<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-QSB
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to__________
Commission File Number 0-24592
---------
CINEMA RIDE, INC.
---------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-4417467
- -------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12001 VENTURA PLACE, STUDIO CITY, SUITE 340, CALIFORNIA 91604
(Address of principal executive offices)
(Zip Code)
(818) 761-1002
(Registrant's telephone number, including area code)
................................................................................
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or give 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
----- -----
As of August 14 1996, there were 4,600,000 outstanding shares of common stock,
par value $0.01 per share.
Transitional Small Business Disclosure Format: Yes No X
----- -------
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED
JUNE 30, 1996
==================================
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets as of June 30, 1996, and as of
December 31, 1995. 3
Statements of Operations for the three months and
six months ended June 30, 1996, and June 30, 1995. 5
Statements of Cash Flows for the six months ended
June 30, 1996, and June 30, 1995. 6
Summary of Accounting Policies 8
Notes to Financial Statements. 10
Item 2. Management Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission to Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibits Index 17
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996, AND DECEMBER 31, 1995
====================================
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -------------
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 185,780 $ 144,539
Restricted Cash (Note 1) 600,000 -
Inventories 63,630 45,806
Prepaid expenses 121,514 141,367
Other Receivables 50,935 21,154
---------- ----------
Total current assets 1,021,859 352,866
---------- ----------
Property and equipment:
Office equipment and furniture 106,730 104,094
Equipment under capital lease 139,474 139,474
Leasehold improvements 1,203,219 1,076,097
Theater and film equipment 1,656,546 1,693,129
Theater and film equipment under construction 1,595,971 1,521,414
---------- ----------
4,701,940 4,534,208
Less accumulated depreciation and
amortization (588,726) (291,679)
Total property and equipment 4,113,214 4,242,529
---------- ----------
Film library:
Film projects under development 269,872 259,411
Film library, net 501,996 542,787
---------- ----------
Total film library, net 771,868 802,198
---------- ----------
Receivable from officers 94,040 100,000
Deferred lease costs and other assets (net) 442,336 317,112
---------- ----------
$6,443,317 $5,814,705
========== ==========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
3
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
JUNE 30, 1996, AND DECEMBER 31, 1995
====================================
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ -------------
(unaudited) (audited)
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 732,570 $ 517,765
Current portion of capital lease obligation 14,686 13,485
Current portion of notes payable (Note 1) 625,954 -
----------- -----------
Total current liabilities 1,373,210 531,250
----------- -----------
Obligation under capital lease 90,334 97,989
Deferred Rent 147,066 -
Long term portion of notes payable (Note 1) 28,740 -
----------- -----------
Total long term liabilities 266,140 97,989
Total liabilities 1,639,350 629,239
Commitments and contingency (Note 1, 2 and 3)
Stockholders' equity
Preferred stock, $.01 par value, 500,000
shares authorized, none issued - -
Common stock, $.01 par value, 10,000,000
shares authorized, 4,570,000 shares
issued and outstanding 45,700 45,700
Additional paid-in-capital 8,376,984 8,363,638
Accumulated deficit (3,618,717) (3,223,872)
----------- -----------
Total stockholders' equity 4,803,967 5,185,466
----------- -----------
Total liabilities and stockholders' equity $ 6,443,317 $ 5,814,705
=========== ===========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
4
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996, AND JUNE 30, 1995
===================================================================
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
1996 1995 1996 1995
--------------------------- ------------------------------
<S> <C> <C> <C> <C>
Revenues $712,223 $527,833 $1,321,968 $972,856
--------- --------- ---------- ---------
Selling, general and administrative expenses 643,543 660,967 1,320,758 1,391,230
Depreciation and amortization 144,686 83,366 386,789 165,022
--------- --------- ---------- ---------
Total expenses 788,229 744,333 1,707,547 1,556,252
--------- --------- ---------- ---------
Loss from operations (76,006) (216,500) (385,579) (583,396)
Interest expense 14,676 - 21,537 -
Interest income 3,418 28,091 6,006 57,576
--------- --------- ---------- ---------
Net Loss $(87,264) $(188,409) $(401,110) $(525,820)
========= ========= ========== =========
Net Loss per common share $(.02) $(.04) $(.09) $(.12)
========= ========= ========== =========
Weighted Average common share outstanding 4,570,000 4,505,000 4,570,000 4,505,000
========= ========= ========== ==========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
5
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 & JUNE 30, 1995
==============================================
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(401,110) $ (525,820)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 386,789 165,022
Issuance of warrants for services rendered 13,346 -
Increase (decrease) from changes in:
Inventories (17,824) 19,208
Prepaid expenses 19,853 (77,793)
Other receivables (23,818) (39,629)
Accounts payable and accrued expenses 214,805 10,897
Deferred Rent 147,066 -
Accrued interest on note payable 17,032 -
Customer deposits - (273,000)
--------- ----------
Net cash provided (used) by operating activities 356,139 (721,115)
--------- -----------
Cash flows from investing activities:
Capital expenditures for
Office furniture and equipment (2,636) (29,366)
Leasehold Improvements (127,122) (31,376)
Theater and film equipment (2,645) (111,764)
Theater and film equipment under construction (74,557) (999,228)
Film production costs (31,353) (46,905)
Film production costs under development (10,461) (97,447)
Deferred lease and financing costs (22,995) -
Proceeds from insurance for equipment 39,228 -
Organization costs and other assets (113,565) (56,144)
--------- -----------
Net cash used in investing activities (346,106) (1,372,230)
--------- -----------
Cash flows from financing activities:
Proceeds from notes payable 640,575 -
Principal payments under capital lease obligation (6,454) -
Payments on note payable (2,913) -
--------- -----------
Net cash provided in financing activities 631,208 -
Net increase (decrease) in cash 641,241 (2,093,345)
Cash at beginning of period 144,539 3,511,754
--------- -----------
Cash at end of period $ 785,780 $ 1,418,409
========= ===========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
6
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 & JUNE 30, 1995
==============================================
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes $ 800 $ 800
====== ==========
Cash paid during the period for interest $9,256 $ -
====== ==========
</TABLE>
See Acompanying Notes to Unaudited Consolidated Financial Statements
7
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
SIX MONTHS ENDED JUNE 30, 1996
==================================
Basis of presentation
- ---------------------
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position of Cinema Ride,
Inc. (the "Company") as of June 30, 1996, and December 31, 1995, and the results
of its operations and statements of cash flows for each of the three months and
six months ended June 30, 1996, and June 30, 1995, in conformity with generally
accepted accounting principles applied on a consistent basis. Unless the context
otherwise requires, references to the "Company" in this report refer to Cinema
Ride, Inc. and its consolidated subsidiaries.
