<PAGE> 1
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, 1997
[ ] 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 July 10, 1997, 223,920,708 shares of Common Stock, $0.05 par
value per share, were outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
================================================================================
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31,
ASSETS 1997 1996
-------- ------------ ------------
<S> <C> <C>
Property held for timeshare development $ 16,150,410 $ 16,098,289
Cash 93,566 35,341
Construction deposits 493,195 624,400
Other receivable 446,609 411,775
Other assets 580,734 81,656
Property and equipment 36,596 38,702
------------ ------------
$ 17,801,110 $ 17,290,163
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable secured by trust deeds $ 13,492,996 $ 11,597,996
Accounts payable and accrued expenses 472,817 404,734
Notes payable 5,450,582 5,180,582
Accrued interest 532,995 706,761
Other accrued liabilities 594,975 641,154
Due to related parties 85,971 201,371
------------ ------------
20,630,336 18,732,598
------------ ------------
Common stock - par value $.05 per share;
authorized 200,000,000; issued 206,320,708
and 162,406,691 10,316,036 8,120,335
Additional paid-in capital 22,244,748 22,365,449
Accumulated deficit (35,390,010) (31,928,219)
------------ ------------
Total shareholders' equity (2,829,226) (1,442,435)
------------ ------------
$ 17,801,110 $ 17,290,163
============ ============
</TABLE>
<PAGE> 3
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30 JUNE 30
---------------------------------- ----------------------------------
1997 1996 1997 1996
Revenue RESTATED RESTATED
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Other $ 2,546 $ 0 $ 1,210 $ 0
------------- ------------- ------------- -------------
Expenses
Excess of expenses over revenues
from incidental operations 21,390 29,887 15,842 3,372
General, administrative and consulting 2,705,124 1,649,684 694,373 648,776
Interest 737,823 590,383 325,806 292,624
------------- ------------- ------------- -------------
3,464,337 2,269,954 1,036,021 944,772
------------- ------------- ------------- -------------
Net loss ($ 3,461,791) ($ 2,269,954) ($ 1,034,811) ($ 944,772)
============= ============= ============= =============
Net loss per share ($ 0.02) ($ 0.05) ($ 0.01) ($ 0.02)
============= ============= ============= =============
Weighted average number of shares outstanding 181,578,404 51,842,410 197,439,763 62,514,267
============= ============= ============= =============
</TABLE>
See note 6 for explanation of restatement of net losses for the periods
indicated.
<PAGE> 4
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss ($3,461,791) ($2,269,954)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Issuance of common stock for services 1,425,000 2,104,057
Depreciation and amortization 159,000 408,062
Changes in assets and liabilities (805,068) (1,577,752)
----------- -----------
Net Cash Used in Operating Activities (2,682,859) (1,335,587)
----------- -----------
Cash Flows From Investing Activities:
Construction deposits $ 131,205 ($ 165,000)
Other assets (205,121) 0
----------- -----------
Net Cash Used in Investing Activities ($ 73,916) ($ 165,000)
----------- -----------
Cash Flows From Financing Activities:
Proceeds from issuance of notes payable $ 5,313,250 $ 1,472,000
Proceeds from sale of common stock 650,000 74,685
Proceeds from collection of subscription
receivables 0 20,000
Principal repayments on notes payable (3,148,250) (34,385)
----------- -----------
Net Cash Provided by Financing Activities $ 2,815,000 $ 1,532,300
----------- -----------
Net Increase (Decrease) in Cash $ 58,225 $ 31,713
Cash, beginning of period 35,341 223,796
----------- -----------
Cash, end of period $ 93,566 $ 255,509
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 499,572 $ 424,010
=========== ===========
</TABLE>
See note 3 for supplemental disclosure of non-cash investing and financing
activities.
<PAGE> 5
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
NUMBER ADDITIONAL TOTAL
OF COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES STOCK CAPITAL DEFICIT EQUITY
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances January 1, 1997 162,406,691 $ 8,120,335 $ 22,365,449 ($31,928,219) ($ 1,442,435)
Net loss for the six months
ended June 30, 1997 0 0 0 (3,461,791) (3,461,791)
Common stock issued for
services and compensation 6,464,909 323,246 1,101,754 0 1,425,000
Common stock sold 37,449,108 1,872,455 (1,222,455) 0 650,000
------------ ------------ ------------ ------------ ------------
BALANCES, JUNE 30, 1997 206,320,708 $ 10,316,036 $ 22,244,748 ($35,390,010) ($ 2,829,226)
============ ============ ============ ============ ============
</TABLE>
<PAGE> 6
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
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, 1997 and the results of operations and
cash flows for the six months ended June 30, 1997 and 1996, 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, 1997 are not necessarily
indicative of results of operations to be expected for the year ending December
31, 1997. Refer to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996 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 $35,390,010 since
its incorporation. The Company is in default on certain of its secured notes
payable, and thus may 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
obtaining 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.
