<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 June 30, 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
--------------------------------------------------------------
(Address of principal executive offices)
(818) 761-1002
--------------------------
(Issuer's telephone number)
Not applicable
---------------------------------------------------
(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 July 31, 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.
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CINEMA RIDE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) - December
31, 1998 and June 30, 1999
Consolidated Statements of Operations (Unaudited) -
Three months and six months ended June 30, 1999 and
1998
Consolidated Statements of Cash Flows (Unaudited) -
Six months ended June 30, 1999 and 1998
Notes to Consolidated Financial Statements
(Unaudited) - Six Months Ended June 30, 1999 and 1998
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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Cinema Ride, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 161,825 $ 240,341
Inventories 11,860 8,666
Prepaid expenses and other
current assets 18,160 62,577
----------- -----------
Total current assets 191,845 311,584
----------- -----------
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 (1,540,908) (1,390,528)
----------- -----------
1,306,135 1,454,736
----------- -----------
Other assets:
Film library, net of accumulated
amortization of $792,491 and
$676,293 300,279 416,477
Investment in joint venture 439,838 473,957
Receivables from officers 93,348 89,631
Consulting agreement 33,814 39,016
Deferred lease costs and other
assets 132,557 156,679
----------- -----------
999,836 1,175,760
----------- -----------
Total assets $2,497,816 $2,942,080
=========== ===========
</TABLE>
(continued)
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Cinema Ride, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited) (continued)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 178,715 $ 243,480
Current portion of capital
lease obligations 20,680 18,985
Current portion of note payable
to lender (Note 2) 122,656 111,386
Current portion of note payable
to bank 5,044 10,052
----------- -----------
Total current liabilities 327,095 383,903
----------- -----------
Non-current liabilities:
Obligations under capital lease,
less current portion 52,222 63,004
Note payable to lender, less
current portion (Note 2) 766,290 782,849
Deferred rent 96,042 109,157
----------- -----------
914,554 955,010
----------- -----------
Total liabilities 1,241,649 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 (8,014,588) (7,602,159)
----------- -----------
Total stockholders' equity 1,256,167 1,603,167
----------- -----------
Total liabilities and
stockholders' equity $ 2,497,816 $ 2,942,080
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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Cinema Ride, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
Revenues $660,869 $537,954
Selling, general and
administrative expenses 645,659 585,770
Depreciation and amortization 135,596 137,343
------- -------
Loss from operations (120,386) (185,159)
Other income (expense)
Equity in net income
of joint venture 27,524
Interest income 2,281 7,748
Interest expense (61,212) (58,124)
------- -------
Net loss ($151,793) ($235,535)
======= =======
Basic and diluted net loss
per common share (Note 1) ($0.21) ($0.32)
==== ====
Weighted average common
shares outstanding -
basic and diluted 731,823 731,885
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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Cinema Ride, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1999 1998
--------- ---------
<S> <C> <C>
Revenues $1,172,327 $1,161,018
Selling, general and
administrative expenses 1,183,828 1,239,704
Depreciation and amortization 271,959 308,547
------- -------
Loss from operations (283,460) (387,233)
Other income (expense)
Equity in net income
of joint venture 45,579
Interest income 5,283 15,042
Interest expense (115,211) (125,178)
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 (412,429) (497,369)
Extraordinary item -
settlement with vendors 56,413
------- -------
Net loss ($412,429) ($440,956)
======= =======
Basic and diluted loss per
common share (Note 1):
Operating loss before
extraordinary item ($0.56) ($0.68)
Extraordinary item 0.08
---- ----
Net loss ($0.56) ($0.60)
==== ====
Weighted average common
shares outstanding -
basic and diluted 731,823 731,885
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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Cinema Ride, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($412,429) ($440,956)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 271,959 308,547
Common stock issued for services
rendered 809 3,107
Equity in net income of joint
venture (45,579)
Amortization of consulting
agreement 5,202 5,202
Amortization of deferred
financing costs 6,209 21,459
Settlement with vendors (56,413)
Exchange loss 20,091
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 (3,194) 8,817
Prepaid expenses and other
current assets 44,417 (5,789)
Receivable from Times Square
landlord 500,000
Deposits 12,532
Increase (decrease) in:
Accounts payable and
accrued expenses (66,544) (192,493)
Deferred rent (13,115) (16,478)
------- -------
