UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
( ) 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: 0-30018
MERIDIAN HOLDINGS,INC.
----------------------
(Exact Name of Registrant as Specified in its Charter)
COLORADO 52-2133742
------------------------------- ------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
900 WILSHIRE BOULEVARD, SUITE 500, LOS ANGELES, CALIFORNIA 90017
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(Address of Principal Executive Offices)
(213) 627-8878
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and formal fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months and, (2) has been subject to such filing
requirements for the past 90 days. Yes ( X ) No ( )
As of November 11, 1999, Meridian Holdings, Inc., Registrant had 26,957,500
shares of its $0.001 par value common stock outstanding. Based upon the closing
price at such date, aggregate market value was $26,9575,000
Page 1 of 12 sequentially numbered pages
Form 10-Q
Third Quarter 1999
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MERIDIAN HOLDINGS, INC.
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
Balance Sheets - September 30, 1999 3
Statements of Operations for the Nine Months
Ended September 30, 1999 4
Statement of Cash Flows for the Six Months
Ended September 30, 1999 5
Statement of Shareholders' Equity for the Nine Months
Ended September 30, 1999 6
Notes to Financial Statements 7-8
Statements of Operations for the Nine Months
Ended September 30, 1998 9
The Company Overview 11
Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
PART II OTHER INFORMATION
Additional Information 13
Y2K Disclosure 13
Signature 13
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MERIDIAN HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30,
(UNAUDITED)
1999 1998
========== ===========
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Current Assets:
Cash In Bank 77,101 39,701
Accounts Receivable 282,226 342,144
Inventories 25,557 15,000
---------- -----------
Total Current Assets 384,883 396,845
---------- -----------
Fixed Assets:
Computer Equipment 112,628 72,516
Leasehold Improvements 6,500
Office Furniture & Fixtures 36,603
Office Equipment 7,262 21,548
Computer Software 5,956
Medical Equipment 6,150 58,094
---------- -----------
Total 175,098 152,158
Depreciation Reserve (146,642) (128,195)
---------- -----------
Total Fixed Assets 28,457 23,963
Other Assets:
Other Investments 500 1,000
Prepaid Rent Deposit 4,791
Organization Costs (net) 20,333 1,469
---------- -----------
Total Other Assets 25,624 2,469
Total Assets 438,964 423,277
========== ===========
Current Liabilities:
Accounts Payable 15,046 6,519
Accrued Payroll Taxes Payable 4,347
Credit Cards Payable 49,598 38,183
Loan Payable MME 43,906
Payroll Liabilities 264,615
---------- -----------
Total Current Liabilities 68,991 353,223
Long Term Liabilities:
Loan Payable - Small Business Administration 43,352 44,643
Loan Payable - L.A. Community Development Bank 60,000
Loan Payable - First Professional Bank 15,031
Loan Payable - G.E. Capital Credit 30,247
Loan Payable Sanwa 8,309
Loan Payable Stockholder 329,096
Note Payable - MMG Investments 458,002
Total Long Term Liabilities 148,630 840,050
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Total Liabilities 217,621 1,193,273
---------- -----------
Shareholders' Equity:
Common Stock, Par Value $0.001 Per Share; 26,958 1,000
Authorization 50,000,000 shares; Issued and
Outstanding 26,957,500 Shares
Additional Paid In Capital 1,015,460 280,792
Accumulated Deficit (821,075) (1,051,788)
---------- -----------
Total Shareholders' Equity 221,343 (769,996)
---------- -----------
Total Liabilities & Shareholders' Equity 438,964 423,277
========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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<CAPTION>
MERIDIAN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Month Ended Nine Months Ended
September 30, September 30,
-------------------- ----------------------
1999 1998 1999 1,998
---------- -------- ----------- ---------
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Revenues:
Professional Fees 336,642 107,397 976,534 238,033
Cost of Revenues:
Capitation Fees 140,953 53,154 328,061 95,563
Medical Services 1,040 2,803 25,540 4,749
