UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

FORM 10-Q

____________________________________

(Mark one)

☒xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2020~~ 2021

☐¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to __________

Commission file number: 001-36827

____________________________________

Anterix Inc.

(Exact name of registrant as specified in its charter)

____________________________________



Delaware	33-0745043
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

3 Garret Mountain Plaza Suite 401 Woodland Park, New Jersey	07424
(Address of principal executive offices)	(Zip Code)

(973) 771-0300

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

____________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	ATEX	The ~~NASDAQ~~Nasdaq Stock Market LLC (Nasdaq Capital Market)

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. ☒x 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	☒ x	Smaller reporting company	☒x
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. ☐¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐¨ Yes ☒x No

At ~~November 11, 2020, 17,494,639~~October 28, 2021, 18,366,428 shares of the registrant’s common stock were outstanding.

Table of Contents

Anterix Inc.

FORM 10-Q

For the quarterly period ended September30, ~~2020~~2021

TABLE OF CONTENTS




PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	4
	Consolidated Balance Sheets as of September 30, ~~2020~~2021 (Unaudited) and March 31, ~~2019~~2021 (Audited)	4
	Unaudited Consolidated Statements of Operations for the three and six months ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020	5
	Unaudited Consolidated Statement of Stockholders’ Equity for the three and six months ended September 30, 2021	6
	Unaudited Consolidated Statement of Stockholders’ Equity for the three and six months ended September 30, 2020	6 7
	~~Unaudited Consolidated Statement of Stockholders’ Equity for the three and six months ended September 30, 2019~~	7
	Unaudited Consolidated Statements of Cash Flows for the six months ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020	8
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION		33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
SIGNATURES		35

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Form 10-Q”) includes statements of our expectations, intentions, plans, and beliefs that constitute “forward-looking statements.” These forward-looking statements are principally, but not solely, contained in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements include, but are not limited to, statements about our strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements contained herein that are not historical facts. Our forward-looking statements are generally, but not always, accompanied by words such as, but not limited to, “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend” “may,” “might,” “ongoing,” “plan,” “possible,” “project,” “predict,” ~~“believe,~~“potential,” ~~“expect,” “anticipate,” “potential,~~“seek,” “should,” “strategy,” “target,” “will,” ~~“may,” “plan,” “goal,” “can,” “could,” “continuing,” “ongoing,” “intend”~~“would” and similar expressions or phrases, or the negative of those expressions or phrases, or other words that convey the uncertainty of future events or ~~outcomes.~~outcomes, which are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections and related assumptions, about future events and financial ~~market and business~~ trends. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. Many of these risks, uncertainties and other factors are beyond our ability to control, influence, or predict. The most significant of these risks, uncertainties and other factors are described in “Item 1A—Risk Factors” in Part II of this Form 10-Q and in our Annual Report on Form 10-K for the year ended March 31, ~~2020~~2021 filed with the SEC on ~~May 28, 2020.~~June 15, 2021. As a result, investors are urged not to place undue reliance on any forward-looking statements. These forward-looking statements reflect our views and assumptions only as of the date such forward-looking statements were made. Except to the limited extent required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1: ~~Consolidated~~Consolidated Financial Statements

Anterix Inc.

Consolidated Balance Sheets

(dollars in thousands, except share data)


		September 30, 2020		March 31, 2020			September 30, 2021		March 31, 2021
		(Unaudited)			(Audited)		(Unaudited)			(Audited)
ASSETS	ASSETS					ASSETS
Current Assets
Cash and cash equivalents		$	116,210	$	137,453		$	100,866	$	117,538
Accounts receivable, net of allowance for doubtful accounts of $8 and $12, respectively			59		61
Accounts receivable								—		4
Prepaid expenses and other current assets			2,358		4,638			5,514		3,508
Total current assets			118,627		142,152			106,380		121,050
Property and equipment, net			4,755		7,000			3,049		3,574
Right of use assets, net			5,665		6,500			4,522		5,100
Intangible assets			117,341		111,526			130,886		122,117
Equity method investment			23		39
Other assets			210		180			1,657		1,214
Total assets		$	246,621	$	267,397		$	246,494	$	253,055
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses		$	4,016	$	5,649		$	4,685	$	6,256
Due to related parties			114		110			120		152
Restructuring reserve			89		636
Operating lease liabilities			1,531		1,695			1,432		1,470
Deferred revenue			729		733			737		737
Total current liabilities			6,479		8,823			6,974		8,615
Noncurrent liabilities
Operating lease liabilities			6,254		7,051			4,903		5,601
Contingent liability								20,000		20,000
Deferred revenue			2,368		2,733			7,319		2,246
Deferred income tax			3,240		3,084			3,506		3,209
Other liabilities			982		640			743		876
Total liabilities			19,323		22,331			43,445		40,547
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.0001 par value per share, 10,000,000 shares authorized and no shares outstanding at September 30, 2020 and March 31, 2020			—		—
Common stock, $0.0001 par value per share, 100,000,000 shares authorized and 17,487,201 shares issued and outstanding at September 30, 2020 and 17,184,712 shares issued and outstanding at March 31, 2020			2		2
Preferred stock, $0.0001 par value per share, 10,000,000 shares authorized and 0 shares outstanding at September 30, 2021 and March 31, 2021								—		—
Common stock, $0.0001 par value per share, 100,000,000 shares authorized and 18,333,721 shares issued and outstanding at September 30, 2021 and 17,669,905 shares issued and outstanding at March 31, 2021								2		2
Additional paid-in capital			464,620		450,978			487,366		472,854
Accumulated deficit			(237,324)		(205,914)			(284,319)		(260,348)
Total stockholders' equity			227,298		245,066			203,049		212,508
Total liabilities and stockholders' equity		$	246,621	$	267,397		$	246,494	$	253,055

See accompanying notes to consolidated financial statements.

Table of Contents

Anterix Inc.

Consolidated Statements of Operations

(dollars in thousands, except share data)

(Unaudited)



	Three months ended September 30,				Six months ended September 30,					Three months ended September 30,				Six months ended September 30,
	2020		2019		2020		2019			2021		2020		2021		2020
Operating revenues
Service revenue	$	66	$	241	$	140	$	512		$	—	$	66	$	—	$	140
Spectrum revenue		182		182		364		364			182		182		364		364
Total operating revenues		248		423		504		876			182		248		364		504
Operating expenses
Direct cost of revenue (exclusive of depreciation and amortization)		515		699		1,063		1,617			—		515		—		1,063
General and administrative		5,582		4,557		11,320		9,405			9,825		13,955		19,555		21,499
Sales and support		631		759		1,292		1,973			993		693		2,048		1,394
Product development		805		555		1,497		1,236			930		988		1,933		1,789
Depreciation and amortization		1,190		636		2,398		1,277			257		1,190		535		2,398
Stock compensation expense		8,618		1,412		10,573		2,989
Restructuring costs		8		50		21		160			—		8		—		21
Impairment of long-lived assets		—		—		29		—			112		—		127		29
Total operating expenses		17,349		8,668		28,193		18,657			12,117		17,349		24,198		28,193
(Gain)/loss from disposal of intangible assets, net		(829)		—		3,849		—			—		(829)		—		3,849
(Gain)/loss from disposal of long-lived assets, net		(5)		61		(6)		62			16		(5)		19		(6)
Loss from operations		(16,267)		(8,306)		(31,532)		(17,843)			(11,951)		(16,267)		(23,853)		(31,532)
Interest income		31		634		72		988			20		31		46		72
Other income		113		113		222		214			62		113		134		222
(Loss)/income on equity method investment		(12)		15		(16)		15			—		(12)		—		(16)
Loss before income taxes		(16,135)		(7,544)		(31,254)		(16,626)			(11,869)		(16,135)		(23,673)		(31,254)
Income tax expense		145		171		156		463			152		145		298		156
Net loss	$	(16,280)	$	(7,715)	$	(31,410)	$	(17,089)		$	(12,021)	$	(16,280)	$	(23,971)	$	(31,410)
Net loss per common share basic and diluted	$	(0.94)	$	(0.46)	$	(1.82)	$	(1.09)		$	(0.67)	$	(0.94)	$	(1.34)	$	(1.82)
Weighted-average common shares used to compute basic and diluted net loss per share		17,350,386		16,634,154		17,279,349		15,702,673
Weighted-average common shares used to compute basic ‎ and diluted net loss per share											17,876,440		17,350,386		17,951,885		17,279,349


See accompanying notes to consolidated financial statements.									See accompanying notes to consolidated financial statements.

Table of Contents

Anterix Inc.

Consolidated Statement of Stockholders’ Equity

(dollars and shares in thousands)

(Unaudited)



	Number of Shares

	Common ‎stock	Common ‎stock		Additional ‎paid-in ‎capital		Accumulated ‎deficit		Total
Balance at June 30, 2021	18,038	$	2	$	481,521	$	(272,298)	$	209,225
Equity based compensation*	112		—		3,221		—		3,221
Equity payment of prior year accrued employee related expenses	—		—		—		—		—
Stock option exercises	206		—		3,932		—		3,932
Shares withheld for taxes	(22)		—		(1,308)		—		(1,308)
Net loss	—		—		—		(12,021)		(12,021)
Balance at September 30, 2021	18,334	$	2	$	487,366	$	(284,319)	$	203,049



Balance at March 31, 2021	17,670	$	2	$	472,854	$	(260,348)	$	212,508
Equity based compensation*	185		—		6,516		—		6,516
Equity payment of prior year accrued employee related expenses	—		—		—		—		—
Stock option exercises	501		—		9,304		—		9,304
Shares withheld for taxes	(22)		—		(1,308)		—		(1,308)
Net loss	—		—		—		(23,971)		(23,971)
Balance at September 30, 2021	18,334	$	2	$	487,366	$	(284,319)	$	203,049

* includes restricted shares issued.

See accompanying notes to consolidated financial statements.

‎

Table of Contents

Anterix Inc.

Consolidated Statement of Stockholders’ Equity

(dollars and shares in thousands)

(Unaudited)



	Number of Shares

	Common ‎stock	Common ‎stock		Additional ‎paid-in ‎capital		Accumulated ‎deficit		Total
Balance at June 30, 2020	17,289	$	2	$	455,489	$	(221,044)	$	234,447
Equity based compensation*	168		—		8,618		—		8,618
Equity payment of prior year accrued employee related expenses	4		—		—		—		—
Stock option exercises	26		—		513		—		513
Shares withheld for taxes	—		—		—		—		—
Net loss	—		—		—		(16,280)		(16,280)
Balance at September 30, 2020	17,487	$	2	$	464,620	$	(237,324)	$	227,298



Balance at March 31, 2020	17,185	$	2	$	450,978	$	(205,914)	$	245,066
Equity based compensation*	206		—		10,573		—		10,573
Equity payment of prior year accrued employee related expenses	24		—		1,537		—		1,537
Stock option exercises	72		—		1,532		—		1,532
Shares withheld for taxes	—		—		—		—		—
Net loss	—		—		—		(31,410)		(31,410)
Balance at September 30, 2020	17,487	$	2	$	464,620	$	(237,324)	$	227,298


* includes restricted shares issued.

See accompanying notes to consolidated financial statements.

‎

Table of Contents

Anterix Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)


	Six months ended September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(23,971)	$	(31,410)
Adjustments to reconcile net loss to net cash used ‎ by operating activities
Depreciation and amortization		535		2,398
Non-cash compensation expense attributable to stock awards		6,516		10,573
Deferred income taxes		298		156
Net loss from disposal of intangible assets		—		3,849
(Gain)/loss on disposal of long-lived assets, net		19		(6)
Impairment of long-lived assets		127		29
Loss/(income) on equity method investment		—		16
Changes in operating assets and liabilities
Accounts receivable		4		2
Prepaid expenses and other assets		701		(163)
Right of use assets		578		841
Accounts payable and accrued expenses		(1,572)		505
Due to related parties		(32)		4
Restructuring reserve		—		(547)
Operating lease liabilities		(735)		(961)
Deferred revenue		5,073		(369)
Other liabilities		(133)		342
Net cash used by operating activities		(12,592)		(14,741)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of intangible assets, including refundable deposits		(11,866)		(7,829)
Purchases of equipment		(209)		(205)
Net cash used by investing activities		(12,075)		(8,034)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock option exercises		9,304		1,532
Payments of withholding tax on net issuance of restricted stock		(1,308)		—
Net cash provided by financing activities		7,996		1,532
Net change in cash and cash equivalents		(16,671)		(21,243)
CASH AND CASH EQUIVALENTS
Beginning of the period		117,538		137,453
End of the period	$	100,866	$	116,210
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period:
Taxes paid	$	7	$	33
Non-cash investing activity:
Network equipment provided in exchange for wireless licenses	$	53	$	23
Non-cash financing activities:
Equity payment of prior year accrued employee related expenses	$	—	$	1,537

See accompanying notes to consolidated financial statements.

Table of Contents

Anterix Inc.

~~Consolidated Statement of Stockholders’ Equity~~

~~(dollars in thousands, except share data)~~

~~(Unaudited)~~

Number of Shares

Common
stock

Common
stock

Additional
paid-in
capital

Accumulated
deficit

Total
Balance at June 30, 2020

17,289,027

$
2

$
455,489

$
(221,044)

$
234,447
Equity based compensation*

167,975

—

8,618

—

8,618
Equity payment of prior year accrued employee related expenses

4,199

—

—

—

—
Stock option exercises

26,000

—

513

—

513
Shares withheld for taxes

—

—

—

—

—
Net loss

—

—

—

(16,280)

(16,280)
Balance at September 30, 2020

17,487,201

$
2

$
464,620

$
(237,324)

$
227,298

Balance at March 31, 2020

17,184,712

$
2

$
450,978

$
(205,914)

$
245,066
Equity based compensation*

206,440

—

10,573

—

10,573
Equity payment of prior year accrued employee related expenses

23,932

—

1,537

—

1,537
Stock option exercises

72,117

—

1,532

—

1,532
Shares withheld for taxes

—

—

—

—

—
Net loss

—

—

—

(31,410)

(31,410)
Balance at September 30, 2020

17,487,201

$
2

$
464,620

$
(237,324)

$
227,298

* includes restricted shares

~~See accompanying notes to consolidated financial statements.~~

~~Table of Contents~~

~~Anterix Inc.~~

~~Consolidated Statement~~ ~~of Stockholders’ Equity~~

~~(dollars in thousands, except share data)~~

~~(Unaudited)~~

Number of Shares

Common
stock

Common
stock

Additional
paid-in
capital

Accumulated
deficit

Total
Balance at June 30, 2019

14,840,113

$
1

$
352,193

$
(177,650)

$
174,544
Issuance of stock during July 2019 follow-on offering, net of closing costs

2,222,223

1

94,243

—

94,244
Equity based compensation*

55,844

—

1,412

—

1,412
Stock option exercises

15,000

—

301

—

301
Shares withheld for taxes

(7,242)

—

(304)

—

(304)
Net loss

—

—

—

(7,715)

(7,715)
Balance at September 30, 2019

17,125,938

$
2

$
447,845

$
(185,365)

$
262,482

Balance at April 1, 2019

14,739,145

$
1

$
349,039

$
(168,276)

$
180,764
Issuance of stock during July 2019 follow-on offering, net of closing costs

2,222,223

1

94,243

—

94,244
Equity based compensation*

80,697

—

2,989

—

2,989
Stock option exercises

94,323

—

2,020

—

2,020
Shares withheld for taxes

(10,450)

—

(446)

—

(446)
Net loss

—

—

—

(17,089)

(17,089)
Balance at September 30, 2019

17,125,938

$
2

$
447,845

$
(185,365)

$
262,482

* includes restricted shares

~~See accompanying notes to consolidated financial statements.~~

~~Table of Contents~~

~~Anterix Inc.~~

~~Consolidated Statements of Cash Flows~~

~~(dollars in thousands)~~

~~(Unaudited)~~

Six months ended September 30,

2020

2019
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$
(31,410)

$
(17,089)
Adjustments to reconcile net loss to net cash used
by operating activities

Depreciation and amortization

2,398

1,277
Non-cash compensation expense attributable to stock awards

10,573

2,989
Deferred income taxes

156

463
Bad debt expense

—

49
Net loss from disposal of intangible assets

3,849

—
(Gain)/loss on disposal of long-lived assets, net

(6)

