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 March 31, 2014

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.)
88 Silva Lane 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 May 8, 2014, there were 66,445,044 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 March 31, 2014 (unaudited) and December 31, 2013	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and 2013 (unaudited)	2
	Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2014 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013 (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5-13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14-22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	22
Item 4.	Controls and Procedures.	22
Part II	OTHER INFORMATION
Item 6.	Exhibits.	23

i 

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited) March 31, 2014			December 31, 2013
Assets
Current Assets
Cash and cash equivalents	$	21,205,943		$	28,181,531
Accounts receivable, net		1,125,107			611,548
Prepaid expenses and other current assets		1,425,938			925,587
Total Current Assets		23,756,988			29,718,666
Property and equipment, net		37,911,826			38,484,858
Intangible assets, net		2,503,801			3,088,827
Goodwill		1,674,281			1,674,281
Other assets		1,873,799			1,950,835
Total Assets	$	67,720,695		$	74,917,467
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	756,211		$	1,241,743
Accrued expenses		1,836,100			2,532,679
Deferred revenues		1,383,159			1,396,780
Current maturities of capital lease obligations		773,415			783,051
Other		70,970			67,255
Total Current Liabilities		4,819,855			6,021,508
Long-Term Liabilities
Capital lease obligations, net of current maturities		1,606,683			1,805,336
Other		1,406,787			996,682
Total Long-Term Liabilities		3,013,470			2,802,018
Total Liabilities		7,833,325			8,823,526
Commitments (Note 13)
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; 66,445,044 and 66,424,561 shares issued and outstanding, respectively		66,445			66,425
Additional paid-in-capital		154,474,911			154,171,695
Accumulated deficit		(94,653,986	)		(88,144,179	)
Total Stockholders' Equity		59,887,370			66,093,941
Total Liabilities and Stockholders' Equity	$	67,720,695		$	74,917,467

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 March 31,
	2014			2013
Revenues	$	8,379,906		$	8,299,223
Operating Expenses
Cost of revenues (exclusive of depreciation)		5,855,944			4,981,306
Depreciation and amortization		3,695,415			3,871,087
Customer support services		1,172,135			1,396,894
Sales and marketing		1,421,599			1,440,856
General and administrative		2,677,939			3,137,599
Total Operating Expenses		14,823,032			14,827,742
Operating Loss		(6,443,126	)		(6,528,519	)
Other Income/(Expense)
Interest income		7,420			154
Interest expense		(70,471	)		(35,768	)
Gain on business acquisition		-			941,457
Other income (expense), net		(3,630	)		(3,630	)
Total Other Income/(Expense)		(66,681	)		902,213
Net Loss	$	(6,509,807	)	$	(5,626,306	)
Net loss per common share – basic and diluted	$	(0.10	)	$	(0.09	)
Weighted average common shares outstanding – basic and diluted		66,439,061			61,464,706

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 Three Months Ended March 31, 2014

	Common Stock
	Shares		Amount		Additional Paid-In-Capital			Accumulated Deficit			Total
Balance at December 31, 2013		66,424,561	$	66,425	$	154,171,695		$	(88,144,179	)	$	66,093,941
Issuance of common stock under employee stock purchase plan		5,483		5		12,880			-			12,885
Issuance of common stock upon vesting of restricted stock awards		15,000		15		(15	)		-			-
Stock-based compensation for options		-		-		290,351			-			290,351
Net loss		-		-		-			(6,509,807	)		(6,509,807	)
Balance at March 31, 2014		66,445,044	$	66,445	$	154,474,911		$	(94,653,986	)	$	59,887,370

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)

	Three Months Ended March 31,
	2014			2013
Cash Flows From Operating Activities
Net loss	$	(6,509,807	)	$	(5,626,306	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts		10,000			-
Depreciation for property, plant and equipment		3,110,389			3,118,487
Amortization for customer based intangibles		585,026			752,600
Stock-based compensation		292,269			396,481
Gain on business acquisition		-			(941,457	)
Loss on sale and disposition of property and equipment		-			41,951
Deferred rent		70,761			(28,940	)
Changes in operating assets and liabilities:
Accounts receivable		(523,559	)		62,074
Prepaid expenses and other current assets		(500,351	)		(392,784	)
Other assets		96,407			114,105
Accounts payable		(485,532	)		(695,724	)
Accrued expenses		(1,221,108	)		(1,071,747	)
Deferred revenues		(13,621	)		(151,467	)
Total Adjustments		1,420,681			1,203,579
Net Cash Used In Operating Activities		(5,089,126	)		(4,422,727	)
Cash Flows From Investing Activities
Acquisitions of property and equipment		(2,012,828	)		(696,813	)
Lease incentive payment from landlord		380,000			-
Acquisition of a business, net of cash acquired		-			(222,942	)
Proceeds from sale of property and equipment		-			1,000
Payments of security deposits		(19,371	)		(18,344	)
Deferred acquisition payments		(36,941	)		(38,754	)
Net Cash Used In Investing Activities		(1,689,140	)		(975,853	)
Cash Flows From Financing Activities
Payments on capital leases		(208,289	)		(192,310	)
Issuance of common stock upon exercise of options		-			246,989
Issuance of common stock under employee stock purchase plan		10,967			20,157
Net proceeds from sale of common stock		-			30,500,836
Net Cash (Used In) Provided By Financing Activities		(197,322	)		30,575,672
Net (Decrease) Increase In Cash and Cash Equivalents		(6,975,588	)		25,177,092
Cash and Cash Equivalents – Beginning		28,181,531			15,152,226
Cash and Cash Equivalents – Ending	$	21,205,943		$	40,329,318
Supplemental Disclosures of Cash Flow Information
Cash paid during the periods for:
Interest	$	70,471		$	35,732
Taxes	$	28,257		$	28,262
Non-cash investing and financing activities:
Fair value of common stock issued in connection with an acquisition	$	-		$	1,071,172
Acquisition of property and equipment:
Under capital leases	$	-		$	80,894
Included in accrued expenses	$	524,529		$	549,258

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 business customers in New York City, Boston, Chicago, Los Angeles, San Francisco, Seattle, Miami, Dallas-Fort Worth, Houston, Philadelphia, 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.

In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”).  Hetnets was formed to operate a new shared wireless infrastructure platform that emerged from the Company's efforts to identify opportunities to leverage its fixed wireless network in urban markets to provide other wireless technology solutions and services.  Hetnets operates a carrier-class network which has been constructed on "street level rooftops" which are closer to the ground (where Wi-Fi and small cell can operate with less interference from the macro cell) than the Company's traditional fixed wireless network.  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.  Hetnets is structured to operate like a tower company and expects  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 “Wi-Fi Agreement”) with a major cable operator (the “Cable Operator”). The Wi-Fi 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 Wi-Fi Agreement is for an initial three year period, and provides for automatic annual renewals for two additional years.

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 March 31, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the operating results for the full fiscal year 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, 2013. 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, 2013, 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.

5

 TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 (“FDIC”) insurance limits. As of March 31, 2014, the Company had cash and cash equivalent balances of approximately $5,946,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $15,010,000 invested in 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 March 31,
	2014			2013
Beginning of period	$	81,009		$	190,109
Additions		10,000			-
Deductions		(25,290	)		(46,672	)
End of period	$	65,719		$	143,437

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 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 identifiable assets acquired and liabilities assumed is recognized as goodwill.  If the consideration is lower than the fair value of the identifiable net assets acquired, 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.

The highest level of judgment and estimation involved in accounting for business acquisitions relates to determining the fair value of the customer relationships and network assets acquired. In each of the five acquisitions completed over the past four years, the highest asset value has been allocated to the customer relationships acquired. Determining the fair value of customer relationships involves judgments and estimates regarding how long the customers will continue to contract services with us. During the course of completing five acquisitions, we have developed a database of historical experience from prior acquisitions to assist us in preparing future estimates of cash flows. Similarly, we have used our historical experience in building networks to prepare estimates regarding the fair value of the networks assets that we acquire.

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 purchase price over the estimated fair value of identifiable net assets acquired 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. 

Recent Accounting Pronouncements. No accounting pronouncements adopted during the three months ended March 31, 2014 had a material impact on the Company's condensed consolidated financial statements. No new accounting pronouncements issued during the three months ended March 31, 2014 but not yet adopted are expected to have a material impact on the Company's condensed consolidated financial statements.

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 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 and determined that the acquisition 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. The number of shares issued was based on the closing price of the Company's common stock on the February 28, 2013 closing date which was $2.47.

Fair value of consideration transferred:	Original			Adjustments			Final
Cash	$	225,000		$	-		$	225,000
Common stock		1,071,172			(119,916	)		951,256
Other liabilities assumed		-			36,733			36,733
Capital lease obligations assumed		128,929			-			128,929
Total consideration transferred		1,425,101			(83,183	)		1,341,918
Fair value of identifiable assets acquired and liabilities assumed:
Cash		2,058			-			2,058
Accounts receivable		80,524			1,286			79,238
Property and equipment		826,524			18,824			807,700
Security deposits		1,993			-			1,993
Accounts payable		(26,970	)		2,566			(29,536	)
Deferred revenue		(62,110	)		(2,135	)		(59,975	)
Other liabilities		(89,930	)		-			(89,930	)
Total identifiable net tangible assets		732,089			20,541			711,548
Customer relationships		1,634,469			-			1,634,469
Total identifiable net assets		2,366,558			20,541			2,346,017
Gain on business acquisition	$	941,457		$	62,642		$	1,004,099

The Company recognized a gain on business acquisition of $941,457 which is included in other income (expense) in the Company’s condensed consolidated statements of operations for the three months ended March 31, 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 which 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.

During the three months ended March 31, 2013, the Company incurred approximately $58,000 of third-party costs in connection with the Delos acquisition. These expenses are included in the general and administrative expenses in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2013.

