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 June 30, 2000
( ) 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
----------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
----------------------------------------------------------------
(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 June 30, 2000, Meridian Holdings, Inc., Registrant had 94,360,985
shares of its $0.001 par value common stock outstanding. Based upon the closing
price at such date, aggregate market value was $76,432,398.
Page 1 of 13 sequentially numbered pages
Form 10-Q
Second Quarter 2000
<PAGE>
MERIDIAN HOLDINGS, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Independent auditors report 3
Balance Sheets - June 30, 2000 4
Statements of Operations for the Three Months
Ended June 30, 2000 5
Statement of Cash Flows for the Three Months
Ended June 30, 2000 6
Notes to Financial Statements 7-9
Company Overview 10
Management's Discussion and Analysis of Financial Condition
and Results of Operations 10-12
PART II OTHER INFORMATION
Signature 12
<PAGE>
INDEPENDENT ACCOUNTANTS REPORT
To the Board of Directors
Meridian Holdings, Inc.
900 Wilshire Blvd., Suite 500
Los Angeles, CA 90017
We have reviewed the accompanying balance sheet of Meridian Holdings, Inc. (MHC)
as of June 30, 2000 and the related statements of income for the quarter then
ended, in accordance with Statements of Standards of Accounting and Review
Services issued by the American Institute of Certified Public Accountants. All
Information included in these financial statements is the representation of the
management of MHC.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Our review was made for the purpose of expressing limited assurance that there
are no material modifications that should be made to the financial statements in
order for them to be in conformity with generally accepted accounting
principles. Such information has been subjected to the inquiry and analytical
procedures applied in the review of the basic financial statements, and we are
not aware of any material modifications that should be made to it.
Andrew M. Smith CPA
Long Beach, California
August 12, 2000
<PAGE>
<TABLE>
<CAPTION>
MERIDIAN HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30,
(UNAUDITED)
2000 1999
======= =======
<S> <C> <C>
Current Assets:
Cash In Bank 85,879 71,130
Accounts Receivable 715,327 231,611
Inventories 6,528 4,334
---------- -----------
Total Current Assets 807,734 307,075
---------- -----------
Fixed Assets:
Computer Equipment 57,409 56,419
Leasehold Improvements 6,500 6,500
Office Furniture & Fixtures 36,603 36,603
Office Equipment 7,169 7,262
Computer Software 14,835 4,792
Medical Equipment 5,391 5,391
---------- ----------
Total 127,907 116,967
Depreciation Reserve (97,889) (90,186)
---------- ---------
Total Fixed Assets 30,018 26,781
Other Assets:
Other Investments 6,580,000 500
Prepaid Rent Deposit 4,541 4,541
---------- ----------
Total Other Assets 6,584,541 5,041
---------- ----------
Total Assets 7,422,293 338,897
========== ==========
Current Liabilities 89,930 69,127
Long Term Liabilities 3,585,272 118,598
---------- ----------
Total Liabilities 3,675,201 187,725
---------- ----------
Shareholders' Equity:
Common Stock, Par Value $0.001 Per Share; 94,361 25,958
Authorization 100,000,000 shares; Issued and
Outstanding 94,360,985 Shares
Additional Paid In Capital 3,898,175 535,237
Accumulated Deficit (245,444) (410,023)
---------- -----------
Total Shareholders' Equity 3,747,092 151,172
---------- -----------
Total Liabilities & Shareholders' Equity 7,422,293 338,897
========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
MERIDIAN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Month Ended Six Months Ended
June 30, June 30,
-------------------- --------- ---------
2000 1999 2000 1999
---------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Professional Fees 301,315 351,947 638,500 639,892
Software Sales 450,000 450,000
Cost of Revenues (136,600)(166,893) (338,037) (295,306)
-------- ------- ------- -------
Gross Margin 614,715 185,054 750,463 344,586
Operating Expenses 234,135 115,706 475,550 235,994
Net Income from Operations 380,580 69,348 274,913 108,592
Net Other Income 22,546 1,864 16,915 (755)
---------- -------- ----------- ---------
Net Income $ 403,126 71,212 291,828 107,837
---------- -------- ----------- ---------
Net Income Per Common Share 0.004 0.003
Common shares Outstanding 94,360,985 25,957,500
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
MERIDIAN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the period Jan 1, 2000 through June 30, 2000
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------
2000 1999
========= =========
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) 291,828 107,837
Depreciation Expense 7,703
Changes in current assets and liabilities:
Accounts Receivable (483,716) ( 43,132)
Organizational Costs 21,403
Inventories (2,194)
Liabilities 20,803 (163,480)
--------- ---------
NETCASH USED IN OPERATING ACTIVITIES (165,576) (77,372)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment (10,940) (21,120)
Organization Costs
Reduction in Retained Earnings
--------- ---------
NET CASH USED IN INVESTING ACTIVITES (10,940) (21,120)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Company Stock - Cash 86,939
Proceeds From Long Term debt 191,265
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 191,265 86,939
--------- ---------
NET INCREASE (DECREASE) IN CASH 14,749 (11,553)
CASH AT BEGINNING OF PERIOD 71,130 82,683
--------- ---------
CASH AT END OF PERIOD 85,879 71,130
========= =========
INVESTING AND FINANCING ACTIVITY NOT REQUIRING CASH
Investment acquired for stock and debt 6,388,235
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
Meridian Holdings, Inc.