74
Impairment of long-lived assets

29

—
Loss/(income) on equity method investment

16

(15)
Changes in operating assets and liabilities

Accounts receivable

2

381
Prepaid expenses and other assets

(163)

546
Right of use assets

841

698
Accounts payable and accrued expenses

505

(1,247)
Due to related parties

4

(69)
Restructuring reserve

(547)

(1,537)
Operating lease liabilities

(961)

(661)
Deferred revenue

(369)

(397)
Other liabilities

342

(5)
Net cash used by operating activities

(14,741)

(14,543)
CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of intangible assets, including refundable deposits

(7,829)

(202)
Purchases of equipment

(205)

(301)
Net cash used by investing activities

(8,034)

(503)
CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from July 2019 follow-on offering

—

94,244
Proceeds from stock option exercises

1,532

2,020
Payments of withholding tax on net issuance of restricted stock

—

(446)
Net cash provided by financing activities

1,532

95,818
Net change in cash and cash equivalents

(21,243)

80,772
CASH AND CASH EQUIVALENTS

Beginning of the period

137,453

76,722
End of the period

$
116,210

$
157,494
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period:

Taxes paid

$
33

$
21
Non-cash investing activity:

Contribution of capital equipment to TeamConnect LLC

$
—

$
14
Network equipment provided in exchange for wireless licenses

$
23

$
—
Non-cash financing activities:

Equity payment of prior year accrued employee related expenses

$
1,537

$
—

~~See accompanying notes to consolidated financial statements.~~

~~Table of Contents~~

~~Anterix Inc.~~

Notes to Consolidated Financial Statements

(Unaudited)

1. Nature of Operations

Anterix Inc. (the “Company”) is a wireless communications company focused on commercializing its spectrum assets to enable its targeted utility and critical infrastructure customers to deploy private broadband networks, technologies and solutions. The Company is the largest holder of licensed spectrum in the 900 MHz band (896-901/935-940 MHz) with nationwide coverage throughout the contiguous United States, Hawaii, Alaska and Puerto Rico. On May 13, 2020, the Federal Communications Commission (“FCC”) approved athe Report and Order to modernize and realign the 900 MHz band to increase its usability and capacity by allowing it to be utilized for the deployment of broadband networks, technologies and solutions (the “Report and Order”). The Report and Order was published in the Federal Register on July 16, 2020 and became effective on August 17, 2020. The Company is now engaged in qualifying for and securing broadband licenses from the ~~FCC, with a focus on pursuing licenses in those counties in which it believes it has near-term commercial opportunities.~~FCC. At the same time, the ~~Company’s sales and marketing organization~~Company is pursuing opportunities to lease the spectrum for which broadband licenses ~~it secures~~are secured to its targeted utility and critical infrastructure customers.

The Company was originally incorporated in California in 1997 and reincorporated in Delaware in 2014. In November 2015, the Company changed its name from Pacific DataVision, Inc. to pdvWireless, Inc. OnIn August 6, 2019, the Company changed its name from pdvWireless, Inc. to Anterix Inc. The Company maintains offices in Woodland Park, New Jersey and McLean, Virginia.

~~Historical Business Operations~~

~~Historically,~~In December 2020, the Company ~~generated~~entered into its first long-term lease agreement of 900 MHz spectrum authorized for broadband use (“900 MHz Broadband Spectrum”), with Ameren Corporation (“Ameren”), (“Ameren Agreements”). The Ameren Agreements will enable Ameren to deploy a private LTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people. Each Ameren Agreement is for a term of up to 40 years, consisting of an initial term of 30 years, with a 10-year renewal option for an additional payment. The scheduled prepayments for the 30-year initial terms of the Ameren Agreements total $47.7 million, of which $0.3 million was received by the Company in February 2021, $5.4 million in September 2021 and $17.2 million in October 2021. The prepayments received to date encompass the initial upfront payment(s) due upon signing of the Ameren Agreements and payments for delivery of the relevant 1.4 x 1.4 cleared spectrum in several metropolitan counties throughout Missouri and Illinois, in accordance with the terms of the Ameren Agreements. The remaining prepayments for the 30-year initial term are due by mid-2026, per the terms of the Ameren Agreements and as the Company delivers the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation in Ameren’s service territory. In August 2021, the FCC granted the first 900 MHz broadband licenses to the Company for several counties in Ameren’s service territory, for which the Ameren Agreements were also subsequently approved by the FCC. The Company expects to recognize revenue ~~principally~~ from the Ameren Agreements commencing in the second half of fiscal year 2022. Revenue will be recognized as cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered based on straight-line amortization over the initial 30-year terms of the Ameren Agreements. The Company’s board of directors (the “Board”) approved the Ameren Agreements on April 23, 2021, and Ameren’s board of directors approved the Ameren Agreements on May 6, 2021.

In February 2021, the Company entered into an agreement with SDG&E (the “SDG&E Agreement”), to provide 900 MHz Broadband Spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County for a total payment of $50.0 million. The SDG&E Agreement will support SDG&E’s deployment of a private LTE network for its California service territory, with a population of approximately 3.6 million people. As part of the SDG&E Agreement, the Company and SDG&E are collaborating to accelerate the utility industry momentum for private networks. The SDG&E Agreement includes the assignment of 6 MHz of 900 MHz Broadband Spectrum, 936.5 – 939.5 MHz paired with 897.5 – 900.5 MHz, within SDG&E’s service territory following the FCC’s issuance of the broadband licenses to the Company. Delivery of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses by county is expected to commence in fiscal year 2023 and is scheduled for completion before the end of fiscal year 2024. The total payment of $50.0 million is comprised of an initial payment of $20.0 million received in February 2021 and the remaining $30.0 million payment, which is due through fiscal year 2024 as the Company delivers the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses to SDG&E. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation in the SDG&E’s California service territory. The SDG&E Agreement is subject to customary provisions regarding remedies, including reduced payment amounts and/or refund of amounts paid, and termination rights, if a party fails to perform its contractual obligations. Both SDG&E and Anterix obtained all necessary internal approvals prior to executing the SDG&E Agreement. A gain or loss will be recognized in each county once the cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered to SDG&E.

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In September 2021, the Company entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy Services, Inc. (“Evergy”), (“Evergy Agreement”). The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments. Prepayment in full of the $30.2 million for the 20-year initial term, which was due and payable within thirty (30) days after execution of the Evergy Agreement, was received by the Company in October 2021. The Evergy Agreement is subject to customary provisions regarding remedies for non-delivery, including refund of amounts paid and termination rights, if Anterix fails to perform its contractual obligations, including failure to deliver the relevant cleared 900 MHz Broadband Spectrum, in accordance with the terms of the Evergy Agreement. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation covered by the Evergy Agreement. Evergy and Anterix obtained all necessary internal approvals prior to executing the Evergy Agreement. The Company expects to recognize revenue from the Evergy Agreement commencing in the second half of fiscal year 2022. Revenue will be recognized as the relevant 900 MHz Broadband Spectrum is delivered based on straight-line amortization over the initial 20-year term of the Evergy Agreement.

2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The unaudited consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

Because certain information and footnote disclosures have been condensed or omitted, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, as filed on June 15, 2021 with the SEC. In the Company’s opinion all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included. The Company believes that the disclosures made in the unaudited consolidated interim financial statements are adequate to make the information not misleading. The results of operations for the interim periods presented are not necessarily indicative of the results for the year. The Company is also required to make certain estimates with regard to the valuation of awards and forfeiture rates for its share-based award programs. New estimates in the period relate to determining the Company’s estimated incremental borrowing rate in recognizing right of use assets and operating lease liabilities. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the applicable period. Accordingly, actual results could materially differ from those estimates.

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, including PDV Spectrum Holding Company, LLC formed in April 2014. All significant intercompany accounts and transactions have been eliminated in consolidation.

Correction of Immaterial Errors

In connection with preparing its financial statements for the year ended March 31, 2021, the Company determined that it incorrectly presented stock-based compensation and loss on disposal of long-lived assets, net in its Consolidated Statement of Operations for the three and six months ended September 30, 2020.

The Company previously reported stock compensation expense as a separate line item in the Consolidated Statement of Operations. Stock compensation expense should have been included in the same income statement line or lines as the cash compensation paid to the individuals receiving the stock-based awards such as general and administrative costs, product development and sales and support. For the three months ended September 30, 2020, the separate line item of $8.6 million in stock compensation expense has been changed and split out to report as $8.4 million in general and administrative, $0.2 million in product development, and $62,000 in sales and support in the Consolidated Statement of Operations. For the six months ended September 30, 2020, the separate line item of $10.6 million in stock compensation expense has been changed and split out to report as $10.2 million in general and administrative, $0.3 million in product development, and $0.1 million in sales and support in the Consolidated Statement of Operations.

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The following table is a comparison of the reported results of operations for the three and six months ended September 30, 2020 as a result of the correction of immaterial errors (in thousands):



	For the three months ended September 30, 2020
	As Originally Reported		Impact of Prior Period Errors		As Revised
Consolidated Statement of Operations
General and administrative		5,582	$	8,373		13,955
Product development		805		183		988
Sales and support		631		62		693
Stock compensation expense		8,618		(8,618)		—

	For the six months ended September 30, 2020

	As Originally Reported		Impact of Prior Period Errors		As Revised

General and administrative	$	11,320	$	10,179	$	21,499
Product development		1,497		292		1,789
Sales and support		1,292		102		1,394
Stock compensation expense		10,573		(10,573)		—

Intangible Assets

Intangible assets are wireless licenses that are used to provide the Company with the exclusive right to utilize designated radio frequency spectrum to provide wireless communication services. While licenses are issued for only a fixed time, generally ten to fifteen years, such licenses are subject to renewal by the FCC. License renewals have occurred routinely and at nominal cost in the past. There are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the Company’s wireless licenses. As a result, the Company has determined that the wireless licenses should be treated as an indefinite-lived intangible asset. The Company will evaluate the useful life determination for its wireless licenses each year to determine whether events and circumstances continue to support their treatment as an indefinite useful life asset.

Historically, wireless licenses were tested for impairment on an aggregate basis, consistent with the Company’s dispatch business at a national level. Effective in the year ended March 31, 2021, (“Fiscal 2021”), the Company determined the unit of accounting for impairment testing purposes should be based on geographical markets and accordingly, tested the wireless licenses for impairment based on these individual markets. The change in the unit of accounting was due to the Company’s expected use and marketability of its wireless licenses to support broadband operations at an individual market level as a result of the Report and Order. Due to the change in the unit of accounting, the Company performed a step one quantitative impairment test in Fiscal 2021 to determine if the fair value of the wireless licenses exceed the carrying value at the geographical market level. The estimated fair values of each unit of accounting were determined using a market-based approach based on the 600 MHz auction price as noted in the Report and Order. The Company also performed a step zero qualitative assessment on an aggregate basis to test the wireless licenses for impairment due to the change in the unit of accounting in Fiscal 2021. There are no triggering events indicating impairment in the six months ended September 30, 2021.

Long-Lived Asset and Right of Use Assets Impairment

The Company evaluates long-lived assets, including right of use assets, other than intangible assets with indefinite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Asset groups are determined at the lowest level for which identifiable cash flows are largely independent from cash flows of other groups of assets and liabilities. When the carrying amount of the asset groups are not recoverable and exceeds its fair value, an impairment loss is recognized equal to the excess of the asset group’s carrying value over the estimated fair value. During the three and six months ended September 30, 2021, the Company recorded $0.1 million for both periods in non-cash impairment charges to reduce the carrying values to 0 for long-lived assets consisting of network equipment. During the six months ended September 30, 2020, the Company recorded a $29,000 non-cash impairment charge to reduce the carrying values to 0 for long-lived assets consisting of network site costs. There was 0 impairment charge for the three months ended September 30, 2020.

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Net Loss Per Share of Common Stock

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. For purposes of the diluted net loss per share calculation, preferred stock, stock options, restricted stock and warrants are considered to be potentially dilutive securities. Because the Company has reported a net loss for the three and six months ended September 30, 2021 and 2020, respectively, diluted net loss per common share is the same as basic net loss per common share for those periods.

Common stock equivalents resulting from potentially dilutive securities approximated 1,454,000 and 1,540,000 at September 30, 2021 and 2020, respectively, and have not been included in the dilutive weighted average shares of common stock outstanding, as their effects are anti-dilutive.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASC 326, Financial Instruments - Credit Losses and has subsequently modified several areas of the standard in order to provide additional clarity and improvements. The new standard requires entities to use a Current Expected Credit Loss impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost within the scope of the standard. The entity's estimate would consider relevant information about past events, current conditions and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses. As a smaller reporting company, the standard will be effective for the Company's fiscal year beginning April 2023, including interim reporting periods within that fiscal year, although early adoption is permitted. The Company is evaluating the potential impact that ASC 326 and subsequent modifications may have on its consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standard-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

3.Revenue

Long-Term Leases of 900 MHz Broadband Spectrum. In December 2020, the Company entered into its first long-term lease agreement of 900 MHz Broadband Spectrum with Ameren. The Ameren Agreements will enable Ameren to deploy a private LTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people. Each Ameren Agreement is for a term of up to 40 years, consisting of an initial term of 30 years, with a 10-year renewal option for an additional payment. The scheduled prepayments for the 30-year initial terms of the Ameren Agreements total $47.7 million, of which $0.3 million was received by the Company in February 2021, $5.4 million in September 2021 and $17.2 million in October 2021. The prepayments received to date encompass the initial upfront payment(s) due upon signing of the Ameren Agreements and payments for delivery of the relevant 1.4 x 1.4 cleared spectrum in several metropolitan counties throughout Missouri and Illinois, in accordance with the terms of the Ameren Agreements. The remaining prepayments for the 30-year initial term are due by mid-2026, per the terms of the Ameren Agreements and as the Company delivers the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation in Ameren’s service territory. In August 2021, the FCC granted the first 900 MHz broadband licenses to the Company for several counties in Ameren’s service territory, for which the Ameren Agreements were also subsequently approved by the FCC. The Company expects to recognize revenue from the Ameren Agreements commencing in the second half of fiscal year 2022. In accordance with ASC 606, the payments of prepaid fees under the Ameren Agreements will be accounted for as deferred revenue on the Company’s Consolidated Balance Sheets and will be recognized ratably as cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered by county over the contractual term of approximately 30-years. The Company’s Board approved the Ameren Agreements on April 23, 2021, and Ameren’s board of directors approved the Ameren Agreements on May 6, 2021.

In September 2021, the Company entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy. The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments. Prepayment in full of the $30.2 million for the 20-year initial term, which was due and payable within thirty (30) days after execution of the Evergy Agreement, was received by the Company in October 2021. The Evergy Agreement is subject to customary provisions regarding remedies for non-delivery, including refund of amounts paid and

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termination rights, if Anterix fails to perform its contractual obligations, including failure to deliver the relevant cleared 900 MHz Broadband Spectrum, in accordance with the terms of the Evergy Agreement. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation covered by the Evergy Agreement. Evergy and Anterix obtained all necessary internal approvals prior to executing the Evergy Agreement. The Company expects to recognize revenue from the Evergy Agreement commencing in the second half of fiscal year 2022. In accordance with ASC 606, the payments of prepaid fees under the Evergy Agreement will be accounted for as deferred revenue on the Company’s Consolidated Balance Sheets and will be recognized ratably as cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered by county over the contractual term of approximately 20-years.

Service Revenue. The Company has historically derived its service revenue from a fixed monthly recurring unit price per user, with 30-day payment terms, for its pdvConnect and TeamConnect businesses. pdvConnect is a mobile communication and workforce management solution. The Company historically marketed pdvConnect primarily through two Tier 1 carriers in the United States. In Fiscal 2016, it began offering a commercial push-to-talk (“PTT”) service which was marketed as TeamConnect, in seven major metropolitan areas throughout the United States, including Atlanta, Baltimore/Washington, Chicago, Dallas, Houston, New York and Philadelphia. It primarily offered the TeamConnect service to customers indirectly through third-party sales representatives who were primarily selected from Motorola’s nationwide dealer network.

offerings. In June 2018, the Company announced its plan to restructure its operations to align and focus its business priorities on its broadband spectrum initiatives. Consistent with this restructuring plan, the Company transferred its TeamConnect business in December 2018 to A BEEP LLC (“A BEEP”) and Goosetown Enterprises, Inc (“Goosetown”), with the Company continuing to provide customer care, billing and collection services through April 1, 2019. On December 31, 2018, the Company entered into a memorandum of understanding (“MOU”) with the principals of Goosetown. Under the terms of the MOU, the Company assigned the intellectual property rights to its TeamConnect and pdvConnect related applications to TeamConnect LLC (the “LLC”). The LLC assumed customer care services related to the pdvConnect service, with the Company providing transition services to the LLC through April 1, 2019. On April 1, 2020, the Company transferred its pdvConnect customers to the LLC and the LLC agreed to pay the Company a certain portion of the recurring revenues from these customers.

