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 May 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 May 31, 1996.
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PRIDE INC. AND SUBSIDIARIES
INDEX
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Page(s)
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PART I. Financial Information:
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets - May 31, 1996
(Unaudited) and November 30, 1995 3.
Consolidated Condensed Statements of Operations (Unaudited) -
Six and Three Months Ended May 31, 1996 and 1995 4.
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Six Months Ended May 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
Exhibit 27 - Financial Data Schedule
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
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PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
- ASSETS -
May 31, November 30,
1996 1995
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 463,176 $ 73,946
Accounts receivable - net of allowance for doubtful accounts 1,351,021 1,255,690
Inventories 202,909 31,137
Property, revenue producing vehicles and equipment - net (Note 2) 11,375,667 9,924,318
Intangible assets - net (Note 6) 9,826,795 10,141,130
------------- -------------
TOTAL ASSETS $ 23,219,568 $ 21,426,221
============= =============
- LIABILITIES AND SHAREHOLDERS' EQUITY -
LIABILITIES:
Due to creditors (Note 3) $ 9,576,411 $ 9,962,888
Loans payable - officers/directors 26,270 149,938
------------- -------------
TOTAL LIABILITIES 9,602,681 10,112,826
------------- -------------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES
(Note 4) 5,979,580 --
------------- -------------
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
May 31, 1996 and November 30, 1995, respectively 3,991 3,811
Additional paid-in capital 8,485,286 12,126,311
Retained earnings (deficit) (1,301,860) (1,226,363)
Foreign currency translation 449,890 409,636
------------- -------------
7,637,307 11,313,395
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 23,219,568 $ 21,426,221
============= =============
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See notes to interim consolidated condensed financial statements.
Page 3.
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PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Six Months For the Three Months
Ended May 31, Ended May 31,
--------------------------- ---------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES $5,242,878 $3,555,331 $2,797,154 $1,848,556
---------- ---------- ---------- ----------
EXPENSES:
Cost of sales 3,932,351 2,374,520 2,228,301 1,418,557
General and administrative expenses 679,160 590,431 271,738 169,674
Amortization of goodwill and acquisition costs 315,360 320,487 157,680 160,244
Interest expense and other 459,123 464,881 251,788 218,287
---------- ---------- ---------- ----------
5,385,994 3,750,319 2,909,507 1,966,762
---------- ---------- ---------- ----------
LOSS BEFORE MINORITY INTERESTS (143,116) (194,988) (112,353) (118,206)
Minority interests in net loss of consolidated
subsidiaries (Note 4) 67,619 -- 45,348 --
---------- ---------- ---------- ----------
LOSS BEFORE PROVISION FOR INCOME
TAXES (75,497) (194,988) (67,005) (118,206)
Provision for income taxes -- -- -- --
---------- ---------- ---------- ----------
NET LOSS $ (75,497) $ (194,988) $ (67,005) $ (118,206)
========== ========== ========== ==========
LOSS PER COMMON SHARE (Note 5) $ (.04) $ (.10) $ (.03) $ (.06)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
(Note 5) 1,913,717 1,851,996 1,921,987 1,905,357
========== ========== ========== ==========
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See notes to interim consolidated condensed financial statements.
Page 4.
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PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For The Six Months Ended
May 31,
-------------------------------
1996 1995
------------ -----------
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 31,608 $ 2,016,106
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of revenue producing assets (3,207,506) (1,347,226)
Proceeds from sale of fixed assets 570,037 252,031
------------ -----------
Net cash (utilized) by investing activities (2,637,469) (1,095,195)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from hire purchase contract funding 3,795,711 1,317,587
Principal repayments of hire purchase contract funding (3,448,679) (1,752,002)
Principal payments of long-term debt (42,436) --
Loans (repaid to) received from officers (123,668) 26,270
Proceeds from subsidiary's sale of stock 2,346,354 --
Bank lines of credit 467,809 --
------------ -----------
Net cash provided (utilized) by financing activities 2,995,091 (408,145)
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 389,230 512,766
Cash and cash equivalents, at beginning of year 73,946 22,336
------------ -----------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 463,176 $ 535,102
============ ===========
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SUPPLEMENTAL INFORMATION:
(i) During the period ended May 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) During the period ended May 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 5.
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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 May 31, 1996 and
the results of its operations for the six and three month periods
ended May 31, 1996 and 1995 and its cash flows for the six month
periods ended May 31, 1996 and 1995.
