<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
[ ] 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.
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(Exact name of small business issuer 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, Suite 340, Studio City, California 91604
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(Address of principal executive offices)
(818) 761-1002
--------------------------
(Issuer's telephone number)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
As of April 30, 1999, the Company had 731,823 shares of common stock issued and
outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
Documents incorporated by reference: None.
<PAGE>
CINEMA RIDE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) - December
31, 1998 and March 31, 1999
Consolidated Statements of Operations (Unaudited) -
Three months ended March 31, 1999 and 1998
Consolidated Statements of Cash Flows (Unaudited) -
Three months ended March 31, 1999 and 1998
Notes to Consolidated Financial Statements
(Unaudited) - Three Months Ended March 31, 1999 and
1998
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 5. Other Events
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
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Cinema Ride, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 96,165 $ 240,341
Inventories 12,052 8,666
Prepaid expenses 50,262 62,139
Other receivables 438
---------- ----------
Total current assets 158,479 311,584
---------- ----------
Property and equipment:
Office equipment and furniture 105,249 105,477
Equipment under capital lease 139,474 139,474
Lease improvements 946,515 946,515
Theater and film equipment 1,655,805 1,653,798
---------- ----------
2,847,043 2,845,264
Accumulated depreciation (1,466,183) (1,390,528)
---------- ----------
1,380,860 1,454,736
---------- ----------
Other assets:
Film library, net of accumulated
amortization of $734,311 and
$676,293 358,459 416,477
Investment in joint venture 458,760 473,957
Receivables from officers 91,471 89,631
Consulting agreement 36,415 39,016
Deferred lease costs and other
assets 141,885 156,679
---------- ----------
1,086,990 1,175,760
---------- ----------
Total assets $2,626,329 $2,942,080
---------- ----------
---------- ----------
</TABLE>
(continued)
3
<PAGE>
Cinema Ride, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited) (continued)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 113,525 $ 243,480
Current portion of capital
lease obligations 19,814 18,985
Current portion of note payable
to lender (Note 2) 117,693 111,386
Current portion of note payable
to bank 7,562 10,052
---------- ----------
Total current liabilities 258,594 383,903
---------- ----------
Non-current liabilities:
Obligations under capital lease,
less current portion 57,729 63,004
Note payable to lender, less
current portion (Note 2) 798,879 782,849
Deferred rent 103,167 109,157
---------- ----------
959,775 955,010
---------- ----------
Total liabilities 1,218,369 1,338,913
---------- ----------
Stockholders' equity (Notes 3 and 4):
Preferred stock, $.01 par value -
Authorized - 500,000 shares
Issued - None
Common stock, $.08 par value -
Authorized - 20,000,000 shares
Issued - 731,823 shares 58,546 58,546
Additional paid-in-capital 9,212,209 9,175,780
Treasury stock, at cost - 6,473
shares at December 31, 1998 (29,000)
Accumulated deficit (7,862,795) (7,602,159)
---------- ----------
Total stockholders' equity 1,407,960 1,603,167
---------- ----------
Total liabilities and
stockholders' equity $2,626,329 $2,942,080
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
4
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Cinema Ride, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Revenues $ 511,458 $ 623,064
Selling, general and
administrative expenses 538,169 653,934
Depreciation and amortization 136,363 171,204
--------- ---------
Loss from operations (163,074) (202,074)
Other income (expense)
Equity in net income
of joint venture 18,055
Interest income 3,002 7,294
Interest expense (53,999) (67,054)
Fair value of warrants
issued to Chief
Executive Officer as
commitment fee for line
of credit (Note 4) (64,620)
--------- ---------
Operating loss before
extraordinary item (260,636) (261,834)
Extraordinary item -
settlement with vendors 56,413
--------- ---------
Net loss ($260,636) ($205,421)
--------- ---------
--------- ---------
Basic and diluted loss per
common share (Note 1):
Operating loss before
extraordinary item ($0.36) ($0.36)
Extraordinary item 0.08
--------- ---------
Net loss ($0.36) ($0.28)
--------- ---------
--------- ---------
Weighted average common
shares outstanding -
basic and diluted 729,665 729,665
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Cinema Ride, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($260,636) ($205,421)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 136,363 171,204