~~Follow-on Offering~~

In July 2019, the Company completed a registered follow-on offering in which it sold 2,222,223 shares of its common stock at a purchase price to the public of $45.00 per share. Net proceeds were approximately $94.2 million after deducting $5.5 million in underwriting discounts and commissions, and $0.3 million in offering expenses.

~~Executive Succession Plan~~

~~On June 25, 2020, the Company issued a press release announcing an effective date of July 1, 2020 for its executive leadership succession plan (the “Succession Plan”), which followed the achievement of the FCC Report and Order.~~

~~TeamConnect LLC~~

On August 4, 2020, we entered into Amendment 2 (“Amendment 2”) to the IP Assignment, Software Support, and Development Services Agreement, dated as of January 7, 2019, as previously amended, by and between us and TeamConnect, LLC (the “LLC”). Under Amendment 2, we agreed to transfer our pdvConnect customers to the LLC, effective as of April 1, 2020, except

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~~for one Tier 1 domestic carrier. In exchange for the customer transfer, the LLC agreed to pay us a certain portion of the recurring revenues from these customers.~~

2.~~Summary of Significant Accounting Policies~~

~~Basis of Presentation and Use of Estimates~~

Because certain information and footnote disclosures have been condensed or omitted, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020, as filed on May 28, 2020 with the SEC. In the Company’s opinion all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included. The Company believes that the disclosures made in the unaudited consolidated interim financial statements are adequate to make the information not misleading. The results of operations for the interim periods presented are not necessarily indicative of the results for the year. The Company is also required to make certain estimates with regard to the valuation of awards and forfeiture rates for its share-based award programs. ~~New estimates in the period relate to determining the Company’s estimated incremental borrowing rate in recognizing right of use assets and operating lease liabilities.~~ Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the applicable period. Accordingly, actual results could materially differ from those estimates.

~~Reclassifications~~

~~Certain prior year amounts have been reclassified to conform to the presentation of the corresponding amounts in the financial statements~~did 0t recognize any service revenue for the three and six months ended September 30, ~~2020. These reclassifications had no effect on previously reported net loss or net loss per common share basic and diluted.~~

~~Intangible Assets~~

Intangible assets are wireless licenses that will be used to provide the Company with the exclusive right to utilize designated radio frequency spectrum to provide wireless communication services. On May 13, 2020, the FCC approved the Report and Order to modernize and realign the 900 MHz band to increase its usability and capacity by allowing it to be utilized for the deployment of broadband networks, technologies and solutions. The Report and Order was published in the Federal Register on July 16, 2020 and became effective on August 17, 2020.2021. The Company ~~is now engaged in qualifying~~recognized $66,000 and $140,000, respectively, for and securing broadband licenses from the FCC, with a focus on pursuing licenses in those counties in which it believes it has near-term commercial opportunities. While licenses are issued for only a fixed time, generally ten years, such licenses are subject to renewal by the FCC. License renewals have occurred routinely and at nominal cost in the past. There are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the Company’s wireless licenses. As a result, the Company has determined that the wireless licenses should be treated as an indefinite-lived intangible asset. The Company will evaluate the useful life determination for its wireless licenses each year to determine whether events and circumstances continue to support their treatment as an indefinite useful life asset.

~~The licenses are tested for impairment annually on an aggregate basis, as the Company will be utilizing the wireless licenses on an integrated basis as part of developing~~ broadband. In the year ended March 31, 2020, (“Fiscal 2020”), the Company performed a step zero qualitative approach to test indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform quantitative impairment testing. ~~There are no triggering events indicating impairment in~~ the three and six months ended September 30, 2020.

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~~See Note 4 “Intangible Assets” for a discussion of the Company’s (gain)/loss from the disposal of intangible assets incurred during the period ended September 30, 2020.~~

~~Long-Lived Asset and Right of Use Asset Impairment~~

The Company evaluates long-lived assets, including right of use assets, other than intangible assets with indefinite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Asset groups are determined at the lowest level for which identifiable cash flows are largely independent of cash flows of other groups of assets and liabilities. When the carrying amount of the asset groups are not recoverable and exceeds its fair value, an impairment loss is recognized equal to the excess of the asset group’s carrying value over the estimated fair value. During the six months ended September 30, 2020, the Company recorded a $29,000 non-cash impairment charge for long-lived assets consisting of $29,000 for network site costs to reduce the carrying values to zero. There was no impairment charge for the three months ended September 30, 2020 and three and six months ended September 30, 2019.

~~Net Loss Per Share of Common Stock~~

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. For purposes of the diluted net loss per share calculation, preferred stock, stock options, restricted stock and warrants are considered to be potentially dilutive securities. Because the Company has reported a net loss for the three and six months ended September 30, 2020 and 2019, respectively, diluted net loss per common share is the same as basic net loss per common share for those periods.

Common stock equivalents resulting from potentially dilutive securities approximated 1,540,000 and 1,409,000 at September 30, 2020 and 2019, respectively, and have not been included in the dilutive weighted average shares of common stock outstanding, as their effects are anti-dilutive.

~~Recently Issued Accounting Pronouncements~~

~~In June 2016, the FASB issued ASC 326,~~ ~~Financial Instruments - Credit Losses~~ and has subsequently modified several areas of the standard in order to provide additional clarity and improvements. The new standard requires entities to use a Current Expected Credit Loss impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost within the scope of the standard. The entity's estimate would consider relevant information about past events, current conditions and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses. As a smaller reporting company, the standard will be effective for the Company's fiscal year beginning April 2023, including interim reporting periods within that fiscal year, although early adoption is permitted. The Company is evaluating the potential impact that ASC 326 and subsequent modifications may have on its consolidated financial statements.

3.~~Revenue~~

In December 2018, the Company’s board of directors (the “Board”) approved the transfer of its TeamConnect business and support for its pdvConnect business to help reduce operating costs and to allow the Company to focus on its FCC initiatives and future broadband opportunities. Specifically, the Company entered into: (i) a Customer Acquisition and Resale Agreement with A BEEP on January 2, 2019, (ii) a Customer Acquisition, Resale and Licensing Agreement with Goosetown on January 2, 2019 and (iii) an MOU with the principals of Goosetown on December 31, 2018. Under the A BEEP and Goosetown Agreements, the Company agreed to: (i) transfer its TeamConnect customers located in the Atlanta, Chicago, Dallas, Houston and Phoenix metropolitan markets to A BEEP, (ii) transfer its TeamConnect customers located in the Baltimore/Washington DC, Philadelphia and New York metropolitan markets to Goosetown, (iii) provide A BEEP and Goosetown with access to MotoTRBO Systems and (iv) grant A BEEP and Goosetown the right to resell access to the MotoTRBO Systems pursuant to separate Mobile Virtual Network Operation arrangements for a two-year period. The Company also granted Goosetown a license to sell the business applications the Company developed for its TeamConnect service. On March 31, 2019, the agreements were amended to formally set the transition date for the businesses as April 1, 2019 and to clarify the responsibilities between the parties.

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Under these agreements, A BEEP and Goosetown agreed to provide customer care, billing and collection services for their respective acquired customers. The Company continued to provide these services through April 1, 2019 to help facilitate the transitioning of the acquired customers. Additionally, the Company is required to maintain and pay all site lease, backhaul and utility costs required to operate the MotoTRBO Systems for a two-year period. As part of the Company’s efforts to clear the 900 MHz spectrum for broadband use, A BEEP and Goosetown are required to migrate the acquired customers off the MotoTRBO Systems over the two-year period. In consideration for the customers and rights the Company transferred, A BEEP and Goosetown are required to pay a certain portion of the recurring revenues they receive from the acquired customers ranging from 100% to 20% during the terms of the agreements. Additionally, A BEEP is required to pay the Company a portion of recurring revenue from customers who utilize A BEEP’s push-to-talk Diga-talk Plus application service ranging from 35% to 15% for a period of two years. For a period of two years, Goosetown is required to pay the Company 20% of recurring revenues from the TeamConnect applications it licensed.

Under the terms of the MOU that the Company entered into with the principals of Goosetown on December 31, 2018, the Company assigned the intellectual property rights to its TeamConnect and pdvConnect related applications to the LLC. The LLC also assumed customer care services related to the pdvConnect service, with the Company providing transition services to the LLC through April 1, 2019. On April 1, 2020, the Company transferred its pdvConnect customers to the LLC, and the LLC agreed to pay the Company a certain portion of the recurring revenues from these customers.

In accordance with ASC 606, when the customer purchased or received a discounted handset in connection with entering into a contract for service, the Company allocated revenue between the handset and the service based on the relative standalone selling price. Revenue was recognized when the performance obligation which includes providing the services or transferring control of promised handsets, which are distinct to a customer, had been satisfied. Revenue was recognized in an amount that reflects the consideration the Company expects to be entitled to for those performance obligations.

~~Service Revenue. The Company has historically derived its service revenue from a fixed monthly recurring unit price per user, with 30-day payment terms, for its pdvConnect and TeamConnect service offerings.~~

~~pdvConnect~~ is a proprietary cloud-based mobile resource management solution which has historically been sold as a separate software-as-a-service offering for dispatch-centric business customers who utilize Tier 1 cellular networks, and to a lesser extent, who utilize land mobile radio networks not operated by the Company. pdvConnect was historically sold directly by the Company or through two Tier 1 domestic carriers. The service is contracted and billed on a month-to-month basis, and the Company satisfies its performance obligation over time as the services are delivered. On April 1, 2020, these customers were transferred to the LLC, except for one Tier 1 domestic carrier. The LLC agreed to pay the Company a certain portion of the recurring revenues from the transferred customers through the term of the agreement.

~~TeamConnect~~ combines pdvConnect with push-to-talk (“PTT”) mobile communication services involving digital network architecture and mobile devices. The contract period for the TeamConnect service varies from a month-to-month basis to 24 months. The customer is billed at the beginning of each month of the contract term. The Company recognizes revenue as it satisfies its performance obligation over time as the services are delivered. On April 1, 2019, these customers were transitioned to A BEEP and Goosetown. A BEEP and Goosetown agreed to pay the Company a certain portion of the recurring revenues during the term of the agreements. While the customer remains on the Company’s MotoTRBO Systems, the portion of recurring revenues paid by A BEEP and Goosetown is recorded as revenue.

Narrowband Spectrum Revenue. In September 2014, Motorola paid the Company an upfront, fully-paid fee of $7.5 million in order to use a portion of the Company’s ~~wireless~~narrowband spectrum licenses. The payment of the fee is accounted for as deferred revenue on the Company’s ~~consolidated balance sheets~~Consolidated Balance Sheets and is recognized ratably as the service is provided over the contractual term of approximately ten years. The revenue recognized for the three and six months ended September30, 2021 and 2020 ~~and 2019 were~~was approximately $182,000 and $364,000, respectively for each period.

Contract Assets. Contract assets include the portion of the Company’s future service invoices which have been allocated to the discounted price of the radios and amortized as a reduction against service revenue over the contract period.

The Company ~~also~~ recognizes a contract asset for the incremental costs of obtaining a contract with a customer. These costs include ~~commissions for salespeople and commissions paid to third-party dealers.~~sales commissions. These costs are amortized ratably using the portfolio approach over the estimated customer contract period. The Company ~~reviews~~will review the contract asset on a periodic basis to determine if an impairment exists. If it is determined that there is an impairment, the contract asset will be expensed. ~~Under the previous accounting standard, the Company expensed commissions as incurred.~~

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~~As a result of transferring customers to A BEEP and Goosetown, all contract and contract acquisition costs were impaired for~~For the six months ended September 30, ~~2019. The~~2021, the Company ~~increased direct cost of revenue~~incurred commission and stock compensation costs to obtain its long-term 900 MHz Broadband Spectrum lease agreements amounting to ~~$178,000~~approximately $127,000, which was capitalized and ~~sales and support expense amounting to $258,000~~will be amortized over the contractual term of approximately 30-years.

The following table presents the activity for the ~~six months ended September30, 2019. The Company did not incur~~Company’s contract ~~and contract acquisition costs for the six months ended September 30, 2020.~~assets (in thousands):



	Contract Assets
Balance at March 31, 2021	$	381
Additions		127
Amortization		—
Impairment		—
Balance at September 30, 2021		508
Less amount classified as current assets - prepaid expenses and other current assets		(102)
Noncurrent assets - included in other assets	$	406

Contract liabilities. Contract liabilities primarily relate to advance consideration received from customers for spectrum services, for which revenue is recognized over time, as the services are performed. These contract liabilities are recorded as deferred revenue on the balance sheet.

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The ~~related liability as of March 31, 2020 of $3.5 million has been reduced by revenue recognized in~~following table presents the ~~six months ended September30, 2020 of $0.4 million leaving a remaining liability of $3.1 million as of September30, 2020.~~ activity for the Company’s contract liabilities (in thousands):


	Contract Liabilities
Balance at March 31, 2021	$	2,983
Additions		5,438
Revenue recognized		(364)
Balance at September 30, 2021		8,056
Less amount classified as current liabilities		(737)
Noncurrent liabilities	$	7,319

4. Intangible Assets

Wireless licenses are considered indefinite-lived intangible assets. Indefinite-lived intangible assets are not subject to amortization but instead are tested for impairment annually, or more frequently if an event indicates that the asset might be impaired. There were no0 impairment charges related to the Company’s indefinite-lived intangible assets during the three and six months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

During the six months ended September 30, ~~2020,~~2021, the Company ~~entered~~acquired wireless licenses for cash consideration of $8.8 million, after receiving FCC approval, of which $6.8 million was spent on licenses acquired by entering into agreements with several third parties in multiple U.S. markets and $2.0 million was paid to ~~acquire wireless licenses~~the U.S. Treasury for ~~cash consideration of $10.8 million after receiving FCC approval.~~

~~The nation’s railroads, particularly~~Anti-Windfall payments, i.e. payments to secure the major freight lines, operate on six narrowband 900 MHz channels licensed to their trade association, the Association of American Railroads (“AAR”). Three of these narrowband channels are located in the 900 MHz broadband segment created by the FCC in the Report and Order. As a result, in order to qualify for broadband licenses under the Report and Order, the Company will be required to provide spectrum for the relocation of the AAR channels to ~~narrowband~~cover any shortfall of channels ~~outside~~needed in a given county to reach the ~~900 MHz broadband segment.~~

~~In January 2020, the Company entered into an agreement with the AAR in which it agreed~~requisite 240 channels to cancel licenses in the 900 MHz band to enable the AAR to relocate its operations, including operations utilizing the three channels located in the 900 MHz broadband segment (the “AAR Agreement”). The FCC referenced the AAR agreement in the Report and Order, and required the Company to cancel its licenses and return them to the FCC in accordance with the AAR Agreement. The Report and Order provides that the FCC will make the channels associated with these licenses available to the AAR to enable the AAR to relocate their current operations. The Report and Order also provides that the FCC will credit the Company for its cancelled licenses for purposes of determining the Company’s eligibilitybe surrendered to secure a broadband ~~licenses~~license for such county, for 11 U.S. counties. As of September 30, 2021 and ~~the calculation of any anti-windfall payments.~~

In accordance with the Report and Order, the Company cancelled its licenses in the three months ended June 30, 2020. Because the Company did not receive any licenses nor monetary reimbursement in exchange for the cancellation, but only credit for purposes of determining its future eligibility and payment obligations for broadband licenses under the Report and Order,March 31, 2021, the Company recorded ~~a $4.7~~initial deposits to incumbents amounting to approximately $5.4 million ~~loss from disposal~~and $2.3 million, respectively, that are refundable if the FCC does not approve the sale of the ~~intangible~~spectrum. Of the $5.4 million initial refundable deposit balance as of September 30, 2021, $4.8 million was included in prepaid expenses and other current assets and the remaining $0.6 million in other assets in the Consolidated ~~Statements~~Balance Sheets. Of the $2.3 million initial refundable deposit balance as of ~~Operations for the three months ended June 30, 2020.~~

~~In August 2020, the Company closed an agreement with a third party for the exchange of 900 MHz licenses plus approximately $0.3~~March 31, 2021, $1.9 million ~~for the reprogramming of their equipment. Since the licenses the Company acquired in the exchange were~~was included in prepaid expenses and other current assets and the ~~licenses returned to the FCC~~remaining $0.5 million in ~~accordance with the AAR Agreement above, the $0.3 million for equipment reprogramming was recorded as additional loss from disposal of the intangible~~other assets in the Consolidated ~~Statements of Operations for the three and six months ended September 30, 2020, respectively.~~Balance Sheets.

