What changed in this filing

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Item 9A. Controls and Procedures

2023-06-14 compared with 2022-05-26 · 301 added, 348 removed, 860 unchanged (43% of the section changed)

7 unchanged sentences

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.

the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework.

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 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, 2023, 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:

automated system notifications to identify new transactions and conduct more frequent meetings to inquire about license exchanges;

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;

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

2 unchanged sentences

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.

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, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

1 unchanged sentence

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.

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.

2 unchanged sentences

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

future periods are subject to risks.

Projections of any evaluation of the effectiveness of controls to 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.

9 unchanged sentences

Information relating to the security ownership of certain beneficial owners and management will be included in the proxy statement for our 2023 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.

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

CERTAIN RELATIONSHIPS AND 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 2023 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.

1 unchanged sentence

Information relating to principal accountant fees and services will be included in the proxy statement for our 2023 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.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

(a)(1) The following consolidated financial statements of the Company appear on pages F-2 through F-31 of this Annual Report and are incorporated by reference in Part II, Item 8:

Reports of Independent Registered Public Accounting Firms

Reports of Independent Registered Public Accounting Firms (PCAOB ID Number 248)

Consolidated Balance Sheets as of March 31, 2023 and 2022

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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.

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)).

3.2.1 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 June 27, 2017 and incorporated herein by reference (File No.

3.2.2 Amendment No.

36 unchanged sentences

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.

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 September 30, 2022, filed with the SEC on October 31, 2022 and incorporated herein by reference (File No.

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.

6 unchanged sentences

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.

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)).

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.

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.

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.

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.

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.

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.

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.

10.26^ 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.

7 unchanged sentences

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.

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.

23.1# Consent of Grant Thornton LLP Independent Registered Public Accounting Firm relating to the Consolidated Financial Statements of the Company, dated June 14, 2023.

24.1# Power of Attorney (included on signature page hereto).

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FORM 10-K SUMMARY

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.

/s/ Robert H.

7 unchanged sentences

/s/ Morgan E.

O’Brien Executive Chairman of the Board May 26, 2022

O’Brien Executive Chairman of the Board June 14, 2023

/s/ Robert H.

Schwartz President and Chief Executive Officer (Principal Executive Officer) May 26, 2022

Schwartz President and Chief Executive Officer (Principal Executive Officer) June 14, 2023

/s/ Timothy A.

Gray Chief Financial Officer (Principal Financial and Accounting Officer) May 26, 2022

Gray Chief Financial Officer (Principal Financial and Accounting Officer) June 14, 2023

/s/ Singleton B.

McAllister Director May 26, 2022

McAllister Director June 14, 2023

/s/ Leslie B.

Daniels Director May 26, 2022

Daniels Director June 14, 2023

/s/ Gregory A.

Haller Director May 26, 2022

/s/ Gregory Pratt Director May 26, 2022

Haller Director June 14, 2023

/s/ Gregory Pratt Director June 14, 2023

Gregory Pratt

/s/ Paul Saleh Director May 26, 2022

/s/ Mahvash Yazdi Director May 26, 2022

/s/ Paul Saleh Director June 14, 2023

/s/ Mahvash Yazdi Director June 14, 2023

Mahvash Yazdi

/s/ Jeffrey Altman Director June 14, 2023

Jeffrey Altman

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

Consolidated Statements of Operations for the Years Ended March 31, 2023, 2022 and 2021

Consolidated Statement of Stockholders’ Equity for the Years Ended March 31, 2022, 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the Years Ended March 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended March 31, 2023, 2022 and 2021

6 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, 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.

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, 2023, 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 June 14, 2023 expressed an unqualified opinion.

Basis for opinion

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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.

Management disaggregates the Company’s wireless licenses based on geographical markets for impairment testing purposes.

Management makes 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 and change 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 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.

These considerations heightened the complexity surrounding the nature and execution of audit procedures designed to respond to this risk.

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.

• 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 tested management’s process of identifying key regional markets based on the demonstrated intent of potential customers coupled with the Company’s ability to provide broadband solutions in targeted markets.

Specifically, we:

◦ Obtained supporting documentation to test the attributes for a sample of potential customers;

◦ Made inquiries of staff members outside of the accounting department to spectrum operations department;

◦ Considered how management determined the disaggregation of potential customers.

/s/ GRANT THORNTON LLP

1 unchanged sentence

New York, New York

June 14, 2023

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, 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.

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, 2023, and our report dated June 14, 2023 expressed an unqualified 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”).

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 Management’s Annual Report 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.