Common stock issued for services
rendered 809 3,107
Equity in net income of joint
venture (18,055)
Amortization of consulting
agreement 2,601 2,601
Amortization of deferred
financing costs 3,104 10,730
Settlement with vendors (56,413)
Exchange loss 20,246
Fair value of warrants issued
to Chief Executive Officer
as commitment fee for line
of credit 64,620
Changes in operating assets and
liabilities:
(Increase) decrease in:
Inventories (3,386) 6,689
Prepaid expenses 11,877 21,449
Receivable from Times Square
landlord 500,000
Other receivables 438 (19,478)
Deposits 9,000
Increase (decrease) in:
Accounts payable and
accrued expenses (131,734) (209,339)
Deferred rent (5,990) (11,097)
--------- ---------
Net cash provided by (used in)
operating activities (190,989) 234,278
--------- ---------
</TABLE>
(continued)
6
<PAGE>
Cinema Ride, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from investing activities:
Film production costs (7,550)
Investment in joint venture (8,285)
Dividends received from joint
venture 41,537
Increase in receivables from
officers (1,840) (35,000)
--------- ---------
Net cash provided by (used in)
investing activities 31,412 (42,550)
--------- ---------
Cash flows from financing activities:
Proceeds from notes payable 22,337
Payments on notes payable (2,490) (79,128)
Principal payments on capital
lease obligations (4,446) (100,000)
--------- ---------
Net cash provided by (used in)
financing activities 15,401 (179,128)
--------- ---------
Cash and cash equivalents:
Net increase (decrease) (144,176) 12,600
At beginning of period 240,341 705,630
--------- ---------
At end of period $ 96,165 $718,230
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
7
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Cinema Ride, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Three Months Ended March 31, 1999 and 1998
1. Organization and Basis of Presentation
Basis of Presentation - The accompanying consolidated financial statements
include the operations of Cinema Ride, Inc. and its wholly-owned subsidiaries
(the "Company"). All significant intercompany transactions and balances have
been eliminated in consolidation.
The Company's investment in joint venture is accounted for under the equity
method of accounting, whereby the Company recognizes its share of the joint
venture's net income or loss and accordingly, the carrying value of the
Company's investment in joint venture in the accompanying consolidated balance
sheets is adjusted.
Business - The Company is in the business of developing and operating rides
consisting of motion simulator attractions and filmed entertainment that
combines projected three-dimensional action films of approximately four
minutes in duration with computer-controlled, hydraulically-mobilized
capsules that are programmed to move in concert with the on-screen action.
The Company currently operates rides in Las Vegas, Nevada, Edmonton, Alberta,
Canada, and Atlanta, Georgia.
Comments - The accompanying consolidated financial statements are unaudited, but
in the opinion of management of the Company, contain all adjustments, which
include normal recurring adjustments, necessary to present fairly the financial
position at March 31, 1999, the results of operations for the three months ended
March 31, 1998 and 1999, and the cash flows for the three months ended March 31,
1998 and 1999. The consolidated balance sheet as of December 31, 1998 is derived
from the Company's audited financial statements.
Certain information and footnote disclosures normally included in financial
statements that have been presented in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although management of
the Company believes that the disclosures contained in these financial
statements are adequate to make the information presented therein not
misleading. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998, as filed with the Securities
and Exchange Commission.
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The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure 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.
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results of operations to be expected for the full
year ending December 31, 1999.
Going Concern - The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The carrying amounts of assets and liabilities
presented in the accompanying consolidated financial statements do not
purport to represent the realizable or settlement values. The Company has
suffered recurring operating losses and has a working capital deficit that
impairs its ability to obtain additional financing. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
As a result, the Company's independent certified public accountants have
included a modification paragraph in their report on the Company's
consolidated financial statements for the year ended December 31, 1998.