In September 2020, the Company closed an agreement with a third party for the exchange of 900 MHz licenses. Under the agreement, the Company received spectrum licenses at their estimated fair value of approximately $0.2 million and a payment of $1.2 million in cash to clear the channels received from incumbents. In January 2018, the Company received $0.6 million as a refundable deposit when the agreement was executed in Fiscal 2018 and the Company is entitled to receive the remaining $0.6 million upon receipt of FCC approval and closing of the agreement in September 2020. Under the agreement, the Company transferred spectrum licenses with book value of approximately $0.3 million to the third party. The Company recognized a $1.1 million gain from disposal of intangible assets in the Consolidated Statement of Operations when the deal closed in September 2020.

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Intangible assets consist of the following at September 30, ~~2020~~2021 and March 31, ~~2020~~2021 (in thousands):


	Wireless Licenses
Balance at March 31, ~~2020~~2021	$	~~111,526~~ 122,117
Acquisitions		~~10,864~~ 8,769
~~Exchanges - licenses received~~		~~196~~
~~Exchanges - licenses surrendered~~		~~(262)~~
~~Cancellations~~		~~(4,983)~~
Balance at September 30, ~~2020~~2021	$	~~117,341~~ 130,886

5.~~Equity Method Investment~~

In connection with the transfer of its TeamConnect business and support for its pdvConnect business, the Company entered into a memorandum of understanding (“MOU”) with the principals of Goosetown on December 31, 2018. Under the MOU, the Company agreed to assign the intellectual property rights to its pdvConnect application to the LLC, a new entity formed by the principals of Goosetown, in exchange for a 19.5% ownership interest in the LLC, effective April 30, 2019. The Goosetown principals have agreed to fund the future operations of the LLC, subject to certain limitations. The LLC has assumed the Company’s software support and maintenance obligations under the Goosetown and A BEEP Agreements. The LLC has also assumed customer care services related to the Company’s pdvConnect application. The Company provided transition services to the LLC through April 1, 2019 to facilitate an orderly transition of the customer care services~~. On April 1, 2020, the Company transferred its pdvConnect customers to the LLC, and the LLC agreed to pay the Company a certain portion of the recurring revenues from these customers.~~

~~During the six months ended~~ ~~September30, 2020, the change in the carrying value of the investment in the LLC is summarized as follows (in thousands):~~


	~~Equity Method Investment~~
~~Equity method investment carrying value at March 31, 2020~~	$	39
~~Share of net loss from LLC~~		~~(16)~~
~~Equity method investment carrying value at September 30, 2020~~	$	23

6.Related Party Transactions

Under the terms of the MOU, the Company iswas obligated to pay the LLC a monthly service fee for a 24-month period ~~ending~~that ended on January 7, 2021 for its assumption of the Company’s support obligations under the A BEEP and Goosetown agreements. The Company is also obligated to pay the LLC a certain portion of the billed revenue received by the Company from pdvConnect customers for a 48-month period. For the three and six months ended September30, ~~2020,~~2021 the Company incurred ~~$176,000~~$15,000 and ~~$353,000~~$30,000 under the MOU, ~~respectively.~~respectively. For the three and six months ended September 30, ~~2019,~~2020 the Company incurred ~~$250,000~~$176,000 and ~~$514,000~~ $353,000 under the MOU, respectively. As of September30, ~~2020 and~~2021, the Company did 0t have any outstanding liabilities to the LLC. As of March 31, ~~2020,~~2021, the Company owed ~~$1,000~~ ~~and $12,000~~$32,000 to the ~~LLC, respectively.~~LLC.

The Company did ~~not~~0t purchase any equipment from Motorola for the three and six months ended September 30, ~~2020.~~ ~~The Company purchased $2,000~~2021 and ~~$11,000 of equipment from Motorola for the three and six months ended September30, 2019.~~ 2020, respectively. The ~~Motorola~~ revenue recognized for the three and six months ended September30, 2021 and 2020 ~~and, 2019 were~~was approximately ~~$182,000~~$182,000 and $364,000, respectively for each period. As of September30, ~~2020~~2021 and March 31, ~~2020,~~2021, the Company owed $~~112,500 and~~ ~~$98,000~~$120,000 to Motorola ~~respectively.~~at the end of each period.

On May 5, 2020, the Company entered into a consulting agreement with Rachelle B. Chong under which Ms. Chong will serve as a Senior Advisor to the Company’s management team effective May 15, 2020. In connection with the consulting agreement, Ms. Chong submitted her resignation from the Company’s Board ~~of Directors~~ and as a member of the Board’s Nominating and Corporate Governance Committee. During the three and six months ended September 30, 2021 the Company incurred $36,000 and $72,000 in consulting fees to Ms. Chong, respectively. During the three and six months ended September 30, 2020 the Company incurred $36,000 and $60,000 ~~respectively,~~ in consulting fees to Ms. ~~Chong.~~Chong, respectively. As of September30, ~~2020,~~2021 and March 31, 2021, the Company did ~~not have any outstanding liabilities to~~0t owe Ms. ~~Chong.~~ Chong fees for consulting services.

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On June 25, 2020, as part of its Executive Succession Plan, the Company announced that Brian D. McAuley had submitted his resignation as Executive Chairman of the Board, effective on July 1, 2020. On August 27, 2020, the Company entered into a consulting agreement (the “Consulting Agreement”) with Mr. McAuley under which Mr. McAuley will serve as a Senior Advisor to the Company’s management team and provide strategic, corporate governance and Board advisory services. The Consulting Agreement provides that Mr. McAuley will receive cash compensation of $40,000 per year. Pursuant to the existing terms of his

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outstanding equity awards, Mr. McAuley will continue to vest in his outstanding equity awards as he continues to provide services to the Company pursuant to the Consulting Agreement. The Consulting Agreement iswas effective as of September 2, 2020 and terminates by its terms on September 1, 2021, unless terminated earlier by either party or extended upon the mutual agreement of the parties at least thirty (30) days before the end of the term. The Consulting agreement was extended by an additional twelve (12) months with a termination date of September 1, 2022. The Consulting Agreement contains standard confidentiality, indemnification and intellectual property assignment provisions in favor of the Company. The Consulting Agreement also contains a waiver by Mr. McAuley to any severance benefits that he might be entitled to receive under the Company’s Executive Severance Plan in connection with his resignation and the Executive Succession Plan. In consideration for this ~~wavier,~~waiver, in the event the Company terminates the Consulting Agreement without cause, Mr. McAuley dies or becomes disabled during the term of the Consulting Agreement, or the Company elects not to extend the term of the Consulting Agreement through September 1, 2023, then the vesting of all outstanding time-based equity awards held by Mr. McAuley shall accelerate on the date his consulting services end such that he will be deemed to have vested in a total of 18,761 shares of Common Stock for his services under the Consulting Agreement. In addition, Mr. McAuley’s performance-based equity awards shall remain outstanding (and shall not terminate) and he shall continue to be eligible to obtain vested option shares and vested restricted stock units under his outstanding performance-based equity awards if the “Vesting Conditions” set forth in the performance-based equity awards are satisfied. For the three and six months ended September 30, 2021, the Company incurred approximately $10,000 and $20,000, respectively, in consulting fees to Mr. McAuley. For the three and six months ended September 30, 2020, the Company did not incur any consulting fees to Mr. McAuley. As of September 30, 2021, the Company owed $40,000 to Mr. McAuley. As of March 31, 2021, the Company did 0t have any outstanding liabilities to Mr. McAuley.

7. 6. Impairment and Restructuring Charges

Long-lived Assets and Right of Use Assets Impairment.

During the three and six months ended September 30, 2021, the Company recorded $0.1 million for both periods in non-cash impairment charges to reduce the carrying values to zero for long-lived assets consisting of network equipment. During the six months ended September 30, 2020, the Company recorded a $29,000 non-cash impairment charge ~~for long-lived assets consisting of $29,000 for network site costs~~ to reduce the carrying values to ~~zero.~~zero for long-lived assets consisting of network site costs. There was no0 impairment charge for the ~~six~~three months ~~ending~~ended September 30, ~~2019.~~2020.

Restructuring Charges.

~~April 2018 and June 2018 restructuring activities.~~ In April 2018, the Company announced a shift in its focus and resources in order to pursue its regulatory initiatives at the FCC and prepare for the future deployment of broadband and other advanced technologies and services. In light of this shift in focus, the Company’s Board also approved a chief executive officer transition plan, under which, John Pescatore, the Company’s chief executive officer and president, transitioned to the position of vice chairman and Morgan O’Brien, the Company’s then-current vice chairman, assumed the position as the new chief executive officer. In connection with the transition, the Company and Mr. Pescatore entered into a Continued Service, Consulting and Transition Agreement and a separate Consulting Agreement (the “CEO Transition Agreements”) and the Company also entered into additional consulting and transition agreements with several other key employees.

On June 1, 2018, the Company’s Board approved an initial plan to restructure its business aimed at reducing the operating costs of its TeamConnect and pdvConnect businesses and better aligning and focusing its business priorities on its spectrum initiatives. As part of the restructuring plan, the Company eliminated approximately 20 positions, or 20% of its workforce, primarily from its TeamConnect and pdvConnect businesses. In August 2018, the Company continued with its restructuring efforts and eliminated approximately seven additional positions.

~~For the six months ended~~ ~~September 30, 2020~~, ~~total accrued restructuring charges for the April 2018 and June 2018 restructuring activities were as follows (in thousands):~~


	~~Restructuring Activities~~
~~Balance at March 31, 2020~~	$	~~565~~
~~Cash payments~~		~~(544)~~
~~Balance at September 30, 2020 (classified as current liabilities - restructuring reserve)~~	$	21

December 2018 cost reductions.On December 31, 2018, the Company’s board of directors approved the following cost reduction actions: (i) the elimination of approximately 20 positions, or 30% of the Company’s workforce and (ii) the closure of its office in San Diego, California (collectively, the “December 2018 Cost-Reduction Actions”). For the three and six months ended September 30, 2020, the Company reduced restructuring ~~charge~~charges relating to the December 2018 Cost-Reduction Actions in the amounts of ~~$17,000~~$17,000 and $3,000, respectively, related to employee severance and benefit costs. ~~For~~The Company did 0t incur restructuring charges for the three and six months ended September 30, 2019, the Company recorded an additional restructuring charge relating to the December 2018 Cost-Reduction Actions amounting to $28,000 and $172,000, respectively, related to employee severance and benefit costs. For the six months ended September 30, 2019, the Company reduced the facility exit costs accrual for our San Diego, California office2021.

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by approximately $28,000. The Company completed the cost reduction and restructuring actions in July 31, 2019 and the related cash payments for severance costs was completed by the end of August 31, 2019.

7. Leases

~~For the six months ended September 30, 2020, total December 2018 cost reduction charges were as follows (in thousands):~~


	~~Restructuring Activities~~
~~Balance at March 31, 2020~~	$	71
~~Severance costs~~		~~(3)~~
~~Cash payments~~		—
~~Balance at September 30, 2020 (classified as current liabilities - restructuring reserve)~~	$	68

8. ~~Leases~~

A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On April 1, 2019, the Company adopted ASC 842 and it primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Substantially all of the leases in which the Company is the lessee are comprised of corporate office space and tower space. The Company is obligated under certain lease agreements for office space with lease terms expiring on various dates from October ~~14,~~31, 2024 through June 30, 2027, which includes a ~~ten-year~~10-year lease extension for its corporate headquarters. The Company entered into multiple lease agreements for tower ~~space related to its TeamConnect business.~~space. The lease expiration dates range from October 31, ~~2020~~2021 to ~~June~~November 30, ~~2026.~~ 2027.

Substantially all of the Company’s leases are classified as operating leases, and as such, were previously not recognized on the Company’s Consolidated Balance Sheet. With the adoption of Topic 842, operating lease agreements are required to be recognized on the Consolidated Balance Sheet as Right of Use (“ROU”) assets and corresponding lease liabilities.

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ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:


	Six months ended September 30,				Six months ended September 30,
	2020		2019		2021		2020
Weighted average term - operating lease liabilities		4.69 years		5.35 years		4.04 years		4.69 years
Weighted average incremental borrowing rate - operating lease liabilities		13%		13%		13%		13%

Rent expense amounted to approximately $0.5 million and $1.0 million, respectively, for the three and six months ended September 30, 2021 and are included in general and administrative expenses in the Consolidated Statements of Operations. Rent expense amounted to approximately $0.6 million for the three months ended September 30, 2020, of which approximately $0.4 million was ~~classified~~included as direct cost of revenue and the remainder of approximately $0.2 million was ~~classified~~included in ~~operating~~general and administrative expenses in the Consolidated Statements of ~~Operations.~~ ~~Rent expense amounted to approximately $1.3 million for the six months ended~~ ~~September 30, 2020, of which approximately~~ ~~$0.8 million~~ ~~was classified as cost of revenue and the remainder of~~ ~~approximately $0.5 million~~ ~~was classified in operating expenses in the Consolidated Statements of Operations.~~

Rent expense amounted to approximately $0.7 million for the three months ended September 30, 2019, of which approximately $0.4 million, was classified as cost of revenue and the remainder of approximately $0.3 million was classified in operating expenses in the Consolidated Statements of Operations.Rent expense amounted to approximately $1.3 million for the six months ended September 30, ~~2019,~~2020, of which approximately $0.8 million was ~~classified~~included as direct cost of revenue and the remainder of approximately $0.5 million was ~~classified~~included in ~~operating~~general and administrative expenses in the Consolidated Statements of ~~Operations~~. Operations.

In June 2020, the Company terminated an operating tower space lease early resulting in a non-cash reductions in ROU assets by $19,000, operating lease liabilities by $20,000 and gain in disposal of long-lived asset by $1,000.

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The following table presents net lease cost for the three and six months ended September 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Three months ended September 30,				Six months ended September 30,				Three months ended September 30,				Six months ended September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Lease cost
Operating lease cost (cost resulting from lease payments)	$	612	$	666	$	1,271	$	1,290	$	495	$	612	$	1,008	$	1,271
Short term lease cost		40		10		43		32		6		40		10		43
Sublease income		(3)		(5)		(6)		(9)		-		(3)		-		(6)
Net lease cost	$	649	$	671	$	1,308	$	1,313	$	501	$	649	$	1,018	$	1,308

The following table presents supplemental cash flow and non-cash activity information for the three and six months ended September 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Six months ended September 30,				Six months ended September 30,
	2020		2019		2021		2020
Operating cash flow information:
Operating lease - operating cash flows (fixed payments)	$	1,411	$	1,321	$	1,155	$	1,411
Operating lease - operating cash flows (liability reduction)	$	961	$	661	$	735	$	961
Non-cash activity:
Right of use assets obtained in exchange for new operating lease liabilities	$	18	$	7,915	$	66	$	18

The following table presents supplemental balance sheet information as of September 30, ~~2020~~2021 and March 31, ~~2020~~2021 (in thousands):

~~On March 27, 2020, the Coronavirus Aid Relief and Economic Security (“CARES”) Act was signed into law.~~ The Act contains several new or changed income tax provisions, including but not limited to the following: increased limitation threshold for determining deductible interest expense, class life changes to qualified improvements (in general, from 39 years to 15 years) and the ability to carry backCompany's net operating losses (“~~NOLs”~~NOLs’) incurred from tax years 2018 through 2020 up to the five preceding tax years. Most of these provisions are either not applicable or have no material effect on the Company. However, the CARES Act changed the language of when NOLs converted from a 20-year life to an indefinite life. From the Tax Cuts and Jobs Act of 2017 (“TCJA”) rule, NOLs in tax periods ending after December 31, 2017 had an indefinite life. Under the new CARES Act, NOLs generated in periods beginning after December 31, 2017 are carried forward indefinitely. This dating change effectively disqualified the Company's March 31, 2018 NOL as an indefinite lived asset and source of taxable income to offset the Company's deferred tax liability stemming from indefinite-lived intangibles. The Company's NOLs generated after March 31, 2018 may ~~continue to~~ be used as an indefinite-lived asset to offset ~~the~~its deferred tax liability, but limited to ~~80%~~80 percent of future taxable ~~income (or the balance of the~~income. The deferred tax ~~liability~~liabilities as of ~~March 31, 2020). The total impact of this date change from the CARES Act increased the Company's net~~September 30, 2021 are approximately $2.1 million for federal ~~deferred tax liability from approximately $0.2 million to $1.6 million as of March 31, 2020. The state deferred tax liability of approximately~~and $1.4 million ~~as of March 31, 2020 is unchanged.~~for state.

