8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

_________________

Date of Report (Date of earliest event reported): May 12, 2014

Towerstream Corporation
(Exact Name of Registrant as Specified in Charter)

Delaware	001-33449	20-8259086
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

88 Silva Lane Middletown, RI	02842
(Address of principal executive offices)	(Zip Code)

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

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

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

Item 2.02.     Results of Operations and Financial Condition.

Item 7.01.     Regulation FD Disclosure

On May 12, 2014, Towerstream Corporation (the “Company”) issued a press release (the “Press Release”) announcing results for the three months ended March 31, 2014. A copy of the press release is attached to this report as Exhibit 99.1 and is being furnished pursuant to Item 2.02 and 7.01 and shall not be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The furnishing of the information in this Current Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information contained in this Current Report on Form 8-K constitutes material investor information that is not otherwise publicly available. A copy of the Press Release is attached hereto as Exhibit 99.1.

The Company uses certain Non-GAAP measures to monitor the Company's business performance and that of its segments. These Non-GAAP measures are not recognized under generally accepted accounting principles ("GAAP"). Accordingly, investors are cautioned about using or relying on these measures as alternatives to recognized GAAP measures. The Company’s methods of calculating these measures may not be comparable to similar measures presented by other companies.

A definition of key Non-GAAP measures that the Company employs, and how it uses them to monitor business performance, are as follows:

“Adjusted EBITDA” represents net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, deferred rent expense, 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.

“Adjusted Market EBITDA” also excludes corporate overhead expenses and other centralized costs. The Company believes that Adjusted Market EBITDA trends are insightful indicators of its markets’ relative performance, and whether its markets are able to produce sufficient market cash flow to fund working capital and capital expenditure needs.

“EBITDA” represents net income (loss) before interest, income taxes, depreciation and amortization.

“Market Cash Flow” represents the amount of cash generated in a market after deducting a market’s direct operating expenses from that market’s revenues. Market Cash Flow does not include (i) centralized costs which support all markets collectively or (ii) any network related capital expenditures incurred in a market.

“Net Cash Flows” represents Adjusted EBITDA less capital expenditures.

The following reconciliations of non-GAAP measures to GAAP financial measures are presented in the attached press release: (i) Adjusted Market EBITDA to Net Loss, Fixed Wireless Segment, (ii) Adjusted EBITDA to Net Loss, and (iii) Net Cash Flow to Net Cash Used in Operating Activities.

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

Item 9.01.     Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release, dated May 12, 2014

SIGNATURES

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

	TOWERSTREAM CORPORATION
Dated: May 12, 2014	By:	/s/ Joseph P. Hernon
		Joseph P. Hernon
		Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated May 12, 2014

EX-99

Exhibit 99.1

Towerstream Reports First Quarter 2014 Results

MIDDLETOWN, R.I., May 12, 2014 – Towerstream Corporation (NASDAQ: TWER) (the “Company”), a leading 4G and Small Cell Rooftop Tower company, announced results for the first quarter ended March 31, 2014.

First Quarter Operating Highlights

HetNets Tower Corporation Subsidiary

● Revenues increased to $0.7 million in the first quarter 2014 compared to $0.2 million in the first quarter 2013.

● Second rental based agreement signed with a leading international telecommunications firm focused on providing wireless services, including Wi-Fi access, in major metropolitan markets across the world. This agreement represents Hetnets' second rental based agreement in New York City and its first in Chicago, San Francisco and Miami.

● Signed small cell services teaming agreement with Alcatel-Lucent enabling a one-stop solution for carriers to deploy Small Cell wireless infrastructure.

Towerstream Corporation

● Total customer ARPU totaled $758 during the first quarter 2014 as compared to $727 for the first quarter 2013.

● Average revenue per user (“ARPU”) of new customers totaled $636 during the first quarter 2014 as compared to $630 for the first quarter 2013.

● New Cogent-like 100 Mbps service offering at $699 per month launched in first quarter 2014 generates strong interest from potential customers and multiple initial orders.