Management Fees 20,747 28,607 89,414 57,765
Other 1,200 16,231
---------- -------- ----------- ---------
Total Cost of Goods Sold 163,940 84,564 459,246 158,077
---------- -------- ----------- ---------
Gross Profit 172,701 22,833 517,287 79,956
Operating Expenses:
Amortization & Depreciation 5,314 5,357 5,314 10,129
Outside Services 5,138 5,138
Accounting 13,934
Advertising 14,500 43,790 750
Automobile 3,325 1,172 4,706 4,042
Bank Charges 515 1,653 1,215 1,653
Consulting Fees 23,542 4,182 34,751 4,182
Credentialing 900 3,855
Due & Subscriptions 182 1,075 2,675 4,150
Employee Benefits 1,943 726 7,193 1,443
Equipment Rental 4,154 6,759 5,496
Insurance 5,195 2,135 15,922 8,947
Legal & Professional 16,294 3,150 19,739 9,162
Licenses & Permits 3,908 472 5,393 1,225
Miscellaneous 10,497 3,204 10,755 3,452
Postage & Delivery 811 154 2,550 831
Printing 609 2,025 1,670
Rent 13,365 4,600 43,336 15,600
Repairs 88 3,315 3,771
Salaries - Medical Staff 41,010 43,971 81,736 133,187
Supplies 2,323 4,295 8,432 5,870
Taxes - Payroll 4,018 3,145 10,979 6,205
Taxes - Property 1,115 174 1,115
Telephone & Internet 8,671 5,694 39,594 10,367
Travel & Entertainment 2,492 4,654
Utilities 900 670 2,109 1,800
---------- -------- ----------- ---------
Total Operating Expenses 165,451 91,012 380,041 235,047
Net Income from Operations 7,251 (68,179) 137,246 (155,091)
Other Income 183 0 3,115 0
Other Expenses 2,345 373 6,033 2,696
Net Other Income 342 2,687 (413) 364
---------- -------- ----------- ---------
Net Income 7,593 (65,492) 136,833 (154,727)
---------- -------- ----------- ---------
Net Income Per Common Share 0.005
Common shares Outstanding 25,957,500
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MERIDIAN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SEPTEMBER 30,
(UNAUDITED)
NINE MONTHS END
SEPTEMBER 30,
--------------------
1999 1,998
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) 136,833 (154,727)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 5,314 10,129
Loss on Abandonment of Fixed Assets 13,246 19,368
Changes in assets and liabilities:
Accounts Receivable (46,091) (294,472)
Inventories (14,060) (988)
Other Investments (1,000)
Prepaid Rent Deposit (4,791)
Accounts Payable (150,405) (800)
Payroll Taxes (985) (822)
Credit Cards 12,208 28,645
Loan Payable MME (70,141) 43,906
Loan Payable SBA (2,457) 271,217
Loan Payable First Professional Bank 15,031
Loan Payable G.E. Capital Credit 30,247
Loan Payable Sanwa (7,965) (829)
Payable Stockholder 329,096
Note Payable - MMG (470,818) 39,690
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NETCASH USED IN OPERATING ACTIVITIES (554,834) 288,413
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment (20,975) (14,046)
Organization Costs (9,453) 339
Reduction in Retained Earnings (275,565)
--------- ---------
NET CASH USED IN INVESTING ACTIVITES (30,428) (289,272)
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CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Company Stock - Cash 55,246
Common stock issued to retire MMG notes 500,000
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NET CASH PROVIDED BY FINANCING ACTIVITIES 555,246 -
--------- ---------
NET DECREASE IN CASH (30,016) (859)
CASH AT BEGINNING OF PERIOD 107,117 40,560
--------- ---------
CASH AT END OF PERIOD 77,101 39,701
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
MERIDIAN HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------
This summary of significant accounting policies of Meridian Holdings, Inc. (the
"Company") is presented to assist in understanding the Company's financial
statements. Management has made all of the necessary adjustments which, in the
opinion of management, are necessary to make these financial statements not to
appear misleading. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
The Company completed the acquisition of the Capnet Group of Companies on May
25, 1999. On September 18th 1999, the Company acquired 51% of all the
outstanding Common Stock of Intercare Diagnostics, Inc., a California
Corporation, in exchange for services and assumption of certain debts of
Intercare Diagnostics, Inc. The financial statements for the Quarter ended
September 30, 1999 have been prepared to reflect a consolidation of the 51%
equity interest in Intercare Diagnostics, Inc.