The results of operations for the six months ended June 30, 1996, are not
necessarily indicative of the results of operations to be expected for the full
year ending December 31, 1996.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. The accompanying financial statements should be
read in conjunction with the Company's audited financial statements and notes
thereto incorporated in reference in the 1995 Annual Report on Form 10-KSB.
The accompanying consolidated unaudited financial statements have been prepared
assuming the Company will continue as a going concern. At June 30, 1996, the
Company had a negative working capital of $351,351 and the Company will require
substainial additional funds though debt or equity financing to complete its new
location in Times Square, New York, New York, and to pay expenses already
incurred relating to the construction of the Times Square Facility.
Organization
- ------------
The Company was incorporated in Delaware in April 1993. The Company is in the
business of developing and operating rides consisting of motion simulator
attractions and filmed entertainment which combine video-projected three-
dimensional action films of approximately four minutes duration with computer-
controlled, hydraulically-mobilized seating platforms that are programmed to
move in concert with the on-screen action. Each attraction is designed to
provide the viewer with a realistic feeling of being a participant in the action
on the screen. To date, the Company has completed construction and installation
of two facilities. The first facility (the "Las Vegas Facility") commenced
operations in October 1994 and is located in the Forum Shops at Caesars (the
"Forum Shops"), a high traffic tourist mall which is located between Caesars
Palace Hotel & Casino and the Mirage Hotel in Las Vegas, Nevada. The second
facility (the " West Edmonton Mall Facility") commenced operations in August
1995 and is located in the West Edmonton Mall, Alberta, Canada. The Company
expects to open, subject to the completion of financing, a motion simulator
attraction in the near future at Times Square in New York City, New York (the
"Times Square Facility") which will consist of three capsules. The Company's
executive offices are located in Studio City, California.
Property and equipment
- ----------------------
Property and equipment are stated at cost. Depreciation is provided at the time
property and equipment is placed in service using the straight-line method over
the estimated useful lives of the assets which range from five to ten years.
Amortization of tenant improvements is provided using the straight-line method
over the lower of the estimated useful lives of the assets or the lease term
which range from five to ten years.
8
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
SIX MONTHS ENDED JUNE 30, 1996
==================================
(CONTINUED)
Film Production Costs
- ---------------------
Film production costs are stated at the lower of amortized cost or market. Upon
completion, film production costs are amortized on an individual production
basis in the proportion that current gross revenues bear to management's
estimate of total gross revenues with such estimates being reviewed at least
quarterly.
Deferred Lease Costs
- --------------------
Deferred lease costs represent amounts paid in connection with the successful
negotiation of the Company's leases. Costs are amortized on a straight-line
basis over the term of the leases.
Pre-opening Costs
- -----------------
The Company capitalizes pre-opening costs incurred in connection with potential
new locations. These costs are amortized over the twelve months following
commencement of operations, or charged to expense when the project is abandoned.
At June 30, 1996, pre opening costs of $134,432 are included in other assets
primarily relating to the Times Square Facility.
Foreign Currency Translation
- ----------------------------
Foreign currency denominated assets and liabilities of subsidiaries with local
functional currencies are translated to United States dollars at the prevailing
exchange rates. The effects of translation are recorded in the cumulative
translation component of shareholder's equity.
Income Taxes
- ------------
The Company provides for income taxes in accordance with Statement of Financial
Accounting Standards 109 (SFAS109"), Accounting for Income Taxes. Deferred
income taxes are provided on the difference in earnings determined for tax and
financial reporting purposes and result primarily from differences in methods
used to amortize production costs.
Loss Per Share
- --------------
Loss per share is based on the weighted average number of shares of common stock
outstanding during the period.
Statement of Cash Flows
- -----------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.
Accounting Estimates
- --------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities, disclosures of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
9
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NOTE PAYABLE
On June 17, 1996, the Company obtained a loan for $600,000 from an
unaffiliated party. The loan is due in sixty days bearing interest at 2% per
month compounded monthly. In connection with obtaining the loan, the Company
agreed to pay the lender a 2 point fee ($12,000), and issue 50,000 warrants to
purchase the Company's common stock at the than fair market value. The funds
from this loan were deposited in an escrow account and are restricted to use by
the lender. Any remaining funds can be withdrawn by the lender at any time. As
of this date, none of the funds in the escrow account have been used by the
Company. The Company is currently attempting to obtain an extension to this
loan.
On March 6, 1996, Cinema Ride Edmonton, Inc. obtained a $40,328 loan
($55,000 Canadian dollars) from a Canadian bank at prime plus two percent. The
loan has a term of four years requiring monthly payments of approximately $1,027
($1,400 Canadian dollars) and is guaranteed by the Company. The lender has
first security interest in the equipment and improvements located at the West
Edmonton Facility. The loan also restricts transfer of funds to the Company
other than amounts in excess of cash flow. The loan may be prepaid at any time
without any penalties.
