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, 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 August 14, 2004.
Common Stock $.0005 par value 23,740,964
(Class) (Number of shares)
2
CAMERA PLATFORMS INTERNATIONAL, INC.
Part I FINANCIAL INFORMATION
The financial statements presented herein have not been reviewed by the
Company's independent public accountant as required by Regulation S-X,
Rule 11-01(d). The Company has insufficient funds to pay amounts due
to the Company's independent public accountant. As a result, the
Company's independent public accountant is unable to complete the work
necessary to issue a review report on the financial statements of the
Company as of June 30, 2004.
An amendment to this For 10-Q will be filed the the SEC as soon as
the review report becomes available.
CONTENTS
Page
Number
Item 1. Financial Statements:
Balance Sheets at June 30, 2004,
and December 31, 2003 3
Statements of Operations for the Three Months
and Six Months ended June 30, 2004 and 2003 4
Statements of Cash Flows for the Six Months
ended June 30, 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
Item 3. Quantitative and Qualitative Disclosures about 13
Material Risk
Item 4. Controls and Procedures 13
PART II. OTHER INFORMATION 14
Item 1. Legal Proceedings 14
Item 3. Defaults on Senior Securities 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature Page 15
Exhibit 99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 16
3
CAMERA PLATFORMS INTERNATIONAL, INC.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
2004 2003
ASSETS
Current Assets
Cash $1,000 $1,000
Accounts receivable, less allowance for
doubtful accounts of $5,000 in 2004 and 2003 39,000 34,000
Prepaid expenses 38,000 36,000
------- -------
Total current assets 78,000 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
-------- ----------
$137,000 $130,000
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $51,000 $40,000
Accrued interest 396,000 316,000
Accrued expenses 14,000 35,000
Accrued taxes 41,000 44,000
Note payable - related party 25,000 25,000
------- -------
Total current liabilities 528,000 460,000
Long Term Debt 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 (29,255,000) (29,113,000)
------------ ------------
Total shareholders' deficit (2,206,000) (2,064,000)
----------- -----------
$137,000 $130,000
=========== ===========
Not reviewed by the Company's independent public accountant.
See accompanying notes to unaudited financial statements.
4 CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
Revenues
Revenues from rental operations $181,000 $171,000 $342,000 $387,000
Expenses
Cost of rental operations 146,000 143,000 287,000 288,000
Selling, general and administrative 50,000 58,000 106,000 111,000
------- ------- ------- -------
196,000 201,000 393,000 399,000
------- ------- -------- ---------
Operating loss (16,000) (30,000) (52,000) (12,000)
Interest expense, net (46,000) (41,000) (90,000) (84,000)
Other income (expenses), net - 164,000 - 164,000
--------- --------- -------- --------
Net income (loss) ($62,000) $93,000 ($142,000) $68,000
========== ========== ======= =========
Basic and diluted income
(loss) per share $0.00 $0.01 ($0.01) $0.01
Weighted average number of
shares outstanding 23,740,964 23,740,964 23,740,964 23,740,964
Not reviewed by the Company's independent public accountant.
See accompanying notes to financial statements.
5 CAMERA PLATFORMS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30, 2004 June 30, 2003
OPERATING ACTIVITIES
Net income (loss) ($142,000) $68,000
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Gain on disposal of equipment -- (165,000)
Depreciation and amortization -- --
Changes in assets and liabilities:
Accounts receivable (5 000) 2,000
Prepaid expenses and other current assets (2,000) 6,000
Deposits and other assets -- --
Accounts payable 11,000 49,000
Accrued liabilities 57,000 58,000
-------- --------
Net cash provided by (used in) operating
activities (81,000) 18,000
INVESTING ACTIVITIES
Proceeds from disposal of equipment -- 171,000
Purchases of property and equipment -- (14,000)
-------- --------
Net cash provided by investing activities -- 157,000
FINANCING ACTIVITIES
Proceeds from borrowings from long-term debt 96,000 16,000
Repayment of borrowings from long-term debt (15,000) (191,000)
--------- --------
Net cash provided (used) by financing activities 81,000 (175,000)
Net increase (decrease) in cash -- --
Cash at beginning of period 1,000 2,000
------ -------
Cash at end of period $1,000 $2,000
====== ======
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $10,000 $11,000
Income taxes $1,000 $1,000
Not reviewed by the Company's independent public accountant.
