SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended November 30, 1998

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                         Commission File Number 0-27944


                          PRIDE AUTOMOTIVE GROUP, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                               <C>       
Delaware                                          98-0157860
(State or other jurisdiction of                   (I.R.S. Employer Identification No.)
Incorporation or organization)
</TABLE>

                Pride House, Watford Metro Centre, Tolpits Lane,
                     Watford, Hertfordshire, WD1 8SB England
                    (Address of principal executive offices)

                                 (800) 698-6590
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
Title of each class                 Name of each exchange on which registered

                                      NONE

                 Securities registered pursuant to Section 12(g)
                                  of the Act:
                          Common Stock, $.001 par value
                                (Title of Class)

     Check  whether  the Issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such  shorter  period that  registrant  was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [X] No [ ]

     Check  if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ].

     The  aggregate  market  value of the  voting  stock on  February  19,  1999
(consisting of Common Stock,  $.001 par value per share) held by  non-affiliates
was  approximately  $2,918,116  based upon the average bid and asked  prices for
such  Common  Stock on said date  ($2.18) as  reported  by a market  maker.  The
issuer's  and  its  subsidiaries  had  on  a  consolidated  basis,  revenues  of
$13,102,000  for its fiscal year ended  November 30, 1998. On February 19, 1999,
there were 2,822,500 shares of Registrant's Common Stock outstanding.




<PAGE>
                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

History

     Pride Automotive  Group,  Inc., a Delaware  corporation (the "Company") was
formed by Pride, Inc. ("Pride"),  in March 1995 for the purpose of acquiring all
of the outstanding shares of common stock of Pride Management Services, Plc., an
English corporation ("PMS"), which has been accounted for as a "Reorganization."
Prior to the Reorganization, PMS was a wholly owned subsidiary of Pride.

     Pride 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.

     Pursuant to the terms and conditions of the  Reorganization  in March 1995,
between the Company,  PMS and Pride,  the Company issued 1,500,000 shares of its
Common Stock to Pride in exchange for all of the issued and  outstanding  shares
of PMS. In connection with the Reorganization and formation of the Company,  PMS
became a wholly owned  subsidiary of the Company  which,  prior to the Company'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.
Unless the context  otherwise  requires,  all references to the "Company" are to
its wholly owned subsidiary,  PMS and PMS's six wholly owned  subsidiaries.  See
"--Subsidiaries."


<PAGE>
Public Offering of Pride Automotive Group, Inc.

     In April  1996,  the  Company  completed  an  underwritten  initial  public
offering of its  securities.  The securities were registered with the Securities
and Exchange  Commission  ("SEC")  pursuant to a registration  statement on Form
SB-2. The initial public offering was declared effective by the SEC on April 24,
1996.  In the offering,  the Company sold 592,500  shares of its common stock to
the public at a price of $5.00 per share and 2,300,000  redeemable  common stock
purchase  warrants at a price of $.10 per warrant.  The warrants are exercisable
at a price of $5.75 per share,  subject to adjustment,  beginning April 24, 1997
and expiring April 23, 2001. In connection  therewith,  the Company also granted
to the  underwriters of the offering,  Mason Hill & Co., Inc. and the Thornwater
Group, Inc., warrants to purchase an aggregate of 95,000 shares of the Company's
common stock at a purchase  price of $7.50 and 200,000  redeemable  common stock
purchase warrants at a price of $0.15 per warrant,  each warrant  exercisable to
purchase one share of common stock at a purchase price of $7.50 per share. Other
than with respect to the exercise  price,  the terms of the warrants  granted to
the underwriter are identical to those described above.

     On January 12, 1998,  the Company  filed a  registration  statement on Form
SB-2 with the SEC, to register  1,000,000  shares of the Company's Common Stock.
In connection therewith,  the Company entered into a letter of intent with Mason
Hill & Co., Inc., an NASD  broker-dealer,  to underwrite  such securities a firm
commitment basis.

     Although the Company has filed a  Registration  Statement for the offer and
sale of  additional  securities  to raise  capital  and pay  down  loans to note
holders and  creditors,  the Company does not believe that such Offering will be
completed  because of the  limited  operations  of the  Company  and its current
financial   condition.   Accordingly,   the  Company  expects  to  withdraw  its
Registration  Statement upon completion of an acquisition (of which there can be
no  assurance),  although it retains the option to proceed  with the offering on
term as  filed or as may be  modified  at the  discretion  of the  Company.  See
"Proposed Acquisition of Digital Mafia Enterprises, LLC."

     Prior to February 19, 1999,  the  Company's  securities  were traded on the
Nasdaq SmallCap Stock Market and the Boston Stock Exchange, Inc. On February 19,
1999,  both Nasdaq and the Boston Stock Exchange halted trading in the Company's
securities  upon  dissemination  by the  Company of news that it had  executed a
letter of intent to acquire a company known as Digital Mafia Entertainment, LLC.
("DME"). Shortly thereafter, the Company received notice from Nasdaq that it was
being delisted for, among other things,  failure to maintain tangible book value
of at least $2,000,000.

Business of Pride Management Services, Plc.

     Prior to November 1998, the Company  engaged in the business of leasing new
automobiles to businesses,  servicing such automobiles during the lease term and
remarketing the automobiles  upon the expiration of the lease. 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 $14,763,000. The portfolio sold had been
carried on the books of the Company at a value of approximately $17,851,000. PMS
currently maintains leases on approximately 100 vehicles,

                                        2

<PAGE>
     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.  The sale of the leasing  portfolios  and  operating
losses  reduced  the  Company net  tangible  assets to a level which  caused the
NASDAQ SmallCap market to delist the Company's securities.

Employees

     As of March 23, 1999, the Company  employed 5 full-time  persons,  3 are in
management  (2  of  which  are  officers),  eight  administrative,   four  sales
representative  and two drivers.  None of the  employees  are  represented  by a
union, and the Company considers employee relations to be good.

Properties

     The Company  maintains  6,000  square feet of  executive  office space in a
modern,  free standing  building at Pride House,  Watford Metro Centre,  Tolpits
Lane Watford  Hertfordshire,  WD1 8SB England. The building was purchased by PMS
in  December  1992 at a cost  of  approximately  $895,000.  The  annual  cost of
servicing  the  building's  mortgage  and  taxes is  approximately  $80,000  and
$18,000,  respectively.  Pride  Leasing  Limited  owned a building  in  Croydon,
England,  which it purchased in 1991 at a cost of  approximately  $825,000.  The
Company sold this property in November 1997 for $400,000.

Pending Litigation

     The Company has been sued in New York by a noteholder to recover the sum of
$95,000  which the  noteholder  loaned to the  Company  in  connection  with its
November 1996 private  offering.  In addition to the  foregoing,  the Company is
currently  in  default  on  another  $1,520,000  of notes due to  holders  which
acquired  such notes from the Company in or about  November  1996 in  connection
with the Company's private offering.  The proceeds of such private offering were
used to acquire the assets of AC Cars Limited and Autokraft  Limited.Inasmuch as
the Company has limited  liquidity as at the date hereof,  any judgement against
the Company would have a significant negative impact on the Company.

Acquisition of AC Car Group Limited

     In November 1996, the Company,  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.

     The Asset Purchase was financed by a private placement, whereby the Company
issued an aggregate of approximately  $1,615,000 of promissory notes and 170,000
shares of Common Stock to Holders.  Mason Hill acted as placement  agent in such
private placement. Additionally, Mason Hill loaned the Company $100,000 of which
$29,000 has been repaid. Interest and principal due under the Notes are

                                        3

<PAGE>
currently in default and the Company lacks the  liquidity and capital  resources
to repay same.  The  Company's  16% equity  interest in  Automotive is valued at
approximately $4,048,460 as at the date hereof.

Business of AC Car Group Limited

     AC Car Group  Limited  was  incorporated  in England  and Wales on June 28,
1996, as  Paradehaven  Limited.  The name was changed to AC Car Group Limited on
August 30, 1996.

     AC Cars was formed in 1901 as Autocar & Accessories Limited and has been in
continuous  operations  ever  since.  AC Cars is  Britain's  oldest  independent
manufacturer. Today, AC Car Group Limited manufactures and sell two automobiles,
the Superblower (a continuation of the AC Cobra) and the AC Ace.

     The AC Cobra is a  high-powered,  hand built  sports  car with an  aluminum
body.  The automobile is  manufactured  today using the same  traditional  coach
building  methods and  original  Cobra  tooling  which were used on the original
manufactured  Cobras in the 1960s.  Historically,  in 1963 the AC Cobra caused a
sensation  by racing  along the MI motorway  (England's  first  motorway) at 196
miles per hour, and by 1964, the 427 AC Cobra was listed in the Guinness Book of
Records as the fastest production car in the world. The AC Cobra sells for about
(pound)69,000 ($115,644).

     In 1994, the AC Ace prototype was first displayed at the London Motor show.
In 1995,  the AC Ace was  shown to the  North  American  public  at the  Detroit
Motorshow. When the AC Ace comes into production, it will sell for approximately
(pound)75,000  ($125,700).  As of January 1, 1998, AC has produced approximately
fifty pre-production AC Aces.

     In 1987,  Ford Motor Company  became a partner with  Autokraft and AC Cars.
The AC Cobra is equipped  with a Ford V8 engine.  Currently,  Ford Motor Company
owns the  trademark to the name Cobra.  However,  Autokraft and AC Cars used the
name Cobra under a license  arrangement with Ford Motor Company.  When they were
placed in administrative  receivership,  the license arrangement with Ford Motor
Company was voided.  After the Asset  Acquisition,  the Company negotiated a new
licensing  agreement with Ford Motor Company  whereby the Company has procured a
three year  license,  commencing  December 7, 1996,  to continue to use the name
"Cobra" on its AC Cobra model.  Notwithstanding  the foregoing,  the "Cobra" has
been recently updated and has been renamed the AC "Superblower."

Administrative Receivership

     AC Cars has  incurred  losses  in recent  years as a result  of design  and
development costs incurred in bringing the AC Ace into production. Although most
of the  development  work is now complete and  approximately  fifty AC Aces have
been  produced  to date as  pre-production  vehicles,  the  expenses AC Cars and
Autokraft  incurred  in  connection  with  the  development  of the  Ace  forced
Autokraft and AC Cars to seek  additional  capital  investments  so as to enable
them to both meet  current  production  needs  and  increase  future  production
levels.  Once  it  became  clear  to  Autokraft  and AC  Cars'  management  that
additional funds were unlikely to be forthcoming in time to allow the businesses
to meet their financial obligations,

                                        4

<PAGE>
     coupled with their bankers  indications  that they no longer had confidence
in the current  ownership,  the Directors of the businesses  resolved to request
their bankers to appoint Administrative Receivers. Administrative receivers were
appointed on March 7, 1996.  This is when AC Cars and Autokraft  were put up for
sale which resulted in the acquisition by AC Car Group Limited.

Development Projects and Enhancements

     The Company,  through AC,  intends to continue to evaluate  developing  the
Cobra and the Ace's chassis to be compatible with other engines.

Marketing and Sales; License Arrangement

     AC Cars has used very little, if any, print or other media advertising with
respect to the AC Ace. However, both the Cobra and the Ace have been the subject
of numerous  magazine  articles in automotive  publications,  and, as such, have
received extensive exposure.

     As discussed above, AC Cars and Autokraft were using the name Cobra under a
license  arrangement  with Ford Motor Company.  Although the arrangement  became
void when the two companies were placed in receivership, the Company has entered
into a new licensing arrangement with the Ford Motor Company whereby the Company
has  procured  a three  year  license to use the name  "Cobra,"  terminating  in
December 1999.

     The  Company  believes  that  the  principal   markets  for  sales  of  its
automobiles  are the United States,  Australia,  Germany and the United Kingdom.
The Company is in the process of negotiating  distribution agreements in some of
these  important  markets,  including  Australia and the United  Kingdom,  while
agreements and approvals in other key markets have already been received.

     The AC Cobra is Type approved for sale in certain countries of the European
Economic Community ("EEC").


                                        5

<PAGE>
Trademarks

     Acquired  as part of the Asset  Acquisitions  was the rights to utilize the
"Ace" mark on sales of the Ace. The right to use the Cobra name was subject to a
license arrangement which was in place with Ford Motor Company, the owner of the
trademark just prior to the appointment of Receivers.  As discussed  above,  the
Company has entered into a new license agreement with Ford Motor Company whereby
the Company has  procured a three year license to use the name  "Cobra".  Former
management of Autokraft and AC Cars has advised the Company that it is not aware
of any actions  attempting to invalidate or challenge its use of such trademarks
and that it has not received any notice or claims of infringement  regarding its
trademarks.

Products Liability Insurance

     At present,  AC maintains  product  liability  insurance  through Lloyds of
London.  The limit of the indemnity is  (pound)2,000,000  ($3,520,000)  for each
instance.  Although  AC has  procured  this  insurance  policy,  there can be no
assurance that it will be able to maintain such  insurance,  that such insurance
will be sufficient to cover claims, if any, or that such insurance will continue
to be available at  commercially  reasonable  terms. If AC is unable to maintain
products liability insurance for the automobiles that it manufactures,  it would
adversely  affect  the  business  of  AC  and  could  potentially  cause  it  to
discontinue  operations.  However, there can be no assurance that such insurance
will be obtained, or that if obtained, that such insurance will be sufficient to
cover claims,  if any, or that such  insurance  will continue to be available at
commercially  reasonable  terms.  If  the  Company  or AC  are  required  to pay
uninsured claims, it would adversely affect the businesses of the Company and AC
and could cause a discontinuation of operations. The Company and AC do not carry
business interruption or key man insurance. See "Risk Factors."

Legal Proceedings

     AC is not a party to any  material  litigation.  Autokraft  and AC Cars are
involved in legal proceedings, all of which are related to their being placed in
administrative receivership. Although the Company acquired the assets of AC Cars
and  Autokraft  and does not believe that it will have any exposure to liability
claims for automobiles built by AC Cars and Autokraft, there can be no assurance
that the  Company is  correct in such  belief.  Any such claim  relating  to new
automobiles  built by AC or to automobiles  built by AC Cars and Autokraft could
have an adverse effect on the Company.

                                        6

<PAGE>
Employees

     At the time of their acquisition, Autokraft and AC Cars together employed a
total of 83 persons.  The Company  retained  approximately  31 of such employees
upon completion of the Asset  Acquisition and has hired 12 additional  employees
to oversee the manufacturing and marketing of the automobiles.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company  maintains  6,000  square feet of  executive  office space in a
modern,  free standing  building at Pride House,  Watford Metro Centre,  Tolpits
Lane Watford  Hertfordshire,  WD1 8SB England. The building was purchased by PMS
in  December  1992 at a cost  of  approximately  $895,000.  The  annual  cost of
servicing  the  building's  mortgage  and  taxes is  approximately  $80,000  and
$18,000,  respectively.  Pride  Leasing  Limited  owned a building  in  Croydon,
England,  which it purchased in 1991 at a cost of  approximately  $825,000.  The
Company sold this property in November 1997 for $400,000.

     AC  currently  occupies  premises  on a four  acre  site at the  Brooklands
Industrial Park in Surrey, England. The property comprises a factory,  workshop,
showroom and office space. In all, the facility  provides  approximately  90,000
square feet of  manufacturing  area and 20,000  square feet of executive  office
area. The Company had agreed to lease the premises  currently occupied by AC for
a period of one year  commencing  December 1, 1996.  The  Company's  lease costs
approximately  (pound)32,000  ($53,632)  per month.  AC exercised  its option to
purchase the premises for the purchase price of (pound)5,200,000 ($8,715,200) in
July 1997. AC then sold the property for  $9,385,600  and entered into a 15 year
lease for 39,000 square feet of the property at the rate of $30,200 per month.

