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Symbol changed to MBNDD Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 13, 2010 10:16PM
Symbol changed to MBNDD (MBND) filed Quarterly Report for the period ended 2010-03-31. Symbol Changed To Mbndd has a market cap of $18.2 million; its shares were traded at around $1.88 with and P/S ratio of 0.1.
Highlight of Business Operations:
The Company, in the first quarter of 2010, earned income from operations of $342 versus incurring a loss from operations of $2,183 during the prior year s comparable period. For the first quarter of 2010, the HSP segment earned income from operations of $2,524, compared to a loss of $949 in the same period last year. This improvement is primarily due to increased incentive revenue, improved inventory control and reduced tech training expense. The MDU segment showed a loss from operations of $679 for the three months ended March 31, 2010 compared to a loss of $257 for the three months ended March 31, 2009. The MBCorp segment, which has no revenues, showed a loss from operations of $1,503 for the three months ended March 31, 2010 compared to a loss of $977 for the same period last year. The MBCorp segment loss is expected to continue in future periods as corporate overhead is expected to remain consistent with current levels. The HSP segment is expected to improve its profitability throughout the balance of 2010 due to seasonal increases in revenues. The Company plans to mitigate its loss in the MDU segment in future periods by growing its subscriber base at existing properties since the on-going selling, general and administrative expenses to service those subscribers is more fixed than variable.
The noncontrolling interest in subsidiaries was $0 on March 31, 2010 and December 31, 2009, after the Company purchased the remaining 20% of the issued and outstanding shares of common stock of all of the DTHC operating subsidiaries (DirecTECH) and reclassified $5,996 of noncontrolling interest to Multiband s controlling interest on December 17, 2009. The net loss attributable to the noncontrolling interest in subsidiaries for the year ended March 31, 2010 and 2009 was $0 and $296, respectively.
The Company has federal and state net operating losses of approximately $67,000 and $50,000, respectively, which, if not used, will begin to expire in 2018. Changes in the stock ownership of the Company may place limitations on the use of these net operating loss carryforwards (NOLs). During 2009, the Company performed an IRC 382 study and determined that an ownership change had occurred. As a result of the ownership change, $41,613 of the Company s NOLs are limited, consisting of annual federal limitations of $6,294 for the next five years and $634 for each year thereafter. The Company has determined there are also limitations on the state net operating loss carryforwards, but has not completed the analysis to determine the limitation. For the three months ended March 31, 2010 and 2009, the Company has recorded income tax expense of $200 and $100, respectively, related to federal and state taxes.
During the three months ended March 31, 2010 and 2009, the Company incurred net losses of $964 and $2,881, respectively. Net cash provided by operations during the three months ended March 31, 2010 was $4,258, compared to the three months ended March 31, 2009 of $846. Principal payments on current long-term debt, short-term debt to a related party and capital lease obligations over the next 12 months are expected to total $1,368.
Cash and cash equivalents totaled $3,747 at March 31, 2010 versus $2,240 at December 31, 2009. Working capital deficit at March 31, 2010 was $28,635, compared to $28,596 at December 31, 2009. Net cash used by investing activities totaled $467 for the period ended March 31, 2010, compared to $1,263 for the period ended March 31, 2009.
The Company is subject to claims, regulatory processes and lawsuits that arise in the ordinary course of business. The Company accrues for such matters when a loss is considered probable and the amount of such loss, or a range of loss, can be reasonably estimated. The Company s defense costs are expensed as incurred. The Company has recorded $8,549 and $9,299 of accrued liabilities as of March 31, 2010 and December 31, 2009, for claims and known and potential settlements and legal fees associated with existing litigation. The majority of the accrual relates to claims for back overtime wages alleged in a number of cases filed between 2006 to 2008 entitled Lachiev v. JBM (S.D. Ohio); Davis v. JBM (S.D. Ohio); Gruchy v. DirecTech Northeast (D. Mass); Stephen v. Michigan Microtech (E.D. Mich); and In re DirecTECH Southwest, Inc. (E.D. La). Effective December 31, 2009, the Company settled in principal the majority of these claims. While the Company and its predecessors denied the allegations underlying the lawsuits, it agreed to a settlement to avoid significant legal fees, the uncertainty of a jury trial, and other expenses and management time that would have to be devoted to protracted litigation. The Company recorded the settlement of $6,729, net of imputed interest of $575 and including administration fees and estimated payroll taxes. The aforementioned settlement is being paid in equal installments of $291 over a 24 month period beginning January 15, 2010. The balance of the settlement as of March 31, 2010 is $5,983.
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