Anterix (ATEX) came out with a quarterly loss of $0.55 per share versus the Zacks Consensus Estimate of a loss of $0.61. This compares to loss of $0.66 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 9.84%. A quarter ago, it was expected that this wireless communications company would post a loss of $0.64 per share when it actually produced a loss of $0.55, delivering a surprise of 14.06%.Over the last four quarters, the compa ...

Table of Contents Title of each class Trading symbol Name of each exchange on which registered Common Stock, $0.0001 par value ATEX The Nasdaq Stock Market LLC (Nasdaq Capital Market) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________ FORM 10-Q ______________________ (Mark one) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 1 ...

Industry Overview - The Zacks Communication - Infrastructure industry is positioned to benefit from strong demand trends and a growing user inclination towards digital innovations, despite facing challenges such as high capital expenditures, margin erosion, and geopolitical conflicts [1][4] - Key players like Anterix Inc. (ATEX), CommScope Holding Company, Inc. (COMM), and Bandwidth Inc. (BAND) are expected to gain from the increasing demand for scalable infrastructure due to the proliferation of IoT, cloud transitions, and accelerated 5G rollouts [1] Industry Description - The industry provides various infrastructure solutions for communication networks, including high-speed network access solutions and a range of products such as optical fiber, structured cable solutions, and wireless network backhaul products [2] Future Trends - The industry is experiencing a seamless transition to cloud services, driven by the growth in bandwidth-intensive applications and the deployment of 5G technology, leading to significant investments in LTE, broadband, and fiber [3] - Companies are transforming from traditional telecommunications firms to technology-driven entities to meet the rising demand for flexible data and communication solutions [3] Profitability Challenges - The industry is currently facing profitability challenges due to a shortage of chips, high raw material prices, and geopolitical tensions affecting business credibility and operations [4] - Ongoing conflicts, such as the Israel-Hamas conflict and the Russia-Ukraine war, have further impacted profitability and operational risks [4] Network Convergence - Operators are moving towards converged network structures that integrate voice, video, and data communications, which is expected to reduce service delivery costs and enhance competition in broadband services [5] Industry Performance - The Zacks Communication - Infrastructure industry has underperformed compared to the broader Zacks Computer and Technology sector and the S&P 500, declining 58.8% over the past year [8] - The industry's current valuation, based on trailing 12-month EV/EBITDA, is 3.29X, significantly lower than the S&P 500's 14.40X and the sector's 14.14X [9] Key Stocks to Watch - **Anterix Inc. (ATEX)**: Holds the largest licensed spectrum in the 900 MHz band and has seen a 36.5% earnings surprise on average over the last four quarters, with a 35.5% upward revision in current-year earnings estimates [10] - **CommScope Holding Company, Inc. (COMM)**: Focused on core operations after divesting its Home Networks business, with a long-term earnings growth expectation of 17.2% [11] - **Bandwidth Inc. (BAND)**: A Communications Platform-as-a-Service provider with a 175.3% average earnings surprise over the last four quarters and upward revisions in earnings estimates for the current and next year [14]

Anterix (ATEX) has been on a downward spiral lately with significant selling pressure. After declining 13.8% over the past four weeks, the stock looks well positioned for a trend reversal as it is now in oversold territory and there is strong agreement among Wall Street analysts that the company will report better earnings than they predicted earlier.How to Determine if a Stock is OversoldWe use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock i ...

Financial Data and Key Metrics - The company launched a share repurchase program in September, allowing the repurchase of up to $250 million of outstanding shares over three years [6] - The company expects to receive $53 million in proceeds from existing contracts during the remainder of the fiscal year [6] - Currently, 16 utilities representing approximately $900 million in potential contract proceeds have crossed the demonstrated intent threshold [12] Business Line Data and Key Metrics - Anterix is enabling a nationwide platform for utilities to support a resilient, secure, and clean energy future through collaboration with customers and solutions providers [7] - The Utility Broadband Alliance (UBBA) Annual Summit saw participation from 35 utilities, representing over 60% of Anterix's spectrum value [7][8] - Itron, an Anterix Active Ecosystem member, announced the availability of 900 megahertz compatible devices, enhancing deployment flexibility for utilities [9] Market Data and Key Metrics - The 900 megahertz private wireless broadband is gaining traction, with significant industry focus and executive acknowledgment at events like the UBBA Summit [9][10] - The demonstrated intent scorecard shows positive movement, with seven utilities adding 11 demonstrated intent indicators from August to November [11] Company Strategy and Industry Competition - Anterix is focused on driving the utility industry towards 900 megahertz private wireless broadband, with significant progress in customer engagement and ecosystem development [5][7] - The company is leveraging its share repurchase program and near-term opportunities exceeding $250 million to deliver shareholder value [6][14] - Anterix is actively involved in industry forums and panels, such as the EEI Foundation wildfire mitigation panel, to promote the adoption of 900 megahertz private LTE networks [10] Management Commentary on Operating Environment and Future Outlook - Management remains highly confident in the company's ability to deliver value to shareholders, citing industry movement towards 900 megahertz, utility progress on the demonstrated intent scorecard, and the share repurchase program [14] - The company sees near-term opportunities in excess of $250 million, underpinning its confidence in future growth [6][14] Other Important Information - Wassim Akhdar joined Anterix as Senior Vice President of Product Innovation, bringing extensive experience in delivering innovative solutions to utilities [13] - The company's CatalyX solution, a turnkey subscriber management and roaming solution, was demonstrated at the UBBA Summit, showcasing its potential to enhance private broadband networks [9] Q&A Session Summary Question: Quantification of investment by utilities and ecosystem partners - Anterix estimates that its spectrum represents roughly a third of the spend in network deployment costs, with utilities spending upwards of $150 billion annually on capital projects [17][18] - The company tracks 23 companies with commercial-ready products for 900 megahertz, indicating significant third-party investment in the ecosystem [19] Question: Impact of the Hawaii situation on utility boards - Wildfire mitigation has become a critical focus for utilities, with private LTE 900 megahertz networks being deployed to address these risks [21][22] - The discussion at the EEI Foundation panel highlighted the importance of technology solutions, such as falling conductor protection, in mitigating wildfire risks [23][24] Question: Milestones with Evergy and other contract proceeds - Anterix expects $20 million from Xcel this quarter and $16 