SCHEDULE 14C
(RULE 14C-101)
Information Statement Pursuant to Section 14(c) of the Securities Exchange
Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
PRIDE, INC.
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the Appropriate Box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which the transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PRIDE, INC.
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
PRELIMINARY INFORMATION STATEMENT
PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE NOT REQUESTED TO SEND US A PROXY
INTRODUCTION
This information statement has been mailed on _________, 1999 to the
stockholders of record on August 12, 1999 of Pride, Inc., a Delaware corporation
("Pride" or the "Company") in connection with certain actions to be taken by the
Company pursuant to the written consent by the majority stockholders of the
Company, dated August 12, 1999. The action to be taken pursuant to the written
consent shall be taken on September 27, 1999. The principal executive offices of
the Company are located at AC Cars House Vickers Drive North Brooklands
Industrial Park Surrey, KT13 0YU . The Company's telephone number is 011 44 1932
336033.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO
STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED
HEREIN.
Alan Lubinsky
President
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NOTICE OF ACTION TO BE TAKEN PURSUANT THE WRITTEN CONSENT OF A
MAJORITY STOCKHOLDER IN LIEU OF A SPECIAL MEETING OF THE
STOCKHOLDERS ON SEPTEMBER 27, 1999
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the following actions will be taken pursuant
the written consent of a majority of stockholders in lieu of a special Meeting
of the stockholders of Pride, Inc. on September 27, 1999:
1. The adoption of a Share Exchange Agreement (the "Agreement"), dated
as of July 30, 1999, between Pride and the shareholders of Mason Hill &
Co., Inc. ("Mason Hill"), providing for the acquisition of Mason Hill
by Pride on the terms and conditions contained in such Agreement, a
copy of which is attached as Exhibit A to the accompanying Information
Statement;
2. The adoption of an amendment to the Certificate of Incorporation of
Pride to (i) decrease the number of authorized shares of common stock
of Pride from 500,000,000 to 20,000,000 shares; and (ii) change the
name of the Company to Mason Hill Holdings,Inc.;
3. The election of the directors set forth herein to serve as directors
of Pride for the ensuing year;
4.A reverse-split of the Company's common stock on a one-for-two basis;
5. The selection of Lilling & Company as the Company's independent
accountants for the fiscal year ended March 31, 2000.
6. The reorganization of Pride's AC Investments, Inc. and PMS
Investments, Inc. subsidiaries such that they become wholly-owned
subsidiaries of AC Holdings, Inc., a wholly owned subsidiary of Pride;
7. The spin-off of all of the 2,166,357 shares of common stock of
Pride's AC Holdings, Inc. subsidiary to the stockholders of Pride;
8. The spin-off of 743,000 shares of DME Interactive Holdings, Inc.
common stock which are owned by the Company, to the stockholders of the
Company.
The Board of Directors has fixed the close of business on August 12, 1999
as the record date for determining the shareholders entitled to notice of the
foregoing.
By order of the
Board of Directors,
Alan Lubinsky, Secretary
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August __, 1999
OUTSTANDING SHARES AND VOTING RIGHTS
As of the Record Date, the Company's authorized capitalization consists of
500,000,000 shares of Common Stock, par value $.002 per share and 5,000,000
shares of Preferred Stock, par value $.001 per share, which may be issued in one
or more series at the discretion of the board of directors. As of the Record
Date hereof, there were 2,166,357 shares of Common Stock outstanding, all of
which were fully paid and non-assessable and no shares of Preferred Stock issued
or outstanding. Holders of Common Stock of the Company have no preemptive rights
to acquire or subscribe to any of the additional shares of Common Stock.
Each share of Common Stock entitles its holder to one vote on each matter
submitted to the stockholders. However, because shareholders holding at least a
majority of the Common Stock issued and outstanding as at the Record Date,
namely New World Finance Limited, the holder of 1,050,000 shares of the
Company's common stock; Eros Nominees Limited, the holder of 100,000 shares of
the Company's common stock; Regent Nominees Limited, the holder of 81,000 shares
of the Company's common stock; and Fort Investments, Limited, the holder of
100,000 shares of the Company's common stock have voted in favor of the
following proposals by Resolution dated August 12, 1999; and having sufficient
voting power to approve such Proposals through their ownership of the Company's
Common Stock, no other shareholder consents will be solicited in connection with
this Information Statement.
