UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[Mark one]
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File Number: 0-14675
CAMERA PLATFORMS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4024550
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
10909 Vanowen Street, North Hollywood, California, 91605
(Address of principal executive offices) (Zip Code)
(818) 623-1700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of July 26, 2002.
Common Stock $.0005 par value 23,740,964
(Class) (Number of shares)
2
CAMERA PLATFORMS INTERNATIONAL, INC.
CONTENTS
Page
Number
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets
at June 30, 2002, and December 31, 2001 3
Consolidated Statements of Operations for the
Three Months ended June 30, 2002 and 2001 and the
Six Months ended June 30, 2002 and 2001 4
Consolidated Statements of Cash Flows for the
Six Months ended June 30, 2002 and 2001 5
Notes to Consolidated Unaudited Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION 12
Item 1 Legal Proceedings 12
Signature Page 13
3
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
June 30, DECEMBER 31,
2002 2001
(unaudited)
ASSETS
Current Assets
Cash $4,000 $3,000
Accounts receivable, less allowance for
doubtful accounts of $5,000 in 2002 and 2001 34,000 54,000
Other receivable - 75,000
Prepaid expenses 38,000 40,000
------- -------
Total current assets 76,000 172,000
Property and equipment, net of depreciation,
amortization and rental asset valuation
allowance - Note 3 313,000 599,000
Deposits and other assets 22,000 22,000
-------- ----------
$411,000 $793,000
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $57,000 $56,000
Accrued interest 103,000 85,000
Accrued expenses 25,000 40,000
Accrued taxes 54,000 62,000
------- -------
Total current liabilities 239,000 243,000
Long Term Debt 1,753,000 1,702,000
Commitments and Contingencies - Note 6
Shareholders' Equity (deficit)
Common stock $.0005 par value; 100,000,000
shares authorized; 23,740,964 shares issued
and outstanding 12,000 12,000
Additional paid-in capital 27,037,000 27,037,000
Accumulated deficit (28,630,000) (28,201,000)
------------ ------------
Total shareholders' deficit (1,581,000) (1,152,000)
----------- -----------
$411,000 $793,000
=========== ===========
See accompanying notes to consolidated unaudited financial statements.
4
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
Revenues
Revenues from rental operations $168,000 $279,000 $330,000 $563,000
Expenses
Cost of rental operations 278,000 307,000 552,000 606,000
Selling, general and
administrative 66,000 71,000 117,000 144,000
------- ------- ------- -------
344,000 378,000 669,000 750,000
Operating loss (176,000) (99,000) (339,000) (187,000)
Interest expense, net 46,000 41,000 90,000 84,000
Other income (expense), net - 3,000 - (8,000)
--------- --------- --------- ---------
Net loss ($222,000) ($137,000) ($429,000) ($279,000)
========= ========= ========= =========
Basic and diluted loss per share ($0.01) ($0.01) ($0.01) ($0.01)
Weighted average number of
shares outstanding 23,740,964 23,740,964 23,740,964 23,740,964
See accompanying notes to consolidated unaudited financial statements.
5
CAMERA PLATFORMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30, 2002 June 30, 2001
OPERATING ACTIVITIES
Net loss ($429,000) ($279,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 286,000 311,000
Changes in assets and liabilities:
Accounts and other receivable 95,000 6,000
Prepaid expenses 2,000 (3,000)
Deposits and other assets -- (2,000)
Accounts payable 1,000 (19,000)
Accrued liabilities (5,000) (39,000)
-------- --------
Net cash used in operating activities (50,000) (25,000)
INVESTING ACTIVITIES
Purchases of property and equipment -- (28,000)
------- --------
Net cash used in investing activities -- (28,000)
FINANCING ACTIVITIES
Proceeds from borrowings from short-term debt 51,000 80,000
Repayment of borrowings from short-term debt -- (22,000)
------ --------
Net cash provided by financing activities 51,000 58,000
Net increase (decrease) in cash 1,000 5,000
Cash at beginning of period 3,000 11,000
------- -------
Cash at end of period $4,000 $16,000
======= ======
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $72,000 $97,000
Income taxes -- $1,000
See accompanying notes to consolidated unaudited financial statements.
6
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all normal
recurring adjustments considered necessary for a fair presentation have been
included. Operating results for the six-month period ended June 30, 2002
are not necessarily indicative of the results that may be expected for the
year ending December 31, 2002. For further information refer to the financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 2001.
