(Mark
One)
|
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934
|
FOR
THE PERIOD ENDING JUNE 30, 2009
|
|
OR
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934
|
FOR
THE TRANSITION PERIOD FROM ________ TO ________
|
|
COMMISSION
FILE NUMBER
0 – 1325
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30, 2009 (unaudited)
|
June
30, 2008 (unaudited)
|
June
30, 2009 (unaudited)
|
June
30, 2008 (unaudited)
|
|||||||||||||
REVENUES
|
$ | 67,396 | $ | 10,806 | $ | 129,554 | $ | 16,520 | ||||||||
COSTS
AND EXPENSES
|
||||||||||||||||
Cost
of products and services (exclusive of depreciation and
amortization shown separately below)
|
56,894 | 6,394 | 104,210 | 10,214 | ||||||||||||
Selling,
general and administrative
|
15,509 | 2,561 | 29,249 | 4,416 | ||||||||||||
Depreciation
and amortization
|
2,703 | 879 | 5,988 | 1,617 | ||||||||||||
Impairment
of assets
|
- | 7 | - | 65 | ||||||||||||
Total
costs and expenses
|
75,106 | 9,841 | 139,447 | 16,312 | ||||||||||||
INCOME
(LOSS) FROM OPERATIONS
|
(7,710 | ) | 965 | (9,893 | ) | 208 | ||||||||||
OTHER
EXPENSE
|
||||||||||||||||
Interest
expense
|
(890 | ) | (113 | ) | (1,745 | ) | (214 | ) | ||||||||
Interest
income
|
3 | - | 10 | - | ||||||||||||
Other
income
|
98 | 32 | 348 | 73 | ||||||||||||
Total
other expense
|
(789 | ) | (81 | ) | (1,387 | ) | (141 | ) | ||||||||
NET
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING
INTEREST IN SUBSIDIARIES
|
(8,499 | ) | 884 | (11,280 | ) | 67 | ||||||||||
PROVISION
FOR INCOME TAXES
|
102 | 434 | 202 | 463 | ||||||||||||
NET
INCOME (LOSS)
|
(8,601 | ) | 450 | (11,482 | ) | (396 | ) | |||||||||
LESS:
NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING
INTEREST IN SUBSIDIARIES
|
(1,482 | ) | 394 | (1,778 | ) | 412 | ||||||||||
NET
INCOME (LOSS) ATTRIBUTABLE TO MULTIBAND
CORPORATION AND SUBSIDIARIES
|
(7,119 | ) | 56 | (9,704 | ) | (808 | ) | |||||||||
Preferred
stock dividends
|
71 | 103 | 144 | 3,985 | ||||||||||||
LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (7,190 | ) | $ | (47 | ) | $ | (9,848 | ) | $ | (4,793 | ) | ||||
LOSS
PER COMMON SHARE – BASIC AND DILUTED:
|
||||||||||||||||
LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (0.75 | ) | $ | (0.00 | ) | $ | (1.02 | ) | $ | (0.53 | ) | ||||
Weighted
average common shares outstanding – basic and diluted
|
9,651 | 9,499 | 9,650 | 8,999 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30, 2009 (unaudited)
|
June
30, 2008 (unaudited)
|
June
30, 2009 (unaudited)
|
June
30, 2008 (unaudited)
|
|||||||||||||
NET
INCOME (LOSS)
|
$ | (7,119 | ) | $ | 56 | $ | (9,704 | ) | $ | (808 | ) | |||||
OTHER
COMPREHENSIVE INCOME (LOSS), NET OF
TAX:
|
||||||||||||||||
Unrealized
gains (losses) on securities:
|
||||||||||||||||
Unrealized
holding gains (losses) arising during period
|
(38 | ) | (57 | ) | (8 | ) | 152 | |||||||||
COMPREHENSIVE
LOSS
|
$ | (7,157 | ) | $ | (1 | ) | $ | (9,712 | ) | $ | (656 | ) |
June
30, 2009 (unaudited)
|
December
31, 2008 (audited)
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$
|
5,584
|
$
|
4,346
|
||||
Securities
available for sale
|
38
|
46
|
||||||
Accounts
receivable, net
|
16,990
|
3,437
|
||||||
Other
receivable – related party
|
518
|
7,666
|
||||||
Inventories
|
14,873
|
1,903
|
||||||
Prepaid
expenses and other
|
2,585
|
1,273
|
||||||
Current