ITEM 3.  LEGAL PROCEEDINGS

     AC is not a party to any  material  litigation.  Autokraft  and AC Cars are
involved in legal proceedings, all of which are related to their being placed in
administrative receivership. Although the Company acquired the assets of AC Cars
and  Autokraft  and does not believe that it will have any exposure to liability
claims for automobiles built by AC Cars and Autokraft, there can be no assurance
that the  Company is  correct in such  belief.  Any such claim  relating  to new
automobiles  built by AC or to automobiles  built by AC Cars and Autokraft could
have an adverse effect on the Company.

     The Company has been sued in New York by a noteholder to recover the sum of
$95,000  which the  noteholder  loaned to the  Company  in  connection  with its
November 1996 private  offering.  In addition to the  foregoing,  the Company is
currently  in  default  on  another  $1,520,000  of notes due to  holders  which
acquired  such notes from the Company in or about  November  1996 in  connection
with the Company's private offering.  The proceeds of such private offering were
used to acquire the assets of AC Cars Limited and Autokraft  Limited.Inasmuch as
the Company has limited  liquidity as at the date hereof,  any judgement against
the Company would have a significant negative impact on the Company.

                                        7

<PAGE>
Proposed Acquisition of Digital Mafia Enterprises, LLC

     PMS is  winding  down its  operations  and has a negative  net  worth.  The
Company has  proposed  selling  PMS to its parent  company,  Pride,  for nominal
consideration  (ie,  $1.00)  together with its interest in Automotive.  Although
Automotive  has a book value in excess of  $4,000,000,  Pride refused to acquire
PMS,  with its  negative  book  value,  without  acquiring  the 16%  interest in
Automotive. The Company is of the opinion that PMS is of no commercial value and
is agreeing to dispose of same to Pride to allow Pride to sell off the remaining
assets and  attempt to minimize  any  additional  losses to lenders of PMS.  The
disposition of PMS and  Automotive is subject to  shareholder  approval and will
not be effected unless and until the Company completes its intended  acquisition
of Digital Mafia Enterprises, LLC. ("DME").

     In light of the  foregoing,  Management  has been  searching for a business
opportunity for the Company. The opportunity to acquire DME was presented to the
Company by Mason Hill. Mason Hill has agreed to act as the Company's  investment
bankers in connection with such acquisition  opportunity and will be compensated
therefor.  On February 19, 1999, the Company  entered into a letter of intent to
acquire 100% of the capital stock of Digital in exchange for 7,400,000 shares of
the Company's  common stock.  After receiving a notice of delisting from NASDAQ,
the Company and DME  renegotiated  the terms of the  acquisition,  and agreed to
double the number of shares  being issued to DME to  14,800,000  in exchange for
100% of the issued and  outstanding  capital stock of DME. If the Acquisition is
completed,  the Company will have  20,790,500  shares of its common stock issued
and  outstanding  (assuming the  conversion of all of the Notes by the Holders).
This  includes  approximately  728,000  shares  being issued in lieu of debt and
costs of $364,000 and 740,000  shares of common stock being issued to Mason Hill
for its investment  banking services in connection with the Digital  Transaction
and this Offering. The proposed acquisition of DME is subject to shareholder and
director  approval by both companies and requires that a significant  portion of
the $1,615,000 of noteholders convert their debt to equity.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Company did not submit any  matters to a vote of its  security  holders
during its fiscal year ended November 30, 1998.


                                        8

<PAGE>
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Prior to February 19, 1999,  the  Company's  securities  were traded on the
Nasdaq SmallCap Stock Market and the Boston Stock Exchange, Inc. On February 19,
1999,  both Nasdaq and the Boston Stock Exchange halted trading in the Company's
securities  upon  dissemination  by the  Company of news that it had  executed a
letter of intent to acquire a company known as Digital Mafia Entertainment, LLC.
("DME"). Shortly thereafter, the Company received notice from Nasdaq that it was
being delisted for, among other things,  failure to maintain tangible book value
of at least $2,000,000.

     The following table sets forth  representative  high and low closing prices
by calendar quarters as reported by a market maker,  during the periods provided
for herein.  Quotations  represent prices between dealers, do not include resale
mark-ups,  mark-downs  or  other  fees or  commissions,  and do not  necessarily
represent actual transactions.
<TABLE>
<CAPTION>


                            Common Stock                          Warrants
Calendar Period            Low      High                      Low      High

1996

<S>                        <C>      <C>                       <C>      <C>
4/24/96 to 5/31/96         7 1/2    8 1/4                     3         4 1/8
6/1/96  to 8/31/96         8        81/8                      2 7/8     4
9/1/95  to 11/30/96        5        67/8                      1 1/8     1 1/2
12/1/96  to 2/29/96        1 3/4    4 11/16                     5/16    1 1/2

1997

03/01/97 - 05/31/97        2        2 1/2                     5/16     5/8
06/01/97 - 08/31/97        1 1/4    2 5/16                    5/16     3/8
09/01/97 - 11/30/97        2 1/4    3 1/2                     13/32    13/32
12/01/97 - 02/28/98        27/8     3 1/2                     5/32

1998

03/01/98 - 5/31/98         3 7/16   4 1/2                     5/16     3/4
06/01/98 - 8/31/98         37/8     3 7/8                     5/16     3/4
09/01/98 - 11/30/98        2        3 7/16                    5/16     3/4
12/01/98 - 01/11/99        2        2 7/16                    3/8      7/16


</TABLE>


                                        9

<PAGE>
     (1) The Company effected an initial public offering of its Common Stock and
Warrants on April 24, 1996.

     As of February 19, 1999,  there were 31 holders of record of the  Company's
Common Stock,  although the Company believes that there are approximately  1,000
additional  beneficial  owners of shares of Common Stock held in street name. As
of February 19, 1999, the number of outstanding  shares of the Company's  Common
Stock was 2,822,500.

     As of February 19, 1999,  there were 10 holders of the Company's  Warrants,
although  the  Company  believes  that there are  approximately  400  additional
beneficial owners of the Company's  Warrants held in street name. As of February
19, 1999, the number of outstanding Warrants was 2,300,000.

     On February 12, 1998, the Board of Directors of AC Automotive  Group,  Inc.
authorized  the  issuance  of  6,633,000  shares of its  common  stock to Erwood
Holdings,  Inc., a company affiliated with Alan Lubinsky,  the President,  Chief
Executive Officer and a Director of the Company and AC Automotive  Group,  Inc.,
for aggregate  consideration of $6,633. In addition,  on such date AC Automotive
Group, Inc. authorized the issuance of 176,520, 176,520 and 88,260 shares of its
common stock to Beth-Anne  Kinsley,  Victor and Marion  Durchhalter  and Bridget
Staff,  respectively,  for  consideration  of $177, $177 and $89,  respectively.
Beth-Anne  Kinsley,  Victor and Marion  Durchhalter  and Bridget  Staff were all
prior  shareholders of AC Automotive Group, Inc. and are all associated  persons
of Mason Hill & Co., Inc., the  broker/dealer  which effected the initial public
offering of the Company's  securities and the subsequent private offering of the
Company's  securities,  the  proceeds  from which (the  private  offering)  were
utilized by the Company to complete the AC asset acquisition.

     The  foregoing  issuance of shares  reduced the  ownership of AC Automotive
Group, Inc. by the Company to under 50%.  Accordingly,  financial  statements of
the  Company  will be  issued on an  unconsolidated  basis.  Footnote  18 to the
Company's Financial Statements has been prepared to show the effect of the share
issuance described herein. See "Financial Statements."

     On February  25, 1998 Ivan  Averbuch  resigned as a Director of the Company
and on the same date the board of  directors  elected Ian  Satill,  to fill such
vacancy.

     On February  25,  1998,  the Board of  Directors  resolved to form an audit
committee  in order to comply  with then  current  Nasdaq  corporate  governance
requirements.  The Audit  Committee is  comprised of the three  directors of the
Company,  two of whom (Ian Satill and Alan  Edgar) are  believed by the Board of
Directors to be independent.

     The Company has paid no dividends and has no present plan to pay dividends.
Payment of future dividends will be determined from time to time by its board of
directors, based upon its future earnings, if any, financial condition,  capital
requirements  and other  factors.  The Company is not  presently  subject to any
contractual or similar  restriction on its present or future ability to pay such
dividends.



                                       10

<PAGE>
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The  following  is  management's  discussion  and  analysis of  significant
factors  which have  affected the Company's  financial  position and  operations
during the years ended November 30, 1998 and 1997.

     Pride Automotive  Group, Inc (the Company) was incorporated in the State of
Delaware in March 1995. Pursuant to the terms and conditions of a reorganization
agreement entered into in March 1995, the Company issued 1,500,000 shares of its
Common Stock to Pride, Inc (an entity incorporated in the State of Delaware), in
exchange for all the issued and  outstanding  shares of PMS,  thereby making the
Company a majority owned subsidiary of Pride and PMS an wholly-owned  subsidiary
of the Company.  PMS is the holding Company for six  wholly-owned  subsidiaries,
operating as one unit,  located in the United Kingdom.  PMS and its wholly-owned
subsidiaries  are located in the United  Kingdom and follow  generally  accepted
accounting  principles in the United Kingdom.  For purposes of the  consolidated
financial  statements of the Company,  the statements have been converted to the
generally accepted accounting principles in the United States.

     Pride, the Company's parent, is an entity reporting under the Exchange Act,
and its reports may be obtained and reviewed by either contacting the Company or
the Securities and Exchange Commission.  Pride, Inc on its own, has virtually no
operations.  As such,  its financial  viability is  represented by the financial
statements of the Company.  Pride 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  and  establish  sports
expositions  in sports  merchandise  such as clothing and  equipment.  ISI never
engaged  in any  business  operations.  In January  1994,  ISI  entered  into an
Agreement and Plan of Reorganization with PMS, whereby PMS became a wholly-owned
subsidiary of ISI and ISI changed its name to Pride,  Inc.  Pride also owns 100%
of the  capital  stock of Watford  Investments,  a South  African  Company  with
minimal operations. This Company was formed in March 1995.

     The six  wholly-owned  subsidiaries  of PMS  are  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,  which  comprise  the  majority  of the  operations  of the
Company.  Unless the context otherwise requires, all references to the "Company"
include its wholly-owned  subsidiary,  PMS and PMS's wholly-owned  subsidiaries.
These  companies  jointly  engage in the business of leasing new  automobiles to
businesses, servicing such automobiles during the lease term and remarketing the
automobiles  upon  the  expiration  of the  lease  term,  which  arrangement  is
described as a "contract hire".  The Company  purchases each vehicle pursuant to
its  clients'  specifications,  finances  its  purpose  and  pays  for  all  the
maintenance on the vehicle during the lease term.


                                       11

<PAGE>
     The Company has servicing  agreements with  automobile  dealers and service
centres,  which specify pricing  schedules for maintenance and repair work to be
performed, all of which require the prior consent of the Company. Typically, the
term of the  loan  corresponds  with the term of the  lease,  whereby,  upon the
completion of the lease term,  the  automobiles  are fully paid and owned by the
Company. Upon the expiration of the lease, the Company remarkets the automobiles
through various  distribution  channels including,  but not limited to, user car
wholesalers  or used car  retailers.  Each  client's  monthly  lease  payment is
determined  by a computer  program  which takes into account  estimated  service
costs, new vehicle pricing, manufacturer bonuses, rebates and options, potential
residual  value at lease end, as well as other  variable  information  including
interest rates and other current and anticipated future economic variables.  The
monthly lease payments are usually sufficient to pay the financing and servicing
on the vehicles  during the lease term,  with the bulk of the  profits,  if any,
coming on the resale of the automobile.

     The Company's principal  operations are conducted by PMS which reflects its
financial statements in British pounds. As a result, most assets and liabilities
of the foreign  operations are translated into US dollars using current exchange
rates in effect at the balance sheet date.  Fixed assets and  intangible  assets
are translated at historical  exchange rates.  Revenue and expense  accounts are
translated  using an average  exchange  rate during the period  except for those
expenses  related to assets an  liabilities  which are  translated at historical
exchange rates.  These expenses include  depreciation and amortisation which are
translated  at the  rates  existing  at the time the  asset  was  acquired.  Any
resulting  gains or losses due to the  translation  are  reflected as a separate
item of stockholders' equity.

     On December 11, 1998, the Company, through its subsidiary, Pride Management
Services Plc,  completed the sale of a large portion of its leasing  assets (see
Note   3-Subsequent   Event).   Pride  Management   Services  Plc,  through  its
subsidiaries, continues to service the remaining contract hire agreements.

     On November 29, 1996, the Company,  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), acquired certain of the assets
of AC Cars Limited and Autokraft  Limited.  The purchase price of  approximately
$6,000,000  was  financed  by  the  sale  of  common  stock  and by  loans.  The
acquisition  involved  the  purpose  of plant and  equipment,  the  brand  name,
inventories  and an  aircraft  and was  recorded  using the  purchase  method of
accounting.

     On February 12, 1998,  following  restructure of AC Automotive  Group, Inc,
the  ownership of AC  Automotive  Group,  Inc, by the Company was reduced to 16%
(see Note 1- Description of Company).  The Company's investment in AC Automotive
Group, Inc, is therefore being reported under the cost method of accounting.

     On February  19, 1999,  the Company  executed a letter of intent to acquire
all the issued and outstanding capital stock of Digital Mafia Entertainment, LLC
("DME"),  in exchange for the issuance of 7,400,000  shares in Pride  Automotive
common stock. In addition,  the Company also announced that it will, at the same
time,  sell its shares in Pride  Management  Services  Plc, to Pride,  Inc,  its
majority shareholder, for a nominal value.

                                       12

<PAGE>
     On March 12, 1999,  the Company was  notified by NASDAQ that the  Company's
securities  would be delisted from the Nasdaq Small Cap Market  effective  March
19, 1999, since the Company's financial condition does not meet the requirements
for  continual  inclusion of such  securities.  The Company is in the process of
appealing this decision.  After receiving a notice of delisting from NASDAQ, the
Company and DME renegotiated the terms of the acquisition,  and agreed to double
the number of shares being issued to DME to  14,800,000  in exchange for 100% of
the issued and outstanding  capital stock of DME. If the  Acquisition,  which is
subject to  shareholder  and board of director  approval by both the Company and
Digital,  is completed,  the Company will have  20,790,500  shares of its common
stock issued and outstanding (assuming the conversion of all of the Notes by the
Holders).  This includes  approximately  728,000  shares being issued in lieu of
debt and costs of $364,000  and 740,000  shares of common  stock being issued to
Mason Hill for its investment  banking  services in connection  with the Digital
Transaction and this Offering.

     In  addition,  the  Company  had agreed to sell PMS to its parent  company,
Pride,  for nominal  consideration  (ie, $1.00) as part of the  transaction,  in
order to remove such entity,  with its negative  book value,  from the financial
statements  of  the  Company.  However,  in  light  of  the  delisting  and  the
renegotiated  terms of the DME  acquisition,  Pride  advised the Company that it
would not  acquire  PMS  unless it could  also  acquire  the  Company's  16% its
interest  in  Automotive.   The  proposed  acquisition  of  DME  is  subject  to
shareholder  and  director  approval  by  both  companies  and  requires  that a
significant  portion of the  $1,615,000  of  noteholders  convert  their debt to
equity.


                                       13

<PAGE>
RESULT OF OPERATIONS -
YEARS ENDED NOVEMBER 30, 1998 AND NOVEMBER 30, 1997

     The following  discusses the results of operations of the contract hire and
fleet  management  operations  of the  Company.  The  Consolidated  Statement of
Operations  for  November  30,  1997  included  the  consolidated  results of AC
Automotive Group, Inc.

     Contract hire income for the year ended November 30, 1998 was approximately
$8,329,000 compared to approximately  $8,410,000 for the year ended November 30,
1997,  a decrease  of $81,000.  The main reason for this small  decrease is that
there was an overall decrease in the contract hire fleet of 88 vehicles over the
year which gave rise to the decrease in revenues.

