<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CINEMA RIDE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
CINEMA RIDE, INC.
12001 Ventura Place, Suite 340
Studio City, California 91604
(818) 761-1002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 18, 1997
To the Stockholders of Cinema Ride, Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders
of Cinema Ride, Inc., a Delaware corporation (the "Company"), which will be held
at the Sportsmen's Lodge, 12825 Ventura Boulevard, Studio City, California at
10:00 a.m., California time, on Wednesday, June 18, 1997, to consider and act
upon the following matters, all as more fully described in the accompanying
Proxy Statement which is incorporated herein by this reference:
1. To elect a board of three directors to serve until the
next annual meeting of the Company's stockholders and until their successors
have been elected and qualify;
2. To ratify the selection of BDO Seidman as the Company's
independent public accountants for fiscal year 1997;
3. To approve a one-for-ten reverse stock split; and
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record of the Company's common stock at the close of
business on April 19, 1997, the record date fixed by the Board of Directors, are
entitled to notice of, and to vote at, the Meeting.
THOSE WHO CANNOT ATTEND ARE URGED TO SIGN, DATE, AND OTHERWISE
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. ANY
STOCKHOLDER GIVING A PROXY HAS THE RIGHT TO REVOKE IT ANY TIME BEFORE IT IS
VOTED.
BY ORDER OF THE BOARD OF DIRECTORS
Mitch Francis
Chairman of the Board, President,
and Chief Executive Officer
Studio City, California
May 15, 1997
<PAGE>
CINEMA RIDE, INC.
12001 Ventura Place, Suite 340
Studio City, California 91604
(818) 761-1002
_________
PROXY STATEMENT
_________
Approximate date proxy material first sent
to stockholders: May 20, 1997
_________
The following information is in connection with the solicitation of proxies
for the Annual Meeting of Stockholders of Cinema Ride, Inc., a Delaware
corporation (the "Company"), to be held at the Sportsmen's Lodge, 12825 Ventura
Boulevard, Studio City, California at 10:00 a.m., California time, on Wednesday,
June 18, 1997, and adjournments thereof (the "Meeting"), for the purposes stated
in the Notice of Annual Meeting of Stockholders preceding this Proxy
Statement.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is being furnished herewith by the Company to each
stockholder, and, in each case, is solicited on behalf of the Board of Directors
of the Company for use at the Meeting. The entire cost of soliciting these
proxies will be borne by the Company. The Company may pay persons holding
shares in their names or the names of their nominees for the benefit of others,
such as brokerage firms, banks, depositories, and other fiduciaries, for costs
incurred in forwarding soliciting materials to their principals. Members of the
management of the Company may also solicit some stockholders in person, or by
telephone, telegraph or telecopy, following solicitation by this Proxy
Statement, but will not be separately compensated for such solicitation
services.
Proxies duly executed and returned by stockholders and received by the
Company before the Meeting will be voted FOR the election of all three of the
nominee-directors specified herein, FOR the one-for-ten reverse stock split, and
FOR the ratification of the selection of BDO Seidman as the Company's
independent public accountants for fiscal year 1997, unless a contrary choice is
specified in the proxy. Where a specification is indicated as provided in the
proxy, the shares represented by the proxy will be voted and cast in accordance
with the specification made. As to other matters, if any, to be voted upon, the
persons designated as proxies will take such actions as they, in their
discretion, may deem advisable. The persons named as proxies were selected by
the Board of Directors of the Company.
Under the Company's bylaws and Delaware law, shares represented by proxies
that reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the Meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Any shares not voted (whether by
abstention, broker non-vote or otherwise) will have no impact in the election of
directors, except to the extent that the failure to vote for an individual
results in another individual receiving a larger proportion of votes. Any
shares represented at the Meeting but not voted (whether by abstention, broker
non-vote or otherwise) with respect to the proposal to ratify the selection of
BDO Seidman or approval of the reverse stock split, will have no effect on the
vote for such proposal except to the extent the number of abstentions causes the
number of shares voted in favor of the proposals not to equal or exceed a
majority of the quorum required for the Meeting.
