PART IV
AREAS OF CONCERN:
IMPROPERLY ISSUED STOCK
In the early part of 1996, shares of the MPTV's freely tradable Common Stock were improperly issued twice (first from 50 million to 100 million, and then from 100 million to 500 million) without registration under Federal and state securities laws. According to the company, it issued a significant number of shares of its Common Stock for cash and services rendered, and such actions were necessary to maintain ongoing operations and corporate viability. As for the second increase, management determined that the first increase was not sufficient to provide the company with the required ability to raise capital or compensate consultants and employees for services rendered to the company. These subsequent issuances of its Common Stock caused the total number of issued and outstanding shares to exceed the shares then authorized in its Articles of Incorporation. MPTV's Board of Directors subsequently filed amendments to its Articles of Incorporation, approved an eventual increase in the number of authorized shares to 500,000,000, and received consents approving such increases from holders of in excess of a majority of the then-outstanding shares of Common Stock (not hard to do if the insiders control 70% of the outstanding shares). According to MPTV, there are no existing liabilities due to these events.
POTENTIAL REVERSE SPLIT
MPTV management has reaffirmed that there are no plans for a reverse split in the next year. According to CEO James Vellema, MPTV might consider a reverse split in several years once the company has demonstrated a track record of earnings history and has garnered backing in the form of major investment banking support. All of this would only be done in an effort to move MPTV off the OTC-BB and back onto the NASDAQ exchange. When asked what sort of ratio the company would use, he said it would not be more than 1 to 10, believing that the 20 to 30 million share range would be appropriate. Intelligent investors, however, know from experience (PKGP, HCCA, et al.) that anything can happen and as such must be prepared.
LEGAL PROCEEDINGS
On March 14, 1994, Albert C. Gannaway, Jr., the founder and former officer, director and principal stockholder of the company (before the CRE reverse merger), and Gannaway Productions, Ltd. filed a complaint in the Superior Court of Orange County, California against the company and Messrs. Rasmussen (the company's former Chairman and Chief Executive Officer and a current 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 case has been settled and is no longer a liability.
On January 8, 1996, the Circuit Court of the Ninth Judicial District in Orange County, Florida, entered a final judgment in the amount of $282,433.36 against the company in the matter known as Neely v. MPTV, Inc., Successor to United Shoppers of America, Inc. (Case No. CI93-7554). The case was filed in December 1993 by a former consultant to the company's predecessor, and contained claims for breach of contract and recovery of unpaid wages. The company has appealed the judgment, and the appeal was denied. The case has been settled and is no longer a liability.
In 1998, Desert Valley Painting filed an action against Allstar Resorts, Inc. for payments of approximately $40,000 of work done in connection with renovations at the Lake Tropicana property in Las Vegas. MPTV expects the matter to be resolved and Desert Valley Painting paid once the Las Vegas property's closing is accomplished.
In 1998, Nevada Employment Agency Services filed an action against MPTV, Inc. for $2,000, claiming wrongful termination. MPTV Inc. is currently engaged in litigation.
SEC FILINGS
The company has prepared the three overdue and one expected 10Q filings, and plans on filing within 45 to 60 days of the Las Vegas property's closing. In addition, they plan on staying current. The CPA is currently waiting for payment. |
