UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
Amendment Number 1
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2005
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From ___________ to ____________
COMMISSION FILE NUMBER: 0-30018
MERIDIAN HOLDINGS,INC.
----------------------
(Exact Name of Registrant as Specified in its Charter)
COLORADO 52-2133742
------------------------------- ------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
6201 Bristol Parkway, Culver City, California 90230
----------------------------------------------------------------
(Address of Principal Executive Offices)
(213) 627-8878
----------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
----------------------------------------------------------------
(Former name, former address and formal fiscal year, if changed since last
report)
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 ( X ) No ( )
As of September 30, 2005, Meridian Holdings, Inc., Registrant had 18,120,200
shares of its $0.001 par value common stock outstanding, with a total
market value of $1,812,020.
Page 1 of 12 sequentially numbered pages
Form 10-QSB
Third Quarter 2005
MERIDIAN HOLDINGS, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-12
PART II OTHER INFORMATION
Legal Proceedings 12
Additional Information 12
Signature 12
Exhibits 13-14
2
MERIDIAN HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
ASSETS
As of September 30, December 31
2005 2004
(Restated)
========== ==========
Current assets
Cash and cash equivalents $ 132,974 $ 173,628
Restricted cash 94,942 217,283
Accounts receivable, net of allowance for
doubtful accounts of $282,896 and $198,813
respectively 2,344,893 1,645,838
Other current assets 8,302 11,420
------------ --------------
Total current assets 2,581,111 2,048,170
Fixed assets, net of accumulated depreciation 20,650 33,944
Investments 3,424,997 3,424,997
----------- -----------
Total assets $ 6,026,758 $ 5,507,111
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued Expense 331,467 299,504
Reserve for incurred but not reported claims 55,738 201,311
Line of credit 62,741 50,263
Current portion of long term debt 4,465 4,117
------------ ----------
Total current liabilities 675,368 555,195
Long Term liabilities
Long-term debt 359,475 391,821
--------- ----------
Total liabilities 1,034,843 947,016
--------- ----------
Commitments and contingencies
Stockholders' equity
Preferred stock (20,000,000 shares authorized,
par value $0.001; no shares issued and - -
outstanding) Common stock (100,000,000 shares
authorized, par value $0.001; 18,120,200 shares
issued and outstanding at September 30, 2005
and 14,370,200 as at December 31, 2004
respectively) 18,120 14,370
Additional paid-in capital 5,526,760 5,526,760
Accumulated deficit (552,966) (981,035)
------------- -------------
Total stockholders' equity 4,991,914 4,560,095
------------- ------------
Total liabilities and stockholders' equity $ 6,026,758 $ 5,507,111
============ ============
See accompanying notes to Condensed consolidated financial statements
3
MERIDIAN HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(UNAUDITED)
Three Months Ended Sept 30, Nine Months Ended Sept 30,
2005 2004 2005 2004
(Restated) (Restated)
===== ==== ====== ======
Revenues
HMO Capitation Revenue $ 54,646 $ 290,495 $ 384,125 $ 991,316
Risk Pool Revenue (Note7) 50,986 113,099 230,664 429,932
Fee For Service 338,678 54,070 886,290 55,875
-------- ---------- ----------- ---------
444,310 457,664 1,501,079 1,477,123
General Operating expenses
Cost of Provider Services 10,514 136,616 284,118 528,989
General and Administrative 348,455 466,116 1,073,263 1,287,738
-------- -------- ---------- -------
(Loss)/Income from operations) 85,341 (145,068) 143,698 (339,604)
-------- -------- ---------- -------
Other income and (expense)
Stock option issued - - - (500,000)
Other net (2,654) (5,173) (16,916) (10,342)
-------- --------- ------------- --------
Net Other (2,654) (5,173) (16,916) (510,342)
-------- ----------- ------------- ----------
Net Income 82,718 (150,241) 126,781 (849,946)
-------- ---------- ----------- ------------
Earnings per share:
$ 0.005 $( 0.01) $ 0.008 $ ( 0.07)
========== ========== ========== ==========
Weighted average
shares outstanding 15,203,533 11,870,200 15,203,533 11,870,200
See accompanying notes to Condensed consolidated financial statements
4
MERIDIAN HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
Nine Months Ended September 30, Three Months Ended September 30
2005 2004 2005 2004
(restated) (restated)
====== ====== ======= ==========
Cash flows from operating activities
Net income/(loss) $ 126,781 (849,946) $ 78,358 (150,242)
Adjustments to reconcile net Loss/income
to net cash used in operating activities:
Stock Option issued - - -
Depreciation and amortization 13,294 13,570 4,013 4,662
(Increase) decrease in:
Accounts receivable (695,937) (197,639) (347,335) (65,878)
Other current liabilities ( 10,345) - ( 16,828) 36,349