Pro Forma Information

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

	Three Months Ended March 31, 2013
Revenues	$	8,411,793
Amortization expense		817,979
Total operating expenses		14,999,721
Net loss		(5,685,715	)
Basic net loss per share	$	(0.09	)

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

7

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4.    Property and Equipment

Property and equipment is comprised of:

	March 31, 2014		December 31, 2013
Network and base station equipment	$	33,092,603	$	32,233,262
Customer premise equipment		24,838,433		24,244,017
Shared wireless infrastructure		20,098,809		19,128,064
Information technology		4,517,495		4,417,869
Furniture, fixtures and other		1,667,779		1,661,567
Leasehold improvements		1,441,001		1,433,984
		85,656,120		83,118,763
Less: accumulated depreciation		47,744,294		44,633,905
Property and equipment, net	$	37,911,826	$	38,484,858

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

	March 31, 2014		December 31, 2013
Network and base station equipment	$	828,027	$	828,027
Shared wireless infrastructure		1,216,142		1,216,142
Customer premise equipment		96,843		96,843
Information technology		1,860,028		1,860,028
		4,001,040		4,001,040
Less: accumulated depreciation		1,533,718		1,333,666
Property acquired through capital leases, net	$	2,467,322	$	2,667,374

Note 5. Intangible Assets

Intangible assets consist of the following:

	March 31, 2014		December 31, 2013
Goodwill	$	1,674,281	$	1,674,281
Customer relationships	$	11,856,127	$	11,856,127
Less: accumulated amortization of customer relationships		10,636,881		10,051,855
Customer relationships, net		1,219,246		1,804,272
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	2,503,801	$	3,088,827

Amortization expense for the three months ended March 31, 2014 and 2013 was $585,026 and $752,600, 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 March 31, 2014, the remaining amortization period for all acquisitions with customer relationship balances ranged from 1 to 37 months. Future amortization expense is expected to be as follows:

Remainder of 2014	$	303,943
2015		392,272
2016		392,272
2017		130,759
	$	1,219,246

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

8

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6. Accrued Expenses

Accrued expenses consist of the following: 

	March 31, 2014		December 31, 2013
Property and equipment	$	524,529	$	867,311
Payroll and related		673,108		937,624
Professional services		241,345		186,917
Network		126,744		138,684
Marketing		94,842		108,741
Other		175,532		293,402
Total	$	1,836,100	$	2,532,679

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:

	March 31, 2014		December 31, 2013
Current
Deferred rent	$	37,935	$	-
Deferred acquisition payments		33,035		67,255
Total	$	70,970	$	67,255
Long-Term
Deferred rent	$	1,075,187	$	662,361
Deferred acquisition payments		8,795		11,516
Deferred taxes		322,805		322,805
Total	$	1,406,787	$	996,682

Gross deferred acquisition payments related to the acquisition of Pipeline Wireless LLC (“Pipeline”) in December 2010 totaled $33,261 and are payable in monthly installments of $16,630 through May 2014. The carrying value of these non-interest bearing payments were discounted rate at 12% and totaled $22,422 at March 31, 2014. Deferred acquisition payments related to Delos totaled $19,408 at March 31, 2014 and bear interest at rates ranging from 7% to 12.5%.

 Note 8. 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 $290,351 and $378,205 for the three months ended March 31, 2014 and 2013, 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 $1,398,465 as of March 31, 2014 which will be recognized over a weighted-average period of 2.1 years.

During the three months ended March 31, 2014, there were no stock options granted by the Company. The fair values of stock option grants during the three months ended March 31, 2013 were calculated on the date of grant using the Black-Scholes option pricing model and the following weighted average assumptions:

	Three Months Ended March 31, 2013
Risk-free interest rate		0.8	%
Expected volatility		68	%
Expected life (in years)		5
Expected dividend yield		-
Weighted average per share grant date fair value	$	1.46

9

 TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Option transactions under the stock option plans during the three months ended March 31, 2014 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2013		4,055,016		$	2.70
Granted during 2014		-		$	-
Exercised		-		$	-
Forfeited /expired		(35,000	)	$	2.31
Outstanding as of March 31, 2014		4,020,016		$	2.70
Exercisable as of March 31, 2014		2,897,049		$	2.45

Cancellations for the three months ended March 31, 2014 included 35,000 options related to employee terminations.

The weighted average remaining contractual life of the outstanding options as of March 31, 2014 was 5.8 years.

The intrinsic value of outstanding and exercisable options totaled $1,754,542 and $1,726,406, respectively, as of March 31, 2014. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of March 31, 2014, which was $2.35 per share, and the exercise price of the options.

The number of shares issuable upon the exercise of an option 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 option compared to the current market price of the Company’s common stock on the date of exercise.

Note 9.    Stock Warrants

The 450,000 warrants outstanding and exercisable at March 31, 2014 and December 31, 2013 had 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 March 31, 2014. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of March 31, 2014, which was $2.35 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 10. 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 92,105 shares have been issued to date and 107,895 shares are available for future issuance. During the three months ended March 31, 2014, a total of 5,483 shares were issued under the ESPP Plan with a fair value of $12,885. The Company recognized $1,918 and $3,501 of stock-based compensation related to the 15% discount for the three months ended March 31, 2014 and 2013, respectively.

10

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11. 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 to valuation 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 three months ended March 31, 2014.

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
March 31, 2014	$	21,205,943	$	21,205,943	$	-	$	-
December 31, 2013	$	28,181,531	$	28,181,531	$	-	$	-

Note 12.    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 March 31, 2014 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 $13,116,000 if exercised by the holder for cash.

Stock options	4,020,016
Warrants	450,000
Total	4,470,016

Note 13.    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 March 31, 2014, total future operating lease obligations were as follows:

Remainder of 2014	$	18,945,459
2015		17,296,665
2016		15,980,241
2017		10,476,902
2018		3,182,292
Thereafter		1,127,327
	$	67,008,886

11

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Rent expenses were as follows:

	Three Months Ended March 31,
	2014		2013
Points of Presence	$	1,845,246	$	1,625,702
Street level rooftops		3,129,493		2,464,098
Corporate offices		84,109		123,758
Other		90,498		119,877
	$	5,149,346	$	4,333,435

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.

In September 2013, the Company entered into a new lease agreement for its corporate offices and new warehouse space. The lease commenced on January 1, 2014 and expires on December 31, 2019 with an option to renew for an additional five year term through December 31, 2024. The Company spent approximately $600,000 in leasehold improvements in connection with consolidating its corporate based employees from two buildings into one building. The Landlord agreed to contribute $380,000 in funding towards qualified leasehold improvements and made such payment to the Company in February 2014. Total annual rent payments begin at $359,750 for 2014 and escalate by 3% annually reaching $416,970 for 2019.

Capital Lease Obligations

The Company has entered into capital leases to acquire property and equipment expiring through March 2018.  As of March 31, 2014, total future capital lease obligations were as follows:

Remainder of 2014	$	734,919
2015		908,344
2016		655,754
2017		391,305
2018		53,923
	$	2,744,245
Less: Interest expense		364,147
Total capital lease obligations	$	2,380,098
Current	$	773,415
Long-term	$	1,606,683

Other

During the fourth 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 2014. Payments of approximately $121,000 are due quarterly through the first quarter of 2015.

Note 14. 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.

12

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 include 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 March 31, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,685,526	$	740,349		$	-		$	(45,969	)	$	8,379,906
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,498,693		3,388,951			14,269			(45,969	)		5,855,944
Depreciation and amortization		2,537,873		940,938			216,604			-			3,695,415
Customer support services		268,515		176,190			727,430			-			1,172,135
Sales and marketing		1,263,137		76,750			81,712			-			1,421,599
General and administrative		108,425		146,528			2,422,986			-			2,677,939
Total Operating Expenses		6,676,643		4,729,357			3,463,001			(45,969	)		14,823,032
Operating Income (Loss)	$	1,008,883	$	(3,989,008	)	$	(3,463,001	)	$	-		$	(6,443,126	)
Capital expenditures	$	1,486,450	$	938,053		$	112,854		$	-		$	2,537,357
As of March 31, 2014
Property and equipment, net	$	22,570,307	$	12,832,453		$	2,509,066		$	-		$	37,911,826
Total assets	$	28,562,095	$	15,336,248		$	23,822,352		$	-		$	67,720,695

	Three Months Ended March 31, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	8,186,736	$	158,476		$	-		$	(45,989	)	$	8,299,223
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,334,145		2,650,885			42,265			(45,989	)		4,981,306
Depreciation and amortization		2,819,609		864,112			187,366			-			3,871,087
Customer support services		275,075		244,522			877,297			-			1,396,894
Sales and marketing		1,296,941		47,048			96,867			-			1,440,856
General and administrative		146,897		190,184			2,800,518			-			3,137,599
Total Operating Expenses		6,872,667		3,996,751			4,004,313			(45,989	)		14,827,742
Operating Income (Loss)	$	1,314,069	$	(3,838,275	)	$	(4,004,313	)	$	-		$	(6,528,519	)
Capital expenditures	$	1,087,472	$	136,200		$	103,293		$	-		$	1,326,965
As of March 31, 2013
Property and equipment, net	$	25,641,570	$	13,275,065		$	2,057,627		$	-		$	40,974,262
Total assets	$	34,427,109	$	15,556,795		$	42,494,289		$	-		$	92,478,193

Note 15. Subsequent Events

In April 2014, Hetnets entered into a Wi-Fi Agreement with an international provider of Wi-Fi access services in major urban markets. This agreement provides leased access to access points within New York City, Chicago, San Francisco, and Miami. The term of the agreement is for an initial three year period, includes annual escalations of 2%, and provides for automatic annual renewals for two additional years. 

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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 three months ended March 31, 2014. 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, 2013 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 rent 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 upfront cost of establishing or expanding our Network Presence.  However, we may experience variability in gross margins during periods in which we are expanding our Network Presence in a market.

14

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.

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 twelve metropolitan markets.

Market Information – Fixed Wireless

As of March 31, 2014, we operated in twelve metropolitan markets consisting of New York, Boston, Los Angeles, Chicago, San Francisco, Miami, Seattle, Dallas-Fort Worth, Houston, Philadelphia, Las Vegas-Reno and Providence-Newport. Although we provide services in multiple markets, these operations have been aggregated into one reportable segment based on the similar economic characteristics among all markets, including the nature of the services provided and the type of customers purchasing such services. 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 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 mature 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 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.

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 Internet (“Delos”). We exited the Nashville market effective March 31, 2014.

