PART II
BUSINESS OVERVIEW:
MPTV is actively engaged in the timeshare resort and related entertainment industries. Through its wholly-owned subsidiary, CRE, MPTV plans to develop and market timeshare properties in Las Vegas (NV), Palm Springs (CA), Kailua-Kona (Hawaii), Lake Tahoe/Reno (NV), and San Francisco (CA). MPTV's principal asset is a multi-million dollar resort property, called "Lake Tropicana," located in Las Vegas, Nevada adjacent to the MGM Grand/Hotel/Casino and Theme Park. The property has a current market value of over $30 million and a timeshare value of over $110 million. Through its other wholly-owned subsidiary CRS (Continental Resort Services), MPTV also intends to provide management and travel services at its timeshare resorts. Such services will include housekeeping, maintenance, reservations and accounting services, as well as various activities. For these services, MPTV will receive a management fee equal to approximately ten percent of the gross annual assessment at each resort. CRS also seeks to provide management services to timeshare resorts unaffiliated with CRE, and plans to actively pursue these areas as soon as funds are made available from the Las Vegas property. Currently, CRS has no management agreements with any unaffiliated entities.
MANAGEMENT:
Chairman/CEO/CFO/CAO: Mr. James C.ÿVellema,
President/COO: Mr. Hurley C.ÿReed
Directors: Mr. Raymond H. Rasmussen, Mr. Hurley C. Reed, Mr. Joseph C. Vellema
Director of Investor Relations/Lake Tropicana Timeshare Manager: Mr. Neil Holland
Total Employees: 13
This is a company which has strong managerial experience in the timeshare industry.
James C. Vellema has served as Chairman of the Board and Chief Executive Officer of MPTV since November 1994, and as Chief Financial Officer since December 1993. He served as President and a Director of the company from December 1993 through October 1994. He also serves as the President and a Director of CRE (Consolidated Resort Enterprises), which he founded in October 1992. From July 1989 to October 1992, Mr. Vellema served as President and a founder of Tamarack Holdings/Reefshare, which developed and marketed timeshare intervals in certain resort properties. From 1978 to 1989, he served as a business consultant in the areas of product development and association management for Glen Ivy Financial Group, Inc., a developer of 12 resort projects in the Western United States and Hawaii. From 1972 to 1978, Mr. Vellema was the President of Donner Financial Inc., a company involved in non-hotel timeshare development and sales.
Hurley C. Reed has served as President and Chief Operating Officer of MPTV since November 1994, and as a Director of MPTV since December 1993. From December 1993 through October 1994, he served as Executive Vice President of the company. Since August 1993, Mr. Reed has also served as the Executive Vice-President of CRE, where he has been responsible for financial controls and development functions. From 1987 to 1993, Mr. Reed served in various executive management positions at Glen Ivy Financial Group, Inc. Mr. Reed initiated and developed the Glen Ivy Management Company which controlled 22 resorts and 30 associations with an annual budget of $25 million serving 50,000 timeshare owners. Mr. Reed's last position at Glen Ivy was Executive Vice-President and Chief Operating Officer. For the period 1984 to 1986 Mr. Reed was Eastern Regional Director for North American Companies and was responsible for five major resorts in the Eastern United States. From 1966 to 1984, Mr. Reed served as a senior executive with Owens Illinois, where he was involved in the development of a headquarters building and a large scale high-value woodlands portfolio. In 1976 Mr. Reed was promoted to Chief Executive Officer at Owens. Mr. Reed received his MBA degree from the University of Illinois.
Raymond H. Rasmussen has been a Director of MPTV since March 1993. From March 1993 through October 1994, he also served as Chairman of the Board and Chief Executive Officer of the company. Since 1991, he has also served as Chairman/Chief Executive Officer of Anova Corp, a Minneapolis-based publicly held holding company with international interests. He served as Chairman/Chief Executive Officer of Select Gas, Inc., a publicly held oil and gas company from 1990 to 1992, and as Chairman/Chief Executive Officer of Braxton Industries, Inc., a publicly held railroad tie recycling company, from 1982 to 1989. He has also served as CEO and President of various privately held companies.
HISTORY OF MPTV:
Following the acquisition in 1993 of Lake Tropicana for $4.6 million, Mr. Vellema sought to acquire a publicly registered corporation to provide greater access to capital to facilitate the conversion of Lake Tropicana to timeshare and through which to conduct a national timeshare development business. He located MPTV during the fall of 1993. MPTV, Inc. had been incorporated in the state of Nevada in October 1986 by persons who were unrelated to Mr. Vellema, under the name "United Shoppers of America". MPTV, Inc. originally operated a satellite telecasting home shopping network designed to offer a balanced program of family-oriented entertainment, plus a variety of products that could be ordered through a toll-free telephone number. The home shopping network was subsequently discontinued by its then managers, but it retained certain assets related to the development and production of television infomercials. The parties conducted negotiations during the fall of 1993. In December 1993, CRE completed a "reverse" merger in which the owners of CRE exchanged their shares of CRE for 75% of the outstanding common stock of MPTV and became the principal shareholders of MPTV. As a result, CRE became a wholly-owned subsidiary of MPTV. In the merger, most officers and directors of MPTV resigned (with the exception of one director).
