<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 March 31, 2000
[ ] 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.)
366 San Miguel Dr.
Suite #210
Newport Beach, California 92660
(Address of Principal Executive Offices)
(949) 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 month (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 April 30, 2000, 949,888,889 shares of Common Stock, $0.01 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
MARCH 31, 2000 AND DECEMBER 31, 1999
(unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 2000 1999
----------- -----------
<S> <C> <C>
Cash $ 28,052 $ 9,672
Property and equipment 17,383 20,383
Investment in Lake Trop, LLC 2,450,702 2,109,400
----------- -----------
$ 2,496,137 $ 2,139,455
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Notes payable $ 7,196,824 $ 7,146,824
Accounts payable and accrued expenses 595,305 620,889
Accrued interest 2,456,895 2,277,599
Other accrued liabilities 982,000 982,000
Due to related parties 773,973 315,671
----------- -----------
Total Liabilities $12,004,997 $11,342,983
----------- -----------
Commitments and Contingencies (see notes)
Common stock - 2000 and 1999 respectively,
$.01 par value,
1,900,000,000 and 950,000,000 shares
authorized,
949,888,889 and 932,801,558 shares
issued $ 9,498,889 $ 9,328,016
Additional paid-in capital 27,956,565 27,982,438
Accumulated deficit (46,964,314) (46,513,982)
----------- -----------
Total Shareholders' equity $(9,508,860) $(9,335,053)
----------- -----------
Total Liabilities and Shareholders' Deficit $ 2,496,137 $ 2,139,455
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
1
<PAGE> 3
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
<S> <C> <C>
2000 1999
------------ ------------
Revenue $ 0 $ 0
------------ ------------
Expenses:
General, administrative and consulting $ 271,036 $ 249,049
Interest 179,296 184,420
------------ ------------
Total Expenses $ 450,332 $ 433,469
------------ ------------
Net loss $ (450,332) $ (433,469)
============ ============
Net loss per share $ (0.01) $ (0.01)
============ ============
Weighted average number of shares
outstanding 948,888,889 496,736,807
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 4
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (450,332) $ (433,469)
Adjustments to reconcile net loss to net
income:
cash provided by operating activities:
Issuance of common stock for services 10,000 0
Issuance of common stock for debt 0 90,000
Depreciation and amortization 3,000 3,000
Changes in assets and liabilities 612,014 151,324
------------ ------------
Net Cash Provided/(Used)
in Operating Activities $ 174,682 $ (189,145)
------------ ------------
Cash Flows From Investing Activities:
Investment in Lake Trop, LLC $ (341,302) $ 0
------------ ------------
Net Cash Used in Investing Activities $ (341,302) $ 0
------------ ------------
Cash Flows From Financing Activities:
Proceeds from issuance of notes payable $ 60,000 $ 55,500
Proceeds from sale of common stock 135,000 100,000
Principal repayments on notes payable (10,000) 0
------------ ------------
Net Cash Provided by Financing Activities $ 185,000 $ 155,500
------------ ------------
Net Increase (Decrease) in Cash $ 18,380 $ (33,645)
Cash, beginning of period 9,146 42,791
------------ ------------
Cash, end of period $ 28,052 $ 9,146
============ ============
Supplemental Disclosure of Cash Flow
Information:
Cash paid for:
Interest $ 0 $ 0
Income Taxes $ 0 $ 0
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(unaudited)
<TABLE>
<CAPTION>
Number Additional Total
of Common Paid-In Accumulated Stockholders'
Shares Stock Capital Deficit Deficit
----------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balances,
January 1, 2000 932,801,558 $ 9,328,016 $27,982,438 $(46,513,982) $(9,203,528)
Net loss for
the three months
ended March 31, 2000 0 0 0 (450,332) (450,332)
Common Stock issued
for services 3,087,331 30,873 (20,873) 0 10,000
Conversion of
Warrants 14,000,000 140,000 (5,000) 0 135,000
----------- ----------- ----------- ------------- ------------
Balances,
March 31, 2000 949,888,889 $ 9,498,889 $27,956,565 $(46,964,314) $(9,508,860)
=========== =========== =========== ============= ============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 6
MPTV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of MPTV, Inc.,
Continentsl Resort Services, Inc. and Consolidated Resort Enterprises, Inc.
(collectively referred to as "MPTV" or as "The Company"). All material
intercompany balances have been eliminated. Certain limited reclassification
and format changes have been made to prior year's amounts to conform to the
current year presentation.