14 unchanged sentences

New York, New York

June 14, 2023

Consolidated Balance Sheets

4 unchanged sentences

Cash and cash equivalents $ 43,182 $ 105,624

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 , respectively

Prepaid expenses and other current assets 16,277 10,147

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Operating lease liabilities 1,725 1,512

Contingent liability 20,249 —

Deferred revenue 2,769 1,478

Total current liabilities 31,900 9,636

Noncurrent liabilities

Operating lease liabilities 2,922 4,177

41 unchanged sentences

See accompanying notes to consolidated financial statements.

Consolidated Statement of Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

Years Ended March 31, 2023, 2022 and 2021

5 unchanged sentences

Balance at April 1, 2020 17,185 $ 2 $ 450,978 $ ( 205,914 ) $ 245,066

Issuance of stock during July 2019 follow-on offering, net of closing costs 2,222 1 94,243 — 94,244

Equity based compensation — — 16,121 — 16,121

Restricted shares issued 249 — — — —

Stock option exercises 208 — 4,218 — 4,218

Shares withheld for taxes ( 13 ) — ( 566 ) — ( 566 )

Equity payment of prior year accrued employee related expenses 28 — 1,537 — 1,537

Net loss — — — ( 54,434 ) ( 54,434 )

1 unchanged sentence

Equity based compensation — — 13,725 — 13,725

Restricted shares issued 226 — — — —

Stock option exercises* 778 — 15,004 — 15,004

Equity payment of prior year accrued employee related expenses 28 — 1,537 — 1,537

Shares withheld for taxes ( 24 ) — ( 1,458 ) — ( 1,458 )

Retirement of common stock* ( 272 ) — — ( 15,962 ) ( 15,962 )

Net loss — — — ( 37,519 ) ( 37,519 )

1 unchanged sentence

Equity based compensation — — 17,874 — 17,874

Restricted shares issued 219 — — — —

Stock option exercises 77 — 1,726 — 1,726

Motorola Shares 500 — — — —

Shares withheld for taxes ( 36 ) — ( 1,565 ) — ( 1,565 )

2 unchanged sentences

Balance at March 31, 2023 18,922 $ 2 $ 518,160 $ ( 338,369 ) $ 179,793

* 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.

11 unchanged sentences

Deferred income taxes 1,248 983 124

Bad debt expense — — 41

Accretion expense — — 1

(Gain)/loss from disposal of intangible assets, net ( 38,399 ) ( 11,209 ) 3,849

Loss from disposal of long-lived assets, net 10 107 70

Loss on disposal of capitalized patent costs — — 140

Impairment of long-lived assets — — 85

11 unchanged sentences

Other liabilities ( 28 ) ( 335 ) 235

Net cash provided by (used in) operating activities 17,913 ( 9,959 ) ( 27,823 )

Net cash (used in) provided by operating activities ( 27,250 ) 17,913 ( 9,959 )

CASH FLOWS FROM INVESTING ACTIVITIES

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from July 2019 follow-on offering — — 94,244

Proceeds from stock option exercises 1,726 14,004 4,218

9 unchanged sentences

Nature of Operations

(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.

On May 13, 2020, 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.

At the same time, the Company is pursuing opportunities to monetize 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.

3 unchanged sentences

to Anterix Inc.

The Company maintains offices in Woodland Park, New Jersey and McLean, Virginia.

The Company maintains offices in Woodland Park, New Jersey, McLean, Virginia and Abilene, Texas.

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.

On October 28, 2022, the Company entered into an agreement with Xcel Energy Services Inc.

(“Xcel Energy”) providing Xcel Energy dedicated long-term usage of the Company’s 900 MHz Broadband Spectrum for a term of 20 years throughout Xcel Energy’s service territory in eight states (the “Xcel Energy Agreement”).

The Xcel Energy Agreement also provides Xcel Energy an option to extend the agreement for two 10-year terms for additional payments.

The Xcel Energy Agreement allows Xcel Energy to deploy a PLTE network to support its grid modernization initiatives for the benefit of its approximately 3.7 million electricity customers and 2.1 million natural gas customers.

The scheduled prepayments for the 20-year initial term of the Xcel Energy Agreement total $ 80.0 million, of which $ 8.0 million was received by the Company in December 2022.

See Note 3 Revenue for further discussion on the Xcel Energy Agreement.

In September 2021, the Company entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy, 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.

The Evergy Agreement is for an initial term of 20 years with two 10-year renewal options for additional payments.

The Company received full prepayment of $ 30.2 million for the initial 20-year term in October 2021.

During the year ended March 31, 2023, the Company delivered to Evergy the 1.4 x 1.4 cleared 900 MHz Broadband Spectrum and the associated broadband licenses for 81 counties.

