##### 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 June 30, 2010
 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
    
    10573(Address of principal executive offices)
    
    (Zip code)
 (914) 922-7000
 o o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ
  Class
    
    Outstanding at August 12, 2010Class A Common Stock, $.01 par value per share
    
    9,333,680Class B Common Stock, $.01 par value per share
    
    360,050




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    5Condensed Consolidated Balance Sheets as of December 31, 2009 and June 30, 2010 (unaudited)
    
    
    5Condensed Consolidated Statements of Operations (unaudited) for the three and six months
ended June 30, 2009 and 2010
    
    
    6Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June
30, 2009 and 2010
    
    
    7Notes to 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. (Removed and Reserved)
    
    
    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 and refinancing our substantial indebtedness;
    
    our history of net 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;
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##### Table of Contents




    
    increased regulation of Internet-protocol-based service providers;
    
    vendor bills related to past periods;
    
    the ability to maintain certain real estate leases and agreements;
    
    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;
    
    the financial difficulties by others in our industry;
    
    the solvency and liquidity of the administrative agent and primary creditor under
our revolving credit facility;
    
    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, if any;
    
    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,
    
    
    June 30,2009
    
    
    2010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    21,975
    
    
    $
    15,216Certificates of deposit
    
    
    1,878
    
    
    
    2,094Investment securities
    
    
    23,549
    
    
    
    18,554Accounts receivable, less allowance for doubtful accounts of $7,942 and $9,323
    
    
    41,388
    
    
    
    37,262Other current assets
    
    
    10,976
    
    
    
    10,550Total current assets
    
    
    99,766
    
    
    
    83,676Property and equipment, net
    
    
    86,875
    
    
    
    87,638Goodwill
    
    
    98,238
    
    
    
    98,238Intangible assets, net of accumulated amortization of $51,728 and $58,738
    
    
    27,484
    
    
    
    20,474Other assets
    
    
    14,965
    
    
    
    9,736Total assets
    
    $
    327,328
    
    
    $
    299,762LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent liabilities:Accounts payable
    
    $
    9,196
    
    
    $
    9,066Accrued expenses and other current liabilities
    
    
    35,630
    
    
    
    30,312Taxes payable
    
    
    12,768
    
    
    
    10,188Deferred revenues
    
    
    8,965
    
    
    
    8,754Current portion of capital lease obligations
    
    
    3,080
    
    
    
    2,143Total current liabilities
    
    
    69,639
    
    
    
    60,463Long-term debt
    
    
    326,510
    
    
    
    319,635Deferred rent payable
    
    
    3,343
    
    
    
    3,317Deferred revenues
    
    
    1,445
    
    
    
    1,285Capital lease obligations, net of current portion
    
    
    1,776
    
    
    
    1,023Deferred income taxes payable
    
    
    3,040
    
    
    
    3,525Other
    
    
    721
    
    
    
    751Total liabilities
    
    
    406,474
    
    
    
    389,999Stockholders deficiency:Common stock A  $.01 par value; authorized 80,000,000 shares, issued 9,342,509 shares and
outstanding 9,333,680 shares
    
    
    107
    
    
    
    107Common stock B  $.01 par value; authorized 10,000,000 shares, 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 $156,927 and $166,484
    
    
    1
    
    
    
    1Series A-1 Preferred stock  $.01 par value; authorized 105,000 shares, designated, issued and
outstanding 100,702 shares, entitled in liquidation to $181,114 and $192,144
    
    
    1
    
    
    
    1Series B Preferred stock  $.01 par value; authorized 93,180 shares, designated, issued and
outstanding
91,187 shares entitled in liquidation to $164,001 and $173,989
    
    
    1
    
    
    
    1Series B-1 Preferred stock  $.01 par value; authorized 86,000 shares, designated and issued
64,986 shares, and
outstanding 64,633 shares entitled in liquidation to $116,243 and $123,381
    
    
    1
    
    
    
    1Series C Preferred stock  $.01 par value; authorized 52,332 shares, designated, issued and
outstanding
14,402 shares entitled in liquidation to $18,466 and $20,043
    
    
    
    
    
