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, 1997
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, 1997.
<PAGE>
PRIDE INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page(s)
PART I Financial Information:
ITEM 1 Financial Statements
<S> <C>
Consolidated Condensed Balance Sheets - August 31, 1997 (Unaudited)
and November 30, 1996 .................................................. 3.
Consolidated Condensed Statements of Operations (Unaudited) -
Nine and Three Months Ended August 31, 1997 and 1996 ................... 4.
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Nine Months Ended August 31, 1997 and 1996 ............................. 5.
Notes to Interim Consolidated Condensed Financial Statements (Unaudited) 6.
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations .................................................. 9.
PART II Other Information 13.
SIGNATURES ............................................................................ 14.
EXHIBITS:
Exhibit 11 - Computation of Earnings (Loss) Per Share ............................. 15.
Exhibit 27 - Financial Data Schedule .............................................. 16.
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
- ASSETS -
<TABLE>
<CAPTION>
August 31, November 30,
1997 1996
(Unaudited) (As restated -
see Note 1)
ASSETS:
<S> <C> <C>
Cash and cash equivalents ........................................................ $ 41,453 $ 255,283
Accounts receivable - net of allowance for doubtful accounts ..................... 2,010,855 1,936,166
Inventories ...................................................................... 1,691,941 1,127,452
Property, revenue producing vehicles and equipment - net (Note 2) ................ 26,699,630 20,671,854
Intangible assets - net (Note 3) ................................................. 9,048,673 9,544,293
------------ ------------
TOTAL ASSETS ....................................................................... $ 39,492,552 $ 33,535,048
============ ============
- LIABILITIES AND SHAREHOLDERS' EQUITY -
LIABILITIES (Note 4):
Bank overdraft line of credit .................................................... $ 5,972,743 $ 2,964,465
Accounts payable ................................................................. 2,763,192 654,920
Accrued liabilities and expenses ................................................. 374,944 490,915
Bank debt ........................................................................ 948,782 1,002,571
Obligations under hire purchase contracts ........................................ 15,326,166 11,034,951
Loans payable - directors ........................................................ 34,610 --
Other loans - acquisition ........................................................ 4,274,500 5,098,470
Other liabilities ................................................................ 127,215 33,560
------------ ------------
TOTAL LIABILITIES .................................................................. 29,822,152 21,279,852
------------ ------------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES (Note 5) ........................... 4,681,944 5,677,891
------------ ------------
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 shares issued and outstanding .................................... 3,991 3,991
Additional paid-in capital ..................................................... 7,910,046 8,425,722
Retained earnings (deficit) .................................................... (2,525,510) (1,555,104)
Foreign currency translation ................................................... (400,071) (297,304)
------------ ------------
4,988,456 6,577,305
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................................... $ 39,492,552 $ 33,535,048
============ ============
</TABLE>
See notes to interim consolidated condensed financial statements.
Page 3.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
August 31, August 31,
1997 1996 1997 1996
REVENUES:
<S> <C> <C> <C> <C>
Contract hire income ......................... $ 5,571,724 $ 3,524,377 $ 2,046,665 $ 1,265,939
Sale of contract hire vehicles ............... 5,859,791 4,105,599 1,626,790 1,609,219
Fleet management and other income ............ 1,104,908 714,750 593,366 226,690
------------ ------------ ------------ ------------
12,536,423 8,344,726 4,266,821 3,101,848
------------ ------------ ------------ ------------
EXPENSES:
Cost of sales ................................ 10,019,382 6,418,409 3,398,049 2,486,058
General and administrative expenses .......... 2,316,820 1,025,129 774,762 345,969
Amortization of goodwill and acquisition costs 474,887 473,399 158,295 158,039
Interest expense and other ................... 1,330,278 724,435 520,004 265,312
Research and development costs ............... 691,166 -- 377,244 --
------------ ------------ ------------
14,832,533 8,641,372 5,228,354 3,255,378
------------ ------------ ------------ ------------
LOSS BEFORE MINORITY INTERESTS ................... (2,296,110) (296,646) (961,533) (153,530)
Minority interests in net loss of consolidated
subsidiaries (Note 4) ..................... 1,325,704 133,520 493,440 65,901
------------ ------------ ------------ ------------
LOSS BEFORE PROVISION FOR
INCOME TAXES ................................. (970,406) (163,126) (468,093) (87,629)
Provision for income taxes ................... -- -- -- --
------------ ------------ ------------
NET LOSS ......................................... $ (970,406) $ (163,126) $ (468,093) $ (87,629)
============ ============ ============ ============
LOSS PER COMMON SHARE (Note 6):
Net loss before minority interest ............ $ (1.15) $ (.15) $ (.48) $ (.08)
Minority interests in net loss of subsidiary . .66 .07 .24 .04
------------ ------------ ------------ ------------
LOSS PER COMMON SHARE ............................ $ (0.49) $ (.08) $ (.24) $ (.04)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
(Note 6) ..................................... 1,995,357 1,990,775 1,995,357 1,995,357
============ ============ ============ ============
</TABLE>
See notes to interim consolidated condensed financial statements.