     Fleet  management and other income for the year ended November 30, 1998 was
approximately  $470,000 compared to approximately  $1,076,000 for the year ended
November  30, 1997,  a decrease of  $606,000.  This  decrease is mainly due to a
decrease  of 385  vehicles  managed  and loss of  rental  income  from  property
disposed at the end of 1997.

     Vehicle  sales  for the year  ended  November  30,  1998 was  approximately
$4,302,000 compared to approximately  $6,762,000 for the year ended November 30,
1997.  This  decrease  was mainly due to  reduction  in sale of  vehicles at low
margins to take advantage of dealer bonuses.

     For the year ended  November 30, 1998,  194 new vehicles  were  acquired as
against 550 in the year ended November 30, 1997.  The average  monthly rental of
new contracts written was $675 as against an average of $541 per vehicle for the
previous  year.  The average  monthly rental is dependant on the type of vehicle
being rented and the terms of the contract.

     For the year ended  November 30, 1998,  284  vehicles  were  disposed of on
termination of contracts. 152 vehicles were disposed of at an average net profit
of $2,830 and 132 vehicles were disposed of at an average net loss of $3,191 per
vehicle.  For the year ended November 30, 1997, 153 vehicles were disposed of on
termination of contracts at an average profit of $1,529 per vehicle. The average
profit per  disposal is  dependent  on the type and the current  market value of
vehicles  sold,  as well as any  additional  termination  income that accrues on
termination of the contract.

     As of November 30, 1998,  1,265  vehicles  were under lease and  management
compared to 1,740 vehicles as at November 30, 1997.

     Cost of sales including depreciation, decreased by approximately $3,146,000
or 16% when comparing the years ended November 30, 1998 and 1997.  This decrease
is less than the 19% decrease in revenues.  As a  percentage  of sales,  cost of
sales for 1998 was 85.5% versus 82.6% for 1997.

     General and administration expenses increased from approximately $1,958,000
to  $1,973,000,  an increase of $115,000  or 6%.  Management  believe  that this
increase was acceptable in a difficult trading environment.

                                       14

<PAGE>
     Interest  expense  increased from $1,747,000 in 1997 to $2,307,000 in 1998,
an increase of $560,000.  Management  attributes  this increase to the effect of
funding for a full year, the 550 new vehicles acquired in 1997 and the increased
cost of the increasing bank line of credit.  After the completion of the sale of
a substantial  portion of the contracts and related assets on December 11, 1998,
the Company decided to write off the intangibles.

     Loss for the years ended November 30, 1998 and 1997,  prior to amortization
and write off of goodwill for the period ($9,075,000 and $632,000  respectively)
aggregated ($2,379,000) and ($198,000).

LIQUIDITY AND CAPITAL RESOURCES

     Due to the nature of the Company's  business,  namely  contract  leasing of
motor  vehicles  which are fixed long term  assets,  the balance  sheet has been
prepared on an unclassified  basis.  Accordingly,  there is no classification of
current  assets and current  liabilities.  As at November 30, 1998 and 1997, the
Company's  balance  sheet  reflected  cash of $52,000 and $77,000  respectively,
accounts receivable of $1,486,000 and $2,002,000 respectively,  and total assets
of  $27,122,000  and  $40,300,000  respectively.  The  principal  reason for the
decrease  in total  assets  is due to the  deconsolidation  of the  assets in AC
Automotive Group, Inc, after the change in ownership and control.

     In December  1995,  the Company  completed  a private  placement  offering,
selling  20 units,  each unit  consisting  of 25,000  shares of common  stock at
$6,000 per unit for aggregate proceeds of $120,000 ($0.24 per share).

     In April  1996,  the  Company  successfully  completed  an  initial  public
offering  of its common  stock,  which  yielded  net  proceeds to the Company of
approximately $2,166,000.

     During the years ended  November 30, 1998 and 1997,  the Company  generated
cash flows from operating activities  aggregating  approximately  $4,086,000 and
$1,571,000 respectively. Investing activities reflect uses of cash for the years
ended  November 30, 1998 and 1997 of $2,488,000  and  $11,911,000  respectively.
These uses of cash are the result of the  purchase  of fixed  assets  (primarily
revenue  producing  vehicles) net of the proceeds from sale of vehicles at lease
expiration dates and the acquisition described above.

     For the year ended  November  30,  1998,  the  Company  utilized  cash from
financing  activities of $1,913,000.  This was due to financing provided by bank
lines  of  credit   ($966,000)  and  increases  in  financing  of  new  vehicles
($6,888,000) net of the amounts to reduce hire purchase  financing  ($9,757,000)
and long term debt  ($10,000).  For fiscal 1997, the Company  provided cash from
financing  activities  ($10,208,000)  primarily  due to  financing  provided  by
banking lines of credit ($4,012,000) plus increases in financing of new vehicles
($19,492,000) net of amounts needed to reduce hire purchase  contract  financing
($12,185,000) and debts ($1,207,000) and the net proceeds from the sale of stock
($96,000).

     The  Company  has  incurred  losses  from  operations  of  $11,475,629  and
$4,455,400 for the years ended November 30, 1998 and 1997.

                                       15

<PAGE>
     The  losses  for the  year  ended  November  30,  1997  includes  a loss of
$4,111,664  incurred by its then  subsidiary,  AC Car Group Limited.  The equity
held in this  Company has since been  diluted  and the  Company's  accounts  are
therefore no longer consolidated.

     The losses for the year ended  November 30, 1998 includes  $8,444,147  from
the writing off of the  goodwill  related to the  subsidiary,  Pride  Management
Services Plc, as substantially  all of its assets were sold on December 11, 1998
(see Note 3).

     The  circumstances  described  above,  together  with the  material  events
discussed in Note 3 to the financial statements,  which took place subsequent to
November 30, 1998, and the restated  proforma balance sheets after these events,
raise  substantial  doubts  about the  Company's  ability to continue as a going
concern.

     Management plans in regard to this matter were described in a press release
issued on February 19, 1999. In this press  release,  it was announced  that the
Company  had  executed  a Letter of  Intent to  acquire  all of the  issued  and
outstanding capital stock of Digital Mafia  Entertainment,  LLC, in exchange for
the issuance of 7,400,000 shares in Pride Automotive  common stock. In addition,
the Company also announced that it will, at the same time, sell its ownership of
Pride Management Services to Pride, Inc, its majority  shareholder,  for nominal
value.  At this time,  the these  sales has not been  consummated.  As set forth
hereinabove,  the terms of said transaction  have been  renegotiated to increase
the number of shares being issued to DME to 14,800,000.

     Management  is also  attempting to raise capital for the purpose of meeting
the  Company's  financial  obligations  until such time as the  Contract of Sale
described above is consummated. If this raising of capital is unsuccessful, then
the  Company  will  not  have  sufficient  cash  on hand  to  meet  its  current
obligations.  The financial statements do not include any adjustments that might
result from this uncertainty.

     There are no material planned capital expenditure.

     This report  contains  forward looking  statements and information  that is
based on management's beliefs and assumptions,  as well as information currently
available to  management.  When used in this  document,  the word  "anticipate",
"expect",  "intend" and similar  expressions  are  intended to identify  forward
looking  statements.   Although  the  Company  believes  that  the  expectations
reflected in such  forward-looking  statements  are  reasonable,  it can give no
assurance that such expectations  will prove to be correct.  Such statements are
subject to certain risks,  uncertainties and assumptions.  Should one or more of
these risks or uncertainties  materialize,  or should the underlying assumptions
prove  incorrect,  actual results may vary  materially  from those  anticipated,
estimated or expected.


                                       16

<PAGE>
ITEM 7.  FINANCIAL STATEMENTS

         See attached Financial Statements.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

     There  have  been no  disagreements  between  registrant  and  the  firm of
Civvals,  Chartered  Accountants  and  Registered  Auditors  on  any  matter  of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedure.




                                       17

<PAGE>
                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT


Directors and Executive Officers.

         The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>

         <S>                                <C>                        <C>
         Name                               Age                        Position with the Company

         Alan Lubinsky                      40                         President, Secretary, and
                                                                       Chairman of the Board of
                                                                       Directors

         Ivan Averbuch                      43                         Chief Financial Officer and
                                                                       Treasurer

         Allan Edgar                        52                         Director

         Ian Satill                         40                         Director


</TABLE>

     Alan  Lubinsky Mr.  Lubinsky has been the  President  and a director of the
Company since its  inception in March 1995. Mr Lubinsky has been the  President,
Secretary and director of Pride,  Inc since January 14, 1994.  Mr.  Lubinsky has
been the  Chairman  and  Managing  Director of Pride  Management  Services,  Plc
("PMS")  since its  inception  in 1988.  Mr.  Lubinsky has been the Chairman and
Managing Director of AC Car Group Limited since July 1996. Mr. Lubinsky has been
the  President,  Chairman and director of AC Automotive  Group,  Inc.  since its
inception in 1996.  Mr.  Lubinsky has 19 years  experience  in the motor vehicle
industry in positions of executive management.

     Ivan  Averbuch  Mr.  Averbuch has been the Chief  Financial  Officer of the
Company since  December  1995.  Mr.  Averbuch was a director of the Company from
December 1995 until  February 1998.  Mr.  Averbuch has been the Chief  Financial
Officer of Pride,  Inc. since December 1995. Mr. Averbuch has been the Financial
Director of AC Car Group  Limited  since July 1996.  Mr.  Averbuch  has been the
Chief  Financial  Officer and Director of AC Automotive  Group,  Inc.  since its
inception  in 1996.  From  September  1987 to November  1995,  Mr.  Averbuch was
employed at Kessel Feinstein, a member firm of Grant Thorton  International,  an
accounting firm. In January 1989, Mr. Averbuch was promoted to audit manager and
appointed as a partner in October 1992.



                                       18

<PAGE>
     Allan Edgar Mr.  Edgar has been a director  of the Company  since May 1997.
Mr. Edgar has been a director of AC Automotive  Group,  Inc. since its inception
in 1996. Mr. Edgar has been the Marketing Director of Hyatt Hotels & Resorts for
Europe,  Africa  and the  Middle  East  since  1990.  Mr.  Edgar  has  extensive
experience in the automobile industry,  including positions at Hertz Rent-a-Car,
Volkswagen Interent, and Leyland Motor Corporation.

     Ian Satill Mr.  Satill has been a director  of the Company  since  February
1998.  From June 1996 until  present,  Mr.  Satill  has been the Group  Managing
Director of Rustlers Food Group Pty. Ltd.

     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  Corporation 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.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's officers, directors and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities to file reports
of securities  ownership and changes in such  ownership  with the Securities and
Exchange  Commission ("SEC").  Officers,  directors and greater than ten percent
beneficial  owners also are required by rules  promulgated by the SEC to furnish
the Company with copies of all Section  16(a) forms they file.  The Company does
not believe that all officers,  directors or greater than 10% shareholders  have
filed such  reports as is  required  pursuant to Section  16(a)  during the 1998
fiscal year, although the Company, its officers and directors have undertaken to
file Form 5's to identify  options which have been issued during fiscal 1998 and
to use their best efforts  cause such forms to be filed on a timely basis in the
future.



                                       19

<PAGE>
ITEM 10. EXECUTIVE COMPENSATION


Executive Compensation

Summary of Cash and Certain Other Compensation

     The following provides certain information concerning all Plan and Non-Plan
(as  defined in Item 402 (a)(ii) of  Regulation  S-B)  compensation  awarded to,
earned by,  paid by Pride  Vehicle  Contracts  Limited  during  the years  ended
November 30,  1998,  1997 and 1996.  The Company did not incur any  compensation
expenses during such period.

                           Summary Compensation Table

                               Annual Compensation
<TABLE>
<CAPTION>

(a)                           (b)        (c)         (d)            (e)

Name and Principal                                               Other Annual
   Position  (1)              Year      Salary($)   Bonus($)     Compensation($)(2)

<S>                           <C>       <C>           <C>        <C>    
Alan Lubinsky                 1998      $176,000       -         $30,000
  President, Secretary        1997      $176,000       -         $30,000 (3)(4)
  and Chairman of the Board   1996      $160,000       -         $30,000
</TABLE>


(1)   All of the Company's  administrative  functions,  including the payment of
      salaries,  are performed by Pride  Vehicle  Contracts  Limited,  since the
      Company's operations run basically as one operation.  The Company believes
      that it is easier  and cost  effective  to  operate  in this  manner.  The
      Company plans on continuing this practice in the future.

(2)   Includes contributions to the Company's pension plan of $18,000 in each of
      1998, 1997 and 1996, respectively, and the cost of an automobile and 
      expenses of $12,000 annually.

(3)   Alan  Lubinsky  entered into an  employment  agreement  with PAG in August
      1995. The agreement is for a term of three years, and pays Mr. Lubinsky an
      annual salary of $160,000 per annum with 10% yearly  escalations,  subject
      to  adjustment  by the  Company's  board  of  directors.  Pursuant  to the
      agreement,  Mr. Lubinsky received stock options under the Company's Senior
      Management  Incentive Plan to purchase  100,000 shares at $5.50 per share.
      These  options  vest at the rate of 33 1/3% per  annum  commencing  August
      1996. Although Mr. Lubinsky's  employment  agreement  terminated in August
      1998,  the  Company  has  continued  his  employment  on the terms as same
      existed upon termination of the employment agreement.

(4)   In May 1997, Mr. Lubinsky received stock options under PAG's Senior 
      Management Incentive Plan to purchase 43,234 shares at $2.54 per share.  
      These options vest at the rate of 33 1/3% per annum commencing May 1998.


                                       20

<PAGE>
Stock Options

     The following table sets forth certain information  concerning the grant of
stock options made during the year ended November 30, 1998,  under the Company's
1995 Senior Management Incentive Plan.


                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)
<TABLE>
<CAPTION>

====================================================================================================================================


                                                Individual Grants
------------------------------------------------------------------------------------------------------------------------------------
             (a)                           (b)                      (c)                     (d)                       (e)
                                                                 % of Total
                                     # of Securities           Options/SAR's
                                        underlying               Granted to
                                      Options/SAR's             Employees in          Exercise or Base
             Name                       Granted(1)              Fiscal Year            Price ($/SH)             Expiration Date
------------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>        <C>                            <C>                      <C>  
Alan Lubinsky (1)                                33,333     35.5%                          $5.50                    8/01/08
------------------------------------------------------------------------------------------------------------------------------------
Alan Lubinsky (2)                                43,234     46.1%                          $2.54                    5/29/02
------------------------------------------------------------------------------------------------------------------------------------
Ivan Averbuch (2)                                 8,647     9.2%                           $2.31                    5/29/10
------------------------------------------------------------------------------------------------------------------------------------
Allan Edgar (2)                                   8,647     9.2%                           $2.31                    5/29/10
====================================================================================================================================
</TABLE>


(1)   Alan  Lubinsky  entered into an  employment  agreement  with PAG in August
      1995. The agreement is for a term of three years, and pays Mr. Lubinsky an
      annual salary of $160,000 per annum with 10% yearly  escalations,  subject
      to adjustment by PAG's board of directors.  Pursuant to the agreement, Mr.
      Lubinsky  received stock options under PAG's Senior  Management  Incentive
      Plan to purchase 100,000 shares at $5.50 per share.  These options vest at
      the rate of 33 1/3% per annum  commencing  August  1996.  See  "Employment
      Agreements".

      Represents incentive stock options granted under the Company's 1995 Senior
      Management Incentive Plan (the "Plan"). Options granted under the Plan are
      intended to qualify as incentive stock options under the Internal  Revenue
      Code of 1986,  as  amended.  Under the terms of the Plan,  options  may be
      granted to officers,  key  employees,  directors  and  consultants  of the
      Company until  September 2005.  Options granted to directors,  who are not
      officers or  employees,  or to  consultants,  do not qualify as  incentive
      stock  options.  The option  price per share may not be less than the fair
      market  value of the  Company's  shares on the date the option is granted.
      However,  options granted to persons owning more than 10% of the Company's
      Common  Stock may not have a term in excess of five years and may not have
      an option  price of less than 110% of the fair  market  value per share of
      the Company's shares on the date the option is granted. See "--1995 Senior
      Management Incentive Plan".

