<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, 1998
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 ('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 April 15, 1999 was $3,011,800 (based on the average bid and
asked price of Common Stock in the over-the-counter market on that date).
13,768,228 shares of registrant's Common Stock, $.0005 par value, were
outstanding on April 15, 1999.
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CAMERA PLATFORMS INTERNATIONAL, INC.
CONTENTS
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PART I
Item 1. BUSINESS.................................................... 3
Item 2. PROPERTIES.................................................. 8
Item 3. LEGAL PROCEEDINGS........................................... 8
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS............................................ 9
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS............................. 9
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA........................ 10
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................................. 12
Item 8. CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.......................................... 16
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING OR FINANCIAL
DISCLOSURES................................................. 36
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.................................................. 37
Item 11. EXECUTIVE COMPENSATION...................................... 38
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................. 39
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................................................ 41
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K..................................... 42
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CAMERA PLATFORMS INTERNATIONAL, INC.
PART I
ITEM 1 -BUSINESS
Camera Platforms International, Inc. ("Shotmaker" or "the Company")
designs, manufactures, sells, rents and leases a wide variety of production
equipment to the film and video industries. The Company rents three varieties of
camera cars, and both rents and sells Pegasus and Enlouva cranes, Panther and
the Company's own "Shotmaker Blue" dollies, jib arms, remote heads, and
Precision and Cadillac dolly track.
On January 1, 1998, the Company's wholly owned subsidiary, Shotmaker
Sound, Inc. ("Sound"), completed the purchase of the assets and business of
Third Encore ("3E"), a company which provides rehearsal studio, storage and
cartage services to recording artists. On February 1, 1999, Sound sold the
assets and business of 3E to an independent third party, and was released from
the real estate lease obligations associated with the business. On April 2,
1999, Sound filed for bankruptcy protection under Chapter 7 of the bankruptcy
code. Sound has substantially no assets.
On April 6, 1998, the Company acquired the business of Production
Services-Atlanta, Inc., operating grip and lighting rental operations in
Atlanta, Georgia and Nashville, Tennessee. Operations were closed in October,
1998, and the assets sold at auction in November, 1998.
On May 27, 1998, the Company acquired all the stock of Fluid Images,
Inc., ("Fluid Images") an Oregon corporation, including all assets of Fluid
Images and the name "Akela Cranes". Immediately upon acquisition, Fluid Images
was liquidated and its assets and liabilities were assumed by the Company.
Shotmaker equipment has been used to film many of the top recent U.S.
movies. A partial list includes TITANIC, LETHAL WEAPON IV, YOU'VE GOT MAIL, THE
WEDDING SINGER, MEET JOE BLACK and WILD, WILD WEST. In addition, a number of
prime time television programs and series use Shotmaker equipment such as E.R.,
BAYWATCH, NASH BRIDGES, ALLY McBEAL, DREW CAREY, THE PRACTICE, and WHEEL OF
FORTUNE.
FORM AND ORGANIZATION
The Company is incorporated under the laws of the State of Delaware. As
of December 31, 1998, the Company had two wholly owned subsidiaries. Shotmaker
Dollies, Inc. ("SDI") was incorporated under the laws of the State of California
on March 7, 1997. Another wholly owned subsidiary, Shotmaker Sound, Inc. was
incorporated under the laws of the State of California on August 22, 1997.
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CAMERA PLATFORMS INTERNATIONAL, INC.
PRODUCTS
The Shotmaker Camera Car fleet 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 except
one car operating under a split rental agreement in New York City.
The Shotmaker Elite. 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 Premier. The Company has modified some of its Classics by
adding a crane arm. The non-collapsible 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 Classic. 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. As of December 31, 1998 all 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 Camera Car 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.
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CAMERA PLATFORMS INTERNATIONAL, INC.
Shotmaker Dollies, Cranes and Accessories
Major items of equipment in the Dollies and Cranes rental fleet include:
26 dollies (13 Super Panthers and 6 Mini Panthers); 13 Pegasus cranes; 11 jib
arms (9 super Jibs and 2 Mini Jibs); 7 Akela cranes; 4 Enlouva cranes; 6
Shotmaker Blue dollies (4 Falcons and 2 Eagles); approximately 2,000 feet of
Precision track; and approximately 650 feet of tubular track. The Company is
aggressively looking for new products to add to its inventory or rental fleet.
Shotmaker Blue Dollies. During 1998, the Company began manufacturing of
the first model of three Shotmaker Blue Dollies, the 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. The Company
delivered the first of its manufactured dollies in March, 1999.
Akela Cranes. In May 1998, the Company acquired Fluid Images, Inc, the
designer, manufacturer and renter of Akela cranes. Akela cranes are the longest
and highest cranes available. The Akela comes in three versions: Akela Plus (97'
length), Akela Sr. (57' to 84') and Akela Jr. (41' to 62'). The Akela offers the
versatility of going from ground level to six stories high in a single move, and
substitutes for many helicopter shots. As of April 15, 1999, the Company had
seven Akela cranes in its rental inventory.
Enlouva Cranes. In late 1996, the Company acquired exclusive worldwide
rights to manufacture, lease and sell Enlouva cranes. Enlouova cranes are used
for shots with remote heads which allow for cameras to be controlled by an
operator on the ground. 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, 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 of 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. The
Enlouva IV incorporates a number of design improvements including a lighter
fulcrum, improved brakes, a smaller profile and an easier transport system. The
Company has completed the manufacturing of thirteen of these new generation of
cranes. As of April 15, 1999, the Company had four Enlouva IV cranes in its
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
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CAMERA PLATFORMS INTERNATIONAL, INC.
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 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 was upgraded
during 1997. The Company has converted all of its Super Panther II dollies to
Super Panther IIIs by retrofitting the dollies with more advanced electronic
components. As a result, all these dollies can now be 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 the Company, 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.
Dolly track. The Company is a distributor and sales representative in
the United States, Central America and South America for Precision I-Beam.
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
is also a manufacturer and distributor of "Cadillac" track under an agreement
with its owner. The agreement also provides for split rentals once the Company
has been reimbursed for its cost of manufacturing. "Cadillac" track is only
three inches high instead of the standard four inches,
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CAMERA PLATFORMS INTERNATIONAL, INC.
which allows use by both cranes and dollies without changing track or
components. In addition, "Cadillac" track is both strong and very light weight.
MARKETING, COMPETITION, INTELLECTUAL PROPERTY AND AWARDS
Marketing. The Company's marketing efforts are primarily conducted by
direct sales efforts, advertisements in trade publications, and participation in
various trade exhibitions.
Competition. No other company currently owns a fleet of camera cars as
large or as sophisticated as the Company's. 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, 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. Shotmaker 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
Shotmaker, very few companies sell dollies in the United States. For crane
sales, the main competitor in the United States is E-Gripment, 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 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. Cinemeccanica Italiana S.r.l.,
the manufacturer of the new Shotmaker line of dollies, also owns certain
European patents related to these dollies.
Awards. During 1997, the Company received the Society of Operating
Cameramen's technical achievement award for its Elite camera car. The Company
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 Engineering. The Super
Panther dolly received the 1990 Scientific and Engineering Award from the
Academy of Motion Picture Arts and Sciences.
Employees. The Company had approximately 20 employees at December 31,
1998. The Company is not a party to any collective bargaining agreements and its
employees are not represented by a labor union.
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CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 2 - PROPERTIES
The Company's principal executive offices and place of business are
located at 10909 Vanowen Street, North Hollywood, California 91605. The premises
are leased and subleased from unaffiliated third parties for a gross rent of
$166,000 per year, including common area maintenance and water expenses. (The
lessor of the majority of the Company's premises is the lessee under a master
lease of the premises and the other buildings in the industrial complex.) The
current lease terms are for a three-year period expiring in November 1999; the
lease contains two three-year options. The Company also is a sublessor on a
lease which expires April, 2000. 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.
ITEM 3. LEGAL PROCEEDINGS
Peterman v Camera Platforms International. Inc., De La Motte v Camera
Platforms International, Inc.. In July 1997, a production company was involved
in an accident whereby a Pegasus crane system which it rented from the Company
collapsed due to operator error, injuring two of its crew members. Those crew
members are suing the Company for negligence. The Company has since filed a
cross complaint against the production company for operator error. Based upon
the advice of outside counsel, the management believes the Company has no
exposure that is not covered by applicable insurance.