million from Xcel and $15 million from LCRA in the March quarter [26][27] - One additional utility representing a $50 million licensing opportunity has moved above the demonstrated intent threshold in the last three months [28] Question: Cash balances, liquidity, and buyback strategy - The company plans to keep $40 million to $50 million in cash to cover annual OpEx, with excess liquidity directed towards the buyback program [30] - The buyback program reflects the company's confidence in near-term opportunities exceeding $250 million [34] Question: Interest in 800 megahertz spectrum and 5G adoption - Anterix is opportunistic about spectrum opportunities, including potential partnerships or acquisitions related to 800 megahertz spectrum [32][33] - Utilities are currently focused on LTE, with future compatibility for 5G through software upgrades, as highlighted by ecosystem partners like Ericsson and Nokia [36][37] Question: Demonstrated Intent (DI) scorecard and Phase III progress - The DI scorecard tracks utilities' progress towards 900 megahertz contracts, with 16 utilities currently above the threshold [12][40] - The DI scorecard provides granularity on utility progress, including contract negotiations and other indicators of intent [41][43] Question: Government spectrum policy and shared spectrum - Anterix is monitoring potential spectrum opportunities, including shared spectrum models like CBRS, but emphasizes the need for control and certainty in utility networks [50][53] - The company believes both shared and exclusive license models will continue to play a role in the spectrum landscape [54] Question: Interest from the satellite industry - Anterix is engaged with leading vendors on potential hybrid terrestrial-satellite solutions, viewing 900 megahertz as a foundational element for future network expansions [56]

General Information [Filing Information](index=1&type=section&id=Filing%20Information) Anterix Inc. filed its Form 10-Q for the period ended September 30, 2023, as a non-accelerated filer on Nasdaq - Anterix Inc. filed its Quarterly Report on Form 10-Q for the period ended September 30, 2023[3](index=3&type=chunk) Filing Details | Indicator | Detail | | :---------- | :----- | | **Filing Type** | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | | **Period Ended** | September 30, 2023 | | **Trading Symbol** | ATEX | | **Exchange** | The Nasdaq Stock Market LLC (Nasdaq Capital Market) | | **Filer Status** | Non-accelerated filer, Smaller reporting company | | **Common Stock Outstanding (Nov 10, 2023)** | 18,769,676 shares | [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) The report's forward-looking statements are subject to significant business, economic, and regulatory risks and uncertainties - Forward-looking statements are subject to significant business, economic, competitive, regulatory, and other risks, contingencies, and uncertainties[8](index=8&type=chunk) - Key risks include the ability to qualify for and obtain broadband licenses from the FCC, successfully commercialize spectrum assets, correctly estimate financial needs, achieve operating and financial projections, and manage macroeconomic pressures[8](index=8&type=chunk) - Investors are urged not to place undue reliance on forward-looking statements, which reflect views and assumptions only as of the date made[11](index=11&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents unaudited financial statements, highlighting changes in cash, intangible assets, and a shift to near break-even [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20September%2030%2C%202023%20(Unaudited)%20and%20March%2031%2C%202023) Consolidated Balance Sheet Highlights (in thousands) | Item | Sep 30, 2023 | Mar 31, 2023 | Change (Absolute) | Change (%) | | :------------------------------------- | :----------- | :----------- | :---------------- | :--------- | | Cash and cash equivalents | $48,534 | $43,182 | $5,352 | 12.4% | | Total current assets | $62,112 | $59,459 | $2,653 | 4.5% | | Intangible assets | $197,566 | $202,044 | $(4,478) | -2.2% | | Total assets | $279,876 | $278,558 | $1,318 | 0.5% | | Total current liabilities | $15,298 | $31,900 | $(16,602) | -52.0% | | Deferred revenue (non-current) | $74,984 | $57,990 | $16,994 | 29.3% | | Total liabilities | $103,775 | $98,765 | $5,010 | 5.1% | | Total stockholders' equity | $176,101 | $179,793 | $(3,692) | -2.1% | [Unaudited Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20September%2030%2C%202023%20and%202022) Consolidated Statements of Operations Highlights (in thousands, except per share data) | Item | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (YoY) | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | Change (YoY) | | :------------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Spectrum revenues | $1,052 | $398 | 164.3% | $1,660 | $733 | 126.5% | | Operating expenses | $14,571 | $13,943 | 4.5% | $28,834 | $27,996 | 3.0% | | Gain on disposal of intangible assets, net | $(8,513) | $(2,905) | 193.0% | $(19,298) | $(3,553) | 443.2% | | Gain on sale of intangible assets, net | $(7,332) | $0 | N/A | $(7,332) | $0 | N/A | | Loss from operations | $(10,660) | $(10,660) | 0.0% | $(580) | $(23,732) | -97.6% | | Net income (loss) | $(10,643) | $(10,643) | 0.0% | $(45) | $(23,839) | -99.8% | | Net income (loss) per common share basic | $(0.56) | $(0.56) | 0.0% | $0.00 | $(1.27) | -100.0% | [Unaudited Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20six%20months%20ended%20September%2030%2C%202023) Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Item | Balance at Mar 31, 2023 | Balance at Sep 30, 2023 | Change (Absolute) | | :------------------------------------- | :---------------------- | :---------------------- | :---------------- | | Common stock (shares) | 18,922 | 18,768 | (154) | | Additional paid-in capital | $518,160 | $525,248 | $7,088 | | Accumulated deficit | $(338,369) | $(349,149) | $(10,780) | | Total stockholders' equity | $179,793 | $176,101 | $(3,692) | - Equity-based compensation for the six months ended September 30, 2023, was **$8.1 million**, contributing to the increase in additional paid-in capital[19](index=19&type=chunk) - The company repurchased and retired **333,000 common shares for $10.7 million** during the six months ended September 30, 2023[19](index=19&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20September%2030%2C%202023%20and%202022) Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | Change (YoY) | | :------------------------------------- | :-------------------------- | :-------------------------- | :----------- | | Net cash provided by (used in) operating activities | $2,213 | $(17,948) | $20,161 | | Net cash provided by (used in) investing activities | $14,889 | $(12,373) | $27,262 | | Net cash used in financing activities | $(11,750) | $(5,189) | $(6,561) | | Net change in cash and cash equivalents | $5,352 | $(35,510) | $40,862 | | Cash and cash equivalents, end of period | $48,534 | $70,114 | $(21,580) | - Operating cash flow significantly improved, moving from a net use of **$17.9 million** in 2022 to a net provision of **$2.2 million** in 2023, primarily due to increased deferred revenue from customer prepayments and reduced net loss[25](index=25&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - Investing activities shifted from a net use of **$12.4 million** in 2022 to a net provision of **$14.9 million** in 2023, driven by **$25.2 million** proceeds from spectrum sales, partially offset by intangible asset purchases[25](index=25&type=chunk)[109](index=109&type=chunk) - Financing activities used more cash, increasing from **$5.2 million** in 2022 to **$11.8 million** in 2023, mainly due to higher common stock repurchases (**$10.7 million** in 2023 vs **$4.7 million** in 2022)[25](index=25&type=chunk)[110](index=110&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [1. Nature of Operations and Basis of Presentation](index=11&type=section&id=1.