(2)   On May 30, 1997,  the Company  issued these  options to Messrs.  Lubinsky,
      Averbuch  and Edgar  pursuant  to the terms of the  Company's  1995 Senior
      Management  Incentive Plan.  These options vest at the rate of 33 1/3% per
      annum commencing May 30, 1998.



                                       21

<PAGE>
     The following table contains  information  with respect to employees of the
Company concerning options held as of November 30, 1998

               AGGREGATED OPTION/SAR EXERCISED IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
================================================================================================================================
             (a)                         (b)                     (c)                     (d)                      (e)
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Value of
                                                                                      Number of             Unexercised In-
                                                                                     Unexercised               The-Money
                                                                                   Options/SAR's at          Options/SAR's
                                                                                      FY-End (#)             at FY-End($)
                                   Shares Acquired        Value Realized($)          Exercisable/            Exercisable/
            Name                   on Exercise (#)                                  Unexercisable          Unexercisable(1)
--------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                     <C>               <C>                           <C>
Alan Lubinsky                             0                       0                 66,667/33,333                  0
================================================================================================================================
</TABLE>


(1)   As of February 19, 1999, the average of the prior day's closing bid and 
      ask price was $____.  Since the exercise price of the Options ($5.50) is 
      greater than the current average price, the Company believes the Options 
      have no value.

Employment Agreements

     Alan  Lubinsky  entered into an  employment  agreement  with the Company in
August 1995. The agreement is for a term of three years,  and pays Mr.  Lubinsky
an annual salary of $160,000 per annum with 10% yearly  escalations,  subject to
adjustment  by  the  Company's  board  of  directors.  Although  Mr.  Lubinsky's
employment  agreement  terminated in August 1998,  the Company has continued his
employment  on the terms as same  existed  upon  termination  of the  employment
agreement.  Pursuant to the terms of his employment agreement, Mr. Lubinsky will
devote all his business  time to the affairs of the Company and Pride.  Pursuant
to the agreement, Mr. Lubinsky received stock options under the Company's Senior
Management  Incentive Plan to purchase 100,000 shares at $5.50 per share.  These
options  vest at the rate of 33 1/3%  per  annum  commencing  August  1996.  The
agreement restricts Mr. Lubinsky from competing with the Company for a period of
one year after the termination of his employment.

     Ivan  Averbuch  entered into an  employment  agreement  with the Company in
September  1995,  for a term of 24 months,  commencing  December  1,  1995.  The
agreement is  automatically  extendable for an additional 24 months,  subject to
cancellation  by either the Company or Mr.  Averbuch on 90 days written  notice.
Pursuant  to the terms of the  agreement,  Mr.  Averbuch is to receive an annual
salary of $55,000 per annum,  with an annual increase of 10% per annum,  subject
to review by the Company's board of directors.

Senior Management Incentive Plan

     In September  1995,  the board of directors  adopted the Senior  Management
Incentive Plan (the "Management Plan"), which was adopted by written stockholder
consent.  The Management  Plan provides for the issuance of up to 300,000 shares
of the Company's  Common Stock in connection  with the issuance of stock options
and other  stock  purchase  rights to  executive  officers,  key  employees  and
consultants.


                                       22

<PAGE>
     The adoption of the  Management  Plan was prompted by its desire to provide
the  board  with  sufficient   flexibility  regarding  the  forms  of  incentive
compensation which the Company will have at its disposal in rewarding  executive
officers,  key employees and consultants who render significant  services to the
Company  and its  subsidiaries.  The  board of  directors  intends  to offer key
personnel equity ownership in the Company through the grant of stock options and
other rights  pursuant to the  Management  Plan to enable the Company to attract
and retain qualified  personnel  without  unnecessarily  depleting the Company's
cash reserves. The Management Plan is designed to augment the Company's existing
compensation  programs  and is intended to enable the Company to offer to its as
well as its  subsidiaries  executives,  key employees and consultants a personal
interest in the Company's  growth and success through awards of either shares of
Common Stock or rights to acquire shares of Common Stock.

     The Management Plan is intended to attract and retain  executive  officers,
key  employees  and  consultants   whose  performance  is  expected  to  have  a
substantial  impact on the Company's and its  subsidiaries  long-term profit and
growth potential by encouraging and assisting those persons to acquire equity in
the Company.  It is contemplated that only those who perform services of special
importance to the Company will be eligible to  participate  under the Management
Plan.  A total of 300,000  shares of Common  Stock will be reserved for issuance
under  the  Management  Plan.  It is  anticipated  that  awards  made  under the
Management  Plan will be subject to  three-year  vesting  periods,  although the
vesting periods are subject to the discretion of the Administrator.

     Unless  otherwise  indicated,  the Management Plan is to be administered by
the board of directors or a committee of the board, if one is appointed for this
purpose (the board or such  committee,  as the case may be, shall be referred to
in the following  description as the  "Administrator").  Subject to the specific
provisions of the Management Plan, the Administrator will have the discretion to
determine the recipients of the awards,  the nature of the awards to be granted,
the dates such awards will be granted,  the terms and  conditions  of awards and
the  interpretation of the Management Plan, except that any award granted to any
employee of the  Company  who is also a director  of the  Company  shall also be
subject,  in the event the persons  serving as members of the  Administrator  of
such plan at the time such award is  proposed  to be granted do not  satisfy the
requirements regarding the participation of "disinterested persons" set forth in
Rule 16b-3 ("Rule 16b-3") promulgated under the Exchange Act, to the approval of
an  auxiliary  committee  consisting  of not less than two  individuals  who are
considered  "disinterested  persons" as defined under Rule 16b-3. As of the date
hereof,  the Company  has not yet  determined  who will serve on such  auxiliary
committee,  if one is required.  The Management  Plan  generally  provides that,
unless the  Administrator  determines  otherwise,  each option or right  granted
under a plan shall become  exercisable in full upon certain  "change of control"
events as described in the  Management  Plan. If any change is made in the stock
subject to the Management  Plan, or subject to any right or option granted under
the   Management   Plan   (through   merger,   consolidation,    reorganization,
recapitalization,  stock dividend,  dividend in property other than cash,  stock
split,  liquidating dividend,  combination of shares, exchange of shares, change
in corporate  structure or otherwise),  the Administrator  will make appropriate
adjustments to such plans and the classes,  number of shares and price per share
of stock subject to  outstanding  rights or options.  Generally,  the Management
Plan may be  amended  by  action  of the  board of  directors,  except  that any
amendment  which would increase the total number of shares subject to such plan,
extend the duration of such plan,  materially  increase the benefits accruing to
participants under such plan, or would change the category of persons who

                                       23

<PAGE>
can be eligible for awards under such plan must be approved by affirmative  vote
of a majority of  stockholders  entitled to vote.  The  Management  Plan permits
awards to be made thereunder until September 2005.

     Directors  who  are not  otherwise  employed  by the  Company  will  not be
eligible for  participation in the Management Plan. The Management Plan provides
for  four  types  of  awards:  stock  options,  incentive  stock  rights,  stock
appreciation rights (including limited stock appreciation rights) and restricted
stock purchase agreements, as described below.

     Stock  Options.  Options  granted under the  Management  Plan may be either
incentive  stock  options  ("ISOs")  or  options  which do not  qualify  as ISOs
("non-ISOs").  ISOs may be granted  at an option  price of not less than 100% of
the fair market value of the Common  Stock on the date of grant,  except that an
ISO granted to any person who owns capital stock  representing  more than 10% of
the total  combined  voting  power of all classes of Common Stock of the Company
("10% stockholder") must be granted at an exercise price of at least 110% of the
fair market  value of the Common  Stock on the date of the grant.  The  exercise
price of the  non-ISOs  may not be less than 85% of the fair market value of the
Common  Stock  on  the  date  of  grant.  Unless  the  Administrator  determines
otherwise,  no ISO or non-ISO may be exercisable  earlier than one year from the
date of grant.  ISOs may not be granted to persons who are not  employees of the
Company.  ISOs granted to persons other than 10% stockholders may be exercisable
for a period of up to ten  years  from the date of grant;  ISOs  granted  to 10%
stockholders  may be exercisable  for a period of up to five years from the date
of grant.  No  individual  may be granted  ISOs that become  exercisable  in any
calendar  year for Common  Stock having a fair market value at the time of grant
in excess of  $100,000.  Non-ISOs  may be  exercisable  for a period of up to 13
years from the date of grant. In connection with the Company's  entering into an
employment  agreement with its president,  Alan Lubinsky,  Mr. Lubinsky received
100,000 stock  options to purchase  shares of Common  Stock.  See  "Management -
Employment Agreement."

     In May 1997, Mr.  Lubinsky,  Mr. Averbuch and Mr. Edgar were issued 43,234,
8,647 and 8,647  options,  respectively,  to  purchase  shares of the  Company's
Common Stock pursuant to the Company's Senior Management Incentive Plan.

     In January  1998,  Mr.  Lubinsky,  Mr.  Averbuch  and Mr. Edgar were issued
29,137,  5,000  and  5,000  options,  respectively,  to  purchase  shares of the
Company's  Common Stock pursuant to the Company's  Senior  Management  Incentive
Plan.

     Payment for shares of Common  Stock  purchased  pursuant to the exercise of
stock  options  shall be paid in full in cash,  by  certified  check  or, at the
discretion of the Administrator, (i) by promissory note combined with cash, (ii)
by shares of Common Stock having a fair market value equal to the total exercise
price or (iii)  by a  combination  of (i) and (ii)  above.  The  provision  that
permits  the  delivery  of  already  owned  shares of stock as  payment  for the
exercise of an option may permit "pyramiding".  In general, pyramiding enables a
holder to start with as little as one share of common  stock  and,  by using the
shares of common stock  acquired in  successive,  simultaneous  exercises of the
option, to exercise the entire option,

                                       24

<PAGE>
regardless of the number of shares covered  thereby,  with no additional cash or
investment  other than the  original  share of Common Stock used to exercise the
option.

     Upon termination of employment or consulting services,  an optionee will be
entitled to exercise the vested portion of an option for a period of up to three
months after the date of termination,  except that if the reason for termination
was a discharge  for cause,  the option  shall  expire  immediately,  and if the
reason for  termination  was for death or permanent  disability of the optionee,
the vested portion of the option shall remain exercisable for a period of twelve
months thereafter.

     Incentive  Stock Rights.  Incentive stock rights consist of incentive stock
units  equivalent  to one share of Common  Stock in  consideration  for services
performed for the Company.  Each  incentive  stock unit shall entitle the holder
thereof to receive,  without  payment of cash or property  to the  Company,  one
share of Common Stock in consideration for services performed for the Company or
any subsidiary by the employee,  subject to the lapse of the incentive  periods,
whereby the Company  shall  issue such number of shares upon the  completion  of
each specified  period.  If the employment or consulting  services of the holder
with the Company  terminate prior to the end of the incentive period relating to
the units awarded,  the rights shall thereupon be null and void,  except that if
termination  is caused by death or permanent  disability,  the holder or his/her
heirs,  as the case may be,  shall be entitled to receive a pro rata  portion of
the shares  represented  by the units,  based upon that portion of the incentive
period which shall have elapsed prior to the death or disability.

     Stock  Appreciation  Rights  (SARs).  SARs may be granted to  recipients of
options under the Management Plan. SARs may be granted  simultaneously  with, or
subsequent  to, the grant of a related option and may be exercised to the extent
that  the  related  option  is  exercisable,  except  that  no  general  SAR (as
hereinafter  defined) may be exercised within a period of six months of the date
of grant of such SAR and no SAR granted  with respect to an ISO may be exercised
unless the fair market value of the Common Stock on the date of exercise exceeds
the exercise  price of the ISO. A holder may be granted  general SARs  ("general
SARs") or limited SARs ("limited SARs"), or both. General SARs permit the holder
thereof to receive an amount (in cash,  shares of Common Stock or a  combination
of both) equal to the number of SARs  exercised  multiplied by the excess of the
fair market  value of the Common  Stock on the  exercise  date over the exercise
price of the related  option.  Limited SARs are similar to general SARs,  except
that, unless the Administrator determines otherwise,  they may be exercised only
during  a  prescribed  period  following  the  occurrence  of one or more of the
following  "Change of Control"  transactions:  (i) the  approval of the Board of
Directors of a consolidation or merger in which the Company is not the surviving
corporation,  the sale of all or substantially all the assets of the Company, or
the liquidation or dissolution of the Company; (ii) the commencement of a tender
or exchange offer for the Company's Common Stock (or securities convertible into
Common Stock) without the prior consent of the Board;  (iii) the  acquisition of
beneficial  ownership by any person or other  entity  (other than the Company or
any employee benefit plan sponsored by the Company) of securities of the Company
representing  25% or more  of the  voting  power  of the  Company's  outstanding
securities;  or (iv) if during any period of two years or less,  individuals who
at the beginning of such period  constitute the entire Board cease to constitute
a majority of the Board, unless the election, or the nomination for election, of
each new director is approved by at least a majority of the directors then still
in office.

                                       25

<PAGE>
     The exercise of any portion of either the related option or the tandem SARs
will cause a corresponding  reduction in the number of shares remaining  subject
to the option or the tandem SARs, thus maintaining a balance between outstanding
options and SARs.

     Restricted Stock Purchase Agreements.  Restricted stock purchase agreements
provide  for the sale by the  Company of shares of Common  Stock at prices to be
determined  by the Board,  which  shares  shall be subject  to  restrictions  on
disposition  for a stated  period  during  which  the  purchaser  must  continue
employment  with the Company in order to retain the shares.  Payment can be made
in  cash,  a  promissory  note or a  combination  of  both.  If  termination  of
employment  occurs for any reason  within six months after the date of purchase,
or for any  reason  other than death or by  retirement  with the  consent of the
Company after the six-month  period but prior to the time that the  restrictions
on disposition  lapse, the Company shall have the option to reacquire the shares
at the original purchase price.

     Restricted  shares awarded under the  Management  Plan will be subject to a
period of time designated by the Administrator (the "restricted  period") during
which the recipient  must continue to render  services to the Company before the
restricted  shares will become vested.  The  Administrator may also impose other
restrictions,  terms and conditions that must be fulfilled before the restricted
shares may vest.

     Upon the grant of restricted shares,  stock certificates  registered in the
name of the recipient will be issued and such shares will constitute  issued and
outstanding shares of Common Stock for all corporate  purposes.  The holder will
have the right to vote the  restricted  shares and to receive all  regular  cash
dividends (and such other distributions as the Administrator may designate),  if
any, which are paid or distributed  on the restricted  shares,  and generally to
exercise all other rights as a holder of Common  Stock,  except that,  until the
end of the  restricted  period:  (i) the  holder  will not be  entitled  to take
possession of the stock certificates representing the restricted shares and (ii)
the holder will not be entitled to sell,  transfer or  otherwise  dispose of the
restricted shares. A breach of any restrictions, terms or conditions established
by the  Administrator  with  respect  to any  restricted  shares  will  cause  a
forfeiture of such restricted shares.

     Upon expiration of the applicable restricted period and the satisfaction of
any other applicable  conditions,  all or part of the restricted  shares and any
dividends or other  distributions  not  distributed to the holder (the "retained
distributions")  thereon  will  become  vested.  Any  restricted  shares and any
retained  distributions  thereon  which do not so vest will be  forfeited to the
Company.  If prior  to the  expiration  of the  restricted  period  a holder  is
terminated  without  cause or  because  of a total  disability  (in each case as
defined in the Management Plan), or dies, then,  unless otherwise  determined by
the  Administrator at the time of the grant, the restricted period applicable to
each award of restricted shares will thereupon be deemed to have expired. Unless
the Administrator  determines  otherwise,  if a holder's  employment  terminates
prior to the expiration of the applicable restricted period for any reason other
than as set forth above,  all restricted  shares and any retained  distributions
thereon will be forfeited.

