UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON,  D.  C.  20549

                                  FORM  10-KSB/A
                                Amendment Number 2

(  X  )   ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR 15 (d) OF THE SECURITIES
                                    EXCHANGE  ACT  OF  1934

          For  the  Fiscal Year Period Ended       December  31,  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)

             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 former 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   (    )

The  Registrant's  revenues for the year ended December 31, 2004 were $2,295,047

As  of  December  31, 2004, the Registrant had 14,370,649  shares  of its $0.001
par value common stock outstanding with a market capitalization of $574,826 







                                        Page 1 of 28 sequentially numbered pages
                                                                   Form 10-KSB
                       Annual Report For The Fiscal Year Ended December 31, 2004

                                            1


                                   TABLE OF CONTENTS

                                  EXPLANATORY NOTE 
The Company has to restate its financials to correct errors in the accounting
for a judgment receivable and the corresponding income from this judgment.

                                                                    Page Number
                                    PART  I

Item 1. Description of Business . . . . . . . . . . . . . . . . . . . .  . .  .3

Item 2. Description of Property . . . . . . . . . . . . . . . .  . . . . . . . 7

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . .  7

Item 4. Submission of Matters to a Vote of Security Holders Our . . . ... . .  8

                                  PART II

Item 5. Market for Common Equity and Related Stockholder matters . . . . . ..  8

Item 6. Management's Discussion and Analysis . . . . . . . . . . . . . . . . . 9

Item 7. Financial Statements  . . . . . . . . . .  . . . . . . . . . . . . . .13

Item 8. Changes In and Disagreements With Accountants on Accounting and .. . .13
Financial Disclosure 

                                  PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons . . . . .13

Item 10. Executive Compensation  . . . . . . . . . . . . . . . . . . . . . . .17

Item 11. Security Ownership of Certain Beneficial Owners and Management . . . 18

Item 12. Certain Relationships and Related Transaction . . . . . . . . . . .. 19

Item 13. Exhibits and Reports on Form 8-k  . . . . . . . . . . . . . . . . . .19






















                                            2

PART  I

ITEM 1. DESCRIPTION OF BUSINESS

                                    BUSINESS

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 establish and the development of new 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. 

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 provides management services to its'
Affiliated group of Companies.

Meridian Holdings, Inc., assigns a dedicated team to each affiliated company and
actively  assists  in their management, operations  and  finances.  The  Company
seeks to maximize shareholder value by actively providing operational assistance
and  expertise to help its partner  companies  grow  and  develop  and by giving
its shareholders the opportunity to participate in the initial public  offerings
of its partner companies while retaining a significant  ownership interest after
the initial public offering.

Its  network of partner companies creates an environment through which companies
can  leverage  one  another's  information  technology,  operational experience,
business  contacts  and  industry  expertise. 

We  plan  to  hire  additional  senior  management  personnel   to  lend  expert
guidance  in  further  development  of our business plan. Also, we will actively
seek opportunities for strategic  transactions  intended  to  raise  capital  to
develop  our  emerging  business  strategy,  potentially  including  issuance of
additional  equity  or  debt instruments.  In  addition,  we  will  continue  to
evaluate  and  may  enter into strategic  transactions,  including  mergers  and
acquisitions.

              BUSINESS UNITS AND AFFILIATED PARTNERS 

The  Company  has  under  management  the  following  business  units: 
 
1.     Capnet IPA

2.     InterCare DX,  Inc. 

3.     CGI  Communications  Services,  Inc. 

4.     Meridian Energy Corporation

5.     Meridian Health Systems

                          CAPNET IPA

Capnet  IPA  ("Independent Physician Association"), with over 300 physicians, 15
community  hospitals, 4 teaching Hospitals and other ancillary service companies
contracted  within its network, is the core component of Meridian Holdings, Inc.
healthcare  management  division  business.  The  linkage  of  these entities is
imminent  as   the    convergence  of  technology  brings  to bear the burden of
information overload, currently  one  of  the  most  critical  problems  in  the
healthcare industry. The  Company  believes  that by  using  currently available
                                            3

Software technology, most of the  healthcare  industry   information  processing
could be handled more efficiently.  To  be competitive, the Company must license
leading  technologies,  enhance  its  existing services and content, develop new
technologies  that  address  the  increasingly sophisticated and varied needs of
healthcare  professionals  and healthcare consumers and respond to technological
advances  and  emerging  industry  standards  and  practices  on  a  timely  and
cost-effective  basis. 

                       InterCare DX, Inc.

InterCare DX,  Inc.  formerly  known  as  Inter-Care  Diagnostics, Inc., is
organized in the  State  of California. The company is  an innovative software 
products and  services company specializing in providing  healthcare management
and  information   system   solutions.   The  Company  recently  completed  the
development of ICE(tm) software, which comprises of three primary layers:

The  strength  of  ICE(tm)  application  is  derived  from  differentiated  core
technologies  consisting of: Mainstream SQL Database with full open architecture
;human  anatomy  and  graphical  user  interfaces  that  simplify  documentation
and  information access; data mining and data query tools; end-user  tool  sets;
and  interface  capabilities  to  facilitate  peaceful  coexistence  with  other
systems.  Over  10  years  of  research  and  development have been spent in the
development  of  ICE(tm)  software.

Benefits of ICE(tm) Products to Healthcare Payors and Providers:


ICE(tm) can  seamlessly  integrate  with  legacy  systems  (utilizing  any
off- the- shelf interface  engine)  through  both  HL7  and  proprietary  legacy
interfaces. A 12-tier  security paradigm offers industry leading confidentiality
and  control of information. Security "behavior" rules are fully configurable by
privileged system  administrator(s), without programming, through the underlying
knowledge   bases.  ICE(tm)'s   embedded  security  will  be fully HIPAA (Health
Insurance Portability and  Accountability  Act of 1996) compliant when the final
rulings are  released,  and  supports  data  compartmentalization  down  to  the
level  of specific value  in  any  data  field.


                   CGI  COMMUNICATIONS  SERVICES,  INC. 

CORPORATE  INFORMATION 

CGI  Communications Services, Inc., was incorporated under Delaware law on April
12,  1997.  Its  executive  offices  are  at  900 Wilshire Blvd., Suite 500, Los
Angeles,  California  90017.  Its  telephone  number  is (213) 627-8878. Its fax
number  is  (213)  627-9183.  On  December  10,  1999,  Meridian Holdings, Inc.,
acquired  20%  equity  interest  in the Company, in exchange for an aggregate of
$12,000,000  equity  investment  over  5  years. 

