<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 of (I.R.S. Employer
incorporation or organization) Identification No.)
10909 VANOWEN STREET, NORTH HOLLYWOOD, CALIFORNIA 91605
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 623-1700
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK -- $.0005 PAR VALUE
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by
non-affiliates of the registrant on March 17, 1997, was $235,974 (based on the
average bid and asked price of Common Stock in the over-the-counter market on
that date).
12,418,228 shares of registrant's Common Stock, $.0005 par value,
were outstanding on March 17, 1997.
================================================================================
<PAGE> 2
CAMERA PLATFORMS INTERNATIONAL, INC.
CONTENTS
<TABLE>
<CAPTION>
Page
----
PART I
<S> <C> <C>
Item 1. BUSINESS.............................................. 3
Item 2. PROPERTIES............................................ 9
Item 3. LEGAL PROCEEDINGS..................................... 9
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS...................................... 10
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS....................... 11
Item 6. SELECTED FINANCIAL DATA............................... 11
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................................ 13
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.................................................. 16
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING OR FINANCIAL
DISCLOSURE............................................ 30
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT............................................ 30
Item 11. EXECUTIVE COMPENSATION................................ 32
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT........................................ 33
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.......................................... 34
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K............................... 34
</TABLE>
- 2 -
<PAGE> 3
CAMERA PLATFORMS INTERNATIONAL, INC.
PART I
ITEM 1 - BUSINESS
GENERAL
Camera Platforms International, Inc. ("CPI" or the "Company"), was
organized in June 1985 to engage in the business of manufacturing, marketing and
leasing camera cars for use in film and television productions. In 1987 the
Company established a new division, Lightmaker, to engage in the development,
manufacture and marketing of electronic ballasts for use in connection with high
intensity lighting used in the film and television industry. In 1993 the Company
began selling and renting camera dollies and cranes to the motion picture and
television industry.
Shotmaker equipment was used to film many of the recent top U.S. box
office movies. A partial list of these films includes TWISTER, INDEPENDENCE DAY,
MY FELLOW AMERICANS, MARVIN'S ROOM, THE ROCK, DANTES PEAK, CASINO, ERASER,
MICHAEL, BEVERLY HILLS NINJA, AIR FORCE ONE and VOLCANO. Upcoming features
include WAG THE DOG, SPEED II, ANACONDA, LOST WORLD, CONTACT and BATMAN AND
ROBIN. In addition, a number of prime time television programs and series have
used or are currently using Shotmaker equipment such as E.R., BAYWATCH,
SEINFELD, VIPER, NASH BRIDGES, CHICAGO HOPE and the '96 ATLANTA OLYMPICS.
The Company underwent significant changes in 1996. On October 10,
1996, the majority shareholders of the Company, which were UST, Inc., a Delaware
corporation, and UST Enterprises Inc., a Delaware corporation (collectively,
"UST"), sold their equity interests in the Company to Shotmaker Acquisition
Corporation, a Delaware corporation ("SAC"), as nominee of W/F Investment Corp.,
a California corporation ("W/F"). The Chairman and Chief Executive Officer of
the Company, as well as the President and Chief Operating Officer, each resigned
and new senior management was appointed. With the objective of remaking the
Company into a profitable enterprise, the new management initiated a number of
changes. In December 1996, the Company sold its Lightmaker division, which had
been operating at a loss for the previous four quarters. The Company relocated
its corporate headquarters from Valencia, California, which is a substantial
distance from most of the film and television studios, to the North
Hollywood/Burbank area, which is near the heart of the entertainment industry
and more convenient for the majority of the Company's existing and prospective
customers. The Company acquired worldwide rights to manufacture and market the
Enlouva crane. By 1996 year end, the Company had refocused its business around
its two core divisions: Shotmaker Camera Cars, which is engaged in the
manufacture and leasing of camera cars, and Shotmaker Dollies & Cranes, which is
engaged in the manufacture, assembly, sale, leasing or rental of camera cranes
and jib arms, camera dollies, remote heads for mounting cameras, and track
systems for cranes and dollies.
The Company is incorporated under the laws of the State of Delaware.
As of December 31, 1996, the Company had one wholly-owned subsidiary, Shotmaker
Dollies & Cranes, Inc. ("SD&C"), which was dissolved on January 31, 1997. On
March 7, 1997, another wholly-owned subsidiary, Shotmaker Dollies, Inc. ("SDI")
was established within the Shotmaker Dollies & Cranes Division. (The Shotmaker
Dollies & Cranes Division, including SDI, will hereinafter be referred to as the
"SD&C Division".) As of March 17, 1997, the Company employed 20 full-time
personnel.
SALE OF THE COMPANY
On October 10, 1996, SAC, as nominee of W/F, purchased from UST an
aggregate of 9,403,168 shares of the $.0005 common stock, which shares
constitute 75.7% of the issued and outstanding common stock of the Company. The
acquisition of the common stock was made pursuant to that certain Stock Purchase
and Contribution Agreement dated October 10, 1996 (the "Stock Purchase
Agreement") by and among UST, Inc., UST Enterprises Inc., W/F and the Company.
In accordance with the terms of the Stock Purchase Agreement, SAC paid to UST
cash in the amount of $94,032 for the 9,403,168 shares of common stock. SAC also
made a capital contribution of $191,738 to the Company and W/F arranged for a
line of credit from Foothill Capital Corporation ("Foothill") to be made
available to the Company in the amount of $850,000.
- 3 -
<PAGE> 4
CAMERA PLATFORMS INTERNATIONAL, INC.
SHOTMAKER CAMERA CARS
The Shotmaker Camera Car Division currently consists of 15 camera
cars, which include five Shotmaker "Elites", three Shotmaker "Premiers", six
Shotmaker "Classics" and one Shotmaker "Standard". All the camera cars are based
at the Company's headquarters and rented throughout the Western United States
with the exception of one Premier operating under a long-term lease in Tokyo and
another Premier operating under a long-term lease in Vancouver, B.C.
The Shotmaker Elites. The Company has manufactured five
top-of-the-line Elite camera cars. The Elite is a custom-built camera car with
numerous positions for mounting cameras. The car contains a built-in fold-away
two- man camera crane with a maximum height of 23 feet. This crane can be in
motion while the car is moving at speeds up to 50 mph. The car also has a
front-mounted hydraulic platform that rises to 12 feet in height. There is a
built-in 500 amp DC generator and a 200 amp DC battery pack. The car runs on
both gas and a silent electric drive. The Elite has a special air-ride
suspension system which minimizes camera movement, and a six-wheel configuration
which allows the vehicle to crab sideways. The car is approximately 23 feet in
length and weighs approximately 22,000 lbs.
The Shotmaker Premiers. The Company has modified some of its
Classics by adding a crane arm. The noncollapsible two-man crane arm on the
Premier enables film crews to shoot action scenes while on the move from ground
level to 21 feet in height. With the addition of the Company's "Video Turret",
the Premier can be used for television productions, sporting events, parades and
other functions for which a light crane arm vehicle is required. The Premier is
approximately 22 feet in length and weighs approximately 15,000 lbs.
The Shotmaker Classics. Each Classic built by the Company has an
auxiliary camera platform which can be mounted on the front or sides of the
Classic. These cars do not have a built-in crane arm, but a standard portable
crane can be used on each vehicle. The Classic has three axles and air
suspension for a smooth and steady ride. A 250 amp DC generator is located under
the car's hood, along with a 200 amp DC battery pack which can be used to
provide silent power for lights and other electrical equipment. Four of the
Classics have been modified with independent 70-200 amp AC/DC generators. The
Classic has a self-leveling suspension system which provides added stability.
The Classic weighs approximately 11,000 lbs and is approximately 22 feet in
length.
The Shotmaker Standard. The Standard is a lightweight, two-axle
insert car, with an on-board 200 amp AC/DC generator, and a battery pack
providing power for lights and other electrical equipment. The Standard has a
front platform, top of cab platform, and numerous positions behind the cab for
mounting cameras.
Accessory Equipment. The Company rents accessory equipment,
including tow dollies and process trailers. Tow dollies are used to tow a car
with its front two wheels inches off the ground. Process trailers carry the
entire car behind the Shotmaker on a platform which can be expanded up to
fourteen feet wide. The Company has available a custom motorcycle towing device
which can tow two motorcycles side by side. The Company also offers remote
heads, lamp heads and ballasts for use on its Shotmaker camera cars.
To better serve its customers and create an additional source of
revenue, the Company has entered into an agreement to serve as an agent of
Young's Generators, Inc. ("Young's"). Young's is an industry leader in
manufacturing and distributing AC/DC generators with a variety of uses,
including power generation for film and television production. The arrangement
with Young's allows the Company to rent a generator to its customers and earn a
percentage of the rental revenue from the generator without the financial burden
of maintaining inventory or servicing the generators.
Maintenance. After the transition to new management in October 1996,
the Company's maintenance records and expenses for 1996 were carefully reviewed
in an effort to improve maintenance and reduce those expenses going forward.
Each of the Shotmaker camera cars was inspected and overhauled. The Company
believes that maintenance expense in 1997 is not likely to increase and, indeed,
may well decrease. Although the fleet continues to age, the mechanical parts of
the camera cars are regularly inspected and periodically replaced. The
non-mechanical parts of the camera cars, such as the frame and chassis, are in
good condition and likely to last for many years.
Environmental Issues. For a number of years, the Shotmaker
division's camera cars had been unable to meet vehicle emission standards
prescribed by federal and state regulations. These standards require that in
order for a motor
- 4 -
<PAGE> 5
CAMERA PLATFORMS INTERNATIONAL, INC.
vehicle to obtain the necessary vehicle registration and license, the owner must
obtain a certificate from an authorized agent indicating such vehicle has met
the emission control standards set by the State of California. The Company had
encountered difficulty in meeting the emission standards generally because the
camera cars had been modified to include a substantial amount of additional
equipment, leaving no physical space for the required emission control devices.
Additionally, the Company had been concerned that the installation of emission
control devices would reduce the engine's power. In March 1996, the Company
publicly disclosed that it obtained smog control certificates for certain camera
cars illegally. After this disclosure was made, the Company sought an exemption
from the emission control requirements from state authorities. This exemption
was never obtained.
After the transition to new management on October 10, 1996, the
Company re-analyzed the problem of how to install emission control devices in
the camera car engines. By reconfiguring some of the equipment in the engine
compartment, the Company determined that it could successfully retrofit
virtually every type of camera car in its fleet. As of March 17, 1997, thirteen
of the fourteen camera cars operating in the United States had been successfully
retrofitted with emission control devices and were certified as having satisfied
emission control requirements. The fourteenth camera car had been retrofitted
but, as of March 17, 1997, had not yet been certified; the fifteenth camera car
in the fleet is currently operating in Japan under a long term lease.
No fines were paid as a result of the Company's previous
non-compliance with emission control regulations and it is not anticipated that
any such fines will be imposed at this time. During the 1996 year, a number of
camera cars were withheld from service for substantial periods as a result of
their not having proper smog certificates. Currently, no camera cars are being
withheld from service for this or any other reason. Consequently, it is
anticipated that the rental utilization of the camera cars, that is, the number
of hours each vehicle is being rented and generating income, will be higher in
1997 than in 1996.