For the year ended March 31, ~~2020,~~2021, the Company had federal and state NOL carryforwards of approximately ~~$211.9~~$266.3 million and ~~$112.7~~$152.3 million, respectively. Of these federal and state NOLs, approximately ~~$125.3~~$125.1 million and ~~$92.6~~$114.4 million respectively, are expiring in various amounts from ~~2020~~2021 through ~~2040, to offset future taxable income.~~2041. The remaining federal and state NOLs of approximately ~~$86.6~~$141.2 million and ~~$20.1~~$37.9 million, respectively, have an indefinite life ~~and~~but the federal NOLs may only offset 80% of taxable income when used.

For the six months ended September 30, ~~2020,~~2021, the Company incurred federal and state net operating losses of approximately ~~$23.2~~$45.7 million and ~~$18.7~~$36.8 million, respectively, to offset future taxable income, of which ~~$30.0~~$58.4 million can be carried forward indefinitely, but can only offset 80% of taxable income when used.

The Company used a discrete effective tax rate method to calculate taxes for the three and six months ended September 30, ~~2020.~~2021. The Company determined that applying an estimate of the annual effective tax rate would not provide a reasonable estimate as small changes in estimated “ordinary” loss would result in significant changes in the estimated annual effective tax rate. Accordingly, for the three and six months ended September 30, ~~2020,~~2021, the Company recorded a total deferred tax expense of ~~$145,000~~$0.2 million and ~~$156,000,~~$0.3 million, respectively, due to the inability to use some portion of federal and state NOL carryforwards against the deferred tax liability created by amortization of indefinite-lived intangibles.

~~10.~~ 9.Stockholders’ Equity and Stock ~~Acquisition Rights, Stock Options and Warrants~~Compensation

The Company established the 2014 Stock Plan (the “2014 Stock Plan”) to attract, retain and reward individuals who contribute to the achievement of the Company’s goals and objectives. This 2014 Stock Plan superseded previous stock plans. ~~As of September 30, 2020, stock options to purchase~~ ~~18,358 shares of common stock were outstanding and vested under such previous plans.~~

The ~~Company’s~~ Board has reserved ~~4,147,985~~5,027,201 shares of common stock for issuance under ~~its~~the 2014 Stock Plan as of September 30, ~~2020,~~2021, of which ~~838,251~~1,205,398 shares are available for future issuance. ~~The~~Historically, the number of shares ~~may increase,~~reserved under the 2014 Stock Plan were increased, based on Board approval, each January 1~~through January~~ ~~1, 2024~~ by an amount equal to the lesser of (i) 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or (ii) a lesser amount determined by the ~~Board.~~Board (the “evergreen provision”). Effective January 1, ~~2020,~~2021, the Board elected to increase the shares authorized under the 2014 Stock Plan by ~~342,762~~879,216 shares, which represented 2%5% of the of the Company’s common stock issued and outstanding as of December 31, ~~2019.~~2020. On June 15, 2021, the Compensation Committee of the Board approved Amendment No. 1 to 2014 Stock Plan to eliminate the evergreen provision for all future years (i.e., January 1, 2022 through January 1, 2024).

The Company recognizes compensation expense for restricted stock on a straight-line basis over the explicit vesting period. Vested restricted stock units are settled and issuable upon the earlier of the date the employee ceases to be an employee of the Company or a date certain in the future. Stock compensation expense related to restricted stock was approximately ~~$3.1 million and $4.9~~$2.4 million for the three ~~and six~~ months ended September 30, ~~2020, respectively,~~2021 of which $2.0 million is included ~~$0.8~~in general and administrative expenses, $0.2 million is included in product and development and $0.2 million is included in sales and support expenses in the Consolidated Statement of expense related to the Type III modification of restricted stock units held by the Company’s former Chairman of the Board upon his transition to a consultant to the Company that is probable of vesting under the modified condition.Operations. Stock compensation expense related to restricted stock was approximately ~~$1.0 million and $2.0~~$5.0 million for the ~~three and~~ six months ended September 30, ~~2019, respectively.~~2021 of which $4.3 million is included in general and administrative expenses, $0.4 million is included in product and development and $0.3 million is included in sales and support expenses in the Consolidated Statement of Operations. Stock compensation expense related to restricted stock was approximately $4.0 million for the three months ended September 30, 2020 of which $3.7 million is included in general and administrative expenses, $0.2 million is included in product and development and the remainder of the expense, $62,000, is included in sales and support in the Consolidated Statement of Operations. Stock compensation expense related to restricted stock was approximately $5.7 million for the six months ended September 30, 2020 of which $5.3 million included in general and administrative expenses, $0.3 million is included in product and development and $0.1 million is included in sales and support in the Consolidated Statement of Operations.

On August 23, 2021, the Compensation Committee approved the grant of restricted stock units to the Company’s President and CEO of 50,000 units. These restricted stock units vest in four equal annual installments measured from the grant date based on the CEO’s continued services to the Company.

At September 30, ~~2020,~~2021, there was ~~$15.8~~$24.5 million of unvested compensation expense for restricted stock, which is expected to be recognized over a weighted average period of ~~2.8 years~~.3.0 years.

A summary of the performance stock unit activity for the six months ended September 30, ~~2020~~2021 is as follows:

On December 31, 2020, the Compensation Committee awarded performance-based restricted units to the Company’s President and Chief Executive Officer (“CEO”) as part of the Succession Plan, (the “CEO Performance Units”). The performance-based restricted units will vest on a determination date of June 24, 2024 (“Determination Date”) (unless sooner triggered by an earlier involuntary termination), based on Cumulative Spectrum Proceeds Monetized (“CSPM”) metric over a four-year measurement period commencing on June 24, 2020, with 15,025 units vesting if the minimum CSPM level is achieved, 30,049 units vesting if the target CSPM metric is achieved and up to 60,098 vesting if the maximum CSPM metric is achieved.

On ~~June 24, 2020~~,August 23, 2021, the ~~Company awarded~~Compensation Committee approved the grant of a stock option to ~~purchase 60,558~~the Company’s CEO for 100,000 shares of common stock ~~to its newly appointed President and Chief Executive Officer as part~~at an exercise price of ~~the Succession Plan. The award has a contractual life of 10 years~~. ~~25% of the~~$57.00 per share. These option shares ~~will~~ vest ~~on July 1, 2021 with the remaining shares vesting~~ in ~~three~~four equal annual installments measured from the grant date based on the ~~President and Chief Executive Officer’s continuous service~~CEO’s continued services to the ~~Company through the applicable vesting dates.~~

Company. The Black-Scholes option model requires weighted average assumptions to be used for the calculation of the Company’s stock compensation expense. The assumptions used ~~during the six months ended September 30, 2020~~for this grant were: the expected life of the award was ~~6.07~~6.02 years; the risk free interest rate was ~~0.43%~~0.92%; the expected volatility rate was ~~53.41%~~53.18%; the expected dividend yield was 0.0%; and the expected forfeiture rate was 0%.

~~Stock~~On September 7, 2021, the Compensation Committee approved the grant of a stock option to the Company’s Executive Chairman for 65,768 shares of common stock at an exercise price of $60.92 per share. These option shares vest in three equal annual installments measured from the grant date based on the Executive Chairman’s continued services to the Company. The Black-Scholes option model requires weighted average assumptions to be used for the calculation of the Company’s stock compensation expense. The assumptions used for this grant were: the expected life of the award was 5.92 years; the risk free interest rate was 0.96%; the expected volatility rate was 53.45%; the expected dividend yield was 0.0%; and the expected forfeiture rate was 0%.

In May 2021, the Company reacquired 20,132 shares when a participant surrendered already-owned shares of the Company’s common stock to cover the exercise price of an outstanding stock option exercised by the participant. The 20,132 shares surrendered are constructively retired by the Company as of September 30, 2021 which resulted in the reduction of approximately $1.0 million in additional paid in capital in the Consolidated Statement of Stockholders’ Equity.

For the three and six months ended September 30, 2021, stock compensation expense related to the amortization of the fair value of stock options issued was approximately ~~$0.3~~$0.5 million and ~~$0.5~~$0.9 million, ~~for~~ respectively, and is included in general and administrative expenses reported in the ~~three and six months ended September30, 2020.~~Consolidated Statements of Operations. For the three and six months ended September 30, ~~2019,~~2020, stock compensation expense related to the amortization of the fair value of stock options issued was approximately ~~$0.4~~$0.3 million and ~~$1.0~~$0.5 million, ~~respectively.~~ respectively, and is included in general and administrative expenses reported in the Consolidated Statements of Operations.

As of September 30, ~~2020,~~2021, there was approximately ~~$1.6~~$5.8 million of unrecognized compensation expense related to non-vested stock options granted under the Company’s stock option plans which is expected to be recognized over a weighted-average period of ~~1.3~~1.9 years.

A summary of the performance stock options as of September 30, ~~2020~~2021 is as follows:

~~On February 28, 2020, the Company awarded 67,562 performance-based stock options. The performance goals are:~~

~~(A)~~ ~~Target Goal~~: 50% of the shares vest upon (i) achievement by December 31, 2020 of a Final Order from the FCC providing for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (ii) the lack of objection by the Company’s Board to the terms and conditions (including, but not limited to, the rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order and

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~~(B)~~ ~~Stretch Goal~~: The remaining 50% of the performance shares vest and settle upon the occurrence of all three of the following conditions: (i) the Company enters into one or more long-term agreement(s) with critical infrastructure or enterprise business(es) to enable such business(es) to utilize the Company’s spectrum for broadband connectivity; (ii) the combined total contract dollars payable to the Company over the initial term(s) of such agreement(s) equals or exceeds a certain amount as specified by the Board; and (iii) the agreement(s) is/are binding on such business(es) and is/are either not contingent on prior Board of Director approval(s) or such approval(s) has/have been received. If all of these conditions have not been achieved by December 30, 2020, the performance shares will expire unvested.

~~Additionally, the Company awarded 14,635 performance-based~~There were 0 performance stock options ~~on February 28, 2020. The performance goal is: 100% of the shares will vest upon (i) achievement by December 31, 2020 of a Final Order from the FCC providing~~granted for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (ii) the lack of objection by the Company’s Board to the terms and conditions (including, but not limited to, the rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order. The goal was achieved when the Report and Order was effective in August 2020.

~~For the three and~~ six months ended September 30, 2020, the Company recognized $0.8 million based on the achievement of the Target Goal under the performance-based stock options, upon the Report and Order becoming effective in August 2020. As of September 30, 2020, there was approximately $0.6 million of unvested compensation expense relating to the outstanding performance-based stock options for the Stretch Goal.2021.

Motorola Investment

On September 15, 2014, Motorola invested $10.0 million to purchase 500,000 Class B Units of the Company’s subsidiary, PDV Spectrum Holding Company, LLC (at a price equal to $20.00 per unit). The Company owns 100% of the Class A Units in this subsidiary. Motorola has the right at any time to convert its 500,000 Class B Units into 500,000 shares of the Company’s common stock. The Company also has the right to force Motorola’s conversion of these Class B Units into shares of its common stock at its election. Motorola is not entitled to any assets, profits or distributions from the operations of the subsidiary. In addition, Motorola’s conversion ratio from Class B Units to shares of the Company’s common stock is fixed on a one-for-one basis, and is not dependent on the performance or valuation of either the Company or the subsidiary. The Class B Units have no redemption or call provisions and can only be converted into shares of the Company’s common stock. Management has determined that this investment does not meet the criteria for temporary equity or non-controlling interest due to the limited rights that Motorola has as a holder of Class B Units, and accordingly has presented this investment as part of its permanent equity within Additional Paid-in Capital in the accompanying consolidated financial statements.

~~11.Contingencies~~ Share Repurchase Program

~~Litigation~~On September 29, 2021, the Company’s Board authorized a share repurchase program (the “Share Repurchase Program”) pursuant to which the Company may repurchase up to $50.0 million of the Company’s common stock on or before September 29, 2023. The manner, timing and amount of any share repurchases will be determined by the Company based on a variety of factors, including price, general business and market conditions and alternative investment opportunities. The share repurchase program authorization does not obligate the Company to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934.

10.Contingencies

Contingent Liability

In February 2021, the Company entered into an agreement with SDG&E to provide 900 MHz Broadband Spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County for a total payment of $50.0 million. The SDG&E Agreement will support SDG&E’s deployment of a private LTE network for its California service territory, with a population of approximately 3.6 million people. As part of the SDG&E Agreement, the Company and SDG&E are collaborating to accelerate the utility industry momentum for private networks. The SDG&E Agreement includes the assignment of 6 MHz of 900 MHz Broadband Spectrum, 936.5 – 939.5 MHz paired with 897.5 – 900.5 MHz, within SDG&E’s service territory following the FCC’s issuance of the broadband licenses to the Company. Delivery of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses by county is expected to commence in fiscal year 2023 and is scheduled for completion before the end of fiscal year 2024. The total payment of $50.0 million is comprised of an initial payment of $20.0 million received in February 2021 and the remaining $30.0 million payment, which is due through fiscal year 2024 as the Company delivers the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses to SDG&E. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation in the SDG&E’s California service territory. The SDG&E Agreement is subject to customary provisions regarding remedies, including reduced payment amounts and/or refund of amounts paid, and termination rights, if a party fails to perform its contractual obligations. Both SDG&E and Anterix obtained all necessary internal approvals prior to executing the SDG&E Agreement. A gain or loss will be recognized in each county once the cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered to SDG&E.

As the Company is required to refund the initial payment in the event of termination or non-delivery of the 900 MHz Broadband Spectrum, it recorded $20.0 million for the upfront payment received from SDG&E in February2021 as contingent liability in the Consolidated Balance Sheet as of March31, 2021. There was 0 additional contingent liability incurred for the quarter ended September 30, 2021.

Litigation

From time to time, the Company may be involved in litigation that arises from the ordinary operations of the business, such as contractual or employment disputes or other general actions. The Company is not involved in any material legal proceedings at this time.

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COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic and COVID-19 continues to cause significant disruptions throughout the United States. The Company instituted numerous precautionary measures intended to help ensure the well-being as majority of the Company’s employees continue to work from home, remotely negotiate and work with customers, covered incumbents and the FCC. Virtually all employees remain subject to travel restrictions and access to the Company’s premises is restricted. The Company will continue to closely monitor the risks posed by COVID-19 and adjust its practices accordingly.

In order to manage the financial impact caused by the pandemic, the Company also deferred payroll taxes under the CARES Act amounting to approximately $0.3 million as of September 30, 2021. As a result of prioritizing the use of our cash and measures implemented, no significant adverse impact on our results of operations through and financial position as of September 30, 2021, has occurred as a result of the pandemic.