15

Three months ended March 31, 2014

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
New York	$	1,916,030	$	618,511	$	1,297,519		$	280,240	$	1,017,279
Los Angeles		2,039,758		561,310		1,478,448			468,298		1,010,150
Boston		1,534,256		393,615		1,140,641			196,710		943,931
Chicago		725,062		293,659		431,403			141,098		290,305
Miami		369,061		102,474		266,587			95,102		171,485
Houston		172,815		57,939		114,876			17,899		96,977
Las-Vegas-Reno		255,897		121,485		134,412			42,321		92,091
San Francisco		276,040		127,678		148,362			90,561		57,801
Providence-Newport		80,285		47,555		32,730			1,575		31,155
Dallas-Fort Worth		166,657		93,483		73,174			49,131		24,043
Seattle		64,934		47,831		17,103			5,586		11,517
Philadelphia		36,858		20,510		16,348			14,872		1,476
Nashville		1,904		12,642		(10,738	)		2,331		(13,069	)
Total	$	7,639,557	$	2,498,692	$	5,140,865		$	1,405,724	$	3,735,141

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	3,735,141
Fixed wireless, non-market specific
Other expenses		(234,354	)
Depreciation and amortization		(2,537,873	)
Shared wireless infrastructure, net		(3,943,039	)
Corporate		(3,463,001	)
Other income (expense)		(66,681	)
Net loss	$	(6,509,807	)

Three months ended March 31, 2013  

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Los Angeles	$	2,069,824	$	529,767	$	1,540,057		$	411,463	$	1,128,594
Boston		1,669,439		330,279		1,339,160			214,620		1,124,540
New York		1,885,865		599,099		1,286,766			336,437		950,329
Chicago		913,199		305,649		607,550			113,759		493,791
Las Vegas-Reno		388,174		131,925		256,249			56,555		199,694
Miami		377,347		99,261		278,086			84,025		194,061
San Francisco		302,629		100,840		201,789			85,926		115,863
Providence-Newport		127,368		49,141		78,227			18,345		59,882
Seattle		137,037		45,685		91,352			39,177		52,175
Houston		52,985		21,016		31,969			12,720		19,249
Dallas-Fort Worth		171,352		88,781		82,571			75,459		7,112
Philadelphia		39,940		18,037		21,903			22,528		(625	)
Nashville		5,588		14,665		(9,077	)		4,248		(13,325	)
Total	$	8,140,747	$	2,334,145	$	5,806,602		$	1,475,262	$	4,331,340

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	4,331,340
Fixed wireless, non-market specific
Other expenses		(243,651	)
Depreciation and amortization		(2,819,609	)
Shared wireless infrastructure, net		(3,792,286	)
Corporate		(4,004,313	)
Other income (expense)		902,213
Net loss	$	(5,626,306	)

16

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) Wi-Fi access and 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 deliver the services being offered by our shared wireless segment.

In June 2013, we entered into the Wi-Fi Agreement with a major cable operator (the “Cable Operator”). The Wi-Fi 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 Wi-Fi Agreement is for an initial three year period, and provides for automatic renewals for two additional years.  

In April 2014, we entered into a Wi-Fi Agreement with an international provider of Wi-Fi access services in major urban markets. This agreement provides leased access to access points within New York City, Chicago, San Francisco, and Miami. The term of the agreement is for an initial three year period, includes annual escalations of 2%, and provides for automatic annual renewals for two additional years.

Supplemental Segment Information 

Operating information about each segment in accordance with GAAP is disclosed in Note 14 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 employs 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, 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.

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

Three Months Ended March 31, 2014

	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Total
Operating Income (Loss)	$	1,008,883	$	(3,989,008	)	$	(3,463,001	)	$	(6,443,126	)
Depreciation and amortization		2,537,873		940,938			216,604			3,695,415
Stock-based compensation		-		-			292,269			292,269
Loss on non-monetary transactions		67,568		-			-			67,568
Deferred rent		6,753		72,815			(8,807	)		70,761
Adjusted EBITDA		3,621,077		(2,975,255	)		(2,962,935	)		(2,317,113	)
Less: Capital expenditures		1,486,450		938,053			112,854			2,537,357
Net Cash Flow	$	2,134,627	$	(3,913,308	)	$	(3,075,789	)	$	(4,854,470	)

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(2,317,113	)
Depreciation and amortization		(3,695,415	)
Stock-based compensation		(292,269	)
Loss on non-monetary transactions		(67,568	)
Deferred rent		(70,761	)
Operating Income (Loss)		(6,443,126	)
Interest income		7,420
Interest expense		(70,471	)
Other income (expense), net		(3,630	)
Net loss	$	(6,509,807	)

17

Reconciliation of Net Cash Flow to Net Cash Used in Operating Activities
Net cash flow	$	(4,854,470	)
Capital expenditures		2,537,357
Changes in operating assets and liabilities, net		(2,647,764	)
Other, net		(124,249	)
Net cash used in operating activities	$	(5,089,126	)

Three Months Ended March 31, 2013

	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Total
Operating Income (Loss)	$	1,314,069	$	(3,838,275	)	$	(4,004,313	)	$	(6,528,519	)
Depreciation and amortization		2,819,609		864,112			187,366			3,871,087
Stock-based compensation		-		-			396,481			396,481
Loss on property and equipment		39,227		2,724			-			41,951
Loss on non-monetary transactions		77,184		-			-			77,184
Non-recurring expenses, primarily acquisition-related		-		-			65,400			65,400
Adjusted EBITDA		4,250,089		(2,971,439	)		(3,355,066	)		(2,076,416	)
Less: Capital expenditures		1,087,472		136,200			103,293			1,326,965
Net Cash Flow	$	3,162,617	$	(3,107,639	)	$	(3,458,359	)	$	(3,403,381	)

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(2,076,416	)
Depreciation and amortization		(3,871,087	)
Non-recurring expenses, primarily acquisition-related		(65,400	)
Stock-based compensation		(396,481	)
Loss on property and equipment		(41,951	)
Loss on non-monetary transactions		(77,184	)
Operating Income (Loss)		(6,528,519	)
Interest income		154
Interest expense		(35,768	)
Gain on business acquisition		941,457
Other income (expense), net		(3,630	)
Net loss	$	(5,626,306	)

Reconciliation of Net Cash Flow to Net Cash Used in Operating Activities
Net cash flow	$	(3,403,381	)
Capital expenditures		1,326,965
Non-recurring expenses, primarily acquisition related		(65,400	)
Changes in operating assets and liabilities, net		(2,135,543	)
Other, net		(145,368	)
Net cash used in operating activities	$	(4,422,727	)

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

Revenues. Revenues totaled $8,379,906 during the three months ended March 31, 2014 compared to $8,299,223 during the three months ended March 31, 2013 representing an increase of $80,683, or 1%. Shared Wireless revenues totaled $740,349 during the three months ended March 31, 2014 compared to $158,476 during the three months ended March 31, 2013 representing an increase of $581,873, or greater than 100%. Substantially all of the increase related to revenues associated with a Wi-Fi service agreement signed with a major cable operator in June 2013. Fixed Wireless segment revenues totaled $7,685,526 during the three months ended March 31, 2014 compared to $8,186,736 during the three months ended March 31, 2013 representing a decrease of $501,210, or 6%. The decrease principally related to a 4% decrease in monthly recurring billings, lower short term contract revenues, and higher than normal customer churn (as further described below).

18

Average revenue per user (“ARPU”) for the Fixed Wireless segment totaled $758 as of March 31, 2014 compared to $727 as of March 31, 2013 representing an increase of $31, or 4%. ARPU for new customers totaled $636 during the quarter ended March 31, 2014 compared to $630 during the quarter ended March 31, 2013 representing an increase of $6, or 1%. 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 or reducing their recurring service level, totaled 2.33% during the three months ended March 31, 2014 compared to 1.63% during the three months ended March 31, 2013. Our goal is to maintain churn levels between 1.40% and 1.70% which we believe is below industry averages of approximately 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 1.70% over the past 36 months and we do not believe that the higher than targeted churn level experienced in the first quarter of 2014 is indicative of any long term business developments or trends. We have recently formed a customer retention department which has adopted an active communications program with our customers and believe that these efforts will return churn levels to our targeted range.

Cost of Revenues. Cost of revenues totaled $5,855,944 during the three months ended March 31, 2014 compared to $4,981,306 during the three months ended March 31, 2013 representing an increase of $874,638, or 18%. On a consolidated basis, gross margin during the three months ended March 31, 2014 was 30% as compared to 40% during the three months ended March 31, 2013 representing a decrease of 10 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 $209,455 and $714,214, respectively, and reduced gross margin by 2 and 9 percentage points, respectively. The increase for the fixed wireless network primarily related to lease amendments which provide for additional equipment to be installed for additional rent. The increase for the shared wireless network primarily related to a higher number of lease agreements in the 2014 period as compared to the 2013 period. These increases were partially offset by lower Customer Network and other costs which decreased by $49,031 and benefited gross margin by 1 percentage points. On a per market basis, the increase in cost of revenues is largely attributable to New York and Chicago which are two of the markets in which we have constructed a shared wireless infrastructure network. These two markets represented $699,793 or 80% of the total increase in cost of revenues for the three months ended March 31, 2014.

Depreciation and Amortization. Depreciation and amortization totaled $3,695,415 during the three months ended March 31, 2014 compared to $3,871,087 during the three months ended March 31, 2013 representing a decrease of $175,672, or 5%. Depreciation expense totaled $3,110,389 during the three months ended March 31, 2014 compared to $3,118,487 during the three months ended March 31, 2013 representing a decrease of $8,098, or less than 1%. The net base of assets subject to depreciation was approximately $40 million during both the three months ended March 31, 2014 and 2013 resulting in depreciation expense which was comparable for both periods.

Amortization expense totaled $585,026 during the three months ended March 31, 2014 compared to $752,600 during the three months ended March 31, 2013 representing a decrease of $167,574, or 22%. 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 decrease was primarily related to the acquisition of One Velocity Inc. (“One Velocity”) for which $232,953 of amortization expense was recognized in the 2013 period with zero recognized in the 2014 period as the related asset became fully amortized in November 2013. The decrease was partially offset by higher amortization expense associated with the Delos acquisition which was completed in February 2013, and for which $98,068 and $32,689 of expense was recorded in the 2014 and 2013 periods, respectively.

Customer Support Services. Customer support services totaled $1,172,135 during the three months ended March 31, 2014 compared to $1,396,894 during the three months ended March 31, 2013 representing a decrease of $224,759, or 16%. The decrease was primarily related to lower payroll costs as average headcount totaled 66 during the 2014 period as compared to 77 during the 2013 period.

Sales and Marketing. Sales and marketing expenses totaled $1,421,599 during the three months ended March 31, 2014 compared to $1,440,856 during the three months ended March 31, 2013 representing a decrease of $19,257, or 1%. Average headcount totaled 46 during the 2014 period as compared to 50 during the 2013 period representing a decrease of 4, or 8%.

