<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB
_X_ Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 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 March 31, 1996, 47,440,071 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
MARCH 31, 1996 AND DECEMBER 31, 1995
MARCH 31 DECEMBER 31
ASSETS 1996 1995
------ ----------- -----------
Property held for timeshare development $16,500,881 $16,170,614
Cash 4,791 223,796
Construction deposits 325,000 220,000
Land held for sale 360,000 360,000
Other assets 273,503 112,503
Deferred financing costs 63,140 252,562
----------- -----------
$17,527,315 $17,339,475
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
All inclusive trust deed note payable $11,798,817 $11,818,361
Accounts payable and accrued expenses 294,890 470,864
Notes payable 2,054,000 1,584,000
Accrued interest 1,990,135 1,923,653
Other accrued liabilities 1,156,945 1,156,945
Due to related parties 223,189 223,189
----------- -----------
17,517,976 17,177,012
----------- -----------
Common stock - par value $.05 per share;
authorized 50,000,000; issued 47,440,071
and 37,487,390 2,372,004 1,874,370
Additional paid-in capital 24,153,446 23,529,022
Accumulated deficit (26,452,611) (25,157,429)
Services to be rendered (38,500) (38,500)
Stock subscriptions receivable (25,000) (45,000)
----------- -----------
Total Shareholders' equity 9,339 162,463
----------- -----------
$17,527,315 $17,339,475
----------- -----------
----------- -----------
<PAGE>
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
OCT. 22, 1992
(INCORPORATION)
TO THREE MONTHS ENDED
MAR. 31, 1996 MARCH 31
-------------- ------------------------
1996 1995
----------- -----------
Revenue
Other $ 112,103 $ 0 $ 20,841
------------ ----------- -----------
Expenses
Excess of expenses over revenues
from incidental operations 468,894 (3,485) 18,024
General, administrative and consulting 9,831,525 1,000,908 394,108
Interest 1,873,409 297,759 2,186
Commitment fee for timeshare financing 750,000 0 0
Provision for litigation settlements 628,863 0 0
Reorganization items 14,596 0 0
Provision for write-off 13,346,879 0 0
------------ ----------- -----------
26,914,166 1,295,182 414,316
------------ ----------- -----------
Net loss before minority interest (26,802,063) (1,295,182) (393,475)
Minority interest in loss of
consolidated subsidiary 349,452 0 0
------------ ----------- -----------
Net loss ($26,452,611) ($1,295,182) ($ 393,475)
------------ ----------- -----------
------------ ----------- -----------
Net loss per share ($1.94) ($0.03) ($0.03)
------------ ----------- -----------
------------ ----------- -----------
Weighted average number of shares
outstanding 13,619,498 41,170,552 14,894,357
------------ ----------- -----------
------------ ----------- -----------
<PAGE>
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
OCT. 22, 1992
(INCORPORATION)
TO THREE MONTHS ENDED
MAR. 31, 1996 MARCH 31
-------------- ---------------------
1996 1995
----------- ---------
Cash Flows From Operating Activities:
Net loss ($26,452,611) ($1,295,182) ($393,475)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Issuance of common stock for services 4,585,882 1,085,888 150,000
Depreciation and amortization 1,456,794 253,922 58,699
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 (977,754) (619,089) 85,090
------------ ----------- ---------
Net Cash Used in Operating Activities (7,332,294) (574,461) (99,686)
------------ ----------- ---------
Cash Flows From Investing Activities:
Construction Deposits ($325,000) ($105,000) $ 0
Other assets 67,105 0 (184,330)
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 (310,251) (105,000) (184,330)
------------ ----------- ---------
Cash Flows From Financing Activities:
Proceeds from issuance of notes payable 2,442,503 460,000 0
Proceeds from sale of common stock 3,985,879 0 298,957
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 (149,158) (19,544) 0
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 Activites 7,647,336 460,456 298,957
------------ ----------- ---------
Net Increase (Decrease) in Cash 4,791 (219,005) 14,941
Cash, beginning of period 0 223,796 14,243
------------ ----------- ---------
Cash, end of period $ 4,791 $ 4,791 $ 29,184
------------ ----------- ---------
------------ ----------- ---------
Supplemental Disclosure of Cash Flow
Information:
Cash paid for
Interest $ 1,561,067 $ 198,277 $ 242,186
------------ ----------- ---------
------------ ----------- ---------
Taxes $ 1,600 $ 0 $ 0
------------ ----------- ---------
------------ ----------- ---------
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 THREE MONTHS ENDED MARCH 31, 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> <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 three months
ended March 31, 1996 0 0 0 0 (1,295,182) 0 (1,295,182)
Common stock issued for
services and compensation 9,886,014 494,301 617,757 0 0 20,000 1,132,058
Common stock sold 0 0 0 0 0 0 0
Common stock issued for
loan origination 0 0 0 0 0 0 0
Common stock to pay notes 66,667 3,333 6,667 0 0 0 10,000
---------- ---------- ----------- -------- ------------ -------- -----------
BALANCES, MARCH 31, 1996 47,440,071 $2,372,004 $24,153,446 ($38,500) ($26,452,611) ($25,000) $ 9,339
---------- ---------- ----------- -------- ------------ -------- -----------
---------- ---------- ----------- -------- ------------ -------- -----------
</TABLE>
<PAGE>
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 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 March 31, 1996 and the results of operations and
cash flows for the three months ended March 31, 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 three months ended March 31, 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 $26,452,611 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>
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
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 three months ended March 31, 1996, the Company incurred costs
amounting to $414,267, of which $56,387 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 COMMITMENT
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. Through May 20, 1996, the
Company has not consummated this transaction. There can be no assurance that
any funds will be raised from this private debt placement.