By combining  enabling  technology  with  industry  leading companies  supplying
telecommunications,  medical  products  and  services, CGI  is  poised  to  make
InterCare, DX Inc.'s ICE(tm)  suite of  clinical  applications,  the  global
leader  in  providing comprehensive  telemedicine  and  telecare  solutions. CGI
will  now  begin  a  Pilot-testing  of this technology among over 300 healthcare
providers   affiliated  with  CAPNET  IPA,  an  integrated  healthcare  delivery
system,  located  in  Los  Angeles,  California, managed  by  Meridian Holdings,
Inc., the ASP version of ICE(tm) when released.

BUSINESS  STRATEGY 

CGI  Communications Services, Inc., intends to capitalize on the enormous public
attention  focused  on  the  Internet  and  the  need for increased bandwidth by
increasing  its'  telemarketing sales and technical support staff, targeting its
advertising  to  its  core  audience,  and  by  providing  the  most  efficient,
lowest-cost high speed Internet service in its service corridor. CGI is focusing
                                            4

its  marketing  efforts  to  specialty and small business entities. 

Meridian Energy Corporation

Meridian Energy Corporation is a wholly owned subsidiary  of  Meridian Holdings,
Inc., both Colorado Corporation., is a diversified  energy  and natural resource
Company, seeking high returns with minimal risk,  in  the  field of Electricity,
Oil and Gas market. Meridian Operates, backs  and invests  in  major exploration
and  exploitation  organized  by  highly regarded geologist,  geophysicists  and
other energy executives. The  Company  seeks  highly  visible  opportunities  in
countries around the globe with a history  of  natural  resource production that
offer  exciting  and  attractive  propositions the company will seek to minimize
risk by bringing in either joint venture, carried or  working interest partners,
depending on the size and scale of the project.

Meridian Health System

Meridian Health System,(VIP Concierge Medical Services Company) is a division of
Meridian Holdings  focusing  on provision of tertiary medical specialty care for
the  international  clientele  in the U.S.A. The Company's mission is to provide
access to the very best US  physicians  and hospitals for international patients
and  providers  as well as reduce and mitigate access barriers to US healthcare.
The Company serves as a single point of contact and accountability for patients,
families, physicians, allied health, hospitals and vendors.

MANAGEMENT  OF  POTENTIAL  GROWTH 

The  Company  has  rapidly  and   significantly   expanded  its  operations  and
anticipates  that further expansion will be required to address potential growth
in  its  customer  base,  to  expand  its  product and service offerings and its
international operations and to pursue other market opportunities. The projected
expansion of the Company's operations and employee base will place a significant
strain  on  the  Company's  management,  operational  and  financial  resources.
To  manage  the  expected  growth  of its  operations and personnel, the Company
will be required  to  improve existing and implement new transaction-processing,
operational  and  financial  systems,  procedures  and  controls  and to expand,
train and manage its growing employee base. There can be no assurance  that  the
Company's  current  and  planned  personnel,  systems, procedures  and  controls
will  be  adequate to support  the Company's future operations, that  management
will be able to hire, train, retain, motivate and manage  required  personnel or
that   Company   management  will  be  able  to  successfully  identify,  manage
and  exploit   existing  and  potential  market opportunities.  If  the  Company
is  unable  to manage growth effectively, such inability could have  a  material
adverse  effect  on the Company's business, prospects,  financial  condition and
results  of  operations. 

NEW  BUSINESS  AREAS 

The  Company  intends to expand its operations by promoting new or complementary
products  or sales formats and by expanding the breadth and depth of its product
or service offerings. Expansion of the Company's operations in this manner would
require  significant  additional expenses, development, operations and editorial
resources  and  would strain the Company's management, financial and operational
resources.  Furthermore,  the  Company  may  not  benefit  from  the first-mover
advantage that it will experience in the online high technology market and gross
margins  attributable  to  new business areas may be lower than those associated
with the Company's existing business activities prior to the introduction of new
products or line of business. There can be no assurance that the Company will be
able to expand its operations in a cost-effective or timely manner. Furthermore,
any  new  business  launched  by  the  Company that is not favorably received by
consumers  could  damage  the Company's reputation or the Bolingo.com brand. The
lack of market acceptance of such efforts or the Company's inability to generate
satisfactory  revenues  from  such expanded services or products to offset their
cost  could have a material adverse effect on the Company's business, prospects,
financial  condition  and  results  of  operations. 
                                            5

INTERNATIONAL  EXPANSION 

The  Company  intends  to  expand  its presence in foreign markets. To date, the
Company  has  only  limited  experience  in sourcing, marketing and distributing
products  on  an international basis and in developing localized versions of its
Web  site  and  other systems. The Company expects to incur significant costs in
establishing  international  facilities  and  operations, in promoting its brand
internationally,  in  developing  localized  versions  of its Web site and other
systems and in sourcing, marketing and distributing products in foreign markets.
There  can  be  no  assurance  that  the Company's international efforts will be
successful.  If  the  revenues   resulting  from  international  activities  are
inadequate  to  offset  the  expense  of  establishing  and  maintaining foreign
operations,  such  inadequacy  could  have  a  material  adverse  effect  on the
Company's business, prospects, financial condition and results of operations. In
addition, there are certain risks inherent in doing business on an international
level,  such as unexpected changes in regulatory requirements, export and import
restrictions,  tariffs  and  other  trade barriers, difficulties in staffing and
managing  foreign  operations,  longer  payment  cycles,  political instability,
fluctuations  in  currency  exchange  rates,  seasonal  reductions  in  business
activity  in  other parts of the world and potentially adverse tax consequences,
any  of  which could adversely impact the success of the Company's international
operations.  There can be no assurance that one or more of such factors will not
have  a material adverse impact on the Company's future international operations
and, consequently, on the Company's business, prospects, financial condition and
results  of  operations. 