%20Nature%20of%20Operations%20and%20Basis%20of%20Presentation) Anterix commercializes its 900 MHz spectrum for private broadband networks and has secured key customer agreements - Anterix Inc. is a wireless communications company commercializing 900 MHz spectrum for private broadband networks for utility and critical infrastructure customers[28](index=28&type=chunk) - The company launched CatalyX, an integrated platform offering public network roaming management and secure, remote SIM provisioning to enhance utilities' resiliency and collaboration[28](index=28&type=chunk) - Key agreements include a **$30.0 million** sale of 900 MHz Broadband Spectrum to LCRA (April 2023), an **$80.0 million** long-term usage agreement with Xcel Energy (October 2022), and a **$50.0 million** sale to SDG&E (February 2021), with a **$25.2 million** milestone payment received from SDG&E in Q3 2023[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - The company adopted the Anterix Inc. 2023 Stock Plan and authorized a new **$250.0 million** share repurchase program on September 21, 2023, extending through September 21, 2026[32](index=32&type=chunk) [2. Revenue](index=13&type=section&id=2.%20Revenue) Spectrum revenues grew significantly, driven by new agreements, leading to a substantial increase in deferred revenue Spectrum Revenues (in thousands) | Revenue Source | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | | :--------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Ameren Corporation | $152 | $152 | $304 | $305 | | Evergy | $274 | $64 | $548 | $64 | | Xcel Energy | $444 | $0 | $444 | $0 | | Motorola (Narrowband) | $182 | $182 | $364 | $364 | | **Total spectrum revenue** | **$1,052** | **$398** | **$1,660** | **$733** | - Total spectrum revenue increased by **164%** for the three months and **126%** for the six months ended September 30, 2023, primarily due to new revenue recognition from Evergy and Xcel Energy agreements[38](index=38&type=chunk) Contract Liabilities (Deferred Revenue) (in thousands) | Item | Sep 30, 2023 | Mar 31, 2023 | | :------------------------------------- | :----------- | :----------- | | Balance at beginning of period (6 months) | $60,759 | $54,678 | | Additions (6 months) | $21,166 | $0 | | Revenue recognized (6 months) | $(1,660) | $(733) | | Balance at end of period (6 months) | $80,265 | $53,945 | | Noncurrent liabilities | $74,984 | $51,431 | - Contract liabilities (deferred revenue) increased significantly, with a **$21.2 million** addition from Xcel Energy's milestone payment during the six months ended September 30, 2023[42](index=42&type=chunk) [3. Intangible Assets](index=14&type=section&id=3.%20Intangible%20Assets) Intangible assets decreased due to spectrum sales and exchanges, resulting in significant recognized gains Intangible Assets Activity (in thousands) | Item | Wireless Licenses (Mar 31, 2023) | Wireless Licenses (Sep 30, 2023) | | :------------------------------------- | :------------------------------- | :------------------------------- | | Balance at March 31, 2023 | $202,044 | | | Acquisitions | $8,022 | | | Sale of intangible assets | $(31,798) | | | Exchanges – licenses received | $24,146 | | | Exchanges – licenses surrendered | $(4,848) | | | Balance at September 30, 2023 | | $197,566 | - The company recorded a **$19.3 million** non-monetary gain on disposal of intangible assets for the six months ended September 30, 2023, from exchanging narrowband for broadband licenses in 14 counties[49](index=49&type=chunk) - A **$7.3 million** gain on sale of intangible assets was recognized for the six months ended September 30, 2023, from transferring the San Diego County broadband license to SDG&E[51](index=51&type=chunk) Purchases of Intangible Assets (in thousands) | Item | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | | Refundable deposits | $1,613 | $2,665 | | Retuning cost and Swaps | $442 | $3,815 | | Purchases and Anti-Windfall Payments | $8,022 | $4,748 | | **Total** | **$10,077** | **$11,228** | [4. Related Party Transactions](index=15&type=section&id=4.%20Related%20Party%20Transactions) The company withdrew from its LLC agreement with Goosetown, resulting in no related party payments or liabilities in the current period - Anterix Inc. withdrew as a member of TeamConnect LLC in February 2023 for no consideration[52](index=52&type=chunk) - No payments were incurred to related parties for the three and six months ended September 30, 2023, compared to **$15,000** and **$30,000** respectively in 2022[53](index=53&type=chunk) - As of September 30, 2023, the company had no outstanding liabilities to related parties[53](index=53&type=chunk) [5. Leases](index=16&type=section&id=5.%20Leases) The company's operating leases for office and tower space resulted in ROU assets of $2.8 million and total liabilities of $3.9 million - Substantially all of the company's leases are classified as operating leases for corporate office space and tower space[55](index=55&type=chunk) Lease Financials (in thousands) | Item | Sep 30, 2023 | Mar 31, 2023 | | :------------------------------------- | :----------- | :----------- | | Right of use assets, net | $2,826 | $3,371 | | Current operating lease liabilities | $1,610 | $1,725 | | Non-current operating lease liabilities | $2,278 | $2,922 | | **Total Operating Lease Liabilities** | **$3,888** | **$4,647** | Net Lease Cost (in thousands) | Item | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease cost | $471 | $445 | $978 | $894 | | Short term lease cost | $0 | $3 | $0 | $7 | | **Net lease cost** | **$471** | **$448** | **$978** | **$901** | - The weighted-average remaining lease term for operating leases is **2.65 years** (Sep 30, 2023), with a weighted-average incremental borrowing rate of **12%**[56](index=56&type=chunk) [6. Income Taxes](index=17&type=section&id=6.%20Income%20Taxes) The company recorded deferred tax expenses due to the inability to fully utilize NOL carryforwards against certain deferred tax liabilities - The company recorded deferred tax expenses of **$0.6 million** for the three months and **$0.4 million** for the six months ended September 30, 2023[63](index=63&type=chunk) - This is primarily due to the inability to use some portion of federal and state NOL carryforwards against deferred tax liabilities created by the amortization of indefinite-lived intangible assets[63](index=63&type=chunk) - Deferred tax liabilities as of September 30, 2023, were approximately **$2.9 million** for federal and **$2.9 million** for state[64](index=64&type=chunk) [7. Stockholders' Equity](index=17&type=section&id=7.%20Stockholders'%20Equity) The company adopted a new stock plan and authorized a new $250.0 million share repurchase program - The Anterix Inc. 2023 Stock Plan was adopted on August 8, 2023, authorizing 250,000 shares for grant, with **603,542 shares available** for future issuance as of September 30, 2023[65](index=65&type=chunk)[66](index=66&type=chunk) - A new **$250.0 million** share repurchase program was authorized on September 21, 2023, replacing the 2021 program, with **$250.0 million** remaining as of September 30, 2023[67](index=67&type=chunk)[70](index=70&type=chunk) Share Repurchase Activity (in thousands, except per share data) | Item | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Number of shares repurchased and retired | 333 | 54 | 333 | 110 | | Average price paid per share | $32.69 | $36.73 | $32.69 | $48.42 | | Total cost to repurchase | $10,735 | $2,000 | $10,735 | $4,725 | - An excise tax of approximately **$45 thousand** was accrued for stock repurchases for the three and six months ended September 30, 2023, due to the Inflation Reduction Act of 2022[68](index=68&type=chunk) [8. Net Income (Loss) Per Share of Common Stock](index=18&type=section&id=8.