10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 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	20-8259086
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
88 Silva Lane
Middletown, Rhode Island	02842
(Address of principal executive offices)	(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

As of November 6, 2014, there were 66,650,752 shares of common stock, par value $0.001 per share, outstanding.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

Table of Contents

		Pages
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
	Condensed Consolidated Balance Sheets as of  September 30, 2014 (unaudited) and December 31, 2013	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013 (unaudited)	2
	Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2014 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013 (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5-15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16-28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	29
Item 4.	Controls and Procedures.	29
Part II	OTHER INFORMATION
Item 1A.	Risk Factors.	30
Item 6.	Exhibits.	31

i 

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited) September 30, 2014			December 31, 2013
Assets
Current Assets
Cash and cash equivalents	$	11,890,770		$	28,181,531
Accounts receivable, net		1,046,736			611,548
Prepaid expenses and other current assets		1,431,720			925,587
Total Current Assets		14,369,226			29,718,666
Property and equipment, net		35,382,147			38,484,858
Intangible assets, net		2,297,926			3,088,827
Goodwill		1,674,281			1,674,281
Other assets		1,751,100			1,950,835
Total Assets	$	55,474,680		$	74,917,467
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	603,937		$	1,241,743
Accrued expenses		2,229,030			2,532,679
Deferred revenues		1,263,456			1,396,780
Current maturities of capital lease obligations		775,817			783,051
Other		54,340			67,255
Total Current Liabilities		4,926,580			6,021,508
Long-Term Liabilities
Capital lease obligations, net of current maturities		1,249,126			1,805,336
Other		1,596,477			996,682
Total Long-Term Liabilities		2,845,603			2,802,018
Total Liabilities		7,772,183			8,823,526
Commitments (Note 12)
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; 66,650,752 and 66,424,561 shares issued and outstanding, respectively		66,651			66,425
Additional paid-in-capital		154,938,511			154,171,695
Accumulated deficit		(107,302,665	)		(88,144,179	)
Total Stockholders' Equity		47,702,497			66,093,941
Total Liabilities and Stockholders' Equity	$	55,474,680		$	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 September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues	$	8,301,604		$	8,400,664		$	24,946,358		$	24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)		6,210,920			5,444,298			18,168,776			15,591,890
Depreciation and amortization		3,318,395			3,846,644			10,294,872			11,653,557
Customer support services		1,244,161			1,221,076			3,563,571			3,799,687
Sales and marketing		1,353,015			1,368,628			4,173,703			4,333,288
General and administrative		2,381,586			2,600,168			7,726,523			8,373,800
Total Operating Expenses		14,508,077			14,480,814			43,927,445			43,752,222
Operating Loss		(6,206,473	)		(6,080,150	)		(18,981,087	)		(18,840,161	)
Other Income/(Expense)
Interest expense, net		(43,970	)		(59,613	)		(166,509	)		(153,897	)
Gain on business acquisition		-			-			-			1,004,099
Other income (expense), net		(3,630	)		(3,630	)		(10,890	)		(10,890	)
Total Other Income/(Expense)		(47,600	)		(63,243	)		(177,399	)		839,312
Net Loss	$	(6,254,073	)	$	(6,143,393	)	$	(19,158,486	)	$	(18,000,849	)
Net loss per common share – basic and diluted	$	(0.09	)	$	(0.09	)	$	(0.29	)	$	(0.28	)
Weighted average common shares outstanding – basic and diluted		66,643,804			66,402,499			66,521,267			64,764,085

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

2

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

For the Nine Months Ended September 30, 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
Cashless exercise of options		192,270		192		(192	)		-			-
Issuance of common stock under employee stock purchase plan		18,921		19		35,740			-			35,759
Issuance of common stock upon vesting of restricted stock awards		15,000		15		(15	)		-			-
Stock-based compensation for options		-		-		735,076			-			735,076
Fair value of options repurchased		-		-		(3,793	)		-			(3,793	)
Net loss		-		-		-			(19,158,486	)		(19,158,486	)
Balance at September 30, 2014		66,650,752	$	66,651	$	154,938,511		$	(107,302,665	)	$	47,702,497

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

3

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2014			2013
Cash Flows From Operating Activities
Net loss	$	(19,158,486	)	$	(18,000,849	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts		192,000			70,000
Depreciation for property, plant and equipment		9,503,971			9,264,999
Amortization for customer based intangibles		790,901			2,388,558
Stock-based compensation		740,405			939,200
Gain on business acquisition		-			(1,004,099	)
Loss on sale and disposition of property and equipment		-			81,824
Deferred rent		271,455			(86,820	)
Changes in operating assets and liabilities:
Accounts receivable		(627,188	)		(250,270	)
Prepaid expenses and other current assets		(506,133	)		(100,310	)
Other assets		213,407			353,130
Accounts payable		(637,806	)		(471,399	)
Accrued expenses		(690,097	)		(1,411,797	)
Deferred revenues		(133,324	)		(137,859	)
Total Adjustments		9,117,591			9,635,157
Net Cash Used In Operating Activities		(10,040,895	)		(8,365,692	)
Cash Flows From Investing Activities
Acquisitions of property and equipment		(5,981,608	)		(3,896,628	)
Lease incentive payment from landlord		380,000			-
Acquisition of a business, net of cash acquired		-			(222,942	)
Proceeds from sale of property and equipment		-			14,779
Payments of security deposits		(13,672	)		(39,154	)
Deferred acquisition payments		(64,574	)		(124,460	)
Net Cash Used In Investing Activities		(5,679,854	)		(4,268,405	)
Cash Flows From Financing Activities
Payments on capital leases		(596,649	)		(571,500	)
Proceeds upon exercise of options		-			292,389
Issuance of common stock under employee stock purchase plan		30,430			55,623
Net proceeds from sale of common stock		-			30,499,336
Fair value of options repurchased		(3,793	)		-
Net Cash (Used In) Provided By Financing Activities		(570,012	)		30,275,848
Net (Decrease) Increase In Cash and Cash Equivalents		(16,290,761	)		17,641,751
Cash and Cash Equivalents – Beginning		28,181,531			15,152,226
Cash and Cash Equivalents – Ending	$	11,890,770		$	32,793,977
Supplemental Disclosures of Cash Flow Information
Cash paid during the periods for:
Interest	$	187,653		$	154,298
Taxes	$	45,685		$	34,072
Non-cash investing and financing activities:
Fair value of common stock issued in connection with an acquisition	$	-		$	951,256
Acquisition of property and equipment:
Under capital leases	$	33,204		$	80,894
Included in accrued expenses	$	386,448		$	780,254

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 one year periods.

In August 2014, the Company executed a master licensing agreement ("MLA") with a carrier for small cell deployments. The MLA establishes the detailed terms and conditions under which individual orders are governed, and are generally designed to expedite the deployment process. The term of this agreement is for 25 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 September 30, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the operating results for the full fiscal year or for any future period.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 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, the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of September 30, 2014, the Company had cash and cash equivalent balances of approximately $1,614,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $10,023,000 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 September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Beginning of period	$	161,863		$	162,678		$	81,009		$	190,109
Additions		75,000			10,000			192,000			70,000
Deductions		(30,995	)		(39,552	)		(67,141	)		(126,983	)
End of period	$	205,868		$	133,126		$	205,868		$	133,126

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 this 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 the Company’s 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 the Company. During the course of completing five acquisitions, the Company has developed a database of historical experience from prior acquisitions to assist in preparing future estimates of cash flows. Similarly, the Company has used its historical experience in building networks to prepare estimates regarding the fair value of the network assets that it acquires.

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. 

Intrinsic Value of Stock Options and Warrants. The Company calculates the intrinsic value of stock options and warrants as the difference between the closing price of the Company’s common stock at the end of the reporting period and the exercise price of the stock options and warrants.

6

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Recent Accounting Pronouncements. In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers,” which requires an entity to recognize revenue representing the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. ASU 2014-09 is intended to establish principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenues and cash flows arising from the entity’s contracts with customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The Company is currently evaluating the effect that ASU 2014-09 will have on its condensed consolidated financial statements and related disclosures.

In June 2014, FASB issued ASU No. 2014-12 (“ASU 2014-12”), “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which requires a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. ASU 2014-12 states that the performance target should not be reflected in estimating the grant date fair value of the award. ASU 2014-12 clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the periods for which the requisite service has already been rendered. The new standard is effective for the Company on January 1, 2016. The Company does not expect adoption of ASU 2014-12 to have a significant impact on its condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014–15 (“ASU 2014-15”), “Presentation of Financial Statements – Going Concern.”  ASU 2014-15 provides GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued.  ASU 2014-15 is the final version of Proposed ASU No. 2013–300 “Presentation of Financial Statements (Topic 205): Disclosure of Uncertainties about an Entity’s Going Concern Presumption,” which has been deleted. The Company does not expect the adoption of ASU 2014–15 to have a significant impact on its 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’s condensed consolidated financial statements. These reclassifications have no effect on the previously reported net loss.

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

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.

	Original			Adjustments			Final
Fair value of consideration transferred:
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

7

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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

In May 2013, the Company finalized the purchase price of Delos 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.

The Company incurred approximately $99,000 of third-party costs in connection with the Delos acquisition for the nine month ended September 30, 2013.  There were no third-party costs incurred by the Company in connection with the Delos acquisition for the three months ended September 30, 2013. These expenses are included in the general and administrative expenses in the Company’s condensed consolidated statements of operations.

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:

	Nine Months Ended September 30, 2013
Revenues	$	25,024,631
Amortization expense		2,453,937
Total operating expenses		43,924,201
Net loss		(18,060,258	)
Basic net loss per share	$	(0.28	)

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

Note 4.    Property and Equipment

Property and equipment is comprised of:

	September 30, 2014		December 31, 2013
Network and base station equipment	$	35,373,208	$	32,233,262
Customer premise equipment		25,278,981		24,244,017
Shared wireless infrastructure		21,014,018		19,128,064
Information technology		4,586,445		4,417,869
Furniture, fixtures and other		1,667,978		1,661,567
Leasehold improvements		1,599,393		1,433,984
		89,520,023		83,118,763
Less: accumulated depreciation		54,137,876		44,633,905
Property and equipment, net	$	35,382,147	$	38,484,858

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TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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

	September 30, 2014		December 31, 2013
Network and base station equipment	$	861,231	$	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
		4,034,244		4,001,040
Less: accumulated depreciation		1,933,822		1,333,666
Property acquired through capital leases, net	$	2,100,422	$	2,667,374

Note 5. Intangible Assets

Intangible assets consist of the following:

	September 30, 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		10,842,756		10,051,855
Customer relationships, net		1,013,371		1,804,272
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	2,297,926	$	3,088,827

Amortization expense for the three months ended September 30, 2014 and 2013 was $98,068 and $817,979, respectively. Amortization expense for the nine months ended September 30, 2014 and 2013 was $790,901 and $2,388,558, respectively. The customer contracts acquired in the Company’s acquisition of Delos are being amortized over a 50 month period ending April 2017. As of September 30, 2014, the remaining amortization period for the Delos acquisition was 31 months. Balances related to the Company’s other acquisitions have been fully amortized. Future amortization expense is as follows:

Remainder of 2014	$	98,068
2015		392,272
2016		392,272
2017		130,759
	$	1,013,371

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

Note 6. Accrued Expenses

Accrued expenses consist of the following:

	September 30, 2014		December 31, 2013
Payroll and related	$	1,125,257	$	937,624
Property and equipment		386,448		867,311
Professional services		302,095		186,917
Other		187,811		293,402
Network		149,164		138,684
Marketing		78,255		108,741
Total	$	2,229,030	$	2,532,679

9

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Network represents costs incurred to provide services to the Company’s customers including tower rentals, bandwidth, troubleshooting and gear removal.

Note 7.    Other Liabilities

Other liabilities consist of the following:

	September 30, 2014		December 31, 2013
Current
Deferred rent	$	43,351	$	-
Deferred acquisition payments		10,989		67,255
Total	$	54,340	$	67,255
Long-Term
Deferred rent	$	1,270,464	$	662,361
Deferred acquisition payments		3,208		11,516
Deferred taxes		322,805		322,805
Total	$	1,596,477	$	996,682

Deferred acquisition payments related to Delos totaled $14,197 at September 30, 2014 and bear interest at a rate of 7%. In May 2014, the Company made its last deferred acquisition payment of $16,630 related to the acquisition of Pipeline Wireless LLC.

Note 8. Stock Options and Warrants

Stock Options

The Company uses the Black-Scholes option pricing model on the date of grant to value options issued to employees, directors and consultants. Compensation expense, including the effect of forfeitures, is recognized over the period of service, generally the vesting period. Stock compensation expense and the weighted average assumptions used to calculate the fair values of stock options granted during the periods indicated were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Risk-free interest rate		1.7%-1.8	%		1.9	%		1.6%-1.8	%		0.8%-1.9	%
Expected volatility		59	%		68	%		47%-59	%		65%-68	%
Expected life (in years)		5.3			6			5.3			5-6.5
Expected dividend yield		-			-			-			-
Weighted average per share grant date fair value	$	0.75		$	1.42		$	0.80		$	1.44
Stock-based compensation	$	183,844		$	253,813		$	735,076		$	885,116

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. 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 $1,113,205 as of September 30, 2014 which will be recognized over a weighted-average period of 1.7 years.

Option transactions under the stock option plans during the nine months ended September 30, 2014 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2013		4,055,016		$	2.70
Granted during 2014		372,073		$	1.70
Exercised		(340,906	)	$	0.74
Forfeited /expired		(184,869	)	$	2.51
Outstanding as of September 30, 2014		3,901,314		$	2.78
Exercisable as of September 30, 2014		2,882,066		$	2.69

10

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

In June 2014, the Company made its annual grant to the Board of Directors consisting of 200,000 options with an exercise price of $1.93 vesting monthly through June 2015.

