<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 September 30, 1999
[ ] 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 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 November 30, 1999, 931,912,669 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
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1999 1998
<S> <C> <C>
Property held for timeshare development $ 0 $ 0
Cash 69,121 42,791
Other Receivable 506,609 461,609
Other assets 593,334 593,334
Property and equipment 23,383 27,627
Investment in Lake Trop, LLC 1,839,400 0
$ 3,031,847 $ 1,125,361
LIABILITIES AND SHAREHOLDERS' EQUITY
All inclusive trust deed note payable $ 0 $ 0
Accounts payable and accrued expenses 628,424 766,202
Notes payable 7,566,824 7,349,082
Accrued interest 2,143,348 1,581,684
Other accrued liabilities 684,475 654,475
Due to related parties 553,971 78,971
11,577,042 10,460,414
Common stock - par value $.01 per share;
authorized 950,000,000; issued 777,900,000 7,779,000 19,260,521
Additional paid-in capital 28,426,784 14,375,263
Accumulated deficit (44,750,979) (42,970,837)
Total Shareholders' equity (8,545,195) (9,335,053)
$ 3,031,847 $ 1,125,361
</TABLE>
<PAGE> 3
MPTV, Inc. and SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1999 1998 1999 1998
Revenue
<S> <C> <C> <C> <C>
Other $ 474 $ 0 $ 121 $ 0
Expenses
Excess of expenses over revenues
from incidental operations 0 0 0 0
General, administrative and consulting 1,067,952 1,053,023 335,010 95,913
Interest 712,664 601,998 340,983 259,968
Provisions for write-off 0 2,725,589 0 0
Total 1,780,616 4,380,610 675,993 355,881
Net loss $(1,780,142) $(4,380,610) $ (675,872) $ (355,881)
Net loss per share ($0.01) ($0.02) ($0.01) ($0.01)
Weighted average number of 617,790,047 241,120,453 768,566,667 275,519,945
shares outstanding
</TABLE>
<PAGE> 4
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss (1,780,142) (4,380,610)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Issuance of common stock for services 345,000 0
Issuance of common stock for debt 320,000 0
Depreciation and amortization 9,000 9,000
Changes in assets and liabilities 953,886 658,482
Net Cash Used in Operating Activities (152,256) (3,713,128)
Cash Flows From Investing Activities:
Investment in Lake Trop (839,400) 0
Equipment Purchase (4,756) 0
Write-off of timeshare property 0 16,218,585
Net Cash Used in Investing Activities (844,156) 16,218,585
Cash Flows From Financing Activities:
Proceeds from issuance of notes payable 269,000 1,000,500
Proceeds from sale of common stock 905,000 580,000
Principal repayments on notes payable (151,258) (570,000)
Write-off of Trust Deed notes payable 0 (13,492,996)
Net Cash Provided by Financing Activities 1,022,742 (12,482,496)
Net Increase (Decrease) in Cash 26,330 22,961
Cash, beginning of period 42,791 19,303
Cash, end of period 69,121 42,264
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 0 $ 0
<FN>
See note 3 for supplemental disclosure of non-cash investing and financing activities.
</TABLE>
<PAGE> 5
MPTV, Inc. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(unaudited)
<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, 1999 383,210,422 $19,260,521 $14,375,263 $(42,970,837) $(9,335,053)
Net loss for the nine months
ended September 30, 1999 0 0 0 (1,780,142) (1,780,142)
Common stock issued
for services 37,900,000 1,895,000 (1,550,000) 0 345,000
Common stock issued for debt 125,789,578 6,289,479 (5,969,479) 0 320,000
Conversion of warrants 61,000,000 3,050,000 (2,895,000) 0 155,000
Investment in Lake Trop, LLC 170,000,000 8,500,000 (6,750,000) 0 1,750,000
Reorganization 0 (31,216,000) 31,216,000 0 0
Balances, September 30, 1999 777,900,000 $ 7,779,000 $28,426,784 $(44,750,979) $(8,545,195)
</TABLE>
<PAGE> 6
MPTV, Inc. and SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 1999 and 1998
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 September 30, 1999 and the
results of operations and cash flows for the nine months ended September 30,
1999 and 1998, 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 nine
months September 30, 1999 are not necessarily indicative of results of
operations to be expected for the year ending December 31, 1999. Refer to
the Company's Annual Report on Form 10- KSB for the year ended December 31,
1998 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
$44,750,979. The Company is in default on certain of its secured notes
payable. 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 Joint Venture, 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
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 rental operations and
development of timeshare units for sale in early 1998. The property, its
improvements, and all related debt were written off in 1998, and are reflected
as such in these financial statements, Should the Company obtain new
financing in order to reacquire the property, these write-offs will be
reversed.
