UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2002
( ) 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
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
900 WILSHIRE BOULEVARD, SUITE 500, LOS ANGELES, CALIFORNIA 90017
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(Address of Principal Executive Offices)
(213) 627-8878
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(Registrant's telephone number, including area code)
N/A
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(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, 2002, Meridian Holdings, Inc., Registrant had
93,706,485 shares of its $0.001 par value common stock outstanding.
Page 1 of 12 sequentially numbered pages
Form 10-Q
Third Quarter 2002
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 6-7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II OTHER INFORMATION
Legal Proceedings 12
Additional Information 13
Signature 14
2
MERIDIAN HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
ASSETS
As of Sept. 30,
2002 2001
========== ==========
Current assets
Cash and cash equivalents $ 2,071 $ 19,944
Restricted Cash (Note 1) 623,286 269,022
Accounts receivable, net of allowance for
doubtful accounts of ($179,812) 1,099,909 1,382,161
Other current assets 53,140 37,920
---------- ----------
Total current assets 1,778,406 1,708,777
Fixed assets, net of accumulated depreciation 380,122 51,445
Pre-paids 4,541 4,761
Investments 3,915,003 4,018,100
--------- ----------
Total assets $6,078,072 $ 5,783,083
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 180,388 $ 99,542
Accrued payroll and other 144,000 213,103
Reserve for incurred but not reported claims 366,258 203,794
Accrued interest 45,716 23,668
Line of credit 65,063 33,473
Current portion of long-term debt 96,375 96,375
------- -------
Total current liabilities 897,800 669,955
Long Term liabilities
Loan from majority stockholder/officer 266,380 253,767
Long-term debt, net of current portion 297,625 51,636
--------- ---------
Total liabilities 1,461,805 975,358
========= ==========
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; 93,706,485 shares issued and outstanding as
at September 30, 2002 and 93,206,485 as at
September 30, 2001 93,706 93,206
Additional paid-in capital 4,947,424 4,947,424
Accumulated deficit (424,863) (232,905)
---------- ----------
Total stockholders' equity 4,616,276 4,807,725
----------- -----------
Total liabilities and stockholders' equity $ 6,078,072 $ 5,783,083
============ ============
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,
2002 2001 2002 2001
===== ==== ==== ====
Revenues
HMO Capitation Revenue $ 492,033 $ 324,485 $ 1,323,347 $ 999,129
Risk Pool Revenue (Note7) 264,612 862,362 565,384 1,241,501
Other Software Sales - - - 149,600
Fee For Service 9,131 - 25,327 -
--------- -------- ---------- ----------- --- ---------
765,776 1,186,847 1,914,058 2,390,230
General Operating expenses
Cost of Provider Services 156,668 111,182 441,360 573,918
Research and development - - 80,833
General and Administrative 574,644 1,082,037 1,424,444 2,018,955
-------- -------- ---------- -------
Income/loss from operations 34,464 (6,372) 48,254 (283,476)
-------- -------- ---------- -------
Other income and expense
Equity interest in earnings
(loss) of investment 99 (12,687) 111,312 (86,868)
Other net 8,209 (2,865) (31,289) (17,639)
-------- ------- ---------- --------
Net Other 8,308 (15,552) 80,023 (104,507)
-------- ------- ---------- --------
Net income/loss before
Extraordinary items. 26,156 (21,924) 128,277 (387,983)
-------- ------- --------- -------
Extraordinary items
Loss on abandonment of
Software (Note 2) - - - (2,193,750)
Gain on forgiveness of
debt - - - 2,891,250
----------- ----------- ----------- ---------
- - - 697,500
----------- ----------- ----------- ---------
Net income after
Extraordinary items $ 26,156 (21,924) $ 128,277 $ 309,517
=========== =========== =========== ==========
Net income/loss per share:
Basic and diluted - Net
Income(loss) before
Extraordinary items $ .0003 (0.0002) $ .001 $ (0.004)
Basic and diluted
Extraordinary items $ - $ - $ - 0.007
---------- ---------- ---------- ---------
Basic and diluted
Net income (loss)after
extraordinary items $ .0003 $ (0.0002) $ .001 $ 0.003
========== ========== ========== ==========
Common Shares (Note 8)
outstanding 93,706,485 93,206,485 93,706,485 93,206,485
=========== ========== ========== ==========
See accompanying notes to Condensed consolidated financial statements
4
MERIDIAN HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
Nine Months Ended Sept 30,
2002 2001
===== ======
Cash flows from operating activities
Net income $ 128,276 $ 309,517
Adjustments to reconcile net Loss to net
cash used in operating activities:
Loss on abandonment of software - 2,193,750
Gain on forgiveness of debt - (2,891,250)
