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 August 31, 1996
Commission File Number 33-24718-A
PRIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0109088
(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, $.002 par value. 1,995,357 shares outstanding as of August 31,
1996.
<PAGE>
PRIDE INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
INDEX
Page(s)
<S> <C>
PART I. Financial Information:
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets - August 31, 1996
(Unaudited) and November 30, 1995 3.
Consolidated Condensed Statements of Operations (Unaudited) -
Nine and Three Months Ended August 31, 1996 and 1995 4.
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Nine Months Ended August 31, 1996 and 1995 5.
Notes to Interim Consolidated Condensed Financial Statements (Unaudited) 6.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8.
PART II. Other Information 10.
SIGNATURES 11.
EXHIBITS: Exhibit 11 - Computation of Earnings (Loss) Per Share 12.
Exhibit 27 - Financial Data Schedule 13.
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
- ASSETS -
August 31, November 30,
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $28,052 $73,946
Accounts receivable - net of allowance for doubtful accounts 1,592,396 1,255,690
Inventories 308,660 31,137
Property, revenue producing vehicles and equipment - net (Note 2) 13,254,544 9,924,318
Intangible assets - net (Note 6) 9,668,089 10,141,130
TOTAL ASSETS $24,851,741 $21,426,221
- LIABILITIES AND SHAREHOLDERS' EQUITY -
LIABILITIES:
Due to creditors (Note 3) $11,435,638 $9,962,888
Loans payable - officers/directors 36,310 149,938
TOTAL LIABILITIES 11,471,948 10,112,826
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES
(Note 4) 5,878,786 -
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares authorized,
none issued or outstanding - -
Common stock, $.002 par value, 500,000,000 shares authorized,
1,995,357 and 1,905,357 shares issued and outstanding at
August 31, 1996 and November 30, 1995, respectively 3,991 3,811
Additional paid-in capital 8,355,321 12,126,311
Retained earnings (deficit) (1,389,489) (1,226,363)
Foreign currency translation 531,184 409,636
7,501,007 11,313,395
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $24,851,741 $21,426,221
</TABLE>
See notes to interim consolidated condensed financial statements.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended August 31, Ended August 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES $8,344,726 $6,436,044 $3,101,848 $2,880,713
EXPENSES:
Cost of sales 6,406,076 4,505,390 2,473,725 2,130,870
General and administrative expenses 1,037,462 1,068,120 358,302 477,689
Amortization of goodwill and acquisition costs 473,399 480,727 158,039 160,240
Interest expense and other 724,435 656,237 265,312 191,356
8,641,372 6,710,474 3,255,378 2,960,155
LOSS BEFORE MINORITY INTERESTS (296,646) (274,430) (153,530) (79,442)
Minority interests in net loss of consolidated
subsidiaries (Note 4) 133,520 - 65,901 -
LOSS BEFORE PROVISION FOR INCOME TAXES (163,126) (274,430) (87,629) (79,442)
Provision for income taxes - - - -
NET LOSS $(163,126) $(274,430) $(87,629) $(79,442)
LOSS PER COMMON SHARE (Note 5) $(.08) $(.14) $(.04) $(.04)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
(Note 5) 1,990,775 1,980,061 1,995,357 2,048,232
</TABLE>
See notes to interim consolidated condensed financial statements.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For The Nine Months Ended
August 31,
1996 1995
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $460,301 $2,062,177
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of revenue producing assets (6,438,370) (1,840,318)
Proceeds from sale of fixed assets 1,195,509 565,336
Net cash (utilized) by investing activities (5,242,861) (1,274,982)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from hire purchase contract funding 7,628,185 1,907,655
Principal repayments of hire purchase contract funding (5,533,009) (2,557,063)
Principal payments of long-term debt (43,537) -
Loans (repaid to) received from officers (113,628) 26,270
Net proceeds from subsidiary's sale of stock 2,346,354 -
Bank lines of credit 452,301 -
Net cash provided (utilized) by financing activities 4,736,666 (623,138)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (45,894) 164,057
Cash and cash equivalents, at beginning of year 73,946 22,336
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $28,052 $186,393
</TABLE>
SUPPLEMENTAL INFORMATION:
(i)In 1995, the Company issued 155,000 shares of common stock at a price
of $1.00 per share in lieu of repayment of loans aggregating $155,000.
(ii)In 1996, the Company issued 90,000 shares of common stock in
connection with consulting services rendered.
