x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
|
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2008
OR
|
|
¨
|
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
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Page
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Part
I
|
Item
1.
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Business
|
2
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Item
1A.
|
Risk
Factors
|
4
|
|
Item
1B.
|
Unresolved
Staff Comments
|
7
|
|
Item
2.
|
Properties
|
8
|
|
Item
3.
|
Legal
Proceedings
|
8
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
8
|
|
Part
II
|
|
||
Item
5.
|
Market
for the Registrant's Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities
|
8
|
|
Item
6.
|
Selected
Consolidated Financial Data
|
12
|
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
13
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
24
|
|
Item
8.
|
Consolidated
Financial Statements and Supplementary Data
|
24
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
24
|
|
Item
9A.
|
Disclosure
Controls and Procedures
|
24
|
|
Item
9B.
|
Other
Information
|
26
|
|
Part
III
|
|
||
Item
10.
|
Directors,
Executive Officers, and Corporate Governance
|
26
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|
Item
11.
|
Executive
and Director Compensation
|
29
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management
|
33
|
|
Item
13.
|
Certain
Relationships, Related Transactions and Director
Independence
|
34
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
34
|
|
Item
15.
|
Exhibits
and Financial Statement Schedules
|
34
|
|
Signatures
|
37
|
Quarter Ended
|
High Bid
|
Low Bid
|
||||||
March 31, 2008
|
3.33 | 1.63 | ||||||
June 30, 2008
|
1.99 | .69 | ||||||
September 30, 2008
|
1.87 | .70 | ||||||
December 31, 2008
|
1.80 | 1.00 | ||||||
March 31, 2007
|
4.10 | 2.00 | ||||||
June 30, 2007
|
3.90 | 1.10 | ||||||
September 30, 2007
|
5.05 | 2.39 | ||||||
December 31, 2007
|
4.20 | 2.26 |
Statement of Operations
Data
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Revenues
|
$ | 42,986,513 | $ | 15,085,604 | $ | 18,051,601 | $ | 16,515,426 | $ | 11,067,834 | ||||||||||
Cost of products and services (exclusive of
depreciation and amortization listed separately
below)
|
$ | 28,425,926 | $ | 8,339,933 | $ | 8,280,666 | $ | 7,849,597 | $ | 5,943,395 | ||||||||||
Cost of products and services as % of
revenue
|
66.13 | % | 55.3 | % | 45.9 | % | 47.5 | % | 53.7 | % | ||||||||||
Selling, general and administrative
expenses
|
$ | 10,499,863 | $ | 8,887,883 | $ | 11,480,677 | $ | 9,723,132 | $ | 5,986,267 | ||||||||||
Selling, general and administrative as % of
revenues
|
24.43 | % | 58.9 | % | 63.6 | % | 58.9 | % | 54.1 | % | ||||||||||
Depreciation and
amortization
|
$ | 3,025,478 | $ | 3,623,903 | $ | 5,168,209 | $ | 4,780,436 | $ | 3,432,779 | ||||||||||
Impairment of assets
|
$ | 132,209 | $ | - | $ | 2,261,500 | $ | - | $ | - | ||||||||||
Income (loss) from
operations
|
$ | 903,037 | $ | (5,766,115 | ) | $ | (9,139,451 | ) | $ | (5,837,739 | ) | $ | (4,294,607 | ) | ||||||
Other income (expense), net
|
$ | 1,826,061 | $ | (322,238 | ) | $ | (1,046,472 | ) | $ | (1,655,088 | ) | $ | (1,032,035 | ) | ||||||
Income (loss) before income taxes and minority
interest in subsidiary
|
$ | 2,729,098 | $ | (6,088,353 | ) | $ | (10,185,923 | ) | $ | (7,492,827 | ) | $ | (5,326,642 | ) | ||||||
Provision for income taxes
|
$ | 1,132,000 | $ | - | $ | - | $ | - | $ | - | ||||||||||
Minority interest in net income of
subsidiary
|
$ | 652,167 | $ | - | ||||||||||||||||
Income (loss) from continuing
operations
|
$ | 944,931 | $ | (6,088,353 | ) | $ | (10,185,923 | ) | $ | (7,492,827 | ) | $ | (5,326,642 | ) | ||||||
Discontinued operations
|
$ | - | $ | - | $ | 2,200 | $ | 17,827 | $ | (4,457,320 | ) | |||||||||
Net income (loss)
|
$ | 944,931 | $ | (6,088,353 | ) | $ | (10,183,723 | ) | $ | (7,475,000 | ) | $ | (9,783,962 | ) | ||||||
Loss attributable to common
stockholders
|
$ | (3,143,344 | ) | $ | (8,388,855 | ) | $ | (14,250,446 | ) | $ | (10,827,229 | ) | $ | (10,374,417 | ) | |||||
Income (loss) from continuing
operations
|
$ | (.34 | ) | $ | (1.16 | ) | $ | (2.11 | ) | $ | (1.86 | ) | $ | (1.27 | ) | |||||
Income (loss) from discontinued
operations
|
$ | (.00 | ) | $ | (.00 | ) | $ | (.00 | ) | $ | (.00 | ) | $ | (.96 | ) | |||||
Loss attributable to common
stockholders
|
$ | (.34 | ) | $ | (1.16 | ) | $ | (2.11 | ) | $ | (1.86 | ) | $ | (2.23 | ) | |||||
Weighted average shares
outstanding
|
9,302,570 | 7,237,473 | 6,757,643 | 5,819,585 | 4,661,519 |
Balance Sheet Data
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Working Capital
(deficiency)
|
$ | 2,465,209 | $ | (5,018,177 | ) | $ | (5,294,245 | ) | $ | (971,418 | ) | $ | (8,931,414 | ) | ||||||
Total Assets
|
$ | 26,043,228 | $ | 8,893,429 | $ | 17,986,056 | $ | 26,271,405 | $ | 26,633,712 | ||||||||||
Mandatory Redeemable Preferred Stock (1)
|
$ | 150,000 | $ | 220,256 | $ | 280,000 | $ | 333,334 | $ | 500,000 | ||||||||||
Long-Term Debt, net (2)
|
$ | 345,874 | $ | 118,924 | $ | 2,969,764 | $ | 3,816,536 | $ | 3,498,657 | ||||||||||
Capital Lease Obligations, net (2)
|
$ | 317,628 | $ | 249,469 | $ | 491,672 | $ | 452,649 | $ | 481,249 | ||||||||||
Stockholders’ Equity
|
$ | 5,642,247 | $ | 673,838 | $ | 5,659,309 | $ | 14,968,295 | $ | 8,549,431 |
|
2008
|
2007
|
||||||
Revenues
|
||||||||
Multiband
|
0.00 | % | 0.00 | % | ||||
MCS
|
8.68 | % | 34.06 | % | ||||
MDU
|
36.20 | % | 65.94 | % | ||||
HSP
|
55.12 | % | - | % | ||||
Total
Revenues
|
100.00 | % | 100.00 | % | ||||
Cost
of Products and Services (exclusive of depreciation and
amortization)
|
||||||||
Multiband
|
0.00 | % | 0.00 | % | ||||
MCS
|
6.19 | % | 23.09 | % | ||||
MDU
|
22.11 | % | 32.19 | % | ||||
HSP
|
37.83 | % | - | % | ||||
Total
Cost of Products and Services (exclusive of depreciation and
amortization)
|
66.13 | % | 55.28 | % | ||||
Selling,
General and Administrative Expenses
|
24.43 | % | 58.92 | % | ||||
Impairment
of Assets
|
0.31 | % | 0.00 | % | ||||
Income
(Loss) from Continuing Operations
|
2.20 | % | (40.36 | )% | ||||
Net
Income (Loss)
|
2.20 | % | (40.36 | )% |
Total
Assets
|
2008
|
2007
|
||||||
Multiband
|
$ | 5,567,052 | $ | 1,272,271 | ||||
MCS
|
3,373,305 | 2,968,249 | ||||||
MDU
|
4,098,137 | 4,652,909 | ||||||
HSP
|
13,004,734 | - | ||||||
Total
Assets
|
$ | 26,043,228 | $ | 8,893,429 |
As reported
|
Less:
DTHC
Related(1)
|
(unaudited)
Proforma
|
||||||||||
Accounts
receivable, net
|
$ | 3,436,424 | $ | (771,427 | ) | $ | 2,664,997 | |||||
Other
receivable – related party
|
7,666,295 | (7,666,295 | ) | - | ||||||||
Prepaid
expenses and other
|
1,273,083 | (518,024 | ) | 755,059 | ||||||||
Accounts
payable
|
8,274,003 | (1,127,005 | ) | 7,146,998 | ||||||||
Revenues
|
42,986,513 | (3,333,119 | ) | 39,653,394 | ||||||||
Cost
of products and services (exclusive of depreciation and amortization shown
separately below)
|
28,425,926 | (2,895,176 | ) | 25,530,750 | ||||||||
Selling,
general and administrative
|
10,499,863 | 750,000 | 11,249,863 | |||||||||
Management
consulting income
|
2,366,466 | (2,366,466 | ) | - |
(1)
|
All
adjustments described in the paragraphs of Note
16
|
|
2007
|
2006
|
||||||
Revenues
|
||||||||
Multiband
|
0.00 | % | 0.00 | % | ||||
MCS
|
34.06 | % | 41.96 | % | ||||
MDU
|
65.94 | % | 58.04 | % | ||||
Total
Revenues
|
100.00 | % | 100.00 | % | ||||
Cost
of Products and Services (exclusive of depreciation and
amortization)
|
||||||||
Multiband
|
0.00 | % | 0.00 | % | ||||
MCS
|
23.09 | % | 22.56 | % | ||||
MDU
|
32.19 | % | 23.31 | % | ||||
Total
Cost of Products and Services (exclusive of depreciation and
amortization)
|
55.28 | % | 45.87 | % | ||||
Selling,
General and Administrative Expenses
|
58.92 | % | 63.60 | % | ||||
Impairment
of Assets
|
0.00 | % | 12.53 | % | ||||
Loss
from Continuing Operations
|
(40.36 | )% | (56.42 | )% | ||||
Gain(Loss)
from Discontinued Operations
|
0.00 | % | 0.01 | % | ||||
Net
Loss
|
(40.36 | )% | (56.41 | )% |
Total
Assets
|
2007
|
2006
|
||||||
Multiband
|
$ | 1,272,271 | $ | 2,478,638 | ||||
MCS
|
2,968,249 | 9,063,793 | ||||||
MDU
|
4,652,909 | 6,443,625 | ||||||
Total
Assets
|
$ | 8,893,429 | $ | 17,986,056 |
Dec.
31,
2008
|
Sept.
30,
2008
|
June
30,
2008
|
March
31,
2008
|
Dec.
31,
2007
|
Sept.
