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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-QSB
(MARK ONE)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT UNDER 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)
(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 May 10, 1997, there were 5,734,999 outstanding shares of common stock, par
value $0.01 per share.
Transitional Small Business Disclosure Format: Yes No X
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CINEMA RIDE, INC. AND SUBSIDIARIES
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED
MARCH 31, 1997
==========================================
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets as of March 31, 1997 and as of
December 31, 1996. 3
Statements of Operations for the three months ended
March 31, 1997 and March 31, 1996. 5
Statements of Cash Flows for the three months ended March 31, 1997
and March 31, 1996. 6
Summary of Accounting Policies 8
Notes to Financial Statements. 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997, AND DECEMBER 31, 1996
================================================================================
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- ------------
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash $ 104,792 $1,395,978
Inventories 44,252 45,515
Prepaid Expenses 60,410 93,330
Other Receivables 4,902 5,311
------------ ----------
Total current assets 214,356 1,540,134
------------ ----------
Property and equipment: (Note 1)
Office Equipment and furniture 105,478 103,050
Equipment under capital lease 589,474 589,474
Leasehold improvements 2,222,967 2,222,967
Theater and film equipment 3,078,593 3,078,593
Theater and film equipment under construction 564,432 564,432
------------ ----------
6,560,944 6,558,516
Less accumulated depreciation and
amortization (1,021,903) (846,873)
Total property and equipment (net) 5,539,041 5,711,643
------------ ----------
Film library:
Film projects under development 303,748 271,872
Film library, net of accumulated amortization
of $338,115 and $297,582. 414,250 454,783
------------ ----------
Total film library, net 717,998 726,655
------------ ----------
Receivable from officers 99,974 97,865
Deferred lease costs and other assets (net) 611,279 783,217
------------ ----------
Total assets $ 7,182,648 $8,859,514
============ ==========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
3
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CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
MARCH 31, 1997, AND DECEMBER 31, 1996
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LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ -------------
(unaudited) (audited)
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 545,748 $ 1,342,855
Accrued interest 1,300 50,547
Current portion of capital lease obligation 54,795 53,102
Notes payable to investors (Note 1) - 337,500
Current portion of notes payable to lender (Note 1) 286,684 275,979
Notes payable to vendors (Note 1) 64,965 52,612
Note payable to bank (Note 1) 9,549 9,310
----------- -----------
Total current liabilities 963,041 2,121,905
----------- -----------
Obligation under capital lease 322,378 336,548
Note payable to bank (Note 1) 20,872 23,370
Note payable to lender (Note 1) 1,140,765 1,116,384
Deferred rent 150,100 154,261
----------- -----------
Total long term liabilities 1,634,115 1,630,563
Total liabilities 2,597,156 3,752,468
Commitments and contingency (Note 1)
Stockholders' equity
Preferred stock, $.01 par value, 500,000
shares authorized, none issued - -
Common stock, $.01 par value, 20,000,000
shares authorized, 5,786,785 and 5,731,785
shares issued and outstanding 57,868 57,318
Additional paid-in-capital 9,244,238 9,134,389
Accumulated deficit (4,716,614) (4,084,661)
----------- -----------
Total stockholders' equity 4,585,492 5,107,046
----------- -----------
Total liabilities and stockholders' equity $ 7,182,648 $ 8,859,514
=========== ===========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
4
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CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997, AND MARCH 31, 1996
================================================================================
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------- -------------
<S> <C> <C>
Revenues $ 869,795 $ 609,745
Selling, general and administrative expenses 949,812 677,213
Depreciation and amortization 330,997 242,103
---------- ----------
Total expenses 1,280,809 919,316
---------- ----------
Loss from operations (411,014) (309,571)
---------- ----------
Other income (expense)
Interest expense (226,486) (6,861)
Interest income 2,679 2,588
---------- ----------
Net loss $ (634,821) $ (313,844)
---------- ----------
Net loss per common share $(0.11) $(0.07)
========== ==========
Weighted Average common shares outstanding 5,786,785 4,570,000
========== ==========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
5
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 & MARCH 31, 1996
================================================================================
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (634,821) $(313,844)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 330,997 242,103
Stock issued for services rendered 20,900 -
Non cash compensation 3,696 -
Issuance of warrants for services rendered - 13,346
Amortization of deferred financing costs 153,868 -
Increase (decrease) from changes in:
Inventory 1,263 (18,613)
Prepaid expenses 32,920 33,617
Other receivables 409 2,857
Accounts payable and accrued expenses (827,004) 193,281
Deferred rent (4,161) -
----------- ---------
Net cash (used in) provided by operating activities (921,933) 152,747
----------- ---------
Cash flows from investing activities:
Acquisition of:
Capital expenditures (2,428) (97,669)
Film production costs (31,876) (35,511)
Proceeds from insurance for equipment - 39,228
Deferred lease costs and other assets (17,799) (7,088)
----------- ---------
Net cash used in investing activities (52,103) (101,040)
----------- ---------
Cash flows from financing activities:
Proceeds from notes payable 100,000 39,660
Payments made on notes payable (404,673) -
Principal payments under capital lease obligation (12,477) (3,158)
----------- ---------
