10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission File No. 001-35724

Alteva, Inc.

(Exact name of registrant as specified in its charter)

New York	14-1160510
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

401 Market Street, 1st Floor
Philadelphia, PA	19106
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone, including area code:  (877) 258-3722

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 x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

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

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act. YES o NO x

The number of shares of Alteva, Inc. common stock outstanding as of May 2, 2014 was 6,088,347.

Index to Form 10-Q

Part I	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2014 and 2013 (unaudited)	4
	Condensed Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19
Part II	Other Information
Item 1A.	Risk Factors	20
Item 6.	Exhibits	20

2

Part I — Financial Information

Item 1.  Financial Statements

ALTEVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

	Three Months Ended
	March 31,
	2014			2013
Operating revenues
Unified Communications	$	4,211		$	3,956
Telephone	3,313			3,784
Total operating revenues	7,524			7,740
Operating expenses
Cost of services and products (exclusive of depreciation and amortization expense)	3,052			3,789
Selling, general and administration expenses	5,798			7,248
Depreciation and amortization	903			1,002
Total operating expenses	9,753			12,039
Operating loss	(2,229		)	(4,299		)
Other income (expense)
Interest expense	(139		)	(236		)
Income from equity method investment	2,040			3,250
Other income, net	21			108
Total other income	1,922			3,122
Loss before income taxes	(307		)	(1,177		)
Income tax benefit	(58		)	(506		)
Net loss	(249		)	(671		)
Preferred dividends	6			6
Loss applicable to common stock	$	(255	)	$	(677	)
Basic loss per common share	$	(0.04	)	$	(0.12	)
Diluted loss per common share	$	(0.04	)	$	(0.12	)
Weighted average shares of common stock used to calculate loss per share:
Basic (common)	6,161			5,751
Diluted (common)	6,161			5,751

Please see accompanying notes, which are an integral part of the condensed consolidated financial statements.

3

ALTEVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands)

	Three Months Ended
	March 31,
	2014			2013
Net loss	$	(249	)	$	(671	)
Other comprehensive income (loss):
Defined benefit pension plans:
Amortization of prior service costs	(35		)	(69		)
Amortization of actuarial loss	183			213
Other comprehensive income	148			144
Comprehensive loss	$	(101	)	$	(527	)

Please see accompanying notes, which are an integral part of the condensed consolidated financial statements.

4

ALTEVA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	March 31,			December 31,
	2014			2013
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	259		$	1,636
Trade accounts receivable - net of allowance for uncollectibles - $406 and $378 at March 31, 2014 and December 31, 2013, respectively	3,126			2,836
Other accounts receivable	557			480
Equity method investment	2,040			—
Materials and supplies	225			237
Prepaid expenses	817			774
Prepaid income taxes	204			—
Deferred income taxes	108			108
Total current assets	7,336			6,071
Property, plant and equipment, net	13,563			13,837
Intangibles, net	5,644			5,856
Seat licenses	1,736			1,749
Goodwill	9,006			9,006
Other assets	822			744
Total assets	$	38,107		$	37,263
Liabilities and Shareholders’ Equity
Current liabilities
Short-term debt	$	10,898		$	10,126
Accounts payable	1,354			944
Advance billing and payments	334			341
Accrued taxes	1,203			1,692
Pension and post retirement benefit obligations	267			267
Other accrued expenses	4,200			3,934
Total current liabilities	18,256			17,304
Long-term debt	404			297
Deferred income taxes	711			649
Pension and post retirement benefit obligations	5,929			6,007
Total liabilities	25,300			24,257
Commitments and contingencies
Shareholders’ equity
Preferred shares - $100 par value, authorized and issued shares of 5; $0.01 par value authorized and unissued shares of 10,000;	500			500
Common stock - $0.01 par value, authorized shares of 10,000 6,862 and 6,971 shares issued at March 31, 2014 and December 31, 2013, respectively	69			70
Treasury stock - at cost, 875 and 830 common shares at March 31, 2014 and December 31, 2013, respectively	(8,010		)	(7,612		)
Additional paid in capital	13,586			13,279
Accumulated other comprehensive loss	(1,288		)	(1,436		)
Retained earnings	7,950			8,205
Total shareholders’ equity	12,807			13,006
Total liabilities and shareholders’ equity	$	38,107		$	37,263

Please see accompanying notes, which are an integral part of the condensed consolidated financial statements.

5

ALTEVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Three Months Ended March 31,
	2014			2013
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(249	)	$	(671	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	903			1,002
Stock based compensation expense	306			218
Undistributed earnings from equity investment	(2,040		)	—
Distribution in excess of income from equity investments included in net loss	—			(1,424		)
Other non-cash operating activities	113			193
Changes in assets and liabilities
Trade accounts receivable	(290		)	364
Other assets	(473		)	(597		)
Accounts payable	410			144
Other accruals and liabilities	(274		)	1,331
Net cash (used in) provided by operating activities	(1,594		)	560
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures	(48		)	(176		)
Proceeds from sale of assets	33			—
Acquired intangibles	—			(58		)
Purchase of seat licenses	—			(194		)
Distribution in excess of income from equity investments	—			1,424
Net cash (used in) provided by investing activities	(15		)	996
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from debt	1,300			16,273
Repayment of debt and capital leases	(664		)	(15,845		)
Payment of fees for acquisition of debt	—			(119		)
Purchase of treasury stock	(398		)	(62		)
Dividends (Common and Preferred)	(6		)	(1,670		)
Net cash provided by (used in) financing activities	232			(1,423		)
Net change in cash and cash equivalents	(1,377		)	133
Cash and cash equivalents at beginning of period	1,636			1,799
Cash and cash equivalents at end of period	$	259		$	1,932
Supplemental disclosure of non-cash investing activities:
Acquisition of equipment under capital leases	$	242		$	—
Seat licenses acquired but not paid	$	114		$	—

Please see the accompanying notes, which are an integral part of the condensed consolidated financial statements.

6

ALTEVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:   NATURE OF OPERATIONS AND CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Nature of Operations

Alteva, Inc. (“Alteva” or the “Company”) is a cloud-based communications company that provides Unified Communications (“UC”) solutions, including enterprise hosted Voice over Internet Protocol (“VoIP”) and operates as a regional Incumbent Local Exchange Carrier (“ILEC”) in southern Orange County, New York and northern New Jersey.  Unless otherwise indicated or unless the context requires, all references to the Company means the Company and its wholly-owned subsidiaries.  The Company delivers cloud-based UC solutions including VoIP hosted Microsoft Communication Services, fixed mobile convergence and advanced voice applications for a broad customer base including, medium and large-sized business customers.  The Company’s ILEC operations consist of providing local and toll telephone service to residential and business customers, Internet high-speed broadband service, and satellite television services provided by DIRECTV.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results and cash flows for the three month period ended March 31, 2014 are not necessarily indicative of the results that may be expected for the entire year.  The consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All material intercompany transactions and balances have been eliminated.  The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Amended Annual Report on Form 10-K for the year ended December 31, 2013.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period.  Significant estimates include, but are not limited to, depreciation expense, allowance for doubtful accounts, long-lived assets, pension and postretirement expenses and income taxes.  Actual results could differ from those estimates.

Revenue Recognition

The Company derives its revenue from the sale of UC services as well as traditional telephone services.

The Company recognizes revenue when (i) persuasive evidence of an arrangement between the Company and the customer exists, (ii) the delivery of the product to the customer has occurred or service has been provided to the customer, (iii) the price to the customer is fixed or determinable, and (iv) collectability of the sales or service price is reasonably assured.  Revenue is reported net of all applicable sales tax.

UC

The Company’s UC services and solutions consist primarily of its hosted VoIP UC system, certain UC applications, and other professional services associated with the installation and activation. Additionally, the Company offers customers the ability to purchase telephone equipment from the Company directly or independently from external vendors.

Multiple element arrangements primarily include the sale of telephone equipment, along with professional services associated with installation, activation and implementation services, as well as follow on hosting services.  The Company has concluded that the separate units of accounting in these arrangements consist of (i) the telephone equipment sale and (ii) the professional services provided combined with the follow on hosting services.  The professional services provided do not constitute a separate unit of accounting as they do not have value to the customer on a stand-alone basis.  Arrangement consideration is allocated to the separate units of accounting based on the relative selling price.  The selling price for telephone equipment is based on third-party evidence representing list prices for similar equipment when sold a stand-alone basis.  The selling price for professional and hosting services is based on the Company’s best estimate of selling price (“BESP”).  The Company develops its BESP by considering pricing practices, margin, competition and overall market trends.

7

The Company bills a portion of its monthly recurring hosted service revenue a month in advance. Any amounts billed and collected, but for which the service is not yet delivered, are included in deferred revenue. These amounts are recognized as revenues only when the service is delivered.

Equipment sales associated with the sale of telephone equipment is recognized upon delivery to the customer, as it is considered to be a separate earnings process. The sales are recognized on a gross basis, as the Company is considered the principal obligor in customer transactions among other considerations.  Other upfront fees, excluding equipment, along with associated costs, up to but not exceeding these fees, are deferred and recognized over the estimated life of the customer relationship.  The Company has estimated its customer relationship life at eight years and evaluates it periodically for continued appropriateness.

Telephone

Revenue is earned from monthly billings to customers for local voice services, long distance, DSL, Internet services, hardware and other services. Revenue is also derived from charges for network access to the local exchange telephone network from subscriber line charges and from contractual arrangements for services such as billing and collection and directory advertising. Revenue is recognized in the period in which service is provided to the customer. Directory advertising revenue is recorded ratably over the life of the directory. With multiple billing cycles, the Company accrues revenue earned but not yet billed at the end of a quarter. The Company also defers services billed in advance and recognizes them as income when earned.

The Telephone segment markets competitive service bundles which may include multiple deliverables. The base bundles consist of voice services (including a business or residential phone line), calling features and long distance services and customers may choose to add internet services to a base bundle package. Separate units of accounting within the bundled packages include voice services, long distance and Internet services. Revenue for all services included in bundles are recognized over the same service period, which is the time period in which the service is provided to the customer.

Certain revenue is realized under pooling arrangements with other service providers and is divided among the companies based on respective costs and investments to provide the services. The companies that take part in pooling arrangements may adjust their costs and investments for a period of two years, which causes the funds distributed by the pool to be adjusted retroactively. The Company believes that recorded amounts represent reasonable estimates of the final distribution from these pools. However, to the extent that the companies participating in these pools make adjustments, there will be corresponding adjustments to the Company’s recorded revenue in future periods.

Revenue from these pooling arrangements which includes Universal Service Funds (“USF”) and National Exchange Carrier Association (“NECA”) pool settlements, accounted for 2% and 7% of the Company’s consolidated revenues for the three months ended March 31, 2014 and 2013, respectively.

Materials and Supplies

The Company’s materials and supplies are carried at average cost, net of reserves for obsolescence, and consist principally of telephone equipment, telephone pole and wiring spare parts and other ancillary equipment for resale.

Fair Value

Fair value is the estimated price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company is required by accounting standards to provide the disclosure framework for measuring fair value and expanded disclosure about fair value measurements.  Fair value measurements are classified and disclosed in one of the following categories:

Level 1:Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:These are inputs, other than quoted prices that are included in Level 1, which are observable in the marketplace throughout the term of the assets or liabilities, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.

Level 3:Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.  The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

8

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the net fair value of identifiable assets acquired and liabilities assumed.  Goodwill is not amortized, but rather is assessed for impairment at least annually.  The Company tests goodwill for impairment annually on October 1, or whenever events or circumstances indicate that there may be an impairment.  If it is determined that an impairment has occurred, the Company records a write down of the carrying value and records the charge for the impairment as an operating expense during the period in which the determination is made.

The UC reporting unit included $9.0 million of goodwill as of March 31, 2014. The Company recorded $9.1 million as a result of the acquisition of certain assets and certain liabilities of Alteva, LLC in 2011.  In the third quarter of 2013, as a result of the disposal and business restructuring of its Syracuse, New York operations, the Company allocated $0.1 million of its goodwill to the disposal group and wrote it off as part of the sale.  The Company is not aware of any events or circumstances that occurred during the quarter ended March 31, 2014 that would have more likely than not reduced the fair value of this reporting unit below its carrying value.

Income Taxes

The Company records deferred taxes that arise from temporary differences between the financial statement and the tax basis of assets and liabilities.  Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate.  Deferred tax assets and deferred tax liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.  The Company’s deferred taxes result principally from differences in the timing of depreciation and in the accounting for pensions and other postretirement benefits.

The process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties, make judgments regarding outcomes and utilize estimates. Management must make judgments currently about such uncertainties and determine estimates of the Company’s tax assets and liabilities. To the extent the final outcome differs, future adjustments to the Company’s tax assets and liabilities may be necessary.

The Company assesses the realizability of its deferred tax assets, taking into consideration future reversals of existing temporary differences, the Company’s forecast of future taxable income principally arising from its O-P put (see Note 5), and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need for, and the amount of, valuation allowances against the Company’s deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required.

Accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities unless they are expected to be paid within one year.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense.

Accounting Policies

There were no material changes to the Company’s other accounting policies as presented in Item 8 of its Annual Report on Form 10-K for the year ended December 31, 2013.

NOTE 2:  NEW ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements adopted during the three months ended March 31, 2014.

NOTE 3:  SEAT LICENSES AND OTHER INTANGIBLE ASSETS

Intangible assets with finite lives are amortized over their respective estimated useful lives to their estimated residual value. Identifiable intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

The components of seat licenses are as follows:

	Estimated	Gross		Accumulated			Net
($ in thousands)	Useful Lives	Value		Amortization			Value
As of March 31, 2014
Seat licenses	5 years	$	2,721	$	(985	)	$	1,736

	Estimated	Gross		Accumulated			Net
($ in thousands)	Useful Lives	Value		Amortization			Value
As of December 31, 2013
Seat licenses	5 years	$	2,606	$	(857	)	$	1,749

9

The components of other intangible assets are as follows:

	Estimated	Gross		Accumulated			Net
($ in thousands)	Useful Lives	Value		Amortization			Value
As of March 31, 2014
Customer relationships	8 years	$	5,400	$	(1,800	)	$	3,600
Trade name	15 years	2,400		(427		)	1,973
Website	12 years	79		(8		)	71
Total		$	7,879	$	(2,235	)	$	5,644

	Estimated	Gross		Accumulated			Net
($ in thousands)	Useful Lives	Value		Amortization			Value
As of December 31, 2013
Customer relationships	8 years	$	5,400	$	(1,631	)	$	3,769
Trade name	15 years	2,400		(387		)	2,013
Website	12 years	79		(5		)	74
Total		$	7,879	$	(2,023	)	$	5,856

NOTE 4: SEVERANCE

On March 31, 2014, David J. Cuthbert was terminated as President and Chief Executive Officer of Alteva.  The Company notified Mr. Cuthbert that his termination was for “cause” and, as such, Mr. Cuthbert was not entitled to any of the benefits provided for under his employment agreement dated March 5, 2013, including cash severance and the acceleration of vesting on any unvested equity instruments.

Mr. Cuthbert has disputed the Company’s basis for termination and claimed that he is due his full severance benefits.  The Company strongly believes the termination for “cause” was appropriate and intends to vigorously defend its position.

The maximum cash severance payments called for under Mr. Cuthbert’s employment agreement in the case of a termination not for cause total $0.8 million. At the time of his termination, Mr. Cuthbert held outstanding unvested restricted stock awards and unvested stock options of 101,235 and 6,175, respectively, previously granted under the long-term incentive plan (see Note 9).  These awards, which had unrecognized compensation cost of approximately $1.2 million, were cancelled as of his termination.

The Company accrued $100,000 during the three months ended March 31, 2014, in connection with the potential exposure for this matter based upon the current facts and circumstances. The Company will continually monitor the status of this matter to determine the potential impact and any required adjustment to the accrual.

