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, 2016

or

 

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

For the transition period from_______to_______

 

Commission file number 001-33449

 

TOWERSTREAM CORPORATION

(Exact name of registrant as specified in its charter)

 

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

 

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

  

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

 

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

Yes ☒ No ☐

 

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

  

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

 

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

 

As of November 8, 2016, there were 8,830,716 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, 2016 (unaudited) and December 31, 2015	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)	2
	Condensed Consolidated Statement of Stockholders’ (Deficit) Equity for the Nine Months Ended September 30, 2016 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5-16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17-26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	27
Item 4.	Controls and Procedures.	27
Part II	OTHER INFORMATION
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6.	Exhibits.	29

 

 

   

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

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

 

 

  

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

  

 

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

 

 

   

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ (DEFICIT) EQUITY

For the Nine Months Ended September 30, 2016

(UNAUDITED)

  

   

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

 

 

   

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2016 and 2015

  

 

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

 

 

 

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

  

 

 

 

 

 

  

 

 

   

  

 

 

  

 

 

 

 

 

 

   

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, 2016. 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, 2015 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. 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

 

Infrastructure and access expenses relate directly to maintaining our network and providing connectivity to our customers. Infrastructure primarily relates to our Points-of-Presence ("PoPs") where we install a substantial amount of equipment, mostly on the roof, which we utilize to connect numerous customers to the internet. We enter into long term lease agreements to maintain our equipment on these PoPs and these rent payments comprise the majority of our infrastructure and access costs. Access expenses primarily consist of bandwidth connectivity agreements that we enter into with national service providers.

 

Network operations costs relate to the daily operations of our network and ensuring that our customers have connectivity within the terms of our service level agreement. We have employees based in our largest markets who are dedicated to ensuring that our network operates effectively on a daily basis. Other employees monitor network operations from our network operating center which is located at our corporate headquarters. Payroll comprises approximately 55% to 60% of network operations costs. Information technology systems and support comprises approximately 15% to 20% of network operations costs.

 

Customer support costs relate to our continuing communications with customers regarding their service level agreement. Payroll comprises approximately 83% to 88% of customer support costs. Other costs include travel expenses to service customer locations, shipping, troubleshooting, and facilities related expenses.

 

 

   

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.

  

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 and finance personnel are included in this category. Other costs include 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.

  

As of September 30, 2016, 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.

 

Overview - Shared Wireless Infrastructure 

 

In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”), to operate a new business designed to leverage its fixed wireless network in urban markets to provide other wireless technology solutions and services. Hetnets built a carrier-class network which offered a shared wireless infrastructure platform, primarily for (i) co-location of customer owned antenna and related equipment and (ii) Wi-Fi access and offloading. The Company referred to this as its “Shared Wireless Infrastructure” or “Shared Wireless” business. During the fourth quarter of 2015, the Company determined to exit this business and curtailed activities in its smaller markets. The remaining network, located in New York City (or “NYC”), was the largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015 and continuing into the first quarter of 2016 to sell the New York City network. On March 9, 2016, the Company completed a sale and transfer of certain assets pursuant to an Asset Purchase Agreement (the "Agreement") with a large cable company (the "Buyer"). Under the terms of the Agreement, the Buyer assumed certain rooftop leases and acquired ownership of and the right to operate the Wi-Fi access point and related equipment associated with such leases. The Company retained ownership of all backhaul and related equipment, and the parties entered into an agreement under which the Company provides backhaul services to the Buyer. The agreement is for a three-year period with two one-year renewals and is cancellable by the Buyer on sixty days notice. During the first quarter of 2016, the Company determined that it would not be able to sell the remainder of the New York City network, and accordingly, all remaining assets are being redeployed into the fixed wireless network or written off. The operating results and cash flows for Hetnets have been reclassified and presented as discontinued operating results for all periods presented in these condensed consolidated financial statements.

 

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

 

Continuing Operations – Fixed Wireless

 

Revenues. Revenues totaled $6,664,183 during the three months ended September 30, 2016 compared to $6,947,467 during the three months ended September 30, 2015 representing a decrease of $283,284, or 4%. The decrease principally related to a 4% decrease in the base of customers billed on a monthly recurring basis.

