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, 1997 and 1996.

         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 a
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 in 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  purchase  and  pays  for  all the
maintenance on the vehicle during the lease term.


                                       18

<PAGE>
         The  Company  has  servicing  agreements  with  automobile  dealers and
service centers, 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,
used 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 U.S.  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  expenses  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 translation are reflected
as a separate item of stockholders' equity.

         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.  These two  companies  were
engaged in the manufacture and sale of specialty automobiles. The purchase price
of  approximately  $6,000,000  was  financed by the sale of common  stock and by
loans. The acquisition  involved the purchase of plant and equipment,  the brand
name,  inventories and an aircraft and was recorded using the purchase method of
accounting (see also Note 18b - notes to financial statements).

Results of Operations - Years Ended November 30, 1997 and November 30, 1996:

Contract Hire/Fleet Management

         Revenues,  including  those from other  group  companies,  for the year
ended November 30, 1997 were approximately $17,294,000 compared to approximately
$12,884,000  for the year ended  November 30, 1996, an increase of $4,410,000 or
34%. The primary reason for this 34% increase was due to an increase in revenues
from  contract  hire,  sale of  vehicles  at lease  maturity  and the selling of
vehicles at low margins to take advantage of dealer bonuses.

         For the year ended November 30, 1997, 550 new vehicles were acquired as
against 385 in the year ended November 30, 1996.  The average  monthly rental of
new  contracts  written  was $541 per  vehicle as against an average of $569 per
vehicle for the previous  year.  The average  monthly rental is dependent on the
type of vehicle being rented and the terms of the contract.

                                       19

<PAGE>
         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.  For the
year ended  November 30, 1996,  157 vehicles were disposed of on  termination of
contracts  at an average  profit of $2,233 per vehicle.  The average  profit per
disposal is dependent  on the type of vehicle  sold and current  market value of
vehicles.

         As of November 30, 1997, 1,740 vehicles were under lease and management
compared to 1,409 vehicles as at November 30, 1996.

         Cost of sales  increased  in actual  dollars and as a percent of sales,
when comparing the years ended November 30, 1997 and 1996. These costs increased
by approximately $3,193,000 or 31%, which is less than the increase in revenues.
As a percent of sales, cost of sales for 1997 was 77.7% versus 79.5% for 1996.

         General and administrative  expenses increased from $1,802,000 for 1996
to  $1,858,000  for 1997,  an  increase  of $56,000 or 3%. As a percent of sales
these expenses  represented  11% of sales for 1997 and 14% for 1996.  Management
believes that they can continue to increase  revenues whilst keeping general and
administration costs under control.

         Interest expense increased from $860,000 in 1996 to $1,747,000 in 1997.
Management  attributes  this  increase  to the large  increase  in new  business
written and the associated increase in funding of vehicles,  providing financial
support to AC Cars (see  below)  and the costs  associated  with the  raising of
finances to fund the acquisition of AC Cars.

         The loss on sale of fixed assets  resulted  from the sale of a property
to the tenant who  exercised  their  option to  purchase.  The loss  amounted to
approximately $455,000.

   
     Income (loss) before taxes for the years ended  November 30, 1997 and 1996,
prior to  amortization  of  goodwill  for the  period  ($632,000  and  $635,000,
respectively)  and  extraordinary  loss on  sale of  fixed  assets  of  $455,000
aggregated $256,000 and ($20,000), respectively.     

AC Cars

         The Company,  on November 29, 1996,  through its newly formed 70% owned
subsidiary,  AC Automotive  Group,  Inc. and its wholly-owned  subsidiary AC Car
Group  Limited,  completed the  acquisition of certain assets of AC Cars Limited
and Autokraft  Limited.  These two companies are engaged in the  manufacture and
sale of sports  cars  among  which the famous AC Cobra  sells for  approximately
$100,000 each.

         The Company  acquired the business out of  administrative  receivership
and for most of the year  has  devoted  most of its  resources  to  resurrecting
operations.  This has involved  upgrading of  production  facilities,  improving
efficiency,  appointing  new  dealerships,  installing  systems and controls and
appointing new management where  necessary.  New dealerships have been appointed
in the United  Kingdom and a distributor  has been  appointed in Australia.  The
Company  has  embarked  on a  program  to bring the new AC Ace  Sports  car into
production in the last quarter of 1997.

                                       20

<PAGE>
         Revenues,  including  those from other  group  companies,  for the year
ended November 30, 1997, were approximately $1,633,000. Other income of $701,000
resulted mainly from the sale of the option to purchase the property occupied by
the operation.

         Cost  of  sales  amounted  to  approximately  $1,573,000  on the  above
revenues.

General and administration expenses amounted to approximately  $2,589,000.  Rent
and property taxes of approximately  $865,000 and salaries of $282,000 accounted
for 44% of the above costs.

         Depreciation  of plant,  machinery,  tooling,  equipment  and  fixtures
amounted to approximately $400,000.

         Interest amounted to approximately  $462,000 for the year. Interest was
incurred  on a bank line of credit of  $195,000,  on bank debt of $80,000 and on
acquisition debt of $187,000.

         The  Hurricane  aircraft  which was  acquired  as part of the assets at
acquisition, was disposed of at a loss of approximately $299,000.

         AC Cars is in a developmental  stage and certain specific expenses have
been  classified  as research  and  development  costs.  These  costs  relate to
research and development  incurred on the manufacture and distribution of the AC
Cobra and AC Ace and are separately  disclosed.  Management  believes it is more
prudent  to write  off these  costs  immediately  as they  occur.  Research  and
development costs amounted to approximately $983,000 for the current year.

