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, 1997

                                       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 0-24550


                                   PRIDE, INC.
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>

<S>                                                                    <C>       
                  Delaware                                             65-0109088
                  (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, $.002 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 May 6, 1998  (consisting  of
Common  Stock,   $.002  par  value  per  share)  held  by   non-affiliates   was
approximately  $ , based upon the average  bid and asked  prices for such Common
Stock on said date ($0.66) as reported by a market  maker.  The issuer's and its
subsidiaries  had on a  consolidated  basis,  revenues  of $ for its fiscal year
ended  November  30,  1997.  On May 6,  1998,  there  were  1,995,357  shares of
Registrant's Common Stock outstanding.




<PAGE>
                                     PART I


ITEM 1.           DESCRIPTION OF BUSINESS

History of the Company

     Pride,  Inc. (the "Company") was incorporated as L.H.M.  Corp. in the State
of  Delaware  on May 10,  1988,  as a "blank  check"  company for the purpose of
seeking  potential  business  ventures through  acquisition or merger.  In April
1990, L.H.M.  Corp.  entered into an Agreement and Plan of  Reorganization  with
International  Sportsfest,  Inc.  ("ISI"),  a  company  formed  to engage in and
establish  sports  expositions  in sports  products  such as clothing and sports
related equipment.  At such time L.H.M. Corp. changed its name to ISI. ISI never
engaged in any business  operations.  In November 1992, ISI effected a 1 for 200
reverse split of its issued and  outstanding  shares of Common Stock. In January
1994,  ISI  entered  into an  Agreement  and Plan of  Reorganization  with Pride
Management Services, Plc. ("PMS"), an English corporation,  whereby PMS became a
wholly owned subsidiary of ISI and ISI changed its name to Pride, Inc.

     The  Company  also owns 100% of the  capital  stock of Watford  Investments
(Pty) Limited ("WI"), a South African  company,  which was formed in March 1995.
WI was formed for the purpose of obtaining a 24% interest in Masonic Motors,  an
automobile  dealership in South Africa,  which WI subsequently sold in September
1995.  WI is an import and  export  company,  which had  minimal  revenues  from
operations in fiscal 1996 and no revenues from operations in fiscal 1997.

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

     Pursuant to the terms and conditions of the  Reorganization  in March 1995,
between the  Company,  PMS and PAG,  PAG issued  1,500,000  shares of its common
stock to the Company in exchange for all of the issued and outstanding shares of
PMS. In connection  with the  Reorganization  and formation of PAG, PMS became a
wholly  owned  subsidiary  of PAG  which  is  approximately  72.8%  owned by the
Company.  PMS is a holding company which has six wholly owned subsidiaries which
engage in PAG'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 operate as one unit, with
the same management and facilities.  Unless the context otherwise requires,  all
references  to the  "Company"  are to its  subsidiary  PAG,  PAG's  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. The Company's securities
are currently  traded on the Nasdaq  SmallCap  Stock Market and the Boston Stock
Exchange, Inc.

     On January 12, 1998, PAG filed a  registration  statement on Form SB-2 with
the SEC, to register  1,000,000  shares of PAG's  Common  Stock.  In  connection
therewith,  PAG has entered into a letter of intent with Mason Hill & Co., Inc.,
an NASD broker-dealer,  to underwrite such securities a firm commitment basis. A
condition to such  commitment  requires PAG to grant to Mason Hill,  warrants to
purchase an  aggregate  of 100,000  shares of PAG's  common stock at 120% of the
public offering price.  PAG has applied to have the additional  securities being
underwritten in that offering  listed on the Nasdaq SmallCap Stock Market,  Inc.
and the Boston Stock Exchange.  Additionally, PAG has agreed to register 170,000
shares of Common Stock on such registration statement,  which shares were issued
in connection with PAG's December 1996 private placement (the "Private Placement
Shares").  The Private Placement Shares will not be underwritten by Mason Hill &
Co., Inc. There can be no assurance that the public  offering  described  herein
will be completed.

Business of Pride Management Services, Plc.

     The  Company  engages  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. The Company's business strategy is
to (i) provide  personal  and  attentive  service to its  clientele,  (ii) lease
primarily  to  high-quality  credit  applicants  in order to continue to build a
lease portfolio with low  delinquency  and credit loss rates,  (iii) finance its
lease portfolio with competitive  credit terms and (iv) manage its residual risk
relating to the  Company's  resale of  automobiles  after the  expiration of the
lease term. The leasing, financing and servicing of the vehicles is described as
a "contract hire."

     The Company purchases each automobile pursuant to the specifications of its
clients,  finances the purchase and pays for all the  maintenance and repairs on
the  vehicle  during  the term of lease.  Typically,  the  Company  pays off the
purchase price of the vehicles during the term of the lease and then resells the
automobile at the end of the lease term.


                                        2

<PAGE>
Acquisitions

         The Company has  expanded  its  operations  in the past  several  years
through  acquisition.  In May 1990, the Company  formed Baker Vehicle  Contracts
Limited ("Baker") to acquire certain assets, including the right to the name and
contracts  of  Baker  Hire  Limited,  an  English  company.  At the  time of its
acquisition, Baker was a division of W.H. Baker Limited, which company had filed
for bankruptcy protection. Baker's vehicle leasing is primarily in Wales and the
southwest  region of England.  In December  1990,  PMS was contracted to run the
business  of  County  Contract  Hire  Limited  ("County"),  which  at that  time
comprised  approximately  3,500 leased  vehicles.  In February 1992, the Company
purchased County from Berisford  International  Plc., an English public company,
pursuant  to a  stock  purchase  agreement,  whereby  PMS  acquired  all  of the
outstanding  shares  of  County  and  changed  County's  name to  Pride  Vehicle
Contracts (UK) Limited.  In October 1994, the Company acquired certain assets of
Master Vehicle Contracts Limited ("Master"), an English company, pursuant to the
terms of an asset purchase  agreement.  The assets purchased  included vehicles,
vehicle lease agreements and customer lists. At the time of the sale, Master was
in  receivership,  whereby  the  sale  was  entered  into by PMS  and the  court
appointed receivers.  In connection with this purchase, the Company acquired the
rights to use the name Master Vehicle Contracts Limited.

Industry Overview

     Companies  have a variety of  financing  alternatives  available to them in
acquiring the use of a new  automobile,  either through the purchase or lease of
such  vehicle.  In financing  the  purchase of a vehicle  there are various loan
alternatives  including,  fully amortizing,  balloon payment, no money down, low
down payment and business equity loans. In terms of leasing vehicles,  there are
various options including,  payment schedules,  term, maintenance and repurchase
rights. The primary benefit of leasing over purchasing is that leasing typically
provides a consumer with the  opportunity to acquire the use of a new automobile
at a lower monthly payment than financing the purchase of such vehicle,  usually
without a  significant  initial  cash  outlay,  and  enables  the  return of the
automobile without any further liability at the end of the lease term. Companies
which provide  employees with  automobile  transportation  typically  lease such
vehicles and expense the costs.

         The increase in new vehicle  prices in relation to annual median family
income  has been a  contributing  factor in the growth in the  leasing  and used
automobile markets. This has provided the Company with a further opportunity for
revenue growth through the resale of its vehicles after the term of the lease or
in the event there are defaults of the leases.

Business Objectives

     The  Company's  primary goal is to expand its leasing and fleet  management
operations,  increase and obtain  better terms with respect to the  financing of
the  vehicles  it  leases  and to  increase  the  profitability  of its  vehicle
remarketing  program.  The  Company's  strategy for  continued  growth is to (i)
increase lease origination by (a) increased name recognition, (b) acquisition of
similar companies or their assets, (c) the development,  expansion and retention
of existing  clients,  and (d) the expansion into new geographic  markets,  (ii)
further develop and market its fleet management services, (iii) increase and

                                        3

<PAGE>
improve  the terms of its  financing  arrangements,  (iv)  further  develop  and
increase the profitability of its used automobile  remarketing  operations,  and
(v) lease  primarily to high quality  credit  applicants in order to continue to
build a lease portfolio with low delinquency and credit loss rates.

Subsidiaries

         The following table lists all the wholly owned subsidiaries of PMS, the
date of their formation and business operations.  These companies operate as one
unit in conducting the business affairs of the Company.
<TABLE>
<CAPTION>

                                             Date of
         Name                                Formation                 Business Operations

<S>                                         <C>                        <C>
         Pride Vehicle Contracts
          Limited                           12/23/86                   Conducts all administrative functions for the Company,
                                                                       including paying salaries and all operational expenses of
                                                                       the Company.

         Baker Vehicle Contracts Limited    02/22/89                   Vehicle leasing,  primarily the business operations of Baker 
                                                                       Hire Contracts Limited,  acquired in May 1990,  which 
                                                                       operations are primarily in Wales and the south west region 
                                                                       of England.

         Pride Vehicle Contracts            09/28/88                   Vehicle leasing, acquired County Contract Hire Limited
          (UK) Limited                                                 Hire Limited and Master Vehicle Contracts Limited in
                                                                       February 1992 and March 1994, respectively.

         Pride Leasing Limited              02/22/89                   Owned  property  and a  building  in  Croydon,  England,  
                                                                       which was sold in November 1997.

         Pride Vehicle Management           02/14/90                   Operates the Company's fleet management services.
          Limited

         Pride Vehicle Deliveries           06/14/90                   Provides vehicle distribution and collection services for
          Limited                                                      all the Company's leasing operations.
</TABLE>

Leasing, Maintenance and Resale

           The  Company   purchases  each  vehicle   pursuant  to  its  client's
specifications;  finances its purchase and pays for all the  maintenance  on the
vehicle during the term of the lease.  The Company usually finances the purchase
of each  vehicle to  correspond  with the term of the lease,  such that upon the
completion  of the lease term the  automobiles  are fully paid. As of January 1,
1998, the Company had approximately 1,477 vehicles under lease.

         The term of the leases average generally between 24 and 48 months, with
the average lease being 36 months.  In addition to setting forth the lease term,
the amount of the rental payments and the mileage allowance, each lease requires
the lessee to pay all fees, taxes,  fines and other costs relating to the use of
the  vehicle.  Generally,  the lessee  pays the first and last two months  lease
payment in advance of the

                                        4

<PAGE>
lease term. The lessee is required to maintain  liability and casualty insurance
on each  vehicle at  specified  limits and to name the Company as an  additional
insured and loss payee.  The Company  will only  approve  policies  which have a
maximum deductible of $500.

         The Company's  sales policy  emphasizes  leasing to  financially  sound
clients and requires certain financial  disclosures prior to executing any lease
agreement. Customer accounts are targeted from profitable, growing, medium-sized
corporate companies. For the years ended November 30, 1996 and 1997, the Company
had two  unaffiliated  customers,  Westbury  Homes Plc. and Campbell  Distillers
Limited,  which companies  accounted for in the aggregate  approximately 15% and
7%,  respectively,  of the  Company's  total  revenues.  The Company also leases
vehicles to the following local government  agencies;  Swansea Council in Wales,
Brent Council in London and Mid Glarmorgan Council in Wales.

