Towerstream Reports Fourth Quarter and Year End 2012 Results

Towerstream Reports Fourth Quarter and Year End 2012 Results

MIDDLETOWN, R.I., March 18, 2013 (GLOBE NEWSWIRE) -- Towerstream Corporation
(Nasdaq:TWER) (the "Company"), a leading 4G and Small Cell Rooftop Tower
company, announced results for the fourth quarter and year ended December 31,
2012.

Fourth Quarter and Annual Operating Highlights

  oRevenue increased 15% to $8.2 million for the fourth quarter 2012 compared
    to the fourth quarter 2011 and increased 1% compared to the third quarter
    2012.
  oRevenue increased 22% to $32.3 million for the year ended December 31,
    2012 compared to $26.5 million for the year ended December 31, 2011.
  oAdjusted EBITDA profitability, excluding non-recurring and non-core
    expenses, was $1.7 million for the fourth quarter 2012 compared to $1.6
    million for the third quarter 2012 and the fourth quarter 2011.
  oAdjusted EBITDA profitability, excluding non-recurring and non-core
    expenses, was $6.4 million for the year ended December 31, 2012 compared
    to $5.2 million for the year ended December 31, 2011.
  oCustomer churn for the fourth quarter 2012 was 1.59% compared to 1.54% for
    the third quarter 2012 and 1.43% for the fourth quarter 2011. Customer
    churn remained within the Company's target range of 1.4% to 1.7% for the
    thirteenth consecutive quarter.
  oClosed acquisition of Delos Internet in Houston in February 2013. This
    transaction brings our national presence to thirteen markets, including
    nine of the eleven largest business markets.
  oFormed Hetnets Tower Corporation, a wholly owned subsidiary which will
    provide a range of shared infrastructure services and access.

Management Comments

"We are pleased to report another year of solid growth and stronger operating
performance," noted Joseph Hernon, Chief Financial Officer. "We recently
closed our fifth acquisition and are focused on bringing our fixed wireless
business to cash flow profitability in the first half of 2013."

"We are excited to launch our new subsidiary, Hetnets Tower Corporation, in
January which will offer a wide range of shared wireless infrastructure
services and access," stated Jeffrey Thompson, President and Chief Executive
Officer. "The explosion in mobile data in urban markets is driving a migration
to small cell architecture, and the major carriers are presently focused on
the densification of their network."

"Our fixed wireless, backhaul network and street-level rooftop locations
enables us to quickly deliver solutions to the challenges associated with
small cell deployments," added Mr. Thompson.

About Hetnets Tower Corporation

Since 2010, we have been exploring opportunities to leverage our fixed
wireless network in major urban markets to provide other wireless technology
solutions and services. Over the past few years, a significant increase in
mobile data generated by smartphones, tablets, and other devices has placed
tremendous demand on the networks of the carriers. In recent months, we have
concluded that the wireless communications industry is experiencing a
fundamental shift from its current, macro-cellular architecture to
hyper-densified Small Cell architecture where existing cell sites will be
supplemented by many smaller base stations operating near street level. We
believe that Wi-Fi will be an integral component of Small Cell architecture.

Hetnets plans to offer wireless technology solutions and services 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 the offloading
of mobile data, (iii) rental of cabinets, switch ports, interconnection
services, including backhaul or transport, and (iv) rental of power and power
backup.

