(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, 2005
|
|
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, 2005
(unaudited)
|
September
30,
2004
(unaudited)
|
September
30, 2005
(unaudited)
|
September
30, 2004
(unaudited)
|
||||||||||
REVENUES
|
$
|
4,257,660
|
$
|
3,918,342
|
$
|
12,148,142
|
$
|
7,592,258
|
|||||
COSTS
AND EXPENSES
|
|||||||||||||
Cost
of products and services (exclusive of depreciation and amortization
shown
separately below)
|
2,303,357
|
1,937,644
|
5,886,382
|
4,060,886
|
|||||||||
Selling,
general and administrative
|
2,453,410
|
1,871,764
|
6,977,897
|
3,837,697
|
|||||||||
Depreciation
and amortization
|
1,255,188
|
1,048,031
|
3,622,922
|
2,550,953
|
|||||||||
Total
Costs and Expenses
|
6,011,955
|
4,857,439
|
16,487,201
|
10,449,536
|
|||||||||
LOSS
FROM OPERATIONS
|
(1,754,295
|
)
|
(939,097
|
)
|
(4,339,059
|
)
|
(2,857,278
|
)
|
|||||
OTHER
EXPENSE
|
|||||||||||||
Interest
expense
|
(536,000
|
)
|
(254,314
|
)
|
(1,594,714
|
)
|
(672,634
|
)
|
|||||
Other
income (expense)
|
77,737
|
(4,192
|
)
|
160,029
|
17,521
|
||||||||
Total
Other Expense
|
(458,263
|
)
|
(258,506
|
)
|
(1,434,685
|
)
|
(655,113
|
)
|
|||||
LOSS
FROM CONTINUING OPERATIONS
|
(2,212,558
|
)
|
(1,197,603
|
)
|
(5,773,744
|
)
|
(3,512,391
|
)
|
|||||
INCOME
(LOSS) FROM DISCONTINUED OPERATIONS
|
248,249
|
(653,989
|
)
|
(70,127
|
)
|
(1,307,540
|
)
|
||||||
NET
LOSS
|
(1,964,309
|
)
|
(1,851,592
|
)
|
(5,843,871
|
)
|
(4,819,931
|
)
|
|||||
Preferred
Stock Dividends
|
(1,364,180
|
)
|
(83,714
|
)
|
(2,964,898
|
)
|
(541,640
|
)
|
|||||
LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(3,328,489
|
)
|
$
|
(1,935,306
|
)
|
$
|
(8,808,769
|
)
|
$
|
(5,361,571
|
)
|
|
BASIC
AND DILUTED - LOSS PER COMMON SHARE
|
|||||||||||||
Loss
from continuing operations
|
(.08
|
)
|
(.05
|
)
|
(.21
|
)
|
(.16
|
)
|
|||||
Income
(Loss) from discontinued operations
|
.01
|
(.02
|
)
|
(.00
|
)
|
(.05
|
)
|
||||||
Net
Loss
|
(.07
|
)
|
(.07
|
)
|
(.21
|
)
|
(.21
|
)
|
|||||
LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
(.11
|
)
|
(.08
|
)
|
(.31
|
)
|
(.24
|
)
|
|||||
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
|
29,352,257
|
25,480,077
|
28,408,934
|
22,494,250
|
|||||||||
September
30, 2005
|
December
31, 2004
|
||||||
ASSETS
|
(unaudited)
|
(audited)
|
|||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
3,383,326
|
$
|
726,553
|
|||
Certificate
of deposit
|
650,000
|
650,000
|
|||||
Accounts
receivable, net
|
2,194,768
|
2,783,774
|
|||||
Inventories
|
219,871
|
231,993
|
|||||
Current
assets of discontinued operations
|
—
|
634,307
|
|||||
Current
portion of notes receivable
|
411,504
|
—
|
|||||
Other
current assets
|
325,128
|
146,334
|
|||||
TOTAL
CURRENT ASSETS
|
7,184,597
|
5,172,961
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
5,385,939
|
4,372,474
|
|||||
OTHER
ASSETS
|
|||||||
Goodwill
|
1,154,871
|
812,366
|
|||||
Intangible
assets, net
|
14,636,237
|
16,081,635
|
|||||
Other
assets of discontinued operations
|
—
|
47,975
|
|||||
Notes
