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)
|
(Former name or former address, if changed since last report)
|
¨
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 DFR 240.14a-12)
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02.
|
Results of Operations and Financial Condition.
|
Item 9.01.
|
Financial Statements and Exhibits.
|
99.1
|
Press Release, dated November 14, 2011
|
TOWERSTREAM CORPORATION
|
|||
Dated: November 14, 2011
|
By:
|
/s/ Joseph P. Hernon
|
|
Joseph P. Hernon
|
|||
Chief Financial Officer
|
Exhibit No.
|
Description
|
|
99.1
|
Press Release, dated November 14, 2011
|
|
·
|
Signed the first Wi-Fi agreement with Boingo Wireless, Inc. giving Towerstream an anchor tenant for our Wi-Fi networks
|
|
·
|
Entered into a definitive agreement with Color Broadband Communications Inc. to acquire certain business assets in the Los Angeles area
|
|
·
|
Towerstream to launch Smart-Fi Wi-Fi service by end of Q4 2011
|
|
·
|
Revenues increased 3% to $6.8 million during the third quarter 2011 compared to the second quarter 2011 and increased 33% compared to the third quarter 2010
|
|
·
|
Adjusted EBITDA profitability, excluding non-recurring expenses and costs associated with the Wi-Fi network investment, remained stable at $1.1 million for both the second and third quarters 2011 and increased compared to $0.4 million for the third quarter 2010
|
|
·
|
Customer churn improved to 1.27% compared to 1.56% for the second quarter 2011 and 1.60% for the third quarter 2010
|
|
·
|
ARPU for the new customers increased to $625 compared to $607 for the second quarter 2011 and $543 for the third quarter 2010
|
(Unaudited)
|
||||||||||||
Three months ended
|
||||||||||||
9/30/2011
|
6/30/2011
|
9/30/2010
|
||||||||||
Selected Financial Data
|
||||||||||||
Revenues
|
$ | 6,776 | $ | 6,581 | $ | 5,080 | ||||||
Gross margin
|
67 | % | 72 | % | 75 | % | ||||||
Adjusted gross margin excluding Wi-Fi network expenses
|
73 | % | 74 | % | 75 | % | ||||||
Depreciation and amortization
|
2,299 | 2,213 | 1,557 | |||||||||
Core operating expenses (1)( 2)
|
4,875 | 4,379 | 3,681 | |||||||||
Operating loss (1)
|
(2,629 | ) | (1,857 | ) | (1,409 | ) | ||||||
Gain on business acquisition
|
- | 564 | - | |||||||||
Net loss (1)
|
(2,620 | ) | (1,294 | ) | (1,387 | ) | ||||||
Adjusted EBITDA (2)
|
96 | 536 | 382 | |||||||||
Non-recurring expenses
|
112 | 135 | 32 | |||||||||
Wi-Fi network expenses
|
880 | 404 | - | |||||||||
Adjusted EBITDA excluding non-recurring and Wi-Fi network expenses(2)
|
1,088 | 1,075 | 414 | |||||||||
Capital expenditures
|
||||||||||||
Wireless broadband
|
$ | 2,627 | $ | 2,077 | $ | 1,051 | ||||||
Wi-Fi network
|
1,663 | 1,827 | - | |||||||||
Key Operating Metrics
|
||||||||||||
Churn rate (2)
|
1.27 | % | 1.56 | % | 1.60 | % | ||||||
ARPU (2)
|
$ | 709 | $ | 703 | $ | 669 | ||||||
ARPU of new customers (2)
|
625 | 607 | 543 |
|
·
|
Revenues for the fourth quarter 2011 are expected to range between $7.0 million to $7.1 million.
|
|
·
|
Adjusted EBITDA profitability is expected to range between $1.0 million to $1.2 million.