DISPOSITION OF THE LIGHTMAKER DIVISION
Background. The Lightmaker division designed, manufactured and sold
electronic ballasts which control HMI lamps, which are high intensity lights
used in film and television production. The Company marketed Lightmaker products
directly to equipment rental houses, original equipment manufacturers and motion
picture studios, both domestically and internationally. The Company provided a
one-year warranty on all of its ballasts, with the exception of one particular
component which was covered by a three-year warranty beginning in 1996. The
Company performed warranty repairs and other repair work on the ballasts at its
former premises in Valencia.
The Lightmaker division was beset with a number of problems. Sales
had declined steadily over the past four years and the division had been
operating at a loss during each of the past four quarters through September 30,
1996. Research and development expenditures had been curtailed in 1995 and 1996
and, consequently, the ballasts did not contain state-of-the-art technology. The
Company did not have any employees with the expertise required to develop a new
generation of ballasts and would have had to hire new employees or independent
contractors. On March 1, 1996, the general manager of the Lightmaker division
resigned, which adversely affected the division; the general manager's position
was not replaced. After the transition on October 10, 1996, the Company's new
management was concerned that the Lightmaker division did not fit strategically
with the Company's other two divisions and, indeed, would detract from the
Company's ability to rebuild these divisions into a profitable enterprise in
1997. During the last two months of 1996, the Company began entertaining offers
from interested parties to purchase the Lightmaker division.
The Disposition. On December 27, 1996, the Company sold the
Lightmaker division to LTM Corporation of America ("LTM") for a cash price of
$110,000. The assets sold to LTM were the raw materials inventory, the
machinery and equipment associated with the manufacture of ballasts, and the
intellectual property of the Lightmaker division including the Lightmaker
tradename. Under the terms of the letter agreement dated December 19, 1996, the
Company retained the accounts receivable, the accounts payable and the remaining
finished goods inventory. LTM assumed all warranty liability for the Lightmaker
ballasts. By mid-March 1997, the Company had completed the sale of all the
remaining Lightmaker finished goods inventory.
SHOTMAKER DOLLIES & CRANES
Background. The SD&C Division sells, leases and rents cranes, jib
arms, dollies, remote heads and track
- 5 -
<PAGE> 6
CAMERA PLATFORMS INTERNATIONAL, INC.
systems for cranes and dollies, to the motion picture and television industry.
In some instances, the SD&C Division assembles or manufactures equipment such as
dollies, cranes and track. The division sells its products primarily in North
and South America, and leases and rents its products for use anywhere in the
world.
The Company is the exclusive representative in the Western
Hemisphere for Panther GmbH, a manufacturer headquartered in Munich, Germany,
which markets a line of cranes, dollies and related products. The Company's
representation of Panther products began in July 1993 when the Company purchased
from Panther GmbH its U.S. subsidiary, Panther Corporation of America ("PCA").
After the acquisition PCA was renamed Shotmaker Dollies & Cranes, Inc., which
was operated as a wholly-owned subsidiary of CPI. On January 31, 1997, Shotmaker
Dollies & Cranes, Inc. was dissolved as a corporation and its business is now
operated as part of the SD&C Division.
Two dramatic developments occurred in the SD&C Division over the
past year. The Company acquired exclusive worldwide rights to manufacture, lease
and sell Enlouva cranes and commenced production on a new generation of these
cranes, to be called the Enlouva IV's. On March 12, 1997, the Company's
subsidiary, SDI, announced the anticipated introduction of a new line of
hydraulic dollies and publicly unveiled three different-sized models of this new
line. In addition, the Company has entered into two significant split rental
arrangements, one with Servicevision System S.A. ("Servicevision"), a remote
head manufacturer located in Barcelona, Spain, and the other with Peterson/Holt
Productions, Inc., which owns the rights to Precision I-Beam Track systems.
Major items of equipment in the SD&C Division rental fleet include:
26 dollies (18 Super Panthers and 8 Mini Panthers); 10 Pegasus cranes; 14 jib
arms (12 Super Jibs and 2 Mini Jibs); 3 Scorpio remote heads; approximately
2,000 feet of Precision track; and approximately 650 feet of tubular track. A
number of Enlouva cranes are scheduled to be added to the rental fleet by June
1997. The Company is aggressively looking for new products to add to its
inventory or rental fleet.
Panther Equipment. Panther's Pegasus Crane is the first fully
convertible camera crane that is lightweight, remarkably stable, and capable of
being assembled without tools. The Pegasus III Crane can take a camera operator
and a fully loaded camera up to a 31 foot lens height, and can be swiftly
converted from a standard crane to a remote head crane with a lens height of
over 36 feet. The Company's Pegasus Remote cranes are used for shots with remote
heads (cameras which can be controlled from an operator on the ground). With
extensions, the Pegasus Remote Crane has a lift range of 54 feet.
The Super Panther Dolly is an electro-mechanical camera dolly used
to mount a film or video camera and up to two operators. Its innovative digital
electronics allow for precise vertical movements along its center-post column.
The ascent and descent of the column is operated by a hand-held remote control,
which allows the camera operator, dolly grip or camera assistant to move the
column. Built into the remote control is the capability to program up to 200
movements, which sequentially repeat the upward or downward movement, the rate
of speed and the distance. The column supports two operators and a camera.
The Mini Panther Dolly is also an electro-mechanical dolly precisely
operated by digital electronics. The Mini Panther's column supports 175 lbs,
whereas the Super Panther supports over half a ton. While the Super Panther has
five variable speeds, the Mini Panther has one. The dolly rides two operators,
with the camera on the center post. The Mini also has interchangeable columns: a
motorized unit; a two-stage handcrank column; and a pneumatic version for
television studio work.
The Panther Super Jib is an arm which is positioned on the
center-post of the Super Panther. The Super Jib is in fact a mini-crane, capable
of taking a camera operator and camera to a 12 foot lens height. The Super Jib
can be assembled in less than seven minutes, minimizing down time in production.
The Panther Mini Jib is a lightweight arm that floats a camera system. The Mini
Jib can be attached to any Panther dolly.
A significant portion of the Company's Panther equipment has been
upgraded over the past few months or is currently in the process of being
upgraded. The Company has converted all of its Super Panther II dollies to Super
Panther III's by retrofitting the dollies with more advanced electronic
components. As a result, all these dollies can now be
- 6 -
<PAGE> 7
CAMERA PLATFORMS INTERNATIONAL, INC.
controlled remotely. All the Company's Pegasus I and II cranes can now be
converted to Pegasus III cranes, with the result that all the Company's cranes
can be extended further or ridden by camera operators. Partly as a result of the
research and development conducted by SD&C, Panther is expected to introduce a
"crab-to-steer" modification kit that will allow Panther dollies to
automatically change from standard 2-wheel steering to 4-wheel crab steering
while the dolly is in use. This kit is expected to enhance the marketability of
the Panther dollies in the United States.
Introduction of New Line of Dollies. On March 12, 1997, the
Company's subsidiary, SDI, unveiled a new line of dollies that the Company
anticipates will be made available for sale and rental within several months.
The dollies are available in three sizes, known as the Shotmaker Eagle,
Shotmaker Hawk and Shotmaker Falcon. These dollies are hydraulic, rather than
electronic like the Panther dollies, and are particularly well suited to the
U.S. market. In management's view, these new dollies represent a significant
improvement over any other hydraulic dollies currently available in the United
States. The new Shotmaker dollies have a number of significant competitive
advantages including greater stability and a stronger hoist mechanism with the
capability of lifting two camera operators. SDI's management believes that the
dollies will be enthusiastically received by customers.
The Enlouva Crane. On December 18, 1996, the Company finalized an
agreement with Thomas C. Countryman and Camera Support Systems, Inc., a
Minnesota corporation, to acquire exclusive worldwide rights to manufacture,
sell and rent Enlouva cranes. The agreement provides that the Company will pay
$65,000 for the Enlouva rights. As of December 31, 1996, the Company had paid
$35,000; the balance of the purchase price is being paid over an approximate
three-year period with interest on a fully amortized basis. The Enlouva crane is
a streamlined, compact crane that incorporates a number of revolutionary design
features. Manufactured from aircraft quality aluminum, it is extremely
lightweight. It is completely modular and can be assembled by two people in less
than 15 minutes without tools. It is highly stable and has a maximum lens height
over 26 feet. With a minimum overhead clearance of less than seven feet, the
unit can be used in areas inaccessible to other cranes. It supports all 35mm,
16mm and video cameras, and can be used in combination with most dolly and track
systems, camera cars, boats and trains. A small number of Enlouva III's are
currently available for rent through the Company's competitors or individual
camera operators or grips. From approximately 1993 through 1995, pursuant to a
split rental arrangement, the Company had several Enlouva III's in its rental
fleet and had rented them very successfully. After the split rental arrangement
was terminated, the Company continued to receive inquiries on a weekly (and
sometimes daily) basis from persons interested in renting Enlouva's. Enlouva III
cranes have been used in producing numerous feature films, recent examples of
which include JERRY MCGUIRE, THE ROCK and APOLLO 13.
In December 1996, immediately after acquiring the exclusive rights
to Enlouva, the Company commenced production on a number of units of a new
Enlouva model, which will be called the Enlouva IV. The Enlouva IV incorporates
a number of design improvements including a lighter fulcrum, improved brakes, a
smaller profile and an easier transport system. Based on the Company's past
experience, the rental market for the Enlouva IV's is likely to be strong.
Management expects that with the exclusive rights to both Pegasus and Enlouva
cranes, the Company will be well positioned to increase its market share of
crane rentals.
Remote Heads. Remote heads are used to mount a camera at the end of
a crane or jib arm and are remotely controlled by an operator on the ground. The
operator can view the camera's coverage with a video monitor, and can pan, tilt,
zoom and focus the camera from a safe vantage point. Remote heads could become
an integral part of the Company's business because they are typically used in
conjunction with cranes, such as the Pegasus and Enlouva cranes. The trend in
the industry is toward greater reliance on remote heads.
The Company is the exclusive agent of Servicevision for the rental
and sale of Scorpio remote heads in the Western Hemisphere. Under a split rental
arrangement, Servicevision has provided the Company with three Scorpio remote
heads; the Company shares with Servicevision the revenue from the rental of the
equipment on a 50/50 basis. The Scorpio heads are remarkable because they
operate in either a two-axis or three-axis mode, and are more compact than any
other three-axis remote heads currently available in the marketplace.
Notwithstanding the merits of the Scorpio's, The Company is aggressively
pursuing opportunities to acquire a wider variety of remote heads for SD&C
Division customers.
Precision track. The SD&C Division is a distributor and sales
representative in the United States, Central
- 7 -
<PAGE> 8
CAMERA PLATFORMS INTERNATIONAL, INC.
America and South America for Precision I-Beam Track, which is owned by
Peterson/Holt Productions, Inc. Precision I-Beam Track is based on a
revolutionary design innovation in dolly and crane track which provides dollies
and cranes with a much smoother and more stable ride than the industry standard
tubular track. Precision Track's extruded aluminum construction makes it
lightweight and easily transportable. The Company expects to be marketing two
new Precision I-Beam products, a light weight version of the standard track and
a flat-top version that is specially designed for dollies manufactured by one of
the Company's main competitors.
MARKETING, COMPETITION, INTELLECTUAL PROPERTY AND AWARDS
Marketing. The Company's marketing efforts for its two divisions are
primarily conducted by direct sales efforts, advertisements in trade
publications, and participation in various trade exhibitions. In December 1996,
the Company commenced a complete overhaul of its marketing and advertising plan.