NOTE 2 - PROPERTY HELD FOR TIMESHARE DEVELOPMENT
During the six months ended June 30, 1997, the Company incurred costs
in the aggregate amount of $205,121, which were paid in cash, relating to its
development of the Lake Tropicana Apartments.
<PAGE> 7
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
NOTE 3 - FINANCING COMMITMENT
The Company has entered into a firm commitment underwriting agreement
with J.E. Liss and Company, Inc. ("Liss") for a private placement of 12% senior
secured notes in the aggregate principal amount of $6,600,000 (with an
additional $3,200,000 in principal amount which may be sold on a best efforts
basis). In addition, the Company has entered into a firm commitment underwriting
with Liss for a private placement of 15% senior secured notes in the aggregate
principal amount of $2,000,000. Proceeds from the private placements will be
used to refinance a portion of the Lake Tropicana debt and for working and
development capital. There can be no assurance that any funds will be raised
from these private placements.
During the six months ended June 30, 1997, the Company issued various
notes aggregating $5,313,250 with interest at 10% per annum. Certain of the
notes are payable on demand; others are payable on various dates in 1997 and
1998. The Company used the proceeds from such notes to fund capital improvements
to the Lake Tropicana Apartments and to provide working capital for operations.
NOTE 4 - STOCKHOLDERS' EQUITY
From time to time, the Board of Directors of the Company has authorized
the issuance of shares of the Company's Common Stock for services rendered by
the Company's consultants. During the six months ended June 30, 1997, the
Company issued an aggregate of 6,464,909 shares of its common stock to
consultants for consideration valued at an average of $0.22 per share, with an
aggregate value of $1,425,000. The fair value was determined by management based
on the closing price of the Company's common stock as quoted on the OTC Bulletin
Board, less a discount for transferability restrictions.
The Financial Accounting Standards Board (the "FASB") 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 standards for the Company required by Statement No. 123 began on
January 1, 1996.
The Company has issued no employee stock options for which the exercise
prices are below market. Accordingly, there would be no compensatory effects
which, on a pro forma basis, would have a material effect on the accompanying
financial statements.
<PAGE> 8
MPTV, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
NOTE 5 - RELATED PARTY TRANSACTIONS
During the six months ended June 30, 1997, 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.
NOTE 6 - RESTATEMENT OF PRIOR PERIODS NET LOSSES
Net loss and net loss per share amounts for the six months and three
months ended June 30, 1996 have been restated. The effect of the restatement
increased the Company's net loss for each period by $1,200,000. Net loss per
share amounts increased from $0.02 to $0.05 for the six months ended June 30,
1996 and from $0.00 to $0.02 for the three months ended June 30, 1996. The
restatement was necessary to correctly reflect the reversal of debt forgiveness
that occurred during 1996 but subsequent to June 30, 1996.
<PAGE> 9
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, 1997 Compared to June 30, 1996
At June 30, 1997, MPTV was in the development stage, with no
significant operating revenues to date. Revenues from the sale of timeshare
units are expected in late 1997. [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
$29,887 during the first six months in 1996 to $21,390 during the first six
months in 1997. During the six months ended June 30, 1997, 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. Other expenses remained consistent through the
year.
The Company's general, administrative and consulting expenses in the
six months ended June 30, 1997 equalled $2,705,124, a substantial increase from
$1,649,684 for the comparable period in 1996. This increase was due to a
significant increase in financing fees (incurred as a result of the Company's
attempts to locate and obtain financing for the development of its Lake
Tropicana Resort), commissions and marketing expenditures. Marketing and sales
expenses are expected to remain at this level for the remainder of 1997 as the
Company prepares to launch timeshare sales (FLS).
MPTV also incurred interest expense of $737,823 in the first half of
1997 as compared to $590,383 in the first half of 1996. The increase is
primarily due to the significant amount of notes payable issued throughout 1996.
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; however, development resumed
in the second quarter of 1997. In addition, the Company commenced taking
reservations for sales of timeshare units at Lake Tropicana on July 18, 1997,
and began sales of timeshare interests at Rancho Mirage Vacations on August 9,
1997.
Due to the above factors, the Company had a net loss of $3,461,791 for
the six months ended June 30, 1997, as compared to a net loss of $2,269,954 for
the six months ended June 30, 1996. Net loss per share was $0.02 for the six
months ended June 30, 1997 compared to $0.05 for the six months ended June 30,
1996, due primarily to a significant increase in the weighted average number of
shares outstanding.