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Your execution of the enclosed proxy will not affect your right as a
stockholder to attend the Meeting and to vote in person. Any stockholder giving
a proxy has a right to revoke it at any time by either (a) a later-dated proxy,
(b) a written revocation sent to and received by the Secretary of the Company
prior to the Meeting, or (c) attendance at the Meeting and voting in person.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The Company has outstanding only Common Stock, of which 5,786,785 shares
were outstanding as of the close of business on April 19, 1997 (the "Record
Date"). Only stockholders of record on the books of the Company at the close of
business on the Record Date will be entitled to vote at the Meeting. Each share
of Common Stock is entitled to one vote. Representation at the Meeting by the
holders of a majority of the outstanding Common Stock of the Company, either by
personal attendance or by proxy, will constitute a quorum.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date as to (a) each
director, (b) each executive officer identified in the Summary Compensation
Table below, (c) all officers and directors of the Company as a group, and (d)
each person known to the Company to beneficially own five percent or more of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Name and Address of Beneficial of
Title of Class Beneficial Owner(1) Owner Class(2)
- -------------- ------------------- ----- --------
<S> <C> <C> <C>
DIRECTORS AND
EXECUTIVE OFFICERS:
Common Stock Mitch Francis 824,500(3) 13.59%
Common Stock Gary H. Packman 304,750(4) 5.17%
NON-EMPLOYEE
DIRECTORS:
Common Stock Benjamin Frankel 30,000(5,6) *
Common Stock Norman Feirstein 10,000(7) *
All directors and 1,250,916 20.18%
executive officers as
a group (5 persons)
</TABLE>
- -----------------
(1) The address of Messrs. Francis and Packman is c/o the Company, 12001
Ventura Place, Suite 340, Studio City, California 91604. The address of
Mr. Frankel is 16530 Ventura Boulevard, Suite 305, Encino, California 91436
and the address of Mr. Feirstein is 8311 Westminster Avenue, Suite 330,
Westminster, California 92683.
(2) Percent of class is based on the number of shares outstanding on the Record
Date plus, with respect to each named person, the number of shares of
common stock, if any, which the stockholder has the right to acquire within
60 days of such Date. Ownership of less than one percent is indicated by
an asterisk.
(3) Includes 280,500 shares of common stock issuable upon exercise of options
to acquire an aggregate of 541,500 shares granted to Mr. Francis which are
exercisable within 60 days of the Record Date.
(4) Includes 103,500 shares of common stock issuable upon exercise of options
to acquire an aggregate of 210,500 shares stock granted to Mr.
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Packman which are exercisable within 60 days of the Record Date. Mr.
Packman resigned as an officer and director of the Company effective
February 1, 1997.
(5) Includes 20,000 shares which have been issued to the accountancy firm of
Frankel, Lodgen, Lacher, Golditch & Sardi, of which Mr. Frankel is a
partner, in exchange for services rendered in 1994. Mr. Frankel disclaims
beneficial ownership of all such shares.
(6) Includes 10,000 shares of common stock issuable upon exercise of options to
acquire an aggregate of 30,000 shares stock granted to Mr. Frankel which
are exercisable within 60 days of the Record Date.
(7) Includes 10,000 shares of common stock issuable upon exercise of options to
acquire an aggregate of 30,000 shares stock granted to Mr. Feirstein which
are exercisable within 60 days of the Record Date.
NOMINATION AND ELECTION OF DIRECTORS
The Company's directors are to be elected at each Annual Meeting of
Stockholders. At this Meeting, three directors are to be elected to serve until
the next Annual Meeting of Stockholders and until their successors are elected
and qualify. The nominees for election as directors at this Meeting set forth
in the table below are all recommended by the Board of Directors of the Company.
In the event that any of the nominees for director should become unable to
serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominee(s) as may be
recommended by the Company's existing Board of Directors.
The three nominee-directors receiving the highest number of votes cast at
the Meeting will be elected as the Company's directors to serve until the next
Annual Meeting of Stockholders and until their successors are elected and
qualify.
There were two meetings of the Board of Directors of the Company during the
last fiscal year of the Company. Each of the directors of the Company attended
all of the total number of meetings of the Board of Directors held during the
period in which he was a director and the total number of meetings held by all
committees of the Board of Directors on which he served during such period.
