U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended May 31, 1999
or
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________ to ________________
Commission file number ________________________________________
DME INTERACTIVE HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of Small Business Issuer as Specified in Its Charter)
DELAWARE 98-0157860
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
519 Palisades Ave, Englewood, New Jersey 07632
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(Address of Principal Executive Offices)
(201) 816-1285
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(Issuer's Telephone Number, Including Area Code)
Pride Automotive Group, Inc.,
Pride House, Watford Metro Centre, Tolpits Lane, Watford England WD1 8SB
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(Former Name, Former Address and Former Fiscal Year,
if Changed, Since Last Report)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
-------- ------------
The number of shares outstanding of the registrant's Common Stock,
$.001 Par Value, on May 31, 1999 was 2,822,500 shares.
<PAGE>
PRIDE AUTOMOTIVE GROUP, INC.
MAY 31, 1999 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Page Number
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
May 31, November 30,
1999 1998
unaudited
----------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 911 $ 52,693
Accounts receivable 1,580,763 1,486,053
Property revenue producing vehicles
and equipment-net (Note 2) 3,464,989 21,535,087
Investment in affiliate (Note 1) 4,048,460 4,048,460
----------------------------
TOTAL ASSETS $ 9,095,123 $ 27,122,293
============================
LIABILITIES AND SHAREHOLDERS EQUITY
LIABILITIES
Bank line of credit $ 64,599 $ 6,264,245
Accounts payable 525,233 551,924
Accrued liabilities and expenses 4,387,303 1,738,304
Bank debt 4,851,109 685,428
Obligations under hire purchase contracts 1,401,069 15,231,850
Other liabilities 9,091 217,119
Acquisition debt payable 1,686,000 1,686,000
----------------------------
TOTAL LIABILITIES $ 12,924,404 $ 26,374,870
============================
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS EQUITY
Preferred stock, $.01 par value,
2,000,000 shares authorized, none
issued or outstanding Common stock,
$.001 par value, 10,000,000 shares
authorized, 2,822,500 shares issued
and outstanding in 1999 and 1998
respectively $ 2,823 $ 2,823
Additional paid-in capital 14,122,165 14,122,165
Deferred financing costs (70,850) (88,600)
Retained earnings (deficit) (18,648,624) (13,570,826)
Accumulated other comprehensive income 765,205 281,861
----------------------------
TOTAL SHAREHOLDERS EQUITY $ (3,829,281) $ 747,423
----------------------------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 9,095,123 $ 27,122,293
============================
</TABLE>
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<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Six Months For The Three Months
Ended May 31 Ended May 31
------------------------------------------------------------
1999 1998 1999 1998
REVENUE
<S> <C> <C> <C> <C>
Contract hire income $ 447,100 $ 4,901,660 $ 119,602 $ 2,459,795
Sale of vehicles 14,999,816 1,604,359 177,829 787,247
Fleet management and other income 172,370 554,455 99,263 232,461
------------------------------------------------------------
Total Revenue $ 15,619,286 $ 7,060,474 $ 396,694 $ 3,479,503
============================================================
EXPENSES
Cost of sales $ 18,086,710 $ 922,537 $ 301,675 $ 1,441,950
Depreciation 160,759 2,252,844 75,297 1,180,888
General and administration expenses 887,826 881,711 267,629 392,125
Amortization of goodwill -- 315,360 -- 157,680
Interest and other financing costs 1,561,791 1,101,730 75,324 525,921
------------------------------------------------------------
Total Expenses $ 20,697,086 $ 7,474,182 $ 19,925 $ 3,698,564
============================================================
LOSS BEFORE PROVISION FOR
INCOME TAXES $ (5,077,800) $ (413,708) $ (23,231) $ (219,061)
Provision for income taxes 0 0 0 0
------------------------------------------------------------
NET (LOSS) $ (5,077,800) $ (413,708) $ (323,231) $ (219,061)
============================================================
LOSS PER COMMON
SHARE (NOTE 5A) $ (1.80) $ (0.15) $ (0.11) $(.0.8)
============================================================
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (NOTE 5A) 2,822,500 2,822,500 2,822,500 2,822,500
============================================================
</TABLE>
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<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months For the three Months
Ended May 31, Ended May 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
NET LOSS $(5,077,500) $ (413,708) $ (323,231) $ (219,061)
OTHER COMPREHENSIVE
INCOME (NOTE 5b)
Foreign currency translation adjustments 572,509 452,243 (61,032) 43,676
--------------------------------------------------------
COMPREHENSIVE (LOSS) $(4,504,991) $ 38,535 $ (384,263) $ 124,615
========================================================
</TABLE>
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<PAGE>
PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six months ended May 31
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (5,077,800) $ (413,708)
Adjustments to reconcile net (loss) to cash provided by operating
activities:
Depreciation and amortization 160,759 2,252,844
Amortization of goodwill -- 315,360
Deferred financing costs -- 17,400
Loss on disposal of fixed assets 1,580,370 128,795
Changes in assets and liabilities
(increase) decrease in accounts receivable (94,710) (292,212)
(increase) in inventories -- 107,090
increase in accounts payable, accrued expenses and other
liabilities 2,414,280 (190,552)
----------------------------
NET CASH (UTILIZED) PROVIDED FROM OPERATING ACTIVITIES $ (1,017,101) $ 1,925,017
============================
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of revenue producing assets -- $ (5,492,212)
Proceeds from sale of fixed assets 16,317,110 2,147,269
----------------------------
NET CASH PROVIDED (UTILIZED) BY INVESTING ACTIVITIES $ 16,317,110 $ (3,344,943)
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank lines of credit -- $ 391,515
Reduction in bank line of credit (6,199,646) --
Increase in bank debt 4,160,000 --
Principal payment of long term debt (54,143) (36,273)
Proceeds from hire purchase contract funding -- 5,255,114
Principal repayments of hire purchase funding (13,830,781) (4,713,853)
----------------------------
NET CASH(UTILIZED) PROVIDED FROM FINANCING ACTIVITIES $(15,924,570) $ 896,503
----------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH $ 572,509 $ 452,243
----------------------------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS $ (52,052) $ (71,180)
Cash and cash equivalents, beginning of year 52,963 77,354
----------------------------
CASH AND CASH EQUIVALENTS END OF YEAR $ 911 $ 6,174
============================
</TABLE>
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<PAGE>
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1-DESCRIPTION OF COMPANY
DME Interactive Holdings, Inc., formerly known as 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 became a majority owned subsidiary of Pride, Inc. (a Delaware
corporation) when it issued 1,500,000 shares of its common stock to Pride, Inc.
in exchange for all 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. PMS was 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. PMS is the holding company
for six wholly owned subsidiaries, operating as one unit, located in the United
Kingdom. For purposes of the consolidated financial statements of the Company,
the statements have been converted to generally accepted accounting principles
in the United States. On June 18, 1999, the Company acquired all of the
membership interests in Digital Mafia LLC d/b/a Digital Mafia Entertainment LLC
("DME") in exchange for 14,800,000 shares of the Company's common stock
representing approximately 66% of the then issued and outstanding stock. As part
of such transaction, the Company's operating subsidiaries were sold for $1.00
each to Pride, Inc. and the Company changed its name to DME Interactive
Holdings, Inc. DME is engaged primarily in the business of developing web sites
for others. Since the transaction closed after the end of the quarter reported
in this Current Report, the results and financial condition reported herein are
those of the Company prior to the transaction described above and do not reflect
the financial condition or operations of the Company as it now exists. The
Company, its subsidiary PMS and PMS's subsidiaries are referred to as the
Company unless the context otherwise requires.
Pride, Inc., 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, Inc. was incorporated as L.H.M. Corp. in the
State of Delaware on August 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, the Company consummated a private placement offering of common
stock of 500,000 shares, which reduced Pride, Inc.'s ownership interest to
72.8%. In April 1996, the Company 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 Pride, Inc.'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 Autokraft 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 acquisition was
recorded using the purchase method of accounting.
On February 12,1998, the board of Directors of AC Automotive Group, Inc.
authorized the issuance of 6,130,000 shares of its common stock to Erwood
Holdings, Inc., a company affiliated with Alan Lubinsky, the President and Chief
Executive Officer and director of the Company and AC Automotive Group, Inc. for
aggregate consideration of $6,130. In addition, 441,300 shares were issued to
other unrelated parties for aggregate consideration of $443. Following further
restructuring and the forgoing issuance of shares, the ownership of AC
Automotive Group, Inc. by the Company has been reduced to 16%. Due to the change
in ownership percentage, the Company does not believe that it still has the
ability to exercise significant influence over AC Automotive, Inc. Accordingly,
consolidation is not considered appropriate. The Company's investment in AC
Automotive Group, Inc. is therefore being reported under the cost method of
accounting.
