10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2013

OR

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

For the transition period from_______to_______

Commission file number 001-33449

TOWERSTREAM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	20-8259086 (I.R.S. Employer Identification No.)
55 Hammarlund Way Middletown, Rhode Island (Address of principal executive offices)	02842 (Zip Code)

Registrant’s telephone number, including area code (401) 848-5848

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 ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒    No

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         ☐		Accelerated filer ☒
Non-accelerated filer           ☐	(Do not check if a smaller reporting company)	Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐     No ☒

As of November 7, 2013, there were 66,419,380 shares of common stock, par value $0.001 per share, outstanding.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

Table of Contents

		Pages
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
	Condensed Consolidated Balance Sheets as of  September 30, 2013 (unaudited) and December 31, 2012	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012 (unaudited)	2
	Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2013 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5-14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15-25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	26
Item 4.	Controls and Procedures.	26
Part II	OTHER INFORMATION
Item 6.	Exhibits.	27

i 

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited) September 30, 2013			December 31, 2012
Assets
Current Assets
Cash and cash equivalents	$	32,793,977		$	15,152,226
Accounts receivable, net		868,811			609,302
Prepaid expenses and other current assets		1,043,730			943,420
Total Current Assets		34,706,518			16,704,948
Property and equipment, net		38,186,083			41,982,210
Intangible assets, net		3,794,087			4,548,177
Goodwill		1,674,281			1,674,281
Other assets		1,888,116			2,200,098
Total Assets	$	80,249,085		$	67,109,714
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	721,578		$	1,163,442
Accrued expenses		2,444,408			2,986,020
Deferred revenues		1,379,580			1,457,464
Current maturities of capital lease obligations		809,934			775,087
Other		103,107			235,018
Total Current Liabilities		5,458,607			6,617,031
Long-Term Liabilities
Capital lease obligations, net of current maturities		1,991,152			2,387,674
Other		258,463			301,101
Total Long-Term Liabilities		2,249,615			2,688,775
Total Liabilities		7,708,222			9,305,806
Commitments (Note 14)
Stockholders' Equity
Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued		-			-
Common stock, par value $0.001; 95,000,000 shares authorized; 66,419,380 and 54,670,712 shares issued and outstanding, respectively		66,420			54,671
Additional paid-in-capital		153,844,182			121,118,127
Accumulated deficit		(81,369,739	)		(63,368,890	)
Total Stockholders' Equity		72,540,863			57,803,908
Total Liabilities and Stockholders' Equity	$	80,249,085		$	67,109,714

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues	$	8,400,664		$	8,127,507		$	24,912,061		$	24,049,887
Operating Expenses
Cost of revenues (exclusive of depreciation)		5,772,664			4,443,991			16,363,595			11,240,050
Depreciation and amortization		3,846,644			3,399,442			11,653,557			10,028,804
Customer support services		892,710			1,173,432			3,027,982			3,573,561
Sales and marketing		1,368,628			1,561,972			4,333,288			4,598,300
General and administrative		2,600,168			2,928,653			8,373,800			9,073,010
Total Operating Expenses		14,480,814			13,507,490			43,752,222			38,513,725
Operating Loss		(6,080,150	)		(5,379,983	)		(18,840,161	)		(14,463,838	)
Other Income/(Expense)
Interest income		125			10,206			401			41,395
Interest expense		(59,738	)		(37,247	)		(154,298	)		(76,233	)
Gain on business acquisition		-			-			1,004,099			(40,079	)
Other income (expense), net		(3,630	)		(1,210	)		(10,890	)		(8,270	)
Total Other Income/(Expense)		(63,243	)		(28,251	)		839,312			(83,187	)
Net Loss	$	(6,143,393	)	$	(5,408,234	)	$	(18,000,849	)	$	(14,547,025	)
Net loss per common share – basic and diluted	$	(0.09	)	$	(0.10	)	$	(0.28	)	$	(0.27	)
Weighted average common shares outstanding – basic and diluted		66,402,499			54,403,237			64,764,085			54,361,646

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

For the Nine Months Ended September 30, 2013

	Common Stock				Additional
	Shares		Amount		Paid-In- Capital			Accumulated Deficit				Total
Balance at December 31, 2012		54,670,712	$	54,671	$	121,118,127		$	(63,368,890	)	$	57,803,908
Cashless exercise of options		37,770		38		(38	)		-			-
Exercise of options		284,688		285		292,104			-			292,389
Issuance of common stock under employee stock purchase plan		26,086		26		65,356			-			65,382
Issuance of common stock upon vesting of restricted stock awards		15,000		15		(15	)		-			-
Net proceeds from issuance of common stock		11,000,000		11,000		30,488,336			-			30,499,336
Issuance of common stock for business acquisitions		385,124		385		950,871			-			951,256
Stock-based compensation for options		-		-		885,116			-			885,116
Stock-based compensation for restricted stock		-		-		44,325			-			44,325
Net loss		-		-		-			(18,000,849	)		(18,000,849	)
Balance at September 30, 2013		66,419,380	$	66,420	$	153,844,182		$	(81,369,739	)	$	72,540,863

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
	2013			2012
Cash Flows From Operating Activities
Net loss	$	(18,000,849	)	$	(14,547,025	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts		70,000			219,082
Depreciation and amortization		11,653,557			10,028,804
Stock-based compensation		939,200			1,353,404
Gain on business acquisition		(1,004,099	)		40,079
Loss on sale and disposition of property and equipment		81,824			72,072
Deferred rent		(86,820	)		(75,267	)
Changes in operating assets and liabilities:
Accounts receivable		(250,270	)		(230,195	)
Prepaid expenses and other current assets		(100,310	)		(332,872	)
Other assets		353,130			(893,202	)
Accounts payable		(471,399	)		(304,545	)
Accrued expenses		(1,411,797	)		(30,674	)
Deferred revenues		(137,859	)		(318,999	)
Total Adjustments		9,635,157			9,527,687
Net Cash Used In Operating Activities		(8,365,692	)		(5,019,338	)
Cash Flows From Investing Activities
Acquisitions of property and equipment		(3,896,628	)		(15,997,052	)
Acquisition of a business, net of cash acquired		(222,942	)		-
Proceeds from sale of property and equipment		14,779			12,850
Payments of security deposits		(39,154	)		(292,209	)
Deferred acquisition payments		(124,460	)		(221,633	)
Net Cash Used In Investing Activities		(4,268,405	)		(16,498,044	)
Cash Flows From Financing Activities
Payments on capital leases		(571,500	)		(384,802	)
Issuance of common stock upon exercise of options		292,389			312,853
Issuance of common stock under employee stock purchase plan		55,623			84,251
Repurchase of options		-			(34,986	)
Net proceeds from sale of common stock		30,499,336			-
Net Cash Provided By (Used In) Financing Activities		30,275,848			(22,684	)
Net Increase (Decrease) In Cash and Cash Equivalents		17,641,751			(21,540,066	)
Cash and Cash Equivalents – Beginning		15,152,226			44,672,587
Cash and Cash Equivalents – Ending	$	32,793,977		$	23,132,521
Supplemental Disclosures of Cash Flow Information
Cash paid during the periods for:
Interest	$	154,298		$	76,233
Taxes	$	34,072		$	18,158
Non-cash investing and financing activities:
Fair value of common stock issued (returned) in connection with an acquisition	$	951,256		$	(403,365	)
Acquisition of property and equipment:
Under capital leases	$	80,894		$	2,333,006
Included in accrued expenses	$	780,254		$	1,590,798

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Organization and Nature of Business

Towerstream Corporation (referred to as ““Towerstream’’ or the ““Company’’) was incorporated in Delaware in December 1999.During its first decade of operations, the Company's business activities were focused on delivering fixed wireless broadband services to commercial customers over a wireless network transmitting over both regulated and unregulated radio spectrum. The Company's fixed wireless service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. The Company provides services to approximately 3,500 business customers in New York City, Boston, Chicago, Los Angeles, San Francisco, Seattle, Miami, Dallas-Fort Worth, Houston, Philadelphia, Nashville, Las Vegas-Reno and Providence-Newport. The Company's "fixed wireless business” has historically grown both organically and through the acquisition of five other fixed wireless broadband providers in various markets.

Since 2010, the Company has been exploring opportunities to leverage its fixed wireless network in 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. This has caused the carriers to explore a wide range of solutions including (i) acquiring additional spectrum, (ii) employing Wi-Fi to offload data traffic and (iii) utilizing small cell technologies to increase capacity and coverage in dense urban areas. During this period, the Company incurred various costs related to identifying possible new solutions and services. These costs included rent payments under lease agreements which provide the Company with the right to install wireless technology equipment on the rooftops of buildings. The Company refers to these locations as "street level rooftops" because Wi-Fi and small cell technologies are required to be close to the ground, and therefore, the buildings are often one to two stories high. The Company also incurred costs to construct a carrier-class network to offload data traffic. The Company has entered into the lease agreements and commenced these capital projects for the purpose of securing capacity that it believes is needed to maintain its competitive position in the wireless industry. The Company believes that the wireless communications industry is experiencing a fundamental shift from its traditional, macro-cellular architecture to densified small cell architecture where existing cell sites will be supplemented by many smaller base stations operating near street level. The Company also believes that Wi-Fi will be an integral component of small cell architecture.

In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”).  Hetnets plans to utilize the carrier-class network constructed on the street level rooftops to generate rental income from four separate sources 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 internet access and the offloading of mobile data, (iii) rental of a port for backhaul or transport, and (iv) power and other related services. The Company refers to the activities of Hetnets as its “shared wireless infrastructure” (or “shared wireless”) business.

In June 2013, Hetnets entered into a Wi-Fi service agreement (the “Agreement”) with a major cable operator (the “Cable Operator”). The Agreement provides leased access to certain access points, primarily within New York City and Bergen County, New Jersey. The Cable Operator has a limited right to expand access in other Hetnets’ markets. The term of the Agreement is for an initial three year period, and provides for automatic renewals for two, one year periods.

Note 2.    Summary of Significant Accounting Policies

Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2013 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the operating results for the full fiscal year or for any future period.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2012, and updated, as necessary, in this Quarterly Report on Form 10-Q.

Use of Estimates.    The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses. Actual results could differ from those estimates.

5

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash and Cash Equivalents.    The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk.    Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limits. As of September 30, 2013, the Company had cash and cash equivalent balances of approximately $24,777,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $7,766,000 invested in three institutional money market funds. These funds are protected under the Securities Investor Protection Corporation, a nonprofit membership corporation which provides limited coverage up to $500,000.

Accounts Receivable. Accounts receivable are stated at cost less an allowance for doubtful accounts which reflects the Company’s estimate of balances that will be not collected. The allowance is based on the history of past write-offs, the aging of balances, collections experience and current credit conditions. Additions include provisions for doubtful accounts and deductions include customer write-offs. Changes in the allowance for doubtful accounts were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Beginning of period	$	162,678		$	275,070		$	190,109		$	262,525
Additions		10,000			50,000			70,000			219,082
Deductions		(39,552	)		(113,656	)		(126,983	)		(270,193	)
End of period	$	133,126		$	211,414		$	133,126		$	211,414

Business Acquisitions. Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the fair value of the consideration transferred on the acquisition date.  When the Company acquires a business, it assesses the assets acquired and liabilities assumed for the appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. The excess of the total consideration transferred over the net amount of identifiable assets acquired and liabilities assumed is recognized as goodwill.  If this consideration is lower than the net amount of the identifiable net assets acquired and liabilities assumed, the difference is recognized as a gain on business acquisition. Acquisition costs are expensed and included in general and administrative expenses in the statements of operations.

Revenue Recognition. The Company normally enters into contractual agreements with its customers for periods ranging between one to three years. The Company recognizes the total revenue provided under a contract ratably over the contract period, including any periods under which the Company has agreed to provide services at no cost. The Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery or installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured.

Deferred Revenues. Customers are billed monthly in advance. Deferred revenues are recognized for that portion of monthly charges not yet earned as of the end of the reporting period. Deferred revenues are also recognized for certain customers who pay for their services in advance.

Goodwill. Goodwill represents the excess of the total consideration transferred over the net amount of identifiable assets acquired and liabilities assumed in an acquisition. Goodwill is not amortized but rather is reviewed annually for impairment, or whenever events or circumstances indicate that the carrying value may not be recoverable. The Company initially performs a qualitative assessment of goodwill which considers macro-economic conditions, industry and market trends, and the current and projected financial performance of the reporting unit.  No further analysis is required if it is determined that there is a less than 50 percent likelihood that the carrying value is greater than the fair value. 

Reclassifications.    Certain accounts in the prior year’s condensed consolidated financial statements have been reclassified for comparative purposes to conform to the presentation in the current year’s condensed consolidated financial statements. These reclassifications have no effect on the previously reported net loss.

Subsequent Events. Subsequent events have been evaluated through the date of this filing.

6

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3.    Business Acquisitions

Delos Internet

In February 2013, the Company completed the acquisition of Delos Internet (“Delos”). The Company obtained full control of Delos in the acquisition. The Company has determined that the acquisition of Delos was a business combination to be accounted for under the acquisition method. The following table summarizes the consideration transferred and the amounts of identified assets acquired and liabilities assumed at the acquisition date:

Fair value of consideration transferred:
Cash	$	225,000
Common stock (385,124 shares)		951,256
Capital lease obligations assumed		128,929
Other liabilities assumed		36,733
Total consideration transferred					1,341,918
Fair value of identifiable assets acquired and liabilities assumed:
Cash		2,058
Accounts receivable		79,238
Property and equipment		807,700
Security deposits		1,993
Accounts payable		(29,536	)
Deferred revenue		(59,975	)
Other liabilities		(89,930	)
Total identifiable net tangible assets					711,548
Customer relationships					1,634,469
Total identifiable net assets					2,346,017
Gain on business acquisition				$	1,004,099

The Company recognized a gain on business acquisition of $1,004,099 which is included in other income (expense) in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2013. The challenging economic environment during 2012 made it difficult for smaller companies like Delos to raise sufficient capital to sustain their growth.  As a result, the Company was able to acquire the customer relationships and wireless network of Delos at a discounted price.

In May 2013, the Company finalized the purchase price of Delos. The final purchase price of $1,341,918 was $83,183, or 6%, lower than the initially reported purchase price of $1,425,101. The finalization of the purchase price resulted in a reduction of approximately $21,000 of identifiable net assets and an increase in the gain on business acquisition of approximately $63,000. The purchase price adjustment resulted in a decrease in the number of shares of common stock issued to Delos of 48,549 from 433,673 to 385,124 shares.

Pro Forma Information

The following table reflects the unaudited pro forma consolidated results of operations had the acquisition of Delos taken place at the beginning of the 2013 and 2012 periods:

	Three Months Ended September 30, 2012
Revenues	$	8,296,362
Amortization expense		817,979
Total operating expenses		13,765,459
Net loss		(5,497,348	)
Basic net loss per share	$	(0.10	)

7

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Nine Months Ended September 30,
	2013			2012
Revenues	$	25,024,631		$	24,556,452
Amortization expense		2,453,937			2,946,061
Total operating expenses		43,924,201			39,287,631
Net loss		(18,060,258	)		(14,814,366	)
Basic net loss per share	$	(0.28	)	$	(0.27	)

The pro forma information presented above does not purport to present what actual results would have been had the acquisition actually occurred at the beginning of 2013 and 2012 and are not necessarily indicative of the operating results for any future period.

Note 4.    Property and Equipment

Property and equipment is comprised of:

	September 30, 2013		December 31, 2012
Network and base station equipment	$	31,994,152	$	28,983,284
Customer premise equipment		23,427,912		23,036,057
Shared wireless infrastructure		17,889,725		17,232,566
Information technology		4,208,769		3,863,212
Furniture, fixtures and other		1,607,038		1,598,979
Leasehold improvements		789,392		789,392
		79,916,988		75,503,490
Less: accumulated depreciation		41,730,905		33,521,280
Property and equipment, net	$	38,186,083	$	41,982,210

Depreciation expense for the three months ended September 30, 2013 and 2012 was $3,028,665 and $2,679,531, respectively. Depreciation expense for the nine months ended September 30, 2013 and 2012 was $9,264,999 and $7,376,947, respectively. The Company sold or disposed of property and equipment with $1,151,978 of original cost and $1,055,375 of accumulated depreciation during the nine months ended September 30, 2013 which resulted in $14,779 received in proceeds and $81,824 recognized as loss on disposals. The Company sold or disposed of property and equipment with $356,915 of original cost and $271,993 of accumulated depreciation during the nine months ended September 30, 2012 which resulted in $12,850 received in proceeds and $72,072 recognized as loss on disposals. Loss on disposals is included in general and administrative expenses in the Company’s condensed consolidated statements of operations.

