UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, ~~2021~~2022


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-32358


SPOK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)


Delaware						16-1694797
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


5911 Kingstown Village Pkwy, 6th Floor
Alexandria,	Virginia	22315
(Address of principal executive offices)		(Zip Code)

(800) 611-8488

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	SPOK	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~19,385,155~~19,693,657 shares of the registrant’s common stock (par value $0.0001 per share) were outstanding as of April ~~23, 2021.~~22, 2022.

SPOK HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX


			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of March 31, ~~2021,~~2022, (Unaudited) and December 31, ~~2020~~2021	2
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, ~~2021, an~~d ~~2020~~2022, and 2021 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31,~~, 202~~1, 2022, and 20 20 2021 (Unaudited)	4
		Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, ~~2021,~~2022, and ~~2020~~2021 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 202 2 , ~~202~~1,and 20 20 2021 (Unaudited)	6
		Unaudited Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1718
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2932
	Item 4.	Controls and Procedures	2932
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	3033
	Item 1A.	Risk Factors	3033
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3033
	Item 6.	Exhibits	3134
Signatures

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
							(Unaudited)

ASSETS	ASSETS	(Unaudited)				ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	41,646	$	48,729	Cash and cash equivalents	$	31,350	$	44,583
Short-term investments	Short-term investments	29,996		29,995		Short-term investments	14,978		14,999
Accounts receivable, net	Accounts receivable, net	28,675		29,934		Accounts receivable, net	23,373		26,908
Prepaid expenses	Prepaid expenses	8,284		8,958		Prepaid expenses	8,095		6,641
Other current assets	Other current assets	1,681		1,269		Other current assets	878		922
Total current assets	Total current assets	110,282		118,885		Total current assets	78,674		94,053
Non-current assets:	Non-current assets:					Non-current assets:
Property and equipment, net	Property and equipment, net	7,421		7,815		Property and equipment, net	6,642		6,746
Operating lease right-of-use assets	Operating lease right-of-use assets	17,636		14,016		Operating lease right-of-use assets	14,993		15,821
Capitalized software development, net		12,064		10,179
Goodwill	Goodwill	99,175		99,175		Goodwill	99,175		99,175
Intangible assets, net		0		417

Deferred income tax assets, net	Deferred income tax assets, net	25,223		25,826		Deferred income tax assets, net	32,684		31,653
Other non-current assets	Other non-current assets	875		978		Other non-current assets	707		706
Total non-current assets	Total non-current assets	162,394		158,406		Total non-current assets	154,201		154,101
Total assets	Total assets	$	272,676	$	277,291	Total assets	$	232,875	$	248,154

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	4,451	$	6,685	Accounts payable	$	3,863	$	5,292
Accrued compensation and benefits	Accrued compensation and benefits	13,084		14,103		Accrued compensation and benefits	15,769		13,948
Deferred revenue	Deferred revenue	26,743		27,686		Deferred revenue	24,223		25,608
Operating lease liabilities	Operating lease liabilities	6,037		5,264		Operating lease liabilities	5,112		5,405
Other current liabilities	Other current liabilities	3,923		3,702		Other current liabilities	5,147		4,745
Total current liabilities	Total current liabilities	54,238		57,440		Total current liabilities	54,114		54,998
Non-current liabilities:	Non-current liabilities:					Non-current liabilities:
Asset retirement obligations	Asset retirement obligations	7,402		7,289		Asset retirement obligations	6,372		6,355
Operating lease liabilities	Operating lease liabilities	12,640		9,456		Operating lease liabilities	11,256		11,883
Other non-current liabilities	Other non-current liabilities	1,824		2,493		Other non-current liabilities	1,238		1,227
Total non-current liabilities	Total non-current liabilities	21,866		19,238		Total non-current liabilities	18,866		19,465
Total liabilities	Total liabilities	76,104		76,678		Total liabilities	72,980		74,463
Commitments and contingencies (Note 12)		0		0
Commitments and contingencies (Note 13)						Commitments and contingencies (Note 13)	0		0
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock	Preferred stock	$	0	$	0	Preferred stock	$	—	$	—
Common stock	Common stock	2		2		Common stock	2		2
Additional paid-in capital	Additional paid-in capital	92,575		91,780		Additional paid-in capital	97,197		97,291
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,438)		(1,452)		Accumulated other comprehensive loss	(1,563)		(1,588)
Retained earnings	Retained earnings	105,433		110,283		Retained earnings	64,259		77,986
Total stockholders’ equity	Total stockholders’ equity	196,572		200,613		Total stockholders’ equity	159,895		173,691
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	272,676	$	277,291	Total liabilities and stockholders' equity	$	232,875	$	248,154

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(Unaudited and in thousands except share and per share amounts)	(Unaudited and in thousands except share and per share amounts)	2021		2020			(Unaudited and in thousands except share and per share amounts)	2022		2021

Revenue:	Revenue:						Revenue:
Wireless		$	20,120	$	21,386
Software		15,916		15,881
Wireless revenue							Wireless revenue	$	18,846	$	20,120
Software revenue							Software revenue	14,979		15,916
Total revenue	Total revenue	36,036		37,267			Total revenue	33,825		36,036
Operating expenses:	Operating expenses:						Operating expenses:
Cost of revenue (exclusive of items shown separately below)	Cost of revenue (exclusive of items shown separately below)	7,241		8,264			Cost of revenue (exclusive of items shown separately below)	7,804		7,982
Research and development	Research and development	4,506		5,449			Research and development	6,497		4,444
Technology operations	Technology operations	7,252		7,904			Technology operations	7,013		7,204
Selling and marketing	Selling and marketing	4,900		6,361			Selling and marketing	5,315		5,139
General and administrative	General and administrative	11,150		11,251			General and administrative	10,435		10,280
Depreciation, amortization and accretion	Depreciation, amortization and accretion	2,727		2,146			Depreciation, amortization and accretion	934		2,727
Severance and restructuring							Severance and restructuring	4,495		—

Total operating expenses	Total operating expenses	37,776		41,375			Total operating expenses	42,493		37,776
Operating loss	Operating loss	(1,740)		(4,108)			Operating loss	(8,668)		(1,740)
Interest income	Interest income	61		363			Interest income	67		61
Other expense	Other expense	(27)		(137)			Other expense	(13)		(27)
Loss before income taxes	Loss before income taxes	(1,706)		(3,882)			Loss before income taxes	(8,614)		(1,706)
Provision for income taxes		(591)		(657)
Benefit from (provision for) income taxes							Benefit from (provision for) income taxes	1,400		(591)
Net loss	Net loss	$	(2,297)	$	(4,539)		Net loss	$	(7,214)	$	(2,297)
Basic and diluted net loss per common share	Basic and diluted net loss per common share	$	(0.12)	$	(0.24)		Basic and diluted net loss per common share	$	(0.37)	$	(0.12)

Basic and diluted weighted average common shares outstanding	Basic and diluted weighted average common shares outstanding	19,272,786		18,958,716			Basic and diluted weighted average common shares outstanding	19,599,526		19,272,786

Cash dividends declared per common share	Cash dividends declared per common share	$	0.125	$	0.125		Cash dividends declared per common share	$	0.3125	$	0.1250

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(Unaudited and in thousands)	(Unaudited and in thousands)	2021		2020			(Unaudited and in thousands)	2022		2021

Net loss	Net loss	$	(2,297)	$	(4,539)		Net loss	$	(7,214)	$	(2,297)
Other comprehensive income (loss), net of tax:
Other comprehensive income, net of tax:							Other comprehensive income, net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	14		(220)			Foreign currency translation adjustments	25		14
Other comprehensive income (loss)		14		(220)
Other comprehensive income							Other comprehensive income	25		14
Comprehensive loss	Comprehensive loss	$	(2,283)	$	(4,759)		Comprehensive loss	$	(7,189)	$	(2,283)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


(Unaudited and in thousands except share amounts)	(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity		(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity

Balance, January 1, 2020		19,071,614	$	2	$	85,273	$	164,819	$	250,094
Balance, January 1, 2021											Balance, January 1, 2021	19,384,192	$	2	$	90,328	$	110,283	$	200,613
Net loss	Net loss	—	—		—		(4,539)		(4,539)		Net loss	—	—		—		(2,297)		(2,297)
Adoption of current expected credit loss ("CECL")		—	—		—		(365)		(365)

Purchase of common stock for tax withholding	Purchase of common stock for tax withholding	(79,981)	—		(903)		—		(903)		Purchase of common stock for tax withholding	(132,281)	—		(1,444)		—		(1,444)
Amortization of stock-based compensation	Amortization of stock-based compensation	—	—		1,182		—		1,182		Amortization of stock-based compensation	—	—		2,239		—		2,239
Cash dividends declared	Cash dividends declared	—	—		—		(2,488)		(2,488)		Cash dividends declared	—	—		—		(2,553)		(2,553)
Issuance of restricted stock under the 2012 Equity Plan and other		1,918	—		—		19		19
Issuance of restricted stock under the Equity Plans and other											Issuance of restricted stock under the Equity Plans and other	20,952	—		—		—		—
Issuance of common stock in lieu of cash compensation											Issuance of common stock in lieu of cash compensation	50,741	—		—		—		—
Cumulative translation adjustment	Cumulative translation adjustment	—	—		(220)		—		(220)		Cumulative translation adjustment	—	—		14		—		14
Balance, March 31, 2020		18,993,551	$	2	$	85,332	$	157,446	$	242,780
Balance, March 31, 2021											Balance, March 31, 2021	19,323,604	$	2	$	91,137	$	105,433	$	196,572

Balance, January 1, 2021 19,384,192 $ 2 $ 90,328 $ 110,283 $ 200,613
Net loss — — — (2,297) (2,297)
Purchase of common stock for tax withholding (132,281) — (1,444) — (1,444)
Amortization of stock-based compensation — — 2,239 — 2,239
Cash dividends declared — — — (2,553) (2,553)
Issuance of restricted stock under the equity plans and other 20,952 — — — —
Issuance of common stock in lieu of cash compensation 50,741 — — — —
Cumulative translation adjustment — — 14 — 14
Balance, March 31, 2021 19,323,604 $ 2 $ 91,137 $ 105,433 $ 196,572




Balance, January 1, 2022	19,828,033	$	2	$	95,703	$	77,986	$	173,691
Net loss	—	—		—		(7,214)		(7,214)

Purchase of common stock for tax withholding and other	(134,354)	—		(1,209)		—		(1,209)
Amortization of stock-based compensation	—	—		1,115		—		1,115
Cash dividends declared	—	—		—		(6,513)		(6,513)


Cumulative translation adjustment	—	—		25		—		25
Balance, March 31, 2022	19,693,679	$	2	$	95,634	$	64,259	$	159,895

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


		For the Three Months Ended March 31,					For the Three Months Ended March 31,
(Unaudited and in thousands)	(Unaudited and in thousands)	2021		2020		(Unaudited and in thousands)	2022		2021

Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(2,297)	$	(4,539)	Net loss	$	(7,214)	$	(2,297)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:						Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:
Depreciation, amortization and accretion	Depreciation, amortization and accretion	2,727		2,146		Depreciation, amortization and accretion	934		2,727

Deferred income tax expense		510		790
Deferred income tax (benefit) expense						Deferred income tax (benefit) expense	(1,024)		510
Stock-based compensation	Stock-based compensation	2,239		1,182		Stock-based compensation	1,115		2,239
Provisions for doubtful accounts, service credits and other		215		18
Provisions for credit losses, service credits and other						Provisions for credit losses, service credits and other	594		215
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	1,039		2,441		Accounts receivable	2,951		1,039
Prepaid expenses and other assets	Prepaid expenses and other assets	457		238		Prepaid expenses and other assets	(1,421)		457
Net operating lease liabilities	Net operating lease liabilities	338		(77)		Net operating lease liabilities	(91)		338
Accounts payable, accrued liabilities and other	Accounts payable, accrued liabilities and other	(3,038)		(340)		Accounts payable, accrued liabilities and other	879		(3,038)
Deferred revenue	Deferred revenue	(1,471)		(542)		Deferred revenue	(1,602)		(1,471)
Net cash provided by operating activities		719		1,317
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(4,879)		719
Investing activities:	Investing activities:					Investing activities:
Purchases of property and equipment	Purchases of property and equipment	(727)		(1,049)		Purchases of property and equipment	(679)		(727)
Capitalized software development	Capitalized software development	(2,920)		(1,705)		Capitalized software development	—		(2,920)
Purchase of short-term investments	Purchase of short-term investments	(14,995)		(14,888)		Purchase of short-term investments	(14,967)		(14,995)
Maturity of short-term investments	Maturity of short-term investments	15,000		15,000		Maturity of short-term investments	15,000		15,000
Net cash used in investing activities	Net cash used in investing activities	(3,642)		(2,642)		Net cash used in investing activities	(646)		(3,642)
Financing activities:	Financing activities:					Financing activities:
Cash distributions to stockholders	Cash distributions to stockholders	(2,730)		(2,629)		Cash distributions to stockholders	(6,524)		(2,730)

Purchase of common stock for tax withholding on vested equity awards	Purchase of common stock for tax withholding on vested equity awards	(1,444)		(903)		Purchase of common stock for tax withholding on vested equity awards	(1,209)		(1,444)
Net cash used in financing activities	Net cash used in financing activities	(4,174)		(3,532)		Net cash used in financing activities	(7,733)		(4,174)
Effect of exchange rate on cash		14		(220)
Effect of exchange rate on cash and cash equivalents						Effect of exchange rate on cash and cash equivalents	25		14
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(7,083)		(5,077)		Net decrease in cash and cash equivalents	(13,233)		(7,083)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	48,729		47,361		Cash and cash equivalents, beginning of period	44,583		48,729
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	41,646	$	42,284	Cash and cash equivalents, end of period	$	31,350	$	41,646
Supplemental disclosure:	Supplemental disclosure:					Supplemental disclosure:

Income taxes paid		$	(118)	$	0
Income tax refunds received						Income tax refunds received	$	(39)	$	(118)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Spok Holdings, Inc. (NASDAQ: SPOK) ("Spok," "we," "our" or the "Company"), through its wholly owned subsidiary Spok, Inc., is proud to be the global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on Spok products and services to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients.