In July 2014, the Company granted to its two executive officers 47,073 options with an exercise price of $1.67 vesting monthly over a two year period.

In September 2014, the Company granted to its two executive officers 125,000 options with an exercise price of $1.34 vesting quarterly over a two year period.

A total of 340,906 options were exercised on a cashless basis during the nine months ended September 30, 2014 resulting in the net issuance of 192,270 shares. There were no other options exercised during the nine months ended September 30, 2014.

Cancellations for the three and nine months ended September 30, 2014 were 74,064 and 184,869, respectively. Cancellations related to employee terminations except for 14,250 options which were repurchased during the nine months ended September 30, 2014.

The weighted average remaining contractual life of the outstanding options as of September 30, 2014 was 5.8 years.

The intrinsic value of outstanding and exercisable options totaled $196,892 and $179,392 respectively, as of September 30, 2014.

Stock Warrants 

There were 450,000 warrants outstanding and exercisable at September 30, 2014 and December 31, 2013 with an exercise price of $5.00 and an expiration date in July 2016.

       The warrants had no intrinsic value at September 30, 2014.

Cashless Exercises

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

Note 9. 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 105,543 shares have been issued to date and 94,457 shares are available for future issuance. During the three and nine months ended September 30, 2014, a total of 6,948 and 18,921 shares were issued under the ESPP Plan with a fair value of $10,283 and $35,759, respectively. The Company recognized $1,529 and $5,329 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2014, respectively. The Company recognized $3,236 and $9,759 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2013, respectively.

Note 10. Fair Value Measurement

Valuation Hierarchy

The accounting standard of the FASB 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.

11

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Cash and cash equivalents are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. There were no changes in the valuation techniques during the nine months ended September 30, 2014.

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2014	$	11,890,770	$	11,890,770	$	-	$	-
December 31, 2013	$	28,181,531	$	28,181,531	$	-	$	-

Note 11.    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. The following common stock equivalents were excluded from the computation of diluted net loss per common share because they were anti-dilutive. The exercise or issuance of these common stock equivalents outstanding at September 30, 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 million if exercised by the holder for cash.

Stock options	3,901,314
Warrants	450,000
Total	4,351,314

Note 12.    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 August 2023. Certain of these operating leases include extensions, at the Company's option, for additional terms ranging from 1 to 25 years. Amounts associated with the extension periods have not been included in the table below as it is not presently determinable which options, if any, the Company will elect to exercise. As of September 30, 2014, total future operating lease obligations were as follows:

Remainder of 2014	$	5,182,797
2015		19,758,856
2016		18,300,039
2017		12,639,857
2018		5,160,998
Thereafter		2,779,175
	$	63,821,722

Rent expenses were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Points of Presence	$	1,939,574	$	1,767,441	$	5,732,922	$	5,108,347
Street level rooftops		3,359,804		2,707,304		9,752,720		7,757,206
Corporate offices		84,109		121,518		252,328		366,794
Other		88,211		102,039		273,928		327,268
	$	5,471,698	$	4,698,302	$	16,011,898	$	13,559,615

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 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.

12

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Capital Lease Obligations

The Company has entered into capital leases to acquire property and equipment expiring through March 2018. As of September 30, 2014, total future capital lease obligations were as follows:

Remainder of 2014	$	238,464
2015		921,437
2016		668,847
2017		401,125
2018		53,922
	$	2,283,795
Less: Interest expense		258,852
Total capital lease obligations	$	2,024,943
Current	$	775,817
Long-term	$	1,249,126

Other

During the fourth quarter of 2013, the Company renewed a one year information technology infrastructure support agreement which 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 13.    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. Inter-segment 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 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 the Company’s operating segments:

	Three Months Ended September 30, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,553,609	$	793,964		$	-		$	(45,969	)	$	8,301,604
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,631,572		3,609,807			15,510			(45,969	)		6,210,920
Depreciation and amortization		1,980,519		1,013,693			324,183			-			3,318,395
Customer support services		342,288		147,379			754,494			-			1,244,161
Sales and marketing		1,239,446		38,261			75,308			-			1,353,015
General and administrative		63,686		163,125			2,154,775			-			2,381,586
Total Operating Expenses		6,257,511		4,972,265			3,324,270			(45,969	)		14,508,077
Operating Income (Loss)	$	1,296,098	$	(4,178,301	)	$	(3,324,270	)	$	-		$	(6,206,473	)
Capital expenditures	$	1,154,281	$	589,883		$	21,603		$	-		$	1,765,767

13

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	Three Months Ended September 30, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,910,377	$	535,936		$	-		$	(45,649	)	$	8,400,664
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,510,278		2,956,914			22,755			(45,649	)		5,444,298
Depreciation and amortization		2,754,675		857,739			234,230			-			3,846,644
Customer support services		339,206		208,491			673,379			-			1,221,076
Sales and marketing		1,206,125		80,956			81,547			-			1,368,628
General and administrative		126,256		151,561			2,322,351			-			2,600,168
Total Operating Expenses		6,936,540		4,255,661			3,334,262			(45,649	)		14,480,814
Operating Income (Loss)	$	973,837	$	(3,719,725	)	$	(3,334,262	)	$	-		$	(6,080,150	)
Capital expenditures	$	1,242,975	$	680,324		$	200,347		$	-		$	2,123,646

	Nine Months Ended September 30, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	22,811,582	$	2,272,683		$	-		$	(137,907	)	$	24,946,358
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,750,725		10,512,098			43,860			(137,907	)		18,168,776
Depreciation and amortization		6,598,893		2,932,592			763,387			-			10,294,872
Customer support services		878,764		502,342			2,182,465			-			3,563,571
Sales and marketing		3,754,707		177,874			241,122			-			4,173,703
General and administrative		374,164		467,290			6,885,069			-			7,726,523
Total Operating Expenses		19,357,253		14,592,196			10,115,903			(137,907	)		43,927,445
Operating Income (Loss)	$	3,454,329	$	(12,319,513	)	$	(10,115,903	)	$	-		$	(18,981,087	)
Capital expenditures	$	4,044,135	$	2,018,334		$	338,791		$	-		$	6,401,260
As of September 30, 2014
Property and equipment, net	$	21,340,927	$	11,753,330		$	2,287,890		$	-		$	35,382,147
Total assets	$	26,293,518	$	14,232,594		$	14,948,568		$	-		$	55,474,680

14

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	Nine Months Ended September 30, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	24,158,268	$	890,920		$	-		$	(137,127	)	$	24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,229,469		8,404,925			94,623			(137,127	)		15,591,890
Depreciation and amortization		8,411,263		2,633,176			609,118			-			11,653,557
Customer support services		900,349		587,389			2,311,949			-			3,799,687
Sales and marketing		3,825,299		239,213			268,776			-			4,333,288
General and administrative		443,863		486,495			7,443,442			-			8,373,800
Total Operating Expenses		20,810,243		12,351,198			10,727,908			(137,127	)		43,752,222
Operating Income (Loss)	$	3,348,025	$	(11,460,278	)	$	(10,727,908	)	$	-		$	(18,840,161	)
Capital expenditures	$	3,358,758	$	1,049,344		$	349,674		$	-		$	4,757,776
As of September 30, 2013
Property and equipment, net	$	23,870,843	$	12,439,779		$	1,875,461		$	-		$	38,186,083
Total assets	$	30,590,803	$	14,881,500		$	34,776,782		$	-		$	80,249,085

Note 14. Subsequent Events

   In October 2014, the Company entered into a loan agreement (the “Loan Agreement”) with Melody Business Finance, LLC (the “Lender”). The Lender will provide the Company with a five-year $35 million secured term loan (the “Financing”). Pursuant to the terms of the Loan Agreement, the loan bears interest at a rate equal to the greater of (i) the sum of the most recently effective one month Libor as in effect on each payment date plus 7% or (ii) 8% per annum, and additional paid in kind (“PIK”), or deferred, interest that shall accrue at 4% per annum.

The aggregate principal amount outstanding plus all accrued and unpaid interest is due in October 2019. The Company has the option of making principal payments (i) on or before October 16, 2016 (the “Second Anniversary”) but only for the full amount outstanding and (ii) after the Second Anniversary in minimum amount(s) of $5 million.

   In connection with the Loan Agreement and pursuant to a Warrant and Registration Rights Agreement, the Company issued warrants (the “Warrants”) to purchase 3.6 million shares of common stock of which two-thirds have an exercise price of $1.26 and one-third have an exercise price of $0.01, subject to standard antidilution provisions. The Warrants have a term of seven and a half years. The Company has agreed to include the shares of common stock underlying the Warrants in a registration statement that must be filed no later than the one year anniversary of the Loan Agreement. If, following the one year anniversary, the registration statement is not declared effective, the Company will pay the warrant holders liquidated damages in the aggregate amount of $5,000 per month, with maximum liquidated damages of $50,000, until the registration statement has become effective.

15

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

The following discussion and analysis summarizes the significant factors affecting our condensed consolidated results of operations, financial condition and liquidity position for the nine months ended September 30, 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.

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.

16

Customer support services include salaries and related payroll costs associated with our customer support services, customer care, 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 September 30, 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.

17

Three months ended September 30, 2014

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs			Adjusted Market EBITDA
Los Angeles	$	2,016,888	$	543,967	$	1,472,921		$	513,935		$	958,986
New York		1,949,316		724,148		1,225,168			348,283			876,885
Boston		1,363,282		397,754		965,528			201,988			763,540
Chicago		722,474		298,883		423,591			111,998			311,593
Las-Vegas-Reno		338,417		126,312		212,105			1,114			210,991
Miami		357,315		116,987		240,328			50,620			189,708
Houston		178,249		71,171		107,078			10,050			97,028
Dallas-Fort Worth		155,612		96,015		59,597			19,545			40,052
San Francisco		270,055		125,070		144,985			105,417			39,568
Seattle		74,418		44,696		29,722			(3,434	)		33,156
Providence-Newport		56,279		53,874		2,405			1,746			659
Philadelphia		25,335		32,695		(7,360	)		4,246			(11,606	)
Total	$	7,507,640	$	2,631,572	$	4,876,068		$	1,365,508		$	3,510,560

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	3,510,560
Fixed wireless, non-market specific
Other expenses		(279,912	)
Depreciation and amortization		(1,980,519	)
Shared wireless infrastructure, net		(4,132,332	)
Corporate		(3,324,270	)
Other income (expense)		(47,600	)
Net loss	$	(6,254,073	)

Three months ended September 30, 2013

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Boston	$	1,632,918	$	361,630	$	1,271,288		$	196,340	$	1,074,948
Los Angeles		2,020,905		549,122		1,471,783			418,928		1,052,855
New York		1,914,892		635,865		1,279,027			293,841		985,186
Chicago		779,457		284,498		494,959			135,484		359,475
Miami		383,462		119,758		263,704			132,562		131,142
San Francisco		311,765		127,717		184,048			80,345		103,703
Las Vegas-Reno		251,167		127,045		124,122			51,798		72,324
Houston		153,727		65,566		88,161			22,746		65,415
Providence-Newport		115,246		49,954		65,292			11,472		53,820
Dallas-Fort Worth		174,095		101,718		72,377			64,619		7,758
Seattle		83,019		48,334		34,685			27,405		7,280
Nashville		4,902		15,359		(10,457	)		1,804		(12,261	)
Philadelphia		39,173		23,712		15,461			31,159		(15,698	)
Total	$	7,864,728	$	2,510,278	$	5,354,450		$	1,468,503	$	3,885,947

18

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

Nine months ended September 30, 2014

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Los Angeles	$	6,052,647	$	1,678,286	$	4,374,361		$	1,451,033	$	2,923,328
New York		5,815,345		2,044,692		3,770,653			964,342		2,806,311
Boston		4,346,847		1,195,300		3,151,547			588,665		2,562,882
Chicago		2,182,059		885,682		1,296,377			381,365		915,012
Miami		1,107,265		337,978		769,287			224,265		545,022
Las-Vegas-Reno		819,169		369,667		449,502			99,524		349,978
Houston		524,596		195,183		329,413			65,662		263,751
San Francisco		831,018		376,525		454,493			254,237		200,256
Dallas-Fort Worth		482,736		289,727		193,009			114,985		78,024
Seattle		214,245		140,426		73,819			13,944		59,875
Providence-Newport		201,137		152,317		48,820			4,770		44,050
Philadelphia		94,708		72,300		22,408			25,070		(2,662	)
Nashville		1,903		12,642		(10,739	)		2,331		(13,070	)
Total	$	22,673,675	$	7,750,725	$	14,922,950		$	4,190,193	$	10,732,757

Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
Adjusted market EBITDA	$	10,732,757
Fixed wireless, non-market specific
Other expenses		(817,442	)
Depreciation and amortization		(6,598,893	)
Shared wireless infrastructure, net		(12,181,606	)
Corporate		(10,115,903	)
Other income (expense)		(177,399	)
Net loss	$	(19,158,486	)

Nine months ended September 30, 2013

Market	Revenues		Cost of Revenues		Gross Margin			Operating Costs		Adjusted Market EBITDA
Los Angeles	$	6,137,710	$	1,562,383	$	4,575,327		$	1,210,148	$	3,365,179
Boston		4,930,604		1,047,995		3,882,609			656,367		3,226,242
New York		5,740,805		1,869,032		3,871,773			1,002,173		2,869,600
Chicago		2,512,670		856,002		1,656,668			362,409		1,294,259
Miami		1,151,525		324,411		827,114			302,437		524,677
Las Vegas-Reno		913,230		399,685		513,545			149,622		363,923
San Francisco		934,437		341,833		592,604			283,345		309,259
Houston		386,965		143,864		243,101			65,675		177,426
Providence-Newport		356,342		148,797		207,545			48,672		158,873
Seattle		313,758		140,719		173,039			90,503		82,536
Dallas-Fort Worth		507,795		290,537		217,258			206,418		10,840
Philadelphia		119,165		61,061		58,104			68,971		(10,867	)
Nashville		16,135		43,150		(27,015	)		8,910		(35,925	)
Total	$	24,021,141	$	7,229,469	$	16,791,672		$	4,455,650	$	12,336,022

19

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

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 service 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 markets. The term of the Wi-Fi Agreement is for an initial three year period and provides for automatic renewals for two additional one year periods.