 

 

  

Customer churn totaled 2.02% during the three months ended September 30, 2016 compared to 1.79% during the three months ended September 30, 2015. Churn represents the percent of revenue lost on a monthly basis from customers who have cancelled their contract. Effective January 1, 2016, we have modified our methodology to conform to common practice in the telecommunications industry. Revenue adjustments associated with customers who are modifying the (i) amount of their bandwidth or (ii) the pricing terms of their contract will no longer be included in the calculation of customer churn. Customer churn calculated under the previous methodology would have totaled 2.47% and 1.87% for the three months ended September 30, 2016 and 2015, respectively. Our goal is to maintain churn levels below industry averages of approximately 2.00%. Churn levels can fluctuate from period to period depending upon whether customers move to a location not serviced by the Company, go out of business, or a myriad of other reasons.

 

Infrastructure and Access. Infrastructure and access totaled $2,589,485 during the three months ended September 30, 2016 compared to $2,559,406 during the three months ended September 30, 2015 representing an increase of $30,079, or 1%. The increase primarily relates to our tower rental expense.

 

Depreciation and Amortization. Depreciation and amortization totaled $2,992,758 during the three months ended September 30, 2016 compared to $2,430,452 during the three months ended September 30, 2015 representing an increase of $562,306 or 23%. Depreciation expense totaled $2,574,875 during the three months ended September 30, 2016 compared to $2,332,384 during the three months ended September 30, 2015 representing an increase of $242,491, or 10%. The increase primarily related to the transfer of certain assets during the first quarter of 2016 from discontinued operations to continuing operations.

 

Amortization expense totaled $417,883 during the three months ended September 30, 2016 compared to $98,068 during the three months ended September 30, 2015 representing an increase of $319,815, or more than 100%. Amortization expense relates to intangible assets recorded in connection with acquisitions and other transactions, and can fluctuate significantly from period to period depending upon the timing of acquisitions and other transactions, the relative amounts of intangible assets recorded, and the amortization periods. The increase related entirely to amortization associated with a transaction with a large cable company which closed in March 2016.

 

Network Operations. Network operations totaled $1,250,670 during the three months ended September 30, 2016 compared to $1,254,640 during the three months ended September 30, 2015 representing a decrease of $3,970, or less than 1%. Payroll costs totaled $763,648 in the 2016 period compared to $726,813 in the 2015 period representing an increase of $36,835, or 5%. Information technology support expenses totaled $202,188 in the 2016 period compared to $197,137 in the 2015 period representing an increase of $5,051 or 3%, as the Company internally absorbed certain functions that were previously provided by third parties which resulted in a slight increase in headcount. Network support costs totaled $163,652 during the three months ended September 30, 2016 compared to $179,152 during the three months ended September 30, 2015 representing a decrease of $15,500, or 9%. These costs can fluctuate from period to period and the dollar change is not meaningful.

 

Customer Support. Customer support totaled $417,265 during the three months ended September 30, 2016 compared to $619,274 during the three months ended September 30, 2015 representing a decrease of $202,009, or 33%. Payroll expense totaled $366,286 during the 2016 period compared to $524,734 during the 2015 period representing a decrease of $158,448, or 30%. Average headcount was lower in the 2016 period as the Company consolidated departments and improved efficiencies. Other customer support costs totaled $50,979 during the three months ended September 30, 2016 compared to $94,540 during the 2015 period representing a decrease of $43,561 or 46%. This decrease was principally attributable to lower customer troubleshooting costs which can fluctuate from period to period.

 

Sales and Marketing. Sales and marketing expenses totaled $757,316 during the three months ended September 30, 2016 compared to $1,519,697 during the three months ended September 30, 2015 representing a decrease of $762,381, or 50%. Payroll costs totaled $508,110 during the 2016 period compared to $1,017,631 during the 2015 period representing a decrease of $509,521, or 50%. The decrease related to lower headcount in connection with the closing of our sales office in Florida as well as additional sales reductions made at our corporate headquarters in the first quarter of 2016. Outside commissions totaled $195,963 in the 2016 period compared to $151,439 in the 2015 period representing an increase of $44,524, or 29%. The increase relates almost exclusively to the Company’s residual program which pays continuing commissions as long as the referred business is a customer. Other costs totaled $54,291 during the three months ended September 30, 2016 compared to $86,086 during the three months ended September 30, 2015 representing a decrease of $31,795, or 37%. The decrease primarily relates to the reduction in our sales force. The remaining decrease in sales and marketing expense relates to advertising expenses. The Company has significantly reduced its Internet marketing initiatives in connection with its current marketing focus on specific businesses in certain connected buildings rather than marketing broadly to all businesses in a market.

