<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, 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 July 31, 2000, 1,168,704,554 shares of Common Stock, $0.01 par value
per share, were outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE> 2
<TABLE>
<CAPTION>
MPTV, INC.
CONTENTS
Page No.
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet 3
Consolidated Statement of Operations 4
Consolidated Statement of Cash Flows 5
Notes to the Consolidated Financial Statements 6-14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15-21
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 23
Item 3. Defaults Upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 24
</TABLE>
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 2000 1999
----------- -----------
<S> <C> <C>
Cash $ 156,761 $ 9,672
Notes Receivable 285,000 0
Property and equipment 14,383 20,383
Investment in Lake Trop, LLC 5,738,485 2,109,400
Deposits 52,500 0
----------- -----------
$ 6,247,129 $ 2,139,455
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Notes payable $ 5,919,910 $ 7,146,824
Accounts payable and accrued expenses 464,861 620,889
Accrued interest 2,620,854 2,277,599
Other accrued liabilities 982,000 982,000
Due to related parties 473,973 315,671
----------- -----------
Total Liabilities $10,461,598 $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,
1,168,704,554 and 932,801,558 shares
issued $11,687,046 $ 9,328,016
Additional paid-in capital 31,916,408 27,982,438
Accumulated deficit (47,817,923) (46,513,982)
----------- -----------
Total Shareholders' equity $(4,214,469) $(9,335,053)
----------- -----------
Total Liabilities and Shareholders' Deficit $ 6,247,129 $ 2,139,455
=========== ===========
</TABLE>
The accompanying notes are an integral part of these Financial Statements
1
<PAGE> 4
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30 JUNE 30
2000 1999 2000 1999
Revenue
<S> <C> <C> <C> <C>
Other $ 0 $ 474 $ 0 $ 121
Expenses
Excess of expenses over revenues
from incidental operations 0 0 0 0
General, administrative and consulting 846,686 732,942 575,650 483,540
Interest 457,255 371,681 277,959 187,261
Total 1,303,941 1,104,623 853,609 670,801
Net loss ($1,303,941) $(1,104,149) $ (853,609) $ (670,680)
Net loss per share ($0.01) ($0.01) ($0.01) ($0.01)
Weighted average number of 1,039,660,778 546,401,737 1,130,432,665 596,066,667
shares outstanding
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE> 5
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
2000 1999
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (1,303,941) $ (1,104,149)
Adjustments to reconcile net loss to net
income:
cash provided by operating activities:
Issuance of common stock for services 250,000 249,000
Issuance of common stock for debt 2,173,000 355,000
Issuance of common stock for investment 3,450,000
Depreciation and amortization 6,000 6,000
Changes in assets and liabilities 345,529 338,054
------------ ------------
Net Cash Provided/(Used)
in Operating Activities $ 4,920,588 $ (156,095)
------------ ------------
Cash Flows From Investing Activities:
Investment in Lake Trop, LLC $ (3,629,085) $ 0
Deposits (52,500) 0
------------ ------------
Net Cash Used in Investing Activities $ (3,681,585) $ 0
------------ ------------
Cash Flows From Financing Activities:
Proceeds from issuance of notes payable $ 271,086 $ 269,000
Proceeds from sale of common stock 135,000 140,000
Principal repayments on notes payable (1,498,000) (86,258)
------------ ------------
Net Cash Provided by Financing Activities $ (1,091,914) $ 322,742
------------ ------------
Net Increase (Decrease) in Cash $ 147,089 $ 166,647
Cash, beginning of period 9,672 42,791
------------ ------------
Cash, end of period $ 156,761 $ 209,438
============ ============
Supplemental Disclosure of Cash Flow
Information:
Cash paid for:
Interest $ 114,000 $ 0
Income Taxes $ 0 $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE> 6
MPTV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 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 six months
ended June 30, 2000 0 0 0 (1,303,941) (1,303,941)
Common Stock issued
for services 6,902,996 69,030 180,970 0 250,000
Common Stock issued
for Notes 10,000,000 100,000 185,000 0 285,000
Common Stock issued
for debt 90,000,000 900,000 1,273,000 0 2,173,000
Conversion of
Warrants 14,000,000 140,000 (5,000) 0 135,000
Investment in
Lake Trop 115,000,000 1,150,000 2,300,000 0 3,450,000
------------- ----------- ----------- ------------- ------------
Balances,
March 31, 2000 1,168,704,554 $11,687,046 $31,916,408 $(47,817,923) $(4,214,469)
============= =========== =========== ============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 7
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
$47,817,923 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> 8
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> 9
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> 10
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 June 30, 2000 and
December 31, 1999:
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Property and equipment $ 113,635 $ 113,635
Less accumulated depreciation (99,252) (93,252)
--------- ---------
Net Property and equipment $ 14,383 $ 20,383
========= =========
</TABLE>
Note 4 - NOTES PAYABLE - STOCKHOLDERS
Notes payable to stockholders' at June 30, 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
June 30, 2000 and December 31, 1999.