Net cash provided by (used in)
operating activities (135,113) 155,094
------- -------
</TABLE>
(continued)
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Cinema Ride, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from investing activities:
Capital expenditures $ ($ 17,739)
Film production costs (2,643)
Investment in joint venture (1,724)
Dividends received from joint
venture 81,422
Increase in receivables from
officers (3,717) (35,000)
------- -------
Net cash provided by (used in)
investing activities 75,981 (55,382)
------- -------
Cash flows from financing activities:
Payments on notes payable (10,297) (160,866)
Principal payments on capital
lease obligations (9,087) (101,212)
------- -------
Net cash used in financing
activities (19,384) (262,078)
------- -------
Cash and cash equivalents:
Net decrease (78,516) (162,366)
At beginning of period 240,341 705,630
------- -------
At end of period $161,825 $543,264
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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Cinema Ride, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Six Months Ended June 30, 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 that
combine 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
June 30, 1999, the results of operations for the three months and
six months ended June 30, 1998 and 1999, and the cash flows for
the six months ended June 30, 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 fiscal 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 and six months
ended June 30, 1999 are not necessarily indicative of the results
of operations to be expected for the full fiscal 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 for all periods presented, and
accordingly, basic and diluted earnings per share are the same for
all periods presented. As of June 30, 1999, potential common
stock consisted of 184,813 stock options and 1,899,535 warrants
outstanding.
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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
at the end of the term 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 $888,946 and $894,235 at June 30, 1999 and December 31,
1998, respectively.
3. Stockholders' Equity
During January 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 the six months ended June 30, 1998.
During April 1997, the Company paid $29,000 to repurchase 6,473
shares of its common stock previously issued to one of its
vendors. During February 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 during the six months ended June 30, 1999.
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 grant 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 expires on February 2,
2002, with interest at 12% per annum, which is secured by a lien
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on the Company's assets. Through June 30, 1999, there had been no
borrowings under this line of credit. 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 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 six
months ended June 30, 1999.
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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 June 30, 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 this Quarterly Report on Form 10-QSB
for the quarterly period ended June 30, 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
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Officer (see "Liquidity and Capital Resources - June 30, 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 on
a timely basis and/or under acceptable terms and conditions.
Results of Operations:
Three Months Ended June 30, 1999 and 1998 -
Revenues increased by 23% or $122,915, to $660,869 in 1999 from
$537,954 in 1998, as a result of new marketing programs
implemented during 1999 that have increased both traffic and sales
per customer at the Las Vegas Facility.
Selling, general and administrative expenses increased by 10% or
$59,889, to $645,659 in 1999 from $585,770 in 1998, primarily as a
result of a charge of $70,000 recorded during the three months
ended June 30, 1999 related to the termination and settlement of
the former Chief Financial Officer's employment agreement and
severance agreement effective March 1, 1999.
Depreciation and amortization remained relatively constant,
decreasing by 1% or $1,747, to $135,596 in 1999 from $137,343 in
1998.
Interest expense increased by 5% or $3,088, to $61,212 in 1999
from $58,124 in 1998.
The Company recorded equity in net income of joint venture of
$27,524 for the three months ended June 30, 1999.
Net loss was $151,793 for the three months ended June 30, 1999, as
compared to a net loss of $235,535 for the three months ended June
30, 1998.
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Six Months Ended June 30, 1999 and 1998 -
Revenues remained relatively constant, increasing by 1% or
$11,309, to $1,172,327 in 1999 from $1,161,018 in 1998. Included
in 1998 revenues is approximately $70,000 of revenues from the
Times Square Facility prior to its closure in January 1998.
However, as a result of new marketing programs implemented during
1999 that increased both traffic and sales per customer at the Las
Vegas Facility, the Las Vegas Facility generated a sufficient
increase in revenues in 1999 to more than offset the loss of
revenues from the Times Square Facility.