 

 

   

General and Administrative. General and administrative expenses totaled $2,266,838 for the three months ended September 30, 2016 compared to $1,453,809 for the three months ended September 30, 2015 representing an increase of $813,029, or 56%. Payroll costs totaled $364,776 during the 2016 period compared to $452,224 during the 2015 period representing a decrease of $87,448, or 19%, due to executive compensation. Stock based compensation totaled $662,369 during the three months ended September 30, 2016 compared to $192,973 during the three months ended September 30, 2015 representing an increase of $469,396, or more than 100%. Stock-based compensation can fluctuate significantly from period to period depending on the timing, quantity and valuation of stock option grants. Public company fees totaled $489,997 during the three months ended September 30, 2016 compared to $133,404 during the three months ended September 30, 2015 representing an increase of $356,593, or greater than 100%.  This increase related primarily to the restructuring of the business during 2016. Professional services fees totaled $338,294 during the three months ended September 30, 2016 compared to $273,761 during the three months ended September 30, 2015 representing an increase of $64,533, or 24%.  This increase related primarily to the restructuring of the business during 2016. Corporate travel expenses totaled $16,292 in the 2016 period compared to $70,686 in the 2015 period representing a decrease of $54,394, or 77%. The decrease related to lower travel expenses at the executive level. Non-recurring expenses totaled $94,688 during the three months ended September 30, 2016 compared to $6,361 during the three months ended September 30, 2015 representing an increase of $88,327, or greater than 100%. This increase related primarily to the restructuring of the business during 2016. Non-recurring expenses can vary from period to period depending on the level of activity during a period. .

 

Interest Expense, Net. Interest expense, net totaled $1,580,444 during the three months ended September 30, 2016 compared to $1,665,682 during the three months ended September 30, 2015 representing a decrease of $85,238, or 5%. Interest expense relates to the $35 million secured term loan which closed in October 2014.

 

Discontinued Operations – Shared Wireless

 

Revenues. Revenues for the Shared Wireless business totaled zero during the three months ended September 30, 2016 compared to $849,824 during the three months ended September 30, 2015 representing a decrease of $849,824 or 100%. The decrease related to our decision to exit the business conducted by Hetnets.

 

Infrastructure and Access. Infrastructure and access totaled zero during the three months ended September 30, 2016 compared to $3,479,160 during the three months ended September 30, 2015 representing a decrease of $3,479,160, or 100%. The reduction reflects the termination of lease agreements associated with our shared wireless business. 

 

Depreciation. Depreciation totaled zero during the three months ended September 30, 2016 compared to $1,005,185 during the three months ended September 30, 2015 representing a decrease of $1,005,185 or 100%. We have terminated business activities associated with our shared wireless business.

 

Network Operations. Network operations totaled zero during the three months ended September 30, 2016 compared to $188,104 during the three months ended September 30, 2015 representing a decrease of $188,104, or 100%. The 2015 period primarily related to payroll expenses.

 

Customer Support Services. Customer support services totaled zero during the three months ended September 30, 2016 compared to $95,515 during the three months ended September 30, 2015 representing a decrease of $95,515 or 100%. The business was terminated in early March 2016.

 

Sales and Marketing. Sales and marketing expenses totaled zero during the three months ended September 30, 2016 compared to $35,793 during the three months ended September 30, 2015 representing a decrease of $35,793, or 100%. The business was terminated in early March 2016.

 

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

 

Continuing Operations – Fixed Wireless

 

Revenues. Revenues totaled $20,270,615 during the nine months ended September 30, 2016 compared to $21,150,841 during the nine months ended September 30, 2015 representing a decrease of $880,226, or 4%. The decrease principally related to a 4% decrease in the base of customers billed on a monthly recurring basis.

  

 

   

Infrastructure and Access. Infrastructure and access totaled $7,772,326 during the nine months ended September 30, 2016 compared to $7,608,888 during the nine months ended September 30, 2015 representing an increase of $163,438, or 2%. The increase primarily relates to our tower rental expense.

