# Anterix Inc. (ATEX) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Anterix Inc.'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1304492/000130449222000020/atex-20220331.htm
Accession: 0001304492-22-000020
Filing date: 2022-05-26
Report date: 2022-03-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/ATEX/
All MD&A years: /company/ATEX/mda/
Next year: /company/ATEX/mda/fy2023/ (FY 2023)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and the related notes. This management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause our actual results or events to differ materially from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included elsewhere in this Annual Report. Except as required by applicable law we do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.

This management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

Overview

We are a wireless communications company focused on commercializing our spectrum assets to enable our targeted utility and critical infrastructure customers to deploy private broadband networks, technologies and solutions. We are the largest holder of licensed spectrum in the 900 MHz band (896-901/935-940 MHz) with nationwide coverage throughout the contiguous United States, Hawaii, Alaska and Puerto Rico. On May 13, 2020, the FCC approved the Report and Order to modernize and realign the 900 MHz band to increase its usability and capacity by allowing it to be utilized for the deployment of broadband networks, technologies and solutions. The Report and Order was published in the Federal Register on July 16, 2020, and became effective on August 17, 2020. We are now engaged in qualifying for and securing broadband licenses from the FCC. At the same time, we are pursuing opportunities to lease the broadband spectrum we secure to our targeted utility and critical infrastructure customers.

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

Refer to our Business Section of this Annual Report for a more complete description of the nature of our business, including details regarding the process and costs to secure our broadband licenses.

Business Developments

In December 2020, we entered into our first long-term lease agreement of 900 MHz spectrum authorized for broadband use, with Ameren. The Ameren Agreements will enable Ameren to deploy a private LTE network in its service territories in Missouri and Illinois, covering approximately 7.5 million people. Each Ameren Agreement is for a term of up to 40 years, consisting of an initial term of 30 years, with a 10-year renewal option for an additional payment. The scheduled prepayments for the 30-year initial terms of the Ameren Agreements total $47.7 million, of which $0.3 million was received in February 2021, $5.4 million in September 2021 and $17.2 million in October 2021. See Note 3 Revenue in the Notes to the Unaudited Consolidated Financial Statements contained within this Annual Report for further discussion on the Ameren Agreements.

In September 2021, we entered into a long-term lease agreement of 900 MHz Broadband Spectrum with Evergy. The Evergy service territories covered by the Evergy Agreement are in Kansas and Missouri with a population of approximately 3.9 million people. The Evergy Agreement is for a term of up to 40 years, comprised of an initial term of 20 years with two 10-year renewal options for additional payments. Prepayment in full of $30.2 million for the 20-year initial term, which was due and payable within thirty (30) days after execution of the Evergy Agreement, was received in October 2021. See Note 3 Revenue in the Notes to the Unaudited Consolidated Financial Statements contained within this Annual Report for further discussion on the Evergy Agreement.

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Results of Operations 

Comparison of the years ended March 31, 2022, 2021 and 2020

The following table sets forth our results of operations for the fiscal years ended March 31, 2022 (“Fiscal 2022”), March 31, 2021 (“Fiscal 2021”) and March 31, 2020 (“Fiscal 2020”). The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.

Operating revenues

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["Service revenue","","$","\u2014","","","$","192","","","$","835","","","$","(192)","","","-100","%","","$","(643)","","","-77","%"],["Spectrum lease revenue","","1,084","","","729","","","729","","","355","","","49","%","","\u2014","","","0","%"],["Total operating revenues","","$","1,084","","","$","921","","","$","1,564","","","$","163","","","18","%","","$","(643)","","","-41","%"]]
[[/GREPCENT_TABLE]]

Overall operating revenues increased by $0.2 million, or 18%, to $1.1 million in Fiscal 2022 from $0.9 million in Fiscal 2021. The increase in our spectrum lease revenue was attributable to revenue recognized in connection with the Ameren Agreements of approximately $0.4 million for the current year. Overall operating revenues decreased by $0.6 million, or 41%, to $0.9 million in Fiscal 2021 from $1.6 million in Fiscal 2020. The decrease in our operating revenues during this period were attributable to the transfer of our TeamConnect customers to A BEEP and Goosetown as part of our December 2018 restructuring efforts as discussed in Note 3 Revenue in the Notes to the Consolidated Financial Statements contained within this Annual Report, as well as the loss of customers in our pdvConnect business.

