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 1934
 FOR THE
PERIOD ENDING MARCH 31, 2009
 OR
  ̈
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
      OF 1934
 FOR THE
TRANSITION PERIOD FROM 
TO
 COMMISSION
FILE NUMBER 0 – 1325
  
 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  ̈
 
 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, May
15, 2009 there were 9,650,690 shares outstanding of the registrant's common
stock, no par value, and 291,618 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
 (in
thousands, except per share amounts)
 Three Months EndedMarch 31, 2009
                      (unaudited)
                    
                    
                    March 31, 2008
                      (unaudited)REVENUES
                    
                    $
                    62,158
                    
                    
                    $
                    5,714COSTS
      AND EXPENSESCost
      of products and services (exclusive of depreciation and amortization shown
      separately below)
                    
                    
                    47,316
                    
                    
                    
                    3,820Selling,
      general and administrative
                    
                    
                    13,740
                    
                    
                    
                    1,855Depreciation
      and amortization
                    
                    
                    3,285
                    
                    
                    
                    738Impairment
      of assets
                    
                    
                    -
                    
                    
                    
                    58Total
      costs and expenses
                    
                    
                    64,341
                    
                    
                    
                    6,471LOSS
      FROM OPERATIONS
                    
                    
                    (2,183
                    )
                    
                    
                    (757
                    )OTHER
      EXPENSEInterest
      expense
                    
                    
                    (855
                    )
                    
                    
                    (100
                    )Interest
      income
                    
                    
                    7
                    
                    
                    
                    -Other
      income
                    
                    250
                    
                    
                    40Total
      other expense
                    
                    (598
                    )
                    
                    (60
                    )NET
      LOSS BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN
      SUBSIDIARIES
                    
                    
                    (2,781
                    )
                    
                    
                    (817
                    )PROVISION
      FOR INCOME TAXES
                    
                    
                    100
                    
                    
                    
                    29NET
      LOSS
                    
                    
                    (2,881
                    )
                    
                    
                    (846
                    )LESS:
      NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST IN
      SUBSIDIARIES
                    
                    
                    (296
                    )
                    
                    
                    18NET
      LOSS ATTRIBUTABLE TO MULTIBAND CORPORATION AND
SUBSIDIARIES
                    
                    
                    (2,585
                    )
                    
                    
                    (864
                    )Preferred
      stock dividends
                    
                    
                    73
                    
                    
                    
                    3,881LOSS
      ATTRIBUTABLE TO COMMON STOCKHOLDERS
                    
                    $
                    (2,658
                    )
                    
                    $
                    (4,745
                    )LOSS
      PER COMMON SHARE – BASIC AND DILUTED:LOSS
      ATTRIBUTABLE TO COMMONSTOCKHOLDERS
                    
                    $
                    (0.28
                    )
                    
                    $
                    (0.56
                    )Weighted
      average common shares outstanding – basic and diluted
                    
                    
                    9,650
                    
                    
                    
                    8,498
 
 See
accompanying notes to the unaudited condensed consolidated financial
statements
  Page
2
  MULTIBAND
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 (in
thousands)
 Three Months EndedMarch 31, 2009
                                (unaudited)
                              
                              
                              March 31, 2008
                                (unaudited)NET
      LOSS
                              
                              $
                              (2,585
                              )
                              
                              $
                              (864
                              )OTHER
      COMPREHENSIVE INCOME, NET OF TAX:Unrealized
      gains on securities:Unrealized
      holding gains arising during period
                              
                              
                              30
                              
                              
                              
                              209COMPREHENSIVE
      LOSS
                              
                              $
                              (2,555
                              )
                              
                              $
                              (655
                              )
 
 See
accompanying notes to the unaudited condensed consolidated financial
statements
  Page
3
  MULTIBAND
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
  ASSETS
 (in
thousands)
 March 31, 2009
                      (unaudited)
                    
                    
                    December 31, 2008
                      (audited)CURRENT
      ASSETSCash
      and cash equivalents
                    
                    $
                    3,640
                    
                    
                    $
                    4,346Securities
      available for sale
                    
                    
                    76
                    
                    
                    
                    46Accounts
      receivable, net
                    
                    
                    12,099
                    
                    
                    
                    3,437Other
      receivable – related party
                    
                    
                    2,290
                    
                    
                    
                    7,666Inventories
                    
                    
                    16,241
                    
                    
                    
                    1,903Prepaid
      expenses and other
                    
                    
                    4,310
                    
                    
                    
                    1,273Current
      portion of notes receivable
                    
                    
                    61
                    
                    
                    
                    61Total
      Current Assets
                    
                    
                    38,717
                    
                    
                    
                    18,732PROPERTY
      AND EQUIPMENT, NET
                    
                    
                    8,217
                    
                    
                    
                    2,033OTHER
      ASSETSGoodwill
                    
                    
                    36,817
                    
                    
                    
                    1,095Intangible
      assets, net
                    
                    
                    28,674
                    
                    
                    
                    3,668Notes
      receivable – long-term, net of current portion
                    
                    
                    63
                    
                    
                    
                    39Other
      assets
                    
                    
                    2,119
                    
                    
                    
                    476Total
      Other Assets
                    
                    
                    67,673
                    
                    
                    
                    5,278TOTAL
      ASSETS
                    
                    $
                    114,607
                    
                    
                    $
                    26,043
 
 See
accompanying notes to the unaudited condensed consolidated financial
statements
  Page
4
  MULTIBAND
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 LIABILITIES
AND STOCKHOLDERS' EQUITY
 (in
thousands, except share and liquidation preference amounts)
  March 31, 2009
                            (unaudited)
                          
                          December 31, 2008
                            (audited)CURRENT
      LIABILITIESMandatory
      redeemable preferred stock, 5,000 and 15,000 Class F preferred
      shares
                          
                          $
                          50
                          
                          $
                          150Line
      of credit
                          
                          
                          40
                          
                          
                          -Short
      term debt
                          
                          
                          764
                          
                          
                          -Current
      portion of long-term debt
                          
                          
                          1,618
                          
                          
                          1,609Current
      portion of capital lease obligations
                          
                          
                          420
                          
                          
                          311Accounts
      payable
                          
                          
                          42,053
                          
                          
                          8,274Accrued
      liabilities
                          
                          
                          22,549
                          
                          
                          4,435Deferred
      service obligations and revenue
                          
                          
                          1,530
                          
                          
                          1,488Total
      Current Liabilities
                          
                          
                          69,024
                          
                          
                          16,267LONG-TERM
      LIABILITIESLong-term
      debt, net of current portion
                          
                          
                          33,860
                          
                          
                          346Capital
      lease obligations, net of current portion
                          
                          
                          415
                          
                          
                          317Total
      Liabilities
                          
                          
                          103,299
                          
                          
                          16,930COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITYCumulative
      convertible preferred stock, no par value:8%
      Class A (14,171 shares issued and outstanding, $148,796 liquidation
      preference)
                          
                          
                          213
                          
                          
                          21310%
      Class B (2,270 and 2,570 shares issued and outstanding, $23,835 and
      $26,985 liquidation preference)
                          
                          
                          23
                          
                          
                          2610%
      Class C (113,780 and 114,080 shares issued and outstanding, $1,137,800 and
      $1,140,800 liquidation preference)
                          
                          
                          1,478
                          
                          
                          1,48210%
      Class F (150,000 shares issued and outstanding, $1,500,000 liquidation
      preference)
                          
                          
                          1,500
                          
                          
                          1,5008%
      Class G (11,595 shares issued and outstanding, $115,950 liquidation
      preference)
                          
                          
                          48
                          
                          
                          486%
      Class H (2.0 shares issued and outstanding, $200,000 liquidation
      preference)
                          
                          
                          -
                          
                          
                          -Common
      stock, no par value (9,650,690 and 9,642,374 shares issued and
      outstanding)
                          
                          
                          37,771
                          
                          
                          37,688Stock
      subscriptions receivable
                          
                          
                          (70
                          )
                          
                          (84
                          )Options
      and warrants
                          
                          
                          46,158
                          
                          
                          46,038Accumulated
      other comprehensive income – unrealized gain on securities available for
      sale
                          
                          
                          76
                          
                          
                          45Accumulated
      deficit
                          
                          
                          (83,578
                          )
                          
                          (81,314
                          )Total
      Stockholders' Equity
                          
                          3,619
                          
                          5,642Noncontrolling
      interest in subsidiaries
                          
                          7,689
                          
                          3,471Total
      Equity
                          
                          11,308
                          
                          9,113TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                          
                          $
                          114,607
                          
                          $
                          26,043
 
 See
accompanying notes to the unaudited condensed consolidated financial
statements
  Page
5
  MULTIBAND
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in
thousands)
 THREE
      MONTHS ENDED MARCH 31,2009
                              
                              
                              2008(unaudited)
                              
                              
                              (unaudited))OPERATING
      ACTIVITIESNet
      loss
                              
                              $
                              (2,881
                              )
                              
                              $
                              (846
                              )Adjustments
      to reconcile net loss attributable to Multiband Corporation and
      subsidiaries to net cash provided from operating
      activities:Depreciation
      and amortization
                              
