8-K

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): March 18, 2013

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:

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

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

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

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

Item 2.02. Results of Operations and Financial Condition.

Item 7.01. Regulation FD Disclosure

On March 18, 2013, Towerstream Corporation (the “Company”) issued a press release announcing results for the three months and year ended December 31, 2012. A copy of the press release is attached to this report as Exhibit 99.1 and is being furnished pursuant to Item 2.02 and 7.01 and shall not be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The furnishing of the information in this Current Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information contained in this Current Report on Form 8-K constitutes material investor information that is not otherwise publicly available.

The press release includes EBITDA calculations, which is not a generally accepted accounting principles (“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 with valuable insight into its operating results. EBITDA is calculated as net income (loss) before interest, income taxes, depreciation and amortization. The Company defines adjusted EBITDA as net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding when applicable, stock-based compensation, other non-operating income or expenses, non-core expenses as well as gain or loss on (i) disposal of property and equipment, (ii) nonmonetary transactions, and (iii) business acquisitions. 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 adjusted EBITDA, excluding non-recurring and non-core expenses, as compared to the most directly comparable GAAP financial measure, net loss, is presented in a reconciliation table in the attached press release.

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

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release, dated March 18, 2013

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: March 18, 2013	By:	/s/ Joseph P. Hernon
		Joseph P. Hernon
		Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated March 18, 2013

EX-99.1

Towerstream Reports Fourth Quarter and Year End 2012 Results

MIDDLETOWN, R.I., March 18, 2013 – Towerstream Corporation (NASDAQ: TWER) (the “Company”), a leading 4G and Small Cell Rooftop Tower company, announced results for the fourth quarter and year ended December 31, 2012.

Fourth Quarter and Annual Operating Highlights

· Revenue increased 15% to $8.2 million for the fourth quarter 2012 compared to the fourth quarter 2011 and increased 1% compared to the third quarter 2012.

· Revenue increased 22% to $32.3 million for the year ended December 31, 2012 compared to $26.5 million for the year ended December 31, 2011.

· Adjusted EBITDA profitability, excluding non-recurring and non-core expenses, was $1.7 million for the fourth quarter 2012 compared to $1.6 million for the third quarter 2012 and the fourth quarter 2011.

· Adjusted EBITDA profitability, excluding non-recurring and non-core expenses, was $6.4 million for the year ended December 31, 2012 compared to $5.2 million for the year ended December 31, 2011.

· Customer churn for the fourth quarter 2012 was 1.59% compared to 1.54% for the third quarter 2012 and 1.43% for the fourth quarter 2011. Customer churn remained within the Company’s target range of 1.4% to 1.7% for the thirteenth consecutive quarter.

· Closed acquisition of Delos Internet in Houston in February 2013. This transaction brings our national presence to thirteen markets, including nine of the eleven largest business markets.

· Formed Hetnets Tower Corporation, a wholly owned subsidiary which will provide a range of shared infrastructure services and access.

Management Comments

“We are pleased to report another year of solid growth and stronger operating performance,” noted Joseph Hernon, Chief Financial Officer.  “We recently closed our fifth acquisition and are focused on bringing our fixed wireless business to cash flow profitability in the first half of 2013.”

“We are excited to launch our new subsidiary, Hetnets Tower Corporation, in January which will offer a wide range of shared wireless infrastructure services and access,” stated Jeffrey Thompson, President and Chief Executive Officer.  “The explosion in mobile data in urban markets is driving a migration to small cell architecture, and the major carriers are presently focused on the densification of their network.”

"Our fixed wireless, backhaul network and street-level rooftop locations enables us to quickly deliver solutions to the challenges associated with small cell deployments," added Mr. Thompson.