 

Depreciation and Amortization. Depreciation and amortization totaled $8,564,537 during the nine months ended September 30, 2016 compared to $7,171,577 during the nine months ended September 30, 2015 representing an increase of $1,392,960 or 19%. Depreciation expense totaled $7,524,097 during the nine months ended September 30, 2016 compared to $6,877,373 during the nine months ended September 30, 2015 representing an increase of $646,724, or 9%. The increase primarily related to the transfer of certain assets during the first quarter of 2016 from discontinued operations to continuing operations.

 

Amortization expense totaled $1,040,440 during the nine months ended September 30, 2016 compared to $294,204 during the nine months ended September 30, 2015 representing an increase of $746,236, or more than 100%. Amortization expense relates to intangible assets recorded in connection with acquisitions and other transactions, and can fluctuate significantly from period to period depending upon the timing of acquisitions and other transactions, the relative amounts of intangible assets recorded, and the amortization periods. The increase related entirely to amortization associated with the TWC transaction which closed in March 2016.

 

Network Operations. Network operations totaled $3,805,985 during the nine months ended September 30, 2016 compared to $3,955,071 during the nine months ended September 30, 2015 representing a decrease of $149,086, or 4%. Payroll costs totaled $2,224,450 in the 2016 period compared to $2,176,174 in the 2015 period representing an increase of $48,276, or 2%. Average headcount was slightly higher in the 2016 period. Information technology support expenses totaled $687,303 in the 2016 period compared to $795,510 in the 2015 period representing a decrease of $108,207, or 14%, as the Company internally absorbed certain functions that were previously provided by third parties. Network support costs totaled $490,892 during the nine months ended September 30, 2016 compared to $564,767 during the nine months ended September 30, 2015 representing a decrease of $73,875, or 13%. These costs can fluctuate from period to period and the dollar change is not meaningful.

 

Customer Support. Customer support totaled $1,479,580 during the nine months ended September 30, 2016 compared to $1,931,434 during the nine months ended September 30, 2015 representing a decrease of $451,854, or 23%. Payroll expense totaled $1,308,008 during the 2016 period compared to $1,597,867 during the 2015 period representing a decrease of $289,859 or 18%. Average headcount was lower in the 2016 period as the Company consolidated departments and improved efficiencies. Other customer support costs totaled $171,572 during the nine months ended September 30, 2016 compared to $333,567 during the 2015 period representing a decrease of $161,995 or 49%. This decrease was principally attributable to lower customer troubleshooting costs which can fluctuate from period to period.

 

Sales and Marketing. Sales and marketing expenses totaled $3,136,198 during the nine months ended September 30, 2016 compared to $4,386,247 during the nine months ended September 30, 2015 representing a decrease of $1,250,049 or 28%. Payroll costs totaled $2,049,538 during the 2016 period compared to $2,907,238 during the 2015 period representing a decrease of $857,700, or 30%. The decrease related to lower headcount in connection with the closing of our sales office in Florida as well as additional sales reductions made at our corporate headquarters in the first quarter of 2016. Advertising expenses totaled $241,591 during the nine months ended September 30, 2016 compared to $796,552 during the nine months ended September 30, 2015 representing a decrease of $554,961 or 70%. The Company has significantly reduced its Internet marketing initiatives in connection with its current marketing focus on specific businesses in certain connected buildings rather than marketing broadly to all businesses in a market. Outside commissions totaled $592,056 in the 2016 period compared to $424,440 in the 2015 period representing an increase of $167,616, or 39%. The increase relates almost exclusively to the Company’s residual program which pays continuing commissions as long as the referred business is a customer.

 

