Anterix Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act. Based upon that evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer have concluded that the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, were effective as of the end of the period covered by this Annual Report. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial and Accounting Officer, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. GAAP. Our management, under the supervision of our President and Chief Executive Officer and our Chief Financial Officer, conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth by Page 39 Table of Contents the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on this assessment, our management determined that, as of March 31, 2022, we maintained effective internal control over financial reporting. Material Weakness and Remediation Subsequent to filing the Quarterly Report on Form 10-Q for the period ended September 30, 2021, an error was discovered related to our interpretation and application of the accounting for our intangible assets following the non-monetary exchange of our narrowband licenses for broadband licenses. This error, which was not detected timely by management, was the result of an inadequate design of controls pertaining to the identification, review, analysis and recording of transactions involving our intangible assets, more specifically, non-monetary exchanges of our narrowband licenses for broadband licenses. The deficiency represented a material weakness in our internal control over financial reporting. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Management has taken steps to remediate the material weakness. The remediation plan included the implementation of new controls designed to identify, review and analyze transactions involving the value of our intangible assets in a timely manner, such as: i. automated system notifications to identify new transactions and conduct more frequent meetings to inquire about license exchanges; ii. review applicable inputs regarding the accounting cost basis of broadband licenses and the carrying value of the narrowband licenses with internal experts as the exchanges occur; and iii. analyze inputs to calculate and timely record gain or loss in accordance with all the relevant authoritative accounting guidance. Management believes the measures described above and others that have been implemented have remediated the material weakness identified. As management continues to evaluate and improve our internal control over financial reporting, we may decide to take additional measures to address control deficiencies or determine to modify certain of the remediation measures identified. The material weakness is considered remediated as the applicable remedial controls operated for a sufficient period of time and management has concluded through testing, that these controls were operating effectively as of the end of the period covered by this Annual Report. Attestation Report on Internal Control over Financial Reporting For the Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting, see Part IV, Item 15, Exhibits and Financial Statement Schedules. The effectiveness of our internal control over financial reporting as of March 31, 2022 has been audited by Grant Thornton LLP, our independent registered public accounting firm, as stated in their report which appears herein. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) or 15d-15(d) of the Exchange Act, during the quarterly period ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than changes as a result of the remediation efforts described above. Inherent Limitations on Effectiveness of Controls Our management, including our President and Chief Executive Officer and our Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints and that the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to Page 40 Table of Contents future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. Page 41 Table of Contents PART III. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information relating to our directors, executive officers and corporate governance, including our Code of Business Conduct, will be included in the proxy statement for our 2022 annual meeting of our stockholders, expected to be filed within 120 days of the end of our fiscal year, which is incorporated herein by reference. The full text of our Code of Business Conduct, which is the code of ethics that applies to all of our officers, directors and employees, can be found in the “Investors” section of our website accessible to the public at www.anterix.com. ITEM 11. EXECUTIVE COMPENSATION Information relating to our executive compensation will be included in the proxy statement for our 2022 annual meeting of our stockholders, expected to be filed within 120 days of the end of our fiscal year, which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information relating to the security ownership of certain beneficial owners and management will be included in the proxy statement for our 2022 annual meeting of our stockholders, expected to be filed within 120 days of the end of our fiscal year, which is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information relating to certain relationships and related transactions and director independence will be included in the proxy statement for our 2022 annual meeting of our stockholders, expected to be filed within 120 days of the end of our fiscal year, which is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information relating to principal accountant fees and services will be included in the proxy statement for our 2022 annual meeting of our stockholders, expected to be filed within 120 days of the end of our fiscal year, which is incorporated herein by reference. Page 42 Table of Contents PART IV. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1) The following consolidated financial statements of the Company appear on pages F-2 through F-32 of this Annual Report and are incorporated by reference in Part II, Item 8: Reports of Independent Registered Public Accounting Firms Consolidated Balance Sheets as of March 31, 2022 and 2021 Consolidated Statements of Operations for the Years Ended March 31, 2022, 2021 and 2020 Consolidated Statements of Stockholders’ Equity for the Years Ended March 31, 2022, 2021 and 2020 Consolidated Statements of Cash Flows for the Years Ended March 31, 2022, 2021 and 2020 Notes to Consolidated Financial Statements (a)(2) All schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted. (a)(3) The following exhibits are filed as part of, or incorporated by reference into, this Annual Report. Exhibit No. Description of Exhibit 3.1 Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 3.1.1 Certificate of Amendment No. 1 to Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 of the Registrant’s Current Report on Form 8-K on November 5, 2015 and incorporated herein by reference (File No. 001-36827)). 3.1.2 Certificate of Amendment No. 2 to Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 of the Registrant’s Current Report on Form 8-K on August 6, 2019 and incorporated herein by reference (File No. 001-36827)). 3.2.1 Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 3.2.2 Amendment No. 1 to the Amended and Restated Bylaws of the Company (filed as Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on May 8, 2020 and incorporated herein by reference (File No. 001-36827)). 4.1 Form of Common Stock Certificate of the Company (filed as Exhibit 4.1 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 4.2 Description of Common Stock (filed as Exhibit 4.5 to the Annual Report on Form 10-K for the year ended March 31, 2020, filed with the SEC on May 28, 2020 and incorporated herein by reference (File No. 001-36827)). 10.1+ 2004 Stock Plan, as amended (filed as Exhibit 10.1 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.2+ Form of Stock Option Agreement under 2004 Stock Plan (filed as Exhibit 10.2 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.3+ 2010 Stock Plan, as amended (filed as Exhibit 10.3 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.4+ Form of Stock Option Agreement under 2010 Stock Plan (filed as Exhibit 10.4 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.5+ Form of Restricted Stock Bonus Agreement under 2010 Stock Plan (filed as Exhibit 10.5 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.6+ 2014 Stock Plan (filed as Exhibit 10.6 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.7+ Executive Form of Notice of Grant of Stock Option and Stock Option Agreement under 2014 Stock Plan (filed as Exhibit 10.7 to the Annual Report on Form 10-K for the year ended March 31, 2015, filed with the SEC on June 10, 2015 and incorporated herein by reference (File No. 001-36827)). Page 43 Table of Contents 10.8+ Non-employee Director Form of Notice of Grant of Stock Option and Stock Option Agreement under 2014 Stock Plan (filed as Exhibit 10.8 to the Annual Report on Form 10-K for the year ended March 31, 2015, filed with the SEC on June 10, 2015 and incorporated herein by reference (File No. 001-36827)). 10.9+ Non-employee Director Form of Notice of Grant of Restricted Stock Units and Restricted Stock Units Agreement under 2014 Stock Plan (filed as Exhibit 10.9 to the Annual Report on Form 10-K for the year ended March 31, 2015, filed with the SEC on June 10, 2015 and incorporated herein by reference (File No. 001-36827)). 10.10+ Form of Notice of Grant of Restricted Stock Units and Restricted Stock Units Agreement under 2014 Stock Plan (filed as Exhibit 10.8 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.11+ Form of Indemnification Agreement by and among the Company and its officers and directors (filed as Exhibit 10.9 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.12† Asset Purchase Agreement, dated May 13, 2014, by and among the Company, and FCI 900, Inc., ACI 900, Inc., Machine License Holding, LLC, Nextel WIP License Corp., and Nextel License Holdings 1, Inc. (filed as Exhibit 10.14 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.13 Letter Amendment to the Asset Purchase Agreement, dated May 28, 2014, by and among the Company and FCI 900, Inc., ACI 900, Inc., Machine License Holding, LLC, Nextel WIP License Corp., and Nextel License Holdings 1, Inc. (filed as Exhibit 10.15 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.14† Management Services Agreement, dated September 15, 2014, by and between the Company and Sprint Spectrum, L.P. (filed as Exhibit 10.18 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.15† License Agreement, dated September 15, 2014, by and between Sprint/United Management Company and the Company (filed as Exhibit 10.19 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.16† Spectrum Rights Agreement, dated September 8, 2014, by and between PDV Spectrum Holding Company, LLC and Motorola Solutions, Inc. (filed as Exhibit 10.20 to the Registration Statement on Form S-1, filed with the SEC on December 19, 2014 and incorporated herein by reference (File No. 333-201156)). 10.17+ The Company’s Executive Severance Plan (composite version reflecting corporate name change and all prior amendments) (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2021, filed with the SEC on February 3, 2022 and incorporated herein by reference (File No. 001-36827)). 10.18+ The Company’s Form of Executive Severance Plan Participation Agreement (filed as Exhibit 99.2 to the Current Report on Form 8-K, filed with the SEC on March 27, 2015 and incorporated herein by reference (File No. 001-36827)). 10.19+ Executive Form of Performance-Based Stock Option Agreement and Grant Notice under the 2014 Stock Plan (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, filed with the SEC on February 16, 2016 and incorporated herein by reference (File No. 001-36827)). 10.20+ Executive Form of Performance-Based Restricted Stock Units Agreement and Grant Notice under the 2014 Stock Plan (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, filed with the SEC on February 16, 2016 and incorporated herein by reference (File No. 001-36827)). 10.21+ Non-employee Director Form of Restricted Stock Award Agreement and Grant Notice under the 2014 Stock Plan (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, filed with the SEC on February 16, 2016 and incorporated herein by reference (File No. 001-36827)). 10.22+ Executive Form of Time-Based Stock Option Agreement and Grant Notice under the 2014 Stock Plan (filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, filed with the SEC on February 16, 2016 and incorporated herein by reference (File No. 001-36827)). 10.23+ Executive Form of Time-Based Restricted Stock Award Agreement and Grant Notice under the 2014 Stock Plan (filed as Exhibit 10.5 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, filed with the SEC on February 16, 2016 and incorporated herein by reference). 10.24+ Continued Service, Consulting and Separation Agreement, dated April 23, 2018, by and between the Company and John Pescatore (filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 23, 2018 and incorporated herein by reference (File No. 001-36827)). 10.25+ Consulting Agreement dated April 23, 2018, by and between the Company and John Pescatore (filed as Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on April 23, 2018 and incorporated herein by reference (File No. 001-36827)). 10.26 Amended and Restated Controlled Equity Offering SM Sales Agreement, dated April 3, 2020, by and between the Company and Cantor Fitzgerald & Co. (filed as Exhibit 1.2 to the Registration Statement on Form S-3, filed with the SEC on April 3, 2020 and incorporated herein by reference (File No. 333-237572)). Page 44 Table of Contents 10.27 Amended and Restated Sales Agreement, dated April 3, 2020, by and between the Company and B. Riley FBR, Inc. (filed as Exhibit 1.3 to the Registration Statement on Form S-3, filed with the SEC on April 3, 2020 and incorporated herein by reference (File No. 333-237572)). 10.28† Customer Acquisition and Resale Agreement, dated January 2, 2019, by and between the Company and A BEEP LLC (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, filed with the SEC on February 08, 2019 and incorporated herein by reference (File No. 001-36827)). 10.29† Customer Acquisition, Resale and Licensing Agreement, dated January 2, 2019, by and between the Company and Goosetown Enterprises, Inc. (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, filed with the SEC on February 08, 2019 and incorporated herein by reference (File No. 001-36827)). 10.30† Memorandum of Understanding, dated December 31, 2018, by and between the Company and the principals of Goosetown Enterprises, Inc. (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, filed with the SEC on February 08, 2019 and incorporated herein by reference (File No. 001-36827)). 10.31^ Amendment to Customer Acquisition and Resale Agreement, dated March 31, 2019 by and between the Company and A BEEP, LLC (filed as Exhibit 10.31 to the Annual Report on Form 10-K for the year ended March 31, 2019, filed with the SEC on May 20, 2019 and incorporated herein by reference (File No. 001-36827)). 10.32 Amendment to Customer Acquisition and Resale Agreement, dated March 31, 2019 by and between the Company and Goosetown Enterprises, Inc. (filed as Exhibit 10.32 to the Annual Report on Form 10-K for the year ended March 31, 2019, filed with the SEC on May 20, 2019 and incorporated herein by reference (File No. 001-36827)). 10.33^ Amendment to Memorandum of Understanding and IP Assignment, dated March 31, 2019, by and between the Company and the principals of Goosetown Enterprises, Inc. (filed as Exhibit 10.33 to the Annual Report on Form 10-K for the year ended March 31, 2019, filed with the SEC on May 20, 2019 and incorporated herein by reference (File No. 001-36827)). 