From December 1993 until November 1994, MPTV restructured its operations by divesting those aspects that were incompatible with a timeshare development business. To assist in the restructuring, CRE filed a Chapter 11 reorganization petition on October 11, 1994. The reorganization proceeding was commenced in order to position CRE to restructure the underlying financing for the Lake Tropicana property which it had acquired subject to financing, and to pursue certain claims against two of the junior mortgage holders on the property. MPTV successfully negotiated this restructuring and in March 1995, the U.S. Bankruptcy Court granted an Unconditional Order to Dismiss the proceedings subject to a 180-day bar on the refiling of a Chapter 11 case. During that time management also negotiated a settlement of certain litigation with a former principal stockholder of MPTV, and negotiated to acquire a part interest in a Palm Springs, California timeshare conversion project and a timeshare development project in Hawaii.
On July 24, 1993, LVEN OTC-BB(Las Vegas Entertainment Inc., 1801 Century Park East, 23rd Floor, Los Angeles, CA 90067, 310-551-0011) acquired from Pacific D.N.S. Inc. (CRE's original joint-venture partner before the MPTV reverse-merger; no longer in existence) a 45% interest in CRE's "Lake Tropicana" property in Las Vegas, Nevada for $806,488. During 1994, the managing general partner of the joint venture, CRE (a wholly-owned subsidiary of MPTV), agreed to purchase one-half of LVEN's interest (22.5%) for $1,868,643. The purchase price was payable by a promissory note bearing interest at a rate of 8% per annum, secured by a deed of trust on the property. During 1994, as mentioned in the previous paragraph, the MPTV filed for bankruptcy protection. As part of the reorganization, MPTV replaced LVEN's original $1,868,000 principal note for a new note of the same amount dated March 22, 1995, and sold to MPTV its remaining 22.5% interest in the project for a second additional note of $1,868,000. The first note calculated the interest at a rate of 8% per annum, was payable monthly, and was secured by a fifth position in a deed of trust on the underlying time-share project. The second note was unsecured and non-interest bearing. Principal payments for both notes were at a rate of $205 ($410 for both notes) as each time-share interval is sold until August 1, 1998, when any remaining outstanding principal was due in full. The notes contained a cross-default provision so that a default under one note shall also be deemed a default on the other. As a result of MPTV's reorganization, the LVEN's secured note receivable moved up to a second position. LVEN had provided an allowance of $2,929,511 against these notes (including an allowance for imputed interest on the non-interest bearing note) as of April 30, 1997, for a net receivable of $806,489. These notes have been paid off and LVEN is no longer holding any mortgages/liens on the property.
On November 10, 1995, the MPTV entered into a partnership agreement with Robert V. Jones Corp. (RJC, 3275 S. Jones Blvd #105, Las Vegas, NV 89102, 702-227-6600), a Nevada corporation, to aid in obtaining a loan from a financial institution for the refinancing and renovation of Lake Tropicana. Upon consummation and acting as the limited partner, RJC was to contribute $1,000,000 to the partnership, representing a 20% interest in the partnership. MPTV, acting as the general partner, was to contribute all of its rights, title and interest in, and to, the Lake Tropicana Apartments and all of its rights, title and interest in, and to, any development plans and documents, as defined. Such investment by MPTV would represent an 80% interest in the partnership. Profits and losses of the partnership were to be generally allocated in accordance with ownership interest, subject to certain priorities and allocations, as defined. However, before the conditions precedent to the completion of the partnership agreement occurred, MPTV decided against entering and subsequently rescinded the agreement. Their conclusion was that the terms of the agreement were too favorable to RJC and that other financing with more beneficial terms was acquirable.
During December 1996, MPTV, through CRE, secured a two-year loan of $7,600,000 (at 15% interest) from Kennedy Financial, Inc. (a subsidiary of Anglo-American Financial, Inc., 675 Berkmar Court, Charlottesville, Virginia 22901, 804-975-5959) which it applied to pay certain previously existing promissory notes secured by deeds of trust and to pay certain of the costs of remodeling the Lake Tropicana property. In addition to refinancing certain notes secured by deeds of trust on Lake Tropicana, this transaction provided approximately $680,000 for the development of the Lake Tropicana resort. The proceeds of the initial loan were used to repay the existing first, second and third mortgages on the Lake Tropicana timeshare project in Las Vegas, to provide some of the funds to build timeshare models and for some of the renovation costs. This financing was essential because provisions of the previous first trust deed, which was in place on Lake Tropicana when CRE acquired title, prohibited the sale of timeshare intervals in the property. As a result of this refinancing, MPTV proceeded to develop and sell timeshare intervals. The $7.6 million loan was repaid in 1998. In 1998, Kennedy Financial/Anglo-American Financial made another two-year $6.8 million loan to MPTV, guaranteed by MPTV's wholly-owned subsidiary, CRE. The second and most recent loan was secured by marketable securities with a value of $5.6 million mortgage plus liens on several pieces of real estate in southern California (belonging to MPTV's single largest private shareholder) with a value net of liens of $9.1 million. The marketable securities which Kennedy Financial/Anglo-American Financial has as collateral consist of diversified portfolios of common stocks, preferred stocks, mutual funds, government bonds and highly rated municipal bonds which have a current market value in excess of $6 million. While the loan is current at the moment, there have been many months when MPTV had a default enabling Kennedy Financial/Anglo-American Financial to accrue interest at the 24% per annum default rate. According to MPTV, these default periods were back in 1997 and they do not anticipate any further defaulting (especially considering that they are acquiring new financing).