Accounts payable 234,806 (6,634) 198,876 ( 8,573)
Accrued expense 101,425 93,363 -
Incurred but not reported reserve (145,573) 59,785 - -
--------- --------- -------- -------
Net cash used in operating activities (375,549) (887,501) ( 83,316) (183,682)
Cash flow from investing activities
Acquisition of fixed assets 0 (8,918) 0 -
---------- --------- ------ --------
Net cash used in investing activities 0 (8,918) 0 -
---------- --------- -------- -------
Cash flow from financing activities
Borrowings from majority stockholder/officer 8,700 34,433 10,050 7,781
Repayment on long-term debt (95,268) -
Long Term Debt 120,863 (261,800) 26,721
Repayment on line of credit (11,784)
Repayment of shareholder loan - - -
Proceed from the sale of common stock 306,146 495,000 296,250 -
-------- --------- ------- -------
Net cash (used in) provided by financing activities 209,578 650,295 44,500 34,502
--------- --------- -------- -------
Increase/(Decrease) in cash and cash equivalents (165,971) (246,123) (38,816) (149,180)
Cash and cash equivalents, beginning of period 390,912 282,462 263,357 185,517
--------- ------- ----- ------
Cash and cash equivalents, end of period $ 224,941 36,338 224,941 36,337
========= ======== ======= ========
Supplemental Disclosure of non-cash investing and financing activities
Stock Issued 3,750,000 500,000 3,750,000 500,000
See accompanying notes to Condensed consolidated financial statements
5
MERIDIAN HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
1. General
Basis of Reporting
The interim accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements.
In the opinion of management, all adjustments (consisting of normal, recurring
accruals) considered necessary for a fair presentation have been included.
For further information, management suggests that the reader refer to the
audited financial statements for the year ended December 31, 2004 included in
its Annual Report on Form 10-KSB. Operating results for the nine-month
period ended September 30, 2005 are not necessarily indicative of the results of
operations that may be expected for the year ending December 31, 2005.
Cash And Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
Nature of Operations
Meridian Holdings, Inc. (the "Company") was incorporated under the laws of the
State of Colorado on October 13, 1998. The Company is located in Culver City,
California, U.S.A. and contracts with physicians to provide healthcare services
primarily within the area of Los Angeles County.
The Company is an acquisition-oriented holding company focused on building,
operating, and managing a portfolio of business-to-business companies. It seeks
to acquire majority or controlling interests in companies engaged in e-commerce,
e-communication, and e-business services, which will allow the holding company
to actively participate in management, operations, and finances. The Company's
network of affiliated companies is designed to encourage maximum leverage of
information technology, operational excellence, industry expertise, and
synergistic business opportunity.
2. Investments
CGI
On December 10, 1999, the Company agreed to acquire a 20% equity interest in CGI
for common stock. On December 20, 1999, the board of directors authorized the
issuance of 4,000,000 pre-split (adjusted to 12,000,000 post-split) shares of
common stock in consideration for the 20% of the interest in CGI. At the date
of the transaction, the Company's shares opened at a price of $3 per share.
Between September 1, 1999 and the acquisition date, the Company's stock sold
within a range of $.25 to $3.25 per share (an average of $.97 per share).
Because of the limited trading history of the Company, the six-month average was
deemed to be a fair valuation of the transaction, resulting in a total
investment balance of $3,880,000 as of December 31, 2000 and 1999. The
shareholders of CGI were also issued warrants to purchase an additional
1,000,000 pre-split (adjusted to 3,000,000 post-split) shares of common stock at
$2 pre-split share (or approximately $0.67 on a post-split basis) over a
five-year period as a hedge against any fluctuation of the share price of the
common stock in the immediate future. These warrants will expire on December
30, 2004.
On September 2, 2005, Meridian Holdings, Inc, announced that pursuant to the
written consent of the board of directors of both Meridian Holdings, Inc, and
CGI Communications Services, Inc., (OTC: CGIC) dated August 24, 2005, in which
6
it was approved that Meridian Holdings, Inc., declare a dividend of shares of
CGI Communications Services, Inc., Common Stock it owns, to each of its
shareholders with the exception of all current and past officers, directors and
affiliates, by transferring or causing to be issued one (1) share of the CGI
Stock for every ten (10) shares of Meridian Holdings, Inc., common Stock held
by each of such shareholder ("Dividends") of record as of September 26, 2005.