8
<PAGE> 11
MPTV, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
Note 6 - RELATED PARTY TRANSACTIONS
A summary of related party transactions at June 30, 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 $ 473,973 $ 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 six months ended June 30, 2000, the Company issued
6,902,996 shares of stock, at a value of $250,000, 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> 12
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 June 30, 2000 and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Federal Benefit $ 15,779,914 $ 15,364,924
State benefit, net 0 0
Less change in valuation account
for realization of benefit (15,779,914) (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
$47,000,000.
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> 13
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 June 30, 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 June 30, 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> 14
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> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, including, without limitation,
statements regarding the Company's expectations, beliefs, intentions, or
future strategies that are signified by the words "expects," "anticipates,"
"intends," "believes," or similar language. These forward-looking
statements involve risks, uncertainties, and other factors. All forward-
looking statements included in this document are based on information
available to the Company on the date hereof and speak only as of the date
hereof. The factors discussed below under "forward-looking statements"
and elsewhere in this quarterly report on Form 10-QSB are among those
factors that in some cases have affected the Company's results and could
cause the actual results to differ materially from those projected in the
forward-looking statements.
The following discussion and analysis should be read together with the
Condensed Consolidated Financial Statements and Notes thereto included
elsewhere herein.
General
We were incorporated in 1986 in Nevada. We are engaged in the timeshare and
related vacation entertainment industries. Through its wholly-owned
subsidiaries, Consolidated Resort Enterprises, Inc. ("CRE") and Continental
Resort Services, Inc. ("CRS"), MPTV develops, markets, and manages timeshare
resort properties. Our principal asset is an investment in a multi-million
dollar resort property called "Lake Tropicana," located in Las Vegas, Nevada,
adjacent to the MGM Grand Hotel/Casino and Theme Park. MPTV currently
obtains its funding through issuance of stock and debt.
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
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, we intend to construct a decorative block and stucco
wall around the property, plant extensive landscaping in the front, and install
a new sign at the entrance. 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.
<PAGE> 16
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 MPTV will commence sales upon
approval. Phases two and three entail tearing down 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. We anticipate
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. The two-bedroom unit is designed so
that it can be partitioned, 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. In addition, we plan to
construct a new pool with a waterfall, and a tennis court.
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, cardiovascular machines, cardio theatre, spinning, aerobics,
a pro shop, a childcare center, a video arcade, and a restaurant. 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 and it 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.
<PAGE> 17
Results of Operations
Three Months Ended June 30, 2000 Compared With Three Months Ended
June 30, 1999
For the three months ended June 30, 2000 and the three months ended June
30, 1999, MPTV had no sales. Revenue from rentals of the Lake Tropicana
Apartments are considered incidental to the business of development and sale
of timeshare intervals and the numbers are netted against related expenses in
the accompanying statements of operations. Other revenues are unrelated to
the business activity currently in development. 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.
MPTV incurred interest expense of $277,959 in the second quarter of 2000 as
compared to $187,261 in the second quarter of 1999. The increase is primarily
due to the payment of a loan extension fee in 2000. 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.
