UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 **Washington,
        D.C. 20549**
  
 FORM
        10-Q
 
 **(Mark One)**
                x
              QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                  ACT
                  OF 1934FOR
                  THE PERIOD ENDING SEPTEMBER 30, 2008OR ̈
              TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                  ACT
                  OF 1934FOR
                  THE TRANSITION PERIOD FROM _________TO
                  _________COMMISSION
                  FILE NUMBER
                  0 – 1325










MULTIBAND
      CORPORATION





(Exact
      name of registrant as specified in its charter)





**MINNESOTA**





(State
      or
      other jurisdiction of incorporation or organization)





**41 - 1255001**





(IRS
      Employer Identification No.)





**9449
      Science Center Drive, New Hope, Minnesota 55428**





(Address
      of principal executive offices)





**Telephone
      (763) 504-3000 Fax (763) 504-3060**





**Internet:**  www.multibandusa.com





(Registrant's
      telephone number, facsimile number, and Internet address)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days.





Yes x No o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer“ and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer o Accelerated filer o


Non-accelerated
      filer x (do not
      check if a smaller reporting company) Smaller reporting company o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).





Yes o No x





On
      November 10, 2008 there were 9,632,305 shares outstanding of the registrant's
      common stock, no par value, and 297,375 outstanding shares of the registrant's
      convertible preferred stock.













**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1. CONSOLIDATED FINANCIAL STATEMENTS**





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**





ThreeMonths Ended
            
            Nine Months EndedSeptember 30,
              2008
            
            September 30,
              2007
            
            September 30,
              2008
            
            September 30,
              2007(unaudited)
            
            (unaudited)
            
            (unaudited)
            
            (unaudited)**REVENUES**
            
            $
            12,340,659
            
            $
            3,653,600
            
            $
            28,860,595
            
            $
            11,960,281**COSTS
                AND EXPENSES**Cost
                of products and services (exclusive of depreciation and amortization
                shown
                separately below)
            
            
            8,556,168
            
            
            2,345,895
            
            
            18,769,937
            
            
            6,395,179Selling,
                general and administrative
            
            
            2,757,319
            
            
            2,360,254
            
            
            7,173,357
            
            
            7,057,936Depreciation
                and amortization
            
            
            846,317
            
            
            770,215
            
            
            2,463,079
            
            
            2,814,981Impairment
                of assets
            
            
            -
            
            
            -
            
            
            65,452
            
            
            -Total
                costs and expenses
            
            
            12,159,804
            
            
            5,476,364
            
            
            28,471,825
            
            
            16,268,096**INCOME
                (LOSS) FROM OPERATIONS**
            
            
            180,855
            
            
            (1,822,764
            )
            
            388,770
            
            
            (4,307,815
            )**OTHER
                INCOME (EXPENSE)**Interest
                expense
            
            
            (300,826
            )
            
            (108,847
            )
            
            (514,485
            )
            
            (430,264
            )Management
                consulting income
            
            
            1,446,938
            
            
            -
            
            
            1,446,938
            
            
            -Other
                income
            
            
            8,109
            
            
            13,267
            
            
            80,699
            
            
            177,361Total
                other income (expense)
            
            
            1,154,221
            
            
            (95,580
            )
            
            1,013,152
            
            
            (252,903
            )**INCOME
                (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST IN
                SUBSIDIARY**
            
            
            1,335,076
            
            
            (1,918,344
            )
            
            1,401,922
            
            
            (4,560,718
            )**PROVISION
                FOR INCOME TAXES**
            
            
            286,658
            
            
            -
            
            
            749,458
            
            
            -**MINORITY
                INTEREST IN NET INCOME OF SUBSIDIARY**
            
            
            137,755
            
            
            -
            
            
            549,758
            
            
            -**NET
                INCOME (LOSS)**
            
            
            910,663
            
            
            (1,918,344
            )
            
            102,706
            
            
            (4,560,718
            )Preferred
                stock dividends
            
            
            64,014
            
            
            1,793,297
            
            
            4,048,696
            
            
            2,153,698**INCOME
                (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS**
            
            $
            846,649
            
            $
            (3,711,641
            )
            $
            (3,945,990
            )
            $
            (6,714,416
            )**INCOME
                (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE -
                BASIC**
            
            $
            .09
            
            $
            (.50
            )
            $
            (.43
            )
            $
            (.94
            )**INCOME
                (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE -
                DILUTED**
            
            $
            .09
            
            $
            (.50
            )
            $
            (.43
            )
            $
            (.94
            )Weighted
                average shares outstanding – basic
            
            
            9,561,718
            
            
            7,356,413
            
            
            9,184,475
            
            
            7,177,435Weighted
                average shares outstanding – diluted
            
            
            9,796,685
            
            
            7,356,413
            
            
            9,184,475
            
            
            7,177,435





See
      notes
      to condensed consolidated financial statements





Page
            2





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**





Three Months Ended
            
            Nine Months EndedSeptember30,
              2008
            
            September30,
              2007
            
            September30,
              2008
            
            September30,
              2007(unaudited)
            
            (unaudited)
            
            (unaudited)
            
            (unaudited)**NET
                INCOME (LOSS)**
            
            $
            910,663
            
            $
            (1,918,344
            )
            $
            102,706
            
            $
            (4,560,718
            )**OTHER
                COMPREHENSIVE INCOME (LOSS), NET OF TAX:**Unrealized
                gains(losses) on securities:Unrealized
                holding gains(losses) arising during period
            
            
            -
            
            
            -
            
            
            151,978
            
            
            -**COMPREHENSIVE
                INCOME (LOSS)**
            
            $
            910,663
            
            $
            (1,918,344
            )
            $
            254,684
            
            $
            (4,560,718
            )





See
      notes
      to condensed consolidated financial statements





Page
            3





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





September 30,
              2008
            
            December 31,
              2007(unaudited)
            
            (audited)***ASSETS*****CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
            11,092,373
            
            $
            944,456Accounts
                receivable, net
            
            
            3,340,501
            
            
            1,560,123Securities
                available for sale
            
            
            151,978
            
            
            -Inventories
            
            
            2,128,393
            
            
            132,992Prepaid
                expenses and other
            
            
            343,280
            
            
            135,589Current
                portion of notes receivable
            
            
            61,418
            
            
            59,861Total
                Current Assets
            
            
            17,117,943
            
            
            2,833,021**PROPERTY
                AND EQUIPMENT, NET**
            
            
            1,306,054
            
            
            1,769,261**OTHER
                ASSETS**Goodwill
            
            
            116,757
            
            
            16,757Intangible
                assets, net
            
            
            5,107,154
            
            
            4,072,076Notes
                receivable – long-term, net
            
            
            38,856
            
            
            -Other
                assets
            
            
            455,432
            
            
            202,314Total
                Other Assets
            
            
            5,718,199
            
            
            4,291,147**TOTAL
                ASSETS**
            
            $
            24,142,196
            
            $
            8,893,429***LIABILITIES
                AND STOCKHOLDERS' EQUITY*****CURRENT
                LIABILITIES**Mandatory
                redeemable preferred stock, 16,200 and 22,026 Class F preferred
                shares
            
            $
            162,000
            
            $
            220,256Current
                portion of long-term debt
            
            
            1,644,633
            
            
            1,658,342Current
                portion of capital lease obligations
            
            
            244,354
            
            
            225,291Accounts
                payable
            
            
            8,466,643
            
            
            2,950,596Accrued
                liabilities – short term
            
            
            3,179,204
            
            
            2,531,611Customer
                deposits
            
            
            60,582
            
            
            60,582Deferred
                service obligations and revenue
            
            
            985,232
            
            
            204,520Total
                Current Liabilities
            
            
            14,742,648
            
            
            7,851,198**LONG-TERM
                LIABILITIES**Long-term
                debt, net
            
            
            807,943
            
            
            118,924Capital
                lease obligations, net of current portion
            
            
            149,796
            
            
            249,469Accrued
                liabilities – long term
            
            
            74,243
            
            
            -Total
                Liabilities
            
            
            15,774,630
            
            
            8,219,591**COMMITMENTS
                AND CONTINGENCIES****MINORITY
                INTEREST**
            
            
            3,387,917
            
            
            -**STOCKHOLDERS'
                EQUITY**Cumulative
                convertible preferred stock, no par value:8%
                Class A (21,328 and 24,728 shares issued and outstanding, $223,944
                and
                $259,644 liquidation preference)
            
            
            320,708
            
            
            371,70810%
                Class B (2,870 and 3,770 shares issued and outstanding, $30,135 and
                $39,585 liquidation preference)
            
            
            28,700
            
            
            37,70010%
                Class C (114,380 and 120,250 shares issued and outstanding, $1,143,800
                and
                $1,202,500 liquidation preference)
            
            
            1,486,082
            
            
            1,548,35210%
                Class F (150,000 shares issues and outstanding, $1,500,000 liquidation
                preference)
            
            
            1,500,000
            
            
            1,500,0008%
                Class G (11,595 and 26,595 shares issued and outstanding, $115,950
                and
                $265,950 liquidation preference)
            
            
            47,970
            
            
            111,4686%
                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 (9,603,294 and 7,451,891 shares issued and
                outstanding)
            
            
            37,614,598
            
            
            29,574,673Stock
                subscriptions receivable
            
            
            (98,453
            )
            
            (170,888
            )Options
                and warrants
            
            
            46,024,617
            
            
            45,871,964Accumulated
                comprehensive income – unrealized gain on securities available for
                sale
            
            
            151,978
            
            
            -Accumulated
                deficit
            
            
            (82,096,551
            )
            
            (78,171,139
            )Total
                Stockholders' Equity
            
            
            4,979,649
            
            
            __
                _673,838**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            $
            24,142,196
            
            $
            8,893,429





See
      notes
      to condensed consolidated financial statements





Page
            4




**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**




Nine Months EndedSeptember 30,
              2008
            
            September 30,
              2007(unaudited)
            
            (unaudited)**OPERATING
                ACTIVITIES**Net
                income (loss)
            
            $
            102,706
            
            $
            (4,560,718
            )Adjustments
                to reconcile net income (loss) to net cash flows from operating
                activitiesDepreciation
                and amortization
            
            
            2,463,079
            
            
            2,829,277Minority
                interest in net income of consolidated subsidiary
            
            
            549,758
            
            
            -Impairment
                of intangibles
            
            
            65,452
            
            
            -Amortization
                of original issue discount
            
            
            -
            
            
            29,746Amortization
                of imputed interest discount
            
            
            218,912
            
            
            -Loss
                on sale of property and equipment and intangible assets
            
            
            51,807
            
            
            150,582Warrants
                issued for services
            
            
            -
            
            
            42,300Gain
                on debt extinguishment
            
            
            (29,965
            )
            
            (118,040
            )Stock
                based compensation expense for future services
            
            
            152,653
            
            
            549,434Stock
                based compensation expense for services
            
            
            18,555
            
            
            -Compensation
                expense of restricted stock awards
            
            
            23,625
            
            
            -Management
                consulting income from DirecTECH
            
            
            (1,446,938
            )
            
            -Change
                in allowance for doubtful accounts on accounts receivable
            
            
            (15,000
            )
            
            (97,500
            )Change
                in reserve for stock subscriptions and interest receivable
            
            
            8,102
            
            
            45,000Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            887,553
            
            
            373,588Inventories
            
            
            220,666
            
            
            191,933Prepaid
                expenses and other
            
            
            (52,275
            )
            
            182,272Other
                assets
            
            
            120,527
            
            
            (13,051
            )Accounts
                payable and accrued liabilities
            
            
            (228,829
            )
            
            (320,485
            )Customer
                deposits
            
            
            -
            
            
            (750
            )Deferred
                service obligations and revenue
            
            
            780,712
            
            
            (591,000
            )Liabilities
                of discontinued operations
            
            
            -
            
            
            (125,000
            )Net
                cash flows from (used by) operating activities
            
            
            3,891,100
            
            
            (1,432,412
            )**INVESTING
                ACTIVITIES**Purchases
                of property and equipment
            
            
            (112,253
            )
            
            (271,588
            )Cash
                acquired via purchase of Michigan Microtech, Inc.
            
            
            4,043,942
            
            
            -Cash
                collected on other receivables – related parties acquired via the purchase
                of Michigan Microtech, Inc.
            
