and Order; • our ability to negotiate agreements with the operators of Complex Systems; • the cost and time to promote, market and commercialize our spectrum assets, including the long sales cycle required to enter commercial arrangements with our targeted utility and critical infrastructure customers; • the commercial terms, including the length of the lease and the timing of payments, in our future commercial arrangements with our targeted customers; • the costs associated with increasing the size of our organization, including the costs to attract and retain personnel with the skills required to support our business plans; • adverse economic conditions, including as a result of inflation, that delay or otherwise hinder our commercialization efforts; and • the funds we return to stockholders through our share repurchase program.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • we will not be obligated pursuant to our Amended and Restated Bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our Board or brought to enforce a right to indemnification; • the rights conferred in our Amended and Restated Bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and • we may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • we will not be obligated pursuant to our Amended and Restated Bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnities, except with respect to proceedings authorized by our Board or brought to enforce a right to indemnification; • the rights conferred in our Amended and Restated Bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and • we may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects.
We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant expenditures and may divert financial resources from other projects.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We discovered in the past and may discover in the future areas of our internal controls that need improvement or additional documentation.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We have discovered in the past and may discover in the future areas of our internal controls that need improvement or additional documentation.
Some of the factors that could negatively affect or result in fluctuations in the market price of our common stock include: • the timing and costs of securing broadband licenses; • our ability to enter into contracts with our targeted utility and critical infrastructure customers, on a timely basis or at all; • the terms of our customer contracts, including pre-payments and our contractual obligations; • our ability to comply with our obligations, on a timely and cost-effective basis, under our existing customer contracts; • market reaction to any changes in our business plans or strategies; • announcements, offerings or actions by our competitors; • governmental regulations or actions taken by governmental bodies; • additions or departures of any of our executive officers or key personnel; • actions by our stockholders; • speculation in the press or investment community; • general market, economic and political conditions, including an economic slowdown, inflation or dislocation in the global credit markets; • our operating performance and the performance of other similar companies; • changes in accounting principles, judgments or assumptions; and • passage of legislation or other regulatory developments that adversely affect us or our industry.
Some of the factors that could negatively affect or result in fluctuations in the market price of our common stock include: • the timing and costs of securing broadband licenses; • our ability to enter into contracts with our targeted utility and critical infrastructure customers, on a timely basis or at all; • the terms of our customer contracts, including pre-payments and our contractual obligations; Page 26 Table of Contents • our ability to comply with our obligations, on a timely and cost-effective basis, under our existing customer contracts; • market reaction to any changes in our business plans or strategies; • announcements, offerings or actions by our competitors; • governmental regulations or actions taken by governmental bodies; • additions or departures of any of our executive officers or key personnel; • actions by our stockholders; • speculation in the press or investment community; • general market, economic and political conditions, including an economic slowdown, inflation or dislocation in the global credit markets; • our operating performance and the performance of other similar companies; • changes in accounting principles, judgments or assumptions; and • passage of legislation or other regulatory developments that adversely affect us or our industry.
As a result, there is no assurance that we will be able to retain any upfront payments or receive future payments in the amounts and on the timeline we currently expect, or at all. Further, Ameren and Evergy may not elect to exercise their options for additional terms contemplated by the terms of the long-term lease agreements.
As a result, there is no assurance that we will be able to retain any upfront payments or receive future payments in the amounts and on the timeline we currently expect, or at all. Further, Ameren, Evergy and Xcel Energy may not elect to exercise their options for additional terms contemplated by the terms of the long-term lease agreements.
In such case, we may not be able to return capital to our stockholders as planned (through dividends and stock repurchases) and may be required to issue additional equity or debt securities or enter into other commercial arrangements to secure the additional financial resources to support our future operations and the implementation of our business plans.
In such case, we may not be able to return capital to our stockholders through dividends and stock repurchases and may be required to issue additional equity or debt securities or enter into other commercial arrangements to secure the additional financial resources to support our future operations and the implementation of our business plans.
If we do not have a sufficient number of channels to satisfy any of these eligibility requirements, we will be required to purchase the additional channels from incumbents in privately negotiated transactions, swap our existing channels Page 17 Table of Contents with incumbents (including any required retuning of the incumbent radio systems), demonstrate the ability to protect Covered Incumbents or effectively purchase channels not previously licensed by the FCC by making an Anti-Windfall Payment.
If we do not have a sufficient number of channels to satisfy any of these eligibility requirements, we will be required to purchase the additional channels from incumbents in privately negotiated transactions, swap our existing channels with incumbents (including any required retuning of the incumbent radio systems), demonstrate the ability to protect Covered Incumbents or effectively purchase channels not previously licensed by the FCC by making an Anti-Windfall Payment.
Since the Report and Order, we have signed commercial agreements with three of our target utility and critical infrastructure customers for the long-term lease or transfer of our spectrum assets.
Since the Report and Order, we have signed commercial agreements with five of our target utility and critical infrastructure customers for the long-term lease or transfer of our spectrum assets.
Our information technology and other systems, and those of our service providers or contract partners (including A BEEP, Goosetown and the LLC), that maintain and transmit customer information, including location or personal information, may be compromised by a malicious third-party penetration of our network security, or that of our third-party service providers or contract partners, or impacted by unauthorized intentional or inadvertent actions or inactions by our employees, or by the employees of our third-party service providers or contract partners.
Our information technology and other systems, and those of our service providers or contract partners, that maintain and transmit customer information, including location or personal information, may be compromised by a malicious third-party penetration of our network security, or that of our third-party service providers or contract partners, or impacted by unauthorized intentional or inadvertent actions or inactions by our employees, or by the employees of our third-party service providers or contract partners.
Further, our assumptions regarding the terms of any spectrum leases we enter into with our targeted customers, including the timing of customer payments, may turn out to be inaccurate.
Further, our assumptions regarding the terms of any spectrum transactions we enter into with our targeted customers, including the timing of customer payments, may turn out to be inaccurate.
While, to date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, have been material to our operations or financial condition, the preventive actions we and our third-party service providers and contract partners take to reduce the risk of cyber incidents and protect information technology resources and networks may be Page 24 Table of Contents insufficient to repel a major cyber-attack in the future.
While, to date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, have been material to our operations or financial condition, the preventive actions we and our third-party service providers and contract partners take to reduce the risk of cyber incidents and protect information technology resources and networks may be insufficient to repel a major cyber-attack in the future.
There are typically a number of constituencies within each of our targeted customers that need to review and approve the lease of our spectrum before signing a contract with us. As a result, we have experienced, and we expect to continue to experience, long sales cycles with our targeted customers.
There are typically a number of constituencies within each of our targeted customers that need to review and approve the commercial agreements of our spectrum before signing a contract with us. As a result, we have experienced, and we expect to continue to experience, long sales cycles with our targeted customers.
There is no assurance that we will be able to clear incumbents from Ameren’s, SDG&E’s and/or Evergy’s respective service territories and obtain broadband licenses from the FCC on the timeline required under our agreements, or at all.
There is no assurance that we will be able to clear incumbents from Ameren’s, SDG&E’s, Evergy’s, Xcel Energy’s, and/or LCRA’s respective service territories and obtain broadband licenses from the FCC on the timeline required under our agreements, or at all.
Please refer to the section entitled “Cautionary Statement Concerning Forward-Looking Statements.” Risks Related to Obtaining Broadband Licenses, the Retuning Process and the Use of Our Spectrum Our plans to commercialize our 900 MHz spectrum assets depend on our ability to qualify for and obtain broadband licenses from the FCC in accordance with the requirements of the Report and Order.
Please refer to the section entitled “Cautionary Statement Concerning Forward-Looking Statements.” Page 17 Table of Contents Risks Related to Obtaining Broadband Licenses, the Retuning Process and the Use of Our Spectrum Our plans to commercialize our 900 MHz spectrum assets depend on our ability to qualify for and obtain broadband licenses from the FCC in accordance with the requirements of the Report and Order.
As a business with a limited operating history with our current business plan, any future success will depend, in large part, on our ability to, among other things: • comply with the requirements and restrictions the FCC has established in the Report and Order to qualify for and obtain broadband licenses in key geographic areas on a timely and cost-effective basis; • successfully commercialize our spectrum assets to our targeted utility and critical infrastructure customers on favorable terms, on a timely basis, or at all; • comply with our obligations under our existing and any future agreements with our customers on a timely basis and on commercially reasonable terms; • compete against other wireless companies, including the Tier 1 carriers, manufacturers and vendors who have significantly greater resources and pricing flexibility, long-term relationships with our targeted customers and greater political and regulatory influence; • successfully convince chipmakers and other technology, product and solution manufacturers and vendors to develop the technology, products and solutions required to satisfy our customers’ various use cases and meet the technical specifications established in the Report and Order; and • successfully manage and grow our internal business, regulatory, technical and commercial operations in an efficient and cost-effective manner .
As a business with a limited operating history with our current business plan, any future success will depend, in large part, on our ability to, among other things: • comply with the requirements and restrictions the FCC has established in the Report and Order to qualify for and obtain broadband licenses in key geographic areas on a timely and cost-effective basis; • successfully commercialize our spectrum assets to our targeted utility and critical infrastructure customers on favorable terms, on a timely basis, or at all; • comply with our obligations under our existing and any future agreements with our customers on a timely basis and on commercially reasonable terms; • compete against other wireless companies, such as Verizon, AT&T, T-Mobile, Dish and UScellular, manufacturers and vendors who have significantly greater resources and pricing flexibility, long-term relationships with our targeted customers and greater political and regulatory influence; • successfully convince chipmakers and other technology, product and solution manufacturers and vendors to develop the technology, products and solutions required to satisfy our customers’ various use cases and meet the technical specifications established in the Report and Order; and • successfully manage and grow our internal business, regulatory, technical and commercial operations in an efficient and cost-effective manner .
