PRIDE AUTOMOTIVE GROUP, INC.
Watford Metro Centre
Tolpits Lane
Watford Hertordshire, England, WD1 8SB
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 30, 1997
To the Shareholders of PRIDE AUTOMOTIVE GROUP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of PRIDE
AUTOMOTIVE GROUP, INC. (the "Corporation") will be held at the corporate offices
of Pride Automotive Group, Inc., located at Watford Metro Centre, Tolpits Lane,
Watford Hertordshire, England WD1 8SB on May 30, 1997 at 11:30 a.m., England
time, for the following purposes:
1. To elect three Directors to the Corporation's Board of Directors to hold
office for a period of one year or until their successors are duly elected and
qualified.
2. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on April 18, 1997 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, please complete, date and sign the accompanying proxy and return
it promptly in the enclosed envelope to assure that your shares are represented
at the meeting. If you do attend, you may revoke any prior proxy and vote your
shares in person if you wish to do so. Any prior proxy will automatically be
revoked if you execute the accompanying proxy or if you notify the Secretary of
the Corporation, in writing, prior to the Annual Meeting of Shareholders.
By order of the Board of Directors
Alan Lubinsky, Secretary
Dated: May 1, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC.
Watford Metro Centre,
Tolpits Lane, Watford Hertordshire, England
PROXY STATEMENT
FOR
Annual Meeting of Stockholders
To Be Held on May 30, 1997
This proxy statement and the accompanying form of proxy have been
mailed on May 1, 1997 to the stockholders of record on April 18, 1997 of Pride
Automotive Group, Inc., a Delaware corporation (the "Corporation" or "Company")
in connection with the solicitation of proxies by the Board of Directors of the
Corporation for use at the Annual Meeting to be held on May 30, 1997 and at any
adjournment thereof.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Shares of the Corporation's common stock (the "Common Stock")
represented by an effective proxy in the accompanying form will, unless contrary
instructions are specified in the proxy, be voted FOR the election of the three
(3) persons nominated by the Board of Directors as directors.
Any such proxy may be revoked at any time before it is voted. A
stockholder may revoke this proxy by notifying the Secretary of the Corporation
either in writing prior to the Annual Meeting or in person at the Annual
Meeting, by submitting a proxy bearing a later date or by voting in person at
the Annual Meeting. An affirmative vote of a plurality of the shares of Common
Stock, present in person or represented by proxy, at the Annual Meeting and
entitled to vote thereon is required to elect the directors. A stockholder
voting through a proxy who abstains with respect to the election of directors is
considered to be present and entitled to vote on the election of directors at
the meeting, and is in effect a negative vote, but a stockholder (including a
broker) who does not give authority to a proxy to vote, or withholds authority
to vote, on the election of directors shall not be considered present and
entitled to vote on the election of directors. A stockholder voting through a
proxy who abstains with respect to approval of any other matter to come before
the meeting is considered to be present and entitled to vote on that matter and
is in effect a negative vote, but a stockholder (including a broker) who does
not give authority to a proxy to vote, or withholds authority to vote, on any
such matter shall not be considered present and entitled to vote thereon.
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<PAGE>
The Corporation will bear the cost of the solicitation of proxies by
the Board of Directors. The Board of Directors may use the services of its
executive officers and certain directors to solicit proxies from stockholders in
person and by mail, telegram and telephone. Arrangements may also be made with
brokers, fiduciaries, custodians, and nominees to send proxies, proxy statements
and other material to the beneficial owners of the Corporation's Common Stock
held of record by such persons, and the Corporation may reimburse them for
reasonable out-of-pocket expenses incurred by them in so doing.
The Corporation's annual report on Form 10-KSB for the fiscal year
ended November 30, 1996 including audited financial statements, and the
Corporation's quarterly report on Form 10-QSB for the three months ended
February 28, 1997 are annexed hereto
The principal executive offices of the Corporation are located at
Watford Metro Centre, Tolpits Lane, Watford Hertordshire, England WD1 8SB, the
Corporation's telephone number is (800) 698-6590.
Independent Public Accountants
The Board of Directors of the Corporation has selected Civvals
Chartered Accountants, as independent certified public accountants of the
Corporation for the fiscal year ending November 30, 1997. Stockholders are not
being asked to approve such selection because such approval is not required. The
audit services provided by Civvals Chartered Accountants consisted of
examination of financial statements, services relative to filings with the
Securities and Exchange Commission, and consultation in regard to various
accounting matters. Representatives of Civvals Chartered Accountants are
expected to be present at the meeting and will have the opportunity to make a
statement if they so desire and answer appropriate questions.
RECENT DEVELOPMENTS
In November 1996, the Company, through its subsidiary AC Car Group
Limited, purchased all the assets of AC Cars Limited and Autokraft Limited.
In April 1996, the Company consummated an initial public offering,
whereby the Company sold 950,000 shares of its common stock at a purchase price
of $5.00 per share and 2,000,000 redeemable common stock purchase warrants at a
price of $0.10 per warrant. The warrants are exercisable at a price of $5.75 per
share, subject to adjustment, beginning April 24, 1997 and expiring April 23,
2001. In connection therewith, the Company also granted to the underwriter of
the offering a warrant to purchase 95,000 shares of the Company's common stock
at a purchase price of $5.00 and 200,000 redeemable common stock purchase
warrants, each warrant exercisable to purchase one share of common stock at a
purchase price of $7.50 per share. Other than with respect to the exercise
price, the terms of the warrants granted to the underwriter are identical to
those described above. The Company's securities are currently traded on the
Nasdaq SmallCap Stock Exchange and the Boston Exchange.
The Company was formed by Pride, Inc. ("Pride") in March 1995 for the
purpose of acquiring all of the outstanding shares of common stock of Pride
Management Services, Plc., an English corporation ("PMS"). Prior to the
acquisition PMS was a wholly owned subsidiary of the Company. Pursuant to the
terms and conditions of the reorganization in March 1995 (the "Reorganization"),
between the Company, Pride and PMS, the Company issued 1,500,000 shares of its
Common Stock to Pride in exchange for all of the issued and outstanding shares
of PMS. In connection with the
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<PAGE>
Reorganization and formation of the Company, PMS became a wholly owned
subsidiary of the Company which was at that time 96% owned by Pride.
In October 1994, Pride acquired certain assets of Master Vehicle
Contracts Ltd. ("Master"), an English Company pursuant to the terms of an asset
purchase agreement. This sale was entered into by the appointed receivers
pursuant to Master's receivership. In connection with this purchase, Pride
acquired the rights to use the Master's name. Automobiles, client lists and
computer systems software and hardware approximately $400,000.
Ivan Averbuch has entered into an employment agreement with the Company
dated September 1995, for a term of 12 months, commencing December 1, 1995, to
become the Company's Chief Financial Officer, which agreement is continent on
Mr. Averbuch obtaining a work permit from the British government, in order to
work in England. The agreement is automatically extendable for an additional 12
months, subject to cancellation by either the Company or Mr. Averbuch on 90 days
written notice. Pursuant to the terms of the agreement Mr. Averbuch is to
receive an annual salary of $55,000 per annum, subject to review by the board of
directors.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Corporation's
Common Stock, par value $.002 per share. The presence, in person or by proxy, of
a majority of shares entitled to vote will constitute a quorum for the meeting.
Each share of Common Stock entitles its holder to one vote on each matter
submitted to stockholders. The close of business on April 18, 1997 has been
fixed as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and any adjournment thereof. At that date,
1,995,357 shares of Common Stock were outstanding. Voting of the shares of
Common Stock is on a non-cumulative basis.
The following table sets forth information as of April 18, 1997, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), known by the Corporation to be the
owner of more than 5% of the outstanding shares of Common Stock, (ii) each
director, and (iii) all officers and directors as a group. Except to the extent
indicated in the footnotes to the following table, each of the individuals
listed below possesses sole voting power with respect to the shares of Common
Stock listed opposite their name.
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<PAGE>
<TABLE>
<CAPTION>
Number of Percentage of
Name Shares Share Ownership
<S> <C> <C>
Pride, Inc. 1,500,000 53.7%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England
Alan Lubinsky (1) 1,600,000 54.3%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England
Peter Dixon - *
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England
Ivan Averbuch - *
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England
All officers and
Directors as a group
(4 persons) (1) 1,600,000 54.3%
</TABLE>
(1) New World Finance, Limited, which is wholly owned by a trust of which
family members of Mr. Lubinsky are the beneficiaries, owns
approximately 52.6% of the outstanding shares of Pride, Inc. and may be
considered the beneficial owner of the shares of the Company owned by
Pride, Inc. The trustee is Elfin Trust Company Limited, located on the
Island of Guernsey, Channel Islands. Although Mr. Lubinsky disclaims
beneficial ownership of the shares owned by New World Finance, Limited,
it may be expected that such entity will vote its respective shares in
favor of proposals espoused by Mr. Lubinsky. See "Executive
Compensation - Employment Agreement."
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<PAGE>
Certain Reports
No person who, during the fiscal year ended November 30, 1996, was a
director, officer or beneficial owner of more than ten percent of the
Corporation's Common Stock (which is the only class of securities of the
Corporation registered under Section 12 of the Securities Exchange Act of 1934
(the "Act") (a "Reporting Person") failed to file on a timely basis, reports
required by Section 16 of the Act during the most recent fiscal year or prior
years, except Alan Lubinsky did not file a Form 4 with respect to the receipt of
stock options in July 1995 and May 1996. Mr. Lubinsky has stated that he intends
on filing a Form 5 to rectify the situation. Neither Ivan Averbuch nor Peter
Dixon filed a Form 4 with respect to the receipt of stock options in May 1996.
Messrs. Averbuch and Dixon have stated that they intent to file Form 5's to
rectify the situation. The Company has no basis to believe that any other
required filing by any of the above indicated individuals has not been made.
It is expected that the following will be considered at the meeting
and action taken thereon.
I. ELECTION OF DIRECTORS
The Board of Directors currently consists of three members elected for
a term of one year and until their successors are duly elected and qualified.
An affirmative vote of a plurality of the shares of Common Stock,
present in person or represented by proxy at the Annual Meeting, and entitled to
vote thereon is required to elect the directors. All proxies received by the
Board of Directors will be voted for the election as directors of the nominees
listed below if no direction to the contrary is given. In the event any nominee
is unable to serve, the proxy solicited hereby may be voted, in the discretion
of the proxies, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate this will occur.
The following table sets forth as of April 18, 1997, with respect to
the three nominees for election as directors of the Corporation:
<TABLE>
<CAPTION>
Name Position with Corporation; Continually
Principal Occupation and Age Since
<S> <C> <C>
Alan Lubinsky President, Secretary and Chairman 1994
of the Board; 38
Ivan Averbuch Chief Financial Officer, Treasurer 1995
and Director; 41
Allan Edgar Director; ----
- --------------------------------
</TABLE>
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<PAGE>
All directors hold office until the next annual meeting of stockholders
or until their successors are elected and qualified. Vacancies on the Board of
Directors may be filled by the remaining directors. Officers are elected
annually by, and serve at the discretion of the Board of Directors. There are no
family relationships between and among any officer or director of the
Corporation.
