<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-K
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                  For the fiscal year ended February 28, 1999

                                       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 or other jurisdiction             (I.R.S. Employer
         of incorporation or organization)           Identification No.)

         805 Chicago Street, Toledo, Ohio                 43611
       (Address of principal executive offices)        (Zip Code)

                                 (419) 729-3918
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

                                      None

Securities registered pursuant to Section 12 (g) of the Act:

                          Common Stock, $.01 par value
          Series B Convertible Voting Preferred Stock, $.001 par value
                  Common Stock Purchase Warrants expiring 1999
                             (Title of each class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.       Yes          No  X
                                             ----        ----
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

     As of May 31, 1999, 3,717,552 shares of Meridian National Corporation
common stock were outstanding, and the aggregate market value of voting stock
(based upon the average bid and ask price on the OTC Bulletin Board) held by
non-affiliates was approximately $422,000 for common stock and $142,000 for
Series B convertible voting preferred stock.

<PAGE>

                                     PART I

ITEM 1.     Description of  Business

     Meridian National Corporation ("Meridian National" or the "Company", which,
unless otherwise indicated, refers to Meridian National and its subsidiaries) is
engaged in the steel distribution and processing business through its
subsidiary, Ottawa River Steel Company ("Ottawa River Steel") and in the waste
management business through its subsidiary, Environmental Purification
Industries Company ("EPI").

                        General Development of Business

     Meridian National was incorporated as a Delaware corporation in  1985.
Shortly thereafter, the Company acquired from certain present and former members
of management, who were also principal stockholders of the Company, all of the
outstanding capital stock of Ottawa River Steel, and three other companies whose
operations were either later combined with Ottawa River Steel or discontinued.
The operations of these acquired companies formed the foundation of its current
steel distribution and processing business.

     In January 1994, the Company acquired real property and equipment located
in Detroit, Michigan which was previously operated by the seller as a steel
service center.  The acquisition expanded the Company's steel processing
services to the end-user market, primarily serving customers which supply the
automotive industry.

     In November 1995, the Company acquired the business and assets of a steel
service center located in Gary, Indiana.  This facility supplied steel products
to primarily non-automotive markets.  In the fourth quarter of fiscal year ended
February 28, 1999, the Company significantly reduced its operations at this
location due to continuing losses resulting from the inability to generate
sufficient sales volume in this competitive market.  The Company has sublet the
facility to an unrelated company and either sold or transferred to the Company's
location in Toledo, Ohio the steel service center equipment.  The Company
maintains a small sales office at this location.

     In 1989 the Company formed National Purification, Inc.  ("National
Purification") as a wholly-owned subsidiary to enter into a general partnership
with Haden Purification, Inc.  ("Haden Purification").  The partnership, EPI,
was formed to own and operate one or more facilities for the recycling of paint
waste using a proprietary paint waste drying system (DryPure/TM/) developed by
Haden Environmental Corporation ("Haden Environmental"), an affiliate of Haden
Purification, and for the marketing of the reclaimed solids.  EPI's first paint
waste recycling facility started commercial operations in March 1991.  National
Purification and Haden Purification were equal partners in EPI and were
otherwise unaffiliated.  In 1992 Haden Purification terminated and abandoned its
interest in EPI, and EPI became wholly-owned by the Company through its
subsidiaries National Purification and MEPI Corp. ("MEPI"), which was formed in
1992. In September 1995, EPI entered into a license agreement with Aster, Inc.
("Aster") which developed a new paint waste recycling process known as the
Polymeric Recovery System (the "PRS system").  The Company completed a building
and equipment expansion of its Toledo, Ohio facility in April 1997 which
utilizes the PRS system.  In the fourth quarter of fiscal 1999, the Company
recorded restructuring charges of $2,703,000 to write down certain assets and
accrue certain liabilities related to the PRS system.  The Company had intended
to use this system to produce a product using recycled paint waste, which would
be marketed as a lower cost replacement for traditional, virgin materials used
in formulated products in the sealant, coating and adhesive industries.  The
Company has been unable to market this product in a commercially viable manner
and therefore will discontinue processing of paint waste through this system.
The Company will continue to recycle paint waste using the DryPure(TM) system.

                                       2
<PAGE>

     In February 1996, Meridian National formed EPI Technologies, Inc., ("EPI
Technologies"), as a wholly-owned subsidiary.  In November 1996, the Company
transferred all of its shares in National Purification and MEPI to EPI
Technologies.  After the transfer, EPI Technologies effectively owned 100% of
EPI, the general partnership which operates Meridian National's paint waste
recycling facility.  Concurrent with the transfers, EPI Technologies issued
shares of its common stock representing a 20% ownership interest, equally to
three investors, for $600,000, effectively  reducing the Company's ownership
interest in its paint waste recycling operation to 80%.

     The Company's principal executive offices are located at 805 Chicago
Street, Toledo, Ohio  43611 and its telephone number is (419) 729-3918.

                                       3
<PAGE>

                 Financial Information about Industry Segments

     The Company's operations are classified within two separate industry
segments.  The steel distribution and processing segment handles flat-rolled
steel products primarily for the automotive, truck and appliance industries.
The waste management segment recycles paint wastes for companies in the
automotive and waste management industries, as well as arranging for disposal of
paint wastes at third-party disposal sites.  Prior to July 1996, the waste
management segment provided similar services for the recycling and disposal of
spent acids.

     For financial information about the Company's industry segments, see Note
11 to the consolidated financial statements of the Company which are included
elsewhere in this report as listed in PART IV, ITEM 14.

                       Narrative Description of Business

Steel Distribution and Processing Segment

     Steel service centers and steel distributors represent a major market for
primary steel producers ("steel mills"), serving as a source of supply for
smaller manufacturers whose product requirements make purchasing directly from
the steel mills unfeasible or for companies whose production processes require
steel to be pre-processed before being placed into production. Companies
operating in this industry generally are classified as steel service centers
when they operate facilities that process steel products.  Companies that
acquire steel products for warehousing and/or direct redistribution to other
steel consumers are generally classified as distributors.  Steel service centers
and distributors acquire steel products from steel mills and from other
distributors.  It is not uncommon for steel products to pass through the hands
of one or more steel distributors and/or steel service centers before reaching
an end user.  Steel service centers and distributors normally specialize in
particular grades of steel products.  The majority of the companies operating in
this industry are small to medium in size with no single company or group of
companies exercising control over the industry.  The products handled by the
Company's steel distribution and processing business are carbon steel coils,
sheets and bars.

     Steel Distribution  During fiscal years ended February 28, 1999, February
28, 1998 and February 28, 1997, 36%, 35% and 38%, respectively, of the Company's
net sales were generated through its steel distribution operations.  The
Company's steel distribution operations involve purchasing, storing and
reselling steel products in their original form.  The Company acquires steel
from domestic steel mills under various steel purchase programs.  Some of these
programs involve the purchase of steel which did not meet order specifications
of customers of the steel mills for whom the steel was originally intended.  The
Company also acquires steel products from steel mills under excess steel
purchase programs.  In times of low steel consumption, steel mills will make
offerings of steel to distributors to maintain higher production rates at the
steel mills.  Ottawa River Steel is among the oldest companies operating as a
steel distributor and has attained a good reputation and name identification in
its industry.  Historically, Ottawa River Steel has maintained strong
relationships with a number of steel mills.  These relationships and a broad
base of steel suppliers have historically allowed Ottawa River Steel access to
steel supplies when steel availability within the industry has been limited due
to high demand.  As further discussed in Management's Discussion and Analysis of
Financial Condition and Results of Operations, the Company in recent months has
experienced a reduction in the availability of steel from its suppliers due to
insufficient availability of cash and credit facilities to fulfill all of its
steel purchasing needs.

     Steel Processing  During fiscal years ended February 28, 1999, February 28,
1998 and February 28, 1997, 56%, 60% and 57%, respectively, of the Company's net
sales were generated by processed steel products and processing services.  The
Company provides slitting, cut-to-length, and batch pickling for steel products.
These services are provided to customers as a value-added process to the
Company's inventory for sale to end-user customers or to customers for customer-
owned material (toll processing).

     *  Slitting and Cut-to-length  Flat rolled steel products are generally
manufactured by the steel mills in wide coil form.  Consumers of these flat
rolled products may require the steel to be cut into several coils of narrower
widths.  The steel slitting process involves the passing of the coil through
roller

                                       4
<PAGE>

knives which cut the steel into the desired widths.  Additionally, others
may require coils to be cut-to-length into sheets prior to taking delivery.

     *  Pickling  When steel is produced at the steel mills, it is rolled at
high temperatures which creates a scaly surface on the steel.  This scale must
be removed for surface sensitive steel applications which require polishing,
plating or other finished surfaces.  The pickling process removes this scale by
the immersion of the steel in acid.  This process can be performed while the
steel is in coil form through a continuous pickling process or when the steel is
in either the coil or sheet  form through a batch pickling process.  Generally,
hydrochloric acid is used in the continuous pickling process and sulfuric acid
is used in the batch pickling process.  After pickling, the steel is rinsed in
baths of neutralizer and water and then is coated with oil to prevent rust.

     Customers  The Company's steel distribution and processing services are
marketed to the automotive, truck, building, appliance, furniture and
agriculture industries and to companies servicing these industries in the upper
midwest, as well as other areas east of the Mississippi River.  The majority of
North American car and truck final assembly plants and primary metal industries
are located within a 500-mile radius of the Company's facilities.  Sales to a
steel stamping customer, Production Stamping, Inc., accounted for 12%, 14% and
14% of the Company's net sales in fiscal 1999, 1998 and 1997, respectively.

     Competition  In the steel distribution and processing business, competitive
factors include quality of service, timeliness and cost.  The Company's success
in this business depends on its ability to continue to provide quality products
and services on a timely basis at a competitive cost.

     The steel service center industry is highly fragmented and intensely
competitive within localized areas or regions.  Accordingly, the Company faces
substantial competition in the steel distribution and processing business from
other independent steel distributors and processors as well as from steel mills
and customers that perform these functions internally.  Among the Company's
competitors and potential competitors are numerous companies that have
substantially greater financial and other resources than the Company.

     Raw Materials  The raw materials required for the Company's steel
processing operations are  acids, oils and banding supplies.  All materials are
readily available from a number of suppliers.


Waste Management Segment

     In early 1989, the Company became aware of the magnitude of the disposal
problems facing generators of paint wastes and learned of a unique process for
the handling of these wastes. The process, known as DryPure/TM/ and patented by
Haden Environmental, heats the paint wastes, driving off liquids and volatile
organic compounds, resulting  in a dry inert powder that represents a reduction
in volume of paint waste by up to 90%.  Originally DryPure/TM/ systems were sold
directly to automobile manufacturers which disposed of the resultant dry powder
from the process in landfills. The Company recognized that small and mid-size
paint waste generators presented a market for the DryPure/TM/ system. In
addition, the Company began exploring the possibility of marketing the resultant
dry powder, EPI-PURE/TM/ and was successful in finding commercial applications
for it. In 1989, as a result of the Company's success in finding uses and
markets for EPI-PURE/TM/, Haden Purification and the Company formed EPI as a
general partnership for the purpose of constructing and operating commercial
facilities to recycle paint wastes.  EPI commenced commercial operations at its
newly-constructed paint waste recycling facility in Toledo, Ohio in March 1991.
In 1992, Haden Purification terminated its 50% partnership interest in EPI and
National Purification and MEPI, wholly-owned subsidiaries of the Company, became
sole general partners of EPI.

     In September 1995, EPI entered into a license agreement with Aster which
developed the PRS system.  EPI completed a building and equipment expansion of
its Toledo, Ohio facility in April 1997 to commercialize the PRS system.  In the
fourth quarter of fiscal 1999, the Company recorded restructuring charges of
$2,703,000 to write down certain assets and accrue certain liabilities related
to the PRS system.  The Company had intended to use this system to produce a
product using recycled paint waste, which

                                       5
<PAGE>

would be marketed as a lower cost replacement for traditional, virgin materials
used in formulated products in the sealant, coating and adhesive industries. The
Company has been unable to market this product in a commercially viable manner
and therefore will discontinue processing of paint waste through this system.
The Company will continue to recycle paint waste using the DryPure(TM) system.


     Paint Waste Recycling  8% of the Company's net sales in the fiscal year
ended February 28, 1999 and 5% in each of the fiscal years ended February 28,
1998 and 1997 was generated by the paint waste recycling business.

     Paint wastes, because of their stickiness and leaching characteristics, are
one of the most difficult wastes to legally dispose of and therefore pose a
significant disposal problem for their generators.  Approximately 40% to 60% of
the paint used in industrial spray painting processes becomes waste that
requires disposal or recycling.  Currently, the only legal disposal methods
available for paint wastes are landfill and incineration.  While the short-term
costs associated with landfilling (currently the most widely-used disposal
method) are less than the short-term costs of incineration, generators using
this method of paint waste disposal could be "potentially responsible parties"
for liabilities associated with remediation of landfills where their paint waste
has been disposed.  Additionally, there continues to be a trend in the
regulatory environment toward greater restrictions and liabilities associated
with landfilling, including the disposal of paint wastes.  As a result, many
generators are electing to use incineration which is a more expensive disposal
process than direct disposal into landfills.  Incineration involves either (i)
fuel blending, which is the commingling of various waste streams into a fuel
supplement for use as an alternative fuel in the manufacture of cement,
reducing, in the process, but not eliminating  the generator's liability, or
(ii) direct thermal destruction of waste streams which results in the generation
of an ash residue which may contain heavy metals or other hazardous
constituents. Ash residue containing hazardous constituents must be disposed in
a fully permitted hazardous waste landfill thereby continuing  the generator's
potential long-term liability connected with the disposal of hazardous wastes.

     Recycling of waste materials is considered by the U.S. EPA to be a
desirable means of reducing waste.  According to the U.S. EPA's definition,
recycle is a broad term that includes "to use, reuse, or reclaim."  A material
is reclaimed if it is processed to recover a useful product or if it is
regenerated.  When customers send paint waste to the Company's facility, the
Company reclaims the paint waste by processing it to recover a useful product.
The U.S. EPA encourages this type of waste management because it preserves
limited landfill space.  Avoiding the need to place hazardous paint waste in
landfills also allows generators to significantly reduce the threat of incurring
liability under the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), also known as Superfund liability.

     The DryPure/TM/ process heats the paint wastes, driving off liquids and
volatile organic compounds, resulting in a dry, inert powder that represents a
reduction in the volume of paint waste by up to 90%.  Originally DryPure/TM/
systems were sold directly to automobile manufacturers which disposed of the
resultant dry powder from the process in landfills.  In the PRS system, patented
technology is used to process paint waste in a reaction vessel under low heat to
drive off the volatile organic compounds and moisture.  The resin, pigment and
fillers that remain are not cured but are further compounded with proprietary
additives producing a putty-like material trademarked as EPI-MER(TM), a recycled
product that can be formulated as an additive, plasticizer, resin extender or
filler in vinyl or butyl adhesive and sealant applications.  The formulated
material has substantially the same performance characteristics as virgin
materials but has a substantially lower formulation cost.  The Company has not
been able to sell any EPI-MER(TM), although the product is being tested by
several sealant and adhesive manufacturers for automotive industry applications.
Trials for other uses of any EPI-MER(TM) are also in process for non-automotive
applications.  Although testing and trials for this product are being conducted
by prospective customers, the development of a market for this product is
uncertain and therefore processing of paint waste through the PRS system will be
discontinued.

