Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		(in thousands)	September 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)

ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	23,437	$	44,583	Cash and cash equivalents	$	37,165	$	44,583
Short-term investments	Short-term investments	14,995		14,999		Short-term investments	—		14,999
Accounts receivable, net	Accounts receivable, net	26,583		26,908		Accounts receivable, net	26,920		26,908
Prepaid expenses	Prepaid expenses	7,187		6,641		Prepaid expenses	7,322		6,641
Other current assets	Other current assets	788		922		Other current assets	785		922
Total current assets	Total current assets	72,990		94,053		Total current assets	72,192		94,053
Non-current assets:	Non-current assets:					Non-current assets:
Property and equipment, net	Property and equipment, net	6,487		6,746		Property and equipment, net	6,379		6,746
Operating lease right-of-use assets	Operating lease right-of-use assets	17,367		15,821		Operating lease right-of-use assets	16,148		15,821
Goodwill	Goodwill	99,175		99,175		Goodwill	99,175		99,175

Deferred income tax assets, net	Deferred income tax assets, net	32,151		31,653		Deferred income tax assets, net	31,494		31,653
Other non-current assets	Other non-current assets	706		706		Other non-current assets	1,153		706
Total non-current assets	Total non-current assets	155,886		154,101		Total non-current assets	154,349		154,101
Total assets	Total assets	$	228,876	$	248,154	Total assets	$	226,541	$	248,154

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	4,160	$	5,292	Accounts payable	$	5,792	$	5,292
Accrued compensation and benefits	Accrued compensation and benefits	11,475		13,948		Accrued compensation and benefits	10,560		13,948
Deferred revenue	Deferred revenue	25,975		25,608		Deferred revenue	26,203		25,608
Operating lease liabilities	Operating lease liabilities	5,150		5,405		Operating lease liabilities	5,139		5,405
Other current liabilities	Other current liabilities	5,091		4,745		Other current liabilities	5,013		4,745
Total current liabilities	Total current liabilities	51,851		54,998		Total current liabilities	52,707		54,998
Non-current liabilities:	Non-current liabilities:					Non-current liabilities:
Asset retirement obligations	Asset retirement obligations	6,490		6,355		Asset retirement obligations	6,634		6,355
Operating lease liabilities	Operating lease liabilities	13,575		11,883		Operating lease liabilities	12,976		11,883
Other non-current liabilities	Other non-current liabilities	766		1,227		Other non-current liabilities	962		1,227
Total non-current liabilities	Total non-current liabilities	20,831		19,465		Total non-current liabilities	20,572		19,465
Total liabilities	Total liabilities	72,682		74,463		Total liabilities	73,279		74,463
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)	0		0		Commitments and contingencies (Note 13)
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock	Preferred stock	$	—	$	—	Preferred stock	$	—	$	—
Common stock	Common stock	2		2		Common stock	2		2
Additional paid-in capital	Additional paid-in capital	98,158		97,291		Additional paid-in capital	99,035		97,291
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,792)		(1,588)		Accumulated other comprehensive loss	(2,060)		(1,588)
Retained earnings	Retained earnings	59,826		77,986		Retained earnings	56,285		77,986
Total stockholders’ equity	Total stockholders’ equity	156,194		173,691		Total stockholders’ equity	153,262		173,691
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	228,876	$	248,154	Total liabilities and stockholders' equity	$	226,541	$	248,154


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Unaudited and in thousands except share and per share amounts)	(Unaudited and in thousands except share and per share amounts)	2022		2021		2022		2021		(Unaudited and in thousands except share and per share amounts)	2022		2021		2022		2021

Revenue:	Revenue:									Revenue:
Wireless revenue	Wireless revenue	$	18,700	$	19,859	$	37,547	$	39,979	Wireless revenue	$	19,054	$	19,644	$	56,601	$	59,623
Software revenue	Software revenue	15,010		15,864		29,988		31,780		Software revenue	14,690		16,207		44,678		47,987
Total revenue	Total revenue	33,710		35,723		67,535		71,759		Total revenue	33,744		35,851		101,279		107,610
Operating expenses:	Operating expenses:									Operating expenses:
Cost of revenue (exclusive of items shown separately below)	Cost of revenue (exclusive of items shown separately below)	6,980		7,859		14,784		15,840		Cost of revenue (exclusive of items shown separately below)	6,624		8,340		21,408		24,180
Research and development	Research and development	2,624		4,156		9,121		8,600		Research and development	2,223		4,063		11,344		12,663
Technology operations	Technology operations	6,880		7,022		13,893		14,226		Technology operations	6,719		7,287		20,612		21,513
Selling and marketing	Selling and marketing	3,874		5,184		9,189		10,323		Selling and marketing	3,440		5,404		12,629		15,727
General and administrative	General and administrative	9,619		10,480		20,054		20,761		General and administrative	8,868		11,664		28,922		32,425
Depreciation, amortization and accretion	Depreciation, amortization and accretion	871		2,457		1,805		5,184		Depreciation, amortization and accretion	828		2,568		2,633		7,752
Severance and restructuring	Severance and restructuring	450		174		4,945		174		Severance and restructuring	1,503		82		6,448		256

Total operating expenses	Total operating expenses	31,298		37,332		73,791		75,108		Total operating expenses	30,205		39,408		103,996		114,516
Operating income (loss)	Operating income (loss)	2,412		(1,609)		(6,256)		(3,349)		Operating income (loss)	3,539		(3,557)		(2,717)		(6,906)
Interest income	Interest income	170		61		237		122		Interest income	129		141		366		263
Other income	Other income	25		29		12		2		Other income	98		10		110		13
Income (loss) before income taxes	Income (loss) before income taxes	2,607		(1,519)		(6,007)		(3,225)		Income (loss) before income taxes	3,766		(3,406)		(2,241)		(6,630)
(Provision for) benefit from income taxes	(Provision for) benefit from income taxes	(683)		800		717		209		(Provision for) benefit from income taxes	(846)		912		(129)		1,120
Net income (loss)	Net income (loss)	$	1,924	$	(719)	$	(5,290)	$	(3,016)	Net income (loss)	$	2,920	$	(2,494)	$	(2,370)	$	(5,510)
Basic and diluted net income (loss) per common share	Basic and diluted net income (loss) per common share	$	0.10	$	(0.04)	$	(0.27)	$	(0.16)	Basic and diluted net income (loss) per common share	$	0.15	$	(0.13)	$	(0.12)	$	(0.28)

Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	19,693,659		19,395,364		19,645,680		19,335,081		Basic weighted average common shares outstanding	19,693,659		19,464,893		19,661,849		19,378,543
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	19,807,430		19,395,364		19,645,680		19,335,081		Diluted weighted average common shares outstanding	19,901,267		19,464,893		19,661,849		19,378,543
Cash dividends declared per common share	Cash dividends declared per common share	$	0.3125	$	0.1250	$	0.6250	$	0.2500	Cash dividends declared per common share	$	0.3125	$	0.1250	$	0.9375	$	0.3750


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Unaudited and in thousands)	(Unaudited and in thousands)	2022		2021		2022		2021		(Unaudited and in thousands)	2022		2021		2022		2021

Net income (loss)	Net income (loss)	$	1,924	$	(719)	$	(5,290)	$	(3,016)	Net income (loss)	$	2,920	$	(2,494)	$	(2,370)	$	(5,510)
Other comprehensive (loss) income, net of tax:
Other comprehensive loss, net of tax:										Other comprehensive loss, net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(229)		3		(204)		17		Foreign currency translation adjustments	(268)		(163)		(472)		(146)
Other comprehensive (loss) income		(229)		3		(204)		17
Other comprehensive loss										Other comprehensive loss	(268)		(163)		(472)		(146)
Comprehensive income (loss)	Comprehensive income (loss)	$	1,695	$	(716)	$	(5,494)	$	(2,999)	Comprehensive income (loss)	$	2,652	$	(2,657)	$	(2,842)	$	(5,656)


(Unaudited and in thousands except share amounts)	(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity		(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity

Balance, January 1, 2021	Balance, January 1, 2021	19,384,192	$	2	$	90,328	$	110,283	$	200,613	Balance, January 1, 2021	19,384,192	$	2	$	90,328	$	110,283	$	200,613
Net loss	Net loss	—	—		—		(2,297)		(2,297)		Net loss	—	—		—		(2,297)		(2,297)

Purchase of common stock for tax withholding	Purchase of common stock for tax withholding	(132,281)	—		(1,444)		—		(1,444)		Purchase of common stock for tax withholding	(132,281)	—		(1,444)		—		(1,444)
Amortization of stock-based compensation	Amortization of stock-based compensation	—	—		2,239		—		2,239		Amortization of stock-based compensation	—	—		2,239		—		2,239
Cash dividends declared	Cash dividends declared	—	—		—		(2,553)		(2,553)		Cash dividends declared	—	—		—		(2,553)		(2,553)
Issuance of restricted stock under the Equity Plans and other	Issuance of restricted stock under the Equity Plans and other	20,952	—		—		—		—		Issuance of restricted stock under the Equity Plans and other	20,952	—		—		—		—
Issuance of common stock in lieu of cash compensation	Issuance of common stock in lieu of cash compensation	50,741	—		—		—		—		Issuance of common stock in lieu of cash compensation	50,741	—		—		—		—
Cumulative translation adjustment	Cumulative translation adjustment	—	—		14		—		14		Cumulative translation adjustment	—	—		14		—		14
Balance, March 31, 2021	Balance, March 31, 2021	19,323,604	$	2	$	91,137	$	105,433	$	196,572	Balance, March 31, 2021	19,323,604	$	2	$	91,137	$	105,433	$	196,572
Net loss	Net loss	—	—		—		(719)		(719)		Net loss	—	—		—		(719)		(719)
Purchase of common stock for tax withholding	Purchase of common stock for tax withholding	(19,874)	—		(212)		—		(212)		Purchase of common stock for tax withholding	(19,874)	—		(212)		—		(212)
Amortization of stock-based compensation	Amortization of stock-based compensation	—	—		1,781		—		1,781		Amortization of stock-based compensation	—	—		1,781		—		1,781
Cash dividends declared	Cash dividends declared	—	—		—		(2,553)		(2,553)		Cash dividends declared	—	—		—		(2,553)		(2,553)

Issuance of restricted stock under the 2020 Equity Plan and other	Issuance of restricted stock under the 2020 Equity Plan and other	39,010	—		132		—		132		Issuance of restricted stock under the 2020 Equity Plan and other	39,010	—		132		—		132
Issuance of common stock in lieu of cash compensation	Issuance of common stock in lieu of cash compensation	58,430	—		—		—		—		Issuance of common stock in lieu of cash compensation	58,430	—		—		—		—
Cumulative translation adjustment	Cumulative translation adjustment	—	—		3		—		3		Cumulative translation adjustment	—	—		3		—		3
Balance, June 30, 2021	Balance, June 30, 2021	19,401,170	$	2	$	92,841	$	102,161	$	195,004	Balance, June 30, 2021	19,401,170	$	2	$	92,841	$	102,161	$	195,004
Net loss											Net loss	—	—		—		(2,494)		(2,494)

Purchase of common stock for tax withholding											Purchase of common stock for tax withholding	(20,439)	—		(204)		—		(204)
Amortization of stock-based compensation											Amortization of stock-based compensation	—	—		2,016		—		2,016
Cash dividends declared											Cash dividends declared	—	—		—		(2,545)		(2,545)
Issuance of restricted stock under the 2020 Equity Plans and other											Issuance of restricted stock under the 2020 Equity Plans and other	26,772	—		—		—		—
Issuance of common stock in lieu of cash compensation											Issuance of common stock in lieu of cash compensation	60,773	—		—		—		—
Cumulative translation adjustment											Cumulative translation adjustment	—	—		(163)		—		(163)
Balance, September 30, 2021											Balance, September 30, 2021	19,468,276	$	2	$	94,490	$	97,122	$	191,614


(Unaudited and in thousands except share amounts)	(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity		(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity

Balance, January 1, 2022	Balance, January 1, 2022	19,828,033	$	2	$	95,703	$	77,986	$	173,691	Balance, January 1, 2022	19,828,033	$	2	$	95,703	$	77,986	$	173,691
Net loss	Net loss	—	—		—		(7,214)		(7,214)		Net loss	—	—		—		(7,214)		(7,214)

