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Symbol changed to MBNDD Reports Operating Results (10-Q)

November 16, 2009 | About:
10qk

10qk

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Symbol changed to MBNDD (MBND) filed Quarterly Report for the period ended 2009-09-30.

Multiband Corporation provides voice, data and video services to multi-dwelling unit and single family home customers. The Company's products and services are sold to customers located throughout the United States of America. The Company has three operating segments: Multiband Consumer Services (MCS, legally known as Multiband Subscriber Services, Inc.), Multi-Dwelling Unit (MDU, legally known as Minnesota Digital Universe, Inc.), and Home Service Provider (HSP, legally known as Michigan Microtech, Inc (MMT)). The MCS segment provides satellite television services, as well as offers local and long distance telephone, cable television, and Internet services. The MDU segment serves as a master service operator for DirecTV, a provider of satellite television service. The HSP segment engages in the installation and servicing of DirecTV video programming for residents of single family homes. The company offers services to multiple-dwelling units, including apartment buildings, condo Symbol Changed To Mbndd has a market cap of $18.45 million; its shares were traded at around $1.91 with and P/S ratio of 0.43.

Highlight of Business Operations:

The Company, in the third quarter of 2009, incurred income from operations of $588 as compared to generating an income of $181 during the prior year s comparable period. Loss from operations was $9,305 during the first nine months of 2009 compared to an income of $389 during the first nine months of 2008. During the quarter ended June 30, 2009, the Company incurred a material operating loss primarily due to significant hiring and training expenses and inventory breakage related to changes in work order closure technology. During the quarter ended September 30, 2009, the Company generated an operating profit of $588 as the aforementioned hiring, training and inventory breakage expenses were reduced. Although the Company cannot definitively predict future quarter operating results, we have reason to believe second quarter operating results were atypical.

The MDU segment generated an income from operations of $36 for the three months ended September 30, 2009 and incurred a loss from operations of $346 for the nine months ended September 30, 2009 compared to income from operations of $164 and $826 for the three and nine months ended September 30, 2008. The MBCorp segment, which has no revenues, incurred a loss from operations of $976 for the three months ended September 30, 2009 and $2,997 for the nine months ended September 30, 2009 compared to losses of $547 and $2,290 for the same periods last year. For the third quarter of 2009, the HSP segment generated an income from operations of $1,528, compared to income from operations of $564 in the same period last year, which included NC (MMT) only. During the three months ended September 30, 2009, the Company s improved job mix and earnings from incentives increased its revenue over prior periods. For the nine months ended September 30, 2009, loss from operations was $5,962 for the HSP segment, compared to an income from operations of $1,853 in the prior year which included seven 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 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 maintain its profitability by reaching incentive goals and continued improvement in job mix.

Interest expense was $1,026 for the quarter ended September 30, 2009, versus $301 for the similar period a year ago. Amortization of original issue discount was $11 and $0 for the three months ended September 30, 2009 and 2008. Interest expense was $2,771 for the nine months ended September 30, 2009 and $514 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 $15 for the nine months ended September 30, 2009, respectively and $0 for the same period last year.

Effective January 1, 2009, the Company transitioned from accounting for a minority interest to accounting for 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 nine months ended September 30, 2009 was ($266) and ($2,044), respectively. For the three and nine months ended September 30, 2008, net income attributable to the noncontrolling interest in subsidiaries was $138 and $550, respectively.

During the nine months ended September 30, 2009, the Company incurred net losses attributable to Multiband Corporation and subsidiaries of $10,163 compared to a net income attributable to Multiband Corporation and subsidiaries of $103 for the nine months ended September 30, 2008. Net cash used by operations during the nine months ended September 30, 2009 was $2,937 as compared to the net cash from operations during the nine months ended September 30, 2008 of $3,891. During the quarter ended June 30, 2009, the Company incurred a material operating loss primarily due to significant hiring and training expenses and inventory breakage related to changes in work order closure technology. During the quarter ended September 30, 2009, the Company generated an operating profit of $588 as the aforementioned hiring, training and inventory breakage expenses were reduced. Although the Company cannot definitively predict future quarter operating results, we have reason to believe second quarter operating results were atypical. As of September 30, 2009, the Company met the compliance covenants of its lender, Convergent Capital.

Cash and cash equivalents totaled $4,253 at September 30, 2009 versus $4,346 at December 31, 2008. Working capital deficit at September 30, 2009 was $30,785 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 $38,957 in the nine months ended September 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 September 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 $2,673 for the period ended September 30, 2009, compared to net cash of $6,656 provided by investing activities for the period ended September 30, 2008, related to cash acquired in the acquisition of NC (formerly MMT).

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