On May 21, 2013, the Company announced a reduction in workforce of its Warwick, New York facility of approximately 17% due to the decline in work associated with the Telephone segment.  Total expense recognized in selling general and administrative expenses during the second quarter of 2013 related to this reduction was $0.3 million.  As of March 31, 2014 and December 31, 2013, the liability associated with this workforce reduction was reported in other accrued expenses was $0.2 million, which the Company expects to pay-out through August 2014.

NOTE 5:  ORANGE COUNTY-POUGHKEEPSIE LIMITED PARTNERSHIP

The Company is a limited partner in the Orange County-Poughkeepsie Limited Partnership (“O-P”) and has an 8.108% limited partnership interest as of March 31, 2014 and 2013, which is accounted for under the equity method of accounting.  The majority owner and general partner of the O-P is Verizon Wireless of the East LP (“Verizon”).

On May 26, 2011, the Company entered into an agreement with Verizon and Cellco Partnership (d/b/a Verizon Wireless), the other limited partner, in the O-P to make certain changes to the O-P partnership agreement which, among other things, specifies that the O-P will provide 4G cellular services (the “4G Agreement”).  The 4G Agreement provides that the O-P’s business will be converted from a wholesale business to a retail business.  The 4G Agreement provided for guaranteed annual cash distributions to the Company from the O-P through 2013.  For the years ended December 31, 2013, 2012 and 2011, the Company received annual cash distributions from the O-P of $13.0 million, $13.0 million and $13.6 million, respectively.  Starting in 2014, the agreement provides that the Company will receive cash distributions equal to its ownership share percentage of the approved total distributions by the O-P. The 4G Agreement also gives the Company the right (the “Put”) to require Verizon to purchase all of the Company’s ownership interest in the O-P during April 2013 or April 2014 for an amount equal to the greater of (a) $50.0 million or (b) the product of five (5) times 0.081081 times the O-P’s EBITDA, as defined in the 4G Agreement for the calendar year preceding the exercise of the Put.

On April 30, 2014, the Company exercised the Put option and sold all of its ownership interest in the O-P for gross proceeds of $50 million.  The Company will not receive any income from the O-P after April 30, 2014.  The Company used a portion of the proceeds to repay all of the outstanding borrowings under the TriState credit facility (see Note 6).  The Company expects the remaining gross proceeds to be used to pay taxes on the related gain, fund working capital needs and support growth initiatives.

10

Pursuant to the equity method accounting of the Company’s investment income, the Company is required to record the income from the O-P as an increase to the Company’s investment account.  The Company is required to apply the cash payments made under the 4G Agreement as a return on its investment when received.   As a result of receiving the fixed guaranteed cash distributions from the O-P in excess of the Company’s proportionate share of the O-P income, the investment account was reduced to zero within the first six months of 2012. Thereafter, the Company recorded the fixed guaranteed cash distributions that were received from the O-P in excess of the proportionate share of the O-P income directly to the Company’s statement of operations as other income.

The following summarizes the income statement (unaudited) for the three months ended March 31, 2014 and 2013 that O-P provided to the Company:

	For the three months ended March 31,
($ in thousands)	2014		2013
Net sales	$	84,441	$	79,892
Cellular service cost	37,610		35,980
Operating expenses	21,689		21,398
Operating income	25,142		22,514
Other income (expense)	19		3
Net income	$	25,161	$	22,517
Company’s share	$	2,040	$	1,826

The following summarizes the balance sheet as of March 31, 2014 (unaudited) and December 31, 2013 that O-P provided to the Company:

	As of
($ in thousands)	March 31, 2014		December 31, 2013
Current assets	$	47,835	$	23,351
Property, plant and equipment, net	41,485		41,646
Other assets	957		365
Total assets	$	90,277	$	65,362
Total liabilities	$	17,641	$	17,887
Partners’ capital	72,636		47,475
Total liabilities and partners’ capital	$	90,277	$	65,362

NOTE 6: DEBT OBLIGATIONS

Debt obligations consisted of the following at March 31, 2014 and December 31, 2013:

	As of
($ in thousands)	March 31, 2014		December 31, 2013
Short-term debt:
Capital leases and other borrowings, current portion	$	400	$	428
TriState credit line	10,498		9,698
	10,898		10,126
Long-term debt:
Capital leases and other borrowings	404		297
Total debt obligations	$	11,302	$	10,423

On March 11, 2013, the Company entered into a new credit agreement with TriState Capital Bank (“TriState”) to provide for borrowings up to $17.0 million with the ability to increase the facility for borrowings up to $20.0 million with the participation of another lender (the “Credit Agreement”).  All borrowings become due and payable on June 30, 2014. The TriState borrowings incur interest at a variable rate based on either LIBOR or a Base Rate, as defined in the Credit Agreement, plus an applicable margin of 3.50% or 2.00%, respectively.   As of March 31 2014, the Company had $6.5 million available under the Credit Agreement.

Under the terms of the Credit Agreement, the Company is required to comply with certain loan covenants, which include, but are not limited to, the achievement of certain financial ratios and certain financial reporting requirements. The Company must maintain a consolidated liquidity ratio, as defined in the Credit Agreement, in excess of 1.0 to 1.0, including the value of the Put calculated in accordance with the 4G Agreement, until April 30, 2014.  The Company is required to obtain the consent of TriState prior to agreeing to any amendment to the agreements the Company has with the O-P. The Company’s obligations under the TriState credit facility are secured by all of the Company’s asset and guaranteed by all of the Company’s wholly-owned subsidiaries except for the Company’s ILEC subsidiary.  The ILEC subsidiary entered into a negative pledge agreement with TriState whereby the ILEC subsidiary agreed not to pledge any of its assets as collateral or lien to be placed on any of its assets.

The Company sold its ownership interest in the O-P on April 30, 2014 (see Note 5) and a portion of the proceeds was used to repay all of the outstanding borrowings under the TriState credit facility, allowing $17.0 million to remain available under the credit facility.

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NOTE 7:  INCOME TAXES

The effective tax rate for the three months ended March 31, 2014, and March 31, 2013 was 18.9% and 43.0%, respectively.  We determined our interim tax provision by developing an estimate of the annual effective tax rate and applying such rate to interim pre-tax results. The estimated rate includes projections of tax expense on the expected increase in our valuation allowance for deferred tax assets.  The estimated effective tax rate differed from the U.S. statutory rate primarily due to the expected increase in the valuation allowance, which reduced the overall tax benefit recorded for the period ended March 31, 2014, and does not include the estimated tax effects of the O-P gain on the put exercise, which is being treated as a discrete item in the second quarter.

As of March 31, 2014 and December 31, 2013, the Company carried a full valuation allowance against its deferred tax assets because management determined that it was not more likely than not that it would realize the benefits of such deferred tax assets. The Company maintains a deferred tax liability related to indefinite lived intangibles.

The accounting standard regarding accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities, unless expected to be paid within one year.  As of March 31, 2014 and December 31, 2013, the Company has no liability for unrecognized tax benefits.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense.  For the three months ended March 31, 2014 and 2013, there was no interest expense relating to unrecognized tax benefits.

NOTE 8:  PENSION AND POSTRETIREMENT OBLIGATIONS

The components of net periodic cost (benefit) for the three months ended March 31, 2014 and 2013 are as follows:

	Pension Benefits						Postretirement Benefits
	For the three months ended						For the three months ended
($ in thousands)	March 31, 2014			March 31, 2013			March 31, 2014			March 31, 2013
Service cost	$	—		$	—		$	3		$	4
Interest cost	212			190			32			56
Expected return on plan assets	(225		)	(262		)	(8		)	(104		)
Amortization of transition asset	—			—			—			7
Amortization of prior service cost	14			14			(49		)	(83		)
Recognized actuarial loss	177			198			6			15
Net periodic benefit cost (benefit)	$	178		$	140		$	(16	)	$	(105	)

For the three months ended March 31, 2014 and March 31, 2013, the Company has contributed $0.1 million and $0.2 million, respectively, to its pension and postretirement benefits plans.  The amortization of prior service cost and recognized actuarial (gain) loss included in pension and postretirement expense represent reclassifications out of other comprehensive income (loss).

NOTE 9:    STOCK BASED COMPENSATION

The Company has a shareholder approved long-term incentive plan (the “LTIP”) to assist the Company and its affiliates in attracting, motivating and retaining selected individuals to serve as employees, directors, consultants and advisors of the Company and its affiliates by providing incentives to such individuals through the ownership and performance of the Company’s common stock. There are 1.1 million shares of common stock authorized for issuance under the LTIP.  Shares available for grant under the LTIP may be either authorized, but unissued shares or shares that have been reacquired by the Company and designated as treasury shares. As of March 31, 2014 and December 31, 2013, 246,511 and 57,923 shares of the Company’s common stock were available for grant under the LTIP. The LTIP permits the issuance by the Company of awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units and performance shares. The exercise price per share of the Company’s common stock purchasable under any stock option or stock appreciation right may not be less than 100% of the fair market value of one share of common stock on the date of grant. The term of any stock option or stock appreciation right may not exceed ten years. The LTIP also provides plan participants with a cashless mechanism to exercise their stock options. Issued restricted stock, stock options and restricted stock units are subject to vesting restrictions.

Restricted Stock Awards

Stock-based compensation expense for restricted stock awards was $0.3 million and $0.2 million for the three months ended March 31, 2014 and 2013, respectively.  Restricted stock awards are amortized over their respective vesting periods of two or three years.  The Company records stock-based compensation for grants of restricted stock awards on a straight-line basis.

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The following table summarizes the restricted common stock activity for the three months ended March 31, 2014:

	March 31, 2014
	Shares		Weighted Average Fair Value
Balance - nonvested at January 1, 2014	409,889		$	10.33
Granted	22,508		8.35
Vested	(140,176	)	10.36
Forfeited	(131,018	)	10.54
Balance - nonvested at March 31, 2014	161,203		$	9.69

The total fair value of restricted stock vested for the three months ended March 31, 2014 was $1.5 million.  As of March 31, 2014, $1.5 million of total unrecognized compensation expense related to restricted common stock is expected to be recognized over a weighted average period of approximately 2 years.

Stock Options

The following tables summarize stock option activity for the three months ended March 31, 2014, along with stock options exercisable at the end of the period:

	For the three months Ended
	March 31, 2014
Options	Shares		Weighted Average Exercise Price		Weighted Average Contractual Life (Years)
Outstanding - Beginning of period	499,542		$	11.78
Forfeited or expired	(34,811	)	11.01
Outstanding - End of period	464,731		$	11.84	6
Vested and Expected to Vest at March 31, 2014	446,142
Exercisable at March 31, 2014	333,571

The fair value of the stock-based awards was estimated using the Black-Scholes model.  No options were granted in the first quarter 2014. Effective the third quarter 2013, the Company’s dividend yield is zero as it has discontinued its dividends on common stock.

As of March 31, 2014, $0.1 million of total unrecognized compensation expense related to stock options awards is expected to be recognized over a weighted average period of approximately 2 years.

The following table sets forth the total stock-based compensation expense resulting from stock options and restricted stock granted to employees that are included in the Company’s consolidated statements of income for the three months ended March 31, 2014 and 2013:

($ in thousands)	For the three months ended March 31,
Stock-Based Compensation Expense	2014		2013
Cost of services and products	$	—	$	3
Selling, general and administrative expenses	306		215
	$	306	$	218

NOTE 10:  EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) applicable to common stock by the weighted average number of shares of common stock outstanding during the period.  Diluted earnings (loss) per share is computed by dividing net income (loss) applicable to common stock by the weighted average number of shares of common stock adjusted to include the effect of potentially dilutive securities.  Potentially dilutive securities include incremental shares issuable upon exercise of outstanding stock options and shares of unvested restricted stock.  Diluted earnings (loss) per share exclude all dilutive securities if their effect is anti-dilutive.

The Company’s restricted stock awards are considered “participating securities” because they contain non-forfeitable rights to dividends. Under the two-class method, earnings per share (“EPS”) is computed by dividing earnings allocated to common shareholders by the weighted-average number of common shares outstanding for the period. In applying the two-class method,

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earnings are allocated to both shares of common stock and participating securities based on their respective weighted-average shares outstanding for the period.

For the three months ended March 31, 2014 and 2013, the Company experienced a net loss.  As a result, the effect of participating securities was excluded from the computation of basic and diluted EPS.  The net losses were not allocated because the restricted stockholders are not required to fund losses.

The weighted average number of shares of common stock used in basic and diluted earnings per share for the three months ended March 31, 2014 and 2013 is as follows:

	For the three months ended March 31,
(amounts in thousands, except for per share)	2014			2013
NUMERATOR:
Net loss applicable to common stock before participating securities	$	(255	)	$	(677	)
Less: income applicable to participating securities (1)	—			—
Net loss applicable to common stock	$	(255	)	$	(677	)
DENOMINATOR:
Weighted average shares outstanding - Basic and Diluted (2)	6,161			5,751
EPS:
Net loss per share - Basic and Diluted	$	(0.04	)	$	(0.12	)

(1)For the three months ended March 31, 2014 and 2013, the Company had 0.4 million and 0.4 million in nonvested participating securities, respectively.  As the participating securities do not participate in losses, there was no allocation of loss for the three months ended March 31, 2014 and 2013.

(2)   For the three months ended March 31, 2014 and 2013, potentially dilutive shares related to out of the money common stock options that were excluded from EPS, as their effect was anti-dilutive, were nominal.

NOTE 11:  SHAREHOLDERS’ EQUITY

A summary of the changes to shareholders’ equity for the three months ended March 31, 2014 and 2013 is provided below:

	For the three months ended March 31,
($ in thousands)	2014			2013
Shareholders’ equity, beginning of period	$	13,006		$	13,098
Net loss	(249		)	(671		)
Dividends paid on common stock	—			(1,664		)
Dividends paid on preferred stock	(6		)	(6		)
Stock based compensation	306			218
Treasury stock purchases	(398		)	(62		)
Changes in pension and postretirement benefit plans	148			144
Shareholders’ equity, end of period	$	12,807		$	11,057

NOTE 12:  SEGMENT INFORMATION

The Company’s two segments, UC and Telephone, are strategic business units that offer different products and services.  The Company evaluates the performance of its two segments based upon factors such as revenue growth, expense containment, market share and operating results.

The UC segment is a premier provider of hosted Unified Communications as a Service (UCaaS) including VoIP, hosted Microsoft communication services, fixed mobile convergence and advanced voice applications for a broad customer base including, medium and large-sized businesses and enterprise business customers.

The Telephone segment operates as an ILEC in southern Orange County, New York and northern New Jersey.  The Telephone segment consists of providing local and toll telephone service, high-speed broadband and fiber Internet access services and satellite video services to residential and business customers.  The ILEC service areas are primarily rural and have an estimated population of 50,000.  We also operate as a CLEC in in Middletown, New York, Scotchtown, New York and Vernon, New Jersey.

The segment results presented below are not necessarily indicative of the results of operations these segments would have achieved had they operated as stand-alone entities during the periods presented.  All intersegment transactions are shown net of eliminations.

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Segment statement of operations information for the three months ended March 31, 2014 and 2013 is set forth below:

	For the three months ended March 31,
				2014									2013
	UC			Telephone			Consolidated			UC			Telephone			Consolidated
Operating Revenues	$	4,211		$	3,313		$	7,524		$	3,956		$	3,784		$	7,740
Operating Expenses
Cost of services and products	2,026			1,026			3,052			2,570			1,219			3,789
Selling, general and administrative expense	3,717			2,081			5,798			4,689			2,559			7,248
Depreciation and amortization	521			382			903			618			384			1,002
Total Operating Expenses	6,264			3,489			9,753			7,877			4,162			12,039
Operating Loss	(2,053		)	(176		)	(2,229		)	(3,921		)	(378		)	(4,299		)
Interest income, (expense), net							(139		)							(236		)
Income from equity method investment							2,040									3,250
Other (expense) income, net							21									108
Loss before income taxes							$	(307	)							$	(1,177	)

NOTE 13:    COMMITMENTS AND CONTINGENCIES

The Company is party, from time to time, to various legal proceedings, including patent infringement claims, regulatory investigations and tax examinations incidental to its business.  The Company continually monitors these legal proceedings, regulatory investigations and tax examinations to determine the impact and any required accruals.