Johnson v Camera Platforms International, Inc. The former shareholders
of Fluid Images Inc., holders of a $750,000 unsecured obligation filed notice on
February 1, 1999 with the American Arbitration Association requesting a binding
arbitration hearing. The Company is in default under certain provisions of the
note, and Johnson has demanded payment in full pursuant to an acceleration
provision in the note. The Company has commenced negotiations to settle the
matter by restructuring the debt.
Traba v Camera Platforms International, Inc. On February 17, 1999,
Traba, the holder of a past due $150,000 unsecured obligation filed suit in
Federal Court in Chicago demanding payment in full, together with unpaid
interest and attorney's fees. The Company claims offsets against Traba.
JMYC v Camera Platforms International, Inc. On January 26, 1999, JMYC,
former shareholders of PSA (Notes 6 and 7), filed suit in Atlanta for past due
interest payments and certain accounts receivable allegedly collected by the
Company on its behalf but not paid over to JMYC. The amount in dispute is less
than $50,000.
Crocket and Fish v Camera Platforms International, Inc. Crocket and
Fish represented Cinemeccanica Italiana Srl. in its defense of an action brought
by Leonard Studio Equipment Inc. The Company agreed to pay certain costs of
defense on behalf of Cinemeccanica. On December 8, 1998, Crocket and Fish filed
suit claiming $132,000 of unpaid attorneys' fees.
Atlas v Camera Platforms International, Inc. A claim by the Company's
former President and
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CAMERA PLATFORMS INTERNATIONAL, INC.
Chief Operating Officer for breach of employment contract arising out of his
termination in June, 1998. In March, 1999 the Company entered into a settlement
agreement calling for a four month consulting contract and issuance of stock
pursuant to previously granted options.
The Company is a defendant in certain other actions claiming non-payment
of accounts payable and certain long-term debt obligations.
The Company is also from time to time named as a defendant in the
ordinary course of its business.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
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". 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.
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Period High Low
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1997: 1st Quarter................................. 1/10 3/32
2nd Quarter................................. 3/16 1/10
3rd Quarter................................. 3/16 1/8
4th Quarter................................. 11/32 1/8
1998: 1st Quarter ................................ 1 1/4 1/4
2nd Quarter................................. 9/16 3/16
3rd Quarter ................................ 11/32 3/16
4th Quarter................................. 1/4 3/16
1999: 1st Quarter ................................ 11/16 5/32
2nd Quarter through April 15, 1999............ 1/4 3/16
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As of April 15, 1999, there were approximately 900 beneficial owners of
13,768,228 outstanding shares of the Company's common stock, held by 320
shareholders of record.
The Company has not paid a dividend on its common stock since inception.
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CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 6 - SELECTED CONSOLIDATED FINANCIAL DATA
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Year ended December 31, 1998 1997 1996 1995 1994
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Revenues $ 2,245,000 $ 3,356,000 $ 3,321,000 $ 4,290,000 $ 4,428,000
Net loss (3,597,000) (737,000) (1,883,000) (851,000) (999,000)
Total assets 4,115,000 2,498,000 2,431,000 3,462,000 3,811,000
Long-term debt 3,747,000 811,000 250,000 -- 353,000
Net loss per share
of common stock ($0.27) ($0.06) ($0.15) ($0.07) ($0.15)
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CONSOLIDATED SUMMARY OF QUARTERLY OPERATIONS
(Unaudited)
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Quarter ended Quarter ended
March 31, June 30,
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1998 1997 1998 1997
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Revenues $ 432,000 $ 1,047,000 $ 683,000 $ 1,035,000
Cost of sales and rentals 449,000 837,000 604,000 761,000
Selling, general and
administrative 419,000 262,000 478,000 534,000
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Operating (loss) (436,000) (52,000) (399,000) (260,000)
Interest expense,net (65,000) (11,000) (86,000) (21,000)
Gain (loss) on
discontinued operations 5,000 -- (233,000) --
Impairment loss on
long-lived assets -- -- -- --
Other income
(expense), net 5,000 72,000 25,000 8,000
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Net income (loss) $ (491,000) 9,000 $ (693,000) (273,000)
- ----------------------------------------------------------------------------------------------
Net (loss) per share
of common stock $ (0.04) $ (0.00) $ (0.05) $ (0.02)
- ----------------------------------------------------------------------------------------------
Weighted average number
of shares outstanding 12,418,228 12,418,228 12,628,228 12,418,228
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</TABLE>
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Quarter ended Quarter ended
September 30, December 31,
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1998 1997 1998 1997
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Revenues $ 565,000 $ 804,000 $ 565,000 470,000
Cost of sales and rentals 503,000 596,000 588,000 489,000
Selling, general and
administrative 335,000 189,000 522,000 479,000
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Operating (loss) (273,000) 19,000 (545,000) (498,000)
Interest expense,net (184,000) (6,000) (225,000) (33,000)
Gain (loss) on
discontinued operations (203,000) -- (600,000) --
Impairment loss on
long-lived assets -- -- (342,000)
Other income
(expense), net 4,000 (3,000) (45,000) 48,000
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Net income (loss) (656,000) 10,000 (1,757,000) $ (483,000)
- ----------------------------------------------------------------------------------------------
Net (loss) per share
of common stock $ (0.05) $ (0.01) $ (0.13) $ (0.05)
- ----------------------------------------------------------------------------------------------
Weighted average number
of shares outstanding 13,768,228 12,418,228 13,768,228 12,418,228
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</TABLE>
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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 operated under credit lines established with
its former majority shareholder, UST Inc. ("UST"). UST sold its interest in the
Company on October 10, 1996. 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 ("Foothill") in the amount of
$850,000, which matured October 10, 1997. As of that date, the Company entered
into a new agreement with Foothill for a $2,500,000 credit facility consisting
of a $1,250,000 term loan, a $750,000 revolving line of credit and a $500,000
inventory equipment line of credit. In addition, Foothill advanced $2,250,000 to
fund acquisitions during 1998. The loans, as restructured, call for principal
payments of $45,238 commencing April 15, 1999. The loans mature on February 15,
2001.
The Company had outstanding balances under the various Foothill credit
facilities of $3,195,000 and $3,195,000 as of December 31, 1998 and April 15,
1999, respectively.
The Company has incurred net losses of $3,597,000 in 1998, $737,000 in
1997, and $1,883,000 in 1996, and now shows a negative shareholders' equity. The
Company also recorded negative cash flows from operations in 1998 of $1,522,000,
and was in default on its borrowing facilities. The Company has been able to
secure financing to support operations to date, but there is no assurance that
funding will be available to support the operations in the future.
The Company's continued ability to operate is dependent on its ability
to either extend or refinance its existing debt forbearance agreement, liquidate
significant assets, or raise additional capital. Management is actively seeking
a potential buyer for its Akela Crane division and other assets, and is
negotiating with its lender to extend the terms of the credit facility. There
can be no assurance that this sale or any other will occur, and that the credit
facility will be extended in a manner that allows the Company to continue its
operations in its present form. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
RESULTS OF OPERATIONS
1998 versus 1997
Net product sales decreased 65% from $1.72 million in 1997 to $607,000
in 1998. This was due largely to the Company's inability to market the Enlouva
crane and jib arm. Problems with the manufacturing of the Shotmaker Blue Dolly
also contributed to the lower sales volume in 1998.
Revenues from continuing rental operations remained unchanged in 1998.
There was a
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CAMERA PLATFORMS INTERNATIONAL, INC.
28% decrease in Shotmaker camera car rentals. The decrease in camera car rentals
was largely the result of increased competition and the displacement of
significant television and feature production to Canada. The decrease was offset
by the addition of Akela cranes, which accounted for $268,000 in revenues in
1998.
Total revenue for the Company decreased by 41% from $3.36 million in
1997 to $2.24 million in 1998.
Cost of sales decreased by 65% from $1.17 million in 1997 to $410,000 in
1998. This decrease was generally related to a 65% decrease in sales in 1998.
Cost of rental operations increased by 13% from $1.536 million in 1997
to $1.739 million in 1998. This increase is due to $400,678 in cost of rentals
associated with the Akela crane, offset by decreases of 9% and 15% in camera car
and crane rentals, respectively.
Selling, general and administrative expenses increased by 22% from
$1.438 million in 1997 to $1.754 million in 1998. The increase is a result of
higher costs for payroll, outside labor, legal and accounting, and bad debts.
Selling expenses decreased by 39% from $391,000 in 1997 to $239,000 in 1998. The
decrease is primarily due to lower advertising and sales related travel and
entertainment expenses during 1998.