    
    Additional paid-in capital
    
    
    140,752
    
    
    
    140,811Accumulated deficit
    
    
    (219,836
    )
    
    
    (230,986
    )Treasury stock, at cost
    
    
    (177
    )
    
    
    (177
    )Total stockholders deficiency
    
    
    (79,146
    )
    
    
    (90,237
    )Total liabilities and stockholders deficiency
    
    $
    327,328
    
    
    $
    299,762
 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 June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2010
    
    
    2009
    
    
    2010Revenues
    
    $
    116,050
    
    
    $
    102,907
    
    
    $
    238,021
    
    
    $
    208,613Operating expenses:Cost of revenues (exclusive of depreciation and amortization)
    
    
    57,477
    
    
    
    49,605
    
    
    
    119,128
    
    
    
    99,665Selling, general and administrative (includes share-based
compensation of $59, $0, $116 and $59)
    
    
    39,629
    
    
    
    39,701
    
    
    
    81,262
    
    
    
    77,471Depreciation and amortization
    
    
    12,245
    
    
    
    11,343
    
    
    
    25,803
    
    
    
    22,751Total operating expenses
    
    
    109,351
    
    
    
    100,649
    
    
    
    226,193
    
    
    
    199,887Income from operations
    
    
    6,699
    
    
    
    2,258
    
    
    
    11,828
    
    
    
    8,726Interest expense
    
    
    (10,124
    )
    
    
    (9,440
    )
    
    
    (20,101
    )
    
    
    (19,363
    )Interest income
    
    
    12
    
    
    
    12
    
    
    
    96
    
    
    
    17Other income
    
    
    16
    
    
    
    
    
    
    
    16
    
    
    
    Loss before provision for income taxes
    
    
    (3,397
    )
    
    
    (7,170
    )
    
    
    (8,161)
    
    
    
    (10,620
    )Provision for income taxes
    
    
    (358
    )
    
    
    (242
    )
    
    
    (699
    )
    
    
    (530
    )Net loss
    
    
    (3,755
    )
    
    
    (7,412
    )
    
    
    (8,860
    )
    
    
    (11,150
    )Dividends on preferred stock
    
    
    (17,704
    )
    
    
    (19,907
    )
    
    
    (34,892
    )
    
    
    (38,626
    )Loss available to common shareholders
    
    $
    (21,459
    )
    
    $
    (27,319
    )
    
    $
    (43,752
    )
    
    $
    (49,776
    )Loss available per common share  basic and diluted
    
    $
    (2.21
    )
    
    $
    (2.82
    )
    
    $
    (4.52
    )
    
    $
    (5.14
    )Weighted average common shares outstanding  basic and diluted
    
    
    9,688,771
    
    
    
    9,691,287
    
    
    
    9,684,139
    
    
    
    9,686,684
 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)
 Six Months Ended June 30,2009
    
    
    2010Cash flows from operating activitiesNet loss
    
    $
    (8,860
    )
    
    $
    (11,150
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation
    
    
    16,404
    
    
    
    15,711Amortization of deferred financing costs
    
    
    1,313
    
    
    
    1,313Amortization of intangible assets
    
    
    9,365
    
    
    
    7,010Amortization of bond premium
    
    
    (444
    )
    
    
    (497
    )Provision for doubtful accounts
    
    
    3,916
    
    
    
    2,438Write-off of costs incurred in conneciton with initial public offering
    
    
    
    
    
    
    3,669Share-based compensation
    
    
    116
    
    
    
    59Deferred income taxes
    
    
    484
    
    
    
    485Other
    
    
    41
    
    
    
    23Changes in operating assets and liabilities:Accounts receivable
    
    
    2,228
    
    
    
    1,688Other current assets
    
    
    (311
    )
    
    
    426Other assets
    
    
    (672
    )
    
    
    130Accounts payable
    
    
    3,354
    
    
    
    (130
    )Accrued expenses and other current liabilities
    
    
    (13,763
    )
    
    
    (5,201
    )Taxes payable
    
    
    2,820
    
    
    
    (2,580
    )Deferred revenues
    
    
    (1,003
    )
    
