ANTERIX INC. : Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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 (this "Quarterly Report") and the
audited financial statements and notes thereto included in our Annual Report on
Form 10-K for the year ended March 31, 2021, filed with the Securities and
Exchange Commission (the "SEC") on June 15, 2021 (the "2021 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 Quarterly Report. 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 Quarterly Report.

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 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. 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, we are pursuing
opportunities to lease the spectrum for which these broadband licenses are
secured to our targeted utility and critical infrastructure customers.

We were originally incorporated in California in 1997 and reincorporated in
Delaware in 2014. In November 2015, we changed our name from Pacific DataVision,
Inc. to pdvWireless, Inc. In August 2019, we changed our name from pdvWireless,
Inc. to Anterix Inc. We maintain offices in Woodland Park, New Jersey and
McLean, Virginia.

Refer to our 2021 Annual Report for a fuller description of the nature of our business, including details regarding the securing and costs of our broadband licenses.

Business developments


In December 2020, we entered into our first long-term lease agreement of 900 MHz
spectrum authorized for broadband use, with Ameren Corporation. 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 in February
2021, $5.4 million in September 2021 and $17.2 million in October 2021. See Note
2 Revenue in the Notes to the Unaudited Consolidated Financial Statements
contained within this Quarterly Report for further discussion on the Ameren
Agreement.

In September 2021, we entered into a long-term lease agreement of 900 MHz
Broadband Spectrum with Evergy Services, Inc. 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 in October 2021. See Note 2 Revenue in the
Notes to the Unaudited Consolidated Financial Statements contained within this
Quarterly Report for further discussion on the Evergy Agreement.


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Operating results

Comparison of three and nine months ended December 31, 2021 and 2020


The following tables set forth our results of operations for the three and nine
months ended December 31, 2021 ("Fiscal 2022") and 2020 ("Fiscal 2021"). The
period-to-period comparison of financial results is not necessarily indicative
of the financial results we will achieve in future periods.

operating income


                            Three months ended December 31,       Aggregate 

Change Nine months ended the 31st of DecemberOverall change (in thousands)

                   2021              2020            2021 from 2020              2021              2020            2021 from 2020
                              (Unaudited)       (Unaudited)                                 (Unaudited)       (Unaudited)
Service revenue            $               -   $          53   $     (53)        -100%   $               -   $         193   $     (193)       -100%
Spectrum lease revenue                   385             183          202         110%                 749             547           202         37%
Total operating revenues   $             385   $         236   $      149          63%   $             749   $         740   $         9          1%


Operating revenues increased by $0.2 million, or 63%, to $0.4 million for the
three months ended December 31, 2021 from $0.2 million for the three months
ended December 31, 2020. For the nine months ended December 31, 2021, operating
revenue remained insignificant and relatively flat as compared to the nine
months ended December 31, 2020. The increase in our spectrum lease revenue was
attributable to revenue recognized in connection with the Ameren Agreements of
approximately $0.2 million for the current quarter. The decrease in our service
revenues was attributable to the transfer of our TeamConnect customers as part
of our restructuring efforts as discussed in Note 2 Revenue in the Notes to the
Unaudited Consolidated Financial Statements contained within this Quarterly
Report, as well as the loss of customers in our historical pdvConnect business.

Operating expenses

                              Three months ended December 31,        Aggregate Change        Nine months ended December 31,       Aggregate Change
(in thousands)                      2021              2020            2021 from 2020              2021              2020           2021 from 2020
                                (Unaudited)        (Unaudited)                                 (Unaudited)       (Unaudited)
Direct cost of revenue
(exclusive of depreciation
and amortization)            $                5   $         543   $     (538)        -99%   $               5   $       1,606   $    (1,601)   -100%
General and administrative               10,219           8,806         1,413         16%              29,774          30,326          (552)     -2%
Sales and support                         1,263             676           587         87%               3,311           2,070          1,241     60%
Product development                         893           1,244         (351)        -28%               2,826           3,033          (207)     -7%
Depreciation and                                                        (697)        -68%                                                       -71%
amortization                                323           1,020                                           996           3,418        (2,422)
Impairment of long-lived                                                            -100%
assets                                        -              11          (11)                               -              40           (40)   -100%
Total operating expenses     $           12,703   $      12,300   $       403          3%   $          36,912   $      40,493   $    (3,581)     -9%


Direct cost of revenue. Direct cost of revenue decreased by $0.5 million, or
99%, to $5,000 for the three months ended December 31, 2021 from $0.5 million
for the three months ended December 31, 2020. For the nine months ended
December 31, 2021, direct cost of revenue decreased by $1.6 million, or 100%, to
$5,000 from $1.6 million for the nine months ended December 31, 2020. The
decreases in the three and nine months ended December 31, 2021 primarily
resulted from lower support costs related to the transfer of pdvConnect
customers as a part of our restructuring efforts as discussed in Note 2 Revenue
in the Notes to the Unaudited Consolidated Financial Statements contained within
this Quarterly Report.