portion of notes receivable
|
61
|
61
|
||||||
Total
Current Assets
|
40,649
|
18,732
|
||||||
PROPERTY
AND EQUIPMENT, NET
|
8,569
|
2,033
|
||||||
OTHER
ASSETS
|
||||||||
Goodwill
|
34,744
|
1,095
|
||||||
Intangible
assets, net
|
26,694
|
3,668
|
||||||
Other
receivable – related party – long term
|
2,230
|
-
|
||||||
Notes
receivable – long-term, net of current portion
|
34
|
39
|
||||||
Other
assets
|
2,245
|
476
|
||||||
Total
Other Assets
|
65,947
|
5,278
|
||||||
TOTAL
ASSETS
|
$
|
115,165
|
$
|
26,043
|
June
30, 2009 (unaudited)
|
December
31, 2008 (audited)
|
|||||||
CURRENT
LIABILITIES
|
||||||||
Mandatory
redeemable preferred stock, 0 and 15,000 Class F preferred
shares
|
$ | - | $ | 150 | ||||
Line
of credit
|
49 | - | ||||||
Short
term debt
|
731 | - | ||||||
Current
portion of long-term debt
|
236 | 1,609 | ||||||
Current
portion of capital lease obligations
|
580 | 311 | ||||||
Accounts
payable
|
43,994 | 8,274 | ||||||
Accrued
liabilities
|
22,692 | 4,435 | ||||||
Deferred
service obligations and revenue
|
3,557 | 1,488 | ||||||
Total
Current Liabilities
|
71,839 | 16,267 | ||||||
LONG-TERM
LIABILITIES
|
||||||||
Long-term
debt – related party
|
1,500 | - | ||||||
Long-term
debt, net of current portion and original issue discount
|
38,465 | 346 | ||||||
Capital
lease obligations, net of current portion
|
610 | 317 | ||||||
Total
Liabilities
|
112,414 | 16,930 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Cumulative
convertible preferred stock, no par value:
|
||||||||
8%
Class A (14,171 shares issued and outstanding, $148,796 liquidation
preference)
|
213 | 213 | ||||||
10%
Class B (1,970 and 2,570 shares issued and outstanding, $20,685
and
$26,985 liquidation preference)
|
20 | 26 | ||||||
10%
Class C (113,480 and 114,080 shares issued and outstanding, $1,134,800
and $1,140,800 liquidation preference)
|
1,474 | 1,482 | ||||||
10%
Class F (150,000 shares issued and outstanding, $1,500,000 liquidation
preference)
|
1,500 | 1,500 | ||||||
8%
Class G (11,595 shares issued and outstanding, $115,950 liquidation
preference)
|
48 | 48 | ||||||
6%
Class H (2.0 shares issued and outstanding, $200,000 liquidation
preference)
|
- | - | ||||||
Common
stock, no par value (9,652,297 and 9,642,374 shares issued and
outstanding)
|
37,781 | 37,687 | ||||||
Stock
subscriptions receivable
|
(55 | ) | (84 | ) | ||||
Options
and warrants
|
46,555 | 46,038 | ||||||
Accumulated
other comprehensive income – unrealized gain on securities available
for sale
|
38 | 46 | ||||||
Accumulated
deficit
|
(90,768 | ) | (81,314 | ) | ||||
Total
Stockholders' Equity
|
(3,194 | ) | 5,642 | |||||
Noncontrolling
interest in subsidiaries
|
5,945 | 3,471 | ||||||
Total
Equity
|
2,751 | 9,113 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 115,165 | $ | 26,043 |
SIX
MONTHS ENDED JUNE 30,
|
||||||||
2009
|
2008
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
loss
|
$
|
(11,482
|
)
|
$
|
(396
|
)
|
||
Adjustments
to reconcile net loss attributable to Multiband Corporation and
subsidiaries to net cash provided from operating
activities:
|
||||||||
Depreciation
and amortization
|
5,988
|
1,617
|
||||||
Amortization
of imputed interest discount
|
35
|
24
|
||||||
Amortization
of original issue discount related to warrants issued with long term
debt
|
9
|
-
|