Purchase of common stock for tax withholding and other	Purchase of common stock for tax withholding and other	(134,354)	—		(1,209)		—		(1,209)		Purchase of common stock for tax withholding and other	(134,354)	—		(1,209)		—		(1,209)
Amortization of stock-based compensation	Amortization of stock-based compensation	—	—		1,115		—		1,115		Amortization of stock-based compensation	—	—		1,115		—		1,115
Cash dividends declared	Cash dividends declared	—	—		—		(6,513)		(6,513)		Cash dividends declared	—	—		—		(6,513)		(6,513)

Cumulative translation adjustment	Cumulative translation adjustment	—	—		25		—		25		Cumulative translation adjustment	—	—		25		—		25
Balance, March 31, 2022	Balance, March 31, 2022	19,693,679	$	2	$	95,634	$	64,259	$	159,895	Balance, March 31, 2022	19,693,679	$	2	$	95,634	$	64,259	$	159,895
Net Income		—	—		—		1,924		1,924
Net income											Net income	—	—		—		1,924		1,924

Purchase of common stock for tax withholding and other	Purchase of common stock for tax withholding and other	(22)	—		—		—		—		Purchase of common stock for tax withholding and other	(22)	—		—		—		—
Amortization of stock-based compensation	Amortization of stock-based compensation	—	—		961		—		961		Amortization of stock-based compensation	—	—		961		—		961
Cash dividends declared	Cash dividends declared	—	—		—		(6,357)		(6,357)		Cash dividends declared	—	—		—		(6,357)		(6,357)

Cumulative translation adjustment	Cumulative translation adjustment	—	—		(229)		—		(229)		Cumulative translation adjustment	—	—		(229)		—		(229)
Balance, June 30, 2022	Balance, June 30, 2022	19,693,657	$	2	$	96,366	$	59,826	$	156,194	Balance, June 30, 2022	19,693,657	$	2	$	96,366	$	59,826	$	156,194
Net income											Net income	—	—		—		2,920		2,920

Amortization of stock-based compensation											Amortization of stock-based compensation	—	—		877		—		877
Cash dividends declared											Cash dividends declared	—	—		—		(6,461)		(6,461)

Cumulative translation adjustment											Cumulative translation adjustment	—	—		(268)		—		(268)
Balance, September 30, 2022											Balance, September 30, 2022	19,693,657	$	2	$	96,975	$	56,285	$	153,262


		For the Six Months Ended June 30,					For the Nine Months Ended September 30,
(Unaudited and in thousands)	(Unaudited and in thousands)	2022		2021		(Unaudited and in thousands)	2022		2021

Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(5,290)	$	(3,016)	Net loss	$	(2,370)	$	(5,510)
Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:	Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:					Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:
Depreciation, amortization and accretion	Depreciation, amortization and accretion	1,805		5,184		Depreciation, amortization and accretion	2,633		7,752

Deferred income tax benefit		(495)		(291)
Deferred income tax expense (benefit)						Deferred income tax expense (benefit)	157		(907)
Stock-based compensation	Stock-based compensation	2,076		4,020		Stock-based compensation	2,953		6,036
Provisions for credit losses, service credits and other	Provisions for credit losses, service credits and other	861		657		Provisions for credit losses, service credits and other	1,244		765
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(576)		1,775		Accounts receivable	(1,276)		2,165
Prepaid expenses and other assets	Prepaid expenses and other assets	(416)		994		Prepaid expenses and other assets	(984)		202
Net operating lease liabilities	Net operating lease liabilities	(109)		563		Net operating lease liabilities	500		778
Accounts payable, accrued liabilities and other	Accounts payable, accrued liabilities and other	(3,582)		(3,538)		Accounts payable, accrued liabilities and other	(3,068)		300
Deferred revenue	Deferred revenue	(169)		(2,482)		Deferred revenue	63		(2,053)
Net cash (used in) provided by operating activities	Net cash (used in) provided by operating activities	(5,895)		3,866		Net cash (used in) provided by operating activities	(148)		9,528
Investing activities:	Investing activities:					Investing activities:
Purchases of property and equipment	Purchases of property and equipment	(1,192)		(2,198)		Purchases of property and equipment	(1,773)		(3,103)
Capitalized software development	Capitalized software development	—		(5,618)		Capitalized software development	—		(8,239)
Purchase of short-term investments	Purchase of short-term investments	(14,967)		(29,993)		Purchase of short-term investments	(14,967)		(44,990)
Maturity of short-term investments	Maturity of short-term investments	15,000		30,000		Maturity of short-term investments	30,000		45,000
Net cash used in investing activities		(1,159)		(7,809)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	13,260		(11,332)
Financing activities:	Financing activities:					Financing activities:
Cash distributions to stockholders	Cash distributions to stockholders	(12,679)		(5,152)		Cash distributions to stockholders	(18,849)		(7,590)

Proceeds from issuance of common stock under the Employee Stock Purchase Plan	Proceeds from issuance of common stock under the Employee Stock Purchase Plan	—		132		Proceeds from issuance of common stock under the Employee Stock Purchase Plan	—		132
Purchase of common stock for tax withholding on vested equity awards	Purchase of common stock for tax withholding on vested equity awards	(1,209)		(1,656)		Purchase of common stock for tax withholding on vested equity awards	(1,209)		(1,860)
Net cash used in financing activities	Net cash used in financing activities	(13,888)		(6,676)		Net cash used in financing activities	(20,058)		(9,318)
Effect of exchange rate on cash and cash equivalents	Effect of exchange rate on cash and cash equivalents	(204)		17		Effect of exchange rate on cash and cash equivalents	(472)		(146)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(21,146)		(10,602)		Net decrease in cash and cash equivalents	(7,418)		(11,268)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	44,583		48,729		Cash and cash equivalents, beginning of period	44,583		48,729
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	23,437	$	38,127	Cash and cash equivalents, end of period	$	37,165	$	37,461
Supplemental disclosure:	Supplemental disclosure:					Supplemental disclosure:

Income taxes paid/(refunded)	Income taxes paid/(refunded)	$	185	$	(42)	Income taxes paid/(refunded)	$	212	$	(165)

Spok Holdings, Inc. (NASDAQ: SPOK) ("Spok," "we," "our" or the "Company"), through its wholly owned subsidiary Spok, Inc., is proud to be the global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on Spok products and services to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients.

We provide one-way and advanced two-way wireless messaging services, including information services, throughout the United States. These services are offered on a local, regional and nationwide basis employing digital networks. One-way messaging consists of numeric and alphanumeric messaging services. Numeric messaging services enable subscribers to receive messages that are composed entirely of numbers, such as a phone number, while alphanumeric messages may include numbers and letters, which enable subscribers to receive text messages. Two-way messaging services enable subscribers to send and receive messages to and from other wireless messaging devices, including pagers, personal digital assistants and personal computers. We also offer voice mail, personalized greetings, message storage and retrieval, and equipment loss and/or maintenance protection to both one-way and two-way messaging subscribers. These services are commonly referred to as wireless messaging and information services.

We also develop, sell and support enterprise-wide systems for hospitals and other organizations needing to automate, centralize and standardize clinical communications. These solutions are used for contact centers, clinical alerting and notification, mobile communications and messaging and for public safety notifications. These areas of market focus complement the market focus of our wireless services outlined above.

The accompanying Condensed Consolidated Financial Statements include our accounts and the accounts of our wholly owned direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In management's opinion, the unaudited Condensed Consolidated Financial Statements include all adjustments and accruals that are necessary for the presentation of the results of all interim periods reported herein and all such adjustments are of a normal, recurring nature.

Amounts shown in the Condensed Consolidated Statements of Operations within the operating expense categories of cost of revenue; research and development; technology operations; selling and marketing; and general and administrative are recorded exclusive of depreciation, amortization and accretion. These items are shown separately to the extent that they are considered material for the periods presented.

The financial information included herein, other than the Condensed Consolidated Balance Sheet as of December 31, 2021, is unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2021, has been derived from, but does not include all, the disclosures contained in the audited Consolidated Financial Statements as of and for the year ended December 31, 2021.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”). The Condensed Consolidated Statements of Operations for the interim periods presented are not necessarily indicative of the results that may be expected for a full year.

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets, goodwill, accounts receivable allowances, revenue recognition, determining the standalone selling price of performance obligations, variable consideration, restructuring related liabilities, depreciation expense, asset retirement obligations and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). The Company has determined that all recent ASUs issued by the FASB are either not applicable or are expected to have minimal impact on the Company's Condensed Consolidated Financial Statements.

In February 2022, the Company announced a new strategic business plan that includes a restructuring of its business to discontinue the integrated communications and collaboration platform, Spok Go®, eliminate all associated costs and optimize the Company’s existing structure to drive continued cost improvement. As part of the restructuring program, the Company initially estimated the elimination of approximately 175 positions, primarily in research and development, but also in professional services, selling and marketing, and back-office support functions. The Company currently expects total eliminations of approximately ~~150~~183 positions, with the majority of positions having been terminated as of ~~June~~September 30, 2022. The following table provides a summary of our updated cost estimates by major type of expense associated with the strategic business plan. The restructuring activities associated with these changes are ~~substantially complete, and we expect the remainder~~expected to be substantially completed inby the ~~second half~~fourth quarter of 2022.


						~~Total Estimated Amount to be Incurred~~
Strategic Business Plan Estimates						~~(Dollars in millions)~~Total Estimated Amount to be Incurred
Severance and personnel related costs						$~~5.5~~5.7 million to ~~$5.8~~$6.6 million
Contractual terminations						$~~0.5~~1.3 million to ~~$0.7~~$1.4 million
Total severance and restructuring related charges						$~~6.0~~7.0 million to ~~$6.5~~$8.0 million

For the three and ~~six~~nine months ended ~~June~~September 30, 2022, the Company incurred total severance and restructuring costs of ~~$0.5~~$1.5 million and ~~$4.9~~$6.4 million respectively, which isare included within the Condensed Consolidated Statement of Operations. These costs are as follows:


		For the Three Months Ended June 30,		For the Six Months Ended June 30,		For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2022			(Dollars in thousands)	2022			2022

Severance and personnel related costs	Severance and personnel related costs	$	349	$	4,346		Severance and personnel related costs	$	791		$	5,137
Contractual terminations	Contractual terminations	101		599			Contractual terminations	712			1,311
Total severance and restructuring costs	Total severance and restructuring costs	$	450	$	4,945		Total severance and restructuring costs	$	1,503		$	6,448

A summary of activity for the ~~six~~nine months ended ~~June~~September 30, 2022, for restructuring-related liabilities associated with the strategic business plan, which is included within accrued compensation and benefits and other current liabilities within the Condensed Consolidated Balance Sheet, is as follows:


	(Dollars in thousands)

Balance at December 31, 2021	$	—
Restructuring and other charges	4,495
Payments	(34)
Non-cash adjustment	(124)
Balance at March 31, 2022	$	4,337
Restructuring and other charges	$		525
Payments	(2,302)
Non-cash adjustment	(188)
Balance at June 30, 2022	$	2,372
Restructuring and other charges	807
Payments	(1,385)
Non-cash adjustment	(9)
Balance at September 30, 2022	$	1,785

Wireless revenue consists of 2two primary components: paging revenue and product and other revenue. Paging revenue consists primarily of recurring fees associated with the provision of messaging services and fees for paging devices and is net of a provision for service credits. Product and other revenue reflects system sales, the sale of devices and charges for paging devices that are not returned and are net of anticipated credits. Our core offering includes subscriptions to one-way or two-way messaging services for a periodic (monthly, quarterly, semiannual, or annual) service fee. This is generally based upon the type of service provided, the geographic area covered, the number of devices provided to the customer and the period of commitment. A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs. Two-way messaging is generally offered on a nationwide basis. (See Item 1. “Business,” in the 2021 Annual Report for more details.)

Software revenue consists of 2two primary components: operations revenue and maintenance revenue. Operations revenue consists primarily of license revenues for our healthcare communications solutions, revenue from the sale of equipment that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is for ongoing support of our software solutions or related equipment and access to when-and-if available software updates. Maintenance is generally purchased and renewed on an annual basis.