Depreciation and amortization 26,182 129,579
Equity interest in earnings of investments - 86,868
(Increase) decrease in:
Restricted cash (292,054) (793,395)
Accounts receivable 385,621 1,382,161
Other current assets ( 39,799) (37,920)
Accounts payable ( 22,362) (99,542)
Accrued payroll and other (139,475) (213,103)
Incurred but not reported reserve 222,233 (269,022)
Accrued interest 45,716 (23,668)
---------- ----------
Net cash used in operating activities 314,388 (226,025)
--------- ----------
Cash flow from investing activities
Acquisition of fixed assets (368,434) (15,162)
Invenstment in Intercare (111,312) -
---------- ---------
Net cash used in investing activities (479,746) (15,162)
----------- ---------
Cash flow from financing activities
Borrowings from majority stockholder/officer 266,380 253,767
Borrowings on long-term debt - 51,636
Repayment of debt (124,905) (25,288)
Borrowings on line of credit 18,785 (3,733)
-------- ---------
Net cash (used in) provided by financing activities 160,260 276,382
-------- ---------
(Decrease) increase in cash and cash equivalents (5,148) 35,195
Cash and cash equivalents, beginning of period 7,219 253,501
---------- ----------
Cash and cash equivalents, end of period $2,071 $ 288,696
========== ==========
Supplemental Disclosure of non-cash investing and financing activities
During the nine months ended September 30, 2002, the Company recorded non-cash
fixed assets of $350,000, This represented the purchased of ICE source-code
from InterCare.com-Dx, Inc., an affiliated company.
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, 2001 included in
its Annual Report on Form 10-KSB. Operating results for the nine-month
period ended Sept 30, 2002 are not necessarily indicative of the results of
operations that may be expected for the year ending December 31, 2002.
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. From time to time, the Company
maintains cash balances with financial institutions in excess of federally
insured limits.
Reclassification
Certain amounts in the unaudited financial statements for the three month period
ended September 30, 2001 have been reclassified to conform with the September
30, 2002 financial statement presentation.
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 and Intellectual Property
On June 29, 2000, the Company purchased all of the assets of Sirius Computerized
Technologies Limited (Israel), consisting primarily of intellectual property and
technology related to that company's software used in healthcare management.
The asset purchase includes the highly innovative intellectual property commonly
known as MedMaster and the associated Virtual Multi-object-architecture
Database, as well as all components, subsystems, source code, and documentation.
The purchase price was $2.7 million.
The purchase of intellectual property was funded by the majority
stockholder/officer of the Company, and the Company has recorded a note payable
to the majority stockholder/officer in the amount of $2.7 million. Intellectual
property has been capitalized in the amount of $2.7 million in the accompanying
condensed consolidated balance sheet. The acquisition was made with the
understanding that the Company would have free and clear title to the
intellectual property.
6
The intellectual property, including its subsystems, source code and
documentation, was acquired out of the bankruptcy proceedings of Sirius
Computerized Technologies Limited (Israel) and Sirius Technologies of America
(Collectively, "Sirius"). The acquisition was made with the understanding that
the Company would have free and clear title to the intellectual property.
However, during fiscal year 2000, a significant creditor of Sirius, Lockheed
Martin Systems Integration, Owego ("Lockheed") obtained a judgment against
Sirius and executed same to obtain possession of the source code underlying
the Sirius MedMaster suite of software products, and has expressed its
intention to exploit same, thus creating competition with the Company. In
April 2001, the receiver for Sirius filed the appropriate documents to prevent
the Company from taking the software from the Corsys premises. In May 2001, the
Company notified the receiver of its intent not to pursue the intellectual
property rights further and to cancel the original purchase agreement.
The original intent of the related note payable to the majority
stockholder/officer was to pay him back for the proceeds of $2,700,000 which he
had pledged in connection with the acquisition of the intellectual property.
The majority stockholder/officer is now seeking return of the stock, and, in
July 2001, has also rescinded the note payable, plus accrued interest. This
forgiveness of debt was recorded as of June 30, 2001 to match the timing of the
cancellation of the acquisition.