Property acquired through capital leases included within the Company’s property and equipment consists of the following:

	September 30, 2013		December 31, 2012
Network and base station equipment	$	828,027	$	736,612
Customer premise equipment		96,843		59,330
Shared wireless infrastructure		1,216,142		1,216,142
Information technology		1,860,028		1,779,135
		4,001,040		3,791,219
Less: accumulated depreciation		1,133,614		541,800
Property acquired through capital leases, net	$	2,867,426	$	3,249,419

Note 5. Intangible Assets

Intangible assets consist of the following:

	September 30, 2013		December 31, 2012
Goodwill	$	1,674,281	$	1,674,281
Customer relationships	$	11,856,126	$	10,221,659
Less: accumulated amortization of customer relationships		9,346,594		6,958,037
Customer relationships, net		2,509,532		3,263,622
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	3,794,087	$	4,548,177

8

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization expense for the three months ended September 30, 2013 and 2012 was $817,979 and $719,911, respectively. Amortization expense for the nine months ended September 30, 2013 and 2012 was $2,388,558 and $2,651,857, respectively. The customer contracts acquired in the Company’s acquisition of Delos are being amortized over a 50 month period ending April 2017. As of September 30, 2013, the remaining amortization period for all acquisitions with customer relationship balances ranged from 2 to 43 months. Future amortization expense is expected to be as follows:

Remainder of 2013	$	705,260
2014		888,969
2015		392,272
2016		392,272
2017		130,759
	$	2,509,532

The Company’s licenses with the Federal Communications Commission (the “FCC”) are not subject to amortization as they have an indefinite useful life.

Note 6. Accrued Expenses

Accrued expenses consist of the following:

	September 30, 2013		December 31, 2012
Property and equipment	$	780,254	$	1,240,774
Payroll and related		804,164		859,130
Professional services		397,814		314,270
Network		185,720		288,060
Other		276,456		283,786
Total	$	2,444,408	$	2,986,020

Network expenses consist of costs incurred to provide services to our customers and includes tower rentals, bandwidth, troubleshooting and gear removal.

Note 7.    Other Liabilities

Other liabilities consist of the following:

	September 30, 2013		December 31, 2012
Current
Deferred rent	$	-	$	86,820
Deferred acquisition payments		103,107		148,198
Total	$	103,107	$	235,018
Long-Term
Deferred acquisition payments	$	14,189	$	56,827
Deferred taxes		244,274		244,274
Total	$	258,463	$	301,101

Gross deferred acquisition payments related to the acquisition of Pipeline Wireless LLC (“Pipeline”) in December 2010 totaled $133,043 and are payable in monthly installments of $16,630 through May 2014. The carrying value of these non-interest bearing payments were discounted at 12% and totaled $92,181 at September 30, 2013. Deferred acquisition payments related to Delos totaled $25,115 at September 30, 2013 and bear interest at rates ranging from 7% to 12.5%.

Note 8. Capital Stock

In February 2013, the Company completed an underwritten offering which raised gross proceeds of $30,000,000 in connection with the sale of 10,000,000 shares at $3.00 per share. In March 2013, the Company raised additional gross proceeds of $3,000,000 in connection with the sale of 1,000,000 shares at $3.00 per share related to the exercise of the over-allotment option by the underwriters. The Company incurred costs of approximately $2,501,000 related to the underwritten offering.

9

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9. Stock-Based Compensation

The Company uses the Black-Scholes option pricing model to value options granted to employees, directors and consultants. Compensation expense, including the effect of forfeitures, is recognized over the period of service, generally the vesting period. Stock-based compensation totaled $253,813 and $403,765 for the three months ended September 30, 2013 and 2012, respectively. Stock-based compensation totaled $885,116 and $1,249,925 for the nine months ended September 30, 2013 and 2012, respectively. Stock-based compensation is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

The unamortized amount of stock options expense totaled $2,044,445 as of September 30, 2013 which will be recognized over a weighted-average period of 2.4 years.

The fair values of stock option grants were calculated on the dates of grant using the Black-Scholes option pricing model and the following weighted average assumptions:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013				2012
Risk-free interest rate		1.9	%		-		0.8%	-	1.9%		0.6%	-	1.0%
Expected volatility		68	%		-		65%	-	68%		65%	-	74%
Expected life (in years)		6			-		5	-	6.5		5	-	5.3
Expected dividend yield		-			-			-				-
Weighted average per share grant date fair value	$	1.42			-	$			1.44	$			2.16

The risk-free interest rate was based on rates established by the Federal Reserve. The Company’s expected volatility was based upon the historical volatility for its common stock. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield is based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future.

During the first quarter of 2011, the Company issued 90,000 shares of restricted stock to two executives. The fair value of $354,600 was based on the closing market price of the Company’s common stock on the date of grant. The restricted stock vests over a three year period, of which 45,000 shares were vested as of September 30, 2013. 30,000 shares were forfeited in the fourth quarter of 2012 in connection with an executive’s cessation of employment. Stock-based compensation for restricted stock totaled $14,775 and $29,550 for the three months ended September 30, 2013 and 2012, respectively. Stock-based compensation for restricted stock totaled $44,325 and $88,650 for the nine months ended September 30, 2013 and 2012, respectively. Unrecognized compensation cost of $14,775 at September 30, 2013 will be recognized ratably through December 2013. As of September 30, 2013, 15,000 shares of restricted stock remain unvested.

Option transactions under the stock option plans during the nine months ended September 30, 2013 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2012		3,916,045		$	2.85
Granted during 2013		950,000		$	2.40
Exercised		(420,159	)	$	1.23
Forfeited /expired		(390,870	)	$	5.07
Outstanding as of September 30, 2013		4,055,016		$	2.70
Exercisable as of September 30, 2013		2,676,434		$	2.36

In February 2013, the Company granted 75,000 options to its two executive officers in recognition of the completion of an underwritten offering and the formation of Hetnets. These options were granted at an exercise price of $2.62 and vested immediately. In June 2013, the Company made its annual grant to the Board of Directors consisting of 200,000 options with an exercise price of $2.56 vesting monthly through May 2014. In June 2013, the Company granted 50,000 options to an executive officer with an exercise price of $2.56 which vests annually over a five year period. In August 2013, the Company granted 625,000 options to certain employees with an exercise price of $2.31 vesting annually over a three year period.

10

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A total of 30,508 and 135,471 options were exercised on a cashless basis during the three and nine months ended September 30, 2013 resulting in the net issuance of 10,016 and 37,770 shares, respectively. Under a cashless exercise, the holder uses a portion of the shares that would otherwise be issuable upon exercise, rather than cash, as consideration for the exercise. The amount of net shares issuable in connection with a cashless exercise will vary based on the exercise price of the option compared to the current market price of the Company’s common stock on the date of exercise.

A total of 41,665 and 284,688 options were exercised on a cash basis during the three and nine months ended September 30, 2013, which resulted in proceeds to the Company of $39,199 and $292,389, respectively.

Cancellations of options for the three and nine months ended September 30, 2013 were 6,566 and 390,870, respectively, and related to employee terminations.

The weighted average remaining contractual life of the outstanding options as of September 30, 2013 was 6.3 years.

The intrinsic value of outstanding and exercisable options totaled $3,047,325 and $2,595,864, respectively, as of September 30, 2013. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of September 30, 2013, which was $2.85 per share, and the exercise price of the options.

Note 10.    Stock Warrants

The 450,000 warrants outstanding at September 30, 2013 and December 31, 2012 have an exercise price of $5.00 and expire in July 2016.

There was no intrinsic value associated with the outstanding and exercisable warrants as of September 30, 2013. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of September 30, 2013, which was $2.85 per share, and the exercise price of the warrants.

The number of shares issuable upon the exercise of a warrant will be lower if a holder exercises on a cashless basis. Under a cashless exercise, the holder uses a portion of the shares that would otherwise be issuable upon exercise, rather than cash, as consideration for the exercise. The amount of net shares issuable in connection with a cashless exercise will vary based on the exercise price of the warrant compared to the current market price of the Company’s common stock on the date of exercise.

Note 11. Employee Stock Purchase Plan

Under the Company’s 2010 Employee Stock Purchase Plan (“ESPP Plan”), participants can purchase shares of the Company’s stock at a 15% discount. A maximum of 200,000 shares of common stock can be issued under the ESPP Plan, of which 81,441 shares have been issued to date and 118,559 shares are available for future issuance. During the three and nine months ended September 30, 2013, a total of 7,526 and 26,086 shares were issued under the ESPP Plan with a fair value of $21,449 and $65,382, respectively. The Company recognized $3,236 and $9,759 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2013, respectively. The Company recognized $4,252 and $14,829 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2012, respectively.

Note 12. Fair Value Measurement

Valuation Hierarchy

The accounting standard of the Financial Accounting Standards Board for fair value measurements establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Cash and cash equivalents are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. There were no changes in the valuation techniques during the nine months ended September 30, 2013.

11

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2013	$	32,793,977	$	32,793,977	$	-	$	-
December 31, 2012	$	15,152,226	$	15,152,226	$	-	$	-

Note 13.    Net Loss Per Common Share

        Basic and diluted net loss per share has been calculated by dividing net loss by the weighted average number of common shares outstanding during the period. All potentially dilutive common shares have been excluded since their inclusion would be anti-dilutive.

        The following common stock equivalents were excluded from the computation of diluted net loss per common share because they were anti-dilutive. The exercise or issuance of these common stock equivalents outstanding at September 30, 2013 would dilute earnings per share if the Company becomes profitable in the future. The exercise of the outstanding stock options and warrants could potentially generate proceeds up to approximately $13,197,000 if exercised by the holder for cash.

Stock options	4,055,016
Restricted stock	15,000
Warrants	450,000
Total	4,520,016

Note 14.    Commitments

Operating Lease Obligations

The Company has entered into operating leases related to roof rights, cellular towers, office space, and equipment leases under various non-cancelable agreements expiring through December 2020. Certain of these operating leases include extensions, at the Company's option, for additional terms ranging from 1 to 25 years. Amounts associated with the extension periods have not been included in the table below as it is not presently determinable which options, if any, the Company will elect to exercise. As of September 30, 2013, total future operating lease obligations were as follows:

Remainder of 2013	$	4,763,777
2014		16,280,282
2015		15,376,341
2016		13,949,461
2017		8,406,490
Thereafter		1,758,256
	$	60,534,607

Rent expenses were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Points of Presence	$	1,767,441	$	1,418,061	$	5,108,347	$	4,122,836
Street level rooftops		2,707,304		1,609,252		7,757,206		3,209,569
Corporate offices		121,518		126,619		366,794		365,856
Other		102,039		91,582		327,268		285,801
	$	4,698,302	$	3,245,514	$	13,559,615	$	7,984,062

Rent expenses related to Points of Presence, street level rooftops and other were included in cost of revenues in the Company’s condensed consolidated statements of operations. Rent expense related to our corporate offices was included in general and administrative expenses in the Company’s condensed consolidated statements of operations.

12

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Capital Lease Obligations

The Company has entered into capital leases to acquire property and equipment expiring through March 2018. As of September 30, 2013, total future capital lease obligations were as follows:

Remainder of 2013	$	262,903
2014		997,824
2015		908,344
2016		655,754
2017		391,305
Thereafter		53,923
	$	3,270,053
Less: Interest expense		(468,967	)
Total capital lease obligations	$	2,801,086
Current	$	809,934
Long-term	$	1,991,152

Other

During the first quarter of 2013, the Company renewed a one year information technology infrastructure support agreement. The agreement became effective at the end of the first quarter of 2013. Payments of approximately $128,000 are due quarterly through the fourth quarter of 2013.

Note 15.    Segment Information

The Company has two reportable segments: Fixed Wireless and Shared Wireless Infrastructure.  Management evaluates performance and allocates resources based on the operating performance of each segment as well as the long-term growth potential for each segment.  Costs reported for each segment include costs directly associated with a segment’s operations.  Intersegment revenues and expenses are eliminated in consolidation.

The balance of the Company’s operations is in the Corporate group which includes centralized operations. This group includes operations related to corporate overhead and centralized activities which support our overall operations. Corporate overhead includes administrative personnel, including executive management, and other support functions such as information technology and facilities. Centralized operations includes network operations, customer care, and the management of network assets. The Corporate group is treated as a separate segment consistent with how management monitors and analyzes financial results. Corporate costs are not allocated to the segments because such costs are managed and controlled on a functional basis that encompasses all markets, with centralized, functional management held accountable for corporate results. Management also believes that not allocating these centralized costs provides a better reflection of the direct operating performance of each segment. The table below presents information about our operating segments:

	Three Months Ended September 30, 2013
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,910,377	$	535,936		$	-		$	(45,649	)	$	8,400,664
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,640,529		3,110,640			67,144			(45,649	)		5,772,664
Depreciation and amortization		2,754,675		857,739			234,230			-			3,846,644
Customer support services		208,955		54,765			628,990			-			892,710
Sales and marketing		1,206,125		80,956			81,547			-			1,368,628
General and administrative		126,256		151,561			2,322,351			-			2,600,168
Total Operating Expenses		6,936,540		4,255,661			3,334,262			(45,649	)		14,480,814
Operating Income (Loss)	$	973,837	$	(3,719,725	)	$	(3,334,262	)	$	-		$	(6,080,150	)
Capital expenditures	$	1,242,975	$	680,324		$	200,347		$	-		$	2,123,646

13

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Nine Months Ended September 30, 2013
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	24,158,268	$	890,920		$	-		$	(137,127	)	$	24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,563,846		8,777,611			159,265			(137,127	)		16,363,595
Depreciation and amortization		8,411,263		2,633,176			609,118			-			11,653,557
Customer support services		565,972		214,703			2,247,307			-			3,027,982
Sales and marketing		3,825,299		239,213			268,776			-			4,333,288
General and administrative		443,863		486,495			7,443,442			-			8,373,800
Total Operating Expenses		20,810,243		12,351,198			10,727,908			(137,127	)		43,752,222
Operating Income (Loss)	$	3,348,025	$	(11,460,278	)	$	(10,727,908	)	$	-		$	(18,840,161	)
Capital expenditures	$	3,358,758	$	1,049,344		$	349,674		$	-		$	4,757,776
As of September 30, 2013
Property and equipment, net	$	23,870,843	$	12,439,779		$	1,875,461		$	-		$	38,186,083
Total assets	$	30,590,803	$	14,881,500		$	34,776,782		$	-		$	80,249,085

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis summarizes the significant factors affecting our condensed consolidated results of operations, financial condition and liquidity position for the nine months ended September 30, 2013. This discussion and analysis should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012 and the condensed consolidated unaudited financial statements and related notes included elsewhere in this filing. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

Forward-Looking Statements

Forward-looking statements in this Quarterly Report on Form 10-Q, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth and competition; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place too much reliance on these forward-looking statements which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report on Form 10-Q.

Non-GAAP Measures and Reconciliations to GAAP Measures

We prepare our financial statements in accordance with generally accepted accounting principles (“GAAP”). We use certain Non-GAAP measures to monitor our business performance and that of our segments. These Non-GAAP measures are not recognized under GAAP. Accordingly, investors are cautioned about using or relying on these measures as alternatives to recognized GAAP measures. Our methods of calculating these measures may not be comparable to similar measures presented by other companies.

Characteristics of Revenues and Expenses

Our Fixed Wireless segment offers broadband services under agreements for periods normally ranging between one to three years. Pursuant to these agreements, we bill customers on a monthly basis, in advance, for each month of service. Payments received in advance of services performed are recorded as deferred revenues and recognized as revenue ratably over the service period. Our Shared Wireless Infrastructure segment offers to rent space, channels, and ports on our street level rooftops at a fixed monthly rent.

Costs of revenues consists of expenses that are directly related to providing services to our customers, including Core Network expenses (tower and street level rooftop rents and utilities, bandwidth costs, maintenance and other) and Customer Network expenses (customer maintenance, non-installation fees and other customer specific expenses). We collectively refer to Core Network and Customer Network as our "Network," and Core Network costs and Customer Network costs as "Network Costs." When we first enter a new market, or expand in an existing market, we are required to incur up-front costs in order to be able to provide services to commercial customers. We refer to these activities as establishing a "Network Presence." For the Fixed Wireless segment, these costs include constructing Points-of-Presence ("PoPs") in buildings in which we have a lease agreement ("Company Locations") where we install a substantial amount of equipment in order to connect numerous customers to the Internet. For the Shared Wireless Infrastructure segment, these costs include installing numerous access points, backhaul and other equipment on street level rooftops that we refer to as "Hotzones." The costs to build PoPs and construct Hotzones are capitalized and expensed over a five year period. In addition, we also enter into tower and roof rental agreements, secure bandwidth and incur other Network Costs. Once we have established a Network Presence in a new market or expanded our Network Presence in an existing market, we are capable of servicing a significant number of customers through that Network Presence. The variable cost to add new customers is relatively modest, especially compared to the up-front cost of establishing or expanding our Network Presence. As a result, our gross margins in a market normally increase over time as we add new customers in that market. However, we may experience variability in gross margins during periods in which we are expanding our Network Presence in a market.

