-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FqmnU8qx5ECZkg+KJ/ICu3W2oXGGj08VdOFkRKRvJM+0bpyyuQkbTUW/xIe/c+6a 3d9e4KslVpSHeMboK8hOfQ== 0000950148-98-000936.txt : 19980416 0000950148-98-000936.hdr.sgml : 19980416 ACCESSION NUMBER: 0000950148-98-000936 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980415 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMERA PLATFORMS INTERNATIONAL INC CENTRAL INDEX KEY: 0000775714 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 954024550 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-14675 FILM NUMBER: 98594650 BUSINESS ADDRESS: STREET 1: 10909 VANOWEN STREET CITY: NORTH HOLLYWOOD STATE: CA ZIP: 91605 BUSINESS PHONE: 818-623-1700 MAIL ADDRESS: STREET 1: 28145 AVE CROCKER CITY: VALENCIA STATE: CA ZIP: 19355 10-K405 1 FORM 10-K (12/31/1997) 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number: 0-14675 CAMERA PLATFORMS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 95-4024550 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 10909 Vanowen Street, North Hollywood, California 91605 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 623-1700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock - $.0005 par value (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ('229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the registrant on April 15, 1998 was $2,175,441 (based on the average bid and asked price of Common Stock in the over-the-counter market on that date). 12,418,228 shares of registrant's Common Stock, $.0005 par value, were outstanding on April 15, 1998. ================================================================================ 2 CAMERA PLATFORMS INTERNATIONAL, INC. CONTENTS
Page ---- PART I Item 1. BUSINESS.................................................... 3 Item 2. PROPERTIES.................................................. 9 Item 3. LEGAL PROCEEDINGS........................................... 9 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................ 9 PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............................. 9 Item 6. SELECTED CONSOLIDATED FINANCIAL DATA........................ 10 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................. 12 Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................................... 16 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING OR FINANCIAL DISCLOSURES................................................. 30 PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................................................. 30 Item 11. EXECUTIVE COMPENSATION...................................... 32 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................................. 33 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................ 34 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K..................................... 34
-2- 3 CAMERA PLATFORMS INTERNATIONAL, INC. Item 1 -Business Camera Platforms International, Inc. ("Shotmaker" or "the Company") designs, manufactures, sells, rents and leases a wide variety of production equipment to the film and video industries. The Company rents three varieties of camera cars, and both rents and sells Pegasus and Enlouva cranes, Panther and the Company's own "Shotmaker Blue" dollies, jib arms, remote heads, and Precision and Cadillac dolly track. Shotmaker equipment has been used to film many of the top recent U.S. movies. A partial list includes WAG THE DOG, MOUSE HUNT, FACE OFF, CONSPIRACY THEORY, JERRY MAGUIRE, DANCES WITH WOLVES, L.A. CONFIDENTIAL, JACKIE BROWN, HARD RAIN, MICHAEL, TWISTER, MEN IN BLACK, and PRIMARY COLORS. In addition, a number of prime time television programs and series use Shotmaker equipment such as E.R., BAYWATCH, SEINFELD, NASH BRIDGES, ALLY McBEAL, DREW CAREY, THE PRACTICE, and WHEEL OF FORTUNE. Form and Organization The Company is incorporated under the laws of the State of Delaware. As of December 31, 1997, the Company had two wholly owned subsidiaries. Shotmaker Dollies, Inc. ("SDI") was incorporated under the laws of the State of California on March 7, 1997. Another wholly owned subsidiary, Shotmaker Sound, Inc. was incorporated under the laws of the State of California on August 22, 1997. As was previously reported, the Company's wholly owned subsidiary Shotmaker Dollies and Cranes, Inc. was dissolved and its assets distributed to the Company on January 31, 1997. Sale of the Company On October 10, 1996, Shotmaker Acquisition Corp ("SAC") purchased 9,403,168 shares of .0005 common stock (75.7% of the issued and outstanding shares) of the Company held by UST Inc. and UST Enterprises Inc. As part of the agreement, SAC made a capital contribution of $191,738 to the Company. 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 with the exception of one Premier operating under a long-term lease in Tokyo and another Premier operating under a long-term lease in Vancouver, B.C. -3- 4 CAMERA PLATFORMS INTERNATIONAL, INC. The Shotmaker Elite. The Company has manufactured five top-of-the-line Elite camera cars. The Elite is a custom-built camera car with numerous positions for mounting cameras. The car contains a built-in fold-away two-man camera crane with a maximum height of 23 feet. This crane can be in motion while the car is moving at speeds up to 50 mph. The car also has a front-mounted hydraulic platform that rises to 12 feet in height. There is a built-in 500 amp DC generator and a 200 amp DC battery pack. The car runs on both gas and a silent electric drive. The Elite has a special air-ride suspension system which minimizes camera movement, and a six-wheel configuration which allows the vehicle to crab sideways. The car is approximately 23 feet in length and weighs approximately 22,000 lbs. The Shotmaker Premier. The Company has modified some of its Classics by adding a crane arm. The non-collapsible two-man crane arm on the Premier enables film crews to shoot action scenes while on the move from ground level to 21 feet in height. With the addition of the Company's "Video Turret", the Premier can be used for television productions, sporting events, parades and other functions for which a light crane arm vehicle is required. The Premier is approximately 22 feet in length and weighs approximately 15,000 lbs. The Shotmaker Classic. Each Classic built by the Company has an auxiliary camera platform which can be mounted on the front or sides of the Classic. These cars do not have a built-in crane arm, but a standard portable crane can be used on each vehicle. The Classic has three axles and air suspension for a smooth and steady ride. A 250 amp DC generator is located under the cars hood, along with a 200 amp DC battery pack which can be used to provide silent power for lights and other electrical equipment. Four of the Classics have been modified with independent 70-200 amp AC/DC generators. The Classic has a self-leveling suspension system which provides added stability. The Classic weighs approximately 11,000 lbs and is approximately 22 feet in length. The Shotmaker Standard. The Standard is a lightweight, two-axle insert car, with an on-board 200 amp AC/DC generator, and a battery pack providing power for lights and other electrical equipment. The Standard has a front platform, top of cab platform, and numerous positions behind the cab for mounting cameras. Accessory Equipment. The Company rents accessory equipment, including tow dollies and process trailers. Tow dollies are used to tow a car with its front two wheels inches off the ground. Process trailers carry the entire car behind the Shotmaker 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. Maintenance. After the transition to new management in October 1996, the Company's maintenance records and expenses for 1996 were carefully reviewed in an effort -4- 5 CAMERA PLATFORMS INTERNATIONAL, INC. to improve maintenance and reduce those expenses going forward. Each of the Shotmaker camera cars was inspected and overhauled. As a result of this effort, on-the-job mechanical problems have been reduced to a minimum and maintenance expense has decreased significantly. Environmental Issues. For a number of years, Shotmaker's camera cars had been unable to meet vehicle emission standards prescribed by federal and state regulations. All fourteen camera cars operating in the United States have been successfully modified and received smog certifications from the State of California. The fifteenth camera car in the fleet is currently operating in Japan under a long term lease. Shotmaker Dollies, Cranes and Accessories Major items of equipment in the Dollies and Cranes rental fleet include: 26 dollies (13 Super Panthers and 6 Mini Panthers); 13 Pegasus cranes; 11 jib arms (9 super Jibs and 2 Mini Jibs); 3 Enlouva cranes; approximately 2,000 feet of Precision track; and approximately 650 feet of tubular track. The Company is aggressively looking for new products to add to its inventory or rental fleet. Shotmaker Blue Dollies. On March 12, 1997, the Company's subsidiary, SDI, announced the anticipated introduction of a new line of hydraulic dollies (the "Shotmaker Blue" dollies). The dollies are available in three sizes, known as the Shotmaker Eagle, Shotmaker Hawk and Shotmaker Falcon. These dollies are hydraulic, rather than electronic like the Panther dollies, and are particularly well suited to the U.S. market. They are the only dollies on the market with a dual, rideable hoist and which incorporate a four-way braking system. The arms are the most rigid in the industry and can hold up to 110 pounds. 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. On July 10, 1997, the Company won the right to market its "Blue" dollies in an action brought by Leonard Studio Equipment, Inc. ("Chapman") claiming contempt under a previous patent infringement case against Cinemeccanica Italiana Srl., designer of the Company's "Blue" line of dollies. (See "Legal Proceedings"). Enlouva Cranes. In late 1996, the Company acquired exclusive worldwide rights to manufacture, lease and sell Enlouva cranes. Enlouova cranes are used for shots with remote heads which allow for cameras to be controlled by an operator on the ground. The Enlouva crane is a streamlined, compact crane that incorporates a number of revolutionary design features. Manufactured from aircraft quality aluminum, it is extremely lightweight, completely modular, and can be assembled by two people in less than 15 minutes without tools. It is highly stable and has a maximum lens height of over -5- 6 CAMERA PLATFORMS INTERNATIONAL, INC. 26 feet. With a minimum overhead clearance of less than seven feet, the unit can be used in areas inaccessible to other cranes. It supports all 35mm, 16mm and video cameras, and can be used in combination with most dolly and track systems, camera cars, boats and trains. A small number of Enlouva III's are currently available for rent through the Company's competitors or individual camera operators or grips. From approximately 1993 through 1995, pursuant to a split rental arrangement, the Company had several Enlouva III's in its rental fleet and had rented them very successfully. After the split rental arrangement was terminated, the Company continued to receive inquiries on a weekly (and sometimes daily) basis from persons interested in renting Enlouvas. 