(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
|
FOR
THE PERIOD ENDING SEPTEMBER 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
|
Nine
Months Ended
|
|||||||||||||||
September
30, 2009 (unaudited)
|
September
30, 2008 (unaudited)
|
September
30, 2009 (unaudited)
|
September
30, 2008 (unaudited)
|
|||||||||||||
REVENUES
|
$ | 71,421 | $ | 12,341 | $ | 200,975 | $ | 28,861 | ||||||||
COSTS
AND EXPENSES
|
||||||||||||||||
Cost
of products and services (exclusive of depreciation and amortization shown
separately below)
|
54,645 | 8,556 | 158,855 | 18,770 | ||||||||||||
Selling,
general and administrative
|
13,774 | 2,758 | 43,023 | 7,173 | ||||||||||||
Depreciation
and amortization
|
2,414 | 846 | 8,402 | 2,463 | ||||||||||||
Impairment
of assets
|
- | - | - | 66 | ||||||||||||
Total
costs and expenses
|
70,833 | 12,160 | 210,280 | 28,472 | ||||||||||||
INCOME
(LOSS) FROM OPERATIONS
|
588 | 181 | (9,305 | ) | 389 | |||||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Interest
expense
|
(1,026 | ) | (301 | ) | (2,771 | ) | (514 | ) | ||||||||
Interest
income
|
9 | 13 | 19 | 32 | ||||||||||||
Management
consulting income
|
- | 1,447 | - | 1,447 | ||||||||||||
Other
income(expense)
|
76 | (5 | ) | 424 | 48 | |||||||||||
Total
other income (expense)
|
(941 | ) | 1,154 | (2,328 | ) | 1,013 | ||||||||||
NET
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN
SUBSIDIARIES
|
(353 | ) | 1,335 | (11,633 | ) | 1,402 | ||||||||||
PROVISION
FOR INCOME TAXES
|
372 | 286 | 574 | 749 | ||||||||||||
NET
INCOME (LOSS)
|
(725 | ) | 1,049 | (12,207 | ) | 653 | ||||||||||
LESS:
NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST IN
SUBSIDIARIES
|
(266 | ) | 138 | (2,044 | ) | 550 | ||||||||||
NET
INCOME (LOSS) ATTRIBUTABLE TO MULTIBAND CORPORATION AND
SUBSIDIARIES
|
(459 | ) | 911 | (10,163 | ) | 103 | ||||||||||
Preferred
stock dividends
|
70 | 64 | 214 | 4,049 | ||||||||||||
INCOME
(LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (529 | ) | $ | 847 | $ | (10,377 | ) | $ | (3,946 | ) | |||||
INCOME
(LOSS) PER COMMON SHARE – BASIC:
|
||||||||||||||||
INCOME
(LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS
|
$ | (0.05 | ) | $ | 0.09 | $ | (1.08 | ) | $ | (0.43 | ) | |||||
INCOME
(LOSS) PER COMMON SHARE – DILUTED:
|
||||||||||||||||
INCOME
(LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS
|
$ | (0.05 | ) | $ | 0.09 | $ | (1.08 | ) | $ | (0.43 | ) | |||||
Weighted
average common shares outstanding – basic
|
9,659 | 9,562 | 9,653 | 9,184 | ||||||||||||
Weighted
average common shares outstanding – diluted
|
9,659 | 9,797 | 9,653 | 9,184 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30, 2009 (unaudited)
|
September
30, 2008 (unaudited)
|
September
30, 2009 (unaudited)
|
September
30, 2008 (unaudited)
|
|||||||||||||
NET
INCOME (LOSS)
|
$ | (459 | ) | $ | 911 | $ | (10,163 | ) | $ | 103 | ||||||
OTHER
COMPREHENSIVE INCOME (LOSS), NET OF TAX:
|
||||||||||||||||
Unrealized
gains (losses) on securities:
|
||||||||||||||||
Unrealized
holding gains (losses) arising during period
|
(29 | ) | - | (37 | ) | 152 | ||||||||||
COMPREHENSIVE
INCOME (LOSS)
|
$ | (488 | ) | $ | 911 | $ | (10,200 | ) | $ | 255 |
September
30, 2009 (unaudited)
|
December
