<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
- ---- of 1934
For the quarterly period ended June 30, 1996
Transition report under Section 13 or 15(d) of the Securities Exchange Act
- ---- of 1934
For the transition period from _________ to ________
Commission File Number 0-16545
MPTV, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 88-0222781
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3 Civic Plaza
Suite #210
Newport Beach, California 92660
(Address of Principal Executive Offices)
(714) 760-6747
(Registrant's Telephone Number, Including Area Code)
Check whether the Registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
As of June 30, 1996, 76,685,245 shares of Common Stock, $0.05 par value per
share, were outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31,
ASSETS 1996 1995
----------- ------------
<S> <C> <C>
Property held for timeshare development $16,420,361 $16,170,614
Cash 255,509 223,796
Construction deposits 385,000 220,000
Land held for sale 360,000 360,000
Other assets/prepaid expenses 1,341,267 112,503
Deferred financing costs 0 252,562
----------- -----------
$18,762,137 $17,339,475
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
All inclusive trust deed and secured
notes payable $10,899,933 $11,818,361
Accounts payable and accrued expenses 322,001 470,864
Notes payable 3,107,333 1,584,000
Accrued interest 1,767,735 1,923,653
Other accrued liabilities 1,111,945 1,156,945
Due to related parties 234,939 223,189
----------- -----------
17,443,886 17,177,012
----------- -----------
Common stock - par value $.05 per share;
authorized 100,000,000; issued 76,685,245
and 37,487,390 3,834,262 1,874,370
Additional paid-in capital 23,774,872 23,529,022
Accumulated deficit (26,227,383) (25,157,429)
Services to be rendered (38,500) (38,500)
Stock subscriptions receivable (25,000) (45,000)
----------- -----------
Total shareholders' equity 1,318,251 162,463
----------- -----------
$18,762,137 $17,339,475
----------- -----------
----------- -----------
</TABLE>
<PAGE>
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
OCT. 22, 1992
(Incorporation)
TO SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1996 JUNE 30 JUNE 30
------------- ------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenue
Other $112,103 $0 $45,756 $0 $25,415
----------- ---------- ---------- ----------- ----------
Expenses
Excess of expenses over revenues
from incidental operations 502,266 29,887 28,848 3,372 10,824
General and administrative 10,480,301 1,649,684 2,078,973 648,776 1,684,867
Interest 2,166,033 590,383 5,132 292,624 2,946
Commitment fee for timeshare financing 750,000 0 0 0 0
Provision for litigation settlements 628,863 0 0 0 0
Reorganization items 14,596 0 0 0 0
Provisions for write-off 13,346,879 0 0 0 0
----------- ---------- ---------- ----------- ----------
27,888,938 2,269,954 2,112,953 944,772 1,698,637
----------- ---------- ---------- ----------- ----------
Net loss before minority interest and extraordinary item (27,776,835) (2,269,954) (2,067,197) (974,772) (1,673,222)
Minority interest in loss of consolidated subsidiary 349,452 0 0 0 0
Extraordinary item - forgiveness of debt 1,200,000 1,200,000 0 1,200,000 0
----------- ---------- ---------- ----------- ----------
Net income/loss ($26,227,383) ($1,069,954) ($2,067,197) $225,228 ($1,673,222)
----------- ---------- ---------- ----------- ----------
----------- ---------- ---------- ----------- ----------
Net income/loss per share ($1.55) ($0.02) ($0.11) $0.01 ($0.09)
----------- ---------- ---------- ----------- ----------
----------- ---------- ---------- ----------- ----------
Weighted average number of shares outstanding 16,953,232 51,842,410 18,042,011 62,514,267 18,958,177
----------- ---------- ---------- ----------- ----------
----------- ---------- ---------- ----------- ----------
</TABLE>
<PAGE>
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
OCT. 22, 1992
(Incorporation)
TO SIX MONTHS ENDED
JUNE 30, 1996 June 30
------------- ------------------------------
1996 1995
---------- ----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss ($26,227,383) ($1,069,954) ($2,067,197)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Extraordinary item - cancellation of debt (1,200,000) (1,200,000) 0