            
            2,815,488
            
            
            -Purchase
                of US Install
            
            
            (101,000
            )
            
            -Proceeds
                from sale of property and equipment and intangible assets
            
            
            5,695
            
            
            2,639,869Collections
                on notes receivable
            
            
            4,601
            
            
            4,802Net
                cash flows from investing activities
            
            
            6,656,473
            
            
            2,373,083**FINANCING
                ACTIVITIES**Checks
                issued in excess of cash in bank
            
            
            -
            
            
            (319,244
            )Payments
                on long-term debt
            
            
            (83,683
            )
            
            (146,405
            )Payments
                on capital lease obligations
            
            
            (152,241
            )
            
            (191,405
            )Payments
                on note payable to stockholder
            
            
            -
            
            
            (24,739
            )Payments
                on mandatory redeemable preferred stock
            
            
            (58,256
            )
            
            (52,744
            )Payments
                for stock issuance costs
            
            
            (25,379
            )
            
            (25,916
            )Payments
                received on stock subscriptions receivable
            
            
            3,000
            
            
            62Proceeds
                from issuance of long term debt
            
            
            100,000
            
            
            -Redemption
                of preferred stock
            
            
            (101,700
            )
            
            (77,099
            )Preferred
                stock dividends
            
            
            (81,397
            )
            
            (40,217
            )Net
                cash flows used by financing activities
            
            
            (399,656
            )
            
            (877,707
            )**INCREASE
                IN CASH AND CASH EQUIVALENTS**
            
            
            10,147,917
            
            
            62,964**CASH
                AND CASH EQUIVALENTS**Beginning
                of period
            
            
            944,456
            
            
            1,020,975End
                of period
            
            $
            11,092,373
            
            $
            1,083,939




See
      notes
      to condensed consolidated financial statements





Page
            5





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**





Nine Months EndedSeptember 30,
              2008
            
            September 30,
              2007(unaudited)
            
            (unaudited)**SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION**Cash
                paid for interest, net of amortization of original issue discount
                and
                imputed interest discount
            
            $
            198,749
            
            $
            411,477Cash
                paid for federal and state income taxes
            
            
            681,500
            
            
            -**SUPPLEMENTAL
                DISCLOSURES OF NON-CASH INVESTING AND FINANCING
                ACTIVITIES**Conversion
                of Class I preferred stock into common stock
            
            
            3,744,600
            
            
            -Conversion
                of Class G preferred stock into common stock
            
            
            150,000
            
            
            -Conversion
                of accrued interest into common stock
            
            
            2,000
            
            
            15,680Conversion
                of accrued dividends into common stock
            
            
            175,412
            
            
            534,879Intrinsic
                value of preferred dividends
            
            
            84,068
            
            
            13,884Purchase
                of property and equipment via increase of capital lease
                obligations
            
            
            46,867
            
            
            -Purchase
                of US Install via increase in accrued expenses
            
            
            102,516
            
            
            -Acquisition
                of securities available for sale upon expiration of contingent
                rights
            
            
            208,969
            
            
            -Reduction
                of stock subscription receivable via cancellation of common
                stock
            
            
            61,333
            
            
            -Debt
                and accrued interest paid with issuance of common stock
            
            
            19,500
            
            
            -Purchase
                of 51% of Michigan Microtech, Inc. via issuance of notes payable
                and
                common stock, net of discount for imputed interest
            
            
            5,782,690
            
            
            -Sale
                of property, equipment and intangible to DirecTECH for other current
                asset
            
            
            -Debt
                reduced by reduction in other receivable from DirecTECH
            
            
            1,446,938
            
            
            -Conversion
                of preferred stock into common stock
            
            
            -
            
            
            1,706,400Notes
                payable and other liens paid by MDUC as part of asset sale
            
            
            -
            
            
            1,713,785Debt
                and interest assumed by DirecTECH as part of asset sale
            
            
            -
            
            
            267,143Common
                stock issued for services to be rendered
            
            
            157,500
            
            
            164,337Note
                payable issued for services to be rendered
            
            
            -
            
            
            44,407




See
      notes
      to condensed consolidated financial statements





Page
            6





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**








**NOTE
      1 - Unaudited Consolidated Financial Statements**





The
      information furnished in this report is unaudited and reflects all adjustments
      which are normal recurring adjustments and, which in the opinion of management,
      are necessary to fairly present the operating results for the interim periods.
      The operating results for the interim periods presented are not necessarily
      indicative of the operating results to be expected for the full fiscal year.
      The
      consolidated financial statements should be read in conjunction with the
      consolidated financial statements and footnotes thereto included in the
      Company’s Annual Report on Form 10-K for the year ended December 31, 2007,
      previously filed with the Securities and Exchange Commission.








**NOTE
      2 - Summary of Significant Accounting Policies**








*Nature
      of Business*





Multiband
      Corporation and subsidiaries (the Company) was incorporated in Minnesota in
      September 1975. The Company provides voice, data and video services to
      multi-dwelling unit customers and provides video services to single family
      home
      customers. The Company's products and services are sold to customers located
      throughout the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern that contemplates the realization
      of
      assets and satisfaction of liabilities in the normal course of business. For
      the
      nine months ended September 30, 2008, the Company earned net income of $102,706
      versus the nine months ended September 30, 2007 in which the Company incurred
      a
      net loss of $4,560,718. At September 30, 2008, the Company had an accumulated
      deficit of $82,096,551. The Company's ability to continue as a going concern
      is
      dependent on it ultimately achieving profitability and/or raising additional
      capital. Management intends to sell certain assets on a strategic basis for
      prices agreeable to the Company and/or obtain additional debt or equity capital
      to meet all of its existing cash obligations and fund commitments on planned
      Multiband projects; however, there can be no assurance that the sources will
      be
      available or available on terms favorable to the Company. Management anticipates
      that the impact of the actions listed below will generate sufficient cash flows
      to pay current liabilities, long-term debt and capital and operating lease
      obligations and fund the Company's future operations for the next twelve
      months:


1.
              Reduction
                  of operating expenses by controlling payroll, professional fees
                  and other
                  general and administrative
                  expenses.
  2.
              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.
  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.
              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) (see Note 4 and Note 13). MMT installs
                  DirecTV
                  video services in single family homes. Historically MMT has been
                  profitable. The Company anticipates that by combining MMT operations
                  with
                  Multiband operations that it will achieve a beneficial impact to
                  its
                  consolidated cash flows and operating results. However, there is
                  no
                  guarantee that these combined results will ultimately be favorable
                  to the
                  Company.
  7.
              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.




Page
            7





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





*Principles
      of Consolidation*





The
      consolidated financial statements include the accounts of Multiband Corporation
      (MB) and its wholly owned subsidiaries, Minnesota Digital Universe, Inc. (MDU),
      Rainbow Satellite Group, LLC (Rainbow), Multiband Subscriber Services, Inc.
      (MBSS), and Multiband USA, Inc. (MBUSA). Effective March 1, 2008, the Company
      acquired 51% of the outstanding shares of Michigan Microtech, Inc. (MMT) (see
      Note 4). The minority interest on the consolidated balance sheet and statement
      of operations represents DTHC’s 49% ownership of MMT. The consolidated financial
      statements include the accounts of MMT. All significant intercompany
      transactions and balances have been eliminated in consolidation.





*Revenue
      Recognition*





The
      Company recognizes revenue in accordance with the Securities Exchange
      Commission’s Staff Accounting Bulletin No. 104 (SAB 104) “Revenue Recognition”,
      which requires that four basic criteria be met before revenue can be recognized:
      (i) persuasive evidence of a customer arrangement exists; (ii) the price is
      fixed or determinable; (iii) collectability is reasonably assured; and (iv)
      product delivery has occurred or services have been rendered. The Company
      recognizes revenue as products are shipped based on FOB shipping point terms
      when title passes to customers.





The
      Company earns revenues from four sources: 1) Voice, video and data
      communications products which are sold and installed, 2) MBSS user charges
      to
      multiple dwelling units, 3) MDU earns revenue primarily through the activation
      of, enhancement of, and residual fees on video programming services provided
      to
      residents of multiple dwelling units; and 4) MMT earns revenue primarily through
      the installation and service of DirecTV (DTV) video programming for residents
      of
      single family homes.





Customers
      contract for both the purchase and installation of voice and data networking
      technology products and certain video technologies products. Revenue is
      recognized when the products are delivered and installed and the customer has
      accepted and has the ability to fulfill the terms of the contract.





Revenue
      generated from activation of video programming services is earned in the month
      of activation. According to Multiband's Master System Operator agreement with
      DirecTV, in the event that a customer cancels within the first 12 months of
      service, DirecTV has the right to chargeback the Company for a portion of the
      activation fees received. In accordance with Securities Exchange Commission
      SAB
      104, the Company has estimated the potential charge back of commissions received
      on activation fees during the past 12 months based on historical percentages
      of
      customer cancellations and has included that amount as a reduction of revenue.
      Residual income is earned as services are provided by DirecTV through its system
      operators. As a master system operator for DirecTV, the Company earns a fixed
      percentage based on net cash received by DirecTV for recurring monthly services,
      a variable amount depending on the number of activations in a given month,
      and a
      variable amount for coordinating improvements of systems used to deliver
      enhanced programming services. The Company’s master system operator contract
      with DirecTV also permits the Company to earn revenues through its control
      of
      other system operators who are unable to provide DirecTV video programming
      services without the Company’s performance.





MMT
      has a
      home services provider (HSP) agreement with DirecTV which allows MMT to install
      and activate DTV video programming services for residents of single family
      homes. As a DirecTV HSP, MMT earns revenue for installing and servicing DTV
      video customers pursuant to predetermined rates set by DirecTV which may vary
      from time to time. Revenue
      is recognized upon completion of the delivery and installation of
      equipment.





The
      Company reports the aforementioned voice, data, and video revenues on a gross
      basis based on the following factors: the Company has the primary obligation
      in
      the arrangement with its customers; the Company controls the pricing of its
      services; the Company performs customer service for the agreements; the Company
      approves customers; and the Company assumes the risk of payment for services
      provided.





Page
            8





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





We
      offer
      some products and services that are provided by third party vendors. We review
      the relationship between us, the vendor and the end customer on an individual
      basis to assess whether revenue should be reported on a gross or net basis.
      As
      an example, our resold satellite digital television revenue is reported on
      a net
      basis.


The
      Company has determined that the accounting policies for income recognition
      described above were in accordance with the Financial Accounting Standards
      Board
      Emerging Issues Task Force (“EITF”) Issue No. 99-19, “Reporting Revenue Gross as
      a Principal versus Net as an Agent”. EITF No. 99-19 employs multi-factor tests
      to determine whether amounts charged to customers in respect of certain expenses
      incurred should be included in revenues or netted against such
      expenses.





In
      June
      2006, the Financial Accounting Standards Board (FASB) ratified the consensus
      of
      Emerging Issues Task Force Issue No. 06-3, “How Taxes Collected from Customers
      and Remitted to Governmental Authorities Should Be Presented in the Income
      Statement (That Is, Gross versus Net Presentation)” (EITF 06-3). EITF 06-3
      concluded that the presentation of taxes imposed on revenue-producing
      transactions (sales, use, value added and excise taxes) on either a gross
      (included in revenues and costs) or a net (excluded from revenues) basis is
      an
      accounting policy that should be disclosed. The Company’s policy is to present
      taxes imposed on revenue-producing transactions on a net basis.





Revenue
      generated by the support center to service third party subscribers by providing
      billing and call center support services is recognized in the period the related
      services are provided.





MBSS,
      Rainbow, MDU and MBUSA user charges are recognized as revenues in the period
      the
      related services are provided in accordance with SAB 104. Any amounts billed
      prior to services being provided are reported as deferred service obligations
      and revenues. MMT installation and services revenues are recognized in the
      period the related services are provided in accordance with SAB
      104.





*Goodwill
      and Other Intangible Assets*





We
      periodically evaluate goodwill and other intangible and long-lived assets for
      potential impairment indicators. Our judgments regarding the existence of
      impairment indicators are based on legal factors, market conditions and
      operational performance of our business segments. Future events could cause
      us
      to conclude that impairment indicators exist and that goodwill and other
      intangible and long-lived assets are impaired. Any resulting impairment loss
      could have a material adverse impact on our financial condition and results
      of
      operations. Goodwill was $116,757 and $16,757 at September 30, 2008 and December
      31, 2007, respectively, and is recorded as part of our Multiband Corp. and
      MCS
      segments. The increase in goodwill during 2008 is due to the purchase US Install
      (see Note 4).





Due
      to
      the abandonment of a right of entry intangible asset, the Company recorded
      an
      impairment charge of $0 and $65,452 for the three and nine months ended
      September 30, 2008. This charge was determined based upon the net book value
      of
      assets to be abandoned.