Sales and marketing expenses primarily consist of the salaries, benefits, travel and other costs of our sales and marketing teams, as well as marketing initiatives and business development expenses.

15

Customer support services include salaries and related payroll costs associated with our customer support services, customer care, and installation and operations staff.

General and administrative expenses include costs attributable to corporate overhead and the overall support of our operations. Salaries and other related payroll costs for executive management, finance, administration and information systems personnel are included in this category. Other costs include office rent, utilities and other facilities costs, accounting, legal and other professional services, and other general operating expenses.

Overview – Fixed Wireless

We provide fixed wireless broadband services to commercial customers and deliver access over a wireless network transmitting over both regulated and unregulated radio spectrum. Our service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. We currently provide service to business customers in thirteen metropolitan markets. 

In February 2013, we closed a merger agreement with Delos Internet (“Delos”) pursuant to which a wholly owned subsidiary of ours would be merged with and into Delos, with Delos becoming our wholly owned subsidiary. Delos operates in Houston, Texas.

Market Information – Fixed Wireless

As of September 30, 2013, we operated in thirteen metropolitan markets consisting of New York, Boston, Los Angeles, Chicago, San Francisco, Miami, Seattle, Dallas-Fort Worth, Houston, Philadelphia, Nashville, Las Vegas-Reno and Providence-Newport. The markets were launched at different times, and as a result, may have different operating metrics based on their size and stage of maturation. We incur significant up-front costs in order to establish a Network Presence in a new market.  These costs include building PoPs and incurring Network Costs.  Other material costs include hiring and training sales and marketing personnel who will be dedicated to securing customers in that market. Once we have established a Network Presence in a new market, we are capable of servicing a significant number of customers. The rate of customer additions varies from market to market, and we are unable to predict how many customers will be added in a market during any specific period. We believe that providing operating information regarding each of our markets provides useful information to shareholders in understanding the leveraging potential of our business model and the operating performance of our markets. Set forth below is a summary of our operating performance on a per-market basis, and a description of how each category is determined.

Revenues: Revenues are allocated based on which market each customer is located in.

Costs of Revenues: Includes payroll, Core Network costs and Customer Network costs that can be allocated to a specific market.

Operating Costs: Represents costs that can be specifically allocated to a market which include direct sales personnel, certain direct marketing expenses, certain customer support and installation payroll expenses and third party commissions.

Corporate: Includes corporate overhead and centralized activities which support our overall operations. Corporate overhead includes administrative personnel, including executive management, and other support functions such as information technology and facilities. Centralized operations include network operations, customer care, and the management of network assets.

Shared Wireless Infrastructure, net: Represents the net operating results for that business segment.

Non-Core Expenses: These costs related to our efforts in 2012 to develop other wireless technology solutions and services, and primarily consisted of rent payments for street level rooftops, costs associated with constructing an offload network and payroll costs for employees working on these projects.

Adjusted Market EBITDA: Represents a market’s income (loss) before interest, taxes, depreciation, amortization, stock-based compensation, and other income (expense). We believe this metric provides useful information regarding the operating cash flow being generated in a market.

We entered the Houston market in February 2013 through the acquisition of Delos.

16

Three months ended September 30, 2013

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Boston	$	1,632,918	$	391,788	$	1,241,130		$	166,182	$	1,074,948
Los Angeles		2,020,905		568,621		1,452,284			399,429		1,052,855
New York		1,914,892		659,803		1,255,089			269,903		985,186
Chicago		779,457		308,090		471,367			111,892		359,475
Miami		383,462		124,259		259,203			128,061		131,142
San Francisco		311,765		131,498		180,267			76,564		103,703
Las Vegas-Reno		251,167		145,683		105,484			33,160		72,324
Houston		153,727		65,566		88,161			22,746		65,415
Providence-Newport		115,246		50,145		65,101			11,281		53,820
Dallas-Fort Worth		174,095		101,718		72,377			64,619		7,758
Seattle		83,019		54,289		28,730			21,450		7,280
Nashville		4,902		15,359		(10,457	)		1,804		(12,261	)
Philadelphia		39,173		23,713		15,460			31,158		(15,698	)
Total	$	7,864,728	$	2,640,532	$	5,224,196		$	1,338,249	$	3,885,947

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	3,885,947
Fixed wireless, non-market specific
Other expenses		(203,084	)
Depreciation and amortization		(2,754,675	)
Shared wireless infrastructure, net		(3,674,076	)
Corporate		(3,334,262	)
Other income (expense)		(63,243	)
Net loss	$	(6,143,393	)

Three months ended September 30, 2012

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Boston	$	1,698,654	$	385,411	$	1,313,243		$	220,220	$	1,093,023
Los Angeles		1,994,972		598,913		1,396,059			399,146		996,913
New York		1,857,988		557,909		1,300,079			319,498		980,581
Chicago		943,775		308,102		635,673			170,327		465,346
Miami		413,321		119,406		293,915			93,954		199,961
San Francisco		373,210		102,810		270,400			75,971		194,429
Las Vegas-Reno		369,748		157,851		211,897			28,518		183,379
Seattle		144,369		50,687		93,682			33,054		60,628
Providence-Newport		131,992		64,491		67,501			29,955		37,546
Nashville		11,810		14,106		(2,296	)		8,547		(10,843	)
Dallas-Fort Worth		157,625		82,537		75,088			90,172		(15,084	)
Philadelphia		30,043		22,355		7,688			32,125		(24,437	)
Total	$	8,127,507	$	2,464,578	$	5,662,929		$	1,501,487	$	4,161,442

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	4,161,442
Fixed wireless, non-market specific
Other expenses		(228,662	)
Depreciation and amortization		(2,593,681	)
Non-core expenses		(2,802,828	)
Corporate		(3,916,254	)
Other income (expense)		(28,251	)
Net loss	$	(5,408,234	)

17

Nine months ended September 30, 2013

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Los Angeles	$	6,137,710	$	1,641,874	$	4,495,836		$	1,130,657	$	3,365,179
Boston		4,930,604		1,132,960		3,797,644			571,402		3,226,242
New York		5,740,805		1,911,270		3,829,535			959,935		2,869,600
Chicago		2,512,670		890,162		1,622,508			328,249		1,294,259
Miami		1,151,525		328,912		822,613			297,936		524,677
Las Vegas-Reno		913,230		452,570		460,660			96,737		363,923
San Francisco		934,437		357,603		576,834			267,575		309,259
Houston		386,965		145,764		241,201			63,775		177,426
Providence-Newport		356,342		149,356		206,986			48,113		158,873
Seattle		313,758		158,632		155,126			72,590		82,536
Dallas-Fort Worth		507,795		290,537		217,258			206,418		10,840
Philadelphia		119,165		61,060		58,105			68,972		(10,867	)
Nashville		16,135		43,150		(27,015	)		8,910		(35,925	)
Total	$	24,021,141	$	7,563,850	$	16,457,291		$	4,121,269	$	12,336,022

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	12,336,022
Fixed wireless, non-market specific
Other expenses		(713,861	)
Depreciation and amortization		(8,411,263	)
Shared wireless infrastructure, net		(11,323,151	)
Corporate		(10,727,908	)
Other income (expense)		839,312
Net loss	$	(18,000,849	)

Nine months ended September 30, 2012

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Boston	$	5,134,784	$	1,144,736	$	3,990,048		$	710,288	$	3,279,760
Los Angeles		5,888,039		1,802,956		4,085,083			1,116,232		2,968,851
New York		5,348,145		1,635,169		3,712,976			906,773		2,806,203
Chicago		2,743,001		844,320		1,898,681			506,676		1,392,005
Miami		1,238,460		299,815		938,645			290,415		648,230
Las Vegas-Reno		1,198,464		463,654		734,810			114,537		620,273
San Francisco		1,160,212		319,432		840,780			236,192		604,588
Seattle		375,496		163,362		212,134			78,860		133,274
Providence-Newport		365,247		149,520		215,727			93,489		122,238
Dallas-Fort Worth		488,163		256,909		231,254			257,546		(26,292	)
Nashville		31,418		42,145		(10,727	)		26,052		(36,779	)
Philadelphia		78,458		55,061		23,397			77,206		(53,809	)
Total	$	24,049,887	$	7,177,079	$	16,872,808		$	4,414,266	$	12,458,542

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	12,458,542
Fixed wireless, non-market specific
Other expenses		(615,377	)
Depreciation and amortization		(8,102,666	)
Non-core expenses		(6,026,046	)
Corporate		(12,178,291	)
Other income (expense)		(83,187	)
Net loss	$	(14,547,025	)

18

Overview - Shared Wireless Infrastructure

Our Shared Wireless Infrastructure segment offers a range of rental options on street level rooftops related to (i) the installation of customer owned Small Cells, (ii) the offloading of mobile data, and (iii) backhaul, power and other related telecommunications. To date, our operating activities have been primarily focused in New York City, and to a lesser degree, San Francisco, Chicago, and Southern Florida. Costs incurred to establish and operate this business segment include (a) rent payments under lease agreements which provide us with the right to install wireless technology equipment and (b) construction of a carrier-class network to offload data traffic.

In June 2013, we entered into a Wi-Fi service agreement (the “Agreement”) with a major cable operator (the “Cable Operator”). The Agreement provides leased access to certain access points, primarily within New York City and Bergen County, New Jersey. The Cable Operator has a limited right to expand access in our other markets. The term of the Agreement is for an initial three year period, and provides for automatic renewals for two, one year periods.

Supplemental Segment Information

Operating information about each segment in accordance with GAAP is disclosed in Note 15 of the financial statements. In addition, we use other non-GAAP measurements to assess the operating performance of each segment. These non-GAAP financial measures are commonly used by investors, financial analysts, and rating agencies. Management believes that these non-GAAP financial measures should be available so that investors have the same data that management utilizes in assessing our overall operations.

EBITDA, a non-GAAP financial measure, is calculated as 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 as well as gain or loss on (i) disposal of property and equipment, (ii) nonmonetary transactions, and (iii) business acquisitions.

Net Cash Flow is another commonly used non-GAAP financial measure that we utilize. Net Cash Flow is defined as Adjusted EBITDA less capital expenditures.

Three months ended September 30, 2013

	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Total
Operating Income (Loss)	$	973,837	$	(3,719,725	)	$	(3,334,262	)	$	(6,080,150	)
Depreciation and amortization		2,754,675		857,739			234,230			3,846,644
Stock-based compensation		-		-			271,824			271,824
Loss on property and equipment		19,521		3,168			-			22,689
Loss on non-monetary transactions		62,394		-			-			62,394
Adjusted EBITDA		3,810,427		(2,858,818	)		(2,828,208	)		(1,876,599	)
Less: Capital expenditures		1,242,975		680,324			200,347			2,123,646
Net Cash Flow	$	2,567,452	$	(3,539,142	)	$	(3,028,555	)	$	(4,000,245	)

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(1,876,599	)
Depreciation and amortization		(3,846,644	)
Stock-based compensation		(271,824	)
Loss on property and equipment		(22,689	)
Loss on non-monetary transactions		(62,394	)
Operating Income (Loss)		(6,080,150	)
Interest income		125
Interest expense		(59,738	)
Other income (expense), net		(3,630	)
Net loss	$	(6,143,393	)

19

Reconciliation of Net Cash Flow to Net Cash Used in Operating Activities
Net cash flow	$	(4,000,245	)
Capital expenditures		2,123,646
Changes in operating assets and liabilities, net		383,410
Other, net		(144,575	)
Net cash used in operating activities	$	(1,637,764	)

     Nine Months Ended September 30, 2013

	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Total
Operating Income (Loss)	$	3,348,025	$	(11,460,278	)	$	(10,727,908	)	$	(18,840,161	)
Depreciation and amortization		8,411,263		2,633,176			609,118			11,653,557
Stock-based compensation		-		-			939,200			939,200
Loss on property and equipment		73,622		8,202			-			81,824
Loss on non-monetary transactions		204,552		-			-			204,552
Non-recurring expenses, primarily acquisition-related		-		-			112,815			112,815
Adjusted EBITDA		12,037,462		(8,818,900	)		(9,066,775	)		(5,848,213	)
Less: Capital expenditures		3,358,758		1,049,344			349,674			4,757,776
Net Cash Flow	$	8,678,704	$	(9,868,244	)	$	(9,416,449	)	$	(10,605,989	)

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(5,848,213	)
Depreciation and amortization		(11,653,557	)
Non-recurring expenses, primarily acquisition-related		(112,815	)
Stock-based compensation		(939,200	)
Loss on property and equipment		(81,824	)
Loss on non-monetary transactions		(204,552	)
Operating Income (Loss)		(18,840,161	)
Interest income		401
Interest expense		(154,298	)
Gain on business acquisition		1,004,099
Other income (expense), net		(10,890	)
Net loss	$	(18,000,849	)

Reconciliation of Net Cash Flow to Net Cash Used in Operating Activities
Net cash flow	$	(10,605,989	)
Capital expenditures		4,757,776
Non-recurring expenses, primarily acquisition-related		(112,815	)
Changes in operating assets and liabilities, net		(2,018,505	)
Other, net		(386,159	)
Net cash used in operating activities	$	(8,365,692	)

20

Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012

Revenues. Revenues totaled $8,400,664 during the three months ended September 30, 2013 compared to $8,127,507 during the three months ended September 30, 2012 representing an increase of $273,157, or 3%. This increase was substantially related to a Wi-Fi contract with a major cable company which began in July 2013.

Average revenue per user (“ARPU”) for the Fixed Wireless segment as of September 30, 2013 totaled $747 compared to $714 as of September 30, 2012 representing an increase of $33, or 5%. ARPU for new customers for the quarter ended September 30, 2013 totaled $648 compared to $560 for the quarter ended September 30, 2012 representing an increase of $88, or 16%. The increase in ARPU primarily related to customers upgrading to higher bandwidth service which generates higher monthly recurring revenue. 

Customer churn, calculated as a percent of revenue lost on a monthly basis from customers terminating service or reducing their service level, totaled 1.81% for the three months ended September 30, 2013 compared to 1.54% for the three months ended September 30, 2012. Our goal is to maintain churn levels between 1.40% and 1.70% which we believe is below industry averages of 2.00%. Churn levels can fluctuate from quarter to quarter depending upon whether customers move to a location not serviced by the Company, go out of business, or a myriad of other reasons. Churn has averaged 1.61% over the past 36 months and we do not believe that the slightly higher than targeted churn level is indicative of any long term business developments or trends.

Cost of Revenues.    Cost of revenues totaled $5,772,664 for the three months ended September 30, 2013 compared to $4,443,991 for the three months ended September 30, 2012 representing an increase of $1,328,673, or 30%.On a consolidated basis, gross margin for the three months ended September 30, 2013 was 31% as compared to 45% for the three months ended September 30, 2012 representing a decrease of 14 percentage points.  Higher rent expense associated with both PoPs for the fixed wireless network and street level rooftops for the shared wireless infrastructure network increased cost of revenues by $306,342 and $1,189,641, respectively, and reduced gross margin by 4 and 14 percentage points, respectively. Increases in rent expense for the fixed wireless network primarily related to annual escalation provisions in lease agreements.  Increases in rent expense for the shared wireless network primarily related to a higher number of lease agreements in the 2013 period as compared to the 2012 period. These increases were partially offset by lower Customer Network and other costs which decreased by $167,310 and benefited gross margin by 2 percentage points.

Depreciation and Amortization.    Depreciation and amortization totaled $3,846,644 for the three months ended September 30, 2013 compared to $3,399,442 for the three months ended September 30, 2012 representing an increase of $447,202, or 13%. Depreciation expense totaled $3,028,665 for the three months ended September 30, 2013 compared to $2,679,531 for the three months ended September 30, 2012 representing an increase of $349,134, or 13%. The gross base of depreciable assets as of September 30, 2013 increased by $9,238,934, or 13%, compared to September 30, 2012. The increase in the depreciable base during the twelve months ended September 30, 2013 reflects continued growth in our fixed wireless network (approximately $5,685,000), spending on our shared wireless infrastructure (approximately $2,281,000) and additions resulting from acquisitions (approximately $808,000).