Pursuant to Rule 14c-2 under the Exchange Act, the proposals will not be
adopted until a date at least twenty (20) days after the date on which this
Information Statement has been mailed to the Shareholders. As this Information
Statement is being sent to the beneficial owners of the Common Stock on August
12, 1999, which is more than twenty (20) days before the date of the action to
be taken by the written consent of a majority of stockholders, the Company
anticipates that the actions contemplated herein will be effected on or about
the close of business on September 27, 1999.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this Information Statement to the beneficial owners of
the Common Stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
This Information Statement will serve as written notice to stockholders
pursuant to Section 228 of the Delaware Business Company Law.
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OWNERSHIP OF SECURITIES
The following table sets forth, as of the Record Date, the number of shares
of Common Stock of the Company owned by (i) each person who is known by the
Company to own of record or beneficially five percent (5%) or more of the
Company's outstanding shares, (ii) each director of the Company, (iii) each of
the executive officers, and (iv) all directors and executive officers of the
Company as a group. The shareholders listed in the table have sole voting and
investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
Number of Percentage of
Name Shares Share Ownership
<S> <C> <C>
Alan Lubinsky (1) * *
c/o Pride House
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
Christopher Kinsley 40,500 *
c/o Mason Hill & Co., Inc.
110 Wall Street
New York, NY 10005
Walter Durchhalter (2) * *
c/o Mason Hill & Co., Inc.
110 Wall Street
New York, NY 10005
Ivan Averbuch (1) * *
c/o Pride House
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
Allan Edgar (1) * *
c/o Pride House
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
New World Finance, Ltd. 1,050,535 48.5%
c/o Pride House
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
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Eros Nominees, Ltd. 100,000 4.6%
c/o Pride House
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
Regent Nominees, Ltd. 81,000 3.7%
c/o Pride House
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
Fort Investments, Ltd. 100,000 4.6%
c/o Pride House
AC Cars House
Vickers Drive North
Brooklands Industrial Park
Surrey, KT13 0YU
All officers and
Directors as a group
(3 persons) (1) 1,845,535 70.3%
</TABLE>
(1) Excludes Shares which are issuable upon the exercise of options granted
under the Company's 1994 Stock Option Plan.
(2) Excludes 40,500 Shares which are owned by Marion Durchhalter, the
mother of Walter Durchhalter, as to which Mr. Durchhalter disclaims beneficial
ownership.
APPROVAL REQUIRED
The approval of a majority of the outstanding stock entitled to vote is
necessary to approve the following proposals. However, as discussed above, the
Company's Board of Directors has obtained the necessary approval for these
proposals from stockholders with voting authority for stock constituting in
excess of 50% of the total outstanding shares of the Company's Common Stock
entitled to vote. As such, the Board of Directors does not intend to solicit any
proxies or consents from any other stockholders in connection with these
actions.
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BACKGROUND AND RECENT DEVELOPMENTS
Pride, Inc. (the "Company") was incorporated as L.H.M. Corp. in the State
of Delaware on May 10, 1988, as a "blank check" company for the purpose of
seeking potential business ventures through acquisition or merger. In April
1990, L.H.M. Corp. entered into an Agreement and Plan of Reorganization with
International Sportsfest, Inc. ("ISI"), a company formed to engage in and
establish sports expositions in sports products such as clothing and sports
related equipment. At such time L.H.M. Corp. changed its name to ISI. ISI never
engaged in any business operations. In November 1992, ISI effected a 1 for 200
reverse split of its issued and outstanding shares of Common Stock. In January
1994, ISI entered into an Agreement and Plan of Reorganization with Pride
Management Services, Plc. ("PMS"), an English corporation, whereby PMS became a
wholly owned subsidiary of ISI and ISI changed its name to Pride, Inc.
Pride Automotive Group, Inc., a Delaware corporation ("PAG") was formed by
the Company in March 1995 for the purpose of acquiring all of the outstanding
shares of common stock of PMS, which was accounted for as a "Reorganization."
Prior to the Reorganization, PMS was a wholly owned subsidiary of the Company.
In connection with the Reorganization and formation of PAG, PMS became a
wholly owned subsidiary of PAG which, prior to PAG's initial public offering,
was approximately 72.8% owned by Pride. PMS is a holding company which has six
wholly owned subsidiaries which, prior to the Asset Disposition (as hereinafter
defined) engaged in the Company's operations. PMS's wholly-owned subsidiaries
include; Pride Vehicle Contracts Limited, Baker Vehicle Contracts Limited, Pride
Vehicle Contracts (UK) Limited, Pride Leasing Limited, Pride Vehicle Management
Limited and Pride Vehicle Deliveries Limited. These companies operated as one
unit, with the same management and facilities.
In November 1996, PAG, through its subsidiary AC Automotive Group Limited
("Automotive"), acquired all of the assets of AC Cars Limited ("AC Cars") and
Autokraft Limited ("Autokraft"), two companies incorporated under the laws of
England and Wales, respectively. AC Cars and Autokraft are specialty automobile
manufacturers that had been in administrative receivership since March 1996.