Components
      of intangible assets are as follows:


September
                  30, 2008
              
              December
                  31, 2007Gross
                Carrying
              
              Accumulated
              
              Gross
                Carrying
              
              AccumulatedAmount
              
              Amortization
              
              Amount
              
              AmortizationIntangible
                  assets subject to amortizationRight
                  of entry contracts
              
              $
              800,741
              
              $
              503,735
              
              $
              993,393
              
              $
              618,027Contracts
                  with DirecTV
              
              
              12,547,145
              
              
              7,714,260
              
              
              9,697,879
              
              
              6,001,169Customer
                  contracts
              
              
              102,516
              
              
              59,801
              
              
              -
              
              
              -Total
              
              
              13,450,402
              
              
              8,277,796
              
              
              10,691,272
              
              
              6,619,196Impairment
                  of intangibles
              
              
              -
              
              
              65,452
              
              
              -
              
              
              -Total
                  including impairment
              
              $
              13,450,402
              
              $
              8,343,248
              
              $
              10,691,272
              
              $
              6,619,196




Page
            9





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





Amortization
      of intangible assets was $668,544 and $519,519 for the three months ended
      September 30, 2008 and 2007, respectively. For the nine months ended September
      30, 2008 and 2007, amortization of intangible assets was $1,851,250 and
      $1,829,272, respectively. Amortization of debt issuance costs of $0 and $7,986
      for the nine months ended September 30, 2008 and 2007, respectively, is included
      in interest expense. Estimated amortization expense of intangible assets for
      the
      remainder of the year ending December 31, 2008 and for the years ending December
      31, 2009, 2010, 2011, 2012 and thereafter is $669,036, $2,537,421, $1,464,137,
      $336,190, $36,267, $64,102, respectively. The weighted average remaining life
      of
      the intangibles is 2.22 years with right of entry average life of 5.77 years,
      contracts with DirecTV of 2.06 years and customer contracts of .42 years as
      of
      September 30, 2008.





*Share-Based
      Compensation*





The
      Company recognizes share-based compensation costs on a straight-line basis
      over
      the requisite service period of the award, which is generally the option vesting
      term. For the three months ended September 30, 2008 total share-based
      compensation expense of ($209,474) (($.02) per share) was recorded as a
      reduction to selling, general and administrative expenses due to a change in
      accounting estimates related to black scholes assumptions. For the three months
      ended September 30, 2007, total share-based compensation expense of $158,001
      ($.02 per share) was included in selling, general and administrative expenses,
      respectively. For the nine months ended September 30, 2008 and 2007, total
      share-based compensation expense of $152,652 ($.02 per share) and $549,434
      ($.08
      per share) was included in selling, general and administrative expenses,
      respectively.




As
      of
      September 30, 2008, there was $68,773 of total unrecognized compensation cost
      related to nonvested share-based compensation arrangements granted under the
      Plan. That cost is expected to be recognized over a weighted-average period
      of
      1.66 years. This is an estimate based on options currently outstanding and
      therefore this projected expense could be more in the future.





In
      determining the compensation cost of the options granted during the three and
      nine months ended September 30, 2008 and 2007, as specified by SFAS No. 123R,
      the fair value of each option grant has been estimated on the date of grant
      using the Black-Scholes option pricing model and the weighted average
      assumptions used in these calculations are summarized as follows:




Three months ended
            
            Nine months endedSeptember 30,
              2008
            
            September 30,
              2007
            
            September 30,
              2008
            
            September 30,
              2007Risk-free
                interest rate
            
            
            3.15
            %
            
            4.50
            %
            
            3.15
            %
            
            4.58
            %Expected
                life of options granted
            
            
            6.5
                Years
            
            
            10
                Years
            
            
            6.5
                Years
            
            
            10
                YearsExpected
                volatility range
            
            
            95
            %
            
            236
            %
            
            94
            %
            
            236
            %Expected
                dividend yield
            
            
            0
            %
            
            0
            %
            
            0
            %
            
            0
            %





The
      Company’s determination of fair value of share-based payment awards on the date
      of grant using an option-pricing model is affected by the Company’s stock price
      as well as assumptions regarding a number of variables. These variables include,
      but are not limited to the Company’s expected stock price volatility, and actual
      and projected stock option exercise behaviors and forfeitures. During the
      quarter ended September 30, 2008, the Company evaluated the variables used
      in
      calculating its option values. The Company has recorded a change in accounting
      estimate based on this assessment.





In
      May
      2008, the Company issued 22,500 shares of restricted stock in the amount of
      $23,625 to two officers of the Company. The value of the restricted stock was
      established by the market price on the date of grant. These restricted shares
      were immediately vested and were issued as performance bonuses pursuant to
      the
      Company’s Employee Stock Compensation Plan.





Page
            10






**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





*Net
      Income (Loss) per Common Share*





Basic
      net
      income (loss) per common share is computed by dividing the income (loss)
      attributable to common stockholders by the weighted average number of common
      shares outstanding for the reporting period. Diluted income (loss) per common
      share is computed by dividing loss attributable to common stockholders by the
      sum of the weighted average number of common shares outstanding plus all
      additional common stock that would have been outstanding if potentially dilutive
      common shares related to common share equivalents (stock options, stock
      warrants, convertible preferred shares, and issued but not outstanding
      restricted stock) had been issued. All options, warrants, convertible preferred
      shares, and restricted stock outstanding during the nine months ended September
      30, 2008 and the three and nine months ended September 30, 2007 were excluded
      from the calculation of diluted loss per share as their effects were
      anti-dilutive due to the Company’s net losses for the periods. The three months
      ended September 30, 2008 accounted for dilutive options, warrants, preferred
      shares, and restricted stock. There were 2,138,244 shares of anti-dilutive
      shares related to options and warrants that were not included in the denominator
      for diluted earnings per share.





The
      following table sets forth the computation of basic and diluted earnings per
      share:





Three months ended
            
            Nine months endedSeptember 30,
              2008
            
            September 30,
              2007
            
            September 30,
              2008
            
            September 30,
              2007Numerator:
                Income (loss) attributable to common stockholders
            
            $
            846,649
            
            $
            (3,711,641
            )
            $
            (3,945,990
            )
            $
            (6,714,416
            )Denominator:Weighted-average
                shares outstanding
            
            
            9,561,718
            
            
            7,356,413
            
            
            9,184,475
            
            
            7,177,435Effect
                of dilutive securities
            
            
            234,967
            
            
            -
            
            
            -
            
            
            -Denominator
                for diluted earnings per share
            
            
            9,796,685
            
            
            7,356,413
            
            
            9,184,475
            
            
            7,177,435Basic
                earnings (loss) per share
            
            $
            .09
            
            $
            (.50
            )
            $
            (.43
            )
            $
            (.94
            )Diluted
                earnings (loss) per share
            
            $
            .09
            
            $
            (.50
            )
            $
            (.43
            )
            $
            (.94
            )





*Segment
      Reporting*





A
      business segment is a distinguishable component of an enterprise that is engaged
      in providing an individual product or service or a group of related products
      or
      services and that is subject to risks and returns that are different from those
      of other business segments. Management believes that the Company has three
      operating segments, MCS, where the Company bills voice, data and video
      subscribers as a principal; MDU where the Company, as a master service operator
      for DirecTV, receives net cash payments for managing video subscribers through
      its network of system operators and HSP (Home Service Provider), where the
      Company receives net cash payments for the installation and service of DirecTV
      (DTV) video programming for residents of single family homes. These video
      subscribers are billed by DirecTV.




**NOTE
        3** **–
        Sales Transactions**





Effective
      March 1, 2007, the Company, pursuant to an asset purchase agreement entered
      into
      October 19, 2006 (the “agreement”), completed the sale of substantially all of
      its video assets located in California to Consolidated Smart Broadband Systems,
      LLC (CSBS). The purchase price paid by CSBS was $1,214,000 at closing plus
      an
      additional $100,000, paid on March 30, 2007 consisting of cash proceeds of
      $757,731 and direct payments to lenders of $556,269 (including $22,338 of
      imputed interest).


Page
          11





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





In
      accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets”, the Company classified the assets as held for sale, and
      recorded an impairment charge for the year ended December 31, 2006, that was
      determined based upon the excess net book value of assets sold over the known
      proceeds from the sale. Any consideration received for the assets during future
      accounting periods based upon the earnout formula will be recognized as a gain
      on sale of assets in that period. The results of the sale of the California
      assets resulted in a loss of $40,110, which is included in the selling, general
      and administrative expenses of the accompanying consolidated statements of
      operations for the three months ended March 31, 2007.





Effective
      March 31, 2007, the Company completed the sale of substantially all of its
      video
      assets located in Ohio to DirecTECH MDU (Dtech). The purchase price paid by
      Dtech was $745,790. The purchase price consisted of the assumption of a note
      payable for the gross value of $329,036 and $416,754 cash paid at closing on
      April 20, 2007. The sale of the Ohio assets resulted in a gain on sale in the
      amount of $324,626, which is included in the selling, general and administrative
      expenses during the three months ended March 31, 2007. The proceeds of $683,897,
      including assumed liabilities of $267,143, less the net book value of the MCS
      segment assets sold amounted to a gain on sale of $324,626.





On
      October 16, 2007, the Company completed the sale to MDU Communications (MDUC)
      of
      approximately 9,800 subscriptions and the related assets located in 181
      multi-family properties located throughout Florida, Illinois, New York,
      Colorado, New Jersey, and Texas. Total proceeds for MCS assets sold amounted
      to
      approximately $3,325,000, consisting of cash proceeds of $1,476,753, selling
      expenses paid by MDUC of $135,000 and the remainder on debt and liabilities
      paid
      directly by MDUC. The sale resulted in a loss of $461,687 which is included
      in
      the selling, general and administrative expenses of the consolidated statements
      of operations for the year ended December 31, 2007. The aforementioned loss
      primarily resulted from fewer multi-family properties being sold to MDUC than
      was originally intended in the party’s asset purchase agreement. Certain
      properties could not be sold due to the Company’s inability to obtain some
      property owners consent to assignment. The difference in the mix of properties
      ultimately transferred to MDUC increased the loss on sale compared to what
      the
      Company originally estimated upon execution of the asset purchase agreement
      in
      July 2007.





These
      sales were not reported as a discontinued operation because the assets sold
      did
      not constitute a segment or component of the Company’s business, and the Company
      retained assets and on-going service rights associated with the video
      subscribers.





**NOTE
      4** **–
      Business Acquisitions**





Effective
      March 1, 2008, the Company purchased, pursuant to a Supplemental Agreement
      and
      Plan of Share Exchange, 51% of the outstanding shares of Michigan Microtech,
      Inc. (MMT), previously a wholly owned subsidiary of DirecTECH Holding Company,
      Inc. (DTHC) which equaled 1,020,000 MMT common shares. The consideration paid
      for the shares was 1,490,000 shares of restricted Multiband common stock valued
      at $3,854,000 and a promissory note for $2,246,000. The note is secured by
      the
      aforementioned MMT common shares, which carries a stated interest rate of 5%
      per
      annum and is due February 2013. The Multiband shares, via negotiation and mutual
      agreement between buyer and seller, were valued at $2.59 per share. The seller
      received certain piggyback registration rights with regards to the Multiband
      shares. The note payable was recorded net of a discount for imputed interest
      of
      3% which amortizes monthly as part of interest expense. The total discount
      for
      imputed interest amounted to $317,310. The Company purchased MMT to enter the
      market of installing video services in single family homes. The Company, on
      a
      preliminary and unaudited basis, allocated the purchase price to the fair values
      of MMT assets and liabilities. As part of the acquisition, the Company
      recognized an intangible asset of $2,849,266 related to MMT’s HSP agreement with
      DirecTV. The Company will amortize this intangible over the remaining 38 month
      term of MMT’s home services provided contract with DirecTV. The term of the
      contract will automatically renew as of April 30, 2011 for additional one year
      periods unless either MMT or DirecTV gives written notice of termination at
      least 90 days in advance of expiration of the then current term. Also, all
      signing parties to the October 31, 2007 Plan of Merger Agreement involving
      Multiband Corporation and DirecTECH Holding Company, Inc. have agreed to extend
      the time to reach a definitive agreement in the matter from March 31, 2008
      to
      December 31, 2008. Subsequently, in November, 2008, Multiband and DTHC entered
      into a stock purchase agreement (SPA) which superceded the aforementioned Plan
      of Merger Agreement. (See Note 13)


Page
          12





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





Effective
      March 1, 2008, the Company purchased 100% of the assets of US Install LLC in
      exchange for $95,000 in cash plus 37,879 shares of restricted Multiband common
      stock valued at $102,516, which is included in accrued liabilities on the
      consolidated balance sheet and was subsequently issued in October, 2008. The
      Company also incurred acquisition expense of $1,000 related to this purchase.
      In
      addition, the parties executed employment agreements with US Install’s two
      principals. The parties also executed noncompetition and nonsolicitation
      agreements with each principal in exchange for cash consideration of $2,500
      per
      agreement. The Company allocated the purchase price as follows:





Intangible
                assets
            
            $
            102,516Goodwill
            
            
            100,000Total
                assets acquired
            
            
            202,516





Proceeds
      for the acquisition were obtained via an unsecured promissory note in the amount
      of $100,000 between Multiband and Bas Mattingly Master, LLC, a trust controlled
      by J. Bas Mattingly, chairman of DTHC, with DTHC as a 49% owner of MMT. The
      note
      carries an interest rate of 7% per annum and is due August 20, 2009. The Company
      purchased US Install LLC to diversify its revenue sources.





The
      unaudited pro forma information does not purport to represent what the Company’s
      results of operations would actually have been if such transactions in fact
      had
      occurred at such date or to project the Company’s results of future
      operations.