Notes to Financial Statements
June 30, 2000
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
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. Meridian Holdings, Inc., is a
technology and Internet-centric holding company which identifies, acquires,
operates and manages business-to-business companies . Meridian Holdings, Inc.,
currently focuses on companies engaged in e-commerce, e-communication, and
e-business services. The Company generally acquires ownership interests in
companies that allow it to have a significant influence over their direction and
management over the long-term. Meridian Holdings, Inc., assigns a dedicated team
to each partner company and actively assists its partner companies in their
management, operations and finances. The Company seeks to maximize shareholder
value by actively providing operational assistance and expertise to help its
partner companies grow and develop and by giving its shareholders the
opportunity to participate in the initial public offerings of its partner
companies while retaining a significant ownership interest after the initial
public offering. Its network of partner companies creates an environment through
which companies can leverage one another's information technology, operational
experience, business contacts and industry expertise.
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
On April 11, 2000, the Board of Directors approved the amendment of the article
of incorporation of the registrant, whereby the total number of authorized
shares was increased to 100,000,000 Common Stock, and 20,000,000 Preferred Stock
all at $.001 par value. The Common Shares each have voting rights, with par
value $0.001 per share and no preference rights.
On May 8, 2000,pursuant to consent resolution by the Board of Directors and
for the best interest of the corporation and shareholders, the Registrant
announced a 3 for 1 forward stock split with a record date of June 15, 2000
and distribution date of June 30, 2000.
As of June 30, 2000, there were 94,360,985 Common Shares of the Company
issued and outstanding. There were no Preferred Shares issued or outstanding.
NOTE 3 - Business Combinations
On June 29, 2000, the registrant purchased all of the assets of Sirius
Computerized Technologies Limited (Israel), consisting primarily of intellectual
property and technology related to that company's software used in healthcare
management. The asset purchase includes the highly innovative intellectual
property commonly known as MedMaster and the associated Virtual
Multi-object-architecture Database (VMDB), as well as all components,
subsystems, source code and documentation. The purchase price was $2.7 million.
NOTE 4 - Business Loans
a) Loan Payable to Los Angeles Community Development Bank with balance in
the amount of $53,801,and a variable annual percentage rate, which as at this
report is 11.50%
b).Loan payable to First Professional Bank with a balance in the amount of
$8,640, and a variable annual percentage rate, which as at this report
is 11.50%.
c).Loan payable to Union Bank of California with a balance of $50,000, and a
variable annual percentage rate, which as of this report is 11.50%.
d). On June 13, 2000, the Board of Directors of the registrant resolved to
borrow three million and two hundred thousand dollars from the registrant's
chairman and chief executive officer, Anthony C. Dike, MD. The promissory note
stipulates that (i) the loan shall not bear interest if repaid on or before
July 1, 2001; and (ii) any unpaid principal not repaid on or before July 1, 2001
Shall thereafter bear interest at the rate of ten percent (10%) per annum,
calculated on the basis of a 365-day year.
Of the amount borrowed, $2.7 million was for the purchase of the assets of
Sirius Computerized Technology of Israel, LTD, and the remaining $500,000 will
be used for working capital purposes.