Operating expenses

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["Direct cost of revenue (exclusive of depreciation and amortization)","","$","5","","","$","1,606","","","$","2,833","","","$","(1,601)","","","-100","%","","$","(1,227)","","","-43","%"],["General and administrative","","39,525","","","39,302","","","25,469","","","223","","","1","%","","13,833","","","54","%"],["Sales and support","","4,461","","","2,942","","","4,055","","","1,519","","","52","%","","(1,113)","","","-27","%"],["Product development","","3,593","","","4,343","","","2,953","","","(750)","","","-17","%","","1,390","","","47","%"],["Depreciation and amortization","","1,450","","","3,533","","","3,591","","","(2,083)","","","-59","%","","(58)","","","-2","%"],["Impairment of long-lived assets","","\u2014","","","85","","","46","","","(85)","","","-100","%","","39","","","85","%"],["Operating expenses","","$","49,034","","","$","51,811","","","$","38,947","","","$","(2,777)","","","-5","%","","$","12,864","","","33","%"]]
[[/GREPCENT_TABLE]]

Direct cost of revenue

Direct cost of revenue decreased by $1.6 million to $5,000 for Fiscal 2022, or 100%, from $1.6 million for Fiscal 2021. Direct cost of revenue decreased by $1.2 million to $1.6 million for Fiscal 2021, or 43%, from $2.8 million for Fiscal 2020. The overall decreases primarily resulted from lower support costs related to the transfer of pdvConnect customers to the LLC as part of our December 2018 restructuring efforts as discussed in Note 3 Revenue in the Notes to the Consolidated Financial Statements contained within this Annual Report.

General and administrative expenses

General and administrative expenses increased by $0.2 million to $39.5 million for Fiscal 2022, or 1%, from $39.3 million for Fiscal 2021. The $0.2 million increase for Fiscal 2022 primarily resulted from a $1.5 million increase in headcount and employee related costs, $0.8 million in professional service fees due to our strategic spectrum initiatives, $0.7 million in higher site rent related costs and $0.3 million recruiting costs partially offset by a $2.7 million decrease in stock compensation expense and $0.4 million in lower management fees. General and administrative expenses increased by $13.8 million to $39.3 million for Fiscal 2021, or 54%, from $25.5 million for Fiscal 2020. The $13.8 million increase for Fiscal 2021 was attributable to $5.1 million in stock compensation expense recognized upon the achievement of a performance metric under the performance-based restricted stock units and performance-based stock options, upon the Report and Order becoming effective in August 2020 (see Note 11 Stock Acquisition Rights, Stock Options and Warrants in the Notes to the Consolidated Financial Statements contained within this Annual Report), $0.8 million relating to the Type III modification to the restricted stock units held by the former Chairman of the Board upon his transition to a consultant to the Company, approximately $3.8 million due to higher valuation of grants awarded in Fiscal 2021, $3.6 million higher employee related costs due to increased headcount as well as the realignment of the business development team and $1.1 million higher consulting services related to our strategic spectrum initiatives. These increases were partially offset by a $0.4 million decrease in employee related travel and meeting

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costs due to the COVID-19 pandemic and $0.2 million decrease due to the completion of the December 2018 cost reduction and restructuring actions associated with the transfer of the TeamConnect business to A BEEP and Goosetown and the transfer of the pdvConnect business to the LLC in Fiscal 2020.  

Sales and support expenses

Sales and support expenses increased by $1.5 million, or 52%, to $4.5 million for Fiscal 2022 from $2.9 million for Fiscal 2021. The increase primarily resulted from a $0.6 million increase in headcount and employee related costs, $0.5 million in higher marketing costs related to advertising, sponsorships and trade shows, $0.1 million in higher contract consulting costs and $0.3 million in higher stock compensation expense. Sales and support expenses decreased by $1.1 million, or 27%, to $2.9 million for Fiscal 2021 from $4.1 million for Fiscal 2020. The decrease primarily resulted from $1.1 million related to the realignment of the business development team from Sales and support to General and administrative and $0.3 million lower employee related travel and meeting costs due to the pandemic, partially offset by $0.3 million increase in headcount and employee related costs resulting from building the sales team.

Product development expenses

Product development expenses decreased by $0.8 million, or 17%, to $3.6 million for Fiscal 2022 from $4.3 million for Fiscal 2021. The decrease primarily resulted from $0.4 million in lower consulting fees as we converted consultants to employees and $0.4 million in lower technology related costs. Product development expenses increased by $1.4 million, or 47%, to $4.3 million for Fiscal 2021 from $3.0 million for Fiscal 2020. The increase is primarily attributable to $0.4 million higher valuation of grants awarded in Fiscal 2021, $0.4 million higher consulting charges, $0.6 million higher technology and equipment related charges to assist with the development of future product offerings, offset by $0.2 million lower employee related travel and meeting costs due to the COVID-19 pandemic.

