Anterix Inc.: Form 10-Q for the period ended Dec 31, 2023

This discussion and analysis of the financial condition and results of operations of Anterix Inc. (“Anterix,” the “Company”, “we”, “us”, or “our”) should be read in conjunction with our financial statements and notes thereto included in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on June 14, 2023 (the “2023 Annual Report”). In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those identified or referenced in “Item 1A—Risk Factors” in Part II of this Quarterly Report. As a result, investors are urged not to place undue reliance on any forward-looking statements. Except 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 Quarterly Report.

Overview

We are a wireless communications company focused on commercializing our spectrum assets to enable our targeted utility and critical infrastructure customers to deploy private broadband networks and on offering innovative broadband solutions to the same target customers. 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 monetize the broadband spectrum we secure to our targeted utility and critical infrastructure customers. We are also expanding the benefits and solutions we offer to the same targeted customers. As part of our solution expansion, we launched an integrated platform to accelerate the scale benefits of combining, or networking together, individual private broadband networks to enhance utilities’ resiliency, reach and collaboration. The first commercial service on the platform, CatalyX, includes public network roaming management solution along with secure, remote SIM provisioning. CatalyX is a turnkey connectivity management solution that helps utilities gain economic and operational benefits leveraging commercial broadband during their transition to private LTE (“PLTE”) networks, extending coverage into gap areas or providing back-up connectivity for private networks. We have successfully led and completed initiatives in 3GPP to secure enhancements to the US 900 MHz spectrum to benefit our customers, including the designation of a new band, both for LTE and 5G, as well as a transition to 5G, which received worldwide wireless industry support.

Refer to our 2023 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

TECO Agreement

On November 22, 2023, we entered into an agreement with Tampa Electric Company (“TECO”) to provide TECO the use of our 900 MHz Broadband Spectrum for a term of 20 years throughout TECO’s service territory in West Central Florida (the “TECO Agreement”). The TECO Agreement also provides TECO an option to extend the agreement for two 10-year terms for additional payments. The TECO Agreement, which covers an approximately 2,000-square-mile service territory in West Central Florida, is expected to enable TECO to deploy a PLTE network providing critical broadband communications capabilities in support of its initiatives. The scheduled prepayments for the 20-year initial term of the TECO Agreement total $34.5 million, of which $6.9 million was received in December 2023. See Note 2 Revenue in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion on the TECO Agreement.

LCRA Agreement

In April 2023, we entered into an agreement with 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. The new licenses will enable LCRA to move from narrowband to next generation broadband and provide mission-critical data and voice services within LCRA and to more than 100 external customers such as electric cooperatives, schools and transit authorities across more than 73,000 square miles. Total consideration of $30.0 million is to be paid through fiscal year 2026 pursuant to the terms of the LCRA Agreement. During the quarter ended December 31, 2023, we received an initial $15.0 million payment, of which $7.5 million was deposited in an escrow account (refer to Note 3 Escrow Deposits in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion). See Note 10 Contingencies and Guaranty in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion on the LCRA Agreement.

Xcel Energy Agreement

In October 2022, we entered into an agreement with Xcel Energy Services Inc. (“Xcel Energy”) providing Xcel Energy dedicated long-term usage of our 900 MHz Broadband Spectrum for a term of 20 years throughout Xcel Energy’s service territory in eight states (the “Xcel Energy Agreement”) for a total of $80.0 million, of which $8.0 million was received in December 2022. In July 2023 and November 2023, we delivered the cleared 900 MHz Broadband Spectrum and the associated broadband licenses and received the full milestone payments of $21.2 million in each period. The revenue recognized for the three and nine months ended December 31, 2023, was approximately $0.7 million and $1.1 million, respectively.

During the quarter ended December 31, 2023, we cleared 900 MHz Broadband Spectrum in 10 additional counties in Xcel Energy’s service territory and applied for the associated broadband licenses. As a result, we received an advanced payment of $16.8 million in January 2024.