Alan Lubinsky Mr. Lubinsky has been the President and a director of the
Company since its inception in March 1995. Mr Lubinsky has been the President,
Secretary and director of Pride, Inc since January 14, 1994. Mr. Lubinsky has
been the Chairman and Managing Director of Pride Management Services, Plc
("PMS") since its inception in 1988. Mr. Lubinsky has 18 years experience in the
motor vehicle industry in positions of executive management.
Ivan Averbuch Mr. Averbuch has been a director and the Chief Financial
Officer of the Company since December 1995. Mr. Averbuch has been the Chief
Financial Officer of the of Pride, Inc. since December 1995. From September 1987
to November 1995, Mr. Averbuch was employed at Kessel Feinstein, a member firm
of Grant Thorton International, an accounting firm. In January 1989, Mr.
Averbuch was promoted to audit manager and appointed as a partner in October
1992.
Allan Edgar
As permitted under Delaware General Corporation Law, the Company's
certificate of incorporation eliminates the personal liability of the directors
to the Company or any of its shareholders for damages for breaches of their
fiduciary duty as directors. As a result of the inclusion of such provision,
stockholders may be unable to recover damages against directors for actions
taken by them which constitute negligence or gross negligence or that are in
violation of their fiduciary duties. The inclusion of this provision in the
Company's Certificate of Incorporation may reduce the likelihood of derivative
litigation against directors and other types of shareholder litigation.
Board Meetings, Committees and Compensation
During the fiscal year ended November 30, 1996, no meetings of the
Board of Directors were held and action was taken on _____ occasions by
unanimous written consent of the Board of Directors in lieu of meeting. The
Corporation does not pay its directors for attendance at meetings of the Board
of Directors or committee meetings.
The Board of Directors recommends that you vote "FOR" the nominees for
Director.
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<PAGE>
EXECUTIVE COMPENSATION AND RELATED MATTERS
Summary of Cash and Certain Other Compensation
The following provides certain information concerning all Plan and
Non-Plan (as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded
to, earned by, paid by PMS Company during the years ended November 30, 1996,
1995 and 1994. The Company did not incur any compensation expense during such
periods.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e)
Name and Principal Other Annual Options/
Position (1) Year Salary($) Bonus($) Compensation($)(2) SARS
- ------------------------ ---- --------- -------- ------------------ ------
<S> <C> <C> <C> <C> <C>
Alan Lubinsky
President, Secretary 1996 $160,000 - $30,000 100,000(3)
and Chairman of the Board 1995 $137,750 - 30,000 -
1994 $135,000 - 30,000 -
</TABLE>
(1) All of the Company's administrative functions, including the payment of
salaries, are performed by Pride Vehicle Contracts Limited, since the Company's
operations run basically as one operation. The Company believes that it is
easier and cost effective to operate in this manner. The Company plans on
continuing this practice in the future.
(2) Includes contributions to the Company's pension plan of $18,000 in each
of 1996, 1995 and 1994, respectively, and the cost of an automobile and expenses
of $12,000 annually.
(3) Alan Lubinsky entered into an employment agreement with PAG in August
1995. The agreement is for a term of three years, and pays Mr. Lubinsky an
annual salary of $160,000 per annum with 10% yearly escalations, subject to
adjustment by PAG's board of directors. Pursuant to the agreement, Mr. Lubinsky
received stock options under PAG's Senior Management Incentive Plan to purchase
100,000 shares at $5.50 per share. These options vest at the rate of 33 1/3% per
annum commencing August 1996.
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<PAGE>
Stock Options
The following table sets forth certain information concerning the grant
of stock options made during the year ended November 30, 1996, under the
Company's 1995 Senior Management Incentive Plan.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Individual Grants
(a) (b) (c) (d) (e)
% of Total
# of Securities Options/SAR's
underlying Granted to
Options/SAR's Employees in Exercise or Base
Name Granted(1) Fiscal Year Price ($/SH) Expiration Date
- ---- ---------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Alan Lubinsky 100,000 100% $5.50 8/01/08
</TABLE>
(1) Alan Lubinsky entered into an employment agreement with PAG in August
1995. The agreement is for a term of three years, and pays Mr. Lubinsky
an annual salary of $160,000 per annum with 10% yearly escalations,
subject to adjustment by PAG's board of directors. Pursuant to the
agreement, Mr. Lubinsky received stock options under PAG's Senior
Management Incentive Plan to purchase 100,000 shares at $5.50 per
share. These options vest at the rate of 33 1/3% per annum commencing
August 1996. See "Employment Agreements".
Represents incentive stock options granted under the Company's 1995
Senior Management Incentive Plan (the "Plan"). Options granted under
the Plan are intended to qualify as incentive stock options under the
Internal Revenue Code of 1986, as amended. Under the terms of the Plan,
options may be granted to officers, key employees, directors and
consultants of the Company until September 2005. Options granted to
directors, who are not officers or employees, or to consultants, do not
qualify as incentive stock options. The option price per share may not
be less than the fair market value of the Company's shares on the date
the option is granted. However, options granted to persons owning more
than 10% of the Company's Common Stock may not have a term in excess of
five years and may not have an option price of less than 110% of the
fair market value per share of the Company's shares on the date the
option is granted. See "--1995 Senior Management Incentive Plan".
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<PAGE>
The following table contains information with respect to employees of
the Company concerning options held as of November 30, 1996
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Number of Unexercised In-
Unexercised The-Money
Options/SAR's at Options/SAR's at
FY-End (#) FY-End($)
Shares Acquired Value Realized($) Exercisable/ Exercisable/
Name on Exercise (#) Unexercisable Unexercisable(1)
- --- --------------- ------------- ----------------
<S> <C> <C> <C> <C>
Alan Lubinsky 0 0 33,333/66,667 0
</TABLE>
(1) As of February 20, 1997, the average of the prior day's closing bid and
ask price was $2.63. Since the exercise price of the Options ($5.50) is greater
than the current average price, the Company believes the Options have no value.
Employment Agreements
Alan Lubinsky entered into an employment agreement with the Company in
August 1995. The agreement is for a term of three years, and pays Mr. Lubinsky
an annual salary of $160,000 per annum with 10% yearly escalations, subject to
adjustment by the Company's board of directors. Pursuant to the terms of his
employment agreement, Mr. Lubinsky will devote all his business time to the
affairs of the Company and Pride. Pursuant to the agreement, Mr. Lubinsky
received stock options under the Company's Senior Management Incentive Plan to
purchase 100,000 shares at $5.50 per share. These options vest at the rate of 33
1/3% per annum commencing August 1996. The agreement restricts Mr. Lubinsky from
competing with the Company for a period of one year after the termination of his
employment.
Ivan Averbuch entered into an employment agreement with the Company in
September 1995, for a term of 24 months, commencing December 1, 1995. The
agreement is automatically extendable for an additional 24 months, subject to
cancellation by either the Company or Mr. Averbuch on 90 days written notice.
Pursuant to the terms of the agreement, Mr. Averbuch is to receive an annual
salary of $55,000 per annum, with an annual increase of 10% per annum, subject
to review by the Company's board of directors.
Senior Management Incentive Plan
In September 1995, the board of directors adopted the Senior Management
Incentive Plan (the "Management Plan"), which was adopted by written stockholder
consent. The Management Plan provides for the issuance of up to 300,000 shares
of the Company's Common Stock in connection with the issuance of stock options
and other stock purchase rights to executive officers, key employees and
consultants.
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<PAGE>
The adoption of the Management Plan was prompted by its desire to
provide the board with sufficient flexibility regarding the forms of incentive
compensation which the Company will have at its disposal in rewarding executive
officers, key employees and consultants who render significant services to the
Company and its subsidiaries. The board of directors intends to offer key
personnel equity ownership in the Company through the grant of stock options and
other rights pursuant to the Management Plan to enable the Company to attract
and retain qualified personnel without unnecessarily depleting the Company's
cash reserves. The Management Plan is designed to augment the Company's existing
compensation programs and is intended to enable the Company to offer to its as
well as its subsidiaries executives, key employees and consultants a personal
interest in the Company's growth and success through awards of either shares of
Common Stock or rights to acquire shares of Common Stock.
The Management Plan is intended to attract and retain executive
officers, key employees and consultants whose performance is expected to have a
substantial impact on the Company's and its subsidiaries long-term profit and
growth potential by encouraging and assisting those persons to acquire equity in
the Company. It is contemplated that only those who perform services of special
importance to the Company will be eligible to participate under the Management
Plan. A total of 300,000 shares of Common Stock will be reserved for issuance
under the Management Plan. It is anticipated that awards made under the
Management Plan will be subject to three-year vesting periods, although the
vesting periods are subject to the discretion of the Administrator.
Unless otherwise indicated, the Management Plan is to be administered
by the board of directors or a committee of the board, if one is appointed for
this purpose (the board or such committee, as the case may be, shall be referred
to in the following description as the "Administrator"). Subject to the specific
provisions of the Management Plan, the Administrator will have the discretion to
determine the recipients of the awards, the nature of the awards to be granted,
the dates such awards will be granted, the terms and conditions of awards and
the interpretation of the Management Plan, except that any award granted to any
employee of the Company who is also a director of the Company shall also be
subject, in the event the persons serving as members of the Administrator of
such plan at the time such award is proposed to be granted do not satisfy the
requirements regarding the participation of "disinterested persons" set forth in
Rule 16b-3 ("Rule 16b-3") promulgated under the Exchange Act, to the approval of
an auxiliary committee consisting of not less than two individuals who are
considered "disinterested persons" as defined under Rule 16b-3. As of the date
hereof, the Company has not yet determined who will serve on such auxiliary
committee, if one is required. The Management Plan generally provides that,
unless the Administrator determines otherwise, each option or right granted
under a plan shall become exercisable in full upon certain "change of control"
events as described in the Management Plan. If any change is made in the stock
subject to the Management Plan, or subject to any right or option granted under
the Management Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Administrator will make appropriate
adjustments to such plans and the classes, number of shares and price per share
of stock subject to outstanding rights or options. Generally, the Management
Plan may be amended by action of the board of directors, except that any
amendment which would increase the total number of shares subject to such plan,
extend the duration of such plan, materially increase the benefits accruing to
participants under such plan, or would change the category of persons who can be
eligible for awards under such plan must be approved
11
<PAGE>
by affirmative vote of a majority of stockholders entitled to vote. The
Management Plan permits awards to be made thereunder until September, 2005.
Directors who are not otherwise employed by the Company will not be
eligible for participation in the Management Plan. The Management Plan provides
for four types of awards: stock options, incentive stock rights, stock
appreciation rights (including limited stock appreciation rights) and restricted
stock purchase agreements, as described below.