General and Administrative. General and administrative expenses totaled $2,677,939 during the three months ended March 31, 2014 compared to $3,137,599 during the three months ended March 31, 2013 representing a decrease of $459,660, or 15%. Payroll costs totaled $989,291 during the 2014 period compared to $1,126,417 during the 2013 period representing a decrease of $137,126, or 12%. The decrease primarily related to non-recurring bonuses related to a corporate financing and an acquisition that were completed in the 2013 period that were not applicable during the 2014 period. Stock-based compensation totaled $292,269 during the 2014 period compared to $396,481 during the 2013 period representing a decrease of $104,212, or 26%. Stock-based compensation can fluctuate significantly from period to period depending on the timing, quantity and valuation of stock option grants. Professional services expenses totaled $374,609 during the 2014 period compared to $447,926 during the 2013 period representing a decrease of $73,317, or 16%. The decrease primarily related to non-recurring expenses associated with the formation of Hetnets which were incurred in the 2013 period. Finally, facility expenses totaled $98,083 during the 2014 period compared to $163,909 during the 2013 period representing a decrease of $65,826, or 40%. The decrease related to the consolidation of the Company's corporate offices which was completed in the fourth quarter of 2013.

Interest Income. Interest income totaled $7,420 during the three months ended March 31, 2014 compared to $154 during the three months ended March 31, 2013 representing an increase of $7,266, or greater than 100%. The increase relates to more interest earned on our cash accounts during the 2014 period.

19

Interest Expense. Interest expense totaled $70,471 during the three months ended March 31, 2014 compared to $35,768 during the three months ended March 31, 2013 representing an increase of $34,703, or 97%. The increase in interest expense was primarily related to additional capital leases for network equipment and information technology infrastructure.

Gain on Business Acquisition.  There was no gain on business acquisition during the three months ended March 31, 2014 compared to $941,457 during the three months ended March 31, 2013.  The gain in the 2013 period related to the acquisition of Delos in February 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, we were able to acquire the customer relationships and wireless network of Delos at a discounted price.

Net Loss. Net loss totaled $6,509,807 during the three months ended March 31, 2014 compared to $5,626,306 during the three months ended March 31, 2013 representing an increase of $883,501, or 16%. Revenues increased by $80,683, or 1%, while operating expenses decreased by $4,710, or less than 1%. In addition, non-operating expense totaled $66,681 during the three months ended March 31, 2014 compared with non-operating income, primarily related to gain on business acquisition, of $902,213 during the three months ended March 31, 2013.

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 three months ended March 31, 2014 and 2013 are described below.

Net Cash Used in Operating Activities.     Net cash used in operating activities for the three months ended March 31, 2014 totaled $5,089,126 compared to $4,422,727 for the three months ended March 31, 2013 representing an increase of $666,399, or 15%. Cash used in operations for the three months ended March 31, 2014 totaled $2,441,362 as compared to $2,287,184 for the three months ended March, 31, 2013. 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 $2,647,764 during the three months ended March 31, 2014 compared to $2,135,543 for the three months ended March 31, 2013.

Net Cash Used in Investing Activities.     Net cash used in investing activities for the three months ended March 31, 2014 totaled $1,689,140 compared to $975,853 for the three months ended March 31, 2013 representing an increase of $713,287, or 73%. Cash capital expenditures for the fixed wireless segment increased from $689,742 in the 2013 period to $1,307,376 in the 2014 period representing an increase of $617,634, or 90%. Cash capital expenditures for the shared wireless infrastructure segment increased from zero in the 2013 period to $701,501 in the 2014 period representing an increase of $701,501 or 100%. In addition, we received an incentive payment of $380,000 from our landlord in connection with entering a new lease agreement for our corporate offices. These funds were used to pay for qualified leasehold improvements to the facility. Finally, we paid cash of $225,000 for the acquisition of Delos in the 2013 period. There were no acquisitions in the 2014 period.

Net Cash (Used In) Provided by Financing Activities.  Net cash used in financing activities for the three months ended March 31, 2014 totaled $197,322 compared to net cash provided by financing activities of $30,575,672 for the three months ended March 31, 2013, representing a decrease of $30,772,994, or greater than 100%. The decrease was primarily related to net proceeds of $30,500,836 received in the first quarter of 2013 from the sale of 11,000,000 shares of our common stock at a public offering of $3.00 per share.

Acquisition of Delos. In February 2013, we completed the acquisition of Delos which was based in the Houston, Texas area. 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 approximately $30,500,836 after underwriting discounts, commissions and offering expenses.

Working Capital.     As of March 31, 2014, we had working capital of $18,937,133. Based on our current operating activities and plans, we believe our working capital position at the end of March 31, 2014 will enable us to meet our anticipated cash requirements for at least the next twelve months.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and other commitments as of March 31, 2014:

	Payments due by period
	Total		2014		2015		2016		2017		2018		Thereafter
Capital leases	$	2,744,245	$	734,919	$	908,344	$	655,754	$	391,305	$	53,923	$	-
Operating leases		67,008,886		18,945,459		17,296,665		15,980,241		10,476,902		3,182,292		1,127,327
Deferred payments		33,261		33,261				-		-		-		-
Other		506,351		372,967		133,042		342		-		-		-
Total	$	70,292,743	$	20,086,606	$	18,338,051	$	16,636,337	$	10,868,207	$	3,236,215	$	1,127,327

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Capital Lease Obligations. We have entered into capital leases to acquire network, rooftop tower site and customer premise equipment expiring through March 2018.

Operating Leases. We have entered into operating leases related to roof rights, 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 the acquisition. There were 2 monthly payments of $16,630 remaining as of March 31, 2014.

Other. In December 2013, we entered into a one year information technology infrastructure support agreement. The agreement became effective at the end of the first quarter of 2014. The quarterly payments are approximately $121,000 and will be paid through the first quarter of 2015.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 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 when 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 identifiable assets acquired and liabilities assumed is recognized as goodwill.  If the total consideration is lower than the fair value of the identifiable net assets acquired, 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.

The highest level of judgment and estimation involved in accounting for business acquisitions relates to determining the fair value of the customer relationships and network assets acquired. In each of the five acquisitions completed over the past four years, the highest asset value has been allocated to the customer relationships acquired. Determining the fair value of customer relationships involves judgments and estimates regarding how long the customers will continue to contract services with us. During the course of completing five acquisitions, we have developed a database of historical experience from prior acquisitions to assist us in preparing future estimates of cash flows. Similarly, we have used our historical experience in building networks to prepare estimates regarding the fair value of the networks assets that we acquire. 

Goodwill. Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired 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. 

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Recent Accounting Pronouncements. No accounting pronouncements adopted during the three months ended March 31, 2014 had a material impact on our condensed consolidated financial statements. No new accounting pronouncements issued during the three months ended March 31, 2014 but not yet adopted are expected to have a material impact on our condensed consolidated financial statements.

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

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 March 31, 2014, all cash and cash equivalents are immediately available cash balances.  A portion of our cash and cash equivalents are held in institutional money market funds.   

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 March 31, 2014, 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 three months ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

22

 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 March 31, 2014 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.  

23

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: May 12, 2014	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)

24

 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 March 31, 2014 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.  

25

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 March 31, 2014;
(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: May 12, 2014

/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 March 31, 2014;
(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: May 12, 2014

/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 March 31, 2014 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: May 12, 2014

/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 March 31, 2014, 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: May 12, 2014

/s/ Joseph P. Hernon

Joseph P. Hernon
Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

XML

Note 4 - Property and Equipment (Details) - Property and Equipment (USD $)	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 85,656,120	$ 83,118,763
Less: accumulated depreciation	47,744,294	44,633,905
Property and equipment, net	37,911,826	38,484,858	40,974,262
Network and Base Station Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	33,092,603	32,233,262
Customer Premise Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	24,838,433	24,244,017
Rooftop Tower Sites [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	20,098,809	19,128,064
Information Technology [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	4,517,495	4,417,869
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	1,667,779	1,661,567
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 1,441,001	$ 1,433,984

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Note 12 - Net Loss per Common Share (Details) - Antidilutive Securities	3 Months Ended
	Mar. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	4,470,016
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	4,020,016
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	450,000

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Note 8 - Stock-Based Compensation (Details) - Black-Scholes Option Pricing Model Assumptions (USD $)	3 Months Ended
	Mar. 31, 2014
Black-Scholes Option Pricing Model Assumptions [Abstract]
Risk-free interest rate	0.80%
Expected volatility	68.00%
Expected life (in years)	5 years
Expected dividend yield	0.00%
Weighted average per share grant date fair value (in Dollars per share)	$ 1.46

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Note 13 - Commitments (Details) (USD $)	3 Months Ended				1 Months Ended	3 Months Ended		3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Due in 2014 [Member] Corporate Offices [Member]	Mar. 31, 2014 Due in 2019 [Member] Corporate Offices [Member]	Sep. 30, 2013 Corporate Offices [Member]	Mar. 31, 2014 Corporate Offices [Member]	Feb. 28, 2014 Corporate Offices [Member]	Mar. 31, 2014 Minimum [Member]	Mar. 31, 2014 Maximum [Member]
Note 13 - Commitments (Details) [Line Items]
Lessee Leasing Arrangements, Operating Leases, Renewal Term					5 years			1 year	25 years
Leasehold Improvements, Gross					$ 600,000
Operating Lease, Leasehold Improvements to be Made by Lessor							(380,000)
Operating Leases, Rent Expense	5,149,346	4,333,435	359,750	416,970
Annual Increase in Operating Lease Rent Expense						3.00%
Other Obligations Quarterly Payments	$ 121,000

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Note 7 - Other Liabilities (Details) - Other Liabilities (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current
Deferred rent	$ 37,935
Deferred acquisition payments	33,035	67,255
Total	70,970	67,255
Long-Term
Deferred rent	1,075,187	662,361
Deferred acquisition payments	8,795	11,516
Deferred taxes	322,805	322,805
Total	$ 1,406,787	$ 996,682

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Note 14 - Segment Information (Tables)

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

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

	Three Months Ended March 31, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,685,526	$	740,349		$	-		$	(45,969	)	$	8,379,906
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,498,693		3,388,951			14,269			(45,969	)		5,855,944
Depreciation and amortization		2,537,873		940,938			216,604			-			3,695,415
Customer support services		268,515		176,190			727,430			-			1,172,135
Sales and marketing		1,263,137		76,750			81,712			-			1,421,599
General and administrative		108,425		146,528			2,422,986			-			2,677,939
Total Operating Expenses		6,676,643		4,729,357			3,463,001			(45,969	)		14,823,032
Operating Income (Loss)	$	1,008,883	$	(3,989,008	)	$	(3,463,001	)	$	-		$	(6,443,126	)
Capital expenditures	$	1,486,450	$	938,053		$	112,854		$	-		$	2,537,357
As of March 31, 2014
Property and equipment, net	$	22,570,307	$	12,832,453		$	2,509,066		$	-		$	37,911,826
Total assets	$	28,562,095	$	15,336,248		$	23,822,352		$	-		$	67,720,695

