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 March 31, 2004
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 May 10, 2004.
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:
Balance Sheets at March 31, 2004,
and December 31, 2003 3
Statements of Operations for the Three Months
ended March 31, 2004 and 2003 4
Statements of Cash Flows for the Three Months
ended March 31, 2004 and 2003 5
Notes to 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.
BALANCE SHEETS
MARCH 31, DECEMBER 31,
2004 2003
ASSETS
Current Assets
Cash $ - $1,000
Accounts receivable, less allowance for
doubtful accounts of $5,000 in 2004 and 2003 61,000 34,000
Prepaid expenses 39,000 36,000
------- -------
Total current assets 100,000 71,000
Property and equipment, net of depreciation,
amortization and rental asset valuation
allowance 37,000 37,000
Deposits and other assets 22,000 22,000
-------- ----------
$159,000 $130,000
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $37,000 $40,000
Accrued interest 360,000 316,000
Accrued expenses 27,000 35,000
Accrued taxes 39,000 44,000
Note payable - related party - Note 4 25,000 25,000
------- -------
Total current liabilities 488,000 460,000
Long Term Debt - related party - Note 4 1,815,000 1,734,000
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 (29,193,000) (29,113,000)
------------ ------------
Total shareholders' deficit (2,144,000) (2,064,000)
----------- -----------
$159,000 $130,000
=========== ===========
See accompanying notes to unaudited financial statements.
4 CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31, 2004 March 31, 2003
Revenues
Revenues from rental operations $161,000 $216,000
Expenses
Cost of rental operations 141,000 145,000
Selling, general and administrative 56,000 53,000
------- -------
197,000 198,000
------- -------
Operating income (loss) (36,000) 18,000
Interest expense, net (44,000) (43,000)
Other income (expenses), net -- --
------- -------
Net loss ($80,000) ($25,000)
========== ==========
Basic and diluted loss per share ($0.01) ($0.01)
Weighted average number of shares outstanding 23,740,964 23,740,964
See accompanying notes to financial statements.
5 CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31, 2004 March 31, 2003
OPERATING ACTIVITIES
Net loss ($80,000) ($25,000)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 20,000 141,000
Change in asset valuation allowance (20,000) (141,000)
Changes in assets and liabilities:
Accounts receivable (27,000) 5,000
Prepaid expenses and other current assets (3,000) --
Deposits and other assets -- --
Accounts payable (3,000) 39,000
Accrued and other current liabilities 31,000 21,000
-------- --------
Net cash provided by (used in) operating
activities (82,000) 40,000
INVESTING ACTIVITIES
Purchases of property and equipment -- --
------- --------
Net cash used in investing activities -- --
FINANCING ACTIVITIES
Proceeds from borrowings from short-term debt 81,000 --
Repayment of borrowings from short-term debt -- (13,000)
------ --------
Net cash provided (used) by financing activities 81,000 (13,000)
Net increase (decrease) in cash (1,000) 27,000
Cash at beginning of period 1,000 2,000
------- -------
Cash at end of period $ -- $29,000
======= =======
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $1,000 $2,000
Income taxes -- --
See accompanying notes to unaudited financial statements.
6
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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 three-month period ended March 31, 2004
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, 2003.
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, increased
revenues to support the Company's operations. There is no assurance that
revenues will increase, or that such increases will provide sufficient cash
flows to meet the Company's working capital needs.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leasing Operations
The Company's leasing operations consist of operating and sales-type 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.
7
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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 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 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 $1,900 and $2,400
for the quarters ended March 31, 2004 and 2003, 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
8
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO 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 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.
Pro forma loss and loss per share as if the Company had accounted for
its stock option in accordance with FAS 123 is the same as the reported
loss and loss per share.
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. 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 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.
