This discussion and analysis of the financial condition and results of
operations of Anterix Inc. ("Anterix," the "Company", "we", "us", or "our")
should be read in conjunction with our financial statements and notes thereto
included in this Quarterly Report on Form 10-Q (the "Form 10-Q") and the audited
financial statements and notes thereto included in our Annual Report on Form
10-K for the year ended March 31, 2019, filed with the SEC on May 20, 2019 (the
"Annual Report"). In addition to historical information, this discussion and
analysis contains forward-looking statements that involve risks, uncertainties,
and assumptions. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors including,
but not limited to, those identified or referenced in "Item 1A-Risk Factors" in
Part II of this Form 10-Q. As a result, investors are urged not to place undue
reliance on any forward-looking statements.  Except to the limited extent
required by applicable law, we do not undertake any obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of this Form 10-Q.



Overview



We are a wireless communications company focused on empowering the modernization
of critical infrastructure and enterprise businesses communications by enabling
broadband connectivity. Our foundational spectrum provides the ability to
transform our customers operations to meet new business complexities while
achieving higher levels of performance and safety. 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 average, we hold approximately 60% of channels in the 900 MHz band in
the top 20 metropolitan market areas in the United States. We are currently
pursuing a regulatory proceeding at the Federal Communications Commission
("FCC") that seeks to modernize and realign the 900 MHz band by allowing it to
be utilized for the deployment of broadband networks, technologies and
solutions. Our goal is to become the leading provider of broadband spectrum
assets to critical infrastructure and enterprise customers. We maintain offices
in Woodland Park, New Jersey and McLean, Virginia.



Our FCC Initiatives



Our spectrum is our most valuable asset. While our current licensed spectrum can
support narrowband and wideband wireless services, the most significant business
opportunities we have identified require contiguous spectrum that allows for
greater bandwidth than allowed by the current configuration of our spectrum. As
a result, our first priority is to continue to pursue our initiatives at the FCC
seeking to modernize and realign a portion of the 900 MHz band to increase its
usability and capacity by allowing it to accommodate the deployment of broadband
networks, technologies and solutions.



On March 14, 2019, the FCC unanimously adopted a Notice of Proposed Rulemaking
("NPRM") in WT Docket No. 17-200 (the "900 MHz Proceeding").  Comments on the
NPRM were filed on May 31, 2019 and reply comments were filed on July 2, 2019.




The NPRM endorsed our objective of creating a broadband opportunity in the 900
MHz band for critical infrastructure and other enterprise users. The NPRM
generally proposes our recommended band plan concept and technical rules.
Importantly, the proposed technical rules include our recommended equipment
specifications that would enable the use of available, globally standardized
broadband LTE networks, technologies and solutions.



In the NPRM, the FCC has proposed three criteria for an applicant to secure a
broadband license in a particular county within the United States: (i) the
applicant must hold all 20 blocks of geographic Specialized Mobile Radio ("SMR")
licenses in the county; (ii) the applicant must reach agreement to relocate all
incumbents in the broadband segment in a 1:1 voluntary channel exchange or
demonstrate that the incumbents will be protected from interference; and (iii)
the applicant must agree to return to the FCC all rights to geographic and
site-based spectrum in the county in exchange for the broadband license.



The FCC requested comments from incumbents and other interested parties on a
number of important topics in the NPRM that will have a material impact on our
ability to qualify for, and the related time and costs of obtaining, broadband
licenses. As noted above, the broadband applicant must hold all 20 blocks of
geographic SMR licenses in the county. In certain areas, some of the SMR
spectrum is being held in inventory by the FCC. In the NPRM, the FCC requested
comments on how a broadband applicant could acquire the FCC's inventory of
geographic SMR allocated spectrum. Specifically, in considering whether to make
its inventory of geographic SMR spectrum available to the broadband applicant,
the FCC has asked whether it should do so only if the applicant meets a
threshold number of its own geographic SMR licenses. The FCC also questions how
to mitigate a windfall that might thereby be attributed to the broadband
applicant by the FCC's action.  We have recommended that broadband applicants be
able to include geographic SMR spectrum held in inventory by the FCC for
purposes of eligibility, provided that they hold all licensed geographic SMR
spectrum. We addressed the windfall question by identifying a number of recent
instances when the FCC has authorized rule changes that improved certain
licensees' spectrum positions based on an FCC finding that doing so addressed a
significant public interest consideration.