SDG&E Agreement

In February 2021, we entered into an agreement with San Diego Gas & Electric Company, a subsidiary of Sempra Energy (“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 total payment of $50.0 million is comprised of an initial payment of $20.0 million received in February 2021 and the remaining payments which are due as we deliver the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses to SDG&E. During the quarter ended September 30, 2023, we transferred to SDG&E the San Diego County broadband license and received a milestone payment net of delivery delay adjustments of $25.2 million. During the quarter ended December 31, 2023, we transferred to SDG&E the remainder of the cleared 900 MHz Broadband Spectrum and the associated broadband license related to Imperial County and received a milestone payment of $0.2 million. Refer to Note 4 Intangible Assets in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion on the sale of intangible assets.

2023 Stock Plan

On August 8, 2023, we adopted a new equity-based compensation plan known as the Anterix Inc. 2023 Stock Plan (the “2023 Stock Plan”). The 2023 Stock Plan permits us to grant equity compensation awards to employees, consultants and non-employee directors of the Company. Refer to Note 8 Stockholders’ Equity in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion.

2023 Share Repurchase Program

On September 21, 2023, our Board of Directors (“Board”) authorized a new share repurchase program (the “2023 Share Repurchase Program”) pursuant to which we may repurchase up to $250.0 million of our common stock on or before September 21, 2026. Refer to Note 8 Stockholders’ Equity in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion.

Results of Operations

Comparison of the three and nine months ended December 31, 2023 and 2022

The following tables set forth our results of operations for the three and nine months ended December 31, 2023 and 2022. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.

Spectrum revenues

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Spectrum revenues increased by $0.7 million, or 120%, to $1.3 million for the three months ended December 31, 2023 from $0.6 million for the three months ended December 31, 2022. The increase for the three months ended December 31, 2023 of $0.7 million, was attributable to revenue recognized in connection with our agreement with Xcel Energy of approximately $0.7 million. Spectrum revenues increased by $1.6 million, or 124%, to $2.9 million for the nine months ended December 31, 2023 from $1.3 million for the nine months ended December 31, 2022. The increase for the nine months ended December 31, 2023 of $1.6 million, was attributable to revenue recognized in connection with our agreements with Evergy and Xcel Energy of approximately $0.5 million and $1.1 million, respectively.

Operating expenses

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

General and administrative expenses

General and administrative expenses decreased by $0.8 million, or -7%, to $11.3 million for the three months ended December 31, 2023 from $12.1 million for the three months ended December 31, 2022. The decrease for the three months ended December 31, 2023 of $0.8 million primarily resulted from $0.6 million lower stock compensation expense due to fewer grants awarded. General and administrative expenses for the nine months ended December 31, 2023 remained relatively flat as compared to the nine months ended December 31, 2022.

Sales and support expenses

Sales and support expenses for the three months ended December 31, 2023 remained relatively flat as compared for the three months ended December 31, 2022. Sales and support expenses increased by $0.2 million, or 5%, to $4.0 million for the nine months ended December 31, 2023 from $3.8 million for nine months ended December 31, 2022. The increase for the nine months ended December 31, 2023 of $0.2 million primarily resulted from $0.2 million higher headcount and related costs.

Product development expenses

Product development expenses increased by $0.3 million, or 32%, to $1.2 million for the three months ended December 31, 2023 from $0.9 million for three months ended December 31, 2022. The increase for the three months ended December 31, 2023 of $0.3 million primarily resulted from $0.4 million higher consulting costs, $0.2 million higher headcount and related costs, partially offset by $0.2 million lower IT related costs, and $0.1 million lower stock compensation expense due to fewer grants. Product development expenses increased by $0.4 million, or 15%, to $3.5 million for the nine months ended December 31, 2023 from $3.0 million for nine months ended December 31, 2022. The increase for the nine months ended December 31, 2023 of $0.4 million primarily resulted from $0.4 million higher headcount and related costs, $0.1 million higher IT related costs, $0.1 million higher professional services, partially offset by $0.2 million lower stock compensation expense due to fewer grants.

Depreciation and amortization

Depreciation and amortization decreased by $0.2 million, or -47%, to $0.2 million for the three months ended December 31, 2023 from $0.4 million for three months ended December 31, 2022. Depreciation and amortization decreased by $0.5 million, or -41%, to $0.7 million for the nine months ended December 31, 2023 from $1.1 million for nine months ended December 31, 2022. The decreases were as a result of certain assets becoming fully depreciated during the current period compared to the prior period.