     Acid Waste Recycling and Disposal  In July 1996 the Company exited the
business of recycling and disposal of spent acids when the property and
equipment used in this business was sold.  This business was in a decline as it
was substantially dependent on one customer which ceased operations in March
1996.

                                       6
<PAGE>

      Customers  The Company markets its paint waste recycling services to
businesses that have spray painting operations.  The Company's marketing
activities are concentrated in the midwest region of the United States where
over 80% of its revenues are generated, with the majority of annual revenues
derived from customers in the automotive assembly business.  The Company's
customers generally are environmentally conscientious and demand that the
Company maintain stringent quality controls.  The Company has built its
reputation in the industry through consistent customer service by addressing
these customer needs.  Since one of the primary benefits of using the Company's
services is the elimination of the potential long-term liability associated with
landfill disposal of paint waste, many customers conduct thorough reviews and
audits of the Company's operations, including the Company's compliance with
environmental laws and regulations.

      Competition  Presently, approximately 99% of paint waste nationally is
disposed of through landfills or by incineration, and approximately 1% is
processed and recycled by methods utilized by the Company and its other
competitors.  The Company is aware of only three other companies that compete
directly with the Company by providing processing and recycling services to
generators of paint waste.  These competitors utilize similar methods of thermal
drying to those of the Company; however, over the years the Company believes it
has developed the capability to process a broader range of paint waste than its
competitors.

      Competitive factors in paint waste processing or disposal include price,
service and the elimination of the potential long-term liability associated with
paint waste generation and disposal.  While paint wastes generally can be
landfilled or incinerated at a lower initial cost than recycling, these disposal
methods expose the generators to potential long-term liability under stringent
federal and state regulations.  On the other hand, although the costs of the
Company initially are greater than landfill or incineration, the Company's
recycling process substantially eliminates continuing generator liability.
Landfill and incineration are provided by national, regional and local
companies, many of which have substantially greater resources than the Company.
In addition, the Company's direct recycling competitors have substantially
greater financial, marketing and other resources than the Company.  There can be
no assurance that one of the Company's competitors or a new company will not
develop a method of recycling paint waste which is more efficient and less
costly than the methods currently employed by the Company.  Additionally, there
can be no assurance that large industrial customers or other waste management
companies will not attempt to develop their own methods of recycling or
otherwise minimizing, treating or disposing of wastes.

      Raw Materials  In the DryPure/TM/ system, trap rock (a small, inexpensive
stone) is used to facilitate heat transfer, to keep paint waste from adhering to
the equipment and to reduce the size of the EPI-PURE/TM/ particles.  Trap rock
is readily available at reasonable prices.

Backlog

      The steel distribution and processing business typically processes orders
within a relatively short time of receipt.  Accordingly there is not a
significant backlog of unfilled orders at any time.

      The paint waste recycling business typically processes shipments within a
relatively short time of receipt.  Accordingly, no large volume of paint waste
is stored at the Company's Toledo, Ohio facility at any time.  Because the
generators and the Company need to carefully control the shipment and processing
of paint waste, upon execution of a sales contract, the Company establishes a
long-term schedule for delivery and processing of the customer's paint waste at
the Company's facility.  Accordingly, the Company normally has its maximum
processing capacity scheduled for one to three months in advance.

Seasonality

      The Company primarily provides products and services to the automotive,
truck and appliance industries.  Therefore, the Company's results are affected
by cycles in such industries.  Traditionally, many automotive plants operate at
reduced levels during June and July due to holiday and vacation schedules and
are closed during the last part of December which adversely affects the
Company's revenues

                                       7
<PAGE>

for those periods. The operations of EPI are generally unaffected by seasonality
factors since it has been operating at near capacity for several years.

Employees

     As of May 31, 1999, the Company had 110 employees, of whom 76 were employed
in steel distribution and processing (includes 23 leased employees), 28 were
employed in waste management, with the remainder serving in executive and
administrative capacities.  Approximately 29 of the Company's employees are
covered by collective bargaining agreements.  The Company believes that its
relations with its own employees and with the leased employees presently
employed at its facilities are good.

ITEM 2.     Properties

     The Company's corporate offices are located in Toledo, Ohio and occupy
approximately one-half of an 8,500 square foot building pursuant to a lease with
Greenbelt Associates which expired in February 1997 and is now leased on a
month-to-month basis.  Greenbelt is a general partnership owned by William D.
Feniger, Yale M. Feniger and Real P. Remillard, who are current or former
officers and/or stockholders in the Company.  The Company leases the remainder
of the building for the offices of its steel distribution  and steel processing
operations under identical terms and conditions.  The monthly rent on each such
lease is  $3,672 at February 28, 1999.

     On a site adjacent to its corporate offices, the Company maintains office
space and its active steel pickling operation in a 23,000 square foot building.
Also on the site the Company utilizes an additional 45,000 square feet in a
building for steel warehousing and a steel slitting operation.  The facilities
at this site, including an additional 60,000 square feet of outside storage
space, is leased pursuant to a lease executed in July 1997 for an initial term
of 120 months with Chicago Investors, with three additional one-year options.
Chicago Investors is a general partnership which is owned, in turn, by two other
partnerships.  One of these partnerships is Champlain Investors, a general
partnership, which is owned by William D. Feniger, and Yale M. Feniger.  The
other partnership is unrelated to the Company.  The lease provides for a monthly
rent of $14,255 through the June 30, 2007 lease termination date.  The monthly
rental for the option periods is $17,106.  Chicago Investors has granted a
mortgage secured by the leased premises to a bank.  Should the debt service on
this mortgage debt increase from the amount of debt service required as of the
lease commencement date, the Company is obligated under the lease to pay, at the
request of Chicago Investors, 50% of the increase in the debt service.  Chicago
Investors, under an oral arrangement, has agreed to defer the rental increase
which was due to commence on March 1, 1998 and to maintain the monthly rent at
$12,255, at the option of Chicago Investors.  The Company also sub-leases
another 22,000 square feet of warehouse space used for steel storage at this
site from an affiliate of the unrelated partnership.

     The Company's steel service center in Detroit, Michigan is housed in two
adjacent buildings situated on approximately two acres of land.  The main
building consists of 58,500 square feet, including 8,500 square feet of office
space.  The second building consists of 8,000 square feet and is being used for
steel storage.  This property is subject to a mortgage having an outstanding
balance of $608,000 at February 28, 1999.

     In November 1995, the Company acquired the business and assets of a steel
service center located in Gary, Indiana, which operated in a 60,000 square foot
facility in a common building in an industrial park pursuant to a lease expiring
in November 2001 with one renewal option of three years.  As of December 15,
1998, the Company has sublet this facility to an unaffiliated company on
substantially the same terms as those contained in the Company's lease.  The
Company maintains only a small sales office in the sublet space for a monthly
rental of $500.

     In March 1996 the Company shut down a steel pickling operation in Detroit,
Michigan.  The Company leased the majority of this facility, encompassing
220,000 square feet, to a company which is a shareholder in the Company and
whose majority owner is a director of Meridian National.  This facility was
subject to a lease purchase obligation covering industrial revenue bonds.  In
August 1998 the Company sold this facility and related equipment to the company
which was leasing it pursuant to a purchase option contained in the lease, and
paid off the remaining lease purchase obligation.

                                       8
<PAGE>

     The Company conducts its paint waste recycling operations in an 19,500
square foot building in Toledo, Ohio, which includes a 2,500 square foot
addition completed in April 1997.  This property, along with certain recycling
equipment, is owned by EPI and is subject to a mortgage of which 50% of the
obligation has been assumed by the former partner of EPI.  EPI's obligation with
respect to this mortgage was $682,000 at February 28, 1999.

     In addition, an adjacent 14,000 square foot building is leased by EPI from
Chicago Investors where the recycled powder from the DryPure/TM/ process is
screened, packaged and warehoused prior to shipment.  The term of the lease ran
through February 28, 1998, but provides for three one-year option periods
extending to February 28, 2001.  The lease provides for monthly rental of $1,375
through February 28, 1998 at which time the rent was scheduled to increase to
$1,550 per month, subject to annual increases thereafter.  In December 1996,
Chicago Investors agreed to reduce rents to the present rental of $1,175 per
month.

     The Company believes that its existing facilities and properties are
adequate for its current operations.


ITEM 3.     Legal Proceedings

     There are no material legal proceedings pending against the Company.


ITEM 4.     Submission of Matters to Vote of Security Holders

     There were no matters submitted to a vote of security holders during the
last quarter of the Company's fiscal year ended February 28, 1999.


                                    PART II

ITEM 5.     Market for Common Stock and Related Stockholder Matters

     The Common Stock of the Company has traded on the OTC Bulletin Board
maintained by the National Association of Securities Dealers under the symbol
"MRCO" since December 4, 1997.  Prior to December 4, 1997, the Company's Common
Stock was traded in the SmallCap Market of the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") under the same symbol.
On December 4, 1997, the Company's Common Stock was delisted by NASDAQ based on
the failure to maintain the $1 per share minimum bid price and capital and
surplus of at least $1,000,000.  The following table sets forth, for the
quarterly periods indicated, the high and low bid prices while the Company's
Common Stock was quoted on the OTC Bulletin Board and the high and low sales
price for the Common Stock while traded on the NASDAQ SmallCap Stock Market.
Such quotations on the OTC Bulletin Board represent bids between dealers without
adjustment for retail mark-ups, mark-downs, or commissions and may not
necessarily represent actual transactions.


Year ended February 28, 1999
----------------------------
        First Quarter                  $ .656  $.406
        Second Quarter                   .540   .406
        Third Quarter                    .406   .125
        Fourth Quarter                   .200   .125

Year Ended February 28, 1998           High      Low
----------------------------           ----      ---
        First Quarter                  $1.188  $.625
        Second Quarter                   .938   .625




                                       9
<PAGE>

             Third Quarter               1.563   .813
             Fourth Quarter              1.000   .125

     As of May 31, 1999 there were approximately 500 stockholders of record of
the Company's Common Stock.

     To date, the Company has not paid any dividends on its Common Stock.  The
payment by the Company of dividends, if any, in the future rests within the
discretion of its Board of Directors and will depend, among other things, on the
Company's earnings, its capital requirements and its financial condition, as
well as other relevant factors.  The Board does not presently intend to pay any
dividends on its Common Stock in the immediate future, but it intends to retain
all earnings for use in its business operations.  Pursuant to a current credit
agreement with a bank, the Company cannot pay dividends on its Common Stock.


ITEM 6.     Selected Financial Data

     The selected financial data of the Company set forth below should be read
in conjunction with the audited consolidated financial statements, the notes
thereto and other financial information included elsewhere in this report and in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein.

<TABLE>
<CAPTION>

                                                           Year ended February 28 or 29
                                       ------------------------------------------------------------------------------------

                                       1999             1998            1997           1996             1995
                                       -----------------------------------------------------------------------------------
Operations Statement Data:

<S>                                  <C>             <C>             <C>             <C>              <C>
Net sales                            $49,291,003     $70,683,989     $66,511,224     $54,672,987      $50,638,763
Gross margin                           3,973,144       6,284,309       7,988,913       5,659,971        7,453,251
Loss from continuing operations
before extraordinary gain             (5,533,982)(4)  (2,617,911)(3)    (619,465)     (1,728,196)      (1,563,880)(2)
Net (loss) income                     (5,533,982)(4)  (2,617,911)(3)       4,392      (1,349,608)      (1,126,366)(2)
Loss applicable
   to common stock (1)                (5,657,700)(4)  (2,763,101)(3)    (131,967)     (1,479,370)      (1,262,744)(2)
Loss per common share -
   Basic and diluted :
      Loss from continuing operations
before extraordinary gain                 $(1.54)(4)      $(0.78)(3)      $(0.23)         $(0.71)          $(0.70)(2)
      Net loss                             (1.54)(4)       (0.78)(3)       (0.04)          (0.56)           (0.52)(2)
 Weighted average common shares:
       Basic                           3,678,082       3,532,195       3,241,349       2,638,126        2,423,864
       Diluted                         3,678,082       3,532,195       3,241,349       2,638,126        2,423,864

Balance Sheet Data:

Working capital (deficiency)        $(10,141,118)    $(7,511,001)   $(1,866,090)     $(1,443,113)      $1,254,643
Total assets                          22,122,626      32,924,546     33,700,810       26,546,797       26,627,261
Long-term debt                         1,169,705       2,983,375      6,586,293        6,847,416        6,602,417
Stockholders' (deficit) equity        (7,040,026)     (1,431,271)     1,198,162          546,581        1,767,098

</TABLE>
___________
(1)  Represents net (loss) income reduced by dividends paid on preferred stock
     in cash and in shares of common stock. To date, the Company has not paid
     any dividends on its common stock.

(2)  Includes a $2,285,548 charge or 94 cents per share, net of income tax, from
     write-down of noncurrent assets.

(3)  Includes a $169,465 charge or 5 cents per share, net of income tax, from
     write-down of noncurrent assets.

(4)  Includes a $2,702,764 charge or 73 cents per share, net of income tax, from
     restructuring charges.



                                      10
<PAGE>

ITEM 7.     Management's Discussion and Analysis of Financial Condition and

Results of Operations

   As further discussed in Note 5 to the accompanying Consolidated Financial
Statements, in July 1996 the Company sold all of the property and equipment of
its waste acid recycling and disposal business.  Accordingly, fiscal 1997
operating results for the Company have been restated to separately report the
operating results of this discontinued operation.  Discussions of results of
operations that follow pertain only to continuing operations.


                             Results of Operations

     Year Ended February 28, 1999 Compared to Year Ended February 28, 1998

   Fiscal 1999 sales of $49.3 million represented a decrease of 30% from fiscal
1998 sales.  The Company reported a net loss of $5.5 million for fiscal 1999
compared to a net loss of $2.6 million for fiscal 1998.  The fiscal 1999 loss
includes $2.7 million of restructuring charges related to the paint waste
recycling business, as further discussed below.  The steel operations were
adversely affected by a number of factors, including a major automotive strike
in the summer of 1998 and an overabundance of steel product on the market, due
in part to the flooding of the U.S. steel market with low-price foreign steel.


Steel Distribution and Processing Segment The Company's steel distribution and
processing operations reported net sales of $45.4 million for fiscal 1999, a
decrease of $21.5 million or 32% from the prior year. The sales decrease
resulted primarily from the pervasive effects on the steel industry and many of
the Company's customers of a major automotive strike in the summer of 1998. Also
a sharp decline in demand for steel products at reasonable pricing was
experienced in the latter half of the fiscal year as a result of the large
supply of low-priced foreign steel entering the domestic steel market.

   Operating profits for this segment amounted to $12,000 for fiscal 1999, a
decrease of $1,074,000 from the prior year.  Gross margin (net sales less cost
of sales) as a percentage of net sales was 7.4% in fiscal 1999 compared to 8.2%
in the prior year.  Gross margin percentages have decreased due to pricing
pressures resulting from a softening of demand in the steel markets.

Waste Management Segment   This segment reflects the results of the operations
of the Company's paint waste recycling operation.  Net sales for paint waste
recycling increased slightly to $3,872,000 in fiscal 1999 from $3,719,000 in the
prior year.  For the past several years, this business has operated at or near
its processing capacity.