Issuance of common stock for services 5,604,051 2,104,057 1,072,397
Depreciation and amortization 1,610,934 408,062 117,398
Minority interest (349,452) 0 0
Provision for loss on land held for sale 130,668 0 0
Notes payable issued for services 82,500 0 0
Common stock issued for loan fees 844,800 0 0
Provisions for write-offs of intangibles 13,346,879 0 0
Changes in assets and liabilities (1,936,417) (1,577,752) 219,300
----------- ----------- -----------
Net Cash Used in Operating Activities (8,093,420) (1,335,587) (658,102)
----------- ----------- -----------
Cash Flows From Investing Activities:
Construction deposits ($385,000) ($165,000) $0
Other assets 67,105 0 (405,409)
Pre-acquisition costs paid in connection
with purchase of real estate (35,365) 0 0
Purchase of furniture and equipment (87,103) 0 0
Cash received in connection with MPTV
merger 70,112 0 0
----------- ----------- -----------
Net Cash Used in Investing Activities ($370,251) ($165,000) ($405,409)
----------- ----------- -----------
Cash Flows From Financing Activities:
Proceeds from issuance of notes payable $3,454,503 $1,472,000 $176,807
Proceeds from sale of common stock 4,060,564 74,685 1,011,664
Proceeds from collection of subscription
receivables 20,000 20,000 0
Advances from MPTV prior to merger 589,360 0 0
Principal repayments on notes payable (163,999) (34,385) (48,464)
Net advances from (to) affiliates, net (47,736) 0 0
Capital contribution received by
joint venture 806,488 0 0
----------- ----------- -----------
Net Cash Provided by Financing Activities $8,719,180 $1,532,300 $1,140,007
----------- ----------- -----------
Net Increase (Decrease) in Cash $255,509 $31,713 $76,496
Cash, beginning of period 0 223,796 14,243
----------- ----------- -----------
Cash, end of period $255,509 $255,509 $90,739
----------- ----------- -----------
----------- ----------- -----------
Supplemental Disclosure of Cash Flow
Information:
Cash paid for:
Interest $1,786,800 $424,010 $408,967
----------- ----------- -----------
----------- ----------- -----------
Taxes $1,600 $0 $0
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See note 3 for supplemental disclosure of non-cash investing and
financing activities.
<PAGE>
MPTV, Inc. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Number Additional Services Stock Total
of Common Paid-In to be Accumulated Subscription Stockholders'
Shares Stock Capital Rendered Deficit Receivable Equity
---------- ---------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1996 37,487,390 $1,874,370 $23,529,022 ($38,500) ($25,157,429) ($45,000) $162,463
Net loss for the six months
ended June 30, 1996 0 0 0 0 (1,069,954) 0 (1,069,954)
Common stock issued for
services and compensation 37,831,188 1,891,559 212,498 0 0 20,000 2,124,057
Common stock sold 1,200,000 60,000 14,685 0 0 0 74,685
Common stock to pay notes 166,667 8,333 18,667 0 0 0 27,000
---------- ---------- ----------- ---------- ----------- ---------- ----------
Balances, June 30, 1996 76,685,245 $3,834,262 $23,774,872 ($38,500) ($26,227,383) ($25,000) $1,318,251
---------- ---------- ----------- ---------- ----------- ---------- ----------
---------- ---------- ----------- ---------- ----------- ---------- ----------
</TABLE>
<PAGE>
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
NOTE 1 - BASIS OF PRESENTATION
In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements include all adjustments consisting
of only normal recurring adjustments necessary for a fair presentation of the
Company's financial position at June 30, 1996 and the results of operations and
cash flows for the six months ended June 30, 1996 and 1995, respectively.
Although the Company believes that the disclosures in these financial statements
are adequate to make the information presented not misleading, certain
information normally included in financial statements prepared in accordance
with generally accepted accounting principles has been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
Results of operations for the six months ended June 30, 1996 are not necessarily
indicative of results of operations to be expected for the year ending December
31, 1996. Refer to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995 for additional information.