Net interest expense increased 680% from $72,000 in 1997 to $560,000 in
1998 as a result of the increase in long term debt, proceeds of which were used
both in acquisitions and to provide working capital for operations.
Net operating losses associated with the discontinued operations in
Atlanta/Nashville, New York, and Third Encore accounted for $1.030 million in
losses during 1998. In addition, the Company recorded a $342,000 loss in the
carrying value of the assets acquired in the Fluid Images purchase.
The Company's net loss increased 388% from $737,000 in 1997 to $3.597 in
1998. The net loss per basic and diluted share of common stock increased from
$0.06 in 1997 to $0.27 in 1998.
1997 versus 1996
Net product sales decreased 3% from $1.77 million in 1996 to $1.72
million in 1997. Excluding the effect attributed to the sale of Lightmaker
division in December 1996, dolly and crane sales increased 70% from $940,000 in
1996 to $1.59 million in 1997 as a result of strong sales of Panther dollies and
cranes.
Revenues from rental operations increased 5% from $1.55 million in 1996
to $1.64 million in 1997. This increase was the net result of a 12% increase in
Shotmaker camera car rentals
-13-
<PAGE> 14
CAMERA PLATFORMS INTERNATIONAL, INC.
offset by a 3% decrease in dolly and crane rentals during 1997. The increase in
camera car rentals was largely the result of price changes resulting in higher
average day rates. The decrease in dolly and crane rentals was primarily due to
fewer split rental relationships for remote heads and cranes.
Total revenue for the Company was essentially unchanged, increasing by
1% from $3.32 million in 1996 to $3.36 million in 1997.
Cost of sales decreased by 25% from $1.57 million in 1996 to $1.17
million in 1997. This decrease was generally related to the Company's continued
efforts to reduce variable costs. Dolly and crane sales margins improved from
$73,000 in 1996 to $591,000 for 1997 as a result of tighter cost controls over
equipment purchases, sale of older equipment with high depreciation, fewer
discounts given to customers and the poor margins reported in previous periods
on Lightmaker sales.
Cost of rental operations increased by 5% from $1.44 million in 1996 to
$1.51 million in 1997. This increase relates to a similar 5% increase in rental
revenue over the same period. Shotmaker's dolly, crane and camera car rental
costs decreased $104,000 and $80,000 for 1997, respectively, as compared to
1996, due to lower repair and maintenance on camera cars and cost reductions
which resulted from the elimination of Lightmaker products.
Selling, general and administrative expenses decreased by 26% from $1.97
million in 1996 to $1.46 million in 1997. The decrease is primarily due to
management's continued efforts to reduce operating expenses primarily in
corporate, advertising, maintenance and repairs. This decrease was hampered by
an increase in litigation expenses, primarily due to defense of the "Chapman"
patent lawsuit. Legal expenses totaled $55,000 in 1996 as compared with $235,000
in 1997.
Total expenses decreased by 16% from $4.97 million in 1996 to $4.15
million in 1997.
Net interest expense increased 82% from $39,000 in 1996 to $71,000 in
1997 in relation to the larger average balances outstanding on the Foothill
credit facility which was used to purchase more rental inventory and reduce
accounts payable. Other income (expenses) increased 164% from ($193,000) in 1996
to $125,000 in 1997 as a result of income related to the liquidation of
Lightmaker inventory and other sales of obsolete and slower moving rental
equipment.
The Company's net loss decreased 292% from $1.88 million in 1996 to
$737,000 in 1997. The net loss per basic and diluted share of common stock
decreased from $0.15 in 1996 to $0.06 in 1997.
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.
-14-
<PAGE> 15
CAMERA PLATFORMS INTERNATIONAL, INC.
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
Audited financial statements as of and for the year ended December 31, 1998 are
not available at this time. The Company's auditors are still gathering
information for the purpose of their audit. It is anticipated that the opinion
issued by the Company's auditors for the year ended December 31, 1998 will
address doubt as to the Company's ability to continue as a going concern. The
Company is also negotiating with its prior auditors for their consent to attach
their report to the consolidated financial statements as of and for the years
ended December 31, 1997 and 1996.
An amendment to the Form 10K will be filed with the SEC as soon as these reports
become available.
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Unaudited Consolidated Financial Statements:
Unaudited Consolidated Statements of Financial Position at
December 31, 1997 and 1996................................................. 17
Unaudited Consolidated Statements of Operations for the Years Ended
December 31, 1998, 1997 and 1996........................................... 18
Unaudited Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996........................................... 19
Unaudited Consolidated Statement of Shareholders' Equity for the Years Ended
December 31, 1998, 1997 and 1996........................................... 21
Notes to Unaudited Consolidated Financial Statements.......................... 22
Schedule II - Valuation and Qualifying Accounts for the
Years Ended December 31, 1998, 1997 and 1996.............................. 35
</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
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH $ 26,000 $ 77,000
ACCOUNTS RECEIVABLE, LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS OF
$87,000 IN 1998 AND $46,000 IN 1997 153,000 177,000
CURRENT MATURITIES OF NET INVESTMENT IN SALES-TYPE LEASE
AND INSTALLMENT SALE 43,000 42,000
INVENTORIES 964,000 322,000
PREPAID EXPENSES 191,000 98,000
------------ ------------
TOTAL CURRENT ASSETS 1,377,000 716,000
PROPERTY AND EQUIPMENT, NET OF DEPRECIATION, AMORTIZATION
AND RENTAL ASSET VALUATION ALLOWANCE 2,644,000 1,446,000
NET INVESTMENT IN SALES-TYPE LEASE AND INSTALLMENT SALE,
NET OF CURRENT MATURITIES 38, 000 90,000
DEPOSITS AND OTHER ASSETS 56,000 246,000
4,115,000 2,498,000
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE 1,220,000 $ 478,000
CURRENT MATURITIES OF LONG-TERM DEBT 1,195,000 560,000
CUSTOMER DEPOSITS 19,000 31,000
DEFERRED REVENUE 29,000 12,000
OTHER CURRENT LIABILITIES 192,000 52,000
------------ ------------
TOTAL CURRENT LIABILITIES 2,655,000 1,133,000
LONG-TERM DEBT, NET OF CURRENT MATURITIES 3,747,000 811,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
COMMON STOCK $.0005 PAR VALUE; 15,000,000 SHARES
AUTHORIZED; 13,768,228 SHARES ISSUED AND OUTSTANDING 7,000 6,000
ADDITIONAL PAID-IN CAPITAL 23,547,000 22,792,000
ACCUMULATED DEFICIT (25,841,000) (22,244,000)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (2,287,000) 554,000
------------ ------------
4,115,000 2,498,000
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
-17-
<PAGE> 18
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1998 1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
NET PRODUCT SALES $ 607,000 $ 1,719,000 $ 1,769,000
REVENUES FROM RENTAL OPERATIONS 1,638,000 1,637,000 1,552,000
------------ ------------ ------------
2,245,000 3,356,000 3,321,000
EXPENSES
COST OF SALES 406,000 1,172,000 1,556,000
COST OF RENTAL OPERATIONS 1,739,000 1,511,000 1,441,000
SELLING, GENERAL AND ADMINISTRATIVE 1,754,000 1,464,000 1,965,000
------------ ------------ ------------
3,899,000 4,147,000 4,972,000
OPERATING LOSS (1,654,000) (791,000) (1,651,000)
INTEREST EXPENSE, NET (560,000) (71,000) (39,000)
OTHER INCOME (EXPENSE), NET (10,000) 125,000 (193,000)
IMPAIRMENT LOSS ON LONG-LIVED ASSETS (342,000) -- --
NET LOSS FROM DISCONTINUED OPERATIONS (1,031,000) -- --
------------
NET LOSS (3,597,000) $ (737,000) $ (1,883,000)
- ----------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.27) $ (0.06) $ (.015)
- ----------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 13,145,228 12,418,228 12,418,228
- ----------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
-18-
<PAGE> 19
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
NET LOSS $(3,597,000) $ (737,000) $(1,883,000)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 899,000 408,000 422,000
(GAIN) LOSS ON DISPOSAL OF EQUIPMENT 386,000 (155,000) (33,000)
IMPAIRMENT LOSS ON LONG-LIVED ASSETS 342,000 -- --
PROVISION FOR DOUBTFUL ACCOUNTS, NET 41,000 12,000 (34,000)
CHANGES IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE (19,000) 94,000 381,000
NET INVESTMENT IN LEASE AND INSTALLMENT SALE 52,000 (132,000) --
INVENTORIES (642,000) (53,000) 155,000
PREPAID EXPENSES (93,000) (16,000) (59,000)
DEPOSITS AND OTHER ASSETS 222,000 (128,000) 57,000
ACCOUNTS PAYABLE 742,000 (87,000) 52,000
DEFERRED REVENUE 17,000 12,000 --
CUSTOMER DEPOSITS (12,000) (64,000) --
OTHER CURRENT LIABILITIES 140,000 (8,000) --
NET CASH USED IN OPERATING ACTIVITIES (1,522,000) (854,000) (975,000)
- -----------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