receivable, net of current portion
|
63,996
|
—
|
|||||
Other
assets
|
132,465
|
146,301
|
|||||
TOTAL
OTHER ASSETS
|
15,987,569
|
17,088,277
|
|||||
TOTAL
ASSETS
|
$
|
28,558,105
|
$
|
26,633,712
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Checks
issued in excess of cash in bank
|
$
|
79,585
|
$
|
234,348
|
|||
Short-term
debt
|
333,334
|
4,481,099
|
|||||
Wholesale
line of credit
|
—
|
926,201
|
|||||
Current
portion of long-term debt
|
990,370
|
1,524,527
|
|||||
Current
portion of note payable, stockholder
|
32,837
|
84,801
|
|||||
Current
portion of capital lease obligations
|
223,335
|
201,530
|
|||||
Accounts
payable
|
1,955,697
|
2,561,611
|
|||||
Accrued
liabilities
|
3,514,372
|
3,030,024
|
|||||
Contingent
liability
|
222,700
|
222,700
|
|||||
Customer
deposits
|
60,170
|
59,875
|
|||||
Current
liabilities of discontinued operations
|
500,000
|
370,921
|
|||||
Deferred
subscription revenue
|
623,630
|
406,738
|
|||||
TOTAL
CURRENT LIABILITIES
|
8,536,030
|
14,104,375
|
|||||
LONG-TERM
LIABILITIES
|
|||||||
Long-term
debt, net
|
3,653,786
|
3,498,657
|
|||||
Capital
lease obligations, net of current portion
|
488,789
|
481,249
|
|||||
Long
term liabilities of discontinued operations
|
250,000
|
—
|
|||||
TOTAL
LIABILITIES
|
12,928,605
|
18,084,281
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
Cumulative
convertible preferred stock, no par value:
|
|||||||
8%
Class A (27,931 shares issued and outstanding, $293,276 liquidation
preference)
|
419,752
|
419,752
|
|||||
10%
Class B (8,550 and 8,700 shares issued and outstanding, $89,775 and
$91,350 liquidation preference)
|
60,500
|
62,000
|
|||||
10%
Class C (125,210 and 125,400 shares issued and outstanding, $1,252,100
and
$1,254,000 liquidation preference)
|
1,609,205
|
1,611,105
|
|||||
10%
Class F (150,000 shares issued and outstanding, $1,500,000 liquidation
preference)
|
1,500,000
|
1,500,000
|
|||||
8%
Class G (45,245 shares issued and outstanding, $452,450 liquidation
preference)
|
179,897
|
179,897
|
|||||
6%
Class H (2.0 and 11.5 shares issued and outstanding, $200,000 and
$1,150,000 liquidation preference)
|
—
|
—
|
|||||
Variable
rate Class I (90,000 and 0 shares issued and outstanding , $9,000,000
and
$0 liquidation preference)
|
—
|
—
|
|||||
Common
stock, no par value (30,988,618 and 25,784,490 shares issued; 30,988,618
and 25,781,818 shares outstanding)
|
21,243,680
|
16,888,291
|
|||||
Stock
subscriptions receivable
|
(319,864
|
)
|
(391,264
|
)
|
|||
Options
and warrants
|
44,541,771
|
32,985,983
|
|||||
Unamortized
compensation
|
(92,063
|
)
|
(1,724
|
)
|
|||
Accumulated
deficit
|
(53,513,378
|
)
|
(44,704,609
|
)
|
|||
TOTAL
STOCKHOLDERS’ EQUITY
|
15,629,500
|
8,549,431
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
28,558,105
|
$
|
26,633,712
|
|||
NINE
MONTHS ENDED SEPTEMBER 30,
|
|||||||
2005
|
2004
|
||||||
(unaudited)
|
(unaudited)
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
loss
|
(5,843,871
|
)
|
$
|
(4,819,931
|
)
|
||
Adjustments
to reconcile net loss to net cash flows from operating