The accompanying condensed consolidated financial statements have been
prepared assuming the Company will continue as a going concern, which
contemplates, among other things, the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company is in the
development stage and has incurred cumulative net losses of $26,227,383 since
its incorporation. The Company is in default on certain of its secured notes
payable which must be refinanced by July 31, 1996. In the event the Company
does not refinance certain of its secured notes payable, it will be subject to
foreclosure proceedings on its Lake Tropicana Apartments currently held for
development as timeshare units. The Company will also require capital for its
timeshare development and marketing activities, as well as capital for interest
and administrative expenses. Furthermore, freely tradable shares of common
stock have been improperly issued without registration under Federal and state
securities laws. Until resolved, the impact of such issuances, if any, on the
Company's ability to raise additional capital through future issuances of common
stock is unknown. The successful refinancing of the Company's debt and the
obtainment of additional financing, the successful development of the Company's
properties, the successful completion of its marketing program and its
transition, ultimately, to the attainment of profitable operations are necessary
for the Company to continue operations for the foreseeable future. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
Management plans to refinance the Lake Tropicana Apartment debt and obtain
redevelopment and improvement funding necessary to enable the Company to prepare
the Lake Tropicana property for the marketing and sale of timeshare units. The
Company has entered into a firm underwriting agreement with J.E. Liss and
Company, Inc. (see Note 3) to provide a private placement of 12% senior secured
notes in the aggregate amount of $6,800,000, with an additional $3,200,000 which
may be available, on a best efforts basis, for working and
<PAGE>
development capital. Furthermore, the Company has negotiated a substantial
reduction in the amount required to satisfy the second trust deed note payable
should the funds from the debt issuance be received and applied to the first and
second trust deed notes payable on or before July 31, 1996. There are no
assurances that management will be successful in achieving its plans. The
accompanying condensed consolidated financial statements do not include any
adjustments that may result from the outcome of this uncertainty.
NOTE 2 - PROPERTY HELD FOR TIMESHARE DEVELOPMENT
During the six months ended June 30, 1996, the Company incurred costs
amounting to $417,747, of which $59,867 was paid in cash, $154,072 in
capitalized interest, and $203,808 in common stock, related to its development
of the Lake Tropicana Apartments.
NOTE 3 - FINANCING ARRANGEMENTS
PROPOSED FINANCINGS
The Company has entered into a firm commitment underwriting agreement with
J.E. Liss and Company, Inc. for a private placement of 12% senior secured notes
in the aggregate principal amount of $6,800,000 (with an additional $3,200,000
in principal amount which may be sold on a best efforts basis). Proceeds from
the private placement will be used to refinance a portion of the Lake Tropicana
debt and for working and development capital. The Company has also negotiated a
substantial reduction in the amount required to satisfy the note secured by a
second trust deed in Lake Tropicana, should the funds be received from the
private debt placement and applied to the notes secured by the first and second
deeds of trust by July 31, 1996. There can be no assurance that any funds will
be raised from this private debt placement. On June 30, 1996 the Company
negotiated a reduction of the amount required to satisfy the note secured by a
second trust deed in Lake Tropicana. The reduction, totalling $1,200,000, and
presented as an extraordinary item in the financial statements, consists of
$315,957 of accrued interest and $884,043 in principal. This reduction was
granted in exchange for a warrant to purchase 5,000,000 shares of the Company's
Common Stock at $0.015625 per share.
OUTSTANDING OBLIGATIONS
During the six months ended June 30, 1996, the Company issued various
notes aggregating $1,472,000, with interest at 10% per annum. Certain of the
notes due on demand, with the remainder due and payable on various dates in
1996 and 1997. The Company used such notes to fund capital improvements to
the Lake Tropicana Apartments and provide working capital for operations.
<PAGE>
DEBT FORGIVENESS
On June 30, 1996 the Company negotiated a reduction of the amount required
to satisfy the note secured by a second trust deed in Lake Tropicana. The
reduction, totalling $1,200,000, and presented as an extraordinary item in the
financial statements, consists of $315,957 of accrued interest and $884,043 in
principal. This reduction was granted in exchange for a warrant to purchase
5,000,000 shares of the Company's Common Stock at $0.015625 per share. Due in
part to this debt reduction, the Company had a net loss of $1,069,954 for the
six months ended June 30, 1996 compared to a net loss of $2,067,197 for the
comparable period in 1995. Net loss per share was $0.02 for the six months
ended June 30, 1996 compared to $0.11 per share for the six months ended June
30, 1995, due primarily to a significant increase in the weighted average number
of shares outstanding.
NOTE 4 - STOCKHOLDERS' EQUITY
During the six months ended June 30, 1996, the Company issued 166,667
shares of its Common Stock in satisfaction of a note payable for $27,000.