We offer a focused suite of unified clinical communication and collaboration solutions that include call center ~~operations,~~applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.

We provide one-way and advanced two-way wireless messaging services, including information services, throughout the United States. These services are offered on a local, regional and nationwide basis employing digital networks. One-way messaging consists of numeric and alphanumeric messaging services. Numeric messaging services enable subscribers to receive messages that are composed entirely of numbers, such as a phone number, while alphanumeric messages may include numbers and letters, which enable subscribers to receive text messages. Two-way messaging services enable subscribers to send and receive messages to and from other wireless messaging devices, including pagers, personal digital assistants and personal computers. We also offer voice mail, personalized greetings, message storage and retrieval, and equipment loss and/or maintenance protection to both one-way and two-way messaging subscribers. These services are commonly referred to as wireless messaging and information services.

We also develop, sell and support enterprise-wide systems for hospitals and other organizations needing to automate, centralize and standardize clinical communications. These solutions are used for contact centers, clinical alerting and notification, mobile communications and messaging and for public safety notifications. We offer a variety of solutions in both on-premise and Software as a Service ("SaaS") delivery models. The Spok Go platform was made commercially available in early 2020. Spok Go features an integrated cloud-native platform that is built on a foundation of a single, best-in-class architecture with hosting and security handled through our partnership with Amazon Web Services®. These areas of market focus complement the market focus of our wireless services outlined above. ~~These products and services are commonly referred to as software solutions and services.~~

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include our accounts and the accounts of our wholly owned direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In management's opinion, the unaudited Condensed Consolidated Financial Statements include all adjustments and accruals that are necessary for the presentation of the results of all interim periods reported herein and all such adjustments are of a normal, recurring nature.

Amounts shown onin the Condensed Consolidated Statements of Operations within the operating expense categories of ~~Cost~~cost of revenue; ~~Research~~research and development; ~~Technology~~technology operations; ~~Selling~~selling and marketing; and ~~General~~general and administrative are recorded exclusive of depreciation, amortization and accretion. These items are shown separately to the extent that they are considered material for the periods presented.

Certain ~~immaterial~~ prior period amounts in the Condensed Consolidated Financial Statements have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations or the ~~statement of financial position.~~Condensed Consolidated Balance Sheets.

The financial information included herein, other than the Condensed Consolidated Balance Sheet as of December 31, ~~2020,~~2021, is unaudited. The Condensed Consolidated Balance Sheet as of December 31, ~~2020,~~2021, has been derived from, but does not include all, the disclosures contained in the audited Consolidated Financial Statements as of and for the year ended December 31, ~~2020.~~2021.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 Annual Report”). The Condensed Consolidated ~~Statement~~Statements of Operations for the interim periods presented are not necessarily indicative of the results that may be expected for a full year.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Use of Estimates

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets, ~~intangible assets subject to amortization and~~ goodwill, accounts receivable allowances, revenue recognition, determining the standalone selling price of performance obligations, variable consideration, restructuring related liabilities, depreciation expense, asset retirement obligations and income ~~taxes and capitalization of software costs.~~taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

NOTE 2 - RISKS AND OTHER IMPORTANT FACTORS

See “Item 1A. Risk Factors” of Part II of this Quarterly Report on Form 10-Q (“Quarterly Report”) and "Item 1A. Risk Factors" of Part I of the ~~2020~~2021 Annual Report, which describe key risks associated with our operations and industry.

NOTE 3 - RECENT ACCOUNTING STANDARDS

The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). The Company has determined that all recent ASUs issued by the FASB are either not applicable or are expected to have minimal impact on the Company's Condensed Consolidated Financial Statements.

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES UPDATE

Our significant accounting policies are detailed in Note 1, “Organization and Significant Accounting Policies” of the ~~2020~~2021 Annual Report.

NOTE 5 - RESTRUCTURING

In February 2022, the Company announced a new strategic business plan that includes a restructuring of its business to discontinue our integrated communications and collaboration platform, Spok Go®, eliminate all associated costs and optimize the Company’s existing structure to drive continued cost improvement. As part of the restructuring program, the Company is eliminating approximately 175 positions, primarily in research and development, but also in professional services, selling and marketing, and back-office support functions. The following table provides a summary of our cost estimates by major type of expense associated with the strategic business plan. The restructuring actions associated with these charges are expected to be substantially complete in 2022.


						Total Estimated Amount to be Incurred
Strategic Business Plan Estimates						(Dollars in millions)
Severance and personnel related costs						$5.7 million to $6.6 million
Contractual terminations						$0.5 million to $0.9 million
Total severance and restructuring related charges						$6.2 million to $7.5 million

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the three months ended March 31, 2022, the Company incurred total severance and restructuring costs of $4.5 million, which is included within the Condensed Consolidated Statement of Operations. These costs are as follows:


	For the Three Months Ended March 31,
(Dollars in thousands)	2022

Severance and personnel related costs	$	3,997
Contractual terminations	498
Total severance and restructuring costs	$	4,495

A summary of activity for the three months ended March 31, 2022, for restructuring-related liabilities associated with the strategic business plan, which is included within accrued compensation and benefits and other current liabilities within the Condensed Consolidated Balance Sheet, is as follows:


	(Dollars in thousands)

Balance at December 31, 2021	$	—
Restructuring and other charges	4,495
Payments	(34)
Non-cash adjustment	(124)
Balance at March 31, 2022	$	4,337

NOTE 56 - REVENUE, DEFERRED REVENUE AND PREPAID COMMISSIONS

Wireless Revenue

Wireless revenue consists of 2 primary components: paging revenue and product and other revenue. Paging revenue consists primarily of recurring fees associated with the provision of messaging services and fees for paging devices and is net of a provision for service credits. Product and other revenue reflects system sales, the sale of devices and charges for paging devices that are not returned and are net of anticipated credits. Our core offering includes subscriptions to one-way or two-way messaging services for a periodic (monthly, quarterly, semiannual, or annual) service fee. This is generally based upon the type of service provided, the geographic area covered, the number of devices provided to the customer and the period of commitment. A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs. Two-way messaging is generally offered on a nationwide basis. (See Item 1. “Business,” in the ~~2020~~2021 Annual Report for more details.)

Software Revenue

Software revenue consists of 2 primary components: operations revenue and maintenance revenue. Operations revenue consists primarily of license ~~and subscription~~ revenues for our healthcare communications solutions, revenue from the sale of equipment that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is for ongoing support of our software solutions or related equipment and access to when-and-if available software updates. Maintenance is generally purchased and renewed on an annual basis.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Our software licenses and hardware are generally recognized at a point in time when we have transferred control to the customer. For software licenses, revenue is not recognized until the related license(s) has been made available to the customer and the customer can begin to benefit from its right to use the license(s). Our software licenses represent a right to use Spok’s ~~Intellectual Property~~intellectual property ("IP") as it exists at a point in time at which the license is granted. Many of our software licenses have significant standalone functionality due to their ability to process a transaction or perform a function or task, and we do not need to maintain those products, once provided to the customer, for value to exist. While the functionality of the IP that we license may substantively change during the license period, customers are not contractually or practically required to update their license as a result of those changes.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our wireless, professional, ~~subscription,~~ and maintenance services are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless, ~~maintenance or subscription services.~~maintenance. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project. Revenues are recognized proportionally as hours are incurred.

The following table presents our revenues disaggregated by revenue type:


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020			(Dollars in thousands)	2022		2021

Wireless products and services		$	20,120	$	21,386
Revenue:							Revenue:
Paging revenue							Paging revenue	$	18,313	$	19,353
Product and other revenue							Product and other revenue	533		767
Wireless revenue							Wireless revenue	$	18,846	$	20,120

License	License	1,507		955			License	$	1,824	$	1,552
Services		4,354		4,549
Equipment		616		725
Subscription		45		0
Professional services							Professional services	3,336		4,354
Hardware							Hardware	589		616

Operations revenue							Operations revenue	5,749		6,522
Maintenance	Maintenance	9,394		9,652			Maintenance	9,230		9,394
Software revenue							Software revenue	$	14,979	$	15,916
Total revenue	Total revenue	$	36,036	$	37,267		Total revenue	$	33,825	$	36,036

The U.S. was the only country that accounted for more than 10% of the Company’s total revenue for the three months ended March 31, ~~2021,~~2022, and ~~2020.~~2021. Revenue generated in the U.S. and internationally consisted of the following for the periods stated:


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020			(Dollars in thousands)	2022		2021

United States	United States	$	35,174	$	36,503		United States	$	32,772	$	35,174
International	International	862		764			International	1,053		862
Total revenue	Total revenue	$	36,036	$	37,267		Total revenue	$	33,825	$	36,036

Deferred Revenues

Our deferred revenues represent payments made by, or due from, customers in advance of our performance. Changes in the balance of total deferred revenue during the three months ended March 31, ~~2021~~2022, are as follows:


(Dollars in thousands)	(Dollars in thousands)	December 31, 2020		Additions		Revenue Recognized		March 31, 2021		(Dollars in thousands)	December 31, 2021		Additions		Revenue Recognized		March 31, 2022

Deferred Revenue	Deferred Revenue	$	29,796	$	14,378	$	(15,849)	$	28,325	Deferred Revenue	$	26,406	$	13,491	$	(15,093)	$	24,804

During the three months ended March 31, ~~2021,~~2022, the Company recognized ~~$10.5~~$9.7 million related to amounts deferred as of December 31, ~~2020.~~2021.

Prepaid Commissions

Our prepaid commissions represent payments made to employees in advance of our performance on the related underlying contracts. These costs have been incurred directly in relation to obtaining a contract. As such, these costs are amortized over the estimated period of benefit. Changes in the balance of total prepaid commissions during the three months ended March 31, ~~2021~~2022 are as follows:

(Dollars in thousands) December 31, 2020 Additions Commissions Recognized March 31, 2021
Prepaid Commissions $ 2,290 $ 1,043 $ (1,105) $ 2,228

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


(Dollars in thousands)	December 31, 2021		Additions		Commissions Recognized		March 31, 2022

Prepaid Commissions	$	1,821	$	831	$	(1,024)	$	1,628

Prepaid commissions are included within ~~Prepaid~~prepaid expenses onin the Condensed Consolidated Balance Sheets and commissions expense is included within ~~Selling~~selling and marketing onin the Condensed Consolidated Statements of Operations.

Remaining Performance Obligations

The balance of remaining performance obligations at March 31, ~~2021,~~2022, was ~~$48.8~~$40.5 million. We expect to recognize approximately ~~$35.0~~$29.6 million of our remaining performance obligations over the next 12 months, with the remaining balance recognized thereafter.

~~SPOK HOLDINGS, INC.~~

~~UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

NOTE 67 - LEASES

We have operating lease arrangements for corporate offices, cellular towers, storage units and small building space. The building space is used to house infrastructure, such as transmitters, antennae and other various equipment for the Company’s wireless paging services. For leases with a term of 12 months or less, renewal terms are generally of an evergreen nature (either month-to-month or year-to-year). For leases with a term greater than 12 months, renewal terms are generally explicit and provide for 1 to 5 optional renewals consistent with the initial term. Many of our leases, with the exception of those for our corporate offices, include options to terminate the lease within one year. Variable lease payments, residual value guarantees or purchase options are not generally present in these leases.

Lease costs are included in technology operations and general and administrative expenses onin the Condensed Consolidated Statements of Operations. The following table presents lease costs disaggregated by type:

For the Three Months Ended March 31,
(Dollars in thousands) 2021 2020
Operating lease cost $ 1,470 $ 1,382
Short-term lease cost 2,739 1,977
Short-term lease cost - related party(1)
0 890
Total lease cost $ 4,209 $ 4,249
Supplemental Disclosure:
Cash paid for amounts included in the measurement of lease liabilities - operating leases $ 1,375 $ 1,349
Weighted-average remaining lease term - operating leases (in years) 5.09 5.55
Weighted-average discount rate - operating leases 4.65% 5.39%


	For the Three Months Ended March 31,
(Dollars in thousands)	2022		2021

Operating lease cost	$	1,482	$	1,470
Short-term lease cost	2,633		2,739

Total lease cost	$	4,115	$	4,209

The following table presents supplemental cash flow information:


	For the Three Months Ended March 31,
(Dollars in thousands)		2022		2021


Cash paid for amounts included in the measurement of lease liabilities - operating leases		$	1,535	$	1,375

~~(1)~~
~~A former member of our Board of Directors, who departed~~

The following table presents the ~~Board during the third quarter of 2020, concurrently served as a director for an entity that leases transmission tower sites to the Company.~~weighted average remaining lease term and discount rate:

In March 2021, we relocated our corporate headquarters to office space located in Alexandria, Virginia, consisting of approximately 26,000 square feet of space under a lease that will expire on September 30, 2026. At that time, we recorded $4.4 million in a right-of-use asset and corresponding operating lease liability for this lease. Over the life of this lease, cash payments are expected to total approximately $4.9 million.