||||||
Amortization
of deferred financing costs
|
5
|
-
|
||||||
Loss
on sale of property and equipment and intangible assets
|
-
|
59
|
||||||
Gain
on debt extinguishment
|
-
|
(30
|
)
|
|||||
Impairment
of goodwill, intangibles and property and equipment
|
-
|
65
|
||||||
Change
in allowance for doubtful accounts on accounts receivable
|
(127
|
)
|
(15
|
)
|
||||
Change
in reserve for stock subscriptions and interest receivable
|
29
|
(6
|
)
|
|||||
Expense
related to repricing of warrants
|
30
|
-
|
||||||
Stock
based compensation expense
|
114
|
362
|
||||||
Compensation
expense of restricted stock award
|
-
|
24
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(8,727
|
)
|
(66
|
)
|
||||
Inventories
|
1,160
|
917
|
||||||
Prepaid
expenses and other
|
344
|
(592
|
)
|
|||||
Other
assets
|
(31
|
)
|
(4
|
)
|
||||
Accounts
payable and accrued liabilities
|
9,333
|
(1,766
|
)
|
|||||
Deferred
service obligations and revenue
|
1,981
|
736
|
||||||
Net
cash flows from (used by) operating activities
|
(1,339
|
)
|
929
|
|||||
INVESTING
ACTIVITIES
|
||||||||
Purchases
of property and equipment
|
(1,426
|
)
|
(66
|
)
|
||||
Checks
issued in excess of bank balance with the purchase of 80% of outstanding
stock
of DirecTECH operating entities
|
(369
|
)
|
-
|
|||||
Cash
acquired via purchase of NC (formerly Michigan Microtech, Inc.
(MMT))
|
-
|
4,044
|
||||||
Cash
collected on other receivables – related party acquired with the purchase
of NC (formerly
Michigan Microtech, Inc. (MMT))
|
-
|
2,815
|
||||||
Purchase
of US Install
|
-
|
(101
|
)
|
|||||
Purchases
of intangible assets
|
(102
|
)
|
-
|
|||||
Proceeds
from sale of property and equipment and intangible assets
|
-
|
6
|
||||||
Collections
on notes receivable
|
35
|
1
|
||||||
Net
cash flows from (used in) investing activities
|
(1,862
|
)
|
6,699
|
|||||
FINANCING
ACTIVITIES
|
||||||||
Payments
on short-term debt
|
(25
|
)
|
-
|
|||||
Payments
on long-term debt
|
(2,580
|
)
|
(34
|
)
|
||||
Payments
on capital lease obligations
|
(210
|
)
|
(112
|
)
|
||||
Payments
on note payable – related party
|
(1,400
|
)
|
-
|
|||||
Payments
for debt issuance costs
|
(144
|
)
|
-
|
|||||
Net
advances on line of credit
|
4
|
-
|
||||||
Payment
on mandatory redeemable preferred stock
|
(150
|
)
|
(38
|
)
|
||||
Payments
for stock issuance costs
|
-
|
(25
|
)
|
|||||
Payments
received on stock subscriptions receivable
|
-
|
1
|
||||||
Proceeds
from note payable – related party
|
2,900
|
-
|
||||||
Proceeds
from issuance of long-term debt
|
6,100
|
100
|
||||||
Redemption
of preferred stock
|
(12
|
)
|
(51
|
)
|
||||
Preferred
stock dividends
|
(44
|
)
|
(62
|
)
|
||||
Net
cash flows from (used in) financing activities
|
4,439
|
(221
|
)
|
|||||
INCREASE
IN CASH AND CASH EQUIVALENTS
|
1,238
|
7,407
|
||||||
CASH
AND CASH EQUIVALENTS - Beginning of Period
|
4,346
|
944
|
||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
5,584
|
$
|
8,351
|
SIX
MONTHS ENDED JUNE 30,
|
||||||||
2009
|
2008
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Cash
paid for interest, net of amortization of original issue discount and
interest discount
|
$ | 989 | $ | 136 | ||||
Cash
paid for federal and state income taxes
|
598 | 120 | ||||||
Non-cash
investing and financing transactions:
|
||||||||
Conversion