From time to time, the Board of Directors have authorized certain shares of
its common stock to be issued for services rendered by the Company's
consultants. During the six months ended June 30, 1996, the Company issued
37,831,188 shares for consideration valued at an average of $0.078 per share,
with an aggregate value of $2,104,057. The fair value was determined by
management based on the closing price of the Company's Common Stock as quoted by
NASDAQ, less a discount for transferability restrictions.
Since March 31, 1996, the Company has issued a significant number of shares
of its Common Stock for cash and services rendered. Management has become aware
that these issuances of its Common Stock have caused the total number of issued
and outstanding shares to exceed the 50,000,000 shares currently authorized in
its Articles of Incorporation. The Company's Board of Directors has approved,
and management is requesting approval from its stockholders at the next annual
meeting of stockholders (scheduled for July 1996), to effect a one-for-10
reverse stock split and increase the number of shares authorized to 100,000,000.
Management believes that such reverse split and increase will be approved by the
stockholders. At June 30, 1996, approximately 76,685,245 shares of Common Stock
were issued and outstanding.
<PAGE>
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123 "Accounting for Stock Based Compensation"
("Statement No. 123"). Statement No. 123 is primarily a disclosure standard for
the Company because the Company will continue to account for employee stock
options under Accounting Principles Board Opinion No. 25. The disclosure
requirements for the Company required by Statement No. 123 began January 1,
1996.
The Company has no employee stock options in which the exercise prices are
below market and, accordingly, there would be no compensatory effects which, on
a proforma basis, would have a material effect on the financial position or
results of operations.
On April 19, 1996, The NASDAQ Stock Market ("NASDAQ"), which manages The
NASDAQ SmallCap Market Exchange (the "Exchange") on which the Company's Common
Stock is listed and traded, informed management that the Company had failed to
meet certain listing maintenance requirements and had not filed its Annual
Report on Form 10-KSB within the required time frame. NASDAQ gave the Company
until May 20, 1996 to file such Annual Report and to submit a plan detailing how
the Company intends to meet the listing maintenance requirements in the future.
The Company filed the Form 10-KSB on May 20, 1996, and submitted a plan to
NASDAQ that included a one-for-10 reverse stock split or the infusion of capital
through a financial transaction. On June 12, 1996, the Company received a
letter from The Nasdaq Stock Market, Inc. ("Nasdaq"), informing the Company that
its Common Stock was scheduled to be delisted from The Nasdaq SmallCap Market
effective with the close of business on Wednesday, June 26, 1996, for failure to
meet certain continuing listing requirements. Although the Company currently
satisfies the market float, number of market makers and asset requirements, it
does not meet the net worth or share price criteria. The Company has requested
that Nasdaq conduct an oral hearing to reconsider the decision to delist the
Common Stock; such hearing will be held on Friday, July 12, 1996. Management
has been informed that the delisting will be stayed pending the outcome of such
hearing. In the event of such delisting, management anticipates that the
Company's Common Stock will be listed in the OTC Bulletin Board.
NOTE 5 - RELATED PARTY TRANSACTIONS
During the six months ended June 30, 1996, the Company paid an officer
$150,000 as an advance on commission for future timeshare sales. Another
officer was paid a salary of $90,000. These payments were made pursuant to the
terms of the respective officer's employment agreement.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read together with the
Condensed Consolidated Financial Statements and Notes thereto included elsewhere
herein.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO JUNE 30, 1995
At June 30, 1996, MPTV was in the development stage, with no significant
operating revenues to date. Revenues from the sale of timeshare units are
expected in late 1996. [The preceding sentence contains a forward looking
statement (hereinafter defined as "FLS"). Each of the forward looking
statements in this Quarterly Report on Form 10-QSB is subject to various
factors that could cause actual results to differ materially from the results
anticipated in such forward looking statement, as more fully discussed in this
Item 2 under "Forward Looking Statements"]. Revenue from rentals of the Lake
Tropicana Apartments are considered incidental to the business of development
and sale of timeshare intervals and these are netted against related expenses in
the accompanying statements of operations for the periods presented therein.
Other revenues are unrelated to the business activities currently in
development.
Expenses in excess of revenues of incidental operations increased to
$29,887 during the first six months in 1996 from $28,848 during the first six
months in 1995. During the six months ended June 30, 1996, the Company
significantly reduced certain expenses of CRE/Continental Resort Services,
consisting primarily of the operation of the Lake Tropicana Apartments. The
expenses reduced included advertising, certain salaries, commissions and
professional and consulting fees, which had been incurred in the first half of
1995.