**2007**
              **Consolidated**
              **as reported**
            
            **2007**
              **Pro Forma**
              **Disclosed**Three
                months ended September 30, 2007Revenues
            
            $
            3,653,600
            
            $
            10,622,338Loss
                from operations
            
            
            (1,822,764
            )
            
            (1,511,477
            )Net
                Loss
            
            
            (1,918,344
            )
            
            (1,732,972
            )Preferred
                dividends
            
            
            1,793,297
            
            
            1,793,297Loss
                attributable to common shareholders
            
            $
            (3,711,641
            )
            $
            (3,526,269
            )Loss
                attributable to common shareholders per common share– basic and
                diluted
            
            $
            (.50
            )
            $
            (.40
            )Weighted
                average shares outstanding - basic and diluted
            
            
            7,356,413
            
            
            8,846,413


Page
          13


**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





**2008**
              **Consolidated**
              **as reported**
            
            **2008**
              **Pro Forma**
              **Disclosed**
            
            **2007**
              **Consolidated**
              **as reported**
            
            **2007**
              **Pro Forma**
              **Disclosed**Nine
                months ended September 30, 2008 and 2007Revenues
            
            $
            28,860,595
            
            $
            33,260,475
            
            $
            11,960,281
            
            $
            30,236,120Income
                (loss) from operations
            
            
            388,770
            
            
            592,305
            
            
            (4,307,815
            )
            
            (5,317,760
            )Net
                income (loss)
            
            
            102,706
            
            
            246,029
            
            
            (4,560,718
            )
            
            (5,312,504
            )Preferred
                stock dividends
            
            
            4,048,696
            
            
            4,048,696
            
            
            2,153,698
            
            
            2,153,698Loss
                attributable to common shareholders
            
            $
            (3,945,990
            )
            $
            (3,802,667
            )
            $
            (6,714,416
            )
            $
            (7,466,202
            )Loss
                attributable to common shareholders per common share – basic and
                diluted
            
            $
            (.43
            )
            $
            (.41
            )
            $
            (.94
            )
            $
            (.86
            )Weighted
                average shares outstanding – basic and diluted
            
            
            9,184,475
            
            
            9,353,051
            
            
            7,177,435
            
            
            8,667,435








**NOTE
      5** **–
      Inventories**








Inventories
      consisted of the following:





**September 30,**
              **2008**
            
            **December 31,**
              **2007**DirecTV
                – serialized
            
            $
            1,028,154
            
            $
            -DirecTV
                – nonserialized
            
            
            667,435
            
            
            -Other
            
            
            432,804
            
            
            132,992**Total**
            
            $
            2,128,393
            
            $
            132,992





The
      Company’s inventories are segregated into three major categories. Serialized
      DirecTV inventories consists primarily of satellite receivers and similar
      devices. Non-serialized DirecTV inventories consist primarily of satellite
      dishes, poles and similar devices which are supplied by DirecTV. Other inventory
      consists primarily of cable, switches and various small parts used in the
      installation of DirecTV satellite dishes.








**NOTE
      6** **–
      Securities Available for Sale**








As
      of
      December 31, 2007, Multiband had the voting rights for and was holding in trust
      58,161 common shares of URON for various contingent rights holders whose rights
      were tied to potential future warrant exercises or preferred stock conversions.
      As of February 4, 2008, certain aforementioned contingent rights were not
      exercised by the various holders; therefore Multiband now owns 37,994 shares
      of
      URON. As a result, Multiband recorded the fair value of URON shares based on
      quoted market prices as an unrealized gain.





**Unrealized**
              **Gains on**
              **Securities**Balance,
                December 31, 2007
            
            $
            -Initial
                investment
            
            
            121,582Increase
                in value, for the nine months ended
            
            
            30,396Balance,
                September 30, 2008
            
            $
            151,978


Page
          14


**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**







**NOTE
      7** **–
      Stock Transactions**








Stock
      warrants activity is as follows for the nine months ended September 30,
      2008:





**Number of**
              **Warrants**
            
            **Weighted – Average**
              **Exercise Price**Outstanding,
                December 31, 2007
            
            
            3,088,873
            
            $
            7.64Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Cancelled
            
            
            (1,605,310
            )
            
            (7.90
            )Outstanding,
                September 30, 2008
            
            
            1,483,563
            
            $
            7.26





In
      February 2008, all remaining shares of Class I Preferred Stock (39,500 shares)
      were converted into 526,667 shares of Multiband common stock. This conversion
      event created a non-cash dividend expense of $3,744,600 which is reflected
      in
      the Company’s consolidated statement of operations for the nine months ended
      September 30, 2008.








**NOTE
      8** **–
      Accrued Liabilities**





Accrued
      liabilities consisted of the following:





**September 30,**
              **2008**
            
            **December 31,**
              **2007**Payroll
                and related taxes
            
            $
            1,571,249
            
            $
            512,960Accrued
                preferred stock dividends
            
            
            623,750
            
            
            642,395Accrued
                liability - vendor chargebacks
            
            
            -
            
            
            630,800Accrued
                income taxes
            
            
            145,647
            
            
            -Accrued
                interest payable – short term
            
            
            31,724
            
            
            27,363Other
            
            
            806,834
            
            
            718,093Total
                accrued liabilities – short term
            
            
            3,179,204
            
            
            2,531,611Accrued
                interest payable – long term
            
            
            74,243
            
            
            -**Total
                Accrued Liabilities**
            
            $
            3,253,447
            
            $
            2,531,611




Page
          15





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**








**NOTE
      9 - Business Segments**





The
      Company has four reporting segments. Multiband Corp. includes corporate expenses
      (e.g. corporate administrative costs), interest income, interest expense,
      depreciation and amortization. The MDU segment represents results as the master
      service operator for DirecTV. The MCS segment provides voice, data and video
      services to residential multi-dwelling units as the principal to subscribers.
      The HSP segment provides the installation and service of DirecTV (DTV) video
      programming for residents of single family homes. Segment
      disclosures by entity are provided to the extent practicable under the Company's
      accounting system.





Segment
      disclosures are as follows:




Multiband
              Corp.
            
            MDU
            
            MCS
            
            HSP
            
            TotalThree
                months ended September 30, 2008:Revenues
            
            $
            -
            
            $
            4,148,786
            
            $
            799,445
            
            $
            7,392,428
            
            $
            12,340,659Income
                (loss) from operations
            
            
            (546,911
            )
            
            838,401
            
            
            (674,349
            )
            
            563,714
            
            
            180,855Identifiable
                assets
            
            
            4,675,491
            
            
            4,261,614
            
            
            2,328,163
            
            
            12,876,928
            
            
            24,142,196Depreciation
                and amortization
            
            
            276,907
            
            
            396,650
            
            
            163,782
            
            
            8,978
            
            
            846,317Capital
                expenditures
            
            
            21,497
            
            
            -
            
            
            14,205
            
            
            10,575
            
            
            46,277





Multiband
              Corp.
            
            MDU
            
            MCS
            
            HSP
            
            TotalThree
                months ended September 30, 2007:Revenues
            
            $
            -
            
            $
            2,569,486
            
            $
            1,084,114
            
            $
            -
            
            $
            3,653,600Income
                (loss) from operations
            
            
            (1,038,768
            )
            
            461,068
            
            
            (1,245,064
            )
            
            -
            
            
            (1,822,764
            )Identifiable
                assets
            
            
            1,897,511
            
            
            5,392,234
            
            
            2,885,771
            
            
            -
            
            
            10,175,516Depreciation
                and amortization
            
            
            39,846
            
            
            397,850
            
            
            332,519
            
            
            -
            
            
            770,215Capital
                expenditures
            
            
            1,987
            
            
            -
            
            
            28,720
            
            
            -
            
            
            30,707





Multiband
              Corp.
            
            MDU
            
            MCS
            
            HSP
            
            TotalNine
                months ended September 30, 2008:Revenues
            
            $
            -
            
            $
            10,395,193
            
            $
            2,488,473
            
            $
            15,976,929
            
            $
            28,860,595Income
                (loss) from operations
            
            
            (2,290,096
            )
            
            2,701,269
            
            
            (1,875,140
            )
            
            1,852,737
            
            
            388,770Identifiable
                assets
            
            
            4,675,491
            
            
            4,261,614
            
            
            2,328,163
            
            
            12,876,928
            
            
            24,142,196Depreciation
                and amortization
            
            
            693,165
            
            
            1,189,380
            
            
            560,514
            
            
            20,020
            
            
            2,463,079Capital
                expenditures
            
            
            43,162
            
            
            -
            
            
            58,516
            
            
            10,575
            
            
            112,253





Multiband
              Corp.
            
            MDU
            
            MCS
            
            HSP
            
            TotalNine
                months ended September 30, 2007:Revenues
            
            $
            -
            
            $
            7,619,689
            
            $
            4,340,592
            
            $
            -
            
            $
            11,960,281Income
                (loss) from operations
            
            
            (3,220,516
            )
            
            2,508,408
            
            
            (3,595,707
            )
            
            -
            
            
            (4,307,815
            )Identifiable
                assets
            
            
            1,897,511
            
            
            5,392,234
            
            
            2,885,771
            
            
            -
            
            
            10,175,516Depreciation
                and amortization
            
            
            139,573
            
            
            1,208,592
            
            
            1,466,816
            
            
            -
            
            
            2,814,981Capital
                expenditures
            
            
            1,987
            
            
            -
            
            
            269,601
            
            
            -
            
            
            271,588




Page
          16





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**










**NOTE
      10** **–
      Commitments and Contingencies**





*Legal
      proceedings*





The
      Company is subject to legal actions that arise in the ordinary course of its
      business. The Company accrues for such litigation when a loss is considered
      probable and the amount of such loss, or a range of loss, can be reasonably
      estimated.





In
      July
      2008, the Company received a complaint dated May 2008 filed by various
      individuals against MMT and DTHC alleging violations of state and federal
      statutory payroll overtime law. The Company believes it pays overtime properly
      when earned and intends to vigorously defend the allegations. At this time,
      the
      Company could not reliably estimate a range of loss, if any, with regards to
      the
      matter.





*Significant
      relationship*





The
      Company is a master agent for DirecTV pursuant to a system operator agreement
      with DirecTV dated August 2005. Under that agreement the Company is required
      to
      ensure that its system operators meet minimum technical DTV system standards
      so
      that the system operator subscribers may properly receive DTV programming
      services. The initial term of the agreement is for three years and provides
      for
      two additional two-year renewals if the Company has a minimum number of paying
      video subscribers in its system operator network. The Company has met the
      requirements and has entered into the first two year automatic renewal period.
      The Company, via MMT, also has a separate home service provider agreement with
      DirecTV ending April 30, 2011.  The term
      of the MMT contract with DirecTV will automatically renew as of May 1, 2011
      for
      additional one year periods unless either MMT or DirecTV gives written notice
      of
      termination at least 90 days in advance of expiration of the then current term.
      Termination of the Company's DirecTV agreements would have a material adverse
      impact on the Company's on-going operations. Revenues generated from DirecTV
      were 93.5% and 91.4% of total revenue for the three and nine months ended
      September 30, 2008, respectively. Revenues generated from DirecTV for the three
      and nine months ended September 30, 2007 were 70.3% and 63.7% of total revenue,
      respectively.





*Gain
      on extinguishment of debt*





In
      January 2008, the Company negotiated payment of the remaining balance of the
      note payable to Vern Swedin by issuing 7,500 shares of common stock at $2.60
      per
      share in settlement of this debt resulting in a gain on extinguishment of debt
      of $29,965. This modification was accounted for as a gain on extinguishment
      of
      debt in accordance with EITF 96-19, “Debtor’s Accounting for a Modification or
      Exchange of Debt Instruments”. This amount is included in other income on the
      consolidated statement of operations for the nine months ended September 30,
      2008.





*Current
      portion of long-term debt*





As
      of
      September 30, 2008, the Company failed to meet one of the compliance covenants
      of its lender, Convergent Capital, with respect to having minimum net worth
      of
      five million dollars at September 30, 2008. Convergent Capital provided the
      Company with a waiver for the covenant for the nine months ended September
      30,
      2008. The Company’s management believes it is probable that the violation will
      not be cured at measurement dates that are within the next twelve months. In
      accordance with EITF 86-30 “Classification of obligations when a violation is
      waived by the creditor”, the Company has classified the debt as current as of
      September 30, 2008 and December 31, 2007.


Page
          17





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





*DirecTECH
      Holding Company Bank Loan*





In
      May
      2007 (as subsequently amended in June 2007, December 2007 and June 2008),
      DirecTECH Holding Company (DTHC) and its subsidiaries, including Michigan
      Microtech, Inc. (MMT) which, prior to March 1, 2008, was 100% owned by DTHC,
      entered into a loan and security agreement with MB Financial Bank, N.A. (MB
      Bank). Multiband Corporation, effective March 1, 2008, owns 51% of the common
      stock of MMT. At the time of Multiband’s purchase of the MMT stock in February
      2008, Multiband received a release of the MB Bank’s lien against the MMT stock.
      However, MMT remains an obligor on the overall MB Bank loan. To date, MMT has
      not utilized any of the loan proceeds. Based on the Company’s interpretation of
      Securities Exchange Commission’s Staff Accounting Bulletin No. 5J (SAB 5J), none
      of the DTHC bank loan debt is reflected in MMT’s financial statements which have
      been consolidated with Multiband Corporation’s financial statements for the
      seven months ended September 30, 2008.