   This segment reported a $3,174,000 operating loss for fiscal 1999, compared
to a $1,067,000 operating loss for the prior year.  The operating results for
this segment includes operating costs related to the commencement of the start-
up period for the Polymeric Recovery System, which uses the new paint waste
recycling technology.  In fiscal 1999, the Company recorded restructuring
charges of $2,703,000 to write down certain assets, principally impaired
equipment, and accrue certain liabilities related to the Polymeric Recovery
System.  The Company had intended to use this system to produce a product using
recycled paint waste, which would be marketed as a lower cost replacement for
traditional, virgin materials used in formulated products in the sealant,
coating and adhesive industries.  The Company has been unable to market this
product in a commercially viable manner and therefore will discontinue
processing of paint waste through this system.  The operating loss in fiscal
1998 also includes $462,000 of costs written off relating to a proposed public
offering for this segment.  The funding for this expansion was to have been
provided from the proceeds of an initial pubic offering of an approximate 50%
interest in EPI Technologies.  The proposed offering was abandoned due to
weakness in the public market for the offering and other matters

Selling, General and Administrative Expenses   The $1,090,000 decrease in
selling, general and administrative expenses is primarily attributable to
reduced personnel and administration costs in response to the significant
decline in the Company's sales in fiscal 1999 and the closing of the steel
processing center in Gary, Indiana.






                                      11
<PAGE>

Interest Expense   Interest expense decreased $66,000 or 4% in fiscal 1999.  The
decrease is due primarily to lower interest rates during fiscal 1999.

     Year Ended February 28, 1998 Compared to Year Ended February 28, 1997

   Fiscal 1998 sales of $70.7 million represented record sales volume.  The
sales increase of 6% over fiscal 1997 was primarily the result of continued
growth of the Company's steel processing operations.

   Despite the continued growth in sales, the Company's loss from continuing
operations before extraordinary gain increased to $2,618,000 in fiscal 1998 from
$619,000 in the prior year.  Significant factors contributing to the increased
loss included smaller gross margins generated from the steel operations,
continued costs associated with the expansion of the paint waste recycling
operations, and a 12% increase in financing costs.  Additionally, expenses
amounted to $462,000 in fiscal 1998 and $276,000 in fiscal 1997 were incurred in
conjunction with abandoned public offerings of the Company's paint waste
recycling operations as further discussed below.

Steel Distribution and Processing Segment   The Company's steel distribution and
processing operations reported net sales of $67.0 million for fiscal 1998, an
increase of $3.9 million or 6% over the prior year.  The sales increase resulted
primarily from the continuing growth of the Company's steel processing
operations in the Detroit and Chicago markets.

   Operating profits for this segment amounted to $1,086,000 for fiscal 1998, a
decrease of $1,402,000 from the prior year.  Gross margin (net sales less cost
of sales) as a percentage of net sales was 8.2% in fiscal 1998 compared to 11.1%
in the prior year.  Gross margin percentages have decreased due to pricing
pressures resulting from a softening of demand in the steel markets.

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 slightly to $3,719,000 in fiscal 1998 from
$3,417,000 in the prior year.

   This segment reported a $1,067,000 operating loss for fiscal 1998, compared
to a $629,000 operating loss for the prior year.  The operating results for this
segment includes costs incurred in the development and implementation of a new
paint waste recycling technology and, in fiscal 1998, operating costs related to
the commencement of the start-up period for the Polymeric Recovery System, which
uses the new paint waste recycling technology.  The operating loss also includes
$462,000 in fiscal 1998 and $276,000 in fiscal 1997 of costs written off
relating to proposed public offerings for this segment in each year.  The
funding for this expansion was to have been provided from the proceeds of an
initial pubic offering of an approximate 50% interest in EPI Technologies.  The
proposed offerings were abandoned due to weakness in the public market for the
offerings and other matters

Selling, General and Administrative Expenses   The $259,000 decrease in selling,
general and administrative expenses is primarily attributable to lower corporate
personnel and administration costs in fiscal 1998.

Interest Expense   Interest expense increased $192,000 or 12% in fiscal 1998.  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 the expansion of the steel
processing business.




                                       12
<PAGE>

                        Liquidity and Capital Resources

   The Company had a $10,141,000 working capital deficit at February 28, 1999,
reflecting a $2,630,000 decrease in working capital from February 28, 1998.
This decrease results from the funding of losses generated during fiscal 1999.
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.  During fiscal 1999, the bank permitted the Company to exceed the
eligible borrowing amount based on the lending formula by $2,350,000 (the
"overadvance").  As of February 28, 1999, the outstanding balance of the
revolving credit line amounted to $11,812,000 and unused availability, after
considering the allowed overadvance,  amounted to $900,000.  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 addition to the revolving credit line facility, the bank has previously
provided financing which primarily funded the purchase and installation of the
PRS system.  This financing was intended to be interim financing until the
Company was able to provide permanent funding anticipated to be raised through
an initial public offering of the Company's paint waste business.  The Company
was unable to complete the public offering and therefore was unable to make the
final scheduled payment due to the bank in March 1998 of $2,035,000.  The bank
has allowed the Company to continue to make monthly principal payments on the
debt of $21,000 plus interest.  The outstanding obligation under this financing
amounted to $1,783,000 at February 28, 1999.

   As a result of the Company's inability to make payment of sums due and
maintain the terms and covenants of the original loan agreements, the Company
entered into a forbearance agreement with the bank in May 1999, expiring on June
30, 1999. Under the terms of the forbearance agreement, the bank has required
the Company to reduce the permitted overadvance by applying approximately
$800,000 the Company held in a certificate of deposit, which represented a
portion of the proceeds from the sale of a building earlier in the year. Also on
June 15, 1999, the allowed overadvance was reduced an additional $50,000,
bringing this amount of allowed overadvance to approximately $1,500,000. During
the forbearance period the bank has agreed not to exercise its right to demand
immediate payment of obligations due, and the right to foreclose, take
possession of, and liquidate all collateral. The bank also will not enforce the
default interest rate during the forbearance period. The Company has requested
from the bank an extension of the June 30, 1999 expiration of the forbearance
period. The bank has not granted such an extension and there can be no assurance
such extension will be granted.

   As a result of losses incurred, requirements for servicing the Company's debt
financings and the large working capital deficiency, the Company's cash flow
generated from operations and availability under the revolving credit line with
the bank has been inadequate to timely meet the Company's obligation to its
suppliers.  In recent months, the availability of steel product from suppliers
has been reduced impacting the Company's ability to obtain sufficient inventory
and resulting in lower sales volume for the steel distribution business.






                                       13
<PAGE>

   As a result of the foregoing and other issues, there exists substantial doubt
about the Company's ability to continue as a going concern.  The consolidated
financial statements of the Company have been prepared assuming the Company will
continue as a going concern.  The ability of the Company to continue as a going
concern is dependent upon the Company having sufficient funds available to meet
its financing requirements and to generate sufficient revenues to sustain
operations and operate at a profitable level.  The Company has taken a number of
actions to improve its operating results, including closing down unprofitable
operations.

   Management's future plans with regards to these matters include:

 .  Renegotiation or refinancing obligations with its primary lender.

 .  Assess current and future opportunities, which may include outside debt
   infusion, raising additional equity capital or the sale or merger of all or
   part of the Company's operations.

 .  Continued focus on its core steel processing and distribution business.

 .  Reduce operating and administrative costs.


                                   Year 2000

   The Company uses computer hardware and financial and manufacturing software
that it purchased from third party suppliers.  Such suppliers have confirmed to
the Company that such products are Year 2000 compliant or will be in the near
future.  Consequently, the Company does not expect to incur any significant
costs to become Year 2000 compliant.  The Company has no information concerning
the Year 2000 compliance status of its suppliers or customers.  If any of the
Company's significant suppliers or customers does not successfully and timely
become Year 2000 compliant, the Company's business or operations could be
adversely affected.  The Company has not generated any disaster contingency
plans related to the Year 2000 compliance issue, because operations are not
heavily dependent on computer software, and management believes that alternative
means of operating can be utilized in the event a Year 2000 problem occurs.

                           Forward-Looking Statements

   This Form 10-K, other SEC filings, and other pronouncements made from time to
time by the Company may include a number of forward-looking statements,
including, but not limited to, statements with respect to the Company's future
financial performance, operating results, plans and objectives.  Such statements
are made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995.  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
may differ materially from those anticipated by such statements, as a result of
a variety of 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.  The Company undertakes no responsibility to update any forward-
looking statement that may be made to reflect events or circumstances occurring
after the dates the statements were made or to reflect the occurrence of
unanticipated events.


ITEM 8.     Financial Statements and Supplementary Data

   Consolidated financial statements of the Company are included elsewhere in
this report as listed in Part IV, ITEM 14.


ITEM 9.    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

   None.






                                       14
<PAGE>

                                    PART III

ITEM 10.     Directors and Executive Officers of the Registrant

   Set forth below is certain information regarding the directors and executive
officers of the Company.  Directors serve until the next Annual Meeting of
Stockholders and until his successor is elected and qualified.  Officers are
elected by and serve at the pleasure of the Board of Directors.


William D. Feniger, age 52       Chairman of the Board of Directors and Chief
                                 Executive Officer since August 1995.  President
                                 since March 1991.

Wayne Gardenswartz, age 52       Director since August 1985. Mr. Gardenswartz is
                                 a certified public accountant and has been a
                                 partner in the accounting firm of Gardenswartz
                                 & Suber, P.C., Denver, Colorado, for more than
                                 the past five years .

Jeffrey A. Slade, age 58         Director since February 1995. For more than the
                                 past five years Mr. Slade has been President of
                                 Slade Investment Management, an investment
                                 advisory firm.

Larry Berman, age 59             Director since June 1996. Mr. Berman is a
                                 majority owner of MNP Corporation of Utica,
                                 Michigan and has served as Chairman of the
                                 Board and President of MNP Corporation for more
                                 than the past five years. MNP Corporation is a
                                 diversified metals fastener manufacturing firm.

James L Rosino, age 44           Chief Financial Officer and Vice President-
                                 Finance since February 1996. Secretary and
                                 Treasurer since May 1996. Mr. Rosino served as
                                 Corporate Controller from May 1988 through
                                 February 1996.


                        COMPLIANCE WITH SECTION 16(A) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

   Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.  Officers,
directors and greater than 10% beneficial owners are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms which they file
with the SEC.

   To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during and with respect to the fiscal year ended February
28, 1999, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with except that
each of Messrs. Feniger, Gardenswartz, Slade and Berman had one late filing
related to








                                       15





<PAGE>

the issuance of stock options and Mr. Feniger had one late filing
related to a purchase of 30,000 shares of common stock.


ITEM 11.     Executive Compensation

   The following table sets forth the annual and long-term compensation paid or
accrued by the Company for the three fiscal years ended February 28, 1999, 1998
and 1997. for the Company's Chief Executive Officer.
<TABLE>
<CAPTION>
                                                                                  Long-Term             All Other
                                         Annual Compensation                     Compensation          Compensation
                                         -------------------                     ------------          ------------
                                                                           Restricted
Name and                                                     Other Annual    Stock        Options
Principal Position          Year       Salary       Bonus    Compensation    Awards     (in shares)
------------------          ----       ------       -----    ------------  ----------   -----------
<S>                        <C>      <C>            <C>         <C>          <C>         <C>            <C>

William D. Feniger          1999     $230,000        ---          ---         ---           ---          $3,364
Chairman, President         1998     $240,000        ---          ---         ---           ---          $4,529
and Chief Executive         1997     $193,325        ---          ---         ---       200,000          $6,581
Officer
</TABLE>


Employment Agreements

          William D. Feniger has an employment agreement with the Company, which
extends to July 31, 2002.  The agreement provides for automatic renewals for an
additional 12 months upon each anniversary date of the agreement.  Commencing
July 31, 2002 and on each anniversary date thereafter, the agreement provides
for termination of employment by either party upon not less than 120 days prior
written notice.   The agreement provides that Mr. Feniger is to receive such
annual salary as may be determined by the Board of Directors, plus employment
privileges and benefits but in no event is the annual salary to be lower than
$240,000.  Mr. Feniger's annual salary, as part of a cost reduction program
implemented by the Company's management effective May 1998, was reduced from
$240,000 to $228,000 indefinitely.  The agreement also provides that in the
event of Mr. Feniger's death during the term of the employment agreement, the
current salary is to be continued by payment for three years to Mr. Feniger's
surviving spouse while she is living, otherwise to his estate.  In the event of
Mr. Feniger's permanent disability, the agreement provides for a continuation of
salary for a period of 12 months, less, however, any payments received by Mr.
Feniger directly from any insurer under any insurance policy of health or
disability, the premiums for which have been paid by the Company.

Option Exercises and Fiscal 1999 Year End Values

          The following table sets forth information with respect to (i) options
to purchase shares of the Company's Common Stock granted under the Company's
Stock Option Plan, which were exercised by the named executive officers during
fiscal 1999, and (ii) unexercised options to purchase shares of the Company's
Common Stock granted under the Company's Stock Option Plan to the named
executive officers and held by them at February 28, 1999.

<TABLE>
<CAPTION>

                                                                         Value of Unexercised
                                             Unexercised Options         In-the-Money Options
                                               Held at 2/28/99              at 2/28/99 (1)
                                             --------------------       ----------------------
                         Shares
                        Acquired
                          on
Name                   Exercise  Realized  Exercisable  Unexercisable  Exercisable    Unexercisable
----                   --------  --------  -----------  -------------  -----------    -------------
<S>                    <C>        <C>       <C>          <C>            <C>            <C>
William D. Feniger       ---       ---      128,000        132,000        (2)              (2)
</TABLE>

                                       16
<PAGE>

(1) The dollar values are calculated by determining the difference between the
    fair market value of the shares of the Company's Common Stock underlying the
    options and the exercise price of such options at February 28, 1999.

(2) None of Mr. Feniger's options are in-the-money.


Tax Deferred Savings and Retirement Plan

          The Company's Tax Deferred Savings and Retirement Plan (the "401(k)
Plan") consists of a defined contribution profit sharing plan with a cash or
deferred arrangement.  Each employee of the Company is eligible to participate
in the 401(k) Plan after the person has both attained age 20-1/2 and completes
six months of service.  Subject to limitations prescribed by the tax laws, a
participant may elect to make a pretax salary deferral contribution to the
401(k) Plan of up to 15% of the participant's compensation.  Unless the
Company's Board of Directors determines otherwise, the Company makes matching
contributions equal to 25% of the first 6% of compensation contributed by each
participant as a salary deferral.  For any year, the Company may also make a
discretionary profit sharing contribution of an amount determined by the
Company's Board of Directors.  Profit sharing contributions are allocated among
eligible participant on the basis of each participant's compensation during the
year for which the contribution is made.

          All salary deferral contributions are 100% vested.  The Company's
matching contributions and profit sharing contributions vests on an incremental
basis after three completed years of service and become fully vested after seven
years of completed service.  In addition, a participant is fully vested upon
attainment of age 65, death or disability, provided he is in the employ of the
Company at the time such event occurs.

          For the plan year ended February 28, 1999, the Company made a matching
contribution to the account of William D. Feniger in the amount of $289 under
the 401(k) Plan.  The Company made no discretionary contribution to the 401(k)
Plan during fiscal year ended February 28, 1999.  Mr. Feniger is fully vested.


