Item 4.02(a) Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On February 1, 2022, the Audit Committee of the Board of Directors (the “Audit Committee”) of Anterix Inc. (the “Company”), after consultation with management on the issue described below, approved management’s recommendation that the Company’s previously issued financial statements for the quarter ended September 30, 2021 (the “Relevant Period”), as filed in the Company’s Quarterly Report on Form 10-Q (“Quarterly Report”) for the quarter ended September 30, 2021 (“Q2 FY 22 Quarterly Report”), with the Securities and Exchange Commission on November 3, 2021, should be restated and should no longer be relied upon.
In connection with the preparation of the Quarterly Report for the quarter ended December 31, 2021, the Company determined that it incorrectly excluded the gain in the value of its intangible assets following the non-monetary exchange of the Company’s narrowband licenses for broadband licenses in August 2021, upon approval of the exchange by the Federal Communications Commission. Upon the exchange, the Company should have recorded the newly received broadband licenses at their estimated accounting cost basis. The difference between the estimated accounting cost basis of these broadband licenses and the carrying value of the narrowband licenses relinquished should have been recognized as a gain of $10.2 million on disposal of intangible assets.
Although the gain on the license exchanges is non-monetary and does not change the Company’s reported operating revenues or reported operating expenses, the Company determined the gain has a material impact on the previously filed financial statements for the Relevant Period. As a result, the Audit Committee concluded that a restatement of the Q2 FY 22 Quarterly Report is required.
The Company has completed its review of the restated financial statements for the quarter ended September 30, 2021, and the Company has filed an Amendment No. 1 to Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2021 (the “Amended Quarterly Report”) on the same date as this Current Report on Form 8-K.
In connection with the restatement, the Company has identified a material weakness in its internal control over financial reporting related to its controls and procedures over the identification, review, analysis and recording of transactions involving its intangible assets, more specifically, non-monetary exchanges of its narrowband licenses for broadband licenses. The Company has developed a plan to remediate this material weakness, which is described in the Amended Quarterly Report.
The Audit Committee has discussed with the registrant’s independent auditors the matters disclosed in this Item 4.02(a) filing.