Net cash (used in) provided by financing activities (317,150) 36,502
----------- ---------
Net (decrease) increase in cash (1,291,186) 88,209
Cash at beginning of period 1,395,978 144,539
----------- ---------
Cash at end of period $ 104,792 $ 232,748
=========== =========
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
6
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CINEMA RIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 & MARCH 31, 1996
================================================================================
(UNAUDITED)
<TABLE>
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes $ 800 $ 800
=========== =========
Cash paid during the period for interest $ 77,744 $ 6,861
=========== =========
Non cash financing activities:
Conversion of accounts payable to notes payable 12,354 -
Issue of warrants to public 89,603 -
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
7
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CINEMA RIDE, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
THREE MONTHS ENDED MARCH 31, 1997
================================================================================
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 March 31, 1997, and December 31, 1996, and the
results of its operations and statements of cash flows for each of the three
months ended March 31, 1997, and March 31, 1996, 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 three months ended March 31, 1997, are not
necessarily indicative of the results of operations to be expected for the full
year ending December 31, 1997.
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 1996 Annual Report on Form 10-KSB.
Certain reclassifications were made to the financial statements previously
reported to conform with current year presentation.
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 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 three 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 third facility (the " Times Square
Facility") commenced operations in September 1996 and is located in Times Square
in New York City, New York. 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.
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.
8
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CINEMA RIDE, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
THREE MONTHS ENDED MARCH 31, 1997
================================================================================
(CONTINUED)
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 March 31, 1997 and 1996 unamortized pre-opening costs of $171,144 and
$132,347 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.
New Accounting Standards
- - ------------------------
On March 3, 1997, the FASB issued Statement of Financial Accounting Standard No.
128. Earnings per share (SFAS 128). This pronouncement provides a different
method of calculating earnings per share than is currently used in accordance
with APB 15, Earning per Share. SFAS 128 provides for the calculation of Basic
and
9
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Diluted earning per share. Basic earning per share includes no dilution and is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities that could share in the
earnings of the entity, similar to fully diluted earnings per share. This
pronouncement is effective for fiscal years and interim periods after December
15, 1997, early adoption is not permitted. The Company has not determined the
effect, if any, of adoption on its EPS computation(s).
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NOTES PAYABLE
NOTE PAYABLE TO BANK
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.
NOTES PAYABLE TO INVESTORS
During the quarter ended September 30, 1996, the Company obtained loans
aggregating $437,500 bearing interest at 15% per annum 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 were 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 437,500
shares of the Company's common stock to the lenders. In connection with the
issuance of the shares to the lenders the Company recognized $250,469 in
financing costs which is deferred and is amortized as interest expense over the
life of these loans. During the fourth quarter, some of lenders elected to
convert $100,000 of the above notes to common stock at the than fair market
value of $.40 per share. Accordingly, the Company issued 250,000 additional
shares relating to the conversion of these notes. During January 1997, the
Company repaid the remaining $337,500 balance of the notes. As such, the
Company wrote off in January 1997 the remaining unamortized portion of the
deferred financing costs relating to these notes as interest expense.
NOTE PAYABLE TO LENDER
On December 31, 1996, the Company closed a financing agreement with Finova
Technology Finance, Inc. ( the "Lender") structured as a sale leaseback
transaction of certain equipment owed by the Company. Based on the substance of
this transaction, this financing agreement was accounted for as a note payable
for financial reporting purposes. The gross loan amount was for $1,575,027 to
be paid over a four year term at $40,903 per month with a balloon payment of
$157,503. The loan bears a variable interest rate based on the average weekly
interest rate of three-year U.S. Treasury Securities. The financing agreement
requires the Company to repurchase the equipment at the end of the lease for $1.
In connection with obtaining the financing, the Lender required the Company to
raise a minimum of $500,000 through a combination of equity, subordinated debt,
or conversion to equity of existing notes/liabilities. As of May 10, 1997, the
Company has issued 444,285 shares of the Company's common stock to various
vendors and 250,000 shares to existing note holders in lieu of amounts owed by
the Company, enabling the Company to meet the Lender's requirement. The Company
also issued 100,000 warrants to the Lender at an exercise price of $2.00 per
share, and an aggregate of 265,643 warrants to the brokers who arranged the
financing at an exercise price of $.41 per share representing approximately 110%
of the market value at the closing date of the financing. During the quarter
ended March 31, 1997, the Company received the remaining $100,000 of this loan
which was held by the Lender pending the Company's meeting all of the Lender's
requirements.