BUSINESS  COMBINATIONS  AND  STRATEGIC  ALLIANCES 

The  Company  may choose to expand its operations or market presence by entering
into  business  combinations,  investments,  joint  ventures  or other strategic
alliances  with  third parties. Any such transaction would be accompanied by the
risks  commonly  encountered  in such transactions. These include, among others,
the  difficulty  of assimilating the operations, technology and personnel of the
combined  companies, the potential disruption of the Company's ongoing business,
the inability to retain key technical and managerial personnel, the inability of
management  to  maximize  the  financial  and  strategic position of the Company
through  the  successful integration of acquired businesses, additional expenses
associated  with  amortization of acquired intangible assets, the maintenance of
uniform  standards,  controls  and  policies and the impairment of relationships
with  existing  employees  and  customers.  There  can  be no assurance that the
Company  would  be  successful  in  overcoming these risks or any other problems
encountered  in  connection  with such business combinations, investments, joint
ventures or other strategic alliances, or that such transactions will not have a
material  adverse   effect  on  the  Company's  business,  prospects,  financial
condition  and  results  of  operations. 

RAPID  TECHNOLOGICAL  CHANGE 

To  remain  competitive,  the  Company  must continue to enhance and improve the
responsiveness,  functionality  and  features  of the its Internet websites. The
Internet   and   the  online   commerce  industry  are  characterized  by  rapid
technological change, changes in user and customer requirements and preferences,
frequent  new  product  and service introductions embodying new technologies and
the  emergence  of  new  industry  standards and practices that could render the
Company's existing Web site and proprietary technology and systems obsolete. The
Company's  success  will  depend,  in  part,  on  its ability to license leading
technologies  useful in its business, enhance its existing services, develop new
services  and  technology that address the increasingly sophisticated and varied
needs  of  its  prospective  customers and respond to technological advances and
emerging  industry standards and practices on a cost-effective and timely basis.
The development of Web site and other proprietary technology entails significant
technical,  financial  and  business  risks.  There can be no assurance that the
Company  will  successfully  implement  new  technologies or adapt its Web site,
proprietary   technology  and   transaction-processing   systems   to   customer
requirements  or  emerging  industry  standards.  If  the Company is unable, for
                                            6

technical,  legal,  financial  or  other reasons, to adapt in a timely manner in
response  to changing market conditions or customer requirements, such inability
could  have  a  material  adverse  effect  on the Company's business, prospects,
financial condition and results of operations. The Company's future success also
depends  on  its  ability to identify, attract, hire, train, retain and motivate
other  highly skilled technical, managerial, editorial, merchandising, marketing
and  customer  service  personnel. Competition for such personnel is intense and
there can be no assurance that the Company will successfully attract, assimilate
or  retain  sufficiently  qualified  personnel.  In  particular, the Company has
encountered difficulties in attracting a sufficient number of qualified software
developers  for its Web site and transaction-processing systems and there can be
no  assurance  that  the  Company  will  retain and attract such developers. The
failure  to  retain  and attract the necessary technical, managerial, editorial,
merchandising,  marketing  and  customer service personnel could have a material
adverse  effect  on  the  Company's business, prospects, financial condition and
results  of  operations. 

ACQUISITIONS 

If  appropriate opportunities present themselves, the Company intends to acquire
businesses,  technologies,  services  or  products that the Company believes are
strategic.  The  Company  currently   has   no  understandings,  commitments  or
agreements  with respect to any other material acquisition and no other material
acquisition  is  currently  being  pursued.  There  can be no assurance that the
Company will identify, negotiate or finance future acquisitions successfully, or
to  integrate  such  acquisitions  with its current business. 

EMPLOYEES

As of December 31, 2004, the  Company had  approximately 15 full-time employees.
Of the total,10 were employed at the Company's executive offices. No employee of
the Company is covered by a collective bargaining agreement or is represented by
a labor union. The Company considers its employee relations to be good.


ITEM 2. DESCRIPTION OF PROPERTY

The  Company's  corporate  offices  are located at 900 Wilshire Boulevard, Suite
500, Los Angeles, California 90017. The Company is required to pay $5,791.00 per
month rental. The Company was required to make a lease deposit of $5,186.00. The
lease  expires on February 28, 2005. The telephone number is (213) 627-8878. The
Company has additional office space located at 1601 Centinela Avenue, Inglewood,
California 90302. The Company is required to pay $1,560.00 per month rental. The
Company  was  not  required to make a lease deposit. This lease is on a month to
month  basis.

ITEM 3. LEGAL PROCEEDINGS

On  July  19,  2001,  Ventures  &  Solutions,  LLC,  filed a lawsuit against the
company, styled Ventures & Solutions, LLC, Plaintiff v. Meridian Holdings, Inc.,
Defendant,  Circuit Court of Alexandria, Virginia, Case No. C10517.  The company
was  served  with  a  copy  of  the  Complaint on August 6, 2001.  Plaintiff has
alleged that the company owes it approximately $29,000.00, pre and post judgment
interest,  and  attorneys'  fees  and  costs.  The Virginia court ruled in favor
of  the  plaintiff,  for  the  actual  amount  claimed  owed in April 2003. The
Company is currently in negotiation with the Judgment Creditor

On May 6,  2003, the  registrant  was served with a summons for a lawsuit filed
in the District  Court of  Jerusalem, Case No A3359/01(BSA 1646/03) titled "Dr.
Danny  Basel vs Corsys Group  LTD;   Meridian  Holdings,  Inc., and Anthony  C.
Dike."  The   plaintiff  is   seeking  amongst   other  things: enforcement  of
contract,  compensation,  negligent  misrepresentation,  cause  in   breach  of
contract and equitable relief.The registrant has been advised that Dr. Basel's 
employment  was terminated for  cause by  Corsys Group LTD, due to  intentional
interference  with  contract  and  other  economic relationship;  and negligent
                                            7

interference with  economic relationship; breach  of  fiduciary  duty and other
complicity  in the Sirius/MedMaster  matter  as disclosed  previously with SEC,
which resulted in significant loss of income and future business opportunities.
The Company is awaiting the final court ruling in this matter.

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.

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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On March 6, 2004 the shareholders voted to re-appoint Mr. Andrew  Smith  CPA, as
the Company's  independent  accountant  for  the  fiscal year ended December 31,
2003. Also, the  shareholders  re-approved  the Registrants' 2001  stock  option
plan for 2004, as well as  the election of  the  following directors for another
one year term: 

     Mr.  James  Truher 
     Mr.  Michael Muldavin
     Mr.  Randy Simpson 
     Mrs  Marcelina  Offoha 

PART  II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTER

The  Common  Stock  is currently quoted on the OTC Bulletin Board, maintained by
the  National  Association of Security Dealers, Inc. under the Symbol: MRDH, and
there is presently only a very limited market for the Common Stock. Historically
the  spread  between  the  bid and asked price of the Company's Common Stock has
been  large,  reflecting  limited  trading  in the stock. The price range of the
Company's Common Stock has varied significantly in the past months, ranging from
a high bid of $1.00 and a low bid of $0.04 per share. The trading price for the
Common  Stock  has  fluctuated  widely  in  the  recent  past.  The above prices
represent   inter-dealer   quotations   without  retail  mark-up,  mark-down  or
commission,  and  may  not  necessarily  represent  actual  transactions.