%20Net%20Income%20(Loss)%20Per%20Share%20of%20Common%20Stock) Net loss per share for the six-month period improved significantly to near zero from a loss of $(1.27) in the prior year Net Income (Loss) Per Share (in thousands, except per share data) | Item | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $2,073 | $(10,643) | $(45) | $(23,839) | | Basic weighted-average shares | 18,921,126 | 18,953,044 | 18,935,929 | 18,786,928 | | Diluted weighted-average common shares | 19,109,394 | 18,953,044 | 18,935,929 | 18,786,928 | | Net income (loss) per common share basic | $0.11 | $(0.56) | $0.00 | $(1.27) | | Net income (loss) per common share diluted | $0.11 | $(0.56) | $0.00 | $(1.27) | - For the three months ended September 30, 2023, **1,176,107 stock options and restricted stock units** were excluded from diluted EPS calculation due to anti-dilutive effect[73](index=73&type=chunk) - For the six months ended September 30, 2023, **193,437 potentially dilutive securities** were excluded due to the company reporting a net loss[73](index=73&type=chunk) [9. Contingencies and Guaranty](index=19&type=section&id=9.%20Contingencies%20and%20Guaranty) The company has contingent liabilities related to SDG&E refund obligations and a guaranty for spectrum delivery to Xcel Energy - SDG&E refund obligations represent a contingent liability, with **$1.4 million** remaining as a short-term liability after the delivery of the San Diego County broadband license[74](index=74&type=chunk)[75](index=75&type=chunk) - The company has a guaranty agreement with Xcel Energy for 900 MHz Broadband Spectrum delivery, with a maximum potential liability of approximately **$28.8 million** as of September 30, 2023[76](index=76&type=chunk)[77](index=77&type=chunk) - The company is not involved in any material legal proceedings[78](index=78&type=chunk) [10. Concentrations of Credit Risk](index=20&type=section&id=10.%20Concentrations%20of%20Credit%20Risk) Credit risk is concentrated in cash equivalents, while operating revenue is secured through upfront payments with no outstanding receivables - The company's primary credit risk is concentrated in cash and cash equivalents, which are placed with financial institutions where credit loss is not anticipated[80](index=80&type=chunk) - Operating revenue is entirely from upfront, fully paid fees from spectrum customers[80](index=80&type=chunk) - As of September 30, 2023, there were no outstanding accounts receivable[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial results, highlighting revenue growth, expense changes, and the company's liquidity position [Overview](index=21&type=section&id=Overview) - Anterix Inc. is a wireless communications company focused on commercializing its 900 MHz spectrum assets to enable utility and critical infrastructure customers to deploy private broadband networks[83](index=83&type=chunk) - The company is the largest holder of licensed spectrum in the 900 MHz band with nationwide coverage and is actively securing broadband licenses from the FCC following the 2020 Report and Order[83](index=83&type=chunk) - Anterix launched CatalyX, an integrated platform offering public network roaming management and secure, remote SIM provisioning to enhance utilities' resiliency and collaboration[83](index=83&type=chunk) [Business Developments](index=21&type=section&id=Business%20Developments) - In April 2023, Anterix entered into an agreement with Lower Colorado River Authority (LCRA) to sell 900 MHz Broadband Spectrum for **$30.0 million**, supporting LCRA's PLTE network deployment[84](index=84&type=chunk) - In October 2022, Anterix signed an agreement with Xcel Energy for dedicated long-term usage of 900 MHz Broadband Spectrum for **$80.0 million**, with a **$21.2 million** milestone payment received in July 2023[85](index=85&type=chunk)[86](index=86&type=chunk) - Anterix transferred the San Diego County broadband license to SDG&E in Q3 2023, receiving a **$25.2 million** milestone payment as part of the **$50.0 million** SDG&E Agreement[87](index=87&type=chunk) - The company adopted the Anterix Inc. 2023 Stock Plan and authorized a new **$250.0 million** share repurchase program on September 21, 2023[88](index=88&type=chunk)[89](index=89&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) [Spectrum Revenues](index=22&type=section&id=Spectrum%20revenues) Spectrum Revenues (in thousands) | Period | 2023 | 2022 | Aggregate Change (2023 from 2022) | Change % | | :-------------------------- | :----- | :----- | :-------------------------------- | :------- | | Three months ended Sep 30 | $1,052 | $398 | $654 | 164% | | Six months ended Sep 30 | $1,660 | $733 | $927 | 126% | - The increase in spectrum revenues for both periods was primarily due to revenue recognized from agreements with Evergy (approx **$0.3M** for 3 months, **$0.5M** for 6 months) and Xcel Energy (approx **$0.4M** for both periods)[91](index=91&type=chunk) [Operating Expenses](index=23&type=section&id=Operating%20expenses) Operating Expenses (in thousands) | Expense Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change % | 6 Months Ended Sep 30, 2023 | 6 Months Ended Sep 30, 2022 | Change % | | :------------------------------------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | General and administrative | $11,905 | $11,427 | 4% | $23,578 | $22,786 | 3% | | Sales and support | $1,310 | $1,164 | 13% | $2,585 | $2,400 | 8% | | Product development | $1,147 | $980 | 17% | $2,216 | $2,076 | 7% | | Depreciation and amortization | $209 | $372 | -44% | $455 | $734 | -38% | | **Total Operating expenses** | **$14,571** | **$13,943** | **5%** | **$28,834** | **$27,996** | **3%** | - General and administrative expenses increased due to higher contract consulting costs, professional service expenses, and headcount, partially offset by lower stock compensation expense[93](index=93&type=chunk) - Sales and support expenses increased primarily due to higher headcount and related costs[94](index=94&type=chunk) - Product development expenses rose due to higher IT-related expenses and headcount, partially offset by lower contract consulting costs[95](index=95&type=chunk) - Depreciation and amortization decreased significantly as certain assets became fully depreciated[96](index=96&type=chunk) [Gain on Disposal of Intangible Assets, Net](index=24&type=section&id=Gain%20on%20disposal%20of%20intangible%20assets%2C%20net) Gain on Disposal of Intangible Assets, Net (in thousands) | Period | 2023 | 2022 | Aggregate Change (2023 from 2022) | Change % | | :-------------------------- | :------- | :------- | :-------------------------------- | :------- | | Three months ended Sep 30 | $(8,513) | $(2,905) | $(5,608) | 193% | | Six months ended Sep 30 | $(19,298) | $(3,553) | $(15,745) | 443% | - The significant increase in gain was due to the exchange of narrowband licenses for broadband licenses in 5 counties (3 months) and 14 counties (6 months) in 2023, resulting in non-monetary gains of **$8.5 million** and **$19.3 million**, respectively[97](index=97&type=chunk) [Gain on Sale of Intangible Assets, Net](index=24&type=section&id=Gain%20on%20sale%20of%20intangible%20assets%2C%20net) Gain on Sale of Intangible Assets, Net (in thousands) | Period | 2023 | 2022 | Aggregate Change (2023 from 2022) | Change % | | :-------------------------- | :------- | :----- | :-------------------------------- | :------- | | Three months ended Sep 