30,
2007
|
June
30,
2007
|
March
31,
2007
|
|||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Multiband
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
MCS
|
$ | 1,242,666 | $ | 799,445 | $ | 840,466 | $ | 848,562 | $ | 797,164 | $ | 1,084,114 | $ | 1,404,398 | $ | 1,852,080 | ||||||||||||||||
MDU
|
$ | 5,164,136 | $ | 4,148,786 | $ | 3,360,696 | $ | 2,885,711 | $ | 2,328,159 | $ | 2,569,486 | $ | 2,517,328 | $ | 2,532,875 | ||||||||||||||||
HSP
|
$ | 7,719,116 | $ | 7,392,428 | $ | 6,604,545 | $ | 1,979,956 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
Total
Revenues
|
$ | 14,125,918 | $ | 12,340,659 | $ | 10,805,707 | $ | 5,714,229 | $ | 3,125,323 | $ | 3,653,600 | $ | 3,921,726 | $ | 4,384,955 | ||||||||||||||||
Cost
of Products & services (exclusive of depreciation and amortization
shown separately below)
|
$ | 9,655,989 | $ | 8,556,168 | $ | 6,393,571 | $ | 3,820,198 | $ | 1,944,754 | $ | 2,345,895 | $ | 1,871,238 | $ | 2,178,046 | ||||||||||||||||
SG&A
Expense
|
$ | 3,326,506 | $ | 2,757,319 | $ | 2,560,755 | $ | 1,855,283 | $ | 1,829,947 | $ | 2,360,254 | $ | 2,308,426 | $ | 2,389,256 | ||||||||||||||||
Depreciation
& Amortization
|
$ | 562,399 | $ | 846,317 | $ | 879,055 | $ | 737,707 | $ | 808,922 | $ | 770,215 | $ | 995,068 | $ | 1,049,698 | ||||||||||||||||
Impairment
of assets
|
$ | 66,757 | - | $ | 7,406 | $ | 58,046 | - | - | - | - | |||||||||||||||||||||
Operating
Income (Loss)
|
$ | 514,267 | $ | 180,855 | $ | 964,920 | $ | (757,005 | ) | $ | (1,458,300 | ) | $ | (1,822,764 | ) | $ | (1,253,006 | ) | $ | (1,232,045 | ) | |||||||||||
Interest
Expense
|
$ | (142,804 | ) | $ | (300,826 | ) | $ | (113,000 | ) | $ | (100,659 | ) | $ | (73,623 | ) | $ | (108,847 | ) | $ | (168,010 | ) | $ | (153,407 | ) | ||||||||
Management
Income
|
919,528 | 1,446,938 | - | - | - | - | - | - | ||||||||||||||||||||||||
Other
Income (Expenses)
|
$ | 36,185 | $ | 8,109 | $ | 32,407 | $ | 40,183 | $ | 4,288 | $ | 13,267 | $ | 141,037 | $ | 23,057 | ||||||||||||||||
Net
Income (Loss) Before Taxes and Minority
Interest
|
$ | 1,327,176 | $ | 1,335,076 | $ | 884,327 | $ | (817,481 | ) | $ | (1,527,635 | ) | $ | (1,918,344 | ) | $ | (1,279,979 | ) | $ | (1,362,395 | ) | |||||||||||
Income
Tax Provision
|
$ | 382,542 | $ | 286,658 | $ | 434,300 | $ | 28,500 | - | - | - | - | ||||||||||||||||||||
Minority
Interest
|
$ | 102,409 | $ | 137,755 | $ | 393,586 | $ | 18,417 | - | - | - | - | ||||||||||||||||||||
Net
Income (Loss)
|
$ | 842,225 | $ | 910,663 | $ | 56,441 | $ | (864,398 | ) | $ | (1,527,635 | ) | $ | (1,918,344 | ) | $ | (1,279,979 | ) | $ | (1,362,395 | ) | |||||||||||
Income
(Loss) attributable to commons stockholders
|
$ | 802,646 | $ | 846,649 | $ | (47,221 | ) | $ | (4,745,418 | ) | $ | (1,674,439 | ) | $ | (3,711,641 | ) | $ | (1,400,453 | ) | $ | (1,602,322 | ) | ||||||||||
Income
(Loss) per common share attributable to common stockholders –
basic
|
$ | 0.08 | $ | 0.09 | $ | 0.00 | $ | (0.56 | ) | $ | (0.23 | ) | $ | (.50 | ) | $ | (.20 | ) | $ | (.23 | ) | |||||||||||
Income
(Loss) per common share attributable to common stockholders –
diluted
|
$ | 0.08 | $ | 0.09 | $ | 0.00 | $ | (0.56 | ) | $ | (0.23 | ) | $ | (.50 | ) | $ | (.20 | ) | $ | (.23 | ) | |||||||||||
Weighted
average shares outstanding – basic
|
9,634,174 | 9,561,718 | 9,499,469 | 8,497,734 | 7,415,629 | 7,356,413 | 7,093,071 | 7,079,781 | ||||||||||||||||||||||||
Weighted
average shares outstanding – diluted
|
9,865,287 | 9,796,685 | 9,499,469 | 8,497,734 | 7,415,629 | 7,356,413 | 7,093,071 | 7,079,781 |
1.
|
Reduction
of operating expenses by controlling payroll, professional fees and other
general and administrative
expenses.
|
2.
|
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 DTHC. MMT installs DirecTV video services
in single family homes. Historically, MMT has been
profitable. In 2008, by combining MMT operations with Multiband
operations, Multiband achieved a beneficial impact to its consolidated
cash flows and operating results. In January 2009, Multiband
significantly expanded its single family home video installation business
by purchasing the former operations of DTHC. However, there is
no guarantee that the results of the HSP business segment will be
favorable to the Company in future
periods.
|
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.
|
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.
|
7.
|
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.
|
Total
|
1 Year or Less
|
2-3 Years
|
Over 3
Years
|
|||||||||||||
Operating
leases - buildings
|
$ | 2,335,000 | $ | 625,000 | $ | 944,000 | $ | 766,000 | ||||||||
Operating
leases - vehicles
|
3,412,000 | 1,060,000 | 1,814,000 | 538,000 | ||||||||||||
Capital
leases
|
722,370 | 368,639 | 349,948 | 3,783 | ||||||||||||
Long-term
debt
|
2,255,589 | 1,721,198 | 40,597 | 493,794 | ||||||||||||
Totals
|
$ | 8,724,959 | $ | 3,774,837 | $ | 3,148,545 | $ | 1,801,577 |
Year
|
Amount
|
|||
2009
|
6,397,000 | |||
2010
|
5,640,000 | |||
2011
|
4,501,000 | |||
2012
|
1,667,000 | |||
2013
|
451,000 | |||
Thereafter
|
901,000 | |||
$ | 19,557,000 |
Name of Director and/or Executive Officer
|
Age
|
Position
|
Director Since
|
|||
Steven Bell
|
49
|
President
& Chief Financial Officer, Multiband Corporation
|
1994
|
|||
Frank
Bennett
|
52
|
President,
Artesian Management, Inc.
|
2002
|
|||
Jonathan
Dodge
|
57
|
Partner,
Dodge & Fox C.P.A. Firm
|
1997
|
|||
Eugene
Harris
|
44
|
Managing
Director, Flagstone Securities
|
2004
|
|||
James
L. Mandel
|
51
|
Chief
Executive Officer, Multiband Corporation
|
1998
|
|||
Donald
Miller
|
68
|
Chairman,
Multiband Corporation
|
2001
|
|||
Bernard
Schafer
|
49
|
Director,
DirecTECH Holding Company, Inc.
|
2008
|
·
|
recommends
to our Board of Directors the independent registered public accountants to
conduct the annual audit of our books and
records;
|
·
|
reviews
the proposed scope and results of the
audit;
|
·
|
approves
the audit fees to be paid;
|
·
|
reviews
accounting and financial controls with the independent registered public
accountants and our financial and accounting staff;
and
|
·
|
reviews
and approves transactions between us and our Directors, officers and
affiliates.
|
·
|
reviews
and recommends the compensation arrangements for management, including the
compensation for our chief executive officer;
and
|
·
|
establishes
and reviews general compensation policies with the objective to attract
and retain superior talent, to reward individual performance and to
achieve our financial goals.
|
Item
11.
|
Executive
and Director Compensation
|
Name and principal
position
|
Year
|
Salary
|
Bonus
|
(1)
Stock
awards
|
Option
awards
|
Non-equity
incentive plan
compensation
|
Change in
pension value
and nonqualified
deferred
compensation
earnings
|
All other
compensation
|
Total
|
|||||||||||||||||||||||||
James
Mandel
Chief
Executive Officer
|
2008
|
$ | 259,615 | $ | 155,500 | $ | 15,750 | $ | - | $ | - | $ | - | $ | 7,848 | $ | 438,713 | |||||||||||||||||
Steven
Bell
Chief
Financial Officer
|
2008
|
208,814 | 7,000 | 7,875 | - | - | - | 7,848 | 231,537 | |||||||||||||||||||||||||
Dave
Ekman
Chief
Information Officer
|
2008
|
155,764 | 2,183 | - | - | - | - | 5,000 | 162,947 |
(1)
|
The
amounts in this column are calculated based on FAS 123R and equal the
financial statement compensation expense as reported in our 2008
consolidated statement of operations for the fiscal
year.
|
Name
|
Fees earned
or paid in
cash
|
Stock awards
|
(1)
Option
awards
|
Non-equity
incentive plan
compensation
|
Change in
pension value
and nonqualified
deferred
compensation
earnings
|
(2)
All other
compensation
|
Total
|
|||||||||||||||||||||
F Bennett
|
$ | 10,000 | $ | - | $ | 8,694 | $ | - | $ | - | $ | 2,216 | $ | 20,910 | ||||||||||||||
J Dodge
|
10,000 | - | 8,694 | - | - | - | 18,694 | |||||||||||||||||||||
E Harris
|
10,000 | - | 8,694 | - | - | 3,754 | 22,448 | |||||||||||||||||||||
D Miller
|
10,000 | - | 17,387 | - | - | 1,251 | 28,638 |
(1)
|
The
amounts in this column are calculated based on FAS 123R and equal the
financial statement compensation expense as reported in our 2008
consolidated statement of operations for the fiscal year. Total
board of directors options outstanding at December 31, 2008 are
164,400
|
(2)
|
Represents
payment of expenses incurred in conjunction with attending board
meetings.
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable (#)
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable (#)
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)
|
||||||||||||||||||||||||
Steven
M. Bell
|
2,000
|
(1)
|
-
|
-
|
$
|
22.00
|
1/31/2011
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||||||||||||
100
|
(2)
|
-
|
-
|
7.50
|
8/28/2011
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
10,000
|
(3)
|
-
|
-
|
5.50
|
1/8/2013
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
5,000
|
(4)
|
-
|
-
|
9.45
|
4/23/2014
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
10,000
|
(5)
|
-
|
-
|
7.25
|
6/18/2014
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
80,000
|
(6)
|
-
|
-
|
7.35
|
1/16/2015
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
David
Ekman
|
30,000
|
(7)
|
-
|
-
|
10.00
|
12/29/2009
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
100
|
(8)
|
-
|
-
|
7.50
|
8/28/2011
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
40,000
|
(9)
|
-
|
-
|
6.75
|
4/27/2015
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
James
L. Mandel
|
100
|
(10)
|
-
|
-
|
7.50
|
8/28/2011
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
60,000
|
(11)
|
-
|
-
|
7.50
|
1/8/2013
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
20,000
|
(12)
|
-
|
-
|
7.25
|
6/18/2014
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
120,000
|
(13)
|
-
|
-
|
7.35
|
1/6/2015
|
-
|
-
|
-
|
-
|
(1)
|
The
stock option was granted January 31, 2001 and is fully
vested.
|
(2)
|
The
stock option was granted August 28, 2001 and is fully
vested.
|
(3)
|
The
stock option was granted January 8, 2003 and is fully
vested.
|
(4)
|
The
stock option was granted April 23, 2004 and is fully
vested.
|
(5)
|
The
stock option was granted June 18, 2004 and is fully
vested.
|
(6)
|
The
stock option was granted January 6, 2005 and is fully
vested.
|
(7)
|
The
stock option was granted December 29, 1999 and is fully
vested.
|
(8)
|
The
stock option was granted August 28, 2001 and is fully
vested.
|
(9)
|
The
stock option was granted April 27, 2005 and is fully
vested.
|
(10)
|
The
stock option was granted August 28, 2001 and is fully
vested.
|
(11)
|
The
stock option was granted January 8, 2003 and is fully
vested.
|
(12)
|
The
stock option was granted June 18, 2004 and is fully
vested.
|
(13)
|
The
stock option was granted January 6, 2005 and is fully
vested.
|
Name and Address of Beneficial Owners
|
Number of Shares1
Beneficially Owned
|
Percent of
Common Shares
Outstanding
|
||||||
Steven
Bell
9449
Science Center Drive
New
Hope, MN 55428
|
225,313 | 2 | 2.34 | % | ||||
Frank
Bennett
301
Carlson Parkway – Suite 120
Minnetonka,
Minnesota 55305
|
228,000 | 3 | 2.36 | % | ||||
Jonathan
Dodge
715
Florida Avenue South – Suite 402
Golden
Valley, MN 55426
|
56,100 | 4 | * | |||||
David
Ekman
200
44th
Street SW
Fargo,
ND 58103
|
433,917 | 5 | 4.50 | % | ||||
Eugene
Harris
7773
Forsyth Blvd
Clayton,
MO 63105
|
101,290 | 6 | 1.05 | % | ||||
James
L. Mandel
9449
Science Center Drive
New
Hope, MN 55428
|
247,367 | 7 | 2.57 | % | ||||
Donald
Miller
1924
Cocoplum Way
Naples,
FL 34105
|
337,021 | 8 | 3.50 | % | ||||
Bernard
Schafer
2185
East Remus Road
Mt.
Pleasant, MI 48858
|
- | * | ||||||
Special
Situations Fund II QP, LP
527
Madison Avenue
New
York, NY 10022
|
982,481 | 10.19 | % | |||||
DirecTECH
Holding Company, Inc.