The  following  information  with  respect to the high and low bid  price of our
shares  was  obtained from the National Quotation Bureau. 



                                                 
                                    High                  Low
Calendar 2004
Quarter ended March 31              0.20                  0.20
Quarter ended June  30              0.10                  0.10
Quarter ended September 30          0.06                  0.06
Year ended December 31, 2004        0.04                  0.04



                                            8



                                                 
                                    High                  Low
Calendar 2003
Quarter ended March 31              0.02                  0.02
Quarter ended June  30              0.07                  0.07
Quarter ended September 30          0.08                  0.08
Year ended December 31, 2003        0.15                  0.15


At  December 31, 2004, the company had approximately 800 shareholders of record
for  its  common stock.  Our  preferred  shares  have never been offered to the 
public, therefore  have  never  been  publicly  traded.

SELECTED  FINANCIAL  DATA

The Company had  net  working capital of $1,187,221  as  at   December 31  2004
compared  to $1,279,979 at  December 31,  2003.This  represents  a  7% decrease
in working capital.

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 6. MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF THE 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, expected operating cash flow improvements through HMO 
capitation payments.

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. 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 impact on our  operations.

RESULTS  OF  OPERATIONS

THE  FINANCIAL  RESULTS  DISCUSSED  BELOW  RELATE  TO  THE OPERATION OF MERIDIAN
HOLDINGS  FOR  THE  TWELVE MONTHS  ENDED DECEMBER 31, 2004 AS  COMPARED  TO  THE
TWELVE  MONTHS  ENDED  DECEMBER 31, 2003.

                                            9

REVENUE

Medical services revenues decreased by 9.8% from $2,624,135    for  the  twelve
months   ended December  31,  2003 to  $2,365,048  for the twelve  months ended
December 31, 2004. The decrease in medical services revenue is attributed to
decrease in membership in the Capnet IPA due to dis-enrollment.

Revenue  generated  from our  managed care contracts with HMOs  as a percentage
of medical services revenue was approximately 99% during the two consecutive
period.

Cost of Revenues

The cost  of revenue for  twelve months  ended  December 31, 2004 is $1,288,208,
compared  to  $900,203 for  twelve  months  ended  December  31,  2003.  This
represents a 43% increase in cost of revenue. The increase  in cost  of  revenue
is due to increase in volume medical claims paid in 2004 fiscal year.

Direct medical costs includes all costs associated  with  providing services for
CAPNET  IPA contracted members,  including direct medical  payment  to physician
providers, hospitals and ancillary services  on  capitated  and  fee for service
basis. For the year ended December 31, 2004, these cost represents  56% of total
revenue compared to 59% for the year ended December 31, 2003.  This is referred 
to as Medical Loss Ratio (MLR).  The  decrease  in Medical Loss Ratio is  due to
increase in  volume  of  claims  paid  to  contracted  providers  and  hospitals
for  services  rendered. 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  Medical 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  counterbalancing  increases in capitation revenues.

EXPENSES

General  and  administrative expenses  is $1,549,824 or 66 %  of total revenues
for  the twelve  months ended December 31, 2004,  compared to $1,515,505 or 43%
of  total  revenues for  twelve months ended December 31, 2003. The increase in
general and administrative expense is  due increase in fees paid to consultants
as well as  other corporate expenses.. The company continues  to implement cost
cutting  measures  started  in  2001  during  the  twelve months ended December
31, 2004. 

Of  the  $1,549,824  General  and  administrative  expense for the period ended
December 31, 2004, $574,865  was  for  employee salaries and wages, $90,102 was
for rent and lease payments, $29,030 was for insurance including stop-loss, D&O
liability, general and liability, Medical Mal-practice, Workermans'
Compensation, employees health and dental  insurance, $223,402  was for payment
of  outside  consultants, and the rest was for other corporate purposes.

INCOME/LOSS FROM OPERATIONS

The  registrant  recorded a net loss from  operations  for  the  twelve months
ended December 31, 2004 of  $522,227  compared to  a  net  income  of  $138,566
during  comparable  period in 2003. The net  loss from  operations is due to
decrease in revenue following the  disenrollment of some of our members from our
managed care contract and non-renewal of the TENET component of our Managed
care contract with Los Angeles County Community Health Plan.

OTHER INCOME/EXPENSE

The Company recorded  a net loss of $33,568 from its equity investments in 
CGI Communications Services subsidiary for the period ended December 31, 2004,
Compared to $45,316 for comparable period in 2003. 

                                            10


CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

This  Form   10-KSB  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.

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.

The state of California has stopped all marketing  activities  for  the  Healthy
Family Program,  and this will impact  our  revenue from this line  of  business
due to membership attrition. 

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..

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.

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.
                                            11


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  second  quarter of  2005,  which  we believe  will
significantly enhance our revenue generation.

The Company continues to look into various business opportunities that will help
to increase its revenue and the results of operation. There  can be no assurance
that such an effort will materialize in any meaningful results.

RECENT  EVENTS

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, with allowance
for  impairment  recorded  accordingly. On  December  8,2004,  the  registrant
entered  into  a  judgment  collection  agreement with Surgimed Funds, a legal
collections  agency. Under  the  terms of  the agreement, the Company will pay
Surgimed  45%  of net  collectible. (See note 14 of the financial statements.)

On  March  6 2004, the  following  board  members  were re-elected to serve as
Directors  of  the  company  until  the  next  annual  meeting  or until their
Successors are elected and qualified :

1.   Michael Muldavin
2.   James Truher
3.   Randy Simpson
4.   Marcellina Offoha

Additionally,  shareholders  ratified  the  reappointment  of Andrew Smith, CPA,
as  the  independent  auditor  for  the fiscal year ending December 31, 2003 and
re-approved the  Company's  2001 Joint Incentive and Non-Qualified Stock  Option
Plan  for  fiscal  year 2004. 

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.

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.

