-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DoFpphRRHUmIpekmvgohk0CSjTmoO9b5uaJU1b8sf/0Er5v9TeIGnwcKfQOfo6db 50BvMbRGDe/idBP3hfLfCQ== 0001144204-08-061312.txt : 20081106 0001144204-08-061312.hdr.sgml : 20081106 20081105193818 ACCESSION NUMBER: 0001144204-08-061312 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20081105 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081106 DATE AS OF CHANGE: 20081105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOWERSTREAM CORP CENTRAL INDEX KEY: 0001349437 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33449 FILM NUMBER: 081165022 BUSINESS ADDRESS: STREET 1: 55 HAMMARLUND WAY CITY: MIDDLETOWN STATE: RI ZIP: 02842 BUSINESS PHONE: (401) 848-5848 MAIL ADDRESS: STREET 1: 55 HAMMARLUND WAY CITY: MIDDLETOWN STATE: RI ZIP: 02842 FORMER COMPANY: FORMER CONFORMED NAME: University Girls Calendar LTD DATE OF NAME CHANGE: 20060111 8-K 1 v130757_8k.htm Unassociated Document
UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
_________________
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
_________________
 
Date of Report (Date of earliest event reported): November 5, 2008
 
Towerstream Corporation

 
(Exact Name of Registrant as Specified in Charter)
 
Delaware
  
001-33449
  
20-8259086
(State or other
jurisdiction
of incorporation)
  
(Commission File Number)
  
(IRS Employer
Identification No.)
 

55 Hammarlund Way
Middletown, RI
  
02842
(Address of principal executive offices)
  
(Zip Code)

Registrant’s telephone number, including area code: (401) 848-5848
 
(Former name or former address, if changed since last report)
 
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 DFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02. Results of Operations and Financial Condition.

On November 5, 2008, we issued a press release announcing results for the nine months ended September 30, 2008. A copy of the press release is attached to this report as Exhibit 99.1 and is being furnished pursuant to Item 2.02 of Form 8 shall not be deemed incorporated by reference into any of the Registrant’s registration statements or other filings with the Securities and Exchange Commission.

The press release includes EBITDA calculations, which is not a GAAP financial measure. It is presented in the press release because the Registrant’s management uses this information in evaluating the operating efficiency and overall financial performance of its business. The Registrant’s management also believes that this information provides the users of the Registrant’s financial statements a valuable insight into its operating results. EBITDA is calculated as net loss plus depreciation, amortization, income taxes and interest expense less interest income. It is important to note, however, that non-GAAP financial measures as presented do not represent cash provided by or used in operating activities and may not be comparable to similarly titled measures reported by other companies. Neither should be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. A reconciliation of EBITDA, as compared to the most directly comparable GAAP financial measure, net loss, is presented in a reconciliation table in the attached press release.

The information contained in this Form 8-K contains forward-looking statements, including certain statements regarding intent, beliefs, expectations, projections, forecasts and plans, which are subject to numerous assumptions, risks, and uncertainties. A number of factors described from time to time in our periodic filings with the Securities and Exchange Commission could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements. All forward-looking statements included in this Form 8-K are based on information available at the time of the report. We assume no obligation to update any forward-looking statement.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits
 
99.1
Press Release, dated November 5, 2008





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


 TOWERSTREAM CORPORATION
     
     
Dated: November 5, 2008
By:
/s/ Jeffrey M. Thompson
 
 
Name: Jeffrey M. Thompson
 
 
Title: Chief Executive Officer


EXHIBIT INDEX

Exhibit No.
Description
99.1
Press Release, dated November 5, 2008



 
 EX-99.1 2 v130757_ex99-1.htm PRESS RELEASE, DATED NOVEMBER 5, 2008

Towerstream Announces Record Revenues for the Third Quarter of 2008 with Sequential Growth of 15% and Year over Year Growth of 63%

Company in a strong financial position with cash balance of $28 million

Middletown, RI., November 5, 2008 - Towerstream (NASDAQ: TWER), a leading fixed WiMAX provider currently operating in nine major metropolitan areas, announced results for the third quarter ended September 30, 2008.

