<PAGE>
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 NOVEMBER 30, 1997
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 December 31, 1997, 3,555,708 shares of Meridian National Corporation
common stock were outstanding.
<PAGE>
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 nine months ended November 30, 1997 may
not be indicative of the results of operations for the year ending February 28,
1998. 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 28, 1997.
2
<PAGE>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
NOVEMBER 30, February 28,
1997 1997
------------ ------------
ASSETS
Current assets:
Cash $ 20,813 $ 16,778
Accounts receivable - net 10,493,907 11,174,851
Inventories 12,742,746 12,083,532
Other current assets 799,639 678,504
------------ -----------
Total current assets 24,057,105 23,953,665
Property and equipment, at cost 12,611,352 11,963,239
Less accumulated depreciation and amortization 4,747,635 4,151,923
------------ -----------
7,863,717 7,811,316
Other assets 1,955,789 1,935,829
------------ -----------
$ 33,876,611 $33,700,810
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 13,283,111 $11,138,254
Accounts payable and accrued liabilities 12,794,404 13,132,857
Long-term debt due within one year:
Related parties -- --
Other 3,686,082 1,548,644
------------ -----------
Total current liabilities 29,763,597 25,819,755
Long-term debt due after one year:
Related parties 275,232 275,232
Other 3,583,580 6,311,061
Minority interests -- 96,600
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, 3,555,708 shares outstanding
(3,488,246 at February 28, 1997) 35,557 34,882
Capital in excess of stated value 10,920,075 10,818,545
Deficit (11,876,750) (10,830,585)
------------ -----------
Total stockholders' equity 254,202 1,198,162
------------ -----------
$ 33,876,611 $33,700,810
------------ -----------
------------ -----------
SEE ACCOMPANYING NOTES.
3
<PAGE>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
-------------------------------- --------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 16,895,054 $ 18,124,374 $ 53,038,939 $ 49,593,396
Costs of sales 15,456,438 15,893,599 47,652,542 43,307,617
------------ ------------ ------------ ------------
Gross margin 1,438,616 2,230,775 5,386,397 6,285,779
Other costs and expenses (income):
Selling, general and administrative 1,704,996 1,826,173 5,295,998 5,405,740
Interest expense 512,588 411,812 1,428,930 1,195,549
Minority interests -- -- (96,600) --
Miscellaneous - net (84,604) (86,463) (275,479) (239,194)
------------ ------------ ------------ ------------
2,132,980 2,151,522 6,352,849 6,362,095
------------ ------------ ------------ ------------
Income (loss) from continuing operations
before extraordinary gain (694,364) 79,253 (966,452) (76,316)
Discontinued operations:
Income (loss) from operations -- 891 -- (12,728)
Gain from disposal -- 5,000 -- 200,498
------------ ------------ ------------ ------------
Income (loss) before extraordinary gain (694,364) 85,144 (966,452) 111,454
Extraordinary gain - extinguishment of debt -- -- -- 329,279
------------ ------------ ------------ ------------
Net income (loss) $ (694,364) $ 85,144 $ (966,452) $ 440,733
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings (loss) applicable to common stock $ (728,562) $ 50,946 $ (1,071,363) $ 337,163
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings (loss) per common share -
primary and fully diluted:
Income (loss) before extraordinary gain:
Continuing operations ($0.20) ($0.01) ($0.30) ($0.05)
Discontinued operations -- -- -- 0.05
Extraordinary gain -- -- -- 0.10
------------ ------------ ------------ ------------
Net income (loss) ($0.20) ($0.01) ($0.30) $0.10
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average common
shares outstanding 3,555,708 3,409,878 3,517,929 3,178,500
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
NOVEMBER 30,
---------------------------
1997 1996
------------ -----------
OPERATING ACTIVITIES
Loss from continuing operations before
extraordinary gain $ (966,452) $ (76,316)
Adjustments to reconcile loss to net cash
used in continuing operating activities:
Depreciation and amortization 718,372 634,637
Minority interests (96,600) (19,096)
Gain on disposal of assets -- (19,741)
Changes in operating assets and liabilities:
Accounts receivable 680,944 (2,405,921)
Inventories (659,214) (1,287,800)
Other current assets (70,510) (63,191)
Accounts payable and accrued liabilities (338,453) 2,560,472
----------- ----------
Net cash used in continuing
operating activities (731,913) (676,956)
Net cash provided by discontinued
operating activities -- 13,397
----------- ----------
Net cash used in operating activities (731,913) (663,559)
INVESTING ACTIVITIES
Additions to property and equipment (410,210) (1,516,730)
Proceeds from disposal of assets -- 530,759
Changes in other assets (404,995) (599,536)
----------- ----------
Net cash used in investing activities (815,205) (1,585,507)
FINANCING ACTIVITIES
Changes in notes payable 2,144,857 2,623,918
Payments on long-term debt (841,696) (1,107,540)
Proceeds from bridge note and bridge warrants 275,000 --
Cash dividends paid (27,008) (27,159)
Issuance of common stock of subsidiary -- 600,000
----------- ----------
Net cash provided by financing
activities 1,551,153 2,089,219
----------- ----------
Increase (decrease) in cash 4,035 (159,847)
Cash at beginning of period 16,778 176,667
----------- ----------
Cash at end of period $ 20,813 $ 16,820
----------- ----------
----------- ----------
SEE ACCOMPANYING NOTES.