of Class I preferred stock to common stock
|
- | 3,745 | ||||||
Conversion
of Class G preferred stock to common stock
|
- | 150 | ||||||
Conversion
of accrued interest into common stock
|
2 | 2 | ||||||
Conversion
of accrued dividends into common stock
|
91 | 175 | ||||||
Intrinsic
value of preferred dividends
|
2 | 70 | ||||||
Purchase
of property and equipment via increase of capital lease
obligations
|
565 | 34 | ||||||
Warrants
issued for long-term notes payable
|
372 | - | ||||||
Reduction
in notes payable via reduction in other receivables
|
76 | - | ||||||
Purchase
of US Installs via increase in accrued expenses
|
- | 103 | ||||||
Acquisition
of securities available for sale upon expiration of contingent
rights
|
- | 209 | ||||||
Reduction
of stock subscription receivable via cancellation of common
stock
|
- | 61 | ||||||
Debt
and accrued interest paid with issuance of common stock
|
- | 20 | ||||||
Purchase
of 51% of MMT via issuance of notes payable and common stock, net of
discount
for imputed interest
|
- | 5,783 | ||||||
Increase
in short-term debt via offset to accounts payable
|
159 | - | ||||||
Purchase
of 80% of outstanding stock of DirecTECH operating entities via issuance
of short
and long-term notes payable
|
38,240 | - | ||||||
Reduction
of notes payable via reduction of related party receivable in connection
with the
purchase of 80% of outstanding stock of DirecTECH operating
entities
|
5,844 | - | ||||||
Reduction
of notes payable with issuance notes payable in connection with
acquisition
|
300 | - | ||||||
Purchase
of 29% of outstanding stock of NC (formerly MMT) via issuance of short and
long-term
notes payable
|
1,660 | - | ||||||
Purchase
of 80% of outstanding stock of DirecTECH operating entities via payment to
escrow
in 2008
|
500 | - |
NOTE 1 - Unaudited Consolidated
Financial Statements
|
NOTE 2 - Summary of Significant
Accounting Policies
|
1.
|
Initiate
and grow its Home Service Provider (HSP) business by eliminating
competitive HSP providers from certain of its core
markets.
|
2.
|
Improve
gross margin percentages by cycling technicians from training and placing
them in a revenue generating role and by mitigating work order breakage
expense.
|
3.
|
Reduce
operating expenses by reducing training costs through the lowering of
technician turnover, managing professional fees and other general and
administrative expenses.
|
4.
|
Evaluate
and reduce of excess inventory including such factors as anticipated
usage, inventory turnover, inventory levels and product demand
levels.
|
5.
|
Obtain
additional debt financing.
|
6.
|
Expansion
of call center support with sales of call center services to both existing
and future system operators and to buyers of the Company’s video
subscribers.
|
7.
|
Solicit
additional equity investment in the Company by either issuing preferred or
common stock.
|
·
|
installation
and service of DirecTV video programming for residents of single family
homes
|
·
|
installation
of home security systems and internet
services
|
1.
|
from
voice, video and data communications products which are sold and
installed
|
2.
|
direct
billing to user charges to multiple dwelling units, through the activation
of, enhancement of, and residual fees on video programming services
provided to residents of multiple dwelling
units
|
MBCorp.