30 | $(7,332) | $0 | $(7,332) | 100% | | Six months ended Sep 30 | $(7,332) | $0 | $(7,332) | 100% | - A **$7.3 million** gain was recognized for the three and six months ended September 30, 2023, from the transfer of the San Diego County broadband license to SDG&E[99](index=99&type=chunk) - A **$4.9 million** deferred gain on sale of intangible assets was recorded related to SDG&E's option to pursue additional spectrum, expiring in September 2028[99](index=99&type=chunk) [Loss on Disposal of Long-Lived Assets, Net](index=25&type=section&id=Loss%20on%20disposal%20of%20long-lived%20assets%2C%20net) Loss on Disposal of Long-Lived Assets, Net (in thousands) | Period | 2023 | 2022 | Aggregate Change (2023 from 2022) | Change % | | :-------------------------- | :----- | :----- | :-------------------------------- | :------- | | Three months ended Sep 30 | $67 | $20 | $47 | 236% | | Six months ended Sep 30 | $36 | $22 | $14 | 63% | [Interest Income](index=25&type=section&id=Interest%20income) Interest Income (in thousands) | Period | 2023 | 2022 | Aggregate Change (2023 from 2022) | Change % | | :-------------------------- | :----- | :----- | :-------------------------------- | :------- | | Three months ended Sep 30 | $396 | $244 | $152 | 62% | | Six months ended Sep 30 | $782 | $261 | $521 | 200% | - The increase in interest income for both periods was attributable to higher interest rates[101](index=101&type=chunk) [Other Income (Expense)](index=25&type=section&id=Other%20income%20(expense)) Other Income (Expense) (in thousands) | Period | 2023 | 2022 | Aggregate Change (2023 from 2022) | Change % | | :-------------------------- | :----- | :----- | :-------------------------------- | :------- | | Three months ended Sep 30 | $63 | $(12) | $75 | -623% | | Six months ended Sep 30 | $158 | $47 | $111 | 236% | [Income Tax Expense](index=25&type=section&id=Income%20tax%20expense) Income Tax Expense (in thousands) | Period | 2023 | 2022 | Aggregate Change (2023 from 2022) | Change % | | :-------------------------- | :----- | :----- | :-------------------------------- | :------- | | Three months ended Sep 30 | $645 | $215 | $430 | 200% | | Six months ended Sep 30 | $405 | $415 | $(10) | -2% | - The change in income tax expense is due to the inability to use some federal and state NOL carryforwards against deferred tax liability from intangible asset amortization and changes in the state effective tax rate[103](index=103&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) - Anterix Inc. had **$48.5 million** in cash and cash equivalents as of September 30, 2023[104](index=104&type=chunk) - The company believes its current cash and contracted customer proceeds will be sufficient to meet financial obligations for at least 12 months[105](index=105&type=chunk) - Future capital requirements depend on customer contracts, spectrum retuning costs, acquisitions, Anti-Windfall Payments, and the ability to timely deliver broadband licenses[105](index=105&type=chunk) - Net cash provided by operating activities was **$2.2 million** for the six months ended September 30, 2023, a significant improvement from a **$17.9 million** use in the prior year, driven by customer prepayments and reduced net loss[106](index=106&type=chunk)[107](index=107&type=chunk) - Net cash provided by investing activities was **$14.9 million** for the six months ended September 30, 2023, primarily from **$25.2 million** in spectrum sales proceeds, offsetting intangible asset purchases[106](index=106&type=chunk)[109](index=109&type=chunk) - Net cash used in financing activities increased to **$11.8 million** for the six months ended September 30, 2023, mainly due to **$10.7 million** in common stock repurchases[106](index=106&type=chunk)[110](index=110&type=chunk) [Material Cash Requirements](index=27&type=section&id=Material%20Cash%20Requirements) - Future capital requirements are influenced by costs and time related to spectrum commercialization, customer contracts, timely delivery of broadband licenses, and potential refunds/penalties[111](index=111&type=chunk) - Total estimated payments for lease agreements (office and tower spaces) are approximately **$4.5 million**, with lease expiration dates ranging from October 2023 to July 2030[112](index=112&type=chunk)[113](index=113&type=chunk) - An asset retirement obligation (ARO) for clearing tower site locations is estimated at approximately **$0.6 million**[113](index=113&type=chunk) - The Xcel Energy guaranty has a maximum potential liability of approximately **$28.8 million** as of September 30, 2023, related to deferred revenue from prepayments[114](index=114&type=chunk) - The 2023 Share Repurchase Program authorizes up to **$250.0 million** in common stock repurchases by September 21, 2026, with **$250.0 million** remaining as of September 30, 2023[115](index=115&type=chunk)[117](index=117&type=chunk) [Off-balance sheet arrangements](index=29&type=section&id=Off-balance%20sheet%20arrangements) - As of September 30, 2023, and March 31, 2023, Anterix Inc. did not have any relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks include interest rate fluctuations and inflation, with no foreign currency exposure - Primary market risk exposure is interest income sensitivity, but a **10% change** in U.S. interest rates is not expected to materially impact financial condition due to the short-term nature of highly liquid investments[120](index=120&type=chunk) - The company is not exposed to foreign currency exchange rate fluctuations as all transactions are denominated in U.S. dollars[121](index=121&type=chunk) - Inflationary factors may adversely affect operating results by increasing costs and potentially harming commercialization efforts and revenues if not controlled[122](index=122&type=chunk) [Interest Rate Risk](index=29&type=section&id=Interest%20Rate%20Risk) - The company's primary exposure to market risk is interest income sensitivity, affected by changes in U.S. interest rates[120](index=120&type=chunk) - A **10% change** in market interest rates is not expected to have a material impact due to the short-term nature of highly liquid instruments[120](index=120&type=chunk) [Foreign Currency Exchange Rate Fluctuations](index=29&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Fluctuations) - The company's operations are based in the United States, and all transactions are denominated in U.S. dollars, resulting in no exposure to foreign currency exchange rate fluctuations[121](index=121&type=chunk) [Inflation Risk](index=29&type=section&id=Inflation%20Risk) - Inflationary factors have increased operating expenses and could adversely affect target customers' businesses, potentially harming commercialization efforts and revenues[122](index=122&type=chunk) - Continued high inflation could materially affect the business, operating results, and financial condition if higher operating costs are not controlled or commercialization efforts are negatively impacted[122](index=122&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective as of September 30, 2023 - Management concluded that disclosure controls and procedures were effective as of September 30, 2023[124](index=124&type=chunk) - No material changes in internal control over financial reporting occurred during the period[125](index=125&type=chunk) - Control systems provide only reasonable assurance and are subject to inherent limitations, including faulty judgments, simple errors, circumvention by individual acts or collusion, and management override[126](index=126&type=chunk)[127](index=127&type=chunk) [Disclosure Controls and Procedures](index=29&type=section&id=Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, evaluated and concluded that