Director Compensation

          Each director who is not an employee of the Company is entitled to
receive a fee of $2,000 ($1,000 for telephonic meetings) plus travel expenses
for each directors' meeting attended.  Directors receive a fee of $1,000 for
attending committee meetings which are held separately from directors' meetings.
Under a nonemployee directors' stock option plan, eligible directors who have
served twelve consecutive months are annually granted options to purchase 2,500
shares of the Company's Common Stock.  Options are granted at an exercise price
equal to the market value on the date of grant and are exercisable for a period
not exceeding ten years from the date of the grant.

                                       17
<PAGE>

ITEM 12.     Security Ownership of Management and Certain Beneficial Owners

Security Ownership of Management

          The following tables set forth information, as of May 31, 1999,
regarding the beneficial ownership of each director of the Company, each named
executive officer and all current directors and executive officers of the
Company as a group, of the Company's Common Stock.  None of such persons
beneficially owns any of the Company's Series B Preferred Stock.  Additionally,
there are 4,000 shares of non-voting $100 Series A Preferred Stock ("Series A
Stock"), $.001 par value, of the Company outstanding as of May 31, 1999, of
which William D. Feniger owns 1,334 shares.
<TABLE>
<CAPTION>

   Officers and Directors
   ----------------------
                                                      Number of Shares                   Percentage
     Name of Beneficial Owner                        Beneficially Owned (1)              Ownership
     ------------------------                       -----------------------              ---------
<S>                                     <C>                       <C>                         <C>
     William D. Feniger                                  993,802 (2)(3)(4)                  25.4%
     Wayne Gardenswartz                                   32,865 (5)(6)                      *
     Jeffrey A. Slade                                     17,500 (5)                         *
     Larry Berman                                        295,581 (5)(7)                      7.9%
     All directors and executive                       1,363,748 (8)                        34.1%
     officers as a group (5 persons)
</TABLE>

__________________
*Less than 1% of the outstanding Common Stock of the Company.

(1) Except as otherwise indicated, each director and officer has sole voting and
    investment power over the shares he beneficially owns.

(2) Includes 17,643 shares issuable upon conversion of a Convertible
    Subordinated Note and 5,500 shares issuable upon the exercise of Common
    Stock Purchase Warrants held by William D. Feniger.

(3) Includes 7,500 shares held by William D. Feniger as trustee pursuant to a
    voting trust agreement over which he has no investment power, 500 shares
    held by Mr. Feniger's wife, as to which Mr. Feniger disclaims beneficial
    interest and 1,500 shares held by Mr. Feniger as custodian for his minor
    children.

(4) Includes options held by William D. Feniger granted under the Stock Option
    Plan to purchase 176,000 shares which are exercisable currently.

(5) Includes options to purchase 30,500 shares granted to Wayne Gardenswartz,
    17,500 shares granted to Jeffrey A. Slade and 15,000 shares granted to Larry
    Berman under the Directors' Plan, which are exercisable currently.

(6) Includes 2,365 shares held by Mr. Gardenswartz as trustee under a trust
    agreement over which Mr. Gardenswartz has no investment power.

(7) Includes 280,581 shares, which Mr. Berman may be deemed to beneficially own,
    held by MNP Corporation, a Michigan corporation.  Mr. Berman is a majority
    owner of MNP Corporation and is the Chairman of the Board and President of
    MNP Corporation.

(8) Includes options granted to officers and directors of the Company under the
    Stock Option Plan and Directors' Plan, which are exercisable currently.

                                       18
<PAGE>

Other Principal Stockholders

     As of May 31, 1999, the following person, other than the directors and
officers of the Company (or their affiliates), is known to be a beneficial owner
of more than 5% of the outstanding shares of Common Stock:


     5% Holders
     ----------

     Name and Address           Number of Shares           Percentage
     Beneficial Owner           Beneficially Owned         Ownership
     ----------------           ------------------         ---------

     George Hofmeister               272,921                   7.3%
     700 Highland Road
     Salem, OH  44460


ITEM 13.     Certain Relationships and Related Transactions

     In connection with the 1985 purchase by the Company of stock of four
companies controlled in part by William D. Feniger and Yale M. Feniger (William
D. Feniger's father), the Company issued, as part of the purchase price, a
series of non-negotiable subordinated promissory notes, each due on September
15, 1995, and bearing interest at the rate of 9% per annum (the "Notes").
William D. Feniger received a Note in the amount of $770,720, and Yale M.
Feniger received a Note in the amount of $943,424 (which Note Yale M. Feniger
transferred to his wife).  In July 1989, William D. Feniger converted his Note
into a like amount of convertible subordinated notes (the "Convertible
subordinated Note").  In June 1994, Mrs. Yale Feniger and the Company entered
into an agreement whereby Mrs. Feniger accepted $305,738, or 50% of the
outstanding balance of her Note, in full satisfaction of the Note.

     The Convertible Subordinated Note payable to William D. Feniger, having a
balance of $275,232 at February 28, 1999, bears interest at a rate equal to 9%
per annum.  Mr. Feniger agreed to defer the principal payment on the Note to
March 1, 2000.  The outstanding principal balance of the Note held by Mr.
Feniger is convertible, at his option, into Common Stock, at any time, at a
conversion price of $15.60 per share.  In May 1996 the Board of Directors
authorized the issuance to Mr. Feniger of 600,000 shares of the Corporation's
Common Stock in exchange for a $300,000 reduction of the Convertible
Subordinated Note held by Mr. Feniger, which balance in May 1996 was $596,822.
The Company, as of May 31, 1996, reduced the principal amount of the Convertible
Subordinated due to William D. Feniger by an additional $21,590, by way of an
offset for principal and interest due on the notes payable to the Company by Mr.
Feniger as disclosed below.  The Company has agreed, at its expense, to register
under the Securities Act of 1933, on one occasion, and at the expense of the
holder of such Convertible Subordinated Note on other occasions, the Convertible
Subordinated Note and/or the underlying securities at the request of the holder
thereof.  The Company has also agreed to certain "piggy-back" registration
rights for the Convertible Subordinated Note and the securities issuable on
exercise thereof.

     At the end of fiscal year 1999, William D. Feniger was indebted to the
Company in the amount of $109,581 which consisted of $93,400 evidenced by notes
receivable and $16,181 of accrued interest on the notes.  The first note, in an
original amount of $97,000, was executed in May 1994 and bears interest at 6%
and requires annual principal payments of $5,000.  A second note for $6,400 was
executed in November 1994 and bears interest at 6%.  At May 31, 1996, the
principal payments and interest payments due on the notes were offset by
payments owed by the Company to Mr. Feniger under the Convertible Subordinated
Note as disclosed above.  The final maturities of these notes receivable will be
extended to May 31, 2000.

                                       19
<PAGE>

     The Company and one of its subsidiaries lease office space in Toledo, Ohio,
pursuant to two separate lease agreements with Greenbelt Associates, a general
partnership in which Messrs. William D. Feniger and Yale M. Feniger, a former
executive officer and shareholder of the Company, are general partners.  William
D. Feniger and Yale M. Feniger own a controlling interest in the partnership.
Each lease expired on February 14, 1997 and the properties are now leased on a
month-to-month basis.  During the year ended February 28, 1999, the Company paid
$67,025 to Greenbelt Associates.

     The Company leases plant and office space, including some equipment, in
Toledo, Ohio for certain of its processing and storage operations pursuant to
two separate lease agreements with Chicago Investors, a general partnership.
Champlain Investors, also a general partnership, has 50% interest in Chicago
Investors.  William D. Feniger and Yale M. Feniger own Champlain Investors.  One
of the leases, entered into on July 1, 1997, has an initial term of 120 months
with options to renew for three one-year periods upon certain conditions.  The
lease provides for monthly rent of $12,255 through February 28, 1998 and monthly
rent of $14,255 from March 1, 1998 through the lease termination date, June 30,
2007. The monthly rent for each of the renewal options is $17,106. Chicago
Investors has granted a mortgage secured by the leased premises to a bank.
Should the debt service on this mortgage debt increase from the amount of debt
service required as of the lease commencement date, the Company is obligated
under the lease to pay, at the request of Chicago Investors, 50% of the increase
in the debt service. Chicago Investors, under an oral arrangement, has agreed to
defer the rental increase which was due to commence on March 1, 1998 and to
maintain the monthly rent at $12,255 at the option of Chicago Investors. The
Company also leases a 14,000 square foot building from Chicago Investors
pursuant to a lease, which became effective March 1, 1996. The lease expired on
February 28, 1998 and is now extended pursuant to three one-year option periods
extending to February 28, 2001. This lease provides for monthly rental of $1,375
through February 1998 at which time the rent was scheduled to  increased to
$1,550 per month, subject to annual increases thereafter. In December 1996,
Chicago Investors agreed to reduce the rents, at its option, to the present
rental of $1,175 per month.  During the year ending February 28, 1999, the
Company paid $118,591 to Chicago Investors pursuant to these arrangements.

     On June 1, 1995 National Metal Processing, Inc., a wholly-owned subsidiary
of the Company, and MNP Corporation entered into a three-year lease pursuant to
which MNP leases space from the Company.  Larry Berman, a director of the
Company, is the majority stock- holder and Chairman of the Board and President
of MNP Corporation.  The annual rental is $271,514.  In August 1998, MNP
Corporation exercised an option to purchase the facility and property adjacent
to the facility for an aggregate purchase price of $1,500,000, which resulted in
a gain by the Company of approximately $960,000.

     Management of the Company believes that the terms of each of the foregoing
transactions are at least favorable as those that could have been obtained from
independent third parties.

                                       20
<PAGE>

                                    PART IV

ITEM 14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)     Documents filed as part of this report:

          1.  The following consolidated financial statements of the Company are
              submitted pursuant to the requirements of ITEM 8:

              Reports of Independent Auditors                          F-1, F-2

              Consolidated Balance Sheets at February 28, 1999
              and February 29,1998                                     F-3

              Consolidated Statements of Operations for each of
              the three years in the period ended February 28, 1999    F-5

              Consolidated Statements of Stockholders' (Deficit)
              Equity for each of the three years in the period
              ended February 28, 1999                                  F-6

              Consolidated Statements of Cash Flows for each of
              the three years in the period ended February 28, 1999    F-7

              Notes to Consolidated Financial Statements               F-8

          2.  All schedules required pursuant to the requirements of ITEM 14 (d)
              are omitted because they are not applicable, not material, not
              required or the required information is included in the applicable
              financial statements or notes thereto.


    3.  EXHIBITS

     3.1(a)*       Certificate   of    Incorporation   of     the   Company
                   (incorporated herein by reference from the Company's
                   Registration Statement on Form 8-A, dated January 31, 1986).

     3.1(b)*       Amendment to the Certificate of Incorporation of the Company,
                   effective September 30, 1986 (incorporated herein by
                   reference from the Company's Report on Form 10-K for fiscal
                   year ended February 28, 1987).

     3.1(c)*       Amendment to the Certificate of Incorporation of the Company,
                   effective August 1, 1988 (incorporated herein by reference
                   from the Company's Registration Statement on Form S-1, filed
                   April 15, 1989, File No. 33-27955).

     3.1(d)*       Amendment to the Certificate of Incorporation of the Company,
                   effective August 18, 1993 (incorporated herein by reference
                   from the Company's Report on Form 10-Q for the quarterly
                   period ended August 31, 1993).

     3.2(a)*       Certificate of Designation, Preferences and Rights of the
                   Company (incorporated herein by reference from the Company's
                   Registration Statement on Form S-1, filed September 16, 1989,
                   File No. 33-27955).

     3.2(b)*       Amendment to the Certificate of Designation, Preferences and
                   Rights of the Company, effective August 25, 1993
                   (incorporated herein by reference from the Company's Report
                   on Form 10-Q for the quarterly period ended August 31, 1993).

     3.3(a)*       By-Laws of the Company (incorporated herein by reference from
                   the Company's Registration Statement on Form 8-A, dated
                   January 31, 1986).

                                       21
<PAGE>

     3.3(b)*      Certificate of Amendment of By-Laws of the Company
                  (incorporated herein by reference from the Company's Report on
                  Form 10-K for fiscal year ended February 28, 1990).

     4.1*         Specimen Stock Certificate (incorporated herein by reference
                  from the Company's Registration Statement on Form 8-A, dated
                  January 31, 1986).

     4.2*         Registration Statement on Form 8-A, dated January 31, 1986
                  (incorporated herein by reference to File No. 0-14203).

     4.3*         Form of Series B Preferred Stock (incorporated herein by
                  reference from the Company's Registration on Form S-1, filed
                  June 4, 1989, File No. 33-27955).

     4.4*         Warrant Agreement dated as of July 22, 1994 among the Company,
                  Continental and Whale (incorporated herein by reference from
                  the Company's registration Statement on Form S-3, filed
                  January 17, 1995, File No. 33-83590).

     4.5*         Form of Warrant Agreement among the Company, Continental and
                  Whale (incorporated herein by reference from the Company's
                  Registration Statement on Form S-3, filed January 17, 1995,
                  File No. 33-83590).

     10.01(a)*    Loan and Security Agreement, dated December 6, 1989, among the
                  Company, certain of its subsidiaries and Bank of New England,
                  N.A. (incorporated herein by reference from the Company's
                  Report on Form 10-K for fiscal year ended February 28, 1990).

     10.01(b)*    Demand Note for $7,000,000 dated December 6, 1989, of the
                  Company to Bank of New England, N.A. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1990).

     10.01(c)*    Amendment No. 1 to Loan and Security Agreement, dated March
                  27, 1990, among the Company, certain of its subsidiaries and
                  Bank of New England, N.A. (incorporated herein by reference
                  from the Company's Report on Form 10-K for fiscal year ended
                  February 28, 1990).

     10.01(d)*    Amendment No. 2 to the Loan and Security Agreement, dated
                  September 14, 1990, among the Company, certain of its
                  subsidiaries and National Canada Finance Corp. (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 28, 1991).

     10.01(e)*    Amendment No. 3 to the Loan and Security Agreement, dated May
                  31, 1991, among the Company, certain of its subsidiaries and
                  National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1991).

     10.01(f)*    Amendment No. 4 to the Loan and Security Agreement, dated June
                  22, 1992, among the Company, certain of its subsidiaries and
                  National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1993).

     10.01(g)*    Amendment No. 5 to the Loan and Security Agreement, dated May
                  11, 1993, among the Company, certain of its subsidiaries and
                  National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1993).

                                       22
<PAGE>

     10.01(h)*    Amendment No. 6 to the Loan and Security Agreement, dated
                  October 20, 1993, among the Company, certain of its
                  subsidiaries and National Canada Finance Corp. (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 28, 1994).

     10.01(i)*    Amendment No. 7 to the Loan and Security Agreement, dated
                  January 31, 1994, among the Company, certain of its
                  subsidiaries and National Canada Finance Corp. (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 28, 1994).

     10.01(j)*    Term Note for $300,000, dated January 31, 1994, of the Company
                  to National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1994).

     10.01(k)*    Amendment No. 8 to the Loan and Security Agreement, dated
                  November 30, 1994 among the Company, certain of its
                  subsidiaries and National Canada Finance Corp. (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 28, 1995).

     10.01(l)*    Amendment No. 9 to the Loan and Security Agreement, dated
                  February 14, 1995 among the Company, certain of its
                  subsidiaries and National Canada Finance Corp. (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 28, 1995).

     10.01(m)*    Amendment No. 10 to the Loan and Security Agreement, dated May
                  25, 1995, among the Company, certain of its subsidiaries and
                  National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 29, 1996).

