UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB/A
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2004
( ) 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)
900 WILSHIRE BOULEVARD, SUITE 500, LOS ANGELES, CALIFORNIA 90017
----------------------------------------------------------------
(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, 2004, Meridian Holdings, Inc., Registrant had
14,370,200 shares of its $0.001 par value common stock outstanding.
Page 1 of 12 sequentially numbered pages
Form 10-QSB
Third Quarter 2004
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 9-13
PART II OTHER INFORMATION
Legal Proceedings 13
Additional Information 13
Signature 13
Exhibits 14-16
2
MERIDIAN HOLDINGS, INC.
Condensed Consolidated Balance Sheets
ASSETS
As of Sept 30, as of Dec 31
2004 2003
(Unaudited) (audited)
========== ==========
Current assets
Cash and cash equivalents $ 13,815 $ 1,218
Restricted Cash (Note 1) 168,918 281,010
Judgement Receivable 31,422,202 -
Accounts receivable, net of allowance for
doubtful accounts of ($179,812) 1,697,121 1,499,482
Other current assets 8,302 8,302
--------- ----------
Total current assets 33,310,358 1,790,012
Fixed assets, net of accumulated depreciation 38,606 43,258
Investments 3,448,564 3,448,564
------------ ------------
Total assets $ 36,797,528 $ 5,281,834
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 404,680 $ 233,301
Reserve for incurred but not reported claims 201,311 227,820
Line of credit 76,209 48,912
---------- ---------
Total current liabilities 682,200 510,033
Long Term liabilities
Loan from majority stockholder/officer 38,879 189,479
Long-term debt, net of current portion 263,504 -
--------- ---------
Total liabilities 984,584 699,512
========= ==========
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; 14,370,200 shares issued and outstanding as
at September 30, 2004 and 9,370,649 as at
December 31, 2003 14,370 9,370
Additional paid-in capital 5,526,760 5,031,760
Accumulated deficit 30,271,814 (458,808)
------------ ------------
Total stockholders' equity 35,812,944 4,582,322
------------- -----------
Total liabilities and stockholders' equity $36,797,528 $ 5,281,834
============ ============
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,
2004 2003 2004 2003
===== ==== ====== ======
Revenues
HMO Capitation Revenue $ 290,495 $ 444,006 $ 991,316 $ 1,399,039
Risk Pool Revenue (Note7) 113,099 185,337 429,932 572,696
Fee For Service 54,070 1,808 55,875 2,910
-------- ---------- ----------- ---------
457,664 631,151 1,477,123 1,974,645
General Operating expenses
Cost of Provider Services 136,616 197,746 528,989 698,538
General and Administrative 330,990 364,607 1,129,630 1,092,615
-------- -------- ---------- -------
(Loss)/Income from operations (9,942) 68,798 (181,496) 183,492
-------- -------- ---------- -------
Other income and (expense)
Judgment Award - - 30,687,926 -
Interest on judgment 269,318 - 734,636 -
Stock option issued - - (500,000) -
Other net (5,173) (4,066) (10,678) (68,992)
-------- --------- ------------- --------
Net Other 264,145 (4,066) 30,911,883 (68,992)
-------- ----------- ------------- ----------
Net Income 254,203 64,732 30,730,388 114,500
-------- ---------- ----------- ------------
Earnings per share:
$ 0.02 $ 0.01 $ 2.59 $ 0.01
========== ========== ========== ==========
Weighted average
shares outstanding 14,370,200 9,370,649 11,870,200 9,370,649
See accompanying notes to Condensed consolidated financial statements
4
MERIDIAN HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
Nine Months Ended Sept 30,
2004 2003
===== ======
Cash flows from operating activities
Net income $ 30,730,622 $ 114,499
Adjustments to reconcile net Loss to net
cash used in operating activities:
Stock option issued 500,000 -
Depreciation and amortization 13,570 11,353
(Increase) decrease in:
Restricted cash 112,092 (9,981)
Judgment receivable (31,422,202) -
Accounts receivable (197,639) (245,155)
Other current assets - (20,390)
Accounts payable 171,379 71,844
Accrued payroll and other - (606,650)
Incurred but not reported reserve (26,509) (49,405)
Accrued interest - (47,172)
---------- ----------
Net cash used in operating activities (118,687) (781,058)
--------- ----------
Cash flow from investing activities
Acquisition of fixed assets (8,917) (10,792)
Disposition of Fixed Asset - 315,002
Investment in Intercare - 298,931
Investments in CGI - 163,715
---------- ---------
Net cash used in investing activities (8,917) 766,856
----------- ---------
Cash flow from repayment of debt/financing activities
Borrowings from majority stockholder/officer (150,600) -
Borrowings on long-term debt 263,504 -
Borrowings on line of credit 27,297 -
-------- ---------
Net cash (used in) provided by financing activities 140,201 -
-------- ---------
(Decrease) increase in cash and cash equivalents 12,597 (14,202)
Cash and cash equivalents, beginning of period 1,218 23,040
---------- ----------
Cash and cash equivalents, end of period $ 13,815 $ 8,838
========== ==========
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, 2003 included in
its Annual Report on Form 10-KSB. Operating results for the nine-month
period ended September 30, 2004 are not necessarily indicative of the results of
operations that may be expected for the year ending December 31, 2004.
