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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 Mark One
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For The Fiscal Year Ended December 31, 2010
 OR
 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.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    11-3310798(I.R.S. Employer
Identification No.)800 Westchester Avenue, Suite N501
Rye Brook, NY 10573(Address of principal executive offices)
    
    10573(Zip Code)
 (914) 922-7000  (Registrants telephone number, including area
code)   Securities registered pursuant to Section 12(b) of the Act:
NONE
 Securities registered pursuant to Section 12(g) of the Act:
NONE
 Yes
o No
þ
 þ o
 o o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  NOT APPLICABLE because no public equity market exists for such shares, the aggregate market
value of the common stock held by non-affiliates of the Company is not determinable.
  Class
    
    Outstanding at March 18, 2011Series A common stock, $.01 par value
    
    9,333,680Series B common stock, $.01 par value
    
    360,050
 DOCUMENTS INCORPORATED BY REFERENCE
NONE.




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    5Item 1A. Risk Factors
    
    
    32Item 1B. Unresolved Staff Comments
    
    
    44Item 2. Properties
    
    
    44Item 3. Legal Proceedings
    
    
    45Item 4. (Removed and Reserved)
    
    
    45PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    46Item 6. Selected Financial Data
    
    
    46Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    48Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    66Item 8. Financial Statements and Supplementary Data
    
    
    67Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    93Item 9A. Controls and Procedures
    
    
    93Item 9B. Other Information
    
    
    94PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    95Item 11. Executive Compensation
    
    
    102Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    108Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    111Item 14. Principal Accounting Fees and Services
    
    
    112PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    113Schedule II Valuation and Qualifying Accounts
    
    
    113Exhibit 3.1Exhibit 10.25Exhibit 12.1Exhibit 21.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   3 8 3 8




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##### Table of Contents



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 revolving credit facility;
 
    
    government regulation;
 
    
    increased regulation of Internet-protocol-based service providers;
 
    
    vendor bills related to past periods;
  3




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
    
    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;
 
    
    the financial difficulties faced 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 integrate 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.
   4




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PART I
 
 Item 1.
    
    Business
 Company Overview
       5




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Industry Overview
   6




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Our Strengths
  Significant Growth Potential of Our Newer Product Offerings.
 Unique Integrated OSS Infrastructure.
 Award Winning Customer Service.
  7




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Facilities-Based Network Infrastructure.
 Experienced and Proven Senior Management Team.
 Experience Integrating Companies and Providing New Services.
 Our Markets
  Region
    
    MarketNew York Metro
    
    New York City Long Island WestchesterPennsylvania
    
    Allentown Harrisburg PhiladelphiaUpstate New York
    
    Buffalo Syracuse AlbanyMassachusetts
    
    Boston Metro Western MANew Jersey
    
    Northern NJ Southern NJRhode Island
    
    Rhode IslandNew Hampshire
    
    New HampshireMaryland
    
    BaltimoreDelaware
    
    DelawareDistrict of Columbia
    
    District of ColumbiaNorthern Virginia
    
    Northern VirginiaConnecticut
    
    ConnecticutOfficeSuite Nationwide
    
    Nationwide
  8




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Our Customers
    Products and Services
    9




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Value-Added Products and Services
    
    Data Services
    
    Voice Services    Hosted IP solutions (OfficeSuite)
    
        Dedicated Internet T-1 access
    
        Local, regional, domestic and international services    Automated attendant
    
       
Switched Ethernet-delivered High Bandwidth access
    
        T-1 Primary rate interface and Session Initiation Protocol services    Unified messaging
    
       
Broadband Internet access
    
        Private line    Telecommuting
    
        DSL data service and Symmetric DSL Internet access
    
        Voicemail    Automatic Call Distribution (ACD)
    
        E-mail
    
        Caller identification    Integrated services
    
        Collocation
    
        Call waiting    Traditional and converged telephone systems
    
        IP Virtual Private Networks (MPLS and Remote Access Switching)
    
        Call forwarding    Enhanced e-mail security
    
        Metro Ethernet services
    
        Conference calling    Managed firewall
    
    
    
        VoIP    Content filtering
    
    
    
        Toll free services    Managed Wide Area Network    Local Area Network/Wide Area Network integration    Inside wiring    Data backup and recovery    Disaster recovery services    Unified Communications solutions    Fixed-Mobile Convergence solutions    Software as a Service (SaaS)    Infrastructure as a Service (IaaS)
 Value-Added Products and Services
  Hosted IP Phone Solutions (OfficeSuite).
  10




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Integrated Services. ®
 Managed Services.
 Software as a Service/Infrastructure as a Service. ® ®
 Data Services
   11




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Voice Services
  Sales and Marketing
       12




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Customer Service and Retention
      Network Deployment
   13




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Voice and Data Switches
  Collocations and Edge Equipment
  On-Net (Lit) Buildings
  ATM Backbone Network and IP Network Equipment
  Fiber Network and Fiber Equipment
  Feature/Application Servers
   14




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Customer Access Methods
     On-net T-1:
 On-net unbundled network element loops:
 Off-Net:
 Service Agreements with Carriers
   15




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Integrated OSS
   Sales, Order Entry and Provisioning Systems
   16




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Customer Relationship Management System
  Network Management Systems
  Billing System
   17




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Cost Assurance System
  Collections Management System
  Competition
  Regional Bell Operating Companies
   Competitive Local Exchange Carriers and Other Market Participants
    18




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Interexchange Carriers
  Data/Internet Services Providers
  Vendors, Installers and Communication Management Companies
  Intellectual Property
   Employees
   19




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Available Information
     20




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Regulation
 Overview
    Federal Regulation
   
    
    Reciprocal Compensation.Requires all incumbent local exchange carriers and competitive
local exchange carriers to complete calls originated by competing carriers under reciprocal
arrangements at prices based on a reasonable approximation of incremental cost or through
mutual exchange of traffic without explicit payment.
  21




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
    
    Resale.Requires all incumbent local exchange carriers and competitive local exchange
carriers to permit resale of their communications services without unreasonable or
discriminatory restrictions or conditions. In addition, incumbent local exchange carriers
are required to offer for resale, wholesale versions of all communications services that the
incumbent local exchange carrier provides at retail to subscribers that are not
telecommunications carriers at discounted rates, based on the costs avoided by the incumbent
local exchange carrier in the wholesale offering.
 
    
    Access to Rights-of-Way.Requires all incumbent local exchange carriers and competitive
local exchange carriers and any other public utility that owns or controls poles, conduits,
ducts, or rights-of-way used in whole or in part for wire communications, to permit
competing carriers (and cable television systems) access to those poles, ducts, conduits and
rights-of-way at regulated prices. Competitive local exchange carrier rates for access to
its poles, ducts, conduits and rights-of-way, however, are not regulated.
  Legislation.
 Unbundled Network Elements.
    22




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23




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Special Access.
  24




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Interconnection Agreements.
  Collocation.
 Regulation of Internet Service Providers.
  Long Distance Competition.
   25




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Detariffing.
 Intercarrier Compensation.
    26




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CALEA.
  Customer Proprietary Network Information.
  27




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Universal Service.
   Telephone Numbering.
    28




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Slamming.
 Taxes and Regulatory Fees.
 State Regulation
     29




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Local Regulation
  Regulation of VoIP
 Federal and State
    30




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Other Domestic Regulation
   31




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Item 1A.
    
    Risk Factors
 Our business faces many risks. Accordingly, existing and prospective investors and
shareholders should carefully consider the risks and uncertainties described below and the other
information in this report, including the consolidated financial statements and notes to
consolidated financial statements. If any of the following risks or uncertainties actually occurs,
our business, financial condition or results of operations would likely suffer. Additional risks
and uncertainties not presently known to us or that are not currently believed to be important to
you also may adversely affect our company.
 Our substantial indebtedness may restrict our operating flexibility, could adversely affect our
financial health and could prevent us from fulfilling our financial obligations.
  
    
    make it more difficult for us to satisfy our current and future debt obligations;
 
    
    make it more difficult for us to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes;
 
    
    require us to dedicate a substantial portion of our cash flows from operating activities
to the payment of principal and interest on our indebtedness, thereby reducing the funds
available to us for our operations and other purposes, including investments in service
development, capital spending and acquisitions;
 
    
    place us at a competitive disadvantage to our competitors who are not as highly leveraged
as we are;
 
    
    make us vulnerable to interest rate fluctuations, if we incur any indebtedness that bears
interest at variable rates;
 
    
    impair our ability to adjust to changing industry and market conditions; and
 
    
    make us more vulnerable in the event of a further downturn in general economic conditions
or in our business or changing market conditions and regulations.
  3 8
 We have a history of net losses and we may not be profitable in the future.
   32




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Our current billing disputes with our vendors may cause us to pay our vendors certain amounts of
money, which could materially adversely affect our business, financial condition, results of
operations and cash flows and which may cause us to be unable to meet certain financial covenants
related to our senior indebtedness.
  Elimination or relaxation of regulatory rights and protections could harm our business, results of
operations and financial condition.
     33




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The communications market in which we operate is highly competitive, and we may not be able to
compete effectively against companies that have significantly greater resources than we do, which
could cause us to lose customers and impede our ability to attract new customers.
  
    
    long-standing relationships and strong brand reputation with customers;
 
    
    financial, technical, marketing, personnel and other resources substantially greater than
ours;
 
    
    more funds to deploy communications services and systems that compete with ours;
 
    
    the potential to subsidize competitive services with revenue from a variety of
businesses;
 
    
    anticipated increased pricing flexibility and relaxed regulatory oversight;
 
    
    larger networks; and
 
    
    benefits from existing regulations that favor the incumbent local exchange carriers.
    To service our indebtedness, including our notes and credit facility, we require a significant
amount of cash. The ability to generate cash depends on many factors beyond our control.
   34




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System disruptions or the failure of our information systems to perform as expected could result in
increased capital expenditures, customer and vendor dissatisfaction, loss of business or the
inability to add new customers or additional services.
   Our ability to provide our services and systems at competitive prices is dependent on our ability
to negotiate and enforce favorable interconnection and other agreements.
     35




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If the incumbent local exchange carriers with which we have interconnection agreements engage in
anticompetitive practices or we experience difficulties in working with the incumbent local
exchange carriers, our ability to offer services on a timely and cost-effective basis will be
materially and adversely affected.
  We are subject to substantial government regulation that may restrict our ability to provide local
services and may increase the costs we incur to provide these services.
   36




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Difficulties we may experience with incumbent local exchange carriers, interexchange carriers and
wholesale customers over payment issues may harm our financial performance.
     37




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Continued industry consolidation could further strengthen our competitors, and could adversely
affect our prospects.
  Providers of VoIP service have been the target of recent intellectual property infringement
litigation that may materially and adversely affect our ability and/or the ability of other
providers to continue to sell or provide VoIP service.
    38




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The indenture governing the notes and the credit agreement governing our credit facility contain
restrictive and operating covenants that limit our operating flexibility, and we may obtain a
credit facility in the future that may include similar or additional restrictions.
  
    
    incur or guarantee additional indebtedness or issue preferred stock;
 
    
    pay dividends or distributions on, or redeem or repurchase, capital stock;
 
    
    create liens with respect to our assets;
 
    
    make investments, loans or advances;
 
    
    prepay subordinated indebtedness;
 
    
    enter into transactions with affiliates;
 
    
    merge, consolidate or sell our assets; and
 
    
    engage in any business other than activities related or complementary to communications.
  The communications industry faces significant regulatory uncertainties and the adverse resolution
of these uncertainties could harm our business, results of operations and financial condition.
   39




