UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934

      For the Fiscal Year Ended  December 31, 2000

[ ]  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.
                 ----------------------------------------------
                 (Name of small business issuer 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, including zip code)


Issuer's telephone number, including area code:  (818) 761-1002

Securities registered pursuant to Section 12(b) of the Act:  None.

Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $0.08 par value
                          -----------------------------
                                (Title of class)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the Exchange  Act during the  preceding 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 [ ]

     Check  if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

     The  issuer's  revenues  for the fiscal year ended  December  31, 2000 were
$2,760,309.

     The  aggregate   market  value  of  the  issuer's   common  stock  held  by
non-affiliates of the Company as of March 30, 2001, was $182,183.

     As of March 30, 2001,  the issuer had 789,823 shares of common stock issued
and outstanding. Transitional Small Business Disclosure Format: Yes [ ] No [x]

     Documents incorporated by reference: None.


<PAGE>

Cautionary   Statement  Pursuant  to  Safe  Harbor  Provisions  of  the  Private
Securities Litigation Reform Act of 1995:

     This Annual  Report on Form 10-KSB for the fiscal year ended  December  31,
2000  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
Annual  Report on Form  10-KSB for the fiscal year ended  December  31, 2000 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.


                                       -2-
<PAGE>


                                     PART I.


ITEM 1.   DESCRIPTION OF BUSINESS

Overview:

        Cinema Ride, Inc. (the "Company") was  incorporated in Delaware in April
1993. Unless the context otherwise  requires,  references to the Company in this
report refer to Cinema Ride,  Inc. and its  subsidiaries.  The Company is in the
business of developing and operating  rides  consisting of 3-D 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.  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 five facilities.  The
first facility (the "Las Vegas Facility")  commenced  operations in October 1994
and is located  in the Forum  Shops at  Caesar's  Palace  Hotel and Casino  (the
"Forum  Shops"),  a high traffic  tourist mall located  between  Caesar's Palace
Hotel and 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 at a location in
Times Square in New York City, New York, and was closed during January 1998. The
fourth facility (the "Atlanta Facility")  commenced operations in September 1998
as a joint  venture  with Dave &  Buster's,  Inc.  and is  located  in  Atlanta,
Georgia.  The fifth facility (the "New Jersey Facility") commenced operations in
January 2000 and is located in the Jersey Gardens Mall in Elizabeth, New Jersey,
near Newark Airport. The Company's executive offices are located in Studio City,
California.

Going Concern:

     The consolidated financial statements as of and for the year ended December
31, 2000 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 consolidated financial statements do not purport to
represent  the  realizable  or  settlement  values.  The  Company  has  suffered
recurring  operating  losses and had a working  capital  deficit at December 31,
2000.  In  addition,  the Company did not make several  monthly  payments to its
primary  secured  lender  during the latter part of the year ended  December 31,
2000 and the early part of the year ending  December  31,  2001.  As a result of
these factors,  the Company's  independent  certified  public  accountants  have
expressed  substantial  doubt about the Company's ability to continue as a going
concern.  The Company  believes  that its  previous  efforts to reduce costs and
operate  more  efficiently,  combined  with the March  1999  modified  financing
arrangements  with the Company's  secured lender,  borrowings  under the line of
credit provided by the Company's Chief Executive Officer, and the opening of the
New Jersey Facility, will generate improved cash flows, although there can be no
assurances that such efforts will be successful. Furthermore, to the extent that
the Company's Las Vegas Facility  experiences a continuing  decline in revenues,
the  Company's  liquidity and ability to continue to conduct  operations  may be
impaired.

        The Company will require  additional  capital to fund operating and debt
service  requirements,   as  well  as  to  fund  expansion  plans  and  possible
acquisitions,  mergers and joint  ventures,  including the amended joint venture
agreement  with  Dave  &  Buster's,   Inc.  The  Company  is  exploring  various
alternatives to raise this required capital, but there can be no assurances that
the Company will be successful in this regard. To the extent that the Company is
unable to secure the capital necessary to fund its future cash requirements on a
timely basis and/or under acceptable  terms and conditions,  the Company may not
have  sufficient  cash  resources  to maintain  operations.  In such event,  the
Company  may be  required  to  consider a formal or  informal  restructuring  or
reorganization.

Equipment and Technology:

        Each of the Company's rides is comprised of two basic elements, a motion
simulator,  which consists of an enclosed seating platform and related equipment
and  computer  programming,  and  the  3-D  films  viewed  by  audiences  in the
simulator.


                                      -3-
<PAGE>

        Simulators:

        The Company  utilizes a simulator that is both space and cost efficient.
Each simulator includes an enclosed capsule with 15 seats in which audiences are
seated during a given ride. Inside the capsule,  each seat faces a screen at the
front of the capsule onto which the ride film is projected.  Company attractions
consist of one or more  capsules,  the number of which  varies  depending on the
size and  desired  seating  capacity  of a  particular  location.  The Las Vegas
Facility consists of four capsules, the New Jersey consists of two capsules, and
the West  Edmonton  Mall  Facility and the Atlanta  Facility each consist of one
capsule.

        Capsules  are  mounted  on  top  of a  motion  base  consisting  of  six
independent  hydraulic  cylinders  that  control the  movement  of the  attached
capsule.  The motion bases allow an audience to experience a full six degrees of
motion (pitch,  roll, heave, yaw, surge and sway). Through the use of the motion
base,  capsules have a maximum range of motion of  approximately  six feet.  The
motion bases used by the Company were  constructed by a manufacturer of military
and commercial flight simulators which is now out of business.  However, to date
this has not  been a  problem  for the  Company,  since  replacement  parts  are
available  from other  sources and the motion  bases are being  manufactured  by
another company.

        Each  simulator  combines  the motion  base and  capsule  with two video
projectors  and audio  systems  which  provide a visual  and audio  presentation
without the  degeneration  of picture  and sound that is common to film  formats
under  heavy  usage.  In  addition,  the use of laser disk  players  enables the
Company to avoid delays  associated with rewinding  traditional film and enables
the Company to change entire presentations with the push of a single button. The
projection  equipment used by the Company is capable of projecting  both 3-D and
standard ride films.

        All of the mechanical  equipment comprising the simulator is coordinated
by a computer system. A time code is added to each laser disk in order to enable
the film data to  correspond  with the  movement  of the  motion  bases.  As the
projectors receive the film and sound data from the laser disks, the simulator's
computer  receives the time code,  which enables the computer to synchronize the
filmed  action with the  movement of the motion  bases and the  operation of the
wind machines.

        The  equipment  utilized by the  Company  contains  relatively  standard
hydraulic  components  that are readily  available  through  various vendors and
suppliers.  Should the need arise,  the Company  believes that other vendors are
available  that could  manufacture  and  maintain  the  equipment.  In addition,
because each simulator is completely  independent  of the other  simulators in a
given location,  the Company is able to perform routine maintenance and make any
necessary repairs to simulator  equipment without hindering the operation of the
entire attraction at a facility that has more than one capsule.

        The Company currently owns two remaining capsules that it intends to use
exclusively for spare parts. Accordingly,  the Company expects that any new ride
sites would be based on newly-developed ride technology.

        3-D Films:

        Each  of  the  Company's  attractions  utilize  3-D  technology  in  the
exhibition  of  ride  films.  This  3-D  technology   creates  the  illusion  of
three-dimensional  images. The technology  involves the filming and simultaneous
projection of images that are slightly offset from each other which, when viewed
with  special  polarized  glasses,  create an illusion  of depth and  off-screen
effects which are not possible with traditional 2-D filmed  entertainment.  With
regard to this  technology,  on January 12, 1999, the Company was granted Patent
No.  5,857,917 by the United States  Patent and  Trademark  Office for 3-D video
projected motion simulator rides.

        The Company had completed production of six ride films for exhibition in
its attractions. The Company produces ride films by contracting with independent
film production companies.

        The typical ride film lasts approximately four minutes.  Each capsule is
able to feature  approximately  nine to twelve attractions per hour. The Company
does not anticipate that any of its attractions  will operate at or near maximum
capacity.

                                      -4-
<PAGE>

Facility Operations:

        The Company  currently  generates  virtually  all of its income from the
sale of ride  tickets.  Ride tickets are sold to  customers  at a ticket  booth.
Prior to the showing,  ticket  holders are led through an entry area where their
tickets are taken and they are handed 3-D glasses and led into a pre-show  area.
While the previous  audience is inside the capsule viewing the ride film, ticket
holders in the  pre-show  area watch a short film on a video  monitor  outlining
safety instructions and other information regarding the ride.

        Once the previous  showing has been  completed,  ticket  holders are led
into the  capsule.  Each seat in the  capsule  has a safety  belt that  audience
members are required to wear for the duration of the ride film. The audience and
the area  surrounding  the capsule are  monitored  via video cameras by the ride
operator during each showing for the safety of audience members. Upon completion
of the ride film,  audiences exit back into the lobby area where the 3-D glasses
are deposited into a return basket for cleaning.

        The hours of operation for all of the Company's facilities are generally
from 11:00 a.m. to 11:30 p.m. The average price per show is generally  less than
$5.00 due to the Company's  practice of selling multiple features per ticket and
the use of coupons and other promotional discounts.

Joint Ventures:

        On May 29, 1998,  the Company  entered into a three-year  joint  venture
agreement  with Dave &  Buster's,  Inc.  to install  its 3-D  motion  simulation
theater at Dave & Buster's, Inc. facility in Atlanta,  Georgia. Dave & Buster's,
Inc. was  responsible for providing the space in its Atlanta,  Georgia  facility
and preparing the premises for installation. The Company was responsible for the
transportation and installation of its equipment.  The theater  installation was
completed  and became  operational  on  September  14, 1998.  The joint  venture
agreement can be  terminated by either party prior to the end of the  three-year
period if,  among  other  things,  certain  revenue  and cash flow goals are not
achieved.

        During May 2000,  the  Company  entered  into an  agreement  with Dave &
Buster's,  Inc. to amend and update the  existing  joint  venture  agreement  to
include the  installation  of five additional ride facilities in new or existing
Dave &  Buster's,  Inc.  locations.  The  Company  will be  responsible  for the
installation of its newly-designed  twenty seat open pod simulator systems.  The
Company will also be responsible  for providing all of the hardware and software
required  to operate the ride  facility.  The Company  will  require  additional
capital  in order to be able to fund its  obligations  under the  amended  joint
venture agreement (see "ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION - Going Concern").

        In order to reduce the  out-of-pocket  costs in the  development  of new
attractions,   the  Company   intends  to  continue  to  pursue  joint   venture
arrangements  with property owners and businesses that want to operate their own
attractions.  The Company and its joint venture partner would split the profits,
if any, from the attraction based on negotiated terms. Joint ventures with third
parties  would  provide the Company  with an  additional  source of revenues and
profits with less risk and capital investment than is associated with owning and
operating systems.

Competition:

        The Company faces intense  competition in the  development and marketing
of attractions.  Such competition includes gaining access to desirable locations
for  attractions,  as well as to selling or leasing  simulators  and ride films.
Iwerks Entertainment, Inc. and Showscan Corporation, as well as other companies,
develop and market  simulators  that  compete  with the  simulators  and related
filmed  entertainment  developed  and  marketed  by the  Company.  Many of these
corporations have greater financial and marketing resources than the Company and
have  established  reputations  for success in the  development and marketing of
products.  In addition,  there are no  significant  barriers to entry that would
prevent   additional   competitors  from  competing  with  the  Company  in  the
development and operation of attractions on a site-by-site basis.