31, 2008 (audited)
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$
|
4,253
|
$
|
4,346
|
||||
Securities
available for sale
|
9
|
46
|
||||||
Accounts
receivable, net
|
15,170
|
3,437
|
||||||
Other
receivable – related party
|
518
|
7,666
|
||||||
Inventories
|
10,387
|
1,903
|
||||||
Prepaid
expenses and other
|
3,731
|
1,273
|
||||||
Current
portion of notes receivable
|
61
|
61
|
||||||
Total
Current Assets
|
34,129
|
18,732
|
||||||
PROPERTY
AND EQUIPMENT, NET
|
8,438
|
2,033
|
||||||
OTHER
ASSETS
|
||||||||
Goodwill
|
35,489
|
1,095
|
||||||
Intangible
assets, net
|
24,446
|
3,668
|
||||||
Other
receivable – related party – long term
|
3,169
|
-
|
||||||
Notes
receivable – long-term, net of current portion
|
32
|
39
|
||||||
Other
assets
|
2,197
|
476
|
||||||
Total
Other Assets
|
65,333
|
5,278
|
||||||
TOTAL
ASSETS
|
$
|
107,900
|
$
|
26,043
|
September
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
|
50 | - | ||||||
Short
term debt
|
202 | - | ||||||
Short-term
debt – related party
|
1,400 | 100 | ||||||
Current
portion of long-term debt
|
456 | 1,509 | ||||||
Current
portion of capital lease obligations
|
523 | 311 | ||||||
Accounts
payable
|
34,610 | 8,274 | ||||||
Accrued
liabilities
|
24,427 | 4,435 | ||||||
Deferred
service obligations and revenue
|
3,246 | 1,488 | ||||||
Total
Current Liabilities
|
64,914 | 16,267 | ||||||
LONG-TERM
LIABILITIES
|
||||||||
Long-term
debt, net of current portion and original issue discount
|
4,705 | 46 | ||||||
Long-term
debt, net of current portion-related party
|
33,715 | 300 | ||||||
Capital
lease obligations, net of current portion
|
539 | 317 | ||||||
Total
Liabilities
|
103,873 | 16,930 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
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 (1,670 and 2,570 shares issued and outstanding, $17,535 and
$26,985 liquidation preference)
|
17 | 26 | ||||||
10%
Class C (113,480 and 114,080 shares issued and outstanding, $1,134,800 and
$1,140,800 liquidation preference)
|
1,469 | 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)
|
- | - | ||||||
Class
E, no par value, (200,000 and 0 shares issued and outstanding, $2,000,000
and $0 liquidation preference)
|
2,000 | - | ||||||
Common
stock, no par value (9,659,797 and 9,642,374 shares issued and
outstanding)
|
37,856 | 37,687 | ||||||
Stock
subscriptions receivable
|
(40 | ) | (84 | ) | ||||
Options
and warrants
|
46,573 | 46,038 | ||||||
Accumulated
other comprehensive income – unrealized gain on securities available for
sale
|
9 | 46 | ||||||
Accumulated
deficit
|
(91,297 | ) | (81,314 | ) | ||||
Total
Stockholders' Equity (Deficit)
|
(1,652 | ) | 5,642 | |||||
Noncontrolling
interest in subsidiaries
|
5,679 | 3,471 | ||||||
Total
Equity
|
4,027 | 9,113 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 107,900 | $ | 26,043 |
NINE
MONTHS ENDED SEPTEMBER 30,
|
||||||||
2009
|
2008
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
loss
|
$
|
(12,207
|
)
|
$
|
653
|
|||
Adjustments
to reconcile net loss attributable to Multiband Corporation and
subsidiaries to net cash provided from operating
activities:
|
||||||||
Depreciation
and amortization
|
8,402
|
2,463
|
||||||
Amortization
of imputed interest discount