MPTV's general, administrative and consulting expenses in the three
months ended June 30, 2000 equalled $575,650, substantially the same as
$483,540 for the comparable period in 1999. The majority of the general
and administrative expenses in the second quarter of 2000 were from
consulting, legal and accounting fees, and payroll. These amounts represent
a substantial decrease from previous years, due to a significant decrease
in financing fees (incurred as a result of MPTV'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.
Depreciation and amortization expense was $3,000 for both the three months
ended June 30, 2000 and June 30, 1999.
MPTV incurred no research and development expenses for the the three months
ended June 30, 2000 and June 30, 1999.
During the three months ended June 30, 2000, MPTV had a positive net cash flow
of $128,709. This net positive cash flow was comprised of negative cash flows
of $1,276,914 from financing activities and a positive cash flow of $4,745,906
from operating activities, offset by negative cash flows of $3,340,283 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. A substantial portion of
the operating activities reflects stock issued for the investment in Lake Trop
and for debt and services.
As a result of the foregoing factors, MPTV's net loss increased to $853,609
for the three months ended June 30, 2000, from a net loss of $670,680 for the
three months ended June 30, 1999.
<PAGE> 18
Six Months Ended June 30, 2000 Compared With Six Months Ended
June 30, 1999
For the six months ended June 30, 2000 and the six months ended June
30, 1999, MPTV had no sales. Revenue from rentals of the Lake Tropicana
Apartments are considered incidental to the business of development and sale
of timeshare intervals and the numbers are netted against related expenses in
the accompanying statements of operations. Other revenues are unrelated to
the business activity currently in development. 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.
MPTV incurred interest expense of $457,255 in the first half of 2000 as
compared to $371,681 in the first half of 1999. The increase is primarily
due to the payment of a loan extension fee in 2000. 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.
MPTV's general, administrative and consulting expenses in the six months ended
June 30, 2000 equalled $846,686, substantially the same as $732,942 for the
comparable period in 1999. Substantially all of the general and administrative
expenses in the first half of 2000 were derived from consulting, legal and
accounting fees, and payroll.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.
Depreciation and amortization expense was $3,000 for both the six months
ended June 30, 2000 and June 30, 1999.
MPTV incurred no research and development expenses for the the six months
ended June 30, 2000 and June 30, 1999.
During the six months ended June 30, 2000, the Company had a positive net
cash flow of $147,089. This net positive cash flow was comprised of negative
cash flows of $1,091,914 from financing activities and a positive cash flow of
$4,920,588 from operating activities, offset by negative cash flows of
$3,681,585 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. A
substantial portion of the operating activities reflects stock issued for the
investment in Lake Trop and for debt and services.
As a result of the foregoing factors, MPTV's net loss increased to $1,303,941
for the six months ended June 30, 2000, from a net loss of $1,104,149 for the
six months ended June 30, 1999.
<PAGE> 19
Liquidity and Capital Resources
The Company's consolidated financial statements at June 30, 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.
To date, MPTV has funded its operations primarily through private placements of
equity securities and secondarily through its interest in Lake Tropicana. At
June 30, 2000, MPTV had a working capital deficit of $3,573,454, including
cash of $156,761 compared to a working capital deficit of $3,870,816, including
$9,672 in cash at December 31, 1999.
MPTV remains dependent upon its ability to obtain outside financing through the
issuance of additional securities until it achieves sustained profitability
through increased sales. Management believes that MPTV will require
significant resources in 2000, principally to fund MPTV's working capital needs
to support its development efforts and planned renovation of the Lake Tropicana
project.
Shares of MPTV'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 MPTV'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 MPTV's ability to raise additional capital through the future
issuances of Common Stock is unknown.
Management estimates MPTV will require approximately $43,000,000 to fund its
operations through the year 2001. Of this amount, MPTV estimates that it will
require approximately $10,500,000 to fund its operations for 2000. MPTV
expects to generate the necessary resources for its 2000 business plan through
additional private placements of its equity securities. No assurances can be
given, however, that MPTV will be able to obtain such additional resources.