NOTE 14:    SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring after the balance sheet date.  Based on this evaluation, the Company has determined that no subsequent events, except for the matter discussed below, have occurred which require disclosure in the condensed consolidated financial statements.

On April 30, 2014, the Company exercised the Put option and sold all of its ownership interest in the O-P for gross proceeds of $50 million.  The Company will not receive any income from the O-P after April 30, 2014.  The Company used a portion of the proceeds to repay all of the outstanding borrowings under the TriState credit facility (see Note 6).  The Company expects the remaining gross proceeds to be used to pay taxes on the related gain, fund working capital needs and support growth initiatives.

On May 5, 2014, Brian J. Kelley resigned as a member and Chairman of the Board’s Compensation Committee and as a member of the Board’s Audit Committee.  On May 7, 2014, the Company announced the appointment of Mr. Kelley as its Interim Chief Executive Officer, effective immediately.

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

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words “believes,” “anticipates,” “intends,” “expects” and words of similar import, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the geographic regions in which we operate; industry capacity; goodwill and long-lived asset impairment; demographic changes; management turnover; technological changes and changes in consumer demand; existing governmental regulations and changes in or our failure to comply with, governmental regulations; legislative proposals relating to the businesses in which we operate; changes to the USF; risks associated with our unfunded pension liability; competition; the loss of any significant ability to attract and retain highly skilled personnel and any other factors that are described in “Risk Factors.” Given these uncertainties, current and prospective investors should be cautioned regarding reliance on such forward-looking statements. Except as required by law, we disclaim any obligation to update any such factors or to publicly announce the results of any revision to any of the forward-looking statements contained herein to reflect future events or developments. For a further discussion of the matters described above, see Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013.

Overview

Alteva, Inc. (we, our or us) is a cloud-based communications company that provides Unified Communication (“UC”) solutions that unify an organization’s communications systems; enterprise hosted VoIP and we operate a regional Incumbent Local Exchange Carrier (“ILEC”) in southern Orange County, New York and northern New Jersey. Our UC segment delivers cloud-based UC solutions including enterprise hosted VoIP, hosted Microsoft Communication Services, fixed mobile convergence and advanced voice applications for the desktop. By combining voice service with Microsoft Communications Services products, our customers receive a voice-enabled UC solution that integrates with existing business applications. Our Telephone segment consists of our ILEC operations that provide local and toll telephone service to residential and business customers, internet high-speed broadband service, and DIRECTV. Our cloud-based Unified Communication as a Service (“UCaaS”) solutions are focused on medium, large and enterprise markets, which are defined as 20-1,000 users per location. We meet our customers’ unique needs for a business communications solution that integrates multi-location, mobility, business productivity and analytics, into a single seamless experience.

This discussion and analysis provides information about the important aspects of our operations and investments, both at the consolidated and segment levels, and includes discussions of our results of operations, financial position and sources and uses of cash.

This discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.

Executive Summary

	Three months ended March 31, 2014									Three months ended March 31, 2013									Change
			% of Total		Segment			Segment				% of Total		Segment			Segment					Segment Favorable
	Revenue		Revenue		Loss			Margin		Revenue		Revenue		Loss			Margin		Revenue			(Unfavorable)
Unified Communications	$	4,211	56	%	$	(2,053	)	(49	)%	$	3,956	51	%	$	(3,921	)	(99	)%	$	255		$	1,868
Telephone	3,313		44	%	(176		)	(5	)%	3,784		49	%	(378		)	(10	)%	(471		)	202
Total	$	7,524	100	%	$	(2,229	)	(30	)%	$	7,740	100	%	$	(4,299	)	(56	)%	$	(216	)	$	2,070

Revenues decreased 2.8% to $7.5 million for the three months ended March 31, 2014, in comparison to $7.7 million for the three months ended March 31, 2013.  The decrease is primarily from a $0.5 million decrease in revenue due to our sale of operations in Syracuse, New York in August 2013 and a $0.4 million decrease in our USF revenues in our Telephone segment,  partially offset by a $0.7 million growth in our UC license and usage revenue. During the three months ended March 31, 2014, we had an operating loss of $2.2 million, compared to an operating loss of $4.3 million for the three months ended March 31, 2013.  The decrease in operating loss was attributable to higher selling, general and administrative expenses incurred in 2013 to support the growth of the UC segment and severance costs related to management changes and staff rationalization.  During the three months ended March 31, 2014, we had a net loss of $0.2 million, compared to a net loss of $0.7 million for the three months ended March 31, 2013.

For the past several years, we have experienced declines in telephone access lines within our Telephone segment due to sustained competition and cellular substitution for landline telephone services in our regulated franchise area that has reduced revenue in this segment. We partially offset the decline in telephone access lines by focusing our efforts on identifying and pursuing growth opportunities to increase our ILEC broadband Internet business.

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Results of Operations for the three months ended March 31, 2014 and 2013

OPERATING REVENUES

	For the three months ended March 31, 2014				For the three months ended March 31, 2013				Change
			% of Total				% of Total
	Revenue		Revenue		Revenue		Revenue		Revenue
Unified Communications	$	4,211	56	%	$	3,956	51	%	$	255
Telephone	3,313		44	%	3,784		49	%	(471		)
Total	$	7,524	100	%	$	7,740	100	%	$	(216	)

Revenues for our UC segment increased 7% for the three months ended March 31, 2014 compared to the same period in 2013.  This increase was primarily associated with a $0.7 million increase in license and usage revenue from the segment’s organic growth.  This increase was partially offset by a $0.5 million decrease due to our sale of operations in Syracuse, New York in August 2013.

Revenues for our Telephone segment decreased 12% for the three months ended March 31, 2014 compared to the same period in 2013.  The decrease was primarily driven by a $0.4 million decline in USF revenues, due to lower reimbursable costs.

OPERATING EXPENSES

	Unified Communications							Telephone							Consolidated
	For the Three Month Ended March 31,							For the Three Month Ended March 31,							For the Three Month Ended March 31,
in thousands	2014		2013		Change			2014		2013		Change			2014		2013		Change
Cost of services and products	$	2,026	$	2,570	$	(544	)	$	1,026	$	1,219	$	(193	)	$	3,052	$	3,789	$	(737	)
Selling, general and administrative	3,717		4,689		(972		)	2,081		2,559		(478		)	5,798		7,248		(1,450		)
Depreciation and amortization	521		618		(97		)	382		384		(2		)	903		1,002		(99		)
Total operating expenses	$	6,264	$	7,877	$	(1,613	)	$	3,489	$	4,162	$	(673	)	$	9,753	$	12,039	$	(2,286	)

Operating expenses declined 19% for the three months ended March 31, 2014 compared to the three months ended March 31, 2013 primarily due to selling, general and administrative expenses decreasing 21% associated with our UC segment.  In the first three months of 2013 we incurred $1.3 million in charges associated with the restructuring of management and staff rationalization, as well as $0.4 million in marketing expenses associated with the rebranding of the company, which were not incurred in 2014.

Cost of Services and Products

Cost of services and products for our UC segment decreased 21% for three months ended March 31, 2014 compared to the same period in 2013 and decreased as a percentage of revenue to 48% from 65% primarily due to leveraging the UC infrastructure over a larger revenue base.  The decrease was primarily due to a combined $0.6 million decrease from lower third-party carrier costs as a part of our cost reduction initiatives and cost savings from the sale of our operations in Syracuse, New York.

Cost of services and products for our Telephone segment decreased for three months ended March 31, 2014 compared to the same period in 2013 primarily due to a $0.2 million reduction in wages from the right sizing of the segment in 2013.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 20% for the three months ended March 31, 2014 compared to the same period primarily due to severance costs related to management changes and staff rationalization impacting both segments in 2013 of approximately $1.3 million.  In addition, both marketing and legal expenses decreased each by $0.2 million which was primarily driven by higher costs in 2013 from the rebranding to the Alteva name.

Depreciation and Amortization Expense

Depreciation and amortization expense in the UC segment decreased 16% for the three months ended March 31, 2014 compared to the three months ended March 31, 2013 primarily due to a lower depreciable base due to the sale of our operations in Syracuse, New York in August 2013.

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TOTAL OTHER INCOME (EXPENSE)

	For the Three Month Ended March 31,
in thousands	2014			2013			Change
Interest expense, net	$	(139	)	$	(236	)	$	97
Income from equity method investment	2,040			3,250			(1,210		)
Other income, net	21			108			(87		)
Total other income	$	1,922		$	3,122		$	(1,200	)

Total other income decreased 38% for the three months ended March 31, 2014 compared to same period in 2013 due to the decline in income from the O-P agreement.  In 2013 we received guaranteed annual distributions of $13 million ($3.25 million each quarter). In 2014, in accordance with to the O-P agreement, our guaranteed distribution levels stopped and we will receive income from the equity investment only for our ownership share of 8.108% of the O-P’s net income.

INCOME TAXES

For the three months ended March 31, 2014, we had an income tax benefit of $58,000, or 19% of loss before income taxes, as compared to an income tax benefit of $0.5 million, or 43% of loss before income taxes, for the three months ended March 31, 2013.  The estimated effective tax rate for each period includes projections of tax expense on the expected change in our valuation allowance for deferred tax assets. The estimated annual effective tax rate for the year ended December 31, 2014 excludes the estimated tax effects of the O-P gain on the put exercise, which is being treated as a discrete item in the Company’s second quarter of 2014. The decrease in the effective tax rate is due to the expected increase in the valuation allowance for deferred tax assets reducing the overall tax benefit recorded for the period ended March 31, 2014.

LIQUIDITY AND CAPITAL RESOURCES

We had $0.3 million of cash and cash equivalents at March 31, 2014 as compared with $1.6 million at December 31, 2013.  Our source of cash flows continue to be primarily generated from cash distributions from the O-P and borrowing under our credit facilities.  The O-P’s cash distributions are made to us on a quarterly basis.

We sold all of our ownership interest in the O-P on April 30, 2014 for gross proceeds of $50 million (see Note 5).  We will not receive any income from the O-P after April 30, 2014.  We used a portion of the proceeds to repay all of the outstanding borrowings under the TriState credit facility, allowing $17.0 million to remain available under the credit facility (see Note 6).  We expect the remaining gross proceeds to be used to pay taxes on the related gain, fund working capital needs and support growth initiatives.

In August 2013, we announced the discontinuation of dividends on our common stock to support future growth initiatives and strengthen our financial position.

On March 11, 2013, we entered into a new credit agreement with TriState to provide for borrowings up to $17.0 million with the ability to increase the facility for borrowings up to $20.0 million with the participation of another lender.  All borrowings become due and payable on June 30, 2014. The TriState borrowings incur interest at a variable rate based on either LIBOR or a Base Rate, as defined in the credit agreement, plus an applicable margin 3.50% or 2.00%, respectively.  For the three months ended March 31, 2014, the effective interest rate on the TriState credit facility was approximately 3.7%.  As of March 31, 2014, the Company had $6.5 million available under the Credit Agreement.

Under the terms of the TriState credit agreement, we are required to comply with certain loan covenants, which include, but are not limited to, the achievement of certain financial ratios as well as certain financial reporting requirements. We must maintain a Consolidated Liquidity Ratio, as defined in the TriState credit agreement, in excess of 1.0 to 1.0, including the value of the Put calculated in accordance with the 4G Agreement, until April 30, 2014.  We are required to obtain the consent of TriState prior to agreeing to any amendment to the agreements we have with the O-P. Our obligations under the TriState credit facility are secured by all of our assets and guaranteed by all of our wholly-owned subsidiaries except for the subsidiary that is operating as an ILEC.  The ILEC subsidiary entered into a negative pledge agreement with TriState whereby the ILEC subsidiary agreed not to pledge any of its assets as collateral or lien to be placed on any of its assets.  On March 11, 2013, we borrowed $15.2 million to repay all borrowings outstanding under the CoBank, Provident and prior TriState credit facilities and retired those facilities.

CASH FROM OPERATING ACTIVITIES

The change from net cash provided by to cash used in operating activities from March 31, 2013 to March 31, 2014 was primarily due to the fact that although we recorded $2.0 million of income from O-P for the three months ended March 31, 2014, the distribution of this income is expected in May 2014.  We did not receive cash from the O-P during the three months ended March 31, 2014.

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For the three months ended March 31, 2013, net cash provided by operating activities was $0.6 million.  Operating cash flows included $1.8 million of distributions from the O-P that represented our share of the O-P’s income.

CASH FROM INVESTING ACTIVITIES

Net cash provided by investing activities was nominal for the three months ended March 31, 2014. In the first quarter of 2014, we purchased $0.1 million of seat licenses; however, we still have a payable balance and therefore no cash outflows were incurred for the three months ended March 31, 2014.  Net cash provided by investing activities of $1.0 million for the three months ended March 31, 2013 was primarily due to distributions of $1.4 million we received from the O-P in excess of our share of the O-P’s income.

CASH FROM FINANCING ACTIVITIES

Net cash provided by financing activities during the three months ended March 31, 2014 was $0.2 million compared to cash used in financing activities of $1.4 million for the three months ended March 31, 2013.  We had net borrowings of $0.6 million primarily from our TriState credit facility to fund working capital needs of the Company offset by $0.4 million in purchases of treasury shares from employee restricted stock vestings.  Dividends declared on our common shares by the Board of Directors were $0.27 per share for the three months ended March 31, 2013.  The total amount of dividends paid on our common shares by us for the three months ended March 31, 2013 was $1.7 million.  The additional financing activities for the three months ended March 31, 2013 were attributed to the repayment of debt of $15.1 million offset by $15.5 million proceeds from our new debt with TriState.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not subject to any material market risk. Our exposure to changes in interest rates results from our borrowing activities. There were no material changes to our quantitative disclosure about market risk as presented in item 7A of our Annual Report on Form 10-K for the year ended December 31, 2013.

ITEM 4.  CONTROLS AND PROCEDURES

Background

On March 14, 2014, the Audit Committee of our Board of Directors (the “Audit Committee”), in consultation with management, determined that, due to an error in the application of U.S. generally accepted accounting principles (“GAAP”) for income taxes related to the determination of the valuation allowance needed to reflect its deferred tax assets at the amount that is more than likely than not realizable, our previously filed consolidated financial statements and related financial statement schedules as of and for the year ended December 31, 2012, contained in our Annual Report on Form 10-K/A for the year ended December 31, 2012, should be restated.  This conclusion was reached because the Company determined that it overstated its prepaid income taxes and deferred income taxes in the consolidated balance sheet at December 31, 2012 by $0.3 million and $1.1 million, respectively, due to the need to increase its valuation allowance, which resulted in an understatement of the net loss reported for the year ended December 31, 2012 by $1.4 million.

In addition, the Audit Committee concluded that, due to similar errors in income tax accounting, the condensed interim financial statements as of March 31, 2013, June 30, 2013 and September 30, 2013 included in our Quarterly Reports on Forms 10-Q for the respective fiscal quarters then ended should be restated.

Evaluation of Disclosure Controls and Procedures

As of March 31, 2014, our management carried out an assessment, under the supervision of and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our internal disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b).  Based on this assessment, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2014, since the remediation of the previously identified material weaknesses remains in process.

