##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 Mark One
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For The Quarterly Period Ended June 30, 2008
 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 333-147720
 Broadview Networks Holdings, Inc.
  Delaware
    
    11-3310798(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification Number)800 Westchester Avenue, 
Suite N501 Rye Brook, NY 10573
(Address of principal executive offices)
    
    10573
(Zip code)
 (914) 922-7000
 o þ
  Large accelerated filer oAccelerated filer oNon-accelerated filer þ(Do not check if a smaller reporting company)Smaller reporting company o o þ
  Class
    
    Outstanding at August 13, 2008Class A Common Stock, $.01 par value per share 
Class B Common Stock, $.01 par value per share
    
    9,342,880
   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, 2007 and June 30, 2008 (unaudited)
    
    
    5Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30,
2007 and 2008
    
    
    6Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2007 and 2008
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4.
    
    Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    27Item 1A.
    
    Risk Factors
    
    
    27Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3.
    
    Defaults Upon Senior Securities
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27Item 5.
    
    Other Information
    
    
    27Item 6.
    
    Exhibits
    
    
    27Signatures
    
    
    28EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    our history of operating losses;
    
    our substantial indebtedness;
    
    the elimination or relaxation of certain regulatory rights and protections;
    
    incumbent local exchange carriers, with which we have
interconnection agreements, leveraging their historical monopoly
position;
    
    the failure to anticipate and keep up with technological changes;
    
    our ability to provide services and systems at competitive prices;
    
    difficulties associated with collecting payment from incumbent local exchange carriers, interexchange carriers and
wholesale customers;
    
    billing and other disputes with vendors;
    
    the highly competitive nature of the communications market in which we operate and
declining prices for communications services;
    
    continued industry consolidation;
    
    the recent intellectual property infringement litigation involving the provision of Voice
over Internet Protocol (VoIP) services;
    
    restrictions in connection with our indenture governing the notes and credit agreement
governing the credit facility;
    
    servicing our indebtedness;
    
    government regulation;
    
    regulatory uncertainties in the communications industry;
    
    increased regulation of Internet-protocol-based service providers;
    
    declining prices for communication services;
    
    bills related to past periods;
    
    the ability to maintain certain real estate leases and agreements;
    
    system disruptions or the failure of our information systems to perform as expected;
    
    interruptions in the business operations of third party service providers;
    
    the loss of our customers;
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
    
    the ability to seek indemnification for losses from individuals and entities from whom we
have acquired assets and operations;
    
    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 efficiently integrate InfoHighway into our operations or the failure to
successfully engage in future acquisitions;
    
    misappropriation of our intellectual property and proprietary
rights; and
    
    the possibility of incurring liability for information
disseminated through our network.
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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 30,2007
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    41,998
    
    
    $
    30,507Accounts receivable, less allowance for doubtful accounts of $10,082 and $12,314
    
    
    56,426
    
    
    
    55,657Other current assets
    
    
    8,463
    
    
    
    9,064Total current assets
    
    
    106,887
    
    
    
    95,228Property and equipment, net
    
    
    77,373
    
    
    
    84,238Goodwill
    
    
    96,154
    
    
    
    96,237Intangible assets, net of accumulated amortization of $109,335 and $130,466
    
    
    82,841
    
    
    
    61,710Other assets
    
    
    18,543
    
    
    
    18,859Total assets
    
    $
    381,798
    
    
    $
    356,272LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent liabilities:Accounts payable
    
    $
    21,247
    
    
    $
    21,126Accrued expenses and other current liabilities
    
    
    43,952
    
    
    
    41,713Taxes payable
    
    
    10,818
    
    
    
    9,378Deferred revenues
    
    
    10,148
    
    
    
    11,625Current portion of capital lease obligations and equipment notes
    
    
    3,136
    
    
    
    3,297Total current liabilities
    
    
    89,301
    
    
    
    87,139Long-term debt
    
    
    304,740
    
    
    
    304,344Deferred rent payable
    
    
    2,628
    
    
    
    2,321Capital lease obligations and equipment notes, net of current portion
    
    
    6,114
    
    
    
    5,394Deferred income taxes payable
    
    
    1,141
    
    
    
    1,598Other
    
    
    589
    
    
    
    624Total liabilities
    
    
    404,513
    
    
    
    401,420Stockholders 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 $123,880 and $131,424
    
    
    1
    
    
    
    1Series A-1 Preferred stock  $.01 par value; authorized 105,000 shares, designated, issued and outstanding
100,702 shares, entitled in liquidation to $142,973 and $151,680
    
    
    1
    
    
    