Since this event occurred close to the end of third quarter, 2005, and the
delivery of shares to the shareholders of the registrant continued into the
forth quarter of 2005, its impact on the registrants' investment in CGI
Communications, Inc., has not been reflected in the balance sheet or income
Statement as of September 30, 2005, until the registrant receives the final
tally of the share holder list and reconciliation of the issued CGI
Communications Services, Inc., shares from the transfer agent.
3. Fixed Assets
Fixed assets consist of the following:
As of
Sept 30, 2005 September 30,2004
Computer equipment $ 111,155 $ 111,155
Leasehold improvements 6,500 6,500
Office furniture, fixtures and equipment 61,915 61,915
Software 25,803 25,803
Medical equipment 6,654 6,654
-------- -------
212,027 212,027
Less accumulated depreciation (191,377) (173,421)
--------- --------
$ 20,650 $ 38,606
========= ==========
4. Line of Credit
The Company has a $50,000 line of credit with a financial institution. Related
advances bear interest at 11%, and interest is payable monthly. The line of
credit expires March 21, 2006
5. Long-term Debt
The Company has various loans with financial institutions and majority
shareholder, with interest rates ranging from 4% to 15% and maturity
dates ranging from 2015 to 2024.
6. Risk Pool Agreement
The Company is a party to a Risk Pool Agreement (the "Agreement") with
Tenet HealthSystem Hospitals, Inc. ("Tenet"). Pursuant to the Agreement, 50% of
the monthly capitation revenue is received directly by the Company, and the
remaining 50% is deposited into an escrow account from which Cap-Management
Systems, Inc., a subsidiary of Tenet pays all facility related claims
expenses, reinsurance expenses, make allowance for IBNR reserve, and
retains a management fee, the Company is responsible for 50% of Profit
(loss) after all institutional claims reinsurance and management fees are paid,
and Incurred But Not Reported ("IBNR") reserve have been accounted for.
These revenues and expenses have been reflected in the accompanying
consolidated statements of operations for the for the quarters ended
September 30, 2005 and 2004 respectively..
The Company has also reflected the monies in the escrow account as of September
30, 2005 and September 30, 2004 as restricted cash in the accompanying
7
Consolidated balance sheets. Additionally, Cap-Management Systems, Inc.,
provides the Company with an estimate as to the incurred but not reported
reserve, which has been recorded as such in the accompanying consolidated
balance sheets.
Related party Transaction
On August 5, 2005 the board of directors of the registrant approved the
issuance of 3,750,000 restricted shares of common stock with a fair market
value of 0.08 cents per share as of date of issuance, to Anthony C. Dike, our
Chairman/CEO, exchange for forgiveness of $300,000 debt owed to him by the
registrant.
7. Judgment Receivable
On January 8, 2004, a default judgment was entered in favor of the registrant,
by the Los Angeles County Superior Court in a case titled Meridian Holdings,
Inc. versus Sirius Technologies of America, a Delaware Corporation Case Number
BC256860. The amount of the judgment including damages, court cost and punitive
damages are $30,687,926, with a pre-judgment interest at the annual rate of
10%. This amount and potential interest is not reflected in the balance sheet
and the income statement.
Other Events
On October 4, 2005, Tenet HealthSystem Hospitals, Inc, (Tenet) announced that
it has entered into an agreement to sell Community & Mission Hospitals of
Huntington Park in Huntington Park, Calif., to Karykeion, Inc., a privately
held Corporation. These are two of the hospitals contracted with CAPNET IPA
and County of Los Angeles Community Health Plan . This transaction is expected
to close within the next several months. Subsequently, Capnet IPA will seek
for a delegation and assignment of the contract with TENET to the new owners
upon completion of this transaction.
8
MERIDIAN HOLDINGS, INC.
THE COMPANY
Meridian Holdings, Inc. (the "Company") was incorporated under the laws of the
State of Colorado on October 13, 1998. The Company is located in Culver City,
California, U.S.A. and contracts with physicians to provide health care services
primarily within the area of Los Angeles County.
