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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, 1999
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.
(Debtor in Possession as of October 25, 1999)
(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 March 20, 2000 was $4,515,978 (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 March 20, 2000.
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CAMERA PLATFORMS INTERNATIONAL, INC.
CONTENTS
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PART I
Item 1. BUSINESS.................................................... 3
Item 2. PROPERTIES.................................................. 10
Item 3. LEGAL PROCEEDINGS........................................... 10
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS............................................ 11
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS............................. 11
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA........................ 12
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................................. 14
Item 8. CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.......................................... 18
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING OR FINANCIAL
DISCLOSURES................................................. 38
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.................................................. 38
Item 11. EXECUTIVE COMPENSATION...................................... 39
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................. 40
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 dolly
track.
PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
On September 1, 1999, the Company engaged Workout Specialist, Inc.,
("WSI") to act on behalf of the Company in an attempt to reorganize its debts
outside of the formal bankruptcy process. The agreement between the Company and
WSI is for one year, and may be terminated by either party on thirty days
written notice. The agreement calls for compensation of $5,000 per month, and an
option to purchase 1,100,000 shares of the Company's stock at $.25 per share.
Walter Kornbluh of WSI commenced service as the general manager of the Company.
Before the Company could effectively formulate and implement a plan, however, on
September 24, 1999, Camera Platforms International, Inc. was served with a
notice by the clerk of the United States Bankruptcy Court that, on September 17,
1999, a petition under Title 11, United States Code, was filed against the
Company praying by certain creditors for an order for relief under Title 11,
Chapter 7 or 11 of the United States Code.
On October 14, 1999, the Company filed an answer to the court in the
form of a Debtor's Consent to Entry of an Order for Relief Under Chapter 11 of
Title 11 of the United States Code, and such an entry was ordered by the United
States Bankruptcy Court, Central District of California, San Fernando Valley
Division ("Bankruptcy Court"), on October 25, 1999, under case number
SV-99-20947 GM ("Bankruptcy Case"). The Company is currently operating its
business as debtor-in-possession pursuant to the Bankruptcy Code.
Actions to collect pre-petition indebtedness are stayed and other
contractual obligations against the Company may not be enforced. In addition,
under the Bankruptcy Code, the Company may assume or reject executory contracts,
including lease obligations and employment and option agreements. Parties
affected by these rejections may file claims with the Bankruptcy Court in
accordance with the reorganization process. Substantially all pre-petition
liabilities are subject to settlement under a plan of reorganization to be voted
upon by creditors and equity holders and approved by the Bankruptcy Court. On
February 21, 2000 the Company filed a reorganization plan that provides for
emergence from bankruptcy in 2000. There can be no assurance that the
reorganization plan proposed by the Company will be confirmed by the Bankruptcy
Court, or that any such plan will be consummated. If such plan is not accepted
by the required number of creditors and equity holders, any party in interest
may subsequently file its own plan of reorganization. A plan of reorganization
must be confirmed by the Bankruptcy Court, upon certain findings being made by
the Bankruptcy Court which are required by the Bankruptcy Code. The Bankruptcy
Court may confirm a plan notwithstanding the non-acceptance of the plan by an
impaired class of creditors or equity security holders if certain requirements
of the Bankruptcy Code are met. A plan of reorganization could also result in
holders of the Common Stock receiving no value for their interests. Because of
such possibilities, the value of the Common Stock of the Company is highly
speculative.
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CAMERA PLATFORMS INTERNATIONAL, INC.
At a hearing held on November 16, 1999 before Judge Kathleen T. Lax, the
Bankruptcy Court entered orders granting authority to the Company, among other
things, to pay pre-petition and post-petition employee wages, salaries, benefits
and other employee obligations, to pay vendors and other providers in the
ordinary course for goods and services received from September 24, 1999.
As part of the Bankruptcy Case, the Company entered into a
stipulation with Foothill Capital Corporation ("Foothill"), the Company's
secured lender, to use cash collateral on an interim basis. The agreement
authorizes the use of cash collateral solely to pay the Company's ordinary and
necessary business expenses of operation as set forth in a budget mutually
agreed upon between the parties. The stipulation calls for, among other things,
mandatory sales of deemed excess rental equipment pursuant to an agreed upon
schedule, with gross proceeds from such sales to be remitted to a special
account under the control of Foothill, with all proceeds from such sales
segregated until such time as the claims of all potential secured parties are
determined by the Bankruptcy Court. In addition, the Company agreed to continue
to pay Foothill $5,000 per week, and to be bound by certain budget targets for
net income. On January 6, 2000, an order was entered granting the debtor's
motion to use cash collateral pursuant to the stipulation with Foothill.
On December 7, 1999 the meeting of creditors was held pursuant to Code
Section 341(a). The Company and creditors appeared, and the Company's
representatives were examined by the representative of the Office of the United
States Trustee, as well as by creditors present.
On December 8, 1999, a hearing was held before Judge Mund to consider
the motion for appointment of a Chapter 11 trustee which was filed by one of the
Company's creditors. On December 22, 1999, Judge Mund ordered the motion denied.
On January 11, 2000 a Chapter 11 status conference was held by the
Court. The court ruled at that hearing that March 15, 2000 will be set as the
bar date for filing proofs of claim and interest and that the Company is to file
its plan of reorganization and related disclosure statement on or before April
1, 2000.
On March 8, 2000, a hearing was held on a debtor's emergency motion to
approve debtor-in-possession ("DIP") financing to allow the Company to meet
immediate working capital requirements. The motion was granted by Judge Mund in
an amount not to exceed $250,000. The financing is being provided by DOOFF,
LLC., the Company's secured lender (see below).
AGREEMENTS WITH CONSOLIDATED PRODUCTIONS, INC.
On February 7, 2000, Shotmaker Acquisition Corp. ("SAC"), the majority
shareholder of the Company, entered into an agreement with Consolidated
Productions, Inc. "(Consolidated") by which SAC and Consolidated agreed that SAC
would transfer to Consolidated 4,000,000 shares of the Company's common stock
currently held by SAC in exchange for the following: Consolidated will purchase
Foothill's entire rights, title and interest in Foothill's loans to the Company;
Consolidated will provide $250,000 in working capital to the Company (see DIP
financing motion above); the Company will file a plan of reorganization, which
will result in, among other things, sufficient shares of the Company's common
stock to be issued to Consolidated, such that in aggregate Consolidated will own
49.9% of the total outstanding shares of the Company's common stock after
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CAMERA PLATFORMS INTERNATIONAL, INC.
the adoption of the plan of reorganization.
On February 8, 2000, Consolidated Productions, Inc. ("Consolidated")
entered into an agreement with Foothill by which Consolidated agreed to
purchase, for $1,500,000, Foothill's entire rights, title and interest in
Foothill's loans to the Company, including Foothill's interest in any insurance
policy, loss, or payments therefrom. Several parties have asserted liens or
security interest in the Company's assets. The agreement calls for the Company
to commence adversary proceeding to establish that Foothill's liens and security
interests are prior to all other asserted liens or security interest. If a
satisfactory decision regarding priority of lien interests is not reached by May
15, 2000, Consolidated will either waive this condition to closing, or the
agreement will automatically terminate. On February 23, 2000, Consolidated
waived this condition and closed the transaction. Subsequently, Consolidated
assigned its rights under the agreement to a new entity, DOOFF LLC.