Reclassification - Certain prior period amounts have been reclassified to
conform to the current year presentation.
Foreign Currency Translation - Foreign currency denominated assets and
liabilities of the subsidiary where the United States dollar is the functional
currency and which have certain transactions denominated in a local currency are
remeasured as if the functional currency was the United States dollar. The
remeasurement of local currency into United States dollars creates translation
adjustments which are included in the statement of operations.
Loss Per Share - Basic earnings per share are calculated by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. Diluted earnings per share reflects the potential dilution that would
occur if stock options and warrants were exercised. These potentially dilutive
securities were anti-dilutive during the three months ended March 31, 1999 and
1998. Basic and diluted earnings per share are the same for all periods
presented. As of March 31, 1999, potential common stock consisted of 184,813
stock options and 1,899,535 warrants outstanding.
9
<PAGE>
2. Note Payable to Lender
On December 31, 1996, the Company completed a financing agreement (the
"Financing Agreement") with Finova Technology Finance, Inc. (the "Lender")
structured as a sale-leaseback transaction of certain equipment owned by the
Company. Based on the substance of this transaction, the Financing Agreement
was accounted for as a note payable for financial reporting purposes. The
gross loan amount was for $1,575,027 and the original terms specified a
four-year term with payments of $40,903 per month and a balloon payment of
$157,503. On March 10, 1999, the Financing Agreement was amended to reduce
the monthly payments from $40,903 to $21,789 and to extend the maturity date
from January 1, 2001 to January 1, 2004, with no change in the balloon
payment of $157,503. The loan bears interest at 15.7% per annum. The
Financing Agreement requires the Company to repurchase the equipment at the
end of the lease for $1.00. The loan had a balance of $916,572 and $894,235
at March 31, 1999 and December 31, 1998, respectively.
3. Stockholders' Equity
During the three months ended March 31, 1998, the Company issued 6,474 shares
of common stock to its Chief Financial Officer. The Company recorded the
issuance of such shares as additional compensation to the Chief Financial
Officer at the aggregate fair market value of $3,107.
During April 1997, the Company repurchased 6,473 shares of its common stock
previously issued to one of its vendors for $29,000. During the three months
ended March 31, 1999, the Company reissued these 6,473 shares held as
treasury stock to its Chief Financial Officer. The Company recorded the
issuance of such shares as additional compensation to the Chief Financial
Officer at the aggregate fair market value of $809. The $28,191 difference
between the original cost of the treasury shares of $29,000 and the fair
market value on the date of issuance of $809 was charged to additional
paid-in capital.
4. Warrants Issued to Chief Executive Officer
On February 2, 1999, the Company entered into a loan agreement with its Chief
Executive Officer. The loan agreement amends the existing notes receivable of
approximately $90,000 from such officer to allow the Company the right to
demand repayment within 90 days of a written request. In addition, the loan
agreement includes a line of credit for $120,000 that the Chief Executive
Officer is providing to the Company that matures on February 2, 2002, with
interest at 12% per annum. The line of credit is secured by a lien on the
Company's assets. As consideration for providing the line of credit, the
Company granted the Chief Executive Officer warrants
10
<PAGE>
to purchase 1,527,461 shares of common stock at an exercise price of $0.13
per share, the fair market value on the date of the agreement, expiring on
February 2, 2002.