Depreciation and amortization 

Depreciation and amortization expenses decreased by $2.1 million, or 59%, to $1.5 million for Fiscal 2022 from $3.5 million for Fiscal 2021. The decrease was due to the change in the useful life for our market network sites during Fiscal 2020 that resulted in higher depreciation expense for the Fiscal years 2021 and 2020. Market network site assets for our historical business were fully depreciated by December 31, 2020. Depreciation and amortization in Fiscal 2021 remained relatively flat as compared to Fiscal 2020. 

Impairment of long-lived assets

There were no impairment of long-lived assets expenses for Fiscal 2022. Impairment of long-lived assets expenses were $0.1 million and $46,000 for Fiscal 2021 and Fiscal 2020, respectively. Impairment for long-lived assets expenses remained relatively flat for the periods presented.

(Gain)/loss from disposal of intangible assets, net

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["(Gain)/loss from disposal of intangible assets, net","","$","(11,209)","","","$","3,849","","","$","88","","","$","(15,058)","","","-391","%","","$","3,761","","","4274","%"]]
[[/GREPCENT_TABLE]]

During Fiscal 2022, we exchanged our narrowband licenses for broadband licenses in 21 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $15.3 million for the new broadband licenses and disposed of $4.1 million related to the value ascribed to the narrowband licenses we relinquished to the FCC for those same 21 counties. As a result, we recorded a $11.2 million gain from disposal of the intangible assets in our Consolidated Statements of Operations. Refer to Note 5 Intangible Assets in the Notes to the Consolidated Financial Statements contained within this Annual Report for further discussion on the exchanges.

In June 2020, we cancelled licenses in the 900 MHz band in accordance with the Report and Order and our agreement with the AAR. Because we did not receive any licenses nor monetary reimbursement in exchange for the cancellation, but only credit for purposes of determining our future eligibility and payment requirements for broadband licenses under the Report and Order, we recorded a $5.0 million loss from disposal of the intangible assets in the Consolidated Statements of Operations for Fiscal 2021.

In September 2020, we closed an agreement with a third party for the exchange of 900 MHz licenses. Under the agreement, we received spectrum licenses at their estimated fair value of approximately $0.2 million and a payment of $1.2 million in cash. Under the agreement, we transferred spectrum licenses with a book value of approximately $0.3 million to the third party. We recognized a $1.1 million gain from disposal of intangible assets in the Consolidated Statement of Operations when the deal closed in September 2020.

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In Fiscal 2020, we recorded a loss on disposal of capitalized patent costs amounting to $0.1 million relating to the transfer of the intellectual property to the LLC. In addition, we also entered into a barter transaction with a third party whereby we acquired wireless licenses valued at approximately $88,000 in exchange of equipment with a net book value of $21,000 and approximately $15,000 in cash. We recorded a corresponding gain of $52,000.

Loss from disposal of long-lived assets, net

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["Loss from disposal of long-lived assets, net","","$","107","","","$","70","","","$","62","","","$","37","","","53","%","","$","8","","","13","%"]]
[[/GREPCENT_TABLE]]

Loss on disposal of long-lived assets, net in Fiscal 2022 remained relatively flat as compared to Fiscal 2021. Loss on disposal of long-lived assets, net in Fiscal 2021 remained relatively flat as compared to Fiscal 2020.

Interest income

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["Interest income","","$","56","","","$","124","","","$","1,810","","","$","(68)","","","-55","%","","$","(1,686)","","","-93","%"]]
[[/GREPCENT_TABLE]]

Interest income decreased by $68,000, or 55%, to $56,000 for Fiscal 2022 as compared to $0.1 million from Fiscal 2021 due to lower effective money market rates. Interest income decreased by $1.7 million, or 93%, to $0.1 million for Fiscal 2021 as compared to $1.8 million from Fiscal 2020 due to lower cash balance driven by payments for our spectrum initiatives, along with lower effective money market rates.

Other income

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["Other income","","$","256","","","$","414","","","$","496","","","$","(158)","","","-38","%","","$","(82)","","","-17","%"]]
[[/GREPCENT_TABLE]]

Other income decreased by $0.2 million, or 38%, to $0.3 million for Fiscal 2022 from $0.4 million for Fiscal 2021 due to lower payments received in consideration for the customer and rights transferred to A BEEP. Other income in Fiscal 2021 remained relatively flat as compared to Fiscal 2020.