The following table sets forth certain information concerning the nominees
for election as directors (all of such nominees being continuing members of the
Company's present Board of Directors):
<TABLE>
<CAPTION>
Other Positions Director
Nominee(1) With Company Age Since
- ---------- ------------ --- -----
<S> <C> <C> <C>
Mitch Francis(2) Chairman of the Board, 42 April, 1993
President, and Chief
Executive Officer
Benjamin Frankel(2) None 61 March, 1995
(3) (4)
Norman Feirstein(2) None 48 March, 1995
(3)(4)
</TABLE>
____________________
(1) The Company does not have a nominating committee of the Board of Directors.
The nominees for election as directors at the Meeting were selected by the
Board of Directors of the Company.
(2) Member of the compensation committee of the Board of Directors of the
Company, currently consisting of three directors, one of whom is an
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<PAGE>
employee of the Company. The compensation committee reviews the
performance of executive officers of the Company and reviews the
compensation programs for key employees, including salary and cash bonus
levels.
(3) Member of the audit committee of the Board of Directors of the Company,
currently consisting of two directors, none of whom is an employee of the
Company. The audit committee reviews, acts on, and reports to the Board of
Directors with respect to various auditing and accounting matters,
including the selection of the Company's independent public accountants,
the scope of the annual audits, the nature of non-audit services, and fees
to be paid to the independent public accountants, the performance of the
Company's independent public accountants, and the accounting practices of
the Company.
(4) Member of the Stock Option Committee of the Board of Directors of the
Company, currently consisting of two directors none of whom is an employee
of the Company. The Stock Option Committee is responsible for the
operation and administration of the Company's stock option plans, including
the grants thereunder.
COMPENSATION OF DIRECTORS
For service on the Board of Directors, directors who are not employees of
the Company receive $1,000 for each meeting of the Board of Directors, and
reimbursement for expenses which are related to attending board meetings.
Directors who are employees of the Company receive no additional compensation
for serving on the Board of Directors. The non-employee directors are eligible
to participate in the 1995 Directors Stock Option Plan. See "Executive
Compensation and Other Information-Stock Options."
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company as of April 15, 1997. Each executive officer serves at
the discretion of the Board of Directors, subject to the terms of any employment
contract:
<TABLE>
<CAPTION>
Executive
Officer
Name Office Age Since
- ---- ------ --- -----
<S> <C> <C> <C>
Mitch Francis Chairman of the Board, 42 April, 1993
President and Chief Executive
Officer
Toufic Roger Bassil Chief Financial Officer 32 December,
1995
</TABLE>
BUSINESS EXPERIENCE
The following section summarizes the present occupation and prior business
experience during the past five years for each director and executive officer of
the Company:
MITCH FRANCIS has been the Chairman of the Board of Directors of the
Company since June 1993 and has been its Chief Executive Officer, President and
a director since the Company's inception. Mr. Francis is also the President and
principal shareholder of Francis Development Inc., a real estate development
company which he founded in 1981. Mr. Francis has been involved in site
acquisition, analysis, architectural design,
4
<PAGE>
construction, management and marketing of numerous residential and commercial
projects and has been the general partner of several real estate limited
partnerships.
TOUFIC ROGER BASSIL has been the Chief Financial Officer of the Company
since December, 1995 and Controller from April 1995 to December 1995. From July
1994 to April 1995, Mr. Bassil was an independent consultant. From January 1994
to July 1994, Mr. Bassil was Controller of Vector Aeromotive Corporation. Prior
to that, Mr. Bassil was in public accounting with several large firms. Mr.
Bassil is a certified public accountant.
BENJAMIN FRANKEL has been a director of the Company since March 17, 1995.
Mr. Frankel is a certified public accountant and has been a partner in the
accountancy firm of Frankel, Lodgen, Lacher, Golditch & Sardi and its
predecessors since 1965.
NORMAN FEIRSTEIN has been a director of the Company since March 17, 1995.
Mr. Feirstein practiced law as a sole practitioner from 1978 until July, 1993.