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The effects of increased regulation of IP-based service providers are unknown.
  Declining prices for communications services could reduce our revenues and profitability.
  Certain real estate leases and agreements are important to our business and failure to maintain
such leases and agreements could adversely affect us.
   We depend on a limited number of third party service providers for long distance and other
services, and if any of these providers were to experience significant interruptions in its
business operations, or were to otherwise cease to provide such services to us, our ability to
provide services to our customers could be materially and adversely affected.
   40




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The communications industry is undergoing rapid technological changes, and new technologies may be
superior to the technologies we use. We may fail to anticipate and keep up with such changes.
  Limits exist on our ability to seek indemnification for losses from individuals and entities from
whom we have acquired assets and operations.
  We are recovering from a period of significant disruption and instability in the financial markets.
  The financial difficulties faced by others in our industry could adversely affect our public image
and our financial results.
  If we are unable to retain and attract management and key personnel, we may not be able to execute
our business plan.
   41




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Our success depends on the ability to manage and expand operations effectively.
  
    
    offer high-quality, reliable services at reasonable costs;
 
    
    introduce new technologies;
 
    
    install and operate telecommunications switches and related equipment;
 
    
    lease access to suitable transmission facilities at competitive prices;
 
    
    scale operations;
 
    
    obtain successful outcomes in disputes and in litigation, rule-making, legislation and
regulatory proceedings;
 
    
    successfully negotiate, adopt or arbitrate interconnection agreements with other
carriers;
 
    
    acquire necessary equipment, software and facilities;
 
    
    integrate existing and newly acquired technology and facilities, such as switches and
related equipment;
 
    
    evaluate markets;
 
    
    add products;
 
    
    monitor operations;
 
    
    control costs;
 
    
    maintain effective quality controls;
 
    
    hire, train and retain qualified personnel;
 
    
    enhance operating and accounting systems;
 
    
    address operating challenges;
 
    
    adapt to market and regulatory developments; and
 
    
    obtain and maintain required governmental authorizations.
   42




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We may engage in future acquisitions that are not successful or fail to integrate acquired
businesses into our operations, which may adversely affect our competitive position and growth
prospects.
   
    
    integrating that businesss personnel, services, products or technologies into our
operations;
 
    
    retaining key personnel of the acquired business;
 
    
    failing to adequately identify or assess liabilities of that business;
 
    
    failing to achieve the forecasts we used to determine the purchase price of that
business; and
 
    
    diverting our managements attention from the normal daily operation of our business.
   Misappropriation of our intellectual property and proprietary rights could impair our competitive
position, and defending against intellectual property infringement and misappropriation claims
could be time consuming and expensive and, if we are not successful, could cause substantial
expenses and disrupt our business.
    43




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As an Internet access provider, we may incur liability for information disseminated through our
network.
  MCG, Baker, NEA and other significant investors control us, and their interests as equity holders
may conflict with interests of noteholders.
  
 Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
  ApproximateLease
    
    
    SquareLocation
    
    Expiration
    
    
    FootageOffices:King of Prussia, PA
    
    January 2011
    
    
    
    102,085Rye Brook, NY
    
    May 2015
    
    
    
    57,293New York, NY
    
    September 2019
    
    
    
    28,567Newark, NJ
    
    April 2011
    
    
    
    24,819New York, NY
    
    April 2015
    
    
    
    21,111Quincy, MA
    
    April 2011
    
    
    
    14,637Melville, NY
    
    March 2011
    
    
    
    13,152Switches:New York, NY
    
    May 2012
    
    
    
    38,500Philadelphia, PA
    
    July 2023
    
    
    
    16,617Long Island City, NY
    
    October 2019
    
    
    
    12,144Charlestown, MA
    
    April 2020
    
    
    
    12,490Philadelphia, PA
    
    Month to month
    
    
    
    21,000Syracuse, NY
    
    October 2014
    
    
    
    8,000Philadelphia, PA
    
    January 2013
    
    
    
    5,928Herndon, VA
    
    June 2020
    
    
    
    5,000
  44




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Item 3.
    
    Legal Proceedings
    
 Item 4.
    
    (Removed and Reserved)
  45




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
   HoldersofClass of Equity Security
    
    RecordCommon stock A
    
    
    206Common stock B
    
    
    36Series A Preferred stock
    
    
    1Series A-1 Preferred stock
    
    
    1Series B Preferred stock
    
    
    133Series B-1 Preferred stock
    
    
    90Series C Preferred stock
    
    
    36
  
 Item 6.
    
    Selected Financial Data
    46




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Years Ended December 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Statements of operations data:Revenues
    
    $
    272,653
    
    
    $
    448,774
    
    
    $
    496,922
    
    
    $
    456,452
    
    
    $
    407,704Operating expenses:Cost of revenues (1)
    
    
    130,841
    
    
    
    234,166
    
    
    
    257,883
    
    
    
    225,431
    
    
    
    193,860Selling, general and administrative (2)(3)
    
    
    107,805
    
    
    
    166,231
    
    
    
    168,421
    
    
    
    154,722
    
    
    
    148,917Depreciation and amortization
    
    
    49,781
    
    
    
    75,980
    
    
    
    73,608
    
    
    
    49,922
    
    
    
    44,085Impairment charges
    
    
    
    
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    Merger integration costs
    
    
    1,430
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    289,857
    
    
    
    480,877
    
    
    
    499,912
    
    
    
    430,075
    
    
    
    386,862Income (loss) from operations
    
    
    (17,204
    )
    
    
    (32,103
    )
    
    
    (2,990
    )
    
    
    26,377
    
    
    
    20,842Interest expense
    
    
    (25,463
    )
    
    
    (34,390
    )
    
    
    (39,514
    )
    
    
    (39,197
    )
    
    
    (38,379
    )Interest income
    
    
    1,395
    
    
    
    1,489
    
    
    
    702
    
    
    
    112
    
    
    
    73Other income (expense)
    
    
    21
    
    
    
    240
    
    
    
    (8
    )
    
    
    17
    
    
    
    Loss before provision for income taxes
    
    
    (41,251
    )
    
    
    (64,764
    )
    
    
    (41,810
    )
    
    
    (12,691
    )
    
    
    (17,464
    )Provision for income taxes
    
    
    (262
    )
    
    
    (726
    )
    
    
    (1,056
    )
    
    
    (1,179
    )
    
    
    (1,288
    )Net loss
    
    $
    (41,513
    )
    
    $
    (65,490
    )
    
    $
    (42,866
    )
    
    $
    (13,870
    )
    
    $
    (18,752
    )Statements of cash flow data:Cash flows provided by (used in):Operating activites
    
    $
    13,296
    
    
    $
    (2,663
    )
    
    $
    26,637
    
    
    $
    37,867
    
    
    $
    30,369Investing activities
    
    
    (115,568
    )
    
    
    (88,935
    )
    
    
    (68,490
    )
    
    
    (33,894
    )
    
    
    (20,886
    )Financing activities
    
    
    129,471
    
    
    
    89,541
    
    
    
    23,541
    
    
    
    (4,175
    )
    
    
    (6,254
    )December 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Balance Sheet data:Cash and cash equivalents
    
    $
    42,546
    
    
    $
    40,489
    
    
    $
    22,177
    
    
    $
    21,975
    
    
    $
    25,204Investment securities
    
    
    
    
    
    
    
    
    
    
    23,533
    
    
    
    23,549
    
    
    
    13,554Property and equipment, net
    
    
    61,395
    
    
    
    77,373
    
    
    
    85,248
    
    
    
    86,875
    
    
    
    85,144Goodwill
    
    
    69,632
    
    
    
    96,154
    
    
    
    98,111
    
    
    
    98,238
    
    
    
    98,238Total assets
    
    
    317,666
    
    
    
    380,010
    
    
    
    355,006
    
    
    
    327,328
    
    
    
    294,825Total debt, including current portion
    
    
    217,769
    
    
    
    313,990
    
    
    
    336,778
    
    
    
    331,366
    
    
    
    324,088Total stockholders equity (deficiency)
    
    
    20,470
    
    
    
    (22,715
    )
    
    
    (65,266
    )
    
    
    (79,146
    )
    
    
    (97,839
    )
 
 (1)
    
    Exclusive of depreciation and amortization.(2)
    
    Includes share-based compensation of $754, $2,552, $293, $233 and $59 for the years ended
December 31, 2006, 2007, 2008, 2009 and 2010, respectively.(3)
    
    Includes software development expenses of $1,819, $2,293, $1,639, $1,843 and $1,334 for the
years ended December 31, 2006, 2007, 2008, 2009 and 2010, respectively.  47




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##### Table of Contents



Item 7.
    
    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 Selected Financial Data and the Consolidated Financial
Statements and Notes to Consolidated Financial Statements included elsewhere in this report.
Certain information contained in the discussion and analysis set forth below and elsewhere in this
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, existing and prospective investors should specifically consider the various
factors identified in this report that could cause results to differ materially from those
expressed in such forward-looking statements, including matters set forth in the section entitled
Risk Factors. Many of the amounts and percentages presented in this discussion and analysis have
been rounded for convenience of presentation, and all amounts included in tables are presented in
thousands.
 Overview
      48




---



##### Table of Contents



T-1-based
  Results of Operations
  Years Ended December 31,2008
    
    
    2009
    
    
    2010Revenues:Voice and data services
    
    
    86.5
    %
    
    
    87.0
    %
    
    
    87.5
    %Wholesale
    
    
    3.8
    %
    
    
    4.4
    %
    
    
    5.3
    %Access
    
    
    5.8
    %
    
    
    5.2
    %
    
    
    5.2
    %Total network services
    
    
    96.1
    %
    
    
    96.6
    %
    
    
    98.0
    %Other
    
    
    3.9
    %
    
    
    3.4
    %
    
    
    2.0
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Network services
    
    
    49.5
    %
    
    
    47.9
    %
    
    
    46.9
    %Other cost of revenues
    
    
    2.4
    %
    
    
    1.5
    %
    
    
    0.6
    %Selling, general and administrative
    
    
    33.9
    %
    
    
    33.9
    %
    
    
    36.5
    %Depreciation and amortization
    
    
    14.8
    %
    
    
    10.9
    %
    
    
    10.9
    %Total operating expenses
    
    
    100.6
    %
    
    
    94.2
    %
    
    
    94.9
    %Income (loss) from operations
    
    
    (0.6
    %)
    
    
    5.8
    %
    
    
    5.1
    %Interest expense
    
    
    (8.0
    %)
    
    
    (8.6
    %)
    
    
    (9.4
    %)Interest income
    
    
    0.1
    %
    
    
    0.0
    %
    
    
    0.0
    %Loss before provision for income taxes
    
    
    (8.5
    %)
    
    
    (2.8
    %)
    
    
    (4.3
    %)Provision for income taxes
    
    
    (0.2
    %)
    
    
    (0.3
    %)
    
    
    (0.3
    %)Net loss
    
    
    (8.7
    %)
    
    
    (3.1
    %)
    
    
    (4.6
    %)
  49




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##### Table of Contents



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.
     50




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##### Table of Contents



Gross Profit (exclusive of depreciation and amortization)
   Years Ended December 31,2008
    
    
    2009
    
    
    2010Income (loss) from operations
    
    $
    (2,990
    )
    
    $
    26,377
    
    
    $
    20,842Add back non-gross profit items included in net loss:Depreciation and amortization
    
    
    73,608
    
    
    
    49,922
    
    
    
    44,085Selling, general and administrative
    
    
    168,421
    
    
    
    154,722
    
    
    