The Company's general, administrative and consulting expenses in the six
months ended June 30, 1996 equalled $1,649,684, a substantial decrease from
$2,078,973 for the comparable period in 1995, due to a significant increase in
unexpired consulting fee contracts which are included in assets as prepaid
expenses.
On June 30, 1996 the Company negotiated a reduction of the amount required
to satisfy the note secured by a second trust deed in Lake Tropicana. The
reduction, totalling $1,200,000, and presented as an extraordinary item in the
financial statements, consists of $315,957 of accrued interest and $884,043 in
principal. This reduction was granted in exchange for a warrant to purchase
5,000,000 shares of the Company's Common Stock at $0.015625 per share. Due in
part to this debt reduction, the Company had a net loss of $1,069,954 for the
six months ended June 30, 1996 compared to a net loss of $2,067,197 for the
comparable period in 1995. Net loss per share was $0.02 for the six months
ended June 30, 1996 compared to $0.11 per share for the six months ended June
30, 1995, due primarily to a significant increase in the weighted average number
of shares outstanding.
<PAGE>
MPTV also incurred interest expense of $590,383 in the first half of 1996
as compared to $5,132 in the first half of 1995. Interest costs incurred for
the development of Lake Tropicana timeshares were capitalized to property held
from timeshare development during periods of active development based on
qualifying assets. The project ceased to be under active development for
accounting purposes in April 1995, but active development has subsequently
commenced again. During the periods ended June 30, 1996 and 1995, the
capitalized interest totalled approximately $242,000 and $240,000, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated financial statements at June 30, 1996 and for
the period then ended have been presented on the basis that the Company is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. Continuation of the Company as
a going concern is dependent upon the Company raising additional financing and
achieving and sustaining profitable operations. Because of the uncertainties
regarding the Company's ability to achieve these goals, no assurance can be
given that the Company will be able to continue in existence. Based on the
Company's interest in Lake Tropicana, and the potential to raise additional
debt and/or equity financing (see below), management believes that there will
be sufficient capital available to complete existing contracts and projects
(FLS). The financial statements do not include any adjustments relating to the
recoverability of recorded assets amounts or the amounts of liabilities that
might be necessary should the Company be unable to continue as a going concern.
The planned renovation program for the Lake Tropicana project is intended
to appeal to family-oriented visitors to Las Vegas and includes major common
area improvements such as landscaping, parking and a decorative security wall,
as well as construction of a reception area and activity center and installation
of a new roof and porches, the rebuilding of the main pool and construction of
two additional pools and a tennis court (FLS). The Company also anticipates
undertaking a complete renovation of the timeshare units, including kitchens,
bathroom fixtures, air conditioning, wall and floor coverings and complete
furniture and fixture packages (FLS). Management currently estimates that
timeshare unit renovations will cost approximately $38,000 per unit, while
common area renovations will require an additional $1,000,000 (FLS). The entire
renovation project will require six phases and approximately $7,000,000 to
$8,000,000 to complete (FLS), of which approximately $1,000,000 (excluding
capitalized interest paid in cash of $1,400,000) has been expended to date.
In April 1994, the Company commenced phase one of the project, which involved
renovation of the first 16 timeshare units and the construction of a sales
facility, and management currently anticipates completion of this phase in
August 1996, subject to obtaining the required financing (see below), (FLS).
Phases two and three include the renovation of approximately one-half of the
176 timeshare units. Architects retained by the Company are currently preparing
plans for the purpose of soliciting fixed bids for remaining phases of the
renovations.
<PAGE>
Funds for phase one of the renovation and project carrying costs have been
derived from equity private placements conducted by the Company, issuances of
common stock to vendors and the incurrence of unsecured debt. The Company has
received a commitment to refinance the existing notes secured by first and
second deeds of trust on the project (see below), which financing would provide
partial releases of condominiums. These release provisions facilitate the
phasing of the Lake Tropicana project for conveyance to timeshare purchasers.