Management Comments

"We are pleased to sign a services agreement with one of the world's leading providers of Wi-Fi access in major urban markets," stated Jeffrey Thompson, President and CEO.  "This represents our second, rent based customer contract for Hetnets in New York and our first agreement in Chicago, San Francisco, and Miami."  

"We launched a new, Cogent-like 100 megabyte offering targeted at buildings where our wireless technology has a significant cost advantage over fiber," noted Joseph Hernon, Chief Financial Officer.  "Initial customer response has been encouraging and we believe that the program will contribute strongly to our fixed wireless segment during 2014."

Page 1 of 10

Selected Financial Data and Key Operating Metrics

(All dollars are in thousands except ARPU)

	(Unaudited)
	Three months ended
	3/31/2014			12/31/2013			3/31/2013
Revenues	$	8,380		$	8,521		$	8,299
Gross margin
Consolidated		30	%		27	%		40	%
Fixed wireless		67	%		64	%		71	%
Capital expenditures
Fixed wireless	$	1,486		$	1,160		$	1,087
Shared wireless infrastructure		938			1,265			136
Corporate		113			909			104
Churn rate (1)		2.33	%		1.78	%		1.63	%
ARPU (1)	$	758		$	761		$	727
ARPU of new customers (1)		636			752			630
Cash and cash equivalents		21,206			28,182			40,329

(1) See Non-GAAP Measures below for the definitions of Churn, ARPU and ARPU of new customers.

Consolidated Statement of Operations (Unaudited)

(All dollars are in thousands except per share amounts)

	Three months ended March 31,
	2014			2013
Revenues	$	8,380		$	8,299
Operating Expenses
Cost of revenues		5,856			4,981
Depreciation and amortization		3,695			3,871
Customer support		1,172			1,397
Sales and marketing		1,422			1,441
General and administrative		2,678			3,137
Total Operating Expenses		14,823			14,827
Operating Loss		(6,443	)		(6,528	)
Other Income (Expense)
Gain on business acquisition		-			941
Interest income		7			-
Interest expense		(70	)		(36	)
Other income (expense), net		(4	)		(3	)
Total Other Income (Expense)		(67	)		902
Net Loss	$	(6,510	)	$	(5,626	)
Net loss per common share – basic and diluted	$	(0.10	)	$	(0.09	)
Weighted average common shares outstanding – basic and diluted		66,439			61,465

Page 2 of 10

Statement of Operations - Segment Basis (Unaudited)

	Three months ended March 31, 2014
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,686	$	740		$	-		$	(46	)	$	8,380
Operating Expenses
Cost of revenues		2,499		3,389			14			(46	)		5,856
Depreciation and amortization		2,538		940			217			-			3,695
Customer support		269		176			727			-			1,172
Sales and marketing		1,263		77			82			-			1,422
General and administrative		108		147			2,423			-			2,678
Total Operating Expenses		6,677		4,729			3,463			(46	)		14,823
Operating Income (Loss)	$	1,009	$	(3,989	)	$	(3,463	)	$	-		$	(6,443	)
Non-cash expenses (a)		2,612		1,014			500			-			4,126
Adjusted EBITDA (b)		3,621		(2,975	)		(2,963	)		-			(2,317	)
Less: Capital expenditures		1,486		938			113			-			2,537
Net Cash Flow (b)	$	2,135	$	(3,913	)	$	(3,076	)	$	-		$	(4,854	)

	Three months ended March 31, 2013
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	8,187	$	158		$	-		$	(46	)	$	8,299
Operating Expenses
Cost of revenues		2,334		2,651			42			(46	)		4,981
Depreciation and amortization		2,820		864			187			-			3,871
Customer support		275		245			877			-			1,397
Sales and marketing		1,297		47			97			-			1,441
General and administrative		147		190			2,800			-			3,137
Total Operating Expenses		6,873		3,997			4,003			(46	)		14,827
Operating Income (Loss)	$	1,314	$	(3,839	)	$	(4,003	)	$	-		$	(6,528	)
Non-recurring expenses, primarily acquisition related		-		-			65			-			65
Non-cash expenses (a)		2,936		867			584			-			4,387
Adjusted EBITDA (b)		4,250		(2,972	)		(3,354	)		-			(2,076	)
Less: Capital expenditures		1,087		136			104			-			1,327
Net Cash Flow (b)	$	3,163	$	(3,108	)	$	(3,458	)	$	-		$	(3,403	)

(a) Includes depreciation and amortization, stock-based compensation, deferred rent expense, loss on property and equipment, and loss on nonmonetary transactions.