    148,917Gross profit
    
    $
    239,039
    
    
    $
    231,021
    
    
    $
    213,844Percentage of total revenue
    
    
    48.1
    %
    
    
    50.6
    %
    
    
    52.5
    %
     
    
    gross profit does not reflect our capital expenditures or future requirements for capital
expenditures;
 
    
    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.
  51




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Selling, General and Administrative
   Depreciation and Amortization
  Adjusted EBITDA Presentation
   Years Ended December 31,2008
    
    
    2009
    
    
    2010Net loss
    
    $
    (42,866
    )
    
    $
    (13,870
    )
    
    $
    (18,752
    )Add back non-EBITDA items included in net
loss:Depreciation and amortization
    
    
    73,608
    
    
    
    49,922
    
    
    
    44,085Interest expense, net of interest income
    
    
    38,812
    
    
    
    39,085
    
    
    
    38,306Provision for income taxes
    
    
    1,056
    
    
    
    1,179
    
    
    
    1,288EBITDA
    
    
    70,610
    
    
    
    76,316
    
    
    
    64,927Costs associated with initial public offering
    
    
    
    
    
    
    
    
    
    
    3,669Severance and related separation costs
    
    
    30
    
    
    
    552
    
    
    
    1,121Professional fees related to strategic
initiatives
    
    
    32
    
    
    
    101
    
    
    
    137Share-based compensation
    
    
    293
    
    
    
    233
    
    
    
    59Adjusted EBITDA
    
    $
    70,965
    
    
    $
    77,202
    
    
    $
    69,913Percentage of total revenues
    
    
    14.3
    %
    
    
    16.9
    %
    
    
    17.1
    %
  52




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##### Table of Contents




    
    adjusted EBITDA does not reflect our capital expenditures, future requirements for
capital expenditures or contractual commitments to purchase capital equipment;
 
    
    adjusted EBITDA 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 adjusted EBITDA does not
reflect any cash requirements for such replacements;
 
    
    adjusted EBITDA does not reflect the cost of equity awards to employees; and
 
    
    adjusted EBITDA does not reflect the effect of earnings or charges resulting from matters
that management considers not indicative of our ongoing operations.
  53




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Year Ended December 31, 2009 Compared to the Year Ended December 31, 2010
   Years Ended December 31,2009
    
    
    2010% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Network services
    
    $
    440,928
    
    
    
    96.6
    %
    
    $
    399,355
    
    
    
    98.0
    %
    
    
    (9.4
    %)Other
    
    
    15,524
    
    
    
    3.4
    %
    
    
    8,349
    
    
    
    2.0
    %
    
    
    (46.2
    %)Total revenues
    
    $
    456,452
    
    
    
    100.0
    %
    
    $
    407,704
    
    
    
    100.0
    %
    
    
    (10.7
    %)Cost of revenues:Network services
    
    $
    218,673
    
    
    
    47.9
    %
    
    $
    191,232
    
    
    
    46.9
    %
    
    
    (12.5
    %)Other
    
    
    6,757
    
    
    
    1.5
    %
    
    
    2,628
    
    
    
    0.6
    %
    
    
    (61.1
    %)Total cost of revenues
    
    $
    225,430
    
    
    
    49.4
    %
    
    $
    193,860
    
    
    
    47.5
    %
    
    
    (14.0
    %)Gross profit:Network services
    
    $
    222,255
    
    
    
    48.7
    %
    
    $
    208,123
    
    
    
    51.0
    %
    
    
    (6.4
    %)Other
    
    
    8,767
    
    
    
    1.9
    %
    
    
    5,721
    
    
    
    1.5
    %
    
    
    (34.8
    %)Total gross profit
    
    $
    231,022
    
    
    
    50.6
    %
    
    $
    213,844
    
    
    
    52.5
    %
    
    
    (7.4
    %)
  54




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##### Table of Contents



Revenues
  Years Ended December 31,2009
    
    
    2010% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data services
    
    $
    397,274
    
    
    
    87.0
    %
    
    $
    356,792
    
    
    
    87.5
    %
    
    
    (10.2
    %)Wholesale
    
    
    19,906
    
    
    
    4.4
    %
    
    
    21,656
    
    
    
    5.3
    %
    
    
    8.8
    %Access
    
    
    23,748
    
    
    
    5.2
    %
    
    
    20,907
    
    
    
    5.2
    %
    
    
    (12.0
    %)Total network services
    
    
    440,928
    
    
    
    96.6
    %
    
    
    399,355
    
    
    
    98.0
    %
    
    
    (9.4
    %)Other
    
    
    15,524
    
    
    
    3.4
    %
    
    
    8,349
    
    
    
    2.0
    %
    
    
    (46.2
    %)Total revenues
    
    $
    456,452
    
    
    
    100.0
    %
    
    $
    407,704
    
    
    
    100.0
    %
    
    
    (10.7
    %)
  Cost of Revenues (exclusive of depreciation and amortization)
  Gross Profit (exclusive of depreciation and amortization)
   55




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##### Table of Contents



Selling, General and Administrative
  Depreciation and Amortization
  Interest
  Years Ended December 31,2009
    
    
    2010Interest expense
    
    $
    39,197
    
    
    $
    38,379Weighted average debt outstanding
    
    $
    330,711
    
    
    $
    322,536Effective interest rate
    
    
    11.9
    %
    
    
    11.9
    %
  56




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##### Table of Contents



Year Ended December 31, 2008 Compared to the Year Ended December 31, 2009
   Years Ended December 31,2008
    
    
    2009% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Network services
    
    $
    477,576
    
    
    
    96.1
    %
    
    $
    440,928
    
    
    
    96.6
    %
    
    
    (7.7
    %)Other
    
    
    19,346
    
    
    
    3.9
    %
    
    
    15,524
    
    
    
    3.4
    %
    
    
    (19.8
    %)Total revenues
    
    $
    496,922
    
    
    
    100.0
    %
    
    $
    456,452
    
    
    
    100.0
    %
    
    
    (8.1
    %)Cost of revenues:Network services
    
    $
    246,019
    
    
    
    49.5
    %
    
    $
    218,673
    
    
    
    47.9
    %
    
    
    (11.1
    %)Other
    
    
    11,864
    
    
    
    2.4
    %
    
    
    6,757
    
    
    
    1.5
    %
    
    
    (43.0
    %)Total cost of revenues
    
    $
    257,883
    
    
    
    51.9
    %
    
    $
    225,430
    
    
    
    49.4
    %
    
    
    (12.6
    %)Gross profit:Network services
    
    $
    231,557
    
    
    
    46.6
    %
    
    $
    222,255
    
    
    
    48.7
    %
    
    
    (4.0
    %)Other
    
    
    7,482
    
    
    
    1.5
    %
    
    
    8,767
    
    
    
    1.9
    %
    
    
    17.2
    %Total gross profit
    
    $
    239,039
    
    
    
    48.1
    %
    
    $
    231,022
    
    
    
    50.6
    %
    
    
    (3.4
    %)
 Revenues
  Years Ended December 31,2008
    
    
    2009% of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    Revenues
    
    
    % ChangeRevenues:Voice and data services
    
    $
    429,754
    
    
    
    86.5
    %
    
    $
    397,274
    
    
    
    87.0
    %
    
    
    (7.6
    %)Wholesale
    
    
    19,096
    
    
    
    3.8
    %
    
    
    19,906
    
    
    
    4.4
    %
    
    
    4.2
    %Access
    
    
    28,726
    
    
    
    5.8
    %
    
    
    23,748
    
    
    
    5.2
    %
    
    
    (17.3
    %)Total network services
    
    
    477,576
    
    
    
    96.1
    %
    
    
    440,928
    
    
    
    96.6
    %
    
    
    (7.7
    %)Other
    
    
    19,346
    
    
    
    3.9
    %
    
    
    15,524
    
    
    
    3.4
    %
    
    
    (19.8
    %)Total revenues
    
    $
    496,922
    
    
    
    100.0
    %
    
    $
    456,452
    
    
    
    100.0
    %
    
    
    (8.1
    %)
  57




---



##### 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
   58




---



##### Table of Contents



Interest
  Years Ended December 31,2008
    
    
    2009Interest expense
    
    $
    39,514
    
    
    $
    39,197Weighted average debt outstanding
    
    $
    315,988
    
    
    $
    330,711Effective interest rate
    
    
    12.5
    %
    
    
    11.9
    %
 Off-Balance Sheet Arrangements
   Liquidity and Capital Resources
   59




---



##### Table of Contents



Disputes
  Revolving Credit Facility
       60




---



##### Table of Contents



2006 Note and 2007 Note Offerings
 3 8
 3 8 3 8
 3 8
   Year Ended December 31, 2009 Compared to Year Ended December 31, 2010
 Cash Flows from Operating Activities
   61




---



##### Table of Contents



Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  Year Ended December 31, 2008 Compared to the Year Ended December 31, 2009
 Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  Cash Flows from Financing Activities
   62




---



##### Table of Contents



Contractual Obligations
  More Than 5Total
    
    
    Less Than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years11 3/8 senior secured notes due 2012
    
    $
    300,000
    
    
    $
    
    
    
    $
    300,000
    
    
    $
    
    
    
    $
    Cash interest for notes
    
    
    68,250
    
    
    
    34,125
    
    
    
    34,125
    
    
    
    
    
    
    
    Credit facility
    
    
    17,122
    
    
    
    
    
    
    
    17,122
    
    
    
    
    
    
    
    Cash interest for credit facility at current
rate of 5.25%
    
    
    1,046
    
    
    
    911
    
    
    
    135
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    4,980
    
    
    
    2,298
    
    
    
    2,368
    
    
    
    314
    
    
    
    Operating leases
    
    
    51,975
    
    
    
    7,709
    
    
    
    13,295
    
    
    
    10,738
    
    
    
    20,233443,373
    
    
    
    45,043
    
    
    
    367,045
    
    
    
    11,052
    
    
    
    20,233Purchase commitment obligations:Communications commitments
    
    
    61,337
    
    
    
    40,859
    
    
    
    20,478
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    504,710
    
    
    $
    85,902
    
    
    $
    387,523
    
    
    $
    11,052
    
    
    $
    20,233
 New Accounting Standards
    Application of Critical Accounting Policies and Estimates
    63




---



##### Table of Contents



Revenue Recognition
  Accounts Receivable and Allowance for Doubtful Accounts
  Depreciation
  Impairment of Long-Lived Assets
  Goodwill and Other Intangible Assets
   64




---



##### Table of Contents



Disputes
   Income Taxes
   65




---



##### Table of Contents



Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
     3 8
   66




---



##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 Index to Consolidated Financial Statements
 Managements Report on Internal Control over Financial Reporting
    
    
    68Report of Independent Registered Public Accounting Firm
    
    
    69Consolidated Balance Sheets at December 31, 2009 and 2010
    
    
    70Consolidated Statements of Operations for the years ended December 31, 2008, 2009 and 2010
    
    
    71Consolidated Statements of Stockholders Deficiency for the years ended December 31, 2008, 2009 and 2010
    
    
    72Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2009 and 2010
    
    
    73Notes to Consolidated Financial Statements
    
    
    74Financial Statement Schedules
    
    
    113
  67




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 Internal Control  Integrated
Framework
  68




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Ernst & Young LLP
 
  69




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
(in thousands, except share amounts)
 December 31,2009
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    21,975
    
    
    $
    25,204Certificates of deposit
    
    
    1,878
    
    
    
    2,894Investment securities
    
    
    23,549
    
    
    
    13,554Accounts receivable, less allowance for doubtful accounts of $7,942 and $10,664
    
    
    41,388
    
    
    