disclosure controls and procedures were effective as of the end of the reporting period[124](index=124&type=chunk) [Changes in Internal Control over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No changes in internal control over financial reporting occurred during the period that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[125](index=125&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=29&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) - Management acknowledges that control systems provide only reasonable assurance and cannot prevent or detect all errors and fraud due to inherent limitations[126](index=126&type=chunk) - Limitations include faulty judgments, simple errors, circumvention by individuals or collusion, and management override[127](index=127&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Anterix Inc. is not currently involved in any material legal proceedings - The company is not involved in any material legal proceedings[129](index=129&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the company's 2023 Annual Report on Form 10-K - No material changes have occurred from the risk factors previously disclosed in the 2023 Annual Report on Form 10-K[130](index=130&type=chunk) - Investors should carefully consider the disclosed risks, as well as additional unknown risks, which could materially and adversely affect the company's results of operations or financial condition[130](index=130&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased $10.7 million of its common stock under its share repurchase programs Issuer Purchases of Equity Securities (in thousands except for share and per share data) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Announced Plans or Programs | | :------------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------ | | July 1, 2023 through July 31, 2023 | — | $— | — | $26,815 | | August 1, 2023 through August 31, 2023 | 235,849 | $32.31 | 235,849 | $19,289 | | September 1, 2023 through Sep 30, 2023 | 96,730 | $33.27 | 96,730 | $250,000 | | **Total** | **332,579** | **$32.69** | **332,579** | **$250,000** | - The company repurchased **332,579 shares** of common stock at an average price of **$32.69 per share** during the three months ended September 30, 2023[132](index=132&type=chunk) - A new **$250.0 million** share repurchase program was authorized on September 21, 2023, replacing the prior program, with repurchases to be made via open market and/or privately negotiated transactions[133](index=133&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Anterix Inc. reported no defaults upon senior securities during the period - There were no defaults upon senior securities[134](index=134&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to Anterix Inc - Mine Safety Disclosures are not applicable[135](index=135&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) Anterix Inc. reported no other information requiring disclosure under this item - No other information is reported under this item[135](index=135&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including governance documents, stock plans, and required certifications - Exhibits include corporate governance documents such as Amended and Restated Certificate of Incorporation and Bylaws, and their amendments[137](index=137&type=chunk) - The Anterix Inc. 2023 Stock Plan is filed as Exhibit 10.1[137](index=137&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to Rules 13a-14, 15d-14, and 18 U.S.C. Section 1350) are included[137](index=137&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and the Cover Page Interactive Data File are also part of the exhibits[137](index=137&type=chunk) [Signatures](index=34&type=section&id=SIGNATURES) The report was duly signed by the CEO and CFO on November 13, 2023 - The report was signed on November 13, 2023[140](index=140&type=chunk) - Signatories include Robert H. Schwartz (President and Chief Executive Officer) and Timothy A. Gray (Chief Financial Officer and Principal Accounting Officer)[140](index=140&type=chunk)

Financial Data and Key Metrics Changes - The company received approximately $21 million from the first Excel Spectrum milestone for broadband licenses and expects to receive roughly $80 million of additional near-term proceeds based on the delivery of additional milestones throughout the fiscal year [17] - The company remains debt-free and forecasts free cash flow for fiscal 2024 [17] Business Line Data and Key Metrics Changes - The Demonstrated Intent (DI) scorecard indicates that 15 utilities have crossed the DI threshold, representing more than $850 million in potential contract proceeds, with an additional three utilities close to crossing the threshold representing over $275 million [11] - Since the introduction of the DI scorecard, there have been positive movements recorded on about 50 new measurable indicators of intent [11] Market Data and Key Metrics Changes - The utility sector is spending over $150 billion annually in capital expenditures, indicating a significant market opportunity for the company [28] - The Utility Broadband Alliance (UBBA) surpassed 100 members, reflecting growing interest in private broadband networks within the utility sector [14] Company Strategy and Development Direction - The company aims to become the de facto wireless broadband solution for the utility industry, focusing on capturing valuable customer contracts and demonstrating the value of its spectrum asset [6][12] - The company is actively working with the Utility Strategic Advisory Board and the Utility Broadband Alliance to identify and pursue key solutions for current and potential customers [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges investor frustration with the slow pace of the utility sector but remains optimistic about the progress indicated by the DI scorecard [6][26] - The company sees the current market as an opportunity to drive customer contracts and believes that educational efforts on the value of private broadband networks will lead to increased adoption [16] Other Important Information - The company has a share repurchase program with approximately $26 million available, which it plans to utilize efficiently [17] - The company has successfully closed 100% of contracts with the five utilities that have committed to wide area private wireless broadband since the availability of its broadband spectrum [12] Q&A Session Summary Question: What is the appropriate cash balance for the company? - The CFO indicated a preference for a cash balance that covers at least a year of operating expenses, estimated at roughly $40 million to $45 million [20][21] Question: What are the key issues causing delays in the utility industry? - Management explained that the cautious nature of utility customers, the complexity of organizational decision-making, and the need for regulatory approvals contribute to the delays [22][24] Question: Can you provide insights on the water opportunity? - The company highlighted that the utility sector's significant capital expenditures present monetization opportunities, with a focus on expanding use cases in water management [28][29] Question: What government programs are available to help utilities upgrade the grid? - Management discussed various programs, including the BIO IIJ and GRIP programs, which are expected to provide funding over the next few years [33][34] Question: How does the partnership with NRTC fit into the pipeline? - The company views the partnership with NRTC as an opportunity to reach smaller rural co-ops and municipal organizations, expanding its customer base [48][49] Question: What activities are being undertaken by the 100 companies in the active ecosystem? - A third of the companies in the ecosystem are developing broadband-enabled products, indicating a growing interest in the market [56]

