SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 18, 1999
- --------------------------------------------------------------------------------
DME INTERACTIVE HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-27944 98-0157860
- --------------------------------------------------------------------------------
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
519 PALISADES AVENUE, ENGLEWOOD, NEW JERSEY 07632
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, Including area code 201-816-1285
- --------------------------------------------------------------------------------
PRIDE AUTOMOTIVE GROUP, INC.
- --------------------------------------------------------------------------------
(Former Name of Former Address, if Changed Since Last Report)
<PAGE>
This Amendment to the Current Report on Form 8-K filed by the Registrant with
the Securities and Exchange Commission ("Commission") on June 25, 1999 is being
filed in order to amend Item 7 thereto as set forth below. The undersigned
Registrant (the "Company") hereby amends the following item of its Current
Report on Form 8-K, originally filed with the Commission on June 25, 1999, as
set forth on the pages attached hereto.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) The following financial statements and exhibits are filed as part of this
report:
1. The Financial Statements and Independent Auditors' Report of Digital
Mafia Entertainment, LLC as of June 17, 1999, December 31, 1998 and
1997 and the Six Month Period and the Years then Ended.
2. Recapatilized Statement of Earnings Per Share of Digital Mafia
Entertainment, LLC
3. The Unaudited Pro-Forma Condensed Balance Sheet of the Company and
Digital Mafia Entertainment, LLC as of June 17, 1999.
As part of the transactions described in Items 1 and 2 of this Form
8-K, the Company acquired all of the membership interests of Digital Mafia
Entertainment, LLC (the "LLC") in exchange for 14,800,000 shares of its Common
Stock (representing approximately 64% of the issued and outstanding shares after
the exchange). That transaction was accounted for as a reverse merger (or
recapitalization), that is, as if the LLC has acquired the Company. Therefore,
the historical financial data of the LLC is now deemed to be the relevant
historical financial data of the Company. The deemed acquisition will be
accounted for using the purchase method of accounting and the financial results
of the Company will be consolidated with those of the LLC commencing on June 18,
1999.
As part of those transactions, the Company sold all of its subsidiaries
related to its Pride Automotive operations. Those disposed subsidiaries
accounted for substantially all of the revenue and expenses reflected in the
Company's historical financial statements that had previously been filed with
the Commission. The income statements and other operational data in the
Company's historical financial statements are therefore not meaningful to an
analysis of the prospects or future financial results of the Company.
The historical financial data of the Company reflecting its existing
operations are the financial statements of the LLC. Therefore, the Company has
elected to omit any pro-forma financial information except the balance sheet
dated June 17, 1999 and the Recapitalized Earning Per Share data. Any pro-forma
income or cash flow statements would be substantially similar to the information
in the financial statements included below. Those financial statements are not
intended to be a projection or indicative of future results. Furthermore, those
financial statements are not necessarily indicative of the results of the LLC
had it operated under the Company's ownership and tax structure.
2
<PAGE>
(B) EXHIBITS
*3.3 Certificate of Amendment to Certificate of
Incorporation increasing authorized shares.
*3.4 Certificate of Amendment to Certificate of
Incorporation changing name.
*16.1 Change of Certifying Accountant
*21 Subsidiaries
23.1 Consent of Mitchell & Titus, LLP
*99.1 Letter from Civvals responding to the disclosures in this
Current Report on Form 8-K.
* Previously Filed.
3
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
--------------------------------
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS' REPORT
--------------------------------
AS OF JUNE 17, 1999, DECEMBER 31, 1998 AND 1997
AND FOR THE SIX MONTH PERIOD
AND YEARS THEN ENDED
--------------------
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
TABLE OF CONTENTS
-----------------
PAGE
----
Independent auditors' report 1
Balance Sheets 2
Statements of operations and members' equity 3
Statements of changes in members' equity 4
Statements of cash flows 5
Notes to financial statements 6-8
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Members of
Digital Mafia Entertainment, LLC
We have audited the accompanying balance sheets of Digital Mafia Entertainment,
LLC (the "Company") as of June 17, 1999, December 31, 1998 and 1997 and the
related statements of operations and members' equity, changes in members'
equity, and cash flows for the period ended June 17, 1999 and the years ended
December 31, 1998 and 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in 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 financial statements referred to above present fairly, in
all material respects, the financial position of Digital Mafia Entertainment,
LLC as of June 17, 1999, December 31, 1998 and 1997, and the results of its
operations and its cash flows for the period and years then ended in conformity
with generally accepted accounting principles.