activities
|
|||||||
Depreciation
and amortization
|
3,896,131
|
2,344,853
|
|||||
Amortization
of deferred compensation
|
128,354
|
212,935
|
|||||
Amortization
of original issue discount
|
913,339
|
541,873
|
|||||
Gain
on sale of segment
|
(253,356
|
)
|
—
|
||||
Common
stock issued for services
|
20,580
|
291,220
|
|||||
Warrants
issued for services
|
6,256
|
—
|
|||||
Impairment
of goodwill
|
—
|
527,879
|
|||||
Loss
(gain) on sale of property and equipment
|
(94,277
|
)
|
26,217
|
||||
Reduction
of note payable in connection with reimbursement of seller
expenses
|
—
|
(273,900
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable, net
|
574,006
|
(2,134,902
|
)
|
||||
Inventories
|
(189,220
|
)
|
610,119
|
||||
Other
current assets
|
113,991
|
17,987
|
|||||
Other
assets
|
5,000
|
(87,135
|
)
|
||||
Wholesale
line of credit
|
(1,000,987
|
)
|
93,045
|
||||
Accounts
payable and accrued liabilities
|
(1,336,387
|
)
|
620,817
|
||||
Deferred
subscription revenue
|
184,995
|
98,133
|
|||||
Liabilities
of discontinued operations
|
(250,000
|
)
|
—
|
||||
Customer
deposits
|
295
|
—
|
|||||
Net
cash flows from operating activities
|
(3,125,151
|
)
|
(1,930,790
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Purchases
of property and equipment
|
(698,269
|
)
|
(483,810
|
)
|
|||
Purchase
of intangible assets
|
(209,225
|
)
|
—
|
||||
Purchase
of Dinamo Entertainment, LLC
|
(726,525
|
)
|
—
|
||||
Purchase
of Ultravision
|
(287,050
|
)
|
—
|
||||
Purchase
of Satellite Broadcasting Corporation
|
(200,000
|
)
|
(187,424
|
)
|
|||
Purchase
of Minnesota Digital Universe, Inc.
|
—
|
(1,100,000
|
)
|
||||
Purchase
of Rainbow Satellite Group, LLC
|
—
|
(1,000,000
|
)
|
||||
Purchase
of 21st
Century Satellite Communication, Inc.
|
—
|
(250,000
|
)
|
||||
Proceeds
from sale of business segment
|
1,682,184
|
—
|
|||||
Proceeds
from sale of property and equipment
|
91,500
|
649
|
|||||
Collections
on notes receivable
|
—
|
3,172
|
|||||
Net
cash flows from investing activities
|
(347,385
|
)
|
(3,017,413
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Checks
issued in excess of cash in bank
|
(154,760
|
)
|
(74,068
|
)
|
|||
Payments
on short-term debt
|
(4,147,765
|
)
|
—
|
||||
Payments
on long-term debt
|
(2,456,305
|
)
|
(1,215,788
|
)
|
|||
Payments
on capital lease obligations
|
(137,040
|
)
|
(63,066
|
)
|
|||
Payments
on note payable to stockholder
|
(51,964
|
)
|
(19,598
|
)
|
|||
Payments
for debt issuance costs
|
(25,000
|
)
|
—
|
||||
Proceeds
from issuance of long term debt
|
2,000,000
|
750,021
|
|||||
Proceeds
from issuance of stock and warrants
|
11,084,783
|
2,888,836
|
|||||
Payments
received on stock subscriptions receivable
|
66,399
|
—
|
|||||
Redemption
of common stock
|
—
|
(62,975
|
)
|
||||
Redemption
of preferred stock
|
(3,400
|
)
|
—
|
||||
Exercise
of warrants
|
6,960
|
390,279
|
|||||
Preferred
stock dividends
|
(52,599
|
)
|
(125,513
|
)
|
|||
Net
cash flows from financing activities
|
6,129,309
|
2,468,128
|
|||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