See notes to interim consolidated condensed financial statements.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - DESCRIPTION OF COMPANY:
Pride, Inc. (the "Company"), which is a holding company, was incorporated as
International Sportsfest, Inc. in the state of Delaware on September 11,
1988. The Company was a development stage company with no operations through
January 13, 1994. On that date, the Company acquired, through an exchange of
stock, Pride Management Services Plc ("PMS"), a consolidated group of
companies located in the United Kingdom. Simultaneously with the
acquisition, the Company changed its name from International Sportsfest, Inc.
to Pride, Inc. and now has its corporate offices in Watford, England and New
York, New York. By acquiring 100% of the issued and outstanding common stock
of Pride Management, PMS became a wholly-owned subsidiary of the Company.
For accounting purposes the acquisition was treated as a recapitalization of
Pride Management with PMS as the acquiror in a reverse acquisition. In March
1995, pursuant to the terms and conditions of a reorganization, the Company
exchanged all its shares in Pride Management Services, Plc. for 1,500,000
shares of common stock in Pride Automotive Group, Inc. (a newly formed
Delaware corporation). As a result of this exchange, Pride Automotive Group,
Inc. ("PAG") became a majority owned subsidiary of the Company and the parent
of PMS. See also Note 4 re: Minority Interest in Subsidiaries.
Pride Management Services Plc ("PMS") is a holding company of six
subsidiaries which are engaged in the leasing of motor vehicles, primarily on
contract hire, to local authorities and selected corporate customers
throughout the United Kingdom.
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, 1995, 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, Inc. and its wholly-owned
subsidiaries, contain all adjustments necessary to present fairly the
Company's financial position as of August 31, 1996 and the results of its
operations for the nine and three month periods ended August 31, 1996 and
1995 and its cash flows for the nine month periods ended August 31, 1996 and
1995.
The results of operations for the nine and three month periods ended August
31, 1996 are not necessarily indicative of the results to be expected for the
full year.
NOTE 2 - FIXED ASSETS:
Fixed assets consists of the following:
<TABLE>
<CAPTION>
August 31, November 30,
1996 1995
<S> <C> <C>
Building and improvements $1,719,415 $1,719,415
Revenue producing vehicles 15,726,614 11,989,192
Furniture, fixtures and machinery 529,771 519,753
17,975,800 14,228,360
Less: accumulated depreciation 4,721,256 4,304,042
$13,254,544 $9,924,318
</TABLE>
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - DUE TO CREDITORS:
Included in due to creditors as of August 31, 1996, are amounts in the
aggregate of $4,913,970 which are not due and payable until after August 31,
1997. This amount consists of amounts due to trade creditors, loans payable,
equipment notes payable and various accruals.
NOTE 4 - MINORITY INTERESTS IN SUBSIDIARIES:
In December 1995, PAG 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, PAG successfully completed an initial public offering. The
offering consisted of 592,500 shares of common stock at a price of $5.00 per
share and 2,000,000 warrants at a price of $.10 per warrant. As a result of
the above transactions, the Company now owns 56.55% of PAG. As of August 31,
1996, the minority interest liabilities aggregated $5,878,786.
NOTE 5 - COMMON STOCK / EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share has been computed on the basis of the weighted
average number of common shares and common equivalent shares outstanding
during each period presented.
NOTE 6 - INTANGIBLE ASSETS:
Intangible assets consist primarily of goodwill which arose in connection
with the acquisition of certain subsidiaries of PMS. Acquisition costs
representing organization type expenditures have also been capitalized as
intangible assets. These are being amortized on a straight-line basis over
a 20 and 10 year period, respectively.
The Company periodically reviews the valuation and amortization of goodwill
to determine possible impairment by comparing the carrying value to the
undiscounted future cash flows of the related assets.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Pride, Inc. (the "Company"), which is a holding company, was incorporated as
International Sportsfest, Inc. in the state of Delaware on September 11,
1988. The Company was a development stage company with no operations through
January 13, 1994. On that date, the Company acquired, through an exchange of
stock, Pride Management Services Plc ("PMS"), a consolidated group of
companies located in the United Kingdom. Simultaneously with the
acquisition, the Company changed its name from International Sportsfest, Inc.
to Pride, Inc. and now has its corporate offices in Watford, England and New
York, New York. By acquiring 100% of the issued and outstanding common stock
of Pride Management, PMS became a wholly-owned subsidiary of the Company.
For accounting purposes the acquisition was treated as a recapitalization of
Pride Management with PMS as the acquiror in a reverse acquisition. In March
1995, pursuant to the terms and conditions of a reorganization, the Company
exchanged all its shares in Pride Management Services, Plc. for 1,500,000
shares of common stock in Pride Automotive Group, Inc. (a newly formed
Delaware corporation). As a result of this exchange, Pride Automotive Group,
Inc. ("PAG") became a majority owned subsidiary of the Company and the parent
of PMS.