     10.01(n)*    Amendment No. 11 to the Loan and Security Agreement, dated
                  February 29, 1996, among the Company, certain of its
                  subsidiaries and National Canada Finance Corp. (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 29, 1996).

     10.01(o)*    Term Note for $300,000, dated February 29, 1996, of the
                  Company and Environmental Purification Industries, Inc. to
                  National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 29, 1996).

     10.01(p)*    Amendment No. 12 to the Loan and Security Agreement, dated
                  July 25, 1996, among the Company, certain of its subsidiaries
                  and National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1997).

     10.01(q)*    Term Note for $350,000, dated July 25, 1996, of the Company
                  and Environmental Purification Industries, Inc. to National
                  Canada Finance Corp. (incorporated herein by reference from
                  the Company's Report on Form 10-K for fiscal year ended
                  February 28, 1997).

     10.01(r)*    Amendment No. 13 to the Loan and Security Agreement, dated
                  November 4, 1996, among the Company, certain of its
                  subsidiaries and National Canada Finance Corp. (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 28, 1997).

     10.01(s)*    Term Note for $1,700,000, dated November 4, 1996, of the
                  Company and Environmental Purification Industries, Inc. to
                  National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1997).

                                       23
<PAGE>

     10.01(t)*    Amendment No. 14 to the Loan and Security Agreement, dated May
                  12, 1996, among the Company, certain of its subsidiaries and
                  National Canada Finance Corp. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1997).

     10.01(u)     Forbearance Agreement, dated May 7, 1999, among the Company,
                  certain of its subsidiaries and National Bank of Canada.

     10.02(a)*    Form of Amended and Restated Non-negotiable Promissory Note
                  for $596,822.79 issued to William D. Feniger (incorporated
                  herein by reference from the Company's Registration Statement
                  on Form S-1, filed June 9, 1989, File No. 33-27955).

     10.02(b)*    Escrow Agreement, dated January 4, 1990, by and among Yale M.
                  Feniger, William D. Feniger, Melvin G. DeGrazia, Ted R. Meyers
                  and David A. Katz (incorporated herein by reference from the
                  Company's Report on Form 10-K for fiscal year ended February
                  28, 1990).

     10.02(c)*    Amendment to Non-negotiable Promissory Note, dated November 1,
                  1992, between the Company and William D. Feniger (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 28, 1993).


     10.02(d)*    Subscription Agreement, dated May 31, 1996, between the
                  Company and William D. Feniger. (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 29, 1996).

     10.03(a)*    Lease between the Company and Greenbelt Associates, dated
                  February 14, 1992 (incorporated herein by reference from the
                  Company's Report on Form 10-K for fiscal year ended February
                  29, 1992).

     10.03(b)*    Lease between Ottawa River Steel and Greenbelt Associates,
                  dated February 14, 1992 (incorporated herein by reference from
                  the Company's Report on Form 10-K for fiscal year ended
                  February 29, 1992).

     10.04(a)*    Lease between Ottawa River Steel Co. and Chicago Investors,
                  dated March 1, 1996 (incorporated herein by reference from the
                  Company's Report on Form 10-K for fiscal year ended February
                  29, 1996).

     10.04(b)*    Lease between Environmental Purification Industries Company
                  and Chicago Investors, dated March 1, 1996 (incorporated
                  herein by reference from the Company's Report on Form 10-K for
                  fiscal year ended February 29, 1996).

     10.05(a)*    Lease Purchase Agreement, dated June 30, 1986, between The
                  Economic Development Corporation of the City of Detroit and
                  National Metal (incorporated herein by reference from the
                  Company's Report on Form 10-K for fiscal year ended February
                  28, 1987).

     10.05(b)*    Form of Bond No. R-1 (Roney & Co.) and Bond No R-2 (SeaGate
                  Corporation), dated June 30, 1986, (incorporated herein by
                  reference from the Registrant's Report on Form 10-K for fiscal
                  year ended February 28, 1987).

     10.05(c)*    Guaranty Agreement, dated June 30, 1986, between National
                  Metal and The Toledo Trust Company (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1987).

     10.06(a)*    Meridian National Corporation 1990 Non-Qualified and Incentive
                  Stock Option Plan, dated August 20, 1990 (incorporated herein
                  by reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1991).

                                       24
<PAGE>

     10.06(b)*    Amendment No. 1 to the Meridian National Corporation 1990 Non-
                  Qualified and Incentive Stock Option Plan, effective May 12,
                  1994 (incorporated herein by reference from the Company's
                  Report on Form 10-K for fiscal year ended February 29, 1996).

     10.06(c)*    Amendment No. 2 to the Meridian National Corporation 1990 Non-
                  Qualified and Incentive Stock Option Plan, effective June 6,
                  1995 (incorporated herein by reference from the Company's
                  Report on Form 10-K for fiscal year ended February 29, 1996).

     10.07(a)*    Amended and Restated 1987 Non-Employee Directors' Stock Option
                  Plan of Meridian National Corporation, dated August 20, 1990
                  (incorporated herein by reference from the Company's Report on
                  Form 10-K for fiscal year ended February 28, 1991).

     10.07(b)*    Amendment No. 1 to the Amended and Restated 1987 Non-Employee
                  Directors' Stock Option Plan of Meridian National Corporation,
                  effective May 27, 1993 (incorporated herein by reference from
                  the Company's Report on Form 10-K for fiscal year ended
                  February 28, 1994).

     10.07(c)*    Amendment No. 2 to the Amended and Restated 1987 Non-Employee
                  Directors' Stock Option Plan of Meridian National Corporation,
                  effective May 12, 1994 (incorporated herein by reference from
                  the Company's Report on Form 10-K for fiscal year ended
                  February 29, 1996).

     10.07(d)*    Amendment No. 3 to the Amended and Restated 1987 Non-Employee
                  Directors' Stock Option Plan of Meridian National Corporation,
                  effective June 6, 1995 (incorporated herein by reference from
                  the Company's Report on Form 10-K for fiscal year ended
                  February 29, 1996).

     10.08*       Meridian National Corporation Tax Deferred Retirement and
                  Savings Plan , as amended and restated (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1995).

     10.09*       Employment Agreement of William D. Feniger, dated July 31,
                  1997 (incorporated herein by reference from the Company's
                  Report on Form 10-K for fiscal year ended February 28, 1998).

     10.10(a)*    Bond Purchase Agreement, dated February 12, 1990, between the
                  Company, EPI, Haden MacLellan Holdings, plc, Miller &
                  Schroeder Financial, Inc. and The Toledo-Lucas County Port
                  Authority (incorporated herein by reference from the Company's
                  Report on Form 10-K for fiscal year ended February 28, 1990).

     10.10(b)*    Guaranty Agreement, dated as of December 15, 1989, between the
                  Company and Society Bank & Trust, Trustee (incorporated herein
                  by reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1990).

     10.10(c)*    Loan Agreement, dated as of December 15, 1989 (including the
                  Note as an Exhibit thereto) between Toledo-Lucas County Port
                  Authority and EPI (incorporated herein by reference from the
                  Company's Report on Form 10-K for fiscal year ended February
                  28, 1990).

     10.10(d)*    Open-End Mortgage and Security Agreement, dated as of December
                  15, 1989, between EPI and Society Bank & Trust, Trustee
                  (incorporated herein by reference from the Company's Report on
                  Form 10-K for fiscal year ended February 28, 1990).

                                       25
<PAGE>

     10.11*       Amended and Restated Partnership Agreement of Environmental
                  Purification Industries Company (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1994).

     10.12*       Mortgage Note and Promissory Note and related agreements,
                  dated January 26, 1994, between Ottawa River Steel and
                  Klockner Namasco Corporation (incorporated herein by reference
                  from the Company's Report on Form 10-K for fiscal year ended
                  February 28, 1994).

     10.13*       Agreement dated April 20, 1995 between Company and The Wall
                  Street Group, Inc. (incorporated herein by reference from the
                  Company's Report on Form 10-K for fiscal year ended February
                  28, 1995).

     10.14*       Lease between National Metal Processing, Inc. and MNP
                  Corporation, dated June 1, 1995 (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 29, 1996).

     10.15(a)*    Loan and Security Agreement, dated November 17, 1995, between
                  Ottawa River Steel Co. and FINOVA Capital Corporation
                  (incorporated herein by reference from the Company's Report on
                  Form 10-K for fiscal year ended February 29, 1996).

     10.15(b)*    Lease Agreement, dated October 31, 1995, between Ottawa River
                  Steel Company and USL Capital Corporation (incorporated herein
                  by reference from the Company's Report on Form 10-K for fiscal
                  year ended February 29, 1996).

     10.15(c)*    Industrial Building Lease, dated November 10, 1995, between
                  Ottawa River Steel Co. and Centerpoint Properties Corporation
                  (incorporated herein by reference from the Company's Report on
                  Form 10-K for fiscal year ended February 29, 1996).

     10.15(d)     Second Lease Amendment dated December 15, 1998, between Ottawa
                  River Steel Co., Meridian National Corporation and Great Lakes
                  Industrial Partners L.P.

     10.15(e)     Sublease Agreement, effective as of December 15, 1998, between
                  Ottawa River Steel Co. and Centennial Steel Processing, LLC.

     10.16*       License Agreement, dated September 7, 1995, between
                  Environmental Purification Industries Company and Aster, Inc.
                  (incorporated herein by reference from the Company's Report on
                  Form 10-K for fiscal year ended February 29, 1996).

     10.17(a)*    Stock Purchase Agreement, dated November 19, 1996, among
                  Environmental Purification Industries, Inc., Spencer Browne,
                  MNP Corporation and Elliot Smith (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1997).

     10.17(b)*    Registration Rights Agreement, dated November 19, 1996, among
                  Environmental Purification Industries, Inc., Spencer Browne,
                  MNP Corporation and Elliot Smith (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1997).

     10.17 (c)*   Stockholders Agreement, dated November 19, 1996, among
                  Environmental Purification Industries, Inc., Spencer Browne,
                  MNP Corporation and Elliot Smith (incorporated herein by
                  reference from the Company's Report on Form 10-K for fiscal
                  year ended February 28, 1997).

                                       26
<PAGE>

     10.18(a)     Cognovit Demand Promissory Note for $618,000, dated February
                  4, 1999, of Ottawa River Steel Co. to William D. Feniger.

     10.18(b)     Open-end Mortgage, dated February 4, 1999, between Ottawa
                  River Steel Co. and William D. Feniger.

     10.18(c)     Security Agreement, dated February 4, 1999, between Ottawa
                  River Steel Co. and William D. Feniger.

     21              List of Subsidiaries of Registrant

     23.01           Consent of Independent Auditors

     23.02           Consent of Independent Auditors

     27              Financial Data Schedule



(b)  Reports filed on Form 8-K.

     There were no reports filed on Form 8-K during the fourth quarter of the
     Company's 1999 fiscal year.
________________________

*  Indicates an exhibit previously filed with the Securities and Exchange
   Commission and incorporated herein by reference.




                                       27
<PAGE>

                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 18th day of
June, 1999.

                                    MERIDIAN NATIONAL CORPORATION



                                    By:  /s/ William D. Feniger
                                         ----------------------
                                         William D. Feniger
                                         Chairman of the Board of Directors,
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)



          Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

       Signature                         Title                        Date
       ---------                         ------                       ----


/s/ William D. Feniger            Chairman of the Board           June 18, 1999
---------------------------       of Directors, President
William D. Feniger                and Chief Executive Officer
                                  (Principal Executive Officer)


/s/ James L. Rosino               Vice President - Finance        June 18, 1999
---------------------------       (Principal Financial and
James L. Rosino                   Accounting Officer)



/s/ Wayne Gardenswartz            Director                        June 18, 1999
---------------------------
Wayne Gardenswartz


/s/ Jeffrey A. Slade              Director                        June 18, 1999
---------------------------
Jeffrey A. Slade


/s/ Larry Berman                  Director                        June 18, 1999
---------------------
Larry Berman



                                       28
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

June 18, 1999

To the Board of Directors and Stockholders
MERIDIAN NATIONAL CORPORATION AND SUBSIDIARIES
Toledo, Ohio

We have audited the accompanying consolidated balance sheets of Meridian
National Corporation and Subsidiaries as of February 28, 1999 and 1998, and the
related consolidated statements of operations, stockholders' deficit, and cash
flows for the years then ended.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Meridian National Corporation and Subsidiaries as of February 28, 1999 and 1998,
and the consolidated results of their operations and their cash flows for the
years then ended, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 1 to the
consolidated financial statements, the Company has sustained losses in recent
years, has a working capital deficiency and total liabilities exceed total
assets.  These conditions raise substantial doubt about its ability to continue
as a going concern.  Management's plans regarding those matters also are
described in Note 1.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


                                         Rehmann Robson P.C.
                                         Farmington Hills, MI




                                      F-1
<PAGE>

                        Report of Independent Auditors


The Board of Directors and Stockholders
Meridian National Corporation

We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Meridian National Corporation for the
year ended February 28, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of Meridian National
Corporation's operations and its cash flows for the year ended February 28,
1997, in conformity with generally accepted accounting principles.


                                                               ERNST & YOUNG LLP


Toledo, Ohio
June 20, 1997

                                       F-2
<PAGE>
<TABLE>
<CAPTION>

                                   MERIDIAN NATIONAL CORPORATION AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEETS

--------------------------------------------------------------------------------------------------------------------
                            ASSETS                                                       February 28
                                                                           -----------------------------------------
                                                                              1 9 9 9                    1 9 9 8
                                                                           -----------                --------------
<S>                                                                       <C>                         <C>
Current assets
 Cash and cash equivalents                                                 $   825,437                $       21,260
 Accounts receivable, net of allowance  for doubtful
  accounts of $448,000 ($149,500 in 1998)                                    8,021,764                    11,219,600
 Inventories                                                                 8,281,272                    11,928,955
 Other current assets                                                          723,356                       691,626
                                                                           -----------                --------------
Total current assets                                                        17,851,829                    23,861,441
                                                                           -----------                --------------

Property and equipment, at cost:
 Buildings, building improvements and
  leasehold improvements                                                     1,263,209                     2,988,916
 Machinery and equipment                                                     4,825,722                     8,382,085
 Office furniture and equipment                                                815,466                       887,657
 Land and land improvements                                                    163,592                       179,085
 Construction in progress                                                       26,350                       200,028
                                                                           -----------                --------------
                                                                             7,094,339                    12,637,771
 Less accumulated depreciation and amortization                              3,514,601                     4,946,160
                                                                           -----------                --------------

Net property and equipment                                                   3,579,738                     7,691,611
                                                                           -----------                --------------
Other assets                                                                   691,059                     1,371,494
                                                                           -----------                --------------







Total assets                                                               $   22,122,626              $  32,924,546
                                                                           =============               =============



The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT                                                 February 28
                                                                      ---------------------------------------
                                                                         1 9 9 9                  1 9 9 8
                                                                      -------------            -------------
<S>                                                                   <C>                      <C>
Current liabilities
 Short-term bank borrowings                                           $  11,811,627            $  13,153,473
 Accounts payable and accrued liabilities                                12,528,463               14,024,728
 Current portion of long-term debt:
  Loans payable affiliate                                                   607,811                4,194,241
  Other                                                                   3,045,046                      -
                                                                      -------------            -------------
Total current liabilities                                                27,992,947               31,372,442
                                                                      -------------            -------------