                                      -5-
<PAGE>

        The  Company  also  competes  with  existing  motion   simulators  on  a
site-by-site  basis. The Company is aware of several  competing motion simulator
attractions  currently  existing in the vicinity of its facilities,  including a
motion simulator  attraction  developed by Caesar's Palace Hotel and Casino with
IMAX  Corporation  which was opened during December 1997 in the new expansion of
the Forum Shops.  In addition,  the Excalibur Hotel in Las Vegas has a simulator
ride facility that has been  operational for many years. The Hilton Hotel Casino
and the  Luxor  Hotel  and  Casino  in Las Vegas  also  offer  motion  simulator
attractions.  In addition,  other hotels or theme parks in Las Vegas may acquire
or develop motion simulator attractions, including such major new hotels such as
the Mandalay Bay and the Venetian. To a lesser extent, the Company also competes
for customers with theme parks,  traditional  motion pictures and other forms of
filmed or computer  entertainment.  Similarly,  the West  Edmonton Mall Facility
competes with existing motion  simulators within the West Edmonton Mall. The New
Jersey  Facility  has no  motion  simulator  competition  within  the  immediate
vicinity.   The  Company's   attractions  compete  with  other  attractions  and
entertainment alternatives in a given region on the basis of location, price and
content of its ride films.

        The Company  believes that the real estate  experience of its management
assists  it  in  effectively  competing  in  locating  and  acquiring  favorable
locations  for its  attractions.  In  addition,  the Company  believes  that the
compact size and realistic motion capabilities of its simulators, as well as the
unique and entertaining  thematic elements and effects of its ride films, enable
it to compete  effectively  for  customers  with regard to the  marketing of its
attractions.

Identification and Development of New Sites for Attractions:

        Subject to the availability of operating capital, the Company intends to
seek additional  locations for attractions.  The Company intends to target sites
for its  attractions  which  are in large  metropolitan  areas  or which  are at
tourist  destinations that attract more than three million persons per year. The
Company's objective is to lease high-profile, high-traffic space at a reasonable
cost in areas with a large number of permanent  residents  and which do not have
extreme  seasonal  attendance   patterns,   and  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 $400,000 per
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 theaters  installed,  as well as the
size and  location  of the  planned  attraction.  In addition to the cost of the
equipment  necessary  to  establish  a  new  attraction  location,  the  Company
estimates  that it will add  approximately  ten  employees  per each  additional
location that it owns and operates.  There can be no assurances that the Company
will  be  able to  locate  acceptable  new  sites  in  which  to  establish  new
attractions, or that the Company will be able to fund the development of any new
sites that it may select.

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. Attendance at the Company's facilities is 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.

                                      -6-
<PAGE>

Trademarks, Copyrights and Patents:

        On January 12, 1999, the Company was granted Patent No. 5,857,917 by the
United  States  Patent  and  Trademark  Office  for 3-D video  projected  motion
simulator  rides.  However,  there can be no assurance  that the Company will be
able to utilize  this  patent to prevent  competitors  from  developing  similar
simulator systems.

        During 1996,  the Company  obtained a trademark  for "Cinema Ride" and a
trademark for "Ride Guy". In addition,  the Company holds  copyright  protection
for each of the ride films owned by the Company.  Although patent, trademark and
copyright  protection  is  desirable,  the  Company  believes  that  such  legal
protection is less significant to the Company's success than factors such as the
location and  marketing of  attractions  and the  production or  acquisition  of
entertaining ride films.

Insurance:

        The Company  maintains  insurance  coverage  that it  believes  provides
adequate coverage for all of its current operations.  The Company also maintains
$1,000,000  "key-man"  life  insurance on the life of Mitchell J.  Francis,  its
President  and Chief  Executive  Officer,  as to which the  Company  is the sole
beneficiary.

Governmental Regulations:

        The  Company  is  subject  to  certain  governmental   regulations  that
establish  standards  for the design,  construction,  installation,  alteration,
maintenance,  operation and inspection of amusement  rides such as the Company's
attractions.  The Company is in compliance  with such standards and has obtained
all necessary permits and approvals.

Employees:

        As of March 30, 2001, the Company had three  full-time  employees at its
corporate  offices  (including  its  officers),  21  employees  at its Las Vegas
Facility,  four employees at its West Edmonton Mall Facility,  five employees at
its New Jersey Facility, and one employee at the Dave & Buster's,  Inc. facility
in Atlanta,  Georgia.  Employees at the ride locations consist of both full-time
and  part-time  employees.  Should the Company add new  facilities,  the Company
expects to hire  additional  employees to manage and operate the new facilities.
The Company's  employees are not represented by any unions. The Company believes
that its relations with its employees are satisfactory.


ITEM 2.   DESCRIPTION OF PROPERTY

Las Vegas Facility:

        In October 1993, the Company  entered into a lease  agreement for a site
in the Forum Shops adjacent to Caesar's  Palace Hotel and Casino that houses the
Company's  Las Vegas  Facility.  The Las Vegas  Facility  lease has a term of 10
years through July 2004,  with an option to extend the term of the lease for one
additional five-year period.

West Edmonton Mall Facility:

        During July 1995, the Company,  through its wholly-owned Alberta, Canada
subsidiary,  Cinema Ride  Edmonton,  Inc.,  entered  into a lease  agreement  to
install  and operate one capsule in the West  Edmonton  Mall,  Alberta,  Canada.
Effective  July 1,  2000,  the  Company  entered  into a  Renewal  and  Amending
Agreement for a term of five years through June 2005.

        The West  Edmonton  Mall  consists of 5,200,000  square feet of rentable
space,  combining  recreation,  entertainment  and retail  shops.  The mall also
includes  a 360 room  hotel,  a gambling  casino,  several  restaurants,  an ice
skating  ring, a dolphin  show, a water park,  20  aquariums,  a miniature  golf
course, a roller coaster,  and two motion simulators.  The Company's facility is
located within the food court of the mall, thus capitalizing on the traffic that
the food  court  generates,  especially  in the high  tourist  season.  The West
Edmonton  Mall  completed  an  expansion   project  in  1999  that  included  an
entertainment center and an IMAX Theater.


                                      -7-
<PAGE>

New Jersey Facility:

        During  October 1999,  the Company,  through its  wholly-owned  New York
subsidiary,  Cinema Ride Times Square,  Inc.,  entered into a lease agreement to
install and operate two  capsules in the Jersey  Gardens  Mall,  Elizabeth,  New
Jersey.  The New Jersey  Facility lease has a term of five years through January
2005,  with an  option  to  extend  the  term of the  lease  for one  additional
five-year  period.  The Company opened this facility in January 2000. The Jersey
Gardens Mall  consists of  1,500,000  square feet of rentable  space,  combining
factory outlet shops and entertainment, and is located near Newark Airport.

Corporate Offices:

        The  Company  leases  office  space in Studio  City,  California  as its
corporate  headquarters.  The lease is for a period of five years  expiring June
2005,  with an  option  to  extend  the  term of the  lease  for one  additional
five-year period. The monthly rent is currently $4,263.


ITEM 3.   LEGAL PROCEEDINGS

        From time to time, the Company is involved in litigation  arising in the
ordinary  course  of  business.  In the  opinion  of  management,  the  ultimate
disposition  of these  matters  will not have a material  adverse  effect on the
Company's consolidated financial position, results of operations or cash flows.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were  submitted to a vote of the Company's  security  holders
during the fourth quarter of the fiscal year ended December 31, 2000.






                                    PART II.


ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        Since March 12, 1998, the common stock of the Company has been traded on
the OTC Bulletin Board under the symbol "MOVE".  The following  table sets forth
the range of reported  closing bid prices of the  Company's  common stock during
the  periods  indicated.  Such  quotations  reflect  prices  between  dealers in
securities and do not include any retail mark-up,  mark-down or commission,  and
may not necessarily  represent  actual  transactions.  The information set forth
below reflects the one-for-eight reverse stock split effective May 29, 1998. The
information set forth below was obtained from America Online, Inc.


                                                     High          Low
                                                     ----          ---
     Fiscal Year Ended December 31, 1999:
     -----------------------------------

     Three months ended -

     March 31, 1999                                  0.25         0.06

     June 30, 1999                                   0.38         0.12

     September 30, 1999                              0.13         0.13

     December 31, 1999                               0.44         0.13


     Fiscal Year Ended December 31, 2000:
     -----------------------------------

     Three months ended -

     March 31, 2000                                  1.69         0.25

     June 30, 2000                                   1.51         1.13

     September 30, 2000                              1.25         0.50

     December 31, 2000                               0.54         0.31




                                      -8-
<PAGE>


        As  of  March  30,  2001,  the  Company  had  approximately  200  common
shareholders of record,  excluding shares held in street name by brokerage firms
and other nominees who hold shares for multiple investors. The Company estimates
that it had approximately  1,100 beneficial common  shareholders as of March 30,
2001.

        Holders of common  stock are  entitled to receive  dividends  if, as and
when declared by the Board of Directors out of funds legally available therefor,
subject to the dividend and  liquidation  rights of any preferred stock that may
be issued and outstanding. The Company has not paid cash dividends on its common
stock and has no present  intention of paying cash dividends in the  foreseeable
future.  It is the  present  policy of the  Board of  Directors  to  retain  all
earnings  to provide  for the future  growth and  development  of the  Company's
business operations.

        During the year ended  December  31,  2000,  the Company  issued  58,000
shares of common stock to certain of its non-officer employees and consultants.

        During the year ended  December  31,  2000,  the Company  issued a stock
option to its Chief Executive  Officer to purchase 25,000 shares of common stock
with an exercise price of $0.25 per share.

        During the year ended  December  31,  2000,  the Company  issued a stock
option to its Chief Executive Officer to purchase 300,000 shares of common stock
with an exercise price of $0.50 per share.

        The shares of common stock, stock options and warrants were issued based
on an exemption from registration pursuant to Section 4(2) of the Securities Act
of 1933, as amended, based on the representations of the recipients.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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 current operating  locations,  the West Edmonton Mall Facility,
the Atlanta  Facility,  and the New Jersey Facility,  in August 1995,  September
1998, and January 2000, respectively.

Going Concern:

     The consolidated financial statements as of and for the year ended December
31, 2000 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 consolidated financial statements do not purport to
represent  the  realizable  or  settlement  values.  The  Company  has  suffered
recurring  operating  losses and had a working  capital  deficit at December 31,
2000.  In  addition,  the Company did not make several  monthly  payments to its
primary  secured  lender  during the latter part of the year ended  December 31,
2000 and the early part of the year ending  December  31,  2001.  As a result of
these factors,  the Company's  independent  certified  public  accountants  have
expressed  substantial  doubt about the Company's ability to continue as a going
concern.  The Company  believes  that its  previous  efforts to reduce costs and
operate  more  efficiently,  combined  with the March  1999  modified  financing
arrangements  with the Company's  secured lender,  borrowings  under the line of
credit provided by the Company's Chief Executive Officer, and the opening of the
New Jersey Facility, will generate improved cash flows, although there can be no
assurances that such efforts will be successful. Furthermore, to the extent that
the Company's Las Vegas Facility  experiences a continuing  decline in revenues,
the  Company's  liquidity and ability to continue to conduct  operations  may be
impaired.