The Company then intends to utilize the proceeds from timeshare sales (derived
from the $100 million end-loan financing of timeshare receivables, for which the
Company has received a letter of commitment, subject to the completion of
definitive documents and due diligence procedures, from Stanford Investors,
Ltd.) plus cash flow from operations, to fund the remainder of the renovations
(FLS). However, there can be no assurance the Company will receive financing
adequate to complete renovations. In the event that the Company does not
receive financing, it would be unable to complete the renovation of Lake
Tropicana, which would seriously impair the Company's ability to sell timeshare
units in the project. If the Company is unable to sell timeshare units in Lake
Tropicana, the potential value of Lake Tropicana as a rental property would be
substantially lower than the potential value if sold in timeshare intervals.
Furthermore, sales of timeshare units require registration or other regulatory
compliance in the State of Nevada and certain other states where such units may
be sold.
The Company has entered into a firm commitment underwriting agreement with
J.E. Liss and Company, Inc. for a private placement of 12% senior secured notes
in the aggregate principal amount of $6,800,000 (with an additional $3,200,000
in principal amount which may be sold on a best efforts basis). Proceeds from
the private placement will be used to refinance a portion of the Lake Tropicana
debt and for working and development capital (FLS). The Company has also
negotiated a substantial reduction in the amount required to satisfy the note
secured by a second trust deed on Lake Tropicana, should the funds be received
from the private debt placement and applied to the notes secured by the first
and second deeds of trust by July 31, 1996. There can be no assurance that any
funds will be raised from the private debt placement.
On November 10, 1995, the Company entered into a partnership agreement with
Robert V. Jones Corp., a Nevada corporation ("RJC"), to aid in obtaining a loan
from a financial institution for the refinancing and renovation of lake
Tropicana. The partnership agreement is subject to certain terms and
conditions, one of which is the consummation of the refinancing. Upon
consummation, (RJC), acting as the limited partner, is to contribute $1,000,000
to the partnership, representing a 20% interest in the partnership. The
Company, acting as the general partner, is to contribute all of its rights,
title and interest in, and to, the Lake Tropicana Apartments and all of its
rights, title and interest in, and to, any development plans and documents, as
defined. Such investment by the Company will represent an 80% interest in the
partnership. Profits and losses of the partnership are generally allocated in
accordance with ownership interest, subject to certain priorities and
allocations, as defined. As of March 31, 1996, the conditions precedent to the
completion of the partnership agreement had not yet occurred, and there can be
no assurance that the partnership will be formed or that the parties will
consummate the transactions contemplated by the partnership agreement.
<PAGE>
Shares of the Company's freely tradable Common Stock have been improperly
issued without registration under Federal and state securities laws. In
addition to administrative remedies which may be pursued by governmental
agencies, the recipients of these shares of Common Stock may seek recovery of
the purchase price of the stock plus interest through a rescission offer, the
amount of which cannot be presently determined, and could have a material
adverse impact on the Company's financial liquidity. Management intends to file
the necessary registrations statements subsequent to the filing of this
Quarterly Report on Form 10-QSB to register these shares. There can be no
assurances that the filings of these registration statements will provide an
adequate remedy. Until resolved, the impact of such issuances, if any, on the
Company's ability to raise additional capital through the future issuances of
Common Stock is unknown.
On April 19, 1996 the NASDAQ Stock Market, Inc., ("NASDAQ"), which manages
the NASDAQ SmallCap Market Exchange (the "Exchange") on which the Company's
Common Stock is listed and traded, informed management that the Company had
failed to meet certain listing maintenance requirements and had not filed its
Annual Report on Form 10-KSB within the required time frame. NASDAQ gave the
Company until May 20,1996 to file such Annual Report and to submit a plan
detailing how the Company intends to meet the listing maintenance requirements
in the future. The Company filed such Annual Report, and has submitted a plan
to NASDAQ that included a one-for-10 reverse stock split or the infusion of
capital through a financial transaction. On June 12, 1996, the Company received
a letter from The Nasdaq Stock Market, Inc. ("Nasdaq"), informing the Company
that its Common Stock was scheduled to be delisted from The Nasdaq SmallCap
Market effective with the close of business on Wednesday, June 26, 1996, for
failure to meet certain continuing listing requirements. Although the Company
currently satisfies the market float, number of market makers and asset
requirements, it does not meet the net worth or share price criteria. The
Company has requested that Nasdaq conduct an oral hearing to reconsider the
decision to delist the Common Stock; such hearing will be held on Friday, July
12, 1996. Management has been informed that the delisting will be stayed
pending the outcome of such hearing. In the event of such delisting, management
anticipates that the Company's Common Stock will be listed in the OTC Bulletin
Board.