New York, New York
August 23, 1999
5
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
As of As of
June 17, December 31,
1999 1998 1997
----------- ----------- --------------
CURRENT ASSETS:
<S> <C> <C> <C>
Cash and cash equivalents $ 687,394 $ 629 $ 8,490
Accounts receivable-operating 8,009 5,567 15,000
Accounts receivable-employee loans 7,300 5,000 --
Due from affiliated company 6,296 30 30
----------- ----------- -----------
TOTAL CURRENT ASSETS 708,999 11,226 23,520
NOTE RECEIVABLE (Note 2) 260,373 -- --
PROPERTY AND EQUIPMENT (Note 3)
Property and Equipment, net 33,538 30,487 24,890
----------- ----------- -----------
TOTAL ASSETS $ 1,002,910 $ 41,713 $ 48,410
=========== =========== ===========
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 156,042 $ 87,272 $ 27,589
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 156,042 87,272 27,589
NON-CURRENT LIABILITIES:
Note payable (Note 7) 1,033,808 -- --
Advances/Unearned Revenue 41,804 36,804 75,000
Loans from member 322,669 322,669 80,061
----------- ----------- -----------
TOTAL NON-CURRENT LIABILITIES 1,398,281 359,473 155,061
TOTAL LIABILITIES 1,554,323 446,745 182,650
MEMBERS' EQUITY:
Members' Equity (551,413) (405,302) (134,240)
----------- ----------- -----------
TOTAL MEMBERS' EQUITY (551,413) (405,032) (134,240)
----------- ----------- -----------
$ 1,002,910 $ 41,713 $ 48,410
=========== =========== ===========
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
STATEMENTS OF OPERATIONS AND MEMBERS' EQUITY
<TABLE>
<CAPTION>
For the For the Year Ended
Period Ended December 31,
June 17, 1999 1998 1997
------------- --------- ---------
<S> <C> <C> <C>
GROSS REVENUES $ 246,809 $ 235,659 $ 198,173
--------- --------- ---------
COST OF OPERATIONS:
Salary 80,179 111,118 13,803
Project expense 44,707 46,860 66,339
Consulting services 92,316 47,930 121,500
--------- --------- ---------
TOTAL COST OF OPERATIONS 217,202 205,908 201,642
--------- --------- ---------
GROSS PROFIT (LOSS) 29,607 29,751 (3,469)
GUARANTEED PAYMENT 25,241 60,467 40,800
GENERAL AND ADMINISTRATIVE
EXPENSES 149,622 240,217 96,056
--------- --------- ---------
LOSS FROM OPERATIONS (145,256) (270,933) (140,325)
--------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income -- 573 --
Interest expense (1,125) (432) --
--------- --------- ---------
(1,125) 141 --
--------- --------- ---------
NET LOSS (146,381) (270,792) (140,325)
MEMBERS' EQUITY,
beginning of period/year (411,000) (140,208) 117
--------- --------- ---------
MEMBERS' EQUITY,
end of period/year ($557,381) ($411,000) ($140,208)
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
<TABLE>
<CAPTION>
Member Member
Balance Capital Allocation Balance
Member January 1, Contri- of December 31,
Member % 1997 bution Losses 1997
- ------ -------- ---------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
D. Dash 95.00% $5,780 $ -- ($133,308) ($127,528)
Linda Holmes 2.00 122 -- (2,807) (2,685)
D. Dash, Jr 2.00 122 -- (2,807) (2,685)
Deborah Dash 1.00 61 -- (1,403) (1,342)
------ ------ --------- --------- ---------
100.00% $6,085 $ -- ($140,325) ($134,240)
====== ====== ========= ========= =========
Member Member
Allocation Balance Allocation Balance
Capital of December 31, Capital of June 17,
Member Contribution Losses 1998 Contribution Losses 1999
- ------ ------------ ------ ------ ------------ ------ ------
D. Dash $ -- ($257,252) ($384,780) $ -- ($139,061) ($523,841)
Linda Holmes -- (5,416) (8,101) -- (2,928) (11,029)
D. Dash, Jr -- (5,416) (8,101) -- (2,928) (11,029)