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NOTE PAYABLE TO VENDORS
As a part of the requirements to obtain the Financing Agreement referred to
above, the Company converted $64,965 of accounts to vendors into unsecured
subordinated notes payable bearing interest at 8%. Principal payments on the
notes are to be made at 20% increments on April 30, 1997 and July 31, 1997 with
the remaining 60% and interest due on September 30, 1997.
NOTE 2. STOCK TRANSACTIONS
During the quarter ended March 31, 1997, the Company issued 55,000 shares to
its employees including 50,000 shares to its chief financial officer. The
Company recorded the then fair market value of the shares as additional
compensation to the employees.
NOTE 3. SUBSEQUENT EVENT
During April 1997, the Company entered into a three year employment
agreement with its chief financial officer. The agreement provides for a base
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.
During April 1997, the Company repurchased 51,786 shares of the Company's
common stock previously issued to one of its vendors for $29,000 of which
$19,000 has been paid as of this date.
During April 1997, the Company obtained a $50,000 loan from a related party
bearing interest at 18% per annum with both principal and interest due in six
months. In connection with obtaining this loan, the Company issued 25,000
warrants at an exercise price of $.28 per share.
ITEM 2. MANAGEMENT'S 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 other locations, the West Edmonton Mall Facility and the
Times Square Facility, in August 1995 and September 1996 respectively.
RESULTS OF OPERATIONS
- - ---------------------
QUARTER ENDED MARCH 31, 1997 VS. QUARTER ENDED MARCH 31, 1996:
Revenues increased by 43% or $260,050 from $609,745 in 1996 to $869,795 in
1997. The increase is due to the opening of the Times Square Facility in
September 1996 which contributed $347,382 in revenues in 1997 which was
partially offset by 1) a decrease in revenues at the Las Vegas Facility by 13%
or $74,056 from $553,792 in 1996 to $479,736 in 1997 which management believes
is due to lower attendance at the Forum Shops and reduced advertising spending,
and 2) a decrease in revenues at the West Edmonton Mall Facility by 23% or
approximately $13,000 from approximately $56,000 in 1996 to approximately
$43,000 in 1997. In addition, the Company raised the price of a single ticket
to seven dollars from six dollars. The average ticket price remained under four
dollars due to discounts offered through multiple purchases of tickets.
Management believes that the trend at the Las Vegas Facility is expected to
continue but could be offset by the Company's installation of a ticket booth at
the main level of the Forum Shops during the Summer and by the opening of the
new expansion of the Forum Shops scheduled in September 1997.
Selling, general and administrative expenses increased by 40% or $272,599
from $677,213 in 1996 to $949,812 in 1997. This increase is mainly due to an
increase in overall expenses of approximately $287,500 relating to the new Times
Square Facility which was opened in September 1996 and was fully operational in
the first quarter of 1997, which was partially offset by decreases in expenses
at the Las Vegas and West Edmonton Mall Facilities.
11
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Depreciation and amortization increased by 37% or approximately $89,000 from
$242,103 in 1996 to $330,997 in 1997 due to 1) the new Times Square Facility
which contributed to an increase of approximately $181,332 in 1997 which was
partially offset by a decrease of $102,000 relating to the write off of certain
assets in 1996.
Interest expense increased by $219,625 from $6,861 in 1996 to $226,486 in
1997 mostly due to 1) the Company's write off of $146,103 in deferred interest
relating to the issuance of common stock to note holders and the subsequent
repayment of these notes in January 1997, and 2) the Company incurring
approximately $57,700 in interest on the loan from lender in 1997. In addition,
in connection with the issuance of the warrants relating to the Company's
financing during December 1996, the Company incurred, based on a valuation of
these warrants which were issued to the Lender and the brokers who arranged the
financing, $47,498 as deferred financing costs which is amortized over the life
of the loan as interest expense.