The consolidated financial statements are presented in accordance with
generally accepted accounting principals which require management to make
estimates regarding asset valuations and their realization, the outcome of
litigation and other matters that affect the reported amounts and disclosure of
contingencies in the financial statements. Estimates, by their nature, are
based on judgement and available information. As such, actual results could
differ materially from those estimates.
The consolidated financial statements of MPTV have been prepared assuming
that MPTV 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. MPTV has incurred cumulative net losses of
$46,964,314 since its inception in October 1992. MPTV is in default on
certain of its secured and unsecured notes payable. In the event that MPTV can
not refinance or renegotiate the notes, it may be subject to foreclosure
proceedings on its property currently being held for timeshare development.
The company requires capital for its contemplated timeshare development and
marketing activities to take place. MPTV also requires capital for operating
expenses and interest and note obligations. In addition MPTV has at certain
times, issued shares of its common stock without proper registration under
Federal and state securities laws. 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 the obtainment of additional
financing, the successful development of the company's contemplated 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. The ability to successfully resolve these
factors raise substantial doubt about the company's ability to continue as a
going concern.
The consolidated financial statements of MPTV do not include any adjustments
that may result from the outcome of these aforementioned uncertainties.
5
<PAGE> 7
MPTV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Pro Forma Compensation Expense:
MPTV accounts for costs of stock-based compensation in accordance with APB
No. 25 Accounting for Stock Issued to Employees rather than the fair value
based method in SFAS No. 123 Accounting for Stock Based Compensation.
Improper Issuances of Common Stock:
Shares of freely tradable common stock have been issued without proper
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. Accordingly, no provision for any
rescission offer that may occur has been reflected in the accompanying
consolidated financial statements. Management of MPTV intends to eventually
file the necessary registration statements to register these shares. There
can be no assurances that the filings of these registration statements will
provide an adequate remedy.
Property and Equipment:
Property and equipment are being depreciated on a straight-line basis over
five to seven years. Expenditures for maintenance and repairs are charged
to operations, as incurred, while betterments are capitalized.
Revenue Recognition:
The Company plans to recognize revenues from sales of timeshare units upon
the execution of a contract and receipt of a down payment of at least 10%,
and when proceeds are assured and all conditions precedent to closing have
been performed by the parties. Costs applicable to sales will be allocated
based on relative sales value.
Incidental rental revenues will be recognized as earned.
6
<PAGE> 8
MPTV, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Income Taxes:
The Company accounts for its income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" Under
Statement 109, a liability method is used whereby deferred tax assets and
liabilities are determined based on temporary differences between bases
used for financial reporting and income tax reporting purposes. Income
taxes are provided based on tax rates in effect at the time such temporary
differences are expected to reverse. A valuation allowance is provided for
certain deferred tax assets if it is more likely than not, that the Company
will not realize the tax assets through future operations.
Fair Value of Financial Instruments:
Financial Accounting Standards Statement No. 107, "Disclosures About Fair
Value of Financial Instruments," requires the Company to disclose, when
reasonably attainable, the fair values of its assets and liabilities which
are deemed to be financial instruments. The Company's financial instruments
consist primarily of its secured and unsecured notes payable and certain
investments. Management has determined that it is not practicable to estimate
fair value of its secured and unsecured notes payable because of the complexity
of the debt arrangements and the lack of an active market with which to obtain
reasonable comparables for the terms and interest rates of such debt.
Per Share Information:
The Company computes per share information by dividing the net loss for the
period presented by the weighted average shares outstanding during such
period. The effect of common stock equivalents would be antidilutive for all
periods and is not included in the net loss per share calculations.
Recently Issued Accounting Pronouncements:
Recently issued accounting pronouncements will have no significant impact on
the Company and its reporting methods.
7
<PAGE> 9
MPTV, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 2 - PROPERTY HELD FOR TIMESHARE DEVELOPMENT
In November, 1997, the First Trust Deed Holder of the Lake Tropicana
property, the company's primary asset, forced the property into
receivership as a result of late payments by MPTV. This foreclosure
is reflected in the financial statements as of a write-off of the
property. The company has ceased rental operations and development
of timeshare units for sale. The property, its improvements, and all
related debt were written off in 1998 and are reflected as such in these
financial statements.