|
Three months ended
|
||||||||||||
9/30/2011
|
6/30/2011
|
9/30/2010
|
||||||||||
Reconciliation of Non-GAAP to GAAP:
|
||||||||||||
Adjusted EBITDA, excluding non-recurring expenses and Wi-Fi network expenses
|
$ | 1,088 | $ | 1,075 | $ | 414 | ||||||
Depreciation and amortization
|
(2,299 | ) | (2,213 | ) | (1,557 | ) | ||||||
Non-recurring expenses, primarily acquisition-related
|
(112 | ) | (135 | ) | (32 | ) | ||||||
Wi-Fi network expenses
|
(880 | ) | (404 | ) | - | |||||||
Stock-based compensation
|
(415 | ) | (141 | ) | (220 | ) | ||||||
Loss on property and equipment
|
(1 | ) | (30 | ) | (14 | ) | ||||||
Loss on nonmonetary transactions
|
(10 | ) | (9 | ) | - | |||||||
Interest expense
|
(9 | ) | (2 | ) | - | |||||||
Gain on business acquisition
|
- | 564 | - | |||||||||
Other income (expense), net
|
(4 | ) | (3 | ) | 21 | |||||||
Interest income
|
22 | 4 | 1 | |||||||||
Net loss
|
$ | (2,620 | ) | $ | (1,294 | ) | $ | (1,387 | ) |
Statement of Operations
|
(Unaudited)
|
(Unaudited)
|
||||||||||||||
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
2011
|
2010
|
2011 | 2010 | |||||||||||||
Revenues
|
$ | 6,776 | $ | 5,080 | $ | 19,310 | $ | 14,193 | ||||||||
Operating Expenses
|
||||||||||||||||
Cost of revenues (exclusive of depreciation)
|
2,231 | 1,251 | 5,583 | 3,533 | ||||||||||||
Depreciation and amortization
|
2,299 | 1,557 | 6,487 | 4,112 | ||||||||||||
Customer support services
|
870 | 637 | 2,374 | 1,887 | ||||||||||||
Sales and marketing
|
1,348 | 1,286 | 4,069 | 3,833 | ||||||||||||
General and administrative
|
2,657 | 1,758 | 6,797 | 5,474 | ||||||||||||
Total Operating Expenses
|
9,405 | 6,489 | 25,310 | 18,839 | ||||||||||||
Operating Loss
|
(2,629 | ) | (1,409 | ) | (6,000 | ) | (4,646 | ) | ||||||||
Other Income (Expense)
|
||||||||||||||||
Gain on business acquisition
|
- | - | 564 | 356 | ||||||||||||
Interest income
|
22 | 1 | 32 | 2 | ||||||||||||
Interest expense
|
(9 | ) | - | (14 | ) | - | ||||||||||
Other income (expense), net
|
(4 | ) | 21 | (9 | ) | 63 | ||||||||||
Total Other Income (Expense)
|
9 | 22 | 573 | 421 | ||||||||||||
Net Loss
|
$ | (2,620 | ) | $ | (1,387 | ) | $ | (5,427 | ) | $ | (4,225 | ) | ||||
Net loss per common share
|
$ | (0.05 | ) | $ | (0.04 | ) | $ | (0.12 | ) | $ | (0.12 | ) | ||||
Weighted average common shares outstanding – basic and diluted
|
51,599 | 35,005 | 45,517 | 34,864 |
Balance Sheet
|
||||||||
(Unaudited)
September 30,
2011
|
(Audited)
December 31,
2010
|
|||||||
Assets
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 51,587 | $ | 23,173 | ||||
Other
|
847 | 856 | ||||||
Total Current Assets
|
52,434 | 24,029 | ||||||
Property and equipment, net
|
23,414 | 15,266 | ||||||
Other assets
|
6,426 | 5,295 | ||||||
Total Assets
|
82,274 | 44,590 | ||||||
Liabilities and Stockholders’ Equity
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
3,339 | 2,506 | ||||||
Deferred revenues and other
|
1,781 | 1,339 | ||||||
Total Current Liabilities
|
5,120 | 3,845 | ||||||
Long-Term Liabilities
|
605 | 724 | ||||||
Total Liabilities
|
5,725 | 4,569 | ||||||
Stockholders’ Equity
|
||||||||
Common stock
|
53 | 42 | ||||||
Additional paid-in-capital
|
117,277 | 75,333 | ||||||
Accumulated deficit
|
(40,781 | ) | (35,354 | ) | ||||
Total Stockholders’ Equity
|
76,549 | 40,021 | ||||||
Total Liabilities and Stockholders’ Equity
|
$ | 82,274 | $ | 44,590 |
Statement of Cash Flows (Unaudited)
|
Nine months ended September 30,
|
|||||||
2011
|
2010
|
|||||||
