<PAGE>

                UNITED STATES 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 June 30, 1998

                                       OR

[   ]       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 0-24534

                          MERIDIAN SPORTS INCORPORATED
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            DELAWARE                                         13-3776096
-------------------------------------------------------------------------------
 (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                        Identification No.)

100 CHEROKEE COVE DRIVE, VONORE, TENNESSEE                     37885
-------------------------------------------------------------------------------
(Address of principal executive offices)                           (Zip Code)

                                  423-884-6776
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


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 [ ]

            Indicate the number of shares outstanding of each of the
                     issuer's classes of common stock as of
                          the latest practicable date.

         Class                               Outstanding at August 13, 1998
-----------------------                      ------------------------------
Common Stock, $0.01 par                                 8,000,000

          As of August 13, 1998, 5,200,000 shares of the Registrant's
               outstanding common stock were held by an indirect
                 wholly-owned subsidiary of Mafco Holdings Inc.


<PAGE>

                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES


                                     INDEX




                             PART I - FINANCIAL INFORMATION                PAGE
                                                                           ----

Item 1.    Consolidated Financial Statements:

           Consolidated Statements of Operations
           Six and Three Months Ended June 30, 1998 and 1997................ 3

           Consolidated Balance Sheets
           June 30, 1998 and December 31, 1997.............................. 4

           Consolidated Statements of Cash Flows
           Six Months Ended June 30, 1998 and 1997.......................... 5

           Notes to Consolidated Financial Statements....................... 6

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations........................................ 8


                            PART II - OTHER INFORMATION

Item 1.    Legal Proceedings............................................... 11

Item 4.    Submission of Matters to a Vote of Security Holders............. 11

Item 6.    Exhibits and Reports on Form 8-K ............................... 11

           Exhibit Index................................................... 12

           Signatures...................................................... 13






<PAGE>

                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                     Six Months Ended      Three Months Ended
                                                          June 30,               June 30,
                                                    -------------------    -------------------
                                                      1998        1997       1998        1997
                                                    -------     -------    -------     -------
<S>                                                 <C>         <C>        <C>         <C>    
Net sales:
   Ongoing operations                               $31,621     $24,009    $16,559     $11,179
   Former operations                                      -      19,719    $     -     $10,527
                                                    -------     -------    -------     -------
                                                     31,621      43,728     16,559      21,706
                                                    -------     -------    -------     -------
Cost of sales:
   Ongoing operations                                24,669      18,980     12,871       8,827
   Former operations                                      -      13,792          -       7,239
                                                    -------     -------    -------     -------
                                                     24,669      32,772     12,871      16,066
                                                    -------     -------    -------     -------
Selling, general and administrative expenses:
   Ongoing operations                                 6,260       5,142      3,005       2,393
   Former operations                                    (17)      5,083         (4)      2,716
                                                    -------     -------    -------     -------
                                                      6,243      10,225      3,001       5,109
                                                    -------     -------    -------     -------
Operating income (loss):
   Ongoing operations                                   692        (113)       683         (41)
   Former operations                                     17         844          4         572
                                                    -------     -------    -------     -------
                                                        709         731        687         531
                                                    -------     -------    -------     -------

Interest and related amortization expense              (707)       (970)      (322)       (504)
                                                    -------     -------    -------     -------

Income (loss) before income taxes                         2        (239)       365          27
(Provision) benefit for income taxes                      -           -          -           -
                                                    =======     =======    =======     =======
Net income (loss)                                        $2       ($239)      $365         $27
                                                    =======     =======    =======     =======

Basic and diluted income (loss) per common share:
   Net income (loss)                                  $0.00      ($0.03)     $0.05       $0.00
                                                    =======     =======    =======     =======

Weighted average shares outstanding (000s)            8,000       8,000      8,000       8,000
                                                    =======     =======    =======     =======
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       3

<PAGE>

                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                 (Dollars in thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                  June 30,     December 31,
ASSETS                                                              1998           1997
                                                                  --------     ------------
<S>                                                                   <C>          <C>   
Current assets:
   Cash                                                               $190         $1,123
   Accounts receivable, net of allowances                            3,390          3,681
   Inventories                                                       6,979          8,040
   Prepaid expenses and other                                          927          3,974
                                                                   -------        -------
      Total current assets                                          11,486         16,818