Page 4.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
August 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ...................................................................... $ (970,406) $ (163,126)
Adjustments to reconcile net loss to net cash provided by operating activities:
Minority interests in net loss of subsidiaries .............................. (1,325,704) (133,520)
Depreciation and amortization ............................................... 2,909,949 2,013,901
Amortization of goodwill .................................................... 474,424 443,174
(Gain) loss on disposal of fixed assets ..................................... (193,752) (46,078)
Provision for maintenance costs ............................................. -- 31,679
Changes in assets and liabilities:
(Increase) in accounts receivable ........................................... (74,689) (336,706)
(Increase) in inventories ................................................... (564,489) (277,523)
Increase (decrease) in accounts payable, accrued expenses and
other liabilities ......................................................... 2,085,956 (1,062,869)
------------ ------------
Net cash provided by operating activities ................................... 2,341,289 468,932
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of revenue producing assets ......................................... (10,162,619) (6,438,370)
Proceeds from sale of fixed assets ............................................ 1,443,250 1,195,509
------------ ------------
Net cash (utilized) by investing activities ................................. (8,719,369) (5,242,861)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from hire purchase contract funding .................................. 14,438,622 7,628,185
Principal repayments of hire purchase contract funding ........................ (10,147,407) (5,533,009)
Principal payments of long-term debt .......................................... (53,789) (43,537)
Loans received from (repaid to) directors ..................................... 34,610 (113,628)
Proceeds from subsidiary's sale of stock ...................................... 92,500 3,282,500
Costs associated with subsidiary's sale of stock .............................. (180,137) (876,206)
Net proceeds from bank lines of credit ........................................ 3,008,278 452,301
Payment of acquisition debt ................................................... (823,970) --
------------ ------------
Net cash provided by financing activities ................................... 6,368,707 4,796,606
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES IN CASH ............................................. (204,457) (68,571)
------------ ------------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS ......................................... (213,830) (45,894)
Cash and cash equivalents, at beginning of year ............................... 255,283 73,946
------------ ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD ......................................... $ 41,453 $ 28,052
============ ============
</TABLE>
See notes to interim consolidated condensed financial statements.
Page 5.
<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 5
re: Minority Interest in Subsidiaries.
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.
On November 29, 1996, the Company, through PAG's 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 net assets of AC
Cars Limited and Autokraft Limited. These two companies were
engaged in the manufacture and sale of specialty automobiles.
The purchase price of $6,067,000 was financed with the proceeds
of a private debt offering which was completed, by PAG, in
December 1996 and by loans. The acquisition was recorded using
the purchase method of accounting. Fixed assets recorded as a
result of this acquisition aggregated $3,038,182. In April 1997,
the Company, through the services of an independent third-party
expert, determined that the value of such fixed assets acquired
was actually $6,643,365 at the date of acquisition. A portion of
this increase ($1,990,215) was previously reflected as an
intangible asset, and has been reclassified. The balance of the
increase of $1,614,968, recorded as negative goodwill, has been
offset against non-current assets acquired. The balance sheet as
of November 30, 1996 (year end) included herein has therefore
been restated to reflect this corrected valuation as follows:
Fixed Assets has been increased by $1,990,215 and Intangible
Assets has been reduced by $1,990,215. In addition financial
statements for the year ended November 30, 1996 have been
restated to correct an error in the method by which the Company
was reflecting the minority shareholders' interest in AC
Automotive Group, Inc. The effect of this restatement was to
increase the minority interest liability and decrease additional
paid-in capital as of November 30, 1996 in the amount of
$307,919. The Company has filed an amended Form 10-KSB with the
Securities and Exchange Commission to reflect such restatements.
Page 6.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - DESCRIPTION OF COMPANY (Continued):
The accounting policies followed by the Company are set forth in
Note 2 to the Company's consolidated financial statements
included in its Annual Report on Form 10-KSB for the year ended
November 30, 1996, which is incorporated herein by reference.