QUARTER ENDED MARCH 31, 1996 VS. QUARTER ENDED MARCH 31, 1995:
Revenues increased by 37% or $164,722, from $445,023 in 1995 to $609,745 in
1996. The increase is mainly due to the opening of the West Edmonton Mall
Facility in August 1995 which contributed approximately $56,000 in revenues
during the quarter. In addition, the Company raised the price of a single
ticket to six dollars from four dollars. 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 7% or $53,050,
from $730,263 in 1995 to $677,213 in 1996. This decrease is due to 1) a
decrease in expenses at the Las Vegas Facility of approximately $116,000 (from
approximately $406,000 in 1995 to approximately $290,000 in 1996) relating
primarily to decreases in wages, advertising, and administrative expenses
(accounting for approximately $107,000 of the $116,000 decrease), 2) a decrease
in corporate expenses by approximately $600 during the current quarter due to a
decrease of approximately $95,000 in professional fees in the current quarter
which was offset by an increase of approximately $94,400 in salaries due to the
hiring of additional accounting, administrative and sales personnel, as well as
increases in rent and other administrative expenses, and 3) an increase in
overall expenses of approximately $63,000 due to the opening of the West
Edmonton Mall Facility in August 1995.
Depreciation and amortization increased by 196% or $160,447, from $81,656 in
1995 to $242,103 in 1996 due to the opening of the West Edmonton Mall Facility
in August 1995 which contributed to an increase of approximately $41,000, and
due to the Company non recurring write down of the life of certain projection
equipment from ten to two years which contributed an additional $114,000 in
depreciation during the quarter.
Interest expense increased by $6,861 mostly due to the Company's financing
of its leased equipment.
Interest income decreased by 91% or $26,898, from $29,486 in 1995 to $2,588
in 1996 mainly due to interest earned on the proceeds from the Company's public
offering.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
Net cash used in operating activities was $921,933 during the quarter ended
March 31, 1997, as compared to the cash provided by operating activities of
$152,747 for the same period during the prior year. The increase of $1,074,680
was primarily due to 1) an increase in losses for the quarter ended March 31,
1997 by $320,977, 2) a decrease in accounts payable and accrued expenses of
$1,020,285 which was partially offset by an increase in depreciation and
amortization of $88,894, and 3) an increase in amortization of deferred
financing costs of $153,868.
Net cash used in investing activities decreased by 48% or $48,937, from
$101,040 in 1996 to $52,103 in 1997. The decrease is primarily due to payments
made by the Company to complete the construction of its
12
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capsules during the prior year.
Net cash used in financing activities was $317,150 during the quarter ended
March 31, 1997, as compared to the cash provided in financing activities of
$36,502 for the same period during the prior year. The increase of $353,652 was
primarily due to payments made on notes payable in 1997 of $404,673 which was
partially offset by the receipt of $100,000 in 1997 which was held by the
Lender.
The Company has relied on the proceeds of sales of Common Stock, Redeemable
Warrants, loans and equipment leasing to provide it with the cash necessary to
develop its facilities and ride films and to operate its business.
As discussed in Note 1 to the unaudited consolidated financial statements,
during the quarter ended September 30, 1996, the Company obtained loans
aggregating $437,500 bearing interest at 15% per annum paid monthly with the
principal balance due at the earlier of one year or at the time the Company
successfully obtains permanent financing. During December 1996, some of
lenders elected to convert $100,000 of the above notes to common stock at the
than fair market value of $.40 per share. Accordingly, the Company issued
250,000 additional shares relating to the conversion of these notes. During
January 1997, the Company repaid the remaining $337,500 balance of the notes.
As such, the Company wrote off in January 1997 the remaining unamortized portion
of the deferred financing costs relating to these notes as interest expense.
As discussed in Note 1 to the unaudited consolidated financial statements,
on December 31, 1996, the Company closed a financing agreement with Finova
Technology Finance, Inc. ( the "Lender") structured as a sale leaseback
transaction of certain equipment owed by the Company. In connection with
obtaining the financing, the Lender required the Company to raise a minimum of
$500,000 through a combination of equity, subordinated debt, or conversion to
equity of existing notes/liabilities. As of May 10, 1997, the Company has
issued 444,285 shares of the Company's common stock to various vendors and
250,000 shares to existing note holders in lieu of amounts owed by the Company,
enabling the Company to meet the Lender's requirement. The Company also issued
100,000 warrants to the Lender at an exercise price of $2.00 per share, and an
aggregate of 265,643 warrants to the brokers who arranged the financing at an
exercise price of $.41 per share representing approximately 110% of the market
value at the closing date of the financing. During the quarter ended March 31,
1997, the Company received the remaining $100,000 of this loan which was held by
the Lender pending the Company's meeting all of the Lender's requirements.
The Company is currently in production of a ski and snowboard film which is
being produced by Warren Miller Entertainment which is scheduled to be released
in 1997. The Company has been performing additional work on its previously
released films adding more special effects and reworking some scenes. As of May
10, 1997, the Company anticipates additional expenditures of approximately
$20,000 relating to the completion of these films. The Company also expects to
incur approximately an additional $50,000 in expenses relating to reprogramming
the motion of its existing capsules for the above films.