General and administrative expenses. General and administrative expenses
increased by $1.4 million, or 16%, to $10.2 million for the three months ended
December 31, 2021 from $8.8 million for three months ended December 31, 2020.
For the nine months ended December 31, 2021, general and administrative expenses
decreased by $0.6 million, or 2%, to $29.8 million from $30.3 million for nine
months ended December 31, 2020. The increase of $1.4 million for the three
months ended December 31, 2021 primarily resulted from $0.6 million in higher
headcount and professional service costs and $0.8 million in higher stock
compensation expense. The decrease of $0.6 million for the nine months ended
December 31, 2021 primarily resulted from a $3.6 million decrease in stock
compensation expense offset by a $3.0 million increase in headcount and
professional service costs.

Sales and support expenses. Sales and support expenses increased by $0.6
million, or 87%, to $1.3 million for the three months ended December 31, 2021
from $0.7 million for three months ended December 31, 2020. For the nine months
ended December 31, 2021, sales and support expenses increased by $1.2 million,
or 60%, to $3.3 million from $2.1 million for the nine months ended

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December 31, 2020. The increase in the three months ended December 31, 2021
primarily resulted from a $0.3 million increase in headcount and related costs,
$0.2 million higher marketing costs and $0.1 million in higher stock
compensation expense. The increase in the nine months ended December 31, 2021
primarily resulted from a $0.7 million increase in headcount and related costs,
$0.3 million in higher marketing costs and $0.2 million in higher stock
compensation expense.

Product development expenses. Product development expenses decreased by $0.4
million, or 28%, to $0.9 million for the three months ended December 31, 2021
from $1.2 million for three months ended December 31, 2020. For the nine months
ended December 31, 2021, product development expenses decreased by $0.2 million,
or 7%, to $2.8 million from $3.0 million for the nine months ended December 31,
2020. The decrease in the three months ended December 31, 2021 primarily
resulted from $0.4 million in lower consulting costs. The decrease in the nine
months ended December 31, 2021 primarily resulted from a $0.2 million decrease
in consulting costs.

Depreciation and amortization. Depreciation and amortization decreased by $0.7
million, or 68% to $0.3 million for the three months ended December 31, 2021
from $1.0 million for the three months ended December 31, 2020. For the nine
months ended December 31, 2021, depreciation and amortization decreased by $2.4
million, or 71%, to $1.0 million from $3.4 million for the nine months ended
December 31, 2020. The decrease for both the three and nine months ended
December 31, 2021 was due to the change in the useful life for our market
network sites during Fiscal 2020 that resulted in higher depreciation expense
for the three and nine months ended December 31, 2020. Market network site
assets for our historical business were fully depreciated by December 31, 2020.

Impairment of long-lived assets. Impairment of long-lived assets decreased by
$11,000 to $0 for the three months ended December 31, 2021 from $11,000 for the
three months ended December 31, 2020. Impairment of long-lived assets decreased
by $40,000 to $0 for the nine months ended December 31, 2021 from $40,000 for
the nine months ended months ended December 31, 2020. The decrease for both the
three and nine months ended December 31, 2021 resulted from no non-cash
impairment charges recorded in the three and nine months ended December 31,
2021.

