(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT
OF 1934
|
FOR
THE PERIOD ENDING MARCH 31, 2008
|
|
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
|
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer x(do not check if a smaller reporting company) | Smaller reporting company o |
Three
Months Ended
|
|||||||
March
31, 2008
(unaudited)
|
March
31, 2007
(unaudited)
|
||||||
REVENUES
|
$
|
5,714,229
|
$
|
4,384,955
|
|||
COSTS
AND EXPENSES
|
|||||||
Cost
of products and services (exclusive of depreciation and amortization
shown
separately below)
|
3,820,198
|
2,178,046
|
|||||
Selling,
general and administrative
|
1,855,283
|
2,389,256
|
|||||
Depreciation
and amortization
|
737,707
|
1,049,698
|
|||||
Impairment
of assets
|
58,046
|
-
|
|||||
Total
costs and expenses
|
6,471,234
|
5,617,000
|
|||||
LOSS
FROM OPERATIONS
|
(757,005
|
)
|
(1,232,045
|
)
|
|||
OTHER
EXPENSE
|
|||||||
Interest
expense
|
(100,659
|
)
|
(153,407
|
)
|
|||
Other
income
|
40,183
|
23,057
|
|||||
Total
other expense
|
(60,476
|
)
|
(130,350
|
)
|
|||
LOSS
BEFORE INCOME TAXES AND MINORITY INTEREST IN
SUBSIDIARY
|
(817,481
|
)
|
(1,362,395
|
)
|
|||
PROVISION
FOR INCOME TAXES
|
28,500
|
-
|
|||||
MINORITY
INTEREST IN NET INCOME OF SUBSIDIARY
|
18,417
|
-
|
|||||
NET
LOSS
|
(864,398
|
)
|
(1,362,395
|
)
|
|||
Preferred
stock dividends
|
3,881,020
|
239,927
|
|||||
LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(4,745,418
|
)
|
$
|
(1,602,322
|
)
|
|
BASIC
AND DILUTED LOSS PER COMMON SHARE:
|
|||||||
NET
LOSS
|
$
|
(.56
|
)
|
$
|
(.23
|
)
|
|
LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(.56
|
)
|
$
|
(.23
|
)
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
|
8,497,734
|
7,087,561
|
Three
Months Ended
|
|||||||
March
31, 2008
(unaudited)
|
March
31, 2007
(unaudited)
|
||||||
NET
LOSS
|
$
|
(864,398
|
)
|
$
|
(1,362,395
|
)
|
OTHER
COMPREHENSIVE INCOME, NET OF TAX:
|
|||||||
Unrealized
gains on securities:
|
|||||||
Unrealized
holding gains arising during period
|
208,969
|
-
|
|||||
COMPREHENSIVE
LOSS
|
$
|
(655,429
|
)
|
$
|
(1,362,395
|
)
|
|
March
31, 2008
(unaudited)
|
December
31, 2007
(audited)
|
|||||
CURRENT
ASSETS
|
|
|
|||||
Cash
and cash equivalents
|
$
|
7,303,397
|
$
|
944,456
|
|||
Accounts
receivable, net
|
3,867,868
|
1,560,123
|
|||||
Securities
available for sale
|
208,969
|
-
|
|||||
Inventories
|
1,318,586
|
132,992
|
|||||
Prepaid
expenses and other
|
229,159
|
135,589
|
|||||
Current
portion of notes receivable
|
62,954
|
59,861
|
|||||
Total
Current Assets
|
12,990,933
|
2,833,021
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
1,683,423
|
1,769,261
|
|||||
OTHER
ASSETS
|
|||||||
Goodwill
|
116,757
|
16,757
|
|||||
Intangible
assets, net
|
6,598,691
|
4,072,076
|
|||||
Notes
receivable - long-term, net
|
41,921
|
-
|
|||||
Other
assets
|
604,064
|
202,314
|
|||||
Total
Other Assets
|
7,361,433
|
4,291,147
|
|||||
|
|||||||
TOTAL
ASSETS
|
$
|
22,035,789
|
$
|
8,893,429
|
LIABILITIES
AND STOCKHOLDERS'
EQUITY
|
CURRENT
LIABILITIES
|
|||||||
Mandatory
redeemable preferred stock, 20,526 and 22,026 Class F preferred
shares
|
$
|
205,256
|
$
|
220,256
|
|||
Current
portion of long-term debt
|
1,555,542
|
1,658,342
|
|||||
Current
portion of capital lease obligations
|
221,325
|
225,291
|
|||||
Accounts
payable
|
6,658,711
|
2,950,596
|
|||||
Accrued
liabilities
|
3,523,272
|
2,531,611
|
|||||
Customer
deposits
|
60,582
|
60,582
|
|||||
Deferred
service obligations and revenue
|
611,989
|
204,520
|
|||||
Total
Current Liabilities
|
12,836,677
|
7,851,198
|
|||||
LONG-TERM
LIABILITIES
|
|||||||
Long-term
debt, net
|
2,208,255
|