    35,945Other current assets
    
    
    10,976
    
    
    
    10,718Total current assets
    
    
    99,766
    
    
    
    88,315Property and equipment, net
    
    
    86,875
    
    
    
    85,144Goodwill
    
    
    98,238
    
    
    
    98,238Intangible assets, net of accumulated amortization of $51,728 and $39,747
    
    
    27,484
    
    
    
    15,053Other assets
    
    
    14,965
    
    
    
    8,075Total assets
    
    $
    327,328
    
    
    $
    294,825LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent liabilities:Accounts payable
    
    $
    9,196
    
    
    $
    12,431Accrued expenses and other current liabilities
    
    
    35,630
    
    
    
    29,232Taxes payable
    
    
    12,768
    
    
    
    9,361Deferred revenues
    
    
    8,965
    
    
    
    8,555Current portion of capital lease obligations
    
    
    3,080
    
    
    
    2,298Total current liabilities
    
    
    69,639
    
    
    
    61,877Long-term debt
    
    
    326,510
    
    
    
    319,108Deferred rent payable
    
    
    3,343
    
    
    
    3,086Deferred revenues
    
    
    1,445
    
    
    
    1,133Capital lease obligations, net of current portion
    
    
    1,776
    
    
    
    2,682Deferred income taxes payable
    
    
    3,040
    
    
    
    4,009Other
    
    
    721
    
    
    
    769Total liabilities
    
    
    406,474
    
    
    
    392,664Stockholders 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 $176,623
    
    
    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 $203,845
    
    
    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 $184,585
    
    
    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 $130,834
    
    
    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 $21,717
    
    
    
    
    
    
    Additional paid-in capital
    
    
    140,752
    
    
    
    140,811Accumulated deficit
    
    
    (219,836
    )
    
    
    (238,588
    )Treasury stock, at cost
    
    
    (177
    )
    
    
    (177
    )Total stockholders deficiency
    
    
    (79,146
    )
    
    
    (97,839
    )Total liabilities and stockholders deficiency
    
    $
    327,328
    
    
    $
    294,825
 See notes to consolidated financial statements
  70




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BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations
(in thousands)
 Years Ended December 31,2008
    
    
    2009
    
    
    2010Revenues
    
    $
    496,922
    
    
    $
    456,452
    
    
    $
    407,704Operating expenses:Cost of revenues (exclusive of depreciation and amortization)
    
    
    257,883
    
    
    
    225,431
    
    
    
    193,860Selling, general and administrative (includes share-based
compensation of $293, $233 and $59)
    
    
    168,421
    
    
    
    154,722
    
    
    
    148,917Depreciation and amortization
    
    
    73,608
    
    
    
    49,922
    
    
    
    44,085Total operating expenses
    
    
    499,912
    
    
    
    430,075
    
    
    
    386,862Income (loss) from operations
    
    
    (2,990
    )
    
    
    26,377
    
    
    
    20,842Interest expense
    
    
    (39,514
    )
    
    
    (39,197
    )
    
    
    (38,379
    )Interest income
    
    
    702
    
    
    
    112
    
    
    
    73Other income (expense)
    
    
    (8
    )
    
    
    17
    
    
    
    Loss before provision for income taxes
    
    
    (41,810
    )
    
    
    (12,691
    )
    
    
    (17,464
    )Provision for income taxes
    
    
    (1,056
    )
    
    
    (1,179
    )
    
    
    (1,288
    )Net loss
    
    $
    (42,866
    )
    
    $
    (13,870
    )
    
    $
    (18,752
    )
 See notes to consolidated financial statements.
  71




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BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Stockholders Deficiency
(in thousands, except share amounts)
 Years Ended December 31,2008
    
    
    2009
    
    
    2010Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    AmountSeries A common stockBalance at beginning of year
    
    
    9,342,880
    
    
    $
    107
    
    
    
    9,342,880
    
    
    $
    107
    
    
    
    9,333,680
    
    
    $
    107Cancellation of shares
    
    
    
    
    
    
    
    
    
    
    (371
    )
    
    
    
    
    
    
    
    
    
    
    Treasury shares acquired
    
    
    
    
    
    
    
    
    
    
    (8,829
    )
    
    
    
    
    
    
    
    
    
    
    Balance at end of year
    
    
    9,342,880
    
    
    
    107
    
    
    
    9,333,680
    
    
    
    107
    
    
    
    9,333,680
    
    
    
    107Series B common stockBalance at beginning of year
    
    
    360,050
    
    
    
    4
    
    
    
    360,050
    
    
    
    4
    
    
    
    360,050
    
    
    
    4Balance at end of year
    
    
    360,050
    
    
    
    4
    
    
    
    360,050
    
    
    
    4
    
    
    
    360,050
    
    
    
    4Series A Preferred stockBalance at beginning of year
    
    
    87,254
    
    
    
    1
    
    
    
    87,254
    
    
    
    1
    
    
    
    87,254
    
    
    
    1Balance at end of year
    
    
    87,254
    
    
    
    1
    
    
    
    87,254
    
    
    
    1
    
    
    
    87,254
    
    
    
    1Series A-1 Preferred StockBalance at beginning of year
    
    
    100,702
    
    
    
    1
    
    
    
    100,702
    
    
    
    1
    
    
    
    100,702
    
    
    
    1Balance at end of year
    
    
    100,702
    
    
    
    1
    
    
    
    100,702
    
    
    
    1
    
    
    
    100,702
    
    
    
    1Series B Preferred StockBalance at beginning of year
    
    
    91,202
    
    
    
    1
    
    
    
    91,202
    
    
    
    1
    
    
    
    91,187
    
    
    
    1Cancellation of shares
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    Balance at end of year
    
    
    91,202
    
    
    
    1
    
    
    
    91,187
    
    
    
    1
    
    
    
    91,187
    
    
    
    1Series B-1 Preferred StockBalance at beginning of year
    
    
    64,986
    
    
    
    1
    
    
    
    64,986
    
    
    
    1
    
    
    
    64,633
    
    
    
    1Treasury shares acquired
    
    
    
    
    
    
    
    
    
    
    (353
    )
    
    
    
    
    
    
    
    
    
    
    Balance at end of year
    
    
    64,986
    
    
    
    1
    
    
    
    64,633
    
    
    
    1
    
    
    
    64,633
    
    
    
    1Series C Preferred StockBalance at beginning of year
    
    
    14,402
    
    
    
    
    
    
    
    14,402
    
    
    
    
    
    
    
    14,402
    
    
    
    Balance at end of year
    
    
    14,402
    
    
    
    
    
    
    
    14,402
    
    
    
    
    
    
    
    14,402
    
    
    
    Additional paid-in capitalBalance at beginning of year
    
    
    
    
    
    
    140,270
    
    
    
    
    
    
    
    140,563
    
    
    
    
    
    
    
    140,752Stock-based compensation
    
    
    
    
    
    
    293
    
    
    
    
    
    
    
    233
    
    
    
    
    
    
    
    59Cancellation of warrnats
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    
    
    
    
    Balance at end of year
    
    
    
    
    
    
    140,563
    
    
    
    
    
    
    
    140,752
    
    
    
    
    
    
    
    140,811Accumulated deficitBalance at beginning of year
    
    
    
    
    
    
    (163,100
    )
    
    
    
    
    
    
    (205,966
    )
    
    
    
    
    
    
    (219,836
    )Net loss
    
    
    
    
    
    
    (42,866
    )
    
    
    
    
    
    
    (13,870
    )
    
    
    
    
    
    
    (18,752
    )Balance at end of year
    
    
    
    
    
    
    (205,966
    )
    
    
    
    
    
    
    (219,836
    )
    
    
    
    
    
    
    (238,588
    )Accumulated other comprehensive incomeBalance at beginning of year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    Unrealized gain on investment securities
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reclassification adjustment for
realized gains included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    Balance at end of year
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury stockBalance at beginning of year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )Treasury shares acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    Balance at end of year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    (177
    )Total stockholders deficiency
    
    
    
    
    
    $
    (65,266
    )
    
    
    
    
    
    $
    (79,146
    )
    
    
    
    
    
    $
    (97,839
    )
 See notes to consolidated financial statements
  72




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
(in thousands)
 Years Ended December 31,2008
    
    
    2009
    
    
    2010Cash flows from operating activitiesNet loss
    
    $
    (42,866
    )
    
    $
    (13,870
    )
    
    $
    (18,752
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation
    
    
    32,322
    
    
    
    32,120
    
    
    
    31,606Amortization of deferred financing costs
    
    
    2,639
    
    
    
    2,625
    
    
    
    2,660Amortization of intangible assets
    
    
    41,221
    
    
    
    17,736
    
    
    
    12,431Amortization of bond premium
    
    
    (816
    )
    
    
    (914
    )
    
    
    (1,024
    )Provision for doubtful accounts
    
    
    5,539
    
    
    
    6,924
    
    
    
    5,100Write-off of costs incurred in connection with initial public offering
    
    
    
    
    
    
    
    
    
    
    3,669Stock-based compensation
    
    
    293
    
    
    
    233
    
    
    
    59Deferred income taxes
    
    
    930
    
    
    
    969
    
    
    
    969Other
    
    
    55
    
    
    
    (591
    )
    
    
    38Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,887
    )
    
    
    5,174
    
    
    
    343Other current assets
    
    
    (1,899
    )
    
    
    (2,299
    )
    
    
    258Other assets
    
    
    (1,369
    )
    
    
    (619
    )
    
    
    561Accounts payable
    
    
    (3,806
    )
    
    
    966
    
    
    
    3,235Accrued expenses and other current liabilities
    
    
    (4,924
    )
    
    
    (9,973
    )
    
    
    (9,805
    )Deferred revenues
    
    
    1,433
    
    
    
    (1,557
    )
    
    
    (722
    )Deferred rent payable
    
    
    (228
    )
    
    
    943
    
    
    
    (257
    )Net cash provided by operating activities
    
    
    26,637
    
    
    
    37,867
    
    
    
    30,369Cash flows from investing activitiesAcquisition, net of cash and restricted cash acquired
    
    
    (4,953
    )
    
    
    (127
    )
    
    
    Purchases of property and equipment
    
    
    (39,786
    )
    
    
    (33,747
    )
    
    
    (29,879
    )Purchases of investment securities
    
    
    (23,500
    )
    
    
    (145,764
    )
    
    
    (116,325
    )Sales of investment securities
    
    
    
    
    
    
    145,728
    
    
    
    126,334Merger acquisition costs
    
    
    (311
    )
    
    
    
    
    
    
    Other
    
    
    60
    
    
    
    16
    
    
    
    (1,016
    )Net cash used in investing activities
    
    
    (68,490
    )
    
    
    (33,894
    )
    
    
    (20,886
    )Cash flows from financing activitiesDrawdowns on revolving credit facility
    
    
    23,902
    
    
    
    2,275
    
    
    
    1,276Repayments of revolving credit facility
    
    
    (402
    )
    
    
    (2,275
    )
    
    
    (7,654
    )Proceeds from capital lease financing and equipment notes
    
    
    3,789
    
    
    
    441
    
    
    
    3,479Payments on capital lease obligations and equipment notes
    
    
    (3,685
    )
    
    
    (4,284
    )
    
    
    (3,355
    )Other
    
    
    (63
    )
    
    
    (332
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    23,541
    
    
    
    (4,175
    )
    
    
    (6,254
    )Net increase (decrease) in cash and cash equivalents
    
    
    (18,312
    )
    
    
    (202
    )
    
    
    3,229Cash and cash equivalents at beginning of year
    
    
    40,489
    
    
    