                              
                              3,285
                              
                              
                              
                              738Amortization
      of imputed interest discount
                              
                              
                              35
                              
                              
                              
                              10Gain
      on debt extinguishment
                              
                              
                              -
                              
                              
                              
                              (30
                              )Impairment
      of goodwill, intangibles and property and equipment
                              
                              
                              -
                              
                              
                              
                              58Change
      in allowance for doubtful accounts on accounts receivable
                              
                              
                              (205
                              )
                              
                              
                              (15
                              )Change
      in reserve for stock subscriptions and interest receivable
                              
                              
                              14
                              
                              
                              
                              (20
                              )Expense
      related to repricing of warrants
                              
                              
                              29
                              
                              
                              
                              -Stock
      based compensation expense
                              
                              
                              91
                              
                              
                              
                              212Changes
      in operating assets and liabilities:Accounts
      receivable
                              
                              
                              (6,348
                              )
                              
                              
                              294Inventories
                              
                              
                              (207
                              )
                              
                              
                              697Prepaid
      expenses and other
                              
                              
                              (1,076
                              )
                              
                              
                              (85
                              )Other
      assets
                              
                              
                              (30
                              )
                              
                              
                              (21
                              )Accounts
      payable and accrued liabilities
                              
                              
                              8,184
                              
                              
                              
                              (1,711
                              )Deferred
      service obligations and revenue
                              
                              
                              (45
                              )
                              
                              
                              407Net
      cash flows from operating activities
                              
                              
                              846
                              
                              
                              
                              (312
                              )INVESTING
      ACTIVITIESPurchases
      of property and equipment
                              
                              
                              (873
                              )
                              
                              
                              (42
                              )Checks
      issued in excess of bank balance with the purchase of 80% of outstanding
      stock of DirecTECH operating entities
                              
                              
                              (369
                              )
                              
                              
                              -Cash
      acquired via purchase of NC (formerly Michigan Microtech, Inc.
      (MMT))
                              
                              
                              -
                              
                              
                              
                              4,044Cash
      collected on other receivables – related party acquired with the purchase
      of NC (formerly Michigan Microtech, Inc. (MMT))
                              
                              
                              -
                              
                              
                              
                              2,815Purchase
      of US Install
                              
                              
                              -
                              
                              
                              
                              (101)Purchases
      of intangible assets
                              
                              
                              (26
                              )
                              
                              
                              -Collections
      on notes receivable
                              
                              
                              5
                              
                              
                              
                              -Net
      cash flows from investing activities
                              
                              
                              (1,263
                              )
                              
                              
                              6,716FINANCING
      ACTIVITIESPayments
      on long-term debt
                              
                              
                              (43
                              )
                              
                              
                              (10
                              )Payments
      on capital lease obligations
                              
                              
                              (107
                              )
                              
                              
                              (63
                              )Net
      repayment on line of credit
                              
                              
                              (4
                              )
                              
                              
                              -Payment
      on mandatory redeemable preferred stock
                              
                              
                              (100
                              )
                              
                              
                              (15
                              )Proceeds
      from issuance of long-term debt
                              
                              
                              -
                              
                              
                              
                              100Redemption
      of preferred stock
                              
                              
                              (6
                              )
                              
                              
                              (19
                              )Preferred
      stock dividends
                              
                              
                              (29
                              )
                              
                              
                              (38
                              )Net
      cash flows from financing activities
                              
                              
                              (289
                              )
                              
                              
                              (45
                              )INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS
                              
                              
                              (706
                              )
                              
                              
                              6,359CASH
      AND CASH EQUIVALENTS - Beginning of Period
                              
                              
                              4,346
                              
                              
                              
                              944CASH
      AND CASH EQUIVALENTS - END OF PERIOD
                              
                              $
                              3,640
                              
                              
                              $
                              7,303
 
 See
accompanying notes to the unaudited condensed consolidated financial
statements
  Page
6
  MULTIBAND
CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in
thousands)
  THREE
      MONTHS ENDED MARCH 31,2009
                                                
                                                
                                                
                                                2008Cash
      paid for interest, net of amortization of OID and interest
      discount
                                                
                                                $
                                                95
                                                
                                                
                                                $
                                                67Cash
      paid for federal and state income taxes
                                                
                                                
                                                530
                                                
                                                
                                                
                                                -Non-cash
      investing and financing transactions:Reduction
      of stock subscription receivable via cancellation of common
      stock
                                                
                                                
                                                -
                                                
                                                
                                                
                                                61Purchase
      of 51% of ownership of MMT via issuance of notes payable and common stock,
      net of discount for imputed interest
                                                
                                                
                                                -
                                                
                                                
                                                
                                                5,783Purchase
      of property and equipment via increase in capital lease
      obligations
                                                
                                                
                                                107
                                                
                                                
                                                
                                                13Purchase
      of US Install via issuance of common stock
                                                
                                                
                                                -
                                                
                                                
                                                
                                                103Acquisition
      of securities available for sale upon expiration of contingent
      rights
                                                
                                                
                                                -
                                                
                                                
                                                
                                                209Intrinsic
      value of preferred dividends
                                                
                                                
                                                1
                                                
                                                
                                                
                                                1Conversion
      of Class I preferred stock to common stock
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,745Conversion
      of Class G preferred stock to common stock
                                                
                                                
                                                -
                                                
                                                
                                                
                                                100Conversion
      of accrued dividends into common stock
                                                
                                                
                                                83
                                                
                                                
                                                
                                                86Debt
      and accrued interest paid with issuance of common stock
                                                
                                                
                                                -
                                                
                                                
                                                
                                                20Increase
      in short term debt via offset to accounts payable
                                                
                                                
                                                159
                                                
                                                
                                                
                                                -Purchase
      of 80% of outstanding stock of DirecTECH operating entities via issuance
      of short and long term notes payable
                                                
                                                
                                                39,900
                                                
                                                
                                                
                                                -Purchase
      of 80% of outstanding stock of DirecTECH operating entities via issuance
      of accrued contingent consideration
                                                
                                                
                                                1,608
                                                
                                                
                                                
                                                -Reduction
      of notes payable via reduction of related party receivable in connection
      with the purchase of 80% of outstanding stock of DirecTECH operating
      entities
                                                
                                                
                                                5,844
                                                
                                                
                                                
                                                -Reduction
      of notes payable with issuance notes payable in connection with
      acquisition
                                                
                                                
                                                300
                                                
                                                
                                                
                                                -Purchase
      of 29% of outstanding stock of NC (formerly MMT) via issuance of short and
      long term notes payable
                                                
                                                
                                                1,660
                                                
                                                
                                                
                                                -Purchase
      of 80% of outstanding stock of DirecTECH operating entities via payment to
      escrow in 2008
                                                
                                                
                                                500
                                                
                                                
                                                
                                                -
 
 See
accompanying notes to the unaudited condensed consolidated financial
statements
  Page
7





MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





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 unaudited consolidated financial statements should be read
in conjunction with the audited consolidated financial statements and footnotes
thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008, 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 and 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 three months ended March 31, 2009 and 2008, the
Company incurred net losses of $2,585 and $864, respectively.  At
March 31, 2009, the Company had an accumulated deficit of
$83,578.  The Company's ability to continue as a going concern is
dependent on it maintaining profitability and/or raising additional
capital.  Management may sell, if prudent, 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
operations through 2009:





1.
            Initiate
      and grow its Home Service Provider (HSP) business by eliminating
      competitive HSP providers from certain of its core
  markets.2.
            Reduction
      of operating expenses by reducing training costs through the lowering of
      technician turnover, managing professional fees and other general and
      administrative expenses.3.
            Evaluation
      and reduction of excess inventory including such factors as anticipated
      usage, inventory turnover, inventory levels and product demand
      levels.4.
            Obtain
      additional debt financing.5.
            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.6.
            Solicit
      additional equity investment in the Company by either issuing preferred or
      common stock.





Principles of
Consolidation





The 2008
consolidated financial statements include the accounts of Multiband Corporation
(MBCorp) and its wholly owned subsidiaries, Minnesota Digital Universe, Inc.
(MDU), Multiband Subscriber Services, Inc. (MBSS), and Multiband USA, Inc.
(MBUSA).  In addition, effective March 1, 2008, the Company acquired a
51% interest in Multiband nc, inc. (NC) ((formerly Michigan Microtech, Inc.
(MMT)) and have also included NC’s results of operations and cash flow for the
one month ended March 31, 2008 and the financial position as of March 31, 2008
in the consolidated financial statements for that period.





In
addition, effective January 2, 2009, the Company purchased 80% of the issued and
outstanding shares of common stock of all of the DirecTECH Holding Co. (DTHC)
operating subsidiaries (DirecTECH) (an additional 29% of Multiband nc, inc.
(NC) (formerly Michigan Microtech, Inc. (MMT)), 51% of which was previously
purchased effective March 1, 2008 (see Note 3) and 80% of Multiband ne, inc.
(NE), Multiband sw, inc. (SW), Multiband ec, inc. (EC), Multiband mdu, inc.
(MBMDU), Multiband dc, inc. (DC) and Multiband Security, Inc. (Security) (see
Note 3)).  The noncontrolling interest in subsidiaries on the
unaudited condensed consolidated balance sheet (formerly Minority Interest) and
statement of operations represents DTHC’s 20% ownership of Multiband ne, inc.
(NE), Multiband sw, inc. (SW), Multiband ec, inc. (EC), Multiband nc, inc. (NC),
Multiband mdu, inc. (MBMDU), Multiband dc, inc. (DC) and Multiband Security,
Inc. (Security).  The 2009 consolidated financial statements include
the accounts of all wholly owned subsidiaries and the newly acquired companies
(DirecTECH). All
significant intercompany transactions and balances have been eliminated in
consolidation.