The single most important change has been the decision to market the Company as
one company with a variety of high quality related products, rather a number of
different divisions with separate customers and distinct marketing and
advertising plans. With its divisions working in concert, management believes
that the Company will be better able to cross-market its products, promote the
Shotmaker name and realize significant synergies and efficiencies.
As part of its efforts to revamp the Company's marketing plans, the
Company hired Wagner Design, an advertising and graphic design firm with a
well-established reputation in the entertainment industry. Beginning in December
1996, Wagner Design prepared new advertising and marketing material for the
Company. With assistance from Wagner Design, the Company's print advertising
budget was thoroughly reviewed in order to maximize the return for each print
advertising dollar expended. During the 1997 year, ads will be placed
selectively in certain trade publications and mailings will be sent to existing
and prospective customers. When appropriate, the Company will issue press
releases announcing new products or services. In December 1996 and the first
quarter of 1997, the Company's sales personnel were retrained to cross-market
products from each of the Company's divisions. On March 12, 1997, an open house
was held to re-introduce the Company to its target customers and to show off the
Company's new premises in the North Hollywood/Burbank area. Monthly seminars
have been planned beginning in April 1997, alternating on a monthly basis at the
Company's premises and at suitable off-site locations such as the production
studios.
Competition. No other company currently owns a fleet of camera cars
as large or as sophisticated as the Company's. While a number of competitors
lease camera cars, these competitors' cars are typically two-axle pickup trucks
comparable in size and features to the Shotmaker Standard. There are no other
camera cars currently on the market which have a built-in camera crane,
hydraulic front platform and the towing capability of the Company's Elites. The
Company is the undisputed industry leader for manufacturing and leasing camera
cars and mobile camera cranes.
Two firms, Leonard Studio Equipment, Inc. ("Chapman") and J. L.
Fisher, Inc. ("Fisher"), dominate the rental market for dollies. Chapman and
Fisher are both strong players in the rental market for cranes, but no single
competitor is dominant in crane rentals. Both Chapman and Fisher are Los
Angeles-based companies that are engaged exclusively in the rental and leasing
business. CPI is the third largest dolly and crane company in the United States.
There are also a number of smaller competitors, usually offering one or more
specialized niche products. Other than CPI, very few companies sell dollies in
the United States. For crane sales, the main competitor in the United States is
Egripment, but no single company is dominant. Many small companies also
manufacture cranes to a customer's specifications. In management's opinion, the
Company's acquisition of exclusive rights to the Enlouva crane and its
anticipated introduction of a new line of hydraulic dollies will position the
Company to increase its share of the crane and dolly rental markets.
Patents and Trademarks. The Company has registered THE SHOTMAKER(R)
as a trademark in the United States, Canada, and Japan. The Shotmaker name has
been licensed to SDI, the Company's wholly owned subsidiary. Panther GmbH holds
all patents and trademarks on its Panther products. Peterson/Holt Productions,
Inc. is the licensee for patents relating to the Precision I-Beam Track, and
Cinemeccanica Italiana S.r.l., the manufacturer of the new Shotmaker line of
dollies, owns certain U.S. and European patents related to these dollies.
Awards. The Shotmaker Division received a Scientific and Engineering
Award in 1986 from the Academy of Motion Picture Arts & Sciences for the
development of the Elite Camera Car. In 1991, the division was also honored with
a Primetime Emmy Award from the Television Academy of Arts & Sciences for
Outstanding Achievement in
- 8 -
<PAGE> 9
CAMERA PLATFORMS INTERNATIONAL, INC.
Engineering. The Super Panther dolly received the 1990 Scientific and
Engineering Award from the Academy of Motion Picture Arts and Sciences.
ITEM 2 - PROPERTIES
The Company's principal executive offices and place of business are
located at 10909 Vanowen Street, North Hollywood, California 91605. The
Company's premises are located in an industrial complex in the North
Hollywood/Burbank area and include approximately 19,000 square feet of office,
warehouse and manufacturing space and approximately 5,000 square feet of secured
yard space. The premises are leased from an unaffiliated third party for a gross
rent of $123,600 per year, including common area maintenance and water expenses.
(The lessor is the lessee under a master lease of the premises and the other
buildings in the industrial complex.) The current lease term is for a three-year
period expiring in November 1999; the lease contains two three-year options. The
North Hollywood facility serves as the principal business office of the Company,
its two divisions and one subsidiary. Management believes that the Company's
premises have the capacity to handle the operating requirements of the Company
through the end of the lease term.
The Company's previous place of business was 28145 Avenue Crocker in
Valencia, California. The Company was paying higher rent on a triple net basis
for approximately the same amount of usable space. Current management believes
that the Valencia place of business put the Company at a severe disadvantage
since rental customers were reluctant to travel that far to pick up equipment.
By contrast, the North Hollywood premises are conveniently located near most of
the major studios and production companies in Southern California. The move to
the new premises was accomplished within approximately a thirty-day period, with
minimal disruption to the business.
ITEM 3 - LEGAL PROCEEDINGS
HQ Studio Equipment and Movie Tech, et al. On March 1, 1995, the
Company initiated litigation against HQ Studio Equipment, Inc., of Burbank,
California; MovieTech Film Equipment GmbH; Ivo Houston individually; and Rob
Quintana individually. The suit was filed in the Superior Court of the State of
California, County of Los Angeles, Case No. EC 016977. The suit alleges the
following: (i) Mr. Houston, a former employee of the Company, had been assigned
in late 1993 to develop new steering technology for the Company's dollies; (ii)
over the next year, Mr. Houston either deliberately refrained from developing
the new technology, or developed it in part or in whole and withheld it from the
Company; (iii) Mr. Houston's purpose for this conduct was that, for perhaps as
much as a year before December 24, 1994, he was planning to open a United States
distributorship for MovieTech and it was not in his interest to assist the
Company to compete with him in his new venture; (iv) Mr. Houston's scheme was
discovered in late December, 1994, at which time he was terminated from the
Company; (v) Mr. Houston formed HQ Studio Equipment with a partner, Rob
Quintana, and commenced marketing MovieTech's products to, among others, the
Company's customers.
On March 17, 1995, the Company obtained a preliminary injunction
against HQ Studio Equipment, Houston, and Quintana prohibiting them from
soliciting any person or entity who has been a customer of the Company's within
the prior three years, or with whom the Company has been in discussions about
becoming a customer during the previous year. The Company is seeking damages, in
an amount yet to be determined, against defendants for, among other things,
misappropriation of trade secrets and unfair competition. In 1996, Mr. Houston
filed personal bankruptcy. Settlement negotiations between the Company and Movie
Tech are ongoing.
Rick Dinkel. On December 13, 1995, the Company commenced an action
entitled against Rick Dinkel in Los Angeles Superior Court, Case No. BC 140686.
Dinkel, a former manager in the Company's former subsidiary, Shotmaker Cranes &
Dollies, Inc., was terminated for cause in March 1995. The Company alleged,
among other things, conversion, breach of a confidentiality agreement and
failure to return Company property. Dinkel answered the complaint and
cross-complained against the Company and its president, Phil Panzera, for
wrongful termination, severance and defamation. In December 1996, the Company
and Dinkel executed a settlement agreement, pursuant to which Dinkel and the
Company exchanged certain items of personal property belonging to the other
party and the Company paid $5,000 to Dinkel. On January 28, 1997, the order for
dismissal of the case was entered by the court. The Company, having obtained
partial insurance coverage for its defense costs and any liability based upon
the defamation claim in the cross-complaint, was reimbursed $5,000 by its
insurer.
- 9 -
<PAGE> 10
CAMERA PLATFORMS INTERNATIONAL, INC.
Fred Neva, et al. On August 9, 1996, the Company was served with a
complaint in an action entitled Neva, et al. v. Camera Platforms International,
Inc., et al., which was filed in the United States District Court, District of
Minnesota, 4th Division, Case Number 4-96 Civ. 776. The complaint was filed by a
number of shareholders of the Company against the Company, its officers and
directors, and certain of its former officers and directors. The complaint
alleges that (i) the officers and directors of the Company mismanaged the
Company and breached their fiduciary duty to the Company and its shareholders;
(ii) the Company violated Section 10(b) and Rule 10(b)(5) under the Securities
Exchange Act of 1934 by making false representations concerning the Company's
stock, and (iii) the officers and directors breached their duty of care to the
Company by paying excessive compensation to the Company's officers. On November
6, 1996, plaintiffs amended their complaint and added a fourth count alleging
that defendants breached their duty of loyalty by submitting to UST's
instructions and control. The complaint seeks unspecified damages in excess of
$50,000 on each of three counts, plus costs, disbursements and attorneys' fees.
Defendants have made a motion to dismiss the amended complaint; a hearing on the
motion was held on March 14, 1997 and the parties are awaiting the Court's
decision. Pursuant to the Stock Purchase Agreement the Company has been
indemnified by UST for losses arising out of this lawsuit.
Chapman. The Company's largest competitor in the dolly rental
market, Chapman, has asserted that the Company (actually SDI), by importing and
publicly showing its new line of Shotmaker dollies, is infringing a Chapman
patent. Chapman has further asserted that Shotmaker's new dollies are the same
as another dolly, which was the subject of an injunction issued in 1991 by a
Federal District Court in New Jersey. SDI management believes that the new
Shotmaker dollies are not subject to the 1991 injunction because significant
components of the dollies have been redesigned to ensure that they do not
infringe any Chapman patent. SDI has provided Chapman with the designs to
certain key components of new dollies. SDI has invited Chapman to meet with SDI
management and inspect the equipment first-hand. As of March 17, 1997, that
meeting had not yet occurred.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1996.
- 10 -
<PAGE> 11
CAMERA PLATFORMS INTERNATIONAL, INC.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on the over-the-counter market
under the symbol "CPFR" (formerly the symbol was "CMPL"). The following table
sets forth the high and low bid prices for the Company's common stock. Bids
represent inter-dealer prices, without retail mark-up, mark-down or commissions,
and may not represent actual transactions.
<TABLE>
<CAPTION>
Period High Low
------ ---- ---
<S> <C> <C> <C>
1995:
1st Quarter ............................................. 1/8 1/8
2nd Quarter.............................................. 1/8 1/8
3rd Quarter.............................................. 1/8 1/8
4th Quarter.............................................. 1/8 1/8
1996:
1st Quarter.............................................. 3/32 3/32
2nd Quarter.............................................. 3/32 3/32
3rd Quarter.............................................. 1/8 3/32
4th Quarter.............................................. 1/8 2/32
1997: 1st Quarter through March 17, 1997....................... 1/8 3/32
</TABLE>
As of March 17, 1997, there were approximately 900 beneficial
owners of 12,418,228 outstanding shares of the Company's common stock, held by
315 shareholders of record.
The Company has not paid a dividend on its common stock since
inception.
ITEM 6 - SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Year ended December 31 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $3,321,000 $4,290,000 $4,428,000 $3,498,000 $3,850,000
Net loss (1,883,000) (851,000) (1,999,000) (1,896,000) (1,092,000)
Total assets 2,431,000 3,462,000 4,411,000 5,010,000 2,966,000
Long-term debt 250,000 -- 353,000(1) 5,094,000 1,450,000
Net loss per share
of common stock ($.15) ($0.07) ($0.16) ($0.15) ($0.09)
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Long-term debt decreased substantially during 1994 as a result of a
debt to equity conversion. For further information please refer to Note
7 to the Consolidated Financial Statements.