Operating Highlights:

 
·
Third quarter 2008 revenues increased 15% from second quarter 2008, above previous guidance of 12%, and a 63% increase from third quarter 2007
 
·
Gross margin improved more than 10% sequentially, increasing to 64% during the third quarter 2008 as compared to 58% in the second quarter 2008
 
·
Customer churn for the third quarter of 2008 was 1.22%, as compared to 1.17% for the second quarter of 2008 and 1.26% for the third quarter of 2007
 
·
Average revenue per user (ARPU) reached $827, an increase of 4% from second quarter 2008 and an increase of 19% from third quarter 2007
 
·
“Cash burn” totaled $3.9 million in third quarter 2008, representing a 9% decrease from the second quarter of 2008 and a 17% decrease from the first quarter of 2008
 
·
EBITDA before stock based compensation improved by 18% from the second quarter of 2008, decreasing from a loss of $2.7 million to a loss of $2.2 million
 
·
Cash and cash equivalents totaled $28 million at September 30, 2008

Management Comments:

“I am pleased to report that Towerstream has recorded another quarter of significant revenue growth with 63% percent year-over-year growth and 15% sequential quarterly growth,” said Jeff Thompson, President and Chief Executive Officer.  “We continue to deliver strong operating performance despite an extremely difficult economic environment and believe that our low cost, high quality suite of broadband products position us well going forward.”

“We remain focused on driving revenues higher and cash burn lower,” said Joseph Hernon, Chief Financial Officer. “We were able to improve EBITDA before stock based compensation by 18% on a sequential basis and our cash burn for the third quarter decreased by 9% from the second quarter. We expect that continued growth, careful cost controls and the leveraging of our business model will result in further decreases in cash burn. We ended the third quarter in a strong financial position with more than $28 million in cash and cash equivalents. We have the capital required to execute our business plan through the current economic downturn.”



“Customers recognize that we provide high quality services at a lower price than the large telecommunication providers,” added Thompson. “Churn remains well below industry standards and existing customers continue to upgrade to higher bandwidth products, especially our mid-range offering.”

 
Selected Financial Data and Key Operating Metrics:
(All dollars are in thousands except ARPU)

   
(Unaudited)
  
   
Three months ended
  
   
9/30/2008
  
6/30/2008
  
9/30/2007*
  
Selected Financial Data
              
Revenues
  
$
2,870
  
$
2,494
  
$
1,765
  
Gross profit margin
    
64
%
  
58
%
  
63
%
Operating expenses (1)
    
6,092
    
6,262
    
3,958
  
Operating loss (1)
    
(3,222
)
  
(3,768
)
  
(2,193
)
Net loss (1)
    
(3,216
)
  
(3,730
)
  
(1,746
)
EBITDA before stock-based compensation (2)
    
(2,189
)
  
(2,683
)
  
(1,431
)
Capital expenditures
  
$
2,041
  
$
1,841
  
$
4,294
  
 
Key Operating Metrics
                    
Churn rate (2)
    
1.22
%
  
1.17
%
  
1.26
%
ARPU (2)
  
$
827
  
$
797
  
$
694
  
ARPU of new subscribers (2)
  
$
733
  
$
898
  
$
748
  

* Certain reclassifications of prior period amounts have been made to conform to current year presentation.
(1) Includes Stock-based compensation of $188, $336, and $276, respectively.
(2) See Non-GAAP Measures below for a definition and reconciliation of EBITDA before stock-based compensation, and definitions of Churn, ARPU and ARPU of new subscribers.

 
Analysis of Results of Operations and Financial Condition
 
Revenues for the third quarter 2008 increased 15% as compared to the second quarter 2008, and increased 63% from the third quarter 2007. These increases were driven by the continued growth in our customer base and higher ARPU.
 

ARPU of new subscribers in the third quarter 2008 decreased 18% as compared to the second quarter 2008, and decreased 2% as compared to the third quarter 2007. During the third quarter, a higher percentage of new subscribers purchased our lower priced multipoint service offering, partly in response to promotional programs offered during the third quarter. ARPU of all subscribers in the third quarter of 2008 increased 4% as compared to the second quarter 2008, and increased 19% as compared to the third quarter 2007. Customer churn for the third quarter 2008 of 1.22% remained essentially flat as compared to 1.17% for the second quarter 2008 and 1.26% for the third quarter of 2007.


Gross margin increased by 10% in the third quarter 2008 as compared to the second quarter of 2008, and was relatively flat as compared to the third quarter 2007. Towerstream’s gross margin can fluctuate from period to period due to the timing of when the Company expands into new markets or adds network capacity to existing markets. The effect of entering new markets can be substantial because the Company is required to incur significant costs to establish a market presence before generating new subscriber revenues. 
 
 
Customer support expenses in the third quarter of 2008 increased 1% as compared to the second quarter 2008, and increased 76% as compared to the third quarter of 2007. These increases reflect staffing additions and other costs incurred to support our growing customer base. The number of customers increased 11% during the third quarter 2008.
 

Sales and marketing expenses in the third quarter 2008 increased 1% as compared to the second quarter 2008, and increased 96% as compared to the third quarter 2007. The increase in the 2008 period as compared to the 2007 period reflects higher payroll costs associated with the expansion of our sales team.
 