MPTV anticipates that its capital requirements of approximately $32,500,000
for the balance of the period ending December 31, 2001 will need to be met
through cash generated from operations and from equity investments. There can
be no assurance, however, that MPTV will be able to generate capital sufficient
to meet these long-term needs.
<PAGE> 20
Risk Factors
MPTV has suffered recurring losses from operations and needs additional
funding, which raises substantial concerns about its ability to continue as a
going concern. MPTV has incurred cumulative net losses of $47,817,923 since
its inception, and is also in default on certain of its secured and unsecured
notes payable. In the event that we 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. MPTV'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 MPTV is currently attempting to raise funds
through a private placement of debt securities, there can be no assurance that
a private placement will be successfully consummated or, if so, that it will
meet all our future capital requirements of MPTV. If additional funds
are required, MPTV 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, MPTV's ability to obtain additional financing
will be adversely affected. If and to the extent that MPTV incurs additional
indebtedness, debt service requirements will have a negative effect on
earnings. Further, if MPTV 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 MPTV
will be able to obtain financing on acceptable terms, if at all.
The availability of equity and debt financing is also affected by, among other
things, domestic and world economic conditions and the competition for funds as
well as MPTV'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 MPTV and its prospects and comparisons with
alternative investment opportunities. There can be no assurance that MPTV
will be able to obtain financing on acceptable terms, if at all.
Trading in our 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.
<PAGE> 21
MPTV'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 MPTV's competitors have greater
financial resources than the Company.
Forward Looking Statements
The forward-looking statements contained in this Quarterly Report on Form
10-QSB 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 discussed below.
Few of the forward-looking statements in this Quarterly Report on Form 10-QSB
deal with matters that are within the unilateral control of MPTV. The
availability of equity and debt financing to MPTV is affected by, among other
things, domestic and world economic conditions and the competition for funds.
Rising interest rates might affect the feasibility of debt financing that is
offered. Potential investors and lenders will be influenced by their
evaluations of MPTV and its products and comparisons with alternate investment
opportunities.
The markets for MPTV's services or products are rapidly changing and are
characterized by an increasing number of market entrants. It is not assured
that sufficient demand for MPTV's services or products will develop to sustain
its business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
<PAGE> 22
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 MPTV, and Gannaway Productions, Ltd.
(collectively, "Gannaway") filed a Complaint in the Superior Court of Orange
County, California against MPTV 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 MPTV and Gannaway in 1993. Gannaway claimed (i) he was
entitled to additional shares of our Common Stock to be received pursuant
to an option or, in the alternative, a lower option price; (ii) MPTV was
indebted to him for prior loans, cost advances and wages in excess of the
amounts shown on MPTV's books and records; and (iii) certain equipment being
used by MPTV 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.
On March 1, 1996, the parties entered into a settlement agreement (the
"Settlement Agreement"). Pursuant to the terms of the Settlement Agreement,
Gannaway will receive the following: (i)$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. MPTV
is currently in default with respect to the May, June, July and August, 1996
payments; (ii) From August 1, 1996 to August 1, 1999, Gannaway will receive
(a) monthly payments equal to $65.00 per timeshare interval sold in the
preceding month and (b) 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.
MPTV has not made this payment; (iii) MPTV will transfer its video
productions assets in Florida and the Club Carib intervals owned to Gannaway.
If these three (3) conditions are met, the litigation will be conditionally
dismissed with prejudice (provided that the court retains jurisdiction to
enter final judgment upon default and mutual general releases will be
exchanged 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 MPTV.
This was reflected in the 1998 financial statements as a write-off of the
property, as MPTV ceased the rental operations and development of timeshare
units for sale in early 1998. Subsequently, MPTV 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> 23
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Not Applicable
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 2000.
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date:August 15, 2000 MPTV, Inc.
By: /s/ HURLEY C. REED
Hurley C. Reed,
Chairman
(Principal Financial and Accounting
Officer)