Our software licenses and hardware are generally recognized at a point in time when we have transferred control to the customer. For software licenses, revenue is not recognized until the related license(s) has been made available to the customer and the customer can begin to benefit from its right to use the license(s). Our software licenses represent a right to use Spok’s intellectual property ("IP") as it exists at a point in time at which the license is granted. Many of our software licenses have significant standalone functionality due to their ability to process a transaction or perform a function or task, and we do not need to maintain those products, once provided to the customer, for value to exist. While the functionality of the IP that we license may substantively change during the license period, customers are not contractually or practically required to update their license as a result of those changes.

Our wireless, professional services, and maintenance ~~services~~ are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless or maintenance services. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project. Revenues are recognized proportionally as hours are incurred.


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2022		2021		(Dollars in thousands)	2022		2021		2022		2021

Revenue:	Revenue:									Revenue:
Paging revenue	Paging revenue	$	18,141	$	19,135	$	36,454	$	38,488	Paging revenue	$	18,419	$	18,844	$	54,873	$	57,332
Product and other revenue	Product and other revenue	559		724		1,093		1,491		Product and other revenue	635		800		1,728		2,291
Wireless revenue	Wireless revenue	$	18,700	$	19,859	$	37,547	$	39,979	Wireless revenue	$	19,054	$	19,644	$	56,601	$	59,623

License	License	$	1,962	$	908	$	3,786	$	2,460	License	$	2,147	$	1,807	$	5,933	$	4,267
Professional services	Professional services	3,331		4,865		6,667		9,219		Professional services	2,835		4,159		9,502		13,378
Hardware	Hardware	507		482		1,096		1,098		Hardware	530		596		1,626		1,694

Operations revenue	Operations revenue	5,800		6,255		11,549		12,777		Operations revenue	5,512		6,562		17,061		19,339
Maintenance	Maintenance	9,210		9,609		18,439		19,003		Maintenance	9,178		9,645		27,617		28,648
Software revenue	Software revenue	$	15,010	$	15,864	$	29,988	$	31,780	Software revenue	$	14,690	$	16,207	$	44,678	$	47,987
Total revenue	Total revenue	$	33,710	$	35,723	$	67,535	$	71,759	Total revenue	$	33,744	$	35,851	$	101,279	$	107,610


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2022		2021		(Dollars in thousands)	2022		2021		2022		2021

United States	United States	$	32,553	$	34,799	$	65,325	$	69,973	United States	$	32,827	$	34,758	$	98,152	$	104,730
International	International	1,157		924		2,210		1,786		International	917		1,093		3,127		2,880
Total revenue	Total revenue	$	33,710	$	35,723	$	67,535	$	71,759	Total revenue	$	33,744	$	35,851	$	101,279	$	107,610

Our prepaid commissions represent payments made to employees in advance of our performance on the related underlying contracts. These costs have been incurred directly in relation to obtaining a contract. As such, these costs are amortized over the estimated period of benefit. Changes in the balance of total prepaid commissions during the ~~six~~nine months ended ~~June~~September 30, 2022 are as follows:


(Dollars in thousands)	(Dollars in thousands)	December 31, 2021		Additions		Commissions Recognized		June 30, 2022		(Dollars in thousands)	December 31, 2021		Additions		Commissions Recognized		September 30, 2022

Prepaid Commissions	Prepaid Commissions	$	1,821	$	2,039	$	(2,071)	$	1,789	Prepaid Commissions	$	1,821	$	2,966	$	(3,016)	$	1,771

We have operating lease arrangements for corporate offices, cellular towers, storage units and small building space. The building space is used to house infrastructure, such as transmitters, antennae and other various equipment for the Company’s wireless paging services. For leases with a term of 12 months or less, renewal terms are generally of an evergreen nature (either month-to-month or year-to-year). For leases with a term greater than 12 months, renewal terms are generally explicit and provide for 1one to 5five optional renewals consistent with the initial term. Many of our leases, with the exception of those for our corporate offices, include options to terminate the lease within one year. Variable lease payments, residual value guarantees or purchase options are not generally present in these leases.

In May 2022, we extended ~~NaN~~twenty-three site leases on a Master License Agreement which included a term of 10 years with an option to terminate within 45 days of notification of termination. At that time, we recorded a $2.9 million ~~in a~~ right-of-use asset and a corresponding operating lease liability for these leases.


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2022		2021		(Dollars in thousands)	2022		2021		2022		2021

Operating lease cost	Operating lease cost	$	1,379	$	1,491	$	2,861	$	2,961	Operating lease cost	$	1,965	$	1,651	$	4,828	$	4,612
Short-term lease cost	Short-term lease cost	2,448		2,642		5,081		5,383		Short-term lease cost	2,490		2,563		7,569		7,946

Total lease cost	Total lease cost	$	3,827	$	4,133	$	7,942	$	8,344	Total lease cost	$	4,455	$	4,214	$	12,397	$	12,558


For the Year Ended December 31,	For the Year Ended December 31,	(Dollars in thousands)		For the Year Ended December 31,	(Dollars in thousands)

2022 (remaining six months)		$	2,656
2022 (remaining three months)				2022 (remaining three months)	$	1,337
2023	2023	4,790		2023	4,966
2024	2024	3,894		2024	4,081
2025	2025	2,926		2025	3,059
2026	2026	2,559		2026	2,607
Thereafter	Thereafter	4,192		Thereafter	4,226
Total future lease payments	Total future lease payments	21,017		Total future lease payments	20,276
Imputed interest	Imputed interest	(2,292)		Imputed interest	(2,161)
Total	Total	$	18,725	Total	$	18,115


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2022		2021		(Dollars in thousands)	2022		2021		2022		2021

Depreciation	Depreciation									Depreciation
Leasehold improvements	Leasehold improvements	$	16	$	18	$	35	$	34	Leasehold improvements	$	16	$	18	$	51	$	52
Asset retirement costs	Asset retirement costs	(175)		(22)		(350)		(44)		Asset retirement costs	(176)		(22)		(526)		(66)
Paging and computer equipment	Paging and computer equipment	800		982		1,650		2,052		Paging and computer equipment	763		871		2,413		2,923
Furniture, fixtures and vehicles	Furniture, fixtures and vehicles	60		62		130		120		Furniture, fixtures and vehicles	55		65		185		185
Total depreciation	Total depreciation	701		1,040		1,465		2,162		Total depreciation	658		932		2,123		3,094
Amortization	Amortization									Amortization
Intangible assets	Intangible assets	—		—		—		417		Intangible assets	—		—		—		417
Capitalized software development costs	Capitalized software development costs	—		1,263		—		2,297		Capitalized software development costs	—		1,482		—		3,779
Total amortization	Total amortization	—		1,263		—		2,714		Total amortization	—		1,482		—		4,196
Accretion	Accretion	170		154		340		308		Accretion	170		154		510		462
Total depreciation, amortization and accretion expense	Total depreciation, amortization and accretion expense	$	871	$	2,457	$	1,805	$	5,184	Total depreciation, amortization and accretion expense	$	828	$	2,568	$	2,633	$	7,752

Accounts receivable was recorded net of an allowance of ~~$1.4~~$1.6 million at both ~~June~~September 30, 2022, and December 31, ~~2021, respectively.~~2021. Accounts receivable, net includes ~~$7.8~~$6.8 million and $7.1 million of unbilled receivables at ~~June~~September 30, 2022, and December 31, 2021, respectively. Unbilled receivables are defined as the Company's right to consideration in exchange for goods or services that we have transferred to the customer but have not yet billed for, generally as a result of contractual billing terms.


(Dollars in thousands)	(Dollars in thousands)	Useful Life (In Years)	June 30, 2022		December 31, 2021		(Dollars in thousands)	Useful Life (In Years)	September 30, 2022		December 31, 2021

Leasehold improvements	Leasehold improvements	shorter of useful life or lease term	$	2,613	$	3,307	Leasehold improvements	shorter of useful life or lease term	$	2,496	$	3,307
Asset retirement costs	Asset retirement costs	1-5	2,307		2,307		Asset retirement costs	1-5	2,307		2,307
Paging and computer equipment	Paging and computer equipment	1-5	87,745		89,844		Paging and computer equipment	1-5	87,183		89,844
Furniture, fixtures and vehicles	Furniture, fixtures and vehicles	3-5	3,322		3,668		Furniture, fixtures and vehicles	3-5	3,321		3,668
Total property and equipment	Total property and equipment		95,987		99,126		Total property and equipment		95,307		99,126
Accumulated depreciation	Accumulated depreciation		(89,500)		(92,380)		Accumulated depreciation		(88,928)		(92,380)
Total property and equipment, net	Total property and equipment, net		$	6,487	$	6,746	Total property and equipment, net		$	6,379	$	6,746

During the three months ended ~~June~~September 30, 2022, we performed a qualitative assessment of goodwill and determined that a triggering event had not occurred. While an impairment assessment is performed annually in the fourth quarter, the Company monitors its business environment for potential triggering events on a quarterly basis. There is potential for further impairment charges being recognized in future periods based on these ongoing assessments.


(Dollars in thousands)	(Dollars in thousands)	Short-Term Portion		Long-Term Portion		Total		(Dollars in thousands)	Short-Term Portion		Long-Term Portion		Total

Balance at December 31, 2021	Balance at December 31, 2021	$	130	$	6,355	$	6,485	Balance at December 31, 2021	$	130	$	6,355	$	6,485
Accretion	Accretion	69		271		340		Accretion	103		407		510
Amounts paid	Amounts paid	(186)		—		(186)		Amounts paid	(214)		—		(214)

Reclassifications	Reclassifications	136		(136)		—		Reclassifications	128		(128)		—
Balance at June 30, 2022		$	149	$	6,490	$	6,639
Balance at September 30, 2022								Balance at September 30, 2022	$	147	$	6,634	$	6,781

The cost associated with the estimated removal costs and timing refinements due to ongoing network rationalization activities is expected to accrete to a total liability of $7.8 million. The total estimated liability is based on the transmitter locations remaining after we have consolidated the number of networks we operate and ~~assume~~assuming the underlying leases continue to be renewed to that future date. Accretion expense related solely to asset retirement obligations and was recorded based on the interest method.

On September 2, 2021, the Company entered into a Rights Agreement (as amended from time to time, the “Rights Agreement”) between the Company and Computershare Trust Company, N.A., as Rights Agent (the "Rights Agent"), that was approved by our Board of Directors. In connection with the Rights Agreement, a dividend was declared of 1 preferred stock purchase right (individually, a “Right” and collectively, the “Rights”) for each share of our common stock outstanding at the close of business on September 17, 2021. Each Right entitled the registered holder thereof, upon the Rights becoming exercisable, to purchase from the Company one one-tenth of a share of Series A Junior Participating Preferred Stock, par value $0.00001 per share (the “Series A Preferred”), of the Company at a price of $50.95 per one one-tenth of a share of Series A Preferred.

The Rights would have become exercisable upon the earlier to occur of (i) the close of business on the tenth business day following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 10% (20% in the case of a passive institutional investor) or more of our common stock (an “Acquiring Person”) or (ii) the close of business on the 10th business day (or such later date as may be determined by action of our Board of Directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) following the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in a person or group becoming an Acquiring Person.

On June 15, 2022, the Company and the Rights Agent entered into an amendment to the Rights Agreement (the “Rights Agreement Amendment”) that accelerated the expiration of the Rights by amending the “Final Expiration Date” under the Rights Agreement to “June 15, 2022”. Accordingly, the Rights expired as of the close of business on June 15, 2022, upon the expiration of the Rights Agreement no person has any remaining rights pursuant to the Rights Agreement or the Rights.

Cash distributions to stockholders, as disclosed in the Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, include previously declared cash dividends on shares of vested restricted common stock ("restricted stock") issued to our non-executive directors and dividends related to vested restricted stock units ("RSUs") issued to eligible employees. Cash dividends on RSUs and restricted stock have been accrued and are paid when the applicable vesting conditions are met. Accrued cash dividends on forfeited restricted stock and RSUs are also forfeited. The following table details our cash dividends declared and paid in 2022 through the date hereof:

(Dollars in thousands)

Declaration Date

Record Date

Payment Date

Per Share Amount

Total Declared(1)

Declaration Date

Record Date

Payment Date

Per Share Amount

Total Declared(1)

February 16, 2022

March 16, 2022

March 30, 2022

0.3125

6,513

February 16, 2022

March 16, 2022

March 30, 2022

0.3125

6,513

April 27, 2022

May 25, 2022

June 24, 2022

0.3125

6,357

April 27, 2022

May 25, 2022

June 24, 2022

0.3125

6,357

July 27, 2022

August 17, 2022

September 9, 2022

0.3125

6,461

Total

0.6250

12,870

Total

0.9375

19,331

On February 16, 2022, our Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. For the ~~six~~nine months ended ~~June~~September 30, 2022, we did not ~~repurchased~~repurchase any common stock.