33
West Second Street, Suite 504
Maysville,
KY 41056-1166
|
1,490,000 | 15.45 | % | |||||
Lacuna,
LLC
1100
Spruce Street
Boulder,
CO 80302
|
881,000 | 9.14 | % | |||||
All
Directors and executive officers as a group (eight
persons)
|
1,629,008 | 16.90 | % |
2008
|
2007
|
|||||||
Audit
Fees
|
$ | 308,787 | $ | 227,996 | ||||
Audit-Related
Fees
|
13,836 | (1) | 18,230 | (2) | ||||
Tax
Fees
|
25,979 | 20,258 | ||||||
Total
|
$ | 348,602 | $ | 266,484 |
(1)
|
Fees
related to accounting required for the acquisition of
MMT.
|
(2)
|
Fees
related to S-3 and S-1 filings and accounting for possible merger with the
Form S-4 filings.
|
Exhibit No.
|
Description
|
|
2.1
|
Asset
Purchase Agreement and related documents with Enstar Networking
Corporation dated December 31, 1998(1)
|
|
2.2
|
Agreement
and Plan of Merger with Ekman, Inc. dated December 29,
1999(1)
|
|
2.3
|
Asset
Purchase Agreement with Vicom Systems (14)
|
|
3.1
|
Amended
and Restated Articles of Incorporation of Vicom,
Inc.(1)
|
|
3.2
|
Restated
Bylaws of Vicom, Incorporated(1)
|
|
3.3
|
Articles
of Incorporation of Corporate Technologies, USA,
Inc.(1)
|
|
3.5
|
Audit
Committee Charter (9)
|
|
4.1
|
Certificate
of Designation of the Relative Rights, Restrictions and Preferences of 8%
Class A Cumulative Convertible Preferred Stock and 10% Class B
Cumulative Convertible Preferred Stock dated December 9,
1998(1)
|
|
4.2
|
Form
of Warrant Agreement(1)
|
|
4.3
|
Warrant
Agreement with James Mandel dated December 29, 1999(1)
|
|
4.4
|
Warrant
Agreement with Marvin Frieman dated December 29,
1999(1)
|
|
4.5
|
Warrant
Agreement with Pierce McNally dated December 29,
1999(1)
|
|
4.6
|
Warrant
Agreement with Enstar, Inc. dated December 29, 1999(1)
|
|
4.7
|
Warrant
Agreement with David Ekman dated December 29, 1999(1)
|
|
4.8
|
Certificate
of Designation of the Relative Rights, Restrictions and Preferences of 10%
Class C Cumulative Convertible Stock(2)
|
|
4.9
|
Certificate
of Designation of the Relative Rights, Restrictions and Preferences of 14%
Class D Cumulative Convertible Stock(2)
|
|
4.10
|
Certificate
of Designation of the Relative Rights, Restrictions and Preferences of 15%
Class E Cumulative Convertible Stock(2)
|
|
4.11
|
Securities
Purchase Agreement Dated September 18, 2003 (6)
|
|
4.12
|
Secured
Convertible Note Agreement (7)
|
|
4.13
|
Wholesale
Services Agreement Dated March 4, 2004 (8)
|
|
4.14
|
Note
Purchase Agreement (11)
|
|
4.15
|
Series
H Preferred Documents (12)
|
|
4.16
|
Series
I Preferred Documents (13)
|
|
5.1
|
Opinion
of Steven M. Bell, Esq.(6)
|
|
10.1
|
Vicom
Lease with Marbell Realty dated June 20, 1996(1)
|
|
10.2
|
Employment
Agreement with Marvin Frieman dated October 1, 1996(1)
|
|
10.3
|
Employment
Agreement with Steven Bell dated October 1, 1996(1)
|
|
10.4
|
Employment
Agreement with James Mandel dated August 14, 1998(1)
|
|
10.5
|
Vicom
Associate Agreement with NEC America, Inc. dated June
1999(1)
|
|
10.6
|
Loan
Agreement with Wells Fargo dated June 17, 1999(1)
|
|
10.7
|
Employment
Agreement with David Ekman dated December 29, 1999(1)
|
|
10.8
|
Debenture
Loan Agreement with Convergent Capital dated March 9,
2000(1)
|
|
10.9
|
Corporate
Technologies, USA, Inc. lease with David Ekman dated January 19,
2000(1)
|
|
10.10
|
Amendment
dated July 11, 2000 to debenture loan agreement with Convergent Capital
dated March 9, 2000.(2)
|
|
10.11
|
Corporate
Technologies agreement with Siemens dated December 14,
2001(4)
|
|
10.12
|
Note
with Pyramid Trading, L.P. (4)
|
|
10.14
|
Employment
Agreement of Steven M. Bell dated January, 1, 2002(5)
|
|
10.15
|
Employment
Agreement of James Mandel dated January 1, 2002(5)
|
|
10.16
|
Acquisition
Agreement of Minnesota Digital Universe (9)
|
|
10.17
|
Acquisition
of Rainbow Satellite Group, LLC (10
|
|
10.18
|
Asset
Purchase Agreement between Multiband Corporation and Consolidated Smart
Broadband Systems dated March 1, 2007 (15)
|
|
10.19
|
Asset
Purchase Agreement between Multiband Corporation and MDU Communications
dated July 21, 2007 (16)
|
|
10.20
|
Supplemental
Agreement and Plan of Share Exchange (18)
|
|
10.21
|
Stock
Purchase Agreement (19)
|
|
10.22
|
First
Amendment to Stock Purchase Agreement (20)
|
|
10.23
|
Employment
Agreements of James Mandel, Steven Bell and J. Basil Mattingly
(21)
|
|
14
|
Multiband
Code of Ethics for Senior Officers (9)
|
|
19.1
|
2000
Non-Employee Director Stock Compensation Plan (3)
|
|
19.2
|
2000
Employee Stock Purchase Plan (3)
|
|
21.1
|
List
of subsidiaries of the registrant(1)
|
|
23.1
|
Consent
of Virchow, Krause & Company, LLP (17)
|
|
24.1
|
Power
of Attorney (included on signature page of original registration
statement)
|
|
31.1
|
Rule
13a-14 (s) Certification of Chief Executive Officer - James Mandel
(17)
|
|
31.2
|
Rule
13a-14 (s) Certification of Chief Financial Officer - Steven
Bell (17)
|
|
32.1
|
Section
1350 of Sarbanes-Oxley Act of 2002 – James Mandel (17)
|
|
32.2
|
Section
1350 of Sarbanes-Oxley Act of 2002 – Steven Bell
(17)
|
MULTIBAND
CORPORATION.
Registrant
|
||
Date:
April 2, 2009
|
By:
|
|
/s/ James L. Mandel
|
||
James
L. Mandel
Chief
Executive Officer
|
||
Date:
April 2, 2009
|
By:
|
|
|
/s/ Steven M. Bell
|
|
Steven
M. Bell
Chief
Executive Officer
(Principal
Financial and Accounting
Officer)
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Financial
Statements
|
|
Consolidated
Balance Sheets
|
F-3
|
Consolidated
Statements of Operations
|
F-5
|
Consolidated
Statements of Comprehensive Income (Loss)
|
F-6
|
Consolidated
Statements of Stockholders' Equity
|
F-7
|
Consolidated
Statements of Cash Flows
|
F-16
|
Notes
to Consolidated Financial Statements
|
F-17
|
Supplemental
Information
|
|
Report
of Independent Registered Public Accounting Firm on Supplementary
Information
|
F-51
|
Valuation
and Qualifying Accounts
|
F-52
|
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 4,346,377 | $ | 944,456 | ||||
Securities
available for sale
|
45,594 | - | ||||||
Accounts
receivable, net
|
3,436,424 | 1,560,123 | ||||||
Other
receivable – related party
|
7,666,295 | - | ||||||
Inventories
|
1,902,868 | 132,992 | ||||||
Prepaid
expenses and other
|
1,273,083 | 135,589 | ||||||
Current
portion of notes receivable
|
61,321 | 59,861 | ||||||
Total
Current Assets
|
18,731,962 | 2,833,021 | ||||||
PROPERTY
AND EQUIPMENT, NET
|
2,033,067 | 1,769,261 | ||||||
OTHER
ASSETS
|
||||||||
Goodwill
|
1,095,166 | 16,757 | ||||||
Intangible
assets, net
|
3,667,866 | 4,072,076 | ||||||
Notes
receivable – long-term, net of current portion
|
39,095 | - | ||||||
Other
assets
|
476,072 | 202,314 | ||||||
Total
Other Assets
|
5,278,199 | 4,291,147 | ||||||
TOTAL
ASSETS
|
$ | 26,043,228 | $ | 8,893,429 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
||||||||
Mandatory
redeemable preferred stock, 15,000 and 22,026 Class F preferred
shares
|
$ | 150,000 | $ | 220,256 | ||||
Current
portion of long-term debt
|
1,608,778 | 1,658,342 | ||||||
Current
portion of capital lease obligations
|
310,656 | 225,291 | ||||||
Accounts
payable
|
8,274,003 | 2,950,596 | ||||||
Accrued
liabilities
|
3,875,193 | 2,531,611 | ||||||
Accrued
income taxes
|
499,153 | - | ||||||
Customer
deposits
|
60,582 | 60,582 | ||||||
Deferred
service obligations and revenue
|
1,488,388 | 204,520 | ||||||
Total
Current Liabilities
|
16,266,753 | 7,851,198 | ||||||
LONG-TERM
LIABILITIES
|
||||||||
Long-term
debt, net of current portion
|
345,874 | 118,924 | ||||||
Capital
lease obligations, net of current portion
|
317,628 | 249,469 | ||||||
Total
Liabilities
|
16,930,255 | 8,219,591 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
MINORITY
INTEREST
|
3,470,726 | - | ||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Cumulative
convertible preferred stock, no par value:
|
||||||||
8%
Class A (14,171 and 24,728 shares issued and outstanding, $148,796 and
$259,644 liquidation preference)
|
213,353 | 371,708 | ||||||
10%
Class B (2,570 and 3,770 shares issued and outstanding, $26,985
and $39,585 liquidation preference)
|
25,700 | 37,700 | ||||||
10%
Class C (114,080 and 120,250 shares issued and outstanding, $1,140,800 and
$1,202,500 liquidation preference)
|
1,481,918 | 1,548,352 | ||||||
10%
Class F (150,000 shares issued and outstanding, $1,500,000 liquidation
preference)
|
1,500,000 | 1,500,000 | ||||||
8%
Class G (11,595 and 26,595 shares issued and outstanding, $115,950 and
$265,950 liquidation preference)
|
47,970 | 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 (9,642,374 and 7,451,891 shares issued and
outstanding)
|
37,687,864 | 29,574,673 | ||||||
Stock
subscriptions receivable
|
(84,071 | ) | (170,888 | ) | ||||
Options
and warrants
|
46,038,402 | 45,871,964 | ||||||
Accumulated
other comprehensive income – unrealized gain on securities available for
sale
|
45,594 | - | ||||||
Accumulated
deficit
|
(81,314,483 | ) | (78,171,139 | ) | ||||
Total
Stockholders' Equity
|
5,642,247
|
673,838
|
||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 26,043,228 | $ | 8,893,429 |
2008
|
2007
|
2006
|
||||||||||
REVENUES
|
$ | 42,986,513 | $ | 15,085,604 | $ | 18,051,601 | ||||||
COSTS
AND EXPENSES
|
||||||||||||
Cost
of products and services (exclusive of depreciation and amortization shown
separately below)
|
28,425,926 | 8,339,933 | 8,280,666 | |||||||||
Selling,
general and administrative
|
10,499,863 | 8,887,883 | 11,480,677 | |||||||||
Depreciation
and amortization
|
3,025,478 | 3,623,903 | 5,168,209 | |||||||||
Impairment
of assets
|
132,209 | - | 2,261,500 | |||||||||
Total
costs and expenses
|
42,083,476 | 20,851,719 | 27,191,052 | |||||||||
INCOME
(LOSS) FROM OPERATIONS
|
903,037 | (5,766,115 | ) | (9,139,451 | ) | |||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||
Interest
expense
|
(657,289 | ) | (503,887 | ) | (1,206,196 | ) | ||||||
Management
consulting income
|
2,366,466 | - | - | |||||||||
Interest
income
|
58,030 | 31,277 | 67,796 | |||||||||
Other
income
|
58,854
|
150,372
|
91,928 | |||||||||
Total
other income (expense)
|
1,826,061
|
(322,238)
|
(1,046,472 | ) | ||||||||
INCOME
(LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST IN
SUBSIDIARY
|
2,729,098 | (6,088,353 | ) | (10,185,923 | ) | |||||||
PROVISION
FOR INCOME TAXES
|
1,132,000 | - | - | |||||||||
MINORITY
INTEREST IN NET INCOME OF SUBSIDIARY
|
652,167 | - | - | |||||||||
INCOME
(LOSS) FROM CONTINUING OPERATIONS
|
944,931 | (6,088,353 | ) | (10,185,923 | ) | |||||||
GAIN
FROM DISCONTINUED OPERATIONS
|
-
|
-
|
2,200 | |||||||||
NET
INCOME (LOSS)
|
944,931 | (6,088,353 | ) | (10,183,723 | ) | |||||||
Preferred
stock dividends
|
4,088,275 | 2,300,502 | 4,066,723 | |||||||||
LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (3,143,344 | ) | $ | (8,388,855 | ) | $ | (14,250,446 | ) | |||
LOSS
PER COMMON SHARE – BASIC AND DILUTED:
|
||||||||||||
LOSS
FROM CONTINUING OPERATIONS
|
$ | (0.34 | ) | $ | (1.16 | ) | $ | (2.11 | ) | |||
GAIN
FROM DISCONTINUED OPERATIONS
|
$ | - | $ | - | $ | 0.0 | ||||||
LOSS
ATTRIBUTABLE TO COMMON
STOCKHOLDERS
|
$ | (0.34 | ) | $ | (1.16 | ) | $ | (2.11 | ) | |||
Weighted
average common shares outstanding – basic and diluted
|
9,302,570 | 7,237,473 | 6,757,643 |
2008
|
2007
|
2006
|
||||||||||
NET
INCOME (LOSS)
|
$ | 944,931 | $ | (6,088,353 | ) | $ | (10,183,723 | ) | ||||
OTHER
COMPREHENSIVE INCOME, NET OF TAX:
|
||||||||||||
Unrealized
gains on securities:
|
||||||||||||
Unrealized
holding gains arising during period
|
45,594 | - | - | |||||||||
COMPREHENSIVE
INCOME (LOSS)
|
$ | 990,525 | $ | (6,088,353 | ) | $ | (10,183,723 | ) |
8%
Class A
|
10%
Class B
|
10%
Class C
|
10%
Class F
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
BALANCES,
December 31, 2005
|
27,931 | $ | 419,752 | 8,390 | $ | 58,900 | 125,050 | $ | 1,607,605 | 150,000 | $ | 1,500,000 | ||||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||||||||||
Cash
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Exercise
of options
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Acquisition
of assets – Extreme Video
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of notes payable
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of preferred stock
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
In
lieu of cash for revenue share payments
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Redemption
of preferred stock
|
(1,273 | ) | (12,730 | ) | (920 | ) | (9,200 | ) | (920 | ) | (9,200 | ) | - | - | ||||||||||||||||||
Intrinsic
value of convertible feature
|
- | (6,365 | ) | - | - | - | (4,929 | ) | - | - | ||||||||||||||||||||||
Adjustment
in Dinamo purchase price
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||||||||||
Cash
received
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
collected
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
earned
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Increase
in reserve
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Warrants
issued for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Options
expense
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Amortization
of deferred compensation
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restricted
stock forfeited
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Common
stock dividends related to spin-off of URON (see Note 10)
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
BALANCES,
December 31, 2006
|
26,658 | $ | 400,657 | 7,470 | $ | 49,700 | 124,130 | $ | 1,593,476 | 150,000 | $ | 1,500,000 |
8%
Class A
|
10%
Class B
|
10%
Class C
|
10%
Class F
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||||||||||
Cash
|
- | $ | - | - | $ | - | - | $ | - | - | $ | - | ||||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of preferred stock
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
In
lieu of cash for equipment
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Redemption
of preferred stock
|
(1,930 | ) | (19,300 | ) | (3,700 | ) | (37,000 | ) | (3,880 | ) | (38,800 | ) | - | - | ||||||||||||||||||
Intrinsic
value of convertible feature
|
- | (9,649 | ) | - | 25,000 | - | (6,324 | ) | - | - | ||||||||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||||||||||
Cash
received
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
collected
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
earned
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Increase
in reserve
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Warrants
issued for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Options
expense
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
BALANCES,
December 31, 2007
|
24,728 | $ | 371,708 | 3,770 | $ | 37,700 | 120,250 | $ | 1,548,352 | 150,000 | $ | 1,500,000 |
8%
Class A
|
10%
Class B
|
10%
Class C
|
10%
Class F
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||||||||||
Cash
|
- | $ | - | - | $ | - | - | $ | - | - | $ | - | ||||||||||||||||||||
Acquisition
of assets – Michigan Microtech, Inc.