Page
8


MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)








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 services are performed and complete.





The
Company earns HSP segment revenue as follows:





·
            installation
      and service of DirecTV video programming for residents of single family
      homes


·
            installation
      of home security systems and internet
services





The
Company has home services provider (HSP) agreements with DirecTV which allow the
Company to install and activate DirecTV video programming services for residents
of single family homes.  As a DirecTV HSP, the Company earns revenue
for installing and servicing DirecTV 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.  DirecTV reimburses the Company for substantially all
DirecTV equipment used for customer installation related to the HSP
segment.





HSP
segment installation and services revenues are recognized in the period the
related services are provided in accordance with SAB 104.  MDU segment
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.





The
Company earns MDU segment revenue as follows:





1.
            from
      voice, video and data communications products which are sold and
      installed


2.
            direct
      billing to user charges to multiple dwelling units, through the activation
      of, enhancement of, and residual fees on video programming services
      provided to residents of multiple dwelling
units




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.





The
Company reports the aforementioned MDU 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
9





MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





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.





MDU
segment 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.





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.





The
Company applies 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.





Deferred Revenue





The
Company invoices for certain installation upgrade projects upon order of project
equipment.  Revenue is deferred on these projects until the equipment
is installed.





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 $36,817 and $1,095 at March
31, 2009 and December 31, 2008, respectively, and is recorded as part of our MDU
and HSP segments.  The increase in goodwill during 2009 is due to
the purchase of DirecTECH (see Note 3).





Goodwill
by business segment consists of the following:


MBCorp
                              
                              
                              MDU
                              
                              
                              HSP
                              
                              
                              TotalBalance,
      December 31, 2008
                              
                              $
                              -
                              
                              
                              $
                              50
                              
                              
                              $
                              1,045
                              
                              
                              $
                              1,095Acquisitions
                              
                              
                              -
                              
                              
                              
                              341
                              
                              
                              
                              35,381
                              
                              
                              
                              35,722Balance,
      March 31, 2009
                              
                              $
                              -
                              
                              
                              $
                              391
                              
                              
                              $
                              36,426
                              
                              
                              $
                              36,817




Page
10


MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





Components
of intangible assets are as follows:


March 31, 2009
                        
                        
                        December 31, 2008Gross
                          Carrying
                        
                        
                        Accumulated
                        
                        
                        Gross
                          Carrying
                        
                        
                        AccumulatedAmount
                        
                        
                        Amortization
                        
                        
                        Amount
                        
                        
                        AmortizationIntangible
      assets subject to amortizationRight
      of entry contracts
                        
                        $
                        3,061
                        
                        
                        $
                        785
                        
                        
                        $
                        801
                        
                        
                        $
                        526Contracts
      with DirecTV
                        
                        
                        36,902
                        
                        
                        
                        10,504
                        
                        
                        
                        11,502
                        
                        
                        
                        8,060Customer
      contracts
                        
                        
                        102
                        
                        
                        
                        102
                        
                        
                        
                        102
                        
                        
                        
                        86Total
                        
                        
                        40,065
                        
                        
                        
                        11,391
                        
                        
                        
                        12,405
                        
                        
                        
                        8,672Impairment
      of intangibles
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        65Total
      including impairment
                        
                        $
                        40,065
                        
                        
                        $
                        11,391
                        
                        
                        $
                        12,405
                        
                        
                        $
                        8,737





Amortization
of intangible assets was $2,654 and $517 for the three months ended March 31,
2009 and 2008, respectively.  Estimated amortization expense of
intangible assets for the remainder of the year ending December 31, 2009 and for
the years ending December 31, 2010, 2011, 2012, 2013, 2014 and thereafter is
$7,827, $9,147, $8,146, $2,830, $192, $144 and $265,
respectively.  Right of entry contracts contain $123 of contracts that
have not been placed in service, therefore no amortization expense has been
recorded.  The weighted average remaining life of the intangibles is
3.10 years with right of entry contracts average life of 5.50 years and
contracts with DirecTV of 2.91 years as of March 31, 2009.





Stock-Based
Compensation





The
Company applies SFAS No. 123R “Share-Based Payment” (“SFAS 123R”), which
requires companies to measure and recognize compensation expense for all
stock-based payments at fair value. SFAS 123R is being applied on the modified
prospective transition method and therefore the Company has not restated results
for prior periods. The financial statements for the three months ended March 31,
2009 and 2008 recognize compensation cost for the portion of outstanding awards
which have vested during the year.  The Company recognizes stock-based
compensation costs on a straight-line basis over the requisite service period of
the award, which is generally the option vesting term. The Company recognizes
stock-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 March 31, 2009 and 2008 total share-based compensation
expense of $91 ($.01 per share) and $212 ($.02 per share), respectively, was
included in selling, general and administrative expenses.  As of March
31, 2009, there was $226 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 3.31 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 months
ended March 31, 2009 and 2008, 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 endedMarch 31, 2009
                  
                  
                  March 31, 2008Risk-free
      interest rate
                  
                  
                  1.43%
                  
                  
                  
                  2.99%Expected
      life of options granted
                  
                  5.0
      Years
                  
                  
                  6.5
      YearsExpected
      volatility range
                  
                  
                  95%
                  
                  
                  
                  94%Expected
      dividend yield
                  
                  
                  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.  An option's expected term is the estimated period
between the grant date and the exercise date of the option.  As the
expected-term period increases, the fair value of the option and the
compensation cost will also increase.  The expected-term assumption is
generally calculated using historical stock option exercise data.  The
Company does not have historical exercise data to develop such an
assumption.  In cases where companies do not have historical data and
where the options meet certain criteria, SEC Staff Accounting Bulletin 107 ("SAB
107") provides the use of a simplified expected-term
calculation.  Accordingly, the Company calculated the expected terms
using the SAB 107 simplified method.




In
January 2009, the Company issued 80 shares of stock options with
a Black-Scholes valuation of $72 to four directors of the Company. These
seven year stock options were immediately vested and were issued as long-term
incentive compensation pursuant to the Company's 2000 Non-employee Directors
Stock Compensation Plan.
 
 In
January 2009, the Company issued 214 shares of stock options with
a Black-Scholes valuation of $193 to two officers of the Company. These
seven year stock options vest over four years and were issued as long-term
incentive compensation pursuant to the Company's 1999 Stock Compensation
Plan.


Page
11





MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





Net Loss per Common
Share





Basic net
loss per common share is computed by dividing the loss attributable to common
stockholders by the weighted average number of common shares outstanding for the
reporting period.  Diluted 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 three months ended March 31, 2009 and
2008 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.





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  two operating segments, 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;
and  MDU, where the Company acts as a master service operator for
DirecTV, receives net cash payments for managing video subscribers through its
network of system operators who are billed by DirecTV and also directly bills
voice, data and video subscribers as a principal.  The previously
filed Form 10-K business segments disclosed the MCS segment which is now
reported within the MDU segment.





Income Taxes





We
account for income taxes under the liability method in accordance with SFAS No.
109, “Accounting for Income Taxes” (“SFAS 109”).  Deferred tax
liabilities are recognized for temporary differences that will result in taxable
amounts in future years.  Deferred tax assets are recognized for
deductible temporary differences and tax operating loss and tax credit
carryforwards.  Deferred tax assets and liabilities are measured using
the enacted tax rates expected to apply to taxable income in the periods in
which the deferred tax asset or liability is expected to be realized or
settled.  We assess the likelihood that our deferred tax assets will
be recovered from future taxable income and record a valuation allowance to
reduce our deferred tax assets to the amounts we believe to be
realizable.  We concluded that a full valuation allowance against our
U.S. deferred tax assets was appropriate as of March 31, 2009 and December 31,
2008.





Reclassifications





Certain
accounts in the prior quarter’s
consolidated financial statements have been reclassified for comparative
purposes to conform to the presentation in the current quarter’s consolidated
financial statements.  These reclassifications had no effect on net
loss or stockholders’ equity.