    
    (371
    )Deferred rent payable
    
    
    (133
    )
    
    
    (26
    )Net cash provided by operating activities
    
    
    14,855
    
    
    
    12,997Cash flows from investing activitiesPurchases of property and equipment
    
    
    (13,631
    )
    
    
    (16,474
    )Purchases of investment securities
    
    
    (60,574
    )
    
    
    (70,653
    )Sales of investment securities
    
    
    60,539
    
    
    
    75,655Other
    
    
    (108
    )
    
    
    (216
    )Net cash used in investing activities
    
    
    (13,774
    )
    
    
    (11,688
    )Cash flows from financing activitiesDrawdowns on revolving credit facility
    
    
    620
    
    
    
    642Repayments of revolving credit facility
    
    
    (1,620
    )
    
    
    (7,020
    )Proceeds from capital lease financing
    
    
    215
    
    
    
    142Payments on capital lease obligations
    
    
    (2,005
    )
    
    
    (1,832
    )Net cash used in financing activities
    
    
    (2,790
    )
    
    
    (8,068
    )Net decrease in cash and cash equivalents
    
    
    (1,709
    )
    
    
    (6,759
    )Cash and cash equivalents at beginning of period
    
    
    22,177
    
    
    
    21,975Cash and cash equivalents at end of period
    
    $
    20,468
    
    
    $
    15,216
 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. Recent Accounting Pronouncements
   4. InfoHighway Acquisition
   5. Fair Values of Financial Instruments
   6. Commitments and Contingencies
   9




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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
 6. Commitments and Contingencies (continued)
   7. Long-term Debt Guarantees
   8. Income Taxes
   10




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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
 9. Loss per share
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2010
    
    
    2009
    
    
    2010Loss available to common shareholders (Numerator):Net loss
    
    $
    (3,755
    )
    
    $
    (7,412
    )
    
    $
    (8,860
    )
    
    $
    (11,150
    )Dividends on preferred stock
    
    
    (17,704
    )
    
    
    (19,907
    )
    
    
    (34,892
    )
    
    
    (38,626
    )Loss available to common shareholders
    
    $
    (21,459
    )
    
    $
    (27,319
    )
    
    $
    (43,752
    )
    
    $
    (49,776
    )Shares (Denominator):Weighted average common shares outstanding:Class A common stock
    
    
    9,342,880
    
    
    
    9,333,680
    
    
    
    9,342,880
    
    
    
    9,333,680Class B common stock
    
    
    345,891
    
    
    
    357,607
    
    
    
    341,259
    
    
    
    353,004Total weighted average common shares outstanding  basic and diluted
    
    
    9,688,771
    
    
    
    9,691,287
    
    
    
    9,684,139
    
    
    
    9,686,684Loss available per common share  basic and diluted
    
    $
    (2.21
    )
    
    $
    (2.82
    )
    
    $
    (4.52
    )
    
    $
    (5.14
    )
    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, 2009 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, 2009 filed with the SEC.
 Overview
      12




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Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2010
    
    
    2009
    
    
    2010Revenues:Voice and data services
    
    
    86.8
    %
    
    
    88.2
    %
    
    
    86.6
    %
    
    
    88.0
    %Wholesale
    
    
    4.2
    %
    
    
    5.2
    %
    
    
    4.2
    %
    
    
    5.0
    %Access
    
    
    5.5
    %
    
    
    4.2
    %
    
    
    5.5
    %
    
    
    4.7
    %Total network services
    
    
    96.5
    %
    
    
    97.6
    %
    
    
    96.3
    %
    
    
    97.7
    %Other
    
    
    3.5
    %
    
    
    2.4
    %
    
    
    3.7
    %
    
    
    2.3
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Network services
    
    
    47.7
    %
    
    
    47.4
    %
    
    
    48.2
    %
    
    
    47.0
    %Other cost of revenues
    
    
    1.7
    %
    
    
    0.8
    %
    
    
    1.9
    %
    
    
    0.8
    %Selling, general and
administrative
    
    
    34.1
    %
    
    
    38.6
    %
    
    
    34.1
    %
    
    
    37.1
    %Depreciation and amortization
    
    
    10.6
    %
    
    
    11.0
    %
    
    
    10.8
    %
    
    
    10.9
    %Total operating expenses
    
    
    94.1
    %
    
    
    97.8
    %
    
    
    95.0
    %
    
    
    95.8
    %Income from operations
    
    
    5.9
    %
    
    
    2.2
    %
    
    
    5.0
    %
    
    
    4.2
    %Interest expense
    
    
    (8.8
    %)
    