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 eight of these new generation of cranes. As of April 15, 1998, the Company had three 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 III Crane can take a camera operator and a fully loaded camera up to a 31 foot lens height, and can be swiftly converted from a standard crane to a remote head crane with a lens height of over 36 feet. The Super Panther Dolly is an electro-mechanical camera dolly used to mount a film or video camera and up to two operators. Its innovative digital electronics allow for precise vertical movements along its center-post column. The ascent and descent of the column is operated by a hand-held remote control, which allows the camera operator, dolly grip or camera assistant to move the column. Built into the remote control is the capability to program up to 200 movements, which sequentially repeat the upward or downward movement, the rate of speed and the distance. The column supports two operators and a camera. The Mini Panther Dolly is also an electro-mechanical dolly precisely operated by digital electronics. The Mini Panther's column supports 175 lbs, whereas the Super Panther supports over half a ton. While the Super Panther has five variable speeds, the Mini Panther has one. The dolly rides two operators, with the camera on the center post. The Mini also has interchangeable columns: a motorized unit; a two-stage handcrank column; and a pneumatic version for television studio work. The Panther Super Jib is an arm which is positioned on the center-post of the Super Panther. The Super Jib is in fact a mini-crane, capable of taking a camera operator and camera to a 12 foot lens height. The Super Jib can be assembled in less than seven minutes, minimizing down time in production. The Panther Mini Jib is a lightweight arm that floats a camera system. The Mini Jib can be attached to any Panther dolly. A significant portion of the Company's Panther equipment was upgraded during 1997. The Company has converted all of its Super Panther II dollies to Super Panther IIIs -6- 7 CAMERA PLATFORMS INTERNATIONAL, INC. by retrofitting the dollies with more advanced electronic components. As a result, all these dollies can now be controlled remotely. All the Company's Pegasus I and II cranes can now be converted to Pegasus III cranes, with the result that all the Company's cranes can be extended further or ridden by camera operators. Partly as a result of the research and development conducted by the Company, Panther is expected to introduce a "crab-to-steer" modification kit that will allow Panther dollies to automatically change from standard 2-wheel steering to 4-wheel crab steering while the dolly is in use. This kit is expected to enhance the marketability of the Panther dollies in the United States. Remote Heads. Remote heads are used to mount a camera at the end of a crane or jib arm and are remotely controlled by an operator on the ground. The operator can view the camera's coverage with a video monitor, and can pan, tilt, zoom and focus the camera from a safe vantage point. Remote heads could become an integral part of the Company's business because they are typically used in conjunction with cranes, such as the Pegasus and Enlouva cranes. The trend in the industry is toward greater reliance on remote heads. Dolly track. The Company is a distributor and sales representative in the United States, Central America and South America for Precision I-Beam. Precision I-Beam Track is based on a revolutionary design innovation in dolly and crane track which provides dollies and cranes with a much smoother and more stable ride than the industry standard tubular track. Precision Track's extruded aluminum construction makes it lightweight and easily transportable. During September 1997, the Company entered into an agreement with Mr. Per Peterson to manufacture and market "Cadillac" track.The Agreement also provides for split rentals once the Company has been reimbursed for its cost of manufacturing. "Cadillac" track is only three inches high instead of the standard four inches, which allows use by both cranes and dollies without changing track or components. In addition, "Cadillac" track is both strong and very light weight. Marketing, Competition, Intellectual Property and Awards Marketing. The Company's marketing efforts are primarily conducted by direct sales efforts, advertisements in trade publications, and participation in various trade exhibitions. In December 1996, the Company commenced a complete overhaul of its marketing and advertising plan. The single most important change has been the decision to market the Company as one company with a variety of high quality related products, rather a number of different divisions with separate customers and distinct marketing and advertising plans. With its divisions working in concert, management believes that the Company will be better able to cross-market its products, promote the Shotmaker name and realize significant synergism and efficiencies. As part of its efforts to revamp the Company's marketing plans, the Company hired Wagner Design, an advertising and graphic design firm with a well-established reputation in the entertainment industry. Beginning in December 1996, Wagner Design prepared new -7- 8 CAMERA PLATFORMS INTERNATIONAL, INC. advertising and marketing material for the Company. With assistance from Wagner Design, the Company's print advertising budget was thoroughly reviewed in order to maximize the return for each print advertising dollar expended. In December 1996 and the first quarter of 1997, the Company's sales personnel were retrained to cross-market products from each of the Company's divisions. On March 12, 1997, an open house was held to re-introduce the Company to its target customers and to show off the Company's new premises in the North Hollywood/Burbank area. Competition. No other company currently owns a fleet of camera cars as large or as sophisticated as the Company's. While a number of competitors lease camera cars, these competitors' cars are typically two-axle pickup trucks comparable in size and features to the Shotmaker Standard. There are no other camera cars currently on the market which have a built-in camera crane, hydraulic front platform and the towing capability of the Company's Elites. The Company is the undisputed industry leader for manufacturing and leasing camera cars and mobile camera cranes. Two firms, Chapman and J. L. Fisher, Inc. ("Fisher"), dominate the rental market for dollies. Chapman and Fisher are both strong players in the rental market for cranes, but no single competitor is dominant in crane rentals. Both Chapman and Fisher are Los Angeles-based companies that are engaged exclusively in the rental and leasing business. Shotmaker is the third largest dolly and crane company in the United States. There are also a number of smaller competitors, usually offering one or more specialized niche products. Other than Shotmaker, very few companies sell dollies in the United States. For crane sales, the main competitor in the United States is E-Gripment, but no single company is dominant. Many small companies also manufacture cranes to a customer's specifications. In management's opinion, the Company's acquisition of exclusive rights to the Enlouva crane and its anticipated introduction of a new line of hydraulic dollies will position the Company to increase its share of the crane and dolly rental markets. Patents and Trademarks. The Company has registered THE SHOTMAKER as a trademark in the United States, Canada, and Japan. The Shotmaker name has been licensed to SDI, the Company's wholly owned subsidiary. Panther GmbH holds all patents and trademarks on its Panther products. Cinemeccanica Italiana S.r.l., the manufacturer of the new Shotmaker line of dollies, also owns certain European patents related to these dollies. Awards. During 1997, the Company received the Society of Operating Cameramen's technical achievement award for its Elite camera car. The Company received a Scientific and Engineering Award in 1986 from the Academy of Motion Picture Arts & Sciences for the development of the Elite Camera Car. In 1991, the division was also honored with a Primetime Emmy Award from the Television Academy of Arts & Sciences for Outstanding Achievement in Engineering. The Super Panther dolly received the 1990 Scientific and Engineering Award from the Academy of Motion Picture Arts and Sciences. -8- 9 CAMERA PLATFORMS INTERNATIONAL, INC. Employees. The Company had approximately 44 employees at December 31, 1997. 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 Company's premises are located in an industrial complex in the North Hollywood/Burbank area and include approximately 30,000 square feet of office, warehouse and manufacturing space and approximately 5,000 square feet of secured yard space. The premises are leased and subleased from unaffiliated third parties for a gross rent of $166,000 per year, including common area maintenance and water expenses. (The lessor of the majority of the Company's premises is the lessee under a master lease of the premises and the other buildings in the industrial complex.) The current lease terms are for a three-year period expiring in November 1999; the lease contains two three-year options. The Company also is a sublessor on a lease which expires April, 2000. Management believes that the Company's premises have the capacity to handle the operating requirements of the Company through the end of the lease term. Item 3. Legal Proceedings During 1997, the Company was successful in its efforts to resolve various legal matters referred in its 1996 annual report. The HQ Studio Equipment and Movie Tech, et al, and Rick Dinkel lawsuits were settled without adverse effect upon the Company. In May 1997, the Fred Neva, et al, complaint was dismissed with prejudice by the court. In July 1997, the court found that the Company is free to market its "Blue" dollies in the U.S. and therefore not subject to the injunction sought by Leonard Studio Equipment, Inc. Also in July 1997, a production company was involved in an accident whereby a Pegasus crane system which it rented from the Company collapsed due to operator error, injuring two crew members. Those crew members are suing the Company for negligence. The Company has since filed a cross complaint against the production company for operator error. Based upon the advice of outside counsel, management believes the Company has no exposure that is not covered by applicable insurance. The Company is also from time to time named as a defendant in the ordinary course of its business. In the opinion of management, after consultation with outside counsel, there are no outstanding suits or claims that may reasonably result in a material adverse effect on the business, financial condition or results of operations of the Company. Item 4 - Submission of Matters to a Vote of Security Holders - None Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters The Company's common stock trades on the over-the-counter market under the symbol CPFR' (formerly CMPL'). The following table sets forth the high and low bid prices for the Company's common stock. Bids represent inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions. -9- 10 CAMERA PLATFORMS INTERNATIONAL, INC.