Plan for Remediation of Material Weakness

We have already begun the remediation process for the material weakness identified at December 31, 2013.  We performed a multi-year evaluation of the recoverability of our deferred tax assets and we plan to enhance our quarterly and annual review process and related controls for income taxes through a combination of addition of incremental internal and/or external resources. The enhanced review process will include a more robust valuation allowance review process including a detailed analysis of the expected timing of the reversal of temporary differences.  Management believes that the new review process in addition to incremental internal and/or external resources will remediate the identified control deficiency.

Changes in Internal Control over Financial Reporting

Other than as discussed above under “Plan for Remediation of Material Weakness,” there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter

19

ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A. - RISK FACTORS

Risks related to our business are detailed in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission.

ITEM 6. EXHIBITS

3.1	Articles of Incorporation, as amended, are incorporated herein by reference from Exhibit 3(i) to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.
3.2	By-Laws, as amended, are incorporated herein by reference from Exhibit 3.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
3.3	Certificate of Amendment of the Certificate of Incorporation filed with the New York Department of State on May 21, 2013 is incorporated herein by reference from Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
10.1	Partnership Interest Purchase Agreement as of April 30, 2014 between Alteva, Inc. and Cellco Partnership.
31.1	Rule 13a-14(a)/15d-14(a) Certification signed by Brian J. Kelley, Interim Chief Executive Officer and Director.
31.2	Rule 13a-14(a)/15d-14(a) Certification signed by Brian H. Callahan, Executive Vice President, Chief Financial Officer and Treasurer.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Brian J. Kelley, Interim Chief Executive Officer and Director.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Brian H. Callahan, Executive Vice President, Chief Financial Officer and Treasurer.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

20

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.

		Alteva, Inc.
		(Registrant)
Date:	May 12, 2014	/s/ Brian J. Kelley
		Brian J. Kelley
		Interim Chief Executive Officer
		(Principal Executive Officer)
Date:	May 12, 2014	/s/ Brian H. Callahan
		Brian H. Callahan
		Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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Index to Exhibits

3.1	Articles of Incorporation, as amended, are incorporated herein by reference from Exhibit 3(i) to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.
3.2	By-Laws, as amended, are incorporated herein by reference from Exhibit 3.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
3.3	Certificate of Amendment of the Certificate of Incorporation filed with the New York Department of State on May 21, 2013 is incorporated herein by reference from Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
10.1	Partnership Interest Purchase Agreement as of April 30, 2014 between Alteva, Inc. and Cellco Partnership.
31.1	Rule 13a-14(a)/15d-14(a) Certification signed by Brian J. Kelley, Interim Chief Executive Officer and Director.
31.2	Rule 13a-14(a)/15d-14(a) Certification signed by Brian H. Callahan, Executive Vice President, Chief Financial Officer and Treasurer.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Brian J. Kelley, Interim Chief Executive Officer and Director.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Brian H. Callahan, Executive Vice President, Chief Financial Officer and Treasurer.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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EX-10.1

Exhibit 10.1

PARTNERSHIP INTEREST PURCHASE AGREEMENT

This PARTNERSHIP INTEREST PURCHASE AGREEMENT, dated as of April 30, 2014 (the “Agreement”), is entered into by and between Alteva, Inc., a New York corporation formerly known as Warwick Valley Telephone Company (“Seller”), and Cellco Partnership, a Delaware general partnership doing business as Verizon Wireless (“Buyer”).

RECITALS

WHEREAS, Seller owns an 8.1081% limited partnership interest (the “Interest”) in Orange County-Poughkeepsie Limited Partnership (the “Partnership”), a limited partnership formed under the New York Revised Limited Partnership Act (the “Partnership Act”) pursuant to the Agreement Establishing Orange County — Poughkeepsie Limited Partnership dated as of April 21, 1987, as amended (the “Partnership Agreement”);

WHEREAS, Seller has exercised the option granted to it pursuant to the Agreement dated as of May 26, 2011 among Verizon Wireless of the East LP, Buyer and Seller (the “2011 Agreement”) to require Buyer to purchase the Interest from Seller, and accordingly the parties are entering into this Agreement to effectuate the purchase and sale of the Interest;

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants, agreements and conditions herein contained, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE 1

PURCHASE AND SALE OF INTEREST

1.1            Purchase and Sale of Interest.  Subject to the terms and conditions of this Agreement, as of the date hereof, Seller hereby assigns, sells, transfers, conveys and delivers to Buyer, Seller’s entire right, title and interest in the Interest, free and clear of all liens, claims, security interests, charging orders and encumbrances whatsoever (other than under the Communications Act of 1934, as amended and the rules and regulations promulgated thereunder), in consideration of the payment by Buyer to Seller of cash in the amount of $50,000,000 (the “Purchase Price”), receipt of which is hereby acknowledged.  Buyer hereby accepts the foregoing assignment from Seller of the Interest, subject to the terms, provisions and conditions of this Agreement.

1.2            Final Distributions.  During the month of May, 2014, Buyer will cause the Partnership to deliver to Seller a distribution pursuant to Section 6.3 of the Partnership Agreement attributable to the Interest for the quarter ended March 31, 2014.  During the month of August, 2014, Buyer will cause the Partnership to deliver to Seller a distribution pursuant to Section 6.3 of the Partnership Agreement attributable to the Interest for the quarter ended June 30, 2014, which distribution shall be calculated based on the daily weighted average of Seller’s ownership interest in the Partnership during such quarter.  Except for such two distributions, Seller agrees that it shall not be entitled to any further distribution of any amounts from the Partnership, whether pursuant to Section 6.3 or 11.4 of the Partnership Agreement or otherwise, and Seller hereby waives any right it may have, under the Partnership Agreement or otherwise, to receive any such distributions.   It is understood and agreed that Seller will receive unaudited Partnership financial statements for the quarters ended March 31, 2014 and June 30, 2014.  The foregoing notwithstanding, if Seller notifies Buyer that Seller is required by law or regulations of the Securities and Exchange Commission or the New York Stock Exchange to obtain audited financial statements for the Partnership for either the four months ended April 30, 2014 or calendar year 2014, Buyer will cause the Partnership to prepare and obtain such audited financial statements and provide them to Seller, and Seller will reimburse Buyer and the Partnership for all costs and expenses incurred in preparing, obtaining and providing such audited financial statements.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as follows:

2.1            Organization and Authority.  Seller is a corporation duly organized, validly existing, and in good standing under the laws of the state of New York.  Seller and has all necessary power, authority and legal right to execute and deliver this Agreement and to consummate the purchase and sale transaction contemplated by this Agreement (the “Sale”).  The execution, delivery, and performance of this Agreement by Seller have been duly

authorized by all necessary action on the part of Seller.  This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as may be limited by bankruptcy laws and other similar laws affecting creditors’ rights generally and general principles of equity.

2.2            Compliance.  The execution, delivery and performance of this Agreement by Seller will not, with or without the giving of notice or the passage of time, or both, conflict with, result in a breach, default or loss of rights under, accelerate the maturity of, or result in the creation of any lien, claim, security interest, charging order or encumbrance on the Interest under (a) the Partnership Agreement, (b) the organizational documents of Seller, or (c) any note, mortgage, contract, agreement, lease, obligation, license, governmental authorization or other instrument, or any statute, ordinance, rule, order or regulation to which Seller is a party or by which Seller’s assets, properties, or rights are bound.

2.3            Valid Partnership Interest.  The Interest constitutes an 8.1081% limited partnership interest in the Partnership.  Seller owns good and marketable title to the Interest, free and clear of all liens, claims, security interests, charging orders or encumbrances of any nature whatsoever (other than those arising under the Partnership Agreement or the Partnership Act), and Seller is the exclusive owner of the Interest. The execution and delivery of the Assignment by Seller will vest in Buyer good and marketable title to the Interest, subject to the Partnership Agreement and the Partnership Act.  Except for this Agreement, the Partnership Agreement and the 2011 Agreement, there exists no contract, option, warrant, right to consent, right of first refusal, right of first offer, preemptive right, put right or similar right to acquire the Interest or any portion thereof or interest therein that would be triggered by the execution of this Agreement or the consummation of the Sale.

2.4            Litigation.  There is no pending or, to Seller’s knowledge, threatened, lawsuit or governmental investigation or proceeding against Seller (on behalf of or related to the Partnership or as a partner of the Partnership) or the Interest. There is no outstanding order, injunction, judgment, or decree of any court or government agency against Seller (on behalf of or related to the Partnership or as a partner of the Partnership) or the Interest.

2.5            Consents and Approvals. There are no persons (including but not limited to governmental authorities and agencies, creditors of such party, the Partnership or parties to any other instrument or agreement to which Seller or, to Seller’s knowledge, the Partnership is a party or by which Seller or, to Seller’s knowledge, the Partnership is bound) whose approval or consent to the execution, delivery, or performance of this Agreement by Seller is legally or contractually required or is necessary duly and validly to sell, assign and deliver the Interest in accordance with this Agreement.

2.6            No Broker.  Neither Seller nor its directors, officers, employees, fiduciaries or agents has retained, employed or used any broker or finder in connection with the Sale or in connection with the negotiation hereof that would create a liability or obligation of Buyer or the Partnership.

2.7            Partner Actions.  Seller has not taken any action or incurred any obligation or liability on behalf of the Partnership through an exercise of Seller’s actual or apparent authority to act on behalf of the Partnership that has not been approved by the partners of the Partnership as required by the Partnership Agreement and the Partnership Act.  Seller nor is not in breach or default under the Partnership Agreement, and no event caused by, relating to or affecting Seller has occurred which, with or without the giving of notice or lapse of time, or both, would constitute a material breach or default, or permit termination, modification or acceleration thereunder.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as follows:

3.1            Organization and Authority.  Buyer is a general partnership duly organized and validly existing under the laws of the State of Delaware.  Buyer has all necessary power, authority and legal right to execute and deliver this Agreement and consummate the Sale.  The execution, delivery, and performance of this Agreement by Buyer have been duly authorized by all necessary action on the part of Buyer.  This Agreement has been duly executed and delivered by Buyer.  This Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as may be limited by bankruptcy laws and other similar laws affecting creditors’ rights generally and general principles of equity.

3.2            Compliance.  The execution, delivery and performance of this Agreement by Buyer will not, with or without the giving of notice or the passage of time, or both, conflict with, result in a breach, default or loss of rights under, accelerate the maturity of, or result in the creation of any lien, claim, security interest, charging order or encumbrance under (a) the organizational documents of Buyer, or (b) any note, mortgage, contract, agreement, lease, obligation, license, governmental authorization or other instrument, or any statute, ordinance, rule, order or regulation to which Buyer is a party or by which any of its assets, properties or rights are bound.

3.3            Litigation.  There is no pending or, to Buyer’s knowledge, threatened lawsuit or governmental investigation or proceeding against Buyer that would affect the ability of Buyer to consummate the Sale.  There is no outstanding order, injunction, judgment or decree of any court or government agency against Buyer that would affect the ability of Buyer to consummate the Sale.

3.4            Consents and Approvals.  There are no persons (including but not limited to governmental authorities and agencies, creditors of Buyer or parties to any other instrument or agreement to which Buyer is a party or by which Buyer is bound) whose approval or consent to the execution, delivery or performance of this Agreement by Buyer is legally or contractually required or is necessary duly and validly to purchase the Interest in accordance with this Agreement.

3.5            No Broker.  Neither Buyer nor any of its directors, officers, employees or agents has retained, employed or used any broker or finder in connection with the Sale or in connection with the negotiation hereof that would create a liability or obligation of Seller.

ARTICLE 4

INDEMNIFICATION; RELEASE

4.1            Indemnification by Seller.  Seller shall indemnify and hold harmless Buyer, and Buyer’s officers, directors, employees and affiliates, with respect to any and all claims, losses, costs, liabilities and expenses, including without limitation, reasonable attorneys’ fees and costs (collectively “Losses”), resulting from, arising out of or related to any breach of any representation or warranty of Seller contained in this Agreement, any default in the performance by Seller of any covenant or agreement of Seller contained in this Agreement or any claim or allegation based upon, arising from or alleging any such breach or default.

4.2          Indemnification by Buyer.  Buyer shall indemnify and hold harmless Seller, and Seller’s officers, directors, employees and affiliates, with respect to any and all Losses resulting from, arising out of or related to any breach of any representation or warranty of Buyer contained in this Agreement, any default in the performance by Buyer of any covenant or agreement of Buyer contained in this Agreement or any claim or allegation based upon, arising from or alleging any such breach or default.

4.3          Claims Procedure.  In the event Seller or Buyer should have a claim against the other under this Article 4, the party seeking indemnification (the “Indemnified Party”) shall, as promptly as reasonably practicable after discovery of such claim, deliver written notice of such claim to the other party (the “Indemnifying Party”).  The failure by the Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to such Indemnified Party under this Article 4 except to the extent that the Indemnifying Party demonstrates that it has been prejudiced by such failure.

4.4          Indemnification Limitations.

(a)           IN NO EVENT SHALL ANY PARTY BE LIABLE FOR INDIRECT, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES OR LOST PROFITS ARISING OUT OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

(b)           The amount of any Losses with respect to any claim for which indemnification is available under this Article 4 shall be (A) reduced by an amount equal to any tax benefits attributable to such claim and (B) increased by an amount equal to any taxes attributable to the receipt of such payment, but only to the extent that such tax benefits are actually realized, or such taxes are actually paid, as the case may be, by Buyer or Seller or by any consolidated, combined or unitary group of which Buyer or Seller is a member.

4.5            Mutual Release.  Effective on the date of this Agreement, without further action on the part of any party, Seller (including its affiliates, successors and assigns and its and its affiliates’, successors’ and assigns’ respective officers, directors, employees and agents) hereby releases and discharges Buyer and its affiliates (including without limitation the Partnership), officers, directors, employees and agents, from any and all claims, obligations, causes of action and liabilities (collectively, “Claims”) related to the Partnership, known or unknown, that the releasing party now has, ever had, or hereafter may have or claim to have, other than (a) Claims arising under this Agreement, (b) Claims arising or accruing from fraudulent acts or omissions occurring prior to the Closing, or (c) Claims which may accrue from acts or omissions occurring subsequent to the Closing.  Effective on the date of this Agreement, without further action on the part of any party, Buyer (including its affiliates, successors and assigns and its and its affiliates’, successors’ and assigns’ respective officers, directors, employees and agents) hereby releases and discharges Seller and its affiliates, officers, directors, employees and agents, from any and all Claims related to the Partnership, known or unknown, that the releasing party now has, ever had, or hereafter may have or claim to have, other than (a) Claims arising under this Agreement, (b) Claims arising or accruing from fraudulent acts or omissions occurring prior to the Closing, and (c) Claims which may accrue from acts or omissions occurring subsequent to the Closing.

ARTICLE 5

MISCELLANEOUS PROVISIONS

5.1            Press Releases.  Neither Buyer nor Seller shall issue or cause the publication of any press release or otherwise make public statements related to the Sale without the prior written consent of Seller or Buyer, as applicable; except that nothing herein will prohibit any party from issuing or causing publication of any press release to the extent that such action is required by applicable law or the rules of any national stock exchange applicable to such party or its affiliates, in which case the party wishing to make such disclosure will, if practicable under the circumstances, notify the other party of the proposed time of issuance of such press release and consult with and allow the other party reasonable time to comment on such press release in advance of its issuance.

5.2            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.

5.3            Notices.  Any notice, request, instruction or other document to be given hereunder by either party hereto to the other party hereto shall be in writing and delivered personally or by telecopy or facsimile transmission or sent by registered or certified mail or by any express mail service, postage or fees prepaid:

If to Seller, to:

Alteva, Inc.

401 Market Street, 1st Floor

Philadelphia, PA  19106

Attn:  Brian Callahan, CFO

Facsimile:  215-253-5099

With a copy to:

Jennifer Brown, CAO

Alteva, Inc.