    22,177
    
    
    
    21,975Cash and cash equivalents at end of year
    
    $
    22,177
    
    
    $
    21,975
    
    
    $
    25,204Supplemental disclosure of cash flow informationCash paid during the year for interest
    
    $
    37,581
    
    
    $
    38,146
    
    
    $
    35,955Cash paid during the year for taxes
    
    $
    151
    
    
    $
    210
    
    
    $
    319
 See notes to consolidated financial statements
  73




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
(in thousands, except share information)
 1. Organization and Description of Business
  2. Significant Accounting Policies
 Basis of Presentation
  Use of Estimates
  Fair Value Measurements
  Revenue Recognition
    74




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 2. Significant Accounting Policies (continued)
      Cost of Revenues
  Cash and Cash Equivalents
  Investment Securities
   75




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 2. Significant Accounting Policies (continued)
 Comprehensive Loss
  Years Ended December 31,2008
    
    
    2009
    
    
    2010Net loss
    
    $
    (42,866
    )
    
    $
    (13,870
    )
    
    $
    (18,752
    )Unrealized gain on investment securities
    
    
    22Reclassification adjustment for realized gains included in net loss
    
    
    
    
    
    
    (22
    )
    
    
    Comprehensive loss
    
    $
    (42,844
    )
    
    $
    (13,892
    )
    
    $
    (18,752
    )
 Accounts Receivable and Allowance for Doubtful Accounts
  Property and Equipment
  Impairment of Long-Lived Assets
   76




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 2. Significant Accounting Policies (continued)
 Goodwill
  Third Party Conversion Costs
  Debt Issuance Costs
  Significant Vendor
  Income Taxes
  Uncertainty in Income Taxes
   77




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 2. Significant Accounting Policies (continued)
  Stock-Based Compensation
  Software Development Costs
   Advertising
  Disputes
  Reclassifications
   78




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 3. Recent Accounting Pronouncements
  4. Other Assets
  December 31,2009
    
    
    2010Deferred carrier charges
    
    $
    2,433
    
    
    $
    4,430Prepaid expenses
    
    
    3,990
    
    
    
    1,875Other
    
    
    4,553
    
    
    
    4,413Total other current assets
    
    $
    10,976
    
    
    $
    10,718
  December 31,2009
    
    
    2010Deferred financing costs
    
    $
    7,424
    
    
    $
    5,179Lease security and carrier deposits
    
    
    1,811
    
    
    
    1,912Registration statement costs
    
    
    3,669
    
    
    
    Other
    
    
    2,061
    
    
    
    984Total other non-current assets
    
    $
    14,965
    
    
    $
    8,075
    79




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information
 5. Property and Equipment
  December 31,2009
    
    
    2010Network equipment
    
    $
    171,658
    
    
    $
    184,145Computer and office equipment
    
    
    21,226
    
    
    
    20,844Capitalized software costs
    
    
    15,914
    
    
    
    18,662Furniture and fixtures and other
    
    
    9,539
    
    
    
    8,540Leasehold improvements
    
    
    6,713
    
    
    
    6,676225,050
    
    
    
    238,867Less accumulated depreciation and amortization
    
    
    (138,175
    )
    
    
    (153,723
    )$
    86,875
    
    
    $
    85,144
  6. Identifiable Intangible Assets and Goodwill
  Customer Relationships:
  Trademark:
    80




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 6. Identifiable Intangible Assets and Goodwill (continued)
  December 31,2009
    
    
    2010Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Net CarryingValue
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    ValueCustomer relationships
    
    $
    71,812
    
    
    $
    (46,064
    )
    
    $
    25,748
    
    
    $
    50,400
    
    
    $
    (35,577
    )
    
    $
    14,823Trademarks
    
    
    7,400
    
    
    
    (5,664
    )
    
    
    1,736
    
    
    
    4,400
    
    
    
    (4,170
    )
    
    
    230$
    79,212
    
    
    $
    (51,728
    )
    
    $
    27,484
    
    
    $
    54,800
    
    
    $
    (39,747
    )
    
    $
    15,053
   2011
    
    $
    5,3052012
    
    
    3,4862013
    
    
    2,1942014
    
    
    1,5692015
    
    
    1,123Thereafter
    
    
    1,376$
    15,053
  Balance at December 31, 2008
    
    $
    98,111Finalization of purchase price allocation in connection with 2008 acquisition
    
    
    127Balance at December 31, 2009
    
    
    98,2382010 activity
    
    
    Balance at December 31, 2010
    
    $
    98,238
  81




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 7. Accrued Expenses and Other Current Liabilities
  December 31,2009
    
    
    2010Recurring network costs
    
    $
    8,510
    
    
    $
    6,368Recurring operating accruals
    
    
    6,212
    
    
    
    4,690Accrued interest (a)
    
    
    11,480
    
    
    
    11,459Payroll-related liabilities
    
    
    6,701
    
    
    
    5,576Other
    
    
    2,727
    
    
    
    1,139Total accrued expenses and other current liabilities
    
    $
    35,630
    
    
    $
    29,232
 (a)
    
    Primarily represents accrued interest on the Senior Secured Notes
and the Revolving Credit Facility. Interest on the Senior Secured
Notes is paid semi-annually on March 1 and September 1 of each
year. 8. Obligations Under Capital and Operating Leases
 Capital Leases
    2011
    
    $
    2,8722012
    
    
    1,6212013
    
    
    1,2512014
    
    
    3286,072Less amounts representing interest
    
    
    (1,092
    )4,980Less current portion
    
    
    (2,298
    )Capital lease obligations, net of current portion
    
    $
    2,682
  82




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 8. Obligations Under Capital and Operating Leases (continued)
 Operating Leases
  2011
    
    $
    7,7092012
    
    
    7,0462013
    
    
    6,2492014
    
    
    5,8752015
    
    
    4,863Thereafter
    
    
    20,233Total minimum lease payments
    
    $
    51,975
  9. Debt
 Senior Secured Notes
 3 8 3 8 3 4
 3 8
   83




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 9. Debt (continued)
  $25,000 Revolving Credit Facility
       10. Shareholders Deficiency
   84




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BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 10. Shareholders Deficiency (continued)
       85




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 10. Shareholders Deficiency (continued)
        InfoHighway Warrants
   86




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 10. Shareholders Deficiency (continued)
  11. Stock-Based Compensation
 Restricted Stock Awards
   Stock Option Awards
   87




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 11. Stock-Based Compensation (continued)
  Series C
    
    
    AveragePreferred
    
    
    Exercise PriceOutstanding December 31, 2007
    
    
    20,900
    
    
    $
    137.50Grants
    
    
    
    
    
    
    Forfeit/Cancel/Repurchase
    
    
    (696
    )
    
    
    137.50Outstanding December 31, 2008
    
    
    20,204
    
    
    
    137.50Grants
    
    
    
    
    
    
    Forfeit/Cancel/Repurchase
    
    
    (146
    )
    
    
    137.50Outstanding December 31, 2009
    
    
    20,058
    
    
    
    137.50Grants
    
    
    
    
    
    
    Forfeit/Cancel/Repurchase
    
    
    (20,058
    )
    
    
    137.50Outstanding December 31, 2010
    
    
    
    
    
    $
    
  12. Income Taxes
  Years Ended December 31,2008
    
    
    2009
    
    
    2010Current:Federal
    
    $
    (25
    )
    
    $
    
    
    
    $
    45State
    
    
    151
    
    
    
    210
    
    
    
    274126
    
    
    
    210
    
    
    
    319Deferred:Federal
    
    
    808
    
    
    
    843
    
    
    
    843State
    
    
    122
    
    
    
    126
    
    
    
    126930
    
    
    
    969
    
    
    
    969$
    1,056
    
    
    $
    1,179
    
    
    $
    1,288
  88




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information
 12. Income Taxes (continued)
  Years Ended December 31,2008
    
    
    2009
    
    
    2010Statutory federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net of federal tax benefits
    
    
    (0.4
    %)
    
    
    (1.8
    %)
    
    
    (1.5
    %)Permanent items
    
    
    (1.2
    %)
    
    
    (3.6
    %)
    
    
    (0.8
    %)Valuation allowance
    
    
    (35.9
    %)
    
    
    (39.0
    %)
    
    
    (40.1
    %)Effective income tax rate
    
    
    (2.5
    %)
    
    
    (9.4
    %)
    
    
    (7.4
    %)
  December 31,2009
    
    
    2010Deferred tax assets:CurrentAccounts receivable
    
    $
    6,301
    
    
    $
    6,890Deferred revenue
    
    
    3,961
    
    
    
    3,706Other
    
    
    1,395
    
    
    
    1,028Total deferred tax assets-current
    
    
    11,657
    
    
    
    11,624NoncurrentNet operating loss carry forwards
    
    
    71,193
    
    
    
    76,662Customer lists
    
    
    6,724
    
    
    
    7,778Trademark
    
    
    1,811
    
    
    
    2,007Other
    
    
    2,634
    
    
    
    2,327Total deferred tax assets-noncurrent
    
    
    82,362
    
    
    
    88,774Total deferred tax assets
    
    $
    94,019
    
    
    $
    100,398Deferred tax liabilities:NoncurrentCustomer Lists
    
    $
    7,637
    
    
    $
    5,241Other current liabilities
    
    
    716
    
    
    
    570Trademark
    
    
    276
    
    
    
    Goodwill
    
    
    3,040
    
    
    
    4,009Accelerated Depreciation
    
    
    16,088
    
    
    
    17,385Total deferred tax liabilities-noncurrent
    
    $
    27,757
    
    
    $
    27,205Net deferred tax assets  current:Deferred tax assets-current
    
    $
    11,657
    
    
    $
    11,624Valuation allowance
    
    
    (11,657
    )
    
    
    (11,624
    )Net current deferred tax assets
    
    $
    
    
    
    $
    Net deferred tax liabilities  noncurrent:Deferred tax assets-noncurrent
    
    $
    82,361
    
    
    $
    88,774Deferred tax liabilities-noncurrent
    
    
    (27,757
    )
    
    
    (27,205
    )Valuation allowance
    
    
    (57,644
    )
    
    
    (65,578
    )Net noncurrent deferred tax liabilities
    
    $
    (3,040
    )
    
    $
    (4,009
    )
  89




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 12. Income Taxes (continued)
   13. Employee Savings and Retirement Plan
  14. Fair Values of Financial Instruments
    90




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 15. Commitments and Contingencies
        91




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##### Table of Contents



BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (continued)
(in thousands, except share information)
 16. Unaudited Quarterly Results of Operations
  2010Three Months EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,Revenues
    
    $
    105,706
    
    
    $
    102,907
    
    
    $
    100,423
    
    
    $
    98,668Cost of revenues (exclusive of depreciation and amortization)
    
    
    50,060
    
    
    
    49,605
    
    
    
    47,214
    
    
    
    46,981Income from operations
    
    
    6,469
    
    
    
    2,258
    
    
    
    5,234
    
    
    
    6,881Net loss
    
    
    (3,737
    )
    
    
    (7,412
    )
    
    
    (4,650
    )
    
    
    (2,953
    )
 2009Three Months EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,Revenues
    
    $
    121,971
    
    
    $
    116,050
    
    
    $
    111,761
    
    
    $
    106,670Cost of revenues (exclusive of depreciation and amortization)
    
    
    61,651
    
    
    
    57,477
    
    
    
    54,844
    
    
    
    51,459Income from operations
    
    
    5,131
    
    
    
    6,699
    
    
    
    7,435
    
    
    
    7,112Net loss
    
    
    (5,105
    )
    
    
    (3,755
    )
    
    
    (2,838
    )
    
    
    (2,172
    )
  92




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##### Table of Contents



Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
   (b) Managements Annual Report on Internal Control Over Financial Reporting
         93




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(c) Attestation Report of the Registered Public Accounting Firm
  (d) Changes in Internal Control Over Financial Reporting
  
 Item 9B.
    