NOTE 2 - COMMITMENT AND CONTINGINCIES
During the quarter ended June 30, 1996, the Company entered into a lease
agreement for a sign to be installed at the Times Square Facility. The lease
term is for sixty months commencing the first month following installation of
the sign. The Company is required to pay $150,000 as a down payment on the
sign, of which, $50,000 was paid during August 1996, $50,000 is due upon
installation, and $50,000 to be paid over the following ten months at a rate of
$5,000 per month. The lease requires monthly payments of $7,950 which includes
taxes and maintenance. The Company has the option to purchase the sign at the
end of the lease term for approximately $50,000.
NOTE 3 - SUBSEQUENT EVENT
Subsequent to the end of the quarter, the Company obtained several loans
aggregating $250,000 bearing interest at 15% compounded and paid monthly with
the principal balance due at the earlier of one year or at the time the Company
successfully obtains permanent financing. These loans are secured by certain
equipment owned by the Company and by the net cash flow of the Las Vegas
Facility. In connection with obtaining these loans, the Company issued 250,000
shares of the Company's common stock to the lenders.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
---------------------------------------------------------------------
OF OPERATIONS
-------------
Although the Company was formed in April 1993, operations of the Company did
not commence until October 1994 when the Las Vegas Facility was opened. The
Company opened its second location, the West Edmonton Mall Facility, in August
1995.
RESULTS OF OPERATIONS
- ---------------------
QUARTER ENDED JUNE 30, 1996 VS. QUARTER ENDED JUNE 30, 1995:
Revenues increased by 35% or $184,390, from $527,833 in 1995 to $712,223 in
1996. The increase is due to the opening of the West Edmonton Mall Facility in
August 1995 which contributed approximately $60,500 in revenues during the
quarter. In addition, the Company raised the price of a single ticket to six
dollars from four dollars. However, the average ticket price remained under
four dollars due to discounts offered through multiple purchases of tickets. The
Company has been successful in marketing the sale of multiple features tickets
which had a positive contribution to revenues.
10
<PAGE>
Selling, general and administrative expenses decreased by approximately 3% or
$17,424, from $660,967 in 1995 to $643,543 in 1996. This decrease is due to a
decrease in expenses at the Las Vegas Facility of approximately $64,000 (from
approximately $381,000 in 1995 to approximately $317,000 in 1996) relating
primarily to decreases in wages, advertising, and administrative expenses, which
was partially offset by an increase in overall expenses of approximately $47,000
due to the opening of the West Edmonton Mall Facility in August 1995.
Depreciation and amortization increased by 74% or $61,320, from $83,366 in 1995
to $144,686 in 1996 due to the opening of the West Edmonton Mall Facility in
August 1995 which contributed to an increase of approximately $16,600, and due
to the Company change of the useful life of certain projection equipment from
ten to two years which contributed an additional $44,700 in depreciation during
the quarter.
Interest expense increased by $14,676 mostly due to the Company's financing of
its leased equipment, and due to interest on loans.
Interest income decreased by 88% or $24,673, from $28,091 in 1995 to $3,418 in
1996 mainly due to utilization of cash previously available to the Company from
the proceeds of the Company's public offering.
SIX MONTHS ENDED JUNE 30, 1996 VS. SIX MONTHS ENDED JUNE 30 1995:
Revenues increased by 36% or $349,112, from $972,856 in 1995 to $1,321,968 in
1996. The increase is due to the opening of the West Edmonton Mall Facility in
August 1995 which contributed approximately $116,800 in revenues during the
period. In addition, the Company raised the price of a single ticket to six
dollars from four dollars. However, the average ticket price remained under
four dollars due to discounts offered through multiple purchases of tickets. The
Company has been successful in marketing the sale of multiple features tickets
which had a positive contribution to revenues.
Selling, general and administrative expenses decreased by approximately 5% or
$70,472, from $1,391,230 in 1995 to $1,320,758 in 1996. This decrease is due to
a decrease in expenses at the Las Vegas Facility of approximately $180,000 (from
approximately $787,000 in 1995 to approximately $607,000 in 1996) relating
primarily to decreases in wages, advertising, and administrative expenses, which
was partially offset by an increase in overall expenses of approximately
$110,000 due to the opening of the West Edmonton Mall Facility in August 1995.
Depreciation and amortization increased by 134% or $221,767, from $165,022 in
1995 to $386,789 in 1996 due to the opening of the West Edmonton Mall Facility
in August 1995 which contributed to an increase of approximately $57,600 and due
to the Company non recurring change of the useful life of certain projection
equipment from ten to two years which contributed an additional $164,200 in
depreciation during the quarter.
Interest expense increased by $21,537 mostly due to the Company's financing of
its leased equipment and due to interest on loans.
Interest income decreased by 90% or $51,570, from $57,576 in 1995 to $6,006 in
1996 mainly due to utilization of cash previously available to the Company from
the proceeds of the Company's public offering.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash provided in operating activities was $356,139 during the six months
ended June 30, 1996, as compared to the cash used in operating activities of
$721,115 for the same period during the prior year. The increase of $1,077,254
was primarily due to an increase in depreciation and amortization of $221,767,
an increase in accounts payable and accrued expenses of $203,908, an increase in
deferred rent of $147,066, and an increase in prepaid expenses of $97,646.
Net cash used in investing activities decreased by $1,026,124 from
$1,372,230 in 1995 to $346,106 in
11
<PAGE>
1996. The decrease is primarily due to payments made by the Company to complete
the construction of its capsules during the prior year.
Net cash provided by financing activities increased by $631,208 due to the
Company's obtaining a loan from a Canadian bank during the quarter ended March
31, 1996, and due to the Company's obtaining $600,000 in short term borrowing as
described more fully in Note 1 to the unaudited consolidated financial
statements.