PROCEEDS FROM SALE OF LIGHTMAKER DIVISION -- -- 110,000
PROCEEDS FROM SALE OF PROPERTY
AND EQUIPMENT 1,320,000 549,000 208,000
PURCHASES OF PROPERTY AND EQUIPMENT (3,379,000) (750,000) (77,000)
PURCHASE OF COVENANT NOT TO COMPETE (40,000) -- --
NET CASH USED IN INVESTING ACTIVITIES (2,099,000) (201,000) 241,000
- -----------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
NET PROCEEDS (PRINCIPAL PAYMENTS)
ON REVOLVING LINE OF CREDIT -- (170,000) 170,000
PROCEEDS FROM BORROWINGS OF SHORT-TERM DEBT 585,000 527,000
PRINCIPAL PAYMENTS ON SHORT-TERM DEBT (360,000) -- --
PROCEEDS FROM BORROWINGS OF LONG-TERM DEBT 5,215,000 1,146,000 250,000
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (1,870,000) (25,000) --
</TABLE>
-19-
<PAGE> 20
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<S> <C> <C> <C>
CONTRIBUTION OF CAPITAL -- -- 192,000
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,570,000 951,000 725,000
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH ($ 51,000) ($ 104,000) ($ 9,000)
----------- ----------- -----------
CASH AT BEGINNING OF YEAR 77,000 181,000 190,000
CASH AT END OF YEAR $ 26,000 $ 77,000 $ 181,000
----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
INTEREST $ 539,000 $ 55,000 $ 36,000
INCOME TAXES $ 1,000 $ 1,000 $ 2,000
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
- 20 -
<PAGE> 21
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED 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, 1997 12,418,228 $ 6,000 $ 22,792,000 ($21,507,000) $ 1,291,000
NET LOSS FOR THE YEAR -- -- -- (737,000) (737,000)
---------- ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 1997 12,418,228 6,000 22,792,000 (22,244,000) 554,000
---------- ------------ ------------ ------------ ------------
ISSUANCE OF
COMMON STOCK 1,350,000 1,000 755,000 -- 756,000
NET LOSS FOR THE YEAR -- -- -- (3,597,000) (3,629,000)
---------- ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 1998 13,768,228 $ 7,000 $ 23,547,000 ($25,841,000) ($ 2,319,000)
---------- ------------ ------------ ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
- 21 -
<PAGE> 22
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Camera Platforms International, Inc. ("CPI" or 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. As discussed in Note 2, in October 1996, UST, Inc., a former majority
stockholder of CPI, consummated a sale of its position in CPI to Shotmaker
Acquisition Corporation ("SAC") and SAC acquired 76% ownership in CPI as a
result of a Stock Purchase Agreement.
During 1997, the Company formed Shotmaker Dollies, Inc. ("SDI"), a wholly
owned subsidary. SDI has been inactive since inception (Note 15).
Also during 1997, the Company formed Shotmaker Sound Inc. ("SSI"), a wholly
owned subsidiary, to allow for future expansion into the music and theatrical
production industries (Notes 6 and 15).
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 and music industries.
Liquidity
The Company has incurred net losses of $3,597,000 in 1998, $737,000 in
1997, and $1,883,000 in 1996, and now shows a negative shareholders' equity. The
Company also recorded negative cash flows from operations in 1998 of $1,522,000,
and was in default on its borrowing facilities. The Company has been able to
secure financing to support operations to date, but there is no assurance that
funding will be available to support the operations in the future.
The Company's continued ability to operate is dependent on its ability
to either extend or refinance its existing debt forbearance agreement, liquidate
significant assets, or raise additional capital. Management is actively seeking
a potential buyer for its Akela Crane division and other assets, and is
negotiating with its lender to extend the terms of the credit facility. There
can be no assurance that this sale or any other will occur, and that the credit
facility will be extended in a manner that allows the Company to continue its
operations in its present form. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated in consolidation.
Leasing Operations
- 22 -
<PAGE> 23
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The Company's leasing operations consist of operating and sales-type leases on a
variety of equipment types, primarily camera cars, dollies and cranes, and other
accessories.
Under the operating lease method of accounting, the leased asset is recorded at
cost and depreciated over its estimated useful life, using periods ranging from
three to ten years. Rental payments are recognized as revenue as they become due
under the terms of the operating lease agreements.
Revenues from certain qualifying non-cancelable lease contracts are accounted
for as sales-type leases wherein the present value of all payments are recorded
currently as revenues, and the related cost of the asset is charged to cost of
sales. Interest is recorded over the term of the related lease agreement.
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.
Research and Development
Research and development costs are charged to expense as incurred. Such amounts
are not material in any year presented.
Cash Equivalents
The Company considers all highly liquid investments held at financial
institutions with maturity dates of three months or less at the time of
acquisition to be cash equivalents.
Per Share Data
The Company has adopted Statement of Financial Accounting Standards ("SFAS")
SFAS No. 128, "Earnings Per Share", which establishes new standards for
computing and presenting basic and diluted earnings per share. Adoption of SFAS
No. 128 does not have a material effect on the computation or presentation of
per share data in the accompanying consolidation financial statements.
The basic income (loss) per share is calculated based upon the weighted average
number of common shares outstanding during each year. Diluted income (loss) per
share is calculated based upon the weighted average of shares of common stock
outstanding and shares that would have been outstanding assuming the issuance of
common stock for all dilutive potential common stock outstanding. The Company's
outstanding stock options represent the only dilutive potential
- 23 -
<PAGE> 24
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
common stock outstanding.
Concentration of Credit Risk
The Company's customers are principally engaged in the production of motion
pictures or television programming, or are suppliers to such companies. Credit
is extended based on an evaluation of the customer's financial condition.
Receivables arising from the granting of credit under normal trade terms are
generally due within 30 to 90 days and are generally not collateralized. From
time to time, the Company grants extended terms, which are generally
collateralized by a security interest in the products sold. Collections of
accounts receivable have consistently been within management's expectations.
Advertising Costs
The Company expenses all advertising costs as incurred. Advertising costs
totaled $142,000, $191,000, and $243,000 for the years ended December 31, 1998,
1997, and 1996, respectively, and were recorded as part of selling, general and
administrative expenses.
Equipment Leases
The Company's leasing operations consist primarily of short-term rentals of
camera cars, camera dollies and cranes. These rentals generally range from one
day to several weeks in duration, with occasional rentals of several months. The
Company also has a small number of camera car and dollies on long-term operating
leases of twelve to thirty-six months, and one camera car on an indefinite
long-term operating lease in Japan. None of the rentals are noncancelable
leases, and no contingent rentals are included in the Company's consolidated
statements of operations.
Stock-Based Compensation
The Company has adopted the disclosure-only provisions of SFAS 123, "Accounting
for Stock-Based Compensation", but applies APB No. 25 and related
interpretations in accounting for options granted under its plan.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements. Actual
results could differ from those estimates and such differences could be material
to the consolidated financial statements.
Reclassifications
Certain accounts in 1996 have been reclassified in order to conform to the
presentation in 1997.
New Accounting Standards
The Company will adopt SFAS No. 130, "Reporting Comprehensive Income" and
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" during 1998. The Company is evaluating the impact of these
statements on its consolidated financial statements.
- 24 -
<PAGE> 25
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" was adopted during the first quarter of 1997.
SFAS No. 129, Disclosures of Information about Capital Structure" and SFAS No.
128, "Earnings Per Share" were adopted in the fourth quarter of 1997, with no
material effect on the consolidated financial statements.
NOTE 2 - 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"), Shotmaker Acquisition Corp ("SAC"), 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 was due,
together with accrued interest thereon, on April 11, 1998, subject to certain
offsets in favor of the Company.
