Anterix Inc

Previous wording

Spectrum revenues increased by $0.7 million, or 120%, to $1.3 million for the three months ended December 31, 2023 from $0.6 million for the three months ended December 31, 2022. The increase for the three months ended December 31, 2023 of $0.7 million, was attributable to revenue recognized in connection with our agreement with Xcel Energy of approximately $0.7 million. Spectrum revenues increased by $1.6 million, or 124%, to $2.9 million for the nine months ended December 31, 2023 from $1.3 million for the nine months ended December 31, 2022. The increase for the nine months ended December 31, 2023 of $1.6 million, was attributable to revenue recognized in connection with our agreements with Evergy and Xcel Energy of approximately $0.5 million and $1.1 million, respectively.

Current wording

•Spectrum revenues increased by $0.9 million, or 151%, to $1.5 million for the three months ended June 30, 2024 from $0.6 million for the three months ended June 30, 2023. The increase in our spectrum revenue was primarily attributable to revenue recognized in connection with our agreement with Xcel Energy of approximately $0.8 million.

Previous wording

During the three months ended December 31, 2023, we exchanged our narrowband licenses for broadband licenses in 10 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $17.1 million for the new broadband licenses and relinquished to the FCC narrowband licenses for those same 10 counties valued at $3.4 million. As a result, we recorded a $13.7 million non-monetary gain on disposal of the intangible assets on our Consolidated Statements of Operations for the three months ended December 31, 2023. During the nine months ended December 31, 2023, we exchanged our narrowband licenses for broadband licenses in 24 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $41.3 million for the new broadband licenses and relinquished to the FCC narrowband licenses for those same 24 counties valued at $8.2 million. As a result, we recorded a $33.0 million non-monetary gain on disposal of the intangible assets on our Consolidated Statements of Operations for the nine months ended December 31, 2023.

Current wording

•Gain from disposal of intangible assets, net decreased by $10.7 million, or 99%, to $0.1 million for the three months ended June 30, 2024 from $10.8 million for the three months ended June 30, 2023. During the three months ended June 30, 2024, we exchanged our narrowband license for a broadband license in 1 county. In connection with the exchange, we recorded an estimated accounting cost basis of $0.1 million for the new broadband license and relinquished to the FCC narrowband license for the same 1 county with de minimis value. As a result, we recorded a $0.1 million non-monetary gain from disposal of the intangible assets on our Consolidated Statements of Operations. During the three months ended June 30, 2023, we exchanged our narrowband licenses for broadband licenses in 9 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $13.3 million for the new broadband licenses and disposed of $2.5 million related to the value ascribed to the narrowband licenses we relinquished to the FCC for those same 9 counties. As a result, we recorded a $10.8 million non-monetary gain from disposal of the intangible assets on our Consolidated Statements of Operations.

Previous wording

Our principal source of liquidity is our cash and cash equivalents generated from customer contract proceeds. At December 31, 2023, we had cash and cash equivalents of $62.0 million.

Current wording

Our principal source of liquidity is our cash and cash equivalents generated from customer contract proceeds. At June 30, 2024, we had cash and cash equivalents of $51.7 million.

Previous wording

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 Quarterly Report. As noted above, our future capital requirements will depend on a number of factors, including among others, future customer contracts, the costs and timing of our spectrum retuning activities, spectrum acquisitions and the Anti-Windfall Payments to the U.S. Treasury, our operating activities, any cash proceeds we generate through our commercialization activities, our ability to timely deliver broadband licenses to our customers in accordance with our contractual obligations and our obligation to refund payments or pay penalties if we do not meet our commercial 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. We cannot reasonably estimate any potential financial impact to our results of operations, commercialization efforts and financial condition of any potential future changes to our macroeconomic, legal or regulatory environment, including potential legislation affecting the energy or utility industry, the telecommunications environment, or supply chains. 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 “Risk Factors” in Item 1A of Part II of this Quarterly Report for a reference to the risks and uncertainties that could cause our costs to be more than we currently anticipate and/or our revenue and operating results to be lower than we currently anticipate. If required, we intend to raise additional capital through debt or equity financing 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. Any failure to obtain financing when required will have a material adverse effect on our business, operating results, financial condition and liquidity.