Selling, general and administrative expenses decreased by 5% or
$55,876, to $1,183,828 in 1999 from $1,239,704 in 1998, primarily
as a result of the closure of the Times Square Facility in January
1998. Included in selling, general and administrative expenses in
1999 is a charge of $70,000 related to the termination and
settlement of the former Chief Financial Officer's employment
agreement and severance agreement effective March 1, 1999.
Depreciation and amortization decreased by 12% or $36,588, to
$271,959 in 1999 from $308,547 in 1998, primarily as a result of
depreciation and amortization related to the Times Square
Facility, which was closed in January 1998.
Interest expense decreased by 8% or $9,967, to $115,211 in 1999
from $125,178 in 1998, as a result of reductions in the
outstanding balances of note payable to lender and capital lease
obligations.
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
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 six months ended
June 30, 1999.
The Company recorded equity in net income of joint venture of
$45,579 for the six months ended June 30, 1999.
The Company recorded an extraordinary item relating to a
settlement with vendors of $56,413 during the six months ended
June 30, 1998.
Net loss was $412,429 for the six months ended June 30, 1999, as
compared to a net loss of $440,956 for the six months ended June
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30, 1998.
Liquidity and Capital Resources - June 30, 1999:
The Company utilized cash of $135,113 in operating activities
during the six months ended June 30, 1999, as compared to
utilizing cash of $344,906 during the six months ended June 30,
1998, excluding the collection of the $500,000 receivable from the
Times Square landlord during the six months ended June 30, 1998.
The reduction in cash utilized in operating activities in 1999 as
compared to 1998 of $209,793 was primarily a result of a reduction
in cash utilized for accounts payable and accrued expenses. At
June 30, 1999, cash and cash equivalents had decreased by $78,516,
to $161,825, as compared to $240,341 at December 31, 1998. As a
result, the Company had a working capital deficit of ($135,250) at
June 30, 1999, as compared to ($72,319) at December 31, 1998,
resulting in current ratios of .59:1 and .81:1 at June 30, 1999
and December 31, 1998, respectively.
Net cash provided by investing activities was $75,981 for the six
months ended June 30, 1999, primarily as a result of $81,422 of
dividends received from the Company's joint venture with Dave &
Buster's, Inc. Net cash used in investing activities was $55,382
for the six months ended June 30, 1998, primarily as a result of a
$35,000 loan to the Company's Chief Executive Officer.
Net cash used in financing activities was $19,384 and $262,078 for
the six months ended June 30, 1999 and 1998, respectively, 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.
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
at the end of the term 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
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balance of $888,946 and $894,235 at June 30, 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 grant the Company the right to demand repayment within
90 days of a written request. In addition, the loan agreement
includes a line of credit of $120,000 that the Chief Executive
Officer is providing to the Company that expires on February 2,
2002, with interest at 12% per annum, which is secured by a lien
on the Company's assets. Through June 30, 1999, there had been no
borrowings under this line of credit. 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.
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 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 than the Las Vegas Facility due to
the extreme weather conditions during the winter months in
-17-
<PAGE>
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
date 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 and cash flows.
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Effective March 1, 1999, Toufic R. Bassil's employment as the
Company's Chief Financial Officer, Secretary and Treasurer was
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 June 30, 1999 - None
-19-
<PAGE>
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)
/s/ MITCHELL J. FRANCIS
Date: August 9, 1999 By: ___________________________
Mitchell J. Francis
Chief Executive Officer,
President, Chief Financial
Officer and Chairman of the
Board of Directors
(Duly Authorized Officer
and Chief Financial
Officer)
-20-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED JUNE
30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 161,825
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 11,860
<CURRENT-ASSETS> 191,845
<PP&E> 2,847,043
<DEPRECIATION> 1,540,908
<TOTAL-ASSETS> 2,497,816
<CURRENT-LIABILITIES> 327,095
<BONDS> 818,512
0
0
<COMMON> 58,546
<OTHER-SE> 1,197,621
<TOTAL-LIABILITY-AND-EQUITY> 2,497,816
<SALES> 0
<TOTAL-REVENUES> 1,172,327
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,211
<INCOME-PRETAX> (412,429)
<INCOME-TAX> 0
<INCOME-CONTINUING> (412,429)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (412,429)
<EPS-BASIC> (.56)
<EPS-DILUTED> (.56)
</TABLE>