Cash Flows From Operating Activities
|
||||||||
Net loss
|
$ | (5,427 | ) | $ | (4,225 | ) | ||
Non-cash adjustments:
|
||||||||
Depreciation & amortization
|
6,487 | 4,112 | ||||||
Stock-based compensation
|
661 | 678 | ||||||
Gain on business acquisition
|
(564 | ) | (356 | ) | ||||
Other
|
202 | 94 | ||||||
Changes in operating assets and liabilities
|
18 | (563 | ) | |||||
Net Cash Provided By (Used In) Operating Activities
|
1,377 | (260 | ) | |||||
Cash Flows From Investing Activities
|
||||||||
Acquisitions of property and equipment
|
(10,359 | ) | (4,203 | ) | ||||
Acquisition of businesses
|
(1,600 | ) | (1,170 | ) | ||||
Other
|
(51 | ) | (3 | ) | ||||
Net Cash Used In Investing Activities
|
(12,010 | ) | (5,376 | ) | ||||
Cash Flows From Financing Activities
|
||||||||
Payments on capital leases
|
(97 | ) | - | |||||
Proceeds from stock issuances
|
309 | - | ||||||
Net proceeds from sale of common stock
|
38,835 | - | ||||||
Net Cash Provided By Financing Activities
|
39,047 | - | ||||||
Net Decrease In Cash and Cash Equivalents
|
28,414 | (5,636 | ) | |||||
Cash and Cash Equivalents – Beginning
|
23,173 | 14,041 | ||||||
Cash and Cash Equivalents – Ending
|
$ | 51,587 | $ | 8,405 |
Market
|
Revenues
|
Cost of
Revenues(1)
|
Gross Margin(1)
|
Operating
Costs
|
Adjusted
Market
EBITDA
|
|||||||||||||||||||
Boston
|
$ | 1,695 | $ | 390 | $ | 1,305 | 77 | % | $ | 224 | $ | 1,081 | ||||||||||||
New York
|
1,533 | 708 | 825 | 54 | % | 341 | 484 | |||||||||||||||||
Los Angeles
|
1,087 | 223 | 864 | 79 | % | 263 | 601 | |||||||||||||||||
Chicago
|
870 | 266 | 604 | 69 | % | 151 | 453 | |||||||||||||||||
San Francisco
|
370 | 67 | 303 | 82 | % | 92 | 211 | |||||||||||||||||
Las Vegas-Reno
|
409 | 180 | 229 | 56 | % | 44 | 185 | |||||||||||||||||
Miami
|
365 | 81 | 284 | 78 | % | 100 | 184 | |||||||||||||||||
Providence-Newport
|
120 | 51 | 69 | 58 | % | 24 | 45 | |||||||||||||||||
Seattle
|
125 | 55 | 70 | 56 | % | 27 | 43 | |||||||||||||||||
Dallas-Fort Worth
|
166 | 85 | 81 | 49 | % | 80 | 1 | |||||||||||||||||
Nashville
|
13 | 1 | 12 | 92 | % | 11 | 1 | |||||||||||||||||
Philadelphia
|
23 | 15 | 8 | 35 | % | 28 | (20 | ) | ||||||||||||||||
Total
|
$ | 6,776 | $ | 2,122 | $ | 4,654 | 69 | % | $ | 1,385 | $ | 3,269 |
Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
|
||||
Adjusted market EBITDA
|
$ | 3,269 | ||
Centralized costs (1)
|
(942 | ) | ||
Corporate expenses
|
(2,242 | ) | ||
Depreciation and amortization
|
(2,299 | ) | ||
Stock-based compensation
|
(415 | ) | ||
Other income (expense)
|
9 | |||
Net loss
|
$ | (2,620 | ) |
Market
|
Revenues
|
Cost of
Revenues(1)
|
Gross Margin(1)
|
Operating
Costs
|
Adjusted Market EBITDA
|
|||||||||||||||||||
New York
|
$ | 1,436 | $ | 281 | $ | 1,155 | 80 | % | $ | 271 | $ | 884 | ||||||||||||
Boston
|
1,130 | 174 | 956 | 85 | % | 167 | 789 | |||||||||||||||||
Los Angeles
|
840 | 158 | 682 | 81 | % | 294 | 388 | |||||||||||||||||
Chicago
|
749 | 227 | 522 | 70 | % | 181 | 341 | |||||||||||||||||
San Francisco
|
285 | 61 | 224 | 79 | % | 92 | 132 | |||||||||||||||||
Miami
|
243 | 84 | 159 | 65 | % | 81 | 78 | |||||||||||||||||
Providence-Newport
|
121 | 39 | 82 | 68 | % | 23 | 59 | |||||||||||||||||
Seattle
|
125 | 54 | 71 | 57 | % | 32 | 39 | |||||||||||||||||
Nashville
|
18 | 8 | 10 | 56 | % | 4 | 6 | |||||||||||||||||
Dallas-Fort Worth
|
128 | 87 | 41 | 32 | % | 59 | (18 | ) | ||||||||||||||||
Philadelphia
|
5 | 13 | (8 | ) | 0 | % | 40 | (48 | ) | |||||||||||||||
Total
|