    Other Information
   94




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##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
    Name
    
    PositionMichael K. Robinson
    
    Chief Executive Officer, President and DirectorBrian P. Crotty
    
    Chief Operating OfficerCorey Rinker
    
    Chief Financial Officer, Treasurer and Assistant SecretaryCharles C. Hunter
    
    Executive Vice President, General Counsel and SecretaryKenneth A. Shulman
    
    Chief Technology Officer and Chief Information OfficerTerrence J. Anderson
    
    Executive Vice President  Corporate Development and Assistant TreasurerSteven F. Tunney, Sr.
    
    Chairman of the BoardRichard W. Roedel
    
    Director and Chairman of the Audit CommitteeSamuel G. Rubenstein
    
    DirectorJohn S. Patton, Jr.
    
    DirectorB. Hagen Saville
    
    DirectorKerri Ford
    
    DirectorRobert Manning
    
    DirectorPeter J. Barris
    
    DirectorRaul K. Martynek
    
    Director
   95




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##### Table of Contents



Biographies of Executive Officers
 Michael K. Robinson, Chief Executive Officer, President and Director (54).
 Brian P. Crotty, Chief Operating Officer (40).
 Corey Rinker, Chief Financial Officer, Treasurer and Assistant Secretary (52).
 Charles C. Hunter, Executive Vice President, General Counsel and Secretary (58).
  96




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Kenneth A. Shulman, Chief Technology Officer and Chief Information Officer (57).
 Terrence J. Anderson, Executive Vice President  Corporate Development and Assistant
Treasurer (44).
 Biographies of Directors
 Steven F. Tunney, Sr. (50).
 Richard W. Roedel (61).
  97




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##### Table of Contents



Samuel G. Rubenstein (49).
 B. Hagen Saville (49).
 John S. Patton, Jr. (52).
 Peter J. Barris (57).
  98




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##### Table of Contents



Kerri Ford (39).
 Robert Manning (51).
 Raul K. Martynek (45
 Code of Business Conduct and Ethics
 www.broadviewnet.com . www.broadviewnet.com
  99




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##### Table of Contents



Board of Directors and Committees of the Board of Directors
      www.broadviewnet.com
 Compensation Committee Interlocks and Insider Participation
   Indemnification
   100




---



##### Table of Contents



Compensation Committee Report
   
  101




---



##### Table of Contents



Item 11.
    
    Executive Compensation
 COMPENSATION DISCUSSION & ANALYSIS
  Determination of Compensation
    Components of Compensation
   102




---



##### Table of Contents



Base Salary
  Annual Bonuses
  4 01(k) Savings Plan
  Perquisites and Other Benefits
  Severance Benefits
   103




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##### Table of Contents



SUMMARY COMPENSATION TABLE
  Name and Principal
    
    
    
    
    
    
    
    
    
    
    
    
    
    All OtherPosition
    
    Year
    
    
    Salary
    
    
    Bonus (1)
    
    
    Compensation (2)
    
    
    TotalMichael K. Robinson
    
    
    2010
    
    
    $
    450,000
    
    
    $
    
    
    
    $
    105,588
    
    
    $
    555,588President and Chief Executive Officer
    
    
    2009
    
    
    
    450,000
    
    
    
    240,000
    
    
    
    95,843
    
    
    
    785,8432008
    
    
    
    436,264
    
    
    
    230,000
    
    
    
    120,446
    
    
    
    786,710Corey Rinker
    
    
    2010
    
    
    
    270,000
    
    
    
    
    
    
    
    
    
    
    
    270,000Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary
    
    
    2009
    
    
    
    270,000
    
    
    
    90,000
    
    
    
    
    
    
    
    360,0002008
    
    
    
    268,242
    
    
    
    80,000
    
    
    
    
    
    
    
    348,242Brian P. Crotty
    
    
    2010
    
    
    
    335,000
    
    
    
    
    
    
    
    
    
    
    
    335,000Chief Operating Officer
    
    
    2009
    
    
    
    335,000
    
    
    
    150,000
    
    
    
    
    
    
    
    485,0002008
    
    
    
    328,736
    
    
    
    140,000
    
    
    
    
    
    
    
    468,736Charles C. Hunter
    
    
    2010
    
    
    
    270,000
    
    
    
    
    
    
    
    
    
    
    
    270,000Executive Vice President, General Counsel and Secretary
    
    
    2009
    
    
    
    270,000
    
    
    
    90,000
    
    
    
    
    
    
    
    360,0002008
    
    
    
    265,000
    
    
    
    80,000
    
    
    
    
    
    
    
    345,000Terrence J. Anderson
    
    
    2010
    
    
    
    270,000
    
    
    
    
    
    
    
    
    
    
    
    270,000Executive Vice President,
Finance and Corporate Development
    
    
    2009
    
    
    
    270,000
    
    
    
    90,000
    
    
    
    
    
    
    
    360,0002008
    
    
    
    265,000
    
    
    
    80,000
    
    
    
    
    
    
    
    345,000Kenneth A. Shulman
    
    
    2010
    
    
    
    270,000
    
    
    
    
    
    
    
    
    
    
    
    270,000Executive Vice President, Chief Technology Officer and Chief
Information Officer
    
    
    2009
    
    
    
    270,000
    
    
    
    90,000
    
    
    
    
    
    
    
    360,0002008
    
    
    
    265,000
    
    
    
    80,000
    
    
    
    
    
    
    
    345,000
 
 (1)
    
    In 2011, the ad hoc compensation committee of the board of directors
approved a $1.5 million discretionary bonus pool that will be
allocated among our named executive officers and other employees. This
pool was established to reward these individuals for their efforts in
connection with continued progress with respect to improvement of
various operating metrics, including EBITDA margin and revenue
metrics. As of the date of this report, the portion of the pool that
will be allocated to each of our named executive officers as their
2010 annual bonuses has not been determined. We expect such amounts to
be determined in the second quarter of 2011 and will file a Form 8-K
promptly after this information is determined.(2)
    
    Represents company paid travel expenses and lodging expenses of
$58,571 incurred by Mr. Robinson during 2010, which were grossed up by
$47,017 to make him whole for taxes he was required to pay. Narrative Disclosure Relating to Summary Compensation Tables
 Chief Executive Officer Employment Agreement
   104




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Employment Agreements with Other Named Executive Officers
    105




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##### Table of Contents



Management Incentive Plan
  STOCK VESTED AT FISCAL YEAR-END
  Stock AwardsNumber ofClass or
    
    
    Units
    
    
    ValueSeries
    
    
    Acquired on
    
    
    RealizedName
    
    of Stock
    
    
    Vesting
    
    
    on VestingMichael K. Robinson
    
    
    
    
    
    
    
    
    
    $
    Corey Rinker
    
    
    (1
    )
    
    
    51
    
    
    
    7,013Brian P. Crotty
    
    
    (1
    )
    
    
    144
    
    
    
    19,800Charles C. Hunter
    
    
    (1
    )
    
    
    51
    
    
    
    7,013Terrence J. Anderson
    
    
    (1
    )
    
    
    111
    
    
    
    15,263Kenneth A. Shulman
    
    
    (1
    )
    
    
    86
    
    
    
    11,825
 
 (1)
    
    Securities granted under the MIP have been presented as units for
purposes of this table only. Each unit represents 1 share of Series C
preferred stock and 25 shares of Class B common stock. However, while
presented as a unit for convenience, the actual grants represent
separate and distinct securities for accounting and securities law
purposes. The market value of the units acquired upon vesting is based
on a unit price of $137.50 per unit. The amounts shown in the Value
Realized on Vesting column is calculated by multiplying the number of
units by the fair value of the underlying shares on the vesting date.  106




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Potential Payments Upon Termination Or Change In Control
  Cash
    
    
    Value of TaxName
    
    Event
    
    Severance
    
    
    Gross-Up(1)
    
    
    TotalMichael K. Robinson
    
    Voluntary Termination
    
    $
    
    
    
    $
    
    
    
    $
    Involuntary Termination
    
    
    685,000
    
    
    
    
    
    
    
    685,000Death or Disability
    
    
    
    
    
    
    
    
    
    
    Change in Control Termination
    
    
    685,000
    
    
    
    
    
    
    
    685,000Corey Rinker
    
    Voluntary Termination
    
    
    
    
    
    
    
    
    
    
    Involuntary Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000Death or Disability
    
    
    
    
    
    
    
    
    
    
    Change in Control Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000Brian P. Crotty
    
    Voluntary Termination
    
    
    
    
    
    
    
    
    
    
    Involuntary Termination
    
    
    335,000
    
    
    
    
    
    
    
    335,000Death or Disability
    
    
    
    
    
    
    
    
    
    
    Change in Control Termination
    
    
    335,000
    
    
    
    
    
    
    
    335,000Charles C. Hunter
    
    Voluntary Termination
    
    
    
    
    
    
    
    
    
    
    Involuntary Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000Death or Disability
    
    
    
    
    
    
    
    
    
    
    Change in Control Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000Terrence J. Anderson
    
    Voluntary Termination
    
    
    
    
    
    
    
    
    
    
    Involuntary Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000Death or Disability
    
    
    
    
    
    
    
    
    
    
    Change in Control Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000Kenneth A. Shulman
    
    Voluntary Termination
    
    
    
    
    
    
    
    
    
    
    Involuntary Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000Death or Disability
    
    
    
    
    
    
    
    
    
    
    Change in Control Termination
    
    
    270,000
    
    
    
    
    
    
    
    270,000
 
 (1)
    
    Pursuant to the terms of Mr. Robinsons employment agreement, in the
event that any payment under the agreements constitutes an excess
parachute payment under Section 280G of the Internal Revenue Code, he
will be entitled to a gross-up payment to cover the 20% excise tax
which may be imposed on such payment pursuant to Section 4999 of the
Internal Revenue Code.  107




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DIRECTOR COMPENSATION
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
    
    each stockholder known by us to beneficially own more than 5% of each class of our
outstanding stock;
 
    
    each of our directors and executive officers; and
 
    
    all directors and executive officers as a group.
   108




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##### Table of Contents



Class A
    
    
    
    
    
    
    
    
    
    
    Class BClass A
    
    
    Common Stock on an
    
    
    Class B
    
    
    Common Stock on anCommon Stock
    
    
    As-Converted Basis(1)
    
    
    Common Stock
    
    
    As-Converted Basis(1)Amount
    
    
    
    
    
    
    Amount
    
    
    
    
    
    
    Amount
    
    
    
    
    
    
    Amountand
    
    
    Percent of
    
    
    and
    
    
    Percent of
    
    
    and
    
    
    Percent of
    
    
    and
    
    
    Percent ofNature of
    
    
    Outstanding
    
    
    Nature of
    
    
    Outstanding
    
    
    Nature of
    
    
    Outstanding
    
    
    Nature of
    
    
    OutstandingBeneficial
    
    
    Shares
    
    
    Beneficial
    
    
    Shares
    
    
    Beneficial
    
    
    Shares
    
    
    Beneficial
    
    
    SharesOwnership
    
    
    of Class
    
    
    Ownership
    
    
    of Class
    
    
    Ownership
    
    
    of Class
    
    
    Ownership
    
    
    of ClassSteven F. Tunney, Sr.(2)
    
