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, 2003
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, 2003.
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, 2003 and December 31, 2002 3
Statement of Operations for the
Three Months ended September 30, 2003 and 2002, and
the Nine Months ended September 30, 2003 and 2002 4
Statement of Cash Flows for the
Nine Months ended September 30, 2003 and 2002 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about 13
Material Risk
Item 4. Controls and Procedures 13
PART II. OTHER INFORMATION
Item 1. Litigation 14
Item 3. Defaults on Senior Securities 14
Item 4. Exhibits and Reports on Form 8-K 14
Signature Page 14
Exhibit 31.1 Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 Certifications Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
3
CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENT OF FINANCIAL POSITION
September 30, December 31,
2003 2002
(Unaudited) (Audited)
ASSETS
Current Assets
Cash $2,000 $2,000
Accounts receivable, less allowance
for doubtful accounts of $5,000 in 2003
and $5,000 in 2002 38,000 36,000
Prepaid expenses 18,000 20,000
------ ------
Total current assets 58,000 58,000
Property and equipment, net of depreciation,
amortization and rental asset
valuation allowance 34,000 26,000
Deposits and other non current assets 22,000 22,000
------- -------
Total Assets $114,000 $106,000
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable $126,000 $43,000
Accrued interest 280,000 167,000
Accrued expenses 13,000 35,000
Accrued taxes 47,000 44,000
------- -------
Total current liabilities 466,000 289,000
Long Term Debt 1,594,000 1,725,000
Commitments and contingencies - Note 6
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 (28,995,000) (28,957,000)
------------ ------------
Total shareholders' deficit (1,946,000) (1,908,000)
----------- -----------
Total liabilities and
shareholders' deficit $114,000 $106,000
======== ========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2003 2002 2003 2002
Revenues
Rentals 144,000 237,000 531,000 567,000
Expenses
Cost of rental operations 147,000 288,000 435,000 840,000
Selling, general and administrative 63,000 52,000 174,000 169,000
------- ------- ------- -------
210,000 340,000 609,000 1,009,000
------- ------- ------- ---------
Operating (loss) (66,000) (103,000) (78,000) (442,000)
Interest expense, net (40,000) (44,000) (124,000) (124,000)
Other income (expense), net - (1,000) 164,000 (1,000)
-------- --------- --------- ---------
Net (loss) ($106,000) (148,000) ($38,000) ($577,000)
========== ========= ========== ==========
Basic and diluted loss per share ($0.00) ($0.01) $(0.00) ($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, 2003 September 30, 2002
OPERATING ACTIVITIES
Net loss ($38,000) ($577,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Gain on asset disposal (165,000) -
Depreciation and amortization - 431,000
Changes in assets and liabilities:
Accounts receivable (2,000) 68,000
Prepaid expenses 2,000 10,000
Deposits and noncurrent assets - -
Accounts payable 83,000 (18,000)
Other current liabilities 94,000 40,000
-------- -------
Net cash provided by (used in) operating activities (26,000) (46,000)
INVESTING ACTIVITIES
Proceeds from asset disposal 169,000 -
Purchases of property and equipment (12,000) -
------- -------
Net cash provided by investing activities 157,000 -
FINANCING ACTIVITIES
Proceeds from borrowings of long-term debt 70,000 51,000
Principal payments on long-term debt (201,000) (7,000)
-------- --------
Net cash provided (used) by financing activities (131,000) 44,000
-------- --------
Net (decrease) in cash - (2,000)
Cash at beginning of period 2,000 3,000
----- ------
Cash at end of period $2,000 $1,000
===== ======
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $11,000 $77,000
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, 2003 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2003.
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, 2002.
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 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 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
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.
7
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
One customer accounted for approximately 54% of total accounts receivable at
September 30, 2003.
Advertising Costs
The Company expenses advertising costs over the period it benefits, generally
twelve months. Advertising costs expensed totaled $4,000 and $7,000 for the
nine months ended September 30, 2003 and 2002, 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
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 statements of operations.
Stock-Based Compensation
The Company has adopted the disclosure-only provisisions of SFAS 123,
"Accounting for Stock-Based Compensation":, but applied APB No. 25 and
related intepretations 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 financial statements.
8
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 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 financial
statements.
In 2002, the Company adopted FASB No. 142,"Goodwill and other Intangible
Assets", and FASB No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets". These pronouncements had no material effect on the
Company's financial statements.
In 2003, the Company adopted FASB No. 143 "Accounting for Asset Retirement
Obligations". This pronouncement has had no material effect on the
Company's 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.
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
2003 2002
Equipment available for lease $6,200,000 $6,417,000
Machinery and equipment 179,000 348,000
Leasehold improvements 63,000 63,000
Furniture and fixtures 27,000 62,000
Automobiles and trucks 113,000 119,000
--------- ---------
6,582,000 7,009,000
Less accumulated depreciation and amortization 6,290,000 6,441,000
Less rental asset valuation allowance 258,000 542,000
--------- ---------
$34,000 $26,000
========= =========
The valuations allowance has been reduced by $284,000 for the nine months ended
September 30, 2003, which was recorded against and reduced depreciation expense.
During the nine months ended September 30, 2003, equipment with a cost of
$309,000 and accumulated depreciation of $303,000 was damaged beyond repair
while on customer rental. The Company received $171,000 of insurance proceeds
from the customer's insurance carrier with respect to this equipment, realizing
a gain of $165,000.
9
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
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 $94,000 and $225,000 at
September 30, 2003 and December 31, 2002, respectively. These loans are with
DOOFF, LLC. Two directors and principal shareholders of the Company are also
principals of DOOFF, LLC. As of September 31, 2003, the Company was $280,000
in arrears in its interest payment to DOOFF, LLC. due under the terms of these
loans.