    1Series B Preferred stock  $.01 par value; authorized 93,180 shares, designated, issued and outstanding
91,202 shares entitled in liquidation to $129,485 and $137,371
    
    
    1
    
    
    
    1Series B-1 Preferred stock  $.01 par value; authorized 86,000 shares, designated, issued and outstanding
64,986 shares entitled in liquidation to $92,265 and $97,884
    
    
    1
    
    
    
    1Series C Preferred stock  $.01 par value; authorized 52,332 shares, designated, issued and outstanding
14,402 shares entitled in liquidation to $13,011 and $14,256
    
    
    
    
    
    
    Additional paid-in capital
    
    
    140,270
    
    
    
    140,449Accumulated deficit
    
    
    (163,100
    )
    
    
    (185,712
    )Total stockholders deficiency
    
    
    (22,715
    )
    
    
    (45,148
    )Total liabilities and stockholders deficiency
    
    $
    381,798
    
    
    $
    356,272
 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 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Revenues
    
    $
    106,524
    
    
    $
    128,313
    
    
    $
    202,344
    
    
    $
    251,856Operating expenses:Cost of revenues (exclusive of depreciation
and amortization)
    
    
    53,699
    
    
    
    65,427
    
    
    
    103,246
    
    
    
    131,448Selling, general and administrative
(includes share-based
compensation of $1,950, $63, $2,113 and $179)
    
    
    40,931
    
    
    
    43,935
    
    
    
    78,482
    
    
    
    85,675Software development
    
    
    565
    
    
    
    275
    
    
    
    1,164
    
    
    
    822Depreciation and amortization
    
    
    17,668
    
    
    
    17,480
    
    
    
    33,746
    
    
    
    36,696Merger integration costs
    
    
    316
    
    
    
    
    
    
    
    415
    
    
    
    Total operating expenses
    
    
    113,179
    
    
    
    127,117
    
    
    
    217,053
    
    
    
    254,641Income (loss) from operations
    
    
    (6,655
    )
    
    
    1,196
    
    
    
    (14,709
    )
    
    
    (2,785
    )Other income
    
    
    49
    
    
    
    (8
    )
    
    
    96
    
    
    
    (8
    )Interest expense
    
    
    (8,517
    )
    
    
    (9,927
    )
    
    
    (15,227
    )
    
    
    (19,455
    )Interest income
    
    
    452
    
    
    
    160
    
    
    
    711
    
    
    
    431Loss before provision for income taxes
    
    
    (14,671
    )
    
    
    (8,579
    )
    
    
    (29,129
    )
    
    
    (21,817
    )Provision for income taxes
    
    
    (683
    )
    
    
    (451
    )
    
    
    (1,477
    )
    
    
    (795
    )Net loss
    
    
    (15,354
    )
    
    
    (9,030
    )
    
    
    (30,606
    )
    
    
    (22,612
    )Dividends on preferred stock
    
    
    (13,346
    )
    
    
    (15,730
    )
    
    
    (25,655
    )
    
    
    (31,001
    )Modification of preferred stock
    
    
    
    
    
    
    
    
    
    
    (95,622
    )
    
    
    Loss available to common shareholders
    
    $
    (28,700
    )
    
    $
    (24,760
    )
    
    $
    (151,883
    )
    
    $
    (53,613
    )Loss available per common share  basic and
diluted
    
    $
    (3.11
    )
    
    $
    (2.56
    )
    
    $
    (16.79
    )
    
    $
    (5.54
    )Weighted average common shares outstanding
 basic and diluted
    
    
    9,240,321
    
    
    
    9,676,996
    
    
    
    9,045,470
    
    
    
    9,672,338
 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 30,2007
    
    
    2008Cash flows from operating activities
    
    $
    (30,606
    )
    
    $
    (22,612
    )Net lossAdjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation
    
    
    14,749
    
    
    
    15,531Amortization and write-off of deferred financing costs
    
    
    875
    
    
    
    1,326Amortization of intangible assets
    
    
    18,998
    
    
    
    21,131Amortization of bond premium
    
    
    (100
    )
    
    
    (396
    )Provision for doubtful accounts
    
    
    2,553
    
    
    
    3,321Share-based compensation
    
    
    2,113
    
    
    
    179Deferred income taxes
    
    
    850
    
    
    
    457Other
    
    
    288
    
    
    
    35Changes in operating assets and liabilities:Restricted cash
    
    
    (63
    )
    
    
    Accounts receivable
    
    
    (6,531
    )
    
    
    (2,552
    )Prepaid expenses and other current assets
    
    
    (704
    )
    