In addition, numerous other factors, many of which are out of our control, may now or in the future impact our ability to acquire new customers, including not gaining support from governmental bodies that regulate our customers, the ability of our customers to pass their lease and broadband deployment costs to their ratepayers, our customers’ existing commitments to other providers or communication solutions, real or perceived costs of leasing our spectrum assets and deploying broadband networks, solutions and services, our failure to expand, retain and motivate our sales and marketing personnel, our failure to develop or expand relationships with the manufacturers or suppliers of broadband technologies, solutions and services that can be utilized on our spectrum, negative media, industry or financial analyst commentary regarding us or our solutions, litigation, the spectrum and service offerings of our competitors, the adverse impacts of the COVID-19 pandemic and deteriorating general economic conditions.
In addition, numerous other factors, many of which are out of our control, may now or in the future impact our ability to acquire new customers, including not gaining support from governmental bodies that regulate our customers, the ability of our customers to pass their broadband spectrum use and deployment costs to their ratepayers, our customers’ existing commitments to other providers or communication solutions, real or perceived costs of leasing our spectrum assets and deploying broadband networks, solutions and services, our failure to expand, retain and motivate our sales and marketing personnel, our failure to develop or expand relationships with the manufacturers or suppliers of broadband technologies, solutions and services that can be utilized on our spectrum, negative media, industry or financial analyst commentary regarding us or our solutions, litigation, the spectrum and service offerings of our competitors, the adverse impacts of the health pandemics and deteriorating general economic conditions and events.
See the risk factor entitled “ We may not be able to correctly estimate our operating expenses or future revenues, which could lead to cash shortfalls and require us to secure additional financing .” The v oluntary exchange process established by the FCC in the Report and Order may not allow us to clear or relocate incumbents in a timely manner and on commercially reasonable terms, or at all.
See the risk factor entitled “ We may not be able to correctly estimate our operating expenses or future revenues, which could lead to cash shortfalls, and may prevent us from returning capital to our stockholders and require us to secure additional financing .” The v oluntary exchange process established by the FCC in the Report and Order may not allow us to clear or relocate incumbents in a timely manner and on commercially reasonable terms, or at all.
In addition, under our current business plan, we intend to enter long-term leasing or other transfer arrangements for our spectrum assets with one customer, or a limited number of customers, in each geographic area.
In addition, under our current business plan, we generally intend to enter into long-term leasing or other transfer arrangements for our spectrum assets in one county with one customer, or a limited number of customers, in each geographic area.
Ameren’s, SDG&E’s and Evergy’s respective payment obligations, including our ability to maintain any upfront payments and any future payment obligations under these agreements, are contingent on our ability to deliver cleared spectrum and broadband spectrum licenses on the timelines required in these agreements.
Ameren’s, SDG&E’s, Evergy’s, Xcel Energy’s, and LCRA’s respective payment obligations, including our ability to maintain any upfront payments and any future payment obligations under these agreements, are contingent on our ability to deliver cleared spectrum and Broadband Spectrum licenses on the timelines required in these agreements.
Many of these competitors have significantly more resources, a longer track record of providing technologies, products and solutions to our targeted customers and greater political and regulatory influence than we do, all of which could prevent, delay or increase the costs of commercializing the broadband licenses we secure to our targeted customers.
Many of these competitors have significantly more resources, a longer track record of providing technologies, products and solutions to our targeted customers and greater political and regulatory influence than we do, all of which could prevent, delay or increase the costs of commercializing the broadband Page 23 Table of Contents licenses we secure to our targeted customers.
Although we are not aware of any voting arrangements between these stockholders, our significant stockholders can determine (if acting together) or significantly influence (if acting as a group of two or more): (i) the outcome of any corporate actions submitted by our Board for approval by our stockholders and (ii) any proposals or director nominees submitted by a stockholder.
Although we are not aware of any voting arrangements between these stockholders, our significant stockholders can determine (if acting together) or significantly influence: (i) the outcome of any corporate actions submitted by our Board for approval by our stockholders and (ii) any proposals or director nominees submitted by a stockholder.
We also expect that our customers will pay what we believe is the fair market value for the lease of the spectrum and bear the costs of deploying and operating their private broadband networks.
We also expect that our customers will pay what we believe is the fair market value for rights to our spectrum and bear the costs of deploying and operating their private broadband networks.
Our share repurchase program may be modified, suspended or terminated at any time, which may result in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.
Our share repurchase program may be modified, suspended or terminated at any time, which may result in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not Page 27 Table of Contents enhance long-term stockholder value.
As of March 31, 2022, we had approximately $90.3 million of federal net operating loss (“NOL”) carryforwards, expiring in various amounts from 2023 through 2038, to offset future taxable income and the remaining $240.4 million of which can be carried forward indefinitely but limited to 80% of future taxable income when used.
As of March 31, 2023, we had approximately $90.3 million of federal net operating loss (“NOL”) carryforwards, expiring in various amounts from 2023 through 2038, to offset future taxable income and the remaining $237.5 million of which can be carried forward indefinitely but limited to 80% of future taxable income when used.
Further, our costs to clear incumbents, qualify for broadband licenses and perform our other obligations under our agreements with Ameren, SDG&E and Evergy may be significantly more than we currently anticipate, which could increase our operating expenses and reduce the net revenue or proceeds we recognize from these agreements.
Further, our costs to clear incumbents, qualify for broadband licenses and perform our other obligations under our agreements with Ameren, SDG&E, Evergy, Xcel Energy and LCRA may be significantly more than we currently anticipate, which could increase our capital expenses and reduce the net revenue or proceeds we recognize from these agreements.
As a result, claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. Page 28 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
As a result, claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We also will need to expend Page 21 Table of Contents substantial resources for the foreseeable future to qualify for and obtain broadband licenses, including the costs related to retuning incumbent systems, purchasing additional spectrum from incumbents and/or making Anti-Windfall Payments to the U.S. Treasury to commercialize our spectrum assets.
We also will need to expend substantial resources for the foreseeable future to qualify for and obtain broadband licenses, including the costs related to retuning incumbent systems, purchasing additional spectrum from incumbents and/or making Anti-Windfall Payments to the U.S. Treasury to commercialize our spectrum assets.
If we do not gain support from these governmental bodies, our targeted critical infrastructure customers may not find it commercially feasible to lease our spectrum assets. Page 20 Table of Contents We may not be able to maintain any broadband licenses that we own and/or obtain from the FCC.
If we do not gain support from these governmental bodies, our targeted critical infrastructure customers may not find it commercially feasible to lease our spectrum assets. We may not be able to maintain any broadband licenses that we own and/or obtain from the FCC.
Under any of these circumstances, we may expose ourselves to different and more significant risks, decrease our revenues or increase our expenses and financial requirements, any of which could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations. We depend on our executive officers and key personnel.
Under any of these circumstances, we may expose ourselves to different and more significant risks, decrease our revenues or increase our expenses and financial requirements, any of which could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.
We may not be able to adjust our operations in a timely manner to compensate for any shortfall in our revenues, delays in obtaining broadband licenses, delays in entering long-term leases for our spectrum or increases in the expenses required to secure broadband licenses and implement our commercialization and business plans.
We may not be able to adjust our operations in a timely manner to compensate for any shortfall in our revenues, delays in obtaining broadband licenses, delays in entering commercial agreements for our spectrum or increases in the expenses required to secure broadband licenses and implement our commercialization and business plans.
If our losses or expenses exceed our expectations or our revenue assumptions are not met in future periods, we may never achieve or maintain profitability in the future. Our ability to use our net operating losses to offset future taxable income, if any, may be subject to certain limitations.
If our losses or expenses exceed our expectations or our revenue assumptions are not met in future periods, we may never achieve or maintain profitability in the future. Page 24 Table of Contents Our ability to use our net operating losses to offset future taxable income, if any, may be subject to certain limitations.
The value of our spectrum assets may fluctuate significantly based on supply and demand, as well as technical and regulatory changes. The FCC spectrum licenses we hold are our most valuable asset.
Page 21 Table of Contents The value of our spectrum assets may fluctuate significantly based on supply and demand, as well as technical and regulatory changes. The FCC spectrum licenses we hold are our most valuable asset.
If such technologies, products and solutions are not available or competitively priced or are significantly delayed, our customers may decide not to lease any broadband licenses we secure on acceptable terms, on a timely basis, or at all.
If such technologies, products and solutions are not available or competitively priced or are Page 19 Table of Contents significantly delayed, our customers may decide not to lease any broadband licenses we secure on acceptable terms, on a timely basis, or at all.
For example, utilities or other critical infrastructure enterprises may not elect to lease any broadband licenses we secure on terms satisfactory to us or for a lease amount that represents what we believe is the fair market value for the lease of our spectrum, on a timely basis, or at all.
For example, utilities or other critical infrastructure enterprises may not elect to acquire use of any broadband licenses we secure on terms satisfactory to us or for a consideration that represents what we believe is the fair market value for the rights to our spectrum, on a timely basis, or at all.
Delays by members of the AAR in clearing their channels in the broadband segment could delay or hinder our ability to commercialize broadband licenses and the ability of our customers to Page 18 Table of Contents deploy 3/3 MHz broadband networks in the affected area, which could have a material adverse effect on our operations and business plan, our future prospects and opportunities and on our ability to develop a profitable business.
Delays by members of the AAR in clearing their channels in the broadband segment could delay or hinder our ability to commercialize broadband licenses and the ability of our customers to deploy 3 x 3 MHz broadband networks in the affected area, which could cause delays, penalties or have a material adverse effect on our operations and business plan, our future prospects and opportunities and on our ability to develop a profitable business.
As a result, a significant shortfall in our planned revenues, a significant delay in obtaining broadband licenses and entering into long-term leases for our spectrum assets, customers electing not to make significant pre-payments under the terms of any lease agreements we enter into or significant increases in our planned expenses could have an immediate and material adverse effect on our business, liquidity, results of operations and prospects.
As a result, a significant shortfall in our planned revenues, a significant delay in obtaining broadband licenses and entering into agreements for our spectrum assets, customers Page 22 Table of Contents electing not to make significant pre-payments under the terms of any agreements we enter into or significant increases in our planned expenses could have an immediate and material adverse effect on our business, liquidity, results of operations and prospects.
Although we were incorporated in 1997, our business is now reliant on our ability to secure broadband licenses pursuant to the Report and Order approved by the FCC in May 2020 and to commercialize our spectrum assets to our targeted utility and critical infrastructure customers.