Stock Options. Options granted under the Management Plan may be either
incentive stock options ("ISOs") or options which do not qualify as ISOs
("non-ISOs"). ISOs may be granted at an option price of not less than 100% of
the fair market value of the Common Stock on the date of grant, except that an
ISO granted to any person who owns capital stock representing more than 10% of
the total combined voting power of all classes of Common Stock of the Company
("10% stockholder") must be granted at an exercise price of at least 110% of the
fair market value of the Common Stock on the date of the grant. The exercise
price of the non-ISOs may not be less than 85% of the fair market value of the
Common Stock on the date of grant. Unless the Administrator determines
otherwise, no ISO or non-ISO may be exercisable earlier than one year from the
date of grant. ISOs may not be granted to persons who are not employees of the
Company. ISOs granted to persons other than 10% stockholders may be exercisable
for a period of up to ten years from the date of grant; ISOs granted to 10%
stockholders may be exercisable for a period of up to five years from the date
of grant. No individual may be granted ISOs that become exercisable in any
calendar year for Common Stock having a fair market value at the time of grant
in excess of $100,000. Non-ISOs may be exercisable for a period of up to 13
years from the date of grant. In connection with the Company's entering into an
employment agreement with its president, Alan Lubinsky, Mr. Lubinsky received
100,000 stock options to purchase shares of Common Stock. See "Management -
Employment Agreement."
Payment for shares of Common Stock purchased pursuant to the exercise
of stock options shall be paid in full in cash, by certified check or, at the
discretion of the Administrator, (i) by promissory note combined with cash, (ii)
by shares of Common Stock having a fair market value equal to the total exercise
price or (iii) by a combination of (i) and (ii) above. The provision that
permits the delivery of already owned shares of stock as payment for the
exercise of an option may permit "pyramiding". In general, pyramiding enables a
holder to start with as little as one share of common stock and, by using the
shares of common stock acquired in successive, simultaneous exercises of the
option, to exercise the entire option, regardless of the number of shares
covered thereby, with no additional cash or investment other than the original
share of Common Stock used to exercise the option.
Upon termination of employment or consulting services, an optionee will
be entitled to exercise the vested portion of an option for a period of up to
three months after the date of termination, except that if the reason for
termination was a discharge for cause, the option shall expire immediately, and
if the reason for termination was for death or permanent disability of the
optionee, the vested portion of the option shall remain exercisable for a period
of twelve months thereafter.
12
<PAGE>
Incentive Stock Rights. Incentive stock rights consist of incentive
stock units equivalent to one share of Common Stock in consideration for
services performed for the Company. Each incentive stock unit shall entitle the
holder thereof to receive, without payment of cash or property to the Company,
one share of Common Stock in consideration for services performed for the
Company or any subsidiary by the employee, subject to the lapse of the incentive
periods, whereby the Company shall issue such number of shares upon the
completion of each specified period. If the employment or consulting services of
the holder with the Company terminate prior to the end of the incentive period
relating to the units awarded, the rights shall thereupon be null and void,
except that if termination is caused by death or permanent disability, the
holder or his/her heirs, as the case may be, shall be entitled to receive a pro
rata portion of the shares represented by the units, based upon that portion of
the incentive period which shall have elapsed prior to the death or disability.
Stock Appreciation Rights (SARs). SARs may be granted to recipients of
options under the Management Plan. SARs may be granted simultaneously with, or
subsequent to, the grant of a related option and may be exercised to the extent
that the related option is exercisable, except that no general SAR (as
hereinafter defined) may be exercised within a period of six months of the date
of grant of such SAR and no SAR granted with respect to an ISO may be exercised
unless the fair market value of the Common Stock on the date of exercise exceeds
the exercise price of the ISO. A holder may be granted general SARs ("general
SARs") or limited SARs ("limited SARs"), or both. General SARs permit the holder
thereof to receive an amount (in cash, shares of Common Stock or a combination
of both) equal to the number of SARs exercised multiplied by the excess of the
fair market value of the Common Stock on the exercise date over the exercise
price of the related option. Limited SARs are similar to general SARs, except
that, unless the Administrator determines otherwise, they may be exercised only
during a prescribed period following the occurrence of one or more of the
following "Change of Control" transactions: (i) the approval of the Board of
Directors of a consolidation or merger in which the Company is not the surviving
corporation, the sale of all or substantially all the assets of the Company, or
the liquidation or dissolution of the Company; (ii) the commencement of a tender
or exchange offer for the Company's Common Stock (or securities convertible into
Common Stock) without the prior consent of the Board; (iii) the acquisition of
beneficial ownership by any person or other entity (other than the Company or
any employee benefit plan sponsored by the Company) of securities of the Company
representing 25% or more of the voting power of the Company's outstanding
securities; or (iv) if during any period of two years or less, individuals who
at the beginning of such period constitute the entire Board cease to constitute
a majority of the Board, unless the election, or the nomination for election, of
each new director is approved by at least a majority of the directors then still
in office.
The exercise of any portion of either the related option or the tandem
SARs will cause a corresponding reduction in the number of shares remaining
subject to the option or the tandem SARs, thus maintaining a balance between
outstanding options and SARs.
Restricted Stock Purchase Agreements. Restricted stock purchase
agreements provide for the sale by the Company of shares of Common Stock at
prices to be determined by the Board, which shares shall be subject to
restrictions on disposition for a stated period during which the purchaser must
continue employment with the Company in order to retain the shares. Payment can
be made in cash, a promissory note or a combination of both. If termination of
employment occurs for any reason within six months after the date of purchase,
or for any reason other than death or by retirement with the consent of the
Company after the six-month period but prior to the time that the restrictions
on disposition lapse, the Company shall have the option to reacquire the shares
at the original purchase price.
Restricted shares awarded under the Management Plan will be subject to
a period of time designated by the Administrator (the "restricted period")
during which the recipient must continue to render services to the Company
before the restricted shares will become vested. The Administrator may also
impose other restrictions, terms and conditions that must be fulfilled before
the restricted shares may vest.
Upon the grant of restricted shares, stock certificates registered in
the name of the recipient will be issued and such shares will constitute issued
and outstanding shares of Common Stock for all corporate purposes. The holder
will have the right to vote the restricted shares and to receive all regular
cash dividends (and such other distributions as the Administrator may
designate), if any, which are paid or distributed on the restricted shares, and
generally to exercise all other rights as a holder of Common Stock, except that,
until the end of the restricted period: (i) the holder will not be entitled to
take possession of the stock certificates representing the restricted shares and
(ii) the holder will not be entitled to sell, transfer or otherwise dispose of
the restricted shares. A breach of any restrictions, terms or conditions
established by the Administrator with respect to any restricted shares will
cause a forfeiture of such restricted shares.
Upon expiration of the applicable restricted period and the
satisfaction of any other applicable conditions, all or part of the restricted
shares and any dividends or other distributions not distributed to the holder
(the "retained distributions") thereon will become vested. Any restricted shares
and any retained distributions thereon which do not so vest will be forfeited to
the Company. If prior to the expiration of the restricted period a holder is
terminated without cause or because of a total disability (in each case as
defined in the Management Plan), or dies, then, unless otherwise determined by
the Administrator at the time of the grant, the restricted period applicable to
each award of restricted shares will thereupon be deemed to have expired. Unless
the Administrator determines otherwise, if a holder's employment terminates
prior to the expiration of the applicable restricted period for any reason other
than as set forth above, all restricted shares and any retained distributions
thereon will be forfeited.
Accelerating of the vesting of the restricted shares shall occur, under
the provisions of the Management Plan, on the first day following the occurrence
of any of the following: (a) the approval by the stockholders of the Company of
an "Approved Transaction"; (b) a "Control Purchase"; or (c) a "Board Change".
An "Approved Transaction" is defined as (A) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted into
cash, securities or other property other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (B) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (C) the adoption of any plan or proposal for
the liquidation or dissolution of the Company.
A "Control Purchase" is defined as circumstances in which any person
(as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act),
corporation or other entity (other than the Company or
13
<PAGE>
any employee benefit plan sponsored by the Company) (A) shall purchase any
Common Stock of the Company (or securities convertible into the Company's Common
Stock) for cash, securities or any other consideration pursuant to a tender
offer or exchange offer, without the prior consent of the Board of Directors, or
(B) shall become the "beneficial owner" (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power of
the then outstanding securities of the Company ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors (calculated as provided in paragraph (d) of such Rule 13d-3 in the
case of rights to acquire the Company's securities).
A "Board Change" is defined as circumstances in which, during any
period of two consecutive years or less, individuals who at the beginning of
such period constitute the entire Board shall cease for any reason to constitute
a majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
a majority of the directors then still in office.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the terms of the acquisition of County in 1992, the Company
paid $1 and assumed approximately $11,500,000 of net liabilities. These
liabilities were purchased by New World Finance Limited within thirty days of
the acquisition. New World Finance Limited ("New World") is a company which is
wholly owned by New World Trust, the beneficiaries of which are members of Mr.
Lubinsky's family. This debt accrued interest at 6% and was repayable five years
from the date of issuance. This debt was converted in March 1992 into a
convertible note, which was convertible into shares of common stock of PMS at
$1.50 per share. In March 1992, New World converted approximately $5,250,0000 of
the note into 3,500,000 shares of PMS. In March 1993, New World converted
approximately $3,750,000 of the note into 2,500,000 shares of PMS. In January
1994, pursuant to the reorganization of Pride and PMS, Pride acquired all the
shares of PMS from New World, and issued shares of common stock of Pride, in
return. In September 1994, the right to convert the note into shares of PMS, was
converted into the right to purchase shares of common stock of Pride, at a price
to be determined by the board of directors of Pride, as of each conversion date.
In addition, New World guaranteed to PMS that the sale proceeds of vehicles
acquired from County would be at least equal to the residual value shown on the
books of County as of the date of the acquisition. Mr. Lubinsky did not vote on
the conversion price of any of the following conversions. In September 1994, New
World converted $1,125,000 into 281,250 shares of common stock of Pride, Inc. In
October 1994, New World converted $400,000 into 114,285 shares of common stock
of Pride, Inc. In January 1995, New World converted $155,000 into 155,000 shares
of common stock of Pride, Inc.
In August 1995, the Company determined, with the agreement of New
World, that the estimated ultimate sales values of the vehicles were less than
expected and it was agreed that the note ($562,292) be written off and canceled
against the New World guarantee.
14
<PAGE>
In March 1995, Pride formed the Company in the State of Delaware and
reorganized its corporate structure by exchanging all of its shares of PMS for
1,500,000 shares of the Company's Common Stock, making PMS a wholly owned
subsidiary of the Company.
In March 1995, the Company issued 60,000 shares of its Common Stock to
Lampert & Lampert, counsel to the Company for fees and expenses of $500.
In July 1995, PMS entered into a loan agreement with the Company's
president, whereby PMS borrowed approximately $232,500. The loan is payable on
demand and accrues interest at the rate of 2.5% over the Midland Bank base rate.