(Gain)/loss on disposal of intangible assets

                                                                                               Nine months ended December
                                Three months ended December 31,         Aggregate Change                   31,                  Aggregate Change

(in thousands)                      2021                 2020            2021 from 2020           2021            2020           2021 from 2020
                                 (Unaudited)          (Unaudited)                              (Unaudited)     (Unaudited)
(Gain)/loss from disposal
of intangible assets, net     $               -      $           -   $      

– 0% ($10,230) $3,849 ($14,079) -366%



During the nine months ended December 31, 2021, we exchanged our narrowband
licenses for broadband licenses in 12 counties. In connection with the exchange,
we recorded an estimated accounting cost basis of $13.6 million for the new
broadband licenses and disposed of $3.4 million related to the value ascribed to
the narrowband licenses we relinquished to the FCC for those same 12 counties.
As a result, we recorded a $10.2 million gain from disposal of the intangible
assets in the Consolidated Statements of Operations for the nine months ended
December 31, 2021. There were no exchanges in the three months ended December
31, 2021. Refer to Note 3 Intangibles in the Notes to the Unaudited Consolidated
Financial Statements contained within this Quarterly Report for further
discussion on the exchanges.

For the nine months ended December 31, 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 $5.0 million loss from disposal of the intangible assets in
the Consolidated Statements of Operations for the nine months ended December 31,
2020.

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 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. We
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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Loss on disposal of long-lived assets, net

                              Three months ended December 31,      Aggregate Change    Nine months ended December 31,        Aggregate Change

(in thousands)                     2021                2020         2021 from 2020          2021              2020            2021 from 2020
                                (Unaudited)         (Unaudited)                          (Unaudited)       (Unaudited)
Loss/(gain) from
disposal of long-lived
assets, net                $                  57   $           -   $      57   100%   $             111   $         (6)   $    117        -1950%

Loss on disposal of long-lived assets, net for the three and nine month periods ended
December 31, 2021 result from disposals of network site equipment.

interest income


                            Three months ended December 31,     Aggregate 

Change Nine months ended the 31st of DecemberOverall change (in thousands)

                  2021               2020          2021 from 2020           2021             2020          2021 from 2020
                             (Unaudited)        (Unaudited)                           (Unaudited)       (Unaudited)
Interest income            $             9     $          27   $      (18)   -67%   $             55   $          99   $      (44)   -44%


Interest income decreased a modest amount during the three and nine months ended
December 31, 2021 as compared to the three and nine months ended December 31,
2020.

Other income

                           Three months ended December 31,     Aggregate Change     Nine months ended December 31,        Aggregate Change
(in thousands)                   2021             2020          2021 from 2020           2021              2020            2021 from 2020
                             (Unaudited)       (Unaudited)                            (Unaudited)       (Unaudited)
Other income               $             63   $         110   $      (47)   -43%   $             197   $         332   $     (135)        -41%


Other income decreased a modest amount during the three and nine months ended
December 31, 2021 as compared to the three and nine months ended December 31,
2020.

Investment loss under the equity method


                            Three months ended December
                                        31,                Aggregate Change 

End of nine months the 31st of DecemberOverall change (in thousands)

                 2021            2020         2021 from 2020          2021             2020         2021 from 2020
                            (Unaudited)     (Unaudited)                          (Unaudited)      (Unaudited)
Loss on equity method
investment                 $           -   $         (7)   $       7   -100%   $             -   $        (23)   $     23   -100%

Investment loss under the equity method for the three and nine month periods ended
December 31, 2020 relates to the 19.5% stake in Team Connect LLC
that we acquired as part of the transfer of our historical activity.


Income tax expense

                            Three months ended December 31,    Aggregate Change    Nine months ended December 31,     Aggregate Change
(in thousands)                   2021              2020         2021 from 2020          2021              2020         2021 from 2020
                              (Unaudited)       (Unaudited)                          (Unaudited)       (Unaudited)
Income tax expense         $             412   $         155   $     257   166%   $             710   $         311   $     399   128%


For the three and nine months ended December 31, 2021, we recorded a total
deferred tax expense of $0.4 million and $0.7 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.

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 NOL arising in a taxable year beginning
before January 1, 2018, is carried forward 20 years provided that a carryback
claim is not affected. 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 nine
months ended December 31, 2020. We determined that applying an estimate of the
annual effective tax rate would

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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 nine months ended December 31, 2020, we
recorded a total deferred tax expense of $0.1 million and $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.

Cash and capital resources

AT December 31, 2021we had cash and cash equivalents of $127.8 million.