The Company accounts for stock options and warrants granted to non-employees
in accordance with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation", which establishes a fair value
method of accounting for stock-based compensation plans and for transactions
in which an entity acquires goods or services in exchange for equity
instruments. The Company has calculated the fair value of the warrants issued
to the Chief Executive Officer on the date of grant using the Black-Scholes
option pricing model, and has charged the fair value of $64,620 to operations
as a loan commitment fee during the three months ended March 31, 1999.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:
This Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
1999 contains "forward-looking" statements within the meaning of the Federal
securities laws. These forward-looking statements include, among others,
statements concerning the Company's expectations regarding its working
capital requirements, its business, growth prospects, competition and results
of operations, and other statements of expectations, beliefs, future plans
and strategies, anticipated events or trends, and similar expressions
concerning matters that are not historical facts. The forward-looking
statements in the Quarterly Report on Form 10-QSB for the quarterly period
ended March 31, 1999 are subject to risks and uncertainties that could cause
actual results to differ materially from those results expressed in or
implied by the statements contained herein.
Overview:
The Company was formed in April 1993, and operations of the Company commenced in
October 1994 when the Las Vegas Facility was opened. The Company opened its
other locations, the West Edmonton Mall Facility, the Times Square Facility and
the Atlanta Facility, in August 1995, September 1996 and September 1998,
respectively. The Company closed the Times Square Facility in January 1998.
Going Concern:
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The carrying amounts of assets and liabilities
presented in the accompanying consolidated financial statements do not
purport to represent the realizable or settlement values. The Company has
suffered recurring operating losses and has a working capital deficit that
impairs its ability to obtain additional financing. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
As a result, the Company's independent certified public accountants have
included a modification paragraph in their report on the Company's
consolidated financial statements for the year ended December 31, 1998.
The Company intends to manage its short-term liquidity requirements through a
modified financing arrangement with its Lender and a line of credit provided
by its Chief Executive Officer (see "Liquidity and Capital Resources - March
31, 1999" below). The Company believes that its previous efforts to utilize
and improve its operating efficiencies will result in reduced expenses and
improved operating cash flows in the future. Management believes that these
previous efforts, combined with the modified financing arrangement with the
Lender and the line of credit provided by the Chief Executive Officer, will
provide adequate funds to operate at current levels. However, there can be no
assurances that the Company will be able to realize any benefit from improved
operating efficiencies that will result in increased operating cash flows.
In addition, the Company is continuing its efforts to secure working capital
for operations, expansion and possible acquisitions, mergers or joint
ventures. The Company is also considering a wide range of other business
opportunities, some of which are unrelated to the Company's current business
activities and could result in a change in control of the Company. There can
be no assurances that the Company will be able to secure the working capital
necessary to fund any future business endeavor, or that if such capital is
available, whether it will be available on a timely basis and/or under
acceptable terms and conditions.
12
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Results of Operations:
Three Months Ended March 31, 1999 and 1998:
Revenues decreased by 18% or $111,606 from $623,064 in 1998 to $511,458 in 1999.
Approximately $70,000 of the decrease in revenues in 1999 as compared to 1998
was a result of the closing of the Times Square Facility in January 1998, which
contributed revenues for a portion of the three months ended March 31, 1998,
with the remainder of the decrease in revenues reflecting decreased tourist
traffic at both the West Edmonton Mall Facility and the Las Vegas Facility.
Selling, general and administrative expenses decreased by 18% or $115,765 from
$653,934 in 1998 to $538,169 in 1999, primarily as a result of the closing of
the Times Square Facility in January 1998.
Depreciation and amortization decreased by 20% or $34,841 from $171,204 in 1998
to $136,363 in 1999, primarily as a result of depreciation and amortization
related to the Times Square Facility, which was closed in January 1998.
Interest expense decreased by 19% or $13,055 from $67,054 in 1998 to $53,999 in
1999, primarily as a result of a reduction in the principal balances on interest
bearing debt.
As consideration for providing a line of credit to the Company, the Company
granted the Chief Executive Officer warrants to purchase 1,527,461 shares of
common stock at an exercise price of $0.13 per share, the fair market value on
the date of the
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agreement, expiring on February 2, 2002. The Company has calculated the fair
value of the warrants issued to the Chief Executive Officer on the date of
grant using the Black-Scholes option pricing model, and has charged the fair
value of $64,620 to operations as a loan commitment fee during the three
months ended March 31, 1999.
