FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Response to Comments 6-17-99
(Mark One)
[XX]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER -0-300181-14825
MERIDIAN HOLDINGS, INC.
(Exact name of registrants specified in its charter)
COLORADO 52-2133742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 Wilshire Avenue, Suite 500
Los Angeles, California 90017
(213) 627-8878 Fax: (213) 627-9183
Attention: Anthony C. Dike
(Address, Including Zip Code, And Telephone Number, Including Area Code,
Of Registrant's Principal Executive Offices)
1601 Centinela Avenue Suite#5
Inglewood, CA 90302
(Former name, former address and former three-months, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of the registrant's common stock outstanding as of
February 8th, 1999 was:
$.001 Par Value Common: 957,500
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited financial statements for the three month period ending
March 31st, 1999 are attached as exhibit A.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of operations.
The following discussion should be read in conjunction
with the Company's unaudited financial statements and notes
thereto included herein. In connection with, and because it
desires to take advantage of, the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward looking
statements in the following discussion and elsewhere in this
report and in any other statement made by, or on the behalf
of the Company, whether or not in future filings with the
Securities and Exchange Commission. Forward looking statements
are statements not based on historical information and which
relate to future operations, strategies, financial results or
other developments. Forward looking statements are necessarily
based upon estimates and assumptions that are inherently subject
to significant business, economic and competitive uncertainties
and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are
subject to change. These uncertainties and contingencies can
affect actual results and could cause actual results to differ
materially from those expressed in any forward looking statements
made by, or on behalf of, the Company. The Company disclaims any
obligation to update forward looking statements.
Overview
Meridian Holdings, Inc. is a Colorado Corporation organized on
October 13, 1998. The Company was formed to become an Internet
retailer of computer software and related hardware products. Since
incorporation, the Company's activities have been limited to capital
formation.
On October 13, 1998, the Company issued 650,000 shares of its common
stock to its sole officer and director for a consideration of $3,524.
On December 5, 1998, the Company began a private stock offering to
raise $35,000 of additional capital. The offering was for 70 units.
Each unit consisted of 5,000 shares of Common Stock at $500 per unit.
As of the date hereof, the Company has received proceeds of $12,000.
Subsequent to the balance sheet of December 31, 1998 and additional
187,500 common shares were subscribed in consideration for cash and
services performed in the amount of $18,750.
Total shares subscribed as of February 8, 1999 were 307,500 shares in
addition to 650,000 common shares issued and outstanding. Total shares
committed and/or outstanding as of February 8, 1999 were 957,500.
2
Also the Company entered into a non-binding Letter of Intent (the "Letter
of Intent") as of March 24th 1999, pursuant to which the Company has the
option to acquire 100% of certain Internet Related Assets of Anthony C.
Dike, in exchange for the Companies Common Stock.
These Assets include Capnet Group of Companies which includes "Capnet.com
d/b/a/ Capnet Gateway Online Services", and "Capnet IPA" all owned
and operated by Anthony C. Dike. "Capnet.com" is an Internet based
information and management services company, with focus on Internet
Content and Electronic Commerce.
"Capnet IPA" is a healthcare transaction based management company that
utilizes the Internet to provide management services to contracted
healthcare entities on a fee based transaction model. Capnet IPA had
approximately $0.5 Million sales for the year ending December 1998,
with a projected revenue of $1.5 million for the year ending December
1999. Capnet has a website located at http://www.capnet.com that will
become the portal for users of the Company's services.
The website will undergo a design upgrade in order to meet the Companies
objectives. The Company plans to use proprietary Internet software that
it is currently developing to independently enhance Capnet.com existing
Website with the plan to create a unique virtual "Shopping Center" and
"Information Portal". By acquiring Capnet Group of Companies, an
established service company, the company will acquire an established
client base.
The acquisition of Capnet Group of Companies will give the company access
to management personnel with expertise and experience in the Internet
Electronic Commerce related business.
Capnet.com has existing infrastructures, such as a corporate office located
at 900 Wilshire Blvd, Suite 500, Los Angeles California. During the period
of negotiation and upon completion of contemplated acquisition of Capnet
Group of Companies, the Company will maintain its executive offices at 900
Wilshire Blvd., Suite 500, Los Angeles, California. The Company also intends
to host its Internet Web Server at the same facility.
The transaction contemplated calls for an exchange of shares for assets, with
no anticipated income tax consequences, and is contingent solely upon certain
working capital commitments, which are expected to be fulfilled in the near
future.
The parties contemplate a final Closing will take place on or before May 1st,
1999. Upon completion of Contemplated transaction, Anthony C. Dike, will be
elected into the board of director of Meridian Holdings, Inc., and assume
control of the Company on or before Closing.
Results of Operations
Results of Operations for the period ended March 31, 1999.
Meridian Holdings, Inc. is still a development stage company, and has
invested the initial funds raised in the last offering to purchase of
computer hardware and software for hosting the Company's Electronic
Commerce Server, as well as paying for other developmental expense.
During this initial month of operations, no revenues were generated.
3
Liquidity and Capital Resources
At the close of the three month period ended March 31st, 1999, the
Company had about $4287 cash and $0 in account receivables.