Loss on equity method investment

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["Loss on equity method investment","","$","\u2014","","","$","(39)","","","$","(9)","","","$","39","","","-100","%","","$","(30)","","","333","%"]]
[[/GREPCENT_TABLE]]

We reported loss on investment for Fiscal 2021 and Fiscal 2020 amounting to $39,000 and $9,000, respectively, relating to the 19.5% ownership interest in the LLC.

Income tax expense

[[GREPCENT_TABLE]]
[["","","For the years ended March 31,","","Aggregate Change","","Aggregate Change"],["(in thousands)","","2022","","2021","","2020","","2022 from 2021","","2021 from 2020"],["Income tax expense","","$","983","","","$","124","","","$","2,402","","","$","859","","","693","%","","$","(2,278)","","","-95","%"]]
[[/GREPCENT_TABLE]]

On March 27, 2020, the Coronavirus Aid Relief and Economic Security (“CARES”) Act was signed into law. The new CARES Act modified Section 172(b)(1)(A) of the Code to state that NOL arising in a taxable year beginning before January 1, 2018, is carried forward 20 years provided that a carryback claim is not affected. From this adjusted provision, our March 31, 2018 NOL carryforward changed from an indefinite life to a 20-year life. We used a discrete effective tax rate method to calculate taxes for Fiscal 2021. We determined that applying an estimate of the annual effective tax rate would not provide a reasonable estimate as small changes in estimated “ordinary” loss would result in significant changes in the estimated annual effective tax rate. Accordingly, for Fiscal 2022 and Fiscal 2021, we recorded a total deferred tax expense of $1.0 million and $0.1 million, respectively, due to the inability to use some portion of our federal and state NOL carryforwards against the deferred tax liability created by amortization of indefinite-lived intangibles. A non-cash deferred income tax expense of $2.4 million was recorded for Fiscal 2020 as a result of our state operating loss carryforwards no longer being deemed indefinite and a technical correction from the federal CARES Act relating to fiscal year effective dates on NOLs.

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Liquidity and Capital Resources 

On March 31, 2022, we had cash and cash equivalents of $105.6 million.

We believe our cash and cash equivalents on hand will be sufficient to meet our financial obligations through at least the next 12 months. As noted above, our future capital requirements will depend on a number of factors, including among others, the costs and timing of securing broadband licenses, including our spectrum retuning activities, spectrum acquisitions and the Anti-Windfall Payments to the U.S. Treasury, and our operating activities and any revenues we generate through our commercialization activities. We will deploy this capital at our determined pace based on several key ongoing factors, including customer demand, market opportunity, and offsetting income from spectrum leases. As we cannot predict the duration or scope of the COVID-19 pandemic and its impact on our targeted customers, the potential negative financial impact to our results of operations and financial condition cannot be reasonably estimated. We are actively managing our business to maintain our cash flow and believe that we currently have adequate liquidity. To implement our business plans and initiatives, however, we may need to raise additional capital. We cannot predict with certainty the exact amount or timing for any future capital raises. See “Risk Factors” in Item 1A of Part I of this Annual Report for a reference to the risks and uncertainties that could cause our costs to be more than we currently anticipate and/or our revenue and operating results to be lower than we currently anticipate. If required, we intend to raise additional capital through debt or equity financings, including pursuant to our Shelf Registration Statement, or through some other financing arrangement. However, we cannot be sure that additional financing will be available if and when needed, or that, if available, we can obtain financing on terms favorable to our stockholders and to us. Any failure to obtain financing when required will have a material adverse effect on our business, operating results, financial condition and liquidity.

On April 3, 2020, we filed the Shelf Registration Statement on Form S-3 with the SEC that was declared effective by the SEC on April 20, 2020, which permits us to offer up to $150 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time. Our Shelf Registration Statement is intended to provide us with additional flexibility to access capital markets for general corporate purposes, which may include working capital, capital expenditures, repayment of debt, other corporate expenses and acquisitions of complementary products, technologies, or businesses.

We entered into the Sales Agreements with Cantor Fitzgerald & Co. and B. Riley FBR, Inc. and on April 3, 2020, registered the sale of up to an aggregate of $50,000,000 in shares of our common stock in at the market sales transactions pursuant to the Sales Agreements under the Shelf Registration Statement. Through the date of this filing, we have not sold any shares of our common stock in at the market transactions or any securities under the Shelf Registration Statement.