The interim accompanying unaudited condensed consolidated financial statements
include the operations of the Company and its majority-owned subsidiary
Corsys Group Limited.
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 the City of
Los Angeles, 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.
2. Investments
InterCare
On September 18, 1999, the Company acquired 51% of all the outstanding Common
Stock of InterCare in exchange for services and assumption of certain debts of
InterCare. During fiscal year 2000, additional stock issued by InterCare
combined with a dividend distribution by the Company of InterCare stock
resulted in a net decrease in the Company's ownership percentage to 32% as at
December 31, 2000. A dividend of approximately $160,800 was recorded reflecting
the relative net book value of the Company's investment in InterCare that was
distributed to Meridian Holdings, Inc., shareholders as at that time.
On April 10, 2003, the board of directors of the registrant approved the
transfer of certain assets of the registrant to Meridian Medical Group, P.C,
an affiliated entity, valued at $675,022, in exchange for forgiveness of
$714,833 debt owed by the registrant. As a result of the above incident, the
registrant completely divested itself from InterCare DX, Inc.
6
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, and none have been exercised as of September 30 , 2004.
3. Fixed Assets
Fixed assets consist of the following:
As of
Sept 30, 2004 December31,2003
Computer equipment $ 111,155 $ 99,934
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
-------- -------
212,027 200,806
Less accumulated depreciation (173,421) (155,673)
--------- --------
$ 38,606 $ 45,133
========= ==========
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, 2005.
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
7
consolidated statements of operations for the for the quarters ended
September 30, 2004 and 2003 respectively..
The Company has also reflected the monies in the escrow account as of September
30, 2004 and September 30, 2003 as restricted cash in the accompanying
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 April 26, 2004 the registrant issued 5,000,000 shares of common stock
with a fair market value of 0.10 cents per share as of June 30, 2004, to
consultant and employees of the registrant, under the 2003 qualified and
non-qualified stock option plan, following an S8 registration statement
filing with the SEC.
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 has been reflected in the balance sheet and
the income statement as a judgment receivable. Management is pursuing all
collections options regarding this judgment.
Other Events
In August, 2004, Tenet HealthSystem Hospitals, Inc, (Tenet) announced that
it has entered into an agreement to transfer one of the hospitals contracted
with CAPNET IPA and County of Los Angeles Community Health Plan to Centinela
Freeman HealthSystem. This transaction is expected to close sometime in
November 2004. Subsequently, Capnet IPA has signed a release and assignment of
the contract with Tenet to Centinela Freeman HealthSystem.
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 the City of
Los Angeles, 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.
Effective August 1, 2004, the registrant outsourced some of the IPA management
functions to Cap-Management Systems, a subsidiary of Tenet Healthsystems, while
retaining over-site.
SELECTED FINANCIAL DATA
The Company had net working capital of $ 32,628,158 as at September 30, 2004
compared to $ 1,279,979 as of December 30, 2003. This represents an increase
in working capital of 24.49%. This increase in working capital is
attributed primarily to a judgment award (judgment receivable) against Sirius
Technologies of America, a Delaware Corporation, et al.
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
royalities 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.
9
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
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, 2004 AS
COMPARED TO THE THREE MONTHS ENDED AND NINE MONTHS ENDED SEPTEMBER 30, 2003.
REVENUE
Medical services revenues decreased by 22% from $444,406 for the three months
ended September 30, 2003 to $ 344,565 for the three months ended September 30,
2004, and decreased by 25% from $1,399,039 for the nine months ended September
30, 2003 to $1,047,191 for the nine months ended September 30, 2004. The
decrease in revenue for the three and nine months ended September 2004
respectively, is due to decreased membership enrolment in the Capnet IPA
physician network.
Risk pool revenue for the three months ended September 30, 2004 was
$113,099, a decrease of 39% compared to $185,337 for the same period in 2003.
For the nine months ended September 30, 2004, risk pool revenue was $429,932,
a decrease of 25 % compared to $ 572,696 for the nine month ended September
30, 2003. The decrease in risk pool revenue for the three and nine months ended
September 2004 was due to decrease in membership enrolment, with concomitant
increase in claims expense and in adjustment of IBNR reserve.
We provided managed care services for approximately 45,000 and 75,000 member
months (members per month multiplied by the months for which services were
available) during the nine months ended September 30, 2004 and 2003,
respectively.
The decrease in member months was due to disenrollment of Medi-Cal members
following the ongoing State of California Department of Health Services Medi-Cal
membership redetermination efforts.
Revenue generated by our managed care entities under our contracts with
HMOs as a percentage of medical services revenue was approximately 80% and 96%,
respectively, during the nine months ended September 30, 2004 and 2003.