10.34^ TeamConnect, LLC Amended and Restated Limited Liability Company Agreement, dated April 30, 2019 (filed as Exhibit 10.34 to the Annual Report on Form 10-K for the year ended March 31, 2019, filed with the SEC on May 20, 2019 and incorporated herein by reference (File No. 001-36827)). 10.35^ Transition Agreement between the PDV Spectrum Holding Company, LLC and Association of American Railroads, dated January 28, 2020 (filed as Exhibit 10.35 to the Annual Report on Form 10-K for the year ended March 31, 2020, filed with the SEC on May 28, 2020 and incorporated herein by reference (File No. 001-36827)). 10.36 Amendment 2, dated August 4, 2020, to the IP Assignment, Software Support, and Development Services Agreement, dated as of January 7, 2019, by and between the Company and TeamConnect, LLC (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC on August 6, 2020 and incorporated herein by reference (File No. 001-36827)). 10.37+ Independent Contractor Services Agreement, dated August 27, 2020, by and between the Company and Brian D. McAuley (filed as Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on September 2, 2020 and incorporated herein by reference (File No. 001-36827)). 10.38+ Senior Executive Form of Performance-Based Restricted Stock Units Agreement and Grant Notice (2021 Short-Term Incentive Plan) under the 2014 Stock Plan (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed with the SEC on November 16, 2020 and incorporated herein by reference (File No. 001-36827)). 10.39+ Executive Form of Performance-Based Restricted Stock Units Agreement and Grant Notice (2021 Short-Term Incentive Plan) under the 2014 Stock Plan (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed with the SEC on November 16, 2020 and incorporated herein by reference (File No. 001-36827)). 10.40+ Amendment No. 1 to 2014 Stock Plan, dated June 14, 202 1 (filed as exhibit 10.40 to the Annual Report on Form 10-K for the year ended March 31, 2021, filed with the SEC on June 15, 2021 and incorporated herein by reference (File No. 001-36827)). 21.1 Subsidiaries of the Registrant (filed as Exhibit 21.1 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the SEC on June 6, 2017 and incorporated herein by reference (File No. 001-36827)). 23.1# Consent of Grant Thornton LLP Independent Registered Public Accounting Firm relating to the Consolidated Financial Statements of the Company , dated May 26 , 2022. 24.1# Power of Attorney (included on signature page hereto). 31.1# Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15-d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Page 45 Table of Contents 31.2# Certification of Principal Financial and Accounting Officer pursuant to Rules 13a-14 and 15-d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1#* Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS# XBRL Instance Document 101.SCH# XBRL Taxonomy Extension Schema 101.CAL# XBRL Taxonomy Extension Calculation Linkbase 101.DEF# XBRL Taxonomy Extension Definition Linkbase 101.LAB# XBRL Taxonomy Extension Label Linkbase 101.PRE# XBRL Taxonomy Extension Presentation Linkbase ______________________ + Management Contract or Compensatory Plan. † Portions of this exhibit have been omitted pursuant to a request for confidential treatment pursuant to either Rule 406 under the Securities Act or Rule 24b-2 of the Exchange Act which request has been granted by the SEC. ^ Certain confidential portions of this exhibit were omitted by means of marking such portions with an asterisk because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. # Filed herewith. * The certification furnished in Exhibit 32.1 hereto is deemed to accompany this Annual Report and will not be deemed “filed” for purposes of Section 18 of the Exchange Act except to the extent that the Registrant specifically incorporates it by reference. ITEM 16. FORM 10-K SUMMARY None. Page 46 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized in Woodland Park, State of New Jersey, on May 26, 2022. Anterix Inc. By: /s/ Robert H. Schwartz Robert H. Schwartz President and Chief Executive Officer (Principal Executive Officer) KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert H. Schwartz and Timothy A. Gray, and each of them individually, as the undersigned’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their respective substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Annual Report has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Morgan E. O’Brien Executive Chairman of the Board May 26, 2022 Morgan E. O’Brien /s/ Robert H. Schwartz President and Chief Executive Officer (Principal Executive Officer) May 26, 2022 Robert H. Schwartz /s/ Timothy A. Gray Chief Financial Officer (Principal Financial and Accounting Officer) May 26, 2022 Timothy A. Gray /s/ Singleton B. McAllister Director May 26, 2022 Singleton B. McAllister /s/ Leslie B. Daniels Director May 26, 2022 Leslie B. Daniels /s/ Gregory A. Haller Director May 26, 2022 Gregory A. Haller /s/ Gregory Pratt Director May 26, 2022 Gregory Pratt /s/ Paul Saleh Director May 26, 2022 Paul Saleh /s/ Mahvash Yazdi Director May 26, 2022 Mahvash Yazdi Page 47 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS For the Years ended March 31, 2022, 2021 and 2020 Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) F- 2 Consolidated Balance Sheets as of March 31, 2022 and 2021 F- 5 Consolidated Statements of Operations for the Years Ended March 31, 2022, 2021 and 2020 F- 6 Consolidated Statement of Stockholders’ Equity for the Years Ended March 31, 2022, 2021 and 2020 F- 7 Consolidated Statements of Cash Flows for the Years Ended March 31, 2022, 2021 and 2020 F- 8 Notes to Consolidated Financial Statements F- 9 Page F- 1 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Anterix Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Anterix Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of March 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of March 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated May 26, 2022 expressed an unmodified opinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Wireless Licenses – Unit of accounting for impairment testing purposes under ASC 350 Intangibles – Goodwill and Other (“ASC 350”) As described further in note 2 to the financial statements, historically, the Company’s wireless licenses were tested for impairment on an aggregate basis, consistent with its nationwide dispatch business. Effective fiscal 2021, management determined to disaggregate the Company’s wireless licenses based on geographical markets for impairment testing purposes. This change required management to make certain assumptions as it relates to the expected use and marketability of the wireless licenses in order to determine the appropriate unit of accounting under ASC 350. We identified the determination of the unit of accounting for purposes of testing impairment of the Company’s wireless licenses as a critical audit matter. The principal considerations for our determination that the unit of accounting used to test indefinite-lived intangible assets for impairment is a critical audit matter includes the complexity of the guidance and the judgement involved in identifying the unit of accounting under ASC 350. Accordingly, there is a risk that the unit of accounting is not properly identified in accordance with ASC 350. These considerations heightened the complexity surrounding the design and execution of audit procedures to respond to this risk. Page F- 2 Table of Contents Our audit procedures related to the Company’s determination of the unit of accounting for its wireless licenses included the following, among others: • In consultation with national office resources, we evaluated the reasonableness of management’s assessment and conclusions as it related to the unit of accounting determination of the Company’s wireless licenses under ASC 350. • We assessed the appropriateness of management’s identified factors and assumptions that were significant in arriving at the units of accounting for purposes of its wireless licenses impairment testing. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2019. New York, New York May 26, 2022 Page F- 3 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Anterix Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting Anterix Inc., a Delaware corporation, and subsidiaries (the “Company”) as of March 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended March 31, 2022, and our report dated May 26, 2022 expressed an unmodified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control Over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP New York, New York May 26, 2022 Page F- 4 Table of Contents Anterix Inc. Consolidated Balance Sheets March 31, 2022 and 2021 (thousands, except share data) March 31, 2022 March 31, 2021 ASSETS Current Assets Cash and cash equivalents $ 105,624 $ 117,538 Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 , respectively — 4 Prepaid expenses and other current assets 10,147 3,508 Total current assets 115,771 121,050 Property and equipment, net 2,949 3,574 Right of use assets, net 4,047 5,100 Intangible assets 151,169 122,117 Other assets 4,108 1,214 Total assets $ 278,044 $ 253,055 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 6,526 $ 6,256 Due to related parties 120 152 Operating lease liabilities 1,512 1,470 Deferred revenue 1,478 737 Total current liabilities 9,636 8,615 Noncurrent liabilities Operating lease liabilities 4,177 5,601 Contingent liability 20,000 20,000 Deferred revenue 53,200 2,246 Deferred income tax 4,192 3,209 Other liabilities 541 876 Total liabilities 91,746 40,547 Commitments and contingencies Stockholders’ equity Preferred stock, $ 0.0001 par value per share, 10,000,000 shares authorized and no shares outstanding at March 31, 2022 and March 31, 2021 — — Common stock, $ 0.0001 par value per share, 100,000,000 shares authorized and 18,377,483 shares issued and outstanding at March 31, 2022 and 17,669,905 shares issued and outstanding at March 31, 2021 2 2 Additional paid-in capital 500,125 472,854 Accumulated deficit ( 313,829 ) ( 260,348 ) Total stockholders’ equity 186,298 212,508 Total liabilities and stockholders’ equity $ 278,044 $ 253,055 See accompanying notes to consolidated financial statements. Page F- 5 Table of Contents Anterix Inc. Consolidated Statements of Operations Years Ended March 31, 2022, 2021, and 2020 (in thousands, except share and per share data) 2022 2021 2020 Operating revenues Service revenue $ — $ 192 $ 835 Spectrum revenue 1,084 729 729 Total operating revenues 1,084 921 1,564 Operating expenses Direct cost of revenue (exclusive of depreciation and amortization) 5 1,606 2,833 General and administrative 39,525 39,302 25,469 Sales and support 4,461 2,942 4,055 Product development 3,593 4,343 2,953 Depreciation and amortization 1,450 3,533 3,591 Impairment of long-lived assets — 85 46 Operating expenses 49,034 51,811 38,947 (Gain)/loss from disposal of intangible assets, net ( 11,209 ) 3,849 88 Loss from disposal of long-lived assets, net 107 70 62 Loss from operations ( 36,848 ) ( 54,809 ) ( 37,533 ) Interest income 56 124 1,810 Other income 256 414 496 Loss on equity method investment — ( 39 ) ( 9 ) Loss before income taxes ( 36,536 ) ( 54,310 ) ( 35,236 ) Income tax expense 983 124 2,402 Net loss $ ( 37,519 ) $ ( 54,434 ) $ ( 37,638 ) Net loss per common share basic and diluted $ ( 2.07 ) $ ( 3.13 ) $ ( 2.29 ) Weighted-average common shares used to compute basic and diluted net loss per share 18,142,828 17,412,958 16,421,610 See accompanying notes to consolidated financial statements. Page F- 6 Table of Contents Anterix Inc. Consolidated Statement of Stockholders’ Equity Years Ended March 31, 2022, 2021 and 2020 (in thousands) Number of Shares Common stock Common stock Additional paid-in capital Accumulated deficit Total Balance at April 1, 2019 14,739 $ 1 $ 349,039 $ ( 168,276 ) $ 180,764 Issuance of stock during July 2019 follow-on offering, net of closing costs 2,222 1 94,243 — 94,244 Equity based compensation* 124 — 5,826 — 5,826 Stock option exercises 113 — 2,436 — 2,436 Shares withheld for taxes ( 13 ) — ( 566 ) — ( 566 ) Net loss — — — ( 37,638 ) ( 37,638 ) Balance at March 31, 2020 17,185 2 450,978 ( 205,914 ) 245,066 Equity based compensation* 249 — 16,121 — 16,121 Stock option exercises 208 — 4,218 — 4,218 Equity payment of prior year accrued employee related expenses 28 — 1,537 — 1,537 Net loss — — — ( 54,434 ) ( 54,434 ) Balance at March 31, 2021 17,670 2 472,854 ( 260,348 ) 212,508 Equity based compensation* 226 — 13,725 — 13,725 Stock option exercises** 778 — 15,004 — 15,004 Shares withheld for taxes ( 24 ) — ( 1,458 ) — ( 1,458 ) Retirement of common stock** ( 272 ) — — ( 15,962 ) ( 15,962 ) Net loss — — — ( 37,519 ) ( 37,519 ) Balance at March 31, 2022 18,378 $ 2 $ 500,125 $ ( 313,829 ) $ 186,298 * Includes restricted shares issued. ** Includes approximately $ 1.0 million, or 20,132 shares, received associated with a non-cash exercise of stock options and subsequent retirement. See Note 11 Stock Acquisition Rights, Stock Options and Warrants and Note 12 Supplemental Disclosure of Cash Flow Information for further discussion and disclosure. See accompanying notes to consolidated financial statements. Page F- 7 Table of Contents Anterix Inc. Consolidated Statements of Cash Flows Years Ended March 31, 2022, 2021 and 2020 (in thousands) 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 37,519 ) $ ( 54,434 ) $ ( 37,638 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and amortization 1,450 3,533 3,591 Non-cash compensation expense attributable to stock awards 13,625 15,925 5,826 Deferred income taxes 983 124 2,399 Bad debt expense — — 41 Accretion expense — — 1 (Gain)/loss from disposal of intangible assets, net ( 11,209 ) 3,849 — Loss from disposal of long-lived assets, net 107 70 76 Loss on disposal of capitalized patent costs — — 140 Impairment of long-lived assets — 85 46 Loss on equity method investment — 39 9 Changes in operating assets and liabilities Accounts receivable 4 57 464 Prepaid expenses and other assets ( 797 ) ( 745 ) 316 Right of use assets 1,053 1,407 1,404 Accounts payable and accrued expenses 270 2,647 578 Due to related parties ( 32 ) 42 ( 73 ) Restructuring reserve — ( 636 ) ( 2,699 ) Operating lease liabilities ( 1,382 ) ( 1,674 ) ( 1,447 ) Contingent liability — 20,000 — Deferred revenue 51,695 ( 483 ) ( 791 ) Other liabilities ( 335 ) 235 ( 66 ) Net cash provided by (used in) operating activities 17,913 ( 9,959 ) ( 27,823 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of intangible assets, including refundable deposits ( 26,358 ) ( 13,944 ) ( 7,096 ) Purchases of equipment ( 1,053 ) ( 230 ) ( 464 ) Net cash used in investing activities ( 27,411 ) ( 14,174 ) ( 7,560 ) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from July 2019 follow-on offering — — 94,244 Proceeds from stock option exercises 14,004 4,218 2,436 Repurchase of common stock ( 14,962 ) — — Payments of withholding tax on net issuance of restricted stock ( 1,458 ) — ( 566 ) Net cash (used in) provided by financing activities ( 2,416 ) 4,218 96,114 Net change in cash and cash equivalents ( 11,914 ) ( 19,915 ) 60,731 CASH AND CASH EQUIVALENTS Beginning of the year 117,538 137,453 76,722 End of the year $ 105,624 $ 117,538 $ 137,453 See accompanying notes to consolidated financial statements. Page F- 8 Table of Contents Anterix Inc. Notes to Consolidated Financial Statements 1. Nature of Operations Anterix Inc. (the “Company”) is a wireless communications company focused on commercializing its spectrum assets to enable its targeted utility and critical infrastructure customers to deploy private broadband networks, technologies and solutions. The Company is the largest holder of licensed spectrum in the 900 MHz band (896 - 901 / 935 - 940 MHz) with nationwide coverage throughout the contiguous United States, Hawaii, Alaska and Puerto Rico. On May 13, 2020, the Federal Communications Commission (the “FCC”) approved the Report and Order (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. The Company is now engaged in qualifying for and securing broadband licenses from the FCC. At the same time, the Company is pursuing opportunities to lease the broadband spectrum it secures to its targeted utility and critical infrastructure customers. The Company was originally incorporated in California in 1997 and reincorporated in Delaware in 2014. In November 2015, the Company changed its name from Pacific DataVision, Inc. to pdvWireless, Inc. In August 2019, the Company changed its name from pdvWireless, Inc. to Anterix Inc. The Company maintains offices in Woodland Park, New Jersey and McLean, Virginia. Business Developments In December 2020, the Company entered into its first long-term lease agreements of 900 MHz spectrum authorized for broadband use (“900 MHz Broadband Spectrum”), with Ameren Corporation (“Ameren”), (the “Ameren Agreements”). The Ameren Agreements will enable Ameren to deploy a private LTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people. Each Ameren Agreement is for a term of up to 40 years, consisting of an initial term of 30 years, with a 10-year renewal option for an additional payment. The scheduled prepayments for the 30-year initial terms of the Ameren Agreements total $ 47.7 million, of which $ 0.3 million was received by the Company in February 2021, $ 5.4 million in September 2021 and $ 17.2 million in October 2021. See Note 3 Revenue for further discussion on the Ameren Agreements. In September 2021, the Company entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy Services, Inc. (“Evergy”), (the “Evergy Agreement”). The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments. Prepayment in full of the $ 30.2 million for the 20-year initial term, which was due and payable within thirty ( 30 ) days after execution of the Evergy Agreement, was received by the Company in October 2021. See Note 3 Revenue for further discussion on the Evergy Agreement. 2. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to estimated useful lives of depreciable assets, asset retirement obligations, valuation allowance on the Company’s deferred tax assets and recoverability of intangible assets. The Company is also required to make certain estimates with regard to the valuation of awards and forfeiture rates for its share-based award programs. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the applicable period. Accordingly, actual results could materially differ from those estimates. The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, including PDV Spectrum Holding Company, LLC formed in April 2014. All significant intercompany accounts and transactions have been eliminated in consolidation. Correction of Immaterial Error In connection with preparing its financial statements for the quarter ended December 31, 2021, the Company determined that it incorrectly accounted for idled assets as Held For Future Use within its Annual Report on Form 10-K for the year ended March 31, 2021, which resulted in an incorrect presentation of the asset classification included in the Property and Equipment footnote within the Notes to the Consolidated Financial Statements. The idled assets should have remained as in-service assets with no change in classification as the idling of these assets is temporary in nature. Page F- 9 Table of Contents The following table is a comparison of the reported property and equipment classification, as presented in the Property and Equipment footnote, for the year ended March 31, 2021, as a result of the correction of the immaterial error (in thousands): For the year ended March 31, 2021 As Originally Reported Impact of Prior Period Errors As Revised Network sites and equipment $ 12,547 $ 688 $ 13,235 Computer software 592 — 592 Computer equipment 293 — 293 Furniture and fixture and other equipment 284 — 284 Leasehold improvements 242 — 242 13,958 688 14,646 Less accumulated depreciation 11,082 — 11,082 2,876 688 3,564 Construction in process 10 — 10 Assets held for future use 688 ( 688 ) — Property and equipment, net $ 3,574 $ — $ 3,574 Reclassifications Certain amounts previously reported in the Company’s Consolidated Statement of Operations for prior years have been reclassified to conform to the presentation within this Annual Report on Form 10-K. The reclassification includes the consolidation of the restructuring costs line into the general and administrative line within the Company’s Consolidated Statement of Operations. Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the time of purchase are considered cash equivalents. Cash equivalents are stated at cost, which approximates the quoted market value and includes amounts held in money market funds. Concentrations of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The cash balance at times may exceed federally insured limits, however, the Company places its cash and temporary cash investments with financial institutions for which credit loss is not anticipated. For the year ended March 31, 2022, the Company’s operating revenue was entirely from Motorola Solutions, Inc. (“Motorola”) and Ameren, as discussed in Note 2 Revenue . For the year ended March 31, 2021, the Company had one Tier 1 domestic carrier and one reseller that accounted for approximately 17 % of total operating revenues, respectively. For the year ended March 31, 2020, the Company had two domestic carriers and one reseller that accounted for approximately 21 % of total operating revenues, respectively. As of March 31, 2022, the Company does not have an outstanding accounts receivable balance. As of March 31, 2021, the Company had one Tier 1 domestic carrier that accounted for the entire total accounts receivable, which was carried at the invoiced amount. Allowance for Doubtful Accounts An allowance for uncollectible receivables is estimated, as required, based on a combination of write-off history, aging analysis and any specific known troubled accounts. The Company reviews its allowance for uncollectible receivables on a quarterly basis. Past due balances meeting specific criteria are reviewed individually for collectability. Page F- 10 Table of Contents Changes in the allowance for doubtful accounts for the years ended March 31, 2022, 2021 and 2020 are summarized below (in thousands): 2022 2021 2020 Balance at beginning of the year $ — $ 12 $ 77 Bad debt expense — — 41 Write-offs — ( 12 ) ( 69 ) Recoveries — — ( 37 ) Balance at end of the year $ — $ — $ 12 In connection with the Company’s adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), as discussed below, the Company will continue to monitor its credit loss exposure based on the write-off history, current conditions and future forecasts on the collectability of the accounts. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the applicable lease term. The carrying amount at the balance sheet date of long-lived assets under construction in process includes assets purchased, constructed, or being developed internally that are not yet in service. Depreciation commences when the assets are placed in service. Depreciation rates for assets are updated periodically to account for changes, if any, in the estimated useful lives of the assets, lease terms, management’s strategic objectives, estimated residual values or obsolescence. Changes in estimates will result in adjustments to depreciation expense prospectively. Accounting for Asset Retirement Obligations An asset retirement obligation is evaluated and recorded as appropriate on assets for which the Company has a legal obligation to retire. The Company records a liability for an asset retirement obligation and the associated asset retirement cost at the time the underlying asset is acquired and put into service. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation, if any. Over time, the liability is accreted to its present value and the capitalized cost is depreciated over the estimated useful life of the asset. The Company entered into long-term leasing arrangements primarily for tower site locations. The Company constructed assets at these locations and, in accordance with the terms of many of these agreements, the Company is obligated to restore the premises to their original condition at the conclusion of the agreements, generally at the demand of the other party to these agreements. The Company recognizes the fair value of a liability for an asset retirement obligation and capitalizes that cost as part of the cost basis of the related asset, depreciating it over the useful life of the related asset. Upon settlement of the obligation, any difference between the cost to retire the asset and the recorded liability is recognized in the Consolidated Statement of Operations. As of March 31, 2022, the Company settled approximately $ 0.1 million of its obligation to restore the leased premises to its original condition and revised its asset retirement obligations accrual by $ 17,000 on estimated future cash flows. As of March 31, 2021, the Company settled approximately $ 0.2 million of its obligation to restore the leased premises to its original condition and revised its asset retirement obligations accrual by $ 0.1 million on estimated future cash flows. Changes in the liability for the asset retirement obligations for the years ended March 31, 2022 and 2021 are summarized below (in thousands): 2022 2021 Balance at beginning of the year $ 749 $ 886 Liabilities settled ( 109 ) ( 226 ) Revision of estimate ( 17 ) 85 Accretion expense 3 4 Balance at end of the year 626 749 Less amount classified as current - included in accounts payable and accrued expenses 85 167 Noncurrent liabilities - included in other liabilities $ 541 $ 582 Intangible Assets Intangible assets are wireless licenses that are used to provide the Company with the exclusive right to utilize designated radio frequency spectrum to provide wireless communication services. While licenses are issued for only a fixed Page F- 11 Table of Contents time, generally ten years , such licenses are subject to renewal by the FCC. License renewals have occurred routinely and at nominal cost in the past. There are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the Company’s wireless licenses. As a result, the Company has determined that the wireless licenses should be treated as an indefinite-lived intangible asset. The Company will evaluate the useful life determination for its wireless licenses each year to determine whether events and circumstances continue to support their treatment as an indefinite useful life asset. Evaluation of Indefinite-Lived Intangible Assets for Impairment Historically, wireless licenses were tested for impairment on an aggregate basis, consistent with the Company’s dispatch business at a national level. Effective Fiscal 2021, the Company determined that its unit of accounting should be based on geographic markets and that it should test its wireless licenses for impairment based on the individual markets, as the Company will be utilizing the wireless licenses as part of facilitating broadband spectrum networks at an individual market level. The Company may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an intangible asset is less than its carrying value. If the Company does not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the intangible asset is less than its carrying amount, the Company will calculate the estimated fair value of the intangible asset. If the estimated fair value of the spectrum licenses is lower than their carrying amount, an impairment loss is recognized. The Company will use a market-based approach to estimate fair value. The valuation approach used to estimate fair value for the purpose of impairment testing requires management to use complex assumptions and estimates such as population, discount rates, industry and market considerations, long-term market equity risk, as well as other factors. These assumptions and estimates are forward-looking and depend on the Company’s ability to successfully apply for broadband licenses and commercialize its 900 MHz Broadband Spectrum. During Fiscal 2022, the Company changed the date of its annual impairment assessment from March 31, its fiscal year-end, to January 1. For the year ended March 31, 2022, the Company performed a step zero qualitative approach impairment test as of January 1, 2022, for each geographical market to test indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform quantitative impairment testing. As a result of the step zero test, the Company was not required to perform a step one analysis. As of and for the year ended March 31, 2021, the Company performed a step one quantitative impairment test to determine if the fair value of the licenses exceed the carrying values for each geographical market. Estimated fair value is determined using a market-based approach primarily using the 600 MHz auction price as the Report and Order noted that the FCC will use as a reference the spectrum price based on the average price paid in the FCC’s 600 MHz auction to calculate the Anti-Windfall Payments. For the year ended March 31, 2020, the Company performed a step zero qualitative approach impairment test on an aggregate basis to test indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform quantitative impairment testing. Based on the results of the impairment tests, there were no impairment charges recorded during the years ended March 31, 2022, 2021 and 2020. Exchanges of Intangible Assets At times, the Company enters into agreements to exchange or cancel spectrum licenses. Upon entering into the arrangement, if the transaction has been deemed to have commercial substance, spectrum licenses are reviewed for impairment. The licenses are exchanged or cancelled at their carrying value and adjusted for any gain or loss recognized. Upon receipt of FCC approval, the spectrum licenses acquired as part of an exchange of nonmonetary assets are recorded at their new accounting basis, for those acquired from the FCC, or fair value for those acquired from third party, (collectively, the “acquired basis”). The difference between the acquired basis of the spectrum licenses obtained, carrying value of the spectrum licenses transferred and cash paid, if any, is recognized as a gain or loss on disposal of spectrum licenses reported separately in the Company’s Consolidated Statements of Operations. The acquired basis of spectrum licenses is based on information for which there is little or no observable market data. If the transaction lacks commercial substance or the acquired basis is not measurable, the acquired spectrum licenses are recorded at the carrying value of the spectrum assets transferred, cancelled or exchanged. For the purpose of the valuation of broadband licenses received in connection with nonmonetary exchanges, the Company utilizes the 600 MHz Auction price per MHzPop, as defined in the Report and Order, which is considered the accounting basis for the new broadband licenses. See Note 5 Intangible Assets for a discussion on the Company’s spectrum exchanges during the years ended March 31, 2022 and 2021. Long-Lived Assets and Right of Use Assets Impairment The Company evaluates long-lived assets, including right of use assets, other than intangible assets with indefinite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not Page F- 12 Table of Contents be recoverable. Asset groups are determined at the lowest level for which identifiable cash flows are largely independent of cash flows of other groups of assets and liabilities. When the