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The NPRM also proposes a market-driven, voluntary exchange process for clearing
the broadband spectrum. An applicant seeking a broadband license for a
particular county will need to demonstrate that it has entered into agreements
with incumbents or that it can protect their narrowband operations from
interference. All incumbents must be accounted for before the broadband
applicant can file an application with the FCC.  As the FCC recognized in the
NPRM, this requirement, without some mechanism for preventing holdouts, could
allow a single incumbent with a license for a single channel to thwart the FCC's
objective of creating a 900 MHz broadband opportunity in any county.



In the NPRM, the FCC has requested comments on different approaches to address
the holdout situation. One approach is based on a "success threshold" whereby
once the broadband applicant has reached voluntary agreements with incumbents
holding a prescribed percentage of channels in the broadband segment, remaining
incumbents would become subject to mandatory relocations. In this and other
approaches set forth in the NPRM, the broadband applicant would be responsible
for providing comparable facilities and paying the reasonable costs of
relocation.  The NPRM proposes to exempt from mandatory relocation "complex
systems," with 65 or more integrated sites. There are only a small number of
complex systems in the country in the broadband segment proposed by the FCC, and
all of them are operated by utilities or other critical infrastructure
entities.  We have endorsed the proposed "success threshold" as the most
efficient way to address holdouts and have reaffirmed our commitment that any
system that is mandatorily retuned is entitled to comparable facilities and cost
reimbursement. We also have supported the proposal that complex systems, as
defined in the NPRM, be exempt from mandatory relocation.



The Association of American Railroads ("AAR") holds a nationwide geographic
license for nine non-contiguous Private Land Mobile Systems for Business Users
("B/ILT") channels in the 900 MHz band, three of which are located within the
FCC's proposed broadband segment. The spectrum is used by freight railroads for
Advanced Train Control System ("ATCS") operations. We have recognized from the
outset the importance of reaching agreement with the railroads about their
relocation, and have worked with them throughout the FCC process. We and the AAR
are in agreement about the optimal solution. However, this proposed solution
will require an exemption from the relocation rules proposed by the FCC in the
NPRM. We are continuing to coordinate our activities at the FCC with the AAR in
support of securing the required exemption from the FCC and have urged the FCC
to recognize AAR's unique 900 MHz spectrum position with an appropriate solution
that is consistent with the future wireless requirements of the railroad
industry.



The NPRM also sought comment on several different auction approaches for
counties where the broadband segment cannot be cleared of incumbents, including
overlay auctions that, again, would trigger mandatory relocation rights for the
auction winner with the obligation of providing comparable facilities and paying
reasonable relocation costs. We believe the challenge of any proposed approach
is achieving the appropriate balance between protecting incumbents' rights to a
minimally disruptive relocation process, and not preventing the deployment of
broadband technologies on a timely and cost-effective basis.  While auctions are
one mechanism for addressing holdouts, they can involve lengthy delays that slow
delivery of modernized capabilities. We have advised the FCC that a success
threshold approach would allow broadband deployment on a more expedited
schedule.



While the NPRM proposes a 6 MHz broadband segment, it also sought comment on a
realignment of the entire 900 MHz band to create a 10 MHz broadband channel,
citing suggestions from Southern California Edison and Duke Energy that this
larger channel would better address their broadband needs.



A number of other parties filed Comments and Reply Comments as well. The number
of utilities expressing an immediate need for private broadband networks has
increased steadily through the course of the proceeding and the number of
parties opposing realignment to create a 900 MHz band broadband option has
diminished, but some incumbents continue to disagree with the NPRM proposal.
Most are incumbents with systems that would be exempt from the possibility of
mandatory retuning under the proposed complex system definition.