Although we were incorporated in 1997, our business is now reliant on our ability to secure broadband licenses pursuant to the Report and Order and to commercialize our spectrum assets to our targeted utility and critical infrastructure customers.
These provisions also could limit the Page 27 Table of Contents price that investors might be willing to pay in the future for our common stock, thereby depressing the market price of our common stock.
These provisions also could limit the price that investors might be willing to pay in the future for our common stock, thereby depressing the market price of our common stock.
Page 19 Table of Contents We are subject to contingencies and obligations under our commercial agreements with Ameren, SDG&E and Evergy, including the delivery of cleared spectrum and broadband licenses on a timely basis, and as a result, there is no assurance that we will receive payments from Ameren and/or SDG&E in the amounts and on the timeline we currently expect, or that any payments we have received to date, including from Evergy, will not be subject to repayment or that we will not be subject to contract claims, including rights of termination.
We are subject to contingencies and obligations under our commercial agreements with our customers including the delivery of cleared spectrum and broadband licenses on a timely basis, and as a result, there is no assurance that we will receive payments from such customers in the amounts and on the timeline we currently expect, or that any payments we have received to date, including from Evergy, will not be subject to repayment or that we will not be subject to contract claims, including rights of termination.
The material weakness is considered remediated as the applicable remedial controls operated for a sufficient period of time and management has concluded through testing, that these controls were operating effectively as of the end of the period covered by this Annual Report.
The material weakness was remediated as of March 31, 2022 as the applicable remedial controls operated for a sufficient period of time and management has concluded through testing, that these controls were operating effectively as of the end of the period covered by this Annual Report.
In January 2020, we formalized our AAR Agreement with the AAR in which we agreed to cancel licenses in the 900 MHz band to enable the AAR to relocate its operations, including operations utilizing the three channels located in the 900 MHz broadband segment. We cancelled these licenses in June 2020 in accordance with the AAR Agreement.
In January 2020, we formalized our AAR Agreement with the AAR in which we agreed to provide licenses in the 900 MHz band to enable the AAR to relocate its operations, including operations utilizing the three channels located in the 900 MHz broadband segment.
In addition, we may not be able to fund or invest in certain areas of our business to the same degree as our competitors. Many have substantially greater product development and marketing budgets and other financial and regulatory personnel resources than we do.
In addition, we may not be able to fund or invest in certain areas of our business to the same degree as our competitors. Many have substantially greater product development and marketing budgets and other financial and regulatory personnel resources than we do. Many also have greater name and brand recognition and a larger base of customers than we have.
We have Page 22 Table of Contents encountered, and expect to continue to encounter, risks and uncertainties frequently experienced by new businesses in highly competitive, technical and rapidly changing markets.
We have encountered, and expect to continue to encounter, risks and uncertainties frequently experienced by new businesses in highly competitive, technical and rapidly changing markets.
In addition, as discussed in more detail below, incumbents may elect not to sell or swap their existing channels on reasonable terms, or at all, and until we can satisfy the 90% Broadband Segment Test, we will not be able to utilize the Mandatory Retuning procedures the FCC established in the Report and Order.
In addition, as discussed in more detail below, incumbents may elect not to sell or swap their existing channels on reasonable terms, or at all, and until we obtain a broadband license from the FCC, we will not be able to utilize the Mandatory Retuning procedures the FCC established in the Report and Order.
As of the date of this filing, we have signed long-term leases of our spectrum assets with Ameren and Evergy and have entered into a contract to sell our spectrum assets to SDG&E.
As of the date of this filing, we have signed long-term leases of our spectrum assets with Ameren, Evergy and Xcel Energy and have entered into agreements to sell our spectrum assets to SDG&E and LCRA.
The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri. We are subject to contingencies and obligations under our commercial agreements with Ameren, SDG&E and Evergy, including the delivery of cleared spectrum and broadband licenses in the designated service territories on a timely basis.
We are subject to contingencies and obligations under our commercial agreements with Ameren, SDG&E, Evergy, Xcel Energy and LCRA, including the delivery of cleared spectrum and broadband licenses in the designated service territories on a timely basis.
In addition, under our business plan, our targeted customers will be required to bear the cost of installing and operating the broadband networks, technologies and solutions utilizing our licensed spectrum, thereby requiring the replacement of some or all of their existing communication systems.
In addition, we expect our targeted customers will bear the cost of installing and operating the broadband networks, technologies and solutions utilizing our licensed spectrum, thereby requiring the replacement of some or all of their existing communication systems.
The Report and Order establishes “performance” or build-out requirements that we will be required to meet to retain and renew any broadband licenses we obtain. Performance will be measured at the six- and twelve-year anniversaries of each broadband license. A failure to satisfy the six-year anniversary requirements, accelerates the twelve-year anniversary to a ten-year anniversary requirement.
The Report and Order establishes “performance” or build-out requirements that we will be required to meet to retain and renew any broadband licenses we obtain (“Build-out Requirements”). Performance will be measured at the six- and twelve-year anniversaries of each broadband license.
In addition, even if we enter a long-term lease or transfer arrangement for a geographic area, payments by our customer will be contingent on our ability to clear incumbents and take the other necessary actions to secure broadband licenses on a timely basis. Our customers also will typically require rights to all spectrum we have in its geographic operating area.
In addition, even if we enter a long-term lease or transfer arrangement for a geographic area, we expect payments by our customer in such area will be contingent on our ability to clear incumbents and take the other necessary actions to secure broadband licenses on a timely basis.
As a result, the incumbents operating Complex Systems can make demands that are not commercially reasonable (including the commercial terms of any long-term lease of our spectrum), delay their decision or refuse to negotiate with us altogether.
As a result, the incumbents Page 18 Table of Contents operating Complex Systems can make demands that are not commercially reasonable (including the commercial terms to obtain the use of our spectrum), delay their decision or refuse to negotiate with us altogether.
Further, adverse economic conditions, including as a result of COVID-19, may result in supply chain issues which limit our customer’s ability to obtain the necessary technology and products to deploy an LTE broadband network utilizing our spectrum.
Further, adverse economic conditions, including as a result of health pandemics, inflation, regulatory actions and policy changes, and geopolitical matters, may result in supply chain issues which limit our customer’s ability to obtain the necessary technology and products to deploy an LTE broadband network utilizing our spectrum.
Our competitors include the Tier 1 carriers (Verizon, AT&T and T-Mobile), private radio operators and other public and private companies who supply communication networks, technologies, products and solutions to our targeted utility and critical infrastructure entities.
Our competitors include retail wireless network providers, such as Verizon, AT&T, T-Mobile, Dish and UScellular, private radio operators and other public and private companies who supply communication networks, technologies, products and solutions to our targeted utility and critical infrastructure entities.
In the Report and Order, the FCC has established the 90% Broadband Segment Test, which if satisfied, triggers a Mandatory Retuning process to help a broadband applicant clear the remaining channels in the broadband segment.
In the Report and Order, the FCC has established that a Broadband license can trigger a Mandatory Retuning process to help a broadband applicant clear the remaining channels in the broadband segment.
If we are unable to attract new customers, our results of operations and our business will be adversely affected. Our targeted customers are large, heavily-regulated enterprises and our business plan requires these customers to commit to long-term leases of our spectrum and then to purchase and deploy broadband network equipment, solutions and services utilizing our leased spectrum.
Our targeted customers are large, heavily-regulated enterprises and our business plan requires these customers to commit to long-term transactions for our spectrum and then to purchase and deploy broadband network equipment, solutions and services utilizing our leased spectrum.
If we are unable to obtain broadband licenses on favorable terms and on a timely basis, our business, liquidity, results of operations and prospects will be materially adversely affected.
If we are unable to obtain broadband licenses on favorable terms and on a timely basis, our business, liquidity, results of operations and prospects will be materially adversely affected. Our plans to commercialize our 900 MHz spectrum assets depend on our ability to obtain broadband licenses in accordance with the requirements of the Report and Order.
Because of this, we may not have additional spectrum assets to lease in such geographical area to other potential customers. Further, other than our lease or transfer arrangements, we will not generate revenue from the operation of the broadband networks or technologies deployed by our customers.
Further, other than our lease or transfer arrangements, we will not generate revenue from the operation of the broadband networks or technologies deployed by our customers.
As a result of Page 26 Table of Contents this concentration of ownership, our other stockholders may have no effective voice in our corporate actions or the operations of our business, which may adversely affect the market price of our common stock.
Alternatively, these stockholders could place pressure on our Board to pursue a sale of the company or its assets. As a result of this concentration of ownership, our other stockholders may have no effective voice in our corporate actions or the operations of our business, which may adversely affect the market price of our common stock.
In addition, other costs may arise that we currently do not anticipate. Further, other unanticipated events may occur that reduce the amounts and delay the timing of our future revenues, including the potential impacts of the business disruptions and economic consequences resulting from the COVID-19 pandemic.
Other costs may arise that we currently do not anticipate and unanticipated events may occur that reduce the amounts and delay the timing of our future revenues.
Based on our review of publicly available filings as of May 24, 2022, funds affiliated with Owl Creek Asset Management (“Owl Creek”) beneficially owned approximately 28.6% and funds affiliated with Morgan Stanley Investment Management Inc. owned approximately 6.7% of our outstanding common stock, and together with Owl Creek, approximately 35.3% of our outstanding shares of common stock.
Based on our review of publicly available filings as of June 09, 2023, funds affiliated with Owl Creek Asset Management (“Owl Creek”) beneficially owned approximately 28.4%, funds affiliated with Heard Capital LLC owned approximately 7.9%, funds affiliated with Morgan Stanley Investment Management Inc. owned approximately 6.8%, funds affiliated with BlackRock, Inc. owned approximately 6.8%, and funds affiliated with GIC Private Limited owned approximately 6.1% of our outstanding common stock.
As a result, our election to be subject to Section 203 of the DGCL could limit the ability of a third party to acquire control of us. Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
As a result, our election to be subject to Section 203 of the DGCL could limit the ability of a third party to acquire control of us.
Although we are in discussions with other utilities and critical infrastructure companies, there is no assurance that these discussions will continue to progress or will eventually result in contracts with these entities.
