Form 8-K TOWERSTREAM CORP For: Nov 10

FREE Breaking News Alerts from StreetInsider.com!

StreetInsider.com Top Tickers, 8/14/2026

1. GLOB
2. AMAT
3. ELUT
4. RDDT
5. XOS

6. DGNX
7. ZNTL
8. ETON
9. SPY
10. UCB

Top News Most Read Special Reports

November 10, 2014 4:10 PM EST

E-mail

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

�

_________________

�

FORM 8-K

�

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

_________________

�

Date of Report (Date of earliest event reported): November 10, 2014

�

Towerstream Corporation

(Exact Name of Registrant as Specified in Charter)

�

Delaware	�	001-33449	�	20-8259086
(State or other jurisdiction of incorporation)	�	(Commission File Number)	�	(IRS Employer Identification No.)
�	�	�	�	�

�

88 Silva Lane

Middletown, RI

�

02842

(Address of principal executive offices)

�

(Zip Code)

�

Registrants telephone number, including area code: (401) 848-5848

�

(Former name or former address, if changed since last report)

�

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

�

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

�

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 DFR 240.14a-12)

�

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

�

[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

�

Item 2.02.��Results of Operations and Financial Condition.

Item 7.01.��Regulation FD Disclosure.

�

On November 10, 2014, Towerstream Corporation (the Company) issued a press release (the Press Release) announcing results for the three and nine months ended September 30, 2014. A copy of the press release is attached to this report as Exhibit 99.1 and is being furnished pursuant to Items 2.02 and 7.01 and shall not be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the Securities Act) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The furnishing of the information in this Current Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information contained in this Current Report on Form 8-K constitutes material investor information that is not otherwise publicly available.

�

The Company uses certain Non-GAAP measures to monitor the Company's business performance and that of its segments. These Non-GAAP measures are not recognized under generally accepted accounting principles ("GAAP"). Accordingly, investors are cautioned about using or relying on these measures as alternatives to recognized GAAP measures. The Companys methods of calculating these measures may not be comparable to similar measures presented by other companies.

�

A definition of key Non-GAAP measures that the Company employs, and how it uses them to monitor business performance, are as follows:

�

Adjusted EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, deferred rent expense, other non-operating income or expenses, as well as gain or loss on (i) disposal of property and equipment, (ii) nonmonetary transactions, and (iii) business acquisitions.

�

Adjusted Market EBITDA also excludes corporate overhead expenses and other centralized costs. The Company believes that Adjusted Market EBITDA trends are insightful indicators of its markets relative performance, and whether its markets are able to produce sufficient market cash flow to fund working capital and capital expenditure needs.

�

EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization.

�

Market Cash Flow represents the amount of cash generated in a market after deducting a markets direct operating expenses from that markets revenues. Market Cash Flow does not include (i) centralized costs which support all markets collectively or (ii) any network related capital expenditures incurred in a market.

�

Net Cash Flows represents Adjusted EBITDA less capital expenditures.

�

The following reconciliations of non-GAAP measures to GAAP financial measures are presented in the attached press release: (i) Adjusted Market EBITDA to Net Loss, Fixed Wireless Segment, (ii) Adjusted EBITDA to Net Loss, and (iii) Net Cash Flow to Net Cash Used in Operating Activities.

�

Any statements that are not historical facts contained in this Form 8-K are "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA) which statements may be identified by words such as "expects," "plans," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning. Forward-looking statements, include certain statements regarding intent, beliefs, expectations, projections, forecasts and plans, which are subject to numerous assumptions, risks, and uncertainties. A number of factors described from time to time in our periodic filings with the Securities and Exchange Commission could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements. All forward-looking statements included in this Form 8-K are based on information available at the time of the report. We assume no obligation to update any forward-looking statement. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

�

Item 9.01.��Financial Statements and Exhibits.

�

(d) Exhibits

�

99.1	Press Release, dated November 10, 2014

�

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 hereunto duly authorized.