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Acquisition
of assets – US Install
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of notes payable
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of preferred stock
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restricted
stock issued
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Cancellation
of note receivable
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Redemption
of preferred stock
|
(10,557 | ) | (105,570 | ) | (1,200 | ) | (12,000 | ) | (6,170 | ) | (61,700 | ) | - | - | ||||||||||||||||||
Intrinsic
value of convertible feature
|
- | (52,785 | ) | - | - | (4,734 | ) | - | - | |||||||||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||||||||||
Cash
received
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
collected
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
earned
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Increase
in reserve
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Warrants
issued for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Options
expense
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Other
comprehensive income – unrealized gains on securities available for
sale
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
BALANCES,
December 31, 2008
|
14,171 | $ | 213,353 | 2,570 | $ | 25,700 | 114,080 | $ | 1,481,918 | 150,000 | $ | 1,500,000 |
8%
Class G
|
6%
Class H
|
%
Class I
|
Common
Stock
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
BALANCES,
December 31, 2005
|
45,245 | $ | 179,897 | 2 | $ | - | 90,000 | $ | - | 6,426,912 | $ | 22,801,405 | ||||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||||||||||
Cash
|
- | - | - | - | - | - | - | (23,840 | ) | |||||||||||||||||||||||
Exercise
of options
|
- | - | - | - | - | - | 6,000 | 18,000 | ||||||||||||||||||||||||
Acquisition
of assets – Extreme Video
|
- | - | - | - | - | - | 32,500 | 162,500 | ||||||||||||||||||||||||
Conversion
of notes payable
|
- | - | - | - | - | - | 40,000 | 200,000 | ||||||||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | - | 8,866 | 44,333 | ||||||||||||||||||||||||
Conversion
of preferred stock
|
(7,050 | ) | (70,500 | ) | - | - | (32,500 | ) | - | 442,146 | 3,151,500 | |||||||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | - | 61,015 | 473,001 | ||||||||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | - | 16,000 | 57,600 | ||||||||||||||||||||||||
In
lieu of cash for revenue share payments
|
- | - | - | - | - | - | 193 | 1,156 | ||||||||||||||||||||||||
Redemption
of preferred stock
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Intrinsic
value of convertible feature
|
- | 52,034 | - | - | - | - | - | - | ||||||||||||||||||||||||
Adjustment
in Dinamo purchase price
|
- | - | - | - | - | - | - | (12,400 | ) | |||||||||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||||||||||
Cash
payments
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
collected
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
earned
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Increase
in reserve
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Warrants
issued for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Options
expense
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Amortization
of deferred compensation
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restricted
stock forfeited
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Common
stock dividends related to spin-off of URON (see Note 10)
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
BALANCES,
December 31, 2006
|
38,195 | $ | 161,431 | 2 | $ | - | 57,500 | $ | - | 7,033,632 | $ | 26,873,255 |
8%
Class G
|
6%
Class H
|
%
Class I
|
Common
Stock
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||||||||||
Cash
|
- | $ | - | - | $ | - | - | $ | - | - | $ | (24,208 | ) | |||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | - | 3,536 | 17,680 | ||||||||||||||||||||||||
Conversion
of preferred stock
|
(11,600 | ) | (116,000 | ) | - | - | (18,000 | ) | - | 254,500 | 1,822,400 | |||||||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | - | 88,223 | 637,209 | ||||||||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | - | 42,000 | 164,337 | ||||||||||||||||||||||||
In
lieu of cash for equipment
|
- | - | - | - | - | - | 30,000 | 84,000 | ||||||||||||||||||||||||
Redemption
of preferred stock
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Intrinsic
value of convertible feature
|
- | 66,037 | - | - | - | - | - | - | ||||||||||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||||||||||
Cash
payments
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
collected
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
earned
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Increase
in reserve
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Warrants
issued for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Options
expense
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
BALANCES,
December 31, 2007
|
26,595 | $ | 111,468 | 2 | $ | - | 39,500 | $ | - | 7,451,891 | $ | 29,574,673 |
8%
Class G
|
6%
Class H
|
%
Class I
|
Common
Stock
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||||||||||
Cash
|
- | $ | - | - | $ | - | - | $ | - | - | $ | (30,379 | ) | |||||||||||||||||||
Acquisition
of assets – Michigan Microtech, Inc.
|
- | - | - | - | - | - | 1,490,000 | 3,854,000 | ||||||||||||||||||||||||
Acquisition
of assets – US Install
|
- | - | - | - | - | - | 37,880 | 101,516 | ||||||||||||||||||||||||
Conversion
of notes payable
|
- | - | - | - | - | - | 7,500 | 19,500 | ||||||||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | - | 800 | 4,000 | ||||||||||||||||||||||||
Conversion
of preferred stock
|
(15,000 | ) | (150,000 | ) | - | - | (39,500 | ) | - | 545,417 | 3,894,600 | |||||||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | - | 23,386 | 179,412 | ||||||||||||||||||||||||
Restricted
stock issued
|
- | - | - | - | - | - | 22,500 | 23,625 | ||||||||||||||||||||||||
Cancellation
of note receivable
|
- | - | - | - | - | - | (12,000 | ) | (61,333 | ) | ||||||||||||||||||||||
In
lieu of cash for future services rendered
|
- | - | - | - | - | - | 75,000 | 128,250 | ||||||||||||||||||||||||
Redemption
of preferred stock
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Intrinsic
value of convertible feature
|
- | 86,502 | - | - | - | - | - | - | ||||||||||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||||||||||
Cash
payments
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
collected
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Interest
earned
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Increase
in reserve
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Warrants
issued for services
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Options
expense
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Other
comprehensive income – unrealized gain on securities available for
sale
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
BALANCES,
December 31, 2008
|
11,595 | $ | 47,970 | 2 | $ | - | - | $ | - | 9,642,374 | $ | 37,687,864 |
Stock
Subscriptions
Receivable
|
Options
and
Warrants
|
Unamortized
Compensation
|
Accumulated
Other
Comprehensive
Income
|
Accumulated
Deficit
|
Total
|
|||||||||||||||||||
BALANCES,
December 31, 2005
|
$ | (297,105 | ) | $ | 44,259,540 | $ | (29,861 | ) | $ | - | $ | (55,531,838 | ) | $ | 14,968,295 | |||||||||
Stock
issued:
|
||||||||||||||||||||||||
Cash
|
- | - | - | - | - | (23,840 | ) | |||||||||||||||||
Exercise
of options
|
- | - | - | - | - | 18,000 | ||||||||||||||||||
Acquisition
of assets – Extreme Video
|
- | - | - | - | - | 162,500 | ||||||||||||||||||
Conversion
of notes payable
|
- | - | - | - | - | 200,000 | ||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | 44,333 | ||||||||||||||||||
Conversion
of preferred stock
|
- | - | - | - | (3,081,000 | ) | - | |||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | 473,001 | ||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | 57,600 | ||||||||||||||||||
In
lieu of cash for revenue share payments
|
- | - | - | - | - | 1,156 | ||||||||||||||||||
Redemption
of preferred stock
|
- | - | - | - | - | (31,130 | ) | |||||||||||||||||
Intrinsic
value of convertible feature
|
- | - | - | - | (40,740 | ) | - | |||||||||||||||||
Adjustment
in Dinamo purchase price
|
- | - | - | - | - | (12,400 | ) | |||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||
Cash
payments
|
5,938 | - | - | - | - | 5,938 | ||||||||||||||||||
Interest
collected
|
2,062 | - | - | - | - | 2,062 | ||||||||||||||||||
Interest
earned
|
(2,257 | ) | - | - | - | - | (2,257 | ) | ||||||||||||||||
Increase
in reserve
|
61,435 | - | - | - | - | 61,435 | ||||||||||||||||||
Warrants
issued for services
|
- | 12,085 | - | - | - | 12,085 | ||||||||||||||||||
Options
expense
|
- | 821,757 | - | - | - | 821,757 | ||||||||||||||||||
Amortization
of deferred compensation
|
- | - | 29,480 | - | - | 29,480 | ||||||||||||||||||
Restricted
stock forfeited
|
- | (381 | ) | 381 | - | - | - | |||||||||||||||||
Common
stock dividends related to spin-off of URON (see Note 10)
|
- | - | - | - | (46,989 | ) | (46,989 | ) | ||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | (897,994 | ) | (897,994 | ) | ||||||||||||||||
Net
loss
|
- | - | - | - | (10,183,723 | ) | (10,183,723 | ) | ||||||||||||||||
BALANCES,
December 31, 2006
|
$ | (229,927 | ) | $ | 45,093,001 | $ | - | $ | - | $ | (69,782,284 | ) | $ | 5,659,309 |
Stock
Subscriptions
Receivable
|
Options
and
Warrants
|
Unamortized
Compensation
|
Accumulated
Other
Comprehensive
Income
|
Accumulated
Deficit
|
Total
|
|||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||
Cash
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | (24,208 | ) | |||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | 17,680 | ||||||||||||||||||
Conversion
of preferred stock
|
- | - | - | - | (1,706,400 | ) | - | |||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | 637,209 | ||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | 164,337 | ||||||||||||||||||
In
lieu of cash for equipment
|
- | - | - | - | - | 84,000 | ||||||||||||||||||
Redemption
of preferred stock
|
- | - | - | - | - | (95,100 | ) | |||||||||||||||||
Intrinsic
value of convertible feature
|
- | - | - | - | (75,064 | ) | - | |||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||
Cash
payments
|
62 | - | - | - | - | 62 | ||||||||||||||||||
Interest
collected
|
1,438 | - | - | - | - | 1,438 | ||||||||||||||||||
Interest
earned
|
(2,461 | ) | - | - | - | - | (2,461 | ) | ||||||||||||||||
Increase
in reserve
|
60,000 | - | - | - | - | 60,000 | ||||||||||||||||||
Warrants
issued for services
|
- | 67,540 | - | - | - | 67,540 | ||||||||||||||||||
Options
expense
|
- | 711,423 | - | - | - | 711,423 | ||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | (519,038 | ) | (519,038 | ) | ||||||||||||||||
Net
loss
|
- | - | - | - | (6,088,353 | ) | (6,088,353 | ) | ||||||||||||||||
BALANCES,
December 31, 2007
|
$ | (170,888 | ) | $ | 45,871,964 | $ | - | $ | - | $ | (78,171,139 | ) | $ | 673,838 |
Stock
Subscriptions
Receivable
|
Options
and
Warrants
|
Unamortized
Compensation
|
Accumulated
Other
Comprehensive
Income
|
Accumulated
Deficit
|
Total
|
|||||||||||||||||||
Stock
issued:
|
||||||||||||||||||||||||
Cash
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | (30,379 | ) | |||||||||||
Acquisition
of assets – Michigan Microtech, Inc.