NOTE 5 - Accounts Receivable
As at June 30, 2000, accounts receivable represented the residual amount
of fees earned and reasonably expected to be collected.
NOTE 6 - Property Plant & 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 expensed
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 as of
June 30, 2000 is summarized as follows:
2000
=====
Computer Equipment $ 56,628
Leasehold Improvements 6,500
Office Furniture & Fixtures 36,603
Office Equipment 7,169
Software 11,385
Medical Equipment 5,391
Less: Accumulated Depreciation 97,889
-------
$ 25,787
=======
NOTE 7 - INCOME TAXES
Operating Loss and Tax Credit Carryforwards
The Company, as of December 31, 1999, has loss carryforwards totaling $906,336
that may be offset against future taxable income. If not used, the
carryforwards will expire as follows:
Year 2011 $329,768
Year 2012 576,568
--------
Total $906,336
========
As a result of the above carry-forwards, there is no provision for income tax
for
the year ended December 31, 1999.
NOTE 8 - EARNINGS PER SHARE
The Company has calculated the income per common share based upon 94,360,985
shares issued and outstanding. The net income per share was $0.004
<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
acquisition-oriented holding company focused on building, operating and managing
a portfolio of business-to-business companies. Meridian seeks to acquire
majority or controlling interests in companies engaged in e-commerce,
e-communication, and e-business services, which will allow the holding company
to actively participate in management, operations and finances. Meridian's
network of affiliated companies is designed to encourage maximum leverage of
information technology, operational excellence, industry expertise and
synergistic business opportunity. Meridian is committed to building shareholder
value by positioning affiliated companies as independent business entities in
which Meridian shareholders enjoy equity participation.
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, financial
resources, research and development and administrative operations.
Additionally, with the acquisition of the intellectual properties of Sirius
Computerized Technologies of Israel, LTD, the company hired immediately 10
additional personnel and well as established a Research and Development
subsidiary known as InterCare MedMaster (Israel) LTD, based in Jerusalem,
Israel. The Company's future performance will depend in part on its ability to
manage rapid growth and to adapt its operational and financial control systems
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 OTC Bulletin Board, maintained by
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.
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 second
quarter ranging from a high bid of $4.65 and a low bid of $.81 per share.
The above prices represent inter-dealer quotations without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.
SELECTED FINANCIAL DATA
The Company had net working capital of $1,088,501 as at June 30, 2000 compared
to $337,185 during the second quarter ended March 31, 2000. This represents
an increase in working capital of 337.18%. This increase in working capital
is attributed to increase in enrolment of membership into Capnet IPA Network;
MedMaster software licenses sell, as well as expansion on new contracts
with one of the contracted health plans.
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 develop new products and 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.
On June 29, 2000, the registrant the purchase of all the assets of Sirius
Computerized Technologies Limited (Israel), consisting primarily of intellectual
property and technology related to that company's software used in healthcare
management. The asset purchase includes the highly innovative intellectual
property commonly known as MedMaster and the associated Virtual
Multi-object-architecture Database (VMDB), as well as all components,
subsystems, source code and documentation. The purchase price was $2.7 million.
Additionally, with the acquisition of the intellectual properties of Sirius
Computerized Technologies of Israel, LTD, the company hired immediately 10
Additional personnel as well as established a Research and Development
subsidiary known as InterCare MedMaster (Israel) LTD, which is based in
Jerusalem, Israel. The Company's future performance will depend in part on its
ability to manage rapid growth and to adapt its operational and financial
control systems to respond to changes resulting from any such growth.
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 $751,315 during the
Second quarter ended June 30, 2000, compared to the revenues from operations of
$351,947 during same period in 1999. This represents an increase in revenues
of 213%. This increase in revenue is attributed to increase in enrolment of
membership into Capnet IPA Network and sales of Medmaster software program
licenses. Operating expenses for the period ending June 30, 2000 were $234,135
compared to $115,706 during the same period in 1999. This represents a 202%
increase compared to the same period in 1999. This increase operating expenses
is attributed to hiring of additional personnel and purchase of new equipment.