The accompanying financial statements have been prepared on a going concern
basis of accounting which contemplates continuity of operations, realization
of assets, liabilities, and commitments in the normal course of business.
The accompanying financial statements do not reflect any adjustments that
might result if the Company is unable to continue as a going concern.
The Company's losses, negative cash flows from operations and its working
capital deficit raise substantial doubt about the Company's ability to
continue as a going concern and the appropriateness of using the going
concern basis, which is dependent upon, among other things, an additional
cash infusion. Management believes that credit provided by DOOFF LLC.
should provide the additional cash required for the Company's
operations and the meeting of its obligations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated in consolidation.
Leasing Operations
The Company's leasing operations consist of operating leases on a variety
of equipment types, primarily camera cars, dollies and cranes, and other
accessories.
Under the operating lease method of accounting, the leased asset is recorded
at cost and depreciated over its estimated useful life, using periods ranging
from three to ten years. Rental payments are recognized as revenue as they
become due under the terms of the operating lease agreements.
Property and Equipment
Property and equipment is stated at cost, less accumulated depreciation and
amortization. Depreciation and amortization is generally determined using
the straight-line method over the estimated useful life of the property and
equipment, using periods ranging from three to ten years.
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CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Research and Development
Research and development costs are charged to expense as incurred. Such
amounts are not material in any year presented.
Cash Equivalents
The Company considers all highly liquid investments held at financial
institutions with maturity dates of three months or less at the time of
acquisition to be cash equivalents.
Per Share Data
The Company has adopted Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings Per Share", which establishes new standards for computing
and presenting basic and diluted earnings per share. Adoption of SFAS No. 128
does not have a material effect on the computation or presentation of per share
data in the accompanying consolidated financial statements.
The basic income (loss) per share is calculated based upon the weighted average
number of common shares outstanding during each year. Diluted income (loss)
per share is calculated based upon the weighted average of shares of common
stock outstanding and shares that would have been outstanding assuming the
issuance of common stock for all dilutive potential common stock outstanding.
The Company's outstanding stock options have not been included in the
calculation of the weighted average shares of common stock as they would have
an antidilutive effect.
Concentration of Credit Risk
The Company's customers are principally engaged in the production of motion
pictures or television programming, or are suppliers to such companies. Credit
is extended based on an evaluation of the customer's financial condition.
Receivables arising from the granting of credit under normal trade terms are
generally due within 30 to 90 days and are generally not collateralized. From
time to time, the Company grants extended terms, which are generally
collateralized by a security interest in the products sold. Collections of
accounts receivable have consistently been within management's expectations.
Advertising Costs
The Company expenses advertising costs over the period it benefits, generally
12 months. Advertising costs expensed totaled $5,000 and $16,000
for the six months ended June 30, 2002 and 2001, respectively, and were
recorded as part of selling, general and administrative expenses.
Equipment Leases
The Company's leasing operations consist primarily of short-term rentals of
camera cars, camera dollies and cranes. These rentals generally range from
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CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
one day to several weeks in duration, with occasional rentals of several
months. None of the rentals are noncancelable leases, and no contingent
rentals are included in the Company's consolidated statements of operations.
Stock-Based Compensation
The Company has adopted the disclosure-only provisions of SFAS 123,
"Accounting for Stock-Based Compensation", but applies APB No. 25 and
related interpretations in accounting for options granted under its plan.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements.
The Company's management estimates the valuation for doubtful accounts, rental
asset valuation allowance and the useful lives of property and equipment.
Actual results could differ from those estimates and such differences could be
material to the consolidated financial statements.
New Accounting Standards
In 2001, the Company adopted SFAS No. 140, "Accounting for Transfer and
Services of Financial Assets and Extinguishment of Liabilities", and FASB
No. 141, "Business Combinations" with no material impact on the consolidated
financial statements.
Starting in 2002, the Company is also subject to provisions of FASB No. 142,
"Goodwill and other Intangible Assets". This new pronouncement is
expected to have no material effect on the Company's consolidated financial
statements.
The Company operates in a single business segment. The Company leases and
rents equipment for the motion picture, television and theatrical production
and music industries.