Page
12





MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





NOTE 3 – Business Acquisitions





Effective
January 2, 2009, the Company purchased 80% of the issued and outstanding shares
of common stock of all of the DTHC operating subsidiaries (DirecTECH) (an
additional 29% of NC (formerly MMT), 51% of which was previously purchased
effective March 1, 2008 and 80% of NE, SW, EC, MBMDU, DC and
Security.  DTHC, a fulfillment agent for a national satellite
television company, DirecTV, specializes in the provisioning of satellite TV to
single family homes.  The purpose of this acquisition was to increase
the Company’s business of installing video services in single family homes (HSP
segment).  The purchase price totaled $40,400 plus other consideration
valued at $1,608 as of the acquisition date.  The $40,400 consists of
three parts; 1) $500 in cash which was paid at the initial closing date of
January 2, 2009 and in escrow as a deposit at December 31, 2008, 2) a
non-interest bearing note of $500 payable without interest as follows:
$250,000 on demand on or after April 1, 2009 and $250,000 after the Company’s
retention of senior financing, as defined, no later than August 31, 2009 and
3) a promissory note in the amount of $39,400, due January 1, 2013, bearing
interest at an annual rate of 8.25% (subject to adjustment in the event of a
default), plus the remaining $800 note payable from the purchase of 51% of
NC.  Subsequent to the closing, the Company and DTHC mutually agreed
to offset the $40,200 promissory note by the sum of $5,844, for an offsetting
receivable on Multiband’s books as of December 31, 2008.  This reduced
the amount of this promissory note to $34,356.  As part of the
agreement, Multiband has until December 31, 2009 to purchase the remaining 20%
of the issued and outstanding shares of common stock of all
DirecTECH.  The consideration for the 20% purchase will be $10,000 of
Multiband Series J Preferred Stock, whose issuance will require Multiband
shareholder approval. The closing on the remaining 20% stock transaction is
anticipated to occur on or before December 31, 2009.





The
Company applied SFAS No. 141(R) “Business Combinations” (“SFAS 141(R)”) to
evaluate the purchase price allocation based on the fair value of the assets
acquired and liabilities assumed.  The Company also applied Staff
Position No. FSP FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies” (“FSP FAS 141
(R)-1”) which amends the accounting in FAS 141(R) for assets and liabilities
arising from contingencies in a business combination.  FSP FAS
141(R)-1 requires that pre-acquisition contingencies be recognized at fair
value, if fair value can be reasonably determined.  If fair value
cannot be reasonably determined, FSP FAS 141(R)-1 requires measurement based on
the best estimate in accordance with SFAS No. 5, “Accounting for Contingencies.”
FSP FAS 141(R)-1 is effective as of January 1, 2009 in connection with the
adoption of FAS 141(R).





The
Company applied SFAS No. 160 “Noncontrolling Interests in Consolidated Financial
Statements” (“SFAS 160”) for the presentation and accounting of the
noncontrolling 20% interest at March 31, 2009.  Because Multiband had
previously gained control of NC with its purchase of 51% of NC in March 2008,
SFAS 160 required Multiband to recognize the acquisition of additional 29%
ownership interest in NC on January 2, 2009 as an equity
transaction.  The purchase price of $1,660 increased the accumulated
deficit and the transfer of $2,054 of noncontrolling interest to controlling
interest decreased the accumulated deficit.  No increase to goodwill
or intangibles was recorded as part of this acquisition.





As it
relates to the purchase of the remainder of the DTHC operating subsidiaries,
SFAS 141(R) required the Company to recognize the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with certain
exceptions.  It also required the Company to recognize goodwill as of
the acquisition date, measured using an income, market or cost approach, which
in most types of business combinations will result in measuring goodwill as the
excess of the fair value of consideration transferred plus the fair value of any
noncontrolling interest in the acquiree at the acquisition date over the fair
value of the identifiable net assets acquired or assumed.  A
qualitative and quantitative analysis of factors that make up recognized
goodwill, such as DirecTECH’s assets, liabilities and other contingent
considerations, such as leases and other off-balance sheet commitments,
follows.  This analysis is preliminary while the Company is still in
its one year measurement period.





A summary
of the transaction is as follows:


Cash
      paid
                      
                      $
                      500Short-term
      debt
                      
                      
                      500Promissory
      note
                      
                      
                      39,400Contingent
      consideration
                      
                      
                      1,608Total
      consideration
                      
                      
                      42,008Less
      consideration for 29% of NC (recorded separately as an equity
      transaction)
                      
                      
                      (1,660
                      )Consideration
      for 80% of outstanding stock of EC, NE, SW, MBMDU, DC, and
      Security
                      
                      $
                      40,348Assets
                      
                      $
                      27,193Intangible
      assets
                      
                      
                      27,839Goodwill
                      
                      
                      35,722Liabilities
                      
                      
                      (43,838
                      )Noncontrolling
      interest
                      
                      
                      (6,568
                      )$
                      40,348




Page
13


MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





The fair
value of the noncontrolling interest of $6,568 was obtained by management, using
significant level 3 unobservable inputs, as defined in Statement of Financial
Accounting Standards (SFAS) No. 157, “Fair Value Measurements” (“SFAS 157”)
including discount rates of 15%, a terminal value of $28,200, as well as a
noncontrolling discount of 30%.





The
contingent consideration recorded on the acquisition is related to the
acquisition agreement which requires a 20% cash payout on all earnings in 2009
until the remaining 20% of the Company is acquired.  The Company
estimated this consideration based on significant level 3 inputs as defined
in  SFAS 157 and the probability adjusted cash flow.





As part
of the acquisition, the Company preliminarily assessed a $5,015 contingent legal
accrual related to an existing litigation.  In connection with the
purchase of the operating subsidiaries of DTHC, the Company has the right to
offset 50% of certain claims against the note to DTHC once those claims are
settled and paid. The Company has recorded a receivable of $2,290 as of March
31, 2009 which represents an estimate of the amount that can be recovered from
DTHC based on the current legal estimate.  At present, the litigation
is proceeding through a discovery stage.  While the parties have made
some preliminary attempts to settle the matter there is no guarantee that the
matter can be settled out of court.  As a result there is no current
timeline under which the amount of the aforementioned accrual can be
finalized.  The Company intends to adjust the purchase price
allocation should more information become available as to the fair value of the
legal contingency during the measurement period.




The
Company acquired $25,400 of intangible assets relating to contracts with DirecTV
as well as right of entry contracts of $2,439. The weighted average remaining
life of the intangibles acquired is 2.57 years based on terms without renewals,
with right of entry average contracts life of 5.44 years and contracts with
DirecTV of 2.33 years. Assuming one year term renewals on the contracts
with DirecTV, the weighted average remaining life of the intangibles acquired is
3.49 years and contracts with DirecTV of 3.33 years. The Company
capitalizes material costs incurred to renew or extend terms of intangible
assets. No costs have been incurred to renew or extend the terms of intangible
assets during the three months ended March 31, 2009. Goodwill and intangible
assets acquired are not expected to be deductible for tax purposes.


The
Company’s report on Form 10-K for the year ended December 31, 2008 contained a
preliminary estimated fair value of all the aforementioned assets and
liabilities related to the purchase.  At the time of the preliminary
estimate DirecTech had not completed its audit for the year ended December 31,
2008.  Nor at this time had the Company completed its procedures to
value and allocate the final purchase price to intangible and tangible assets
acquired in the acquisition.  The Company’s subsequent receipt of
final balance sheet information to the aforementioned Form 10-K filing,
necessitated a revision of the DirecTech purchase price
valuation.  This revision is reflected in this
footnote.  The revision consists of reallocations of goodwill and
other intangible assets related to the purchase.  More specifically,
goodwill assets were increased by $16,474 and intangible assets were decreased
by $8,851 from the original estimate, due to the additional purchase of 29% of
NC being treated as an equity transaction under SFAS 160 and therefore no
additional assets (including goodwill) or liabilities were allocated for NC in
the purchase price (see Note 4).





Since the
transaction was effective January 2, 2009, there is not a change in the March
31, 2009 balance sheet or income statement for the three months ended March 31,
2009.  The unaudited pro forma information for the three months ended
March 31, 2008 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.


Page
14





MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





2008Consolidated
                            as
      reported
                          
                          
                          2008
                            Pro
      FormaThree
      months ended March 31, 2008Revenues
                          
                          $
                          5,714
                          
                          
                          $
                          58,907Loss
      from operations
                          
                          
                          (757
                          )
                          
                          
                          (6,395
                          )Net
      loss attributable to Multiband Corp and subsidiaries
                          
                          
                          (864
                          )
                          
                          
                          (4,538
                          )Preferred
      stock dividends
                          
                          
                          3,881
                          
                          
                          
                          3,881Loss
      attributable to common shareholders
                          
                          $
                          (4,745
                          )
                          
                          $
                          (8,418
                          )Loss
      attributable to common shareholders per common share – basic and
      diluted
                          
                          $
                          (0.56
                          )
                          
                          $
                          (0.99
                          )Weighted
      average shares outstanding – basic and diluted
                          
                          
                          8,498
                          
                          
                          
                          8,498





NOTE 4 – Noncontrolling Interest




March 31,
                                2009
                              
                              
                              December 31,
                                2008Equity
      of noncontrolling interest (previously minority interest) in
      subsidiaries:Noncontrolling
      interest in subsidiaries, beginning balance
                              
                              $
                              3,471
                              
                              
                              $
                              -Purchase
      of 51% of NC
                              
                              
                              -
                              
                              
                              
                              2,819Purchase
      of 80% of NE, SC, EC, MBMDU, DC & Security
                              
                              
                              6,568
                              
                              
                              
                              -Purchase
      of NC from noncontrolling interest
                              
                              
                              (2,054
                              )
                              
                              
                              -Net
      income(loss) attributable to the noncontrolling interest in
      subsidiaries
                              
                              
                              (296
                              )
                              
                              
                              652Noncontrolling
      interest (previously minority interest) in subsidiaries, ending
      balance
                              
                              $
                              7,689
                              
                              
                              $
                              3,471





NOTE 5 – Inventories




March 31,
                      2009
                    
                    
                    December 31,
                      2008Inventories
      consisted of the following:DirecTV
      – serialized
                    
                    $
                    5,476
                    
                    
                    $
                    813DirecTV
      – nonserialized
                    
                    
                    7,725
                    
                    
                    
                    670Other
                    
                    
                    3,040
                    
                    
                    
                    420Total
                    
                    $
                    16,241
                    
                    
                    $
                    1,903




Page
15


MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





The
Company’s inventories are segregated into three major
categories.  Serialized DirecTV inventories consist 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.  The large increase in inventory is due to the
purchase of DirecTECH (see Note 3).