Amortization expense totaled $817,979 for the three months ended September 30, 2013 compared to $719,911 for the three months ended September 30, 2012 representing an increase of $98,068, or 14%. Amortization expense relates to customer related intangible assets recorded in connection with acquisitions and can fluctuate significantly from period to period depending upon the timing of acquisitions, the relative amounts of intangible assets recorded, and the amortization periods. The increase was primarily related to the amortization of intangible assets associated the Delos acquisition which began in February 2013.

Customer Support Services.    Customer support services totaled $892,710 for the three months ended September 30, 2013 compared to $1,173,432 for the three months ended September 30, 2012 representing a decrease of $280,722, or 24%. Average headcount totaled 67 during the 2013 period as compared to 82 during the 2012 period representing a decrease of 15, or 18%.

Sales and Marketing. Sales and marketing expenses for the three months ended September 30, 2013 totaled $1,368,628 compared to $1,561,972 for the three months ended September 30, 2012 representing a decrease of $193,344, or 12%. Average headcount totaled 46 during the 2013 period as compared to 57 during the 2012 period representing a decrease of 11, or 19%. 

General and Administrative.    General and administrative expenses totaled $2,600,168 for the three months ended September 30, 2013 compared to $2,928,653 for the three months ended September 30, 2012 representing a decrease of $328,485, or 11%. The decrease primarily related to lower payroll and stock-based compensation costs of approximately $124,000 and $166,000, respectively.

Interest Income. Interest income for the three months ended September 30, 2013 totaled $125 compared to $10,206 for the three months ended September 30, 2012 representing a decrease of $10,081, or 99%. The decrease in the 2013 period compared to the 2012 period related to a decision to apply earnings credits against bank charges rather than be paid interest income as it yielded a higher net benefit to the Company.

21

Interest Expense.    Interest expense for the three months ended September 30, 2013 totaled $59,738 compared to $37,247 for the three months ended September 30, 2012 representing an increase of $22,491, or 60%. The increase in interest expense was primarily related to additional capital leases for network equipment and information technology infrastructure.

Net Loss.    Net loss for the three months ended September 30, 2013 totaled $6,143,393 compared to $5,408,234 for the three months ended September 30, 2012 representing an increase of $735,159, or 14%. Revenues increased by $273,157, or 3%, while operating expenses increased by $973,324, or 7%.

Nine Months Ended September 30, 2013 Compared to Nine Months Ended September 30, 2012

Revenues. Revenues totaled $24,912,061 during the nine months ended September 30, 2013 compared to $24,049,887 during the nine months ended September 30, 2012 representing an increase of $862,174, or 4%. Fixed wireless revenues increased by approximately $363,000, or 2%, primarily related to an increase in ARPU from $714 in the 2012 period to $747 in the 2013 period. Revenues that we presently attribute to our shared wireless segment increased by approximately $499,000, or greater than 100%, in the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012.

Cost of Revenues.    Cost of revenues totaled $16,363,595 for the nine months ended September 30, 2013 compared to $11,240,050 for the nine months ended September 30, 2012 representing an increase of $5,123,545, or 46%. On a consolidated basis, gross margin for the nine months ended September 30, 2013 was 34% as compared to 53% for the nine months ended September 30, 2012 representing a decrease of 19 percentage points.  Higher rent expense associated with both PoPs for the fixed wireless network and street level rooftops for the shared wireless infrastructure network increased cost of revenues by $911,116 and $4,846,920, respectively, and reduced gross margin by 4 and 19 percentage points, respectively. Increases in rent expense for the fixed wireless network primarily related to annual escalation provisions in lease agreements.  Increases in rent expense for the shared wireless network primarily related to a higher number of lease agreements in the 2013 period as compared to the 2012 period. These increases were partially offset by lower Customer Network and other costs which decreased by $634,491 and benefited gross margin by 3 percentage points.

Depreciation and Amortization.    Depreciation and amortization totaled $11,653,557 for the nine months ended September 30, 2013 compared to $10,028,804 for the nine months ended September 30, 2012 representing an increase of $1,624,753, or 16%. Depreciation expense totaled $9,264,999 for the nine months ended September 30, 2013 compared to $7,376,947 for the nine months ended September 30, 2012 representing an increase of $1,888,052, or 26%. The gross base of depreciable assets, measured on a quarterly basis, averaged $78,528,816 for the nine months ended September 30, 2013 as compared to $64,091,105 for the nine months ended September 30, 2012 representing an increase of $14,437,711 or 23%. 

Amortization expense totaled $2,388,558 for the nine months ended September 30, 2013 compared to $2,651,857 for the nine months ended September 30, 2012 representing a decrease of $263,299 or 10%. The decrease was primarily related to the amortization of intangible assets associated with the acquisition of Pipeline Wireless LLC (“Pipeline”) which became fully amortized in May 2012. This decrease was partially offset by amortization expense associated with the Delos acquisition which began in February 2013.

Customer Support Services.    Customer support services totaled $3,027,982 for the nine months ended September 30, 2013 compared to $3,573,561 for the nine months ended September 30, 2012 representing a decrease of $545,579, or 15%. Average headcount totaled 72 during the 2013 period as compared to 81 during the 2012 period representing a decrease of 9, or 11%.

Sales and Marketing. Sales and marketing expenses for the nine months ended September 30, 2013 totaled $4,333,288 compared to $4,598,300 for the nine months ended September 30, 2012 representing a decrease of $265,012, or 6%. Average headcount totaled 48 during the 2013 period as compared to 56 during the 2012 period representing a decrease of 8, or 14%. 

General and Administrative.    General and administrative expenses totaled $8,373,800 for the nine months ended September 30, 2013 compared to $9,073,010 for the nine months ended September 30, 2012 representing a decrease of $699,210, or 8%. On a functional basis, decreases in acquisition costs (approximately $266,000), stock-based compensation (approximately $414,000), and payroll (approximately $312,000) were partially offset by an increase in professional services (approximately $279,000).

Interest Income. Interest income for the nine months ended September 30, 2013 totaled $401 compared to $41,395 for the nine months ended September 30, 2012 representing a decrease of $40,994, or 99%. The decrease in the 2013 period compared to the 2012 period related to a decision to apply earnings credits against bank charges rather than be paid interest income as it yielded a higher net benefit to the Company.

Interest Expense.    Interest expense for the nine months ended September 30, 2013 totaled $154,298 compared to $76,233 for the nine months ended September 30, 2012 representing an increase of $78,065, or greater than 100%.   The increase in interest expense was primarily related to additional capital leases for network equipment and information technology infrastructure.

22

Gain on Business Acquisition.    Gain on business acquisition totaled $1,004,099 for the nine months ended September 30, 2013 compared to a loss of $40,079 for the nine months ended September 30, 2012.  The gain recognized in the 2013 period relates to the acquisition of Delos in February 2013. The loss recognized in the 2012 period represents the final purchase price adjustment related to the acquisition of Color Broadband Communications (“Color Broadband”) in May 2012. The final purchase price for the Color Broadband acquisition resulted in an adjusted gain on business acquisition of $1,146,011. The challenging economic environment during 2012 made it difficult for smaller companies like Delos and Color Broadband to raise sufficient capital to sustain their growth.  As a result, we were able to acquire the customer relationships and wireless network of Delos and Color Broadband at a discounted price.

Net Loss.    Net loss for the nine months ended September 30, 2013 totaled $18,000,849 compared to $14,547,025 for the nine months ended September 30, 2012 representing an increase of $3,453,824, or 24%.   Revenues increased by $862,174, or 4%, while operating expenses increased by $5,238,497, or 14%. In addition, non-operating income, primarily related to gains on a business acquisition, totaled $839,312 for the nine months ended September 30, 2013 compared to non-operating expense of $83,187 for the nine months ended September 30, 2012.

Liquidity and Capital Resources

We have historically met our liquidity and capital requirements primarily through the public sale and private placement of equity securities and debt financing. Changes in capital resources during the nine months ended September 30, 2013 and 2012 are described below.

Net Cash Used in Operating Activities.    Net cash used in operating activities for the nine months ended September 30, 2013 totaled $8,365,692 compared to $5,019,338 for the nine months ended September 30, 2012 representing an increase of $3,346,354, or 67%. Cash used in operations for the nine months ended September 30, 2013 totaled $6,347,187 as compared to $2,908,851 for the nine months ended September 30, 2012. Changes in operating assets and liabilities generally represent timing differences regarding payments and receipts, and are normally not indicative of operating results.  Changes in operating assets and liabilities used cash of $2,018,505 during the nine months ended September 30, 2013 as compared to $2,110,487 for the nine months ended September 30, 2012.

Net Cash Used in Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2013 totaled $4,268,405 compared to $16,498,044 for the nine months ended September 30, 2012 representing a decrease of $12,229,639, or 74%. Capital expenditures for the fixed wireless segment decreased from $6,707,477 in the 2012 period to $3,027,247 in the 2013 period representing a reduction of $3,680,230, or 55%. During the 2012 period, we upgraded the fixed wireless network acquired in connection with the acquisition of Color Broadband and also added additional capacity in order to be able to provide backhaul services to the shared wireless infrastructure network. Capital expenditures for the shared wireless infrastructure segment decreased from $9,048,443 in the 2012 period to $777,359 in the 2013 period representing a reduction of $8,271,084, or 91%. During the 2012 period, the construction of a carrier class network to offload data traffic and offer access for small cells was substantially completed.

Net Cash Provided by (Used in) Financing Activities.  Net cash provided by financing activities for the nine months ended September 30, 2013 totaled $30,275,848 compared to net cash used in financing activities of $22,684 for the nine months ended September 30, 2012, representing an increase of $30,298,532, or greater than 100%. The increase was primarily related to net proceeds of $30,499,336 received in the first quarter of 2013 from the sale of 11,000,000 shares of our common stock at a public offering price of $3.00 per share.

Acquisition of Delos. In February 2013, we completed the acquisition of Delos which was based in Houston, Texas. The aggregate consideration for the acquisition included (i) approximately $225,000 in cash, (ii) 385,124 shares of common stock with a fair value of approximately $951,000 based on the market price of our common stock on the closing date, and (iii) approximately $166,000 in assumed liabilities. The acquisition of Delos was a business combination accounted for under the acquisition method.

Underwritten Offering. In the first quarter of 2013, we completed an underwritten offering of 11,000,000 shares of our common stock at a public offering price of $3.00 per share. The total gross proceeds of the offering were $33,000,000. Net proceeds were $30,499,336, after underwriting discounts, commissions and offering expenses.

Working Capital.    As of September 30, 2013, we had working capital of $29,247,911. Based on our current operating activities and plans, we believe our existing working capital will enable us to meet our anticipated cash requirements for at least the next twelve months.

23

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and other commitments as of September 30, 2013:

	Payments due by period
	Total		2013		2014		2015		2016		2017		Thereafter
Capital leases	$	3,270,053	$	262,903	$	997,824	$	908,344	$	655,754	$	391,305	$	53,923
Operating leases		60,534,607		4,763,777		16,280,282		15,376,341		13,949,461		8,406,490		1,758,256
Deferred payments		133,043		49,891		83,152		-		-		-		-
Other		155,327		131,731		11,627		11,627		342		-		-
Total	$	64,093,030	$	5,208,302	$	17,372,885	$	16,296,312	$	14,605,557	$	8,797,795	$	1,812,179

Capital Lease Obligations. We have entered into capital leases to acquire property and equipment expiring through March 2018.

Operating Leases. We have entered into operating leases related to roof rights, cellular towers, office space, and equipment leases under various non-cancelable agreements expiring through December 2020. Certain of these operating leases include extensions, at our option, for additional terms ranging from 1 to 25 years. Amounts associated with the extension periods have not been included in the table above as it is not presently determinable which options, if any, we will elect to exercise.

Deferred Payments. We are making deferred payments to Pipeline as part of the consideration paid for our acquisition of Pipeline in December 2010. There were 8 monthly payments of approximately $16,630 remaining as of September 30, 2013.

Other. During the first quarter of 2013, we renewed a one year information technology infrastructure support agreement. The agreement became effective at the end of the first quarter of 2013. Payments of approximately $128,000 are due quarterly through the fourth quarter of 2013.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, we utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming our estimates and judgments, giving appropriate consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates which may impact the comparability of our results of operations to other companies in our industry. We believe that of our significant accounting policies, the following may involve a higher degree of judgment and estimation, or are fundamentally important to our business.

Revenue Recognition.    We normally enter into contractual agreements with our customers for periods normally ranging between one to three years. We recognize the total revenue provided under a contract ratably over the contract period including any periods under which we have agreed to provide services at no cost. Deferred revenues are recognized as a liability when billings are issued in advance of the date that revenues are earned. We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery or installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured.

Long-Lived Assets. Long-lived assets with definite lives consist primarily of property and equipment, and intangible assets such as acquired customer relationships. Long-lived assets are evaluated periodically for impairment or whenever events or circumstances indicate their carrying value may not be recoverable. Conditions that would result in an impairment charge include a significant decline in the fair value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if impairment exists. If the asset is determined to be impaired, the impairment loss is measured based on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value.

Business Acquisitions. Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the fair value of the consideration transferred on the acquisition date.  When we acquire a business, we assess the acquired assets and liabilities assumed for the appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. The excess of the total consideration transferred over the net amount of the identifiable assets acquired and liabilities assumed is recognized as goodwill.  If the total consideration is lower than the net amount of the identifiable assets acquired and liabilities assumed, the difference is recognized as a gain on business acquisition. Acquisition costs are expensed and included in general and administrative expenses in our condensed consolidated statements of operations.

24

Goodwill. Goodwill represents the excess of the total consideration transferred over the net amount of identifiable assets acquired and liabilities assumed in an acquisition. Goodwill is not amortized but rather is reviewed annually for impairment, or whenever events or circumstances indicate that the carrying value may not be recoverable. We initially perform a qualitative assessment of goodwill which considers macro-economic conditions, industry and market trends, and the current and projected financial performance of the reporting unit.  No further analysis is required if it is determined that there is a less than 50 percent likelihood that the carrying value is greater than the fair value. 

Asset Retirement Obligations.   The Financial Accounting Standards Board (“FASB”) guidance on asset retirement obligations addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated costs. This guidance requires the recognition of an asset retirement obligation and an associated asset retirement cost when there is a legal obligation associated with the retirement of tangible long-lived assets.  Our network equipment is installed on both buildings in which we have a lease agreement (“Company Locations”) and at customer locations.  In both instances, the installation and removal of our equipment is not complicated and does not require structural changes to the building where the equipment is installed.  Costs associated with the removal of our equipment at Company or customer locations are not material, and accordingly, we have determined that we do not presently have asset retirement obligations under the FASB’s accounting guidance.

Off-Balance Sheet Arrangements.    We have no off-balance sheet arrangements, financings, or other relationships with unconsolidated entities known as ““Special Purposes Entities.’’

25

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the potential loss arising from adverse changes in market rates and prices.  Our primary market risk relates to interest rates.  At September 30, 2013, all cash and cash equivalents are immediately available cash balances.  A portion of our cash and cash equivalents are held in three institutional money market funds.   Our interest rate risk exposure is to a decline in interest rates which would result in a decline in interest income. Due to our current market yields, a further decline in interest rates would not have a material impact on earnings.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ““Exchange Act’’). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective, as of September 30, 2013, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in our system of internal control over financial reporting during the nine months ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

26

PART II

OTHER INFORMATION

Item 6. Exhibits.

Exhibit No.	Description
31.1	Section 302 Certification of Principal Executive Officer.
31.2	Section 302 Certification of Principal Financial Officer.
32.1	Section 906 Certification of Principal Executive Officer.
32.2	Section 906 Certification of Principal Financial Officer.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Calculation Linkbase Document*
101.LAB	XBRL Taxonomy Labels Linkbase Document*
101.PRE	XBRL Taxonomy Presentation Linkbase Document*
101.DEF	XBRL Definition Linkbase Document*

*Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, and (v) related notes to these financial statements.  

27

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	TOWERSTREAM CORPORATION
Date: November 12, 2013	By:	/s/ Jeffrey M. Thompson
		Jeffrey M. Thompson
		President and Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Joseph P. Hernon
		Joseph P. Hernon
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

28

EXHIBIT INDEX

 

Exhibit No.	Description
31.1	Section 302 Certification of Principal Executive Officer.
31.2	Section 302 Certification of Principal Financial Officer.
32.1	Section 906 Certification of Principal Executive Officer.
32.2	Section 906 Certification of Principal Financial Officer.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Calculation Linkbase Document*
101.LAB	XBRL Taxonomy Labels Linkbase Document*
101.PRE	XBRL Taxonomy Presentation Linkbase Document*
101.DEF	XBRL Definition Linkbase Document*

*Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, and (v) related notes to these financial statements.  