�

TOWERSTREAM CORPORATION �
�	�	�	�
Dated: November 10, 2014�	�	By: /s/ Joseph P. Hernon	�
�	�	Joseph P. Hernon	�
�	�	Chief Financial Officer	�

�

EXHIBIT INDEX

�

Exhibit No.	Description
99.1	Press Release, dated November 10, 2014

�

Exhibit 99.1

�

Towerstream Reports Third Quarter 2014 Results

�

MIDDLETOWN, R.I., November 10, 2014 Towerstream Corporation (NASDAQ: TWER) (the Company), a leading 4G and Small Cell Rooftop Tower company, announced results for the third quarter ended September 30, 2014.

�

Third Quarter Operating Highlights

�

HetNets Tower Corporation Subsidiary

�

Revenues increased to $0.8 million in the third quarter 2014 compared to $0.5 million in the third quarter 2013.

�

Expanded Wi-Fi locations for large cable company customer by approximately 20% over the twelve months ended September 30, 2014.

�

Towerstream Corporation

�

Total customer average revenue per user (ARPU) totaled $769 during the third quarter 2014 as compared to $760 for the second quarter 2014 and $747 for the third quarter 2013.

�

ARPU of new customers totaled $651 during the third quarter 2014 as compared to $626 for the second quarter 2014 and $648 for the third quarter 2013.

�

Customer churn for the third quarter 2014 was 1.69% compared to 1.71% for the second quarter 2014 and the third quarter 2013.

�

New Cogent-like offering of 100 Mbps for $699 continues to gain traction with 22 customer installations and 17 buildings lit.

�

Completed a $35 million debt financing in October 2014.

�

Management Comments

�

"We are seeing increased activity in the densification of networks in major urban markets where our robust fixed wireless backhaul network provides us with a unique advantage over competing solutions" stated Jeff Thompson, President and Chief Executive Officer. "Carriers are now physically evaluating our rooftop locations for potential initial deployments and we believe the FCCs newly issued new order, designed to streamline the regulatory process, will accelerate the deployment of small cell infrastructure."

�

"Our recently completed debt financing provides us with the capital needed to support the strategic growth objectives for our fixed wireless and shared wireless businesses" stated Joseph Hernon, Chief Financial Officer. "We have expanded the number of buildings powered with our 100 megabyte offering and are visiting potential locations for a second sales center designed to re-ignite growth in our fixed wireless segment."

�

1 of 12

�

Selected Financial Data and Key Operating Metrics

(All dollars are in thousands except ARPU)

�

(Unaudited)

�

Three months ended

�

9/30/2014

�

6/30/2014

�

9/30/2013

�

Revenues

�

8,302

�

8,265

�

8,401

�

Gross margin

�

Consolidated

�

Fixed wireless

�

Capital expenditures

�

Fixed wireless

�

1,154

�

1,403

�

1,243

�

Shared wireless infrastructure

�

590

�

490

�

681

�

Corporate

�

205

�

200

�

Churn rate (1)

�

1.69

�

1.71

�

1.71

ARPU (1)

�

769

�

760

�

747

�

ARPU of new customers (1)

�

651

�

626

�

648

�

Cash and cash equivalents

�

11,891

�

17,289

�

32,794

�

(1)

See Non-GAAP Measures below for the definitions of Churn, ARPU and ARPU of new customers.

�

Consolidated Statement of Operations (Unaudited)

(All dollars are in thousands except per share amounts)

�

Three Months Ended September 30,

�

Nine Months Ended September 30,

�

2014

�

2013

�

2014

�

2013

�

Revenues

�

8,302

�

8,401

�

24,946

�

24,912

�

Operating Expenses

�

Cost of revenues

�

6,211

�

5,445

�

18,169

�

15,592

�

Depreciation and amortization

�

3,318

�

3,846

�

10,295

�

11,653

�

Customer support

�

1,244

�

1,221

�

3,563

�

3,800

�

Sales and marketing

�

1,353

�

1,369

�

4,174

�

4,333

�

General and administrative

�

2,382

�

2,600

�

7,726

�

8,374

�

Total Operating Expenses

�

14,508

�

14,481

�

43,927

�

43,752

�

Operating Loss

�

(6,206

)

�

(6,080

)

�

(18,981

)

�

(18,840

)

Other Income/(Expense)

�

Gain on business acquisition

�

1,004

�

Interest expense, net

�

(44

)

�

(60

)

�

(166

)

�

(154

)

Other income (expense), net

�

)