carrying amount of the asset groups are not recoverable and exceeds its fair value, an impairment loss is recognized equal to the excess of the asset group’s carrying value over the estimated fair value. There were no impairment charges during the year ended March 31, 2022. During the year ended March 31, 2021, the Company recorded an $ 85,000 non-cash impairment charge for long-lived assets consisting of network site and equipment costs to reduce the carrying values to zero . During the year ended March 31, 2020, the Company recorded a $ 46,000 non-cash impairment charge for long-lived assets consisting of $ 35,000 for property and equipment and $ 11,000 for a right of use asset to reduce the carrying values to zero . Equity Method Investment The Company’s 19.5 % investment in the TeamConnect LLC (the “LLC”) for which the Company is not the primary beneficiary and does not influence or control the activities that most significantly impact the LLC’s economic performance, are not consolidated and are accounted for under the equity method of accounting. Under the equity method of accounting, the LLC’s accounts are not reflected within the Company’s consolidated balance sheets and statements of operations. The Company’s share of the earnings of the LLC is reported as income (loss) on equity method investment in the Company’s consolidated statements of operations. The Company’s carrying value in an equity method investment is reported as equity method investment on the Company’s consolidated balance sheets. If the Company’s carrying value in an equity method is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guarantees obligations of the LLC or commits additional funding. When the LLC subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Fair Value Measurement A Level 1, Level 2 or Level 3 fair value hierarchy is used to categorize fair value amounts depending on the quality of inputs used to measure the fair value. Level 1 fair value derived inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 fair value derived inputs are based on quoted prices for similar assets and liabilities in active markets or based on inputs other than quoted prices for the assets or liability that are either directly or indirectly observable. Level 3 fair value derived inputs are unobservable for the asset or liability as a result of little, if any, market activity for the asset or liability. The Company uses appropriate valuation techniques for the fair values of the applicable assets or liabilities based on the available inputs. When available, the Company measures fair value using Level 1 inputs as they generally provide the most reliable evidence of fair value. The inputs may fall into different levels within the hierarchy in some valuations. In these cases, the fair value hierarchy of the asset or liability level is based on the lowest level of input that is significant to the fair value measurements. Financial Instruments Financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at cost, which management believes approximates fair value because of the short-term maturity of these instruments. Leases Leases in which the Company is the lessee are comprised of corporate office space and tower space. Substantially all of the leases are classified as operating leases. The Company is obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2023 through June 30, 2027, which includes lease extensions ranging from three to ten-years for its corporate headquarters. The Company entered into multiple lease agreements for tower space related to its spectrum holdings. In accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, Leases (“ASC 842”), the Company recognized right of use (“ROU”) assets and corresponding lease liabilities on its Consolidated Balance Sheets for its operating lease agreements with contractual terms greater than 12 months. Lease liabilities are based on the present value of remaining lease payments over the lease term. As the discount rate implied in the Company’s leases is not readily determinable, the present value is calculated using the Company’s incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms. Revenue Recognition Revenues are recognized when a contract with a customer exists and control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services and the identified performance obligation has been satisfied. Page F- 13 Table of Contents A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification, Revenue from Contracts with Customers (“ASC 606”). A contract’s transaction price is allocated to each distinct performance obligation and is recognized as revenue when, or as, the performance obligation is satisfied, which typically occurs when the services are rendered. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. It generally determines standalone selling prices based on the prices charged to customers under contracts involving only the relevant performance obligation. Judgment may be used to determine the standalone selling prices for items that are not sold separately, including services provided at no additional charge. Most of the Company’s performance obligations will be satisfied over time as services are provided. The nature of the licenses provide the benefit of the leased spectrum regardless of whether the customer uses the spectrum or not. As a result, revenue will be recognized ratably as the Company delivers cleared 900 MHz Broadband Spectrum and the associated broadband licenses by county to the customer over the contractual term. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company determined that certain sales commissions met the requirements to be capitalized and were recorded as an asset upon the Company’s adoption of ASC 606. As a result of the customers being assigned to A BEEP and Goosetown (see Note 3 Revenue below), the Company’s capitalized sales commissions were impaired on April 1, 2019. For the years ended March 31, 2022 and 2021, the Company capitalized commission costs required to obtain long-term 900 MHz Broadband Spectrum lease agreements which will be amortized over the contractual term of approximately 30-years . See Note 3 Revenue for a discussion on the Company’s capitalized contract assets incurred during the period ended March 31, 2022 and 2021. Direct Cost of Revenue The Company’s historical direct cost of revenue related to its TeamConnect service offering includes the costs of operating its dispatch network and its cloud-based solutions. With respect to sales of its historical software applications through its wireless carrier partners, direct cost of revenue includes the portion of service revenue retained by its domestic Tier 1 carrier or reseller partners pursuant to its agreements with these parties, which may include network services, connectivity, SMS service, sales, marketing, billing and other ancillary services. Product Development Costs The Company charges all product and development costs to expense as incurred. Types of expense incurred in product and development costs include employee compensation, consulting, travel, equipment and technology costs. Advertising and Promotional Expense The Company expenses advertising and promotional costs as incurred. Advertising and promotional expense was approximately $ 89,000 , $ 19,000 and $ 33,000 for the years ended March 31, 2022, 2021 and 2020, respectively. Stock Compensation The Company accounts for stock options in accordance with U.S. GAAP, which requires the measurement and recognition of compensation expense, based on the estimated fair value of awards granted to consultants, employees and directors. The Company estimates the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense in the Company’s statements of operations over the requisite service periods. In the event the participant’s employment by or engagement with (as a director or otherwise) the Company terminates before exercise of the options granted, the stock options granted to the participant shall immediately expire and all rights to purchase shares thereunder shall immediately cease and expire and be of no further force or effect, other than applicable exercise rights for vested shares that may extend past the termination date as provided for in the participant’s applicable option award agreement. Additionally, the Company’s Compensation Committee (the “Compensation Committee”) adopted an Executive Severance Plan (the “Severance Plan”) in February 2015, which was amended in February 2019, and the Company subsequently entered into Severance Plan Participation Agreements with its executive officers. In addition to providing participants with severance payments, the Severance Plan provides for accelerated vesting and extends the exercise period for outstanding equity awards if the Company terminates a participant’s service for reasons other than cause, death or disability or the participant terminates his or her service for good reason, whether before or after a change of control (each of such terms as defined in the Severance Plan). In addition to the Severance Plan, the equity awards issued to the Company’s President and Chief Executive Officer provide for accelerated vesting upon termination of service for reasons other than cause or a resignation for good reason; involuntary termination in connection with a change in control; or a change in control with a purchase price at or above $ 100 per share (each of such terms defined in the equity award agreements). Page F- 14 Table of Contents To calculate option-based compensation, the Company uses the Black-Scholes option-pricing model. The Company’s determination of fair value of option-based awards on the date of grant using the Black-Scholes model is affected by assumptions regarding a number of subjective variables. The fair value of restricted stock, restricted stock units and performance units without market conditions are measured based upon the quoted closing market price for the stock on the date of grant. The compensation cost for the restricted stock and restricted stock units is recognized on a straight-line basis over the vesting period. The compensation cost for the performance units without market conditions is recognized when the performance criteria are expected to be complete. The Company uses a Monte Carlo simulation model to determine the fair value of performance units with market condition at grant date. The Monte Carlo simulation model is based on a discounted cash flow approach, with the simulation of a large number of possible stock price outcomes for the Company’s stock and the target composite index. The use of the Monte Carlo simulation model requires the input of a number of assumptions including expected volatility of the Company’s stock price, which is based on the weighted-average historical volatility of its stock; correlation between changes in the Company’s stock price and changes in the target composite index, which is based on the historical relationship between the Company’s stock price and the target composite index average; risk-free interest rate, which is based on the treasury zero-coupon yield appropriate for the term of the performance unit as of the grant date; and expected dividends as applicable, which is zero, as the Company has never paid any cash dividends. Any future determination to pay dividends will be at the discretion of the board of directors (the “Board”) and will depend on the Company’s financial condition, results of operations, capital requirements, restrictions contained in any financing instruments and such other factors as the Board deems relevant in its sole discretion. Therefore, the Company has used an expected dividend yield of zero in the Monte Carlo simulation model. No tax benefits have been attributed to the share-based compensation expense because the Company maintains a full valuation allowance for all net deferred tax assets. All excess tax benefits and tax deficiencies, including tax benefits of dividends on share-based payment awards, are recognized as income tax expense or benefit in the income statement, eliminating the notion of the additional paid-in capital (“APIC”) pool. The excess tax benefits are classified as operating activities along with other income tax cash flows rather than financing activities in the statement of cash flows. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Cash payments to tax authorities in connection with shares withheld to meet statutory tax withholding requirements are presented as a financing activity in the statement of cash flows. Retirement of common stock From time to time, the Company may acquire its common stock through share repurchases or option exercise swaps and return these shares to authorized and unissued. If the Company elects to retire these shares, the Company’s policy is to allocate a portion of the repurchase price to par value of common stock with the excess over par value allocated to accumulated deficit. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities as well as from net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is established when it is estimated that it is more likely than not that the tax benefit of a deferred tax asset will not be realized. Changes in valuation allowance for the years ended March 31, 2022, 2021 and 2020 are summarized below (in thousands): 2022 2021 2020 Balance at beginning of the year $ 65,304 $ 47,664 $ 37,019 Charged to costs and expenses 979 124 2,399 Changes in net loss carryforward and other 13,715 17,516 8,246 Balance at end of the year $ 79,998 $ 65,304 $ 47,664 Accounting for Uncertainty in Income Taxes The Company recognizes the effect of tax positions only when they are more likely than not to be sustained. Management has determined that the Company had no uncertain tax positions that would require financial statement recognition or disclosure. The Company is no longer subject to U.S. federal, state or local income tax examinations for periods Page F- 15 Table of Contents prior to 2019. When applicable, the Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. Net Loss Per Share of Common Stock Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. For purposes of the diluted net loss per share calculation, preferred stock, convertible notes payable-affiliated entities, stock options, restricted stock and warrants are considered to be potentially dilutive securities. Because the Company has reported a net loss for the years ended March 31, 2022, 2021 and 2020, diluted net loss per common share is the same as basic net loss per common share for those periods. Common stock equivalents resulting from potentially dilutive securities approximated 1,343,000 , 1,382,000 and 1,440,000 at March 31, 2022, 2021 and 2020, respectively, and have not been included in the dilutive weighted average shares of common stock outstanding, as their effects are anti-dilutive. Recently Adopted Accounting Guidance In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, and has subsequently modified several areas of the Accounting Standards Codification 326, Financial Instruments – Credit Losses , in order to provide additional clarity and improvements. The new standard requires entities to use a Current Expected Credit Loss impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost within the scope of the standard. The entity’s estimate would consider relevant information about past events, current conditions and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses. As the Company was previously a smaller reporting company, the standard updates would have been effective beginning April 2023, however, due to the transition to a large accelerated filer during the current fiscal year, the updates were effective for the Company as of the fiscal year end 2022. The Company adopted the new standard effective March 31, 2022, and the adoption did not have a material impact on its consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements While there have been accounting standards that have been issued or proposed by the FASB or other standard-setting bodies that do not require adoption until a future date, these updates are not expected to have a material impact on the Company’s consolidated financial statements upon adoption . 