Current wording

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 Quarterly Report. As noted above, our future capital requirements will depend on a number of factors, including among others, future customer contracts, the costs and timing of our spectrum retuning activities, spectrum acquisitions and the Anti-Windfall Payments to the U.S. Treasury, our operating activities, any cash proceeds we generate through our commercialization activities, our ability to timely deliver broadband licenses to our customers in accordance with our contractual obligations and our obligation to refund payments or pay penalties if we do not meet our commercial 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. We cannot reasonably estimate any potential impact to our results of operations, commercialization efforts and financial condition arising from changes to our macroeconomic, legal or regulatory environment, including potential legislation affecting the energy or utility industry, the telecommunications environment, or supply chains. 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 “Risk Factors” in Item 1A of Part II of this Quarterly Report for a reference to the risks and uncertainties that could cause our costs to be more than we currently anticipate and/or our revenue and operating results to be lower than we currently anticipate. If required, we intend to raise additional capital through debt or equity financing 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. Any failure to obtain financing when required will have a material adverse effect on our business, operating results, financial condition and liquidity.

Previous wording

Our principal source of cash provided by operating activities is our customer contract proceeds in the form of advanced payments. For spectrum lease agreements, we record these advanced payments as deferred revenue on our Consolidated Balance Sheets and recognize revenue over the term of the lease, which is typically 20 to 30 years. For spectrum sale agreements, we record advanced payments as a contingent liability on our Consolidated Balance Sheets and derecognize this liability upon closing of the sale along with recording a gain or loss on sale. In addition, our cash flows will reflect a non-cash gain or loss on disposal of intangible assets for the difference in cost basis as we exchange narrowband licenses for broadband licenses. We expect net cash provided by (used in) operating activities to be affected by the progress on our customer agreements as well as changes in other operating assets and liabilities. The following represents our changes in net cash provided by (used in) operating activities for the nine months ended December 31, 2023 and 2022.

Current wording

Our principal source of cash provided by operating activities is our customer contract proceeds in the form of advanced payments. For spectrum revenue agreements, we record these advanced payments as deferred revenue on our Consolidated Balance Sheets and recognize revenue over the term of the lease, which is typically 20 to 30 years. For spectrum sale agreements, we record advanced payments as a contingent liability on our Consolidated Balance Sheets and derecognize this liability upon closing of the sale along with recording a gain or loss on sale. In addition, our cash flows reflect a non-cash gain or loss on disposal of intangible assets for the difference in cost basis as we exchange narrowband licenses for broadband licenses. We expect net cash provided by (used in) operating activities to be affected by the progress on our customer agreements as well as changes in other operating assets and liabilities. The following represents our changes in net cash used in operating activities for the three months ended June 30, 2024 and 2023.

Previous wording

Net cash used in operating activities was approximately $18.7 million in the nine months ended December 31, 2022. The net cash used in operating activities in the nine months ended December 31, 2022 was primarily due to the following:

Current wording

Net cash used in operating activities was approximately $2.4 million for the three months ended June 30, 2024. The net cash used in operating activities for the three months ended June 30, 2024 was primarily due to the following:

Previous wording

•$46.3 million increase in deferred revenue due to $49.2 million cash proceeds from our 900 MHz Broadband Spectrum customer prepayments offset by $2.9 million in revenue recognition in connection with the delivery of cleared 900 MHz Broadband Spectrum.

Current wording

•$1.5 million decrease in deferred revenue due to revenue recognition in connection with the delivery of cleared 900 MHz Broadband Spectrum; and

Previous wording

•$15.0 million increase in contingent liability related to the LCRA Agreement;

Current wording

•$10.0 million increase in contingent liability related to the Oncor Agreement.

Previous wording

Net cash provided by operating activities was approximately $35.9 million in the nine months ended December 31, 2023. The net cash provided by operating activities in the nine months ended December 31, 2023 was primarily due to the following:

Current wording

Net cash used in operating activities was approximately $8.2 million for the three months ended June 30, 2023. The net cash used in operating activities for the three months ended June 30, 2023 was primarily due to the following:

Previous wording

Our principal outflow of cash used in investing activities is our purchases of intangible assets, including refundable deposits, which represent our spectrum clearing efforts as we work toward the conversion from narrowband to broadband spectrum. The purchases of intangible assets may be offset by current period cash proceeds from the sale of intangible assets, with a potential non-cash derecognition of the contingent liability for any proceeds received and recognized in operating activities in a prior period. We expect net cash provided by (used in) investing activities to be affected by the timing of our spectrum clearing efforts and the closing of our sale transactions and the related transfer of broadband licenses. The following represents our changes in net cash provided by (used in) investing activities for the nine months ended December 31, 2023 and 2022.

