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, 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.
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(Exact Name of Registrant as Specified in its Charter)
COLORADO 52-2133742
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(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 September 30, 2000, Meridian Holdings, Inc., Registrant had 93,916,895
shares of its $0.001 par value common stock outstanding. Based upon the closing
price at such date, aggregate market value was $29,349,030
Page 1 of 12 sequentially numbered pages
Form 10-Q
Third Quarter 2000
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MERIDIAN HOLDINGS, INC.
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
Balance Sheets - September 30, 2000 2
Statements of Operations for the Nine Months
Ended September 30, 2000 3
Statement of Cash Flows for the Nine Months
Ended September 30, 2000 3
Notes to Financial Statements 4-5
Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II OTHER INFORMATION
Additional Information 7
Signature 12
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MERIDIAN HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30,
(UNAUDITED)
2000 1999
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Current Assets:
Cash In Bank 410,498 77,101
Accounts Receivable 587,804 282,226
Inventories 6,732 25,557
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Total Current Assets 1,009,575 384,883
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Fixed Assets:
Computer Equipment 63,064 112,628
Leasehold Improvements 6,500 6,500
Office Furniture & Fixtures 36,603 36,603
Office Equipment 25,187 7,262
Computer Software 16,989 5,956
Medical Equipment 5,391 6,150
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Total 153,734 175,098
Depreciation Reserve (97,889) (146,642)
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Total Fixed Assets 55,845 28,457
Other Assets:
Investments 7,945,067 500
Prepaid Rent Deposit 4,541 4,791
Organization Costs (net) 20,333
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Total Other Assets 8,005,453 25,624
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Total Assets 9,010,487 438,964
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Current Liabilities 117,108 68,991
Long Term Liabilities 3,685,754 148,630
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Total Liabilities 3,802,862 217,621
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Shareholders' Equity:
Common Stock, Par Value $0.001 Per Share; 93,916 26,958
Authorization 100,000,000 shares; Issued and
Outstanding 93,916,485 Shares
Additional Paid In Capital 5,367,259 1,015,460
Accumulated Deficit (253,551) (821,075)
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Total Shareholders' Equity 5,207,625 221,343
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Total Liabilities & Shareholders' Equity 9,010,487 438,964
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SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MERIDIAN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Month Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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Revenues:
Professional Fees 295,888 336,642 934,388 976,534
Software Sales 450,000
Cost of Revenues (152,013)(163,940) (490,050) (459,246)
---------- -------- ----------- ---------
Gross Profit 143,875 172,701 894,338 517,287
Operating Expenses 210,899 165,451 686,449 380,041
Net Income from Operations (67,024) 7,251 207,889 137,246
Net Other Income (14,908) 342 2,007 ( 413)
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Net Income (81,932) 7,593 209,896 136,833
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Net Income Per Common Share 0.002
Common shares Outstanding 93,916,485
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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,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) (81,932) 7,593
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 5,314
Loss on Abandonment of Fixed Assets 13,246
Changes in assets and liabilities:
Accounts Receivable 127,523 (46,091)
Inventories (204) (14,060)
Other Investments
Prepaid Rent Deposit (4,791)
Accounts Payable 27,178 (150,405)
Payroll Taxes (985)
Loan Payables (493,895)
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NETCASH USED IN OPERATING ACTIVITIES 72,565 (684,074)
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CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment (25,827) (20,975)
Organization Costs (9,453)
Reduction in Retained Earnings
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NET CASH USED IN INVESTING ACTIVITES (25,827) (30,428)
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CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Company Stock - Cash 103,572 55,246
Common stock issued to retire MMG notes 500,000
Proceeds From LT debt (100,482)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 3,090 555,246
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NET DECREASE IN CASH 49,829 (159,076)
CASH AT BEGINNING OF PERIOD (36,729) 107,117
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CASH AT END OF PERIOD 13,100 (51,959)
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See accompanying notes to consolidated financial statements
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MERIDIAN HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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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.