3. Revenue 900 MHz Broadband Spectrum Revenue In December 2020, the Company entered into its first long-term lease agreements of 900 MHz Broadband Spectrum with Ameren. The Ameren Agreements will enable Ameren to deploy a private LTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people. Each Ameren Agreement is for a term of up to 40 years, consisting of an initial term of 30 years, with a 10-year renewal option for an additional payment. The scheduled prepayments for the 30-year initial terms of the Ameren Agreements total $ 47.7 million, of which $ 0.3 million was received by the Company in February 2021, $ 5.4 million in September 2021 and $ 17.2 million in October 2021. The prepayments received to date encompass the initial upfront payment(s) due upon signing of the Ameren Agreements and payments for delivery of the relevant 1.4 x 1.4 cleared spectrum in several metropolitan counties throughout Missouri and Illinois, in accordance with the terms of the Ameren Agreements. The remaining prepayments for the 30-year initial term are due by mid-2026, per the terms of the Ameren Agreements and as the Company delivers the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation in Ameren’s service territory. In August 2021, the FCC granted the first 900 MHz broadband licenses to the Company for several counties in Ameren’s service territory, for which the Ameren Agreements were also subsequently approved by the FCC. In accordance with ASC 606, the payments of prepaid fees under the Ameren Agreements will be accounted for as deferred revenue on the Company’s Consolidated Balance Sheets and will be recognized ratably as the Company delivers cleared 900 MHz Broadband Spectrum and the associated broadband licenses by county over the contractual term of approximately 30-years . The revenue recognized for the year ended March 31, 2022 was $ 0.4 million. In September 2021, the Company entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy. The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri, with a population of approximately 3.9 million people. The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments. Prepayment in full of the $ 30.2 million for the 20-year initial term, which was due and payable within thirty ( 30 ) days after execution of the Evergy Agreement, was received by the Company in October 2021. The Evergy Agreement is subject to customary provisions regarding remedies for non-delivery, Page F- 16 Table of Contents including refund of amounts paid and termination rights, if Anterix fails to perform its contractual obligations, including failure to deliver the relevant cleared 900 MHz Broadband Spectrum, in accordance with the terms of the Evergy Agreement. The Company is working with incumbents to clear the 900 MHz Broadband Spectrum allocation covered by the Evergy Agreement. The Company expects to recognize revenue from the Evergy Agreement commencing in the first half of fiscal year 2023. In accordance with ASC 606, the payments of prepaid fees under the Evergy Agreement will be accounted for as deferred revenue on the Company’s Consolidated Balance Sheets and will be recognized ratably as the Company delivers cleared 900 MHz Broadband Spectrum and the associated broadband licenses by county over the contractual term of approximately 20-years . Narrowband Spectrum Revenue In September 2014, Motorola paid the Company an upfront, fully-paid fee of $ 7.5 million in order to use a portion of the Company’s narrowband spectrum licenses (the “2014 Motorola spectrum agreement”). The payment of the fee is accounted for as deferred revenue on the Company’s consolidated balance sheets and is recognized ratably as the service is provided over the contractual term of approximately ten years . The revenue recognized for the years ended March 31, 2022, 2021 and 2020 was approximately $ 0.7 million each year. Service Revenue The Company has historically derived its service revenue from a fixed monthly recurring unit price per user, with 30 -day payment terms, for its pdvConnect, TeamConnect, and Diga-talk service offerings. In December 2018, the Board approved the transfer of various customers under its TeamConnect business to A BEEP and Goosetown along with the support for its pdvConnect business to help reduce operating costs and to allow the Company to focus on its FCC initiatives and future broadband opportunities. On March 31, 2019, these agreements were amended to formally set the transition date for the businesses as April 1, 2019 and to clarify the responsibilities between the parties. Under the terms of the agreement, the Company assigned the intellectual property rights to its TeamConnect and pdvConnect related applications to the LLC. pdvConnect is a proprietary cloud-based mobile resource management solution which has historically been sold as a separate software-as-a-service offering for dispatch-centric business customers who utilize Tier 1 cellular networks. pdvConnect was historically sold directly by the Company or through two Tier 1 domestic carriers. On April 1, 2020, these customers were transferred to the LLC, except for one Tier 1 domestic carrier. The LLC agreed to pay the Company a certain portion of the recurring revenues from the transferred customers through the term of the agreement. TeamConnect combines pdvConnect with push-to-talk mobile communication services involving digital network architecture and mobile devices. A BEEP and Goosetown agreed to pay the Company a certain portion of the recurring revenues during the term of the agreements. While the customer remained on the Company’s TeamConnect Metro and Campus Systems (the “MotoTRBO Systems”), the portion of recurring revenues paid by A BEEP and Goosetown was recorded as revenue. As a result of the completion of the migration to A BEEP and Goosetown in December 2020, service revenue is recorded to other income in the Consolidated Statement of Operations. Contract Assets The Company recognizes a contract asset for the incremental costs of obtaining a contract with a customer. These costs include sales commissions. These costs are amortized ratably using the portfolio approach over the estimated customer contract period. The Company will review the contract asset on a periodic basis to determine if an impairment exists, and subsequent to the Company’s adoption of ASU 2016-13, will review the contract assets for potential credit loss exposure. If it is determined that there is an impairment, or a potential credit loss, the Company will expense the contract asset. As of March 31, 2022 and 2021, the Company incurred commission and stock compensation costs to obtain its long-term 900 MHz Broadband Spectrum lease agreements amounting to approximately $ 0.3 million and $ 0.4 million, respectively, which was capitalized and will be amortized over the contractual term of approximately 30-years . Historically, contract assets include commissions for salespeople and commissions paid to third-party dealers. As a result of transferring customers to A BEEP and Goosetown, all contract and contract acquisition costs were impaired for the year ended March 31, 2020. The Company recorded the impairment by increasing direct cost of revenue amounting to $ 0.2 million and sales and support expense amounting to $ 0.3 million for the year ended March 31, 2020. Page F- 17 Table of Contents The following table presents the activity for the Company’s contract assets (in thousands): Contract Assets Balance at March 31, 2020 $ — Additions 381 Amortization — Impairment — Balance at March 31, 2021 381 Additions 263 Amortization ( 6 ) Impairment — Balance at March 31, 2022 638 Less amount classified as current assets - prepaid expenses and other current assets ( 238 ) Noncurrent assets - included in other assets $ 400 Contract liabilities Contract liabilities primarily relate to advance consideration received from customers for spectrum services, for which revenue is recognized over time, as the services are performed. These contract liabilities are recorded as deferred revenue on the balance sheet. The following table presents the activity for the Company’s contract liabilities (in thousands): Contract Liabilities Balance at March 31, 2020 $ 3,462 Additions 250 Revenue recognized ( 729 ) Balance at March 31, 2021 2,983 Additions 52,779 Revenue recognized ( 1,084 ) Balance at March 31, 2022 54,678 Less amount classified as current liabilities ( 1,478 ) Noncurrent liabilities $ 53,200 4. Property and Equipment Property and equipment consists of the following at March 31, 2022 and 2021 (in thousands): Estimated useful life 2022 2021 Network sites and equipment 5 - 10 years $ 14,588 $ 13,235 Computer software 1 - 7 years 639 592 Computer equipment 5 - 7 years 204 293 Furniture and fixture and other equipment 2 - 5 years 415 284 Leasehold improvements Shorter of the lease term or 10 years 242 242 16,088 14,646 Less accumulated depreciation 13,379 11,082 2,709 3,564 Construction in process 240 10 Property and equipment, net $ 2,949 $ 3,574 Depreciation expense for the years ended March 31, 2022, 2021 and 2020 amounted to approximately $ 1.5 million, $ 3.5 million and $ 3.6 million, respectively. Page F- 18 Table of Contents During the years ending March 31, 2021 and 2020, the Company recorded $ 85,000 and $ 46,000 , respectively, of non-cash impairment charges for network sites and equipment to reduce the carrying values to zero . There were no impairment charges during the year ended March 31, 2022. 5. Intangible Assets Wireless licenses are considered indefinite-lived intangible assets. Indefinite-lived intangible assets are not subject to amortization but instead are tested for impairment annually, or more frequently if an event indicates that the asset might be impaired. There were no impairment charges related to the Company’s indefinite-lived intangible assets during the years ended March 31, 2022, 2021 and 2020. During the years ended March 31, 2022 and 2021, the Company entered into agreements with several third parties in multiple U.S. markets to acquire wireless licenses for cash consideration of $ 17.8 million and $ 15.6 million, respectively, after receiving FCC approval. As of March 31, 2022 and 2021, the Company recorded initial deposits to incumbents amounting to approximately $ 8.0 million and $ 2.3 million, respectively, that are refundable if the FCC does not approve the sale of the spectrum. Of the $ 8.0 million initial refundable deposit balance as of March 31, 2022, $ 7.6 million was included in prepaid expenses and other current assets and the remaining $ 0.4 million in other assets in the Consolidated Balance Sheets. Of the $ 2.3 million initial refundable deposit balance as of March 31, 2021, $ 1.9 million was included in prepaid expenses and other current assets and the remaining $ 0.4 million in other assets in the Consolidated Balance Sheets. As of March 31, 2022 and 2021, the Company recorded deferred charges of $ 3.4 million and $ 0.4 million, respectively, related to in-process deals, of which $ 0.2 million and $ 0.1 million was recorded in prepaid expenses and other current assets and $ 3.1 million and $ 0.3 million, respectively, was recorded in other assets. Once the FCC approves the sale, the Company makes the final payment to the incumbent. Once the final payment is made, both the initial deposit and final payment are transferred to the intangible asset for the wireless licenses. The nation’s railroads, particularly the major freight lines, operate on six narrowband 900 MHz channels licensed to the Association of American Railroads (“AAR”). Three of these narrowband channels are located in the 900 MHz broadband segment created by the FCC in the Report and Order. As a result, in order to qualify for broadband licenses under the Report and Order, the Company will be required to provide spectrum for the relocation of the AAR channels to narrowband channels outside the 900 MHz broadband segment. In January 2020, the Company entered into an agreement with the AAR pursuant to which the Company agreed to cancel licenses in the 900 MHz band to enable the AAR to relocate its operations, including operations utilizing the three channels located in the 900 MHz broadband segment (the “AAR Agreement”). The Report and Order provides that the FCC will make the channels associated with these licenses available to the AAR to enable the AAR to relocate their current operations. The Report and Order also provides that the FCC will credit the Company for its cancelled licenses for purposes of determining the Company’s eligibility to secure broadband licenses and the calculation of any Anti-Windfall Payments. In accordance with the Report and Order and the AAR Agreement, the Company cancelled its licenses in June 2020. Because the Company did not receive any licenses nor monetary reimbursement in exchange for the cancellation, but only credit for purposes of determining its future eligibility and payment obligations for broadband licenses under the Report and Order, the Company recorded a $ 4.7 million loss from disposal of the intangible assets in the Consolidated Statements of Operations for the year ended March 31, 2021. In August 2020, the Company closed an agreement with a third party for the exchange of 900 MHz licenses plus approximately $ 0.3 million for the reprogramming of their equipment. Since the licenses the Company acquired in the exchange were included in the licenses returned to the FCC in accordance with the AAR Agreement above, the $ 0.3 million for equipment reprogramming was recorded as additional loss from disposal of the intangible assets in the Consolidated Statements of Operations. In September 2020, the Company closed an agreement with a third party for the exchange of 900 MHz licenses. Under the agreement, the Company received spectrum licenses at their estimated fair value of approximately $ 0.2 million and a payment of $ 1.2 million in cash to clear the channels received from incumbents. In January 2018, the Company received $ 0.6 million as a refundable deposit when the agreement was executed in Fiscal 2018, and the Company is entitled to receive the remaining $ 0.6 million upon receipt of FCC approval and closing of the agreement in September 2020. Under the agreement, the Company transferred spectrum licenses with book value of approximately $ 0.3 million to the third party. The Company recognized a $ 1.1 million gain from disposal of intangible assets in the Consolidated Statement of Operations when the deal closed in September 2020. In addition, during the year ended March 31, 2020, the Company entered into a barter agreement whereby it provided equipment with a net book value of $ 21,000 and approximately $ 15,000 in cash in exchange for wireless licenses valued at approximately $ 88,000 . The Company recorded a corresponding gain of $ 52,000 . Page F- 19 Table of Contents During the year ended March 31, 2022, the Company applied for, and was granted by the FCC, broadband licenses for 21 counties. The Company recorded the new broadband licenses at their estimated accounting cost basis of approximately $ 15.3 million. In connection with receiving the broadband licenses, the Company disposed of $ 4.1 million related to the value ascribed to the narrowband licenses it relinquished to the FCC for the same 21 counties. The total carrying value of narrowband licenses included the cost to acquire the original