The revenue recognized for the year ended March 31, 2023 was approximately $ 0.6 million.

See Note 3 Revenue for further discussion on the Evergy Agreement.

In February 2021, the Company entered into an agreement with San Diego Gas & Electric Company, a subsidiary of Sempra Energy (“SDG&E”), to provide 900 MHz Broadband Spectrum throughout SDG&E’s California service territory, including San Diego and Imperial Counties and portions of Orange County for a total payment of $ 50.0 million.

The total payment of $ 50.0 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 associated broadband licenses to SDG&E and the relevant cleared 900 MHz Broadband Spectrum.

In September 2022, the Company delivered to SDG&E 1.4 x 1.4 cleared 900 MHz Broadband Spectrum and the associated broadband license related to Imperial County and received a milestone payment of $ 0.2 million.

See Note 12 Contingencies for further discussion.

In May 2022, the Company issued Motorola Solutions, Inc.

(“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 Company’s subsidiary, PDV Spectrum Holding Company, LLC (the “Subsidiary”).

Motorola acquired the Units in September 2014 in connection with a Spectrum Lease Agreement between Motorola and the Subsidiary (the “2014 Motorola Spectrum Agreement”).

Under the 2014 Motorola Spectrum Agreement, Motorola leased a portion of our 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.

Summary of Significant Accounting Policies

8 unchanged sentences

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.

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

4 unchanged sentences

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 .

As of March 31, 2023 and 2022, substantially all of the Company’s cash balance exceeded the federally insured limits.

For the year ended March 31, 2023, the Company’s operating revenue was entirely from Motorola, Ameren, and Evergy as discussed in Note 3 Revenue .

For the year ended March 31, 2022, the Company’s operating revenue was entirely from Motorola and Ameren as discussed in Note 3 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.

As of March 31, 2023 and March 31, 2022, the Company does not have an outstanding accounts receivable balance.

Allowance for Doubtful Accounts

2 unchanged sentences

Past due balances meeting specific criteria are reviewed individually for collectability.

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.

14 unchanged sentences

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.

Upon settlement of the obligation, any difference between the cost to retire the asset and the recorded liability is recognized on the Company’s Consolidated Statements of Operations.

As of March 31, 2023, 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 $ 6,000 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.

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.

Changes in the liability for the asset retirement obligations for the years ended March 31, 2023 and 2022 are summarized below (in thousands):

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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

time, generally ten years , such licenses are subject to renewal by the FCC.

While licenses are issued for only a fixed 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.

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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.

Effective for the year ended March 31, 2021 (“Fiscal 2021”), the Company determined that its unit of accounting should be based on geographic markets and deal markets.

Unit of accounting of wireless licenses not associated with closed deals is based on geographic markets.

Unit of accounting of wireless licenses associated with closed deals is based on the deal markets.

The Company’s wireless licenses not associated with closed deals are tested for impairment based on the geographic markets, as the Company will be utilizing the existing wireless narrowband licenses, or broadband licenses if applicable, as part of facilitating broadband spectrum networks at a geographic market level.

The Company’s wireless licenses associated with closed deals are tested for impairment based at the deal 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.

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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 Company will use a market-based approach to estimate fair value for impairment testing purposes.

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.

These assumptions and estimates depend on our ability to accurately predict forward looking assumptions including successfully applying for broadband licenses, commercializing our 900 MHz Broadband Spectrum and properly estimating favorable deal terms over the life of the contract.

For impairment testing, estimated fair value is determined using a market-based approach primarily using the 600 MHz auction price.

As noted in the Report and Order, the FCC will use the spectrum price based on the average price paid in the FCC’s 600 MHz auction to calculate the Anti-Windfall Payments.

During the year ended March 31, 2023 (“Fiscal 2023”), the Company shifted from a probability analysis approach to a more detailed approach with measurable qualitative metrics.

The new approach, Demonstrated Intent (“DI”), determines how likely a deal is to close based on certain qualitative factors, like applying for an experimental license, entering into a request for proposal, joining certain utility board or publicly backing 900 MHz Broadband Spectrum and its application.

As a result, the Company will utilize the DI scores on a go-forward basis for our impairment analysis.

As of and for the year ended March 31, 2023, the Company performed a step one quantitative approach impairment test as of January 1, 2023, to determine if the fair value of the combined licenses by the associated geographical or deal market exceeds the carrying value for each geographical or deal market.

During the year ended March 31, 2022 (“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.

For the year ended March 31, 2021, the Company performed a step one quantitative impairment test to determine if the fair value of the combined licenses by the associated geographical or deal market exceeds the carrying value for each geographical or deal market.

Based on the results of the impairment tests, there were no impairment charges recorded during the years ended March 31, 2023, 2022 and 2021.