NOTE 3 - INVESTMENT IN SALES-TYPE LEASE AND INSTALLMENT SALE
The following lists the components of the investment in sales-type lease and
installment sale:
<TABLE>
<CAPTION>
December 31,
------------
1998 1997
---- ----
<S> <C> <C>
Minimum lease payments receivable ......... $ 81,000 $145,000
Less: Unearned income ..................... 29,000 13,000
-------- --------
Net investment ............................ $ 52,000 $132,000
======== ========
</TABLE>
At December 31, 1998, lease and installment sale receivables are due in
installments as follows:
<TABLE>
<S> <C>
1999....................................... 39,000
2000....................................... 13,000
</TABLE>
NOTE 4 - INVENTORIES
<TABLE>
<CAPTION>
December 31,
------------
1998 1997
---- ----
<S> <C> <C>
Work in process .......................... $454,000 $185,000
Finished goods ........................... 510,000 137,000
-------- --------
$964,000 $322,000
======== ========
</TABLE>
- 25 -
<PAGE> 26
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
------------
1998 1997
---- ----
<S> <C> <C>
Equipment available for lease...................... $6,523,000 $4,930,000
Machinery and equipment............................ 390,000 350,000
Leasehold improvements............................. 73,000 60,000
Furniture and fixtures............................. 94,000 62,000
Automobiles and trucks............................. 143,000 57,000
--------- ---------
7,223,000 5,459,000
Less accumulated depreciation and amortization..... 4,037,000 3,471,000
Less rental asset valuation allowance.............. 542,000 542,000
--------- ---------
$2,644,000 $1,446,000
========== ==========
</TABLE>
Accumulated depreciation and amortization pertaining to equipment available for
lease amounted to $3,528,000 and $3,065,000 at December 31, 1998 and 1997,
respectively.
NOTE 6 - ACQUISITIONS AND DISPOSITIONS
THIRD ENCORE
On January 1, 1998, the Company's wholly owned subsidiary, Shotmaker Sound, Inc.
("Sound"), completed the purchase of the assets and business of Third Encore
("3E"), a company which provides rehearsal studio, storage and cartage services
to recording artists. In conjunction with the purchase, the former shareholder
of 3E entered into a five year agreement not to compete with the Company, which
requires payment of an additional $40,000, which was to be paid quarterly during
1998. As part of the acquisition, the Company assumed 3E's existing building
leases which require a combined monthly rental of $18,400 through January 2003.
Sound subsequently sold the assets and business of 3E to an unrelated third
party, effective February 1, 1999 (Note 13).
Sound, the obligor under the covenant not to compete, failed to make additional
payments under the covenant not to compete, claiming certain violations and
offsets. Binding arbitration ruled against Sound, requiring it to deposit into a
separate interest-bearing account approximately $34,000 pending the resolution
of claimed offsets. Sound has no assets, and has thus far failed to post the
required deposit (Notes 12 and 13).
PRODUCTION SERVICES-ATLANTA
On April 6, 1988, the Company acquired the business of Production
Services-Atlanta, Inc. ("PSA") for a total consideration of $2.1 million
consisting of (i) $1 million cash at closing, (ii) a $500,000 promissory note
due in three years, interest payable quarterly at 8%, and (iii) 600,000
- 26 -
<PAGE> 27
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
shares of Company common stock, at an agreed upon value of $1 per share. The
promissory note was secured by a lien on the acquired assets, subordinate to the
lien of the Company's primary lender. The $1 million cash at closing, together
with $250,000 in working capital, was funded by Foothill Capital Corporation
("Foothill"). The Foothill loan fully amortized over sixty months, with interest
payable monthly at the reference rate plus 2%. The Foothill loan was
collateralized by all the assets of PSA.
In October, 1998, the Company ceased all PSA operations (Note 15). On November
10, 1998, all the assets of PSA were sold at auction. Prior to the auction,
Foothill noticed an event of default under its note, and foreclosed on the
assets. The Company recognized a $384,000 loss on the disposition of the assets.
The remaining amounts due under the Foothill debt were restructured, together
with all other Foothill debt in December, 1998 (Note 7).
The Company is in default under the promissory note due to the former
shareholders of PSA (Notes 7 and 12).
FLUID IMAGES, INC
On May 27, 1998, the Company acquired all the stock of Fluid Images, Inc.,
("Fluid Images") an Oregon corporation, including all assets of Fluid Images,
the name "Akela Cranes", but excluding all liabilities except certain accounts
payable and debt of Fluid Images, for a purchase price of $2.5 million.
Immediately upon acquisition, Fluid Images was liquidated and its assets and
liabilities were assumed by the Company. The consideration consisted of (i) $1
million cash at closing, (ii) a $750,000 promissory note with $250,000 annual
principal reductions, interest only payable quarterly at 10%, and (iii) 750,000
shares of the Company's common stock, at an agreed upon value of $1 per share.
The promissory note is unsecured. The $1 million cash at closing was funded by
Foothill. The Foothill loan initially fully amortized over sixty months, with
interest payable monthly at the reference rate plus 2% (9.75 at December 31,
1999) (Note 7). The Foothill loan is collateralized by all the acquired assets.
Subsequently, the Company restated the value of the shares issued to $.20 per
share and recognized an impairment in the carrying value of the acquired assets
of $342,000 (Note 16).
The Company is in default under the promissory note due to the former
shareholders of Fluid Images, Inc. (Notes 7 and 12).
NOTE 7 - LONG-TERM DEBT
In October, 1997 the Company secured a $2.5 million credit facility, consisting
of (1) $1,250,000 term loan, (2) $750,000 revolving line of credit and (3)
$500,000 inventory equipment line of credit, with interest at reference rate
plus 2% (effective rate of 10.5 % at December 31, 1998), with Foothill. The
original maturity of the loan was January 15, 2000. The term loan required
monthly principal reductions of $25,000. The loans refinanced an earlier credit
facility totaling $850,000 which matured October 15, 1997.
- 27 -
<PAGE> 28
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Subsequently, Foothill advanced $1 million for the PSA purchase and $1.25
million for the Fluid Images purchase (Note 6).
On December 22, 1998, the Company entered into a forbearance agreement with
Foothill. The agreement called for $37,959 to be paid to Foothill upon the sale
of the assets of Sound (Notes 6 and 15) to be applied against past due interest;
no further advances under any of the notes; and an extension of the due date of
all the notes to February 15, 2001. As part of the agreement, past due interest
of $92,000 together with an annual renewal fee of $32,000, was added to
principal. The agreement calls for interest only payments for ninety days, with
monthly principal payments of $45,200 plus interest commencing with the April
15, 1999 payment.
The Company is obligated under a promissory note due to the former shareholders
of PSA of $500,000, bearing interest at 8% payable quarterly, principal all due
and payable April, 2001. The note is unsecured. At December 31, 1998, the
Company was in default of interest payments under the note (Note 12).
The Company is obligated under a promissory note due to the former shareholders
of Fluid Images, Inc. of $750,000, bearing interest at 10%, interest payable
quarterly, with annual principal payments of $250,000. The note is unsecured. At
December 31, 1998, the Company was in default of interest payments under the
note (Note 12).
The Company has a $250,000 unsecured obligation to the former majority
shareholder of the Company, bearing interest at the Bank of Boston reference
rate (7.75% at December 31, 1998) which was due and payable together with
accrued interest thereon on April 11, 1998. Demand has been made on the note,
but no further action or discussions have taken place.
The Company has a $150,000 unsecured obligation to an unrelated third which is
convertible to 600,000 shares of common stock, interest payable monthly at
reference rate plus 2% (9.75% at December 31, 1998), with principal due January,
1999. The Company failed to pay the note upon maturity, demand was made, and
litigation has commenced (Note 12).
The Company is financing its remaining obligation on its purchase of the
worldwide rights to the "Enlouva" patents and trademark over thirty-five equal
monthly installments of $1,000, including interest at 10%. The note matures
December 1999. In the event of default, the seller is entitled to collect money
damages, restoration to the right of the name "Enlouva", the right to
manufacture and sell cranes under the "Enlouva" name, and the restoration of
parts shipped. As of March, 1999, the Company was in arrears three payments.
NOTE 8 - INCOME TAXES
The Company utilizes the liability method to account for income taxes.
Under this method,
- 28 -
<PAGE> 29
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws expected to apply when the differences are
expected to reverse.