In November 1998, PMS and its subsidiaries entered into an agreement with
Newcourt Automotive Services, Ltd. ("Newcourt) to sell it substantially all of
their leasing portfolios for the sum of approximately $14,943,000 (the "Asset
Dispostion"). The portfolio sold had been carried on the books of the Company at
a value of approximately (pound)18,098,000 ($29,499,740). PMS currently
maintains leases on approximately 100 vehicles, although it intends to
discontinue its leasing operations by the end of calendar year 1999. The sale of
such assets was deemed necessary by PMS due to pressure from its lenders. In
June 1999, the Company acquired 100% of the issued and outstanding capital stock
of PMS and PAG's 16% interest in AC Automotive, each for the sum of $1.00. The
acquisition of the foregoing by the Company
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from PAG was in connection with PAG's acquisition, through a
"reverse-merger" type transaction, of DME Interactive Holdings, Inc. ("DME").
PMS is winding down its operations and has a negative net worth. The
Company is of the opinion that PMS is of no commercial value and that its 16%
interest in Automotive could be of value to its shareholders in the future. The
Company is also of the belief that delivering shares of DME to its shareholders
will result in value to the shareholders as there currently exists a limited
market for such securities.
In light of the foregoing, Management had been searching for a business
opportunity for the Company. Since Mason Hill had been investment bankers for
PAG and was recently engaged as investment bankers for the Company, the
opportunity to acquire Mason Hill resulted from conversations between management
of the Company and management of Mason Hill. The terms of the merger transaction
were negotiated by management of both companies. The Company and Mason Hill
executed a definitive share exchange agreement on July 30, 1999.
The Company's assets currently consist of its ownership interest of PMS and
its ownership of approximately 16% of the capital stock of AC Automotive Group,
Inc. ("Automotive"), its ownership of PMS (through its subsidiaries) and its
ownership of 1,193,000 shares of common stock of DME Interactive Holdings, Inc.
("DME"), 743,000 of which will be spun-off to shareholders in connection with
the matters contemplated herein and 350,000 of which will be contributed to AC
Holdings, Inc. ("ACH") prior to the spin-off of ACH to the shareholders of
Pride.
ACTIONS TO BE TAKEN AT THE SPECIAL MEETING
I. THE ADOPTION OF A SHARE EXCHANGE AGREEMENT (THE
"AGREEMENT"), DATED AS OF JULY 30, 1999, BETWEEN PRIDE AND THE
SHAREHOLDERS OF MASON HILL
On July 30, 1999, the Company entered into a definitive Share Exchange
Agreement with Mason Hill which provides for the exchange of all of the issued
and outstanding capital shares of Mason Hill by its shareholders for 15,886,618
shares of the Company's common stock.
The Company does not believe that Delaware law requires shareholder
approval of the foregoing transaction, although same was approved by a majority
of Pride shareholders pursuant to the terms of the Agreement. Upon completion of
the Mason Hill Acquisition, Mason Hill will become a wholly-owned subsidiary of
the Company.
Business - Mason Hill & Co., Inc.
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Mason Hill is an NASD registered securities broker/dealer which has been
engaged in commercial brokerage operations since November 1995. Mason Hill
concentrates its efforts in the areas of (a) retail and institutional sale of
securities; (b) trading and market making activities; and (c) investment and
merchant banking. Mason Hill may additionally engage in other aspects of the
securities business, including the purchase and sale of United States Government
obligations, money market instruments, mortgage related securities, municipal
and tax exempt securities, options, and foreign exchange commodities. Such other
activities may involve the different or additional business risks and would
require personnel experienced in such areas.
Mason Hill utilizes the services of CIBC Oppenheimer ("Oppenheimer") as its
clearing broker to process all of the securities transactions for Mason Hill.
Mason Hill leases 18,650 square feet at 110 Wall Street, New York, New York as
its principal offices. The term of the lease is for a period of five (5) years
ending July of the year 2000.
Retail and Institutional Sale of Securities
Mason Hill derives a significant portion of its revenues from commissions
on brokerage transactions resulting from the retail and institutional sale of
equity securities. Mason Hill's customers include both United States and foreign
individuals and high net worth individuals.
Mason Hill earns retail commissions from brokerage transactions in Nasdaq
securities, as well as securities listed on the NYSE and AMEX. Depending on the
circumstances, Mason Hill acts as either principal or agent in the execution of
trades in these markets. Mason Hill employs registered representatives who
principally engage in the retail sale of securities. As of the date hereof,
Mason Hill employs 25 registered representatives.