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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 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 on 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.

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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

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.

There were no impairment charges during the years ended March 31, 2023 and 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

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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.

The lease expiration dates range from May 31, 2023 to August 31, 2029.

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 the Company’s 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.

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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.

For the Company’s customer agreements, most of the performance obligations involve delivering leased spectrum on a county-by-county basis and are generally 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.

As a result, revenue will be recognized ratably as the Company delivers cleared 900 MHz Broadband Spectrum and the associated broadband licenses to the customer on a county-by-county basis over the contractual term.

See Note 3 Revenue for a discussion of the Company’s recognized revenues during the years ended March 31, 2023, 2022 and 2021.

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 .

For the years ended March 31, 2023 and 2022, the Company capitalized commission costs required to obtain long-term 900 MHz Broadband Spectrum lease agreements which will be amortized over the contractual term.

See Note 3 Revenue for a discussion on the Company’s capitalized contract assets incurred during the period ended March 31, 2023 and 2022.

2 unchanged sentences

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.

Contract Assets and liabilities

The Company recognizes a contract asset for the incremental costs of obtaining a contract with a customer.

These costs include sales commissions, equity compensation and other costs associated with acquiring customer contracts.

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 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.

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.

Product Development Costs

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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 compensation cost for the stock options with a graded vesting schedule is recognized on an accelerated method over the vesting period.

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.

31 unchanged sentences

The Company is no longer subject to U.S.

federal, state or local income tax examinations for periods

prior to 2019.

federal, state or local income tax examinations for periods prior to 2019.

When applicable, the Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

4 unchanged sentences

Common stock equivalents resulting from potentially dilutive securities approximated 352,000 , 1,343,000 and 1,382,000 at March 31, 2023, 2022 and 2021, 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 .

The following table provides information regarding the Company’s revenue for each of the services it provides pursuant to its spectrum revenue agreements for the years ended March 31, 2023, 2022 and 2021 (in thousands):

2023 2022 2021

Spectrum revenues

900 MHz Broadband Spectrum Revenue

Ameren $ 609 $ 355 $ —

Narrowband Spectrum Revenue

Motorola 729 729 729

Total spectrum revenue (2)

$ 1,919 $ 1,084 $ 729

Services revenue — — 192

Total operating revenues $ 1,919 $ 1,084 $ 921

The Company commenced revenue recognition in connection with the delivery of cleared 900 MHz Broadband Spectrum and the associated broadband licenses to Evergy for 81 counties.

Revenue recognized during the years ended March 31, 2023, 2022 and 2021 was included in deferred revenue at the beginning of the respective periods.

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 Ameren Agreements will enable Ameren to deploy a PLTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people.

Each Ameren Agreement is for an initial term of 30 years with a 10-year renewal option for an additional payment.

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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 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.

Revenue is recognized over time as the performance obligations of clearing the 900 MHz Broadband Spectrum and the associated broadband licenses are delivered by respective county, over the contractual term of 30-years .

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.

The Evergy Agreement is for an initial term of 20 years with two 10-year renewal options for additional payments.

The Evergy Agreement is subject to customary provisions regarding remedies for non-delivery,

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 .

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.

In October 2022, the Company entered into an agreement with Xcel Energy providing Xcel Energy dedicated long-term usage of the Company’s 900 MHz Broadband Spectrum for a term of 20 years throughout Xcel Energy’s service territory in eight states including Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin.

The Xcel Energy Agreement also provides Xcel Energy an option to extend the agreement for two 10-year terms for additional payments.

The scheduled prepayments for the 20-year initial term of the Xcel Energy Agreement total $ 80.0 million, of which $ 8.0 million

was received by the Company in December 2022.

The remaining prepayments for the 20-year initial term are due by mid-2028, per the terms of the Xcel Energy Agreement 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 Xcel Energy service territories.

In accordance with ASC 606, the payments of prepaid fees under the Xcel Energy Agreement will be accounted for as deferred revenue on the Company’s Consolidated Balance Sheets.

Revenue will be recognized over time as the performance obligations of clearing the 900 MHz Broadband Spectrum and the associated broadband licenses are delivered by respective 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”).

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 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.

The Company has historically derived its service revenue from 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.

As a result of the completion of the migration to A BEEP and Goosetown in December 2020, service revenue is recorded to other income on the Company’s Consolidated Statements of Operations.

The payments received from Goosetown ended during Fiscal 2022 and A BEEP is expected to continue to provide payments until December 2024.

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.