|
35
|
219
|
||||||
Amortization
of original issue discount related to warrants issued with long term
debt
|
35
|
-
|
||||||
Amortization
of debt issuance costs
|
15
|
-
|
||||||
Loss
(gain) on sale of property and equipment and intangible
assets
|
(35
|
)
|
52
|
|||||
Gain
on debt extinguishment
|
-
|
(30
|
)
|
|||||
Impairment
of goodwill, intangibles and property and equipment
|
-
|
65
|
||||||
Change
in allowance for doubtful accounts on accounts receivable
|
51
|
(15
|
)
|
|||||
Change
in reserve for stock subscriptions and interest receivable
|
43
|
8
|
||||||
Expense
related to repricing of warrants
|
30
|
-
|
||||||
Stock
based compensation expense for future services
|
-
|
153
|
||||||
Stock
based compensation expense for services
|
133
|
18
|
||||||
Compensation
expense of restricted stock award
|
-
|
24
|
||||||
Management
consulting income from DirecTECH
|
-
|
(1,447
|
)
|
|||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(7,104
|
)
|
887
|
|||||
Inventories
|
5,647
|
221
|
||||||
Prepaid
expenses and other
|
(1,095)
|
(52
|
)
|
|||||
Other
assets
|
(21
|
)
|
120
|
|||||
Accounts
payable and accrued liabilities
|
1,463
|
(229
|
)
|
|||||
Deferred
service obligations and revenue
|
1,671
|
781
|
||||||
Net
cash flows from (used by) operating activities
|
(2,937
|
)
|
3,891
|
|||||
INVESTING
ACTIVITIES
|
||||||||
Purchases
of property and equipment
|
(2,166
|
)
|
(112
|
)
|
||||
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
|
(175
|
)
|
-
|
|||||
Proceeds
from sale of property and equipment and intangible assets
|
-
|
5
|
||||||
Collections
on notes receivable
|
37
|
5
|
||||||
Net
cash flows from (used in) investing activities
|
(2,673
|
)
|
6,656
|
|||||
FINANCING
ACTIVITIES
|
||||||||
Payments
on short-term debt
|
(25
|
)
|
-
|
|||||
Payments
on long-term debt
|
(2,657
|
)
|
(84
|
)
|
||||
Payments
on capital lease obligations
|
(335
|
)
|
(152
|
)
|
||||
Payments
on note payable – related party
|
(1,400
|
)
|
-
|
|||||
Payments
for debt issuance costs
|
(144
|
)
|
-
|
|||||
Net
advances on line of credit
|
5
|
-
|
||||||
Payment
on mandatory redeemable preferred stock
|
(150
|
)
|
(58
|
)
|
||||
Payments
for stock issuance costs
|
-
|
(25
|
)
|
|||||
Payments
received on stock subscriptions receivable
|
-
|
3
|
||||||
Proceeds
from issuance of preferred stock
|
500
|
-
|
||||||
Proceeds
from note payable – related party
|
3,700
|
-
|
||||||
Proceeds
from issuance of long-term debt
|
6,100
|
100
|
||||||
Redemption
of preferred stock
|
(18
|
)
|
(102
|
)
|
||||
Preferred
stock dividends
|
(59
|
)
|
(81
|
)
|
||||
Net
cash flows from (used in) financing activities
|
5,517
|
(399
|
)
|
|||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(93
|
)
|
10,148
|
|||||
CASH
AND CASH EQUIVALENTS - Beginning of Period
|
4,346
|
944
|
||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
4,253
|
$
|
11,092
|
NINE
MONTHS ENDED SEPTEMBER 30,
|
||||||||
2009
|
2008
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Cash
paid for interest, net of amortization of original issue discount and
interest discount
|
$ | 1,872 | $ | 199 | ||||
Cash
paid for federal and state income taxes
|
611 | 682 | ||||||
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