Long-term debt due after one year:
 Affiliate                                                                  275,232                  275,232
 Other                                                                      894,473                2,708,143
                                                                      -------------            -------------
Total long-term debt due after one year                                   1,169,705                2,983,375
                                                                      -------------            -------------
Total liabilities                                                        29,162,652               34,355,817
                                                                      -------------            -------------

Commitments and contingencies (Note 7)

Stockholders' deficit:
 Preferred stock, $.001 par value,
   authorized 5,000,000 shares:
  $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, authorized 20,000,000
   shares, issued and outstanding, 3,717,552 shares
    (3,625,203 in 1998)                                                      37,176                   36,252
 Additional paid in capital                                              10,998,866               10,950,845
 Accumulated deficit                                                    (19,251,388)             (13,593,688)
                                                                      -------------            -------------
Total stockholders' deficit                                              (7,040,026)              (1,431,271)
                                                                      -------------            -------------
Total liabilities and stockholders' deficit                           $  22,122,626            $  32,924,546
                                                                      =============            ============
</TABLE>


                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                                          MERIDIAN NATIONAL CORPORATION AND SUBSIDIARIES

                                               CONSOLIDATED STATEMENTS OF OPERATIONS

------------------------------------------------------------------------------------------------------------------------------

                                                                                 Year Ended February 28
                                                           -------------------------------------------------------------------
                                                              1 9 9 9                        1 9 9 8              1 9 9 7
                                                           --------------                --------------        ---------------
<S>                                                        <C>                          <C>                    <C>
Net sales                                                  $   49,291,003                $   70,683,989        $    66,511,224
Cost of sales                                                  45,317,859                    64,399,680             58,522,311
                                                           --------------                --------------        ---------------
Gross margin                                                    3,973,144                     6,284,309              7,988,913
                                                           --------------                --------------        ---------------

Other costs and expenses (income):
 Selling, general and administrative                            5,811,642                     6,901,510              7,160,131
 Interest                                                       1,720,719                     1,786,465              1,594,788
 Restructuring charges                                          2,702,764                           -                     -
 Gain on disposal of property
  and equipment                                                  (501,327)                          -                     -
 Cost of abandoned registrations                                     -                          462,414                275,908
 Minority interests                                                  -                          (96,600)              (101,189)
 Miscellaneous - net                                             (226,672)                     (151,569)              (321,260)
                                                           --------------                --------------        ---------------
Total other costs and expenses                                  9,507,126                     8,902,220              8,608,378
                                                           --------------                --------------        ---------------

Loss from continuing operations before
 extraordinary gain                                            (5,533,982)                   (2,617,911)              (619,465)

Discontinued operations:
 Income from operations                                              -                              -                   90,924
 Gain upon disposal                                                  -                              -                  203,654
                                                           --------------                --------------        ---------------
Loss before extraordinary gain                                 (5,533,982)                   (2,617,911)              (324,887)

Extraordinary gain on early
 extinguishment of debt                                              -                              -                  329,279
                                                            -------------                --------------        ---------------
Net (loss) income                                           $  (5,533,982)               $   (2,617,911)       $         4,392
                                                            =============                ==============        ===============
Loss applicable to common stock                             $  (5,657,700)               $   (2,763,101)       $      (131,967)
                                                            =============                ==============        ===============

Earnings (loss) per common share -
 basic and diluted:
 Income (loss) before extraordinary gain:
  Continuing operations                                     $       (1.54)               $        (0.78)       $         (0.23)
  Discontinued operations                                            -                             -                      0.09
 Extraordinary gain                                                  -                             -                      0.10
                                                            -------------                --------------        ---------------
 Net loss                                                   $       (1.54)               $        (0.78)       $         (0.04)
                                                            =============                ==============        ===============



The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>


                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                                          MERIDIAN NATIONAL CORPORATION AND SUBSIDIARIES

                                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

-----------------------------------------------------------------------------------------------------------------------------------
                                                                   $100        $3.75
                                                                 Series A     Series B              Additional
                                                                 Preferred   Preferred    Common     Paid in      Accumulated
                                                                   Stock       Stock      Stock       Capital       Deficit
                                                                ----------   ---------   --------  ------------  -------------
<S>                                                             <C>          <C>         <C>       <C>           <C>
Balance at March 1, 1996                                        $  400,000   $ 775,320   $ 27,551  $ 10,042,327  $ (10,698,617)
 Net income for 1997                                                                                                     4,392
 Dividends:
  Cash dividends on Series A preferred stock                          -           -          -             -           (36,000)
  Cash dividends on Series B preferred stock                          -           -          -             -               (68)
  133,101 shares of common stock issued to holders
   of Series B preferred stock                                        -           -         1,331        98,961       (100,292)
 600,000 shares of common stock issued in exchange for a
  $300,000 reduction in a convertible note payable                    -           -         6,000       294,000           -
 Issuance of common stock of subsidiary                               -           -          -          383,257           -
                                                                ----------   ---------   --------  ------------  -------------
Balance at February 28, 1997                                       400,000     775,320     34,882    10,818,545    (10,830,585)
 Net loss for 1998                                                    -           -          -             -        (2,617,911)
 Dividends:
  Cash dividends on Series A preferred stock                          -           -          -             -           (36,000)
  Cash dividends on Series B preferred stock                          -           -          -             -               (22)
  136,957 shares of common stock issued to holders
   of Series B preferred stock                                        -           -         1,370       107,300       (109,170)
 Issuance of warrants for purchase of common stock of subsidiary      -           -          -           25,000           -
                                                                ----------   ---------   --------  ------------  -------------
Balance at February 28, 1998                                       400,000     775,320     36,252    10,950,845    (13,593,688)
 Net loss for 1999                                                    -           -          -             -        (5,533,982)
 Dividends:
  Cash dividends on Series A preferred stock                          -           -          -             -           (36,000)
  Cash dividends on Series B preferred stock                          -           -          -             -                (7)
  92,349 shares of common stock issued to holders
   of Series B preferred stock                                        -           -           924        48,021        (48,945)
  Accrued dividends on Series B preferred stock                       -           -          -             -           (38,766)
                                                                ----------   ---------   --------  ------------  --------------
Balance at February 28, 1999                                    $  400,000   $ 775,320   $ 37,176  $ 10,998,866  $  (19,251,388)
                                                                ==========   =========   ========  ============  ==============



                                                                                                              Total
                                                                                                         -------------
<S>                                                                                                     <C>
Balance at March 1, 1996                                                                                $    546,581
 Net income for 1997                                                                                           4,392
 Dividends:
  Cash dividends on Series A preferred stock                                                                 (36,000)
  Cash dividends on Series B preferred stock                                                                     (68)
  133,101 shares of common stock issued to holders
   of Series B preferred stock                                                                                  -
 600,000 shares of common stock issued in exchange for a
  $300,000 reduction in a convertible note payable                                                           300,000
 Issuance of common stock of subsidiary                                                                      383,257
                                                                                                        ------------
Balance at February 28, 1997                                                                               1,198,162
 Net loss for 1998                                                                                        (2,617,911)
 Dividends:
  Cash dividends on Series A preferred stock                                                                 (36,000)
  Cash dividends on Series B preferred stock                                                                     (22)
  136,957 shares of common stock issued to holders
   of Series B preferred stock                                                                                  (500)
 Issuance of warrants for purchase of common stock of subsidiary                                              25,000
                                                                                                        ------------
Balance at February 28, 1998                                                                              (1,431,271)
 Net loss for 1999                                                                                        (5,533,982)
 Dividends:
  Cash dividends on Series A preferred stock                                                                 (36,000)
  Cash dividends on Series B preferred stock                                                                      (7)
  92,349 shares of common stock issued to holders
   of Series B preferred stock                                                                                  -
  Accrued dividends on Series B preferred stock                                                              (38,766)
                                                                                                        ------------
Balance at February 28, 1999                                                                            $ (7,040,026)
                                                                                                        ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
                               statements.



                                      F-6
<PAGE>
                MERIDIAN NATIONAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                 Year Ended February 28
                                                              ----------------------------------------------------------
                                                                 1 9 9 9                1 9 9 8               1 9 9 7
                                                              -------------           ------------         -------------
<S>                                                           <C>                     <C>                  <C>
Cash flows from operating activities
Net (loss) income                                             $  (5,533,982)          $ (2,617,911)        $       4,392
Adjustments to reconcile net (loss) income
 to net cash provided by (used in)
 continuing operating activities:
  Depreciation and amortization                                     974,160                856,332               810,397
  Restructuring charges                                           2,702,764                    -                     -
  Extraordinary gain                                                    -                      -                (329,279)
  Minority interest                                                     -                  (96,600)             (101,189)
  Discontinued operations                                               -                      -                (294,578)
  Write-down of inventory                                           830,000                    -                     -
  Write-down of noncurrent assets                                       -                  169,463                   -
  Gain on disposal of property and equipment                       (501,327)                   -                  (5,161)
  Changes in operating assets and
   liabilities which provided (used) cash:
     Accounts receivable                                          3,176,784                (17,124)           (2,975,085)
     Inventories                                                  2,817,683                154,577            (3,222,958)
     Other current assets                                           (31,730)               (13,122)               (8,789)
     Accounts payable and accrued liabilities                    (1,935,031)               786,517             3,931,939
                                                              -------------           ------------         -------------
Net cash provided by (used in) continuing operations              2,499,321               (777,868)           (2,190,311)
Net cash provided by discontinued operations                            -                      -                 117,049
                                                              -------------           ------------         -------------
Net cash provided by (used in) operating activities               2,499,321               (777,868)           (2,073,262)
                                                              -------------           ------------         -------------
Cash flows from investing activities
Additions to property and equipment                                (486,591)              (331,277)           (2,288,008)
Proceeds from disposals of property and equipment                 2,119,811                    -                 558,143
Changes in other assets                                              24,543                (17,221)               (8,894)
                                                              -------------           ------------         -------------
Net cash provided by (used in) investing activities               1,657,763               (348,498)           (1,738,759)
                                                              -------------           ------------         -------------
Cash flows from financing activities
Net short-term bank borrowings (repayments)                      (1,341,846)             2,015,219             2,132,072
Payments on long-term debt                                       (1,975,054)            (1,123,349)           (1,374,918)
Issuance of common stock of subsidiary                                  -                      -                 581,046
Cash dividends paid                                                 (36,007)               (36,022)              (36,068)
Proceeds from long-term debt                                            -                  250,000             2,350,000
Net proceeds from exchange of warrants                                  -                   25,000                   -
                                                              -------------           ------------         -------------
Net cash (used in) provided by financing activities              (3,352,907)             1,130,848             3,652,132
                                                              -------------           ------------         -------------
Increase (decrease) in cash and cash equivalents                    804,177                  4,482              (159,889)
Cash and cash equivalents, at beginning of year                      21,260                 16,778               176,667
                                                              -------------           ------------         -------------
Cash and cash equivalents, at end of year                     $     825,437           $     21,260         $      16,778
                                                              =============           ============         =============
Supplemental cash flows information:
 Cash paid for interest, net of
  amount capitalized                                          $   1,718,983           $  1,915,035         $   1,489,843
                                                              =============           ============         =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-7
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

1.   OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Operations
     ----------

     Meridian National Corporation and its subsidiaries (the "Company") are
     engaged in the trading and processing of steel products for the automotive,
     truck and appliance industries and the recycling or disposal of paint
     wastes for generators of such wastes in the automotive industries located
     primarily in the Midwest Region of the United States.

     Basis of Presentation
     ---------------------

     The financial statements have been presented on the basis that the Company
     is a going concern.  Such basis assumes the realization of assets and the
     satisfaction of liabilities, each in the normal course of business.  The
     Company has sustained losses in recent years, has a working capital
     deficiency, and total liabilities exceed total assets.  Additionally, the
     Company has been unable to meet certain payment obligations to a bank as
     they became due and has been unable to maintain certain financial ratios
     and covenants required under lending agreements with a bank.  Continued
     operations are dependent upon the Company's ability to meet its financing
     requirements and the success of its future operations.  The accompanying
     consolidated financial statements do not include any adjustments to the
     carrying values of assets or to the amount or classification of liabilities
     that might be necessary should the Company be unable to continue as a going
     concern.

     Management's plans with regard to these matters include:

          .   Renegotiations or refinancing obligations with its primary lender,
              which are currently in default, as further described in Note 2.

          .   Assess current and future opportunities, which may include outside
              debt infusion, raising additional equity capital or the sale or
              merger of all or part of the Company's operations.

          .   Continued focus on its core steel processing and distribution
              business.

          .   Reduce certain operating and administrative costs.

     Restructuring of the Paint Waste Business
     -----------------------------------------

     During the year ended February 28, 1999, the Company recorded restructuring
     charges of $2,702,764 to write down certain assets, principally impaired
     equipment, and accrue certain liabilities related to the Polymeric Recovery
     System of the paint waste business unit.  The Company had intended to use
     this system to produce a product using recycled paint waste, which would be
     marketed as a lower cost replacement for traditional, virgin materials used
     in formulated products in the sealant, coating, and adhesive industries.
     The Company has been unable to market this product in a commercially viable
     manner.  The Company will continue to


                                      F-8
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     recycle paint waste using the DryPure system, which generates an inert dry
     powder, used as a filler in the formulation of certain building and
     construction products.

     Management believes this restructuring will enable the paint waste business
     to generate sufficient cash flows to cover normal operating costs and
     contribute to its debt service requirement.  There is no assurance,
     however, that the business will be a viable operation in the future.

     Concentration Risks
     -------------------

     Substantially all of the Company's accounts receivable as of February 28,
     1999 and 1998 are due from businesses, which operate in the automotive,
     truck and appliance industries.  The Company extends credit based on an
     evaluation of credit reports, payment practices and, in most cases,
     financial condition.  Generally, collateral or letters of credit are not
     required.  Allowances for credit losses are provided for in the financial
     statements and such losses consistently have been within management's
     expectations.

     Principles of Consolidation
     ---------------------------

     The consolidated financial statements include the accounts of Meridian
     National Corporation and all subsidiaries in which it has in excess of a
     50% ownership interest.  All material intercompany transactions and
     balances have been eliminated.

     Use of Estimates
     ----------------

     The preparation of consolidated financial statements in accordance with
     generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosures of contingent assets and liabilities at the
     date of the consolidated financial statements and the reported amounts of
     revenues and expenses during the reporting period.  Actual results may
     differ from these estimates.

     Cash and Cash Equivalents
     -------------------------

     Cash and cash equivalents consist of demand deposits in banks, cash on
     hand, and certificates of deposit with original maturities when purchased
     of less than three months.

     Inventory Valuation
     -------------------

     Inventories are carried at the lower of cost, using the specific
     identification method, or market.  At February 28, 1999, the Company
     recorded an $830,000 charge to cost of sales for inventory write downs to
     their estimated net realizable value.


                                      F-9
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     Revenue Recognition
     -------------------

     Sales are generally recognized at the time of shipment of products or
     performance of services.

     Property and Equipment and Depreciation
     ---------------------------------------

     Property and equipment are stated at cost.  Major improvements and renewals
     are capitalized while ordinary maintenance and repairs are expensed.

     Depreciation and amortization are provided, principally by means of
     accelerated methods, except for the paint waste recycling subsidiary for
     which all assets are depreciated using the straight-line method, based on
     the following estimated useful lives:

<TABLE>
<S>                                                 <C>     <C>  <C>
          Land improvements                         15 to   20   years
          Buildings, building improvements and
            leasehold improvements                  32 to   40   years
          Machinery and equipment                    5 to   15   years
          Office furniture and equipment             5 to   10   years
</TABLE>

     Capitalized Interest
     --------------------

     Interest costs of approximately $36,000 in 1998 were capitalized as a cost
     of the expansion of the Company's paint waste recycling facility.