The ultimate extent of the impact of COVID-19 on ~~the~~future financial performance of the Company and its ability to secure broadband licenses pursuant to the terms of the 900 MHz Report and Order and to commercialize any broadband licenses it secures, will depend on ~~future~~ongoing developments, including the duration and further spread of COVID-19, the laws, orders and restrictions imposed by federal, state and local governmental agencies, ~~the impact of COVID-19 on the Company’s targeted utility and critical infrastructure customers,~~ and the overall economy, all of which ~~are highly~~remain uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company's operating results may be materially and adversely affected. The Company is ~~actively~~ managing ~~the business to maintain~~ its cash flow and believes that it has adequate ~~liquidity through at least the next twelve months.~~liquidity.

~~12.~~11.Concentrations of Credit Risk

Financial instruments ~~that~~which potentially expose the Company to concentrations of credit risk consist primarily of cash and ~~cash equivalents and~~ trade accounts receivable.

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The Company places its cash and temporary cash investments with financial institutions for which credit loss is not anticipated.

~~As of~~ ~~September30, 2020~~, the Company sells its pdvConnect product and extends credit predominately to one Tier 1 domestic carrier. The Company maintains allowances for doubtful accounts based on factors surrounding the write-off history, historical trends, and other information.

~~13.~~12.Business Concentrations

For the three and six months ended September 30, 2021, the Company’s operating revenue was entirely from the upfront, fully-paid fee received from Motorola, as discussed in Note 3 to the Consolidated Financial Statements in this Quarterly Report. For the three and six months ended September 30, 2020, the Company had ~~one~~1 Tier 1 domestic carrier and one reseller that accounted for approximately 21% of total operating revenues, respectively. ~~For the three and six months ended September 30, 2019, the Company had two domestic carriers that accounted for approximately 23% and 25% of operating revenues, respectively.~~

As of September 30, ~~2020,~~2021, the Company does 0t have an outstanding accounts receivable balance. As of March 31, 2021, the Company had ~~one~~1 Tier 1 domestic carrier ~~and one reseller~~ that accounted for ~~approximately 93% of~~the entire total accounts receivable.~~As of March 31, 2020, the Company had one domestic carrier and one reseller that accounted for approximately 71% of total accounts receivable~~.

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis of the financial condition and results of operations of Anterix Inc. (“Anterix,” the “Company”, “we”, “us”, or “our”) should be read in conjunction with our financial statements and notes thereto included in this Quarterly Report on Form 10-Q (the “Form 10-Q”) and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, ~~2020,~~2021, filed with the ~~SEC~~Securities and Exchange Commission (the “SEC”) on ~~May 28, 2020~~June 15, 2021 (the “Annual Report”). In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those identified or referenced in “Item 1A—Risk Factors” in Part II of this Form 10-Q. As a result, investors are urged not to place undue reliance on any forward-looking statements. Except to the limited extent required by applicable law, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.

Overview

We are a wireless communications company focused on commercializing our spectrum assets to enable our targeted utility and critical infrastructure customers to deploy private broadband networks, technologies and solutions. We are the largest holder of licensed spectrum in the 900 MHz band (896-901/935-940 MHz) with nationwide coverage throughout the contiguous United States, Hawaii, Alaska and Puerto Rico. On May 13, 2020, the ~~Federal Communications Commission (“FCC”)~~FCC approved athe Report and Order to modernize and realign the 900 MHz band to increase its usability and capacity by allowing it to be utilized for the deployment of broadband networks, technologies and ~~solutions (the “Report and Order”).~~solutions. The Report and Order was published in the Federal Register on July 16, 2020 and became effective on August 17, 2020. We are now engaged in qualifying for and securing broadband licenses from the FCC, with a focus on pursuing licenses in those counties in which we believe we have near-term commercial opportunities. At the same time, ~~our sales and marketing organization~~the Company is pursuing opportunities to lease the spectrum for which these broadband licenses ~~we secure~~are secured to our targeted utility and critical infrastructure customers.

Securing Broadband Licenses

In the Report and Order, the FCC reconfigured the 900 MHz land mobile radio band to create a 6 MHz broadband segment (240 channels) and two narrowband segments, consisting of a 3 MHz narrowband segment (120 channels) and a 1 MHz narrowband segment (39 channels).

The Role of the County. Under the Report and Order, the FCC established the “county” as the base unit of measure in determining whether a broadband applicant is eligible to secure a broadband license. There are ~~3,223~~3,233 counties in the United States, including Puerto Rico.

Broadband License Eligibility Requirements. The Report and Order establishes three eligibility requirements to obtain broadband licenses in a county, which we refer to herein as (i) the “50% Licensed Spectrum Test,” (ii) the “90% Broadband Segment Test” and (iii) the “240 Channel Requirement.”

1.50% Licensed Spectrum Test. To be eligible for a broadband license in a particular county, we must demonstrate that we hold more than 50% of the outstanding licensed channels in the 900 MHz band in the county. Because the 50% Licensed Spectrum Test is based on licensed channels, any channels that are not licensed by the FCC are not included in the denominator when determining whether we have satisfied this test. The denominator is determined by the number of channels licensed by all licensees with sites in the county and within 20 miles of the county boundary. In some situations, a single channel is licensed by more than one entity, and therefore could be counted more than once. The FCC has licensed less than 399 channels in all but the most populous counties. Only after we satisfy the 50% Licensed Spectrum Test are we permitted to apply for a broadband license. As of the date of this filing, we satisfy the 50% Licensed Spectrum Test in more than 3,100 counties of the ~~3,223~~3,233 counties in the United States and its territories.

2.90% Broadband Segment Test. As a condition precedent to the FCC issuing a broadband license, we must satisfy the 90% Broadband Segment Test by utilizing our channel holdings and negotiating with Covered Incumbents on a purely voluntary basis for any additional channels we require to satisfy this test. This test requires we hold, protect or have agreements with Covered Incumbents for 90% of the licensed channels in the broadband segment in a particular county and within 70 miles of the county’s boundaries. In some situations, a single channel is licensed more than once within the 70 mile radius, and therefore could be counted more than once. The ~~second test,~~broadband segment in the 900 MHz band has a total of 240 channels. The 90% Broadband Segment Test is calculated using outstanding licensed channels, which means that if the FCC has licensed 240 channels, we will be required to protect, have control of or agreements covering 216 channels within the broadband segment. In many counties in the United States, the FCC has licensed fewer than 240 channels in the broadband segment and these unlicensed channels are not included in the denominator when determining whether we have satisfied this 90% Broadband Segment Test. As of the date of this filing, we satisfy the 90% Broadband Segment Test in approximately 2000 counties.

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Only after we satisfy the 90% Broadband Segment Test will the FCC issue a broadband license to us. Once the license is issued we can initiate the “Mandatory Retuning” period by notification to the Covered Incumbent. During this Mandatory Retuning period, any Covered Incumbents that remain in the broadband segment (other than Complex Systems) are required to negotiate with us in good faith to clear the broadband segment, subject to intervention by the FCC if the parties cannot reach an agreement.

This 90% Broadband Segment Test addresses the balance between a voluntary market process to clear any Covered Incumbent (i.e., holders of licenses in the broadband segment) and the mandatory relocation process established by the FCC in the Report and Order (which applies to all Covered Incumbents, except for those Covered Incumbents operating “Complex Systems” as described below). This test requires we hold or have agreements with Covered Incumbents for 90% of the licensed channels in the broadband segment in a particular county and within 70 miles of the county’s boundaries. The broadband segment in the 900 MHz band has a total of 241 channels. The 90% Broadband Segment Test is calculated using outstanding licensed channels,Complex Systems, which ~~means that if~~ the FCC defines as a radio system that has licensed 241 channels, we will be required to have control of or agreements covering 217 channels within the broadband segment. In many counties in the United States, the FCC has licensed fewer than 241 channels in the broadband segment and these unlicensed channels are not included in the denominator when determining whether we have satisfied this 90% Broadband Segment Test.at least 45 integrated sites).

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Before filing for a broadband license, we must satisfy the 90% Broadband Segment Test by utilizing our channel holdings and negotiating with Covered Incumbents on a purely voluntary basis for any additional channels we require to satisfy this test. Only after we satisfy the 90% Broadband Segment Test will the FCC issue a broadband license to us and commence the “Mandatory Retuning” period. During this period, any Covered Incumbents that remain in the broadband segment (other than Complex Systems) are required to negotiate with us in good faith to clear the broadband segment, subject to intervention by the FCC if the parties cannot reach an agreement.

3.240 Channel Requirement. The Report and Order requires the broadband applicant to surrender 6 MHz of spectrum (or 240 channels) in a county to receive the broadband license. If ~~we do~~the applicant does not have sufficient channels in the county to return 240 channels to the FCC, ~~we will~~they must make an “Anti-Windfall Payment” to the U.S. Treasury to secure the broadband ~~license.~~channels to cover the shortfall of channels needed to reach the requisite 240. The Anti-Windfall Payment for ~~these~~the number of channels below 240 will be based on prices paid in the applicable county in the 600 MHz auction previously conducted by the FCC.

Treatment of Complex Systems. The Report and Order exempts ~~“Complex Systems”~~Complex Systems from the mandatory retuning process—even if ~~we meet~~the Broadband applicant meets the 90% Broadband Segment Test. ~~The FCC defines a Complex System as a radio system that has at least 45 integrated sites.~~ The FCC exempted Complex Systems from the mandatory retuning requirements because retuning these systems would potentially be more disruptive to the operators than retuning the smaller systems operated by other incumbents. Of the small number of systems that qualify for this 45-site exemption, based on our calculation, all but one ~~system~~Complex System belongs to utilities that we have identified as our target customers.

The Association of American Railroads. The nation’s railroads, particularly the major freight lines, operate on six narrowband 900 MHz channels licensed to ~~their trade association,~~ the Association of American Railroads (“AAR”). Three of these narrowband channels are located in the 900 MHz broadband segment created by the FCC in the Report and Order. As a result, in order to qualify for broadband licenses under the Report and Order, we are required to provide spectrum for the relocation of the AAR channels to narrowband channels outside the 900 MHz broadband segment.

In January 2020, we entered into an agreement with ~~the~~ AAR in(the “AAR Agreement”), pursuant to which itwe agreed to cancel licenses in the 900 MHz band to enable the AAR to relocate its operations ~~including operations utilizing the three channels located in~~outside the 900 MHz broadband segment (the “AAR Agreement”). The FCC referenced the AAR agreement in the Report and Order and required us to cancel our licenses and return them to the FCC in accordance with the AAR Agreement.segment. The Report and Order provides that the FCC will make the channels associated with these cancelled licenses available to the ~~AAR to enable the AAR to relocate their current operations.~~AAR. The Report and Order also provides that the FCC will credit us for our cancelled licenses for purposes of determining our eligibility and the calculation of our requirement to pay any ~~anti-windfall payments~~Anti-Windfall Payments to secure broadband licenses.

In accordance with the Report and Order and the AAR Agreement, we cancelled our licenses and recorded a loss on the disposal of intangible assets, in the ~~six months~~year ended ~~September 30, 2020.~~March 31, 2021.

Costs of Securing Broadband Licenses

As a broadband applicant, we can satisfy the three eligibility ~~tests~~requirements discussed above by including our existing licensed channels and by acquiring, protecting or retuning additional channels when necessary through (i) spectrum purchases, (ii) spectrum relocations and/or (iii) Anti-Windfall Payments, or any combination thereof.

1.Channel Acquisition. In 2015, we began acquiring targeted additional channels in various markets in anticipation of the Report and Order. We will continue to employ spectrum acquisition as a tool for those situations where an incumbent desires to exit the 900 MHz band. We may selectively acquire channels outside the 900 MHz broadband segment and use them to swap for channels within the broadband segment. For purposes of broadband license eligibility, any potential acquisitions of 900MHz channels we negotiate will be included as part of our broadband application, but the acquisition does not need to be consummated at the time we submit our license application.

2.Retuning Costs. Retuning is the exercise of exchanging, also referred to as swapping, broadband segment channels held by Covered Incumbents and moving them to channels outside of the 900 MHz broadband segment. A retune or swap adds to the number of channels we hold for computational purposes in the 90% Broadband Segment Test. We began retuning or swapping channels with Covered Incumbents in 2015 in anticipation of the Report and Order. We have continued retuning channels with Covered Incumbents since that time.

3.Anti-Windfall Payments. To obtain a 6 MHz broadband license, wethe broadband applicant must surrender up to 240 licensed channels in the county. As this band has been underutilized historically, most counties in the United States do not have 240 channels licensed. ~~To make up~~When the ~~difference, we~~broadband applicant does not surrender 240 channels, they will pay for the difference inbetween the spectrum held ~~by the Company~~

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and the 6 MHz it will be receiving as the broadband licensee by making an Anti-Windfall Payment. As noted above, the FCC will use as a reference the spectrum price based on the average price paid in the FCC’s 600 MHz auction in aeach given county.

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Importantly, the markets where the FCC has channels in inventory and where we may need to make Anti-Windfall Payments to effectively return 240 channels to the FCC are generally in smaller urban, suburban and rural markets. Our spectrum position is greatest in the largest, most populated and therefore most expensive markets, with a few exceptions. Although we will need to make Anti-Windfall Payments to secure broadband licenses in some counties, the cost for the channels, on average, will be lower than the nationwide average amount paid in the FCC’s 600 MHz auction.

When combining our estimated clearing and spectrum acquisition costs with our anticipated Anti-Windfall Payments to the U.S. Treasury, we anticipate the combined total costs of securing broadband licenses from the FCC will to range from $130 to $160 million, the significant majority of which we intend to spend byfrom our fiscal year 2021 through the end of fiscal year 2024. We will deploy this capital at our determined pace based on several key ongoing factors, including customer demand, market opportunity and offsetting income from spectrum leases.

Broadband Spectrum Agreements

In December 2020, we entered into our first long-term lease agreement of 900 MHz Broadband Spectrum with Ameren. The Ameren Agreements will enable Ameren to deploy a private LTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people. Each Ameren Agreement is for a term of up to 40 years, consisting of an initial term of 30 years, with a 10-year renewal option for an additional payment. The scheduled prepayments for the 30-year initial terms of the Ameren Agreements total $47.7 million, of which $0.3 million was received by us in February 2021, $5.4 million in September 2021 and $17.2 million in October 2021. The prepayments received to date encompass the initial upfront payment(s) due upon signing of the Ameren Agreements and payments for delivery of the relevant 1.4 x 1.4 cleared spectrum in several metropolitan counties throughout Missouri and Illinois, in accordance with the terms of the Ameren Agreements. The remaining prepayments for the 30-year initial term are due by mid-2026, per the terms of the Ameren Agreements and as we deliver the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses. We are working with incumbents to clear the 900 MHz Broadband Spectrum allocation in Ameren’s service territory. In August 2021, the FCC granted the first 900 MHz broadband licenses to us for several counties in Ameren’s service territory, for which the Ameren Agreements were also subsequently approved by the FCC. We expect to recognize revenue from the Ameren Agreements commencing in the second half of fiscal year 2022. Revenue will be recognized as cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered based on straight-line amortization over the initial 30-year terms of the Ameren Agreements. Our Board approved the Ameren Agreements on April 23, 2021, and Ameren’s board of directors approved the Ameren Agreements on May 6, 2021.

In February 2021, we entered into an agreement with SDG&E to provide 900 MHz Broadband Spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County for a total payment of $50.0 million. The SDG&E Agreement will support SDG&E’s deployment of a private LTE network for its California service territory, with a population of approximately 3.6 million people. As part of the SDG&E Agreement, SDG&E and Anterix are collaborating to accelerate the utility industry momentum for private networks. The SDG&E Agreement includes the assignment of 6 MHz of 900 MHz Broadband Spectrum, 936.5 – 939.5 MHz paired with 897.5 – 900.5 MHz, within SDG&E’s service territory following the FCC’s issuance of the broadband licenses to us. Delivery of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses by county is expected to commence in fiscal year 2023 and is scheduled for completion before the end of fiscal year 2024. The total payment of $50.0 million is comprised of an initial payment of $20.0 million received in February 2021 and the remaining $30.0 million payment, which is due through fiscal year 2024 as we deliver the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses to SDG&E. We are working with incumbents to clear the 900 MHz Broadband Spectrum allocation in the SDG&E’s California service territory. The SDG&E Agreement is subject to customary provisions regarding remedies, including reduced payment amounts and/or refund of amounts paid, and termination rights, if a party fails to perform its contractual obligations. Both SDG&E and Anterix obtained all necessary internal approvals prior to executing the SDG&E Agreement. A gain or loss will be recognized in each county once the cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered to SDG&E.