                                      -9-
<PAGE>

        The Company will require  additional  capital to fund operating and debt
service  requirements,   as  well  as  to  fund  expansion  plans  and  possible
acquisitions,  mergers and joint  ventures,  including the amended joint venture
agreement  with  Dave  &  Buster's,   Inc.  The  Company  is  exploring  various
alternatives to raise this required capital, but there can be no assurances that
the Company will be successful in this regard. To the extent that the Company is
unable to secure the capital necessary to fund its future cash requirements on a
timely basis and/or under acceptable  terms and conditions,  the Company may not
have  sufficient  cash  resources  to maintain  operations.  In such event,  the
Company  may be  required  to  consider a formal or  informal  restructuring  or
reorganization.

        From time to time the  Company  may also  consider a wide range of other
business opportunities,  some of which may be unrelated to the Company's current
business activities and could also require additional capital,  and could result
in a change in control of the Company.

Results of Operations:

Years Ended December 31, 2000 and 1999 -

        Revenues  increased  by  $302,702  or 12.3% to  $2,760,309  in 2000,  as
compared to $2,457,607 in 1999,  almost all of which was attributable to the New
Jersey Facility, which opened in January 2000.

        Direct costs of revenues increased by $349,999 or 30.4% to $1,474,949 in
2000, as compared to $1,130,950 in 1999, primarily as a result of the opening of
the New Jersey Facility in January 2000. Approximately $75,000 of start-up costs
for the New Jersey Facility were incurred  during January 2000.  Direct costs of
revenues  were 53.4% of  revenues  in 2000,  as compared to 46.0% of revenues in
1999.

        Selling and marketing costs increased by $99,796 or 67.5% to $247,588 in
2000,  as  compared  to $147,792  in 1999,  primarily  as a result of  increased
marketing and promotional activities.

        General  and  administrative  expenses  decreased  by $52,591 or 5.1% to
$978,529 in 2000, as compared to  $1,031,120  in 1999,  primarily as a result of
cost-cutting measures implemented by the Company.

        Depreciation  and  amortization  decreased  by  24.1%  or  $120,741,  to
$381,788 in 2000,  as compared to $502,529 in 1999,  primarily  as a result of a
reduction in depreciation and  amortization  related to the closure of the Times
Square Facility in January 1998.

        Interest  expense  decreased by $16,471 or 8.2% to $184,422 in 2000,  as
compared  to  $200,893  in 1999,  primarily  as a result of a  reduction  in the
outstanding  principal  balance on the note payable to lender and a reduction in
the outstanding balance of capital lease obligations.

        Equity in net income  (loss) of joint  venture was $(6,715) in 2000,  as
compared  to  $48,403  in 1999 (see  "ITEM 1.  DESCRIPTION  OF  BUSINESS - Joint
Ventures").

        As  consideration  for  providing a line of credit to the  Company,  the
Company  granted the Chief  Executive  Officer  warrants  to purchase  1,538,461
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
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 charged
the fair value of $64,620 to operations as a loan commitment fee during the year
ended December 31, 1999.

                                      -10-
<PAGE>

        The Company  recorded a net loss of  $510,283 in 2000,  as compared to a
net loss of $559,941 in 1999.

        As of December  31,  2000,  the Company had Federal and  California  net
operating  loss  carryforwards  of  approximately   $7,244,000  and  $3,374,000,
respectively,  available to offset future Federal and California taxable income.
The unused net operating loss  carryforwards  expire in various  amounts through
2020 for Federal and through 2010 for California state purposes.

        Net deferred tax assets of approximately $2,733,000 at December 31, 2000
resulting from net operating losses, tax credits and other temporary differences
have been offset by a 100% valuation allowance since management cannot determine
whether it is more likely than not that such assets will be realized.

Liquidity and Capital Resources:

     The Company  utilized  cash of $84,088 in operating  activities  during the
year ended  December 31, 2000, as compared to utilizing  cash of $17,260  during
the year ended  December  31, 1999.  The increase in cash  utilized in operating
activities  in 2000 as compared to 1999 of $66,828 was primarily a result of the
opening  of the New  Jersey  Facility  in January  2000 and a  reduction  in the
Company's  equity in net income (loss) of joint  venture.  At December 31, 2000,
the Company's cash and cash equivalents had decreased by $210,355,  to $109,834,
as compared to $320,189 at December 31, 1999. The Company has also  reclassified
to current  liabilities  the  non-current  portion of notes payable to lender of
$553,891 at December 31, 2000.  As a result,  the Company had a working  capital
deficit of  ($874,385)  at December 31, 2000,  as compared to a working  capital
deficit of ($47,006) at December 31, 1999, resulting in current ratios of 0.16:1
and 0.88:1 at December 31, 2000 and 1999, respectively.

     Net cash provided by investing  activities  was $9,431 in 2000, as compared
to $73,163 in 1999.  Dividends  from the joint  venture were $44,223 in 2000, as
compared to $110,697 in 1999.  The Company  received  $8,069 and $85,000 in 2000
and 1999,  respectively,  as proceeds  from the repayment of a loan to its Chief
Executive Officer,  including both principal and interest.  The Company expended
$42,861 and $122,535 in 2000 and 1999,  respectively,  for the purchase of fixed
assets, primarily with respect to the New Jersey Facility.

        Net cash  utilized in  financing  activities  was  $135,698 in 2000,  as
compared  to net cash  generated  by  financing  activities  of $23,946 in 1999.
Principal payments on notes payable were $98,238 in 2000, as compared to $73,722
in 1999.  Principal  payments on capital lease obligations were $37,460 in 2000,
as compared  to $22,332 in 1999.  During  November  1999,  the Company  borrowed
$120,000 from its Chief  Executive  Officer under the line of credit arranged in
February 1999,  which was utilized to fund the costs associated the installation
and  start-up of the New Jersey  Facility,  which  opened in January  2000.  The
Company also financed the  acquisition of fixed assets  aggregating  $65,384 for
the New Jersey Facility through capital lease obligations in 1999.

        During the last few years the  Company has relied on the  proceeds  from
loans from both related and unrelated  parties and capital leases to provide the
resources  necessary to develop its facilities and ride films and to operate its
business.  As of  December  31,  2000,  the  Company  did not have  any  capital
expenditure commitments outstanding.

        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 the 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.

                                      -11-
<PAGE>

     On December  31, 1996,  the Company  completed a financing  agreement  with
Finova  Technology  Finance,  Inc. (the "Lender") which was structured as a sale
leaseback  transaction of certain  equipment owned 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
$1,575,027,  repayable  over a  four-year  period at  $40,903  per month  with 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 an annual  rate of
16.75%. The financing agreement requires the Company to repurchase the equipment
at the end of the lease for  $1.00.  The  balance of the loan was  $732,327  and
$830,149 at December  31,  2000 and 1999,  respectively.  As a result of reduced
cash flows  generated  by  operations  during the year ended  December 31, 2000,
Company did not make the monthly  payments due the lender during the latter part
of the year  ended  December  31,  2000 and the  early  part of the year  ending
December 31, 2001.  Although  the Company is in  discussions  with the lender to
restructure its financing agreement, there can be no assurances that the Company
will be successful in this regard.  As a result,  the Company has classified its
entire  obligation  to the lender as a current  obligation  in the  consolidated
financial statements.

        On February 2, 1999, the Company  entered into a loan agreement with the
Company's Chief Executive Officer.  The loan agreement amended outstanding notes
receivable,  including  accrued  interest,  of  approximately  $90,000 from such
officer so as to grant the Company the right to demand  repayment within 90 days
of a written request. In addition,  the loan agreement included a line of credit
of $120,000 from the Chief  Executive  Officer that expires on February 2, 2002,
with  interest  at 12% per annum,  which 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  1,538,461  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.  Pursuant to this amended loan
agreement,  during November 1999, the Chief Executive  Officer repaid $85,000 of
his notes receivable, consisting of principal of $75,000 and accrued interest of
$10,000, and the Company borrowed $120,000 from him under the line of credit. At
December 31, 1999,  the  remaining  balance of notes  receivable  from the Chief
Executive  Officer was $8,069,  which was repaid during the year ended  December
31, 2000.

New Accounting Pronouncement:

        In June 1998,  the Financial Accounting Standards Board issued Statement
No. 133, "Accounting for  Derivative Instruments and Hedging Activities"  ("SFAS
No. 133"),  which is effective for financial  statements for all fiscal quarters
of all fiscal years beginning after June 15, 2000. SFAS No. 133 standardizes the
accounting for derivative instruments, including  certain derivative instruments
embedded in other contracts,  by requiring that an entity recognize  those items
as assets or  liabilities  in the  statement of financial position  and  measure
them  at fair  value.  SFAS No.  133 also  addresses  the accounting for hedging
activities.   The  Company will adopt SFAS No. 133 for its fiscal year beginning
January 1, 2001. The Company does not anticipate that the adoption  of SFAS  No.
133 will have any impact on its financial statement presentation or disclosures.


ITEM 7.   FINANCIAL STATEMENTS

        The  consolidated  financial  statements  are  listed  at the  "Index to
Consolidated Financial Statements" elsewhere in this document.


ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

        Effective  February 5, 2001,  BDO Seidman,  LLP ("BDO")  resigned as the
independent accountants of the Company.  Effective February 7, 2001, the Company
engaged  Hollander,  Lumer & Co. LLP ("HLC") as the  Company's  new  independent
accountants.  The  retention  of HLC was  approved  by the  Company's  Board  of
Directors.


                                      -12-
<PAGE>

        Prior  to the engagement of HLC, neither the Company,  nor anyone on its
behalf,  consulted  with HLC  regarding  either the  application  of  accounting
principles  to a  specific  or  contemplated  transaction,  or the type of audit
opinion that might be rendered on the  Company's  financial  statements;  or any
matter  that was the subject of a  disagreement  or event as defined at Item 304
(a)(1)(iv) of Regulation S-B.

        BDO  audited the  Company's  financial  statements  for the fiscal years
ended  December 31, 1999 and 1998.  BDO's reports for these fiscal years did not
contain an adverse  opinion or a disclaimer of opinion,  nor were they qualified
as to audit scope or  accounting  principles.  However,  BDO's reports for these
fiscal  years were  modified as to  uncertainty  with  respect to the  Company's
ability to continue as a going concern.

        During  the period  from  January 1, 1998 to  December  31, 1999 and the
period from  January 1, 2000 to February  5, 2001,  there were no  disagreements
with  BDO on  any  matter  of  accounting  principles  or  practices,  financial
statement disclosure,  or auditing scope or procedure,  which disagreements,  if
not resolved to the  satisfaction of BDO, would have caused it to make reference
to the subject matter of the disagreements in connection with its reports on the
Company's  financial  statements.  In  addition,  there  were no such  events as
described under Item 304(a)(1)(iv)(B) of Regulation S-B during such periods.

        The  Company  provided  BDO with a copy of the  disclosures  it has made
herein in response to Item 304(a) of  Regulation  S-B,  and  requested  that BDO
provide its response  letter,  addressed  to the United  States  Securities  and
Exchange  Commission,  pursuant to Item  304(a)(3) of  Regulation  S-B,  stating
whether it agreed with the statements  made by the Company and, if not,  stating
the respects in which it did not agree.  BDO  confirmed by letter that it agreed
with the statements made by the Company herein insofar as they related to BDO.