The principal balance of such loan was $117,034 as of February 29, 1996. The
principal amount of the loan, including accrued interest thereon, will be paid
from the proceeds of this Offering. "Use of Proceeds."
In December 1995, the Company consummated a private placement offering,
whereby the Company sold 20 units, each unit comprised 25,000 shares of Common
Stock at a purchase price of $6,000 per unit.
In April 1996, the Company consummated an initial public offering,
whereby the Company sold 950,000 shares of its common stock at a purchase price
of $5.00 per share and 2,000,000 redeemable common stock purchase warrants at a
price of $0.10 per warrant. The warrants are exercisable at a price of $5.75 per
share, subject to adjustment, beginning April 24, 1997 and expiring April 23,
2001. In connection therewith, the Company also granted to the underwriter of
the offering a warrant to purchase 95,000 shares of the Company's common stock
at a purchase price of $5.00 and 200,000 redeemable common stock purchase
warrants, each warrant exercisable to purchase one share of common stock at a
purchase price of $7.50 per share. Other than with respect to the exercise
price, the terms of the warrants granted to the underwriter are identical to
those described above. The Company's securities are currently traded on the
Nasdaq SmallCap Stock Exchange and the Boston Exchange.
In November 1996, the Company, through its subsidiary AC Car Group
Limited, purchased all the assets of AC Cars Limited and Autokraft Limited.
For a description of the Company's employment agreements, see "Executive
Compensation - Employment Agreements."
15
<PAGE>
FINANCIAL INFORMATION
ENCLOSED HEREIN ARE THE AUDITED FINANCIAL STATEMENTS OF THE COMPANY FOR
THE YEAR ENDED NOVEMBER 30, 1996 AND THE UNAUDITED FINANCIAL STATEMENTS FOR THE
THREE MONTHS ENDED FEBRUARY 28, 1997. A COPY OF THE CORPORATION'S ANNUAL REPORT
ON FORM 10-KSB FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1996 AND THE QUARTERLY
REPORT ON FORM 10-QSB FOR THE QUARTER ENDED FEBRUARY 28, 1997, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT THE ACCOMPANYING
EXHIBITS TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR SENT TO
PRIDE, INC., WATFORD METRO CENTRE, TOLPITS LANE, WATFORD HERTORDSHIRE, ENGLAND
WD1 8SB. EACH SUCH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT AS OF
APRIL 18, 1997 THE PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF COMMON
SHARES OF THE CORPORATION ENTITLED TO VOTE AT THE ANNUAL MEETING OF
STOCKHOLDERS.
IV. OTHER BUSINESS
As of the date of this proxy statement, the only business which the
Board of Directors intends to present, and knows that others will present, at
the Annual Meeting is that herein above set forth. If any other matter or
matters are properly brought before the Annual Meeting, or any adjournments
thereof, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy on such matters in accordance with their judgment.
Stockholder Proposals
Proposals of stockholders intended to be presented at the
Corporation's 1997 Annual Meeting of Stockholders must be received by the
Corporation on or prior to January 2, 1998 to be eligible for inclusion in the
Corporation's proxy statement and form of proxy to be used in connection with
the 1997 Annual Meeting of Stockholders.
By Order of the Board of Directors,
Alan Lubinsky
Secretary
May 1, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND
RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF
IT IS MAILED IN THE UNITED STATES OF AMERICA.
16
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC.
Annual Meeting of Stockholders - May 30, 1997
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan Lubinsky and Ivan
Averbuch and each of them, proxies, with full power of substitution to each, to
vote all shares of Common Stock of Pride Automotive Group, Inc. owned by the
undersigned at the Annual Meeting of Stockholders of Pride Automotive Group,
Inc. to be held on May 30, 1997 and at any adjournments thereof, hereby revoking
any proxy heretofore given. The undersigned instructs such proxies to vote:
I. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below)
|_| listed below |_|
(Instruction: To withhold authority for any individual nominee, strike a
line through the nominee's name in the list below)
Alan Lubinsky Ivan Averbuch Allan Edgar
and to vote upon any other business as may properly come before the meeting
or any adjournment thereof, all as described in the Proxy Statement dated May 1,
1997, receipt of which is hereby acknowledged.
(Continued and to be signed on the reverse side)
17
<PAGE>
Either of the proxies or their respective substitutes, who
shall be present and acting shall have and may exercise all the powers hereby
granted.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
ELECTION OF FIVE DIRECTORS UNLESS CONTRARY INSTRUCTIONS ARE GIVEN.
Said proxies will use their discretion with respect to any
other matters which properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE SIGN AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
Dated:___________________________, 1997
- ---------------------------------------
- ---------------------------------------
(Please date and sign exactly as name appears at left. For joint accounts,
each joint owner should sign, Executors, administrators, trustees, etc., should
also so indicate when signing.)
18
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page Nos
<S> <C>
Independent Auditors' Report F - 2
Financial Statements:
Consolidated Balance Sheets as of November 30, 1996 and 1995 F - 3
Consolidated Statements of Operations for the Years Ended November 30, 1996 and 1995 F - 4
Consolidated Statement of Changes in Shareholders' Equity for the Two Years in the
Period Ended November 30, 1996 F - 5
Consolidated Statements of Cash Flows for the Years Ended November 30, 1996 and 1995 F - 6
Notes to Consolidated Financial Statements F - 7
</TABLE>
F - 1
<PAGE>
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Pride Automotive
Group, Inc. and subsidiaries as of November 30, 1996 and 1995 and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for each of the two years in the period ended November 30, 1996. These
consolidated financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United Kingdom which are substantially the same as those followed in the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the 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 audits provide a reasonable basis for our
opinion.
In our opinion, the above mentioned consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the
Corporation as of November 30, 1996 and 1995 and the results of their operations
for the two years in the period ended November 30, 1996 in conformity with
accounting principles generally accepted in the United States of America.
Our audits also include the translation of British pounds into United States
dollars for amounts included in the consolidated financial statements. In our
opinion, such translation has been made in conformity with the basis stated in
Note 2(h) of the notes to the consolidated financial statements.
MARBLE ARCH HOUSE
66-68 SEYMOUR STREET
LONDON W1H 5AF CIVVALS
UNITED KINGDOM FEBRUARY 14, 1997 CHARTERED ACCOUNTANTS
F - 2
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ASSETS (Note 6(a) -
<TABLE>
<CAPTION>
November 30,
1996 1995
------------- -----------
ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 250,699 $ 3,377
Accounts receivable (Notes 2c and 3) 2,022,011 1,241,167
Inventories (Note 2d) 1,022,655 31,137
Property, revenue producing vehicles and equipment - net (Notes 2e, 4, 6 and 7) 18,681,638 9,924,318
Intangible assets - net (Note 2f) 11,712,578 10,340,396
Deferred offering costs - 59,940
-------------------- ---------------
TOTAL ASSETS $33,689,581 $21,600,335
=========== ===========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
LIABILITIES:
Bank line of credit (Note 6a) $ 2,964,465 $ 1,093,680
Accounts payable 624,953 1,291,368
Accrued liabilities and expenses (Note 5) 490,915 358,892
Bank debt (Note 6b) 1,002,571 1,070,492
Obligations under hire purchase contracts (Note 7) 11,034,951 5,578,565
Loans payable - directors (Note 9) - 123,668
Other liabilities (Note 8) 33,560 532,804
Acquisition debt payable (Note 10) 5,098,470 -
---------------------------
TOTAL LIABILITIES 21,249,885 10,049,469
------------ ------------
MINORITY INTEREST IN SUBSIDIARY (Note 18) - -
----------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 14 and 17)
SHAREHOLDERS' EQUITY (Notes 11, 12 and 19):
Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued
or outstanding - -
Common stock, $.001 par value, 10,000,000 shares authorized 2,652,500
and 1,560,000 shares issued and outstanding in 1996 and 1995, respectively 2,653 1,560
Additional paid-in capital 14,026,758 11,741,922
Retained earnings (deficit) (1,456,963) (801,965)
Foreign currency translation (Note 2h) (132,752) 609,349
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY 12,439,696 11,550,866
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $33,689,581 $21,600,335
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F - 3
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
November 30,
1996 1995
--------- -----------
REVENUES (Notes 2i and 14):
<S> <C> <C>
Contract hire income $ 6,286,677 $ 4,723,539
Sale of vehicles 5,839,080 4,629,860
Fleet management and other income 758,261 369,657
-------------- --------------
TOTAL REVENUE 12,884,018 9,723,056
------------- -------------
COSTS AND EXPENSES:
Cost of sales 10,241,850 7,297,331
General and administrative expenses 1,802,111 2,035,529
Amortization of goodwill 634,813 630,718
Interest and other 860,242 629,623
-------------- --------------
13,539,016 10,593,201
(LOSS) BEFORE PROVISION FOR INCOME TAXES (654,998) (870,145)
Provision for income taxes (Notes 2g and 13) - -
NET (LOSS) $ (654,998) $ (870,145)
============= =============
(LOSS) PER COMMON SHARE (Note 2j) $(.27) $(.42)
===== =====
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING (Note 2j) 2,405,760 2,060,000
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Shares Additional Retained Foreign Total
(As Restated Common Paid-in Earnings Currency Shareholders'
- See Note 1) Stock Capital (Deficit) Translation Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 1, 1994 1,500,000 $1,500 $11,119,690 $ 68,180 $ 407,768 $11,597,138
Compensatory stock (Note 11) 60,000 60 59,940 - - 60,000
Early extinguishment of debt
with related party (Note 16) - - 562,292 - - 562,292
Foreign currency translation
adjustment - - - - 201,581 201,581
Net loss for the year ended
November 30, 1995 - - - (870,145) - (870,145)
Balance at November 30, 1995 1,560,000 1,560 11,741,922 (801,965) 609,349 11,550,866
Private offering of common stock
(Note 11) 500,000 500 119,500 - - 120,000
Shares and warrants sold in
initial public offering (Note 11) 592,500 593 2,165,336 - - 2,165,929
Foreign currency translation
adjustment - - - - (742,101) (742,101)
Net loss for the year ended
November 30, 1996 - - - (654,998) - (654,998)
BALANCE AT
NOVEMBER 30, 1996 2,652,500 $2,653 $14,026,758 $(1,456,963) $(132,752) $12,439,696
========= ====== =========== =========== ========= ===========
</TABLE>
See notes to consolidated financial statements.