~~Maturities of lease liabilities as of March 31, 2021, were as follows:~~

For the Year Ended December 31, (Dollars in thousands)
For the remaining nine months ending December 31, 2021 $ 4,649
2022 4,653
2023 3,500
2024 2,658
2025 2,002
Thereafter 3,526
Total future lease payments 20,988
Imputed interest (2,311)
Total $ 18,677


	March 31,
(Dollars in thousands)	2022	2021

Weighted-average remaining lease term - operating leases (in years)	4.60	5.09
Weighted-average discount rate - operating leases	4.42%	4.65%

1011

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Maturities of lease liabilities as of March 31, 2022, were as follows:


For the Year Ended December 31,	(Dollars in thousands)

2022 (remaining nine months)	$	3,784
2023	4,309
2024	3,419
2025	2,459
2026	2,079
Thereafter	2,078
Total future lease payments	18,128
Imputed interest	(1,760)
Total	$	16,368

NOTE 78 - CONSOLIDATED FINANCIAL STATEMENT COMPONENTS

Depreciation, Amortization and Accretion

Depreciation, amortization and accretion expenses consisted of the following for the periods stated:


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020			(Dollars in thousands)	2022		2021

Depreciation	Depreciation						Depreciation
Leasehold improvements	Leasehold improvements	$	16	$	16		Leasehold improvements	$	19	$	16
Asset retirement costs	Asset retirement costs	(22)		(161)			Asset retirement costs	(175)		(22)
Paging and computer equipment	Paging and computer equipment	1,069		1,478			Paging and computer equipment	850		1,069
Furniture, fixtures and vehicles	Furniture, fixtures and vehicles	58		70			Furniture, fixtures and vehicles	70		58
Total depreciation	Total depreciation	1,121		1,403			Total depreciation	764		1,121
Amortization	Amortization						Amortization
Intangible assets	Intangible assets	417		625			Intangible assets	—		417
Capitalized software development costs	Capitalized software development costs	1,035		0			Capitalized software development costs	—		1,035
Total amortization	Total amortization	1,452		625			Total amortization	—		1,452
Accretion	Accretion	154		118			Accretion	170		154
Total depreciation, amortization and accretion expense	Total depreciation, amortization and accretion expense	$	2,727	$	2,146		Total depreciation, amortization and accretion expense	$	934	$	2,727

Accounts Receivable, Net

Accounts receivable was recorded net of an allowance of ~~$1.5 million and $1.7~~$1.4 million at March 31, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. Accounts receivable, net includes ~~$7.0~~$7.7 million and $7.1 million of unbilled receivables at March 31, ~~2021,~~2022, and December 31, ~~2020.~~2021, respectively. Unbilled receivables are defined as the Company's right to consideration in exchange for goods or services that we have transferred to the customer but have not yet billed for, generally as a result of contractual billing terms.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property and Equipment, Net

Property and equipment, net consisted of the following as of the dates stated:


(Dollars in thousands)	(Dollars in thousands)	Useful Life (In Years)	March 31, 2021		December 31, 2020		(Dollars in thousands)	Useful Life (In Years)	March 31, 2022		December 31, 2021

Leasehold improvements	Leasehold improvements	shorter of useful life or lease term	$	3,172	$	3,628	Leasehold improvements	shorter of useful life or lease term	$	2,747	$	3,307
Asset retirement costs	Asset retirement costs	1-5	3,717		3,717		Asset retirement costs	1-5	2,307		2,307
Paging and computer equipment	Paging and computer equipment	1-5	91,441		92,608		Paging and computer equipment	1-5	88,467		89,844
Furniture, fixtures and vehicles	Furniture, fixtures and vehicles	3-5	3,530		3,517		Furniture, fixtures and vehicles	3-5	3,539		3,668
Total property and equipment	Total property and equipment		101,860		103,470		Total property and equipment		97,060		99,126
Accumulated depreciation	Accumulated depreciation		(94,439)		(95,655)		Accumulated depreciation		(90,418)		(92,380)
Total property and equipment, net	Total property and equipment, net		$	7,421	$	7,815	Total property and equipment, net		$	6,642	$	6,746

~~Capitalized Software Development~~

~~Capitalized software development is amortized on a straight-line basis over~~NOTE 9 - GOODWILL

During the ~~estimated useful life of the asset, typically three years. Capitalized software development costs were $2.9 million and $1.7 million for the three months~~quarter ended March 31, ~~2021~~2022, we determined, based on qualitative assessment, that the Company's change in its strategic business plan and ~~2020 respectively. Amortization expense with respect to software development costs was $1.0 million and $0.0 million for~~ the ~~three months ended March 31, 2021, and 2020, respectively.~~

~~SPOK HOLDINGS, INC.~~

~~UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~NOTE 8 - GOODWILL AND INTANGIBLE ASSETS, NET~~

~~Goodwill~~

~~During the three months ended March 31, 2021,~~accompanying restructuring, announced in February 2022, created a triggering event that required further assessment. As such, we performed a ~~qualitative~~quantitative assessment. Based on this assessment, the estimated fair value of the reporting unit exceeded the carrying value of the Company, which indicated an impairment did not exist. For purposes of the goodwill ~~and determined that~~impairment assessment, the Company as a ~~triggering event had not occurred.~~ whole is considered to be the reporting unit. The fair value of the reporting unit is estimated under a market-based approach using the fair value of the Company's common stock.

While an impairment assessment is performed annually in the fourth quarter of the fiscal year, the Company monitors its business environment for potential triggering events on a quarterly basis. There is potential for ~~further~~ impairment charges being recognized in future periods based on these ongoing assessments.

~~Intangible Assets~~

Amortizable intangible assets at March 31, 2021, related primarily to customer relationships that resulted from our acquisition of Amcom Software, Inc. in 2011. These intangibles, with an original gross carrying amount of $25.0 million, were being amortized over a period of 10 years and became fully amortized during the quarter ended March 31, 2021.

NOTE 910 - ASSET RETIREMENT OBLIGATIONS

The components of the changes in the asset retirement obligation liabilities were:


(Dollars in thousands)	(Dollars in thousands)	Short-Term Portion		Long-Term Portion		Total		(Dollars in thousands)	Short-Term Portion		Long-Term Portion		Total

Balance at December 31, 2020		$	335	$	7,289	$	7,624
Balance at December 31, 2021								Balance at December 31, 2021	$	130	$	6,355	$	6,485
Accretion	Accretion	(31)		185		154		Accretion	34		136		170
Amounts paid	Amounts paid	(101)		0		(101)		Amounts paid	(96)		—		(96)

Reclassifications	Reclassifications	72		(72)		0		Reclassifications	119		(119)		—
Balance at March 31, 2021		$	275	$	7,402	$	7,677
Balance at March 31, 2022								Balance at March 31, 2022	$	187	$	6,372	$	6,559

The short-term portion of the balance above is included within ~~Other~~other current liabilities onin the Condensed Consolidated Balance ~~Sheet~~Sheets at March 31, ~~2021,~~2022, and December 31, ~~2020.~~2021.

The cost associated with the estimated removal costs and timing refinements due to ongoing network rationalization activities is expected to accrete to a total liability of ~~$9.3~~$7.8 million. The total estimated liability is based on the transmitter locations remaining after we have consolidated the number of networks we operate and assume the underlying leases continue to be renewed to that future date. Accretion expense related solely to asset retirement obligations and was recorded based on the interest method.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 1011 - STOCKHOLDERS' EQUITY

General

Our authorized capital stock consists of 75 million shares of common stock, par value $0.0001 per share, and 25 million shares of preferred stock, par value $0.0001 per share.

At March 31, ~~2021,~~2022, and December 31, ~~2020,~~2021, we had 0no stock options outstanding.

At March 31, ~~2021,~~2022, and December 31, ~~2020,~~2021, there were ~~19,323,604~~19,693,679 and ~~19,384,192~~19,828,033 shares of common stock outstanding, respectively, and 0no shares of preferred stock outstanding.

~~SPOK HOLDINGS, INC.~~Rights Plan

~~UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~On September 2, 2021, the Company entered into a Rights Agreement between the Company and Computershare Trust Company, N.A., as Rights Agent (as amended from time to time, the “Rights Agreement”), that was approved by our Board of Directors. In connection with the Rights Agreement, a dividend was declared of 1 preferred stock purchase right (individually, a “Right” and collectively, the “Rights”) for each share of our common stock outstanding at the close of business on September 17, 2021. Each Right will entitle the registered holder thereof, after the Rights become exercisable and until August 31, 2022 (or the earlier redemption, exchange or termination of the Rights), to purchase from the Company one one-tenth of a share of Series A Junior Participating Preferred Stock, par value $0.00001 per share (the “Series A Preferred”), of the Company at a price of $50.95 per one one-tenth of a share of Series A Preferred.

The Rights become exercisable upon the earlier to occur of (i) the close of business on the tenth business day following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 10% (20% in the case of a passive institutional investor) or more of our common stock (an “Acquiring Person”) or (ii) the close of business on the 10th business day (or such later date as may be determined by action of our Board of Directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) following the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in a person or group becoming an Acquiring Person.

Dividends

~~The following table details our cash dividends declared in 2021.~~ Cash ~~dividends paid~~distributions to stockholders, as disclosed in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2021,~~2022, and ~~2020~~2021, include previously declared cash dividends on shares of vested restricted common stock ("restricted stock") issued to our non-executive directors and dividends related to vested restricted stock units ("RSUs") issued to eligible employees. Cash dividends on RSUs and restricted stock have been accrued and are paid when the applicable vesting conditions are met. Accrued cash dividends on forfeited restricted stock and RSUs are also forfeited. The following table details our cash dividends declared and paid in 2022 through the date hereof:


						(Dollars in thousands)							(Dollars in thousands)
Declaration Date	Declaration Date	Record Date	Payment Date	Per Share Amount		Total Declared(1)		Declaration Date	Record Date	Payment Date	Per Share Amount		Total Declared(1)

February 17, 2021		March 16, 2021	March 30, 2021	$	0.125	$	2,553
February 16, 2022								February 16, 2022	March 16, 2022	March 30, 2022	$	0.3125	$	6,513

Total	Total			$	0.125	$	2,553	Total			$	0.3125	$	6,513

(1) The total declared reflects the cash dividends declared in relation to common stock, deferred stock units ~~('DSUs'~~("DSUs") and unvested RSUs.

On April ~~28, 2021,~~27, 2022, our Board of Directors declared a regular quarterly cash dividend of ~~$0.125~~$0.3125 per share of common stock with a record date of May 25, ~~2021,~~2022, and a payment date of June 24, ~~2021. This cash dividend~~2022. Cash dividends related to common stock of approximately ~~$2.4~~$6.1 million will be paid from available cash on hand.

Common Stock Repurchase Program

On February 16, 2022, our Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. For the three months ended March 31, 2022, we repurchased no common stock.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net ~~Income (Loss)~~Loss per Common Share

Basic net ~~income (loss)~~loss per common share is computed on the basis of the weighted average common shares outstanding. Diluted net ~~income (loss)~~loss per common share is computed on the basis of the weighted average common shares outstanding plus the effect of all potentially dilutive common shares, including outstanding restricted stock and RSUs, which are treated as contingently issuable shares, using the “treasury stock” method.

The components of basic and diluted net ~~income~~ (loss) per common share were as follows for the periods stated:


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(in thousands, except for share and per share amounts)	(in thousands, except for share and per share amounts)	2021		2020			(in thousands, except for share and per share amounts)	2022		2021

Numerator:	Numerator:						Numerator:
Net loss	Net loss	$	(2,297)	$	(4,539)		Net loss	$	(7,214)	$	(2,297)

Denominator:	Denominator:						Denominator:
Basic and diluted weighted average common shares outstanding	Basic and diluted weighted average common shares outstanding	19,272,786		18,958,716			Basic and diluted weighted average common shares outstanding	19,599,526		19,272,786

Basic and diluted net loss per common share	Basic and diluted net loss per common share	$	(0.12)	$	(0.24)		Basic and diluted net loss per common share	$	(0.37)	$	(0.12)

For the three months ended March 31, ~~2021,~~2022, and ~~2020~~2021 the following securities were excluded from the calculation of diluted shares outstanding as the effect would have been anti-dilutive:

For the Three Months Ended March 31,
2021 2020
Restricted stock units 292,059 203,188


	For the Three Months Ended March 31,
	2022	2021

Restricted stock units	270,225	292,059

~~Share-Based~~Stock-Based Compensation Plans

On March 23, 2012, our Board of Directors adopted the Spok Holdings, Inc. 2012 Equity Incentive Award Plan (the “2012 Equity Plan”) that our stockholders subsequently approved on May 16, 2012. A total of 2,194,986 shares of common stock were reserved for issuance under this plan.

On April 29, 2020, our Board of Directors adopted the Spok Holdings, Inc. 2020 Equity Incentive Award Plan (the “2020 Equity Plan” and, together with the 2012 Equity Plan, the "Equity Plans") that our stockholders subsequently approved on July 28, 2020. ~~As of that date,~~At July 28, 2020, a total of 1,699,950 shares of common stock ~~have~~had been reserved for issuance under the Equity Plans, including 1,600,000 shares available under the 2020 Equity Plan and no99,950 shares which, as of the shareholder approval date, remained available for issuance under the 2012 Equity Plan. No further grants will be made under the 2012 Equity ~~Plan. However,~~Plan, although, the 2012 Equity Plan ~~will continue~~continues to govern all outstanding awards thereunder.

~~SPOK HOLDINGS, INC.~~

~~UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Awards under the 2020 Equity Plan may be in the form of stock options, restricted common stock, RSUs, performance awards, dividend equivalents, stock payment awards, deferred stock, DSUs, stock appreciation rights or other stock or cash-based awards.

Restricted stock awards generally vest one year from the date of grant. Related dividends accumulate during the vesting period and are paid at the time of vesting.

Contingent RSUs generally vest over a three-year performance period upon successful completion of the performance objectives. Non-contingent RSUs generally vest in thirds, annually, over a three-year period. Dividend equivalent rights generally accompany each RSU award and those rights accumulate and vest along with the underlying RSU.