[Part I. Financial Information](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Anterix reported total assets of $279.3 million, a net loss of $2.1 million, and a $14.1 million decrease in cash, driven by a $10.8 million gain on intangible asset disposal [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets increased slightly to $279.3 million, driven by intangible assets, while cash decreased and stockholders' equity rose to $181.2 million | Balance Sheet Items (in thousands) | June 30, 2023 (Unaudited) | March 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $29,033 | $43,182 | | Intangible assets | $215,795 | $202,044 | | **Total Assets** | **$279,328** | **$278,558** | | **Liabilities & Equity** | | | | Total current liabilities | $32,600 | $31,900 | | Total liabilities | $98,133 | $98,765 | | Total stockholders' equity | $181,195 | $179,793 | | **Total Liabilities and Stockholders' Equity** | **$279,328** | **$278,558** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2023, the company significantly reduced its net loss to $2.1 million from $13.2 million, primarily due to a $10.8 million gain from intangible asset disposal, with spectrum revenues increasing by 81% | Statement of Operations (in thousands) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :--- | :--- | :--- | | Spectrum revenues | $608 | $335 | | Operating expenses | $14,263 | $14,053 | | Gain from disposal of intangible assets, net | $(10,785) | $(648) | | Loss from operations | $(2,839) | $(13,072) | | **Net loss** | **$(2,118)** | **$(13,196)** | | **Net loss per common share** | **$(0.11)** | **$(0.71)** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $14.1 million to $29.0 million, driven by $8.2 million used in operating activities and $5.2 million in investing activities for intangible asset purchases | Cash Flow Activities (in thousands) | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,209) | $(9,832) | | Net cash used in investing activities | $(5,195) | $(6,656) | | Net cash used in financing activities | $(745) | $(2,680) | | **Net change in cash and cash equivalents** | **$(14,149)** | **$(19,168)** | | **Cash and cash equivalents, end of period** | **$29,033** | **$86,456** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Key notes detail a $30.0 million spectrum sale agreement, primary revenue sources, a $10.8 million non-monetary gain from license exchange, and contingent liabilities - In April 2023, the company entered into an agreement with Lower Colorado River Authority (LCRA) to sell 900 MHz Broadband Spectrum for total payments of **$30.0 million** plus the contribution of select LCRA narrowband spectrum[28](index=28&type=chunk) - Spectrum revenue for Q1 2023 totaled **$608,000**, primarily from agreements with Ameren (**$152k**), Evergy (**$274k**), and Motorola (**$182k**)[32](index=32&type=chunk) - The company recorded a non-monetary gain of **$10.8 million** from exchanging **$2.5 million** of narrowband licenses for **$13.3 million** of new broadband licenses in 9 counties[45](index=45&type=chunk) - A contingent liability of **$20.2 million** remains on the balance sheet related to payments received from SDG&E, which are refundable in the event of non-delivery, with a potential delivery delay adjustment of **$0.8 million to $1.3 million** anticipated for the San Diego County license transfer to SDG&E[68](index=68&type=chunk)[69](index=69&type=chunk) - Subsequent to the quarter's end, in July 2023, the company delivered cleared spectrum to Xcel Energy for 14 counties and received a full milestone payment of **$21.2 million**[74](index=74&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes increased spectrum revenues to the Evergy agreement and reduced net loss to a $10.8 million non-monetary gain, with liquidity relying on cash and future customer proceeds [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Spectrum revenues increased 81% to $0.6 million due to the Evergy agreement, while a $10.8 million gain from intangible asset disposal significantly reduced the loss from operations - Spectrum revenues increased by **$0.3 million**, or **81%**, primarily due to revenue recognized from the agreement with Evergy, Inc[81](index=81&type=chunk) - A non-monetary gain of **$10.8 million** was recorded from exchanging narrowband licenses for new broadband licenses in 9 counties, significantly reducing the net loss for the quarter[86](index=86&type=chunk) - General and administrative expenses increased by **$0.3 million (3%)** due to higher headcount and related costs (**$0.5 million**) and stock compensation (**$0.2 million**), partially offset by lower professional service and recruiting costs[83](index=83&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily its $29.0 million cash balance, with material cash requirements including spectrum commercialization, lease obligations, and potential SDG&E and Xcel Energy liabilities - The company's principal source of liquidity is its cash and cash equivalents, which stood at **$29.0 million** at June 30, 2023[93](index=93&type=chunk) - Net cash used in operating activities was **$8.2 million**, and net cash used in investing activities was **$5.2 million**, primarily for acquiring, swapping, or retuning wireless licenses[96](index=96&type=chunk)[98](index=98&type=chunk) - The company anticipates a delivery delay adjustment between **$0.8 million** and **$1.3 million** related to the transfer of the San Diego County broadband license to SDG&E[102](index=102&type=chunk) - As of June 30, 2023, **$26.8 million** remained available under the company's share repurchase program, which expires in September 2023, with no shares repurchased during the quarter[107](index=107&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is inflation, which could increase operating costs and hinder commercialization, while interest rate and foreign currency risks are minimal - The company identifies inflation as a key risk that may adversely affect operating results by increasing costs and potentially slowing customer commercialization efforts[110](index=110&type=chunk) - Interest rate risk is not expected to have a material impact due to the short-term nature of the company's highly liquid investments[108](index=108&type=chunk) - The company is not exposed to foreign currency exchange risk as all operations and transactions are denominated in U.S. dollars[109](index=109&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting identified - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[112](index=112&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[113](index=113&type=chunk) [Part II. Other Information](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings and Risk Factors](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material legal proceedings and reports no material changes to previously disclosed risk factors - The company is not currently involved in any material legal proceedings[116](index=116&type=chunk) - There have been no material changes from the risk factors previously disclosed in the company's 2023 Annual Report[117](index=117&type=chunk) [Share Repurchases and Other Disclosures](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock was repurchased during the quarter, with $26.8 million remaining available under the share repurchase program expiring in September 2023 | Share Repurchase Activity | Three Months Ended June 30, 2023 | | :--- | :--- | | Total Number of Shares Purchased | 0 | | Average Price Paid per Share | $0 | | Maximum Dollar Value Remaining (in thousands) | $26,815 |