F - 5
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
November 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) $ (654,998) $ (870,145)
Adjustments to reconcile net (loss) to net cash (utilized) provided by
operating activities:
Depreciation and amortization 2,354,942 1,852,825
Amortization of goodwill 594,735 630,718
Extinguishment of debt with related party - 562,292
(Gain) loss on disposal of fixed assets (119,030) 229,563
Compensatory stock - 60
Provision for maintenance costs (18,524) (176,302)
Foreign currency translation (742,101) 201,581
Changes in assets and liabilities:
(Increase) in accounts receivable (599,753) (236,681)
(Increase) decrease in inventories (93,794) 111,382
(Decrease) increase in accounts payable, accrued expenses and bank overdraft (955,172) (553,388)
-------------- -------------
Net cash (utilized) provided from operating activities (233,695) 1,751,905
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (9,858,724) (3,433,132)
Acquisition of assets in new subsidiary (969,279) -
Proceeds from sale of fixed assets 2,068,601 906,727
-------------- --------------
Net cash (utilized) by investing activities (8,759,402) (2,526,405)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank lines of credit 1,870,785 1,093,680
Funds received from sale of common stock 2,285,929 -
Loans received from officers - 232,500
Loans repaid to officers (304,759) (108,832)
Loans repaid to affiliate - (132,147)
Principal payments of long term debt (67,921) (92,375)
Proceeds from hire purchase contract funding 11,530,175 3,262,390
Principal repayments of hire purchase contract funding (6,073,790) (3,495,819)
------------- -------------
Net cash provided from financing activities 9,240,419 759,397
------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 247,322 (15,103)
Cash and cash equivalents, beginning of year 3,377 18,480
---------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 250,699 $ 3,377
============= ==============
</TABLE>
SUPPLEMENTAL INFORMATION:
(i) In November 1996, the Company acquired certain of the assets of AC Cars
Limited aggregating $6,067,749 and incurred debt obligations
aggregating $5,098,470.
(ii) The loss on the disposal of fixed assets resulted from the sale of
certain non-revenue producing assets whereby the proceeds were less
than the carrying value.
See notes to consolidated financial statements.
F - 6
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 1 - DESCRIPTION OF COMPANY:
Pride Automotive Group, Inc. (the "Company") was incorporated in
the State of Delaware in March 1995. Pursuant to the terms and
conditions of a reorganization in March 1995, the Company issued
1,500,000 shares of its common stock to Pride, Inc. (an entity
incorporated in the State of Delaware), thereby making the
Company a majority owned subsidiary of Pride Inc., in exchange
for all of the issued and outstanding shares held by Pride, Inc.,
of Pride Management Services Plc (PMS), a consolidated group of
operating companies located in the United Kingdom which are
engaged in the leasing of motor vehicles primarily on contract
hire to local authorities and selected corporate customers
throughout the United Kingdom. This exchange of stock resulted in
PMS becoming a wholly owned subsidiary of the Company. The
Company, its subsidiary PMS and PMS's subsidiaries are referred
to as the "Company" unless the context otherwise requires. The
accompanying consolidated financial statements are based on the
assumption that the Company and PMS were combined for all periods
presented, in a manner similar to the pooling of interests method
of accounting.
On November 29, 1996, the Company, through its newly formed
majority owned subsidiary, AC Automotive Group Inc. and its
wholly owned subsidiary AC Car Group Limited (registered in the
United Kingdom), completed the acquisition of certain assets (see
Note 10) of AC Cars Limited and Autokraft Limited. These two
companies were engaged in the manufacture and sale of specialty
automobiles. The purchase price of approximately $6,067,000 is
being financed with the proceeds of a private offering of the
Company's common stock, (see Note 19) and by loans. The
acquisition has been recorded using the purchase method of
accounting. (See also Notes 2f and 10).
The following unaudited pro-forma results of operations assume
the acquisition occurred as of March 1, 1996 (amounts in millions
except per share data):
<TABLE>
<CAPTION>
<S> <C>
Revenues $14.2
Net loss (1.8)
Earnings per common share $(.75)
</TABLE>
The pro-forma financial information, which is only available
beginning March 1, 1996, is not necessarily indicative of the
operating results that would have occurred had the acquisition
been consummated as of March 1, 1996, nor are they necessarily
indicative of future operating results. This is because AC Cars
Limited and Autokraft Limited were in administrative receivership
in the United Kingdom and this severely restricted the ability of
the companies to manufacture and market their products. The
Company has made the United States Securities and Exchange
Commission aware of the fact that financial information is not
available for prior periods.
F - 7
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PMS, the operating group of companies, which is located in the
United Kingdom, follows generally accepted accounting principles
in the United Kingdom. For purposes of these consolidated
financial statements, the Company has converted to the generally
accepted accounting principles of the United States.
(a) Basis of Consolidation and Presentation:
The consolidated financial statements include the accounts of the
Company (Pride Automotive Group, Inc.), its' wholly owned
subsidiary Pride Management Services Plc and its' wholly owned
subsidiaries, and its' majority owned subsidiary AC Automotive
Group, Inc. and its' wholly owned subsidiary. All material
intercompany balances and transactions have been eliminated.
Due to the nature of the Company's business, contract leasing of
motor vehicles (revenue producing assets) which are treated as
non-current fixed assets, the balance sheet is reflected on an
unclassified basis. Accordingly, current assets and current
liabilities are not reflected separately on the face of the
balance sheet.
(b) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain
estimates and assumptions, where applicable, that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and
expenses during the reporting period. While actual results could
differ from those estimates, management does not expect such
variances, if any, to have a material effect on the financial
statements.
(c) Concentration of Credit Risk/Fair Value:
Financial instruments that potentially subject the Company to
concentrations of credit risk in accordance with SFAS No 105
consist principally of accounts receivable. The Company believes
however, that risks associated with accounts receivable are
limited due to its large customer base and the fact that it
leases vehicles to companies in many industries.
The carrying amounts of cash and cash equivalents, trade
receivables, other assets, accounts payable and debt obligations
approximate fair value.
F - 8
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(d) Inventories:
Inventories include vehicles which are no longer being leased to
customers and which are temporarily being held for resale at cost
less accumulated depreciation, which approximates net realizable
value.
The inventories of AC Automotive Group, Inc. and its subsidiary
consist of finished goods, work in progress and spare parts of
specialty automobiles and are stated at the lower of cost,
(first-in, first-out method) or market. Market is considered as
net realizable value.
As of November 30, 1996 and 1995 inventories consisted of the
following:
<TABLE>
<CAPTION>
1996 1995
------------- ------
<S> <C> <C>
Cars held for resale $ 124,932 $31,137
Finished goods 75,510 -
Work-in-progress 684,305 -
Spare parts 137,908 -
$1,022,655 $31,137
========== =======
</TABLE>
(e) Fixed Assets and Depreciation:
Fixed assets are stated at cost less depreciation. Depreciation
is provided on all assets at rates calculated to write off the
cost of each asset over its estimated useful life, as follows:
Building and improvements 50 years straight-line
basis Revenue producing vehicles 3-6 years
straight-line basis Furniture and fixtures 4
years double declining basis Machinery and
equipment 4 years double declining basis Aircraft
4 years double declining basis
Maintenance and repairs are charged to operations and major
improvements are capitalized. Upon retirement, sale of other
disposal, the associated cost and accumulated depreciation of the
asset are eliminated from the accounts and any resulting gain or
loss is included in operations.
F - 9
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(f) Intangible Assets:
Intangible assets consist primarily of goodwill which arose in
connection with the acquisition of certain subsidiaries of PMS.
Goodwill is being amortized over a period of 10-20 years on a
straight-line basis. Accumulated amortization as of November 30,
1996 and 1995 aggregated $2,990,626 and $2,355,813, respectively.
In November 1996, the Company acquired certain of the assets of
AC Cars Limited and Autokraft Limited (see Note 1 above). The
purchase price exceeded the tangible net assets acquired by
$2,006,995. This amount was assigned to the brand name and
various contracts with suppliers and customers and is to be
amortized over 20 years on a straight-line basis.
The Company periodically reviews the valuation and amortization
of goodwill and other intangibles to determine possible
impairment by evaluating events and circumstances that might
indicate an inability to recover the carrying amount. Such
evaluation is based on analysis, including profitability,
projections and cash flows that incorporate the impact on
existing Company business.
(g) Income Taxes:
The Company conducts all of its operating activities in the
United Kingdom (UK). As such, they are subject to taxation in the
UK based upon that country's tax statutes. Under UK taxation
rules, provision is made for taxation deferred as a result of
material timing differences between the incidence of income and
expenditures for taxation and accounting purposes, using the
liability method, only to the extent that there is reasonable
probability that a liability or asset will crystallize in the
near future. See also Note 13 regarding SFAS No 109 - Accounting
for Income Taxes.
(h) Foreign Currency Translation:
The Company's principal operations are conducted by PMS which
reflects its financial statements in British pounds. As a result,
most assets and liabilities of the foreign operations are
translated into US dollars using current exchange rates in effect
at the balance sheet date. Fixed assets and intangible assets are
translated at historical exchange rates. Revenue and expense
accounts are translated using an average exchange rate during the
period except for those expenses related to assets and
liabilities which are translated at historical exchange rates.
These include depreciation and amortization which are translated
at the rates existing at the time the asset was acquired. Any
resulting gains or losses due to the translations are reflected
as a separate item of shareholders' equity.
F - 10
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(i) Income Recognition:
Contract hire income of leased vehicles is recognized as
operating leases over the period of the contract in accordance
with SFAS No 13 - Accounting for Leases and the related
amendments and interpretations. Income from the sale of
previously leased vehicles, is reflected at the time of sale of
the vehicle. Fleet management revenues and miscellaneous income
are reflected on the accrual basis over the term that the
services are provided.
(j) Earnings Per Share:
Earnings per share are computed based upon the weighted average
shares and common equivalent shares outstanding. The shares
issued in connection with the reorganization (see Note 1), the
shares issued in lieu of compensation for legal services and the
shares sold during the year ended November 30, 1996 in a private
offering (see Note 11), have been treated as outstanding for all
periods presented, in accordance with the guidelines of the
Securities and Exchange Commission. Common stock equivalents have
been excluded from the computation since the results would be
anti-dilutive.
(k) Cash and Cash Equivalents:
For purposes of the statements of cash flows, the Company
considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents.
(l) Lease Agreements:
The Company leases vehicles with terms generally ranging from two
to four years. The following table shows the future minimum lease
payments of existing leases to be received, net of related costs
(see also Note 7):
<TABLE>
<CAPTION>
<S> <C> <C>
November 30, 1997 $ 5,103,977
November 30, 1998 4,390,779
November 30, 1999 2,634,819
November 30, 2000 1,007,729
-------------
Total minimum lease payments receivable
net of executory costs $13,137,304
</TABLE>
(m) Accounting Changes:
As permitted by SFAS 123, Accounting for Stock-Based
Compensation, which becomes effective for the Company as of
December 1, 1996, and which encourages companies to record
expense for stock options and other stock-based employee
compensation awards based on their fair value at date of grant,
the Company will continue to apply its current accounting policy
under Accounting Principles Board Opinion No. 25 and will include
the necessary disclosures in its fiscal 1997 financial
statements.
F - 11
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 3 - ACCOUNTS RECEIVABLE:
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------------- ----------
<S> <C> <C>
Trade receivables $1,192,949 $ 955,437
Lease maintenance receivables 330,902 69,182
Value added tax 102,114 97,707
Due from related companies 95,125 -
Other 300,921 118,841
------------ ------------
$2,022,011 $1,241,167
</TABLE>
Included in the above trade receivables is $59,002 due on a long term basis
as of November 30, 1996.