Period High Low ------ ---- --- 1996: 1st Quarter................................. 3/32 3/32 2nd Quarter................................. 3/32 3/32 3rd Quarter................................. 1/8 3/32 4th Quarter................................. 1/8 2/32 1997: 1st Quarter................................. 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 through April 15, 1998.......... 1/2 1/2
As of April 15, 1998, there were approximately 900 beneficial owners of 12,418,228 outstanding shares of the Company's common stock, held by 315 shareholders of record. The Company has not paid a dividend on its common stock since inception. Item 6 - Selected Consolidated Financial Data
- ------------------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------- Revenues $ 3,356,000 $ 3,321,000 $ 4,290,000 $ 4,428,000 $ 3,498,000 Net loss (737,000) (1,883,000) (851,000) (1,999,000) (1,896,000) Total assets 2,498,000 2,431,000 3,462,000 3,811,000 5,010,000 Long-term debt 811,000 250,000 -- 353,000(1) 5,094,000 Net loss per share of common stock $(.06) $(0.15) $(0.07) $(0.15) $(0.15) - -------------------------------------------------------------------------------------------------------
(1) Long-term debt decreased substantially during 1994 as a result of a debt to equity conversion. -10- 11 CONSOLIDATED SUMMARY OF QUARTERLY OPERATIONS (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------- Quarter ended Quarter ended Quarter ended Quarter ended March 31, June 30, September 30, December 31, 1997 1996 1997 1996 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- Revenues $1,047,000 $792,000 $1,035,000 $779,000 $804,000 $1,052,000 $470,000 $698,000 Cost of sales and rentals 837,000 774,000 761,000 736,000 596,000 846,000 489,000 651,000 Selling, general and administrative 262,000 450,000 534,000 528,000 189,000 352,000 479,000 580,000 ----------------------------------------------------------------------------------------------------------- Operating income (loss) (52,000) (432,000) (260,000) (485,000) 19,000 (146,000) (498,000) (533,000) Interest expense, net (11,000) (14,000) (21,000) (2,000) (6,000) (1,000) (33,000) (24,000) Other income (expense), net 72,000 12,000 8,000 4,000 (3,000) (42,000) 48,000 (220,000) ------------------------------------------------------------------------------------------------------------ Net income (loss) $9,000 $(434,000) $(273,000) $(483,000) $10,000 $(189,000) $(483,000) $(777,000) =================================================================================================================================== Net income (loss) per share of common stock $0.00 $(0.03) $(0.02) $(0.04) $0.01 $(0.02) $(0.05) $(0.06) =================================================================================================================================== Weighted average number of shares outstanding 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228 12,418,228 ===================================================================================================================================
-11- 12 CAMERA PLATFORMS INTERNATIONAL, INC. Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Historically, the Company operated under credit lines established with its former majority shareholder, UST Inc. ("UST"). UST sold its interest in the Company on October 10, 1996 (See item 1, "Sale of Company"). Pursuant to the terms of the Stock Purchase Agreement, UST forgave $1,338,138 owed by the Company to UST, which was recorded as an addition to paid in capital. On the same date, the Company obtained a line of credit from Foothill Capital Corporation ("Foothill") in the amount of $850,000, which matured October 10, 1997. As of that date, the Company entered into a new agreement with Foothill for a $2,500,000 credit facility consisting of a $1,250,000 term loan, a $750,000 revolving line of credit and a $500,000 inventory equipment line of credit. The loans mature in January, 2000. The Company neither accrued nor paid interest on any UST credit line advances beginning March 1, 1995. The term loan portion of the Foothill credit facility requires monthly principal paydowns in the amount of $25,000. Interest on all the credit facilities are due monthly, and were current as of April 15, 1998. The Company had outstanding balances under the various Foothill credit facilities of $811,000 and $1,768,000 as of December 31, 1997 and April 15, 1998, respectively. The Consolidated Statement of Cash Flows presented herein indicates $881,000 of negative cash flow from the Company's operating activities for the year ended December 31, 1997. Included in this deficit amount are legal fees totaling $235,000 which were primarily incurred by the Company in assisting Cinemeccanica Italiana in its successful defense of the "Chapman" patent lawsuit and other related matters. While the Company's operations have not been able to provide sufficient cash flow to meet current operating requirements, the Company has successfully been able to augment working capital deficits generated by operations through debt financing provided under the Foothill credit facility. The Company expects that future debt and equity financings will continue to provide sufficient funds to meet its operating cash requirements for the next twelve months. Results of Operations 1997 versus 1996 Net product sales decreased 3% from $1.77 million in 1996 to $1.72 million in 1997. Excluding the effect attributed to the sale of Lightmaker division in December 1996, dollies and cranes sales increased 70% from $940,000 in 1996 to $1.59 million in 1997 as a result of strong sales of Panther dollies and cranes. -12- 13 CAMERA PLATFORMS INTERNATIONAL, INC. Revenues from rental operations increased 5% from $1.55 million in 1996 to $1.64 million in 1997. This increase was the net result of a 12% increase in Shotmaker camera car rentals offset by a 3% decrease in dollies and crane rentals during 1997. The increase in camera car rentals was largely the result of price changes resulting in higher average day rates. The decrease in dollies and crane rentals was primarily due to fewer split rental relationships for remote heads and cranes. Total revenue for the Company was essentially unchanged, increasing by 1% from $3.32 million in 1996 to $3.36 million in 1997. Cost of sales decreased by 25% from $1.57 million in 1996 to $1.17 million in 1997. This decrease was generally related to the Company's continued efforts to reduce variable costs. Dollies and crane sales margins improved from $73,000 in 1996 to $591,000 for 1997 as a result of tighter cost controls over equipment purchases, sale of older equipment with high depreciation, fewer discounts given to customers and the poor margins reported in previous periods on Lightmaker sales. Cost of rental operations increased by 5% from $1.44 million in 1996 to $1.51 million in 1997. This increase relates to a similar 5% increase in rental revenue over the same period. Shotmaker's dollies and cranes and camera car rental costs decreased $104,000 and $80,000 for 1997, respectively, as compared to 1996, due to lower repair and maintenance on camera cars and cost reductions which resulted from the elimination of Lightmaker products. Selling, general and administrative expenses decreased by 26% from $1.97 million in 1996 to $1.46 million in 1997. The decrease is primarily due to management's continued efforts to reduce operating expenses primarily in corporate, advertising, maintenance and repairs. This decrease was hampered by an increase in litigation expenses, primarily due to defense of the "Chapman" patent lawsuit. Legal expenses totaled $55,000 in 1996 as compared with $235,000 in 1997. Total expenses decreased by 16% from $4.97 million in 1996 to $4.15 million in 1997. Net interest expense increased 82% from $39,000 in 1996 to $71,000 in 1997 in relation to the larger average balances outstanding on the Foothill credit facility which was used to purchase more rental inventory and reduce accounts payable. Other income (expenses) increased 164% from ($193,000) in 1996 to $125,000 in 1997 as a result of income related to the liquidation of Lightmaker inventory and other sales of obsolete and slower moving rental equipment. The Company's net loss decreased 292% from $1.88 million in 1996 to $737,000 in -13- 14 CAMERA PLATFORMS INTERNATIONAL, INC. 1997. The net loss per basic and diluted share of common stock decreased from $0.15 in 1996 to $0.06 in 1997. 1996 versus 1995 Net product sales decreased by 28% from $2.45 million in 1995 to $1.77 million in 1996. This decrease primarily resulted from a 41% decrease in Lightmaker revenue. Lightmaker sales were adversely affected in 1996 as a result of concerns in the industry about the future of Lightmaker after the sale of the Company. Lightmaker continued to face stiff competition during 1996 as several competitors had introduced new electronic ballasts with innovative features. Dolly and crane sales in 1996 declined 10% from 1995. Revenues from rental operations decreased 16% from $1.84 million in 1995 to $1.55 million in 1996. This decrease resulted from a 14% decrease in Shotmaker camera car rentals and a 16% decrease in dolly and crane rentals during 1996. The decrease in camera car rentals was largely the result of a number of cars being out of service due to the Company's difficulties in legally obtaining smog certificates for those cars. The Company also had difficulty obtaining parts for repair of the cars since a number of suppliers had not been paid on a timely basis prior to the transition to new management on October 10, 1996. The decrease in dolly and crane rentals resulted from several factors. The Company lost two lucrative split rental arrangements; the Company location outside of the prime rental area continued to suppress the rental revenue; the Company sold certain items of rental equipment from its fleet and was not able to replace or obtain parts for equipment on a timely basis. Total revenue for the Company decreased by 23% from $4.29 million in 1995 to $3.32 million in 1996. Cost of sales decreased by 10% from $1.75 million in 1995 to $1.57 million in 1996. This decrease was generally related to the corresponding 28% decrease in 1996 sales revenue. Dolly and crane sales margins for the year deteriorated as a result of a higher cost of equipment, increased inbound freight expense and greater discounts given to customers. Lightmaker sales margins also deteriorated due to higher direct labor and factory overhead costs. Cost of rental operations decreased by 5% from $1.52 million in 1995 to $1.44 million in 1996. This decrease was partly the result of the 16% decrease in rental revenue. Shotmaker's dolly, crane, and camera car rental costs decreased, but not sufficiently to offset the decrease in revenues. Selling, general and administrative expenses increased by 8% from $1.82 million in 1995 to $1.97 million in 1996. Selling, general and administrative expenses were adversely affected during 1996 as a result of additional expenses related to the sale of the Company, and additional legal expenses related to the two lawsuits initiated by the Company. Expenses related to the sale of the Company were $301,000 in 1996, as compared with -14- 15 Interest expense increased 15% in 1996, from $34,000 in 1995 to $39,000 in 1996. Interest ceased to accrue on the borrowings under the UST line of credit on February 28, 1995, pursuant to a letter of intent related to the sale of the Company. Other expenses increased from $19,000 in 1995 to $193,000 in 1996 as a result of expenses related to the sale of the Lightmaker division and the leasehold abandonment related to moving the Company's premises. The Company's net loss increased from $0.85 million in 1995 to $1.88 million in 1996, a 121% increase. The net loss per share of common stock increased from $0.07 in 1995 to $0.15 in 1996. Impact of Inflation Inflation has not had a material impact on the Company's operations to date, and the Company believes it will not have a material effect on operations in the next twelve months. Foreign Currency Transactions All international sales are denominated and remitted in U.S. dollars, and all foreign transactions are settled within a short period of time. Accordingly, the Company does not anticipate that foreign currency fluctuations will have a material effect on operations in the next twelve months. -15- 16 CAMERA PLATFORMS INTERNATIONAL, INC. Item 8 - Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page ---- Report of Grant Thornton LLP, Independent Auditors................................. 17 Report of Ernst & Young LLP, Independent Auditors................................ 18 Consolidated Financial Statements: Consolidated Statements of Financial Position at December 31, 1997 and 1996................................................. 19 Consolidated Statements of Operations for the Years Ended December 31, 1997, 1996 and 1995........................................... 20 Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995........................................... 21 Consolidated Statement of Shareholders' Equity for the Years Ended December 31, 1997, 1996 and 1995........................................... 23 Notes to Consolidated Financial Statements.................................... 24 Schedule II - Valuation and Qualifying Accounts for the Years Ended December 31, 1997, 1996 and 1995.............................. 34
