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 SEPTEMBER 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 October 31, 2002.
Common Stock $.0005 par value 23,740,964
(Class) (Number of shares)
2
CAMERA PLATFORMS INTERNATIONAL, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Statement of Financial Position
at September 30, 2002 and December 31, 2001 3
Statement of Operations for the
Three Months ended September 30, 2002 and 2001, and
the Nine Months ended September 30, 2002 and 2001 4
Statement of Cash Flows for the
Nine Months ended September 30, 2002 and 2001 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 12
Signature Page 12
Certifications 13
3
CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENT OF FINANCIAL POSITION
September 30, December 31,
2002 2001
(Unaudited) (Audited)
ASSETS
Current Assets
Cash $1,000 $ 3,000
Accounts receivable, less allowance
for doubtful accounts of $5,000 in 2002
and $5,000 in 2001 61,000 54,000
Other receivables - 75,000
Prepaid expenses 30,000 40,000
------- -------
Total current assets 92,000 172,000
Property and equipment, net of depreciation,
amortization and rental asset
valuation allowance 168,000 599,000
Deposits and other non current assets 22,000 22,000
------- -------
Total Assets $ 282,000 $793,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $38,000 $56,000
Accrued liabilities 142,000 85,000
Accrued expenses 31,000 40,000
Accrued taxes 54,000 62,000
------- -------
Total current liabilities 265,000 243,000
Long Term Debt 1,746,000 1,702,000
Shareholders' Deficit
Common stock - $.0005 par value; 100,000,000
shares authorized; shares issued
and outstanding: 23,740,964 12,000 12,000
Additional paid-in capital 27,037,000 27,037,000
Accumulated deficit (28,778,000) (28,201,000)
------------ ------------
Total shareholders' deficit (1,729,000) (1,152,000)
--------- ------------
Total liabilities and
shareholders' deficit $282,000 $793,000
========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
Revenues
Rentals 237,000 185,000 567,000 748,000
Expenses
Cost of rental operations 288,000 292,000 840,000 898,000
Selling, general and administrative 52,000 63,000 169,000 207,000
------- ------- ------- -------
340,000 355,000 1,009,000 1,105,000
------- ------- --------- ---------
Operating (loss) (103,000) (170,000) (442,000) (357,000)
Interest expense, net (44,000) (42,000) (134,000) (126,000)
Other income (expense), net (1,000) 115,000 (1,000) 107,000
------- ------- ------- -------
Net (loss) ($148,000) ($97,000) ($577,000) ($376,000)
========== ========= ========== ==========
Basic and diluted loss per share ($0.01) ($0.00) ($0.02) ($0.02)
Weighted average number of
shares outstanding 23,740,964 23,740,964 23,740,964 23,740,964
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Nine months ended September 30, 2002 September 30, 2001
OPERATING ACTIVITIES
Net loss ($577,000) ($376,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 431,000 461,000
Gain on asset disposal - (134,000)
Changes in assets and liabilities:
Accounts receivable 68,000 (150,000)
Prepaid expenses 10,000 1,000
Deposits and noncurrent assets - (2,000)
Accounts payable (18,000) 3,000
Other current liabilities 40,000 (6,000)
-------- ---------
Net cash provided by (used in) operating activities (46,000) (203,000)
INVESTING ACTIVITIES
Purchases of property and equipment - (50,000)
Proceeds from asset disposal - 150,000
------- -------
Net cash provided by investing activities - 100,000
FINANCING ACTIVITIES
Proceeds from borrowings of long-term debt 51,000 115,000
Principal payments on long-term debt (7,000) (22,000)
-------- --------
Net cash provided by financing activities 44,000 93,000
-------- --------
Net (decrease) in cash (2,000) (10,000)
Cash at beginning of year 3,000 11,000
------ ------
Cash at end of period $1,000 $1,000
====== =======
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $77,000 $101,000
Income taxes --- 1,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited 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 nine month period ended September 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 and the
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 Companyis 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 conern and the appropriateness of using the going
concern basis, which is dependent upon, among other things, an additional
cash infusion. Management believes that, in the near term, credit provided
by DOOFF LLC. should provide the additional cash required for the Company's
operations and meeting of its obligations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. 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.
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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 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.
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
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.
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.
8
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Segment Reporting
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.
NOTE 3 - PROPERTY AND EQUIPMENT
September 30, December 31
2002 2001
Equipment available for lease $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 6,299,000 5,868,000
Less rental asset valuation allowance 542,000 542,000
--------- ---------
$168,000 $599,000
========= =========
NOTE 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 $246,000 and $202,000 at
September 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.