2,656,773
|
(2,480,075
|
)
|
||||
CASH
AND CASH EQUIVALENTS
|
|||||||
Beginning
of period
|
726,553
|
2,945,960
|
|||||
End
of period
|
3,383,326
|
465,885
|
|||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|||||||
Cash
paid for interest, net of amortization of original issue
discount
|
658,429
|
447,548
|
|||||
SUPPLEMENTAL
DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|||||||
Note
receivable recorded on sale of discontinued operations
|
400,000
|
—
|
|||||
Issuance
of common stock for acquisition of assets, MBUSA and URON
|
—
|
274,800
|
|||||
Conversion
of preferred stock and accrued dividends into common stock
|
1,834,001
|
776,500
|
|||||
Current
liabilities converted to common stock
|
93,297
|
136,581
|
|||||
Conversion
of notes payable into common stock
|
1,436,062
|
510,908
|
|||||
Conversion
of dividend into common stock
|
185,045
|
78,591
|
|||||
Note
receivable recorded on sale of intangibles to Satellite Broadcasting
Corporation
|
75,500
|
—
|
|||||
Capital
lease obligation entered into as part of the purchase of intangibles
from
Satellite Broadcasting Corporation
|
105,000
|
—
|
|||||
Issuance
of common stock for purchase of SBC intangibles
|
105,000
|
—
|
|||||
Note
payable issued in relation to acquisition of Dinamo Entertainment,
LLC
|
600,000
|
—
|
|||||
Common
stock issued in relation to acquisition of Dinamo Entertainment,
LLC
|
702,500
|
—
|
|||||
Issuance
of common stock for acquisition of 21st
Century
|
—
|
364,583
|
|||||
Issuance
of preferred stock and notes payable for acquisition of assets -
Rainbow
|
—
|
6,519,999
|
|||||
Purchase
of property and equipment as a reduction of accounts
receivable
|
—
|
40,714
|
|||||
Capitalized
construction costs in accrued expenses
|
—
|
20,000
|
|||||
Issuance
of common stock of $3,850,000 and notes payable of $2,750,000 for
acquisition of assets - MDU
|
—
|
6,600,000
|
|||||
Capital
lease assumed in acquisition of equipment from 21st
Century
|
—
|
416,666
|
|||||
Common
stock issued in lieu of cash for deferred financing costs
|
36,000
|
—
|
|||||
Common
stock issued in lieu of cash for other current assets
|
218,000
|
—
|
|||||
Warrants
issued for deferred compensation
|
213,120
|
—
|
|||||
Issuance
of accrued liabilities for debt issuance costs
|
125,000
|
—
|
|||||
1. |
Continued
reduction of operating expenses by controlling payroll, professional
fees
and other general and administrative
expenses.
|
2. |
Solicit
additional equity investment in the Company by either issuing preferred
or
common stock. The Company, in February 2005 issued $10,000,000
worth of
Class I Preferred Stock to a group of accredited
investors.
|
3. |
Continue
to market Multiband services and acquire additional multi-dwelling
unit
customers.
|
4. |
Control
capital expenditures by contracting Multiband services and equipment
through a landlord-owned equipment
program.
|
5. |
Establish
market for wireless internet
services.
|
6. |
Discontinuation
of Multiband business services segment which was unprofitable in
2004.