The Company recorded an extraordinary item of $56,413 relating to a settlement
with vendors during the three months ended March 31, 1998.
Net loss was $260,636 for the three months ended March 31, 1999, as compared to
a net loss of $205,421 for the three months ended March 31, 1998.
Liquidity and Capital Resources - March 31, 1999:
The Company utilized net cash of $190,989 in operating activities during the
three months ended March 31, 1999, as compared to utilizing net cash of $265,722
during the three months ended March 31, 1998, excluding the collection of the
$500,000 receivable from the Times Square landlord during the three months ended
March 31, 1998. The reduction in cash utilized in operating activities in 1999
as compared to 1998 of $74,733 was primarily a result of a reduction in cash
utilized for accounts payable and accrued expenses. At March 31, 1999, cash and
cash equivalents had decreased by $144,176, to $96,165, as compared to $240,341
at December 31, 1998. As a result, the Company had a working capital deficit of
($100,115) at March 31, 1999, as compared to ($72,319) at December 31, 1998,
resulting in current ratios of .61:1 and .81:1 at March 31, 1999 and December
31, 1998, respectively.
Net cash provided by investing activities was $31,412 for the three months ended
March 31, 1999, primarily as a result of $41,537 of dividends received from the
Company's joint venture with Dave & Buster's, Inc. Net cash used in investing
activities was $42,550 for the three months ended March 31, 1998, primarily as a
result of a $35,000 loan to the Company's Chief Executive Officer.
Net cash provided by financing activities was $15,401 for the three months ended
March 31, 1999. Net cash used in investing activities was $179,128 for the three
months ended March 31, 1998, as a result of principal payments on notes payable
and capital lease obligations.
The Company has relied on the proceeds from the sale of its securities and from
loans and equipment leases to provide the cash necessary to develop its
facilities and ride films and to operate its business.
14
<PAGE>
On December 31, 1996, the Company completed a financing agreement (the
"Financing Agreement") with Finova Technology Finance, Inc. (the "Lender")
structured as a sale-leaseback transaction of certain equipment owned by the
Company. Based on the substance of this transaction, the Financing Agreement was
accounted for as a note payable for financial reporting purposes. The gross loan
amount was for $1,575,027 and the original terms specified a four-year term with
payments of $40,903 per month and a balloon payment of $157,503. On March 10,
1999, the Financing Agreement was amended to reduce the monthly payments from
$40,903 to $21,789 and to extend the maturity date from January 1, 2001 to
January 1, 2004, with no change in the balloon payment of $157,503. The loan
bears interest at 15.7% per annum. The Financing Agreement requires the Company
to repurchase the equipment at the end of the lease for $1.00. The loan had a
balance of $916,572 and $894,235 at March 31, 1999 and December 31, 1998,
respectively.
On February 2, 1999, the Company entered into a loan agreement with its Chief
Executive Officer. The loan agreement amends the existing notes receivable of
approximately $90,000 from such officer to allow the Company the right to
demand repayment within 90 days of a written request. In addition, the loan
agreement includes a line of credit for $120,000 that the Chief Executive
Officer is providing to the Company that matures on February 2, 2002, with
interest at 12% per annum. The line of credit is secured by a lien on the
Company's assets. As consideration for providing the line of credit, the
Company granted the Chief Executive Officer warrants to purchase 1,527,461
shares of common stock at an exercise price of $0.13 per share, the fair
market value on the date of the agreement, expiring on February 2, 2002.
Las Vegas Facility Lease:
The Company generates the majority of its revenues from the Las Vegas
Facility. In connection with the December 1995 amendment to the Las Vegas
Facility lease, the Company waived, on a one-time only basis, its exclusivity
right within the Forum Shops at Caesar's Palace Hotel and Casino to allow an
IMAX Simulator Theater to be installed within the Forum Shops. However, the
Company obtained the right to terminate its lease if the Company's sales for
any full lease year after opening of the IMAX Simulator Theater do not equal
or exceed $2,000,000, and in return the landlord obtained the right to
terminate the lease if sales for any full lease year do not equal or exceed
$1,500,000. The IMAX Simulator Theater opened during December 1997.