NOTE 2 -- ORGANIZATION
------------
Meridian Holdings, Inc. (NASDAQ: Bulletin Board - MEHO) was incorporated under
the laws of the State of Colorado on October 13, 1998. The Company is an
Internet based company with special emphasis on e-Commerce. The Company's
activities have been limited to capital formation and the development of a
business plan. The Company became fully reporting under Securities & Exchange
Commission guidelines on March 31, 1999. Meridian Holdings, Inc. acquired the
Capnet Group of Companies on May 25, 1999. The Company is focusing on providing
services that will generate recurring revenue. Internet based communities, an
on-line mall, classified advertisement and auction websites will be developed,
acquired or be affiliated with the Company. The Company expects that the
majority of its revenues will initially consist of recurring subscription
revenues and revenues from management service agreements. If the Company is
successful in increasing its subscriber base, building brand recognition and
increasing traffic on its Web site, the Company expects revenues from
advertising, transaction and sponsorship fees to increase as percentages of its
total revenues.
Income per share -- The Company has calculated the income per common share based
- ----------------
upon 25,957,500 shares issued and outstanding. The net income per share was
$0.00.
NOTE 3 -- LEASE OBLIGATION
-----------------
The Company's corporate offices are located at 900 Wilshire Boulevard, Suite
500, Los Angeles, California 90017. The Company is required to pay $2,270.67
per month rental. The Company was required to make a lease deposit of
$4,541.34. The lease expires on February 28, 2001. The telephone number is
(213) 627-8878. The Company has additional office space located at 1601
Centinela Avenue, Inglewood, California 90302. The Company is required to pay
$2,000.00 per month rental. The Company was not required to make a lease
deposit. This lease is on a month to month basis.
<PAGE>
MERIDIAN HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CAPITALIZATION
--------------
The Company has established one class of preferred stock, one class of common
stock and has established two classes of warrants. 1,000,000 Class "A"
Redeemable Common Stock Purchase Warrants have been established, exercising into
Common Shares at an exercise price of $3.00 per share. 1,000,000 Class "B"
Redeemable Common Stock Purchase Warrants have been established, exercising into
Common Shares at an exercise price of $4.50 per share. There were no Warrants
issued or outstanding as of September 30, 1999.
The Common Shares each have voting rights, with par value $0.001 per share and
no preference rights.
As of September 30, 1999, there were 25,957,500 Common Shares of the Company
issued and outstanding. There were no Preferred Shares issued or outstanding.
NOTE 5 -- PROPERTY AND EQUIPMENT
--------------------------
Property and equipment are stated at cost. Acquisitions having a useful life in
excess of one (1) year are capitalized. Repairs and maintenance are expenses in
the year incurred. Capital assets are depreciated by the straight-line method
over estimated useful lives of the related assets, normally five (5) to seven
(7) years.
Property and equipment consists of the following:
Computer Equipment & Software $112,628
Leasehold Improvements 6,500
Office Furniture & Fixtures 36,603
Computer Software 5,956
Medical Equipment 6,150
Office Equipment 7,262
----------
Total 175,098
Less: Accumulated Depreciation 146,642
----------
Total Property & Equipment 28,457
Depreciation expense for the period has not been computed.
NOTE 6 -- INCOME TAXES
-------------
Operating Loss and Tax Credit Carryforwards
The Company has loss carryforwards totaling $864,852 that may be offset against
future taxable income. If not used, the carryforwards will expire as follows:
Year 2011 288,284
Year 2012 576,568
--------
Total $864,852
As a result of the above carryforwards, there is no provision for income tax for
the nine months ended September 30, 1999.
<PAGE>
MERIDIAN HOLDINGS, INC.
THE COMPANY
Meridian Holdings, Inc. (NASDAQ: Bulletin Board - MEHO) was incorporated under
the laws of the State of Colorado on October 13, 1998. The Company is an
Internet based company with special emphasis on e-Commerce. The Company's
activities have been limited to capital formation and the development of a
business plan. The Company became fully reporting under Securities & Exchange
Commission guidelines on March 31, 1999. Meridian Holdings, Inc. acquired the
Capnet Group of Companies on May 25, 1999. The Company is focusing on providing
services that will generate recurring revenue. Internet based communities, an
on-line mall, classified advertisement and auction websites will be developed,
acquired or be affiliated with the Company. The Company expects that the
majority of its revenues will initially consist of recurring subscription
revenues and revenues from management service agreements. If the Company is
successful in increasing its subscriber base, building brand recognition and
increasing traffic on its Web site, the Company expects revenues from
advertising, transaction and sponsorship fees to increase as percentages of its
total revenues. On September 18, 1999, the company acquired 51% of all the
outstanding Common Stock of Intercare Diagnostics, Inc. a California
Corporation, and a United States FDA registered Bio-Medical Software
Manufacturing Company, located in the city of Inglewood California, in exchange
for assumption of debt and services.