Revenue generated by the Los Angeles County Community Health Plan ("CHP")
Contracts was 80% and 99% of medical services revenue for the nine months
ended September 30, 2004 and 2003, respectively.
Management is the process of launching the International Preferred Provider
Network program, through the Meridian Health Systems division, which will be
official launched during the fourth quarter of 2004, which we believe will
significantly enhance our revenue generation.
EXPENSES
Of the $330,990 General Operating expenses for the three months ended
September 30, 2004, $136,616 was paid for the cost of provider services, which
consist of capitation payments to our contracted primary care providers
or 47% of medical services revenue after giving account to IBNR reserves,
compared to $197,746 or 45% of medical services revenue for the three month
period ended September 30, 2003.
General and administrative expenses were $ 330,990 or 72 % of total revenues
and $364,607 or 58% of total revenues, for the three months ended September
30, 2004 and September 30, 2003 respectively and $1,129,630 or 76% of total
revenues compared to $1,092,615 or 55% of total revenues for the nine months
10
ended September 30, 2004 and 2003 respectively. Medical claims expenses,
for the nine month period ended September 30, 2004 were $387,517 or 26% of
medical services revenue, compared to $482,314 or 24% of medical services
revenue for the nine month period ended September 30, 2003.
For the three months ended September 30, 2004, payroll and employee benefits
for administrative personnel was $148,403 or 32% of total revenues, compared to
$147,131 or 23% of revenue for comparable period in 2003.
Payroll and employee benefits for administrative personnel was $456,830 for
the nine months ended September 30, 2004, or 30% of total revenues, compared to
$375,320 or 19% of revenue for comparable period in 2003. The increase in
employee payroll expenses was due to hiring additional support staff.
INCOME/LOSS FROM OPERATIONS
For the quarter ended September 30, 2004, the Company recorded a net income of
$254,203, compared to a net income of $64,732 for the same period in 2003. The
Increase in net income for this quarter is due to recognition of 10% interest
from the judgment amount.
For the nine months ended September 30, 2004, the company reported a net income
of $30,730,388, compared to a net income of $114,500 for comparable period in
2003. The increase in net income for nine months ended September 30, 2004 is
Due to recognition of $30,687,927 judgment award and $734,636 (10%) interest
income of the judgment amount. Management is currently pursuing all its
available options regarding collections of this judgment.
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, 2003, 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.
Medical claims payable include estimates of medical claims expenses incurred
by our members but not yet reported to us. These estimates are based on a number
of factors, including our prior claims experience and pre-authorizations
of treatment. Adjustments, if necessary, are made to medical claims expenses in
the period the actual claims costs are ultimately determined. We cannot assure
that actual medical claims costs in future periods will not exceed our
estimates. If these costs exceed our estimates, our profitability in future
periods will be adversely affected.
Pursuant to the Medicaid program, the federal government supplements
funds provided by the various states for medical assistance to the medically
indigent. Payment for such medical and health services is made to providers in
an amount determined in accordance with procedures and standards established by
state law under federal guidelines. Significant changes have been and may
continue to be made in the Medicaid program which could have an adverse effect
on our financial condition, results of operations and cash flows.
11
During certain fiscal years, the amounts appropriated by state legislatures
for payment of Medicaid claims have not been sufficient to reimburse providers
for services rendered to Medicaid patients. Failure of a state to pay Medicaid
claims on a timely basis may have an adverse effect on our cash flow, results
of operations and financial condition.
PLAN OF OPERATIONS
The Company intends to embark on more aggressive marketing campaign to increase
the enrollment of membership into its Capnet IPA Healthy Family Program
contract with the County of Los Angeles Community Health Plan. There can be no
assurance that such an effort will materialize in any meaningful results.
The Company through it's CGI Communications, Services, Inc., has embarked on a
global telemedicine initiative, which we believe will expand our operational
network to key strategic countries all over the world, and will increase our
operational capacity and revenues.
Management is the process of launching the International Preferred Provider
Network program, through the Meridian Health Systems division, which will be
official launched during the fourth quarter of 2004, which we believe will
significantly enhance our revenue generation.
In August, 2004, Tenet HealthSystem Hospitals, Inc, (Tenet) announced that
it has entered into an agreement to transfer one of the hospitals contracted
with CAPNET IPA and County of Los Angeles Community Health Plan to Centinela
Freeman HealthSystem. This transaction is expected to close sometime in
November 2004. Subsequently, Capnet IPA has signed a release and assignment of
the contract with Tenet to Centinela Freeman HealthSystem.
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, 2004. 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, 2004, 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.
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
12
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 significant 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 been reflected in both the balance sheet and
income statement of the registrant as a judgment receivable. Management is
pursuing all collections options regarding this judgment.
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: February 25, 2005 By: /s/ Anthony C. Dike
____________________________________Signature
Anthony C. Dike
Chief Executive officer
13