|
September
30, 2005
|
December
31, 2004
|
||||||||||||
|
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
|||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
||||||||||
Intangible
assets subject to amortization
|
|||||||||||||
Domain
name
|
$
|
83,750
|
$
|
68,395
|
$
|
83,750
|
$
|
55,833
|
|||||
Access
contracts
|
60,000
|
48,333
|
60,000
|
33,333
|
|||||||||
Debt
issuance costs
|
499,837
|
251,675
|
313,837
|
47,214
|
|||||||||
Right
of entry
|
17,376,709
|
4,083,988
|
17,226,759
|
1,933,294
|
|||||||||
Customer
cable lists
|
1,608,469
|
540,137
|
753,930
|
286,967
|
|||||||||
Total
|
$
|
19,628,765
|
$
|
4,992,528
|
$
|
18,438,276
|
$
|
2,356,641
|
|||||
Intangible
assets not subject to amortization
|
|||||||||||||
Goodwill
|
$
|
1,154,871
|
$
|
—
|
$
|
812,366
|
$
|
—
|
|||||
Three
months ended
September
30, 2005
|
Three
months ended
September
30, 2004
|
Nine
months ended
September
30,2005
|
Nine
months ended
September
30, 2004
|
||||||||||
Loss
attributable to common stockholders
|
(3,328,489
|
)
|
(1,935,306
|
)
|
(8,808,769
|
)
|
(5,361,571
|
)
|
|||||
Pro
forma loss attributable to common shares
|
(3,361,016
|
)
|
(1,965,794
|
)
|
(9,226,215
|
)
|
(5,887,093
|
)
|
|||||
Basic
and diluted loss attributable to common shareholders:
|
|||||||||||||
As
reported
|
(.11
|
)
|
(.08
|
)
|
(.31
|
)
|
(.24
|
)
|
|||||
Pro
forma loss attributable to common shares
|
(.11
|
)
|
(.08
|
)
|
(.32
|
)
|
(.26
|
)
|
|||||
Stock-based
compensation:
|
|||||||||||||
As
reported
|
—
|
15,448
|
—
|
212,935
|
|||||||||
Pro
forma
|
32,527
|
30,488
|
417,446
|
525,522
|
Three
months ended
September
30, 2005
|
Three
months ended
September
30, 2004
|
Nine
months ended
September
30, 2005
|
Nine
months ended
September
30, 2004
|
||||||||||
Risk-free
interest rate
|
4.12%
|
|
3.50%
|
3.75%
|
|
3.50%
|
|
||||||
Expected
life of options granted
|
10
Years
|
10
Years
|
10
Years
|
10
Years
|
|||||||||
Expected
volatility range
|
211%
|
|
184%
|
|
207%
|
|
184%
|
|
|||||
Expected
dividend yield
|
0%
|
|
0%
|
|
0%
|
|
0%
|
|
MDU
|
Rainbow
|
21st
Century
|
Dinamo
|
||||||||||
Allocation
of Purchase Price:
|
|||||||||||||
Total
Cash/Stock/Notes Payable Consideration
|
$
|
7,000,000
|
$
|
7,219,999
|
$
|
987,000
|
$
|
1,727,500
|
|||||
Add:
Transaction Costs
|
726,550
|
361,850
|
93,754
|
176,525
|
|||||||||
Add:
Liabilities assumed
|
2,030,373
|
319,921
|
—
|
170,200
|
|||||||||
Total
Consideration
|
9,756,923
|
7,901,770
|
1,080,754
|
2,074,225
|
|||||||||
Less:
Cash and accounts receivable
|
59,044
|
—
|
—
|
—
|
|||||||||
Less:
Tangible assets
|
—
|
773,000
|
372,420
|
1,450,000
|
|||||||||
Less:
Goodwill
|
—
|
800,000
|
—
|
350,000
|
|||||||||
Intangible
assets
|
$
|
9,697,879
|
$
|
6,328,770
|
$
|
708,334
|
$
|
274,225
|
|||||
2005
|
2005
|
2004
|
2004
|
||||||||||
Consolidated
as
reported
|
Pro
Forma
Disclosed
|
Consolidated
as
reported
|
Pro
Forma
Disclosed
|
||||||||||
Three
months ended September 30, 2005 and 2004
|
|||||||||||||
Revenues
|
$
|
4,257,660
|
$