RISKS ASSOCIATED WITH MANAGING GROWTH
The Company's anticipated level of growth, should it occur, will challenge the
Company's management and its sales and marketing, customer support, research and
development and finance and administrative operations. The Company's future
performance will depend in part on its ability to manage any such growth, should
it occur, and to adapt its operational and financial control systems, if
necessary, to respond to changes resulting from any such growth. There can be no
assurance that the Company will be able to successfully manage any future growth
or to adapt its systems to manage such growth, if any, and its failure to do so
would have a material adverse effect on the Company's business, financial
condition and results of operations.
LACK OF A PRESENT MARKET FOR SECURITIES
The Common Stock is currently quoted on the Bulletin Board, maintained by the
National Association of Security Dealers, Inc. ("NASDAQ") under the Symbol:
MEHO, and there is presently only a very limited market for the Common Stock.
Historically the spread between the bid and asked price of the Company's Common
Stock has been large reflecting limited trading in the stock. The trading price
for the Common Stock has fluctuated widely in the recent past. See "Common Stock
Price Range."
MARKET FOR COMMON STOCK
The Common Stock is traded on the Bulletin Board maintained by the National
Association of Securities dealers, Inc. under the symbol "MEHO." The Price Range
of the Company's Common Stock has varied significantly in the past months
ranging from a high bid of $1.00 and a low bid of $0.125 per share. The above
prices represent inter-dealer quotations without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.
At September 30, 1999, the company had approximately 58 shareholders of record
for its common stock, not including shareholders whose Common Stock is held in
"Street" names. The Preferred shares have never been offered to the public,
therefore have never been publicly traded.
<PAGE>
SELECTED FINANCIAL DATA
Cash and cash equivalents totaled $77,101 at September 30, 1999 compared to
$39,701 at September 30, 1998. The increase in cash was due to the acquisition
of the Capnet Group of Companies and consolidation of 51% interest in Intercare
Diagnostics, Inc. The Company had net working capital of $336,642 at September
30, 1999 compared to $238,033 at September 30, 1998. This increase in working
capital was due to the restructuring of the long-term liabilities, infusion of
additional capital and the reduction of account receivable.
The selected financial data set forth above should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements notes thereto.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS:
The following section contains forward-looking statements that involve risks and
uncertainties, including those referring to the period of time the Company's
existing capital resources will meet the Company's future capital needs, the
Company's future operating results, the market acceptance of the services of the
Company, the Company's efforts to establish and the development of new services,
and the Company's planned investment in the marketing of its current services
and research and development with regard to future endeavors, The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including: domestic
and global economic patterns and trends.
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY.
With the completion of the acquisition of the Capnet Group of Companies into the
Company, the operations have changed significantly. Prior to the acquisition,
the Company was in the capital formation stages and did not have any business
operations. With the increased operations, however, there is also an increase
in commitments and cash requirements. On September 18, 1999, the company
acquired 51% of all the outstanding Common Stock of Intercare Diagnostics, Inc.,
in exchange for assumption of debt and services. This acquisition is accounted
for in the current consolidated financial statement. As a result of limited
cash resources for continued operation, Anthony C. Dike, the chairman and chief
executive officer of the company has agreed not to take his monthly salary of
$12,000, until such a time the company can afford to pay him, and this is
anticipated to begin during the first quarter of the year 2000.
Long-term cash requirements, other than normal operating expenses, are
anticipated for the continued development of the Company's business plans. The
Company will need to raise additional funds from investors in order to complete
these business plans. There is no assurance that such funds will be available,
and even when available, the terms may be very prohibitive.
RESULTS OF OPERATIONS
The Company generated revenues from operations of $976,534 during the nine-month
period ended September 30, 1999, compared to the revenues from operations of
$238,033 during the nine-month period ended September 30, 1998. This represents
an increase in revenues of 410% from the year earlier. The acquisition of 51%
of Intercare Diagnostics, Inc., was completed on September 18, 1999. The
financial statements for the periods ended September 30, 1998 and September 30,
1999 include the consolidated operations. The Company recorded a net profit
from operations of $136,833 during the nine-month period ended September 30,
1999, compared to a net operating loss of $(154,727) during the period ended
September 30, 1998.
Management anticipates that general operating expenses will increase, as it
pursues vigorously its acquisition of new business opportunities and the
integration of the existing ones.