9
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - PROPERTY AND EQUIPMENT
March 31, December 31,
2004 2003
Rental equipment $5,363,000 $5,363,000
Machinery and equipment 116,000 116,000
Leasehold improvements 12,000 12,000
Furniture and fixtures 26,000 26,000
Automobiles and trucks 113,000 113,000
---------- ----------
$5,630,000 $5,630,000
Less accumulated depreciation and amortization 5,359,000 5,339,000
Less rental asset valuation allowance 234,000 254,000
--------- ---------
$37,000 $37,000
======== ========
The valuation allowance has been reduced by $20,000 and $141,000 which was
recorded against and reduced depreciation expense for the quarters ended
March 31, 2004 and 2003, respectively.
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 $315,000 and $234,000 at
March 31, 2004 and December 31, 2003, respectively. These loans are with DOOFF,
LLC. Two directors and principal shareholders of the Company are also
principals of DOOFF, LLC. As of March 31, 2004, the Company was $360,000
in arrears in its interest payments to DOOFF, LLC. due under the terms of
these loans.
During 2003, the Company acted as a facilitator in selling equipment that
belonged to a director of the Company. The sales proceeds of $25,000 were
retained by the Company and are evidenced by a note payable bearing interest
at 10%, all due in October 2004.
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 March 31, 2004, 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 $4 million for California tax purposes, which expire from 2004
to 2013.
10
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
At March 31, 2004, total deferred tax assets, consisting principally of
net operating loss carryforwards, amounted to approximately $8.8 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
Effective April 1, 2004, the Company entered into a new lease for reduced
space at its premises that expires December 31, 2007. The lease of $7,000
per month increases annually based on a cost of living index, and the
Company is also responsible for common area maintenance charges,
utilities, property taxes, and insurance.
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 quarters ending March 31, 2004 and 2003. 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 March 31, 2004 and
December 31, 2003.
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 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 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 a $250,000 revolving line of credit from its secured
lender DOOFF, LLC. The Company was over-advanced by $65,000 on the
line at March 31, 2004. In addition the Company has failed to make
interest payments totaling $360,000 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.
12
CAMERA PLATFORMS INTERNATIONAL, INC.
RESULTS OF OPERATIONS
The following analysis compares the three months ended March 31, 2004 with the
three months ended March 31, 2003.
The Company's revenue for the first quarter decreased by 25% compared with the
same period of 2003. Camera car rentals which accounted for 83% of the
Company's revenues for the 2004 quarter, decreased by 10%. New York (Silvercup
Studios) rentals accounted for most of this decrease. Dolly and standard
crane rentals decreased by 67%. Akela crane revenues decreased by 33% The
revenue decreases were as result of a comparison with a historically high first
quarter of 2003. In addition, during the first quarter of 2003 there were
several long-term Pegasus crane rentals.
The gross margin on camera car rentals decreased by 29%, due to a lower
revenue base and increases in insurance, rent and repairs and maintentance
costs. The gross margin on dolly and standard crane rentals decreased $25,000,
reflecting significantly lower revenues reduced slightly by decreases in
payroll and rent allocated to the department.
Selling expenses increased by $1,600 because of increases in print advertising.
General and administrative expenses increased by approximately 2%. The
increase in general and administrative expenses reflected legal fees during
the period.
The net loss for the quarter was $80,000 compared with a loss of $25,000
for the same period of 2003 primarily because of the decrease in revenues.
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.
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 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.
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 end of the period covered by this
report, 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.
PART II - OTHER INFORMATION
Item 1. Litigation.
The Company is not party to any litigation.
Item 3. Defaults on Senior Securities
As of March 31, 2004, the Company was $360,000 in arrears in its
interest payments and $65,000 overdrawn on its line of credit
with DOOFF LLC under the terms of the loans from DOOFF LLC
(see Note 4 to Financial Statements).
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits 31 and 32 Certifications Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) The Company filed no reports on Form 8-K during the quarter ended
March 31, 2004.
13
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: May 10, 2004 Martin Perellis
Chief Executive Officer
/s/ Herbert Wolas
Date: May 10, 2004 Herbert Wolas
Chairman of the Board and
Chief Financial Officer