5
<PAGE>
MERIDIAN NATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
1. PROPOSED PUBLIC OFFERING OF SUBSIDIARY
A registration statement has been filed with the Securities and Exchange
Commission by EPI Technologies, Inc., an 80%-owned subsidiary. The registration
statement relates to a proposed public offering of 1.25 million shares of common
stock and 1.25 million redeemable common stock purchase warrants of EPI
Technologies. Subsequent to the completion of the offering, the Company's
beneficial ownership of EPI Technologies' common stock will be reduced to
approximately 40%, representing 1 million shares of EPI Technologies' common
stock.
The net proceeds from the offering of these newly-issued securities,
estimated to be $5.1 million, will principally be used to expand EPI
Technologies' paint waste recycling business and facilities, repay certain
indebtedness of EPI Technologies and for working capital and general corporate
purposes of EPI Technologies. If the proposed public offering is successfully
completed, the Company does not intend to continue to provide financial support
to EPI Technologies, except for the guarantee of a mortgage note to trustee bank
and the guarantee of EPI Technologies' obligation pursuant to an employment
agreement with a senior executive of EPI Technologies.
2. BRIDGE FINANCING
In August 1997, EPI Technologies raised $275,000 through a private
placement of a $250,000 bridge note and 500,000 bridge warrants. The bridge
note is unsecured , bears interest at 10% per annum and is due upon completion
of the proposed offering. The bridge warrants, sold for an aggregate price of
$25,000, entitle the holder to purchase shares of EPI Technologies' common
stock. The bridge warrants automatically convert to warrants with the same
terms as the warrants offered pursuant to the proposed offering, upon completion
of the proposed offering.
3. 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
6
<PAGE>
3. RELATED PARTY TRANSACTIONS (CONTINUED)
the three months and nine months ended November 30, 1997 approximated $64,000
and $192,000, respectively. During the three months and nine months ended
November 30, 1996, the lease payments amounted to $75,000 and $226,000,
respectively. The Company's management believes the terms of the leases are at
least as favorable as those that could have been obtained from unrelated
parties.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussions which follow contain forward-looking statements including
statements regarding, among other things, anticipated trends in the Company's
business and the industries in which it operates and the Company's business
strategy. The words "believe," "expect," "anticipate," "intends," "forecasts,"
"project," and similar expressions identify forward-looking statements. Such
forward-looking statements are based upon the Company's expectations and are
subject to a number of risks and uncertainties, many of which are beyond the
Company's control. Actual results could differ materially from such
forward-looking statements, as a result of such factors, including among others,
regulatory or economic influences. In light of these risks and uncertainties,
there can be no assurance that any forward-looking information contained herein
will in fact transpire or prove to be accurate. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
RESULTS OF OPERATIONS
In July 1996 the Company sold all of the property and equipment of its
waste acid recycling and disposal business. Accordingly, operating results have
been restated for all periods presented to separately report the operating
results of this discontinued operation. The waste acid recycling and disposal
business had been declining and was substantially dependent on one major
customer, which had shut down its operations in March 1996. The discussion of
results of operations which follow pertain only to continuing operations.
THIRD QUARTER ENDED NOVEMBER 30, 1997
COMPARED TO
THIRD QUARTER ENDED NOVEMBER 30, 1996
STEEL DISTRIBUTION AND PROCESSING SEGMENT Net sales for the third quarter of
fiscal 1998 amounted to $15.9 million, a decrease of 8% from the third quarter
of the prior fiscal year. Third quarter sales for the current year were
affected by a modest softening of demand for flat-rolled steel products,
resulting in a decline in selling prices and tons sold.
Operating profits for this segment amounted to $178,000 for the third
quarter, a decrease of $642,000 from the same period of the prior year. Gross
margin (net sales less cost of sales) as a percentage of net sales was 7.8% in
the third quarter compared to 11.4% for the same quarter in the prior year.