As of March 31, 1997, the Company had a negative working capital of
$748,685. The Company has and is continuing to take steps to reduce its
expenses without materially impacting its operations. Management believes that
the existing funds, combined with the Company's ability to generate cash from
its operations and through lease or debt financing of the Company's existing
equipment, or through equity financing, should be adequate to finance current
levels of activity. The Company was able to secure financing which was
necessary to pay for expenses already incurred relating to the Times Square
Facility, as well as other current obligations. 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 or to finance current levels
of activity.
13
<PAGE>
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 at least $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. Accordingly, the
Company expects to spend approximately at least 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 twenty 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.
SIMULATOR SALES, JOINT VENTURES AND RIDE FILM LEASING
The Company intends to 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 may retain the services of outside or in-house
sales representatives to locate potential purchasers of simulators and licensees
of ride films.
SEASONALITY OF BUSINESS
Because of the seasonal nature of tourist traffic, attendance patterns at
attractions may vary. The 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. Similarly, the Times
Square Facility is effected by seasonality during the slower Winter months. As
a result, the Company's results of operations at its three 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.
14
<PAGE>
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 5. OTHER INFORMATION
-----------------
On February 1, 1997 Mr. Gary Packman, the Company's Executive Vice
President, Chief Operating Officer, Secretary, Treasurer and Director resigned
from the aforementioned offices. Mr. Packman agreed to be available to the
Company on a consulting basis for the period between February 1, 1996 and
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) EXHIBITS
The following exhibits are submitted herewith:
NUMBER DESCRIPTION
------- -----------
10.35 Form of Employment Agreement of Toufic Roger Bassil dated April
29, 1997.
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed a Form 8-K on January 28, 1997, reporting under item 5.
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
<TABLE>
<CAPTION>
SIGNATURE DATE
--------- ----
<S> <C>
/s/ MITCH FRANCIS May 10, 1997
- - --------------------------------------------- ------------
Mitch Francis
Chairman of the Board, President, Chief
Executive Officer and Director (principal
executive officer)
/s/ TOUFIC R. BASSIL May 10, 1997
- - --------------------------------------------- ------------
Toufic R. Bassil
Chief Financial Officer
(principal financial officer,
principal accounting officer).
</TABLE>
16
<PAGE>
EXHIBIT 10.35
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 29th day of
April, 1997, by and between Cinema Ride, Inc., a Delaware Corporation
(hereinafter the "Company") and Toufic Roger Bassil. An individual (hereinafter
"Employee").
WITNESSETH
WHEREAS, the company desires to retain the services of the Employee, and the
Employee is willing to be an employee of the Company, on the terms and subject
to the conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual promises herein
contained, the parties hereto hereby agree as follows;
1. Engagement; Nature of Duties. Company hereby engages Employee, for the
period hereinafter set forth, to serve as and hold the officers of Chief
Financial Officer, Treasurer Secretary, and to perform the duties of such
offices as provided in the Bylaws of the Company and as directed by the Board of
Directors of the company. Employee agrees to serve in such capacity and to do
and perform the service, acts, or things necessary to carry out the duties of
such office, and such other duties, not inconsistent with such office and
Employee's position as an executive officer of the Company. Employee shall
report only to the Board of Directors of the Company. It is expressly agreed
and acknowledged that employment in the capacity of the aforementioned offices
was a material inducement to Employee to enter into this Agreement, and not
withstanding any right the Company may have at law or pursuant to the Bylaw of
the company to remove Employee from or fail to maintain employee in such
offices, any such failure or removal shall be deemed a, material breach of this
Agreement by the Company.
2. Term. The term of employment pursuant to this Agreement shall be for a
period of three (3) years, commencing retroactively on Jan 1, 1997 (the
"Commencement Date"), unless sooner terminated in accordance with the provisions
hereof (the "Term").
3. Performance of Duties. Employee shall devote such time and attention to
Employee's duties as may be reasonably necessary to perform and carry out such
duties. The Employee shall not accept or undertake, directly or indirectly, any
other employment or similar activity including (without limiting the generality
of the foregoing) any position as an employee, director or consultant, with any
person, firm or entity other than the Company ( regardless of whether such other
person, firm, or entity in competition with the Company or any of its
subsidiaries) without first having obtained the approval of the Board of
Directors of the Company, which shall be given in the company's sole and
absolute discution.
Employee shall perform his duties hereunder primarily in the Los Angeles,
California area, and shall not be required to perform such duties on a regular
basis, at any other location except for site visits Employee shall not be
required to relocate without his consent.