|
166 | 175 | ||||||
Intrinsic
value of preferred dividends
|
3 | 84 | ||||||
Purchase
of property and equipment via increase of capital lease
obligations
|
562 | 47 | ||||||
Warrants
issued for long-term notes payable
|
372 | - | ||||||
Debt
reduced by reduction in other receivable from DirecTECH
|
1,447 | |||||||
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
|
- | |||||||
Purchase
of 29% of outstanding stock of NC (formerly MMT) with issuance of short
and long-term notes payable
|
1,660 | - | ||||||
Purchase
of 80% of outstanding stock of DirecTECH operating entities with payment
to escrow in 2008
|
500 | - | ||||||
Reduction
of notes payable with issuance notes payable in connection with
acquisition
|
300 | - | ||||||
Reduction
of note payable – related party with exchange for preferred
stock
|
1,500 | - | ||||||
Reduction
of accounts payable with proceeds from sale of intangible asset and
equipment
|
446 | - | ||||||
Reduction
in accounts payable and accrued expenses with issuance of long-term
debt
|
394 | - | ||||||
Common
stock issued for services to be rendered
|
- | 158 |
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, insurance and other
general and administrative expenses.
|
4.
|
Evaluate
factors such as anticipated usage and inventory turnover to maintain
optimal inventory 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 either issuing preferred or
common stock.
|
|
Revenue
Recognition
|
·
|
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 of 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 | 34,082 | 34,394 | ||||||||||||
Balance,
September 30, 2009
|
$ | - | $ | 362 | $ | 35,127 | $ | 35,489 |
September 30, 2009
|
December 31, 2008
|
|||||||||||||||
Gross Carrying
|
Accumulated
|
Gross Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Intangible
assets subject to amortization
|
||||||||||||||||
Right
of entry contracts
|
$ | 2,583 | $ | 1,087 | $ | 801 | $ | 526 | ||||||||
Contracts
with DirecTV
|
36,902 | 13,952 | 11,502 | 8,060 | ||||||||||||
Customer
contracts
|
102 | 102 | 102 | 86 | ||||||||||||
Total
|
39,587 | 15,141 | 12,405 | 8,672 | ||||||||||||
Impairment
of intangibles
|
- | - | - | 65 | ||||||||||||
Total
including impairment
|
$ | 39,587 | $ | 15,141 | $ | 12,405 | $ | 8,737 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September 30, 2009
|
September 30, 2008
|
September 30, 2009
|
September 30, 2008
|
|||||||||||||
Risk-free
interest rate
|
*
|
3.15%
|
1.43%
|
3.15%
|
||||||||||||
Expected
life of options granted
|
*
|
6.5
Years
|
5.0
Years
|
6.5
Years
|
||||||||||||
Expected
volatility range
|
*
|
95%
|
95%
|
94%
|
||||||||||||
Expected
dividend yield
|
*
|
0%
|
0%
|
0%
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September 30, 2009
|
September 30, 2008
|
September 30, 2009
|
September 30, 2008
|
|||||||||||||
Numerator:
Income (loss) attributable to common stockholders
|
$ | (529 | ) | $ | 847 | $ | (10,377 | ) | $ | (3,946 | ) | |||||
Denominator:
|
||||||||||||||||
Weighted-average
shares outstanding
|
9,659 | 9,562 | 9,653 | 9,184 | ||||||||||||
Effect
of dilutive securities
|
235 | - | - | |||||||||||||
Denominator
for diluted earnings per share
|