RISKS  ASSOCIATED  WITH  MANAGING  GROWTH

The  Company's  anticipated level of growth, should it occur, will challenge the
Company's management and its sales and marketing, customer support, research and
development  and  finance  and  administrative  operations. The Company's future
performance will depend in part on its ability to manage any such growth, should
it  occur,  and  to  adapt  its  operational  and  financial control systems, if
necessary, to respond to changes resulting from any such growth. There can be no
assurance that the Company will be able to successfully manage any future growth
or  to adapt its systems to manage such growth, if any, and its failure to do so
would  have  a  material  adverse  effect  on  the Company's business, financial
condition  and  results  of  operations.
                                            12


QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company's  securities may be deemed "penny stock" as defined in Rule 3a51-1
of  the  Securities  and Exchange Act of 1934, as amended, since the average bid
price  has  remained  consistently  below  $2.  Such  a designation could have a
material  adverse  effect  on the development of the public market for shares of
the  Company's  common  stock  or,  if such a market develops, its continuation,
since  broker-dealers are required to personally determine whether an investment
in  such  securities  is suitable for customers prior to any solicitation of any
offer  to purchase these securities. Compliance with procedures relating to sale
by  broker-dealers of "penny stock" may make it more difficult for purchasers of
the  Company's  common  stock  to  resell  their  shares  to third parties or to
otherwise  dispose  of  such  shares.

ITEM 7. FINANCIAL  STATEMENTS

Please  refer  to  Exhibit  99.1  for  the  Independent  Auditors'  Reports  and
Consolidated Financial  Statements.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

ITEM 8a. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(e) 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
the end of this reporting period.  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 March 31,
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.

Occasionally,   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 provisions 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
                                            13

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 as of
December 31, 2004


PART  III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; 
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The  Board  of  Directors,  which  consists of five directors, four of which are
outside  members  and one of which is an officer of the Company, establishes the
general  compensation  policies  of  the  Company and the compensation plans and
specific compensation levels for executive officers. The Company does not have a
separate  Compensation  Committee  of  its  Board  of  Directors.  The Company's
objective is to ensure that executive compensation be directly linked to ongoing
improvement  in  corporate  performance  and  increasing  shareholder value. The
following  objectives  are  guidelines  for  compensation  decisions:  Job
Classification.  The  Company assigns a job grade to each salaried position, and
each  job  grade  has a salary range, which is based on national salary surveys.
These  salary  ranges  are  reviewed  annually to determine parity with national
compensation  trends,  and  to  ensure  that the Company maintains a competitive
compensation  structure.  Competitive  Salary Base. Actual salaries are based on
individual  performance contributions within a competitive salary range for each
position  established  through job evaluation and market comparisons. The salary
of  each corporate officer is reviewed annually by the Board of Directors. Stock
Option  Programs.  The  purposes  of  the  Company's ESOP and SOP are to provide
additional  incentives  to  employees to work to maximize shareholder value. The
ESOP  is  open  to all full-time employees of the Company and the SOP is open to
participation  by  key  employees  and other persons as determined by the Board,
based  upon  a  subjective evaluation of the key employee's ability to influence
the  Company's  long-term growth and profitability. Stock options under the ESOP
may be granted at the current market price at the time of the grant or under the
SOP  at  prices as determined by the Board. With specific reference to the Chief
Executive  Officer,  the  Board  attempts  to exercise great latitude in setting
salary  and  bonus levels and granting stock options. Philosophically, the Board
attempts  to  relate  executive  compensation  to those variables over which the
individual  executive generally has control. The Chief Executive officer has the
primary  responsibility  for  improving shareholder value for the whole Company.
The  Board  believes  that  its  objectives of linking executive compensation to
corporate  performance results in alignment of compensation with corporate goals
and   shareholder   interest.  When  performance  goals  are  met  or  exceeded,
shareholder  value  is increased and executives are rewarded commensurately. The
Board  believes that compensation levels during 2003/2004 adequately reflect the
Company's  compensation  goals  and policies. In 1993, the Internal Revenue Code
was amended to add section 162(m), which generally disallows a tax deduction for
compensation  paid  to  a  company's  senior  executive officers in excess of $1
million  per  person  in  any  year.  Excluded from the $1 million limitation is
compensation  which  meets  pre-established performance criteria or results from
the  exercise  of  stock  options which meet certain criteria. While the Company
generally  intends  to qualify payment of compensation under section 162(m), the
Company  reserves  the  right to pay compensation to its executives from time to
time  that  may  not  be  tax  deductible.

The  Company  will  compensate  the  members  of the Board of Directors for each
meeting  he/she attends, in the amount of $250 cash or equivalent in the form of
the  Company's  Common  Stock  at  the  fair  market  value.


                                            14

TERM  AND  CLASSIFICATION  OF  BOARD  OF  DIRECTORS

The  Board  of  Directors  has  determined  that  there  will  be two Classes of
Directors  (Class  A  and  Class  B). Class A Directors are also officers of the
Company.  Class  B Directors are outside directors. The full Board shall consist
of five directors. Directors are elected each year for one-year term, except for
Class  "A"  directors,  who  are  elected  for  a  period  of  three  years. The
stockholders  will  elect  five  directors  for  the  coming  year.

The  business  of  the  Company is managed under the direction of the Board. The
Board  members  will  serve  until  their  successors  are elected at the Annual
Shareholder meeting,  unless  they  earlier resign or are removed as provided in
the Bylaws.

The  following  is  the list of members of the board of directors elected during
the  annual  shareholders  meeting  held  on  March 6,  2004.

James  W.  Truher
-----------------
Mr.  Truher, aged 69, has been a Director of the Company since August 19, 1999.
Mr. Truher has  over  40  years management and engineering experience in the 
telecommunications industry. He is  currently, the Chairman and Chief  Executive
officer  of  Superwire.Com, an  Internet services and content provider  company.
Mr.  Truher  owns  Columbia  Management  Corp.,  a  telecommunications  services
and investment company. In 1988, Mr. Truher founded and  served  as  Chairman of
the Board and Chief Executive officer of SelecTel Corporation,  which  prior  to
a   merger   with   a   public   company, was an AT&T Co-Marketing  Partner  and
system  integration  company. Mr. Truher  then  served  as  Chairman  and  Chief
Executive  officer  of  two  publicly  traded NASDAQ telecom companies  and  has
worked  extensively  with foreign PTT telephone companies. In 1981,  Mr.  Truher
founded  and  was  the  Chief  Executive  officer of Polaris Intelcom, the first
shared  tenant  service  company  in  California.