In September 2021, we entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy. The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments. Prepayment in full of the $30.2 million for the 20-year initial term, which was due and payable within thirty (30) days after execution of the Evergy Agreement, was received by us in October 2021. The Evergy Agreement is subject to customary provisions regarding remedies for non-delivery, including refund of amounts paid and termination rights, if we fail to perform our contractual obligations, including failure to deliver the relevant cleared 900 MHz Broadband Spectrum, in accordance with the terms of the Evergy Agreement. We are working with incumbents to clear the 900 MHz Broadband Spectrum allocation covered by the Evergy Agreement. Evergy and Anterix obtained all necessary internal approvals prior to executing the Evergy Agreement. We expect

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to recognize revenue from the Evergy Agreement commencing in the second half of fiscal year 2022. Revenue will be recognized as the relevant 900 MHz Broadband Spectrum is delivered based on straight-line amortization over the initial 20-year term of the Evergy Agreement.

Historical Spectrum Initiatives

We acquired our 900 MHz spectrum and certain related equipment from Sprint in September 2014 for $100 million. While the spectrum we initially purchased can support narrowband and wideband wireless services, the most significant business opportunities we identified requires contiguous spectrum that allows for greater bandwidth than allowed by the current configuration of our spectrum. As a result, since purchasing our 900 MHz spectrum in 2014, we pursued initiatives at the FCC seeking to modernize and realign a portion of the 900 MHz band to increase its usability and capacity by allowing it to accommodate the deployment of broadband networks, technologies and solutions. Specifically, in November 2014, we and the Enterprise Wireless Alliance (“EWA”) submitted a Joint Petition for Rulemaking to the FCC to propose a realignment of a portion of the 900 MHz band to create a 6 MHz broadband authorization, while retaining 4 MHz for continued narrowband operations. Comments on the proposed rules were filed in June 2015 and reply comments in July 2015.

In August 2017, the FCC issued a Notice of Inquiry (“NOI”) announcing that it had commenced a proceeding to examine whether it would be in the public interest to change the existing rules governing the 900 MHz band to increase access to spectrum, improve spectrum efficiency and expand flexibility for a variety of potential uses and applications, including broadband and other advanced technologies and services. We and EWA filed a joint response to the FCC’s NOI in October 2017 and reply comments in November 2017.

On March 14, 2019, the FCC unanimously adopted a Notice of Proposed Rulemaking ~~(the “NPRM”~~(“NPRM”) that endorsed the Company’s objective of creating a broadband opportunity in the 900 MHz band for critical infrastructure and other enterprise users. In the NPRM, the FCC requested comments from interested parties, including us, on a number of important topics that would impact the timing and costs of obtaining a broadband license. The Company filed comments to the NPRM in June 2019 and reply comments in July 2019.

On May 13, 2020, the FCC approved a Report and Order to modernize and realign the 900 MHz band to increase its usability and capacity by allowing it to be utilized for the deployment of broadband networks, technologies and solutions.

The Report and Order was published in the Federal Register on July 16, 2020 and became effective on August 17, 2020.

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~~Historical Business Operations~~

Historically, we generated revenue principally from our pdvConnect and TeamConnect businesses. We historically marketed pdvConnect, a mobile communication and workforce management solution, primarily through two Tier 1 carriers in the United States. In Fiscal 2016, we began offering a commercial push-to-talk (“PTT”) service, which we marketed as TeamConnect, in seven major metropolitan areas throughout the United States, including Atlanta, Baltimore/Washington, Chicago, Dallas, Houston, New York and Philadelphia. We primarily offered the TeamConnect service to customers indirectly through third-party sales representatives who were primarily selected from Motorola’s nationwide dealer network.

In June 2018, we announced our plan to restructure our operations to align and focus our business priorities on our spectrum initiatives. Consistent with this restructuring plan, we transferred our TeamConnect business and support obligations for our pdvConnect business in December 2018. Specifically, we entered into: (i) a Customer Acquisition and Resale Agreement with A BEEP LLC (“A BEEP”) on January 2, 2019, (ii) a Customer Acquisition, Resale and Licensing Agreement with Goosetown Enterprises, Inc. (“Goosetown”) on January 2, 2019 and (iii) a memorandum of understanding (“MOU”) with the principals of Goosetown on December 31, 2018. Under the A BEEP and Goosetown Agreements, we agreed to: (i) transfer our TeamConnect customers located in the Atlanta, Chicago, Dallas, Houston and Phoenix metropolitan markets to A BEEP, (ii) transfer our TeamConnect customers located in the Baltimore/Washington DC, Philadelphia and New York metropolitan markets to Goosetown, (iii) provide A BEEP and Goosetown with access to our TeamConnect Metro and Campus Systems (the “MotoTRBO Systems”) and

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(iv) grant A BEEP and Goosetown the right to resell access to our MotoTRBO Systems pursuant to separate Mobile Virtual Network Operation arrangements for a two-year period. We also granted Goosetown a license to sell the business applications we developed for our TeamConnect service.

We retained a number of significant obligations under our A BEEP and Goosetown agreements related to the TeamConnect and pdvConnect businesses. To help ensure the transitioning of the TeamConnect customers, we continued to provide customer care, billing and collection services through April 1, 2019. We are required to pay all site lease, backhaul and utility costs required to operate the MotoTRBO Systems for a two (2)-year period ending on January 2, 2021. By the end of this two-year period, A BEEP and Goosetown are required to migrate their respective customers off of the MotoTRBO Systems. We are required to continue to pay the cell tower leases for the TeamConnect networks we deployed for the balance of the lease terms. We also retained customer billing and collection responsibility for the pdvConnect business.

Under the terms of the MOU, we assigned the intellectual property rights to our TeamConnect and pdvConnect related applications to TeamConnect LLC (the “LLC”), a new entity formed by the principals of Goosetown, in exchange for a 19.5% ownership interest in the LLC, effective April 30, 2019. The Goosetown Principals have agreed to fund the future operations of the LLC, subject to certain limitations. The LLC assumed our software support and maintenance obligations under the A BEEP and Goosetown Agreements. The LLC also assumed customer care services related to the pdvConnect service. We provided transition services to the LLC through April 1, 2019. We are also obligated to pay the LLC a monthly service fee for a 24-month period ending on January 7, 2021 for its assumption of our support obligations under the A BEEP and Goosetown Agreements. We are obligated to pay the LLC a certain portion of the billed revenue we received from pdvConnect customers for a 48-month period. On April 1, 2020, we transferred the pdvConnect customers to the LLC, and the LLC agreed to provide us a portion of the billed revenue they receive from these customers.

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Results of Operations

Comparison of the three and six months ended September 30, ~~2020~~2021 and ~~2019~~2020

The following ~~table sets~~tables set forth our results of operations for the three and six months ended September 30, 2021 (“Fiscal 2022”) and 2020 (“Fiscal 2021”~~) and 2019 (“Fiscal 2020”~~). The period-to-period comparison of financial results is not necessarily indicative of the financial results we will achieve in future periods.

Operating revenues


	Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change			Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change
(in thousands)	2020		2019		2020 from 2019			2020		2019		2020 from 2019			2021		2020		2021 from 2020			2021		2020		2021 from 2020
	(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)
Service revenue	$	66	$	241	$	(175)	-73%	$	140	$	512	$	(372)	-73%	$	—	$	66	$	(66)	-100%	$	—	$	140	$	(140)	-100%
Spectrum lease revenue		182		182		—	0%		364		364		—	0%		182		182		—	0%		364		364		—	0%
Total operating revenues	$	248	$	423	$	(175)	-41%	$	504	$	876	$	(372)	-42%	$	182	$	248	$	(66)	-27%	$	364	$	504	$	(140)	-28%

~~Overall operating~~

Operating revenues decreased by ~~$0.2~~$0.1 million, or ~~41%~~27%, to $0.2 million for the three months ended September 30, ~~2020~~2021 from ~~$0.4~~$0.3 million for the three months ended September 30, ~~2019.~~2020. For the six months ended September 30, ~~2020,~~2021, operating revenue decreased by $0.1 million, or 28%, to $0.4 million ~~or 42%, to~~from $0.5 ~~million from $0.9~~ million for the six months ended September 30, ~~2019.~~2020. The decrease in ~~the three and six month periods are~~our operating revenues was attributable to the transfer of ~~pdvConnect~~our TeamConnect customers to A BEEP and Goosetown as part of our December 2018 restructuring efforts as discussed in Note 3 to the ~~LLC.~~ Consolidated Financial Statements in this Quarterly Report, as well as the loss of customers in our historical pdvConnect business.

Operating expenses


	Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change			Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change
(in thousands)	2020		2019		2020 from 2019			2020		2019		2020 from 2019			2021		2020		2021 from 2020			2021		2020		2021 from 2020
	(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)
Direct cost of revenue (exclusive of depreciation and amortization)	$	515	$	699	$	(184)	-26%	$	1,063	$	1,617	$	(554)	-34%	$	—	$	515	$	(515)	-100%	$	—	$	1,063	$	(1,063)	-100%
General and administrative		5,582		4,557		1,025	22%		11,320		9,405		1,915	20%		9,825		13,955		(4,131)	-30%		19,555		21,499		(1,944)	-9%
Sales and support		631		759		(128)	-17%		1,292		1,973		(681)	-35%		993		693		300	43%		2,048		1,394		654	47%
Product development		805		555		250	45%		1,497		1,236		261	21%		930		988		(58)	-6%		1,933		1,789		145	8%
Depreciation and amortization		1,190		636		554	87%		2,398		1,277		1,121	88%		257		1,190		(933)	-78%		535		2,398		(1,863)	-78%
Stock compensation expense		8,618		1,412		7,206	510%		10,573		2,989		7,584	254%
Restructuring costs		8		50		(42)	-84%		21		160		(139)	-87%		—		8		(8)	-100%		—		21		(21)	-100%
Impairment of long-lived assets		—		—		—	0%		29		—		29	100%		112		—		112	100%		127		29		97	333%
Total operating expenses	$	17,349	$	8,668	$	8,681	100%	$	28,193	$	18,657	$	9,536	51%	$	12,117	$	17,349	$	(5,232)	-30%	$	24,198	$	28,193	$	(3,995)	-14%

Direct cost of revenue. Direct cost of revenue decreased by ~~$0.2~~$0.5 million, or ~~26%~~100%, tofor the three months ended September 30, 2021 from $0.5 million for the three months ended September 30, ~~2020 from $0.7 million for the three months ended September 30, 2019.~~2020. For the six months ended September 30, ~~2020,~~2021, direct cost of revenue decreased by ~~$0.6~~$1.1 million, or ~~34%~~100%, to ~~$1.1 million~~$0 from ~~$1.6~~$1.1 million for the six months ended September 30, ~~2019.~~2020. The decreases in the three and six months ended September 30, ~~2020~~2021 primarily resulted from ~~the $0.2 million and $0.3 million, respectively, of~~ lower support ~~services~~costs related to the transfer of pdvConnect customers to the ~~LLC. In addition,~~LLC as part of our December 2018 restructuring efforts as discussed in ~~the six month period, we recorded a $0.2 million impairment of contract costs related~~Note 3 to the ~~TeamConnect customers transferred to A BEEP and Goosetown that we incurred~~Consolidated Financial Statements in ~~Fiscal 2020.~~this Quarterly Report.

General and administrative expenses. General and administrative expenses ~~increased~~decreased by ~~$1.0~~$4.1 million, or ~~22%~~30%, to ~~$5.6~~$9.8 million for the three months ended September 30, ~~2020~~2021 from ~~$4.6~~$14.0 million for three months ended September 30, ~~2019.~~2020. For the six months ended September 30, ~~2020,~~2021, general and administrative expenses ~~increased~~decreased by $1.9 million, or ~~20%~~9%, to ~~$11.3~~$19.6 million from ~~$9.4~~$21.5 million for the six months ended September 30, ~~2019.~~2020. The ~~increase~~decrease of ~~$1.0~~$4.1 million for the three months ended September 30, ~~2020~~2021, resulted ~~mainly~~primarily from ~~$0.7~~$1.2 million in higher headcount and ~~employee related~~professional service costs ~~and $0.3~~offset by $5.6 million ~~higher consulting charges~~in lower stock compensation expense. The three months ended September 30, 2020 included a one-time stock compensation expense of $5.1 million related to ~~our strategic spectrum initiatives.~~the vesting of performance share units upon grant of the FCC Report & Order. The ~~increase~~decrease of $1.9 million for the six months ended September 30, ~~2020~~2021 resulted mainly from a ~~$1.4~~$2.2 million increase in headcount and ~~employee related~~professional service costs ~~$0.6 million higher consulting charges related to our initiatives, partially~~ offset by a ~~$0.2~~$4.4 million decrease in ~~employee related travel and meeting costs due to the pandemic.~~stock compensation expense.

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Sales and support expenses. Sales and support expenses ~~decreased~~increased by ~~$0.1~~$0.3 million, or ~~17%~~43%, to ~~$0.6~~$1.0 million for the three months ended September 30, ~~2020~~2021 from ~~$0.8~~$0.7 million for three months ended September 30, ~~2019.~~2020. For the six months ended September 30, ~~2020,~~2021, sales and support expenses ~~decreased~~increased by ~~$0.7~~$0.6 million, or ~~35%~~47%, to ~~$1.~~3$.2.0 million from ~~$2.0~~$1.4 million for the six months ended

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September 30, ~~2019.~~2020. The increase, in the three months ended September 30, 2021, principally resulted from a $0.2 million increase in headcount and related costs and $0.1 million higher marketing costs. The increase in the six months ended September 30, 2021, primarily resulted from a $0.5 million increase in headcount and related costs and $0.1 million in higher marketing costs.

Product development expenses. Product development expenses decreased by $0.1 million, or 6%, to $0.9 million for the three months ended September 30, 2021 from $1.0 million for three months ended September 30, 2020. For the six months ended September 30, 2021, product development expenses increased by $0.1 million, or 8%, to $1.9 million from $1.8 million for the six months ended September 30, 2020. The decrease in the three months ended September 30, 2020 principally resulted from $0.1 million in ~~delayed marketing expenditures due to the pandemic.~~lower consulting costs. The ~~decrease~~increase in the six months ended September 30, 2021, primarily resulted from $0.3 million impairment of contract costs incurred in Fiscal 2020 related to the TeamConnect customers transferred to A BEEP and Goosetown. In addition, a $0.2 million decrease for rebranding efforts in Fiscal 2020 that did not incur in Fiscal 2021 and a $0.1 million ~~decrease~~increase in ~~lower marketing expenses due to the pandemic.~~consulting costs.

~~Product development expenses.~~ ~~Product development expenses increased~~Depreciation and amortization. Depreciation and amortization decreased by ~~$0.3~~$0.9 million, or ~~45%,~~78% to ~~$0.8~~$0.3 million for the three months ended September 30, ~~2020~~2021 from ~~$0.5~~$1.2 million for the three months ~~ended~~ September 30, ~~2019.~~2020. For the six months ended September 30, ~~2020, product development expenses increased~~2021, depreciation and amortization decreased by ~~$0.3~~$1.9 million, or ~~21%~~78%, to ~~$1.5~~$0.5 million from ~~$1.2~~$2.4 million for the six months ended September 30, ~~2019.~~2020. The ~~increases in~~decrease for both the three and six months ended September 30, ~~2020 are primarily attributable to $0.3 million higher consulting charges to assist with development of future products used for broadband spectrum.~~

~~Depreciation and amortization.~~ Depreciation and amortization increased by $0.6 million, or 87% to $1.2 million for the three months ended September 30, 2020 from $0.6 million for the three months ended September 30, 2019. For the six months ended September 30, 2020, depreciation and amortization increased by $1.1 million, or 88%, to $2.4 million from $1.3 million for the six months ended September 30, 2019. The increase2021 was due to the change in the useful life for our market network sites during ~~the last two quarters of~~ Fiscal 2020 that resulted in higher depreciation expense for the three and six months ended September 30, 2020. Market network site assets for our historical business were fully depreciated by December 31, 2020.