NOTE 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 September 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.
9
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES (Continued)
At September 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.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Lease
The Company leases its premises under terms of a lease which expires
June 30, 2007, with monthly rent of $12,333.
NOTE 7 - SALES TO MAJOR CUSTOMERS, GEOGRAPHIC AREAS, AND CONCENTRATION
No revenue derived from a single customer accounted for more than ten percent
of total revenue during the first three quarters of 2000 or 2001. No
geographic area outside the United States accounted for more than ten percent
of total sales during the last three years.
Note 8 - FAIR VALUE 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 September 30, 2002 and
December 31, 2001.
10
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 risksand 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 $4,000 and $48,000 of undrawn funds
available at September 30, 2002 and December 31, 2001 respectively. In
addition, the Company has failed to make interest payments totalling $142,000
to DOOFF, LLC. It is expected, but not certain, that in the near term,
ongoing operations together with funds available under this credit line 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 and seek protection under the federal Bankrupcty
Code.
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
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.
11
CAMERA PLATFORMS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
RESULTS OF OPERATIONS
The following analysis compares the three months ended September 30, 2002, with
the three months ended September 30, 2001, and the nine months ended September
30, 2002 with the nine months ended September 30, 2001.
Third quarter 2002 results compared with third quarter 2001
The Company's revenue for the third quarter increased by 28% compared with
the same period of 2001. Camera car and crane rentals increased while
Akela crane rentals continued to decrease.
The gross margin increased by 86% on camera car rentals. Costs for camera
cars remained stable over an increased revenue base. The negative gross margin
on dollies and cranes decreased by 20%, also because of the increase in gross
revenues. The gross margin on Akela rentals remained substantially unchanged.
Selling expenses decreased 66%, and general and administrative expenses
decreased 10% in 2002. The reduction in selling expenses was primarily due
to a decrease in expenditures on brochures. The reductions in general and
administrative expenses reflected additional cost cutting measures.
The net loss for the quarter was $148,000 compared with a loss of $97,000
for the same period of 2001. The operating losses in the third quarter of
2001 were offset by a one-time gain of $115,000. Earnings before interest,
taxes, depreciation and amortization (EBITDA) was $94,000 for the quarter
ended September 30, 2001 compared to $42,000 in the current quarter.
Nine months ended September 30, 2002 results compared with nine months
nine months ended September 30, 2001
The Company's year-to-date revenues through the third quarter decreased by 24%
compared with the same period of 2001. Decreases were across the board:
Camera car rentals have decrease by 18%; dolly and crane rentals have
decreased by 21%; Akela rentals have decreased by 56%.
The gross margins decreased by 25% on camera car rentals. The negative
gross margins for dolly and cranes and Akela rentals increased by 15% for
both dolly and crane and Akela rentals. The gross margin decreases
were due primarily to lower revenues.
Selling expenses decreased 69%, and general and administrative expenses
decreased approximately 11% in 2002. The reduction in selling expenses is due
primarily to a reduction in printing and trade shows exenses. The reductions
in general and administrative expenses reflected lower personnel expenses
offset by higher legal, accounting and insurance expenses.
The year-to-date net loss was $577,000 compared with $376,000 for the
same period of 2001. Earnings (loss) before interest, taxes, depreciation
and amortization (EBITDA) were $(12,000) for the nine months ended
September 30, 2002 compared to $211,000 in the same period of 2001.
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.
12
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
September 30, 2002.
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: October 22, 2002 Martin Perellis
President and
Chief Executive Officer
/s/ Herbert Wolas
Date: October 22, 2002 Herbert Wolas
Chairman of the Board and
Chief Financial Officer
13
CERTIFICATIONS
I, Herbert Wolas, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Camera Platforms,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact necessary to make the statements made, in
light of circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to
us by others within the entity, particularly during the period
in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of theis quarterly report (the "Evaluation
Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiences in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses
in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
14
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
October 22, 2002 By: /s/ Herbert Wolas
_____________________
Herbert Wolas
Chairman of the Board, and
Chief Financial Officer
15
CERTIFICATIONS
I, Martin Perellis, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Camera Platforms,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact necessary to make the statements made, in
light of circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to
us by others within the entity, particularly during the period
in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of theis quarterly report (the "Evaluation
Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiences in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses
in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
16
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
October 22, 2002 By: /s/ Martin Perellis
_____________________
Martin Perellis,
President
and Chief Executive Officer