On
      May 2,
      2008, MB Bank filed a complaint against DTHC and various affiliates in the
      United States District Court for the Northern District of Illinois, Eastern
      Division seeking, amongst other things, to recover the amounts due under the
      notes. At the time of the filing of the complaint, balances due under all
      facilities totaled $15,340,000, which included a balance due on a revolving
      loan
      of $3,500,000. On June 18, 2008, MB Bank and DTHC and various affiliates
      including MMT, entered into an initial Forbearance Agreement, which expired
      on
      October 10, 2008, which sets forth revised terms and conditions, including
      the
      dismissal of the court action without prejudice. The initial Forbearance
      Agreement was extended until January 9, 2009. Under this Forbearance Agreement,
      MMT remains an obligor on the overall MB Bank loan. Revised terms include
      monthly principal payments of $236,667 beginning July 15, 2008. Effective
      November 15, 2008, the monthly principal payments increase to $240,914. In
      addition, commencing April 21, 2008, interest on all loans will be calculated
      using the default rate in the loan agreements (ranges from 9.37-9.62% as of
      June
      18, 2008) and will be payable on a monthly basis beginning on July 15, 2008.
      The
      agreement also contains certain reporting requirements and financial covenants
      that DTHC must adhere to during the period of the agreement. As of September
      30,
      2008, the total loan balance equals $11,909,564.





*Auto
      leases*





The
      Company leases substantially all of its fleet vehicles under operating leases
      from one lessor. Each lease commences upon the in-service date of the vehicle
      and requires scheduled lease payments to be paid monthly for one year. After
      one
      year, the Company has the option to renew the open ended lease for one year
      renewal periods or surrender the leased vehicle to the lessor to be sold. If
      the
      net proceeds of such sale exceed the vehicle’s then depreciated value, the
      lessee receives the benefit of such excess. If there is a deficiency upon such
      sale, then lessee is required to pay the deficiency as additional rent to
      lessor. The Company has entered this agreement jointly and severally with
      various subsidiaries of DTHC. For the three and seven months ended September
      30,
      2008, the Company’s operating lease expense under the lease totaled
      approximately $381,000 and $748,000, respectively.





*Guaranty*





On
      March
      1, 2006, Corporate Technologies, LLC (CTLLC), a subsidiary of North Central
      Equity, LLC, the purchaser of the MBS business segment, signed a lease with
      Lexstar Tower I Limited Partnership whereby CTLLC assumed the lease obligation
      for substantially all of the first floor space the Company is renting in Fargo,
      North Dakota for the period beginning March 1, 2006 to February 28, 2011.
      Pursuant to the aforementioned lease, the Company entered into a guaranty
      whereby the Company, in the event of a default or early termination of the
      lease
      by CTLLC, is obligated to perform CTLLC’s lease obligation during months 43-60
      of the lease. This guaranty has no effect on the Company’s consolidated
      financial statements for the three and nine months ended September 30, 2008
      and
      2007. However, should Multiband eventually have to perform on the guaranty
      in
      the future, it could be liable for up to $348,881 in rent payments plus any
      associated charges such as property taxes and common area maintenance. The
      Company has evaluated the accounting guidance of FIN 45 “Guarantor’s Accounting
      and Disclosure Requirements for Guarantees” and has determined that it does not
      apply to this guaranty.


Page
          18





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**




**NOTE
        11** **–
        Income Taxes**





At
      September 30, 2008, the Company’s federal and state net operating loss
      carryforwards were estimated to be approximately $45,000,000 and $39,000,000,
      respectively. Under
      Internal Revenue Code Section 382, utilization of federal losses expiring prior
      to 2019 is limited to approximately $375,000 each year.





Due
      to
      Multiband’s purchase of 51% of MMT’s stock, effective March 1, 2008, MMT will no
      longer file consolidated tax returns with its former parent DTHC but will file
      as a single entity as it no longer meets the 80% ownership required for tax
      consolidation. Therefore, MMT will not be able to utilize the tax loss
      carryforwards of Multiband Corporation. As of and for the three and nine months
      ended September 30, 2008, MMT has recorded income tax expense of $286,658 and
      $749,458, respectively.





The
      Company has adopted FASB Interpretation 48 (FIN 48), “Accounting for Uncertainty
      in Income Taxes” to address the non-comparability in reporting tax assets and
      liabilities resulting from a lack of specific guidance in FASB Statement of
      Financial Accounting Standards No. 109 (SFAS 109), “Accounting for Income Taxes”
on the uncertainty in income taxes recognized in an enterprise’s financial
      statements. Specifically, FIN 48 prescribes (a) a consistent recognition
      threshold and (b) a measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return, and provides related guidance on derecognition, classification,
      interest and penalties, accounting interim periods, disclosure and transition.
      To the extent interest and penalties would be assessed by taxing authorities
      on
      any underpayment of income taxes, such amounts would be accrued and classified
      as a component of income tax expenses on the consolidated statement of
      operations. There was no impact on the consolidated financial statements for
      the
      three and nine months ended September 30, 2008 and 2007 related to FIN 48.
      The
      Company’s federal and state tax returns are potentially open to examinations for
      fiscal years 2005-2007. The Company has no significant unrecognized tax benefits
      as of September 30, 2008 that would reasonably be expected to affect our
      effective tax rate during the next twelve months.


**NOTE
        12** **–
        Related Party Transactions**





Proceeds
      for the acquisition of US Install Inc. by the Company completed in February,
      2008 were obtained via an unsecured promissory note in the amount of $100,000
      between Multiband and Bas Mattingly Master, LLC, a trust controlled by J. Bas
      Mattingly, chairman of DTHC, which is a 49% owner of MMT. The note carries
      an
      interest rate of 7% per annum and is due August 20, 2009.





MMT
      leases warehouse space from two individuals that have ownership via related
      trusts in DTHC. DTHC owns 49% of MMT as a minority interest shareholder (see
      Note 4). Lease payments amount to $3,200 per month plus expenses, expiring
      in
      April 2009.





Multiband
      and its subsidiaries lease principal offices located at 2000 44 th Street
      SW, Fargo, ND 58013. The Fargo base rate ranges from $7,621 to $8,466 per month.
      The Fargo property is owned in part by David Ekman, Chief Information Officer,
      Multiband.





Bernard
      Schafer is a director of both DTHC and Multiband. DTHC is the minority
      shareholder of MMT (see Note 4).





Multiband
      and DTHC perform certain management and information systems functions for one
      another pursuant to management consulting and employee leasing agreements.
      DTHC
      is the minority shareholder of MMT (see Note 4). During the three and nine
      months ended September 30, 2008, the Company has reduced selling, general and
      administrative expenses by $330,000 and $960,000 as a reimbursement of direct
      expenses in relation to this management consulting agreement.


Page
          19





**MULTIBAND
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 AND 2007**





Multiband
      earned a performance bonus as part of the aforementioned management consulting
      agreement with DTHC of $1,446,938 which was paid via reduction of the debt
      incurred in the acquisition of MMT (see Note 4). The Company recorded this
      consulting income as part of other income and expense on the statement of
      operations because the income does not constitute the entity’s ongoing major or
      central operations. The consulting income was not a reimbursement of direct
      expenses.





Jim
      Mandel, CEO of Multiband, borrowed DTHC $100,000 in a short-term note paying
      simple interest monthly at 10%. This note is subordinated to MB Bank
      debt.








**Note
      13 - Subsequent Event**





On
      November 3, 2008, the Company and DTHC, entered into a comprehensive Stock
      Purchase Agreement (“SPA”) which superseded the parties’ original Plan of Merger
      Agreement dated October 2007. Pursuant to the SPA, the Company will purchase
      80%
      of the issued and outstanding shares of common stock of all DTHC operating
      subsidiaries for $40 million and certain other consideration, of which
      $6,100,000 has already been paid due to the Company’s prior purchase effective
      March 1, 2008 of 51% of the issued and outstanding common stock of Michigan
      Microtech, Inc., a Michigan corporation (“MMT”), a former 100% owned DTHC
      subsidiary (see Note 4). The remaining $33,900,000 will be paid as follows:
      $1,000,000 in cash at closing and a secured promissory note for $32,900,000
      which is due four years from the date of the parties’ initial closing of the
      SPA. The promissory note carries an interest rate of 8.25% per annum, subject
      to
      adjustment in the event of a default. Multiband shall have until December 31,
      2009, to purchase the remaining 20% of the issued and outstanding shares of
      common stock of all DTHC operating subsidiaries. The consideration for the
      20%
      purchase will be $10 million worth of Multiband Series J Preferred Stock, whose
      issuance will require Multiband shareholder approval. The closing on the 80%
      stock transaction is expected to occur on or about January 1, 2009, and the
      closing on the 20% stock transaction is anticipated to occur on or before
      December 31, 2009. The Company will apply FASB 141R and evaluate the purchase
      price allocation based on the guidance and fair value of the assets acquired
      and
      liabilities assumed. The Company has retained an independent outside expert
      to
      complete a fairness opinion for the Company’s shareholders concerning the
      consideration expected to be paid by Multiband in the transaction.




Page
          20




**FORWARD-LOOKING
      STATEMENTS**





From
      time
      to time, the Company may publish forward-looking statements relating to such
      matters as anticipated financial performance, business prospects, product
      pricing, management for growth, integration of acquisitions, technological
      developments, new products, and similar matters. Words such as “anticipates”,
“may”, “will”, “should”, “believes”, “estimates”, “expects”, “intends”, “plans”,
“predicts”, “will likely result”, “will continue”, or similar expressions
      identify forward-looking statements. The Private Securities Litigation Reform
      Act of 1995 provides a safe harbor for forward-looking statements including
      those made in this statement. In order to comply with the terms of the Private
      Securities Litigation Reform Act, the Company notes that a variety of factors
      could cause the Company's actual results and experience to differ materially
      from the anticipated results or Company's forward-looking statements.





The
      risks
      and uncertainties that may affect the operations, performance, developments
      and
      results of the Company's business include the following: national and regional
      economic conditions; pending and future legislation affecting IT and
      telecommunications industries; market acceptance of the Company's products
      and
      services; the Company's products and services; the Company's continued ability
      to provide integrated communication solutions for customers in a dynamic
      industry; the Company’s ability to successfully integrate and operate recently
      acquired operations, and other competitive factors.





Because
      these and other factors could affect the Company's operating results, past
      financial performance should not necessarily be considered as a reliable
      indicator of future performance and anticipated future period results.





**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF
      OPERATION**




**OUR
      COMPANY**





Multiband
      Corporation (the Company), is a Minnesota corporation formed in
      September 1975. The Company has three operating segments: 1) Multiband
      Consumer Services (MCS, legally known as Multiband Subscriber Services, Inc.),
      which encompasses the subsidiary corporations, Multiband USA, Inc., and Rainbow
      Satellite Group, LLC, 2) Multi-Dwelling Unit (MDU, legally known as Minnesota
      Digital Universe, Inc.); and 3) Home Service Provider (HSP, legally known as
      Michigan Microtech, Inc (MMT)).





The
      Company completed an initial public offering in June 1984. In
      November 1992, the Company became a non-reporting company under the
      Securities Exchange Act of 1934. In July 2000, the Company regained its
      reporting company status. In December 2000, The Company stock began trading
      on
      the NASDAQ stock exchange under the symbol VICM. In July 2004, the symbol was
      changed to MBND concurrent with the Company’s name change from Vicom,
      Incorporated to Multiband Corporation.





The
      Company’s website is located at: www.multibandusa.com .





From
      its
      inception until December 31, 1998, the Company operated as a telephone
      interconnect company only. Effective December 31, 1998, the Company
      acquired the assets of the Midwest region of Enstar Networking Corporation
      (ENC), a data cabling and networking company. In late 1999, in the context
      of a
      forward triangular merger, the Company, to expand its range of computer products
      and related services, purchased the stock of Ekman, Inc. d/b/a Corporate
      Technologies, and merged Ekman, Inc. into the newly formed surviving
      corporation, Corporate Technologies USA, Inc. (MBS). MBS provided voice,
      data and video systems and services to business and government. The MBS business
      segment was sold effective April 1, 2005. The Company’s MCS segment began in
      February 2000. MCS, the Company’s continuing operating division, provides voice,
      data and video services to multiple dwelling units (MDU), including apartment
      buildings, condominiums and time share resorts. During 2004, the Company
      purchased video subscribers in a number of separate transactions, the largest
      one being Rainbow Satellite Group, LLC. During 2004, the Company also purchased
      the stock of Minnesota Digital Universe, Inc., (MDU segment) which made the
      Company the largest master service operator in MDU’s for DirecTV satellite
      television in the United States. Effective March 1, 2008, the Company purchased
      51% of the outstanding stock of MMT. MMT installs DTV video services in single
      family homes. At
      October 25, 2008, the Company had approximately 109,000 owned and managed
      subscriptions with an additional 24,000 subscriptions supported by the call
      center.