     Accelerating of the vesting of the restricted shares shall occur, under the
provisions of the Management  Plan, on the first day following the occurrence of
any of the following:  (a) the approval by the stockholders of the Company of an
"Approved Transaction"; (b) a "Control Purchase"; or (c) a "Board Change".


                                       26

<PAGE>
     An "Approved  Transaction" is defined as (A) any consolidation or merger of
the Company in which the Company is not the continuing or surviving  corporation
or  pursuant  to which  shares of Common  Stock  would be  converted  into cash,
securities  or other  property  other than a merger of the  Company in which the
holders  of  Common  Stock  immediately  prior  to  the  merger  have  the  same
proportionate ownership of common stock of the surviving corporation immediately
after the merger,  or (B) any sale, lease,  exchange,  or other transfer (in one
transaction or a series of related  transactions) of all, or substantially  all,
of the assets of the  Company,  or (C) the  adoption of any plan or proposal for
the liquidation or dissolution of the Company.

     A "Control  Purchase" is defined as  circumstances  in which any person (as
such term is defined in Sections  13(d)(3) and  14(d)(2) of the  Exchange  Act),
corporation or other entity (other than the Company or any employee benefit plan
sponsored by the Company) (A) shall purchase any Common Stock of the Company (or
securities  convertible into the Company's Common Stock) for cash, securities or
any other  consideration  pursuant to a tender offer or exchange offer,  without
the prior consent of the Board of Directors, or (B) shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Exchange Act),  directly
or indirectly,  of securities of the Company  representing  twenty-five  percent
(25%) or more of the combined voting power of the then outstanding securities of
the  Company   ordinarily   (and  apart  from  rights   accruing  under  special
circumstances) having the right to vote in the election of directors (calculated
as provided in paragraph (d) of such Rule 13d-3 in the case of rights to acquire
the Company's securities).

     A "Board Change" is defined as circumstances in which, during any period of
two consecutive  years or less,  individuals who at the beginning of such period
constitute  the entire Board shall cease for any reason to constitute a majority
thereof  unless the election,  or the  nomination  for election by the Company's
stockholders, of each new director was approved by a vote of at least a majority
of the directors then still in office.



                                       27

<PAGE>
ITEM 1PRINCIPAL STOCKHOLDERS

     The following  table sets forth certain  information  at February 19, 1999,
with  respect to the  beneficial  ownership  of Common  Stock by (i) each person
known by the  Company  to be the owner of 5% or more of the  outstanding  Common
Stock;  (ii) by each  director;  (iii) and by all  officers  and  directors as a
group. Except as otherwise indicated below, each named beneficial owner has sole
voting and investment power with respect to the shares of Common Stock listed.
<TABLE>
<CAPTION>

                                                        Number of               Percentage of
Name                                                    Shares                  Share Ownership

<S>                                                  <C>                              <C>  
Pride, Inc.                                          1,425,000                        50.4%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England

Alan Lubinsky (1)                                   1,425,000                         50.4%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England

Ivan Averbuch                                                -                          *
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England

Allan Edgar                                                  -                          *
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England



                                       28

<PAGE>
Ian Satill                                                   -                          *
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England

All officers and
Directors as a group
 (4 persons) (1)(2)(3)                                     1,425,000                     50.4%
</TABLE>

(1)      New World Finance,  Limited,  which is wholly owned by a trust of which
         family   members  of  Mr.   Lubinsky   are  the   beneficiaries,   owns
         approximately 50.4% of the outstanding shares of Pride, Inc. and may be
         considered the  beneficial  owner of the shares of the Company owned by
         Pride, Inc. The trustee is Elfin Trust Company Limited,  located on the
         Island of Guernsey,  Channel Islands.  Although Mr. Lubinsky  disclaims
         beneficial ownership of the shares owned by New World Finance, Limited,
         it may be expected that such entity will vote its respective  shares in
         favor of proposals espoused by Mr. Lubinsky.  See "Executive 
         Compensation - Employment Agreement."

(2)      Excludes shares issuable upon the exercise of options granted to Mr. 
         Lubinsky (i) pursuant to the terms of his employment agreement.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pursuant  to the terms of the  acquisition  of County in 1992,  the Company
paid  $1  and  assumed  approximately  $11,500,000  of  net  liabilities.  These
liabilities  were  purchased by New World Finance  Limited within thirty days of
the  acquisition.  New World Finance Limited ("New World") is a company which is
wholly owned by New World Trust,  the  beneficiaries of which are members of Mr.
Lubinsky's family. This debt accrued interest at 6% and was repayable five years
from  the date of  issuance.  This  debt was  converted  in  March  1992  into a
convertible  note,  which was convertible  into shares of common stock of PMS at
$1.50 per share. In March 1992, New World converted approximately $5,250,0000 of
the note  into  3,500,000  shares of PMS.  In March  1993,  New World  converted
approximately  $3,750,000 of the note into  2,500,000  shares of PMS. In January
1994,  pursuant to the  reorganization  of Pride and PMS, Pride acquired all the
shares of PMS from New World,  and issued  shares of common  stock of Pride,  in
return. In September 1994, the right to convert the note into shares of PMS, was
converted into the right to purchase shares of common stock of Pride, at a price
to be determined by the board of directors of Pride, as of each conversion date.
In  addition,  New World  guaranteed  to PMS that the sale  proceeds of vehicles
acquired from County would be at least equal to the residual  value shown on the
books of County as of the date of the acquisition.  Mr. Lubinsky did not vote on
the conversion price of any of the following conversions. In September 1994, New
World converted $1,125,000 into 281,250 shares of common stock of Pride, Inc. In
October 1994, New World  converted  $400,000 into 114,285 shares of common stock
of Pride, Inc. In January 1995, New World converted $155,000 into 155,000 shares
of common stock of Pride, Inc.

                                       29

<PAGE>
     In August 1995,  the Company  determined,  with the agreement of New World,
that the estimated ultimate sales values of the vehicles were less than expected
and it was agreed that the note  ($562,292) be written off and canceled  against
the New World guarantee.

     In March  1995,  Pride  formed  the  Company in the State of  Delaware  and
reorganized  its corporate  structure by exchanging all of its shares of PMS for
1,500,000  shares of the  Company's  Common  Stock,  making  PMS a wholly  owned
subsidiary of the Company.

     In March 1995,  the Company  issued  60,000  shares of its Common  Stock to
Lampert & Lampert, counsel to the Company for fees and expenses of $500.

     In  July  1995,  PMS  entered  into a loan  agreement  with  the  Company's
president,  whereby PMS borrowed approximately  $232,500. The loan is payable on
demand and accrues interest at the rate of 2.5% over the Midland Bank base rate.
The principal balance of such loan was $117,034, which was paid in April 1996.

     In December 1995,  the Company  consummated a private  placement  offering,
whereby the Company sold 20 units,  each unit comprised  25,000 shares of Common
Stock at a purchase price of $6,000 per unit.

     In April 1996, the Company consummated an initial public offering,  whereby
the Company sold 950,000 shares of its common stock at a purchase price of $5.00
per share and 2,000,000  redeemable common stock purchase warrants at a price of
$0.10 per warrant.  The warrants are  exercisable at a price of $5.75 per share,
subject to adjustment,  beginning April 24, 1997 and expiring April 23, 2001. In
connection  therewith,  the  Company  also  granted  to the  underwriter  of the
offering a warrant to purchase 95,000 shares of the Company's  common stock at a
purchase price of $7.50 and 200,000 redeemable common stock purchase warrants at
a purchase price of $0.15 per warrant,  each warrant exercisable to purchase one
share of common  stock at a purchase  price of $7.50 per share.  Other than with
respect  to the  exercise  price,  the  terms  of the  warrants  granted  to the
underwriter are identical to those described above. The Company's securities are
currently traded on the Nasdaq SmallCap Stock Exchange and the Boston Exchange.

     In November 1996, the Company,  through its subsidiary AC Automotive Group,
Inc., purchased all the assets of AC Cars Limited and Autokraft Limited.

     Between  December  1996 and March 1997,  the Company  consummated a private
placement offering,  whereby the Company sold 17 units, each unit comprised of a
10% promissory note in the amount of 10,000 shares of Common Stock at a purchase
price of  $100,000  per  unit.  In  connection  with such  offering,  AC sold an
aggregate  of  1,028,700  shares  to three  affiliates  of the  Underwriter  for
aggregate  consideration of $1,030.  Such persons  currently own an aggregate of
approximately 5% of the capital stock of AC. In addition, the Underwriter loaned
the Company the sum of $100,000, $71,000 of which remains outstanding.


                                       30

<PAGE>
     On February  17, 1998 the Company  received a letter from NASDAQ  informing
the  Company  that it did not comply  with  recently  amended  NASDAQ  continued
listing  criteria which required the Company to have minimum net tangible assets
of at least  $2,000,000,  two independent  directors and an audit  committee,  a
majority of which are  independent  directors.  The  Company  was granted  until
February 23, 1998 to comply with such requirements, and is now in compliance.

     On February 12, 1998,  the Board of Directors of Automotive  authorized the
issuance of  6,130,000  shares of its common stock to Erwood  Holdings,  Inc., a
company  affiliated with Alan Lubinsky,  the President,  Chief Executive Officer
and a Director of the Company and  Automotive,  for aggregate  consideration  of
$6,130.  Such shares have been  subsequently  transferred  from Erwood Holdings,
Inc. to Durnover,  Ltd.,  another company with which Mr. Lubinsky is affiliated.
In addition, on such date Automotive authorized the issuance of 176,520, 176,520
and 88,260  shares of its common stock to Beth-Anne  Kinsley,  Victor and Marion
Durchhalter and Bridget Staff, respectively, for consideration of $177, $177 and
$89,  respectively.  After  the  foregoing  issuances,  there  was  a  total  of
10,000,000 shares of Automotive  authorized,  issued and outstanding.  See "Risk
Factors" and "Certain Relationships and Related Transactions."

     On March 1998,  the Board of Directors of  Automotive  authorized a one for
four  reverse  split of its common  stock and issued (1)  525,000  shares of its
common stock to Durnover  Ltd., an entity  affiliated  with Alan  Lubinsky,  for
aggregate  consideration of $526; (ii) 651,000 shares of its common stock to the
Company for aggregate  consideration of $2,248,460 which  consideration was paid
by the  capitalization  of debt of $2,248,460 owed by Automotive to the Company.
On March 31, 1998, the Board of Directors of Automotive authorized the following
issuance of its common stock (i) 2,352,000 shares of its common stock to Michael
Hall for $2,352,  (ii) 514,500 shares of its common stock to Kingsbury  Company,
Ltd. for $514.50,  (iii)  367,500  shares of its common stock to ACL (1996) Ltd.
and a  further  367,500  shares of its  common  stock to  Autokraft  for a total
consideration of $1,675,000,  which consideration was paid by the capitalization
of debt of $1,675,000  owed by Automotive  to ACL and  Autokraft.  In connection
with such share issuances,  Michael Hall and Kingsbury Company,  Ltd. loaned the
sum  of  (pound)1,000,000  ($1,630,000)  and  (pound)500,000  ($825,000)  to  AC
respectively.

     In  October  1997,  Alan  Lubinsky  loaned  AC the  sum  of  (pound)100,000
($163,000),  which note is payable on demand and accrues interest at the rate of
2% over the base lending rate in England. Mr. Lubinsky has made additional loans
to AC and Automotive since such date interest free. The balance on such loans as
at the date hereof is approximately  (pound)20,000  ($32,600)  (exclusive of the
October 1997  (pound)100,000  ($163,000)  loan which remains  outstanding).  The
(pound)20,000 ($32,600) loan is due on demand and is interest free.

     The  foregoing  issuance of shares  reduced the  ownership of AC Automotive
Group,  Inc.  by  the  Company  to  under  50%.  Accordingly,  future  financial
statements of the Company will be issued on an unconsolidated  basis. Footnote 1
to the Company's  Financial  Statements  has been prepared to show the effect of
the share issuance described herein. See "Financial Statements."

     On February  25, 1998 Ivan  Averbuch  resigned as a Director of the Company
and on the same date the board of  directors  elected Ian  Satill,  to fill such
vacancy.

                                       31

<PAGE>
     On February  25,  1998,  the Board of  Directors  resolved to form an audit
committee  in  order  to  comply  with  current  Nasdaq   corporate   governance
requirements.  The Audit  Committee is  comprised of the three  directors of the
Company,  two of whom (Ian Satill and Allan  Edgar) are believed by the Board of
Directors to be independent.

     In August and September  1998,  Pride sold an aggregate of 75,000 shares of
the Company's  common stock under Rule 144. The Company  realized gross proceeds
of $239,375 from such sales. Approximately $220,000 of such proceeds were loaned
to by Pride to Automotive. Such loan is interest free and payable on demand.

     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 $14,763,000. The portfolio
sold had been  carried on the books of the  Company at a value of  approximately
$17,851,000.  The  Company  currently  maintains  leases  on  approximately  100
vehicles,  although it intends to discontinue its leasing  operations by the end
of calendar year 1999.

     The Company has entered into a  Distribution  Agreement with AC pursuant to
which it will act as AC's  sole  distributor  in all of the  European  Community
Countries, the United States, Canada, Australia, South Africa and Asia (with the
exception of Japan). The Distribution  Agreement permits AC to engage dealers in
the  foregoing  territories  to sell  AC  vehicles.  See  "Business"  and  "Risk
Factors."

     On January 7, 1999,  the Company  issued to Pride a Special  Warrant  which
will entitle Pride to purchase up to 2,500,000  shares of the  Company's  common
stock at an exercise  price of $2.20 each during the  twenty-four  month  period
commencing  with the date of this  Prospectus.  If the Special Warrant was to be
exercised in full by Pride,  it would result in Pride owning in excess of 50% of
the issued and outstanding common stock of the Company and would enable Pride to
control the Company. See "Risk Factors" and "Description of Securities".

     For a description of the Company's  employment  agreements,  see "Executive
Compensation - Employment Agreements."

     Transactions  referenced herein between Management,  the Company and/or its
subsidiaries  present  conflicts  of interest  for  Management.  There can be no
assurance  that  Management  resolved such  conflicts of interest in the past or
that it will be able to avoid or resolve  conflicts  of  interest in the future.
There can further be no assurance that prior  transactions  between the Company,
its  subsidiaries  and Management  were on terms no less favorable than could be
obtained from independent third parties,  although Management  represents herein
that it will attempt to resolve future conflicts of interest, if any in a manner
such that future transactions  between the Company and any officer,  director or
5%  stockholder  will be on terms no less  favorable than could be obtained from
independent  third parties and will be approved by a majority of the independent
disinterested directors of the Company. See "Risk Factors."



                                       32

<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) The following financial  statements of the Company are included as Part
II, Item 8:

                  1)       Independent Auditors Reports                F-1
                  2)       Balance Sheets                              F-2
                  3)       Statements of Operations                    F-3
                  4)       Statement of Stockholders' Equity           F-4
                  5)       Statements of Cash Flows                    F-5
                  6)       Notes to Financial Statements               F-6

                  FINANCIAL STATEMENT SCHEDULES

     (b) During the 1998 fiscal year,  the Company  filed Reports on Form 8-K on
each of the following date:

         (i)      Form 8-K dated March 13, 1998.