<PAGE> 10
Liquidity and Capital Resources
The Company's consolidated financial statements at June 30, 1997 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 asset 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 partial renovation of the first 16 timeshare units and the
construction of a sales facility. Due to liquidity and other financial concerns,
phase one of the renovation was delayed but resumed in the second quarter of
1997. Management currently anticipates completion of this phase in September
1997, subject to obtaining the required financing (see below) (FLS). After
completing phase one of the renovation, the Company plans to commence phases two
and three, which will include the renovation of approximately one-half of the
176 timeshare units. Architects retained by the Company have prepared plans for
the purpose of soliciting fixed bids for remaining phases of the renovations.
The Company commenced taking reservations for sales of timeshare units at Lake
Tropicana on July 18, 1997. MPTV also began sales of timeshare interests at
Rancho Mirage Vacations on August 9, 1997.
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 incurrence of debt (see below). The Company has
deposited these funds with an escrow holder, to be held in trust for the
development of the Lake Tropicana
<PAGE> 11
project. The Company has refinanced the original notes secured by first and
second deeds of trust on the project (see below), which financing provides
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, in the event that the Company determined that additional funds
were required for the development of Lake Tropicana, there can be no assurance
that such financing would be available on terms acceptable to the Company, if at
all. In the event that the Company does not receive such additional 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 completed the process of complying with applicable regulations to
sell interval units in Lake Tropicana in Nevada, except for the posting of bonds
to activate the public permit, and has received approval to take reservations
for such sales.
In December 1996, MPTV consummated a refinancing transaction with
Kennedy Financial, Inc. in the amount of $7,600,000. In addition to refinancing
certain notes secured by deeds of trust on Lake Tropicana, this transaction
provided approximately $680,000 for the development of the Lake Tropicana
resort, of which $144,046 remained in escrow as of August 14, 1997. In May
1997, the Company obtained a loan in the amount of $5,000,000 from an
individual unaffiliated with the Company, of which $1,200,000 was to be used
for construction and marketing at Lake Tropicana. Of this amount, $471,674
remained in escrow at August 14, 1997.
The Company has entered into a firm commitment underwriting agreement
with J.E. Liss and Co., Inc. ("Liss") 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). In addition, the Company has entered into a firm commitment underwriting
with Liss for a private placement of 15% senior secured notes in the aggregate
principal amount of $2,000,000. Proceeds from the private placements will be
used to refinance a portion of the Lake Tropicana debt and for working and
development capital (FLS). There can be no assurance that any funds will be
raised from these private placements.
Shares of the Company's freely tradable Common Stock may 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 registration statement to register these shares. There can be no
assurances that the filing of this registration statement 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.
Subsequent to March 31, 1997, 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
200,000,000 shares currently authorized in its Articles of Incorporation. The
Company's Board of Directors has approved an increase in the number of
authorized shares to 500,000,000, and is requesting approval from its
stockholders for such increase.
<PAGE> 12
During the six months ended June 30, 1997, the Company had a positive
net cash flow of $58,225. This positive net cash flow was comprised of positive
cash flow of $2,815,000 from financing activities offset by negative cash flows
of $73,916 from investing activities and $2,682,859 from operating activities.
Such financing activities consisted primarily of proceeds from the issuance of
notes payable and stock.
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.
MPTV has suffered recurring losses from operations and shows a need for
additional funding, which raises substantial concerns about its ability to
continue as a going concern. The Company has incurred cumulative net losses of
$35,390,010 since its inception, and is also in default on certain of its
secured and unsecured notes payable. In the event that the Company cannot
refinance or renegotiate these notes, it may be subject to collection actions
and foreclosure proceedings on its property currently being held for timeshare
development. MPTV requires capital to conduct its timeshare unit development and
marketing activities, and for operating expenses, interest and note obligations.
The Company's ability to continue as a going concern is dependent upon its
ability to obtain outside financing through the issuance of either equity or
debt securities and, ultimately, upon future development of profitability
through sales of timeshare units at Lake Tropicana. While the Company is
currently attempting to raise funds through private placements of debt
securities, there can be no assurance that such private placements will be
successfully consummated or, if so, that they will meet all future capital
requirements of the Company. If additional funds are required, the Company may
offer additional or other securities for sale or attempt to secure financing
from banks or other financial institutions. If significant indebtedness is then
outstanding, the Company's ability to obtain additional financing will be
adversely affected. If and to the extent the Company incurs additional
indebtedness, debt service requirements will have a negative effect on earnings.
Further, if the Company is unable to service its indebtedness and to renew or
refinance such obligations on a continuing basis, its ability to operate
profitably will be materially threatened. No assurance can be given that the
Company will be able to obtain additional funds from any source on satisfactory
terms, if at all.