�

)

�

(11

)

�

(11

)

Total Other Income/(Expense)

�

(48

)

�

(63

)

�

(177

)

�

839

�

Net Loss

�

(6,254

)

�

(6,143

)

�

(19,158

)

�

(18,001

)

�

Net loss per common share basic and diluted

�

(0.09

)

�

(0.09

)

�

(0.29

)

�

(0.28

)

Weighted average common shares outstanding basic and diluted

�

66,644

�

66,402

�

66,521

�

64,764

�

2 of 12

�

Statement of Operations - Segment Basis (Unaudited)

�

Three Months Ended September 30, 2014

�

Fixed Wireless

�

Shared Wireless Infrastructure

�

Corporate

�

Eliminations

�

Total

�

Revenues

�

7,554

�

794

�

(46

)

�

8,302

�

Operating Expenses

�

Cost of revenues

�

2,632

�

3,610

�

(46

)

�

6,211

�

Depreciation and amortization

�

1,981

�

1,014

�

323

�

3,318

�

Customer support

�

342

�

147

�

755

�

1,244

�

Sales and marketing

�

1,239

�

1,353

�

General and administrative

�

163

�

2,155

�

2,382

�

Total Operating Expenses

�

6,258

�

4,972

�

3,324

�

(46

)

�

14,508

�

Operating Income (Loss)

�

1,296

�

(4,178

)

�

(3,324

)

�

(6,206

)

Non-cash expenses (a)

�

2,096

�

1,084

�

501

�

3,681

�

Adjusted EBITDA (b)

�

3,392

�

(3,094

)

�

(2,823

)

�

(2,525

)

Less: Capital expenditures

�

1,154

�

590

�

1,766

�

Net Cash Flow (b)

�

2,238

�

(3,684

)

�

(2,845

)

�

(4,291

)

�

Three Months Ended September 30, 2013

�

Fixed Wireless

�

Shared Wireless Infrastructure

�

Corporate

�

Eliminations

�

Total

�

Revenues

�

7,910

�

536

�

(45

)

�

8,401

�

Operating Expenses

�

Cost of revenues

�

2,510

�

2,957

�

(45

)

�

5,445

�

Depreciation and amortization

�

2,755

�

857

�

234

�

3,846

�

Customer support

�

339

�

209

�

673

�

1,221

�

Sales and marketing

�

1,206

�

1,369

�

General and administrative

�

126

�

152

�

2,322

�

2,600

�

Total Operating Expenses

�

6,936

�

4,256

�

3,334

�

(45

)

�

14,481

�

Operating Income (Loss)

�

974

�

(3,720

)

�

(3,334

)

�

(6,080

)

Non-cash expenses (a)

�

2,836

�

862

�

506

�

4,204

�

Adjusted EBITDA (b)

�

3,810

�

(2,858

)

�

(2,828

)

�

(1,876

)

Less: Capital expenditures

�

1,243

�

681

�

200

�

2,124

�

Net Cash Flow (b)

�

2,567

�

(3,539

)

�

(3,028

)

�

(4,000

)

�

3 of 12

�

Nine Months Ended September 30, 2014

�

Fixed Wireless

�

Shared Wireless Infrastructure

�

Corporate

�

Eliminations

�

Total

�

Revenues

�

22,811

�

2,273

�

(138

)

�

24,946

�

Operating Expenses

�

Cost of revenues

�

7,751

�

10,512

�

(138

)

�

18,169

�

Depreciation and amortization

�

6,599

�

2,933

�

763

�

10,295

�

Customer support

�

879

�

502

�

2,182

�

3,563

�

Sales and marketing

�

3,754

�

178

�

242

�

4,174

�

General and administrative

�

374

�

467

�

6,885

�

7,726

�

Total Operating Expenses

�

19,357

�

14,592

�

10,116

�

(138

)

�

43,927

�

Operating Income (Loss)

�

3,454

�

(12,319

)

�

(10,116

)

�

(18,981

)

Non-recurring expenses, primarily acquisition related

�

Non-cash expenses (a)

�

6,896

�

3,136

�

1,478

�

11,510

�

Adjusted EBITDA (b)

�

10,350

�

(9,183

)

�

(8,547

)