	Three Months Ended March 31, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	8,186,736	$	158,476		$	-		$	(45,989	)	$	8,299,223
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,334,145		2,650,885			42,265			(45,989	)		4,981,306
Depreciation and amortization		2,819,609		864,112			187,366			-			3,871,087
Customer support services		275,075		244,522			877,297			-			1,396,894
Sales and marketing		1,296,941		47,048			96,867			-			1,440,856
General and administrative		146,897		190,184			2,800,518			-			3,137,599
Total Operating Expenses		6,872,667		3,996,751			4,004,313			(45,989	)		14,827,742
Operating Income (Loss)	$	1,314,069	$	(3,838,275	)	$	(4,004,313	)	$	-		$	(6,528,519	)
Capital expenditures	$	1,087,472	$	136,200		$	103,293		$	-		$	1,326,965
As of March 31, 2013
Property and equipment, net	$	25,641,570	$	13,275,065		$	2,057,627		$	-		$	40,974,262
Total assets	$	34,427,109	$	15,556,795		$	42,494,289		$	-		$	92,478,193

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Note 13 - Commitments (Details) - Rent Expenses (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Note 13 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	$ 5,149,346	$ 4,333,435
Other Property [Member]
Note 13 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	90,498	119,877
Points of Presence [Member]
Note 13 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	1,845,246	1,625,702
Street Level Rooftops [Member]
Note 13 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	3,129,493	2,464,098
Corporate Offices [Member]
Note 13 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	$ 84,109	$ 123,758

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Note 4 - Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	March 31, 2014		December 31, 2013
Network and base station equipment	$	33,092,603	$	32,233,262
Customer premise equipment		24,838,433		24,244,017
Shared wireless infrastructure		20,098,809		19,128,064
Information technology		4,517,495		4,417,869
Furniture, fixtures and other		1,667,779		1,661,567
Leasehold improvements		1,441,001		1,433,984
		85,656,120		83,118,763
Less: accumulated depreciation		47,744,294		44,633,905
Property and equipment, net	$	37,911,826	$	38,484,858

Schedule of Capital Leased Assets [Table Text Block]

	March 31, 2014		December 31, 2013
Network and base station equipment	$	828,027	$	828,027
Shared wireless infrastructure		1,216,142		1,216,142
Customer premise equipment		96,843		96,843
Information technology		1,860,028		1,860,028
		4,001,040		4,001,040
Less: accumulated depreciation		1,533,718		1,333,666
Property acquired through capital leases, net	$	2,467,322	$	2,667,374

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Note 9 - Stock Warrants (Details) (USD $)			3 Months Ended	12 Months Ended
	Mar. 31, 2014	Feb. 28, 2013	Mar. 31, 2014 Warrant [Member]	Dec. 31, 2013 Warrant [Member]	Mar. 31, 2014 Common Stock [Member]
Note 9 - Stock Warrants (Details) [Line Items]
Class of Warrant or Right, Issued During Period			450,000	450,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 5.00	$ 5.00
Share Price	$ 2.35	$ 2.47			$ 2.35

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Note 5 - Intangible Assets (Details) - Intangible Assets (USD $)	Mar. 31, 2014	Dec. 31, 2013
Intangible Assets [Abstract]
Goodwill	$ 1,674,281	$ 1,674,281
Customer relationships	11,856,127	11,856,127
Less: accumulated amortization of customer relationships	10,636,881	10,051,855
Customer relationships, net	1,219,246	1,804,272
FCC licenses	1,284,555	1,284,555
Intangible assets, net	$ 2,503,801	$ 3,088,827

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Note 3 - Business Acquisitions (Details) - Consideration Transferred and the Amounts of Identified Assets Acquired and Liabilities Assumed (USD $)	3 Months Ended	1 Months Ended
	Mar. 31, 2013	Feb. 28, 2013 Scenario, Previously Reported [Member] Capital Lease Obligations Assumed [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Previously Reported [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Adjustment [Member] Other Liabilities Assumed [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Adjustment [Member] Capital Lease Obligations Assumed [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Adjustment [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Actual [Member] Other Liabilities Assumed [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Actual [Member] Capital Lease Obligations Assumed [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Actual [Member] Delos Internet [Member]
Business Acquisition [Line Items]
Cash			$ 225,000						$ 225,000
Common stock			1,071,172			(119,916)			951,256
Fair value of liabilies transferred		128,929		36,733			36,733	128,929
Total consideration transferred		1,425,101			(83,183)			1,341,918
Fair value of identifiable assets acquired and liabilities assumed:
Cash			2,058						2,058
Accounts receivable			80,524			1,286			79,238
Property and equipment			826,524			18,824			807,700
Security deposits			1,993						1,993
Accounts payable			(26,970)			2,566			(29,536)
Deferred revenue			(62,110)			(2,135)			(59,975)
Other liabilities			(89,930)						(89,930)
Total identifiable net tangible assets			732,089			20,541			711,548
Customer relationships			1,634,469						1,634,469
Total identifiable net assets			2,366,558			20,541			2,346,017
Gain on business acquisition	$ 941,457		$ 941,457			$ 62,642			$ 1,004,099

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Note 11 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities (USD $)	Mar. 31, 2014	Dec. 31, 2013
Note 11 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities [Line Items]
Balance as of	$ 21,205,943	$ 28,181,531
Fair Value, Inputs, Level 1 [Member]
Note 11 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities [Line Items]
Balance as of	$ 21,205,943	$ 28,181,531

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Note 15 - Subsequent Events (Details) (Subsequent Event [Member], Hetnets [Member])	4 Months Ended
	Apr. 30, 2014
Subsequent Event [Member] | Hetnets [Member]
Note 15 - Subsequent Events (Details) [Line Items]
Lessee Leasing Arrangements, Operating Leases, Term of Contract	3 years
Annual Escalations Percentage	2.00%
Lessee Leasing Arrangements, Operating Leases, Renewal Term	2 years

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Note 8 - Stock-Based Compensation (Details) (USD $)	3 Months Ended		3 Months Ended
	Mar. 31, 2014	Feb. 28, 2013	Mar. 31, 2014 Employee Stock Option [Member] General and Administrative Expense [Member]	Mar. 31, 2013 Employee Stock Option [Member] General and Administrative Expense [Member]	Mar. 31, 2014 Employee Stock Option [Member]
Note 8 - Stock-Based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense			$ 290,351	$ 378,205
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized					1,398,465
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition					2 years 36 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period (in Shares)	35,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	5 years 292 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	1,754,542
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 1,726,406
Share Price (in Dollars per share)	$ 2.35	$ 2.47

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Note 3 - Business Acquisitions

3 Months Ended

Mar. 31, 2014

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 and determined that the acquisition 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. The number of shares issued was based on the closing price of the Company's common stock on the February 28, 2013 closing date which was $2.47.

Fair value of consideration transferred:	Original			Adjustments			Final
Cash	$	225,000		$	-		$	225,000
Common stock		1,071,172			(119,916	)		951,256
Other liabilities assumed		-			36,733			36,733
Capital lease obligations assumed		128,929			-			128,929
Total consideration transferred		1,425,101			(83,183	)		1,341,918
Fair value of identifiable assets acquired and liabilities assumed:
Cash		2,058			-			2,058
Accounts receivable		80,524			1,286			79,238
Property and equipment		826,524			18,824			807,700
Security deposits		1,993			-			1,993
Accounts payable		(26,970	)		2,566			(29,536	)
Deferred revenue		(62,110	)		(2,135	)		(59,975	)
Other liabilities		(89,930	)		-			(89,930	)
Total identifiable net tangible assets		732,089			20,541			711,548
Customer relationships		1,634,469			-			1,634,469
Total identifiable net assets		2,366,558			20,541			2,346,017
Gain on business acquisition	$	941,457		$	62,642		$	1,004,099

The Company recognized a gain on business acquisition of $941,457 which is included in other income (expense) in the Company’s condensed consolidated statements of operations for the three months ended March 31, 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 which 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.

During the three months ended March 31, 2013, the Company incurred approximately $58,000 of third-party costs in connection with the Delos acquisition. These expenses are included in the general and administrative expenses in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2013.

Pro Forma Information

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

	Three Months Ended March 31, 2013
Revenues	$	8,411,793
Amortization expense		817,979
Total operating expenses		14,999,721
Net loss		(5,685,715	)
Basic net loss per share	$	(0.09	)

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

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Note 5 - Intangible Assets (Details) - Future Amortization Expense (USD $)	Mar. 31, 2014	Dec. 31, 2013
Future Amortization Expense [Abstract]
Remainder of 2014	$ 303,943
2015	392,272
2016	392,272
2017	130,759
	$ 1,219,246	$ 1,804,272

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Note 8 - Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2014

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 March 31, 2013
Risk-free interest rate		0.8	%
Expected volatility		68	%
Expected life (in years)		5
Expected dividend yield		-
Weighted average per share grant date fair value	$	1.46

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

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2013		4,055,016		$	2.70
Granted during 2014		-		$	-
Exercised		-		$	-
Forfeited /expired		(35,000	)	$	2.31
Outstanding as of March 31, 2014		4,020,016		$	2.70
Exercisable as of March 31, 2014		2,897,049		$	2.45

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Note 7 - Other Liabilities (Tables)

3 Months Ended

Mar. 31, 2014

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

Schedule of Other Liabilities [Table Text Block]

	March 31, 2014		December 31, 2013
Current
Deferred rent	$	37,935	$	-
Deferred acquisition payments		33,035		67,255
Total	$	70,970	$	67,255
Long-Term
Deferred rent	$	1,075,187	$	662,361
Deferred acquisition payments		8,795		11,516
Deferred taxes		322,805		322,805
Total	$	1,406,787	$	996,682

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Note 13 - Commitments (Details) - Total Future Operating Lease Obligations (USD $)	Mar. 31, 2014
Total Future Operating Lease Obligations [Abstract]
Remainder of 2014	$ 18,945,459
2015	17,296,665
2016	15,980,241
2017	10,476,902
2018	3,182,292
Thereafter	1,127,327
	$ 67,008,886

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Note 6 - Accrued Expenses (Details) - Accrued Expenses (USD $)	Mar. 31, 2014	Dec. 31, 2013
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	$ 1,836,100	$ 2,532,679
Property and Equipment [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	524,529	867,311
Payroll and Related [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	673,108	937,624
Professional Services [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	241,345	186,917
Network [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	126,744	138,684
Marketing [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	94,842	108,741
Other Accrued Liabilities [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	$ 175,532	$ 293,402

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Note 11 - Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2014

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)
March 31, 2014	$	21,205,943	$	21,205,943	$	-	$	-
December 31, 2013	$	28,181,531	$	28,181,531	$	-	$	-

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Note 12 - Net Loss per Common Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

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

Stock options	4,020,016
Warrants	450,000
Total	4,470,016

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Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

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 March 31, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the operating results for the full fiscal year 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, 2013. 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, 2013, 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 (“FDIC”) insurance limits. As of March 31, 2014, the Company had cash and cash equivalent balances of approximately $5,946,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $15,010,000 invested in 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 March 31,
	2014			2013
Beginning of period	$	81,009		$	190,109
Additions		10,000			-
Deductions		(25,290	)		(46,672	)
End of period	$	65,719		$	143,437

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 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 identifiable assets acquired and liabilities assumed is recognized as goodwill.  If the consideration is lower than the fair value of the identifiable net assets acquired, 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.