In August 2014, we executed a master licensing agreement ("MLA") with a carrier for small cell deployments. The MLA establishes the detailed terms and conditions under which individual orders are governed, and are generally designed to expedite the deployment process. The term of this agreement is for 25 years.

Supplemental Segment Information

Operating information about each segment in accordance with GAAP is disclosed in Note 13 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 September 30, 2014

	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Total
Operating Income (Loss)	$	1,296,098	$	(4,178,301	)	$	(3,324,270	)	$	(6,206,473	)
Depreciation and amortization		1,980,519		1,013,693			324,183			3,318,395
Stock-based compensation		-		-			185,373			185,373
Loss on non-monetary transactions		67,833		-			-			67,833
Deferred rent		47,932		70,439			(8,807	)		109,564
Adjusted EBITDA		3,392,382		(3,094,169	)		(2,823,521	)		(2,525,308	)
Less: Capital expenditures		1,154,281		589,883			21,603			1,765,767
Net Cash Flow	$	2,238,101	$	(3,684,052	)	$	(2,845,124	)	$	(4,291,075	)

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(2,525,308	)
Depreciation and amortization		(3,318,395	)
Stock-based compensation		(185,373	)
Loss on non-monetary transactions		(67,833	)
Deferred rent		(109,564	)
Operating Income (Loss)		(6,206,473	)
Interest expense, net		(43,970	)
Other income (expense), net		(3,630	)
Net loss	$	(6,254,073	)

20

Reconciliation of Net Cash Flow to Net Cash Used in Operating Activities
Net cash flow	$	(4,291,075	)
Capital expenditures		1,765,767
Changes in operating assets and liabilities, net		(737,288	)
Other, net		(40,434	)
Net cash used in operating activities	$	(3,303,030	)

Three months ended September 30, 2013

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

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(1,876,599	)
Depreciation and amortization		(3,846,644	)
Stock-based compensation		(271,824	)
Loss on property and equipment		(22,689	)
Loss on non-monetary transactions		(62,394	)
Operating Income (Loss)		(6,080,150	)
Interest expense, net		(59,613	)
Other income (expense), net		(3,630	)
Net loss	$	(6,143,393	)

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

21

     Nine Months Ended September 30, 2014

	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Total
Operating Income (Loss)	$	3,454,329	$	(12,319,513	)	$	(10,115,903	)	$	(18,981,087	)
Depreciation and amortization		6,598,893		2,932,592			763,387			10,294,872
Stock-based compensation		-		-			740,405			740,405
Loss on non-monetary transactions		203,231		-			-			203,231
Deferred rent		93,428		204,447			(26,420	)		271,455
Non-recurring expenses, primarily acquisition-related		-		-			91,359			91,359
Adjusted EBITDA		10,349,881		(9,182,474	)		(8,547,172	)		(7,379,765	)
Less: Capital expenditures		4,044,135		2,018,334			338,791			6,401,260
Net Cash Flow	$	6,305,746	$	(11,200,808	)	$	(8,885,963	)	$	(13,781,025	)

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(7,379,765	)
Depreciation and amortization		(10,294,872	)
Stock-based compensation		(740,405	)
Loss on non-monetary transactions		(203,231	)
Deferred rent		(271,455	)
Non-recurring expenses, primarily acquisition-related		(91,359	)
Operating Income (Loss)		(18,981,087	)
Interest expense, net		(166,509	)
Other income (expense), net		(10,890	)
Net loss	$	(19,158,486	)

Reconciliation of Net Cash Flow to Net Cash Used in Operating Activities
Net cash flow	$	(13,781,025	)
Capital expenditures		6,401,260
Non-recurring expenses, primarily acquisition-related		(91,359	)
Changes in operating assets and liabilities, net		(2,381,141	)
Other, net		(188,630	)
Net cash used in operating activities	$	(10,040,895	)

Nine Months Ended September 30, 2013

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

22

Reconciliation of Adjusted EBITDA to Net Loss
Adjusted EBITDA	$	(5,848,213	)
Depreciation and amortization		(11,653,557	)
Stock-based compensation		(939,200	)
Loss on property and equipment		(81,824	)
Loss on non-monetary transactions		(204,552	)
Non-recurring expenses, primarily acquisition-related		(112,815	)
Operating Income (Loss)		(18,840,161	)
Interest expense, net		(153,897	)
Gain on business acquisition		1,004,099
Other income (expense), net		(10,890	)
Net loss	$	(18,000,849	)

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

Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013

Revenues. Revenues totaled $8,301,604 during the three months ended September 30, 2014 compared to $8,400,664 during the three months ended September 30, 2013 representing a decrease of $99,060, or 1%. Revenues for the fixed wireless segment totaled $7,553,609 during the three months ended September 30, 2014 compared to $7,910,377 during the three months ended September 30, 2013 representing a decrease of $356,768, or 5%. The decrease principally related to a 7% decrease in the base of customers billed on a monthly recurring basis. New customer additions have been adversely impacted by a 15% decrease in the number of account executives during the three months ended September 30, 2014 compared to the three months ended September 30, 2013, which we plan to address by opening a second sales center so that personnel can be recruited from an additional geographic area. Revenues for the shared wireless segment totaled $793,964 during the three months ended September 30, 2014 compared to $535,936 during the three months ended September 30, 2013 representing an increase of $258,028, or 48%. The increase was exclusively related to higher revenues generated through a large cable company customer contract.

Average revenue per user (“ARPU”) for the Fixed Wireless segment totaled $769 as of September 30, 2014 compared to $747 as of September 30, 2013 representing an increase of $22, or 3%. The increase in ARPU primarily related to customers upgrading to higher bandwidth service which generates higher monthly recurring revenue. ARPU for new customers totaled $651 during the three months ended September 30, 2014 compared to $648 during the three months ended September 30, 2013 representing an increase of $3, or less than 1%.

Customer churn, calculated as a percent of revenue lost on a monthly basis from customers terminating service or reducing their service level, totaled 1.69% during the three months ended September 30, 2014 compared to 1.71% during the three months ended September 30, 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.

Cost of Revenues.    Cost of revenues totaled $6,210,920 during the three months ended September 30, 2014 compared to $5,444,298 for the three months ended September 30, 2013 representing an increase of $766,622, or 14%.On a consolidated basis, higher rent expense represented approximately 113% of the increase with rents for PoPs for the fixed wireless segment increasing by approximately $194,000 and rents for street level rooftops for the shared wireless segment increasing by approximately $680,000. The number of street level rooftops for the shared wireless segment were approximately 20% higher at September 30, 2014 compared to September 30, 2013. On a consolidated basis, gross margin was 25% for the three months ended September 30, 2014 as compared to 35% for the three months ended September 30, 2013 representing a decrease of 10 percentage points with the shared wireless and fixed wireless segments accounting for 8 and 2 of the percentage point decreases, respectively. On a per market basis, approximately $697,000, or 91%, of the increase in cost of revenues occurred in our New York City market which is the second largest market for our fixed wireless segment and where approximately 63% of the street level rooftops for our shared wireless segment are located. Other cost of revenues, including bandwidth and customer network costs, totaled $713,767 during the three months ended September 30, 2014 as compared to $821,208 during the three months ended September 30, 2013 representing a decrease of $107,441, or 13%.

23

Depreciation and Amortization.    Depreciation and amortization totaled $3,318,395 during the three months ended September 30, 2014 compared to $3,846,644 during the three months ended September 30, 2013 representing a decrease of $528,249, or 14%. Depreciation expense totaled $3,220,327 during the three months ended September 30, 2014 compared to $3,028,665 during the three months ended September 30, 2013 representing an increase of $191,662, or 6%.

Amortization expense totaled $98,068 during the three months ended September 30, 2014 compared to $817,979 during the three months ended September 30, 2013 representing a decrease of $719,911, or 88%. 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 related to two acquisitions which hadno amortization in the 2014 period but full amortization in the 2013 period. We recognized zero and $232,953 of amortization expense in the 2014 and 2013 periods, respectively, related to intangible assets associated with One Velocity Inc. (“One Velocity”) which became fully amortized in November 2013. In addition, we recognized zero and $486,958 of amortization expense in the 2014 and 2013 periods, respectively, related to intangible assets associated with Color Broadband Communications (“Color Broadband”) which became fully amortized in April 2014.

Customer Support Services.    Customer support services totaled $1,244,161 during the three months ended September 30, 2014 compared to $1,221,076 during the three months ended September 30, 2013 representing an increase of $23,085, or 2%. The increase was primarily related to higher payroll costs as average headcount totaled 71 during the 2014 period as compared to 67 during the 2013 period.

Sales and Marketing. Sales and marketing expenses totaled $1,353,015 during the three months ended September 30, 2014 compared to $1,368,628 during the three months ended September 30, 2013 representing a decrease of $15,613, or 1%. Compensation related costs, including sales commissions, totaled $917,486 during the 2014 period as compared to $975,548 during the 2013 period representing a decrease of $58,062, or 6%. Average headcount totaled 38 during the 2014 period compared to 46 during the 2013 period representing a decrease of 8, or 17%. Advertising costs totaled $284,320 during the 2014 period as compared to $266,566 during the 2013 period representing an increase of $17,754, or 7%.

General and Administrative. General and administrative expenses totaled $2,381,586 during the three months ended September 30, 2014 compared to $2,600,168 during the three months ended September 30, 2013 representing a decrease of $218,582, or 8%. Stock-based compensation totaled $185,373 during the 2014 period compared to $271,824 during the 2013 period representing a decrease of $86,451, or 32%. Stock-based compensation can fluctuate significantly from period to period depending on the timing, quantity and valuation of stock option grants. Professional services costs totaled $260,245 during the 2014 period compared to $361,013 during the 2013 period representing a decrease of $100,768, or 28%. The decrease primarily related to higher legal fees for FCC matters during the 2013 period. Facilities expense totaled $103,008 during the 2014 period compared to $166,811 during the 2013 period representing a decrease of $63,803, or 38%. The Company consolidated its corporate offices from two buildings to one building which has lowered its facilities costs. Insurance expense totaled $112,184 during the 2014 period compared to $69,552 during the 2013 period representing an increase of $42,632, or 61%. The increase primarily related to higher workers' compensation premiums.

Interest Expense, Net.  Interest expense, net totaled $43,970 during the three months ended September 30, 2014 compared to $59,613 during the three months ended September 30, 2013 representing a decrease of $15,643, or 26%.

Net Loss.  Net loss totaled $6,254,073 during the three months ended September 30, 2014 compared to $6,143,393 during the three months ended September 30, 2013 representing an increase of $110,680, or 2%. Revenues decreased by $99,060, or 1%, while operating expenses increased by $27,263, or less than 1%. In addition, non-operating expense totaled $47,600 during the three months ended September 30, 2014 compared with non-operating expense of $63,243 during the three months ended September 30, 2013.

Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

Revenues. Revenues totaled $24,946,358 during the nine months ended September 30, 2014 compared to $24,912,061 during the nine months ended September 30, 2013 representing an increase of $34,297, or less than 1%. Revenues for the fixed wireless segment totaled $22,811,582 during the nine months ended September 30, 2014 compared to $24,158,268 during the nine months ended September 30, 2013 representing a decrease of $1,346,686, or 6%.   The decrease principally related to a 6% decrease in the base of customers billed on a monthly recurring basis. New customer additions have been adversely impacted by a 10% decrease in the number of account executives during the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013, which we plan to address by opening a second sales center so that personnel can be recruited from an additional geographic area. Revenues for the shared wireless segment totaled $2,272,683 during the nine months ended September 30, 2014 compared to $890,920 during the nine months ended September 30, 2013 representing an increase of $1,381,763, or greater than 100%. The increase was primarily related to higher revenues generated through a large cable company customer contract.

24

Cost of Revenues.    Cost of revenues totaled $18,168,776 during the nine months ended September 30, 2014 compared to $15,591,890 during the nine months ended September 30, 2013 representing an increase of $2,576,886, or 17%. On a consolidated basis, higher rent expense represented approximately 107% of the increase with rents for PoPs for the fixed wireless segment increasing by approximately $605,000 and rents for street level rooftops for the shared wireless segment increasing by approximately $2,139,000. The number of street level rooftops for the shared wireless segment were approximately 20% higher at September 30, 2014 compared to September 30, 2013. On a consolidated basis, gross margin was 27% for the nine months ended September 30, 2014 as compared to 37% for the nine months ended September 30, 2013 representing a decrease of 10 percentage points with the shared wireless and fixed wireless segments accounting for 8 and 2 of the percentage point decreases, respectively. On a per market basis, approximately $1,962,000, or 76%, of the increase in cost of revenues occurred in our New York City market which is the second largest market for our fixed wireless segment and where approximately 63% of the street level rooftops for our shared wireless segment are located. Other cost of revenues, including bandwidth and customer network costs, totaled $2,124,992 during the nine months ended September 30, 2014 as compared to $2,292,612 during the nine months ended September 30, 2013 representing a decrease of $167,620, or 7%.