Cash Flows from Operating, Investing and Financing Activities

[[GREPCENT_TABLE]]
[["","For the years ended March 31,"],["(in thousands)","2022","","2021","","2020"],["Net cash provided by (used in) operating activities","$","17,913","","","$","(9,959)","","","$","(27,823)"],["Net cash used in investing activities","$","(27,411)","","","$","(14,174)","","","$","(7,560)"],["Net cash (used in) provided by financing activities","$","(2,416)","","","$","4,218","","","$","96,114"]]
[[/GREPCENT_TABLE]]

Net cash provided by (used in) operating activities

Net cash provided by operating activities was approximately $17.9 million in Fiscal 2022. Net cash used in operating activities was approximately $10.0 million and $27.8 million in Fiscal 2021 and Fiscal 2020, respectively. The majority of net cash provided by operating activities in Fiscal 2022 resulted from deferred revenue of $51.7 million and non-cash adjustments to net loss of $5.0 million (primarily attributable to stock compensation expense of $13.6 million, partially offset by gain on disposal of intangible assets of $11.2 million), partially offset by a net loss of $37.5 million. The majority of net cash used by operating activities in Fiscal 2021 resulted from a net loss of $54.4 million, partially offset by contingent liability relating to the upfront payment we received from SDG&E of $20.0 million, non-cash compensation expense attributable to stock awards of $15.9 million, net loss on disposal of intangible assets of $3.8 million and depreciation of $3.5 million. The majority of net cash used by operating activities in Fiscal 2020 resulted from a net loss of $37.6 million, partially offset by non-cash compensation expense attributable to stock awards of $5.8 million and depreciation of $3.6 million.

Net cash used in investing activities

Net cash used in investing activities was approximately $27.4 million, $14.2 million and $7.6 million for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively. For Fiscal 2022, the net cash used by investing activities resulted from $26.4 million in wireless license acquisitions including refundable deposits and $1.1 million for purchases of equipment. For Fiscal 2021, the net cash used by investing activities resulted from $13.9 million in wireless license acquisitions including refundable deposits and $0.2 million for purchases of equipment. For Fiscal 2020, the net cash used by investing activities resulted from $7.1 million in wireless license acquisitions, including refundable deposits and $0.5 million for purchases of equipment.

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Net cash (used in) provided by financing activities

Net cash used in financing activities was $2.4 million in Fiscal 2022. Net cash provided by financing activities was $4.2 million and $96.1 million in Fiscal 2021 and Fiscal 2020, respectively. For Fiscal 2022, net cash used in financing activities was primarily from the repurchase of common stock of $15.0 million, partially offset by the proceeds from stock option exercises of $14.0 million, net of payments of withholding tax on net issuance of restricted stock of $1.5 million. For Fiscal 2021, the net cash provided by financing activities primarily resulted $4.2 million in cash received from the proceeds of stock option exercises. For Fiscal 2020, the net cash provided by financing activities primarily resulted from $94.2 million net proceeds from the July 2019 follow-on offering and $2.4 million in cash received from the proceeds of stock option exercises.

Material Cash Requirements

We are now engaged in qualifying for and securing broadband licenses from the FCC pursuant to the Report and Order. At the same time, our sales and marketing departments are pursuing opportunities to lease the broadband licenses we secure to our targeted utility and critical infrastructure customers. Our future capital requirements will depend on many factors, including: the timeline and costs to acquire broadband licenses pursuant to the Report and Order, including the costs to acquire additional spectrum, the costs related to retuning, or swapping spectrum held by, Covered Incumbents and the costs of paying Anti-Windfall Payments to the U.S. Treasury; costs related to the commercializing of our spectrum assets; and our ability to sign customer contracts and generate revenues from the license or transfer of any broadband licenses we secure; the terms and conditions of any customer contracts, including the timing of payments.

We are obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2023 through June 30, 2027, which includes a three to ten-year lease extension for our corporate headquarters. We have also entered into multiple lease agreements for tower space related to our TeamConnect business. The lease expiration dates range from May 31, 2022 to April 30, 2028. Total estimated payments for these lease agreements are approximately $7.1 million (exclusive of real estate taxes, utilities, maintenance and other costs borne by us). In addition to the lease payments for our tower space, we also have an obligation to clear the tower site locations, for which we recorded an asset retirement obligation (the “ARO”). Total estimated payments as a result of the ARO is approximately $0.7 million. See Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report for further information on the AROs.