The highest level of judgment and estimation involved in accounting for business acquisitions relates to determining the fair value of the customer relationships and network assets acquired. In each of the five acquisitions completed over the past four years, the highest asset value has been allocated to the customer relationships acquired. Determining the fair value of customer relationships involves judgments and estimates regarding how long the customers will continue to contract services with us. During the course of completing five acquisitions, we have developed a database of historical experience from prior acquisitions to assist us in preparing future estimates of cash flows. Similarly, we have used our historical experience in building networks to prepare estimates regarding the fair value of the networks assets that we acquire.

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 purchase price over the estimated fair value of identifiable net assets acquired 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. 

Recent Accounting Pronouncements. No accounting pronouncements adopted during the three months ended March 31, 2014 had a material impact on the Company's condensed consolidated financial statements. No new accounting pronouncements issued during the three months ended March 31, 2014 but not yet adopted are expected to have a material impact on the Company's condensed consolidated financial statements.

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 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.

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Note 13 - Commitments (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure Text Block Supplement [Abstract]

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

Remainder of 2014	$	18,945,459
2015		17,296,665
2016		15,980,241
2017		10,476,902
2018		3,182,292
Thereafter		1,127,327
	$	67,008,886

Schedule of Rent Expense [Table Text Block]

	Three Months Ended March 31,
	2014		2013
Points of Presence	$	1,845,246	$	1,625,702
Street level rooftops		3,129,493		2,464,098
Corporate offices		84,109		123,758
Other		90,498		119,877
	$	5,149,346	$	4,333,435

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

Remainder of 2014	$	734,919
2015		908,344
2016		655,754
2017		391,305
2018		53,923
	$	2,744,245
Less: Interest expense		364,147
Total capital lease obligations	$	2,380,098
Current	$	773,415
Long-term	$	1,606,683

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Note 4 - Property and Equipment (Details) - Property Acquired Through Capital Leases (USD $)	Mar. 31, 2014	Dec. 31, 2013
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	$ 4,001,040	$ 4,001,040
Less: accumulated depreciation	1,533,718	1,333,666
Property acquired through capital leases, net	2,467,322	2,667,374
Network and Base Station Equipment [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	828,027	828,027
Rooftop Tower Sites [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	1,216,142	1,216,142
Customer Premise Equipment [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	96,843	96,843
Information Technology [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	$ 1,860,028	$ 1,860,028

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Note 12 - Net Loss per Common Share (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Earnings Per Share [Abstract]
Proceeds From Stock Option And Warrant Exercises	$ 13,116,000

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current Assets
Cash and cash equivalents	$ 21,205,943	$ 28,181,531
Accounts receivable, net	1,125,107	611,548
Prepaid expenses and other current assets	1,425,938	925,587
Total Current Assets	23,756,988	29,718,666
Property and equipment, net	37,911,826	38,484,858
Intangible assets, net	2,503,801	3,088,827
Goodwill	1,674,281	1,674,281
Other assets	1,873,799	1,950,835
Total Assets	67,720,695	74,917,467
Current Liabilities
Accounts payable	756,211	1,241,743
Accrued expenses	1,836,100	2,532,679
Deferred revenues	1,383,159	1,396,780
Current maturities of capital lease obligations	773,415	783,051
Other	70,970	67,255
Total Current Liabilities	4,819,855	6,021,508
Long-Term Liabilities
Capital lease obligations, net of current maturities	1,606,683	1,805,336
Other	1,406,787	996,682
Total Long-Term Liabilities	3,013,470	2,802,018
Total Liabilities	7,833,325	8,823,526
Commitments (Note 13)
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; 66,445,044 and 66,424,561 shares issued and outstanding, respectively	66,445	66,425
Additional paid-in-capital	154,474,911	154,171,695
Accumulated deficit	(94,653,986)	(88,144,179)
Total Stockholders' Equity	59,887,370	66,093,941
Total Liabilities and Stockholders' Equity	$ 67,720,695	$ 74,917,467

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Note 7 - Other Liabilities (Details) (USD $)			3 Months Ended	41 Months Ended				3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Pipeline Wireless [Member]	May 31, 2014 Pipeline Wireless [Member]	Dec. 15, 2010 Pipeline Wireless [Member]	Mar. 31, 2014 Delos Internet [Member]	Mar. 31, 2014 Minimum [Member] Pipeline Wireless [Member]	Mar. 31, 2014 Minimum [Member] Delos Internet [Member]	Mar. 31, 2014 Maximum [Member] Delos Internet [Member]
Note 7 - Other Liabilities (Details) [Line Items]
Deferred Acquisition Payments, Gross					$ 33,261	$ 19,408
Deferred Acquisition Monthly Payments				16,630
Deferred Acquisition Payments Discount Rate			12.00%
Liabilities	$ 7,833,325	$ 8,823,526					$ 22,422
Delos Interest Rate								7.00%	12.50%

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flows From Operating Activities
Net loss	$ (6,509,807)	$ (5,626,306)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts	10,000
Depreciation for property, plant and equipment	3,110,389	3,118,487
Amortization for customer based intangibles	585,026	752,600
Stock-based compensation	292,269	396,481
Gain on business acquisition		(941,457)
Loss on sale and disposition of property and equipment		41,951
Deferred rent	70,761	(28,940)
Changes in operating assets and liabilities:
Accounts receivable	(523,559)	62,074
Prepaid expenses and other current assets	(500,351)	(392,784)
Other assets	96,407	114,105
Accounts payable	(485,532)	(695,724)
Accrued expenses	(1,221,108)	(1,071,747)
Deferred revenues	(13,621)	(151,467)
Total Adjustments	1,420,681	1,203,579
Net Cash Used In Operating Activities	(5,089,126)	(4,422,727)
Acquisitions of property and equipment	(2,012,828)	(696,813)
Lease incentive payment from landlord	380,000
Acquisition of a business, net of cash acquired		(222,942)
Proceeds from sale of property and equipment		1,000
Payments of security deposits	(19,371)	(18,344)
Deferred acquisition payments	(36,941)	(38,754)
Net Cash Used In Investing Activities	(1,689,140)	(975,853)
Cash Flows From Financing Activities
Payments on capital leases	(208,289)	(192,310)
Issuance of common stock upon exercise of options		246,989
Issuance of common stock under employee stock purchase plan	10,967	20,157
Net proceeds from sale of common stock		30,500,836
Net Cash (Used In) Provided By Financing Activities	(197,322)	30,575,672
Net (Decrease) Increase In Cash and Cash Equivalents	(6,975,588)	25,177,092
Cash and Cash Equivalents – Beginning	28,181,531	15,152,226
Cash and Cash Equivalents – Ending	21,205,943	40,329,318
Cash paid during the periods for:
Interest	70,471	35,732
Taxes	28,257	28,262
Non-cash investing and financing activities:
Fair value of common stock issued in connection with an acquisition		1,071,172
Under capital leases		80,894
Included in accrued expenses	$ 524,529	$ 549,258

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Note 14 - Segment Information (Details)	3 Months Ended
	Mar. 31, 2014
Segment Reporting [Abstract]
Number of Reportable Segments	2

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Note 2 - Summary of Significant Accounting Policies (Details) - Changes in Allowance for Doubtful Accounts (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Changes in Allowance for Doubtful Accounts [Abstract]
Beginning of period	$ 81,009	$ 190,109
Additions	10,000
Deductions	(25,290)	(46,672)
End of period	$ 65,719	$ 143,437

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Accounting Policies, by Policy (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [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 March 31, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the operating results for the full fiscal year 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, 2013. 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, 2013, 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 (“FDIC”) insurance limits. As of March 31, 2014, the Company had cash and cash equivalent balances of approximately $5,946,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $15,010,000 invested in 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. Changes in the allowance for doubtful accounts were as follows:

	Three Months Ended March 31,
	2014			2013
Beginning of period	$	81,009		$	190,109
Additions		10,000			-
Deductions		(25,290	)		(46,672	)
End of period	$	65,719		$	143,437

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 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 identifiable assets acquired and liabilities assumed is recognized as goodwill.  If the consideration is lower than the fair value of the identifiable net assets acquired, 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.

The highest level of judgment and estimation involved in accounting for business acquisitions relates to determining the fair value of the customer relationships and network assets acquired. In each of the five acquisitions completed over the past four years, the highest asset value has been allocated to the customer relationships acquired. Determining the fair value of customer relationships involves judgments and estimates regarding how long the customers will continue to contract services with us. During the course of completing five acquisitions, we have developed a database of historical experience from prior acquisitions to assist us in preparing future estimates of cash flows. Similarly, we have used our historical experience in building networks to prepare estimates regarding the fair value of the networks assets that we acquire.

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]

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 purchase price over the estimated fair value of identifiable net assets acquired 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.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements. No accounting pronouncements adopted during the three months ended March 31, 2014 had a material impact on the Company's condensed consolidated financial statements. No new accounting pronouncements issued during the three months ended March 31, 2014 but not yet adopted are expected to have a material impact on the Company's condensed consolidated financial statements.

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 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.

