|
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, 1998 and the results of
operations and cash flows for the nine months ended September 30, 1998 and 1997, 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, 1998 are not necessarily indicative
of results of operations to be expected for the year ending December 31, 1998. Refer to the Company's Annual Report
on Form 10- KSB for the year ended December 31, 1997 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 $41,996,034. 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 properties, the successful completion of its
marketing program and its transition, ultimately, to the attainment of profitable operations are necessary for
the Company to continue operations for the foreseeable future. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
MPTV, Inc. and SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 1998 and 1997
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.
Note 3 - Financing Commitment
During the nine months ended September 30, 1998, the Company issued various notes aggregating $1,000,500 with interest
at 10% per annum, and due on demand and on various dates in 1998 and 1999. 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, 1998 the Company issued no stock.
Notes payable with an aggregate value of $570,000 were converted to stock during the period. The Company issued
59,265,904 shares for notes payable, averaging $0.010 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.
MPTV, Inc. and SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 1998 and 1997
Note 5 - Related Party Transactions
During the nine months ended September 30, 1998 the Company paid an officer $207,000 as an advance on commission
for future timeshare sales. Another officer was paid a salary of $135,000. These payments were made pursuant to
the terms of the respective officer's Employment Agreement.
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, 1998 Compared to September 30, 1997
At September 30,1998, MPTV was in the development stage, with no significant operating revenues to date. Revenues
from the sale of timeshare units are expected in late 1999. [The preceding sentence contains a forward looking
statement (hereinafter defined as "FLS"). Each of the forward looking statements in this Quarterly Report
on Form 10-QSB is subject to various factors that could cause actual results to differ materially from the results
anticipated in such forward looking statement, as more fully discussed in this Item 2 under "Forward Looking
Statements"]. Revenue from rentals of the Lake Tropicana Apartments are considered incidental to the business
of development and sale of timeshare intervals and these are netted against related expenses in the accompanying
statements of operations for the periods presented therein. Other revenues are unrelated to the business activities
currently in development.
Expenses in excess of revenues of incidental operations decreased from $83,958 during the first nine months in
1997 to $-0- during the first nine months in 1998. During the nine months ended September 30, 1998, the Company
significantly reduced certain expenses of Consolidated Resort Enterprises, Inc., consisting primarily of the operation
of the Lake Tropicana Apartments. The expenses reduced included advertising, certain salaries, commissions and
professional and consulting fees. Other expenses remained consistent through the year. 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, 1998 equalled
$1,053,023, a substantial decrease from $3,682,850 for the comparable period in 1997. This decrease was 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 the suspension of
operations concerning the development of Lake Tropicana.
MPTV also incurred interest expense of $1,044,217 in first nine months of 1997 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 interest consisted primarily
of interest related to notes payable.
During the nine months ended September 30, 1998, the Company had a positive net cash flow of $22,961. This net
positive cash flow was comprised of positive cash flow of $16,218,585 from investing activities offset by negative
cash flows of $3,713,128 from operating activities and negative cash flows of $12,482,496 from financing activities.
A substantial portion of investing and financing activities consisted of the write-off of the Lake Tropicana property
ad its related debt. Should the Company obtain financing to reacquire the property from receivership, this write-off
will be reversed.
Liquidity and Capital Resources
The Company's consolidated financial statements at September 30, 1998 and for the period then ended have been presented
on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. Continuation of the Company as a going concern is dependent upon
the Company raising additional financing and achieving and sustaining profitable operations. Because of the uncertainties
regarding the Company's ability to achieve these goals, no assurance can be given that the Company will be able
to continue in existence. Based on the Company's interest in Lake Tropicana, and the potential to raise additional
debt and/or equity financing (see below), management believes that there will be sufficient capital available to
complete existing contracts and projects (FLS). The financial statements do not include any adjustments relating
to the recoverability of recorded asset amounts or the amounts of liabilities that might be necessary should
the Company be unable to continue as a going concern.
The planned renovation program for the Lake Tropicana project is intended to appeal to family-oriented visitors
to Las Vegas and includes major common area improvements such as landscaping, parking and a decorative security
wall, as well as construction of a reception area and activity center and installation of a new roof and porches,
the rebuilding of the main pool and construction of two additional pools and a tennis court (FLS). The Company
also anticipates undertaking a complete renovation of the timeshare units, including kitchens, bathroom fixtures,
air conditioning, wall and floor coverings and complete furniture and fixture packages ( FLS ). Management currently
estimates that timeshare unit renovations will cost approximately $38,000 per unit, while common area renovations
will require an additional $1,000,000 (FLS). The entire renovation project will require six phases and approximately
$7,000,000 to $8,000,000 to complete (FLS), of which approximately $1,000,000 (excluding capitalized interest paid
in cash of $1,400,000) has been expended to date. In April 1994, the Company commenced phase one of the project,
which involved renovation of the first 16 timeshare units and the construction of a sales facility. Due to liquidity
and other financial concerns, phase one of the renovation was delayed. Management currently anticipates completion
of this phase in September 1997, subject to obtaining the required financing (see below)(FLS). After completing
phase one of the renovation, the Company plans to commence phases two and three, which will include the renovation
of approximately one-half of the 176 timeshare units.