$ | 5,080 | $ | 1,186 | $ | 3,894 | 77 | % | $ | 1,244 | $ | 2,650 |
Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
|
||||
Adjusted market EBITDA
|
$ | 2,650 | ||
Centralized costs (1)
|
(744 | ) | ||
Corporate expenses
|
(1,538 | ) | ||
Depreciation and amortization
|
(1,557 | ) | ||
Stock-based compensation
|
(220 | ) | ||
Other income (expense)
|
22 | |||
Net loss
|
$ | (1,387 | ) |
Market
|
Revenues
|
Cost of
Revenues(1)
|
Gross Margin(1)
|
Operating
Costs
|
Adjusted Market EBITDA
|
|||||||||||||||||||
Boston
|
$ | 5,054 | $ | 1,183 | $ | 3,871 | 77 | % | $ | 722 | $ | 3,149 | ||||||||||||
New York
|
4,484 | 1,512 | 2,972 | 66 | % | 997 | 1,975 | |||||||||||||||||
Los Angeles
|
3,085 | 589 | 2,496 | 81 | % | 799 | 1,697 | |||||||||||||||||
Chicago
|
2,604 | 788 | 1,816 | 70 | % | 499 | 1,317 | |||||||||||||||||
San Francisco
|
1,105 | 199 | 906 | 82 | % | 283 | 623 | |||||||||||||||||
Miami
|
1,008 | 229 | 779 | 77 | % | 295 | 484 | |||||||||||||||||
Las Vegas-Reno
|
598 | 257 | 341 | 57 | % | 52 | 289 | |||||||||||||||||
Seattle
|
400 | 163 | 237 | 59 | % | 90 | 147 | |||||||||||||||||
Providence-Newport
|
351 | 134 | 217 | 62 | % | 75 | 142 | |||||||||||||||||
Dallas-Fort Worth
|
490 | 245 | 245 | 50 | % | 215 | 30 | |||||||||||||||||
Nashville
|
44 | 21 | 23 | 52 | % | 34 | (11 | ) | ||||||||||||||||
Philadelphia
|
87 | 46 | 41 | 47 | % | 84 | (43 | ) | ||||||||||||||||
Total
|
$ | 19,310 | $ | 5,366 | $ | 13,944 | 72 | % | $ | 4,145 | $ | 9,799 |
Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
|
||||
Adjusted market EBITDA
|
$ | 9,799 | ||
Centralized costs (1)
|
(2,516 | ) | ||
Corporate expenses
|
(6,135 | ) | ||
Depreciation and amortization
|
(6,487 | ) | ||
Stock-based compensation
|
(661 | ) | ||
Other income (expense)
|
573 | |||
Net loss
|
$ | (5,427 | ) |
Market
|
Revenues
|
Cost of
Revenues(1)
|
Gross Margin(1)
|
Operating
Costs
|
Adjusted
Market
EBITDA
|
|||||||||||||||||||
New York
|
$ | 4,289 | $ | 838 | $ | 3,451 | 80 | % | $ | 914 | $ | 2,537 | ||||||||||||
Boston
|
3,266 | 520 | 2,746 | 84 | % | 505 | 2,241 | |||||||||||||||||
Los Angeles
|
2,269 | 428 | 1,841 | 81 | % | 841 | 1,000 | |||||||||||||||||
Chicago
|
1,691 | 542 | 1,149 | 68 | % | 431 | 718 | |||||||||||||||||
San Francisco
|
830 | 178 | 652 | 79 | % | 239 | 413 | |||||||||||||||||
Miami
|
697 | 238 | 459 | 66 | % | 257 | 202 | |||||||||||||||||
Providence-Newport
|
374 | 122 | 252 | 67 | % | 85 | 167 | |||||||||||||||||
Seattle
|
378 | 164 | 214 | 57 | % | 94 | 120 | |||||||||||||||||
Nashville
|
40 | 22 | 18 | 45 | % | 12 | 6 | |||||||||||||||||
Dallas-Fort Worth
|
352 | 252 | 100 | 28 | % | 174 | (74 | ) | ||||||||||||||||
Philadelphia
|
7 | 41 | (34 | ) | 0 | % | 146 | (180 | ) | |||||||||||||||
Total
|
$ | 14,193 | $ | 3,345 | $ | 10,848 | 76 | % | $ | 3,698 | $ | 7,150 |
Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
|
||||
Adjusted market EBITDA
|
$ | 7,150 | ||
Centralized costs (1)
|
(2,210 | ) | ||
Corporate expenses
|
(4,796 | ) | ||
Depreciation and amortization
|
(4,112 | ) | ||
Stock-based compensation
|
(678 | ) | ||
Other income (expense)
|
421 | |||
Net loss
|
$ | (4,225 | ) |
|
(1)
|
Certain expenses are reported as Cost of Revenues for financial statement purposes but are included in Centralized costs in the Market Data table because they are not specific to any market. These costs totaled $109 and $65 respectively for the three months ended September 30, 2011 and 2010 and $218 and $188 for nine months ended September 30, 2011 and 2010.
|