EX-31

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey M. Thompson, certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of Towerstream Corporation for the quarter ended September 30, 2013;
(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 the 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 the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
(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: November 12, 2013

/s/ Jeffrey M. Thompson

Jeffrey M. Thompson

President and Chief Executive Officer

(Principal Executive Officer)

EX-31

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph P. Hernon, certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of Towerstream Corporation for the quarter ended September 30, 2013;
(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 the 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 the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
(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: November 12, 2013

/s/ Joseph P. Hernon

Joseph P. Hernon

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Towerstream Corporation, (the ““Company’’) on Form 10-Q for the period ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the ““Report’’), I, Jeffrey M. Thompson, President and 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.

Date: November 12, 2013

/s/ Jeffrey M. Thompson

Jeffrey M. Thompson
President and Chief Executive Officer

(Principal Executive Officer)

EX-32

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Towerstream Corporation, (the ““Company’’) on Form 10-Q for the period ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the ““Report’’), I, Joseph P. Hernon, Chief Financial 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.

Date: November 12, 2013

/s/ Joseph P. Hernon

Joseph P. Hernon
Chief Financial Officer

(Principal Financial Officer and Principal Accounting

 Officer)

XML

Note 11 - Employee Stock Purchase Plan

9 Months Ended

Sep. 30, 2013

Employee Stock Purchase Plan Disclosure [Abstract]

Employee Stock Purchase Plan Disclosure [Text Block]

Note 11. Employee Stock Purchase Plan

Under the Company’s 2010 Employee Stock Purchase Plan (“ESPP Plan”), participants can purchase shares of the Company’s stock at a 15% discount. A maximum of 200,000 shares of common stock can be issued under the ESPP Plan, of which 81,441 shares have been issued to date and 118,559 shares are available for future issuance. During the three and nine months ended September 30, 2013, a total of 7,526 and 26,086 shares were issued under the ESPP Plan with a fair value of $21,449 and $65,382, respectively. The Company recognized $3,236 and $9,759 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2013, respectively. The Company recognized $4,252 and $14,829 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2012, respectively.

XML

Note 10 - Stock Warrants (Details) (USD $)	Sep. 30, 2013
Stock Warrants [Abstract]
Class of Warrant or Right, Outstanding	450,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item)	5.00
Share Price (in Dollars per share)	$ 2.85

XML

Condensed Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues	$ 8,400,664	$ 8,127,507	$ 24,912,061	$ 24,049,887
Operating Expenses
Cost of revenues (exclusive of depreciation)	5,772,664	4,443,991	16,363,595	11,240,050
Depreciation and amortization	3,846,644	3,399,442	11,653,557	10,028,804
Customer support services	892,710	1,173,432	3,027,982	3,573,561
Sales and marketing	1,368,628	1,561,972	4,333,288	4,598,300
General and administrative	2,600,168	2,928,653	8,373,800	9,073,010
Total Operating Expenses	14,480,814	13,507,490	43,752,222	38,513,725
Operating Loss	(6,080,150)	(5,379,983)	(18,840,161)	(14,463,838)
Other Income/(Expense)
Interest income	125	10,206	401	41,395
Interest expense	(59,738)	(37,247)	(154,298)	(76,233)
Gain on business acquisition			1,004,099	(40,079)
Other income (expense), net	(3,630)	(1,210)	(10,890)	(8,270)
Total Other Income/(Expense)	(63,243)	(28,251)	839,312	(83,187)
Net Loss	$ (6,143,393)	$ (5,408,234)	$ (18,000,849)	$ (14,547,025)
Net loss per common share – basic and diluted (in Dollars per share)	$ (0.09)	$ (0.10)	$ (0.28)	$ (0.27)
Weighted average common shares outstanding – basic and diluted (in Shares)	66,402,499	54,403,237	64,764,085	54,361,646

XML

Note 4 - Property and Equipment

9 Months Ended

Sep. 30, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 4.    Property and Equipment

Property and equipment is comprised of:

	September 30, 2013		December 31, 2012
Network and base station equipment	$	31,994,152	$	28,983,284
Customer premise equipment		23,427,912		23,036,057
Shared wireless infrastructure		17,889,725		17,232,566
Information technology		4,208,769		3,863,212
Furniture, fixtures and other		1,607,038		1,598,979
Leasehold improvements		789,392		789,392
		79,916,988		75,503,490
Less: accumulated depreciation		41,730,905		33,521,280
Property and equipment, net	$	38,186,083	$	41,982,210

Depreciation expense for the three months ended September 30, 2013 and 2012 was $3,028,665 and $2,679,531, respectively. Depreciation expense for the nine months ended September 30, 2013 and 2012 was $9,264,999 and $7,376,947, respectively. The Company sold or disposed of property and equipment with $1,151,978 of original cost and $1,055,375 of accumulated depreciation during the nine months ended September 30, 2013 which resulted in $14,779 received in proceeds and $81,824 recognized as loss on disposals. The Company sold or disposed of property and equipment with $356,915 of original cost and $271,993 of accumulated depreciation during the nine months ended September 30, 2012 which resulted in $12,850 received in proceeds and $72,072 recognized as loss on disposals. Loss on disposals is included in general and administrative expenses in the Company’s condensed consolidated statements of operations.

Property acquired through capital leases included within the Company’s property and equipment consists of the following:

	September 30, 2013		December 31, 2012
Network and base station equipment	$	828,027	$	736,612
Customer premise equipment		96,843		59,330
Shared wireless infrastructure		1,216,142		1,216,142
Information technology		1,860,028		1,779,135
		4,001,040		3,791,219
Less: accumulated depreciation		1,133,614		541,800
Property acquired through capital leases, net	$	2,867,426	$	3,249,419

XML

Note 3 - Business Acquisitions (Tables)

9 Months Ended

Sep. 30, 2013

Note 3 - Business Acquisitions (Tables) [Line Items]

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended September 30, 2012
Revenues	$	8,296,362
Amortization expense		817,979
Total operating expenses		13,765,459
Net loss		(5,497,348	)
Basic net loss per share	$	(0.10	)

	Nine Months Ended September 30,
	2013			2012
Revenues	$	25,024,631		$	24,556,452
Amortization expense		2,453,937			2,946,061
Total operating expenses		43,924,201			39,287,631
Net loss		(18,060,258	)		(14,814,366	)
Basic net loss per share	$	(0.28	)	$	(0.27	)

Delos Internet [Member]

Note 3 - Business Acquisitions (Tables) [Line Items]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

Fair value of consideration transferred:
Cash	$	225,000
Common stock (385,124 shares)		951,256
Capital lease obligations assumed		128,929
Other liabilities assumed		36,733
Total consideration transferred					1,341,918
Fair value of identifiable assets acquired and liabilities assumed:
Cash		2,058
Accounts receivable		79,238
Property and equipment		807,700
Security deposits		1,993
Accounts payable		(29,536	)
Deferred revenue		(59,975	)
Other liabilities		(89,930	)
Total identifiable net tangible assets					711,548
Customer relationships					1,634,469
Total identifiable net assets					2,346,017
Gain on business acquisition				$	1,004,099

XML

Note 13 - Net Loss Per Common Share (Details) (USD $)	9 Months Ended
	Sep. 30, 2013
Earnings Per Share [Abstract]
Proceeds From Stock Option And Warrant Exercises	$ 13,197,000

XML

Note 12 - Fair Value Measurement

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 12. Fair Value Measurement

Valuation Hierarchy

The accounting standard of the Financial Accounting Standards Board for fair value measurements establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Cash and cash equivalents are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. There were no changes in the valuation techniques during the nine months ended September 30, 2013.

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2013	$	32,793,977	$	32,793,977	$	-	$	-
December 31, 2012	$	15,152,226	$	15,152,226	$	-	$	-

XML

Note 7 - Other Liabilities (Details) - Other Liabilities (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current
Deferred rent		$ 86,820
Deferred acquisition payments	103,107	148,198
Total	103,107	235,018
Long-Term
Deferred acquisition payments	14,189	56,827
Deferred taxes	244,274	244,274
Total	$ 258,463	$ 301,101

XML

Note 13 - Net Loss Per Common Share (Details) - Antidilutive Securities	9 Months Ended
	Sep. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	4,520,016
Stock Options 1 [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	4,055,016
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	15,000
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	450,000

XML

Note 3 - Business Acquisitions (Details) - Consideration Transferred and the Amounts of Identified Assets Acquired and Liabilities Assumed (Parentheticals) (Delos Internet [Member])	9 Months Ended
	Sep. 30, 2013
Delos Internet [Member]
Business Acquisition [Line Items]
Common stock, shares	385,124

XML

Note 6 - Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2013

Accrued Liabilities Disclosure [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

	September 30, 2013		December 31, 2012
Property and equipment	$	780,254	$	1,240,774
Payroll and related		804,164		859,130
Professional services		397,814		314,270
Network		185,720		288,060
Other		276,456		283,786
Total	$	2,444,408	$	2,986,020

XML

Note 5 - Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure Text Block [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

	September 30, 2013		December 31, 2012
Goodwill	$	1,674,281	$	1,674,281
Customer relationships	$	11,856,126	$	10,221,659
Less: accumulated amortization of customer relationships		9,346,594		6,958,037
Customer relationships, net		2,509,532		3,263,622
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	3,794,087	$	4,548,177

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Remainder of 2013	$	705,260
2014		888,969
2015		392,272
2016		392,272
2017		130,759
	$	2,509,532

XML

Note 6 - Accrued Expenses (Details) - Accrued Expenses (USD $)	Sep. 30, 2013	Dec. 31, 2012
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	$ 2,444,408	$ 2,986,020
Property, Plant and Equipment [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	780,254	1,240,774
Payroll and Related [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	804,164	859,130
Professional Services [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	397,814	314,270
Network [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	185,720	288,060
Other Current Liabilities [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	$ 276,456	$ 283,786

XML

Note 2 - Summary of Significant Accounting Policies (Details) (USD $)	Sep. 30, 2013
Accounting Policies [Abstract]
Cash, Uninsured Amount (in Dollars)	$ 24,777,000
Cash, FDIC Insured Amount (in Dollars)	250,000
Money Market Funds, at Carrying Value (in Dollars)	7,766,000
Cash Securities Investor Protection Corporation Coverage Amount (in Dollars)	$ 500,000

XML

Note 4 - Property and Equipment (Details) (USD $)	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Jun. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Property, Plant and Equipment [Abstract]
Depreciation	$ 3,028,665	$ 2,679,531		$ 9,264,999	$ 7,376,947
Property, Plant and Equipment, Disposals				1,151,978	356,915
Accumulated Depreciation, Depletion and Amortization, Sale or Disposal of Property, Plant and Equipment				1,055,375	271,993
Proceeds from Sale of Property, Plant, and Equipment				14,779	12,850
Gain (Loss) on Disposition of Assets			$ (81,824)	$ (81,824)	$ (72,072)

XML

Note 8 - Capital Stock (Details) (USD $)	1 Months Ended		3 Months Ended	9 Months Ended
	Mar. 31, 2013	Feb. 28, 2013	Mar. 31, 2013	Sep. 30, 2013
Stockholders' Equity Note [Abstract]
Stock Issued During Period, Value, New Issues	$ 3,000,000	$ 30,000,000		$ 30,499,336
Stock Issued During Period, Shares, New Issues (in Shares)	1,000,000	10,000,000
Sale of Stock, Price Per Share (in Dollars per share)	$ 3.00	$ 3.00	$ 3.00
Payment of Financing and Stock Issuance Costs			$ 2,501,000

XML

Note 13 - Net Loss Per Common Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

Stock options	4,055,016
Restricted stock	15,000
Warrants	450,000
Total	4,520,016

XML

Note 15 - Segment Information (Details) - Segment Information (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenues	$ 8,400,664		$ 24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)	5,772,664	4,443,991	16,363,595	11,240,050
Depreciation and amortization	3,846,644	3,399,442	11,653,557	10,028,804
Customer support services	892,710	1,173,432	3,027,982	3,573,561
Sales and marketing	1,368,628	1,561,972	4,333,288	4,598,300
General and administrative	2,600,168	2,928,653	8,373,800	9,073,010
Total Operating Expenses	14,480,814	13,507,490	43,752,222	38,513,725
Operating Income (Loss)	(6,080,150)	(5,379,983)	(18,840,161)	(14,463,838)
Capital expenditures	2,123,646		4,757,776
Property and equipment, net	38,186,083		38,186,083		41,982,210
Total assets	80,249,085		80,249,085		67,109,714
Fixed Wireless [Member]
Segment Reporting Information [Line Items]
Revenues	7,910,377		24,158,268
Operating Expenses
Cost of revenues (exclusive of depreciation)	2,640,529		7,563,846
Depreciation and amortization	2,754,675		8,411,263
Customer support services	208,955		565,972
Sales and marketing	1,206,125		3,825,299
General and administrative	126,256		443,863
Total Operating Expenses	6,936,540		20,810,243
Operating Income (Loss)	973,837		3,348,025
Capital expenditures	1,242,975		3,358,758
Property and equipment, net	23,870,843		23,870,843
Total assets	30,590,803		30,590,803
Shared Wireless Infrastructure [Member]
Segment Reporting Information [Line Items]
Revenues	535,936		890,920
Operating Expenses
Cost of revenues (exclusive of depreciation)	3,110,640		8,777,611
Depreciation and amortization	857,739		2,633,176
Customer support services	54,765		214,703
Sales and marketing	80,956		239,213
General and administrative	151,561		486,495
Total Operating Expenses	4,255,661		12,351,198
Operating Income (Loss)	(3,719,725)		(11,460,278)
Capital expenditures	680,324		1,049,344
Property and equipment, net	12,439,779		12,439,779
Total assets	14,881,500		14,881,500
Corporate Segment [Member]
Operating Expenses
Cost of revenues (exclusive of depreciation)	67,144		159,265
Depreciation and amortization	234,230		609,118
Customer support services	628,990		2,247,307
Sales and marketing	81,547		268,776
General and administrative	2,322,351		7,443,442
Total Operating Expenses	3,334,262		10,727,908
Operating Income (Loss)	(3,334,262)		(10,727,908)
Capital expenditures	200,347		349,674
Property and equipment, net	1,875,461		1,875,461
Total assets	34,776,782		34,776,782
Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	(45,649)		(137,127)
Operating Expenses
Cost of revenues (exclusive of depreciation)	(45,649)		(137,127)
Total Operating Expenses	$ (45,649)		$ (137,127)

XML

Note 15 - Segment Information (Details) - Segment Information (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Revenues	$ 8,400,664		$ 24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)	5,772,664	4,443,991	16,363,595	11,240,050
Depreciation and amortization	3,846,644	3,399,442	11,653,557	10,028,804
Customer support services	892,710	1,173,432	3,027,982	3,573,561
Sales and marketing	1,368,628	1,561,972	4,333,288	4,598,300
General and administrative	2,600,168	2,928,653	8,373,800	9,073,010
Total Operating Expenses	14,480,814	13,507,490	43,752,222	38,513,725
Operating Income (Loss)	(6,080,150)	(5,379,983)	(18,840,161)	(14,463,838)
Capital expenditures	2,123,646		4,757,776
Fixed Wireless [Member]
Segment Reporting Information [Line Items]
Revenues	7,910,377		24,158,268
Operating Expenses
Cost of revenues (exclusive of depreciation)	2,640,529		7,563,846
Depreciation and amortization	2,754,675		8,411,263
Customer support services	208,955		565,972
Sales and marketing	1,206,125		3,825,299
General and administrative	126,256		443,863
Total Operating Expenses	6,936,540		20,810,243
Operating Income (Loss)	973,837		3,348,025
Capital expenditures	1,242,975		3,358,758
Shared Wireless Infrastructure [Member]
Segment Reporting Information [Line Items]
Revenues	535,936		890,920
Operating Expenses
Cost of revenues (exclusive of depreciation)	3,110,640		8,777,611
Depreciation and amortization	857,739		2,633,176
Customer support services	54,765		214,703
Sales and marketing	80,956		239,213
General and administrative	151,561		486,495
Total Operating Expenses	4,255,661		12,351,198
Operating Income (Loss)	(3,719,725)		(11,460,278)
Capital expenditures	680,324		1,049,344
Corporate Segment [Member]
Operating Expenses
Cost of revenues (exclusive of depreciation)	67,144		159,265
Depreciation and amortization	234,230		609,118
Customer support services	628,990		2,247,307
Sales and marketing	81,547		268,776
General and administrative	2,322,351		7,443,442
Total Operating Expenses	3,334,262		10,727,908
Operating Income (Loss)	(3,334,262)		(10,727,908)
Capital expenditures	200,347		349,674
Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	(45,649)		(137,127)
Operating Expenses
Cost of revenues (exclusive of depreciation)	(45,649)		(137,127)
Total Operating Expenses	$ (45,649)		$ (137,127)