Depreciation and Amortization.    Depreciation and amortization totaled $10,294,872 during the nine months ended September 30, 2014 compared to $11,653,557 during the nine months ended September 30, 2013 representing a decrease of $1,358,685 or 12%. Depreciation expense totaled $9,503,971 during the nine months ended September 30, 2014 compared to $9,264,999 during the nine months ended September 30, 2013 representing an increase of $238,972, or 3%.

Amortization expense totaled $790,901 during the nine months ended September 30, 2014 compared to $2,388,558 during the nine months ended September 30, 2013 representing a decrease of $1,597,657 or 67%. 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 related to two acquisitions which hadmodest or no amortization in the 2014 period but full amortization in the 2013 period. We recognized zero and $698,860 of amortization expense in the 2014 and 2013 periods, respectively, related to intangible assets associated with One Velocity which became fully amortized in November 2013. In addition, we recognized $496,697 and $1,460,873 of amortization expense in the 2014 and 2013 periods, respectively, related to intangible assets associated with Color Broadband which became fully amortized in April 2014. These decreases were partially offset by higher amortization expense associated with the Delos acquisition which was completed in February 2013, and for which $294,204 was recorded in the 2014 period compared to $228,825 in the 2013 period.

Customer Support Services.    Customer support services totaled $3,563,571 during the nine months ended September 30, 2014 compared to $3,799,687 during the nine months ended September 30, 2013 representing a decrease of $236,116, or 6%. The decrease was primarily related to lower payroll costs as average headcount decreased 4% to 69 during the 2014 period as compared to 72 during the 2013 period.

Sales and Marketing. Sales and marketing expenses totaled $4,173,703 during the nine months ended September 30, 2014 compared to $4,333,288 during the nine months ended September 30, 2013 representing a decrease of $159,585, or 4%. Compensation related costs, including sales commissions, totaled $2,857,407 during the 2014 period as compared to $3,148,792 during the 2013 period representing a decrease of $291,385, or 9%. Average headcount totaled 43 during the 2014 period compared to 48 during the 2013 period representing a decrease of 5, or 10%. Channel commissions totaled $310,957 during the 2014 period as compared to $280,343 during the 2013 period representing an increase of $30,614, or 11%. Advertising costs totaled $869,762 during the 2014 period as compared to $808,854 during the 2013 period representing an increase of $60,908, or 8%.

General and Administrative.  General and administrative expenses totaled $7,726,523 during the nine months ended September 30, 2014 compared to $8,373,800 during the nine months ended September 30, 2013 representing a decrease of $647,277 or 8%. Stock-based compensation totaled $740,405 during the 2014 period compared to $939,200 during the 2013 period representing a decrease of $198,795, or 21%. Stock-based compensation can fluctuate significantly from period to period depending on the timing, quantity and valuation of stock option grants. Professional services costs totaled $887,181 during the 2014 period compared to $1,110,175 during the 2013 period representing a decrease of $222,994, or 20%. The decrease partially related to higher legal fees for the shared wireless segment during the 2013 period, primarily related to our San Francisco network. Facilities expense totaled $306,170 during the 2014 period compared to $475,569 during the 2013 period representing a decrease of $169,399, or 36%. The Company consolidated its corporate offices from two buildings to one building which has lowered its facilities costs. Insurance expense totaled $346,454 during the 2014 period compared to $208,107 during the 2013 period representing an increase of $138,347, or 66%. The increase primarily related to higher workers' compensation premiums.

Interest Expense, Net.    Interest expense, net totaled $166,509 during the nine months ended September 30, 2014 compared to $153,897 during the nine months ended September 30, 2013 representing an increase of $12,612, or 8%.

Gain on Business Acquisition.    There was no gain on business acquisition during the nine months ended September 30, 2014 compared to $1,004,099 during the nine months ended September 30, 2013.  The gain recognized 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.

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Net Loss.    Net loss totaled $19,158,486 during the nine months ended September 30, 2014 compared to $18,000,849 during the nine months ended September 30, 2013 representing an increase of $1,157,637, or 6%. Revenues increased by $34,297, or less than 1%, while operating expenses increased by $175,223, or less than 1%. In addition, non-operating expense totaled $177,399 during the nine months ended September 30, 2014 compared with non-operating income, primarily related to a gain on a business acquisition, of $839,312 during the nine months ended September 30, 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 nine months ended September 30, 2014 and 2013 are described below.

Net Cash Used in Operating Activities.    Net cash used in operating activities for the nine months ended September 30, 2014 totaled $10,040,895 compared to $8,365,692 for the nine months ended September 30, 2013 representing an increase of $1,675,203, or 20%. Cash used in operations for the nine months ended September 30, 2014 totaled $7,659,754 as compared to $6,347,187 for the nine months ended September 30, 2013 representing an increase of $1,312,567, or 21%. The increase primarily related to higher cost of revenues in the 2014 period related to increased rent expense for both business segments. 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 $2,381,141 during the nine months ended September 30, 2014 as compared to using cash of $2,018,505 during the nine months ended September 30, 2013 representing an increase of $362,636, or 18%.

Net Cash Used in Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2014 totaled $5,679,854 compared to $4,268,405 for the nine months ended September 30, 2013 representing an increase of $1,411,449, or 33%. Cash capital expenditures for the fixed wireless segment increased from $3,027,247 in the 2013 period to $3,724,092 in the 2014 period representing an increase of $696,845, or 23%. Cash capital expenditures for the shared wireless infrastructure segment increased from $777,359 in the 2013 period to $1,971,791 in the 2014 period representing an increase of $1,194,432, or greater than 100%. Capital expenditures for both business segments can fluctuate from period to period depending upon the number of customer additions and upgrades, network construction activity related to increasing capacity or coverage, and other related reasons.  In addition, we received an incentive payment of $380,000 in the 2014 period 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 nine months ended September 30, 2014 totaled $570,012 compared to net cash provided by financing activities of $30,275,848 for the nine months ended September 30, 2013 representing a decrease of $30,845,860, or greater than 100%. The decrease was primarily related to net proceeds of $30,499,336 received in the first quarter of 2013 from the sale of 11,000,000 shares of our common stock at a public offering price of $3.00 per share.

Acquisition of Delos. In February 2013, we completed the acquisition of Delos which was based in 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 $30,499,336, after underwriting discounts, commissions and offering expenses.

Debt Financing. In October 2014, we entered into a loan agreement (the “Loan Agreement”) with Melody Business Finance, LLC (the “Lender”). The Lender will provide us with a five-year $35 million secured term loan (the “Financing”). Pursuant to the terms of the Loan Agreement, the loan bears interest at a rate equal to the greater of (i) the sum of the most recently effective one month Libor as in effect on each payment date plus 7% or (ii) 8% per annum, and additional paid in kind (“PIK”), or deferred, interest that shall accrue at 4% per annum.

The aggregate principal amount outstanding plus all accrued and unpaid interest is due in October 2019. The Company has the option of making principal payments (i) on or before October 16, 2016 (the “Second Anniversary”) but only for the full amount outstanding and (ii) after the Second Anniversary in minimum amount(s) of $5 million.

In connection with the Loan Agreement and pursuant to a Warrant and Registration Rights Agreement, we issued warrants (the “Warrants”) to purchase 3.6 million shares of common stock of which two-thirds have an exercise price of $1.26 and one-third have an exercise price of $0.01, subject to standard antidilution provisions. The Warrants have a term of seven and a half years. We have agreed to include the shares of common stock underlying the Warrants in a registration statement that must be filed no later than the one year anniversary of the Loan Agreement. If, following the one year anniversary, the registration statement is not declared effective, we will pay the warrant holders liquidated damages in the aggregate amount of $5,000 per month, with maximum liquidated damages of $50,000, until the registration statement has become effective.

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Capital Resources.    As of September 30, 2014, we had cash and cash equivalents of $11,890,770 and working capital of $9,442,646. In October 2014, we raised gross proceeds of $35,000,000 in the Financing. Based on our current operating activities and plans, we believe our capital resources at the end of September 30, 2014, combined with proceeds from the Financing, 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 September 30, 2014:

	Payments due by period
	Total		2014		2015		2016		2017		2018		Thereafter
Capital leases	$	2,283,795	$	238,464	$	921,437	$	668,847	$	401,125	$	53,922	$	-
Operating leases		63,821,722		5,182,797		19,758,856		18,300,039		12,639,857		5,160,998		2,779,175
Deferred payments		14,876		2,907		11,627		342		-		-		-
Other		242,830		121,415		121,415		-		-		-		-
Total	$	66,363,223	$	5,545,583	$	20,813,335	$	18,969,228	$	13,040,982	$	5,214,920	$	2,779,175

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, cellular towers, office space, and equipment leases under various non-cancelable agreements expiring through August 2023. 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.

Other. During the fourth quarter of 2013, we renewed a one year information technology infrastructure support agreement which 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.

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.

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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 network 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. 

Recent Accounting Pronouncements. In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers,” which requires an entity to recognize revenue representing the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. ASU 2014-09 is intended to establish principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenues and cash flows arising from the entity’s contracts with customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard is effective for us on January 1, 2017. Early application is not permitted. We are currently evaluating the effect that ASU 2014-09 will have on our condensed consolidated financial statements and related disclosures.

In June 2014, FASB issued ASU No. 2014-12 (“ASU 2014-12”), “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which requires a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. ASU 2014-12 states that the performance target should not be reflected in estimating the grant date fair value of the award. ASU 2014-12 clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the periods for which the requisite service has already been rendered. The new standard is effective for us on January 1, 2016. We do not expect adoption of ASU 2014-12 to have a significant impact on our condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014–15 (“ASU 2014-15”), “Presentation of Financial Statements – Going Concern.”  ASU 2014-15 provides GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued.  ASU 2014-15 is the final version of Proposed ASU No. 2013–300 “Presentation of Financial Statements (Topic 205): Disclosure of Uncertainties about an Entity’s Going Concern Presumption,” which has been deleted. We do not expect the adoption of ASU 2014–15 to have a significant 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.’’

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the potential loss arising from adverse changes in market rates and prices.  Our primary market risk relates to interest rates.  At September 30, 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 September 30, 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 nine months ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1A. Risk Factors.

The Company’s Annual Report on Form 10-K filed with the Commission on March 17, 2014, as amended (the “2013 Form 10-K) includes detailed disclosure about the risks faced by the Company’s business. Such risks have not materially changed since December 31, 2013, except as described below. The new risk factors are as a result of the loan agreement we entered with Melody Business Finance, LLC (the “Loan Agreement”). Events or circumstances arising from one or more of these risks, together with the risks we identify in our 2013 Form 10-K, could adversely affect our business, financial condition, operating results and prospects and the value and price of our common stock could decline. The risks identified below and in our 2013 Form 10-K are not intended to be a comprehensive list of all risks we face and additional risks that we may currently view as not material may also impair our business operations and results.

Our cash flows and capital resources may be insufficient to make required payments on our indebtedness and future indebtedness.

Our indebtedness could have important consequences to you. For example, it could:

● make it difficult for us to satisfy our debt obligations;

● make us more vulnerable to general adverse economic and industry conditions;

● limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other general corporate requirements;

● expose us to interest rate fluctuations because the interest rate on the debt under the Loan Agreement is variable;

● require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for operations and other purposes;

● limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

● place us at a competitive disadvantage compared to competitors that may have proportionately less debt and greater financial resources.

In addition, our ability to make scheduled payments or refinance our obligations depends on our successful financial and operating performance, cash flows and capital resources, which in turn depend upon prevailing economic conditions and certain financial, business and other factors, many of which are beyond our control. These factors include, among others:

● economic and demand factors affecting our industry;

● pricing pressures;

● increased operating costs;

● competitive conditions; and

● other operating difficulties.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. In the event that we are required to dispose of material assets or operations to meet our debt service and other obligations, the value realized on such assets or operations will depend on market conditions and the availability of buyers. Accordingly, any such sale may not, among other things, be for a sufficient dollar amount. Our obligations pursuant to the Loan Agreement are secured by a security interest in all of our assets, exclusive of capital stock of the Company, certain capital leases, certain contracts and certain assets secured by purchase money security interests. The foregoing encumbrances may limit our ability to dispose of material assets or operations. We also may not be able to restructure our indebtedness on favorable economic terms, if at all.

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The Loan Agreement contains various covenants limiting the discretion of our management in operating our business.

The Loan Agreement contains, subject to certain carve-outs, various restrictive covenants that limit our management's discretion in operating our business. In particular, these instruments limit our ability to, among other things:

● incur additional debt;

● grant liens on assets;

● issue capital stock with certain features;

● sell or acquire assets outside the ordinary course of business; and

● make fundamental business changes.

If we fail to comply with the restrictions in the Loan Agreement, a default may allow the Lender to accelerate the related debt and to exercise its remedies under the Loan Agreement and related agreements, which will typically include the right to declare the principal amount of that debt, together with accrued and unpaid interest and other related amounts, immediately due and payable, to exercise any remedies the Lender may have to foreclose on assets that are subject to liens securing that debt and to terminate any commitments they had made to supply further funds. The Loan Agreement governing our indebtedness also contains various covenants that may limit our ability to pay dividends.

Item 6. Exhibits.

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

*Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 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.  

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TOWERSTREAM CORPORATION
Date: November 10, 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)

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EXHIBIT INDEX

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

*Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 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.  