Marcellina  Offoha,  Ph.D.
--------------------------

Ms. Offoha, age 49, a director of the Company in  October  1999,  Ms. Offoha has
extensive experience  in  teaching  and  counseling.  Ms.  Offoha  has taught at
several universities  such as Shaw University, Ithaca  College, State University
of  New York, Philadelphia College of Pharmacy & Science, Temple University, and
Morgan  State  University.  Ms.  Offoha  holds  a Ph.D. in Sociology from Temple
University,  Philadelphia,  Pennsylvania.

Michael Muldavin, J.D.
---------------------
Mr.  Michael  Muldavin,  age  81 is the  Chairman of Sandock Fund, Sandock
Investment  Trust  and  Benchmark  Company  Group.

He  was  formerly  the  associate  dean and  clinical  professor of  medicine at
The University of California,  Irvine,  College  of  Medicine.  He  was  also  a
Medical  Economist  for  California  State  Department  of  Public  Health,  and
assisted  in  the  drafting  of  Medi-Cal  legislation  in   1967-1968   period.
Earlier  in  his  career  as  a  WWII  veteran,  he  served   as  the  Chief  of
Labor Administration  in  Japan,  under  General  MacArthur.

Mr.  Muldavin  holds   a  Bachelors  of  Science  degree  in   Mathematics   and
Engineering, Masters of Science degree in Economics  and  Public  Health,  Juris
Doctorate degree with specialization in administrative  law,  all  degrees  from
Harvard University. He also  holds  a  Masters  in  Public  Health  degree  from
UCLA School  of  Public  Health.

Randy Simpson
------------

Mr.  Randy  Simpson, age 48, a  Certified Public Accountant with nearly 30
                                            15

years' experience,  began his career with Ernst & Young's Salt Lake City office.
He  has  served  in  a  variety  of finance and accounting capacities, including
chief financial officer for  Rocky Mountain  Helicopters  (medical  helicopters)
and controller (Gulf Energy). In conjunction  with  his  independent  accounting
practice,  he  has provided registration work and financial  advisory assistance
to a number of North  American  public  companies. He received a BS in marketing
and  an  MS  in  accounting  from  Utah  State  University.

There  are  no family relationships between any directors or executive officers.

The  election of the nominees requires the affirmative vote of a majority of the
shares  of  Common  Stock represented at the Annual Meeting and entitled to vote
thereon.

COMMITTEES OF THE BOARD OF DIRECTORS

FUNCTIONS OF COMMITTEES

AUDIT AND ETHICS COMMITTEE:

       - Has general powers relating to accounting disclosure and auditing
         matters;
       - Recommends the selection and monitors the independence of our
         independent auditors;
       - Reviews the scope and timing of the independent auditors' work;
       - Reviews the financial accounting and reporting policies and principles
         appropriate for the Corporation, and recommendations to improve
         existing practices;
       - Reviews the financial statements to be included in the Corporation's
         Annual Report on Form 10-KSB
       - Reviews accounting and financial reporting issues, including the
         adequacy of disclosures;
       - Monitors compliance with the Code of Ethics and Standards of Conduct;
       - Reviews and resolves all matters presented to it by our Ethics office;
       - Reviews and monitors the adequacy of our policies and procedures, and
         the organizational structure for ensuring general compliance with
         environmental, health and safety laws and regulations;
       - Reviews with the General Counsel the status of pending claims,
         litigation and other legal matters;
       - Meets separately and independently with the Chief Financial officer,
         Internal
         Audit and our independent auditors.

It is composed of Messrs. Simpson, Truher, Muldavin and Ms. Offoha

EXECUTIVE COMMITTEE:

         The Executive  Committee  may  exercise  the  power  of  the Board of
Directors in the management of  the business and affairs of the Corporation at
any  time  when  the  Board  of  Directors  is  not  in session. The Executive
Committee shall, however, be subject to the specific direction of the Board of
Directors and all actions must be by unanimous vote. It is composed of Messrs.
Dike, Truher, and Robert L. Smith.

Meetings of the  Board  of  Directors

During  the  fiscal  year  ended  December  31,  2004, the Company's  Board of
Directors  acted  five times by  a unanimous  written  consent  in  lieu of a
meeting.  Each  member of the Board participated in each action of  the Board.

AUDIT AND ETHICS COMMITTEE REPORT

Management has the primary responsibility for the  financial reporting process
and  the  audited consolidated financial  statements, including the systems of
internal  controls. The  Corporation's  independent  auditors,  Mr.  Andrew
                                            16

Smith  CPA,  is  responsible for expressing  an  opinion   on  the   quality
and  conformity  of consolidated financial  statements  with accounting
principles  generally accepted  in  the United States. In our  capacity as
members of the Audit  and Ethics  Committee and  on  behalf  of  the  Board of
Directors,  we  oversee  the  Corporation's financial  reporting  process  and
monitor compliance with its Code  of Ethics and Business Conduct. The  Audit
Committee has not adopted a written charter, which has been approved by the
Board of Directors

The members  of  the Audit and  Ethics Committee are independent as defined by
the listing standards of the National  Association of Securities Dealers(NASD)

In connection with our oversight responsibilities, we have:

     - discussed with the internal and independent auditors the overall scope
       and plans for their audits;
     - reviewed  and  discussed the audited consolidated financial statements
       included  in Meridian Holdings  2003 Annual Report with management and
       the independent auditors;

     - discussed  with  the  independent  auditors the matters (including the
       quality  of  the  financial  statements  and clarity  of  disclosures)
       required  to  be  discussed  under the American Institute of Certified
       Public  Accountants'  Statement  on  Auditing  Standards  No.  61,
       Communications  with  Audit  Committees, which generally requires that
       certain matters related to the performance of an audit be communicated
       to the audit committee;

     - received  from  the  independent  auditors  and  reviewed  the written
       disclosures  and  the  letter  required  from the independent auditors
       required by the  Independence Standards Board, and have discussed with
       them their independence from management and the Corporation;

     - considered  the  nature  of  the  nonaudit services  performed  by the
       independent  auditors  and  the  compatibility  of those services with
       their independence; and

     - met  with  the  internal  and  independent  auditors, with and without
       management  present,  to discuss  the  results  of their examinations,
       their  evaluations  of  the  Corporation's  internal controls, and the
       overall quality of the Corporation's financial reporting.

Based on the reviews and discussions referred to above, we recommended to the
Board of Directors (and the Board has approved) the inclusion of  the audited
Consolidated  financial  statements  referred  to above in the Corporation's
Annual  Report  on Form 10-KSB for the year ended December 31, 2004 and 2003,
for  filing  with  the  Securities and Exchange Commission. 