Page
          21


**SELECTED
      CONSOLIDATED FINANCIAL DATA**





DOLLAR AMOUNTS AS A
              PERCENTAGE OF REVENUES
            
            DOLLAR AMOUNTS AS A
              PERCENTAGE OF REVENUESTHREE MONTHS ENDED
            
            NINE MONTHS ENDEDSeptember 30,
              2008
              (unaudited)
            
            September 30,
              2007
              (unaudited)
            
            September 30,
              2008
              (unaudited)
            
            September 30,
              2007
              (unaudited)REVENUES
            
            
            100
            %
            
            100
            %
            
            100
            %
            
            100
            %COST
                OF PRODUCTS & SERVICES (Exclusive of depreciation and amortization
                shown below)
            
            
            69.3
            %
            
            64.2
            %
            
            65.0
            %
            
            53.5
            %SELLING,
                GENERAL & ADMINISTRATIVE
            
            
            22.3
            %
            
            64.6
            %
            
            24.9
            %
            
            59.0
            %DEPRECIATION
                & AMORTIZATION
            
            
            6.9
            %
            
            21.1
            %
            
            8.5
            %
            
            23.5
            %IMPAIRMENT
                OF ASSETS
            
            
            -
            
            
            -
            
            
            0.2
            %
            
            -INCOME
                (LOSS) FROM OPERATIONS
            
            
            1.5
            %
            
            -49.9
            %
            
            1.4
            %
            
            -36.0
            %INTEREST
                EXPENSE & OTHER, NET
            
            
            9.3
            %
            
            -2.6
            %
            
            3.5
            %
            
            -2.1
            %INCOME
                (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST IN
                SUBSIDIARY
            
            
            10.8
            %
            
            -52.5
            %
            
            4.9
            %
            
            -38.1
            %PROVISION
                FOR INCOME TAXES
            
            
            2.3
            %
            
            -
            
            
            2.6
            %
            
            -MINORITY
                INTEREST IN NET INCOME OF SUBSIDIARY
            
            
            1.1
            %
            
            -
            
            
            1.9
            %
            
            -NET
                INCOME (LOSS)
            
            
            7.4
            %
            
            -52.5
            %
            
            0.4
            %
            
            -38.1
            %


**RESULTS
      OF OPERATIONS**





*Revenues*





Total
      revenues increased 237.8% to $12,340,659 for the quarter ended September 30,
      2008 as compared to $3,653,600 for the quarter ended September 30, 2007.
      Revenues for the nine month period ended September 30, 2008 increased 141.3%
      to
      $28,860,595 from $11,960,281 for the same period in 2007. This overall increase
      in revenues is primarily due to the purchase of MMT in March 2008, with revenues
      for the three and seven month periods ended September 30, 2008 of $7,392,428
      and
      $15,976,929, respectively, offset by sales of approximately 13,000 owned
      subscriptions which occurred throughout the first nine months of 2007 in efforts
      to strategically sell unprofitable owned assets, utilizing the proceeds from
      those assets into facilitating growth in the Company’s managed subscriber
      services including our support center and our master system operator
      program.





Revenues
      in the third quarter of 2008, for the MCS segment, decreased 26.3% to $799,445
      as compared to $1,084,114 in the third quarter of 2007. Revenues for the nine
      month period ended September 30, 2008, for the MCS segment, decreased 42.7%
      to
      $2,488,473 from $4,340,592 for the same period in 2007. These decreases were
      primarily due to the aforementioned sales of owned subscriptions offset by
      an
      increase in call center revenue. In 2008, the Company expects MCS revenues
      to
      remain relatively consistent throughout the balance of the year.





Revenues
      in the third quarter of 2008 for the MDU segment increased 61.5% to $4,148,786
      as compared to $2,569,486 in the third quarter of 2007. Revenues for the nine
      month period ended September 30, 2008, for the MDU segment, increased 36.4%
      to
      $10,395,193 from $7,619,689 for the same period in 2007. These increases are
      primarily due to the revenue recognized for coordinating improvements of systems
      used to deliver enhanced programming services, and increased activity from
      a
      large system operator. The Company believes it can ultimately increase revenues
      by selling its support center services to its network of system operators and
      by
      providing ancillary programs for voice and data services to that same network.
      Due to demand for high definition television services and the aforementioned
      revenue generated from coordinating system improvements to provide enhanced
      programming services, MDU revenues are expected to remain above 2007 levels
      for
      the balance of 2008.




Page
          22




Revenues
      for the three month period ended September 30, 2008 for the HSP segment, was
      $7,392,428 in comparison to $0 for the same period in 2007. Revenues for the
      seven month period ended September 30, 2008, for the HSP segment (acquired
      March
      1, 2008), were $15,976,929 from $0 for the same period in 2007. This increase
      is
      due to the purchase of MMT (see Note 4). The Company expects that revenues
      in
      the HSP segment will continue at a rate consistent with the three months ended
      September 30, 2008 throughout the balance of 2008.





*Cost
      of Products and Services (Exclusive of depreciation and
      amortization)*





The
      Company's cost of products and services, increased by 264.7% to $8,556,168
      for
      the quarter ended September 30, 2008, as compared to $2,345,895 for the similar
      quarter last year. For the nine months ended September 30, 2008, cost of
      products and services were $18,769,937 compared to $6,395,179 in the prior
      year,
      a 193.5% increase. Overall cost of products and services as a percentage of
      revenue did increase due, in part, to the purchase of MMT with costs for the
      three and seven month periods ended September 30, 2008 of $5,252,332 and
      $10,989,473, respectively. Other factors affecting costs included specific
      vendor price increases without a corresponding increase in price to customers,
      certain commission payments, and allocation of certain support center costs
      to
      cost of products and services. These increases were offset by a decrease in
      costs related to a decrease in programming and circuit charges due to a
      decreased subscriber number.





Cost
      of
      products and services for the MCS segment for the quarter were $571,202 compared
      to $772,985 in the same quarter last year, a 26.1% decrease. For the nine months
      ended September 30, 2008, cost of products and services were $1,767,081 for
      the
      MCS segment, compared to $2,865,173 in the prior year, a 38.3% decrease. In
      2008, the decrease in cost of products and services in the MCS segment is
      directly related to a decrease in programming and circuit charges between the
      comparable periods due to sales of approximately 13,000 owned subscriptions
      which occurred throughout the first nine months of 2007.





Cost
      of
      products and services for the MDU segment for the quarter were $2,732,634
      compared to $1,572,910 in the same quarter last year, an 73.7% increase. For
      the
      nine months ended September 30, 2008, cost of products and services were
      $6,013,383 for the MDU segment, compared to $3,530,006 in the prior year, a
      70.4% increase. The increase in cost of products and services in the MDU segment
      is primarily related to an increase in revenue generated by the system operators
      along with a change in revenue mix and certain commission payments. In 2008,
      the
      Company expects MDU cost of products and services to increase slightly
      throughout the balance of the year due to certain commission
      payments.





Cost
      of
      products and services for the HSP segment for the quarter were $5,252,332
      compared to $0 in the same quarter last year. For the seven months ended
      September 30, 2008, cost of products and services were $10,989,473 for the
      HSP
      segment (acquired March 1, 2008), compared to the $0 in the prior year. This
      increase is due to the purchase of MMT (see Note 4). In 2008, the Company
      expects HSP cost of products and services to remain consistent throughout the
      remainder of 2008.





*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses increased 16.8% to $2,757,319 in the quarter
      ended September 30, 2008, compared to $2,360,254 in the prior year’s quarter due
      primarily to the addition of the HSP segment resulting from the acquisition
      of
      MMT in 2008. Selling, general and administrative expenses were, as a percentage
      of revenues, 22.3% for the quarter ended September 30, 2008 and 64.6% for the
      similar period a year ago. This percentage decrease is primarily due to
      decreases in payroll and employee expenses, property maintenance expenses,
      and
      outside service expenses between the comparable periods due to the sale of
      subscribers. The Company revised an accounting estimate for option expense
      during the quarter. Multiband Corp segment selling, general and administrative
      expense for the quarter was reduced by approximately $209,000 for this revised
      estimate. Multiband Corp segment also recorded $330,000 of reimbursed payroll
      expenses for management consulting to DTHC per its management consulting
      agreement (see Note 12). The Company anticipates that for the remainder of
      2008,
      selling, general and administrative expenses will remain consistent with third
      quarter levels.


Page
          23





For
      the
      nine months ended September 30, 2008, selling, general and administrative
      expenses increased 1.6% to $7,173,357 compared to $7,057,936 for the nine months
      ended September 30, 2007. This increase is due to the additional seven months
      of
      the newly acquired HSP segment offset by a reduction in payroll and employee
      expenses, property maintenance expenses, and outside service expenses. As a
      percentage of revenue, selling general and administrative expenses were 24.9%
      for the nine months ended September 30, 2008, compared to 59.0% for the same
      period in 2007. This percentage decrease is primarily due to the decreases
      in
      payroll, employee expenses, property maintenance expenses and outside service
      expenses between the comparable periods for subscribers sold in the MCS segment.
      For the nine months ended September 30, 2008, the Multiband Corp. segment has
      recorded $960,000 of reimbursed payroll expenses for management consulting
      to
      DTHC per its management consulting agreement entered into with DTHC in November
      2007. (see Note 12).





*Depreciation
      and Amortization*





Depreciation
      and amortization expense increased 9.9% to $846,317 for the quarter ended
      September 30, 2008 compared to $770,215 in the prior year’s quarter, largely due
      to amortization of intangibles related to the MMT purchase (see Note 4), partly
      offset by the sale of tangible and intangible assets in various states most
      of
      which occurred in 2007 (see Note 3). For the nine months ended September 30,
      2008, depreciation and amortization expense decreased 12.5% to $2,463,079
      compared to $2,814,981 for the nine months ended September 30, 2007. This
      decrease in depreciation and amortization through nine months is due to the
      sale
      of tangible and intangible assets in various states most of which occurred
      in
      2007 (see Note 3) offset by the increase in amortization of intangible related
      to the MMT purchase (see Note 4). Depreciation and amortization expense is
      expected to remain comparable to third quarter through the remainder
      2008.





*Income
      (Loss) from Operations*





The
      Company, in the third quarter of 2008, earned income from operations of $180,855
      versus a loss of $1,822,764 during the prior year’s comparable period. Income
      from operations was $388,770 during the first nine months of 2008, compared
      to a
      loss of $4,307,815 during the first nine months of 2007. The MDU segment showed
      a profit from operations of $838,401 and $2,701,269 for the three and nine
      months ended September 30, 2008 compared to profits of $461,068 and $2,508,408
      for the three and nine months ended September 30, 2007. For the third quarter
      of
      2008, the MCS segment showed a loss from operations of $674,349 compared to
      a
      loss of $1,245,064 for the same quarter last year. For the nine months ended
      September 30, 2008, the MCS segment showed a loss from operations of $1,875,140
      compared to a loss of $3,595,707 for the same period in 2007. The Multiband
      Corporation segment, which has no revenues, showed a loss from operations of
      $546,911 for the three months ended September 30, 2008 and $2,290,096 for the
      nine months ended September 30, 2008 compared to losses of $1,038,768 and
      $3,220,516 for the same periods last year. For the third quarter of 2008, the
      HSP segment showed a profit from operations of $563,714, compared to $0 in
      the
      same period last year. For the nine months ended September 30, 2008, profit
      was
      $1,852,737 for the HSP segment, compared to the $0 in the prior year. The HSP
      segment did not exist in 2007 so there are no comparable results to report
      (see
      Note 4). The Multiband Corporation loss is expected to continue in future
      periods as corporate overhead is expected to remain consistent with current
      levels. The Company expects the MDU segment profitability in future periods
      to
      stabilize at current levels as the year to date reduction in profits for this
      segment has been impacted by increased payments to dealers. The Company plans
      to
      continue to mitigate its loss in the MCS segment by increasing the subscribers
      managed by the support center. At the same time, the Company will look to add
      subscribers in its MDU division since the on-going selling, general and
      administrative expenses to service those subscribers is more variable than
      fixed.





*Interest
      Expense*





Interest
      expense was $300,826 for the quarter ended September 30, 2008, versus $108,847
      for the similar period a year ago. Amortization of an original issue discount
      was $0 and $13,157 for the three months ended September 30, 2008 and 2007.
      Interest expense was $514,485 for the nine months ended September 30, 2008
      and
      $430,264 for the same period last year, primarily reflecting an increase due
      to
      interest expense incurred on the debt issued for the purchase of 51% of MMT
      (see
      Note 4). Amortization of original issue discount was $0 for the nine months
      ended September 30, 2008 and $29,746 for the same period last
      year.