         Each lease applicant must provide  information  regarding,  among other
things, corporate history, length of time in business, ability to pay based both
on income level and certain debt to income  ratios  developed by the Company and
credit history,  including comparable borrowing experience.  Review of financial
statements,  audited where obtainable allows for the independent verification of
the  Company's  financial  position and past history.  The foregoing  procedures
provide the general basis for the Company's credit  decisions,  but the ultimate
determination   is  in  the  discretion  of  the  Company's   credit   analysts.
Accordingly, certain of the leases entered into by the Company may not meet each
of the Company's credit guidelines.

         The  Company  has  servicing  agreements  with  over  1,400  automotive
dealerships  and independent  service centers in its areas of operations.  Since
all of the leased vehicles are new, there are warranties  typically ranging from
12 to 36 months or 20,000 to 60,000  miles,  which  ever comes  first,  with the
average being 24 months or 40,000 miles. Also each lease has mileage  limitation
and  additional  fees for  overages.  Therefore,  the  Company  does  not  incur
significant  expenses for  repairs.  Maintenance  is regularly  performed on all
vehicles,  pursuant to negotiated pricing schedules.  No work is permitted to be
performed on any vehicle,  unless  performed by one of the Company's  contracted
service centers with the prior consent of the Company.

         The monthly  lease  payment  which the  Company  charges its clients 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  anticipated  future  economic  variables.  The
client is responsible for maintaining its own insurance, of which the Company is
the beneficiary, in the event the vehicle is damaged.

         The Company  typically  attempts to match the  financing  term with the
lease  term,  whereby  at  the  end of the  lease  term  the  Company  owns  the
automobile.  The Company does not currently  perform  repairs or refurbishing on
the returned  vehicles,  rather,  the Company  attempts to resell such  vehicles
immediately  upon their  return in the same  condition  as they are returned in.
This enables the Company to increase its cash flow,  though the Company believes
it could obtain  higher  prices for the used vehicles in the event minor repairs
were  performed  prior to resale.  The  Company  manages  its  residual  risk by
focusing on the leasing of vehicle  models  which it believes  will have a broad
appeal in the used

                                        5

<PAGE>
automobile  market  at the  end of the  lease  term  and by  utilizing  multiple
remarketing channels including, but not limited to used car wholesalers and used
car retailers.  The Company upon pricing the lease of a new vehicle  reviews the
listed  wholesale price as listed in several pricing guides,  predominantly  the
Current Auction Prices ("CAP") book, which gives the current  wholesale price of
the model being leased.  The Company  currently  attempts to get at least 85% of
the CAP  listed  wholesale  price upon the resale of the  vehicle.  The  Company
believes that with increased working capital and cash flow from operations,  the
Company can make minor repairs and  refurbishings  on the automobiles  performed
and seek  higher  prices  on  resales  of up to 110% of the  wholesale  price on
popular  models.  The Company  sells its used vehicles  through used  automobile
wholesalers  and  retailers,   automobile  auctions,  unaffiliated  dealers  and
pursuant to sales to related parties of the lessees. In the event the market for
used automobiles  decreases the models or conditions of the vehicles returned to
the Company  decrease  their resale  value or vehicles are returned  pursuant to
defaults in the lease agreements, such events may adversely affect the Company's
cash  flow,  profitability  and  business  operations.  See  "--  Financing  and
Collections" and "-- Competition."

Fleet Management Services

         In 1994,  the  Company  opened  its fleet  management  division,  which
division manages the automobiles for certain of its corporate clients who choose
to  own  the  vehicle(s)  directly.  Customarily,  these  clients  purchase  the
automobiles through the Company in order to take advantage of the Company's bulk
purchase  discounts.  The  Company  maintains  these  vehicles on behalf of such
clients  pursuant to a monthly  management  fee,  usually $15 per automobile and
disposes of the vehicles thereafter on behalf of the client. The client pays all
costs  associated with the purchase,  maintenance and resale of the automobiles.
The Company  estimates that for the year ended November 30, 1997 less than 5% of
the Company's revenues were from fleet management services.

Suppliers

         The  Company  purchases  all of the  automobiles  that it leases to its
clients from  automotive  dealerships,  usually several at a time. For the years
ended November 30, 1996 and November 30, 1997,  General Motors and Ford were the
manufacturers  of  approximately  20% and  20%,  respectively  and 16% and  17%,
respectively,  of the vehicles  which it leased.  The Company does not depend on
any individual dealership for the purchase of any vehicle brand. The Company has
no written  agreements with any dealership it purchases vehicles from, though it
does receive yearly rebates from manufacturers  based on quantity of automobiles
purchased.  Management believes that the price it pays and the terms it receives
for the  automobiles it purchases are more favorable than it would receive if it
was purchasing  automobiles on an individual basis. The Company believes that it
will continue to be able to purchase automobiles at competitive prices and terms
into the future.

         A portion of the Company's  profit margin is based on rebates  received
directly  from the  automobile  manufacturers  on a yearly  basis.  The  Company
receives  a  rebate  on most  vehicles  purchased  based  upon the  quantity  of
automobiles  purchased from said  manufacturer each year. This rebate is usually
between $100 and $400 per vehicle.  However,  the Company has no assurances that
it will be able to  acquire  automobiles  at  favorable  prices in the future or
receive  such  rebates  in the  future.  No  assurance  can  be  given  that  an
uninterrupted and adequate supply of automobiles will be available to the

                                        6

<PAGE>
Company  in  the  future,  although,  the  Company  believes  that  there  are a
sufficient number of automobile dealerships, so that in the event any individual
or group of dealerships can no longer service the Company's  needs,  the Company
will be able to find other  dealerships at competitive  prices. In the event the
Company  cannot  obtain  the   automobiles  of  any  specific   manufacturer  or
automobiles  in general or is not able to purchase such  automobiles  on similar
terms as is presently  available to it, the Company may be materially  adversely
affected.

Financing and Collections

         The Company  provides new  automobiles to its clients  pursuant to each
individual  client's  specifications,  with  personal and  attentive  service to
include all of its clients  needs.  The  Company's  sales  representatives  have
extensive  experience in the  automobile  finance and leasing  industry and work
closely with the clients to meet their driving and financial needs.

         Since  November  1992,  when  entering into new lease  agreements,  the
Company purchases the automobile,  which usually requires a 10% down payment and
pays down the note on the purchase  including  principal and interest during the
term of the lease.  Prior to  November  1992,  the  Company  would  finance  the
purchase of automobiles  through  promissory notes which required the payment of
interest  during the term of the loan and the  repayment  of the  principal in a
balloon payment at loan maturity which is the same as the end of the lease term.
This financing strategy enabled the Company to increase its cash flow during the
term of the lease,  but the higher  financing fees and interest  expense reduced
the Company's profit on the resale of the vehicles.

         The  Company  has asset  funding  lines to  acquire  revenue  producing
vehicles  with  several  institutions  in  England  in the  aggregate  amount of
$23,667,500  of which the Company has borrowed  approximately  $18,342,778 as of
November  30,  1997.  The  increase  in the  Company's  asset  funding  line  is
attributable  to the equity raised in the Company's  initial public  offering in
April 1996. See "Management's Discussion and Analysis of Financial Condition and
Results of  Operations  -  Liquidity  and  Capital  Resources."  Under the lease
agreements,  the lessees generally have no right to terminate their leases prior
to the end of their scheduled term. In the event that any lease terminates prior
to the end of its scheduled term (whether by way of default,  the destruction or
theft of the  vehicle),  the lessee is liable to the  Company  for the amount by
which the  lessee's  default  termination  liability  under the lease  agreement
exceeds the realized  value of such vehicle,  which may be obtained  through the
proceeds of the sale of the vehicle (including a sale following repossession) or
the proceeds of any applicable insurance on the vehicle.  Under the terms of the
lease, the term "default termination  liability" includes;  (i) all payments due
under the lease  agreement up to the  termination  date,  inclusive of interest,
(ii) future rental payments due from termination date until the contracted lease
termination  date,  less  maintenance and a 5% discount and (iii) the difference
between  the  amount  received  pursuant  to the  sale  of the  vehicle  and the
estimated residual value, if such sale price is less than the estimated residual
value.  Under its  agreements  with the  lessee,  the  Company  pays the sale or
insurance  proceeds to its lender up to the amount of the then remaining balance
of the note payable  related to the vehicle.  Any shortfall is a credit loss and
is borne by the lessee, and any excess is retained by the Company.



                                        7

<PAGE>
         As of August  31,  1997,  the  Company's  line of credit  with its bank
expired.  In February  1998,  the Company  entered into a new agreement with the
bank. This new line of credit of $7,202,500, is payable on demand and is secured
by all assets of the Company other than building and revenue-producing  vehicles
which are  already  pledged  (see  Notes 6b and 7 to the Notes to the  Financial
Statements).  Interest  is payable  at rates  between 2% and 4% in excess of the
bank's base rate (7 1/2% at November 30, 1997).  This facility has to be reduced
by $837,500 by March 31, 1998 and a further  $921,250 by December 31, 1998.  The
agreement is due for review November 1998.

         The  Company  attempts  to enhance  the  performance  of its leases and
thereby  minimize its financial  risks by  maintaining  timely,  consistent  and
direct   customer   contact.   When  a  default  does  occur,   collections  and
repossessions are handled by the Company's collection  department.  Upon a lease
payment default and after the passage of three days, the Company mails a written
notice to the defaulting  customer and attempts to contact the customer directly
by phone. Once contact is established,  the collection department will work with
the customer  until the default is cured.  If contact is not made or the default
is not satisfactorily  cured, the Company will proceed to repossess the vehicle.
The Company will repossess the vehicle upon a determination that there is a risk
of not  recovering  the  vehicle.  In the event  repossession  is  required,  it
typically will take place within 20 days after the initial default.  Pursuant to
English  law, a company  can  repossess  a vehicle  for non payment in the event
payment is not received within two days of the due date, however,  the Company's
lease agreements provide for a seven day grace period. No notice is required and
no demand for payment need be made prior to  repossession.  The Company,  as the
vehicles owner,  has all key numbers with respect to the vehicles it leases.  In
the event the  Company  deems  repossession  necessary  it sends an  employee to
physically  drive the vehicle  away from the lessee.  Repossessed  vehicles  are
offered by the Company at public sale,  after the giving of notice,  and sold by
the Company in a commercially  reasonable manner. There were no repossessions of
vehicles in fiscal 1996. In 1997, there were eight repossessions, however six of
those repossessions were re-leased.  There have been none to date in 1998. There
were no  repossessions  in fiscal 1995. Only one vehicle was repossessed  during
fiscal 1994.