Based upon past experience, the Company has deemed that no allowance for
uncollectible accounts receivable is necessary.
NOTE 4 - FIXED ASSETS AND DEPRECIATION:
Fixed assets consist of the following:
<TABLE>
<CAPTION>
1996 1995
---------------- -----------
<S> <C> <C>
Buildings and improvements $ 1,719,415 $ 1,719,415
Revenue producing vehicles 17,282,095 11,989,192
Furniture, fixtures, plant and equipment 2,247,430 519,753
Aircraft 1,331,493 -
----------------------------
22,580,433 14,228,360
Less: accumulated depreciation (including
$3,388,495 and $3,853,753 of accumulated
depreciation on revenue producing vehicles,
for 1996 and 1995, respectively) 3,898,795 4,304,042
------------- -------------
$18,681,638 $ 9,924,318
=========== ============
</TABLE>
Depreciation expense for the years ended November 30, 1996 and
1995 aggregated $2,295,164 and $2,415,117, respectively.
One of the buildings owned by Pride Management is not currently
being utilized by the Company. This building is being leased to
an unrelated party at an annual rent of approximately $80,000 per
annum.
F - 12
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 5 - ACCRUED LIABILITIES AND EXPENSES:
Accrued liabilities and expenses consist of the following:
<TABLE>
<CAPTION>
1996 1995
----------- -------
<S> <C> <C>
Taxes other than income taxes $418,082 $333,586
Miscellaneous accrued expenses 72,833 25,306
---------- ----------
$490,915 $358,892
======== ========
</TABLE>
NOTE 6 - BANK LOANS/LINE OF CREDIT:
(a) The Company has a $2,684,800 line of credit with a bank at an
interest rate of 3% in excess of the base rate (6% as of November
30, 1996). This line of credit is payable on demand and is
secured by all assets of the Company other than revenue producing
vehicles and buildings which are already pledged (see Notes 6b
and 7). As of November 30, 1996, the bank had granted a temporary
increase to $2,965,000 at similar terms.
(b) At November 30, 1996, bank loans consisted of $1,002,571 due to
two banks at rates of 3% and 5% in excess of the banks' base rate
(6% as of November 30, 1996). These loans are secured by the
freehold properties (buildings) owned by Pride Management and its
subsidiaries, and mature in 2001 and 2017.
The scheduled principal payments of this bank debt as of November
30, 1996 are as follows:
For the Year Ended November 30,
1997 $ 98,890
1998 98,890
1999 98,890
2000 98,890
2001 98,890
Thereafter 508,121
-----------
$1,002,571
NOTE 7 - HIRE PURCHASE CONTRACTS/EQUIPMENT FINANCING:
The Company has funding lines with several financing institutions
in the United Kingdom in the aggregate amount of approximately
$18,200,000 as of November 30, 1996. These funding lines are
utilized to acquire revenue producing vehicles, which vehicles
collateralize the outstanding obligations.
F - 13
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 7 - HIRE PURCHASE CONTRACTS/EQUIPMENT FINANCING (Continued):
Assets (revenue producing vehicles) obtained under hire purchase
contracts are capitalized as fixed assets and depreciated over
their useful lives. The obligations under such agreements, which
mature at various dates within five years from inception, are
reflected separately on the balance sheet net of finance charges
which are charged to the periods to which they apply. At November
30, 1996, obligations under hire purchase contracts are as
follows:
For the Year Ended November 30,
1997 $ 4,951,662
1998 3,977,882
1999 1,878,445
2000 226,962
--------------
$11,034,951
The annual interest rates on these obligations range from 7.25%
to 15.6%.
NOTE 8 - OTHER LIABILITIES:
At November 30, 1996 and 1995 other liabilities consisted of
$33,560 and $532,804, respectively due to other creditors at
interest rates approximating the current market rates and
repayable on a demand basis.
NOTE 9 - RELATED PARTY TRANSACTIONS:
At November 30, 1995, the Company was indebted to its President
in the aggregate amount of $123,668. These unsecured loans were
repayable on demand at an interest rate of 2 1/2% in excess of
the base lending rate (6.75% at November 30, 1995) of the
Company's bank. The loan was repaid during the year ended
November 30, 1996.
NOTE 10 - ACQUISITION DEBT PAYABLE:
As of November 30, 1996, acquisition debt payable (see Note 1) consisted of
the following:
Unsecured notes payable on demand after October 31, 1999; interest payable
quarterly at 8% per annum $1,678,000
Notes payable in 18 monthly installments of $46,611 plus interest at 2%
above the base rate 839,000
Other short-term notes payable (see Note 19) 2,581,470 -----------
$5,098,470
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 11 - COMMON STOCK/RECAPITALIZATION:
In March 1995, the Company issued 1,500,000 shares of common
stock in connection with a reorganization (see Note 1).
In March 1995, the Company issued 60,000 shares of common stock
in lieu of compensation for legal services rendered.
In December 1995, the Company completed a private placement
offering selling 20 units, each unit consisting of 25,000 shares
of common stock, at $6,000 per unit for aggregate gross proceeds
of $120,000.
In April 1996 the Company successfully completed an initial
public offering ("IPO") of its common stock whereby it sold
592,500 shares of common stock at a price of $5.00 per share and
2,300,000 common stock purchase warrants at a price of $.10 per
warrant. This offering yielded net proceeds of approximately
$2,166,000.
The warrants are exercisable at a price of $5.75 per share,
subject to adjustment, one year from the date of the offering,
for a period of four years. The warrants are redeemable by the
Company at any time commencing one year from the date of its
prospectus, upon 30 days notice, at a redemption price of $.05
per warrant.
In addition, the Company entered into a consulting agreement with
one of the Under- writers as a financial consultant for a period
of two years at a monthly fee of $2,500 payable in full at the
closing of the offering. The Underwriters have also been granted
warrants to acquire 95,000 shares of Common Stock and 200,000
warrants at 150% of the public offering prices or $7.50 per share
and $.15 per Warrant, respectively.
NOTE 12 - STOCK OPTION PLANS:
In September 1995, the board of directors adopted the 1995 Senior
Management Incentive Plan (the "Management Plan") which was
adopted by shareholder consent. The Plan provides for the
issuance of up to 300,000 shares of the Company's common stock in
connection with the issuance of stock options and other stock
purchase rights to executive officers and other key employees.
As of November 30, 1996, the Company had granted options to
purchase 100,000 shares of common stock at an exercise price of
$5.50 per share, none of which had been exercised as of that
date. These options are exercisable over a five year period
pursuant to a three year vesting schedule (331/3% per annum)
beginning in August 1996.
See also Note 2(m) re: Accounting Changes.
F - 15
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 13 - INCOME TAXES:
The provisions for United Kingdom income taxes utilizing the
requirements of SFAS No 109 consisted of the following for the
years ended November 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
-------------- ---------
<S> <C> <C>
Current tax expense $ 763,350 $ 860,000
Deferred tax expense 174,650 -
Investment tax credits on vehicles (938,000) (860,000)
--------- ----------
$ - $ -
=============== ==========
</TABLE>
At November 30, 1996, investment tax credits being carried over
to future periods aggregated approximately $11,904,000.
The components of the deferred tax asset, pursuant to SFAS No.
109, as of November 30, 1996 and 1995, respectively, are as
follows:
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Operating loss carryforward $ 52,000 $ 23,000
Valuation allowance (52,000) (23,000)
-------- ---------
$ - $ -
</TABLE>
The Company has available operating losses carryforwards for tax
purposes aggregating approximately $148,000 as of November 30,
1996, which may result in a deferred tax asset. The Company has
recognized this asset but has provided a valuation allowance for
the full amount since there is no assurance that such losses will
be utilized in the near future.
NOTE 14 - ECONOMIC DEPENDENCY:
For the years ended November 30, 1996 and 1995, the Company had
two unaffiliated customers, which accounted for an aggregate of
approximately 17% (1995 - 18%) and 12% (1995 - 15%) respectively,
of the Company's total revenues.
The Company purchases all of the automobiles that it leases to
its clients from automotive dealerships, usually several at a
time. The Company does not depend on any one dealership for its
purchase of automobiles and does not have any written agreements
with any of the dealerships it purchases vehicles from. The
Company believes that it will continue to be able to purchase
automobiles at competitive prices and terms into the future.
F - 16
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 15 - PENSION PLAN:
PMS and its' subsidiaries have a fully insured defined
contribution plan for all of its eligible employees.
Contributions to the plan, which are discretionary, for the years
ended November 30, 1996 and 1995 amounted to $33,264 and $55,817,
respectively.
NOTE 16 - CONVERTIBLE DEBT:
The Company had reflected convertible debt of $562,292 as of
November 30, 1994. These loans were to bear interest at 6% and
were repayable five years from date of issue. The original debt,
which was not convertible, arose at the time PMS acquired one of
its subsidiaries in 1992. The Company acquired this subsidiary
for $1 and assumed approximately $11,500,000 of net liabilities.
This acquisition resulted in goodwill of approximately
$11,500,000. The ultimate holder of the debt, in 1994, was given
the option of converting such loans into shares of Pride Inc.'s
(the Company's parent) common stock at the end of such period,
based upon their guarantee of the ultimate sales values of the
related revenue producing vehicles. The debt holder was the
controlling shareholder of the Company's parent at the time of
this transaction.
During the year ended November 30, 1995, the Company determined,
with the agreement of the debt holder, that the estimated
ultimate sales values of the vehicles were less than expected and
it was agreed that the debt would be written off against the debt
holder's guarantee. The balance of the debt, $562,292, was
therefore treated as an early extinguishment of debt. At the time
of extinguishment, the debt outstanding was owed to a related
party. In accordance with APB No 26, extinguishment transactions
between related entities should be treated as capital
transactions. Accordingly, the gain on the extinguishment was
added to additional paid-in capital.
NOTE 17 - COMMITMENTS:
(a) Leases:
The Company has entered into a one-year lease agreement for the
manufacturing facility being utilized for its new subsidiary at a
cost of approximately $54,000 per month. The Company has an
option to purchase this facility at a cost of $8,700,000, through
August 1997. This lease expires in December 1997.
(b) Employment Agreements:
In August 1995, the Company entered into an employment agreement
with its President/Chairman of the Board of Directors. This
three-year agreement provides for an annual salary of $160,000
with annual escalations of 10% and also contains certain
non-compete restrictions. This employee was also granted 100,000
stock options (see Note 12).
F - 17
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
NOTE 17 - COMMITMENTS (Continued):
(b) Employment Agreements (continued):
In September 1995, the Company entered into an employment
agreement with an officer/director for a period of twenty four
months commencing December 1, 1995. This agreement is
automatically extendable for a further twenty four month period
and provides for an annual salary of $55,000, subject to review
by the Board of Directors.
(c) Rental Income:
The Company leases one of its owned facilities to an unaffiliated
company. The lease, which expires in 2004, provides for rental
income of approximately $80,000 per annum. The annual cost of
servicing the mortgage and real estate taxes on this building
approximates $70,000.