         Effective  February 16, 2001,  HLC merged with the  accounting  firm of
Good  Swartz  Brown & Berns LLP  ("GSBB"),  as a result of which GSBB became the
successor entity to HLC. As a result of this merger, GSBB subsequently  acquired
most of the accounting  practice of HLC and became the  independent  accountants
for the Company  effective March 29, 2001. HLC did not issue an audit opinion on
the Company's financial statements between February 7, 2001 and March 29, 2001.

         Prior to GSBB  becoming the  independent  accountants  for the Company,
neither the Company,  nor anyone on its behalf,  consulted  with GSBB  regarding
either the  application of accounting  principles to a specific or  contemplated
transaction,  or the  type of  audit  opinion  that  might  be  rendered  on the
Company's  financial  statements;  or any  matter  that  was  the  subject  of a
disagreement or event as defined at Item 304 (a)(1)(iv) of Regulation S-B.

         During the period from  February 7, 2001 to March 29, 2001,  there were
no  disagreements  with HLC any matter of  accounting  principles  or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements,  if not resolved to the satisfaction of HLC, would have caused it
to make reference to the subject matter of the  disagreements in connection with
its reports on the Company's financial  statements.  In addition,  there were no
such events as described  under Item  304(a)(1)(iv)(B)  of Regulation S-B during
such periods.

         The Company  provided  HLC with a copy of the  disclosures  it has made
herein in response to Item 304(a) of  Regulation  S-B,  and  requested  that HLC
provide its response  letter,  addressed  to the United  States  Securities  and
Exchange  Commission,  pursuant to Item  304(a)(3) of  Regulation  S-B,  stating
whether it agreed with the statements  made by the Company and, if not,  stating
the respects in which it did not agree.  HLC  confirmed by letter that it agreed
with the statements made by the Company herein insofar as they related to HLC.


                                      -13-
<PAGE>


                                    PART III.


ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

       The  following  table  and  text  set  forth  the  names  and ages of all
directors and executive  officers of the Company as of March 30, 2001. The Board
of Directors is comprised  of only one class.  All of the  directors  will serve
until the next annual  meeting of  stockholders  and until their  successors are
elected and qualified, or until their earlier death, retirement,  resignation or
removal.  There  are no  family  relationships  among  directors  and  executive
officers. Also provided herein is a brief description of the business experience
of each  director  and  executive  officer  during  the past  five  years and an
indication of directorships  held by each director in other companies subject to
the reporting requirements under the Federal securities laws.

Name                   Age     Position(s)
----                   ---     -----------

Mitchell J. Francis     46     Chairman of the Board of Directors, President,
                               Chief Executive Officer and Chief Financial
                               Officer

Benjamin Frankel        65     Director

Norman Feirstein        52     Director


Biographies of Directors and Executive Officers:

Mitchell J. Francis. Mr. Francis has been the Chairman of the Board of Directors
since June 1993,  has been  Chief  Executive  Officer  and  President  since the
Company's  inception in April 1993, and has been Chief  Financial  Officer since
March 1, 1999.  Prior to founding the Company,  Mr. Francis was involved in site
acquisition,  analysis,  architectural  design,  construction,   management  and
marketing  of numerous  residential  and  commercial  projects  and has been the
general  partner of numerous real estate  limited  partnerships.  Mr. Francis is
also the President and principal shareholder of Francis Development Inc., a real
estate development company that he founded in 1981.

Benjamin Frankel. Mr. Frankel has been a director of the Company since March 17,
1995. Mr. Frankel is a certified public accountant and has been a partner in the
accountancy  firm  of  Frankel,   Lodgen,  Lacher,  Golditch  &  Sardi  and  its
predecessors since 1965.

Norman  Feirstein.  Mr. Feirstein has been a director of the Company since March
17, 1995. Mr.  Feirstein  practiced law as a sole  practitioner  from 1978 until
July 1993.  Since such time, Mr.  Feirstein has practiced law as the Law Offices
of Norman Feirstein, P.C.

Compliance  with  Section  16(a) of the  Securities  Exchange  Act of  1934,  as
Amended:

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities to file various reports
with the Securities and Exchange  Commission  concerning  their holdings of, and
transactions  in,  securities  of the Company.  Copies of these  filings must be
furnished to the Company.

                                      -14-
<PAGE>

     Based on a review of the copies of such forms  furnished to the Company and
written representations from the Company's directors and executive officers, the
Company  believes  that all  individual  filing  requirements  applicable to the
Company's  directors  and  executive  officers  were complied with under Section
16(a) during 2000.

ITEM 10.  EXECUTIVE COMPENSATION

       The following table and text sets forth  information  with respect to the
compensation paid to the Chief Executive Officer and the other executive officer
of the Company at December 31, 2000 whose total  compensation  exceeded $100,000
during the fiscal years ended December 31, 1998, 1999 and 2000.

                           Summary Compensation Table

Name and
Principal                                        Other Annual    All Other
Position(s)                Year      Salary      Compensation    Compensation
-----------                ----      ------      ------------    ------------

Mitchell J. Francis        2000    $235,936       $30,965 (1)    $
Chairman of the            1999     216,216        28,665 (2)     64,620 (4)
Board of Directors,        1998     200,200        24,384 (3)
President and Chief
Executive Officer

----------------------

(1)  Includes  $4,807 in disability  insurance  premiums,  $13,387 in automobile
     expense, $6,399 in life insurance premiums, and $6,372 in medical insurance
     premiums paid to or on behalf of Mr. Francis in 2000.
(2)  Includes  $4,575 in disability  insurance  premiums,  $12,569 in automobile
     expense, $5,731 in life insurance premiums, and $5,790 in medical insurance
     premiums paid to or on behalf of Mr. Francis in 1999.
(3)  Includes  $2,810 in disability  insurance  premiums,  $11,001 in automobile
     expense, $5,422 in life insurance premiums, and $5,151 in medical insurance
     premiums paid to or on behalf of Mr. Francis in 1998.
(4)  Represents  the value of warrants to  purchase  1,538,461  shares of common
     stock at an exercise price of $0.13 per share, the fair market value on the
     date of issuance, expiring on February 2, 2002. The warrants were issued as
     consideration  for the Chief Executive Officer providing a $120,000 line of
     credit to the Company (see "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
     PLAN OF OPERATION - Liquidity and Capital  Resources" and "ITEM 12. CERTAIN
     RELATIONSHIPS AND RELATED TRANSACTIONS").

Board of Directors:

       During the year ended  December 31, 2000,  the Company had no meetings of
the Board of Directors; all board actions were by unanimous written consent. For
serving  on the  Board of  Directors,  directors  who are not  employees  of the
Company  receive  $2,000  for  each  meeting  of the  Board  of  Directors,  and
reimbursement for any expenses  incurred in attending board meetings.  Directors
who are employees of the Company receive no additional  compensation for serving
on  the  Board  of  Directors.   The  non-employee  directors  are  eligible  to
participate in the 1995 Directors Stock Option Plan.

       The  Company  does  not  have a  nominating  committee  of the  Board  of
Directors, or any committee performing similar functions.  Nominees for election
as a director are selected by the Board of Directors.

       The  compensation  committee  of the Board of  Directors  consists of the
three directors of the Company,  one of whom is an employee of the Company.  The
compensation  committee reviews the performance of the executive officers of the
Company and reviews  the  compensation  programs  for key  employees,  including
salary and bonus levels.

       The  audit  committee  of the Board of  Directors  consists  of  Benjamin
Frankel and Norman Feirstein, neither of whom is an employee of the Company. The
audit  committee  reviews,  acts on and reports to the Board of  Directors  with
respect to various auditing and accounting  matters,  including the selection of
the Company's  independent public  accountants,  the scope of the annual audits,
the nature of  non-audit  services,  and the fees to be paid to the  independent
public  accountants,   the  performance  of  the  Company's  independent  public
accountants, and the accounting practices of the Company.

                                      -15-
<PAGE>

       The stock option committee of the Board of Directors consists of Benjamin
Frankel and Norman Feirstein, neither of whom is an employee of the Company. The
stock option  committee is responsible for the operation and  administration  of
the Company's stock option plans, including the grants thereunder.

Employment Agreements:

       Effective  September  1, 2000,  the  Company  entered  into a  three-year
employment  agreement  with Mitchell J. Francis to serve as Chairman,  President
and Chief Executive Officer.  The agreement provides for a base annual salary of
$275,000,  annual  increases  of  8%,  and  annual  bonuses  based  on 6% of the
Company's annual earnings before interest,  taxes, depreciation and amortization
in excess of $500,000.  The agreement provides for the issuance of 300,000 stock
options,  with an  exercise  price of $0.50 per share,  vesting in equal  annual
increments  through  September  1, 2003.  The  agreement  also  provides for the
granting of  additional  stock options based on the opening of new locations and
attaining and maintaining  certain market prices for the Company's common stock.
In addition,  in the event the Company completes a new debt or equity financing,
for each  $1,000,000 of such funding,  or fraction  thereof on a pro rata basis,
the Company shall issue to Mr. Francis shares of common stock equal to 5% of the
Company's fully diluted shares outstanding.

       Pursuant to the Company's previous employment  agreement with Mr. Francis
that expired on August 31, 2000,  the Company  granted Mr. Francis stock options
as  follows:  During  September  1998,  in  conjunction  with the opening of the
Company's new facility in Atlanta,  Georgia,  the Company  granted Mr. Francis a
bonus in the form of a stock  option to purchase  25,000  shares of common stock
exercisable at the fair market value of $0.25 per share exercisable for a period
of five years,  and during January 2000, in conjunction  with the opening of the
Company's new facility in Elizabeth, New Jersey, the Company granted Mr. Francis
a bonus in the form of a stock option to purchase  25,000 shares of common stock
exercisable at the fair market value of $0.25 per share exercisable for a period
of five years.

       Effective May 13, 1998,  the Company  entered into a severance  agreement
with Mr.  Francis  that  provided  for certain  compensation  to such  executive
officer  in the event of a change in  control  of the  Company.  The term of the
severance  agreement is through June 30, 1999, at which time it is automatically
extended for one year periods  commencing on July 1, 1999 and on each subsequent
July 1,  unless the  Company  gives  notice not later  than  December  31 of the
preceding year that it does not wish to extend the severance agreement. A change
in control of the  Company  is defined as (a) the  acquisition  by any person or
entity of 20% or more of the Company's voting equity securities, (b) a change in
control  of the  Board of  Directors,  or (c) a merger or  consolidation  of the
Company with any other entity,  unless the  shareholders of the Company prior to
the merger or  consolidation  continue to represent at least 80% of the combined
voting power of the merged  entity.  In the event of a change in control,  among
other compensation and benefits, the severance agreement entitles Mr. Francis to
receive a  severance  payment of five times his current  annual  salary upon his
termination without cause.

Stock Option Plans:

       In June 1994, the Company adopted the Cinema Ride, Inc. Stock Option Plan
(the "Option Plan"),  under which stock options to purchase a maximum of 112,500
shares of common stock of the Company may be issued  pursuant to  incentive  and
non-qualified  stock  options  granted to  officers,  employees,  directors  and
consultants  of the  Company.  The Option Plan is  administered  by the Board of
Directors or, in the discretion of the Board of Directors, by a committee of not
less than two individuals with authority to determine  employees to whom options
will be  granted,  the  timing  and manner of grants of  options,  the  exercise
prices,  the number of shares covered by the options,  the terms of the options,
and all other  determinations  necessary or advisable for  administration of the
Option Plan.