Competition

         The  Company's   business  is  highly   competitive,   with  relatively
insignificant  barriers to entry and with numerous firms  competing for the same
customers.  The Company is in direct competition with local (includes the county
of Hertfordshire and the surrounding  areas),  regional (includes London and the
surrounding areas) and national  (includes all of the United Kingdom,  inclusive
of England,  Wales, Scotland and Northern Ireland) automotive leasing companies,
many of which  have  greater  resources  and  more  extensive  distribution  and
marketing than the Company.  The largest leasing companies in direct competition
with the Company are Cowie  Interleasing,  a division  of Cowie,  Plc.,  and Lex
Vehicle  Leasing  Limited,  each of  which  claim  to have  presently  on  lease
approximately  65,000  vehicles.  As of January 1, 1998,  the  Company had 1,477
vehicles  under lease.  The Company also  competes in the  automobile  financing
industry with providers of other forms of financing.  Other competitors  include
finance companies affiliated with automobile manufacturers,  a variety of local,
regional and national finance  companies,  commercial banks,  savings and loans,
and other consumer  lenders such as industrial  thrifts and credit  unions.  The
automobile  leasing business is highly  competitive and the Company competes for
business on the basis of both pricing and service. The Company believes that the
main

                                        8

<PAGE>
concern of the lessee or buyer of a new  automobile is the amount of the monthly
payment  and  of any  down  payment.  Many  of the  Company's  competitors  have
significantly  greater financial,  technical and marketing  resources and market
share than the Company.  Automobile finance companies affiliated with automobile
manufacturers, from time to time offer aggressive leasing and financing programs
at below market pricing to promote the sale of certain vehicle  models.  Many of
the national  leasing  companies  have  extensive  advertising  campaigns  which
develop and reinforce brand recognition. In addition, many of such manufacturers
have agreements with vehicle  leasing  entities to jointly  advertise and market
their products and services.

         The  used  automobile  sales  business  is  highly  competitive,   with
competition coming from individuals, independent used automobile wholesalers and
dealerships  and used  automobile  lots operated by new  automobile  dealers and
rental car companies.

Marketing and Sales

         The sales policies of the Company have  emphasized  quality of business
rather than  volume,  both in its own new  business  contracts  and its acquired
contracts.  This  controlled  and  conservative  approach  to growth  allows the
Company to write  what it  considers  to be good  quality,  profitable  contract
hires.  Customer service and satisfaction is then emphasized as a high priority,
to ensure that the group's premium pricing policies can be maintained for repeat
business.

         Customer accounts are targeted from profitable,  growing,  medium-sized
corporate companies together with public sector referrals.  The Company's credit
underwriting  policies reflect this prudent  approach,  and ensure that the high
quality of the portfolio is maintained. The Company takes a balanced,  portfolio
approach to risk  management  with a variety of company sizes to balance  credit
risk against profit margin.

         The Company executes a finance company standard hire purchase agreement
for each lease and the  finance  company  takes a  registered  charge  (security
interest)  over the underlying  agreement  between the Company and its customer.
The security of the lender is further increased by the Company's down payment on
the vehicles and the monthly  payments of principal and interest during the term
of the  lease.  The  Company  has all  required  liens  and  security  interests
appropriately filed and recorded.

         As part of its  obligations,  the Company  performs all  administrative
functions in the  acquisition,  registration  and leasing of the  automobile and
controls  and pays for all  required  servicing  of its  vehicles.  The  Company
obtains  appropriate  vehicle  registrations  and titles for all lease vehicles,
tracks compliance with insurance requirements, negotiates and handles all claims
with  insurance  companies  and  remits  all  appropriate  sales  taxes on lease
payments to the taxing authority.

Government Regulations

         The Company is subject to regulation by the United  Kingdom  Department
of Trade and Industry  (the  "Department  of Trade").  The  Department  of Trade
establishes  general  rules and  regulations  with respect to the operation of a
business in the United Kingdom. The Department of Trade has not

                                        9

<PAGE>
established any regulations or licensing  requirements  specifically  regulating
the leasing of  automobiles to companies.  There can be no assurances  that such
will be the case in the future or that if licensing or other form of  regulation
is required in order to engage in the  Company's  business that the Company will
be successful in obtaining such licenses or in meeting the  requirements of such
regulations.  The Department of Trade, in accordance  with the credit  agreement
act,  requires  the  issuance  of a  license  in  order  to  lease  vehicles  to
individuals,  which license the Company has obtained, however, the Company never
has nor does it presently intend to lease vehicles to individuals.  In addition,
the  Company  must also  comply with a wide range of other state and local rules
and regulations applicable to its business, including regulations covering labor
relations,  safety  standards,  affirmative  action  and the  protection  of the
environment.  Continued  compliance  with the broad  regulatory  network  of the
United  Kingdom is  essential  and costly  and the  failure to comply  with such
regulations may have an adverse effect on the Company's operations.

         In August 1995, the British  Government  passed a law allowing  leasing
companies to be reimbursed by the Government for the value added tax "VAT" which
is added to all consumer goods including  automobiles.  The VAT tax is currently
at 17.5%. Reimbursement of the VAT tax allowed the Company to charge lower lease
rates.

Employees

         As of January 1, 1998, the Company employed 20 full-time  persons,  six
are in management  (three 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 is not a party to any material pending litigation which, if
decided  adversely to the Company,  would have a significant  negative impact on
the business, income, assets or operation of the Company, and the Company is not
aware of any material threatened  litigation which might involve the Company. In
England,  the owner of the automobile is not  considered  liable for the acts of
the driver where there is a lease arrangement.



                                       10

<PAGE>
Acquisition of AC Car Group Limited

         In November  1996,  the Company,  through its  subsidiary  AC Car Group
Limited, 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.

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. The Company expects the AC Ace should enter into
its final production stage in January 1998.

         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."



                                       11

<PAGE>
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, 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.

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.

         Whereas  the  Company  is  pleased  that it has been able to  procure a
licensing  arrangement  to  continue  to  use  the  name  "Cobra",  the  Company
anticipates that a significantly  larger portion of its future marketing efforts
will concentrate on the venerable history and prestige  associated with the name
"AC", which name the Company acquired outright as part of the Asset Acquisition.

         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").



                                       12

<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.

Properties

         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

                                       13

<PAGE>
($8,715,200)  in July  1997.  AC then  sold the  property  for  (pound)5,600,000
($9,385,600)  and  entered  into a 15 year lease for 39,000  square  feet of the
property at the rate of (pound)18,000 ($30,200) per month.

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

         The Company is not a party to any material pending litigation which, if
decided  adversely to the Company,  would have a significant  negative impact on
the business, income, assets or operation of the Company, and the Company is not
aware of any material threatened  litigation which might involve the Company. In
England,  the owner of the automobile is not  considered  liable for the acts of
the driver where there is a lease arrangement.

         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.



                                       14

<PAGE>
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, 1997.


                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The  Company's  Common Stock,  $.002 par value per share,  is currently
traded sporadically and on a limited basis in the over-the-counter market on the
OTC Bulletin Board. 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                                                   Common Stock
    Calendar Quarter                     Prices               Calendar Quarter                         Prices
         Ended                      Low       High                  Ended               Low               High

<S>                                 <C>     <C>               <C>                       <C>                <C>    
12/1/94 to 2/28/95                  11/16   21/2              3/1/96 to 5/31/96           1/16            1 7/16
3/1/95  to 5/31/95                  1/4     11/4              6/1/96 to 8/31/96         1                 1 7/16
6/1/95  to 8/31/95                  1/4     1/4               9/1/96 to 11/30/96          5/8             1 7/16
9/1/95  to 11/30/95                 1/4     1/4               12/1/96 to 2/21/97          1/4             1 7/16
12/1/95 to 2/29/96                  3/32    1/8

3/01/97  to 5/31/97                 1/4     1
6/01/97  to 8/31/97                 5/16    1
9/01/97  to 11/30/97                1/4     1
12/01/97 to 3/13/98                 5/16    1
</TABLE>

         On January 13, 1994, the Company  entered into an Agreement and Plan of
Reorganization  with  PMS  and  the  shareholders  of PMS.  The  Company  issued
9,000,000  (pre 10 for 1 reverse  stock  split)  shares  of Common  Stock to the
stockholders of PMS for all the shares of PMS, thereby making PMS a wholly-owned
subsidiary of the Company.  On September 20, 1994, the Company  effected a 1 for
10 reverse  stock split of its issued and  outstanding  shares of Common  Stock,
thereby  reducing  the  issued  and  outstanding  shares  of Common  Stock  from
12,205,355 shares to 1,220,537 shares.

         As of March 13, 1998, the number of registered holders of record of the
Common  Stock,  $.002  par  value,  of the  Company  was  approximately  40,  as
determined by the Company's stockholder records, and does not include beneficial
owners at the Common Stock whose shares are held in names of various

                                       15

<PAGE>
security holders,  dealers and clearing agencies. The Company believes there are
in excess of 400 beneficial holders of the Common Stock.

         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.


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 Inc. (the  "Company")  which is a holding  company,  was  incorporated  as
International  Sportsfest,  Inc. in the state of Delaware on September 11, 1988.
The Company was a development  stage company with no operations  through January
13, 1994. On January 13, 1994, the Company acquired Pride  Management  Services,
Plc ("PMS"), a consolidated  group of operating  companies located in the United
Kingdom.  Simultaneously with the acquisition, the Company changed its name from
International  Sportsfest Inc. to Pride,  Inc. and now has its corporate offices
in Watford,  England and New York City,  New York.  The Company  also decided to
change  its  year  end  from  April 30 to  November  30,  in  order to  coincide
accounting periods with its new subsidiary.

Pursuant  to the  acquisition,  the Company  issued an  aggregate  of  9,000,000
(900,000  shares - post reverse  stock split - see Note 11) shares of its common
stock to the stockholders of PMS in the acquisition.  The 9,000,000 (pre-reverse
split) shares  represented 89% of the 10,155,350  (pre-reverse  split) shares of
common stock outstanding  immediately  after the acquisition.  The consideration
given by the Company, in the form of 9,000,000 (pre-reverse split) shares of its
common stock, was determined in arms-length  negotiations  between management of
the Company and management of PMS. None of the stockholders or management of PMS
were previously  affiliated with the Company in any manner.  The principal basis
used in the  negotiations  to determine the number of shares to be issued by the
Company  was the  percentage  of stock  which  would be owned by the new control
groups  after  the  issuance  thereof,  rather  than any  traditional  valuation
formulas.  By acquiring 100% of the issued and outstanding  common stock of PMS,
PMS became a wholly-owned  subsidiary of the Company.  For accounting  purposes,
the  acquisition has been treated as a  recapitalization  of PMS with PMS as the
acquirer  in a reverse  acquisition.  In March  1997,  pursuant to the terms and
conditions of a  reorganization,  the Company  exchanged all its shares in Pride
Management Services Plc for 1,500,000 shares of common stock in Pride Automotive
Group Plc (a newly formed Delaware  corporation).  As a result of this exchange,
Pride Automotive  Group,  Inc. ("PAG") became a majority owned subsidiary of the
Company and the parent of PMS.

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 operations of the Company.  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.
<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, PAG, through its newly formed majority owned subsidiary AC
Automotive  Group,  Inc. and its  wholly-owned  subsidiary  AC Car Group Limited
(registered in the United  Kingdom),  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 has been recorded using the purchase  method of
accounting. (See also Notes 1 and 17b - 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  $17,366,000  compared  to  approximately
$12,982,000  for the year ended  November 30, 1996, an increase of $4,384,000 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.

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.
<PAGE>
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 $3,279,000 or 32%, which is less than the increase in revenues. As
a percent of sales, cost of sales for 1997 was 77.8% versus 79.1% for 1996.