     (c) The exhibits  designated  with an asterisk have  previously  been filed
with the Commission in connection  with Pride,  Inc.'s Report on Form 8-K, dated
January 13, 1994,  PAG's  Registration  Statement on Form SB-2 dated January 12,
1996 (33-296-NY) and PAG's Report on Form 8-K dated September 5, 1996,  pursuant
to 17 C.F.R. ss.230.411, are incorporated by reference herein.
<TABLE>
<CAPTION>

<S>                        <C>
 2.1*             -        Agreement and Plan of Reorganization dated effective as of January
                           13, 1994.
 3.1*             -        Amendment to the Certificate of Incorporation of the Company dated January
                           15, 1994.
 3.2*             -        By-Laws of the Company.
10.2*             -        Employment Agreement with Alan Lubinsky.
10.3*             -        Employment Agreement with Ivan Averbuch.
10.5*             -        Loan Agreement between PMS and Alan Lubinsky.
10.6*             -        Form of Service Agreement.
10.7*             -        Asset purchase agreement between Pride Vehicle Contracts (UK)
                           Limited and Master Vehicle Contracts, Limited.
10.8*             -        Form of Hire Purchase Agreement.
10.9*             -        Mortgage on Pride House, Watford Metro Centre.
10.10*            -        Mortgage on Croydon, England property.
10.11*            -        Lease agreement with respect to the Croydon, England property.
10.12*            -        Form of Agreement to purchase all of the assets of AC Cars Limited and
                           Autokraft Limited.
24.1*             -        Letter from Mark H. Sternberg, with respect to the change in
                           accountants  [incorporated  by  reference  to Exhibit
                           7(a)(1) of the  Amendment to the Report on Form 8-K/A
                           dated June 6, 1994].

24.2*             -        Letter from Lazar, Levine & Company, Certified Public Accountants,
                           with respect to the change in accountants [incorporated by reference to Exhibit
                           4(a)(v) of the Report on Form 8-K dated November 14, 1994].
</TABLE>


                                       34

<PAGE>
                                   SIGNATURES


     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
has duly  caused  this  report to be signed  on its  behalf by the  undersigned,
thereunto duly authorized, this 26th day of March, 1999.


                                                    PRIDE AUTOMOTIVE GROUP, INC.


                                                     /s/ Alan Lubinsky
                                                     ALAN LUBINSKY, President


     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the dates indicated.




/s/ Alan Lubinsky        President, Secretary and Chairman            2/26/99
ALAN LUBINSKY            of the Board of Directors (Principal         Date
                         Executive Officer)


/s/ Ivan Averbuch        Chief Financial Officer,                     2/26/99
IVAN AVERBUCH            Vice President and Treasurer                 Date



/s/ Allan Edgar          Director                                     2/26/99
ALLAN EDGAR                                                           Date



/s/ Ian Satill           Director                                     2/26/99
IAN SATILL                                                            Date

                                       35

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                              Page Nos

<S>                                                                                                                 <C>
Independent Auditors' Report                                                                                       F - 2

Financial Statements:

    Consolidated Balance Sheets as of November 30, 1998 and 1997                                                   F - 3

    Consolidated Statements of Operations for the Years Ended November 30, 1998 and 1997                           F - 4

    Consolidated Statement of changes in Shareholders' Equity for the Years Ended November 30, 1998 and 1997       F - 5

    Consolidated Statements of Cash Flows for the Years Ended November 30, 1998 and 1997                           F - 6

    Notes to Consolidated Financial Statements                                                                     F - 7 to 21

</TABLE>


                                      F - 1


<PAGE>
                          INDEPENDENT AUDITORS' REPORT


     We have  audited  the  accompanying  consolidated  balance  sheets of Pride
Automotive Group, Inc. and subsidiaries as of November 30, 1998 and 1997 and the
related consolidated  statements of operations,  changes in shareholders' equity
and cash flows for each of the two years in the period ended  November 30, 1998.
These   consolidated   financial   statements  are  the  responsibility  of  the
Corporation's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted  in the  United  Kingdom,  which  are  substantially  the same as those
followed in the United States.  Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our  opinion,  the above  mentioned  consolidated  financial  statements
present fairly, in all material respects, the consolidated financial position of
the  Corporation  as of  November  30,  1998 and 1997 and the  results  of their
operations for the two years in the period ended November 30, 1998 in conformity
with accounting principles generally accepted in the United States of America.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  the  Company  had  incurred  losses of  $11,475,629  and
$4,455,400 for the years ended November 30, 1998 and 1997,  respectively.  This,
together with the sale of assets,  the restated  balance sheets after this sale,
and the  delisting of the  Company's  shares from the Nasdaq Small Cap Market as
discussed in Note 3 to the financial statements, raises substantial doubts about
the  Company's  ability  to  continue  as a going  concern.  Management's  plans
regarding  these  matters are also  discussed in Note 2. As discussed in Note 3,
the  restated  proforma  balance  sheets  show  that  there  was  an  excess  of
liabilities  over assets on December 11, 1998.  The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.

     Our audits  also  include  the  translation  of British  pounds into United
States dollars for amounts included in the consolidated financial statements. In
our opinion,  such translation has been made in conformity with the basis stated
in Note 4(h) of the notes to the consolidated financial statements.














MARBLE ARCH HOUSE
66-68 SEYMOUR STREET
LONDON W1H 5AF                                             CIVVALS
UNITED KINGDOM               MARCH 22, 1999                CHARTERED ACCOUNTANTS





                                      F - 2


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS



                              - ASSETS (Note 8a) -
<TABLE>
<CAPTION>


                                                                                 November 30, 1998           November 30, 1997
                                                                              ------------------------    -----------------------
                                                                                         $                           $
ASSETS:
<S>                                                                                 <C>                         <C>   
    Cash and cash equivalents                                                       52,693                      77,354
    Accounts receivable (Notes 4c and 5)                                            1,486,053                   2,002,365
    Inventories (Note 4d)                                                           -                           1,248,360
      Property, revenue producing vehicles and equipment - net                      21,535,087                  27,882,350
         (Notes 4e, 6, 6b and 9)
    Intangible assets - net (Note 4f)                                               -                           9,090,156
    Investment in affiliate (Note 18)                                               4,048,460                   -

                                                                              ------------------------    -----------------------
    TOTAL ASSETS                                                                    27,122,293                  40,300,585
                                                                              ========================    =======================


                    - LIABILITIES AND SHAREHOLDERS' EQUITY -


    LIABILITIES:
    Bank line of credit (Note 8a)                                                   6,264,245                   6,976,699
    Accounts payable                                                                551,924                     1,758,764
    Accrued liabilities and expenses (Note 7)                                       1,738,304                   865,977
    Bank debt (Note 8b)                                                             685,428                     695,782
    Obligations under hire purchase contracts (Note 9)                              15,231,850                  18,341,778
    Other liabilities (Note 10)                                                     217,119                     52,707
    Acquisition debt payable (Note 11)                                              1,686,000                   4,198,500

                                                                                                          -----------------------
                                                                              ------------------------
    TOTAL LIABILITIES                                                               26,374,870                  32,890,207
                                                                              ------------------------    -----------------------

MINORITY INTEREST IN SUBSIDIARY (Note 18)                                           -                           -
                                                                              ------------------------    -----------------------

COMMITMENTS AND CONTINGENCIES (Notes 15 and 17)

    SHAREHOLDERS' EQUITY (Notes 3, 12 and 13):
      Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued 
      or outstanding                                                                -                           -
      Common stock, $.001 par value, 10,000,000 shares authorized, 2,822,500 and
      2,822,500 shares issued and outstanding in 1998 and 1997 respectively          2,823                       2,823
    Additional paid-in capital                                                      14,122,165                  13,582,795
    Deferred financing costs (Note 12)                                              (88,600)                    (141,500)
    Retained earnings (deficit)                                                     (13,570,826)                (5,857,987)
    Accumulated other comprehensive income (Note 4h)                                281,861                     (175,753)

                                                                              ------------------------    -----------------------
    TOTAL SHAREHOLDERS' EQUITY                                                      747,423                     7,410,378
                                                                              ------------------------    -----------------------

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      27,122,293                  40,300,585
                                                                              ========================    =======================
</TABLE>
                 See notes to consolidated financial statements.



                                      F - 3


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


                                                                                 November 30, 1998           November 30, 1997
                                                                              ------------------------    -----------------------
                                                                                         $                           $
REVENUES (Notes 4i and 15):
<S>                                                                                 <C>                         <C>      
    Contract hire income                                                            8,329,498                   8,410,366
    Sale of vehicles                                                                4,302,757                   7,090,027
    Fleet management and other income                                               470,388                     1,076,650
    Service and spare parts revenue                                                 -                           180,990
    Other income                                                                    -                           701,242

                                                                              ------------------------    -----------------------
                                                                                    13,102,643                  17,459,275
                                                                              ------------------------    -----------------------

    EXPENSES:
      Cost of sales                                                                 6,475,102                   10,336,360
      Depreciation                                                                  4,726,206                   3,946,635
      General and administrative expenses                                           1,973,618                   3,540,130
      Amortization of goodwill                                                      630,718                     632,207
      Interest and other financing costs                                            2,328,481                   2,209,150
      Research and development                                                      -                           982,580
      Loss on sale of fixed assets (Note 6)                                         -                           753,933
      Write off of intangibles (Notes 3 and 4f)                                     8,444,147                   -

                                                                              ------------------------    -----------------------
                                                                                    24,578,272                  22,400,995
                                                                              ------------------------    -----------------------

    LOSS BEFORE MINORITY INTERESTS                                                  (11,475,629)                (4,941,720)

      Minority interest in net loss of consolidated subsidiaries (Note 18)          -                           486,320

    LOSS BEFORE PROVISION FOR INCOME TAXES                                          (11,475,629)                (4,455,400)

      Provision for income taxes (Notes 4g and 14)                                  -                           -

                                                                              ------------------------    -----------------------
    NET (LOSS)                                                                      (11,475,629)                (4,455,400)
                                                                              ========================    =======================

LOSS PER COMMON AND DILUTIVE COMMON EQUIVALENT SHARE (Note 4j)

      Net loss before minority interests                                            (4.07)                      (1.76)
      Minority interest in net loss of subsidiaries                                 -                           .17

                                                                              ------------------------    -----------------------
NET LOSS PER SHARE                                                                  (4.07)                      (1.59)
                                                                              ========================    =======================

WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT 
     SHARES OUTSTANDING (Note 4j)
                                                                                2,822,500                   2,801,075
                                                                              ========================    =======================

</TABLE>










                 See notes to consolidated financial statements.



                                      F - 4


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                 Shares         Common   Additional         Deferred      Retained       Accumulated     Totalr
                                                Stock      Paid-In           Financing    Earnings         Other        Shareholders
                                                           Capital             Costs      (Deficit)      Comprehensive    Equity  
                                                                                                           Income
                                                    $          $                 $           $                $             $


<S>                              <C>               <C>      <C>                 <C>       <C>              <C>          <C>     
Balance at November 30, 1996     2,652,500         2,653    13,487,388           --       (1,402,587)      (130,243)    11,957,211

Private offering of common
stock (Note 12)
                                   170,000           170        95,407           --             --             --           95,577

Deferred financing costs
(Note 12) ..................          --            --            --         (141,500)          --         (141,500)

Foreign currency translation
adjustment
                                      --            --            --             --             --          (45,510)       (45,510)

Net Loss for the year ended
November 30, 1997
                                      --            --            --             --       (4,455,400)          --       (4,455,400)

                                                                                                                       -----------
Balance at November 30, 1997     2,822,500         2,823    13,582,795       (141,500)    (5,857,987)      (175,753)     7,410,378

Deferred financing costs
(Note 12) ..................          --            --          52,900           --             --           52,900

Adjustment - AC Car Group
Limited
                                      --            --         539,370           --        3,762,790           --        4,302,160

Foreign currency translation
adjustment
                                      --            --            --             --             --          457,614        457,614

Net loss for the year ended
November 30, 1998
                                      --            --            --             --      (11,475,629)          --      (11,475,629)

                                                                                                                       -----------
BALANCE AT NOVEMBER 30, 1998
                                 2,822,500         2,823    14,122,165        (88,600)   (13,570,826)       281,861        747,423
                                                                                                                       ===========

</TABLE>








                 See notes to consolidated financial statements



                                      F - 5


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                                 November 30, 1998           November 30, 1997
                                                                              ------------------------    -----------------------
                                                                                         $                           $
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                 <C>                         <C>        
    Net (loss)                                                                      (11,475,629)                (4,455,400)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
    Minority interest in net loss of subsidiary                                     -                           (486,320)
    Depreciation and amortization                                                   4,726,206                   3,946,635
    Amortization of goodwill                                                        9,074,865                   632,207
    Deferred financing costs                                                        52,900                      (141,500)
    Loss on disposal of fixed assets                                                715,694                     753,933
    Changes in assets and liabilities:
    Decrease in accounts receivable                                                 427,540                     19,646
    (Decrease) increase in inventories                                              132,369                     (225,705)
    Increase  in accounts payable, accrued expenses                                 432,587                     1,528,020
                                                                              ------------------------    -----------------------
    Net cash provided from operating activities                                     4,086,532                   1,571,516
                                                                              ------------------------    -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of fixed assets                                                        (6,726,057)                 (16,494,724)
    Proceeds from sale of fixed assets                                              4,237,204                   4,583,660
                                                                              ------------------------    -----------------------
    Net cash (utilized) by investing activities                                     (2,488,853)                 (11,911,064)
                                                                              ------------------------    -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Bank lines of credit                                                            966,558                     4,012,234
    Net proceeds from sale of stock                                                 -                           95,577
    Payment of acquisition debt                                                     -                           (899,970)
    Principal payment of long term debt                                             (10,354)                    (306,789)
    Proceeds from hire purchase contract funding                                    6,887,945                   19,491,763
    Principal repayments of hire purchase contract funding                          (9,757,781)                 (12,184,936)
                                                                              ------------------------    -----------------------
Net cash provided from financing activities                                         (1,913,632)                 10,207,879
                                                                              ------------------------    -----------------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                             291,292                     (41,676)

                                                                              ------------------------    -----------------------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS                                         (24,661)                    (173,345)

    Cash and cash equivalents, beginning of year                                    77,354                      250,699
                                                                              ------------------------    -----------------------
CASH AND CASH EQUIVALENTS END OF YEAR                                               52,693                      77,354
                                                                              ========================    =======================

</TABLE>
                 See notes to consolidated financial statements.



                                      F - 6


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 1 - DESCRIPTION OF COMPANY:

                    Pride   Automotive   Group,   Inc.   (the   "Company")   was
               incorporated in the State of Delaware in March 1995.  Pursuant to
               the terms and conditions of a  reorganization  in March 1995, the
               Company  issued  1,500,000  shares of its common  stock to Pride,
               Inc. (an entity  incorporated in the State of Delaware),  thereby
               making the Company a majority owned  subsidiary of Pride Inc., in
               exchange  for all of the issued and  outstanding  shares  held by
               Pride,   Inc.,  of  Pride   Management   Services  Plc  (PMS),  a
               consolidated  group of operating  companies located in the United
               Kingdom  which  are  engaged  in the  leasing  of motor  vehicles
               primarily  on contract  hire to local  authorities  and  selected
               corporate customers throughout the United Kingdom.  This exchange
               of stock  resulted in PMS becoming a wholly owned  subsidiary  of
               the  Company.   The  Company,   its   subsidiary  PMS  and  PMS's
               subsidiaries  are referred to as the "Company" unless the context
               otherwise requires.

                    On November 29, 1996, the Company,  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 specialty automobiles. The
               purchase price of approximately  $6,067,000 was financed with the
               proceeds of a private  offering of the Company'  common stock and
               by loans.  The acquisition was recorded using the purchase method
               of accounting.

                    On  February  12,  1998,   the  board  of  Directors  of  AC
               Automotive  Group,  Inc.  authorized  the  issuance of  6,130,000
               shares of its common  stock to Erwood  Holdings,  Inc., a company
               affiliated with Alan Lubinsky,  the President and Chief Executive
               Officer and director of the Company and AC Automotive Group, Inc,
               for aggregate consideration of $6130. In addition, 441,300 shares
               were   issued   to  other   unrelated   parties   for   aggregate
               consideration  of $443.  Following  further  restructure  and the
               foregoing  issuance of shares,  the  ownership  of AC  Automotive
               Group,  Inc. by the Company has been  reduced to 16%.  Due to the
               change in ownership percentage, the Company does not believe that
               it still has the ability to exercise  significant  influence over
               AC  Automotive  Group,  Inc.  Accordingly,  consolidation  is not
               considered appropriate. The Company's investment in AC Automotive
               Group, Inc., is therefore being reported under the cost method of
               accounting (see also Note 18).