The following table presents the activity for the Company’s contract assets (in thousands):

Contract Assets

Balance at March 31, 2020 $ —

Additions 381

Amortization —

Balance at March 31, 2021 381

Balance at the beginning of the year $ 638 $ 381

Additions 249 263

Amortization ( 17 ) ( 6 )

Balance at March 31, 2022 638

Impairment — —

Balance at the end of the year 870 638

Less amount classified as current assets - prepaid expenses and other current assets ( 418 ) ( 238 )

1 unchanged sentence

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

Balance at the beginning of the year $ 54,678 $ 2,983

Additions 8,000 52,779

Revenue recognized ( 1,919 ) ( 1,084 )

Balance at March 31, 2022 54,678

Balance at the end of the year 60,759 54,678

Less amount classified as current liabilities ( 2,769 ) ( 1,478 )

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Depreciation expense for the years ended March 31, 2023, 2022 and 2021 amounted to approximately $ 1.4 million, $ 1.5 million and $ 3.5 million, respectively.

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.

During the year ended March 31, 2021, the Company recorded $ 85,000 of non-cash impairment charges for network sites and equipment to reduce the carrying values to zero .

There were no impairment charges during the years ended March 31, 2023 and March 31, 2022.

Intangible Assets

2 unchanged sentences

There were no impairment charges related to the Company’s indefinite-lived intangible assets during the years ended March 31, 2023, 2022 and 2021.

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 .

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, 2023 and 2022 (in thousands):

4 unchanged sentences

Exchanges - licenses surrendered ( 4,132 )

Cancellations ( 4,983 )

Balance at March 31, 2022 151,169

3 unchanged sentences

Balance at March 31, 2023 $ 202,044

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.

Purchases of intangible assets, including refundable deposits

During the years ended March 31, 2023, 2022 and 2021, the Company entered into agreements with several third parties in multiple U.S.

markets to acquire, retune or swap wireless licenses for cash consideration (“deals”) and made Anti-Windfall Payments to the U.S.

Treasury Department.

The initial deposits to incumbents are recorded as prepaid expenses and other current assets on the Company’s Consolidated Statements of Balance Sheets and are refundable if the FCC does not approve the sale, retuning or swap of the spectrum.

The initial deposits are transferred to other assets or intangible assets in the Company’s Consolidated Statements of Balance Sheets, as applicable, upon meeting the relevant deal milestones.

The final payments related to closed retuning or swap deals are recorded as other assets on the Company’s Consolidated Statements of Balance Sheets.

The final payments for license purchases or Anti-Windfall Payments are recorded as intangible assets on the Company’s Consolidated Statements of Balance Sheets.

The purchases of intangible assets, including refundable deposits, consisted of the following activity during the years March 31, 2023, 2022 and 2021 (in thousands):

2023 2022 2021

Refundable deposits * $ 6,492 $ 5,621 $ ( 1,986 )

Retuning cost and Swaps 6,036 2,894 290

Purchases and Anti-Windfall Payments 12,476 17,843 15,640

Total $ 25,004 $ 26,358 $ 13,944

* The decrease in refundable deposits during the year end 2021 was related to the exchange of narrowband license discussed below.

Broadband License Exchanges

During the year ended March 31, 2023, the Company was granted by the FCC, broadband licenses for 84 counties.

The Company recorded the new broadband licenses at their estimated accounting cost basis of approximately $ 46.2 million.

In connection with receiving the broadband licenses, the Company disposed of $ 7.8 million related to the value ascribed to the narrowband licenses it relinquished to the FCC for the same 84 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 $ 38.4 million, for the year ended March 31, 2023.

During the year ended March 31, 2022, the Company 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.

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.

Narrowband License Exchanges

In September 2020, the Company closed an agreement with a third party for the exchange of 900 MHz licenses.

In January 2018, the Company received $ 0.6 million as a refundable deposit when the agreement was executed during the year ended March 31, 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 on the Company’s Consolidated Statements of Operations when the deal closed in September 2020.

The Association of American Railroads

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.

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.

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 on the Company’s 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.

Accounts Payable and Accrued Expenses

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Related Party Transactions

Under the MOU, the Company agreed to assign the intellectual property rights to its pdvConnect application to TeamConnect LLC (“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.

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.

On February 22, 2023, the Company amended the LLC agreement to withdraw as a member of the LLC for no consideration.

For the years ended March 31, 2023, 2022 and 2021, the Company incurred payments of $ 55,000 , $ 60,000 and $ 0.6 million under the MOU, respectively.

As of March 31, 2023 and March 31, 2022, the Company did not have outstanding liabilities to the related parties associated with the services transfer.

During the year ended March 31, 2023, the Company purchased equipment from Motorola in the amount of $ 1.4 million.

