Anterix(ATEX) - 2024 Q1 - Quarterly Report

Part I. Financial Information Consolidated Financial Statements 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 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 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 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 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] - Spectrum revenue for Q1 2023 totaled $608,000, primarily from agreements with Ameren ($152k), Evergy ($274k), and Motorola ($182k)[32] - 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] - 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][69] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] - 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] Liquidity and Capital Resources 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] - 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][98] - 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] - 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] Quantitative and Qualitative Disclosures about Market Risk 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] - 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] - The company is not exposed to foreign currency exchange risk as all operations and transactions are denominated in U.S. dollars[109] Controls and Procedures 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] - 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] Part II. Other Information Legal Proceedings and Risk Factors 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] - There have been no material changes from the risk factors previously disclosed in the company's 2023 Annual Report[117] Share Repurchases and Other Disclosures 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 |