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CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - PROPERTY AND EQUIPMENT
June 30, December 31,
2002 2001
Rental equipment $6,417,000 $6,417,000
Machinery and equipment 348,000 348,000
Leasehold improvements 63,000 63,000
Furniture and fixtures 62,000 62,000
Automobiles and trucks 119,000 119,000
---------- ----------
$7,009,000 $7,009,000
Less accumulated depreciation and amortization 6,154,000 5,868,000
Less rental asset valuation allowance 542,000 542,000
--------- ---------
$313,000 $599,000
======== ========
4. LONG TERM DEBT AND RELATED PARTY TRANSACTIONS
Long term debt consists of (1) a $1,500,000 term loan, interest only payable
monthly at 10% maturing June 2010, secured by all the assets of the Company
and (2) a $250,000 revolving line of credit, interest only payable monthly at
10%, maturing June 2005 and also secured by all the assets of the Company.
The balance outstanding on this line of credit was $253,000 and $202,000 at
June 30, 2002 and December 31, 2001, respectively. These loans are with DOOFF,
LLC. Two directors and principal shareholders of the Company are also
principals of DOOFF, LLC. As of June 30, 2002, the Company was $103,000
in arrears in its interest payments to DOOFF, LLC. due under the terms of
these loans.
5. INCOME TAXES
The Company utilizes the liability method under SFAS No. 109 to account for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and
laws expected to apply when the differences are expected to reverse.
At June 30, 2002, the Company has net operating loss-carry forwards of
approximately $24 million for federal tax purposes, which expire from 2006
to 2021. Because of statutory "ownership changes" the amount of net operating
losses which may be utilized in future years are subject to significant annual
limitations. The Company also has operating loss carryforwards of
approximately $3 million for California tax purposes, which expire from 2002
to 2006.
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CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At June 30, 2002, total deferred tax assets, consisting principally of
net operating loss carryforwards, amounted to approximately $8 million. For
financial reporting purposes, a valuation allowance has been recognized in an
amount equal to such deferred tax assets due to the uncertainly surrounding
their ultimate realization.
The effective tax rate differs from the U.S. Federal statutory rate principally
due to the valuation allowance recognized due to the uncertainty surrounding
the ultimate realization of deferred tax assets.
6. COMMITMENTS AND CONTINGENCIES
Lease
On January 2, 2001, the Company entered into a lease for its premises that
originally expired June 30, 2002. The Company exercised a five year
option extending the lease to June 30, 2007. The monthly rent is $12,333.
Litigation and Assessment
On February 26, 2002, the State of California Board of Equilization issued
an assessment in the amount of $279,261. This assessment mainly related to
the disposal of assets that were foreclosed upon by a secured creditor prior
to the Company's bankruptcy. On July 16, 2002, the Company received an
Adjusted Field Billing Order which eliminated all liabilities related to the
original assessment.
7. SALES TO MAJOR CUSTOMERS AND GEOGRAPHIC AREAS
No revenue derived from a single customer accounted for more than ten percent
of total revenue during the six months ending June 30, 2002 and 2001. No
geographic area outside the United States accounted for more than ten percent
of total sales during the last three years.
8. FAIR VALUES OF FINANCIAL INSTRUMENTS
Management has determined that the estimated fair value of the Company's
financial instruments approximates the carrying amount of such financial
instruments in all material respects as of June 30, 2002 and
December 31, 2001.
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CAMERA PLATFORMS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
This Quarterly Report on Form 10-Q includes certain forward-looking statements
based upon management's beliefs, as well as assumptions made by and data
currently available to management. This information has been, or in the
future, may be included in reliance on the "safe harbor" provision of the
Private Securities Litigation Reform Act of 1995. These statements are
subject to a number of risks and uncertainties including, but not limited
to, the following: adverse developments with respect to the Company's
liquidity or results of operations; the ability of the Company to obtain
products and services and negotiate terms with vendors and service providers
for current orders; the ability to develop, fund and execute an operating
plan for the Company; the ability of the Company to attract and retain
employees; competitive pressures from other camera car companies and grip
equipment rental companies which may affect the nature and viability of the
Company's business strategy; the ability of the Company to attract and
retain customers; and the absence of an active public trading market for
the Company's common stock.
Actual results may differ materially from those anticipated in any such
forward-looking statements. The Company undertakes no obligation to update
or revise any forward-looking statements to reflect subsequent events or
circumstances.
Overview
The Notes to Consolidated Financial Statements are an integral part of
Management's Discussion and Analysis of Financial Condition and Results of
Operations and should be read in conjunction herewith.