118,924
|
|||||
Capital
lease obligations, net of current portion
|
227,565
|
249,469
|
|||||
Total
Liabilities
|
15,272,497
|
8,219,591
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
|
|||||||
MINORITY
INTEREST
|
2,692,880
|
-
|
|||||
|
|||||||
STOCKHOLDERS'
EQUITY
|
|||||||
Cumulative
convertible preferred stock, no par value:
|
|||||||
8%
Class A (24,728 shares issued and outstanding, $259,644 liquidation
preference)
|
371,708
|
371,708
|
|||||
10%
Class B (3,470 and 3,770 shares issued and outstanding, $36,435 and
$39,585 liquidation preference)
|
34,700
|
37,700
|
|||||
10%
Class C (118,650 and 120,250 shares issued and outstanding, $1,186,500
and
$1,202,500 liquidation preference)
|
1,531,188
|
1,548,352
|
|||||
10%
Class F (150,000 shares issues and outstanding, $1,500,000 liquidation
preference)
|
1,500,000
|
1,500,000
|
|||||
8%
Class G (16,595 and 26,595 shares issued and outstanding, $165,950
and
$265,950 liquidation preference)
|
68,407
|
111,468
|
|||||
6%
Class H (2.0 shares issued and outstanding, $200,000 liquidation
preference)
|
-
|
-
|
|||||
Variable
rate % Class I (0 and 39,500 shares issued and outstanding, $0 and
$3,950,000 liquidation preference)
|
-
|
-
|
|||||
Common
stock, no par value (9,489,826 and 7,451,891 shares issued and
outstanding)
|
37,317,676
|
29,574,673
|
|||||
Stock
subscriptions receivable
|
(129,221
|
)
|
(170,888
|
)
|
|||
Options
and warrants
|
46,083,542
|
45,871,964
|
|||||
Accumulated
comprehensive income - unrealized gain in securities
|
208,969
|
-
|
|||||
Accumulated
deficit
|
(82,916,557
|
)
|
(78,171,139
|
)
|
|||
Total
Stockholders' Equity
|
4,070,412
|
673,838
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
22,035,789
|
$
|
8,893,429
|
THREE
MONTHS ENDED MARCH 31,
|
|||||||
2008
|
2007
|
||||||
(unaudited)
|
(unaudited)
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
loss
|
$
|
(864,398
|
)
|
$
|
(1,362,395
|
)
|
|
Adjustments
to reconcile net loss to net cash flows from operating
activities
|
|||||||
Depreciation
and amortization
|
737,707
|
1,053,691
|
|||||
Minority
interest in net income of consolidated subsidiary
|
18,417
|
-
|
|||||
Impairment
of intangibles
|
58,046
|
-
|
|||||
Amortization
of original issue discount
|
-
|
8,294
|
|||||
Amortization
of imputed interest discount
|
9,656
|
-
|
|||||
Loss(gain)
on sale of property and equipment and intangible assets
|
-
|
(284,516
|
)
|
||||
Warrants
issued for services
|
-
|
900
|
|||||
Gain
on debt extinguishment
|
(29,965
|
)
|
-
|
||||
Stock
based compensation expense
|
211,578
|
233,748
|
|||||
Change
in allowance for doubtful accounts on accounts receivable
|
(15,000
|
)
|
-
|
||||
Change
in reserve for stock subscriptions and interest receivable
|
(20,053
|
)
|
15,000
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
293,771
|
342,086
|
|||||
Inventories
|
696,949
|
165,609
|
|||||
Prepaid
expenses and other
|
(84,528
|
)
|
55,565
|
||||
Other
assets
|
(20,676
|
)
|
(21,638
|
)
|
|||
Accounts
payable and accrued liabilities
|
(1,711,313
|
)
|
45,656
|
||||
Deferred
service obligations and revenue
|
407,469
|
(352,440
|
)
|
||||
Liabilities
of discontinued operations
|
-
|
(125,000
|
)
|
||||
Customer
deposits
|
-
|
(375
|
)
|
||||
Net
cash flows used by operating activities
|
(312,340
|
)
|
(225,815
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Purchases
of property and equipment
|
(42,047
|
)
|
(120,196
|
)
|
|||
Cash
acquired via purchase of MMT
|
4,043,942
|
-
|
|||||
Cash
collected on other receivables - related parties acquired via the
purchase
of MMT
|
2,815,488
|
-
|
|||||
Purchase
of US Installs
|