                   Members of the Audit and Ethics Committee:

James Truher                                                 Michael Muldavin
Randy Simpson                                               Marcellina Offoha

                               Capnet IPA Management Team

Anthony  C.  Dike,  M.D.  Chairman/CEO  

Wesley Bradford, M.D., M.P.H.,M.B.A,  Chief Medical Officer

Elizabeth Campos, Vice President IPA Operations

Foday Conteh, BSc.(Accounting)  Director of Finance

David Cutler, MSc, Director of Medical Information Systems

                                            16


ITEM 10. EXECUTIVE COMPENSATION

Executive  Officers

The  executive  officers  of  the  Company  are  as  follows:

Anthony  C.  Dike,     Chairman/CEO
Wesley Bradford        Chief Medical Officer

                             EXECUTIVE  COMPENSATION

The  table  below  shows  information  concerning  the  annual  and  long-term
compensation  for  services  in  all  capacities  to  the  Company for the Chief
Executive  Officer  and  other  full-time  employee  executive  officers  of the
Company:

                               Annual  Compensation


Name              Year     Salary         Bonus      Stock  Option   All  Other
                                                                   Compensation
                                                                   Stock Awards
                                                     
Anthony  C.  Dike (1)  2004    $144,000          0        150,000        0

Wesley Bradford   (2)  2004    $ 35,000          0        100,000        100,000

1.  As  of  December  31, 2003, Anthony C. Dike has not received any salary from
the  registrant,  and  has deferred such payment until the registrant can afford
to  pay after  meeting  all  other  obligations.

2. Dr. Bradford's salary is based on a part-time employment, with a base salary 
and other non-cash compensation such as stock and stock option award. He is also
a member of the Board of Directors of  InterCare DX, Inc., an affiliated entity.


Indemnification

         The Company's  Certificate  of  Incorporation  eliminates or limits the
personal financial  liability of the Company's  directors,  except in situations
where  there has been a breach of the duty of  loyalty,  failure  to act in good
faith,  intentional misconduct or knowing violation of the law. In addition, the
Company's by-laws include provisions to indemnify its officers and directors and
other persons against expenses,  judgments, fines and amounts paid in settlement
in connection with threatened, pending or completed suits or proceedings against
such persons by reason of serving or having served as officers,  directors or in
other  capacities,  except in  relation  to matters  with  respect to which such
persons shall be  determined to have acted not in good faith,  unlawfully or not
in  the  best  interest  of  the  Company.

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

Section  16(a)  of  the  Securities  Exchange Act of 1934 requires the Company's
directors  and  executive  officers,  and  persons  who  own more than ten (10%)
percent of the  outstanding  Common  Stock,  to  file  with  the  Securities and
Exchange  Commission  (the "SEC")  initial  reports  of  ownership on Form 3 and
reports  of  changes  in ownership of Common Stock on Forms 4 or 5. Such persons
are  required  by  SEC regulation to furnish the Company with copies of all such
reports they file.

Based  solely  on  its  review  of  the  copies of such reports furnished to the
Company  or  written  representations  that  no other reports were required, the
Company  believes  that all  Section 16(a) filing requirements applicable to its
officers,  directors  and greater  than (10%)  percent  beneficial  owners  were
complied with during the twelve months ended December 31, 2004.

                                            18

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table sets forth, as of December 31, 2004 to the extent
known  to the  Company,  certain  information  regarding  the  ownership  of the
Company's  Common Stock by (i) each person who is known by the Company to own of
record or  beneficially  more than five percent of the  Company's  Common Stock,
(ii)  each of the  Company's  directors  and  executive  officers  and (iii) all
directors and executive officers as a group. Except as otherwise indicated,  the
shareholders  listed in the table have sole  voting and  investment  powers with
respect  to  the  shares  indicated.


Name  and  Address  of                       Amount  and  Nature  of
Beneficial  Owner            Title    Beneficial  Ownership   Status  Percent  of  Class
-------------------------  --------  --------------------  --------  -----------------
                                                                 
Anthony  C.  Dike,  M.D. (1,2)  Director     8,590,270         Active           58%

Michael  Muldavin        (2)    Director       125,000         Active            1%

James  W.  Truher        (2)    Director       165,900         Active            1%

Randy  Simpson           (2)    Director       125,000         Active            1%

Marcellina  Offoha, Ph.D (2)    Director       157,190         Active            1%

All  directors  and  Officers  as
a  group  (five  persons)                    9,162,460                          62%

Other  Beneficial  Owners

CGI  Communications  Services,  Inc.           961,501                           6%

Other public shareholders                    4,746,689                          32%

Total  Number  of  Shares  Outstanding      14,870,650                         100%

1.  Includes  330,000  shares  pledged  to  secure  the  asset  purchased by the
registrant from the Israeli Bankruptcy court. The said asset has been abandoned,
every efforts  are being made to recover these shares from the Israeli receiver.
Meanwhile, a stop transfer order  has  been  place  on  these securities.

2.  The numbers shown include the shares of  our  Common  Stock  actually  owned
as  of December  31,  2004  and the underlying options and warrants representing
shares person has the right or will have the right to acquire based on  the 2004
stock option plan  table.

3.  Anthony C. Dike, is the sole Director of MMG Investments, Inc, and an indirect
beneficial owner of 267,000 shares of Common stock  held by MMG Investments, Inc.



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

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.

PART  IV

ITEM 13. EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  OF  FORM  8-K

Item          Description
Exhibit 99.1  Independent Auditors' Report and Consolidated Financial Statements

                                            19

ADDITIONAL  INFORMATION
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
31.2  Certification pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
        of Foday Sorsor Conteh
32.1  Certification pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
        of Anthony C. Dike and Foday  Sorsor Conteh

Signatures

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:  September 1,  2005             By:  /s/  Anthony  C.  Dike
                           ____________________________________Signature
                                        Anthony  C.  Dike
                                    Chief  Executive  officer












































                                             20



                                    EXHIBIT 99.1




                              Financial Statements
                        and Independent Auditors' Reports
                           MERIDIAN  HOLDINGS,  INC.
                  YEARS  ENDED  DECEMBER  31,  2004  AND  2003






















































                                            i

                             MERIDIAN HOLDINGS, INC.