    
    4,371,031
    
    
    
    50.7
    %
    
    
    12,392,268
    
    
    
    72.9
    %B. Hagen Saville(2)
    
    
    4,371,031
    
    
    
    50.7
    %
    
    
    12,392,268
    
    
    
    72.9
    %Samuel G. Rubenstein(2)
    
    
    4,371,031
    
    
    
    50.7
    %
    
    
    12,392,268
    
    
    
    72.9
    %John S. Patton, Jr.(2)
    
    
    4,371,031
    
    
    
    50.7
    %
    
    
    12,392,268
    
    
    
    72.9
    %Robert Manning(3)
    
    
    1,508,506
    
    
    
    16.2
    %
    
    
    3,951,369
    
    
    
    33.6
    %Peter J. Barris(4)
    
    
    821,345
    
    
    
    8.8
    %
    
    
    2,151,424
    
    
    
    20.2
    %Michael K. Robinson(5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,075
    
    
    
    25.6
    %
    
    
    203,146
    
    
    
    43.1
    %Brian P. Crotty(6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,825
    
    
    
    18.6
    %
    
    
    147,437
    
    
    
    33.5
    %Terrence J. Anderson(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,325
    
    
    
    15.9
    %
    
    
    126,477
    
    
    
    29.5
    %Kenneth A. Shulman(8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,525
    
    
    
    10.1
    %
    
    
    80,586
    
    
    
    19.9
    %Corey Rinker(9)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,200
    
    
    
    7.6
    %
    
    
    60,012
    
    
    
    15.3
    %Charles C. Hunter(10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,450
    
    
    
    7.1
    %
    
    
    56,151
    
    
    
    14.4
    %Directors and Executive
Officers as a Group(11)
    
    
    7,060,882
    
    
    
    75.6
    %
    
    
    18,495,060
    
    
    
    89.1
    %
    
    
    305,400
    
    
    
    84.8
    %
    
    
    673,808
    
    
    
    92.5
    %MCG(2)
    
    
    4,731,031
    
    
    
    50.7
    %
    
    
    12,392,268
    
    
    
    72.9
    %Baker(3)
    
    
    1,508,506
    
    
    
    16.2
    %
    
    
    3,951,369
    
    
    
    33.6
    %NEA(4)
    
    
    821,345
    
    
    
    8.8
    %
    
    
    2,151,424
    
    
    
    20.2
    %Com Ventures(12)
    
    
    328,065
    
    
    
    3.5
    %
    
    
    859,331
    
    
    
    8.7
    %WPG(13)
    
    
    224,072
    
    
    
    2.4
    %
    
    
    586,933
    
    
    
    6.1
    %Apollo(14)
    
    
    163,161
    
    
    
    1.7
    %
    
    
    427,382
    
    
    
    4.5
    %Trimaran(15)
    
    
    127,499
    
    
    
    1.4
    %
    
    
    333,969
    
    
    
    3.5
    %
 
 (1)
    
    The calculation of Class A Common Stock on an As-Converted Basis
includes all shares of Series A Preferred Stock, Series A-1 Preferred
Stock, Series B Preferred Stock and Series B-1 Preferred Stock and
warrants and options convertible or exercisable into Class A Common
Stock within 60 days of December 31, 2010. This does not include
shares of capital stock, warrants or options that are convertible or
exercisable into Class A Common Stock upon a change of control or
qualifying initial public offering.The calculation of Class B Common Stock on an As-Converted Basis
includes all shares of Series C Preferred Stock, warrants and options
convertible or exercisable into Class B Common Stock within 60 days
of December 31, 2010. This does not include shares of capital stock,
warrants or options that are convertible or exercisable into Class B
Common Stock upon a change of control or qualifying initial public
offering.(2)
    
    MCG beneficially owns (i) 87,254 shares of our Series A Preferred
Stock, which represents 100.0% of the outstanding shares of our
Series A Preferred Stock, (ii) 100,702 shares of our Series A-1
Preferred Stock, which represents 100% of the outstanding shares of
our Series A-1 Preferred Stock and (iii) 1,282 shares of our Series B
Preferred Stock, which represents 1.4% of the outstanding shares of
our Series B Preferred Stock. Each of Mr. Tunney, Mr. Saville, Mr.
Rubenstein and Mr. Patton is an officer of MCG Capital Corporation.
By virtue of such relationship, each of Mr. Tunney, Mr. Saville, Mr.
Rubenstein and Mr. Patton, may be deemed to beneficially own the
shares listed as beneficially owned by MCG. Each of Mr. Tunney, Mr.
Saville, Mr. Rubenstein and Mr. Patton disclaims beneficial ownership
of such shares.(3)
    
    Baker beneficially owns (i) 38,119 shares of our Series B Preferred
Stock, which represents 41.8% of the outstanding shares of our Series
B Preferred Stock and (ii) 22,221 shares of our Series B-1 Preferred
Stock, which represents 34.4% of the outstanding shares of our Series
B-1 Preferred Stock. Mr. Manning is a manager of the general partners
of Baker Communications Fund, L.P. and Baker Communications Fund II
(QP) L.P. By virtue of such relationship, Mr. Manning may be deemed
to beneficially own the shares listed as beneficially owned by Baker.
Mr. Manning disclaims beneficial ownership of such shares.(4)
    
    NEA beneficially owns (i) 20,838 shares of our Series B Preferred
Stock, which represents 22.8% of the outstanding shares of our Series
B Preferred Stock and (ii) 12,016 shares of our Series B-1 Preferred
Stock, which represents 18.6% of the outstanding shares of our Series
B-1 Preferred Stock. Mr. Barris is the managing general partner of
New Enterprise Associates VII, L.P., New Enterprise Associates 9,
L.P., New Enterprise Associates 10, L.P. and NEA Presidents Fund. By
virtue of such relationship, Mr. Barris may be deemed to beneficially
own the shares listed as beneficially owned by NEA. Mr. Barris
disclaims beneficial ownership of such shares.  109




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##### Table of Contents



(5)
    
    Mr. Robinson beneficially owns 3,683 shares of our Series C Preferred
Stock, which represents 25.6% of the outstanding shares of our Series
C Preferred Stock.(6)
    
    Mr. Crotty beneficially owns 2,673 shares of our Series C Preferred
Stock, which represents 18.6% of the outstanding shares of our Series
C Preferred Stock.(7)
    
    Mr. Anderson beneficially owns 2,293 shares of our Series C Preferred
Stock, which represents 15.9% of the outstanding shares of our Series
C Preferred Stock.(8)
    
    Mr. Shulman beneficially owns 1,461 shares of our Series C Preferred
Stock, which represents 10.1% of the outstanding shares of our Series
C Preferred Stock.(9)
    
    Mr. Rinker beneficially owns 1,088 shares of our Series C Preferred
Stock, which represents 7.6% of the outstanding shares of our Series
C Preferred Stock.(10)
    
    Mr. Hunter beneficially owns 1,018 shares of our Series C Preferred
Stock, which represents 7.1% of the outstanding shares of our Series
C Preferred Stock.(11)
    
    The Directors and Executive Officers as a group beneficially own (i)
87,254 shares of our Series A Preferred Stock, which represents
100.0% of the outstanding shares of our Series A Preferred Stock,
(ii) 100,702 shares of our Series A-1 Preferred Stock, which
represents 100% of the outstanding shares of our Series A-1 Preferred
Stock, (iii) 60,239 shares of our Series B Preferred Stock, which
represents 66.1% of the outstanding shares of our Series B Preferred
Stock, (iv) 34,237 shares of our Series B-1 Preferred Stock, which
represents 53.0% of the outstanding shares of our Series B-1
Preferred Stock and (v) 12,217 shares of our Series C Preferred
Stock, which represents 87.7% of the outstanding shares of our Series
C Preferred Stock.(12)
    
    References to Com Ventures are to Communications Ventures II, L.P.,
ComVentures IV, L.P., Communications Ventures II Affiliates Fund,
L.P., ComVentures IV CEO Fund, L.P., and ComVentures IV
Entrepreneurs Fund, L.P. Com Ventures beneficially owns (i) 8,910
shares of our Series B Preferred Stock, which represents 9.8% of the
outstanding shares of our Series B Preferred Stock and (ii) 4,213
shares of our Series B-1 Preferred Stock, which represents 6.5% of
the outstanding shares of our Series B-1 Preferred Stock.(13)
    
    References to WPG are to Weiss, Peck & Greer Venture Associates IV,
L.L.C., WPG Enterprise Fund III, L.L.C., Weiss, Peck & Greer Venture
Associates IV Cayman, L.P., and WPG Information Sciences Entrepreneur
Fund, L.P. WPG beneficially owns (i) 6,418 shares of our Series B
Preferred Stock, which represents 7.0% of the outstanding shares of
our Series B Preferred Stock and (ii) 2,545 shares of our Series B-1
Preferred Stock, which represents 3.9% of the outstanding shares of
our Series B-1 Preferred Stock.(14)
    
    References to Apollo are to APEUREKAGGN, LLC. Apollo beneficially
owns 6,526 shares of our Series B-1 Preferred Stock, which represents
10.1% of the outstanding shares of our Series B-1 Preferred Stock.(15)
    
    References to Trimaran are to CIBC Capital Corporation, CIBC Employee
Private Equity Fund, Trimaran Capital, LLC, Trimaran Fund II, LLC,
and Trimaran Parallel Fund II, LLC. Trimaran beneficially owns 5,100
shares of our Series B-1 Preferred Stock, which represents 7.9% of
the outstanding shares of our Series B-1 Preferred Stock.  110




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##### Table of Contents



Securities authorized for issuance under equity compensation plans
 Number of RemainingNumber of
    
    
    Units AvailableRestricted
    
    
    for Future IssuanceStock
    
    
    under EquityPlan Category
    
    Units(1)
    
    
    Compensation PlansEquity compensation plans approved by security holders(2)
    
    
    14,402
    
    
    
    17,872Total
    
    
    14,402
    
    
    
    17,872
 
 (1)
    
    Securities granted under the MIP have been presented as units for
purposes of this table only. Each unit represents 1 share of Series C
preferred stock and 25 shares of Class B common stock. However, while
presented as a unit for convenience, the actual grants represent
separate and distinct securities for accounting and securities law
purposes.(2)
    
    For a description of the material features of the MIP, see the section
entitled Executive Compensation  Compensation Discussion &
Analysis. 
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
 Amended and Restated Shareholders Agreement
       111




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##### Table of Contents



Employment Agreements
  Policies and Procedures Regarding Transactions with Related Persons
  Director Independence
  
 Item 14.
    