PLAN OF REORGANIZATION and DISCLOSURE STATEMENT
On February 21, 2000, the Company filed the Debtor's Plan of
Reorganization and the related Disclosure Statement Describing Debtor's Plan of
Reorganization with the Bankruptcy Court. The plan divides the creditors claims
and proposes settlements to each class on the effective date of the adoption of
the plan as follows:
Administrative Claims in general: Each holder of an administrative claim
allowed by the Court shall receive, at the sole option of such holder, cash
equal to the amount to such claim or one share of the Company's New Common stock
for each $.25 in approved claims.
Administrative claims include statutory fees; ordinary course
liabilities incurred post-petition; post-petition profession fees and expenses
incurred in conjunction with the Chapter 11 Case; United States Trustee fees;
and allowed tax claims. Allowed tax claims, at the election of the debtor, maybe
paid out in equal quarterly installments over a period of six years, with
interest at 9% per annum on the unpaid balance.
Classes of Claims of Interest:
Class 1: Allowed Secured Claim Of DOOFF LLC ("DOOFF"). DOOFF, successor
in interest to Foothill, shall have an allowed secured claim of $1,500,000 and
shall retain its security interest in the pre-petition collateral, which
includes, without limitation, all of the Company's accounts receivable,
inventory, equipment, and all tangible and intangible assets. Interest only
shall be paid monthly at the reference rate plus 2% per annum for 10 years,
commencing the first month immediately following the effective date of
reorganization. DOOFF shall receive 4,000,000 shares of the New Common stock of
the Company. The balance of DOOFF's claim, approximately $1.938 million, will be
classified as a General Allowed Unsecured Claim.
Class 2: Allowed Secured Claim of IPA/Airport Partners. IPA/Airport
Partners holds an impaired secured claim, and will be classified as a General
Allowed Unsecured Claim.
Class 3: Allowed Secured Claim of Prologis FDBA SCI-N.C. Prologis holds
an impaired secured claim, and will be classified as a General Allowed Unsecured
Claim.
Class 6: General Allowed Unsecured Claims. Unsecured claims will receive
one share of the New
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CAMERA PLATFORMS INTERNATIONAL, INC.
Common stock of the Company for each $2.00 in allowed claims held or the lesser
of $250.00 or the amount of the allowed class 6 claim.
Class 7: Holders of the Old Common Stock of the Company. The holders of
the Old Common stock of the Company will retain their interests subject to the
dilution provided for through the issuance of New Common stock to the other
classes of claimants. As indicated above, the prior control shareholder, SAC,
will be disproportionately diluted.
Any party in interest may object to the confirmation of the plan.
Voting of Claims and Interests:
The Court cannot confirm the Plan of Reorganization unless and until (1)
at least one impaired class has accepted the plan and (2) all impaired classes
have voted to accept the plan, unless the plan is eligible to be confirmed by
"cramdown", as discussed below. A class of claims is considered to have accepted
the plan when more than one-half in number and at least two-thirds in dollar
amount of the claimants which actually voted, voted in favor of the plan.
Even if all the impaired classes do not accept the proposed plan, the
Court may nonetheless confirm the plan if the non-accepting classes are treated
in the manner required by the Code. The process by which non-accepting classes
are forced to be bound by the terms of a plan is commonly referred to as
"cramdown". The Bankruptcy Code allows a plan to be "crammed down" if certain
requirements of the Code are met, and if the plan does not discriminate unfairly
and is fair and equitable. The Company may ask the Court to confirm its plan of
reorganization by cramdown on any impaired class which does not vote to accept
the plan.
At this time, it is not possible to predict the outcome of the Chapter
11 Case or its effect on the Company's business. The plan of reorganization
above may be rejected, and alternative plans may or may not be proposed,
accepted or implemented. Reference is made to Item 7, "Management's Discussion
and Analysis of Financial Condition". If it is determined that the liabilities
subject to compromise in the Chapter 11 Case exceed the fair market value of the
assets, unsecured claims may be satisfied at less than 100% of their face value
and the equity interest of the Company's shareholders may be severely diluted,
or may have no value.
GENERAL
Shotmaker equipment has been used to film many of the top recent U.S.
movies. A partial list includes THE GREEN MILE, THE WHOLE NINE YARDS,
BICENTENNIAL MAN and MISSION IMPOSSIBLE II. In addition, a number of prime time
television programs and series use Shotmaker equipment such as NASH BRIDGES,
ONCE AND AGAIN, and GET REAL.
FORM AND ORGANIZATION
The Company is incorporated under the laws of the State of Delaware. As
of December 31, 1999, 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.
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CAMERA PLATFORMS INTERNATIONAL, INC.
("Sound"), was incorporated in 1997 under the laws of the State of California.
On April 2, 1999, SDI and Sound filed for bankruptcy protection under Chapter 7
of the bankruptcy code. SDI and Sound have no assets. Shotmaker Dollies, Inc.
never actively operated. Shotmaker Sound provided rehearsal studio, storage and
cartage services to recording artists.
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
two cars 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 that
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 that 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 that 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:
19 dollies (13 Super Panthers and 6 Mini Panthers); 9 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 650 feet of
tubular dolly 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. Because of
severe cash limitations, the Company has been unable to complete seven Blue
Dollies that are in various stages of manufacture.
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 March 15, 2000, the Company had
seven Akela cranes in its rental inventory, six of which were operational.
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 allowing 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 March 20,
2000, 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 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
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CAMERA PLATFORMS INTERNATIONAL, INC.
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 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.
On August 10, 1999, the Company entered into a license agreement with an
affiliate to develop a web site, shotmaker.com.
MARKETING, COMPETITION, INTELLECTUAL PROPERTY AND AWARDS
Marketing. The Company's marketing efforts are primarily conducted by
direct sales efforts, limited 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. However, in recent years several small fleets of camera cars have
emerged, which include AC electricity availability and greater generator power,
which have affected the Company's rental revenues.
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
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CAMERA PLATFORMS INTERNATIONAL, INC.
specifications.
Patents and Trademarks. The Company has registered THE SHOTMAKER as a
trademark in the United States, Canada, and Japan. Panther GmbH holds all
patents and trademarks on its Panther products.
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 8 employees at March 20, 2000.
The Company is not a party to any collective bargaining agreements and its
employees are not represented by a labor union.
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
Company's lease expired in November 1999; although the lease contained two
three-year options, the Company, by virtue of its failure to pay rent on a
timely basis, was in violation of certain provisions of the lease, and was thus
unable to exercise the lease option. The Company is currently renting its
premises on a month-to-month basis under the same terms and conditions as its
previous lease. Management hopes to sublease approximately 40% of its current
facilities to reduce its rent obligations.