In addition, the Company entered into a Frequency Relocation Agreement with Motorola for a total amount of $ 1.0 million, of which the Company paid $ 0.1 million during the year ended March 31, 2023.

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.

The Company recognized approximately $ 0.7 million each year in Spectrum revenue for the years ended March 31, 2023, 2022 and 2021.

As of March 31, 2023, the Company owed $ 0.5 million to Motorola in connection with the equipment purchased.

As of March 31, 2022, the Company owed $ 0.1 million to Motorola, unrelated to the Frequency Relocation Agreement.

On May 5, 2020, the Company entered into a consulting agreement with Rachelle B.

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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.

For the years ended March 31, 2023, 2022 and 2021, the Company incurred $ 0.1 million and $ 0.1 million and $ 0.1 million, respectively, in consulting fees to Ms.

As of March 31, 2023 and 2022, the Company did not have any outstanding liabilities to Ms.

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McAuley will serve as a Senior Advisor to the Company’s management team and provide strategic, corporate governance and Board advisory services.

In July 2022, the Company extended the agreement by an additional 12 months with a new termination date of September 1, 2023.

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.

McAuley will receive cash compensation of $ 40,000 per year and allow for his outstanding equity awards to continue to vest, unless accelerated pursuant to the terms of the agreement.

For the years ended March 31, 2023, 2022 and 2021, the Company incurred approximately $ 40,000 , $ 40,000 and $ 23,000 , respectively, in consulting fees to Mr.

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The Company entered into multiple lease agreements for tower space.

The lease expiration dates range from May 31, 2022 to April 30, 2028.

The lease expiration dates range from May 31, 2023 to August 31, 2029.

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.

With the adoption of ASC 842, operating lease agreements are required to be recognized on the Company’s 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.

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Weighted average incremental borrowing rate - operating lease liabilities 12 % 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.

Rent expense amounted to approximately $ 1.8 million for the year ended March 31, 2023, of which is included in general and administrative expenses on the Company’s Consolidated Statement of Operations.

Rent expense amounted to approximately $ 2.0 million for the year ended March 31, 2022, of which is included in general and administrative expenses on the Company’s Consolidated Statement of Operations.

For the years ended March 31, 2023, 2022 and 2021, the following table presents net lease cost (in thousands):

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Right of use assets obtained in exchange for new operating lease liabilities $ 165 $ 116 $ 230

The following table presents supplemental balance sheet information as of March 31, 2022 and March 31, 2021 (in thousands):

The following table presents supplemental balance sheet information as of March 31, 2023 and 2022 (in thousands):

Non-current assets - right of use assets, net $ 3,371 $ 4,047

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The remaining federal and state NOLs of approximately $ 237.5 million and $ 63.7 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.

For the year ended March 31, 2022, the Company incurred federal and state operating losses of approximately $ 330.7 million and $ 191.8 million, respectively, to offset future taxable income, of which $ 240.4 million federal NOL and $ 37.3 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 $ 80.5 million and $ 75.8 million relating principally to the NOLs as of March 31, 2023 and 2022, respectively.

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Therefore, the Company continues to apply a full valuation allowance against its deferred tax assets as of March 31, 2023 and 2022, with the exception of the net deferred tax liability of approximately $ 5.4 million and $ 4.2 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.

For Fiscal 2023, analysis of the state NOL carryforwards revealed that most of them are not indefinite.

The Company recorded $ 0.8 million of state deferred tax expense during the year March 31, 2023 and increased the state deferred tax liability by the same amount from the inability to use the state NOL carryforwards against the indefinite-lived intangible.

For Fiscal 2022, the Company recorded $ 0.6 million of state deferred tax benefit during the year March 31, 2022 and decreased the state deferred tax liability by the same amount from the inability to use the state NOL carryforwards against the indefinite-lived

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

likelihood that the deferred tax assets will be realizable in the future and the valuation allowance will be adjusted accordingly.

GAAP, the Company will continue to assess the 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.

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The Board has reserved 5,027,201 shares of common stock for issuance under the 2014 Stock Plan as of March 31, 2023, of which 502,256 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”).

Historically, the number of shares reserved under the 2014 Stock Plan were increased, based on Board approval, each January 1 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.

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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

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.

Stock compensation expense related to restricted stock was approximately $ 10.9 million for the year ended March 31, 2023, which included $ 9.8 million in general and administrative expenses, $ 0.6 million in product development and the remainder of approximately $ 0.5 million included in sales and support reported on the Company’s Consolidated Statements of Operations.

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 sales and support reported on the Company’s Consolidated Statements of Operations.

As of March 31, 2023, the Company did not incur stock compensation costs to obtain its long-term 900 MHz Broadband Spectrum lease agreements.