|
- | - | - | - | - | 3,854,000 | ||||||||||||||||||
Acquisition
of assets – US Install
|
- | - | - | - | - | 101,516 | ||||||||||||||||||
Conversion
of notes payable
|
- | - | - | - | - | 19,500 | ||||||||||||||||||
Conversion
of accrued interest
|
- | - | - | - | - | 4,000 | ||||||||||||||||||
Conversion
of preferred stock
|
- | - | - | - | (3,744,600 | ) | - | |||||||||||||||||
Conversion
of dividends payable
|
- | - | - | - | - | 179,412 | ||||||||||||||||||
Restricted
stock issued
|
- | - | - | - | - | 23,625 | ||||||||||||||||||
Cancellation
of note receivable
|
61,333 | - | - | - | - | - | ||||||||||||||||||
In
lieu of cash for services
|
- | - | - | - | - | 128,250 | ||||||||||||||||||
Redemption
of preferred stock
|
- | - | - | - | - | (179,270 | ) | |||||||||||||||||
Intrinsic
value of convertible feature
|
- | - | - | - | (28,983 | ) | - | |||||||||||||||||
Stock
subscriptions receivable:
|
||||||||||||||||||||||||
Cash
payments
|
348 | - | - | - | - | 348 | ||||||||||||||||||
Interest
collected
|
2,652 | - | - | - | - | 2,652 | ||||||||||||||||||
Interest
earned
|
(2,463 | ) | - | - | - | - | (2,463 | ) | ||||||||||||||||
Increase
in reserve
|
24,947 | - | - | - | - | 24,947 | ||||||||||||||||||
Warrants
issued for services
|
- | 1,641 | - | - | - | 1,641 | ||||||||||||||||||
Options
expense
|
- | 164,797 | - | - | - | 164,797 | ||||||||||||||||||
Preferred
stock dividends
|
- | - | - | - | (314,692 | ) | (314,692 | ) | ||||||||||||||||
Other
comprehensive income – unrealized gain on securities available for
sale
|
- | - | - | 45,594 | - | 45,594 | ||||||||||||||||||
Net
income
|
- | - | - | - | 944,931 | 944,931 | ||||||||||||||||||
BALANCES,
December 31, 2008
|
$ | (84,071 | ) | $ | 46,038,402 | $ | - | $ | 45,594 | $ | (81,314,483 | ) | $ | 5,642,247 |
2008
|
2007
|
2006
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
income (loss)
|
$ | 944,931 | $ | (6,088,353 | ) | $ | (10,183,723 | ) | ||||
Adjustments
to reconcile net income (loss) to cash flows from operating
activities:
|
||||||||||||
Depreciation
and amortization
|
3,025,478 | 3,638,543 | 5,347,251 | |||||||||
Minority
interest in net income of consolidated subsidiary
|
652,167 | - | - | |||||||||
Amortization
of deferred compensation
|
- | - | 29,480 | |||||||||
Amortization
of original issue discount
|
- | 30,413 | 436,108 | |||||||||
Amortization
of imputed interest discount
|
282,100 | - | - | |||||||||
Gain
on debt extinguishment
|
(29,965 | ) | (131,529 | ) | - | |||||||
Impairment
of goodwill, intangibles and property and equipment
|
132,209 | - | 2,261,500 | |||||||||
Loss
(gain) on sale of property and equipment
|
77,115 | 192,234 | (105,139 | ) | ||||||||
Gain
on sale of URON Inc. subsidiary
|
- | - | (26,669 | ) | ||||||||
Change
in allowance for doubtful accounts on accounts receivable
|
(15,000 | ) | (154,400 | ) | (155,130 | ) | ||||||
Change
in reserve for stock subscriptions and interest receivable
|
22,484 | 60,000 | 61,434 | |||||||||
Management
consulting income from DirecTECH
|
(1,946,000 | ) | - | - | ||||||||
Warrants
issued for services
|
1,641 | 67,540 | 12,085 | |||||||||
Stock
issued for future services
|
47,435 | 164,337 | 58,756 | |||||||||
Compensation
expense of restricted stock awards
|
23,625 | - | - | |||||||||
Stock
based compensation expense
|
164,797 | 711,423 | 821,757 | |||||||||
Reduction
in interest receivable by increase in note receivable
|
(2,257 | ) | - | - | ||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
776,630 | 615,241 | 502,942 | |||||||||
Other
receivable – related party
|
(2,364,995 | ) | - | - | ||||||||
Inventories
|
455,867 | 208,388 | (102,800 | ) | ||||||||
Prepaid
expenses and other
|
(520,507 | ) | 82,133 | 34,924 | ||||||||
Other
assets
|
(419,813 | ) | (81,778 | ) | 33,798 | |||||||
Accounts
payable and accrued liabilities
|
211,798 | 27,236 | 707,265 | |||||||||
Accrued
income taxes
|
499,153 | - | - | |||||||||
Customer
deposits
|
- | (750 | ) | (2,829 | ) | |||||||
Liabilities
of discontinued operations
|
- | (125,000 | ) | (500,000 | ) | |||||||
Deferred
service obligations and revenue
|
1,283,868 | (606,674 | ) | 119,004 | ||||||||
Net
cash flows from operating activities
|
3,302,761 | (1,390,996 | ) | (649,986 | ) | |||||||
INVESTING
ACTIVITIES
|
||||||||||||
Purchases
of property and equipment
|
(171,133 | ) | (383,834 | ) | (993,108 | ) | ||||||
Cash
acquired via purchase of Michigan Microtech, Inc.
|
4,043,942 | - | - | |||||||||
Cash
collected on other receivables – related party acquired via the purchase
of Michigan Microtech, Inc.
|
2,815,488 | - | - | |||||||||
Purchase
of US Install
|
(101,000 | ) | - | - | ||||||||
Purchases
of intangible assets
|
- | - | (31,159 | ) | ||||||||
Proceeds
from sale of URON Inc. subsidiary
|
- | - | 75,000 | |||||||||
Issuance
of other receivable-related party
|
(5,843,942 | ) | - | - | ||||||||
Proceeds
from sale of intangible assets and related equipment
|
40,019 | 2,651,239 | 611,094 | |||||||||
Collections
on notes receivable
|
6,716 | 9,995 | 2,801 | |||||||||
Net
cash flows from investing activities
|
790,090 | 2,277,400 | (335,372 | ) | ||||||||
FINANCING
ACTIVITIES
|
||||||||||||
Checks
issued in excess of cash in bank
|
- | (319,244 | ) | 226,239 | ||||||||
Payments
on long-term debt
|
(145,734 | ) | (139,209 | ) | (871,076 | ) | ||||||
Payments
on capital lease obligations
|
(212,734 | ) | (251,057 | ) | (235,517 | ) | ||||||
Payments
on note payable to stockholder
|
- | (24,739 | ) | (8,098 | ) | |||||||
Payment
on mandatory redeemable preferred stock
|
(70,256 | ) | (59,744 | ) | (53,334 | ) | ||||||
Payments
for stock issuance costs
|
(30,379 | ) | (24,208 | ) | (23,840 | ) | ||||||
Proceeds
from issuance of long-term debt
|
100,000 | - | - | |||||||||
Payments
received on stock subscriptions and interest receivables
|
3,000 | 62 | 5,938 | |||||||||
Redemption
of preferred stock
|
(179,270 | ) | (95,100 | ) | (31,130 | ) | ||||||
Preferred
stock dividends
|
(155,557 | ) | (49,684 | ) | (121,276 | ) | ||||||
Exercise
of stock options
|
- | - | 18,000 | |||||||||
Net
cash flows from financing activities
|
(690,930 | ) | (962,923 | ) | (1,094,094 | ) | ||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
3,401,921 | (76,519 | ) | (2,079,452 | ) | |||||||
CASH
AND CASH EQUIVALENTS - Beginning of Year
|
944,456 | 1,020,975 | 3,100,427 | |||||||||
CASH
AND CASH EQUIVALENTS - END OF YEAR
|
$ | 4,346,377 | $ | 944,456 | $ | 1,020,975 |
NOTE
1 - Summary of Significant Accounting
Policies
|
1.
|
Reduction
of operating expenses by controlling payroll, professional fees and other
general and administrative
expenses.
|
2.
|
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). MMT
installs DirecTV video services in single family
homes. Historically, MMT has been profitable. In
2008, by combining MMT operations with Multiband operations, Multiband
achieved a beneficial impact to its consolidated cash flows and operating
results. In January 2009, Multiband significantly expanded its
single family home video installation business by purchasing the former
operations of DTHC (see Note 17). However, there is no
guarantee that the results of the HSP business segment will be favorable
to the Company in future periods. While
the profitability of all the former operating subsidiaries of DTHC
(excluding MMT) has been inconsistent in prior periods and while the DTHC
operating subsidiaries as a whole (excluding MMT) were unprofitable in
2008, Multiband management, through management services agreements
conducted throughout 2008 helped, in conjunction with legacy DTHC
management, enact significant changes to those subsidiaries’ expense
structure, management and operating practices. These aforementioned
changes had a material improvement in the operating results of the DTHC
operating subsidiaries (excluding MMT) during the second half of 2008 as
selling, general and administrative expenses (as adjusted for certain one
time expenses such as legal accruals and transaction expenses related to
the Multiband acquisition) dropped significantly. The Company believes the
changes made to the former DTHC operating subsidiaries throughout 2008,
combined with stay at home consumers robust entertainment demands, will
continue to lead to materially improved operating results for those
subsidiaries during
2009.
|
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.
|
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.
|
7.
|
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.