                                      -16-
<PAGE>

       The purchase price for the shares  subject to any incentive  stock option
granted  under the Option  Plan  shall not be less than 100% of the fair  market
value of the shares of common  stock of the Company on the date of the option is
granted  (110% for  stockholders  who own in  excess  of 10% of the  outstanding
common  stock).  No  options  shall be  exercisable  after the  earliest  of the
following:  the  expiration  of 10 years  after the date the option is  granted;
three  months  after  the  date  the  optionee's  employment  with  the  Company
terminates if termination  is for any reason other than permanent  disability or
death;  or one year  after  the date the  optionee's  employment  terminates  if
termination  is a  result  of  death  or  permanent  disability.  Unless  sooner
terminated  by the Board of  Directors,  the Option Plan expires on December 31,
2003.

       In December  1995, the Company  adopted the 1995  Directors  Stock Option
Plan (the "Directors Plan"),  under which stock options to purchase a maximum of
12,500  shares  of common  stock of the  Company  may be issued to  non-employee
directors  of the  Company.  The  Directors  Plan  provides  that on the  fourth
business day following each annual meeting of stockholders, each director who is
not an employee of the Company automatically  receives a non-statutory option to
purchase 1,250 shares at the fair market value on the date of grant. The Company
granted Mr.  Frankel and Mr.  Feirstein  1,250  options each under the Directors
Plan during 1998 and 1999.

       All stock  options shown below  reflect the  one-for-eight  reverse stock
split effective May 29, 1998. On June 18, 1998, the Board of Directors cancelled
all issued and outstanding stock options at that time and reissued them based on
the then  current  fair  market  value of $0.39 per share,  except for the Chief
Executive  Officer's  stock  options,  which were  repriced  at 110% of the then
current fair market value, or $0.43 per share.

       During the years ended  December  31,  1999 and 2000,  no officers of the
Company were granted stock options under the Option Plan.

       A summary of stock  options  issued to the  Company's  officer  under the
Option Plan as of December 31, 2000 is presented  below.  No stock  options were
exercised during 1999 or 2000.

                            Stock Option Value Table

                             Number of                        Value of
                             Shares of                      Unexercised
                           Common Stock                    in-the-Money
                            Underlying                   Stock Options at
                           Stock Options      Weighted   Fiscal Year-End (1)
                         ------------------   Exercise   -------------------
Name                     Unvested    Vested    Price     Unvested     Vested
----                     --------    ------    -----     --------     ------

Mitchell J. Francis         -0-      95,188    $0.43      $  -       $   -
                          =======    ======                ======     ======
-------------------

(1)  The dollar values are calculated by determining the excess,  if any, of the
     market  price for the common  stock of $0.31 per share at December 31, 2000
     over the  weighted  average  exercise  price of the  stock  options.  As of
     December 31, 2000, none of the unexercised stock options were in-the-money.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       As used in this section,  the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities  Exchange Act of 1934, as
amended,  as consisting of sole or shared voting power  (including  the power to
vote or direct the vote) and/or sole or shared  investment  power (including the
power to dispose of or direct the  disposition  of) with respect to the security
through any contract,  arrangement,  understanding,  relationship  or otherwise,
subject to community property laws where applicable.

       As of March 30, 2001, the Company had a total of 789,823 shares of common
stock issued and  outstanding,  which is the only issued and outstanding  voting
equity   security  of  the  Company.   All  common  share  amounts  reflect  the
one-for-eight reverse stock split effective May 29, 1998.

                                      -17-
<PAGE>

       The following  table sets forth,  as of March 30, 2001: (a) the names and
addresses  of each  beneficial  owner  of more  than  five  percent  (5%) of the
Company's  common  stock  known to the  Company,  the number of shares of common
stock  beneficially  owned by each such person, and the percent of the Company's
common  stock so owned;  and (b) the names and  addresses  of each  director and
executive officer,  the number of shares of common stock beneficially owned, and
the percentage of the Company's common stock so owned, by each such person,  and
by all directors and executive  officers of the Company as a group.  Each person
has sole voting and investment power with respect to the shares of common stock,
except  as  otherwise  indicated.  Beneficial  ownership  consists  of a  direct
interest in the shares of common stock, except as otherwise indicated.

                                   Percent of
Name and Address             Amount and Nature of       Shares of Common
of Beneficial Owner          Beneficial Ownership       Stock Outstanding (2)
-------------------          --------------------       -----------------

Mitchell J. Francis (1)          1,832,767 (3)                 72.3%

Benjamin Frankel (1)                 8,750 (4)                  1.1%

Norman Feirstein (1)                 6,250 (5)                   .8%

All directors and
executive officers
as a group (3 persons)           1,847,767 (6)                 72.5%

----------------------

(1)  The address of each such person is c/o the Company,  12001  Ventura  Place,
     Suite 340, Studio City,  California  91604.
(2)  The  calculation  is  based  on  the  number  of  shares  of  common  stock
     outstanding on March 30, 2001, plus, with respect to each named person, the
     number of shares of common  stock  which the  stockholder  has the right to
     acquire upon exercise of stock options.
(3)  Includes  1,746,149  shares of common stock issuable upon exercise of stock
     options and warrants  granted to Mitchell J. Francis,  but excludes 300,000
     shares of common stock  issuable  upon  exercise of stock options which had
     not vested as of March 30,  2001 (see "ITEM 10.  EXECUTIVE  COMPENSATION  -
     Employment  Agreements"  and "- Stock Option  Plans" and "ITEM 12.  CERTAIN
     RELATIONSHIPS AND RELATED  TRANSACTIONS").  Excludes 4,688 shares of common
     stock owned by Sandra Francis,  the wife of Mitchell J. Francis,  and 3,125
     shares of common stock  issuable upon  exercise of options  granted to Mrs.
     Francis, as to which Mr. Francis disclaims beneficial ownership.
(4)  Includes  6,250  shares of common  stock  issuable  upon  exercise of stock
     options granted to Mr. Frankel.  Also includes 2,500 shares of common stock
     that were  issued  to the  accountancy  firm of  Frankel,  Lodgen,  Lacher,
     Golditch & Sardi in exchange for services  rendered in 1994. Mr. Frankel is
     a partner in such firm, but disclaims beneficial ownership of such shares.
(5)  Includes  6,250  shares of common  stock  issuable  upon  exercise of stock
     options granted to Mr. Feirstein.
(6)  Includes  1,758,649  shares of common stock issuable upon exercise of stock
     options.

Changes in Control:

       The  Company  is  unaware  of any  contract  or  other  arrangement,  the
operation of which may at a subsequent date result in a change in control of the
Company.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       As of  December  31,  1998,  the  amount  due  from the  Company's  Chief
Executive Officer,  Mitchell J. Francis, in connection with loans made to him in
prior years aggregated  $89,631,  consisting of principal of $75,000 and accrued
interest of $14,631.  During November 1999, the Chief  Executive  Officer repaid
$85,000 of the loan  balance,  consisting  of  principal  of $75,000 and accrued
interest of $10,000. As of December 31, 1999, the remaining accrued interest due
from the Chief  Executive  Officer  was  $8,069,  which was paid during the year
ended December 31, 2000.

                                      -18-
<PAGE>

       During the year ended  December 31, 1999, the Company issued 6,473 shares
of common  stock to Toufic R.  Bassil,  its then Chief  Financial  Officer,  and
recorded the fair market value of the shares of $809 as compensation expense.

       On February 2, 1999,  the Company  entered into a loan agreement with its
Chief  Executive  Officer,  Mitchell  J.  Francis.  The loan  agreement  amended
outstanding  notes  receivable,  including  accrued  interest,  of approximately
$90,000  from  such  officer  so as to grant  the  Company  the  right to demand
repayment within 90 days of a written request.  In addition,  the loan agreement
included a line of credit of $120,000 from the Chief Executive  Officer expiring
on February 2, 2002,  with  interest at 12% per annum,  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  1,538,461  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.  Pursuant  to this
amended loan agreement, during November 1999, the Company borrowed $120,000 from
the Chief Executive Officer under the line of credit.







                                    PART IV.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

     A list of exhibits required to be filed as part of this report is set forth
     in the Index to Exhibits,  which immediately precedes such exhibits, and is
     incorporated herein by reference.

(b)  Reports on Form 8-K:

     The Company did not file any Current  Reports on Form 8-K during or related
     to the three months ended December 31, 2000.


                                      -19-
<PAGE>







                                   SIGNATURES



       In  accordance  with  Section  13 or  15(d)  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:  April 12, 2001                         By:  ___________________________
                                                   Mitchell J. Francis
                                                   Chief Executive Officer



       In  accordance  with the Exchange Act, this report has been signed by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.



                                                   /s/ MITCHELL J. FRANCIS
Date:  April 12, 2001                         By:  ___________________________
                                                   Mitchell J. Francis
                                                   Chief Executive Officer,
                                                   President, Chief Financial
                                                   Officer and Chairman of the
                                                   Board of Directors




                                                   /s/ BENJAMIN FRANKEL
Date:  April 12, 2001                         By:  ___________________________
                                                   Benjamin Frankel
                                                   Director





                                                   /s/ NORMAN FEIRSTEIN
Date:  April 12, 2001                         By:  ___________________________
                                                   Norman Feirstein
                                                   Director


                                      -20-
<PAGE>



                                INDEX TO EXHIBITS

Exhibit
Number      Description of Document
------      -----------------------

 3.1        Certificate of Incorporation, as amended. (1)(P)
 3.2        Bylaws of the Company. (1)(P)
10.1        Cinema Ride, Inc. Stock Option Plan. (1)(P)(C)
10.2        Equipment lease between the Company and Sign Systems dated April
            6, 1995. (2)(P)
10.3        Lease between the Company and Forum Developers Limited Partnership
            dated July 2, 1993. (1)(P)
10.4        Amendment to lease between the Company and Forum Developers Limited
            Partnership dated May 18, 1993. (1)(P)
10.5        Third lease amendment between the Company and Forum Developers
            Limited Partnership dated July 27, 1994. (1)(P)
10.6        Fourth lease amendment between the Company and Forum Developers
            Limited Partnership dated December 30, 1995. (2)(P)
10.7        Form of Promissory Note and Security Agreement (stock pledge) of
            Mitchell J. Francis dated July 5, 1995. (3)(P)
10.8        Standard Office Lease - Gross between the Company and WFC Ventures
            L.P. dated March 21, 1995. (3)(P)
10.9        First Lease Amendment between the Company and WFC Ventures L.P.
            dated April 15, 1995. (3)(P)
10.10       Lease between the Company and West Edmonton Mall Property Inc.
            dated July 17, 1995. (3)(P)
10.11       Amendment to lease between the Company and West Edmonton Mall
            Property Inc. dated April 7, 1998.
10.12       Master Equipment Lease Agreement between the Company and Finova
            Technology Finance, Inc. dated December 12, 1996. (4)
10.13       Amendment to Master Equipment Lease Agreement between the Company
            and Finova Technology Finance, Inc. dated March 10, 1999. (6)
10.14       Form of employment agreement with Mitchell J. Francis dated
            September 1, 2000. (7)(C)
10.16       Joint Venture Agreement with Dave & Buster's, Inc. dated May 29,
            1998. (6)
10.17       Loan Agreement between the Company and Mitchell J. Francis dated
            February 2, 1999. (6)
10.18       1995 Directors Stock Option Plan. (6) (C)
10.19       Warrant expiring February 2, 2002 to Mitchell J. Francis. (6)
10.20       Lease between the Company and Jersey Gardens Mall dated October 19,
            1999.
21          Subsidiaries of the Registrant. (6)

-----------------------

(1)  Previously filed as an Exhibit to the Company's  Registration  Statement on
     Form SB-2, and incorporated herein by reference.
(2)  Previously  filed as an Exhibit to the Company's  Quarterly  Report on Form
     10-QSB for the  quarterly  period  ended March 31, 1995,  and  incorporated
     herein by reference.
(3)  Previously  filed as an Exhibit to the Company's  Quarterly  Report on Form
     10-QSB for the  quarterly  period  ended June 30,  1995,  and  incorporated
     herein by reference.
(4)  Previously filed as an Exhibit to the Company's  Current Report on Form 8-K
     filed on January 28, 1997, and incorporated herein by reference.
(5)  Previously  filed as an Exhibit to the Company's  Quarterly  Report on Form
     10-QSB for the quarterly  period ended September 30, 1997, and incorporated
     herein by reference.
(6)  Previously  filed as an  Exhibit  to the  Company's  Annual  Report on Form
     10-KSB for the fiscal year ended December 31, 1998, and incorporated herein
     by reference.
(7)  Filed herein.