Although we are in discussions with other utilities and critical infrastructure companies, and we believe many of these utility and critical infrastructure customers have demonstrated an intention to acquire use of our 900 MHz Broadband Spectrum based on their level of engagement, there is no assurance that these discussions will continue to progress or will eventually result in contracts with these entities.
Further, they could place significant pressure on our Board to pursue corporate actions, director candidates and business opportunities they identify. For example, we previously engaged in cooperative discussions with Owl Creek regarding Owl Creek’s interest in nominating an individual to our Board.
Further, they could place significant pressure on our Board to pursue corporate actions, director candidates and business opportunities they identify.
Many Page 23 Table of Contents also have greater name and brand recognition and a larger base of customers than we have. Competition could increase our selling and marketing expenses and related customer acquisition costs. We may not have the financial resources, technical expertise or marketing and support capabilities to compete successfully.
Competition could increase our selling and marketing expenses and related customer acquisition costs. We may not have the financial resources, technical expertise or marketing and support capabilities to compete successfully. If we are unable to attract new customers, our results of operations and our business will be adversely affected.
These and other competitors may own or acquire spectrum that directly competes with our 900 MHz spectrum and/or have developed or may develop technologies that directly compete with our solutions.
Some of our competitors, such as Verizon, AT&T, T-Mobile, Dish and UScellular , have significantly greater pricing flexibility, have taken steps and may decide to compete against us more aggressively. These and other competitors may own or acquire spectrum that directly competes with our 900 MHz spectrum and/or have developed or may develop technologies that directly compete with our solutions.
We believe our existing cash will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next 12 months from the date of this filing.
We believe our cash and cash equivalents on hand, along with contracted proceeds from customers will be sufficient to meet our financial obligations through at least 12 months from the date of this filing.
Removed
Our plans to commercialize our 900 MHz spectrum assets depend on our ability to obtain broadband licenses in accordance with the requirements of the Report and Order approved by the FCC in May 2020, and which became effective on August 17, 2022.
Added
We cancelled these licenses in June 2020 in accordance with the AAR Agreement and the FCC Report and Order.
Removed
In December 2020, we announced that we had entered into the Ameren Agreements to provide 900 MHz broadband spectrum licenses covering Ameren’s service territories in Missouri and Illinois.
Added
Our customers also will typically require rights to all spectrum we have in its geographic operating area. Because of this, we may not have additional spectrum assets to lease in such geographical area to other potential customers.
Removed
In February 2021, we announced that we had entered into the SDG&E Agreements to provide 900 MHz broadband spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County. In September 2021, we entered into a long-term lease agreement of 900 MHz broadband spectrum with Evergy.
Added
Macroeconomic pressures resulting from health epidemics, including the recent COVID-19 pandemic, unfavorable market conditions, regulatory and policy changes, and ongoing geopolitical matters, may have an adverse impact on our business, financial results, stock price and results of operations as well as the business of our current and potential customers.
Removed
The COVID-19 pandemic has disrupted and could continue to adversely impact our business, including our broadband licensing and commercialization efforts and our financial condition, liquidity and results of operations. In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic and COVID-19 continues to cause significant disruptions throughout the World.
Added
While the severity of the recent COVID-19 pandemic has lessened significantly, the pandemic has had a significant negative impact on the macroeconomic environment, such as decreases in per capital income and level of disposable income, inflation, rising interest rates, and supply chain issues.
Removed
The COVID-19 pandemic has disrupted and could continue to adversely impact our business operations and the business operations of our targeted utility and critical infrastructure customers and equipment technology and solution suppliers.
Added
Ongoing geopolitical matters have also contributed to difficult macroeconomic conditions and exacerbated supply chain issues, resulting in significant economic uncertainty as well as volatility in the financial markets and new regulatory and policy initiatives particularly in the United States. Such conditions may adversely impact our business, financial results, and prospects and our target customers’ businesses.
Removed
Reduced business operations may prevent us from timely and successfully negotiating and entering into agreements with incumbents to acquire and/or swap the spectrum required to enable us to qualify for broadband licenses.
Added
In addition, such macroeconomic conditions could impact our ability to access the public markets as and when appropriate or necessary to carry out our operations or our strategic goals. We cannot predict the ongoing extent, duration or severity of these conditions, nor the extent to which we may be impacted.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have the right of first offer for adjacent space if it becomes available. In February 2019, we entered into a lease agreement for our second office space located at 8260 Greensboro Drive, Suite 501, McLean, Virginia for 5.5 years, which commenced on April 15, 2019. The leased office facility includes approximately 5,365 square feet.
Biggest changeIn February 2019, we entered into a lease agreement for our second office space located at 8260 Greensboro Drive, Suite 501, McLean, Virginia for 5.5 years, which was amended in September 2022 to expand the office by an additional 2,847 square feet for a total of 8,212 square feet with a termination date of October 2024.
In November 2018, we entered into a lease agreement to store equipment located at 5520 North First Street, Abilene, Texas for 5 years. The leased warehouse includes approximately 37,409 square feet. We believe that our existing facilities are adequate for our current needs. We do not own any real property.
In November 2018, we entered into a lease agreement to store equipment located at 5520 North First Street, Abilene, Texas for 5 years with a termination date of October 2023. The leased warehouse includes approximately 37,409 square feet. We believe that our existing facilities are adequate for our current needs. We do not own any real property.
ITEM 2. PROPERTIES We maintain offices in Woodland Park, New Jersey, McLean, Virginia and Abilene, Texas. The lease for our corporate headquarters at 3 Garret Mountain Plaza, Suite 401, Woodland Park, New Jersey, which was renewed in February 2017 for an additional 10 years, is for 19,276 square feet of office space.
ITEM 2. PROPERTIES We maintain offices in Woodland Park, New Jersey, McLean, Virginia and Abilene, Texas. The lease for our corporate headquarters at 3 Garret Mountain Plaza, Suite 401, Woodland Park, New Jersey, which was renewed in February 2017 for an additional 10 years, is for 19,276 square feet of office space with a termination date of June 2027.
Added
We have the right of first offer for adjacent space if it becomes available.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 13 Contingencies of the Notes to the Consolidated Financial Statements contained within this Annual Report for a further discussion of potential commitments and contingencies related to legal proceedings.
Biggest changeSee Note 12 Contingencies of the Notes to the Consolidated Financial Statements contained within this Annual Report for a further discussion of potential commitments and contingencies related to legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. Page 29 Table of Contents PART II.
ITEM 3. LEGAL PROCEEDINGS AND OTHER MATTERS We are not involved in any material legal proceedings or other legal matters at this time. However, from time to time, we may be involved in litigation that arises from the ordinary operations of business, such as contractual or employment disputes or other general actions.
ITEM 3. LEGAL PROCEEDINGS We are not involved in any material legal proceedings or other legal matters at this time. However, from time to time, we may be involved in litigation that arises from the ordinary operations of business, such as contractual or employment disputes or other general actions.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information On February 3, 2015, shares of our common stock became listed for trading on the Nasdaq Capital Market under the symbol “PDVW.” Effective June 17, 2019, we changed our ticker symbol on the Nasdaq Capital Market to “ATEX” and subsequently changed our name to Anterix Inc.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Shares of our common stock are listed for trading on the Nasdaq Capital Market under the symbol “ATEX”.
On June 14, 2021, the Compensation Committee of our Board approved Amendment No. 1 to 2014 Stock Plan to eliminate the evergreen provision for all future years (i.e., January 1,2022 through January 1, 2024). There was no increase in the number of shares authorized under the 2014 Stock Plan during the fiscal year ended March 31, 2022.
On June 14, 2021, the Compensation Committee of our Board approved Amendment No. 1 to 2014 Stock Plan to eliminate the evergreen provision for all future years (i.e., January 1,2022 through January 1, 2024). There was no increase in the number of shares authorized under the 2014 Stock Plan during the fiscal year ended March 31, 2023.
The following table provides information with respect to purchases of our common stock by us or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act, during the three months ended March 31, 2022.
The following table provides information with respect to purchases of our common stock by us or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act, during the three months ended March 31, 2023.
Page 30 Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds. We did not sell any equity securities not registered under the Securities Act, during the fiscal year ended March 31, 2022. Purchase of Equity Securities by the Issuer and Affiliated Purchasers.
Page 30 Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds. We did not sell any equity securities not registered under the Securities Act, during the fiscal year ended March 31, 2023. Purchase of Equity Securities by the Issuer and Affiliated Purchasers.
The performance graph set forth below compares our cumulative total stockholder return for the periods commending March 31, 2017 through March 31, 2022, assuming an initial investment of $100 in our common stock, and in each of the Nasdaq Capital Market Composite Index and Nasdaq Telecommunications Index and assumes the reinvestment of dividends.
The performance graph set forth below compares our cumulative total stockholder return for the periods commending March 31, 2018 through March 31, 2023, assuming an initial investment of $100 in our common stock, and in each of the Nasdaq Capital Market Composite Index and Nasdaq Telecommunications Index and assumes the reinvestment of dividends.
Issuer Purchases of Equity Securities (1) (in thousands except for share and per share data) Period Total Number of Shares Purchased Average Price paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Announced Plans or Programs January 1, 2022 through January 31, 2022 Open market and privately negotiated purchases — $ — — $ 38,007 February 1, 2022 through February 28, 2022 Open market and privately negotiated purchases — — — 38,007 March 1, 2022 through March 31, 2022 Open market and privately negotiated purchases 51,795 57.35 51,795 35,038 Total 51,795 $ 57.35 51,795 $ 35,038 (1) On September 30, 2021, we announced that our Board authorized a new share repurchase program pursuant to which we may repurchase up to $50.0 million of our outstanding shares of common stock on or before September 29, 2023.
Issuer Purchases of Equity Securities (1) (in thousands except for share and per share data) Period Total Number of Shares Purchased Average Price paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Announced Plans or Programs January 1, 2023 through January 31, 2023 Open market and privately negotiated purchases — $ — — $ 26,815 February 1, 2023 through February 28, 2023 Open market and privately negotiated purchases — — — 26,815 March 1, 2023 through March 31, 2023 Open market and privately negotiated purchases — — — 26,815 Total — $ — — $ 26,815 (1) On September 30, 2021, our Board authorized a share repurchase program pursuant to which we may repurchase up to $50.0 million of our outstanding shares of common stock on or before September 29, 2023.