Dividend equivalent rights generally accompany each DSU award and are paid to participants in cash on the Company's applicable dividend payment date whether the DSU is vested or unvested. The dividend equivalent right associated with a DSU continues until delivery of the underlying shares of common stock is made.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Payment of the underlying shares of common stock occurs at the earliest of a participant's separation from service, disability, death, or a change in control. Any shares subject to an award under the 2012 Equity Plan that are forfeited or expire will be available for the future grant of awards under the 2020 Equity Plan. As of March 31, ~~2021, the~~2022, there was an aggregate ~~amount~~ of 270,885 unvested RSUs ~~and restricted stock outstanding~~ under the 2012 Equity ~~Plan was 585,006.~~

Plan.

The following table summarizes the activities under the Equity Plans from January 1, ~~2021,~~2022, through March 31, ~~2021:~~2022:


			Activity

Total equity securities available at January 1, ~~2021~~2022			~~1,699,314~~990,129
RSU, DSU, and restricted stock awarded to eligible employees, net of forfeitures			~~(564,858)~~(443,901)
~~Issuance of common stock in lieu of cash compensation~~			~~(50,741)~~
Total equity securities available at March 31, ~~2021~~2022			~~1,083,715~~546,228

The following table details activities with respect to outstanding RSUs, DSUs, and restricted stock under the Equity Plans for the three months ended March 31, ~~2021:~~2022:


		Shares	Weighted- Average Grant Date Fair Value			Shares	Weighted- Average Grant Date Fair Value

Unvested at January 1, 2021		636,722	$	12.16
Unvested at January 1, 2022					Unvested at January 1, 2022	771,171	$	11.24
Granted	Granted	579,905	11.14		Granted	454,429	8.65
Vested	Vested	(6,842)	11.86		Vested	(12,890)	11.10
Forfeited	Forfeited	(15,047)	13.48		Forfeited	(10,390)	11.92
Unvested at March, 31 2021		1,194,738	$	11.65
Unvested at March, 31 2022					Unvested at March, 31 2022	1,202,320	$	10.26

Of the ~~1,194,738~~1,202,320 unvested RSUs, DSUs and restricted stock outstanding at March 31, ~~2021, 592,674~~2022, 571,898 RSUs include contingent performance requirements for vesting purposes. At March 31, ~~2021,~~2022, there was ~~$8.8~~$6.7 million of unrecognized net compensation cost related to RSUs and restricted stock, which is expected to be recognized over a weighted average period of ~~2.0~~1.9 years.

For the first three quarters of 2021, qualified employees ~~are receiving~~received a portion of their compensation in the form of shares of the Company's common stock in lieu of cash. These awards ~~are~~were made in advance on a quarterly basis and ~~vest~~vested immediately. For the three months ended March 31, 2021, 50,741 shares of common stock were issued, with a weighted average grant date fair value of $12.13.

Employee Stock Purchase Plan

In 2016, our Board of Directors adopted the Spok Holdings, Inc. Employee Stock Purchase Plan ~~("ESPP"~~(the "ESPP") that our stockholders subsequently approved on July 25, 2016. A total of 250,000 shares of common stock were reserved for issuance under this plan.

The ESPP allows employees to purchase shares of common stock at a discounted rate, subject to plan limitations. Under the ESPP, eligible participants can voluntarily elect to have contributions withheld from their pay for the duration of an offering period, subject to the ESPP limits. At the end of an offering period, contributions will be used to purchase the Company's common stock at a discount to the market price based on the first or last day of the offering period, whichever is lower.

~~SPOK HOLDINGS, INC.~~

~~UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Participants are required to hold common stock for a minimum period of two years from the grant date. Participants will begin earning dividends on shares after the purchase date. Each offering period will generally last for no longer than six months. Once an offering period begins, participants cannot adjust their withholding amount. If a participant chooses to withdraw, any previously withheld funds will be returned to the participant, with no stock purchased, and that participant will be eligible to participate in the ESPP during the next offering period. If the participant terminates employment with the Company during the offering period, all contributions will be returned to the employee and no stock will be purchased.

The Company uses the Black-Scholes model to calculate the fair value of the common stock to be purchased each offering period on the offer date. The Black-Scholes model requires the use of estimates for the expected term, the expected volatility of the underlying common stock over the expected term, the risk-free interest rate and the expected dividend payment.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the three months ended March 31, 2022, and 2021, ~~and 2020, 0~~no shares of the Company's ~~common~~ stock were purchased. The following table summarizes the activities under the ESPP from January 1, ~~2021,~~2022, through March 31, ~~2021:~~2022:


			Activity

Total ESPP equity securities available at January 1, ~~2021~~2022			~~149,199~~133,184
ESPP common stock purchased by eligible employees			0—
Total ESPP securities available at March 31, ~~2021~~2022			~~149,199~~133,184

Amounts withheld from participants will be classified as Accrued compensation and benefits onin the Condensed Consolidated Balance Sheets until funds are used to purchase shares. This liability amount is immaterial to the Condensed Consolidated Financial Statements.

Stock-Based Compensation Expense

We record all stock-based compensation, which consist of RSUs, DSUs, restricted stock, equity in lieu of salary, and the option to purchase common stock under the ESPP, at fair value as of the grant date. Stock-based compensation expense is recognized based on a straight-line amortization basis over the respective service period. Forfeitures and withdrawals are accounted for as incurred.

The following table reflects the items for stock-based compensation expense onin the Condensed Consolidated Statements of Operations for the periods stated:


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020			(Dollars in thousands)	2022		2021

Performance-based RSUs	Performance-based RSUs	$	573	$	346		Performance-based RSUs	$	460	$	573
Time-based RSUs, DSUs and restricted stock	Time-based RSUs, DSUs and restricted stock	1,023		812			Time-based RSUs, DSUs and restricted stock	655		1,023
Equity in lieu of salary	Equity in lieu of salary	622		0			Equity in lieu of salary	—		622
ESPP	ESPP	21		24			ESPP	—		21
Total stock-based compensation	Total stock-based compensation	$	2,239	$	1,182		Total stock-based compensation	$	1,115	$	2,239

~~SPOK HOLDINGS, INC.~~

~~UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

NOTE 1112 - INCOME TAXES

The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law on March 27, ~~2020. The CARES Act was initiated~~2020, to provide stimulus and relief in response to the coronavirus disease 2019 ("COVID-19") pandemic and resulting economic collapse. ~~While the~~The CARES Act ~~provides a number of potential benefits to companies, the Company has made use of the following provisions:~~

•~~Payroll Tax Deferral~~ ~~- Allows~~allows for the deferral of payment on the Company's share of the 6.2% Social Security tax on wages paid beginning on March 27, 2020 and ending on December 31, 2020. Deferred amounts are payable in two installments, with 50% of such taxes due on December 31, 2021, and the remainder due on December 31, 2022. This resulted in a total deferral of approximately $2.1 million of payroll taxes under this provision, as of which $1.0 million remains due by December 31, ~~2020. We do not anticipate additional deferrals~~2022, and is included within current liabilities in ~~2021.~~

•~~Employee Retention Credits~~ ~~- Allows for a refundable tax credit for~~ the Company's share of the 6.2% Social Security tax on wages. This tax credit applies to the first $10,000 in qualified wages paid to each employee commencing on March 13, 2020. To be eligible, the Company must (i) have had operations fully or partially suspended because of a shut-down order from a governmental authority related to COVID-19, or (ii) have had gross receipts decline by more than 50% in a calendar quarter when compared to the same quarter in 2019. Qualified wages are limited to wages paid to employees who were not providing services due to the COVID-19 pandemic. This resulted in a total claim of approximately $1.3 million in employee retention credits under this provision, as of December 31, 2020. We do not anticipate additional material employee retention credits in 2021.

•~~Alternative Minimum Tax ("AMT") Credit~~ - Allows for an immediate refund of all refundable AMT credits resulting from passage of the Tax Cuts and Jobs Act of 2017. This resulted in accelerated collection of approximately $1.3 million of other current assets which was received during the third quarter of 2020.Condensed Consolidated Balance Sheet.

Spok files a consolidated U.S. federal income tax return and income tax returns in various state, local and foreign jurisdictions as required.

Our quarterly tax provision and our quarterly estimate of our annual effective tax rate isare subject to significant variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in how we do business, changes in our stock price, foreign currency gains (losses), tax law developments (including changes in statutes, regulations, case law, and administrative practices), and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower.

For ~~2021,~~2022, the anticipated effective income tax rate is expected to continue to differ from the federal statutory rate of 21% primarily due to the effect of state income taxes, ~~research and development credits and related valuation allowance,~~ permanent differences between book and taxable income, and certain discrete items.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We had total net deferred income tax assets ("DTAs") of ~~$25.2~~$32.7 million and ~~$25.8~~$31.7 million at March 31, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. We had a valuation allowance of ~~$23.1~~$25.2 million and ~~$22.1~~$24.2 million at March 31, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively.

We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of the deferred income tax assets will be realized in future periods. During the fourth quarter of each year, we update our multi-year forecast of taxable income for our operations, which assists in analyzing the recoverability of our DTAs.

~~Those deferred~~Deferred income tax assets which are not currently covered by a valuation allowance are those that are indefinite-lived, or whose temporary differences would reverse in the future and may result in the creation of an indefinite-lived deferred income tax asset, which we consider to be realized through future taxable income despite ~~near term~~near-term uncertainties. The amount of deferred income tax assets considered realizable, however, could be adjusted in the future if objective negative evidence in the form of cumulative losses is no longer present, additional weight is given to subjective evidence such as our projections for future profitability and growth, or other relevant factors arise.

~~SPOK HOLDINGS, INC.~~

~~UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

NOTE 1213 - COMMITMENTS AND CONTINGENCIES

There have been no material changes during the three months ended March 31, ~~2021,~~2022, to the commitments and contingencies previously reported in the ~~2020~~2021 Annual Report.

NOTE 1314 - RELATED PARTIES

A member of our Board of Directors, who was appointed at the beginning of 2020, serves as Chief Information Officer for an entity that is also a customer of the Company. For ~~both~~ the three months ended March 31, ~~2021,~~2022, and ~~2020,~~2021, we recognized revenues of $0.1 million and $0.2 million respectively, related to contracts from the entity at which the individual is employed.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements and information relating to Spok Holdings, Inc. and its subsidiaries (collectively, “we,”"us,", “Spok,” “our” or the “Company”) that set forth anticipated results based on management’s current plans, known trends and assumptions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “target,” “forecast” and similar expressions, as they relate to Spok are forward-looking statements.

Although these statements are based upon current plans, known trends and assumptions that management considers reasonable, they are subject to certain risks, uncertainties and assumptions, including, but not limited to, those discussed in this section and "Risk Factors" below and under the captions “Business,” “Management’s Discussion and Analysis of Financial Condition and ~~Statement~~Results of Operations (“MD&A”),” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 ("~~2020~~2021 Annual Report"). Should known or unknown risks or uncertainties materialize, known trends change, or underlying assumptions prove inaccurate, actual results or outcomes may differ materially from past results and those described herein as anticipated, believed, estimated, expected, intended, targeted or forecasted. Investors are cautioned not to place undue reliance on these forward-looking statements.

The Company undertakes no obligation to update forward-looking statements. Investors are advised to consult all further disclosures the Company makes in its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that it will file with the SEC. Also note that, in the ~~risk factors disclosed in the Company’s 2020~~2021 Annual Report, the Company provides a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to its business. These are factors that, individually or in the aggregate, could cause the Company’s actual results to differ materially from past results as well as those results that may be anticipated, believed, estimated, expected, intended, targeted or forecasted. It is not possible to predict or identify all such risk factors. Consequently, investors should not consider the risk factor discussion to be a complete discussion of all of the potential risks or uncertainties that could affect Spok's business, statement of operations or financial condition, subsequent to the filing of this Quarterly Report.

~~Overview~~

Overview

The following MD&A is intended to help the reader understand the results of operations and financial condition of Spok. This MD&A is provided as a supplement to, and should be read in conjunction with, our ~~2020~~2021 Annual Report and our unaudited Condensed Consolidated Financial Statements and accompanying notes. A reference to a “Note” in this section refers to the accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

Spok, acting through its indirect wholly owned operating subsidiary, Spok, Inc., delivers smart, reliable clinical communication and collaboration solutions to organizations, primarily in the U.S. healthcare industry, to help protect the health, well-being and safety of ~~people primarily in the United States.~~individuals. Organizations rely on Spok for workflow improvement, secure ~~texting,~~messaging, paging services, contact center optimization and public safety response.

Business

See Note 1, "Organization and Significant Accounting Policies" in Item 1 of Part I of this Quarterly Report and ~~"Item~~Item 1. ~~Business"~~"Business" of Part I of the ~~2020~~2021 Annual Report, which describe our business in further detail.

17New Strategic Business Plan

In February 2022, our Board of Directors announced a new strategic business plan that includes a restructuring of our business to discontinue Spok Go®, eliminate all associated costs and optimize the Company’s existing structure to drive continued cost improvement. The strategic business plan includes a renewed focus on our existing and established business, including the Spok Care Connect Suite and our wireless service offerings. While there are numerous factors that went into this decision, the ongoing challenge of the COVID-19 pandemic made it difficult for the Spok Go platform to gain sufficient traction with customers or for our business to continue operating with our current level of costs and personnel. This shift in focus will allow us to prioritize cash flow generation and the return of capital to stockholders. As a result of this new strategic business plan, our Board of Directors has increased the regular quarterly dividend from $0.125 to $0.3125 and has authorized a share repurchase program of up to $10 million of our common stock.