Given the above events, the Company has recorded a loss on abandonment of
software during the nine months ended Sept 30, 2001 in the amount of
$2,193,750, which is classified as an extraordinary item in the accompanying
condensed consolidated statement of operations.
During the nine months ended September 30, 2002, the Company recorded non-cash
fixed assets of $350,000, this represented the purchase price of ICE(tm)
software source-code from InterCare.com-Dx, Inc., an affiliated company. The
soruce-code as well as the prototype application so developed, will form
the basis of further development of a replacement software program for the
now abandoned Medmaster Software.
3. Fixed Assets
Fixed assets consist of the following:
As of
Sept 30, 2002 December 31,2001
Computer equipment $ 87,574 $ 73,816
Leasehold improvements 6,500 6,500
Office furniture, fixtures and equipment 61,915 72,928
Software 25,803 22,389
Medical equipment 6,654 5,391
ICE software source code 350,000 -
-------- -------
538,446 170,012
Less accumulated depreciation (158,324) (132,141)
--------- --------
$ 380,122 $ 48,883
========= ==========
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, 2003.
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.
7
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 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, 2002 and 2001.
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.
The Company also provides medical services management to its' Capnet IPA health
care provider network. We provide the following services:
- disease management -- a method to manage the costs and care of high risk
patients and produce better patient care
- quality management -- a review of overall patient care measured against
best medical practice patterns
- utilization management -- a daily review of statistical data created by
encounters, referrals, hospital, admissions and nursing home information
- claims adjudication and payment
Under our model, the primary care physicians maintain their independence
but are aligned with a professional staff to assist in providing cost effective
medicine. Each primary care physician provides direct patient services as a
primary care doctor including referrals to specialists, hospital admissions
and referrals to diagnostic services. These physicians are compensated on a per
member per month capitation basis.
We believe our expertise allows us to provide a service and manage the risk
that health insurance companies cannot provide on an efficient and economic
level. Health insurance companies are typically structured as marketing entities
to sell their products on a broad scale. Due to mounting pressures from the
industry, managed care organizations have altered their strategy, returning to
the traditional model of selling insurance and transferring the risk to a
provider service network such as us. Under such arrangements, managed care
organizations receive premiums from the Healthcare Financing Administration
(HCFA), state Medicaid programs and other commercial groups and pass a
significant percentage of the premium on to a third party such as us, to
provide covered benefits to patients, including sometimes pharmacy and other
enhanced services. After all medical expenses are paid, any surplus or deficit
remains with the provider service network. When managed properly, accepting
this risk can create significant surpluses.
8
SELECTED FINANCIAL DATA
The Company had net working capital of $880,605 as at Sept 30, 2002
compared to $1,038,822 at September 30, 2001. This represents a decrease
in working capital of 15%. This decrease in working capital is the result
of increase in operating expense during the reporting period.
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.
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.
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 SEPT 30, 2001 AS
COMPARED TO THE THREE MONTHS ENDED AND NINE MONTHS ENDED SEPT 30, 2000.
REVENUE
Effective May 31, 2001, the Company received an adjustment increase in the per
member per month reimbursement from the Los Angeles County Community Health
Plan. As a result of this Amendment, the Company recorded an additional adjusted
capitation payment in the amount of $71,865 (the "2001 Contractual Adjustment").
Medical services (Capitation) revenues increased by 51.5% from $324,485 for
the three months ended September 30, 2001 to $492,033 for the three months
ended September 30, 2002, and by 32.5% from $999,129 for the nine months ended
September 30, 2001 to $1,323,347 for the nine months ended Sept 30, 2002.
The increase in revenue is as a result of increased membership enrolment in the
Capnet IPA physician network. There was $0 revenue generated from software sales
or services during the three and nine months ended September 30, 2002,
respectively, compared to revenue of $149,600 during comparable period in 2001.
9
Risk pool revenue for the three months ended September 30, 2002 was
$264,612 a decrease of 69% compared to $862,362 for the same period in 2001.
For the nine months ended September 30, 2002, risk pool revenue was $565,384,
a decrease of 46% compared to $1,241,501 for the nine month ended September
30, 2001. The decrease in risk pool revenue was due to a change in recording
procedures for risk pool revenue.
We provided managed care services for approximately 75,000 and 55,000 member
months (members per month multiplied by the months for which services
were available) during the nine months ended September 30, 2002 and 2001,
respectively.