Gain on disposal of intangible assets, net

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

During the three months ended December 31, 2023, we exchanged our narrowband licenses for broadband licenses in 10 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $17.1 million for the new broadband licenses and relinquished to the FCC narrowband licenses for those same 10 counties valued at $3.4 million. As a result, we recorded a $13.7 million non-monetary gain on disposal of the intangible assets on our Consolidated Statements of Operations for the three months ended December 31, 2023. During the nine months ended December 31, 2023, we exchanged our narrowband licenses for broadband licenses in 24 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $41.3 million for the new broadband licenses and relinquished to the FCC narrowband licenses for those same 24 counties valued at $8.2 million. As a result, we recorded a $33.0 million non-monetary gain on disposal of the intangible assets on our Consolidated Statements of Operations for the nine months ended December 31, 2023.

During the three months ended December 31, 2022, we exchanged our narrowband licenses for broadband licenses in 25 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $8.2 million for the new broadband licenses and relinquished to the FCC narrowband licenses for those same 25 counties valued at $2.4 million. As a result, we recorded a $5.8 million non-monetary gain on disposal of the intangible assets on our Consolidated Statements of Operations for the three ended December 31, 2022. During the nine months ended December 31, 2022, we exchanged our narrowband licenses for broadband licenses in 70 counties. In connection with the exchange, we recorded an estimated accounting cost basis of $13.1 million for the new broadband licenses and relinquished to the FCC narrowband licenses for those same 70 counties valued at $3.8 million. As a result, we recorded a $9.3 million non-monetary gain on disposal of the intangible assets on our Consolidated Statements of Operations for the nine months ended December 31, 2022. Refer to Note 4 Intangibles Assets in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion on the exchanges.

Gain on sale of intangible assets, net

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

During the three months ended December 31, 2023, we transferred to SDG&E the Imperial County broadband license. As a result, we recorded a $32 thousand gain on sale of intangible assets on our Consolidated Statements of Operations for the three months ended December 31, 2023. In addition, during the nine months ended December 31, 2023, we transferred to SDG&E the San Diego County broadband license and recorded a cumulative $7.4 million gain on sale of intangible assets on our Consolidated Statements of Operations for the nine months ended December 31, 2023. As part of the SDG&E Agreement, SDG&E has an option to pursue additional spectrum with us. In accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, we recorded a cumulative $4.9 million deferred gain on sale of intangible assets on our Consolidated Balance Sheets as of December 31, 2023, related to this option, which expires within 5 years of each delivery date. Refer to Note 4 Intangible Assets in the Notes to the Unaudited Consolidated Financial Statements contained within this Quarterly Report for further discussion on the sale of intangible assets.

Loss (gain) on disposal of long-lived assets, net

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Loss (gain) on disposal of long-lived assets, net increased by $24 thousand, or -115%, to $3 thousand for the three months ended December 31, 2023 from $21 thousand for three months ended December 31, 2022. Loss (gain) on disposal of long-lived assets, net increased by $38 thousand, or 3839%, to $39 thousand for the nine months ended December 31, 2023 from $1 thousand for nine months ended December 31, 2022.

Interest income

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Interest income increased by $0.3 million, or 63%, to $0.7 million for the three months ended December 31, 2023 from $0.4 million for three months ended December 31, 2022. Interest income increased by $0.8 million, or 116%, to $1.4 million for the nine months ended December 31, 2023 from $0.7 million for nine months ended December 31, 2022. The increase for both the three and nine months ended December 31, 2023 and 2022 was attributable to higher interest rates and higher cash balance.

Other income

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Other income decreased by $0.2 million, or -83%, to $31 thousand for the three months ended December 31, 2023 from $0.2 million for three months ended December 31, 2022. Other income (expense) decreased by $43 thousand, or -19%, to $0.2 million for the nine months ended December 31, 2023 from $0.2 million for nine months ended December 31, 2022.