As part of the restructuring program, we have begun the process of eliminating approximately 175 positions, primarily in research and development, but also in professional services, selling and marketing, and back-office support functions. We expect to record one-time pre-tax restructuring charges of approximately $6.2 million to $7.5 million, comprised of approximately $5.7 million to $6.6 million in severance and personnel related costs and approximately $0.5 million to $0.9 million in contractual terminations. Future cash payments related to these charges are expected to generally be within the same range. The restructuring actions associated with these charges are expected to be substantially complete in 2022. Further details can be found in Note 5 "Restructuring" in the Notes to Condensed Consolidated Financial Statements.

COVID-19

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and the virus ~~has~~ significantly impacted the global economy. Although federal and state restrictions were not widely adopted until late in the first quarter of 2020, we began to experience a direct impact on our sales cycle in late February 2020 as hospitals, our largest customer segment, began to delay purchasing decisions and address staff reductions. These delays ~~have~~ continued to affect our software bookings, which directly ~~impact~~impacted license and equipment ~~revenues.~~ revenues during 2021.

We ~~have~~ also experienced delays in our ability to deliver on-site implementation services, which ~~continued to impact~~has impacted our services revenue ~~throughout 2020 and into~~since the ~~first quarter~~onset of ~~2021.~~the pandemic. While much of our implementation process can be performed remotely, the on-premise nature of certain of our solutions requires some level of on-site ~~availability~~presence to ~~complete~~completely implement. These impacts primarily resulted in delays in the timing of revenue recognition during 2021, as associated revenue corresponds to our backlog of performance obligations ready for delivery at some point in the future.

While many hospitals relaxed their initial capacity and finalize customer software solutions. Although our software revenues for the first quarter of 2021 have marginally improved, we believe we will continue to see weaker professional services revenue in comparison to normal operating levels during the second quarter of 2021, followed by more normal operating levelssocial distancing guidelines in the second half of 2020, some of our customers continued such restrictions into 2021 and 2022 to ensure the ~~year.~~safety of their personnel and patients. Such restrictions, which have varied considerably depending on the size of an organization, geographical location and local regulations, can make it difficult for external personnel who are not critical to the immediate operating needs of a hospital, such as our implementation staff, to gain access.

~~Our ability~~Furthermore, hospital have continued to struggle with significant burnout and resource constraints due to the pandemic. The U.S. Healthcare system has lost between one in five and one in six healthcare workers since the pandemic began, and nursing staffs have been significantly depleted. On average it takes four to five years to train a nurse, and we expect these resource constraints to last well into the future.

As we return to ~~normal~~pre-pandemic operating levels, ~~is largely~~much of our business continues to be driven by our customers and their ability to ~~bring~~resume operations ~~back to levels~~ beyond providing just critical needs and emergency services. Many hospitals initially reduced the number of elective surgeries as a result of government restrictions, as well as patients delaying or canceling elective procedures during the pandemic. While ~~these~~most organizations began to see improved operating levels during the second half of 2020 and into 2021 and 2022 as ~~they better managed their admissions process and~~the number of overall U.S. virus cases declined, some of our customers in certain geographic areas continued to experience periodic capacity constraints due to the ~~timing~~emergence of ~~vaccine distributions as well as any~~new COVID-19 variants.

The length and severity of pandemic-related challenges affecting our customer base remain uncertain, and we continue to monitor new COVID-19 variants of concern that may indicate risks of increased transmission and more severe disease. Any significant spikes in U.S. virus cases could ~~further~~ delay or reverse progress towards returning to ~~normal~~pre-pandemic operational levels. ~~As previously discussed,~~With the continued distribution of effective vaccines, however, we ~~believe~~are optimistic that spikes in virus cases will be mitigated and that our customers' operating levels will continue to improve as pandemic-related restrictions are lifted.

While we are likely to see some lingering and continued effects from COVID-19, ~~throughout 2021, although we are cautiously optimistic that normal operating levels could be achieved during~~barring the ~~second half of the year.~~

Additionally, many hospitals continue to maintain restrictive social distancing guidelines to ensure the safety of their personnel and patients. These restrictions can make it difficult for external personnel who are not critical to the immediate operating needsemergence of a ~~hospital, such as our implementation staff, to gain access. These factors can vary considerably depending~~severe COVID-19 variant of concern, which might have significant negative effects on the ~~size of an organization, geographical location~~overall economy and ~~local regulations. Given that~~our customer base specifically, we ~~anticipate continued disruptions~~have largely returned to ~~our business, we believe our software revenues will continue to be impacted by the pandemic for the remainder of 2021. With regard to implementation services, these impacts have primarily resulted~~pre-pandemic operations in ~~delays in timing of revenue recognition, as associated revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future.~~2022.

~~Over the last several months of 2020 and into the first quarter of~~During 2021, we began to see modest improvements in each of the aforementioned areas that have been impacted by the COVID-19 pandemic, and we are cautiously optimistic that we will continue seeing sequential improvement in these areas over the next several quarters. We are also optimistic that any lingering effects from COVID-19 will have a lesser impact on our financial results in 2021 than they did in 2020.

As facts and circumstances continue to evolve over the coming months, we will continue to assess and communicate the anticipated impact on our business, and we will continue to diligently pursue countermeasurescontinued to prudently manage operating expenses ~~during this time,~~and liquidity, with athe goal of neutralizing the impact of the pandemic on our cash flows. Each of these measures is described in further detail ~~below and is subject to actual operating conditions experienced during the year.~~below:

•Reduced work schedules: We enacted a Company-wide plan that reduced work schedules, ~~with~~resulting in a ~~related~~ temporary reduction in compensation ~~rates~~expenses during the second, third and fourth quarters of 2020 and continuing ~~for~~through the first half of 2021, whereby each of our employees, including our executive officers, iswas subject to one ~~week~~to two weeks of a reduced work schedule per quarter. For the three months ended March 31, 2021, these reduced work schedules resulted in realized savings of $1.0 million in compensation expense. We expect to realize savings of between $0.7 million and $1.2 million in compensation expense for the second quarter of 2021. While we originally enacted this plan for the full-year 2021, we now believe that continuing this plan for the second half of the year is unnecessary, given our positive results for the first quarter as well as management's confidence in mitigating short-term uncertainties with regard to the pandemic.

•Equity in Lieu of Cash Compensation: ~~For~~We also enacted a plan for the first three quarters of 2021 whereby qualified employees ~~are receiving~~received a portion of their compensation in the form of shares of the Company's common stock in lieu of cash. These awards, ~~affecting~~which affected approximately 450 of our employees, ~~are~~were made in advance on a quarterly basis and ~~vest~~vested immediately. For the three months ended March 31, 2021, we achieved cash savings of $0.6 ~~million, and we expect to achieve a total of between $2.0 million and $3.0 million in cash savings for the year.~~million.

•Non-Employee Director Alternative DSU or Restricted Stock Plan: ~~Since inception of~~Under this alternative payment plan, which ~~began~~was in effect from the third quarter of 2020 through the third quarter of 2021, all non-employee directors ~~have~~ voluntarily elected to receive either DSUs or restricted stock in lieu of the entire cash portion of their compensation. ~~As a result, for~~For the three months ended March 31, 2021, we achieved cash savings of $0.1 ~~million, and we expect to achieve between $0.3 million and $0.5 million in cash savings for the year.~~million. (Refer to Note ~~10,~~11, "Stockholder's Equity" in the Notes to Condensed Consolidated Financial Statements for further detail related to the alternative DSU or restricted stock plan).

As we continue to see improvements in our operating levels, we are confident that the need to mitigate cash flow impacts through direct expense management will also continue to decline. While the Company has the ability to continue its countermeasures for the foreseeable future, we anticipate re-evaluating our position on a quarterly basis based on the progression of COVID-19, impacts on our business, and other facts and circumstances as deemed relevant by management.

We believe our cost mitigation efforts, in addition to relief provided by the CARES Act and natural cost savings that will materialize as a result of COVID-19 (e.g., reduced travel and events), will allow us to continue to offset any negative cash flow impact resulting from the pandemic during 2021.

Results of Operations

The following table is a summary of our Condensed Consolidated Statement of Operations for the ~~Three Months Ended~~three months ended March 31, ~~2021,~~2022, and ~~2020:~~2021:


		For the Three Months Ended March 31,				Change				For the Three Months Ended March 31,		Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Total		%			(Dollars in thousands)	2022		2021		Total		%

Revenue:	Revenue:										Revenue:
Wireless		$	20,120	$	21,386	$	(1,266)	(5.9)	%
Software		15,916		15,881		35		0.2	%
Wireless revenue											Wireless revenue	$	18,846	$	20,120	$	(1,274)	(6.3)	%
Software revenue											Software revenue	14,979		15,916		(937)		(5.9)	%
Total revenue	Total revenue	36,036		37,267		(1,231)		(3.3)	%		Total revenue	33,825		36,036		(2,211)		(6.1)	%
Operating expenses:	Operating expenses:										Operating expenses:
Cost of revenue (exclusive of items shown separately below)	Cost of revenue (exclusive of items shown separately below)	7,241		8,264		(1,023)		(12.4)	%		Cost of revenue (exclusive of items shown separately below)	7,804		7,982		(178)		(2.2)	%
Research and development	Research and development	4,506		5,449		(943)		(17.3)	%		Research and development	6,497		4,444		2,053		46.2	%
Technology operations	Technology operations	7,252		7,904		(652)		(8.2)	%		Technology operations	7,013		7,204		(191)		(2.7)	%
Selling and marketing	Selling and marketing	4,900		6,361		(1,461)		(23.0)	%		Selling and marketing	5,315		5,139		176		3.4	%
General and administrative	General and administrative	11,150		11,251		(101)		(0.9)	%		General and administrative	10,435		10,280		155		1.5	%
Depreciation, amortization and accretion	Depreciation, amortization and accretion	2,727		2,146		581		27.1	%		Depreciation, amortization and accretion	934		2,727		(1,793)		(65.7)	%
Severance and restructuring											Severance and restructuring	4,495		—		4,495		—	%

Total operating expenses	Total operating expenses	37,776		41,375		(3,599)		(8.7)	%		Total operating expenses	42,493		37,776		4,717		12.5	%
Operating loss	Operating loss	(1,740)		(4,108)		2,368		(57.6)	%		Operating loss	(8,668)		(1,740)		(6,928)		398.2	%
Interest income	Interest income	61		363		(302)		(83.2)	%		Interest income	67		61		6		9.8	%
Other expense	Other expense	(27)		(137)		110		(80.3)	%		Other expense	(13)		(27)		14		(51.9)	%
Loss before income taxes	Loss before income taxes	(1,706)		(3,882)		2,176		(56.1)	%		Loss before income taxes	(8,614)		(1,706)		(6,908)		404.9	%
Provision for income taxes		(591)		(657)		66		(10.0)	%
Benefit from (provision for) income taxes											Benefit from (provision for) income taxes	1,400		(591)		1,991		(336.9)	%
Net loss	Net loss	$	(2,297)	$	(4,539)	$	2,242	(49.4)	%		Net loss	$	(7,214)	$	(2,297)	$	(4,917)	214.1	%

Supplemental Information	Supplemental Information										Supplemental Information
Full-Time Equivalent ("FTE") Employees	Full-Time Equivalent ("FTE") Employees	603		620		(17)		(2.7)	%		Full-Time Equivalent ("FTE") Employees	548		603		(55)		(9.1)	%
Active transmitters	Active transmitters	3,631		3,811		(180)		(4.7)	%		Active transmitters	3,399		3,631		(232)		(6.4)	%

2021

Revenue

We offer a focused suite of unified clinical communications and collaboration solutions that include call center ~~operations,~~applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.

We develop, sell and support enterprise-wide systems for healthcare, government, large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos, and well-known manufacturers. Our primary market ~~has been~~is the healthcare provider industry, particularly hospitals. While we ~~continue to identify~~have historically identified hospitals with 200 or more beds as the primary targets for our software solutions, as well as our paging services, we have ~~recently~~ expanded our focus to include smaller hospitals with shorter sales cycles, including academic medical centers.

Revenue generated by wireless messaging services (including voice mail, personalized greeting, message storage and retrieval) ~~and~~, equipment, ~~loss~~maintenance plans and/or ~~maintenance~~equipment loss protection for both one-way and two-way messaging subscribers is presented as wireless revenue in our Statement of Operations. Revenue generated by the sale of our software solutions, which includes software license, ~~SaaS,~~ professional services (installation, consulting and training), equipment (to be used in conjunction with the software), and post-contract support (ongoing maintenance), is presented as software revenue in our Condensed Consolidated Statement of Operations. Our software is licensed to end users under an industry standard software license agreement.

Refer to Note 5,6, "Revenue, Deferred Revenue and Prepaid Commissions" in the Notes to Condensed Consolidated Financial Statements for additional information on our wireless and software revenue streams.