- 11 -
<PAGE> 12
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED SUMMARY OF QUARTERLY OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Quarter ended Quarter ended Quarter ended Quarter ended
March 31, June 30, September 30, December 31,
1996 1995 1996 1995 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 792,000 $ 1,266,000 $ 779,000 $ 1,048,000 $ 1,052,000 $ 929,000 $ 698,000 $ 1,047,000
Cost of sales and
rentals 774,000 914,000 736,000 769,000 846,000 661,000 651,000 928,000
Selling, general and
administrative 450,000 411,000 528,000 553,000 352,000 426,000 580,000 426,000
--------------------------------------------------------------------------------------------------------
Operating loss (432,000) (59,000) (485,000) (274,000) (146,000) (158,000) (533,000) (307,000)
Interest expense to
related party -- (2,000) -- (1,000) -- -- --
Interest income
(expense) net (14,000) (9,000) (2,000) (5,000) (1,000) (9,000) (24,000) (8,000)
Other income (expense) 12,000 (11,000) 4,000 (10,000) (42,000) -- (220,000) 2,000
--------------------------------------------------------------------------------------------------------
Net loss (434,000) (81,000) (483,000) ($290,000) (189,000) ($167,000) (777,000) ($313,000)
==================================================================================================================================
Net loss per share
of common stock ($0.03) ($0.01) ($0.04) ($0.02) ($0.02) ($0.02) ($0.06) ($0.02)
==================================================================================================================================
Weighted average number
of shares outstanding 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228
==================================================================================================================================
</TABLE>
- 12 -
<PAGE> 13
CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has operated under credit lines
established with its majority shareholder, UST Inc. ("UST"). UST sold its
interest in the Company on October 10, 1996 (See item 1, "Sale of Company").
Pursuant to the terms of the Stock Purchase Agreement, UST forgave $1,338,138
owed by the Company to UST, which was recorded as an addition to paid in
capital. On the same date, the Company obtained a line of credit from Foothill
Capital Corporation in the amount of $850,000 (the "Foothill Credit Line"). The
Foothill Credit Line has a term of one year and operates as a revolving line of
credit.
The Company has neither accrued nor paid interest on the UST credit
line advances since February 28, 1995. The Foothill Credit Line requires monthly
principal paydowns in the amount of $17,000 together with monthly interest
payments all of which were current as of March 17, 1997.
The Company had outstanding balances under the Foothill Credit Line
of $170,000 and $305,000 as of December 31, 1996 and March 17, 1997,
respectively.
The Consolidated Statement of Cash Flows presented herein indicates
$975,000 of negative cash flow from the Company's operating activities for the
year ended December 31, 1996. Included in this deficit amount are $446,000 of
professional expenses, a portion of which was related to the sale of the
Company.
The Company's operations are providing sufficient cash flow to meet
current operating requirements. The Company believes that working capital
generated by operations, along with the remaining availability under the
Foothill Credit Line or a successor line of credit, will continue to provide
sufficient funds to meet CPI's operating cash requirements for the next twelve
months. Based on the Company's performance as of March 17, 1997, the Company
believes that it will not have difficulty either renewing its line of credit
with Foothill Capital Corporation or obtaining a comparable line of credit from
another lending institution on similar or more favorable terms.
RESULTS OF OPERATIONS
1996 versus 1995
Net sales decreased by 28% from $2.45 million in 1995 to $1.77
million in 1996. This decrease primarily resulted from a 41% decrease in
Lightmaker revenue. Lightmaker sales were adversely affected in 1996 as a result
of concerns in the industry about the future of Lightmaker after the sale of the
Company. Lightmaker continued to face stiff competition during 1996 as several
competitors had introduced new electronic ballasts with innovative features.
SD&C sales in 1996 declined 10% from 1995.
Rental revenue decreased 16% from $1.84 million in 1995 to $1.55
million in 1996. This decrease resulted from a 14% decrease in Shotmaker camera
car rentals and a 16% decrease in SD&C rentals during 1996. The decrease in
camera car rentals was largely the result of a number of cars being out of
service due to the Company's difficulties in legally obtaining smog certificates
for those cars. The Company also had difficulty obtaining parts for repair of
the cars since a number of suppliers had not been paid on a timely basis prior
to the transition to new management on October 10, 1996. The decrease in SD&C
rentals resulted from several factors. The Company lost two lucrative split
rental arrangements; the Company location outside of the prime rental area
continued to suppress the rental revenue; the Company sold certain items of
rental equipment from its fleet and was not able to replace or obtain parts for
equipment on a timely basis.
Total revenue for the Company decreased by 23% from $4.29 million
in 1995 to $3.32 million in 1996.
- 13 -
<PAGE> 14
CAMERA PLATFORMS INTERNATIONAL, INC.
Cost of sales decreased by 10% from $1.75 million in 1995 to $1.57
million in 1996. This decrease was generally related to the corresponding 28%
decrease in 1996 sales revenue. SD&C sales margin for the year deteriorated as a
result of a higher cost of equipment, increased inbound freight expense and
greater discounts given to customers. Lightmaker sales margins also deteriorated
due to higher direct labor and factory overhead costs.
Cost of rentals decreased by 5% from $1.52 million in 1995 to $1.44
million in 1996. This decrease was partly the result of the 16% decrease in
rental revenue. Both SD&C and Shotmaker Camera Car rental costs decreased, but
not sufficiently to offset the decrease in revenues.
Selling, general and administrative expenses increased by 8% from
$1.82 million in 1995 to $1.97 million in 1996. Selling, general and
administrative expenses were adversely affected during 1996 as a result of
additional expenses related to the sale of the Company, and additional legal
expenses related to the two lawsuits initiated by the Company. Expenses related
to the sale of the Company were $301,000 in 1996, as compared with $258,000 in
1995. Litigation expenses were $55,000 in 1996, as compared with $53,000 in
1995. Total expenses decreased by 4% in 1996.
Interest expense increased 15% 1996 from $34,000 in 1995 to $39,000
in 1996. Interest ceased to accrue on the borrowings under the UST line of
credit on February 28, 1995, pursuant to a letter of intent related to the sale
of the Company. Other expenses increased from $19,000 in 1995 to $193,000 in
1996 as a result of expenses related to the sale of the Lightmaker division and
the leasehold abandonement related to moving the Company's premises.
The Company's net loss increased from $0.85 million in 1995 to
$1.88 million in 1996, a 121% increase. The net loss per share of common stock
increased from $0.07 in 1995 to $0.15 in 1996.
1995 versus 1994
Net sales decreased by 6% from $2.62 million in 1994 to $2.45
million in 1995. This decrease primarily resulted from a 9% decrease in
Lightmaker revenue. Lightmaker sales were adversely affected in 1995 as a result
of concerns in the industry about the future of Lightmaker after the sale of the
Company. Lightmaker has also faced increasingly stiff competition during 1995 as
several competitors have introduced new electronic ballasts with innovative
features. SD&C sales in 1995 were substantially similar to 1994 results.
1995 rental revenue remained relatively stable at $1.84 million, as
compared to $1.81 million in 1994. This slight increase resulted from a 24%
increase in Shotmaker camera car rentals during 1995. The increase in camera car
rentals returned the Shotmaker division to its normal historical revenue level
after the atypical results recorded in 1994. Camera car rentals in 1994 were
abnormally low as a result of lost rental engagements caused by the January 1994
earthquake, and an unusually low number of long-term feature films. The increase
in camera car rental revenue was partially offset by a 16% decrease in SD&C
rental revenue. This decrease resulted primarily from the loss of two split
rental relationships for cranes. Total revenue for the Company decreased by 3%
from $4.43 million in 1994 to $4.29 million in 1995.
Cost of sales decreased by 9% from $1.92 million in 1994 to $1.75
million in 1995. This decrease resulted from reduced variable costs incurred
from the corresponding 6% decrease in 1995 sales revenue. SD&C sales margin for
the year improved as a result of 1994 ballast writedowns of $80,000. There were
no Lightmaker ballast writedowns during 1995.
Cost of rentals decreased by 11% from $1.71 million in 1994 to
$1.52 million in 1995. The 11% decrease was recorded despite a 2% increase in
rental revenue. The decrease resulted from continued efforts at internal
- 14 -
<PAGE> 15
CAMERA PLATFORMS INTERNATIONAL, INC.
cost reduction, primarily in SD&C rentals.
Selling, general and administrative expenses decreased by 3% from
$1.88 million in 1994 to $1.82 million in 1995. Selling, general and
administrative expenses have been adversely affected during 1995 as a result of
additional expenses related to the sale of the Company, and additional legal
expense related to an unfair competition lawsuit initiated by the Company.
Expenses related to the sale of the Company were $258,000 in 1995, as compared
with $133,000 in 1994. Litigation expenses were $53,000 in 1995, as compared
with zero in 1994. Without the addition of these sale-related and litigation
expenses, selling, general and administrative expense would have decreased by
$245,000. These reductions resulted from continued efforts at internal cost
reduction, primarily in corporate expenses.
A $600,000 asset valuation allowance was established at December
31, 1994, to reduce the shareholders' equity of the Company to an amount
consistent with the net proceeds expected from the contemplated sale of the
Company. Total expenses decreased by 17% in 1995. Without including the effect
of the sale-related asset valuation allowance, total expenses would have
decreased by 8% in 1995.
Interest expense decreased substantially during 1995 as a result of
the $5.3 million forgiveness of debt by UST in November 1994. In addition,
interest ceased to accrue on borrowings under the UST line of credit on February
28, 1995, pursuant to a letter of intent related to the sale of the Company. The
Company recorded a loss on foreign currency exchange as the deutsche mark
strengthened, increasing the cost of products purchased for resale from Panther
GmbH.
The Company's net loss decreased from $2.0 million in 1994 to $0.85
million in 1995, a 57% decrease. The net loss per share of common stock
decreased from $0.16 in 1994 to $0.07 in 1995. Without including expenses
related to the sale of the Company, interest expense, and the 1994 sale-related
asset valuation allowance, the Company's net loss would have decreased from
$989,000 in 1994 to $590,000 in 1995, a $399,000 improvement on 3% less total
revenue.
Impact of 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.
Foreign Currency Transactions
All international sales are denominated and remitted in U.S.
dollars, and all foreign transactions are settled within a short period of time.
Accordingly, the Company does not anticipate that foreign currency fluctuations
will have a material effect on operations in the next twelve months.
- 15 -
<PAGE> 16
CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Grant Thornton LLP, Independent Auditors........................... 17
Report of Ernst & Young LLP, Independent Auditors............................ 18
Financial Statements:
Consolidated Statement of Financial Position at
December 31, 1996 and 1995.......................................... 19
Consolidated Statement of Operations for the Years Ended
December 31, 1996, 1995 and 1994.................................... 20
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994.................................... 21
Consolidated Statement of Shareholders' Equity for the Years Ended
December 31, 1996, 1995 and 1994.................................... 22
Notes to Consolidated Financial Statements............................... 23
Schedule II - Valuation and Qualifying Accounts for the
Years Ended December 31, 1994, 1995 and 1996......................... 30
</TABLE>
- --------------------------------------------------------------------------------
ALL OTHER SCHEDULES FOR WHICH PROVISION IS MADE IN THE APPLICABLE
ACCOUNTING REGULATION OF THE SECURITIES AND EXCHANGE COMMISSION ARE
NOT REQUIRED UNDER THE RELATED INSTRUCTIONS OR ARE INAPPLICABLE, AND
THEREFORE HAVE BEEN OMITTED.
- 16 -
<PAGE> 17
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Camera Platforms International, Inc.
