Towerstream’s to the stock market before Clearwire

If and when wireless broadband provider Clearwire hits the public markets as expected this week, the offering is sure to be heralded as a first for WiMAX. However, the smaller startup WiMAX service provider Towerstream is already selling stock, albeit via an over-the-counter offering whose roots the company isn’t exactly flattered in sharing since it involves a defunct producer of girly calendars.

Using the well-known method of acquiring a failing company which already had a public listing, the Middletown, R.I-based Towerstream quietly joined the markets in January after “merging” with a Nevada-based concern known as University Girls Calendar Ltd. While he isn’t exactly out trumpeting the deal, Towerstream CEO Jeff Thompson said the “APO” — for Acquisition Public Offering — gave the company the financial power it needed without selling off a chunk to VCs, or by trying for a big-league IPO that might never have happened. Via the reverse merger and a private placement of stock and debt, Towerstream raised just north of $14 million, Thompson said.

“The small-cap IPO has disappeared after 2001,” said Thompson in a recent phone interview, explaining why the company didn’t pursue a more-traditional public offering. Since Towerstream has been “bootstrapped” from the start, Thompson didn’t want to take VC money to help the company expand (like it did recently when it snapped up the wireless assets of Speakeasy in Seattle).

So enter the “APO,” a term that Thompson says is shedding its pink-sheets shame these days. “There are conferences and workshops on how to do this [reverse mergers],” Thompson says. “For us it will allow us to grow rapidly and grow quickly, while still being scrappy. It was the right way to do it.”

The necessary SEC filings also give a window into Towerstream’s business, and so far so good. According to its filing, Towerstream recorded $4.7 million in revenue for the first 9 months of 2006, enough to produce a net loss of just $236,898 during that period. For all of 2005, Towerstream lost $947,000 on revenues of $5.3 million, so the line is moving in the right direction.

The company also claims margins “in excess of 70 percent” for its business-market services, which are now available in New York, Los Angeles, Chicago, Boston, San Francisco, Rhode Island and Seattle. Let’s see if Clearwire, which targets the consumer market, is able to make similar boasts.