The following table summarizes information about our equity compensation plans as of March 31, 2022: Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Stock Options or Rights (1) (a) Weighted-Average Exercise Price of Outstanding Stock Options or Rights (1) (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 1,040,023 $ 33.43 1,216,868 (2) Equity compensation plans not approved by security holders — — — (1) Does not take into account outstanding restricted stock units.
The following table summarizes information about our equity compensation plans as of March 31, 2023: Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Stock Options or Rights (1) (a) Weighted-Average Exercise Price of Outstanding Stock Options or Rights (1) (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 1,436,731 $ 39.30 502,256 (2) Equity compensation plans not approved by security holders — — — (1) Does not take into account outstanding restricted stock units.
As of May 24, 2022, we had 18,933,986 shares of common stock outstanding and approximately 113 record holders of our common stock, including common stock held through brokerage firms in “street name.” Dividend Policy We have never declared or paid any cash dividends on our common stock.
As of June 09, 2023, we had 19,042,634 shares of common stock outstanding and approximately 108 record holders of our common stock, including common stock held through brokerage firms in “street name.” Dividend Policy We have never declared or paid any cash dividends on our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+33 added−40 removed21 unchanged
Biggest changeThe majority of net cash provided by operating activities in Fiscal 2022 resulted from deferred revenue of $51.7 million and non-cash adjustments to net loss of $5.0 million (primarily attributable to stock compensation expense of $13.6 million, partially offset by gain on disposal of intangible assets of $11.2 million), partially offset by a net loss of $37.5 million.
Biggest changeThe net cash used in operating activities in Fiscal 2022 due to the following: • $37.5 million net loss, offset by the following non-cash activity: ◦ increase of $1.5 million for depreciation and amortization as a result of assets placed in service during the year; ◦ increase of $13.6 million in stock-based compensation expense due to additional grants awarded; and Page 36 Table of Contents ◦ decrease of $11.2 million related to the non-monetary gain on disposals of intangible assets in connection to our exchange of narrowband licenses for broadband licenses; offset by the following: • $51.7 million increase in deferred revenue due to $52.8 million cash proceeds from our 900 MHz Broadband Spectrum customer prepayments offset by $1.1 million in revenue recognition in connection with the delivery of cleared 900 MHz Broadband Spectrum.
General and administrative expenses General and administrative expenses increased by $0.2 million to $39.5 million for Fiscal 2022, or 1%, from $39.3 million for Fiscal 2021.
General and administrative expenses increased by $0.2 million to $39.5 million for Fiscal 2022, or 1%, from $39.3 million for Fiscal 2021.
As a result, we recorded a $11.2 million gain from disposal of the intangible assets in our Consolidated Statements of Operations. Refer to Note 5 Intangible Assets in the Notes to the Consolidated Financial Statements contained within this Annual Report for further discussion on the exchanges.
As a result, we recorded a $11.2 million gain from disposal of the intangible assets on our Consolidated Statements of Operations. Refer to Note 5 Intangible Assets in the Notes to the Consolidated Financial Statements contained within this Annual Report for further discussion on the exchanges.
Because we did not receive any licenses nor monetary reimbursement in exchange for the cancellation, but only credit for purposes of determining our future eligibility and payment requirements for broadband licenses under the Report and Order, we recorded a $5.0 million loss from disposal of the intangible assets in the Consolidated Statements of Operations for Fiscal 2021.
Because we did not receive any licenses nor monetary reimbursement in exchange for the cancellation, but only credit for purposes of determining our future eligibility and payment requirements for broadband licenses under the Report and Order, we recorded a $5.0 million loss from disposal of the intangible assets on our Consolidated Statements of Operations for Fiscal 2021.
Share Repurchase Program On September 29, 2021, our Board authorized a share repurchase program pursuant to which we may repurchase up to $50.0 million of our common stock on or before September 29, 2023.
Share Repurchase Program In September 2021, our Board authorized a share repurchase program pursuant to which we may repurchase up to $50.0 million of our common stock on or before September 29, 2023.
The Report and Order was published in the Federal Register on July 16, 2020, and became effective on August 17, 2020. We are now engaged in qualifying for and securing broadband licenses from the FCC. At the same time, we are pursuing opportunities to lease the broadband spectrum we secure to our targeted utility and critical infrastructure customers.
The Report and Order was published in the Federal Register on July 16, 2020 and became effective on August 17, 2020. We are now engaged in qualifying for and securing broadband licenses from the FCC. At the same time, we are pursuing opportunities to monetize the broadband spectrum we secure to our targeted utility and critical infrastructure customers.
Depreciation and amortization Depreciation and amortization expenses decreased by $2.1 million, or 59%, to $1.5 million for Fiscal 2022 from $3.5 million for Fiscal 2021. The decrease was due to the change in the useful life for our market network sites during Fiscal 2020 that resulted in higher depreciation expense for the Fiscal years 2021 and 2020.
Depreciation and amortization expenses decreased by $2.1 million, or 59%, to $1.5 million for Fiscal 2022 from $3.5 million for Fiscal 2021. The decrease was due to the change in the useful life for our market network sites during Fiscal 2021 that resulted in higher depreciation expense.
Page 37 Table of Contents We believe that the areas described below are the most critical to aid in fully understanding and evaluating our reported financial results, as they require management’s significant judgments in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods.
We believe that the areas described below are the most critical to aid in fully understanding and evaluating our reported financial results, as they require management’s significant judgments in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods.
On April 3, 2020, we filed the Shelf Registration Statement on Form S-3 with the SEC that was declared effective by the SEC on April 20, 2020, which permits us to offer up to $150 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time.
In April 2020, we filed the Shelf Registration Statement on Form S-3 with the SEC that was declared effective by the SEC on April 20, 2020, which permitted us to offer up to $150.0 million of common stock, preferred stock, warrants or units in one or more offerings and in any combination, including in units from time to time.
Under the agreement, we transferred spectrum licenses with a book value of approximately $0.3 million to the third party. We recognized a $1.1 million gain from disposal of intangible assets in the Consolidated Statement of Operations when the deal closed in September 2020.
Under the agreement, we transferred spectrum licenses with a book value of approximately $0.3 million to the third party. We recognized a $1.1 million gain from disposal of intangible assets on our Consolidated Statements of Operations when the deal closed in September 2020.
If required, we intend to raise additional capital through debt or equity financings, including pursuant to our Shelf Registration Statement, or through some other financing arrangement. However, we cannot be sure that additional financing will be available if and when needed, or that, if available, we can obtain financing on terms favorable to our stockholders and to us.
If required, we intend to raise additional capital through debt or equity financings or through some other financing arrangement. However, we cannot be sure that additional financing will be available if and when needed, or that, if available, we can obtain financing on terms favorable to our stockholders and to us.
The $0.2 million increase for Fiscal 2022 primarily resulted from a $1.5 million increase in headcount and employee related costs, $0.8 million in professional service fees due to our strategic spectrum initiatives, $0.7 million in higher site rent related costs and $0.3 million recruiting costs partially offset by a $2.7 million decrease in stock compensation expense and $0.4 million in lower management fees.
The increase primarily resulted from $1.5 million higher headcount and employee related costs, $0.8 million higher professional service fees due to our strategic spectrum initiatives, $0.7 million higher site rent related costs and $0.3 million recruiting costs partially offset by $2.7 million lower stock compensation expense and $0.4 million lower management fees.
Our significant accounting policies are set forth in Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report.
Our significant Page 38 Table of Contents accounting policies are set forth in Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report.
Operating revenues For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2022 2021 2020 2022 from 2021 2021 from 2020 Service revenue $ — $ 192 $ 835 $ (192) -100 % $ (643) -77 % Spectrum lease revenue 1,084 729 729 355 49 % — 0 % Total operating revenues $ 1,084 $ 921 $ 1,564 $ 163 18 % $ (643) -41 % Overall operating revenues increased by $0.2 million, or 18%, to $1.1 million in Fiscal 2022 from $0.9 million in Fiscal 2021.
Operating revenues For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 Service revenue $ — $ — $ 192 $ — 0 % $ (192) -100 % Spectrum lease revenue 1,919 1,084 729 835 77 % 355 49 % Total operating revenues $ 1,919 $ 1,084 $ 921 $ 835 77 % $ 163 18 % Overall operating revenues increased by $0.8 million, or 77%, to $1.9 million in Fiscal 2023 from $1.1 million in Fiscal 2022.
The following table presents the share repurchase activity for Fiscal 2022, Fiscal 2021 and Fiscal 2020 (in thousands, except per share data): For the years ended March 31, 2022 2021 2020 Number of shares repurchased 252 — — Average price paid per share* $ 57.50 $ — $ — Total cost to repurchase $ 14,962 $ — $ — * Average price paid per share includes costs associated with the repurchases.
The following table presents the share repurchase activity for Fiscal 2023, Fiscal 2022 and Fiscal 2021 (in thousands, except per share data): For the years ended March 31, 2023 2022 2021 Number of shares repurchased and retired 216 252 — Average price paid per share* $ 47.05 $ 57.50 $ — Total cost to repurchase $ 8,223 $ 14,962 $ — * Average price paid per share includes costs associated with the repurchases.
Loss on equity method investment For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2022 2021 2020 2022 from 2021 2021 from 2020 Loss on equity method investment $ — $ (39) $ (9) $ 39 -100 % $ (30) 333 % We reported loss on investment for Fiscal 2021 and Fiscal 2020 amounting to $39,000 and $9,000, respectively, relating to the 19.5% ownership interest in the LLC.
Loss on equity method investment For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 Loss on equity method investment $ — $ — $ (39) $ — 0 % $ 39 -100 % We reported loss on investment for Fiscal 2021 amounting to $39,000, relating to the 19.5% ownership interest in the LLC.
Net cash used in investing activities Net cash used in investing activities was approximately $27.4 million, $14.2 million and $7.6 million for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively. For Fiscal 2022, the net cash used by investing activities resulted from $26.4 million in wireless license acquisitions including refundable deposits and $1.1 million for purchases of equipment.