In June, 1999, the Company entered into an agreement with All Star Resorts,
Inc. (a Nevada Corporation) in a joint venture to form Lake Trop, LLC, a Nevada
Limited Liability Company. The purpose of Lake Trop, LLC is to release the
Lake Tropicana property from receivership, reduce debt, and renovate and
develop the Lake Tropicana property in Las Vegas. MPTV, Inc. and its
subsidiaries issued 220,000,000 shares of stock with an aggregate value of
$2,000,000 as its initial investment in Lake Trop.
Note 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at March 31, 2000 and
December 31, 1999:
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Property and equipment $ 113,635 $ 113,635
Less accumulated depreciation (96,252) (93,252)
--------- ---------
Net Property and equipment $ 17,383 $ 20,383
========= =========
</TABLE>
Note 4 - NOTES PAYABLE - STOCKHOLDERS
Notes payable to stockholders' at March 31, 2000 consists of numerous
unsecured loans that accrue annual interest at rates that vary between
8% and 12% per annum. These notes mature monthly throughout 2000 and 2001, and
are in a continual state of extension and renegotiation.
Note 5 - ACCRUED INTEREST
Accrued interest consists of interest owing on notes payable as of
March 31, 2000 and December 31, 1999.
8
<PAGE> 10
MPTV, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 6 - RELATED PARTY TRANSACTIONS
A summary of related party transactions at March 31, 2000 and
December 31, 1999 is as follows:
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Due From:
Advances receivable officer/shareholder,
unsecured, accruing no interest, due
upon demand $ 0 $ 225,000
Advances related entities, accruing no
interest, due upon demand 0 17,423
--------- ---------
Subtotal $ 0 $ 242,423
Less amounts written off 0 (242,423)
--------- ---------
Total due from related parties $ 0 $ 0
========= =========
Due to:
Note payable related entities,
unsecured, payable upon demand $ 773,973 $ 315,671
========= =========
</TABLE>
Note 7 - STOCKHOLDERS' EQUITY/DEFICIT
Common Stock
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, 2000, the Company issued
3,087,331 shares of stock, at a value of $10,000, for services rendered by
the Company's consultants. The Company issued 14,000,000 shares, at a value
of $135,000, to shareholders exercising warrants during the period.
In August, 1999, the Company's board of directors elected to reduce the par
value of the Company's common stock to $0.01, and to increase authorized shares
to 950,000,000. This was done to more accurately reflect the Company's equity
position after several years of issuing stock below par, and to provide for
the future raising of capital through issuance of common stock.
On March 30, 2000, the Company's board of directors increased the number of
authorized shares to 1,900,000,000, in order to provide for the future raising
of capital through issuance of stock.
Stock Options and Warrants
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.
9
<PAGE> 11
MPTV, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 8 - PROVISION FOR INCOME TAXES
The provision for income taxes represents the minimum state income tax
expense of the Company, which is not considered significant.
A reconciliation of estimated federal income taxes to the provision for
income taxes as of March 31, 2000 and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Federal Benefit $ 15,432,474 $ 15,364,924
State benefit, net 0 0
Less change in valuation account
for realization of benefit (15,432,474) (15,364,924)
------------ ------------
Total provision for
income taxes $ 0 $ 0
============ ============
</TABLE>
Because of the "change in ownership" provisions of the Tax Reform Act of
1986, the utilization of the Company's net operating loss carry forwards
prior to the merger on December 20, 1993 are subject to annual limitation
of approximately $2,000,000. In addition, the Company experienced a
substantial change in ownership due to issuances of its common stock.
As a result, the Company will experience an additional limitation of its
annual utilization of net operating losses. Net operating loss carry
forwards for Federal and state tax reporting purposes are approximately
$46,000,000.
Note 9 - COMMITMENTS AND CONTINGENCIES
Operating Leases:
The company has sublet administrative office space on a year-to-year basis
beginning April 1, 1999, and expiring April 1, 2001. Monthly rent under
this lease is $2,405. This lease requires no other payments.
10
<PAGE> 12
MPTV, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 9 - COMMITMENTS AND CONTINGENCIES - CONTINUED
Litigation:
In 1999, and in prior years, the company has been the defendant in certain
lawsuits. In 1995, the founder and former officer, director and principal
(the "Plaintiff")of MPTV filed a Complaint against the Company to enforce a
settlement. In exchange MPTV issued 328,800 shares of its common stock,
subject to certain registration rights. The Company had not registered such
shares. In February 1996, the Company settled, with the Plaintiff agreeing
to pay $600,000 in damages. The Company recorded a provision for loss
totaling $256,000 relating to this settlement in the 1995 consolidated
statement of operations. The Company has reflected the entire $600,000
settlement obligation in other accrued liabilities on the consolidated balance
sheet at March 31, 2000 and December 31, 1999 and 1998. This obligation
has not been paid.