401 Market Street, 1st Floor

Philadelphia, PA  19106

Facsimile:  215-240-8035

Michael J. Tierney

Dilworth Paxson, LLP

1500 Market Street, 3500E

Philadelphia, PA  19102

Facsimile:  215-575-7200

If to Buyer, to:

Cellco Partnership d/b/a Verizon Wireless

One Verizon Way

Basking Ridge, NJ 07920

Attn:  William Hickey

Facsimile: 908-559-7129

With a copy to:

Stephen B. Heimann

Assistant General Counsel — Business Development and Finance

Verizon Wireless

One Verizon Way

Basking Ridge, NJ 07920

Facsimile: 908-559-7125

or at such other address or number for a party as shall be specified by like notice.  Any notice which is delivered personally or by telecopy or facsimile transmission in the manner provided herein shall be conclusively deemed to have been duly given to the party to whom it is directed upon actual receipt by such party or its agent.  Any notice which is addressed and mailed in the manner herein provided shall be conclusively presumed to have been duly given to the party to which it is addressed at the close of business, local time of the recipient, on the fourth business day after the day it is so placed in the mail or, if earlier, the time of actual receipt.

5.4            Expenses.  Except as otherwise provided herein, each party shall bear its own expenses and costs, including the fees of any attorney, accountant, broker, finder or other advisor or representative retained by it, incurred at any time in connection with the preparation of this Agreement and the consummation of the Sale.

5.5            Counterparts.  This Agreement may be executed in counterparts, each of which when so executed shall be an original, but all of which together shall constitute one agreement. This Agreement shall become binding when one or more counterparts taken together shall have been executed and delivered by all of the parties.  It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.  The parties intend to sign and deliver this Agreement by facsimile transmission or by electronic transmission in portable document format (“PDF”).  Each party agrees that the delivery of this Agreement by facsimile or PDF shall have the same force and effect as delivery of original signatures and that each party may use such facsimile or PDF signatures as evidence of the execution and delivery of this Agreement by all parties to the same extent that an original signature could be used.

5.6            Entire Agreement.  This Agreement represents the entire agreement of the parties with respect to the Sale and supersedes all previous agreements relating to the subject matter hereof.

5.7            Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns.  No party may assign or delegate any of its rights or duties hereunder without the prior written consent of the other party; provided that Buyer may assign its rights and/or obligations hereunder in whole or in part to any company controlling, controlled by or under common control with Buyer, provided that Buyer shall remain liable for its covenants and obligations hereunder.

5.8            Headings.  The headings of the Articles, Sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

5.9            Modification and Waiver.  This Agreement may be amended, modified, waived, discharged, or terminated only by a subsequent writing duly executed by authorized representatives of each of the parties.  Any of the terms or conditions of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof.  No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provisions hereof (whether or not similar).

5.10          Severability.  Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction.  If

any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

5.11          No Third-Party Beneficiaries.  With the exception of the parties to this Agreement and their permitted successors and assigns, there shall exist no right of any person to claim a beneficial interest in this Agreement or any rights occurring by virtue of this Agreement.

5.12          Further Assurances.  From time to time, as and when requested by one of the parties, the other parties will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the Sale.

[The remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

SELLER:

ALTEVA, INC.
By:	/s/ Brian H. Callahan
	Name: Brian H. Callahan
	Title: Executive Vice President, Chief Financial Officer and Treasurer

BUYER:

CELLCO PARTNERSHIP D/B/A VERIZON WIRELESS
By:	/s/ Holly Hess
	Name: Holly Hess
	Title: SVP and CFO

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Brian J. Kelley, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Alteva, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2014

/s/ Brian J. Kelley

Brian J. Kelley

Interim Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Brian H. Callahan, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Alteva, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2014

/s/ Brian H. Callahan

Brian H. Callahan

Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT 0F 2002

In connection with the Quarterly Report of Alteva, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian J. Kelley, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Brian J. Kelley

Brian J. Kelley

Interim Chief Executive Officer

(Principal Executive Officer)

May 12, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT 0F 2002

In connection with the Quarterly Report of Alteva, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian H. Callahan, Executive Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Brian H. Callahan

Brian H. Callahan

Executive Vice President, Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

May 12, 2014

XML

Pension And Postretirement Obligations (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 Pension Benefits [Member]	Mar. 31, 2013 Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Company contributions	$ 0.1	$ 0.2

XML

Segment Information (Segment Income Statement Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Operating Revenues	$ 7,524	$ 7,740
Cost of services and products	3,052	3,789
Selling, general and administration expense	5,798	7,248
Depreciation and amortization	903	1,002
Total operating expenses	9,753	12,039
Operating loss	(2,229)	(4,299)
Interest income (expense), net	(139)	(236)
Income from equity method investment	2,040	3,250
Other (expenses) income, net	21	108
Loss before income taxes	(307)	(1,177)
Unified Communications [Member]
Segment Reporting Information [Line Items]
Operating Revenues	4,211	3,956
Cost of services and products	2,026	2,570
Selling, general and administration expense	3,717	4,689
Depreciation and amortization	521	618
Total operating expenses	6,264	7,877
Operating loss	(2,053)	(3,921)
Telephone [Member]
Segment Reporting Information [Line Items]
Operating Revenues	3,313	3,784
Cost of services and products	1,026	1,219
Selling, general and administration expense	2,081	2,559
Depreciation and amortization	382	384
Total operating expenses	3,489	4,162
Operating loss	$ (176)	$ (378)

XML

Shareholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Shareholders' Equity [Abstract]
Shareholders' equity, beginning of period	$ 13,006	$ 13,098
Net loss	(249)	(671)
Dividends paid on common stock		(1,664)
Dividends paid on preferred stock	(6)	(6)
Stock based compensation	306	218
Treasury stock purchases	(398)	(62)
Changes in pension and postretirement benefit plans	148	144
Shareholders' equity, end of period	$ 12,807	$ 11,057

XML

Orange County-Poughkeepsie Limited Partnership (Narrative) (Details) (USD $)	3 Months Ended	6 Months Ended	12 Months Ended				0 Months Ended
	Mar. 31, 2014 item	Jun. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Mar. 31, 2013	Apr. 30, 2014 Put Option [Member] Subsequent Event [Member]
Option Indexed to Issuer's Equity [Line Items]
Equity interest in O-P	8.108%					8.108%
Annual cash distributions to the Company from the O-P			$ 13,000,000	$ 13,000,000	$ 13,600,000
Aggregate strike price	50,000,000
Equity method investment put option value multiplier times EBITDA	0.081081
Proceeds from exercise of stock options							50,000,000
Equity method investment, amount the investment account was reduced to		$ 0

XML

Pension And Postretirement Obligations (Tables)

3 Months Ended

Mar. 31, 2014

Pension And Postretirement Obligations [Abstract]

Components Of Net Periodic Cost (Gain)

		Pension Benefits						Postretirement Benefits
		For the three months ended						For the three months ended
($ in thousands)		March 31, 2014			March 31, 2013			March 31, 2014			March 31, 2013
Service cost	$	-		$	-		$	3		$	4
Interest cost		212			190			32			56
Expected return on plan assets		(225	)		(262	)		(8	)		(104	)
Amortization of transition asset		-			-			-			7
Amortization of prior service cost		14			14			(49	)		(83	)
Recognized actuarial loss		177			198			6			15
Net periodic benefit cost (benefit)	$	178		$	140		$	(16	)	$	(105	)

XML

Stock Based Compensation (Schedule Of Restricted Stock Activity) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Stock Based Compensation [Abstract]
Balance - Beginning of period, Shares	409,889
Granted, Shares	22,508
Vested, Shares	(140,176)
Forfeited, Shares	(131,018)
Balance - End of period, Shares	161,203
Balance - Beginning of period, Grant Date Weighted Average Price per Share	$ 10.33
Granted, Grant Date Weighted Average per Share	$ 8.35
Vested, Grant Date Weighted Average per Share	$ 10.36
Forfeited, Grant Date Weighted Average per Share	$ 10.54
Balance - End of period, Grant Date Weighted Average Price per Share	$ 9.69

XML

Debt Obligations (Schedule Of Debt Obligations) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Short-term debt	$ 10,898	$ 10,126
Capital leases and other borrowings	404	297
Total debt obligations	11,302	10,423
Capital Leases And Other Borrowings [Member]
Debt Instrument [Line Items]
Short-term debt	400	428
TriState Capital Bank [Member]
Debt Instrument [Line Items]
Short-term debt	$ 10,498	$ 9,698

XML

Segment Information (Narrative) (Details)	3 Months Ended
	Mar. 31, 2014 segment
Segment Information [Abstract]
Number of segments	2

XML

Seat Licenses And Other Intangible Assets

3 Months Ended

Mar. 31, 2014

Goodwill Amd Intangible Assets[Abstract]

Seat Licenses And Other Intangible Assets

NOTE 3: SEAT LICENSES AND OTHER INTANGIBLE ASSETS

Intangible assets with finite lives are amortized over their respective estimated useful lives to their estimated residual value. Identifiable intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

The components of seat licenses are as follows:

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of March 31, 2014
Seat licenses	5 years	$	2,721	$	(985	)	$	1,736

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of December 31, 2013
Seat licenses	5 years	$	2,606	$	(857	)	$	1,749

The components of other intangible assets are as follows:

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of March 31, 2014
Customer relationships	8 years	$	5,400	$	(1,800	)	$	3,600
Trade name	15 years		2,400		(427	)		1,973
Website	12 years		79		(8	)		71
Total		$	7,879	$	(2,235	)	$	5,644

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of December 31, 2013
Customer relationships	8 years	$	5,400	$	(1,631	)	$	3,769
Trade name	15 years		2,400		(387	)		2,013
Website	12 years		79		(5	)		74
Total		$	7,879	$	(2,023	)	$	5,856

XML

Stock Based Compensation (Schedule Of Stock Option Activity) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Stock Based Compensation [Abstract]
Outstanding - Beginning of period, Shares	499,542
Forfeited or expired, Shares	(34,811)
Outstanding - End of period, Shares	464,731
Vested and Expected to Vest at March 31, Shares	446,142
Exercisable at March 31, Shares	333,571
Outstanding - Beginning of period, Weighted Average Exercise Price	$ 11.78
Forfeited or expired, Weighted Average Exercise Price	$ 11.01
Outstanding - End of period, Weighted Average Exercise Price	$ 11.84
Outstanding - End of period, Weighted Average Contractual Life (Years)	6 years

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2014

Segment Information [Abstract]

Segment Reporting Information

							For the three months ended March 31,
				2014								2013
	UC			Telephone			Consolidated			UC		Telephone		Consolidated
Operating Revenues	$	4,211	$	3,313		$	7,524		$	3,956	$	3,784	$	7,740
Operating Expenses
Cost of services and products		2,026		1,026			3,052			2,570		1,219		3,789
Selling, general and administrative expense		3,717		2,081			5,798			4,689		2,559		7,248
Depreciation and amortization		521		382			903			618		384		1,002
Total Operating Expenses		6,264		3,489			9,753			7,877		4,162		12,039
Operating Loss		(2,053	)	(176	)		(2,229	)		(3,921	)	(378	)	(4,299	)
Interest income, (expense), net							(139	)						(236	)
Income from equity method investment							2,040							3,250
Other (expense) income, net							21							108
Loss before income taxes						$	(307	)				$		(1,177	)

XML

Shareholders' Equity (Tables)

3 Months Ended

Mar. 31, 2014

Shareholders' Equity [Abstract]

Summary Of The Changes To Shareholders' Equity

		For the three months ended March 31,
($ in thousands)		2014			2013
Shareholders' equity, beginning of period	$	13,006		$	13,098
Net loss		(249	)		(671	)
Dividends paid on common stock		-			(1,664	)
Dividends paid on preferred stock		(6	)		(6	)
Stock based compensation		306			218
Treasury stock purchases		(398	)		(62	)
Changes in pension and postretirement benefit plans		148			144
Shareholders' equity, end of period	$	12,807		$	11,057

XML

Stock Based Compensation (Schedule Of Stock-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 306	$ 218
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense		3
Selling, General And Administrative Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 306	$ 215

XML

Nature Of Operations And Critical Accounting Policies And Estimates (Narrative) (Details) (USD $)	3 Months Ended			3 Months Ended				3 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2013	Dec. 31, 2013	Mar. 31, 2014 Company's Revenues [Member]	Mar. 31, 2013 Company's Revenues [Member]	Mar. 31, 2014 Unified Communications [Member]	Dec. 31, 2011 Unified Communications [Member]	Mar. 31, 2014 Customer Relationships [Member]	Dec. 31, 2013 Customer Relationships [Member]
Significant Accounting Policies [Line Items]
Estimated useful life								8 years	8 years
Cost adjustment period	2 years
Percentage of regulatory revenue				2.00%	7.00%
Goodwill	$ 9,006,000		$ 9,006,000			$ 9,000,000	$ 9,100,000
Goodwill to be allocated		$ 100,000

XML

Seat Licenses And Other Intangible Assets (Components Of Other Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Seat Licenses [Member]	Dec. 31, 2013 Seat Licenses [Member]	Mar. 31, 2014 Customer Relationships [Member]	Dec. 31, 2013 Customer Relationships [Member]	Mar. 31, 2014 Trade Name [Member]	Dec. 31, 2013 Trade Name [Member]	Mar. 31, 2014 Website [Member]	Mar. 31, 2013 Website [Member]	Dec. 31, 2013 Website [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives			5 years	5 years	8 years	8 years	15 years	15 years	12 years	12 years
Gross Value	$ 7,879	$ 7,879	$ 2,721	$ 2,606	$ 5,400	$ 5,400	$ 2,400	$ 2,400	$ 79		$ 79
Accumulated Amortization	(2,235)	(2,023)	(985)	(857)	(1,800)	(1,631)	(427)	(387)	(8)		(5)
Net Value	$ 5,644	$ 5,856	$ 1,736	$ 1,749	$ 3,600	$ 3,769	$ 1,973	$ 2,013	$ 71		$ 74

XML

New Accounting Pronouncements

3 Months Ended

Mar. 31, 2014

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements adopted during the three months ended March 31, 2014.