Since such time, Mr. Feirstein has practiced law as the Law Offices of Norman
Feirstein, P.C. On August 16, 1993, Mr. Feirstein filed for personal bankruptcy
in the United States District Court for the Central District of California. The
bankruptcy was prompted by the failure of a real estate investment partnership
of which Mr. Feirstein was a general partner. The bankruptcy case was dismissed
on February 3, 1994.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1995, the Board of Directors of the Company approved the issuance
of 20,000 shares of the Company's Common Stock to the accounting firm of
Frankel, Lodgen, Lacher, Golditch & Sardi as compensation for services rendered
by such firm during the year ended December 31, 1994. On the date the Board
approved the issuance of such shares, the closing bid price for the Company's
common stock was $2.875 per share. It is anticipated that Benjamin Frankel will
acquire beneficial ownership of 1,800 of such shares. The Company also paid the
firm of Frankel, Lodgen, Lacher, Golditch & Sardi $ 11,333 for accounting
services during the year ended December 31, 1996.
During the year ended December 31, 1995, the Company made loans to each of
Mitch Francis and Gary Packman in the amount of $50,000. The loans bear
interest at a rate of 8% per year and are due on the earlier of June 30, 1998 or
six months after the officer ceases to be an employee of the Company. Principal
payments of $5,000 per loan are due on June 30, 1996 and June 30, 1997, with the
balance due on June 30, 1998. Each note is secured by the higher of 40,000
shares of Common Stock or the number of shares equivalent to the unpaid value of
the note. Effective upon Mr. Packman's resignation as an officer and director
of the Company (February 1, 1997), Mr. Packman agreed to be available to the
Company on a consulting basis for the period between February 1, 1997 through
September 30, 1997. Additionally, Mr. Packman agreed to be available to the
Company on a limited consulting basis for the five years following September 30,
1997 in consideration for the release from one fifth each year of Mr. Packman's
balance on his note to the Company and the waiver of accrued and future interest
on the unpaid balance.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation of the
chief executive officer and the other executive officer of the Company whose
salary and bonus exceeded an annual rate of $100,000 during the fiscal year
ended December 31, 1996:
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------
Securities
Name and Other Annual Underlying
Principal Position Year Salary Compensation Options/SARs
- ------------------ ---- ------ ------------ ------------
<S> <C> <C> <C> <C>
Mitch Francis 1996 $153,373 $18,240 (1) 241,500 (3)
Chairman of the 1995 $147,684 $ -- (2) 150,000 (3)
Board, President and 1994 $124,375 $ -- (2) 150,000 (3)
Chief Executive
Officer
Gary H. Packman 1996 $137,666 $20,157 (4) 80,500 (7)
Chief Operating 1995 $128,544 $15,590 (5) 80,000 (7)
Officer and 1994 $105,625 $14,964 (6) 50,000 (7)
Executive Vice
President (8)
</TABLE>
- -------------------
(1) Includes $3,747 in disability insurance premiums, $7,521 in automobile
expense and $6,972 in medical insurance premiums paid to or on behalf of
Mr. Francis. See "Employment Agreement" below.
(2) Perquisites and other personal benefits did not in the aggregate reach the
lesser of $50,000 or 10 percent of the total of annual salary and bonus
reported in this table for Mr. Francis.
(3) In June 1996, Mr. Francis received options to purchase 241,500 shares of
Common Stock. In August 1995, Mr. Francis received options to purchase
150,000 shares of Common Stock. In December 1995, Mr. Francis returned to
the Company options to purchase 300,000 shares of Common Stock out of
450,000 shares previously granted in 1994, and the remaining options to
purchase 150,000 shares were repriced at the then current market price plus
10%. On December 31, 1996, the Company's Board of Directors agreed to
reprice the exercise price of all options already issued under the Company
Stock Option Plan and the Directors' Option Plan to the then current market
value.
(4) Includes $7,853 in disability insurance premiums, $8,008 in automobile
expense and $4,296 in medical insurance premiums paid to or on behalf of
Mr. Packman.
(5) Includes $3,272 in disability insurance premiums, $7,128 in automobile
expense and $5,190 in medical insurance premiums paid to or on behalf of
Mr. Packman.
(6) Includes $7,853 in disability insurance premiums, $3,419 in automobile
lease expense and $3,692 in medical insurance premiums paid to or on behalf
of Mr. Packman.
(7) In June 1996, Mr. Packman received options to purchase 80,500 shares of
Common Stock. In August 1995, Mr. Packman received options to purchase
80,000 shares of Common Stock. In December 1995, Mr. Packman returned to
the Company options to purchase 100,000 shares out of 150,000 shares
previously granted in 1994, and the remaining option to purchase 50,000
shares was repriced at the then current market price. On December 31,
1996, the Company's Board of Directors agreed to reprice the exercise price
of all options already issued under the Company Stock Option Plan and the
Directors' Option Plan to the then current market value.