33

EX-31

EXHIBIT 31.1

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

I, Jeffrey M. Thompson, certify that:

(1)		I have reviewed this quarterly report on Form 10-Q of Towerstream Corporation for the quarter ended September 30, 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: November 10, 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 September 30, 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: November 10, 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 September 30, 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: November 10, 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 September 30, 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: November 10, 2014

/s/ Joseph P. Hernon

Joseph P. Hernon
Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

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Note 4 - Property and Equipment (Details) - Property Acquired Through Capital Leases (USD $)	Sep. 30, 2014	Dec. 31, 2013
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	$ 4,034,244	$ 4,001,040
	4,034,244	4,001,040
Less: accumulated depreciation	1,933,822	1,333,666
Property acquired through capital leases, net	2,100,422	2,667,374
Network and Base Station Equipment [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	861,231	828,027
	861,231	828,027
Rooftop Tower Sites [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	1,216,142	1,216,142
	1,216,142	1,216,142
Customer Premise Equipment [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	96,843	96,843
	96,843	96,843
Information Technology [Member]
Capital Leased Assets [Line Items]
Capital Leased Assets, Gross	1,860,028	1,860,028
	$ 1,860,028	$ 1,860,028

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Note 12 - Commitments (Details) - Total Future Operating Lease Obligations (USD $)	Sep. 30, 2014
Total Future Operating Lease Obligations [Abstract]
Remainder of 2014	$ 5,182,797
2015	19,758,856
2016	18,300,039
2017	12,639,857
2018	5,160,998
Thereafter	2,779,175
	$ 63,821,722

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Note 8 - Stock Options and Warrants (Details) - Option Transactions Under the Stock Option Plans (USD $)	9 Months Ended
	Sep. 30, 2014
Option Transactions Under the Stock Option Plans [Abstract]
Outstanding as of	4,055,016
Weighted average exercise price as of	$ 2.70
Exercisable as of September 30, 2014	2,882,066
Exercisable as of September 30, 2014	$ 2.69
Granted during 2014	372,073
Granted during 2014	$ 1.70
Exercised	(340,906)
Exercised	$ 0.74
Forfeited /expired	(184,869)
Forfeited /expired	$ 2.51
Outstanding as of	3,901,314
Weighted average exercise price as of	$ 2.78

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Note 12 - Commitments (Details) - Rent Expenses (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Note 12 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	$ 5,471,698	$ 4,698,302	$ 16,011,898	$ 13,559,615
Points of Presence [Member]
Note 12 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	1,939,574	1,767,441	5,732,922	5,108,347
Street Level Rooftops [Member]
Note 12 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	3,359,804	2,707,304	9,752,720	7,757,206
Corporate Offices [Member]
Note 12 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	84,109	121,518	252,328	366,794
Other Leased Property [Member]
Note 12 - Commitments (Details) - Rent Expenses [Line Items]
Lease and Rental Expense	$ 88,211	$ 102,039	$ 273,928	$ 327,268

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Note 8 - Stock Options and Warrants (Details) (USD $)	3 Months Ended	9 Months Ended			1 Months Ended		9 Months Ended	1 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Warrant [Member]	Sep. 30, 2014 Employee Stock Option [Member] Executives [Member]	Jul. 31, 2014 Employee Stock Option [Member] Two Unspecified Executive Officers [Member]	Sep. 30, 2014 Employee Stock Option [Member]	Jun. 30, 2014 Board of Directors [Member]	Sep. 30, 2014 Executives [Member]	Jul. 31, 2014 Executives [Member]
Note 8 - Stock Options and Warrants (Details) [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)							$ 1,113,205
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition							1 year 255 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		372,073						200,000	125,000	47,073
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price (in Dollars per share)								$ 1.93
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)		$ 1.70							$ 1.34	$ 1.67
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period					2 years	2 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		340,906
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Net of Shares in Lieu of Cash		192,270
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	74,064	184,869
Stock Repurchased During Period, Shares		14,250
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 (in Dollars)	196,892	196,892
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value (in Dollars)	179,392	179,392
Class of Warrant or Right, Outstanding	450,000	450,000	450,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 5.00	$ 5.00	$ 5.00
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Outstanding (in Dollars)				$ 0

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Note 2 - Summary of Significant Accounting Policies (Details) (USD $)	Sep. 30, 2014
Accounting Policies [Abstract]
Cash, Uninsured Amount	$ 1,614,000
Cash, FDIC Insured Amount	250,000
Money Market Funds, at Carrying Value	10,023,000
Cash Securities Investor Protection Corporation Coverage Amount	$ 500,000

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Note 13 - Segment Information (Details)	9 Months Ended
	Sep. 30, 2014
Segment Reporting [Abstract]
Number of Reportable Segments	2

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Note 5 - Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

	September 30, 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		10,842,756		10,051,855
Customer relationships, net		1,013,371		1,804,272
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	2,297,926	$	3,088,827

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

Remainder of 2014	$	98,068
2015		392,272
2016		392,272
2017		130,759
	$	1,013,371

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Note 10 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities (USD $)	Sep. 30, 2014	Dec. 31, 2013
Note 10 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities [Line Items]
Balance as of	$ 11,890,770	$ 28,181,531
Fair Value, Inputs, Level 1 [Member]
Note 10 - Fair Value Measurement (Details) - Fair Value of Assets and Liabilities [Line Items]
Balance as of	$ 11,890,770	$ 28,181,531

XML

Note 5 - Intangible Assets (Details) - Future Amortization Expense (USD $)	Sep. 30, 2014	Dec. 31, 2013
Future Amortization Expense [Abstract]
Remainder of 2014	$ 98,068
2015	392,272
2016	392,272
2017	130,759
	$ 1,013,371	$ 1,804,272

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Note 3 - Business Acquisitions (Details) - Unaudited Pro Forma Consolidated Results of Operations (USD $)	9 Months Ended
	Sep. 30, 2013
Unaudited Pro Forma Consolidated Results of Operations [Abstract]
Revenues	$ 25,024,631
Amortization expense	2,453,937
Total operating expenses	43,924,201
Net loss	$ (18,060,258)
Basic net loss per share (in Dollars per share)	$ (0.28)

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Note 11 - Net Loss per Common Share (Details) - Antidilutive Securities	9 Months Ended
	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	4,351,314
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	3,901,314
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	450,000

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Note 8 - Stock Options and Warrants (Details) - Black-Scholes Option Pricing Model Assumptions (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Note 8 - Stock Options and Warrants (Details) - Black-Scholes Option Pricing Model Assumptions [Line Items]
Risk-free interest rate		1.90%
Expected volatility	59.00%	68.00%
Expected life (in years)	5 years 109 days	6 years	5 years 109 days
Weighted average per share grant date fair value (in Dollars per share)	$ 0.75	$ 1.42	$ 0.80	$ 1.44
Stock-based compensation (in Dollars)	$ 183,844	$ 253,813	$ 735,076	$ 885,116
Minimum [Member]
Note 8 - Stock Options and Warrants (Details) - Black-Scholes Option Pricing Model Assumptions [Line Items]
Risk-free interest rate	1.70%		1.60%	0.80%
Expected volatility			47.00%	65.00%
Expected life (in years)				5 years
Maximum [Member]
Note 8 - Stock Options and Warrants (Details) - Black-Scholes Option Pricing Model Assumptions [Line Items]
Risk-free interest rate	1.80%		1.80%	1.90%
Expected volatility			59.00%	68.00%
Expected life (in years)				6 years 6 months

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Note 3 - Business Acquisitions

9 Months Ended

Sep. 30, 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.

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

In May 2013, the Company finalized the purchase price of Delos 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.

The Company incurred approximately $99,000 of third-party costs in connection with the Delos acquisition for the nine month ended September 30, 2013.  There were no third-party costs incurred by the Company in connection with the Delos acquisition for the three months ended September 30, 2013. These expenses are included in the general and administrative expenses in the Company’s condensed consolidated statements of operations.

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:

	Nine Months Ended September 30, 2013
Revenues	$	25,024,631
Amortization expense		2,453,937
Total operating expenses		43,924,201
Net loss		(18,060,258	)
Basic net loss per share	$	(0.28	)

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

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Note 6 - Accrued Expenses (Details) - Accrued Expenses (USD $)	Sep. 30, 2014	Dec. 31, 2013
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	$ 2,229,030	$ 2,532,679
Payroll and Related [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	1,125,257	937,624
Property and Equipment [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	386,448	867,311
Professional Services [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	302,095	186,917
Other Accrued Liabilities [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	187,811	293,402
Network [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	149,164	138,684
Marketing [Member]
Note 6 - Accrued Expenses (Details) - Accrued Expenses [Line Items]
Accrued Liabilities, Current	$ 78,255	$ 108,741

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Note 10 - Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 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)
September 30, 2014	$	11,890,770	$	11,890,770	$	-	$	-
December 31, 2013	$	28,181,531	$	28,181,531	$	-	$	-

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Note 8 - Stock Options and Warrants (Tables)

9 Months Ended

Sep. 30, 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 September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Risk-free interest rate		1.7%-1.8	%		1.9	%		1.6%-1.8	%		0.8%-1.9	%
Expected volatility		59	%		68	%		47%-59	%		65%-68	%
Expected life (in years)		5.3			6			5.3			5-6.5
Expected dividend yield		-			-			-			-
Weighted average per share grant date fair value	$	0.75		$	1.42		$	0.80		$	1.44
Stock-based compensation	$	183,844		$	253,813		$	735,076		$	885,116

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		372,073		$	1.70
Exercised		(340,906	)	$	0.74
Forfeited /expired		(184,869	)	$	2.51
Outstanding as of September 30, 2014		3,901,314		$	2.78
Exercisable as of September 30, 2014		2,882,066		$	2.69

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Note 12 - Commitments (Details) - Total Future Capital Lease Obligations (USD $)	Sep. 30, 2014	Dec. 31, 2013
Total Future Capital Lease Obligations [Abstract]
Remainder of 2014	$ 238,464
2015	921,437
2016	668,847
2017	401,125
2018	53,922
	2,283,795
Less: Interest expense	258,852
Total capital lease obligations	2,024,943
Current	775,817	783,051
Long-term	$ 1,249,126	$ 1,805,336

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Note 7 - Other Liabilities (Details) (USD $)	9 Months Ended		1 Months Ended
	Sep. 30, 2013	Sep. 30, 2014 Delos Internet [Member]	May 31, 2014 Pipeline Wireless [Member]
Note 7 - Other Liabilities (Details) [Line Items]
Deferred Acquisition Payments, Gross		$ 14,197
Delos Interest Rate		7.00%
Payments to Acquire Businesses, Net of Cash Acquired	$ 222,942		$ 16,630

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Note 11 - Net Loss per Common Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

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

Stock options	3,901,314
Warrants	450,000
Total	4,351,314

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Note 12 - Commitments (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure Text Block Supplement [Abstract]

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

Remainder of 2014	$	5,182,797
2015		19,758,856
2016		18,300,039
2017		12,639,857
2018		5,160,998
Thereafter		2,779,175
	$	63,821,722

Schedule of Rent Expense [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Points of Presence	$	1,939,574	$	1,767,441	$	5,732,922	$	5,108,347
Street level rooftops		3,359,804		2,707,304		9,752,720		7,757,206
Corporate offices		84,109		121,518		252,328		366,794
Other		88,211		102,039		273,928		327,268
	$	5,471,698	$	4,698,302	$	16,011,898	$	13,559,615

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

Remainder of 2014	$	238,464
2015		921,437
2016		668,847
2017		401,125
2018		53,922
	$	2,283,795
Less: Interest expense		258,852
Total capital lease obligations	$	2,024,943
Current	$	775,817
Long-term	$	1,249,126

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Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 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 September 30, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the operating results for the full fiscal year or for any future period.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 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, the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of September 30, 2014, the Company had cash and cash equivalent balances of approximately $1,614,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $10,023,000 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 September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Beginning of period	$	161,863		$	162,678		$	81,009		$	190,109
Additions		75,000			10,000			192,000			70,000
Deductions		(30,995	)		(39,552	)		(67,141	)		(126,983	)
End of period	$	205,868		$	133,126		$	205,868		$	133,126

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 this 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 the Company’s 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 the Company. During the course of completing five acquisitions, the Company has developed a database of historical experience from prior acquisitions to assist in preparing future estimates of cash flows. Similarly, the Company has used its historical experience in building networks to prepare estimates regarding the fair value of the network assets that it acquires.

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. 

Intrinsic Value of Stock Options and Warrants. The Company calculates the intrinsic value of stock options and warrants as the difference between the closing price of the Company’s common stock at the end of the reporting period and the exercise price of the stock options and warrants.

Recent Accounting Pronouncements. In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers,” which requires an entity to recognize revenue representing the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. ASU 2014-09 is intended to establish principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenues and cash flows arising from the entity’s contracts with customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The Company is currently evaluating the effect that ASU 2014-09 will have on its condensed consolidated financial statements and related disclosures.

In June 2014, FASB issued ASU No. 2014-12 (“ASU 2014-12”), “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which requires a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. ASU 2014-12 states that the performance target should not be reflected in estimating the grant date fair value of the award. ASU 2014-12 clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the periods for which the requisite service has already been rendered. The new standard is effective for the Company on January 1, 2016. The Company does not expect adoption of ASU 2014-12 to have a significant impact on its condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014–15 (“ASU 2014-15”), “Presentation of Financial Statements – Going Concern.”  ASU 2014-15 provides GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued.  ASU 2014-15 is the final version of Proposed ASU No. 2013–300 “Presentation of Financial Statements (Topic 205): Disclosure of Uncertainties about an Entity’s Going Concern Presumption,” which has been deleted. The Company does not expect the adoption of ASU 2014–15 to have a significant impact on its 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’s condensed consolidated financial statements. These reclassifications have no effect on the previously reported net loss.