�

(7,380

)

Less: Capital expenditures

�

4,044

�

2,018

�

339

�

6,401

�

Net Cash Flow (b)

�

6,306

�

(11,201

)

�

(8,886

)

�

(13,781

)

�

Nine Months Ended September 30, 2013

�

Fixed Wireless

�

Shared Wireless Infrastructure

�

Corporate

�

Eliminations

�

Total

�

Revenues

�

24,158

�

891

�

(137

)

�

24,912

�

Operating Expenses

�

Cost of revenues

�

7,229

�

8,405

�

(137

)

�

15,592

�

Depreciation and amortization

�

8,411

�

2,633

�

609

�

11,653

�

Customer support

�

901

�

588

�

2,311

�

3,800

�

Sales and marketing

�

3,825

�

239

�

269

�

4,333

�

General and administrative

�

444

�

486

�

7,444

�

8,374

�

Total Operating Expenses

�

20,810

�

12,351

�

10,728

�

(137

)

�

43,752

�

Operating Income (Loss)

�

3,348

�

(11,460

)

�

(10,728

)

�

(18,840

)

Non-recurring expenses, primarily acquisition related

�

113

�

113

�

Non-cash expenses (a)

�

8,689

�

2,641

�

1,549

�

12,879

�

Adjusted EBITDA (b)

�

12,037

�

(8,819

)

�

(9,066

)

�

(5,848

)

Less: Capital expenditures

�

3,359

�

1,049

�

350

�

4,758

�

Net Cash Flow (b)

�

8,678

�

(9,868

)

�

(9,416

)

�

(10,606

)

�

��

(a) Includes depreciation and amortization, stock-based compensation, deferred rent expense, loss on property and equipment, and loss on nonmonetary transactions.

�

(b) See Non-GAAP Measures below for a definition and reconciliation of (i) Adjusted EBITDA to Net Loss and (ii) Net Cash Flow to Net Cash Used in Operating Activities.

�

4 of 12

�

Effective January 1, 2013, the Company has two reportable segments. The Fixed Wireless segment provides fixed wireless broadband services to commercial customers and delivers access over a wireless network transmitting over both regulated and unregulated radio spectrum. The Shared Wireless Infrastructure segment offers a range of rental options on street level rooftops related to (i) the installation of customer owned Small Cells, (ii) Wi-Fi access and the offloading of mobile data, and (iii) backhaul, power and other related telecommunications.

�

The Corporate group includes corporate overhead and centralized activities which support our overall operations. Corporate overhead includes administrative personnel, including executive management, and other support functions such as information technology and facilities. Centralized operations include network operations, customer care, and the management of network assets. Corporate costs are not allocated to the segments because such costs are managed on a centralized basis. Management also believes that not allocating these centralized costs provides a better reflection of the direct operating performance of each segment.

�

�Summary Condensed Balance Sheet

(All dollars are in thousands)

�	�	(Unaudited) September 30, 2014		�	�	(Audited) December 31, 2013		�
Assets	�	�	�	�	�	�	�	�
Current Assets	�	�	�	�	�	�	�	�
Cash and cash equivalents	�	$	11,891	�	�	$	28,182	�
Other	�	�	2,478	�	�	�	1,537	�
Total Current Assets	�	�	14,369	�	�	�	29,719	�
�	�	�	�	�	�	�	�	�
Property and equipment, net	�	�	35,382	�	�	�	38,485	�
�	�	�	�	�	�	�	�	�
Other assets	�	�	5,724	�	�	�	6,713	�
�	�	�	�	�	�	�	�	�
Total Assets	�	�	55,475	�	�	�	74,917	�
�	�	�	�	�	�	�	�	�
Liabilities and Stockholders Equity	�	�	�	�	�	�	�	�
Current Liabilities	�	�	�	�	�	�	�	�
Accounts payable and accrued expenses	�	�	2,833	�	�	�	3,774	�
Deferred revenues and other	�	�	2,094	�	�	�	2,247	�
Total Current Liabilities	�	�	4,927	�	�	�	6,021	�
�	�	�	�	�	�	�	�	�
Long-Term Liabilities	�	�	2,845	�	�	�	2,802	�
Total Liabilities	�	�	7,772	�	�	�	8,823	�
�	�	�	�	�	�	�	�	�
Stockholders Equity	�	�	�	�	�	�	�	�
Common stock	�	�	67	�	�	�	66	�
Additional paid-in-capital	�	�	154,939	�	�	�	154,172	�
Accumulated deficit	�	�	(107,303	)	�	�	(88,144	)
Total Stockholders Equity	�	�	47,703	�	�	�	66,094	�
Total Liabilities and Stockholders Equity	�	$	55,475	�	�	$	74,917	�

�

5 of 12

�

Summary Condensed Statement of Cash Flows

(Unaudited)

�

�	�	Nine Months Ended�September 30,						�
�	�	2014		�	�	2013		�
�	�	�	�	�	�	�	�	�
Cash Flows from Operating Activities	�	�	�	�	�	�	�	�
Net loss	�	$	(19,158	)	�	$	(18,001	)
Non-cash adjustments:	�	�	�	�	�	�	�	�
Depreciation & amortization	�	�	10,295	�	�	�	11,653	�
Stock-based compensation	�	�	740	�	�	�	939	�
Gain on business acquisition	�	�	-	�	�	�	(1,004	)
Other	�	�	463	�	�	�	65	�
Changes in operating assets and liabilities	�	�	(2,381	)	�	�	(2,018	)
Net Cash Used in Operating Activities	�	�	(10,041	)	�	�	(8,366	)
�	�	�	�	�	�	�	�	�
Cash Flows From Investing Activities	�	�	�	�	�	�	�	�
Acquisitions of property and equipment	�	�	(5,982	)	�	�	(3,897	)
Acquisition of a business, net of cash acquired	�	�	-	�	�	�	(223	)
Lease incentive payment from landlord	�	�	380	�	�	�	-	�
Other	�	�	(78	)	�	�	(148	)
Net Cash Used in Investing Activities	�	�	(5,680	)	�	�	(4,268	)
�	�	�	�	�	�	�	�	�
Cash Flows From Financing Activities	�	�	�	�	�	�	�	�
Payments on capital leases	�	�	(596	)	�	�	(571	)
Proceeds from stock issuances	�	�	30	�	�	�	348	�
Net proceeds from sale of common stock	�	�	-	�	�	�	30,499	�
Other	�	�	(4	)	�	�	-	�
Net Cash (Used in) Provided by Financing Activities	�	�	(570	)	�	�	30,276	�
�	�	�	�	�	�	�	�	�
Net (Decrease) Increase In Cash and Cash Equivalents	�	�	(16,291	)	�	�	17,642	�
Cash and cash equivalents beginning	�	�	28,182	�	�	�	15,152	�
Cash and cash equivalents ending	�	$	11,891	�	�	$	32,794	�

�

Fixed Wireless Segment Market data for the three months ended�September 30, 2014

(All dollars are in thousands)

�

Market

�

Revenues

�

Cost of
Revenues

�

Gross Margin�

�

Operating

Costs

�

Adjusted
Market
EBITDA

�

Los Angeles

�

2,017

�

544

�

1,473

73%

�

514

�

959

�

New York

�

1,949

�

724

�

1,225

63%

�

348

�

877

�

Boston

�

1,364

�

398

�

966

71%

�

202

�

764

�

Chicago

�

722

�

299

�

423

59%

�

112

�

311

�

Las-Vegas-Reno

�

338

�

126

�

212

63%

�

211

�

Miami

�

358

�

117

�

241

67%

�

50�

�

191�

�

Houston

�

178

�

107

60%

�

Dallas-Fort Worth

�

156

�

38%

�

San Francisco

�

270

�

125

�

145

54%

�

105

�

Seattle

�

39%

�

(3)

�

Providence-Newport

�

Philadelphia

�

(8)

�

(12)

�

Total

�

7,508

�

2,632

�

4,876

65%

�

1,365�

�

3,511�

�

6 of 12

�

Fixed Wireless Segment Market data for the three months ended September 30, 2013

(All dollars are in thousands)