We have audited the accompanying consolidated statements of financial position
of Camera Platforms International, Inc. as of December 31, 1996, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used an significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Camera Platforms
International, Inc. as of December 31, 1996, and the consolidated results of its
operations and its consolidated cash flows for the year then ended in conformity
with generally accepted accounting principles.
GRANT THORNTON LLP
Los Angeles, California
March 18, 1997
- 17 -
<PAGE> 18
Report of Independent Auditors
Shareholders and Board of Directors
Camera Platforms International, Inc.
We have audited the accompanying consolidated balance sheet of Camera Platforms
International, Inc. as of December 31, 1995 and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
two years in the period ended December 31, 1995. Our audits also included the
financial statement schedule listed in the Index at Item (8). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Camera Platforms
International, Inc. at December 31, 1995 and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
ERNST & YOUNG LLP
Woodland Hills, California
February 2, 1996
-18-
<PAGE> 19
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
December 31 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 181,000 $ 190,000
Accounts receivable, less allowance
for doubtful accounts of
$34,000 in 1996 and $49,000 in 1995 283,000 630,000
Inventories 269,000 424,000
Prepaid expenses 82,000 23,000
------------ ------------
TOTAL CURRENT ASSETS 815,000 1,267,000
Property and equipment, net of accumulated depreciation
and a $600,000 rental asset valuation allowance 1,498,000 2,020,000
Deposits and other noncurrent assets 118,000 175,000
$ 2,431,000 $ 3,462,000
=================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 565,000 $ 513,000
Revolving credit facility 170,000 --
Current portion of long-term debt -- 382,000
Notes payable to related party -- 600,000
Accrued interest payable to related party -- 235,000
Customer deposits 95,000 42,000
Other current liabilities 60,000 38,000
------------ ------------
TOTAL CURRENT LIABILITIES 890,000 1,810,000
Long-term debt, net of current maturities 250,000 --
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock--$.0005 par value; 15,000,000 shares authorized;
12,418,228 shares issued and outstanding 6,000 6,000
Additional paid-in capital 22,792,000 21,270,000
Accumulated deficit (21,507,000) (19,624,000)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 1,291,000 1,652,000
------------ ------------
$ 2,431,000 $ 3,462,000
=================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
- 19 -
<PAGE> 20
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Year ended December 31 1996 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales $ 1,769,000 $ 2,450,000 $ 2,617,000
Rentals 1,552,000 1,840,000 1,811,000
------------ ------------ ------------
3,321,000 4,290,000 4,428,000
------------ ------------ ------------
EXPENSES
Cost of sales 1,566,000 1,749,000 1,918,000
Cost of rentals 1,441,000 1,523,000 1,707,000
Selling, general and administrative 1,965,000 1,816,000 1,883,000
Asset valuation allowance -- -- 600,000
------------ ------------ ------------
4,972,000 5,088,000 6,108,000
------------ ------------ ------------
Operating loss (1,651,000) (798,000) (1,680,000)
Interest expense to related party -- (3,000) (277,000)
Interest income (expense), net (39,000) (31,000) (30,000)
Other expense (193,000) (19,000) (12,000)
------------ ------------ ------------
NET LOSS ($ 1,883,000) ($ 851,000) ($ 1,999,000)
============================================================================================
NET LOSS PER SHARE OF COMMON STOCK ($0.15) ($0.07) ($0.16)
============================================================================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 12,418,228 12,418,228 12,418,228
============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
- 20 -
<PAGE> 21
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Year ended December 31 1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ($1,883,000) ($851,000) ($1,999,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 422,000 512,000 623,000
Rental asset valuation allowance -- -- 542,000
Loss (gain) on disposal of equipment (33,000) (4,000) (48,000)
Provision (credit) for doubtful
accounts (34,000) 26,000 (45,000)
Gain on sale of Lightmaker Division (108,000) -- --
Changes in assets and liabilities
Accounts receivable 381,000 (259,000) 313,000
Inventories 155,000 221,000 (154,000)
Prepaid expenses (59,000) 5,000 61,000
Deposits and noncurrent assets 57,000 37,000 (63,000)
Accounts payable 52,000 95,000 46,000
Accrued interest payable 6,000 3,000 203,000
Other current liabilities 69,000 (26,000) (8,000)
- ---------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (975,000) (241,000) (529,000)
- ---------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sale of Lightmaker division 110,000 -- --
Proceeds from sale of equipment 208,000 4,000 147,000
Purchases of property and equipment (77,000) (14,000) (145,000)
- ---------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES 241,000 (10,000) 2,000
- ---------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from borrowings of long-term debt 250,000 -- 715,000
Proceeds from borrowings of short-term debt 697,000 600,000 --
Principal payments on notes payable (414,000) (200,000) (200,000)
Contribution of capital 192,000 -- --
- ---------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 725,000 400,000 515,000
- ---------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (9,000) 149,000 (12,000)
Cash at beginning of year 190,000 41,000 53,000
- ---------------------------------------------------------------------------------------------------
CASH AT END OF YEAR $ 181,000 $ 190,000 $ 41,000
===================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 36,000 $ 1,000 $ 81,000
Income taxes 2,000 2,000 3,000
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
- 21 -
<PAGE> 22
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Number of Common Paid-in Accumulated
Shares Stock Capital Deficit Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1994 12,418,228 $6,000 $15,970,000 ($16,774,000) ($798,000)
Forgiveness of notes
payable to related party -- -- 5,300,000 -- 5,300,000
Net loss for the year -- -- -- (1,999,000) (1,999,000)
- ------------------------------------------------------------------------------------------------------
Balance at
December 31, 1994 12,418,228 $6,000 $21,270,000 ($18,773,000) $ 2,503,000
Net loss for the year -- -- -- (851,000) (851,000)
- ------------------------------------------------------------------------------------------------------
Balance at
December 31, 1995 12,418,228 $6,000 $21,270,000 ($19,624,000) $ 1,652,000
Forgiveness of notes
payable to related party -- -- 1,330,000 -- 1,330,000
Contribution of capital
by shareholders 192,000 192,000
Net loss for the year (1,883,000) (1,883,000)
- ------------------------------------------------------------------------------------------------------
Balance at
December 31, 1996 12,418,228 $ 6,000 $22,792,000 ($21,507,000) $ 1,291,000
======================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
- 22 -
<PAGE> 23
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SALE OF THE COMPANY
Pursuant to a Stock Purchase and Contribution Agreement dated October 10, 1996,
(the "Stock Purchase Agreement") by and among UST Inc., ("UST"), UST Enterprises
Inc. ("Enterprises"), W/F Investment Corp ("W/F") and the Company, Shotmaker
Acquisition Corp ("SAC"), as nominee for W/F, purchased 9,403,168 shares of the
common stock of the Company from UST and Enterprises, representing approximately
76% of the outstanding shares of the Company. SAC paid cash to UST and
Enterprises in the amount of $94,000, and made a cash capital contribution to
the Company of $192,000. As part of the Stock Purchase Agreement, UST forgave
approximately $1,330,000 of debt, leaving a balance of $250,000 which is due,
together with accrued interest thereon, on April 11, 1998. Also as part of the
Stock Purchase Agreement, W/F obtained on behalf of the Company an $850,000
revolving line of credit with Foothill Capital, secured by substantially all the
assets of the Company (see Note 6).
NOTE 2 -- SALE OF LIGHTMAKER DIVISION
On December 27, 1996, the Company completed the sale of its Lightmaker division
to LTM Corporation of America ("LTM") for a cash price of $110,000. The assets
sold to LTM were raw materials inventory, machinery and equipment associated
with the manufacture of the electronic ballasts, and the intellectual property
of the Lightmaker division including the Lightmaker trade name. Under the terms
of the agreement, the Company retained the accounts receivable, the accounts
payable, and the remaining finished goods inventory. LTM assumed all warranty
liability for the Lightmaker ballasts.
NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Camera Platforms International, Inc. (the "Company"), was organized in the state
of Delaware in 1985 to engage in the business of leasing camera cars and other
related equipment to motion picture and television production companies. In 1987
the Company began developing a proprietary line of electronic lighting ballasts.
In 1988 the Company commenced the production and sale of the ballasts and
related products to motion picture, television and theater productions. As more
fully described in Note 2, the Company sold the lighting ballast division during
1996. In 1993 the Company began to lease and sell camera dollies, cranes, and
related products to motion picture and television productions.
The Company is 76% owned by Shotmaker Acquisition Corp as a result of a Stock
Purchase Agreement more fully described in Note 1.
The Company operates in a single business segment. The Company designs,
manufactures, sells, leases and rents equipment for the motion picture,
television and theatrical production industry.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a going concern
basis. The Company has incurred recurring operational losses and negative cash
flows from operations. The Company has historically supplemented its cash flows
from operations through a combination of debt and equity financings from UST.
Since UST's sale of its ownership in the Company, the Company has supplemented
cash flows from operations through a revolving line of credit with Foothill
Capital.
Since the transition to new management on October 10, 1996, the Company has
taken steps to reduce operating
- 23 -
<PAGE> 24
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
expenses and increase revenue and profitability. To reduce operating expenses,
the Company has, among other things, sold the Lightmaker division, which had
been incurring losses (see Note 2), and reduced payroll and other expenses
including rent, insurance and legal and professional expenses. To improve
profitability, the Company has taken steps to increase utilization of its camera
cars, cranes and dollies. The Company has added new products including a new
line of Shotmaker dollies and it has begun manufacturing a second line of cranes
under the Enlouva name. The Company's sales and marketing plans have been
revamped, and the Company has relocated its headquarters in order to provide
better service to customers. Given these changes in the Company's operations, it
is management's belief that the Company will not incur any significant negative
cash flow from operations in 1997 and that, in the event there is any negative
cash flow from operations, the Foothill Capital line of credit will be more than
sufficient to offset such negative cash flow.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary. Significant intercompany accounts and transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
Revenues from assets held for lease are considered rental revenues under the
terms of the related operating leases. Accordingly, the revenue is recognized as
it becomes due under the terms of the lease agreements.
The Company sells its products on ordinary trade terms.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
utilizing the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment is stated at the lower of cost or net realizable value,
less accumulated depreciation. Depreciation is generally determined using the
straight-line method over the estimated useful life of the equipment, using
periods ranging from three to ten years. Lighting ballasts held for rental are
depreciated using the straight-line method over five years.
INTANGIBLE ASSETS
Intangible assets, which are included in other noncurrent assets, consisted of
goodwill associated with the Company's purchase of Panther Corporation of
America in July 1993. This goodwill was recorded at cost and is being amortized
using the straight-line method over 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
Loss per share is calculated based upon the weighted average number of common
shares outstanding during each year. Common stock equivalents have been excluded
from the earnings per share calculations as their effect would have been
anti-dilutive.
- 24 -
<PAGE> 25
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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. At December 31, 1996
and 1995 there were no extended term receivables. Collections of accounts
receivable have consistently been within management's expectations.
WARRANTY OBLIGATIONS
The Company warrants its products, generally for either a six or twelve month
period, and provides currently for the estimated costs which may be incurred
under these product warranties.
ADVERTISING COSTS
The Company expenses all advertising costs as incurred. Advertising costs were
$243,000, $186,000, and $193,000 for the years ended December 31, 1996, 1995 and
1994, respectively, and were recorded as part of selling, general and
administrative expenses.