                    See Note 3 regarding the Company's sale of substantially all
               of its leasing assets, subsequent to the balance sheet date.


NOTE 2 -

                    The  Company  has  incurred   losses  from   operations   of
               $11,475,629  and $4,455,400 for the years ended November 30, 1998
               and 1997.

                    The losses for the year ended  November 30, 1997  includes a
               loss of $4,111,664 incurred by its then subsidiary,  AC Car Group
               Limited.  The equity held in this  Company has since been diluted
               and the Company's accounts are therefore no longer consolidated.

                                      F - 7


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 2 - BASIS OF PRESENTATION (Continued):

                    The losses for the year ended  November  30,  1998  includes
               $8,444,147  from the writing off of the  goodwill  related to the
               subsidiary,  Pride Management  Services Plc, as substantially all
               of its assets were sold on December 11, 1998 (see Note 3).

                    The  circumstances   described  above,   together  with  the
               material events discussed in Note 3 to the financial  statements,
               which  took  place  subsequent  to  November  30,  1998,  and the
               restated  proforma  balance  sheets  after  these  events,  raise
               substantial  doubts about the Company's  ability to continue as a
               going concern.

                    Management  plans in regard to this matter were described in
               a press  release  issued on  February  19,  1999.  In this  press
               release,  it was announced that the Company had executed a Letter
               of Intent to acquire  all of the issued and  outstanding  capital
               stock of Digital  Mafia  Entertainment,  LLC, in exchange for the
               issuance of 7,400,000 shares in Pride Automotive common stock. In
               addition,  the Company also  announced  that it will, at the same
               time, sell its ownership of Pride  Management  Services to Pride,
               Inc, its majority  shareholder,  for nominal value. At this time,
               the these sales has not been consummated.

                    Management  is  also  raising  capital  for the  purpose  of
               meeting the Company's  financial  obligations  until such time as
               the  Contract of Sale  described  above is  consummated.  If this
               raising of capital is  unsuccessful,  then the  Company  will not
               have sufficient cash on hand to meet its current obligations. The
               financial  statements do not include any  adjustments  that might
               result from this uncertainty.

NOTE 3 - SUBSEQUENT EVENT:

        (a)      Sale of Assets:

                    On December 11, 1998, the Company,  through its  subsidiary,
               Pride   Management   Services   Plc,   completed   the   sale  of
               substantially all its leasing assets,  leaving  approximately 13%
               of its revenue producing vehicles after the sale (see also Note 2
               which  discusses  the  sale  of the  Company's  shares  in  Pride
               Management Services Plc to Pride, Inc.

                    The  consideration  paid was  $14,763,680  against a balance
               sheet value of $17,851,023.

                    As a condition of sale,  hire purchase  creditors  were paid
               $14,537,000 in full and final  settlement of the debt outstanding
               on the  leased  assets  sold  against  a balance  sheet  value of
               $13,127,303 at an early settlement penalty of $1,409,697.

                    In  addition,  the bank line of credit was  restructured  as
               follows.  Upon  completion of the sale,  $1,815,000 was repaid to
               the bank.  The balance of $4,449,245  has been converted into two
               loans;   Loan  A  for   $1,485,000  and  Loan  B  for  $2,964,245
               respectively.

                    Loan A of  $1,485,000  is repayable by July 31, 1999, in the
               event of which Loan B of $2,964,245 will be forgiven.


                                      F - 8


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 3 - SUBSEQUENT EVENT:

        (a)      Sale of Assets (Continued):

                    In the event that Loan A is not repaid by July 31, 1999, the
               full amount outstanding on the two loans is repayable on demand.

                    As a result of the sale,  the  Company  has decided to write
               off  its  related  goodwill,   which  had  a  carrying  value  of
               $8,444,147.

                    The following is a condensed  proforma  balance sheet of the
               Company assuming this sale occurred as of November 30, 1998.
<TABLE>
<CAPTION>

                 Assets                                                              Exhibit 1        Exhibit 2
                                                                                     ---------        ---------

<S>                                                                               <C>              <C>         
                 Cash                                                             $  1,048,727     $  1,048,727
                 Accounts receivable - net                                           1,486,059        1,486,059
                 Fixed assets - net (Note 6)                                         4,148,582        4,148,582
                 Intangible assets - net (Note 4f)                                      -                -
                 Investment in affiliate                                             4,048,460        4,048,460
                                                                                 -------------    -------------
                 Total Assets                                                      $10,731,828      $10,731,828
                                                                                   ===========      ===========


                 Liabilities and Shareholders Equity

                 Bank line of credit (Note 8a)                                         -                -
                 Accounts payable                                                      551,923          551,923
                 Accrued liabilities and expenses (Note 7)                           4,206,305        4,206,305
                 Bank debt (Note 8a)                                                 5,134,673        2,170,428
                 Obligations under hire purchase contracts (Note 9)                  2,104,547        2,104,547
                 Loans payable                                                          65,109           65,109
                 Other liabilities                                                     268,367          268,367
                 Acquisition debt payable                                            1,686,000        1,686,000
                                                                                  ------------     ------------
                 Total Liabilities                                                  14,016,924       11,052,679
                 Shareholders equity (deficit)                                   (   3,285,096)  (      320,851)
                                                                                  ------------    -------------
                                                                                   $10,731,828      $10,731,828
</TABLE>

                    Exhibit 2 assumes that the bank  conditions  will be met and
               the outstanding loan balance of $2,964,245 will be forgiven.

        (b)      Nasdaq Small Cap Market Listing:

                    On March 12,  1999,  the Company was notified by NASDAQ that
               the Company's  securities would be delisted from the Nasdaq Small
               Cap  Market   effective  March  19,  1999,  since  the  Company's
               financial  condition does not meet the requirements for continual
               inclusion  of such  securities.  The Company is in the process of
               appealing this decision.

                                      F - 9


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

                    PMS, the operating  group of companies,  which is located in
               the  United  Kingdom,   follows  generally  accepted   accounting
               principles  in  the  United   Kingdom.   For  purposes  of  these
               consolidated  financial statements,  the Company has converted to
               the  generally  accepted  accounting  principles  of  the  United
               States.

        (a)      Basis of Consolidation and Presentation:

                    The consolidated  financial  statements include the accounts
               of the Company (Pride Automotive Group,  Inc.), its' wholly owned
               subsidiary  Pride  Management  Services Plc and its' wholly owned
               subsidiaries,  and for 1997 its'  majority  owned  subsidiary  AC
               Automotive  Group,  Inc.  and its' wholly owned  subsidiary.  All
               material   intercompany   balances  and  transactions  have  been
               eliminated.

                    Due  to  the  nature  of the  Company's  business,  contract
               leasing of motor vehicles  (revenue  producing  assets) which are
               treated  as  non-current  fixed  assets,  the  balance  sheet  is
               reflected on an unclassified basis.  Accordingly,  current assets
               and current liabilities are not reflected  separately on the face
               of the balance sheet.

        (b)      Use of Estimates:

                    In  preparing   financial   statements  in  accordance  with
               generally  accepted  accounting   principles,   management  makes
               certain estimates and assumptions,  where applicable, that affect
               the reported amounts of assets and liabilities and disclosures of
               contingent  assets and  liabilities  at the date of the financial
               statements,  as well as the  reported  amounts  of  revenues  and
               expenses during the reporting period.  While actual results could
               differ  from those  estimates,  management  does not expect  such
               variances,  if any,  to have a material  effect on the  financial
               statements.

        (c)      Concentration of Credit Risk/Fair Value:

                    Financial  instruments that potentially  subject the Company
               to  concentrations  of credit risk in accordance with SFAS No 105
               consist principally of accounts receivable.  The Company believes
               however,  that risks  associated  with  accounts  receivable  are
               limited  due to its  large  customer  base and the  fact  that it
               leases vehicles to companies in many industries.

                    The  carrying  amounts of cash and cash  equivalents,  trade
               receivables,  other assets, accounts payable and debt obligations
               approximate fair value.

        (d)      Inventories:

                    Inventories  include  vehicles  which  are no  longer  being
               leased to  customers  and which are  temporarily  being  held for
               resale at cost less accumulated depreciation,  which approximates
               net realizable  value.  The  inventories of AC Automotive  Group,
               Inc.  and its  subsidiary  as of  November  30,  1997  consist of
               finished  goods,  work in progress  and spare parts of  specialty
               automobiles  and are  stated  at the  lower of  cost,  (first-in,
               first-out  method)  or  market.   Market  is  considered  as  net
               realizable  value.  The Company did not have any  inventory as of
               November 30, 1998.



                                     F - 10


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

        (d)      Inventories (Continued):

                    As of November 30, 1998 and 1997,  inventories  consisted of
               the following:
<TABLE>
<CAPTION>

                                                                           November 30,             November 30,
                                                                              1998                  1997       

<S>                                                                        <C>                      <C>        
                 Cars held for resale                                      $         -              $   132,369
                 Finished goods                                                      -                   90,784
                 Work-in-progress                                                    -                  502,500
                 Spare parts                                                                          -               522,707
                                                                                    ----------        ---------
                                                                           $         -               $1,248,360
                                                                           ===================       ==========
</TABLE>

        (e)      Fixed Assets and Depreciation:

                    Fixed   assets  are   stated  at  cost  less   depreciation.
               Depreciation  is  provided on all assets at rates  calculated  to
               write off the cost of each asset over its estimated  useful life,
               as follows:
<TABLE>
<CAPTION>

<S>                                                                         <C>                         
                 Building and improvements                                  50 years straight-line basis
                 Revenue producing vehicles                                 3-6 years straight-line basis
                 Furniture and fixtures                                     4 years double declining basis
                 Machinery and equipment                                    4 years double declining basis
                 Aircraft                                                   4 years double declining basis
</TABLE>

                    Maintenance  and repairs are charged to operations and major
               improvements  are  capitalized.  Upon  retirement,  sale or other
               disposal, the associated cost and accumulated depreciation of the
               asset are eliminated  from the accounts and any resulting gain or
               loss is included in operations.

         (f)     Intangible Assets:

                    Intangible  assets  consisted  primarily  of goodwill  which
               arose in connection with the acquisition of certain  subsidiaries
               of PMS.  Goodwill has been amortized over a period of 10-20 years
               on a straight-line basis. Accumulated amortization as of November
               30,  1998  and  1997   aggregated   $4,253,551   and   $3,622,833
               respectively.

                    The  Company   periodically   reviews  the   valuation   and
               amortization  of  goodwill  and other  intangibles  to  determine
               possible  impairment by evaluating events and circumstances  that
               might indicate an inability to recover the carrying amount.  Such
               evaluation  is  based  on  analysis,   including   profitability,
               projections  and  cash  flows  that  incorporate  the  impact  on
               existing Company business.


                                     F - 11


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

        (f)      Intangible Assets (Continued):

                    On December 11, 1998,  the Company,  through its  subsidiary
               Pride   Management   Services   Plc,   completed   the   sale  of
               substantially  all its leasing assets (see Note 3).  Accordingly,
               the Company has decided to write off its related goodwill,  which
               had a carrying value of $8,444,147.

        (g)      Income Taxes:

                    The Company conducts all of its operating  activities in the
               United Kingdom (UK). As such, they are subject to taxation in the
               UK based upon that  country's  tax  statutes.  Under UK  taxation
               rules,  provision  is made for  taxation  deferred as a result of
               material timing  differences  between the incidence of income and
               expenditures  for taxation  and  accounting  purposes,  using the
               liability  method,  only to the extent  that there is  reasonable
               probability  that a liability  or asset will  crystallize  in the
               near future.  See also Note 14 regarding SFAS No 109 - Accounting
               for Income Taxes.

        (h)      Foreign Currency Translation:

                    The  Company's  principal  operations  are  conducted by PMS
               which reflects its financial  statements in British pounds.  As a
               result, most assets and liabilities of the foreign operations are
               translated into US dollars using current exchange rates in effect
               at the balance sheet date. Fixed assets and intangible assets are
               translated  at  historical  exchange  rates.  Revenue and expense
               accounts are translated using an average exchange rate during the
               period   except  for  those   expenses   related  to  assets  and
               liabilities  which are translated at historical  exchange  rates.
               These include  depreciation and amortization which are translated
               at the rates  existing  at the time the asset was  acquired.  Any
               resulting gains or losses due to the  translations  are reflected
               as a separate item of shareholders' equity.

        (i)      Income Recognition:

                    Contract  hire income of leased  vehicles is  recognized  as
               operating  leases over the period of the  contract in  accordance
               with  SFAS  No  13  -  Accounting  for  Leases  and  the  related
               amendments   and   interpretations.   Income  from  the  sale  of
               previously  leased vehicles,  is reflected at the time of sale of
               the vehicle.  Fleet management revenues and miscellaneous  income
               are  reflected  on the  accrual  basis  over  the  term  that the
               services are provided.

                    The Company  leases  vehicles with terms  generally  ranging
               from two to four  years.  The  following  table  shows the future
               minimum  lease  payments  of  existing   leases  (after  sale  as
               discussed  in Note 3) to be received,  net of related  costs (see
               also Note 9):
<TABLE>
<CAPTION>

<S>                       <C> <C>                                                                      <C>     
                 November 30, 1999                                                                     $560,640
                 November 30, 2000                                                                      160,666
                 November 30, 2001                                                                      66,581
                 November 30, 2002                                                                      11,277
                                                                                                    ----------
                 Total minimum lease payments receivable net of executory costs                       $799,164
                                                                                                      ========
</TABLE>

                                     F - 12


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

         (j)     Earnings Per Share:

                    Earnings  per share are  computed  based  upon the  weighted
               average  shares and common  equivalent  shares  outstanding.  The
               shares sold during the year ended  November 30, 1996 in a private
               offering (see Note 12), have been treated as outstanding  for all
               periods  presented,  in  accordance  with the  guidelines  of the
               Securities and Exchange Commission. 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 the period ending after December 15,
               1997.  The  Company  has  adopted  SFAS 128 for the  year  ending
               November 30, 1998, and accordingly restated prior periods.

        (k)      Cash and Cash Equivalents:

                    For purposes of the  statements  of cash flows,  the Company
               considers all highly liquid investments with an original maturity
               of three months or less to be cash equivalents.

        (l)      Stock Based Compensation:

                    SFAS  No  123  "Accounting  for  Stock-Based  Compensation",
               effective  December  1996,  requires the Company to either record
               compensation  expense or to provide  additional  disclosures with
               respect  to stock  awards  and stock  option  grants  made  after
               December  31,  1994.  The  accompanying   Notes  to  Consolidated
               Financial  Statements  include the  disclosures  required by SFAS
               123.  No  compensation  expense  is  recognized  pursuant  to the
               Company's  stock option plans under SFAS 123 which is  consistent
               with prior treatment under APB No 25.

        (m)      New Accounting Pronouncements:

                    SFAS No 130 "Reporting  Comprehensive  Income", is effective
               for years beginning after December 15, 1997 and early adoption is
               permitted.  This  statement  prescribes  standards  for reporting
               comprehensive income and its components.  The Company has adopted
               these standards effective for the year ended November 30, 1998.

                 See also Earnings (Loss) Per Share.





                                     F - 13


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

        (n)      Impact of the Year 2000 Issue:

                    The year 2000 issue is the result of computer programs being
               written  using  two  digits  rather  than four to  designate  the
               applicable  year.  Accordingly,  any  of the  Company's  computer
               programs  that utilize date  sensitive  software may  recognize a
               date using "00" as the year 1900 rather than the year 2000.  This
               could potentially  result in a system failure or  miscalculations
               causing disruptions of operations,  including among other things,
               a temporary inability to process transactions,  send invoices, or
               engage in other similar normal business activities.