     Fair Value of Financial Instruments
     -----------------------------------

     Based on the Company's financial condition, the collateral securing
     outstanding debt and the frequently redetermined interest rates associated
     with the majority of the Company's debt instruments, the Company believes
     that the aggregate fair values of short-term notes payable and long-term
     debt approximate the carrying values.

     Intangible Assets
     -----------------

     The Company evaluates the recoverability of long-lived assets based on
     undiscounted projected cash flows, excluding interest and taxes, when
     factors indicate that an impairment may exist.  The Company wrote off in
     fiscal 1998 all of the remaining goodwill associated with the acquisition
     of the common stock of certain subsidiaries in the amount of approximately
     $169,000, primarily due to operating losses incurred in fiscal 1998.


                                     F-10
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     Earnings (Loss) Per Common Share
     --------------------------------

     Earnings (loss) per share is computed using the weighted average number of
     common shares outstanding during the year.  The Company adopted Statement
     of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share",
     effective March 1, 1997.  This statement requires a dual presentation and
     reconciliation of "basic" and "diluted" per share amounts.  Diluted
     reflects the potential dilution of all common stock equivalents.  At
     February 28, 1999, 1998 and 1997 options to purchase 427,750, 497,750, and
     503,300 shares, respectively, were excluded from the computation of
     earnings per share because the options' exercise prices were greater than
     the average market price of the common shares.  Common shares issued for
     dividends on preferred stock are included in weighted average shares
     outstanding beginning on the date issued.  The effects of options and
     warrants are excluded  from earnings per share calculations when the effect
     would be anti-dilutive.  The weighted  average number of common and common
     equivalent shares used to compute earnings (loss) per share for each year
     is:

<TABLE>
     <S>                            <C>            <C>            <C>
                                     1 9 9 9        1 9 9 8        1 9 9 7
                                    ---------      ---------      ---------
          Basic and diluted         3,678,082      3,532,195      3,241,349
                                    =========      =========      =========
</TABLE>

     Cash dividends on preferred stock and the value of common shares issued as
     dividends on Series B preferred stock ($123,718 in 1999, $145,192 in 1998
     and $136,359 in 1997) are deducted in arriving at loss applicable to common
     shares.

     Stock Options
     -------------

     All options have been granted at prices not less than the market price on
     the date granted.  Accordingly, the Company recognizes no compensation
     expense related to these options in accordance with Accounting Principles
     Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No.
     25).

2.   SHORT-TERM BANK BORROWINGS

     The Company has a $13,500,000 revolving demand line of credit with a bank
     under a Loan and Security Agreement with interest at 1% above the bank's
     prime rate (effective rate of 8.75% at February 28, 1999).  The agreement
     allows borrowings under a lending formula based upon eligible accounts
     receivable and inventories less outstanding letters of credit issued under
     the agreement.  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.


                                     F-11
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     As a result of the Company's inability to make payments of sums due and
     maintain the terms and covenants of the original loan agreements, the
     Company entered into a forbearance agreement with the bank in May 1999
     which expires June 30, 1999.  Under the forbearance agreement, the bank has
     agreed not to exercise its right to demand immediate payment of obligations
     due, and the right to foreclose, take possession of, and liquidate all
     collateral.  The bank has also agreed to permit the Company to exceed the
     eligible borrowing amount based on the lending formula by approximately
     $2,350,000 (the "overadvance") and not enforce the default interest rate
     during the forbearance period.

     At February 28, 1999, approximately $900,000 was available under the
     revolving demand line after considering the allowable overadvance.  The
     agreement provides for a commitment fee equal to .25% of the excess of
     $13,500,000 over average daily borrowings and is secured by substantially
     all of the Company's personal property not otherwise pledged.

     Weighted average interest rates at year end were 9.00% in 1999, 9.48% in
     1998 and 9.33% in 1997.

3.   LONG-TERM DEBT

     Long-term debt consists of the following obligations at February 28:

<TABLE>
<CAPTION>
                                                                                     1 9 9 9            1 9 9 8
                                                                                  -------------      -------------
<S>                                                                               <C>                <C>
          8.5% mortgage note payable to trustee bank, due in monthly
          installments, including interest of approximately $73,000
          until final maturity in November 2000.                                   $  1,363,750       $  2,063,750

          Notes payable to bank collateralized by certain equipment,
          due in monthly installments of $21,000, plus interest at
          1.5% above prime (effective rate of 9.25% at February 28,
          1998), with a final payment of $2,035,000 which was due
          March 1998 and is currently in default.                                     1,783,000          2,035,000

          Note payable to an officer and stockholder, due in monthly
          installments of $15,000, including interest at 9.25% with
          balance due in July 1999.  The note is guaranteed by the
          Company, and by a security interest in certain machinery and
          equipment.                                                                    607,811                  -

          Note payable, collateralized by certain machinery and
          equipment, due in monthly installments of $17,675
          including interest at 11.7% through December 2000.                            348,444            496,681
</TABLE>

                                     F-12
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                  1 9 9 9              1 9 9 8
                                                                                 ----------           ----------
<S>       <C>                                                                 <C>                   <C>
          Convertible note payable to an officer and stockholder,
          interest payable quarterly at 9%, secured by a pledge of
          common stock of certain subsidiaries.  The note is
          subordinate to bank borrowings and is convertible into
          shares of common stock at a conversion price of $15.60 per
          share.                                                                 $  275,232           $  275,232

          Unsecured promissory note, due August 1998, and currently
          in default, plus interest at 18% per annum.                               250,000              250,000

          Mortgage and other notes payable to bank, repaid during the
          year ended February 28, 1999.                                                   -              750,915

          Obligations under long-term capital leases:

            Lease purchase obligations, repaid during the year ended
            February 28, 1999.                                                            -            1,053,151

            Lease purchase obligation payable in monthly installments
            of $2,315 including interest at 5% through May 2002.                     83,855              103,165

            Lease purchase obligation payable in monthly installments
            of $1,992 including interest at 8.53% through June 2002.                 67,769              101,140

            Other                                                                    42,701               48,582
                                                                                 ----------           ----------
          Total long-term debt                                                    4,822,562            7,177,616

          Less amounts due within one year                                        3,652,857            4,194,241
                                                                                 ----------           ----------
          Long-term debt due after one year                                      $1,169,705           $2,983,375
                                                                                 ==========           ==========
</TABLE>

     An officer and stockholder of the Company has personally guaranteed the
     Company's borrowings from the bank, aggregating $13,594,627 at February 28,
     1999.

     An officer and stockholder of the Company has agreed to defer payment of a
     convertible note payable of $275,232 until after February 28, 2000. The
     note was scheduled to mature in September 1995. Accordingly, the note
     payment has been excluded from long-term debt due within one year in the
     accompanying consolidated balance sheets. In May 1996 the Board of
     Directors authorized the issuance of 600,000 shares of the Company's common
     stock to the officer and stockholder in exchange for a reduction of
     $300,000 to the convertible note payable to the officer and stockholder.


                                     F-13
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     Effective July 1, 1992, Environmental Purification Industries Company
     ("EPI") became a wholly-owned subsidiary of the Company when, pursuant to a
     Termination Agreement, Haden Purification, Inc. ("Haden Purification")
     terminated and abandoned its 50% partnership interest in EPI.  Under the
     Termination Agreement, Haden Purification assumed liability for one-half of
     the remaining principal, interest and fee payments due under the Company's
     8.5% mortgage note payable and was assigned 50% of the amount held in trust
     to meet future debt service requirements.  Haden Purification makes
     principal, interest and fee payments directly to the trustee bank.  As
     such, these payments are excluded from the statement of cash flows.
     Interest expense in the accompanying consolidated statements of operations
     excludes interest and fee payments made by Haden Purification amounting to
     $91,600 in 1999, $120,100 in 1998, and $140,407 in 1997.

     In June 1996, the Company executed an agreement (the "Compromise
     Agreement") to repay a note payable to Haden Purification.  The terms of
     the Compromise Agreement included, among other things, settlement of the
     note payable for a payment of $350,000 made in July 1996.  The Company is
     required to continue to pay, through July 1, 1998, Haden Environmental
     Corporation, an affiliate of Haden Purification, a throughput charge of $10
     per cubic yard of paint waste processed through EPI's current recycling
     system.  Prior to execution of the Compromise Agreement, payments of the
     throughput charge were credited towards amounts due under the note payable
     to Haden Purification.  The gain of $329,279 on early extinguishment of
     debt during fiscal 1997 is reflected as an extraordinary gain.  Throughput
     charges subsequent to July 1, 1996 are reported as operating expenses as
     incurred.

     Scheduled maturities of long-term debt in each of the five fiscal years
     subsequent to February 28, 1999, including the principal portion of minimum
     payments under long-term lease obligations, are approximately as follows:

<TABLE>
<S>          <C>                             <C>
             2000                             $ 3,653,000
             2001                               1,101,000
             2002                                  55,000
             2003                                  13,562
                                              -----------
             Total                            $ 4,822,562
                                              ===========
</TABLE>

     These amounts include principal payments to be made by Haden Purification,
     as follows:

<TABLE>
<S>        <C>                              <C>
             1999                              $  380,000
             2000                                 301,875
                                               ----------
            Total                              $  681,875
                                               ==========
</TABLE>

                                     F-14
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

4.   LEASE COMMITMENTS

     Capitalized Leases
     ------------------

     The Company leases certain property and equipment under long-term
     agreements classified as capital leases.  The property and equipment can be
     purchased at the expiration of the leases for nominal amounts.

     The cost and accumulated amortization of property leased under capital
     leases are as follows as of February 28:

<TABLE>
<S>                                                       <C>              <C>
                                                            1 9 9 9          1 9 9 8
                                                          ----------       ----------
           Buildings                                      $        -       $  634,383
           Machinery and equipment                           328,521        1,249,209
                                                          ----------       ----------
                                                             328,521        1,883,592
           Less accumulated amortization                     153,875          735,030
                                                          ----------       ----------
                                                          $  174,646       $1,148,562
                                                         ===========       ==========
</TABLE>

     Future minimum payments and their present value under these leases at
     February 28, 1999 are approximately as follows:

<TABLE>
<S>           <C>                                                                         <C>
              2000                                                                         $    83,000
              2001                                                                              61,000
              2002                                                                              58,000
              2003                                                                              12,000
                                                                                           -----------
              Total minimum lease payments                                                     214,000

              Less amount representing interest at imputed rates
                ranging from 5% to 12.83%                                                       20,000
                                                                                           -----------
              Present value of net minimum lease payments
                included in long-term debt                                                 $   194,000
                                                                                           ===========
</TABLE>

     Certain property and equipment leased under a capital lease with a cost and
     accumulated amortization of $742,983 and $468,000, respectively, were sold
     in August 1998.  The present value of the lease payments were paid at the
     time of the sale of the property in full satisfaction of this lease
     purchase obligation.

     Operating Leases
     ----------------

     The Company leases certain property and equipment under agreements
     classified as operating leases.  Total rent expense charged to operations
     for 1999, 1998 and 1997 approximated $588,000, $620,000, and $610,000,
     respectively, which included $253,000, $249,000, and $290,000,
     respectively, to related parties.  Minimum future rental commitments under


                                     F-15
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     noncancelable operating leases at February 28, 1999, including aggregate
     payments of $897,000 to an affiliate of an officer and certain
     stockholders, are $443,000 in 2000, $437,000 in 2001, $334,000 in 2002,
     $171,000 in 2003, and $171,000 in 2004.

5.   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 former MES
     management.  Of the $700,000 sales price, $200,000 was represented by notes
     due from the purchaser, receivable in varying installments over a period of
     five years.   Due to the uncertainty of the collectibility of the notes,
     recognition of $185,000 of the gain on the sale, representing the balance
     of the unpaid notes, has been deferred at February 28, 1999.

     The accompanying consolidated financial statements separately report the
     operating results of this discontinued operation.  Net sales of the
     discontinued operation were approximately $458,000 through the disposal
     date in fiscal 1997.

6.   SUBSIDIARY STOCK

     During fiscal 1997, 25 shares of common stock (a 20% interest) of EPI
     Technologies, Inc. were issued to outside investors for $581,046 in cash,
     net of related offering costs.  Proceeds of the sale were credited to
     minority interest, based on the carrying value of the subsidiary, with the
     remainder credited to capital in excess of stated value.  EPI Technologies,
     previously a wholly-owned subsidiary, holds the Company's interest in EPI,
     the Company's paint waste recycling operation.

7.   COMMITMENTS AND CONTINGENCIES

     License Agreement
     -----------------

     EPI has entered into a license agreement with Aster, Inc. ("Aster") whereby
     Aster has granted the Company the exclusive right, except in Mexico, to use
     certain patented processes and technology in its paint recycling process.
     EPI has agreed to pay Aster royalties and other fees for ongoing work
     performed by Aster to commercialize and to continue to refine the
     processes, formulae and technology.  During fiscal 1999, the minimum
     monthly payments required by the agreement were reduced from $20,000 to
     $10,000.

                                     F-16
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     Litigation and Regulatory Matters
     ---------------------------------

     The Company is involved in certain litigation and claims incidental to its
     business.  In one such claim, the Company is involved in a labor relations
     matter in which the National Labor Relations Board has instituted a claim
     against companies which leased employees to the Company.  The amount of the
     claim is $1.3 million.  The ultimate outcome with respect to such
     proceedings currently cannot be predicted.  However, the Company believes,
     based on its examination and review of such matters and consultation with
     outside legal counsel, that there are meritorious defenses available to the
     Company.

     In April 1999, the Company received a notice from the United States
     Environmental Protection Agency concerning the Agency's intent to file an
     administrative complaint.  The complaint, if filed, could seek civil
     penalties against EPI.  The Company has answered the notice and believes
     the ultimate outcome of the matter will not result in material liability to
     the Company.

     Employment Agreement
     --------------------

     The Company and its President have an employment agreement which provides
     for annual automatic renewals through July 31, 2002.  The agreement also
     provides that in the event of the officer's death during the term of the
     employment agreement, the current salary is to be continued by payment for
     three years to his surviving spouse or estate.

8.   CAPITAL STOCK

     The Series B preferred stock has a mandatory dividend payable semiannually
     at an annual rate of $.375 per share, if paid in cash, or, at the Company's
     option, $.4875 per share if paid in shares of common stock based on the
     average market value of the common stock for the 20 days prior to the
     record date.  At February 28, 1999, preferred stock dividends of $38,766
     have been accrued but not paid.  Holders of the Series B preferred stock
     are entitled to one-tenth vote for each share held and, subject to certain
     conditions, vote together with the holders of common stock as a single
     class.  Each share of the Series B preferred stock is convertible, at the
     option of the holder into .25 shares of common stock, subject to adjustment
     under certain circumstances.  The Series B preferred stock may be redeemed
     by the Company, in whole or in part, at a redemption price of $4.875 per
     share if the average of the closing prices of the common stock has been at
     least $22.50 per share during twenty consecutive trading days.