Net cash used in investing activities Net cash used in investing activities was approximately $27.1 million, $27.4 million and $14.2 million in Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. For Fiscal 2023, the net cash used in investing activities resulted from $25.0 million in wireless license acquisitions including refundable deposits and $2.1 million for purchases of equipment.
For Fiscal 2021, the net cash used by investing activities resulted from $13.9 million in wireless license acquisitions including refundable deposits and $0.2 million for purchases of equipment. For Fiscal 2020, the net cash used by investing activities resulted from $7.1 million in wireless license acquisitions, including refundable deposits and $0.5 million for purchases of equipment.
For Fiscal 2022, the net cash used for investing activities resulted from $26.4 million in wireless license acquisitions including refundable deposits and $1.1 million for purchases of equipment. For Fiscal 2021, the net cash used for investing activities resulted from $13.9 million in wireless license acquisitions including refundable deposits and $0.2 million for purchases of equipment.
In June 2020, we cancelled licenses in the 900 MHz band in accordance with the Report and Order and our agreement with the AAR.
Page 34 Table of Contents In June 2020, we cancelled licenses in the 900 MHz band in accordance with the Report and Order and our agreement with the AAR.
We are obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2023 through June 30, 2027, which includes a three to ten-year lease extension for our corporate headquarters. We have also entered into multiple lease agreements for tower space related to our TeamConnect business.
Treasury. We are obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2023 through June 30, 2027, which includes a three to ten-year lease extension for our corporate headquarters.
The overall decreases primarily resulted from lower support costs related to the transfer of pdvConnect customers to the LLC as part of our December 2018 restructuring efforts as discussed in Note 3 Revenue in the Notes to the Consolidated Financial Statements contained within this Annual Report.
The decrease is due to lower support costs related to the transfer of pdvConnect customers to the Team Connect LLC as part of our December 2018 restructuring efforts as discussed in Note 3 Revenue in the Notes to the Consolidated Financial Statements contained within this Annual Report.
Page 32 Table of Contents Results of Operations Comparison of the years ended March 31, 2022, 2021 and 2020 The following table sets forth our results of operations for the fiscal years ended March 31, 2022 (“Fiscal 2022”), March 31, 2021 (“Fiscal 2021”) and March 31, 2020 (“Fiscal 2020”).
Results of Operations Comparison of the years ended March 31, 2023, 2022 and 2021 The following table sets forth our results of operations for the fiscal years ended March 31, 2023 (“Fiscal 2023”), March 31, 2022 (“Fiscal 2022”) and March 31, 2021 (“Fiscal 2021”).
(Gain)/loss from disposal of intangible assets, net For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2022 2021 2020 2022 from 2021 2021 from 2020 (Gain)/loss from disposal of intangible assets, net $ (11,209) $ 3,849 $ 88 $ (15,058) -391 % $ 3,761 4274 % During Fiscal 2022, we exchanged our narrowband licenses for broadband licenses in 21 counties.
(Gain)/loss from disposal of intangible assets, net For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 (Gain)/loss from disposal of intangible assets, net $ (38,399) $ (11,209) $ 3,849 $ (27,190) 243 % $ (15,058) -391 % During Fiscal 2023, we exchanged our narrowband licenses for broadband licenses in 84 counties.
Product development expenses Product development expenses decreased by $0.8 million, or 17%, to $3.6 million for Fiscal 2022 from $4.3 million for Fiscal 2021. The decrease primarily resulted from $0.4 million in lower consulting fees as we converted consultants to employees and $0.4 million in lower technology related costs.
Product development expenses decreased by $0.8 million, or 17%, to $3.6 million for Fiscal 2022 from $4.3 million for Fiscal 2021. The decrease primarily resulted from $0.4 million lower consulting fees and $0.4 million lower technology related costs. Depreciation and amortization Depreciation and amortization in Fiscal 2023 remained relatively flat as compared to Fiscal 2022.
For Fiscal 2021, the net cash provided by financing activities primarily resulted $4.2 million in cash received from the proceeds of stock option exercises. For Fiscal 2020, the net cash provided by financing activities primarily resulted from $94.2 million net proceeds from the July 2019 follow-on offering and $2.4 million in cash received from the proceeds of stock option exercises.
For Fiscal 2021, the net cash provided by financing activities primarily resulted $4.2 million in cash received from the proceeds of stock option exercises.
As noted above, our future capital requirements will depend on a number of factors, including among others, the costs and timing of securing broadband licenses, including our spectrum retuning activities, spectrum acquisitions and the Anti-Windfall Payments to the U.S. Treasury, and our operating activities and any revenues we generate through our commercialization activities.
As noted above, our future capital requirements will depend on a number of factors, including among others, the costs and timing of our spectrum retuning activities, spectrum acquisitions and the Anti-Windfall Payments to the U.S.
The increase in our spectrum lease revenue was attributable to revenue recognized in connection with the Ameren Agreements of approximately $0.4 million for the current year. Overall operating revenues decreased by $0.6 million, or 41%, to $0.9 million in Fiscal 2021 from $1.6 million in Fiscal 2020.
The increase in our spectrum lease revenue was attributable to revenue recognized in connection with our agreements with Ameren and Evergy of approximately $0.3 million and $0.6 million, respectively, for the current year. Overall operating revenues increased by $0.2 million, or 18%, to $1.1 million in Fiscal 2022 from $0.9 million in Fiscal 2021.
Net cash used in operating activities was approximately $10.0 million and $27.8 million in Fiscal 2021 and Fiscal 2020, respectively.
Net cash used in operating activities was approximately $10.0 million in Fiscal 2021.
Cash Flows from Operating, Investing and Financing Activities For the years ended March 31, (in thousands) 2022 2021 2020 Net cash provided by (used in) operating activities $ 17,913 $ (9,959) $ (27,823) Net cash used in investing activities $ (27,411) $ (14,174) $ (7,560) Net cash (used in) provided by financing activities $ (2,416) $ 4,218 $ 96,114 Net cash provided by (used in) operating activities Net cash provided by operating activities was approximately $17.9 million in Fiscal 2022.
Cash Flows from Operating, Investing and Financing Activities For the years ended March 31, (in thousands) 2023 2022 2021 Net cash (used in) provided by operating activities $ (27,250) $ 17,913 $ (9,959) Net cash used in investing activities $ (27,130) $ (27,411) $ (14,174) Net cash (used in) provided by financing activities $ (8,062) $ (2,416) $ 4,218 Net cash (used in) provided by operating activities Net cash used in operating activities was approximately $27.3 million in Fiscal 2023 an increase of $45.2 million from Fiscal 2022.
To implement our business plans and initiatives, however, we may need to raise additional capital. We cannot predict with certainty the exact amount or timing for any future capital raises.
We are actively managing our business to maintain our cash flow and believe that we currently have adequate liquidity. To implement our business plans and initiatives, however, we may need to raise additional capital. We cannot predict with certainty the exact amount or timing for any future capital raises.
See Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report for further information on the AROs.
Total estimated payments as a result of the ARO is approximately $0.6 million. See Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report for further information on the AROs.
Market network site assets for our historical business were fully depreciated by December 31, 2020. Depreciation and amortization in Fiscal 2021 remained relatively flat as compared to Fiscal 2020. Impairment of long-lived assets There were no impairment of long-lived assets expenses for Fiscal 2022.
Market network site assets for our historical business were fully depreciated by December 31, 2020. Impairment of long-lived assets There were no impairment of long-lived assets expenses for Fiscal 2023 and Fiscal 2022. Impairment of long-lived assets expenses were $0.1 million for Fiscal 2021 .
Direct cost of revenue decreased by $1.2 million to $1.6 million for Fiscal 2021, or 43%, from $2.8 million for Fiscal 2020.
Direct cost of revenue decreased by $1.6 million to $5,000 for Fiscal 2022, or 100%, from $1.6 million for Fiscal 2021.
Accordingly, for Fiscal 2022 and Fiscal 2021, we recorded a total deferred tax expense of $1.0 million and $0.1 million, respectively, due to the inability to use some portion of our federal and state NOL carryforwards against the deferred tax liability created by amortization of indefinite-lived intangibles.
Income tax expense For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 Income tax expense $ 1,262 $ 983 $ 124 $ 279 28 % $ 859 693 % For Fiscal 2023, Fiscal 2022 and Fiscal 2021, we recorded a total deferred tax expense of $1.3 million, $1.0 million and $0.1 million, respectively, due to the inability to use some portion of our federal and state NOL carryforwards against the deferred tax liability created by amortization of indefinite-lived intangibles.
Recent Accounting Pronouncements Information regarding recent accounting pronouncements, including those recently adopted, is provided in Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report.
Based on the results of the impairment test, there were no impairment charges recorded during the year ended March 31, 2023. Recent Accounting Pronouncements Information regarding recent accounting pronouncements, including those recently adopted, is provided in Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report.
Page 36 Table of Contents Net cash (used in) provided by financing activities Net cash used in financing activities was $2.4 million in Fiscal 2022. Net cash provided by financing activities was $4.2 million and $96.1 million in Fiscal 2021 and Fiscal 2020, respectively.
Net cash (used in) provided by financing activities Net cash used in financing activities was approximately $8.1 million and $2.4 million in Fiscal 2023 and Fiscal 2022, respectively. Net cash provided by financing activities was $4.2 million in Fiscal 2021.
The increase primarily resulted from a $0.6 million increase in headcount and employee related costs, $0.5 million in higher marketing costs related to advertising, sponsorships and trade shows, $0.1 million in higher contract consulting costs and $0.3 million in higher stock compensation expense.
Sales and support expenses increased by $1.5 million, or 52%, to $4.5 million for Fiscal 2022 from $2.9 million for Fiscal 2021. The increase primarily resulted from $0.6 million higher headcount and employee related costs, $0.5 million higher marketing costs related to advertising, sponsorships and trade shows, $0.1 million higher contract consulting costs and $0.3 million higher stock compensation expense.