The availability of equity and debt financing to the Company is also
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
<PAGE> 13
that the Company will be able to obtain financing on acceptable terms, if at
all.
Shares of the Company's freely tradeable Common Stock may 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 position and liquidity. Management intends to
prepare and file the necessary registration statement to register these shares.
There can be no assurances that the filing of this registration statement 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.
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.
Subsequent to March 31, 1997, 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 200,000,000
shares currently authorized in its Articles of Incorporation. The Company's
Board of Directors has approved an increase in the number of authorized shares
to 500,000,000, and is requesting approval from its stockholders for such
increase.
Effective July 18, 1996, The NASDAQ Stock Market, Inc. ("NASDAQ")
delisted the Company's Common Stock from the NASDAQ Small Cap Market Exchange
for failure to meet certain continuing listing requirements. The Company has
requested that the NASDAQ Listing and Review Committee review this decision, but
the request will not operate as a stay to the deletion of the Common Stock. In
the meantime, the Common Stock is listed and traded on the OTC Bulletin Board.
There can be no assurance as to the outcome of the pending review.
As a result of such delisting, an investor could find it more difficult
to dispose of, or to obtain accurate quotations as to the market value of, the
Common Stock. In addition, subsequent to such delisting, trading in the Common
Stock is also subject to the requirements
<PAGE> 14
of Rule 15c2-6 and/or Rule 15g-9 promulgated under the Exchange Act. Under such
Rules, broker/dealers who recommend such low-priced securities to persons other
than established customers and accredited investors must satisfy special sales
practice requirements, including a requirement that they make an individualized
written suitability determination for the purchase and receive the purchaser's
written consent prior to the transaction. The Securities Enforcement Remedies
and Penny Stock Reform Act of 1990 also requires additional disclosure in
connection with any trades involving a stock defined as a "penny stock"
(generally, according to recent regulations adopted by the Securities and
Exchange Commission, any non-NASDAQ equity security that has a market price of
less than $5.00 per share, subject to certain exemptions), including the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith. Such
requirements could severely limit the market liquidity of the Common Stock and
the ability of purchasers of the Company's Common Stock to sell their securities
in the open market.
<PAGE> 15
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Effective March 1, 1996, Albert C. Gannaway, Jr., the founder and
former officer, director and principal stockholder of the Company, and Gannaway
Productions, Ltd. (collectively, "Gannaway"), the Company and Messrs. Rasmussen
(the Company's former Chairman, Chief Executive Officer and a Director) and
Vellema entered into a settlement agreement (the "Settlement Agreement") to
resolve certain litigation commenced by Gannaway in 1994. 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.
The Company is currently in default with respect to the May, June, July and
August payments. 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. Pursuant to
the Settlement Agreement, MPTV transferred its video production assets in
Florida and the Club Carib weeks to Gannaway, and the litigation was
conditionally dismissed with prejudice (provided that the court retains
jurisdiction to enter final judgment upon default). Mutual general releases were
exchanged by all parties with respect to all claims and counterclaims. For
additional information, please see the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996.
ITEM 2. CHANGES IN SECURITIES.
During the six months ended June 30, 1997, the Company issued an
aggregate of 6,464,909 shares of common stock to certain consultants, in
consideration for services rendered. Such issuances were deemed to be exempt
from registration under the Securities Act of 1933, as amended, in reliance
upon Section 4(6) of the Act as transactions by an issuer with accredited
investors. The recipients of securities in each such transaction represented
their status as accredited investors, and that they intended to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof. All recipients had adequate access to
information about the Company.
<PAGE> 16
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: August 19, 1997 REGISTRANT:
MPTV, Inc.
By: /s/ JAMES C. VELLEMA
------------------------------------
James C. Vellema
Chairman
(Principal Financial and Accounting
Officer)
Date: August 19, 1997 By: /s/ HURLEY C. REED
------------------------------------
Hurley C. Reed
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 93,566
<SECURITIES> 0
<RECEIVABLES> 446,609
<ALLOWANCES> 0
<INVENTORY> 16,150,410<F1>
<CURRENT-ASSETS> 0
<PP&E> 36,596
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,801,110
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 10,316,036
<OTHER-SE> 22,244,748
<TOTAL-LIABILITY-AND-EQUITY> 17,801,110
<SALES> 0
<TOTAL-REVENUES> 2,546
<CGS> 0
<TOTAL-COSTS> 21,390
<OTHER-EXPENSES> 2,705,124
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 737,823
<INCOME-PRETAX> (3,461,791)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,461,791)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,461,791)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
<FN>
<F1>Represents property held for timeshare development.
</FN>
</TABLE>