Share Repurchase Program

On September 29, 2021, our Board authorized a share repurchase program pursuant to which we may repurchase up to $50.0 million of our common stock on or before September 29, 2023. The manner, timing and amount of any share repurchases will be determined by us based on a variety of factors, including price, general business and market conditions and alternative investment opportunities. The share repurchase program authorization does not obligate us to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. We currently anticipate the cash used for the share repurchase program will come primarily from our prepaid customer agreements.

The following table presents the share repurchase activity for Fiscal 2022, Fiscal 2021 and Fiscal 2020 (in thousands, except per share data):

[[GREPCENT_TABLE]]
[["","For the years ended March 31,"],["","2022","","2021","","2020"],["Number of shares repurchased","252","","","\u2014","","","\u2014"],["Average price paid per share*","$","57.50","","","$","\u2014","","","$","\u2014"],["Total cost to repurchase","$","14,962","","","$","\u2014","","","$","\u2014"]]
[[/GREPCENT_TABLE]]

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

Critical Accounting Policies and Estimates 

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, our actual results could differ from those based on such estimates and assumptions. Further, to the extent that there are differences between our estimates and our actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical performance, as these policies relate to the more significant areas involving our judgments and estimates.

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We believe that the areas described below are the most critical to aid in fully understanding and evaluating our reported financial results, as they require management’s significant judgments in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods. Our significant accounting policies are set forth in Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report. Of those policies, we believe that the policies discussed below may involve a higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations.

Revenue Recognition

We recognize revenue when a contract with a customer exists and control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services and the identified performance obligation has been satisfied.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification, Revenue from Contracts with Customers (“ASC 606”). A contract’s transaction price is allocated to each distinct performance obligation and is recognized as revenue when, or as, the performance obligation is satisfied, which typically occurs when the services are rendered. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers under contracts involving only the relevant performance obligation. Judgment may be used to determine the standalone selling prices for items that are not sold separately, including services provided at no additional charge. Most of our performance obligations will be satisfied over time as services are provided. The nature of the licenses provide the benefit of the leased spectrum regardless of whether the customer uses the spectrum or not. As a result, revenue will be recognized ratably as cleared 900 MHz Broadband Spectrum and the associated broadband licenses are delivered by county to the customer over the contractual term.

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We determined that certain sales commissions meet the requirements to be capitalized and were recorded as an asset.

Evaluation of Indefinite-Lived Intangible Assets for Impairment

Our wireless licenses’ unit of accounting is based on geographic markets and our wireless licenses are tested for impairment based on the individual markets, as we will be utilizing the wireless licenses as part of facilitating broadband spectrum networks at an individual market level. We may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an intangible asset is less than its carrying value. If we do not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the intangible asset is less than its carrying amount, we will calculate the estimated fair value of the intangible asset. If the estimated fair value of the spectrum licenses is lower than their carrying amount, an impairment loss is recognized. We use a market-based approach to estimate fair value.

The valuation approach used to estimate fair value for the purpose of impairment testing requires management to use complex assumptions and estimates such as population, discount rates, industry and market considerations, long-term market equity risk, as well as other factors. These assumptions and estimates are forward-looking and depend on our ability to successfully apply for broadband licenses and commercialize our 900 MHz Broadband Spectrum.

During Fiscal 2022, we changed the date of our annual impairment assessment from March 31, our fiscal year-end, to January 1. For the year ended March 31, 2022, we 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, we were not required to perform a step one analysis.

Exchanges of Intangible Assets

At times, we enter into agreements to exchange or cancel spectrum licenses. Upon entering into the arrangement, if the transaction has been deemed to have commercial substance, spectrum licenses are reviewed for impairment. The licenses are exchanged or cancelled at their carrying value and adjusted for any gain or loss recognized. Upon receipt of FCC approval, the spectrum licenses acquired as part of the 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 our Consolidated Statements of

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Operations. The acquired basis of spectrum licenses is based on information for which there is little or no observable market data. If the transaction lacks commercial substance or the acquired basis is not measurable, the acquired spectrum licenses are recorded at the carrying value of the spectrum assets transferred, cancelled or exchanged. For the purpose of the valuation of broadband licenses received in connection with nonmonetary exchanges, we utilize the 600 MHz Auction price per MHzPop, as defined in the Report and Order, which is considered the accounting basis for the new broadband licenses.

See Note 5 Intangible Assets in the Notes to the Consolidated Financial Statements contained within this Annual Report for a discussion on our spectrum exchanges during the years ended March 31, 2022 and 2021.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements, including those recently adopted, is provided in Note 2 Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements contained within this Annual Report.