4. Compensation.
<PAGE>
(a) Base Salary. Company shall pay to Employee a base salary in the amount of
One Hundred Twenty Thousand Dollars ($120,000) per year (the "Base Salary"),
payable in periodic installments in accordance with Company's prevailing policy
for compensating personnel, but not less often than semi monthly. On each yearly
anniversary of the Commencement Date (Jan 1, 1997), the Base Salary shall be
increased by eight percent (8%).
(b) Annual Bonus. In addition to the Base Salary, and any and all other
compensation, profit-sharing participation, benefits, bonuses or other amounts
due to or receivable by Employee pursuant to this Agreement, Employee at the
discretion of Board Of Directors, may receive an annual bonus based on the
company's performance, and opening of new facilities.
(c) Grant of Stock Option. Effective on the Commencement Date, the Company
shall grant to Employee 100,000 warrants to purchase shares of the Company's
Common Stock at an exercise price of .19 per share. Such option shall be vested
equally over 2 years (50,000 options on 1/1/98 and 50,000 options on (1/1/99).
These options will have piggy backs, registration, and dilution rights.
5. Expenses Reimbursement; Automobile. The services required of Employee by
this Agreement shall include the responsibility and duty of entertaining
business associates and others with whom Company is, desires to be, or may
become engaged in business or with whom it seeks, now or in the future, to
develop or expand business relationships, or with whom it is otherwise to the
benefit of the Company to establish or maintain communications. It may also be
necessary for Employee to travel from time to time on behalf of and for the
benefit of the Company, or in furtherance of the Company's business. It is the
Company's belief that the performance of the Employee's duties in such travel
and entertainment activities will be productive of the maximum benefits which
company expects to derive from Employee's services. Accordingly, Company
shall pay, or if Employee shall have paid, shall reimburse to Employee, any and
all expenses incurred by him or for his account in the performance of his duties
hereunder, including all expenses for business, entertainment, promotion and
travel by Employee, subject only to Employee providing appropriate documentation
for such expenses. It is expressly agreed, in connection therewith, that
Employee shall be provided or reimbursed for reasonable travel and
accommodations, but no first-class air travel will be deemed reasonable.
Company shall provide Employee with an automobile, reasonably commensurate with
Employee's office and position, for use by Employee in performing Employee's,
duties hereunder and Company shall be responsible for all expenses associated
with ownership of such automobile, including, but not limited to, costs of
licensing or registration, maintenance and gasoline; provided, however, that in
no event shall the Company's total cost in providing such automobile (excluding
the cost of automobile insurance, registration, maintenance, and gasoline)
exceed $700 per month. Company and Employee may provide, by mutual agreement,
that Employee may use an automobile owned by Employee in connection with
performing his duties hereunder, in which case Employee shall be reimbursed by
company for all costs associated with ownership of such automobile (excluding
the cost of automobile insurance, registration, maintenance, and gasoline),
subject to the $700 per month limitation described above. In addition to the
foregoing expenses, the Company shall provide, or reimburse Employee for the
cost of, automobile insurance for such automobile and shall provide cellular
telephone service for such automobile. Employee shall maintain such
<PAGE>
records with respect to the use of such automobile as Company may reasonably
request.
In the event that the Employee shall be deemed to have received income, for
state or federal income tax purposes, by reason of Employee's receipt of or
reimbursement for any of the benefits or expanses set forth in this Paragraph 5,
the Company shall pay or reimburse Employee for all taxes required to be paid by
employee. with respect to such income.
6. Medical and Life Insurance; Pension Benefits. Employee shall have the
right to participate in any and all group, life, disability income, health or
accident insurance program applicable to any personnel of company, and in affect
at any time during the period of Employees employment hereunder, subject only to
any eligibility restrictions of such programs. Coverage under any group health
insurance shall also cover Employee's spouse. Employee shall also have the right
to participate in any and all employee retirement benefits plan or profit-
sharing plan which Company maintains for its personnel, and in effect at any
time during the period of Employee's employment hereunder, subject only to any
eligibility restrictions of such plans.
7. Vacation. During each year of the Term, Employee shall be entitled to a
vacation of four (4) weeks, without deduction of salary. Such vacation shall be
taken at such time or times during the applicable year as may be mutually
determined by Employee and Company. Any additional vacation period shall be
determined by Company consistent with the general customs and practices of the
company applicable to its personnel.
8. Termination. This Agreement may be terminated by Company only for cause.
As used herein, "cause" shall mean:
(a) Employee's willful breach of Employee's duties hereunder which breach
remains (30) days after written notice of such breach to employee; or
(b) Employee's conviction of a felony involving moral turpitude.