Current wording

Our principal outflow of cash used in investing activities is our purchases of intangible assets, including refundable deposits, retuning costs and swaps, which represent our spectrum clearing efforts as we work toward the conversion from narrowband to broadband spectrum. The purchases of intangible assets may be offset by current period cash proceeds from the sale of intangible assets, with a potential non-cash derecognition of the contingent liability for any proceeds received and recognized in operating activities in a prior period. We expect net cash provided by (used in) investing activities to be affected by the timing of our spectrum clearing efforts and the closing of our sale transactions and the related transfer of broadband licenses. The following represents our changes in net cash used in investing activities for the three months ended June 30, 2024 and 2023.

Previous wording

Net cash provided by investing activities was $10.4 million for the nine months ended December 31, 2023, as compared to net cash used in investing activities of $20.6 million for the nine months ended December 31, 2022. For the nine months ended December 31, 2023, net cash provided by investing activities was primarily from the $25.4 million sale of spectrum related to our transfer of the San Diego County and Imperial County broadband license to SDG&E partially offset by payments made to acquire, swap or retune wireless licenses in markets across the United States. For the nine months ended December 31, 2022, net cash used in investing activities was primarily from payments made to acquire, swap or retune wireless licenses in markets across the United States.

Current wording

Net cash used in investing activities was $5.4 million and $5.2 million for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024, net cash used in investing activities was from $5.4 million payments made to acquire, swap or retune wireless licenses in markets across the United States. For the three months ended June 30, 2023, net cash used in investing activities was primarily from $5.2 million payments made to acquire, swap or retune wireless licenses in markets across the United States.

Previous wording

Our principal outflow of cash used in financing activities is a result of our equity transactions, including repurchases of common stock and taxes and fees associated with the issuance of restricted stock awards, offset by proceeds from stock options exercised in the period. We expect net cash used in financing activities to be affected by the timing of future equity transactions including the timing of our repurchases of common stock. The following represents our changes in net cash used in financing activities for the nine months ended December 31, 2023 and 2022.

Current wording

Our principal outflow of cash used in financing activities is a result of our equity transactions, including repurchases of common stock and taxes and fees associated with the issuance of restricted stock awards, offset by proceeds from stock options exercised in the period. We expect net cash used in financing activities to be affected by the timing of future equity transactions including the timing of our repurchases of common stock. The following represents our changes in net cash used in financing activities for the three months ended June 30, 2024 and 2023.

Previous wording

Net cash used in financing activities was $19.8 million for the nine months ended December 31, 2023, as compared to $8.8 million for the nine months ended December 31, 2022. For the nine months ended December 31, 2023, net cash used in financing activities was primarily from the repurchase of common stock of $18.7 million, payments of withholding tax on net issuance of restricted stock of $1.1 million. For the nine months ended December 31, 2022, net cash used in financing activities was primarily from the repurchase of common stock of $8.2 million, payments of withholding tax on net issuance of restricted stock of $1.5 million, partially offset by the proceeds from stock option exercises of $0.9 million.

Current wording

Net cash used in financing activities was $1.1 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024, net cash used in financing activities was primarily for the repurchases of common stock of $2.0 million, payments of withholding tax on net issuance of restricted stock of $0.7 million, partially offset by the proceeds from stock option exercises of $1.6 million. For the three months ended June 30, 2023, net cash used in financing activities was primarily for payments of withholding tax on net issuance of restricted stock of $0.8 million, partially offset by the proceeds from stock option exercises of $7 thousand.

Previous wording

We are obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2024 through January 31, 2029, 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 historical TeamConnect business and in connection with obtaining spectrum licenses. The lease expiration dates range from February 29, 2024 to December 18, 2030. Total estimated payments for these lease agreements are approximately $6.4 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”). Total estimated payments as a result of the ARO is approximately $0.6 million.

Current wording

We are obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2024 through January 31, 2029, 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 spectrum holdings. The lease expiration dates range from November 30, 2024 to June 12, 2031. Total estimated payments for these lease agreements are approximately $6.0 million (exclusive of real estate taxes, utilities, maintenance and other costs borne by us). 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. In addition to the lease payments and ARO for our tower site locations, we entered into agreements with several third parties in multiple U.S. markets to acquire, retune or swap wireless licenses for cash consideration (“deals”). As of June 30, 2024, our total estimated future payments for these agreements with incumbents are approximately $11.1 million.