Revenue generated by our managed care entities under our contracts with
HMOs as a percentage of medical services revenue was approximately 100%
during the nine months ended Sept 30, 2002 and 2001 respectively. Revenue
generated by the Los Angeles County Community Health Plan ("CHP") contracts was
99% of medical services revenue for the nine months ended Sept 30, 2002
and 2001, respectively. Revenue generated by LACARE Health Plan ("LACARE")
contract was approximately 1% of medical services revenue for the three and
nine months ended Sept 30, 2002 and 2001, respectively.
EXPENSES
Of the $574,644 General Operating expense for the three months ended
September 30, 2002, $156,668 was paid for the cost of provider services, which
consist of capitation payments to our contracted primary care providers
or 20.5% of medical services revenue after giving account to IBNR reserves,
compared to $111,182 or 34% of medical services revenue for the three month
period ended Sept 30, 2001.
General and administrative expenses were $574,644 or 75 % of total revenues
and $1,082,037 or 91% of total revenues, for the three months ended September
30, 2002 and September 30, 2001 respectively and $1,424,444 or 74.4% of total
revenues compared to $2,018,955 or 84.5% of total revenues for the nine months
ended September 30, 2002 and 2001 respectively. Medical claims expenses,
for the nine month period ended September 30,2002 were $488,582 or 25.5% of
medical services revenue, compared to $573,918 or 24% of medical services
revenue for the nine month period ended September 30, 2001.
Medical claims represent the costs of medical services provided by other
healthcare providers other than our contracted primary care providers,
but which are to be paid by us for individuals covered by our capitated risk
contracts with HMOs. Our claim loss ratio varies from quarter to quarter
due to fluctuations in utilization, the timing of claims paid by the HMOs
on our behalf, as well as increases in medical costs without counter
balancing increases in capitation revenues.
For the three months ended September 30, 2002, payroll and employee benefits
for administrative personnel was $111,913 or 15% of total revenues, compared to
$148,540 or 15% of revenue for comparable period in 2001, respectively.
Payroll and employee benefits for administrative personnel was $349,995 for
the nine months ended Sept 30, 2001, or 18% of total revenues, compared to
$408,115 or 29% of revenue for comparable period in 2000. The decrease in
employee payroll expenses was due to recent cost cutting measures, including
laying-off of some employees.
INCOME/LOSS FROM OPERATIONS
The registrant recorded a profit from operations for the three months ended
September 30, 2002 of $34,464, or 4.5% of total revenues, and a loss of
$6,372, or 2% of total revenues, for the three months ended Sept 30, 2001.
During the nine months ended September 30, 2002, the registrant recorded a
profit from operations of $48,254, or 2.5% of total revenues compared to
a loss from operations of $283,476 or 28% of total revenues for the nine months
ended September 30, 2001. The increase in net profit from operations are due
to the decrease in operating expenses, decrease in cost of medical claims paid
and outside consultants fees.
10
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, 2000, 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.
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
On September 16, 2002, the Company announced the release of version 3.0 of
its' flagship software application known as ICE(tm), a scalable healthcare
software solution that integrates every aspect of the healthcare enterprise,
designed for information tracking, error reduction, patient safety.
ICE 's extensive, scalable system flexibility allows its adaptation to clinical
workflow, operating independently in centralized and decentralized facilities.
The program features intuitive order entry, "tapering" orders, a clinical
knowledge base, digital video enhanced patient education module, real-time
electro-physiological data capture and display, voice command, voice
recognition, digital dictation module and numerous other capabilities to
complement and document the diagnostic and treatment processes, including
unlimited free-text notes.
ICE provides practical business solutions unique to current health care
environments, where error reduction, medical necessity checking, HIPAA
compliance and revenue loss reduction are essential. The software meets HL-7
standards, operating as a stand-alone system or integrated with other Legacy or
third-party healthcare applications.
Microsoft OCX, GRID, SQL Server and PUSH technologies are provided on ICE , and
the system provides real-time information to physicians and other healthcare
providers on a need-to-know basis. Maximized information displays increase
workflow efficiency by minimizing mouse clicks and screen changes.
11
ICE is available for both inpatient and outpatient clinical documentations,
thus enabling healthcare providers to create a life-time longitudinal multimedia
patient clinical record.
InterCare.com-Dx Inc. an affiliate of the Company has now embarked on aggressive
marketing and sales efforts in other to introduce the application into the
highly competitive healthcare market. As of this writing, no sales prospects
have been closed, however, this event represents a significant milestone in the
Company's overall business plan. The Company anticipates a significant revenue
increase in future from software licensing royalties.