Now that the formal comment period has closed, the FCC's next step could be the
issuance of a final report and order ("Report and Order"), a request for
additional information, a decision to close the proceeding without further
action, or some other action. There is no assurance if or when the FCC will
issue a Report and Order. Further, the terms of any Report and Order may differ
materially from the terms of the NPRM. Please read "Risk Factors" for a
discussion of material risks related to the NPRM and FCC process.

Our Business Plans and Initiatives





Complementing our regulatory initiatives, we are engaged in a number of business
activities to build demand for and to begin commercializing our spectrum assets
among our targeted critical infrastructure and enterprise customers. We are
identifying customers who are likely to place value on deploying and operating
private broadband networks, technologies and solutions utilizing our spectrum
assets. As part of this exercise, we identified and evaluated potential use
cases in the electric utilities industry, especially those companies that are
investigating ways to fulfill their existing and future network and
communications needs.



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We are also evaluating the appropriate business model for commercializing our
spectrum assets, assuming our FCC initiatives are successful. Based on our
analysis, and discussions with potential customers, we intend to lease our
spectrum to customers for 20 year or longer terms. We intend for our customers
to bear the costs of deploying and operating their private broadband networks,
technologies and solutions. We believe that our licensed spectrum assets in the
900 MHz band present an attractive potential cost-savings opportunity for our
initial target customers when compared to other solutions that utilize medium
band spectrum.  We will be responsible for the costs of securing the broadband
licenses from the FCC, including the costs of acquiring sufficient spectrum to
support broadband use and retuning incumbents to clear the spectrum. The timing
and costs of our spectrum acquisition and retuning activities will be based on
the terms of the Report and Order, if any, the FCC adopts in the 900 MHz
Proceeding and these costs could be significant. We are also exploring
opportunities to offer our customers value-added engineering and commercial
services.



Our Strategy



Our business strategy is to continue to simultaneously pursue our FCC and
business initiatives. Our FCC initiatives are focused on obtaining a Report and
Order from the FCC that supports broadband services in the 900 MHz band. Our
business initiatives are focused on supporting both (i) our FCC initiatives,
including the timely issuance of a favorable Report and Order, and (ii) our
efforts to be ready to obtain broadband licenses from the FCC and to
commercialize our spectrum assets assuming the FCC issues a favorable Report and
Order. Our efforts include:

· engaging with the FCC and other incumbents and interested parties in the 900


    MHz band;

· business development activities with our initial target customers, including


    electrical utilities and other critical infrastructure entities;

· pursuing initiatives with federal and state agencies and commissions that


    regulate our initial target customers; and

· beginning to "retune" the 900 MHz band.

We refer to "retuning" as the process of relocating incumbents in the counties where we plan to obtain broadband licenses. Retuning involves:

· funding the relocation of incumbents that wish to continue operating 900 MHz


    narrowband systems to comparable 900 MHz channels outside the broadband
    segment;

· compensating incumbents that decide to address their wireless communications


    needs through non-900 MHz band solutions; and/or






 ·

· entering into agreements with incumbents that wish to implement broadband


    networks.




In order to relocate incumbents to alternative narrowband channels, we will need
to make acquisitions of additional 900 MHz spectrum outside of the broadband
segment in certain counties. We also will need to acquire spectrum assets in
certain counties to satisfy the broadband license eligibility criteria proposed
by the FCC in the NPRM.



Our FCC and business initiatives, including our retuning efforts, will continue
to involve extensive management efforts and significant costs and expenses for
the foreseeable future. We do not expect to have significant revenue and expect
to incur significant operating losses until such time as we are able to obtain
broadband licenses and commercialize our spectrum assets based on a Report and
Order issued by the FCC, if we are able to at all. Our current estimates
regarding our operating costs, including the timing and costs of our retuning
process, are based on the terms of the NPRM and our assumptions regarding the
terms of the Report and Order to be issued by the FCC, if at all. The accuracy
of these assumptions and the timing of our regulatory initiatives with the FCC,
our retuning efforts and the commercialization of our spectrum assets are
subject to significant uncertainties and may cause our quarterly and annual
results to be unpredictable for the foreseeable future. In addition, the
adoption by the FCC of a Report and Order may be significantly delayed, may
contain materially different and adverse terms than the NPRM, or may never occur
and we may never be able to commercialize our spectrum assets.

