Business context and reporting period
This is pdvWireless, Inc.’s unaudited Form 10-Q for the quarter and nine months ended December 31, 2016, in its fiscal year ending March 31. The company operates DispatchPlus push-to-talk networks in seven U.S. markets, sells communications applications, and is pursuing spectrum initiatives. The filing identifies the registrant as pdvWireless, Inc.; the request metadata names Anterix Inc., a discrepancy to verify.
Financial performance and liquidity
| Metric | Three months ended Dec. 31, 2016 | Three months ended Dec. 31, 2015 | Nine months ended Dec. 31, 2016 | Nine months ended Dec. 31, 2015 |
|---|---|---|---|---|
| Revenue | $1.34 million | $0.94 million | $3.52 million | $2.59 million |
| Gross profit (loss) | $(0.50) million | $0.03 million | $(1.57) million | $0.82 million |
| Gross margin | (37.2%) | 3.6% | (44.5%) | 31.7% |
| Operating expenses | $6.81 million | $5.30 million | $23.66 million | $15.95 million |
| Net loss | $(7.29) million | $(5.24) million | $(25.17) million | $(15.05) million |
| Net loss per share | $(0.51) | $(0.36) | $(1.75) | $(1.07) |
At December 31, cash and cash equivalents were $130.7 million, down from $153.5 million at March 31, 2016. Nine-month operating cash use was $20.6 million and investing cash use was $2.2 million; there were no financing cash flows in the period. The company reported approximately $0.992 million of promissory-note borrowings, bearing 0.55% interest, with about $0.495 million current. Current liabilities were $5.1 million. Non-cancelable office and tower lease payments totaled $10.9 million. Management stated cash on hand should cover obligations for at least the next 12 months, while warning that additional capital could be needed.
Material changes versus the prior comparable periods
- Revenue grew 42% for the quarter and 36% for the nine-month period, primarily from DispatchPlus; the business had not yet produced significant revenue, according to management.
- Cost of revenue rose faster than sales, mainly from costs to maintain the launched PTT networks, pushing gross profit into a loss in both 2016 comparison periods.
- Nine-month operating expenses increased 48%, including higher general and administrative, sales and support, and product-development costs. Management attributed much of the G&A increase to spectrum-related consulting, including FirstNet bid costs.
- Net losses increased in both periods. Operating cash use rose from $14.7 million to $20.6 million year over year; investing cash use declined from $9.3 million to $2.2 million.
Outlook, commentary, risks and contingencies
- Management said DispatchPlus sales ramped more slowly than initially expected, citing indirect dealer performance, longer sales cycles, and coverage gaps. It is testing sales and marketing approaches in the existing seven markets and preparing for possible expansion to more than 13 additional markets.
- The FCC had not decided on the company’s 900 MHz spectrum petition. Management considered a Notice of Inquiry the most likely next step, but said timing and outcome were uncertain and could require significant time and resources. A favorable result is not assured.
- The company was notified on October 17, 2016 that its FirstNet proposal was no longer under consideration for the award.
- Two domestic carrier partners represented approximately 48% of quarterly revenue and 72% of accounts receivable at December 31, 2016, creating customer and collection concentration exposure.
- The company reported no material legal proceedings and no material changes to previously disclosed risk factors. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
- A $100 million shelf registration statement was effective, providing potential access to equity or debt financing; no financing was raised under it during the reported period. No formal revenue or earnings guidance was provided.
Important facts for investors to verify
- Confirm the issuer identity: the supplied metadata says Anterix Inc., while this filing names pdvWireless, Inc.
- Reconcile reported share counts: the cover, balance sheet, and stockholders’ equity table show differing outstanding-share figures.
- Track DispatchPlus revenue growth, network costs, sales execution, and progress toward gross-margin improvement.
- Monitor cash burn, the stated 12-month liquidity outlook, and any use of the shelf registration statement.
- Follow FCC action on the 900 MHz petition and assess the implications of FirstNet’s rejection and customer concentration.