XML

Note 5 - Intangible Assets (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Note 5 - Intangible Assets (Details) [Line Items]
Amortization of Intangible Assets	$ 817,979	$ 719,911	$ 2,388,558	$ 2,651,857
Delos Internet [Member]
Note 5 - Intangible Assets (Details) [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life				50 months
Minimum [Member]
Note 5 - Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Assets, Remaining Amortization Period				2 months
Maximum [Member]
Note 5 - Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Assets, Remaining Amortization Period				43 months

XML

Note 4 - Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	September 30, 2013		December 31, 2012
Network and base station equipment	$	31,994,152	$	28,983,284
Customer premise equipment		23,427,912		23,036,057
Shared wireless infrastructure		17,889,725		17,232,566
Information technology		4,208,769		3,863,212
Furniture, fixtures and other		1,607,038		1,598,979
Leasehold improvements		789,392		789,392
		79,916,988		75,503,490
Less: accumulated depreciation		41,730,905		33,521,280
Property and equipment, net	$	38,186,083	$	41,982,210

Schedule of Capital Leased Assets [Table Text Block]

	September 30, 2013		December 31, 2012
Network and base station equipment	$	828,027	$	736,612
Customer premise equipment		96,843		59,330
Shared wireless infrastructure		1,216,142		1,216,142
Information technology		1,860,028		1,779,135
		4,001,040		3,791,219
Less: accumulated depreciation		1,133,614		541,800
Property acquired through capital leases, net	$	2,867,426	$	3,249,419

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash Flows From Operating Activities
Net loss	$ (18,000,849)	$ (14,547,025)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts	70,000	219,082
Depreciation and amortization	11,653,557	10,028,804
Stock-based compensation	939,200	1,353,404
Gain on business acquisition	(1,004,099)	40,079
Loss on sale and disposition of property and equipment	81,824	72,072
Deferred rent	(86,820)	(75,267)
Changes in operating assets and liabilities:
Accounts receivable	(250,270)	(230,195)
Prepaid expenses and other current assets	(100,310)	(332,872)
Other assets	353,130	(893,202)
Accounts payable	(471,399)	(304,545)
Accrued expenses	(1,411,797)	(30,674)
Deferred revenues	(137,859)	(318,999)
Total Adjustments	9,635,157	9,527,687
Net Cash Used In Operating Activities	(8,365,692)	(5,019,338)
Cash Flows From Investing Activities
Acquisitions of property and equipment	(3,896,628)	(15,997,052)
Acquisition of a business, net of cash acquired	(222,942)
Proceeds from sale of property and equipment	14,779	12,850
Payments of security deposits	(39,154)	(292,209)
Deferred acquisition payments	(124,460)	(221,633)
Net Cash Used In Investing Activities	(4,268,405)	(16,498,044)
Cash Flows From Financing Activities
Payments on capital leases	(571,500)	(384,802)
Issuance of common stock upon exercise of options	292,389	312,853
Issuance of common stock under employee stock purchase plan	55,623	84,251
Repurchase of options		(34,986)
Net proceeds from sale of common stock	30,499,336
Net Cash Provided By (Used In) Financing Activities	30,275,848	(22,684)
Net Increase (Decrease) In Cash and Cash Equivalents	17,641,751	(21,540,066)
Cash and Cash Equivalents – Beginning	15,152,226	44,672,587
Cash and Cash Equivalents – Ending	32,793,977	23,132,521
Cash paid during the periods for:
Interest	154,298	76,233
Taxes	34,072	18,158
Non-cash investing and financing activities:
Fair value of common stock issued (returned) in connection with an acquisition	951,256	(403,365)
Acquisition of property and equipment:
Under capital leases	80,894	2,333,006
Included in accrued expenses	$ 780,254	$ 1,590,798

XML

Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2.    Summary of Significant Accounting Policies

Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2013 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the operating results for the full fiscal year or for any future period.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2012, and updated, as necessary, in this Quarterly Report on Form 10-Q.

Use of Estimates.    The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses. Actual results could differ from those estimates.

Cash and Cash Equivalents.    The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk.    Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limits. As of September 30, 2013, the Company had cash and cash equivalent balances of approximately $24,777,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $7,766,000 invested in three institutional money market funds. These funds are protected under the Securities Investor Protection Corporation, a nonprofit membership corporation which provides limited coverage up to $500,000.

Accounts Receivable. Accounts receivable are stated at cost less an allowance for doubtful accounts which reflects the Company’s estimate of balances that will be not collected. The allowance is based on the history of past write-offs, the aging of balances, collections experience and current credit conditions. Additions include provisions for doubtful accounts and deductions include customer write-offs. Changes in the allowance for doubtful accounts were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Beginning of period	$	162,678		$	275,070		$	190,109		$	262,525
Additions		10,000			50,000			70,000			219,082
Deductions		(39,552	)		(113,656	)		(126,983	)		(270,193	)
End of period	$	133,126		$	211,414		$	133,126		$	211,414

Business Acquisitions. Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the fair value of the consideration transferred on the acquisition date.  When the Company acquires a business, it assesses the assets acquired and liabilities assumed for the appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. The excess of the total consideration transferred over the net amount of identifiable assets acquired and liabilities assumed is recognized as goodwill.  If this consideration is lower than the net amount of the identifiable net assets acquired and liabilities assumed, the difference is recognized as a gain on business acquisition. Acquisition costs are expensed and included in general and administrative expenses in the statements of operations.

Revenue Recognition. The Company normally enters into contractual agreements with its customers for periods ranging between one to three years. The Company recognizes the total revenue provided under a contract ratably over the contract period, including any periods under which the Company has agreed to provide services at no cost. The Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery or installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured.

Deferred Revenues. Customers are billed monthly in advance. Deferred revenues are recognized for that portion of monthly charges not yet earned as of the end of the reporting period. Deferred revenues are also recognized for certain customers who pay for their services in advance.

Goodwill. Goodwill represents the excess of the total consideration transferred over the net amount of identifiable assets acquired and liabilities assumed in an acquisition. Goodwill is not amortized but rather is reviewed annually for impairment, or whenever events or circumstances indicate that the carrying value may not be recoverable. The Company initially performs a qualitative assessment of goodwill which considers macro-economic conditions, industry and market trends, and the current and projected financial performance of the reporting unit.  No further analysis is required if it is determined that there is a less than 50 percent likelihood that the carrying value is greater than the fair value. 

Reclassifications.    Certain accounts in the prior year’s condensed consolidated financial statements have been reclassified for comparative purposes to conform to the presentation in the current year’s condensed consolidated financial statements. These reclassifications have no effect on the previously reported net loss.

Subsequent Events. Subsequent events have been evaluated through the date of this filing.

XML

Note 5 - Intangible Assets

9 Months Ended

Sep. 30, 2013

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

Note 5. Intangible Assets

Intangible assets consist of the following:

	September 30, 2013		December 31, 2012
Goodwill	$	1,674,281	$	1,674,281
Customer relationships	$	11,856,126	$	10,221,659
Less: accumulated amortization of customer relationships		9,346,594		6,958,037
Customer relationships, net		2,509,532		3,263,622
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	3,794,087	$	4,548,177

Amortization expense for the three months ended September 30, 2013 and 2012 was $817,979 and $719,911, respectively. Amortization expense for the nine months ended September 30, 2013 and 2012 was $2,388,558 and $2,651,857, respectively. The customer contracts acquired in the Company’s acquisition of Delos are being amortized over a 50 month period ending April 2017. As of September 30, 2013, the remaining amortization period for all acquisitions with customer relationship balances ranged from 2 to 43 months. Future amortization expense is expected to be as follows:

Remainder of 2013	$	705,260
2014		888,969
2015		392,272
2016		392,272
2017		130,759
	$	2,509,532

The Company’s licenses with the Federal Communications Commission (the “FCC”) are not subject to amortization as they have an indefinite useful life.

XML

Note 3 - Business Acquisitions

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Note 3.    Business Acquisitions

Delos Internet

In February 2013, the Company completed the acquisition of Delos Internet (“Delos”). The Company obtained full control of Delos in the acquisition. The Company has determined that the acquisition of Delos was a business combination to be accounted for under the acquisition method. The following table summarizes the consideration transferred and the amounts of identified assets acquired and liabilities assumed at the acquisition date:

Fair value of consideration transferred:
Cash	$	225,000
Common stock (385,124 shares)		951,256
Capital lease obligations assumed		128,929
Other liabilities assumed		36,733
Total consideration transferred					1,341,918
Fair value of identifiable assets acquired and liabilities assumed:
Cash		2,058
Accounts receivable		79,238
Property and equipment		807,700
Security deposits		1,993
Accounts payable		(29,536	)
Deferred revenue		(59,975	)
Other liabilities		(89,930	)
Total identifiable net tangible assets					711,548
Customer relationships					1,634,469
Total identifiable net assets					2,346,017
Gain on business acquisition				$	1,004,099

The Company recognized a gain on business acquisition of $1,004,099 which is included in other income (expense) in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2013. The challenging economic environment during 2012 made it difficult for smaller companies like Delos to raise sufficient capital to sustain their growth.  As a result, the Company was able to acquire the customer relationships and wireless network of Delos at a discounted price.

In May 2013, the Company finalized the purchase price of Delos. The final purchase price of $1,341,918 was $83,183, or 6%, lower than the initially reported purchase price of $1,425,101. The finalization of the purchase price resulted in a reduction of approximately $21,000 of identifiable net assets and an increase in the gain on business acquisition of approximately $63,000. The purchase price adjustment resulted in a decrease in the number of shares of common stock issued to Delos of 48,549 from 433,673 to 385,124 shares.

Pro Forma Information

The following table reflects the unaudited pro forma consolidated results of operations had the acquisition of Delos taken place at the beginning of the 2013 and 2012 periods:

	Three Months Ended September 30, 2012
Revenues	$	8,296,362
Amortization expense		817,979
Total operating expenses		13,765,459
Net loss		(5,497,348	)
Basic net loss per share	$	(0.10	)

	Nine Months Ended September 30,
	2013			2012
Revenues	$	25,024,631		$	24,556,452
Amortization expense		2,453,937			2,946,061
Total operating expenses		43,924,201			39,287,631
Net loss		(18,060,258	)		(14,814,366	)
Basic net loss per share	$	(0.28	)	$	(0.27	)

The pro forma information presented above does not purport to present what actual results would have been had the acquisition actually occurred at the beginning of 2013 and 2012 and are not necessarily indicative of the operating results for any future period.

XML

Note 4 - Property and Equipment (Details) - Property and Equipment (USD $)	Sep. 30, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 79,916,988	$ 75,503,490
Less: accumulated depreciation	41,730,905	33,521,280
Property and equipment, net	38,186,083	41,982,210
Network and Base Station Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	31,994,152	28,983,284
Customer Premise Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	23,427,912	23,036,057
Shared Wireless Infrastructure [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	17,889,725	17,232,566
Information Technology [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	4,208,769	3,863,212
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	1,607,038	1,598,979
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 789,392	$ 789,392

XML

Note 7 - Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2013

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Schedule of Other Liabilities [Table Text Block]

	September 30, 2013		December 31, 2012
Current
Deferred rent	$	-	$	86,820
Deferred acquisition payments		103,107		148,198
Total	$	103,107	$	235,018
Long-Term
Deferred acquisition payments	$	14,189	$	56,827
Deferred taxes		244,274		244,274
Total	$	258,463	$	301,101

XML

Note 14 - Commitments (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Remainder of 2013	$	4,763,777
2014		16,280,282
2015		15,376,341
2016		13,949,461
2017		8,406,490
Thereafter		1,758,256
	$	60,534,607

Schedule of Rent Expense [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Points of Presence	$	1,767,441	$	1,418,061	$	5,108,347	$	4,122,836
Street level rooftops		2,707,304		1,609,252		7,757,206		3,209,569
Corporate offices		121,518		126,619		366,794		365,856
Other		102,039		91,582		327,268		285,801
	$	4,698,302	$	3,245,514	$	13,559,615	$	7,984,062

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

Remainder of 2013	$	262,903
2014		997,824
2015		908,344
2016		655,754
2017		391,305
Thereafter		53,923
	$	3,270,053
Less: Interest expense		(468,967	)
Total capital lease obligations	$	2,801,086
Current	$	809,934
Long-term	$	1,991,152

XML

Note 3 - Business Acquisitions (Details) - Consideration Transferred and the Amounts of Identified Assets Acquired and Liabilities Assumed (USD $)	1 Months Ended	9 Months Ended
	May 31, 2013	Sep. 30, 2013	Sep. 30, 2012
Business Acquisition [Line Items]
Total consideration transferred	$ 1,341,918	$ 1,341,918
Total identifiable net tangible assets		711,548
Customer relationships		1,634,469
Total identifiable net assets		2,346,017
Gain on business acquisition		1,004,099	(40,079)
Capital Lease Obligations Assumed [Member] | Delos Internet [Member]
Business Acquisition [Line Items]
Fair value of liabilies transferred		128,929
Other Liabilities Assumed [Member] | Delos Internet [Member]
Business Acquisition [Line Items]
Fair value of liabilies transferred		36,733
Delos Internet [Member]
Business Acquisition [Line Items]
Cash		225,000
Common stock (385,124 shares)		951,256
Cash		2,058
Accounts receivable		79,238
Property and equipment		807,700
Security deposits		1,993
Accounts payable		(29,536)
Deferred revenue		(59,975)
Other liabilities		$ (89,930)

XML

Note 12 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities (USD $)	Sep. 30, 2013	Dec. 31, 2012
Note 12 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities [Line Items]
Balance as of	$ 32,793,977	$ 15,152,226
Fair Value, Inputs, Level 1 [Member]
Note 12 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities [Line Items]
Balance as of	$ 32,793,977	$ 15,152,226

XML

Note 9 - Stock-Based Compensation (Details) (USD $)	1 Months Ended		3 Months Ended			9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended			9 Months Ended			3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	1 Months Ended
	Aug. 31, 2013	Feb. 28, 2013	Sep. 30, 2013	Mar. 31, 2013	Mar. 31, 2011	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Employee Stock Option [Member]	Sep. 30, 2012 Employee Stock Option [Member]	Sep. 30, 2013 Employee Stock Option [Member]	Sep. 30, 2012 Employee Stock Option [Member]	Sep. 30, 2013 Restricted Stock [Member]	Mar. 31, 2013 Restricted Stock [Member]	Sep. 30, 2012 Restricted Stock [Member]	Sep. 30, 2013 Restricted Stock [Member]	Sep. 30, 2012 Restricted Stock [Member]	Mar. 31, 2011 Restricted Stock [Member]	Sep. 30, 2013 Cashless Basis [Member]	Sep. 30, 2013 Cashless Basis [Member]	Sep. 30, 2013 Cash Basis [Member]	Sep. 30, 2013 Cash Basis [Member]	Jun. 30, 2013 Board of Directors [Member]	Jun. 30, 2013 Executive Officer [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation						$ 939,200	$ 1,353,404	$ 253,813	$ 403,765	$ 885,116	$ 1,249,925	$ 14,775		$ 29,550	$ 44,325	$ 88,650
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options			2,044,445			2,044,445
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition						2 years 146 days
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares)					90,000
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Total Fair Value																	354,600
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years												3 years										5 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period (in Shares)													45,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares (in Shares)				30,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options												14,775			14,775
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in Shares)												15,000			15,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)	625,000	75,000				950,000																200,000	50,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price (in Dollars per share)	$ 2.31	$ 2.62																				$ 2.56	$ 2.56
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in Shares)						420,159												30,508	135,471	41,665	284,688
Stock Issued During Period, Value, Stock Options Exercised										292,389								10,016	37,770
Proceeds from Stock Options Exercised						292,389	312,853													39,199	292,389
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period (in Shares)			6,566			390,870
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term						6 years 109 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value			3,047,325			3,047,325
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value			$ 2,595,864			$ 2,595,864
Share Price (in Dollars per share)			$ 2.85			$ 2.85

XML

Note 5 - Intangible Assets (Details) - Future Amortization Expense (USD $)	Sep. 30, 2013	Dec. 31, 2012
Future Amortization Expense [Abstract]
Remainder of 2013	$ 705,260
2014	888,969
2015	392,272
2016	392,272
2017	130,759
	$ 2,509,532	$ 3,263,622

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares issued	66,419,380	54,670,712
Common stock, shares outstanding	66,419,380	54,670,712

XML

Note 8 - Capital Stock

9 Months Ended

Sep. 30, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 8. Capital Stock

In February 2013, the Company completed an underwritten offering which raised gross proceeds of $30,000,000 in connection with the sale of 10,000,000 shares at $3.00 per share. In March 2013, the Company raised additional gross proceeds of $3,000,000 in connection with the sale of 1,000,000 shares at $3.00 per share related to the exercise of the over-allotment option by the underwriters. The Company incurred costs of approximately $2,501,000 related to the underwritten offering.