XML

Severance (Details) (USD $)				0 Months Ended	3 Months Ended			3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Termination Of President And CEO [Member]	May 21, 2013 Employee Severance [Member]	Jun. 30, 2013 Employee Severance [Member]	Mar. 31, 2014 Employee Severance [Member]	Dec. 31, 2013 Employee Severance [Member]	Mar. 31, 2014 Maximum [Member] Termination Of President And CEO [Member]	Mar. 31, 2014 Restricted Stock [Member]	Mar. 31, 2014 Restricted Stock [Member] Termination Of President And CEO [Member]	Mar. 31, 2014 Stock Options [Member]	Mar. 31, 2014 Stock Options [Member] Termination Of President And CEO [Member]
Restructuring Cost and Reserve [Line Items]
Severance costs					$ 300,000			$ 800,000
Outstanding unvested restricted stock awards held by Mr. Cuthbert										101,235
Outstanding unvested stock options held by Mr. Cuthbert	464,731	499,542										6,175
Unrecognized compensation cost			1,200,000						1,500,000		100,000
Amount accured for litigation			100,000
Workforce reduction, percentage				17.00%
Severance-related liability						$ 200,000	$ 200,000

XML

Pension And Postretirement Obligations (Components Of Net Periodic Cost (Gain)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 212	$ 190
Expected return on plan assets	(225)	(262)
Amortization of prior service cost	14	14
Recognized actuarial loss	177	198
Net periodic benefit cost (benefit)	178	140
Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	3	4
Interest cost	32	56
Expected return on plan assets	(8)	(104)
Amortization of transition asset		7
Amortization of prior service cost	(49)	(83)
Recognized actuarial loss	6	15
Net periodic benefit cost (benefit)	$ (16)	$ (105)

XML

Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Operating revenues:
Operating revenues	$ 7,524	$ 7,740
Operating expenses:
Cost of services and products (exclusive of depreciation and amortization expense)	3,052	3,789
Selling, general and administration expenses	5,798	7,248
Depreciation and amortization	903	1,002
Total operating expenses	9,753	12,039
Operating loss	(2,229)	(4,299)
Other income (expense):
Interest expense	(139)	(236)
Income from equity method investment	2,040	3,250
Other income, net	21	108
Total other income	1,922	3,122
Loss before income taxes	(307)	(1,177)
Income tax benefit	(58)	(506)
Net loss	(249)	(671)
Preferred dividends	6	6
Loss applicable to common stock	(255)	(677)
Basic loss per common share	$ (0.04)	$ (0.12)
Diluted loss per common share	$ (0.04)	$ (0.12)
Weighted average shares of common stock used to calculate loss per share
Basic (common)	6,161	5,751
Diluted (common)	6,161	5,751
Unified Communications [Member]
Operating revenues:
Operating revenues	4,211	3,956
Operating expenses:
Cost of services and products (exclusive of depreciation and amortization expense)	2,026	2,570
Selling, general and administration expenses	3,717	4,689
Depreciation and amortization	521	618
Total operating expenses	6,264	7,877
Operating loss	(2,053)	(3,921)
Telephone [Member]
Operating revenues:
Operating revenues	3,313	3,784
Operating expenses:
Cost of services and products (exclusive of depreciation and amortization expense)	1,026	1,219
Selling, general and administration expenses	2,081	2,559
Depreciation and amortization	382	384
Total operating expenses	3,489	4,162
Operating loss	$ (176)	$ (378)

XML

Earnings (Loss) Per Share (Schedule Of Weighted Average Number Of Shares Of Common Stock Used In Diluted Earnings (Loss) Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Earnings (Loss) Per Share [Abstract]
Net loss applicable to common stock before participating securities	$ (255)		$ (677)
Less: income applicable to participated securities		[1]		[1]
Net income (loss) applicable to common stock	$ (255)		$ (677)
Weighted average shares outstanding - Basic and Diluted	6,161,000	[2]	5,751,000	[2]
Net loss per share - Basic and Diluted	$ (0.04)		$ (0.12)
Participating securities	400,000		400,000

[1] For the three months ended March 31, 2014 and 2013, the Company had 0.4 million and 0.4 million in nonvested participating securities, respectively. As the participating securities do not participate in losses, there was no allocation of loss for the three months ended March 31, 2014 and 2013.

[2] For the three months ended March 31, 2014 and 2013, potentially dilutive shares related to out of the money common stock options that were excluded from EPS, as their effect was anti-dilutive, were nominal.

XML

Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$ (249)	$ (671)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	903	1,002
Stock based compensation expense	306	218
Undistributed earnings from equity investment	(2,040)
Distribution in excess of income from equity investment included in net loss		(1,424)
Other non-cash operating activities	113	193
Changes in assets and liabilities
Trade accounts receivable	(290)	364
Other assets	(473)	(597)
Accounts payable	410	144
Other accruals and liabilities	(274)	1,331
Net cash (used in) provided by operating activities	(1,594)	560
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures	(48)	(176)
Proceeds from sale of assets	33
Acquired intangibles		(58)
Purchase of seat licenses		(194)
Distribution in excess of income from equity investment		1,424
Net cash (used in) provided by investing activities	(15)	996
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from debt	1,300	16,273
Repayments of debt and capital leases	(664)	(15,845)
Payment of fees for acquisition of debt		(119)
Purchase of treasury stock	(398)	(62)
Dividends (Common and Preferred)	(6)	(1,670)
Net cash provided by (used in) financing activities	232	(1,423)
Net change in cash and cash equivalents	(1,377)	133
Cash and cash equivalents at beginning of period	1,636	1,799
Cash and cash equivalents at end of period	259	1,932
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of equipment under capital leases	242
Seat licenses acquired but not paid	$ 114

XML

Orange County-Poughkeepsie Limited Partnership (Summarized O-P Balance Sheet Information) (Details) (O-P [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
O-P [Member]
Current assets	$ 47,835	$ 23,351
Property, plant and equipment, net	41,485	41,646
Other Assets	957	365
Total assets	90,277	65,362
Total liabilities	17,641	17,887
Partners' capital	72,636	47,475
Total liabilities and partners' capital	$ 90,277	$ 65,362

XML

Seat Licenses And Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2014

Finite-Lived Intangible Assets [Line Items]

Components Of Other Intangible Assets

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of March 31, 2014
Customer relationships	8 years	$	5,400	$	(1,800	)	$	3,600
Trade name	15 years		2,400		(427	)		1,973
Website	12 years		79		(8	)		71
Total		$	7,879	$	(2,235	)	$	5,644

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of December 31, 2013
Customer relationships	8 years	$	5,400	$	(1,631	)	$	3,769
Trade name	15 years		2,400		(387	)		2,013
Website	12 years		79		(5	)		74
Total		$	7,879	$	(2,023	)	$	5,856

Seat Licenses [Member]

Finite-Lived Intangible Assets [Line Items]

Components Of Other Intangible Assets

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of March 31, 2014
Seat licenses	5 years	$	2,721	$	(985	)	$	1,736

	Estimated		Gross		Accumulated			Net
($ in thousands)	Useful Lives		Value		Amortization			Value
As of December 31, 2013
Seat licenses	5 years	$	2,606	$	(857	)	$	1,749

XML

Debt Obligations (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 11, 2013 Maximum [Member] TriState Capital Bank [Member]	Mar. 11, 2013 Minimum [Member] TriState Capital Bank [Member]	Apr. 30, 2014 Subsequent Event [Member]
Debt Obligations [Line Items]
Line of credit facility, maximum		$ 20.0	$ 17.0
Interest rate percent, plus LIBOR		3.50%	2.00%
Credit facilty, amount available	$ 6.5			$ 17.0
Consolidated liquidity ratio	100.00%

XML

Debt Obligations (Tables)

3 Months Ended

Mar. 31, 2014

Debt Obligations [Abstract]

Schedule Of Debt Obligations

	As of
($ in thousands)		March 31, 2014		December 31, 2013
Short-term debt:
Capital leases and other borrowings, current portion	$	400	$	428
TriState credit line		10,498		9,698
		10,898		10,126
Long-term debt:
Capital leases and other borrowings		404		297
Total debt obligations	$	11,302	$	10,423

XML

Nature Of Operations And Critical Accounting Policies And Estimates

3 Months Ended

Mar. 31, 2014

Nature Of Operations And Critical Accounting Policies And Estimates [Abstract]

Nature Of Operations And Critical Accounting Policies And Estimates

NOTE 1: NATURE OF OPERATIONS AND CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Nature of Operations

Alteva, Inc. ("Alteva" or the "Company") is a cloud-based communications company that provides Unified Communications ("UC") solutions, including enterprise hosted Voice over Internet Protocol ("VoIP") and operates as a regional Incumbent Local Exchange Carrier ("ILEC") in southern Orange County, New York and northern New Jersey. Unless otherwise indicated or unless the context requires, all references to the Company means the Company and its wholly-owned subsidiaries. The Company delivers cloud-based UC solutions including VoIP hosted Microsoft Communication Services, fixed mobile convergence and advanced voice applications for a broad customer base including, medium and large-sized business customers. The Company's ILEC operations consist of providing local and toll telephone service to residential and business customers, Internet high-speed broadband service, and satellite television services provided by DIRECTV.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information, with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results and cash flows for the three month period ended March 31, 2014 are not necessarily indicative of the results that may be expected for the entire year. The consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Amended Annual Report on Form 10-K for the year ended December 31, 2013.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Significant estimates include, but are not limited to, depreciation expense, allowance for doubtful accounts, long-lived assets, pension and postretirement expenses and income taxes. Actual results could differ from those estimates.

Revenue Recognition

The Company derives its revenue from the sale of UC services as well as traditional telephone services.

The Company recognizes revenue when (i) persuasive evidence of an arrangement between the Company and the customer exists, (ii) the delivery of the product to the customer has occurred or service has been provided to the customer, (iii) the price to the customer is fixed or determinable, and (iv) collectability of the sales or service price is reasonably assured. Revenue is reported net of all applicable sales tax.

UC

The Company's UC services and solutions consist primarily of its hosted VoIP UC system, certain UC applications, and other professional services associated with the installation and activation. Additionally, the Company offers customers the ability to purchase telephone equipment from the Company directly or independently from external vendors.

Multiple element arrangements primarily include the sale of telephone equipment, along with professional services associated with installation, activation and implementation services, as well as follow on hosting services. The Company has concluded that the separate units of accounting in these arrangements consist of (i) the telephone equipment sale and (ii) the professional services provided combined with the follow on hosting services. The professional services provided do not constitute a separate unit of accounting as they do not have value to the customer on a stand-alone basis. Arrangement consideration is allocated to the separate units of accounting based on the relative selling price. The selling price for telephone equipment is based on third-party evidence representing list prices for similar equipment when sold a stand-alone basis. The selling price for professional and hosting services is based on the Company's best estimate of selling price ("BESP"). The Company develops its BESP by considering pricing practices, margin, competition and overall market trends.

The Company bills a portion of its monthly recurring hosted service revenue a month in advance. Any amounts billed and collected, but for which the service is not yet delivered, are included in deferred revenue. These amounts are recognized as revenues only when the service is delivered.

Equipment sales associated with the sale of telephone equipment is recognized upon delivery to the customer, as it is considered to be a separate earnings process. The sales are recognized on a gross basis, as the Company is considered the principal obligor in customer transactions among other considerations. Other upfront fees, excluding equipment, along with associated costs, up to but not exceeding these fees, are deferred and recognized over the estimated life of the customer relationship. The Company has estimated its customer relationship life at eight years and evaluates it periodically for continued appropriateness.

Telephone

Revenue is earned from monthly billings to customers for local voice services, long distance, DSL, Internet services, hardware and other services. Revenue is also derived from charges for network access to the local exchange telephone network from subscriber line charges and from contractual arrangements for services such as billing and collection and directory advertising. Revenue is recognized in the period in which service is provided to the customer. Directory advertising revenue is recorded ratably over the life of the directory. With multiple billing cycles, the Company accrues revenue earned but not yet billed at the end of a quarter. The Company also defers services billed in advance and recognizes them as income when earned.

The Telephone segment markets competitive service bundles which may include multiple deliverables. The base bundles consist of voice services (including a business or residential phone line), calling features and long distance services and customers may choose to add internet services to a base bundle package. Separate units of accounting within the bundled packages include voice services, long distance and Internet services. Revenue for all services included in bundles are recognized over the same service period, which is the time period in which the service is provided to the customer.

Certain revenue is realized under pooling arrangements with other service providers and is divided among the companies based on respective costs and investments to provide the services. The companies that take part in pooling arrangements may adjust their costs and investments for a period of two years, which causes the funds distributed by the pool to be adjusted retroactively. The Company believes that recorded amounts represent reasonable estimates of the final distribution from these pools. However, to the extent that the companies participating in these pools make adjustments, there will be corresponding adjustments to the Company's recorded revenue in future periods.

Revenue from these pooling arrangements which includes Universal Service Funds ("USF") and National Exchange Carrier Association ("NECA") pool settlements, accounted for 2% and 7% of the Company's consolidated revenues for the three months ended March 31, 2014 and 2013, respectively.

Materials and Supplies

The Company's materials and supplies are carried at average cost, net of reserves for obsolescence, and consist principally of telephone equipment, telephone pole and wiring spare parts and other ancillary equipment for resale.

Fair Value

Fair value is the estimated price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company is required by accounting standards to provide the disclosure framework for measuring fair value and expanded disclosure about fair value measurements. Fair value measurements are classified and disclosed in one of the following categories:

Level 1:	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:	These are inputs, other than quoted prices that are included in Level 1, which are observable in the marketplace throughout the term of the assets or liabilities, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.
Level 3:	Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the net fair value of identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. The Company tests goodwill for impairment annually on October 1, or whenever events or circumstances indicate that there may be an impairment. If it is determined that an impairment has occurred, the Company records a write down of the carrying value and records the charge for the impairment as an operating expense during the period in which the determination is made.

The UC reporting unit included $9.0 million of goodwill as of March 31, 2014. The Company recorded $9.1 million as a result of the acquisition of certain assets and certain liabilities of Alteva, LLC in 2011. In the third quarter of 2013, as a result of the disposal and business restructuring of its Syracuse, New York operations, the Company allocated $0.1 million of its goodwill to the disposal group and wrote it off as part of the sale. The Company is not aware of any events or circumstances that occurred during the quarter ended March 31, 2014 that would have more likely than not reduced the fair value of this reporting unit below its carrying value.

Income Taxes

The Company records deferred taxes that arise from temporary differences between the financial statement and the tax basis of assets and liabilities. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred tax assets and deferred tax liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment. The Company's deferred taxes result principally from differences in the timing of depreciation and in the accounting for pensions and other postretirement benefits.

The process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties, make judgments regarding outcomes and utilize estimates. Management must make judgments currently about such uncertainties and determine estimates of the Company's tax assets and liabilities. To the extent the final outcome differs, future adjustments to the Company's tax assets and liabilities may be necessary.

The Company assesses the realizability of its deferred tax assets, taking into consideration future reversals of existing temporary differences, the Company's forecast of future taxable income principally arising from its O-P put (see Note 5), and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need for, and the amount of, valuation allowances against the Company's deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required.

Accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities unless they are expected to be paid within one year. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense.

Accounting Policies

There were no material changes to the Company's other accounting policies as presented in Item 8 of its Annual Report on Form 10-K for the year ended December 31, 2013.

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Condensed Consolidated Statements Of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Condensed Consolidated Statements Of Comprehensive Income (Loss) [Abstract]
Net loss	$ (249)	$ (671)
Defined benefit pension plans:
Amortizaion of prior service costs	(35)	(69)
Amortization of actuarial loss	183	213
Other comprehensive income	148	144
Comprehensive loss	$ (101)	$ (527)

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Shareholders' Equity

3 Months Ended

Mar. 31, 2014

Shareholders' Equity [Abstract]

Shareholders' Equity

NOTE 11: SHAREHOLDERS' EQUITY

A summary of the changes to shareholders' equity for the three months ended March 31, 2014 and 2013 is provided below:

		For the three months ended March 31,
($ in thousands)		2014			2013
Shareholders' equity, beginning of period	$	13,006		$	13,098
Net loss		(249	)		(671	)
Dividends paid on common stock		-			(1,664	)
Dividends paid on preferred stock		(6	)		(6	)
Stock based compensation		306			218
Treasury stock purchases		(398	)		(62	)
Changes in pension and postretirement benefit plans		148			144
Shareholders' equity, end of period	$	12,807		$	11,057

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Document And Entity Information	3 Months Ended
	Mar. 31, 2014	May 02, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Entity Registrant Name	ALTEVA, INC.
Entity Central Index Key	0000104777
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		6,088,347

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Segment Information

3 Months Ended

Mar. 31, 2014

Segment Information [Abstract]

Segment Information

NOTE 12: SEGMENT INFORMATION

The Company's two segments, UC and Telephone, are strategic business units that offer different products and services. The Company evaluates the performance of its two segments based upon factors such as revenue growth, expense containment, market share and operating results.

The UC segment is a premier provider of hosted Unified Communications as a Service (UCaaS) including VoIP, hosted Microsoft communication services, fixed mobile convergence and advanced voice applications for a broad customer base including, medium and large-sized businesses and enterprise business customers.

The Telephone segment operates as an ILEC in southern Orange County, New York and northern New Jersey. The Telephone segment consists of providing local and toll telephone service, high-speed broadband and fiber Internet access services and satellite video services to residential and business customers. The ILEC service areas are primarily rural and have an estimated population of 50,000. We also operate as a CLEC in in Middletown, New York, Scotchtown, New York and Vernon, New Jersey.