Interest income For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2022 2021 2020 2022 from 2021 2021 from 2020 Interest income $ 56 $ 124 $ 1,810 $ (68) -55 % $ (1,686) -93 % Interest income decreased by $68,000, or 55%, to $56,000 for Fiscal 2022 as compared to $0.1 million from Fiscal 2021 due to lower effective money market rates.
Interest income For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 Interest income $ 1,140 $ 56 $ 124 $ 1,084 1936 % $ (68) -55 % Interest income increased by $1.1 million, or 1936%, to $1.1 million for Fiscal 2023 as compared to $56,000 from Fiscal 2022.
Loss from disposal of long-lived assets, net For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2022 2021 2020 2022 from 2021 2021 from 2020 Loss from disposal of long-lived assets, net $ 107 $ 70 $ 62 $ 37 53 % $ 8 13 % Loss on disposal of long-lived assets, net in Fiscal 2022 remained relatively flat as compared to Fiscal 2021.
Loss from disposal of long-lived assets, net For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 Loss from disposal of long-lived assets, net $ 10 $ 107 $ 70 $ (97) -91 % $ 37 53 % Loss on disposal of long-lived assets, net decreased by $0.1 million, or -91%, to $10 thousand in Fiscal 2023, as compared to $0.1 million Fiscal 2022.
Operating expenses For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2022 2021 2020 2022 from 2021 2021 from 2020 Direct cost of revenue (exclusive of depreciation and amortization) $ 5 $ 1,606 $ 2,833 $ (1,601) -100 % $ (1,227) -43 % General and administrative 39,525 39,302 25,469 223 1 % 13,833 54 % Sales and support 4,461 2,942 4,055 1,519 52 % (1,113) -27 % Product development 3,593 4,343 2,953 (750) -17 % 1,390 47 % Depreciation and amortization 1,450 3,533 3,591 (2,083) -59 % (58) -2 % Impairment of long-lived assets — 85 46 (85) -100 % 39 85 % Operating expenses $ 49,034 $ 51,811 $ 38,947 $ (2,777) -5 % $ 12,864 33 % Direct cost of revenue Direct cost of revenue decreased by $1.6 million to $5,000 for Fiscal 2022, or 100%, from $1.6 million for Fiscal 2021.
Operating expenses For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 Direct cost of revenue (exclusive of depreciation and amortization) $ — $ 5 $ 1,606 $ (5) -100 % $ (1,601) -100 % General and administrative 45,177 39,525 39,302 5,652 14 % 223 1 % Sales and support 5,733 4,461 2,942 1,272 29 % 1,519 52 % Product development 4,439 3,593 4,343 846 24 % (750) -17 % Depreciation and amortization 1,420 1,450 3,533 (30) -2 % (2,083) -59 % Impairment of long-lived assets — — 85 — 0 % (85) -100 % Operating expenses $ 56,769 $ 49,034 $ 51,811 $ 7,735 16 % $ (2,777) -5 % Direct cost of revenue Direct cost of revenue decreased from $5,000 for Fiscal 2022 to zero for Fiscal 2023.
Evaluation of Indefinite-Lived Intangible Assets for Impairment Our wireless licenses’ unit of accounting is based on geographic markets and our wireless licenses are tested for impairment based on the individual markets, as we will be utilizing the wireless licenses as part of facilitating broadband spectrum networks at an individual market level.
Unit of accounting of wireless licenses associated with closed deals is based on the deal markets. Our wireless licenses not associated with closed deals are tested for impairment based on the geographic markets, as we will be utilizing the existing wireless narrowband licenses, or broadband licenses if applicable, as part of facilitating broadband spectrum networks at a geographic market level.
The majority of net cash used by operating activities in Fiscal 2021 resulted from a net loss of $54.4 million, partially offset by contingent liability relating to the upfront payment we received from SDG&E of $20.0 million, non-cash compensation expense attributable to stock awards of $15.9 million, net loss on disposal of intangible assets of $3.8 million and depreciation of $3.5 million.
The net cash used in operating activities in Fiscal 2021 due to the following: • $54.4 million net loss, offset by the following non-cash activity: ◦ increase of $3.5 million depreciation and amortization as a result of assets placed in service during the year; ◦ increase of $15.9 million in stock-based compensation expense due to additional grants awarded; and ◦ increase of $3.8 million related to the non-monetary gain on disposals of intangible assets in connection to our exchange of narrowband licenses for broadband licenses; offset by the following: • $20.0 million increase in contingent liability relating to the upfront payment we received from SDG&E.
Refer to our Business Section of this Annual Report for a more complete description of the nature of our business, including details regarding the process and costs to secure our broadband licenses. Business Developments In December 2020, we entered into our first long-term lease agreement of 900 MHz spectrum authorized for broadband use, with Ameren.
Refer to our Business Section of this Annual Report for a more complete description of the nature of our business, including details regarding the process and costs to secure our broadband licenses.
Of those policies, we believe that the policies discussed below may involve a higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations.
Of those policies, we believe that the policy discussed below may involve a higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations. Evaluation of Indefinite-Lived Intangible Assets for Impairment Unit of accounting of wireless licenses not associated with closed deals is based on geographic markets.
Overview We are a wireless communications company focused on commercializing our spectrum assets to enable our targeted utility and critical infrastructure customers to deploy private broadband networks, technologies and solutions. We are the largest holder of licensed spectrum in the 900 MHz band (896-901/935-940 MHz) with nationwide coverage throughout the contiguous United States, Hawaii, Alaska and Puerto Rico.
We are the largest holder of licensed spectrum in the 900 MHz band (896 - 901 / 935 - 940 MHz) with nationwide coverage throughout the contiguous United States, Hawaii, Alaska and Puerto Rico.
In addition to the lease payments for our tower space, we also have an obligation to clear the tower site locations, for which we recorded an asset retirement obligation (the “ARO”). Total estimated payments as a result of the ARO is approximately $0.7 million.
Total estimated payments for these lease agreements are approximately $5.5 million (exclusive of real estate taxes, utilities, maintenance and other costs borne by us). In addition to the lease payments for our tower space, we also have an obligation to clear the tower site locations, for which we recorded an asset retirement obligation (the “ARO”).
Loss on disposal of long-lived assets, net in Fiscal 2021 remained relatively flat as compared to Fiscal 2020.
The decrease was primarily due to the company disposing less assets in the current year than in the prior year. Loss on disposal of long-lived assets, net in Fiscal 2022 remained relatively flat as compared to Fiscal 2021.
The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments. Prepayment in full of $30.2 million for the 20-year initial term, which was due and payable within thirty (30) days after execution of the Evergy Agreement, was received in October 2021.
The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for an initial term of 20 years with two 10-year renewal options for additional payments. We received full prepayment of $30.2 million for the initial 20-year term in October 2021.
We will deploy this capital at our determined pace based on several key ongoing factors, including customer demand, market opportunity, and offsetting income from spectrum leases.
Treasury, our operating activities, any cash proceeds we generate through our commercialization activities and our ability to timely deliver broadband licenses to our customers in accordance with our contractual obligations. We deploy this capital at our determined pace based on several key ongoing factors, including customer demand, market opportunity, and offsetting income from spectrum leases.
See Note 3 Revenue in the Notes to the Unaudited Consolidated Financial Statements contained within this Annual Report for further discussion on the Evergy Agreement.
(See Note 7 Related Party Transactions in the Notes to the Consolidated Financial Statements contained within this Annual Report).
Critical Accounting Policies and Estimates The accompanying consolidated financial statements have been prepared in accordance with U.S.
As of March 31, 2023, $26.8 million is remaining under the share repurchase program. Critical Accounting Estimates The accompanying consolidated financial statements have been prepared in accordance with U.S.
Page 35 Table of Contents Liquidity and Capital Resources On March 31, 2022, we had cash and cash equivalents of $105.6 million. We believe our cash and cash equivalents on hand will be sufficient to meet our financial obligations through at least the next 12 months.
We believe our cash and cash equivalents on hand, along with contracted proceeds from customers, will be sufficient to meet our financial obligations through at least 12 months from the date of this Annual Report.
See Note 5 Intangible Assets in the Notes to the Consolidated Financial Statements contained within this Annual Report for a discussion on our spectrum exchanges during the years ended March 31, 2022 and 2021.
As a result, we recorded a $38.4 million gain from disposal of the intangible assets on our Consolidated Statements of Operations. Refer to Note 5 Intangible Assets in the Notes to the Consolidated Financial Statements contained within this Annual Report for further discussion on the exchanges. During Fiscal 2022, we exchanged our narrowband licenses for broadband licenses in 21 counties.
Other income For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2022 2021 2020 2022 from 2021 2021 from 2020 Other income $ 256 $ 414 $ 496 $ (158) -38 % $ (82) -17 % Other income decreased by $0.2 million, or 38%, to $0.3 million for Fiscal 2022 from $0.4 million for Fiscal 2021 due to lower payments received in consideration for the customer and rights transferred to A BEEP.
Other income decreased by $0.2 million, or 38%, to $0.3 million for Fiscal 2022 from $0.4 million for Fiscal 2021 due to lower payments received from our historical business.
General and administrative expenses increased by $13.8 million to $39.3 million for Fiscal 2021, or 54%, from $25.5 million for Fiscal 2020.
Page 33 Table of Contents General and administrative expenses General and administrative expenses increased by $5.7 million to $45.2 million for Fiscal 2023, or 14%, from $39.5 million for Fiscal 2022.
Sales and support expenses Sales and support expenses increased by $1.5 million, or 52%, to $4.5 million for Fiscal 2022 from $2.9 million for Fiscal 2021.
Sales and support expenses Sales and support expenses increased by $1.3 million, or 29%, to $5.7 million for Fiscal 2023 from $4.5 million for Fiscal 2022. The increase primarily resulted from $0.8 million higher headcount and employee related costs, $0.3 million higher marketing costs related to advertising, sponsorships and trade shows and $0.2 million higher travel and meeting costs.
In September 2021, we entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy. The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people.
The scheduled prepayments for the 20-year initial term of the Xcel Energy Agreement total $80.0 million, of which $8.0 million was received in December 2022. In September 2021, we entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy.