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About Hetnets Tower Corporation

Since 2010, we have been exploring opportunities to leverage our fixed wireless network in major urban markets to provide other wireless technology solutions and services.  Over the past few years, a significant increase in mobile data generated by smartphones, tablets, and other devices has placed tremendous demand on the networks of the carriers.  In recent months, we have concluded that the wireless communications industry is experiencing a fundamental shift from its current, macro-cellular architecture to hyper-densified Small Cell architecture where existing cell sites will be supplemented by many smaller base stations operating near street level.  We believe that Wi-Fi will be an integral component of Small Cell architecture.

Hetnets plans to offer wireless technology solutions and services including (i) rental of space on street level rooftops for the installation of customer owned Small Cells which includes Wi-Fi antennae, DAS, and Metro and Pico cells, (ii) rental of a channel on Hetnets’ Wi-Fi network for the offloading of mobile data, (iii) rental of cabinets, switch ports, interconnection services, including backhaul or transport, and (iv) rental of power and power backup. 

Selected Financial Data and Key Operating Metrics

(All dollars are in thousands except ARPU)

	(Unaudited)
	Three months ended
	12/31/2012			9/30/2012			12/31/2011
Selected Financial Data
Revenues	$	8,229		$	8,127		$	7,185
Gross margin		38	%		45	%		64	%
Adjusted gross margin excluding non-core expenses		69	%		69	%		72	%
Depreciation and amortization		3,605			3,399			2,651
Core operating expenses (1)(2)		5,767			5,664			5,103
Operating loss (1)		(6,282	)		(5,380	)		(3,164	)
Gain on business acquisition		-			-			1,186
Net loss (1)		(6,442	)		(5,408	)		(2,080	)
Adjusted EBITDA (2)		(2,195	)		(1,424	)		(63	)
Non-recurring expenses		87			55			200
Non-core expenses		3,770			2,973			1,490
Adjusted EBITDA excluding non-recurring and non-core expenses (2)		1,662			1,605			1,627
Capital expenditures
Wireless broadband	$	2,463		$	2,416		$	3,160
Rooftop tower sites		2,430			3,818			963
Key Operating Metrics
Churn rate (2)		1.59	%		1.54	%		1.43	%
ARPU (2)	$	717		$	714		$	710
ARPU of new customers (2)		542			560			612

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	Years ended
	12/31/2012			12/31/2011
Selected Financial Data
Revenues	$	32,279		$	26,495
Gross margin		49	%		69	%
Adjusted gross margin excluding non-core expenses		69	%		73	%
Depreciation and amortization		13,634			9,138
Core operating expenses (1)(2)		23,012			18,331
Operating loss (1)		(20,746	)		(9,164	)
Gain (loss) on business acquisition		(40	)		2,232
Net loss (1)		(20,989	)		(7,025	)
Adjusted EBITDA (2)		(5,023	)		1,161
Non-recurring expenses		517			496
Non-core expenses		10,875			3,581
Adjusted EBITDA excluding non-recurring and non-core expenses (2)		6,370			5,238
Capital expenditures
Wireless broadband	$	13,224		$	9,893
Rooftop tower sites		11,589			5,044
Key Operating Metrics
Churn rate (2)		1.59	%		1.45	%
ARPU (2)	$	717		$	710
ARPU of new customers (2)		531			599

(1) Includes stock-based compensation of $305, $438, $419, $1,658 and $1,081, respectively.

(2) See Non-GAAP Measures below for a definition and reconciliation of Adjusted EBITDA, and definitions of Core Operating Expenses, Non-Core Expenses, Churn, ARPU and ARPU of new customers.

Operating Outlook and Guidance

· Revenues for the first quarter 2013 are expected to range between $8.3 million to $8.4 million.

· Adjusted EBITDA profitability is expected to range between $1.6 million to $1.7 million.

Non-GAAP Measures

The terms “Adjusted EBITDA,” “Churn,” “Churn rate,” “ARPU,” and “Market Cash Flow” are measurements used by Towerstream to monitor business performance and are not recognized measures under generally accepted accounting principles (“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.