Basic net ~~loss~~income (loss) per common share is computed on the basis of the weighted average common shares outstanding. Diluted net ~~loss~~income (loss) per common share is computed on the basis of the weighted average common shares outstanding plus the effect of all potentially dilutive common shares, including outstanding restricted stock and RSUs, which are treated as contingently issuable shares, using the “treasury stock” method.


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands, except for share and per share amounts)	(in thousands, except for share and per share amounts)	2022		2021		2022		2021		(in thousands, except for share and per share amounts)	2022		2021		2022		2021

Numerator:	Numerator:									Numerator:
Net income (loss)	Net income (loss)	$	1,924	$	(719)	$	(5,290)	$	(3,016)	Net income (loss)	$	2,920	$	(2,494)	$	(2,370)	$	(5,510)

Denominator:	Denominator:									Denominator:
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	19,693,659		19,395,364		19,645,680		19,335,081		Basic weighted average common shares outstanding	19,693,659		19,464,893		19,661,849		19,378,543

Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	19,807,430		19,395,364		19,645,680		19,335,081		Diluted weighted average common shares outstanding	19,901,267		19,464,893		19,661,849		19,378,543

Basic and diluted net income (loss) per common share	Basic and diluted net income (loss) per common share	$	0.10	$	(0.04)	$	(0.27)	$	(0.16)	Basic and diluted net income (loss) per common share	$	0.15	$	(0.13)	$	(0.12)	$	(0.28)

On April 29, 2020, our Board of Directors adopted the Spok Holdings, Inc. 2020 Equity Incentive Award Plan (the “2020 Equity Plan” and, together with the 2012 Equity Plan, the "Equity Plans") that our stockholders subsequently approved on July 28, 2020. At July 28, 2020, a total of 1,699,950 shares of common stock had been reserved for issuance under the Equity Plans, including 1,600,000 shares available under the 2020 Equity Plan and 99,950 shares which, as of the stockholders approval date, remained available for issuance under the 2012 Equity Plan. No further grants will be made under the 2012 Equity Plan, although, the 2012 Equity Plan continues to govern all outstanding awards thereunder.

Contingent RSUs generally vest over a three-year performance period upon successful completion of the performance objectives. Non-contingent RSUs generally vest in thirds, annually, over a three-year period. Dividend equivalent rights generally accompany each RSU award and those rights accumulate and vest along with the underlying RSU.

Dividend equivalent rights generally accompany each DSU award and are paid to participants in cash on the Company's applicable dividend payment date whether the DSU is vested or unvested. The dividend equivalent right associated with a DSU continues until delivery of the underlying shares of common stock is made.

Payment of the underlying shares of common stock occurs at the earliest of a participant's separation from service, disability, death, or a change in control. Any shares subject to an award under the 2012 Equity Plan that are forfeited or expire will be available for the future grant of awards under the 2020 Equity Plan. As of ~~June~~September 30, 2022, there was an aggregate of ~~247,467~~247,123 unvested RSUs under the 2012 Equity Plan.


		Shares	Weighted- Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value

Unvested at January 1, 2022	Unvested at January 1, 2022	771,171	$	11.24	Unvested at January 1, 2022	771,171	$	11.24
Granted	Granted	454,429	8.65		Granted	454,429	8.65
Vested	Vested	(26,850)	10.80		Vested	(70,429)	10.24
Forfeited	Forfeited	(135,011)	11.27		Forfeited	(154,982)	10.96
Unvested at June 30, 2022		1,063,739	$	10.14
Unvested at September 30, 2022					Unvested at September 30, 2022	1,000,189	$	10.18

Of the ~~1,063,739~~1,000,189 unvested RSUs, DSUs and restricted stock outstanding at ~~June~~September 30, 2022, ~~542,227~~531,685 RSUs include contingent performance requirements for vesting purposes. At ~~June~~September 30, 2022, there was ~~$4.5~~$3.4 million of unrecognized net compensation cost related to RSUs and restricted stock, which is expected to be recognized over a weighted average period of ~~1.9~~1.7 years.

For the first three quarters of 2021, qualified employees received a portion of their compensation in the form of shares of the Company's common stock in lieu of cash. These awards were made in advance on a quarterly basis and vested immediately. For the ~~six~~nine months ended ~~June~~September 30, 2021, ~~109,171~~169,944 shares of common stock were issued, with a weighted average grant date fair value of ~~$11.35.~~$10.87.

The ESPP allows employees to purchase shares of common stock at a discounted rate, subject to plan limitations. Under the ESPP, eligible participants can voluntarily elect to have contributions withheld from their pay for the duration of an offering period, subject to the ESPP limits. At the end of an offering period, contributions will be used to purchase the Company's common stock at a discount to the market price based on the first or last day of the offering period, whichever is lower.

Participants are required to hold common stock for a minimum period of two years from the grant date. Participants will begin earning dividends on shares after the purchase date. Each offering period will generally last for no longer than six months. Once an offering period begins, participants cannot adjust their withholding amount. If a participant chooses to withdraw, any previously withheld funds will be returned to the participant, with no stock purchased, and that participant will be eligible to participate in the ESPP during the next offering period. If the participant terminates employment with the Company during the offering period, all contributions will be returned to the employee and no stock will be purchased.

For the ~~six~~nine months ended ~~June~~September 30, 2022, ~~and 2021,~~ no shares of the Company's stock were ~~purchased.~~purchased, as compared to 16,015 shares purchased for a total cost of $0.1 million during the same period in 2021 . The following table summarizes the activities under the ESPP from January 1, 2022, through ~~June~~September 30, 2022:

We record all stock-based compensation, which consist of RSUs, DSUs, restricted stock, equity in lieu of salary, and the option to purchase common stock under the ESPP, at fair value as of the grant date. Stock-based compensation expense is recognized based on a straight-line amortization basis over the respective service period. Forfeitures and withdrawals are accounted for as incurred.


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2022		2021		(Dollars in thousands)	2022		2021		2022		2021

Performance-based RSUs	Performance-based RSUs	$	383	$	182	$	843	$	755	Performance-based RSUs	$	362	$	447	$	1,205	$	1,202
Time-based RSUs, DSUs and restricted stock	Time-based RSUs, DSUs and restricted stock	578		958		1,233		1,981		Time-based RSUs, DSUs and restricted stock	515		939		1,748		2,920
Equity in lieu of salary	Equity in lieu of salary	—		618		—		1,240		Equity in lieu of salary	—		607		—		1,847
ESPP	ESPP	—		23		—		44		ESPP	—		23		—		67
Total stock-based compensation	Total stock-based compensation	$	961	$	1,781	$	2,076	$	4,020	Total stock-based compensation	$	877	$	2,016	$	2,953	$	6,036

The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law on March 27, 2020, to provide stimulus and relief in response to the coronavirus disease 2019 ("COVID-19") pandemic and resulting economic collapse. The CARES Act allows for the deferral of payment on the Company's share of the 6.2% Social Security tax on wages paid beginning on March 27, 2020 and ending on December 31, 2020. Deferred amounts are payable in two installments, with 50% of such taxes due on December 31, 2021, and the remainder due on December 31, 2022. This resulted in a total deferral of approximately $2.1 million of payroll taxes under this provision, of which $1.0 million remains due by December 31, 2022, and is included within current liabilities in the Condensed Consolidated Balance Sheet.

Our quarterly tax provision and our quarterly estimate of our annual effective tax rate are subject to significant variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in how we do business, changes in our stock price, foreign currency gains (losses), tax law developments (including changes in statutes, regulations, case law, and administrative practices), and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower.

We had total net deferred income tax assets ("DTAs") of ~~$32.2~~$31.5 million and $31.7 million as of ~~June~~September 30, 2022, and December 31, 2021, respectively. We had a valuation allowance of $26.2 million and $24.2 million as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of the deferred income tax assets will be realized in future periods. During the fourth quarter of each year, we update our multi-year forecast of taxable income for our operations, which assists in analyzing the recoverability of our DTAs.

Deferred income tax assets which are not currently covered by a valuation allowance are those that are indefinite-lived, or whose temporary differences would reverse in the future and may result in the creation of an indefinite-lived deferred income tax asset, which we consider to be realized through future taxable income despite near-term uncertainties. The amount of deferred income tax assets considered realizable, however, could be adjusted in the future if objective negative evidence in the form of cumulative losses is no longer present, additional weight is given to subjective evidence such as our projections for future profitability and growth, or other relevant factors arise.

A member of our Board of Directors, who was appointed at the beginning of 2020, serves as Chief Information Officer for an entity that is also a customer of the Company. For the three months ended ~~June~~September 30, 2022, and 2021, we recognized revenues of $0.1 million and $0.2 million respectively, related to contracts from the entity at which the individual is employed. For the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, we recognized revenues of $~~0.3~~0.5 million and ~~$0.4~~$0.6 million, respectively related to the contracts from the entity at which the individual is employed.

This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements and information relating to Spok Holdings, Inc. and its subsidiaries (collectively, “we,” "us," “Spok,” “our” or the “Company”) that set forth anticipated results based on management’s current plans, known trends and assumptions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “target,” “forecast” and similar expressions, as they relate to Spok are forward-looking statements.

Although these statements are based upon current plans, known trends and assumptions that management considers reasonable, they are subject to certain risks, uncertainties and assumptions, including, but not limited to, those discussed in this section and "Risk Factors" below and under the captions “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Annual Report"). Should known or unknown risks or uncertainties materialize, known trends change, or underlying assumptions prove inaccurate, actual results or outcomes may differ materially from past results and those described herein as anticipated, believed, estimated, expected, intended, targeted or forecasted. Investors are cautioned not to place undue reliance on these forward-looking statements.

The Company undertakes no obligation to update forward-looking statements. Investors are advised to consult all further disclosures the Company makes in its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that it will file with the SEC. Also note that, in the 2021 Annual Report, the Company provides a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to its business. These are factors that, individually or in the aggregate, could cause the Company’s actual results to differ materially from past results as well as those results that may be anticipated, believed, estimated, expected, intended, targeted or forecasted. It is not possible to predict or identify all such risk factors. Consequently, investors should not consider the risk factor discussion to be a complete discussion of all of the potential risks or uncertainties that could affect Spok's business, statement of operations or financial condition, subsequent to the filing of this Quarterly Report.

The following MD&A is intended to help the reader understand the results of operations and financial condition of Spok. This MD&A is provided as a supplement to, and should be read in conjunction with, our 2021 Annual Report and our unaudited Condensed Consolidated Financial Statements and accompanying notes. A reference to a “Note” in this section refers to the accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

Spok, acting through its indirect wholly owned operating subsidiary, Spok, Inc., delivers smart, reliable clinical communication and collaboration solutions to organizations, primarily in the U.S. healthcare industry, to help protect the health, well-being and safety of individuals. Organizations rely on Spok for workflow improvement, secure messaging, paging services, contact center optimization and public safety response.

In February 2022, our Board of Directors announced a new strategic business plan that includes restructuring of our business to discontinue Spok Go®, eliminate all associated costs and optimize the Company’s existing structure to drive continued cost improvement. The strategic business plan includes a renewed focus on our existing and established business, including the Spok Care Connect Suite and our wireless service offerings. While there are numerous factors that went into this decision, the ongoing challenge of the COVID-19 pandemic made it difficult for the Spok Go platform to gain sufficient traction with customers or for our business to continue operating with our current level of costs and personnel. This shift in focus will allow us to prioritize cash flow generation and the return of capital to stockholders. As a result of this new strategic business plan, our Board of Directors ~~has~~ increased the regular quarterly dividend from ~~$0.125~~$0.1250 to $0.3125 and ~~has~~ authorized a share repurchase program of up to $10 million of our common stock.