At December 31, 1998, the Company has net operating loss carryforwards of
approximately $24 million for federal tax purposes, which expire from 2000 to
2013. Because of statutory "ownership changes" the amount of net operating
losses which may be utilized in future years are subject to significant annual
limitations. The Company also has net operating loss carryforwards of
approximately $6 million for California tax purposes, which expire from 1999 to
2003. 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, 1998, 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 - RELATED PARTY TRANSACTIONS
Beginning in September, 1998, a principal shareholder of the Company agreed to
loan approximately $200,000 to VA Industries, the manufacturer of the Company's
new hydraulic dolly, toward the completion of the first production run of twelve
dollies. The VA Industries loan is being administered by the Company, and is
secured by the construction in process of the dollies at VA Industries. In
addition, the shareholder purchased accounts receivable at par from the Company,
which the Company subsequently collected and failed to remit.
NOTE 10 - STOCK OPTIONS
The Company has adopted a Stock Option Plan to provide additional incentive for
officers and key employees to invest in the Company and has granted stock
options to purchase shares of its common stock to certain officers and key
employees as follows:
Options Outstanding
Weighted
- 29 -
<PAGE> 30
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Avg. Exercise
Shares Price
------ -----
<S> <C> <C>
Outstanding at January 1, 1996................... 68,000 $2.25
========= =====
Granted....................................... -- $ --
Exercised..................................... -- --
Terminated or expired......................... (34,000) 2.25
--------- -----
Outstanding at December 31, 1996................. 34,000 $2.25
========= =====
Granted....................................... 700,000 $0.12
Exercised..................................... -- --
Terminated or expired......................... (34,000) --
--------- -----
Outstanding at December 31, 1997................. 700,000 $0.12
========= =====
Granted....................................... 1,500,000 $0.05
Exercised..................................... -- --
Terminated or expired......................... (560,000) $0.12
--------- -----
Outstanding at December 31, 1998................. 1,640,000 $0.05
========= =====
</TABLE>
Options were granted under the plan at not less than the fair market value of
the stock on the date of grant. Had compensation cost for the plan been
determined based on the fair value of the options at the grant dates consistent
with the methodology prescribed by SFAS 123, there would be no change to the
Company's net loss and loss per share.
Options outstanding at December 31, 1998 expire between January 2002 and January
2005.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Leases
In December 1996, the Company entered into a lease for its premises expiring
December, 1999. Minimum payments under the new lease are $111,000 for the year
ending December 31, 1999..
In September 1997, the Company's subsidiary, Shotmaker Dollies, Inc., entered
into a sublease agreement for office and warehouse space adjacent to its
principal premises. Minimum payments under the sublease are $45,000 per year,
expiring April 2000.
In January 1998, as part of the purchase of 3E (Note 6), Sound assumed 3E's
existing building leases which require combined monthly rental of $18,400
through January 2003. Sound was released from the lease obligations under term
of the sale of the assets of 3E on February 1, 1999
- 30 -
<PAGE> 31
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Note 15).
In November, 1997, the Company entered into a sixty month equipment lease
agreement to provide machining equipment for its manufacturing and reengineering
programs. Payments under the lease are $39,000 per year. The Company in turn,
entered into a reengineering agreement with V.A. Industries Co, Inc. ("VA") to
provide the Company with component parts for dollies, cranes, dolly track and
related equipment. Included in inventory at December 31, 1998 was
work-in-process totaling $413,000. The Company is in default under the lease
(Note 12).
The Company also agreed to sublease to VA the aforementioned machining equipment
at an amount equal to the monthly lease payment. At the conclusion of the lease,
ownership in the machining equipment shall be shared equally.
Contingencies related to Environmental Issues
In previous years, the Company reported that the Shotmaker camera cars, fifteen
of which are currently in operation, were unable to meet vehicle emission
standards. As of December 31, 1998 all the Company's cars have been retrofitted
to meet all state and federal emissions requirements. The retrofitting was
accomplished without jeopardizing any of the operational features of the cars.
NOTE 12 - LITIGATION
Chapman v Cinemeccanica Italiana Srl. As previously reported, the Company
prevailed on July 10, 1997 in an action brought by Leonard Studio Equipment,
Inc. (manufacturers of the Chapman dolly line) against Cinemeccanica Italiana,
Srl., designers of the Company's ?Blue? line of dollies. Leonard Studio
Equipment, Inc. filed an appeal in the matter. On October 19, 1998, the Company
learned that the appeal by Leonard Studio Equipment was unsuccessful.
Peterman v Camera Platforms International, De La Motte v Camera Platforms
International. On July 2, 1997, the platform of a Panther Pegasus crane which
had been leased by the Company to Mighty Joe Young Productions, Inc. (?MJY?)
fell, injuring the two operators who were on the platform. The Company's
insurance carrier has assumed the defense of the matter, which is in the
preliminary stages of litigation. The Company is vigorously defending against
the claims, and believes that the cause of the accident was due to operator
error. In addition to its own insurance policies, the Company is an additional
named insured on the policies of MJY with respect to the lease of the crane.
Management believes that exposure, if any, is fully covered by insurance.
Johnson v Camera Platforms International. The former shareholders of Fluid
Images Inc., holders of a $750,000 unsecured obligation (Notes 6 and 7) filed
notice on February 1, 1999 with the American Arbitration Association requesting
a binding arbitration hearing. The Company is in default under the provisions of
the note, and Johnson has demanded payment in full pursuant to
-31-
<PAGE> 32
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
an acceleration provision in the note. The Company has commenced negotiations to
restructure to debt.
Traba v Camera Platforms International. On February 17, 1999, Traba, the holder
of a past due $150,000 unsecured obligation (Notes 6 and 7) filed suit in
Federal Court in Chicago demanding payment in full, together with unpaid
interest and attorney's fees. The Company claims offsets against Traba.
JMYC v Camera Platforms International. On January 26, 1999, JMYC, former
shareholders of PSA (Notes 6 and 7), filed suit in Atlanta for past due interest
payments and certain accounts receivable allegedly collected by the Company on
its behalf but not paid over. The total claim is approximately $50,000, which
has been accrued in the financial statements of the Company.
Crocket and Fish v Camera Platforms International. Crocket and Fish represented
Cinemeccanica Italiana Srl. in its defense of an action brought by Leonard
Studio Equipment Inc. The Company agreed to pay certain costs of defense on
behalf of Cinemeccanica. On December 8, 1998, Crocket and Fish filed suit
claiming $132,000 of unpaid attorneys' fees, which has been accrued in the
financial statements of the Company.
Atlas v Camera Platforms International. A claim by the Company's former
President and Chief Operating Officer for breach of employment contract arising
out of his termination in June, 1998 was settled in March, 1999. The agreement
calls for a four month consulting contract at $10,000 per month, which will be
recorded contemporaneously, and issuance of stock pursuant to previously granted
options.
Pologis/SCI v Camera Platforms International. A notice of entry of sister state
judgment in the amounts of $27,079 was served on January 11, 1999. The Company
is in negotiations regarding settlement by payment of the judgment over time.
U.S. Bancorp Leasing & Financial v Camera Platforms International. US Bancorp
filed suit on March 4, 1999 for damages and has noticed a hearing for
application for writ of possession in connection with the lease of certain
equipment (Note 11).
Other. The Company is a defendant in various actions by creditor for claimed
unpaid invoices. The aggregate amount of such claims is approximately $90,000.
Such amounts are included in accounts payable.
NOTE 13 - SALES TO MAJOR CUSTOMERS AND GEOGRAPHIC AREAS
No sales to a single customer accounted for more than ten percent of total
revenues during 1998, 1997, or 1996. No geographic area outside the United
States accounted for more than ten percent of total sales during the last three
years.
-32-
<PAGE> 33
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 - 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, 1998 and 1997.
NOTE 15 - DISCONTINUED OPERATIONS
In October, 1998, the Company ceased operations in Atlanta and Nashville.
Subsequently, on November 10, 1998 all the inventory and equipment of the
Atlanta and Nashville operations was sold at auction. The Company recognized a
$384,000 loss on the disposition.
On February 1, 1999 (Note 17), the Company sold substantially all the assets of
its wholly owned subsidiary, Shotmaker Sound, Inc.
The disposition of these assets has been accounted for as discontinued
operations and accordingly, the operating results of the Atlanta and Nashville
operations and of Shotmaker Sound have been aggregated and reported as
discontinued operations in the accompanying consolidated statement of
operations. The operations were only in effect during fiscal 1998, and no
restatement prior years' financial statements is required.
NOTE 16 - IMPAIRMENT OF ASSETS
The Company has recognized a loss on impairment of assets of $342,000 based on a
review of the appraised value of the Akela cranes acquired by the purchase of
Fluid Images, Inc. (Note 6) and the estimated revenues expected to be generated
from rentals and sales. The Company also reduced the value associated with the
issuance of new shares of common stock by $600,000. The net effect of these
reductions was to write off purchased goodwill of $942,000.