The Company is an acquisition-oriented holding company focused on building,
operating, and managing a portfolio of business-to-business companies. It seeks
to acquire majority or controlling interests in companies engaged in e-commerce,
e-communication, and e-business services, which will allow the holding company
to actively participate in management, operations, and finances. The Company's
network of affiliated companies is designed to encourage maximum leverage of
information technology, operational excellence, industry expertise, and
synergistic business opportunity.
SELECTED FINANCIAL DATA
The Company had net working capital of $ 1,905,551 as at September 30, 2005
compared to $ 1,009,341 as of December 30, 2004. This represents an increase
in working capital of 53%. This increase in working capital is due to increase
in account receivable, net allowance for doubtful accounts, as well as decrease
in current liabilities.
The selected financial data set forth above should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes thereto.
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
The following section contains forward-looking statements that involve risks and
uncertainties, including those referring to the period of time the Company's
existing capital resources will meet the Company's future capital needs, the
Company's future operating results, the market acceptance of the services of the
Company, the Company's efforts to develop new products and services, and the
Company's planned investment in the marketing of its current services and
research and development with regard to future endeavors. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including: domestic
and global economic patterns and trends.
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY.
We believe that we will be able to fund our capital commitments, operating cash
requirements and satisfy our obligations as they become due from a combination
of cash on hand, restricted cash as they become available, and expected
operating cash flow improvements through HMO premium increases as well as
royalties from software licensing.
However, there can be no assurances that these sources of funds will be
sufficient to fund our operations and satisfy our obligations as they become
due.
Long-term cash requirements, other than normal operating expenses, are
anticipated for the continued development of the Company's business plans. The
Company will need to raise additional funds from investors in order to complete
these business plans.
If we need additional capital to fund our operations, there can be
no assurance that such additional capital can be obtained or, if obtained, that
it will be on terms acceptable to us. The incurring or assumption of additional
indebtedness could result in the issuance of additional equity and/or debt which
9
could have a dilutive effect on current shareholders and a significant effect on
our operations.
RESULTS OF OPERATIONS
THE FINANCIAL RESULTS DISCUSSED BELOW RELATE TO THE OPERATION OF MERIDIAN
HOLDINGS FOR THE THREE MONTHS ENDED AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AS
COMPARED TO THE THREE MONTHS ENDED AND NINE MONTHS ENDED SEPTEMBER 30, 2004.
REVENUE
Medical services revenues decreased by 2% from $457,663 for the three months
ended September 30, 2004 to $ 444,310 for the three months ended September 30,
2005, and increased by 1.6% from $1,477,123 for the nine months ended September
30, 2004 to $1,501,079 for the nine months ended September 30, 2005. The
increase in revenue for the nine months ended September 2005, is due to increase
in fee for service revenue.
Risk pool revenue for the three months ended September 30, 2004 was
$50,986, a decrease of 55% compared to $113,099 for the same period in 2004.
For the nine months ended September 30, 2005, risk pool revenue was $230,644,
a decrease of 46 % compared to $ 429,932 for the nine month ended September
30, 2004. The decrease in risk pool revenue for the three and nine months ended
September 2005 was due to decrease in membership enrolment, with concomitant
increase in claims expense, non renewal of Hospital Contract between the County
of Los Angeles Department of Health Services Community Health Plan (CHP)
and Tenet Health Systems.
Capitation revenues from our CHP contract decreased by 81% from $290,495
for the three months ended September 30, 2004 to $ 54,646 for the three
months ended September 30, 2005, and by 61% from $ 991,316 for the nine
months ended September 30, 2004 to $ 384,125 for the nine months ended
September 30, 2005. The decrease in capitation revenue was due in part to the
termination of some of our Managed care contracts with CHP, delay in procuring a
replacement contracts for the new hospital owners, dis-enrollment of members,
and increased withholding of our capitation fees by CHP. Management is pursuing
all its available options to mitigate further losses, including but not limited
to procuring new manage care contracts, expansion of our primary care physician
network into adjoining counties in Southern California. There can be no
guarantee that these efforts will be successful in reversing these losses.
Fee for Service Revenue, increased by 84% to $338,678 for three months
ended September 30, 2005, as compared to $54,070 for comparable period in 2004.
For nine months ended September 30, 2005, fee for service revenue increased
by 33% to $886,290, as compared to $55,875, during the comparable period in
2004. This receivable relates principally, to medical services provided on a
fee-for-service basis, and are reduced by amounts estimated to be
uncollectible. These receivables are typically uncollateralized customer
obligations due under normal trade terms requiring payment within 30-90 days
from the invoice date. The Company does not charge late fees or penalties
on delinquent invoices, however it continually evaluates the need for a
valuation allowance. Management's estimate of uncollectible amounts is based
upon its analysis of historical collections and other qualitative
factors.