    
    (601
    )Other assets
    
    
    197
    
    
    
    (1,579
    )Accounts payable
    
    
    1,550
    
    
    
    (121
    )Accrued expenses and other current liabilities
    
    
    (18,787
    )
    
    
    (2,239
    )Taxes payable
    
    
    (630
    )
    
    
    (1,440
    )Deferred revenue
    
    
    732
    
    
    
    1,477Deferred rent
    
    
    
    
    
    
    (307
    )Other liabilities
    
    
    54
    
    
    
    Net cash provided by (used in) operating activities
    
    
    (14,462
    )
    
    
    11,610Cash flows from investing activitiesAcquisition, net of cash and restricted cash acquired
    
    
    (58,462
    )
    
    
    Purchase of property and equipment
    
    
    (14,156
    )
    
    
    (22,396
    )Merger acquisition costs
    
    
    (1,457
    )
    
    
    Other
    
    
    
    
    
    
    (83
    )Net cash used in investing activities
    
    
    (74,075
    )
    
    
    (22,479
    )Cash flows from financing activitiesProceeds from capital lease financing and equipment notes
    
    
    2,846
    
    
    
    1,166Payments on capital lease obligations and equipment notes
    
    
    (2,122
    )
    
    
    (1,725
    )Proceeds from issuance of long-term debt
    
    
    95,175
    
    
    
    Drawdowns on revolving credit facility
    
    
    8,500
    
    
    
    Repayments on revolving credit facility
    
    
    (6,817
    )
    
    
    Payment of deferred financing fees
    
    
    (3,891
    )
    
    
    (63
    )Payments for shares purchased under under MIP
    
    
    (1,703
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    91,988
    
    
    
    (622
    )Net decrease in cash and cash equivalents
    
    
    3,451
    
    
    
    (11,491
    )Cash and cash equivalents at beginning of period
    
    
    43,952
    
    
    
    41,998Cash and cash equivalents at end of period
    
    $
    47,403
    
    
    $
    30,507
 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. Significant Accounting Policies
 Property and Equipment
  Significant Vendor
  Comprehensive Income
  Use of Estimates
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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
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of SFAS 115
 Business Combinations (Revised) Business
Communications
 4. InfoHighway Acquisition
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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
 4. InfoHighway Acquisition (continued)
 Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own
 5. Lightwave Acquisition
  6. Accrued Expenses and Other Current Liabilities
  December 31,
    
    
    June 30,2007
    
    
    2008Recurring network costs and other operating accruals
    
    $
    23,488
    
    
    $
    23,121Accrued interest(a)
    
    
    11,375
    
    
    
    11,375Merger transaction costs(b)
    
    
    2,090
    
    
    
    1,270Payroll related liabilities
    
    
    6,840
    
    
    
    4,817Other
    
    
    159
    
    
    
    1,130Total accrued expenses and other current liabilities
    
    $
    43,952
    
    
    $
    41,713
 
 (a)
    
    Represents accrued interest on the Senior Secured Notes. Interest is paid semi-annually on
March 1 and September 1 of each year.(b)
    
    The accrual for merger transaction costs consists of the following: ATX
    
    
    InfoHighway
    
    
    LeaseSeverance
    
    
    Severance
    
    
    Terminations
    
    
    Other
    
    
    TotalBalance at December 31, 2007
    
    $
    287
    
    
    $
    1,086
    
    
    $
    632
    
    
    $
    85
    
    
    $
    2,090Payments
    
    
    (232
    )
    
    
    (334
    )
    
    
    (191
    )
    
    
    (63
    )
    
    
    (820
    )Balance at June 30, 2008
    
    $
    55
    
    
    $
    752
    
    
    $
    441
    
    
    $
    22
    
    
    $
    1,270
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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
 7. Debt
 Senior Secured Notes
   ,
  Revolving $25,000 Senior Credit Facility
      11




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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
 8. Commitments and Contingencies
    9. Income Taxes
 Accounting for Uncertainty in Income Taxes
  12




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Broadview Networks Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share information)
 10. Earnings per share
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Loss available to common shareholders
(Numerator):Net loss
    
    $
    (15,354
    )
    
    $
    (9,030
    )
    
    $
    (30,606
    )
    
    $
    (22,612
    )Dividends on preferred stock
    
    
    (13,346
    )
    
    
    (15,730
    )
    
    
    (25,655
    )
    
    
    (31,001
    )Modification of preferred stock
    
    
    
    
    
    
    
    
    
    
    (95,622
    )
    
    
    Loss available to common shareholders
    
    $
    (28,700
    )
    
    $
    (24,760
    )
    