- -------------------------------------------------------------------------------- ALL OTHER SCHEDULES FOR WHICH PROVISION IS MADE IN THE APPLICABLE ACCOUNTING REGULATION OF THE SECURITIES AND EXCHANGE COMMISSION ARE NOT REQUIRED UNDER THE RELATED INSTRUCTIONS OR ARE INAPPLICABLE, AND THEREFORE HAVE BEEN OMITTED. -16- 17 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors Camera Platforms International, Inc. We have audited the accompanying consolidated balance sheets of Camera Platforms International, Inc. as of December 31, 1997 and 1996, and the related consolidated statements of operations, shareholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Camera Platforms International, Inc. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. We have also audited Schedule II for each of the two years in the period ended December 31, 1997. In our opinion, this schedule presents fairly, in all material respects, the information required to be set forth therein. GRANT THORNTON LLP Los Angeles, California March 12, 1998 except for Note 13 (Paragraph 3), as to which the date is April 8, 1998 -17- 18 REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Directors Camera Platforms International, Inc. We have audited the accompanying consolidated statements of operations, shareholders' equity, and cash flows for Camera Platforms International, Inc. for the year ended December 31, 1995. Our audit also included the financial statement schedule listed in the Index at Item (8). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of its operations and its cash flows of Camera Platforms International, Inc. for the year ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Woodland Hills, California February 2, 1996 -18- 19 CAMERA PLATFORMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31 1997 1996 - ------------------------------------------------------------------------------------------------- ASSETS Current Assets Cash $ 77,000 $ 181,000 Accounts receivable, less allowance for doubtful accounts of $46,000 in 1997 and $34,000 in 1996 177,000 283,000 Current maturities of net investment in sales-type lease and installment sale 42,000 -- Inventories 322,000 269,000 Prepaid expenses 98,000 82,000 ------------ ------------ Total current assets 716,000 815,000 Property and equipment, net of depreciation, amortization and rental asset valuation allowance 1,446,000 1,498,000 Net investment in sales-type lease and installment sale, net of current maturities 90,000 -- Deposits and other assets 246,000 118,000 ------------ ------------ $ 2,498,000 $ 2,431,000 - ------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 478,000 $ 565,000 Revolving credit facility -- 170,000 Current maturities of long-term debt 560,000 -- Customer deposits 31,000 95,000 Deferred revenue 12,000 -- Other current liabilities 52,000 60,000 ------------ ------------ Total current liabilities 1,133,000 890,000 Long-term debt, net of current maturities 811,000 250,000 Commitments and contingencies Shareholders' Equity Common stock $.0005 par value; 15,000,000 shares authorized; 12,418,228 shares issued and outstanding 6,000 6,000 Additional paid-in capital 22,792,000 22,792,000 Accumulated deficit (22,244,000) (21,507,000) ------------ ------------ Total shareholders' equity 554,000 1,291,000 ------------ ------------ $ 2,498,000 $ 2,431,000
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. -19- 20 CAMERA PLATFORMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------- Year ended December 31 1997 1996 1995 - ------------------------------------------------------------------------------------- Revenues Net product sales $ 1,719,000 $ 1,769,000 $ 2,450,000 Revenues from rental operations 1,637,000 1,552,000 1,840,000 ----------- ----------- ----------- 3,356,000 3,321,000 4,290,000 ----------- ----------- ----------- Expenses Cost of sales 1,172,000 1,566,000 1,749,000 Cost of rental operations 1,511,000 1,441,000 1,523,000 Selling, general and administrative 1,464,000 1,965,000 1,816,000 ----------- ----------- ----------- 4,147,000 4,972,000 5,088,000 ----------- ----------- ----------- Operating loss (791,000) (1,651,000) (798,000) Interest expense, net (71,000) (39,000) (34,000) Other income (expense), net 125,000 (193,000) (19,000) ----------- ----------- ----------- Net loss $ (737,000) $(1,883,000) $ (851,000) ===================================================================================== Basic and diluted loss per share $(0.06) $(0.15) $(0.07) ===================================================================================== Weighted average shares outstanding 12,418,228 12,418,228 12,418,228 =====================================================================================
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. -20- 21 CAMERA PLATFORMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------- Year ended December 31 1997 1996 1995 - ------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss $ (737,000) $(1,883,000) $(851,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 408,000 422,000 512,000 Gain on disposal of equipment (155,000) (33,000) (4,000) Provision for (recoveries of) doubtful accounts, net 12,000 (34,000) 26,000 Gain on sale of Lightmaker Division -- (108,000) -- Changes in assets and liabilities Accounts receivable 94,000 381,000 (259,000) Net investment in lease and installment sale (132,000) -- -- Inventories (53,000) 155,000 221,000 Prepaid expenses (16,000) (59,000) 5,000 Deposits and other assets (128,000) 57,000 37,000 Accounts payable (87,000) 52,000 95,000 Deferred revenue 12,000 -- -- Customer deposits (64,000) -- -- Other current liabilities (8,000) 75,000 (23,000) - ------------------------------------------------------------------------------------------------- Net cash used in operating activities (854,000) (975,000) (241,000) - ------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Proceeds from sale of Lightmaker division -- 110,000 -- Proceeds from sale of property and equipment 549,000 208,000 4,000 Purchases of property and equipment (750,000) (77,000) (14,000) - ------------------------------------------------------------------------------------------------- Net cash used in investing activities (201,000) 241,000 (10,000) - ------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Net proceeds (principal payments) on revolving line of credit (170,000) 170,000 -- Proceeds from borrowings of long-term debt 1,146,000 250,000 -- Proceeds from borrowings of short-term debt -- 527,000 600,000 Principal payments on long-term debt (25,000) -- -- Principal payments on notes payable -- (414,000) (200,000) Contribution of capital -- 192,000 -- - ------------------------------------------------------------------------------------------------- Net cash provided by financing activities 951,000 725,000 400,000 - -------------------------------------------------------------------------------------------------
-21- 22 CAMERA PLATFORMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
Net increase (decrease) in cash $ (104,000) $ (9,000) $ 149,000 Cash at beginning of year 181,000 190,000 41,000 - ------------------------------------------------------------------------------------------------- Cash at end of year $ 77,000 $ 181,000 $ 190,000 ================================================================================================= Supplemental disclosure of cash flow information Cash paid during the year for: Interest $ 55,000 $ 36,000 $ 1,000 Income taxes 1,000 2,000 2,000
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. -22- 23 CAMERA PLATFORMS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
- ---------------------------------------------------------------------------------------------------- Number of Common Paid-in Accumulated Shares Stock Capital Deficit Total - ---------------------------------------------------------------------------------------------------- Balance at January 1, 1995 12,418,228 $6,000 $21,270,000 $(18,773,000) $ 2,503,000 Net loss for the year -- -- -- (851,000) (851,000) - ---------------------------------------------------------------------------------------------------- Balance at December 31, 1995 12,418,228 6,000 21,270,000 (19,624,000) 1,652,000 Forgiveness of notes payable to related party -- -- 1,330,000 -- 1,330,000 Contribution of capital by shareholders -- -- 192,000 -- 192,000 Net loss for the year -- -- -- (1,883,000) (1,883,000) - ---------------------------------------------------------------------------------------------------- Balance at December 31, 1996 12,418,228 6,000 22,792,000 (21,507,000) 1,291,000 Net loss for the year -- -- -- (737,000) (737,000) - ---------------------------------------------------------------------------------------------------- Balance at December 31, 1997 12,418,228 $6,000 $22,792,000 $(22,244,000) $ 554,000 ====================================================================================================
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. -23- 24 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Camera Platforms International, Inc. ("CPI" or the "Company"), was organized in the state of Delaware in 1985 to engage in the business of leasing camera cars and other related equipment to motion picture and television production companies. As discussed in Note 2, in October 1996, UST, Inc., a former majority stockholder of CPI, consummated a sale of its position in CPI to Shotmaker Acquisition Corporation ("SAC") and SAC acquired 76% ownership in CPI as a result of a Stock Purchase Agreement. During 1997, the Company formed Shotmaker Sound Inc. ("SSI"), a wholly owned subsidiary, to allow for future expansion into the music and theatrical production industries. As of December 31, 1997, SSI entered into an asset purchase agreement to acquire substantially all the assets of a company that provides rehearsal studio, storage and cartage services to recording artists. This agreement is subject to certain conditions of sale including payoff of seller's existing SBA loan. Included in the Company's consolidated financial statements is a $147,000 deposit which will be applied to the purchase. As of January 31, 1997, Shotmaker Dollies and Cranes, Inc. ("SD&C"), the Company's wholly owned subsidiary, adopted a plan of liquidation. Under the plan, all the assets, liabilities and business operations of SD&C were distributed to the Company. The plan was undertaken primarily to minimize the additional costs associated with operating two corporate entities, and is otherwise not expected to have any material impact on the operations of the Company. 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. Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles which presumes that the Company can continue to operate as a going concern. Although the Company has incurred recurring operational losses and negative cash flows from operations, the Company has historically supplemented its cash flows from operations through a combination of debt and equity financings. Since the transition to new management on October 10, 1996, the Company has taken steps to reduce operating expenses and increase revenue and profitability. To reduce operating expenses, the Company has, among other things, sold the Lightmaker division, which had been incurring losses (see Note 3). To improve profitability, the Company has taken steps to increase utilization of its camera cars, cranes and dollies. The Company has added new products including a new line -24- 25 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS of Shotmaker hydraulic dollies and dolly track, and it has begun manufacturing its new "Shotmaker Blue" dolly and a second line of cranes under the "Enlouva" name. The Company's sales and marketing plans have been revamped in order to provide better service to customers. The single most important change has been the decision to market the Company as one company with a variety of high quality related products, rather a number of different divisions with separate customers and distinct marketing and advertising plans. With its divisions working in concert, management believes that the Company will be better able to cross-market its products, promote the Shotmaker name and realize significant synergism and efficiencies. Given these changes in the Company's operations, it is management's belief that the Company will have positive cash flow beginning in the second quarter of 1998 with the first deliveries in significant numbers of "Shotmaker Blue" dollies. In the event there is any negative cash flow from operations, the Company's $2.5 million bank credit facility should be sufficient to offset such negative cash flow. 