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We focus on Adjusted EBITDA as a principal indicator of the operating performance of our business. EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, other non-operating income or expenses, non-core expenses, as well as gain or loss on (i) disposal of property and equipment, (ii) nonmonetary transactions, and (iii) business acquisitions. Adjusted Market EBITDA also excludes corporate overhead expenses and other centralized costs. We believe that Adjusted Market EBITDA trends are insightful indicators of our markets’ relative performance, and whether our markets are able to produce sufficient market cash flow to fund working capital and capital expenditure needs.

The term “Core Operating Expenses” includes customer support services, sales and marketing, and general and administrative expenses, and excludes cost of revenues, depreciation and amortization.

The term "Non-Core Expenses" includes costs related to the our efforts to develop other wireless technology solutions and services.

The terms “Churn” and “Churn rate” refer to the percent of revenue lost on a monthly basis from customers disconnecting from our network or reducing the amount of their bandwidth. The term “ARPU” refers to the monthly average revenue per user, or customer, being generated from those customers under contract at the end of each indicated period. We calculate ARPU by dividing our monthly recurring revenue (“MRR”) at the end of a period by the number of customers generating that MRR. “ARPU of new customers” is calculated in the same manner but only includes new customers who entered into contracts during the indicated period. Market Cash Flow represents the amount of cash generated in a market after deducting a market’s direct operating expenses from that market’s revenues. Market Cash Flow does not include (i) centralized costs which support all markets collectively or (ii) any network related capital expenditures incurred in a market.

The Non-GAAP measure, Adjusted EBITDA, excluding non-recurring and non-core expenses, has been reconciled to Net loss as follows:

(All dollars are in thousands)

	Three months ended
	12/31/2012			9/30/2012			12/31/2011
Reconciliation of Non-GAAP to GAAP:
Adjusted EBITDA, excluding non-recurring and non-core expenses	$	1,662		$	1,605		$	1,627
Depreciation and amortization		(3,605	)		(3,399	)		(2,651	)
Non-recurring expenses, primarily acquisition-related		(87	)		(55	)		(200	)
Non-core expenses		(3,770	)		(2,973	)		(1,490	)
Stock-based compensation		(305	)		(438	)		(419	)
Loss on property and equipment		(99	)		(48	)		(16	)
Loss on nonmonetary transactions		(78	)		(71	)		(15	)
Interest expense		(29	)		(37	)		(8	)
Gain on business acquisition		-			-			1,186
Other income (expense), net		(6	)		(2	)		(1	)
Interest income		1			10			25
Provision for income taxes		(126	)		-			(118	)
Net loss	$	(6,442	)	$	(5,408	)	$	(2,080	)

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	Years ended
	12/31/2012			12/31/2011
Reconciliation of Non-GAAP to GAAP:
Adjusted EBITDA, excluding non-recurring and non-core expenses	$	6,370		$	5,238
Depreciation and amortization		(13,634	)		(9,138	)
Non-recurring expenses, primarily acquisition-related		(517	)		(496	)
Non-core expenses		(10,875	)		(3,581	)
Stock-based compensation		(1,658	)		(1,081	)
Loss on property and equipment		(172	)		(65	)
Loss on nonmonetary transactions		(260	)		(41	)
Interest expense		(105	)		(22	)
Gain (loss) on business acquisition		(40	)		2,232
Other income (expense), net		(14	)		(10	)
Interest income		42			57
Provision for income taxes		(126	)		(118	)
Net loss	$	(20,989	)	$	(7,025	)

Summary Condensed Consolidated Financial Statements

(All dollars are in thousands except per share amounts)