Gross margin percentages have decreased due to pricing pressures resulting from
the softening of the steel markets. Management believes the current market for
steel products will not soften significantly further and will remain
8
<PAGE>
relatively strong as overall economic growth in the U.S. is expected to continue
near its current levels well into 1998.
WASTE MANAGEMENT SEGMENT Net sales for the Company's paint waste recycling
business during the third quarter amounted to $992,000, an increase of $188,000
or 23% compared to the same period in the prior year. Sales for the third
quarter of the prior fiscal year were hurt by a 10 day loss of production from
one of its two processing systems due to damage from debris which entered the
system with the paint wastes being processed. Overall, sales volume fluctuates
very little as the Company has for the last several years operated its existing
paint waste recycling facility at or near full capacity. A $2.3 million
expansion, which incorporates a new paint waste recycling technology, has
recently been completed at the Toledo, Ohio facility. The Polymeric Recovery
System, as it is known, will provide a 50% capacity increase to the existing
operations. This system is now in a start-up period and has not yet processed
significant volumes of paint waste.
The paint waste recycling operation reported a $178,000 operating loss for
the third quarter compared to a $143,000 operating loss for the third quarter of
the prior year. The operating results for this operation include costs incurred
in the development and implementation of the new paint waste recycling
technology and, in the third quarter of fiscal 1998, operating costs related to
the start-up period for the Polymeric Recovery System.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE The $121,000 decrease in selling,
administrative and general expense is primarily attributable to lower corporate
personnel and administration costs.
INTEREST EXPENSE Interest expense increased $101,000 or 24% in the third
quarter as compared to the third quarter of the prior year. A significant
portion of the increase is due to increased borrowings necessary to finance the
expansion of the paint waste recycling business with the installation of the
Polymeric Recovery System, as further discussed in the Liquidity and Capital
Resources section following. Additionally, the Company's average outstanding
borrowings under its revolving credit line rose as a result of an increase in
working capital requirements, mainly associated with costs of implementing the
Polymeric Recovery System and higher steel inventory levels.
NINE MONTHS ENDED NOVEMBER 30, 1997
COMPARED TO
NINE MONTHS ENDED NOVEMBER 30, 1996
STEEL DISTRIBUTION AND PROCESSING SEGMENT For the nine month period ended
November 30, 1997, net sales amounted to $53 million, an increase of $3.4
million compared to the same period of the prior year. The nine month period
9
<PAGE>
ended November 30, 1997 included record sales volume recorded in the first
quarter of the fiscal year.
Operating profits for the nine month period ended November 30, 1997
amounted to $1,396,000, a decrease of $672,000 from the nine month period ended
November 30, 1996. Gross margin as a percentage of net sales was 9.3% for the
nine month period compared to 11.4% for the same period last year. Margins have
been hurt by price pressures for steel products and a softening of demand in the
steel markets during the second and third quarters.
WASTE MANAGEMENT SEGMENT Net sales for the paint waste recycling business for
the nine month period ended November 30, 1997 amounted to $2.8 million, an
increase of $210,000 or 8% over the same period of the prior year. This
operation generated an operating loss of $400,000 for the nine month period
compared to $305,000 for the nine month period of the prior fiscal year. As
discussed earlier, operations for the nine months ended November 30, 1997
reflect additional costs associated with the commencement of the start-up period
for the Polymeric Recovery System.
INTEREST EXPENSE Interest expense for the nine month period ended November 30,
1997 increased $233,000 or 20% compared to the nine month period of the prior
fiscal year due to increased borrowings necessary to finance the expansion of
the Toledo paint waste recycling operations. Interest costs of $36,000 in the
nine months ended November 30, 1997 were capitalized as part of the Toledo plant
expansion. Additional borrowings under the Company's revolving credit line,
mainly as a result of costs associated with the implementation of the Polymeric
Recovery System and increased levels of steel inventories, have also contributed
to increased interest expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a $5,706,000 working capital deficit at November 30, 1997,
reflecting a $3,840,000 decrease in working capital from February 28, 1997.