Property, plant and equipment, net                                   6,373          6,716
Other assets                                                           310            350
                                                                   -------        -------
                                                                   $18,169        $23,884
                                                                   =======        =======
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable                                                  4,096          2,103
   Accrued expenses and other current liabilities                    6,637          8,122
                                                                   -------        -------
      Total current liabilities                                     10,733         10,225

Long-term debt                                                      11,257         17,515
Other liabilities                                                    5,650          5,617

Commitments and contingencies

Stockholders' deficit:
   Preferred stock, par value $0.01 per share; 10,000,000
      shares authorized; no shares issued and outstanding
   Common stock, par value $0.01 per share; 50,000,000 shares
      authorized; 8,000,000 shares issued and outstanding               80             80
   Additional paid-in capital                                      131,951        131,951
   Accumulated deficit                                            (141,502)      (141,504)
                                                                   -------        -------
      Total stockholders' deficit                                   (9,471)        (9,473)
                                                                   -------        -------
                                                                   $18,169        $23,884
                                                                   =======        =======
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       4

<PAGE>

                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                  Six Months Ended
                                                                       June 30,
                                                                ---------------------
                                                                 1998           1997
                                                                ------         ------
<S>                                                                 <C>         <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                   $2          ($239)
                                                                ------         ------

Adjustments to reconcile net income (loss) to net cash flows
   from operating activities:
      Depreciation and amortization                                650          1,126
      Change in assets and liabilities:
         Decrease (increase) in receivables                        579         (6,446)
         Decrease in inventories                                   905          1,301
         Increase (decrease) in accounts payable and
           accrued expenses                                      1,403         (3,149)
         Payment of restructuring liabilities                   (1,028)        (3,290)
         Other, net                                              1,839          1,526
                                                                ------         ------
                                                                 4,348         (8,932)
                                                                ------         ------
Net cash flows from operating activities                         4,350         (9,171)
                                                                ------         ------

CASH FLOWS FROM INVESTING ACTIVITIES:
Release of escrow funds from the sale of a former operation      1,282              -
Capital expenditures, net                                         (307)          (608)
                                                                ------         ------
Net cash flows from investing activities                           975           (608)
                                                                ------         ------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net bank borrowings, net of fees                                     -          4,272
Net (decrease) increase in borrowings from affiliates           (6,258)         4,235
                                                                ------         ------
Net cash flows from financing activities                        (6,258)         8,507
                                                                ------         ------

Net decrease in cash                                              (933)        (1,272)
Cash at beginning of period                                      1,123          1,968
                                                                ------         ------
Cash at end of period                                             $190           $696
                                                                ======         ======
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      5

<PAGE>


                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
 

1.       BASIS OF FINANCIAL STATEMENT PRESENTATION

         The consolidated financial statements include the accounts of the
Company and its subsidiaries after elimination of all material intercompany
accounts and transactions. The consolidated financial statements are unaudited.
In management's opinion, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the first six months of 1998 are not necessarily
indicative of the results that may be expected for a full year. These interim
financial statements should be read in conjunction with the consolidated
financial statements and related notes thereto which are included on pages F-1
through F-21 of the Company's annual report on Form 10-K for the year ended
December 31, 1997. All terms used but not defined elsewhere herein have the
meanings ascribed to them in the Company's Form 10-K. Certain reclassifications
have been made to conform to the current period's presentation.

         The Company is a holding company which operates through its
wholly-owned subsidiary MasterCraft Boat Company ("MasterCraft"). MasterCraft
is a designer, manufacturer and marketer of specialized ski boats targeted
principally at boating and water-skiing enthusiasts. On July 31, 1997, the
Company sold its O'Brien towable watersports business ("O'Brien"). On October
8, 1997, the Company sold its scuba equipment business ("Soniform"). The
results of operations of O'Brien and Soniform ("former operations") are
included in the consolidated results of operations of the Company through their
respective dates of sale. The results of the Company's MasterCraft business and
headquarters function are presented in "ongoing operations" in the consolidated
statements of operations.

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. The
accruals established for the WetJet recall and repair programs are based on
management's estimates of the costs of such programs. The programs are
substantially complete. There can be no assurance that the programs will be
completed within the reserves established.

2.       BASIC AND DILUTED EARNINGS PER COMMON SHARE

         Basic and diluted earnings per common share have been computed based
upon 8,000,000 shares for the six and three months ended June 30, 1998 and 1997.