The Company has relied on the proceeds of sales of Common Stock and
Redeemable Warrants to provide it with the cash necessary to develop its
facilities and ride films and to operate its business.
On March 6, 1996, Cinema Ride Edmonton, Inc. obtained a $40,328 loan
($55,000 Canadian dollars) from a Canadian bank at prime plus two percent. The
loan has a term of four years requiring monthly payments of approximately $1,027
($1,400 Canadian dollars) and is guaranteed by the Company. The lender has
first security interest in the equipment and improvements located at the West
Edmonton Facility. The loan also restricts transfer of funds to the Company
other than amounts in excess of cash flow. The loan may be prepaid at any time
without any penalties.
As discussed in Note 1 to the unaudited consolidated financial statements,
on June 17, 1996, the Company obtained a loan for $600,000 from an unaffiliated
party. The loan is due in sixty days bearing interest at 2% per month
compounded monthly. In connection with obtaining the loan, the Company agreed
to pay the lender a 2 point fee ($12,000), and issue 50,000 warrants to purchase
the Company's common stock at the than fair market value. The funds from this
loan were deposited in an escrow account and are restricted to use by the
lender. Any remaining funds can be withdrawn by the lender at any time. As of
this date, none of the funds in the escrow account have been used by the
Company. The Company is currently attempting to obtain an extension to this
loan.
As discussed in Note 2 to the unaudited consolidated financial statements,
during July 1996, the Company obtained loans aggregating $250,000 bearing
interest at 15% paid monthly with the principal balance due at the earlier of
one year or at the time the Company successfully obtains permanent financing.
These loans are secured by certain equipment owned by the Company and by the net
cash flow of the Las Vegas Facility. In connection with obtaining these loans,
the Company issued 250,000 shares of the Company's common stock to the lenders.
The Company is currently attempting to obtain the necessary funds to
complete the Times Square Facility through debt or equipment financing. During
April 1996, the Company was granted the necessary permits to commence
construction of the Times Square Facility. As of June 30, 1996, the Company
had incurred costs of approximately $1,700,000 relating to the Times Square
Facility. These costs include the construction of the motion simulators, costs
of securing the lease, and costs relating to getting the facility ready to
commence construction. Subsequent to the end of the quarter, the Company
incurred additional costs relating to this facility totaling approximately
$550,000 increasing the Company's expenditures for the Times Square Facility to
approximately $2,250,000 (of which approximately $405,000 remains unpaid at this
date). The Company expects to incur approximately $500,000 in additional costs
to complete the facility. To date the Company has not secured the financing
required to fund the projected additional costs of approximately $500,000 and to
pay costs already incurred related to this facility. The original lease
required that the Company open its operations by June 1, 1996. During the
quarter ended June 30, 1996, the Company entered into a stipulation and consent
judgement whereby the landlord at the Times Square Facility amended the lease to
extend the opening date to August 15, 1996 subject to extension only for Force
Majeure as provided in the stipulation. The Company does not expect to be in
full operation by the August 15 date due to unforseen delays during the
construction of the facility. As of this date, the Company has not obtained
landlord approval to extend the due date based on the unforseen construction
delays. There also can be no assurance that the Company will be successful in
obtaining the required financing to complete the construction, improvements, and
commence operations.
12
<PAGE>
As of June 30, 1996, the Company had commitments to purchase five capsules,
three of which are designated for the Times Square Facility, and the remaining
two capsules designated for the Company's own use to operate or for sales to
third party. As of June 30, 1996, approximately $110,000 remains unpaid
relating to the construction of the remaining five capsules, which will become
due upon installation and acceptance. As of June 30, 1996, the Company has
accrued $66,000 of this commitment relating to the completion of the Times
Square Facility.
The Company is currently in production of a ski and snowboard film which is
being produced by Warren Miller Entertainment. As of June 30, 1996, the Company
anticipates an additional $70,000 in expenses relating to the production of this
film, of which $60,000 has been accrued by the Company. The film is scheduled
to be released in the Summer of 1996. The Company is currently performing
additional work on its previously released films adding more special effects and
reworking some scenes. As of June 30, 1996, the Company anticipates additional
expenditures of approximately $70,000 relating to the completion of this rework,
of which the Company has accrued approximately $25,000.
At June 30, 1996, the Company had a negative working capital of $351,351.
The Company has and is continuing to take steps to reduce its expenses without
impacting its operations. Management believes that the existing funds, combined
with the Company's ability to generate cash from its operations and through
lease financing of the Company's existing equipment, will be adequate to finance
current levels of activity. However, the Company has not been able to secure
any financing as of this date, which is necessary to complete the Times Square
Facility and pay expenses already incurred relating to this facility.
Additional funds will be required to finance the opening of additional
locations. There can be no assurance that the Company will be successful in
obtaining the necessary funds to finance the opening of any additional
locations.
COMPANY OUTLOOK:
IDENTIFY AND DEVELOP NEW SITES FOR ATTRACTIONS
The Company is currently seeking additional locations for attractions. The
Company's goal is to open approximately three more facilities over the next two
years. In general, the Company will attempt to locate sites for its attractions
(i) which are in large metropolitan areas or which are at tourist destinations
which attract more than three million persons per year, (ii) at which the
Company can lease high-profile, high-traffic space at a reasonable cost, (iii)
which are in areas with a large number of permanent residents and which do not
have extreme seasonal attendance patterns, and (iv) which are at or near other
complementary tourist attractions.
The Company believes that each new attraction will take approximately four
to six months from lease execution to commencement of operations. Total cost of
developing new attractions, including construction, fixtures, equipment and
start-up costs after completion are estimated to be approximately $1,250,000 per
two-capsule site. These costs will vary depending on the leased space, the
scope of any tenant improvements required to be performed by the Company in
connection with leasing a given location and the number of capsules installed,
as well as the size and location of the planned attraction.