Selected Financial Data and Key Operating Metrics                          
(All dollars are in thousands except ARPU)                                 
                              (Unaudited)
                              Three months ended
                              12/31/2012     9/30/2012    12/31/2011
Selected Financial Data                                  
Revenues                       $ 8,229        $ 8,127      $ 7,185
Gross margin                   38%            45%          64%
Adjusted gross margin          69%            69%          72%
excluding non-core expenses
Depreciation and amortization  3,605          3,399        2,651
Core operating expenses (1)(2) 5,767          5,664        5,103
Operating loss (1)             (6,282)        (5,380)      (3,164)
Gain on business acquisition   --             --           1,186
Net loss (1)                   (6,442)        (5,408)      (2,080)
Adjusted EBITDA (2)            (2,195)        (1,424)      (63)
Non-recurring expenses         87             55           200
Non-core expenses              3,770          2,973        1,490
Adjusted EBITDA excluding
non-recurring and non-core     1,662          1,605        1,627
expenses (2)
Capital expenditures                                     
Wireless broadband            $ 2,463        $ 2,416      $ 3,160
Rooftop tower sites            2,430          3,818        963
Key Operating Metrics                                    
Churn rate (2)                 1.59%          1.54%        1.43%
ARPU (2)                       $ 717          $ 714        $ 710
ARPU of new customers (2)      542            560          612
                                                        
                              Years ended
                              12/31/2012                 12/31/2011
Selected Financial Data                                  
Revenues                       $ 32,279                   $ 26,495
Gross margin                   49%                        69%
Adjusted gross margin          69%                        73%
excluding non-core expenses
Depreciation and amortization  13,634                     9,138
Core operating expenses (1)(2) 23,012                     18,331
Operating loss (1)             (20,746)                   (9,164)
Gain (loss) on business        (40)                       2,232
acquisition
Net loss (1)                   (20,989)                   (7,025)
Adjusted EBITDA (2)            (5,023)                    1,161
Non-recurring expenses         517                        496
Non-core expenses              10,875                     3,581
Adjusted EBITDA excluding
non-recurring and non-core     6,370                      5,238
expenses (2)
Capital expenditures                                     
Wireless broadband            $ 13,224                   $ 9,893
Rooftop tower sites            11,589                     5,044
Key Operating Metrics                                    
Churn rate (2)                 1.59%                      1.45%
ARPU (2)                       $ 717                      $ 710
ARPU of new customers (2)      531                        599
                                                        
(1) Includes stock-based compensation of $305, $438, $419, $1,658 and      
$1,081, respectively.
(2) See Non-GAAP Measures below for a definition and reconciliation of
Adjusted EBITDA, and definitions of Core Operating Expenses, Non-Core
Expenses, Churn, ARPU and ARPU of new customers.

Operating Outlook and Guidance

  oRevenues for the first quarter 2013 are expected to range between $8.3
    million to $8.4 million.
    
  oAdjusted EBITDA profitability is expected to range between $1.6 million to
    $1.7 million.

Non-GAAP Measures

The terms "Adjusted EBITDA," "Churn," "Churn rate," "ARPU," and "Market Cash
Flow" are measurements used by Towerstream to monitor business performance and
are not recognized measures under generally accepted accounting principles
("GAAP").Accordingly, investors are cautioned in using or relying upon these
measures as alternatives to recognized GAAP measures.Our methods of
calculating these measures may differ from other issuers and, accordingly, may
not be comparable to similar measures presented by other issuers.

We focus on Adjusted EBITDA as a principal indicator of the operating
performance of our business.EBITDA represents net income (loss) before
interest, income taxes, depreciation and amortization.We define Adjusted
EBITDA as net income (loss) before interest, income taxes, depreciation and
amortization expenses, excluding, when applicable, stock-based compensation,
other non-operating income or expenses, non-core expenses, as well as gain or
loss on (i) disposal of property and equipment, (ii) nonmonetary transactions,
and (iii) business acquisitions.Adjusted Market EBITDA also excludes
corporate overhead expenses and other centralized costs.We believe that
Adjusted Market EBITDA trends are insightful indicators of our markets'
relative performance, and whether our markets are able to produce sufficient
market cash flow to fund working capital and capital expenditure needs.

The term "Core Operating Expenses" includes customer support services, sales
and marketing, and general and administrative expenses, and excludes cost of
revenues, depreciation and amortization.

The term "Non-Core Expenses" includes costs related to the efforts to develop
other wireless technology solutions and services.