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. -25- 26 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Research and Development Research and development costs are charged to expense as incurred. Such amounts are not material in any year presented. Cash Equivalents The Company considers all highly liquid investments held at financial institutions with maturity dates of three months or less at the time of acquisition to be cash equivalents. Per Share Data The Company has adopted Statement of Financial Accounting Standards ("SFAS") SFAS No. 128, "Earnings Per Share", which establishes new standards for computing and presenting basic and diluted earnings per share. Adoption of SFAS No. 128 does not have a material effect on the computation or presentation of per share data in the accompanying consolidation financial statements. The basic income (loss) per share is calculated based upon the weighted average number of common shares outstanding during each year. Diluted income (loss) per share is calculated based upon the weighted average of shares of common stock outstanding and shares that would have been outstanding assuming the issuance of common stock for all dilutive potential common stock outstanding. The Company's outstanding stock options represent the only dilutive potential 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 $191,000, $243,000, and $186,000 for the years ended December 31, 1997, 1996 and 1995, respectively, and were recorded as part of selling, general and administrative expenses. Equipment Leases The Company's leasing operations consist primarily of short-term rentals of camera cars, camera dollies and cranes. These rentals generally range from one day to several weeks in duration, with occasional rentals of several months. The Company also has a small number of camera car and dollies on long-term operating leases of twelve to thirty-six months, and one camera car on an indefinite long-term operating lease in Japan. None of the rentals are noncancelable leases, and no -26- 27 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS contingent rentals are included in the Company's consolidated statements of operations. Stock-Based Compensation The Company has adopted the disclosure-only provisions of SFAS 123, "Accounting for Stock-Based Compensation", but applies APB No. 25 and related interpretations in accounting for options granted under its plan. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results could differ from those estimates and such differences could be material to the consolidated financial statements. Reclassifications Certain accounts in 1996 and 1995 have been reclassified in order to conform to the presentation in 1997. New Accounting Standards The Company will adopt SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" during 1998. The Company is evaluating the impact of these statements on its consolidated financial statements. SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" was adopted during the first quarter of 1997. SFAS No. 129, Disclosures of Information about Capital Structure" and SFAS No. 128, "Earnings Per Share" were adopted in the fourth quarter of 1997, with no material effect on the consolidated financial statements. NOTE 2 - SALE OF THE COMPANY Pursuant to a Stock Purchase and Contribution Agreement dated October 10, 1996, (the "Stock Purchase Agreement") by and among UST Inc., ("UST"), UST Enterprises Inc. ("Enterprises"), Shotmaker Acquisition Corp ("SAC"), purchased 9,403,168 shares of the common stock of the Company from UST and Enterprises, representing approximately 76% of the outstanding shares of the Company. SAC paid cash to UST and Enterprises in the amount of $94,000, and made a cash capital contribution to the Company of $192,000. As part of the Stock Purchase Agreement, UST forgave approximately $1,330,000 of debt, leaving a balance of $250,000 which is due, together with accrued interest thereon, on April 11, 1998, subject to certain offsets in favor of the Company. NOTE 3 - SALE OF LIGHTMAKER DIVISION On December 27, 1996, the Company completed the sale of its Lightmaker division to LTM Corporation of America ("LTM") for a cash price of $110,000. The assets sold to LTM were raw materials inventory, machinery and equipment associated with the manufacture of the -27- 28 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS electronic ballasts, and the intellectual property of the Lightmaker division including the Lightmaker trade name. Under the terms of the agreement, the Company retained the accounts receivable, accounts payable, and the remaining finished goods inventory. LTM assumed all warranty liability for the Lightmaker ballasts. NOTE 4 - INVESTMENT IN SALES-TYPE LEASE AND INSTALLMENT SALE The following lists the components of the investment in sales-type lease and installment sale:
December 31, ---------------------- 1997 1996 -------- ------ Minimum lease payments receivable.......................... $145,000 $ -- Less: Unearned income...................................... 13,000 -- -------- ------ Net investment............................................. $132,000 $ -- ======== ======
At December 31, 1997, lease and installment sale receivables are due in installments as follows: 1998..................................................... $42,000 1999..................................................... 47,000 2000..................................................... 43,000
NOTE 5 - INVENTORIES
December 31, -------------------- 1997 1996 -------- --------- Work in process........................................... $185,000 $ -- Finished goods............................................ 137,000 269,000 -------- -------- $322,000 $269,000 ======== ========
-28- 29 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - PROPERTY AND EQUIPMENT
December 31, ------------------------- 1997 1996 ---------- ---------- Equipment available for lease ............................. $4,930,000 $4,770,000 Machinery and equipment ................................... 350,000 314,000 Leasehold improvements .................................... 60,000 15,000 Furniture and fixtures .................................... 62,000 60,000 Automobiles and trucks .................................... 57,000 57,000 Construction in progress .................................. -- 23,000 ---------- ---------- 5,459,000 5,239,000 Less accumulated depreciation and amortization............. 3,471,000 3,199,000 Less rental asset valuation allowance ..................... 542,000 542,000 ---------- ---------- $1,446,000 $1,498,000 ========== ==========
Accumulated depreciation and amortization pertaining to equipment available for lease amounted to $3,065,000 in 1997 and $2,832,000 in 1996. NOTE 7 - LONG-TERM DEBT The Company has a $2.5 million credit facility, consisting of (1) $1,250,000 term loan, (2) $750,000 revolving line of credit and (3) $500,000 inventory equipment line of credit, with interest at reference rate plus 2% (effective rate of 10.5 % at December 31, 1997), maturing January 15, 2000. The term loan requires monthly principal reductions of $25,000. Advances totaled $475,000 and $625,000 under the term loan and revolving credit facility, respectively, at December 31, 1997. There were no advances made under the inventory equipment line of credit at December 31, 1997. Loans made under the credit facility are cross-collateralized and are secured by substantially all the assets of the Company. The loans refinanced an earlier credit facility totaling $850,000 which matured October 15, 1997. The Company is also financing its remaining obligation on its purchase of the worldwide rights to the "Enlouva" patents and trademark over thirty-five equal monthly installments of $1,000, including interest at 10%. The note matures December 1999. In the event of default, the seller is entitled to collect money damages, restoration to the right of the name "Enlouva", the right to manufacture and sell cranes under the "Enlouva" name, and the restoration of parts shipped. 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 -29- 30 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and tax bases of assets and liabilities and are measured using the enacted tax rates and laws expected to apply when the differences are expected to reverse. At December 31, 1997, the Company has net operating loss carryforwards of approximately $23 million for federal tax purposes, which expire from 2000 to 2012. 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 $4 million for California tax purposes, which expire from 1998 to 2002. 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, 1997, total deferred tax assets, consisting principally of net operating loss carryforwards, amounted to approximately $8 million. For financial reporting purposes, a valuation allowance has been recognized in an amount equal to such deferred tax assets due to the uncertainty surrounding their ultimate realization. The effective tax rate differs from the U.S. Federal statutory rate principally due to the valuation allowance recognized due to the uncertainty surrounding the ultimate realization of deferred tax assets. NOTE 9 - STOCK OPTIONS The Company has adopted a Stock Option Plan to provide additional incentive for officers and key employees to invest in the Company and has granted stock options to purchase shares of its common stock to certain officers and key employees as follows:
Options Outstanding -------------------------- Weighted Avg. Exercise Shares Price -------- ------------- Outstanding at January 1, 1995 ..................... 117,000 $2.12 Granted ......................................... -- -- Exercised ....................................... -- -- Terminated or expired ........................... (49,000) 1.85 -------- ----- Outstanding at December 31, 1995 ................... 68,000 $2.25 ======== ===== Granted ......................................... -- $ -- Exercised ....................................... -- -- Terminated or expired ........................... (34,000) 2.25 -------- ----- Outstanding at December 31, 1996 ................... 34,000 $2.25 ======== =====
-30- 31 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Granted ......................................... 700,000 $0.12 Exercised ....................................... -- -- Terminated or expired ........................... (34,000) -- -------- ----- Outstanding at December 31, 1997.................... 700,000 $0.12 ======== =====
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, 1997 expire between January 2002 and January 2005. NOTE 10 - COMMITMENTS AND CONTINGENCIES Leases In December 1996, the Company entered into a lease for its premises expiring December, 1999. Minimum payments under the new lease are $121,000 and $111,000 for the years ending December 31, 1998 and 1999, respectively. In September 1997, the Company entered into a sublease agreement for office and warehouse space adjacent to its principal premises. Minimum payments under the sublease are $45,000 per year, expiring April 2000. In November, 1997, the Company entered into a sixty month equipment lease agreement to provide machining equipment for its manufacturing and reengineering programs. Payments under the lease are $39,000 per year. The Company in turn, entered into a reengineering agreement with V.A. Industries Co, Inc. ("VA") to provide the Company with component parts for dollies, cranes, dolly track and related equipment. Included in inventory at December 31, 1997 was work-in-process totaling $92,000. The Company also agreed to sublease to VA the aforementioned machining equipment at an amount equal to the monthly lease payment. At the conclusion of the lease, ownership in the machining equipment shall be shared equally. Purchase Commitments In July 1993, the Company entered into a five-year distribution agreement with Panther GmbH. This agreement may be extended to eight years if certain conditions are met at the end of the distribution term and subsequent annual extension periods. Pursuant to the agreement, the Company has been granted exclusive distribution rights for all Panther products in North and South America. The distribution agreement has certain minimum purchase requirements. The -31- 32 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Company has met its minimum purchase commitments under the agreement through December 31, 1997. The minimum purchase commitment for 1998 is $330,000 (DM 600,000). In the event the Company fails to meet its minimum purchase requirement obligation, the Company's exclusive distribution rights shall cease. Contingencies related to Environmental Issues In previous years, the Company reported that the Shotmaker camera cars, fifteen of which are currently in operation, were unable to meet vehicle emission standards. As of December 31, 1997 with the exception of one camera car on long term lease in Japan, all the Company's cars have been retrofitted to meet all state and federal emissions requirements. The retrofitting was accomplished without jeopardizing any of the operational features of the cars. Legal Proceedings The Company is from time to time named as a defendant in the ordinary course of its business. In the opinion of management, after consultation with outside counsel, there are no outstanding suits or claims that are not covered by applicable insurance or that may