As part of the restructuring program, the Company initially estimated the elimination of approximately 175 positions, primarily in research and development, but also in professional services, selling and marketing, and back-office support functions. The Company currently expects total eliminations of approximately ~~150~~183 positions, with the majority of positions having been terminated as of ~~June~~September 30, 2022. We expect to incur pre-tax restructuring charges of approximately ~~$6.0~~$7.0 million to ~~$6.5~~$8.0 million, comprised of approximately ~~$5.5~~$5.7 million to ~~$5.8~~$6.6 million in severance and personnel related costs and approximately ~~$0.5~~$1.3 million to ~~$0.7~~$1.4 million in contractual terminations.

As we continue to optimize costs as a part of the strategic business plan, the expected number of eliminated positions increased, which will result in future savings, and was partially responsible for the change in the estimated range for severance and personnel related costs. Additionally, during the third quarter, we accelerated lease expenses related to a satellite office lease which we no longer use and do not anticipate extending the lease for, which will also lead to future savings. This drove an increase in the estimated range for contractual terminations. As of ~~June~~September 30, 2022, of ~~these~~the estimates, ~~$4.3~~$5.1 million has been incurred in severance and personnel related costs and ~~$0.6~~$1.3 million in contractual termination related costs. Future cash payments related to these charges are expected to generally be within the same range. The restructuring activities associated with these changes are ~~substantially complete, and we expect the remainder~~expected to be substantially completed inby the ~~second half~~fourth quarter of 2022. Further details can be found in Note 5 "Restructuring" in the Notes to Condensed Consolidated Financial Statements.

In March 2020, the World Health Organization declared COVID-19 a global pandemic. In the ensuing months, the global economy was significantly impacted, as schools and businesses shut down in an effort to prevent the spread of the virus. We began to experience a direct impact on our sales cycle in late February 2020 as hospitals, our largest customer segment, began to delay purchasing decisions and address staff reductions. These delays continued to affect our software bookings, which directly impacted license and equipment revenues during 2021. We also experienced delays in our ability to deliver on-site implementation services, which impacted our services revenue resulting in delays in the timing of revenue recognition during 2021, as the associated revenue corresponds to our backlog of performance obligations ready for delivery in the future.

During 2021, we continued to prudently manage operating expenses and liquidity, with the goal of neutralizing the impact of the pandemic on our cash flows. We enacted a Company-wide plan that reduced work schedules, resulting in a temporary reduction in compensation expenses during the second, third and fourth quarters of 2020 and continuing through the first half of 2021. We also enacted a plan for the first three quarters of 2021 whereby qualified employees received a portion of their compensation in the form of shares of the Company's common stock in lieu of cash. Under this alternative payment plan, which was in effect from the third quarter of 2020 through the third quarter of 2021, all non-employee directors voluntarily elected to receive either DSUs or restricted stock in lieu of the entire cash portion of their compensation.

~~Hospitals have continued to struggle with significant burnout and resource constraints caused by the pandemic~~, ~~which further adds to the overall financial strain they have been facing~~. The U.S. Healthcare system has lost between one in five and one in six healthcare workers since the pandemic began, and nursing staffs have been significantly depleted. On average it takes four to five years to train a nurse, and we expect these resource constraints to last well into the future.


		For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change					For the Three Months Ended September 30,				Change				For the Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%		(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%

Revenue:	Revenue:																	Revenue:
Wireless revenue	Wireless revenue	$	18,700	$	19,859	$	(1,159)	(5.8)	%	$	37,547	$	39,979	$	(2,432)	(6.1)	%	Wireless revenue	$	19,054	$	19,644	$	(590)	(3.0)	%	$	56,601	$	59,623	$	(3,022)	(5.1)	%
Software revenue	Software revenue	15,010		15,864		(854)		(5.4)	%	29,988		31,780		(1,792)		(5.6)	%	Software revenue	14,690		16,207		(1,517)		(9.4)	%	44,678		47,987		(3,309)		(6.9)	%
Total revenue	Total revenue	33,710		35,723		(2,013)		(5.6)	%	67,535		71,759		(4,224)		(5.9)	%	Total revenue	33,744		35,851		(2,107)		(5.9)	%	101,279		107,610		(6,331)		(5.9)	%
Operating expenses:	Operating expenses:																	Operating expenses:
Cost of revenue (exclusive of items shown separately below)	Cost of revenue (exclusive of items shown separately below)	6,980		7,859		(879)		(11.2)	%	14,784		15,840		(1,056)		(6.7)	%	Cost of revenue (exclusive of items shown separately below)	6,624		8,340		(1,716)		(20.6)	%	21,408		24,180		(2,772)		(11.5)	%
Research and development	Research and development	2,624		4,156		(1,532)		(36.9)	%	9,121		8,600		521		6.1	%	Research and development	2,223		4,063		(1,840)		(45.3)	%	11,344		12,663		(1,319)		(10.4)	%
Technology operations	Technology operations	6,880		7,022		(142)		(2.0)	%	13,893		14,226		(333)		(2.3)	%	Technology operations	6,719		7,287		(568)		(7.8)	%	20,612		21,513		(901)		(4.2)	%
Selling and marketing	Selling and marketing	3,874		5,184		(1,310)		(25.3)	%	9,189		10,323		(1,134)		(11.0)	%	Selling and marketing	3,440		5,404		(1,964)		(36.3)	%	12,629		15,727		(3,098)		(19.7)	%
General and administrative	General and administrative	9,619		10,480		(861)		(8.2)	%	20,054		20,761		(707)		(3.4)	%	General and administrative	8,868		11,664		(2,796)		(24.0)	%	28,922		32,425		(3,503)		(10.8)	%
Depreciation, amortization and accretion	Depreciation, amortization and accretion	871		2,457		(1,586)		(64.6)	%	1,805		5,184		(3,379)		(65.2)	%	Depreciation, amortization and accretion	828		2,568		(1,740)		(67.8)	%	2,633		7,752		(5,119)		(66.0)	%
Severance and restructuring	Severance and restructuring	450		174		276		158.6	%	4,945		174		4,771		2,742.0	%	Severance and restructuring	1,503		82		1,421		1,732.9	%	6,448		256		6,192		2,418.8	%

Total operating expenses	Total operating expenses	31,298		37,332		(6,034)		(16.2)	%	73,791		75,108		(1,317)		(1.8)	%	Total operating expenses	30,205		39,408		(9,203)		(23.4)	%	103,996		114,516		(10,520)		(9.2)	%
Operating income (loss)	Operating income (loss)	2,412		(1,609)		4,021		(249.9)	%	(6,256)		(3,349)		(2,907)		86.8	%	Operating income (loss)	3,539		(3,557)		7,096		(199.5)	%	(2,717)		(6,906)		4,189		(60.7)	%
Interest income	Interest income	170		61		109		178.7	%	237		122		115		94.3	%	Interest income	129		141		(12)		(8.5)	%	366		263		103		39.2	%
Other income	Other income	25		29		(4)		(13.8)	%	12		2		10		500.0	%	Other income	98		10		88		880.0	%	110		13		97		746.2	%
Income (loss) before income taxes	Income (loss) before income taxes	2,607		(1,519)		4,126		(271.6)	%	(6,007)		(3,225)		(2,782)		86.3	%	Income (loss) before income taxes	3,766		(3,406)		7,172		(210.6)	%	(2,241)		(6,630)		4,389		(66.2)	%
(Provision for) benefit from income taxes	(Provision for) benefit from income taxes	(683)		800		(1,483)		(185.4)	%	717		209		508		243.1	%	(Provision for) benefit from income taxes	(846)		912		(1,758)		(192.8)	%	(129)		1,120		(1,249)		(111.5)	%
Net income (loss)	Net income (loss)	$	1,924	$	(719)	$	2,643	(367.6)	%	$	(5,290)	$	(3,016)	$	(2,274)	75.4	%	Net income (loss)	$	2,920	$	(2,494)	$	5,414	(217.1)	%	$	(2,370)	$	(5,510)	$	3,140	(57.0)	%

Supplemental Information	Supplemental Information																	Supplemental Information
Full-Time Equivalent ("FTE") Employees	Full-Time Equivalent ("FTE") Employees	401		590		(189)		(32.0)	%									Full-Time Equivalent ("FTE") Employees	390		581		(191)		(32.9)	%
Active transmitters	Active transmitters	3,374		3,580		(206)		(5.8)	%									Active transmitters	3,353		3,497		(144)		(4.1)	%

We develop, sell and support enterprise-wide systems for healthcare, government, large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos, and well-known manufacturers. Our primary market is the healthcare provider industry, particularly hospitals. While we have historically identified hospitals with 200 or more beds as the primary targets for our software solutions, as well as our paging services, we have expanded our focus to include smaller hospitals with shorter sales cycles, including academic medical centers.

Revenue generated by wireless messaging services (including voice mail, personalized greeting, message storage and retrieval), equipment, maintenance plans and/or equipment loss protection for both one-way and two-way messaging subscribers is presented as wireless revenue in our Statement of Operations. Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment (to be used in conjunction with the software), and post-contract support (ongoing maintenance), is presented as software revenue in our Condensed Consolidated Statement of Operations. Our software is licensed to end users under an industry standard software license agreement.


		For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change					For the Three Months Ended September 30,				Change				For the Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%		(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%

Revenue - wireless:	Revenue - wireless:																	Revenue - wireless:
Paging revenue	Paging revenue	$	18,141	$	19,135	$	(994)	(5.2)	%	$	36,454	$	38,488	$	(2,034)	(5.3)	%	Paging revenue	$	18,419	$	18,844	$	(425)	(2.3)	%	$	54,873	$	57,332	$	(2,459)	(4.3)	%
Product and other revenue	Product and other revenue	559		724		(165)		(22.8)	%	1,093		1,491		(398)		(26.7)	%	Product and other revenue	635		800		(165)		(20.6)	%	1,728		2,291		(563)		(24.6)	%
Total wireless revenue	Total wireless revenue	18,700		19,859		(1,159)		(5.8)	%	37,547		39,979		(2,432)		(6.1)	%	Total wireless revenue	19,054		19,644		(590)		(3.0)	%	56,601		59,623		(3,022)		(5.1)	%

Revenue - software:	Revenue - software:																	Revenue - software:
License	License	1,962		908		1,054		116.1	%	3,786		2,460		1,326		53.9	%	License	2,147		1,807		340		18.8	%	5,933		4,267		1,666		39.0	%
Professional services	Professional services	3,331		4,865		(1,534)		(31.5)	%	6,667		9,219		(2,552)		(27.7)	%	Professional services	2,835		4,159		(1,324)		(31.8)	%	9,502		13,378		(3,876)		(29.0)	%
Hardware	Hardware	507		482		25		5.2	%	1,096		1,098		(2)		(0.2)	%	Hardware	530		596		(66)		(11.1)	%	1,626		1,694		(68)		(4.0)	%

Operations revenue	Operations revenue	5,800		6,255		(455)		(7.3)	%	11,549		12,777		(1,228)		(9.6)	%	Operations revenue	5,512		6,562		(1,050)		(16.0)	%	17,061		19,339		(2,278)		(11.8)	%
Maintenance revenue	Maintenance revenue	9,210		9,609		(399)		(4.2)	%	18,439		19,003		(564)		(3.0)	%	Maintenance revenue	9,178		9,645		(467)		(4.8)	%	27,617		28,648		(1,031)		(3.6)	%
Total software revenue	Total software revenue	15,010		15,864		(854)		(5.4)	%	29,988		31,780		(1,792)		(5.6)	%	Total software revenue	14,690		16,207		(1,517)		(9.4)	%	44,678		47,987		(3,309)		(6.9)	%
Total revenue	Total revenue	$	33,710	$	35,723	$	(2,013)	(5.6)	%	$	67,535	$	71,759	$	(4,224)	(5.9)	%	Total revenue	$	33,744	$	35,851	$	(2,107)	(5.9)	%	$	101,279	$	107,610	$	(6,331)	(5.9)	%

The decrease in wireless revenue for the three and ~~six~~nine months ended ~~June~~September 30, 2022, compared to the same periods in 2021, reflects the secular decrease in demand for our wireless services. Wireless revenue is generally reflective of the number of units in service and measured monthly as Average Revenue Per User ("ARPU"). On a consolidated basis, ARPU is affected by several factors, including the mix of units in service and the pricing of the various components of our services. The number of units in service changes based on subscribers added, referred to as gross placements, less subscriber cancellations, or disconnects.