                    The Company had already  planned on  upgrading  its computer
               software to increase  operational  efficiencies  and  information
               analysis.  In  conjunction  with this  upgrade,  the Company will
               ensure that the new systems properly utilize dates that go beyond
               December 31, 1999. Due to the subsequent  event described in Note
               3, the cost of this  upgrade  project,  as it relates to the Year
               2000  issue,  is not  expected  to have a material  effect on the
               operations  of the Company and will be funded  through  operating
               cash flows.

NOTE 5 - ACCOUNTS RECEIVABLE:
<TABLE>
<CAPTION>

                 Accounts receivable consist of the following:
                                                                                  November 30,     November 30,
                                                                                   1998             1997       
<S>                                                                               <C>              <C>
                 Trade receivables - net of allowance for doubtful
                 accounts of $NIL and $80,486 for 1998 and 1997,
                 respectively                                                      $   638,001      $   639,109
                 Lease maintenance receivables                                            -             943,261
                 Value added tax                                                           919          138,555
                 Due from related companies                                            478,532           83,219
                 Other                                                                 368,601          198,221
                                                                                  ------------     ------------
                                                                                    $1,486,053       $2,002,365

</TABLE>
                                     F - 14


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 6 - FIXED ASSETS AND DEPRECIATION:

                 Fixed assets consist of the following:
<TABLE>
<CAPTION>

                                                                                  November 30,     November 30,
                                                                                    1998             1997       

<S>                                                                              <C>              <C>          
                 Buildings and improvements                                      $     784,599    $     820,160
                 Revenue producing vehicles                                         26,880,979       27,612,291
                 Furniture, fixtures, plant and equipment                              576,270        4,670,067
                                                                                  ------------      -----------
                                                                                    28,241,848       33,102,518
                 Less: accumulated depreciation (including
                 $6,130,673 and $4,263,115 of accumulated
                 depreciation on revenue producing vehicles,
                 for 1998 and 1997 respectively)                                     6,706,761        5,220,168
                                                                                 -------------    -------------
                                                                                   $21,535,087      $27,882,350
                                                                                   ===========      ===========

                 Depreciation  expense for the years ended November 30, 1998 and
                 1997 aggregated $4,726,206 and $4,681,932, respectively.

                 On December 11, 1998, the Company sold a substantial portion of
                 its assets (see Note 3) at a loss of $3,087,343.  The fixed 
                 assets and depreciation after this transaction were:-

                 Buildings and improvements                                        $   784,599
                 Revenue producing vehicles                                          3,976,641
                 Furniture, fixtures, plant and equipment                              576,270
                                                                                   -----------
                                                                                     5,337,510
                 Less:        accumulated depreciation (including
                 $612,840 of accumulated depreciation on
                 revenue producing vehicles)                                         1,188,928
                                                                                    $4,148,582
</TABLE>
NOTE 7 - ACCRUED LIABILITIES AND EXPENSES:
<TABLE>
<CAPTION>

                 Accrued liabilities and expenses consist of the following:
                                                                                  November 30,     November 30,
                                                                                    1998             1997       

<S>                                                                                 <C>                <C>     
                 Taxes other than income taxes                                      $1,350,195         $438,289
                 Miscellaneous accrued expenses                                        388,109          427,688
                                                                                  ------------        ---------
                                                                                    $1,738,304         $865,977

                 On December 11, 1998, the Company sold a substantial portion of
                 its assets (See Note 3) and as a result, incurred sales taxes. 
                 The accrued liabilities and expenses after this transaction 
                 were:-

                 Taxes other than income taxes                                      $3,360,323
                 Miscellaneous accrued expenses                                        824,507
                                                                                    $4,184,830
</TABLE>

                                     F - 15


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 8 - BANK LOANS/LINE OF CREDIT:

                    As of November 30, 1998 the Company was in negotiation  with
               its bankers  regarding  the  settlement of  outstanding  lines of
               credit  in  the  amount  of  $6,264,245.  As a  result  of  these
               negotiations, the line of credit was restructured as follows:-
<TABLE>
<CAPTION>
                 <S>                                                                <C>       
                 Payable on completion of sale of assets on
                 December 11, 1998 as described in Note 3                           $1,815,000

                 Payable on July 31, 1999                                            1,485,000
                                                                                     ---------
                                                                                     3,300,000

                 To be forgiven if July 31, 1999 installment
                 is paid on time                                                     2,964,245
                                                                                    $6,264,245
</TABLE>

                    At  November  30,  1998,  bank loans  consisted  of $685,428
               payable at a rate of 3% in excess of the bank's  base rate.  This
               loan  is  secured  by  the  freehold   property  owned  by  Pride
               Management Services and its subsidiaries and matures in 2017.

                    The  scheduled  principal  payments  of this bank debt as of
               November 30, 1998 are as follows:

                 For the Year Ended November 30,

                       1999                               $  77,043
                       2000                                  77,043
                       2001                                  77,043
                       2002                                  77,043
                       2003                                  77,043
                       thereafter                           300,213
                                                          ---------
                                                           $685,428


NOTE 9 - HIRE PURCHASE CONTRACTS/EQUIPMENT FINANCING:

                    The  Company  has  funding  lines  with  several   financing
               institutions  in the United  Kingdom in the  aggregate  amount of
               approximately  $15,500,000 as of November 30, 1998. These funding
               lines are utilized to acquire revenue producing  vehicles,  which
               vehicles  collateralize  the  outstanding   obligations.   Assets
               (revenue   producing   vehicles)  obtained  under  hire  purchase
               contracts are  capitalized as fixed assets and  depreciated  over
               their useful lives. The obligations under such agreements,  which
               mature at various  dates  within five years from  inception,  are
               reflected  separately on the balance sheet net of finance charges
               which are charged to the periods to which they apply. At November
               30,  1998,   obligations  under  hire  purchase   contracts  were
               $15,231,850.



                                     F - 16


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997



NOTE 9 - HIRE PURCHASE CONTRACTS/EQUIPMENT FINANCING (Continued):

                    As a result of the sale of assets on December 11,  1998,  as
               described in Note 5,  $13,127,303 of the hire purchase  contracts
               was  repaid at an early  settlement  penalty of  $1,409,697.  The
               balance of hire  purchase  contracts  after this  settlement  was
               $2,104,547.


NOTE 10 - OTHER LIABILITIES:

                    At November 30, 1998 and 1997 other liabilities consisted of
               $217,119 and $52,707,  respectively  due to other  creditors,  at
               interest  rates   approximating  the  current  market  rates  and
               repayable on a demand basis.


NOTE 11 - ACQUISITION DEBT PAYABLE:

                    The  acquisition  debt payable (see Note 1) consisted of the
               following:
<TABLE>
<CAPTION>

                                                                           November 30,     November 30,
                                                                              1998             1997       
<S>              <C>                                                          <C>                   <C>        
                 Unsecured notes payable on demand after
                 May 31, 1998; interest payable quarterly at
                 2% above the base rate                                       $         -           $   837,500

                 Unsecured notes payable on demand after
                 May 31, 1998; interest payable at 10% per
                 annum (see Note 12)                                                 1,615,000        1,615,000

                 Unsecured notes payable on demand after
                 October 31, 1999; interest payable quarterly
                 at 8% per annum                                                        -             1,675,000

                 Other short-term notes payable                                         71,000          71,000
                                                                                 -------------     -----------
                                                                                    $1,686,000       $4,198,500
                                                                                    ==========       ==========
</TABLE>


                                     F - 17


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 12 - COMMON STOCK:

                    In December 1995, the Company  completed a private placement
               offering selling 20 units,  each unit consisting of 25,000 shares
               of common stock,  at $6,000 per unit for aggregate gross proceeds
               of $120,000.

                    In April 1996 the Company successfully  completed an initial
               public  offering  ("IPO")  of its  common  stock  whereby it sold
               592,500  shares of common stock at a price of $5.00 per share and
               2,300,000  common stock purchase  warrants at a price of $.10 per
               warrant.  This  offering  yielded net  proceeds of  approximately
               $2,166,000.

                    The warrants are  exercisable at a price of $5.75 per share,
               subject to  adjustment,  one year from the date of the  offering,
               for a period of four years.  The warrants are  redeemable  by the
               Company  at any time  commencing  one  year  from the date of its
               prospectus,  upon 30 days notice,  at a redemption  price of $.05
               per warrant.

                    In addition, the Company entered into a consulting agreement
               with one of the  Underwriters  as a  financial  consultant  for a
               period of two years at a monthly fee of $2,500 payable in full at
               the  closing of the  offering.  The  Underwriters  have also been
               granted  warrants to acquire  95,000  shares of common  stock and
               200,000  warrants at 150% of the public  offering  price or $7.50
               per share and $.15 per Warrant, respectively.

                    In 1997,  the Company  completed a private  placement  of 17
               units,  each  unit  consisting  of a 10%  promissory  note in the
               amount of $95,000 and 10,000 shares of the Company's common stock
               for an  aggregate  price of  $100,000  per  unit.  The  notes are
               payable on the  earlier of 18 months from the date of issuance or
               a closing of an underwritten public offering of the Company's (or
               any of its subsidiaries)  securities.  These promissory notes are
               classified as acquisition debt (see also Note 11).

                    The Company has  reflected  deferred  financing  costs based
               upon the  difference  between the deemed fair value of the shares
               and the market value at the time of issuance. These costs will be
               recognized  as additional  interest  expense over the term of the
               notes.


NOTE 13 - STOCK OPTION PLANS:

                    In September  1995, the board of directors  adopted the 1995
               Senior  Management  Incentive Plan (the "Management  Plan") which
               was adopted by  shareholder  consent.  The Plan  provides for the
               issuance of up to 300,000 shares of the Company's common stock in
               connection  with the  issuance  of stock  options and other stock
               purchase rights to executive officers and other key employees.

                    During the year ended November 30, 1996, the Company granted
               options to purchase 100,000 shares of common stock at an exercise
               price of $5.50 per share (fair value of $2.60), none of which had
               been exercised to date. These options are exercisable over a five
               year period pursuant to a three year vesting schedule (331/3% per
               annum) beginning in August 1996.

                                     F - 18


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 13 - STOCK OPTION PLANS (Continued):

                    In May 1997,  the  Company  granted an  aggregate  of 60,528
               options to three employees  exercisable at $2.54 per share. These
               options vest at the rate of 331/3% per annum commencing May 1998.

                    The Company  applied APB 25 and related  Interpretations  in
               accounting for the Management Plan. Accordingly,  no compensation
               cost  has  been   recognized   for  the   Management   Plan.  Had
               compensation  cost of the Management Plan been  determined  using
               the fair  value-based  method,  as  defined in SFAS 123 (see Note
               4l), the  Company's net earnings  (loss) and earnings  (loss) per
               share would have been adjusted to the pro forma amounts indicated
               below:-
<TABLE>
<CAPTION>

                                                                              November 30,     November 30,
                                                                                   1998             1997       
                 Net earnings (loss):
<S>                                                                               <C>               <C>         
                       As reported                                                $(11,475,629)     $(4,455,400)
                       Pro forma                                                   (11,636,147)      (4,745,000)
                 Earnings:
                       As reported                                                   (4.07)            (1.59)
                       Pro forma                                                     (4.12)            (1.69)
</TABLE>

                    The fair value of each  option  grant was  estimated  on the
               date of the grant using the  Black-Scholes  option-pricing  model
               with the  following  weighted  average  assumptions  for 1998 and
               1997;   respectively;   expected   volatility   of  1%  and  1.2%
               respectively; risk-free interest rate of 6.5%; and expected lives
               of 3 to 5 years.

                    The  effects  of  applying  SFAS 123 in the  above pro forma
               disclosures  are not  necessarily  indicative of future  amounts.
               Additionally,  future  amounts  are likely to be  affected by the
               number of grants  awarded since  additional  awards are generally
               expected to be made at varying amounts.

NOTE 14 - INCOME TAXES:

                    The Company has available  operating  losses carry  forwards
               for  tax  purposes  aggregating  approximately  $9,000,000  as of
               November 30, 1998,  which may result in a deferred tax asset. The
               Company has  recognized  this asset but has  provided a valuation
               allowance  for the full amount since there is no  assurance  that
               such losses will be utilized in the near future.

                    The  components of the deferred tax asset,  pursuant to SFAS
               No. 109, as of November 30, 1998 and 1997,  respectively,  are as
               follows:
<TABLE>
<CAPTION>

                                                                                  November 30,     November 30,
                                                                                     1998             1997       

<S>                                                                               <C>                <C>       
                 Operating loss carry forward                                     $  3,000,000       $1,709,000
                 Valuation allowance                                                (3,000,000)      (1,709,000)
                                                                                    ----------        ---------
                                                                           $         -         $       -        
                                                                           =================== =================
</TABLE>


                                     F - 19


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 15 - ECONOMIC DEPENDENCY:

                    For the years ended  November 30, 1998 and 1997, the Company
               had two unaffiliated customers,  which accounted for an aggregate
               of approximately 15% (1997 17%) and 6% (1997 7%) respectively, of
               the Company's total revenues.

                    The Company  purchases all of the automobiles that it leases
               to its clients from automotive dealerships,  usually several at a
               time.  The Company does not depend on any one  dealership for its
               purchase of automobiles and does not have any written  agreements
               with any of the  dealerships  it  purchases  vehicles  from.  The
               Company  believes  that it will  continue  to be able to purchase
               automobiles at competitive prices and terms into the future.


NOTE 16 - PENSION PLAN:

                    PMS  and  its'  subsidiaries  have a fully  insured  defined
               contribution   plan   for   all   of  its   eligible   employees.
               Contributions to the plan, which are discretionary, for the years
               ended November 30, 1998 and 1997 amounted to $80,384 and $65,726,
               respectively.


NOTE 17 - COMMITMENTS:

                 Employment Agreements:

                    In August  1995,  the  Company  entered  into an  employment
               agreement with its  President/Chairman of the Board of Directors.
               This  three-year  agreement  provided  for an  annual  salary  of
               $160,000 with annual escalations of 10% and also contains certain
               non-compete restrictions.  This employee was also granted 100,000
               stock options (see Note 13). This  agreement was not renewed upon
               expiration and the employee is currently earning an annual salary
               of $82,500.

                    In September  1995,  the Company  entered into an employment
               agreement  with an  officer/director  for a period of twenty four
               months   commencing   December  1,  1995.   This   agreement   is
               automatically  extendible  for a further twenty four month period
               and provides for an annual  salary of $55,000,  subject to review
               by the Board of  Directors.  As at November 30, 1998,  the annual
               salary amounted to $76,000.




                                     F - 20


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1998 AND 1997


NOTE 18 - MINORITY INTEREST IN SUBSIDIARIES:

                    The Company  owned 70% of AC  Automotive  Group,  Inc.  ("AC
               Group")  through  November 30, 1997. As of November 30, 1996, the
               Company  reflected  a charge of $539,370  to  additional  paid-in
               capital  in order  to  properly  reflect  the  minority  interest
               liability  of  $482,486.  For the y ear ended  November 30, 1998,
               losses  applicable  to  the  minority  shareholder  exceeded  its
               interest.  Accordingly,  such  losses  were  charged  against the
               operations of the company. In February 1998, AC Automotive Group,
               Inc.  issued  additional  shares to  certain  individuals  and an
               entity  affiliated  with the Company  President  for an aggregate
               consideration  of  $6,573.   Following  further  restructure  the
               ownership of AC  Automotive  Group,  Inc. by the Company has been
               reduced to 16%.  Due to the change in ownership  percentage,  the
               Company  does  not  believe  that it  still  has the  ability  to
               exercise significant influence over AC Automotive Group, Inc. and
               accordingly, consolidation is not considered appropriate.

                    The Company's  investment in AC  Automotive  Group,  Inc. is
               therefore being reported under the cost method of accounting.  As
               a result of this change, the assets and liabilities were removed,
               causing an adjustment in shareholders' equity of $4,302,160.

                    The carrying  value,  which  approximates  to the Directors'
               assessment  of fair value,  of the  investment  in AC  Automotive
               Group, Inc is made up of: 16% of equity $4,048,460


                                     F - 21