NOTE 18 - MINORITY INTEREST IN SUBSIDIARY:
The Company owns 70% of AC Automotive Group, Inc. ("AC Group").
As of November 30, 1996, losses applicable to the minority
shareholders exceeded their interest in AC Group, which was
reduced to zero, and as such, excess losses were charged against
the operations of the Company. Future earnings attributable to
the minority interest in AC Group, if any, will first be credited
to the operations of the Company, to the extent that such excess
losses were previously absorbed by the Company.
NOTE 19 - SUBSEQUENT EVENT:
In December 1996, the Company completed a private placement of 14
units, each unit consisting of a 10% promissory note in the
amount of $95,000 and 10,000 shares of the Company's common stock
for an aggregate price of $100,000 per unit. The gross proceeds
of $1,400,000 were used to satisfy a portion of the debt owed re:
the acquisition of AC Car Group (see Notes 1 and 10).
In December 1996, the Company also entered into a loan agreement
with its bank for $755,000, with interest payable at 8% per
annum, secured by a first lien on the aircraft owned by the
Company as a result of the acquisition described in Note 1. This
loan is to be repaid from the proceeds of the sale of the
aircraft.
F - 18
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
EXHIBIT 27
FINANCIAL DATA SCHEDULE
ARTICLE 5 OF REGULATIONS S-X
The schedule contains summary financial information extracted from the
consolidated financial statements for the year ended November 30, 1996 and is
qualified in its entirety by reference to such statements.
<TABLE>
<CAPTION>
<S> <C>
Period type 12 Mos.
Fiscal year end Nov. 30, 1996
Period start Dec. 01, 1995
Period end Nov. 30, 1996
Cash 250,699
Securities 0
Receivables 2,022,011
Allowances 0
Inventory 1,022,655
Current assets 0
PP&E 22,580,433
Depreciation 3,898,795
Total assets 33,689,581
Current liabilities 0
Bonds 0
Common 2,653
Preferred mandatory 0
Preferred 0
Other SE 12,437,043
Total liability and equity 33,689,581
Sales 12,884,018
Total revenues 12,884,018
CGS 10,241,850
Total costs 10,241,850
Other expenses 0
Loss provision 0
Interest expense 860,242
Income pretax (654,998)
Income tax 0
Income continuing (654,998)
Discontinued 0
Extraordinary 0
Changes 0
Net income (654,998)
EPS primary (.27)
EPS diluted (.27)
</TABLE>
- Exhibit 27 -
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended February 28, 1997
Commission File Number 0-27944
PRIDE AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 98-0157860
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Pride House, Watford Metro Centre, Tolpits Lane, Watford, England WD1 8SB
(Address of principal executive offices) (Zip Code)
(800) 698-6590
(Issuer's telephone number, including area code)
Indicate by (X) whether Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days. YES X NO
Common Stock, $.001 par value. 2,812,500 shares outstanding as of February
28, 1997.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
INDEX
Page(s)
PART I. Financial Information:
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets - February 28, 1997
(Unaudited) and3.ovember 30, 1996 3.
Consolidated Condensed Statements of Operations (Unaudited)
Three Months Ended February 28, 1997 and February 29, 1996 4.
Consolidated Condensed Statements of Cash Flows (Unaudited)
Three Months Ended February 28, 1997 and February 29, 1996 5.
Notes to Interim Consolidated Condensed Financial Statements (Unaudited) 6.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9.
PART II. Other Information 12.
SIGNATURES 13.
EXHIBITS: Exhibit 11 - Earnings (Loss) Per Share 14.
Exhibit 27 - Financial Data Schedule 15.
Page 2.
<PAGE>
PART 1. Financial Information
ITEM 1. Financial Statements
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
- ASSETS -
February 28, November 30,
1997 1996
(unaudited)
ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 26,244 $ 250,699
Accounts receivable 1,891,598 2,022,011
Inventories 1,298,916 1,022,655
Property, revenue producing vehicles and equipment -
net (Note 2) 19,866,127 18,681,638
Intangible assets - net (Note 3) 11,494,187 11,712,578
TOTAL ASSETS $34,577,072 $33,689,581
- LIABILITIES AND SHAREHOLDERS' EQUITY -
LIABILITIES (Note 4):
Bank overdraft line of credit $ 3,735,283 $ 2,964,465
Accounts payable 1,152,057 624,953
Accrued liabilities and expenses 314,213 490,915
Bank debt 1,726,692 1,002,571
Obligations under hire purchase contracts 11,645,767 11,034,951
Other loans - acquisition 4,156,000 5,098,470
Other liabilities 35,939 33,560
TOTAL LIABILITIES 22,765,951 21,249,885
MINORITY INTERESTS 295,759 -
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (Note 5):
Preferred stock, $.01 par value, 2,000,000 shares authorized,
none issued or outstanding - -
Common stock, $.001 par value, 10,000,000 shares authorized;
2,812,500 and 2,652,500 shares issued and outstanding at
February 28, 1997 and November 30, 1996 2,813 2,653
Additional paid-in capital 13,565,190 14,026,758
Retained earnings (deficit) (1,868,476) (1,456,963)
Foreign currency translation (184,165) (132,752)
TOTAL SHAREHOLDERS' EQUITY 11,515,362 12,439,696
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $34,577,072
$33,689,581
</TABLE>
See notes to interim consolidated condensed financial statements
Page 3.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
February 28, February 29,
1997 1996
REVENUE:
<S> <C> <C>
Contract hire income $1,652,484 $1,060,979
Sale of contract hire vehicles 1,731,816 1,140,384
Sale of vehicles - AC Cars (Note 1) 202,563 -
Fleet management and other income 207,420 186,051
3,794,283 2,387,414
EXPENSES:
Cost of sales - contract hire 2,843,212 1,701,592
Cost of sales - AC Cars 144,022 -
General and administrative expenses - contract hire 376,027 402,734
General and administrative expenses - AC Cars 543,238 -
Amortization of intangible assets - contract hire 157,680 157,680
Amortization of intangible assets - AC Cars 10,319 -
Interest expenses and other - contract hire 279,311 207,336
Interest expenses and other - AC Cars 78,382 -
4,432,191 2,469,342
LOSS BEFORE MINORITY INTERESTS (637,908)
(81,928)
Minority interests in net loss of consolidated subsidiaries 226,395 -
LOSS BEFORE PROVISION FOR INCOME TAXES (411,513)
(81,928)
Provision (credit) for income taxes - -
NET LOSS $ (411,513) $ (81,928)
LOSS PER COMMON SHARE (Note 6):
Net loss before minority interest $ (.23) $ (.04)
Minority interest in net loss of subsidiary .08 -
$ (.15 ) $ (.04)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (Note 6) 2,759,167
2,060,000
</TABLE>
See notes to interim consolidated condensed financial statements
Page 4.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
February 28, February 29,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (411,513) $ (81,928)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Minority interest in ne (226,395) -
Depreciation and amorti 837,328 581,974
Amortization of goodwil1 148,683 156,655
(Gain)loss on disposal of fixed assets (28,470) 13,792
Provision for maintenan - (14,651)
Foreign currency transl 276,330 1,025
Changes in assets and liabilities:
Decrease in accounts receivable 130,413 258,693
(Increase) in inventories (276,261) (195,756)
Increase in accounts payable, accrued expenses and other liabilities 352,781 248,062
Net cash provided from operating activities 802,896 967,866
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of revenue producing assets (2,918,307) (1,133,500)
Proceeds from sale of fixed assets 517,139 221,135
Net cash (utilized) by (2,401,168) (912,365)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank lines of credit 770,818 1,567
Proceeds from sale of common stock and warrants 80,900 120,000
Costs associated with initial public offering (2,038) -
Loans repaid to directors - (6,634)
Principal payments of long-term debt (6,679) (18,294)
Payment of acquisition debt (80,000) -
Proceeds from hire purchase contract funding 3,701,474 1,323,788
Principal repayments of hire purchase contract funding (3,090,658)
(1,464,676)
Net cash provided (utilized) by financing activiti 1,373,817 (44,249)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(224,455) 11,252
Cash and cash equivalents, beginning of year 250,699 3,377
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 26,244
$ 14,629
</TABLE>
See notes to interim consolidated condensed financial statements
Page 5.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - DESCRIPTION OF COMPANY: Pride Automotive Group, Inc. (the
"Company") was incorporated in the State of Delaware in March 1995. Pursuant to
the terms and conditions of a reorganization in March 1995, the Company issued
1,500,000 shares of its common stock to Pride, Inc. (an entity incorporated in
the State of Delaware), thereby making the Company a majority owned subsidiary
of Pride, Inc., in exchange for all of the issued and outstanding shares held by
Pride, Inc. of Pride Management Services, Plc., (PMS) a consolidated group of
operating companies located in the United Kingdom. The PMS companies are engaged
in the leasing of motor vehicles primarily on contract hire to local authorities
and select corporate customers throughout the United Kingdom. This exchange of
stock resulted in PMS becoming a wholly owned subsidiary of the Company. The
Company, its subsidiary PMS, and PMS's subsidiaries are referred to as the
"Company" unless the context otherwise requires. The accompanying consolidated
financial statements are based on the assumption that the Company and PMS were
combined for all periods presented, in a manner similar to the pooling of
interests method of accounting.
On November 29, 1996, the Company, through its newly formed majority owned
subsidiary, AC Automotive Group Inc., and its wholly-owned subsidiary AC Car
Group Limited (registered in the United Kingdom), completed the acquisition of
certain assets of AC Cars Limited and Autocraft Limited. These two companies
were engaged in the manufacture and sale of speciality automobiles. The purchase
price of approximately $6,067,000 was financed with the proceeds of a private
offering of the Company's common stock and by loans.
The accounting policies followed by the Company are set forth in Note 2 to
the Company's consolidated financial statements included in its Annual report on
Form 10-KSB for the year ended November 30, 1996 which is incorporated herein by
reference. Specific reference is made to this report for a description of the
Company's securities and the notes to consolidated financial statements included
therein.
In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements of Pride Automotive Group, Inc. and
its wholly owned subsidiaries, contain all adjustments necessary to present
fairly the Company's financial position as of February 28, 1997 and the results
of its operations and cash flows for the three month periods ended February 28,
1997 and February 29, 1996.
The results of operations for the three month period ended February 28,
1997 are not necessarily indicative of the results to be expected for the full
year.
Page 6.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS (Unaudited)
NOTE 2 - FIXED ASSETS:
Fixed assets consists of the following:
February 28, November 30,
1997 1996
Building and improvements $ 1,719,415 $ 1,719,415
Revenue producing vehicles 18,835,804 17,282,095
Furniture, fixtures and machinery 2,301,842 2,247,430
Aircraft 1,331,493 1,331,493
24,188,554 22,580,433
Less: accumulated depreciation 4,322,427 3,898,795
- ------------- ------------
$19,866,127 $18,681,638
NOTE 3 - INTANGIBLE ASSETS:
Intangible assets consist of goodwill which arose in connection with the
acquisition of certain subsidiaries of PMS and brand names arising from the
acquisition of AC Car Group. Goodwill is being amortized over a period of 10 -
20 years on a straight-line basis. Brand names are being amortized over 40 years
on a straight line basis. Accumulated amortization as of February 28, 1997 and
November 30, 1996 aggregated $3,148,306 and $2,990,626, respectively.