    Principal Accounting Fees and Services
  Years Ended December 31,2009
    
    
    2010Audit Fees
    
    $
    836
    
    
    $
    820Audit-Related Fees
    
    
    
    
    
    
    Tax Fees
    
    
    
    
    
    
    45All Other Fees
    
    
    2
    
    
    
    2Total Fees
    
    $
    838
    
    
    $
    867
 Form 10-Q,
  112




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##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
 Financial Statements and Schedules
   Managements Report on Internal Control Over Financial ReportingReport of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2009 and 2010Consolidated Statements of Operations for the Years Ended December 31, 2008, 2009 and 2010Consolidated Statements of Stockholders Deficiency for the Years Ended December 31, 2008, 2009 and 2010Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2009 and 2010Notes to Consolidated Financial StatementsFinancial Statement Schedules
 
 SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
BROADVIEW NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
 Balance atBeginning of
    
    
    Charges to
    
    
    Other
    
    
    
    
    
    
    Balance atPeriod
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions (a)
    
    
    End of PeriodAllowance for uncollectible accounts
receivable:Year Ended December 31, 2008
    
    $
    7,046
    
    
    $
    5,539
    
    
    $
    3,740
    
    
    $
    (12,003
    )
    
    $
    4,322Year Ended December 31, 2009
    
    
    4,322
    
    
    
    6,924
    
    
    
    2,936
    
    
    
    (6,240
    )
    
    
    7,942Year Ended December 31, 2010
    
    
    7,942
    
    
    
    5,100
    
    
    
    1,922
    
    
    
    (4,300
    )
    
    
    10,664Valuation allowance for deferred tax assets:Year Ended December 31, 2008
    
    $
    47,643
    
    
    $
    
    
    
    $
    16,563
    
    
    $
    
    
    
    $
    64,206Year Ended December 31, 2009
    
    
    64,206
    
    
    
    
    
    
    
    5,095
    
    
    
    
    
    
    
    69,301Year Ended December 31, 2010
    
    
    69,301
    
    
    
    
    
    
    
    7,901
    
    
    
    
    
    
    
    77,202
 (a)
    
    Allowance for Uncollectible Accounts Receivable includes amounts
written off as uncollectible. (b) Exhibits
 ExhibitNo.
    
    Description2.1
    
    
    Stock Purchase Agreement, dated as of June 26, 2006, by and among Broadview Networks Holdings, Inc., ATX
Communications, Inc., the stockholders of ATX Communications, Inc. and, for the limited purposes set forth
therein, Leucadia National Corporation.(a)2.2
    
    
    Agreement and Plan of Merger, dated as of February 23, 2007, by and among Broadview Networks Holdings, Inc.,
Eureka Acquisition Corporation, Eureka Broadband Corporation, the significant stockholders of Eureka Broadband
Corporation set forth therein and Jeffrey Ginsberg, as agent for the stockholders of Eureka Broadband
Corporation.(a)3.1
    
    
    Tenth Amended and Restated Certificate of Incorporation, dated May 31, 2007, of Broadview Networks Holdings,
Inc.*3.2
    
    
    Second Amended and Restated Bylaws of Broadview Networks Holdings, Inc.(a)4.1
    
    
    Indenture, dated as of August 23, 2006, by and among Broadview Networks Holdings, Inc., the Guarantors named
therein and The Bank of New York, as trustee.(a)4.2
    
    
    Supplemental Indenture, dated as of September 29, 2006, by and among Broadview Networks Holdings, Inc., the
Guarantors named therein and The Bank of New York, as trustee.(a)
  113




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ExhibitNo.
    
    Description4.3
    
    
    Form of Exchange 113/8% Senior Secured Note due 2012.(a)4.4
    
    
    Form of Guarantee of Exchange 113/8% Senior Secured Note due 2012.(a)4.5
    
    
    Second Supplemental Indenture, dated as of May 14, 2007, by and among Broadview Networks Holdings, Inc., the
Guarantors named therein and The Bank of New York, as trustee.(a)4.6
    
    
    Third Supplemental Indenture, dated as of May 31, 2007, by and among Broadview Networks Holdings, Inc., the
Guarantors named therein and The Bank of New York, as trustee.(a)4.7
    
    
    Security Agreement, dated as of August 23, 2006, by and among by and among Broadview Networks Holdings, Inc,
the subsidiaries of Broadview Networks Holdings, Inc. named therein and The Bank of New York, as collateral
agent.(a)4.8
    
    
    Supplement to the Security Agreement, dated as of September 29, 2006, by and among Broadview Networks Holdings,
Inc, the subsidiaries of Broadview Networks Holdings, Inc. named therein and The Bank of New York, as
collateral agent.(a)4.9
    
    
    Second Supplement to the Security Agreement, dated as of May 31, 2007, by and among Broadview Networks
Holdings, Inc, the subsidiaries of Broadview Networks Holdings, Inc. named therein and The Bank of New York, as
collateral agent.(a)10.1
    
    
    Management Incentive Plan, dated as of February 9, 2007, of Broadview Networks Holdings, Inc.(a)(c)10.2
    
    
    Employment Agreement, dated as of February 10, 2005, by and between Broadview Networks Holdings, Inc. and
Michael K. Robinson.(a)(c)10.3
    
    
    Employment Agreement, dated as of March 3, 1994, by and between Bridgecom Holdings, Inc. and Brian Crotty.(a)(c)10.4
    
    
    Employment Agreement, dated as of January 14, 2004, by and between Broadview Networks Holdings, Inc. and
Terrence J. Anderson.(a)(c)10.5
    
    
    Employment Agreement, dated as of January 14, 2005, by and between Broadview Networks Holdings, Inc. and
Kenneth Shulman.(a)(c)10.6
    
    
    Employment Agreement, dated as of March 3, 1994, by and between Bridgecom Holdings, Inc. and Charles
Hunter.(a)(c)10.7
    
    
    Employment Agreement, dated as of March 3, 2994, by and between Bridgecom Holdings, Inc. and Corey Rinker.(a)(c)10.8
    
    
    Credit Agreement, dated as of August 23, 2006, by and among Broadview Networks Holdings, Inc., Broadview
Networks, Inc., Broadview Networks of Massachusetts, Inc., Broadview Networks of Virginia, Inc., the Lenders
named therein, Jefferies & Company, Inc., as syndication agent, and The CIT Group/Business Credit, Inc., as
administrative agent, collateral agent and documentation agent.(a)10.9
    
    
    Collateral Agreement, dated as of August 23, 2006, by and among Broadview Networks Holdings, Inc., the
Subsidiary Grantors named therein and The CIT Group/Business Credit, Inc., as administrative agent.(a)10.10
    
    
    Supplement to the Collateral Agreement, dated as of October 20, 2006, by and among Broadview Networks Holdings,
Inc., the Subsidiary Grantors named therein and The CIT Group/Business Credit, Inc., as administrative
agent.(a)10.11
    
    
    Second Supplement to the Collateral Agreement, dated as of June 26, 2007, by and among Broadview Networks
Holdings, Inc., the Subsidiary Grantors named therein and The CIT Group/Business Credit, Inc., as
administrative agent.(a)10.12
    
    
    Guaranty Agreement, dated as of August 23, 2006, by and among the Subsidiary Grantors named therein and The CIT
Group/Business Credit, Inc., as administrative agent.(a)10.13
    
    
    Supplement to the Guaranty Agreement, dated as of October 20, 2006, by and among the Subsidiary Grantors named
therein and The CIT Group/Business Credit, Inc., as administrative agent.(a)10.14
    
    
    Second Supplement to the Guaranty Agreement, dated as of June 26, 2007, by and among the Subsidiary Grantors
named therein and The CIT Group/Business Credit, Inc., as administrative agent.(a)10.15
    
    
    Intercreditor Agreement, dated as of August 23, 2006, by and among The CIT Group/Business Credit, Inc., as
administrative agent, The Bank of New York, as trustee, collateral agent and second priority agent, Broadview
Networks Holdings, Inc. and the Subsidiary Grantors named therein.(a)10.16
    
    
    Joinder to the Intercreditor Agreement, dated as of October 20, 2006, by and among The CIT Group/Business
Credit, Inc., as administrative agent, The Bank of New York, as trustee, collateral agent and second priority
agent, Broadview Networks Holdings, Inc. and the Subsidiary Grantors named therein.(a)10.17
    
    
    Amendment No. 1 to the Intercreditor Agreement, dated as of May 10, 2007, by and among The CIT Group/Business
Credit, Inc., as administrative agent, The Bank of New York, as trustee, collateral agent and second priority
agent, Broadview Networks Holdings, Inc. and the Subsidiary Grantors named therein.(a)
  114




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##### Table of Contents



ExhibitNo.
    
    Description10.18
    
    
    Joinder No. 2 to the Intercreditor Agreement, dated as of June 26, 2007, by and among The CIT Group/Business
Credit, Inc., as administrative agent, The Bank of New York, as trustee, collateral agent and second priority
agent, Broadview Networks Holdings, Inc. and the Subsidiary Grantors named therein.(a)10.19
    
    
    Third Amended and Restated Shareholders Agreement, dated as of May 31, 2007, by and among Broadview Networks
Holdings, Inc. and the shareholders named therein.(b)10.20
    
    
    Indemnity Escrow Agreement, dated May 31, 2007, between Broadview Networks Holdings, Inc., the agent for the
former stockholders of Eureka Broadband Corporation and JP Morgan Chase Bank, N.A.(b)10.21
    
    
    Escrow Agreement, dated September 29, 2006, by and among ATX Communications, Inc., LUK CLEC LLC, Broadview
Networks Holdings, Inc. and JPMorgan Chase Bank, N.A. (d)10.22
    
    
    1997 Stock Option Plan.(c)(d)10.23
    
    
    2000 Stock Option Plan.(c)(d)10.24
    
    
    Amendment No. 2 to the Credit Agreement, dated as of November 12, 2010, by and among Broadview Networks
Holdings, Inc., Broadview Networks, Inc., Broadview Networks of Massachusetts, Inc., Broadview Networks of
Virginia, Inc., the Lenders named therein, Jefferies & Company, Inc., as syndication agent, and The CIT
Group/Business Credit, Inc., as administrative agent, collateral agent and documentation agent.(e)10.25
    
    

Form
of Indemnification Agreement.*12.1
    
    
    Ratio of Earnings to Fixed Charges.*21.1
    
    
    Subsidiaries of Broadview Networks Holdings, Inc.*31.1
    
    
    Certification 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 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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.*32.2
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.*
 
 *
    
    Filed herewith.(a)
    
    Incorporated by reference to Broadview Networks Holdings, Inc.s Form
S-4/A filed on October 16, 2007 (File No. 333-142946).(b)
    
    Incorporated by reference to Broadview Networks Holdings, Inc.s Form
8-K filed on November 19, 2007 (File No. 333-142946).(c)
    
    Management contract or compensatory plan or arrangement.(d)
    
    Incorporated by reference to Broadview Networks Holdings, Inc.s Form
10-K filed on March 25, 2009 (File No. 333-147720).(e)
    
    Incorporated by reference to Broadview Networks Holdings, Inc.s Form
10-Q filed on November 15, 2010 (File No. 333-142946).  115




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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 Director  Signature
    
    Title
    
    Date/s/ Michael K. Robinson

Michael K. Robinson
    
    Chief Executive Officer, President, and Director 
(Principal
Executive Officer)
    
    March 18, 2011/s/ Corey Rinker

Corey Rinker
    
    Chief Financial Officer, Treasurer and Assistant Secretary 
(Principal Financial and Accounting Officer)
    
    March 18, 2011/s/ Steven F. Tunney

Steven F. Tunney
    
    Director
    
    March 18, 2011/s/ Richard W. Roedel

Richard W. Roedel
    
    Director
    
    March 18, 2011/s/ Samuel G. Rubenstein

Samuel G. Rubenstein
    
    Director
    
    March 18, 2011/s/ John S. Patton, Jr.

John S. Patton, Jr.
    
    Director
    
    March 18, 2011/s/ B. Hagen Saville

B. Hagen Saville
    
    Director
    
    March 18, 2011/s/ Kerri Ford

Kerri Ford
    
    Director
    
    March 18, 2011/s/ Robert Manning

Robert Manning
    
    Director
    
    March 18, 2011/s/ Peter J. Barris

Peter J. Barris
    
    Director
    
    March 18, 2011/s/ Raul K. Martynek

Raul Martynek
    
    Director
    
    March 18, 2011
  116




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SUPPLEMENTAL INFORMATION TO BE FURNISHED
WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
   117