(b) See Non-GAAP Measures below for a definition andreconciliation of (i) Adjusted EBITDA to Net Loss and (ii) Net Cash Flow to Net Cash Used in Operating Activities.

Effective January 1, 2013, the Company has two reportable segments. The Fixed Wireless segment provides fixed wireless broadband services to commercial customers and delivers access over a wireless network transmitting over both regulated and unregulated radio spectrum. The 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) Wi-Fi access and the offloading of mobile data, and (iii) backhaul, power and other related telecommunications. 

Page 3 of 10

The Corporate group 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. Corporate costs are not allocated to the segments because such costs are managed on a centralized basis. Management also believes that not allocating these centralized costs provides a better reflection of the direct operating performance of each segment.

Summary Condensed Balance Sheet

(All dollars are in thousands)

	(Unaudited) March 31, 2014			(Audited) December 31, 2013
Assets
Current Assets
Cash and cash equivalents	$	21,206		$	28,182
Other		2,551			1,537
Total Current Assets		23,757			29,719
Property and equipment, net		37,912			38,485
Other assets		6,052			6,713
Total Assets		67,721			74,917
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued expenses		2,592			3,774
Deferred revenues and other		2,228			2,247
Total Current Liabilities		4,820			6,021
Long-Term Liabilities		3,014			2,802
Total Liabilities		7,834			8,823
Stockholders’ Equity
Common stock		66			66
Additional paid-in-capital		154,475			154,172
Accumulated deficit		(94,654	)		(88,144	)
Total Stockholders’ Equity		59,887			66,094
Total Liabilities and Stockholders’ Equity	$	67,721		$	74,917

Page 4 of 10

Summary Condensed Statement of Cash Flows

(Unaudited)

	Three months ended March 31,
	2014			2013
Cash Flows from Operating Activities
Net loss	$	(6,510	)	$	(5,626	)
Non-cash adjustments:
Depreciation & amortization		3,695			3,871
Stock-based compensation		292			397
Gain on business acquisition		-			(941	)
Other		81			12
Changes in operating assets and liabilities		(2,648	)		(2,136	)
Net Cash Used in Operating Activities		(5,090	)		(4,423	)
Cash Flows From Investing Activities
Acquisitions of property and equipment		(2,013	)		(697	)
Acquisition of a business, net of cash acquired		-			(223	)
Lease incentive payment from landlord		380			-
Other		(56	)		(56	)
Net Cash Used in Investing Activities		(1,689	)		(976	)
Cash Flows From Financing Activities
Payments on capital leases		(208	)		(192	)
Proceeds from stock issuances		11			268
Net proceeds from sale of common stock		-			30,500
Net Cash (Used in) Provided by Financing Activities		(197	)		30,576
Net (Decrease) Increase In Cash and Cash Equivalents		(6,976	)		25,177
Cash and cash equivalents – beginning		28,182			15,152
Cash and cash equivalents – ending	$	21,206		$	40,329

Fixed Wireless Segment Market data for the three months ended March 31, 2014

(All dollars are in thousands)