ARPU was ~~$7.23~~$7.40 and ~~$7.32~~$7.29 for the three months ended ~~June~~September 30, 2022 and 2021, respectively. Total units in service were 0.8 million and 0.9 million as of ~~June~~September 30, 2022, and 2021, respectively. ~~Approximately $0.07 of the decline~~The increase in ARPU was ~~related to the decreases~~primarily driven by increases in Universal Service Fund ("USF") fees, ~~with the remainder coming primarily from lower variable revenue associated with overcall fees~~ which ~~are charged to customers when their service usage is greater than their allotted plan. USF fees~~ are effectively pass-through items that have corresponding costs associated with them. ~~Excluding these pass-through items, ARPU would have declined in-line with historical trends.~~

We believe that demand will continue to decline for the foreseeable future in line with recent and historical trends, as our wireless products and services are replaced with other competing technologies, such as the shift from narrowband wireless service offerings to broadband technology services.


		For the Three Months Ended June 30,			Change Due To:								For the Three Months Ended September 30,		Change Due To:
(in thousands)	(in thousands)		2022		2021		Change		ARPU		Units			(in thousands)		2022		2021		Change		ARPU		Units

Paging revenue	Paging revenue		$	18,141	$	19,135	$	(994)	$	(225)	$	(769)		Paging revenue		$	18,419	$	18,844	$	(425)	$	271	$	(696)

		For the Six Months Ended June 30,			Change Due To:								For the Nine Months Ended September 30,		Change Due To:
(in thousands)	(in thousands)		2022		2021		Change		ARPU		Units			(in thousands)		2022		2021		Change		ARPU		Units

Paging revenue	Paging revenue		$	36,454	$	38,488	$	(2,034)	$	(457)	$	(1,577)		Paging revenue		$	54,873	$	57,332	$	(2,459)	$	(250)	$	(2,209)

As demand for one-way and two-way messaging has declined, we have developed or added service offerings such as encrypted paging and Spok Mobile with a pager number to increase our revenue potential and mitigate the decline in our wireless revenue. We will continue to explore ways to innovate and provide customers with the highest value possible.

In late 2021, we began offering our newest pager, GenA. This one-way alphanumeric pager features a high resolution ePaper display, intuitive modern user interface, advanced encryption and security features, over-the-air remote programming, and an antimicrobial housing. Users can select from various font sizes, and the large GenA display also leverages proportional fonts to maximize key information on a single screen.

The GenA pager is the only product available on the market with these capabilities, and we maintain an exclusive arrangement with the product's manufacturer. Given the product differentiation of the GenA pager, its development is a key initiative providing a competitive advantage, and we expect this new technology will be popular with our customers in clinical environments and may help slow our wireless revenue attrition.

Software revenue consists of two components: operations revenue and maintenance revenue. Operations revenue consists primarily of license revenues for our healthcare communications solutions, revenue from the sale of equipment that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is generated from our ongoing support of our software solutions or related equipment, typically for a period of one year after project completion.

To a large degree, software revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition. Our software projects generally originate from fixed-bid contracts, although many involve a protracted sales cycle and may result in unforeseen complexity and deviation from original scope. The time needed to complete projects, therefore, may not align with our original expectations, which affects our backlog. As a result, software revenue may fluctuate on a short-term basis, and we generally evaluate longer-term trends when managing this business.

Software operations revenue decreased during the three and ~~six~~nine months ended ~~June~~September 30, 2022, when compared to the same periods in 2021. ~~Services~~Professional services revenue decreased primarily from having less billable resources ~~which resulted from~~as a result of our restructuring program. These changes were made in conjunction with our efforts to better align staffing levels with our backlog as well as to drive greater profitability through more efficient services delivery. The decline in professional services revenue was partially offset by an increase in license ~~revenue, given~~revenue. This was in large part due to our new strategic business plan and the resulting shift in priorities which now allows our sales team to exclusively focus on selling the Care Connect Suite of products ("CCS") combined with an improving economy and selling environment when compared to the same period in 2021.

Compared to the same periods in 2021, maintenance revenue decreased for the three and ~~six~~nine months ended ~~June~~September 30, 2022. Current trends in revenue churn rates remain relatively stable and are in line with historical trends. However, the deterioration of maintenance revenue from new license bookings has created an environment where churn is greater than the inflow of new revenue. ~~Historically, this revenue churn had been offset by the growth in our license sales.~~

While we have not seen a meaningful increase in our normal customer churn, our ability to replace this churn with new revenues will not likely replicate what we have accomplished historically nor do we expect to fully offset this with annual increases of our existing base. Given these dynamics, we believe annual maintenance revenue is likely to be ~~relatively flat or~~down slightly ~~down~~ until such time that we are able to enhance our existing software solutions, which would provide an avenue ~~for~~to reduce levels of gross churns and result in additional maintenance revenue.

•Cost of Revenue. These are expenses we incur for the delivery of products and services to our customers and consist primarily of hardware, third-party software, outside services expenses and payroll and related expenses for our professional services, logistics, customer support and maintenance staff.

•Research and Development. These expenses relate primarily to the development of new software products and the ongoing maintenance and enhancement of existing products. This classification consists primarily of employee payroll and related expenses, outside services related to the design, development, testing and enhancement of our solutions and to a lesser extent hardware equipment. Research and development expenses exclude any development costs that qualify for capitalization.

•Technology Operations. These are expenses associated with the operation of our paging networks. Expenses consist largely of site rent expenses for transmitter locations, telecommunication expenses to deliver messages over our paging networks, and payroll and related expenses for our engineering and pager repair functions. We actively pursue opportunities to consolidate transmitters and other service, rental and maintenance expenses in order to maintain an efficient network while simultaneously ensuring adequate service for our customers. We believe continued reductions in these expenses will occur for the foreseeable future as we continue to consolidate our networks, although the benefits of such network rationalization efforts and resulting costs savings will continue to decline.

•Selling and Marketing. The sales and marketing staff are involved in selling our communication solutions primarily in the United States. These expenses support our efforts to maintain gross placements of units in service, which mitigated the impact of disconnects on our wireless revenue base, and to identify business opportunities for additional or future software sales. We maintain a centralized marketing function that is focused on supporting our products and vertical sales efforts by strengthening our brand, generating sales leads and facilitating the sales process. These marketing functions are accomplished through targeted email campaigns, webinars, regional and national user conferences, monthly newsletters and participation at industry trade shows. Expenses consist largely of payroll and related expenses, commissions and other costs such as travel and advertising costs.

•General and Administrative. These are expenses associated with information technology and administrative functions, including finance and accounting, human resources and executive management. This classification consists primarily of payroll and related expenses, outside services expenses, taxes, licenses and permit expenses, and facility rent expenses.

•Depreciation, Amortization and Accretion. These are expenses that may be associated with one or more of the aforementioned functional categories. This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations, amortization of intangible assets, amortization of capitalized software development costs, and accretion of asset retirement obligations.


		For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change					For the Three Months Ended September 30,				Change				For the Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%		(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%

Payroll and related	Payroll and related	$	4,422	$	4,720	$	(298)	(6.3)	%	$	9,532	$	9,859	$	(327)	(3.3)	%	Payroll and related	$	3,817	$	5,208	$	(1,391)	(26.7)	%	$	13,349	$	15,067	$	(1,718)	(11.4)	%
Cost of sales	Cost of sales	1,462		1,633		(171)		(10.5)	%	3,019		3,018		1		—	%	Cost of sales	1,429		1,699		(270)		(15.9)	%	4,448		4,717		(269)		(5.7)	%
Recoverable taxes and fees	Recoverable taxes and fees	677		903		(226)		(25.0)	%	1,389		1,770		(381)		(21.5)	%	Recoverable taxes and fees	929		792		137		17.3	%	2,318		2,562		(244)		(9.5)	%
Stock-based compensation	Stock-based compensation	96		263		(167)		(63.5)	%	205		554		(349)		(63.0)	%	Stock-based compensation	64		220		(156)		(70.9)	%	269		774		(505)		(65.2)	%
Other	Other	323		340		(17)		(5.0)	%	639		639		—		—	%	Other	385		421		(36)		(8.6)	%	1,024		1,060		(36)		(3.4)	%
Total cost of revenue	Total cost of revenue	$	6,980	$	7,859	$	(879)	(11.2)	%	$	14,784	$	15,840	$	(1,056)	(6.7)	%	Total cost of revenue	$	6,624	$	8,340	$	(1,716)	(20.6)	%	$	21,408	$	24,180	$	(2,772)	(11.5)	%

FTE Employees	FTE Employees	148		183		(35)		(19.1)	%									FTE Employees	143		187		(44)		(23.5)	%

For the three months ended ~~June~~September 30, 2022, cost of revenue decreased compared to the same period in 2021, driven by decreases in payroll and related, ~~recoverable taxes and fees,~~ cost of sales and stock-based ~~compensation.~~compensation, offset by increase in recoverable taxes and fees.

The decrease in payroll and related and stock-based compensation is attributable to the restructuring activities and the related elimination of positions. Additionally, stock-based compensation decreased as we discontinued the cash saving measure to provide a portion of compensation for certain employees in the form of shares of the Company's common stock in lieu of cash. ~~Recoverable taxes and fees declined due to general decreases in USF fees, which are pass-through costs.~~ Cost of sales expenses decreased primarily due to reduced use of third-party professional services that we utilize to augment company resources when short-term capacity constraints exist. Recoverable taxes and fees increased as compared to the same period in 2021 due to general increases in USF fees, which are pass-through costs that fluctuate quarterly,

For the ~~six~~nine months ended ~~June~~September 30, 2022, cost of revenue also decreased compared to the same period in 2021, driven by decreases in payroll and related, cost of sales and stock-based compensation as described above. The decrease in recoverable taxes and fees ~~stock-based compensation and payroll and related, as described above.~~over the same period in 2021 was due to overall year-to-date decreases in USF fees, which are pass-through costs.


		For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change					For the Three Months Ended September 30,				Change				For the Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%		(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%

Payroll and related	Payroll and related	$	1,741	$	4,333	$	(2,592)	(59.8)	%	$	6,046	$	8,808	$	(2,762)	(31.4)	%	Payroll and related	$	1,193	$	4,291	$	(3,098)	(72.2)	%	$	7,239	$	13,099	$	(5,860)	(44.7)	%
Outside services	Outside services	735		2,060		(1,325)		(64.3)	%	2,634		4,337		(1,703)		(39.3)	%	Outside services	907		1,759		(852)		(48.4)	%	3,541		6,096		(2,555)		(41.9)	%
Capitalized software development	Capitalized software development	—		(2,698)		2,698		(100.0)	%	—		(5,618)		5,618		(100.0)	%	Capitalized software development	—		(2,621)		2,621		(100.0)	%	—		(8,239)		8,239		(100.0)	%
Stock-based compensation	Stock-based compensation	32		305		(273)		(89.5)	%	162		780		(618)		(79.2)	%	Stock-based compensation	28		435		(407)		(93.6)	%	190		1,215		(1,025)		(84.4)	%
Other	Other	116		156		(40)		(25.6)	%	279		293		(14)		(4.8)	%	Other	95		199		(104)		(52.3)	%	374		492		(118)		(24.0)	%
Total research and development	Total research and development	$	2,624	$	4,156	$	(1,532)	(36.9)	%	$	9,121	$	8,600	$	521	6.1	%	Total research and development	$	2,223	$	4,063	$	(1,840)	(45.3)	%	$	11,344	$	12,663	$	(1,319)	(10.4)	%

FTE Employees	FTE Employees	35		109		(74)		(67.9)	%									FTE Employees	36		105		(69)		(65.7)	%


		For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change					For the Three Months Ended September 30,				Change				For the Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%		(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%

Payroll and related	Payroll and related	$	2,389	$	2,323	$	66	2.8	%	$	4,898	$	4,790	$	108	2.3	%	Payroll and related	$	2,261	$	2,585	$	(324)	(12.5)	%	$	7,159	$	7,375	$	(216)	(2.9)	%
Site rent	Site rent	3,003		3,143		(140)		(4.5)	%	6,070		6,339		(269)		(4.2)	%	Site rent	2,990		3,122		(132)		(4.2)	%	9,060		9,461		(401)		(4.2)	%
Telecommunications	Telecommunications	741		825		(84)		(10.2)	%	1,512		1,662		(150)		(9.0)	%	Telecommunications	721		828		(107)		(12.9)	%	2,233		2,490		(257)		(10.3)	%
Stock-based compensation	Stock-based compensation	54		130		(76)		(58.5)	%	109		267		(158)		(59.2)	%	Stock-based compensation	55		139		(84)		(60.4)	%	164		405		(241)		(59.5)	%
Other	Other	693		601		92		15.3	%	1,304		1,168		136		11.6	%	Other	692		613		79		12.9	%	1,996		1,782		214		12.0	%
Technology Operations	Technology Operations	$	6,880	$	7,022	$	(142)	(2.0)	%	$	13,893	$	14,226	$	(333)	(2.3)	%	Technology Operations	$	6,719	$	7,287	$	(568)	(7.8)	%	$	20,612	$	21,513	$	(901)	(4.2)	%

FTE Employees	FTE Employees	78		87		(9)		(10.3)	%									FTE Employees	78		87		(9)		(10.3)	%

For the three and ~~six~~nine months ended ~~June~~September 30, 2022, technology operations expenses decreased compared to the same periods in 2021, driven primarily by a decrease in stock-based compensation as well as lower site rent and telecommunications costs, which resulted from cost savings initiatives applicable to our wireless network. ~~Payroll~~The decrease in payroll and related expenses ~~largely remained flat as savings from~~is attributable to the ~~reduction of headcount due to~~ restructuring activities and the related elimination of positions. This decrease was ~~largely~~partially offset by ~~the~~an increase in costs ~~that came~~resulting from the discontinuation of the ~~aforementioned~~ cash saving measure of compensation in the form of shares as well as reduced work schedules.

