<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-14203
MERIDIAN NATIONAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 34-1470518
(State of Incorporation) (I.R.S. Employer
Identification Number)
805 CHICAGO STREET, TOLEDO, OH 43611
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number: (419) 729-3918
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 (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
---- ----
As of September 30, 1996, 3,409,878 shares of Meridian National Corporation
common stock were outstanding.
<PAGE> 2
MERIDIAN NATIONAL CORPORATION
PART I
FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements of Meridian
National Corporation are unaudited but, in the opinion of management, reflect
all adjustments (including only normal recurring accruals) necessary to present
fairly such information for the periods and at the dates indicated. The results
of operations for the three months and six months ended August 31, 1996 may not
be indicative of the results of operations for the year ending February 28,
1997. Since the accompanying condensed consolidated financial statements have
been prepared in accordance with Article 10 of Regulation S-X, they do not
contain all information and footnotes normally contained in annual consolidated
financial statements; accordingly, they should be read in conjunction with the
consolidated financial statements and notes thereto appearing in the Company's
Annual Report on Form 10-K for fiscal year ended February 29, 1996.
2
<PAGE> 3
<TABLE>
<CAPTION>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
AUGUST 31, February 29,
1996 1996
--------------------- ---------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 11,389 $ 176,667
Accounts receivable - net 10,438,901 8,221,356
Inventories 9,563,297 8,860,574
Other current assets 177,188 157,840
------------------ -----------------
Total current assets 20,190,775 17,416,437
Property and equipment, at cost 12,118,409 12,295,459
Less accumulated depreciation and amortization 4,687,442 5,403,083
------------------ -----------------
7,430,967 6,892,376
Other assets 1,193,675 944,453
------------------ -----------------
$ 28,815,417 $ 25,253,266
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 12,006,328 $ 9,006,182
Accounts payable and accrued liabilities 10,381,299 8,904,892
Long-term debt due within one year:
Related parties - 149,206
Other 794,284 799,270
------------------ -----------------
Total current liabilities 23,181,911 18,859,550
Long-term debt due after one year:
Related parties 275,232 596,822
Other 3,815,919 4,891,969
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 27,551
Capital in excess of stated value 10,386,992 10,042,327
Deficit (10,054,056) (10,340,273)
------------------ -----------------
Total stockholders' equity 1,542,355 904,925
------------------ -----------------
$ 28,815,417 $ 25,253,266
================== =================
</TABLE>
See accompanying notes.
3
<PAGE> 4
<TABLE>
<CAPTION>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
------------------------------------- --------------------------------------
1996 1995 1996 1995
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ 16,774,302 $ 12,495,289 $ 31,469,022 $ 27,345,051
Costs of sales 14,642,322 11,006,463 27,414,018 24,223,858
--------------- --------------- --------------- ---------------
Gross margin 2,131,980 1,488,826 4,055,004 3,121,193
Other costs and expenses:
Selling, general and administrative 1,817,731 1,464,179 3,579,567 2,912,438
Interest expense 387,469 372,502 783,737 733,624
Miscellaneous - net (77,191) (17,110) (152,731) (32,882)
--------------- --------------- --------------- ---------------
2,128,009 1,819,571 4,210,573 3,613,180
--------------- --------------- --------------- ---------------
Income (loss) from continuing operations
before extraordinary gain 3,971 (330,745) (155,569) (491,987)
Discontinued operations:
Gain (loss) from operations (50,293) 922 (13,619) 56,741
Gain from disposal 195,498 - 195,498 -
--------------- --------------- --------------- ---------------
Income (loss) before extraordinary gain 149,176 (329,823) 26,310 (435,246)
Extraordinary gain - extinguishment of debt 329,279 - 329,279 149,206
--------------- --------------- --------------- ---------------
Net income (loss) $ 478,455 $ (329,823) $ 355,589 $ (286,040)
=============== =============== =============== ===============
Earnings (loss) applicable to common stock $ 443,322 $ (359,128) $ 286,217 $ (349,543)
=============== =============== =============== ===============
Earnings (loss) per common share
primary and fully diluted:
Income (loss) before extraordinary gain:
Continuing operations ($0.01) ($0.14) ($0.07) ($0.22)
Discontinued operations 0.04 - 0.05 0.02
Extraordinary gain 0.10 - 0.10 0.06
--------------- --------------- --------------- ---------------
Net income (loss) $0.13 ($0.14) $0.08 ($0.14)
=============== =============== =============== ===============
Weighted average common
shares outstanding 3,372,993 2,568,541 3,064,069 2,555,994
========= ========= ========= =========
</TABLE>
See accompanying notes.