LIQUIDITY AND CAPITAL RESOURCES
The Company has secured a $250,000 revolving line of credit from its secured
lender DOOFF, LLC. The Company had overdrawn the line of credit by $3,000
as of June 30, 2002. At December 31, 2001 there were undrawn funds
available of $48,000. In addition, the Company has failed to make interest
payments totaling $103,000 to DOOFF, LLC. It is expected, but not certain,
that ongoing operations together with an anticipated increase in credit line
availability will provide sufficient cash to meet the Company's ongoing
obligations as they become due. If sufficient funds are not available, the
Company may be required to curtail or cease operations.
STOCK OPTIONS
On July 1, 2001, the Board of Directors adopted the 2001 Stock Option Plan to
provide for the issuance of incentive stock options and nonqualified stock
options as a means of attracting, motivating and retaining directors, officers
and key employees and consultants of the Company.
Concurrent with the adoption of the 2001 Stock Option, the Board of Directors
authorized the issuance of options to purchase 300,000 shares of the Company's
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CAMERA PLATFORMS INTERNATIONAL, INC.
stock to each of the Company's five directors. The options were priced at
$0.11, which was above the market price of the Company's stock at the date
of issuance.
RESULTS OF OPERATIONS
The following analysis compares the three months ended June 30, 2002 with the
three months ended June 30, 2001, and the six months ended June 30, 2002
with the six months ended June 30, 2001.
Second quarter 2002 results compared with second quarter 2001
The Company's revenues continue to be hurt by so-called "runaway production",
the trend of productions going outside of Southern California, taking
advantage of lower costs and advantageous tax laws.
The Company's revenue for the second quarter decreased by 40% compared
with the same period of 2001. Camera car rentals decreased by 32%.
Dolly and crane rentals decreased 37%. Akela crane rentals decreased
77% from $39,000 to $9,000.
The gross margin on camera car rentals decreased by 42%. Costs were down by
$18,000, but did not offset the effect of the reduction in gross revenues.
The gross margin on dolly and crane rentals decreased 36%, and the gross
margin on Akela crane rentals decreased 31%, reflecting lower revenues and
similar operating expenses.
Selling expenses decreased 76%, and general and administrative expenses
decreased by 1%. Lower payroll expenses were offset by increases in
legal and accounting expenses.
The net loss for the quarter was $222,000 compared with a loss of
$137,000 for the same period of 2001. Earnings (loss) before interest,
taxes, depreciation and amortization (EBITDA) was ($33,000) for the
quarter ended June 30, 2002 compared to $58,000 quarter ended June
30, 2001.
Six months ended June 30, 2002 results compared with six months ended
June 30, 2001
The Company's year-to-date revenue through the second quarter decreased by
41% compared with the same period of 2001. Camera car rentals decreased by
37%. Dolly and crane rentals decreased by 38%. Akela crane rentals decreased
by 66%.
The gross margin on camera car rentals decreased by 51%. Lower personnel
and decreases in fixed expenses were insufficient to offset the lower
revenues. The gross margin on dolly and crane rentals decreased 37%.
The gross margin on Akela rentals decreased 25%, both due primarily to the
decrease in revenues.
Selling expenses decreased 71%, and general and administrative expenses
decreased approximately 12%, from $128,000 to $112,000 in 2002. The reductions
in general and administrative expenses reflected lower personnel and
operating expenses offset by higher legal and accounting costs.
The year-to-date net loss was $429,000 compared with $279,000 for the same
period of 2001. Earnings (loss) before interest, taxes, depreciation and
amortization (EBITDA) was ($53,000) for the six months ended June 30, 2002
compared to $116,000 in the same period of 2001.
International Sales
International sales are not a material component of the Company's total
revenues.
Inflation
Inflation has not had a material impact on the Company's operations to
date, and the Company believes it will not have a material effect on
operations in the next twelve months.
PART II - OTHER INFORMATION
Item 1. Litigation.
The Company is not party to any litigation.
Item 6. Exhibits and Reports on Form 8-K.
The Company filed no reports on Form 8-K during the quarter ended
June 30, 2002.
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CAMERA PLATFORMS INTERNATIONAL, INC.
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.
CAMERA PLATFORMS INTERNATIONAL, INC.
/s/ Martin Perellis
Date: July 26, 2002 Martin Perellis
Chief Executive Officer
/s/ Herbert Wolas
Date: July 26, 2002 Herbert Wolas
Chairman of the Board and
Chief Financial Officer