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.  Effective January 1, 2008, FASB issued Statement No.
157, “Fair Value Measurements” (“SFAS 157”), which provides a framework for
measuring, reporting and disclosing fair value under generally accepted
accounting principles.  SFAS 157 applies to all assets and liabilities
that are measured, reported and/or disclosed on a fair value basis.





As
defined in SFAS 157, fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.  In determining fair value, the
Company values and records all investment securities transactions on a trade
date basis.  Securities listed on a national or regional securities
exchange are valued at their last reported sales price on the last business day
of the period.  Securities which are not traded on a major exchange or for
which no sale was reported on that date are valued at the average of their last
quoted "bid" price and "asked" price.  Short positions are valued at
the last quoted "asked" price.  Inputs used in the valuation methods
can be either readily observable, market corroborated, or generally unobservable
inputs.  Whenever possible the Company attempts to utilize valuation
methods that maximize the use of observable inputs and minimizes the use of
unobservable inputs.  The Company’s investments in available-for-sale
securities was determined based on quoted market prices in active markets for
identical assets and liabilities (Level 1).  As of February 4, 2008,
certain aforementioned contingent rights were not exercised by the various
holders; therefore Multiband 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. URON subsequently changed their name to Western Capital
Resources, Inc.  At March 31, 2009 and December 31, 2008 the balance
in securities available for sale was $76 and $46, respectively.





Securities
available for sale consisted of the following:


Cost
                    
                    
                    Unrealized
                      Gain(Loss)
                    
                    
                    Fair
      Value at
                      Period EndMarch
      31, 2009
                    
                    $
                    -
                    
                    
                    $
                    76
                    
                    
                    $
                    76December
      31, 2008
                    
                    $
                    -
                    
                    
                    $
                    46
                    
                    
                    $
                    46





NOTE 7 – Accrued Liabilities





Accrued
liabilities consisted of the following:


March 31,
                    2009
                  
                  
                  December 31,
                    2008Payroll
      and related taxes
                  
                  $
                  8,028
                  
                  
                  $
                  1,354Accrued
      legal settlements and contingencies
                  
                  
                  5,014
                  
                  
                  
                  960Accrued
      preferred stock dividends
                  
                  
                  583
                  
                  
                  
                  622Accrued
      income taxes
                  
                  
                  37
                  
                  
                  
                  499Other
                  
                  
                  8,887
                  
                  
                  
                  1,000Total
      Accrued Liabilities
                  
                  $
                  22,549
                  
                  
                  $
                  4,435


Page
16







MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





NOTE 8 - Business Segments





The
Company has three reporting segments.  Multiband Corp
segment (MBCorp) includes corporate expenses (e.g. corporate administrative
costs), interest income, interest expense, depreciation and
amortization.  The MDU segment (MDU, MBSS, MBMDU and MBUSA) represents
results as the master service operator for DirecTV and provides voice, data and
video services to residential multi-dwelling units as the principal to
subscribers.  The HSP segment (NE, SW, EC, NC, DC and Security)
provides the installation and service of DirecTV (DTV) video programming,
internet and home security systems 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:


MBCorp
                    
                    
                    MDU
                    
                    
                    HSP
                    
                    
                    TotalThree
      months ended March 31, 2009:Revenues
                    
                    $
                    -
                    
                    
                    $
                    5,325
                    
                    
                    $
                    56,833
                    
                    
                    $
                    62,158Loss
      from operations
                    
                    
                    (977
                    )
                    
                    
                    (257
                    )
                    
                    
                    (949
                    )
                    
                    
                    (2,183
                    )Identifiable
      assets
                    
                    
                    4,122
                    
                    
                    
                    14,362
                    
                    
                    
                    96,123
                    
                    
                    
                    114,607Depreciation
      and amortization
                    
                    
                    83
                    
                    
                    
                    1,033
                    
                    
                    
                    2,169
                    
                    
                    
                    3,285Capital
      expenditures
                    
                    
                    81
                    
                    
                    
                    792
                    
                    
                    
                    -
                    
                    
                    
                    873
 
 MBCorp
                    
                    
                    MDU
                    
                    
                    HSP
                    
                    
                    TotalThree
      months ended March 31, 2008:Revenues
                    
                    $
                    -
                    
                    
                    $
                    3,734
                    
                    
                    $
                    1,980
                    
                    
                    $
                    5,714Income
      (loss) from operations
                    
                    
                    (828
                    )
                    
                    
                    11
                    
                    
                    
                    60
                    
                    
                    
                    (757
                    )Identifiable
      assets
                    
                    
                    4,519
                    
                    
                    
                    7,246
                    
                    
                    
                    10,271
                    
                    
                    
                    22,036Depreciation
      and amortization
                    
                    
                    137
                    
                    
                    
                    598
                    
                    
                    
                    3
                    
                    
                    
                    738Capital
      expenditures
                    
                    
                    21
                    
                    
                    
                    21
                    
                    
                    
                    -
                    
                    
                    
                    42




NOTE 9 – Commitments and Contingencies





Legal
proceedings




The
Company is subject to claims, regulatory processes and lawsuits that arise in
the ordinary course of business.  The Company accrues for such matters
when a loss is considered probable and the amount of such loss, or a range of
loss, can be reasonably estimated.  The Company has preliminarily
recorded $5,015 of accrued liabilities as of March 31, 2009 for claims and
potential settlements associated with litigation.  The majority of the
accrual relates to claims for back overtime wages alleged in a number of cases
filed between 2006 to 2008 entitled Lachiev v. JBM (S.D. Ohio); Davis v. JBM
(S.D. Ohio); Gruchy v. DirecTech Northeast (D. Mass); Stephen v. Michigan
Microtech (E.D. Mich); and In re DirecTECH Southwest, Inc. (E.D.
La).  At present, the Company is vigorously defending those
claims.





In
connection with the purchase of the operating subsidiaries of DTHC, the Company
has the right to offset 50% of certain claims, currently estimated at $4,580,
against the note to DTHC once those claims are settled and paid.  The
Company has recorded a receivable of $2,290 as of March 31, 2009 which
represents an estimate of the amount that potentially be recovered from
DTHC.  Defense costs are expensed as
incurred.  Additionally, the Company is subject to pending claims,
regulatory processes and lawsuits for which losses are not probable and amounts
cannot be reasonably estimated.  Those losses could ultimately be
material to the Company’s financial position, results of operations and cash
flows.





Page
17


MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





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 DirecTV
system standards so that the system operator subscribers may properly receive
DirecTV 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 also has separate home service provider agreements with DirecTV ending
April 30, 2011.   The term of these agreements with DirecTV will
automatically renew as of May 1, 2011 for additional one year periods unless
either the Company 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
amounted to 99.2% and 85.2% of total revenue for the three months ended March
31, 2009 and 2008, respectively.  Accounts receivable from this
customer was 83.10% and 52.56% of total accounts receivable as of March 31, 2009
and December 31, 2008, respectively.  The Company purchases a
substantial portion of its inventory from DirecTV.  DirecTV is the
only supplier of the major components (i.e., dishes and receivers) used in HSP
segment installations.  The total accounts payable to DirecTV, related
to inventory being supplied, was $27,391 and $3,034 at March 31, 2009 and
December 31, 2008, 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 $30.  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
three months ended March 31, 2008.





Line
of credit





The
Company has a line of credit agreement with a bank that provides borrowings up
to $50, due on demand. Amounts outstanding under this line of credit carry an
interest rate defined as the prime rate plus 3.0% (6.25% as of March 31, 2009).
As of March 31, 2009 and December 31, 2008, the amount outstanding was $40 and
$0, respectively. This line of credit is guaranteed by a shareholder of the
Company.





Current
portion of long-term debt





At March
31, 2009 and December 31, 2008, the Company was in compliance with all debt
covenants of its lender, Convergent Capital.  As of this writing, the
Company is working on a refinancing of its note with Convergent
Capital.