Specific reference is made to this report for a description of
the Company's securities and the notes to consolidated financial
statements included therein.
In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements of Pride, Inc. and
its wholly-owned subsidiaries, contain all adjustments necessary
to present fairly the Company's financial position as of August
31, 1997 and the results of its operations for the nine and
three month periods ended August 31, 1997 and 1996, and its cash
flows for the nine month periods ended August 31, 1997 and 1996.
The results of operations for the nine and three month periods
ended August 31, 1997 and 1996 are not necessarily indicative of
the results to be expected for the full year.
NOTE 2 - FIXED ASSETS:
<TABLE>
<CAPTION>
Fixed assets consists of the following:
August 31, November 30,
1997 1996
<S> <C> <C>
Building and improvements ................................................ $ 1,719,415 $ 1,719,415
Revenue producing vehicles ............................................... 25,056,005 17,282,095
Furniture, fixtures and machinery ........................................ 4,519,731 4,641,388
Aircraft ................................................................. 927,751 927,751
----------- -----------
32,222,902 24,570,649
Less: accumulated depreciation .......................................... 5,523,272 3,898,795
----------- -----------
$26,699,630 $20,671,854
=========== ===========
</TABLE>
NOTE 3 - INTANGIBLE ASSETS:
Intangible assets include 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 assets and costs are
being amortized on a straight-line basis over 20 and 10 year
periods, 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.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 - LIABILITIES:
Included in liabilities as of August 31, 1997, are amounts in
the aggregate of $13,773,911 which are not due and payable until
after August 31, 1998. This amount consists of amounts due to
trade creditors, loans payable and equipment notes payable.
NOTE 5 - MINORITY INTERESTS IN SUBSIDIARIES:
In April 1996, PAG successfully completed an initial public
offering of its common stock, as a result of which the Company's
investment in PAG was reduced to 56.55%. PAG owns 70% of a newly
formed subsidiary AC Automotive Group, Inc., ("AC Group"). The
minority interests liabilities represent the minority
shareholders' portion of the equity in these two subsidiaries.
In 1997, PAG completed a private placement of its common stock,
as a result of which the Company's investment in PAG was reduced
to 52.85%.
NOTE 6 - 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. Common stock
equivalents have been excluded from the computation since the
results would be anti-dilutive.
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128 "Earnings per Share" ("SFAS 128"),
which changes the method for calculating earnings per share.
SFAS 128 requires the presentation of "basic" and "diluted"
earnings per share on the face of the income statement. SFAS 128
is effective for financial statements for periods ended after
December 15, 1997. The Company will adopt SFAS 128 for the year
ended November 30, 1997, and accordingly restate prior periods,
as early adoption is not permitted. Statement No. 128 is not
expected to materially differ from primary earnings (loss) per
share as reported in Exhibit 11 in the Company's quarterly Form
10-QSB.
Page 8.
<PAGE>
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%. In 1997, PAG
completed a private placement of its common stock, as a result
of which the Company's investment in PAG was reduced to
52.85%.
On November 29, 1996, PAG, 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 PAG's common stock and by loans. Fixed assets
recorded as a result of this acquisition aggregated
$3,038,182. In April 1997, the Company, through the services
of an independent third-party expert, determined that the
value of such fixed assets acquired was actually $6,643,365 at
the date of acquisition. A portion of this increase
($1,990,215) was previously reflected as an intangible asset,
and has been reclassified. The balance of the increase of
$1,614,968, recorded as negative goodwill, has been offset
against non-current assets acquired. The balance sheet as of
November 30, 1996 (year end) included herein has therefore
been restated to reflect this corrected valuation as follows:
Fixed Assets has been increased by $1,990,215 and Intangible
Assets has been reduced by $1,990,215. In addition, financial
statements for the year ended November 30, 1996 have been
restated to correct an error in the method by which the
Company was reflecting the minority shareholders' interest in
AC Automotive Group, Inc. The effect of this restatement was
to increase the minority interest liability and decrease
additional paid-in capital as of November 30, 1996 in the
amount of $307,919. The Company has filed an amended Form
10-KSB with the Securities and Exchange Commission to reflect
such restatements.
Page 9.
<PAGE>
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, 1997
and November 30, 1996 (as restated); (ii) Consolidated
Condensed Statements of Operations for the Nine and Three
Month Periods Ended August 31, 1997 and 1996 and (iii)
Consolidated Condensed Statements of Cash Flows for the Nine
Month Periods Ended August 31, 1997 and 1996.