General and administrative expenses decreased 14% in the third quarter 2008 as compared to the second quarter 2008, and increased 14% as compared to the third quarter 2007. The decrease in the third quarter 2008 compared to the second quarter 2008 primarily related to lower stock-based compensation charges and lower professional services fees.
 

Net loss decreased 14% in the third quarter 2008 as compared to the second quarter 2008, and increased 84% as compared to the third quarter 2007. The 14% improvement on a sequential basis reflects the positive effect of a 15% increase in revenues and a 3% decrease in operating expenses.

 
Cash and cash equivalents totaled $28.1 million at September 30, 2008 as compared to $40.8 million at December 31, 2007 representing a “cash burn” of approximately $13 million for the first nine months of 2008. Capital expenditures totaled approximately $5.9 million during the nine months ended September 30, 2008 primarily related to network, base station, and customer premise equipment associated with installations for new customers and increases in our network capabilities. Net cash used in operating activities totaled approximately $6.3 million in the nine months ended September 30, 2008 with a significant portion attributable to a substantial increase in the Company’s sales force.


Operating Outlook and Guidance:

 
·
Revenues for the fourth quarter 2008 are expected to increase by approximately 10% on a sequential basis and by approximately 54% on a year over year basis.

 
·
Operating focus will remain on reaching EBITDA break-even in existing markets before expanding into new markets.

Non-GAAP Measures
The terms “EBITDA before stock-based compensation”, “Churn”, “Churn rate” and “ARPU” are measurements used by Towerstream to monitor business performance and are not recognized measures under GAAP. Accordingly, investors are cautioned in using or relying upon these measures as alternatives to recognized GAAP measures. Our methods of calculating these measures may differ from other issuers and, accordingly, may not be comparable to similar measures presented by other issuers.

The term “EBITDA before stock-based compensation” refers to income before deducting interest, taxes, depreciation, amortization and stock-based compensation. The terms “Churn” and “Churn rate” refer to the percent of revenue lost on a monthly basis from subscribers disconnecting from our network. The term “ARPU” refers to average revenue per subscriber, calculated as the average revenue for the period divided by the average number of subscribers on the network. ARPU of new subscribers is calculated as the monthly recurring revenue generated by new subscribers during a period divided by the total number of new subscribers added during the period.

The Non-GAAP measure, EBITDA before stock-based compensation, has been reconciled to the nearest GAAP measure, Net loss, as follows:


   
Three months ended
  
   
9/30/2008
  
6/30/2008
  
*9/30/2007
  
Reconciliation of Non-GAAP to GAAP:
              
EBITDA before stock-based compensation
  
$
(2,189
)
$
(2,683
)
$
(1,431
)
Interest expense
    
(106
)
  
(106
)
  
(133
)
Interest income
    
124
    
148
    
597
  
Depreciation
   
(857
)
  
(753
)
  
(502
)
Stock-based compensation
    
(188
)
  
(336
)
  
(276
)
Net loss
  
$
(3,216
)
$
(3,730
)
$
(1,745
)

 
·
Certain reclassifications of prior period amounts have been made to conform to current year presentation.
 




Summary Balance Sheet and Statements of Operations


 
   
(Unaudited)
September 30, 2008
  
December 31, 2007
  
Assets
          
Current Assets
          
Cash and cash equivalents
  
$
28,085
  
$
40,757
  
Accounts receivable, net
    
259
    
185
  
Other current assets
    
362
    
736
  
Total Current Assets
    
28,706
    
41,678
  
               
Property and equipment, net
    
12,138
    
8,519
  
               
Other assets
    
1,135
    
758
  
               
Total Assets
    
41,979
    
50,955
  
               
Liabilities and Stockholders’ Equity
              
Current Liabilities
              
Accounts payable
    
1,299
    
1,414
  
Accrued expenses
    
1,033
    
686
  
Deferred revenues
    
990
    
632
  
Other current liabilities
    
34
    
47
  
Total Current Liabilities
    
3,356
    
2,779
  
               
Other Liabilities
              
Long-term debt, net of deferred discount
    
2,573
    
3,143
  
Other liabilities
    
422
    
298
  
Total Other Liabilities
    
2,995
    
3,441
  
Total Liabilities
    
6,351
    
6,220
  
               
Stockholders’ Equity
              
Common stock
    
34
    
34
  
Additional paid-in-capital
    
54,650
    
53,223
  
Deferred consulting costs
    
-
    
(20
)
Accumulated deficit
    
(19,056
)
  