General  and  administrative  expenses  increased  from  $1,835,000  for 1996 to
$1,940,000  for 1997, an increase of $105,000 or 6%. 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  $884,000  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 and minority  interests for the years ended  November
30, 1997 and 1996,  prior to amortization  of goodwill for the period  ($632,000
and $635,000,  respectively)  and the loss on sale of fixed  assets,  aggregated
$160,000 and ($10,000), 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 Autocraft  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.

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.
<PAGE>
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 and minority interests 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 17b of Notes to the  Financial
Statements for additional information.

Consolidated

For the year  ended  November  30,  1997,  the  Company  reported  a net loss of
$2,464,724 or $1.24 per share. For the year ended November 30, 1996, the Company
reported a net loss of $328,741 or $.16 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 $85,000 and $255,000,  respectively,  accounts
receivable  of  $1,960,000  and  $1,936,000,  respectively,  and total assets of
$40,087,000 and $33,535,000, respectively. The principal reason for the increase
in total assets is an increase in contract hire vehicles available for lease.

In December 1995, PAG 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,  PAG  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   $8,891,000  and  $9,544,000,   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
($1,760,000) and ($2,967,000), respectively.

During the year ended November 30, 1997,  the Company  generated cash flows from
operating activities aggregating approximately $1,363,000. During the year ended
November 30, 1996, the Company generated $456,000 of cash flows from operations.

Investing  activities reflect uses of cash for the years ended November 30, 1997
and 1996 of $11,702,000 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  $23,667,000 at November 30, 1997. At November 30, 1997,
there was approximately  $18,000,000  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
<PAGE>
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.

For the year ended November 30, 1997,  the Company  provided cash from financing
activities  of  approximately  $10,208,000  primarily as a result of increase in
bank lines a credit  $4,900,000 and the financing needed to acquire new vehicles
($19,492,000)  net  of  the  amounts  utilized  to pay  hire  purchase  contract
financing  ($12,185,000).  For  fiscal  1996,  the  Company  provided  cash from
financing  activities  of  $9,280,000  primarily  from  bank  lines of credit of
$1,820,000,  minority  shareholders  of  $2,285,000  and net proceeds  from hire
purchase financing of $5,456,000.

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.

<PAGE>
ITEM 7.           FINANCIAL STATEMENTS

         See attached Financial Statements.


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

         On  November  15,  1994,  the firm of  Lazar,  Levine &  Company,  LLP,
Certified  Public  Accountants,  which had served as auditors  of Pride,  Inc.'s
financial  statements for the fiscal year ended November 30, 1993, ceased to act
as such by mutual agreement with the registrant's Board of Directors.  The Board
of Directors of the registrant thereupon engaged Civvals,  Chartered Accountants
and Registered  Auditors,  of London,  England,  as auditors of its consolidated
financial  statements  for the years ended  November  30, 1994 and  November 30,
1995.  This Firm was previously the auditors of PMS, the acquiror for accounting
purposes in the reverse acquisition.

         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>


         NAME                                        AGE               POSITION

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

         Ivan Averbuch                               42                Chief Financial Officer
                                                                       and Director

         Allan Edgar                                 51                Director
</TABLE>



     Alan Lubinsky.  Mr Lubinsky has been the President,  Secretary and director
of the Company  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 President and a director of Pride  Automotive
Group, Inc. ("PAG") since its inception in March 1995. Mr. Lubinsky has 18 years
experience in the motor vehicle industry in positions of executive management.

     Ivan  Averbuch has been the Chief  Financial  Officer of the of the Company
since December 1995. Mr.  Averbuch has been the Chief  Financial  Officer of PAG
since December 1995. Mr. Averbuch was a director of PAG from December 1995 until
February 1998.  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.

     Allan Edgar has been a director of the Company  since May 1997.  Mr.  Edgar
has been a director of PAG 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.

     The directors of the Company are elected  annually by the  shareholders and
hold  office  until the next  annual  meeting of  shareholders,  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

                                       18

<PAGE>
     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  shareholders  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 shareholder 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 1996 fiscal year, except Alan Lubinsky, Ivan Averbuch and Allan
Edgar did not file Form 4's with respect to the receipt of stock options in June
1997.  Messrs.  Lubinsky,  Averbuch  and Edgar have  stated  that they intend on
filing  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.



                                       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,  1997,  1996 and 1995.  The Company did not incur any  compensation
expenses during such period.

<TABLE>
<CAPTION>
                           Summary Compensation Table

                               Annual Compensation

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

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

<S>                                         <C>                <C>                <C>                <C>                           
Alan Lubinsky (3)(4)(5)(6)                  1997               $176,000           -                   $30,000
  President, Secretary                      1996               $160,000           -                   $30,000
  and Chairman of the Board                 1995               $137,750           -                   $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 1997, 1996 and 1995, 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 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.

     (4) On May 8, 1996,  Mr.  Lubinsky  was  granted an option to  purchase  an
additional  175,000 shares of the Company's Common Stock at an exercise price of
$0.48 per share.  The shares  underlying this option vest one year from the date
of grant.

     (5) On December 28, 1994, Mr. Lubinsky was granted an option to purchase up
to an aggregate of 60,000  shares of the  Company's  Common Stock at an exercise
price of $1.65 per share.  The shares  underlying this option vested on December
28, 1995. On February 14, 1995,  Mr.  Lubinsky was granted an option to purchase
an additional  110,000 shares of the Company's Common Stock at an exercise price
of $0.90 per share.  The shares  underlying  this option  vested on February 14,
1996.  On July 21,  1995,  Mr.  Lubinsky  was  granted an option to  purchase an
additional  75,000 shares of the Company's  Common Stock at a purchase  price of
$0.50 per share.  These  shares vest 25,000 on each  anniversary  of the date of
grant commencing July 21, 1996.

                                       20

<PAGE>
     (6) On June 2, 1997,  Mr.  Lubinsky was granted an option to purchase up to
an  aggregate  of 250,000  shares of the  Company's  Common Stock at an exercise
price of $0.38 per share. The shares underlying this option will vest on June 2,
1998.

Stock Options

     The following table sets forth certain information  concerning the grant of
stock options made during the year ended November 30, 1997,  under the Company's
1994 Stock Option Plan.
<TABLE>
<CAPTION>


                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)

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


                                                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                           250,000             78.13%                         $0.38                    6/1/03
                                                
------------------------------------------------------------------------------------------------------------------------------------
Ivan Averbuch                            35,000             10.94%                         $0.38                    6/1/08
------------------------------------------------------------------------------------------------------------------------------------
Allan Edgar                              35,000             10.94%                         $0.38                    6/1/08
====================================================================================================================================
</TABLE>

(1)  Represents  incentive  stock options granted under the Company's 1994 Stock
     Option Plan (the "Plan"),  as amended.  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  December  1999.  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  "--1994  Stock
     Option Plan."

                                       21

<PAGE>

     The following table contains  information  with respect to employees of the
Company concerning options held as of November 30, 1997

               AGGREGATED OPTION/SAR EXERCISE 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($)
                                   Shares Acquired              Value                Exercisable/            Exercisable/
            Name                   on Exercise (#)           Realized($)            Unexercisable            Unexercisable
--------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                     <C>                  <C>                      <C> 
Alan Lubinsky                             0                       0                    60,000/0                 0/0 (1)
--------------------------------------------------------------------------------------------------------------------------------
Alan Lubinsky                             0                       0                   110,000/0                 0/0 (2)
--------------------------------------------------------------------------------------------------------------------------------
Alan Lubinsky                             0                       0                 50,000/25,000           $7,812.50/0 (3)
--------------------------------------------------------------------------------------------------------------------------------
Alan Lubinsky                             0                       0                   175,000/0             30,843.75/0 (4)
--------------------------------------------------------------------------------------------------------------------------------
Alan Lubinsky                             0                       0                   0/250,000                 0/0(5)
--------------------------------------------------------------------------------------------------------------------------------
Allan Edgar                               0                       0                    0/35,000                 0/0(6)
--------------------------------------------------------------------------------------------------------------------------------
Ivan Averbuch                             0                       0                    50,000/0              8,812.50/0(7)
--------------------------------------------------------------------------------------------------------------------------------
Ivan Averbuch                             0                       0                    0/35,000                 0/0(8)
================================================================================================================================
</TABLE>


     (1) As of March 13,  1998,  the average of the prior day's  closing bid and
ask  prices was  $0.66.  Since the  exercise  prices of the  Options  ($1.65) is
greater than the current average price, the Company believes the Options have no
value.

     (2) As of March 13,  1998,  the average of the prior day's  closing bid and
ask  prices was  $0.66.  Since the  exercise  prices of the  Options  ($0.90) is
greater than the current average price, the Company believes the Options have no
value.

     (3) As of March 13,  1998,  the average of the prior day's  closing bid and
ask prices was $0.66.  As of March 13,  1998,  50,000  shares  underlying  these
options have vested. However, Mr. Lubinsky has not exercised this option.

     (4) As of March 13,  1998,  the average of the prior day's  closing bid and
ask prices was $0.66.  As of March 13, 1998,  175,000  shares  underlying  these
options have vested. However, Mr. Lubinsky has not exercised this option.

     (5) As of March 13, 1998, none of the shares  underlying these options have
vested.

     (6) As of March 13, 1998, none of the shares  underlying these options have
vested.

     (7) As of March 13,  1998,  the average of the prior day's  closing bid and
ask prices was $0.66.  As of March 13,  1998,  50,000  shares  underlying  these
options have vested. However, Mr. Averbuch has not exercised this option.

     (8) As of March 13, 1998, none of the shares  underlying these options have
vested.



                                       22

<PAGE>
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.  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.

1994 Stock Option Plan

     During 1994, the Company  adopted the Company's 1994 Stock Option Plan (the
"Plan").  The Board  believes  that the Plan is  desirable to attract and retain
executives  and other key  employees  of  outstanding  ability.  Under the Plan,
options to purchase an aggregate of not more than 500,000 shares of Common Stock
may be granted from time to time to key employees, officers, directors, advisors
and independent consultants to the Company and its subsidiaries.

     During  the  1996  annual  meeting  of  shareholders,  a  majority  of  the
shareholders authorized an amendment to the Plan increasing the number of shares
of Common Stock authorized and available for issuance thereunder from 500,000 to
1,000,000.

     The Board of  Directors  is charged with  administration  of the Plan,  the
Board is  generally  empowered  to  interpret  the  Plan,  prescribe  rules  and
regulations  relating  thereto,  determine  the terms of the option  agreements,
amend them with the consent of the  optionee,  determine  the  employees to whom
options are to be granted,  and determine  the number of shares  subject to each
option  and the  exercise  price  thereof.  The per  share  exercise  price  for
incentive  stock options  ("ISOs") will not be less than 100% of the fair market
value of a share of the Common Stock on the date the option is granted  (110% of
fair market value on the date of grant of an ISO if the optionee  owns more than
10% of the Common Stock of the Company).