In addition, this Agreement shall automatically be terminated upon Employee's
death or permanent disability. As used herein, "permanent disability" shall
mean Employee's complete inability to perform Employees duties hereunder, as
determined by Employee's physician, Which inability continues for more than one
Hundred Eighty (180) consecutive days.
In the event that this Agreement is terminated by the Company for any
reason other than for cause as defined above, the Company expressly agrees and
acknowledges that Employee shall be entitled to receive the base salary
described in Section 5 of this agreement for six months and shall have no duty
or obligation to and/or accept other employment, or otherwise mitigate
Employee's damage resulting from such termination. The company further agrees
and acknowledges that, in the event employee does obtain other employment
following the Company's termination of this Agreement, the Company shall not be
entitled to any set off or reduction in the amounts payable to Employee
hereunder as. a result of any compensation paid to Employee with respect to such
new employment.
<PAGE>
9. Indemnification. The Company shall indemnify, defend and hold Employee
harmless from and against and all claims, demands, suits, obligations,
liabilities, actions, losses, cost, expenses, fines or penalties which may now
or Hereafter be Pending, threatened or commenced against or incurred by Employee
relating to or in any way resulting from Employee's performance of his duties
hereunder, or any action or failure to act of Employee in connection with such
duties -Employee's rights under this Section 9 shall be in addition to, and not
in lieu of or, any and all other rights of Employee under applicable law or any
agreement with the Company regarding indemnification.
10. Confidential Information.
(a) As used in this Agreement, "Confidential Information" means any and all
information disclosed to Employee or Which Employee gains knowledge of as a
Consequence or through Employee's employment by Company (including information
conceived, originated, discovered or developed by Employee) about Company's
products, processes, and services, including information relating to research,
development, inventions, manufacture, purchasing, accounting, engineering,
marketing, merchandising, selling trade secrets, or customer lists, which
information the Company maintains as confidential.
(b) Except as required in Employee's duties to Company and then only with
Company prior written consent, Employee will not, directly or indirectly, use
for Employee's own benefit or the benefit of others, or disseminate,. disclose,
letters upon or publish articles concerning, any confidential information either
during or at any time after the term of this Agreement without consent.
(c) All documents, papers, notes, notebooks, memoranda, computer files, and
other written electronic records of any kind by Employee company, shall remain
the property of Company at all times. Upon the termination of Employee's
employment with Company, all documents, papers, notes, notebooks, memoranda,
computer files and other written or electronic records in Employee's possession,
whether prepared by Employee or others will be left with Company.
II. Notice. Any and all notices which arc required or permitted to be given by
any party to any other party hereunder shall be given in writing, sent by
registered or certified mail, electronic communications (including telegram or
facsimile) followed by a confirmation letter sent by registered or certified
mail, postage prepaid, return receipt requested, or delivered by hand or
messenger service with the charges therefor prepaid, addressed to such party as
follows;
(a) Notices to the Employee:
Toufic Roger Bassil
708 Juanita Avenue # 4
Redondo Beach, CA. 90277
(b) Notice to the Company:
<PAGE>
Cinema Ride, Inc.
12001 Ventura Place
Suite 340
Studio City, CA 91604
Attn: Gary Packman
or to such other address as the parties shall from time to time give notice of
in accordance with this Section. Notices sent in accordance with this Section
shall be deemed effective on the date of dispatch, and an affidavit of mailing
or dispatch, executed under penalty of perjury, shall be deemed presumptive
evidence of the date of dispatch.
12. Entire agreement and Modification. This Agreement, Including the exhibits
hereto and the agreements expressly referred to heroin, constitutes the entire
understanding between the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written. There are no warranties, representations or other
agreements between the parties, in connection with the subject 'matter hereof,
except as specifically set forth herein. No supplement, modification, waiver or
termination of this Agreement shall be binding unless made in writing and
executed by the party thereto to be bound.
13. Waivers. No term, Condition or provision of this Agreement may be waived
except by an express written instrument to such effect signed by the party to
whom the benefit of such term condition or provision runs. No such waiver of
any term condition or provision of this Agreement shall be deemed a waiver of
any other term, condition or provision, irrespective of similarity, or shall
constitute a continuing waiver of the same term, condition or provision, unless
otherwise expressly provided. No failure or delay on the part of any party in
exercising any right, power or privilege under any term, condition or provision
of this agreement shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege.
14. Severability. In the event any one or more of the terms, conditions or
provisions contained in this Agreement should be found in a final award or
judgment rendered by any court or arbitrator or panel of arbitrators of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining terms, conditions and
provisions contained herein shall not in any way be affected or impaired
thereby, and this Agreement shall be interpreted and construed as if such term
condition or provision, to the extent the same shall have been held invalid,
illegal, or unenforceable, had never been contained herein, provided that such
interpretation and construction is consistent with the intent of the parties as
expressed in this Agreement.