4
<PAGE> 5
<TABLE>
<CAPTION>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
AUGUST 31,
---------------------------------------------
1996 1995
-------------------- --------------------
<S> <C> <C>
OPERATING ACTIVITIES
Loss from continuing operations before extraordinary gain $ (155,569) $ (491,987)
Adjustments to reconcile loss to net cash
provided by operating activities:
Depreciation and amortization 424,511 240,727
Gain on disposal of assets (24,316) -
Changes in operating assets and liabilities:
Accounts receivable (2,039,135) 1,448,462
Inventories (702,723) (487,567)
Other current assets (19,348) (136,464)
Accounts payable and accrued liabilities 303,175 (378,451)
----------------- ----------------
Net cash used in continuing operating activities (2,213,405) 194,720
Net cash provided by discontinued operating activities 12,506 95,741
----------------- ----------------
Net cash used in operating activities (2,200,899) 290,461
INVESTING ACTIVITIES
Proceeds from disposal of assets 524,559 -
Additions to property and equipment (359,812) (735,848)
Changes in other assets (210,249) 85,560
----------------- ----------------
Net cash used in investing activities (45,502) (650,288)
FINANCING ACTIVITIES
Changes in notes payable 3,000,146 165,464
Payments on long-term debt (900,963) (399,732)
Cash dividends paid (18,060) (18,065)
Net proceeds from exchange of warrants - 304,134
----------------- ----------------
Net cash provided by financing activities 2,081,123 51,801
----------------- ----------------
Decrease in cash and cash equivalents (165,278) (308,026)
Cash at beginning of period 176,667 655,373
----------------- ----------------
Cash at end of period $ 11,389 $ 347,347
================= ================
Significant noncash investing and financing activities:
In the six months ended August 31, 1996, the Company has incurred obligations
of $893,000, related to an expansion project of its paint waste recycling
operation, which are included in accounts payable at August 31, 1996.
See Notes 1 and 3 for additional noncash transactions.
</TABLE>
See accompanying notes.
5
<PAGE> 6
MERIDIAN NATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
1. DISCONTINUED OPERATIONS
On July 5, 1996, the Company sold all of the property and equipment of Meridian
Environmental Services, Inc. ("MES"), a wholly-owned subsidiary which operated
the Company's waste acid recycling and disposal business. The assets were sold
for $700,000 to a new company formed by MES management. Of the $700,000 purchase
price, $200,000 is represented by notes due from the purchaser, payable in
varying installments over a period of five years. Of the $395,000 gain on the
sale of the assets, $195,000 was recognized during the Company's quarter ending
August 31, 1996, and the remainder will be recognized as the notes are
collected.
The accompanying condensed consolidated financial statements have been restated
to separately report the operating results of this discontinued operation. Net
sales of the discontinued operation were $101,000 and $385,000 in the quarters
ended August 31, 1996 and 1995, respectively and $458,000 and $871,000 for the
six-month periods ended August 31, 1996 and 1995, respectively.
2. EXTINGUISHMENT OF DEBT
The Company has executed an agreement effective June 28, 1996 to repay a note
payable to Haden Purification, Inc. ("HPI"). The terms of the agreement
included, among other things, settlement of the note payable, which had a
balance due of $674,000 on June 28, 1996, for a payment of $350,000 made in July
1996 in full satisfaction of all principal and interest due under the note. The
resultant $329,000 gain on extinguishment of debt is classified as an
extraordinary gain in the accompanying statements of operations for the three
months and six months ended August 31, 1996.