     Options will be exercisable  for a term  determined by the Board which will
not be less than one year.  Options  may be  exercised  only while the  original
grantee has a relationship with the Company or a subsidiary of the Company which
confers  eligibility  to be  granted  options  or up to ninety  (90) days  after
termination at the sole discretion of the Board. In the event of termination due
to retirement, the Optionee, with the consent of the Board, shall have the right
to exercise his option at any time during the thirty-six (36) month period after
such  retirement.  Options may be exercised up to  thirty-six  (36) months after
death or total and permanent  disability.  In the event of certain basic changes
in the Company,  including a change in control of the Company (as defined in the
Plan)  in the  discretion  of the  Board,  each  option  may  become  fully  and
immediately  exercisable.  ISOs are not  transferable  other than by will or the
laws of descent and  distribution.  Options may be exercised during the holder's
lifetime only by the holder, his or her guardian or legal representative.

     Options  granted  pursuant to the Plan may be designated as ISOs,  with the
attendant  tax  benefits  provided  under  Section 421 and 422A of the  Internal
Revenue Code of 1986.  Accordingly,  the Plan provides  that the aggregate  fair
market  value  (determined  at the time an ISO is granted)  of the Common  Stock
subject  to ISOs  exercisable  for the  first  time by an  employee  during  any
calendar  year  (under all plans of the Company  and its  subsidiaries)  may not
exceed $100,000.  The Board may modify, suspend or terminate the Plan; provided,
however, that certain material modifications affecting the Plan must be approved
by the  shareholders,  and any change in the Plan that may  adversely  affect an
optionee's rights under an option previously granted under the Plan requires the
consent of the optionee.

                                       23

<PAGE>
     On  December  28,  1994,  60,000  and 5,000  options  were  granted to Alan
Lubinsky and Alan Berkun, respectively,  to purchase shares of Common Stock at a
purchase price of $1.65 per share. These options are exercisable  commencing one
year from the date of grant until five years from the date of grant.

     On February  14,  1995,  110,000  and 5,000  options  were  granted to Alan
Lubinsky and Alan Berkun, respectively,  to purchase shares of Common Stock at a
purchase price of $0.90 per share. These options are exercisable  commencing one
year from the date of grant until five years from the date of grant.

     On July 21, 1995,  75,000 options were granted to Alan Lubinsky to purchase
shares of Common Stock at a purchase  price of $0.50 per share.  25,000 of these
options are  exercisable  each July 21 commencing July 21, 1996 until five years
from the date of grant.

     On May 8, 1996,  175,000,  50,000 and 20,000  options  were granted to Alan
Lubinsky,  Ivan Averbuch and Peter Dixon,  respectively,  to purchase  shares of
Common  Stock  at a  purchase  price of  $0.48  per  share.  These  options  are
exercisable  one year from the date of grant  until  five years from the date of
grant.

     On June 2, 1997,  250,000,  35,000 and 35,000  options were granted to Alan
Lubinsky,  Ivan Averbuch and Allan Edgar,  respectively,  to purchase  shares of
Common Stock at a purchase price of $0.38.


                                       24

<PAGE>
ITEM 11.          PRINCIPAL STOCKHOLDERS - UPDATE

     The following table sets forth certain  information at March 13, 1998, 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>  
Alan Lubinsky (1)(2)(3)(4)                                            1,765,535                         70.3%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England

Ivan Averbuch (5)                                                        50,000                           *
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

New World Finance, Ltd. (1)                                           1,050,535                        52.6%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England



                                       25

<PAGE>
Eros Nominees, Ltd. (1)                                                 100,000                        5.0%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England

Fort Investments, Ltd. (1)                                              100,000                        5.0%
c/o Pride House
Watford Metro Centre
Tolpits Lane
Watford Hertordshire
WD1 8SB England

All officers and
Directors as a group
 (3 persons) (1)(2)(3)(4)(5)                                          1,845,535                       70.3%


</TABLE>

     (1)  Although Mr.  Lubinsky  disclaims  beneficial  ownership of the shares
owned by New World Finance,  Ltd., Eros Nominees,  Ltd., Fort Investments,  Ltd.
and Regent  Nominees,  Ltd.,  it may be expected that each of such entities will
vote their respective shares in favor of proposals espoused by Mr. Lubinsky.

     (2) Includes 170,000 shares which are issuable upon the exercise of options
granted  under the  Company's  1994 Stock  Option  Plan.  Of the 170,000  shares
issuable  upon  exercise of the options,  60,000 vested on December 28, 1995 and
110,000 vested on February 14, 1996.

     (3) Includes 175,000 shares which are issuable upon the exercise of options
granted under the Company's  1994 Stock Option Plan on May 8, 1996.  None of the
175,000 shares issuable upon the exercise of the options are vested.

     (4) Includes  75,000 shares which are issuable upon the exercise of options
granted  under the  Company's  1994 Stock Option Plan on July 21,  1995.  Of the
75,000 shares  issuable upon the exercise of the options,  25,000 vested on July
21, 1996.

     (5) Includes  50,000 shares which are issuable upon the exercise of options
granted  under the Company's  1994 Stock Option Plan.  None of the 50,000 shares
issuable upon the exercise of the options are vested.




                                       26

<PAGE>
ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On January 13, 1994, the Company  entered into an Agreement and Plan of
Reorganization  with  PMS  and  the  shareholders  of PMS.  The  Company  issued
9,000,000  (pre 10 for 1 reverse  stock  split)  shares  of Common  Stock to the
stockholders of PMS for all the shares of PMS, thereby making PMS a wholly-owned
subsidiary of the Company.  On September 20, 1994, the Company  effected a 1 for
10 reverse  stock split of its issued and  outstanding  shares of Common  Stock,
thereby  reducing  the  issued  and  outstanding  shares  of Common  Stock  from
12,205,355 shares to 1,220,537 shares.

         On September 20, 1994 and October 18, 1994,  the Company  issued to New
World Finance,  Ltd., the Company's principal  shareholder,  281,250 and 114,285
shares of Common Stock,  respectively,  in exchange for the  cancellation by New
World  Finance,   Ltd.  of  debt  of  approximately   $1,125,000  and  $400,000,
respectively.

         In October 1994,  the Company sold an additional  114,285 shares of its
common  stock  (post  Reverse-split)  at a price of $1.75 per  share to  foreign
investors  pursuant to  Regulation  S of the  Securities  Act of 1933.  Woodbury
Capital Assets, Inc. received a commission in connection with such transaction.

         In December 1994, the Company  granted 60,000 and 5,000 Options to Alan
Lubinsky  and Alan Berkun,  respectively,  to purchase  shares of the  Company's
Common Stock at $1.65 per share.

         In February 1995, the Company granted 110,000 and 5,000 Options to Alan
Lubinsky  and Alan Berkun,  respectively,  to purchase  shares of the  Company's
Common Stock at $0.90 per share.

         In March 1995, the Company formed Pride Automotive  Group, Inc. ("PAG")
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 PAG.

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

         In July 1995, PMS entered into a loan  agreement with PAG'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  $123,668  as of  November  30,  1995.  The
principal amount of the loan,  including accrued interest thereon,  will be paid
from the proceeds of PAG's Offering. "Use of Proceeds."

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

         In April 1996, PAG consummated an initial public offering,  whereby PAG
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

                                       27

<PAGE>
therewith,  PAG also  granted to the  underwriter  of the  offering a warrant to
purchase  95,000  shares of PAG's common stock at a purchase  price of $5.00 and
200,000 redeemable common stock purchase warrants,  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.  PAG's  securities are
currently traded on the Nasdaq SmallCap Stock Exchange and the Boston Exchange.

         In November  1996,  PAG,  through its  subsidiary AC Car Group Limited,
purchased all the assets of AC Cars Limited and Autokraft Limited.

         In December 1996, PAG consummated a private placement offering, whereby
PAG sold 18.5 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 14% of the  capital  stock  of AC.  In
addition,  the  Underwriter  loaned  PAG the sum of  $100,000,  $71,000 of which
remains outstanding.

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


ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

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

<S>               <C>                                                                                       <C>
                  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-7
</TABLE>

                  FINANCIAL STATEMENT SCHEDULES

(b)      During the 1996 fiscal year,  the Company filed no Reports on Form 8-K.
         PAG filed a report on Form 8-K on September 5, 1996 with respect to the
         Asset Acquisition.


(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.



                                       28

<PAGE>
<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>



                                       29

<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 May, 1998.


                                                     PRIDE, 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.


<TABLE>
<CAPTION>


<S>                                 <C>                                                          <C>
/s/ Alan Lubinsky                   President, Secretary and Chairman                            5/26/98
ALAN LUBINSKY                       of the Board of Directors (Principal                         Date
                                    Executive Officer)

/s/ Ivan Averbuch                   Chief Financial Officer                                      5/26/98
IVAN AVERBUCH                                                                                    Date


/s/ Allan Edgar                     Director                                                     5/26/98
ALLAN EDGAR                                                                                      Date
</TABLE>

                                       30

<PAGE>
                   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, 1997 and 1996                                                  F - 3

    Consolidated Statements of Operations for the Years Ended November 30, 1997 and 1996                          F - 4

    Consolidated Statement of Changes in Shareholders' Equity for the Two Years in the
    Period Ended November 30, 1997                                                                                F - 5

    Consolidated Statements of Cash Flows for the Years Ended November 30, 1997 and 1996                          F - 6


Notes to Consolidated Financial Statements                                                                        F - 7

                                      F - 1

</TABLE>

<PAGE>
                          INDEPENDENT AUDITORS' REPORT


We have audited the accompanying  consolidated  balance sheets of Pride Inc. and
subsidiaries  as of  November  30,  1997 and 1996 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, 1997. 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, 1997 and 1996 and the results of their operations
for the two years in the period  ended  November  30,  1997 in  conformity  with
accounting principles generally accepted in the United States of America.

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 2(h) of the notes to the consolidated financial statements.