The number of active transmitters, which directly affects our site rent expenses, declined ~~5.8%~~4.1% from ~~June~~September 30, 2021, to ~~June~~September 30, 2022, as a result of our network rationalization efforts. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks. Stock-based compensation decreased as a result of discontinuing our plan to provide a portion of compensation for certain employees in the form of shares of our common stock in lieu of cash. Payroll and related expenses increased primarily due to increased payroll resulting from the discontinuation of reduced work schedules as of the third quarter of 2021.


		For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change					For the Three Months Ended September 30,				Change				For the Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%		(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%

Payroll and related	Payroll and related	$	2,382	$	3,361	$	(979)	(29.1)	%	$	5,850	$	6,726	$	(876)	(13.0)	%	Payroll and related	$	2,163	$	3,592	$	(1,429)	(39.8)	%	$	8,013	$	10,318	$	(2,305)	(22.3)	%
Commissions	Commissions	1,047		1,244		(197)		(15.8)	%	2,071		2,349		(278)		(11.8)	%	Commissions	945		924		21		2.3	%	3,016		3,273		(257)		(7.9)	%
Stock-based compensation	Stock-based compensation	93		276		(183)		(66.3)	%	172		626		(454)		(72.5)	%	Stock-based compensation	88		264		(176)		(66.7)	%	260		889		(629)		(70.8)	%
Advertising and events	Advertising and events	293		247		46		18.6	%	861		408		453		111.0	%	Advertising and events	201		527		(326)		(61.9)	%	1,062		935		127		13.6	%
Other	Other	59		56		3		5.4	%	235		214		21		9.8	%	Other	43		97		(54)		(55.7)	%	278		312		(34)		(10.9)	%
Total selling and marketing	Total selling and marketing	$	3,874	$	5,184	$	(1,310)	(25.3)	%	$	9,189	$	10,323	$	(1,134)	(11.0)	%	Total selling and marketing	$	3,440	$	5,404	$	(1,964)	(36.3)	%	$	12,629	$	15,727	$	(3,098)	(19.7)	%

FTE Employees	FTE Employees	63		109		(46)		(42.2)	%									FTE Employees	59		100		(41)		(41.0)	%

For the three ~~and six~~ months ended ~~June~~September 30, 2022, selling and marketing expenses decreased compared to the same ~~periods~~period in 2021, driven primarily by decreases in payroll and related expenses, ~~and~~ stock-based ~~compensation. These decreases were offset in the three~~compensation and ~~six months ended June 30, 2022 by an increase in~~ advertising and events.

Payroll and related expenses declined for the three ~~and six~~ months ended ~~June~~September 30, 2022, largely due to restructuring activities and the related elimination of positions, partially offset by increased payroll resulting from the discontinuation of reduced work schedules as of the third quarter of 2021.

Stock-based compensation for the three ~~and six~~ months ended ~~June~~September 30, 2022 decreased due to the discontinuation of the cash saving measure to provide a portion of compensation for certain employees in the form of shares of our common stock in lieu of cash. Additionally, there was a general decrease in employees compensated with stock-based compensation in 2022, attributable to the restructuring activities and the related elimination of positions.

The ~~increase~~decrease in advertising and events for the ~~six~~ threemonths ended ~~June~~September 30, 2022, largely reflects ~~an increase~~changes in timing of trade show participation as compared to the same period ~~last year, which was more heavily impacted by the COVID-19 pandemic.~~in 2021. Nationwide travel and in-person participation in larger marketing events has improved but ~~continued~~continues to remain below pre-pandemic levels.


		For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change					For the Three Months Ended September 30,				Change				For the Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%		(Dollars in thousands)	2022		2021		Total		%		2022		2021		Total		%

Payroll and related	Payroll and related	$	3,657	$	3,564	$	93	2.6	%	$	7,708	$	7,382	$	326	4.4	%	Payroll and related	$	3,249	$	3,911	$	(662)	(16.9)	%	$	10,957	$	11,293	$	(336)	(3.0)	%
Stock-based compensation	Stock-based compensation	686		807		(121)		(15.0)	%	1,428		1,793		(365)		(20.4)	%	Stock-based compensation	643		958		(315)		(32.9)	%	2,071		2,752		(681)		(24.7)	%
Facility rent, office and technology costs	Facility rent, office and technology costs	2,321		2,484		(163)		(6.6)	%	5,001		4,964		37		0.7	%	Facility rent, office and technology costs	2,196		2,692		(496)		(18.4)	%	7,197		7,656		(459)		(6.0)	%
Outside services	Outside services	1,770		2,219		(449)		(20.2)	%	3,670		4,044		(374)		(9.2)	%	Outside services	1,604		3,078		(1,474)		(47.9)	%	5,274		7,122		(1,848)		(25.9)	%
Taxes, licenses and permits	Taxes, licenses and permits	254		214		40		18.7	%	519		428		91		21.3	%	Taxes, licenses and permits	258		211		47		22.3	%	777		639		138		21.6	%
Bad debt	Bad debt	170		328		(158)		(48.2)	%	156		434		(278)		(64.1)	%	Bad debt	213		(29)		242		(834.5)	%	369		405		(36)		(8.9)	%
Other	Other	761		864		(103)		(11.9)	%	1,572		1,716		(144)		(8.4)	%	Other	705		843		(138)		(16.4)	%	2,277		2,558		(281)		(11.0)	%
Total general and administrative	Total general and administrative	$	9,619	$	10,480	$	(861)	(8.2)	%	$	20,054	$	20,761	$	(707)	(3.4)	%	Total general and administrative	$	8,868	$	11,664	$	(2,796)	(24.0)	%	$	28,922	$	32,425	$	(3,503)	(10.8)	%

FTE Employees	FTE Employees	77		102		(25)		(24.5)	%									FTE Employees	74		102		(28)		(27.5)	%

For the three and nine months ended ~~June~~September 30, 2022, general and administrative expenses decreased compared to the same period in 2021, driven primarily by decreases in outside services, payroll and related, facility rent, office and technology costs and stock-based ~~compensation and bad debt expenses.~~compensation.

Payroll and related expenses decreased due to savings from the reduction of headcount due to restructuring activities, offset by the increase in costs resulting from the discontinuation of the aforementioned cash saving measure of compensation in the form of shares, as well as reduced work schedules.

Stock-based compensation decreased as we discontinued the cash saving measure to provide a portion of compensation for certain employees in the form of shares of our common stock in lieu of cash, which ended as of the fourth quarter of 2021. Additionally, there was an overall decrease in the number of employees compensated with stock-based compensation in 2022, attributable to the restructuring ~~activities and related expenses.~~activities.

Payroll and related expenses largely remained flat as savings from the reduction of headcount due to restructuring activities was largely offset by the increase in costs that came from the discontinuation of the aforementioned cash saving measure of compensation in the form of shares as well as reduced work schedules.

For the six months ended June 30, 2022, general and administrative expenses also decreased compared to the same period in 2021, driven by decreases in outside services, stock-based compensation and bad debt expenses. This was partially offset by increases in payroll and related, as described above in the quarterly discussion.

For the three months ended ~~June~~September 30, 2022, and 2021, depreciation, amortization and accretion expenses were ~~$0.9~~$0.8 million and ~~$2.5~~$2.6 million, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, depreciation, amortization and accretion expenses were ~~$1.8~~$2.6 million and ~~$5.2~~$7.8 million, respectively. These expenses decreased for the three and ~~six~~nine months ended ~~June~~September 30, 2022, compared to the same periods in 2021, primarily due to ~~amortization of~~ software development costs ~~ending in~~no longer being amortized beginning with the fourth quarter of 2021 as a result of discontinuation of Spok Go. Depreciation, amortization and accretion expenses also decreased due to lower depreciation for certain computer hardware and software assets that became fully depreciated in 2021.

For the three and ~~six~~nine months ended ~~June~~September 30, 2022, severance and restructuring expenses were ~~$0.5~~$1.5 million and ~~4.9~~$6.4 million, respectively . Expenses increased for the three and ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to an increase in severance and personnel related costs and costs related to contractual terminations, resulting from the implementation of the new strategic business plan. Further details can be found in Note 5 "Restructuring" in the Notes to Condensed Consolidated Financial Statements.

(Provision for) benefit from income taxes was ~~$(0.7)~~$(0.8) million and ~~$0.8~~$0.9 million for the three months ended ~~June~~September 30, 2022, and 2021, respectively. (Provision for) benefit from income taxes was ~~$0.7~~$(0.1) million and ~~$0.2~~$1.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively. (Provision for) benefit from income taxes changed for the three and ~~six~~nine months ended ~~June~~September 30, 2022, compared to the same periods in 2021 due to the difference in the anticipated annual effective tax rate as a result of certain permanent tax differences, estimated research and development tax credits and related valuation allowance, and certain discrete items. Further details can be found in Note 12, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.

As of ~~June~~September 30, 2022, we held cash and cash equivalents ~~and short-term investments~~ of ~~$38.4~~$37.2 million. The available cash and cash equivalents consist of cash in our operating accounts and cash invested in interest-bearing funds managed by third-party financial institutions. These funds invest in U.S. Treasury securities and are therefore classified as held-to-maturity and are reported at amortized cost in our Condensed Consolidated Balance Sheets. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurance that access to our invested cash and cash equivalents will not be impacted by adverse market conditions. ~~Our short-term investments consist entirely of U.S. Treasury securities, which are classified as held-to-maturity and are measured at amortized cost on our Condensed Consolidated Balance Sheets.~~

Our primary sources of liquidity have been our cash flows generated from operations and existing cash and cash equivalents. We maintain a level of liquidity sufficient to allow us to meet our cash needs in both the short term (next 12 months) and long term (beyond 12 months). At any point in time, we maintain approximately $5.0 million to $10.0 million in our operating accounts that are with third-party financial institutions. While we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts.

We intend to use our cash on hand to provide working capital, to support operations, to invest in our business, and to return value to stockholders through cash dividends and repurchases of our common stock. We may also consider using cash to fund or complete opportunistic investments and acquisitions that we believe will provide a measure of growth or revenue stability while supporting our existing operations. As a result of our discontinuation of Spok Go, we will no longer invest heavily in its development, and, as a result, we anticipate that we will have more cash available for other uses than in prior years.