ITEM 3. LEGAL PROCEEDINGS
On September 24, 1999, the Company was served with a notice by the clerk
of the United States Bankruptcy Court that, on September 17, 1999, a petition
under Title 11, United States Code, was filed against the Company praying for an
order for relief under Title 11, Chapter 7 or 11 of the United States Code.
On October 14, 1999, the Company filed an answer to the court in the
form of a Debtor's Consent to Entry of an Order for Relief Under Chapter 11 of
Title 11 of the Untied States Code, and such an entry was ordered on October 25,
1999, under case number 99-20947 GM ("Bankruptcy Case"). The Company is
currently operating its business as debtor-in-possession pursuant to the
Bankruptcy Code.
At this time, it is not possible to predict the outcome of the Chapter
11 Case or its effect on the Company's business. Additional information
regarding the Chapter 11 Case is set forth in Item 1, "Business - Proceedings
Under Chapter 11 of the Bankruptcy Code", Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", and the Notes to the
Consolidated Financial Statements. If it is determined that liabilities subject
to compromise in the Chapter 11 Case exceed the fair market value of the assets,
unsecured claims may be satisfied at less than 100% of their face value and the
equity interest of the
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CAMERA PLATFORMS INTERNATIONAL, INC.
Company's shareholders by be severely diluted, or may have no value.
All pending litigation is subject to an automatic stay as a result of
the bankruptcy filing. Based upon negotiation, adjudication or other action by
the Bankruptcy Court, amounts with respect to disputed claims may increase the
amounts of liabilities subject to compromise recorded by the Company. Amounts
past due which have been subject to litigation are included in the amounts
recorded as of December 31, 1999.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1999.
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 table below sets forth the high and low bid prices
for the Company's common stock. Bids represent inter-dealer prices, without
retail mark-up, mark-down or commissions, and may not represent actual
transactions.
<TABLE>
<CAPTION>
Period High Low
------ ---- ---
<S> <C> <C> <C>
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................................. 1/4 3/16
3rd Quarter ................................ 7/16 1/8
4th Quarter................................. 1/8 1/16
2000: 1st Quarter through March 20, 2000.......... 3/8 1/16
</TABLE>
As of March 20, 2000, there were approximately 900 beneficial owners of
13,768,228 outstanding shares of the Company's common stock, held by
approximately 320 shareholders of record.
The Company has not paid a dividend on its common stock since
inception.
11
<PAGE> 12
CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 6 - SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,712,000 $ 2,245,000 $ 3,356,000 $ 3,321,000 $ 4,290,000
Net loss (1,225,000) (3,597,000) (737,000) (1,883,000)
(851,000)
Total assets $ 3,014,000 4,115,000 2,498,000 2,431,000 3,462,000
Long-term debt* $ 6,394,000 3,747,000 811,000 250,000 --
Net loss per share
of common stock ($.09) ($0.27) ($0.06) ($0.15) ($0.07)
</TABLE>
*All pre-petition debt has been reclassified on the current balance sheet as
Debt Subject to Compromise.
12
<PAGE> 13
CAMERA PLATFORMS INTERNATIONAL, INC.
CONSOLIDATED SUMMARY OF QUARTERLY OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Quarter ended
March 31, June 30,
----------------------------- -----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 357,000 $ 432,000 $ 536,000 $ 683,000
Cost of sales and rentals 388,000 449,000 489,000 604,000
Selling, general and
administrative 320,000 419,000 211,00 478,000
------------ ------------ ------------ ------------
Operating (loss) (351,000) (436,000) (164,000) (399,000)
Interest expense, net (142,000) (65,000) (148,000) (86,000)
Gain (loss) on
discontinued operations (52,000) (233,000) -- (203,000)
Impairment loss on
long-lived assets -- -- -- --
Other income
(expense), net 28,000 5,000 17,000 25,000
------------ ------------ ------------ ------------
Net income (loss) ($517,000) ($491,000) ($295,000) ($693,000)
============ ============ ============ ============
Net (loss) per share
of common stock ($0.04) ($0.04) ($0.02) ($0.05)
============ ============ ============ ============
Weighted average number
of shares outstanding 12,418,228 12,418,228 12,628,228 12,628,228
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Quarter ended Quarter ended
September 30, December 31,
----------------------------- -----------------------------
1998 1999 1998 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 499,000 $ 565,000 $ 320,000 $ 565,000
Cost of sales and rentals 428,000 503,000 318,000 588,000
Selling, general and
administrative 175,000 335,000 165,000 522,000
------------ ------------ ------------ ------------
Operating (loss) (104,000) (273,000) (163,000) (545,000)
Interest expense, net (140,000) (184,000) (107,000) (225,000)
Gain (loss) on
discontinued operations 50,000 (203,000) -- (600,000)
Impairment loss on
long-lived assets -- -- --
(342,000)
Other income
(expense), net 28,000 4,000 23,000 45,000)
------------ ------------ ------------ ------------
Net income (loss) ($166,000) ($656,000) ($247,000) ($1,757,000)
============ ============ ============ ============
Net (loss) per share
of common stock ($0.02) ($0.05) ($0.01) ($0.13)
============ ============ ============ ============
Weighted average number
of shares outstanding 13,768,228 13,768,228 13,768,228 13,668,228
============ ============ ============ ============
</TABLE>
13
<PAGE> 14
CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
This Annual Report on Form 10-K includes certain forward-looking
statements based upon management's beliefs, as well as assumptions made by and
data currently available to management. This information has been, or in the
future, may be included in reliance on the "safe harbor" provision of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to a number of risks and uncertainties including, but not limited to, the
following: the ability of the Company to continue as a going concern; the
ability of the Company to generate sufficient cash revenue from operations to
pay current operating obligations, including its occupancy costs; the ability of
the Company to operate pursuant to the terms and conditions of the agreement for
the interim use of cash collateral with its primary secured lender; the ability
of the Company to operate successfully under a Chapter 11 proceeding; approval
of plans and activities by the Bankruptcy Court; risks associated with operating
a business in Chapter 11; the ability of the Company to have approved its
reorganization plan in the Chapter 11 Case; adverse developments with respect to
the Company's liquidity or results of operations; the ability of the Company to
obtain products and services and negotiate terms with vendors and service
providers for current orders; the ability to develop, fund and execute an
operating plan for the Company; the ability of the Company to attract and retain
employees; competitive pressures from other camera car companies and grip
equipment rental companies which may affect the nature and viability of the
Company's business strategy; the ability of the Company to attract and retain
customers; and the absence of an active public trading market for the Company's
common stock.
Actual results may differ materially from those anticipated in any such
forward-looking statements. The Company undertakes no obligation to update or
revise any forward-looking statements to reflect subsequent events or
circumstances.
OVERVIEW
The Notes to Consolidate Financial Statements are an integral part of
Management's Discussion and Analysis of Financial Condition and Results of
Operations and should be read in conjunction herewith.