    
    (9.2
    %)
    
    
    (8.4
    %)
    
    
    (9.3
    %)Interest income
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Other income
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Loss before provision for
income taxes
    
    
    (2.9
    %)
    
    
    (7.0
    %)
    
    
    (3.4
    %)
    
    
    (5.1
    %)Provision for income taxes
    
    
    (0.3
    %)
    
    
    (0.2
    %)
    
    
    (0.3
    %)
    
    
    (0.2
    %)Net loss
    
    
    (3.2
    %)
    
    
    (7.2
    %)
    
    
    (3.7
    %)
    
    
    (5.3
    %)
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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.
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Gross Profit (exclusive of depreciation and amortization)
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2010
    
    
    2009
    
    
    2010Income from operations
    
    $
    6,699
    
    
    $
    2,258
    
    
    $
    11,828
    
    
    $
    8,726Depreciation and amortization
    
    
    12,245
    
    
    
    11,343
    
    
    
    25,803
    
    
    
    22,751Selling, general and
administrative
    
    
    39,629
    
    
    
    39,701
    
    
    
    81,262
    
    
    
    77,471Gross profit (exclusive of
depreciation and amortization)
    
    $
    58,573
    
    
    $
    53,302
    
    
    $
    118,893
    
    
    $
    108,948
     
    
    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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Selling, General and Administrative
   Depreciation and Amortization
  Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2010
   Three Months Ended June 30,2009
    
    
    2010% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Network services
    
    $
    112,011
    
    
    
    96.5
    %
    
    $
    100,478
    
    
    
    97.6
    %
    
    
    (10.3
    %)Other
    
    
    4,039
    
    
    
    3.5
    %
    
    
    2,429
    
    
    
    2.4
    %
    
    
    (39.9
    %)Total revenues
    
    
    116,050
    
    
    
    100.0
    %
    
    
    102,907
    
    
    
    100.0
    %
    
    
    (11.3
    %)Cost of revenues:Network services
    
    
    55,352
    
    
    
    47.7
    %
    
    
    48,799
    
    
    
    47.4
    %
    
    
    (11.8
    %)Other
    
    
    2,125
    
    
    
    1.7
    %
    
    
    806
    
    
    
    0.8
    %
    
    
    (62.1
    %)Total cost of revenues
    
    
    57,477
    
    
    
    49.4
    %
    
    
    49,605
    
    
    
    48.2
    %
    
    
    (13.7
    %)Gross profit:Network services
    
    
    56,659
    
    
    
    48.8
    %
    
    
    51,679
    
    
    
    50.2
    %
    
    
    (8.8
    %)Other
    
    
    1,914
    
    
    
    1.8
    %
    
    
    1,623
    
    
    
    1.6
    %
    
    
    (15.2
    %)Total gross profit
    
    $
    58,573
    
    
    
    50.6
    %
    
    $
    53,302
    
    
    
    51.8
    %
    
    
    (9.0
    %)
  16




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##### Table of Contents



Revenues
  Three Months Ended June 30,2009
    
    
    2010% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data services
    
    $
    100,757
    
    
    
    86.8
    %
    
    $
    90,754
    
    
    
    88.2
    %
    
    
    (9.9
    %)Wholesale
    
    
    4,882
    
    
    
    4.2
    %
    
    
    5,353
    
    
    
    5.2
    %
    
    
    9.6
    %Access
    
    
    6,372
    
    
    
    5.5
    %
    
    
    4,371
    
    
    
    4.2
    %
    
    
    (31.4
    %)Total network services
    
    
    112,011
    
    
    
    96.5
    %
    
    
    100,478
    
    
    
    97.6
    %
    
    
    (10.3
    %)Other
    
    
    4,039
    
    
    