We believe our cash and cash equivalents on hand will be sufficient to meet our
financial obligations through at least the next 12 months. 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 to the U.S.
Treasury, and our operating activities and any revenues we generate through our
commercialization activities. 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. As we cannot predict
the duration or scope of the COVID-19 pandemic and its impact on our targeted
customers, the potential negative financial impact to our results of operations
and financial condition cannot be reasonably estimated. We are actively managing
the business to maintain our cash flow and believe that we currently have
adequate liquidity. To implement our business plans and initiatives, however, we
may need to raise additional capital. We cannot predict with certainty the exact
amount or timing for any future capital raises. See "Risk Factors" in Item 1A of
Part II of this Quarterly Report for a reference to the risks and uncertainties
that could cause our costs to be more than we currently anticipate and/or our
revenue and operating results to be lower than we currently anticipate. If
required, we intend to raise additional capital through debt or equity
financings, including pursuant to our Shelf Registration Statement (as defined
below), or through some other financing arrangement. However, we cannot be sure
that additional financing will be available if and when needed, or that, if
available, we can obtain financing on terms favorable to our stockholders and to
us. Any failure to obtain financing when required will have a material adverse
effect on our business, operating results, financial condition and liquidity.

Cash flow from operating, investing and financing activities

                                                          Nine months ended December 31,
(in thousands)                                              2021                   2020
                                                          (Unaudited)            (Unaudited)

Net cash provided by (used in) operating activities $27,037

    $    (20,669)
Net cash used in investing activities                 $        (16,282)        $    (11,116)
Net cash (used in) provided by financing activities   $           (529)     

$2,818



Net cash provided by (used in) operating activities. Net cash provided by
operating activities was $27.0 million for the nine months ended December 31,
2021, as compared to net cash used in operating activities of $20.7 million for
the nine months ended December 31, 2020. The majority of net cash provided by
operating activities during the nine months ended December 31, 2021 resulted
from deferred revenue of $52.0 million and non-cash adjustments to net loss of
$1.6 million (primarily attributable to stock compensation expense of
$10.0 million, partially offset by gain on disposal of intangible assets of
$10.2 million), partially offset by a net loss of $26.5 million. The majority of
net cash used in operating activities during the nine months ended December 31,
2020 resulted from our net loss of $43.5 million, partially offset by non-cash
adjustments to net loss of $20.9 million (primarily attributable to stock
compensation expense of $13.2 million, net loss from disposal of intangible
assets of $3.8 million and depreciation of $3.4 million).

The increase in deferred revenue is mainly due to an additional $52.8 million in
proceeds from our 900 MHz Broadband Spectrum customer prepayments during fiscal
year 2022.

Net cash used in investing activities. For the nine months ended December 31,
2021 and 2020, net cash used in investing activities was $16.3 million and $11.1
million, respectively, primarily to acquire wireless licenses in markets across
the United States.

Net cash (used in) provided by financing activities. Net cash used in financing
activities was $0.5 million for the nine months ended December 31, 2021, as
compared to net cash provided by financing activities of $2.8 million for the
nine months ended December 31, 2020. For the nine months ended December 31,
2021, net cash used in financing activities was primarily from the repurchase of
treasury shares of $12.0 million, partially offset by the proceeds from stock
option exercises of $12.9 million, net of payments of withholding tax on net
issuance of restricted stock of $1.5 million. For the nine months ended
December 31, 2020, net cash provided by financing activities was from the
proceeds from stock option exercises.

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Capital requirements


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
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 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; 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 $150.0 million of
common stock, preferred stock, warrants or units 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 $50.0 million, 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.

Share repurchase program

On September 29, 2021, our Board authorized a share repurchase program pursuant
to which we may repurchase up to $50.0 million of our common stock on or before
September 29, 2023. The manner, timing and amount of any share repurchases will
be determined by us 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 us 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. We
currently anticipate the cash used for the share repurchase program will come
primarily from our prepaid customer agreements.

The following table presents the share repurchase activity for the three and
nine months ended December 31, 2021 and 2020 (in thousands, except per share
data):

                                             Three months ended         Nine months ended
                                                December 31,              December 31,
                                             2021         2020         2021         2020

Number of shares repurchased                      200           -           200           -
Average price paid per share*             $     60.02   $       -   $     60.02   $       -
Total cost to repurchase                  $    11,993   $       -   $    11,993   $       -

* The average price paid per share includes costs associated with redemptions.

Off-balance sheet arrangements


As of December 31, 2021 and March 31, 2021, we did not have and do not have any
relationships with unconsolidated entities or financial partnerships that were
established for the purpose of facilitating off-balance sheet arrangements, as
defined in the rules and regulations of the SEC.

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