The table below details ~~total~~ revenue for the periods stated:


		For the Three Months Ended March 31,				Change				For the Three Months Ended March 31,		Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Total		%			(Dollars in thousands)	2022		2021		Total		%

Revenue - wireless:	Revenue - wireless:										Revenue - wireless:
Paging revenue	Paging revenue	$	19,353	$	20,451	$	(1,098)	(5)	%		Paging revenue	$	18,313	$	19,353	$	(1,040)	(5.4)	%
Product and other revenue	Product and other revenue	767		935		(168)		(18)	%		Product and other revenue	533		767		(234)		(30.5)	%
Total wireless revenue	Total wireless revenue	20,120		21,386		(1,266)		(6)	%		Total wireless revenue	18,846		20,120		(1,274)		(6.3)	%

Revenue - software:	Revenue - software:										Revenue - software:
License	License	1,507		955		552		58	%		License	1,824		1,552		272		17.5	%
Services		4,354		4,549		(195)		(4)	%
Equipment		616		725		(109)		(15)	%
Subscription		45		—		45		—	%
Professional services											Professional services	3,336		4,354		(1,018)		(23.4)	%
Hardware											Hardware	589		616		(27)		(4.4)	%

Operations revenue	Operations revenue	6,522		6,229		293		5	%		Operations revenue	5,749		6,522		(773)		(11.9)	%
Maintenance revenue	Maintenance revenue	9,394		9,652		(258)		(3)	%		Maintenance revenue	9,230		9,394		(164)		(1.7)	%
Total software revenue	Total software revenue	15,916		15,881		35		—	%		Total software revenue	14,979		15,916		(937)		(5.9)	%
Total revenue	Total revenue	$	36,036	$	37,267	$	(1,231)	(3)	%		Total revenue	$	33,825	$	36,036	$	(2,211)	(6.1)	%

Wireless Revenue

The decrease in wireless revenue for the three months ended March 31, ~~2021,~~2022, compared to the same period in ~~2020~~2021, reflects the secular decrease in demand for our wireless services. Wireless revenue is generally ~~based upon~~reflective of the number of units in service and ~~the~~measured monthly as Average Revenue Per User ("ARPU"). On a consolidated basis, ARPU is affected by several factors, including the mix of units in service and the pricing of the various components of our services. The number of units in service changes based on subscribers added, referred to as gross placements, less subscriber cancellations, or disconnects.

ARPU was $7.24 and $7.34 for the three months ended March 31, ~~2021,~~2022, and ~~2020 was $7.34 and $7.31,~~2021, respectively. Total units in service were 0.8 million and 0.9 million as of March 31, 2022, and 2021, ~~and 2020. The increase~~respectively. Approximately half of the decline in ARPU was ~~primarily due~~related to the ~~Telecommunications Relay Service Charge ("TRS") which we began to recover from customers~~decreases in ~~2021, as well as general increases of~~ Universal Service Fees ("USF")~~, offset by~~ with the remainder coming primarily from lower variable revenue ~~and an expected decline in~~associated with overcall fees which are charged to customers when their service ~~revenue.~~usage is greater than their allotted plan. USF ~~and TRS~~ fees are effectively pass-through items that have corresponding costs associated with them. Excluding these pass-through items, ARPU would have declined in-line with historical trends.

~~While demand for wireless services continues to decline, it has done so at a slower rate for each of the periods presented. While we are optimistic that this trend will continue in future periods, we~~We believe that demand will continue to decline for the foreseeable future in line with recent and historical ~~trends. As~~trends, as our wireless products and services are replaced with other competing technologies, such as the shift from narrowband wireless service offerings to broadband technology ~~services, our wireless revenue will continue to decline.~~services.

The following reflects the impact of subscribers and ARPU on the change in ~~wireless~~paging revenue:


		Units in Service as of March 31,			Revenue for the Three Months Ended March 31,						Change Due To:					For the Three Months Ended March 31,			Change Due To:
(in thousands)	(in thousands)	2021	2020	Change	2021		2020		Change		ARPU		Units		(in thousands)		2022		2021		Change		ARPU		Units

Paging revenue	Paging revenue	874	926	(52)	$	19,353	$	20,451	$	(1,098)	$	62	$	(1,160)	Paging revenue		$	18,313	$	19,353	$	(1,040)	$	(232)	$	(808)

As demand for one-way and two-way messaging has declined, we have developed or added service offerings such as encrypted paging and Spok Mobile with a pager number ~~in order~~ to increase our revenue potential and mitigate the decline in our wireless revenue. We will continue to explore ways to innovate and provide customers the highest value possible.

In late 2021, we began offering our newest pager, GenA. This one-way alphanumeric pager features a high resolution ePaper display, intuitive modern user interface, advanced encryption and security features, over-the-air remote programming, and an antimicrobial housing. Users can select from various font sizes, and the large GenA display also leverages proportional fonts to maximize key information on a single screen.

The GenA pager is the only product available on the market with these capabilities, and we maintain an exclusive arrangement with the product's manufacturer. Given the product differentiation of the GenA pager, its development is a key initiative providing a competitive advantage, and we expect this new technology will be popular with our customers in clinical environments and may help slow our wireless revenue attrition.

Software Revenue

Software revenue consists of two components: operations revenue and maintenance revenue. Operations revenue consists primarily of license revenues for our healthcare communications solutions, revenue from the sale of equipment that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is generated from our ongoing support of our software solutions or related equipment, typically for a period of one year after project completion.

To a large degree, software revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition. Our software projects generally originate from fixed-bid contracts, although many involve a protracted sales cycle and may result in unforeseen complexity and deviation from original scope. The time needed to complete projects, therefore, may not align with our original expectations, which affects our backlog. As a result, software revenue may fluctuate on a short-term basis, and we generally evaluate longer-term trends when managing this business.

Operations Revenue

~~For the three months ended March 31, 2021, as compared to the same period in 2020, license~~Software operations revenue increased as a result of an increase in bookings coinciding with modest improvements in sales as our customer base has experienced improved operating levels. Services revenue was lower, primarily as a result of lower travel revenuedecreased during the three months ended March 31, ~~2021, which is generally~~2022, when compared to the same period in 2021. Services revenue decreased due to a ~~pass-through item. Additionally, reduced work-schedules were~~number of factors, including a decrease in ~~place~~billable personnel and an underutilization of resources, during the three months ended March 31, 2022. The underutilization of resources can largely be attributed to the announcement of our new strategic business plan and related restructuring efforts whereby certain services personnel were notified of termination 60 days in advance in accordance with Federal law. The decline in services revenue was partially offset by an increase in license revenue, given an improving economy and selling environment when compared to the period in 2021.

Maintenance Revenue

Compared to the same period in 2021, ~~which resulted in reduced personnel capacity to perform project work in relation to~~maintenance revenue decreased for the three months ended March 31, ~~2020.~~

~~Maintenance Revenue~~

For the three months ended March 31, 2021, as compared to the same period in 2020, the decrease in maintenance revenue is primarily due to the general decline in maintenance revenue throughout 2020. Those declines were largely attributable to the continued historical decline in license bookings, from which maintenance revenues are derived.2022. Current trends in revenue churn rates remain relatively stable and are ~~in-line~~in line with historical trends. However, ~~in 2020,~~ the deterioration of maintenance revenue from new license bookings has created an environment where churn ~~was~~is greater than the inflow of new revenue. Historically, this revenue churn had been offset by the growth in our license sales.

~~As we continue to focus the majority of our development efforts on Spok Go, we anticipate a continued decline in our ability to sell new licenses for the Care Connect Suite of products.~~ While we have not seen a meaningful increase in our normal customer churn, our ability to replace this churn with new revenues will not likely replicate what we have accomplished historically nor do we expect to fully offset this with annual increases of our existing base. ~~Our intent is to replace this churn with the sale of Spok Go as well as transition existing on-premise customers to our cloud-based solution over the next several years.~~ Given these dynamics, we believe annual maintenance revenue is likely to be relatively flat or slightly down asuntil such time that we ~~move forward, especially as we begin the process of transitioning~~are able to enhance our existing ~~customers to a subscription model.~~software solutions, which would provide an avenue for additional maintenance revenue.

2224

Operating Expenses

Our operating expenses are presented in functional categories. Certain of our functional categories are especially important to overall expense control and management. These operating expenses are categorized as follows:

•Cost of Revenue. These are expenses we incur for the delivery of products and services to our customers and consist primarily ~~for~~of hardware, third-party software, outside services expenses and payroll and related expenses for our professional services, logistics, customer support and maintenance staff.

•Research and Development. These expenses relate primarily to the development of new software products and the ongoing maintenance and enhancement of existing products. This classification consists primarily of employee payroll and related expenses, outside services related to the design, development, testing and enhancement of our solutions and to a lesser extent hardware equipment. ~~The research~~Research and development ~~costs~~expenses exclude any development costs ~~which~~that qualify for capitalization.

•Technology Operations. These are expenses associated with the operation of our paging networks. Expenses consist largely of site rent expenses for transmitter locations, telecommunication expenses to deliver messages over our paging networks, and payroll and related expenses for our engineering and pager repair functions. We actively pursue opportunities to consolidate transmitters and other service, rental and maintenance ~~operations~~expenses in order to maintain an efficient network while simultaneously ensuring adequate service for our customers. We believe continued reductions in these expenses will occur for the foreseeable future as ~~our networks~~we continue to ~~be consolidated,~~consolidate our networks, although the benefits of such network rationalization efforts and resulting costs savings will continue to ~~decline .~~decline.

•Selling and Marketing. The sales and marketing staff are involved in selling our communication solutions primarily in the United States. These expenses support our efforts to maintain gross placements of units in service, which mitigated the impact of disconnects on our wireless revenue base, and to identify business opportunities for additional or future software sales. We ~~have~~maintain a centralized marketing function that is focused on supporting our products and vertical sales efforts by strengthening our brand, generating sales leads and facilitating the sales process. These marketing functions are accomplished through targeted email campaigns, webinars, regional and national user conferences, monthly newsletters and participation at industry trade shows. Expenses consist largely of payroll and related expenses, commissions and other costs such as travel and advertising costs.

•General and Administrative. These are expenses associated with information technology and administrative functions, including finance and accounting, human resources and executive management. This classification consists primarily of payroll and related expenses, outside services expenses, taxes, licenses and permit expenses, and facility rent expenses.

•Depreciation, Amortization and Accretion. These are expenses that may be associated with one or more of the aforementioned functional categories. This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations, amortization of intangible assets, amortization of capitalized software development costs, and accretion of asset retirement obligations.

2325

The following is a review of our operating expense categories for the three months ended March 31, ~~2021,~~2022, and ~~2020.~~2021. Certain prior period amounts have been reclassified to conform to the current period's presentation.

Cost of Revenue

Cost of revenue consisted primarily of the following items:


		For the Three Months Ended March 31,				Change				For the Three Months Ended March 31,		Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Total		%			(Dollars in thousands)	2022		2021		Total		%

Payroll and related	Payroll and related	$	5,369	$	5,785	$	(416)	(7.2)	%		Payroll and related	$	5,110	$	5,139	$	(29)	(0.6)	%
Cost of sales	Cost of sales	1,251		1,940		(689)		(35.5)	%		Cost of sales	1,557		1,386		171		12.3	%
Recoverable taxes and fees											Recoverable taxes and fees	712		867		(155)		(17.9)	%
Stock-based compensation	Stock-based compensation	322		119		203		170.6	%		Stock-based compensation	109		291		(182)		(62.5)	%
Other	Other	299		420		(121)		(28.8)	%		Other	316		299		17		5.7	%
Total cost of revenue	Total cost of revenue	$	7,241	$	8,264	$	(1,023)	(12.4)	%		Total cost of revenue	$	7,804	$	7,982	$	(178)	(2.2)	%

FTE Employees	FTE Employees	193		203		(10)		(4.9)	%		FTE Employees	177		186		(9)		(4.8)	%

For the three months ended March 31, ~~2021, as~~2022, cost of revenue decreased compared to the same period in 2020, cost of sales declined largely due to reduced travel costs resulting from the pandemic as well as lower professional services costs. Payroll and related costs decreased primarily as a result of temporary cost reductions implemented2021, driven by ~~management beginning in the second quarter of 2020, as well as~~ a decrease in ~~overall headcount. In addition, effective January 1, 2021, qualified~~stock-based compensation and recoverable taxes and fees, partially offset by an increase in cost of sales.

Stock-based compensation decreased as we discontinued the cost savings measure to provide a portion of compensation for certain employees ~~began receiving~~in the form of shares of the Company's common stock ~~compensation~~ in lieu of ~~cash payment for~~cash. Additionally, there was a ~~portion of their salary, which decreased payroll~~general decrease in employees compensated with stock-based compensation in 2022, attributable to the restructuring activities and related ~~costs~~elimination of positions. Recoverable taxes and ~~increased stock-based compensation for the three months ended March 31, 2021. These temporary cost reductions~~fees declined due to general decreases in USF fees, which are ~~outlined in more detail within our earlier discussion on COVID-19.~~essentially pass-through items. Cost of sales expenses grew primarily due to greater use of third-party professional services that we utilize to augment Company resources when short-term capacity constraints exist.

Research and Development

Research and development expenses consisted of the following items:


		For the Three Months Ended March 31,				Change				For the Three Months Ended March 31,		Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Total		%			(Dollars in thousands)	2022		2021		Total		%

Payroll and related	Payroll and related	$	4,475	$	4,761	$	(286)	(6.0)	%		Payroll and related	$	4,305	$	4,475	$	(170)	(3.8)	%
Outside services	Outside services	2,277		1,584		693		43.8	%		Outside services	1,899		2,277		(378)		(16.6)	%
Capitalized software development	Capitalized software development	(2,920)		(1,705)		(1,215)		71.3	%		Capitalized software development	—		(2,920)		2,920		(100.0)	%
Stock-based compensation	Stock-based compensation	475		236		239		101.3	%		Stock-based compensation	130		475		(345)		(72.6)	%
Other	Other	199		573		(374)		(65.3)	%		Other	163		137		26		19.0	%
Total research and development	Total research and development	$	4,506	$	5,449	$	(943)	(17.3)	%		Total research and development	$	6,497	$	4,444	$	2,053	46.2	%

FTE Employees	FTE Employees	122		123		(1)		(0.8)	%		FTE Employees	101		122		(21)		(17.2)	%

~~Research~~For the three months ended March 31, 2022, research and development expenses ~~decreased~~increased compared to the same period in 2021, driven by lower capitalized software development. This was partially offset by decreases in outside services, stock-based compensation and payroll and related costs.