The Company anticipates that three more locations will be added in the next
two years, with each location consisting of at least two capsules, at a cost of
at least $1,250,000 per location. Accordingly, the Company expects to spend
approximately an additional $3,750,000 on the acquisition and installation of
three more locations in the next two years. In addition to the costs of the
equipment necessary to establish a new attraction location, the Company expects
to add approximately thirty employees per each additional two-capsule location
that it owns and operates.
In order to reduce the out-of-pocket costs in the development of
attractions, the Company may also explore joint venture arrangements with third
parties. The Company and its co-venturer would then split the profits, if any,
from the attraction based on their respective contributions to the venture.
13
<PAGE>
SIMULATOR SALES / JOINT VENTURES, AND RIDE FILM LEASING
The Company intends to actively pursue the sale or joint venturing of
simulator equipment to property owners and businesses that wish to operate
attractions of their own. The sale of simulators to third parties would provide
the Company with an additional source of revenues and profits with a lower
degree of risk than is associated with owning and operating systems. Additional
revenues would be generated from the leasing of the Company's library of ride
films to purchasers of the Company's simulators or to operators of already
existing simulators. The Company does not intend to sell simulators or ride
films into markets in which it expects to operate its own attractions.
It is expected that the Company's management will continue to be responsible
for the marketing of the Company's simulators and ride films for sale and/or
leasing. However, the Company has retained the services of a sales
representative to locate potential purchasers of simulators and licensees of
ride films.
The Company is currently considering opening and operating entertainment
centers in several shopping malls and other locations across the country. The
entertainment centers will consist of, in addition to the Company's own
simulator equipment, other entertainment attractions and games, as well as
offering a food and beverage area. The Company may decide to sublease part of
these entertainment centers to third parties to operate. The concept of opening
and operating entertainment centers by the Company is in its preliminary
planning stage.
SEASONALITY OF BUSINESS
Because of the seasonal nature of tourist traffic, attendance patterns at
attractions may vary. The nature and degree of this seasonality will vary among
attractions depending on the nature of tourist and local traffic patterns at a
given location as well as the nature of entertainment alternatives available to
audiences. The Company expects that attendance at its facilities will be the
highest in June through September (the height of the tourist season) and lowest
during January and February. The West Edmonton Mall Facility is more effected by
seasonality as compared to the Las Vegas Facility due to the extreme weather
conditions during the Winter months in Alberta, Canada. As a result, the
Company's results of operations at its facilities will depend upon sales
generated from the peak tourist periods and any significant decrease in sales
for such periods could have a material adverse effect upon the Company's
operations.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
The Company is not currently involved in any legal proceedings that it
believes could have, either individually or in the aggregate, a material adverse
effect on its business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
The annual meeting of stockholders of the Company was held on June 14, 1996
in Studio City, California, for the purpose of electing a board of directors,
approving the appointment of auditors, adoption of the 1995 directors stock
option plan, and amendment to the Company's certificate of Incorporation.
Proxies for the meeting were solicited pursuant to section 14(a) of the
Securities Exchange Act of 1934 and there was no solicitation in opposition to
management's solicitation.
14
<PAGE>
1. All of management's nominees for directors as listed in the proxy statement
were elected with the following vote:
Name Votes For Withheld
---- --------- --------
Mitch Francis 3,205,055 39,033
Gary Packman 3,205,055 39,033
Benjamin Frankel 3,205,055 39,033
Norman Feirstein 3,204,755 39,333
2. The appointment of BDO Seidman, LLP as independent auditors was approved by
the following vote:
<TABLE>
<CAPTION>
<S> <C>
Votes For: 3,217,155
---------------
Votes Against: 1,400
---------------
Abstentions: 25,533
---------------
Shares Not Voted: 1,325,912
------------
3. Adoption of the 1995 Directors Stock Option Plan:
Votes For: 3,148,802
---------------
Votes Against: 65,638
---------------
Abstentions: 29,648
---------------
Shares Not Voted: 1,325,912
------------
4. Amendment to the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 10,000,000 to 20,000,000:
Votes For: 3,179,660
---------------
Votes Against: 32,780
---------------
Abstentions: 31,648
---------------
Shares Not Voted: 1,325,912
------------
</TABLE>
ITEM 6. EXHIBITS AND REPORTS IN FORM-8-K
(A) EXHIBITS
The following exhibits are submitted herewith:
NUMBER DESCRIPTION
- ------ -----------
10.33 Form of Promissory Note dated June 17, 1996.
10.34 Form of Promissory Note and Security Agreement dated July 27, 1996.
27 Financial Data Schedule.
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter ended June 30, 1996.
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CINEMA RIDE, INC.
BY: /s/ MITCH FRANCIS
------------------------------
MITCH FRANCIS, PRESIDENT
SIGNATURE DATE
--------- ----
/s/ MITCH FRANCIS AUGUST 14, 1996
- ------------------------------ ---------------
Mitch Francis
Chairman of the Board, President, Chief
Executive Officer and Director(principal
executive officer)
/s/ GARY H. PACKMAN AUGUST 14, 1996
- ---------------------------- ---------------
Gary H. Packman
Chief Operating Officer, Executive Vice
President, Secretary, Treasurer and Director
/s/ TOUFIC R. BASSIL AUGUST 14, 1996
- --------------------------------- ---------------
Toufic R. Bassil
Chief Financial Officer
(principal financial officer,
principal accounting officer)
16
<PAGE>
EXHIBITS INDEX
NUMBER DESCRIPTION
- ------ -----------
10.33 Form of Promissory Note dated June 17, 1996.
10.34 Form of Promissory Note and Security Agreement dated July 27, 1996.
27 Financial Data Schedule.
17
<PAGE>
PROMISSORY NOTE
June 17, 1996 $636,000.00
SIXTY DAYS AFTER DATE, for value received CINEMA RIDE, INC., a Delaware
corporation, (Maker) promises to pay to the order of Jaime Sohacheski,
("Holder") the sum of Six Hundred Thrity-Six Thousand ($636,000.00).