See: anglofinancial.com and anglofinancial.com
In 1996, MPTV also entered into a firm commitment underwriting agreement with J.E. Liss and Co., Inc. (424 E Wisconsin Ave, Milwaukee WI 53202, 414-225-3555) for a private placement of 12% senior secured notes in the aggregate principal amount of $6,800,000 (with an additional $3,200,000 in principal amount which may be sold on a best efforts basis). In addition, MPTV has entered into a firm commitment underwriting with Liss for a private placement of 15% senior secured notes in the aggregate principal amount of $2,000,000. Proceeds from the private placements will be used to refinance a portion of the Lake Tropicana debt and for working and development capital. This commitment still stands, is available subject to MPTV's approval, and is currently awaiting the closing of the Vegas property and official commencement of full-time timeshare sales. See: lissco.com
In May of 1997, MPTV obtained a secured loan in the amount of $5,000,000 (at 15% interest) from Las Vegas businessman Mr. Joseph Gould (Joseph B. Gould and Associates, 430 S 3rd St, Las Vegas, NV 89101, 702-366-0083), of which $1,200,000 was to be used for construction and marketing at Lake Tropicana. Mr. Gould's loan was secured by the Lake Tropicana property and took first position in the mortgage chain (considering that Kennedy Financial/Anglo-American Financial's first loan for $7.6 million was repaid, and that their second loan for $6.8 million was entered into after Mr. Gould's loan was consummated). Of this amount, $471,674 was never transferred to MPTV. It has also come to be believed by MPTV that this individual had ulterior motives and made the loan primarily in the hopes that MPTV's efforts would fail, thereby allowing him to foreclose on the property. As the sale of timeshare intervals at the Lake Tropicana property exceeded expectations and surpassed the state required minimum of 104 intervals, it appears that this individual attempted to call in the loan and foreclose on the property prematurely. As such, he initially had Mr. Sheldon Kaplan (Mr. Gould's chauffeur) appointed as receiver. In response, MPTV secured additional third party financing, and attempted to pay the debt to this individual, who refused to accept such payment. By mid-June, 1998, MPTV negotiated with Allstar Resorts, Inc. (the current title holder of the Las Vegas property), and consequently Allstar Resorts, Inc. took the individual to court and won a ruling stating that such individual had to accept payment of the debt (approximately $4.5 million) and would not be allowed to foreclose on the property. While the latest financing institution is yet unknown, we do know that it has never been previously affiliated with MPTV, their corporate headquarters is Illinois, and the estimated amount is $10 million. The property remains protected under a third-party's control (Allstar Resorts, Inc., 31712 Casino Dr., Suite 7B, Lake Elsinore, CA 92530, an entity which has a binding agreement with MPTV). Fidelity National Title Agency (4495 S Pecos Rd # B, Las Vegas, NV 89121, 702-434-3433) is expected to transfer the Las Vegas property to MPTV/CRE within a matter of days or weeks, thereby giving them clear title to the property.
Consequently, the Lake Tropicana resort is currently encumbered by the following deeds of trust: (i) a first deed of trust held by Joseph Gould and Associates, securing a note in the principal amount of $4,528,326, bearing interest at 15% per annum; (ii) a second deed of trust held by Kennedy Financial, Inc./Anglo-American Financial, Inc., securing a note in the principal amount of $6,800,000, bearing interest at 15% per annum (which may be negotiated down); and (iii) a third deed of trust held by Allstar Resorts, Inc. (31712 Casino Dr., Suite 7B, Lake Elsinore, CA 92530; also, formerly known as Marrcshare Financial, Inc.) securing a note in the principal amount of $934,000 (at 8% interest) at December 31, 1996. In addition, the two separate deeds of trust held by LVEN through Pacific D.N.S., Inc. (MPTV's former joint venture partner), securing two notes in the principal amount of $3,626,786 (at 8% annum) at December 31, 1996, had been repaid. The new estimated $10 million financing is expected to take first (i.e. the most senior) place in the chain, and repay the first and third mortgages. |