Interest income decreased by $1.7 million, or 93%, to $0.1 million for Fiscal 2021 as compared to $1.8 million from Fiscal 2020 due to lower cash balance driven by payments for our spectrum initiatives, along with lower effective money market rates.
The increase was primarily attributable to higher interest rates. Interest income decreased by $68,000, or 55%, to $56,000 for Fiscal 2022 as compared to $0.1 million from Fiscal 2021 due to lower interest rates.
The decrease primarily resulted from $1.1 million related to the realignment of the business development team from Sales and support to General and administrative and $0.3 million lower employee related travel and meeting costs due to the pandemic, partially offset by $0.3 million increase in headcount and employee related costs resulting from building the sales team.
The increase primarily resulted from $4.3 million higher stock compensation expense due to additional grants awarded during Fiscal 2023, $1.0 million higher headcount and related costs, $0.4 million higher travel and meeting costs, $0.3 million higher regulatory fees, and $0.1 million higher IT related costs, partially offset by $0.3 million lower site related costs and $0.1 million lower professional services.
As we cannot predict the duration or scope of the COVID-19 pandemic and its impact on our targeted customers, the potential negative financial impact to our results of operations and financial condition cannot be reasonably estimated. We are actively managing our business to maintain our cash flow and believe that we currently have adequate liquidity.
As we cannot predict the duration or scope of the current negative macroeconomic environment, including any adverse effects of the health pandemics, inflation, regulatory and policy changes, and geopolitical matters, or their respective impacts on our business or our targeted customers, we cannot reasonably estimate any respective potential negative financial impact to our results of operations, commercialization efforts and financial condition.
The scheduled prepayments for the 30-year initial terms of the Ameren Agreements total $47.7 million, of which $0.3 million was received in February 2021, $5.4 million in September 2021 and $17.2 million in October 2021. See Note 3 Revenue in the Notes to the Unaudited Consolidated Financial Statements contained within this Annual Report for further discussion on the Ameren Agreements.
The increase in our spectrum lease revenue was attributable to revenue recognized in connection with the Ameren Agreements of approximately $0.4 million. For a discussion of our revenue recognition policy, refer to Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report.
Our future capital requirements will depend on many factors, including: the timeline and costs to acquire broadband licenses pursuant to the Report and Order, including the costs to acquire additional spectrum, the costs related to retuning, or swapping spectrum held by, Covered Incumbents and the costs of paying Anti-Windfall Payments to the U.S.
Material Cash Requirements Our future capital requirements will depend on many factors, including: costs and time related to the commercialization of our spectrum assets; and our ability to sign customer contracts and generate revenues from the license or transfer of any broadband licenses we secure; and our ability to timely deliver broadband licenses and clear spectrum to our customers in accordance with our contractual obligation; the timeline and costs to acquire broadband licenses pursuant to the Report and Order, including the costs to acquire additional spectrum, the costs related to retuning, or swapping spectrum held by 900 MHz site-based licensees in the broadband segment that is required under section 90.621(b) to be protected by a Page 37 Table of Contents broadband licensee with a base station at any location within the county, or any 900 MHz geographic-based SMR licensee in the broadband segment whose license area completely or partially overlaps the county, and the costs of paying Anti-Windfall Payments to the U.S.
Other income in Fiscal 2021 remained relatively flat as compared to Fiscal 2020.
Other income For the years ended March 31, Aggregate Change Aggregate Change (in thousands) 2023 2022 2021 2023 from 2022 2022 from 2021 Other income $ 266 $ 256 $ 414 $ 10 4 % $ (158) -38 % Other income in Fiscal 2023 remained relatively flat as compared to Fiscal 2022.
Removed
We were originally incorporated in California in 1997 and reincorporated in Delaware in 2014. In November 2015, we changed our name from Pacific DataVision, Inc. to pdvWireless, Inc. In August 2019, we changed our name from pdvWireless, Inc. to Anterix Inc. We maintain offices in Woodland Park, New Jersey, McLean, Virginia and Abilene, Texas.
Added
Overview We are a wireless communications company focused on commercializing our spectrum assets to enable our targeted utility and critical infrastructure customers to deploy private broadband networks and on offering innovative broadband solutions to the same target customers.
Removed
The Ameren Agreements will enable Ameren to deploy a private LTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people. Each Ameren Agreement is for a term of up to 40 years, consisting of an initial term of 30 years, with a 10-year renewal option for an additional payment.
Added
Business Developments On October 28, 2022, we entered into an agreement with Xcel Energy providing Xcel Energy dedicated long-term usage of our 900 MHz Broadband Spectrum for a term of 20 years throughout Xcel Energy’s service territory in eight states.
Removed
The decrease in our operating revenues during this period were attributable to the transfer of our TeamConnect customers to A BEEP and Goosetown as part of our December 2018 restructuring efforts as discussed in Note 3 Revenue in the Notes to the Consolidated Financial Statements contained within this Annual Report, as well as the loss of customers in our pdvConnect business.
Added
The Xcel Energy Agreement also provides Xcel Energy an option to extend the agreement for two 10-year terms for additional payments. The Xcel Energy Agreement allows Xcel Energy to deploy a PLTE network to support its grid modernization initiatives for the benefit of its approximately 3.7 million electricity customers and 2.1 million natural gas customers.
Removed
The $13.8 million increase for Fiscal 2021 was attributable to $5.1 million in stock compensation expense recognized upon the achievement of a performance metric under the performance-based restricted stock units and performance-based stock options, upon the Report and Order becoming effective in August 2020 (see Note 11 Stock Acquisition Rights, Stock Options and Warrants in the Notes to the Consolidated Financial Statements contained within this Annual Report), $0.8 million relating to the Type III modification to the restricted stock units held by the former Chairman of the Board upon his transition to a consultant to the Company, approximately $3.8 million due to higher valuation of grants awarded in Fiscal 2021, $3.6 million higher employee related costs due to increased headcount as well as the realignment of the business development team and $1.1 million higher consulting services related to our strategic spectrum initiatives.
Added
During the year ended March 31, 2023, we delivered to Evergy the 1.4 x 1.4 cleared 900 MHz Broadband Spectrum and the associated broadband licenses for 81 counties. The revenue recognized for the year ended March 31, 2023 was approximately $0.6 million.
Removed
These increases were partially offset by a $0.4 million decrease in employee related travel and meeting Page 33 Table of Contents costs due to the COVID-19 pandemic and $0.2 million decrease due to the completion of the December 2018 cost reduction and restructuring actions associated with the transfer of the TeamConnect business to A BEEP and Goosetown and the transfer of the pdvConnect business to the LLC in Fiscal 2020.
Added
In February 2021, we entered into an agreement with SDG&E, to provide 900 MHz Broadband Spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County for a total payment of $50.0 million.
Removed
Sales and support expenses decreased by $1.1 million, or 27%, to $2.9 million for Fiscal 2021 from $4.1 million for Fiscal 2020.
Added
The total payment of $50.0 million is comprised of an initial payment of $20.0 million received in February 2021 and the remaining $30.0 million payment, which is due through fiscal year 2024 as we deliver the associated broadband licenses to SDG&E and the relevant cleared 900 MHz Broadband Spectrum.
Removed
Product development expenses increased by $1.4 million, or 47%, to $4.3 million for Fiscal 2021 from $3.0 million for Fiscal 2020.
Added
In September 2022, we delivered to SDG&E 1.4 x 1.4 cleared 900 MHz Broadband Spectrum and the associated broadband license related to Imperial County and received a milestone payment of $0.2 million. Page 32 Table of Contents In May 2022, we issued Motorola 500,000 shares of our common stock.
Removed
The increase is primarily attributable to $0.4 million higher valuation of grants awarded in Fiscal 2021, $0.4 million higher consulting charges, $0.6 million higher technology and equipment related charges to assist with the development of future product offerings, offset by $0.2 million lower employee related travel and meeting costs due to the COVID-19 pandemic.
Added
Motorola received the Shares by electing to convert 500,000 Class B Units it held in our subsidiary, PDV Spectrum Holding Company, LLC.
Removed
Impairment of long-lived assets expenses were $0.1 million and $46,000 for Fiscal 2021 and Fiscal 2020, respectively . Impairment for long-lived assets expenses remained relatively flat for the periods presented.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are currently not exposed to market risk from changes in foreign currency. We continue to monitor our market risk exposure, including any adverse impacts related to COVID-19, which has resulted in significant market volatility. ITEM 8.
Biggest changeWe continue to monitor our market risk exposure, including any adverse impacts related to health pandemics or the current macroeconomic environment, which has resulted in significant market volatility. ITEM 8.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our financial instruments consist of cash, cash equivalents, trade accounts receivable and accounts payable. We consider investments in highly liquid instruments purchased with original maturities of 90 days or less to be cash equivalents.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our financial instruments consist of cash, cash equivalents, trade accounts receivable and accounts payable. We consider investments in highly liquid instruments purchased with original maturities of 90 days or less to be cash equivalents.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this item are set forth in Item 15 on pages F-2 through F-32 and are filed as part of this Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this item are set forth in Item 15 on pages F-2 through F-31 and are filed as part of this Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
However, because of the short-term nature of the highly liquid instruments in our portfolio, a 10% change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operations. Our operations are based in the United States and, accordingly, all of our transactions are denominated in U.S. dollars.
However, because of the short-term nature of the highly liquid instruments in our portfolio, a 10% change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operations.
Added
Foreign Currency Exchange Rate Fluctuations Our operations are based in the United States and, accordingly, all of our transactions are denominated in U.S. dollars. We are currently not exposed to market risk from changes in foreign currency. Inflation Risk Inflationary factors may adversely affect our operating results.
Added
As a result of recent increases in inflation, certain of our operating expenses have increased. Additionally, although difficult to quantify, we believe that the current macroeconomic environment, including inflation, could have an adverse effect on our target customers’ businesses, which may harm our commercialization efforts and negatively impact our revenues.
Added
Continued periods of high inflation could have a material adverse effect on our business, operating results and financial condition if we are not able to control our higher operating costs Page 39 Table of Contents or if our commercialization efforts are slowed or negatively impacted, continued periods of high inflation could have a material adverse effect on our business, operating results and financial condition.

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