6
<PAGE>
(8) On February 1, 1997, Mr. Packman resigned as an executive officer and a
director of the Company.
EMPLOYMENT AGREEMENT
The Company has entered into a three-year employment agreement with Mr.
Francis which became effective December 1994, pursuant to which his salary is
$135,000 per year, subject to an annual salary increase of seven and one half
percent. Mr. Francis is also entitled to an annual bonus for each year of his
employment equal to four percent of the Company's net income (before payment of
income taxes or bonuses to executive officers), if any, over $2 million, to be
paid quarterly based on annualized results. In addition, if the Company has net
income (before payment of income taxes but after payment of other bonuses to
executive officers) in any year of over $7 million, there will be an additional
payment of $500,000 to Mr. Francis. Mr. Francis also receives an automobile
allowance of up to $500 per month as well as automobile, health and disability
insurance.
Pursuant to his employment agreement, Mr. Francis in September 1994
received options to acquire 450,000 shares of Common Stock at an exercise price
of $5.50 per share. The options granted to Mr. Francis were granted under the
Option Plan, and vest ratably over a three year period. In December 1995, Mr.
Francis returned to the Company options to purchase 300,000 shares and his
remaining options were repriced. See also "Option Grants During 1995."
During April 1997, the Company entered into a three year employment
agreement with Mr. Bassil to serve as the Company's chief financial officer.
The agreement provides for a base year salary of $120,000, annual increases of
8%, and issuance of 100,000 options exercisable at the then current market price
vesting equally over the next two years. In addition, during January 1997, the
Company issued Mr. Bassil 50,000 shares of the Company's common stock which was
recorded as additional compensation to Mr. Bassil.
OPTION GRANTS DURING 1996
The following table sets forth information on grants of stock options
pursuant to the Option Plan during the fiscal year ended December 31, 1996 to
the officers identified in the Summary Compensation Table:
OPTION GRANTS TABLE
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
% of Total
Options
Granted to Exercise
Options Employees Price Expiration
Name Granted(1) in 1995 ($/sh)(2) Date
---- ---------- ------- --------- ----
<S> <C> <C> <C> <C>
Mitch Francis 241,500 65% $1.034 6/14/04
Gary H. Packman 80,500 22% $ 0.94 6/14/04
</TABLE>
- -----------------
(1) Each option becomes exercisable on a cumulative basis as to one-third of
the option shares one year after the date of grant and as to an additional
one-third of the option shares each year thereafter.
(2) The exercise price of each option is the market price per share of the
common stock of the Company on the date of grant, plus, in the case of Mr.
Francis, 10%. At December 31, 1996, the Board of Directors of the Company
elected to reprice the exercise price of all options already granted to the
then current market value.
OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
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The following table sets forth information concerning stock options which
were exercised during, or held at the end of, fiscal 1996 by the officers named
in the Summary Compensation Table:
OPTION EXERCISES AND YEAR-END VALUE TABLE(1)
<TABLE>
<CAPTION>
Number of
Unexerciseable Options at Fiscal Value of Unexerciseable
--------- In-the Money Options
Shares Year End at Fiscal Year End(2)
Acquired on Value -------- ---------------------
Name Exercise Realized Exercisable Unexerciseable Exercisable Unexerciseable
---- -------- -------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Mitch Francis 0 $0 280,500 261,000 $0 $0
Gary H. 0 $0 103,500 107,000 $0 $0
Packman
</TABLE>
_________________
(1)There were no option exercises during fiscal 1995 & 1996
(2)Valued at $.375 per share.
STOCK OPTIONS; REPRICING OF OPTIONS
In June 1994, the Company adopted the Cinema Ride, Inc. Stock Option Plan
(the "Option Plan") under which a maximum of 900,000 shares of common stock of
the Company may be issued pursuant to incentive and non-qualified stock options
granted to officers or other key employees of the Company.
The Option Plan is administered by the Board of Directors or, in the
discretion of the Board of Directors, by a committee of not less than two
individuals with authority to determine employees to whom options will be
granted, the timing and manner of grants of options, the exercise price, the
number of shares covered by and all of the terms of options, and all other
determinations necessary or advisable for administration of the plan.