Statement of Operations	(Unaudited)						(Audited)
	Three months ended December 31,						Years ended December 31,
	2012			2011			2012                     2011
Revenues	$	8,229		$	7,185		$	32,279		$	26,495
Operating Expenses
Cost of revenues (exclusive of depreciation)		5,139			2,595			16,379			8,190
Depreciation and amortization		3,605			2,651			13,634			9,138
Customer support services		1,136			1,043			4,709			3,557
Sales and marketing		1,536			1,287			6,134			5,362
General and administrative		3,095			2,773			12,169			9,412
Total Operating Expenses		14,511			10,349			53,025			35,659
Operating Loss		(6,282	)		(3,164	)		(20,746	)		(9,164	)
Other Income (Expense)
Gain (loss) on business acquisition		-			1,186			(40	)		2,232
Interest income		1			25			42			57
Interest expense		(29	)		(8	)		(105	)		(22	)
Other income (expense), net		(6	)		(1	)		(14	)		(10	)
Total Other Income (Expense)		(34	)		1,202			(117	)		2,257
Loss before income taxes		(6,316	)		(1,962	)		(20,863	)		(6,907	)
Provision for income taxes		(126	)		(118	)		(126	)		(118	)
Net Loss	$	(6,442	)	$	(2,080	)	$	(20,989	)	$	(7,025	)
Net loss per common share – basic and diluted	$	(0.12	)	$	(0.04	)	$	(0.39	)	$	(0.15	)
Weighted average common shares outstanding – basic and diluted		54,648			53,580			54,434			47,506

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Balance Sheet (Audited) (All dollars are in thousands)
	December 31, 2012			December 31, 2011
Assets
Current Assets
Cash and cash equivalents	$	15,152		$	44,672
Other		1,553			1,216
Total Current Assets		16,705			45,888
Property and equipment, net		41,982			27,531
Other assets		8,423			10,218
Total Assets		67,110			83,637
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued expenses		4,149			3,359
Deferred revenues and other		2,468			2,297
Total Current Liabilities		6,617			5,656
Long-Term Liabilities		2,689			836
Total Liabilities		9,306			6,492
Stockholders’ Equity
Common stock		54			54
Additional paid-in-capital		121,118			119,470
Accumulated deficit		(63,368	)		(42,379	)
Total Stockholders’ Equity		57,804			77,145
Total Liabilities and Stockholders’ Equity	$	67,110		$	83,637

Statement of Cash Flows  (Audited)	Years ended December 31,
	2012			2011
Cash Flows From Operating Activities
Net loss	$	(20,989	)	$	(7,025	)
Non-cash adjustments:
Depreciation & amortization		13,634			9,138
Stock-based compensation		1,658			1,081
(Gain) loss on business acquisition		40			(2,232	)
Other		413			349
Changes in operating assets and liabilities		(2,835	)		(609	)
Net Cash (Used in) Provided By Operating Activities		(8,079	)		702
Cash Flows From Investing Activities
Acquisitions of property and equipment		(20,723	)		(13,620	)
Acquisition of business		-			(4,400	)
Other		(620	)		(198	)
Net Cash Used in Investing Activities		(21,343	)		(18,218	)
Cash Flows From Financing Activities
Repayment of capital leases		(492	)		(175	)
Proceeds from stock issuances		428			355
Net proceeds from sale of common stock		-			38,835
Other		(34	)		-
Net Cash (Used in) Provided By Financing Activities		(98	)		39,015
Net (Decrease) Increase In Cash and Cash Equivalents		(29,520	)		21,499
Cash and Cash Equivalents – Beginning		44,672			23,173
Cash and Cash Equivalents – Ending	$	15,152		$	44,672

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Market data for the three months ended December 31, 2012

(All dollars are in thousands)