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

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Note 13 - Segment Information (Tables)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

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

	Three Months Ended September 30, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,553,609	$	793,964		$	-		$	(45,969	)	$	8,301,604
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,631,572		3,609,807			15,510			(45,969	)		6,210,920
Depreciation and amortization		1,980,519		1,013,693			324,183			-			3,318,395
Customer support services		342,288		147,379			754,494			-			1,244,161
Sales and marketing		1,239,446		38,261			75,308			-			1,353,015
General and administrative		63,686		163,125			2,154,775			-			2,381,586
Total Operating Expenses		6,257,511		4,972,265			3,324,270			(45,969	)		14,508,077
Operating Income (Loss)	$	1,296,098	$	(4,178,301	)	$	(3,324,270	)	$	-		$	(6,206,473	)
Capital expenditures	$	1,154,281	$	589,883		$	21,603		$	-		$	1,765,767

	Three Months Ended September 30, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,910,377	$	535,936		$	-		$	(45,649	)	$	8,400,664
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,510,278		2,956,914			22,755			(45,649	)		5,444,298
Depreciation and amortization		2,754,675		857,739			234,230			-			3,846,644
Customer support services		339,206		208,491			673,379			-			1,221,076
Sales and marketing		1,206,125		80,956			81,547			-			1,368,628
General and administrative		126,256		151,561			2,322,351			-			2,600,168
Total Operating Expenses		6,936,540		4,255,661			3,334,262			(45,649	)		14,480,814
Operating Income (Loss)	$	973,837	$	(3,719,725	)	$	(3,334,262	)	$	-		$	(6,080,150	)
Capital expenditures	$	1,242,975	$	680,324		$	200,347		$	-		$	2,123,646

	Nine Months Ended September 30, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	22,811,582	$	2,272,683		$	-		$	(137,907	)	$	24,946,358
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,750,725		10,512,098			43,860			(137,907	)		18,168,776
Depreciation and amortization		6,598,893		2,932,592			763,387			-			10,294,872
Customer support services		878,764		502,342			2,182,465			-			3,563,571
Sales and marketing		3,754,707		177,874			241,122			-			4,173,703
General and administrative		374,164		467,290			6,885,069			-			7,726,523
Total Operating Expenses		19,357,253		14,592,196			10,115,903			(137,907	)		43,927,445
Operating Income (Loss)	$	3,454,329	$	(12,319,513	)	$	(10,115,903	)	$	-		$	(18,981,087	)
Capital expenditures	$	4,044,135	$	2,018,334		$	338,791		$	-		$	6,401,260
As of September 30, 2014
Property and equipment, net	$	21,340,927	$	11,753,330		$	2,287,890		$	-		$	35,382,147
Total assets	$	26,293,518	$	14,232,594		$	14,948,568		$	-		$	55,474,680

	Nine Months Ended September 30, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	24,158,268	$	890,920		$	-		$	(137,127	)	$	24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,229,469		8,404,925			94,623			(137,127	)		15,591,890
Depreciation and amortization		8,411,263		2,633,176			609,118			-			11,653,557
Customer support services		900,349		587,389			2,311,949			-			3,799,687
Sales and marketing		3,825,299		239,213			268,776			-			4,333,288
General and administrative		443,863		486,495			7,443,442			-			8,373,800
Total Operating Expenses		20,810,243		12,351,198			10,727,908			(137,127	)		43,752,222
Operating Income (Loss)	$	3,348,025	$	(11,460,278	)	$	(10,727,908	)	$	-		$	(18,840,161	)
Capital expenditures	$	3,358,758	$	1,049,344		$	349,674		$	-		$	4,757,776
As of September 30, 2013
Property and equipment, net	$	23,870,843	$	12,439,779		$	1,875,461		$	-		$	38,186,083
Total assets	$	30,590,803	$	14,881,500		$	34,776,782		$	-		$	80,249,085

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Note 5 - Intangible Assets (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Note 5 - Intangible Assets (Details) [Line Items]
Amortization of Intangible Assets	$ 98,068	$ 817,979	$ 790,901	$ 2,388,558
Delos Internet [Member]
Note 5 - Intangible Assets (Details) [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			50 months
Finite-Lived Intangible Assets, Remaining Amortization Period			31 months

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Note 12 - Commitments (Details) (USD $)	3 Months Ended		9 Months Ended			1 Months Ended	9 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Corporate Offices [Member] Due in 2019 [Member]	Sep. 30, 2013 Corporate Offices [Member]	Sep. 30, 2014 Corporate Offices [Member]	Feb. 28, 2014 Corporate Offices [Member]	Sep. 30, 2014 Due in 2014 [Member] Corporate Offices [Member]	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2014 Maximum [Member]
Note 12 - 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	5,471,698	4,698,302	16,011,898	13,559,615	416,970				359,750
Annual Increase in Operating Lease Rent Expense							3.00%
Other Obligations Quarterly Payments			$ 121,000

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current Assets
Cash and cash equivalents	$ 11,890,770	$ 28,181,531
Accounts receivable, net	1,046,736	611,548
Prepaid expenses and other current assets	1,431,720	925,587
Total Current Assets	14,369,226	29,718,666
Property and equipment, net	35,382,147	38,484,858
Intangible assets, net	2,297,926	3,088,827
Goodwill	1,674,281	1,674,281
Other assets	1,751,100	1,950,835
Total Assets	55,474,680	74,917,467
Current Liabilities
Accounts payable	603,937	1,241,743
Accrued expenses	2,229,030	2,532,679
Deferred revenues	1,263,456	1,396,780
Current maturities of capital lease obligations	775,817	783,051
Other	54,340	67,255
Total Current Liabilities	4,926,580	6,021,508
Long-Term Liabilities
Capital lease obligations, net of current maturities	1,249,126	1,805,336
Other	1,596,477	996,682
Total Long-Term Liabilities	2,845,603	2,802,018
Total Liabilities	7,772,183	8,823,526
Commitments (Note 12)
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; 66,650,752 and 66,424,561 shares issued and outstanding, respectively	66,651	66,425
Additional paid-in-capital	154,938,511	154,171,695
Accumulated deficit	(107,302,665)	(88,144,179)
Total Stockholders' Equity	47,702,497	66,093,941
Total Liabilities and Stockholders' Equity	$ 55,474,680	$ 74,917,467

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Note 7 - Other Liabilities (Details) - Other Liabilities (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current
Deferred rent	$ 43,351
Deferred acquisition payments	10,989	67,255
Total	54,340	67,255
Long-Term
Deferred rent	1,270,464	662,361
Deferred acquisition payments	3,208	11,516
Deferred taxes	322,805	322,805
Total	$ 1,596,477	$ 996,682

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash Flows From Operating Activities
Net loss	$ (19,158,486)	$ (18,000,849)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts	192,000	70,000
Depreciation for property, plant and equipment	9,503,971	9,264,999
Amortization for customer based intangibles	790,901	2,388,558
Stock-based compensation	740,405	939,200
Gain on business acquisition	(1,004,099)	(1,004,099)
Loss on sale and disposition of property and equipment		81,824
Deferred rent	271,455	(86,820)
Changes in operating assets and liabilities:
Accounts receivable	(627,188)	(250,270)
Prepaid expenses and other current assets	(506,133)	(100,310)
Other assets	213,407	353,130
Accounts payable	(637,806)	(471,399)
Accrued expenses	(690,097)	(1,411,797)
Deferred revenues	(133,324)	(137,859)
Total Adjustments	9,117,591	9,635,157
Net Cash Used In Operating Activities	(10,040,895)	(8,365,692)
Cash Flows From Investing Activities
Acquisitions of property and equipment	(5,981,608)	(3,896,628)
Lease incentive payment from landlord	380,000
Acquisition of a business, net of cash acquired		(222,942)
Proceeds from sale of property and equipment		14,779
Payments of security deposits	(13,672)	(39,154)
Deferred acquisition payments	(64,574)	(124,460)
Net Cash Used In Investing Activities	(5,679,854)	(4,268,405)
Cash Flows From Financing Activities
Payments on capital leases	(596,649)	(571,500)
Proceeds upon exercise of options		292,389
Issuance of common stock under employee stock purchase plan	30,430	55,623
Net proceeds from sale of common stock		30,499,336
Fair value of options repurchased	(3,793)
Net Cash (Used In) Provided By Financing Activities	(570,012)	30,275,848
Net (Decrease) Increase In Cash and Cash Equivalents	(16,290,761)	17,641,751
Cash and Cash Equivalents – Beginning	28,181,531	15,152,226
Cash and Cash Equivalents – Ending	11,890,770	32,793,977
Cash paid during the periods for:
Interest	187,653	154,298
Taxes	45,685	34,072
Non-cash investing and financing activities:
Fair value of common stock issued in connection with an acquisition		951,256
Acquisition of property and equipment:
Under capital leases	33,204	80,894
Included in accrued expenses	$ 386,448	$ 780,254

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Note 14 - Subsequent Events (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified					1 Months Ended				1 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Oct. 31, 2014 Two-Thirds of Warrants [Member] Subsequent Event [Member] Loan Agreement [Member]	Oct. 31, 2014 One-Third of Warrants [Member] Subsequent Event [Member] Loan Agreement [Member]	Oct. 31, 2014 Subsequent Event [Member] Used if Greater than 8% per Year [Member] Secured Debt [Member] London Interbank Offered Rate (LIBOR) [Member] Melody Business Finance, LLC [Member]	Oct. 31, 2014 Subsequent Event [Member] Used if Greater than Variable Rate [Member] Secured Debt [Member] Melody Business Finance, LLC [Member]	Oct. 31, 2014 Subsequent Event [Member] Used for Paid in Kind (PIK) Interest in Addition to Annual Rate [Member] Secured Debt [Member] Melody Business Finance, LLC [Member]	Oct. 31, 2014 Subsequent Event [Member] Loan Agreement [Member]	Oct. 31, 2014 Subsequent Event [Member] Secured Debt [Member] Melody Business Finance, LLC [Member]
Note 14 - Subsequent Events (Details) [Line Items]
Debt Instrument, Term									5 years
Debt Instrument, Face Amount									$ 35,000,000
Debt Instrument, Basis Spread on Variable Rate					7.00%
Debt Instrument, Interest Rate, Effective Percentage						8.00%	4.00%
Debt Instrument, Minimum Amount of Principal Outstanding to Qualify for Prepayment									5,000,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)								3.6
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 5.00	$ 5.00	$ 1.26	$ 0.01
Liquidated Damages Paid to Warrant Holders if Registration Statement Not Declared Effective, per Month								5,000
Liquidated Damages Paid to Warrant Holders if Registration Statement not Declared Effective, Maximum								$ 50,000

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Note 3 - Business Acquisitions (Details) (USD $)	1 Months Ended	9 Months Ended			1 Months Ended			3 Months Ended	9 Months Ended
	May 31, 2013	Sep. 30, 2014	Sep. 30, 2013	Feb. 28, 2013	May 31, 2013 Common Stock Adjustment [Member] Delos Internet [Member]	May 31, 2013 Before Adjustment to Common Stock [Member] Delos Internet [Member]	May 31, 2013 After Adjustment To Common Stock [Member] Delos Internet [Member]	Sep. 30, 2013 Delos Internet [Member]	Sep. 30, 2013 Delos Internet [Member]
Note 3 - Business Acquisitions (Details) [Line Items]
Share Price (in Dollars per share)				$ 2.47
Business Combination, Bargain Purchase, Gain Recognized, Amount		$ 1,004,099	$ 1,004,099
Business Acquisition Purchase Price Allocation Change In Assets Acquired Liabilities Assumed Net	21,000
Business Combination Bargain Purchase Increase Of Gain Recognized	63,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)					48,549	433,673	385,124
Business Combination, Acquisition Related Costs								$ 0	$ 99,000

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Note 2 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Beginning of period	$	161,863		$	162,678		$	81,009		$	190,109
Additions		75,000			10,000			192,000			70,000
Deductions		(30,995	)		(39,552	)		(67,141	)		(126,983	)
End of period	$	205,868		$	133,126		$	205,868		$	133,126

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Note 3 - Business Acquisitions (Details) - Consideration Transferred and the Amounts of Identified Assets Acquired and Liabilities Assumed (USD $)	9 Months Ended		1 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Feb. 28, 2013 Other Liabilities Assumed [Member] Scenario, Adjustment [Member] Delos Internet [Member]	Feb. 28, 2013 Other Liabilities Assumed [Member] Scenario, Actual [Member] Delos Internet [Member]	Feb. 28, 2013 Capital Lease Obligations Assumed [Member] Scenario, Previously Reported [Member] Delos Internet [Member]	Feb. 28, 2013 Capital Lease Obligations Assumed [Member] Scenario, Actual [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Previously Reported [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Adjustment [Member] Delos Internet [Member]	Feb. 28, 2013 Scenario, Actual [Member] Delos Internet [Member]
Fair value of consideration transferred:
Cash							$ 225,000		$ 225,000
Common stock							1,071,172	(119,916)	951,256
Fair value of liabilies transferred			36,733	36,733	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	$ 1,004,099	$ 1,004,099					$ 941,457	$ 62,642	$ 1,004,099

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Note 4 - Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	September 30, 2014		December 31, 2013
Network and base station equipment	$	35,373,208	$	32,233,262
Customer premise equipment		25,278,981		24,244,017
Shared wireless infrastructure		21,014,018		19,128,064
Information technology		4,586,445		4,417,869
Furniture, fixtures and other		1,667,978		1,661,567
Leasehold improvements		1,599,393		1,433,984
		89,520,023		83,118,763
Less: accumulated depreciation		54,137,876		44,633,905
Property and equipment, net	$	35,382,147	$	38,484,858

Schedule of Capital Leased Assets [Table Text Block]

	September 30, 2014		December 31, 2013
Network and base station equipment	$	861,231	$	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
		4,034,244		4,001,040
Less: accumulated depreciation		1,933,822		1,333,666
Property acquired through capital leases, net	$	2,100,422	$	2,667,374

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Note 1 - Organization and Nature of Business

9 Months Ended

Sep. 30, 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 one year periods.