As of March 31, 2022, the Company incurred stock compensation costs to obtain its long-term 900 MHz Broadband Spectrum lease agreements amounting to approximately $ 0.1 million, which was capitalized and will be amortized over the contractual term of approximately 20-years.

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 2021 bonus liability, recorded in accounts payable and accrued expenses, for key individuals.

As of March 31, 2023 and 2022, there was $ 18.5 million and $ 18.4 million, respectively, of unvested compensation expense for the restricted stock, which is expected to be recognized over a weighted average period of 2.31 years and 2.53 years, respectively.

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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.

1 unchanged sentence

(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;

(B) Stretch Goal :

6 unchanged sentences

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.

On September 30, 2020, the Company recorded stock compensation expense included in general and administrative expenses reported on the Company’s 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.

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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.

The Company recorded approximately $ 0.3 million, $ 0.3 million and $ 0.1 million of stock compensation expense included in general and administrative expenses reported on the Company’s Consolidated Statements of Operations relating to the CEO Performance Units - CSPM for the years ended March 31, 2023, 2022 and 2021, respectively.

As of March 31, 2023 and 2022, there was approximately $ 0.8 million and $ 0.8 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 1.49 years and 2.49 years, respectively.

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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.

The Company recorded approximately $ 1.0 million, $ 1.0 million and $ 0.2 million of stock compensation expense relating to the TSR Performance Units for the years ended March 31, 2023, 2022 and 2021, respectively, included in general and administrative expenses reported on the Company’s Consolidated Statements of Operations.

As of March 31, 2023 and 2022, there was approximately $ 2.3 million and $ 2.3 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 1.93 years and 2.93 years, respectively.

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Total vested or expected to vest at March 31, 2023 1,400,235 $ 39.11 6.17 $ 5,128,070

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.

On December 2, 2022, the Compensation Committee approved the grant of a stock option to the Company’s President and Chief Executive Officer and Executive Chairman for 77,102 and 154,203 , respectively, shares of common stock at an exercise price of $ 49.39 per share.

These option shares vest in four equal annual installments measured from the grant date based on the President and Chief Executive Officer and 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 5.43 years;

the risk free interest rate was 3.62 %;

the expected volatility rate was 50.80 %;

the expected dividend yield was 0.0 %;

and the expected forfeiture rate was 0 %.

On May 17, 2022, the Compensation Committee approved the grant of a stock option to the Company’s President and Chief Executive Officer for 122,449 shares of common stock at an exercise price of $ 49.39 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.

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and the expected forfeiture rate was 0 %.

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 %.

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 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 on the Company’s Consolidated Statement of Stockholders’ Equity.

The intrinsic value of stock options exercised was approximately $ 1.2 million, $ 29.5 million, and $ 5.0 million for the years ended March 31, 2023, 2022 and 2021, respectively.

8 unchanged sentences

1,402,949 6.17 $ 39.12 746,371 $ 29.25

The Company recognizes compensation expense for stock options with a graded vesting schedule using an accelerated method over the explicit vesting period.

The fair value of stock options granted is estimated on the date of grant using the Black-Scholes option valuation model.

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0.92 % to 0.96 %

0.43 % to 0.51 %

Dividend yield — % — % — %

1 unchanged sentence

53.18 % to 53.45 %

Expected term 5.92 and 6.02 years

6.07 years 5.67 years

Forfeiture rate — %

53.41 % to 52.43 %

Expected term 5.43 years

5.92 and 6.02 years

Forfeiture rate — % to 3 %

— % — % to 2 %

Weighted-average grant-date fair value per option granted $ 49.39 $ 58.56 $ 42.04

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.

Stock compensation expense related to the amortization of the fair value of service-based stock options issued was approximately $ 5.6 million, $ 2.6 million and $ 1.3 million, respectively, for the years ended March 31, 2023, 2022 and 2021 which was included in general and administrative reported on the Company’s Consolidated Statements of Operations.

The weighted average fair value for the stock option awards granted for the year ended March 31, 2023 was $ 49.39 per share.

As of March 31, 2023 and 2022, there was approximately $ 7.4 million and $ 4.1 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 1.68 years and 1.47 years, respectively.

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The intrinsic value of performance stock options exercised was approximately $ 0.0 million , $ 0.2 million, and $ 0.0 million for the years ended March 31, 2023, 2022 and 2021, respectively.

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.

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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.

For the years ended March 31, 2023 and 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 on the Company’s 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.

The weighted average fair value for the stock option awards granted for the fiscal year ended March 31, 2020 was $ 46.85 per share.