(P)  Indicates  that the document was  originally  filed with the Securities and
     Exchange  Commission  in paper  form and that there have been no changes or
     amendments  to the  document  which would  require  filing of the  document
     electronically with this Annual Report on Form 10-KSB.
(C)  Indicates compensatory plan, agreement or arrangement.


                                      -21-
<PAGE>



CINEMA RIDE, INC. AND SUBSIDIARIES

YEARS ENDED DECEMBER 31, 2000 AND 1999









                                    CONTENTS





                                                                            Page

Independent auditors' report - 2000                                          F-1

Independent auditors' report - 1999                                          F-2


Financial statements

     Consolidated balance sheets                                             F-3

     Consolidated statements of operations                                   F-5

     Consolidated statements of stockholders' equity                         F-6

     Consolidated statements of cash flows                                   F-7

     Notes to consolidated financial statements                              F-8











<PAGE>








                          Independent Auditors' Report





Board of Directors and Stockholders
Cinema Ride, Inc.
Studio City, California



We have audited the accompanying consolidated balance sheet of Cinema Ride, Inc.
and Subsidiaries as of December 31, 2000 and the related consolidated statements
of  operations,  stockholders'  equity and cash  flows for the year then  ended.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial  statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting the amounts and disclosures in these financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Cinema Ride, Inc.
and  Subsidiaries as of December 31, 2000, and the results of its operations and
cash flows for the year then ended,  in conformity  with  accounting  principles
generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
consolidated financial statements,  the Company has suffered recurring operating
losses  that raises  substantial  doubt about its ability to continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note 1. The  consolidated  financial  statements do not include any  adjustments
that might result from the outcome of this uncertainty.


GOOD SWARTZ BROWN & BERNS, LLP.

Los Angeles, California
April 6, 2001                                                                F-1

<PAGE>





Report of Independent Certified Public Accountants


Board of Directors and Stockholders
Cinema Ride, Inc.
Studio City, California


We have audited the accompanying consolidated balance sheet of Cinema Ride, Inc.
and Subsidiaries as of December 31, 1999 and the related consolidated statements
of  operations,  stockholders'  equity and cash  flows for the year then  ended.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in these  financial  statements.  An audit  also
includes assessing the accounting principles used and significant estimates made
by  management,   as  well  as  evaluating  the  overall   financial   statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Cinema Ride, Inc.
and  Subsidiaries  as of December 31, 1999, and the results of their  operations
and cash flows for the year then ended,  in conformity  with generally  accepted
accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
consolidated financial statements,  the Company has suffered recurring operating
losses  that raises  substantial  doubt about its ability to continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note 1. The  consolidated  financial  statements do not include any  adjustments
that might result from the outcome of this uncertainty.



                                                                BDO Seidman, LLP

Los Angeles, California
March 6, 2000






                                                                             F-2
<PAGE>

<TABLE>
<CAPTION>

CINEMA RIDE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999





ASSETS
                                                                    2000            1999
                                                                -----------    -----------
<S>                                                             <C>            <C>
Current assets
     Cash and cash equivalents                                  $   109,834    $   320,189
     Prepaid expenses and other current assets                       57,791         25,804
                                                                -----------    -----------

                  Total current assets                              167,625        345,993
                                                                -----------    -----------

Property and equipment
     Office equipment and furniture                                 110,033        105,249
     Equipment under capital lease                                  208,236        204,858
     Leasehold improvements                                       1,062,582      1,051,723
     Theater and film equipment                                   1,696,972      1,673,132
                                                                -----------    -----------

                                                                  3,077,823      3,034,962
     Less accumulated depreciation                               (1,989,420)    (1,688,658)
                                                                -----------    -----------

                                                                  1,088,403      1,346,304
                                                                -----------    -----------

Other assets
     Film library, net of accumulated amortization of
        $940,193 and $869,930 for 2000 and 1999, respectively       152,577        222,840
     Investment in joint venture                                    360,725        411,663
     Receivables from officers                                         --            8,069
     Consulting agreement                                            18,207         28,611
     Deferred lease costs and other assets                           91,826        123,967
                                                                -----------    -----------

                                                                    623,335        795,150
                                                                -----------    -----------

                                                                $ 1,879,363    $ 2,487,447
                                                                ===========    ===========











See notes to consolidated financial statements.                                       F-3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


CINEMA RIDE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - Continued
DECEMBER 31, 2000 AND 1999





LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                       2000            1999
                                                                   -----------    -----------
<S>                                                                <C>            <C>
Current liabilities
     Accounts payable and accrued expenses                         $   260,829    $   219,125
     Current portion of capital lease obligations                       48,854         40,381
     Current portion of note payable to lender                         732,327        133,077
     Current portion of note payable to bank                              --              416
                                                                   -----------    -----------

                  Total current liabilities                          1,042,000        392,999
                                                                   -----------    -----------

Long-term debt
     Obligations under capital lease, less current portion              38,727         84,660
     Note payable to lender, less current portion                         --          697,072
     Loan payable, officer                                             120,000        120,000
     Deferred rent                                                      63,254         84,061
                                                                   -----------    -----------

                                                                       221,981        985,793
                                                                   -----------    -----------

Commitments (Note 12)

Stockholders' equity
     Preferred stock, $.01 par value; 500,000 shares authorized;
        none issued                                                       --             --
     Common stock, $.08 par value; 20,000,000 shares authorized;
        789,823 shares issued and outstanding                           63,186         58,546
     Additional paid-in capital                                      9,224,569      9,212,209
     Accumulated deficit                                            (8,672,383)    (8,162,100)
                                                                   -----------    -----------

                                                                       615,372      1,108,655

                                                                   $ 1,879,363    $ 2,487,447
                                                                   ===========    ===========








See notes to consolidated financial statements.                                          F-4
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


CINEMA RIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000 AND 1999






                                                                  2000            1999
                                                               -----------    -----------
<S>                                                            <C>            <C>
Revenues                                                       $ 2,760,309    $ 2,457,607

Direct costs of revenues                                         1,474,949      1,130,950

Selling and marketing expenses                                     247,588        147,792

General and administrative expenses                                978,529      1,031,120

Depreciation and amortization                                      381,788        502,529
                                                               -----------    -----------

Loss from operations                                              (322,545)      (354,784)

Other income (expense)
     Equity in net income (loss) of joint venture                   (6,715)        48,403
     Interest income                                                 3,399         11,953
     Interest expense                                             (184,422)      (200,893)
     Fair value of warrants issued to officer as commitment
        fee for line of credit                                        --          (64,620)
                                                               -----------    -----------

                                                                  (187,738)      (205,157)
                                                               -----------    -----------

Net loss                                                       $  (510,283)   $  (559,941)
                                                               ===========    ===========




Basic and diluted loss per common share                        $     (0.66)   $     (0.77)
                                                               ===========    ===========

Basic and diluted weighted average common shares outstanding       778,740        731,823
                                                               ===========    ===========








See notes to consolidated financial statements.                                      F-5
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


CINEMA RIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000 AND 1999




                                             Common stock              Additional                                          Total
                                     ---------------------------        paid-in         Treasury        Accumulated    stockholders'
                                        Shares         Amount           capital           stock           deficit         equity
                                     -----------     -----------      -----------      -----------      -----------     -----------
<S>                                   <C>         <C>              <C>              <C>              <C>              <C>
Balance,

December 31, 1998                        731,823     $    58,546      $ 9,175,780      $   (29,000)     $(7,602,159)     $1,603,167


Issuance of treasury
   stock to officer at
   market value                             --              --            (28,191)          29,000             --               809


Issuance of warrants
   to officer                               --              --             64,620             --               --            64,620

Net loss                                                                                      --           (559,941)       (559,941)
                                     -----------     -----------      -----------      -----------      -----------      -----------


Balance,
   December 31, 1999                     731,823          58,546        9,212,209             --         (8,162,100)      1,108,655


Common stock issued
   for services rendered                  58,000           4,640           12,360             --                             17,000


Net loss                                                                                      --           (510,283)       (510,283)
                                     -----------     -----------      -----------      -----------      -----------      -----------

Balance,
   December 31, 2000                     789,823     $    63,186      $ 9,224,569      $                $(8,672,383)     $  615,372
                                     ===========     ===========      ===========      ===========      ===========      ===========









See notes to consolidated financial statements.                                                                                  F-6
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


CINEMA RIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                2000            1999
                                                             ---------      ---------
<S>                                                          <C>            <C>
Cash flows from operating activities
     Net loss                                                $(510,283)     $(559,941)
     Adjustments to reconcile net loss to cash used by
        operating activities
           Depreciation and amortization                       381,788        502,529
           Common stock issued to employees and outside
               consultants                                      17,000            809
           (Income) loss in equity of joint venture              6,715        (48,403)
           Amortization of consulting agreement                 10,404         10,405
           Amortization of deferred financing costs             12,418         12,418
           Warrants issued to officer                             --           64,620
           Interest income on loan to officer                     --           (3,438)
           Changes in operating assets and liabilities
               Inventories                                        --            8,666
               Prepaid expenses and other current assets       (31,987)        36,773
               Deposits                                          8,960          9,532
               Accounts payable and accrued expenses            41,704        (26,134)
               Deferred rent                                   (20,807)       (25,096
                                                             ---------      ---------
Net cash used by operating activities                          (84,088)       (17,260)
                                                             ---------      ---------
Cash flows from investing activities
     Dividends received from joint venture                      44,223        110,697
     Decrease in receivable from officer                         8,069         85,000
     Purchase of fixed assets                                  (42,861)      (122,535)
                                                             ---------      ---------
Net cash provided by investing activities                        9,431         73,162
                                                             ---------      ---------
Cash flows from financing activities
     Proceeds from loan payable to officer                        --          120,000
     Payments on notes payable                                 (98,238)       (73,722)
     Principal payments under capital lease obligations        (37,460)       (22,332)
                                                             ---------      ---------
Net cash provided by (used in) financing activities           (135,698)        23,946
                                                             ---------      ---------
Net increase (decrease) in cash and cash equivalents          (210,355)        79,848
Cash and cash equivalents, beginning of year                   320,189        240,341
                                                             ---------      ---------
Cash and cash equivalents, end of year                       $ 109,834      $ 320,189
                                                             =========      =========