�

Market

�

Revenues

�

Cost of
Revenues

�

Gross Margin

�

Operating

Costs

�

Adjusted
Market
EBITDA

�

Boston

�

1,633

�

362

�

1,271

78%

�

196

�

1,075

�

Los Angeles

�

2,021

�

549

�

1,472

73%

�

419

�

1,053

�

New York

�

1,915

�

636

�

1,279

67%

�

294

�

985

�

Chicago

�

780

�

284

�

496

64%

�

136

�

360

�

Miami

�

383

�

120

�

263

69%

�

132

�

131

�

San Francisco

�

312

�

128

�

184

59%

�

104

�

Las Vegas-Reno

�

251

�

127

�

124

49%

�

Houston

�

154

�

57%

�

Providence-Newport

�

115

�

57%

�

Dallas-Fort Worth

�

174

�

101

�

42%

�

Seattle

�

48�

�

35�

42%

�

28�

�

Nashville

�

(10)

�

(12)

�

Philadelphia

�

38%

�

(16)

�

Total

�

7,865

�

2,510

�

5,355

68%

�

1,469

�

3,886

�

Fixed Wireless Segment Market data for the nine months ended September 30, 2014

(All dollars are in thousands)

�

Market

�

Revenues

�

Cost of
Revenues

�

Gross Margin�

�

Operating

Costs

�

Adjusted
Market
EBITDA

�

Los Angeles

�

6,053

�

1,678

�

4,375

72%

�

1,451

�

2,924

�

New York

�

5,815

�

2,045

�

3,770

65%

�

964

�

2,806

�

Boston

�

4,347

�

1,195

�

3,152

73%

�

589

�

2,563

�

Chicago

�

2,182

�

886

�

1,296

59%

�

381

�

915

�

Miami

�

1,107

�

338

�

769

69%

�

224

�

545

�

Las-Vegas-Reno

�

819

�

370

�

449

55%

�

100

�

349

�

Houston

�

524�

�

�194�

�

330

63%

�

264

�

San Francisco

�

831

�

377

�

454

55%

�

254

�

200

�

Dallas-Fort Worth

�

483

�

290

�

193

40%

�

115

�

Seattle

�

214

�

140

�

35%

�

Providence-Newport

�

201

�

152

�

24%

�

Philadelphia

�

24%

�

(2)

�

Nashville

�

(11)

�

(13)

�

Total

�

22,673�

�

7,750�

�

14,923

66%

�

4,190

�

10,733

�

Fixed Wireless Segment Market data for the nine months ended September 30, 2013

(All dollars are in thousands)

�

Market

�

Revenues

�

Cost of
Revenues

�

Gross Margin�

�

Operating

Costs

�

Adjusted
Market
EBITDA

�

Los Angeles

�

6,138

�

1,562

�

4,576

75%

�

1,211

�

3,365

�

Boston

�

4,931

�

1,048

�

3,883

79%

�

657

�

3,226

�

New York

�

5,741

�

1,869

�

3,872

67%

�

1,002

�

2,870

�

Chicago

�

2,513

�

856

�

1,657

66%

�

362

�

1,295

�

Miami

�

1,152

�

324

�

828

72%

�

303

�

525

�

Las Vegas-Reno

�

913

�

400

�

513

56%

�

150

�

363

�

San Francisco

�

934

�

342

�

592

63%

�

283

�

309

�

Houston

�

387

�

144

�

243

63%

�

177

�

Providence-Newport

�

356

�

149

�

207

58%

�

159

�

Seattle

�

314

�

141

�

173

55%

�

Dallas-Fort Worth

�

507

�

290

�

217

43%

�

206

�

Philadelphia

�

119

�

49%

�

(11)

�

Nashville

�

(27)

�

(36)

�

Total

�

24,021

�

7,229

�

16,792

70%

�

4,456

�

12,336

�

7 of 12

�

Operating Outlook and Guidance

�

Revenues for the fourth quarter 2014 are expected to range between $7.4 million to $7.7 million for the Fixed Wireless segment.

�

Revenues for the fourth quarter 2014 are expected to range between $0.8 million�to $1.0 million for the Shared Wireless Infrastructure segment.

�

Adjusted EBITDA, on a segment basis, for the fourth quarter 2014 is expected to range between profitability of $3.1 million to $3.4 million for the Fixed Wireless segment.