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 six-month period ended June 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, 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.
Not reviewed by the Company's independent public accountant.
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 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 $0 and $5,000
for the six months ended June 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
Not reviewed by the Company's independent public accountant.
8
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 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.
Not reviewed by the Company's independent public accountant.
9
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - PROPERTY AND EQUIPMENT
June 30, December 31,
2004 2003
Rental equipment $5,360,000 $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
---------- ----------
$5,627,000 $5,630,000
Less accumulated depreciation and amortization 5,377,000 5,339,000
Less rental asset valuation allowance 213,000 254,000
--------- ---------
$37,000 $37,000
======== ========
The valuation allowance has been reduced by $41,000, which was recorded
against and reduced depreciation expense for the six months ended
June 30, 2004.
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
June 30, 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 June 30, 2004, the Company was $396,000
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 December 31, 2003, 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 CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At June 30, 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 existing premises 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 June 30, 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 June 30, 2004 and
December 31, 2003.
Not reviewed by the Company's independent public accountant.
11
Item 2.
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 secured a $250,000 revolving line of credit from its secured
lender DOOFF, LLC, whose members are directors and principal shareholders of
the Company. The Company had overdrawn this line, owing $315,000 at June 30,
2004. At of Decemer 31, 2003, the company had $16,000 available under the
line. In addition, the Company has failed to make interest payments
totaling $396,000 to DOOFF, LLC. Ongoing operations have not been sufficient
to meet the Company's cash needs, and there is no further credit avialable
under the line of credit. If sufficient funds are not available, the Company
may be required to curtail or cease operations.
Not reviewed by the Company's independent public accountant.
12
CAMERA PLATFORMS INTERNATIONAL, INC.
RESULTS OF OPERATIONS
The following analysis compares the three months ended June 30, 2004 with the
three months ended June 30, 2003, and the six months ended June 30, 2004
with the six months ended June 30, 2003.
Second quarter 2004 results compared with second quarter 2003
The Company's total revenue for the second quarter increase slightly over the
same period last year. The increase of $10,000 was attibutable to a $20,000
increase in camera car rentals offset by a $10,000 decline in the rental of
Akela cranes. Dolly and crane rentals remained unchanged.
Cost of rentals decreased by 2%. The Company's lower rental expense resulted
in lower rental expenses allocated to the rental department, however, these
reductions were offset in a large part by increases in insurance, commissions,
and repairs.
Corporate expenses were reduced slightly as a result of lower legal expenses.
During 2003, the Company recognized $165,000 in gain as a result of the insured
loss of an Akela crane while it was under rental contract. The crane was
substantially depreciated on the Company's books.
Six months ended June 30, 2004 results compared with six months ended
June 30, 2003
Equipment rental revenue decreased 11% compared to the same six month
period last year. The largest dollar-denominated decreases were
associated with dolly and crane rentals. Car rental revenues increased
by about 7%. Akela crane revenues continued to decline, falling $16,000
to $23,000.
Cost of rentals remained unchanged. Commission, insurance and repair
increases offset decreases in rent and payroll.
General and administrative expenses decreased by $8,000. Legal and
professional expense reductions offset savings in rent and insurance.
13
CAMERA PLATFORMS INTERNATIONAL, INC.
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.
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 June 30, 2004, the Company was $396,000 in arrears in its interest
payments to DOOFF LLC and had overdrawn its operating line of credit by
$65,000 (see Note 4 to Financial Statements).
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 99.1 Certification 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
June 30, 2004.
15
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: August 8, 2004 Martin Perellis
Chief Executive Officer
/s/ Herbert Wolas
Date: August 8, 2004 Herbert Wolas
Chairman of the Board and
Chief Financial Officer
16