Our Historical Business, TeamConnect and pdvConnect





Historically, we generated our revenue principally from our pdvConnect and
TeamConnect businesses. pdvConnect is a mobile communication and workforce
management solution that we historically marketed through two Tier 1 carriers in
the United States. In Fiscal 2016, we began offering a commercial push-to-talk
("PTT") service, which we marketed as TeamConnect, in seven major metropolitan
areas throughout the United States, including Atlanta, Baltimore/Washington,
Chicago, Dallas, Houston, New York and

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Philadelphia. We primarily offered our TeamConnect service to customers indirectly through third-party sales representatives who were primarily selected from Motorola's nationwide dealer network.





In June 2018, we announced our plan to restructure the business to align and
focus our business priorities on our FCC spectrum initiatives aimed at
modernizing and realigning the 900 MHz band. In December 2018, our board of
directors approved the transfer of our TeamConnect business and support of our
pdvConnect business. Specifically, we entered into: (i) a Customer Acquisition
and Resale Agreement with A BEEP LLC ("A BEEP") on January 2, 2019, (ii) a
Customer Acquisition, Resale and Licensing Agreement with Goosetown Enterprises,
Inc. ("Goosetown") on January 2, 2019 and (iii) a memorandum of understanding
("MOU") with the principals of Goosetown on December 31, 2018. On March 31,
2019, the agreements were amended to define the transition date as April 1, 2019
and to clarify the responsibilities between the parties.



Under the A BEEP and Goosetown Agreements, we agreed to: (i) transfer our
TeamConnect customers located in the Atlanta, Chicago, Dallas, Houston and
Phoenix metropolitan markets to A BEEP, (ii) transfer our TeamConnect customers
located in the Baltimore/Washington DC, Philadelphia and New York metropolitan
markets to Goosetown, (iii) provide A BEEP and Goosetown with access to our
TeamConnect Metro and Campus Systems (the, "MotoTRBO Systems ") and (iv) grant A
BEEP and Goosetown the right to resell access to our MotoTRBO Systems pursuant
to separate Mobile Virtual Network Operation arrangements for a two-year
period. We also granted Goosetown a license to sell the business applications we
developed for our TeamConnect service.



Under these agreements, A BEEP and Goosetown agreed to provide customer care,
billing and collection services for their respective acquired customers. We
initially continued to provide these services through April 1, 2019 to help
facilitate the transitioning of the acquired customers. Additionally, we are
required to maintain and pay all site lease, backhaul and utility costs required
to operate the MotoTRBO Systems for a two-year period. As part of our efforts to
clear the 900 MHz spectrum for broadband use, A BEEP and Goosetown are required
to migrate the acquired customers off the MotoTRBO Systems over the two-year
period.  In consideration for the customers and rights we transferred, A BEEP
and Goosetown are required to pay us a certain portion of the recurring revenues
they receive from the acquired customers ranging from 100% to 20% during the
terms of the agreements. Additionally, A BEEP is required to pay us a portion of
recurring revenue from customers who utilize A BEEP's push-to-talk Diga-Talk
Plus application service ranging from 35% to 15% for a period of two
years. Goosetown is required to pay us 20% of recurring revenues from the
TeamConnect applications we licensed for a period of two years. As part of our
obligations, we will continue operating the TeamConnect networks in the markets
in which customers are being transferred and trunked facilities in other markets
in which we hold FCC licenses.