Market	Revenues		Cost of Revenues		Gross Margin					Operating Costs		Adjusted Market EBITDA
New York	$	1,916	$	619	$	1,297		68	%	$	280	$	1,017
Los Angeles		2,040		561		1,479		73	%		468		1,011
Boston		1,534		394		1,140		74	%		197		943
Chicago		725		294		431		59	%		141		290
Miami		369		102		267		72	%		95		172
Houston		173		58		115		66	%		18		97
Las-Vegas-Reno		256		121		135		53	%		42		93
San Francisco		276		128		148		54	%		91		57
Providence-Newport		80		47		33		41	%		2		31
Dallas-Fort Worth		167		93		74		44	%		49		25
Seattle		65		48		17		26	%		6		11
Philadelphia		37		21		16		43	%		15		1
Nashville		2		13		(11	)	-	%		2		(13	)
Total	$	7,640	$	2,499	$	5,141		67	%	$	1,406	$	3,735

Page 5 of 10

Fixed Wireless Segment Market data for the three months ended March 31, 2013

(All dollars are in thousands)

Market	Revenues		Cost of Revenues		Gross Margin					Operating Costs		Adjusted Market EBITDA
Los Angeles	$	2,070	$	530	$	1,540		74	%	$	411	$	1,129
Boston		1,669		330		1,339		80	%		215		1,124
New York		1,886		599		1,287		68	%		336		951
Chicago		913		305		608		67	%		114		494
Las Vegas-Reno		388		132		256		66	%		57		199
Miami		377		99		278		74	%		84		194
San Francisco		303		101		202		67	%		86		116
Providence-Newport		127		49		78		61	%		18		60
Seattle		137		46		91		66	%		39		52
Houston		53		21		32		60	%		13		19
Dallas-Fort Worth		171		89		82		48	%		75		7
Philadelphia		40		18		22		55	%		23		(1	)
Nashville		6		15		(9	)	-			4		(13	)
Total	$	8,140	$	2,334	$	5,806		71	%	$	1,475	$	4,331

Operating Outlook and Guidance

● Revenues for the second quarter 2014 are expected to range between $7.5 million to $7.8 million for the Fixed Wireless segment.

● Revenues for the second quarter 2014 are expected to range between $800,000 to $900,000 for the Shared Wireless Infrastructure segment.

● Adjusted EBITDA, on a segment basis, is expected to range between profitability of $3.4 million to $3.6 million for the Fixed Wireless segment.

Non-GAAP Measures and Reconciliations to GAAP Measures

We use certain Non-GAAP measures to monitor the Company's business performance and that of our segments. These Non-GAAP measures are not recognized under generally accepted accounting principles ("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.

A definition of the Non-GAAP measures that we employ, and how we use them to monitor business performance, are as follows:

“Adjusted EBITDA” represents net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, deferred rent expense, 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.

Page 6 of 10

“Adjusted Market EBITDA” also excludes corporate overhead expenses and other centralized costs. We believe that Adjusted Market EBITDA trends are insightful indicators of our markets’ relative performance, and whether our markets are able to produce sufficient market cash flow to fund working capital and capital expenditure needs.

“ARPU” refers to the monthly average revenue per user, or customer, being generated from those customers under contract at the end of each indicated period. We calculate ARPU by dividing our monthly recurring revenue (“MRR”) at the end of a period by the number of customers generating that MRR.

“ARPU of new customers” is calculated in the same manner but only includes new customers who entered into contracts during the indicated period.

“Churn” and “Churn rate” refer to the percent of revenue lost on a monthly basis from customers disconnecting from our network or reducing the amount of their bandwidth.

“Corporate” includes corporate overhead and centralized activities which support our overall operations.

“EBITDA” represents net income (loss) before interest, income taxes, depreciation and amortization.

“Market Cash Flow” represents the amount of cash generated in a market after deducting a market’s direct operating expenses from that market’s revenues. Market Cash Flow does not include (i) centralized costs which support all markets collectively or (ii) any network related capital expenditures incurred in a market.

“Net Cash Flows” represents Adjusted EBITDA less capital expenditures.

"Shared Wireless Infrastructure, Net" represents the net operating results for that business segment.