XML

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (USD $)	Cashless Exercise of Options [Member] Common Stock [Member]	Cashless Exercise of Options [Member] Additional Paid-in Capital [Member]	Employee Stock Option [Member] Common Stock [Member]	Employee Stock Option [Member] Additional Paid-in Capital [Member]	Employee Stock Option [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance at at Dec. 31, 2012						$ 54,671	$ 121,118,127	$ (63,368,890)	$ 57,803,908
Balance at (in Shares) at Dec. 31, 2012						54,670,712
Exercise of options	38	(38)	285	292,104	292,389
Exercise of options (in Shares)	37,770		284,688						420,159
Issuance of common stock under employee stock purchase plan						26	65,356		65,382
Issuance of common stock under employee stock purchase plan (in Shares)						26,086
Issuance of common stock upon vesting of restricted stock awards						15	(15)
Issuance of common stock upon vesting of restricted stock awards (in Shares)						15,000
Net proceeds from issuance of common stock						11,000	30,488,336		30,499,336
Net proceeds from issuance of common stock (in Shares)						11,000,000
Issuance of common stock for business acquisitions						385	950,871		951,256
Issuance of common stock for business acquisitions (in Shares)						385,124
Stock-based compensation for options							885,116		885,116
Stock-based compensation for restricted stock							44,325		44,325
Net loss								(18,000,849)	(18,000,849)
Balance at at Sep. 30, 2013						$ 66,420	$ 153,844,182	$ (81,369,739)	$ 72,540,863
Balance at (in Shares) at Sep. 30, 2013						66,419,380

XML

Note 14 - Commitments (Details) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013 Minimum [Member]	Sep. 30, 2012 Maximum [Member]
Note 14 - Commitments (Details) [Line Items]
Operating Lease, Renewal Term		1 year	25 years
Other Obligations Quarterly Payments (in Dollars)	$ 128,000

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current Assets
Cash and cash equivalents	$ 32,793,977	$ 15,152,226
Accounts receivable, net	868,811	609,302
Prepaid expenses and other current assets	1,043,730	943,420
Total Current Assets	34,706,518	16,704,948
Property and equipment, net	38,186,083	41,982,210
Intangible assets, net	3,794,087	4,548,177
Goodwill	1,674,281	1,674,281
Other assets	1,888,116	2,200,098
Total Assets	80,249,085	67,109,714
Current Liabilities
Accounts payable	721,578	1,163,442
Accrued expenses	2,444,408	2,986,020
Deferred revenues	1,379,580	1,457,464
Current maturities of capital lease obligations	809,934	775,087
Other	103,107	235,018
Total Current Liabilities	5,458,607	6,617,031
Long-Term Liabilities
Capital lease obligations, net of current maturities	1,991,152	2,387,674
Other	258,463	301,101
Total Long-Term Liabilities	2,249,615	2,688,775
Total Liabilities	7,708,222	9,305,806
Commitments (Note 14)
Stockholders' Equity
Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued	0	0
Common stock, par value $0.001; 95,000,000 shares authorized; 66,419,380 and 54,670,712 shares issued and outstanding, respectively	66,420	54,671
Additional paid-in-capital	153,844,182	121,118,127
Accumulated deficit	(81,369,739)	(63,368,890)
Total Stockholders' Equity	72,540,863	57,803,908
Total Liabilities and Stockholders' Equity	$ 80,249,085	$ 67,109,714

XML

Note 9 - Stock-Based Compensation (Details) - Black-Scholes Option Pricing Model Assumptions (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Note 9 - Stock-Based Compensation (Details) - Black-Scholes Option Pricing Model Assumptions [Line Items]
Risk-free interest rate	1.90%
Expected volatility	68.00%
Expected life (in years)	6 years
Weighted average per share grant date fair value (in Dollars per share)	$ 1.42	$ 1.44	$ 2.16
Minimum [Member]
Note 9 - Stock-Based Compensation (Details) - Black-Scholes Option Pricing Model Assumptions [Line Items]
Risk-free interest rate		0.80%	0.60%
Expected volatility		65.00%	65.00%
Expected life (in years)		5 years	5 years
Maximum [Member]
Note 9 - Stock-Based Compensation (Details) - Black-Scholes Option Pricing Model Assumptions [Line Items]
Risk-free interest rate		1.90%	1.00%
Expected volatility		68.00%	74.00%
Expected life (in years)		6 years 6 months	5 years 109 days

XML

Note 9 - Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013				2012
Risk-free interest rate		1.9	%		-		0.8%	-	1.9%		0.6%	-	1.0%
Expected volatility		68	%		-		65%	-	68%		65%	-	74%
Expected life (in years)		6			-		5	-	6.5		5	-	5.3
Expected dividend yield		-			-			-				-
Weighted average per share grant date fair value	$	1.42			-	$		1.44		$		2.16

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2012		3,916,045		$	2.85
Granted during 2013		950,000		$	2.40
Exercised		(420,159	)	$	1.23
Forfeited /expired		(390,870	)	$	5.07
Outstanding as of September 30, 2013		4,055,016		$	2.70
Exercisable as of September 30, 2013		2,676,434		$	2.36

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Schedule of Allowance for Doubtful Accounts Receivable [Table Text Block]

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Beginning of period	$	162,678		$	275,070		$	190,109		$	262,525
Additions		10,000			50,000			70,000			219,082
Deductions		(39,552	)		(113,656	)		(126,983	)		(270,193	)
End of period	$	133,126		$	211,414		$	133,126		$	211,414

XML

Note 5 - Intangible Assets (Details) - Intangible Assets (USD $)	Sep. 30, 2013	Dec. 31, 2012
Intangible Assets [Abstract]
Goodwill	$ 1,674,281	$ 1,674,281
Customer relationships	11,856,126	10,221,659
Less: accumulated amortization of customer relationships	9,346,594	6,958,037
Customer relationships, net	2,509,532	3,263,622
FCC licenses	1,284,555	1,284,555
Intangible assets, net	$ 3,794,087	$ 4,548,177

XML

Note 11 - Employee Stock Purchase Plan (Details) (USD $)	9 Months Ended			3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Employee Stock Purchase Plan [Member]	Sep. 30, 2012 Employee Stock Purchase Plan [Member]	Sep. 30, 2013 Employee Stock Purchase Plan [Member]	Sep. 30, 2012 Employee Stock Purchase Plan [Member]
Note 11 - Employee Stock Purchase Plan (Details) [Line Items]
Percentage Of Discount Allowed For Shares Issued Under Employee Stock Purchase Plan				15.00%	15.00%	15.00%	15.00%
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)				200,000		200,000
Common Stock, Shares, Issued (in Shares)	66,419,380		54,670,712	81,441		81,441
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)				118,559		118,559
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in Shares)				7,526		26,086
Stock Issued During Period, Value, Employee Stock Purchase Plan	$ 65,382			$ 21,449		$ 65,382
Share-based Compensation	$ 939,200	$ 1,353,404		$ 3,236	$ 4,252	$ 9,759	$ 14,829

XML

Note 3 - Business Acquisitions (Details) - Unaudited Pro Forma Consolidated Results of Operations (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Unaudited Pro Forma Consolidated Results of Operations [Abstract]
Revenues	$ 8,296,362	$ 25,024,631	$ 24,556,452
Amortization expense	817,979	2,453,937	2,946,061
Total operating expenses	13,765,459	43,924,201	39,287,631
Net loss	$ (5,497,348)	$ (18,060,258)	$ (14,814,366)
Basic net loss per share (in Dollars per share)	$ (0.10)	$ (0.28)	$ (0.27)

XML

Note 2 - Summary of Significant Accounting Policies (Details) - Changes in Allowance for Doubtful Accounts (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Changes in Allowance for Doubtful Accounts [Abstract]
Balance	$ 162,678	$ 275,070	$ 190,109	$ 262,525
Additions	10,000	50,000	70,000	219,082
Deductions	(39,552)	(113,656)	(126,983)	(270,193)
Balance	$ 133,126	$ 211,414	$ 133,126	$ 211,414

XML

Note 3 - Business Acquisitions (Details) (USD $)	1 Months Ended	9 Months Ended
	May 31, 2013	Sep. 30, 2013	Sep. 30, 2012
Note 3 - Business Acquisitions (Details) [Line Items]
Business Combination, Bargain Purchase, Gain Recognized, Amount		$ 1,004,099	$ (40,079)
Business Combination, Consideration Transferred	1,341,918	1,341,918
Business Acquisition Change In Purchase Price	83,183
Business Acquisition Percentage Change In Purchase Price	6.00%
Business Combination Previously Reported Purchase Price	1,425,101
Business Acquisition Purchase Price Allocation Change In Assets Acquired Liabilities Assumed Net	(21,000)
Business Combination Bargain Purchase Increase Of Gain Recognized	$ 63,000
Before Adjustment to Common Stock [Member]
Note 3 - Business Acquisitions (Details) [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)	433,673
After Adjustment To Common Stock [Member]
Note 3 - Business Acquisitions (Details) [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)	385,124
Common Stock Adjustment [Member]
Note 3 - Business Acquisitions (Details) [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)	48,549

XML

Note 7 - Other Liabilities

9 Months Ended

Sep. 30, 2013

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Other Liabilities Disclosure [Text Block]

Note 7.    Other Liabilities

Other liabilities consist of the following:

	September 30, 2013		December 31, 2012
Current
Deferred rent	$	-	$	86,820
Deferred acquisition payments		103,107		148,198
Total	$	103,107	$	235,018
Long-Term
Deferred acquisition payments	$	14,189	$	56,827
Deferred taxes		244,274		244,274
Total	$	258,463	$	301,101

Gross deferred acquisition payments related to the acquisition of Pipeline Wireless LLC (“Pipeline”) in December 2010 totaled $133,043 and are payable in monthly installments of $16,630 through May 2014. The carrying value of these non-interest bearing payments were discounted at 12% and totaled $92,181 at September 30, 2013. Deferred acquisition payments related to Delos totaled $25,115 at September 30, 2013 and bear interest at rates ranging from 7% to 12.5%.

XML

Note 15 - Segment Information (Details)	9 Months Ended
	Sep. 30, 2013
Segment Reporting [Abstract]
Number of Reportable Segments	2

XML

Note 12 - Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2013	$	32,793,977	$	32,793,977	$	-	$	-
December 31, 2012	$	15,152,226	$	15,152,226	$	-	$	-

XML

Note 4 - Property and Equipment (Details) - Property Acquired Through Capital Leases (USD $)	Sep. 30, 2013	Dec. 31, 2012
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	$ 4,001,040	$ 3,791,219
Less: accumulated depreciation	1,133,614	541,800
Property acquired through capital leases, net	2,867,426	3,249,419
Network and Base Station Equipment [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	828,027	736,612
Customer Premise Equipment [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	96,843	59,330
Shared Wireless Infrastructure [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	1,216,142	1,216,142
Information Technology [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	$ 1,860,028	$ 1,779,135

XML

Note 10 - Stock Warrants

9 Months Ended

Sep. 30, 2013

Stock Warrants [Abstract]

Stock Warrants [Text Block]

Note 10.    Stock Warrants

The 450,000 warrants outstanding at September 30, 2013 and December 31, 2012 have an exercise price of $5.00 and expire in July 2016.

There was no intrinsic value associated with the outstanding and exercisable warrants as of September 30, 2013. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of September 30, 2013, which was $2.85 per share, and the exercise price of the warrants.

The number of shares issuable upon the exercise of a warrant will be lower if a holder exercises on a cashless basis. Under a cashless exercise, the holder uses a portion of the shares that would otherwise be issuable upon exercise, rather than cash, as consideration for the exercise. The amount of net shares issuable in connection with a cashless exercise will vary based on the exercise price of the warrant compared to the current market price of the Company’s common stock on the date of exercise.

XML

Note 6 - Accrued Expenses

9 Months Ended

Sep. 30, 2013

Accrued Liabilities Disclosure [Abstract]

Accrued Liabilities Disclosure [Text Block]

Note 6. Accrued Expenses

Accrued expenses consist of the following:

	September 30, 2013		December 31, 2012
Property and equipment	$	780,254	$	1,240,774
Payroll and related		804,164		859,130
Professional services		397,814		314,270
Network		185,720		288,060
Other		276,456		283,786
Total	$	2,444,408	$	2,986,020

Network expenses consist of costs incurred to provide services to our customers and includes tower rentals, bandwidth, troubleshooting and gear removal.

XML

Note 1 - Organization and Nature of Business

9 Months Ended

Sep. 30, 2013

Disclosure Text Block [Abstract]

Nature of Operations [Text Block]

Note 1.    Organization and Nature of Business

Towerstream Corporation (referred to as ““Towerstream’’ or the ““Company’’) was incorporated in Delaware in December 1999. During its first decade of operations, the Company's business activities were focused on delivering fixed wireless broadband services to commercial customers over a wireless network transmitting over both regulated and unregulated radio spectrum. The Company's fixed wireless service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. The Company provides services to approximately 3,500 business customers in New York City, Boston, Chicago, Los Angeles, San Francisco, Seattle, Miami, Dallas-Fort Worth, Houston, Philadelphia, Nashville, Las Vegas-Reno and Providence-Newport. The Company's "fixed wireless business” has historically grown both organically and through the acquisition of five other fixed wireless broadband providers in various markets.

Since 2010, the Company has been exploring opportunities to leverage its fixed wireless network in 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. This has caused the carriers to explore a wide range of solutions including (i) acquiring additional spectrum, (ii) employing Wi-Fi to offload data traffic and (iii) utilizing small cell technologies to increase capacity and coverage in dense urban areas. During this period, the Company incurred various costs related to identifying possible new solutions and services. These costs included rent payments under lease agreements which provide the Company with the right to install wireless technology equipment on the rooftops of buildings. The Company refers to these locations as "street level rooftops" because Wi-Fi and small cell technologies are required to be close to the ground, and therefore, the buildings are often one to two stories high. The Company also incurred costs to construct a carrier-class network to offload data traffic. The Company has entered into the lease agreements and commenced these capital projects for the purpose of securing capacity that it believes is needed to maintain its competitive position in the wireless industry. The Company believes that the wireless communications industry is experiencing a fundamental shift from its traditional, macro-cellular architecture to densified small cell architecture where existing cell sites will be supplemented by many smaller base stations operating near street level. The Company also believes that Wi-Fi will be an integral component of small cell architecture.

In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”).  Hetnets plans to utilize the carrier-class network constructed on the street level rooftops to generate rental income from four separate sources 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 internet access and the offloading of mobile data, (iii) rental of a port for backhaul or transport, and (iv) power and other related services. The Company refers to the activities of Hetnets as its “shared wireless infrastructure” (or “shared wireless”) business.

In June 2013, Hetnets entered into a Wi-Fi service agreement (the “Agreement”) with a major cable operator (the “Cable Operator”). The Agreement provides leased access to certain access points, primarily within New York City and Bergen County, New Jersey. The Cable Operator has a limited right to expand access in other Hetnets’ markets. The term of the Agreement is for an initial three year period, and provides for automatic renewals for two, one year periods.