OPERATING 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. The
Company also has a small number of camera dollies on long-term operating leases
of twelve to thirty-six months, and one camera car on an indefinite long-term
operating lease. None of the rentals are noncancelable leases, and no contingent
rentals are included in the Company's results.
STOCK-BASED COMPENSATION
The Company has adopted the disclosure-only provisions of FAS 123, "Accounting
for Stock-Based Compensation", but applies APB No. 25 and related
interpretations in accounting for options granted under its plan. However, since
there were no options granted in 1996 or 1995, management has determined that
the pro forma disclosure provisions of FAS 123 are not applicable for the years
ended December 31, 1996 and 1995.
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. Actual
results could differ from those estimates and such differences could be material
to the consolidated financial statements.
NOTE 4 -- INVENTORIES
<TABLE>
<CAPTION>
December 31,
---------------------------------
1996 1995
-------- --------
<S> <C> <C>
Raw materials................ $ -- $158,000
Finished goods............... 269,000 266,000
-------- --------
$269,000 $424,000
======== ========
</TABLE>
- 25 -
<PAGE> 26
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
NOTE 5 -- PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
----------------------------------
1996 1995
----------- ----------
<S> <C> <C>
Rental equipment.................................................... $4,770,000 $5,078,000
Machinery and equipment............................................. 314,000 682,000
Leasehold improvements.............................................. 15,000 246,000
Furniture and fixtures.............................................. 60,000 127,000
Automobiles and trucks.............................................. 57,000 57,000
Construction in progress............................................ 23,000 23,000
---------- ----------
5,239,000 6,213,000
Less accumulated depreciation and amortization...................... 3,199,000 3,651,000
Less rental asset valuation allowance............................... 542,000 542,000
---------- ----------
$1,498,000 $2,020,000
========== ==========
</TABLE>
Accumulated depreciation and amortization pertaining to rental equipment
amounted to $2,832,000 in 1996 and $2,590,000 in 1995.
NOTE 6 -- REVOLVING CREDIT FACILITY
The Company has an $850,000 revolving credit facility with interest at reference
rate plus 4% (effective rate of 12.25 % at December 31, 1996) and monthly
principal reductions of $17,000, maturing October 15, 1997. Advances under the
credit facility totaled $170,000 at December 31, 1996 and are secured by
substantially all the assets of the Company.
NOTE 7 -- LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Due to former shareholder, unsecured, interest accruing at
8.25%, principal and interest due April 11, 1998,
unsecured. 250,000 835,000
Installment obligation, non interest bearing -- 382,000
- --------------------------------------------------------------------------------------------------
420,000 1,217,000
Less current maturities -- 1,217,000
----------- ----------
$250,000 $ --
=========
</TABLE>
NOTE 8 -- INCOME TAXES
The Company utilizes the liability method 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.
- 26 -
<PAGE> 27
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
At December 31, 1996, the Company has federal net operating loss carryforwards
of approximately $22 million for tax purposes, which expire from 2000 to 2011.
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 has California net operating loss carryforwards of
approximately $7 million for tax purposes, which expire from 1997 to 2001. The
Company also has federal research and development credits of approximately
$64,000, expiring in 2001 and 2002, which may be used to offset future tax
liabilities. At December 31, 1996, 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 uncertainty
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 9 -- STOCK OPTIONS
The Company has adopted a Stock Option Plan to provide additional incentive for
officers and key employees to invest in the Company. The Company has reserved
500,000 shares of its common stock for issuance in connection with the plan. The
Company has granted stock options to purchase shares of its common stock to
certain officers and key employees as follows:
<TABLE>
<CAPTION>
Options Outstanding
-----------------------------------
Weighted
Ave. Exercise
Shares Price
--------- -------------
<S> <C> <C>
Outstanding at January 1, 1994.................................... 220,000 2.12
Granted...................................................... -- --
Exercised.................................................... -- --
Terminated or expired........................................ (103,000) 2.12
-------- -------
Outstanding at December 31, 1994.................................. 117,000 2.12
Granted...................................................... -- --
Exercised.................................................... -- --
Terminated or expired........................................ (49,000) 1.85
-------- -------
Outstanding at December 31, 1995.................................. 68,000 $2.25
======== =======
Granted...................................................... -- --
Exercised.................................................... -- --
Terminated or expired........................................ (34,000) 2.25
--------- -------
Outstanding at December 31, 1996.................................. 34,000 $2.25
======== =======
</TABLE>
Options were granted under the plan at not less than the fair market value of
the stock on the date of grant. The options became exercisable beginning in
1991, and the remaining options expire in 1997.
- 27 -
<PAGE> 28
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
NOTE 10 -- COMMITMENTS AND CONTINGENCIES
LEASES
The Company's commitment under the lease for its primary business premises
expired December 31, 1996 and the Company vacated the building. Rent expense for
this lease for the years ended December 31, 1996, 1995 and 1994 was $132,000,
$148,000 and $148,000, respectively.
In December 1996, the Company entered into a new lease expiring December, 1999.
Minimum payments under the new lease are $121,000, $121,000 and $111,000 for the
years ending December 31, 1997, 1998, and 1999, respectively.
PURCHASE COMMITMENTS
In 1993, the Company entered into a five-year distribution agreement with
Panther GmbH. This agreement may be extended to eight years if certain
conditions are met at the end of the distribution term and subsequent annual
extension periods. Pursuant to the agreement, the Company has been granted
exclusive distribution rights for all Panther products in North and South
America. The distribution agreement has certain minimum purchase requirements.
The Company has met its minimum purchase commitments under the agreement. The
minimum purchase commitment for 1997 is DM 1,200,000 ($706,000).
CONTINGENCIES RELATED TO ENVIRONMENTAL ISSUES
In previous years, the Company reported that the Shotmaker division's camera
cars, fifteen of which are currently in operation, were unable to meet vehicle
emission standards. As of March 1997, with the exception of one camera car that
had been retrofitted but was not yet certified and one other camera car on long
term lease in Japan, all the Company's cars were retrofitted to meet all state
and federal emissions requirements. The retrofitting was accomplished without
jeopardizing any of the operational features of the vehicles cars.
NOTE 11 -- SALES TO MAJOR CUSTOMERS AND GEOGRAPHIC AREAS
No sales to a single customer accounted for more than ten percent of total
revenues during 1996, 1995, and 1994. No geographic area outside the United
States accounted for more than ten percent of total sales during the last three
years.
NOTE 13 - 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 December 31, 1996 and 1995.
NOTE 14 - SUBSEQUENT EVENTS
As of January 31, 1997, Shotmaker Dollies and Cranes, Inc ("SD&C"), the
Company's wholly owned subsidiary, adopted a tax free plan of liquidation. Under
the plan, all the assets, liabilities and business operations of SD&C were
distributed to the Company. The plan was undertaken primarily to minimize the
additional costs associated with operating two corporate entities, and is
otherwise not expected to have any material impact on the operations of the
Company.
- 28 -
<PAGE> 29
CAMERA PLATFORMS INTERNATIONAL, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Additions
Balance Charged to Balance
January 1 Expenses Deductions December 31
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Asset valuation allowance -- $ 600,000 -- $600,000
Allowance for doubtful accounts 68,000 15,000 (60,000) 23,000
Warranty liability 13,000 5,000 (4,000) 14,000
-------- --------- --------- --------
$ 81,000 $ 620,000 ($ 64,000) $637,000
======== ========= ========= ========
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995
Asset valuation allowance $600,000 -- -- $600,000
Allowance for doubtful accounts 23,000 62,000 (36,000) 49,000
Warranty liability 14,000 8,000 (12,000) 10,000
-------- --------- --------- --------
$637,000 $ 70,000 ($ 48,000) $659,000
======== ========= ========= ========
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996
Asset valuation allowance $600,000 -- -- $600,000
Allowance for doubtful accounts 49,000 34,000 (49,000) 34,000
Warranty liability 10,000 18,000 (24,000) 4,000
-------- --------- --------- --------
$659,000 $ 52,000 ($ 73,000) $638,000
======== ========= ========= ========
- -------------------------------------------------------------------------------------------
</TABLE>
- 29 -
<PAGE> 30
CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING OR
FINANCIAL DISCLOSURE
At a meeting held on January 22, 1997, the Board of Directors of
the Company approved the engagement of Grant Thornton LLP as its independent
auditors for the fiscal year ending December 31, 1996, and for other independent
accounting and tax-related services on an ongoing basis, to replace the firm of
Ernst & Young LLP, who resigned as auditors of the Company effective January 22,
1997. The Board of Directors does not have a separate audit committee.
The reports of Ernst & Young LLP on the Company's financial
statements for the past two fiscal years ended December 31, 1994 and 1995 did
not contain an adverse opinion or a disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements
for each of the past two fiscal years ended December 31, 1994 and 1995 and in
the subsequent interim periods, there were no disagreements with Ernst & Young
LLP on any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the matter in its report.
The Company requested Ernst & Young LLP to furnish it a letter
addressed to the Commission stating whether it agrees with the above statements.
A copy of that letter, dated January 24, 1997, was filed as Exhibit 1 to the
Company's Form 8-K Current Report dated January 22, 1997, which reported the
change in the Company's certifying accountant. Ernst & Young LLP's letter is
also incorporated by reference as an exhibit to this Form 10-K Annual Report.
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's By-Laws provide for a range of one to nine directors
and allow the Board of Directors to set the exact number of authorized directors
within that range. The current number of authorized directors established by the
Board of Directors is four. Directors are elected at each Annual Meeting of
Shareholders to serve thereafter until their successors have been duly elected
and qualified.
The following table provides certain information as of March 17,
1997, for each director and executive officer of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Roy Atlas 53 Director, President and Chief
Operating Officer
William O. Fleischman 51 Chairman of the Board and
Secretary
Leslie J. Kovacs 54 Director*
Ronald J. Riddle 50 Treasurer (Controller)
Laird Robertson 42 Director and Chief Executive
Officer
</TABLE>
- ----------
* Mr. Kovacs is not yet a director but has agreed to become a director as of
April 16, 1997.
Roy Atlas has been a director of the Company since December 19,
1996. Mr. Atlas served as Executive Vice President and Chief Operating Officer
of the Company from October 10 to December 19, 1996, and has been serving as
President and Chief Operating Officer from December 19, 1996. From 1980 to 1996,
Mr. Atlas served in senior management positions at a number of distribution
companies in Florida or the east coast including Gold Coast Distributors in
Miami, Florida, American Potomac Distributors in Washington, D.C., and South
Jersey Distributors in Pleasantville,
- 30 -
<PAGE> 31
CAMERA PLATFORMS INTERNATIONAL, INC.
New Jersey. Previously, Mr. Atlas built up a successful 11-store drugstore chain
in the Washington, D.C. area, which he sold in 1979.
William O. Fleischman has been Chairman of the Board and Secretary
of the Company since October 10, 1996. Mr. Fleischman, in his individual
capacity or through W/F or its affiliates, has substantial experience investing
in and managing companies, financial institutions and real estate. Mr.
Fleischman is also a senior member of the law firm of Fleischman & Schelberg, a
Century City based law firm specializing in corporate and real estate law.
Leslie J. Kovacs will serve as a director of the Company beginning
on April 16, 1997. Mr. Kovacs is a well respected independent lighting gaffer
who has been involved in the motion picture industry since 1965. He is a member
of the International Alliance of Theatrical Stage Employees (I.A.T.S.E.). His
film credits include some of the top U.S. box office films in recent years
including BASIC INSTINCT, BATMAN FOREVER, EXECUTIVE DECISION and the upcoming
BATMAN AND ROBIN.