Both principal and interest shall be payable at such place as may be designated
by the holder thereof.
Upon default in the payment of principal or interest or any part thereof when
due, then the unpaid principal sum and accrued interest shall become immediately
due and payable at the option of the holder hereof, and the Note shall
thereafter bear interest at the rate of 2% per month until fully paid. The
failure of the Holder of this Note to exercise such option shall not be taken or
constructed to be a waiver of the right to exercise such option.
The Maker agrees to pay all costs and expenses if collection, including
attorney's fees, in the event this Note is not paid when due and wether or not
suit is filed.
The Holder's failure, at any time or times hereafter, to require strict
performance by the Maker of any provision or term of this Note shall not waive,
affect or diminish any right of the Holder thereafter to demand strict
compliance and performance herewith. None of the undertakings of the Maker
under this Note shall be deemed to be suspended or waived by the Holder unless
such suspension or waiver is in writing, signed by the Holder and delivered to
the "Maker".
This note shall be governed by the laws of the State of California. If any
provisions of this Note shall be prohibited by or invalid under applicable law,
such provisions shall be ineffective only to the extent of such prohibition or
invalidity and shall not invalidate the remainder of such provision or the
remaining provisions of the Note.
CINEMA RIDE, INC., (Maker)
--------------------------
By Mitch Francis 12001 Ventura Place
Its President Suite 340
Studio City, CA 91604
818/ 761-1002
EXHIBIT 10.33
<PAGE>
PROMISSORY NOTE SECURED
BY SECURITY AGREEMENT
$ Los Angeles, California
- ------------ --------------------
FOR VALUE RECEIVED, the undersigned, CINEMA RIDE, INC. a Delaware corporation
("Maker"), promises to pay to _____________________________________________
________________ ("Secured Party" or "Creditor") or order, the sum of $_______
together with interest on unpaid principal from , at the rate of
---------------
fifteen Percent (15%) per annum until maturity, in accordance with the terms and
provisions hereinafter set forth. As a further and additional inducement to
enter into this agreement maker agrees to issue _________ shares of Cinema Ride,
Inc. common stock to secured party upon the day of funding of this Note.
1. Payment. Payment of said principal and interest shall be made in one
-------
payment as follows: The entire principal amount shall be paid in one
installment one year from the date hereof. There shall be monthly interest
payments at Fifteen Percent (15%) per annum on the principal amount hereof. All
payments shall be made in lawful money of the United States at the office of the
holder of this Note at the address specified in Paragraph 10 hereof or such
other place as the holder of this Note may from time to time designate in
writing.
2. Acceleration. Should default be made in the payment of any installment
------------
when due hereunder or in the performance of or observance of any of the
covenants or agreements of this Note or any instrument now or hereafter
evidencing or securing the indebtedness evidenced hereby, and the same not be
cured within 10 days after the holder of this Note gives written notice of such
default to the Maker, the whole sum of principal remaining unpaid shall become
immediately due and payable. This Promissory Note shall be due upon refinancing
or placement of permanent financing secured by those assets described in the
Security Agreement.
3. Security Agreement. This Note is secured by a security interest in the
------------------
Personal Property described in Exhibit A and is further subject to and governed
by the provisions contained in that certain agreement captioned and herein
called Security Agreement dated as of the date hereof between Maker, as debtor,
and those parties indicated as Secured parties in the Addendum to the Security
Agreement. By entering into this Secured Promissory Note Agreement Creditor
agrees to participate, with other Creditors who will cumulatively loan up to
$1,000,000.00 to Debtor, in the Security Agreement on a pro rata basis
proportionate with those parties listed in the Addendum to the Security
Agreement based upon percentages of interest indicated therein. All of the
terms and provisions of the Security Agreement are incorporated herein by this
reference and any default thereunder shall also constitute a default under this
Note if not cured or corrected within the time specified therein.
As and for additional security for this Promissory Note, debtor agrees to grant
the secured party a priority interest in cash available for distribution from
debtor's business located at the "Forum Shops" at Caesar's Palace, Las Vegas,
and the Cinema Ride Time Square, Inc. facility in New York, New York, to secure
payment of this Note. This priority interest provides that this Note be paid
from operating income at the "Forum Shops" in each month that an installment is
due hereunder prior to the application of any such operating income toward the
payment of any non-"Forum Shops" expense including Cinema Ride, Inc. general or
administrative expenses at the principal corporate office. Upon request from
Creditor, Maker agrees to provide monthly operating statements of the "Forum
Shops" location to be kept confidential by secured party.
4. Prepayment. The undersigned may prepay the unpaid balance of principal
----------
under this Note in whole or in part at any time or times, without a prepayment
penalty calculated on the then outstanding balance of principal.
5. Interest on Delinquent Payments. Any amounts not paid when due hereunder
-------------------------------
shall
EXHIBIT 10.34
<PAGE>
bear interest at the rate of fifteen percent (15%) per annum or the maximum rate
allowed by law, whichever is less.
6. Collection Costs. In the event it shall become necessary to employ
----------------
counsel to collect this obligation, the undersigned agrees to pay to the holder
of this Note reasonable attorneys' fees for the legal services involved.
7. Waiver. The undersigned waives presentment, protest and demand, notice
------
of protest, demand and dishonor and nonpayment of this Note and consents that
the holder of this Note may extend the time of payment or otherwise modify the
terms of payment of any part or the whole of the debt extended by this Note, at
the request of the undersigned, and such consent shall not alter or diminish the
liability of any person, including any guarantor hereof.