Income tax expense

(in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Income tax expense increased by $1.1 million, or 537%, to $1.3 million for the three months ended December 31, 2023 from $0.2 million for three months ended December 31, 2022. Income tax expense increased by $1.1 million, or 179%, to $1.7 million for the nine months ended December 31, 2023 from $0.6 million for nine months ended December 31, 2022. The change in income tax expense is a result of our inability to use some portion of federal and state NOL carryforwards against the deferred tax liability created by amortization of indefinite-lived intangible assets and the change in the state effective tax rate.

Liquidity and Capital Resources

Our principal source of liquidity is our cash and cash equivalents generated from customer contract proceeds. At December 31, 2023, we had cash and cash equivalents of $62.0 million.

We believe our cash and cash equivalents on hand, along with contracted proceeds from customers, will be sufficient to meet our financial obligations through at least 12 months from the date of this Quarterly Report. As noted above, our future capital requirements will depend on a number of factors, including among others, future customer contracts, the costs and timing of our spectrum retuning activities, spectrum acquisitions and the Anti-Windfall Payments to the U.S. Treasury, our operating activities, any cash proceeds we generate through our commercialization activities, our ability to timely deliver broadband licenses to our customers in accordance with our contractual obligations and our obligation to refund payments or pay penalties if we do not meet our commercial obligations. We deploy this capital at our determined pace based on several key ongoing factors, including customer demand, market opportunity, and offsetting income from spectrum leases. We cannot reasonably estimate any potential financial impact to our results of operations, commercialization efforts and financial condition of any potential future changes to our macroeconomic, legal or regulatory environment, including potential legislation affecting the energy or utility industry, the telecommunications environment, or supply chains. 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 II of this Quarterly Report for a reference to the risks and uncertainties that could cause our costs to be more than we currently anticipate and/or our revenue and operating results to be lower than we currently anticipate. If required, we intend to raise additional capital through debt or equity financing or through some other financing arrangement. However, we cannot be sure that additional financing will be available if and when needed, or that, if available, we can obtain financing on terms favorable to our stockholders and to us. Any failure to obtain financing when required will have a material adverse effect on our business, operating results, financial condition and liquidity.

Cash Flows from Operating, Investing and Financing Activities

(in thousands)

(Unaudited)

(Unaudited)

Net cash provided by (used in) operating activities.

Our principal source of cash provided by operating activities is our customer contract proceeds in the form of advanced payments. For spectrum lease agreements, we record these advanced payments as deferred revenue on our Consolidated Balance Sheets and recognize revenue over the term of the lease, which is typically 20 to 30 years. For spectrum sale agreements, we record advanced payments as a contingent liability on our Consolidated Balance Sheets and derecognize this liability upon closing of the sale along with recording a gain or loss on sale. In addition, our cash flows will reflect a non-cash gain or loss on disposal of intangible assets for the difference in cost basis as we exchange narrowband licenses for broadband licenses. We expect net cash provided by (used in) operating activities to be affected by the progress on our customer agreements as well as changes in other operating assets and liabilities. The following represents our changes in net cash provided by (used in) operating activities for the nine months ended December 31, 2023 and 2022.

Net cash provided by operating activities was approximately $35.9 million in the nine months ended December 31, 2023. The net cash provided by operating activities in the nine months ended December 31, 2023 was primarily due to the following:

• $0.3 million net income, offset by the following non-cash activity:
• increase of $0.7 million for depreciation and amortization as a result of assets placed in service during the year;
• increase of $12.0 million in stock-based compensation expense due to additional grants awarded; and
• decrease of $33.0 million related to the non-monetary gain on disposal of intangible assets in connection with our exchange of narrowband licenses for broadband licenses;
• decrease of $7.4 million related to the gain on sale of intangible assets in connection with our delivery of the agreed upon 900 MHz Broadband Spectrum;
• $15.0 million increase in contingent liability related to the LCRA Agreement;
• $46.3 million increase in deferred revenue due to $49.2 million cash proceeds from our 900 MHz Broadband Spectrum customer prepayments offset by $2.9 million in revenue recognition in connection with the delivery of cleared 900 MHz Broadband Spectrum.