-6-
<PAGE>
On December 11,1998, the Company, though its subsidiary, PMS, completed the sale
of substantially all its leasing assets, leaving approximately 13% of its
revenue producing vehicles after the sale. The consideration paid was
$14,763,680 against balance sheet value of $17,851,023. As a condition of sale,
PMS creditors were paid $14,537,000 in full and final settlement of the debt
outstanding on the leased assets sold against a balance sheet value of
$13,127,303 at an early settlement penalty of $1,409,697. In addition, a bank
loan was restructured as follows. Upon completion of the sale, $1,815,000 was
repaid to the bank. The balance of $4,449,245 has been converted into two loans;
Loan A for $1,485,000 and Loan B for $2,964,245. Loan A of $1,485,000 is
repayable by July 31,1999, in the event of which Loan B of $2,964,245 will be
forgiven. In the event that Loan A is not repaid by July 31,1999, the full
amount outstanding on the two loans is repayable on demand. As a result of the
sale, the Company wrote off its related goodwill, which had a carrying value of
$8,444,147, at November 30,1998.
On February 19,1999, the Company announced that it had executed a Letter of
Intent to acquire all of the issued and outstanding capital stock of DME, in
exchange for the issuance of 7,400,000 shares in Pride Automotive common stock.
On March 31, 1999 the Company executed a definitive Share Exchange Agreement
with DME on revised terms to which it agreed to issue 14,800,000 shares of it's
common stock to members of DME. This increase in the number of shares issued is
a result of the Nasdaq notification on March 12, 1999 that the Company's
securities had been delisted. It was subsequently announced that the Company's
common stock and warrants began trading on the NASD OTC Bulletin Board on May
17, 1999. The transaction was completed on June 18, 1999.
The Company also announced that it was selling it's wholly owned subsidiary,
PMS, to Pride, Inc. for a nominal consideration of $1.00. PMS has a negative net
worth and is winding down its operations. In addition, it was also announced the
Company's 16% interest in AC Automotive Group, Inc. valued at $ 4,048,460 as at
November 30, 1998 was being sold for a nominal consideration of $ 1.00.
As part of the transaction, the Company increased its authorized share capital
from 10,000,000 shares of common stock to 30,000,000 shares of common stock and
changed its name to DME Interactive Holdings, Inc. In addition, four new
directors chosen by DME were elected to the Company's board replacing the
officers of the Company who were serving as directors, who resigned on the
closing of the transaction.
The Company had originally agreed to grant an option to Pride, Inc. to allow
Pride, Inc. to acquire the shares in AC Automotive for the sum of $4,048,460,
which is the value that such shares are carried in the Company's books. However,
when the DME transaction was renegotiated, the Company agreed to renegotiate the
AC Automotive, Inc. transaction, with the result that the Company agreed to the
sale of the Automotive stock to Pride, Inc. for $1.00.
As part of the above transaction, the Company and the holders of approximately
$1,425,000 principal of debt agreed to issue 2,850,000 shares of the Company's
common stock in exchange for the principal and interest due under the notes. The
Company has also entered into an agreement to repay the holder of $95,000
principal note the sum of $100,000 in exchange for the principal, whilst the
remaining holder of a $95,000 principal note has commenced litigation which is
expected to be settled by the end of June 1999.
NOTE 2- UNAUDITED INTERIM STATEMENTS
The accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with the instructions to form 10-QSB and do not
include all of the information and footnotes required by generally accepted
accounting principals for complete financial statements. Moreover, due to the
transactions described above, this financial information does not reflect the
Company's current operations or financial condition. 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 May 31,1999 and the results of its operations for the three
months ended May 31,1999 and 1998 and cash flows for the three month periods
ended May 31,1999 and 1998. These financial statements and notes should be read
in conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended November 31, 1998.
-7-
<PAGE>
NOTE 3-FIXED ASSETS
Fixed assets consists of the following:
<TABLE>
<CAPTION>
May 31, November 30,
1999 1998
-----------------------------
(unaudited)
<S> <C> <C>
Building and improvements $ 784,599 $ 784,599
Revenue producing vehicles 3,232,534 26,880,979
Furniture, fixtures and machinery 576,270 576,270
-----------------------------
$ 4,593,403 $28,241,848
Less: accumulated depreciation 1,128,414 6,706,761
-----------------------------
$ 3,464,989 $21,535,087
=============================
</TABLE>
NOTE 4-LIABILITIES
Included in liabilities as of May 31,1999, are amounts in the aggregate of
$1,258,777 which are not due and payable until after May 31,2000. This amount
consists of amounts due to loans payable and equipment notes payable.