Page
          24





*Management
      consulting income*





During
      the three months ended September 30, 2008, Multiband recorded a performance
      bonus as part of the management consulting agreement with DTHC of $1,446,938
      which was paid via reduction of the debt incurred in the acquisition of MMT
      (see
      Note 4 and Note 12). The Company recorded this consulting income as part of
      other income and expense on the statement of operations because the income
      does
      not constitute the entity’s ongoing major or central operations. The consulting
      income was not a reimbursement of direct expenses. No income was earned during
      the comparable period ended September 30, 2007. This income is part of the
      Multiband Corp. business segment.




*Minority
      Interest*





Effective
      March 1, 2008, the Company purchased 51% of the stock of MMT. The minority
      interest on the statement of operations for the three and seven month periods
      ended September 30, 2008 was $137,755 and $549,758, respectively. The minority
      interest represents DTHC’s 49% ownership of MMT. MMT currently makes up 100% of
      the HSP segment.





*Income
      taxes*





Due
      to
      the Company’s purchase of 51% of MMT’s stock, effective March 1, 2008, MMT will
      no longer file consolidated tax returns with its former parent DTHC but will
      file as a single entity as it no longer meets the 80% ownership required for
      tax
      consolidation. Therefore, MMT will not be able to utilize the tax loss
      carryforwards of Multiband Corporation since Multiband owns less than 80% of
      MMT. As of and for the three and seven month periods ended September 30, 2008,
      MMT has recorded a provision for income tax of $286,658 and $749,458,
      respectively. MMT currently makes up 100% of the HSP segment.





*Net
      Income (Loss)*





In
      the
      third quarter of fiscal 2008, the Company generated net income of $910,663
      and
      incurred a net loss of $1,918,344 for the third fiscal quarter of 2007. For
      the
      nine months ended September 30, 2008, the Company generated a net income of
      $102,706 and incurred a net loss of $4,560,718 for the nine months ended
      September 30, 2007. The net income for the three and nine months ended September
      30, 2008 is largely due to the addition of the HSP segment via the acquisition
      of MMT, the sale of unprofitable subscribers in the MCS segment, the increase
      in
      managed subscribers in the MDU segment, and the management consulting income
      in
      Multiband Corp. segment.





**Liquidity
      and Capital Resources**





During
      the nine months ended September 30, 2008 and 2007, the Company generated a
      net
      income of $102,706 and incurred a net loss of $4,560,718, respectively. Net
      cash
      from operations during the nine months ended September 30, 2008 was $3,891,100
      as compared to the net cash used by operations during the nine months ended
      September 30, 2007 of $1,432,412. Principal payments on current long-term debt
      over the next 12 months are expected to total $1,644,633. As of September 30,
      2008, the Company failed to meet one the compliance covenants of its lender,
      Convergent Capital, with respect to having minimum net worth of five million
      dollars as of the quarter ended September 30, 2008. Convergent Capital provided
      the Company with a waiver for the said covenant as of the quarter ended
      September 30, 2008. The Company’s management believes it is probable that the
      violation will not be cured at measurement dates that are within the next twelve
      months. In accordance with EITF 86-30 “Classification of obligations when a
      violation is waived by the creditor”, the Company has classified the debt as
      current as of September 30, 2008.





Cash
      and
      cash equivalents totaled $11,092,373 at September 30, 2008 versus $944,456
      at
      December 31, 2007. Working capital at September 30, 2008 was $2,375,295 as
      compared to a working capital deficit of $5,018,177 at December 31, 2007,
      primarily due to the acquisition of MMT. Total debt and capital lease
      obligations increased by $594,700 in the nine months ended September 30, 2008
      due mainly to the addition of notes payable in order to purchase MMT and US
      Install. The Company had a material increase in accounts receivable, accounts
      payable and accrued liabilities for the period ended September 30, 2008 verses
      the period ended December 31, 2007 due to the acquisition of MMT. Net cash
      from
      investing activities totaled $6,656,473 for the period ended September 30,
      2008,
      compared to $2,277,400 for the period ended December 31, 2007, due to the
      acquisition of MMT. MMT is an obligor on loans entered into by DTHC and
      subsidiaries with MB Financial, N.A. (MB Bank) (see Note 10). In the event
      that
      DTHC and its various subsidiaries other than MMT could not retire the loan
      then
      MMT’s cash or other assets may have to be utilized to retire the loan which
      would adversely affect MMT’s working capital.




Page
          25




The
      Company experienced a material increase in revenues between the quarter ended
      September 30, 2008 and the quarter ended September 30, 2007 as a result of
      the
      additional revenue obtained from the purchase of MMT offset by the reduction
      of
      revenue resulting from the sale of unprofitable assets. For the balance of
      2008,
      the Company intends to focus on facilitating growth of its HSP business segment
      and its managed subscriber services including its support center and its master
      system operator program. The Company believes it can increase revenues by
      selling its support center services to its network of system operators and
      by
      providing ancillary programs for voice and data services to that same network.





The
      Company used $112,253 for capital expenditures during the nine months ended
      September 30, 2008, as compared to $271,588 in the similar period last year.
      Capital expenditures consisted of project build-outs and equipment acquired
      for
      internal use. This decrease was related to a reduction of company funded video
      and internet service build outs to MDU properties made during 2008. Capital
      expenditures in 2008 are expected to be below the 2007 levels.





Management
      anticipates that the impact of the actions listed below will generate sufficient
      cash flows to pay current liabilities, long-term debt and capital and operating
      lease obligations and fund the Company's operations for the next twelve
      months:





1.
            Reduction
                of operating expenses by controlling payroll, professional fees and
                other
                general and administrative
                expenses.




2.
            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.




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.
            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. The Company anticipates that by combining MMT
                operations with Multiband operations that it will achieve a beneficial
                impact to its consolidated cash flows and operating results. However,
                there is no guarantee that these combined results will ultimately
                be
                favorable to the Company.




7.
            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.





Management
      of Multiband believes that the cash on hand, positive operating income, combined
      with capital resources and the potential ability to monetize intangible
      subscriber assets, will be adequate to meet the anticipated liquidity and
      capital resource requirements for the next twelve months.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





Impairment
      of Long-Lived Assets





The
      Company’s long-lived assets include property, equipment and leasehold
      improvements. At September 30, 2008, the Company had net property and equipment
      of $1,306,054, which represents approximately 5.4% of the Company’s total
      assets. The estimated fair value of these assets is dependent on the Company’s
      future performance. In assessing for potential impairment for these assets,
      the
      Company considers future performance. If these forecasts are not met, the
      Company may have to record an impairment charge, which may be material. During
      the three and nine months ended September 30, 2008 and 2007, the Company did
      not
      record any impairment losses related to long-lived assets.


Page
          26





Impairment
      of Goodwill





At
      year
      end, we test goodwill for impairment. If indicators of impairment are determined
      to exist, we test goodwill for impairment quarterly. Our judgments regarding
      the
      existence of impairment indicators are based on legal factors, market conditions
      and operational performance of our operating segments. Future events could
      cause
      us to conclude that impairment indicators exist and that goodwill associated
      with our operating segments which amounts to $116,757 as of September 30, 2008,
      may be impaired. Any resulting impairment loss could have a material adverse
      impact on our financial condition and results of operations. During the three
      and nine months ended September 30, 2008 and 2007, the Company did not record
      any impairment losses related to goodwill.





Impairment
      of Intangible Assets





The
      intangible assets consist of rights of entry contracts, contracts with DirecTV
      and customer contracts. These intangibles are being amortized over their
      estimated useful lives ranging from 12 to 108 months. If significant changes
      would occur to the estimated future cash flows associated with these
      intangibles, the Company would determine if there is impairment and reduce
      the
      value of intangibles based on the discounted present value of such cash flows.
      At September 30, 2008, the Company had net intangibles of $5,107,154 which
      represented approximately 21.2% of the Company’s total assets. During the three
      and nine months ended September 30, 2008, the Company recorded an impairment
      charge to intangible assets of $0 and $65,452, respectively (see Note 2). The
      Company did not record any impairment losses related to intangible assets during
      the three and nine months ended September 30, 2007.





Inventories





We
      value
      our inventories at the lower of the actual cost or the current estimated market
      value of the inventories. We regularly review inventory quantities on hand
      and
      record a provision for excess and obsolete inventories. Rapid technological
      change, frequent new product development, and rapid product obsolescence that
      could result in an increase in the amount of obsolete inventory quantities
      on
      hand characterize our industry.





Share-Based
      Payments





The
      Company accounts for its stock options in compliance with the Statement of
      Financial Accounting Standard No. 123 (revised 2004), *Share-Based
      Payment* (SFAS
      123(R)), which requires the measurement and recognition of compensation expense
      for all share-based payment awards made to employees and directors including
      employee stock options based on fair values. The Company’s determination of fair
      value of share-based payment awards on the date of grant using an option-pricing
      model is affected by the Company’s stock price as well as assumptions regarding
      a number of variables. These variables include, but are not limited to the
      Company’s expected stock price volatility, and actual and projected stock option
      exercise behaviors and forfeitures. During the quarter ended September 30,
      2008,
      the Company evaluated the variables used in calculating its option values.
      The
      Company has recorded a change in accounting estimate based on this
      assessment.





Revenue
      Recognition





The
      Company recognizes revenue in accordance with the Securities Exchange
      Commission’s Staff Accounting Bulletin No. 104 (SAB 104) “Revenue Recognition”,
      which requires that four basic criteria be met before revenue can be recognized:
      (i) persuasive evidence of a customer arrangement exists; (ii) the price is
      fixed or determinable; (iii) collectability is reasonably assured; and (iv)
      product delivery has occurred or services have been rendered. The Company
      recognizes revenue as products are shipped based on FOB shipping point terms
      when title passes to customers.





The
      Company earns revenues from four sources: 1) Voice, video and data
      communications products which are sold and installed, 2) Multiband user charges
      to multiple dwelling units, 3) MDU earns revenue primarily through the
      activation of, enhancement of, and residual fees on video programming services
      provided to residents of multiple dwelling units; and 4) MMT earns revenue
      primarily through the installation and service of DirecTV (DTV) video
      programming services for residents of single family homes.





Customers
      contract for both the purchase and installation of voice and data networking
      technology products and certain video technologies products. Revenue is
      recognized when the products are delivered and installed and the customer has
      accepted and has the ability to fulfill the terms.


Page
          27





Revenue
      generated from activation of video programming services is earned in the month
      of activation. According to Multiband's Master System Operator agreement with
      DirecTV, in the event that a customer cancels within the first 12 months of
      service, DirecTV has the right to chargeback the Company for a portion of the
      activation fees received. In accordance with Securities Exchange Commission
      SAB
      104, the Company has estimated the potential charge back of commissions received
      on activation fees during the past 12 months based on historical percentages
      of
      customer cancellations and has included that amount as a reduction of revenue.
      Residual income is earned as services are provided by DirecTV through its system
      operators. As a master system operator for DirecTV, the Company earns a fixed
      percentage based on net cash received by DirecTV for recurring monthly services,
      a variable amount depending on the number of activations in a given month,
      and a
      variable amount for coordinating improvements of systems used to deliver
      enhanced programming services. The Company’s master system operator contract
      with DirecTV also permits the Company to earn revenues through its control
      of
      other system operators who are unable to provide DirecTV video programming
      services without the Company’s performance.





MMT
      has a
      home services provider (HSP) agreement with DirecTV which allows MMT to install
      and activate DTV video programming services for residents of single family
      homes. As a DirecTV HSP, MMT earns revenue for installing and servicing DTV
      video customers pursuant to predetermined rates set by DirecTV which may vary
      from time to time. Revenue is recognized upon completion of the delivery and
      installation of equipment.





The
      Company reports the aforementioned voice, data, and video revenues on a gross
      basis based on the following factors: the Company has the primary obligation
      in
      the arrangement with its customers; the Company controls the pricing of its
      services; the Company performs customer service for the agreements; the Company
      approves customers; and the Company assumes the risk of payment for services
      provided.





We
      offer
      some products and services that are provided by third party vendors. We review
      the relationship between us, the vendor and the end customer on an individual
      basis to assess whether revenue should be reported on a gross or net basis.
      As
      an example, our resold satellite digital television revenue is reported on
      a net
      basis.





The
      Company has determined that the accounting policies for income recognition
      described above were in accordance with the Financial Accounting Standards
      Board
      Emerging Issues Task Force (“EITF”) Issue No. 99-19, “Reporting Revenue Gross as
      a Principal versus Net as an Agent”. EITF No. 99-19 employs multi-factor tests
      to determine whether amounts charged to customers in respect of certain expenses
      incurred should be included in revenues or netted against such
      expenses.