|
December 31, 2008
|
December 31, 2007
|
|||||||||||||||
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Intangible
assets subject to amortization
|
||||||||||||||||
Right
of entry contracts
|
$ | 800,751 | $ | 526,133 | $ | 993,393 | $ | 618,027 | ||||||||
Contracts
with DirecTV
|
11,501,800 | 8,060,186 | 9,697,879 | 6,001,169 | ||||||||||||
Customer
contracts
|
102,516 | 85,430 | - | - | ||||||||||||
Total
|
12,405,067 | 8,671,749 | 10,691,272 | 6,619,196 | ||||||||||||
Impairment
of intangibles
|
- | 65,452 | - | - | ||||||||||||
Total
including impairment
|
$ | 12,405,067 | $ | 8,737,201 | $ | 10,691,272 | $ | 6,619,196 |
2008
|
2007
|
2006
|
||||||||||
Risk-free
interest rate
|
3.02 | % | 4.56 | % | 4.72 | % | ||||||
Expected
life of options granted
|
6.5
years
|
10
years
|
10
years
|
|||||||||
Expected
volatility range
|
94 | % | 242 | % | 216 | % | ||||||
Expected
dividend yield
|
0 | % | 0 | % | 0 | % |
NOTE
2 – Business Acquisitions/Sales
Transactions
|
Condensed
Balance
Sheet
3/1/08
|
||||
Cash
|
$ | 4,043,942 | ||
Accounts
receivable
|
2,626,866 | |||
Inventory
|
2,209,567 | |||
Other
current assets
|
2,827,135 | |||
Property
and equipment, net
|
73,995 | |||
Other
assets
|
420,708 | |||
Total
assets
|
$ | 12,202,213 | ||
Accounts
payable and accrued liabilities
|
$ | 6,431,832 | ||
Other
liabilities
|
18,218 | |||
Total
liabilities
|
6,450,050 | |||
Stockholders
equity
|
5,752,163 | |||
Total
liabilities and equity
|
$ | 12,202,213 |
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
|
|||||||||||||
Years
ended December 31, 2008 and 2007
|
||||||||||||||||
Revenues
|
$ | 42,986,513 | $ | 47,383,916 | $ | 15,085,604 | $ | 40,942,051 | ||||||||
Income
(loss) from operations
|
903,037 | 1,240,722 | (5,766,115 | ) | (7,100,653 | ) | ||||||||||
Net
income (loss)
|
944,931 | 1,108,594 | (6,088,353 | ) | (7,071,729 | ) | ||||||||||
Preferred
stock dividends
|
4,088,275 | 4,088,275 | 2,300,502 | 2,300,502 | ||||||||||||
Loss
attributable to common shareholders
|
$ | (3,413,344 | ) | $ | (2,979,681 | ) | $ | (8,388,855 | ) | $ | (9,372,231 | ) | ||||
Loss
attributable to common shareholders per common share – basic and
diluted
|
$ | (.34 | ) | $ | (.31 | ) | $ | (1.16 | ) | $ | (1.07 | ) | ||||
Weighted
average shares outstanding – basic and diluted
|
9,302,570 | 9,471,146 | 7,237,473 | 8,727,473 |
NOTE
3 – Securities Available for
Sale
|
Securities
available for sale consisted of the following at December
31:
|
||||||||
2008
|
2007
|
|||||||
Initial
investment
|
$ | 121,582 | $ | - | ||||
Decrease
in value
|
(75,988 | ) | - | |||||
Total
|
$ | 45,594 | $ | - |
NOTE
4 – Inventories
|
Inventories
consisted of the following at December 31:
|
||||||||
2008
|
2007
|
|||||||
DirecTV
– serialized
|
$ | 813,480 | $ | - | ||||
DirecTV
– nonserialized
|
669,911 | - | ||||||
Other
|
419,477 | 132,992 | ||||||
Total
|
$ | 1,902,868 | $ | 132,992 |
NOTE
5 - Property and Equipment
|
Property and equipment consisted of the following at December 31: | ||||||||
2008
|
2007
|
|||||||
Leasehold
improvements
|
$ | 771,435 | $ | 844,828 | ||||
Office
equipment and furniture
|
4,955,807 | 3,239,315 | ||||||
Subscriber
related equipment
|
2,855,487 | 2,916,796 | ||||||
Property
and equipment under capital lease obligations
|
810,535 | 467,878 | ||||||
Total
property and equipment
|
9,393,264 | 7,468,817 | ||||||
Less
accumulated depreciation and amortization
|
(7,016,467 | ) | (5,421,422 | ) | ||||
Less
accumulated depreciation and amortization capital leases
|
(343,730 | ) | (278,134 | ) | ||||
Total
property and equipment, net
|
$ | 2,033,067 | $ | 1,769,261 |
NOTE
6 – Notes Receivable
|
2008
|
2007
|
|||||||
Note
receivable – SBC-OK/TX, variable monthly principal payments based on
revenue generated plus interest of 7%, due October 2008. Note
is collateralized by certain assets. During 2008, this note
receivable was combined with note receivable – SBC-Ohio, and then a new
note receivable was signed with Satellite Systems.
|
$ | - | $ | 40,235 | ||||
Note
receivable – SBC-Ohio, variable monthly principal payments based on
revenue generated plus interest of 7%, due October 2008. Note
is collateralized by certain assets. During 2008, this note
receivable was combined with note receivable – SBC-OK/TX, and then a new
note receivable was signed with Satellite Systems.
|
- | 19,626 | ||||||
Notes
receivable – Satellite Systems, variable monthly principal payments based
on revenue generated plus interest of 7%, due October
2009. Note is collateralized by certain assets.
|
61,321 | - | ||||||
Notes
receivable – S Scott, L.L.C., fixed monthly payments of $670, including
interest at 6%, due October 2015. Note is collateralized by
said property.
|
39,095 | - | ||||||
Total
notes receivable
|
100,416 | 59,861 | ||||||
Less:
current portion
|
(61,321 | ) | (59,861 | ) | ||||
Long-term
portion of notes receivable
|
$ | 39,095 | $ | - |
NOTE
7 – Accrued Liabilities
|
2008
|
2007
|
|||||||
Payroll
and related taxes
|
$ | 1,354,419 | $ | 512,960 | ||||
Accrued
legal settlements and contingencies (see Note 15)
|
960,000 | - | ||||||
Accrued
preferred stock dividends
|
622,118 | 642,395 | ||||||
Accrued
liability – vendor chargeback
|
- | 630,800 | ||||||
Other
|
938,656 | 745,456 | ||||||
$ | 3,875,193 | $ | 2,531,611 |
NOTE
8 - Long-term Debt
|
2008
|
2007
|
|||||||
Debenture
payable - Convergent Partners I, L.P., see terms in note
below.
|
$ | 1,400,000 | $ | 1,500,000 | ||||
Note
payable – DirecTECH Holding Company, Inc., secured with MMT common stock
(51%), net of imputed interest of $35,210 and $0 at December 31, 2008 and
2007. Parties have agreed to offset management performance
bonuses payable to the Company against the note payable (see Note
16). Balance is due in full including interest at 5%, February
2013. The balance of this note payable is included in the note
payable issued for the purchase of the 29% of MMT (see Note
17).
|
264,790 | - | ||||||
Note
payable – Bas Mattingly, unsecured, due in full including interest at 7%,
August 2009 (see Note 2).
|
100,000 | - | ||||||
Notes
payable – group of accredited institutional investors, net of original
issue discount and beneficial conversion of note payable into common stock
of $0 and $30,413 at December 31, 2008 and 2007. Interest is 6%
payable semi-annually in cash or common stock at the Company’s election,
due November 2007, collateralized by certain assets of the Company and
subordinated. This note payable is past due (see Note
below).
|
66,666 | 66,666 | ||||||
Note
payable – DeLage Landen Financial Services, monthly installments of $1,765
including interest at 10.40%, due July 2010.
|
30,804 | 46,460 | ||||||
Note
payable – Lexstar Tower One, LP, monthly installments of $2,737 including
interest at 4.00%, due August 2010.
|
52,741 | 82,818 | ||||||
Note
payable – repaid on January 18, 2008, with the issuance of 7,500 shares of
common stock at $2.60 per share, resulting in a gain on extinguishment of
debt of $29,965.
|
- | 44,446 | ||||||
Note
payable, interest at 7%, the Company’s intent is to pay this note via
reduction of life insurance proceeds, collateralized by life insurance
policy owned by the Company.
|
39,651 | 36,876 | ||||||
Total
long-term debt
|
1,954,652 | 1,777,266 | ||||||
Less:
current portion
|
(1,608,778 | ) | (1,658,342 | ) | ||||
Long-term
debt, net of current portion
|
$ | 345,874 | $ | 118,924 |
2009
|
$ | 1,608,778 | ||
2010
|
25,080 | |||
2011
|
- | |||
2012
|
- | |||
2013
|
281,143 | |||
Thereafter
|
39,651 | |||
Total
future minimum payments
|
$ | 1,954,652 |
NOTE
9 - Capital Lease Obligations
|
2009
|
$ | 368,639 | ||
2010
|
209,039 | |||
2011
|
140,909 | |||
2012
|
3,782 | |||
Less:
amounts representing interest
|
(94,085 | ) | ||
Present
value of future minimum lease payments
|
628,284 | |||
Less:
current portion
|
(310,656 | ) | ||
Capital
lease obligations, net of current portion
|
$ | 317,628 |
NOTE
10 - Stockholders' Equity
|
·
|
275,000
shares of Class A cumulative convertible preferred
stock,
|
·
|
60,000
shares of Class B cumulative convertible preferred
stock,
|
·
|
250,000
shares of Class C cumulative convertible preferred
stock,
|
·
|
250,000
shares of Class D cumulative convertible preferred
stock,
|
·
|
400,000
shares of Class E cumulative convertible preferred
stock,
|
·
|
500,000
shares of Class F cumulative convertible preferred
stock,
|
·
|
600,000
shares of Class G cumulative convertible preferred
stock,
|
·
|
15
shares of Class H cumulative convertible preferred stock
and
|
·
|
100,000
shares of Class I cumulative convertible preferred
stock
|
Options
|
Weighted-Average Exercise
Price
|
|||||||||||||||||||||||
2008
|
2007
|
2006
|
2008
|
2007
|
2006
|
|||||||||||||||||||
Outstanding,
January 1
|
659,832 | 613,331 | 611,986 | $ | 7.15 | $ | 7.55 | $ | 7.70 | |||||||||||||||
Granted
|
41,500 | 57,600 | 41,300 | 1.87 | 2.75 | 5.45 | ||||||||||||||||||
Exercised
|
- | - | (6,000 | ) | - | - | 3.00 | |||||||||||||||||
Cancelled
|
(8,300 | ) | (11,099 | ) | (33,955 | ) | 3.82 | 5.66 | 8.60 | |||||||||||||||
Expired
|
(30,000 | ) | - | - | 3.00 | - | - | |||||||||||||||||
Outstanding,
December 31
|
663,032 | 659,832 | 613,331 | $ | 7.05 | $ | 7.15 | $ | 7.55 |
Outstanding
|
Exercisable
|
||||||||||||||||||||||||||
Weighted - Average
|
Weighted-
|
||||||||||||||||||||||||||
Range of Exercise Prices
|
Options
|
Exercise
Price
|
Remaining
Contractual
Life-Years
|
Options
|
Average
Exercise
Price
|
||||||||||||||||||||||
$ |
0.96
|
to
|
$ | 3.85 | 92,900 | $ | 2.38 | 7.19 | 59,202 | $ | 2.61 | ||||||||||||||||
$ |
4.25
|
to
|
$ | 6.90 | 159,180 | 6.13 | 5.79 | 155,447 | 6.17 | ||||||||||||||||||
$ |
7.00
|
to
|
$ | 8.60 | 348,118 | 7.37 | 5.48 | 348,118 | 7.37 | ||||||||||||||||||
$ |
9.25
|
to
|
$ | 14.38 | 45,100 | 10.05 | 1.48 | 45,100 | 10.05 | ||||||||||||||||||
$ |
21.57
|
to
|