LIQUIDITY AND CAPITAL RESOURCES
As a result of continuing losses from operations exacerbated by the
failure of the Company's strategy to increase it presence in the rental market
through acquisitions of Fluid Images, Inc., and the assets of PSA in Nashville
and Atlanta coupled with cost overruns and production problems with its new
dolly, the Company defaulted on various debt obligations. In 1999, the Company
began negotiations with Foothill Capital Corporation ("Foothill") and other
creditors to restructure the Company's debt.
On September 1, 1999, the Company engaged Workout Specialist, Inc.,
("WSI") to act on behalf of the Company in an attempt to reorganize its debts
outside of the formal bankruptcy process. Before the Company could effectively
formulate and implement a plan, however, it was served with a notice, on
September 24, 1999, by the clerk of the United States Bankruptcy Court that, on
September 17, 1999, a petition under Title 11,
14
<PAGE> 15
CAMERA PLATFORMS INTERNATIONAL, INC.
United States Code, was filed against the Company by certain creditors praying
for an order for relief under Title 11, Chapter 7 or 11 of the United States
Code.
The Company is operating as a debtor-in-possession under Chapter 11 of
the Bankruptcy Code (Item 1). The Company has been able to secure up to $250,000
in debtor-in-possession ("DIP") financing provided by its secured lender, DOOFF
LLC. Even with this financing, however, there remains a serious question as to
the Company's abilities to generate sufficient cash to continue operations.
RESULTS OF OPERATIONS
1999 versus 1998
Product sales continued to decrease in 1999, down 23% from 1998. During
much of 1999, the Company was unable to promote Panther's Pegasus cranes and
dollies or their parts and accessories because of the termination of the
Company's prior exclusive agreement with Panther and ongoing disputes with
Panther related to outstanding debts owed to Panther. The Company was unable to
generate sufficient working capital to complete seven Enlouva cranes, which are
in various states of completion. In addition, the Company was unable to exploit
early interest in its "Blue" hydraulic scissor arm dolly because of insufficient
working capital or credit availability to complete production.
Rentals revenues also decreased from 1998, dropping 24%. Rentals of
camera cars were down 8%, and Akela crane rentals increased 24%, from $268,000
to $333,000. The large decrease in rentals was caused primarily from lower
rentals of Panther dollies and cranes, which were off $275,000 from 1998, and
reduced revenues for dolly track, which decreased from $256,000 in 1998 to
$68,000 in 1999. The decrease in track revenues was caused by a dispute between
the Company and the makers of Precision and Cadillac track, which resulted in
the termination of the split rental agreement between the two companies.
Total revenues decreased by 24% from $2,240,000 in 1998 to $1,712,000 in
1999.
Cost of sales decreased 36%, tracking the lower sales figures. Gross
margins on sales increased 4%.
Cost of rental operations decreased 21% from the prior year. The
decrease was largest in the third and fourth quarters of 1999, reflective of the
Company's ongoing cost cutting measures as a reaction to its working capital
difficulties.
Selling, general and administrative expenses were down 50% from the
previous year. Expenses were down in all categories of expenses, with the
exception of legal and accounting, reflective of the Company's legal expenses
incurred both prior and after the filing of the Chapter 11 case, and its
continuing accrual of audit expenses, recognizing the necessity of completing
audits of current and prior years when such funds are available.
Interest expense decreased from $560,000 in 1998 to $537,000 in 1999.
The decrease was due to the filing of the Chapter 11 Case and the resultant
staying of the long-term debts of the Company.
Net operating losses associated with discontinued operations were $2,000
in 1999, due to the sale of the
15
<PAGE> 16
CAMERA PLATFORMS INTERNATIONAL, INC.
Third Encore operations. In 1998, the Company recorded a loss of $1,030,000 due
to the closures of Atlanta, Nashville and New York operations.
The Company's net loss decreased 66% from $3,597,000 in 1998 to
$1,225,000 in 1999. The net loss per basic and diluted share of common stock
decreased from $0.27 in 1998 to $0.09 in 1999.
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 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.
Impact of Inflation
16
<PAGE> 17
CAMERA PLATFORMS INTERNATIONAL, INC.
Inflation has not had a material impact on the Company's operations to
date, and the Company believes it will not have a material effect on operations
in the next twelve months.
Foreign Currency Transactions
All international sales are denominated and remitted in U.S. dollars,
and all foreign transactions are settled within a short period of time.
Accordingly, the Company does not anticipate that foreign currency fluctuations
will have a material effect on operations in the next twelve months.
17
<PAGE> 18
CAMERA PLATFORMS INTERNATIONAL, INC.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Audited financial statements as of and for the years ended December 31, 1998 and
December 31, 1999 are not available at this time. Because of severe cash
shortages, the Company was unable to pay its auditors for the completion of the
1998 audit, and was unable to engage auditors for the 1999 audit. It is
anticipated that the opinions issued by the Company's independent auditors for
the years ended December 31, 1998 and 1999 would address doubt as to the
Company's ability to continue as a going concern. The Company was unable to
negotiate terms with its prior auditors for their consent to attach their report
to the consolidated financial statements as of and for the year ended December
31, 1997.
An amendment to the Form 10K will be filed with the SEC as soon as these audit
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, 1999 and 1998................................................. 19
Unaudited Consolidated Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997........................................... 20
Unaudited Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997........................................... 21
Unaudited Consolidated Statement of Shareholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997........................................... 23
Notes to Unaudited Consolidated Financial Statements.......................... 24
Schedule II - Valuation and Qualifying Accounts for the
Years Ended December 31, 1999, 1998 and 1997.............................. 37
</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.