The segment results presented below are not necessarily indicative of the results of operations these segments would have achieved had they operated as stand-alone entities during the periods presented. All intersegment transactions are shown net of eliminations.

Segment statement of operations information for the three months ended March 31, 2014 and 2013 is set forth below:

							For the three months ended March 31,
				2014								2013
	UC			Telephone			Consolidated			UC		Telephone		Consolidated
Operating Revenues	$	4,211	$	3,313		$	7,524		$	3,956	$	3,784	$	7,740
Operating Expenses
Cost of services and products		2,026		1,026			3,052			2,570		1,219		3,789
Selling, general and administrative expense		3,717		2,081			5,798			4,689		2,559		7,248
Depreciation and amortization		521		382			903			618		384		1,002
Total Operating Expenses		6,264		3,489			9,753			7,877		4,162		12,039
Operating Loss		(2,053	)	(176	)		(2,229	)		(3,921	)	(378	)	(4,299	)
Interest income, (expense), net							(139	)						(236	)
Income from equity method investment							2,040							3,250
Other (expense) income, net							21							108
Loss before income taxes						$	(307	)				$		(1,177	)

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 259	$ 1,636
Trade accounts receivable - net of allowance for uncollectibles - $406 and $378 at March 31, 2014 and December 31, 2013, respectively	3,126	2,836
Other accounts receivable	557	480
Equity method investment	2,040
Materials and supplies	225	237
Prepaid expenses	817	774
Prepaid income taxes	204
Deferred income taxes	108	108
Total current assets	7,336	6,071
Property, plant and equipment, net	13,563	13,837
Intangibles, net	5,644	5,856
Seat licenses, net	1,736	1,749
Goodwill	9,006	9,006
Other assets	822	744
Total assets	38,107	37,263
Current liabilities:
Short-term debt	10,898	10,126
Accounts payable	1,354	944
Advance billing and payments	334	341
Accrued taxes	1,203	1,692
Pension and postretirement benefit obligations	267	267
Other accrued expenses	4,200	3,934
Total current liabilities	18,256	17,304
Long-term debt	404	297
Deferred income taxes	711	649
Pension and postretirement benefit obligations	5,929	6,007
Total liabilities	25,300	24,257
Commitments and contingencies
Shareholders' equity
Preferred shares - $100 par value; authorized and issued shares of 5; $0.01 par value; authorized and unissued shares of 10,000	500	500
Common stock - $0.01 par value; authorized shares of 10,000; issued 6,862 and 6,971 shares at March 31, 2014 and December 31, 2013, respectively	69	70
Treasury stock - at cost, 875 and 830 common shares at March 31, 2014 and December 31, 2013, respectively	(8,010)	(7,612)
Additional paid in capital	13,586	13,279
Accumulated other comprehensive loss	(1,288)	(1,436)
Retained earnings	7,950	8,205
Total shareholders' equity	12,807	13,006
Total liabilities and shareholders' equity	$ 38,107	$ 37,263

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Debt Obligations

3 Months Ended

Mar. 31, 2014

Debt Obligations [Abstract]

Debt Obligations

NOTE 6: DEBT OBLIGATIONS

Debt obligations consisted of the following at March 31, 2014 and December 31, 2013:

	As of
($ in thousands)		March 31, 2014		December 31, 2013
Short-term debt:
Capital leases and other borrowings, current portion	$	400	$	428
TriState credit line		10,498		9,698
		10,898		10,126
Long-term debt:
Capital leases and other borrowings		404		297
Total debt obligations	$	11,302	$	10,423

On March 11, 2013, the Company entered into a new credit agreement with TriState Capital Bank ("TriState") to provide for borrowings up to $17.0 million with the ability to increase the facility for borrowings up to $20.0 million with the participation of another lender (the "Credit Agreement"). All borrowings become due and payable on June 30, 2014. The TriState borrowings incur interest at a variable rate based on either LIBOR or a Base Rate, as defined in the Credit Agreement, plus an applicable margin of 3.50% or 2.00%, respectively. As of March 31 2014, the Company had $6.5 million available under the Credit Agreement.

Under the terms of the Credit Agreement, the Company is required to comply with certain loan covenants, which include, but are not limited to, the achievement of certain financial ratios and certain financial reporting requirements. The Company must maintain a consolidated liquidity ratio, as defined in the Credit Agreement, in excess of 1.0 to 1.0, including the value of the Put calculated in accordance with the 4G Agreement, until April 30, 2014. The Company is required to obtain the consent of TriState prior to agreeing to any amendment to the agreements the Company has with the O-P. The Company's obligations under the TriState credit facility are secured by all of the Company's asset and guaranteed by all of the Company's wholly-owned subsidiaries except for the Company's ILEC subsidiary. The ILEC subsidiary entered into a negative pledge agreement with TriState whereby the ILEC subsidiary agreed not to pledge any of its assets as collateral or lien to be placed on any of its assets.

The Company sold its ownership interest in the O-P on April 30, 2014 (see Note 5) and a portion of the proceeds was used to repay all of the outstanding borrowings under the TriState credit facility, allowing $17.0 million to remain available under the credit facility.

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Orange County-Poughkeepsie Limited Partnership

3 Months Ended

Mar. 31, 2014

Orange County-Poughkeepsie Limited Partnership [Abstract]

Orange County-Poughkeepsie Limited Partnership

NOTE 5: ORANGE COUNTY-POUGHKEEPSIE LIMITED PARTNERSHIP

The Company is a limited partner in the Orange County-Poughkeepsie Limited Partnership ("O-P") and has an 8.108% limited partnership interest as of March 31, 2014 and 2013, which is accounted for under the equity method of accounting. The majority owner and general partner of the O-P is Verizon Wireless of the East LP ("Verizon").

On May 26, 2011, the Company entered into an agreement with Verizon and Cellco Partnership (d/b/a Verizon Wireless), the other limited partner, in the O-P to make certain changes to the O-P partnership agreement which, among other things, specifies that the O-P will provide 4G cellular services (the "4G Agreement"). The 4G Agreement provides that the O-P's business will be converted from a wholesale business to a retail business. The 4G Agreement provided for guaranteed annual cash distributions to the Company from the O-P through 2013. For the years ended December 31, 2013, 2012 and 2011, the Company received annual cash distributions from the O-P of $13.0 million, $13.0 million and $13.6 million, respectively. Starting in 2014, the agreement provides that the Company will receive cash distributions equal to its ownership share percentage of the approved total distributions by the O-P. The 4G Agreement also gives the Company the right (the "Put") to require Verizon to purchase all of the Company's ownership interest in the O-P during April 2013 or April 2014 for an amount equal to the greater of (a) $50.0 million or (b) the product of five (5) times 0.081081 times the O-P's EBITDA, as defined in the 4G Agreement for the calendar year preceding the exercise of the Put.

On April 30, 2014 the Company exercised the Put option and sold all of its ownership interest in the O-P for gross proceeds of $50 million. The Company will not receive any income from the O-P after April 30, 2014. The Company used a portion of the proceeds to repay all of the outstanding borrowings under the TriState credit facility (see Note 6). The Company expects the remaining gross proceeds to be used to pay taxes on the related gain, fund working capital needs and support growth initiatives.

Pursuant to the equity method accounting of the Company's investment income, the Company is required to record the income from the O-P as an increase to the Company's investment account. The Company is required to apply the cash payments made under the 4G Agreement as a return on its investment when received. As a result of receiving the fixed guaranteed cash distributions from the O-P in excess of the Company's proportionate share of the O-P income, the investment account was reduced to zero within the first six months of 2012. Thereafter, the Company recorded the fixed guaranteed cash distributions that were received from the O-P in excess of the proportionate share of the O-P income directly to the Company's statement of operations as other income.

The following summarizes the income statement (unaudited) for the three months ended March 31, 2014 and 2013 that O-P provided to the Company:

		For the three months ended March 31,
($ in thousands)		2014		2013
Net sales	$	84,441	$	79,892
Cellular service cost		37,610		35,980
Operating expenses		21,689		21,398
Operating income		25,142		22,514
Other income (expense)		19		3
Net income	$	25,161	$	22,517
Company's share	$	2,040	$	1,826

The following summarizes the balance sheet as of March 31, 2014 (unaudited) and December 31, 2013 that O-P provided to the Company:

		As of
($ in thousands)		March 31, 2014	December 31, 2013
Current assets	$	47,835	$	23,351
Property, plant and equipment, net		41,485		41,646
Other assets		957		365
Total assets	$	90,277	$	65,362
Total liabilities	$	17,641	$	17,887
Partners' capital		72,636		47,475
Total liabilities and partners' capital	$	90,277	$	65,362

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Orange County-Poughkeepsie Limited Partnership (Tables)

3 Months Ended

Mar. 31, 2014

Orange County-Poughkeepsie Limited Partnership [Abstract]

Summarized O-P Income Statement Information

		For the three months ended March 31,
($ in thousands)		2014		2013
Net sales	$	84,441	$	79,892
Cellular service cost		37,610		35,980
Operating expenses		21,689		21,398
Operating income		25,142		22,514
Other income (expense)		19		3
Net income	$	25,161	$	22,517
Company's share	$	2,040	$	1,826

Summarized O-P Balance Sheet Information

		As of
($ in thousands)		March 31, 2014	December 31, 2013
Current assets	$	47,835	$	23,351
Property, plant and equipment, net		41,485		41,646
Other assets		957		365
Total assets	$	90,277	$	65,362
Total liabilities	$	17,641	$	17,887
Partners' capital		72,636		47,475
Total liabilities and partners' capital	$	90,277	$	65,362

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Commitments And Contingencies

3 Months Ended

Mar. 31, 2014

Commitments And Contingencies [Abstract]

Commitments And Contingencies

NOTE 13: COMMITMENTS AND CONTINGENCIES

The Company is party, from time to time, to various legal proceedings, including patent infringement claims, regulatory investigations and tax examinations incidental to its business. The Company continually monitors these legal proceedings, regulatory investigations and tax examinations to determine the impact and any required accruals.

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Stock Based Compensation

3 Months Ended

Mar. 31, 2014

Stock Based Compensation [Abstract]

Stock Based Compensation

NOTE 9: STOCK BASED COMPENSATION

The Company has a shareholder approved long-term incentive plan (the "LTIP") to assist the Company and its affiliates in attracting, motivating and retaining selected individuals to serve as employees, directors, consultants and advisors of the Company and its affiliates by providing incentives to such individuals through the ownership and performance of the Company's common stock. There are 1.1 million shares of common stock authorized for issuance under the LTIP. Shares available for grant under the LTIP may be either authorized, but unissued shares or shares that have been reacquired by the Company and designated as treasury shares. As of March 31, 2014 and December 31, 2013, 246,511 and 57,923 shares of the Company's common stock were available for grant under the LTIP. The LTIP permits the issuance by the Company of awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units and performance shares. The exercise price per share of the Company's common stock purchasable under any stock option or stock appreciation right may not be less than 100% of the fair market value of one share of common stock on the date of grant. The term of any stock option or stock appreciation right may not exceed ten years. The LTIP also provides plan participants with a cashless mechanism to exercise their stock options. Issued restricted stock, stock options and restricted stock units are subject to vesting restrictions.

Restricted Stock Awards

Stock-based compensation expense for restricted stock awards was $0.3 million and $0.2 million for the three months ended March 31, 2014 and 2013, respectively. Restricted stock awards are amortized over their respective vesting periods of two or three years. The Company records stock-based compensation for grants of restricted stock awards on a straight-line basis.

The following table summarizes the restricted common stock activity for the three months ended March 31, 2014:

	March 31, 2014
				Weighted
				Average Fair
	Shares			Value
Balance - nonvested at January 1, 2014	409,889		$	10.33
Granted	22,508			8.35
Vested	(140,176	)		10.36
Forfeited	(131,018	)		10.54
Balance - nonvested at March 31, 2014	161,203		$	9.69

The total fair value of restricted stock vested for the three months ended March 31, 2014 was $1.5 million. As of March 31, 2014, $1.5 million of total unrecognized compensation expense related to restricted common stock is expected to be recognized over a weighted average period of approximately 2 years.

Stock Options

The following tables summarize stock option activity for the three months ended March 31, 2014, along with stock options exercisable at the end of the period:

				For the three months Ended
				March 31, 2014
					Weighted
				Weighted	Average
				Average	Contractual
Options	Shares			Exercise Price	Life (Years)
Outstanding - Beginning of period	499,542		$	11.78
Forfeited or expired	(34,811	)		11.01
Outstanding - End of period	464,731		$	11.84	6
Vested and Expected to Vest at March 31, 2014	446,142
Exercisable at March 31, 2014	333,571

The fair value of the stock-based awards was estimated using the Black-Scholes model. No options were granted in the first quarter 2014. Effective the third quarter 2013, the Company's dividend yield is zero as it has discontinued its dividends on common stock.

As of March 31, 2014, $0.1 million of total unrecognized compensation expense related to stock options awards is expected to be recognized over a weighted average period of approximately 2 years.

The following table sets forth the total stock-based compensation expense resulting from stock options and restricted stock granted to employees that are included in the Company's consolidated statements of income for the three months ended March 31, 2014 and 2013:

($ in thousands)		For the three months ended March 31,
Stock-Based Compensation Expense		2014		2013
Cost of services and products	$	-	$		3
Selling, general and administrative expenses		306			215
	$	306	$		218

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes [Abstract]

Income Taxes

NOTE 7: INCOME TAXES

The effective tax rate for the three months ended March 31, 2014, and March 31, 2013 was 18.9% and 43.0%, respectively. We determined our interim tax provision by developing an estimate of the annual effective tax rate and applying such rate to interim pre-tax results. The estimated rate includes projections of tax expense on the expected increase in our valuation allowance for deferred tax assets. The estimated effective tax rate differed from the U.S. statutory rate primarily due to the expected increase in the valuation allowance, which reduced the overall tax benefit recorded for the period ended March 31, 2014, and does not include the estimated tax effects of the O-P gain on the put exercise, which is being treated as a discrete item in the second quarter.

As of March 31, 2014 and December 31, 2013, the Company carried a full valuation allowance against its deferred tax assets because management determined that it was not more likely than not that it would realize the benefits of such deferred tax assets. The Company maintains a deferred tax liability related to indefinite lived intangibles.

The accounting standard regarding accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities, unless expected to be paid within one year. As of March 31, 2014 and December 31, 2013, the Company has no liability for unrecognized tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense. For the three months ended March 31, 2014 and 2013, there was no interest expense relating to unrecognized tax benefits.

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Pension And Postretirement Obligations

3 Months Ended

Mar. 31, 2014

Pension And Postretirement Obligations [Abstract]

Pension And Postretirement Obligations

NOTE 8: PENSION AND POSTRETIREMENT OBLIGATIONS

The components of net periodic cost (benefit) for the three months ended March 31, 2014 and 2013 are as follows:

		Pension Benefits						Postretirement Benefits
		For the three months ended						For the three months ended
($ in thousands)		March 31, 2014			March 31, 2013			March 31, 2014			March 31, 2013
Service cost	$	-		$	-		$	3		$	4
Interest cost		212			190			32			56
Expected return on plan assets		(225	)		(262	)		(8	)		(104	)
Amortization of transition asset		-			-			-			7
Amortization of prior service cost		14			14			(49	)		(83	)
Recognized actuarial loss		177			198			6			15
Net periodic benefit cost (benefit)	$	178		$	140		$	(16	)	$	(105	)

For the three months ended March 31, 2014 and March 31, 2013, the Company has contributed $0.1 million and $0.2 million, respectively, to its pension and postretirement benefits plans. The amortization of prior service cost and recognized actuarial (gain) loss included in pension and postretirement expense represent reclassifications out of other comprehensive income (loss).