(8,502
)
Total Stockholders’ Equity
    
35,628
    
44,735
  
Total Liabilities and Stockholders’ Equity
  
$
41,979
  
$
50,955
  
               
 
 
 
                    
   
Three months ended
September 30,
  
 Nine months ended
September 30,
  
   
2008
  
2007
  
 2008
  
2007
  
                    
Revenues
  
$
2,870
  
$
1,765
  
$
7,446
  
$
4,977
  
                           
Operating Expenses
                          
Cost of revenues (exclusive of depreciation)
    
1,031
    
659
    
3,045
    
1,670
  
Depreciation
    
857
    
502
    
2,287
    
1,279
  
Customer support services
    
453
    
258
    
1,322
    
609
  
Sales and marketing
   
2,059
    
1,050
    
5,927
    
2,146
  
General and administrative
    
1,692
    
1,489
    
5,565
    
4,968
  
Total Operating Expenses
    
6,092
    
3,958
    
18,146
    
10,672
  
Operating Loss
    
(3,222
)
  
(2,193
)
  
(10,700
)
  
(5,695
)
Other Income (Expense)
                          
Interest income
    
124
    
597
    
560
    
933
  
Interest expense
    
(106
)
  
(133
)
  
(395
)
  
(842
)
Other expense, net
    
(12
)
  
(17
)
  
(20
)
  
(171
)
Total Other Income (Expense)
    
6
    
447
    
145
    
(80
)
Net Loss
  
$
(3,216
)
$
(1,746
)
$
(10,555
)
$
(5,775
)
                           
Net loss per common share
  
$
(0.09
)
$
(0.05
)
$
(0.31
)
$
(0.21
)
Net loss per common share excluding
stock-based compensation
  
$
(0.09
)
$
(0.04
)
$
(0.29
)
$
(0.18
)
Weighted average common shares
outstanding - basic and diluted
    
34,557
    
34,077
    
34,536
    
27,614
  





Conference Call and Webcast

A conference call led by President and Chief Executive Officer, Jeff Thompson, and Chief Financial Officer, Joseph Hernon, will be held on November 6, at 8:30 a.m. EST to review results and provide an update on business developments.

Interested parties may participate in the conference by dialing 888-679-8033 or 617-213-4846 (for international callers) using pass code 70974945. A telephonic replay of the conference may be accessed approximately two hours after the call through November 13, 2008 at 11:59 p.m. EST by dialing 888-286-8010 or 617-801-6888 (for international callers) using pass code 14944498. 

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

Towerstream’s wireless broadband solution network delivers high-speed Internet access supporting VoIP, bandwidth on demand, wireless redundancy, VPNs, disaster recovery, bundled data, and video services, and can be delivered in days. Unlike cable Internet and DSL, Towerstream connections are symmetrical, which means that the upload and download speeds are identical.  This creates a more stable connection, suitable for Voice Over IP and web hosting, as well as many other business applications. Companies utilizing multiple appliances simultaneously, such as streaming video and VoIP, can prioritize their bandwidth to secure mission-critical activities. All of Towerstream’s products are backed by its Service Level Agreement (SLA) and the ability to be up and running within a week. Towerstream currently serves businesses of all sizes in New York, Boston, Los Angeles, Chicago, the San Francisco Bay Area, Miami, Seattle, Dallas-Fort Worth and Providence/Newport, RI.

For more information, visit www.towerstream.com.

About Towerstream Corporation
Towerstream is a leading fixed WiMAX service provider in the U.S., delivering high-speed Internet access to businesses. Founded in 2000, the Company has established networks in nine markets including New York City, Boston, Los Angeles, Chicago, the San Francisco Bay Area, Miami, Seattle, Dallas-Fort Worth, and the greater Providence area where the Company is based. The Company was the first carrier selected to join the WiMAX Forum to assist leading vendors in establishing industry compliance with international broadband wireless access standards and cross-vendor interoperability. Towerstream was awarded two 2008 Telephony Innovation Awards for Most Innovative Broadband Wireless Service and Most Innovative Small Business Service and the Best of WiMAX World 2008 Service Provider Deployment Award for its New York City network.

Safe Harbor
Certain statements contained in this press release are “forward-looking statements” within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the company with the Securities and Exchange Commission. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The company undertakes no obligation to publicly release statements made to reflect events or circumstances after the date hereof.





INVESTOR CONTACT:
Terry McGovern
Vision Advisors
415-902-3001
mcgovern@visionadvisors.net 

MEDIA CONTACT: 
Amanda Lordy/ Todd Barrish
Dukas Public Relations
212-704-7385
amanda@dukaspr.com / todd@dukaspr.com 



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