In March 1995, the Company negotiated an agreement with a stockholder who held
less than 5% of the outstanding voting stock, whereby a convertible note payable
in an amount of $596,822 was settled for $447,600 payable in 18 monthly payments
commencing in March 1995, without interest. The early retirement of this
obligation resulted in the recording of an extraordinary gain of $149,000 in the
six months ended August 31, 1995.
6
<PAGE> 7
3. CAPITAL STOCK
In May 1996 the Board of Directors of the Company authorized the issuance of
600,000 shares of common stock in exchange for a reduction of $300,000 to a
convertible note payable to an officer and stockholder. Accordingly, long-term
debt due after one year has been reduced and stockholders' equity has been
increased by $300,000 in the accompanying August 31, 1996 condensed consolidated
balance sheet.
4. DIVIDENDS
The Company's Series B preferred stock has a mandatory dividend payable
semi-annually. On August 1, 1996 the Company paid a dividend to holders of the
Series B preferred stock by issuing 54,733 shares of common stock. The dividend
was recorded at the fair market value of the common shares issued.
5. RELATED PARTY TRANSACTIONS
The Company leases property and equipment from affiliates of certain officers
and directors of the Company. Lease payments to these affiliates during the
three months and six months ended August 31, 1996 amounted to $75,000 and
$151,000, respectively. During the three months and six months ended August 31,
1995, the lease payments amounted to $63,000 and $125,000, respectively. Company
management believes the terms of the leases are at least as favorable as those
that could have been obtained from unrelated parties.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SECOND QUARTER ENDED AUGUST 31, 1996
COMPARED TO
SECOND QUARTER ENDED AUGUST 31, 1995
Second quarter sales of $16.8 million represented a 34% increase over sales
reported in the same quarter in the prior year. This record sales volume for the
Company was a result of the strong demand for steel products in the U.S. economy
and the growth of the Company's steel processing operations.
As discussed further in Note 1 to the condensed consolidated financial
statements, in the second quarter of fiscal 1997 the Company sold all of the
property and equipment of its waste acid recycling and disposal business.
Accordingly, operating results for the Company have been restated for all
periods presented to separately report the operating results and gain on sale of
assets of this discontinued operation. Discussions of results of operations
which follow pertain only to continuing operations.
For the second quarter of fiscal 1997, the Company reported income from
continuing operations before extraordinary gain of $4,000 compared to a loss of
$331,000 in the same quarter last year. Net income of $478,000 for the second
quarter of fiscal 1997 includes an extraordinary gain of $329,000 from the early
extinguishment of debt at less than face value, as further discussed in Note 2
to the condensed consolidated financial statements.
STEEL DISTRIBUTION AND PROCESSING SEGMENT The Company's steel distribution and
processing operations reported net sales of $15.8 million for the second quarter
of fiscal 1997, an increase of $4.2 million or 36% over the second quarter of
the prior year. The sales increase was caused primarily by the growth of the
Company's steel service centers in the Detroit and Chicago markets. Net sales
for the steel service center in Gary, Indiana, which was acquired in November
1995, amounted to $3.6 million in the second quarter of fiscal 1997. Operating
profits for this segment amounted to $681,000, an increase of $450,000 from the
second quarter of the prior year.
Gross margin (net sales less cost of sales) as a percentage of net sales was
11.2% in the second quarter of fiscal 1997 compared to 9.5% in the comparable
quarter of the prior year. This gross margin increase is attributable to the
increased emphasis on providing value-added processing of steel products sold to
end-user customers, which generally generates higher gross margins than the
steel distribution business. Additionally, the market for steel products
continues to be strong as demand continues at high levels.
8
<PAGE> 9
In March 1995 the Company shut down its bumper stock pickling business. At that
time, certain changes were made to the pickling facility in order to handle bar
coil product. The Company was unable to secure sufficient bar coil pickling
business to operate profitably during fiscal 1996 and this operation was closed
in March 1996. The Company has leased the facility and an adjacent warehouse to
another party. Second quarter sales for this facility decreased $225,000 from
the same quarter of the prior year. Operating profit for this facility amounted
to $19,000 for the second quarter of fiscal 1997, whereas the operating loss for
the second quarter of the prior year amounted to $134,000.