The purchase price for the shares subject to any incentive stock option
granted under the Option Plan shall not be less than 100% of the fair market
value of the shares of Common Stock of the Company on the date the option is
granted (110% for stockholders who own in excess of 10% of the outstanding
Common Stock). No option shall be exercisable after the earliest of the
following: the expiration of 10 years after the date the option is granted;
three months after the date the optionee's employment with the Company
terminates if termination is for any reason other than permanent disability or
death; or one year after the date the optionee's employment terminates if
termination is a result of death or permanent disability. Unless sooner
terminated by the Board of Directors, the Option Plan expires on December 31,
2003.
In December 1995, the Company adopted the 1995 Directors Stock Option Plan
(the "Directors Plan") pursuant to which on the fourth business day following
the day of each annual meeting of the stockholders, each director who is not an
employee of the Company automatically receives a non-statutory option to
purchase 10,000 shares at the fair market value of the shares on the date of the
grant. Upon the adoption of the Directors Plan by the Board of Directors, each
non-employee director (Messrs. Feirstein and Frankel) received an option to
purchase 10,000 shares and an additional option to purchase 10,000 shares in
view of the full year of service by each such director. The exercise price for
each stock option is the fair market value per share of the Common Stock on the
date of grant. The Company granted each of Messrs. Feirstein and Frankel
30,000 options under the Directors Plan during 1996.
At December 31, 1996, the Board of Directors of the Company elected to
reprice the exercise options of all options already granted to the then current
market value.
8
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO EFFECTUATE A ONE-FOR-TEN REVERSE STOCK SPLIT
INTRODUCTION
The Company's Board of Directors has adopted a resolution to
effectuate a one-for-ten reverse stock split (the "Reverse Split") of the
Company's Common Stock effective if, as and when determined by the Board of
Directors. The effect of the Reverse Split upon holders of Common Stock will be
that the total number of shares of the Company's Common Stock held by each
stockholder will be automatically converted into the number of whole shares of
Common Stock equal to the number of shares of Common Stock owned immediately
prior to the Reverse Split divided by 10, adjusted, as described below, for any
fractional shares.
Assuming the Reverse Split is approved by the Company's stockholders
at the Annual Meeting, each stockholder's percentage ownership interest in the
Company and proportional voting power will remain unchanged, except for minor
differences resulting from adjustments for fractional shares. The rights and
privileges of the holders of shares of Common Stock will be substantially
unaffected by the Reverse Split.
No certificates or scrip representing fractional shares of the
Company's Common Stock will be issued to stockholders because of the Reverse
Split. All fractional shares of one-half share or more will be increased to the
next higher whole number of shares, and all fractional shares of less than one-
half share will be decreased to the next lower whole number of shares,
respectively.
REASONS FOR THE REVERSE SPLIT
The Company's shares of Common Stock have been listed, and have
traded, on the National Association of Securities Dealers Automated Quotation
("NASDAQ") system since September 1994 when the Company completed its initial
public offering. Under both the current and proposed rules of NASDAQ, for
continued listing on the NASDAQ system, it is necessary that, among other
things, the minimum bid price of the Company's shares of Common stock exceed
$1.00 per share.
Over the recent past, the bid price of the Company's shares of Common
Stock has fluctuated widely. On numerous occasions, and for protracted periods,
the bid price of the Company's shares of Common Stock has fallen below $1.00.
As a result, the Company's shares of Common Stock are in danger of being
delisted from the NASDAQ system. Management believes that if the Reverse Split
is approved by the stockholders at the Annual Meeting, and the Reverse Split is
effectuated, then the Company's shares of Common Stock will have a minimum bid
price in excess of $1.00 per share and, therefore, subject to meeting the other
NASDAQ maintenance requirements, continue to be listed and traded on the NASDAQ
system.
If the Reverse Split is not approved by the stockholders at the Annual
Meeting, then it is highly likely that the Company's shares of Common Stock will
cease to be listed and traded on the NASDAQ system. In such event, the shares
of Common Stock will likely be quoted in the "pink sheets" maintained by the
National Quotation Bureau, Inc. or the NASD Electronic Bulletin Board, the
spread between the bid and ask price of the shares of Common Stock is likely to
be greater than at present and stockholders may experience a greater degree of
difficulty in engaging in trades of shares of Common Stock.