The Company periodically reviews the valuation and amortization of goodwill
to determine possible impairment by evaluating events and circumstances that
might indicate an inability to recover the carrying amount. Such evaluation is
based on various analyses, including profitability projections and cash flows
that incorporate the impact on existing Company business.
NOTE 4 - LIABILITIES:
Included in liabilities as of February 28, 1997, are amounts in the
aggregate of $12,589,097 which are not due and payable until after February 28,
1998. This amount consists of amounts due to trade creditors, loans payable and
equipment notes payable.
NOTE 5 - COMMON STOCK/INITIAL PUBLIC OFFERING:
In December 1995, the Company completed a private placement offering
selling 20 units, each unit consisting of 25,000 shares of common stock, at
$6,000 per unit for aggregate gross proceeds of $120,000.
In April 1996, the Company successfully completed an initial public
offering of its common stock. The Company sold 592,500 shares of common stock
(including the underwriter's over allotment) at a price of $5.00 per share and
2,000,000 redeemable common stock purchase warrants at a price of $.10 per
warrant for aggregate net proceeds of $2,280,294. Each common stock purchase
warrant entitles the holder to purchase one share of common stock at an exercise
price of $5.75.
Page 7.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - COMMON STOCK/INITIAL PUBLIC OFFERING (Continued):
In December 1996, the Company completed a private placement of 16 units,
each unit consisting of a 10% promissory note in the amount of $95,000 and
10,000 shares of the Company's common stock for an aggregate price of $100,000
per unit.
NOTE 6 - EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share are computed based upon the weighted average
shares and common equivalent shares outstanding. The shares issued in connection
with the reorganization (see Note 1), and shares issued at values below the
price at which shares were sold in the Company's initial public offering (see
Note 5) have been treated as outstanding for all periods presented, in
accordance with the guidelines of the Securities and Exchange Commission.
Page 8.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Pride Automotive Group, Inc., (the "Company") was incorporated in the State
of Delaware in March 1995. Pursuant to the terms and conditions of a
reorganization agreement entered into in March 1995, the Company issued
1,500,000 shares of its common stock to Pride, Inc. (an entity incorporated in
the State of Delaware), in exchange for all the issued and outstanding shares of
PMS, thereby making the Company a majority owned subsidiary of Pride and PMS a
wholly-owned subsidiary of the Company. PMS is the holding company for nine
wholly-owned subsidiaries, operating as one unit, located in the United Kingdom.
PMS and its wholly-owned subsidiaries are located in the United Kingdom and
follow generally accepted accounting principles in the United Kingdom. For
purposes of the consolidated financial statements of the Company, the statements
have been converted to the generally accepted accounting principles in the
United States.
Pride, the Company's parent, is an entity reporting under the Exchange Act,
and its reports may be obtained and reviewed by either contacting the Company or
the Securities and Exchange Commission. Pride, Inc. on its own has virtually no
operations. As such, its financial viability is represented by the financial
statements of the Company. Pride was incorporated as L.H.M. Corp. in the State
of Delaware on May 10, 1988 as a "blank check" company, for the purpose of
seeking potential business ventures through acquisitions or merger. In April
1990, L.H.M. Corp. entered into an Agreement and Plan of Reorganization with
International Sportsfest, Inc. ("ISI"), a company formed to engage in and
establish sports expositions in sports merchandise such as clothing and
equipment. ISI never engaged in any business operations. In January 1994, ISI
entered into an Agreement and Plan of Reorganization with PMS, whereby PMS
became a wholly-owned subsidiary of ISI and ISI changed its name to Pride, Inc.
In December 1995, Pride Automotive Group, Inc. consummated a private
placement offering of common stock of 500,000 shares, which reduced the
Company's ownership interest to 72.8%. In April 1996, Pride Automotive Group,
Inc. completed an initial public offering of 592,500 shares of common stock at
$5.00 per share and 2,000,000 redeemable common stock warrants at a price of
$.10 each. The effect of the offering was to reduce the Company's ownership
interest to 56.55%.
On November 29, 1996, the Company, through its newly formed majority owned
subsidiary, AC Automotive Group Inc., and its wholly-owned subsidiary AC Car
Group Limited (registered in the United Kingdom), completed the acquisition of
certain assets of AC Cars Limited and Autocraft Limited. These two companies
were engaged in the manufacture and sale of speciality automobiles. The purchase
price of approximately $6,067,000 was financed with the proceeds of a private
offering of the Company's common stock and by loans.
The financial information presented herein include: (i) Consolidated
Condensed Balance Sheets as of February 28, 1997 and November 30, 1996; (ii)
Consolidated Condensed Statements of Operations for the Three Month Periods
Ended February 28, 1997 and February 29, 1996 and (iii) Consolidated Condensed
Statements of Cash Flows for the Three Month Periods Ended February 28, 1997 and
February 29, 1996.
Page 9.
<PAGE>
Results of Operations
Contract Hire/Fleet Management:
Revenues increased by $1,204,306 or 50%, when comparing the three months
ended February 29, 1996 to the three months ended February 28, 1997. The primary
reason for this increase was due to an increase in revenues from contract hire
income, sales of vehicles at lease maturity, and an increase in fleet management
income.
Cost of sales increased both in dollars and as a percent of sales, when
comparing the three months ended February 29, 1996 to the three months ended
February 28, 1997. These costs increased by $1,141,620 or 67%. As a percent of
sales, cost of sales were 79% versus 71% for the respective periods for 1997 and
1996. Management believes that the increase was primarily due to the
continuation of the more prudent approach to estimating the residual values of
vehicles, thereby increasing the depreciation expense and cost of sales and
reducing the residual value risk.
General and administration expenses decreased by $26,707 when comparing the
three months ended February 29, 1996 to the three months ended February 28,
1997. As a percent of sales, these expenses represent 10% of revenues for the
period ended February 28, 1997 compared with 17% for the period ended February
29, 1996.
Interest expense increased by $71,975 or 35%, when comparing the three
month period ended February 28, 1997 to the three months ended February 29,
1996. Management attributes this increase to the higher volume of borrowing on
hire purchases as result of increased business.
AC Cars - New Vehicles:
The Company, on November 29, 1996, through its newly formed majority owned
subsidiary, AC Automotive Group, Inc. and its wholly-owned subsidiary AC Car
Group Limited, completed the acquisition of certain assets of AC Cars Limited
and Autokraft Limited. These two companies are engaged in the manufacture and
sale of sports cars among which the famous AC Cobra sells for approximately
$100,000.
The Company acquired the business out of administrative receivership and
for the first quarter has devoted most of its resources to resurrecting
operations. This has involved the upgrading of production facilities and
equipment, appointing new dealerships, installing systems and controls and
appointing new management where necessary. New dealerships have been set up in
the United Kingdom and a distributor has been appointed in Australia.
The Company has also embarked on a program to bring the new AC Ace Sports
car into production in the last quarter of 1997. For the three month period
ended February 28, 1997, the operations reported a loss of $573,398, after
amortization of intangibles. Revenues, for the three month period, amounted to
$202,563, with costs of sales amounting to $144,022. General and administration
expenses and interest amounted to $543,238 and $78,382, respectively.
Consolidated:
For the three months ended February 28, 1997 and February 29, 1996, the
Company reported, prior to amortization of goodwill, write-off of acquisition
costs and minority interests, a loss from operations of $469,909 and a profit of
$75,752 respectively. Of the overall loss of $469,909 in 1997, $563,079 is
attributable to AC Cars (prior to amortization of intangibles) amd a profit of
$93,170 is attributable to Pride.
Page 10.
<PAGE>
Liquidity and Capital Resources
In December 1996, the Company completed a private placement of 16 units,
each unit consisting of a 10% promissory note in the amount of $95,000 and
10,000 shares of the Company's common stock for an aggregate price of $100,000
per unit. The proceeds have been used to satisfy a portion of the debt owed for
the acquisition of AC Car Group Limited.
The Company acquires new vehicles as required. There are no material
planned capital expenditures at the present time. Page 11.
<PAGE>
Part II - Other Information
ITEM 1. Legal Proceedings. None.
ITEM 2. Changes in Securities. None.
ITEM 3. Defaults Upon Senior Securities. None.
ITEM 4. Submission of Matters to a Vote. None.
ITEM 5. Other Information. None.
ITEM 6. Exhibit and Reports on Form 8-k.
(a) Exhibit 27 Financial Data Schedule.
(b) None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized
Dated: April 17, 1997
Pride Automotive Group, Inc.
by: \s\ Alan Lubinsky
Alan Lubinsky
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
February 28, February 29,
1997 1996
<S> <C> <C>
LOSS BEFORE MINORITY INTERESTS $(637,908) $ (81,928)
Minority interests in net loss of
consolidated subsidiaries 226,395 -
LOSS BEFORE PROVISION FOR
INCOME TAXES (411,513) (81,928)
Provision (credit) for income taxes - -
NET LOSS $(411,513) $(81,928)
LOSS PER COMMON SHARE:
Net loss before minority interest $ (.23) $ (.04)
Minority interest in net loss of subsidiary .08 -
$ (.15 ) $ (.04)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 2,759,167 2,060,000
</TABLE>
- Exhibit 11 -
Page 14.
<PAGE>
The Schedule contais summary financial information extracted from the
consolidated financial statements for the three months ended February 28, 1997
and is qualified in its entirety by reference to such statements.
<TABLE>
<S> <C>
PERIOD-TYPE 3-MOS
FISCAL-YEAR-END NOV-30-1997
PERIOD-END FEB-28-1997
CASH 26,244
SECURITIES 0
RECEIVABLES 1,891,598
ALLOWANCES 0
INVENTORY 1,298,916
CURRENT-ASSETS 0
PP&E 24,188,554
DEPRECIATION 4,322,427
TOTAL-ASSETS 34,577,072
CURRENT-LIABILITIES 0
BONDS 0
REFERRED-MANDATORY 0
PREFERRED 0
COMMON 2,813
OTHER-SE 11,512,549
TOTAL-LIABILITY-AND-EQUITY 34,577,072
SALES 3,794,283
TOTAL-REVENUES 3,794,283
CGS 2,987,234
TOTAL-COSTS 2,987,234
OTHER-EXPENSES 167,999
LOSS-PROVISION 0
INTEREST-EXPENSE 357,693
INCOME-PRETAX (411,513)
INCOME-TAX 0
INCOME-CONTINUING (411,513)
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME (411,513)
EPS-PRIMARY (.15)
EPS-DILUTED (.15)
</TABLE>