8. Severability. The unenforceability or invalidity of any provision or
------------
provisions of this Note as to any persons or circumstances shall not render that
provision or those provisions unenforceable or invalid as to any other persons
or circumstances, and all provisions hereof, in all other respects, shall remain
valid and enforceable.
9. Notice. Any notice, demand or document given or delivered hereunder
------
shall, in the case of a notice, be in writing and may be personally delivered or
given or made by United States registered or certified mail, return receipt
requested, addressed as follows: to
----------------------------------------
- ----------; to Cinema Ride, 12001 Ventura Place, Suite 340, Studio City, CA
91604. Any notice, demand or document so given, delivered or made by United
States mail shall be deemed to have been given or delivered or made on the
second business day after the same is deposited in the United States mail as
registered or certified matter, addressed as above provided with postage thereon
fully prepaid. Any notice, demand or document not given, delivered or made by
registered or certified mail as aforesaid shall be deemed to be given, delivered
or made only upon receipt of the same by the one to whom the same is to be
given, delivered or made.
Exhibit 10.34
<PAGE>
10. Successors and Assigns. The term "undersigned", as used herein, means
----------------------
Maker and its successors and assigns as obligor under this Note, and the term
"holder of this Note" as used herein, means ____________________ and its
---
successors and assigns as holder of this Note.
CINEMA RIDE, INC.
A Delaware Corporation
By _________________________________________
Mitch Francis, its President
CINEMA RIDE TIMES SQUARE, INC.
By ______________________________________
Mitch Francis, its President
Exhibit 10.34
<PAGE>
SECURITY AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of , 1996, by
-------
and between those parties listed in the addendum hereto ("Creditor") and CINEMA
RIDE, INC. ("Debtor").
RECITALS
--------
A. Creditor and Debtor have entered into those certain promissory note
agreements captioned "Promissory Note Secured by Security Agreement" and dated
the 10th day of August, 1996, ("the Promissory Note") which provides, among
---- -------
other things, for the cumulative loan, by those parties listed in Addendum A
hereto of up to $1,000,000.00 by Creditor to Debtor.
-------------
B. The parties listed in Addendum A have each separately agreed to loan a
portion of the secured sum to Debtor and by execution hereof further agree that
each of their interests in the Security shall be proportionate to the total
secured sum indicated on Addendum A and reflected by the percentage allocated to
each party.
C. Creditor desires to acquire a security interest in the personal
property listed on Exhibit A to secure Debtor's payment obligations under the
Promissory Note.
D. A list of the personal property being transferred to Creditor is set
forth in attached Exhibit A.
E. The parties listed in the Addendum agree that the rights created
hereunder shall be exercisable jointly, not individually, and toward this
purpose agree to be bound by the acts of a creditor committee.
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the parties hereto, it is hereby agreed as follows:
1. Grant of Security Interest: Collateral; Obligations Secured. In
-----------------------------------------------------------
consideration of financial accommodations given, to be given or continued,
Debtor hereby grants to Creditor a security interest in the following personal
property (the "Collateral"): all of Debtor's right, title and interest, claims
and demands, in and to the property listed in said Exhibit A. Creditor's
security interest hereunder shall attach upon execution hereof and shall extend,
without limitation, to the proceeds of any of the above-described property,
provided, however, that this grant of a security interest in proceeds shall in
no event be construed to imply a right of Debtor to sell or dispose of any of
the Collateral without the express written consent of Creditor. This Security
Agreement is given as collateral security for payment in full of all sums owing
under the Promissory Note and as security for all expenses and charges, legal or
otherwise, including attorneys' fees paid or incurred by Creditor, and expenses
and charges incurred in realizing upon or protecting this Security Agreement or
the indebtedness secured hereby.
2. Debtor's Covenants. Debtor shall: (a) execute such financing statements
------------------
and other documents and do such other acts and things, all as Creditor may from
time to time require, to establish and maintain a valid security interest in the
Collateral, including payment of all costs and fees in connection with any of
the foregoing when deemed necessary by Creditor; (b) pay promptly when due all
indebtedness to Creditor; (c) not sell, assign or create or permit to exist any
lien on or security interest in the Collateral in favor of anyone other than
Creditor unless Creditor consents thereto in writing; (d) pay all charges
against the Collateral prior to delinquency including but not limited to taxes,
assessments, encumbrances, insurance and diverse claims, and upon Debtor's
failure to do so, Creditor may pay any such charge as it deems necessary and add
the amount paid to the indebtedness of Debtor hereunder; (e) reimburse Creditor
for any expenses, including without limitation, reasonable attorneys' fees and
legal expenses, incurred by Creditor in seeking to protect, collect or enforce
any rights in the Collateral; (f) when required, provide insurance in form and
amounts and with companies
Exhibit 10.34
<PAGE>
acceptable to Creditor and when required assign the policies or the rights
thereunder to Creditor; (g) maintain the Collateral in good condition and not
use the Collateral for any unlawful purpose; (h) at its own expense, upon
request of Creditor, notify any parties obligated to Debtor on any of the
Collateral to make payment to Creditor; and (I) Debtor does hereby authorize
Creditor to perform any and all acts which Creditor in good faith deems
necessary for the protection and preservation of the Collateral or its value or
Creditor's security interest therein, including transferring any of the
Collateral into its own name and receiving the income thereon as additional
security hereunder.
3. Default. As used herein, the term "default" shall mean the occurrence of
-------
any of the following events: (a) non-payment of any indebtedness to Creditor
when due or non-performance of any obligation when due, whether required
hereunder or otherwise; (b) deterioration or impairment of the value of the
Collateral; ( c) breach of any warranty to or agreement with Creditor whether or
not contained herein; (d) belief by Creditor in good faith that there exists, or
the actual existence of, any deterioration or impairment in the ability of
Debtor to meet its obligations to Creditor.