Management has recognized the Company's need for additional operating
capital. In response thereto, the Company intends to commence a private
offering of its common stock wherein it is offering Units, each Unit
consist of 5,000 shares of the Company's Common Stock, for a price of
$25,000 per unit ($5.00 per share), for aggregate gross proceeds of
$4 million. There can be no assurance that all of the Units to be
offered will be sold, or that the Company will generate sufficient
interest in this offering to solve its cash shortage. It is expected
that the proceeds of this offering will be utilized primarily for
advertising the Company's services using electronic banners on the
major internet services, attendance of the Company at trade shows,
acquisition of business opportunities, further infrastructure
development, research and development.
The Company's securities are currently not liquid. However, an
application to list the Company's common stock for trading on the
OTC Bulletin Board operated by National Association of Securities
Dealers, Inc. will be filed shortly after the date of this report.
While no assurance can be provided, management believes that the
Company's common stock will begin trading on the bulletin Board in
the near future.
Trends
Management believes that the Company will continue to operate at a
loss for the next several months, but is optimistic that the Company
will begin generating profits from its operations beginning thereafter.
This is based upon numerous opportunities for expansion of the services
offered by the Company with major vendors and manufacturers, establishment
of strategic alliances with existing Internet companies, as well as
acquisition of other companies with existing book of business. Discussions
have already commenced in this regard, but as of the date of this report
no definitive agreements have been made and there can be no assurance that
such agreements will be consummated in the future. Further, there can be no
assurances that the Company will become profitable within the time parameters
described herein, or at all.
Inflation
Although the operations of the Company are influenced by general economic
conditions, the Company does not believe that inflation had a material effect
on the results of operations during the three month period ended March 31st,
1999.
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS IN SENIOR SECURITIES
NONE
4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Effective March 24th, 1999, pursuant to unanimous consent in lieu of a meeting
in accordance with the laws of the State of Colorado, the Company's
Shareholders approved the signing of a letter of intent to acquire Capnet
Group of Companies, and to relocate the Company's administrative headquarters
from 1601 Centinela Avenue #5, Inglewood, California to 900 Wilshire Blvd.,
Suite 500, Los Angeles, California. Anthony C. Dike was appointed as the
caretaker of the affairs of the Company pending the signing of a definitive
asset purchase agreement. Upon signing of this agreement, he will be elected
as a member of the Board of Directors of the Company, and will assume the
position of the Chairman and Chief Executive officer of the Company. He will
then oversee the election of additional members of Board of Directors, as
well appointment of officers and additional management staff of the Company.
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit A Financial Data Schedule
(b) Reports on Form 8-K. State whether any reports on Form 8-K have
Been filed during the quarter for which this report is filed, listing
the items reported, any financial statements filed, and the dates of
any such reports.
NONE
Exhibit A
Unaudited Financial Statements
Meridian Holdings, Inc.
BALANCE SHEET (Unaudited)
March 31, 1999
ASSETS
Current Assets
Cash $ 4,287
Subscription Receivable 250
Total Current Assets 4,537
Property, Plant, and Equipment
(Net of Accumulated Depreciation) 825
Organization Costs 16,613
Total Assets $21,975
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
Accounts Payable $ 2,000
Stockholders Equity
Common Stock (50,000,000 shares
authorized, par value $0.001,
650,000 shares issued and
outstanding 650
Common Stock Subscribed 16,450
Additional Paid in Capital 2,875
Total Equity 19,975
Total Liabilities and Stockholders Equity $21,975
See accompanying notes and accountants' report
STATEMENTS OF OPERATIONS
(unaudited)
For the 3 months ended
March 31,
1999
-------------
There were no revenues and expenses
incurred during the period. Total
expenditures charged to preopening
costs were $6,089
See accompanying notes and accountants' report
(Unaudited)
MERIDIAN HOLDINGS, INC.
STATEMENT OF CASH FLOWS
Quarter ended March 31, 1999
Financing Activities
Proceeds from the sale of stock $4,450
Investing Activity
Increase in Pre-Opening Costs 6,339
(Decrease in Cash (1,889)
Cash Balance 12/31/98 6,176
Cash Balance 3/31/99 $4,287
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
March 31, 1999
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. These financial statements and notes are the
representation of the Company's management, which is responsible for the
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements
Nature of Operations
The Company was organized under the laws of the State of Colorado and was
incorporated October 13, 1998. Since incorporation, the Company's activities
have been limited to capital formation. The Company intends to become an
Internet retailer of computer software products, when operational. Costs
accumulated during this period have been capitalized and will be amortized
over a sixty month period.
Use of Estimates
Management will use estimates and assumptions in preparing financial
statements (e.g. depreciation). Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and reported revenues and expenses.
Fiscal Year
The Company operates on a December 31st year end.
Income Recognition
The Company prepares its financial statements and federal income taxes on
the accrual basis of accounting.
The nature of the business is such that the Company receives stock and other
necessary materials from the customers for processing. As such no
inventories of any significance are maintained.
NOTE 2 - Capitalization
The Company is authorized to issue 10,000,000 shares of Preferred Stock, per
value $.001, and 50,000,000 shares of Common Stock, par value $.001. 650,000
shares of Common Stock were issued for cash consideration of $3,524.
As of March 31, 1999 total shares subscribed were 307,500 in consideration
for cash and services performed. Total shares committed and/or outstanding
as of March 31, 1999 were 957,500. Proceeds have been used by the Company
primarily for offering costs and the acquisition of equipment and resources
to support it's intended operations.
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: April 15, 1999 By:___________________________________
/s/ Charles Okehie, President, Chief
Executive Officer and Chief
Financial Officer