On February 16, 2022, the Board authorized a share repurchase program for up to $10 million of the Company’s common stock. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

As part of the restructuring program in connection with our new strategic business plan, we expect to record one-time pre-tax restructuring charges of approximately ~~$6.0~~$7.0 million to ~~$6.5~~$8.0 million, comprised of approximately ~~$5.5~~$5.7 million to ~~$5.8~~$6.6 million in severance and personnel related costs and approximately ~~$0.5~~$1.3 million to ~~$0.7~~$1.4 million in contractual terminations. Future cash payments related to these charges are expected to generally be within the same range. The restructuring actions associated with these charges are expected to be substantially complete in 2022. Because of these cash payments related to the restructuring program, we anticipate that our cash on hand will decrease during 2022. However, our restructuring efforts are meant to refocus our operational efforts towards cash flow generation and the return of capital to our stockholders. Should our restructuring efforts be successful, we anticipate future operating periods will return to historically positive cash flow generation.

In response to the COVID-19 pandemic, management enacted certain temporary cost mitigation measures in 2020 and 2021, as previously discussed. While we have previously discussed the impact on our revenues from the pandemic, we do not expect COVID-19 will have a material impact on our liquidity given our ability to reduce costs further, if necessary. In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce or eliminate our cash dividends to stockholders, not repurchase shares of our common stock under the share repurchase program, sell assets or seek additional financing. We can provide no assurance that reductions in planned capital expenses or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that outside financing would be available on acceptable terms.

Based on current and anticipated levels of operations, we anticipate that net cash provided by operating activities, together with the available cash on hand at ~~June~~September 30, 2022, should be adequate to meet our anticipated cash requirements for the short term (next 12 months) and long term (beyond 12 months).


		Six Months Ended June 30,				Change			Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021				(Dollars in thousands)	2022		2021

Net cash (used in) provided by operating activities	Net cash (used in) provided by operating activities	$	(5,895)	$	3,866	$	(9,761)	Net cash (used in) provided by operating activities	$	(148)	$	9,528	$	(9,676)
Net cash used in investing activities		(1,159)		(7,809)		6,650
Net cash provided by (used in) investing activities								Net cash provided by (used in) investing activities	13,260		(11,332)		24,592
Net cash used in financing activities	Net cash used in financing activities	(13,888)		(6,676)		(7,212)		Net cash used in financing activities	(20,058)		(9,318)		(10,740)

As discussed above, we are dependent on cash flows from operating activities to meet our cash requirements. Cash from operations varies depending on changes in various working capital items, including deferred revenues, accounts payable, accounts receivable, prepaid expenses and various accrued expenses.

For the ~~six~~nine months ended ~~June~~September 30, 2022, net cash used byin operating activities was ~~$5.9~~$0.1 million primarily due ~~primarily~~ to the net loss of ~~$5.3~~$2.4 million, changes in accounts payable, accrued liabilities and other of ~~$3.6~~$3.1 million, accounts receivable of ~~$0.6~~$1.3 million, ~~deferred revenue of $0.2 million~~ and in prepaid expenses and other assets of ~~$0.4 million, and a deferred income tax benefit of $0.5~~$1.0 million. This was partially offset by changes in stock-based compensation of ~~$2.1~~$3.0 million, depreciation, amortization and accretion of ~~$1.8~~$2.6 million, and provision for credit losses, service credits and other of ~~$0.9~~$1.2 million.

For the ~~six~~nine months ended ~~June~~September 30, 2021, net cash provided by operating activities was ~~$3.9~~$9.5 million due primarily to non-cash items such as depreciation, amortization and accretion of ~~$5.2~~$7.8 million, stock-based compensation of ~~$4.0~~$6.0 million, changes in accounts receivable of ~~$1.8~~$2.2 million, change in prepaid expenses and other assets of ~~$1.0~~$0.2 million and changes in lease liability ~~$0.6~~$0.8 million ~~and other non-cash items of $0.4 million.~~. This was partially offset by a net loss of ~~$3.0~~$5.5 million, ~~a change in accounts payable, accrued liabilities and other~~deferred income tax benefit of ~~$3.5~~$0.9 million and deferred revenue of ~~$2.5~~$2.1 million.

For the ~~six~~nine months ended ~~June~~September 30, 2022, ~~and 2021,~~ net cash ~~used in~~provided by investing activities was ~~$1.2~~$13.3 million and ~~$7.8 million.~~cash used for investing activities was $11.3 million for the same period in 2021. Our 2021 investing activities reflected the capitalization of software development costs, however with the discontinuation of Spok Go, we did not incur such costs in 2022. Net cash used in investing activities also reflects purchases of property and equipment, and the purchase and maturity of short-term investments in both periods.

For the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, net cash used in financing activities was ~~$13.9~~$20.1 million and ~~$6.7~~$9.3 million, respectively, primarily due ~~primarily~~ to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.

On ~~July 27,~~October 26, 2022, our Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock with a record date of ~~August 17,~~November 16, 2022, and a payment date of ~~September~~December 9, 2022. This cash dividend of approximately $6.2 million, applicable to our common stock outstanding, will be paid from available cash on hand. We expect to continue paying dividends of $0.3125 per share of common stock ~~each quarter~~ for the ~~remainder~~fourth quarter of 2022, subject to declaration by the Board of Directors.

Purchase obligations are defined as agreements to purchase goods or services that are enforceable, legally binding, non-cancelable, have a remaining term in excess of one year and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable pricing provisions; and the approximate timing of transactions. The amounts of such obligations are based on our contractual commitments, however, it is possible that we may be able to negotiate lower payments if we choose to exit these contracts before their expiration date.

Our contractual payment obligations for operating leases apply to leases for office space and transmitter locations. Substantially all of these leases have lease terms ranging from one month to five years. We continue to review our office and transmitter locations and intend to replace, reduce or consolidate leases where possible. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks. In March 2021, we relocated our corporate headquarters to office space located in Alexandria, Virginia, consisting of approximately 26,000 square feet of space under a lease that will expire on September 30, 2026. Over the life of this lease, cash payments are expected to total approximately $4.9 million.

Payments Due by Period
(Dollars in thousands) Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years
Operating lease obligations $ 17,278 3,298 $ 8,060 $ 3,595 $ 2,325
Unconditional purchase obligations 6,811 3,585 3,198 28 —
Total contractual obligations $ 24,089 $ 6,883 $ 11,258 $ 3,623 $ 2,325

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that ~~could arise~~may have arisen if we had engaged in such relationships.

In March 2021, we relocated our corporate headquarters to office space located in Alexandria, Virginia, consisting of approximately 26,000 square feet of space under a lease that will expire on September 30, 2026. Over the life of this lease, cash payments are expected to total approximately $4.9 million.

The following table provides the Company's significant commitments and ~~transmitter locations. Substantially all~~contractual obligations as of these leases have lease terms ranging from one month to five years. We continue to review our office and transmitter locations and intend to replace, reduce or consolidate leases where possible. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks.September 30, 2022:

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.


	Payments Due by Period
(Dollars in thousands)	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years

Operating lease obligations	$	16,530	$	1,681	$	8,636	$	3,821	$	2,392
Unconditional purchase obligations	6,148		3,513		2,600		35		—
Total contractual obligations	$	22,678	$	5,194	$	11,236	$	3,856	$	2,392

The preceding discussion and analysis of financial condition and operations is based on our Condensed Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of our Condensed Consolidated Financial Statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets and intangible assets subject to amortization and goodwill, accounts receivable, revenue recognition, asset retirement obligations, and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our management carried out an evaluation, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the participation of our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures, as of the end of our last fiscal quarter. Disclosure controls and procedures are defined under Rule 13a-15(e) under the Exchange Act as controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, 2022.

On July 26, 2022, the Company held its 2022 Annual Meeting of Stockholders (the “Annual Meeting”). There were 19,693,657 shares of common stock eligible to vote, of which 16,173,099 shares were represented in person (virtually) or by proxy at the Annual Meeting. The purpose of the Annual Meeting was to elect six directors, to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022, and to approve, on an advisory basis, the compensation of the Company’s named executive officers (“NEOs”).

As reported in the tables below, six directors were elected to hold office until the next annual meeting and until their respective successors have been elected or appointed, Grant Thornton LLP was ratified as the Company's independent registered public accounting firm for the year ending December 31, 2022, and the compensation of the Company's NEOs was approved, on a non-binding advisory basis.

Vote For Vote Against Abstentions Broker Non-Votes
Election of Directors
Bobbie Byrne 9,885,219 2,722,023 13,949 3,551,908
Christine M. Cournoyer 9,722,969 2,884,274 13,948 3,551,908
Randy Hyun 9,878,515 2,728,562 14,114 3,551,908
Vincent D. Kelly 7,482,934 4,408,718 729,539 3,551,908
Brett Shockley 9,723,331 2,882,005 15,855 3,551,908
Todd Stein 7,552,491 4,340,717 727,983 3,551,908
Ratification of the Appointment of Grant Thornton LLP 15,975,900 175,962 21,237 —
Advisory Vote on the Approval of NEO Compensation 8,717,682 3,877,676 25,833 3,551,908

Incorporated by Reference

Exhibit Number

Exhibit Description

Form

File No.

Exhibit/Appendix

Filing Date

Filed/Furnished Herewith

~~10.1†~~

~~First Amendment to Rights Agreement, dated as of June 15, 2022, between Spok Holdings, Inc. and Computershare Trust Company, N.A~~

~~8-K~~

~~001-32358~~

~~4.1~~

~~06/15/2022~~

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

Furnished

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

Furnished

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*

Filed

101.SCH

Inline XBRL Taxonomy Extension Schema*

Filed

101.CAL

Inline XBRL Taxonomy Extension Calculation*

Filed

101.DEF

Inline XBRL Taxonomy Extension Definition*

Filed

101.LAB

Inline XBRL Taxonomy Extension Labels*

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation*

Filed

104

Cover Page Interactive Data File (the cover page XBRL tags
are embedded within the Inline XBRL document and included Exhibit 101)

Filed


Delaware						16-1694797
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


5911 Kingstowne Village Pkwy, 6th Floor
Alexandria,	Virginia	22315
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	SPOK	NASDAQ


			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of ~~June~~ Septem ber 30, 2022 (Unaudited) and December 31, 2021	2
		Condensed Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (Unaudited)	4
		Condensed Consolidated Statements of Stockholders' Equity for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (Unaudited)	7
		Unaudited Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
	Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	34
	Item 1A.	Risk Factors	34
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
	Item 5.	~~Other Information~~	35
	~~Item~~ 6.	Exhibits	3635
Signatures


(Dollars in thousands)	December 31, 2021		Additions		Revenue Recognized		June 30, 2022

Deferred Revenue	$	26,406	$	(30,206)	$	30,037	$	26,237


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


SPOK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)


	June 30,
(Dollars in thousands)	2022	2021

Weighted-average remaining lease term - operating leases (in years)	4.80	4.97
Weighted-average discount rate - operating leases	4.37%	4.60%


	September 30,
(Dollars in thousands)	2022	2021

Weighted average remaining lease term - operating leases (in years)	5.00	4.82
Weighted average discount rate - operating leases	4.36%	4.53%


			Activity

Total equity securities available at January 1, 2022			990,129
RSU, DSU, and restricted stock awarded to eligible employees, net of forfeitures			~~(319,418)~~(299,447)

Total equity securities available at ~~June~~September 30, 2022			~~670,711~~690,682


			Activity

Total ESPP equity securities available at January 1, 2022			133,184
ESPP common stock purchased by eligible employees			—
Total ESPP securities available at ~~June~~September 30, 2022			133,184


	Vote For	Vote Against	Abstentions	Broker Non-Votes

Election of Directors
Bobbie Byrne	9,885,219	2,722,023	13,949	3,551,908
Christine M. Cournoyer	9,722,969	2,884,274	13,948	3,551,908
Randy Hyun	9,878,515	2,728,562	14,114	3,551,908
Vincent D. Kelly	7,482,934	4,408,718	729,539	3,551,908
Brett Shockley	9,723,331	2,882,005	15,855	3,551,908
Todd Stein	7,552,491	4,340,717	727,983	3,551,908

Ratification of the Appointment of Grant Thornton LLP	15,975,900	175,962	21,237	—

Advisory Vote on the Approval of NEO Compensation	8,717,682	3,877,676	25,833	3,551,908


*			The financial information contained in these XBRL documents is unaudited.
†			~~Denotes a management contract or compensatory plan or arrangement.~~


FORM			10-Q