18
<PAGE> 19
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 9,000 $ 26,000
Accounts receivable, less allowance for doubtful accounts of
$5,000 in 1999 and $87,000 in 1998 102,000 153,000
Current maturities of net investment in sales-type lease
and installment sale 34,000 43,000
Inventories 819,000 964,000
Prepaid expenses 230,000 191,000
------------ ------------
Total current assets 1,194,000 1,377,000
Property and equipment, net of depreciation, amortization
and rental asset valuation allowance 1,799,000 2,644,000
Net investment in sales-type lease and installment sale,
net of current maturities -- 38,000
Deposits and other assets 21,000 54,000
------------ ------------
$ 3,014,000 $ 4,115,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 8,000 $ --
Accrued liabilities 94,000 --
Deferred revenue 6,000 29,000
------------ ------------
Total current liabilities 108,000 29,000
Liabilities subject to compromise 6,415,000 6,373,000
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 23,549,000 23,547,000
Accumulated deficit (27,066,000) (25,841,000)
------------ ------------
Total shareholders' equity (deficit) (3,510,000) (2,287,000)
------------ ------------
$ 3,014,000 $ 4,115,000
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
19
<PAGE> 20
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31 1999 1998 1997
- ---------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Net product sales $ 467,000 $ 607,000 $ 1,719,000
Revenues from rental operations 1,245,000 1,638,000 1,637,000
------------ ------------ ------------
1,712,000 2,245,000 3,356,000
Expenses
Cost of sales 258,000 406,000 1,172,000
Cost of rental operations 1,365,000 1,739,000 1,511,000
Selling, general and administrative 871,000 1,754,000 1,464,000
------------ ------------ ------------
2,494,000 3,899,000 4,147,000
Operating loss (782,000) (1,654,000) (791,000)
Interest expense, net (537,000) (560,000) (71,000)
Other income (expense), net 96,000 10,000 (193,000)
Impairment loss on long-lived assets -- (342,000) --
Net income (loss) from
discontinued operations (2,000) (1,031,000) --
------------ ------------ ------------
Net loss ($1,225,000) ($3,597,000) ($737,000)
============ ============ ============
Basic and diluted loss per share ($0.09) ($0.27) ($.06)
============ ============ ============
Weighted average shares outstanding 13,768,228 13,145,228 12,418,228
============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
20
<PAGE> 21
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31 1999 1998 1997
- ---------------------- ----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ($1,225,000) ($3,597,000) ($737,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 670,000 899,000 408,000
(Gain) loss on disposal of equipment (53,000) 386,000 (155,000)
Impairment loss on long-lived assets -- 342,000 --
Provision for doubtful accounts, net (82,000) 41,000 12,000
Changes in assets and liabilities:
Accounts receivable 133,000 (19,000) 94,000
Net investment in lease and installment sale 47,000 (52,000) --
Inventories 145,000 (642,000) (53,000)
Prepaid expenses (39,000) (93,000) (16,000)
Deposits and other assets 35,000 (222,000) (128,000)
Accounts payable (73,000) (742,000) 87,000
Deferred revenue (23,000) 17,000 12,000
Customer deposits 30,000 (12,000) (64,000)
Other current liabilities 217,000 (140,000) (8,000)
Net cash (used) in operating activities (218,000) (1,522,000) (854,000)
----------- ----------- -----------
INVESTING ACTIVITIES
Proceeds from sale of property
and equipment 228,000 1,320,000 549,000
Purchases of property and equipment -- (3,379,000) (750,000)
Purchase of covenant not to compete -- (40,000) --
Net cash used in investing activities 228,000 (2,099,000) (201,000)
----------- ----------- -----------
FINANCING ACTIVITIES
Net proceeds (principal payments)
on revolving line of credit -- --
(170,000)
Proceeds from borrowings of short-term debt -- 585,000 --
Principal payments on short-term debt -- (360,000) --
Proceeds from borrowings of long-term debt 19,000 5,215,000 1,146,000
Principal payments on long-term debt (18,000) (1,870,000) (25,000)
Proceeds from option payment 2,000 -- --
Debt relief (30,000) -- --
</TABLE>
21
<PAGE> 22
CAMERA PLATFORMS INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<S> <C> <C> <C>
Net cash provided (used) by financing activities (27,000) 3,570,000 951,000
----------- ----------- -----------
Net increase (decrease) in cash (17,000) ($ 51,000) ($ 104,000)
----------- ----------- -----------
Cash at beginning of year $ 26,000 77,000 181,000
Cash at end of year $ 9,000 $ 26,000 $ 77,000
=========== =========== ===========
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest $ 337,000 $ 539,000 $ 55,000
Income taxes $ 1,000 $ 1,000 $ 1,000
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
22
<PAGE> 23
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, 1998 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) (3,597,000)
---------- ---------- ----------- ------------ -----------
Balance at
December 31, 1998 13,768,228 7,000 23,547,000 (25,841,000) (2,287,000)
Net loss for the year (1,270,000) 1,222,000)
Option payment 2,000
---------- ---------- ----------- ------------ -----------
Balance at
December 31, 1999 13,768,228 $ 7,000 $23,549,000 ($27,066,000) ($3,510,000)
=== ==== ========== ========== =========== ============ ===========
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
23
<PAGE> 24
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - 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. 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 cranes, dollies, jib arms,
remote heads, and dolly track.
PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE AND GOING CONCERN MATTERS
As a result of continuing losses from operations exacerbated by the failure of
the Company's strategy to increase it presence in the rental market through
acquisitions of Fluid Images, Inc., and the assets of PSA in Nashville and
Atlanta coupled with cost overruns and production problems with its new Dolly,
the Company defaulted on various debt obligations. In 1999, the Company began
negotiations with Foothill Capital Corporation ("Foothill") and other creditors
to restructure the Company's debt.
Before the Company was able to effect any out-of-court restructuring, it was
served with a notice, on September 24, 1999, by the clerk of the United States
Bankruptcy Court that, on September 17, 1999, a petition under Title 11, United
States Code, was filed against the Company by certain creditors praying for an
order for relief under Title 11, Chapter 7 or 11 of the United States Code.
On October 14, 1999, the Company filed an answer to the court in the form of a
Debtor's Consent to Entry of an Order for Relief Under Chapter 11 of Title 11 of
the Untied States Code, and such an entry was ordered by the United States
Bankruptcy Court, Central District of California, San Fernando Valley Division
("Bankruptcy Court"), on October 25, 1999, under case number SV-99-20947 GM
("Bankruptcy Case"). The Company is currently operating its business as
debtor-in-possession pursuant to the Bankruptcy Code.
Actions to collect pre-petition indebtedness are stayed and other contractual
obligations against the Company may not be enforced. In addition, under the
Bankruptcy Code, the Company may assume or reject executory contracts, including
lease obligations and employment agreements. Parties affected by these
rejections may file claims with the Bankruptcy Court in accordance with the
reorganization process. Substantially all pre-petition liabilities are subject
to settlement under a plan of reorganization to be voted upon by creditors and
equity holders and approved by the Bankruptcy Court.
Although the Company has filed a reorganization plan that provides for emergence
from bankruptcy in 2000, there can be no assurance that the proposed
reorganization plan will be confirmed by the Bankruptcy Court, or that any such
plan will be consummated. If the plan is not accepted by the required number of
creditors and equity holders, any party in interest may subsequently file its
own plan of reorganization. A plan of reorganization must be confirmed by the
Bankruptcy Court, upon certain findings being made by the Bankruptcy Court which
are required by the Bankruptcy Code. The Bankruptcy Court may confirm a plan
notwithstanding
24
<PAGE> 25
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
the non-acceptance of the plan by an impaired class of creditors or equity
security holders if certain requirements of the Bankruptcy Code are met. A plan
of reorganization could also result in holders of the Common Stock receiving no
value for their interests. Because of such possibilities, the value of the
Common Stock of the Company is highly speculative.
At a hearing held on November 16, 1999 before Judge Kathleen T. Lax, the
Bankruptcy Court entered orders granting authority to the Company, among other
things, to pay pre-petition and post-petition employee wages, salaries, benefits
and other employee obligations, to pay vendors and other providers in the
ordinary course for goods and services received from September 24, 1999.
As part of the Bankruptcy Case, the Company entered into an agreement with
Foothill Capital Corporation ("Foothill"), the Company's secured lender, to use
cash collateral on an interim basis. The agreement authorizes the use of cash
collateral solely to pay the Company's ordinary and necessary business expenses
of operation as set forth in a budget mutually agreed upon between the parties.
