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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): NOVEMBER 4, 1996
MERIDIAN NATIONAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 0-14203 34-1470518
-------- ------- ----------
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
805 Chicago Street, Toledo, Ohio 43611
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (419) 729-3918
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ITEM 5. OTHER EVENTS
Environmental Purification Industries Company ("EPIC"), a partnership
owned by two wholly-owned subsidiaries of Meridian National Corporation (the
"Company"), which is engaged in the recycling of paint wastes, has commenced an
expansion project at its facility in Toledo, Ohio. The project, currently
anticipated to be operational in February or March 1997, has been undertaken to
expand the capabilities and capacity of its paint waste recycling services. The
expansion will supplement EPIC's existing recycling methods and will utilize a
new technology for recycling paint wastes, the Polymeric Recovery System
("PRS"), which produces a recycled product used in the making of compounded
polymer products such as sealants and adhesives.
The cost of the expansion, estimated to be $2,300,000, was to have been
paid for by a combination of (i) anticipated proceeds from a planned initial
public offering of an approximate 50% interest in the EPIC paint waste recycling
operation and (ii) debt financing. Due to weakness in the investment market for
the public offering, the planned offering has been indefinitely delayed.
Accordingly, the Company has made alternative arrangements to fund the project
through a combination of short-term debt financing and a private placement of a
20% equity interest in EPI Technologies, Inc., a wholly-owned subsidiary
incorporated to hold the Company's investment in the two wholly-owned
subsidiaries which own EPIC.
On November 4, 1996, the Company borrowed $1,700,000 from its major
bank lender to fund the majority of the PRS expansion project. The loan is
secured by the project equipment and, additionally, is guaranteed , up to
$750,000, by MNP Corporation, whose principal owner is a member of the Company's
Board of Directors. The loan agreement calls for a $200,000 closing fee, of
which $25,000 was paid at the loan closing and $175,000 is payable October 31,
1997, or sooner, in the event the Company completes a public offering for shares
of the common stock of EPI Technologies. The Company also obtained extensions of
the due date on $650,000 of notes payable to the bank, until September 30, 1997.
The $650,000 notes require monthly interest payments and the $1,700,000 note
requires monthly payments of $21,000 plus interest. The unpaid balance of the
$1,700,000 note is due October 31, 1997. The $650,000 and $1,700,000 notes
(collectively "the Borrowings") become due immediately upon the completion of a
public offering of shares EPI Technologies. The Borrowings are guaranteed by
William D. Feniger, chairman and Chief Executive Officer of the Company and bear
interest at the bank's prime rate plus 1 1/2%.
On November 19, 1996, the Company completed a private placement through
the sale of previously unissued shares of common stock of EPI Technologies for
$600,000, representing a 20% equity interest in the wholly-owned subsidiary. The
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investors, comprised of MNP Corporation and two unrelated individual investors,
(the "Minority Holders") each purchased an equal 6 1/3% interest. The agreements
evidencing the sale grant the Minority Holders (i) representation on the Board
of Directors of EPI Technologies and (ii) certain rights in the event the
Company proposes to sell some or all of its remaining 80% interest. The Minority
Holders' interest contain certain restrictions on transfers and the underlying
shares of common stock are not registered for public sale, but do carry
registration rights in the event any securities of EPI Technologies are
registered under the Securities Act of 1933. The proceeds will be used to
complete the PRS expansion project, repay a short-term note of $55,000 due to
William D. Feniger, and for working capital and other general corporate purposes
of EPI Technologies, which may include portions of unpaid legal, accounting and
printing costs previously incurred related to the Company's previous attempt to
complete a public offering of shares of EPI Technologies.
ITEM 7. EXHIBITS
Additional exhibit
------------------
99.1 Meridian National Corporation - Pro Forma Condensed Financial
Statements (Unaudited)
Pro Forma Balance Sheet as of September 30, 1996
Statement of Changes in Stockholders' Equity for the seven months
ended September 30, 1996
Note to Financial Statements
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MERIDIAN NATIONAL CORPORATION
Dated: November 27, 1996 By: /s/ James L. Rosino
--------------------------
James L. Rosino
Vice President, Finance
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<TABLE>
EXHIBIT 99.1
MERIDIAN NATIONAL CORPORATION
PRO FORMA CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1996
(UNAUDITED)
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------- ------------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ (1,770,428) $ (1,770,428)
Accounts receivable - net 11,099,433 11,099,433
Inventories 8,814,131 8,814,131
Other current assets 182,241 182,241
------------ -----------
Total current assets 18,325,377 18,325,377
Property and equipment, at cost 12,257,702 12,257,702
Less accumulated depreciation and amortization 4,746,342 4,746,342
------------ ------------
7,511,360 7,511,360
Other assets 1,349,011 1,349,011
----------- ------------
$ 27,185,748 $ 27,185,748
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 11,447,033 $ (590,000) $ 10,857,033
Accounts payable and accrued liabilities 9,295,937 9,295,937
Long-term debt due within one year 794,284 794,284
------------ ------------ ------------
Total current liabilities 21,537,254 (590,000) 20,947,254
Long-term debt due after one year 4,035,576 4,035,576
Minority interest -- 182,000 182,000
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized:
$100 Series A, 5,000 shares authorized,
4,000 shares issued and outstanding 400,000 400,000
$3.75 Series B, 1,375,000 shares authorized,
206,752 shares issued and outstanding 775,320 775,320
Common stock, $.01 par value, 20,000,000 shares authorized,
3,409,878 shares outstanding (2,755,145 at February 29, 1996) 34,099 34,099
Capital in excess of stated value 10,386,992 408,000 10,794,992
Deficit (9,983,493) (9,983,493)
------------ ------------ ------------
Total stockholders' equity 1,612,918 408,000 2,020,918
------------ ------------ ------------
$ 27,185,748 $ 0 $ 27,185,748
============ ============ ============
</TABLE>
See accompanying note.
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<TABLE>
MERIDIAN NATIONAL CORPORATION
PRO FORMA CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SEVEN MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<S> <C>
Balance at February 29, 1996 $ 904,925
Net income 435,152
Issuance of 600,000 shares of common stock in exchange
for a $300,000 reduction in a convertible note payable 300,000
Cash dividends of preferred stock (27,059)
Other (100)
--------------
Balance at September 30, 1996 1,612,918
Pro forma adjustment 408,000
--------------
Pro forma $ 2,020,918
==============
</TABLE>
See accompanying note.
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MERIDIAN NATIONAL CORPORATION
NOTE TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
- ----
The accompanying balance sheet as of September 30, 1996 and statement of changes
in stockholders' equity for the seven months ended September 30, 1996 have been
adjusted to reflect the recently completed transactions as described in Item 5.
Other Events of Form 8-K Current Report. The following pro forma adjustments
have been made to reflect the transactions as if they had been consummated on
September 30, 1996.
a. Record net proceeds of $590,000 from the issuance and sale of
subsidiary stock (net of estimated expenses of $10,000) applied to
pay down short-term borrowings. Such net proceeds have been
allocated to stockholders' equity ($408,000) and minority interest
($182,000).
b. Record proceeds from $1,700,000 borrowing applied to pay down
short-term borrowings until expended on the expansion project.
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