1104358--3/25/2009--BROADVIEW_NETWORKS_HOLDINGS

related topics

{system, service, information}

{debt, indebtedness, cash}

{financial, litigation, operation}

{product, market, service}

{personnel, key, retain}

{acquisition, growth, future}

{condition, economic, financial}

{regulation, change, law}

{investment, property, distribution}

{regulation, government, change}

{property, intellectual, protect}

{control, financial, internal}

{competitive, industry, competition}

{interest, director, officer}

{operation, international, foreign}

Our substantial indebtedness may restrict our operating flexibility, could adversely affect our financial health and could prevent us from fulfilling our financial obligations. We have a history of operating losses and we may not be profitable in the future. 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. 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. To service our indebtedness, including the notes, we will require a significant amount of cash. The ability to generate cash depends on many factors beyond our control. 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. 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. Difficulties we may experience with incumbent local exchange carriers, interexchange carriers, and wholesale customers over payment issues may harm our financial performance. 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. 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. The communications industry faces significant regulatory uncertainties and the adverse resolution of these uncertainties could harm our business, results of operations and financial condition. 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. 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 exposed to risks associated with 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. Our success depends on the ability to manage and expand operations effectively. 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. 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. 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.

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1104358--3/25/2009--BROADVIEW_NETWORKS_HOLDINGS_INC