The stipulation calls for, among other things, mandatory sales of deemed excess
rental equipment pursuant to an agreed upon schedule, with gross proceeds from
such sales to be remitted to a special account under the control of Foothill,
with all proceeds from such sales segregated until such time as the claims of
all potential secured parties are determined by the Bankruptcy Court. In
addition, the Company agreed to continue to pay Foothill $5,000 per week, and to
be bound by certain budget targets for net income.
On January 11, 2000 a Chapter 11 status conference was held by the Court. The
court ruled at that hearing that March 15, 2000 will be set as the bar date for
filing proofs of claim and interest and that the Company is to file its plan of
reorganization and related disclosure statement on or before April 1, 2000.
On March 8, 2000, a hearing was held on a debtor's emergency motion to approve
debtor-in-possession ("DIP") financing to allow the Company to meet immediate
working capital requirements. The motion was granted by Judge Mund in an amount
not to exceed $250,000. The financing is being provided by DOOFF, Inc., the
Company's secured lender (see below).
AGREEMENTS WITH CONSOLIDATED PRODUCTIONS, INC.
On February 7, 2000, Shotmaker Acquisition Corp. ("SAC"), entered into an
agreement with Consolidated Productions, Inc. "(Consolidated") by which SAC and
Consolidated agreed that SAC will transfer to Consolidated 4,000,000 shares of
the Company's common stock currently held by SAC in exchange for the following:
Consolidated will purchase Foothill's entire rights, title and interest in
Foothill's loans to the Company; Consolidated will provide $250,000 in working
capital to the Company; the Company will file a plan of reorganization, which
will result in, among other things, sufficient shares of the Company's common
stock to be issued to Consolidated, such that in aggregate Consolidated will own
49.9% of the total outstanding shares of the Company' s common stock after the
adoption of the plan of reorganization.
On February 8, 2000, Consolidated Productions, Inc. ("Consolidated") entered
into an agreement with Foothill by which Consolidated agreed to purchase, for
$1,500,000, Foothill's entire rights, title and interest in Foothill's
25
<PAGE> 26
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
loans to the Company, including Foothill's interest in any insurance policy,
loss, or payments therefrom. Several parties have asserted liens or security
interest in the Company's assets. The agreement calls for the Company to
commence adversary proceeding to establish that Foothill's liens and security
interests are prior to all other asserted liens or security interest. If a
satisfactory decision regarding priority of lien interests is not reached by May
15, 2000, Consolidated will either waive this condition to closing, or the
agreement will automatically terminate. On February 23, 2000, Consolidated
waived this condition and closed the transaction.
Subsequently, Consolidated assigned its rights under the agreement to a new
entity, DOOFF LLC.
PLAN OF REORGANIZATION and DISCLOSURE STATEMENT
On February 21, 2000, the Company filed the Debtor's Plan of Reorganization and
the related Disclosure Statement Describing Debtor's Plan of Reorganization with
the Bankruptcy Court. The plan divides the creditors claims and proposes
settlements to each class on the effective date of the adoption of the plan as
follows:
Administrative Claims in general: Each holder of an administrative claim allowed
by the Court shall receive, at the sole option of such holder, cash equal to the
amount to such claim or one share of the Company's New Common stock for each
$.25 in approved claims.
Administrative claims include statutory fees; ordinary course liabilities
incurred post-petition; post-petition profession fees and expenses incurred in
conjunction with the Chapter 11 Case; United States Trustee fees; and allowed
tax claims. Allowed tax claims, at the election of the debtor, maybe paid out in
equal quarterly installments over a period of six years, with interest at 9% per
annum on the unpaid balance.
Classes of Claims of Interest:
Class 1: Allowed Secured Claim of DOOFF, LLC ("DOOFF"). DOOFF, successor
in interest to Foothill, shall have an allowed secured claim of $1,500,000 and
shall retain its security interest in the pre-petition collateral, which
includes, without limitation, all of the debtors; accounts receivable,
inventory, equipment, and all tangible and intangible assets. Interest only
shall be paid monthly at the reference rate plus 2% per annum for 10 years,
commencing the fist month immediately following the effective date of
reorganization. Consolidated shall receive 4,000,000 shares of the New Common
stock of the Company. The balance of DOOFF's claim, approximately $1.938
million, will be classified as a General Allowed Unsecured Claim.
Class 2: Allowed Secured Claim of IPA/Airport Partners. IPA/Airport
Partners holds an impaired secured claim, and will be classified as a General
Allowed Unsecured Claim.
Class 3: Allowed Secured Claim of Prologis FDBA SCI-N.C. Prologis holds
an impaired secured claim, and will be classified as a General Allowed Unsecured
Claim.
Class 6: General Allowed Unsecured Claims. Unsecured claims will receive
on share of the New Common stock of the Company for each $2.00 in allowed claims
held or the lesser of $250.00 or the amount of
26
<PAGE> 27
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
the allowed class 6 claim.
Class 7: Holders of the Old Common Stock of the Company. The holders of
the Old Common stock of the Company will retain their interests subject to the
dilution provided for through the issuance of New Common stock to the other
classes of claimants.
Any party in interest may object to the confirmation of the plan.
Voting of Claims and Interests:
The Court cannot confirm the Plan of Reorganization unless and until (1) at
least one impaired class has accepted the plan and (2) all impaired classes have
voted to accept the plan, unless the plan is eligible to be confirmed by
"cramdown", as discussed below. A class of claims is considered to have accepted
the plan when more than one-half in number and at least two-thirds in dollar
amount of the claimants which actually voted, voted in favor of the plan.
Even if all the impaired classes do not accept the proposed plan, the Court may
nonetheless confirm the plan if the non-accepting classes are treated in the
manner required by the Code. The process by which non-accepting classes are
forced to be bound by the terms of a plan is commonly referred to as "cramdown".
The Bankruptcy Code allows a plan to be "crammed down" if certain requirements
of the Code are met, and if the plan does not discriminate unfairly and is fair
and equitable. The Company may ask the Court to confirm its plan of
reorganization by cramdown on any impaired class which does not vote to accept
the plan.
At this time, it is not possible to predict the outcome of the Chapter 11 Case
or its effect on the Company's business. The plan of reorganization above may be
rejected, and alternative plans may or may not be proposed, accepted or
implemented. If it is determined that the liabilities subject to compromise in
the Chapter 11 Case exceed the fair market value of the assets, unsecured claims
may be satisfied at less than 100% of their face value and the equity interest
of the Company's shareholders may be severely diluted, or may have no value.
On April 2, 1999 the Company's wholly owned subsidiaries Shotmaker Dollies, Inc.
("SDI") and Shotmaker Sound Inc. ("Sound") filed for protection under Chapter 7
of the federal Bankruptcy Code. Neither SDI nor Sound have any assets.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The accompanying condensed consolidated financial statements have been prepared
on a going concern basis of accounting, which contemplates continuity of
operations, realization of assets and liabilities and commitments in the normal
course of business. The accompanying consolidated financial statements have been
prepared on a going concern basis of accounting and do not reflect any
adjustments that might result if the Company is unable to continue as a going
concern. The Company's losses and negative cash flows from operations and the
filing of
27
<PAGE> 28
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
the involuntary and voluntary petitions referred to above (Note 1), raise
substantial doubt about the Company's ability to continue as a going concern.