Trading and Market-Making Activities
Mason Hill is subject to the "Net Capital Rule", which rule governs the
amount of securities which Mason Hill may buy, sell or hold in inventory. Mason
Hill purchases some securities for inventory, in order to "make a market" in
such securities. As a market-maker, Mason Hill is required to publish bona fide
bid and offer quotations in a quotation system (generally Nasdaq) or furnish
bona fide quotations to other broker-dealers upon request. Mason Hill, as a
market maker, must be ready to buy and sell reasonable quantities of a security
at its quoted prices. Consequently, Mason Hill has its capital at risk when it
conducts such market-making activities. The number of securities in which Mason
Hill is permitted to make a market is limited by Mason Hill's restriction
agreement with the NASD and the net capital rule under the NASD's regulations
(the "Net Capital Rule").
In executing customer orders for Nasdaq securities in which it does not
make a market, Mason Hill charges a commission and acts as a broker in executing
the order with another firm which is a market-maker. Brokerage commissions are
also charged on NYSE and AMEX transactions in accordance with Mason Hill's
commission schedule. Mason Hill executes
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customer orders for securities listed on the NYSE, AMEX or on Nasdaq through its
clearing firm, Oppenheimer.
Mason Hill also engages in securities trading for its own account. Trading
profits or losses depend on the skills of Mason Hill's employees in
market-making activities, the amount of capital allocated to securities
positions, the volatility of the securities markets and the general trend of
prices in the securities markets. Trading as a principal requires the commitment
of capital and creates an opportunity for profit as well as the risk of loss due
to market fluctuations. Mason Hill takes both long and short positions in
securities in which it makes a market. If Mason Hill is in a short position with
respect to any security, it may be subject to a significant liability if it is
unable to cover the short position. The size of securities positions on any one
day may not be representative of Mason Hill's exposure on any other day, as
securities positions vary substantially on the basis of economic and market
conditions, allocations of capital, including the amount of capital that may be
committed to underwritings, and trading volume. In addition, the aggregate value
of inventories which Mason Hill may carry is limited by certain reserve
requirements imposed by the Net Capital Rule.
Investment and Merchant Banking
Mason Hill's activities in this area include the raising of capital for
corporations, founding and developing new corporations, acting as an underwriter
in public offerings of equity and debt securities for small to mid-size firms
and as placement agent in the private placement of securities. Mason Hill has
acted in such public underwritings as both the syndicate manager or syndicate
member and intends to continue such activities in the future. Mason Hill has in
the past and may continue to arrange for or provide investment candidates with
bridge or temporary financing until consummation of a public offering.
Mason Hill, while engaged in investment banking activities, intends to
provide a full complement of services to its corporate clients. This not only
involves the private and public financing of a corporation, but also
participation in the corporation's development as an active investment banker
and consultant. Mason Hill may additionally attempt to raise capital for its
corporate clients in connection with mergers, acquisitions, leveraged buy-outs,
divestitures, asset-based financing and corporate reorganizations and
recapitalization. In addition, Mason Hill intends to assist in the development
of new corporations and secure the capital for such new business. In connection
with certain of its activities in this area, Mason Hill, and certain of their
officers, directors and employees have in the past and may continue to acquire
significant equity positions in these developing enterprises. Mason Hill expects
that its investment banking activities will, in part, concentrate on
corporations that are engaged in the environmental, technological, automotive,
healthcare, communications and biotechnical fields, although it will consider
businesses in other, unrelated industries.
In addition to the foregoing, the NASD has recently adopted a position of
deeming limited partners and owners of even a limited, de minimis percentage of
a brokerage firm to be "Associated Persons" of such broker/dealer. In essence,
such a position has had the effect of
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preventing such persons from participating in private offerings and bridge
transactions of issuers being underwritten by the broker/dealer and may further
restrict such persons ability to participate in initial public offerings of
securities which open at a premium because of "free-riding and withholding"
rules promulgated by the NASD.
Many of the investment and merchant banking activities in which Mason Hill
may engage will require substantially greater capital than Mason Hill has
available. There can be no assurance that Mason Hill will ever be able to enter
into any significant investment and merchant banking activities, or that it will
be successful in such areas. Moreover, the types of investment and merchant
banking transactions in which Mason Hill may engage is restricted under the
terms of Mason Hill Restriction Agreement.