(101,000
|
)
|
-
|
||||
Proceeds
from sale of property and equipment and intangible assets
|
-
|
757,732
|
|||||
Net
cash flows from investing activities
|
6,716,383
|
637,536
|
|||||
FINANCING
ACTIVITIES
|
|||||||
Checks
issued in excess of cash in bank
|
-
|
(319,244
|
)
|
||||
Payments
on long-term debt
|
(10,144
|
)
|
(129,080
|
)
|
|||
Payments
on capital lease obligations
|
(63,134
|
)
|
(56,255
|
)
|
|||
Payments
on note payable to stockholder
|
-
|
(24,739
|
)
|
||||
Payments
on mandatory redeemable preferred stock
|
(15,000
|
)
|
(21,244
|
)
|
|||
Payments
received on stock subscriptions receivable
|
387
|
62
|
|||||
Proceeds
from issuance of long term debt
|
100,000
|
-
|
|||||
Redemption
of preferred stock
|
(19,000
|
)
|
(20,500
|
)
|
|||
Preferred
stock dividends
|
(38,211
|
)
|
(9,892
|
)
|
|||
Net
cash flows used by financing activities
|
(45,102
|
)
|
(580,892
|
)
|
|||
INCREASE(DECREASE)
IN CASH AND CASH EQUIVALENTS
|
6,358,941
|
(169,171
|
)
|
||||
CASH
AND CASH EQUIVALENTS
|
|||||||
Beginning
of period
|
944,456
|
1,020,975
|
|||||
End
of period
|
$
|
7,303,397
|
$
|
851,804
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|||||||
Cash
paid for interest, net of amortization of original issue
discount
|
$
|
67,183
|
$
|
135,509
|
|||
SUPPLEMENTAL
DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|||||||
Conversion
of Class I preferred stock into common stock
|
3,744,600
|
-
|
|||||
Conversion
of Class G preferred stock into common stock
|
100,000
|
-
|
|||||
Conversion
of accrued dividends into common stock
|
86,236
|
367,092
|
|||||
Intrinsic
value of preferred dividends
|
1,164
|
11,336
|
|||||
Purchase
of property and equipment via increase of capital lease obligations
|
12,500
|
-
|
|||||
Purchase
of US Installs via increase in accrued expenses
|
102,516
|
-
|
|||||
Acquisition
of securities available for sale upon expiration of contingent
rights
|
208,969
|
-
|
|||||
Reduction
of stock subscription receivable via cancellation of common
stock
|
61,333
|
-
|
|||||
Debt
and accrued interest paid with issuance of common stock
|
19,500
|
-
|
|||||
Purchase
of 51% of MMT via issuance of notes payable and common stock, net
of
discount for imputed interest
|
5,782,690
|
-
|
|||||
Sale
of property, equipment and intangible to DirecTECH for other current
asset
|
-
|
416,754
|
|||||
Debt
and interest assumed by DirecTECH as part of asset sale
|
-
|
267,143
|
1. |
Reduction
of operating expenses by controlling payroll, professional fees and
other
general and administrative
expenses.
|
2. |
Sale
of video assets on a strategic basis. The Company, based on recent
transactions, believes there is an active market for its video subscriber
assets. The Company believes it can sell these assets, under certain
circumstances, at prices at or above their current carrying value.
However, there is no guarantee these sales will ultimately be favorable
to
the Company.
|
3. |
Solicit
additional equity investment in the Company by either issuing preferred
or
common stock.
|
4. |
Continue
to market Multiband services and acquire additional multi-dwelling
unit
customers.
|
5. |
Control
capital expenditures by contracting Multiband services and equipment
through a landlord-owned equipment
program.
|
6. |
Delivery
of video services to residents of single family homes. Effective
March 1,
2008 the Company purchased 51% of the outstanding stock of Michigan
Microtech, Inc. (MMT), formerly a wholly owned subsidiary of DirecTECH
Holding Company Inc. (DTHC) (see Note 4). MMT installs DirecTV video
services in single family homes. Historically MMT has been profitable.