reasonably result in a material adverse effect on the business, financial condition or results of operations of the Company. NOTE 11 - SALES TO MAJOR CUSTOMERS AND GEOGRAPHIC AREAS No sales to a single customer accounted for more than ten percent of total revenues during 1997, 1996, or 1995. No geographic area outside the United States accounted for more than ten percent of total sales during the last three years. NOTE 12 - 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, 1997 and 1996. NOTE 13 - SUBSEQUENT EVENTS On January 12, 1998, the Company received $150,000 pursuant to the issuance of a convertible promissory note (the "Note") with interest accruing at prime plus 2% (10 1/2 % at April 15, 1998) and payable monthly. Under the terms of the Note, the principal amount is convertible into up to 600,000 shares of common stock upon fifteen days prior written notice. Proceeds from the note will be used for acquisition purposes. In January 1998, SSI completed its asset purchase of Third Encore ("3E"), a company which provides rehearsal studio, storage and cartage services to recording artists for a purchase price of $200,000, including a five year agreement not-to-compete -32- 33 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS with the former principal shareholder of 3E which requires SSI to pay the seller an additional $30,000 during 1998. SSI also assumed 3E's existing building leases which require combined monthly base rental payments of $18,400 through January 2003. Also in January 1998, the Company entered into negotiations with Production Services - Atlanta ("PSA") to acquire substantially all the assets of the company in exchange for cash, debt and equity totaling $2.1 million. On March 9, 1998 the Company signed a definitive purchase agreement with PSA and the transaction closed April 7, 1998. Funding of the PSA acquisition was provided through an additional $2.55 million acquisition facility from the lender described in Note 7. Advances under this line totaled $1.25 million at April 8, 1998. Principal is payable in monthly installments equal to 1/60th of the amount of the advanced, with all amounts due January 15, 2000. Interest at the reference rate plus 2% (effective rate of 10.5% at April 8, 1998) is payable monthly. The acquisition facility is collateralized by all the assets of the Company. The Company also has entered into negotiations with Fluid Images, Inc. ("FI") to purchase all of the outstanding shares of FI, including all assets of FI as well as the name "Akela Cranes" in exchange for cash, debt and equity totaling $2.5 million. On March 30, 1998, the Company signed a stock purchase agreement with FI and, subject to the completion of its due diligence, the Company expects this transaction to close in May 1998. -33- 34 CAMERA PLATFORMS INTERNATIONAL, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
- ----------------------------------------------------------------------------------------- Balance Balance January 1, Additions Deductions December 31, - ----------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1995 Asset valuation allowance $542,000 -- -- $542,000 Allowance for doubtful accounts 23,000 62,000 (36,000) 49,000 Warranty liability 14,000 8,000 (12,000) 10,000 -------- -------- --------- -------- $579,000 $ 70,000 $ (48,000) $601,000 ======== ======== ========= ======== - ----------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1996 Asset valuation allowance $542,000 -- -- $542,000 Allowance for doubtful accounts 49,000 34,000 (49,000) 34,000 Warranty liability 10,000 18,000 (24,000) 4,000 -------- -------- --------- -------- $601,000 $ 52,000 $ (73,000) $580,000 ======== ======== ========= ======== - ----------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1997 Asset valuation allowance $542,000 -- -- $542,000 Allowance for doubtful accounts 34,000 46,000 (34,000) 46,000 Warranty liability 4,000 18,000 (22,000) -- -------- -------- --------- -------- $580,000 $ 64,000 $ (56,000) $588,000 ======== ======== ========= ======== - -----------------------------------------------------------------------------------------
-34- 35 CAMERA PLATFORMS INTERNATIONAL, INC. Item 9 - Changes In and Disagreements with Accountants on Accounting or Financial Disclosure At a meeting held on January 22, 1997, the Board of Directors of the Company approved the engagement of Grant Thornton LLP as its independent auditors for the fiscal year ending December 31, 1996, and for other independent accounting and tax-related services on an ongoing basis, to replace the firm of Ernst & Young LLP, who resigned as auditors of the Company effective January 22, 1997. The Board of Directors does not have a separate audit committee. The report of Ernst & Young LLP on the Company's financial statements for the fiscal year ended December 31, 1995 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audit of the Company's financial statements for the fiscal year ended December 31, 1995 and in the subsequent interim periods of fiscal 1996, there were no disagreements with Ernst & Young LLP on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which, if not resolved to the satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make reference to the matter in its report. The Company requested Ernst & Young LLP to furnish it a letter addressed to the Commission stating whether it agrees with the above statements. A copy of that letter, dated January 24, 1997, was filed as Exhibit 1 to the Company's Form 8-K Current Report dated January 22, 1997, which reported the change in the Company's certifying accountant. Ernst & Young LLP's letter is also incorporated by reference as an exhibit to this Form 10-K Annual Report. PART III Item 10 - Directors and Executive Officers of the Registrant The Company's by-laws provide for a range of one to nine directors and allow the Board of Directors to set the exact number of authorized directors within that range. The current number of authorized directors established by the Board of Directors is five. Directors are elected at each Annual Meeting of Shareholders to serve thereafter until their successors have been duly elected and qualified. The following table provides certain information as of April 15, 1998, for each director and executive officer of the Company:
Name Age Position with the Company ---- --- ------------------------- Roy Atlas 56 Director, President and Chief Operating Officer William O. Fleischman 52 Chairman of the Board and Secretary
-35- 36 CAMERA PLATFORMS INTERNATIONAL, INC. Leslie J. Kovacs 54 Director Brianne Murphy 54 Director Laird Robertson 42 Director and Chief Executive Officer James P. Robinson 40 Chief Financial Officer
Roy Atlas has been a director of the Company since December 19, 1996. Mr. Atlas served as Executive Vice President and Chief Operating Officer of the Company from October 10 to December 19, 1996, and has been serving as President and Chief Operating Officer from December 19, 1996. From 1980 to 1996, Mr. Atlas served in senior management positions at a number of distribution companies in Florida or the east coast including Gold Coast Distributors in Miami, Florida, American Potomac Distributors in Washington, D.C., and South Jersey Distributors in Pleasantville, New Jersey. Previously, Mr. Atlas built up a successful 11-store drugstore chain in the Washington, D.C. area, which he sold in 1979. William O. Fleischman has been Chairman of the Board and Secretary of the Company since October 10, 1996. Mr. Fleischman, in his individual capacity or through W/F Investment Corp. or its affiliates, has substantial experience investing in and managing companies, financial institutions and real estate. Mr. Fleischman is also a senior member of a Century City based law firm specializing in corporate and real estate law. Leslie J. Kovacs has been a director of the Company since April 16, 1997. Mr. Kovacs is a well respected independent lighting gaffer who has been involved in the motion picture industry since 1965. He is a member of the International Alliance of Theatrical Stage Employees (I.A.T.S.E.). His film credits include some of the top U.S. box office films in recent years including BASIC INSTINCT, BATMAN FOREVER, EXECUTIVE DECISION and the upcoming BATMAN AND ROBIN. Brianne Murphy has been a director of the Company since June 9, 1997. Ms. Murphy is the first woman cinematographer in the I.A.T.S.E. and the first woman invited to join the American Society of Cinematographers. She was a founder of Woman in Film and Behind the Lens. She is recipient of a Crystal Award, A Lucy Award and an Emmy. In 1982 she was awarded an Academy of Motion Picture Arts & Sciences Scientific and Engineering Award for the Mitchell Camera Insert Car and Process Trailer. Ms. Murphy is also a member of the Directors Guild of America and has been directing television and features in the US and Mexico. Laird Robertson has been a director of the Company since December 19, 1996, and the Chief Executive Officer of the Company since October 10, 1996. For approximately the past five years, prior to joining CPI, Mr. Robertson has invested in and/or served as an advisor or a `turnaround' manager for a variety of companies in transition or financial difficulty. Previously, Mr. Robertson was a corporate lawyer with an international law firm based in Los Angeles. From 1984 to 1988, Mr. Robertson was an officer at the Department of State, advising principally the Economic & Business Bureau on international trade, intellectual property and telecommunication matters. -36- 37 CAMERA PLATFORMS INTERNATIONAL, INC. James P. Robinson joined the Company in February 1998 as Chief Financial Officer. Mr. Robinson is a CPA with over 15 years of public and private accounting experience, Prior to joining the Company, Mr. Robinson was employed as an audit manager in the financial services group for several major public accounting firms in Los Angeles. From 1994 through 1995, he served as corporate controller for a casino management company in Las Vegas. From 1987 through 1993, Mr. Robinson was an audit manager for a regional public accounting firm in Houston. None of the officers or directors of the Company is related to any other officer or director of the Company. Officers are appointed by the Board of Directors and serve at the pleasure of the Board of Directors or until they resign. At present two officers of SAC, the principal shareholder of the Company, serve on the Company's Board of Directors. -37- 38 CAMERA PLATFORMS INTERNATIONAL, INC. Item 11 C Executive Compensation Compensation of Directors As of April 1997, directors who are not officers of the Company began receiving $1,000 for each Board of Directors meeting which they attend. Compensation of Executive Officers The following tables set forth information concerning the compensation of the Company's Chief Executive Officer and those other executive officers of the Company whose salary and bonus exceeded $100,000 during 1997. The table below sets forth information regarding the compensation of each listed executive officer for the last three fiscal years. SUMMARY COMPENSATION TABLE
Long Term Compensation --------------------------------------------------------------------------- Annual Compensation Awards Payouts ------------------------------------------------------------- ----------- Other All Annual Restricted Other Compen- Stock Options/ LTIP Compen- Name and Salary Bonus sation Award(s) SAR's Payouts sation Principal Position Year ($) ($) ($) ($) (#) ($) ($) - ------------------ ---- ------ ----- ------- ---------- ------- ------- ---------- Laird Robertson Director, CEO 1997 22,000 -- 9,000 -- -- -- -- 1996 16,000 -- -- -- -- -- -- Roy Atlas President, COO 1997 96,000 6,000 -- -- -- -- -- President, COO 1996 16,000 -- -- -- -- -- -- Hal Needham* Chairman, CEO 1996 49,000 -- -- -- -- -- -- Chairman, CEO 1995 52,000 -- -- -- -- -- -- Philip M. Panzera** President 1996 134,000 -- -- -- -- -- --
- ---------- * Mr. Needham resigned as Chairman and CEO on October 10, 1996. ** Mr. Panzera's duties as President were terminated on October 10, 1996. -38- 39 CAMERA PLATFORMS INTERNATIONAL, INC. OPTION GRANTS IN 1997 During 1997 options to purchase 700,000 shares of common stock were granted to Roy Atlas, the Company's president, at an exercise price of $0.12 and which was determined to be the fair value at date of date. The grant is effective as of January 1, 1997 and is pursuant to Mr. Atlas's individual employment agreement. AGGREGATED OPTION EXERCISED IN 1997 AND YEAR-END 1997 OPTION VALUES
Number of Value of Unexercised Unexercised In-the-Money Shares Options/Sar's at Options/Sar's at Acquired on Value Fiscal year-end (#) Fiscal year-end (#) Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable ---- ----------- -------- ----------- ------------- ----------- ------------- Roy Atlas -- -- -- 700,000 -- --
Item 12 - Security Ownership of Certain Beneficial Owners and Management Security Ownership of Certain Beneficial Owners The following table sets forth information with respect to those persons known by the Company to own beneficially more than 5% of the Company's common stock as of April 15, 1998.