<TABLE>
<CAPTION>

<S>                                        <C>                                          <C>
MARBLE ARCH HOUSE
66-68 SEYMOUR STREET
LONDON W1H 5AH                                                                          CIVVALS
UNITED KINGDOM                             April 14,  1998                              CHARTERED ACCOUNTANTS

</TABLE>





                                      F - 2


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                              - ASSETS (Note 6a) -
<TABLE>
<CAPTION>

                                                                                                          November 30,
                                                                                                      1997            1996
                                                                                               ---------------      -----------

ASSETS:
<S>                                                                                             <C>               <C>          
  Cash and cash equivalents                                                                     $       85,065    $     255,283
  Accounts receivable (Notes 2c and 3)                                                               1,959,355        1,936,166
  Inventories (Note 2d)                                                                              1,248,360        1,127,452
  Property, revenue producing vehicles and equipment - net
    (Notes 2e, 4, 6 and 7)                                                                          27,882,350       20,671,854
  Intangible assets - net (Note 2f)                                                                  8,912,087        9,544,293
                                                                                                 -------------   --------------

TOTAL ASSETS                                                                                       $40,087,217      $33,535,048
                                                                                                   ===========      ===========

                    - LIABILITIES AND SHAREHOLDERS' EQUITY -

LIABILITIES:
  Bank line of credit (Note 6a)                                                                   $  6,976,699    $   2,964,465
  Accounts payable                                                                                   1,767,166          654,920
  Accrued liabilities and expenses (Note 5)                                                            865,977          490,915
  Bank debt (Note 6b)                                                                                  695,782        1,002,571
  Obligations under hire purchase contracts (Note 7)                                                18,341,778       11,034,951
  Acquisition debt payable (Note 9)                                                                  4,198,500        5,098,470
  Other liabilities (Note 8)                                                                           109,978           33,560
                                                                                                -------------- ----------------

TOTAL LIABILITIES                                                                                   32,955,880       21,279,852
                                                                                                  ------------     ------------

MINORITY INTEREST IN SUBSIDIARY (Notes 10 and 17)                                                    3,473,242        5,677,891
                                                                                                 -------------   --------------

COMMITMENTS AND CONTINGENCIES (Notes 6a, 14, 15 and 17)

SHAREHOLDERS' EQUITY (Notes 11 and 12):
  Preferred stock, $.001 par value, 5,000,000 shares authorized, none issued
    or outstanding                                                                                     -                -
  Common stock, $.002 par value, 500,000,000 shares authorized 1,995,357
    shares issued and outstanding                                                                        3,991            3,991
  Additional paid-in capital                                                                         8,063,111        8,425,722
  Retained earnings (deficit)                                                                       (4,019,828)      (1,555,104)
  Deferred financing costs                                                                             (75,178)         -
  Foreign currency translation (Note 2h)                                                              (314,001)        (297,304)
                                                                                                --------------   --------------
TOTAL SHAREHOLDERS' EQUITY                                                                           3,658,095        6,577,305
                                                                                                 -------------    -------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                         $40,087,217      $33,535,048
                                                                                                   ===========      ===========

</TABLE>

                 See notes to consolidated financial statements.

                                      F - 3


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                                                                    Year Ended November 30,
                                                                                                      1997            1996

REVENUES (Note 2i):
<S>                                                                                               <C>              <C>         
  Contract hire income                                                                            $  8,410,366     $  6,286,677
  Sale of vehicles                                                                                   7,090,028        5,839,080
  Fleet management and other income                                                                  1,984,656          856,341
                                                                                                 -------------   --------------
TOTAL REVENUE                                                                                       17,485,050       12,982,098
                                                                                                  ------------     ------------

COSTS AND EXPENSES:
  Cost of sales                                                                                     14,368,881       10,272,334
  General and administrative expenses                                                                3,577,588        1,834,815
  Amortization of goodwill                                                                             632,207          634,813
  Interest and other expenses                                                                        2,209,150          884,223
  Loss on sale of fixed assets (Note 4)                                                                753,933          -
  Research and development                                                                             982,581             -
                                                                                                ----------------------------

                                                                                                    22,524,340       13,626,185

LOSS BEFORE MINORITY INTERESTS AND PROVISION
  FOR INCOME TAXES                                                                                  (5,039,290)        (644,087)

  Minority interest (Note 10)                                                                        2,574,566          315,346
                                                                                                --------------  ---------------

LOSS BEFORE PROVISION FOR INCOME TAXES                                                              (2,464,724)        (328,741)

  Provision for income taxes (Notes 2g and 13)                                                         -                    -
                                                                                         ------------------------------------

NET LOSS                                                                                          $ (2,464,724)   $    (328,741)
                                                                                                  ============    =============

LOSS PER COMMON AND DILUTIVE COMMON
  EQUIVALENT SHARE (Note 2j):
    Net loss before minority interests                                                                  $(2.53)           $(.32)
    Minority interest in net loss of subsidiaries                                                         1.29              .16
                                                                                                       -------           ------
NET LOSS PER SHARE                                                                                      $(1.24)           $(.16)
                                                                                                        ======            =====

WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
  EQUIVALENT SHARES OUTSTANDING                                                                      1,995,357        1,995,357
                                                                                                     =========        =========


</TABLE>
                 See notes to consolidated financial statements.

                                      F - 4


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                        Additional     Retained       Deferred       Foreign        Total
                                           Common       Paid-in        Earnings      Financing      Currency      Shareholders'
                            Shares       Stock          Capital         (Deficit)     Costs        Translation       Equity
                          ----------- ------------ -------------------------------------------     ------------------------

Balance at December 1,
<S>                         <C>             <C>        <C>          <C>           <C>              <C>              <C>        
1995                        1,905,357       $3,811     $12,126,311  $(1,226,363)  $    -           $ 409,636      $11,313,395

Compensatory stock
(Note 11)                      90,000          180           5,820      -              -                -               6,000

Minority interest in
shareholders' equity
at time of issue of
shares in subsidiary
(Note 10)                     -            -            (3,706,409)      -             -                -         (3,706,409)

Foreign currency
translation adjustment        -            -                  -          -             -            (706,940)       (706,940)

Net loss for the year ended
November 30, 1996             -            -                  -        (328,741)       -                -           (328,741)
                     ----------------  ------------------------------------------- ---------------------------------------------

Balance at
November 30, 1996           1,995,357        3,991       8,425,722   (1,555,104)       -            (297,304)       6,577,305

Foreign currency
translation adjustment        -            -               -            -              -             (16,697)         (16,697)

Increase in minority
shareholders' interest        -            -              (362,611)     -              -                -            (362,611)

Deferred financing
costs                         -             -             -             -          (75,178)             -             (75,178)

Net loss for the year ended
November 30, 1997             -              -                -      (2,464,724)       -                -          (2,464,724)
                       --------------  ------------------------------------------ ------------------------------   ------------

BALANCE AT
NOVEMBER 30, 1997           1,995,357       $3,991   $   8,063,111  $(4,019,828)  $(75,178)        $(314,001)    $  3,658,095
                            =========       ======   =============  ===========   ========          =========     ============
</TABLE>






                See notes to consolidated financial statements.

                                      F - 5


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                                          November 30,
                                                                                                      1997            1996
                                                                                              ---------------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                              <C>              <C>           
  Net (loss)                                                                                     $  (2,464,724)   $    (328,741)
  Adjustments to reconcile net loss to net cash provided by operating activities:
     Minority interest in net loss of subsidiary                                                    (2,574,566)        (315,346)
     Depreciation and amortization                                                                   3,946,635        2,354,942
     Amortization of goodwill                                                                          632,206          594,735
     Gain (loss) on disposal of fixed assets                                                           403,352         (119,030)
     Provision for maintenance costs                                                                   -                (18,524)
  Changes in assets and liabilities:
     (Increase) in accounts receivable                                                                 (23,189)        (556,622)
     (Increase) in inventories                                                                        (120,908)        (198,591)
     Increase (decrease) in accounts payable, accrued expenses and other creditors                   1,563,726         (956,502)
                                                                                               ---------------    -------------
     Net cash provided from operating activities                                                     1,362,532          456,321
                                                                                               ---------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of revenue - producing assets                                                           (16,144,143)      (9,858,724)
  Proceeds from sale of fixed assets                                                                 4,442,160        2,068,601
  Acquisition of assets in new subsidiary                                                              -               (969,279)
                                                                                         ---------------------   --------------
  Net cash (utilized) by investing activities                                                      (11,701,983)      (8,759,402)
                                                                                                 -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Bank lines of credit                                                                               4,012,234        1,870,785
  Minority shareholders investment in subsidiary                                                        95,577        2,285,929
  Repayment of officers loans                                                                          -               (294,719)
  Payment of acquisition debt                                                                         (899,970)         -
  Principal payments of long term debt                                                                (306,789)         (67,921)
  Proceeds from hire purchase contract funding                                                      19,491,763       11,530,175
  Principal repayments of hire purchase contract funding                                           (12,184,936)      (6,073,790)
                                                                                                  ------------    -------------
  Net cash provided from financing activities                                                       10,207,879        9,250,459
                                                                                                  ------------   --------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                                (38,646)        (766,041)
                                                                                               ---------------   --------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                  (170,218)         181,337

  Cash and cash equivalents, beginning of year                                                         255,283           73,946
                                                                                                -------------- ----------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                                          $       85,065   $      255,283
                                                                                                ==============   ==============
</TABLE>


     SUPPLEMENTAL INFORMATION: (i) In November 1996, a subsidiary of the Company
acquired  certain of the assets of AC Cars Limited  aggregating  $6,067,749  and
incurred debt obligations aggregating $5,098,470.

     (ii) The loss on the  disposal of fixed  assets  resulted  from the sale of
certain  non-revenue  producing  assets  whereby the proceeds were less than the
carrying value.

                 See notes to consolidated financial statements.

                                      F - 6


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE  1  -     DESCRIPTION OF COMPANY:

               Pride  Inc.  (the  "Company")  which is a  holding  company,  was
               incorporated as  International  Sportsfest,  Inc. in the state of
               Delaware on  September  11, 1988.  The Company was a  development
               stage  company with no  operations  through  January 13, 1994. On
               January 13, 1994, the Company acquired Pride Management Services,
               Plc ("PMS"), a consolidated group of operating  companies located
               in the United Kingdom.  Simultaneously with the acquisition,  the
               Company  changed its name from  International  Sportsfest Inc. to
               Pride Inc. and now has its corporate offices in Watford,  England
               and New York City,  New York.  The Company also decided to change
               its year end from April 30 to  November  30, in order to coincide
               accounting periods with its new subsidiary.

               Pursuant to the  acquisition,  the Company issued an aggregate of
               9,000,000  (900,000  shares - post reverse stock split - see Note
               11) shares of its common stock to the  stockholders of PMS in the
               acquisition. The 9,000,000 (pre-reverse split) shares represented
               89% of the 10,155,350  (pre-reverse split) shares of common stock
               outstanding immediately after the acquisition.  The consideration
               given  by the  Company,  in the  form of  9,000,000  (pre-reverse
               split) shares of its common stock,  was determined in arms-length
               negotiations  between management of the Company and management of
               PMS.  None  of  the   stockholders  or  management  of  PMS  were
               previously  affiliated  with  the  Company  in  any  manner.  The
               principal basis used in the  negotiations to determine the number
               of shares to be issued by the Company was the percentage of stock
               which would be owned by the new control groups after the issuance
               thereof,  rather  than any  traditional  valuation  formulas.  By
               acquiring 100% of the issued and outstanding common stock of PMS,
               PMS  became  a  wholly-owned   subsidiary  of  the  Company.  For
               accounting  purposes,  the  acquisition  has  been  treated  as a
               recapitalization  of PMS with PMS as the  acquirer  in a  reverse
               acquisition.  In March 1995, pursuant to the terms and conditions
               of a  reorganization,  the  Company  exchanged  all its shares in
               Pride  Management  Services  Plc for  1,500,000  shares of common
               stock in Pride  Automotive  Group  Plc (a newly  formed  Delaware
               corporation).  As a result  of this  exchange,  Pride  Automotive
               Group Inc.  ("PAG")  became a majority  owned  subsidiary  of the
               Company and the parent of PMS.

               Pride  Management  Services Plc (PMS) is a holding company of six
               subsidiaries  engaged in the leasing of motor vehicles  primarily
               on contract  hire to local  authorities  and  selected  corporate
               customers throughout the United Kingdom.