|
4,257,660
|
$
|
3,918,342
|
$
|
3,984,174
|
|||||
Loss
from continuing operations
|
(2,212,558
|
)
|
(2,212,558
|
)
|
(1,197,603
|
)
|
(1,197,897
|
)
|
|||||
Income
(loss) from discontinued operations
|
248,249
|
248,249
|
(653,989
|
)
|
(653,989
|
)
|
|||||||
Net
loss
|
$
|
(1,964,309
|
)
|
$
|
(1,964,309
|
)
|
$
|
(1,851,592
|
)
|
$
|
(1,851,886
|
)
|
|
Basic
and diluted loss per share:
|
|||||||||||||
Loss
from continuing operations
|
$
|
(.08
|
)
|
$
|
(.08
|
)
|
$
|
(.05
|
)
|
$
|
(.05
|
)
|
|
Income
(loss) from discontinued operations
|
$
|
.01
|
$
|
.01
|
$
|
(.02
|
)
|
$
|
(.02
|
)
|
|||
Net
loss
|
$
|
(.07
|
)
|
$
|
(.07
|
)
|
$
|
(.07
|
)
|
$
|
(.07
|
)
|
|
Weighted
average shares outstanding - basic and diluted
|
29,352,257
|
29,352,257
|
25,480,077
|
25,480,077
|
2005
|
2005
|
2004
|
2004
|
||||||||||
Consolidated
as
reported
|
Pro
Forma
Disclosed
|
Consolidated
as
reported
|
Pro
Forma
Disclosed
|
||||||||||
Nine
months ended September 30, 2005 and 2004
|
|||||||||||||
Revenues
|
$
|
12,148,142
|
$
|
12,148,142
|
$
|
7,592,258
|
$
|
11,087,407
|
|||||
Loss
from continuing operations
|
(5,773,744
|
)
|
(5,773,744
|
)
|
(3,512,391
|
)
|
(3,478,538
|
)
|
|||||
Loss
from discontinued operations
|
(70,127
|
)
|
(70,127
|
)
|
(1,307,540
|
)
|
(1,307,540
|
)
|
|||||
Net
loss
|
$
|
(5,843,871
|
)
|
$
|
(5,843,871
|
)
|
$
|
(4,819,931
|
)
|
$
|
(4,821,889
|
)
|
|
Basic
and diluted loss per share:
|
|||||||||||||
Loss
from continuing operations
|
$
|
(.21
|
)
|
$
|
(.21
|
)
|
$
|
(.16
|
)
|
$
|
(.16
|
)
|
|
Loss
from discontinued operations
|
$
|
(.00
|
)
|
$
|
(.00
|
)
|
$
|
(.05
|
)
|
$
|
(.05
|
)
|
|
Net
loss
|
$
|
(.21
|
)
|
$
|
(.21
|
)
|
$
|
(.21
|
)
|
$
|
(.21
|
)
|
|
Weighted
average shares outstanding - basic and diluted
|
28,408,934
|
28,408,934
|
22,494,250
|
22,494,250
|
Number
of Warrants
|
Weighted
- Average Exercise Price
|
||||||
Outstanding,
December 31, 2004
|
11,795,641
|
1.64
|
|||||
Granted
|
8,887,273
|
1.70
|
|||||
Exercised
|
(33,066
|
)
|
.91
|
||||
Cancelled
|
(1,621,219
|
)
|
1.80
|
||||
Outstanding,
September 30, 2005
|
19,028,629
|
1.66
|
September
30, 2005
|
December
31, 2004
|
||||||
Payroll
and related taxes
|
$
|
337,982
|
$
|
389,394
|
|||
Accrued
preferred stock dividends
|
1,353,461
|
415,120
|
|||||
Accrued
liability-vendor charge backs
|
1,347,673
|
1,901,972
|
|||||
Other
|
475,256
|
323,538
|
|||||
Total
|
$
|
3,514,372
|
$
|
3,030,024
|
Multiband
Corp.
|
MDU
|
MCS
|
Discontinued
Operations
|
Total
|
||||||||||||
Three
months ended September 30, 2005:
|
||||||||||||||||
Revenues
|
0
|
2,091,442
|
2,166,218
|
0
|
4,257,660
|
|||||||||||
Income
(loss) from continuing operations
|
(1,315,992
|
)
|
475,511
|
(1,372,077
|
)
|
0
|
(2,212,558
|
)
|
||||||||
Identifiable
assets
|
5,980,426
|
8,807,015
|
13,770,664
|
0
|
28,558,105
|
|||||||||||
Depreciation
and amortization
|
71,360
|
401,079
|
782,749
|
0
|
1,255,188
|
|||||||||||
Capital
expenditures
|
20,707
|
0
|
258,015
|
4,482
|
283,204
|
Multiband
Corp.
