Business context and reporting period
The supplied filing is Pacific DataVision, Inc.’s Form 10-Q for the quarter ended June 30, 2015, not a filing under the name Anterix Inc. The company said it would conduct business as pdvWireless. It develops workforce communications and location solutions and was building a 900 MHz push-to-talk network, following its 2014 acquisition of spectrum assets from Sprint. It launched service in Houston in June 2015, with sites also in service in Dallas, Atlanta, and Philadelphia.
Financial results and position
| Metric | Three months ended June 30, 2015 | Comparable 2014 period |
|---|---|---|
| Operating revenue | $840,860 | $831,138 |
| Gross profit | $465,686; 55.4% gross margin | $547,208; 65.8% gross margin |
| Operating expenses | $4,838,978 | $2,941,490 |
| Operating loss | $(4,373,292) | $(2,394,282) |
| Net loss | $(4,351,072); $(0.32) per share | $(2,587,563); $(0.92) per share |
| Operating cash flow | $(7,413,960) | $780,434 |
| Investing cash flow | $(1,400,490) | $(195,923,321) |
| Financing cash flow | $64,792,220 | $202,048,249 |
At June 30, 2015, cash and cash equivalents were $175.9 million, total assets $285.3 million, and total liabilities $9.3 million. Current assets were $177.0 million against current liabilities of $3.1 million. The balance sheet reported no debt; the company said affiliated debt had been settled in September 2014. Deferred revenue totaled $6.9 million, including the remaining balance associated with Motorola’s prepaid spectrum lease.
Material changes versus the prior period
- Total revenue was nearly flat, but service revenue fell 22% to $648,662, which management attributed to higher customer churn. Spectrum lease revenue of $182,186 and other revenue of $10,012 partly offset the decline.
- Gross profit declined 14.9%, as costs rose with DispatchPlus staffing and network-site support. General and administrative expense increased 53.6%, sales and support expense increased 178.3%, and product development expense increased 34.5%, primarily reflecting investment in the new business and public-company costs.
- Net loss widened, while loss per share was lower than in 2014; weighted-average shares increased to 13.5 million from 2.8 million, reflecting the larger share base.
- Operating cash use rose to $7.4 million, including a $4.1 million decline in accounts payable and accrued expenses. Cash increased by $56.0 million, mainly due to the May 2015 follow-on offering, which generated $64.8 million net proceeds from 1.725 million shares sold at $40 per share.
Outlook, risks, and unusual items
- Management expected DispatchPlus to become the principal operating business and anticipated revenue from it to commence in fiscal 2016; it had not yet generated significant DispatchPlus revenue by quarter-end.
- The company planned deployment in 20 metropolitan areas and estimated total capital costs, including amounts already spent, of $30 million to $40 million. It stated cash on hand was sufficient to meet obligations for at least the next 12 months, but warned that higher-than-expected cash use or slower/lower revenue could require additional financing.
- Offering proceeds were intended to support spectrum initiatives, including acquiring additional FCC licenses and a joint petition to repurpose part of the 900 MHz band from narrowband to broadband. Certain license purchase or exchange agreements were contingent on FCC approval; committed costs were $235,000. No definitive transaction agreements were reported.
- Two carriers accounted for 56% and 30% of service revenue, and 69% and 22% of accounts receivable, respectively. Management cited no material change to previously disclosed risk factors. It reported no material legal proceedings and no material subsequent events.
- Management said disclosure controls were effective. The filing also noted remediation efforts for a previously disclosed significant deficiency involving weighted-average share and loss-per-share calculations.
Important facts for investors to verify
- Confirm the issuer identity and filing period: the source document names Pacific DataVision, Inc. and covers the quarter ended June 30, 2015.
- Track customer churn, service revenue, and the timing and scale of DispatchPlus commercialization.
- Compare actual network buildout spending and operating cash burn with the $30 million–$40 million deployment estimate and management’s liquidity outlook.
- Monitor FCC decisions and the status, costs, and financing of planned spectrum acquisitions and repurposing initiatives.
- Assess carrier concentration, equity dilution, and the reported control-deficiency remediation.