Ronald J. Riddle has been employed as the Controller of the Company
since July 1986, and has been the Company's Treasurer since March 1991. Mr.
Riddle has also served as the General Manager of the Shotmaker division from
February 1991 through October 1996. From March 1991 until October 1991 Mr.
Riddle served as Secretary of the Company.
Laird Robertson has been a director of the Company since December
19, 1996, and the Chief Executive Officer of the Company since October 10, 1996.
For approximately the past five years, prior to joining CPI, Mr. Robertson
served as an advisor or "turnaround" manager for a variety of companies in
transition or financial difficulty. Previously, Mr. Robertson was a corporate
lawyer with an international law firm based in Los Angeles. From 1984 to 1988,
Mr. Robertson was an officer at the Department of State, advising principally
the Economic & Business Bureau on international trade, intellectual property and
telecommunication matters.
None of the officers or directors of the Company is related to any
other officer or director of the Company. Officers are appointed by the Board of
Directors and serve at the pleasure of the Board of Directors or until they
resign. At present two officers of SAC, the principal shareholder of the
Company, serve on the Company's Board of Directors.
- 31 -
<PAGE> 32
CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 11 -- EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
In 1996 no directors received any fees for serving as members of the
Board of Directors. As of April 1997, directors who are not officers of the
Company will receive $1,000 for each Board of Directors meeting which they
attend.
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth information concerning the
compensation of the Company's Chief Executive Officer and those other executive
officers of the Company whose salary and bonus exceeded $100,000 during 1996.
The table below sets forth information regarding the compensation of each listed
executive officer for the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------------- ---------------------- ----------
OTHER ALL
ANNUAL RESTRICTED OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS SATION AWARD(S) SAR'S PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- --------- -------- ---------- ----------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hal Needham*
Chairman, CEO 1996 49,000 -- -- -- -- -- --
1995 52,000 -- -- -- -- -- --
1994 52,000 -- -- -- -- -- --
Laird Robertson
Director, CEO 1996 16,000 -- -- -- -- -- --
Philip M. Panzera**
President 1996 134,000 -- -- -- -- -- --
President 1995 115,000 -- -- -- -- -- --
VP & CFO 1994 95,000 -- -- -- -- -- --
</TABLE>
- --------
* Mr Needham resigned as Chairman and CEO on October 10, 1996.
** Mr. Panzera's duties as President were terminated on October 10, 1996.
The Company is considering entering into an Employment Agreement with
its President, Roy Atlas, and will present to agreement for approval of
disinterested members of the Board of Directors on March 19, 1997. The Agreement
is a five-year contract which provides that Mr. Atlas will receive a salary of
$75,000, an annual bonus of $25,000 depending on profitability, and warrants to
purchase up to 700,000 shares of the Company's common stock, which warrants will
vest at the rate of 100,000 per year of service under the Employment Agreement.
A copy of the Employment Agreement is attached to this Form 10-K Annual Report
as Exhibit 10.3.
OPTION GRANTS IN 1996
No stock options were granted to executive officers, or any other
Company employee, during the year ended December 31, 1996.
- 32 -
<PAGE> 33
CAMERA PLATFORMS INTERNATIONAL, INC.
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SAR'S AT OPTIONS/SAR'S AT
ACQUIRED ON VALUE FISCAL YEAR-END (#) FISCAL YEAR-END (#)
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Hal Needham -- -- -- -- -- --
Philip M. Panzera -- -- 12,000 -- -- --
</TABLE>
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to those
persons known by the Company to own beneficially more than 5% of the Company's
common stock as of March 17, 1997.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS
------------------- ----------------- ----------
<S> <C> <C>
Hal Needham 1,123,520(1) 9.0%
12711 Ventura Blvd.
Studio City, CA 91604
William O. Fleischman 6,582,217(2) 52.9%
1900 Avenue of the Stars, Suite 2410
Los Angeles, CA 90067
Laird Robertson 1,880,633(3) 15.1%
1917 Garth Avenue
Los Angeles, CA 90034
</TABLE>
1 Includes 41,520 shares held directly by Mr. Needham and 1,082,000 shares
held directly by Hollywood Camera Cars, Inc.
2 Mr. Fleischman's minor child is the owner of 70% of the outstanding shares
of SAC, which owns 9,403,168 shares or 75.6% of the Company's common
stock.
3 Mr. Robertson is the owner of 20% of the outstanding shares of SAC, which
owns 9,403,168 shares or 75.6% of the Company's common stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to shares of the
Company's outstanding common stock which are owned beneficially by each director
and nominee and the aggregate number of shares owned beneficially by all
directors, nominees and officers as a group as of March 17, 1997.
- 33 -
<PAGE> 34
CAMERA PLATFORMS INTERNATIONAL, INC.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------------ ----------------- ----------
<S> <C> <C>
Roy Atlas -- 0%
William O. Fleischman 6,582,217(1) 52.9%
Ronald J. Riddle -- 0%
Laird Robertson 1,880,663(2) 15.1%
All officers and directors as a 8,462,880 68.1%
group (4 persons)
</TABLE>
1 Represents 6,582,217 shares held by SAC, which owns a total of 9,403,168
shares of the Company's common stock.
2 Represents 1,880,633 shares held by SAC, which owns a total of 9,403,168
shares of the Company's common stock
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Two directors of the Company, Messrs. William O. Fleischman and
Laird Robertson, are officers of SAC. Please refer to "Sale of the Company"
under Item 1 above and "Security Ownership of Certain Beneficial Owners and
Management" under Item 12 above.
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The financial statements and financial statement schedules filed as part of
this report are listed on the Index to Financial Statements and Schedules on
page 16.
Exhibits
2.1(1) Stock Purchase and Contribution Agreement dated as of October
10, 1996
2.2(2) Letter Agreement re sale of Lightmaker dated December 27, 1996
3.1(3) Certificate of Incorporation, as amended.
3.2(4) By-Laws, as amended.
10.1(5) Form of Non-Statutory Stock Option Agreement.
10.2(6) Company's 1990 Stock Option Plan.
10.3 Employment Agreement between the Company and Roy Atlas
16.1(7) Letter re change in certifying accountant dated January 24,
1997.
21.1 Subsidiaries of Registrant.
1 Incorporated by reference to the Company's Form 8-K Current Report
dated October 10, 1996.
2 Incorporated by reference to the Company's Form 8-K Current Report
dated December 27, 1996.
3 Incorporated by reference to the Company's Form 10-K Annual Report for
the year ended December 31, 1987.
4 Incorporated by reference to the Company's Form 10-K Annual Report for
the year ended December 31, 1988.
5 Incorporated by reference to the Company's Form 10-K Annual Report for
the year ended December 31, 1989.
6 Incorporated by reference to the Company's Registration Statement No.
33-37401 on Form S-8, filed on October 23, 1990.
- 34 -
<PAGE> 35
CAMERA PLATFORMS INTERNATIONAL, INC.
7 Incorporated by reference to the Company's Form 8-K Current Report
dated January 22, 1996.
(b) Reports on Form 8-K
Registrant filed the following two reports on Form 8-K during the
fourth quarter of the year ended December 31, 1996:
Form 8-K Current Report, dated October 10, 1996
Item 1 - Changes in Control of Registrant
Item 7 - Financial Statements and Exhibits
Stock Purchase and Contribution Agreement dated
as of October 10, 1996
Form 8-K Current Report, dated December 27, 1996
Item 2 - Disposition of Assets
Item 7 - Financial Statements and Exhibits
Pro Forma Condensed Consolidated Statement of
Financial Position at September 30, 1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of
Operations for the Nine Months Ended September 30,
1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1995
(Unaudited)
Letter Agreement dated as of December 27, 1996, by
and between the Company and LTM Corporation of
America
Press Release dated December 27, 1996, announcing
sale of the Lightmaker division
(c) Exhibits
All exhibits required by Item 601 of Regulation S-K have been
filed.
(d) Financial Statement Schedules
All other financial statement schedules which are required by the
regulations of the Securities and Exchange Commission are either
inapplicable or are included as part of Item 8 herein.
- 35 -
<PAGE> 36
CAMERA PLATFORMS INTERNATIONAL, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: April 2, 1997
CAMERA PLATFORMS INTERNATIONAL, INC.
By: LAIRD ROBERTSON
-----------------------------------
Laird Robertson,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following officers and directors of
Camera Platforms International, Inc., on behalf of the Company, in the
capacities and in the dates indicated.
April 2, 1997 Chairman of the Board
and Secretary WILLIAM O. FLEISCHMAN
----------------------------------
WILLIAM O. FLEISCHMAN
April 2, 1997 Chief Executive Officer
and Director LAIRD ROBERTSON
----------------------------------
LAIRD ROBERTSON
April 2, 1997 President, Chief Operating
Officer and Director ROY ATLAS
----------------------------------
Roy Atlas
April 2, 1997 Controller (Principal
Financial Officer)
RONALD J. RIDDLE
----------------------------------
Ronald J. Riddle
- 36 -
<PAGE> 37
CAMERA PLATFORMS INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibits
2.1(1) Stock Purchase and Contribution Agreement dated as of October
10, 1996
2.2(2) Letter Agreement re sale of Lightmaker dated December 27, 1996
3.1(3) Certificate of Incorporation, as amended.
3.2(4) By-Laws, as amended.
10.1(5) Form of Non-Statutory Stock Option Agreement.
10.2(6) Company's 1990 Stock Option Plan.
10.3 Employment Agreement between the Company and Roy Atlas
16.1(7) Letter re change in certifying accountant dated January 24,
1997.
21.1 Subsidiaries of Registrant.
1 Incorporated by reference to the Company's Form 8-K Current Report
dated October 10, 1996.
2 Incorporated by reference to the Company's Form 8-K Current Report
dated December 27, 1996.
3 Incorporated by reference to the Company's Form 10-K Annual Report for
the year ended December 31, 1987.
4 Incorporated by reference to the Company's Form 10-K Annual Report for
the year ended December 31, 1988.
5 Incorporated by reference to the Company's Form 10-K Annual Report for
the year ended December 31, 1989.
6 Incorporated by reference to the Company's Registration Statement No.
33-37401 on Form S-8, filed on October 23, 1990.
7 Incorporated by reference to the Company's Form 8-K Current Report
dated January 22, 1996.
- 37 -
<PAGE> 1
CAMERA PLATFORMS INTERNATIONAL, INC.
EXHIBIT 10.3
EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND ROY ATLAS
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as
of the 1st day of January, 1997 by and between Camera Platforms International,
Inc., a Delaware corporation (the "Company") and Roy Atlas ("Employee").
WITNESSETH:
WHEREAS, in recognition of the complexity of its industry and the
competitive nature of its business, the Company has experienced and expects to
continue to experience a substantial need for management services;
WHEREAS, the Company acknowledges the expertise and experience of the
Employee, and is aware of the very significant contribution which the Employee
could make to the success of the Company's business by the provision of the
services enumerated herein; and
WHEREAS, the Company now desires to employ the Employee, and the
Employee wishes to be employed by the Company, for the purpose of providing such
services to the Company.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Services to be Performed by the Employee. The Employee shall provide to
the Company such services of a managerial and operational nature as the
Board of Directors shall determine from time to time to be reasonably
necessary or advisable and in the best interests of the Company in the
course of its business. The Employee shall hold the title of President
and Chief Operating Officer, and shall report directly to the Board of
Directors of the Company. The Employee agrees that, to the best of his
ability and experience, he will, at all times, loyally and
conscientiously, perform all of the duties and obligations either
expressly or implicitly required of him by the terms of this Agreement.