In
      June
      2006, the Financial Accounting Standards Board (FASB) ratified the consensus
      of
      Emerging Issues Task Force Issue No. 06-3, “How Taxes Collected from Customers
      and Remitted to Governmental Authorities Should Be Presented in the Income
      Statement (That Is, Gross versus Net Presentation)” (EITF 06-3). EITF 06-3
      concluded that the presentation of taxes imposed on revenue-producing
      transactions (sales, use, value added and excise taxes) on either a gross
      (included in revenues and costs) or a net (excluded from revenues) basis is
      an
      accounting policy that should be disclosed. The Company’s policy is to present
      taxes imposed on revenue-producing transactions on a net basis.





Revenue
      generated by the support center to service third party subscribers by providing
      billing and call center support services is recognized in the period the related
      services are provided.





Multiband,
      Rainbow, MDU and MBUSA user charges are recognized as revenues in the period
      the
      related services are provided in accordance with SAB 104. Any amounts billed
      prior to services being provided are reported as deferred service obligations
      and revenues. MMT installation and services revenues are recognized in the
      period the related services are provided in accordance with SAB
      104.


Page
          28





**ITEM
      3. QUANTITIVE AND QUALITIVE DISCLOSURE ABOUT MARKET RISK**





The
      Company is not subject to any material interest rate risk as any current lending
      agreements are at a fixed rate of interest except for the Convergent Capital
      note of $1,450,000, which varies from 11% to 14%, dependent on the Company’s
      common stock price. Each 1% change in interest impacts the statement of
      operations by approximately $15,000 annually.





**ITEM
      4. CONTROLS AND PROCEDURES**





As
      of the
      end of the period covered by this quarterly report, the Company carried out
      an
      evaluation, under the supervision and with the participation of the Company’s
      management, of the effectiveness of the design and operation of the Company’s
      disclosure controls and procedures pursuant to Rule 13a-14(c) of the Securities
      Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive
      Officer and Chief Financial Officer concluded that the Company’s disclosure
      controls and procedures are effective in alerting them in a timely basis to
      material information relating to the Company required to be disclosed in the
      Company’s periodic SEC reports. There have been no significant changes in the
      Company’s internal controls or in other factors which could significantly affect
      internal controls subsequent to the date the Company carried out its evaluation.
      There was no change in the Company’s internal control over financial reporting
      during the Company’s most recently completed fiscal quarter that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting. An exception to the aforementioned conclusions
      is hereby made specifically with regards to the Company’s home service provider
      business segment. As of September 30, 2008, the Company has not tested the
      effectiveness of any controls or procedures with regards to MMT due to the
      recent acquisition of 51% of MMT. The Company does intend to perform such
      testing prior to December 31, 2008.





**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





The
      Company is subject to legal actions that arise in the ordinary course of its
      business. The Company accrues for such litigation when a loss is considered
      probable and the amount of such loss, or a range of loss, can be reasonably
      estimated.





The
      Company, in July 2008, received a complaint dated May 2008 filed by various
      individuals against MMT and DTHC alleging violations of state and federal
      statutory payroll overtime law. The Company believes it pays overtime properly
      when earned and intends to vigorously defend the allegations. At this time,
      the
      Company could not reliably estimate a range of loss, if any, with regards to
      the
      matter.





**ITEM
      1A. RISK FACTORS**





Our
      operations and our securities are subject to a number of risks, including but
      not limited to those described below. If any of the following risks actually
      occur, the business, financial condition or operating results of Multiband
      and
      the trading price or value of our common stock could be materially adversely
      affected.





**General**





Multiband,
      since 1998, has taken several significant steps to reinvent and reposition
      itself to take advantage of opportunities presented by a shifting economy and
      industry environment.





Recognizing
      that voice, data and video technologies in the late twentieth century were
      beginning to systematically integrate as industry manufacturers were evolving
      technological standards from "closed" proprietary networking architectures
      to a
      more "open" flexible and integrated approach, Multiband, between 1998 and 2001,
      purchased three competitors which, in the aggregate, possessed expertise in
      data
      networking, voice and data cabling and video distribution technologies.





In
      early
      2000, Multiband created its MCS division, employing the aforementioned
      expertise, to provide communications and entertainment services (local dial
      tone, long distance, high-speed internet and expanded satellite television
      services) to residents in MDUs on one billing platform, which the Company
      developed internally.




Page
          29




**Net
      Income (Losses)**





The
      Company had net income of $102,706 for the nine months ended September 30,
      2008
      and net losses of $6,088,353 for the year ended December 31, 2007 and
      $10,183,723 for the year ended December 31, 2006. The Company may never be
      consistently profitable.




The
      prolonged effects of generating losses without additional funding may restrict
      our ability to pursue our business strategy. Unless our business plan is
      successful, an investment in our common stock may result in a complete loss
      of
      an investor's capital.





If
      we
      cannot achieve profitability from operating activities, we may not be able
      to
      meet:


o
            our
                capital expenditure objectives;


o
            our
                debt service obligations; or


o
            our
                working capital needs.





**Goodwill**





In
      June
      2001, the Financial Accounting Standards Board (FASB) adopted Statement of
      Financial Accounting Standards (SFAS) 142, "Goodwill and Other Intangible
      Assets" which changed the amortization rules on recorded goodwill from a monthly
      amortization to an annual test of "impairment" for fiscal years beginning after
      December 15, 2001. As of September 30, 2008, the Company had goodwill of
      $116,757 primarily related to the purchase of US Installs. At September 30,
      2008
      the Company did not note any indications of impairment related to
      goodwill.





**Deregulation**





Several
      regulatory and judicial proceedings have recently concluded, are underway or
      may
      soon be commenced that address issues affecting operations and those of our
      competitors, which may cause significant changes to our industry. We cannot
      predict the outcome of these developments, nor can we assure you that these
      changes will not have a material adverse effect on us. Historically, we have
      been a reseller of products and services, not a manufacturer or carrier
      requiring regulation of its activities. Pursuant to Minnesota statutes, our
      Multiband activity is specifically exempt from the need to tariff our services
      in MDU's. However, the Telecommunications Act of 1996 provides for significant
      deregulation of the telecommunications industry, including the local
      telecommunications and long-distance industries. This federal statute and the
      related regulations remain subject to judicial review and additional
      rule-makings of the Federal Communications Commission, making it difficult
      to
      predict what effect the legislation will have on us, our operations, and our
      competitors.





**Dependence
      on Strategic Alliances**





Several
      suppliers or potential suppliers of Multiband, such as McLeod, WorldCom, WS
      Net,
      XO Communications and others have filed for bankruptcy in recent years. While
      the financial distress of its suppliers or potential suppliers could have a
      material adverse effect on Multiband's business, Multiband believes that enough
      alternate suppliers exist to allow the Company to execute its business plans.
      The Company is also highly dependent on its Master System Operator agreement
      with DirecTV. The initial term of the agreement expires in August 2008, and
      provides for two additional two-year renewals if the Company has a minimum
      number of paying video subscribers in its system operator network. The Agreement
      automatically renewed for a two year period in August 2008. Although an
      alternate provider of satellite television services, Echostar, exists, the
      termination of its agreements with DirecTV could have a material adverse effect
      on Multiband's business.





**Changes
      in Technology**





A
      portion
      of our projected future revenue is dependent on public acceptance of broadband
      and expanded satellite television services. Acceptance of these services is
      partially dependent on the infrastructure of the internet and satellite
      television which is beyond Multiband's control. In addition, newer technologies,
      such as video-on-demand, are being developed which could have a material adverse
      effect on the Company's competitiveness in the marketplace if Multiband is
      unable to adopt or deploy such technologies.


Page
          30





**Attraction
      and Retention of Employees**





Multiband's
      success depends on the continued employment of certain key personnel, including
      executive officers. If Multiband were unable to continue to attract and retain
      a
      sufficient number of qualified key personnel, its business, operating results
      and financial condition could be materially and adversely affected. In addition,
      Multiband's success depends on its ability to attract, develop, motivate and
      retain highly skilled and educated professionals with a wide variety of
      management, marketing, selling and technical capabilities. Competition for
      such
      personnel is intense and is expected to increase in the future.





**Intellectual
      Property Rights**





Multiband
      relies on a combination of trade secret, copyright and trademark laws, license
      agreements, and contractual arrangements with certain key employees to protect
      its proprietary rights and the proprietary rights of third parties from which
      Multiband licenses intellectual property. Multiband also relies on agreements
      with owners of MDUs which grant the Company rights of access for a specific
      period to MDU premises whereby Multiband is allowed to offer its voice, data,
      and video services to individual residents of the MDUs. If it was determined
      that Multiband infringed the intellectual property rights of others, it could
      be
      required to pay substantial damages or stop selling products and services that
      contain the infringing intellectual property, which could have a material
      adverse effect on Multiband's business, financial condition and results of
      operations. Also, there can be no assurance that Multiband would be able to
      develop non-infringing technology or that it could obtain a license on
      commercially reasonable terms, or at all. Multiband's success depends in part
      on
      its ability to protect the proprietary and confidential aspects of its
      technology and the products and services it sells. There can be no assurance
      that the legal protections afforded to Multiband or the steps taken by Multiband
      will be adequate to prevent misappropriation of Multiband's intellectual
      property.





**Variability
      of Quarterly Operating Results**





Variations
      in Multiband's revenues and operating results occur from quarter to quarter
      as a
      result of a number of factors, including customer engagements commenced and
      completed during a quarter, the number of business days in a quarter, employee
      hiring and utilization rates, the ability of customers to terminate engagements
      without penalty, the size and scope of assignments and general economic
      conditions. Because a significant portion of Multiband's expenses are relatively
      fixed, a variation in the number of customer projects or the timing of the
      initiation or completion of projects could cause significant fluctuations in
      operating results from quarter to quarter.





**Certain
      Anti-Takeover Effects**





Multiband
      is subject to Minnesota statutes regulating business combinations and
      restricting voting rights of certain persons acquiring shares of Multiband.
      These anti-takeover statutes may render more difficult or tend to discourage
      a
      merger, tender offer or proxy contest, the assumption of control by a holder
      of
      a large block of Multiband's securities, or the removal of incumbent
      management.





**Volatility
      of Multiband's Common Stock**





The
      trading price of our common stock has been and is likely to be volatile. The
      stock market has experienced extreme volatility, and this volatility has often
      been unrelated to the operating performance of particular companies. Investors
      may not be able to sell the common stock at or above the price they paid for
      their common stock, or at all. Prices for the common stock will be determined
      in
      the marketplace and may be influenced by many factors, including variations
      in
      our financial results, changes in earnings estimates by industry research
      analysts, investors' perceptions of us and general economic, industry and market
      conditions.





**Future
      Sales of Our Common Stock May Lower Our Stock Price**





If
      our
      existing shareholders sell a large number of shares of our common stock, the
      market price of the common stock could decline significantly. The perception
      in
      the public market that our existing shareholders might sell shares of common
      stock could depress our market price.


Page
          31





**Competition**





We
      face
      competition from others who are competing for a share of the MDU market,
      including other satellite companies, cable companies and telephone companies.
      Some of these companies have significantly greater assets and resources than
      we
      do.





**Uncertain
      Effects Of The Merger**





During
      the fourth quarter of 2008, the Company entered into a Stock Purchase Agreement
      (SPA) with DTHC (see Note 13). Even if the SPA is consummated, the DTHC
      operating entity business as merged into the Multiband business may not achieve
      the operating results and growth anticipated by management in structuring the
      transaction.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





a)
            An
                annual meeting of Multiband shareholders was held on August 27, 2008.
                There were present or present by proxy at the meeting 3,648,552 votes,
                the
                number necessary to hold a quorum.


b)
            The
                meeting resulted in the following votes related to the following
                proxy
                items:


1.  Election
      of directors: All directors were re-elected for a term serving until the next
      annual meeting with the votes in favor listed below:





Director
            
            Number of votesBell
            
            
            3,457,552Bennett
            
            
            3,455,602Dodge
            
            
            3,457,552Harris
            
            
            3,457,552Mandel
            
            
            3,455,602Miller
            
            
            3,457,552Schafer
            
            
            3,457,602





2.  Ratify
      the election of Virchow, Krause and Company, LLP as registered public
      accountants of the Company for fiscal year 2007.





Number of votesFor
            
            
            3,457,552Against
            
            
            191,000Abstain
            
            
            557


Page
          32





**ITEM
      6. EXHIBITS**





(a)
            Exhibits




31.1
            Certification
                of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 of
                the
                Exchange Act.31.2
            Certification
                of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 of
                the
                Exchange Act.32.1
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section
                1350.32.2
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section
                1350.





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





MULTIBAND
                CORPORATION
              RegistrantDate:
                November 14, 2008
            By:
            /s/
                James L. Mandel
              *Chief
                Executive Officer*Date:
                November 14, 2008
            By:
            /s/
                Steven M. Bell
              *Chief
                Financial Officer*
              *(Principal
                Financial and Accounting
                Officer)*




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          33