Clearing Accounts and Operations
Mason Hill does not generally hold any funds or securities of its
customers. Mason Hill utilizes, on a fully disclosed basis, the services of CIBC
Oppenheimer ("Oppenheimer") as its clearing broker. Oppenheimer, the clearing
broker, on a fee basis, will process all securities transactions for Mason Hill,
and the accounts of its customers. Services of Oppenheimer, as clearing broker,
include billing and credit control, and receipt, custody and delivery of
securities, for which each brokerage firm pays a portion of the commissions it
receives from customer transactions. The clearing agreement requires that Mason
Hill indemnify and hold harmless the clearing broker from certain liabilities or
claims. The services of Oppenheimer, as clearing broker, in effect provides a
"back office" for Mason Hill's brokerage activities, freeing Mason Hill from the
need and expense of creating its own back office capability, and affording its
customers the security of having their securities and cash held by a major Wall
Street firm.
As required by the NASD and certain other authorities, Mason Hill is
required to carry a fidelity bond covering loss or theft of securities, as well
as embezzlement and forgery. The accounts of Mason Hill's customers are insured
by SIPC for up to $500,000 for each customer, subject to a limitation of
$100,000 for claims for cash balances and $400,000 for securities. Oppenheimer,
Mason Hill's clearing agent, provides this Firm's customers with additional
insurance of up to $49,500,000. SIPC is funded through assessments charged to
registered broker-dealers.
Regulation
The securities industry is subject to extensive regulation under federal
and state laws. The principal purpose of the regulation is to regulate
broker-dealers, protect customers and the securities markets. The SEC is the
federal agency charged with administration of the federal securities laws. Much
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of the regulation of broker-dealers, however, has been delegated to
self-regulatory organizations, principally the NASD and the national securities
exchanges. These self-regulatory organizations adopt rules (which are subject to
approval by the SEC) which govern the industry and conduct periodic examinations
of member broker-dealers. Securities firms are also subject to regulation by
state securities commissions in the states in which they are registered. The
regulations to which broker-dealers are subject cover all aspects of the
securities business, including sales methods, trading practices among
broker-dealers, capital structure of securities firms, record keeping and the
conduct of directors, officers and employees. Mason Hill is currently registered
as a broker-dealer in 44 states.
Net Capital Requirements
As a broker-dealer and a member of the National Association of Securities
Dealers, Inc. (the "NASD") Mason Hill is subject to the NASD's Net Capital Rule
which is designed to measure the general financial integrity and liquidity of a
broker-dealer. In computing net capital, various adjustments are made to net
worth which exclude assets readily convertible into cash, and take a
conservative perspective of other assets such as a firm's position in
securities. The requirements provide that the broker-dealer shall maintain a
certain minimum level of net capital and a certain ratio of net capital to
aggregate indebtedness. The particular levels vary in application depending upon
the nature of the activity undertaken by Mason Hill and the length of time it
has been in business. The Net Capital Rule imposes restrictions on Mason Hill's
operations. Compliance with the Net Capital Rule limits those operations of
securities firms which require the intensive use of their capital, such as
underwriting commitments and principal trading activities, and limits the
ability of securities firms to pay dividends. Although the Net Capital Rule is
operative on a continuous basis, for reasons of administrative practicality,
Mason Hill compliance computations are made on a monthly basis. There can be no
assurance that Mason Hill will maintain adequate net capital, or that its net
capital will not fall below requirements established by the NASD or the SEC and
subject Mason Hill to disciplinary action by those agencies in the form of
fines, censure, suspension, expulsion or the termination of business altogether.
Net capital is essentially defined as net worth (assets minus liabilities)
plus certain qualifying subordinated borrowings, less various mandatory
deductions. Such deductions result from excluding assets not readily convertible
into cash and from conservative valuation of certain other assets. Among such
mandatory deductions are adjustments (called "haircuts") in the market value of
securities to reflect the possibility of a market decline prior to disposition.
The Net Capital Rule as applied to Mason Hill requires that the ratio of
aggregate indebtedness, as defined by the rule, to net capital not exceed 8-to-1
(increased to 15-1 after one (1) year under certain conditions). Compliance with
the Net Capital Rule limits those operations of Mason Hill which require the
intensive use of capital, such as underwriting commitments and trading
activities. The Net Capital Rule also limits the ability of Mason Hill to make
withdrawals of capital under certain conditions. The Net Capital Rule will limit
the ability of Mason Hill to make cash distributions to its Shareholders.
Competition
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All aspects of Mason Hill's business are highly competitive. In its
brokerage activities, Mason Hill competes directly with national broker-dealers,
which are large, well-known firms with substantially greater financial and
personnel resources than Mason Hill. Many of Mason Hill's competitors conduct
extensive advertising and actively solicit potential clients in order to
increase their business. Mason Hill also competes with a number of smaller
regional brokerage firms as well as discount and on-line electronic brokerage
firms which offer lower commission rates to their customers. In recent years,
institutions such as large commercial banks, insurance companies and financial
service companies have become a competitive factor by offering to their
customers many services which are unavailable from a small brokerage firm such
as Mason Hill.