     During the period from June 22 to July 26, 1994, the Company extended a
     special offer to holders of its Series B preferred stock to exchange for
     each 100 shares of Series B preferred stock, one unit, consisting of 90
     newly issued shares of common stock and 100 warrants (the "1999 Warrants")
     to purchase 1.2 shares of common stock each at an exchange price of $2.35
     per share, as adjusted, subject to further adjustment in certain
     circumstances.  The 1999 Warrants are exercisable through June 1999.  A
     total of 1,041,249 shares, or 83% of the Series B preferred



                                     F-17
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     shares outstanding, were validly tendered for exchange. The number of 1999
     Warrants outstanding at February 28, 1999 was 1,040,300.

     Holders of the Series A preferred stock are entitled to receive quarterly,
     cumulative dividends of $2.25 per share.  The Series A preferred stock does
     not have voting rights and is redeemable at the Company's discretion for
     $100 plus accrued and unpaid dividends.

     Common shares reserved for future issuance at February 28, 1999 aggregated
     2,072,582 and related to the following instruments:
<TABLE>
<CAPTION>

<S>                                                <C>
               Common stock purchase warrants      1,271,031
               Stock options                         732,220
               Convertible debt                       17,643
               Convertible preferred stock            51,688

</TABLE>
9.   COMMON STOCK OPTIONS

     The Company has elected to follow APB No. 25, "Accounting for Stock Issued
     to Employees", in accounting for its employee and non-employee director
     stock options.  The alternative fair value accounting provided for under
     Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
     Based Compensation" (SFAS No. 123), requires use of option valuation models
     that were not developed for use in valuing employee stock options.  Under
     APB No. 25 no compensation expense is recognized because the exercise price
     of the Company's employee stock options equals or exceeds the market price
     of the underlying stock at the date of the grant.

     In the opinion of management, the existing fair value models do not provide
     a reliable measure of the fair value of employee stock options.  The Black-
     Scholes option valuation model was developed for use in estimating the fair
     value of traded options which have no vesting restrictions and are fully
     transferable.  The Company's employee and non-employee director stock
     options have characteristics significantly different from those of traded
     options.  In addition, option valuation models require highly subjective
     assumptions.  Changes in these assumptions can materially affect the fair
     value estimate.

     SFAS No. 123 requires, if APB No. 25 is followed, disclosure of pro forma
     information regarding net income and earnings per share determined as if
     the Company accounted for its stock options under the fair value method.
     The fair value for these options was estimated at the date of grant using a
     Black-Scholes option pricing model with the following weighted-average
     assumptions for 1999, 1998 and 1997, respectively; a risk-free interest
     rate of 6.5%; a dividend yield of 0%; expected volatility of the Company's
     common stock .929, .484, and .484; and a weighted-average expected life of
     the options of 7 years.


                                     F-18
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     The weighted-average fair value of options granted in 1999, 1998 and 1997
     was $0.43, $0.49, and $0.47, respectively.  For purposes of pro forma
     disclosures, the estimated fair value of options is amortized to expense
     over the option's vesting period.  Amortization attributable to grants
     awarded in both 1999, 1998 and 1997 impact the pro forma results.  The
     Company's reported and pro forma information follows:

<TABLE>
<CAPTION>
                                          1999               1998              1997
                                      ------------       ------------     -------------
                                     <S>                <C>               <C>
        Net income (loss):
          Reported                    $ (5,533,982)      $ (2,617,911)     $      4,392
          Pro forma                     (5,551,390)        (2,670,322)          (83,018)
        Loss per share:
          Reported                           (1.54)             (0.78)            (0.04)
          Pro forma                          (1.55)             (0.80)            (0.07)
</TABLE>

     The Company has a nonqualified and incentive stock option plan for its
     officers and key employees under which 600,000 shares of common stock may
     be issued.  Incentive stock options issued to stockholders possessing more
     than ten percent of the combined voting rights of the Company may be
     granted at an exercise price of not less than 110 percent of the fair
     market value of the common stock at the date of the grant and are
     exercisable for a period not exceeding five years from the date of the
     grant.  All other options under the plan may be granted at amounts not less
     than the market value of the common stock at the date of the grant and are
     exercisable for a period not exceeding ten years from the date of the
     grant.

     The Company has also established a non-employee directors' stock option
     plan under which 150,000 shares of common stock may be issued.  Under this
     plan, eligible directors who have served twelve consecutive months are
     annually granted options to purchase 2,500 shares.  Under the plan, options
     may be granted at an exercise price equal to the market value on the date
     of grant and are exercisable for a period not exceeding ten years from the
     date of grant.

                                     F-19
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     Summary information on stock options is as follows:

<TABLE>
<CAPTION>
                                                    1 9 9 9                      1 9 9 8                         1 9 9 7
                                        ----------------------------    ----------------------------    ----------------------------

                                                          Weighted                        Weighted                        Weighted
                                                           Average                         Average                         Average
                                                          Exercise                        Exercise                        Exercise
                                         Shares             Price        Shares             Price        Shares             Price
                                        ---------        -----------    ---------        -----------    ---------        -----------

<S>                                     <C>              <C>            <C>              <C>            <C>              <C>
Outstanding,
 beginning of year                        497,750        $      1.48      503,300        $      1.48      229,800        $      2.25

Granted                                     7,500                .52        7,500                .78      315,000               1.00

Terminated                                (77,500)              1.74      (13,050)              1.34      (41,500)              2.07
                                        ---------        -----------    ---------        -----------    ---------        -----------

Outstanding,
 end of year                              427,750        $      1.41      497,750        $      1.48      503,300        $      1.48
                                        =========        ===========    =========        ===========    =========        ===========

Options exercisable,
  end of year                             248,300        $      1.57      213,050        $      1.74      133,450        $      1.99
                                        =========        ===========    =========        ===========    =========        ===========

Weighted average fair value of
 options granted during the year                         $      0.43                     $      0.49                     $      0.47
                                                         ===========                     ===========                     ===========

</TABLE>

     The weighted average remaining contractual life of options outstanding at
     February 28, 1999 is 6.6 years.  Exercise prices for outstanding options at
     February 28, 1999 range from $0.52 to $4.00 per share.

10.  INCOME TAXES

     The Company has net operating loss, alternative minimum tax credit and
     business credit carryforwards for federal income tax purposes of
     approximately $11,326,000, $9,000 and $18,000, respectively, available for
     the reduction of future federal taxable income and income taxes.  Net
     operating loss carryforwards begin expiring in fiscal 2005.

     The effective income tax rate, excluding extraordinary gains and
     discontinued operations for 1999, 1998 and 1997 differs from the statutory
     U.S. federal income tax rate due to the following:

<TABLE>
<CAPTION>
                                                         1999              1998              1997
                                                        ------            ------            ------
<S>                                                   <C>               <C>             <C>
          Tax (benefit) based on statutory              (34.0)%           (34.0)%           (34.0)%
             U.S. federal income tax rate
          Change in valuation allowance                   38.6              27.2              28.2
          Meals and entertainment                          1.0               3.7               6.4
          State and local tax effects                     (6.6)             (4.5)             (4.2)
          Amortization of goodwill                           -                 -               0.3
          Writedown of goodwill                              -               6.3                 -
          Other                                            1.0               1.3               3.3
                                                        ------            ------            ------
          Effective rate                                    - %               - %               - %
                                                        =======           ======            ======
</TABLE>


                                     F-20
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     Deferred income taxes are measured based on temporary differences between
     the carrying amounts of assets and liabilities for financial reporting
     purposes and the amounts used for income tax purposes.  Significant
     components of the Company's deferred tax assets and liabilities are as
     follows as of February 28:

<TABLE>
<CAPTION>
                                                                          1 9 9 9                      1 9 9 8
                                                                        ------------                 ------------
            <S>                                                         <C>                           <C>
            Deferred tax assets:
               Net operating loss carryforwards                         $  4,530,000                 $  3,464,000
               Inventory                                                     545,000                      238,000
               Property and equipment                                        690,000                            -
               Other                                                         300,000                      180,000
                                                                        ------------                 ------------
            Total deferred tax assets                                      6,065,000                    3,882,000
            Valuation allowance                                           (5,494,000)                  (3,373,000)
                                                                        ------------                 ------------
            Net deferred tax assets                                          571,000                      509,000
                                                                        ------------                 ------------
            Deferred tax liabilities:
               Property and equipment                                       (566,000)                    (505,000)
               Other                                                          (5,000)                      (4,000)
                                                                        ------------                 ------------
            Total deferred tax liabilities                                  (571,000)                    (509,000)
                                                                        ------------                 ------------
            Net deferred tax assets and liabilities                     $          -                 $          -
                                                                        ============                 ============
</TABLE>

     Change in the valuation allowance equals the change in net deferred taxes.


11.  INDUSTRY SEGMENT INFORMATION

     The Company has two operating segments which are in separate industries.
     The steel distribution and processing segment handles flat-rolled steel
     products for the automotive, truck and appliance industries.  The waste
     management segment recycles paint wastes for companies in the automotive
     industry.

     Net sales by segment includes sales to unaffiliated customers and
     intersegment sales at prices which the Company believes approximate market.
     Intersegment sales represent services provided by the waste management
     segment for the steel distribution and processing segment.  Corporate
     charges incurred on behalf of the segments are allocated based on the
     percentage of time devoted to segment business by corporate personnel.
     Operating profit (loss) by segment excludes unallocated general corporate
     expenses and net interest expense.  Corporate assets consist primarily of
     cash and other short-term assets.

     Net sales of the steel distribution and processing segment include
     $5,878,000, $10,101,000, and $9,176,000 in 1999, 1998 and 1997,
     respectively, for slitting of coil steel for a steel stamping customer. The
     accounts receivable balances from this customer at February 28, 1999 and
     1998 were approximately $1,079,000 and $2,074,000, respectively.


                                     F-21
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

     The following summarizes the Company's operations and identifiable assets:

<TABLE>
<S>                                                     <C>                  <C>                  <C>
                                                            1 9 9 9              1 9 9 8              1 9 9 7
                                                        --------------       --------------       --------------
Net sales:
  Steel distribution and
    processing                                          $   45,418,511        $  66,965,409        $  63,103,554
  Waste management                                           3,872,492            3,718,580            3,417,070
  Eliminations                                                       -                    -               (9,400)
                                                        --------------       --------------       --------------
Total net sales                                         $   49,291,003        $  70,683,989        $  66,511,224
                                                        ==============       ==============       ==============
Operating profit (loss):
  Steel distribution and
     processing                                         $       12,326        $   1,085,575        $   2,487,412
  Waste management              (a)                         (3,174,435)          (1,066,514)            (629,107)
                                                        --------------       --------------       --------------
Total operating profit (loss)   (a)                         (3,162,109)              19,061            1,858,305
  General corporate expenses                                  (651,154)            (850,507)            (938,624)
  Interest expense - net                                    (1,720,719)          (1,786,465)          (1,539,146)
Loss from continuing operations                         --------------       --------------       --------------
  before income taxes and
  extraordinary gain.           (a)                     $   (5,533,982)       $  (2,617,911)       $    (619,465)
                                                        ==============        =============        =============

                                                            1 9 9 9              1 9 9 8              1 9 9 7
                                                        --------------       --------------       --------------
Identifiable assets:
  Steel distribution and                                $   18,063,893        $  26,772,489        $  27,003,764
     Processing
  Waste management                                           2,833,790            5,655,891            6,130,291
  Corporate and discontinued                                 1,227,567              739,202              647,263
     operations
   Eliminations                                                 (2,624)            (243,036)             (80,508)
                                                        --------------       --------------       --------------
Total assets                                            $   22,122,626        $  32,924,546        $  33,700,810
                                                        ==============        =============        =============
</TABLE>


       (a)     Includes restructuring charge of $2,702,764 in fiscal 1999 and
               costs of withdrawn registrations of $462,000 and $267,000 for
               1998 and 1997, respectively.


                                     F-22
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                        1 9 9 9                 1 9 9 8                 1 9 9 7
                                      ------------            ------------          --------------
<S>                                   <C>                     <C>                   <C>
Depreciation and amortization:
   Steel distribution and
     processing                       $    423,936            $    436,313          $      436,435
  Waste management                         522,675                 389,724                 338,690
  Corporate assets                          27,549                  30,292                  37,116
                                      ------------            ------------          --------------
Total depreciation and
   amortization                       $    974,160            $    856,329          $      812,241
                                      ============            ============          ==============
Capital expenditures:
  Steel distribution and
     processing                       $    258,260            $    355,294          $      135,336
  Waste management                         228,331                 315,732               2,193,270
  Corporate assets and
     discontinued operations                     -                   3,505                   5,135
                                      ------------            ------------          --------------
Total capital expenditures            $    486,591            $    674,531          $    2,333,741
                                      ============            ============          ==============
</TABLE>

12.  COSTS OF ABANDONED REGISTRATIONS

     During 1998 and 1997, the Company incurred expenses in conjunction with
     proposed initial public offerings of approximately 50% of a subsidiary
     which includes the Company's paint waste recycling operation.  Due to
     weakness in the public market and to other matters, the planned offerings
     were ultimately abandoned.  The Company charged to operations in the fourth
     quarters of fiscal 1998 and 1997 approximately $462,000 and $276,000,
     respectively, of legal, accounting and other costs related to the
     unsuccessful offerings.  Such costs exclude the impact, if any, of certain
     services billed to the Company in amounts in excess of what management
     believes are reasonable under the circumstances.  The ultimate settlement
     amount of these contested billings cannot be predicted and accordingly, no
     provision for additional costs, if any, have been made in the financial
     statements.

                                     F-23
<PAGE>

                         MERIDIAN NATIONAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

13.  RELATED PARTY TRANSACTIONS

     In August 1998, the Company sold property and equipment located in Detroit,
     Michigan for $1,500,000 in cash, which resulted in a gain of approximately
     $960,000.  The proceeds were used to pay off existing debt on the building
     and also to make payments against the Company's bank borrowings.  The
     property and equipment sold were previously leased to the purchaser of the
     property.  The purchaser is a company which is a stockholder in the Company
     and one of its subsidiaries.  One of the Company's directors has a majority
     ownership position in the purchaser.

     During fiscal 1999, the Company entered into an agreement whereby it was
     advanced approximately $700,000 from an affiliate to purchase steel.  In
     return, the Company paid the affiliate interest on unpaid advances at a
     rate of 7.75% plus 50% of the gross profit resulting from the related sale
     of steel products.  Total interest and gross profit through year end was
     $20,325, subsequent to year end amounts owed under the agreement were
     substantially repaid.

                                   * * * * *

                                     F-24
<PAGE>

                         MERIDIAN NATIONAL CORPORATION
                                   FORM 10-K

                               INDEX TO EXHIBITS

10.01(u)        Forbearance Agreement, dated May 7, 1999, among the Company,
                certain of its subsidiaries and National Bank of Canada.

10.15(d)        Second Lease Amendment dated December 15, 1998, between Ottawa
                River Steel Co., Meridian National Corporation and Great Lakes
                Industrial Partners L.P.

10.15(e)        Sublease Agreement, effective as of December 15, 1998, between
                Ottawa River Steel Co. and Centennial Steel Processing, LLC.

10.18(a)        Cognovit Demand Promissory Note for $618,000, dated February 4,
                1999, of Ottawa River Steel Co. to William D. Feniger.

10.18(b)        Open-end Mortgage, dated February 4, 1999, between Ottawa River
                Steel Co. and William D. Feniger.

10.18(c)        Security Agreement, dated February 4, 1999, between Ottawa River
                Steel Co. and William D. Feniger.

21               List of Subsidiaries of Registrant

23.01            Consent of Independent Auditors

23.02            Consent of Independent Auditors

27               Financial Data Schedule