Deborah Dash -- (2,708) (4,050) -- (1,464) (5,514)
--------- --------- --------- --------- --------- ---------
$ -- ($270,792) ($405,032) $ -- ($146,381) ($551,413)
========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the Year Ended
Period Ended December 31,
June 17, 1999 1998 1997
------------- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C>
Net loss ($146,381) ($270,792) ($140,325)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 4,969 7,077 2,910
Changes in certain operating assets
and liabilities:
(Increase) decrease in:
Accounts receivable (4,742) 4,433 (15,000)
Due from affiliate (6,266) -- (30)
Increase (decrease) in:
Accounts payable and accrued expenses 68,770 59,683 27,589
Advances/Unearned revenue 5,000 (38,196) 75,000
--------- --------- ---------
Net cash (used in) operating
activities (78,650) (237,795) (49,856)
--------- --------- ---------
INVESTING ACTIVITIES:
Acquisition of property and equipment (8,020) (12,674) (27,800)
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from member's loans -- 242,608 80,061
Proceeds from notes payable 773,435 -- --
--------- --------- ---------
Net cash provided by financing
activities 773,435 242,608 80,061
--------- --------- ---------
Net increase (decrease) in cash
and cash equivalents 686,765 (7,861) 2,405
CASH AND CASH EQUIVALENTS:
Beginning of period/year 629 8,490 6,085
--------- --------- ---------
End of period/year $ 687,394 $ 629 $ 8,490
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Digital Mafia Entertainment, LLC ("DME" or the "Company) is an
advanced technology provider offering an array of digital products
and services ranging from Internet, Intranet and Extranet development
and maintenance, and turnkey e-commerce solutions to online
advertising and software creation.
FIXED ASSETS
------------
Fixed assets are depreciated on the straight-line basis over the
estimated useful lives of the assets.
USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results
could differ from those estimates.
CASH AND CASH EQUIVALENTS
-------------------------
For financial statement purposes, cash in demand deposit accounts and
money market accounts with maturities of ninety days or less are
considered to be cash equivalents.
INCOME TAXES
------------
No provision has been made for any Federal, state or local income
taxes since, pursuant to the provisions of the Internal Revenue Code,
each member is responsible for reporting their distributive share of
each item of income, gain, loss, deduction or credit. Starting June
18, 1999, the Company will operate as a `C' corporation and income
taxes will be recorded on the company's books pursuant to SFAS 109,
which includes booking an asset for future tax benefits.
BAD DEBT
--------
Bad debt expense is recognized using the direct write-off method.
PRINCIPLES OF REPORTING
-----------------------
The accompanying financial statements are based on generally accepted
accounting principles. Revenue is recognized when earned and
liabilities are recorded as incurred.
ALLOCATION OF NET INCOME AND LOSSES
-----------------------------------
The Limited Liability Corporation agreement provides for the
allocation of net income and losses to the members in accordance with
their interests, as defined.
10
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUPPLEMENTAL CASH FLOWS STATEMENT INFORMATION:
As of June 17, 1999, the Company has a note receivable of $260,273.
This balance represents the portion of the note payable not received
as of June 17, 1999 (See Note 8.)