~~Stock compensation expense.~~ ~~Stock compensation expense~~Impairment of long-lived assets. Impairment of long-lived assets increased by ~~$7.2~~$0.1 million ~~or 510%,~~ to ~~$8.6~~$0.1 million for the three months ended September 30, 2020 from $1.4 million for the three months ended September 30, 2019. For the six months ended September 30, 2020, stock and compensation expense increased by $7.6 million, or 254%, to $10.6 million from $3.0 million for the six months ended September 30, 2019. The increase in the three and six months ended September 30, 2020 was attributable to $5.1 million in stock compensation expense recognized upon the achievement of the Target Goal under the performance-based restricted stock units and performance-based stock options, upon the Report and Order becoming effective in August 2020 (see Note 10), $0.8 million relating to the Type III modification to the restricted stock units held by the former Chairman of the Board upon his transition to a consultant to the Company and $0.7 million due to higher valuation of grants awarded in Fiscal 2021.

~~Restructuring costs.~~ ~~Restructuring costs decreased by $42,000, or 84%, to $8,000~~The increase for the three months ended September 30, 2020 from $50,000 for the three months ended September 30, 2019. Restructuring costs decreased by $139,000, or 87%, to $21,000 for the six months ended September 30, 2020 from $160,000 for the six months ended September 30, 2019. The decrease inboth the three and six months ended September 30, 2020 was mainly due to the reduction of employee severance and benefit costs relating to the December 2018 cost reduction and restructuring actions related to the transfer of the TeamConnect business to A BEEP and Goosetown and the transfer of the pdvConnect business to the LLC.

~~Impairment of long-lived assets.~~ ~~The impairment for the six months ended September 30, 2020~~2021 resulted from ~~the $29,000~~a $0.1 million non-cash impairment charge for ~~long-lived assets for~~ network ~~sites. There was no impairment charge for the three months ended September 30, 2020 and three and six months ended September 30, 2019.~~site equipment.

~~(Gain)/loss~~Loss from disposal of intangible assets ~~net~~


	Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change			Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change

(in thousands)	2020		2019		2020 from 2019			2020		2019		2020 from 2019			2021		2020		2021 from 2020			2021		2020		2021 from 2020
	(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)
(Gain)/loss from disposal of intangible assets, net	$	(829)	$	—	$	(829)	-100%	$	3,849	$	—	$	3,849	100%	$	—	$	(829)	$	829	-100%	$	—	$	3,849	$	(3,849)	100%

For the three and six months ended September 30, 2020, we cancelled licenses in the 900 MHz band in accordance with the Report and Order and our agreement with the AAR. Because we did not receive any licenses nor monetary reimbursement in exchange for the cancellation, but only credit for purposes of determining our future eligibility and payment requirements for broadband licenses under the Report and Order, we recorded a $0.3 million and $5.0 million loss from disposal of the intangible assets in the Consolidated Statements of Operations for the three and six months ended September 30, 2020, respectively.

In September 2020, we closed an agreement with a third party for the exchange of 900 MHz licenses. Under the agreement, we received spectrum licenses at their estimated fair value of approximately $0.2 million and a payment of $1.2 million in cash, of which we previously received $0.6 million as a refundable deposit when the agreement was executed in Fiscal 2018 and we ~~are~~were entitled to receive the remaining $0.6 million upon receipt of FCC approval and closing of the agreement in September 2020. Under the agreement, we transferred spectrum licenses with a book value of approximately $0.3 million to the third party. WeThe Company recognized a $1.1 million gain from disposal of intangible assets in the Consolidated Statement of Operations when the deal closed in September 2020.

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~~(Gain)/loss~~Loss from disposal of long-lived assets, net


	Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change			Three months ended September 30,				Aggregate Change			Six months ended September 30,				Aggregate Change

(in thousands)	2020		2019		2020 from 2019			2020		2019		2020 from 2019			2021		2020		2021 from 2020			2021		2020		2021 from 2020
	(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)					(Unaudited)		(Unaudited)
(Gain)/loss from disposal of long-lived assets, net	$	(5)	$	61	$	(66)	-108%	$	(6)	$	62	$	(68)	-110%	$	16	$	(5)	$	21	-452%	$	19	$	(6)	$	25	-441%

~~For the three and six months ended September 30, 2020, we incurred approximately $6,000 in a gain~~

Other income ~~remained relatively flat for~~decreased a modest amount during the three and six months ended September 30, ~~2020~~2021 as compared to the three and six months ended September 30, ~~2019.~~2020.

The ~~Company reported~~ loss on equity method investment for the three and six months ended September 30, 2020 ~~amounting~~relates to ~~($12,000) and ($16,000), respectively,~~ ~~compared to income on investment for~~the 19.5% ownership interest in TeamConnect LLC that we acquired in connection with the transfer of our historical business.

For the three and six months ended September 30, ~~2019 amounting~~2021, we recorded a total deferred tax expense of $0.2 million and $0.3 million, respectively, due to ~~$15,000, respectively,~~ ~~relating~~the inability to use some portion of federal and state NOL carryforwards against the ~~19.5% ownership interest in TeamConnect LLC.~~ deferred tax liability created by amortization of indefinite-lived intangibles.

On March 27, 2020, the Coronavirus Aid Relief and Economic Security (“CARES”) Act was signed into law. The new CARES Act modified Section 172(b)(1)(A) of the Internal Revenue Code to state that ~~net operating loss (“NOL”)~~NOL arising in a taxable year beginning before January 1, 2018, is carried forward 20 years provided that a carryback claim is not effected. From this adjusted

provision, our March 31, 2018 NOL carryforward changed from an indefinite life to a 20-year life. We used a discrete effective tax rate method to calculate taxes for the three and six months ended September 30, 2020. We determined that applying an estimate of the annual effective tax rate would not provide a reasonable estimate as small changes in estimated “ordinary” loss would result in significant changes in the estimated annual effective tax rate. Accordingly, for the three and six months ended September 30, 2020, we recorded a total deferred tax expense of $0.1 million and $0.2 million, respectively, due to the inability to use some portion of federal and state NOL carryforwards against the deferred tax liability created by amortization of indefinite-lived intangibles.

Net cash used by operating activities. Net cash used in operating activities was $12.6 million for the six months ended September 30, 2021, as compared to $14.7 million for the six months ended September 30, ~~2020, as compared to $14.5 million for~~2020. The majority of net cash used by operating activities during the six months ended September 30, ~~2019.~~2021 resulted from a net loss of $24.0 million and a decrease in accounts payable and accrued expenses by $1.6 million, partially offset by non-cash stock-based compensation of $6.5 million and deferred revenue of $5.1 million. The majority of net cash used by operating activities during the six months ended September 30, 2020 resulted from our net loss of $31.4 million partially offset by non-cash stock-based compensation of $10.6 million, net loss from disposal of intangible assets of $3.8 million and depreciation byof $2.4 million.~~The majority of net cash used by operating activities during the six months ended September 30, 2019 resulted~~

We received additional $47.4 million in proceeds from ~~the net loss of $17.1 million and decrease~~our 900 MHz Broadband Spectrum customer prepayments in ~~accounts payable and accrued expenses by $1.2 million, partially offset by non-cash stock-based compensation of $3.0 million.~~ October 2021.

Net cash used by investing activities. Net cash used in investing activities was approximately $8.0 million for the six months ended September 30, 2020 as compared to $0.5 million used for the six months ended September 30, 2019. The net cash used by investing activities during the six months ended September 30, 2020 resulted from wireless license acquisitions net of change in refundable deposits amounting to $7.8 million and purchase of equipment amounting to $0.2 million. The net cash used during the six months ended September 30, 2019 resulted from the purchase of equipment amounting to $0.3 million and wireless license acquisitions amounting to $0.2 million.

~~Net cash provided by financing activities~~. For the six months ended September 30, 2021 and 2020, net cash used by investing activities was $12.1 million and $8.0 million, respectively, primarily to acquire wireless licenses in markets across the United States.

Net cash provided by financing activities. For the six months ended September 30, 2021 and 2020, net cash provided by financing activities was $8.0 million and $1.5 million, respectively, primarily ~~resulting~~ from the proceeds from stock option exercises. For the six months ended September 30, 2019, net cash provided by financing activities was $95.8 million primarily from the $94.2 million net proceeds from the July 2019 follow-on offering and $2.0 million from the proceeds from stock option exercises.

We are now engaged in qualifying for and securing broadband licenses from the FCC pursuant to the Report and Order. At the same time, our sales and marketing ~~department~~departments are pursuing opportunities to lease the broadband licenses we secure to our targeted utility and critical infrastructure customers. Our future capital requirements will depend on many factors, including: the timeline and costs to acquire broadband licenses pursuant to the Report and Order, including the costs to acquire additional spectrum, the costs related to retuning, or swapping spectrum held by, Covered Incumbents and the costs of paying Anti-Windfall ~~payments~~Payments to the U.S. Treasury; costs related to the commercializing of our spectrum assets; and our ability to sign customer contracts and generate revenues from the license or transfer of any broadband licenses we secure; the terms and conditions of any customer contracts, including the timing of payments; the costs associated with expanding our business development, sales and marketing organization, the costs and ongoing obligations related to our former TeamConnect and pdvConnect businesses; the revenues we generate from royalties we may receive

from our agreements we entered into with the buyers of our TeamConnect and our pdvConnect businesses; and our ability to control our operating expenses.

On April 3, 2020, we filed a shelf registration statement (the “Shelf Registration Statement”) on Form S-3 with the SEC that was declared effective by the SEC on April 20, 2020, which permits us to offer up to $150 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time. Our Shelf Registration Statement is intended to provide us with additional flexibility to access capital markets for general corporate purposes, which may include working capital, capital expenditures, repayment of debt, other corporate expenses and acquisitions of complementary products, technologies, or businesses.

We entered into an Amended and Restated Controlled Equity Offering Sales Agreement and an Amended and Restated Sales Agreement (collectively, the “Sales Agreements”) with Cantor Fitzgerald & Co. and B. Riley FBR, Inc., respectively (collectively, the “Agents”), and on April 3, 2020, registered the sale of up to an aggregate of $50,000,000 in shares of our common stock in at the market sales transactions pursuant to the Sales Agreements under the Shelf Registration Statement. Through the date of this filing, we have not sold any shares of our common stock in at the market transactions or any securities under the Shelf Registration Statement.

We believe our cash and cash equivalents on hand will be sufficient to meet our financial obligations through at least the next 12 months. As noted above, our future capital requirements will depend on a number of factors, including among others, the costs and timing of securing broadband licenses, including our spectrum retuning activities, spectrum acquisitions and the Anti-Windfall ~~payments~~Payments to the U.S. Treasury, and our operating activities and any revenues we generate through our commercialization activities. When combining our estimated clearing and spectrum acquisition costs with our anticipated Anti-Windfall payments to the U.S. Treasury to effectively acquire additional spectrum from the FCC’s inventory in markets where we need it, we anticipate the combined total costs to range from $130 to $160 million, the significant majority of which we intend to spend over through the end of fiscal year 2024. We will deploy this capital at our determined pace based on several key ongoing factors, including customer demand, market


		Operating		Operating
Fiscal Year		Leases		Leases
2021 (excluding the six months ended September 30, 2020)	$	1,276
2022		2,256
2022 (excluding the six months ended September 30, 2021)			$	1,100
2023		2,105		2,099
2024		1,917		1,953
2025		1,524		1,553
After 2025		1,375
2026				866
After 2026				596
Total future minimum lease payments		10,453		8,167
Amount representing interest		(2,668)		(1,832)
Present value of net future minimum lease payments	$	7,785	$	6,335



		Weighted			Weighted
		Average			Average
	Restricted	Grant Day		Restricted	Grant Day
	Stock	Fair Value		Stock	Fair Value
Non-vested restricted stock outstanding at March 31, 2020	352,194	$	37.93
Non-vested restricted stock outstanding at March 31, 2021				475,759	$	42.48
Granted	252,419		48.79	348,683		46.79
Vested				(177,356)		(39.38)
Forfeited	—		—	(39,588)		(45.25)
Vested	(140,218)		39.91
Non-vested restricted stock outstanding at September 30, 2020	464,395	$	43.23
Non-vested restricted stock outstanding at September 30, 2021				607,498	$	45.70



		Weighted
		Average
	Performance	Grant Day
	Stock	Fair Value
Performance stock outstanding at March 31, 2020	138,984	$	46.85
Granted	30,049		49.92
Forfeited	—		—
Vested	(91,216)		46.85
Performance stock outstanding at September 30, 2020	77,817	$	48.04



		Weighted
		Average
	Performance	Grant Day
	Stock	Fair Value
Performance stock outstanding at March 31, 2021	75,049	$	58.65
Granted	—		—
Vested	—		—
Forfeited/cancelled	—		—
Performance stock outstanding at September 30, 2021	75,049	$	58.65



	Options	Weighted Average Exercise Price		Options	Weighted Average ‎Exercise Price
Options outstanding at March 31, 2020	1,807,466	$	23.93
Options outstanding at March 31, 2021				1,663,223	$	24.96
Options granted	60,558		49.92	165,768		58.56
Options exercised	(84,704)		(26.43)	(548,767)		(21.53)
Options forfeited/expired	—		—	—		—
Options outstanding at September 30, 2020	1,783,320	$	24.70
Options outstanding at September 30, 2021				1,280,224	$	30.77



	Number of Shares

	Common stock	Common stock		Additional paid-in capital		Accumulated deficit		Total
Balance at June 30, 2020	17,289,027	$	2	$	455,489	$	(221,044)	$	234,447
Equity based compensation*	167,975		—		8,618		—		8,618
Equity payment of prior year accrued employee related expenses	4,199		—		—		—		—
Stock option exercises	26,000		—		513		—		513
Shares withheld for taxes	—		—		—		—		—
Net loss	—		—		—		(16,280)		(16,280)
Balance at September 30, 2020	17,487,201	$	2	$	464,620	$	(237,324)	$	227,298



Balance at March 31, 2020	17,184,712	$	2	$	450,978	$	(205,914)	$	245,066
Equity based compensation*	206,440		—		10,573		—		10,573
Equity payment of prior year accrued employee related expenses	23,932		—		1,537		—		1,537
Stock option exercises	72,117		—		1,532		—		1,532
Shares withheld for taxes	—		—		—		—		—
Net loss	—		—		—		(31,410)		(31,410)
Balance at September 30, 2020	17,487,201	$	2	$	464,620	$	(237,324)	$	227,298



	Performance Options	Weighted Average Exercise Price		Performance Options	Weighted Average ‎Exercise Price
Performance Options outstanding at March 31, 2020	82,197	$	46.85
Performance Options outstanding at March 31, 2021				48,417	$	46.85
Performance Options granted	—		—	—		—
Performance Options exercised	—		—	(6,635)		(46.85)
Performance Options forfeited/expired	—		—	—		—
Performance Options outstanding at September 30, 2020	82,197	$	46.85
Performance Options outstanding at September 30, 2021				41,782	$	46.85




Exhibit ‎No.	Description of Exhibit
3.1(1)	Amended and Restated Certificate of Incorporation of ~~Anterix Inc. (the “Company”).~~the Company.
3.2(2)	Certificate of Amendment No. 1 to Amended and Restated Certificate of Incorporation of the Company.
3.3(3)	Certificate of Amendment No. 2 to Amended and Restated Certificate of Incorporation of the Company.
4(4)	Amended and Restated Bylaws of the Company.
4.1(5)	Amendment No. 1 to the Amended and Restated ~~ByLaws~~Bylaws of the Company.
4.2(1)	Form of Common Stock Certificate of the Company.
~~10.1~~+	~~Senior Executive Form of Performance-Based Restricted Stock Units Agreement and Grant Notice (2021 Short-Term Incentive Plan) under the 2014 Stock Plan.~~
~~10.2~~+	~~Executive Form of Performance-Based Restricted Stock Units Agreement and Grant Notice (2021 Short-Term Incentive Plan) under the 2014 Stock Plan.~~
31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)

			Anterix Inc.
			~~Anterix Inc.~~
Date: November 3, 2021
~~Date:~~	~~November 16, 2020~~		/s/ Robert H. Schwartz
			Robert H. Schwartz
			President and Chief Executive Officer
		(Principal Executive Officer)

~~Date:~~	~~November 16, 2020~~
Date: November 3, 2021		/s/ Timothy A. Gray
			Timothy A. Gray
			Chief Financial Officer
		(Principal Financial ‎and Principal Accounting Officer)