|
|
MDU
|
|
|
HSP
|
Total | ||||||||||
Balance,
December 31, 2008
|
$ | - | $ | 50 | $ | 1,045 | $ | 1,095 | ||||||||
Acquisitions
|
- | 312 | 33,337 | 33,649 | ||||||||||||
Balance,
June 30, 2009
|
$ | - | $ | 362 | $ | 34,382 | $ | 34,744 |
June 30, 2009
|
December 31, 2008
|
|||||||||||||||
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Intangible
assets subject to amortization
|
||||||||||||||||
Right
of entry contracts
|
$ | 3,137 | $ | 953 | $ | 801 | $ | 526 | ||||||||
Contracts
with DirecTV
|
36,902 | 12,392 | 11,502 | 8,060 | ||||||||||||
Customer
contracts
|
102 | 102 | 102 | 86 | ||||||||||||
Total
|
40,141 | 13,447 | 12,405 | 8,672 | ||||||||||||
Impairment
of intangibles
|
- | - | - | 65 | ||||||||||||
Total
including impairment
|
$ | 40,141 | $ | 13,447 | $ | 12,405 | $ | 8,737 |
Three
months ended
|
Six
months ended
|
||||||
June 30, 2009
|
June 30, 2008
|
June 30, 2009
|
June 30, 2008
|
||||
Risk-free
interest rate
|
1.43%
|
3.27%
|
1.43%
|
3.15%
|
|||
Expected
life of options granted
|
5.0
Years
|
6.5
Years
|
5.0
Years
|
6.5
Years
|
|||
Expected
volatility range
|
95%
|
92.9%
|
95%
|
93.3%
|
|||
Expected
dividend yield
|
0%
|
0%
|
0%
|
0%
|
NOTE 3 – Business
Acquisitions
|
Cash
paid
|
$ | 500 | ||
Short-term
debt
|
500 | |||
Promissory
note
|
39,400 | |||
Total
consideration
|
40,400 | |||
Less
consideration for 29% of NC (recorded separately as
an equity transaction)
|
(1,660 | ) | ||
Consideration
for 80% of outstanding stock of EC, NE, SW, MBMDU,
DC, and Security
|
$ | 38,740 | ||
Assets
|
$ | 30,802 | ||
Intangible
assets
|
27,634 | |||
Goodwill
|
33,649 | |||
Liabilities
|
(47,039 | ) | ||
Noncontrolling
interest
|
(6,306 | ) | ||
$ | 38,740 |
2008
|
||||||||
Consolidated
as
reported
|
2008
Pro
Forma
|
|||||||
Three
months ended June 30, 2008
|
||||||||
Revenues
|
$
|
10,806
|
$
|
52,833
|
||||
Income
from operations
|
965
|
2,576
|
||||||
Net
income attributable to Multiband Corp and subsidiaries
|
56
|
727
|
||||||
Preferred
stock dividends
|
103
|
103
|
||||||
Income
(loss) attributable to common shareholders
|
$
|
(47
|
)
|
$
|
624
|
|||
Income
(loss) attributable to common shareholders per common share
– basic and diluted
|
$
|
(0.00
|
)
|
$
|
0.07
|
|||
Weighted
average shares outstanding – basic and diluted
|
9,499
|
9,499
|
||||||
Six
months ended June 30, 2008
|
||||||||
Revenues
|
$
|
16,520
|
$
|
111,741
|
||||
Income
(loss) from operations
|
208
|
(4,869
|
)
|
|||||
Net
loss attributable to Multiband Corp and subsidiaries
|
(808
|
)
|
(6,293
|
)
|
||||
Preferred
stock dividends
|
3,985
|
3,985
|
||||||
Loss
attributable to common shareholders
|
$
|
(4,793
|
)
|
$
|
(10,278
|
)
|
||
Loss
attributable to common shareholders per common share – basic and
diluted
|
$
|
(0.53
|
)
|
$
|
(1.11
|
)
|
||
Weighted
average shares outstanding – basic and diluted
|
8,999
|
9,252
|
NOTE 4 – Noncontrolling
Interest
|
June 30,
2009
|
December 31, 2008
|
|||||||
Equity of noncontrolling interest
(previously minority interest) in subsidiaries:
|
||||||||
Noncontrolling
interest in subsidiaries, beginning balance
|
$ | 3,471 | $ | - | ||||
Purchase
of 51% of NC
|
- | 2,819 | ||||||
Purchase
of 80% of NE, SC, EC, MBMDU, DC & Security
|
6,306 | - | ||||||
Purchase