3.       INVENTORIES

         Inventories are valued at the lower of cost or market. Inventory costs
are determined principally by the last-in, first-out method ("LIFO").
Inventories consisted of the following:

<TABLE>
<CAPTION>
                                          June 30,        December 31,
                                            1998              1997
                                            ----              ----
<S>                                       <C>               <C>
Raw materials and supplies.............    $2,979            $3,394
Work-in-process........................       982               753
Finished goods.........................     3,906             4,781
                                          -------           -------
                                            7,867             8,928
Less: LIFO allowance...................      (888)             (888)
                                          -------           -------
                                          $ 6,979           $ 8,040
                                          =======           =======
</TABLE>

                                       6

<PAGE>

                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


4.       CASH FLOW REPORTING

         The Company uses the indirect method to report cash flows from
operating activities. For the six months ended June 30, 1998 and 1997, interest
paid was $707 and $970, respectively; income taxes paid were $21 and $435,
respectively.



                                       7


<PAGE>


                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS



         Management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the Company's Form
10-K for the year ended December 31, 1997. The results of operations of
MasterCraft and the headquarters function are presented as ongoing operations;
the results of operations of O'Brien and Soniform are presented as former
operations.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997

         Net sales from ongoing operations increased 32% to $31.6 million in
1998 versus $24.0 million in 1997 primarily because of new models introduced in
mid-1997, improved inventory levels and financing availability for the
Company's dealers. Consolidated net sales of $43.7 million in 1997 included
$19.7 million of sales of former operations.

         Gross profit from ongoing operations increased to $7.0 million in 1998
versus $5.0 million in 1997. The improved performance arose from the higher
sales, as well as higher margins on sales due to higher volume and enhanced
manufacturing cost controls. Consolidated gross profit of $11.0 million in 1997
included $6.0 million of gross profit from former operations.

         SG&A expenses of ongoing operations increased to $6.3 million in 1998
versus $5.1 million in 1997. The planned increase is primarily due to
additional sales and marketing spending during the boat show season in 1998 to
drive early season sales. Consolidated SG&A expenses in 1997 included $5.1
million of charges related to former operations.

         Interest and related amortization expense of $0.7 million in 1998 was
$0.3 million lower than 1997 levels due to the effect of lower average
outstanding borrowings in 1998.

         The Company recorded a small profit in 1998 and a pre-tax loss in
1997. During 1998, the company did not record a tax provision due to the
utilization of net operating loss carryforwards. During 1997, the Company did
not provide a tax benefit for losses generated as it is uncertain whether
benefit for such losses will be realized in the future.

THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1997

         Net sales from ongoing operations increased 48% to $16.6 million in
1998 versus $11.2 million in 1997 primarily because of the success of the new
models introduced in mid-1997, reduced inventory levels and financing
availability for the Company's dealers, and increased sell through at retail.
Consolidated net sales of $21.7 million in 1997 included $10.5 million of sales
of former operations.

         Gross profit from ongoing operations increased to $3.7 million in 1998
versus $2.4 million in 1997. The improved performance arose from the higher
sales, as well as higher margins on sales due to higher volume, reduced
discounts due to demand and improved manufacturing cost controls. Consolidated
gross profit of $5.7 million in 1997 included $3.3 million of gross profit from
former operations.

         SG&A expenses for ongoing operations increased to $3.0 million in 1998
versus $2.4 million in 1997. The planned increase is primarily due to
additional sales and marketing spending to promote additional incremental
sales. Consolidated SG&A expenses in 1997 included $2.7 million of charges
related to former operations.

                                       8

<PAGE>

                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


         Interest and related amortization expense of $0.3 million in 1998 was
$0.2 million lower than 1997 levels due to the effect of lower average
outstanding borrowings in 1998.

         During 1998, the Company recorded a pre-tax profit for the second
quarter. During 1998, the company did not record a tax provision due to the
utilization of net operating loss carryforwards. The Company recorded a pre-tax
loss in 1997. During 1997, the Company did not provide a tax benefit for losses
generated as it is uncertain whether benefit for such losses will be realized
in the future.

LIQUIDITY AND CAPITAL RESOURCES

         For the six months ended June 30, 1998 and 1997, cash flows from
operating activities were $4.4 million and ($9.2) million, respectively. The
Company's cash flows from operating activities in 1998 and 1997 reflect the
payment of restructuring liabilities of $1.0 million and $3.3 million,
respectively. In 1997, the Company's cash flows from operating activities
reflected the seasonal working capital requirements of former operations,
primarily accounts receivable.