WASTE MANAGEMENT SEGMENT This segment reflects the results of the operations of
the Company's paint waste recycling operation and excludes the discontinued
operations of the waste acid recycling and disposal operation. Net sales for
paint waste recycling increased to $974,000 in the second quarter of fiscal 1997
from $910,000 in the second quarter of the prior year.
This segment reported a $62,000 operating loss in the second quarter of fiscal
1997, compared to operating profits of $109,000 for the same quarter last year.
The loss principally resulted from higher administrative costs as the paint
waste recycling operation prepares for future expansion of its operations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The $354,000 increase in selling,
general and administrative expenses is primarily attributable to the development
of the Company's steel service center business and increased administrative
expenses associated with the paint waste recycling operations.
INTEREST EXPENSE Interest expense increased $15,000 (or 4%) in the second
quarter of fiscal 1997. The Company's average outstanding borrowings rose as a
result of the increase in working capital requirements associated with the
expansion of the steel processing business.
SIX MONTHS ENDED AUGUST 31, 1996
COMPARED TO
SIX MONTHS ENDED AUGUST 31, 1995
Net sales for the six months ended August 31, 1996 of $31.5 million represented
record sales for the Company for any six month period and was a 15% increase
over the same period for the prior year. For the six month period ended August
31, 1996, the Company reported an operating loss from continuing operations
before extraordinary gain of $156,000 compared to $492,000 for the same period
in the prior fiscal year. Results for fiscal 1997 and 1996 include the
recognition of extraordinary gains from the extinguishment of debt at less than
face value of $329,000 and $149,000, respectively.
9
<PAGE> 10
STEEL DISTRIBUTION AND PROCESSING SEGMENT Sales for the segment amounted to
$29.7 million for the six months ended August 31, 1996, a $4.0 million or 16%
increase over sales reported in the same period in the prior fiscal year. The
development of the Company's steel service center business previously described
largely contributed to this sales increase. Operating profits for this segment
amounted to $1,248,000, an increase of $479,000 from the first six months of the
prior fiscal year. Steel segment gross margin as a percentage of net sales was
11.5% for the first six months of fiscal 1997 compared to 9.3% in the comparable
period of the prior year. The increase in gross margin percentage and operating
profits is due to the effect of the strong demand for steel products and the
Company's emphasis on providing value-added processing of steel products for its
end-user customers.
WASTE MANAGEMENT SEGMENT This segment reflects the results of the operations of
the Company's paint waste recycling operation and excludes the discontinued
operations of the waste acid recycling and disposal operation. Net sales for
paint waste recycling increased to $1,778,000 in the first six months of fiscal
1997 from $1,690,000 in the comparable period of the prior year.
The paint waste recycling operation reported a $161,000 operating loss in the
first six months of fiscal 1997, compared to operating profits of $46,000 for
the same period last year. The loss principally resulted from higher
administrative costs as the paint waste recycling operation prepares for future
expansion of its operations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The $667,000 increase in selling,
general and administrative expenses is primarily attributable to the development
of the Company's steel service center business and increased administrative
expenses associated with the paint waste recycling operations.
INTEREST EXPENSE Interest expense increased $50,000 (or 7%) as the average
outstanding borrowings rose as a result of the increase in working capital
requirements associated with the expansion of the Company's steel processing
business.
LIQUIDITY AND CAPITAL RESOURCES
Environmental Purification Industries Company ("EPIC"), a partnership composed
of two wholly-owned subsidiaries which is engaged in paint waste recycling, has
commenced an expansion project at its facility in Toledo, Ohio. The project 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
10
<PAGE> 11
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. To date
EPIC has incurred commitments of approximately $1,265,000 on the project, of
which $898,000 remains unpaid. The expansion project has been suspended pending
arrangement of a definitive financing arrangement. The Company is pursuing
several alternatives for conventional debt financing for the project, including
negotiations with its major bank lender, to obtain the funds necessary to
complete the project. Although the Company believes financing will be obtained,
there can be no assurance that sufficient financing will be made available on
terms that are economically feasible and acceptable to the Company. The Company
will also continue to seek completion of the proposed initial public offering
and other sources of equity capital.