In the six months ended June 30, 1996, the Company has issued a significant
number of shares of its Common Stock for cash and services rendered. Management
has become aware that these issuances of its Common Stock have caused the total
number of issued and outstanding shares to exceed the 50,000,000 shares
currently authorized in its Articles of Incorporation. The Company's Board of
Directors has approved, and management is requesting approval from its
stockholders at the next annual meeting of stockholders (scheduled for July
1996), to effect a one-for-10 reverse stock split and increase the number of
shares authorized to 100,000,000. Management believes that such reverse split
and increase will be approved by the stockholders. At June 30, 1996,
approximately 76,685,245 shares of Common Stock were issued and outstanding.
During the six months ended June 30, 1996, the Company had a net
positive cash flow of $31,713. This net positive cash flow was comprised of
positive cash flow of $1,532,300 from financing activities offset by negative
cash flows of $165,000 from investing activities and $1,335,587 from operating
activities. Such financing activities consisted primarily of proceeds from
the issuance of notes payable.
<PAGE>
FORWARD LOOKING STATEMENTS
The forward looking statements contained in the Quarterly Report on Form
10-QSB, including those contained in Item 2 - "Management's Discussion and
Analysis or Plan of Operation", are subject to various risks, uncertainties and
other factors that could cause actual results to differ materially from the
results anticipated in such forward looking statements. Included among the
important risks, uncertainties and other factors are those hereinafter
discussed.
Few of the forward looking statements in this Quarterly Report on Form 10-
QSB deal with matters that are within the unilateral control of the Company.
A significant factor that may affect the actual results of the Company is the
Company's's need for additional liquidity, which in turn will depend on the
ability to obtain additional financing. The availability of equity and debt
financing to the Company is affected by, among other things, domestic and world
economic conditions and the competition for funds as well as the Company's
perceived ability to service such obligations should such financing be
consummated. Rising interest rates might affect the feasibility of debt
financing that is offered. Potential investors and lenders will be influenced
by their evaluations of the Company and its prospects and comparisons with
alternative investment opportunities. There can be no assurance that the
Company will be able to obtain financing on acceptable terms, if at all.
Shares of the Company's freely tradeable Common Stock have been improperly
issued without registration under Federal and state securities laws. In
addition to administrative remedies which may be pursued by governmental
agencies, the recipients of these shares of Common Stock may seek recovery of
the purchase price of the stock plus interest through a rescission offer, the
amount of which cannot be presently determined. Management intends to file the
necessary registration statements subsequent to the filing of this Quarterly
Report on Form 10-QSB to register these shares. There can be no assurances that
the filings of these registration statements will provide an adequate remedy.
Until resolved, the impact of such issuance, if any, on the Company's ability to
raise additional capital through the future issuances of Common Stock is
unknown.
On April 19, 1996 the Nasdaq Stock Market, Inc. ("Nasdaq"), which manages
the Nasdaq SmallCap Market Exchange (the "Exchange") on which the Company's
Common Stock is listed and traded, informed management that the Company had
failed to meet certain listing maintenance requirements and had not filed it
Annual Report on Form 10- KSB within the required time frame. Nasdaq gave
the Company until May 20, 1996 to file such Annual Report and to submit a plan
detailing how the Company intends to meet the listing maintenance requirements
in the future. The Company filed such Annual Report, and has submitted a plan
<PAGE>
to Nasdaq that included a one-for-10 reverse stock split or the infusion of
capital through a financial transaction. On June 12, 1996, the Company received
a letter from The Nasdaq Stock Market, Inc. ("Nasdaq"), informing the Company
that its Common Stock was scheduled to be delisted from The Nasdaq SmallCap
Market effective with the close of business on Wednesday, June 26, 1996, for
failure to meet certain continuing listing requirements. Although the Company
currently satisfies the market float, number of market makers and asset
requirements, it does not meet the net worth or share price criteria. The
Company has requested that Nasdaq conduct an oral hearing to reconsider the
decision to delist the Common Stock; such hearing will be held on Friday, July
12, 1996. Management has been informed that the delisting will be stayed
pending the outcome of such hearing. In the event of such delisting, management
anticipates that the Company's Common Stock will be listed in the OTC Bulletin
Board.