General and Administrative. General and administrative expenses totaled $5,851,175 for the nine months ended September 30, 2016 compared to $4,967,537 for the nine months ended September 30, 2015 representing an increase of $883,638, or 18%. Stock based compensation totaled $1,122,343 during the nine months ended September 30, 2016 compared to $615,052 during the nine months ended September 30, 2015 representing an increase of $507,291, or 82%. Stock-based compensation can fluctuate significantly from period to period depending on the timing, quantity and valuation of stock option grants. Payroll costs increased to $1,629,529 in the 2016 period compared to $1,518,304 in the 2015 period representing an increase of $111,225, or 7%. The increase related to severance payments to our former Chief Executive Officer. Public company fees totaled $654,524 during the nine months ended September 30, 2016 compared to $347,380 during the nine months ended September 30, 2015 representing an increase of $307,144, or 88%.  This increase related primarily to the restructuring of the business during 2016. Professional services fees totaled $1,177,618 during the nine months ended September 30, 2016 compared to $927,460 during the nine months ended September 30, 2015 representing an increase of $250,158, or 27%.  This increase related primarily to the restructuring of the business during 2016. Corporate travel expenses totaled $79,999 in the 2016 period compared to $324,375 in the 2015 period representing a decrease of $244,376, or 75%. The decrease related to the cancellation of the President’s club trip for top performers and lower travel expenses at the executive level. Customer related expenses decreased by approximately $109,498 in the 2016 period due to lower bad debt expense compared to the 2015 period.

 

 

   

Interest Expense, Net. Interest expense, net totaled $4,775,855 during the nine months ended September 30, 2016 compared to $5,000,374 during the nine months ended September 30, 2015 representing a decrease of $224,519, or 4%. Interest expense relates to the $35 million secured term loan which closed in October 2014.

 

Loss from Continuing Operations. Loss from continuing operations totaled $15,115,041 during the nine months ended September 30, 2016 compared to $13,870,287 during the nine months ended September 30, 2015 representing an increase of $1,244,754, or 9%. Revenues decreased by $880,226 in the 2016 period which represented 71% of the increased loss.

 

Discontinued Operations – Shared Wireless

 

Revenues. Revenues for the Shared Wireless business totaled $553,302 during the nine months ended September 30, 2016 compared to $2,463,678 during the nine months ended September 30, 2015 representing a decrease of $1,910,376 or 78%. The decrease primarily related to our contract with a major cable company which was terminated in March 2016 resulting in only two months of revenue in the 2016 period compared to nine months of revenue in the 2015 period.

 

Infrastructure and Access. Infrastructure and access totaled $2,523,222 during the nine months ended September 30, 2016 compared to $10,838,337 during the nine months ended September 30, 2015 representing a decrease of $8,315,115, or 77%. Rent expense for rooftop locations totaled $1,994,858 in the 2016 period compared to $10,572,412 in the 2015 period representing a decrease of $8,577,554, or 81%. The reduction reflects the termination of lease agreements associated with our shared wireless business. Loss on fixed assets totaled $528,364 during the nine months ended September 30, 2016 compared to zero during the nine months ended September 30, 2015. During the first quarter of 2016, the Company sold certain network infrastructure assets to a major cable company. The Company determined to shut down the remaining network locations and recognized a loss of $528,364 which represented the net book value of capitalized installation costs as well as equipment which could not be redeployed into the fixed wireless network.

 

Depreciation. Depreciation totaled $638,681 during the nine months ended September 30, 2016 compared to $3,052,554 during the nine months ended September 30, 2015 representing a decrease of $2,413,873 or 79%. All business activities associated with the shared wireless business were terminated during the first quarter of 2016.

 

Network Operations. Network operations totaled $192,947 during the nine months ended September 30, 2016 compared to $579,138 during the nine months ended September 30, 2015 representing a decrease of $386,191, or 67%. Certain costs were incurred in the 2016 period related to the termination of the business. The 2015 period primarily related to payroll expenses.

 

Customer Support Services. Customer support services totaled $69,804 during the nine months ended September 30, 2016 compared to $283,961 during the nine months ended September 30, 2015 representing a decrease of $214,157 or 75%. The business was terminated in early March 2016.

 

Sales and Marketing. Sales and marketing expenses totaled $246 during the nine months ended September 30, 2016 compared to $122,704 during the nine months ended September 30, 2015 representing a decrease of $122,458, or 100%. The decrease reflects a lack of sales and marketing efforts prior to terminating the business in March 2016.

 

General and Administrative. General and administrative expenses totaled $105,545 during the nine months ended September 30, 2016 compared to zero during the nine months ended September 30, 2015. The increase reflects professional services fees incurred in the 2016 period for terminating the business.

 

Loss from Discontinued Operations. Loss from discontinued operations for the nine months ended September 30, 2016 totaled $1,799,401 compared to $12,413,016 for the nine months ended September 30, 2015 representing a decrease of $10,613,615 or 86%. Infrastructure and access costs decreased by $8,315,115 and depreciation decreased by $2,413,873 representing more than 100% of the decrease. Gain on sale of assets increased by $1,177,742 representing 11% of the decrease.