               On November 29, 1996,  the  Company,  through  PAG's newly formed
               majority  owned  subsidiary,  AC  Automotive  Group Inc.  and its
               wholly owned  subsidiary AC Car Group Limited  (registered in the
               United  Kingdom),  completed the acquisition of the net assets of
               AC Cars Limited and Autokraft  Limited.  These two companies were
               engaged in the manufacture and sale of specialty automobiles. The
               purchase  price of $6,067,000 was financed with the proceeds of a
               private debt offering  which was  completed,  by PAG, in December
               1996 and by loans  (see Note 9).  The  acquisition  was  recorded
               using the purchase method of accounting (see also Note 17b).



                                      F - 7


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   1  -    DESCRIPTION OF COMPANY (Continued):

               The following  unaudited  pro-forma  results of operations assume
               the acquisition occurred as of March 1, 1996 (amounts in millions
               except per share data):
<TABLE>
<CAPTION>

<S>                                                                                    <C>  
                               Revenues                                                $14.3
                               Net loss                                                 (2.1)
                               Loss per common share                                  $(1.05)
</TABLE>

               The  pro-forma  financial  information,  which is only  available
               beginning  March 1, 1996,  is not  necessarily  indicative of the
               operating  results that would have  occurred had the  acquisition
               been  consummated as of March 1, 1996,  nor are they  necessarily
               indicative of future operating  results.  This is because AC Cars
               Limited and Autokraft Limited were in administrative receivership
               in the United Kingdom and this severely restricted the ability of
               the  companies  to  manufacture  and market their  products.  The
               Company  has made  the  United  States  Securities  and  Exchange
               Commission  aware of the fact that  financial  information is not
               available for prior periods.

                    All references to the Company include its subsidiary,  Pride
               Automotive Group, Inc. and its subsidiaries.


NOTE   2  -    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  Inc.),   its'  wholly  owned   subsidiary  Pride
               Automotive  Group, Inc. and its' wholly owned  subsidiaries,  and
               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 current  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.


                                      F - 8


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   2   -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

      (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  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.

               As of November  30, 1997 and 1996  inventories  consisted  of the
following:
<TABLE>
<CAPTION>

                                                                                    1997              1996
                                                                               -------------     ---------

<S>                                                                              <C>               <C>        
                      Cars held for resale                                       $   132,369       $   124,932
                      Finished goods                                                  90,784           180,307
                      Work-in-progress                                               502,500           684,305
                      Spare parts                                                    522,707           137,908
                                                                                ------------      ------------
                                                                                  $1,248,360        $1,127,452
</TABLE>



                                      F - 9


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   2   -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

      (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:

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

               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  consist  primarily of goodwill which arose in
               connection with the  acquisition of certain  subsidiaries of PMS.
               Goodwill  is being  amortized  over a period of 10-20  years on a
               straight-line basis.  Accumulated amortization as of November 30,
               1997 and 1996 aggregated $3,622,833 and $2,990,626, respectively.

               In November 1996,  PAG acquired  certain of the assets of AC Cars
               Limited and  Autokraft  Limited (see Note 1). The purchase  price
               exceeded the tangible net assets acquired by $16,780. This amount
               was  assigned  to the brand name and is being  amortized  over 20
               years on a straight-line basis.

               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.

      (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 13 regarding SFAS No 109 - Accounting
               for Income Taxes.



                                     F - 10


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   2   -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

      (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 to be received,  net of related costs
               (see also Note 7):
<TABLE>
<CAPTION>

<S>                                     <C> <C>                                  <C>        
                               November 30, 1998                                 $ 7,504,475
                               November 30, 1999                                   5,072,831
                               November 30, 2000                                   2,152,957
                               November 30, 2001                                     418,979
                                                                              --------------
               Total minimum lease payments receivable
               net of executory costs                                            $15,149,242
</TABLE>

      (j)      Earnings (Loss) Per Share:

               Earnings per share are computed  based upon the weighted  average
               shares and common  equivalent  shares  outstanding.  Common stock
               equivalents  have been  excluded from the  computation  since the
               results would be anti-dilutive.

               In February 1997, the Financial Accounting Standards Board issued
               Statement  No.  128 -  Earnings  Per Share  ("SFAS  128"),  which
               changes the method for calculating  earnings per share.  SFAS 128
               requires the  presentation of "basic" and "diluted"  earnings per
               share on the face of the income statement.  SFAS 128 is effective
               for financial  statements  for periods  ending after December 15,
               1997.  The  Company  will  adopt  SFAS  128 for the  year  ending
               November 30, 1998,  and  accordingly  restate prior  periods,  as
               early  adoption  is not  permitted.  SFAS 128 is not  expected to
               materially  differ from  primary or fully  diluted  earnings  per
               share as previously reported.

                                     F - 11


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   2   -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

      (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 No. 123. No compensation
               expense is  recognized  pursuant to the  Company's  stock  option
               plans under SFAS No. 123 which is consistent with prior treatment
               under APB No. 25.

      (m)      New Accounting Pronouncements:

               SFAS 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 will adopt
               these standards effective for the year ending November 30, 1998.

               SFAS 131 "Disclosures About Segments of an Enterprise and Related
               Information"  is effective for years beginning after December 15,
               1997 and early adoption is  encouraged.  The Company is currently
               operating  in more than one  business  segment.  See Notes 16 and
               17b.

               See also Earnings (Loss) Per Share.

      (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.  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.



                                     F - 12


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   3   -   ACCOUNTS RECEIVABLE:

               Accounts receivable consist of the following:
<TABLE>
<CAPTION>
                                                                                  1997                1996
<S>                                                                              <C>                <C>    
               Trade receivables -  net of allowance for doubtful
                    accounts of $80,486 and $0, for 1997 and 1996,
                    respectively                                                 $   639,109        $1,288,074
               Lease maintenance receivables                                         943,261           330,902
               Value added tax                                                       138,555           102,114
               Due from related companies                                             83,219           -
               Other                                                                 155,211           215,076
                                                                                ------------      ------------
                                                                                  $1,959,355        $1,936,166
</TABLE>

NOTE   4   -   FIXED ASSETS AND DEPRECIATION:
<TABLE>
<CAPTION>

               Fixed assets consist of the following:

                                                                                  1997                1996
                                                                            ----------------   -----------

<S>                                                                            <C>                <C>         
               Buildings and improvements                                      $     820,160      $  1,719,415
               Revenue producing vehicles                                         27,612,291        17,282,095
               Furniture, fixtures, plant and equipment                            4,670,067         4,641,388
               Aircraft                                                              -                 927,751
                                                                        --------------------   ---------------
                                                                                  33,102,518        24,570,649
               Less:  accumulated depreciation (including
                      $4,263,115 and $3,388,495 of accumulated
                      depreciation on revenue producing vehicles,
                      for 1997 and 1996, respectively)                             5,220,168         3,898,795
                                                                               -------------     -------------
                                                                                 $27,882,350       $20,671,854
</TABLE>

               Depreciation  expense for the years ended  November  30, 1997 and
               1996 aggregated $3,946,635 and $2,354,942, respectively.

               One of the buildings  owned by Pride  Management was being leased
               to an unrelated party at an annual rent of approximately  $80,000
               per annum.  In November 1997,  the tenant  exercised an option to
               purchase the building for approximately $400,000.


NOTE   5   -   ACCRUED LIABILITIES AND EXPENSES:

               Accrued liabilities and expenses consist of the following:
<TABLE>
<CAPTION>

                                                                                     1997             1996
                                                                                 -----------       -------

<S>                                                                                 <C>               <C>     
               Taxes other than income taxes                                        $438,289          $418,082
               Miscellaneous accrued expenses                                        427,688            72,833
                                                                                   ---------        ----------
                                                                                    $865,977          $490,915
                                                                                    ========          ========
</TABLE>

                                     F - 13


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996



NOTE   6   -   BANK LOANS/LINE OF CREDIT:

(a)            As of August 31, 1997, the Company's line of credit with its bank
               expired. In February 1998,  subsequent to the balance sheet date,
               the Company  entered into a new agreement with the bank. This new
               line of credit of $7,202,500, is payable on demand and is secured
               by  all  assets  of  the   Company   other  than   building   and
               revenue-producing  vehicles which are already  pledged (see Notes
               6b and 7).  Interest  is  payable  at rates  between 2% and 4% in
               excess of the bank's  base rate (7 1/2% at  November  30,  1997).
               This facility has to be reduced by $837,500 by March 31, 1998 and
               a further $921,250 by December 31, 1998. The agreement is due for
               review in November 1998.

      (b)      At November  30,  1997,  other bank loans  consisted  of $695,782
               payable  at a rate  of 3% in  excess  of  the  bank's  base  rate
               ($1,002,571  due to two  banks at rates of 3% and 5% in excess of
               the  banks'  base rate as of  November  30,  1996).  This loan is
               secured by the  freehold  properties  (buildings)  owned by Pride
               Management and its subsidiaries, and matures in 2017.

               The scheduled principal payments of this bank debt as of November
30, 1997 are as follows:

               For the Year Ended November 30,

                      1998                               $  84,058
                      1999                                  84,058
                      2000                                  84,058
                      2001                                  84,058
                      2002                                  84,058
                      Thereafter                           275,492
                                                          --------
                                                          $695,782


NOTE   7   -   HIRE PURCHASE CONTRACTS/EQUIPMENT FINANCING:

               The Company has funding lines with several financing institutions
               in the United  Kingdom in the aggregate  amount of  approximately
               $23,667,500  as of November 30,  1997.  These  funding  lines are
               utilized to acquire revenue  producing  vehicles,  which vehicles
               collateralize the outstanding obligations.


                                     F - 14


<PAGE>
                           PRIDE INC, AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   7   -   HIRE PURCHASE CONTRACTS/EQUIPMENT FINANCING (Continued):

               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,  1997,  obligations  under  hire  purchase  contracts  are as
               follows:

               For the Year Ended November 30,

                      1998                             $ 8,860,849
                      1999                               7,060,375
                      2000                               2,372,636
                      2001                                  47,918
                                                    --------------
                                                       $18,341,778

               The annual interest rates on these  obligations  range from 9% to
11%.


NOTE   8   -   OTHER LIABILITIES:

               At November  30,  1997 and 1996 other  liabilities  consisted  of
               $109,978 and  $33,560,  respectively,  due to other  creditors at
               interest  rates  approximating  the current  market rates and are
               repayable on a demand basis.


NOTE   9   -   ACQUISITION DEBT PAYABLE:

               Acquisition debt payable (see Note 1) consists of the following:

<TABLE>
<CAPTION>
                                                                                    1997             1996
                                                                             ---------------    ---------
<S>                                                                              <C>               <C>        
               Unsecured  notes  payable on demand after May 31, 1998;  interest
               payable quarterly at 2% above the
               base rate                                                         $   837,500       $   839,000

               Unsecured notes payable on demand after May 31,
               1998; interest payable at 10% per annum                             1,615,000           -

               Unsecured notes payable on demand after October 31,
               1999; interest payable quarterly at 8% per annum                    1,675,000         1,678,000

               Other short-term notes payable                                         71,000         2,581,470
                                                                               -------------       -----------
                                                                                  $4,198,500        $5,098,470

</TABLE>
                                     F - 15


<PAGE>
                           PRIDE INC, AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE  10  -           MINORITY INTERESTS:

               In April  1996,  PAG  successfully  completed  an initial  public
               offering of its common stock,  as a result of which the Company's
               investment in PAG was reduced to 56.55%. The Company has recorded
               a charge to additional  paid-in capital of $3,706,409 in order to
               properly  reflect the aggregate  minority  interest  liability at
               $5,677,891  which  represents  43.45%  of the net  assets  of PAG
               including the minority interest in PAGs 70% owned,  newly formed,
               subsidiary, AC Automotive Group Inc. See also Note 17b.