The terms "Churn" and "Churn rate" refer to the percent of revenue lost on a
monthly basis from customers disconnecting from our network or reducing the
amount of their bandwidth.The term "ARPU" refers to the monthly average
revenue per user, or customer, being generated from those customers under
contract at the end of each indicated period.We calculate ARPU by dividing
our monthly recurring revenue ("MRR") at the end of a period by the number of
customers generating that MRR. "ARPU of new customers" is calculated in the
same manner but only includes new customers who entered into contracts during
the indicated period. Market Cash Flow represents the amount of cash generated
in a market after deducting a market's direct operating expenses from that
market's revenues.Market Cash Flow does not include (i) centralized costs
which support all markets collectively or (ii) any network related capital
expenditures incurred in a market.

The Non-GAAP measure, Adjusted EBITDA, excluding non-recurring and non-core
expenses, has been reconciled to Net loss as follows:

(All dollars are in thousands)                                   
                                              Three months ended
                                              12/31/2012 9/30/2012 12/31/2011
Reconciliation of Non-GAAP to GAAP:                               
Adjusted EBITDA, excluding non-recurring and   $ 1,662    $ 1,605   $ 1,627
non-core expenses
Depreciation and amortization                  (3,605)    (3,399)   (2,651)
Non-recurring expenses, primarily              (87)       (55)      (200)
acquisition-related
Non-core expenses                              (3,770)    (2,973)   (1,490)
Stock-based compensation                       (305)      (438)     (419)
Loss on property and equipment                 (99)       (48)      (16)
Loss on nonmonetary transactions               (78)       (71)      (15)
Interest expense                               (29)       (37)      (8)
Gain on business acquisition                   --         --        1,186
Other income (expense), net                    (6)        (2)       (1)
Interest income                                1          10        25
Provision for income taxes                     (126)      --        (118)
Net loss                                       $ (6,442)  $ (5,408) $ (2,080)
                                                                 
                                              Years ended
                                              12/31/2012          12/31/2011
Reconciliation of Non-GAAP to GAAP:                               
Adjusted EBITDA, excluding non-recurring and   $ 6,370             $ 5,238
non-core expenses
Depreciation and amortization                  (13,634)            (9,138)
Non-recurring expenses, primarily              (517)               (496)
acquisition-related
Non-core expenses                              (10,875)            (3,581)
Stock-based compensation                       (1,658)             (1,081)
Loss on property and equipment                 (172)               (65)
Loss on nonmonetary transactions               (260)               (41)
Interest expense                               (105)               (22)
Gain (loss) on business acquisition            (40)                2,232
Other income (expense), net                    (14)                (10)
Interest income                                42                  57
Provision for income taxes                     (126)               (118)
Net loss                                       $ (20,989)          $ (7,025)

                                                         
Summary Condensed Consolidated Financial Statements                       
(All dollars are in thousands except per share amounts)                   
                                                         
Statement of Operations      (Unaudited)         (Audited)
                             Three months ended  Years ended
                              December 31,        December 31,
                             2012      2011      2012       2011
                                                         
Revenues                      $ 8,229   $ 7,185   $ 32,279   $ 26,495
                                                         
Operating Expenses                                        
Cost of revenues (exclusive   5,139     2,595     16,379     8,190
of depreciation)
Depreciation and amortization 3,605     2,651     13,634     9,138
Customer support services     1,136     1,043     4,709      3,557
Sales and marketing          1,536     1,287     6,134      5,362
General and administrative    3,095     2,773     12,169     9,412
Total Operating Expenses      14,511    10,349    53,025     35,659
Operating Loss                (6,282)   (3,164)   (20,746)   (9,164)
Other Income (Expense)                                    
Gain (loss) on business       --        1,186     (40)       2,232
acquisition
Interest income               1         25        42         57
Interest expense              (29)      (8)       (105)      (22)
Other income (expense), net   (6)       (1)       (14)       (10)
Total Other Income (Expense)  (34)      1,202     (117)      2,257
Loss before income taxes      (6,316)   (1,962)   (20,863)   (6,907)
Provision for income taxes    (126)     (118)     (126)      (118)
Net Loss                      $ (6,442) $ (2,080) $ (20,989) $ (7,025)
                                                         
Net loss per common share –   $ (0.12)  $ (0.04)  $ (0.39)   $ (0.15)
basic and diluted
Weighted average common
shares outstanding – basic    54,648    53,580    54,434     47,506
and diluted

                                                                           
Balance Sheet (Audited)                                                     
(All dollars are in thousands)                                              
                                                       
                                      December 31, 2012 December 31, 2011
Assets                                                  
Current Assets                                          
Cash and cash equivalents              $ 15,152          $ 44,672
Other                                 1,553             1,216
Total Current Assets                   16,705            45,888
                                                       
Property and equipment, net            41,982            27,531
                                                       
Other assets                           8,423             10,218
                                                       
Total Assets                           67,110            83,637
                                                       
Liabilities and Stockholders' Equity                    
Current Liabilities                                     
Accounts payable and accrued expenses  4,149             3,359
Deferred revenues and other            2,468             2,297
Total Current Liabilities              6,617             5,656
                                                       
Long-Term Liabilities                 2,689             836
Total Liabilities                      9,306             6,492
                                                       
Stockholders' Equity                                    
Common stock                           54                54
Additional paid-in-capital             121,118           119,470
Accumulated deficit                    (63,368)          (42,379)
Total Stockholders' Equity             57,804            77,145
Total Liabilities and Stockholders'    $ 67,110          $ 83,637
Equity
                                                       
Statement of Cash Flows(Audited)      Years ended December 31,
                                      2012              2011
Cash Flows From Operating Activities                    
Net loss                               $ (20,989)        $ (7,025)
Non-cash adjustments:                                   
Depreciation & amortization            13,634            9,138
Stock-based compensation              1,658             1,081
(Gain) loss on business acquisition    40                (2,232)
Other                                  413               349
Changes in operating assets and        (2,835)           (609)
liabilities
Net Cash (Used in) Provided By         (8,079)           702
Operating Activities
                                                       
Cash Flows From Investing Activities                    
Acquisitions of property and equipment (20,723)          (13,620)
Acquisition of business                --                (4,400)
Other                                 (620)             (198)
Net Cash Used in Investing Activities  (21,343)          (18,218)
                                                       
Cash Flows From Financing Activities                    
Repayment of capital leases            (492)             (175)
Proceeds from stock issuances          428               355
Net proceeds from sale of common stock --                38,835
Other                                  (34)              --
Net Cash (Used in) Provided By         (98)              39,015
Financing Activities
                                                       
Net (Decrease) Increase In Cash and    (29,520)          21,499
Cash Equivalents
Cash and Cash Equivalents – Beginning  44,672            23,173
Cash and Cash Equivalents – Ending    $ 15,152          $ 44,672

                                                         
Market data for the three months ended December 31, 2012                 
(All dollars are in thousands)                                            
                                                       
                                                             Adjusted
Market                      Cost of     Gross      Operating Market
                   Revenues Revenues(1) Margin (1) Costs     EBITDA
Los Angeles        $ 2,058  $ 538       $     74%  $ 361     $ 1,159
                                        1,520
New York           1,938    655         1,283 66%  383       900
Boston             1,688    376         1,312 78%  207       1,105
Chicago            961      339         622   65%  161       461
Miami              424      111         313   74%  80        233
San Francisco      382      118         264   69%  80        184
Las Vegas-Reno     347      150         197   57%  35        162
Dallas-Fort Worth  155      88          67    43%  84        (17)
Providence-Newport 124      57          67    53%  23        44
Seattle            110      51          59    54%  23        36
Philadelphia       34       18          16    46%  28        (12)
Nashville          8        16          (8)   --%  10        (18)
Total              $ 8,229  $ 2,517     $     69%  $ 1,475   $ 4,237
                                        5,712
                                                       