Supplemental disclosures of cash flow information
     Cash paid for
        Interest                                             $ 165,635      $ 200,885
                                                             =========      =========
Non-cash financing and investing activities
     Common stock issued for services                        $  17,000      $    --
                                                             =========      =========
     Purchase of fixed assets by leasing                     $    --        $  65,384
                                                             =========      =========

See notes to consolidated financial statements.                                   F-7
</TABLE>

<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999




1.    Basis of presentation - 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 had a working  capital  deficit at December 31, 2000. In addition,
          the  Company  did not make  several  monthly  payments  to its primary
          secured  lender during the latter part of the year ended  December 31,
          2000 and the early part of the year ending  December  31,  2001.  As a
          result of these factors,  the Company's  independent  certified public
          accountants  have  expressed  substantial  doubts about the  Company's
          ability to continue as a going concern.  The Company believes that its
          previous  efforts  to  reduce  costs  and  operate  more  efficiently,
          combined with the March 1999 modified financing  arrangements with the
          Company's secured lender, borrowings under the line of credit provided
          by the Company's Chief Executive  Officer,  and the opening of the New
          Jersey Facility, will generate improved cash flows, although there can
          be no assurances that such efforts will be successful. Furthermore, to
          the  extent  that the  Company's  Las  Vegas  Facility  experiences  a
          continuing decline in revenues, the Company's liquidity and ability to
          continue to conduct operations may be impaired.

          The Company will require additional capital to fund operating and debt
          service requirements,  as well as to fund expansion plans and possible
          acquisitions, mergers, and joint ventures, including the amended joint
          venture agreement with Dave & Buster's,  Inc. The Company is exploring
          various  alternatives to raise this required capital, but there can be
          no assurances  that the Company will be successful in this regard.  To
          the extent that the Company is unable to secure the capital  necessary
          to fund its future cash  requirements  on a timely  basis and/or under
          acceptable  terms and conditions,  the Company may not have sufficient
          cash resources to maintain operations.  In such event, the Company may
          be  required  to  consider  a  formal  or  informal  restructuring  or
          reorganization.

          From time to time the Company may also  consider a wide range of other
          business  opportunities,  some  of  which  may  be  unrelated  to  the
          Company's   current   business   activities  and  could  also  require
          additional  capital,  and could  result in a change in  control of the
          Company.








                                                                             F-8


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999




2.    Summary of significant accounting policies and business activity

         Business activity

          Cinema Ride, Inc. (the "Parent") and Subsidiaries (the "Company") were
          incorporated in Delaware in April 1993. The Company is in the business
          of developing  and  operating  rides  consisting  of motion  simulator
          attractions ("attractions" or "rides") and filmed entertainment ("ride
          films")  that  combines  projected  three-dimensional  ("3-D")  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
          opened its first attraction in Las Vegas,  Nevada in October 1994. The
          Company's executive offices are located in Studio City, California.

          During 1995, the Company established a wholly-owned subsidiary, Cinema
          Ride Edmonton,  Inc., a Canadian  corporation that operates one motion
          simulator ride facility  located at the West Edmonton Mall in Alberta,
          Canada.  During the years ended  December 31, 2000 and 1999,  revenues
          and long-lived assets for Cinema Ride Edmonton, Inc. were $258,098 and
          $236,308 and $178,674 and $302,712, respectively.

          The Company  opened a new facility in Elizabeth,  New Jersey under the
          Cinema Ride Times Square,  Inc. subsidiary on January 20, 2000. During
          the years ended  December 31, 2000 and 1999,  revenues and  long-lived
          assets for the New Jersey  location were $396,093 and -0- and $178,609
          and $166,538, respectively

          All  significant  intercompany  transactions  and  balances  have been
          eliminated in consolidation.

      Concentration of credit risk

          The Company maintains cash balances at various financial institutions.
          Deposits not to exceed  $100,000 for each  institution  are insured by
          the Federal Deposit  Insurance  Corporation.  The Company exceeded the
          issuance limit at various times during the year.

      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.






                                                                             F-9


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999


2.    Summary of significant accounting policies and business activity -
      Continued

      Film production costs

          Film  production  costs are stated at the lower of  amortized  cost or
          market.  Upon  completion,  film production  costs are amortized on an
          individual  production  basis in the  proportion  that  current  gross
          revenues bear to  management's  estimate of total gross  revenues with
          such estimates being reviewed at least quarterly.

      Deferred lease costs

          Deferred  lease costs  represent  amounts paid in connection  with the
          successful negotiation of the Company's leases. Costs are amortized on
          a straight-line basis over the term of the lease.

      Income taxes

          The Company  provides for income taxes in accordance with Statement of
          Financial  Accounting  Standards No. 109, 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.

      Fair value of financial instruments

          The carrying amounts of financial  instruments including cash and cash
          equivalents  and accounts  payable  approximate  fair value because of
          their short maturity.

          The carrying  amount of long-term  debt and capital lease  obligations
          approximate fair value because the interest rates on these instruments
          approximate the rate the Company could borrow at December 31, 2000

          The fair value of receivables  from officers  cannot be determined due
          to their related party nature.

      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 U.S.  dollar.  The
          remeasurement of local currency into U.S. dollars creates  translation
          adjustments  which are included in income.  The  translation  exchange
          losses in 2000 and 1999 were $979 and $1,746, respectively.



                                                                            F-10


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999




2.    Summary of significant accounting policies and business activity -
      Continued

      Stock-based compensation

          Statements of Financial  Accounting Standards No. 123, "Accounting for
          Stock-Based  Compensation"  (SFAS No.  123)  establishes  a fair value
          method  of  accounting  for  stock-based  compensation  plans  and for
          transactions  in which an  entity  acquires  goods  or  services  from
          nonemployees  in  exchange  for  equity  instruments.  SFAS  123  also
          encourages, but does not require companies to record compensation cost
          for  stock-based  employee  compensation.  The  Company  has chosen to
          continue  to  account  for  stock-based   compensation  utilizing  the
          intrinsic  value method  prescribed  in  Accounting  Principles  Board
          Opinion No. 25,  "Accounting for Stock Issued to Employees",  with pro
          forma  disclosures  of net income as if the fair value method had been
          applied. Accordingly,  compensation cost for stock options is measured
          as the excess, if any, of the fair market price of the Company's stock
          at the date of grant over the amount an  employee  must pay to acquire
          the stock.

      Loss per share

          The Company  adopted  Statement of Financial  Accounting  Standard No.
          128,  "Earnings  Per Share"  (SFAS  128).  SFAS 128  provides  for the
          calculation  of Basic and Diluted  earnings per share.  Basic earnings
          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.  Since the Company incurred losses in 2000 and
          1999, basic and diluted per share amounts are the same.

          For  the  year  ended  December  31,  2000,   potential  common  stock
          representing   197,118   outstanding   stock   options  and  1,131,586
          outstanding  warrants  are not  included  since their  effect would be
          anti-dilutive.  For the year ended December 31, 1999, potential common
          stock  representing  197,118  outstanding  stock options and 1,899,535
          outstanding  warrants  are not  included  since their  effect would be
          anti-dilutive.

      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.






                                                                            F-11


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999





2.    Summary of significant accounting policies and business activity -
      Continued

         Seasonality of business

          Because of the seasonal nature of tourist traffic, attendance patterns
          at  attractions  may vary.  The nature and 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 the highest in June through
          August (the height of the tourist  season) and lowest  during  January
          and  February.  The West  Edmonton  Mall  Facility is more affected by
          seasonality  as compared to the Las Vegas  Facility due to the extreme
          weather  conditions during the winter months in Alberta,  Canada. As a
          result,  the Company's  results of operations at its  facilities  will
          depend  upon sales  generated  from the peak  tourist  periods and any
          significant  decrease in sales for such periods  could have a material
          adverse effect upon the Company's operations.

         Reclassifications:

          Certain  reclassifications  of 1999  amounts have been made to conform
          with the 2000 presentation.

         Accounting estimates

          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.

         Impairment of Long-Lived Assets

          Statement of Financial  Accounting  Standards No. 121, "Accounting for
          the Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be
          Disposed of", establishes  guidelines regarding when impairment losses
          on long-lived assets,  which include plant and equipment,  and certain
          identifiable   intangible   assets,   should  be  recognized  and  how
          impairment losses should be measured. The Company periodically reviews
          such assets for possible  impairment and expected losses,  if any, are
          recorded currently.




                                                                            F-12


<PAGE>





CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999




3.    Receivables from officers and consulting agreement

          The Company is amortizing the balance of a consulting agreement with a
          former officer over the period of the consulting contract. The balance
          of the remaining unamortized consulting agreement at December 31, 2000
          and 1999 are $18,207 and $28,611, respectively.


4.    Investment in joint venture

          On May 29, 1998, the Company  entered into a three-year  joint venture
          agreement  with Dave & Buster's,  Inc.,  to install the  Company's 3-D
          motion simulation  theater at Dave & Buster's,  Inc. Atlanta facility.
          The Company was responsible for the transportation and installation of
          the  theater.  The  Company  incurred  $95,924 in  transportation  and
          installation  costs  relating to this facility in addition to $367,683
          in equipment  costs.  Dave and Buster's,  Inc.,  was  responsible  for
          providing the space in its Atlanta facility and preparing the premises
          for installation.  The venture agreement can be terminated  earlier by
          either party if, among other things, certain sales and cash flow goals
          are not  met.  The  installation  was  completed  and  operational  on
          September  14, 1998.  The Company  accounts for its  investment in the
          joint  venture  under the  equity  method of  accounting  whereby  the
          Company  recognizes its 50% share of the joint venture's net income or
          losses and,  accordingly,  the carrying  value of  investment in joint
          venture in the accompanying  consolidated  balance sheets is adjusted.
          The Company  received  dividends from the joint venture of $86,543 and
          $110,697 in 2000 and 1999, respectively.

         Summarized financial information for the joint venture is as follows:

                                                    Year ended December 31,
                                                ------------------------------
                                                    2000             1999
                                                ------------     -------------

            Sales                                $   234,674       $   218,024
            Net income                               148,780           171,664

                                                          December 31,
                                                 -----------------------------
                                                    2000             1999
                                                ------------     -------------

            Non-current assets                   $   360,725       $   450,085







                                                                            F-13


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999




5.    Income taxes

          The income tax effect of temporary  differences  between financial and
          tax reporting gives rise to the deferred income tax assets as follows:

                                                   2000               1999
                                               ------------       ------------

            Net operating loss carryforward     $ 2,733,013       $ 2,581,105
            Less valuation allowance             (2,733,013)       (2,581,105)
                                                -----------       -----------

                                                $        -        $        -
                                                ===========       ===========

          The  Company  has  provided a 100%  valuation  allowance  as it cannot
          determine  that it is more  likely  than not that it will  realize the
          deferred tax assets.  As of December 31, 2000,  for federal income tax
          purposes,  the Company has  approximately  $7,244,000 in net operating
          loss carryforwards expiring through 2020. As of December 31, 2000, for
          State tax purposes,  the Company has  approximately  $3,374,000 in net
          operating loss carryforwards expiring through 2010.