Page
18




MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)





Operating
leases – vehicles





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 of its
subsidiaries.  For the three months ended March 31, 2009 and one month
ended March 31, 2008, the Company recognized a loss on the sale of vehicles of
approximately $3 and $9, respectively. For the three months ended March 31, 2009
and one month ended March 31, 2008, the Company’s operating lease expense under
the lease totaled approximately $1,882 and $88, respectively.  In
addition, the Company has a security deposit with the lessor in the amount of
approximately $1,701 and $257 which is included in other assets in the
accompanying balance sheet as of March 31, 2009 and December 31, 2008,
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 months ended March 31, 2009 and
2008. However, should Multiband eventually have to perform on the guaranty in
the future, it could be liable for up to $349 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.





NOTE 10 – Income Taxes





Due to
the Company’s purchase of 80% of the issued and outstanding shares of common
stock of all of the DTHC operating subsidiaries (DirecTECH) (an additional
29% of Multiband nc, inc. (NC) (formerly Michigan Microtech, Inc. (MMT)), 51% of
which was previously purchased effective March 1, 2008 and 80% of Multiband ne,
inc. (NE), Multiband sw, inc. (SW), Multiband ec, inc. (EC), Multiband mdu, inc.
(MBMDU), Multiband dc, inc. (DC) and Multiband Security, Inc. (Security)
effective January 2, 2009 the Company will file a 2009 consolidated tax return
which includes all of the newly acquired subsidiaries.  Therefore, the
Company may be able to utilize the tax loss carryforwards of Multiband
Corporation if there is not a limitation of the use of the tax loss
carryforwards and there is taxable income.  For the three months ended
March 31, 2009 and 2008, the Company has recorded income tax expense of $100 and
$29, respectively, related to state taxes.





The
Company applies 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 months ended March 31, 2009 and
2008 related to FIN 48.  The Company’s federal and state tax returns
are potentially open to examinations for years 2005-2007.  The Company
has no significant unrecognized tax benefits as of March 31, 2009 that would
reasonably be expected to affect our effective tax rate during the next twelve
months.




Page
19


MULTIBAND
CORPORATION AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009 AND 2008


(in
thousands, except for share amounts)




NOTE 11 – Related Party
Transactions





On April
15, 2009, the Company entered into an unsecured short term promissory note in
the amount of $1,500 with director Frank Bennett. The note carries an interest
rate of 6% with a 1% origination fee totaling $15, and was due May 15,
2009.  On May 4, 2009 the note was extended until June 15, 2009. The
terms of the loan were approved by the disinterested members of the Company’s
audit committee.





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
between Multiband and Bas Mattingly Master, LLC, a trust controlled by J. Bas
Mattingly, chairman of DTHC, which is a 20% owner of DirecTECH. The note carries
an interest rate of 7% per annum and is due August 20, 2009.





The
Company has a line of credit agreement with a bank that provides borrowings up
to $50 (see Note 9).  This line of credit is guaranteed by J. Bas
Mattingly, chairman of DTHC.





NC leases
warehouse space from two individuals that have ownership via related trusts in
DTHC.  DTHC owns 20% of DirecTECH as a noncontrolling interest
shareholder (see Note 3).  Lease payments amount to $9 per month plus
expenses, expiring in December 2010.





Multiband
and its subsidiaries lease principal offices located at 2000 44th Street
SW, Fargo, ND 58013. The Fargo base rate ranges from $14 per month. The Fargo
property is owned in part by David Ekman, Chief Information Officer, of the
Company.





Bernard
Schafer is a director of both DTHC and Multiband. DTHC is the minority
shareholder of DirecTECH (see Note 3).





Jim
Mandel, CEO of Multiband, loaned DTHC $100 in a short-term subordinated note
paying simple interest monthly at 10% and is due December 2012.





In 2008,
Multiband and DTHC performed certain management and information systems
functions for one another pursuant to management consulting and employee leasing
agreements.  These agreements terminated concurrent with Multiband’s
purchase of the former DTHC operating entities (Note 3).  During the
three months ended March 31, 2008, the Company has reduced selling, general and
administrative expenses $300 as a reimbursement of direct expenses in relation
to these management consulting agreements.





Prior to
the purchase of DirecTECH on January 2, 2009, Multiband provided support center
services to a then DirecTECH MDU (DTMDU), subsidiary of DTHC, currently
Multiband mdu, inc. (MBMDU).  The Company recorded MDU segment revenue
of $57 from DTMDU for the three months ended March 31, 2008.  DTMDU
was also one of the system operators in the MDU segment during
2008.  The Company has recorded MDU segment cost of products and
services of $370 for the three months ended March 31, 2008 related to this
system operator.  The Company had $771 in accounts receivable and
$1,127 in accounts payable related to these agreements at December 31,
2008.





Multiband
also had receivable balances with various DTHC entities at December 31, 2008 of
$7,666.  Of this amount, $5,844 was subsequently offset in the first
quarter of 2009 against the purchase price note used to acquire majority
ownership of the operating subsidiaries of DTHC (Note 3).





The
Company has a note receivable due from a non-affiliated entity that is 50% owned
by a shareholder.  The stated value of this note receivable is $46 and
$51 at March 31, 2009 and December 31, 2008, respectively.  The note
is non interest bearing and is paid monthly beginning October 31, 2007
through maturity on December 31, 2009.  The Company has discounted
this note to its present value using the Company’s effective borrowing
rate.  The carrying value of this note receivable was $29 and $34 at
March 31, 2009 and December 31, 2008, respectively.  Interest income
on this note is immaterial and has not been recognized.




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 (in thousands)





OUR
COMPANY





Multiband
Corporation (the Company), is a Minnesota corporation formed in
September 1975. The Company has two operating segments: 1) Multi-Dwelling
Unit (MDU), which encompasses the subsidiary corporations Multiband Subscriber
Services, Inc., Minnesota Digital Universe, Inc.; and Multiband mdu, inc.
(MBMDU), and 2) Home Service Provider (HSP), which encompasses the following
subsidiaries of which Multiband owns an 80% interest in: Multiband ne, inc.
(NE), Multiband sw, inc. (SW), Multiband ec, inc. (EC), Multiband dc, inc. (DC)
and Multiband Security, Inc. (Security) (see Note 3).





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.  At May 15, 2009, the
Company had approximately 127,000 owned and managed subscriptions with an
additional 50,000 subscriptions supported by the call center.




Page
21


During
2008, the Company became involved in the business of installing video services
in single family homes by acquiring 51% of the outstanding stock of NC (formerly
Michigan Microtech, Inc. (MMT a former subsidiary of DTHC)), a fulfillment agent
for a national satellite television company, DirecTV, which specializes in the
provisioning of satellite TV to single family homes. This acquisition was
followed up by the acquisition of an 80% interest in a group of companies which
were the former operating subsidiaries of DTHC, (Multiband ne, inc. (NE),
Multiband sw, inc. (SW), Multiband ec, inc. (EC), Multiband dc, inc. (DC) and
Multiband Security, Inc. (Security)).  The Company also purchased an
additional 29% ownership interest of Multiband NC, of which it previously owned
51%, effective on January 2, 2009





The
Company’s rationale for acquiring the aforementioned operating subsidiaries is
as listed below.





1.
            The
      Operating entities are accretive to our business model as they have
      the:


a.
            Same
      line of business (DirecTV)


b.
            Ability
      to leverage systems and management


c.
            Ability
      to leverage core competencies in support center, software, and
      engineering


d.
            Ability
      to expand geographic presence with ample technician
    capacity


e.
            Size,
      scale, and scope of combined business enterprise more in line with growth
      necessary to support public entity


f.
            Accretive
      positive cash flow and capacity for net
income.


2.
            Also,
      new business opportunities may be integrated into an existing installation
      process which touches over 5,000 homes per day.  Multiband Enterprise
      Manager software application is capable of modification to support
      “bundled billing” attribute resulting from new sales
      opportunity.


3.
            Furthermore,
      the transaction produced a strong barrier to entry to other potential
      competitors which creates potential for longevity and
      exclusivity.


4.
            Other
      reasons for the acquisition
included:


a.
            Strong
      financial performance by DirecTV which provides security and continued
      growth potential for Multiband


b.
            Strong
      DIRECTV balance sheet and liquidity which provides comfort for continued,
      successful operations.


c.
            Multiband’s
      public company reporting status provides an excellent platform to support
      and motivate new human resource
asset.


d.
            Multiband’s
      management is, we believe, capable of “rightsizing” operating expense
      structure of DTHC operating entities to provide increased cash flow and
      earning potential over a short period of time;
  and


e.
            Opportunity
      for significant shareholder appreciation when comparing industry valuation
      metrics to pre-existing Multiband market
values.





This
purchase was a significant event for the Company. The purchase materially
increased the size and scope of the Company’s operations.  The Company
has now expanded its operations into 16 states with 32 field offices. The
Company now employs over 3,500 people. Multiband is now the second largest
independent DirecTV field services provider in the United
States.


