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Symbol changed to MBNDD Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 13, 2009 08:21PM

Symbol changed to MBNDD (MBND) filed Quarterly Report for the period ended 2009-06-30. Symbol changed to MBNDD has a market cap of $22.7 million; its shares were traded at around $2.3499 .

Highlight of Business Operations:

Selling, general and administrative expenses increased 505.6% to $15,509 in the quarter ended June 30, 2009, compared to $2,561 in the prior year s quarter due primarily to the acquisition of DirecTECH in 2009. Selling, general and administrative expenses were, as a percentage of revenues, 23.0% for the quarter ended June 30, 2009 and 23.7% for the similar period a year ago. For the six months ended June 30, 2009, selling, general and administrative expenses increased 562.3% to $29,249 compared to $4,416 for the six months ended June 30, 2008, due primarily to the acquisition of DirecTECH in 2009. As a percentage of revenue, selling, general and administrative expenses were 22.6% for the six months ended June 30, 2009, compared to 26.7% for the same period in 2008. The decrease in selling, general and administrative expenses as a percentage of revenue is primarily due to the significant increase in revenues with only modest increases in payroll and administrative expenses offset by reimbursed payroll expenses for management consulting to DTHC recorded to the Multiband Corp segment of $330 and $630 in the three and six months ended June 30, 2008, respectively, per its management consulting agreement. This agreement ended in 2009 as a result of the acquisition of the majority ownership of former operating subsidiaries of DTHC (see Note 3). The Company anticipates that for the remainder of 2009, selling, general and administrative expenses will remain consistent with second quarter levels.

The Company, in the second quarter of 2009, incurred a loss from operations of $7,710 as compared to generating an income of $965 during the prior year s comparable period. Loss from operations was $9,893 during the first six months of 2009 compared to an income of $208 during the first half of 2008. The MDU segment incurred a loss from operations of $125 and $382 for the three and six months ended June 30, 2009 compared to income from operations of $651 and $662 for the three and six months ended June 30, 2008. The MBCorp segment, which has no revenues, incurred a loss from operations of $1,044 for the three months ended June 30, 2009 and $2,021 for the six months ended June 30, 2009 compared to losses of $915 and $1,743 for the same periods last year. For the second quarter of 2009, the HSP segment incurred a loss from operations of $6,541, compared to income from operations of $1,229 in the same period last year, which included NC (MMT) only. For the six months ended June 30, 2009, loss from operations was $7,490 for the HSP segment, compared to a income from operations of $1,289 in the prior year which included four months of NC (MMT) only. The MBCorp segment loss is expected to continue in future periods as corporate overhead is expected to remain consistent with current levels. The Company plans to mitigate its loss in the MDU segment in future periods as increased payments to dealers have negatively impacted profits for this segment. The Company believes these payments will stabilize in future periods as a percentage of revenues. At the same time, the Company believes it can enhance profitability in its MDU division by growing its subscriber base at existing properties since the on-going selling, general and administrative expenses to service those subscribers is more variable than fixed. The HSP segment is expected to improve its profitability throughout the balance of 2009 as competitive providers are driven out of some of its existing core markets increasing revenues without further material increases in expense since technicians will have completed their training in the second quarter. The key to removing competitive providers involves the Company s commitment to DirecTV to significantly expand its technical workforce. The expanded workforce creates expense upfront without offsetting revenue due to a training period. However, once the technicians are trained they move into a revenue generating role.

Interest expense was $890 for the quarter ended June 30, 2009, versus $113 for the similar period a year ago. Amortization of original issue discount was $9 and $0 for the three months ended June 30, 2009 and 2008. Interest expense was $1,745 for the six months ended June 30, 2009 and $214 for the same period last year, primarily reflecting an increase due to interest expense incurred on the debt issued for the purchase of DirecTECH (see Note 3). Amortization of original issue discount was $9 for the three and six months ended June 30, 2009 and $0 for the same periods last year.

Effective January 1, 2009, the Company implemented FAS 160, noncontrolling interests in subsidiaries (see Note 4). This resulted in the transferring of minority interest of $3,471 at December 31, 2008 related to the 51% ownership of NC from the mezzanine section of the balance sheet to the noncontrolling interest in the equity section of the balance sheet. As of January 2, 2009, Multiband purchased an additional 29% of the outstanding stock of NC, $2,054 of noncontrolling interest was transferred to Multiband s controlling interest related to this acquisition, leaving $1,417 as the remaining value of the noncontrolling interest. In addition, Multiband purchased 80% of the outstanding stock of EC, NE, SC, DC, Security and MBMDU (see Note 3). The Company recorded $6,306 of noncontrolling interest related to this acquisition. The net loss attributable to the noncontrolling interest in subsidiaries for the three and six months ended June 30, 2009 was $1,482 and $1,778, respectively. For the three and six months ended June 30, 2008, net income attributable to the noncontrolling interest in subsidiaries was $394 and $412, respectively.

During the six months ended June 30, 2009 and 2008, the Company incurred net losses attributable to Multiband Corporation and subsidiaries of $9,704 and $808, respectively. Net cash used by operations during the six months ended June 30, 2009 was $1,339 as compared to the net cash from operations during the six months ended June 30, 2008 of $929. Principal payments on current long-term debt over the next 12 months are expected to total $236. As of June 30, 2009, the Company met the compliance covenants of its lender, Convergent Capital.

Cash and cash equivalents totaled $5,584 at June 30, 2009 versus $4,346 at December 31, 2008. Working capital deficit at June 30, 2009 was $31,190 as compared to positive working capital of $2,465 at December 31, 2008, primarily due to the acquisition of the former DTHC operating entities. Total debt and capital lease obligations increased by $38,808 in the six months ended June 30, 2009 due mainly to the addition of notes payable in order to purchase DirecTECH. The Company had a material increase in accounts receivable, accounts payable and accrued liabilities for the period ended June 30, 2009 versus the period ended December 31, 2008 due to the acquisition of 80% of outstanding stock of the former DTHC operating entities. Net cash used by investing activities totaled $1,862 for the period ended June 30, 2009, compared to net cash of $6,699 provided by investing activities for the period ended June 30, 2008, related to cash acquired in the acquisition of NC (formerly MMT).

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