Of the $444,310 total medical services revenue generated for the three months
ended September 30, 2005, $338,678 was from the fee for service component, and
$105,632 was from capitated managed care contract.
The increase in fee for Service revenue from $54,070 during the quarter ended
September 30, 2004 to current amount of $338,678 for the comparable period
ended September 30, 2005 is as a result of the recent acquisition of two
large clinics from Centinela Medical Center Clinics, Inc., as of January 1,
2005. These clinic facilities provides a wide array of medical and diagnostic
services to the patient population they serve.
11
With regard to revenues, expenses and receivables arising from global risk
agreements with CHP and TENET, the Company estimates amounts it believes will
ultimately be realizable based in part upon estimates of claims incurred but
not reported (IBNR) and estimates of retroactive adjustments or unsettled
costs to be applied by CHP and/or Cap Management Systems. The IBNR estimates
are made by CAP-Management Systems, utilizing actuarial methods and are
continually evaluated by management of the Company based upon its specific
claims experience. It is reasonably possible that some or all of these
estimates could change in the near term by an amount that could be
material to the financial statements.
EXPENSES
Total expenses decreased by 24% from $466,116 for the three months ended
September 30, 2004 to $352,814 during comparable period in 2005.
For nine months ended September 30, 2005, the total expense decreased by 17%,
to $1,073,263 from $1,287,738 during comparable period in 2004.
This decrease in total expense was due to decrease in enrolment in the
membership in our capitated contract, out sourcing of some of the services
previously performed in-house, as well as lay-off of employees to reduce cost.
Of the $1,073,263 total expense for the nine month period ended September 30,
2005, general and administrative expense were $789,145 or 74% of total
expenses, as opposed to $758,746 or 59% of the total expenses for the
comparable period in 2004. Cost of revenue decreased by 46% from $528,989
for the nine months ended in September 30, 2004 to $284,117, for the same
reasons as stated above.
INCOME/LOSS FROM OPERATIONS
For the quarter ended September 30, 2005, the Company recorded a net income of
$78,358, compared to a net loss of $(150,241) in comparable period in 2004.
For the nine months ended September 30, 2005, the company reported a net income
of $126,781, compared to a net loss of $($849,946) for comparable period in
2004.
The increase in net income is due to increase in fee for service revenue,
decrease in operating expense due to cost cutting measures implemented by
management.
CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS
This Form 10-QSB contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. When used in this Form 10-Q, the words
"believe," "anticipate," "think," "intend," "plan," "will be," and similar
expressions, identify such forward-looking statements. Such statements regarding
future events and/or the future financial performance of our Company are subject
to certain risks and uncertainties, which could cause actual events or our
actual future results to differ materially from any forward-looking statement.
Certain factors that might cause such a difference are set forth in our Form
10-K for the period ended December 31, 2004, including the following: our
success or failure in implementing our current business and operational
strategies; the availability, terms and access to capital and customary trade
credit; general economic and business conditions; competition; changes in our
business strategy; availability, location and terms of new business development;
availability and terms of necessary or desirable financing or refinancing; labor
relations; the outcome of pending or yet-to-be instituted legal proceedings;
and labor and employee benefit costs.
11
PLAN OF OPERATIONS
The Company continues to aggressively expand its provider network, as well
as seek for other managed care and PPO contracts for its contracted providers.
We plan to expand our provider network to Riverside, San Bernardino, Orange
and greater Los Angeles, County, with the hope of increasing our membership
enrollment. Also, the company is aggressively seeking for more managed care
contracts in the four counties targeted for proposed network expansion. There
can be no assurance that this plan of network expansion will yield immediate
dividend.
The Company has initiated a community outreach program targeting Medicare
eligible members about the Medicare Prescription Drug Program.
Passed by Congress and signed into law by President Bush on December 8, 2003,
the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(MMA), made sweeping changes to the Medicare program including the creation of
Part D, the prescription drug coverage program that will be available beginning
January 1, 2006. CMS noted in its September 23, 2005 press release, "People
with Medicare will be able to get prescription drug coverage in January,
through their choice of either a newly approved stand-alone prescription drug
plan that works with traditional Medicare, or a Medicare Advantage plan that
offers drug coverage and other benefits. We hope that by promoting this program
to the communities we serve, we will be able to enroll patients into our
provider network, while proving our patient population timely information
regarding their healthcare needs.