    $
    (151,883
    )
    
    $
    (53,613
    )Shares (Denominator):Weighted average common shares outstanding:Class A common stock
    
    
    8,983,336
    
    
    
    9,342,880
    
    
    
    8,916,268
    
    
    
    9,342,880Class B common stock
    
    
    256,985
    
    
    
    334,116
    
    
    
    129,202
    
    
    
    329,458Weighted average common shares outstanding
 basic and diluted
    
    
    9,240,321
    
    
    
    9,676,996
    
    
    
    9,045,470
    
    
    
    9,672,338Loss available per common share  basic
and diluted
    
    $
    (3.11
    )
    
    $
    (2.56
    )
    
    $
    (16.79
    )
    
    $
    (5.54
    )
  Earnings Per Share
   13




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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, 2007 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, 2007 filed with the SEC.
 Overview
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Lightwave Acquisition
  Results of Operations
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Revenues:Voice and data services
    
    
    88.3
    %
    
    
    86.9
    %
    
    
    88.9
    %
    
    
    87.0
    %Wholesale
    
    
    2.9
    %
    
    
    3.9
    %
    
    
    3.1
    %
    
    
    3.6
    %Access
    
    
    5.4
    %
    
    
    5.5
    %
    
    
    5.3
    %
    
    
    5.8
    %Total network services
    
    
    96.6
    %
    
    
    96.3
    %
    
    
    97.3
    %
    
    
    96.4
    %Other
    
    
    3.4
    %
    
    
    3.7
    %
    
    
    2.7
    %
    
    
    3.6
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Network services
    
    
    48.8
    %
    
    
    48.8
    %
    
    
    49.7
    %
    
    
    50.1
    %Other cost of revenues
    
    
    1.6
    %
    
    
    2.2
    %
    
    
    1.3
    %
    
    
    2.1
    %Selling, general and administrative
    
    
    38.4
    %
    
    
    34.2
    %
    
    
    38.8
    %
    
    
    34.0
    %Software development
    
    
    0.5
    %
    
    
    0.2
    %
    
    
    0.6
    %
    
    
    0.3
    %Depreciation and amortization
    
    
    16.6
    %
    
    
    13.6
    %
    
    
    16.7
    %
    
    
    14.6
    %Merger integration costs
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    0.2
    %
    
    
    0.0
    %Total operating expenses
    
    
    106.2
    %
    
    
    99.0
    %
    
    
    107.3
    %
    
    
    101.1
    %Income (loss) from operations
    
    
    (6.2
    %)
    
    
    1.0
    %
    
    
    (7.3
    %)
    
    
    (1.1
    %)Other income
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Interest expense
    
    
    (8.0
    %)
    
    
    (7.7
    %)
    
    
    (7.5
    %)
    
    
    (7.7
    %)Interest income
    
    
    0.4
    %
    
    
    0.1
    %
    
    
    0.4
    %
    
    
    0.2
    %Loss before provision for income taxes
    
    
    (13.8
    %)
    
    
    (6.6
    %)
    
    
    (14.4
    %)
    
    
    (8.6
    %)Provision for income taxes
    
    
    (0.5
    %)
    
    
    (0.4
    %)
    
    
    (0.7
    %)
    
    
    (0.3
    %)Net loss
    
    
    (14.3
    %)
    
    
    (7.0
    %)
    
    
    (15.1
    %)
    
    
    (8.9
    %)
 Key Components of Results of Operations
 Revenues
    16




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##### Table of Contents



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.
    Selling, General and Administrative
     17




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##### Table of Contents



Depreciation and Amortization
  Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
   Three Months Ended June 30,2007
    
    
    2008% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Network services
    
    $
    102,930
    
    
    
    96.6
    %
    
    $
    123,564
    
    
    
    96.3
    %
    
    
    20.0
    %Other
    
    
    3,594
    
    
    
    3.4
    %
    
    
    4,749
    
    
    
    3.7
    %
    
    
    32.1
    %Total revenues
    
    $
    106,524
    
    
    
    100.0
    %
    
    $
    128,313
    
    
    
    100.0
    %
    
    
    20.5
    %Cost of revenue:Network services
    
    $
    51,988
    
    
    
    48.8
    %
    
    $
    62,593
    
    
    
    48.8
    %
    
    
    20.4
    %Other
    
    
    1,711
    
    
    
    1.6
    %
    
    
    2,834
    
    
    
    2.2
    %
    
    
    65.6
    %Total cost of
revenues
    
    $
    53,699
    
    
    
    50.4
    %
    
    $
    65,427
    
    
    