Funds for phase one of the renovation and project carrying costs have been derived from equity private placements
and loans arranged by the Company, issuances of common stock to vendors and incurrence of unsecured debt. The Company
has deposited a portion of these funds with the holder of one of its deeds of trust, to be held in trust for the
development of the Lake Tropicana project. The Company has also received a commitment to refinance the existing
notes secured by first and second deeds of trust on the project (see below), which financing would provide partial
releases of condominiums. These release provisions facilitate the phasing of the Lake Tropicana project for conveyance
to timeshare purchasers. The Company then intends to utilize the proceeds from timeshare sales (derived from the
$100 million end-loan financing of timeshare receivables, for which the Company has received a letter of commitment,
subject to the completion of definitive documents and due diligence procedures, from Stanford Investors, Ltd.)
plus cash flow from operations, to fund the remainder of the renovations (FLS). However, there can be no assurance
the Company will receive financing adequate to complete renovations. In the event that the Company does not receive
financing, it would be unable to complete the renovation of Lake Tropicana, which would seriously impair the Company's
ability to sell timeshare units in the project. If the Company is unable to sell timeshare units in Lake Tropicana,
the potential value of Lake Tropicana as a rental property would be substantially lower than the potential value
if sold in timeshare intervals. Furthermore, sales of timeshare units require registration or other regulatory
compliance in the State of Nevada and certain other states where such units may besold. The Company has completed
the process of complying with applicable regulations to sell interval units in Lake Tropicana in Nevada, except
for the posting of bonds to activate the public permit.
Shares of the Company's freely tradable Common Stock may have been improperly issued without registration under
Federal andstate 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.
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 $41,996,034
since its inception, and is also in default on certain of its secured and unsecured notes payable. In the event
that the Company cannot refinance or renegotiate these notes, it may be subject to collection actions and foreclosure
proceedings on its property currently being held for timeshare development. MPTV requires capital to conduct its
timeshare unit development and marketing activities, and for operating expenses, interest and note obligations.
The Company's ability to continue as a going concern is dependent upon its ability to obtain outside financing
through the issuance of either equity or debt securities and, ultimately, upon future development of profitability
through sales of timeshare units at Lake Tropicana. While the Company is currently attempting to raise funds through
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.
Shares of the Company's freely tradeable Common Stock may have been improperly issued without registration under
Federal and state securities laws. In addition to administrative remedies which may be pursued by governmental
agencies, the recipients of these shares of Common Stock may seek recovery of the purchase price of the stock plus
interest through a rescission offer, the amount of which cannot be presently determined and could have a material
adverse impact on the Company's financial position and liquidity. Management intends to prepare and file the necessary
registration statement to register these shares. There can be no assurances that the filing of these registration
statements will provide an adequate remedy. Until resolved, the impact of such issuance, if any, on the Company's
ability to raise additional capital through the future issuances of Common Stock is unknown.
On April 19, 1996, The NASDAQ Stock Market, Inc. ("NASDAQ"), which manages the NASDAQ SmallCap Market
Exchange (the "Exchange") on which the Company's Common Stock 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 thepurchase 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 severelylimit 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.
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 will be due and payable on or before August 1, 1999. The Settlement
Agreement also provides that MPTV will transfer its video productions assets in Florida and the Club Carib weeks
to Gannaway, and the litigation will be conditionally dismissed with prejudice (provided that the court retains
jurisdiction to enter final judgment upon default). Mutual general releases will be 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 payment 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 unites for sale in early
1998. Currently, the Company is attempting to obtain new financing in order to reacquire the property, resume development
and begin sales of timeshare intervals.
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: June 4, 1999 REGISTRANT:
MPTV, Inc.
By: /s/ JAMES C. VELLEMA
James C. Vellema
Chairman
(Principal Financial and Accounting
Officer)
Date: June 4, 1999 By: /s/ HURLEY C. REED
Hurley C. Reed
President
EDGAR is a federally registered trademark of the U.S. Securities and Exchange
Commision (SEC). EDGAR ONLINE is a product of EDGAR Online, Inc. and is neither approved by, nor affiliated with the
SEC.
EDGAR Online, Inc. makes no claims concerning the validity of the information provided by EDGAR ONLINE and will not be held
liable for any use of this information. The information ("Information") provided herein may be displayed
and printed for your personal, non-commercial use only. You may not reproduce, retransmit, distribute, disseminate,
sell, publish, broadcast or circulate the Information to anyone, without the express written consent of EDGAR Online,
Inc.
© Copyright 1995-1999 EDGAR Online, Inc. All rights reserved. |
|