NOTE 5-NEW ACCOUNTING PRONOUNCEMENTS
(a) EARNINGS (LOSS) PER SHARE
The Company has adopted SFAS 128 Earnings Per Share ( SFAS 128 ), which
is effective for periods ending after December 15, 1997 and has changed
the method of calculating earnings(loss) per share. SFAS 128 requires
the presentation of basic and diluted earnings(loss) per share on the
face of the income statement. Prior period earnings(loss) per share
data has been restated in accordance with SFAS 128. Loss per common
share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period.
(b) STATEMENT OF COMPREHENSIVE INCOME
The Company has adopted SFAS 130 Reporting Comprehensive Income , which
is effective for the years beginning after December 15,1997 and early
adoption is permitted. Comprehensive income consists of net income or
loss and other comprehensive income (income, expenses, gains and losses
that bypass the income statement and are reported directly as a
separate component of equity).
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This Quarterly Report on Form 10-QSB contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performance and underlying assumptions and other statements,
which are other than statements of historical facts. These statements are
subject to uncertainties and risks including, but not limited to, product and
service demand and acceptance, changes in technology, economic conditions, the
impact of competition and pricing, government regulation, and other risks
defined in this document and in statements filed from time to time with the
Securities and Exchange Commission. All such forward-looking statements are
expressly qualified by these cautionary statements and any other cautionary
statements that may accompany the forward-looking statements. In addition, DME
Interactive Holdings, Inc. disclaims any obligations to update any
forward-looking statements to reflect events or circumstances after the date
hereof.
-8-
<PAGE>
GENERAL
During the three months ended May 31, 1999, the Company, through its subsidiary,
completed the sale of substantially all its leasing assets. 972 vehicles and
their related contracts were disposed of at a book loss of $3,087,343. This
accounts for the large reduction in contract hire income and increase in vehicle
sales when comparing the quarters ending May 31,1999 and May 31,1998
respectively. In addition to this sale, 44 additional vehicles were disposed of
at a loss of $149,363. During the corresponding quarter in 1998, 94 vehicles
were disposed of on termination of contracts at a profit of $98,351. No new
business was written during this quarter in line with the Company's decision to
reduce its leasing and fleet management assets. During the quarter ended May
31,1998, 67 new contracts were written at an average rental of $667 per vehicle.
No new business was written during this quarter in line with the Company's
decision to reduce its leasing and fleet management assets. During the quarter
ended May 31,1998, 67 new contracts were written at an average rental of $667
per vehicle. As of May 31, 1999, 54 vehicles were under lease. As a result of
the sale of the leased assets, the intangibles were written off at November
30,1998. Fleet management income has also reduced substantially due to the
termination of all contracts during the quarter.
Upon completion of the DME acquisition on June 18,1999, DME became a wholly
owned subsidiary of the Company, which will have approximately 23 million shares
of its common stock issued and outstanding, which also includes approximately
728,000 shares being issued in lieu of debt and costs of $364,000 and 740,000
shares of common stock being issued to Mason Hill, Inc. for its investment
banking services in connection with the DME transaction.
The agreement also provides that Pride, Inc. will acquire the Company's 16 %
interest in AC Automotive, Inc. stock and PMS for $1 each on completion of the
acquisition. PMS is winding down it's operations and has negative net worth.
The Company had originally agreed to grant an option to Pride, Inc. to allow
Pride, Inc. to acquire the shares in AC Automotive for the sum of $ 4,048,460
which is the value that such shares are carried in the Company's books. However,
when the DME transaction was renegotiated, the Company agreed to renegotiate the
AC Automotive, Inc. transaction with the result that the Company has now agreed
to sell the Automotive stock to Pride, Inc. for $1.
On March 31, 1999 the Company's board of Directors unanimously authorized an
amendment to the Company's Certificate of Incorporation increasing the number of
authorized shares from 10 million to 30 million shares of common stock and
changing the name of the Company to DME Interactive Holdings, Inc. The amendment
was approved by the majority of the shareholders of the Company on April 30,
1999 and took effect on June 18, 1999.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MAY 31, 1999 TO THREE MONTHS ENDED MAY 31, 1998
Revenues. Revenues decreased by $3,082,809 or 89% from $3,479,503 for the three
months ended May 31, 1998 to $396,694 for the three months ended May 31, 1999.
The decrease in revenues was a result of the sale of the Company's leasing
assets.
Cost of Sales. Costs of sales decreased by $1,140,275 from $1,441,950 for the
three months ended May 31, 1998 to $301,675 for the three months ended May 31,
1999. The decrease in costs of sales was a result of the sale of the Company's
leasing assets.