Page
22




SELECTED
CONSOLIDATED FINANCIAL DATA





DOLLAR AMOUNTS AS A
                        PERCENTAGEOF REVENUESTHREE
      MONTHS ENDEDMarch
      31, 2009
                      
                      
                      March
      31, 2008(unaudited)
                      
                      
                      (unaudited)REVENUES
                      
                      
                      100
                      %
                      
                      
                      100
                      %COST
      OF PRODUCTS & SERVICES (Exclusive of depreciation and amortization
      shown below)
                      
                      
                      76.1
                      %
                      
                      
                      66.9
                      %SELLING,
      GENERAL & ADMINISTRATIVE
                      
                      
                      22.1
                      %
                      
                      
                      32.5
                      %DEPRECIATION
      & AMORTIZATION
                      
                      
                      5.3
                      %
                      
                      
                      12.9
                      %IMPAIRMENT
      OF ASSETS
                      
                      
                      -
                      
                      
                      
                      1.0
                      %LOSS
      FROM OPERATIONS
                      
                      
                      -3.5
                      %
                      
                      
                      -13.3
                      %INTEREST
      EXPENSE & OTHER, NET
                      
                      
                      -1.0
                      %
                      
                      
                      -1.0
                      %LOSS
      BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN
      SUBSIDIARIES
                      
                      
                      -4.5
                      %
                      
                      
                      -14.3
                      %PROVISION
      FOR INCOME TAXES
                      
                      
                      .2
                      %
                      
                      
                      .5
                      %NET
      LOSS
                      
                      
                      -4.7
                      %
                      
                      
                      -14.8
                      %LESS:
      NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST IN
      SUBSIDIARIES
                      
                      
                      -.5
                      %
                      
                      
                      .3
                      %NET
      LOSS ATTRIBUTABLE TO THE MULTIBAND CORPORATION AND
      SUBSIDIARIES
                      
                      
                      -4.2
                      %
                      
                      
                      -15.1
                      %




Page
23




RESULTS
OF OPERATIONS





Revenues





Total revenues increased 987.8% to
$62,158 for the quarter ended March 31, 2009 as compared to $5,714 for the
quarter ended March 31, 2008.  This overall increase in revenues is
due to the purchase of the former DirecTECH operating entities in January 2009,
which had revenues for the three month period ended March 31, 2009 of
$57,854.





Revenues in the first quarter of 2009
for the MDU segment increased 42.6% to $5,325 as compared to $3,734 in the first
quarter of 2009.  These increases are primarily due to a larger
subscriber base, and increased activity from the call center.  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 a larger subscriber base, MDU
revenues are expected to remain above 2008 levels for the balance of
2009.





Revenues for the three months ended
March 31, 2009 for the HSP segment, was $56,833 in comparison to $1,980 for the
same period in 2008.  This increase is due to the purchase of the
former DirecTECH operating subsidiaries. (see Note 3).  The Company
expects that revenues in the HSP segment will be consistent with the three
months ended March 31, 2009 throughout the balance of 2009.





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





The Company's cost of products and
services, increased by 1138.6% to $47,316 for the quarter ended March 31, 2009,
as compared to $3,820 for the similar quarter last year.  Overall cost
of products and services as a percentage of revenue did increase due, in part,
to the purchase of DirecTECH with costs for the three months ended March 31,
2009 of $44,605.  One factor that materially increased Company costs
in the first quarter related to a substantial increase in the number of
technicians employed by the Company.  Since these new technicians go
through a six to eight week training period prior to working on revenue
producing jobs, this training period creates additional expense without any
offsetting revenue.  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
MDU segment for the quarter were $3,585 compared to $2,383 in the same quarter
last year, a 50.4% increase.  The increase in cost of products and
services in the MDU segment is primarily related to the purchase of MBMDU, one
of the former DirecTECH operating subsidiaries, along with an increase in costs
related to the increase in revenue generated by the system operators and with a
change in revenue mix and certain commission payments.  In 2009, 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 three months ended March 31, 2009 were $43,731 for the HSP
segment (acquired March 1, 2008), compared to the $1,438 in the prior
year.  This increase is due to the purchase of the former DirecTECH
operating subsidiaries (see Note 3).  In 2009, the Company expects HSP
cost of products and services to remain consistent throughout the remainder of
2009.





Selling,
General and Administrative Expenses





Selling, general and administrative
expenses increased 640.7% to $13,740 in the quarter ended March 31, 2009,
compared to $1,855 in the prior year’s quarter due primarily to the acquisition
of DirecTECH in 2009.  Selling, general and administrative expenses
were, as a percentage of revenues, 22.1% for the quarter ended March 31, 2009
and 32.5% for the similar period a year ago.  This percentage decrease
is primarily due to a significant increase in revenues with only modest
increases in payroll and administrative expenses offset by $300 of reimbursed
payroll expenses for management consulting to DTHC recorded to the Multiband
Corp segment in the first quarter of 2008 per its management consulting
agreement.  This agreement ended in 2009 as a result of the
acquisition of the majority ownership of former operating subsidiaries of DTHC
(see Note 3).  The Company anticipates that for the remainder of 2009,
selling, general and administrative expenses will remain consistent with first
quarter levels.


Page
24


Depreciation
and Amortization





Depreciation and amortization expense
increased 345.1% to $3,285 for the quarter ended March 31, 2009 compared to $738
in the prior year’s quarter, largely due to amortization of intangibles related
to the DirecTECH purchase (see Note 3).  Depreciation and amortization
expense is expected to remain comparable to first quarter through the remainder
2009.





Loss
from Operations





The Company, in the first quarter of
2009, incurred a loss from operations of $2,183 versus $757 during the prior
year’s comparable period.  The MDU segment showed a loss from
operations of $257 for the three months ended March 31, 2009 compared to profits
of $11 for the three months ended March 31, 2008.  The MBCorp segment,
which has no revenues, showed a loss from operations of $977 for the three
months ended March 31, 2009 compared to losses of $828 for the same period last
year.  For the first quarter of 2009, the HSP segment showed a loss
from operations of $949, compared to profits of $60 in the same period last
year, which included NC (MMT) only.  The MBCorp segment loss
is expected to continue in future periods as corporate overhead is expected to
remain consistent with current levels.  The Company plans to mitigate
its loss in the MDU segment in future periods as increased payments to dealers
have negatively impacted profits for this segment. The Company believes these
payments will stabilize in future periods as a percentage of revenues. At the
same time, the Company believes it can enhance profitability in its MDU division
by growing its subscriber base at existing properties since the on-going
selling, general and administrative expenses to service those subscribers is
more variable than fixed.  The HSP segment is expected to improve is
profitability throughout the balance of 2009 as competitive providers are driven
out of some of its existing core markets.  The key to removing
competitive providers involves the Company’s commitment to DirecTV (which it
fulfilled in the first quarter) to significantly expand its technical
workforce.  The expanded workforce creates expense upfront without
offsetting revenue due to a training period.  However, once the
technicians are trained they move into a revenue generating role.





Interest
Expense





Interest expense was $855 for the
quarter ended March 31, 2009, versus $100 for the similar period a year ago,
primarily reflecting an increase due to interest expense incurred on the debt
issued for the purchase of DirecTECH (see Note 3).





Noncontrolling
Interest





Effective
January 1, 2009, the Company implemented FAS 160, noncontrolling interests in
subsidiaries (see Note 4).  This resulted in the transferring of
minority interest of $3,471 at December 31, 2008 related to the 51% ownership of
NC from the mezzanine section of the balance sheet to the noncontrolling
interest in the equity section of the balance sheet.  As of January 2,
2009, Multiband purchased an additional 29% of the outstanding stock of NC,
$2,054 of noncontrolling interest was transferred to Multiband’s controlling
interest related to this acquisition, leaving $1,417 as the remaining value of
the noncontrolling interest.  In addition, Multiband purchased 80% of
the outstanding stock of EC, NE, SC, DC, Security and MBMDU (Note 3).  The
Company recorded $6,568 of noncontrolling interest related to this
acquisition.





Income
taxes





Due to
the Company’s purchase of 51% of NC’s stock, effective March 1, 2008, NC did not
file a consolidated tax returns in 2008 with its former parent DTHC but will
file as a single entity as it no longer meets the 80% ownership required for tax
consolidation.  Effective with the additional stock purchased in 2009,
NC expects to be able to utilize the tax loss carryforwards of Multiband
Corporation.  For the three months ended March 31, 2009 and 2008, the
Company has recorded a provision for income tax of $100 and $29,
respectively.





Net
Loss





In the
first quarter of fiscal 2009 and 2008, the Company incurred net losses of $2,881
and $846, respectively.


Page
25


Liquidity
and Capital Resources





During the three months ended March 31,
2009 and 2008, the Company incurred net losses of $2,881 and $846, respectively.
Net cash from operations during the three months ended March 31, 2009 was $846
as compared to the net cash used by operations during the three months ended
March 31, 2008 of $312.  Principal payments on current long-term debt
over the next 12 months are expected to total $1,618.  As of March 31,
2009, the Company met the compliance covenants of its lender, Convergent
Capital.  The Company has classified the debt as current as of March
31, 2009 since the note was due May 1, 2009. As of this writing, the Company is
working on a refinancing of its note with Convergent Capital.