9,659 | 9,797 | 9,653 | 9,184 | ||||||||||||
Basic
earnings (loss) per share
|
$ | (0.05 | ) | $ | 0.09 | $ | (1.08 | ) | $ | (0.43 | ) | |||||
Diluted
earnings (loss) per share
|
$ | (0.05 | ) | $ | 0.09 | $ | (1.08 | ) | $ | (0.43 | ) | |||||
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
|
$ | 31,348 | ||
Intangible
assets
|
27,634 | |||
Goodwill
|
34,193 | |||
Liabilities
|
(48,129 | ) | ||
Noncontrolling
interest
|
(6,306 | ) | ||
$ | 38,740 |
2008
|
||||||||
Consolidated
as
reported
|
2008
Pro
Forma
|
|||||||
Three
months ended September 30, 2008
|
||||||||
Revenues
|
$
|
12,341
|
$
|
60,018
|
||||
Income(loss) from
operations
|
181
|
1,566
|
||||||
Net
income attributable to Multiband Corp and subsidiaries
|
911
|
(45
|
)
|
|||||
Preferred
stock dividends
|
64
|
64
|
||||||
Income
attributable to common shareholders
|
$
|
847
|
$
|
(109
|
)
|
|||
Income
(loss) attributable to common shareholders per common share –
basic
|
$
|
0.09
|
$
|
(0.01
|
)
|
|||
Income
(loss) attributable to common shareholders per common share –
diluted
|
$
|
0.09
|
$
|
(0.01
|
)
|
|||
Weighted
average shares outstanding – basic
|
9,562
|
9,562
|
||||||
Weighted
average shares outstanding – diluted
|
9,797
|
9,562
|
||||||
Nine
months ended September 30, 2008
|
||||||||
Revenues
|
$
|
28,861
|
$
|
171,759
|
||||
Income
from operations
|
389
|
(3,303
|
)
|
|||||
Net
income attributable to Multiband Corp and subsidiaries
|
103
|
(6,338
|
)
|
|||||
Preferred
stock dividends
|
4,049
|
4,049
|
||||||
Loss
attributable to common shareholders
|
$
|
(3,946
|
)
|
$
|
(10,387
|
)
|
||
Loss
attributable to common shareholders per common share –
basic and diluted
|
$
|
(0.43
|
)
|
$
|
(1.11
|
)
|
||
Weighted
average shares outstanding – basic and diluted
|
9,184
|
9,353
|
NOTE
4 – Noncontrolling Interest
|
September 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 29% NC from noncontrolling interest
|
(2,054 | ) | - | |||||
Net
income(loss) attributable to the noncontrolling interest in
subsidiaries
|
(2,044 | ) | 652 | |||||
Noncontrolling
interest (previously minority interest) in subsidiaries, ending
balance
|
$ | 5,679 | $ | 3,471 |
NOTE
5 – Inventories
|
September 30, 2009
|
December 31, 2008
|
|||||||
Inventories
consisted of the following:
|
||||||||
DirecTV
– serialized
|
$ | 3,956 | $ | 813 | ||||
DirecTV
– nonserialized
|
4,309 | 670 | ||||||
Other
|
2,122 | 420 | ||||||
Total
|
$ | 10,387 | $ | 1,903 |
NOTE
6 – Securities Available for Sale
|
September 30, 2009
|
December 31, 2008
|
|||||||
Beginning
balance
|
$ | 46 | $ | - | ||||
Initial
investment
|
- | 122 | ||||||
Current
period unrealized loss
|
(37 | ) | (76 | ) | ||||
Ending
balance
|
$ | 9 | $ | 46 |
Cost
|
Unrealized
Gain(Loss)
|
Fair
Value at
Period End
|
||||||||||
September
30, 2009
|
$ | - | $ | 9 | $ | 9 | ||||||
December
31, 2008
|
$ | - | $ | 46 | $ | 46 |
NOTE
7 – Notes Payable
|
NOTE
8 – Accrued Liabilities
|
September 30, 2009
|
December 31, 2008
|
|||||||
Payroll
and related taxes
|
$ | 7,851 | $ | 1,354 | ||||
Accrued
legal settlements and contingencies
|
6,420 | 960 | ||||||
Accrued
preferred stock dividends
|
614 | 622 | ||||||
Accrued
contract labor
|
3,250 | - | ||||||
Accrued
income taxes
|
445 | 499 | ||||||
Other
|