Under the terms of the MOU, we agreed to assign the intellectual property rights
to our TeamConnect and pdvConnect applications and assets to support the
pdvConnect application to TeamConnect LLC (the " LLC"), a new entity formed by
the principals of Goosetown, in exchange for a 19.5% ownership interest in the
LLC. The Goosetown principals have agreed to fund the future operations of the
LLC, subject to certain limitations. The LLC has assumed our software support
and maintenance obligations under the Goosetown and A BEEP Agreements. The LLC
has also assumed customer care services related to our pdvConnect
application. We provided transition services to the LLC through April 1, 2019 to
facilitate an orderly transition of the customer care services. As of September
30, 2019, we transferred network, computer and other equipment with a net book
value of $72,000, and recorded an investment in the LLC amounting to $14,000 and
loss on disposal of assets amounting to $58,000 relating to the transfer of the
assets as of such date.  As of December 31, 2019, the Company also completed the
transfer of the intellectual property rights with a net book value of $174,000
to the LLC and recorded an investment in the LLC amounting to $34,000 and loss
on disposal of intangible asset amounting to $140,000 relating to the transfer
of the intellectual property.  We are also obligated to pay the LLC a monthly
services fee for a 24-month period ending on January 7, 2021 for its assumption
of our support obligations under the Goosetown and A BEEP Agreements. We are
also obligated to pay the LLC a certain portion of the billed revenue received
by us from pdvConnect customers for a 48-month period.





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Results of Operations

Comparison of the three and nine months ended December 31, 2019 and 2018





The following table sets forth our results of operations for the three and nine
months ended December 31, 2019 and 2018. The period-to-period comparison of
financial results is not necessarily indicative of the financial results we will
achieve in future periods.



Operating revenues




                                Three months ended                                     Nine months ended
                                   December 31,             Aggregate Change             December 31,             Aggregate Change
(in thousands)                 2019            2018            Amount      %         2019            2018            Amount      %
                             (Unaudited)     (Unaudited)                           (Unaudited)     (Unaudited)
Service revenue            $        178    $      1,155    $     (977)    -85%   $        690    $      3,798    $   (3,108)    -82%
Spectrum lease revenue              183             183              -     0%             547             547              -     0%
Other revenue                          -            164          (164)   -100%               -            854          (854)   -100%
Total operating revenues   $        361    $      1,502    $   (1,141)    -76%   $      1,237    $      5,199    $   (3,962)    -76%




Overall operating revenues decreased by $1.1 million, or 76%, to $0.4 million
for the three months ended December 31, 2019 from $1.5 million for the three
months ended December 31, 2018. For the nine months ended December 31, 2019,
operating revenue decreased by $4.0 million, or 76%, to $1.2 million from $5.2
million for the nine months ended December 31, 2018. The decrease in the three
and nine month periods 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 above, as well as the loss of customers in our
pdvConnect business.



Operating expenses




                            Three months ended                                      Nine months ended
                               December 31,              Aggregate Change             December 31,              Aggregate Change
(in thousands)             2019            2018            Amount       %         2019            2018             Amount       %
                         (Unaudited)     (Unaudited)                            (Unaudited)     (Unaudited)
Direct cost of         $        631    $        974    $     (343)     -35%   $      2,248    $      3,599    $     (1,351)    -38%
revenue (exclusive
of depreciation and
amortization)
General and                   4,740           5,216          (476)      -9%         14,145          14,310            (165)     -1%
administrative
Sales and support               949             620           329      53%           2,922           3,110            (188)     -6%
Product development             610             647           (37)      -6%          1,846           1,846                -     0%
Depreciation and              1,135             695           440      63%           2,412           2,140             272     13%
amortization
Stock compensation            1,404           1,459           (55)      -4%          4,393           4,419             (26)     -1%
expense (exclusive
of restructuring
related costs)
Restructuring costs              35             418          (383)     -92%            195           8,540          (8,345)    -98%
Impairment of                    33             200          (167)     -84%             33             730            (697)    -95%
long-lived assets
Total operating
expenses               $      9,537    $     10,229    $     (692)      -7%   $     28,194    $     38,694    $    (10,500)    -27%





Direct cost of revenue. Direct cost of revenue decreased by $0.3 million, or
35%, to $0.6 million for the three months ended December 31, 2019 from $0.9
million for the three months ended December 31, 2018. For the nine months ended
December 31, 2019, direct cost of revenue decreased by $1.4 million, or 38%, to
$2.2 million from $3.6 million for the nine months ended December 31, 2018. The
decrease in the three and nine months ended December 31, 2019 were attributable
to lower costs related to radio sales as a result of the transfer of our
TeamConnect customers to A BEEP and Goosetown as part of our December 2018
restructuring efforts as discussed in Note 3 above.