IMPLEMENTATION OF THE REVERSE SPLIT
The Reverse Split will be formally implemented by amending the present
Article 4 of the Company's Certificate of Incorporation as amended, to add at
the end thereof:
"__. Effective as of 5:00 p.m., Eastern time, on ___________, all
outstanding shares of Common Stock held by each holder of record on such
date shall be automatically combined at the rate of one-for-ten without any
further action on the part of the holders thereof or this Corporation. No
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fractional shares shall be issued. All fractional shares for one-half
share or more shall be increased to the next higher whole number of shares
and all fractional shares of less than one-half share shall be decreased to
the next lower whole number of shares, respectively."
Assuming the Reverse Split is approved by the stockholders at the
Annual Meeting, an appropriate amendment to the Company's Certificate of
Incorporation, as amended, will be filed with the Secretary of State of the
State of Delaware if, as and when the directors determine to effect the Reverse
Split.
PRINCIPAL EFFECTS ON THE REVERSE SPLIT
Stockholders have no right under Delaware law or under the Company's
Certificate of Incorporation or Bylaws to dissent from the Reverse Split or to
dissent from the rounding to the nearest whole share of any fractional share
resulting from the Reverse Split in lieu of issuing fractional shares.
The Company has authorized capital of 500,000 shares of Preferred
Stock, par value $.01 per share, and 20,000,000 shares of Common Stock, par
value $.01 per share. The authorized capital stock of the Company will not be
reduced or otherwise affected by the Reverse Split. The number of issued and
outstanding shares of Common Stock of the Company as of April 15, 1997 was
5,786,785. If the Reverse Split is implemented, based upon the Company's best
estimate, the aggregate number of shares of Common Stock that will be issued and
outstanding (assuming for this purpose that no additional shares are issued)
after giving effect to the Reverse Split is 578,678.
The Reverse Split may result in some stockholders owning "odd-lots" of
less than 100 shares of Common Stock. Brokerage commissions and other costs of
transactions in odd-lots are generally somewhat higher than the costs of
transactions in "round-lots" of even multiples of 100 shares.
DILUTION
The Company has suffered recurring losses from operations. The
Company intends to issue additional shares of its Common Stock on an ongoing
basis in order to satisfy all or a portion of its need for cash. If and to the
extent that the Company issues additional shares of its Common Stock, either
prior or subsequent to the implementation of the Reverse Split, each
stockholder's percentage ownership interest in the Company and proportional
voting power will be proportionately reduced.
The Company has previously issued, and has outstanding, various
options, warrants and rights to purchase an aggregate of 4,893,728 shares of its
Common Stock. If the Reverse Split is approved by the stockholders at the
Special Meeting and the Reverse Split is implemented, in general, both the
exercise price per share and the number of shares subject to each such option,
warrant and right will be affected by the Reverse Split. In many instances, the
exercise price per share of an option, warrant or right will increase by a
multiple of ten and the number of shares subject to such option, warrant or
right will be reduced by 90%.
As a result, if the Reverse Split is implemented, it is possible that
the holders of all or a substantial number of the outstanding options, warrants
and rights to purchase shares of the Company's Common Stock will determine that
it is not in their best interests to exercise such options, warrants or rights.
If and to the extent that such is the case, each stockholder's percentage
ownership interest in the Company and proportional voting power will not be
proportionately reduced as the result of the exercise of such outstanding
options, warrants and rights.
EXCHANGE OF STOCK CERTIFICATES
Assuming the Reverse Split is approved by the stockholders,
stockholders may be required to exchange their stock certificates for new
certificates representing the shares of new Common Stock. If so required,
stockholders will be furnished with the necessary materials and instructions for
the surrender and
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exchange of stock certificates at the appropriate time by the Company's transfer
agent. Stockholders will not be required to pay a transfer or other fee in
connection with the exchange of certificates. STOCKHOLDERS SHOULD NOT SUBMIT
------------------------------
ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
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FEDERAL INCOME TAX CONSEQUENCES
The following description of Federal income tax consequences is based
upon the Internal Revenue Code of 1986, as amended, the applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
consequences which may apply to special classes of taxpayers (e.g., non-resident
aliens, broker-dealers or insurance companies). Stockholders are urged to
consult their own tax advisors to determine the particular consequences to them.