This decrease results, in part, from the classification as a current liability
at November 30, 1997 of the balloon payment due in March 1998 of $1,906,000, as
originally scheduled, on the borrowings to finance the Polymeric Recovery System
expansion of the Company's paint waste recycling business, as further discussed
below. At February 28, 1997, that amount was classified as long-term debt. A
payment of $129,000 due in September 1997 was deferred with the bank's approval,
increasing the balloon payment due in March 1998 to $2,035,000. Additionally,
the funding of losses, generated primarily by the paint waste recycling
operations, as well as additional capital expenditures of $271,000 related to
the start-up of the Polymeric Recovery System and approximately $301,000 of
costs related to a proposed public offering of securities of EPI Technologies,
as discussed below, have also contributed to the
10
<PAGE>
decrease in working capital in the nine months ended November 30, 1997. Certain
components of working capital, including accounts receivable, inventories, notes
payable and accounts payable, historically may fluctuate significantly based
upon market conditions, sales volume and steel purchasing strategies of the
Company's steel operations.
The Company's primary source of liquidity is a $13.5 million revolving
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 of certain covenants contained in the line of credit
agreement have been waived by the bank. As of November 30, 1997, the
outstanding balance of the revolving credit line amounted to $13,283,000 and
unused availability amounted to $217,000. 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.
A registration statement has been filed with the Securities and Exchange
Commission by EPI Technologies, Inc., an 80%-owned subsidiary which operates the
Company's paint waste recycling business. The registration statement relates to
a proposed public offering of 1.25 million shares of common stock and 1.25
million redeemable common stock purchase warrants of EPI Technologies. Upon the
successful completion of the offering, the Company's beneficial ownership of EPI
Technologies' common stock will be reduced to approximately 40%, representing 1
million shares of EPI Technologies' common stock.
The Company estimates that EPI Technologies will owe Meridian National
approximately $4,020,000 immediately prior to the completion of the offering.
In connection with the completion of the offering, the Company will receive
1,000,000 shares of cumulative dividend paying preferred stock of EPI
Technologies in exchange for $2,000,000 of such amount due from EPI
Technologies. Of the remaining amount due approximately $1,530,000 will be
contributed to the capital of EPI Technologies and $490,000 will be repaid by
EPI Technologies from the net proceeds of the offering.
The net proceeds from the offering of these newly-issued securities,
estimated to be $5.1 million, will principally be used to expand EPI
Technologies' paint waste recycling business and facilities, repay certain
indebtedness of EPI Technologies and for working capital and general corporate
purposes of EPI Technologies. If the proposed public offering is successfully
completed, the Company does not intend to continue to provide financial support
to EPI Technologies, except for the guarantee of a mortgage note to trustee bank
and the guarantee of EPI Technologies' obligation pursuant to an employment
agreement with a senior executive of EPI Technologies.
11
<PAGE>
EPI Technologies has recently installed the Polymeric Recovery System, a
process which incorporates a new paint waste recycling technology. During the
prior fiscal year, EPI Technologies completed financing totaling $2,350,000 with
the lender that provides the Company's revolving credit line. The proceeds were
used primarily to finance the construction of the Polymeric Recovery System.
The debt requires monthly principal payments of $21,000. A final payment of
$2,035,000 is due in March 1998. The Company is co-signer on the debt. In
addition, $750,000 of the debt is guaranteed by a corporation which is a
stockholder in the Company and EPI Technologies. One of the Company's directors
has a majority ownership position in this guarantor. Additionally, an officer
and stockholder of the Company has personally guaranteed the Company's entire
borrowings from this lender.
Upon the completion of the public offering of securities of EPI
Technologies, the bank has agreed to refinance the debt upon receiving a
$500,000 principal payment and a $50,000 loan closing fee from the offering
proceeds. In connection with this refinancing, (i) the Company would no longer
be required to be a co-signer, (ii) the officer and shareholder of the Company
will be released from his personal guaranty of this debt and (iii) the corporate
shareholder of the Company and EPI Technologies will be released from its
guaranty of $750,000 of the debt. Management anticipates the completion of the
proposed offering will occur prior to the due date of the balloon payment in
March 1998. In the event the offering has not been completed by March 1998, the
Company would seek to refinance the balloon payment with the current lender or
seek other sources of long term financing for EPI Technologies.
The paint waste recycling technology incorporated in the Polymeric Recovery
System is licensed from Aster, Inc. The license agreement grants an exclusive,
worldwide (except Mexico) perpetual license for the use of the Aster technology.
The license agreement requires payment of royalty fees to Aster based on pounds
of paint waste processed with the new technology and pounds of the recycled
product ("EPI-MER-TM-") sold. These fees commence upon successful startup of
the new equipment and the sale of EPI-MER-TM-. Technical and manufacturing
services provided by Aster are paid for based on an hourly rate. Total payments
to Aster may not fall below a minimum of $20,000 per month unless Aster is
provided with six months advance notice. At the end of the six month notice
period, the license for the use of this technology would become non-exclusive.
