20091113Application.pdf

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November 12, 2009
VIA OVERNIGHT COURIER
800 Westchester Avenue
Suite N501
Rye Brook, NY 10573
ß UN:t -D9 -0 (Ms. Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, ID 83702
Re: Broadview Networks, Inc.
Application for Certificate of Public Convenience and Necessity
Dear Ms. Jewell:
On behalf of Broadview Networks, Inc. ("Broadview"), transmitted herewith are an
original and three (3) copies of Broadview's Application for a Certificate of Public Convenience
and Necessity to Provide Local Exchange Services within the State of Idaho. The Company has
no local exchange customers at this time in the State ofIdaho; this is a new filing.
An additional copy of this transmittal letter is also enclosed, to be date-stamped and
retured in the postage prepaid envelope provided.
To the extent you have any questions concernng this filing, please contact the
undersigned at [phone] or chananêbroadviewte1.com.
Respectfully submitted,~71~7I~
Catherine M. Hannan
Regulatory Counsel
Enclosures
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSlcßC ED
IN THE MATTER OF THE
APPLICATION OF
Broadview Networks, Inc.
For a Certifcate of Public
Convenience and Necessity to
Provide Local Exchange
Telecommunications Services
Within the State of Idaho
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2009 NOV l 3 AM 10: 23
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APPLICATION
Pursuant to Title 62 ofthe Idaho Code and IAA 31.01.111, Broadview Networks, Inc.
("Broadview" or "Applicant") hereby respectfully requests that the Idaho Public Utilities
Commission ("Commission") grant Broadview a Certificate of Public Convenience and necessity
to provide local exchange telecommunications services within the State of Idaho. In support of
this Application, Broadview submits the followin:
I. PROPOSED SERVICES.
Broadview Networks, Inc., is presently authorized by the Federal Communications
Commission to provide interstate domestic and international telecommuncations services
pursuant to Section 214 of the Communications Act of 1934, as amended. Broadview is also
certified, or otherwise authorized to provide interexchange long distance telecommunications
services throughout the contiguous United States. In Idaho, Broadview's intrexchange services
price list was allowed to take effect on December 26,2008.
Additionally, Broadview has authority to provide local exchange telecommunications
services in California, Connecticut, the Distrct of Columbia, Delaware, Florida, Georgia, Maine,
Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, Nevada, New York, Ohio,
Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia and
Washington.
Through this Application, Broadview requests authority to allow the company to offer its
customers facilities-based and resold competitive local exchange telecommunications and
interexchange telecommunications services throughout the entire state of Idaho, or to the extent
the facilities of its underlying carrers permit. Applicant seeks authority to provide facilities-
based and resold local exchange and interexchange services to the extent the network and
transmission facilities of its facilities-based competitive suppliers permit. Applicant does not
anticipate installing physical plant at this time. Petitioner may, however, to collocate switching,
signaling systems and other equipment of ILEC and non-ILEC collocation facilities such as
carer hotels, and may lease capacity on fiber circuits from other carrers. The location of
Applicant's facilities will depend upon the service requests of Applicant's customers and
therefore such locations have not been fully finalized. No physical construction of fiber optic or
copper cables is anticipated, now or in the future.
II. FORM OF BUSINESS.
1. Name, Address and Form of Business:
Broadview Networks, Inc.
800 Westchester Avenue, Suite N-501
Rye Brook, NY 10573
Telephone: [phone]
Facsimile: [phone]
Internet: ww.broadviewnet.com
The Commission should direct all inquiries and correspondence with respect to this
Application to:
Catherine M. Hannan, Regulatory Counsel
Broadview Networks, Inc.
800 Westchester Avenue, Suite N-501
Rye Brook, NY 10573
Telephone: [phone]
Facsimile: [phone]
E-mail: chanan(fbroadviewte1.com
Broadview is a corporation organized pursuant to the laws of the State of New York.
Applicant is authorized to conduct business in Idaho as a foreign corporation. Applicant
curently has no principal business address within the State of Idaho. Applicant's registered
agent for service of process in Idaho is
CT Corporation System
1111 W. Jefferson, Suite 530
Boise, il 83702
A certified copy of Applicant's Aricles of Incorporation and Foreign Corporation Certification
are attached as Exhibit 1 hereto.
2. Applicant is a wholly-owned subsidiary of Broadview Networks Holdings, Inc. For the
Commission's convenience, beneficial ownership interests of certain stockholders and
officers/directors of Applicant are more fully set forth in Exhibit 2 hereto.
3. Names and addresses ofthe officers and directors of Applicant:
Please see Exhibit 2 hereto.
4. Names and addresses of organizations holding 5% or greater ownership or management
interests in Applicant:
As noted above, Applicant is 100% owned by Broadview Networks Holdings, Inc. No
management agreements exist with respect to Applicant.
5. Names and addresses of subsidiares owned or controlled by Applicant:
Applicant's parent corporation, Broadview Networks Holdings, Inc., is also the direct or
indirect corporate parent of several entities which are authorized by the Federal Communications
Commission and various state public utility commissions to provide interstate, international,
local and/or long distance telecommunications services. The names and addresses of these
entities are set forth in Exhibit 3 hereto.
III. TELECOMMUNICATIONS SERVICE.
1. The date on which applicant proposes to begin constrction or anticipates it wil begin to
provide service:
As noted above, Applicant does not anticipate installng physical plant at this time.
Applicant anticipates it wil begin to provide service upon grant of authority and the
effectiveness of one or more interconnection agreements with certificated carers in Idaho.
2. Description of Customer Classes and Customer Services that Applicant proposes to offer
to the public:
Although Broadview's service offering wil be focused upon the provision of service to
small- to medium-sized business customers, the Company's services wil also be available to
residential customers. Upon grant of authority by the Commission, and approval of
interconnection/resale agreements, Broadview proposes to initially offer basic two-way local
residential and business service, supplemented by a variety of customer calling services (i.e.,
three-way calling, call forwarding, call waiting, distinctive ringing, and speed calling) and
CLASS features (i.e., caller I.E., automatic rediaVrecall, and customer-originated trace). The
Company will later expand these initial basic service offerings to include advanced
telecommunications services, data services and private line services throughout the service area
of the incumbent provider(s).
IV. SERVICE TERRTORY.
Applicant seeks authority to provide interexchange and local exchange services
throughout the State of Idaho. As noted above, Applicant may provide these services on either a
resold or facilities basis. At present, Applicant neither owns nor controls property in the State of
Idaho. It is likely that Applicant's service offering wil compete with such entities as Qwest
North, Qwest South and Verizon Northwest.
V. FINANCIAL INFORMATION.
With more than 15 years' experience in the provision of telecommuncations services,
initially in the long distance arena and now in the local exchange telecommunications services
area as well, the free flow of cash generated from the Company's operations and the availability
of credit resources if needed, Broadview is well-poised to expand its telecommunications
services offering in Idaho to include the provision of local exchange telecommunications
services.
In demonstration of Applicant's financial qualifications, attached hereto as Exhibit 4 is
the Company's most recently-fied Securties and Exchange Commission Form lO-Q (November
6, 2009), which contains all relevant financial information for the Company.
VI. "ILLUSTRATIVE TARFF FILINGS.
Applicant's initial local exchange services tariffis attached hereto as Exhibit 5.
VII. CUSTOMER CONTACTS.
1. Contact Information for Applicant:
For consumer inquiries and complaints from the public:
Ar Gairo, Senior Vice President
Broadview Networks, Inc.
2100 Renaissance Boulevard
King of Prussia, P A 19406
Tel: [phone]
Fax: [phone]
E-Mail: agairoêbroadviewnet.com
Toll-free number for customer inquiries and complaints:
[phone]
For resolving complaints, inquiries and matters concerning rates and price lists or tarffs:
Steven 1. Bogdan, Director of Regulatory
Broadview Networks, Inc.
2100 Renaissance Boulevard
King of Prussia, PA 19406
Tel: [phone]
Fax: [phone]
E-mail: sbogdan(fbroadviewnet.com
VIII. MANAGEMENT/TECHNICAL QUALIFICATIONS.
The Company has assembled a highly skilled management team, which brings a wealth
of experience and expertise to the Company's telecommunications services ventue. Together,
the Company's executives provide it with the depth and breadth of management, operational and
technical capabilities necessary to facilitate its provision of high quality, affordable
telecommunications services. Brief summaries of the experience of key members of the
Company's executive team are attached hereto as Exhibit 6.
IX. CUSTOMER SERVICE.
Broadview Customer Care Representatives and 24-hour automated customer assistance
wil be available to all Idaho customers, however, allowing customers to bring service, biling
and repair questions or complaints to the Company's attention 24 hours a day, 7 days a week,
facilitating the quick and efficient resolution of Customer concerns. Customers may access
Broadview Customer Care toll-free at [phone] to initiate service complaints or to receive
updates on reported problems or pending customer service complaints; customers may also
contact Broadview Customer Care 24 hours a day via the company's website,
ww.broadviewnet.com. Inquiries regarding service or biling may also be made in wrting.
The Company's tarff will advise customers that they have the right to contact the Idaho Public
Utilities Commission for resolution of customer service and billing issues and provides the
address and toll-free telephone number for the Commission.
X. INTERCONNECTION AGREEMENTS.
Applicant has not yet initiated interconnection or commercial agreement negotiations
with incumbent providers in Idaho.
XI. COMPLIANCE WITH COMMISSION RULES.
Attached hereto, as Exhibit 7, is Applicant's wrtten statement affrming that it has
reviewed all of the Commission rules and agrees to comply with them.
XII. ESCROW ACCOUNT OR SECURITY BOND.
Applicant does not anticipate requiring advance deposits by its customers at this time.
XIII. PUBLIC INTEREST STATEMENT.
Grant of Broadview's Application to provide facilities and non-facilities-based local
exchange services as described above in Idaho is in the public interest and wil serve the public
convenience and necessity. Broadview's proposed services wil increase the competitive choices
available to Idaho consumers. Enhanced competition in telecommunications services, in tu,
will further stimulate economic development with the service area. Furthermore, increased
competition has been shown to create incentives for all carers, including incumbent providers,
to offer lower prices, to introduce new and innovative services and to provide more responsive
customer service.
xiv. WAIVERS AND REGULATORY COMPLIANCE.
Applicant has reviewed all of the Commission's rules applicable to competitive local
exchange telecommunications service providers and agrees to comply with those rules except to
the extent that any such rules are explicitly waived generically for carrers in the same class.
CONCLUSION
Through this Application, Broadview Networks, Inc., demonstrates that it possesses the
financial, technical and managerial resources to provide local exchange telecommunications
services in Idaho, and that the provision of service by Applicant wil promote the public interest.
WHEREFORE, Applicant respectfully requests that the Commission grant Applicant
authority to operate as a provider of facilities and non-facilities based local exchange
telecommunications services in the State of Idaho; grant the waivers requested in this
Application; and grant such other relief as it deems necessary and appropriate.
Respectfully submitted ths g day of -ß"" A ~ , 2009.
BROADVIEW NETWORKS, INC.
BY:~
Charles C. Hunter
Executive Vice President, Secretar and
General Counsel
Broadview Networks, Inc.
800 Westchester Avenue, Suite N-501
Rye Brook, NY 10573
Telephone: [phone]
Facsimile: [phone]
E-mail: chunterêbroadviewnet.com
EXHIBIT 1
Articles of Incorporation
And
Foreign Corporation Certifcate
Of
Broadview Networks, Inc.
11/06/2007 17: 21 ~~ 6157923022
DOREEN FLASH.ATX-BVNI
STATE OF NEW YOR/(
DEPARTMENT OF STATE
I hereby certify that the anexed copy has been compared with the
original document in the custody of the Secretary of State and that the same
is a true copy of said original.
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WITNESS my hand and offcial sea of the
Deparent of State, at the City of Albany. on
August 24, 2007.
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Paul Laointe
Special Deputy Secretary of State
Rev. 06107
I4 002
11/06/2007 17:21 FAX [phone] DOREEN FLASH,ATX-BYXI !4 003
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STATE OF NEW YORK
DEPARTMENT OF STATE
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WITNESS my himd and official seal of the
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Paul LaPointe
Special Deputy Secretary of State
Rev. 06/07
11/06/2007 17: 23 FAX [phone] DOREEN FLASH. ATX-BVNI I4 006
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11/06/2007 17; 24 FAX 615792~022 DOREEN FLASH. KlX-BVNI I4 009
STATE OF NEW YORI(
DEPARTMENT OF STATE
I hereby certfy that the annexed copy has been compared with the
original document in the cusody of the Secretar of State and that the same
is a true copy of said originaL.
.... -. *...." N'r '..... O'f .c W .11..I""~ ~O".L t.'V :;1'\: ~ ~. .: * *:1 ." "· 'Ò ~ ."i:: . t;:", n~ '" .""11"14 s.t...
"11'.iEN o"t i".. ...... ......
wrESS my hand and offcial seal of the
Departent of State, at the Cíty of Albany. on
August 24, 2007.
ß/V~
Paul LaPointe
Special Deputy Secretary of State
Rev. 06107
11/06/2Q07 17; 25 FAX [phone] DOREEN FLASH.ATX-BYNI (4010
~...'.-
,...~~,. f~'7j) B...Zfi.O.O.oEr., -". ,.\.. .~.. --.'--'"
CERllFlATi OF IU£NDMENT Of THE VA
CErlCT! OF INCORPAATlØN OF ''ì!\ f" .
BRAR ,¡OY DevELOPMENT CORPORATIN i.7.UAR
und6 S80t 806 of !: Bisln Coti La ,'D"SE
Pur.nl to tr pr Of Sé eo orir 6u,sln COorittci'l.aw. the underIgne..-beill the Prldèntjl.Dq.SØ.of,Srr~in51r(tr n . dO-----.--
. h~'rabY Cètlfy and set forth: . . -
FIRS'r: The namé of the c~ti is eriar Joy DewlcpmG Corptiri.
SECONO; Th Cirtca Of '~n r: th Co wæ ~ wl th DorÌeri
of Siaie on June ~. 1991 ..
THIRD: Parph 3 Of t.e C6rt1ìçite Of.'~raon. relalig to thQ 8~ of
iohQrei: ji; tilîl'hy c;h:i~ to r~ad as fo1OW:
The number of CÓmmon &hares w1k:'tho Çorpran shal hallÐ'the
aulhOri to lSa is 2.~.OO at $0.10 p¡rvaue ¡:r snà.
F0U.~!H~__ :T.haÍl are ~enuy 2.:i.Cl $hres of st a~ :SO. 50 Par vlSliJ common
,-
siock ltuthOfLted, or whie: 1.429,80 5h~ hae b6ri I811Ued and outsiaing an 1.010.144....
sharps ~main unissued. The Amerclmeni t.o the Cerficate of Incrptln Is intende to provide ..-..._..~-~"" " tr~..-_. ...~_,.. ". _.. ",:-'-'-:.- ..-- ...- n_...-". _ . 1.'~~,~r,_!fa~ø; Md~ri'8t"$U3llPw;,1u ~yire to be clogc int 1,429.85- . -_. .~, . .
. shares issued and oLlta~íri a1£O.10 pdr value pc.r share at !Ie'te of , :1. aM lhere will be OJ
t .070.144 si'~ urÍ!$i at SO.50 pa valu$ pe share that.,11 be d'õln9è1l Into1J)7Ó.1~ $hres
umssoo ai $0.1 \) par value per llha $\ thQ ratG of 1 : 1. ..
:'.- .
FIFTH:The above ~nd forøing arenlTnl 10 thQ Cer(;\( of incrpmon ~
milhonzed by uriaiiimou iiolt of tté Bori:h:if Dlrecrs-u Corpral:Of. follow b' a ma
v('e oftt tiokar of a msjorit) of aU thQ ounding Shllr.11 Ql'tied to IIOtQ therin ai a meeting of
:..e shareti!drs Mll"on!h 13'" day of IllJ. 1~7
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11/06/2007 1 ï: 25 FAX [phone]
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DOREN FLSH.ATX-BVNI !4 011
WI '.
.., 'IN'WlTNESS WHER. lH Mtie otCle dfllc.rt ci~lll ha
bNn SUOSat itll -- da. or Augsl 1al7, b: th i.~ WI a1nm ut tr ... . ~ .tttQ rmt: hMn il lt ur it ~ Qf pw. ,,' &
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..gJimfJCA T;F AMENDMENT OF l'E
CERTlflCATE OF INC9RPQRATION OF
EmAA JOY OEVeiOPMENT CORPRAll0NII
". w..._.....-
ST-~T£ OF NEW YORK
Ðf.PART~.~r:iT OF ST4TE
.~,~...Ht!:~"Auc '~rõ \997.....:..--.._-
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5789 Wkfwaeu: Par!iway
.DeWl:n. NflW York 132i4-2811
.lerephON: (316) 44ß-0737"
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11/06/2007 i 7: 26 FAX [phone] DOREEN FLASH,ATX-BVNI I4 013
STATE OF NEW YORK
DEPARTMENT OF STATE
I hereby certify that the anexed copy has been compared with the
original document in the custody of the Secreta of State and that the same'
is a true copy of said originaL.
. .... ....". N ".... o'~ lìlf? ".
....,.~ .¡¿.....'O"¡:V ~1''': ~ ~.. ... .... * *". .... .... Ó ~".. ~' ~:.. v~ "':"."'4 t.."'O..... 1".iEN.. 0 "t ....."_. 1...-.... ....
WITNESS my hand and official sea of the
Departent of State, at the City of Albany, on
August 24, 2007_
ß.~~
Paul LaPointe
Special Deputy Secretar of State
Rev. 06/07
11/06/2007 17: 26 FAX [phone] DOREEN FLASH. ATX-BVNI 14014
Ý' 9710'020 00 3S~,
CERtATE Of M¡AGER
Of
SCC TELECOMMUNICATIONS. INC.
INTO
BRtAR JOY DEVELOPMfNT CORPOAAll0NJI ~~:;.
t
VAtV~Ú'
'ARD.S;:
UNDER SECTION 904 OF THE ¡USlNESS CORPORATION LAW
p
The undersigned. being The Pi:sident and the Secretary. r$søevely.. .m. sec
TelaCommgnlCèlorlS, trc:;"ilihd beíng 'thÒ. PiMid¿n'lõñd' thö - s~~..ötrY-õi Bri., Joy
O"''19Iopm&nt Corporati9n. botf corpnrl'tiòll!:; being domestic eorpQration$ organized
and exIsting under and py Vlrtua or the laws Of the 5uH'6 of New York, lJnd c plan of
marge, neving bEllin.adoptod bV the Soard nf Directors of each eonJtitl'tl corpoi'tio.
do hereby ceni1V:
(1) The name of each constituent corporation is as fOiio~:
sec Tele(:ommunlolltlons. Il'C,
BriÐr,Joy Development COrpcriition
(~L. The surviving corporation is Briar Joy-t)velopment COfPOl'tioii. whICh 51'811
as of the etfacilve.'ltlate of the merger i:e its çcrprate ri to .sec
Telecommunications. loc.'..
/3) The d~$19nlltion, number, and votlOQ rights 01 the outstanding shareI' of
eElr,h constituent corpOration srß as follows:
..I sec Telei:ommunications. Inc. has 1.000 shares of capital Stock
out:nalli;jil1g"all of which is çommon ~tock and fully errlilocl. to v~Q.
bl Briar ~arapmem Corporation has 1,63lUS!S6 shares of ciipital,
stock outstanding iil! of which is common ~tQçk ô¡nd fuiiy entitled tovm~ .
(41 ThG daur whnn tM C~rtifiCßte of Incorporiilion of sec Telecommunicaticms.
Inc. VVQ:; tiled bv the Department 01 Sulte'is thø 26'" d\'Y ot Auguist. t 997 ..~
The date wilen the certWcate of Incotpori;th:in or 6l¡ar .JoY Oovclopmcnt
Corporation weii ttlc!d by the Department (If Statg i.. the Sl! day of June; 1991,.. .
(5) Th&&r~Eit 01 sec Teiecommuriiç~t¡Qris. 'lnl~. end Briii..' J()y O'..olopNlQritCorporation \lyuthnrôi:iid in raspect to sèc TeJacommvnii;8TI0i:S, Inc.. a constituent ~
corporation. t)Y ll'e vote at tiie sole holder of its eapitat iitock on Sopternber 19. i 9Q7.
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11/06/2007 17; 26 FAX [phone]
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DOREEN FLASH.ATX-BVNI I4 016
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The n' pf seC T~ 1m .w Br Jt ~C~rrQN .. aui In I1 19 II Jr ø..wIl..1t GOpc~ ~cta1i. by rolJon Of thllOl.i:.~ dBr J0 ~ COiiQ'Sii"'.mb is. 1li &l by. VO..Of no at ...io toli~ øfth ~... or capit lD ci iM Jl' ~ Ctll .~ II WH . . ~
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IN VI&R WHf!F, th Ul*S hI .... ai a9 ~:~.øn thla 30 _ Of 8e, 1S9i Md.øf it th .lotinwitsrtrla hM... inunDr th ~Uie of pe. .
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ONDER SECTON:9ò,() InUÙ:ltJSwESS coP,RÁîioN).W,. '.' ." .'..¡;~..
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srAtE:Ofl,NEWNORK: '
'OE.PARrA~fNtöF STArE,
r:ILED U c.r '0' 2 1991
TAX'S .', ,0 .
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VANQUARD"S2
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. ÒeWltt; Na~ York 13214- 2811
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11/0612007 17:27 FAX [phone]
DOREEN FLASH.ATX-BVNI
¡.f)TATE OF NEW YORI(
DEPARTMENT OF STATE
I hereby cei1ify that the annexed copy has been compared with the
original document in the custody of the Secretar of State and that the same
is a tre copy of said originaL.
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WIESS my hand and offcial seal of the
Deparent ofStac, at the City of Albany, on
AugilSt 24,2007.
ß/.f~
Paul LaPointe
Specíal Deputy Secretary of State
Rev. 06107
f4017
11/06/2007 17: 27 FAX [phone] DOREEN FLASH.ATX-BVNI f4OH
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212 WI 2835'04/.20 ;9a.io:3~ N(.~~. 031.2..
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11/06/20Q7 11; 21 FAX [phone] DOREEN FLASH.ATX-BVNI Ii019
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OF INCORPORATION
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OÐ'Â~~¡ii;tN'T OF STA1E
FILED fir R i 1 1998T~$ ~lf~ . . I.ÃI¡)'gy.- ~n. - i;'",.
OUOUE'll & 'rIPTON LL? :5 '
405 Lexingtod Avenue
NeW ~ork, NY 10174
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11/06/2007 17:28 FAX [phone]
DOREEN FLASH.ATX-BVNI
STATE OF NEW YORI(
DEPARTMENT OF STATE
I hereby certify that the aiexed copy has been compared with the
original document in the custody of the Seoretar of State and that the same
is a tre copy of said originaL.
........ ......... or NE\l o.o..n.~ ¡.¿..../t.~ ~..: t; ~. .: * * =.. .... ..~ô tf.:.. :: .. ·to. "'., 't :
". "'-l S..." ... ...... .r.AE"" T' O"t.. .. .... .1~ J. ..
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WITESS my hand and offcial seal of the
Deparent of State, at the City of Albany, on
Augut 24, 2007.
ß/~;;
Paul LaPointe
Special Deputy Secretar of State
Rev. 06/07
!à 020
11/06/2007 17: 28 FAX [phone] DOREEN FLASn,ATX-BVNI ta 0 21
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'. 1. Th I' ofih Coci Is. ~ NCllD. 1b iW~ Yo ii CO _ rgj if Biw 10y'DIl,viçpiD Coei, . ," '"t2. .ni ~..t~OIi;~C4Gl(~ ~Of
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Y Qr OI .i s. 1991.
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nd ~i= io ii tli e.fl of Ament is tb ii md dll o(ih COrpraon as efU\ StlciyofOc. J99!t . ._.. .'
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11/06/2007 17; 29 FAX [phone]
DOREEN FLASH,ATX-BVNI
STATE OF NEW YOR!(
DEPARTMENT OF STATE
I hereby certify that the annexed copy has been compared with the
original document in the custody of the Secretary of State and that the same
is a true copy of said originaL.
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WITNESS my hand and official sea of the
Depai:ent of State, at the City of Albany, on
August 24,2007.
ß/ j/a;
Paul LaPointe
Special Deputy Secretary of State
Rev. 06/07
f4 024
11/06/2007 17: 29 FAX [phone]
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11/06/2007 17: 36 F~X 6157923022
DOREEN Fh~SH.ATX-BVNI
STATE OF NEW YORI(
DEPARTMENT OF STATE
I hereby certfy that the anexed copy has been compared with the
ongínal document in the custody of the Secreta of State and that the same
is a true copy of said originaL.
....."..... Nb' o..0° Of .c W ..0
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WITESS my hand and offcial seal of the
Depaent of State, at the City of Albany, on
Augut 24, 2007.
ß/~1J
Paul LaPointe
Special Deputy Secretary of State
Rev, 06107
I4 043
11/06/2007 17: 36 FAX [phone] DOREEN FLASH,ATX-BVNI I4 044
State of New York
Department of State l ss:
I hereby certify, that the Certificate of incorporation of BROADVIEW
NBTWRKS, INC. wa§ filed on.06!OS/i991, under t~e name of BRIAR ~OyDEV~BN CORPORATION, with perpetual duration, and that a diligent
exRmnation há~ been made of t~e Corporate ind~ for documents filed with
this Department. for a oertificate, order. or record of á dissolution, andupon auch exination, no such certificate. order or record has been
found, ~nd that so far as indicated by the recorda of this Department,
such corporation is an existing corporation.
A Certificate of ~anàment BRIAR JOY DEVELOPME CORPORATION, changing
ita n~ to sec TBLBCOMM~CATIONS, INC" was filed iO/02/1997.
A Certificate of Amendment sec TELECOMMCATioas, INC., ohanging itsname to CO~~ NETWORK, INC. , was filed 04/2i/1998.
A Certificate at Amendment COMMITY ~ORKS, INC. t ohauging its name
to BROADV;(:e NE'IORKS, INC., was filed 10/06/1999.
***
. WIESS my hand and the offcial seal
of th Deprtment of State at the City of
Albar;, this 23rd df of AJtgus two
thousnd and seven
qr-
Special Depui Secretry of State
100708240310 72
IDSOS CERTIFICATE OF EXISTENCE Page 1 of 1
State of Idaho
Iloffce of the Secretary of statell
CERTIFICATE OF EXISTENCE
OF
BROADVIEW NETWORKS, INC.
File Number C-174749
I, BEN YSURSA, Secretary of State of the State of Idaho, hereby certify that I am the custodian of
the corporation records of this State.
I FURTHER CERTIFY That the records ofthis office show that the above-named corporation was
incorporated under the laws of NEW YORK and filed to transact business in Idaho on 8/28/2007.
I FURTHER CERTIFY That the corporation is in goodstanding on the records of this office,
Dated: 11/06/20093:33 PM ~~
SECRETARY OF STATE
Authentic Access Idaho Document (htt://www.accessidaho.org/public/portal/authenticate.html)
Tag: b5ae5f5ff8d74087949bcfOedc5fa259f9b04f03198169cd2ba6b5ed854fae99dl 078d8274543523
https://ww.accessidaho.org/secure/sos/corp/cert,html 11/6/2009
EXHIBIT 2
Officers and Directors
Of
Broadview Networks, Inc.
Officers:
Offcers and Directors
Michael K, Robinson Chief Executive Offcer and President
Brian Crotty Chief Operating Offcer
Corey Rinker Chief Financial Offcer and Assistant
Secretary
Charles C. Hunter Executive Vice President, Secretary
And General Counsel
Terence J. Anderson Executive Vice President - Corporate
Development
Directors:
Michael K. Robinson
Brian J. Mitchell
Steven F. Tuney, Sr.
Samuel G. Rubenstein
John S. Patton, Jr.
David C. Ruberg
Robert Manning
Peter J. Bars
All officers and directors of Broadview Networks, Inc., may be contacted at:
800 Westchester Avenue, Suite N-501
Rye Brook, NY 10573
Beneficial Ownership Interests of
Applicant's Largest Stockholders/Directors
Line Name of Address Term Term Shares of
No,Stockholder/Began *Expires Common Stock!
Director No. of Votes
(a)(b)(c)(d)(e)
Brian 1. Mitchell**800 Westchester Avenue Januar, 2009 January, 2010 4,725,000
Suite N-501
Rye Brook, NY 10573
2 Steven F. Tunney**800 Westchester Avenue January, 2009 January, 2010 4,725,000
Suite N-501
Rye Brook, NY 10573
3 Samuel G. Rubenstein**800 Westchester Avenue Januar, 2009 Januar, 2010 4,725,000
Suite N-501
Rye Brook, NY 10573
4 John S. Patton, Jr.**800 Westchester Avenue January, 2009 January, 2010 4,725,000
Suite N-501
Rye Brook, NY 10573
5 David C. Ruberg***800 Westchester Avenue Januar, 2009 Januar, 2010 1,514,467
Suite N-501
Rye Brook, NY 10573
6 Robert Manning***800 Westchester Avenue January, 2009 January, 2010 1,514,467
Suite N-501
Rye Brook, NY 10573
7 Peter 1. Barris****800 Westchester Avenue January, 2009 Januar, 2010 824,585
Suite N-501
Rye Brook, NY 10573
8 Michael K. Robinson 800 Westchester Avenue January, 2009 Januar, 2010 18,750
Suite N-501
Rye Brook, NY 10573
Please see SEC Form 10-K for Par or Stated Value information.
*
**
***
****
Curent term began January, 2009. All director terms expire annually.
Each of Mr. Mitchell, Mr. Tuney, Mr, Rubenstein and Mr. Patton are offcers of MCG Capital
Corporation. By virtue of such relationship, each of Mr. Mitchell, Mr. Tunney, Mr. Rubenstein
and Mr, Patton may be deemed to beneficially own the shares listed as beneficially owned by
MCG, Each of Mr. Mitchell, Mr. Tunney, Mr. Rubenstein and Mr. Patton disclaims beneficial
ownership of such shares,
Each of Mr. Ruberg and Mr. Manning are managers of the general parters of Baker
Communications Fund, L.P. and Baker Communications Fund II (QP) L.P, By virte of such
relationship, each of Mr. Ruberg and Mr. Manning may be deemed to beneficially own the shares
listed as beneficially owned by Baker. Each ofMr. Ruberg and Mr, Manning disclaims beneficial
ownership of such shares.
Mr. Barris is the managing general parter of New Enterrise Associates VII, L.P" New
Enterprise Associates 9, L.P., New Enterprise Associates 10, L.P. and NEA Presidents Fund. By
virte of such relationship, Mr. Barrs may be deemed to beneficially own the shares listed as
beneficially owned by NEA. Mr. Barrs disclaims beneficial ownership of such shares,
Exhibit 3
Affiliates
Of
Broadview Networks, Inc.
Broadview Networks Holdings, Inc., Applicant's corporate parent, also holds a 100%
ownership interest (indirect or direct) in the following entities, each of which is authorized by the
Federal Communications Commission and various state public utility commissions to provide
interstate, international, local and/or long distance telecommunications services:
A.R.c. Networks, Inc.
ATX Licensing, Inc.
BridgeCom International, Inc.
Broadview NP Acquisition Corp.
Eureka Telecom, Inc.
TruCom Corporation
The business address of each of the above-listed entities is:
800 Westchester Avenue, Suite N-501
Rye Brook, NY 10573
Exhibit 4
Financial Documentation
Of
Broadview Networks, Inc.
Form 10-Q Page 1 of33
10-Q 1 c92197el0vq,htm FORM lO-Q
htt://ww.sec.gov/Archives/edgar/data/1104358/000095012309059301/c92197e10vq.htm11/11/2009
Form 10-Q Page 2 of33
Table of Contents
UNITED STATES
SECURTIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
Mark Oneo QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15( d) OF THE
SECURITIES EXCHAGE ACT OF 1934
For The Quarterly Period Ended September 30, 2009
D TRASITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHAGE ACT OF 1934
For the Transition Period from to
Commission File Number 333-142946
Broadview Networks Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
11-3310798
(IRS Employer Identification Number)
800 Westchester Avenue,
Suite N501 Rye Brook, NY 10573
(Address of principal executive offces)
10573
(Zip code)
[phone]
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has fied all reports required to be fied by Section 13 or 1 5( d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
fie such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 0 No 0
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 shorter period that the registrant was required to submit and post such fies),
Yes DNo 0
Indicate by check mark whether the registrant is a large accelerated fier, an accelerated fier, a non-accelerated fier or a
smaller reporting company, See the definitions of "large accelerated filer," "accelerated fier" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated fier 0 Accelerated filer 0 Non-accelerated filer 0 Smaller reporting company 0
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes DNo 0
The number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date,
Class
Class A Common Stock, $.01 par value per share
Class B Common Stock, $.01 par value per share
Outstanding at November 6, 2009
9,342,880
360,050
http://ww.sec.gov/Archives/edgar/data/1104358/000095012309059301/c92197e10vq.htm11/11/2009
Form 10-Q Page 3 of33
http://ww.sec.gov/Archives/edgar/data/1104358/000095012309059301/c92197e10vq.htm11/11/2009
Form 10-Q Page 40f33
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of December 31, 2008 and September 30, 2009 (unaudited)5
Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended
September 30, 2008 and 2009 6
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30,
2008 and 2009 7
Notes to Unaudited Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 23
Item 4T. Controls and Procedures 23
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 24
Item lA. Risk Factors 24
Item 2, Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits 25
Signatures 26
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32,2
2
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report contains both historical and "forward-looking statements." All statements other than statements of
historical fact included in this report that address activities, events or developments that we expect, believe or anticipate wil or
may occur in the future are forward-looking statements including, in paricular, the statements about our plans, objectives,
strategies and prospects regarding, among other things, our financial condition, results of operations and business, We have
identified some of these forward-looking statements with words like "believe," "may," "wil," "should," "expect," "intend,"
"plan," "predict," "anticipate," "estimate" or "continue" and other words and terms of similar meaning. These forward-looking
statements may be contained throughout this report, including but not limited to statements under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations," These forward-looking statements are based on
current expectations about future events affecting us and are subject to uncertainties and factors relating to our operations and
business environment, all of which are difficult to predict and many of which are beyond our control and could cause our actual
results to differ materially from those matters expressed or implied by forward-looking statements, Many factors mentioned in
our discussion in this report wil be important in determining future results, Although we believe that the expectations reflected
in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or
achievements. Forward-looking statements (including oral representations) are only predications or statements of current plans,
which we review continuously, They can be affected by inaccurate assumptions we might make or by known or unknown risks
and uncertainties, including, among other things, risks associated with:
servicing our substantial indebtedness;
our history of operating losses;
the elimination or relaxation of certain regulatory rights and protections;
biling and other disputes with vendors;
failure to maintain interconnection and service agreements with incumbent local exchange and other carriers;
the loss of customers in an adverse economic environment;
regulatory uncertainties in the communications industry;
system disruptions or the failure of our information systems to perform as expected;
the failure to anticipate and keep up with technological changes;
inability to provide services and systems at competitive prices;
difficulties associated with collecting payment from incumbent local exchange carriers, interexchange cariers and
wholesale customers;
the highly competitive nature of the communications market in which we operate including competition from
incumbents, cable operators and other new market entrants, and declining prices for communications services;
continued industr consolidation;
restrictions in connection with our indenture governing the notes and credit agreement governing the credit facility;
governent regulation;
increased regulation of Internet-protocol-based service providers;
vendor bils related to past periods;
the ability to maintain certain real estate leases and agreements;
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interrptions in the business operations ofthird pary service providers;
limits on our abilty to seek indemnification for losses from individuals and entities from whom we have acquired
assets and operations;
disruption and instability in the financial markets;
solvency and liquidity of the administrative agent and primary creditor under our revolving credit facility;
the financial difficulties by others in our industr;
the failure to retain and attract management and key personnel;
the failure to manage and expand operations effectively;
the failure to successfully engage in future acquisitions;
misappropriation of our intellectual property and proprietary rights;
the possibility of incurrng liability for information disseminated through our network;
service network disruptions due to softare or hardware bugs of the network equipment; and
fraudulent usage of our network and services.
Because our actual results, performance or achievements could differ materially from those expressed in, or implie'd by,
these forward-looking statements, we cannot give any assurance that any of the events anticipated by these forward-looking
statements wil occur or, if any of them do, what impact they will have on our business, results of operations and financial
condition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of
this report. We do not undertake any obligation to update these forward-looking statements to reflect new information, future
events or otherwise, except as may be required under federal securities laws.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Broadview Networks Holdings, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Investment securities
Accounts receivable, less allowance for doubtful accounts of$11,934 and $15,056
Other current assets
Total current assets
Property and equipment, net
Goodwill
Intangible assets, net of accumulated amortization of$150,556 and $164,107
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Taxes payable
Deferred revenues
Current portion of capital lease obligations and equipment notes
Total current liabilities
Long-term debt
Deferred rent payable
Capital lease obligations and equipment notes, net of current portion
Deferred income taxes payable
Other
Total liabilities
Stockholders' deficiency:
Common stock A - $.01 par value; authorized 80,000,000, issued and outstanding
9,342,880 shares
Common stock B - $.01 par value; authorized 10,000,000, issued and outstanding 360,050
shares
Series A Preferred stock - $.01 par value; authorized 89,526 shares, designated, issued and
outstanding 87,254 shares entitled in liquidation to $139,428 and $152,357
Series A-I Preferred stock - $.01 par value; authorized 105,000 shares, designated, issued
and outstanding 100,702 shares, entitled in liquidation to $160,917 and $175,839
Series B Preferred stock - $.01 par value; authorized 93,180 shares, designated, issued and
outstanding 91,202 shares entitled in liquidation to $145,737 and $159,250
Series B-1 Preferred stock - $.01 par value; authorized 86,000 shares, designated, issued
and outstanding 64,986 shares entitled in liquidation to $103,845 and $113,474
Series C Preferred stock - $.01 par value; authorized 52,332 shares, designated, issued and
outstanding 14,402 shares entitled in liquidation to $15,577 and $17,711
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Total stockholders' deficiency
Total liabilities and stockholders' deficiency
See notes to unaudited condensed consolidated financial statements,
Page 7 of33
December 31,
2008
September 30,
2009
(Unaudited)
$24,070 $
23,533
53,486
12,614
113,703
85,248
98,111
45,220
16,746
359,028 $
12,980
23,549
46,319
10,098
92,946
85,308
98,238
31,669
16,344
324,505$
$17,044 $27,464
42,699 11,897
10,680 12,196
11,967 10,663
4,142 3,909
86,532 66,129
327,424 326,748
2,400 2,200
5,212 2,735
2,071 2,798
655 706
424,294 401,316
107 107
4 4
140,563 140,737
(205,966)(217,665)
22 2
(65,266)(76,811)
$359,028 $324,505
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Broadview Networks Holdings, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2008 2009 2008 2009
Revenues $125,535 $112,718 $377,391 $352,243
Operating expenses:
Cost of revenues (exclusive of depreciation and
amortization)65,026 54,844 196,474 173,972
Selling, general and administrative (includes
share-based compensation of$63, $59, $242
and $174)41,467 37,841 127,150 119,677
Softare development 414 487 1,229 1,418
Depreciation and amortization 17,828 12,111 54,525 37,913
Total operating expenses 124,735 105,283 379,378 332,980
Income (loss) from operations 800 7,435 (1,987)19,263
Interest expense (10,019)(10,043)(29,474)(30,143)
Interest income 167 10 598 104
Other income (expense)(3)(10)16
Loss before provision for income taxes (9,055)(2,598)(30,873)(10,760)
Provision for income taxes (118)(240)(913)(939)
Net loss (9,173)(2,838)(31,786)(11,699)
Dividends on preferred stock (16,202)(18,235)(47,203)(53,127)
Loss available to common shareholders $(25,375)$(21,073) $(78,989)$(64,826)
Loss available per common share - basic and
diluted $(2,62)$(2.17) $(8.16)$(6,69)
Weighted average common shares outstanding-
basic and diluted 9,679,455 9,691,230 9,674,728 9,686,529
See notes to unaudited condensed consolidated financial statements.
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Broadview Networks Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30,2008 2009
Cash flows from operating activities
Net loss $(31,786)$(11,699)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 23,430 24,311
Amortization of deferred financing costs 1,983 1,969
Amortization of intangible assets 31,045 13,551
Amortization of bond premium (603)(676)
Provision for doubtful accounts 4,205 5,256
Share-based compensation 242 174
Deferred income taxes 685 727
Other 50 51
Changes in operating assets and liabilities:
Accounts receivable (3,429)1,911
Other current assets (1,898)2,516
Other assets (933)(1,567)
Accounts payable 679 10,420
Accrued expenses and other current liabilities (15,339)(30,802)
Taxes payable (2,526)1,516
Deferred revenues 1,729 (1,304)
Deferred rent payable (299)(200)
Net cash provided by operating activities 7,235 16,154
Cash flows from investing activities
Acquisition, net of cash acquired (4,953)(127)
Purchases of propert and equipment (31,452)(24,371)
Purchases of investment securities (98,664)
Sales of investment securities 98,628
Other (379)
Net cash used in investing activities (36,784)(24,534)
Cash flows from financing activities
Drawdowns on revolving credit facility 10,123 1,964
Repayments of revolving credit facility (123)(1,964)
Proceeds from capital lease financing and equipment notes 3,192 373
Payments on capital lease obligations and equipment notes (2,700)(3,083)
Other (63)
Net cash provided by (used in) financing activities 10,429 (2,710)
Net decrease in cash and cash equivalents (19,120)(11,090)
Cash and cash equivalents at beginning of period 41,998 24,070
Cash and cash equivalents at end of period $22,878 $12,980
See notes to unaudited condensed consolidated financial statements.
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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share information)
1. Organization and Description of Business
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared based upon Securities and
Exchange Commission ("SEC") rules that permit reduced disclosure for interim periods, These financial statements reflect all
adjustments necessar for a fair presentation of the results of operations and financial condition for the interim periods shown,
including normal recurring accruals and other items. The results for interim periods are not necessarily indicative of results for
the full year. For a more complete discussion of significant accounting policies and certain other information, the Company's
interim unaudited financial statements should be read in conjunction with its audited financial statements as of and for the year
ended December 31, 2008 included in the Company's Form lO-K, The condensed consolidated interim financial statements
include both the Company's accounts and the accounts of its wholly-owned subsidiaries. All significant intercompany
transactions have been eliminated in consolidation. The Company has evaluated the impact of subsequent events through
November 6,2009, which is the date the condensed consolidated financial statements were issued and fied with the SEC.
The preparation of the condensed consolidated financial statements in conformity with U,S, Generally Accepted
Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilties and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial
statements and the reported amount of revenues and expenses during the reporting period, Management periodically reviews
such estimates and assumptions as circumstances dictate. Actual results could differ from those estimates.
The Company is an integrated communications company whose primar interests consist of wholly-owned subsidiaries
Broadview Networks, Inc. ("BNI"), Bridgecom Holdings, Inc, ("BH"), Corecomm-ATX, Inc. ("ATX") and Eureka Broadband
Corporation ("Eureka", "InfoHighway" or "IB"), The Company also provides phone systems and other customer service
offerings through its subsidiary, Bridgecom Solutions Group, Inc. ("BSG"). The Company was founded in 1996 to tae
advantage of the deregulation of the U,S, telecommunications market following the Telecommunications Act of 1996, The
Company has one reportable segment providing domestic wireline telecommunications services consisting of local and long
distance voice services, Internet, and data services to commercial and residential customers in the northeast United States.
2. Investment Securities
Investment securities represent the Company's investment in short-term U.S. Treasury notes, The Company's primary
objectives for purchasing these investment securities are liquidity and safety of principaL. The Company considers these
investment securities to be available-for-sale, Accordingly, these investments are recorded at their fair value of $23,549 as of
September 30,2009, The fair value of these investment securities are based on publicly quoted market prices, which are Level 1
inputs. All of the Company's investment securities mature in less than one year, The cost of these investment securities is
$23,547, During the nine months ended September 30, 2009, the Company purchased $98,664 and sold $98,628 ofU,S, Treasury
notes, During the nine months ended September 30, 2009, the Company realized a gain of $36 upon the sale of its investment
securities, which is included in interest income. All unrealized and realized gains are determined by specific identification,
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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
3, Comprehensive Loss
Comprehensive loss represents the change in net assets of a business enterprise during a period from non-ownership
sources. The Company's other comprehensive income is comprised exclusively of unrealized gains on the Company's
investments in U,S, Treasury notes, The comprehensive loss for the three and nine months ended September 30, 2008 and 2009
is as follows:
Net loss
Unrealized gains on investment securities
Reclassification adjustments for realized gains
included in net income
Three Months Ended September 30, Nine Months Ended September 30,2008 2009 2008 2009
$ (9,173) $ (2,838) $ (31,786) $ (11,699)2 2
(22)
Comprehensive loss $(9,173)$(2,836) $(31,786)$(11,719)
4. Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board ("FASB") issued SFAS No. 168, the Accounting Standards
Codifcation and the Hierarchy of Generally Accepted Accounting Principles (as codified in the F ASB Accounting Standards
Codification ("ASC") under subtopic 1 05-1 0-05), which names the ASC as the source of authoritative accounting and reporting
standards in the United States, in addition to guidance issued by the SEC, The ASC is a restructuring of accounting and reporting
standards designed to simplify user access to all authoritative GAAP by providing the authoritative literature in a topically
organized structure, The ASC reduces the GAAP hierarchy to two levels, one that is authoritative and one that is not. The ASC is
not intended to change GAAP or any requirements of the SEC. The ASC became authoritative upon its release on July 1, 2009
and is effective for interim and annual periods ending after September 15, 2009.
In April 2009, the FASB issued FSP FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments (as codified in the ASC under subtopic 825-10-65-1), which requires an entity to provide interim disclosures about
the fair value of financial instruments and to include disclosures related to the methods and significant assumptions used in
estimating those instruments, This guidance is effective for all interim and annual reporting periods ending after June 15, 2009
and shall be applied prospectively. The Company has included additional disclosures in Notes 2 and 6, as a result of adopting
this guidance.
In May 2009, the FASB issued SFAS 165, Subsequent Events (as codified in the ASC under topic 855), This guidance
establishes general standards of accounting for disclosures of events that occur after the balance sheet date but before financial
statements are issued or are available to be issued, Although there is new terminology, the standard is based on the same
principles as those that currently exist in the auditing standards, The guidance, which includes a new required disclosure of the
date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15,
2009. The adoption of this guidance has not had a significant impact on the Company's financial position or results of
operations. The Company has included additional disclosures in Note 1 as a result of adopting this guidance.
5. InfoHighway Acquisition
In connection with the acquisition ofInfoHighway in 2007, the Company issued warrants to acquire 16,976 units, with each
such unit comprised of 1 share of Series B-1 Preferred Stock and 25 shares of Class A Common Stock, which are generally
exercisable for a period of up to five years, with the exercise price of each warant unit determined based on the cash flow
generated from a certain customer of the legacy InfoHighway entity during the two year period following closing of the
acquisition, As certain cash flow parameters are met as calculated and agreed upon for the twelve months ended May 31, 2008
and the twelve months ended May 31, 2009, the exercise price on the warrants may decrease from $883.58 per unit to an
exercise price of$O.OI per unit.
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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
5. InfoHighway Acquisition (continued)
As of November 6,2009, the exercise price on the warrants have not been determined, Negotiations are occurring between
the Company and the warant holders as to how certain carrer disputes relating specifically to InfoHighway that were in
existence at the acquisition date and arising subsequent to that date wil be handled in the cash flow calculation. The Company
wil not adjust the value of the warrants until an exercise price has been determined, When the exercise price for the warrants are
resolved, the Company wil utilize a Black-Scholes model to determine the aggregate value of the warants, If the Company
determines that the value of the warants has increased, the Company wil record additional merger consideration and related
goodwil at such point of determination, The Company has determined that once the exercise price is resolved, the warrants wil
be classified as equity.
6. Fair Values of Financial Instruments
The Company's financial instruments include cash and cash equivalents, investments in U,S, Treasury notes, trade accounts
receivable, accounts payable, and long-term debt. The Company's available cash balances are invested on a short-term basis
(generally overnight) and, accordingly, are not subject to significant nsks associated with changes in interest rates, All of the
Company's cash flows are derived from operations within the United States and are not subject to market risk associated with
changes in foreign exchanges rates. The carrying amounts of the Company's cash and cash equivalents, trade acèounts receivable
and accounts payable reported in the consolidated balance sheets as of December 31, 2008 and September 30, 2009 are deemed
to approximate fair value because of their liquidity and short-term nature. The carrying amounts of the Company's investments
in U,S, Treasury notes are recorded at their fair value of $23,533 and $23,549 which are based on the publicly quoted market
price as of December 31,2008 and September 30,2009, respectively.
The fair value of the long-term debt outstanding under the Company's revolving credit facility approximates its caring
value of $23,500 due to its variable market-based interest rate, The fair value of our 11 3/8% senior secured notes due 2012 at
September 30, 2009 was $274,875, which was based on the publicly quoted closing price of the notes at that date, The publicly
quoted closing pnce used to value the Company's senior secured notes is considered to be a Levell input.
7. Commitments and Contingencies
The Company has, in the ordinary course of its business, disputed certain bilings from carriers and has recorded the
estimated settlement amount of the disputed balances, The settlement estimate is based on various factors, including historical
results of prior dispute settlements, The amount of such disputes at September 30, 2009 was $20,002, The Company believes that
the ultimate settlement of these disputes wil be at amounts less than the amount disputed and has accrued the estimated
settlement in accounts payable and accrued expenses and other current liabilties at September 30,2009, It is possible that actual
settlement of such disputes may differ from these estimates and the Company may settle at amounts greater than the estimates,
The Company has entered into commercial agreements with vendors under which it purchases certain services that it had
previously leased under the unbundled network platform provisions of the Telecommunications Act of 1996 as well as special
access services, For the nine months ended September 30, 2009, the Company met the minimum purchase obligations, The
agreements, which expire in 2010 and 2011, require certain minimum purchase obligations and contain fixed but escalating
pricing over their term.
The Company is involved in claims and legal actions arising in the ordinar course of business, Management is of the
opinion that the ultimate outcome of these matters wil not have a material adverse impact on the Company's condensed
consolidated financial position, results of operations, or cash flows. For more information, see our Form 10-K for the year ended
December 31,2008.
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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
8. Long-term Debt Guarantees
The Company's senior secured notes are fully, unconditionally and irrevocably guaranteed on a senior secured basis,joint1y
and severally, by each of the Company's existing and future domestic restricted subsidiaries, The notes and the guarantees rank
senior in right of payment to all existing and future subordinated indebtedness of the Company and its subsidiar guarantors, as
applicable, and equal in right of payment with all existing and future senior indebtedness of the Company and of such
subsidiaries.
The notes and the guarantees are secured by a lien on substantially all of the Company's assets, provided, however, that
pursuant to the terms of an intercreditor agreement, the security interest in those assets consisting of receivables, inventory,
deposit accounts, securities accounts and certain other assets that secure the notes and the guarantees are contractually
subordinated to a lien thereon that secures the Company's revolving credit facility with an aggregate principal amount of
$25,000 and certain other permitted indebtedness.
9. Income Taxes
At September 30, 2009, the Company had net operating loss ("NOL") carrforwards available totaling $139,198, which
expire in various years through 2029, The utilization of NOL carrforwards, resulting from previous mergers, is subject to
restrictions pursuant to Section 382 of the Internal Revenue Code. As such, it was determined that certain NOLs recorded by the
Company as deferred tax assets were limited. The Company has provided a full valuation allowance against the net deferred tax
asset as of September 30, 2009 because management does not believe it is more likely than not that this asset wil be realized, If
the Company achieves profitability, the net deferred tax assets may be available to offset future income tax liabilities.
10. Earnings Per Share
The following is a reconcilation of the numerators and denominators of the basic and diluted net loss per share
computations for the three and nine months ended September 30, 2008 and 2009:
Three Months Ended September 30,Nine Months Ended September 30,
2008 2009 2008 2009
Loss available to common shareholders
(Numerator):
Net loss $(9,173)$(2,838) $(31,786)$(11,699)
Dividends on preferred stock (16,202)(18,235)(47,203)(53,127)
Loss available to common shareholders $(25,375)$(21,073) $(78,989)$(64,826)
Shares (Denominator):
Weighted average common shares outstanding:
Class A common stock 9,342,880 9,342,880 9,342,880 9,342,880
Class B common stock 336,575 348,350 331,848 343,649
Total weighted average common shares
outstanding - basic and diluted 9,679,455 9,691,230 9,674,728 9,686,529
Loss available per common share - basic and
diluted $(2.62)$(2.17) $(8.16)$(6.69)
As of September 30, 2009, the Company had outstanding options, warrants, restricted stock units and preferred stock, which
were convertible into or exercisable for common shares of 13,866,840 that were not included in the calculation of diluted loss per
common share because the effect would have been anti-dilutive.
Dividends accumulate on the Company's Preferred Stock. The loss available to common shareholders must be computed by
adding any dividends accumulated for the period to net losses. The Company has not declared any dividends.
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Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction
with the Unaudited Condensed Consolidated Financial Statements and Notes to the Unaudited Condensed Consolidated
Financial Statements included elsewhere in this quarterly report and our Form lO-Kfor the year ended December 31, 2008filed
with the Securities and Exchange Commission (the "SEC'') Certain information contained in the discussion and analysis set
forth below and elsewhere in this quarterly report, including information with respect to our plans and strategies for our
business and related financing, includes forward-looking statements that involve risk and uncertainties. In evaluating such
statements, prospective investors should specifcally consider the various factors identifed in this quarterly report that could
cause results to difer materially from those expressed in such forward-looking statements, including matters set forth in our
Form lO-Kfor the year ended December 31, 2008filed with the SEC.
Overview
We are a leading competitive communications provider, in terms of revenue, offering voice and data communications and
managed network solutions to small and medium sized business customers in 20 markets across 10 states throughout the
Northeast and Mid-Atlantic United States, including major metropolitan markets such as New York, Philadelphia, Baltimore,
Washington, D.C. and Boston. To meet the demands of communications-intensive business customers, we offer dedicated local
and long distance voice, high-speed data and integrated services, as well as value-added products and services such as managed
services, Our network architecture pairs the strength of a traditional infrastructure with an IP platform, built into our core and
extending to the edge, to support dynamic growth of Voice Over Internet Protocol ("VoIP"), Multiprotocol Label Switching
("MPLS") and other next generation technologies, In addition, our network topology incorporates metro Ethernet access in key
markets, enabling us to provide T - 1 equivalent and high-speed Ethernet access services via unbundled network element loops to
customers served from selected major metropolitan collocations, significantly increasing our margins while also enhancing
capacity and speed of certain service offerings.
We recorded operating losses of $17.2 milion, $32,1 milion, $3,0 milion for the years ended December 3 I, 2006, 2007
and 2008, respectively, For the nine months ended September 30,2009, we recorded operating income of $19.3 milion, For the
years ended December 31,2006,2007 and 2008 and for the nine months ended September 30,2009, we recorded net losses of
$41.5 milion, $65.5 millon, $42,9 millon and $1 1.7 milion, respectively, Although we expect to continue to have net losses for
the foreseeable future, the synergies we have effectuated through our acquisitions offer some areas of increasing operating
effciencies that could lead to potentially more profitable net results.
Our business is subject to several macro trends, some of which negatively affect our operating performance, Among these
negative trends are lower usage per customer, which translates into less usage-based revenue and lower unit pricing for certain
services, In addition, we continue to face other industr wide trends including rapid technology changes and overall increases in
competition from existing large competitors such as Verizon and established cable operators, other competitive local exchange
carriers and new entrants such as VoIP, wireless and other service providers, These factors are partially mitigated by several
positive trends, These include a more stable customer base, increasing revenue per customer due to the trend of customers to buy
more products from us as we deploy new technology and expand our offerings, a focus on larger customers and an overall
increase in demand for data, managed and enhanced services.
As of September 30, 2009, we have approximately 250 sales, sales management and sales support employees, including
approximately 190 quota-bearing sales representatives, who target small and medium sized business or enterprise customers
located within the footprint of our switching centers and approximately 260 collocations, We focus our sales efforts on
communications intensive business customers who purchase multiple products that can be cost-effectively delivered on our
network. These customers generally purchase high margin services in multi-year contracts and result in high retention rates, We
believe that a lack of focus on the small and medium sized business segment from the Regional Bell Operating Companies has
created an increased demand for alternatives in the small and medium sized business communications market. Consequently, we
view this market as a sustainable growth opportnity and have focused our strategies on providing small and medium sized
businesses with a competitive communications solution.
We focus our business strategy on providing services based on our T-I-based products, which we believe offer greater
value to customers, increase customer retention and provide revenue growth opportnities for us, Historically, the Company's
revenue was dominated by off-net, voice revenue from smaller customers, We have transitioned a large percentage of our
revenue base to T-I based products. As a result our combined revenue from T-I-based products and managed services grew by
approximately 13% from 2007 to 2008. Revenue from the sale of T-l-based products and managed services grew by
approximately 0,9% from the first nine months of 2008 to the first nine months of 2009, and currently represents approximately
43,9% of our total revenue and approximately 50,0% of our retail revenue stream, with typical incremental gross profit margins
in excess of 60%.
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Our facilities-based network encompasses approximately 3,000 route miles of metro and long-haul fiber, approximately 260
collocations and approximately 500 lit buildings. Our network has the abilty to deliver traditional services, such as Plain Old
Telephone Service ("POTS") and T-l lines, as well as DSL, or Digital Subscriber Line, and next generation services, such as
dynamic VolP integrated T-ls, Ethernet in the first mile, hosted VolP solutions, and MPLS Virtual Private Networks, We
provide services to our customers primarily through our network of owned telecommunications switches, data routers and related
equipment and owned and leased communications lines and transport facilities using a variety of access methods, including
unbundled network element loops, special access circuits and digital T-l transmission lines for our on-net customers, We have
deployed an IP-based platform that facilitates the development of next generation services and the migration of our traffc and
customer base to a more cost-effective and efficient IP-based infrastructure, which enhances the performance of our network, As
of September 30,2009, approximately three-fourths of our total lines were provisioned on-net.
Results of Operations
The following table sets forth, for the periods indicated, certain financial data as a percentage of total revenues.
Three Months Ended September 30,Nine Months Ended September 30,
2008 2009 2008 2009
Revenues:
Voice and data services 86.4%87.6%86,9%87.0%
Wholesale 3.9%4.1%3.7%4.1%
Access 5.7%5.0%5,7%5.3%
Total network services 96.0%96.7%96.3%96.4%
Other 4.0%3.3%3.7%3.6%
Total revenues 100.0%100.0%100,0%100.0%
Operating expenses:
Network services 50.0%47,2%50.2%47.7%
Other cost of revenues 1.8%1.5%1.8%1.7%
Selling, general and administrative 33.0%33.6%33.7%33,9%
Softare development 0.3%0.4%0.3%0.4%
Depreciation and amortization 14.2%10.7%14.4%10.8%
Total operating expenses 99.3%93.4%100.4%94.5%
Income (loss) from operations 0.7%6.6%(0.4%)5.5%
Interest expense (7.9%)(8,9%)(7.8%)(8.5%)Interest income 0.1%0.0%0.2%0.0%
Other income (expense)0.0%0.0%0.0%0.0%
Loss before provision for income taxes (7.1%)(2.3%)(8.0%)(3.0%)Provision for income taxes (0.1%)(0,2%)(0.2%)(0,3%)
Net loss (7.2%)(2.5%)(8.2%)(3.3%)
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Key Components of Results of Operations
Revenues
Our revenues, as detailed in the table above, consist primarily of network services revenues, which consists primarily of
voice and data managed and hosted services, wholesale services and access services, Voice and data services consist of local dial
tone, long distance and data services, as well as managed and hosted services, Wholesale services consist of voice and data
services, data collocation services and transport services, Access services includes carier access and reciprocal compensation
revenue, which consists primarily of usage charges that we bil to other cariers to originate and terminate their calls from and to
our customers, Network services revenues represents a predominantly recurring revenue stream linked to our retail and
wholesale customers.
We generate approximately 87% of our revenues from retail end customer voice and data products and services, Revenue
from end customer data includes T-1/T-3, integrated T-1 data and other managed services trending to an increasing percentage of
our overall revenue even as voice revenues, predominately POTS and long distance services, remain the core of our revenue
base. Data cabling, service installation and wiring and phone systems sales and installation also form a small but growing portion
of our overall business, We continue to focus on data, managed and hosted services as growth opportunities as we expect the
industry to trend toward lower usage components of legacy products such as long distance and local usage, This lower usage is
primarily driven by trends toward customers using more online and wireless communications.
Cost of Revenues (exclusive of depreciation and amortization)
Our network services cost of revenues consist primarily of the cost of operating our network facilities. Determining our cost
of revenues requires significant estimates. The network components for our facilities-based business include the cost of:
leasing local loops and digital T -i lines which connect our customers to our network;
leasing high capacity digital lines that connect our switching equipment to our collocations;
leasing high capacity digital lines that interconnect our network with the incumbent local exchange carriers;
leasing space, power and terminal connections in the incumbent local exchange carrier central offces for collocating
our equipment;
signaling system network connectivity; and
Internet transit and peering, which is the cost of delivering Internet traffc from our customers to the public Internet.
The costs to obtain local loops, digital T -1 lines and high capacity digital interoffce transport facilities from the incumbent
local exchange carriers vary by carrier and by state and are regulated under federal and state laws, We do not anticipate any
significant changes in Verizon local loop, digital T -1 line or high capacity digital interoffce transport facility rates in the near
future. Except for our lit buildings, in virtually all areas, we obtain local loops, T-I lines and interoffce transport capacity from
the incumbent local exchange carriers, We obtain interoffice facilties from cariers other than the incumbent local exchange
carriers, where possible, in order to lower costs and improve network redundancy; however, in most cases, the incumbent local
exchange carrers are our only source for local loops and T-1 lines.
Our off-net network services cost of revenues consists of amounts we pay to Verizon and AT&T pursuant to our
commercial agreements with them, Rates for such services are prescribed in the commercial agreements and available for the
term of the agreements, Rates were subject to a surcharge that increased by a predetermined amount on each of the first, second
and third anniversaries of the agreements' terms and is now fixed for the duration of the agreements' terms, The commercial
agreements, which expire in 2010 and 2011, require certain minimum purchase obligations, which we have met in all of the
years we were under the commercial agreements,
Our network services cost of revenues also includes the fees we pay for long distance, data and other services, We have
entered into long-term wholesale purchasing agreements for these services, Some of the agreements contain significant
termination penalties and/or minimum usage volume commitments, In the event we fail to meet minimum volume commitments,
we may be obligated to pay underutilization charges. We do not anticipate having to pay any underutilization charges in the
foreseeable future.
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Gross Profit (exclusive of depreciation and amortization)
Gross profit (exclusive of depreciation and amortization), as presented in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, represents income (loss) from operations, before depreciation and amortization,
softare development expenses and selling, general and administrative expenses ("SG&A"), Gross profit (exclusive of
depreciation and amortization), is a non-GAAP financial measure used by our management, together with financial measures
prepared in accordance with GAAP such as revenue and cost of revenue, to assess our historical and prospective operating
performance.
The following table sets forth, for the periods indicated, a reconcilation of gross profit (exclusive of depreciation and
amortization), to income (loss) from operations as income (loss) from operations is calculated in accordance with GAAP:
Income (loss) from operations
Depreciation and amortization
Softare development
Selling, general and administrative
Three Months Ended September 30,2008 2009$ WO $ ~~517,828 12,111414 487
41,467 37,841
Nine Months Ended September 30,2008 2009
$ (1,987) $ 19,26354,525 37,9131,229 1,418
127,150 119,677
Gross profit (exclusive of depreciation and
amortization)$60,509 $57,874 $180,917 $178,271
Gross profit, as a percentage of revenue 48,2%51.%48.0%50.6%
Gross profit is a measure of the general efficiency of our network costs in comparison to our revenue, As we expense the
current cost of our network against current period revenue, we use this measure as a tool to monitor our progress with regards to
network optimization and other operating metrics,
Our management also uses gross profit to evaluate performance relative to that of our competitors. This financial measure
permits a comparative assessment of operating performance, relative to our performance based on our GAAP results, while
isolating the effects of certain items that vary from period to period without any correlation to core operating performance or that
var widely among similar companies, Our management believes that gross profit is a particularly useful comparative measure
within our industry.
We provide information relating to our gross profit so that analysts, investors and other interested persons have the same
data that management uses to assess our operating performance, which permits them to obtain a better understanding of our
operating performance and to evaluate the effcacy of the methodology and information used by our management to evaluate and
measure such performance on a standalone and a comparative basis.
Our gross profit may not be directly comparable to similarly titled measures reported by other companies due to differences
in accounting policies and items excluded or included in the adjustments, which limits its usefulness as a comparative measure,
In addition, gross profit has other limitations as an analytical financial measure. These limitations include the following:
gross profit does not reflect our capital expenditures, future requirements for capital expenditures or contractual
commitments to purchase capital equipment;
gross profit does not reflect the interest expense, or the cash requirements necessary to service interest or principal
payments, associated with our indebtedness;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized wil likely
have to be replaced in the future, and gross profit does not reflect any cash requirements for such replacements; and
gross profit does not reflect the SG&A expenses necessary to run our ongoing operations.
Our management compensates for these limitations by relying primarily on our GAAP results to evaluate its operating
performance and by considering independently the economic effects of the foregoing items that are or are not reflected in gross
profit. As a result of these limitations, gross profit should not be considered as an alternative to income (loss) from operations, as
calculated in accordance with GAAP, as a measure of operating performance.
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Selling, General and Administrative
SG&A is comprised primarily of salaries and related expenses, non-cash compensation, occupancy costs, sales and
marketing expenses, commission expenses, bad debt expense, biling expenses, professional services expenses and insurance
expenses.
Determining our allowance for doubtful accounts receivable requires significant estimates, In determining the proper level
for the allowance we consider factors such as historical collections experience, the aging of the accounts receivable portfolio and
economic conditions. We perform a credit review process on each new customer that involves reviewing the customer's current
service provider bil and payment history, matching customers with national databases for delinquent customers and, in some
cases, requesting credit reviews through Dun & Bradstreet Corporation.
Depreciation and Amortization
Our depreciation and amortization expense currently includes depreciation for network-related voice and data equipment,
fiber, back-office systems, third-pary conversion costs, internally developed software, furniture, fixtures, leasehold
improvements, office equipment and computers and amortization of intangibles associated with mergers, acquisitions and
softare development costs.
Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2009
Set forth below is a discussion and analysis of our results of operations for the three months ended September 30, 2008 and
2009.
The following table provides a comparison of components of our gross profit (exclusive of depreciation and amortization)
for the three months ended September 30, 2008 and 2009:
Three Months Ended September 30,
2008 2009
% of Total % of Total
Amount Revenues Amount Revenues % Change
Revenues:
Network services $120,570 96,0%$109,053 96.7%(9.6%)
Other 4,965 4,0%3,665 3.3%(26.2%)
Total revenues 125,535 100.0%112,718 100.0%(10.2%)
Cost of revenues:
Network services 62,742 50,0%53,162 47.2%(15.3%)
Other 2,284 1.8%1,682 1.5%(26.4%)
Total cost of revenues 65,026 51.8%54,844 48.7%(15.7%)
Gross profit:
Network services 57,828 46.1%55,891 49.5%(3,3%)
Other 2,681 2.1%1,983 1.9%(26.0%)
Total gross profit $60,509 48.2%$57,874 51.%(4.4%)
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Revenues
Revenues for the three months ended September 30, 2008 and 2009 were as follows:
Three Months Ended September 30,2008 2009
% of Total % of TotalAmount Revenues Amount Revenues % Change
Revenues:
Voice and data services
Wholesale
Access
Total network services
Other
Total revenues
$ 108,446
4,926
7,198
120,570
4,965
$ 125,535
86.4%
3.9%
5.7%
96.0%
4,0%
100.0%
$ 98,814
4,637
5,602
109,053
3,665
$ 112,718
87,6%
4.1%
5.0%
96,7%
3.3%
100.0%
(8.9%)
(5.9%)
(22,2%)
(9.6%)
(26.2%)
(10.2%)
Overall our revenues have declined 10,2% when comparing the three months ended September 30, 2008 with the same
period in 2009, Our overall revenue decline primarily stems from declines in voice services revenues, which have decreased
$10,7 milion or 13,2% between 2008 and 2009, This decrease is due to increased line churn, lower usage revenue per customer,
lower prices per unit for certain services and a lower number of lines and customers, Par of the decrease was also attributable to
our decision to discontinue the use of telemarketing as a sales channel for new sales, The voice service revenue decrease
experienced during the current quarter has moderately accelerated over decreases experienced in previous quarters, which we
attribute to the current economic conditions, Historically, our data services revenues have increased on a quarer over quarer
basis and have partially mitigated our declines in voice services, however, data services revenues were unchanged when
comparing the three months ended September 30, 2008 with the same period in 2009, Our carrier access revenues have
decreased primarily due to decreasing revenue from voice services, which reduces our revenues from access originations and
terminations and reciprocal compensation. In terms of absolute dollars, our wholesale revenues from our T -1 and data products
as well as from voice terminations showed only modest declines, Our other revenues, which include data cabling, service
installation and wiring and phone systems sales and installation, have declined due to current economic conditions,
Cost of Revenues (exclusive of depreciation and amortization)
Cost of revenues were $54.8 milion for the three months ended September 30,2009, a decrease of 15,7% from $65 milion
for the same period in 2008. As part of our continual improvement efforts, we were able to improve the effciency of our network
and improve our margins, Our costs consist primarily of those incurred from other providers and those incurred from the cost of
our network, Costs where we purchased services or products from third par providers comprised $51.5 milion, or 79,2% of our
total cost of revenues for the three months ended September 30, 2008 and $44,2 millon, or 80,5% in the three months ended
September 30, 2009, The most significant components of our costs purchased from third pary providers consist of costs related
to our Verizon wholesale advantage contract (formerly UNE-P), UNE-L and T-l costs, which totaled $13.3 milion, $6,8 milion
and $13.5 milion, respectively, for the three months ended September 30, 2008. These costs totaled $11.2 millon, $6,0 millon
and $13.3 milion, respectively, for the three months ended September 30, 2009. Combined these costs decreased by 9,2%
between 2008 and 2009, We have experienced a decrease in costs where we purchased services or products from third parties
primarily due to our effective migration oflines to lower cost platforms.
Gross Profit (exclusive of depreciation and amortization)
Gross profit was $57,9 milion for the three months ended September 30,2009, a decrease of 4.4% from $60.5 millon for
the same period in 2008, As a percentage of revenues gross profit increased to 51.3% in 2009 from 48,2% in 2008. The increase
in gross profit as a percentage of revenues is primarily due to lower costs resulting from provisioning more lines from resale and
unbundled network platform to on-net. We are focusing sales initiatives towards increasing the amount of data and integrated T-
1 lines sold, as we believe that these initiatives wil produce incrementally higher margins than those currently reported from
POTS services. In addition, as we continue to drive additional cost saving initiatives, including provisioning customers to our on-
net facilties, identifYing additional inaccuracies in billng from existing cariers, renegotiating existing agreements and executing
new agreements with additional interexchange carriers, we believe that our gross profit wil improve.
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Sellng, General and Administrative
SG&A expenses were $37,8 milion, 33,6% of revenues, for the three months ended September 30, 2009, a decrease of
8,9% from $41.5 milion, 33.0% of revenues, for the same period in 2008, This decrease is primarily due to decreased employee
costs of $2.3 milion, which reflects cost savings achieved through reduced headcount, and decreased commission expenses of
$1.2 millon due to declining revenues, We continue to look for additional cost savings in various categories throughout the
organization.
Depreciation and Amortization
Depreciation and amortization costs were $12.1 milion for the three months ended September 30, 2009, a decrease of
32.0% from $17,8 milion for the same period in 2008, This decrease in depreciation and amortization expense was due to fully
amortizing some of our acquired customer base intangible assets during 2008, Amortization expense included in our results of
operations for customer base intangible assets for the three months ended September 30, 2009 was $3,7 millon, a decrease of
$5.6 million, from $9.3 million included in our results of operations during the same period in 2008.
Interest
Interest expense was $10,0 milion for the three months ended September 30, 2009 and was unchanged from the same
period in 2008. Our effective annual interest rates for the three months ended September 30, 2008 and 2009 is as follows:
Three Months Ended September 30,2008 2009
Interest expense
Weighted average debt outstanding
Effective annual interest rate
$
$
10,019
310,882
12.89%
$
$
10,043
330,105
12,17%
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Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2009
Set forth below is a discussion and analysis of our results of operations for the nine months ended September 30, 2008 and
2009.
The following table provides a comparison of components of our gross profit (exclusive of depreciation and amortization)
for the nine months ended September 30, 2008 and 2009:
Nine Months Ended September 30,
2008 2009
% of Total % of Total
Amount Revenues Amount Revenues % Change
Revenues:
Network services $363,458 96.3%$339,653 96.4%(6,5%)
Other 13,933 3.7%12,590 3.6%(9.6%)
Total revenues 377,391 100.0%352,243 100.0%(6.7%)
Cost of revenues:
Network services 189,307 50,2%167,883 47.7%(i 1.%)
Other 7,167 1.8%6,089 1.7%(15.0%)
Total cost of revenues 196,474 52.0%173,972 49.4%(11.%)
Gross profit:
Network services 174,151 46.1%171,770 48,8%(1.4%)
Other 6,766 1.9%6,501 1.8%(3,9%)
Total gross profit $180,917 48.0%$178,271 50,6%(1.5%)
Revenues
Revenues for the nine months ended September 30, 2008 and 2009 were as follows:
Nine Months Ended September 30,2008 2009
% of Total % of TotalAmount Revenues Amount Revenues % Change
Revenues:
Voice and data services $327,822 86.9%$306,519 87.0%
Wholesale 13,944 3.7%14,519 4,1%
Access 21,692 5.7%18,615 5.3%
Total network services 363,458 96.3%339,653 96.4%
Other 13,933 3,7%12,590 3.6%
Total revenues $377,391 100.0%$352,243 100,0%
(6.5%)
4,1%
(14.2%)
(6,5%)
(9.6%)
(6,7%)
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Overall, our revenues have declined 6,7% when comparing the nine months ended September 30, 2008 with the same
period in 2009. Our overall revenue decline primarily stems from declines in voice services revenues, which have decreased
$25,0 milion or 10,1% between 2008 and 2009. This decrease is due to increased line chum, lower usage revenue per customer,
lower prices per unit for certain services and a lower number of lines and customers. Part of the decrease was also attributable to
our decision to discontinue the use of telemarketing as a sales channel for new sales, The voice services revenues decrease
experienced during the current quarer has moderately accelerated over decreases experienced in previous quarters, which we
attribute to the current economic conditions, This decrease has been slightly offset by an increased demand for our data, hosted
and managed services, Our revenues from data services have increased by $3,7 millon or 4.8% when comparing the nine months
ended September 30,2008 with the same period in 2009, The decrease in our voice services have also been parially offset by
higher revenue per customer due to the trend toward multiple products per customer and a focus on larger customers. Our carrier
access revenues have decreased primarily due to decreasing revenue from voice services, which reduces our revenues from
access originations and terminations and reciprocal compensation, Our wholesale revenue increased primarily as a result of
organic growth of our T - 1 and data products as well as from voice terminations, Our other revenues, which include data cabling,
service installation and wiring and phone systems sales and installation, have declined due to current economic conditions.
Cost of Revenues (exclusive of depreciation and amortization)
Cost of revenues was $174,0 milion for the nine months ended September 30, 2009, a decrease of 11.5% from
$ 1 96.5 milion for the same period in 2008. As part of our continual improvement efforts, we were able to improve the efficiency
of our network and improve our margins, Our costs consist primarily of those incurred from other providers and those incurred
from the cost of our network. Costs where we purchased services or products from third-part providers comprised $155.3
milion, or 79.0% of our total cost of revenues for the nine months ended September 30,2008 and $138,1 milion, or 79.4% in
the nine months ended September 30,2009. The most significant components of our costs purchased from third-part providers
consist of costs related to our Verizon wholesale advantage contract (formerly UNE-P), UNE-L and T-I costs, which totaled
$40,1 millon, $19,7 millon and $41. milion, respectively, for the nine months ended September 30,2008, These costs totaled
$34,9 milion, $19,0 milion and $40.4 milion, respectively, for the nine months ended September 30, 2009. Combined, these
costs decreased by 6,5% between 2008 and 2009, We have experienced a decrease in costs where we purchased services or
products from third parties primarily due to our effective migration of lines to lower cost platforms.
Gross Profit (exclusive of depreciation and amortization)
Gross profit was $178.3 milion for the nine months ended September 30,2009, a decrease of 1.5% from $180,9 millon for
the same period in 2008, As a percentage of revenues gross profit increased to 50,6% in 2009 from 48.0% in 2008, The increase
in gross profit as a percentage of revenues is primarily due to lower costs resulting from provisioning more lines from resale and
unbundled network platform to on-net. We are focusing sales initiatives towards increasing the amount of data and integrated T-
i lines sold, as we believe that these initiatives wil produce incrementally higher margins than those currently reported from
POTS services. In addition, as we continue to drive additional cost saving initiatives, including provisioning customers to our on-
net facilities, identifying additional inaccuracies in biling from existing carriers, renegotiating existing agreements and executing
new agreements with additional interexchange carriers, we believe that our gross profit wil improve.
Sellng, General and Administrative
SG&A expenses were $119,7 milion, 33,9% of revenues, for the nine months ended September 30, 2009, a decrease of
5.9% from $127,2 milion, 33,7% of revenues, for the same period in 2008, This decrease is primarily due to decreased employee
costs of $3,7 millon due to cost savings achieved through reduced headcount, decreased commission expenses of $3.5 milion
due to declining revenues, and decreased professional and consulting fees of $0,9 milion due to the reduced use of outside
professional and temporary help, These decreases were partially offset by increased bad debt expenses of $1. milion from
increased accounts receivable write-offs during the nine months ended September 30,2009, We continue to look for additional
cost savings in various categories throughout the organization,
Depreciation and Amortization
Depreciation and amortization costs were $37,9 milion for the nine months ended September 30, 2009, a decrease of 30,5%
from $54,5 milion for the same period in 2008, This decrease in depreciation and amortization expense was due to fully
amortizing some of our acquired customer base intangible assets during 2008. Amortization expense included in our results of
operations for customer base intangible assets for the nine months ended September 30,2009 was $12,0 milion, a decrease of
$17.3 milion from $29.3 milion included in our results of operations during the same period in 2008.
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Interest
Interest expense was $30,1 milion for the nine months ended September 30,2009, an increase of 2,0% from $29.5 millon
for the same period in 2008. The increase was primarily a result of having a higher average outstanding debt balance for the nine
months ended September 30, 2009 compared to 2008, The higher average debt balance is due to the outstanding borrowings on
our revolving credit facility, Our effective annual interest rates for the nine months ended September 30, 2008 and 2009 are as
follows:
Nine Months Ended September 30,2008 2009
Interest expense
Weighted average debt outstanding
Effective annual interest rate
$
$
29,474
310,105
12.67%
$
$
30,143
331,202
12.13%
Off-Balance Sheet Arrangements
We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or
credit risk support, and we do not currently engage in hedging, research and development services, or other relationships that
expose us to any liabilities that are not reflected on the face of our financial statements.
Liquidity and Capital Resources
Our principal sources of liquidity are cash from operations, our cash, cash equivalents and investments and access to
undrawn portions of our $25.0 milion credit facility and our capital lease line. Our short-term liquidity requirements consist of
interest on our notes, capital expenditures and working capitaL. Our long-term liquidity requirements consist of the principal
amount of our notes and our outstanding borrowings under our revolving credit facility, Based on our current level of operations
and anticipated growth, we believe that our existing cash, cash equivalents and available borrowings under our credit facilty wil
be suffcient to fund our operations and to service our notes for at least the next 12 months, Further, a significant majority of our
planned capital expenditures are "success-based" expenditures, meaning that it is directly linked to new revenue, and if they are
made, they will be made only when it is determined that they wil directly lead to more profitable revenue. As of September 30,
2009, we have $6.0 milion of capital lease obligations outstanding under our capital lease line, As of September 30, 2009, we
had $23,5 milion of outstanding borrowings under our revolving credit facility, all of which we have invested in U.S, Treasury
notes. Additionally, we have used our credit facility to collateralize $1.3 milion of outstanding letters of credit as of
September 30, 2009, Our cash and cash equivalents are being held in several large financial institutions, although most of our
balances exceed the Federal Deposit Insurance Corporation insurance limits.
As of September 30, 2009, we require approximately $102.4 milion in cash to service the interest due on our notes
throughout the remaining life of the notes, We may need to refinance all or a portion of our indebtedness, including the notes, at
or before maturity, We cannot assure you that we wil be able to refinance any of our indebtedness, including the notes and our
credit facility, on commercially reasonable terms or at all. However, we continuously evaluate and consider all financing
opportunities, Any future acquisitions or other significant unplanned costs or cash requirements may also require that we raise
additional funds through the issuance of debt or equity.
For information regarding our revolving credit facility and senior secured notes, see our Form lO-K for the year ended
December 31,2008.
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Disputes
During December 2008, we finalized a settlement with Verizon, which extinguished virtually all outstanding disputes
between the paries as of March 3 i, 2008, The settlement included a comprehensive mutual release of any liabilty or potential
liabilty between the paries effective as of that date, We nonetheless continue to be involved in a variety of disputes with
multiple carier vendors relating to bilings of approximately $20 millon as of September 30,2009, We believe we have accrued
an amount appropriate to settle all remaining disputed charges, However, it is possible that the actual settlement of any
remaining disputes may differ from our reserves and that we may settle at amounts greater than the estimates, We have sufficient
cash on hand to fund any differences between our expected and actual settlement amounts.
Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2009
Cash Flows from Operating Activities
Cash provided by operating activities was $7,2 millon for the nine months ended September 30, 2008, compared to cash
provided by operating activities of$16,2 milion for 2009, During the nine months ended September 30,2009 and 2008, we paid
$34.1 milion in interest expense on our notes and $0,9 milion in interest expense on our credit facilty, The change in cash
provided by operations was due to the improvement in our income from operations partially offset by payments made in
connection with our settlement with Verizon.
Cash Flows from Investing Activities
Cash used in investing activities was $36,8 milion for the nine months ended September 30, 2008, compared to
$24.5 milion for 2009. The change in cash flow from investing activities was primarily due to decreased capital expenditures
during the nine months ended September 30, 2009, Additionally, we used $5,0 milion during the nine months ended
September 30, 2008 to acquire Lightwave.
Cash Flows from Financing Activities
Cash flows provided by financing activities were $10.4 milion for the nine months ended September 30,2008, compared to
cash used in financing activities of $2.7 millon for 2009, The change in cash flows from financing activities was primarily due
to a reduced amount of borrowing from our capital lease line and revolving line of credit in the nine months ended September 30,
2009 as compared to the same period in 2008.
New Accounting Standards
See Note 4 to this Item 1 for accounting standards that were issued since the fiing of our Form lO-K for the year ended
December 31,2008, These new accounting standards are not expected to have a material impact on our financial position, results
of operations or liquidity.
Application of Critical Accounting Policies and Estimates
The preparation of the condensed consolidated financial statements in accordance with GAAP requires us to make
judgments, estimates and assumptions regarding uncertinties that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities and the reported amounts of revenues and expenses. We use historical experience and all
available information to make these judgments and estimates and actual results could differ from those estimates and
assumptions that are used to prepare our financial statements at any given time, Despite these inherent limitations, management
believes that Management's Discussion and Analysis of Financial Condition and Results of Operations and the accompanying
condensed consolidated financial statements and footnotes provide a meaningful and fair perspective of our financial condition
and operating results for the current period. For more information, see our Form 10-K for the year ended December 31,2008.
Other Matters
At September 30, 2009, we had NOL carryforwards for federal and state income tax purposes, The amount of such
available NOL carrforwards which may be available to offset future taxable income was approximately $139,2 milion. The
Company has provided a full valuation allowance against the net deferred tax assets as of September 30, 2009 because
management does not believe it is more likely than not that this asset wil be realized.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the nonnal course of business, our financial position is subject to a variety of risks, such as the collectability of our
accounts receivable and the recoverability of the carring values of our long-tenn assets. Our long-tenn obligations consist
primarily of long-tenn debt with fixed interest rates and our revolving credit facility with a variable interest rate. We are not
exposed to market risks from changes in foreign curency exchange rates or commodity prices. We do not hold any derivative
financial instrments nor do we hold any securities for trading or speculative purposes.
We continually monitor the collectability of our accounts receivable and although our wrte-offs have increased during the
nine months ended September 30, 2009, we have not noted any significant changes in our collections as a result of the current
economic and market conditions, We believe that our allowance for doubtful accounts is adequate as of September 30, 2009,
Should the market conditions continue to worsen or should our customers' ability to pay decrease, we may be required to
increase our allowance for doubtful accounts, which would result in a charge to our SG&A expenses.
Our available cash balances are invested on a short-tenn basis (generally overnight) and, accordingly, are not subject to
significant risks associated with changes in interest rates. Substantially all of our cash flows are derived from our operations
within the United States and we are not subject to market risk associated with changes in foreign exchange rates.
Our investment securities are classified as available for sale, and consequently, are recorded on the balance sheet at fair
value with unrealized gains and losses reflected in stockholders' deficiency, Our investment securities are comprised solely of
short-tenn U.S, Treasury notes with original maturity dates of three to nine months, These investment securities, like all fixed
income instrments, are subject to interest rate risk and wil fall in value if market interest rates increase.
The fair value of our 11 3/8% senior secured notes due 2012 was approximately $274,9 milion at September 30,2009, Our
senior secured notes, like all fixed rate securities are subject to interest rate risk and wil fall in value if market interest rates
increase.
The fair value of the long-tenn debt outstanding under our revolving credit facility approximates its carring value of
$23.5 milion due to its variable interest rate, A change in interest rates of 100 basis points would change our interest expense by
$0.2 million on an annual basis.
Item 4T. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that infonnation required to be disclosed in our
reports fied under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms and that such infonnation is accumulated and communicated to our
management, including our Chief Executive Offcer and Chief Financial Offcer, as appropriate, to allow for timely decisions
regarding required disclosure, In evaluating the disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures.
As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the operation of our
disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief
Executive Offcer and Chief Financial Offcer concluded that our disclosure controls and procedures were effective as of
September 30,2009. For infonnation regarding the Company's internal control over financial reporting, see our Form 10-K for
the year ended December 31,2008.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the quarer ended
September 30,2009 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over
financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are currently a part to several legal actions, AT&T Communications of New York, Inc. and Teleport Communications
Group, Inc, commenced an action against us in the U.S, District Court for the Southern District of New York in March, 2008.
Plaintiffs seek monetary relief, including recovery of amounts biled for switched access service, This matter has been referred to
the New York Public Service Commission.
Weare also a part to certain legal actions and regulatory investigations and enforcement proceedings arising in the
ordinary course of business, We are also involved in certain biling and contractual disputes with our vendors, We do not believe
that the ultimate outcome of any of the foregoing actions wil result in any liability that would have a material adverse effect on
our financial condition, results of operations or cash flows.
For more information, see the section entitled "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and our Form 10-K for the year ended December 31, 2008.
Item lA. Risk Factors
CIT Group, Inc. ("CIT"), an affiliate of one of our lenders under our credit facility filed for bankrptcy on November 1,
2009. We do not expect that CIT's banruptcy filing wil have a negative impact on us, but there can be no such assurances. We
wil continue to monitor the situation.
Other than the risk factor noted above, there have been no material changes in our risk factors from those set forth in our
Form 10-K for the year ended December 31,2008, which should be read in conjunction with this report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4, Submission of Matters to a Vote of Security Holders
None.
Item 5, Other Information
None.
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Item 6. Exhibits
The following exhibits are filed herewith:
Exhibit No.
31.
Description
Certification of the Company's Chief Executive Offcer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Company's Chief Financial Officer pursuant to Exchange Act Rules 13a-14( a )/15d-14( a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
32.1 Certification ofthe Company's Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of2002.
32.2 Certification of the Company's Chief Financial Offcer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
Pursuant to the requirements of Section 13 or i 5( d) of the Securities Exchange Act of i 934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 6, 2009.
BROADVIEW NETWORKS HOLDINGS, INC.
By: lsI MICHAEL K. ROBINSON
Name: Michael K. Robinson
Title: Chief Executive Officer,
President and Assistant Treasurer
By: lsI COREY R1R
Name: Corey Rinker
Title: Chief Financial Officer,
Treasurer and Assistant Secretary
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Exhibit No.
31.
31.
32.1
32.2
Page 33 of33
EXHIBIT INDEX
Description
Certification of the Company's Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Company's Chief Financial Offcer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Company's Chief Executive Officer pursuant to 18 U.S.c. Section 1350, as adopted
pursuant to Section 906 ofthe Sarbanes-Oxley Act of2002,
Certification ofthe Company's Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of2002.
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Exhibit 6
Management Biographies of
Senior Executives
Of
Broadview Networks, Inc.
EC..I'I..r.R,.. ...~Hl._.~~\- _ ",-""
1009 NOV 13 ~M to: 2S
BROADVIEW NETWORKS, INC.
TECHNICAL QUALIFICATIONSIMANAGEMENT EXPERIENCE
The Company has assembled a highly skiled management team, which brings a wealth
of experience and expertise to the Company's telecommunications services venture. Together,
the Company's executives provide it with the depth and breadth of management, operational and
technical capabilities necessary to facilitate its provision of high quality, affordable
telecommunications services.
Brief summaries of the experience of key members of the Company's executive team are
set forth below:
MICHAEL K ROBINSON
President and Chief Executive Officer
Mr, Robinson joined the Company as Chief Executive Officer in March, 2005, Prior to
that time, Mr. Robinson had been with US LEC Corporation, a publicly traded competitive
telecommunications provider, holding the position of Executive Vice President and Chief
Financial Officer since July, 1998. In this role, Mr. Robinson was responsible for all financial
operations for the company, including treasur, general accounting and internal control, investor
relations, biling and information systems development, information technology, human
resources and real estate. Prior to joining US LEC, Mr. Robinson spent 10 years in varous
management positions with the telecommunications division of A1catel, including Vice President
and Chief Financial Offcer of Alcatel Data Networks and the worldwide financial operations of
the Enterprise and Data Networking Division of AlcateL. Prior to these roles, Mr. Robinson was
Chief Financial Officer of A1catel Network Systems. Before joining A1catel, Mr, Robinson held
various management positions with Windward International and Siecor Corp. Mr. Robinson
holds a Masters Degree in Business Administration from Wake Forest University.
BRIAN P. CROTTY
Chief Operating Officer
Mr. Crotty has over 15 years of senior management experience in the
telecommunications industry, In his role with Broadview, Mr. Crotty is responsible for all
operational aspects of the Company including sales, marketing, provisioning, biling, network
operations, repair, field services and customer service, Mr. Crotty formerly served as the Chief
Operating Officer of BridgeCom International, Inc. Prior to joining BridgeCom, Mr, Crotty held
a succession of positions with CoreComm Ltd., a publicly traded integrated communications
provider with facilities throughout the Northeast and Midwest, most recently serving in the role
of Director of Operations. Mr. Crotty joined CoreComm Ltd., through the acquisition of USN
Communications Inc., where he held a succession of senior management roles in both sales and
operations including Vice President of Operations. Prior to that time, Mr. Crotty was the co-
founder and served as Executive Vice President of The Millenium Group, one of the first
competitive local exchange carrers in the state of Wisconsin. In addition, Mr. Crotty has also
served in managerial positions with CEI Communications, which he founded, ant AT&T Corp.
Mr. Crotty obtained a degree in Business Administration from St. Norbert College,
COREY RINKER
Chief Financial Officer, Treasurer and Assistant Secretary
Mr. Rinker, a Certified Public Accountant and Attorney, joined the Company (originally
with BridgeCom International, Inc.) as Chief Financial Officer in January 2001 following seven
years of experience serving in similar positions with both privately held and publicly traded
corporation including The Intellsource Group, a Safeguard Scientifics, Inc. parership
company. Mr. Rinker also possesses nearly a decade of cumulative experience with
predecessors of the Big Four accounting firms of Deloitte & Touche LLP and Ernst & Young
LLP, serving in senior managerial positions in the tax and consulting areas. Mr. Rinker has an
Accounting Degree, with honors, from the University of Massachusetts at Amherst and a J.D.
degree from Yeshiva University's Cardozo School of Law.
CHARES C. HUNTER
Executive Vice President, Secretary and General Counsel
Mr. Hunter has served as Executive Vice President, Secretar and General Counsel of
Broadview since 2003. Mr. Hunter responsible for corporate and legal affairs of the Company,
including federal and state public policy advocacy. Mr. Hunter is a 30-year veteran of
telecommunications law and policy who has represented competitive providers of
communications services for well over a decade. Prior to joining Broadview, Mr. Hunter headed
the Hunter Communications Law Group, P.C., a District of Columbia based boutique
telecommunications law firm with a nationwide clientele. Mr. Hunter began his legal career as a
trial attorney with the Federal Martime Commission and afterwards was a parner specializing in
telecommunications matters at the Chicago-based law firm of Gardner, Caron and Douglas and
the District of Columbia based law firm of Herron, Burchette, Ruckert and Rothwell. Mr.
Hunter received his J.D. from the Duke University School of Law and his undergraduate degree
from the University of Michigan at An Arbor. Mr. Hunter is a member of the bars of New
York, the District of Columbia, the U.S. Supreme Court and numerous Federal Appellate Courts.
KENNETH A. SHULMAN
Chief Technology Officer and Chief Information Officer
Mr. Shulman joined Broadview in 1999 as Chief Technology Officer. In this role, he is
responsible for the architecture, technology, standards and evolution plans for the Company's
integrated communications networks and services. As Chief Information Offcer, Mr, Sulman is
also responsible for the Company's patented integrated provisioning, biling and CRM systems,
software and IT infrastructure. Mr. Shulman has 30 years of leadership experience in
communications technology. He previously served as Vice President of local network
technology for AT&T, a position he assumed when AT&T acquired Teleport Communications
Group ("TGC") in 1998. From 1987 to 1988, Mr. Shulman held offcer positions with TGC,
including Senior Vice President and Chief Technology Officer. Earlier, Mr. Shulman was
Director of Systems Engineering for MCI InternationaL. Prior to that time, Mr. Shulman
specialized in network planing with Bell Communications Research, Inc. ("Bell Core") and Bell
Laboratories. Mr. Shulman holds a B.S. in Electrical Engineering from the State University of
New York at Stony Brook, an M.S. in Electrical Engineering from the University of Rochester,
and an M.B.A. from The Wharon School of Business at the University of Pennsylvania. Mr.
Shulman has served on many technical advisory boards and currently serves on advisory board
of Baker Capital and Baypackets, Inc.
TERENCE J. ANDERSON
Executive Vice President - Corporate Development
Mr, Anderson was the co-founder of Broadview Networks in 1996 and has served as
Executive Vice President, Finance since the Company's inception, Mr. Anderson's curent role
includes corporate development, business planing and financial analysis. He has led efforts to
raise start-up capital, offered financial direction and assisted in securing subsequent financing.
Previously, as a Vice President in the Media and Telecommuncations Finance and
Telecommunications Finance Group of Chemical Baning Corp. from 1988 to 1995, Mr.
Anderson was responsible for originating and executing transactions and financing for diverse
customers, including several large cable operators, Mr. Anderson holds a Bachelor's Degree in
Economics from Princeton University and an M.B.A. with honors from Columbia University.
Exhibit 7
Rules Compliance Statement
Of
Broadview Networks, Inc.
PE. .CFI'\ ~~,r)
2009 NOV' 3 AM 10= 24
IN THE MATTER OF THE
APPLICATION OF
Broadview Networks, Inc.
For a Certifcate of Public
Convenience and Necessity to
Provide Local Exchange
Telecommunications Services
Within the State of Idaho
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION REGl:
1009 NOV 13 AM 10: 24)
)
)
)
)
)
)
)
ßVAJ ~-r-cq-o(
State of New York )
)
)
ss:
County of Westchester
CERTIFICATION
I, Charles C. Hunter, Executive Vice President, Secretary and General Counsel of
Applicant Broadview Networks, Inc., being first duly sworn, deposes and says that he has read
the foregoing Application and knows the contents thereof; and
That the same are true of his knowledge, except as to matters which are therein stated on
information and believe, and as to those matters, he believes them to be tre.
Broadview Networks, Inc. has also reviewed all of the Commission's Rules and agrees to
comply with them.
BROADVIEW NETWORKS, INC.
B:~~Hunter
Executive Vice President, Secretar and
General Counsel
Subscribed and sworn to before me this 1'2+1 day of flDII~MBeJ ,2009.~6
NOT PUBLIC
My Commission expires:
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