General and administrative expenses. General and administrative expenses for the
three months ended December 31, 2019 decreased by $0.5 million, or 9%, to $4.7
million from $5.2 million for three months ended December 31, 2018. For the nine
months ended December 31, 2019, general and administrative expenses decreased by
$0.2 million, or 1%, to $14.1 million from $14.3 million for the nine months
ended December 31, 2018. The decrease of $0.5 million for the three months ended
December 31, 2019 resulted mainly from lower professional services. The $0.2
million decrease for the nine months ended December 31, 2019 resulted primarily
from

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$0.1 million lower professional services and $0.6 million lower employee related
costs due to lower headcount resulting from the restructuring activities in
Fiscal 2019, partially offset by $0.5 million increase in costs related to the
monthly service fee for the transfer of our TeamConnect customers.



Sales and support expenses.  Sales and support expenses increased by $0.3
million, or 53%, to $0.9 million for the three months ended December 31, 2019
from $0.6 million for three months ended December 31, 2018. For the nine months
ended December 31, 2019, sales and support expenses decreased by $0.2 million,
or 6%, to $2.9 million from $3.1 million for the nine months ended December 31,
2018. The increase in the three months ended December 31, 2019 was due to higher
salaries and consulting costs due to the realignment of the business. The
decrease in the nine months ended December 31, 2019 was attributable to the
impact of the reduction in workforce that occurred in Fiscal 2019 resulting in
lower headcount and related costs, partially offset by the impairment of
contract costs related to the TeamConnect customers transferred to A BEEP and
Goosetown.



Product development expenses. Product development expenses remained relatively
flat for the three and nine months ended December 31, 2019 as compared to the
three and nine months ended December 31, 2018.



Depreciation and amortization. Depreciation and amortization for the three
months ended December 31, 2019 increased by $0.4 million, or 63% to $1.1 million
from $0.7 million for the three months ended December 31, 2018. For the nine
months ended December 31, 2019, depreciation and amortization increased by $0.3
million, or 13%, to $2.4 million from $2.1 million for the nine months ended
December 31, 2018. During the three months ended December 31, 2019, the Company
adjusted the estimated non-cash capitalized asset retirement obligations and
useful life for its network sites, resulting in additional depreciation expense
of $0.5 million for the three and nine months ended December 31, 2019.



Stock compensation expense (exclusive of restructuring related costs). Stock
compensation expense exclusive of restructuring related costs for the three and
nine months ended December 31, 2019 remained relatively flat as compared to the
three and nine months ended December 31, 2018.



As discussed in Note 11, we have outstanding performance stock units and stock
options that the recipient would receive upon the Company's attainment of the
applicable performance goals, which are: prior to January 13, 2020 (A) 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 Company's board of directors 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. These awards
do not forfeit. The unvested stock compensation expense for these performance
awards was $5.0 million as of December 31, 2019, of which $3.0 million is
related to the performance stock units and $2.0 million is related to the
performance stock options.



Restructuring costs.  Restructuring costs of $35,000 and $195,000 were incurred
in the three and nine months ended December 31, 2019 mainly for employee
severance and benefit costs relating to the December 2018 cost reduction and
restructuring actions related to the transfer of the TeamConnect business and
the support for our pdvConnect business to A BEEP, Goosetown and the LLC.



For the three months ended December 31, 2018, $0.4 million of restructuring
costs was recorded for the cash payments under the consulting and transition
agreements for other key employees. For the nine months ended December 31, 2018,
$8.5 million of the restructuring costs were incurred, as a result of the April,
June and December 2018 announcements of a restructuring plan to shift our focus
and resources to pursue the regulatory initiatives at the FCC and prepare for
the future deployment of broadband and other advanced technologies and services.