Spectrum Holdings and Licensing - Anterix holds approximately 50% of the 900 MHz band spectrum in the United States, with nationwide coverage including Hawaii, Alaska, and Puerto Rico [14]. - As of March 31, 2023, Anterix was granted broadband licenses for 105 counties, up from 21 counties in 2022 [16]. - The company has negotiated and contracted approximately two-thirds of the transactions required to clear the licensed broadband segment channels [21]. - Anterix's strategy includes converting narrowband spectrum to broadband licenses and offering long-term leasing of broadband spectrum [17]. - The company aims to support digital transformations and infrastructure modernization for critical infrastructure industries [17]. - The company is actively working with federal and state agencies to promote the benefits of private broadband LTE networks for utilities [26]. - The company is focusing on expanding its customer base beyond electric utilities to include ports, railroads, water, oil and gas facilities, and mining operations [29]. - The company is facilitating the adoption of 900 MHz Band 8 radio access network equipment and end-user devices in the U.S. to support PLTE networks [28]. - The company has invested in business development and marketing teams to enhance customer relationships and grow its pipeline [34]. Agreements and Financials - The Ameren Agreements cover a service area of approximately 7.5 million people with a total scheduled prepayment of $47.7 million over 30 years [35]. - The Evergy Agreement, covering a population of approximately 3.9 million people, has a total prepayment of $30.2 million for a 20-year term [38]. - The Xcel Energy Agreement provides dedicated long-term usage of the 900 MHz Broadband Spectrum for a term of 20 years across eight states [40]. - The Xcel Energy Agreement includes total prepayments of $80.0 million, with $8.0 million received in December 2022, and remaining prepayments due by mid-2028 [41]. - The SDG&E Agreement involves a total payment of $50.0 million, with an initial payment of $20.0 million received in February 2021 and the remaining $30.0 million due through fiscal year 2024 [43]. - The LCRA Agreement has total payments of $30.0 million, due through fiscal year 2026, as the relevant cleared 900 MHz Broadband Spectrum is delivered [45]. - Revenue recognition for the Xcel Energy Agreement will occur over approximately 20 years as performance obligations are met, starting in Q2 FY24 [42]. - The company delivered 1.4 x 1.4 cleared 900 MHz Broadband Spectrum to SDG&E in September 2022, resulting in a milestone payment of $0.2 million [43]. Regulatory and Compliance - The FCC approved a Report and Order on May 13, 2020, to modernize the 900 MHz band, creating a 6 MHz broadband segment [51]. - The company entered into an agreement with the Association of American Railroads to cancel licenses in the 900 MHz band, enabling the AAR to relocate operations [57]. - The company is collaborating with incumbents to clear the 900 MHz Broadband Spectrum allocation in Xcel Energy service territories [41]. - The company satisfies the 50% Licensed Spectrum Test in approximately 3,200 out of 3,233 counties in the United States and its territories [59]. - The 90% Broadband Segment Test requires the company to control or have agreements covering 216 channels out of 240 in the broadband segment for licensing [60]. - The company must surrender 240 licensed channels to obtain a 6 MHz broadband license, with the option to make an Anti-Windfall Payment if insufficient channels are available [63]. Market and Competitive Landscape - The wireless communications industry is highly competitive, and the company is continuously monitoring changes to maximize the value of its spectrum assets [29]. - The average cost for channels in aggregate will be lower than the nationwide average of $0.93 per MHz of population covered (POP) from the FCC's 600 MHz auction [63]. - The company began acquiring additional channels in the 900 MHz band in 2015 in anticipation of regulatory changes [68]. - The company has been retuning channels with Covered Incumbents since 2015 to facilitate compliance with the 90% Broadband Segment Test [69]. Employee and Organizational Culture - As of March 31, 2023, the company had 82 full-time employees and engages consultants and contract workers as needed [78]. - The company conducted an Employee Engagement survey in 2021 with 80% participation, indicating a highly engaged workforce [80]. - As of March 31, 2023, 33% of the Board members and 28% of the workforce identify as diverse, with 31% of new hires being females and the overall workforce being 35% female [81]. - The company has implemented a hybrid work model requiring employees to work from the office three days a week, three weeks a month, balancing team development and personal benefits [82]. - The company is committed to fostering an inclusive culture through initiatives like Anterix GROW, which was launched in February 2023 [81]. - Employee sentiment is gauged through surveys, and the company is dedicated to addressing areas needing improvement [82]. - The company has established partnerships with organizations like INROADS and Talent Hue to enhance diverse talent recruitment [81]. - The company provides training and development opportunities, including leadership coaching and mentoring, to support employee growth [82]. Financial Risks and Economic Factors - The primary exposure to market risk is interest income sensitivity, with a 10% change in market interest rates not expected to materially impact financial condition or results of operations [162]. - Inflationary factors have led to increased operating expenses, and continued high inflation could adversely affect the company's business and financial condition [164]. - The company is not currently exposed to market risk from changes in foreign currency as all transactions are denominated in U.S. dollars [163]. - The company continues to monitor market risk exposure, including impacts from health pandemics and macroeconomic volatility [165].

Anterix's Core Business and Strategy - Anterix aims to be the leading private wireless broadband solution provider for the utility sector[7, 48] - The company holds the largest amount of licensed 900 MHz spectrum in the U S (896-901/935-940 MHz), covering 312 million people and approximately 1 8 Billion MHz Pops[11, 13] - Anterix's 900 MHz spectrum offers better propagation, coverage, and reliability, supporting secure and resilient private LTE networks for utilities[20] Market Opportunity and Growth Drivers - The electric utility business is becoming more complex, requiring strategic technologies like private wireless broadband communications[8] - Nationwide grid modernization and increased cyber threats are driving demand for private LTE networks[16] - Utility industry capital expenditures are substantial, with $144 3 billion in 2011 and $140 3 billion in 2023, positioning Anterix in a large market[24] Business Model and Customer Engagement - Anterix targets investor-owned utilities (IOUs) as ideal customers due to their coverage of the U S population, strong credit, and growing interest in private networks[21] - The company has secured 4 customer contracts[29] - Anterix has a pipeline of potential customers representing over $3 billion in total contracted proceeds value and over 90% of the addressable market[33, 40] Ecosystem and Momentum - The Anterix ACTIVE Ecosystem Program includes 100+ companies, building a foundation for 900 MHz Private LTE networks[32] - Since receiving FCC rules in 2020, Anterix has demonstrated its ability to convert spectrum, educate the utility sector, monetize its spectrum asset, and build demand[28]