�

Non-GAAP Measures and Reconciliations to GAAP Measures

�

We use certain Non-GAAP measures to monitor the Company's business performance and that of our segments. These Non-GAAP measures are not recognized under generally accepted accounting principles ("GAAP"). Accordingly, investors are cautioned about using or relying on these measures as alternatives to recognized GAAP measures. Our methods of calculating these measures may not be comparable to similar measures presented by other companies.

�

A definition of the Non-GAAP measures that we employ, and how we use them to monitor business performance, are as follows:

�

Adjusted Market EBITDA also excludes corporate overhead expenses and other centralized costs. We believe that Adjusted Market EBITDA trends are insightful indicators of our markets relative performance, and whether our markets are able to produce sufficient market cash flow to fund working capital and capital expenditure needs.

�

ARPU refers to the monthly average revenue per user, or customer, being generated from those customers under contract at the end of each indicated period. We calculate ARPU by dividing our monthly recurring revenue (MRR) at the end of a period by the number of customers generating that MRR.

�

8 of 12

�

ARPU of new customers is calculated in the same manner but only includes new customers who entered into contracts during the indicated period.

�

Churn and Churn rate refer to the percent of revenue lost on a monthly basis from customers disconnecting from our network or reducing the amount of their bandwidth.

�

Corporate includes corporate overhead and centralized activities which support our overall operations.

�

EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization.

�

Net Cash Flows represents Adjusted EBITDA less capital expenditures.

�

"Shared Wireless Infrastructure, Net" represents the net operating results for that business segment.

�

A reconciliation of non-GAAP measures to GAAP financial measures is as follows (amounts in thousands):

�

I. Adjusted Market EBITDA to Net Loss, Fixed Wireless Segment

�

�	�	�	For the three months ended September 30,
�	�	�	2014	�	�	2013
Adjusted Market EBITDA	�	$	3,511	�	$	3,886
Fixed wireless, non-market specific	�	�	�	�	�	�
��Other expenses	�	�	(280)	�	�	(202)
��Depreciation and amortization	�	�	(1,981)	�	�	(2,755)
Shared wireless infrastructure, net	�	�	(4,132)	�	�	(3,675)
Corporate	�	�	(3,324)	�	�	(3,334)
Other income (expense)	�	�	(48)	�	�	(63)
Net loss	�	$	(6,254)	�	$	(6,143)

�

�	�	�	For the nine months ended September 30,
�	�	�	2014	�	�	2013
Adjusted Market EBITDA	�	$	10,733	�	$	12,336
Fixed wireless, non-market specific	�	�	�	�	�	�
��Other expenses	�	�	(818)	�	�	(714)
��Depreciation and amortization	�	�	(6,599)	�	�	(8,411)
Shared wireless infrastructure, net	�	�	(12,181)	�	�	(11,323)
Corporate	�	�	(10,116)	�	�	(10,728)
Other income (expense)	�	�	(177)	�	�	��839
Net loss	�	$	(19,158)	�	$	(18,001)

�

9 of 12

�

II. Adjusted EBITDA to Net Loss

�

�	�	�	For the three months ended September 30,
�	�	�	2014	�	�	2013
Adjusted EBITDA	�	$	(2,525)	�	$	(1,876)
Depreciation and amortization	�	�	(3,318)	�	�	(3,846)
Stock-based compensation	�	�	(185)	�	�	��(272)
Loss on property and equipment	�	�	-	�	�	(23)
Loss on non-monetary transactions	�	�	(68)	�	�	(63)
Deferred rent	�	�	(110)	�	�	-
Operating Income (Loss)	�	$	(6,206)	�	$	(6,080)
Interest expense, net	�	�	(44)	�	�	��(60)
Other income (expense), net	�	�	(4)	�	�	(3)
Net loss	�	$	(6,254)	�	$	(6,143)

�

�	�	�	For the nine months ended September 30,
�	�	�	2014	�	�	2013
Adjusted EBITDA	�	$	(7,380)	�	$	(5,848)
Depreciation and amortization	�	�	(10,295)	�	�	(11,653)
Stock-based compensation	�	�	(740)	�	�	��(939)
Loss on property and equipment	�	�	-	�	�	(82)
Loss on non-monetary transactions	�	�	(203)	�	�	(205)
Deferred rent	�	�	(272)	�	�	-
Non-recurring expenses	�	�	(91)	�	�	(113)
Operating Income (Loss)	�	$	(18,981)	�	$	(18,840)
Interest expense, net	�	�	(166)	�	�	(154)
Gain on business acquisition	�	�	-	�	�	1,004
Other income (expense), net	�	�	(11)	�	�	(11)
Net loss	�	$	(19,158)	�	$	(18,001)