NOTE 17 - SUBSEQUENT EVENTS
On April 2, 1999 the Company's wholly owned subsidiaries SDI and Sound filed for
protection under Chapter 7 of the federal bankruptcy code. Neither SDI nor Sound
have substantial assets.
In July 1993, the Company entered into a five-year distribution agreement with
Panther GmbH. This agreement contained a provision for three additional one year
extensions commencing July, 1998 if certain conditions were met at the end of
the distribution term and subsequent annual extension periods. Pursuant to the
agreement, the Company had been granted exclusive distribution rights for all
Panther products in North and South America. Pursuant to the agreement, in July,
1998 the Company notified Panther GmbH of its desire to extend the agreement. On
March 2, 1999, the Company was notified by Panther GmbH that it was
-33-
<PAGE> 34
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
terminating the agreement for failure to meet certain conditions. Panther GmbH
granted to the Company, until further notice is received, the right to sell
Panther products on a non-exclusive basis, receiving the same purchase discount
as existed under the previous contract.
On February 1, 1999, Shotmaker Sound, Inc. ("Sound"), the Company's wholly owned
subsidiary sold the assets and business of Third Encore ("3E") (Note 6). Terms
of the sale were $133,050 and the execution of a consulting agreement with the
Company through December 31, 1999 for $55,000, both payable in cash at the
closing.
-34-
<PAGE> 35
CAMERA PLATFORMS INTERNATIONAL, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance Balance
January 1, Additions Deductions December 31,
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Asset valuation allowance $ 542,000 -- -- $ 542,000
Allowance for doubtful accounts 49,000 34,000 (49,000) 34,000
Warranty liability 10,000 18,000 (24,000) 4,000
--------- --------- --------- ---------
$ 601,000 $ 52,000 ($ 73,000) $ 580,000
========= ========= ========= =========
YEAR ENDED DECEMBER 31, 1997
Asset valuation allowance $ 542,000 -- -- $ 542,000
Allowance for doubtful accounts 34,000 46,000 (34,000) 46,000
Warranty liability 4,000 18,000 (22,000) --
--------- --------- --------- ---------
$ 580,000 $ 64,000 ($ 56,000) $ 588,000
========= ========= ========= =========
YEAR ENDED DECEMBER 31, 1998
Asset valuation allowance $ 542,000 -- -- $ 542,000
Allowance for doubtful accounts 46,000 41,000 -- 87,000
Warranty liability 0 0 0 0
--------- --------- --------- ---------
$ 588,000 $ 41,000 -- $ 629,000
========= ========= ========= =========
</TABLE>
-35-
<PAGE> 36
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Item 9 - Changes In and Disagreements with Accountants on Accounting or
Financial Disclosure
At a meeting held on February 15, 1999, the Board of Directors of the
Company authorized Edward D. Carlin, Chairman and CEO of Camera Platforms,
International, Inc. to engage Rose, Snyder & Jacobs as its independent auditors
for the fiscal year ending December 31, 1998, and for other independent
accounting and tax-related services on an ongoing basis, to replace the firm of
Grant Thornton LLP, who were dismissed as auditors of the Company. The
engagement of Rose, Snyder & Jacobs was effective March 3, 1999. The Board of
Directors of the Company does not have a separate audit committee.
The reports of Grant Thornton LLP on the Company's financial statements
for the past two fiscal years ended December 31, 1996, and 1997 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, 1996 and 1997 and the
subsequent interim period through March 3, 1999, there were no disagreements
with Grant Thornton LLP on any matter of accounting principles or practice,
financial statement disclosure, or auditing scope or procedures, which, if not
resolved to the satisfaction of Grant Thornton LLP would have caused Grant
Thornton LLP to make reference to the subject matter of the disagreement(s) in
connection with its report.
No reportable events as defined in Item 304(a)(1)(iv) of Regulation S-K
occurred during the Company's two fiscal years ended December 31, 1996 and 1997
and the subsequent interim period through March 3, 1999.
During the Company's two fiscal years ended December 31, 1996 and 1997
and the subsequent interim period through March 3, 1999, Rose, Snyder & Jacobs,
the Company's new independent accountants, were not consulted regarding the
application of accounting principles to any specified transaction, completed or
proposed, or regarding the type of audit opinion that might be rendered on the
Company's financial statements, nor were Rose, Snyder & Jacobs consulted
regarding any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, nor regarding any reportable events
as defined in Item 304(a)(1)(iv) of Regulation S-K.
The Company requested Grant Thornton LLP to furnish it a letter
addressed to the Commission stating whether it agrees with the above statements.
A copy of that letter, dated March 19, 1999, was filed as Exhibit 16 to the
Company's Form 8-KA Current Report dated March 22, 1999, which reported the
change in the Company's certifying accountant. Grant Thornton LLP's letter is
also incorporated by reference as an exhibit to this Form 10-K Annual Report.
-36-
<PAGE> 37
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 five. 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 April 15, 1998,
for each director and executive officer of the Company:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
Edward Carlin 56 Chairman of the Board and Chief Operating
Officer
William O. Fleischman 53 Director
Rick Hicks 55 Director
Leslie J. Kovacs 55 Director
Brianne Murphy 55 Director
</TABLE>
Edward Carlin has been a director since October 1998, and has been
Chairman of the Board and Chief Executive Officer since February 15, 1999.
William O. Fleischman has been a director since October 10, 1996. Mr.
Fleischman, in his individual capacity or through W/F Investment Corp and its
affiliates, has substantial experience investing in and managing companies. Mr.
Fleischman is also a senior member of a Century City based law firm specializing
in corporate and real estate law.
Rick Hicks has been a director since June 11, 1998. Mr. Hicks is an
attorney at law and principal at the law firm of Hicks, Recasens and Berman. He
has been an attorney since 1973. He has been a consultant and frequent investor
in a number of operating companies and real estate projects.
Leslie J. Kovacs has been a director of the Company since 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
-37-
<PAGE> 38
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
upcoming BATMAN AND ROBIN.
Brianne Murphy has been a director of the Company since May 1997. Ms.
Murphy is the first woman cinematographer in the I.A.T.S.E. and the first woman
invited to join the American Society of Cinematographers. She was a founder of
Woman in Film and Behind the Lens. She is recipient of a Crystal Award, A Lucy
Award and an Emmy. In 1982 she was awarded an Academy of Motion Picture Arts &
Sciences Scientific and Engineering Award for the Mitchell Camera Insert Car and
Process Trailer. Ms. Murphy is also a member of the Directors Guild of America
and has been directing television and features in the US and Mexico.
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 one officer of SAC, the principal shareholder of the Company,
serves on the Company's Board of Directors.
Item 11 - Executive Compensation
Compensation of Directors
As of April 1997, directors who are not officers of the Company began
receiving $1,000 for each Board of Directors meeting that 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 $100,000 during 1998. The table
below sets forth information regarding the compensation of each listed executive
officer for the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
-------------------------- -------
Other All
Annual Restricted Other
Compen- Stock Options/ LTIP Compen-
Name and Salary Bonus sation Award(s) SAR's Payouts sation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Laird Robertson**
Director, CEO 1997 22,000 -- 9,000 -- -- -- --
1996 16,000 -- -- -- -- -- --
Roy Atlas*
President, COO
</TABLE>
-38-
<PAGE> 39
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
President, COO 1997 96,000 6,000 -- -- -- -- --
President, COO 1996 16,000 -- -- -- -- -- --
Hal Needham***
Chairman, CEO 1996 49,000 -- -- -- -- -- --
Philip M. Panzera****
President 1996 134,000 -- -- -- -- -- --
</TABLE>
- --------
* Mr. Atlas' duties as President and Chief Operating Officer were
terminated on June 11, 1998
** Mr. Robinson resigned as Chief Executive Officer and as a member
of the Board of Directors on June 11, 1998
*** Mr. Needham resigned as Chairman and CEO on October 10, 1996.
**** Mr. Panzera's duties as President were terminated on October 10,
1996.
OPTION GRANTS IN 1998
During 1998 options to purchase 1,500,000 shares of common stock were granted to
Edward Carlin, the Company's Chairman of the Board and Chief Executive Officer
at an average exercise price of $0.05.
AGGREGATED OPTION EXERCISED IN 1998
AND YEAR-END 1998 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>
Roy Atlas -- -- 140,000 -- -- --
Edward Carlin -- -- 1,500,000 -- -- --
</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 April 15, 1998.