A reconciliation of non-GAAP measures to GAAP financial measures is as follows (amounts in thousands):

I. Adjusted Market EBITDA to Net Loss, Fixed Wireless Segment

	For the three months ended March 31,
	2014			2013
Adjusted Market EBITDA	$	3,735		$	4,331
Fixed wireless, non-market specific
Other expenses		(234	)		(243	)
Depreciation and amortization		(2,538	)		(2,820	)
Shared wireless infrastructure, net		(3,943	)		(3,793	)
Corporate		(3,463	)		(4,003	)
Other income (expense)		(67	)		902
Net loss	$	(6,510	)	$	(5,626	)

Page 7 of 10

II. Adjusted EBITDA to Net Loss

	For the three months ended March 31,
	2014			2013
Adjusted EBITDA	$	(2,317	)	$	(2,076	)
Depreciation and amortization		(3,695	)		(3,871	)
Non-recurring expenses		-			(65	)
Stock-based compensation		(292	)		(397	)
Loss on property and equipment		-			(42	)
Loss on non-monetary transactions		(68	)		(77	)
Deferred rent		(71	)		-
Operating Income (Loss)	$	(6,443	)	$	(6,528	)
Interest income		7			-
Interest expense		(70	)		(36	)
Gain on business acquisition		-			941
Other income (expense), net		(4	)		(3	)
Net loss	$	(6,510	)	$	(5,626	)

III. Net Cash Flow to Net Cash Used in Operating Activities

	For the three months ended March 31,
	2014			2013
Net cash flow	$	(4,854	)	$	(3,403	)
Capital expenditures		2,537			1,327
Non-recurring expenses		-			(65	)
Changes in operating assets and liabilities, net		(2,648	)		(2,136	)
Other, net		(125	)		(146	)
Net cash used in operating activities	$	(5,090	)	$	(4,423	)

Conference Call and Webcast

A conference call led by President and Chief Executive Officer, Jeff Thompson, and Chief Financial Officer, Joseph Hernon, will be held on May 12, 2014 at 5:00 p.m.ETto review our financial results and provide an update on current business developments. Interested parties may participate in the conference by dialing 877-755-7423 or 678-894-3069 (for international callers). A telephonic replay of the conference may be accessed approximately two hours after the call through May 19, 2014 at 11:59 p.m. ET by dialing 855-859-2056 or 404-537-3406 (for international callers) using pass code 29420962.

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

Page 8 of 10

About Towerstream Corporation

Towerstream (NASDAQ: TWER) is a leading 4G and Small Cell Rooftop Tower company. The company owns, operates, and leases Wi-Fi and Small Cell rooftop tower locations to cellular phone operators, tower, Internet and cable companies and hosts a variety of customers on its network. Towerstream was originally founded in 2000 to deliver fixed-wireless high-speed Internet access to businesses and to date offers broadband services in 12 urban markets including New York City, Boston, Los Angeles, Chicago, Philadelphia, the San Francisco Bay area, Miami, Seattle, Dallas-Fort Worth, Houston, Las Vegas-Reno, and the greater Providence area. For more information on Towerstream services, please visit www.towerstream.com and/or follow us @Towerstream.

The Towerstream Corporation logo is available at: http://www.globenewswire.com/newsroom/prs/?pkgid=6570

About HetNets Tower Corporation

HetNets Tower Corporation (“HetNets”) was formed in January 2013 as a wholly owned subsidiary of Towerstream Corporation (NASDAQ:TWER), and offers a neutral host, shared wireless infrastructure solution, either independently or as a turnkey service.  Its wireless communications infrastructure is available to wireless carriers, cable and Internet companies in major urban markets where the explosion in mobile data is creating significant demand for additional capacity and coverage.  HetNets offers a carrier-class Wi-Fi network for Internet access and the offloading of mobile data.  Its street level rooftop locations are ideal for the installation of customer owned small cells including DAS, Metro and Pico cells. Other solutions provided by HetNets include backhaul, power, and related small cell requirements. More information is available at http://www.hetnets.com.

Safe Harbor

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

INVESTOR CONTACT:

Monica Gould

The Blueshirt Group

212-871-3927

monica@blueshirtgroup.com

Page 9 of 10

MEDIA CONTACT:

Todd Barrish

Indicate Media
917-861-0089

todd@indicatemedia.com

Page 10 of 10