In August 1997, EPI Technologies raised $275,000 through a private
placement of a $250,000 bridge note and 500,000 bridge warrants. The bridge
note is unsecured, bears interest at 10% per annum and is due upon the
completion of the proposed offering of EPI Technologies' securities. The bridge
warrants entitle the holder to purchase 500,000 shares of common stock of EPI
Technologies. The bridge warrants automatically convert upon the completion of
12
<PAGE>
the offering to warrants with the same terms as the warrants to be issued as
part of the offering.
EPI Technologies currently estimates that it will incur expenses of
approximately $40,000 when the U.S. EPA reviews and approves its plan to comply
with a consent decree entered into EPI Technologies and the U.S. EPA.
Additionally, it is estimated that the testing requirements necessary to
demonstrate compliance with the U. S. EPA's standards for approval of a "Part B"
permit, for which EPI Technologies has filed an application, will cost
approximately $250,000. The Part B Permit allows a company to handle hazardous
waste at a specific facility. In the event that the U.S. EPA rejects the
application for a Part B permit, or if EPI Technologies decides to modify its
facility to eliminate the need for a Part B permit, EPI Technologies estimates
that it will incur approximately $250,000 in capital expenditures to design and
implement necessary modifications. EPI Technologies expects to incur both the
$40,000 expense related to compliance with the consent decree and the $250,000
expenditure in connection with the application for a Part B permit or
modifications of its facility within the next two years. The Company does not
currently project that it will incur any other material capital expenditures
related to compliance with environmental regulations.
The Company's current steel operations have historically operated
profitably. However, the paint waste recycling business has generated
increasing operating losses during fiscal 1997 and through the first nine months
of fiscal 1998. The increasing losses of the paint waste recycling business are
largely due to the increased costs associated with the licensing of the
technology and other costs related to the implementation of the Polymeric
Recovery System. Management believes the future profitability of the paint
waste recycling business is substantially dependent on the sale of EPI-MER-TM-.
To date, only nominal revenues have been generated from the Polymeric Recycling
System and no EPI-MER-TM- has been sold. EPI Technologies is currently
marketing EPI-MER-TM- to approximately ten potential customers in the sealant,
coating and adhesive industries. EPI Technologies' current business strategy is
to grow the business by (i) developing a market for and selling EPI-MER-TM- for
use as a lower cost replacement for traditional, virgin materials used in
formulated products, (ii) the construction, ownership and operation of up to
five customized Polymeric Recovery Systems on-site at large automotive assembly
plants in the United States, and (iii) the construction of a second facility
using the Polymeric Recovery System in the Southeast region of the United States
to serve the market of small and medium size automotive assembly plants which
individually generate lesser amounts of paint waste.
To meet the financing needs of this business strategy, EPI Technologies is
pursuing the completion of a public offering of securities. In the event the
proposed public offering is not completed, EPI Technologies would seek
additional financing from banks or other
13
<PAGE>
sources to fund its operations and expansion activities. 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 EPI, among
other items. Subject to completion of the proposed offering of securities of
EPI Technologies, 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 the remainder of fiscal 1998.
14
<PAGE>
MERIDIAN NATIONAL CORPORATION
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended November
30, 1997.
15
<PAGE>
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: January 20, 1997 By /s/ William D. Feniger
--------------------------------
William D. Feniger
Chairman of the Board of Directors,
President and Chief Executive
Officer
Date: January 20, 1997 By /s/ James L. Rosino
--------------------------------
James L. Rosino
Vice President - Finance and
Chief Financial Officer
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF MERIDIAN NATIONAL
CORPORATION FOR THE NINE MONTHS ENDED NOVEMBER 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 20,813
<SECURITIES> 0
<RECEIVABLES> 10,493,907
<ALLOWANCES> 0
<INVENTORY> 12,742,746
<CURRENT-ASSETS> 24,057,105
<PP&E> 12,611,352
<DEPRECIATION> 4,747,635
<TOTAL-ASSETS> 33,876,611
<CURRENT-LIABILITIES> 29,763,597
<BONDS> 3,858,812
0
1,175,320
<COMMON> 35,557
<OTHER-SE> (956,675)
<TOTAL-LIABILITY-AND-EQUITY> 33,876,611
<SALES> 53,038,939
<TOTAL-REVENUES> 53,038,939
<CGS> 47,652,542
<TOTAL-COSTS> 47,652,542
<OTHER-EXPENSES> (372,079)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,428,930
<INCOME-PRETAX> (966,452)
<INCOME-TAX> 0
<INCOME-CONTINUING> (966,452)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (966,452)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