Recent Events
On October 4, 2005, Tenet HealthSystem Hospitals, Inc, (Tenet) announced that
it has entered into an agreement to sell Community & Mission Hospitals of
Huntington Park in Huntington Park, Calif., to Karykeion, Inc., a privately
held Corporation. These are two of the hospitals contracted with CAPNET IPA
and County of Los Angeles Community Health Plan . This transaction is expected
to close within the next several months. Subsequently, Capnet IPA will seek
for a delegation and assignment of the contract with TENET to the new owners
upon completion of this transaction.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act" ), the Company carried out an evaluation under the
Supervision and with the participation of the Company's management, including
the Chief Executive Officer and President and the Principal Financial Officer,
of the effectiveness of the Company's disclosure controls and procedures as of
September 30, 2005. In designing and evaluating the Company's disclosure
controls and procedures, the Company and its management recognize that there are
inherent limitations to the effectiveness of any system of disclosure controls
and procedures, including the possibility of human error and the circumvention
or overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of
achieving their desired control objectives. Additionally, in evaluating and
implementing possible controls and procedures, the Company's management was
required to apply its reasonable judgment. Based upon the required evaluation,
the Management concluded that as of September 30, 2005, the Company's disclosure
controls and procedures were effective (at the "reasonable assurance" level
mentioned above) to ensure that information required to be disclosed by the
Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
12
From time to time, the Company and its management have conducted and will
continue to conduct further reviews and, from time to time put in place
additional documentation, of the Company's disclosure controls and procedures,
as well as its internal control over financial reporting. The Company may from
time to time make changes aimed at enhancing their effectiveness, as well as
changes aimed at ensuring that the Company's systems evolve with, and meet the
needs of, the Company's business. These changes may include changes necessary or
desirable to address recommendations of the Company's management, its counsel
and/or its independent auditors, including any recommendations of its
independent auditors arising out of their audits and reviews of the Company's
financial statements. These changes may include changes to the Company's own
systems, as well as to the systems of businesses that the Company has acquired
or that the Company may acquire in the future and will, if made, be intended to
enhance the effectiveness of the Company's controls and procedures. The Company
is also continually striving to improve its management and operational
efficiency and the Company expects that its efforts in that regard will from
time to time directly or indirectly affect the Company's disclosure controls
and procedures, as well as the Company's internal control over financial
reporting.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to
the date of the evaluation.
PART II - OTHER INFORMATION
LEGAL PROCEEDINGS
On January 8, 2004, a default judgment was entered in favor of the registrant,
by the Los Angeles County Superior Court in a case titled Meridian Holdings,
Inc. Versus Sirius Technologies of America a Delaware Corporation Case number
BC256860. The amount of the judgment including damages, court cost and
punitive damages is $30,687,926, with a pre-judgment interest at the annual
rate of 10%. This amount has not been reflected in both the balance sheet
and income statement of the registrant.
From time to time, we may be engaged in litigation in the ordinary course of
our business or in respect of which we are insured or the cumulative effect of
which litigation our management does not believe may reasonably be expected to
be materially adverse. With respect to existing claims or litigation, our
management does not believe that they will have a material adverse effect on
our consolidated financial condition, results of operations, or future
cash flows.
Item 6. Exhibits and Reports on Form 8-K
31.1 Certification pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
of Anthony C. Dike
32.1 Certification pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
of Anthony C. Dike
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: November 7, 2005 By: /s/ Anthony C. Dike
____________________________________Signature
Anthony C. Dike
Chief Executive officer
13
EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony C. Dike, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Meridian Holdings,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this quarterly report based on such evaluation; and
c) disclosed in this quarterly report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: November 7, 2005
By:/s/ Anthony C. Dike
Anthony C. Dike
Chairman and CEO (Principal Executive & Financial Officer)
14
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Meridian Holdings, Inc. (the
"Company") on Form 10-QSB for the period ending September 30, 2005 as filed
with the Securities and Exchange Commission on the date hereof
(the "Report"), we, Anthony C. Dike, the Chief Executive and Principal
Financial Officer, of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906, or
other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to Meridian
Holdings, Inc., and will be retained by Meridian Holdings, Inc., and
furnished to the Securities and Exchange Commission or its staff upon
request.
DATE: November 7 2005 By: /s/ Anthony C. Dike
-------------------
Anthony C. Dike
(Principal Executive and Financial Officer)
15