Cash and cash equivalents totaled
$3,640 at March 31, 2009 versus $4,346 at December 31, 2008.  Working
capital deficit at March 31, 2009 was $30,307 as compared to positive working
capital of $2,465 at December 31, 2008, primarily due to the acquisition of the
former DTHC operating entities.  Total debt and capital lease
obligations increased by $34,534 in the three months ended March 31, 2009 due
mainly to the addition of notes payable in order to purchase
DirecTECH.  The Company had a material increase in accounts
receivable, accounts payable and accrued liabilities for the period ended March
31, 2009 versus the period ended December 31, 2008 due to the acquisition of 80%
of outstanding stock of the former DTHC operating entities.  Net cash
used by investing activities totaled $1,263 for the period ended March 31, 2009,
compared to net cash of $6,716 provided by investing activities for the period
ended March 31, 2008, related to cash acquired in the acquisition of NC
(formerly MMT).





The Company experienced a material
increase in revenues between the quarter ended March 31, 2008 and the quarter
ended March 31, 2009 as a result of the additional revenue obtained from the
purchase of the former DTHC operating entities.  For the balance of
2009, 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 $873 for capital
expenditures during the three months ended March 31, 2009, as compared to $42 in
the similar period last year.  Capital expenditures consisted of
project build-outs and equipment acquired for internal use.  This
increase was related to an expansion of company funded video and internet
service build outs to MDU properties made during 2009.  Throughout the
remainder of 2009, the Company estimates that it will have $1,000 of additional
capital expenditures.





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.
            Initiate
      and grow its Home Service Provider (HSP) business by eliminating
      competitive HSP providers from certain of its core
  markets


2.
            Reduction of operating expenses
      by reducing training costs through the lowering of technician turnover,
      managing professional fees and other general and administrative
      expenses.


3.
            Evaluation
      and reduction of excess inventory including such factors as anticipated
      usage, inventory turnover, inventory levels and product demand
      levels.


4.
            Obtain additional debt
      financing.


5.
            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.


6.
            Solicit additional equity
      investment in the Company by either issuing preferred or common
      stock.





The
Company, as of March 31, 2009, needs to improve its working capital ratio over
the next few quarters to adequately manage the size of its expanded operations.
Since the Company acquired significant assets in its purchase of 80% of the
outstanding stock of the former DTHC operating entities, Multiband believes it
has the capacity to leverage certain of those assets. Management believes that
through a combination of leveraging assets, its cash on hand, positive operating
income, combined with capital resources and the potential ability to monetize
intangible subscriber assets, it can meet its anticipated liquidity and capital
resource requirements for the next twelve months.


Page
26





CRITICAL
ACCOUNTING POLICIES AND ESTIMATES





Impairment of Long-Lived
Assets





The
Company’s long-lived assets include property, equipment and leasehold
improvements.  At March 31, 2009, the Company had net property and
equipment of $8,217, which represents approximately 7.2% of the Company’s total
assets.  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 months ended March 31, 2009 and 2008, the
Company did not record any impairment losses related to long-lived
assets.





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 $36,817 as of March 31, 2009, may be impaired.  Any
resulting impairment loss could have a material adverse impact on our financial
condition and results of operations.  During the three months ended
March 31, 2009 and 2008, 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 3.5 to 116.5 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 March 31, 2009, the Company had net intangibles of
$28,674 which represented approximately 25.0% of the Company’s total
assets.  During the three months ended March 31, 2009 and 2008, the
Company recorded an impairment charge to intangible assets of $0 and $58,
respectively (see Note 2).





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 third quarter of 2008, the Company evaluated
the variables used in calculating its option values and through their
application has reduced the ongoing expense recorded related to stock
options.


Page
27


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 services are performed and complete.





The
Company earns HSP segment revenue as follows:





·
            installation
      and service of DirecTV video programming for residents of single family
      homes


·
            installation
      of home security systems and internet
services





The
Company has home services provider (HSP) agreements with DirecTV which allow the
Company to install and activate DirecTV video programming services for residents
of single family homes.  As a DirecTV HSP, the Company earns revenue
for installing and servicing DirecTV 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.  DirecTV reimburses the Company for substantially all
DirecTV equipment used for customer installation related to the HSP
segment.





HSP
segment installation and services revenues are recognized in the period the
related services are provided in accordance with SAB 104.  MDU segment
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.





The
Company earns MDU segment revenue as follows:





·
            from
      voice, video and data communications products which are sold and
      installed


·
            direct
      billing to user charges to multiple dwelling units, through the activation
      of, enhancement of, and residual fees on video programming services
      provided to residents of multiple dwelling
units





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.





The
Company reports the aforementioned MDU 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.


Page
28


MDU
segment 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.





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.





The
Company applies 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.





Deferred
Revenue





The
Company invoices for certain installation upgrade projects upon order of project
equipment.  Revenue is deferred on these projects until the equipment
is installed.





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 $1,400, 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 $14 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.  As of March 31, 2009, the Company has not
tested the effectiveness of any controls or procedures with regards to its HSP
business segment due to the recent acquisition of same.  The Company
does intend to perform such testing prior to December 31, 2009.





Based
upon that evaluation and the aforementioned acquisition, the Company’s Chief
Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures are not 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.  While the Company
believes its financial information as presented herein is materially accurate,
the Company is not prepared to conclude all of its key disclosure controls and
procedures are effective until it has completed its testing as stated
herein.





PART
II.  OTHER INFORMATION





ITEM
1.  LEGAL PROCEEDINGS





The
Company is subject to claims, regulatory processes and lawsuits that arise in
the ordinary course of business.  The Company accrues for such matters
when a loss is considered probable and the amount of such loss, or a range of
loss, can be reasonably estimated.  The Company has preliminarily
recorded $5,015 of accrued liabilities as of March 31, 2009 for claims and
potential settlements associated with litigation.  The majority of the
accrual relates to claims for back overtime wages alleged in a number of cases
filed between 2006 to 2008 entitled Lachiev v. JBM (S.D. Ohio); Davis v. JBM
(S.D. Ohio); Gruchy v. DirecTech Northeast (D. Mass); Stephen v. Michigan
Microtech (E.D. Mich); and In re DirecTECH Southwest, Inc. (E.D.
La).  At present, the Company is vigorously defending those
claims.


Page
29


In
connection with the purchase of the operating subsidiaries of DTHC, the Company
has the right to offset 50% of certain claims, currently estimated at $4,580,
against the note to DTHC once those claims are settled and paid.  The
Company has recorded a receivable of $2,290 as of March 31, 2009 which
represents an estimate of the amount that potentially be recovered from
DTHC.  Defense costs are expensed as
incurred.  Additionally, the Company is subject to pending claims,
regulatory processes and lawsuits for which losses are not probable and amounts
cannot be reasonably estimated.  Those losses could ultimately be
material to the Company’s financial position, results of operations and cash
flows.





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
over the past decade has continued to reinvent and reposition itself as
technologies for communications and entertainment services continue to grow and
evolve. Multiband needs to continue to stay on the edge of changes in technology
if it is to remain competitive in its chosen marketplaces.





Net
Income (Losses)





The
Company had a net loss of $2,881 for the quarter ended March 31, 2009, net
income of $945 for the year ended December 31, 2008 and net loss of $6,088 for
the year ended December 31, 2007.  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.





Working
Capital





The
Company had a working capital deficit of $30,307 at March 31, 2009 as compared
to positive working capital in the amount of $2,465 at December 31, 2008 due to
the acquisition of DirecTECH.





Goodwill
and Intangible Assets





The
Company applies the Financial Accounting Standards Board Statement (FASB) of
Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible
Assets,” which sets forth financial and reporting standards for the acquisition
of intangible assets, other than those acquired in a business combination, and
for goodwill and other intangible assets subsequent to their
acquisition.  As of March 31, 2009, the Company had goodwill of
$36,817 and intangibles of $28,674 primarily related to the purchase of
DirecTECH.  At March 31, 2009 the Company did not note any indications
of impairment related to goodwill or its intangible assets.





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.


Page
30


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 expired in August
2008, and provided for two additional two-year renewals if the Company had a
minimum number of paying video subscribers in its system operator network. The
Company did meet the requirements and has entered into the first two year
automatic renewal period.  The Company also has separate home service
provider agreements with DirecTV ending April 30, 2011.   The term of the
agreements with DirecTV will automatically renew as of May 1, 2011 for
additional one year periods unless either the Company or DirecTV gives written
notice of termination at least 90 days in advance of expiration of the then
current term.   Although an alternate provider of satellite television
services, Echostar, exists, the termination of any or all of its HSP dealer
agreements with DirecTV would 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.





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.


Page
31





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.





National
Market for Stock





There is
no assurance that the Company’s common stock will continue to trade on the
Nasdaq Stock Market or other national stock exchange due to ongoing listing
criteria for such exchanges.





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  Acquisition





During
the first quarter of 2009, the Company completed its  Stock Purchase
Agreement (SPA) with DTHC (see Note 3).   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.





General
Economic Conditions





As of
this writing, the United States is experiencing overall adverse economic
conditions. While we believe this environment may actually assist the Company in
that consumers may stay home more for entertainment, there is no guarantee that
consumers will continue to purchase the Company’s services at a constant level
if the country’s recession becomes prolonged.




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32





ITEM
6.  EXHIBITS





(a)
                  Exhibits31.1
                  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:  May
      20, 2009
                By:/s/
      James L. MandelChief
      Executive OfficerDate:  May
      20, 2009
                By:/s/
      Steven M. BellChief
      Financial Officer(Principal
      Financial and Accounting
Officer)




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33