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Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2014

Earnings (Loss) Per Share [Abstract]

Earnings (Loss) Per Share

NOTE 10: EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) applicable to common stock by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) applicable to common stock by the weighted average number of shares of common stock adjusted to include the effect of potentially dilutive securities. Potentially dilutive securities include incremental shares issuable upon exercise of outstanding stock options and shares of unvested restricted stock. Diluted earnings (loss) per share exclude all dilutive securities if their effect is anti-dilutive.

The Company's restricted stock awards are considered "participating securities" because they contain non-forfeitable rights to dividends. Under the two-class method, earnings per share ("EPS") is computed by dividing earnings allocated to common shareholders by the weighted-average number of common shares outstanding for the period. In applying the two-class method, earnings are allocated to both shares of common stock and participating securities based on their respective weighted-average shares outstanding for the period.

For the three months ended March 31, 2014 and 2013, the Company experienced a net loss. As a result, the effect of participating securities was excluded from the computation of basic and diluted EPS. The net losses were not allocated because the restricted stockholders are not required to fund losses.

The weighted average number of shares of common stock used in basic and diluted earnings per share for the three months ended March 31, 2014 and 2013 is as follows:

		For the three months ended March 31,
(amounts in thousands, except for per share)		2014			2013
NUMERATOR:
Net loss applicable to common stock before participating securities	$	(255	)	$	(677	)
Less: income applicable to participating securities (1)		-			-
Net loss applicable to common stock	$	(255	)	$	(677	)
DENOMINATOR:
Weighted average shares outstanding - Basic and Diluted (2)		6,161			5,751
EPS:
Net loss per share - Basic and Diluted	$	(0.04	)	$	(0.12	)

(1)	For the three months ended March 31, 2014 and 2013, the Company had 0.4 million and 0.4 million in nonvested participating securities, respectively. As the participating securities do not participate in losses, there was no allocation of loss for the three months ended March 31, 2014 and 2013.
(2)	For the three months ended March 31, 2014 and 2013, potentially dilutive shares related to out of the money common stock options that were excluded from EPS, as their effect was anti-dilutive, were nominal.

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Orange County-Poughkeepsie Limited Partnership (Summarized O-P Income Statement Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Company's share	$ 2,040	$ 3,250
O-P [Member]
Net sales	84,441	79,892
Cellular service cost	37,610	35,980
Operating expenses	21,689	21,398
Operating income	25,142	22,514
Other income (expense)	19	3
Net income	25,161	22,517
Company's share	$ 2,040	$ 1,826

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Nature Of Operations And Critical Accounting Policies And Estimates (Policy)

3 Months Ended

Mar. 31, 2014

Nature Of Operations And Critical Accounting Policies And Estimates [Abstract]

Basis Of Presentation

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information, with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results and cash flows for the three month period ended March 31, 2014 are not necessarily indicative of the results that may be expected for the entire year. The consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Amended Annual Report on Form 10-K for the year ended December 31, 2013.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Significant estimates include, but are not limited to, depreciation expense, allowance for doubtful accounts, long-lived assets, pension and postretirement expenses and income taxes. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

The Company derives its revenue from the sale of UC services as well as traditional telephone services.

The Company recognizes revenue when (i) persuasive evidence of an arrangement between the Company and the customer exists, (ii) the delivery of the product to the customer has occurred or service has been provided to the customer, (iii) the price to the customer is fixed or determinable, and (iv) collectability of the sales or service price is reasonably assured. Revenue is reported net of all applicable sales tax.

UC

The Company's UC services and solutions consist primarily of its hosted VoIP UC system, certain UC applications, and other professional services associated with the installation and activation. Additionally, the Company offers customers the ability to purchase telephone equipment from the Company directly or independently from external vendors.

Multiple element arrangements primarily include the sale of telephone equipment, along with professional services associated with installation, activation and implementation services, as well as follow on hosting services. The Company has concluded that the separate units of accounting in these arrangements consist of (i) the telephone equipment sale and (ii) the professional services provided combined with the follow on hosting services. The professional services provided do not constitute a separate unit of accounting as they do not have value to the customer on a stand-alone basis. Arrangement consideration is allocated to the separate units of accounting based on the relative selling price. The selling price for telephone equipment is based on third-party evidence representing list prices for similar equipment when sold a stand-alone basis. The selling price for professional and hosting services is based on the Company's best estimate of selling price ("BESP"). The Company develops its BESP by considering pricing practices, margin, competition and overall market trends.

The Company bills a portion of its monthly recurring hosted service revenue a month in advance. Any amounts billed and collected, but for which the service is not yet delivered, are included in deferred revenue. These amounts are recognized as revenues only when the service is delivered.

Equipment sales associated with the sale of telephone equipment is recognized upon delivery to the customer, as it is considered to be a separate earnings process. The sales are recognized on a gross basis, as the Company is considered the principal obligor in customer transactions among other considerations. Other upfront fees, excluding equipment, along with associated costs, up to but not exceeding these fees, are deferred and recognized over the estimated life of the customer relationship. The Company has estimated its customer relationship life at eight years and evaluates it periodically for continued appropriateness.

Telephone

Revenue is earned from monthly billings to customers for local voice services, long distance, DSL, Internet services, hardware and other services. Revenue is also derived from charges for network access to the local exchange telephone network from subscriber line charges and from contractual arrangements for services such as billing and collection and directory advertising. Revenue is recognized in the period in which service is provided to the customer. Directory advertising revenue is recorded ratably over the life of the directory. With multiple billing cycles, the Company accrues revenue earned but not yet billed at the end of a quarter. The Company also defers services billed in advance and recognizes them as income when earned.

The Telephone segment markets competitive service bundles which may include multiple deliverables. The base bundles consist of voice services (including a business or residential phone line), calling features and long distance services and customers may choose to add internet services to a base bundle package. Separate units of accounting within the bundled packages include voice services, long distance and Internet services. Revenue for all services included in bundles are recognized over the same service period, which is the time period in which the service is provided to the customer.

Certain revenue is realized under pooling arrangements with other service providers and is divided among the companies based on respective costs and investments to provide the services. The companies that take part in pooling arrangements may adjust their costs and investments for a period of two years, which causes the funds distributed by the pool to be adjusted retroactively. The Company believes that recorded amounts represent reasonable estimates of the final distribution from these pools. However, to the extent that the companies participating in these pools make adjustments, there will be corresponding adjustments to the Company's recorded revenue in future periods.

Revenue from these pooling arrangements which includes Universal Service Funds ("USF") and National Exchange Carrier Association ("NECA") pool settlements, accounted for 2% and 7% of the Company's consolidated revenues for the three months ended March 31, 2014 and 2013, respectively.

Materials And Supplies

Materials and Supplies

The Company's materials and supplies are carried at average cost, net of reserves for obsolescence, and consist principally of telephone equipment, telephone pole and wiring spare parts and other ancillary equipment for resale.

Fair Value

Fair Value

Fair value is the estimated price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company is required by accounting standards to provide the disclosure framework for measuring fair value and expanded disclosure about fair value measurements. Fair value measurements are classified and disclosed in one of the following categories:

Level 1:	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:	These are inputs, other than quoted prices that are included in Level 1, which are observable in the marketplace throughout the term of the assets or liabilities, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.
Level 3:	Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Goodwill

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the net fair value of identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. The Company tests goodwill for impairment annually on October 1, or whenever events or circumstances indicate that there may be an impairment. If it is determined that an impairment has occurred, the Company records a write down of the carrying value and records the charge for the impairment as an operating expense during the period in which the determination is made.

The UC reporting unit included $9.0 million of goodwill as of March 31, 2014. The Company recorded $9.1 million as a result of the acquisition of certain assets and certain liabilities of Alteva, LLC in 2011. In the third quarter of 2013, as a result of the disposal and business restructuring of its Syracuse, New York operations, the Company allocated $0.1 million of its goodwill to the disposal group and wrote it off as part of the sale. The Company is not aware of any events or circumstances that occurred during the quarter ended March 31, 2014 that would have more likely than not reduced the fair value of this reporting unit below its carrying value.

Income Taxes

Income Taxes

The Company records deferred taxes that arise from temporary differences between the financial statement and the tax basis of assets and liabilities. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred tax assets and deferred tax liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment. The Company's deferred taxes result principally from differences in the timing of depreciation and in the accounting for pensions and other postretirement benefits.

The process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties, make judgments regarding outcomes and utilize estimates. Management must make judgments currently about such uncertainties and determine estimates of the Company's tax assets and liabilities. To the extent the final outcome differs, future adjustments to the Company's tax assets and liabilities may be necessary.

The Company assesses the realizability of its deferred tax assets, taking into consideration future reversals of existing temporary differences, the Company's forecast of future taxable income principally arising from its O-P put (see Note 5), and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need for, and the amount of, valuation allowances against the Company's deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required.

Accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities unless they are expected to be paid within one year. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense.

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2014

Stock Based Compensation [Abstract]

Schedule Of Restricted Stock Activity

	March 31, 2014
				Weighted
				Average Fair
	Shares			Value
Balance - nonvested at January 1, 2014	409,889		$	10.33
Granted	22,508			8.35
Vested	(140,176	)		10.36
Forfeited	(131,018	)		10.54
Balance - nonvested at March 31, 2014	161,203		$	9.69

Schedule Of Stock Option Activity

				For the three months Ended
				March 31, 2014
					Weighted
				Weighted	Average
				Average	Contractual
Options	Shares			Exercise Price	Life (Years)
Outstanding - Beginning of period	499,542		$	11.78
Forfeited or expired	(34,811	)		11.01
Outstanding - End of period	464,731		$	11.84	6
Vested and Expected to Vest at March 31, 2014	446,142
Exercisable at March 31, 2014	333,571

Schedule Of Stock-Based Compensation Expense

($ in thousands)		For the three months ended March 31,
Stock-Based Compensation Expense		2014		2013
Cost of services and products	$	-	$		3
Selling, general and administrative expenses		306			215
	$	306	$		218

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Subsequent Events (Details) (Subsequent Event [Member], Put Option [Member], USD $) In Millions, unless otherwise specified	0 Months Ended
	Apr. 30, 2014
Subsequent Event [Member] | Put Option [Member]
Subsequent Event [Line Items]
Proceeds from Stock Options Exercised	$ 50

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Stock Based Compensation (Narrative) (Details) (USD $)	3 Months Ended						3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Restricted Stock [Member]	Mar. 31, 2014 Stock Options [Member]	Mar. 31, 2014 Long-Term Incentive Plan [Member]	Dec. 31, 2013 Long-Term Incentive Plan [Member]	Mar. 31, 2014 Minimum [Member] Restricted Stock [Member]	Mar. 31, 2014 Maximum [Member] Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for plan					1,100,000
Shares avaliable for grant					246,511	57,923
Minimum exercise price per share of stock options as a percentage of grant date fair market value	100.00%
Stock option or stock appreciation term, maximum	10 years
Stock-based compensation expense	$ 306,000	$ 218,000
Vesting period							2 years	3 years
Total fair value of vested restricted stock			1,500,000
Options granted				0
Dividend yield				0.00%
Total unrecognized stock options compensation expense			$ 1,500,000	$ 100,000
Weighted average period of recognition for total unrecognized stock options compensation expense			2 years	2 years

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Accounts receivable, allowance for uncollectibles	$ 406	$ 378
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized shares	10,000,000	10,000,000
Common stock, issued shares	6,862,000	6,971,000
Treasury stock, common shares	875,000	830,000
Preferred Stock $100 Par Value [Member]
Preferred shares, par value	$ 100	$ 100
Preferred shares, authorized shares	5,000	5,000
Preferred shares, issued shares	5,000	5,000
Preferred Stock $0.01 Par Value [Member]
Preferred shares, par value	$ 0.01	$ 0.01
Preferred shares, authorized shares	10,000,000	10,000,000
Preferred shares, unissued shares	10,000,000	10,000,000

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Severance

3 Months Ended

Mar. 31, 2014

Severance [Abstract]

Severance

NOTE 4: SEVERANCE

On March 31, 2014, David J. Cuthbert was terminated as President and Chief Executive Officer of Alteva. The Company notified Mr. Cuthbert that his termination was for "cause" and, as such, Mr. Cuthbert was not entitled to any of the benefits provided for under his employment agreement dated March 5, 2013, including cash severance and the acceleration of vesting on any unvested equity instruments.

Mr. Cuthbert has disputed the Company's basis for termination and claimed that he is due his full severance benefits. The Company strongly believes the termination for "cause" was appropriate and intends to vigorously defend its position.

The maximum cash severance payments called for under Mr. Cuthbert's employment agreement in the case of a termination not for cause total $0.8 million. At the time of his termination, Mr. Cuthbert held outstanding unvested restricted stock awards and unvested stock options of 101,235 and 6,175, respectively, previously granted under the long-term incentive plan (see Note 9). These awards, which had unrecognized compensation cost of approximately $1.2 million, were cancelled as of his termination.

The Company accrued $100,000 during the three months ended March 31, 2014, in connection with the potential exposure for this matter based upon the current facts and circumstances. The Company will continually monitor the status of this matter to determine the potential impact and any required adjustment to the accrual.

On May 21, 2013, the Company announced a reduction in workforce of its Warwick, New York facility of approximately 17% due to the decline in work associated with the Telephone segment. Total expense recognized in selling general and administrative expenses during the second quarter of 2013 related to this reduction was $0.3 million. As of March 31, 2014 and December 31, 2013, the liability associated with this workforce reduction was reported in other accrued expenses was $0.2 million, which the Company expects to pay-out through August 2014.

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings (Loss) Per Share [Abstract]

Schedule Of Weighted Average Number Of Shares Of Common Stock Used In Diluted Earnings (Loss) Per Share

		For the three months ended March 31,
(amounts in thousands, except for per share)		2014			2013
NUMERATOR:
Net loss applicable to common stock before participating securities	$	(255	)	$	(677	)
Less: income applicable to participating securities (1)		-			-
Net loss applicable to common stock	$	(255	)	$	(677	)
DENOMINATOR:
Weighted average shares outstanding - Basic and Diluted (2)		6,161			5,751
EPS:
Net loss per share - Basic and Diluted	$	(0.04	)	$	(0.12	)

(1)	For the three months ended March 31, 2014 and 2013, the Company had 0.4 million and 0.4 million in nonvested participating securities, respectively. As the participating securities do not participate in losses, there was no allocation of loss for the three months ended March 31, 2014 and 2013.
(2)	For the three months ended March 31, 2014 and 2013, potentially dilutive shares related to out of the money common stock options that were excluded from EPS, as their effect was anti-dilutive, were nominal.

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Income Taxes (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Income Taxes [Abstract]
Effective income tax rate	18.90%	43.00%
Unrecognized tax benefits	$ 0		$ 0
Unrecognized tax benefits, interest expense	$ 0	$ 0

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Subsequent Events

3 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

Subsequent Events

NOTE 14: SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring after the balance sheet date. Based on this evaluation, the Company has determined that no subsequent events, except for the matter discussed below, have occurred which require disclosure in the condensed consolidated financial statements.

On April 30, 2014 the Company exercised the Put option and sold all of its ownership interest in the O-P for gross proceeds of $50 million. The Company will not receive any income from the O-P after April 30, 2014. The Company used a portion of the proceeds to repay all of the outstanding borrowings under the TriState credit facility (see Note 6). The Company expects the remaining gross proceeds to be used to pay taxes on the related gain, fund working capital needs and support growth initiatives.

On May 5, 2014, Brian J. Kelley resigned as a member and Chairman of the Board's Compensation Committee and as a member of the Board's Audit Committee. On May 7, 2014, the Company announced the appointment of Mr. Kelley as its Interim Chief Executive Officer, effective immediately.