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2023 2022 2021

Number of shares repurchased 252 — —

Number of shares repurchased and retired 216 252 —

Average price paid per share* $ 47.05 $ 57.50 $ —

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* Average price paid per share includes costs associated with the repurchases.

As of March 31, 2023, $ 26.8 million is remaining under the share repurchase program.

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).

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 (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.

Motorola had the right at any time to convert its 500,000 Class B Units into 500,000 shares of

the Company’s common stock and in May 2022, Motorola exercised such right to convert its 500,000 Class B Units into 500,000 shares of the Company’s common stock.

In June 2022, the Company filed a Registration Statement on Form S-3 to register the 500,000 shares of the Company’s Common Stock held by Motorola for the resale or other disposition of such shares by Motorola (the “Resale Registration Statement”).

The Resale Registration Statement was declared effective by the SEC on July 15, 2022.

Supplemental Disclosure of Cash Flow Information

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Capitalized change in estimated asset retirement obligations $ ( 6 ) $ ( 17 ) $ 85

Contribution of patent to TeamConnect LLC — — 34

Contribution of capital equipment to TeamConnect LLC — — 14

Network equipment provided in exchange for wireless licenses 36 120 61

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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.

During the year ended March 31, 2023, the Company was granted by the FCC, broadband licenses for 84 counties and relinquished to the FCC its narrowband licenses for the same 84 counties.

This transaction resulted in a non-cash increase to intangibles of $ 38.4 million, which has been recorded as a non-cash gain on disposal of intangible assets of $ 38.4 million, for the year ended March 31, 2023.

See Note 5 Intangible Assets for further discussion on the license exchanges.

During the year ended March 31, 2022, the Company 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.

Contingencies

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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

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.

The SDG&E Agreement will support SDG&E’s deployment of a PLTE 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 commenced in Fiscal 2023 and is scheduled for completion before the end of fiscal year 2024.

The total payment of $ 50.0 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.

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 in full.

As the Company is required to refund payments it has received in the event of termination or non-delivery of the specific county’s 900 MHz Broadband Spectrum, it recorded the $ 20.2 million received from SDG&E as contingent liability in the Company’s Consolidated Balance Sheet.

As of March 31, 2023, the Company recorded the $ 20.2 million payments from SDG&E as a short-term liability due to the expected timing of delivery.

Xcel Energy Guaranty

In connection with Xcel Energy Agreement, the Company entered into a guaranty agreement, under which the Company guaranteed the delivery of the relevant 900 MHz Broadband Spectrum and the associated broadband licenses in Xcel Energy’s service territory in eight states along with other commercial obligations.

In the event of default or non-delivery of the specific territory’s 900 MHz Broadband Spectrum, the Company is required to refund payments it has received.

In addition, to the extent Anterix has performed any obligations, the Company’s liability and remaining obligations under the Xcel Energy

Agreement will extend only to the remaining unperformed obligations.

The Company recorded $ 8.0 million in deferred revenue in connection with the prepayment received as delivery of the relevant cleared 900 MHz Broadband licenses or counties is expected to commence in the first quarter of Fiscal 2024 through 2029.

As of March 31, 2023, the maximum potential liability of future undiscounted payments under this agreement is approximately $ 8.0 million.

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.

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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.

Pandemic and Macroeconomic Conditions

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.

Of the total deferred, approximately $ 0.2 million was remitted to the IRS during Fiscal 2022, with the remaining amount remitted to the IRS during Fiscal 2023.

Recent macroeconomic events, including the outbreak of COVID-19, inflation, and geopolitical matters, have increased operating costs and could increase production costs or result in delays in customer contracting or the availability of equipment necessary for the deployment of our target customers’ planned PLTE projects.

The Company continues to closely monitor these risks.

Although difficult to quantify, the Company believes the current macroeconomic environment, including inflation, may have an adverse effect on the Company’s target customers’ businesses, which may harm the Company’s commercialization efforts and negatively impact the Company’s revenues.

If the Company is not able to control its higher operating costs or if the Company’s commercialization efforts are slowed or negatively impacted, continued periods of high inflation could have a material adverse effect on the Company’s business, operating results and financial condition.

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.

LCRA Agreement

In April 2023, the Company entered into an agreement with the Lower Colorado River Authority (“LCRA”) to sell 900 MHz Broadband Spectrum covering 68 counties and more than 30 cities in LCRA’s wholesale electric, transmission, and water service area (the “LCRA Agreement”) for total payments of $ 30.0 million plus the contribution of select LCRA 900 MHz narrowband spectrum.

The LCRA Agreement will support LCRA’s deployment of a PLTE network which will provide a host of capabilities including grid awareness, communications and operational intelligence that will enhance resilience and spur innovation at LCRA.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures