##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For The Quarterly Period Ended September 30, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number 333-142946
 Broadview Networks Holdings, Inc.
  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 offices)
    
    10573
(Zip code)
 (914) 922-7000
 Yes þ No o
 Yes o
No o
  Large accelerated filer
 o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ
  Class
    
    Outstanding at November 6, 2009Class A Common Stock, $.01 par value per share
    
    9,342,880Class B Common Stock, $.01 par value per share
    
    360,050




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of December 31, 2008 and September 30, 2009 (unaudited)
    
    
    5Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30,
2008 and 2009
    
    
    6Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2008 and 2009
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4T. Controls and Procedures
    
    
    23PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    25Signatures
    
    
    26Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    servicing our substantial indebtedness;
    
    our history of operating losses;
    
    the elimination or relaxation of certain regulatory rights and protections;
    
    billing 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 carriers 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 industry consolidation;
    
    restrictions in connection with our indenture governing the notes and credit agreement
governing the credit facility;
    
    government regulation;
    
    increased regulation of Internet-protocol-based service providers;
    
    vendor bills related to past periods;
    
    the ability to maintain certain real estate leases and agreements;
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##### Table of Contents




    
    interruptions in the business operations of third party service providers;
    
    limits on our ability 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 industry;
    
    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 incurring liability for information disseminated through our network;
    
    service network disruptions due to software or hardware bugs of the network equipment;
and
    
    fraudulent usage of our network and services.
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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)
 December 31,
    
    
    September 30,2008
    
    
    2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,070
    
    
    $
    12,980Investment securities
    
    
    23,533
    
    
    
    23,549Accounts receivable, less allowance for doubtful accounts of $11,934 and $15,056
    
    
    53,486
    
    
    
    46,319Other current assets
    
    
    12,614
    
    
    
    10,098Total current assets
    
    
    113,703
    
    
    
    92,946Property and equipment, net
    
    
    85,248
    
    
    
    85,308Goodwill
    
    
    98,111
    
    
    
    98,238Intangible assets, net of accumulated amortization of $150,556 and $164,107
    
    
    45,220
    
    
    
    31,669Other assets
    
    
    16,746
    
    
    
    16,344Total assets
    
    $
    359,028
    
    
    $
    324,505LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent liabilities:Accounts payable
    
    $
    17,044
    
    
    $
    27,464Accrued expenses and other current liabilities
    
    
    42,699
    
    
    
    11,897Taxes payable
    
    
    10,680
    
    
    
    12,196Deferred revenues
    
    
    11,967
    
    
    
    10,663Current portion of capital lease obligations and equipment notes
    
    
    4,142
    
    
    
    3,909Total current liabilities
    
    
    86,532
    
    
    
    66,129Long-term debt
    
    
    327,424
    
    
    
    326,748Deferred rent payable
    
    
    2,400
    
    
    
    2,200Capital lease obligations and equipment notes, net of current portion
    
    
    5,212
    
    
    
    2,735Deferred income taxes payable
    
    
    2,071
    
    
    
    2,798Other
    
    
    655
    
    
    
    706Total liabilities
    
    
    424,294
    
    
    
    401,316Stockholders deficiency:Common stock A  $.01 par value; authorized 80,000,000, issued and outstanding 9,342,880 shares
    
    
    107
    
    
    
    107Common stock B  $.01 par value; authorized 10,000,000, issued and outstanding 360,050 shares
    
    
    4
    
    
    
    4Series 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
    
    
    1
    
    
    
    1Series A-1 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
    
    
    1
    
    
    
    1Series 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
    
    
    1
    
    
    
    1Series 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
    
    
    1
    
    
    
    1Series 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
    
    
    140,563
    
    
    
    140,737Accumulated deficit
    
    
    (205,966
    )
    
    
    (217,665
    )Accumulated other comprehensive income
    
    
    22
    
    
    
    2Total stockholders deficiency
    
    
    (65,266
    )
    
    
    (76,811
    )Total liabilities and stockholders deficiency
    
    $
    359,028
    
    
    $
    324,505
 See notes to unaudited condensed consolidated financial statements.
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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
    
    
    2009Revenues
    
    $
    125,535
    
    
    $
    112,718
    
    
    $
    377,391
    
    
    $
    352,243Operating expenses:Cost of revenues (exclusive of
depreciation and amortization)
    
    
    65,026
    
    
    
    54,844
    
    
    
    196,474
    
    
    
    173,972Selling, general and administrative
(includes share-based
compensation of $63, $59, $242 and $174)
    
    
    41,467
    
    
    
    37,841
    
    
    
    127,150
    
    
    
    119,677Software development
    
    
    414
    
    
    
    487
    
    
    
    1,229
    
    
    
    1,418Depreciation and amortization
    
    
    17,828
    
    
    
    12,111
    
    
    
    54,525
    
    
    
    37,913Total operating expenses
    
    
    124,735
    
    
    
    105,283
    
    
    
    379,378
    
    
    
    332,980Income (loss) from operations
    
    
    800
    
    
    
    7,435
    
    
    
    (1,987
    )
    
    
    19,263Interest expense
    
    
    (10,019
    )
    
    
    (10,043
    )
    
    
    (29,474
    )
    
    
    (30,143
    )Interest income
    
    
    167
    
    
    
    10
    
    
    
    598
    
    
    
    104Other income (expense)
    
    
    (3
    )
    
    
    
    
    
    
    (10
    )
    
    
    16Loss 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.
  6




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Broadview Networks Holdings, Inc.
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 (in thousands)
 Nine Months Ended September 30,2008
    
    
    2009Cash flows from operating activitiesNet loss
    
    $
    (31,786
    )
    
    $
    (11,699
    )Adjustments to reconcile net loss to net cash provided
by operating activities:Depreciation
    
    
    23,430
    
    
    
    24,311Amortization of deferred financing costs
    
    
    1,983
    
    
    
    1,969Amortization of intangible assets
    
    
    31,045
    
    
    
    13,551Amortization of bond premium
    
    
    (603
    )
    
    
    (676
    )Provision for doubtful accounts
    
    
    4,205
    
    
    
    5,256Share-based compensation
    
    
    242
    
    
    
    174Deferred income taxes
    
    
    685
    
    
    
    727Other
    
    
    50
    
    
    
    51Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,429
    )
    
    
    1,911Other current assets
    
    
    (1,898
    )
    
    
    2,516Other assets
    
    
    (933
    )
    
    
    (1,567
    )Accounts payable
    
    
    679
    
    
    
    10,420Accrued expenses and other current liabilities
    
    
    (15,339
    )
    
    
    (30,802
    )Taxes payable
    
    
    (2,526
    )
    
    
    1,516Deferred revenues
    
    
    1,729
    
    
    
    (1,304
    )Deferred rent payable
    
    
    (299
    )
    
    
    (200
    )Net cash provided by operating activities
    
    
    7,235
    
    
    
    16,154Cash flows from investing activitiesAcquisition, net of cash acquired
    
    
    (4,953
    )
    
    
    (127
    )Purchases of property and equipment
    
    
    (31,452
    )
    
    
    (24,371
    )Purchases of investment securities
    
    
    
    
    
    
    (98,664
    )Sales of investment securities
    
    
    
    
    
    
    98,628Other
    
    
    (379
    )
    
    
    Net cash used in investing activities
    
    
    (36,784
    )
    
    
    (24,534
    )Cash flows from financing activitiesDrawdowns on revolving credit facility
    
    
    10,123
    
    
    
    1,964Repayments of revolving credit facility
    
    
    (123
    )
    
    
    (1,964
    )Proceeds from capital lease financing and equipment notes
    
    
    3,192
    
    
    
    373Payments 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
    
    
    
    24,070Cash 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
    2. Investment Securities
   8




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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
 3. Comprehensive Loss
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Net loss
    
    $
    (9,173
    )
    
    $
    (2,838
    )
    
    $
    (31,786
    )
    
    $
    (11,699
    )Unrealized gains on investment securities
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Reclassification adjustments for
realized gains included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )Comprehensive loss
    
    $
    (9,173
    )
    
    $
    (2,836
    )
    
    $
    (31,786
    )
    
    $
    (11,719
    )
 4. Recent Accounting Pronouncements
 Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles
 Interim Disclosures about Fair
Value of Financial Instruments
 Subsequent Events
 5. InfoHighway Acquisition
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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)
  6. Fair Values of Financial Instruments
   7. Commitments and Contingencies
     10




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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
   9. Income Taxes
  10. Earnings Per Share
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Loss 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
    
    
    
    9,342,880Class B common stock
    
    
    336,575
    
    
    
    348,350
    
    
    
    331,848
    
    
    
    343,649Total weighted average common shares
outstanding  basic and diluted
    
    
    9,679,455
    
    
    
    9,691,230
    
    
    
    9,674,728
    
    
    
    9,686,529Loss available per common share  basic
and diluted
    
    $
    (2.62
    )
    
    $
    (2.17
    )
    
    $
    (8.16
    )
    
    $
    (6.69
    )
    11




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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 10-K for the year ended December 31, 2008 filed 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
specifically consider the various factors identified in this quarterly report that could cause
results to differ materially from those expressed in such forward-looking statements, including
matters set forth in our Form 10-K for the year ended December 31, 2008 filed with the SEC.
 Overview
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Results of Operations
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Revenues: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
    %Software 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
    %)
  13




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Key Components of Results of Operations
 Revenues
   Cost of Revenues (exclusive of depreciation and amortization)
  
    
    leasing local loops and digital T-1 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 offices for collocating our equipment;
    
    signaling system network connectivity; and
    
    Internet transit and peering, which is the cost of delivering Internet traffic from our
customers to the public Internet.
     14