Previous wording

In October 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 the Xcel Energy Agreement. In connection with Xcel Energy Agreement, we entered into a guaranty agreement, under which we guaranteed the delivery of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses in Xcel Energy’s service territory in eight states along with other commercial obligations. In the event of default or non-delivery of the specific territory’s 900 MHz Broadband Spectrum, we are required to refund payments we have received. In addition, to the extent Anterix has performed any obligations, our liability and remaining obligations under the Xcel Energy Agreement will extend only to the remaining unperformed obligations. We recorded $50.3 million in deferred revenue in connection with the prepayments received as of December 31, 2023. We commenced delivery of the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses in the first quarter of fiscal year 2024 and will continue through 2029. The revenue recognized for the three and nine months ended December 31, 2023, was approximately $0.7 million and $1.1 million, respectively. As of December 31, 2023, the maximum potential liability of future undiscounted payments under this agreement is approximately $49.2 million.

Current wording

In October 2022, we entered into an agreement with Xcel Energy Services Inc. (“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 (the “Xcel Energy Agreement”). In connection with Xcel Energy Agreement, we entered into a guaranty agreement, under which we guaranteed the delivery of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses in Xcel Energy’s service territory in eight states along with other commercial obligations. In the event of default or non-delivery of the specific territory’s 900 MHz Broadband Spectrum, we are required to refund payments we have received. In addition, to the extent we have performed any obligations, our liability and remaining obligations under the Xcel Energy Agreement will extend only to the remaining unperformed obligations. We recorded $67.1 million in deferred revenue in connection with the prepayments received as of June 30, 2024. We commenced delivery of the relevant cleared 900 MHz Broadband Spectrum and the associated broadband leases in the first quarter of fiscal year 2024 and will continue through 2029. The revenue recognized for the three months ended June 30, 2024, was approximately $0.8 million. As of June 30, 2024, the maximum potential liability of future undiscounted payments under this agreement is approximately $64.4 million.

Previous wording

In September 2021, our Board authorized a share repurchase program (the “2021 Share Repurchase Program”) pursuant to which we may repurchase up to $50.0 million of our common stock on or before September 29, 2023. We repurchased and subsequently retired a total of $33.9 million of our common stock under the 2021 Share Repurchase Program, including $10.7 million during fiscal year 2024. On September 21, 2023, our Board authorized the new 2023 Share Repurchase Program pursuant to which we may repurchase up to $250.0 million of our common stock on or before September 21, 2026. The Company repurchased and subsequently retired a total of $8.0 million of the Company’s common stock under the 2023 Share Repurchase Program during fiscal year 2024. We may repurchase shares of our common stock via the open market and/or privately negotiated transactions. Repurchases will be made in accordance with applicable securities laws and may be effected pursuant to Rule 10b5-1 trading plans. The manner, timing and amount of any share repurchases will be determined by us based on a variety of factors, including proceeds from customer contracts, the timing of which is unpredictable, as well as general business and market conditions, our capital position, and other strategic considerations. The 2023 Share Repurchase Program does not obligate us to repurchase any particular amount of our common stock.

Current wording

In September 2023, our Board authorized the 2023 Share Repurchase Program (the “2023 Share Repurchase Program”) pursuant to which we may repurchase up to $250.0 million of our common stock on or before September 21, 2026. We may repurchase shares of our common stock via the open market and/or privately negotiated transactions. Repurchases will be made in accordance with applicable securities laws and may be effected pursuant to Rule 10b5-1 trading plans. The manner, timing and amount of any share repurchases will be determined by us based on a variety of factors, including proceeds from customer contracts, the timing of which is unpredictable, as well as general business and market conditions, our capital position, and other strategic considerations. The 2023 Share Repurchase Program does not obligate us to repurchase any particular amount of our common stock.

Previous wording

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. Excise tax accrued for the three and nine months ended December 31, 2023 was approximately $74 thousand and $118 thousand, respectively.

Current wording

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. Excise tax accrued for the three months ended June 30, 2024 was approximately $0.1 million.

Previous wording

The following table presents the share repurchase activity for the three and nine months ended December 31, 2023 and 2022 (in thousands, except per share data):

Current wording

The following table presents the share repurchase activity for the three months ended June 30, 2024 and 2023 (in thousands, except per share data):

Previous wording

As of December 31, 2023, $242.0 million is remaining under the share repurchase program.

Current wording

As of June 30, 2024, $234.0 million is remaining under the share repurchase program.