$ | 33.75 | 17,734 | 25.93 | 1.17 | 17,734 | 25.93 | ||||||||||||||||||
$ |
0.96
|
to
|
$ | 33.75 | 663,032 | $ | 7.05 | 5.41 | 625,601 | $ | 7.34 |
Outstanding
|
Weighted - Average Exercise
Price
|
|||||||||||||||||||||||
2008
|
2007
|
2006
|
2008
|
2007
|
2006
|
|||||||||||||||||||
Outstanding,
January 1
|
3,088,873 | 3,488,329 | 3,743,196 | $ | 7.64 | $ | 8.05 | $ | 8.40 | |||||||||||||||
Granted
|
2,920 | 24,202 | 3,134 | 2.20 | 2.96 | 5.25 | ||||||||||||||||||
Exercised
|
- | - | - | - | - | - | ||||||||||||||||||
Forfeited
|
(1,605,960 | ) | (423,658 | ) | (258,001 | ) | 7.85 | 10.62 | 12.90 | |||||||||||||||
Outstanding,
December 31
|
1,485,833 | 3,088,873 | 3,488,329 | $ | 7.25 | $ | 7.64 | $ | 8.05 |
Weighted - Average
|
||||||||||||||||||
Range
of Exercise
Prices
|
Warrants
|
Remaining
contractual
life
|
Exercise
prices
|
|||||||||||||||
$ |
2.06
|
to
|
$ | 5.50 | 239,720 | 1.01 | $ | 4.28 | ||||||||||
$ |
6.25
|
to
|
$ | 6.50 | 747,981 | 1.38 | 6.05 | |||||||||||
$ |
7.00
|
to
|
$ | 8.25 | 67,273 | 1.42 | 7.60 | |||||||||||
$ |
10.00
|
to
|
$ | 11.25 | 430,859 | 1.75 | 10.35 | |||||||||||
$ |
2.06
|
to
|
$ | 11.25 | 1,485,833 | 1.43 | $ | 7.08 |
2008
|
2007
|
2006
|
||||||||||
Common
stock
|
- | - | - | |||||||||
Services
rendered
|
2,920 | 24,202 | 3,134 | |||||||||
Preferred
stock
|
- | - | - | |||||||||
2,920 | 24,202 | 3,134 |
2008
|
2007
|
2006
|
||||||||||
Risk-free
interest rate
|
1.12 | % | 4.58 | % | 4.88 | % | ||||||
Expected
life
|
3
years
|
3
years
|
3.5
years
|
|||||||||
Expected
volatility
|
95 | % | 244 | % | 216 | % | ||||||
Expected
dividend rate
|
0 | % | 0 | % | 0 | % |
NOTE
11– Business Segments
|
Year
Ended December 31, 2008
|
Multiband Corp
|
MDU
|
MCS
|
HSP
|
Total
|
|||||||||||||||
Revenues
|
$ | - | $ | 15,559,329 | $ | 3,731,139 | $ | 23,696,045 | $ | 42,986,513 | ||||||||||
Income
(loss) from operations
|
(2,942,641 | ) | 3,782,927 | (2,271,821 | ) | 2,334,572 | 903,037 | |||||||||||||
Identifiable
assets
|
5,567,231 | 4,098,137 | 3,373,305 | 13,004,734 | 26,043,407 | |||||||||||||||
Depreciation
and amortization
|
698,008 | 1,587,570 | 707,368 | 32,532 | 3,025,478 | |||||||||||||||
Capital
expenditures
|
59,736 | - | 87,476 | 23,921 | 171,133 | |||||||||||||||
Year
Ended December 31, 2007
|
Multiband Corp
|
MDU
|
MCS
|
Total
|
||||||||||||||||
Revenues
|
$ | - | $ | 9,947,848 | $ | 5,137,756 | $ | - | $ | 15,085,604 | ||||||||||
Income
(loss) from operations
|
(4,320,701 | ) | 2,953,736 | (4,399,150 | ) | - | (5,766,115 | ) | ||||||||||||
Identifiable
assets
|
1,272,271 | 4,652,909 | 2,968,249 | - | 8,893,429 | |||||||||||||||
Depreciation
and amortization
|
239,411 | 1,604,905 | 1,779,587 | - | 3,623,903 | |||||||||||||||
Capital
expenditures
|
4,554 | 5,153 | 374,127 | - | 383,834 | |||||||||||||||
Year
Ended December 31, 2006
|
Multiband Corp
|
MDU
|
MCS
|
Total
|
||||||||||||||||
Revenues
|
$ | - | $ | 10,477,802 | $ | 7,573,799 | $ | - | $ | 18,051,601 | ||||||||||
Income
(loss) from operations
|
(4,713,896 | ) | 4,066,850 | (8,492,405 | ) | - | (9,139,451 | ) | ||||||||||||
Identifiable
assets
|
2,478,638 | 6,443,625 | 9,063,793 | - | 17,986,056 | |||||||||||||||
Depreciation
and amortization
|
232,211 | 1,604,313 | 3,331,685 | - | 5,168,209 | |||||||||||||||
Capital
expenditures
|
42,150 | - | 950,958 | - | 993,108 |
NOTE
12 - Income Taxes
|
Federal
|
State
|
Total
|
||||||||||
Current
|
$ | 952,000 | $ | 180,000 | $ | 1,132,000 | ||||||
Deferred
|
- | - | - | |||||||||
Total
|
$ | 952,000 | $ | 180,000 | $ | 1,132,000 |
2008
|
2007
|
|||||||
Deferred
income tax assets:
|
||||||||
Net
operating loss carryforwards and tax credits
|
$ | 17,510,000 | $ | 18,705,000 | ||||
Stock-based
compensation / compensation accruals
|
649,000 | 613,000 | ||||||
Asset
valuation reserves
|
- | 182,000 | ||||||
Accrued
liabilities
|
594,000 | 370,000 | ||||||
18,753,000 | 19,870,000 | |||||||
Less
valuation allowance
|
(17,173,000 | ) | (18,320,000 | ) | ||||
1,580,000 | 1,550,000 | |||||||
Deferred
income tax liabilities:
|
||||||||
Amortization
of intangibles and goodwill, including impairment
|
(1,376,000 | ) | (1,329,000 | ) | ||||
Depreciation
|
(204,000 | ) | (221,000 | ) | ||||
Net
deferred income tax assets
|
$ | - | $ | - |
2008
|
2007
|
2006
|
||||||||||
Federal
statutory tax provision(benefit) rate
|
34.0 | % | (34.0 | )% | (34.0 | )% | ||||||
State
tax, net of federal benefit
|
6.0 | (6.0 | ) | (6.0 | ) | |||||||
Change
in valuation allowance
|
2.0 | 40.0 | 40.0 | |||||||||
Effective
tax rate
|
42.0 | % | 0.0 | % | 0.0 | % |
Year of Expiration
|
Federal
Net
Operating Loss
|
State
Net
Operating Loss
|
||||||
2018
|
255,000 | 1,303,000 | ||||||
2019
|
1,585,000 | 2,723,000 | ||||||
2020
|
4,839,000 | 1,629,000 | ||||||
2021
|
4,726,000 | 4,003,000 | ||||||
2022
|
4,353,000 | 3,737,000 | ||||||
2023
|
4,224,000 | 4,311,000 | ||||||
2024
|
6,052,000 | 3,202,000 | ||||||
2025
|
7,181,000 | 4,589,000 | ||||||
2026
|
5,249,000 | 3,061,000 | ||||||
2027
|
6,418,000 | 7,980,000 | ||||||
$ | 44,882,000 | $ | 36,538,000 |
NOTE 13
- Supplemental Cash Flows
Information
|
2008
|
2007
|
2006
|
||||||||||
Cash
paid for interest, net of amortization of OID and interest
discount
|
$ | 346,814 | $ | 473,601 | $ | 368,612 | ||||||
Cash
paid for federal and state income taxes
|
681,500 | - | - | |||||||||
Non-cash
investing and financing transactions:
|
||||||||||||
Debt
reduced by other receivable-related party
|
1,946,000 | - | - | |||||||||
Reduction
of stock subscription receivable via cancellation of common
stock
|
61,333 | - | - | |||||||||
Reduction
of other receivable-related party with increase in fixed
assets
|
542,642 | - | - | |||||||||
Purchase
of 51% of Michigan Microtech, Inc. via issuance of notes payable and
common stock, net of discount for imputed interest
|
5,782,690 | - | - | |||||||||
Purchase
of property and equipment via increase in capital lease
obligations
|
341,494 | - | - | |||||||||
Purchase
of US Install via issuance of common stock
|
101,516 | - | - | |||||||||
Acquisition
of securities available for sale upon expiration of contingent
rights
|
121,582 | - | - | |||||||||
Intrinsic
value of preferred dividends
|
57,519 | - | - | |||||||||
Note
payable issued for prepaid lease
|
- | 44,407 | - | |||||||||
Common
stock valued at $84,000, issued in lieu of cash for equipment, net of
reduction in accounts payable of $19,665
|
- | 64,335 | - | |||||||||
Common
stock issued in relation to acquisition of Dinamo Entertainment,
LLC
|
- | - | 12,400 | |||||||||
Conversion
of notes payable and accrued interest to common and preferred
stock
|
23,500 | 17,680 | 244,333 | |||||||||
Conversion
of preferred stock to common stock
|
3,894,600 | 1,822,400 | 3,151,500 | |||||||||
Capital
lease obligations related to property and equipment
|
- | - | 539,529 | |||||||||
Conversion
of preferred stock dividends into common stock
|
179,412 | 637,209 | 473,001 | |||||||||
Purchase
of intangible assets
|
- | - | 54,150 | |||||||||
Property
and equipment, intangibles and goodwill transferred to assets held for
sale
|
- | - | 1,244,236 | |||||||||
Notes
payable issued in relation to the acquisition of Rand’M
|
- | - | 116,030 | |||||||||
Notes
payable issued in relation to the acquisition of Extreme
Video
|
- | - | 311,900 | |||||||||
Common
stock issued in relation to the acquisition of Extreme
Video
|
- | - | 162,500 | |||||||||
Distribution
of URON, Inc common stock as stock dividends
|
- | - | 46,989 | |||||||||
Deferred
revenue related to service agreement with URON, Inc. in exchange for other
current assets
|
- | - | 116,500 | |||||||||
Reduction
of notes payable, net of imputed interest in connection with the sale of
intangible assets and related equipment
|
- | 532,015 | - | |||||||||
Common
stock issued for services to be rendered, recorded as a prepaid
asset
|
128,250 | - | - |
NOTE
14 - Retirement Savings Plan
|
NOTE
15 - Commitments and
Contingencies
|
Year
|
Amount
|
||||
2009
|
625,000 | ||||
2010
|
568,000 | ||||
2011
|
375,000 | ||||
2012
|
387,000 | ||||
2013
|
263,000 | ||||
Thereafter
|
116,000 | ||||
$ | 2,334,000 |
Year
|
Amount
|
|||
2009
|
1,060,000 | |||
2010
|
975,000 | |||
2011
|
839,000 | |||
2012
|
310,000 | |||
2013
|
76,000 | |||
Thereafter
|
152,000 | |||
$ | 3,412,000 |
Year
|
Amount
|
|||
2009
|
6,397,000 | |||
2010
|
5,640,000 | |||
2011
|
4,501,000 | |||
2012
|
1,667,000 | |||
2013
|
451,000 | |||
Thereafter
|
901,000 | |||
$ | 19,557,000 |
NOTE
16 – Related Party
Transactions
|
Multiband
Corporation
(as filed) |
Less:
DTHC
Related(1)
(unaudited) |
Proforma
(unaudited) |
||||||||||
Accounts
receivable, net
|
$ | 3,436,424 | $ | (771,427 | ) | $ | 2,664,997 | |||||
Other
receivable – related party
|
7,666,295 | (7,666,295 | ) | - | ||||||||
Prepaid
expenses and other
|
1,273,083 | (518,024 | ) | 755,059 | ||||||||
Accounts
payable
|
8,274,003 | (1,127,005 | ) | 7,146,998 | ||||||||
Revenues
|
42,986,513 | (3,333,119 | ) | 39,653,394 | ||||||||
Cost
of products and services (exclusive of depreciation and amortization shown
separately below)
|
28,425,926 | (2,895,176 | ) | 25,530,750 | ||||||||
Selling,
general and administrative
|
10,499,863 | 750,000 | 11,249,863 | |||||||||
Management
consulting income
|
2,366,466 | (2,366,466 | ) | - |
(1)
|
All
adjustments described in the paragraphs of Note
16
|
NOTE 17 – Subsequent
Event
|
·
|
Total
purchase price
|
·
|
Fair
value of net identifiable assets
|
·
|
Value
of DirecTECH’s workforce of skilled installation
technicians
|
·
|
Value
of DirecTECH’s installed subscriber base in the MDU (multi-dwelling unit)
segment
|
·
|
Intangible
assets that do not qualify for separate
recognition
|
·
|
DirecTV
HSP contract
|
·
|
None
of the goodwill recorded is expected to be deductible for tax
purposes.
|
·
|
The
goodwill recorded as a result of the acquisition is solely related to the
Company’s HSP segment.