�

III. Net Cash Flow to Net Cash Used in Operating Activities

�

�	�	For the three months ended September 30,
�	�	�	2014	�	�	2013
Net cash flow	�	$	(4,291)	�	$	(4,000)
Capital expenditures	�	�	1,766	�	�	2,124
Changes in operating assets and liabilities, net	�	�	(737)	�	�	383
Other, net	�	�	(41)	�	�	(145)
Net cash used in operating activities	�	$	(3,303)	�	$	��(1,638)

�

�	�	�	For the nine months ended September 30,
�	�	�	2014	�	�	2013
Net cash flow	�	$	(13,781)	�	$	(10,606)
Capital expenditures	�	�	6,401	�	�	4,758
Non-recurring expenses	�	�	(91)	�	�	(113)
Changes in operating assets and liabilities, net	�	�	(2,381)	�	�	(2,018)
Other, net	�	�	(189)	�	�	(387)
Net cash used in operating activities	�	$	(10,041)	�	$	(8,366)

�

10 of 12

�

Conference Call and Webcast

�

A conference call led by President and Chief Executive Officer, Jeff Thompson, and Chief Financial Officer, Joseph Hernon, will be held on November 10, 2014 at 5:00 p.m. ET to review our financial results and provide an update on current business developments. Interested parties may participate in the conference by dialing 877-755-7423 or 678-894-3069 (for international callers). A telephonic replay of the conference may be accessed approximately two hours after the call through November 17, 2014 at 11:59 p.m. ET by dialing 855-859-2056 or 404-537-3406 (for international callers) using pass code 23980446.

�

The call will also be webcast and can be accessed in a listen-only mode on the Companys website at http://ir.towerstream.com/events.cfm.

�

About Towerstream Corporation

�

Towerstream (NASDAQ: TWER) is a leading 4G and Small Cell Rooftop Tower company. The company owns, operates, and leases Wi-Fi and Small Cell rooftop tower locations to cellular phone operators, tower, Internet and cable companies and hosts a variety of customers on its network. Towerstream was originally founded in 2000 to deliver fixed-wireless high-speed Internet access to businesses and to date offers broadband services in 12 urban markets including New York City, Boston, Los Angeles, Chicago, Philadelphia, the San Francisco Bay area, Miami, Seattle, Dallas-Fort Worth, Houston, Las Vegas-Reno, and the greater Providence area. For more information on Towerstream services, please visit www.towerstream.com�and/or follow us @Towerstream.

�

The Towerstream Corporation logo is available at: http://www.globenewswire.com/newsroom/prs/?pkgid=6570

�

About HetNets Tower Corporation

�

HetNets Tower Corporation (HetNets) was formed in January 2013 as a wholly owned subsidiary of Towerstream Corporation (NASDAQ: TWER), and offers a neutral host, shared wireless infrastructure solution, either independently or as a turnkey service.� Its wireless communications infrastructure is available to wireless carriers, cable and Internet companies in major urban markets where the explosion in mobile data is creating significant demand for additional capacity and coverage.� HetNets offers a carrier-class Wi-Fi network for Internet access and the offloading of mobile data.� Its street level rooftop locations are ideal for the installation of customer owned small cells including DAS, Metro and Pico cells. Other solutions provided by HetNets include backhaul, power, and related small cell requirements. More information is available at�http://www.hetnets.com.

�

Safe Harbor

�

Certain statements contained in this press release are forward-looking statements within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the Company with the Securities and Exchange Commission, including, without limitation, risk related to our ability to deploy and expand small cell rooftop tower locations in the New York City and other key markets. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.

�

11 of 12

�

INVESTOR CONTACT:

Monica Gould

The Blueshirt Group

212-871-3927

[email protected]

�

MEDIA CONTACT:

Todd Barrish

Indicate Media
917-861-0089