As a result of our decision to discontinue Spok Go, for the three months ended March 31, ~~2021,~~2022, we did not capitalize any software development costs, as compared to ~~the same periods~~$2.9 million in ~~2020, primarily due to the capitalization of certain~~capitalized software development costs related to Spok Go. Refer to Note 7, "Consolidated Financial Statement Components" for further detail. The payroll and related costs decreased primarily as a result of temporary cost reductions implemented by management beginning in the second quarter of 2020, as well as a decrease in overall headcount. In addition, effective January 1, 2021, qualified employees began receiving stock compensation in lieu of cash payment for a portion of their salary, which decreased payroll and related costs and increased stock-based compensation for the three months ended March 31, 2021. These temporary cost reductions are outlined in more detail within our earlier discussion on COVID-19. The increase in outside services for the three months ended March 31, 2021, is largely the timing of costs in relation to the same period in ~~2020.~~2021.

Outside service costs tend to vary based on the timing of professional services, attributable to our full suite of products. Stock-based compensation decreased as we discontinued the cost savings measure to provide a portion of compensation for certain employees in the form of shares of the Company's common stock in lieu of cash. Additionally, there was a general decrease in employees compensated with stock-based compensation in 2022, attributable to the restructuring activities and related elimination of positions.Payroll and related costs declined largely due to the decrease in headcount, partially offset by increased payroll resulting from the discontinuation of reduced work schedules as of the third quarter of 2021.

We will continue to focus on the development efforts of our software solutions and intend to maintain these efforts based on their importance to our continued ~~success. While~~success, however these efforts will be targeted to specific enhancements. We expect total research and development ~~costs have continued to grow, they have done so at a slower pace when compared to prior years. Excluding the effects of capitalization, these~~ costs will continue to ~~substantially impact margins~~significantly decrease in 2022 as part of our new strategic business plan and our ~~cash flow from operations. The benefits from our development efforts are contingent upon successful adoption of~~intent to eliminate all Spok Go ~~in the marketplace, which we expect to gradually take place over the next several years.~~related costs.

Technology Operations

Technology operations expenses consisted primarily of the following items:


		For the Three Months Ended March 31,				Change				For the Three Months Ended March 31,		Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Total		%			(Dollars in thousands)	2022		2021		Total		%

Payroll and related	Payroll and related	$	2,467	$	2,712	$	(245)	(9.0)	%		Payroll and related	$	2,509	$	2,467	$	42	1.7	%
Site rent	Site rent	3,196		3,398		(202)		(5.9)	%		Site rent	3,067		3,196		(129)		(4.0)	%
Telecommunications	Telecommunications	837		1,001		(164)		(16.4)	%		Telecommunications	771		837		(66)		(7.9)	%
Stock-based compensation	Stock-based compensation	137		43		94		218.6	%		Stock-based compensation	55		137		(82)		(59.9)	%
Other	Other	615		750		(135)		(18.0)	%		Other	611		567		44		7.8	%
Technology Operations	Technology Operations	$	7,252	$	7,904	$	(652)	(8.2)	%		Technology Operations	$	7,013	$	7,204	$	(191)	(2.7)	%

FTE Employees	FTE Employees	89		90		(1)		(1.1)	%		FTE Employees	85		89		(4)		(4.5)	%

~~Technology operations expense decreased for~~For the three months ended March 31, ~~2021,~~2022, technology operations expenses decreased slightly compared to the same ~~periods~~period in ~~2020,~~2021, primarily due to ~~the decrease~~decreases in site rent and stock-based compensation, offset by a modest increase in payroll and related ~~site rent, telecommunications and other minor~~ expenses. The payroll and related costs decreased primarily as a result of temporary cost reductions implemented by management beginning in the second quarter of 2020. In addition, effective January 1, 2021, qualified employees began receiving stock compensation in lieu of cash payment for a portion of their salary, which decreased payroll and related costs and increased stock-based compensation for the three months ended March 31, 2021. These temporary cost reductions are outlined in more detail within our earlier discussion on COVID-19.

The number of active transmitters, which directly affects our site rent expenses, declined ~~4.7% between~~6.4% from March 31, 2021, ~~and~~to March 31, ~~2020. The number~~2022, a result of ~~active transmitters directly relates to the amount of site rent expenses we generally incur on a recurring basis.~~our network rationalization efforts. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks. Stock-based compensation decreased as a result of discontinuing our plan to provide a portion of compensation for certain employees in the form of shares of the Company's common stock in lieu of cash. Payroll and related expenses increased primarily due to increased payroll resulting from the discontinuation of reduced work schedules as of the third quarter of 2021

Selling and Marketing

Selling and marketing expenses consisted of the following items:


		For the Three Months Ended March 31,				Change				For the Three Months Ended March 31,		Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Total		%			(Dollars in thousands)	2022		2021		Total		%

Payroll and related	Payroll and related	$	3,135	$	3,583	$	(448)	(12.5)	%		Payroll and related	$	3,468	$	3,365	$	103	3.1	%
Commissions	Commissions	1,105		1,212		(107)		(8.8)	%		Commissions	1,024		1,105		(81)		(7.3)	%
Stock-based compensation	Stock-based compensation	319		172		147		85.5	%		Stock-based compensation	79		350		(271)		(77.4)	%
Advertising and events	Advertising and events	161		784		(623)		(79.5)	%		Advertising and events	568		161		407		252.8	%
Other	Other	180		610		(430)		(70.5)	%		Other	176		158		18		11.4	%
Total selling and marketing	Total selling and marketing	$	4,900	$	6,361	$	(1,461)	(23.0)	%		Total selling and marketing	$	5,315	$	5,139	$	176	3.4	%

FTE Employees	FTE Employees	97		101		(4)		(4.0)	%		FTE Employees	91		104		(13)		(12.5)	%

~~Selling~~

For the three months ended March 31, 2022, selling and marketing expenses ~~decreased~~increased compared to the same period in 2021, driven primarily by increases in advertising and events and payroll and related expenses, partially offset by a reduction in stock-based compensation.

The increase in advertising and events largely reflects an increase in trade show participation compared to the same period last year which was still in peak months of the pandemic. Nationwide travel and in-person participation in larger marketing events has improved but continued to remain below pre-pandemic levels. Payroll and related expenses were lower during the three months ended March 31, 2021 as a result of cost savings measures, including reduced work schedules and equity in lieu of cash compensation that were not in place for the three months ended March 31, ~~2021, compared to~~2022. This was partially offset by the ~~same periods~~decrease in ~~2020, primarily~~headcount.

Stock-based compensation decreased due to the ~~decrease in payroll and related, commissions and advertising and events. The payroll and related costs decreased primarily as~~discontinuation of the cost savings measure to provide a ~~result~~portion of ~~temporary cost reductions implemented by management beginning~~compensation for certain employees in the ~~second quarter~~form of ~~2020, as well as a decrease in overall headcount. In addition, effective January 1, 2021, qualified employees began receiving~~shares of the Company's common stock ~~compensation~~ in lieu of ~~cash payment for~~cash. Additionally, there was a ~~portion of their salary, which decreased payroll~~general decrease in employees compensated with stock-based compensation in 2022, attributable to the restructuring activities and related costs and increased stock-based compensation for the three months ended March 31, 202 These temporary cost reductions are outlined in more detail within our earlier discussion on COVID-19. The decrease in commissions expenses primarily relates to a corresponding decrease in revenue. The decrease in advertising, events and other expenses was largely the resultelimination of ~~reduced travel and fewer trade events as large public gatherings continue to remain generally restricted.~~positions.

General and Administrative

General and administrative expenses consisted of the following items:

For the Three Months Ended March 31, Change
(Dollars in thousands) 2021 2020 Total %
Payroll and related $ 3,818 $ 4,134 $ (316) (7.6) %
Stock-based compensation 986 612 374 61.1 %
Facility rent, office and technology costs 2,480 2,068 412 19.9 %
Outside services 1,825 2,036 (211) (10.4) %
Taxes, licenses and permits 1,081 859 222 25.8 %
Bad debt 106 43 63 146.5 %
Other 854 1,499 (645) (43.0) %
Total general and administrative $ 11,150 $ 11,251 $ (101) (0.9) %
FTE Employees 102 103 (1) (1.0) %

General and administrative expenses decreased for the three months ended March 31, 2021, compared to the same periods in 2020, primarily due to a decrease in payroll and related and various other expenses, partially offset by an increase in stock-based compensation and facility rent, office and technology costs. The payroll and related costs decreased primarily as a result of temporary cost reductions implemented by management beginning in the second quarter of 2020, In addition, effective January 1, 2021, qualified employees began receiving stock compensation in lieu of cash payment for a portion of their salary, which decreased payroll and related costs and increased stock-based compensation for the three months ended March 31, 2021. These temporary cost reductions are outlined in more detail within our earlier discussion on COVID-19.


	For the Three Months Ended March 31,				Change
(Dollars in thousands)	2022		2021		Total		%

Payroll and related	$	4,051	$	3,818	$	233	6.1	%
Stock-based compensation	742		986		(244)		(24.7)	%
Facility rent, office and technology costs	2,680		2,480		200		8.1	%
Outside services	1,900		1,825		75		4.1	%
Taxes, licenses and permits	265		214		51		23.8	%
Bad debt	(14)		106		(120)		(113.2)	%
Other	811		851		(40)		(4.7)	%
Total general and administrative	$	10,435	$	10,280	$	155	1.5	%

FTE Employees	94		102		(8)		(7.8)	%

For the three months ended March 31, 2022, general and administrative expenses increased compared to the same period in 2021, ~~the increase~~driven by increases in payroll and related costs and facility rent, office and technology costs. These were partially offset by decreases in stock-based compensation ~~was primarily~~and bad debt expenses.

Payroll and related ~~to expense related to~~expenses increased as we discontinued the ~~alternative DSU plan made available to the Board~~cost savings measure of ~~Directors in~~reduced work schedules as of the third quarter of ~~2020, as well as stock compensation in lieu of cash for qualified Spok employees, as mentioned above. Refer to Note 10, "Stockholder Equity" for further detail related to the alternative DSU plan.~~

2021. The increase in facility rent, office and technology costs was primarily due to ~~additional rent~~higher expenses for ~~our new headquarters lease, effective March, 2021,~~software, hardware and IT related costs.

Stock-based compensation decreased as ~~well~~we discontinued the cost savings measure to provide a portion of compensation for certain employees in the form of shares of the Company's common stock in lieu of cash, which ended as ~~increase in back office software costs. The~~of the fourth quarter of 2021. Additionally, there was a general decrease in ~~other expenses is due primarily~~employees compensated with stock-based compensation in 2022, attributable to the restructuring activities and related elimination of positions. Bad debt expense was lower ~~travel costs~~ resulting from ~~continued restrictions and other miscellaneous cost savings.~~improvements in collection efforts with a corresponding reduction in the amount reserved for credit losses.

Depreciation, Amortization and Accretion

~~Depreciation,~~For the three months ended March 31, 2022, and 2021, depreciation, amortization and accretion expenses were ~~$2.7~~$0.9 million and ~~$2.1~~$2.7 million, respectively. Expenses decreased for the three months ended March 31, 2022, compared to the same period in 2021, primarily due to amortization of software development costs ending in the fourth quarter of 2021 as a result of discontinuation of Spok Go. Expenses also decreased due to lower depreciation for certain computer hardware and software assets that became fully depreciated in 2021.

Severance and Restructuring

For the three months ended March 31, 2022, severance and restructuring expenses were $4.5 million. Expenses increased for the three months ended March 31, 2022, primarily due to an increase in severance and personnel related costs of $4.0 million and costs related to contractual terminations of $0.5 million, resulting from the implementation of the new strategic business plan. Further details can be found in Note 5 "Restructuring" in the Notes to Condensed Consolidated Financial Statements.

Income Taxes

Benefit from (provision for) income taxes from income taxes was $1.4 million and $(0.6) million for the three months ended March 31, 2022, and 2021, ~~and 2020. Expenses increased by $0.6 million~~respectively. Benefit from (provision for) income taxes changed for the three months ended March 31, ~~2021,~~2022, compared to the same period in 2020 primarily due to the amortization of software development costs offset by decreased expense related to certain computer hardware and software assets becoming fully depreciated in 2020 and continued efforts to reduce capital expenditures. The capitalization of software development costs began in the first quarter of 2020 and amortization of certain of those costs began in the third quarter of 2020. For additional details regarding depreciation, amortization and accretion expenses refer to Note 7, "Consolidated Financial Statement Components."

~~Income Taxes~~

~~Provision for income taxes was $0.6 million and $0.7 million for the three months ended March 31,~~ 2021 ~~and 2020, respectively. Provision for income taxes decreased $0.1 million for the three months ended March 31, 2021, compared to the same period in 2020~~ due to the difference in the anticipated annual effective tax rate as a result of certain permanent tax differences, estimated research and development tax credits and related valuation allowance, and certain discrete items. Further details can be found in Note ~~11,~~12, "Income ~~Taxes."~~Taxes" in the Notes to Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

Cash and Cash Equivalents

At March 31, ~~2021,~~2022, we held cash, cash equivalents and short-term investments of ~~$71.6~~$46.3 million. The available cash and cash equivalents consist of ~~invested~~ cash ~~and~~ in our operating ~~accounts. The invested~~accounts and cash is invested in interest-bearing funds managed by third-party financial institutions. These funds invest in U.S. Treasury securities ~~which~~and are therefore classified as held-to-maturity and are ~~measured~~reported at amortized cost onin our Condensed Consolidated Balance Sheets. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurance that access to our invested cash and cash equivalents will not be impacted by adverse market conditions. Our short-term investments consist entirely of U.S. Treasury securities, which are classified as held-to-maturity and are measured at amortized cost on our Condensed Consolidated Balance Sheets.