Results of Operations
Revenues increased by $1,164,973 when comparing the three
months ended August 31, 1997 and 1996; $290,178 of this
increase relates to AC Cars, which commenced operations in
December 1996. Contract hire revenues increased by $826,486
when comparing the three months period August 31, 1997 to the
three months ended August 31, 1996. The primary reason for
this 27% increase was due to an increase in revenues from
contract hire, sale of vehicles at lease maturity and the
selling of vehicles at low margins to take advantage of dealer
bonuses. During this quarter, 168 new contracts were written
compared with 102 in the previous year. The average monthly
rental of new contracts written was $582 per vehicle compared
with $663 per vehicle during the same quarter in 1996. The
average monthly rental is dependent on the type of vehicle
being rented and the terms of the contract. During this
quarter, 32 vehicles were disposed of on termination of
contracts at an average profit of $1,076 per vehicle. During
the same quarter in 1996, 30 vehicles were disposed of at an
average profit of $2,276 per vehicle. The average profit per
disposal is dependent on the type of vehicle sold and the
current market value of vehicles.
For the nine month period ended August 31, 1997, revenues
increased by $4,191,697 or 50%, when compared to the same
period in 1996. $894,398 of this increase is attributable to
AC Cars, which commenced operations in December 1996; the
balance of $3,297,299 comprises an increase in revenues from
contract hire, sale of vehicles at lease maturity and the
selling of vehicles at low margins to take advantage of dealer
bonuses. During this period, 403 new contracts were written at
an average rental of $572 per vehicle compared with 235
contracts in the corresponding period in 1996 at an average
rental of $574 per vehicle. For the nine months period ending
August 31, 1997, 92 vehicles were disposed of on termination
of contracts at an average profit of $2,106 per vehicle
compared with 76 vehicles being disposed in the corresponding
period in 1996 at an average profit of $2,616 per vehicle. As
of August 31, 1997, 1,654 vehicles were under lease and
management compared to 1,299 vehicles as at August 31, 1996.
Page 10.
<PAGE>
Cost of sales, including depreciation, as of percent of sales,
remained constant at 80% when comparing the three months ended
August 31, 1997 and 1996. Cost of sales, including
depreciation, increased from 77% to 80% as a percent of
revenue, when comparing the nine months ended August 31, 1997
and 1996. Management attributes this increase primarily to the
increase in buying and selling of vehicles and selling to
third parties at low margins to take advantage of dealer
bonuses, adopting a more prudent approach to estimating
residual values of vehicles, thereby increasing the
depreciation expense and cost of sales and reducing the
residual risk, and the inclusion of the AC Cars operations.
.
General and administrative expenses increased by $428,793 when
comparing the three month periods ended August 31, 1997 and
1996. This increase comprises general and administrative
expenses of $477,966 in AC Cars and a decrease of $49,173 in
the contract hire operations. For the nine month period ending
August 31, 1997, general and administrative expenses increased
by $1,291,691. This increase is mainly due to the inclusion of
the administration costs of AC Cars of $1,254,423 and the
increase in staff and normal running costs associated with the
increase in business.
Interest expense increased by 96% when comparing the three
months ended August 31, 1997 and 1996. 38% or $100,612 of this
increase is attributed to funding AC Cars while the balance is
the result of the increased cost of funding new contract hire
business. Interest expense increased by 84% when comparing the
nine months ended August 31, 1997 and 1996. 40% or $286,576 of
this increase is attributed to funding of AC Cars while the
balance is the result of the increased cost of funding new
contract hire business.
Certain costs incurred by AC Cars have been classified as
research and development costs. These costs relate to research
and development incurred on the manufacture and distribution
of the AC Cobra and AC Ace and are separately disclosed.
Research and development costs amounted to $691,166 and
$377,244 for the nine months and three months ended August 31,
1997, respectively.
The shortfall in the working capital requirements of AC Cars
has been funded by the contract hire operations which have
obtained increased bank lines of credit for this purpose. This
will continue in the future until AC Cars is self supportive
and able to fund its own working capital requirements. The
repayment of the monies to the contract hire operations will
be funded out proceeds of vehicle sales.
Consolidated
For the three months ended August 31, 1997, the Company
reported a loss of $803,238 before amortization and minority
interests, as compared to a profit of $4,509 for the same
period in 1996. The reason for this, is that this quarter
includes the operating losses of AC Cars. The quarterly loss
comprises a loss of $826,524 before amortization and minority
interests in AC Cars.