Net cash used in operating activities was approximately $18.7 million in the nine months ended December 31, 2022. The net cash used in operating activities in the nine months ended December 31, 2022 was primarily due to the following:

• $31.9 million net loss, offset by the following non-cash activity:
• increase of $1.1 million for depreciation and amortization as a result of assets placed in service during the year;
• increase of $13.4 million in stock-based compensation expense due to additional grants awarded;
• decrease of $9.3 million related to the non-monetary gain on disposal of intangible assets in connection with our exchange of narrowband licenses for broadband licenses;
• $0.2 million increase in contingent liability related to the SDG&E Agreement
• $6.7 million increase in deferred revenue due to $8.0 million cash proceeds from our 900 MHz Broadband Spectrum customer prepayments offset by $1.3 million in revenue recognition in connection with the delivery of cleared 900 MHz Broadband Spectrum.

Net cash provided by (used in) investing activities.

Our principal outflow of cash used in investing activities is our purchases of intangible assets, including refundable deposits, which represent our spectrum clearing efforts as we work toward the conversion from narrowband to broadband spectrum. The purchases of intangible assets may be offset by current period cash proceeds from the sale of intangible assets, with a potential non-cash derecognition of the contingent liability for any proceeds received and recognized in operating activities in a prior period. We expect net cash provided by (used in) investing activities to be affected by the timing of our spectrum clearing efforts and the closing of our sale transactions and the related transfer of broadband licenses. The following represents our changes in net cash provided by (used in) investing activities for the nine months ended December 31, 2023 and 2022.

Net cash provided by investing activities was $10.4 million for the nine months ended December 31, 2023, as compared to net cash used in investing activities of $20.6 million for the nine months ended December 31, 2022. For the nine months ended December 31, 2023, net cash provided by investing activities was primarily from the $25.4 million sale of spectrum related to our transfer of the San Diego County and Imperial County broadband license to SDG&E partially offset by payments made to acquire, swap or retune wireless licenses in markets across the United States. For the nine months ended December 31, 2022, net cash used in investing activities was primarily from payments made to acquire, swap or retune wireless licenses in markets across the United States.

Net cash used in financing activities.

Our principal outflow of cash used in financing activities is a result of our equity transactions, including repurchases of common stock and taxes and fees associated with the issuance of restricted stock awards, offset by proceeds from stock options exercised in the period. We expect net cash used in financing activities to be affected by the timing of future equity transactions including the timing of our repurchases of common stock. The following represents our changes in net cash used in financing activities for the nine months ended December 31, 2023 and 2022.

Net cash used in financing activities was $19.8 million for the nine months ended December 31, 2023, as compared to $8.8 million for the nine months ended December 31, 2022. For the nine months ended December 31, 2023, net cash used in financing activities was primarily from the repurchase of common stock of $18.7 million, payments of withholding tax on net issuance of restricted stock of $1.1 million. For the nine months ended December 31, 2022, net cash used in financing activities was primarily from the repurchase of common stock of $8.2 million, payments of withholding tax on net issuance of restricted stock of $1.5 million, partially offset by the proceeds from stock option exercises of $0.9 million.

Material Cash Requirements

Our future capital requirements will depend on many factors, including: costs and time related to the commercialization 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; our ability to timely deliver broadband licenses and clear spectrum to our customers in accordance with our contractual obligation; any requirement to refund payments or pay penalties if we do not satisfy our contractual obligations; 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 900 MHz site-based licensees in the broadband segment that is required under section 90.621(b) to be protected by a broadband licensee with a base station at any location within the county, or any 900 MHz geographic-based SMR licensee in the broadband segment whose license area completely or partially overlaps the county, and the costs of paying Anti-Windfall Payments to the U.S. Treasury.

We are obligated under certain lease agreements for office space with lease terms expiring on various dates from October 31, 2024 through January 31, 2029, 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 historical TeamConnect business and in connection with obtaining spectrum licenses. The lease expiration dates range from February 29, 2024 to December 18, 2030. Total estimated payments for these lease agreements are approximately $6.4 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 $0.6 million.