The results of operations for the six and three month periods ended
May 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:
May 31, November 30,
1996 1995
----------- -----------
Building and improvements $ 1,719,415 $ 1,719,415
Revenue producing vehicles 14,039,749 11,989,192
Furniture, fixtures and machinery 529,771 519,753
----------- -----------
16,288,935 14,228,360
Less: accumulated depreciation 4,913,268 4,304,042
----------- -----------
$11,375,667 $ 9,924,318
=========== ===========
Page 6.
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PRIDE, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - DUE TO CREDITORS:
Included in due to creditors as of May 31, 1996, are amounts in the
aggregate of $3,725,807 which are not due and payable until after May
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 May 31, 1996, the minority interest liabilities aggregated
$5,979,580.
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.
Page 7.
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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 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.
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 May 31, 1996 and November 30, 1995;
(ii) Consolidated Condensed Statements of Operations for the Six and
Three Month Periods Ended May 31, 1996 and 1995 and (iii) Consolidated
Condensed Statements of Cash Flows for the Six Month Periods Ended May
31, 1996 and 1995.
Results of Operations
Revenues increased when comparing the three months ended May 31, 1995
to the three months ended May 31, 1996 from $1,848,556 to $2,797,154.
This increase of $948,598 or 51% was due to more new business being
written and more vehicles being sold on termination of leases.
Page 8.
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A portion of the increase, approximately $210,000, resulted from the
Company's fleet management division. For the six months ended May 31,
1996, revenues increased by $1,687,547 as compared to the prior year.
As stated above, this was due to increases in new business being
written, more vehicles being sold and an increase in fleet management
revenues.
Gross profit margins for the three and six month period ended May 31,
decreased by 3%, when comparing 1995 to 1996. Management attributes
this decrease to the buying of vehicles and selling to third parties
at slightly lower margins in order to take advantage of dealer
bonuses.
General and administrative expenses increased by $102,064 and $88,729
for the three and six month periods ended May 31, when comparing 1995
and 1996. Management attributes this increase to the increase in
business activity, when comparing 1995 and 1996.
Income before taxes for the three months ended May 31, 1995 and 1996,
prior to the amortization of goodwill for the period ($160,244 and
$157,680, respectively) and minority interests, aggregated $42,308 (or
$.02 per share) and $45,327 (or $.02 per share) respectively.
Income before taxes for the six months ended May 31, 1995 and May 31,
1996, prior to the amortization of goodwill for the period ($320,487
and $315,360, respectively) and minority interests, aggregated
$125,499 (or $.07 per share) and $172,244 (or $.09 per share).
The Company reported losses after goodwill amortization and minority
interests of $118,206 (or $.06 per share) and $67,005 (or $.03 per
share) for the three month periods ended May 31, when comparing 1995
and 1996.
The Company reported losses after goodwill amortization and minority
interests of $194,988 (or $0.10 per share) and $75,497 (or $.04 per
share) for the six month periods ended May 31, when comparing 1995 and
1996.
Liquidity and Capital Resources
The Company's balance sheet at May 31, 1996 reflects total assets of
$23,219,568 and total liabilities of $15,582,261 (which includes
minority interests in subsidiaries of $5,979,580.). 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 $9,826,795. These excess costs are being
amortized over ten (10) and twenty (20) year periods, respectively.
The Company acquires new vehicles as required. There are no material
planned capital expenditures at the present time.
Page 9.
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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 of Security Holders.
None.
ITEM 5 - Other Information.
None.
ITEM 6 - Exhibits or Reports on From 8-K.
None.
<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 July 16, 1996
PRIDE, INC.
By: /s/ Alan Lubinsky
----------------------------
Chief Executive Officer
Exhibit 11.
PRIDE, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(Unaudited)
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<CAPTION>
For the Six Months For the Three Months
Ended May 31, Ended May 31,
-------------------------- --------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET LOSS $ (75,497) $(194,988) $ (67,005) $(118,206)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,9l3,717 1,851,996 1,921,987 1,905,357
========= ========= ========= =========
LOSS PER COMMON SHARE $(.04) $(.10) $(.03) $(.06)
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
condensed consolidated financial statements for the six months ended
May 31, 1996 and is qualified in its entirety by reference to such
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 463,176
<SECURITIES> 0
<RECEIVABLES> 1,351,021
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 16,288,935
<DEPRECIATION> 4,913,268
<TOTAL-ASSETS> 23,219,568
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3,991
<OTHER-SE> 7,633,316
<TOTAL-LIABILITY-AND-EQUITY> 23,219,568
<SALES> 5,242,878
<TOTAL-REVENUES> 5,242,878
<CGS> 3,932,351
<TOTAL-COSTS> 994,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 459,123
<INCOME-PRETAX> (75,497)
<INCOME-TAX> 0
<INCOME-CONTINUING> (75,497)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (75,497)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