Amount and Nature Name and Address of of Beneficial Percent of Beneficial Owner Ownership Class -------------------- ------------------ ---------- Hal Needham 1,123,520(1) 9.0% 12711 Ventura Blvd. Studio City, CA 91604 William O. Fleischman 6,582,217(2) 52.9% 1900 Avenue of the Stars, Suite 2410 Los Angeles, CA 90067 Laird Robertson 1,880,633(3) 15.1% 1917 Garth Avenue Los Angeles, CA 90034
(1) Includes 41,520 shares held directly by Mr. Needham and 1,082,000 shares held directly by Hollywood Camera Cars, Inc. (2) Mr. Fleischman's minor child is the owner of 70% of the outstanding shares of SAC, which owns 9,403,168 shares or 75.6% of the Company's common stock. (3) Mr. Robertson is the owner of 20% of the outstanding shares of SAC, which owns 9,403,168 shares or 75.6% of the Company's common stock. -39- 40 CAMERA PLATFORMS INTERNATIONAL, INC. Security Ownership of Management The following table sets forth information with respect to shares of the Company's outstanding common stock which are owned beneficially by each director and nominee and the aggregate number of shares owned beneficially by all directors, nominees and officers as a group as of April 15, 1998.
Amount and Nature of Beneficial Percent of Name of Beneficial Owner Ownership Class ------------------------ ------------------ ---------- Roy Atlas -- 0% William O. Fleischman 6,582,217(1) 52.9% Leslie J. Kovacs -- 0% Brianne Murphy -- 0% Laird Robertson 1,880,663(2) 15.1% James P. Robinson -- 0% All officers and directors as a 8,462,880 68.1% group (6 persons)
(1) Represents 6,582,217 shares held by SAC, which owns a total of 9,403,168 shares of the Company's common stock. (2) Represents 1,880,633 shares held by SAC, which owns a total of 9,403,168 shares of the Company's common stock. Item 13 - Certain Relationships and Related Transactions Two directors of the Company, Messrs. William O. Fleischman and Laird Robertson, are officers of SAC. Please refer to "Sale of the Company" under Note 2 above and "Security Ownership of Management" under Item 12 above. PART IV Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) The financial statements and financial statement schedules filed as part of this report are listed on the Index to Financial Statements and Schedules on page 16.
Exhibits -------- 2.1(1) Stock Purchase and Contribution Agreement dated as of October 10, 1996. 2.2(2) Letter Agreement re sale of Lightmaker dated December 27, 1996. 3.1(3) Certificate of Incorporation, as amended.
-40- 41 CAMERA PLATFORMS INTERNATIONAL, INC. 3.2(4) By-Laws, as amended. 10.1(5) Form of Non-Statutory Stock Option Agreement. 10.2(6) Company's 1990 Stock Option Plan. 10.3 Employment Agreement between the Company and Roy Atlas. 16.1(7) Letter re change in certifying accountant dated January 24, 1997. 21.1 Subsidiaries of Registrant.
- ------------------------------------------------------------------------------ (1) Incorporated by reference to the Company's Form 8-K Current Report dated October 10, 1996. (2) Incorporated by reference to the Company's Form 8-K Current Report dated December 27, 1996. (3) Incorporated by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1987. (4) Incorporated by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1988. (5) Incorporated by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1989. (6) Incorporated by reference to the Company's Registration Statement No. 33-37401 on Form S-8, filed on October 23, 1990. (7) Incorporated by reference to the Company's Form 8-K Current Report dated January 22, 1996. (b) Reports on Form 8-K Registrant filed no reports on Form 8-K during the fourth quarter of the year ended December 31, 1997. (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. -41- 42 CAMERA PLATFORMS INTERNATIONAL, INC. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 15, 1998 CAMERA PLATFORMS INTERNATIONAL, INC By: /s/ Laird Robertson -------------------------- LAIRD ROBERTSON Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following officers and directors of Camera Platforms International, Inc., on behalf of the Company, in the capacities and in the dates indicated. April 15, 1998 Chairman of the Board and Secretary By: /s/ William O. Fleischman --------------------------- William O. Fleischman April 15, 1998 Chief Executive Officer and Director By: /s/ Laird Robertson --------------------------- Laird Robertson April 15, 1998 President, Chief Operating Officer and Director By: /s/ Roy Atlas --------------------------- Roy Atlas April 15, 1998 Chief Financial Officer By: /s/ James Robinson --------------------------- James Robinson
-42- 43 EXHIBIT INDEX
Exhibits -------- 2.1(1) Stock Purchase and Contribution Agreement dated as of October 10, 1996. 2.2(2) Letter Agreement re sale of Lightmaker dated December 27, 1996. 3.1(3) Certificate of Incorporation, as amended. 3.2(4) By-Laws, as amended. 10.1(5) Form of Non-Statutory Stock Option Agreement. 10.2(6) Company's 1990 Stock Option Plan. 10.3 Employment Agreement between the Company and Roy Atlas. 16.1(7) Letter re change in certifying accountant dated January 24, 1997. 21.1 Subsidiaries of Registrant.