Xcel Energy Guaranty

In October 2022, we entered into an agreement with Xcel Energy providing Xcel Energy dedicated long-term usage of our 900 MHz Broadband Spectrum for a term of 20 years throughout Xcel Energy’s service territory in eight states the Xcel Energy Agreement. In connection with Xcel Energy Agreement, we entered into a guaranty agreement, under which we 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, we are required to refund payments we have received. In addition, to the extent Anterix has performed any obligations, our liability and remaining obligations under the Xcel Energy Agreement will extend only to the remaining unperformed obligations. We recorded $50.3 million in deferred revenue in connection with the prepayments received as of December 31, 2023. We commenced delivery of the relevant cleared 900 MHz Broadband Spectrum and the associated broadband licenses in the first quarter of fiscal year 2024 and will continue through 2029. The revenue recognized for the three and nine months ended December 31, 2023, was approximately $0.7 million and $1.1 million, respectively. As of December 31, 2023, the maximum potential liability of future undiscounted payments under this agreement is approximately $49.2 million.

Share Repurchase Program

In September 2021, our Board authorized a share repurchase program (the “2021 Share Repurchase Program”) pursuant to which we may repurchase up to $50.0 million of our common stock on or before September 29, 2023. We repurchased and subsequently retired a total of $33.9 million of our common stock under the 2021 Share Repurchase Program, including $10.7 million during fiscal year 2024. On September 21, 2023, our Board authorized the new 2023 Share Repurchase Program pursuant to which we may repurchase up to $250.0 million of our common stock on or before September 21, 2026. The Company repurchased and subsequently retired a total of $8.0 million of the Company’s common stock under the 2023 Share Repurchase Program during fiscal year 2024. We may repurchase shares of our common stock via the open market and/or privately negotiated transactions. Repurchases will be made in accordance with applicable securities laws and may be effected pursuant to Rule 10b5-1 trading plans. The manner, timing and amount of any share repurchases will be determined by us based on a variety of factors, including proceeds from customer contracts, the timing of which is unpredictable, as well as general business and market conditions, our capital position, and other strategic considerations. The 2023 Share Repurchase Program does not obligate us to repurchase any particular amount of our common stock.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. Excise tax accrued for the three and nine months ended December 31, 2023 was approximately $74 thousand and $118 thousand, respectively.

The following table presents the share repurchase activity for the three and nine months ended December 31, 2023 and 2022 (in thousands, except per share data):

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

As of December 31, 2023, $242.0 million is remaining under the share repurchase program.

Off-balance sheet arrangements

As of December 31, 2023 and March 31, 2023, 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.

Interest Rate Risk

Our financial instruments consist of cash, cash equivalents, trade accounts receivable and accounts payable. We consider investments in highly liquid instruments purchased with original maturities of 90 days or less to be cash equivalents. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the highly liquid instruments in our portfolio, a 10% change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operations.

Foreign Currency Exchange Rate Fluctuations

Our operations are based in the United States and, accordingly, all of our transactions are denominated in U.S. dollars. We are currently not exposed to market risk from changes in foreign currency.

Inflation Risk

Inflationary factors may adversely affect our operating results. As a result of recent increases in inflation, certain of our operating expenses have increased. Additionally, although difficult to quantify, we believe that the current macroeconomic environment, including inflation, could have an adverse effect on our target customers’ businesses, which may harm our commercialization efforts and negatively impact our revenues. Continued periods of high inflation could have a material adverse effect on our business, operating results and financial condition if we are not able to control our operating costs or if our commercialization efforts are slowed or negatively impacted, continued periods of high inflation could have a material adverse effect on our business, operating results and financial condition.

We continue to monitor our market risk exposure, including any adverse impacts related to health pandemics or the current macroeconomic environment, which has resulted in significant market volatility.

Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our President and Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of the end of such period.

Changes in Internal Control over Financial Reporting

In connection with the evaluation required by Exchange Act Rule 13a-15(d), our management, including our President and Chief Executive Officer and our Chief Financial Officer, concluded that no changes in our internal control over financial reporting occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our President and Chief Executive Officer and our Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints and that the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to 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.

In evaluating us and our common stock, we urge you to carefully consider the risks and other information in this Quarterly Report as well as the risk factors disclosed in our 2023 Annual Report. There have been no material changes from the risk factors as previously disclosed in our 2023 Annual Report. Any of the risks discussed in this Quarterly Report, if any, and in our 2023 Annual Report, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations or financial condition.