Estimates.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures
Accordingly, actual results could differ from those estimates.
Inventory.
Inventories consists of purchased computer and software products, stated at the
lower of cost or market. Cost is determined by the first-in, first-out (FIFO)
method.
Recognition of Revenues.
The Company' products and services are provided based upon purchase orders and
contractual agreements. Revenues from sale of software are recorded
upon delivery and installation of the software at the customer site. Revenues
from services are recorded upon performance. Revenue is also recognized when
the purchase price of the software product is agreed upon by the customer and
collectibility is reasonably assured.
Software Development Cost
Software development costs are charged to operations
Fair Value of Financial Instruments and Concentration of Credit Risk.
The carrying amounts of cash, receivables, prepaid banner advertisements fees
by the registrant, accounts payables and accrued liabilities approximates fair
value because of the immediate or short-term maturity of these financial
instruments.
Basic and Diluted Net Loss Per Common Share.
In accordance with SFAS No. 128, "Computation of Earnings Per Share," basic
earnings per share is computed by dividing the net earnings available to
Common stockholders for the period by the weighted average number of common
shares outstanding during the period.
The net loss per common share is computed by dividing the net loss for
the period by the weighted average number of shares outstanding. For purposes
of computing the weighted average number of shares, all stock issued with
regards to the founding of the Company is considered to be "cheap stock" as
defined in SEC Staff Accounting Bulletin 4D and is therefore counted as
outstanding for the entire period.
Common equivalent shares, consisting of incremental common shares issuable upon
the exercise of stock options and warrants are excluded from diluted earnings
per share calculation if their effect is anti-dilutive.
Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which was amended by SFAS No. 137. The
Company is required to adopt this new standard in April 2001. SFAS No. 133
establishes methods of accounting for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities. Because the Company currently holds no derivative financial
instruments and does not currently engage in hedging activities, adoption of
SFAS No. 133 is expected to have no material impact on the Company's financial
condition or results of operations.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on Costs of Start-up Activities" ("SOP
98-5"), which is effective for fiscal years beginning after December 15, 1998.
SOP 98-5 requires that costs of start-up activities and organization costs be
expensed as incurred. The adoption of SOP 98-5 had no material effect on the
Company's financial position or results of operations.
The Company adopted SFAS No. 130, "Reporting Comprehensive Income." For year-end
financial statements, SFAS No. 130 requires that comprehensive income, which is
the total of net income and all other non-owner changes in equity, be displayed
in a financial statement with the same prominence as other consolidated
financial statements. The Company displays the components of other comprehensive
income in the accompanying statements of stockholders' equity and
comprehensive income (loss).
The Company has adopted SFAS No. 101, "Revenue Recognition."
This rule stipulates that revenue be recognized when the purchase price for the
product is fixed and determined between the seller and the buyer, and the
collectibility is reasonably assured. This policy will not have a material
impact on the companies financial position or results of operation.
NOTE 2 -- ORGANIZATION
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Meridian Holdings, Inc. (NASDAQ: Bulletin Board-MEHO) was incorporated under the
laws of the state of Colorado on October 13, 1998. The Company is located in the
city of Los Angeles, CA USA.
Meridian Holdings, Inc. 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.
Income per share -- The Company has calculated the income per common share based
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upon 93,916,895 shares issued and outstanding. The net income per share was
$0.002.
NOTE 3 -- LEASE OBLIGATION
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The Company's corporate offices are located at 900 Wilshire Boulevard, Suite
500, Los Angeles, California 90017. The Company is required to pay $4,791.00
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.
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MERIDIAN HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CAPITALIZATION
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As of September 30, 2000, there were 93,916,895 Common Shares of the Company
issued and outstanding. There were no Preferred Shares issued or outstanding.