Cash Sources

Our primary sources of liquidity have been our cash flows generated from operations and existing cash and cash equivalents. We maintain a level of liquidity sufficient to allow us to meet our cash needs in both the ~~short-~~short term (next 12 months) and ~~long-term.~~long term (beyond 12 months). At any point in time, we ~~typically~~ maintain approximately ~~$7.0~~$5.0 million to ~~$15.0~~$10.0 million in our operating accounts that are with third-party financial institutions. While we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts.

Cash Uses

We intend to use our cash on hand to provide working capital, to support operations, to invest in our business, and to return value to stockholders through cash dividends and ~~possible~~ repurchases of our common stock. We may also consider using cash to fund or complete opportunistic investments and acquisitions that we believe will provide a measure of growth or revenue stability while supporting our existing operations. ~~Because~~As a result of our discontinuation of Spok Go, we ~~intend to continue to~~will no longer invest heavily in its development, and, as a result, we anticipate that we will have more cash available for other uses than in prior years.

On February 16, 2022, the ~~development~~Board authorized a share repurchase program for up to $10 million of ~~Spok Go over~~ the ~~next several years, commensurate~~Company’s common stock. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with ~~declining revenues from~~the rules of the SEC and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

As part of the restructuring program in connection with our ~~wireless~~new strategic business plan, we expect to record one-time pre-tax restructuring charges of approximately $6.2 million to $7.5 million, comprised of approximately $5.7 million to $6.6 million in severance and personnel related costs and approximately $0.5 million to $0.9 million in contractual terminations. Future cash payments related to these charges are expected to generally be within the same range. The restructuring actions associated with these charges are expected to be substantially complete in 2022. Because of these cash payments related to the restructuring program, we anticipate that our cash on hand will decrease ~~significantly~~ during ~~that period,~~2022. However, our restructuring efforts are meant to refocus our operational efforts towards cash flow generation and ~~possibly longer until revenues from Spok Go begin~~the return of capital to our stockholders. Should our restructuring efforts be ~~realized.~~successful, we anticipate future operating periods will return to historically positive cash flow generation.

Cash Flows Overview

In response to COVID-19, management ~~has~~ enacted certain temporary cost mitigation measures in 2020 and 2021, as previously ~~discussed, that it believes will allow the Company to operate in a cash flow positive manner for the remainder of the year.~~discussed. While we ~~had~~have previously ~~mentioned~~discussed the ~~potential~~ impact on our revenues from the pandemic, we do not expect COVID-19 will have a material impact on our liquidity ~~at this time~~ given our ability to reduce costs further, if necessary.

In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce or eliminate our cash dividends to stockholders, not ~~resume~~repurchase shares of our common stock under the share repurchase program, sell assets or seek additional financing. We can provide no assurance that reductions in planned capital expenses or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that outside financing would be available on acceptable terms.

Based on current and anticipated levels of operations, we anticipate that net cash provided by operating activities, together with the available cash on hand at March 31, ~~2021,~~2022, should be adequate to meet our anticipated cash requirements for the ~~foreseeable future.~~short term (next 12 months) and long term (beyond 12 months).

The following table sets forth information on our net cash flows from operating, investing, and financing activities for the periods stated:

Three Months Ended March 31, Change
(Dollars in thousands) 2021 2020
Net cash provided by operating activities $ 719 $ 1,317 $ (598)
Net cash used in investing activities (3,642) (2,642) (1,000)
Net cash used in financing activities (4,174) (3,532) (642)


	Three Months Ended March 31,				Change
(Dollars in thousands)	2022		2021

Net cash (used in) provided by operating activities	$	(4,879)	$	719	$	(5,598)
Net cash used in investing activities	(646)		(3,642)		2,996
Net cash used in financing activities	(7,733)		(4,174)		(3,559)

Operating Activities

As discussed above, we are dependent on cash flows from operating activities to meet our cash requirements. Cash from operations varies depending on changes in various working capital items, including deferred revenues, accounts payable, accounts receivable, prepaid expenses and various accrued expenses.

For the three months ended March 31, 2022, net cash used by operating activities was $4.9 million due primarily to the net loss of $7.2 million, changes in deferred revenue of $(1.6) million and in prepaid expenses and other assets of $(1.4) million, and a deferred income tax benefit of $1.0 million. This was partially offset by changes in accounts receivable of $3.0 million, stock-based compensation of $1.1 million, depreciation, amortization and accretion of $0.9 million, and changes in accounts payable, accrued liabilities and other of $0.9 million.

For the three months ended March 31, 2021, net cash provided by operating activities was $0.7 million due primarily to non-cash items such as depreciation, amortization and accretion of $2.7 million, stock-based compensation of $2.2 million, and other non-cash items of $0.7 million. This was partially offset by a net loss of $2.3 million, a change in accounts payable, accrued liabilities and other of $3.0 million and deferred revenue of $1.4 million, partially offset by changes in account receivable of $1.0 million, change in prepaid expenses, inventory, and other assets of $0.5 million and changes in lease liability of $0.3 million.

For the three months ended March 31, 2020, cash provided by operating activities was $1.3 million due primarily to non-cash items such as depreciation, amortization and accretion of $2.1 million, stock-based compensation of $1.1 million, deferred income tax expense of $0.8 million, partially offset by net loss of $4.5 million. Cash provided by operating activities also increased resulting from the change in accounts receivable of $2.4 million and prepaid expenses, inventory, and other assets of $1.0 million, partially offset by changes in accounts payable, accrued liabilities and other of $1.1 million and deferred revenue of $0.5 million.

Investing Activities

For the three months ended March 31, 2022, and 2021, ~~and 2020,~~net cash used in investing activities was ~~$3.6~~$0.6 million and ~~$2.6 million, respectively, due primarily to~~$3.6 million. Our 2021 investing activities reflected the capitalization of software development costs, however with the discontinuation of Spok Go, we did not incur such costs in 2022. Net cash used in investing activities also reflects purchases of property and equipment, and the purchase and maturity of short-term ~~investments.~~investments in both periods.

Financing Activities

For the three months ended March 31, 2022, and 2021, ~~and 2020,~~net cash used in financing activities was ~~$4.2~~$7.7 million and ~~$3.5~~$4.2 million, respectively, due primarily to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.

~~The Board of Directors currently expects to pay dividends of $0.125 per common share each quarter in 2021, subject to declaration by the Board of Directors.~~ On April ~~28, 2021,~~27, 2022, our Board of Directors declared a regular quarterly cash dividend of ~~$0.125~~$0.3125 per share of common stock with a record date of May 25, ~~2021,~~2022, and a payment date of June 24, ~~2021.~~2022. This cash dividend of approximately ~~$2.4~~$6.1 million, applicable to our common stock outstanding, will be paid from available cash on hand. We expect to continue paying dividends of $0.3125 per share of common stock each quarter for the remainder of 2022, subject to declaration by the Board of Directors.

Commitments and Contingencies

In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

~~See Note 12, "Commitments~~Purchase obligations are defined as agreements to purchase goods or services that are enforceable, legally binding, non-cancelable, have a remaining term in excess of one year and ~~Contingencies" for further discussion~~that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable pricing provisions; and the approximate timing of transactions. The amounts of such obligations are based on our contractual commitments, however, it is possible that we may be able to negotiate lower payments if we choose to exit these contracts before their expiration date.

Our contractual payment obligations for operating leases apply to leases for office space and transmitter locations. Substantially all of these leases have lease terms ranging from one month to five years. We continue to review our office and transmitter locations and intend to replace, reduce or consolidate leases where possible. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks. In March 2021, we relocated our corporate headquarters to office space located in Alexandria, Virginia, consisting of approximately 26,000 square feet of space under a lease that will expire on September 30, 2026. Over the life of this lease, cash payments are expected to total approximately $4.9 million.

The Company evaluates contingencies on an ongoing basis and establishes loss provisions for matters in which losses are probable and the amount of loss can be reasonably estimated.

The following table provides the Company's significant commitments and ~~contingencies.~~contractual obligations as of March 31, 2022:


	Payments Due by Period
(Dollars in thousands)	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years

Operating lease obligations	$	14,444	4,559		$	6,961	$	2,695	$	229
Unconditional purchase obligations	6,441		3,256		3,116		69		—
Total contractual obligations	$	20,885	$	7,815	$	10,077	$	2,764	$	229

~~Operating Leases~~

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

We have operating leases for office and transmitter locations. Substantially all of these leases have lease terms ranging from one month to five years. We continue to review our office and transmitter locations and intend to replace, reduce or consolidate leases where possible. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks. ~~Total rent expense under operating leases was $4.2 million for the three months ended March~~

31 ~~2021, and 2020.~~

~~Off-Balance Sheet Arrangements~~

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Refer to Note 7, "Leases," and Note 13, "Commitments and Contingencies" in the Notes to Condensed Consolidated Financial Statements for further discussion on our commitments and contingencies.

Related Party Transactions

See Note ~~13,~~14, "Related Parties" in the Notes to Condensed Consolidated Financial Statements for a discussion regarding our related party transactions.

Critical Accounting Policies and Estimates

The preceding discussion and analysis of financial condition and operations is based on our Condensed Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of our Condensed Consolidated Financial Statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets and intangible assets subject to amortization and goodwill, accounts receivable, revenue recognition, asset retirement obligations, and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes to the critical accounting policies reported in the ~~2020~~2021 Annual Report that affect our significant judgments and estimates used in the preparation of our Condensed Consolidated Financial ~~Statements other than those outlined in Note 4, "Significant Accounting Policies Update."~~Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of March 31, ~~2021,~~2022, we had no outstanding debt and no revolving credit facility.

Foreign Currency Exchange Rate Risk

We conduct a limited amount of business outside the United States. The financial impact of transactions billed in foreign currencies is immaterial to our financial results and, consequently, we do not have any material exposure to the risk of foreign currency exchange rate ~~fluctuations.~~fluctuations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the participation of our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures, as of the end of our last fiscal quarter. Disclosure controls and procedures are defined under Rule 13a-15(e) under the Exchange Act as controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, ~~2021.~~2022.

Changes in Internal Control ~~Over~~over Financial Reporting

There were no changes made to the Company’s internal control over financial reporting during the three months ended March 31, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

2932

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note ~~12,~~13, "Commitments and Contingencies" in the Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings in which we are involved.

ITEM 1A. RISK FACTORS

The risk factors included in “Part I – Item 1A – Risk Factors” of the ~~2020~~Part I of the 2021 Annual Report have not materially changed during the three months ended March 31, ~~2021.~~2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not repurchase any shares of its common stock during the three months ended March 31, ~~2021.~~2022.

3033

ITEM 6. EXHIBITS

The exhibits listed in the accompanying Exhibit Index below are filed or incorporated by reference as part of this report.

EXHIBIT INDEX

Incorporated by Reference

Exhibit Number

Exhibit Description

Form

File No.

Exhibit/Appendix

Filing Date

Filed/Furnished Herewith

10.1†

Employment Agreement Extension Letter, by and between Spok Holdings, Inc. and Vincent D. Kelly, dated as of February 16, 2022

Filed

10.2

Voting and Standstill Agreement, dated March 20, 2022, by and between Spok Holdings, Inc., Braeside Investments, LLC, Braeside Capital, L.P. and Braeside Capital II, L.P.

8-K

001-32358

10.1

3/21/2022

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

Furnished

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

Furnished

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*

Filed

101.SCH

Inline XBRL Taxonomy Extension Schema*

Filed

101.CAL

Inline XBRL Taxonomy Extension Calculation*

Filed

101.DEF

Inline XBRL Taxonomy Extension Definition*

Filed

101.LAB

Inline XBRL Taxonomy Extension Labels*

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation*

Filed

104

Cover Page Interactive Data File (the cover page XBRL tags
are embedded within the Inline XBRL document and included Exhibit 101)

Filed

~~Incorporated by Reference~~

~~Exhibit Number~~

~~Exhibit Description~~

~~Form~~

~~File No.~~

~~Exhibit/Appendix~~

~~Filing Date~~

~~Filed/Furnished Herewith~~

~~31.1~~

~~Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, dated March 31, 2021~~

~~Filed~~

~~31.2~~

~~Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, dated~~ ~~March 31, 20~~21

~~Filed~~

~~32.1~~

~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 dated March 31, 2021~~

~~Furnished~~

~~32.2~~

~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 dated March 31, 2021~~

~~Furnished~~

~~101.INS~~

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*

~~Filed~~

~~101.SCH~~

Inline XBRL Taxonomy Extension Schema*

~~Filed~~

~~101.CAL~~

Inline XBRL Taxonomy Extension Calculation*

~~Filed~~

~~101.DEF~~

Inline XBRL Taxonomy Extension Definition*

~~Filed~~

~~101.LAB~~

Inline XBRL Taxonomy Extension Labels*

~~Filed~~

~~101.PRE~~

Inline XBRL Taxonomy Extension Presentation*

~~Filed~~

~~104~~

Cover Page Interactive Data File (the cover page XBRL tags
are embedded within the Inline XBRL document and included Exhibit 101)

~~Filed~~


*			The financial information contained in these XBRL documents is unaudited.
†			Denotes a management contract or compensatory plan or arrangement.

3134

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SPOK HOLDINGS, INC.

Dated: April ~~29, 2021~~28, 2022

/s/ Michael W. Wallace

Name:

Michael W. Wallace

Title:

Chief Financial Officer

(Principal Financial Officer and duly authorized officer)


For the Year Ended December 31,	(Dollars in thousands)

For the remaining nine months ending December 31, 2021	$	4,649
2022	4,653
2023	3,500
2024	2,658
2025	2,002
Thereafter	3,526
Total future lease payments	20,988
Imputed interest	(2,311)
Total	$	18,677