of NC from noncontrolling interest
|
(2,054 | ) | - | |||||
Net income(loss) attributable to
the noncontrolling interest in subsidiaries
|
(1,778 | ) | 652 | |||||
Noncontrolling
interest (previously minority interest) in subsidiaries,
ending balance
|
$ | 5,945 | $ | 3,471 |
NOTE 5 –
Inventories
|
June 30,
2009
|
December 31, 2008
|
|||||||
Inventories
consisted of the following:
|
||||||||
DirecTV
– serialized
|
$ | 6,222 | $ | 813 | ||||
DirecTV
– nonserialized
|
5,930 | 670 | ||||||
Other
|
2,721 | 420 | ||||||
Total
|
$ | 14,873 | $ | 1,903 |
NOTE 6 – Securities Available for
Sale
|
June 30,
2009
|
December 31, 2008
|
|||||||
Beginning
balance
|
$ | 46 | $ | - | ||||
Initial
investment
|
- | 122 | ||||||
Current
period unrealized loss
|
(8 | ) | (76 | ) | ||||
Ending
balance
|
$ | 38 | $ | 46 |
Cost
|
Unrealized
Gain(Loss)
|
Fair
Value at
Period End
|
||||||||||
June
30, 2009
|
$ | - | $ | 38 | $ | 38 | ||||||
December
31, 2008
|
$ | - | $ | 46 | $ | 46 |
NOTE 7 – Notes
Payable
|
NOTE 8 – Accrued
Liabilities
|
June 30,
2009
|
December 31, 2008
|
|||||||
Payroll
and related taxes
|
$ | 8,442 | $ | 1,354 | ||||
Accrued
legal settlements and contingencies
|
4,920 | 960 | ||||||
Accrued
preferred stock dividends
|
633 | 622 | ||||||
Accrued
income taxes
|
73 | 499 | ||||||
Other
|
8,624 | 1,000 | ||||||
Total
Accrued Liabilities
|
$ | 22,692 | $ | 4,435 |
NOTE 9 - Business
Segments
|
MBCorp
|
MDU
|
|
HSP
|
Total
|
||||||||||||
Three
months ended June 30, 2009:
|
||||||||||||||||
Revenues
|
$ | - | $ | 6,705 | $ | 60,691 | $ | 67,396 | ||||||||
Loss
from operations
|
(1,044 | ) | (125 | ) | (6,541 | ) | (7,710 | ) | ||||||||
Identifiable
assets
|
3,837 | 16,748 | 94,580 | 115,165 | ||||||||||||
Depreciation
and amortization
|
95 | 994 | 1,614 | 2,703 | ||||||||||||
Capital
expenditures
|
65 | 468 | 20 | 553 |
MBCorp
|
MDU
|
HSP
|
|
Total
|
||||||||||||
Three
months ended June 30, 2008:
|
||||||||||||||||
Revenues
|
$ | - | $ | 4,201 | $ | 6,605 | $ | 10,806 | ||||||||
Income
(loss) from operations
|
(915 | ) | 651 | 1,229 | 965 | |||||||||||
Identifiable
assets
|
3,988 | 7,353 | 11,627 | 22,968 | ||||||||||||
Depreciation
and amortization
|
279 | 592 | 8 | 879 | ||||||||||||
Capital
expenditures
|
1 | 23 | - | 24 | ||||||||||||
MBCorp
|
MDU
|
HSP
|
Total
|
|||||||||||||
Six
months ended June 30, 2009:
|
||||||||||||||||
Revenues
|
$ | - | $ | 12,030 | $ | 117,524 | $ | 129,554 | ||||||||
Loss
from operations
|
(2,021 | ) | (382 | ) | (7,490 | ) | (9,893 | ) | ||||||||
Identifiable
assets
|
3,837 | 16,748 | 94,580 | 115,165 | ||||||||||||
Depreciation
and amortization
|
178 | 2,027 | 3,783 | 5,988 | ||||||||||||
Capital
expenditures
|
146 | 1,260 | 20 | 1,426 |
MBCorp
|
MDU
|
HSP
|
Total
|
|||||||||||||
Six
months ended June 30, 2008:
|
||||||||||||||||
Revenues
|
$ | - | $ | 7,935 | $ | 8,585 | $ | 16,520 | ||||||||
Income
(loss) from operations
|
(1,743 | ) | 662 | 1,289 | 208 | |||||||||||
Identifiable
assets
|
3,988 | 7,353 | 11,627 | 22,968 | ||||||||||||
Depreciation
and amortization
|
416 | 1,190 | 11 | 1,617 | ||||||||||||
Capital
expenditures
|
22 | 44 | - | 66 |
NOTE 10 – Commitments and
Contingencies
|
NOTE 11 – Income
Taxes
|
NOTE 12 – Related Party
Transactions
|
NOTE 13 – Subsequent
Events
|
1.
