Anterix(ATEX) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Anterix reported a net loss of $15.1 million for the quarter ended June 30, 2020, driven by a $4.7 million loss on intangible asset disposal and higher operating expenses Consolidated Balance Sheets Total assets decreased to $254.4 million as of June 30, 2020, primarily due to a $12.7 million reduction in cash and cash equivalents Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 (Unaudited) | March 31, 2020 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $124,766 | $137,453 | | Intangible assets | $115,839 | $111,526 | | Total Assets | $254,385 | $267,397 | | Liabilities & Equity | | | | Total liabilities | $19,938 | $22,331 | | Total stockholders' equity | $234,447 | $245,066 | | Total Liabilities and Stockholders' Equity | $254,385 | $267,397 | Consolidated Statements of Operations Net loss for the three months ended June 30, 2020, increased to $15.1 million, primarily due to a $4.7 million loss from intangible asset disposal Statement of Operations Summary (in thousands, except per share data) | Metric | Three months ended June 30, 2020 | Three months ended June 30, 2019 | | :--- | :--- | :--- | | Total operating revenues | $256 | $453 | | Total operating expenses | $10,844 | $9,989 | | Loss from disposal of intangible assets | ($4,678) | $— | | Loss from operations | ($15,266) | ($9,536) | | Net loss | ($15,130) | ($9,374) | | Net loss per common share | ($0.88) | ($0.63) | Consolidated Statements of Cash Flows Net cash decreased by $12.7 million for the quarter, driven by $9.1 million used in investing activities and $4.6 million in operations Cash Flow Summary (in thousands) | Activity | Three months ended June 30, 2020 | Three months ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used by operating activities | ($4,612) | ($9,030) | | Net cash used by investing activities | ($9,094) | ($247) | | Net cash provided by financing activities | $1,019 | $1,577 | | Net change in cash and cash equivalents | ($12,687) | ($7,700) | | Cash and cash equivalents, end of period | $124,766 | $69,022 | Notes to Unaudited Consolidated Financial Statements The notes detail the company's strategic shift to commercialize its 900 MHz spectrum, including significant license acquisitions and disposals - The company's primary focus is commercializing its 900 MHz spectrum assets for private broadband networks following the FCC's Report and Order on May 13, 2020[21] - In the quarter, the company acquired wireless licenses for $9.0 million in cash[55] - A loss of $4.7 million was recorded from the disposal of intangible assets after the company cancelled licenses to enable the Association of American Railroads (AAR) to relocate its operations, a requirement under the FCC's Report and Order[57][58] - On April 1, 2020, the company transferred its pdvConnect customers to TeamConnect LLC, which will pay Anterix a portion of recurring revenues[43][46] - The company acknowledges that the ultimate impact of the COVID-19 pandemic on its financial performance is highly uncertain but believes it has adequate liquidity for at least the next twelve months[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic shift to commercialize 900 MHz spectrum, estimating $130-160 million in license costs and reporting a $15.1 million net loss Overview and Securing Broadband Licenses The company focuses on commercializing its 900 MHz spectrum for private broadband networks, with estimated costs of $130-160 million to secure licenses - The company's primary strategy is to commercialize its 900 MHz spectrum assets for private broadband networks for utility and critical infrastructure customers[111] - The FCC's Report and Order on May 13, 2020, enables the 900 MHz band to be used for broadband deployment, a key milestone for the company's strategy[111][132] - The company anticipates the combined total costs of securing broadband licenses from the FCC, including clearing costs, spectrum acquisitions, and Anti-Windfall Payments, will range from $130 to $160 million, with the majority to be spent by the end of fiscal year 2024[128][161] Results of Operations Operating revenues decreased 43% to $0.3 million, while expenses rose 9%, resulting in a $15.1 million net loss Operating Results Comparison (in thousands) | Item | Q1 FY2021 (ended June 30, 2020) | Q1 FY2020 (ended June 30, 2019) | Change (%) | | :--- | :--- | :--- | :--- | | Total operating revenues | $256 | $453 | -43% | | Total operating expenses | $10,844 | $9,989 | +9% | | Loss from disposal of intangible assets | ($4,678) | $— | -100% | | Net loss | ($15,130) | ($9,374) | +61% | - General and administrative expenses increased by $0.9 million (18%) due to higher headcount, related costs, and consulting charges for FCC initiatives[142] - Depreciation and amortization increased by $0.6 million (88%) due to a change in the useful life of network sites[145] Liquidity and Capital Resources The company ended the quarter with $124.8 million in cash, with future license costs estimated at $130-160 million, and maintains a $150 million shelf registration - The company had cash and cash equivalents of $124.8 million at June 30, 2020[153] - Net cash used in investing activities was $9.1 million for the quarter, mainly due to $9.0 million in wireless license acquisitions[154] - The company filed a $150 million shelf registration statement and established a $50 million at-the-market (ATM) sales agreement to provide financial flexibility, but has not yet sold any securities under these programs[159][160] - Management believes current cash on hand is sufficient to meet financial obligations for at least the next 12 months[161] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate sensitivity on cash, but the impact is not material, and there is no foreign currency risk - The company's main market risk is interest income sensitivity from changes in U.S. interest rates, but the impact is not considered material[163] - There is no exposure to foreign currency risk as all operations and transactions are denominated in U.S. dollars[164] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[165] - No changes in internal control over financial reporting occurred during the quarter that were likely to have a material effect[166] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not involved in any material legal proceedings[169] Item 1A. Risk Factors No material changes have occurred in the risk factors since the last Annual Report on Form 10-K - No material changes have occurred in the risk factors since the last Annual Report filed on May 28, 2020[170] Item 5. Other Information An amendment with TeamConnect, LLC finalized the transfer of pdvConnect customers, with Anterix receiving a portion of recurring revenues - On August 4, 2020, an amendment was made to the agreement with TeamConnect, LLC, finalizing the transfer of pdvConnect customers effective April 1, 2020. Anterix will receive a portion of recurring revenues in exchange[173] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents, material agreements, and CEO/CFO certifications