NOTE 3. PROPERTY AND EQUIPMENT:
At June 17, 1999 and December 31, 1998 and 1997, property and
equipment is comprised of the following:
<TABLE>
<CAPTION>
Estimated
Useful Life 1999 1998 1997
----------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Office equipment 5 $ 32,772 $ 32,772 $ 25,850
Furniture and fixtures 5 13,772 5,752 -
Software 3 1,950 1,950 1,950
------------- ------------- --------------
48,494 40,474 27,800
Less: Accumulated
depreciation (14,956) (9,987) (2,910)
-------------- ------------- --------------
$ 33,538 $ 30,487 $ 24,890
============= ============= ==============
</TABLE>
NOTE 4. COMMITMENTS:
In 1998, the Company entered into a lease agreement for its office
space under a non-cancelable operating lease, which expires March 31,
2000. The lease requires minimum lease payments of $2,200 per month.
As of June 17, 1999 and December 31, 1998, the minimum annual lease
payments are:
Year 1999 1998
---- ------ ------
1999 $ 8,070 $ 10,114
2000 4,030 4,030
------------ ------------
$ 12,100 $ 14,144
============ ============
In addition, the Company rents equipment on a month-to-month basis.
Total rent expense under all operating leases amounted to $13,200 and
$24,000 for the years ended December 31, 1998 and 1997, respectively.
As of June 17, 1999, the amount was $ 7,102.
11
<PAGE>
DIGITAL MAFIA ENTERTAINMENT, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE 5. CONCENTRATION OF RISKS:
Revenues from three customers totaled $120,000 and $173,300 in 1998
and 1997, respectively.
The Company is faced with the potential risks and uncertainties
associated with the Year 2000 issue. Although the Company is
addressing these issues internally as well as with vendors and other
third parties affecting its operations, there can be no assurance
that the issues will be completely addressed or, if addressed, will
eliminate the risks associated with the problem.
NOTE 6. RELATED PARTY TRANSACTION:
The Company shared rental space with a related company. Some
administrative expenses of each company may from time to time be paid
by the other company. The amount outstanding due from the related
company was $6,296 as of June 17, 1999 and $30 as of December 31,
1998 and 1997.
NOTE 7. NOTES PAYABLE:
On May 13, 1999, the Company obtained a $983,698 note from Pride
Automotive Group, Inc. ("Pride"). The loan bears interest at the rate
of 8% per annum and matures on May 13, 2002. Subsequent to June 17,
1999, the Company received additional notes from Pride. (see Note 9)
NOTE 8. SUBSEQUENT EVENTS:
On June 18, 1999, Pride Automotive Group, Inc. ("Pride or PAG"),
pursuant to an agreement concerning the Exchange of Common Stock
dated March 30, 1999 as amended ("Agreement"), exchanged 14,800,000
shares of its Common Stock (representing approximately 64% of the
outstanding shares after the exchange) for all of the membership
interests of Digital Mafia Entertainment, LLC ("LLC"). In connection
with the exchange, PAG sold all of its interest in its two operating
subsidiaries to Pride, Inc., its parent and owner of more than 50% of
the outstanding common stock of the Pride prior to the transaction,
for $1.00 each. As a result of such transactions, the LLC became a
wholly owned subsidiary of Pride. For accounting purposes, the
exchange is treated as a reverse merger (recapitalization), as if the
LLC acquired Pride. On June 18, 1999, Pride changed its name to DME
Interactive Holdings, Inc. As a result, in the future the historic
financial statements will be those of DME Interactive Holdings, Inc.,
a "C" Corporation.
12
<PAGE>
THE UNAUDITED PRO-FORMA CONDENSED BALANCE SHEET OF THE COMPANY AND
DIGITAL MAFIA ENTERTAINMENT, LLC AS OF JUNE 17, 1999
The following unaudited pro forma condensed balance sheet (the "Pro Forma
Balance Sheet") has been derived from the Company's condensed balance sheet as
of June 17, 1999. Adjustments have been made to such information to give effect
to the acquisition of Digital Mafia Entertainment, LLC ("LLC") as if it had
occurred on the balance sheet date. The LLC's balance sheet as of June 17, 1999
was combined with the balance sheet of the Company as of that date, as adjusted
as noted below. The unaudited pro forma condensed balance sheet should be read
in conjunction with the condensed financial statements of the LLC, including the
notes thereto, which are contained elsewhere in this Form 8-K.