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 December 31, 2002, the Company has net operating loss-carry forwards of
approximately $25 million for federal tax purposes, which expire from 2006 to
2022. 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 2003
to 2012.
10
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES (Continued)
At September 30, 2003, 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
On July 1, 2002, The Company entered into a lease for its premises that
expires June 30, 2007. The lease of $12,333 per month is subject to an
increase annually based on a cost of living index, and the Company is also
responsible for common area maintenance charges, utilities, property taxes,
and insurance.
NOTE 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 first three quarters of 2003 or 2002. 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, 2003 and
December 31, 2002.
11
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 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 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 $156,000 and $25,000 of undrawn funds
available at September 30, 2003 and December 31, 2002, respectively. The
Company has failed to make interest payments totalling $280,000 to DOOFF, LLC.
There is no assurance that 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.
RESULTS OF OPERATIONS
The following analysis compares the three months ended September 30, 2003, with
the three months ended September 30, 2002, and the nine months ended September
30, 2003 with the nine months ended September 30, 2002.
Third quarter 2003 results compared with third quarter 2002
The Company's revenue for the third quarter decreased by 39% compared with
the same period of 2002. Camera car rentals decreased by 50%. Camera car
rentals are the largest component of the Company's revenues, and the large
decrease in rental revenues for the third quarter sharply affected
profitability. In addition, dolly and crane rentals decreased by 60% when
compared to the same quarter of last year. Akela revenues increased by $24,000,
or 160%.
12
CAMERA PLATFORMS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
The decreases in revenues during the quarter were a result of fewer feature
films and advertising spots being shot in the Los Angeles area.
The negative gross margin on rentals decreased from ($51,000) to ($3,000).
The change in negative gross margin was a result of reduced revenues offset by
the greater effects of the reversal of previously recorded valuation allowances
on rental assets (a non-cash item) which reduced rental expenses recorded for
the quarter.
Selling expenses increased by $2,000, and general and administrative expenses
increased by 17% or $9,000. The increase in general and administrative expenses
was attributable primarily to increases in insurance and legal expenses.
The net loss for the quarter was $106,000 compared with a loss of $148,000
for the same period of 2002. Earnings before interest, taxes, depreciation
and amortization (EBITDA) was $42,000 for the quarter ended September 30,
2002 compared to ($65,000) in the current quarter.
Nine months ended September 30, 2003 results compared with nine months
nine months ended September 30, 2002
The Company's year-to-date revenues through the third quarter decreased by 6%
compared with the same period of 2002. As a percentage, the largest decrease
was associated with dolly and crane rentals, which decreased $34,000 or 26%.
The largest dollar decrease was in camera car rentals, which decreased $38,000
or 10%. Akela rentals have increased by $36,000, or 81%, from the previous
year.
Gross margins decreased by 23% on camera car rentals. The negative
gross margins for dolly and cranes and Akela rentals decreased by 93% for
dolly and crane rentals and 87% for Akela rentals. The changes in gross
margin were a result of lower revenues offset by the greater effects of the
reversal of previously recorded valuation allowances on rental assets
(a non-cash item) which reduced rental expenses recorded for the period.
Selling expenses decreased 48%, and general and administrative expenses
increased approximately 5% in 2003. The reduction in selling expenses is due
primarily to a reduction in printing expenses. The increase in general and
administrative expenses reflects increased insurance expenses.
The year-to-date net loss was $38,000 compared with $577,000 for the
same period of 2002. Earnings (loss) before interest, taxes, depreciation
and amortization (EBITDA) were $86,000 for the nine months ended
September 30, 2003 compared to ($12,000) in the same period of 2002.
A gain on asset disposal of $165,000 during the nine months ended
September 30, 2003 comprises the largest component of the change
in EBITDA.
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.
13
CAMERA PLATFORMS INTERNATIONAL, INC.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
The Company owns no financial instruments or other assets, nor has it entered
into any contracts or commitments, which would expose it to market risks such
as interest rate risk, foreign currency exchange rate risk or commodity
price risk as required to be disclosed pursuant to Regulation S-K, Item 305,
of the 1934 Securities Exchange Act, as amended.
Item 4.
Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports filed or
submitted under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange Act is
accumulated and communicated to management, to allow timely decisions
regarding required disclosures.
Within the 90 days prior to this report, the Company carried out an
evaluation under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Based
upon and as of the date of that evaluation, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective to ensure that the
information required to be disclosed in the reports the Company files and
submits under the Exchange Act is recorded, processed, summarized, and
reported as and when required.
14
CAMERA PLATFORMS INTERNATIONAL, INC.
(b) Changes in Internal Controls
There were no changes in the Company's internal controls or in other
factors that could have significantly affected those controls subsequent
to the date of the Company's most recent evaluation.
PART II - OTHER INFORMATION
Item 1. Litigation.
The Company is not party to any litigation.
Item 3. Defaults on Senior Securities
As of September 30, 2003, the Company was $280,000 in arrears in its
interest payments to DOOFF LLC under the terms of the loans from DOOFF
LLC (see Note 4 to Financial Statements).
Item 6 (b) Exhibits and Reports on Form 8-K.
The Company filed no reports on Form 8-K during the quarter ended
September 30, 2003.
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 31, 2003 Martin Perellis
President and
Chief Executive Officer
/s/ Herbert Wolas
Date: October 31, 2003 Herbert Wolas
Chairman of the Board and
Chief Financial Officer
Exhibit 31.1 Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 Certifications Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002