In March 1996, the Company received an unfavorable judgment in litigation
with a former consultant related to a compensation dispute. The judgment
provides for the Company to pay the former consultant approximately $282,000.
The Company filed a motion for a rehearing and received an Order from the
Court denying said motion. Management has recorded a provision for loss
totaling $112,000 relating to this settlement in the 1995 consolidated
statement of operations. The Company has reflected the entire $282,000
settlement obligation in other accrued liabilities and accrued expenses on
the consolidated balance sheet at March 31, 2000 and December 31, 1999.
Additional pending lawsuit amounts totaling approximately $100,000 are
included in accrued liabilities at March 31, 2000.
Management feels that other pending lawsuits are without merit and therefore
no reserves for their possible outcomes have been established.
Consulting Agreements:
The company has entered into a variety of consulting agreements which have
terms for up to a year, certain of which are renewable. The agreements
provide for the delivery of assorted services relating to the reacquisition
and financing of the Lake Tropicana timeshare project as well as other
management issues. Certain of the agreements require the monthly payment
of consulting fees in the form of cash or stock.
11
<PAGE> 13
MPTV, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 10 - SUBSEQUENT EVENTS
Year 2000 Compliance:
The Company completed its Year 2000 remediation plan by the end of 1999, and
has not experienced any significant disruptions to its financial or operating
activities caused by failure of its computerized systems resulting from Year
2000 issues. Furthermore, the Company has no information that indicates a
significant vendor or service provider has experienced any significant
disruptions to their financial or operating activities such that they would
have a material adverse effect on the operations of MPTV, Inc.
12
<PAGE> 14
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, 2000 Compared to March 31, 1999
At March 31, 2000, MPTV was in the development stage, with no significant
operating revenues to date. Revenues from the sale of timeshare units are
expected in late 2000. [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 was $ 0 during the
first three months in 2000 and $ 0 during the first three months in 1998.
Previously, the Company derived its incidental revenue from the activities
of Consolidated Resort Enterprises, Inc., which consisted primarily of the
operation of the Lake Tropicana Apartments. In November, 1997 the First
Trust Deed holder took the Lake Tropicana property into receivership. No
revenues or expenses were recorded for Lake Tropicana rental activities
in 1999 or 2000.
The Company's general, administrative and consulting expenses in the three
months ended March 31, 2000 equalled $271,036, substantially the same as
$249,049 for the comparable period in 1999. These amounts represent a
substantial decrease from previous years, due to a significant decrease
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, and reductions in payroll
and other administrative expenses.
MPTV also incurred interest expense of $179,296 in the first quarter of 2000 as
compared to $184,420 in the first quarter of 1999. 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. As Lake Tropicana went into receivership,
interest payments related to the mortgages on the property ceased. The 1999
and 2000 interest consisted primarily of interest related to notes payable.
During the three months ended March 31, 2000, the Company had a positive net
cash flow of $18,380. This net positive cash flow was comprised of positive
cash flows of $185,000 from financing activities and a positive cash flow of
$174,682 from operating activities, offset by negative cash flows of $189,145
from investing activities. A substantial portion of financing activities
consisted of the issuance of stock. A substantial portion of the investing
activities consist of the investment in the Lake Trop project.
<PAGE> 15
Liquidity and Capital Resources
The Company's consolidated financial statements at March 31, 2000 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.
appeal to family-oriented visitors to Las Vegas. Phase one entails the
transformation of 40 existing units into deluxe two-bedroom suites with
fireplaces, marble baths and kitchens, upgraded plumbing, air conditioning, and
deluxe furniture, fixtures, and appliances The exteriors will have new roofs,
the railing will be replaced with stucco walls, and new patio doors and windows
will be installed. This renovation will require approximately three months to
complete. In addition, plans are to construct a decorative block and stucco
wall around the property, extensive landscaping in the front, and a new sign
at the entrance. All of these features will be brightly illuminated to draw
attention to the project at night. A guardhouse is also planned for the
entrance to the project. All of the exteriors of the buildings will be
repainted, the landscaping will be upgraded throughout the project, and the
waterfall and lagoon will be repaired. In addition to the planned renovation
of the forty existing units, fifty units will be painted, refurnished, and
refurbished, to be used for mini-vacations for vacation ownership prospects.