The Company has submitted a plan for reorganization to the Bankruptcy Court. The
ability of the Company to continue as a going concern and appropriateness of
using the going concern basis is dependent upon, among other things, (1) the
Company's ability to comply with the use of cash collateral agreement negotiated
with its secured lender, (2) confirmation of a plan of reorganization under the
Bankruptcy Code, (3) the Company's ability to achieve profitable operations
before and after such confirmation and (4) the Company's ability to generate
sufficient cash from operations to meet its obligations.
Liquidity
The Company is operating as a debtor-in-possession under Chapter 11 of the
Bankruptcy Code (Note 1). The Company has been able to secure up to $250,000 in
debtor-in-possession ("DIP") financing provided by its secured lender, DOOFF
LLC. Even with this financing, however, there remains a serious question as to
the Company's abilities to generate sufficient cash to continue operations. 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
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.
28
<PAGE> 29
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 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 $20,000, $142,000, and $191,000 the years ended December 31, 1999, 1998,
and 1997, 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. 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.
29
<PAGE> 30
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 1998 have been reclassified in order to conform to the
presentation in 1999.
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 1999. The Company is evaluating the impact of these statements on its
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.
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.
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,
----------------------
1999 1998
------- -------
<S> <C> <C>
Minimum lease payments receivable .... $34,000 $81,000
Less: Unearned income ................ 6,000 29,000
------- -------
Net investment ....................... $28,000 $52,000
======= =======
</TABLE>
At December 31, 1999 lease and installment sale receivables are due in
installments as follows:
2000.............................................. $34,000
NOTE 4 - INVENTORIES
<TABLE>
<CAPTION>
December 31,
------------------------
1999 1998
-------- --------
<S> <C> <C>
Work in process....................... $318,000 $454,000
Finished goods........................ 501,000 510,000
-------- --------
$819,000 $964,000
======== ========
</TABLE>
30
<PAGE> 31
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
---------- ----------
<S> <C> <C>
Equipment available for lease ..................... $6,262,000 $6,523,000
Machinery and equipment ........................... 355,000 390,000
Leasehold improvements ............................ 63,000 73,000
Furniture and fixtures ............................ 62,000 94,000
Automobiles and trucks ............................ 119,000 143,000
---------- ----------
6,861,000 7,223,000
Less accumulated depreciation and amortization .... 4,520,000 3,471,000
Less rental asset valuation allowance ............. 542,000 542,000
---------- ----------
$1,799,000 $3,210,000
========== ==========
</TABLE>
Accumulated depreciation and amortization pertaining to equipment available for
lease amounted to $3,993,236 and $3,528,000 at December 31, 1999 and 1998,
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. Sound subsequently sold the assets and business of 3E to
an unrelated third party, effective February 1, 1999.
On April 1, 1999, Sound filed bankruptcy under Chapter 7 of the Bankruptcy Code
as a no asset debtor.
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 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.
31
<PAGE> 32
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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%. 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 7 - LIABILITIES SUBJECT TO COMPROMISE
Liabilities subject to compromise refer to liabilities incurred prior to the
commencement of the Chapter 11 case. These liabilities consist primarily of
amounts outstanding under long-term debt, and also include accounts payable,
accrued interest, customer deposits and other accrued expenses. These amounts
represent the Company's best estimate of known or potential claims to be
resolved in connection with the Chapter 11 Case. Such claims remain subject to
future adjustment based on negotiations, actions of the Bankruptcy Court,
further development with respect to disputed claims, future rejection of
additional executory contracts or expired leases, determination as to the value
of any collateral securing claims, or other events. Payment terms for these
amounts, which are considered long-term liabilities at this time, will be
established in connection with the Chapter 11 Case.
The principal categories of claims classified as liabilities subject to
compromise under the reorganization proceeding are identified below.
<TABLE>
<S> <C>
Accounts Payable $1,139,000
Customer Deposits 48,000
Accrued Expenses 317,000
Long-Term Debt 4,911,000
----------
$6,415,000
==========
</TABLE>
NOTE 8 - INCOME TAXES
The Company utilizes the liability method to account for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws expected to apply when the
differences are expected to reverse.
32
<PAGE> 33
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1999, the Company has net operating loss carryforwards of
approximately $25 million for federal tax purposes, which expire from 2000 to
2014. 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 2000 to
2004. 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, 1999, 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.
On August 10, 1999, the Company entered into a license agreement with an
affiliate to develop a web site, Shotmaker.com
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:
<TABLE>
<CAPTION>
Options Outstanding
----------------------------
Weighted Avg. Exercise
Shares Price
--------- -------------
<S> <C> <C>
Outstanding at January 1, 1998 ......... 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
========= ======
Granted ............................. 1,391,667 $ 0.21
Exercised ........................... -- --
Terminated or expired ............... (600,000) $ 0.05
--------- ------
Outstanding at December 31, 1999 ....... 2,431,667 $ 0.13
========= ======
</TABLE>
33
<PAGE> 34
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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, 1999 expire between January 2001 and January
2005.
Vested options totaling 291,667, issued to Mr. Berardi, former President of the
Company, and included as outstanding at December 31, 1999 were tendered and
rejected by the Company subsequent to Mr. Berardi's resignation on January 6,
2000.
Options are executory contracts as defined by the Bankruptcy Code, and are
subject to acceptance or rejection by the Company.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Leases
In December 1996, the Company entered into a lease for its premises which
expired November, 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. Dollies filed for protection under Chapter 7 of the
Bankruptcy Code, and the lease was rejected under provisions of the Bankruptcy
Code which allow debtors to accept or reject certain lease obligations.
In January 1998, as part of the purchase of 3E (Note 6), Sound assumed 3E's
existing building leases that 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.
NOTE 12 - LITIGATION
On September 24, 1999, Camera Platforms International, Inc. was served with a
notice by the clerk of the United States Bankruptcy Court that, on September 17,
1999, a petition under Title 11, United States Code, was filed against the
Company praying for an order for relief under Title 11, Chapter 7 or 11 of the
United States Code.
On October 14, 1999, the Company filed an answer to the court in the form of a
Debtor's Consent to Entry of an Order for Relief Under Chapter 11 of Title 11 of
the Untied States Code, and such an entry was ordered on October 25, 1999, under
case number SV-99-20947 GM ("Bankruptcy Case"). The Company is currently
operating its business as debtor-in-possession pursuant to the Bankruptcy Code.
34
<PAGE> 35
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
At this time, it is not possible to predict the outcome of the Chapter 11 Case
or its effect on the Company's business. Additional information regarding the
Chapter 11 Case is set forth in Item 1 and 7 of Form 10-K for the year ended
December 31, 1999, filed with the Securities and Exchange Commission "Business -
Proceedings Under Chapter 11 of the Bankruptcy Code", and, "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
respectively. If it is determined that liabilities subject to compromise in the
Chapter 11 Case exceed the fair market value of the assets, unsecured claims may
be satisfied at less than 100% of their face value and the equity interest of
the Company's shareholders may be severely diluted, or may have no value.