Management does not believe that the Company has experienced any significant
decrease in revenues at its Las Vegas Facility subsequent to that date as a
result of the opening of the IMAX Simulator Theater. Management believes that
any decrease in revenues from its Las Vegas Facility is a result of decreased
tourist traffic at the Forum Shops. However, there can be no assurances that
revenues in subsequent years at the Las Vegas Facility will not decrease
below $1,500,000 annually and that the
15
<PAGE>
landlord will not terminate the lease.
Seasonality:
Because of the seasonal nature of tourist traffic, attendance patterns at
attractions may vary. The degree of this seasonality varies 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 highest during June through August (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. The
revenues generated during peak tourist periods have a significant impact on
the Company's results of operations.
Year 2000 Issue:
The Year 2000 issue results from the fact that certain computer programs have
been written using two digits rather than four digits to define the applicable
year. Computer programs that have sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, sell tickets or
engage in similar normal business activities.
Based on a recent internal assessment, the Company has determined that its
software programs are already Year 2000 compliant, or that the cost of any
needed modifications will not have a material effect on the Company's
consolidated financial position, results of operations or cash flows.
16
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) Sales of Equity Securities
During April 1997, the Company repurchased 6,473 shares of its common stock
previously issued to one of its vendors for $29,000. During the three months
ended March 31, 1999, the Company reissued these 6,473 shares held as treasury
stock to its Chief Financial Officer. The Company recorded the issuance of such
shares as additional compensation to the Chief Financial Officer at the
aggregate fair market value of $809.
On February 2, 1999, the Company entered into a loan agreement with its Chief
Executive Officer. The loan agreement includes a line of credit for $120,000
that the Chief Executive Officer is providing to the Company that matures on
February 2, 2002, with interest at 12% per annum. The line of credit is
secured by a lien on the Company's assets. As consideration for providing the
line of credit, the Company granted the Chief Executive Officer warrants to
purchase 1,527,461 shares of common stock at an exercise price of $0.13 per
share, the fair market value on the date of the agreement, expiring on
February 2, 2002.
The aforementioned securities were issued without registration in reliance upon
the exemption afforded by Section 4(2) of the Securities Act of 1933, as
amended, based on certain representations made to the Company by the recipients.
ITEM 5. OTHER EVENTS
Effective March 1, 1999, Toufic R. Bassil's employment as the Company's Chief
Financial Officer, Secretary and Treasurer terminated.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule (electronic filing only)
(b) Reports on Form 8-K:
Three Months Ended March 31, 1999 - None
17
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CINEMA RIDE, INC.
-----------------
(Registrant)
Date: May 18, 1999 By: /s/ MITCHELL J. FRANCIS
-----------------------
Mitchell J. Francis
Chief Executive Officer,
President, Chief Financial
Officer and Chairman of the
Board of Directors
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S QUARTERLY REPORT
ON FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 96,165
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 12,052
<CURRENT-ASSETS> 158,479
<PP&E> 2,847,043
<DEPRECIATION> 1,466,183
<TOTAL-ASSETS> 2,626,329
<CURRENT-LIABILITIES> 258,594
<BONDS> 856,608
0
0
<COMMON> 58,546
<OTHER-SE> 1,349,414
<TOTAL-LIABILITY-AND-EQUITY> 2,626,329
<SALES> 0
<TOTAL-REVENUES> 511,458
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,999
<INCOME-PRETAX> (260,636)
<INCOME-TAX> 0
<INCOME-CONTINUING> (260,636)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (260,636)
<EPS-PRIMARY> (.36)
<EPS-DILUTED> (.36)
</TABLE>