 

 

   

Liquidity and Capital Resources

 

Changes in capital resources during the nine months ended September 30, 2016 and 2015 are described below.

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2016, the Company had cash and cash equivalents of approximately $13 million and working capital of approximately $7.6 million. The Company has incurred significant operating losses since inception and continues to generate losses from operations and as of September 30, 2016, the Company has an accumulated deficit of $173 million. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Historically, the Company has financed its operation through private and public placement of equity securities, as well as debt financing and capital leases. The Company’s ability to fund its longer term cash requirements is subject to multiple risks, many of which are beyond its control. The Company intends to raise additional capital, either through debt or equity financings or through the potential sale of the Company’s assets in order to achieve its business plan objectives. Management believes that it can be successful in obtaining additional capital; however, no assurance can be provided that the Company will be able to do so. There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

 

On July 7, 2016, the Company raised $1,250,000 in a private placement offering of convertible preferred stock and warrants and received net proceeds of $1,194,737.

 

On August 8, 2016, the Company filed a preliminary Form S-1 with the Securities and Exchange Commission to register shares of its common stock which would allow the Company to raise up to $20 million.

 

On September 16, 2016, the Company raised $4,000,000 in a registered public offering of common shares and received net proceeds of $3,371,836.

 

On October 25, 2016, the underwriter of the registered public offering exercised an over-allotment option and the Company received $600,000 from the sale of common stock and received net proceeds of $545,500.

 

On November 8, 2016, the Company entered into a series of agreements wherein $5.0 million of the Company’s senior secured debt due to Melody Business Financing, LLC was canceled and the Company simultaneously issued 1,000 shares of Series D Convertible Preferred Stock and warrants to purchase 4.0 million shares of common stock at an exercise price of $1.15 per share.  The cancellation of that debt serves to reduce the balloon payment due in October 2019 by that amount and reduce interest payments by $400,000 on an annual basis.

 

Continuing Operations

 

Net Cash Used In Operating Activities. Net cash used in operating activities for the nine months ended September 30, 2016 totaled $5,127,270 compared to $2,911,891 for the nine months ended September 30, 2015 representing an increase of $2,215,379. Revenues generated from continuing operations were $880,226 lower in the 2016 period which adversely impacted cash flows available to support operating activities. Cash operating expenses incurred from continuing operations were $996,869 lower in the 2016 period which positively impacted cash flows available to support operating activities.  

 

 

Net Cash Used in Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2016 totaled $1,692,895 compared to $5,133,315 for the nine months ended September 30, 2015 representing a decrease of $3,440,420 or 67%. Cash capital expenditures totaled $1,692,895 in the 2016 period compared to $5,131,432 in the 2015 period representing a decrease of $3,438,537. The Company was able to redeploy certain equipment from its discontinued operations to support its continuing operations, thereby lowering capital expenditures in the 2016 period. Capital expenditures 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.  

 

Net Cash Provided by (Used in) Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2016 totaled $6,083,238 compared to net cash used in financing activities of $729,465 for the nine months ended September 30, 2015, representing an increase of $6,812,703. During the 2016 period, we completed three equity offerings which resulted in net proceeds of $6,802,823.

 

Discontinued Operations

 

Net Cash Used In Operating Activities. Net cash used in operating activities for the nine months ended September 30, 2016 totaled $1,479,792 compared to $8,730,646 for the nine months ended September 30, 2015 representing a decrease of $7,250,854. Operating activities for the discontinued business were terminated in March 2016 which resulted in lower cash requirements for the 2016 period.

 

Net Cash Used in Investing Activities. Net cash provided by investing activities for the nine months ended September 30, 2016 totaled zero compared to net cash used of $213,641 for the nine months ended September 30, 2015 representing a change of $213,641. Cash capital expenditures totaled $220,751 in the 2015 period compared to zero in the 2016 period which reflected the Company’s decision to exit the shared wireless infrastructure business.

 

Net Cash Provided by (Used in) Financing Activities. There were no financing activities during either period.