In the event the Company is unable to secure adequate financing for the project,
EPIC would be unable to complete the project or to meet the obligations already
incurred. The inability to satisfy these obligations would also cause EPIC to be
in default under provisions of agreements relating to a mortgage note payable
having an outstanding balance of $1,506,000 as of August 31, 1996. The Company
has guaranteed EPIC's obligations under the mortgage note payable agreements and
to certain of the project creditors. The default provisions of the mortgage note
payable agreements give certain parties to the agreements the right to declare
the obligation to be immediately due and payable. The Company would seek to set
up deferred payment arrangements with some or all of the project creditors which
the Company believes it could satisfy from future operating cash flows. The
Company also believes it could reach agreements with the parties to the mortgage
note payable agreements to continue principal and interest payments as
scheduled. There can be no assurance that the Company could negotiate such
arrangements with its creditors, in which case, the Company would be unable to
meet its then current financial obligations and, if required, would seek
whatever legal relief is available in order to continue operations.
The Company has incurred in excess of $400,000 for legal, accounting and
printing fees in conjunction with the proposed initial public offering. These
fees were to be paid from the offering proceeds. In the event the Company is
unable to complete the offering, it would seek to satisfy these obligations over
an extended period of time from the Company's operating cash flows. These
offering costs have been deferred as other assets in the accompanying balance
sheet as of August 31, 1996, until such time as the offering is completed or
abandoned.
11
<PAGE> 12
The Company had a $2,991,000 working capital deficit at August 31, 1996,
reflecting an increase in the deficiency since February 29, 1996 of $1,548,000.
This increase is a result of obligations for EPIC's expansion project which
remain unpaid or were paid with short-term interim financing and the
extinguishment of certain long term debt at a discount from proceeds of
short-term borrowings. Certain components of working capital, including accounts
receivable, inventories, notes payable and accounts payable, historically
fluctuate significantly based upon market conditions, sales volume and steel
purchasing strategies of the Company's steel operations.
The Company's primary sources of liquidity are its cash balances and a $12
million revolving demand credit line with a bank. Borrowing availability under
the revolving credit line is determined using a formula based upon eligible
accounts receivable and inventories. Violations in the second quarter of fiscal
1997 of certain covenants contained in the line of credit agreement have been
waived by the bank. The Company is negotiating with the bank to modify certain
covenants for the future. As of August 31, 1996, the outstanding balance of the
revolving credit line amounted to $11,301,000 and unused availability amounted
to $349,000.
The revolving credit line agreement prohibits the payment of cash dividends on
the Company's common stock and allows the payment of cash dividends on the
Company's preferred stock issues only if the Company is not in default of any
provisions in the loan agreement and payment of such dividend would not result
in any defaults.
In the first quarter of fiscal 1997, William D. Feniger, an officer, director
and stockholder received 600,000 newly issued shares of common stock in exchange
for a $300,000 reduction of a convertible note payable to him.
As a result of federal environmental regulations issued in 1991, EPIC, the
Company's paint waste recycling operation, is required to and has submitted to
the U.S. EPA an operating permit application under the Resources Conservation
Recovery Act of 1980. The final approval for such a permit may take several
years and require additional outlays of funds. During the application and review
process, EPIC's operations continue on interim status and are unaffected. EPIC
may be required to make modifications to its operating procedures or equipment
in the future, although EPIC's management believes its operations meet the
requirements without modification.
EPIC has entered into a license agreement with Aster, Inc. whereby Aster has
granted the Company the exclusive right, except in Mexico, to use certain
patented processes and technology in its PRS paint recycling process. EPIC has
agreed to pay Aster royalties and other fees for ongoing work performed by Aster
to commercialize and to continue to refine the process, formulae and
12
<PAGE> 13
technology. Minimum monthly payments required under the agreement are $20,000.
As previously discussed, EPIC has begun, but suspended, pending financing,
construction of a facility which would utilize the Aster technology.
Other than EPIC's expansion project, the Company does not have any material
capital expenditure commitments at this time. Capital expenditures are limited
under its loan agreement with the bank.