4. Creditor Committee. In the event of any dispute, including default,
------------------
between Debtor and Creditor, the parties listed in Addendum A shall form a
Creditor's Committee consisting of all of those parties listed. Each party of
the Creditor's Committee shall have the right to vote on all matters
commensurate with his proportionate interest in the secured sum. For example
each one thousand ($ 1,000.00) dollars of secured interest shall have one vote,
each ten thousand ($ 10,000.00) dollars of secured interest shall have ten
votes, and so forth. The Creditor's Committee shall act in common by majority
vote on all matters.
5. Remedies. Whenever Debtor is given written notice of a default (whether
--------
such notice is given under the Promissory Note or hereunder), and said default
remains uncured for 30 days thereafter, Creditor, at its option may: (a) without
notice accelerate the maturity of any part or all of the secured obligations;
(b) sell, lease or otherwise dispose of any of the Collateral at public or
private sales; Creditor will give Debtor at least five (5) days' prior written
notice of the time and place of any public sale or of the time after which any
private sale or any other intended disposition may be made; [c] transfer any of
the Collateral into its own name or that of its nominee; (d) retain any of the
Collateral in satisfaction of obligations secured hereby, with notice of such
retention sent to Debtor as required by law; (e) require Debtor to deliver any
of the Collateral to Creditor at a reasonably convenient place designated by
Creditor; (f) apply all sums received or collected from or on account of any of
the collateral, including the proceeds of any sales thereof, to the payment of
the costs and expenses incurred in preserving and enforcing the rights of
Creditor, including, without limitation, reasonable attorneys' fees, and
indebtedness secured hereby in such order and manner as Creditor in its sole
discretion determines; Creditor shall account to Debtor for any surplus
remaining thereafter, and shall pay such surplus to the party entitled thereto,
including any second secured party who has made a proper demand upon Creditor
and has furnished proof to Creditor as required in the manner provided by law;
in like manner, Debtor shall pay to Creditor without demand any deficiency after
all of the Collateral has been disposed of and proceeds applied as aforesaid.
Creditor shall have all the rights and remedies of a secured party under the
Commercial Code of Nevada in any jurisdiction where enforcement is sought,
whether in Nevada or elsewhere. All rights, powers and remedies of Creditor
hereunder shall be cumulative and not alternative. No delay on the part of
Creditor in the exercise of any right or remedy shall constitute a waiver
thereof and no exercise by Creditor of any right or remedy shall preclude the
exercise of any other right or remedy or further exercise of the same remedy.
6. Waiver. Debtor hereby waives: (a) all right to require Creditor to
------
proceed against any other person or to apply any Collateral Creditor may hold at
any time or to pursue any other remedy (and, in this connection, Collateral,
endorsers or guarantors may be released,
Exhibit 10.34
<PAGE>
substituted or added without affecting the liability of Debtor hereunder); (b)
the defense of the Statute of Limitations in any action upon any obligation of
Debtor secured hereby; and [c] any right of subrogation and any right to
participate in the Collateral until all obligations hereby secured have been
paid in full.
7. Representations and Warranties. Debtor hereby represents and warrants
------------------------------
that it is or will be the lawful owner of all Collateral free of all claims,
liens or encumbrances whatsoever, other than the security interest granted
pursuant hereto.
8. Successors and Assigns. This Agreement shall be binding on and shall
----------------------
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the parties hereto. Upon transfer by Creditor of any part of the
obligation secured hereby, Creditor shall be fully discharged from all liability
with respect to the Collateral transferred therewith.
9. Severability. Whenever possible, each provision of this Agreement shall
------------
be interpreted in such manner to be effective and valid under applicable law,
but, if any provisions of this Agreement shall be prohibited or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Exhibit 10.34
<PAGE>
10. Notice. Any notice, demand or document given or delivered hereunder
------
shall, in the case of a notice, be in writing and may be personally delivered or
given or made by United States registered or certified mail, return receipt
requested, addressed as follows:
To Creditor: To each party as indicated
on Addendum A
To Debtor: Cinema Ride, Inc.
12001 Ventura Place
Suite 340
Studio, City, CA 91604
subject to the right of Creditor or Debtor to designate a different address for
itself by notice similarly given. Any notice, demand or document so given,
delivered or made by United States mail shall be deemed to have been given or
delivered or made on the second business day after the same is deposited in the
United States mail as registered or certified matter, addressed as above, with
postage thereon fully prepaid. Any notice, demand or document not given,
delivered or made by registered or certified mail as aforesaid shall be deemed
to be given, delivered or made only upon receipt of the same by the one to whom
the same is to be given, delivered or made.
11. Captions. The descriptive headings of the paragraphs of this Agreement
--------
are inserted for convenience only and do not constitute a part of this
Agreement.
12. Controlling Law. This Agreement shall be governed by the laws of the
---------------
State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
By __________________________________
Mitch Francis, President
Cinema Ride, Inc.
("Debtor")
By __________________________________
Mitch Francis, President
Cinema Ride Times Square, Inc.
("Debtor")
By __________________________________
("Creditor")
Exhibit 10.34
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 785,780
<SECURITIES> 0
<RECEIVABLES> 144,975
<ALLOWANCES> 0
<INVENTORY> 63,360
<CURRENT-ASSETS> 1,021,859
<PP&E> 4,701,940
<DEPRECIATION> 588,726
<TOTAL-ASSETS> 6,443,317
<CURRENT-LIABILITIES> 1,373,210
<BONDS> 0
0
0
<COMMON> 45,700
<OTHER-SE> 4,758,267
<TOTAL-LIABILITY-AND-EQUITY> 6,443,317
<SALES> 1,321,968
<TOTAL-REVENUES> 1,321,968
<CGS> 0
<TOTAL-COSTS> 1,707,547
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,537
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (401,110)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