    

In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”), to operate a new business designed to leverage its fixed wireless network in urban markets to provide other wireless technology solutions and services. Hetnets built a carrier-class network which offered a shared wireless infrastructure platform, primarily for (i) co-location of customer owned antenna and related equipment and (ii) Wi-Fi access and offloading. The Company referred to this as its “Shared Wireless Infrastructure” or “Shared Wireless” business. During the fourth quarter of 2015, the Company determined to exit this business and curtailed activities in its smaller markets. The remaining network, located in New York City (or “NYC”), was the largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015 and continuing into the first quarter of 2016 to sell the New York City network. On March 9, 2016, the Company completed a sale and transfer of certain assets to a major cable company (the “Buyer”). The Asset Purchase Agreement provided that the Buyer would assume certain rooftop leases in NYC and acquire ownership of the Wi-Fi access points and related equipment associated with operating the network. The Company retained ownership of all backhaul and related equipment and the parties entered into a backhaul services agreement under which the Company provides internet bandwidth to the Buyer at the locations governed by the leases. The agreement is for a three-year period with two, one year renewals and is cancellable by the Buyer on sixty days’ notice. The net effect of the Buyer (i) assuming certain rooftop leases, (ii) entering into a backhaul services agreement, and (iii) terminating the access agreement is projected to result in a net reduction in cash requirements of approximately $6 million annually. During the first quarter of 2016, the Company determined that it would not be able to sell the remainder of the New York City network, and accordingly, all remaining assets are being redeployed into the fixed wireless network or written off. The operating results and cash flows for Hetnets have been reclassified and presented as discontinued operating results for all periods presented in these condensed consolidated financial statements.

 

Other Considerations

 

Debt Financing. In October 2014, we entered into a loan agreement (the “Loan Agreement”) with Melody Business Finance, LLC (the “Lender”). The Lender provided us with a five-year $35 million secured term loan (the “Financing”). The Financing was issued at a 3% discount and the Company incurred $2,893,739 in debt issuance costs. Net proceeds were $31,056,260.

 

 

 

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 accrues 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 anti-dilution 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 December 31, 2016.

 

Equity Offerings. In the second quarter of 2016, we entered into securities purchase agreements with certain accredited investors in which we sold in a registered direct offering a total of 750,000 shares of common stock at a purchase price of $3.04 per Unit, with each Unit consisting of one share of common stock and an unregistered warrant to purchase one share of common stock.  Expenses associated with this direct offering totaled $43,750.

 

On July 6, 2016, we entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor pursuant to which we raised $1,250,000 in a private placement offering 892,857 units of our securities (the “Units”) at a price of $1.40 per Unit. As adjusted for the Reverse Stock Split, each Unit consists of (i) one share of Series B Convertible Preferred Stock, par value $0.001 per share (the “Preferred Stock”), with each share of Preferred Stock convertible into one half of a share of common stock, and (ii) one fourth of a warrant (a “Warrant”), with each Warrant exercisable into common stock at an exercise price equal to $3.00 per share of common stock. The transaction closed on July 7, 2016. On July 21 and 26, 2016, the holder converted all of the shares of the preferred stock into 446,429 shares of common stock.

 

On September 16, 2016, we completed an underwritten offering at $1.35 per share which resulted in gross proceeds of $4,000,000 and the issuance of 2,962,963 shares. We incurred costs of approximately $630,000 related to the offering. We granted the underwriter an option for a period of up to 45 days from the date of the prospectus to purchase up to an aggregate of 444,444 shares of our common stock to cover overallotments. On October 25, 2016, the underwriter exercised that option and the Company received $600,000 from the sale of common stock and received net proceeds of $545,500. 

 

   

Contractual Obligations and Commitments

 

The following table summarizes our contractual obligations and other commitments as of September 30, 2016:

 

		Payments due by period
		Total				2016				2017				2018				2019				2020				Thereafter
Operating leases		$	21,284,301			$	5,030,287			$	8,494,869			$	4,332,570			$	2,710,244			$	620,960			$	95,371
Long-term debt			37,879,095				-				-				-				37,879,095				-				-
Capital leases			1,254,567				272,960				837,811				143,796				-				-				-
Total		$	60,417,963			$	5,303,247			$	9,332,680			$	4,476,366			$	40,589,339			$	620,960			$	95,371

 

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 April 2025. Certain of these operating leases include extensions, at our option, for additional terms ranging from one to twenty-five 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.