5,847 | 1,000 | ||||||
Total
Accrued Liabilities
|
$ | 24,427 | $ | 4,435 |
NOTE
9 - Business Segments
|
MBCorp
|
MDU
|
HSP
|
Total
|
||||||||||||||
Three
months ended September 30, 2009:
|
|||||||||||||||||
Revenues
|
$ | - | $ | 6,595 | $ | 64,826 | $ | 71,421 | |||||||||
Income
(loss) from operations
|
(976 | ) | 36 | 1,528 | 588 | ||||||||||||
Identifiable
assets
|
2,744 | 12,868 | 92,288 | 107,900 | |||||||||||||
Depreciation
and amortization
|
99 | 1,022 | 1,293 | 2,414 | |||||||||||||
Capital
expenditures
|
69 | 636 | 35 | 740 |
MBCorp
|
MDU
|
HSP
|
Total
|
||||||||||||||
Three
months ended September 30, 2008:
|
|||||||||||||||||
Revenues
|
$ | - | $ | 4,948 | $ | 7,393 | $ | 12,341 | |||||||||
Income
(loss) from operations
|
(547 | ) | 164 | 564 | 181 | ||||||||||||
Identifiable
assets
|
4,675 | 6,590 | 12,877 | 24,142 | |||||||||||||
Depreciation
and amortization
|
277 | 560 | 9 | 846 | |||||||||||||
Capital
expenditures
|
21 | 14 | 11 | 46 |
MBCorp
|
MDU
|
HSP
|
Total
|
||||||||||||||
Nine
months ended September 30, 2009:
|
|||||||||||||||||
Revenues
|
$ | - | $ | 18,625 | $ | 182,350 | $ | 200,975 | |||||||||
Loss
from operations
|
(2,997 | ) | (346 | ) | (5,962 | ) | (9,305 | ) | |||||||||
Identifiable
assets
|
2,744 | 12,868 | 92,288 | 107,900 | |||||||||||||
Depreciation
and amortization
|
278 | 3,049 | 5,075 | 8,402 | |||||||||||||
Capital
expenditures
|
215 | 1,896 | 55 | 2,166 |
MBCorp
|
MDU
|
HSP
|
Total
|
||||||||||||||
Nine
months ended September 30, 2008:
|
|||||||||||||||||
Revenues
|
$ | - | $ | 12,884 | $ | 15,977 | $ | 28,861 | |||||||||
Income
(loss) from operations
|
(2,290 | ) | 826 | 1,853 | 389 | ||||||||||||
Identifiable
assets
|
4,675 | 6,590 | 12,877 | 24,142 | |||||||||||||
Depreciation
and amortization
|
693 | 1,750 | 20 | 2,463 | |||||||||||||
Capital
expenditures
|
43 | 58 | 11 | 112 |
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:
|
|
SELECTED
CONSOLIDATED FINANCIAL DATA
|
DOLLAR
AMOUNTS AS A PERCENTAGE OF REVENUES
|
DOLLAR
AMOUNTS AS A PERCENTAGE OF REVENUES
|
|||
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||
September 30, 2009
(unaudited)
|
September 30, 2008
(unaudited)
|
September 30, 2009
(unaudited)
|
September 30, 2008
(unaudited)
|
|
REVENUES
|
100%
|
100%
|
100%
|
100%
|
COST
OF PRODUCTS & SERVICES (Exclusive of depreciation and amortization
shown below)
|
76.5%
|
69.3%
|
79.0%
|
65.0%
|
SELLING,
GENERAL & ADMINISTRATIVE
|
19.3%
|
22.3%
|
21.4%
|
24.9%
|
DEPRECIATION
& AMORTIZATION
|
3.4%
|
6.9%
|
4.2%
|
8.5%
|
IMPAIRMENT
OF ASSETS
|
-
|
-
|
-
|
0.2%
|
INCOME
(LOSS) FROM OPERATIONS
|
.8%
|
1.5%
|
-4.6%
|
1.4%
|
INTEREST
EXPENSE & OTHER, NET
|
-1.3%
|
9.3%
|
-1.1%
|
3.5%
|
INCOME
(LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN
SUBSIDIARIES
|
-.5%
|
10.8%
|
-5.8%
|
4.9%
|
PROVISION
FOR INCOME TAXES
|
.5%
|
2.3%
|
.3%
|
2.6%
|
NET
INCOME (LOSS)
|
-1.0%
|
8.5%
|
-6.1%
|
2.3%
|
LESS:
NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST IN
SUBSIDIARIES
|
-.4%
|
1.1%
|
-1.0%
|
1.9%
|
NET
INCOME (LOSS) ATTRIBUTABLE TO MULTIBAND CORPORATION AND
SUBSIDIARIES
|
-.6%
|
7.4%
|
-5.1%
|
.4%
|
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, insurance and other general and
administrative expenses.