The
Company anticipates that by combining MMT operations with Multiband
operations that it will achieve a beneficial impact to its consolidated
cash flows and operating results. However, there is no guarantee
that
these combined results will ultimately be favorable to the
Company.
|
7. |
Expansion
of call center support via sales of call center services to both
existing
and future system operators and to buyers of the Company’s video
subscribers.
|
March
31, 2008
|
December
31, 2007
|
||||||||||||
|
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
|||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
||||||||||
Intangible
assets subject to amortization
|
|||||||||||||
Right
of entry contracts
|
$
|
930,739
|
$
|
588,675
|
$
|
993,393
|
$
|
618,027
|
|||||
Contracts
with DirecTV
|
12,696,944
|
6,476,244
|
9,697,879
|
6,001,169
|
|||||||||
Customer
contracts
|
102,516
|
8,543
|
-
|
-
|
|||||||||
Total
|
13,730,199
|
7,073,462
|
10,691,272
|
6,619,196
|
|||||||||
Impairment
of intangibles
|
-
|
58,046
|
-
|
-
|
|||||||||
Total
including impairment
|
$
|
13,730,199
|
$
|
7,131,508
|
$
|
10,691,272
|
$
|
6,619,196
|
Three
months
ended
March
31, 2008
|
Three
months
ended
March
30, 2007
|
||||||
Risk-free
interest rate
|
2.50
|
%
|
4.50
|
%
|
|||
Expected
life of options granted
|
10
Years
|
10
Years
|
|||||
Expected
volatility range
|
261
|
%
|
231
|
%
|
|||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
Intangible
assets
|
$
|
102,516
|
||
Goodwill
|
100,000
|
|||
Total
assets acquired
|
202,516
|
2008
|
2008
|
2007
|
2007
|
||||||||||
Consolidated
as
reported
|
Pro
Forma
Disclosed
|
Consolidated
as
reported
|
Pro
Forma
Disclosed
|
||||||||||
Three
months ended March 31, 2008 and 2007
|
|||||||||||||
Revenues
|
$
|
5,714,229
|
$
|
10,114,109
|
$
|
4,384,955
|
$
|
9,824,084
|
|||||
Loss
from operations
|
(757,005
|
)
|
(524,450
|
)
|
(1,232,045
|
)
|
(1,930,905
|
)
|
|||||
Net
loss
|
(864,398
|
)
|
(721,075
|
)
|
(1,362,395
|
)
|
(1,861,413
|
)
|
|||||
Preferred
dividends
|
3,881,020
|
3,881,020
|
239,927
|
239,927
|
|||||||||
Loss
attributable to common shareholders
|
(4,745,418
|
)
|
(4,602,095
|
)
|
(1,602,322
|
)
|
(2,101,340
|
)
|
|||||
Basic
and diluted loss per share:
|
|||||||||||||
Loss
attributable to common shareholders
|
$
|
(.56
|
)
|
$
|
(.54
|
)
|
$
|
(.23
|
)
|
$
|
(.24
|
)
|
|
Weighted
average shares outstanding - basic and diluted
|
8,497,734
|
8,497,734
|
7,087,561
|
8,577,561
|
Inventories
consisted of the following:
|
March
31,
2008
|
December
31, 2007
|
|||||
DirecTV
- serialized
|
$
|
507,078
|
$
|
-
|
|||
DirecTV
- nonserialized
|
352,135
|
-
|
|||||
Other
|
459,373
|
132,992
|
|||||
Total
|
$
|
1,318,586
|
$
|
132,992
|
Unrealized
Gains on Securities
|
||||
Balance,
December 31, 2007
|
$
|
-
|
||
Current-period
change
|
208,969
|
|||
Balance,
March 31, 2008
|
$
|
208,969
|
Number
of
Warrants
|
Weighted
- Average
Exercise Price
|
||||||
Outstanding,
December 31, 2007
|
3,088,873
|
$
|
7.64
|
||||
Granted
|
-
|
-
|
|||||
Exercised
|
-
|
-
|
|||||
Cancelled
|
(1,522,672
|
)
|
(8.03
|
)
|
|||
Outstanding,
March 31, 2008
|
1,566,201
|
$
|
7.27
|
March
31,
2008
|
December
31, 2007
|
||||||
Payroll
and related taxes
|
$
|
1,297,293
|
$
|
512,960
|
|||
Accrued
preferred stock dividends
|
598,593
|
642,395
|
|||||
Accrued
liability - vendor chargebacks
|
630,800
|
630,800
|
|||||
Accrued
income taxes
|
72,889
|
-
|
|||||
Other
|
923,697
|
745,456
|
|||||
Total
|
$
|
3,523,272
|
$
|
2,531,611
|
Multiband
Corp.