         The Company's net capital expenditures were $0.3 million and $0.6
million for the six months ended June 30, 1998 and 1997, respectively.

         The Company is in the process of replacing all computer software that
is not year 2000 compliant as part of an overall systems upgrading, the
estimated cost of which is approximately $0.5 million. Upon completion of the
systems upgrading, its computer systems will function properly with respect to
dates in the year 2000 and thereafter. The project is estimated to be
substantially completed during 1998. In addition, the Company is in the process
of surveying its significant customers and vendors to assess their year 2000
readiness. We expect to complete the survey by the end of 1998. The Company
believes that with conversions to new software and the completion of our
customer and vendor survey, the year 2000 issue will not pose significant
operations problems.

         The Company's liquidity needs are generally for seasonal working
capital needs and capital expenditures. In March 1997, the Company entered into
the M&F Facility to refinance existing borrowings from affiliates and to
finance, on a revolving basis, the operations, including seasonal working
capital needs and restructuring liabilities, of the Company. The M&F Facility,
as amended, provides for borrowings on a revolving basis of up to $20.0 million
and matures at December 1, 1999. Loans under the M&F Facility bear interest at
the prime rate, as defined, plus 1% and are guaranteed by the subsidiaries of
the Company and a pledge of Cherokee Cove. Borrowings outstanding under the M&F
Facility are required to be repaid with the net cash proceeds of the sales of
assets or the capital stock of any subsidiaries of the Company. The commitment
under the M&F Facility shall be reduced by certain required prepayments. The
M&F Facility contains typical events of default including change of control,
material adverse change and non-payment of obligations.

         At June 30, 1998 the Company had outstanding debt of $11.3 million
under the M&F Facility. The decrease of $6.3 million from December 31, 1997
resulted from the return of cash used to secure financing for the Company's
dealers, the release of escrow funds from the sale of a former operation, and a
reduction in working capital. At August 6, 1998, the company had aggregate
borrowings of $14.5 million under the M&F Facility.

 
                                       9

<PAGE>

                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


SEASONALITY

            The marine industry is seasonal, with consumer sales strongest in
the summer months. As a result of this seasonality, operating results obtained
in the first six months of the year are not necessarily indicative of results
that may be expected for the full year.


                                      10


<PAGE>



                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         During the quarter, the action known as Shelton Smith, on behalf of
himself and others similarly situated v. Sunchaser Marine, MasterCraft Boat
Company, Inc., WetJet, A Division of MasterCraft and Meridian Sports
Incorporated as disclosed in the Company's 1997 Form 10-K was settled.


ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The 1998 annual meeting of shareholders was held on May 14, 1998.
Directors elected at the meeting were Ronald O. Perelman, J. Eric Hanson, Bruce
Slovin, Jerry W. Levin, John P. Murray, and Martin D. Payson, constituting the
entire board of directors. All of the directors were elected without
opposition. There were no broker nonvotes. Other matters voted on were a
proposal to ratify the appointment of Ernst & Young LLP as the independent
certified public accountants for the Company for 1998.

         The tabulation of votes for each matter is as follows:

         1.                      Election of Directors

                  Nominees
                     For
                  Directors              For        Withheld      Abstained
                  ---------              ---        --------      ---------
              Ronald O. Perelman      7,684,834      38,030          - -
              J. Eric Hanson          7,685,834      37,030          - -
              Bruce Slovin            7,685,834      37,030          - -
              Jerry W. Levin          7,685,834      37,030          - -
              John P. Murray          7,685,834      37,030          - -
              Martin D. Payson        7,685,834      37,030          - -
                                                                    
         2.    Ratification of Independent Certified Public Accountants

                                      7,692,434      17,950         12,480


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.  Exhibits

                  See exhibit index on page 12.

         b.  Reports on Form 8-K

                  None.


                                      11


<PAGE>


                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES


                                 EXHIBIT INDEX

Exhibit No.       Description
-----------       -----------

    27*           Financial Data Schedule.



*  filed herewith


                                      12

<PAGE>


                 MERIDIAN SPORTS INCORPORATED AND SUBSIDIARIES


                                   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 SPORTS INCORPORATED
                                                 (Registrant)


August 13, 1998                          By: /s/ James A. Valkenaar
                                             -------------------------- 
                                                 James A. Valkenaar
                                                 Vice President
                                                 (Principal Accounting Officer)



                                      13