(1) Incorporated by reference to the Company's Form 8-K Current Report dated October 10, 1996. (2) Incorporated by reference to the Company's Form 8-K Current Report dated December 27, 1996. (3) Incorporated by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1987. (4) Incorporated by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1988. (5) Incorporated by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1989. (6) Incorporated by reference to the Company's Registration Statement No. 33-37401 on Form S-8, filed on October 23, 1990. -43- EX-1 2 EXHIBIT 1 1 EXHIBIT 1 The Company recently completed its restructuring of its accounting department, which included hiring of a new Chief Financial Officer and the implementation of new accounting and reporting procedures. As such, the Company has incurred delays in preparing its December 31, 1997 financial statements and Form 10-K. The Company is completing its December 31, 1997 financial statements and expects to file its Form 10-K for the period ended December 31, 1997 on or before April 15, 1998. EX-10.3 3 EXHIBIT 10.3 1 EXHIBIT 10.3 FIRST RESTATED EMPLOYMENT AGREEMENT OF ROY ATLAS This First Restated Employment Agreement of Roy Atlas (this "Agreement") is made and entered into as of this 1st day of December 1997 by and between Camera Platforms International, Inc., a Delaware corporation (the "Company") and Roy Atlas ("Employee") with respect to the following facts: A. Company and Employee have previously entered into an Employment Agreement dated January 1, 1997, a copy of which is attached hereto as Exhibit "A". B. In recognition of Employee's faithful service to the Company, the parties wish to restate and amend Employee's contract in its entirety, with the result that this Agreement supercedes the previous agreement and any other agreements or understandings between the parties. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and conditions herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. SERVICES TO BE PERFORMED BY THE EMPLOYEE. The Employee shall provide to the Company such services of managerial and operational nature as the Board of Directors shall determine from time to time to be reasonably necessary or advisable and in the best interests of the Company in the course of its business. The Employee shall hold the title of President and Chief Operating Officer. The Employee agrees that, to the best of his ability and experience, he will, at all times, loyally and conscientiously perform all of the duties and obligations either expressly or implicitly required of him by the terms of this Agreement. The Employee shall provide services hereunder on a full-time and exclusive basis, consisting of not less than 40 hours per week. 2. OTHER ACTIVITIES. At all times during the term of this Agreement, the Employee may not engage or participate for his own account, whether directly or indirectly, as an employee, employer, consultant, agent, principal, partner, stockholder, or in any other capacity in any business which is competitive with the Company or in any activities which detract from his duties hereunder. 1 2 3. TERM OF THE AGREEMENT. Unless terminated earlier pursuant to the terms hereof, the term of this Agreement shall be four (4) years and one month beginning on January 1, 1998 and terminating on December 31, 2001. This Agreement shall automatically be extended for successive one (1) year periods beginning on the respective anniversary dates hereof, unless either party gives at least thirty (30) days written notice of their election not to renew this Agreement to the other party. In the event this Agreement is renewed, all covenants in this Agreement will remain in full force and effect, unless the parties agree to a written modification thereto. 4. COMPENSATION. In consideration for the services to be performed by the Employee hereunder, the Employee shall receive an annual salary of one hundred thousand dollars ($100,000), payable in accordance with the Company's established payroll procedures, but not less often than monthly. The Board of Directors of the Company shall review the Employee's compensation on an annual basis and may increase the Employee's compensation based on the Employee's and the Company's performance. 5. BONUSES. In addition to the compensation set forth in paragraph 4 above, the Employee shall be entitled to receive: (i) in the event that the Company's profits are $1,000,000 or more annually, a cash bonus equal to 2.5%, to a maximum of $300,000, of all profits of the Company or (ii) in the event that the Company's profits are less than $1,000,000 but equal to or greater than $500,000 annually, a cash bonus equal to 1.25% of such profits of the Company. For purposes of this paragraph, the term "Profits" shall mean annual net profits before taxes of the Company including its subsidiaries, as shown in the audited annual financial statement prepared by the Company's independent accountants, adding back any compensation paid to the Chairman, Chief Executive Officer, W/F Investment Corp. ("W/F"), Shotmaker Acquisition Corporation ("SAC") or any affiliates or shareholders holding 10% or more of the stock of W/F or SAC. Such bonuses shall be paid within 30 days following completion of the audited annual financial statement and acceptance thereof by the Board. 6. BENEFITS. The Employee shall be entitled to receive such benefits as the Company may provide for its employees from time to time, including medical and dental insurance (for the Employee and his wife), paid vacation, sick pay and holiday pay, plus the following additional benefits: (a) Vacation. Three (3) weeks during the first year hereunder; four (4) weeks thereafter. (b) Automobile. The Company shall provide the Employee with a car allowance of $500 per month (to cover all automobile related expenses, including lease payments and repairs), with the exception of damage caused by the Company, which is to be reimbursed 100% 2 3 by the Company. Insurance on the vehicle is to be covered under the Company's policy, with liability limits of $1,000,000 or more. (c) Disability Insurance. The Employee shall be entitled to coverage under any policy or policies of disability insurance which the Company provides for the benefit of the employees generally. The Employee understands that the disability insurance policy currently in effect provides for long-term disability benefits at 60 % of an employee's then current compensation, with maximum monthly benefits of $5,000. (d) Life Insurance. The Company shall maintain for the benefit of the Employee a whole life policy in the amount of five hundred thousand dollars ($500,000), provided that the cost of such policy shall not exceed $325 per month. The Company shall be named as the beneficiary of the policy but, in the event of the Employee's death during the term of his employment, the Company shall pay the $500,000 insurance proceeds to the Employee's estate and the Employee's estate shall relinquish to the Company any unexercised vested warrants and any common stock of the Company which it holds as a result of the Employee's having exercised any warrants within the twelve months prior to his death. 7. REIMBURSEMENT OF BUSINESS EXPENSE. During the term of this Agreement, the Company shall reimburse the Employee for all ordinary and necessary business expenses incurred by him in connection with the Company's business. Authorization of the Board of Directors shall be required for any single expenditure of $1000 or more. 8. WARRANTS. As additional compensation for entering into this transaction, the Company shall grant to the Employee, effective January 1, 1997, a warrant giving the Employee the right to purchase seven hundred thousand (700,000) shares of the common stock of the Company. The warrant shall contain customary anti-dilution protections. The warrant shall vest at the rate of one hundred forty thousand (140,000) shares per year of service under the Employment Agreement dated January 1, 1997 and this Agreement, and shall remain exercisable for a period of three (3) years from vesting, subject to the terms and conditions of this Agreement. If the Company should at anytime register its common stock, then the Employee shall have piggyback registration rights exercisable within thirty (30) days of notice. The Employee shall be entitled to customary indemnification in any registration. The exercise price of the warrant shall be $.125 per share, the price at which said shares are currently trading. If there is a change in control of the Company or SAC, all outstanding warrants shall fully vest immediately. In the event of death, all earned shares shall become fully vested in Employee's estate. 9. TERMINATION. The Company shall have the right (but not the obligation) to terminate this Agreement at any time during the term hereof by written notice for the following causes: 3 4 (a) Upon 20 days notice and right to cure, if cure is possible, for conduct which is detrimental to the Company's reputation, goodwill or business operations; (b) The Employee's death or disability, or such other condition as shall prevent the Employee from the performance of his duties hereunder for a period in excess of six months; (c) Upon 20 days notice and right to cure, if cure is possible, for gross neglect or breach of the Employee's duties or misconduct in discharging such duties and without notice and a right to cure for habitual neglect or breach of the Employee's duties and misconduct in discharging such duties; (d) Upon 20 days notice and right to cure, if cure is possible, for Employee's failure or refusal to comply with the directions of the Board of Directors, and without notice and a right to cure for habitual failure or refusal to comply with the directions of the Board of Directors. Upon termination for cause, payment of all unearned compensation shall cease immediately and any unvested warrants shall terminate immediately. 10. BOARD OF DIRECTORS. The Company shall recommend and support the election of Employee to the Company's Board of Directors. 11. INDEMNIFICATION. The Company shall save and hold harmless the Employee from and against any claim of liability or loss (including reasonable attorney's fees) arising as a result of the Employee's activities in the course of his services hereunder to the fullest extent permitted by law. 12. CONFIDENTIALITY. The Employee shall, at no time, either during his employment or following the termination of his employment for any reason, use or disclose to any person, directly or indirectly, any business secret, customer list or other confidential information concerning the business or policies of the Company, except to the extent that such use or disclosure is (i) necessary to the performance of the Employee's duties hereunder, (ii) required by applicable law; (iii) authorized by the Company; or (iv) lawfully obtainable from other sources. Upon the termination of his employment, the Employee shall return to the Company all memoranda, notes and other documents in his possession that relate to the business secrets, customer lists and other confidential information of the Company. 13. INTEGRATION. This Agreement is the entire agreement between the parties hereto with respect to the subject hereof and supersedes all prior agreements (including Exhibit "A") between the parties with respect to the matters expressly contained herein. Any waiver or modification of any provision of this Agreement shall only be effective if in writing and duly executed by all parties hereto. 4 5 14. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same agreement. 15. NOTICES. Any communication, notice or demand a party may be required or may desire to give hereunder shall be in writing and delivered by personal service, telecopied (with oral confirmation of receipt from the office of the addressee) or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: If to the Company: Camera Platforms International, Inc. 10909 Vanowen Street North Hollywood, California 91605 Facsimile (818) 623-1710 With a copy to: Douglas B. Schwab, Esq. 1900 Avenue of the Stars, Suite 2410 Los Angeles, California 90067 Facsimile (310) 552-0834 If to the Employee: Roy Atlas 1420 North Alta Vista Boulevard, #310 Los Angeles, California 90046 Facsimile (213) 876-7917 Any party may change its address or fax number for notice by written notice given to the other in the manner provided in this section. Any such communication, notice or demand shall be deemed to have been duly given or served on the date personally served or telecopied, if by personal service or telecopier, and on the date shown on the return receipt or other evidence of delivery if mailed. 16. FURTHER ASSURANCES. The parties agree to execute such instructions and such other instruments and agree to do such further acts as may be reasonably necessary to carry out the provisions of this Agreement. 17. NO ASSIGNMENT. This Agreement is a personal services contract and may not be assigned by either party. 18. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5 6 19. ARBITRATION. All controversies, claims or disputes between the Employee and the Company or any of its officers, directors or shareholders, including without limitation, contract, tort or other controversies, claims or disputes, shall be arbitrated in accordance with the California Employment Dispute Resolution rules of the American Arbitration Association. All arbitration proceedings shall be held in Los Angeles, California. The award of the arbitrators in any arbitration proceeding shall be final and may be enforced in any court of competent jurisdiction. The unsuccessful party to such arbitration proceeding shall pay to the successful party all costs and expenses, including without limitation, reasonable attorney's fees incurred therein by the successful party, all of which shall be included in and as part of the award or judgment rendered in such proceeding. 20. SEVERABILITY. If any provision or portion of this Agreement shall be or become illegal, invalid or unenforceable in whole or in part, for any reason, such provision shall be ineffective only to the extent of such illegality or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. "COMPANY" CAMERA PLATFORMS INTERNATIONAL, INC. By: /s/ William O. Fleischman ----------------------------------- William O. Fleischman Chairman of the Board "EMPLOYEE" /s/ Roy Atlas ----------------------------------- Roy Atlas 6 EX-21.1 4 EXHIBIT 21.1 1 EXHIBIT 21.1 SUBSIDIARIES OF REGISTRANT As of December 31, 1997 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. EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET, AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS, SHAREHOLDERS' EQUITY AND CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 77,000 0 265,000 (46,000) 322,000 716,000 5,459,000 (3,471,000) 2,498,000 1,133,000 0 0 0 6,000 548,000 2,498,000 1,719,000 3,356,000 1,172,000 4,147,000 (54,000) 12,000 55,000 (791,000) 0 (791,000) 0 0 0 (737,000) (.06) (.06)
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