<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 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 SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31,
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Timeshare property held for sale $16,500,881 $16,170,614
Cash 4,791 223,796
Construction deposits 325,000 220,000
Land held for investment 360,000 360,000
Other assets 879,503 112,503
Deferred financing costs 63,140 252,562
----------- -----------
$18,133,315 $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 (25,846,611) (25,157,429)
Services to be rendered (38,500) (38,500)
Stock subscriptions receivable (25,000) (45,000)
----------- -----------
Total Shareholders' equity 615,339 162,463
----------- -----------
$18,133,315 $17,339,475
----------- -----------
----------- -----------
</TABLE>
<PAGE>
MPTV, Inc. and SUBSIDIARY
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCT. 22, 1992 MARCH 31
(Incorporation) -----------------------------
TO 1996 1995
MAR. 31, 1996 -------------- --------------
-------------- -------------- --------------
<S> <C> <C> <C>
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 9,225,525 394,908 394,106
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
Provisions for write-off 13,346,879 0 0
-------------- -------------- --------------
26,308,166 689,182 414,316
-------------- -------------- --------------
Net loss before minority interest (26,196,063) (689,182) (393,475)
Minority interest in loss of consolidated subsidiary 349,452 0 0
-------------- -------------- --------------
Net loss ($25,846,611) ($689,182) ($393,475)
-------------- -------------- --------------
-------------- -------------- --------------
Net loss per share ($1.90) ($0.02) ($0.03)
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of shares outstanding 13,619,498 41,170,552 14,894,357
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
<PAGE>
MPTV, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
OCT. 22, 1992
(Incorporation)
TO THREE MONTHS ENDED
MAR. 31, 1996 MARCH 31
------------------ -----------------------
1996 1995
------------ ----------
<S> <S> <C> <C>
Cash Flows From Operating Activities:
Net loss ($25,846,611) ($689,182) ($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 (1,583,754) (1,225,089) 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 Activities 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
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See note 3 for supplemental disclosure of non-cash investing and financing
activities.
<PAGE>
<TABLE>
<CAPTION>
MPTV, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
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 (689,182) 0 (689,182)
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) ($25,846,611) ($25,000) $615,339
------------ ------------ ------------ ------------ ------------- ----------- ------------
------------ ------------ ------------ ------------ ------------- ----------- ------------
</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 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 $25,846,611 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 senior 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 the future issuances of
common stock is unknown. The successful refinancing of the Company's debt and
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's 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. to provide a private placement of 12% senior secured
notes of $6,800,000, with an additional $3,200,000 which may
<PAGE>
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
be available, on a best efforts basis, for working and 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 - ACQUISITION OF MINORITY INTEREST IN JOINT VENTURE
On February 24, 1994, MPTV acquired the 45% minority interest in the
venture from Pacific D.N.S. ("Pacific") for an aggregate purchase price of
$3,737,291 consisting of an 8% promissory note for $1,868,645.50, collateralized
by a Deed of Trust on Lake Tropicana and guaranteed by MPTV and 400,000 shares
of the Company's common stock valued at $1,868,645.50 (see below). MPTV agreed
to register said shares under the Securities Act of 1933, as amended, no later
than October 31, 1994. If these shares were not registered by that date,
Pacific had the right to cancel the transaction, and return the shares for
Pacific's Joint Venture interest purchased by MPTV. In the event that the
proceeds to Pacific from the sale of the shares were less than $1,868,545.50,
MPTV agreed to issue to Pacific, and register pursuant to the Securities Act of
1933, that number of additional shares which, if registered and sold, would
yield proceeds, together with those received from the sale of the original
shares, equal to $1,868,645.50. Accordingly, the value of the 400,000 common
shares was based on the guaranteed value referred to above upon registration and
sale of such securities.
On March 22, 1995, the Company agreed to purchase the 400,000 common shares
from Pacific for $1,868,645. The Company's purchase consideration will be a
non-interest bearing note with a maturity date of August 1, 1998, with a
principal reduction requirement of $205 for each timeshare interval sold. The
purchase of the shares is contingent upon terms and conditions, one of which is
the consummation of the refinancing. As a result, the shares of common stock
are reflected as outstanding and the purchase obligation has not been accrued in
the accompanying condensed consolidated balance sheet.
NOTE 3 - FINANCING COMMITMENT
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
<PAGE>
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
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 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 (see above).
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 completion of the partnership agreement have not 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.
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.
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.
<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 $394,908, remaining substantially equal to
such expenses of $394,106 for the comparable period in 1995.
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. During the periods ended March 31, 1996
and 1995, the capitalized interest totaling approximately $240,000 and
$104,894, respectively.
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
<PAGE>
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 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 plant 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 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 issuances of its Common Stock may 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
stockholder to 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 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
<PAGE>
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 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 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.
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: May 23, 1996 REGISTRANT:
MPTV, Inc.
By: /s/ James C. Vellema
-------------------------------------------
James C. Vellema
Chairman
(Principal Financial and Accounting Officer
Date: May 23, 1996 By: /s/ Hurley C. Reed
-------------------------------------------
Hurley C. Reed
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,791
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 16,500,881<F1>
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,133,315
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 26,525,450
<OTHER-SE> (63,500)
<TOTAL-LIABILITY-AND-EQUITY> 18,133,315
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 689,182
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 297,759
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (689,182)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
<FN>
<F1>Represents timeshare property held for sale
</FN>
</TABLE>