The exchange of shares of Common Stock for shares of new Common Stock
will not result in recognition of gain or loss. The holding period of the
shares of new Common Stock will include the stockholder's holding period for the
shares of Common Stock exchanged therefor, provided that the shares of Common
Stock were held as a capital asset. The adjusted basis of the shares of new
Common Stock will be the same as the adjusted basis of the shares of Common
Stock exchanged therefor.
VOTE AND RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
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THE REVERSE SPLIT.
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RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of BDO Seidman serves the Company as its independent
public accountants at the direction of the Board of Directors of the Company.
It is expected that one or more representatives of BDO Seidman will be present
at the Meeting, have an opportunity to make a statement if they desire to do so
and be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of BDO Seidman as the independent public accountants for the Company
for fiscal year 1997. This matter is not required to be submitted for
stockholder approval, but the Board of Directors has elected to seek
ratification of its selection of the independent public accountants by the vote
of a majority of the shares represented and voting at the Meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who own more
than 10% of a registered class of the Company's equity securities to file
various reports with the Securities and Exchange Commission and the National
Association of Securities Dealers concerning their holdings of, and transactions
in, securities of the Company. Copies of these filings must be furnished to the
Company.
Based on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that all individual filing requirements applicable to the
Company's executive officers and directors were complied with under Section
16(a).
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STOCKHOLDER PROPOSALS
Stockholders who wish to present proposals for action at the Company's
1998 Annual Meeting of Stockholders should submit their proposals in writing to
the Secretary of the Company at the address of the Company set forth on the
first page of this Proxy Statement. Proposals must be received by the Secretary
no later than February 1, 1998, for inclusion in next year's proxy statement and
proxy card.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders of the Company for the fiscal year
ended December 31, 1996, including audited financial statements, is being mailed
to the stockholders concurrently herewith, but such report is not incorporated
in this Proxy Statement and is not deemed to be a part of the proxy solicitation
material.
OTHER MATTERS
The Management of the Company does not know of any other matters which
are to be presented for action at the Meeting. Should any other matters come
before the Meeting or any adjournment thereof, the persons named in the enclosed
proxy will have the discretionary authority to vote all proxies received with
respect to such matters in accordance with their collective judgment.
ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB, as filed with
the Securities and Exchange Commission (exclusive of Exhibits), will be
furnished without charge to any person from whom the accompanying proxy is
solicited upon written request to Cinema Ride, Inc., 12001 Ventura Place, Suite
340, Studio City, California 91604 Attention: Toufic Roger Bassil. If Exhibit
copies are requested, a copying charge of $.20 per page will be made.
BY ORDER OF THE BOARD OF DIRECTORS
Mitch Francis
Chairman of the Board, President,
and Chief Executive Officer
Studio City, California
May 15, 1997
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND TO DATE, SIGN, AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND
YOUR COOPERATION WILL BE APPRECIATED.
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CINEMA RIDE, INC.
12001 VENTURA PLACE, STE. 340
STUDIO CITY, CALIFORNIA 91604
(818) 761-1002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mitch Francis and Toufic Bassil as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them or either of them to represent and to vote as designated below, all of the
shares of common stock of Cinema Ride, Inc. held of record by the undersigned on
April 19, 1997, at the Annual Meeting of Stockholders to be held on June 18,
1997, or any adjournment thereof.
1. ELECTION OF DIRECTORS FOR all nominees below WITHHOLD AUTHORITY
(except as marked to the contrary below) [_] to vote for all
nominees listed
below [_]
(INSTRUCTION: To withhold authority to vote for any individual nominee mark
the box next to the nominee's name below):
[_] Mitch Francis [_] Benjamin Frankel
[_] Norman Feirstein
2. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
[_] FOR [_] AGAINST [_] ABSTAIN
3. APPROVAL OF ONE-FOR-TEN REVERSE STOCK SPLIT
[_] FOR [_] AGAINST [_] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
Dated:________________, 1997
____________________________
Signature
____________________________
Signature if held jointly
Please sign exactly as name appears
below. When shares are held by joint
tenants, both should sign. When
signing as attorney, as executor,
administrator, trustee, or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE READ, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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