|
4.
|
Evaluate
factors such as anticipated usage and inventory turnover to maintain
optimal inventory 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 of 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
|
$
|
4,805
|
$
|
1,743
|
$
|
2,311
|
$
|
751
|
||||||||
Operating
leases – vehicles
|
16,928
|
6,615
|
8,306
|
2,007
|
||||||||||||
Short-term
debt, related party
|
1,421
|
1,421
|
-
|
-
|
||||||||||||
Long-term
debt
|
7,934
|
1,372
|
6,509
|
53
|
||||||||||||
Long-term debt, related party | 42,844 | 3,566 | 5,563 | 33,715 | ||||||||||||
Capital
lease obligations
|
983
|
473
|
505
|
5
|
||||||||||||
Totals
|
$
|
74,915
|
$
|
15,190
|
$
|
23,194
|
$
|
36,531
|
a)
|
An
annual meeting of Multiband shareholders was held on August 12, 2009.
There were present or present by proxy at the meeting 3,590,673 votes, the
number necessary to hold a quorum.
|
b)
|
The
meeting resulted in the following votes related to the following proxy
items:
|
1.
|
Election
of directors: All directors were re-elected for a term serving until the
next annual meeting with the votes in favor listed
below:
|
Director
|
Number of votes
|
|||
Bell
|
3,590,617 | |||
Bennett
|
3,590,633 | |||
Dodge
|
3,590,633 | |||
Harris
|
3,590,633 | |||
Mandel
|
3,590,617 | |||
Miller
|
3,590,633 |
2.
|
Ratify
the election of Baker Tilly Virchow Krause, LLP as independent registered
public accounting firm of the Company for fiscal year
2008.
|
Number of votes
|
||||
For
|
3,590,553 | |||
Against
|
0 | |||
Abstain
|
120 |
3.
|
The
approval of an amendment to Multiband’s 2000 Non-Employee Directors Stock
Compensation Plan (the Directors Plan) to increase the total number of
common stock shares reserved for awards to Non-Employee Directors under
the plan from 160,000 to 5,000,000.
|
Number of votes
|
||||
For
|
3,379,689 | |||
Against
|
210,736 | |||
Abstain
|
248 |
4.
|
The
approval of an amendment to Multiband’s 1999 Stock Compensation Plan (the
Employee Plan) to increase the total number of common shares reserved for
awards to employees under the plan from 860,000 to
15,000,000.
|
Number of votes
|
||||
For
|
3,383,351 | |||
Against
|
207,074 | |||
Abstain
|
248 |
5.
|
The
approval of an amendment to Multiband’s Articles of Incorporation to
increase the authorized number of Multiband common shares from 20 million
to 100 million.
|
Number of votes
|
||||
For
|
3,383,628 | |||
Against
|
206,747 | |||
Abstain
|
298 |
|
(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: November
16, 2009
|
By:
|
/s/
James L. Mandel
Chief
Executive Officer
|
Date: November
16, 2009
|
By:
|
/s/
Steven M. Bell
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|