|
MDU
|
MCS
|
Discontinued
Operations
|
Total
|
||||||||||||
Three
months ended September 30, 2004:
|
||||||||||||||||
Revenues
|
0
|
2,122,375
|
1,795,967
|
0
|
3,918,342
|
|||||||||||
Income
(loss) from continuing operations
|
(651,907
|
)
|
467,222
|
(1,012,918
|
)
|
0
|
(1,197,603
|
)
|
||||||||
Identifiable
assets
|
2,491,401
|
10,412,321
|
12,252,604
|
4,857,792
|
30,014,118
|
|||||||||||
Depreciation
and amortization
|
7,636
|
394,911
|
645,484
|
0
|
1,048,031
|
|||||||||||
Capital
expenditures
|
3,083
|
0
|
203,113
|
37,201
|
243,397
|
Multiband
Corp.
|
MDU
|
MCS
|
Discontinued
Operations
|
Total
|
||||||||||||
Nine
months ended September 30, 2005:
|
||||||||||||||||
Revenues
|
0
|
6,105,405
|
6,042,737
|
0
|
12,148,142
|
|||||||||||
Income
(loss) from continuing operations
|
(3,599,284
|
)
|
1,817,807
|
(3,992,267
|
)
|
0
|
(5,773,744
|
)
|
||||||||
Identifiable
assets
|
5,980,426
|
8,807,015
|
13,770,664
|
0
|
28,558,105
|
|||||||||||
Depreciation
and amortization
|
143,131
|
1,203,237
|
2,276,554
|
0
|
3,622,922
|
|||||||||||
Capital
expenditures
|
26,136
|
0
|
629,293
|
42,840
|
698,269
|
Multiband
Corp.
|
MDU
|
MCS
|
Discontinued
Operations
|
Total
|
||||||||||||
Nine
months ended September 30, 2004:
|
||||||||||||||||
Revenues
|
0
|
3,998,039
|
3,594,219
|
0
|
7,592,258
|
|||||||||||
Income
(loss) from continuing operations
|
(2,196,055
|
)
|
591,573
|
(1,907,909
|
)
|
0
|
(3,512,391
|
)
|
||||||||
Identifiable
assets
|
2,491,401
|
10,412,321
|
12,252,604
|
4,857,792
|
30,014,118
|
|||||||||||
Depreciation
and amortization
|
527,930
|
795,406
|
1,227,617
|
0
|
2,550,953
|
|||||||||||
Capital
expenditures
|
9,773
|
0
|
338,195
|
135,842
|
483,810
|
Sale
Price
|
||||
Cash
proceeds
|
$
|
1,682,184
|
||
Note
receivable
|
400,000
|
|||
Assumed
liabilities
|
438,868
|
|||
Total
sale price
|
2,521,052
|
|||
Assets
sold
|
||||
Inventory,
net of reserve
|
1,045,110
|
|||
Property
and equipment
|
52,351
|
|||
Net
assets sold
|
1,097,461
|
|||
Less
costs and expenses
|
||||
Broker’s
fee
|
122,500
|
|||
Other
selling expense
|
10,135
|
|||
Sublease
for one year at no charge
|
500,000
|
|||
Additional
free rent related to inventory adjustment
|
500,000
|
|||
Legal
and accounting costs
|
37,600
|
|||
Total
costs
|
1,170,235
|
|||
Net
gain on sale
|
$
|
253,356
|
Three
Months Ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
Statement
of Operations
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Revenues
|
$
|
1,056
|
$
|
5,123,926
|
$
|
3,699,983
|
$
|
15,106,352
|
|||||
Cost
of sales
|
—
|
3,847,266
|
2,701,664
|
11,519,594
|
|||||||||
Selling,
general and administrative
|
(97,328
|
)
|
1,232,561
|
1,210,174
|
3,794,751
|
||||||||
Depreciation
and amortization