All pending litigation is subject to an automatic stay as a result of the
bankruptcy filing. Based upon negotiation, adjudication or other action by the
Bankruptcy Court, amounts with respect to disputed claims may increase the
amounts of liabilities subject to compromise recorded by the Company. Amounts
past due which have been subject to litigation are included in the amounts
recorded as of December 31, 1999.
NOTE 13 - SALES TO MAJOR CUSTOMERS AND GEOGRAPHIC AREAS
No revenues derived from a single customer accounted for more than ten percent
of total revenues during 1999, 1998, or 1997. No geographic area outside the
United States accounted for more than ten percent of total sales during the last
three years.
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, 1999 and 1998.
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.
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 of Atlanta and Nashville were only in effect during
fiscal 1998, and no restatement prior years' financial statements is required.
On February 1, 1999, the Company sold substantially all the assets of its wholly
owned subsidiary, Shotmaker Sound, Inc ("Sound"). Subsequently, Sound filed for
protection under Chapter 7 of the Bankruptcy Code. Sound was deemed a no asset
debtor.
NOTE 16 - IMPAIRMENT OF ASSETS
35
<PAGE> 36
CAMERA PLATFORMS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In 1998, 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. 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 for the year
ended December 31, 1998.
36
<PAGE> 37
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, 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
======== ========= ========
YEAR ENDED DECEMBER 31, 1999
Asset valuation allowance $542,000 -- -- $542,000
Allowance for doubtful accounts 87,000 0 82,000 5,000
Warranty liability 0 0 0 0
-------- -------- --------- --------
$629,000 $ 0 $ 82,000 $547,000
======== ======== ========= ========
</TABLE>
37
<PAGE> 38
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 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.
As result of the Company's financial difficulties and its inability to
pay its auditors, Rose, Snyder & Jacobs did not complete the audit of the
Company's financial statements for the year ended December 31, 1998, and no
independent accountant was engaged to audit the Company's financial statements
for the year ended December 31, 1999.
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
38
<PAGE> 39
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 March 15, 2000,
for each director and executive officer of the Company:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
Philip Berardi 32 President(1)
Edward D. Carlin 57 Chairman of the Board, Chief Operating Officer(2)
William O. Fleischman 54 Chairman of the Board, Chief Executive Officer, Secretary
Rick Hicks 56 Director
Leslie J. Kovacs 56 Director(3)
Brianne Murphy 56 Director(4)
Ronald J. Riddle 54 Director, Chief Financial Officer
</TABLE>
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 an attorney officed in Century City.
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.
Ronald J. Riddle has been employee of the Company since 1986, and has
served as Chief Financial Officer, Chief Operating Officer and member of the
Board of Directors since January, 1999.
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.
- ------------------
(1) Mr. Berardi was elected to the Board of Directors of the Company in June,
1999, and resigned as a member of the Board of Directors effective November
1, 1999. Mr. Berardi resigned as President on January 6, 2000.
(2) Mr. Carlin resigned as a member of the Board of Directors and as an officer
of the Company on May 24, 1999.
(3) Mr. Kovacs resigned as a member of the Board of Directors of the Company on
May 24, 1999.
(4) Ms. Murphy resigned as a member of the Board of Directors of the Company on
May 24, 1999.
ITEM 11 - EXECUTIVE COMPENSATION
Compensation of Directors
Directors of the Company serve without compensation.
39
<PAGE> 40
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 $100,000 during 1999. The table
below sets forth information regarding the compensation of each listed executive
officer for the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
-------------------------------------- ------------------ --------
Other All
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Name and Salary Bonus sation Award(s) SAR's Payouts sation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- --------- ----- -------- ----------- --------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
No Executive Officers of the Company received a salary or bonus which exceeded
$100,000 during 1999.
OPTION GRANTS IN 1999
During 1999 options to purchase 291,667 shares of common stock were granted to
Philip Berardi, the Company's former President at an average exercise price of
$0.07.
Also during 1999, WSI. Inc was granted options to purchase 1,100,000 shares of
common stock at an average exercise price of $.25.
AGGREGATED OPTIONS EXERCISED IN 1999
AND YEAR-END 1999 OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money
Options/Sar's at Options/Sar's at
Shares Fiscal year-end(#) Fiscal year-end(#)
Acquired on Value -------------------------- --------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roy Atlas -- -- 140,000 -- -- --
Edward Carlin -- -- 900,000 -- -- --
Philip Berardi -- -- 291,667 -- -- --
WSI -- -- 1,100,000 -- -- --
</TABLE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth information with respect to those persons
known by the Company to own beneficially more than 5% of the Company's common
stock as of March 20, 2000.
40
<PAGE> 41
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership Class
------------------- ----------------- ----------
<S> <C> <C>
William O. Fleischman 6,582,217(2) 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 1,123,520(1) 8.2%
12711 Ventura Blvd.
Studio City, CA 91604
Laird Robertson 1,880,633(3) 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 March 20, 2000.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name of Beneficial Owner Ownership Class
------------------------ ----------------- ----------
<S> <C> <C>
William O. Fleischman 6,582,217(1) 47.8%
Ronald J. Riddle 13,500 .1%
Rick Hicks -- 0%
All officers and directors as a 6,595,717 47.9%
group (3 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.
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
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>
3.1(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.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated November 18, 1999,
disclosing the resignation on November 1, 1999 of Philip Berardi as a member of
the Board of Directors of the Company.
(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.
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: March 20, 2000
42
<PAGE> 43
CAMERA PLATFORMS INTERNATIONAL, INC
By: /s/ William O. Fleischmann
------------------------------------
William O. Fleischman
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.
March 20, 2000 Chairman of the Board and Chief Executive Officer
By: /s/ William O. Fleischman
---------------------------------------------
William O. Fleischman
March 20, 2000 Director. Chief Financial Officer and Chief
Operating Officer
By: /s/ Ronald J. Riddle
---------------------------------------------
Ronald J. Riddle
March 20, 2000 Director
By: /s/ Rick Hicks
---------------------------------------------
Rick Hicks
43
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF REGISTRANT
As of December 31, 1999 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.
44
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET, CONDENSED CONSOLIDATED STATEMENT OF INCOME
AND THE CONSOLIDATED STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 9,000
<SECURITIES> 0
<RECEIVABLES> 107,000
<ALLOWANCES> 5,000
<INVENTORY> 819,000
<CURRENT-ASSETS> 1,194,000
<PP&E> 6,861,000
<DEPRECIATION> 4,520,000
<TOTAL-ASSETS> 3,014,000
<CURRENT-LIABILITIES> 108,000
<BONDS> 0
0
0
<COMMON> 7,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,014,000
<SALES> 467,000
<TOTAL-REVENUES> 1,712,000
<CGS> 258,000
<TOTAL-COSTS> 2,494,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 537,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (782,000)
<DISCONTINUED> (2,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,225,000)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