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%.
Pride Management Services Plc. ("PMS") is a holding company of nine
subsidiaries which are engaged in the leasing of motor vehicles, primarily on
contract hire, to local authorities and selected corporate customers
throughout the United Kingdom.
Prior to the aforementioned reorganization PMS prepared its financial
statements in accordance with generally accepted accounting principles of the
United Kingdom. The Company is now preparing its financial statements in
accordance with generally accepted accounting principles in the U.S.
The financial information presented herein includes: (i) Consolidated
Condensed Balance Sheets as of August 31, 1996 and November 30, 1995; (ii)
Consolidated Condensed Statements of Operations for the Nine and Three Month
Periods Ended August 31, 1996 and 1995 and (iii) Consolidated Condensed
Statements of Cash Flows for the Nine Month Periods Ended August 31, 1996 and
1995.
Results of Operations
Revenues increased by 30% when comparing the nine months ended August 31,
1996 and 1995 respectively. This was due to more business being written and
more cars being sold on termination of leases. Expenses increased by 29%,
which is in line with the increase in business activity.
Revenues for the three month period ending August 31, 1996, increased by
approximately 8% when compared to the quarter ended August 31, 1995. This
increase was mainly due to the increase in contract hire business written in
this period. There was a similar increase in expenses for the quarter, in
line with the increase in business activity.
Income before taxes for the nine months ended August 31, 1996 and 1995, prior
to the amortization of goodwill for the period ($473,399 and $480,727,
respectively) and minority interests, aggregated $176,753 (or $.09 per share)
and $206,297 (or $.10 per share). Income before taxes for the three months
ended August 31, 1996 and 1995, prior to the amortization of goodwill for the
period ($158,039 and $160,240, respectively) and minority interests,
aggregated $4,509 (or $.002 per share) and $80,798 (or $.04 per share)
respectively.
The Company reported losses after goodwill amortization and minority
interests of $163,126 (or $0.08 per share) and $274,430 (or $.14 per share)
for the nine month periods ended August 31, 1996 and 1995 respectively. The
Company reported losses after goodwill amortization and minority interests of
$87,629 (or $.04 per share) and $79,442 (or $.04 per share) for the three
month periods ended August 31, 1996 and 1995 respectively.
Liquidity and Capital Resources
The Company's balance sheet at August 31, 1996 reflects total assets of
$24,851,741 and total liabilities of $17,350,734 (which includes minority
interests in subsidiaries of $5,878,786.). Due to the nature of the
Company's business, full maintenance leasing of motor vehicles which are long
term assets, the balance sheet has been prepared on an unclassified basis.
Therefore, there is no classification of current assets and current
liabilities.
The Company's total assets and resulting net worth include the excess of cost
over net assets acquired and acquisition costs, net of amortization,
aggregating $9,668,089. These excess costs are being amortized over twenty
(20) and ten (10) year periods, respectively.
The Company acquires new vehicles as required. There are no material planned
capital expenditures at the present time.
<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. Submissions of Matters to a Vote of Security Holders -
None.
ITEM 5. Other Information - None.
ITEM 6. Exhibits
(a) Exhibit 27 - Financial Data Schedule
(b) Exhibit 11 - Computation of Earnings Per Common
Share
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
Dated: October 11, 1996
PRIDE, INC.
By: /s/ Alan Lubinsky
Chief Executive Officer
By: /s/ Ivan Averbuch
Chief Financial Officer
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended August 31, Ended August 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET LOSS $(163,126) $(274,430) $(87,629) $(79,442)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,990,775 1,980,061 1,995,357 2,048,232
LOSS PER COMMON SHARE $(.08) $(.14) $(.04) $(.04)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the condensed
consolidated financial statements for the nine months ended August 31, 1996 and
is qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 28,052
<SECURITIES> 0
<RECEIVABLES> 1,592,396
<ALLOWANCES> 0
<INVENTORY> 308,660
<CURRENT-ASSETS> 0
<PP&E> 17,975,800
<DEPRECIATION> 4,721,256
<TOTAL-ASSETS> 24,851,741
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3,991
<OTHER-SE> 7,497,016
<TOTAL-LIABILITY-AND-EQUITY> 24,851,741
<SALES> 8,344,726
<TOTAL-REVENUES> 8,344,726
<CGS> 6,406,076
<TOTAL-COSTS> 6,406,076
<OTHER-EXPENSES> 473,399
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 724,435
<INCOME-PRETAX> (163,126)
<INCOME-TAX> 0
<INCOME-CONTINUING> (163,126)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (163,126)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