    51.0
    %
    
    
    21.8
    %
 Revenues
  Three Months Ended June 30,2007
    
    
    2008% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data services
    
    $
    94,101
    
    
    
    88.3
    %
    
    $
    111,417
    
    
    
    86.9
    %
    
    
    18.4
    %Wholesale
    
    
    3,068
    
    
    
    2.9
    %
    
    
    5,035
    
    
    
    3.9
    %
    
    
    64.1
    %Access
    
    
    5,761
    
    
    
    5.4
    %
    
    
    7,112
    
    
    
    5.5
    %
    
    
    23.5
    %Total network services
    
    
    102,930
    
    
    
    96.6
    %
    
    
    123,564
    
    
    
    96.3
    %
    
    
    20.0
    %Other
    
    
    3,594
    
    
    
    3.4
    %
    
    
    4,749
    
    
    
    3.7
    %
    
    
    32.1
    %Total revenues
    
    $
    106,524
    
    
    
    100.0
    %
    
    $
    128,313
    
    
    
    100.0
    %
    
    
    20.5
    %
  18




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##### Table of Contents



Cost of Revenues (exclusive of depreciation and amortization)
   Selling, General and Administrative
   Depreciation and Amortization
  Interest
  Three Months Ended June 30,2007
    
    2008Interest expense
    
    $
    8,517
    
    
    $
    9,927Weighted average debt outstanding
    
    $
    267,656
    
    
    $
    309,048Effective interest rate
    
    
    12.73
    %
    
    
    12.85
    %
 19




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##### Table of Contents



Net Loss
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
   Six Months Ended June 30,2007
    
    
    2008% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Network services
    
    $
    196,918
    
    
    
    97.3
    %
    
    $
    242,887
    
    
    
    96.4
    %
    
    
    23.3
    %Other
    
    
    5,426
    
    
    
    2.7
    %
    
    
    8,969
    
    
    
    3.6
    %
    
    
    65.3
    %Total reveues
    
    $
    202,344
    
    
    
    100.0
    %
    
    $
    251,856
    
    
    
    100.0
    %
    
    
    24.5
    %Cost of revenues:Network services
    
    $
    100,595
    
    
    
    49.7
    %
    
    $
    126,267
    
    
    
    50.1
    %
    
    
    25.5
    %Other
    
    
    2,651
    
    
    
    1.3
    %
    
    
    5,181
    
    
    
    2.1
    %
    
    
    95.4
    %Total cost of revenues
    
    $
    103,246
    
    
    
    51.0
    %
    
    $
    131,448
    
    
    
    52.2
    %
    
    
    27.3
    %
 Revenues
  Six Months Ended June 30,2007
    
    
    2008% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data services
    
    $
    179,927
    
    
    
    88.9
    %
    
    $
    219,376
    
    
    
    87.0
    %
    
    
    21.9
    %Wholesale
    
    
    6,295
    
    
    
    3.1
    %
    
    
    9,017
    
    
    
    3.6
    %
    
    
    43.2
    %Access
    
    
    10,696
    
    
    
    5.3
    %
    
    
    14,494
    
    
    
    5.8
    %
    
    
    35.5
    %Total network services
    
    
    196,918
    
    
    
    97.3
    %
    
    
    242,887
    
    
    
    96.4
    %
    
    
    23.3
    %Other
    
    
    5,426
    
    
    
    2.7
    %
    
    
    8,969
    
    
    
    3.6
    %
    
    
    65.3
    %Total revenues
    
    $
    202,344
    
    
    
    100.0
    %
    
    $
    251,856
    
    
    
    100.0
    %
    
    
    24.5
    %
  20




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##### Table of Contents



Cost of Revenues (exclusive of depreciation and amortization)
   Selling, General and Administrative
   Depreciation and Amortization
  Interest
  Six Months Ended June 30,2007
    
    2008Interest expense
    
    $
    15,227
    
    
    $
    19,455Weighted average debt outstanding
    
    $
    242,761
    
    
    $
    309,115Effective interest rate
    
    
    12.54
    %
    
    
    12.59
    %
 Net Loss
  21




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##### Table of Contents



Off-Balance Sheet Arrangements
  Liquidity and Capital Resources
   Disputes
     Credit Facility
  22




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##### Table of Contents



2006 Note and 2007 Note Offerings
   23




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##### Table of Contents



Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
  Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  24




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##### Table of Contents



New Accounting Standards
  Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of SFAS 115
  Application of Critical Accounting Policies and Estimates
  Other Matters
  25




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Controls Over Financial Reporting
  26




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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. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 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.
 27




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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 28