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Gross Profit (exclusive of depreciation and amortization)
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Income (loss) from operations
    
    $
    800
    
    
    $
    7,435
    
    
    $
    (1,987
    )
    
    $
    19,263Depreciation and amortization
    
    
    17,828
    
    
    
    12,111
    
    
    
    54,525
    
    
    
    37,913Software development
    
    
    414
    
    
    
    487
    
    
    
    1,229
    
    
    
    1,418Selling, general and
administrative
    
    
    41,467
    
    
    
    37,841
    
    
    
    127,150
    
    
    
    119,677Gross profit (exclusive of
depreciation and amortization)
    
    $
    60,509
    
    
    $
    57,874
    
    
    $
    180,917
    
    
    $
    178,271Gross profit, as a percentage
of revenue
    
    
    48.2
    %
    
    
    51.3
    %
    
    
    48.0
    %
    
    
    50.6
    %
     
    
    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 will 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.
   15




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##### Table of Contents



Selling, General and Administrative
   Depreciation and Amortization
  Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2009
   Three Months Ended September 30,2008
    
    
    2009% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues: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
    
    
    
    51.3
    %
    
    
    (4.4
    %)
  16




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##### Table of Contents



Revenues
  Three Months Ended September 30,2008
    
    
    2009% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data
services
    
    $
    108,446
    
    
    
    86.4
    %
    
    $
    98,814
    
    
    
    87.6
    %
    
    
    (8.9
    %)Wholesale
    
    
    4,926
    
    
    
    3.9
    %
    
    
    4,637
    
    
    
    4.1
    %
    
    
    (5.9
    %)Access
    
    
    7,198
    
    
    
    5.7
    %
    
    
    5,602
    
    
    
    5.0
    %
    
    
    (22.2
    %)Total 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 (exclusive of depreciation and amortization)
  Gross Profit (exclusive of depreciation and amortization)
   17




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##### Table of Contents



Selling, General and Administrative
  Depreciation and Amortization
  Interest
  Three Months Ended September 30,2008
    
    
    2009Interest expense
    
    $
    10,019
    
    
    $
    10,043Weighted average debt outstanding
    
    $
    310,882
    
    
    $
    330,105Effective annual interest rate
    
    
    12.89
    %
    
    
    12.17
    %
  18




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##### Table of Contents



Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2009
   Nine Months Ended September 30,2008
    
    
    2009% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues: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
    %
    
    
    (11.3
    %)Other
    
    
    7,167
    
    
    
    1.8
    %
    
    
    6,089
    
    
    
    1.7
    %
    
    
    (15.0
    %)Total cost of
revenues
    
    
    196,474
    
    
    
    52.0
    %
    
    
    173,972
    
    
    
    49.4
    %
    
    
    (11.5
    %)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
  Nine Months Ended September 30,2008
    
    
    2009% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data
services
    
    $
    327,822
    
    
    
    86.9
    %
    
    $
    306,519
    
    
    
    87.0
    %
    
    
    (6.5
    %)Wholesale
    
    
    13,944
    
    
    
    3.7
    %
    
    
    14,519
    
    
    
    4.1
    %
    
    
    4.1
    %Access
    
    
    21,692
    
    
    
    5.7
    %
    
    
    18,615
    
    
    
    5.3
    %
    
    
    (14.2
    %)Total 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
    %)
  19




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##### Table of Contents



Cost of Revenues (exclusive of depreciation and amortization)
  Gross Profit (exclusive of depreciation and amortization)
  Selling, General and Administrative
  Depreciation and Amortization
   20




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##### Table of Contents



Interest
  Nine Months Ended September 30,2008
    
    
    2009Interest expense
    
    $
    29,474
    
    
    $
    30,143Weighted average debt outstanding
    
    $
    310,105
    
    
    $
    331,202Effective annual interest rate
    
    
    12.67
    %
    
    
    12.13
    %
 Off-Balance Sheet Arrangements
  Liquidity and Capital Resources
     21




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##### Table of Contents



Disputes
  Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2009
 Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  New Accounting Standards
  Application of Critical Accounting Policies and Estimates
  Other Matters
   22




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
       
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
   23




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
   24




---



##### Table of Contents



Item 6. Exhibits
  Exhibit No.
    
    Description31.1
    
    
    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 2002.31.2
    
    
    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 of the Companys Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Companys Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
  25




---



##### Table of Contents



SIGNATURES
  BROADVIEW NETWORKS HOLDINGS, INC.By:
    /s/ Michael K. RobinsonName:
    Michael K. RobinsonTitle:
    Chief Executive Officer,
President and Assistant TreasurerBy:
    /s/ Corey RinkerName:
    Corey RinkerTitle:
    Chief Financial Officer,
Treasurer and Assistant Secretary  26




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    
    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 2002.31.2
    
    
    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 of the Companys Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Companys Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
  27