|
MDU
|
|
MCS
|
HSP
|
Total
|
|||||||||||
Three
months ended March 31, 2008:
|
||||||||||||||||
Revenues
|
$
|
-
|
$
|
2,885,711
|
$
|
848,562
|
$
|
1,979,956
|
$
|
5,714,229
|
||||||
Income
(loss) from operations
|
(828,224
|
)
|
554,825
|
(544,172
|
)
|
60,566
|
(757,005
|
)
|
||||||||
Identifiable
assets
|
4,518,567
|
4,672,884
|
2,572,873
|
10,271,465
|
22,035,789
|
|||||||||||
Depreciation
and amortization
|
136,855
|
396,365
|
201,700
|
2,787
|
737,707
|
|||||||||||
Capital
expenditures
|
20,678
|
-
|
21,369
|
-
|
42,047
|
Multiband
Corp.
|
MDU
|
MCS
|
HSP
|
Total
|
||||||||||||
Three
months ended March 31, 2007:
|
||||||||||||||||
Revenues
|
$
|
-
|
$
|
2,532,875
|
$
|
1,852,080
|
$
|
-
|
$
|
4,384,955
|
||||||
Income
(loss) from operations
|
(1,108,925
|
)
|
866,434
|
(989,554
|
)
|
-
|
(1,232,045
|
)
|
||||||||
Identifiable
assets
|
2,214,571
|
6,023,746
|
6,907,969
|
-
|
15,146,286
|
|||||||||||
Depreciation
and amortization
|
49,863
|
406,271
|
593,564
|
-
|
1,049,698
|
|||||||||||
Capital
expenditures
|
-
|
-
|
120,196
|
-
|
120,196
|
DOLLAR
AMOUNTS AS A PERCENTAGE OF REVENUES
|
|||||||
THREE
MONTHS ENDED
|
|||||||
March
31, 2008
(unaudited)
|
March
31, 2007
(unaudited)
|
||||||
REVENUES
|
100
|
%
|
100
|
%
|
|||
COST
OF PRODUCTS & SERVICES (Exclusive of depreciation and amortization
shown below)
|
66.9
|
%
|
49.7
|
%
|
|||
SELLING,
GENERAL & ADMINISTRATIVE
|
32.5
|
%
|
54.5
|
%
|
|||
DEPRECIATION
& AMORTIZATION
|
12.9
|
%
|
23.9
|
%
|
|||
IMPAIRMENT
OF ASSETS
|
1.0
|
%
|
-
|
||||
LOSS
FROM OPERATIONS
|
-13.3
|
%
|
-28.1
|
%
|
|||
INTEREST
EXPENSE & OTHER, NET
|
-1.0
|
%
|
-3.0
|
%
|
|||
LOSS
BEFORE INCOME TAXES AND MINORITY INTEREST IN SUBSIDIARY
|
-14.3
|
%
|
-31.1
|
%
|
|||
PROVISION
FOR INCOME TAXES
|
.5
|
%
|
-
|
||||
MINORITY
INTEREST IN NET INCOME OF SUBSIDIARY
|
.3
|
%
|
-
|
||||
NET
LOSS
|
-15.1
|
%
|
-31.1
|
%
|
(a) |
Exhibits
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rules 13a-15e and 15d-15e
of the
Exchange Act.
|
31.2 |
Certification
of Chief Financial Officer pursuant to Rules 13a-15e and 15d-15e
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:
May 15, 2008
|
By:
|
/s/
James L. Mandel
James
L. Mandel
Chief
Executive Officer
|
Date:
May 15, 2008
|
By:
|
/s/
Steven M. Bell
Steven
M. Bell
Chief
Financial Officer
(Principal
Financial and Accounting
Officer)
|