The Company has incurred losses in the two prior fiscal years, has a working
capital deficiency, and has been unable to meet certain covenants of its bank
loans. Management has taken certain actions to improve the Company's operating
performance and financial position. The following transactions, which are more
fully described above or in the notes to the condensed consolidated financial
statements, have been completed to improve the financial condition of the
Company and provide additional working capital:
- Exchange of 600,000 shares of Common Stock of the Company for
a $300,000 reduction of a note payable to an officer and
stockholder.
- The sale of its spent acid recycling operations in July 1996.
- The extinguishment of certain debt at a discount in July
1996.
- The shutdown of a bar coil pickling operation and the leasing
of the facility and adjacent warehouse to another party.
Historically, the Company's operations have been funded with cash generated from
operations and bank financing. The Company has also raised funds through sale of
equity securities and has used the proceeds to fund its investments in EPIC,
among other items. As previously discussed, management is taking measures to
improve operating results and the Company's financial position and accordingly,
except as noted below, management believes its existing resources, including
available cash, cash provided by operating activities and the Company's credit
facilities will be sufficient to satisfy its working capital and other capital
requirements for fiscal 1997. In the event the Company is unable to obtain
financing to meet the obligations incurred for EPIC's expansion project and the
indefinitely delayed initial public offering, the Company would seek to
establish deferred payment arrangements which would allow the Company to meet
these obligations from operating cash flows over an extended period of time,
although there can be no assurance such arrangements can be agreed upon.
13
<PAGE> 14
MERIDIAN NATIONAL CORPORATION
PART II
OTHER INFORMATION
-----------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of Meridian National
Corporation was held on August 2, 1996.
(c) Matters voted upon at the meeting:
1. An amendment to the Company's 1990 Non-Qualified and
Incentive Stock Option Plan.
Votes in favor 1,116,489
Votes against 66,892
Abstentions 13,434
Broker non-votes 1,312,812
2. Approval of the appointment of Ernst & Young as the
independent accountants for the Company for the Company's
1997 fiscal year.
Votes in favor 2,491,304
Votes against 10,352
Abstentions 7,971
3. Election of the following persons to serve on the Board
of Directors until the next Annual Meeting of Stockholders.
Authority to
Votes in favor vote withheld
-------------- -------------
William D. Feniger 2,479,293 30,334
Wayne Gardenswartz 2,480,395 29,232
Jeffrey A. Slade 2,480,993 28,634
Larry Berman 2,481,090 28,537
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
One report on Form 8-K was filed during the quarter ended August 31,
1996. A report was filed on August 28, 1996 to disclose under Item 5
Other Events, the settlement of a note payable at a discount and the
sale of assets of the Company's waste acid recycling and disposal
business.
15
<PAGE> 16
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 thereunto duly authorized.
MERIDIAN NATIONAL CORPORATION
(Registrant)
Date: October 21, 1996 By /s/ William D. Feniger
--------------------------------
William D. Feniger
Chairman of the Board of Directors,
President and Chief Executive Officer
Date: October 21, 1996 By /s/ James L. Rosino
---------------------------------
James L. Rosino
Vice President - Finance and
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET OF MERIDIAN NATIONAL CORPORATION
AS OF AUGUST 31, 1996 AND THE RELATED UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED AUGUST 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY RFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> AUG-01-1996
<CASH> 11,389
<SECURITIES> 0
<RECEIVABLES> 10,438,901
<ALLOWANCES> 0
<INVENTORY> 9,563,297
<CURRENT-ASSETS> 20,190,775
<PP&E> 12,118,409
<DEPRECIATION> 4,687,442
<TOTAL-ASSETS> 28,815,417
<CURRENT-LIABILITIES> 23,181,911
<BONDS> 4,091,151
<COMMON> 34,099
0
1,175,320
<OTHER-SE> 332,936
<TOTAL-LIABILITY-AND-EQUITY> 28,815,417
<SALES> 31,469,022
<TOTAL-REVENUES> 31,469,022
<CGS> 27,414,018
<TOTAL-COSTS> 27,414,018
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 783,737
<INCOME-PRETAX> 3,971
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,971
<DISCONTINUED> 181,879
<EXTRAORDINARY> 329,279
<CHANGES> 0
<NET-INCOME> 355,589
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