XML

Note 9 - Stock-Based Compensation (Details) - Option Transactions under the Stock Option Plans (USD $)	1 Months Ended		9 Months Ended
	Aug. 31, 2013	Feb. 28, 2013	Sep. 30, 2013
Option Transactions under the Stock Option Plans [Abstract]
Outstanding as of December 31, 2012			3,916,045
Outstanding as of December 31, 2012 (in Dollars per share)			$ 2.85
Granted during 2013	625,000	75,000	950,000
Granted during 2013 (in Dollars per share)			$ 2.40
Exercised			(420,159)
Exercised (in Dollars per share)			$ 1.23
Forfeited /expired			(390,870)
Forfeited /expired (in Dollars per share)			$ 5.07
Outstanding as of September 30, 2013			4,055,016
Outstanding as of September 30, 2013 (in Dollars per share)			$ 2.70
Exercisable as of September 30, 2013			2,676,434
Exercisable as of September 30, 2013 (in Dollars per share)			$ 2.36

XML

Note 7 - Other Liabilities (Details) (USD $)			9 Months Ended			9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Pipeline Wireless [Member]	Sep. 30, 2013 Delos Internet [Member]	Sep. 30, 2013 Minimum [Member] Pipeline Wireless [Member]	Sep. 30, 2013 Minimum [Member] Delos Internet [Member]	Sep. 30, 2013 Maximum [Member] Delos Internet [Member]
Note 7 - Other Liabilities (Details) [Line Items]
Deferred Acquisition Payments, Gross			$ 133,043	$ 25,115
Deferred Acquisition Monthly Payments			16,630
Deferred Acquisition Payments Discount Rate			12.00%
Liabilities	$ 7,708,222	$ 9,305,806			$ 92,181
Delos Interest Rate						7.00%	12.50%

XML

Note 15 - Segment Information (Tables)

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2013

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended September 30, 2013
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,910,377	$	535,936		$	-		$	(45,649	)	$	8,400,664
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,640,529		3,110,640			67,144			(45,649	)		5,772,664
Depreciation and amortization		2,754,675		857,739			234,230			-			3,846,644
Customer support services		208,955		54,765			628,990			-			892,710
Sales and marketing		1,206,125		80,956			81,547			-			1,368,628
General and administrative		126,256		151,561			2,322,351			-			2,600,168
Total Operating Expenses		6,936,540		4,255,661			3,334,262			(45,649	)		14,480,814
Operating Income (Loss)	$	973,837	$	(3,719,725	)	$	(3,334,262	)	$	-		$	(6,080,150	)
Capital expenditures	$	1,242,975	$	680,324		$	200,347		$	-		$	2,123,646

	Nine Months Ended September 30, 2013
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	24,158,268	$	890,920		$	-		$	(137,127	)	$	24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,563,846		8,777,611			159,265			(137,127	)		16,363,595
Depreciation and amortization		8,411,263		2,633,176			609,118			-			11,653,557
Customer support services		565,972		214,703			2,247,307			-			3,027,982
Sales and marketing		3,825,299		239,213			268,776			-			4,333,288
General and administrative		443,863		486,495			7,443,442			-			8,373,800
Total Operating Expenses		20,810,243		12,351,198			10,727,908			(137,127	)		43,752,222
Operating Income (Loss)	$	3,348,025	$	(11,460,278	)	$	(10,727,908	)	$	-		$	(18,840,161	)
Capital expenditures	$	3,358,758	$	1,049,344		$	349,674		$	-		$	4,757,776
As of September 30, 2013
Property and equipment, net	$	23,870,843	$	12,439,779		$	1,875,461		$	-		$	38,186,083
Total assets	$	30,590,803	$	14,881,500		$	34,776,782		$	-		$	80,249,085

XML

Note 14 - Commitments (Details) - Total Future Operating Lease Obligations (USD $)	Sep. 30, 2013
Total Future Operating Lease Obligations [Abstract]
Remainder of 2013	$ 4,763,777
2014	16,280,282
2015	15,376,341
2016	13,949,461
2017	8,406,490
Thereafter	1,758,256
	$ 60,534,607

XML

Note 13 - Net Loss Per Common Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Note 13.    Net Loss Per Common Share

        Basic and diluted net loss per share has been calculated by dividing net loss by the weighted average number of common shares outstanding during the period. All potentially dilutive common shares have been excluded since their inclusion would be anti-dilutive.

        The following common stock equivalents were excluded from the computation of diluted net loss per common share because they were anti-dilutive. The exercise or issuance of these common stock equivalents outstanding at September 30, 2013 would dilute earnings per share if the Company becomes profitable in the future. The exercise of the outstanding stock options and warrants could potentially generate proceeds up to approximately $13,197,000 if exercised by the holder for cash.

Stock options	4,055,016
Restricted stock	15,000
Warrants	450,000
Total	4,520,016

XML

Note 9 - Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 9. Stock-Based Compensation

The Company uses the Black-Scholes option pricing model to value options granted to employees, directors and consultants. Compensation expense, including the effect of forfeitures, is recognized over the period of service, generally the vesting period. Stock-based compensation totaled $253,813 and $403,765 for the three months ended September 30, 2013 and 2012, respectively. Stock-based compensation totaled $885,116 and $1,249,925 for the nine months ended September 30, 2013 and 2012, respectively. Stock-based compensation is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

The unamortized amount of stock options expense totaled $2,044,445 as of September 30, 2013 which will be recognized over a weighted-average period of 2.4 years.

The fair values of stock option grants were calculated on the dates of grant using the Black-Scholes option pricing model and the following weighted average assumptions:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013				2012
Risk-free interest rate		1.9	%		-		0.8%	-	1.9%		0.6%	-	1.0%
Expected volatility		68	%		-		65%	-	68%		65%	-	74%
Expected life (in years)		6			-		5	-	6.5		5	-	5.3
Expected dividend yield		-			-			-				-
Weighted average per share grant date fair value	$	1.42			-	$		1.44		$		2.16

The risk-free interest rate was based on rates established by the Federal Reserve. The Company’s expected volatility was based upon the historical volatility for its common stock. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield is based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future.

During the first quarter of 2011, the Company issued 90,000 shares of restricted stock to two executives. The fair value of $354,600 was based on the closing market price of the Company’s common stock on the date of grant. The restricted stock vests over a three year period, of which 45,000 shares were vested as of September 30, 2013. 30,000 shares were forfeited in the fourth quarter of 2012 in connection with an executive’s cessation of employment. Stock-based compensation for restricted stock totaled $14,775 and $29,550 for the three months ended September 30, 2013 and 2012, respectively. Stock-based compensation for restricted stock totaled $44,325 and $88,650 for the nine months ended September 30, 2013 and 2012, respectively. Unrecognized compensation cost of $14,775 at September 30, 2013 will be recognized ratably through December 2013. As of September 30, 2013, 15,000 shares of restricted stock remain unvested.

Option transactions under the stock option plans during the nine months ended September 30, 2013 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2012		3,916,045		$	2.85
Granted during 2013		950,000		$	2.40
Exercised		(420,159	)	$	1.23
Forfeited /expired		(390,870	)	$	5.07
Outstanding as of September 30, 2013		4,055,016		$	2.70
Exercisable as of September 30, 2013		2,676,434		$	2.36

In February 2013, the Company granted 75,000 options to its two executive officers in recognition of the completion of an underwritten offering and the formation of Hetnets. These options were granted at an exercise price of $2.62 and vested immediately. In June 2013, the Company made its annual grant to the Board of Directors consisting of 200,000 options with an exercise price of $2.56 vesting monthly through May 2014. In June 2013, the Company granted 50,000 options to an executive officer with an exercise price of $2.56 which vests annually over a five year period. In August 2013, the Company granted 625,000 options to certain employees with an exercise price of $2.31 vesting annually over a three year period.

A total of 30,508 and 135,471 options were exercised on a cashless basis during the three and nine months ended September 30, 2013 resulting in the net issuance of 10,016 and 37,770 shares, respectively. Under a cashless exercise, the holder uses a portion of the shares that would otherwise be issuable upon exercise, rather than cash, as consideration for the exercise. The amount of net shares issuable in connection with a cashless exercise will vary based on the exercise price of the option compared to the current market price of the Company’s common stock on the date of exercise.

A total of 41,665 and 284,688 options were exercised on a cash basis during the three and nine months ended September 30, 2013, which resulted in proceeds to the Company of $39,199 and $292,389, respectively.

Cancellations of options for the three and nine months ended September 30, 2013 were 6,566 and 390,870, respectively, and related to employee terminations.

The weighted average remaining contractual life of the outstanding options as of September 30, 2013 was 6.3 years.

The intrinsic value of outstanding and exercisable options totaled $3,047,325 and $2,595,864, respectively, as of September 30, 2013. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of September 30, 2013, which was $2.85 per share, and the exercise price of the options.

XML

Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Business Description and Basis of Presentation [Text Block]

Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2013 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the operating results for the full fiscal year or for any future period.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2012, and updated, as necessary, in this Quarterly Report on Form 10-Q.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates.    The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses. Actual results could differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents.    The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk.    Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limits. As of September 30, 2013, the Company had cash and cash equivalent balances of approximately $24,777,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $7,766,000 invested in three institutional money market funds. These funds are protected under the Securities Investor Protection Corporation, a nonprofit membership corporation which provides limited coverage up to $500,000.

Receivables, Policy [Policy Text Block]

Accounts Receivable. Accounts receivable are stated at cost less an allowance for doubtful accounts which reflects the Company’s estimate of balances that will be not collected. The allowance is based on the history of past write-offs, the aging of balances, collections experience and current credit conditions. Additions include provisions for doubtful accounts and deductions include customer write-offs

Business Combinations Policy [Policy Text Block]

Business Acquisitions. Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the fair value of the consideration transferred on the acquisition date.  When the Company acquires a business, it assesses the assets acquired and liabilities assumed for the appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. The excess of the total consideration transferred over the net amount of identifiable assets acquired and liabilities assumed is recognized as goodwill.  If this consideration is lower than the net amount of the identifiable net assets acquired and liabilities assumed, the difference is recognized as a gain on business acquisition. Acquisition costs are expensed and included in general and administrative expenses in the statements of operations.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition. The Company normally enters into contractual agreements with its customers for periods ranging between one to three years. The Company recognizes the total revenue provided under a contract ratably over the contract period, including any periods under which the Company has agreed to provide services at no cost. The Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery or installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured.

Revenue Recognition, Deferred Revenue [Policy Text Block]

Deferred Revenues. Customers are billed monthly in advance. Deferred revenues are recognized for that portion of monthly charges not yet earned as of the end of the reporting period. Deferred revenues are also recognized for certain customers who pay for their services in advance.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill. Goodwill represents the excess of the total consideration transferred over the net amount of identifiable assets acquired and liabilities assumed in an acquisition. Goodwill is not amortized but rather is reviewed annually for impairment, or whenever events or circumstances indicate that the carrying value may not be recoverable. The Company initially performs a qualitative assessment of goodwill which considers macro-economic conditions, industry and market trends, and the current and projected financial performance of the reporting unit.  No further analysis is required if it is determined that there is a less than 50 percent likelihood that the carrying value is greater than the fair value.

Reclassification, Policy [Policy Text Block]

Reclassifications.    Certain accounts in the prior year’s condensed consolidated financial statements have been reclassified for comparative purposes to conform to the presentation in the current year’s condensed consolidated financial statements. These reclassifications have no effect on the previously reported net loss.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events. Subsequent events have been evaluated through the date of this filing.

XML

Note 14 - Commitments

9 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Commitments Disclosure [Text Block]

Note 14.    Commitments

Operating Lease Obligations

The Company has entered into operating leases related to roof rights, cellular towers, office space, and equipment leases under various non-cancelable agreements expiring through December 2020. Certain of these operating leases include extensions, at the Company's option, for additional terms ranging from 1 to 25 years. Amounts associated with the extension periods have not been included in the table below as it is not presently determinable which options, if any, the Company will elect to exercise. As of September 30, 2013, total future operating lease obligations were as follows:

Remainder of 2013	$	4,763,777
2014		16,280,282
2015		15,376,341
2016		13,949,461
2017		8,406,490
Thereafter		1,758,256
	$	60,534,607

Rent expenses were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Points of Presence	$	1,767,441	$	1,418,061	$	5,108,347	$	4,122,836
Street level rooftops		2,707,304		1,609,252		7,757,206		3,209,569
Corporate offices		121,518		126,619		366,794		365,856
Other		102,039		91,582		327,268		285,801
	$	4,698,302	$	3,245,514	$	13,559,615	$	7,984,062

Rent expenses related to Points of Presence, street level rooftops and other were included in cost of revenues in the Company’s condensed consolidated statements of operations. Rent expense related to our corporate offices was included in general and administrative expenses in the Company’s condensed consolidated statements of operations.

Capital Lease Obligations

The Company has entered into capital leases to acquire property and equipment expiring through March 2018. As of September 30, 2013, total future capital lease obligations were as follows:

Remainder of 2013	$	262,903
2014		997,824
2015		908,344
2016		655,754
2017		391,305
Thereafter		53,923
	$	3,270,053
Less: Interest expense		(468,967	)
Total capital lease obligations	$	2,801,086
Current	$	809,934
Long-term	$	1,991,152

Other

During the first quarter of 2013, the Company renewed a one year information technology infrastructure support agreement. The agreement became effective at the end of the first quarter of 2013. Payments of approximately $128,000 are due quarterly through the fourth quarter of 2013.

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 07, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	TOWERSTREAM CORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		66,419,380
Amendment Flag	false
Entity Central Index Key	0001349437
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

XML

Note 15 - Segment Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 15.    Segment Information

The Company has two reportable segments: Fixed Wireless and Shared Wireless Infrastructure.  Management evaluates performance and allocates resources based on the operating performance of each segment as well as the long-term growth potential for each segment.  Costs reported for each segment include costs directly associated with a segment’s operations.  Intersegment revenues and expenses are eliminated in consolidation.

The balance of the Company’s operations is in the Corporate group which includes centralized operations. This group includes operations related to corporate overhead and centralized activities which support our overall operations. Corporate overhead includes administrative personnel, including executive management, and other support functions such as information technology and facilities. Centralized operations includes network operations, customer care, and the management of network assets. The Corporate group is treated as a separate segment consistent with how management monitors and analyzes financial results. Corporate costs are not allocated to the segments because such costs are managed and controlled on a functional basis that encompasses all markets, with centralized, functional management held accountable for corporate results. Management also believes that not allocating these centralized costs provides a better reflection of the direct operating performance of each segment. The table below presents information about our operating segments:

	Three Months Ended September 30, 2013
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,910,377	$	535,936		$	-		$	(45,649	)	$	8,400,664
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,640,529		3,110,640			67,144			(45,649	)		5,772,664
Depreciation and amortization		2,754,675		857,739			234,230			-			3,846,644
Customer support services		208,955		54,765			628,990			-			892,710
Sales and marketing		1,206,125		80,956			81,547			-			1,368,628
General and administrative		126,256		151,561			2,322,351			-			2,600,168
Total Operating Expenses		6,936,540		4,255,661			3,334,262			(45,649	)		14,480,814
Operating Income (Loss)	$	973,837	$	(3,719,725	)	$	(3,334,262	)	$	-		$	(6,080,150	)
Capital expenditures	$	1,242,975	$	680,324		$	200,347		$	-		$	2,123,646

	Nine Months Ended September 30, 2013
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	24,158,268	$	890,920		$	-		$	(137,127	)	$	24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,563,846		8,777,611			159,265			(137,127	)		16,363,595
Depreciation and amortization		8,411,263		2,633,176			609,118			-			11,653,557
Customer support services		565,972		214,703			2,247,307			-			3,027,982
Sales and marketing		3,825,299		239,213			268,776			-			4,333,288
General and administrative		443,863		486,495			7,443,442			-			8,373,800
Total Operating Expenses		20,810,243		12,351,198			10,727,908			(137,127	)		43,752,222
Operating Income (Loss)	$	3,348,025	$	(11,460,278	)	$	(10,727,908	)	$	-		$	(18,840,161	)
Capital expenditures	$	3,358,758	$	1,049,344		$	349,674		$	-		$	4,757,776
As of September 30, 2013
Property and equipment, net	$	23,870,843	$	12,439,779		$	1,875,461		$	-		$	38,186,083
Total assets	$	30,590,803	$	14,881,500		$	34,776,782		$	-		$	80,249,085

XML

Note 14 - Commitments (Details) - Total Future Capital Lease Obligations (USD $)	Sep. 30, 2013	Dec. 31, 2012
Total Future Capital Lease Obligations [Abstract]
Remainder of 2013	$ 262,903
2014	997,824
2015	908,344
2016	655,754
2017	391,305
Thereafter	53,923
	3,270,053
Less: Interest expense	(468,967)
Total capital lease obligations	2,801,086
Current	809,934	775,087
Long-term	$ 1,991,152	$ 2,387,674

XML

Note 14 - Commitments (Details) - Rent Expenses (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Note 14 - Commitments (Details) - Rent Expenses [Line Items]
Rent Expense	$ 4,698,302	$ 3,245,514	$ 13,559,615	$ 7,984,062
Other Property [Member]
Note 14 - Commitments (Details) - Rent Expenses [Line Items]
Rent Expense	102,039	91,582	327,268	285,801
Points of Presence [Member]
Note 14 - Commitments (Details) - Rent Expenses [Line Items]
Rent Expense	1,767,441	1,418,061	5,108,347	4,122,836
Street Level Rooftops [Member]
Note 14 - Commitments (Details) - Rent Expenses [Line Items]
Rent Expense	2,707,304	1,609,252	7,757,206	3,209,569
Corporate Offices [Member]
Note 14 - Commitments (Details) - Rent Expenses [Line Items]
Rent Expense	$ 121,518	$ 126,619	$ 366,794	$ 365,856