Diversification and Size of Investments
Although Mason Hill maintains its principal offices in the New York
metropolitan area, finance and investment opportunities will be pursued through
the U.S. and global markets. In order to reduce the impact on Mason Hill of
failure of one or more unsuccessful transactions, an objective of Mason Hill is
to balance its portfolio with respect to the size of its corporate finance
transactions and to diversity of industries, products and company maturities
represented.
Consistent with the foregoing, the size of Mason Hill's finance
transactions may vary and may depend upon whether Mason Hill is acting alone or
in conjunction with other investors as part of a public or private financing. It
is expected that Mason Hill will continue to participate in public and private
financings sponsored by other underwriters. In general, the size of each
transaction effected by Mason Hill will be determined by a financial plan which
demonstrates that the capital sought will be sufficient for the company to
achieve a specific objective, that such investment may significantly reduce the
investment risk of any proposed future financing, and that such investment will
support the company's operations.
Personnel
Most aspects of the brokerage, securities trading and investment banking
business are dependent on highly-skilled individuals. To achieve its objectives
of operating a versatile brokerage, securities trading and investment and
merchant banking firm capable of offering a wide variety of services to its
customers, Mason Hill must attract and retain individuals with in-depth
experience in many specialized fields, including, without limitation, stock
trading, research, acquisitions, leveraged buy-outs, corporate takeovers and
other aspects of investment and merchant banking. There can be no assurance that
Mason Hill will be able to retain such personnel.
Properties
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Mason Hill maintains its principal offices at 110 Wall Street, 6th Floor,
in Manhattan, New York. The lease is for 18,650 square feet of office space and
is for a term of 5 years.
Litigation
Many aspects of Mason Hill's business involve substantial risks of
liability. Underwriters are subject to substantial potential liability for
material misstatements and omissions in prospectuses and other communications
with respect to public and private underwritten offerings. There has been an
increased incidence of litigation in the securities industry in recent years,
including class action suits which generally seek substantial damages. Any
litigation, from the groundless to the meritorious, could consume significant
resources of Mason Hill and could affect its ability to carry on normal business
operations. Mason Hill does not have any insurance with outside carriers that
would cover such risks of liability.
The securities of some of the Offerings in which Mason Hill has
participated as underwriter or syndicate member have declined substantially in
value. As a result of the significant decrease in the value of said securities,
it is possible that the potential for litigation exists, most likely in the form
of arbitration claims set forth against Mason Hill. Mason Hill has been named in
an arbitration which, if decided against Mason Hill, would have a material
adverse affect on the financial condition of Mason Hill and could cause it to
reduce or terminate operations. In addition, Mason Hill has been notified that
the trading of one of the public offerings in which it participated is being
reviewed by the NASD and certain state securities agencies.
Except for the foregoing, Mason Hill is not presently a party to any
litigation and knows of no litigation which is threatened or pending.
II. AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY
Background
On August 12, 1999, the Company's Board of Directors unanimously authorized
an amendment to the Company's Certificate of Incorporation (i) decreasing the
number of authorized shares from 500,000,000 million to 20 million shares of
Common Stock; and (ii) changing the name of the Company to "Mason Hill Holdings,
Inc." The amendment was approved by a majority of the shareholders of the
Company on August 12, 1999.
Each of these proposed amendments is discussed in greater detail below.
Additionally, a proposed form of Certificate of Amendment of the Certificate of
Incorporation of the Company is included as Exhibit B to this Information
Statement. A Certificate in substantially the form of Exhibit B will be filed
with the Delaware Secretary of State promptly after completion of the
Acquisition of Mason Hill.
The Board of Directors has determined that the adoption of the proposed
amendments will be in the best interests of the Company.
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Reasons for the Authorized Actions
(i) The Company's Board of Directors believes that it is in the best
interests of the Company to decrease the number of authorized shares of Common
Stock from 500,000,000 million to 20 million shares of Common Stock in order to
effectively reduce potential franchise tax liability of the Company in the
future. The Company's Board of Directors is of the belief that authorized
capital of 20,000,000 shares of Common Stock will be sufficient for current and
near future purposes. The balance of the authorized but unissued shares of
common stock will be issuable at any time and from time to time by action of the
Board of Directors without further authorization from the Company's
shareholders, except as otherwise required by applicable law or rules and
regulations to which the Company may be subject, to such persons and for such
consideration (but not less than the par value thereof) as the Board of
Directors determines. Holders of Common Stock of the Company have no preemptive
rights to acquire or subscribe to any of the additional shares of Common Stock.