The Company recorded a net income from operations of $403,126 during the
three-month period ended June 30, 2000 compared to $71,122 during the same
period in 1999. This represents a 566% increase in net income. The increase
in net income is attributed to the increase in professional fees, sale of
MedMaster software, cost reduction and minimal use of outside consultants.
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.
PLAN OF OPERATIONS
On April 11, 2000, the Board of Directors approved the amendment of the article
of incorporation of the registrant, whereby the total number of authorized
shares was increased to 100,000,000 Common Stock, and 20,000,000 Preferred Stock
all at $.001 par value. Details of this announcement is contained in the Form
8-K filed on April 11, 2000 and incorporated herein by reference.
On April 18, 2000, the registrant inked a joint venture agreement with Dermallay
Industries to market, co-brand, and develop products and technologies.
On May 8, 2000, the Registrant announced a 3 for 1 forward stock split with a
record date of June 15, 2000 and distribution date of June 30, 2000. This is
pursuant to consent resolution by the Board of Directors for the best interest
of the corporation and shareholders. Details of this announcement is contained
in the Form 8-K filed on May 8, 2000 and incorporated herein by reference.
On May 24, 2000, the registrant named Daniel Thornton as its Director of Sales
and Marketing, as well as General Manager of registrant's subsidiary - Meridian
Gateway Online Services, Inc.
On June 6, 2000, the registrant announced a tentative agreement with Sirius
Computerized Technologies Limited (Israel) for the purchase of all the assets of
the latter which comprised mostly of the intellectual property of the MedMaster
software (and its sub-components).
On June 13, 2000, the Board of Directors of the registrant resolved to borrow
three million and two hundred thousand dollars (interest-free for one year) from
the registrant's chairman and chief executive officer, Anthony C. Dike, MD, as
fully described in Form 8-K formerly filed and hereby incorporated by
reference.
On June 16, 2000, the registrant submitted an irrevocable proposal for the
purchase of assets of Sirius Computerized Technologies Limited as fully
described in Form 8-K formerly filed and hereby incorporated by reference.
On June 22, 2000, the registrant acquired substantially all the assets of Triad
Microsystems, Inc., including all intellectual rights owned by Triad
Microsystems, Inc., as fully described in Form 8-K formerly filed and hereby
incorporated by reference
On June 29, 2000, the registrant purchased all of the assets of Sirius
Computerized Technologies Limited (Israel), consisting primarily of intellectual
property and technology related to that company's software used in healthcare
management. The asset purchase includes the highly innovative intellectual
property commonly known as MedMaster and the associated Virtual
Multi-object-architecture Database (VMDB), as well as all components,
subsystems, source code and documentation, as fully described in Form 8-K
formerly filed and hereby incorporated by reference
On June 30, 2000, the registrant entered into a Master Value added-reseller
agreement with its InterCare.Com, Inc., subsidiary. Under the terms of this
agreement, InterCare will market, train and support the MedMaster(tm) Suite of
Software programs on behalf of the registrant, in return for 40% of the net
purchase price of the software, and 60% of the maintenance fees payable by the
potential customer.
PART II - OTHER INFORMATION
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: August 12, 2000
By: /s/ Anthony C. Dike
-------------------
Anthony C. Dike
Chairman/CEO
<PAGE>
EX-27.1
FINANCIAL DATA SCHEDULE
[ARTICLE] 5
[MULTIPLIER].1
<TABLE>
<CAPTION>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-START] APR-01-2000
[PERIOD-END] JUN-30-2000
[CASH] 85,879
[SECURITIES] 6,580,000
[RECEIVABLES] 715,327
[ALLOWANCES] -
<LOAN PROCEEDS & INVENTORY> 3,206,528
[CURRENT-ASSETS] 4,007,734
[PP&E] 127,907
[DEPRECIATION] 97,889
[TOTAL-ASSETS] 10,622,293
[CURRENT-LIABILITIES] 89,930
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 94,361
[OTHER-SE] 6,947,092
[TOTAL-LIABILITY-AND-EQUITY] 10,622,293
[SALES] 751,315
[TOTAL-REVENUES] 751,315
[CGS] 136,600
<OPERATING EXPENSES> 234,135
[OTHER-EXPENSES] 22,546
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 403,126
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 403,126
[EPS-BASIC] 0
<EPS-DILUTE> 0
</TABLE>
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