    3.5
    %
    
    
    2,429
    
    
    
    2.4
    %
    
    
    (39.9
    %)Total revenues
    
    $
    116,050
    
    
    
    100.0
    %
    
    $
    102,907
    
    
    
    100.0
    %
    
    
    (11.3
    %)
  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 June 30,2009
    
    
    2010Interest expense
    
    $
    10,124
    
    
    $
    9,440Weighted average debt outstanding
    
    
    331,054
    
    
    
    323,817Effective annual interest rate
    
    
    12.23
    %
    
    
    11.66
    %
 Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2010
   Six Months Ended June 30,2009
    
    
    2010% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Network services
    
    $
    229,097
    
    
    
    96.3
    %
    
    $
    203,868
    
    
    
    97.7
    %
    
    
    (11.0
    %)Other
    
    
    8,924
    
    
    
    3.7
    %
    
    
    4,745
    
    
    
    2.3
    %
    
    
    (46.8
    %)Total revenues
    
    
    238,021
    
    
    
    100.0
    %
    
    
    208,613
    
    
    
    100.0
    %
    
    
    (12.4
    %)Cost of revenues:Network services
    
    
    114,720
    
    
    
    48.2
    %
    
    
    98,054
    
    
    
    47.0
    %
    
    
    (14.5
    %)Other
    
    
    4,408
    
    
    
    1.9
    %
    
    
    1,611
    
    
    
    0.8
    %
    
    
    (63.5
    %)Total cost of revenues
    
    
    119,128
    
    
    
    50.1
    %
    
    
    99,665
    
    
    
    47.8
    %
    
    
    (16.3
    %)Gross profit:Network services
    
    
    114,377
    
    
    
    48.1
    %
    
    
    105,814
    
    
    
    50.7
    %
    
    
    (7.5
    %)Other
    
    
    4,516
    
    
    
    1.8
    %
    
    
    3,134
    
    
    
    1.5
    %
    
    
    (30.6
    %)Total gross profit
    
    $
    118,893
    
    
    
    49.9
    %
    
    $
    108,948
    
    
    
    52.2
    %
    
    
    (8.4
    %)
  18




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##### Table of Contents



Revenues
  Six Months Ended June 30,2009
    
    
    2010% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data services
    
    $
    206,202
    
    
    
    86.6
    %
    
    $
    183,380
    
    
    
    88.0
    %
    
    
    (11.1
    %)Wholesale
    
    
    9,882
    
    
    
    4.2
    %
    
    
    10,589
    
    
    
    5.0
    %
    
    
    7.2
    %Access
    
    
    13,013
    
    
    
    5.5
    %
    
    
    9,899
    
    
    
    4.7
    %
    
    
    (23.9
    %)Total network
services
    
    
    229,097
    
    
    
    96.3
    %
    
    
    203,868
    
    
    
    97.7
    %
    
    
    (11.0
    %)Other
    
    
    8,924
    
    
    
    3.7
    %
    
    
    4,745
    
    
    
    2.3
    %
    
    
    (46.8
    %)Total revenues
    
    $
    238,021
    
    
    
    100.0
    %
    
    $
    208,613
    
    
    
    100.0
    %
    
    
    (12.4
    %)
  Cost of Revenues (exclusive of depreciation and amortization)
  Gross Profit (exclusive of depreciation and amortization)
   19




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##### Table of Contents



Selling, General and Administrative
  Depreciation and Amortization
  Interest
  Six Months Ended June 30,2009
    
    
    2010Interest expense
    
    $
    20,101
    
    
    $
    19,363Weighted average debt outstanding
    
    
    331,747
    
    
    
    325,845Effective annual interest rate
    
    
    12.12
    %
    
    
    11.88
    %
 Off-Balance Sheet Arrangements
    20




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##### Table of Contents



Liquidity and Capital Resources
   Disputes
   Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2010
 Cash Flows from Operating Activities
   21




---



##### Table of Contents



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




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##### 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. (Removed and Reserved)
 
 Item 5. Other Information
   24




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##### 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




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##### 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
 ExhibitNo.
    
    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