Issuance of additional Common Stock, directly or upon exercise of warrants
or options if issued, has potentially dilutive effects on each of the
shareholders to the extent that any of the authorized but unissued shares are
subsequently issued. The issuance of such shares of Common Stock (or even the
potential issuance) may have a depressive effect on the market price of the
Company's securities. Moreover, an increase in the number of authorized shares
would have a dilutive effect on the voting power of the outstanding Common Stock
of the Company. Finally, the issuance of any of the additional shares of Common
Stock, or options to purchase shares at prices below the current market price
would also have a dilutive effect on stockholder's equity in the Company.
(ii) The Company's Board of Directors believes that it is in the best
interests of the Company to change the name of the Company to "Mason Hill
Holdings, Inc." to reflect the new business direction of the Company. The
Company has decided to redirect its business from the leasing of automobiles to
the brokerage business. See "Business of Mason Hill." To this end, the Company
is spinning-off to shareholders all of its assets (with the exception of 100,000
shares of DME common stock) to its shareholders as part of the actions
contemplated herein.
Required Vote
The adoption of the above described amendments to the Certificate of
Amendment of the Certificate of Incorporation requires the affirmative vote of
not less than a majority of the votes entitled to be cast by all shares of
Common Stock issued and outstanding on the Record Date. As discusses above, the
Company's majority shareholders have approved the foregoing amendment.
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No Right of Appraisal
Under Delaware Business Company Law, the state in which the Company is
incorporated, the decrease in the number of authorized shares does not require
the Company to provide dissenting shareholders with a right of appraisal and the
Company will not provide shareholders with such right.
III. DIRECTORS AND EXECUTIVE OFFICERS
The following persons have been elected as directors by a majority of the
stockhokders pursuant to its written consent, with such elections to become
effective upon the closing of the Digital Acquisition. Furthermore, the
following persons will be elected as officers effective upon the closing of the
Digital Acquisition:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position with the Company
Christopher Kinsley 43 President, Treasurer and Director
Walter Durchhalter 33 Secretary and Director
Peter Andrew Stearne 39 Director
</TABLE>
Christopher J. Kinsley. Mr. Kinsley is the President, Secretary and a
Director of Mason Hill & Co., Inc. From 1982 to present, Mr. Kinsley was
employed with Smith Barney (formerly Shearson Lehman Bros.). Mr. Kinsley began
his employment with Shearson as a retail broker. From 1984 to 1992, Mr. Kinsley
managed two different Shearson branch offices with between 50 and 90 brokers in
each of such offices. Mr. Kinsley currently holds Series 7, 8, 15, 24, 42, 63
and 65 licenses with the NASD. Mr. Kinsley holds a Bachelors of Arts degree from
Adelphi University.
Walter W. Durchhalter. Mr. Durchhalter is the Treasurer and a Director of
Mason Hill & Co., Inc. From July 1993 to March 1995, Mr. Durchhalter was the
Secretary, Executive Vice President, a Director and principal shareholder of
White Rock Corp., the general partner of White Rock Partners & Co., Inc., a New
York City based broker/dealer. From April 1990 until July 1992, Mr. Durchhalter
was a Senior Vice President of Shearson Lehman Brothers. From April 1988 and
April 1990, Mr. Durchhalter was a Senior Vice President of Gruntal & Company, a
registered broker-dealer. From January 1986 through April 1988, Mr. Durchhalter
was a Vice President of Moseley Securities, a registered broker-dealer.
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Peter Andrew Stearne will has agreed to become a Director of the Company
upon completion of the Mason Hill Acquisition. Mr. Stearne is a Patent and
Trademark Attorney who resides in and practices in Sydney Australia. Mr. Stearne
holds a B.S. with Honors from the University of Melbourne, majoring in
biochemistry and chemistry. Mr. Stearne holds a Doctor of Philosophy degree from
the Walter & Eliza Hall Institute of Medical Research.
The directors of the Company are elected annually by the stockholders and
hold office until the next annual meeting of stockholders, or until their
successors are elected and qualified. The executive officers are elected
annually by the board of directors, serve at the discretion of the board of
directors and hold office until their successors are elected and qualified.
Vacancies on the board of directors may be filled by the remaining directors.
As permitted under Delaware Company Law, the Company's Certificate of
Incorporation eliminates the personal liability of the directors to the Company
or any of its stockholders for damages for breaches of their fiduciary duty as
directors. As a result of the inclusion of such provision, stockholders may be
unable to recover damages against directors for actions taken by them which
constitute negligence or gross negligence or that are in violation of their
fiduciary duties. The inclusion of this provision in the Company's Certificate
of Incorporation may reduce the likelihood of derivative litigation against
directors and other types of stockholder litigation.