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Note 3 - Business Acquisitions (Details) (USD $)	1 Months Ended	3 Months Ended
	May 31, 2013	Mar. 31, 2013	Mar. 31, 2014	Feb. 28, 2013
Note 3 - Business Acquisitions (Details) [Line Items]
Share Price (in Dollars per share)			$ 2.35	$ 2.47
Business Combination, Bargain Purchase, Gain Recognized, Amount		$ 941,457
Business Acquisition Purchase Price Allocation Change In Assets Acquired Liabilities Assumed Net	21,000
Business Combination Bargain Purchase Increase Of Gain Recognized	63,000
Common Stock Adjustment [Member] | Delos Internet [Member]
Note 3 - Business Acquisitions (Details) [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)	48,549
Before Adjustment to Common Stock [Member] | Delos Internet [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] | Delos Internet [Member]
Note 3 - Business Acquisitions (Details) [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)	385,124
Delos Internet [Member]
Note 3 - Business Acquisitions (Details) [Line Items]
Business Combination, Acquisition Related Costs		$ 58,000

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Note 3 - Business Acquisitions (Tables)

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

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

Fair value of consideration transferred:	Original			Adjustments			Final
Cash	$	225,000		$	-		$	225,000
Common stock		1,071,172			(119,916	)		951,256
Other liabilities assumed		-			36,733			36,733
Capital lease obligations assumed		128,929			-			128,929
Total consideration transferred		1,425,101			(83,183	)		1,341,918
Fair value of identifiable assets acquired and liabilities assumed:
Cash		2,058			-			2,058
Accounts receivable		80,524			1,286			79,238
Property and equipment		826,524			18,824			807,700
Security deposits		1,993			-			1,993
Accounts payable		(26,970	)		2,566			(29,536	)
Deferred revenue		(62,110	)		(2,135	)		(59,975	)
Other liabilities		(89,930	)		-			(89,930	)
Total identifiable net tangible assets		732,089			20,541			711,548
Customer relationships		1,634,469			-			1,634,469
Total identifiable net assets		2,366,558			20,541			2,346,017
Gain on business acquisition	$	941,457		$	62,642		$	1,004,099

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended March 31, 2013
Revenues	$	8,411,793
Amortization expense		817,979
Total operating expenses		14,999,721
Net loss		(5,685,715	)
Basic net loss per share	$	(0.09	)

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Note 1 - Organization and Nature of Business

3 Months Ended

Mar. 31, 2014

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 business customers in New York City, Boston, Chicago, Los Angeles, San Francisco, Seattle, Miami, Dallas-Fort Worth, Houston, Philadelphia, 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.

In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”).  Hetnets was formed to operate a new shared wireless infrastructure platform that emerged from the Company's efforts to identify opportunities to leverage its fixed wireless network in urban markets to provide other wireless technology solutions and services.  Hetnets operates a carrier-class network which has been constructed on "street level rooftops" which are closer to the ground (where Wi-Fi and small cell can operate with less interference from the macro cell) than the Company's traditional fixed wireless network.  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.  Hetnets is structured to operate like a tower company and expects  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 “Wi-Fi Agreement”) with a major cable operator (the “Cable Operator”). The Wi-Fi 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 Wi-Fi Agreement is for an initial three year period, and provides for automatic annual renewals for two additional years.

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $)	Mar. 31, 2014	Dec. 31, 2013
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	66,445,044	66,424,561
Common stock, shares outstanding	66,445,044	66,424,561

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Note 11 - Fair Value Measurement

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 11. 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 to valuation 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 three months ended March 31, 2014.

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
March 31, 2014	$	21,205,943	$	21,205,943	$	-	$	-
December 31, 2013	$	28,181,531	$	28,181,531	$	-	$	-

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Document And Entity Information	3 Months Ended
	Mar. 31, 2014	May 08, 2014
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		66,445,044
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	Yes
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

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Note 12 - Net Loss per Common Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Note 12.    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 March 31, 2014 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 $13,116,000 if exercised by the holder for cash.

Stock options	4,020,016
Warrants	450,000
Total	4,470,016

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues	$ 8,379,906	$ 8,299,223
Cost of revenues (exclusive of depreciation)	5,855,944	4,981,306
Depreciation and amortization	3,695,415	3,871,087
Customer support services	1,172,135	1,396,894
Sales and marketing	1,421,599	1,440,856
General and administrative	2,677,939	3,137,599
Total Operating Expenses	14,823,032	14,827,742
Operating Loss	(6,443,126)	(6,528,519)
Other Income/(Expense)
Interest income	7,420	154
Interest expense	(70,471)	(35,768)
Gain on business acquisition		941,457
Other income (expense), net	(3,630)	(3,630)
Total Other Income/(Expense)	(66,681)	902,213
Net Loss	$ (6,509,807)	$ (5,626,306)
Net loss per common share – basic and diluted (in Dollars per share)	$ (0.10)	$ (0.09)
Weighted average common shares outstanding – basic and diluted (in Shares)	66,439,061	61,464,706

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Note 6 - Accrued Expenses

3 Months Ended

Mar. 31, 2014

Accrued Liabilities Disclosure [Abstract]

Accrued Liabilities Disclosure [Text Block]

Note 6. Accrued Expenses

Accrued expenses consist of the following: 

	March 31, 2014		December 31, 2013
Property and equipment	$	524,529	$	867,311
Payroll and related		673,108		937,624
Professional services		241,345		186,917
Network		126,744		138,684
Marketing		94,842		108,741
Other		175,532		293,402
Total	$	1,836,100	$	2,532,679

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

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Note 5 - Intangible Assets

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

Note 5. Intangible Assets

Intangible assets consist of the following:

	March 31, 2014		December 31, 2013
Goodwill	$	1,674,281	$	1,674,281
Customer relationships	$	11,856,127	$	11,856,127
Less: accumulated amortization of customer relationships		10,636,881		10,051,855
Customer relationships, net		1,219,246		1,804,272
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	2,503,801	$	3,088,827

Amortization expense for the three months ended March 31, 2014 and 2013 was $585,026 and $752,600, 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 March 31, 2014, the remaining amortization period for all acquisitions with customer relationship balances ranged from 1 to 37 months. Future amortization expense is expected to be as follows:

Remainder of 2014	$	303,943
2015		392,272
2016		392,272
2017		130,759
	$	1,219,246

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

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Note 2 - Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

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

	Three Months Ended March 31,
	2014			2013
Beginning of period	$	81,009		$	190,109
Additions		10,000			-
Deductions		(25,290	)		(46,672	)
End of period	$	65,719		$	143,437

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Note 13 - Commitments

3 Months Ended

Mar. 31, 2014

Disclosure Text Block Supplement [Abstract]

Commitments Disclosure [Text Block]

Note 13.    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 March 31, 2014, total future operating lease obligations were as follows:

Remainder of 2014	$	18,945,459
2015		17,296,665
2016		15,980,241
2017		10,476,902
2018		3,182,292
Thereafter		1,127,327
	$	67,008,886

Rent expenses were as follows:

	Three Months Ended March 31,
	2014		2013
Points of Presence	$	1,845,246	$	1,625,702
Street level rooftops		3,129,493		2,464,098
Corporate offices		84,109		123,758
Other		90,498		119,877
	$	5,149,346	$	4,333,435

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.

In September 2013, the Company entered into a new lease agreement for its corporate offices and new warehouse space. The lease commenced on January 1, 2014 and expires on December 31, 2019 with an option to renew for an additional five year term through December 31, 2024. The Company spent approximately $600,000 in leasehold improvements in connection with consolidating its corporate based employees from two buildings into one building. The Landlord agreed to contribute $380,000 in funding towards qualified leasehold improvements and made such payment to the Company in February 2014. Total annual rent payments begin at $359,750 for 2014 and escalate by 3% annually reaching $416,970 for 2019.

Capital Lease Obligations

The Company has entered into capital leases to acquire property and equipment expiring through March 2018.  As of March 31, 2014, total future capital lease obligations were as follows:

Remainder of 2014	$	734,919
2015		908,344
2016		655,754
2017		391,305
2018		53,923
	$	2,744,245
Less: Interest expense		364,147
Total capital lease obligations	$	2,380,098
Current	$	773,415
Long-term	$	1,606,683

Other

During the fourth 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 2014. Payments of approximately $121,000 are due quarterly through the first quarter of 2015.

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Note 9 - Stock Warrants

3 Months Ended

Mar. 31, 2014

Stock Warrants [Abstract]

Stock Warrants [Text Block]

Note 9.    Stock Warrants

The 450,000 warrants outstanding and exercisable at March 31, 2014 and December 31, 2013 had 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 March 31, 2014. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of March 31, 2014, which was $2.35 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.

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Note 14 - Segment Information (Details) - Segment Information (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Revenues	$ 8,379,906	$ 8,299,223
Operating Expenses
Cost of revenues (exclusive of depreciation)	5,855,944	4,981,306
Depreciation and amortization	3,695,415	3,871,087
Customer support services	1,172,135	1,396,894
Sales and marketing	1,421,599	1,440,856
General and administrative	2,677,939	3,137,599
Total Operating Expenses	14,823,032	14,827,742
Operating Income (Loss)	(6,443,126)	(6,528,519)
Capital expenditures	2,537,357	1,326,965
Property and equipment, net	37,911,826	40,974,262	38,484,858
Total assets	67,720,695	92,478,193	74,917,467
Fixed Wireless [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	7,685,526	8,186,736
Operating Expenses
Cost of revenues (exclusive of depreciation)	2,498,693	2,334,145
Depreciation and amortization	2,537,873	2,819,609
Customer support services	268,515	275,075
Sales and marketing	1,263,137	1,296,941
General and administrative	108,425	146,897
Total Operating Expenses	6,676,643	6,872,667
Operating Income (Loss)	1,008,883	1,314,069
Capital expenditures	1,486,450	1,087,472
Property and equipment, net	22,570,307	25,641,570
Total assets	28,562,095	34,427,109
Shared Wireless Infrastructure [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	740,349	158,476
Operating Expenses
Cost of revenues (exclusive of depreciation)	3,388,951	2,650,885
Depreciation and amortization	940,938	864,112
Customer support services	176,190	244,522
Sales and marketing	76,750	47,048
General and administrative	146,528	190,184
Total Operating Expenses	4,729,357	3,996,751
Operating Income (Loss)	(3,989,008)	(3,838,275)
Capital expenditures	938,053	136,200
Property and equipment, net	12,832,453	13,275,065
Total assets	15,336,248	15,556,795
Corporate, Non-Segment [Member]
Operating Expenses
Cost of revenues (exclusive of depreciation)	14,269	42,265
Depreciation and amortization	216,604	187,366
Customer support services	727,430	877,297
Sales and marketing	81,712	96,867
General and administrative	2,422,986	2,800,518
Total Operating Expenses	3,463,001	4,004,313
Operating Income (Loss)	(3,463,001)	(4,004,313)
Capital expenditures	112,854	103,293
Property and equipment, net	2,509,066	2,057,627
Total assets	23,822,352	42,494,289
Consolidation, Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	(45,969)	(45,989)
Operating Expenses
Cost of revenues (exclusive of depreciation)	(45,969)	(45,989)
Total Operating Expenses	$ (45,969)	$ (45,989)

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Note 7 - Other Liabilities

3 Months Ended

Mar. 31, 2014

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:

	March 31, 2014		December 31, 2013
Current
Deferred rent	$	37,935	$	-
Deferred acquisition payments		33,035		67,255
Total	$	70,970	$	67,255
Long-Term
Deferred rent	$	1,075,187	$	662,361
Deferred acquisition payments		8,795		11,516
Deferred taxes		322,805		322,805
Total	$	1,406,787	$	996,682

Gross deferred acquisition payments related to the acquisition of Pipeline Wireless LLC (“Pipeline”) in December 2010 totaled $33,261 and are payable in monthly installments of $16,630 through May 2014. The carrying value of these non-interest bearing payments were discounted rate at 12% and totaled $22,422 at March 31, 2014. Deferred acquisition payments related to Delos totaled $19,408 at March 31, 2014 and bear interest at rates ranging from 7% to 12.5%.