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 construct and
develop the Lake Tropicana property in Las Vegas. MPTV, Inc. and its
subsidiaries issued 170,000,000 shares of stock with an aggregate value
of $1,750,000 as its initial investment in Lake Trop, and provided an
additional $500,000 cash investment.
<PAGE> 7
MPTV, Inc. and SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 1999 and 1998
Note 3 - Financing Commitment
During the nine months ended September 30, 1999, the Company issued various
notes aggregating $269,000 with interest at 10% per annum, and due on demand
and on various dates in 1999 and 2000. The Company used such notes to provide
working capital for operations.
Note 4 - Stockholders' Equity
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 nine months ended September 30, 1999 the Company
issued 125,789,578 shares for liabilities valued at an average of $0.025 per
share, with an aggregate value of $320,000. The fair value was determined by
management based on the closing price of the Company's common stock as quoted
by OTB, less a discount for transferability restrictions. Warrants were
exercised by lenders during the nine months ended September 30, 1999, totalling
61,000,000 shares at an aggregate value of $155,000 ($0.0025 per share).
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123 (Accounting for Stock Based Compensation)
("Statement No. 123"). Statement No. 123 is primarily a disclosure standard
for the Company because the Company will continue to account for employee
stock options under Accounting Principles Board Opinion No. 25. The
disclosure requirements for the Company required by Statement No. 123 began
January 1, 1996.
The Company has no employee stock options in which the exercise prices are
below market and, accordingly, there would be no compensatory effects which,
on a proforma basis, would have a material effect on the accompanying
financial statements.
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.
Note 5 - Related Party Transactions
During the nine months ended September 30, 1999 the Company paid an officer
$238,000 as an advance on commission for future timeshare sales. Another
officer was paid a salary of $120,000. These payments were made pursuant to
the terms of the respective officer's Employment Agreement.
<PAGE> 8
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
Nine Months Ended September 30, 1999 Compared to September 30, 1998
At September 30, 1999, MPTV was in the development stage, with no significant
operating revenues to date. Revenues from the sale of timeshare units by
Lake Trop, LLC are expected in early 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"].
Expenses in excess of revenues of incidental operations was $ 0 during the
first six months in 1999 and $ 0 during the first six 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
1998.
The Company's general, administrative and consulting expenses in the nine
months ended September 30, 1999 equalled $1,067,952, not a substantial change
from $1,053,023 for the comparable period in 1998.
MPTV also incurred interest expense of $712,664 in the first nine months of
1999 as compared to $601,998 in the first nine months of 1998. 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 1998 and 1999 interest consisted primarily of interest
related to notes payable.
During the nine months ended September 30, 1999, the Company had a positive net
cash flow of $26,330. This net positive cash flow was comprised of positive
cash flow of $1,022,742 from financing activities offset by negative cash
flows of $152,256 from operating activities, and $844,156 from investing
activities. A substantial portion of financing activities consisted of the
issuance of stock and notes payable. A substantial portion of the 1999
investing activities include the investment in the Lake Trop project. A
substantial portion of the 1998 financing and investing activities related to
the write-off of the Lake Tropicana property and its related debt.
<PAGE> 9
Liquidity and Capital Resources
The Company's consolidated financial statements at September 30, 1999 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 Trop, LLC, 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. 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> 10
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> 11
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 $44,750,979 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 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 that the Company will be able to obtain financing
on acceptable terms, if at all.
<PAGE> 12
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 was formerly listed and traded, informed management that the
Company had failed to meet certain listing maintenance requirements and had
not filed its Annual Report on Form 10-KSB within the required time frame.
NASDAQ gave the Company until May 20, 1996 to file such Annual Report and to
submit a plan detailing how the Company intended to meet the listing
maintenance requirements in the future. The Company filed the Annual Report
and submitted the required plan. On June 12, 1996, the Company received a
letter from NASDAQ informing the Company that its Common Stock was scheduled
to be delisted from the Exchange effective with the close of business on
June 26, 1996 for failure to meet certain continuing listing requirements.
Although the Company currently satisfies the market float, number of market
makers and asset requirements, it does not meet the net worth or share price
criteria. The Company requested that NASDAQ conduct an oral hearing to
reconsider the decision to delist the Common Stock, and such hearing was
held on July 12, 1996 (the delisting was stayed pending the outcome of the
hearing). Management subsequently received a letter, dated July 17, 1996,
from NASDAQ, informing the Company that its securities were to be deleted
from the Exchange effective July 18, 1996. 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 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> 13
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> 14
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: December 15, 1999 REGISTRANT:
MPTV, Inc.
By: /s/ JAMES C. VELLEMA
James C. Vellema
Chairman
(Principal Financial and Accounting
Officer)
Date: December 15, 1999 By: /s/ HURLEY C. REED
Hurley C. Reed
President