The Company incurred a profit of $7,593 for the third quarter of 1999, as
compared to a profit of $71,212 for the second quarter. This profit, lower
than anticipated, was due to the amount of time, effort and resources that were
required to be expanded to complete the acquisition of 51% of Intercare
Diagnostics, Inc., on September 18, 1999, hiring of additional support-staff,
acquisition of additional office equipment, marketing and outside consultants
fees.
<PAGE>
There are no seasonal aspects of the Company's business that had, or are
expected to have, a material effect on the financial conditions or results of
operations.
PLAN OF OPERATIONS
The Company has undertaken the completion of a Private Placement pursuant to
Regulation D, Rule 506 of the Securities and Exchange Commission. The Company
will be offering to Accredited Investors the opportunity to purchase Units at a
price of $5.00 each. Each Unit consists of Three Common Shares, par value
$0.001 per share, One Class "A" Redeemable Common Stock Purchase Warrant and One
Class "B" Redeemable Common Stock Purchase Warrant. Each Class "A" Warrant
entitles the holder thereof to purchase one additional share of Common Stock for
$3.00 per share for a period commencing on the date of the Private Placement
Memorandum. Each Class "B" Warrant entitles the holder thereof to purchase one
additional share of common Stock for $4.50 per share for a period commencing on
the date of the Private Placement Memorandum. Each Warrant is redeemable by the
Company at a redemption price of $0.01 per Warrant at any time after nine months
from the date of the Private Placement Memorandum with thirty days prior written
notice, if the average closing bid price of the Common Shares equals or exceeds
$5.00 for any twenty consecutive trading days ending within ten days prior
notice of redemption. As of September 30 1999, no unit of the offering has
been sold, nor has any warrant been issued.
On September 3, 1999, Capnet IPA, a division of Meridian Holdings Inc.,
announced that it has renewed its contracts with the County of Los Angeles -
Department of Health Services Community Health Plan.
The agreements, No. H207146-1, No. H207148-1 and No. H207190-1, provide that
Capnet IPA provide services regarding health-care transactions and management
for the County of Los Angeles - Department of Health Services Community Health
Plan's contracted members, through Capnet's network of Affiliated Physicians,
Hospitals and other ancillary services providers within the greater Los Angeles
County.
The agreements were extended for a 12-month period. These agreements are
evaluated and extended on an annual basis. The company projects that its
agreements with the County of Los Angeles - Department of Health Services
Community Health Plan will provide revenue in the range of $1,500,000 to
$1,800,000 during the extension period.
On September 10 1999, CAPNET.com, a division of Meridian Holdings Inc.,
announced that it has officially released the Version 5.0 of ``The Mirage
Systems Internet-based Healthcare Transaction Management Software Program.''
This program has been under development since 1994, and has undergone rigorous
testing prior to current deployment. The software program was originally
developed as a cross-platform software program (Microsoft Windows and Macintosh)
by Intercare Diagnostics Inc. (A world-renowned biomedical software development
company) utilizing Microsoft FoxPro Software Development tool, in 1993.
The development of the Internet Version of the Program was started in 1994,
under joint development efforts between Intercare Diagnostics Inc., A Microsoft
Developer Network ISV Member, and CAPNET.com, an Internet-based E-Commerce
Transactions and Management division of Meridian Holdings, utilizing Microsoft
Corporation software development tools.
The current software was developed with Microsoft Visual Interdev 6.0, and it is
100% compatible with Microsoft Windows NT 4.0, Microsoft Exchange Server 5.5,
Microsoft SQL 7.0, Microsoft Access 7.0 and above, Microsoft Internet Explorer
4.0 and above, and Netscape 4.0 and above. The estimated street value of this
program is over $5 million and expected to appreciate in value, when all the
program features are fully implemented in subsequent versions.
Under the joint development agreement, Meridian Holdings has an exclusive
license to use this software program to conduct healthcare transactions over the
Internet, including but not limited to Claims and Encounter Data Submission,
Eligibility Verifications, Outcome analysis and Drug Utilization analysis, etc.
<PAGE>
So far the following contracted health plan partners, LA Care Health Plan,
County of Los Angeles Community Health Plan, Blue Cross of California, Care1st
Health Plan and Molina Medical Centers, have been connected to the Network as of
January 1999. This newly released version will allow Capnet contracted
Physicians and Hospitals to utilize the program at no cost, while other
non-affiliated healthcare providers can only logon to the network on fee-based
transaction arrangements.