RECENT EVENTS
On October 21, 2002, the registrants CGI Communications Services, Inc.,
subsidiary announced that it has teamed up with Superwire, Inc., an integrated
broadband Managed Service Provider (MSP) delivering local and long distance
voice, high-speed Internet, network monitoring and support for small to medium
enterprises (SMEs), to give a series of joint presentations in Los Angeles
beginning on October 23, 2002 to provide Superwire and CGI products to the
healthcare market.
CGI also announced that it is releasing the new ASP version of ICE software, a
Scalable healthcare software solution that integrates every aspect of the
healthcare enterprise, designed for information tracking, error reduction,
patient safety. The project calls for delivery of a turnkey solution
which includes broad-band connectivity, Voice Over IP telephony, brand new,
state of the art computers and software to create a wireless network in the
----------------
healthcare providers office or clinic, at a minimal monthly cost. The Company
believes that the potential for this market is big, as a result of recent
healthcare initiatives geared towards improving patient care, safety and
confidentiality.
PART II - OTHER INFORMATION
LEGAL PROCEEDINGS
On October 21, 2002, the Company announced that effective October 17
2002, it has reached a settlement agreement of the entire action
with Silicon Valley Bank Corporation, including the registrant's cross
complaint, entitled Silicon Valley Bank Corporation .v. Meridian Holdings,
Inc., a Colorado Corporation, InterCare.com, Inc., a Nevada Corporation,
Los Angeles California, Superior Court Case number BC 259513.
The salient terms of the settlement include mutual general releases with
prejudice by all parties.
The lawsuit, as well as the cross-complaint, resulted from the earlier
acquisition of the asset of Sirius Computerized Technology of Israel, for which
Silicon Valley Bank claimed that said asset was pledged as collateral by
Sirius et al for a loan in the amount of $450,000. The company had earlier
abandoned the proposed asset purchase, and filed a lawsuit against Sirius
et al as described in the company's Quarterly report on form 10-QSB for
the quarter ended June 30, 2002 filed with the SEC and accessible at
www.sec.gov.
On May 3, 2002 the registrant filed a counter-claim styled Ventures & Solutions,
LLC., Plaintiff v. Meridian Holdings, Inc, in Virginia Circuit Court for the
City of Alexandria, Case No. CL020075, as amended. The Company is seeking over
$1,500,000 for both compensatory and punitive damages against the plaintiff and
Mr. Dale Church the CEO of Ventures and Solutions, LLC, for misrepresentation
and fraud, breach of contract and breach of fiduciary duties. This
counter-claim was as a result of a lawsuit filed by the P laintiff, which was
earlier dismissed as a non-suit by the State of Virginia Circuit Court for the
City of Alexandria, for which the plantiff had filed an amended lawsuit in
November 2001. This lawsuit is in the discovery phase.
Equitable Relief in Superior Court of the State of California, for the County
of Los Angeles (Case No. BC 2566860), titled "Meridian Holdings, vs Sirius
Technologies of America, a Delaware Corporation; Sirius Computerized
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On August 27, 2001, the Company filed a Civil Complaints for Damages and
Technologies Ltd; an Israeli Corporation, Amir Dolev; an individual; Glen
Crowe, an individual;
Danny Basel, an individual; Shaul Bergerson, an individual and DOES through 500,
inclusive. This lawsuit is in connection to the recent cancellation by the
registrant, the purchase of the intellectual property commonly known as
Medmaster Software including the Source-Code and Subsystems. The registrant is
claiming amongst order things: rescission based on fraud; damages for fraud;
money had and received; rescission based on failure of consideration; damages
for breach of written contract; negligent misrepresentation; conversion;
declaratory relief; preliminary and permanent injunction and damages;
intentional interference with contract and other economic relationship;
negligent interference with economic relationship; breach of fiduciary duty etc.
As of this filing, no trial date has been set.
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.
ADDITIONAL INFORMATION
Exhibits 99.1 Certification pursuant to 18 U.S.C. section 1350 as adopted
Pursuant to Section 906 of the SARBANES-OXLEY ACT OF 2002
Filed as a correspondence.
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.
MERIDIAN HOLDINGS, INC.
DATE: November 13, 2002 By: /s/ Foday Sorsor Conteh
-------------------
Foday Sorsor Conteh
Vice-President Finance
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