Impairment of long-lived assets. The impairment for the three and nine months
ended December 31, 2018 resulted from the carrying value of our TeamConnect
radios not being fully recoverable due to the realigning of our business to
focus on our spectrum initiatives.  For the three and nine months ended December
31, 2019, the $33,000 non-cash impairment charge for long-lived assets consisted
of $22,000 for property and equipment and $11,000 for a right of use asset to
reduce the carrying values to zero.



Interest income




                          Three months ended                                      Nine months ended
                             December 31,              Aggregate Change             December 31,              Aggregate Change
(in thousands)           2019            2018            Amount       %         2019            2018            Amount       %
                       (Unaudited)     (Unaudited)                            (Unaudited)     (Unaudited)
Interest income      $        517    $        393    $      124      32%    $      1,505    $      1,079    $      426      39%




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Interest income increased by 32% and 39% for the three and nine months ended
December 31, 2019, respectively, as compared to the three and nine months ended
December 31, 2018 due to the return on the net proceeds from the July 2019
follow-on offering.



Other income (expenses)




                               Three months ended                                     Nine months ended
                                  December 31,             Aggregate Change             December 31,             Aggregate Change
(in thousands)                2019            2018            Amount      %         2019            2018            Amount      %
                            (Unaudited)     (Unaudited)

(Unaudited) (Unaudited) Other income (expenses) $ 2 $ (16) $ 18 -113% $ 154 $ (16) $ 170 100%






For the three and nine months ended December 31, 2019, other income represents
payments received in consideration for the customers and rights transferred to A
BEEP and Goosetown.

Loss on equity method investment






                           Three months ended                                     Nine months ended
                              December 31,             Aggregate Change             December 31,             Aggregate Change
(in thousands)            2019            2018            Amount      %         2019            2018            Amount      %
                        (Unaudited)     (Unaudited)                           (Unaudited)     (Unaudited)
Loss on equity
method investment     $        (23)   $           -   $      (23)   -100%   $         (8)   $           -   $       (8)   -100%

The loss on investment for the three and nine months ended December 31, 2019 is due to the 19.5% ownership interest in TeamConnect LLC.





Income tax expense




                           Three months ended                                     Nine months ended
                              December 31,             Aggregate Change             December 31,             Aggregate Change
(in thousands)            2019            2018            Amount      %         2019            2018            Amount      %
                        (Unaudited)     (Unaudited)                           (Unaudited)     (Unaudited)
Income tax expense    $        131    $           -   $      131    100%    $        594    $           -   $      594    100%




A non-cash deferred income expense of $0.1 million and $0.6 million was recorded
for the three and nine months ended December 31, 2019, respectively. The state
income tax expense portion resulted from our determination that most of our
state operating loss carryforwards are not indefinite. As a result, we recorded
approximately $56,000 and $467,000 of state deferred tax expense and additional
related state deferred tax liability reflecting our inability to use the state
NOL carryforward against the indefinite-lived intangible for the three and nine
months ended December 31, 2019, respectively. A non-cash federal deferred income
tax expense and liability of $75,000 and $127,000 were recorded for the three
and nine months ended December 31, 2019, respectively.



For the three and nine months ended December 31, 2018, there was no income tax
expense recorded as a result of the U.S. Tax Cuts and Jobs Act, (the "TCJA"),
passed on December 22, 2017. The TCJA provided that federal net operating losses
generated in tax years ending after December 31, 2017 are indefinite lived
deferred tax assets and can be fully offset by our deferred tax liability
related to our indefinite lived intangible assets.

Liquidity and Capital Resources

At December 31, 2019, we had cash and cash equivalents of $150.2 million.





Our accounts receivable are heavily concentrated in one domestic carrier partner
and one reseller. As of December 31, 2019, our net accounts receivable balance
was approximately $83,000, of which approximately $72,000, or approximately 87%,
was owed by these one domestic carrier partner and one reseller.