NOTE  11  -           COMMON STOCK/RECAPITALIZATION:

               On September 20, 1994, the Company's board of directors  approved
               a one-for-ten  reverse  stock split of the  Company's  issued and
               outstanding common stock to be effective on September 28, 1994.

               In May 1996, the Company issued 90,000 shares of its common stock
               in lieu of professional fees owed in the amount of $6,000.


NOTE  12  -           STOCK OPTION PLANS:

               During 1994, the Company adopted a Stock Option Plan ("the Plan")
               whereby  options  to  purchase  an  aggregate  of not  more  than
               1,000,000  shares, as amended of common stock may be granted from
               time to time to key employees,  officers, directors, advisors and
               independent consultants to the Company and its subsidiaries.

               The  Company has elected to follow  Accounting  Principles  Board
               Opinion No. 25,  "Accounting  for Stock Issued to Employees  (APB
               25) and related  interpretations  in accounting  for its employee
               stock options  because,  as discussed below, the alternative fair
               value  accounting  provided  for under  FASB  Statement  No.  123
               "Accounting for Stock-Based  Compensation" requires use of option
               valuation  models  that  were not  developed  for use in  valuing
               employee  stock  options.  Under APB 25, if the exercise price of
               the Company's  employee  stock options equals the market price of
               the  underlying  stock  on the  date of  grant,  no  compensation
               expense is recognized.

                                     F - 16


<PAGE>
                           PRIDE INC, AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE  12  -    STOCK OPTION PLANS (Continued):

               Pro forma information regarding net income and earnings per share
               is required by Statement  123, and has been  determined as if the
               Company had  accounted  for its employee  stock options under the
               fair  value  method of that  Statement.  The fair value for these
               options was estimated at the date of grant using a  Black-Scholes
               option   pricing  model  with  the   following   weighted-average
               assumptions for 1997 and 1996,  respectively:  risk-free interest
               rates of 6.1% and 6.8% and dividend yields of 2.6% and 1.8%.

               The Black-Scholes option valuation model was developed for use in
               estimating the fair value of traded options which have no vesting
               restrictions  and are fully  transferable.  In  addition,  option
               valuation   models   require  the  input  of  highly   subjective
               assumptions including the expected stock price volatility.

               Because the Company's employee stock options have characteristics
               significantly different from those of traded options, and because
               changes in the subjective input assumptions can materially affect
               the fair value estimate,  in management's  opinion,  the existing
               models do not  necessarily  provide a reliable  single measure of
               the fair value of its employee stock options.

               For purposes of pro forma  disclosures,  the estimated fair value
               of the options is amortized  to expense over the options  vesting
               period. The Company's pro forma information follows:
<TABLE>
<CAPTION>

                                                                1997               1996
                                                           ---------------     --------

                      Net loss:
<S>                                                            <C>                 <C>       
                          As reported                          $(2,464,724)        $(328,741)
                          Pro forma                             (2,663,124)         (407,141)

                      Basic loss per share:
                          As reported                                (1.24)             (.16)
                          Pro forma                                  (1.33)             (.20)
</TABLE>

               A summary of stock option activity,  and related  information for
               the years ended December 31, follows:
<TABLE>
<CAPTION>

                                                                                    Weighted
                                                                                    Average
                                                                                    Exercise
                                                                   Options          Price

<S>                                                                <C>               <C>
                      Outstanding at December 31, 1995             255,000

                          Granted                                  245,000             .48
                          Exercised                                -                   -
                          Canceled                                  -                  -
                                                            --------------          ----

                      Outstanding, November 30, 1996               500,000             .48
                                                                                    ------
</TABLE>


                                     F - 17


<PAGE>
                           PRIDE INC, AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE  12  -    STOCK OPTION PLANS (Continued):
<TABLE>
<CAPTION>

                                                                                    Weighted
                                                                                    Average
                                                                                    Exercise
                                                                   Options          Price
<S>                                                                <C>                   <C>
                      Weighted average fair value of options
                          granted during the year                                        -

                          Granted                                  320,000               .38
                          Exercised                                 -                    -
                          Canceled                                  -                    -
                                                            --------------             ---

                      Outstanding, November 30, 1997               820,000               .38
                                                                  ========               ---

                      Weighted average fair value of options
                          granted during the year                                        -

                      Options exercisable:
                          November 30, 1996                        205,000
                          November 30, 1997                        475,000
</TABLE>

               Exercise  prices for options  outstanding as of November 30, 1997
               ranged  from  $.38  to  $1.65.  The  weighted-average   remaining
               contractual life of these options is seven years.


NOTE  13  -           INCOME TAXES:

               The Company has available operating losses  carryforwards for tax
               purposes aggregating  approximately $4,000,000 as of November 30,
               1997,  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,  1997 and 1996,  respectively,  are as
               follows:
<TABLE>
<CAPTION>

                                                                  1997                1996
                                                           ---------------        --------

<S>                                                             <C>                 <C>     
                          Operating loss carryforward           $1,360,000          $ 52,000
                          Valuation allowance                   (1,360,000)          (52,000)
                                                               -----------         ---------
                                                         $         -           $     -
                                                         =================     =======
</TABLE>



                                     F - 18


<PAGE>
                           PRIDE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE   14  -          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, 1997 and 1996 amounted to $65,726 and $33,264,
               respectively.


NOTE   15  -          COMMITMENTS:

      (a)      Leases:

               In November 1996, PAG entered into a one-year lease agreement for
               the manufacturing  facility being utilized for its new subsidiary
               at a cost of approximately  $54,000 per month,  with an option to
               purchase this facility at a cost of  $8,700,000,  through  August
               1997.  In August  1997,  PAG sold this  option  to  purchase  for
               $673,750 and negotiated a new lease for a smaller portion of this
               facility at an approximate cost of $31,000 per month.

      (b)      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  provides 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 12).

               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  extendable for a further twenty  four-month period
               subject to review by the Board of  Directors.  For the year ended
               November 30, 1997, the annual salary amounted to $71,000

      (c)      Rental Income:

               The Company leased one of its owned facilities to an unaffiliated
               company for an annual rental of approximately  $80,000 per annum.
               The annual cost of  servicing  the mortgage and real estate taxes
               on this building was  approximately  $70,000.  In November  1997,
               this property was sold for $400,000 (see Note 4).


NOTE  16  -    BUSINESS SEGMENT INFORMATION:

               The Company's  operations  have been classified into two business
               segments;  Contract Hire and Leasing and Automobile  Manufacture.
               The Contract Hire and Leasing is the business of Pride Management
               Services  Plc and its  subsidiaries  and  utilizes  the resale of
               automobiles  at  the  end  of  the   contracts.   The  Automobile
               Manufacturer  is the  business  of AC  Car  Group  Limited.  This
               segment began operations in December 1996.

                                     F - 19


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE  16  -    BUSINESS SEGMENT INFORMATION (Continued):

               Summarized  financial  information  by  business  segment for the
               years ended November 30, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>

                                                                                   1997               1996
                                                                            ----------------   -----------

                      Revenue:
<S>                                                                              <C>               <C>        
                        Pride Management Services Plc                            $16,275,113       $12,982,098
                        AC Car Group Limited                                       1,209,937            -
                                                                               --------------------------
                                                                                 $17,485,050       $12,982,098
                      Income (Loss) Before Minority Interests:
                        Pride Management Services Plc                         $     (927,626)    $    (644,087)
                        AC Car Group Limited                                      (4,111,664)            -
                                                                               ------------- -------------
                                                                                $ (5,039,290)    $    (644,087)
                                                                                ============     =============
                      Total Assets:
                        Pride Management Services Plc                            $35,473,621       $27,526,155
                        AC Car Group Limited                                       4,613,596         6,008,893
                                                                               -------------    --------------
                                                                                 $40,087,217       $33,535,048
                      Depreciation and Amortization:
                        Pride Management Services Plc                           $  4,155,846      $  2,929,977
                        AC Car Group Limited                                         422,995            19,700
                                                                              --------------   ---------------
                                                                                $  4,578,841      $  2,949,677
                                                                                ============      ============
                      Capital Expenditures:
                        Pride Management Services Plc                            $14,948,027       $ 8,002,360
                        AC Car Group Limited                                       1,196,116         1,856,364
                                                                               -------------     -------------
                                                                                 $16,144,143      $  9,858,724
                                                                                 ===========      ============
</TABLE>

NOTE  17  -    SUBSEQUENT EVENTS:

      (a)      In January 1998,  PAG filed a Form SB-2 with the  Securities  and
               Exchange Commission, registering for the sale of 1,000,000 shares
               of common stock. The estimated net proceeds from this offering is
               expected  to be  $4,100,000.  The  Company  intends  to use these
               proceeds to repay existing debt.

      (b)      In February  1998,  AC  Automotive,  PAG's 70% owned  subsidiary,
               issued  additional  shares to certain  individuals  and an entity
               affiliated  with the Company's  President  for aggregate  cash of
               $7,076.  As a  result  of  this  and  other  transactions,  PAG's
               ownership in this  subsidiary was diluted to 16%, and the Company
               is no longer  reflecting this investment under the  consolidation
               or equity method of accounting. The following condensed pro-forma
               unaudited  balance  sheet  assumes this  dilution  occurred as of
               November 30, 1997:


                                     F - 20


<PAGE>
                  PRIDE AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996


NOTE  17  -    SUBSEQUENT EVENTS (Continued):
<TABLE>
<CAPTION>

                      Assets:
<S>                                                                           <C>           
                          Cash                                                $       84,227
                          Accounts receivable - net                                4,178,222
                          Inventory                                                  132,369
                          Fixed assets - net                                      24,489,646
                          Intangible assets - net                                  8,875,599
                          Investment in affiliate                                  1,800,000
                                                                               -------------
                                                                                 $39,560,063

                      Liabilities and Shareholder's Equity:
                          Bank line of credit                                   $  5,297,687
                          Accounts payable and accrued expenses                    2,030,459
                          Bank debt                                                  695,782
                          Obligations under hire purchase contracts               18,341,778
                          Loans payable                                            1,773,313
                          Minority interest                                        5,473,209
                          Shareholders' equity                                     5,947,835
                                                                                ------------
                                                                                 $39,560,063
</TABLE>

               The following pro forma unaudited statement of operations assumes
               the  disposition  occurred  at the  beginning  of the year  ended
               November 30, 1997:

                          Revenue                              $16,275,113
                          Expenses                              17,201,922
                          Net loss                                (926,809)
                          Loss per share                              (.46)

               The pro-forma financial information is not necessarily indicative
               of the  results  that  would  have  occurred  had  this  dilution
               occurred as of the dates indicated above nor are they necessarily
               indicative of future operating results.

                                     F - 21


<PAGE>