In the six months ended June 30, 1996, the Company has issued a significant
number of shares of its Common Stock for cash and services rendered. Management
has become aware that these issuances of its Common Stock have caused the total
number of issued and outstanding shares to exceed the 50,000,000 shares
currently authorized in its Articles of Incorporation. The Company's Board of
Directors has approved, and management is requesting approval from its
stockholders at the next annual meeting of stockholders (scheduled for July
1996), to effect a one-for-10 reverse stock split and increase the number of
shares authorized to 100,000,000. Management believes that such reverse split
and increase will be approved by the stockholders. At June 30, 1996,
approximately 76,685,245 shares of Common Stock were issued and outstanding.
The Company's timeshare resorts do not provide an exclusive solution for
potential purchasers, and such purchasers may choose alternative timeshare
resorts or vacation destinations. Many of the Company's competitors have
greater financial resources than the Company.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On March 14, 1994, Albert C. Gannaway, Jr., the founder and former officer,
director and principal stockholder of the Company, and Gannaway Productions,
Ltd. (collectively, "Gannaway") filed a Complaint in the Superior Court of
Orange County, California against the Company and Messrs. Rasmussen (the
Company's former Chairman and Chief Executive Officer and a current Director)
and Vellema. The Complaint sought to enforce the terms of a settlement
agreement allegedly entered into by the Company and Gannaway in 1993 to resolve
certain asserted or potential claims by Gannaway that (i) he was entitled to
additional shares of the Company's Common Stock to be received pursuant to an
option or, in the alternative, a lower option price; (ii) the Company was
indebted to Gannaway for prior loans, cost advances or wages in excess of the
amounts shown on the Company's books and records; and (iii) certain duplicating
or other equipment being used by the Company belonged to Gannaway, and demanded
damages for an alleged breach of video distribution agreements, an accounting
under said agreements and rescission of the distribution agreements.
The parties have entered into a settlement agreement to be effective
beginning March 1, 1995 (the "Settlement Agreement"). Pursuant to the terms of
the Settlement Agreement, Gannaway will receive the sum of $600,000 to be paid
over the term of four years beginning with an initial payment of $25,000 to be
paid on March 1, 1996; $15,000 on April 1, 1996; $15,000 on May 1,1996; $15,000
on June 1, 1996; $35,000 on July 1, 1996; and $35,000 on August 1, 1996. From
August 1, 1996 to August 1, 1999, Gannaway will receive (i) monthly payments
equal to $65.00 per timeshare interval sold in the preceding month and (ii)
semi-annual payments in the amount calculated by amortizing the remaining
balance of $460,000 over the term at 12% interest. The entire balance will be
due and payable on or before August 1, 1999. the Settlement Agreement also
provides that MPTV will transfer its video productions assets in Florida and the
Club Carib weeks to Gannaway, and the litigation will be conditionally dismissed
with prejudice (provided that the court retains jurisdiction to enter final
judgment upon default). Mutual general releases will be exchanges by all
parties with respect to all claims and counterclaims. Gannaway has started the
operations in Florida as of March 1, 1996.
On January 8, 1996, the Circuit Court of the Ninth Judicial District in
Orange County, Florida, entered a final judgment in the amount of $282,433.36
against the Company in the matter known as Neely v. MPTV, Inc., Successor to
United Shoppers of America, Inc. (Case No. CI 93-7554). The case was filed in
December, 1993 by a former consultant to the Company's predecessor, and
contained claims for breach of contract and recovery of unpaid wages. The
Company is appealing the judgment.
<PAGE>
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
(a) Not Applicable
(b) Not Applicable
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: July 11, 1996 REGISTRANT:
MPTV, Inc.
By: /s/ JAMES C. VELLEMA
------------------------------------
James C. Vellema
Chairman
(Principal Financial and Accounting Officer)
Date: July 11, 1996 By: /s/ HURLEY C. REED
------------------------------------
Hurley C. Reed
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 255,509
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 16,420,361<F1>
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,762,137
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 27,609,134
<OTHER-SE> (63,500)
<TOTAL-LIABILITY-AND-EQUITY> 18,762,137
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,679,571
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 590,383
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 1,200,000
<CHANGES> 0
<NET-INCOME> (1,069,954)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
<FN>
<F1>Represents timeshare property held for sale
</FN>
</TABLE>