15. Headings. The headings of the Articles and Sections contained in this
Agreement are included herein for reference purposes only, solely for the
convenience of the parties hereto, and shall not in any way be deemed to affect
the meaning, interpretation or applicability of this Agreement or any term,
condition or provision hereof.
16. Applicable Law. This Agreement shall be governed by and construed in
accordance with
<PAGE>
the laws of the State of California, notwithstanding the fact that one or more
counterparts hereof may be executed outside of the State, or one or more of the
obligations of the parties hereunder are to be performed outside of the state.
17. Attorneys' Fees. In the event that any party to this Agreement shall
commence any suit, action, arbitration or other proceeding to interpret this
Agreement, or determine or enforce any right or obligation created hereby,
including but not limited to any action for rescission of this Agreement or for
a determination that this Agreement is void or ineffective abinitio, the
---------
prevailing party in such action shall recover such party's costs and expenses
incurred in connection therewith, including attorney's fees and costs of appeal,
if any. Any court, arbitrator or panel of arbitrators shall, in entering any
judgment or making any award in any such suit, action, arbitration or other
proceeding, in addition to any and all other relief awarded to such prevailing
party, include in such judgment or award such party's costs and expenses as
provided in this Section 17.
18. Execution and Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
an original, and such counterparts together shall constitute only one
instrument. Any or all of such counterparts may be executed within or outside
the State of California. Any one of such counterparts shall be sufficient for
the purpose of proving the existence and terms of this Agreement, and no party
shall be required to produce an original or all of such counterparts in making
such proof.
19. Covenant of Further Assurances. All parties to this Agreement shall, upon
request, perform any and all acts and execute and deliver any and all
certificates, instruments and other documents that any be necessary or
appropriate to carry out any of the term, conditions and provisions hereof or to
carry out the in intent of this Agreement.
20. Remedies Cumulative. Each and all of the several right and remedies
provided for in this Agreement shall be construed as being cumulative and no one
of them shall be deemed to be exclusive of the others or of any right or remedy
allowed by law or equity, and pursuit of any one remedy, or a waiver of any
other remedy.
21. Binding Effect. Subject to the restrictions in section 25 hereof
respecting; assignments, this Agreement shall inure to the benefit of and be
binding upon all of the parties hereto and their respective executors,
administrators, successors and permitted assigns.
22. Compliance With Laws. Nothing contained in this Agreement shall be
construed to require the commission of any act contrary to law and whenever
there is a conflict between any term, condition or provision of this Agreement
and any Present or future statute, law, ordinance or regulation contrary to
which than parties have no legal right to contract, the latter shall prevail,
but in such event the term, condition or provision of this Agreement affected
shall be curtailed and limited only to the extent necessary to bring it within
the requirement of the law, provided that such construction is consistent with
the intent of the parties as expressed in this Agreement.
23. Gender. As used in this Agreement, the masculine, feminine or neuter
gender, and the
<PAGE>
singular or plural number, shall be deemed to include the others whenever the
context so indicates.
24. No Third Party Benefit Nothing contained in this Agreement shall be deemed
to confer any right or benefit on any person who is not a party to this
Agreement.
25. Assignment. Neither party may assign this Agreement, or any rights
hereunder, without the prior express consent of the other party.
26. Arbitration. Any claim arising out of or relating to this Agreement, or
the breach thereof, or Employee's employment by Company, or the termination of
Employee's employment by company, shall be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect, and judgment upon the award entered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties have duly executed this agreement
as of the day and year first above written.
"Company"
Cinema Ride, Inc.
A Delaware Corporation
By:____________________
Its:____________________
"Employee"
_______________________
Toufic Roger Bassil
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 104,792
<SECURITIES> 0
<RECEIVABLES> 104,876
<ALLOWANCES> 0
<INVENTORY> 44,252
<CURRENT-ASSETS> 214,356
<PP&E> 6,560,944
<DEPRECIATION> 1,021,903
<TOTAL-ASSETS> 7,182,648
<CURRENT-LIABILITIES> 963,041
<BONDS> 0
0
0
<COMMON> 57,868
<OTHER-SE> 4,527,624
<TOTAL-LIABILITY-AND-EQUITY> 7,182,648
<SALES> 869,795
<TOTAL-REVENUES> 869,795
<CGS> 1,280,809
<TOTAL-COSTS> 1,280,809
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 226,486
<INCOME-PRETAX> (634,821)
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<NET-INCOME> (634,821)
<EPS-PRIMARY> (.11)
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</TABLE>