In August 2014, the Company executed a master licensing agreement ("MLA") with a carrier for small cell deployments. The MLA establishes the detailed terms and conditions under which individual orders are governed, and are generally designed to expedite the deployment process. The term of this agreement is for 25 years.

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $)	Sep. 30, 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	66,650,752	66,424,561
Common stock, shares outstanding	66,650,752	66,424,561

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Note 11 - Net Loss per Common Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Note 11.    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. The following common stock equivalents were excluded from the computation of diluted net loss per common share because they were anti-dilutive. The exercise or issuance of these common stock equivalents outstanding at September 30, 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 million if exercised by the holder for cash.

Stock options	3,901,314
Warrants	450,000
Total	4,351,314

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Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 06, 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		66,650,752
Amendment Flag	false
Entity Central Index Key	0001349437
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Note 12 - Commitments

9 Months Ended

Sep. 30, 2014

Disclosure Text Block Supplement [Abstract]

Commitments Disclosure [Text Block]

Note 12.    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 August 2023. Certain of these operating leases include extensions, at the Company's option, for additional terms ranging from 1 to 25 years. Amounts associated with the extension periods have not been included in the table below as it is not presently determinable which options, if any, the Company will elect to exercise. As of September 30, 2014, total future operating lease obligations were as follows:

Remainder of 2014	$	5,182,797
2015		19,758,856
2016		18,300,039
2017		12,639,857
2018		5,160,998
Thereafter		2,779,175
	$	63,821,722

Rent expenses were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Points of Presence	$	1,939,574	$	1,767,441	$	5,732,922	$	5,108,347
Street level rooftops		3,359,804		2,707,304		9,752,720		7,757,206
Corporate offices		84,109		121,518		252,328		366,794
Other		88,211		102,039		273,928		327,268
	$	5,471,698	$	4,698,302	$	16,011,898	$	13,559,615

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 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 September 30, 2014, total future capital lease obligations were as follows:

Remainder of 2014	$	238,464
2015		921,437
2016		668,847
2017		401,125
2018		53,922
	$	2,283,795
Less: Interest expense		258,852
Total capital lease obligations	$	2,024,943
Current	$	775,817
Long-term	$	1,249,126

Other

During the fourth quarter of 2013, the Company renewed a one year information technology infrastructure support agreement which 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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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues	$ 8,301,604	$ 8,400,664	$ 24,946,358	$ 24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)	6,210,920	5,444,298	18,168,776	15,591,890
Depreciation and amortization	3,318,395	3,846,644	10,294,872	11,653,557
Customer support services	1,244,161	1,221,076	3,563,571	3,799,687
Sales and marketing	1,353,015	1,368,628	4,173,703	4,333,288
General and administrative	2,381,586	2,600,168	7,726,523	8,373,800
Total Operating Expenses	14,508,077	14,480,814	43,927,445	43,752,222
Operating Loss	(6,206,473)	(6,080,150)	(18,981,087)	(18,840,161)
Other Income/(Expense)
Interest expense, net	(43,970)	(59,613)	(166,509)	(153,897)
Gain on business acquisition			1,004,099	1,004,099
Other income (expense), net	(3,630)	(3,630)	(10,890)	(10,890)
Total Other Income/(Expense)	(47,600)	(63,243)	(177,399)	839,312
Net Loss	$ (6,254,073)	$ (6,143,393)	$ (19,158,486)	$ (18,000,849)
Net loss per common share – basic and diluted (in Dollars per share)	$ (0.09)	$ (0.09)	$ (0.29)	$ (0.28)
Weighted average common shares outstanding – basic and diluted (in Shares)	66,643,804	66,402,499	66,521,267	64,764,085

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Note 6 - Accrued Expenses

9 Months Ended

Sep. 30, 2014

Accrued Liabilities Disclosure [Abstract]

Accrued Liabilities Disclosure [Text Block]

Note 6. Accrued Expenses

Accrued expenses consist of the following:

	September 30, 2014		December 31, 2013
Payroll and related	$	1,125,257	$	937,624
Property and equipment		386,448		867,311
Professional services		302,095		186,917
Other		187,811		293,402
Network		149,164		138,684
Marketing		78,255		108,741
Total	$	2,229,030	$	2,532,679

Network represents costs incurred to provide services to the Company’s customers including tower rentals, bandwidth, troubleshooting and gear removal.

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Note 5 - Intangible Assets

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

Note 5. Intangible Assets

Intangible assets consist of the following:

	September 30, 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		10,842,756		10,051,855
Customer relationships, net		1,013,371		1,804,272
FCC licenses		1,284,555		1,284,555
Intangible assets, net	$	2,297,926	$	3,088,827

Amortization expense for the three months ended September 30, 2014 and 2013 was $98,068 and $817,979, respectively. Amortization expense for the nine months ended September 30, 2014 and 2013 was $790,901 and $2,388,558, respectively. The customer contracts acquired in the Company’s acquisition of Delos are being amortized over a 50 month period ending April 2017. As of September 30, 2014, the remaining amortization period for the Delos acquisition was 31 months. Balances related to the Company’s other acquisitions have been fully amortized. Future amortization expense is as follows:

Remainder of 2014	$	98,068
2015		392,272
2016		392,272
2017		130,759
	$	1,013,371

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

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Note 3 - Business Acquisitions (Tables)

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

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

	Original			Adjustments			Final
Fair value of consideration transferred:
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]

	Nine Months Ended September 30, 2013
Revenues	$	25,024,631
Amortization expense		2,453,937
Total operating expenses		43,924,201
Net loss		(18,060,258	)
Basic net loss per share	$	(0.28	)

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Note 13 - Segment Information

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 13.    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. Inter-segment 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 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 the Company’s operating segments:

	Three Months Ended September 30, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,553,609	$	793,964		$	-		$	(45,969	)	$	8,301,604
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,631,572		3,609,807			15,510			(45,969	)		6,210,920
Depreciation and amortization		1,980,519		1,013,693			324,183			-			3,318,395
Customer support services		342,288		147,379			754,494			-			1,244,161
Sales and marketing		1,239,446		38,261			75,308			-			1,353,015
General and administrative		63,686		163,125			2,154,775			-			2,381,586
Total Operating Expenses		6,257,511		4,972,265			3,324,270			(45,969	)		14,508,077
Operating Income (Loss)	$	1,296,098	$	(4,178,301	)	$	(3,324,270	)	$	-		$	(6,206,473	)
Capital expenditures	$	1,154,281	$	589,883		$	21,603		$	-		$	1,765,767

	Three Months Ended September 30, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	7,910,377	$	535,936		$	-		$	(45,649	)	$	8,400,664
Operating Expenses
Cost of revenues (exclusive of depreciation)		2,510,278		2,956,914			22,755			(45,649	)		5,444,298
Depreciation and amortization		2,754,675		857,739			234,230			-			3,846,644
Customer support services		339,206		208,491			673,379			-			1,221,076
Sales and marketing		1,206,125		80,956			81,547			-			1,368,628
General and administrative		126,256		151,561			2,322,351			-			2,600,168
Total Operating Expenses		6,936,540		4,255,661			3,334,262			(45,649	)		14,480,814
Operating Income (Loss)	$	973,837	$	(3,719,725	)	$	(3,334,262	)	$	-		$	(6,080,150	)
Capital expenditures	$	1,242,975	$	680,324		$	200,347		$	-		$	2,123,646

	Nine Months Ended September 30, 2014 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	22,811,582	$	2,272,683		$	-		$	(137,907	)	$	24,946,358
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,750,725		10,512,098			43,860			(137,907	)		18,168,776
Depreciation and amortization		6,598,893		2,932,592			763,387			-			10,294,872
Customer support services		878,764		502,342			2,182,465			-			3,563,571
Sales and marketing		3,754,707		177,874			241,122			-			4,173,703
General and administrative		374,164		467,290			6,885,069			-			7,726,523
Total Operating Expenses		19,357,253		14,592,196			10,115,903			(137,907	)		43,927,445
Operating Income (Loss)	$	3,454,329	$	(12,319,513	)	$	(10,115,903	)	$	-		$	(18,981,087	)
Capital expenditures	$	4,044,135	$	2,018,334		$	338,791		$	-		$	6,401,260
As of September 30, 2014
Property and equipment, net	$	21,340,927	$	11,753,330		$	2,287,890		$	-		$	35,382,147
Total assets	$	26,293,518	$	14,232,594		$	14,948,568		$	-		$	55,474,680

	Nine Months Ended September 30, 2013 (Unaudited)
	Fixed Wireless		Shared Wireless Infrastructure			Corporate			Eliminations			Total
Revenues	$	24,158,268	$	890,920		$	-		$	(137,127	)	$	24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)		7,229,469		8,404,925			94,623			(137,127	)		15,591,890
Depreciation and amortization		8,411,263		2,633,176			609,118			-			11,653,557
Customer support services		900,349		587,389			2,311,949			-			3,799,687
Sales and marketing		3,825,299		239,213			268,776			-			4,333,288
General and administrative		443,863		486,495			7,443,442			-			8,373,800
Total Operating Expenses		20,810,243		12,351,198			10,727,908			(137,127	)		43,752,222
Operating Income (Loss)	$	3,348,025	$	(11,460,278	)	$	(10,727,908	)	$	-		$	(18,840,161	)
Capital expenditures	$	3,358,758	$	1,049,344		$	349,674		$	-		$	4,757,776
As of September 30, 2013
Property and equipment, net	$	23,870,843	$	12,439,779		$	1,875,461		$	-		$	38,186,083
Total assets	$	30,590,803	$	14,881,500		$	34,776,782		$	-		$	80,249,085

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Note 9 - Employee Stock Purchase Plan

9 Months Ended

Sep. 30, 2014

Employee Stock Purchase Plan Disclosure [Abstract]

Employee Stock Purchase Plan Disclosure [Text Block]

Note 9. 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 105,543 shares have been issued to date and 94,457 shares are available for future issuance. During the three and nine months ended September 30, 2014, a total of 6,948 and 18,921 shares were issued under the ESPP Plan with a fair value of $10,283 and $35,759, respectively. The Company recognized $1,529 and $5,329 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2014, respectively. The Company recognized $3,236 and $9,759 of stock-based compensation related to the 15% discount for the three and nine months ended September 30, 2013, respectively.

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Note 7 - Other Liabilities

9 Months Ended

Sep. 30, 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:

	September 30, 2014		December 31, 2013
Current
Deferred rent	$	43,351	$	-
Deferred acquisition payments		10,989		67,255
Total	$	54,340	$	67,255
Long-Term
Deferred rent	$	1,270,464	$	662,361
Deferred acquisition payments		3,208		11,516
Deferred taxes		322,805		322,805
Total	$	1,596,477	$	996,682

Deferred acquisition payments related to Delos totaled $14,197 at September 30, 2014 and bear interest at a rate of 7%. In May 2014, the Company made its last deferred acquisition payment of $16,630 related to the acquisition of Pipeline Wireless LLC.

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Note 8 - Stock Options and Warrants

9 Months Ended

Sep. 30, 2014

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

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

Note 8. Stock Options and Warrants

Stock Options

The Company uses the Black-Scholes option pricing model on the date of grant to value options issued to employees, directors and consultants. Compensation expense, including the effect of forfeitures, is recognized over the period of service, generally the vesting period. Stock compensation expense and the weighted average assumptions used to calculate the fair values of stock options granted during the periods indicated were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Risk-free interest rate		1.7%-1.8	%		1.9	%		1.6%-1.8	%		0.8%-1.9	%
Expected volatility		59	%		68	%		47%-59	%		65%-68	%
Expected life (in years)		5.3			6			5.3			5-6.5
Expected dividend yield		-			-			-			-
Weighted average per share grant date fair value	$	0.75		$	1.42		$	0.80		$	1.44
Stock-based compensation	$	183,844		$	253,813		$	735,076		$	885,116

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. 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 $1,113,205 as of September 30, 2014 which will be recognized over a weighted-average period of 1.7 years.

Option transactions under the stock option plans during the nine months ended September 30, 2014 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of December 31, 2013		4,055,016		$	2.70
Granted during 2014		372,073		$	1.70
Exercised		(340,906	)	$	0.74
Forfeited /expired		(184,869	)	$	2.51
Outstanding as of September 30, 2014		3,901,314		$	2.78
Exercisable as of September 30, 2014		2,882,066		$	2.69

In June 2014, the Company made its annual grant to the Board of Directors consisting of 200,000 options with an exercise price of $1.93 vesting monthly through June 2015.

In July 2014, the Company granted to its two executive officers 47,073 options with an exercise price of $1.67 vesting monthly over a two year period.

In September 2014, the Company granted to its two executive officers 125,000 options with an exercise price of $1.34 vesting quarterly over a two year period.

A total of 340,906 options were exercised on a cashless basis during the nine months ended September 30, 2014 resulting in the net issuance of 192,270 shares. There were no other options exercised during the nine months ended September 30, 2014.

Cancellations for the three and nine months ended September 30, 2014 were 74,064 and 184,869, respectively. Cancellations related to employee terminations except for 14,250 options which were repurchased during the nine months ended September 30, 2014.