IV REVERSE-SPLIT OF THE COMPANY'S COMMON STOCK
The Company's Board of Directors and majority shareholder have approved a
reverse-split of the Company's common stock. The Board of Directors believes
that a reverse-split of the Company's common stock on a one-for-two basis is in
the best interests of the Company as it has the effect of reducing the number of
shares issued and outstanding.
Required Vote
The reverse split of the Company's Common Stock been approved by the Board
of Directors and by the majority shareholders of the Company.
V RATIFICATION OF INDEPENDENT ACCOUNTANTS
A majority of the Company's Stockholders and the Board of Directors have
ratified the selection of Lilling & Company, as the Company's independent
accountants for the fiscal year ended November 30, 1999. Lilling & Company has
previously been retained by Mason Hill and is being retained by the Company for
fiscal 1999 because of such relationship and the fact that the Company will be
effecting its operations through Mason Hill during fiscal 1999.
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VI THE REORGANIZATION OF PRIDE'S AC INVESTMENTS, INC. AND PMS
INVESTMENTS, INC. SUBSIDIARIES SUCH THAT THEY BECOME WHOLLY-
OWNED SUBSIDIARIES OF AC HOLDINGS, INC., A WHOLLY OWNED
SUBSIDIARY OF PRIDE;
The Company has reorganized the ownership of its AC Investments, Inc. and
PMS Investments, Inc. subsidiaries such that they have become wholly-owned
subsidiaries of AC Holdings, Inc., a wholly owned subsidiary of Pride. The
reorganization has been effected to permit the Company to spin-off of Pride's
non-DGMF assets to its shareholders, which the Board believes will benefit its
shareholders. The Company does not believe that Delaware law requires
shareholder approval of the foregoing transaction, although same was approved by
a majority of Pride shareholders pursuant to the terms of the Agreement. Upon
completion of the Mason Hill Acquisition, AC Holdings, Inc. will be 100% owned
by the shareholders of Pride as at the Record Date.
VII THE SPIN-OFF OF ALL OF THE 2,166,357 SHARES OF COMMON STOCK OF PRIDE'S
AC HOLDINGS, INC. SUBSIDIARY TO ITS SHAREHOLDERS.
As set forth above, the Company intends to spin-off of Pride's non-DGMF
assets to its shareholders, which the Board believes will benefit its
shareholders. The Company does not believe that Delaware law requires
shareholder approval of the foregoing transaction, although same was approved by
a majority of Pride shareholders pursuant to the terms of the Agreement. Upon
completion of the Mason Hill Acquisition, shares of AC Holdings, Inc. owned by
the shareholders of Pride will be restricted from transfer, absent registration
of such shares under the Securities Act of 1933 or an exemption therefrom. There
can be no assurance that the AC Holdings, Inc. will ever be transferrable or
that they will be of any value to shareholders.
VII THE SPIN-OFF OF 743,000 SHARES OF DME INTERACTIVE HOLDINGS, INC.
COMMON STOCK WHICH ARE OWNED BY THE COMPANY TO ITS
SHAREHOLDERS.
As set forth above, the Company intends to spin-off 743,000 shares of DGMF
common stock owned by the Company to its shareholders, which the Board believes
will benefit its shareholders. DGMF common stock currently trades on the OTC
Bulletin Board under the symbol "DGMF". It is the intention of the Company that
such shares will be freely transferrable upon the distribution of such shares to
the Pride Shareholders, although there can be no that the DGMF shares will be
transferrable or that they will be of any value to shareholders. The Company
does not believe that Delaware law requires shareholder approval of the
foregoing transaction, although same was approved by a majority of Pride
shareholders pursuant to the terms of the Agreement.
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The Company has not received an appraisal or fairness opinion with respect
to any of the foregoing transactions.
ADDITIONAL INFORMATION
The Company's annual report on Form 10-KSB for the fiscal year ended
November 30, 1998 and Report on Form 10-QSB for the quarter ended February 28,
1999 and the exhibits filed therewith are hereby incorporated by reference. The
Company will furnish a copy of the Form 10-KSB or any exhibit thereto upon
request by a shareholder to Alan Lubinsky, Pride, Inc., Pride House, Watford
Metro Centre, Tolpits Lane, Watford Hertfordshire, WD1 8SB England.
By Order of the Board of Directors,
PRIDE, INC.
Alan Lubinsky, Secretary
New York, New York
August __, 1999
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