|
—
|
71,537
|
56,188
|
278,405
|
|||||||||
Impairment
of goodwill
|
—
|
527,879
|
—
|
527,879
|
|||||||||
Income
(loss) from operations
|
98,834
|
(555,317
|
)
|
(268,043
|
)
|
(1,014,277
|
)
|
||||||
Other
income (expense)
|
—
|
(98,672
|
)
|
(55,440
|
)
|
(293,263
|
)
|
||||||
Net
income (loss)
|
98,384
|
(653,989
|
)
|
(323,483
|
)
|
(1,307,540
|
)
|
||||||
Gain
on sale
|
149,865
|
—
|
253,356
|
—
|
|||||||||
Income
(loss) from discontinued operations
|
$
|
248,249
|
$
|
(653,989
|
)
|
$
|
(70,127
|
)
|
$
|
(1,307,540
|
)
|
||
DOLLAR
AMOUNTS AS A
PERCENTAGE
OF REVENUES
|
DOLLAR
AMOUNTS AS A
PERCENTAGE
OF REVENUES
|
||||||||||||
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
||||||||||||
September
30, 2005
(unaudited)
|
September
30, 2004(unaudited)
|
September
30, 2005
(unaudited)
|
September
30, 2004
(unaudited)
|
||||||||||
REVENUES
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|||||
|
|
|
|
||||||||||
COST
OF PRODUCTS & SERVICES (Exclusive of depreciation and amortization
shown below)
|
54.1%
|
|
49.5%
|
|
48.5%
|
|
53.5%
|
|
|||||
|
|
|
|
||||||||||
SELLING,
GENERAL & ADMINISTRATIVE
|
57.6%
|
|
47.8%
|
|
57.4%
|
|
50.6%
|
|
|||||
|
|
|
|
||||||||||
DEPRECIATION
& AMORTIZATION
|
29.5%
|
|
26.7%
|
|
29.8%
|
|
33.6%
|
|
|||||
|
|
|
|
||||||||||
LOSS
FROM OPERATIONS
|
-41.2%
|
|
-24.0%
|
|
-35.7%
|
|
-37.7%
|
|
|||||
|
|
|
|
||||||||||
INTEREST
EXPENSE & OTHER, NET
|
-10.7%
|
|
-6.6%
|
|
-11.8%
|
|
-8.6%
|
|
|||||
|
|
|
|||||||||||
LOSS
FROM CONTINUING OPERATIONS
|
-51.9%
|
|
-30.6%
|
|
-47.5%
|
|
-46.3%
|
|
|||||
|
|
|
|||||||||||
INCOME
(LOSS) FROM DISCONTINUED OPERATIONS
|
5.8%
|
|
-16.7%
|
|
-0.6%
|
|
-17.2%
|
|
|||||
|
|
|
|||||||||||
NET
LOSS
|
-46.1%
|
|
-47.3%
|
|
-48.1%
|
|
-63.5%
|
|
(a) |
An
annual meeting of Multiband Corporation shareholders was held on
August
31, 2005. There were present or present by proxy at the meeting
10,692,303
votes, the majority necessary to hold a
quorum.
|
(b)
|
The
meeting resulted in the following votes related to the following
proxy
items:
|
1. |
Election
of Directors:
|
For
|
Against
|
Abstain
|
||||||||
Bennett
|
10,690,353
|
1,250
|
0
|
|||||||
Mandel
|
10,689,386
|
2,917
|
0
|
|||||||
Bell
|
10,689,386
|
2,917
|
0
|
|||||||
Miller,
Dodge, Harris, Weiss
|
10,690,353
|
1,250
|
0
|
2. |
Ratify
the election of Virchow, Krause & Company, LLP as independent auditors
of the Company for Fiscal Year
2004.
|
For
|
Against
|
Abstain
|
|||||
10,692,303
|
0
|
0
|
(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 21, 2005 | By: | /s/ James L. Mandel |
|
||
Chief Executive Officer |
Date: November 21, 2005 | By: | /s/ Steven M. Bell |
|
||
Chief
Executive Officer
(Principal Financial and Accounting
Officer)
|