|
The
operating entities are potentially accretive to our business model as they
have the:
|
a.
|
Same
line of business (DirecTV)
|
b.
|
Ability
to leverage systems and management
|
c.
|
Ability
to leverage core competencies in support center, software, and
engineering
|
d.
|
Ability
to expand geographic presence with ample technician
capacity
|
e.
|
Size,
scale, and scope of combined business enterprise more in line with growth
necessary to support public entity
|
f.
|
Potential
for accretive positive cash flow and capacity for net
income.
|
2.
|
Also,
new business opportunities may be integrated into an existing installation
process which touches over 5,000 homes per day. Multiband Enterprise
Manager software application is capable of modification to support
“bundled billing” attribute resulting from new sales
opportunity.
|
3.
|
Furthermore,
the transaction produced a strong barrier to entry to other potential
competitors which creates potential for longevity and
exclusivity.
|
4.
|
Other
reasons for the acquisition
included:
|
a.
|
Strong financial performance by DirecTV which provides security and continued growth potential for Multiband. |
b.
|
Strong DirecTV balance sheet and liquidity which provides comfort for continued, successful operations. |
c.
|
Multiband’s public company reporting status provides an excellent platform to support and motivate new human resource asset. |
d.
|
Multiband’s management is, we believe, capable of “rightsizing” operating expense structure of DTHC operating entities to provide increased cash flow and earning potential over a short period of time; and |
e.
|
Opportunity for significant shareholder appreciation when comparing industry valuation metrics to pre-existing Multiband market values. |
DOLLAR
AMOUNTS AS A
PERCENTAGE
OF REVENUES
|
DOLLAR
AMOUNTS AS A
PERCENTAGE
OF REVENUES
|
|||
THREE
MONTHS ENDED
|
SIX
MONTHS ENDED
|
|||
June 30, 2009
(unaudited)
|
June 30, 2008
(unaudited)
|
June 30, 2009
(unaudited)
|
June 30, 2008
(unaudited)
|
|
REVENUES
|
100%
|
100%
|
100%
|
100%
|
COST
OF PRODUCTS & SERVICES (Exclusive of depreciation and amortization
shown below)
|
84.4%
|
59.2%
|
80.4%
|
61.8%
|
SELLING,
GENERAL & ADMINISTRATIVE
|
23.0%
|
23.7%
|
22.6%
|
26.7%
|
DEPRECIATION
& AMORTIZATION
|
4.0%
|
8.1%
|
4.6%
|
9.8%
|
IMPAIRMENT
OF ASSETS
|
-
|
0.1%
|
-%
|
0.4%
|
INCOME
(LOSS) FROM OPERATIONS
|
-11.4%
|
8.9%
|
-7.6%
|
1.3%
|
INTEREST
EXPENSE & OTHER, NET
|
-1.2%
|
-0.7%
|
-1.1%
|
-0.9%
|
INCOME
(LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN
SUBSIDIARIES
|
-12.6%
|
8.2%
|
-8.7%
|
0.4%
|
PROVISION
FOR INCOME TAXES
|
.2%
|
4.0%
|
.2%
|
2.8%
|
NET
INCOME (LOSS)
|
-12.8%
|
4.2%
|
-8.9%
|
-2.4%
|
LESS:
NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST IN
SUBSIDIARIES
|
-2.2%
|
3.7%
|
-1.4%
|
2.5%
|
NET
LOSS ATTRIBUTABLE TO MULTIBAND CORPORATION AND
SUBSIDIARIES
|
-10.6%
|
0.5%
|
-7.5%
|
-4.9%
|
·
|
Additional
“train the trainer” classes have been completed by staff increasing the
number of certified trainers for the handheld
devices.