The Employee shall provide services hereunder on a full- time and
exclusive basis, consisting of not less than 40 hours per week.
2. Other Activities. At all times during the term of this Agreement, the
Employee may not engage
- 38 -
<PAGE> 2
CAMERA PLATFORMS INTERNATIONAL, INC.
or participate for his own account, whether, directly or indirectly, as
an employee, employer, consultant, agent, principal, partner,
stockholder, or in any other capacity, in any business which is
competitive with the Company, or in any activities which detract from
his duties hereunder.
3. Term of the Agreement. Unless terminated earlier pursuant to the terms
hereof, the term of this Agreement shall be five (5) years, beginning on
January 1, 1997 and terminating on December 31, 2002. This Agreement
shall automatically be extended for successive one (1) year periods
beginning on the respective anniversary dates hereof, unless either
party gives at least thirty (30) days' written notice of their election
not to renew this Agreement to the other party. In the event this
Agreement is renewed, all covenants in this Agreement will remain in
full force and effect, unless the parties agree to a written
modification thereto.
4. Compensation. In consideration for the services to be performed by the
Employee hereunder, the Employee shall receive an annual salary of
Seventy-Five Thousand Dollars ($75,000), payable in accordance with the
Company's established payroll procedures, but not less often than
monthly. The Board of Directors of the Company shall review the
Employee's compensation on an annual basis, and shall adjust the
Employee's compensation based on the Employee's and the Company's
performance. Additionally, the Company shall pay the Employee a
quarterly bonus of Six Thousand Two Hundred and Fifty Dollars ($6,250)
(each, a "Quarterly Bonus"), as follows:
a. The Quarterly Bonuses for the fiscal quarters ending on March
31, 1997 and June 30, 1997 shall be paid regardless of the
profitability of the Company;
b. The Quarterly Bonus for the fiscal quarters ending thereafter
shall be paid if the Company is profitable during such quarter,
as that term is defined in subparagraph (d) below.
c. Subject to subparagraph (d) hereof, the Quarterly Bonuses shall
be calculated quarterly, based on the Company's profitability
for the fiscal quarter most immediately completed, with payment
made within forty-five (45) days following the end of such
fiscal quarter.
d. For purposes of this Agreement, the term "profitable" or
"profitability" shall mean that the Company has generated annual
net profits before taxes, as shown in the audited annual
financial statement prepared by the Company's independent
accountants. Since the Quarterly Bonuses payable hereunder are
to be paid quarterly, and the Company's annual profitability
will not be determined until after the completion of the fiscal
year, then Quarterly Bonuses shall be paid based on the
Company's profitability for the quarter, as determined from its
internally generated financial statements, and shall be subject
to adjustment based on the Company's profitability for the year.
Accordingly, if Quarterly Bonuses were not paid in any quarter
and the Company is found to be
- 39 -
<PAGE> 3
CAMERA PLATFORMS INTERNATIONAL, INC.
profitable for the year, then the Company shall promptly remit
the unpaid Quarterly Bonus(es) to the Employee. If, on the other
hand, Quarterly Bonuses were paid during the year and the
Company is determined not to have been profitable for the year,
then the Quarterly Bonuses erroneously paid shall be applied
towards any Quarterly Bonuses next to be earned in the
subsequent year(s).
5. Additional Bonuses. In addition to the Quarterly Bonuses, the Employee
shall be entitled to receive such additional bonuses as the Board of
Directors shall award from time to time, based on the profitability of
the Company.
6. Benefits. The Employee shall be entitled to receive such benefits as the
Company may provide for its employees from time to time, including
medical and dental insurance (for the Employee, his wife, and his minor
dependents), paid vacation, sick pay and holiday pay, plus the following
additional benefits:
a. Automobile. The Company shall provide the Employee with a car
allowance of $500 per month (to cover all automobile related
expenses, including lease payments, insurance, repairs, gas,
etc.); and
b. Disability. Company shall maintain for the benefit of Employee a
policy or policies of disability insurance providing both (i)
long-term (over one-year) disability benefits at two-thirds (66
2/3%) of Employee's then current compensation; and (ii)
short-term (under one-year) benefits at one hundred (100%)
percent of Employee's then current compensation.
7. Reimbursement of Business Expenses. During the term of this Agreement,
the Company shall reimburse the Employee for all authorized ordinary and
necessary business expenses incurred by him in connection with the
Company's business, provided that prior authorization of the board of
directors shall be required for any single expenditure of $100 or more.
8. Warrants. As additional compensation for entering into this transaction,
the Company shall grant to the Employee a warrant giving the Employee
the right to purchase Seven Hundred Thousand (700,000) shares of the
Common Stock of the Company. The warrant shall contain customary
anti-dilution protections. The warrant shall vest at the rate of One
Hundred Thousand Shares per year of service under this Agreement, and
shall remain exercisable for a period of three (3) years from vesting,
subject to the terms and conditions of this Agreement. If the Company
should at anytime register its common stock, then the Employee shall
have piggyback registration rights, exercisable within thirty (30) days
of notice. The Employee shall be entitled to customary indemnification
in any registration. The exercise price of the warrant shall be $.125
per share, the price at which said shares are currently trading.
- 40 -
<PAGE> 4
CAMERA PLATFORMS INTERNATIONAL, INC.
9. Termination. The Company shall have the right (but not the obligation)
to terminate this Agreement at any time during the term hereof by
written notice for the following causes:
a. Conduct which is detrimental to the Company's reputation,
goodwill or business operations;
b. The Employee's death or disability, or such other condition as
shall prevent the Employee from the performance of his duties
hereunder for a period in excess of three months;
c. Upon 20 days notice and a right to cure, if cure is possible,
for gross neglect or breach of the Employee's duties or
misconduct in discharging such duties, and without notice and a
right to cure for habitual neglect or breach of the Employee's
duties or misconduct in discharging such duties;
d. Upon 20 days notice and a right to cure, if cure is possible,
for Employee's failure or refusal to comply with the directions
of the Board of Directors, and without notice and a right to
cure for habitual failure or refusal to comply with the
directions of the Board of Directors.
Upon any termination for cause, payment of all unearned compensation
shall cease immediately, and any unvested warrants shall terminate immediately.
10. Board of Directors. The Company shall recommend and support the election
or appointment of the Employee to the Company's Board of Directors as
soon as possible, but in no event later than the next election of
directors.
11. Indemnification. The Company shall save and hold harmless the Employee
from and against any claim of liability or loss (including reasonable
attorney's fees) arising as a result of the Employee's activities in the
course of his services hereunder to the fullest extent permitted by law.
12. Confidentiality. The Employee shall, at no time, either during his
employment or following the termination of his employment for any
reason, use or disclose to any person, directly or indirectly, any
business secret, customer list or other confidential information
concerning the business or policies of the Company, except to the extent
that such use or disclosure is (i) necessary to the performance of the
Employee's duties hereunder; (ii) required by applicable law; (iii)
authorized by the Company; or (iv) lawfully obtainable from other
sources. Upon the
- 41 -
<PAGE> 5
CAMERA PLATFORMS INTERNATIONAL, INC.
termination of his employment, the Employee shall return to the Company
all memoranda, notes and other documents in his possession that relate
to the business secrets, customer lists and other confidential
information of the Company.
13. Integration. This Agreement is the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to the matters
expressly contained herein. Any waiver or modification of any provision
of this Agreement shall only be effective if in writing and duly
executed by all parties hereto.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which when taken together shall constitute one and the same agreement.
15. Notices. Any communication, notice or demand a party may be required or
may desire to give hereunder shall be in writing and delivered by
personal service, telecopied (with oral confirmation of receipt from the
office of the addressee), or registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to the Company:
Camera Platforms International, Inc.
10909 Vanowen Street
North Hollywood, California 91605
Fax (818) 623-1710
With a copy to:
Kenneth J. Schelberg, Esq.
Fleischman & Schelberg
1900 Avenue of the Stars, #2410
Los Angeles, California 90067
Fax (310) 552-0834
- 42 -
<PAGE> 6
CAMERA PLATFORMS INTERNATIONAL, INC.
If to the Employee:
Roy Atlas
1420 N. Alta Vista Blvd., #310
Los Angeles, California 90046
Fax (213) 876-7917
Any party may change its address or fax number for notice by written
notice given to the other in the manner provided in this section. Any such
communication, notice or demand shall be deemed to have been duly given or
served on the date personally served or telecopied, if by personal service or
telecopier, and on the date shown on the return receipt or other evidence of
delivery, if mailed.
16. Further Assurances. The parties agree to execute such instructions and
such other instruments and agree to do such further acts as may be
reasonably necessary to carry out the provisions of this Agreement.
17. No Assignment. This Agreement is a personal services contract and may
not be assigned by either party.
18. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
19. Arbitration. All controversies, claims or disputes between the Employee
and the Company or any of its officers, directors or shareholders,
including without limitation, contract, tort or other controversies,
claims or disputes, shall be arbitrated in accordance with the
California Employment Dispute Resolution rules of the American
Arbitration Association. All arbitration proceedings shall be held in
Los Angeles, California. The award of the arbitrators in any arbitration
proceeding shall be final and may be enforced in any court of competent
jurisdiction. The unsuccessful party to such arbitration proceeding
shall pay to the successful party all costs and expenses, including
without limitation, reasonable attorneys fees, incurred therein by the
successful party, all of which shall be included in and as part of the
award or judgment rendered in such proceeding.
20. Severability. If any provision or portion of this Agreement shall be or
become illegal, invalid or unenforceable in whole or in part, for any
reason, such provision shall be ineffective only to the extent of such
illegality or invalidity without invalidating the remainder of such
provision or
- 43 -
<PAGE> 7
CAMERA PLATFORMS INTERNATIONAL, INC.
the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"COMPANY"
CAMERA PLATFORMS
INTERNATIONAL, INC.
By: [WILLIAM O. FLEISCHMAN]
-----------------------------------
William O. Fleischman,
Its: Chairman
"EMPLOYEE"
By: [ROY ATLAS]
------------------------------------
Roy Atlas
- 44 -
<PAGE> 1
CAMERA PLATFORMS INTERNATIONAL, INC.
EXHIBIT 21.1
SUBSIDIARIES OF REGISTRANT
As of December 31, 1996 Camera Platforms International, Inc., had one
wholly-owned subsidiary, Shotmaker Dollies & Cranes, Inc., which was
incorporated in the State of California. Shotmaker Dollies & Cranes, Inc. was
liquidated as of January 31, 1997.
As of March 17, 1997 Camera Platforms International, Inc. had formed a new
wholly-owned subsidiary, Shotmaker Dollies, Inc., which is incorporated in the
State of California.
- 45 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1996 AND THE CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 181
<SECURITIES> 0
<RECEIVABLES> 317
<ALLOWANCES> 34
<INVENTORY> 269
<CURRENT-ASSETS> 815
<PP&E> 4,697
<DEPRECIATION> 3,199
<TOTAL-ASSETS> 2,431
<CURRENT-LIABILITIES> 890
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 22,792
<TOTAL-LIABILITY-AND-EQUITY> 2,431
<SALES> 1,769
<TOTAL-REVENUES> 3,321
<CGS> 1,566
<TOTAL-COSTS> 4,972
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 28
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> (1,690)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,690)
<DISCONTINUED> (193)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,883)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