In future, the company intends to market this program to other non-affiliated
healthcare organizations on a fee based transaction module. As of this report,
no sales agreement for use of the software has been signed by any non-affiliated
healthcare organization, and there can be no assurance that any such market
exists for the software.
On September 18 1999, the Company acquired 51% of Intercare Diagnostics, Inc., a
United States FDA registered, world renowned biomedical software manufacturing
and publishing company with over 5-Multimedia software titles in the market,
namely:
a). The Mirage Systems Body Pain Trigger Points Software programs
(Both Macintosh and Windows versions)
b). The Mirage Systems Multimedia Biofeedback Software Programs
(Both Macintosh and Windows versions)
c). The Mirage Systems Internet-based Healthcare Transaction Management
Software Program
d). The Mirage Systems Stress Profiling Software Programs
(Both Macintosh and Windows versions)
e). The Mirage Systems Electro-Diagnostics Scan Site Program
(Both Macintosh and Windows versions)
This acquisition was consummated in exchange for certain debts to be assumed by
the company and other services to be performed by the company as contained in
the Stock Purchase Agreement dated September 18 1999, filed with SEC on the Form
8K submitted on September 20, 1999 and Form 8-K/A submitted in October 25, 1999
respectively.
On September 27, 1999, Intercare Diagnostics, Inc., a subsidiary of Meridian
Holdings, Inc., announced that it has executed an Electronic Commerce Agreement
with Netsales, Inc., in which Netsales will distribute Intercare's software
programs through more than 140,000 loyal reseller customers in 130 countries of
Ingram Micro, the largest provider of computer technology products and services
in the world.
NetSales, Inc., is one of the oldest and most trusted providers of outsourced
e-commerce services, enables companies to do business via the Internet by
developing secure, client-branded e-commerce sites. Under the exclusive ESD
services agreement with Ingram Micro, Netsales will work directly with software
publishers who are not currently part of the Ingram Micro channel to ESD-enable
products for distribution through Ingram Micro's channel of participating online
resellers - including some of the Internet's largest and most popular online
stores.
Ingram Micro, Inc. (NYSE: IM - news), headquartered in Santa Ana, Calif., is the
-- ----
world's largest wholesale distributor of technology products and services, and a
leading provider of assembly and integration services with sales of $25.5
billion for the past four reported quarters. The company and its subsidiaries
operate in 34 countries and distribute more than 225,000 products to more than
140,000 resellers in 130 countries.
The company had entered into similar agreement earlier, with DigitalRiver, Inc.,
in which DigitalRiver will market the company's software program through major
retailers such as CompUSA, Wal-Mart, and other Internet software resellers. As
of this writing, there has not been any significant sales reported, but
management believes that such sales will occur as soon as more funds are
committed to promotion and marketing of the software program. There can be no
assurance that the company will be able to sustain an extensive marketing
campaign, if it is unable to raise additional capital for such an effort, and
even if the funds were to be available, there can be no assurance that the terms
for such level of funding will be favorable to the Company or could be
consummated without incurring an additional dilution of the Company's Common
Stock.
<PAGE>
On October 8 1999, a term-sheet for a funding agreement was signed with Charter
Financial Corp., located in Lakewood, Colo., to provide funding for the
company's accounts receivable with regard to an anticipated acquisition. Charter
Financial will provide approximately $15 million to the company. The amount is
based upon a formula determined by the value of the account receivable. The
discount rate will range from 7.75% to 11%, depending upon payers and timeliness
of payments. The Agreement will cover all accounts receivable with contract
terms of 30 days or more, free and clear of all liens and encumbrances. All
terms are subject to due diligence review. The company entered into a minimum of
a one-year contract with Charter Financial.
PART II - OTHER INFORMATION
ADDITIONAL INFORMATION
Shareholder meeting and Proxy Vote.
The Company is currently organizing a shareholder meeting, though no date has
yet been set, the company hopes to conduct this meeting in January 2000.
Y2K Disclosure
The company has taken active measures to assure all accounting systems,
operating software and computer hardware are in compliance with Y2K. However,
special effort will be taken before the end of the year to provide backup of all
data both in electronic backup and hard copy of documents.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MERIDIAN HOLDINGS, INC.
DATE: October 25, 1999
By: /s/ Anthony C. Dike
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Anthony C. Dike
Chief Executive Officer and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Discription
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Exhibit 27 Financial Data Schedule to be filed by amendment
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