|
·
|
Ongoing
and repeated training classes have been held for all technicians and their
supervisors on the use of handheld
devices.
|
·
|
Technician
job aids have been developed and distributed to all handheld technicians
with instructions on proper handheld
usage.
|
·
|
Reporting
is now being generated at the technician level which indicates any
potential work order errors. This tool is being used to up-train
technicians and to make the necessary changes to the work order to ensure
the correct equipment is consumed.
|
·
|
A
technician manifest has been developed and deployed. The
technician’s truck level inventory is checked weekly for
accuracy.
|
·
|
A
warehouse manifest has been developed and deployed. Warehouse
inventory is counted weekly and checked for
accuracy.
|
·
|
The
documentation of all processes in the inventory cycle is being developed
with proper controls to ensure all personnel involved are trained and to
enable them to manage their part of the cycle in a consistent
manner.
|
1.
|
Initiate
and grow its Home Service Provider (HSP) business by eliminating
competitive HSP providers from certain of its core
markets
|
2.
|
Improve
gross margin percentages by cycling technicians from training and placing
them in a revenue generating role and by mitigating work order breakage
expense.
|
3.
|
Reduce
operating expenses by reducing training costs through decreased technician
turnover, managing professional fees and other general and administrative
expenses.
|
4.
|
Evaluate
and reduce excess inventory including such factors as anticipated usage,
inventory turnover, inventory levels and product demand
levels.
|
5.
|
Obtain
additional debt financing.
|
6.
|
Expand
call center support with sales of call center services to both existing
and future system operators and to buyers of the Company’s video
subscribers.
|
7.
|
Solicit
additional equity investment in the Company by issuing either preferred or
common stock.
|
·
|
installation
and service of DirecTV video programming for residents of single family
homes
|
·
|
installation
of home security systems and internet
services
|
·
|
from
voice, video and data communications products which are sold and
installed
|
·
|
direct
billing to user charges to multiple dwelling units, through the activation
of, enhancement of, and residual fees on video programming services
provided to residents of multiple dwelling
units
|
Total
|
1
Year or
Less
|
2-3
Years
|
Over
3
Years
|
|||||||||||||
Operating
leases – buildings
|
$
|
20,529
|
$
|
7,519
|
$
|
10,041
|
$
|
2,969
|
||||||||
Operating
leases – vehicles
|
19,241
|
7,036
|
9,636
|
2,569
|
||||||||||||
Long-term
debt
|
43,541
|
2,787
|
5,573
|
35,181
|
||||||||||||
Totals
|
$
|
83,311
|
$
|
17,342
|
$
|
25,250
|
$
|
40,719
|
|
(a)
|
Exhibits
|
31.1
Certification
of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 of the
Exchange Act.
|
||
31.2
Certification
of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 of the
Exchange Act.
|
||
32.1
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section
1350.
|
||
32.2
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section
1350.
|
MULTIBAND
CORPORATION
Registrant
|
||
Date: August
13, 2009
|
By:
|
|
/s/
James L. Mandel
Chief
Executive Officer
|
||
Date: August
13, 2009
|
By:
|
|
/s/
Steven M. Bell
Chief
Financial Officer
(Principal
Financial and Accounting
Officer)
|