 

Long-Term Debt. We have entered into a loan agreement with Melody Business Finance, LLC. The $35 million term loan becomes due in October 2019. Accrued PIK interest totaled $2,879,095 as of September 30, 2016.

 

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

 

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.

 

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

 

 

   

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Market risk is the potential loss arising from adverse changes in market rates and prices. Our primary market risk relates to interest rates. At September 30, 2016, 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, 2016, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our system of internal control over financial reporting during the three months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

  

 

   

 PART II

OTHER INFORMATION

 

 Item 1A. Risk Factors.

 

 We may fail to regain compliance for continued listing on the NASDAQ Capital Market and a delisting of our stock could make it more difficult for investors to sell their shares

 

Our common stock was approved for listing on the NASDAQ Capital Market in May of 2007 where it continues to be listed. The listing Rules (the “Rules”) of NASDAQ require the company to meet certain requirements. These continued listing standards include specific criteria, including:  

 

•

a $1.00 minimum closing bid price;

•

stockholders’ equity of $2.5 million;

•

500,000 shares of publicly-held common stock with a market value of at least $1 million;

•

300 round-lot stockholders; and

•

compliance with NASDAQ’s corporate governance requirements, as well as additional or more stringent criteria that may be applied in the exercise of NASDAQ’s discretionary authority.

 

On November 24, 2015, and as previously disclosed in a current report on Form 8-K filed on November 27, 2015, NASDAQ notified the Company that, based upon the closing bid price of our common stock for the 30 prior consecutive business days, we no longer satisfied the minimum $1.00 closing bid price requirement and provided a 180-day grace period through May 23, 2016 to regain compliance with that requirement. On May 17, 2016, and as previously disclosed in a current report on Form 8-K filed on May 23, 2016, NASDAQ notified us that we also no longer satisfied the minimum $2.5 million stockholders’ equity requirement.

 

 

 

On July 7, 2016, we effected a 1 for 20 reverse split of our common stock which remedied the $1.00 closing bid price deficiency. On that same day, we met with NASDAQ representatives and presented a plan to comply with the minimum $2.5 million stockholders' equity requirement. On July 14, 2016, NASDAQ responded favorably to our plan and granted us until November 22, 2016 to comply with the stockholders' equity requirement.

 

We are diligently working to meet this remaining requirement for continued listing on NASDAQ. However, there is no assurance that we will be able to meet that requirement on or before November 22, 2016.

 

If we are delisted, our common stock will trade, if at all, only on the over-the-counter market, such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with quotation requirements.  In addition, delisting of our common stock could depress our stock price, substantially limit liquidity of our common stock and materially adversely affect our ability to raise capital on terms acceptable to us, or at all.

  

Finally, delisting of our common stock would likely result in our common stock becoming a “penny stock” under the Securities Exchange Act.  The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend the shares but must trade it on an unsolicited basis. Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for shares that become subject to those penny stock rules. Under such circumstances, shareholders may find it more difficult to sell, or to obtain accurate quotations, for our common stock, and our common stock would become substantially less attractive to certain purchasers such as financial institutions, hedge funds and other similar investors.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the quarterly period covered in this Report, we issued the following unregistered securities that have not previously been disclosed in a Current Report on Form 8-K:

 

	●	5,000 shares of our common stock in February 2016 to a third party for consulting services with a fair value $20,000;

	●	125,000 shares of our common stock in July 2016 to a third party for consulting services with a fair value $385,000;

	●	52,966 shares of our common stock in September 2016 to a third party for consulting services with a fair value $68,856;

	●	10,000 shares of our common stock in September 2016 to a third party for consulting services with a fair value $14,800; and

●

75,000 warrants with an exercise price of $1.48 per share in September 2016 to a third party for consulting services with a fair value $66,577.

 

These transactions did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe was exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder.

 

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, 2016 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 Statement of Stockholders’ (Deficit) Equity, and (v) related notes to these financial statements.  

 

   

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, 2016	By: /s/ Philip Urso
	Philip Urso Chairman and Interim Chief Executive Officer (Principal Executive Officer)
	By: /s/ Frederick Larcombe
	Frederick Larcombe
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

 

 

   

 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, 2016 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 Statement of Stockholders’ (Deficit) Equity, and (v) related notes to these financial statements.  

 

 

31