For the nine-month period ended August 31, 1997, the Company
reported a loss of $1,821,223 before amortization and minority
interests as compared to a profit of $176,753 for the same
period in 1996. The overall loss includes a loss of $2,159,177
before amortization and minority interests in AC Cars.
Page 11.
<PAGE>
Liquidity and Capital Resources
In December 1997, PAG completed a private placement of 18 1/2
units, each unit consisting of a 10% promissory note in the
amount of $95,000 and 10,000 shares of PAG's common stock for
an aggregate price of $100,000 per unit. The proceeds have
been used to satisfy a portion of the debt owed for the
acquisition of AC Car Group Limited.
The Company acquires new vehicles as required. There are no
material planned capital expenditures at the present time.
Other
Except for historical information contained herein, the
matters set forth above may be forward-looking statements that
involve certain risks and uncertainties that could cause
actual results to differ from those in the forward-looking
statements. Potential risks and uncertainties include such
factors as the level of business and consumer spending in the
Company's industry, the competitive environment, the ability
of the Company to expand its operations, the level of costs
incurred in connection with the Company's expansion efforts
and economic conditions. Investors are also directed to
consider other risks and uncertainties discussed in documents
filed by the Company with the Securities and Exchange
Commission.
Page 12.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 - Legal Proceedings.
None.
ITEM 2 - Changes in Securities.
None.
ITEM 3 - Defaults Upon Senior Securities.
None.
ITEM 4 - Submission of Matters to a Vote of Security Holders.
None.
ITEM 5 - Other Information.
None.
ITEM 6 - Exhibits or Reports on Form 8-K.
Exhibit 27 - Financial Data Schedule
Exhibit 11 - Computation of Earnings Per Share
Page 13.
<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 14, 1997 PRIDE, INC.
By: /s/ Alan Lubinsky
Chief Executive Officer and
Principal Accounting Officer
Page 14.
<PAGE>
PRIDE, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
August 31, August 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
LOSS BEFORE MINORITY INTERESTS ............... $(2,296,110) $ (296,646) $ (961,533) $ (153,530)
Minority interests in net loss of consolidated
subsidiaries ................................. 1,325,704 133,520 493,440 65,901
----------- ----------- ----------- -----------
LOSS BEFORE PROVISION FOR INCOME
TAXES ........................................ (970,406) (163,126) (468,093) (87,629)
Provision for income taxes ................... -- -- -- --
----------- -----------
NET LOSS ..................................... $ (970,406) $ (163,126) $ (468,093) $ (87,629)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING .................... 1,995,357 1,990,775 1,995,357 1,995,357
=========== =========== =========== ===========
LOSS PER COMMON SHARE:
Net loss before minority interest ............ $ (1.15) $ (.15) $ (.48) $ (.08)
Minority interests in net loss of subsidiary . .66 .07 .24 .04
----------- ----------- ----------- -----------
LOSS PER COMMON SHARE ........................ $ (0.49) $ (.08) $ (.24) $ (.04)
=========== =========== =========== ===========
</TABLE>
- Exhibit 11 -
Page 15.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
PRIDE, INC. AND SUBSIDIARIES
EXHIBIT 27
FINANCIAL DATA SCHEDULE
ARTICLE 5 OF REGULATION S-X
The schedule contains summary financial information extracted from the condensed
consolidated financial statements for the nine months ended August 31, 1997 and
is qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Nov-30-1997
<PERIOD-START> Dec-01-1996
<PERIOD-END> aug-31-1997
<CASH> 41,453
<SECURITIES> 0
<RECEIVABLES> 2,010,855
<ALLOWANCES> 0
<INVENTORY> 1,691,941
<CURRENT-ASSETS> 0
<PP&E> 32,222,902
<DEPRECIATION> 5,523,272
<TOTAL-ASSETS> 39,492,552
<CURRENT-LIABILITIES> 16,048,241
<BONDS> 13,773,911
0
0
<COMMON> 3,991
<OTHER-SE> 4,984,465
<TOTAL-LIABILITY-AND-EQUITY> 39,492,552
<SALES> 11,431,515
<TOTAL-REVENUES> 12,536,423
<CGS> 10,019,382
<TOTAL-COSTS> 10,019,382
<OTHER-EXPENSES> 474,887
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,330,278
<INCOME-PRETAX> (970,406)
<INCOME-TAX> 0
<INCOME-CONTINUING> (970,406)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (970,406)
<EPS-PRIMARY> (.49)
<EPS-DILUTED> (.49)
<PAGE>
</TABLE>