-39-
<PAGE> 40
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership Class
---------------- --------- -----
<S> <C> <C>
William O. Fleischman 6,582,2172 47.8%
1900 Avenue of the Stars, Suite 2410
Los Angeles, CA 90067
Robert, Richard and Robert C. Johnson 750,000 5.4%
14823 Schooner
Sisters, OR 97759
Hal Needham 1,123,5201 8.2%
12711 Ventura Blvd
Studio City, CA 91604
Laird Robertson 1,880,6333 13.7%
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 68.3% 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 68.3% 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 April 15, 1998.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name of Beneficial Owner Ownership Class
------------------------ --------- -----
<S> <C> <C>
Edward Carlin -- 0%
William O. Fleischman 6,582,217 (1) 47.8%
Leslie J. Kovacs -- 0%
Brianne Murphy -- 0%
Rick Hicks -- 0%
All officers and directors as a 6,582,217 47.8%
group (5 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.
-40-
<PAGE> 41
Item 13 - Certain Relationships and Related Transactions
One director of the Company, Mr. William O. Fleischman is an officer of
SAC. Please refer to "Security Ownership of Management" under Item 12 above.
-41-
<PAGE> 42
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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.
<TABLE>
<CAPTION>
Exhibits
--------
<S> <C>
3.11 Certificate of Incorporation, as amended.
3.22 By-Laws, as amended.
10.13 Form of Non-Statutory Stock Option Agreement.
10.24 Company's 1990 Stock Option Plan.
16.15 Letter re change in certifying accountant dated January 24, 1997.
16.26 Letter re change in certifying accountant dated March 22, 1999.
21.1 Subsidiaries of Registrant.
</TABLE>
1 Incorporated by reference to the Company's Form 10-K Annual
Report for the year ended December 31, 1987.
2 Incorporated by reference to the Company's Form 10-K Annual
Report for the year ended December 31, 1988.
3 Incorporated by reference to the Company's Form 10-K Annual
Report for the year ended December 31, 1989.
4 Incorporated by reference to the Company's Registration
Statement No. 33-37401 on Form S-8, filed on October 23, 1990.
5 Incorporated by reference to the Company's Form 8-K Current
Report dated January 22, 1996.
6 Incorporated by reference to the Company's Form 8-K/A Current
Report dated March 22, 1999.
(b) Reports on Form 8-K
Registrant filed no reports on Form 8-K during the fourth quarter of the
year ended December 31, 1998.
(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.
-42-
<PAGE> 43
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 15, 1999
CAMERA PLATFORMS INTERNATIONAL, INC
By:/s/ Edward Carlin
---------------------------------
Edward Carlin
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 15, 1999 Chairman of the Board
and Chief Executive Officer By: /s/Edward Carlin
--------------------
EdwardCarlin
April 15, 1999 Chief Financial Officer By: /s/Scott Haykin
--------------------
Scott Haykin
-43-
<PAGE> 44
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
EXHIBIT INDEX
<TABLE>
<S> <C>
3.1(1) Certificate of Incorporation, as amended.
3.2(2) By-Laws, as amended.
10.1(3) Form of Non-Statutory Stock Option Agreement.
10.2(4) Company's 1990 Stock Option Plan.
16.1(5) Letter re change in certifying accountant dated January 24,
1997.
16.2(6) Letter re change in certifying accountant dated March 22,
1999.
21.1 Subsidiaries of Registrant.
</TABLE>
1 Incorporated by reference to the Company's Form 10-K Annual
Report for the year ended December 31, 1987.
2 Incorporated by reference to the Company's Form 10-K Annual
Report for the year ended December 31, 1988.
3 Incorporated by reference to the Company's Form 10-K Annual
Report for the year ended December 31, 1989.
4 Incorporated by reference to the Company's Registration
Statement No. 33-37401 on Form S-8, filed on October 23, 1990.
5 Incorporated by reference to the Company's Form 8-K Current
Report dated January 22, 1996.
6 Incorporated by reference to the Company's Form 8-K/A Current
Report dated March 22, 1999.
<PAGE> 1
EXHIBIT 16.18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of
Report (Date of earliest event reported): March 3, 1999
CAMERA PLATFORMS INTERNATIONAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-14675 95-4024550
---------------------------- ----------- -------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification No.)
10909 Vanowen Street, North Hollywood, CA 91605 (Address
of principal executive offices) (Zip Code)
(818) - 623-1700
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address if changed since last report)
-45-
<PAGE> 2
This report filed on Form 8-KA amends a previous report filed by the Company on
Form 8-K dated March 10, 1999 to provide further information.
ITEM 4. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT.
At a meeting held on February 15, 1999, the Board of Directors of the
Company authorized Edward D. Carlin, Chairman and CEO of Camera Platforms,
International, Inc. to engage Rose, Snyder & Jacobs as its independent auditors
for the fiscal year ending December 31, 1998, and for other independent
accounting and tax-related services on an ongoing basis, to replace the firm of
Grant Thornton LLP, who were dismissed as auditors of the Company. The
engagement of Rose, Snyder & Jacobs was effective March 3, 1999. The Board of
Directors of the Company does not have a separate audit committee.
The reports of Grant Thornton LLP on the Company's financial statements
for the past two fiscal years ended December 31, 1996 and 1997 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, 1996 and 1997 and the
subsequent interim period through March 3, 1999, there were no disagreements
with Grant Thornton LLP on any matter of accounting principles or practice,
financial statement disclosure, or auditing scope or procedures, which, if not
resolved to the satisfaction of Grant Thornton LLP would have caused Grant
Thornton LLP to make reference to the subject matter of the disagreement(s) in
connection with its report.
No reportable events as defined in Item 304(a)(1)(v) of Regulation S-K
occurred during the Company's two fiscal years ended December 31, 1996 and 1997
and the subsequent interim period through March 3, 1999.
During the Company's two fiscal years ended December 31, 1996 and 1997
and the subsequent interim period through March 3, 1999, Rose, Synder & Jacobs,
the Company's new independent accountants, were not consulted regarding the
application of accounting principles to any specified transaction, completed or
proposed, or regarding the type of audit opinion that might be rendered on the
Company's financial statements, nor were Rose, Snyder & Jacobs consulted
regarding any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, nor regarding any reportable events
as defined in Item 304(a)(1)(iv) of Regulation S-K.
The Company has requested Grant Thornton LLP to furnish it a letter
addressed to the Commission stating whether it agrees with the above statements.
A copy of that letter, dated March 22, 1999, is filed as Exhibit 16 to this Form
8-K/A.
-46-
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMERA PLATFORMS INTERNATIONAL, INC.
/s/ EDWARD D. CARLIN
Date: March 22, 1999 -------------------------------
Chief Executive Officer
-47-
<PAGE> 4
March 22, 1999
Securities and Exchange Commission
Washington, DC 20549
RE: Camera Platform International, Inc.
File No. 0-14675
Dear Sir or Madam:
We have read Item 4 of the Form 8-K/A of Camera Platforms International,
Inc., dated March 22, 1999 and agree with the statements contained therein.
Very truly yours,
/s/ Grant Thornton LLP
-48-
<PAGE> 1
EXHIBIT 21.1
CAMERA PLATFORMS INTERNATIONAL, INC.
SUBSIDIARIES OF REGISTRANT
As of December 31, 1998 Camera Platforms International, Inc., had two
wholly-owned subsidiaries, Shotmaker Dollies, Inc., and Shotmaker Sound
Inc., both of which are
incorporated in the State of California.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND THE
CONSOLIDATED STATEMENT OF CASH FLOW AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 26,000
<SECURITIES> 0
<RECEIVABLES> 240,000
<ALLOWANCES> 87,000
<INVENTORY> 964,000
<CURRENT-ASSETS> 1,377,000
<PP&E> 7,224,000
<DEPRECIATION> 4,038,000
<TOTAL-ASSETS> 4,115,000
<CURRENT-LIABILITIES> 2,655,000
<BONDS> 0
0
0
<COMMON> 7,000
<OTHER-SE> (2,294,000)
<TOTAL-LIABILITY-AND-EQUITY> 4,115,000
<SALES> 607,000
<TOTAL-REVENUES> 2,245,000
<CGS> 406,000
<TOTAL-COSTS> 2,145,000
<OTHER-EXPENSES> 3,137,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 560,000
<INCOME-PRETAX> (3,597,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,597,000)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> (.27)
</TABLE>