         (Loss)  before  tax for the  year  ended  November  30,  1997 on the AC
business aggregated $4,111,000.

         In February 1998, subsequent to the end of the Company's current fiscal
year, AC  Automotive  issued  additional  shares to certain  individuals  and an
entity  affiliated  with the Company's  President for aggregate  cash of $6,776,
thereby diluting the Company's ownership in this subsidiary to 20%. See Note 18b
of Notes to the Financial Statements for additional information.

Consolidated

         For the year ended November 30, 1997,  the Company  reported a net loss
of  $4,455,400  or $1.59 per share.  For the year ended  November 30, 1996,  the
Company reported a net loss of $600,622 or $.25 per share.

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.  At November  30, 1997 and 1996,  the
Company's  balance sheet  reflected cash of $77,000 and $251,000,  respectively,
accounts receivable of

                                       21

<PAGE>
$2,002,000 and  $2,022,000,  respectively,  and total assets of $40,301,000  and
$33,690,000, respectively. The principal reason for the increase in total assets
is an increase in contract hire vehicles available for lease.

         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 $120,000 ($.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.

         The  Company's  total  assets as of November  30, 1997 and 1996 include
intangible  assets of  approximately  $9,090,000 and  $9,722,000,  respectively.
These intangible assets consist of the unamortized portion of the costs over net
assets acquired in acquisitions,  which are being amortized over periods ranging
from 10 to 20 years. When adjusted for these intangible assets, the net tangible
book value of the Company at November  30, 1997 and 1996 would be  approximately
$1,680,000 (negative) $2,235,000, respectively.

         During  the  years  ended  November  30,  1997 and  1996,  the  Company
generated  cash  flows  from  operating  activities  aggregating   approximately
$1,572,000 and $489,000, respectively. Investing activities reflect uses of cash
for the years ended  November 30, 1997 and 1996 of $11,911,000  and  $8,759,000,
respectively. These uses of cash are the result of the purchases of fixed assets
(primarily  revenue  producing  vehicles) net of the proceeds  received from the
sale of vehicles at lease expiration dates and the acquisition described above.

         In  order  to  replenish  its  fleet  of  revenue  producing  vehicles,
annually, the Company is required to purchase from 300 to 400 new vehicles at an
average cost of approximately $25,000 each. At the time of purchase, the Company
typically  makes a cash deposit of  approximately  10% and finances the balance.
The Company has  funding  lines with  several  financing  institutions  for this
purpose  which  aggregate  approximately  $23,677,500  at November 30, 1997.  At
November 30, 1997, there was approximately  $18,342,000  outstanding under these
lines.  These lines are typically open for between 24 and 60 months depending on
the terms,  the most  important  term being the interest  rate.  Therefore,  the
principal amount of the Company's  current credit lines is constantly  changing.
Since the  Company's  funding  lines are asset based  (secured  by the  vehicles
purchased),  there is generally no difficulty obtaining funding lines,  however,
the Company is continuously seeking to find the best terms and rates.  Typically
financing  institutions authorize credit lines with a fixed interest rate, which
line is to be open for a certain  period of time.  During  the term of the line,
the  Company  may draw down on such line in order to  finance  the  purchase  of
vehicles  to lease.  When the time for  drawing  down on the line  expires,  the
Company  can no longer  draw down on such line to finance  additional  vehicles,
however, the amount drawn is repaid pursuant to the terms of such line.



                                       22

<PAGE>
         For the year ended  November 30, 1997,  the Company  provided cash from
financing activities  ($10,208,000)  primarily due to financing provided by bank
lines of credit  ($4,012,000)  plus the  increases  in financing of new vehicles
($19,492,000)  net of the  amounts  needed  to  reduce  hire  purchase  contract
financing  ($12,185,000).  For  fiscal  1996,  the  Company  provided  cash from
financing activities of approximately $9,240,000 primarily as a result of an IPO
($2,200,000) and the financing needed to acquire new vehicles  ($11,500,000) net
of the amounts utilized to pay hire purchase contract financing ($6,100,000).

         Other than the annual  acquisitions  of revenue  producing  vehicles as
mentioned  above,  there are no material  planned  capital  expenditures  at the
present time.

         The  Company  believes  that its cash  flow  from  operations,  and its
available funding lines for the acquisition of revenue  producing  vehicles will
be sufficient for at least the ensuing 12 month period.

         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 words  "anticipate,
"estimate," "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.


                                       23

<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.




                                       24

<PAGE>



                                    PART III



<PAGE>
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>

         Name                       Age                       Position with the Company

<S>                                 <C>                       <C>
         Alan Lubinsky              39                        President, Secretary, and Chairman of
                                                              the Board of Directors

         Ivan Averbuch              42                        Chief Financial Officer and
                                                              Treasurer

         Allan Edgar                51                        Director

         Ian Satill                 39                        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.



                                       25

<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.  Based solely upon
a review of the copies of such forms  furnished to the Company,  the Company has
been informed that all officers, directors or greater than 10% shareholders have
stated  that they have filed such  reports as is  required  pursuant  to Section
16(a)  during the 1997 fiscal year,  except Alan  Lubinsky did not file a Form 4
with  respect to the  receipt of stock  options in May 1997.  Mr.  Lubinsky  has
stated that he intends on filing a Form 5 to rectify the situation. Neither Ivan
Averbuch  nor Allan  Edgar  filed a Form 4 with  respect to the receipt of stock
options in May 1997. Messrs.  Averbuch and Edgar have stated that they intend to
file Form 5's to rectify the situation. The Company has no basis to believe that
any other required filing by any of the above indicated individuals has not been
made.

                                       26