One million shares of Company's Common Stock were issued to MMG Investments,
Inc. at the fair market value of $0.5 per share on the day of exercise. These
shares were issued to satisfy the debt of $500,000 incurred by the acquisition
of 51% of Intercare Diagnostics, Inc.(later renamed InterCare.com, Inc.). On
July 3rd 2000, the company effectuated a 3:1 stock split, with resultant
increase in the outstanding common shares of 93,916,895
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 as of September 30, 2000 and 1999
is Summarized as of the following:
Computer Equipment & Software $63,064 $112,628
Leasehold Improvements 6,500 6,500
Office Furniture & Fixtures 36,603 36,603
Computer Software 16,989 5,956
Medical Equipment 5,391 6,150
Office Equipment 25,187 7,262
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Total 153,734 175,098
Less: Accumulated Depreciation (97,889) (146,642)
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Total Property & Equipment 55,845 23,963
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NOTE 6 -- INCOME TAXES
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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
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Total $864,852
As a result of the above carryforwards, there is no provision for income tax for
the nine months ended September 30, 2000.
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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. On June 29th, 2000, the company
acquired all the assets of Sirius Computerised Technology through the Israeli
Bankruptcy court.
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. ("NASD") 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 $0.80 and a low bid of $0.185 per share. The above
prices represent inter-dealer quotations without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.
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SELECTED FINANCIAL DATA
Cash and cash equivalents totaled $410,498 at September 30, 2000 compared
to $77,101 at September 30, 1999. The increase in cash was due to the sales of
software to customers in the second quarter and paid in the third quarter. The
Company had net accounts receivables of $587,804 at September 30, 2000
compared to $282,226 at September 30, 1999. This increase in accounts
receivables was due to the intercompany receivables from the registrant's
subsidiaries whose activities and expenditures are currently being borne by
the registrant.
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 Sirius Computerized Technologies
Limited(Israel) and establishment of Corsys Group, LTD , the latter as
the Research and Development subsidiary, into the Company, the operations have
changed significantly. With the increased operations, however, there is also
an increase in commitments and cash requirements.
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 $1,384,388 during the
nine-month period ended September 30, 2000, compared to the revenues from
operations of $976,534 during the nine-month period ended September 30, 1999.
This represents an increase in revenues of 70% from the year earlier. The
Company recorded a net profit from operations of $209,896 during the
nine-month period ended September 30, 2000, compared to a net
operating profit of $136,833 during the period ended September 30, 1999.
Management anticipates that general operating expenses will increase, as it
develops the viability of its acquired software (MedMaster), and as it pursues
vigorously its acquisition of new business opportunities and the
integration of the existing ones.
The Company incurred a loss of $81,932 for the third quarter of 2000, as
compared to a profit of $403,126 for the second quarter. This loss, which
is anticipated, was due to the amount of time, effort and resources that were
required to be expended to develop the software acquired in the second
quarter; the hiring of additional technical and support-staff, marketing and
outside consultants; acquisition of additional office equipment; expansion
of office space; marketing and increase in outside consultants' fees.
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
On July 3, 2000, 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 36-month period. 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
$4,500,000 to $6,800,000 during the extension period.
In August of 2000, the Company (and/or through its InterCare.com subsidiary)
entered into series of marketing, licensing , or professional services
agreements with several entities in an effort to market its MedMaster and
its suite of software. Among these entities are: Health Laboratory Research
Institute (for the development of patient - focused web-site); Healthcare.com,
with which it inks its first software licensing agreement; Birman Managed Care,
Inc. - joint marketing and professional services agreement; IMG Group -
preferred implementation partnership agreement; and UIS - for the deployment
of MedMaster computer-based patient record keeping agreement.
On September 11, 2000, the Company appointed Isaac Elkabets as the Chief
Executive Officer of Corsys Group LTD, its wholly owned subsidiary based in
Israel.
PART II - OTHER INFORMATION
ADDITIONAL INFORMATION
Shareholder meeting and Proxy Vote.
The Company is currently organizing the annual shareholder meeting to be held
on January 5, 2001.
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: November 3, 2000
By: /s/ Philip Falese
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Philip Falese
Chief Financial Officer
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