Reconciliation of Non-GAAP Financial Measure to                      
GAAP Financial Measure
Adjusted market EBITDA                                   $ 4,237
Centralized costs                                       (861)
(1)
Corporate expenses                                      (1,957)
Non-core expenses                                       (3,791)
Depreciation and                                         (3,605)
amortization
Stock-based compensation                                 (305)
Other income (expense)                                   (34)
Provision for income taxes                               (126)
Net loss                                                $
                                                             (6,442)
                                                       
Market data for the three months ended December 31, 2011                
(All dollars are in thousands)                                            
                                                                         
                                                             Adjusted
Market                      Cost of     Gross      Operating Market
                   Revenues Revenues(1) Margin(1)  Costs     EBITDA
Boston            $ 1,687  $ 381       $     77%  $ 226     $ 1,080
                                        1,306
New York          1,617    465         1,152 71%  288       864
Los Angeles        1,387    309         1,078 78%  246       832
Chicago           858      251         607   71%  140       467
Las Vegas-Reno     434      181         253   58%  53        200
San Francisco      386      73          313   81%  87        226
Miami              381      76          305   80%  96        209
Dallas-Fort Worth  166      89          77    46%  61        16
Seattle            126      54          72    57%  25        47
Providence-Newport 108      43          65    61%  19        46
Philadelphia       26       16          10    39%  22        (12)
Nashville          9        31          (22)  --% 8         (30)
Total              $ 7,185  $ 1,969     $     73%  $ 1,271   $ 3,945
                                        5,216
                                                       
Reconciliation of Non-GAAP Financial Measure to GAAP Financial           
Measure
                                                       
Adjusted market EBITDA                                   $ 3,945
Centralized costs                                       (790)
(1)
Corporate expenses                                      (1,757)
Non-core expenses                                       (1,492)
Depreciation and                                         (2,651)
amortization
Stock-based compensation                                 (419)
Other income (expense)                                   1,202
Provision for income taxes                               (118)
Net loss                                                $
                                                             (2,080)
                                                       
(1) Certain expenses are reported as Cost of Revenues for financial
statement purposes but are included in other line items in the Market
Data table, either because they are not specific to any market or
they relate to non-core expenses.

Conference Call and Webcast

A conference call led by President and Chief Executive Officer, Jeff Thompson,
and Chief Financial Officer, Joseph Hernon, will be held on March 18, 2013 at
5:00 p.m. ET to review our financial results and provide an update on current
business developments.

Interested parties may participate in the conference by dialing 877-755-7423
or 678-894-3069 (for international callers). A telephonic replay of the
conference may be accessed approximately two hours after the call through
March 25, 2013 at 11:59 p.m. ET by dialing 855-859-2056 or 404-537-3406 (for
international callers) using pass code 18993014.

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

About Towerstream Corporation

Towerstream (Nasdaq:TWER) is a leading 4G and Small Cell Rooftop Tower
company. The company owns, operates, and leases Wi-Fi and Small Cell rooftop
tower locations to cellular phone operators, tower, Internet and cable
companies and hosts a variety of customers on its network. Towerstream was
originally founded in 2000 to deliver fixed-wireless high-speed Internet
access to businesses and to date offers broadband services in over 13 urban
markets including New York City, Boston, Los Angeles, Chicago, Philadelphia,
the San Francisco Bay area, Miami, Seattle, Dallas-Fort Worth, Houston,
Nashville, Las Vegas-Reno, and the greater Providence area. For more
information on Towerstream services, please visit www.towerstream.com and/or
follow us @Towerstream.

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

Safe Harbor

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

CONTACT: INVESTOR CONTACT:
         Terry McGovern
         Vision Advisors
         415-902-3001
         mcgovern@visionadvisors.net
        
         MEDIA CONTACT:
         Todd Barrish
         Indicate Media
         646-396-6038
         todd@indicatemedia.com

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