|
DirecTECH
Operating Subsidiaries December 31, 2008
(unaudited)
|
||||
CONSIDERATION
PAID
|
||||
Cash
|
$ | 500,000 | ||
Promissory
notes
|
40,700,000 | |||
Contingent
consideration
|
1,608,000 | |||
TOTAL
CONSIDERATION PAID
|
$ | 42,808,000 | ||
IDENTIFIABLE
ASSETS ACQUIRED AND LIABILITIES ASSUMED
|
||||
|
||||
Cash
|
$ | 2,292,676 | ||
Receivables
|
10,836,745 | |||
Prepaid
expenses and deposits
|
3,438,544 | |||
Inventory
|
15,839,173 | |||
Fixed
assets
|
7,980,831 | |||
Other
assets
|
2,497,849 | |||
Identifiable
intangible assets
|
36,700,000 | |||
Accounts
payable
|
(32,707,389 | ) | ||
Other
current liabilities
|
(16,333,367 | ) | ||
Long-term
debt
|
(42,808 | ) | ||
TOTAL
IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
|
30,502,254 | |||
Noncontrolling
interest
|
(6,942,209 | ) | ||
Goodwill
|
19,247,955 | |||
FAIR
VALUE OF CONTROLLING INTEREST
|
$ | 42,808,000 |
Multiband
Corporation December 31, 2008
(as filed)
|
DirecTECH
Operating Subsidiaries December 31, 2008
(unaudited)
|
Proforma Adjustments
|
Proforma
Results December 31, 2008
(unaudited)
|
|||||||||||||||||
REVENUES
|
$ | 42,986,513 | $ | 196,755,415 | $ | (3,311,098 | ) | 1 | $ | 236,430,830 | ||||||||||
COSTS AND
EXPENSES
|
||||||||||||||||||||
Cost of products and services
(exclusive of depreciation and amortization shown separately
below)
|
28,425,926 | 151,079,047 | (3,311,098 | ) | 1 | 176,193,875 | ||||||||||||||
Selling, general and
administrative
|
10,499,863 | 52,100,361 | (7,886,466 | ) | 2, 7 | 54,713,758 | ||||||||||||||
Depreciation and
amortization
|
3,025,478 | 1,910,578 | 7,000,000 | 3 | 11,936,056 | |||||||||||||||
Impairment of
assets
|
132,209 | - | - | 132,209 | ||||||||||||||||
Total costs and
expenses
|
42,083,476 | 205,089,986 | (4,197,564 | ) | 242,975,898 | |||||||||||||||
INCOME (LOSS) FROM
OPERATIONS
|
903,037 | (8,334,571 | ) | 886,466 | (6,545,068 | ) | ||||||||||||||
OTHER INCOME
(EXPENSE)
|
||||||||||||||||||||
Interest
expense
|
(657,289 | ) | (3,120,700 | ) | (2,834,372 | ) | 4 | (6,612,361 | ) | |||||||||||
Management consulting
income
|
2,366,466 | - | (2,366,466 | ) | 2 | - | ||||||||||||||
Interest and other income
|
116,884
|
514,867 | - | 631,751 | ||||||||||||||||
Total other income
(expense)
|
1,826,061
|
(2,605,833 | ) | (5,200,838 | ) | (5,980,610 | ) | |||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST IN SUBSIDIARY
|
2,729,098 | (10,940,404 | ) | (4,314,372 | ) | (12,525,678 | ) | |||||||||||||
PROVISION FOR INCOME
TAXES
|
1,132,000 | 173,690 | (870,000 | ) | 6 | 435,690 | ||||||||||||||
MINORITY INTEREST IN NET INCOME OF
SUBSIDIARY
|
652,167 | - | (3,329,418 | ) | 5 | (2,677,251 | ) | |||||||||||||
NET INCOME
(LOSS)
|
944,931 | (11,114,094 | ) | (114,954 | ) | (10,284,117 | ) | |||||||||||||
Preferred stock
dividends
|
4,088,275 | -- | - | 4,088,275 | ||||||||||||||||
LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS
|
$ | (3,143,344 | ) | $ | (11,114,094 | ) | $ | (114,954 | ) | $ | (14,372,392 | ) | ||||||||
|
||||||||||||||||||||
LOSS PER COMMON SHARE – BASIC AND
DILUTED:
|
||||||||||||||||||||
LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS
|
$ | (0.34 | ) | $ | (1.54 | ) | ||||||||||||||
Weighted average common shares
outstanding – basic and diluted
|
9,302,570 | - | - | 9,302,570 |
Multiband
Corporation December 31, 2007
(as filed)
|
DirecTECH
Operating Subsidiaries December 31, 2007 (unaudited)
|
Proforma
Adjustments
|
Proforma
Results December 31, 2007
(unaudited)
|
|||||||||||||||||
REVENUES
|
$ | 15,085,604 | $ | 213,843,932 | $ | - | $ | 228,929,536 | ||||||||||||
COSTS AND
EXPENSES
|
||||||||||||||||||||
Cost of products and services
(exclusive of depreciation and amortization shown separately
below)
|
8,339,933 | 166,715,972 | - | 175,055,905 | ||||||||||||||||
Selling, general and
administrative
|
8,887,883 | 46,606,728 | - | 3 | 55,494,611 | |||||||||||||||
Depreciation and
amortization
|
3,623,903 | 1,058,821 | 7,000,000 | 1 | 11,682,724 | |||||||||||||||
Total costs and
expenses
|
20,851,719 | 214,381,521 | 7,000,000 | 242,233,240 | ||||||||||||||||
LOSS FROM
OPERATIONS
|
(5,766,115 | ) | (537,589 | ) | (7,000,000 | ) | (13,303,704 | ) | ||||||||||||
OTHER INCOME
(EXPENSE)
|
||||||||||||||||||||
Interest
expense
|
(503,887 | ) | (716,238 | ) | (2,834,372 | ) | 2 | (4,054,497 | ) | |||||||||||
Interest and other income
|
181,649
|
- | - | 181,649 | ||||||||||||||||
Total other expense
|
(322,238)
|
(716,238 | ) | (2,834,372 | ) | (3,872,848 | ) | |||||||||||||
LOSS BEFORE INCOME TAXES AND
MINORITY INTEREST IN SUBSIDIARY
|
(6,088,353 | ) | (1,253,827 | ) | (9,834,372 | ) | (17,176,552 | ) | ||||||||||||
PROVISION FOR INCOME
TAXES
|
- | - | - | - | ||||||||||||||||
MINORITY INTEREST IN NET LOSS OF
SUBSIDIARY
|
- | (250,765 | ) | (1,966,875 | ) | 4 | (2,217,640 | ) | ||||||||||||
NET LOSS
|
(6,088,353 | ) | (1,003,062 | ) | (7,867,497 | ) | (14,958,912 | ) | ||||||||||||
Preferred stock
dividends
|
2,300,502 | - | - | 2,300,502 | ||||||||||||||||
LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS
|
$ | (8,388,855 | ) | $ | (1,003,062 | ) | $ | (7,867,497 | ) | $ | (17,259,414 | ) | ||||||||
LOSS PER COMMON SHARE – BASIC AND
DILUTED:
|
||||||||||||||||||||
LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS
|
$ | (1.16 | ) | $ | (2.38 | ) | ||||||||||||||
Weighted average common shares
outstanding – basic and diluted
|
7,237,473 | - | - | 7,237,473 |
|
||||||||||||||||||
Multiband Corporation December 31,
2008
(as filed)
|
DirecTECH Operating
Subsidiaries
December 31, 2008
(unaudited)
|
Purchase Price Adjustments
(A)
|
Proforma
Adjustments
|
Proforma Balance Sheet December
31, 2008
(unaudited)
|
||||||||||||||
Assets
|
|
|||||||||||||||||
Current
assets
|
||||||||||||||||||
Cash and cash
equivalents
|
$ | 4,346,377 | $ | — | $ | (369,320 |
)
|
$ | — | $ | 3,977,057 | |||||||
Accounts receivable,
net
|
3,436,424 | 4,163,314 | — | (771,427 | ) (B) | 6,828,311 | ||||||||||||
Securities available for
sale
|
45,594 | — | — | — | 45,594 | |||||||||||||
Other receivable - related
party
|
7,666,295 | — | — | (7,666,295 | ) (C,E) | — | ||||||||||||
Inventories
|
1,902,868 | 14,130,473 | — | — | 16,033,341 | |||||||||||||
Other current
assets
|
1,273,083 | 3,087,961 | — | (500,000 | ) (D) | 3,861,044 | ||||||||||||
Note receivable - current,
net
|
61,321 | — | — | — | 61,321 | |||||||||||||
Total current
assets
|
18,731,962 | 21,381,748 | (369,320 |
)
|
(8,937,722 | ) | 30,806,668 | |||||||||||
Property and equipment,
net
|
2,033,067 |
7,373,972
|
— | — |
9,407,039
|
|||||||||||||
Other
assets
|
||||||||||||||||||
Goodwill
|
1,095,166 |
—
|
19,247,955 | — |
20,343,121
|
|||||||||||||
Intangible assets,
net
|
3,667,866 |
—
|
36,700,000 | — |
40,367,866
|
|||||||||||||
Notes receivable - long term,
net
|
39,095 | 33,752 | — | — | 72,847 | |||||||||||||
Other long term
assets
|
476,072 | 1,406,987 | 1,396,298 | — | 3,279,357 | |||||||||||||
Total other
assets
|
5,278,199 |
1,440,739
|
57,344,253 | — |
64,063,191
|
|||||||||||||
Total
assets
|
$
|
26,043,228 |
$
|
30,196,459
|
$
|
56,974,933 |
$
|
(8,937,722 | ) |
$
|
104,276,898
|
|||||||
Liabilities and Stockholders'
Equity
|
||||||||||||||||||
Current
liabilities
|
||||||||||||||||||
Checks issued in excess of cash in
bank
|
$ | — | $ | 369,320 |
$
|
(369,320 |
)
|
$ | — | $ | — | |||||||
Mandatory redeemable preferred
stock
|
150,000 | — | — | — | 150,000 | |||||||||||||
Current portion of capital lease
obligations
|
310,656 | 79,839 | — | — | 390,495 | |||||||||||||
Current portion of long-term
debt
|
1,608,778 | 109,904 | — | — | 1,718,682 | |||||||||||||
Accounts
payable
|
8,274,003 | 31,069,288 | — | (1,251,398 | ) (B,E) | 38,091,893 | ||||||||||||
Accounts payable - related
party
|
— | 1,342,352 | — | (1,342,352 | ) (E) | — | ||||||||||||
Accrued
liabilities
|
3,875,193 | 11,735,201 | 1,483,083 | (F) | — | 17,093,477 | ||||||||||||
Accrued income taxes
payable
|
499,153 | — | — | — | 499,153 | |||||||||||||
Customer
deposits
|
60,582 | — | — | — | 60,582 | |||||||||||||
Deferred
revenue
|
1,488,388 | 87,154 | — | — | 1,575,542 | |||||||||||||
Total current
liabilities
|
16,266,753 | 44,793,058 | 1,113,763 | (2,593,750 | ) | 59,579,824 | ||||||||||||
Long-term
liabilities
|
||||||||||||||||||
Long-term debt,
net
|
345,874 | 42,808 | 41,200,000 | (6,343,972 | ) (C,D) | 35,244,710 | ||||||||||||
Capital lease obligations, net of
current portion
|
317,628 | 127,270 |
—
|
—
|
444,898 | |||||||||||||
Total
liabilities
|
16,930,255 | 44,963,136 | 42,313,763 | (8,937,722 | ) | 95,269,432 | ||||||||||||
Minority
Interest
|
3,470,726 | — | (3,470,726 |
)
|
— | — | ||||||||||||
Stockholders'
equity
|
||||||||||||||||||
Cumulative convertible preferred
stock, no par value:
|
||||||||||||||||||
Preferred stock - Class
A
|
213,353 | — | — | — | 213,353 | |||||||||||||
Preferred stock - Class
B
|
25,700 | — | — | — | 25,700 | |||||||||||||
Preferred stock - Class
C
|
1,481,918 | — | — | — | 1,481,918 | |||||||||||||
Preferred stock - Class
F
|
1,500,000 | — | — | — | 1,500,000 | |||||||||||||
Preferred stock - Class
G
|
47,970 | — | — | — | 47,970 | |||||||||||||
Preferred stock - Class
H
|
— | — | — | — | — | |||||||||||||
Common stock, no par
value
|
37,687,864 | 64,435 | (64,435 |
)
|
— | 37,687,864 | ||||||||||||
Stock subscriptions
receivable
|
(84,071 | ) | — | — | — | (84,071 | ) | |||||||||||
Options and
warrants
|
46,038,402 | — | — | — | 46,038,402 | |||||||||||||
Comprehensive income - unrealized
gain on securities available for sale
|
45,594 | — | — | — | 45,594 | |||||||||||||
Noncontrolling
interest
|
— | — | 6,942,209 | — | 6,942,209 | |||||||||||||
Accumulated
deficit
|
(81,314,483 | ) | (14,831,112 | ) | 11,254,122 | — | (84,891,473 | ) | ||||||||||
Total stockholders'
equity
|
5,642,247 | (14,766,677 | ) | 18,131,896 | — | 9,007,466 | ||||||||||||
Total liabilities and
stockholders' equity
|
$ | 26,043,228 | $ | 30,196,459 | $ | 56,974,933 | $ | (8,937,722 | ) | $ | 104,276,898 |
(A)
|
Adjust historical DirecTECH
balances and record the assets acquired and liabilities assumed at fair
value considering the MMT related assets and liabilities previously
acquired
|
(B)
|
Adjust receivables related to the
support center agreement along with offsetting accounts
payable
|
(C)
|
Offset MMT receivable of
$5,843,972 against purchase
debt
|
(D)
|
Adjust deposit in escrow at
December 31, 2008 against purchase
debt
|
(E)
|
Related party receivable of
$1,822,323 offset against related party payables recorded in
accounts payable
|
(F)
|
Includes fair value of contingent
consideration recorded in accrued liabilities of
$1,608,000
|
* Deferred taxes related to the
acquisition have not been recorded in this proforma
presentation
|
Years
Ended December 31, 2008, 2007 and
2006
|
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
||||||||||||
Description
|
Balance
at
Beginning
of
Year
|
Additions
Charged
to
Costs
and
Expenses
|
Deductions
|
Balance
at
End
of Year
|
||||||||||||
ALLOWANCE
DEDUCTED FROM ASSET TO WHICH IT APPLIES
|
||||||||||||||||
Allowance
for doubtful accounts receivable:
|
||||||||||||||||
2008
|
$ | 75,000 | $ | - | $ | 15,000 | (A) | $ | 60,000 | |||||||
2007
|
229,400 | - | 154,400 | (A) | 75,000 | |||||||||||
2006
|
386,000 | - | 156,600 | (A) | 229,400 | |||||||||||
Stock
subscriptions and interest receivable
|
||||||||||||||||
2008
|
160,761 | 60,000 | 35,053 | (A) | 185,708 | |||||||||||
2007
|
100,761 | 60,000 | - | 160,761 | ||||||||||||
2006
|
98,000 | 70,000 | 67,239 | (A) | 100,761 |
(A)
|
Write-off
uncollectible receivables
|