General and Administrative Expenses. For the three months ending May 31,1999,
general and administrative expenses decreased by approximately 33%, from
$392,125 for the three months ended May 31, 1998 to $267,629 for the three
months ending May 31, 1999, which is in line with the winding down of the
leasing operations.
Interest and Financing Costs. Interest and other financing costs for the three
months ended May 31, 1999 as compared to interest and financing costs for the
three months ended May 31, 1998, were reduced substantially by approximately $
450,000 due to the large reduction in Hire Purchase obligations and restructure
of bank line of credit.
Net Loss. For the three months ended May 31,1999 and 1998, the Company reported,
after amortization of goodwill of ($157,680 for 1998) a loss of $323,231 and
$219,061 respectively.
-9-
<PAGE>
COMPARISON OF SIX MONTHS ENDED MAY 31, 1999 TO SIX MONTHS ENDED MAY 31, 1998
Revenues. Revenues increased by $8,558,812 from $7,080,474 for the six months
ended May 31, 1998 to $15,619,286 for the six months ended May 31, 1998. The
increase in revenue was due primarily to the sale of the Company's leasing
assets during the first quarter of the fiscal year.
Cost of Sales. Cost of sales increased by $15,164,173 from $2,922,537 for the
six month period ended May 31, 1998 to $18,086,710 for the six month period
ended May 31, 1999. The increase was the result of the disposal of 1,016
vehicles discussed above. This has resulted in a large reduction in depreciation
due to the reduction in the fleet size when comparing the periods ended May
31,1999 and May 31,1998 respectively.
General and Administrative Expenses. General and administrative expenses
remained unchanged when comparing the six month periods ending May 31, 1999 and
1998 respectively. Although overheads have been reduced substantially, the small
decrease is a result of a large write off of uncollectible debtors amounting to
approximately $250,000 and a provision of $100,000 for professional fees
relating to the Company restructuring.
Interest and Financing Costs. Interest and financing costs increased by $460,000
when comparing the six month periods ended May 31,1999, and May 31,1998,
respectively. Interest costs reduced substantially as a result of the reduction
in Hire Purchase funding relating to the substantial asset sale and restructure
of bank line of credit. However, this was offset by the early settlement penalty
of $1,410,000 relating to the debt outstanding on the leased assets sold on
December 11, 1998
Net Loss. The Company reported, after amortization of goodwill of ($315,360 for
1998) a loss of $5,077,800 and $413,708 respectively.
LIQUIDITY AND CAPITAL RESOURCES
Net cash (utilized) provided from operating activities for the six month periods
ended May 31,1999 and 1998 aggregated $1,017,101 and $1,925,017 respectively.
The Company provided cash of $16,317,110 and $2,147,269 from the sale of fixed
assets for the periods ended May 31,1999 and 1998 respectively. For the six
month period ended May 31,1998, $5,492,212 was utilized to purchase revenue
producing assets. Net cash utilized by the Company from financing activities
amounted to $15,924,570 as against net cash provided of $896,503 for the six
month period ended May 31,1999 and 1998 respectively
The Company is raising approximately $1,200,000 through a private placement of
its common stock to provide working capital funding for the Company.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The information required by this section is set forth in the Information
Statement on Schedule 14C filed by the Company with the Securities and Exchange
Company on May 25, 1999 and is incorporated herein by reference.
Item 5. Other Information
On March 12, 1999, the Company received notification from Nasdaq that its
securities were delisted and on May 11, 1999, the Company's shares were listed
on the OTC Bulletin Board.
On March 31, 1999 the Company executed a definitive Share Exchange Agreement
with Digital Mafia Enterprises LLC ("DME") pursuant to which it agreed to issue
14,800,000 shares of it's common stock to shareholders of DME. Upon completion
of the DME acquisition on June 18,1999, DME became a wholly owned subsidiary of
the Company, which will have approximately 23 million shares of its common stock
issued and outstanding, which also includes approximately 728,000 shares being
issued in lieu of debt and costs of $364,000 and 740,000 shares of common stock
being issued to Mason Hill for its investment banking services in connection
with the DME transaction. In addition, effective June 18, 1999, the Company
changed its name to DME Interactive Holdings, Inc.
-10-
<PAGE>
The Company filed a Current Report on Form 8-K on June 25, 1999 reporting the
June 18, 1999 transaction and is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3.1 - Amended Certificate of Incorporation
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
-11-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DME Interactive Holdings, Inc.
(formerly known as Pride Automotive, Inc.)
/s/ DARIEN DASH
--------------------------------
Darien Dash, President
-12-