Market	Revenues		Cost of Revenues(1)		Gross Margin (1)					Operating Costs		Adjusted Market EBITDA
Los Angeles	$	2,058	$	538	$	1,520		74	%	$	361	$	1,159
New York		1,938		655		1,283		66	%		383		900
Boston		1,688		376		1,312		78	%		207		1,105
Chicago		961		339		622		65	%		161		461
Miami		424		111		313		74	%		80		233
San Francisco		382		118		264		69	%		80		184
Las Vegas-Reno		347		150		197		57	%		35		162
Dallas-Fort Worth		155		88		67		43	%		84		(17	)
Providence-Newport		124		57		67		53	%		23		44
Seattle		110		51		59		54	%		23		36
Philadelphia		34		18		16		46	%		28		(12	)
Nashville		8		16		(8	)	-%			10		(18	)
Total	$	8,229	$	2,517	$	5,712		69	%	$	1,475	$	4,237

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	4,237
Centralized costs (1)		(861	)
Corporate expenses		(1,957	)
Non-core expenses		(3,791	)
Depreciation and amortization		(3,605	)
Stock-based compensation		(305	)
Other income (expense)		(34	)
Provision for income taxes		(126	)
Net loss	$	(6,442	)

Market data for the three months ended December 31, 2011

(All dollars are in thousands)

Market	Revenues		Cost of Revenues(1)		Gross Margin(1)					Operating Costs		Adjusted Market EBITDA
Boston	$	1,687	$	381	$	1,306		77	%	$	226	$	1,080
New York		1,617		465		1,152		71	%		288		864
Los Angeles		1,387		309		1,078		78	%		246		832
Chicago		858		251		607		71	%		140		467
Las Vegas-Reno		434		181		253		58	%		53		200
San Francisco		386		73		313		81	%		87		226
Miami		381		76		305		80	%		96		209
Dallas-Fort Worth		166		89		77		46	%		61		16
Seattle		126		54		72		57	%		25		47
Providence-Newport		108		43		65		61	%		19		46
Philadelphia		26		16		10		39	%		22		(12	)
Nashville		9		31		(22	)	-%			8		(30	)
Total	$	7,185	$	1,969	$	5,216		73	%	$	1,271	$	3,945

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Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	3,945
Centralized costs (1)		(790	)
Corporate expenses		(1,757	)
Non-core expenses		(1,492	)
Depreciation and amortization		(2,651	)
Stock-based compensation		(419	)
Other income (expense)		1,202
Provision for income taxes		(118	)
Net loss	$	(2,080	)

(1) Certain expenses are reported as Cost of Revenues for financial statement purposes but are included in other line items in the Market Data table, either because they are not specific to any market or they relate to non-core expenses.

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 March 18, 2013 at 5:00 p.m.ETto review our financial results and provide an update on current business developments.

Interested parties may participate in the conference by dialing 877-755-7423 or 678-894-3069 (for international callers). A telephonic replay of the conference may be accessed approximately two hours after the call through March 25, 2013 at 11:59 p.m. ET by dialing 855-859-2056 or 404-537-3406 (for international callers) using pass code 18993014.

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

About Towerstream Corporation

Towerstream (NASDAQ: TWER) is a leading 4G and Small Cell Rooftop Tower company. The company owns, operates, and leases Wi-Fi and Small Cell rooftop tower locations to cellular phone operators, tower, Internet and cable companies and hosts a variety of customers on its network. Towerstream was originally founded in 2000 to deliver fixed-wireless high-speed Internet access to businesses and to date offers broadband services in over 13 urban markets including New York City, Boston, Los Angeles, Chicago, Philadelphia, the San Francisco Bay area, Miami, Seattle, Dallas-Fort Worth, Houston, Nashville, Las Vegas-Reno, and the greater Providence area. For more information on Towerstream services, please visit www.towerstream.com and/or follow us @Towerstream.

The Towerstream Corporation logo is available at:

http://www.globenewswire.com/newsroom/prs/?pkgid=6570

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Safe Harbor

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

INVESTOR CONTACT:

Terry McGovern

Vision Advisors

415-902-3001

mcgovern@visionadvisors.net

MEDIA CONTACT:

Todd Barrish

Indicate Media
646-396-6038

todd@indicatemedia.com

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