At the same time, revised permits will be applied for, in California and
Nevada, to sell vacation ownership intervals, and the Company will commence
sales upon approval. Phases two and three entail tearing down all of the
structures on the property with the exception of the 40 remodeled units, and
constructing a high-rise in two phases that will contain 310 units. The design
for these units allows for seventy-two one-bedroom units and
two hundred-thirty-eight two-bedroom units to maximize flexibility. Each
two-bedroom unit (1,350 sq. ft.) includes three bathrooms, a kitchen, and a
kitchenette. This unit is designed so that it can be locked off, creating a
deluxe one-bedroom with a full kitchen and deluxe bath, and a standard
one-bedroom with a kitchenette, one bath, livingroom, and master bedroom.
This plan allows for the sale of all units as two-bedrooms, or all units as
two one-bedroom suites. Based on statistics of types of units purchased by
vacation ownership buyers, the most likely mix of units will be 238
two-bedroom units and 72 one-bedroom deluxe units. Phase two includes an
attractive lobby area, and a 16,000 square foot sales office on the top floor
of the high-rise building. The sales office will remain on the property after
initial sales are completed, so that brokers can resell vacation ownership
intervals for the owners who wish to sell their property. The broker will
charge a commission for this service, much like any real estate transaction.
They also will be available to resell any intervals that come back to the
developer due to the default of the note. Also planned in this phase is the
construction of a new pool with a waterfall, and a tennis court.
<PAGE> 16
On a designated parcel contained within the project, a free-standing 56,000
square foot health club and spa facility will be constructed that will offer a
full weight room (personal training available), cardiovascular machines, cardio
theatre, spinning, aerobics, a pro shop, a childcare center, a video arcade,
and a restaurant. The restaurant will provide breakfast, lunch, dinner, and
room service. The restaurant will feature a standard menu along with a healthy
eating menu, designed by the on-site nutritionists, natural healing M.D., and
the restaurant chef. Also included in this 30,000 square foot facility are
deluxe locker rooms, a sauna, steam room, whirlpools, and a cold plunge. The
spa facility will be equal to those found in major metropolitan areas today
referred to as day spas. They will include herbal wraps, skin care, hair care,
massage therapy, body hair waxing, hair styling, manicures, and pedicures.
The facility will also include a natural healing center, which will be
supervised by a natural healing medical doctor. Treatments will include a
blood analysis, weight and bodyfat analysis, and medical history examinations.
The healing center will provide a recommended program of appropriate dietary
supplementation and a healthy eating plan to treat symptoms with all-natural
products. There will also be an on-site licensed nutritionist to design custom
individual programs. The use of this facility is included in each vacation
ownership annual assessment. Personalized services, food, beverages, pro shop
purchases, spa purchase, and natural healing products will all be available at
a special discount for vacation owners.
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 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.
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.
<PAGE> 17
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 $46,964,314 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. 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 a private
placement of debt securities, there can be no assurance that such private
placement will be successfully consummated or, if so, that it 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
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 that the Company will be able to obtain financing
on acceptable terms, if at all.
<PAGE> 18
Trading in the Company's Common Stock is subject to the requirements 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.
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> 19
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, Chief Executive Officer and a 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 entered into a settlement agreement effective March 1, 1996 (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. 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 was to be due and payable on or before August 1, 1999. The
Settlement Agreement also provides that MPTV will transfer its video
productions assets in Florida and the Club Carib weeks to Gannaway, and the
litigation will be conditionally dismissed with prejudice (provided that the
court retains jurisdiction to enter final judgment upon default). Mutual
general releases will be exchanges by all parties with respect to all claims
and counterclaims.
In November, 1997, the First Trust Deed holder of the Lake Tropicana property
forced the property into receivership as a result of late payments by the
Company. This was reflected in the 1998 financial statements as a write-off
of the property, as the Company ceased the rental operations and development of
timeshare units for sale in early 1998. Subsequently, the Company entered into
an agreement with All Star Resorts, Inc. to form a joint venture in
Lake Trop, LLC, in order to release the property from receivership, and to
develop the property for timeshare sales.
<PAGE> 20
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 15, 2000 REGISTRANT:
MPTV, Inc.
By: /s/ HURLEY C. REED
Hurley C. Reed
Chairman
(Principal Financial and Accounting
Officer)