The weighted average remaining contractual life of the outstanding options as of September 30, 2014 was 5.8 years.

The intrinsic value of outstanding and exercisable options totaled $196,892 and $179,392 respectively, as of September 30, 2014.

Stock Warrants 

There were 450,000 warrants outstanding and exercisable at September 30, 2014 and December 31, 2013 with an exercise price of $5.00 and an expiration date in July 2016.

       The warrants had no intrinsic value at September 30, 2014.

Cashless Exercises

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

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Note 10 - Fair Value Measurement

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 10. Fair Value Measurement

Valuation Hierarchy

The accounting standard of the FASB 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 nine months ended September 30, 2014.

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2014	$	11,890,770	$	11,890,770	$	-	$	-
December 31, 2013	$	28,181,531	$	28,181,531	$	-	$	-

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Note 2 - Summary of Significant Accounting Policies (Details) - Changes in Allowance for Doubtful Accounts (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Changes in Allowance for Doubtful Accounts [Abstract]
Beginning of period	$ 161,863	$ 162,678	$ 81,009	$ 190,109
Additions	75,000	10,000	192,000	70,000
Deductions	(30,995)	(39,552)	(67,141)	(126,983)
End of period	$ 205,868	$ 133,126	$ 205,868	$ 133,126

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Note 11 - Net Loss per Common Share (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Earnings Per Share [Abstract]
Maximum Potential Proceeds from Stock Option and Warrant Exercises	$ 13

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the operating results for the full fiscal year or for any future period.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 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, the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of September 30, 2014, the Company had cash and cash equivalent balances of approximately $1,614,000 in excess of the federally insured limit of $250,000.

The Company also had approximately $10,023,000 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 September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Beginning of period	$	161,863		$	162,678		$	81,009		$	190,109
Additions		75,000			10,000			192,000			70,000
Deductions		(30,995	)		(39,552	)		(67,141	)		(126,983	)
End of period	$	205,868		$	133,126		$	205,868		$	133,126

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 this 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 the Company’s 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 the Company. During the course of completing five acquisitions, the Company has developed a database of historical experience from prior acquisitions to assist in preparing future estimates of cash flows. Similarly, the Company has used its historical experience in building networks to prepare estimates regarding the fair value of the network assets that it acquires.

Revenue Recognition, Policy [Policy Text Block]

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

Revenue Recognition, Deferred Revenue [Policy Text Block]

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

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

Goodwill. Goodwill represents the excess of the 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.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Intrinsic Value of Stock Options and Warrants. The Company calculates the intrinsic value of stock options and warrants as the difference between the closing price of the Company’s common stock at the end of the reporting period and the exercise price of the stock options and warrants.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements. In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers,” which requires an entity to recognize revenue representing the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. ASU 2014-09 is intended to establish principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenues and cash flows arising from the entity’s contracts with customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The Company is currently evaluating the effect that ASU 2014-09 will have on its condensed consolidated financial statements and related disclosures.

In June 2014, FASB issued ASU No. 2014-12 (“ASU 2014-12”), “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which requires a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. ASU 2014-12 states that the performance target should not be reflected in estimating the grant date fair value of the award. ASU 2014-12 clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the periods for which the requisite service has already been rendered. The new standard is effective for the Company on January 1, 2016. The Company does not expect adoption of ASU 2014-12 to have a significant impact on its condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014–15 (“ASU 2014-15”), “Presentation of Financial Statements – Going Concern.”  ASU 2014-15 provides GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued.  ASU 2014-15 is the final version of Proposed ASU No. 2013–300 “Presentation of Financial Statements (Topic 205): Disclosure of Uncertainties about an Entity’s Going Concern Presumption,” which has been deleted. The Company does not expect the adoption of ASU 2014–15 to have a significant impact on its 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’s condensed consolidated financial statements. These reclassifications have no effect on the previously reported net loss.

Subsequent Events, Policy [Policy Text Block]

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

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Note 6 - Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2014

Accrued Liabilities Disclosure [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

	September 30, 2014		December 31, 2013
Payroll and related	$	1,125,257	$	937,624
Property and equipment		386,448		867,311
Professional services		302,095		186,917
Other		187,811		293,402
Network		149,164		138,684
Marketing		78,255		108,741
Total	$	2,229,030	$	2,532,679

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Note 9 - Employee Stock Purchase Plan (Details) (USD $)	9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 2010 Employee Stock Purchase Plan [Member]	Sep. 30, 2013 2010 Employee Stock Purchase Plan [Member]	Sep. 30, 2014 2010 Employee Stock Purchase Plan [Member]	Sep. 30, 2013 2010 Employee Stock Purchase Plan [Member]
Note 9 - Employee Stock Purchase Plan (Details) [Line Items]
Percentage Of Discount Allowed For Shares Issued Under Employee Stock Purchase Plan	15.00%
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)			200,000		200,000
Common Stock, Shares, Issued (in Shares)	66,650,752	66,424,561	105,543		105,543
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)			94,457		94,457
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in Shares)			6,948		18,921
Stock Issued During Period, Value, Employee Stock Purchase Plan	$ 35,759		$ 10,283		$ 35,759
Defined Contribution Plan, Cost Recognized			$ 1,529	$ 3,236	$ 5,329	$ 9,759

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Note 5 - Intangible Assets (Details) - Intangible Assets (USD $)	Sep. 30, 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	10,842,756	10,051,855
Customer relationships, net	1,013,371	1,804,272
FCC licenses	1,284,555	1,284,555
Intangible assets, net	$ 2,297,926	$ 3,088,827

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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
Cashless exercise of options	192	(192)
Cashless exercise of options (in Shares)	192,270			340,906
Issuance of common stock under employee stock purchase plan	19	35,740		35,759
Issuance of common stock under employee stock purchase plan (in Shares)	18,921
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		735,076		735,076
Fair value of options repurchased		(3,793)		(3,793)
Net loss			(19,158,486)	(19,158,486)
Balance at Sep. 30, 2014	$ 66,651	$ 154,938,511	$ (107,302,665)	$ 47,702,497
Shares (in Shares) at Sep. 30, 2014	66,650,752

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Note 4 - Property and Equipment

9 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 4.    Property and Equipment

Property and equipment is comprised of:

	September 30, 2014		December 31, 2013
Network and base station equipment	$	35,373,208	$	32,233,262
Customer premise equipment		25,278,981		24,244,017
Shared wireless infrastructure		21,014,018		19,128,064
Information technology		4,586,445		4,417,869
Furniture, fixtures and other		1,667,978		1,661,567
Leasehold improvements		1,599,393		1,433,984
		89,520,023		83,118,763
Less: accumulated depreciation		54,137,876		44,633,905
Property and equipment, net	$	35,382,147	$	38,484,858

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

	September 30, 2014		December 31, 2013
Network and base station equipment	$	861,231	$	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
		4,034,244		4,001,040
Less: accumulated depreciation		1,933,822		1,333,666
Property acquired through capital leases, net	$	2,100,422	$	2,667,374

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Note 13 - Segment Information (Details) - Segment Information (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Revenues	$ 8,301,604	$ 8,400,664	$ 24,946,358	$ 24,912,061
Operating Expenses
Cost of revenues (exclusive of depreciation)	6,210,920	5,444,298	18,168,776	15,591,890
Depreciation and amortization	3,318,395	3,846,644	10,294,872	11,653,557
Customer support services	1,244,161	1,221,076	3,563,571	3,799,687
Sales and marketing	1,353,015	1,368,628	4,173,703	4,333,288
General and administrative	2,381,586	2,600,168	7,726,523	8,373,800
Total Operating Expenses	14,508,077	14,480,814	43,927,445	43,752,222
Operating Income (Loss)	(6,206,473)	(6,080,150)	(18,981,087)	(18,840,161)
Capital expenditures	1,765,767	2,123,646	6,401,260	4,757,776
As of September 30, 2014
Property and equipment, net	35,382,147	38,186,083	35,382,147	38,186,083	38,484,858
Total assets	55,474,680	80,249,085	55,474,680	80,249,085	74,917,467
Fixed Wireless [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	7,553,609	7,910,377	22,811,582	24,158,268
Operating Expenses
Cost of revenues (exclusive of depreciation)	2,631,572	2,510,278	7,750,725	7,229,469
Depreciation and amortization	1,980,519	2,754,675	6,598,893	8,411,263
Customer support services	342,288	339,206	878,764	900,349
Sales and marketing	1,239,446	1,206,125	3,754,707	3,825,299
General and administrative	63,686	126,256	374,164	443,863
Total Operating Expenses	6,257,511	6,936,540	19,357,253	20,810,243
Operating Income (Loss)	1,296,098	973,837	3,454,329	3,348,025
Capital expenditures	1,154,281	1,242,975	4,044,135	3,358,758
As of September 30, 2014
Property and equipment, net	21,340,927	23,870,843	21,340,927	23,870,843
Total assets	26,293,518	30,590,803	26,293,518	30,590,803
Shared Wireless Infrastructure [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	793,964	535,936	2,272,683	890,920
Operating Expenses
Cost of revenues (exclusive of depreciation)	3,609,807	2,956,914	10,512,098	8,404,925
Depreciation and amortization	1,013,693	857,739	2,932,592	2,633,176
Customer support services	147,379	208,491	502,342	587,389
Sales and marketing	38,261	80,956	177,874	239,213
General and administrative	163,125	151,561	467,290	486,495
Total Operating Expenses	4,972,265	4,255,661	14,592,196	12,351,198
Operating Income (Loss)	(4,178,301)	(3,719,725)	(12,319,513)	(11,460,278)
Capital expenditures	589,883	680,324	2,018,334	1,049,344
As of September 30, 2014
Property and equipment, net	11,753,330	12,439,779	11,753,330	12,439,779
Total assets	14,232,594	14,881,500	14,232,594	14,881,500
Corporate, Non-Segment [Member]
Operating Expenses
Cost of revenues (exclusive of depreciation)	15,510	22,755	43,860	94,623
Depreciation and amortization	324,183	234,230	763,387	609,118
Customer support services	754,494	673,379	2,182,465	2,311,949
Sales and marketing	75,308	81,547	241,122	268,776
General and administrative	2,154,775	2,322,351	6,885,069	7,443,442
Total Operating Expenses	3,324,270	3,334,262	10,115,903	10,727,908
Operating Income (Loss)	(3,324,270)	(3,334,262)	(10,115,903)	(10,727,908)
Capital expenditures	21,603	200,347	338,791	349,674
As of September 30, 2014
Property and equipment, net	2,287,890	1,875,461	2,287,890	1,875,461
Total assets	14,948,568	34,776,782	14,948,568	34,776,782
Consolidation, Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	(45,969)	(45,649)	(137,907)	(137,127)
Operating Expenses
Cost of revenues (exclusive of depreciation)	(45,969)	(45,649)	(137,907)	(137,127)
Total Operating Expenses	$ (45,969)	$ (45,649)	$ (137,907)	$ (137,127)

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Note 7 - Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

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

Schedule of Other Liabilities [Table Text Block]

	September 30, 2014		December 31, 2013
Current
Deferred rent	$	43,351	$	-
Deferred acquisition payments		10,989		67,255
Total	$	54,340	$	67,255
Long-Term
Deferred rent	$	1,270,464	$	662,361
Deferred acquisition payments		3,208		11,516
Deferred taxes		322,805		322,805
Total	$	1,596,477	$	996,682

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Note 4 - Property and Equipment (Details) - Property and Equipment (USD $)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 89,520,023	$ 83,118,763
	89,520,023	83,118,763
Less: accumulated depreciation	54,137,876	44,633,905
Property and equipment, net	35,382,147	38,484,858	38,186,083
Network and Base Station Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	35,373,208	32,233,262
	35,373,208	32,233,262
Customer Premise Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	25,278,981	24,244,017
	25,278,981	24,244,017
Rooftop Tower Sites [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	21,014,018	19,128,064
	21,014,018	19,128,064
Information Technology [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	4,586,445	4,417,869
	4,586,445	4,417,869
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	1,667,978	1,661,567
	1,667,978	1,661,567
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	1,599,393	1,433,984
	$ 1,599,393	$ 1,433,984

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Note 14 - Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 14. Subsequent Events

   In October 2014, the Company entered into a loan agreement (the “Loan Agreement”) with Melody Business Finance, LLC (the “Lender”). The Lender will provide the Company with a five-year $35 million secured term loan (the “Financing”). Pursuant to the terms of the Loan Agreement, the loan bears interest at a rate equal to the greater of (i) the sum of the most recently effective one month Libor as in effect on each payment date plus 7% or (ii) 8% per annum, and additional paid in kind (“PIK”), or deferred, interest that shall accrue at 4% per annum.

The aggregate principal amount outstanding plus all accrued and unpaid interest is due in October 2019. The Company has the option of making principal payments (i) on or before October 16, 2016 (the “Second Anniversary”) but only for the full amount outstanding and (ii) after the Second Anniversary in minimum amount(s) of $5 million.

   In connection with the Loan Agreement and pursuant to a Warrant and Registration Rights Agreement, the Company issued warrants (the “Warrants”) to purchase 3.6 million shares of common stock of which two-thirds have an exercise price of $1.26 and one-third have an exercise price of $0.01, subject to standard antidilution provisions. The Warrants have a term of seven and a half years. The Company has agreed to include the shares of common stock underlying the Warrants in a registration statement that must be filed no later than the one year anniversary of the Loan Agreement. If, following the one year anniversary, the registration statement is not declared effective, the Company will pay the warrant holders liquidated damages in the aggregate amount of $5,000 per month, with maximum liquidated damages of $50,000, until the registration statement has become effective.