During the three months ended March 31, 1996, the Company issued various
notes aggregating $460,000, with interest at 10% per annum, and due on demand
and on various dates in 1996. The Company used such notes to fund capital
improvements to the Lake Tropicana Apartments and provide working capital for
operations.
NOTE 4 - STOCKHOLDERS' EQUITY
During the three months ended March 31, 1996, the Company issued 66,667
shares of its common stock in satisfaction of a note payable for $10,000.
<PAGE>
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
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 three months ended March 31, 1996, the Company issued
9,855,014 shares for consideration valued at an average of $0.125 per share,
with an aggregate value of $1,112,058. 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.
Subsequent to 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 subsequent 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. Management intends to
request approval from its stockholder at the next annual meeting of stockholders
to increase the number of shares authorized to 100,000,000.
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 accompanying financial
statements.
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 includes a one-for-10 reverse stock split or the infusion of capital
through a financial transaction. NASDAQ has requested that additional
documentation be provided. The Company has been informed that its Common Stock
will be subject to delisting from the Exchange should the plan, upon its
receipt by NASDAQ, be rejected.
<PAGE>
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
NOTE 5 - RELATED PARTY TRANSACTIONS
During the quarter ended March 31, 1996, the Company paid an officer
$75,000 as an advance on commission for future timeshare sales. Another officer
was paid a salary of $45,000. 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
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO MARCH 31, 1995
At March 31, 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 decreased from
$18,024 during the first three months in 1995 to a positive $3,485 during the
first three months in 1996. During the three months ended March 31, 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 quarter of 1995.
The Company's general, administrative and consulting expenses in the
three months ended March 31, 1996 equalled $1,000,908, a substantial increase
from $394,106 for the comparable period in 1995, due to a significant increase
in consulting fees and commissions.
MPTV also incurred interest expense of $297,759 in the first quarter
of 1996 as compared to $2,186 in the first quarter 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. In January 1996, the Company resumed its
redevelopment activities, and accordingly, resumed capitalizing interest during
the first quarter of 1996. During the periods ended March 31, 1996 and 1995,
the capitalized interest totalled approximately $154,072 and $104,894,
respectively.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated financial statements at March 31, 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.
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
<PAGE>
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.
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.
<PAGE>
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 includes a one-for-10 reverse stock split or the
infusion of capital through a financial transaction, NASDAQ has requested that
additional documentation be provided. The Company has been informed that its
Common Stock will be subject to delisting from the Exchange should the plan, up
on its receipt by NASDAQ, be rejected.
Since March 31, 1996, the Registrant 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 Registrant'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.
During the three months ended March 31, 1996, the Company had a net
negative cash flow of $219,005. This net negative cash flow was comprised of
positive cash flow of $460,456 from financing activities offset by negative cash
flows of $105,000 from investing activities and $574,461 from operating
activities. Such financing activities consisted primarily of proceeds from the
issuance of notes payable.
FORWARD LOOKING STATEMENTS
The forward looking statements contained in this 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 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
<PAGE>
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 to Nasdaq that included a one-for-10 reverse stock split or
the infusion of capital through a financial transaction. Nasdaq has requested
that additional documentation be provided. The Company has been informed that
it will be subject to delisting from the Exchange should the plan, upon its
receipt by Nasdaq, be rejected.
Subsequent to 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 subsequent that these subsequent issuances of its
Common Stock may have caused the total number of issued and outstanding shares
to exceed 50,000,000 shares currently authorized in its Articles of
Incorporation. Management intends to request approval from its stockholders at
the next annual meeting of stockholders to increase the number of shares
authorized to 100,000,000.
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 production 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 exchanged 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 Amendment No. 1 to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: July 1, 1996 REGISTRANT:
MPTV, Inc.
By: /s/ James C. Vellema
-------------------------------------
James C. Vellema
Chairman
Principal Financial and Accounting Officer
Date: July 1, 1996 By: /s/ Hurley C. Reed
-------------------------------------
Hurley C. Reed
President