6.    Obligations under capital leases

          Minimum  future lease  payments  under capital lease  obligations  for
          equipment are as follows:

            Year ended December 31,
                2001                                              $   57,497
                2002                                                  36,845
                2003                                                   2,075
                2004                                                   1,861
                Thereafter                                                 -
                                                                  -----------
                                                                      98,278
                Amount representing interest                         (10,697)
                                                                   ---------
                Present value of minimum lease payments            $  87,581
                                                                   =========

          At December  31, 2000,  equipment  included  assets under  capitalized
          lease  obligations  of  $208,236  less  accumulated   amortization  of
          $152,737.





                                                                            F-14


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999






7.    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 Canadian prime plus
          two percent  (total  interest is 8.5% at December 31, 1999).  The loan
          has a term of four years requiring  monthly  payments of approximately
          $1,027 ($1,400 Canadian dollars) and is guaranteed by the Parent.  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 Parent  other than  amounts in excess of cash
          flow. The loan may be prepaid at any time without any penalties. As of
          December 31, 2000 and 1999, $0 and $416, remained unpaid on this loan.


8.    Note payable to lender

          On December 31, 1996,  the Company  closed 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 at
          $40,903  per month with 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, 2000 to January  1,  2004,  with no change in the  balloon
          payment of  $157,503.  The loan bears  interest  at an annual  rate of
          16.75%. The financing agreement requires the Company to repurchase the
          equipment  at the end of the lease for $1. The  balance of the loan at
          December 31, 2000 and 1999 was $732,327 and $830,149, respectively. As
          of December 31,  2000,  the Company was  delinquent  on its last three
          monthly  payments and has classified this Note as current.  Management
          is restructuring its agreement with the lender.


          Minimum  future  payments  under  note  payable  to  lender  cannot be
          determined because of the Company's delinquency and debt restructuring
          negotiations.








                                                                            F-15


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999




9.    Loan payable to officer

          On February 2, 1999,  the Company  entered into a loan  agreement with
          its Chief Executive  Officer.  The loan agreement  amends the existing
          notes  payable to the  officer so as to allow the Company the right to
          demand repayment  within 90 days of a written request.  Also, the loan
          agreement  includes  a line of credit in the amount of  $120,000  that
          matures on October 31, 2002 and bears  interest at 12% per annum.  The
          line of credit provides a security  interest in the Company's  assets.
          As consideration for executing this agreement, the Company has granted
          the Chief  Executive  Officer  1,538,461  stock  warrants.  Each stock
          warrant  allows the holder the right to  purchase  one share of common
          stock at an  exercise  price of $.13 per share,  representing  the per
          share  market  price on the date  thereof,  and expires on February 2,
          2002.


10.   Capital stock transactions

          On February 2, 1999, the Company issued 6,473 shares of treasury stock
          to its former Chief Financial  Officer with an aggregate fair value of
          $809. The Company recorded the then fair market value of the shares as
          additional  compensation to the employee,  with the difference between
          the fair  market  value  of the  shares  and the  amount  recorded  as
          treasury stock being recorded to additional paid-in capital.


11.   Stock-based compensation plans

          At December 31, 2000, the Company had various stock-based compensation
          plans, which are described below.

         Employee Stock Option Plan

          The Company  adopted a Stock  Option Plan (the  "Plan") for  officers,
          employees,   directors   and   consultants   of  the  Company  or  its
          subsidiaries.  The Plan  authorizes  the granting of  incentive  stock
          options and  non-qualified  stock  options to purchase an aggregate of
          not more than 112,500 shares of the Company's  common stock.  The Plan
          provides that options  granted will  generally be  exercisable  at any
          time during a ten-year period (five years for a stockholder  owning in
          excess of 10% of the Company's  common stock).  The exercise price for
          non-qualified  stock  options  shall not be less than the par value of
          the Company's  common stock.  The exercise  price for incentive  stock
          options  shall  not be  less  than  100%  of the  fair  market  of the
          Company's  common  stock on the date of grant (110% of the fair market
          value  of the  Company's  common  stock  on the  date of  grant  for a
          stockholder owning in excess of 10% of the Company's common stock).





                                                                            F-16


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999






11.   Stock-based compensation plans - Continued

         1995 Directors' Stock Option Plan

          The Company  adopted a Directors  Stock  Option Plan (the  "Directors'
          Plan") for non-employee  directors of the Company.  The Directors Plan
          authorizes the granting of non-qualified  stock options to purchase an
          aggregate  of not more  than  12,500  shares of the  Company's  common
          stock.  The  Directors'  Plan  provides  that options  granted will be
          exercisable  during a ten year  period  and will vest on a  cumulative
          basis as to one third of the total number of shares covered thereby at
          any time  after one year from the date the  option is  granted  and an
          additional  one-third of such total number of shares at any time after
          the end of each  consecutive  one year  period  thereafter  until  the
          option  has  become  exercisable  as to all of such  total  number  of
          shares.  The exercise price for  non-qualified  stock options shall be
          the fair value of the Company's common stock at the date of the grant.

      Option Activity

          Options  activity during the years ended December 31, 2000 and 1999 is
          as follows:

                                                                       Weighted
                                                                        average
                                                              Options    price
                                                              -------  ---------
            Balance outstanding, December 31, 2000 and 1999   197,188      0.40

            Options exercisable
                 December 31, 2000 and 1999                   160,063      0.42













                                                                            F-17


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999


11.   Stock-based compensation plans - Continued

      Option Activity

          Information  relating to stock options at December 31, 2000 summarized
          by exercise price are as follows:
<TABLE>
<CAPTION>

                                        Outstanding                               Exercisable
                         -------------------------------------------     -------------------------------
                                             Weighted Average                                Weighted
                                                                                              Average
   Exercise Price                        Life            Exercise                            Exercise
     Per Share            Shares        (Years)            Price           Shares              Price
---------------------    ---------     ----------       ------------     -----------        ------------

<S>                      <C>          <C>            <C>                   <C>           <C>
       $0.43              132,688            5.3      $        0.43         122,506       $        0.43
       $0.39               37,000            6.3      $        0.39          30,890       $        0.39
       $0.38                2,500            9.5               0.38             417                0.38
       $0.25               25,000            4.0      $        0.25           6,250       $        0.25
                         ---------     ----------       ------------     -----------        ------------

   $0.25 - $0.43          197,188            5.4      $        0.40         160,063       $        0.42
=====================    =========     ==========       ============     ===========        ============
</TABLE>

          In addition to the above,  the Company issued 325,000 warrants in 2000
          to its Chief Executive Officer,  of which 300,000 of the warrants vest
          equally over a three year period. The 25,000 warrants were vested 100%
          in 2000. For purposes of pro forma disclosure  below, the compensation
          cost of these warrants will be recognized over the vesting period.

          All stock  options and warrants  issued to employees  have an exercise
          price  not less than the fair  market  value of the  Company's  common
          stock on the date of grant, and in accordance with accounting for such
          options  utilizing  the  intrinsic  value  method  there is no related
          compensation  expense recorded in the Company's financial  statements.
          Had  compensation  cost for stock-based  compensation  been determined
          based on the fair value at the grant dates  consistent with the method
          of SFAS 123, the  Company's  net loss and loss per share for the years
          ended  December 31, 2000 and 1999 would have been  adjusted to the pro
          forma amounts presented below:

                                                      December 31,
                                            ---------------------------------
                                                2000              1999
                                            --------------    --------------

     Net loss
         As reported                          $ (510,283)         $ (559,941)
         Pro forma                              (522,033)           (582,818)

     Loss per share
         As reported                            $  (0.66)         $    (0.77)
         Pro forma                              $  (0.67)         $    (0.80)
                                            ==============    ================

The fair value of option grants is estimated on the date of grants utilizing the
Black-Scholes option-pricing with the following weighted average assumptions for
2000 and 1999, expected life of 3 and 10 years:  expected volatility of 208% and
665%,  risk-free  interest rates of 6.1% and 6.5%, and a 0% dividend yield.  The
weighted average fair value at date of grant for options granted during 2000 and
1999 approximated $.47 and $0.38 per option, respectively.

                                                                            F-18


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999





12.   Commitments

          The Company  leases  office space for its  corporate  headquarters  in
          Studio City, California. Additionally, the Company leases retail space
          for  its  attractions  in Las  Vegas,  Nevada,  Edmonton,  Canada  and
          Elizabeth, New Jersey.

          An amendment of the Las Vegas  Facility  lease gave the Company a rent
          reduction not to exceed $150,000. The rent reduction was deducted from
          the monthly  rent payment  until the Company had recorded  $150,000 as
          deferred rent and the rent is being recorded on a straight-line  basis
          through the  expiration of lease which is July 2004.  Deferred rent at
          December  31,  2000 and 1999  was  $63,253  and  $84,061,  which  also
          includes deferred rent on the corporate office lease.

          Minimum  future  rental  payments  for each of the next five years and
          thereafter is as follows:

            Year ending December 31,
                      2001                                      $  419,033
                      2002                                         420,251
                      2003                                         426,859
                      2004                                         338,567
                      Thereafter                                   166,313
                                                               -----------
                                                                $1,771,023
                                                               ===========
          In addition,  some leases  require the payment of  additional  rent if
          sales exceed a certain level.

          Effective  September  1, 2000,  the Company  entered into a three-year
          employment  agreement with its Chief Executive Officer.  The agreement
          provides for a base annual salary of $275,000, annual increases of 8%,
          and annual bonuses based on 6% of the Company's annual earnings before
          interest,  taxes, depreciation and amortization in excess of $500,000.
          The agreement  also  approves the granting of  additional  performance
          options  based  on  various  occurrences  such as the  opening  of new
          locations,  obtaining  additional funds, and attaining and maintaining
          certain market price for the Company's common stock.









                                                                            F-19


<PAGE>


CINEMA RIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
YEARS ENDED DECEMBER 31, 2000 AND 1999





12.   Commitments - Continued

          Effective May 13, 1998, the Company entered into a severance agreement
          with  its  Chief   Executive   Officer   that   provided  for  certain
          compensation  in the event of a change in control of the Company.  The
          terms of the severance  agreement were through June 30, 1999, at which
          time they were automatically  extended for one year periods commencing
          on July 1, 1999 and on each  subsequent  July 1,  unless  the  Company
          gives notice not later than December 31 of the preceding  year that it
          does not wish to extend the severance agreements.  A change in control
          of the  Company  is defined  as (a) the  acquisition  by any person or
          entity of 20% or more of the Company's voting equity securities, (b) a
          change  in  control  of the  Board of  Directors,  or (c) a merger  or
          consolidation  of the  Company  with  any  other  entity,  unless  the
          shareholders  of the  Company  prior to the  merger  or  consolidation
          continue to represent at least 80% of the combined voting power of the
          merged  entity.  In the  event of a change  in  control,  among  other
          compensation and benefits,  the severance agreement entitles the Chief
          Executive  Officer  to receive a  severance  payment of five times his
          current annual salary upon his termination without cause.














                                                                            F-20