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Cash Flows from Operating, Investing and Financing Activities






                                                  Nine months ended
                                                    December 31,
(in thousands)                                  2019            2018
                                              (Unaudited)     (Unaudited)

Net cash used by operating activities $ (21,271) $ (16,960) Net cash used by investing activities $ (1,205) $ (1,434) Net cash provided by financing activities $ 95,997 $ 2,425






Net cash used by operating activities. Net cash used in operating activities was
$21.3 million for the three months ended December 31, 2019, as compared to $17.0
million for the nine months ended December 31, 2018. The majority of net cash
used by operating activities during the nine months ended December 31, 2019
resulted from our net loss of $25.9 million offset by non-cash stock-based
compensation of $4.4 million.  The majority of net cash used by operating
activities during the nine months ended December 31, 2018 resulted from the net
loss of $32.4 million, partially offset by non-cash stock-based compensation of
$8.9 million.



Net cash used by investing activities. Net cash used in investing activities was
approximately $1.2 million for the nine months ended December 31, 2019, as
compared to $1.4 million used for the nine months ended December 31, 2018. The
net cash used during the nine months ended December 31, 2019 resulted from
wireless license acquisitions amounting to $0.8 million and purchase of
equipment amounting to $0.4 million. The net cash used during the nine months
ended December 31, 2018 resulted from $0.9 million from wireless license
acquisitions and $0.5 million from the purchase of equipment.



Net cash provided by financing activities. For the nine months ended December
31, 2019, net cash provided by financing activities was $96.0 million primarily
from the $94.2 million net proceeds from the July 2019 follow-on offering and
$2.2 million from the proceeds from stock option exercises. For the nine months
ended December 31, 2018, net cash provided by financing activities was $2.4
million which was principally due to $2.6 million in cash received from the
proceeds from stock option exercises.



Net proceeds from July 2019 follow-on offering. In July 2019, we completed a
registered follow-on offering in which it sold 2,222,223 shares of common stock
at a purchase price to the public of $45.00 per share. Net proceeds were
approximately $94.2 million after deducting $5.5 million in underwriting
discounts and commissions, and $0.3 million in offering expenses.



In January 2019, we announced that we had entered into agreements to transfer
our TeamConnect and pdvConnect businesses. Specifically, the Company entered
into a (i) Customer Acquisition and Resale Agreement with A BEEP LLC ("A BEEP")
on January 2, 2019, (ii) a Customer Acquisition, Resale and Licensing Agreement
with Goosetown Enterprises, Inc. ("Goosetown") on January 2, 2019 and (iii) a
memorandum of understanding with the principals of Goosetown on December 31,
2018. We will continue operating our push-to-talk networks in the markets in
which customers are being transferred and trunked facilities in other markets in
which we hold FCC licenses.  Under the terms of the MOU, we are obligated to pay
the LLC a monthly service fee for a 24-month period ending on January 7, 2021
for its assumption our support obligations under the A BEEP and Goosetown
agreements. We are 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.



We believe our cash and cash equivalents on hand will be sufficient to meet our
financial obligations through at least the next 12 months.  Our future capital
requirements will depend on many factors, including: the timeline and results of
our FCC initiatives; activities related to the commercializing our spectrum
assets and our ability to sign customer contracts; the costs to retune our
spectrum and relocate incumbents to qualify for broadband licenses; the costs of
any additional spectrum we elect to purchase; the costs and ongoing obligations
related to our former TeamConnect and pdvConnect businesses; the revenues we
generate from royalties we may receive from our agreements we entered into with
the buyers of our TeamConnect and our pdvConnect businesses; and our ability to
control our operating expenses.

See "Risk Factors" in this Form 10-Q for 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.

Off-balance sheet arrangements





As of December 31, 2019 and March 31, 2019, we did not have and do not have any
relationships with unconsolidated entities or financial partnerships that were
established for the purpose of facilitating off-balance sheet arrangements, as
defined in the rules and regulations of the SEC.



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