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Note 8 - Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

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

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

 Note 8. 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 $290,351 and $378,205 for the three months ended March 31, 2014 and 2013, 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 $1,398,465 as of March 31, 2014 which will be recognized over a weighted-average period of 2.1 years.

During the three months ended March 31, 2014, there were no stock options granted by the Company. The fair values of stock option grants during the three months ended March 31, 2013 were calculated on the date of grant using the Black-Scholes option pricing model and the following weighted average assumptions:

	Three Months Ended March 31, 2013
Risk-free interest rate		0.8	%
Expected volatility		68	%
Expected life (in years)		5
Expected dividend yield		-
Weighted average per share grant date fair value	$	1.46

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.

Option transactions under the stock option plans during the three months ended March 31, 2014 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2013		4,055,016		$	2.70
Granted during 2014		-		$	-
Exercised		-		$	-
Forfeited /expired		(35,000	)	$	2.31
Outstanding as of March 31, 2014		4,020,016		$	2.70
Exercisable as of March 31, 2014		2,897,049		$	2.45

Cancellations for the three months ended March 31, 2014 included 35,000 options related to employee terminations.

The weighted average remaining contractual life of the outstanding options as of March 31, 2014 was 5.8 years.

The intrinsic value of outstanding and exercisable options totaled $1,754,542 and $1,726,406, respectively, as of March 31, 2014. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of March 31, 2014, which was $2.35 per share, and the exercise price of the options.

The number of shares issuable upon the exercise of an option 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 option compared to the current market price of the Company’s common stock on the date of exercise.

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Note 10 - Employee Stock Purchase Plan

3 Months Ended

Mar. 31, 2014

Employee Stock Purchase Plan Disclosure [Abstract]

Employee Stock Purchase Plan Disclosure [Text Block]

Note 10. 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 92,105 shares have been issued to date and 107,895 shares are available for future issuance. During the three months ended March 31, 2014, a total of 5,483 shares were issued under the ESPP Plan with a fair value of $12,885. The Company recognized $1,918 and $3,501 of stock-based compensation related to the 15% discount for the three months ended March 31, 2014 and 2013, respectively.

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Note 2 - Summary of Significant Accounting Policies (Details) (USD $)	Mar. 31, 2014
Accounting Policies [Abstract]
Cash, Uninsured Amount	$ 5,946,000
Cash, FDIC Insured Amount	250,000
Money Market Funds, at Carrying Value	15,010,000
Cash Securities Investor Protection Corporation Coverage Amount	$ 500,000

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Note 10 - Employee Stock Purchase Plan (Details) (USD $)	3 Months Ended		51 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014
Note 10 - Employee Stock Purchase Plan (Details) [Line Items]
Percentage Of Discount Allowed For Shares Issued Under Employee Stock Purchase Plan	15.00%
Stock Issued During Period, Value, Employee Stock Purchase Plan (in Dollars)	$ 12,885
2010 Employee Stock Purchase Plan [Member]
Note 10 - Employee Stock Purchase Plan (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	200,000		200,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans	5,483		92,105
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	107,895		107,895
Stock Issued During Period, Value, Employee Stock Purchase Plan (in Dollars)	12,885
Defined Contribution Plan, Cost Recognized (in Dollars)	$ 1,918	$ 3,501

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Note 15 - Subsequent Events

3 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 15. Subsequent Events

In April 2014, Hetnets entered into a Wi-Fi Agreement with an international provider of Wi-Fi access services in major urban markets. This agreement provides leased access to access points within New York City, Chicago, San Francisco, and Miami. The term of the agreement is for an initial three year period, includes annual escalations of 2%, and provides for automatic annual renewals for two additional years. 

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Note 5 - Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

	March 31, 2014		December 31, 2013
Goodwill	$	1,674,281	$	1,674,281
Customer relationships	$	11,856,127	$	11,856,127
Less: accumulated amortization of customer relationships		10,636,881		10,051,855
Customer relationships, net		1,219,246		1,804,272
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	2,503,801	$	3,088,827

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

Remainder of 2014	$	303,943
2015		392,272
2016		392,272
2017		130,759
	$	1,219,246

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Note 8 - Stock-Based Compensation (Details) - Option Transactions Under the Stock Option Plans (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Option Transactions Under the Stock Option Plans [Abstract]
Outstanding as of	4,020,016	4,055,016
Weighted average exercise price as of	$ 2.70	$ 2.70
Exercisable as of March 31, 2014	2,897,049
Exercisable as of March 31, 2014	$ 2.45
Forfeited /expired	(35,000)
Forfeited /expired	$ 2.31

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Note 5 - Intangible Assets (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Note 5 - Intangible Assets (Details) [Line Items]
Amortization of Intangible Assets (in Dollars)	$ 585,026	$ 752,600
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	1 month
Maximum [Member]
Note 5 - Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Assets, Remaining Amortization Period	37 months

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Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (USD $)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2013	$ 66,425	$ 154,171,695	$ (88,144,179)	$ 66,093,941
Shares (in Shares) at Dec. 31, 2013	66,424,561
Issuance of common stock under employee stock purchase plan	5	12,880		12,885
Issuance of common stock under employee stock purchase plan (in Shares)	5,483
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
Stock-based compensation for options		290,351		290,351
Net loss			(6,509,807)	(6,509,807)
Balance at Mar. 31, 2014	$ 66,445	$ 154,474,911	$ (94,653,986)	$ 59,887,370
Shares (in Shares) at Mar. 31, 2014	66,445,044

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Note 4 - Property and Equipment

3 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 4.    Property and Equipment

Property and equipment is comprised of:

	March 31, 2014		December 31, 2013
Network and base station equipment	$	33,092,603	$	32,233,262
Customer premise equipment		24,838,433		24,244,017
Shared wireless infrastructure		20,098,809		19,128,064
Information technology		4,517,495		4,417,869
Furniture, fixtures and other		1,667,779		1,661,567
Leasehold improvements		1,441,001		1,433,984
		85,656,120		83,118,763
Less: accumulated depreciation		47,744,294		44,633,905
Property and equipment, net	$	37,911,826	$	38,484,858

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

	March 31, 2014		December 31, 2013
Network and base station equipment	$	828,027	$	828,027
Shared wireless infrastructure		1,216,142		1,216,142
Customer premise equipment		96,843		96,843
Information technology		1,860,028		1,860,028
		4,001,040		4,001,040
Less: accumulated depreciation		1,533,718		1,333,666
Property acquired through capital leases, net	$	2,467,322	$	2,667,374

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Note 13 - Commitments (Details) - Total Future Capital Lease Obligations (USD $)	Mar. 31, 2014	Dec. 31, 2013
Total Future Capital Lease Obligations [Abstract]
Remainder of 2014	$ 734,919
2015	908,344
2016	655,754
2017	391,305
2018	53,923
	2,744,245
Less: Interest expense	364,147
Total capital lease obligations	2,380,098
Current	773,415	783,051
Long-term	$ 1,606,683	$ 1,805,336

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Note 6 - Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2014

Accrued Liabilities Disclosure [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

	March 31, 2014		December 31, 2013
Property and equipment	$	524,529	$	867,311
Payroll and related		673,108		937,624
Professional services		241,345		186,917
Network		126,744		138,684
Marketing		94,842		108,741
Other		175,532		293,402
Total	$	1,836,100	$	2,532,679

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Note 3 - Business Acquisitions (Details) - Unaudited Pro Forma Consolidated Results of Operations (USD $)	3 Months Ended
	Mar. 31, 2013
Unaudited Pro Forma Consolidated Results of Operations [Abstract]
Revenues	$ 8,411,793
Amortization expense	817,979
Total operating expenses	14,999,721
Net loss	$ (5,685,715)
Basic net loss per share (in Dollars per share)	$ (0.09)

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Note 14 - Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 14. 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 include 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 March 31, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,685,526	$	740,349		$	-		$	(45,969	)	$	8,379,906
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,498,693		3,388,951			14,269			(45,969	)		5,855,944
Depreciation and amortization		2,537,873		940,938			216,604			-			3,695,415
Customer support services		268,515		176,190			727,430			-			1,172,135
Sales and marketing		1,263,137		76,750			81,712			-			1,421,599
General and administrative		108,425		146,528			2,422,986			-			2,677,939
Total Operating Expenses		6,676,643		4,729,357			3,463,001			(45,969	)		14,823,032
Operating Income (Loss)	$	1,008,883	$	(3,989,008	)	$	(3,463,001	)	$	-		$	(6,443,126	)
Capital expenditures	$	1,486,450	$	938,053		$	112,854		$	-		$	2,537,357
As of March 31, 2014
Property and equipment, net	$	22,570,307	$	12,832,453		$	2,509,066		$	-		$	37,911,826
Total assets	$	28,562,095	$	15,336,248		$	23,822,352		$	-		$	67,720,695

	Three Months Ended March 31, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	8,186,736	$	158,476		$	-		$	(45,989	)	$	8,299,223
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,334,145		2,650,885			42,265			(45,989	)		4,981,306
Depreciation and amortization		2,819,609		864,112			187,366			-			3,871,087
Customer support services		275,075		244,522			877,297			-			1,396,894
Sales and marketing		1,296,941		47,048			96,867			-			1,440,856
General and administrative		146,897		190,184			2,800,518			-			3,137,599
Total Operating Expenses		6,872,667		3,996,751			4,004,313			(45,989	)		14,827,742
Operating Income (Loss)	$	1,314,069	$	(3,838,275	)	$	(4,004,313	)	$	-		$	(6,528,519	)
Capital expenditures	$	1,087,472	$	136,200		$	103,293		$	-		$	1,326,965
As of March 31, 2013
Property and equipment, net	$	25,641,570	$	13,275,065		$	2,057,627		$	-		$	40,974,262
Total assets	$	34,427,109	$	15,556,795		$	42,494,289		$	-		$	92,478,193