narrowband licenses, Anti-Windfall payments paid to cover the shortfall in each county and the clearing costs. As a result of the exchange of narrowband licenses for broadband licenses, the Company recorded a gain on disposal of intangible assets of $ 11.2 million, for the year ended March 31, 2022. Intangible assets consist of the following at March 31, 2022 and 2021 (in thousands): Wireless Licenses Balance at March 31, 2020 $ 111,526 Acquisitions 15,640 Exchanges - licenses received 196 Exchanges - licenses surrendered ( 262 ) Cancellations ( 4,983 ) Balance at March 31, 2021 122,117 Acquisitions 17,843 Exchanges - licenses received 15,341 Exchanges - licenses surrendered ( 4,132 ) Balance at March 31, 2022 $ 151,169 6. Equity Method Investment In connection with the transfer of its TeamConnect business and support for its pdvConnect business, the Company entered into a memorandum of understanding (“MOU”) with the principals of Goosetown on December 31, 2018. Under the MOU, the Company agreed to assign the intellectual property rights to its pdvConnect application to the LLC, a new entity formed by the principals of Goosetown, in exchange for a 19.5 % ownership interest in the LLC, effective April 30, 2019. The Goosetown principals have agreed to fund the future operations of the LLC, subject to certain limitations. The LLC has assumed the Company’s software support and maintenance obligations under the Goosetown and A BEEP Agreements. The LLC has also assumed customer care services related to the Company’s pdvConnect application. The Company provided transition services to the LLC through April 1, 2019 to facilitate an orderly transition of the customer care services. On April 1, 2020, the Company transferred its pdvConnect customers to the LLC, and the LLC agreed to pay the Company a certain portion of the recurring revenues from these customers. For the year ended March 31, 2020, the Company transferred network, computer, other equipment and intellectual property rights with a net book value of $ 246,000 , recorded an investment in the LLC amounting to $ 48,000 and loss on disposal of long-lived assets and capitalized patent costs amounting to $ 198,000 relating to the transfer of the assets. As of March 31, 2021, the change in the carrying value of the investment in LLC is summarized below as follows (in thousands): Equity Method Investment Equity method investment carrying value at March 31, 2020 $ 39 Non-cash contribution — Share of net loss from LLC ( 39 ) Equity method investment carrying value at March 31, 2021 $ — As of and for the year ended March 31, 2022, there was no activity for equity method investments. Page F- 20 Table of Contents 7. Accounts Payable and Accrued Expenses The table below provides additional information related to the Company’s accounts payable and accrued expenses at March 31, 2022 and 2021 (in thousands): 2022 2021 Accounts payable $ 1,044 $ 500 Accrued employee related expenses 4,730 4,753 Accrued expenses 735 951 Other 17 52 Total accounts payable and accrued expenses $ 6,526 $ 6,256 8. Related Party Transactions Under the terms of the MOU, the Company was obligated to pay the LLC a monthly service fee for a 24-month period ending on January 7, 2021 for its assumption of the Company’s support obligations under the A BEEP and Goosetown Agreements. The Company is also obligated to pay the LLC a certain portion of the billed revenue received by the Company from pdvConnect customers for a 48-month period. For the years ended March 31, 2022, 2021 and 2020, the Company incurred payments of $ 60,000 , $ 576,000 and $ 974,000 under the MOU, respectively. As of March 31, 2022, the Company did not have outstanding liabilities to the related parties associated with the services transfer. As of March 31, 2021, the Company owed $ 32,000 to the LLC. The Company did not purchase any equipment from Motorola for the years ended March 31, 2022 and 2021. The Company purchased $ 11,000 of equipment from Motorola for the year ended March 31, 2020. The Company recognized approximately $ 729,000 each year in Spectrum revenue for the years ended March 31, 2022, 2021 and 2020. As of March 31, 2022 and 2021, the Company owed $ 120,000 to Motorola, unrelated to the 2014 Motorola spectrum agreement. On May 5, 2020, the Company entered into a consulting agreement with Rachelle B. Chong under which Ms. Chong will serve as a Senior Advisor to the Company’s management team effective May 15, 2020. In connection with the consulting agreement, Ms. Chong submitted her resignation from the Board and as a member of the Board’s Nominating and Corporate Governance Committee. For the years ended March 31, 2022 and 2021, the Company incurred $ 144,000 and $ 132,000 , respectively, in consulting fees to Ms. Chong. As of March 31, 2022 and 2021, the Company did not have any outstanding liabilities to Ms. Chong. On June 25, 2020, as part of its Executive Succession Plan (the “Succession Plan”), the Company announced that Brian D. McAuley had submitted his resignation as Executive Chairman of the Board, effective on July 1, 2020. On August 27, 2020, the Company entered into a consulting agreement (the “Consulting Agreement”) with Mr. McAuley under which Mr. McAuley will serve as a Senior Advisor to the Company’s management team and provide strategic, corporate governance and Board advisory services. The Consulting Agreement provides that Mr. McAuley will receive cash compensation of $ 40,000 per year. Pursuant to the existing terms of his outstanding equity awards, Mr. McAuley will continue to vest in his outstanding equity awards as he continues to provide services to the Company pursuant to the Consulting Agreement. The Consulting Agreement was effective as of September 2, 2020, with an original expiration date of September 1, 2021. The Company extended the agreement by an additional twelve ( 12 ) months with a new termination date of September 1, 2022, unless terminated earlier by either party or extended upon the mutual agreement of the parties at least thirty ( 30 ) days before the end of the term. The Consulting Agreement contains standard confidentiality, indemnification and intellectual property assignment provisions in favor of the Company. The Consulting Agreement also contains a waiver by Mr. McAuley to any severance benefits that he might be entitled to receive under the Company’s Executive Severance Plan in connection with his resignation and the Executive Succession Plan. In consideration for this waiver, in the event the Company terminates the Consulting Agreement without cause, Mr. McAuley dies or becomes disabled during the term of the Consulting Agreement, or the Company elects not to extend the term of the Consulting Agreement through September 1, 2023, then the vesting of all outstanding time-based equity awards held by Mr. McAuley shall accelerate on the date his consulting services end such that he will be deemed to have vested in a total of 18,761 shares of Common Stock for his services under the Consulting Agreement. In addition, Mr. McAuley’s performance-based equity awards shall remain outstanding (and shall not terminate) and he shall continue to be eligible to obtain vested option shares and vested restricted stock units under his outstanding performance-based equity awards if the “Vesting Conditions” set forth in the performance-based equity awards are satisfied. For the years ended March 31, 2022 and 2021, the Company incurred approximately $ 40,000 and $ 23,000 , respectively, in consulting fees to Mr. McAuley. As of March 31, 2022 and 2021, the Company did not have any outstanding liabilities to Mr. McAuley. Page F- 21 Table of Contents 9. Leases A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On April 1, 2019, the Company adopted ASC 842 and it primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. Substantially all the leases in which the Company is the lessee are comprised of corporate office space and tower space. The Company is obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2023 through June 30, 2027, which includes lease extensions for its corporate headquarters ranging from three to ten-years . The Company entered into multiple lease agreements for tower space. The lease expiration dates range from May 31, 2022 to April 30, 2028. Substantially all of the Company’s leases are classified as operating leases, and as such, were previously not recognized on the Company’s Consolidated Balance Sheet. With the adoption of ASC 842, operating lease agreements are required to be recognized on the Consolidated Balance Sheet as ROU assets and corresponding lease liabilities. ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows: 2022 2021 Weighted average term - operating lease liabilities 3.57 years 4.40 years Weighted average incremental borrowing rate - operating lease liabilities 13 % 13 % Rent expense amounted to approximately $ 2.0 million for the year ended March 31, 2022, of which is included in general and administrative expenses in the Consolidated Statement of Operations. Rent expense amounted to approximately $ 2.6 million for the year ended March 31, 2021, of which approximately $ 1.2 million are included in direct cost of revenue and the remainder of approximately $ 1.4 million included in general and administrative in the Consolidated Statement of Operations. Rent expense amounted to approximately $ 2.7 million for the year ended March 31, 2020, of which approximately $ 1.7 million are included in direct cost of revenue and the remainder of approximately $ 1.0 million included in general and administrative in the Consolidated Statement of Operations. For the years ended March 31, 2022, 2021 and 2020, the following table presents net lease cost (in thousands): 2022 2021 2020 Lease cost Operating lease cost (cost resulting from lease payments) $ 1,950 $ 2,451 $ 2,614 Short term lease cost 16 110 52 Sublease income — ( 6 ) ( 16 ) Net lease cost $ 1,966 $ 2,555 $ 2,650 For the years ended March 31, 2022, 2021 and 2020, the following table presents other supplemental cash flow lease information (in thousands): 2022 2021 2020 Cash paid activity: Operating lease - operating cash flows (fixed payments) $ 2,286 $ 2,746 $ 2,743 Operating lease - operating cash flows (liability reduction) $ 1,382 $ 1,674 $ 1,447 Non-cash activity: Right of use assets obtained in exchange for new operating lease liabilities $ 116 $ 230 $ 7,904 Page F- 22 Table of Contents The following table presents supplemental balance sheet information as of March 31, 2022 and March 31, 2021 (in thousands): 2022 2021 Non-current assets - right of use assets, net $ 4,047 $ 5,100 Current liabilities - operating lease liabilities $ 1,512 $ 1,470 Non-current liabilities - operating lease liabilities $ 4,177 $ 5,601 Future minimum payments under non-cancelable leases for office and tower spaces (exclusive of real estate tax, utilities, maintenance and other costs borne by the Company) for the remaining terms of the leases following the year ended March 31, 2022 are as follows (in thousands): Fiscal Year Operating Leases 2023 $ 2,144 2024 1,987 2025 1,555 2026 866 2027 461 After 2027 135 Total future minimum lease payments 7,148 Amount representing interest ( 1,459 ) Present value of net future minimum lease payments $ 5,689 10. Income Taxes For the year ended March 31, 2022, the Company had federal and state NOL carryforwards of approximately $ 330.7 million and $ 191.8 million respectively. Of these federal and state NOLs, approximately $ 90.3 million and $ 154.5 million, respectively, are expiring in various amounts from 2023 through 2038. The remaining federal and state NOLs of approximately $ 240.4 million and $ 37.3 million, respectively, have an indefinite life but the federal NOLs may only offset 80% of taxable income when used. For the year ended March 31, 2021, the Company incurred federal and state operating losses of approximately $ 55.3 million and $ 47.1 million, respectively, to offset future taxable income, of which the entire $ 55.3 million federal NOL and $ 24.5 million of state NOLs can be carried forward indefinitely but can only offset 80% of taxable income when used. The Company has net deferred tax assets, before applying the valuation allowance, of approximately $ 75.8 million and $ 62.1 million relating principally to the NOLs as of March 31, 2022 and 2021, respectively. Federal NOL carryforwards may be subject to limitations as a result of the change in ownership that occurred in the year ended March 31, 2015, as defined under Internal Revenue Code Section 382. State NOL carryforwards are subject to limitations which differ from federal law in that they may not allow the carryback of net operating losses and have shorter carryforward periods. Accounting Standards Codification Topic 740, Income Taxes, requires that a valuation allowance be recorded to reduce deferred tax assets when it is more likely than not that the tax benefit of the deferred tax assets will not be realized. The evaluation includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. In situations where a three-year cumulative loss condition exists, accounting standards limit the ability to consider projections of future results as positive evidence to assess the realizability of deferred tax assets. Since inception, the Company has incurred consecutive tax losses which represents significant negative evidence toward the realizability of its deferred tax assets. Therefore, the Company continues to apply a full valuation allowance against its deferred tax assets as of March 31, 2022 and 2021, with the exception of the net deferred tax liability of approximately $ 4.2 million and $ 3.2 million, respectively, regarding indefinite-lived intangibles. For Fiscal 2022 and 2021, analysis of the state NOL carryforwards revealed that most of them are not indefinite. The Company recorded $ 0.6 million and $ 0.1 million, respectively, of state deferred tax benefit during the year March 31, 2022 and 2021 and decreased the state deferred tax liability by the same amount from the inability to use the state NOL carryforwards against the indefinite-lived intangible. This valuation allowance has no effect on the Company’s ability to utilize the deferred tax assets to offset future taxable income, if generated. As required by U.S. GAAP, the Company will continue to assess the Page F- 23 Table of Contents likelihood that the deferred tax assets will be realizable in the future and the valuation allowance will be adjusted accordingly. The tax benefits relating to any reversal of the valuation allowance on the net deferred tax assets in a future period will be recognized as a reduction of future income tax expense in that period. Net deferred tax assets and liabilities consist of the following as of March 31, 2022 and 2021 (in thousands): 2022 2021 Deferred tax asset Property and equipment $ 700 $ 618 Accrued expenses 998 1,052 Deferred revenue 502 680 Asset retirement obligations 12 11 Net operating loss carryforward 81,818 65,550 Operating lease liabilities 1,434 1,825 Charitable contributions carryforward 60 62 Stock compensation expense 4,408 5,207 Total deferred tax asset 89,932 75,005 Deferred tax liability Right of use assets ( 1,006 ) ( 1,316 ) Indefinite-lived intangible assets ( 13,120 ) ( 11,594 ) Total deferred tax liability ( 14,126 ) ( 12,910 ) Total deferred tax assets and liabilities 75,806 62,095 Valuation allowance ( 79,998 ) ( 65,304 ) Net deferred tax assets and liabilities $ ( 4,192 ) $ ( 3,209 ) The components of the income tax expense for the years ended March 31, 2022, 2021 and 2020 are as follows (in thousands): 2022 2021 2020 Current: Federal $ — $ — $ — State 5 2 3 Total current* 5 2 3 Deferred: Federal 370 251 1,637 State 608 ( 127 ) 762 Total deferred 978 124 2,399 Total income tax expense $ 983 $ 126 $ 2,402 * Fiscal 2021 current state tax expense was recorded as general and administrative expense. Page F- 24 Table of Contents The differences between the United States federal statutory tax rate and the Company’s effective tax rate for the years ended March 31, 2022, 2021 and 2020 are as follows (in thousands): 2022 2021 2020 Statutory federal tax $ ( 7,672 ) 21 % $ ( 11,405 ) 21 % $ ( 7,400 ) 21 % State income taxes, net of federal benefit 612 - 2 % ( 125 ) 1 % 766 - 2 % Incentive stock option expense ( 564 ) 2 % ( 720 ) 1 % ( 41 ) 0 % Other permanent differences ( 4,017 ) 11 % ( 251 ) 0 % ( 91 ) 0 % 162M executive compensation limit 1,673 - 5 % 729 - 1 % — 0 % Restricted stock shortfall/windfall ( 617 ) 2 % ( 136 ) 0 % ( 437 ) 1 % Change in valuation allowance - Federal 11,408 - 31 % 14,570 - 27 % 9,440 - 27 % Prior-year adjustments 160 - 1 % ( 2,536 ) 5 % 165 0 % $ 983 - 3 % $ 126 0 % $ 2,402 - 7 % 11. Stock Acquisition Rights, Stock Options and Warrants The Company established the 2014 Stock Plan (the “2014 Stock Plan”) to attract, retain and reward individuals who contribute to the achievement of the Company’s goals and objectives. This 2014 Stock Plan superseded previous stock plans. The Board has reserved 5,027,201 shares of common stock for issuance under the 2014 Stock Plan as of March 31, 2022, of which 1,216,868 shares are available for future issuance. Historically, the number of shares reserved under the 2014 Stock Plan were increased, based on Board approval, each January 1 through January 1, 2024 by an amount equal to the lesser of (i) 5 % of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or (ii) a lesser amount determined by the Board (the “evergreen provision”). Effective January 1, 2021, the Board elected to increase the shares authorized under the 2014 Stock Plan by 879,216 shares, which represented 5 % of the of the Company’s common stock issued and outstanding as of December 31, 2020. On June 14, 2021, the Compensation Committee of the Board approved Amendment No. 1 to 2014 Stock Plan to eliminate the evergreen provision for all future years (i.e., January 1, 2022 through January 1, 2024). Restricted Stock and Restricted Stock Units A summary of non-vested restricted stock activity for the year ended March 31, 2022 is as follows: Restricted Stock Weighted Average Grant Day Fair Value Non-vested restricted stock outstanding at March 31, 2021 475,759 $ 42.48 Granted 362,073 50.64 Vested ( 221,554 ) 42.72 Forfeited ( 71,991 ) 44.75 Non-vested restricted stock outstanding at March 31, 2022 544,287 $ 47.39 The following table reflects activity related to our restricted stock for the years ended March 31, 2022, 2021 and 2020: 2022 2021 2020 Weighted-average grant-date fair value per unit granted $ 50.64 $ 46.07 $ 42.86 Fair value of restricted stock units vested (in thousands) $ 12,240 $ 8,165 $ 5,877 The Company recognizes compensation expense for restricted stock on a straight-line basis over the explicit vesting period. Vested restricted stock units are settled and issuable upon the earlier of the date the employee ceases to be an employee of the Company or a date certain in the future. Stock compensation expense related to restricted stock was approximately $ 9.7 million for the year ended March 31, 2022, which included $ 8.5 million in general and administrative expenses, $ 0.7 million in product development and the remainder of approximately $ 0.5 million included in sales and support reported in the Consolidated Statements of Operations. Stock compensation expense related to restricted stock was approximately $ 9.2 million for the year ended March 31, 2021, which included $ 0.8 million of expense related to the Type III modification of restricted stock units held by the Company’s former Chairman of the Board upon his transition to a consultant to the Company that is probable of vesting under the modified condition of which approximately $ 8.4 million are included in general and administrative expenses, $ 0.6 million in product development and the remainder of approximately $ 0.2 million included in Page F- 25 Table of Contents sales and support reported in the Consolidated Statements of Operations. Stock compensation expense related to restricted stock was approximately $ 4.3 million for the year ended March 31, 2020, of which approximately $ 3.9 million is included in general and administrative expenses, $ 0.2 million in product development expenses and the remainder of approximately $ 0.2 million included in sales and support expenses reported in the Consolidated Statements of Operations. As of March 31, 2022 and 2021, the Company incurred stock compensation costs to obtain its long-term 900 MHz Broadband Spectrum lease agreements amounting to approximately $ 0.1 million and $ 0.2 million, respectively, which was capitalized and will be amortized over the contractual term of approximately 20-years and 30-years , respectively. In May 2020, the Compensation Committee granted restricted stock awards for 28,000 shares of common stock, or approximately $ 1.5 million, to satisfy the fiscal year 2020 bonus liability, recorded in accounts payable and accrued expenses, for key individuals. As of March 31, 2022 and 2021, there was $ 18.4 million and $ 13.2 million, respectively, of unvested compensation expense for the restricted stock, which is expected to be recognized over a weighted average period of 2.53 years and 2.36 years, respectively. Performance-Based Restricted Stock Units A summary of the performance-based restricted stock unit activity for the year ended March 31, 2022 is as follows: Performance Stock Weighted Average Grant Day Fair Value Performance stock outstanding at March 31, 2021 75,049 $ 58.65 Granted — — Vested — — Forfeited/cancelled — — Performance stock outstanding at March 31, 2022 75,049 $ 58.65 The following table reflects activity related to our performance-based restricted stock units for the years ended March 31, 2022, 2021 and 2020: 2022 2021 2020 Weighted-average grant-date fair value per unit granted $ — $ 58.65 $ 46.23 Fair value of Performance stock units vested (in thousands) $ — $ 3,941 $ — Outstanding performance stock units included in the table above are shown at target. Share payout can range from 0 % to 200 % for CEO Performance Units (as defined below) based on the Cumulative Spectrum Proceeds Monetized (“CSPM”) metric and 25 % to 350 % for CEO Performance Units based on the Total Stockholders Return (“TSR Performance Units”) metrics. Performance-Based related to Report and Order and Long-Term Agreement(s) On October 2, 2019, the Company awarded 11,307 performance-based restricted stock units under the 2014 Stock Plan. The performance goal was: prior to January 13, 2020, (A) issuance of a Final Order from the FCC (“Final Order”) providing for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (B) the lack of objection by the Board to the terms and conditions (including, but not limited to, the rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order. All 120,445 performance-based restricted stock units awarded were forfeited in January 2020 as a result of the performance conditions not being met by January 13, 2020. No compensation expense was recorded for these performance-based restricted stock units. On February 28, 2020, the Company awarded 95,538 performance-based restricted stock units. The performance goals are: (A) Target Goal : 50 % of the shares vest upon (i) achievement by December 31, 2020 of a Final Order from the FCC providing for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (ii) the lack of objection by the Board to the terms and conditions (including, but not limited to, the Page F- 26 Table of Contents rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order; and (B) Stretch Goal : The remaining 50 % of the performance shares vest and settle upon the occurrence of all three of the following conditions: (i) the Company enters into one or more long-term agreement(s) with critical infrastructure or enterprise business(es) to enable such business(es) to utilize the Company’s spectrum for broadband connectivity; (ii) the combined total contract dollars payable to the Company over the initial term(s) of such agreement(s) equals or exceeds a certain amount as specified by the Board; and (iii) the agreement(s) is/are binding on such business(es) and is/are either not contingent on prior Board approval(s) or such approval(s) has/have been received. Additionally, on February 28, 2020, the Company awarded 43,446 performance-based restricted stock units. The performance goal related to these units is: 100 % of the shares will vest upon (i) achievement by December 31, 2020 of a Final Order providing for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (ii) the lack of objection by the Board to the terms and conditions (including, but not limited to, the rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order. On September 30, 2020, the Company recorded stock compensation expense included in general and administrative expenses reported in the Consolidated Statements of Operations amounting to approximately $ 4.3 million based on the achievement of the Target Goal described above or approximately 91,216 shares under the performance-based restricted stock units, upon the Report and Order becoming effective in August 2020. As of March 31, 2021, there was no stock compensation expense recognized for the Stretch Goal described above under the performance-based restricted stock units as the 47,768 performance-based restricted stock units expired as unvested. CEO Performance Units Cumulative Spectrum Proceeds Monetized On December 31, 2020, the Compensation Committee awarded performance-based restricted units to the Company’s President and Chief Executive Officer as part of the Succession Plan, (the “CEO Performance Units”). The performance-based restricted units will vest on a determination date of June 24, 2024 (“Determination Date”) (unless sooner triggered by an earlier involuntary termination), based on Cumulative Spectrum Proceeds Monetized (“CSPM”) metric over a four-year measurement period commencing on June 24, 2020, with 15,025 units vesting if the minimum CSPM level is achieved, 30,049 units vesting if the target CSPM metric is achieved and up to 60,098 vesting if the maximum CSPM metric is achieved. The Company recorded approximately $ 0.3 million and $ 0.1 million of stock compensation expense included in general and administrative expenses reported in the Consolidated Statements of Operations relating to the CEO Performance Units - CSPM for the years ended March 31, 2022 and 2021, respectively. As of March 31, 2022 and 2021, there was approximately $ 0.8 million and $ 1.0 million, respectively, of unvested compensation expense for the outstanding performance-based restricted stock units related to the December 31, 2020 CEO Performance Units, which is expected to be recognized over a weighted average period of 2.49 years and 3.49 years, respectively. Total Stockholder Return On February 1, 2021, the Compensation Committee awarded performance-based restricted units to the Company’s President and Chief Executive Officer based on Total Stockholder Return metrics (“TSR Performance Units”). The performance-based restricted units will vest upon continued service and achievement of certain stock price levels calculated using a four-year compound annual growth rate and based on the average closing bid price per share of the Company’s common stock measured over a sixty-trading day period (“Stock Price Levels”). Shares will vest in a range of 25 % to 350 % of the 45,000 target reported units based on achieving specified Stock Price Levels. The vesting end measurement date is February 1, 2025, with earlier vesting determination dates upon a change in control of the Company, involuntary termination of the CEO or twelve months following the achievement of the maximum stock price level. If after February 1, 2023, the President and Chief Executive Officer achieves a Stock Price Level, there will be a vesting determination date the earlier of twelve months thereafter or February 1, 2025. Page F- 27 Table of Contents The following assumptions were used to calculate the grant date fair value of performance-based restricted units with market price condition using the Monte Carlo simulation model: February 1, 2021 Risk-free interest rate 0.29 % Dividend yield — % Volatility 56.09 % Simulation term 4 years Forfeiture rate — % The Company recorded approximately $ 1.0 million and $ 0.2 million of stock compensation expense relating to the TSR Performance Units for the years ended March 31, 2022 and 2021, respectively, included in general and administrative expenses reported in the Consolidated Statements of Operations. As of March 31, 2022 and 2021, there was approximately $ 2.3 million and $ 3.1 million, respectively, of unvested compensation expense for the outstanding performance-based restricted stock units related to the February 1, 2021 TSR Performance Units, which is expected to be recognized over a weighted average period of 2.93 years and 3.71 years, respectively. Stock Options A summary of Stock Option activity for the year ended March 31, 2022 is as follows: Options Weighted Average Exercise Price Weighted Average Contractual Term Aggregate Intrinsic Value Options outstanding at March 31, 2021 1,663,223 $ 24.96 Options granted 165,768 58.56 Options exercised ( 822,750 ) 21.92 Options forfeited/expired — — Options outstanding at March 31, 2022 1,006,241 $ 32.98 5.33 $ 25,278,510 Exercisable at March 31, 2022 720,180 $ 26.11 3.97 $ 22,892,912 Total vested or expected to vest at March 31, 2022 1,004,729 $ 32.97 5.33 $ 25,242,985 On August 23, 2021, the Compensation Committee approved the grant of a stock option to the Company’s President and Chief Executive Officer for 100,000 shares of common stock at an exercise price of $ 57.00 per share. These option shares vest in four equal annual installments measured from the grant date based on the President and Chief Executive Officer’s continued services to the Company. The Black-Scholes option model requires weighted average assumptions to be used for the calculation of the Company’s stock compensation expense. The assumptions used for this grant were: the expected life of the award was 6.02 years; the risk free interest rate was 0.92 %; the expected volatility rate was 53.18 %; the expected dividend yield was 0.0 %; and the expected forfeiture rate was 0 %. On September 7, 2021, the Compensation Committee approved the grant of a stock option to the Company’s Executive Chairman for 65,768 shares of common stock at an exercise price of $ 60.92 per share. These option shares vest in three equal annual installments measured from the grant date based on the Executive Chairman’s continued services to the Company. The Black-Scholes option model requires weighted average assumptions to be used for the calculation of the Company’s stock compensation expense. The assumptions used for this grant were: the expected life of the award was 5.92 years; the risk free interest rate was 0.96 %; the expected volatility rate was 53.45 %; the expected dividend yield was 0.0 %; and the expected forfeiture rate was 0 %. In May 2021, the Company reacquired 20,132 shares when a participant surrendered already-owned shares of the Company’s common stock to cover the exercise price of an outstanding stock option exercised by the participant. The 20,132 shares surrendered were constructively retired by the Company as of June 30, 2021, which resulted in the non-cash reduction of approximately $ 1.0 million in accumulated deficit in the Consolidated Statement of Stockholders’ Equity. The intrinsic value of stock options exercised was approximately $ 29.5 million, $ 5.0 million, and $ 2.4 million for the years ended March 31, 2022, 2021 and 2020, respectively. Page F- 28 Table of Contents Additional information regarding stock options outstanding at March 31, 2022 is as follows: Exercise Prices Number Outstanding Weighted Average Remaining Life in Years Weighted Average Exercise Price Options Exercisable Weighted Average Exercise-Price of Shares Exercisable $ 20.00 — $ 20.00 189,000 2.18 $ 20.00 189,000 $ 20.00 20.01 — 46.23 569,585 4.94 27.44 494,710 26.74 46.24 — 72.85 247,656 8.64 55.60 36,470 49.25 1,006,241 5.33 $ 32.98 720,180 $ 26.11 The fair value of stock options granted is estimated on the date of grant using the Black-Scholes option valuation model. This stock-based compensation expense valuation model requires the Company to make assumptions and judgments regarding the variables used in the calculation. These variables include the expected term, the expected volatility of the Company’s common stock, expected risk-free interest rate, forfeiture rate and expected dividends. The Company calculates an expected term and volatility from the historical volatilities and terms of selected comparable public companies within its industry along with the Company’s short history regarding these variables. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the stock option. The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors. The Company has never paid any cash dividends. Any future determination to pay dividends will be at the discretion of the Board and will depend on the Company’s financial condition, results of operations, capital requirements, restrictions contained in any financing instruments and such other factors as the Board deems relevant in its sole discretion. Therefore, the Company uses an expected dividend yield of zero in the option-pricing model. The following assumptions were used to calculate the fair value of stock options: Year Ended Year Ended Year Ended March 31, 2022 March 31, 2021 March 31, 2020 Risk-free interest rate 0.92 % to 0.96 % 0.43 % to 0.51 % 0.93 % Dividend yield — % — % — % Volatility 53.18 % to 53.45 % 53.41 % to 52.43 % 49.63 % Expected term 5.92 and 6.02 years 6.07 years 5.67 years Forfeiture rate — % — % to 2 % — % to 2 % Weighted-average grant-date fair value per option granted $ 58.56 $ 42.04 $ 46.85 Stock compensation expense related to the amortization of the fair value of service-based stock options issued was approximately $ 2.6 million, $ 1.3 million and $ 1.5 million, respectively, for the years ended March 31, 2022, 2021 and 2020 which was included in general and administrative reported in the Consolidated Statements of Operations. The weighted average fair value for the stock option awards granted for the fiscal year ended March 31, 2022 was $ 58.56 per share. As of March 31, 2022 and 2021, there was approximately $ 4.1 million and $ 1.8 million, respectively, of unrecognized compensation cost related to non-vested stock options granted under the Company’s stock option plans which is expected to be recognized over a weighted-average period of 1.47 years and 1.32 years, respectively. Performance-Based Stock Options A summary of the Performance-Based Stock Options for the year ended March 31, 2022 is as follows: Performance Options Weighted Average Exercise Price Performance Options outstanding at March 31, 2021 48,417 $ 46.85 Performance Options granted — — Performance Options exercised ( 14,635 ) 46.85 Performance Options forfeited/expired — — Performance Options outstanding at March 31, 2022 33,782 $ 46.85 The intrinsic value of performance stock options exercised was approximately $ 0.2 million, $ 0.0 million , and $ 0.0 million for the years ended March 31, 2022, 2021 and 2020, respectively. Page F- 29 Table of Contents The vesting of the performance-based stock options outstanding at March 31, 2019 were subject to the attainment of a performance goal. The performance goal was: prior to January 13, 2020: (A) the issuance of a Final Order from the FCC providing for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (B) the lack of objection by the Board to the terms and conditions (including, but not limited to, the rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order. All 179,945 performance-based stock options were forfeited on January 13, 2020, as a result of the performance goal not being attained and no stock compensation expense was recorded for these awards. On February 28, 2020, the Company awarded 67,562 performance-based stock options. The performance goals are: (A) Target Goal : 50 % of the shares vest upon (i) achievement by December 31, 2020 of a Final Order from the FCC providing for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (ii) the lack of objection by the Board to the terms and conditions (including, but not limited to, the rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order; and (B) Stretch Goal : The remaining 50 % of the performance shares vest and settle upon the occurrence of all three of the following conditions: (i) the Company enters into one or more long-term agreement(s) with critical infrastructure or enterprise business(es) to enable such business(es) to utilize the Company’s spectrum for broadband connectivity; (ii) the combined total contract dollars payable to the Company over the initial term(s) of such agreement(s) equals or exceeds a certain amount as specified by the Board; and (iii) the agreement(s) is/are binding on such business(es) and is/are either not contingent on prior Board approval(s) or such approval(s) has/have been received. As of December 30, 2020, not all of these conditions had been achieved, and therefore, the 33,780 performance-based stock option shares tied to the stretch goal expired unvested. Additionally, the Company awarded 14,635 performance-based stock options on February 28, 2020. The performance goal is: 100 % of the shares will vest upon (i) achievement by December 31, 2020 of a Final Order from the FCC providing for the creation and allocation of licenses for spectrum in the 900 MHz band consisting of paired blocks of contiguous spectrum, each containing at least 3 MHz of contiguous spectrum, authorized for broadband wireless communications uses and (ii) the lack of objection by the Board to the terms and conditions (including, but not limited to, the rebanding, clearing and relocation procedures, license assignment and award mechanisms and technical and operational rules) set forth or referenced in the Final Order. For the year ended March 31, 2022, there was no stock compensation expense recognized for the 33,782 performance-based stock options. For the year ended March 31, 2021, the Company recognized $ 0.8 million, included in general and administrative expenses reported in the Consolidated Statements of Operations, based on the achievement of the Target Goal under the performance-based stock options, upon the Report and Order becoming effective in August 2020. For the year ended March 31, 2020, there was no stock compensation expense recognized for the 82,197 performance-based stock options. The weighted average fair value for the stock option awards granted for the fiscal year ended March 31, 2020 was $ 46.85 per share. As of March 31, 2022 and 2021, there was no unvested compensation expense relating to the outstanding performance-based stock options. Share Repurchase Program On September 29, 2021, the Board authorized a share repurchase program (the “share repurchase program”) pursuant to which the Company may repurchase up to $ 50.0 million of the Company’s common stock on or before September 29, 2023. The manner, timing and amount of any share repurchases will be determined by the Company based on a variety of factors, including price, general business and market conditions and alternative investment opportunities. The share repurchase program authorization does not obligate the Company to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934. Page F- 30 Table of Contents The following table presents the share repurchase activity for Fiscal 2022, Fiscal 2021 and Fiscal 2020 (in thousands, except per share data): For the years ended March 31, 2022 2021 2020 Number of shares repurchased 252 — — Average price paid per share* $ 57.50 $ — $ — Total cost to repurchase $ 14,962 $ — $ — * Average price paid per share includes costs associated with the repurchases. Motorola Investment On September 15, 2014, Motorola invested $ 10.0 million to purchase 500,000 Class B Units of the Company’s subsidiary, PDV Spectrum Holding Company, LLC (the “Subsidiary”) (at a price equal to $ 20.00 per unit). The Company owns 100 % of the Class A Units in the Subsidiary. Motorola has the right at any time to convert its 500,000 Class B Units into 500,000 shares of the Company’s common stock. The Company also has the right to force Motorola’s conversion into shares of its common stock. Motorola is not entitled to any assets, profits or distributions from the operations of the Subsidiary. In addition, Motorola’s conversion ratio from Class B Units to shares of the Company’s common stock is fixed on a one -for-one basis and is not dependent on the performance or valuation of either the Company or the Subsidiary. The Class B Units have no redemption or call provisions and can only be converted into shares of the Company’s common stock. Management has determined that this investment does not meet the criteria for temporary equity or non-controlling interest due to the limited rights that Motorola has as a holder of Class B Units and accordingly has presented this investment as part of its permanent equity within Additional Paid-in Capital in the accompanying financial statements. On May 18, 2022, Motorola exercised its right to convert its 500,000 Class B Units into common stock. Refer to Note 14 Subsequent Events for further discussion on this conversion. 12. Supplemental Disclosure of Cash Flow Information The following table summarizes the Company’s supplemental cash flow information: For the years ended March 31, (in thousands) 2022 2021 2020 Cash paid during the period: Taxes paid $ 7 $ 61 $ 36 Interest paid — — — Non-cash investing activity: Capitalized change in estimated asset retirement obligations $ ( 17 ) $ 85 $ 557 Contribution of patent to TeamConnect LLC — — 34 Contribution of capital equipment to TeamConnect LLC — — 14 Network equipment provided in exchange for wireless licenses 120 61 21 Non-cash financing activities: Shares surrendered from stock option exercises $ 1,000 $ — $ — Equity payment of prior year accrued employee related expenses — 1,537 — During the year ended March 31, 2022, the Company applied for, and was granted by the FCC, broadband licenses for 21 counties and relinquished to the FCC its narrowband licenses for the same 21 counties. This transaction resulted in a non-cash increase to intangibles of $ 11.2 million, which has been recorded as a non-cash gain on disposal of intangible assets of $ 11.2 million, for the year ended March 31, 2022. See Note 5 Intangible Assets for further discussion on the license exchanges. 13. Contingencies Contingent Liability In February 2021, the Company entered into an agreement with SDG&E to sell 900 MHz Broadband Spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County (the “SDG&E Agreement”), for a total payment of $ 50.0 million. The SDG&E Agreement will support SDG&E’s deployment of a private LTE network for its California service territory, with a population of approximately 3.6 million people. Delivery of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses by county to SDG&E is expected to commence in fiscal year 2023 and is scheduled for completion before the end of fiscal year 2024. The total payment of $ 50.0 Page F- 31 Table of Contents million is comprised of an initial payment of $ 20.0 million, received in February 2021, and the remaining $ 30.0 million payment, which is due through fiscal year 2024 as the Company delivers the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses to SDG&E. The SDG&E Agreement is subject to customary provisions regarding remedies, including reduced payment amounts and/ or refund of amounts paid and termination rights, if a party fails to perform its contractual obligations. A gain or loss on the sale of spectrum will be recognized for each county once the Company delivers the cleared 900 MHz Broadband Spectrum and the associated broadband licenses to SDG&E. As the Company is required to refund the initial payment in the event of termination or non-delivery of the 900 MHz Broadband Spectrum, it recorded $ 20.0 million for the upfront payment received from SDG&E in February 2021 as contingent liability in the Consolidated Balance Sheet as of March 31, 2022 and 2021, respectively. Litigation In addition to commitments and obligations in the ordinary course of business as reflected in the lease footnote above, the Company may be subject, from time to time, to various claims and pending and potential legal actions arising out of the normal conduct of its business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing litigation contingencies is highly subjective and requires judgments about future events. When evaluating contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories and/or the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability. The Company regularly reviews contingencies to determine the adequacy of its accruals and related disclosures. During the period presented, the Company has not recorded any accrual for loss contingencies associated with any claims or legal proceedings; determined that an unfavorable outcome is probable or reasonably possible; or determined that the amount or range of any possible loss is reasonably estimable. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, although management considers the likelihood of a material adverse outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period, the Company’s consolidated financial statements for that reporting period could be materially adversely affected. COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic and COVID-19 continues to cause significant disruptions throughout the World. The ultimate extent of the impact of COVID-19 on future financial performance of the Company will depend on ongoing developments, all of which remain uncertain and cannot be predicted. The Company continues to closely monitor the risks posed by COVID-19 and adjusts its practices accordingly. In December 2020, the Company deferred payroll taxes under the Coronavirus Aid Relief and Economic Security Act, which was signed into law on March 27, 2020. The deferral amounted to approximately $ 0.3 million, which has assisted the Company in managing the financial impact caused by the pandemic. Of the total deferred, approximately $ 0.2 million was remitted to the IRS during Fiscal 2022, with the remaining amount due by December 31, 2022. 14. Subsequent Events Motorola Shares Conversion On May 18, 2022, the Company issued Motorola 500,000 shares of its common stock (the “Shares”). Motorola received the Shares by electing to convert 500,000 Class B Units (the “Units”) it held in the Subsidiary. Motorola acquired the Units in September 2014 in connection with a Spectrum Lease Agreement between Motorola and the Subsidiary. Under the Spectrum Lease Agreement, Motorola leased a portion of the Company’s narrowband spectrum, which was held by the Subsidiary, in consideration for an upfront, fully-paid leasing fee of $ 7.5 million and a $ 10.0 million investment in the Units. Motorola had the right at any time to convert its Units into the Shares, representing a conversion price of $ 20.00 per share. The Shares are currently restricted and may not be resold unless the resale is registered under the federal securities laws, or the Shares are sold in compliance with an exemption from the federal registration requirements. Page F- 32