All assets and liabilities that were owned by subsidiaries that have been sold
are not reflected in this balance sheet. Additionally, a promissory note from
the LLC to the Company was eliminated.
PROFORMA CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
PAG, Inc. DME Post
June 17, June 17, Transaction
1999 1999
unaudited unaudited
--------- --------- -----------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 260,373 $ 687,394 $ 947,767
Accounts receivable -- 15,309 15,309
Due from affiliated company -- 6,296 6,296
Note Receivable 723,434 260,373 --
Fixed Assets -- 33,538 33,538
-----------------------------------------
TOTAL ASSETS $ 983,807 $ 1,002,910 $ 1,002,910
=========================================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable -- 156,042 156,042
Note payable 128,680 1,033,808 178,681
Advances/Unearned Revenue -- 41,804 41,804
Loans to Officers -- 322,669 322,669
-----------------------------------------
TOTAL LIABILITIES $ 128,680 $1,554,323 $699,195
=========================================
SHAREHOLDERS' EQUITY
Outstanding Common stock,
$.001 par value, 30,000,000 shares
authorized, 23,356,599 shares issued
and outstanding in 1999 $ 23,357 $ -- $ 23,357
Additional paid-in capital 831,770 -- 831,770
Members' Capital 5,968 5,968
Retained deficit (557,381) (557,381)
-----------------------------------------
TOTAL SHAREHOLDERS' EQUITY $ 855,127 $ (551,413) $ 303,714
-----------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 983,807 1,002,910 1,002,910
=========================================
</TABLE>
13
<PAGE>
STATEMENT OF RECAPITALIZED EARNINGS PER SHARE OF DIGITAL MAFIA
ENTERTAINMENT, LLC (Unaudited)
The following earnings per share information is based on the net income included
in the financial statements of the LLC. Results of operations from the Company's
operations prior to June 18, 1999 are not reflected in this pro-forma
information because its operating subsidiaries were sold on that date. The
number of shares outstanding is based on actual historical data of the Company
for the relevant periods and the information for the period ending June 17,
1999. This data reflects the effects of the transactions described in Items 1
and 2 above whereby 14,800,000 shares of common stock were issued to the owners
of equity of the LLC and also reflects the issuance of an aggregate of 5,674,099
shares of common stock in a private placement, debt conversions and for fees
incurred in connection with such transactions and the reverse merger. The
recapitalized earnings per share information is not necessarily indicative of
the results that would have occurred had the reverse merger (or
recapitalization) taken place prior to the time periods indicated below. This
information should be read in conjunction with the financial statements of the
LLC, including the notes thereto, which are contained elsewhere in this Form
8-K.
Period
Ended Years Ended December 31,
June 17, 1999 1998 1997
-----------------------------------------------------
Gross Sales $ 246,809 $ 235,659 $ 198,173
Net loss $ 146,381 $ 270,792 $ 140,325
Shares Outstanding 23,356,599 2,822,500 2,822,500
Net loss per share ($ 0.01) ($ 0.10) ($ 0.05)
=====================================================
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 hereunto duly authorized.
DME
INTERACTIVE HOLDINGS, INC.
By: /s/ ANDRE MCKOY
--------------------
Andre Mckoy,Executive Vice-President
14
EXHIBIT 23.1
CONSENT OF MITCHELL & TITUS, LLP, INDEPENDENT AUDITORS
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors of
Digital Mafia Entertainment, LLC
We consent to the inclusion on Form 8-K of our report dated
August 23, 1999, with respect to the balance sheets of Digital Mafia
Entertainment, LLC as of December 31, 1997, 1998 and June 17, 1999, and the
related statements of income and retained earnings and cash flows for each of
the years and six month period then ended, which report appears in the report on
Form 8-K/A of Digital Mafia Entertainment, filed with the Securities and
Exchange Commission on September 3, 1999.
/s/ MITCHELL & TITUS, LLP
-------------------------
Mitchell & Titus, LLP
September 7, 1999