                                TABLE OF CONTENTS
     Item                                                   Page Number
                                                      

INDEPENDENT   AUDITORS' REPORTS                                F-1

RESATATED AUDITED FINANCIAL STATEMENTS

     Consolidated  Balance  Sheets                             F-3

     Consolidated  Statements  of  Operations                  F-4

     Consolidated  Statements  of  Stockholders'  Equity       F-5

     Consolidated  Statements  of  Cash  Flows                 F-6

     Notes  to  Consolidated  Financial  Statements            F-7












































                                     F-1
To  the  Board  of  Directors
Meridian  Holdings,  Inc.


REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM
------------------------------------------------


We have audited the  accompanying balance sheet of Meridian Holdings, Inc. as of
December 31, 2004 and 2003 the related statements of  operations,  stockholders'
equity and cash flows for the year then  ended. These financial  statements  are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial  statements  based  on  our  audit. 

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

As discussed  in note  14  to the financial statements, the Company has restated
its  financial  statements  to  correct  errors in the accounting for a judgment
receivable and the corresponding income from this judgment.

In our opinion, the financial statements referred  to above present  fairly,  in
all material respects, the financial position of Meridian Holdings, Inc., as  of
December 31, 2004,  and 2003 and  the results of its  operations  and cash flows
for the year then  ended,  in  conformity  with accounting  principles generally
accepted  in  the  United  States  of  America.



Madsen and Associates CPA's, Inc.
Salt Lake City, Utah
September 1, 2005


























                                     F-3

                             Meridian Holdings, Inc.
                                 Balance Sheets




ASSETS
                                                                 As of December 31,
                                                                ----------------------
                                                                    2004           2003
                                                                (Restated)                
                                                                 =======          ======== 
                                                                           
Current assets
Cash and cash equivalents                                       $  173,628         $    1,218
     Restricted cash (Note 8)                                      217,283            281,010
Accounts receivable, net of allowance for doubtful accounts 
of $198,030 and $179,813, respectively                            1,645,838         1,497,982
Other current assets                                                 11,420             8,302
                                                                -----------        ----------
            Total current assets                                  2,048,170         1,790,012

Fixed assets, (net of accumulated depreciation                       33,944            43,258
Intellectual property, net of accumulated amortization of
$34,998 as of (Note 3)                                                    -                  -
Investments (Notes 3 and 12)                                      3,424,997          3,448,564
                                                                ----------        -----------
       Total assets                                           $   5,507,111        $ 5,281,834
                                                               ============       ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable                                             $      110,925                  -
Accrued payroll and other                                           299,504          $ 233,301
Reserve for incurred but not reported claims (Note 8)               201,311            227,820
Line of credit (Note 5)                                              50,263             48,912
Current portion of long-term debt (Note 7)                            4,117                  -
                                                                  ---------           --------
               Total current liabilities                            666,120            510,033

Long Term Liabilities
Loan from Majority Stockholder/Office (Note 11)                    235,775                   -
Long-term debt, net of current portion (Note  7)                    45,121             189,479
                                                                   -------             -------
               Total Long Term Liabilities                         280,896             189,512
                                                                   -------             -------
                   Total liabilities                               947,016             699,512
                                                                  ========             =======
Commitments and contingencies (Notes 10)

Stockholders' equity (Notes 2, 3, 10 and 14)
Common stock (100,000,000 shares authorized, par value
  $0.001; 14,370,649 and 9,370,649 shares issued and 
  outstanding at December 31, 2004 and 2003, respectively)          14,370              9,370
Paid-in capital                                            $     5,526,760        $ 5,031,760
Accumulated deficit                                               (981,035)          (458,808)
                                                             --------------       ------------
             Total stockholders' equity                     $    4,560,095       $ 4,582,322
                                                             
                                                             --------------       ------------
        Total liabilities and stockholders' equity          $    5,507,111        $ 5,860,212
                                                             ==============       ============


See accompanying notes to consolidated financial statements.




                                     F-3


                                   Meridian Holdings, Inc.
                             Consolidated Statements of Operations




                                                        YEARS  ENDED  DECEMBER  31,
                                                        ---------------------------
                                                         2004                      2003
                                                      (Restated)
                                                       =======                =========
                                                                      

Revenues
   Capitation                                           $ 2,365,048             $ 2,624,135
                                                           ---------             ----------
                                                          2,365,048               2,624,135

Cost of revenues                                          1,288,208                 900,203
                                                            ---------               -------
                   Gross Profit                           1,076,840               1,723,932

                                                          
Operating expenses

     General and administrative                           1,549,824               1,515,505
                                                            ---------               -------
                                                          1,549,824               1,515,505
                                                      
                 Income (loss) from operations             (472,984)                208,427
                                                            
Other income and (expense)

      Equity interest in earnings of investment              (33,568)             (45,316)
      Other net                                              (15,675)             (24,545)
                                                             -------              --------
                                                             (49,243)             (69,861)

      Provision for income tax                                     -                     -
                                                             -------             ---------
      Net income                                            (522,227)            $ 138,566
                                                            =========            ==========
Net income (loss) per share:
       
       Weighted Average Shares
       Common Stock Outstanding                           13,120,649            9,383,146
                                                          ==========            =========
Net Income(Loss) per Common Share
       (Basic and Fully diluted)                           $  (0.04)              $  0.01
                                                           =========             ==========




See accompanying notes to consolidated financial statements.






                                     F-4


                                  Meridian  Holdings,  Inc.
                            Statements  of  Stockholders'  Equity
                             For  the  Years  Ended  December  31,
                                2004 (Restated)  and  2003





                                                                             
                                                                  Accumulated
                              Common Stock          Paid-in       Earnings
                               Shares     Amount      Capital     (Deficit)   
                             =========   ======      ========    ==========   
                                                            
Balances, December 31, 2001 93,706,485   $ 93,707 $  4,947,424   $(553,571)

Net Income/(Loss)                                                  (43,803) 
                           -----------  ---------  ---------      --------- 
Balance December 31, 2002   93,706,485   $ 93,707 $  4,947,424   $(597,374)

Net Income/(Loss)                                                  138,566 

Stock split reversal       (84,335,836)   (84,337)      84,337           -
                           -----------  ---------  ---------      -------- 

Balance December 31, 2003   9,370,649   $   9,370 $  5,031,760   $(458,808)

Net Income(Loss)                                                       

Issuance of stock for 
services at $.10 per share  5,000,000     5,000      495,000              -

Net loss for period                 -         -            -       (522,227)
                            ----------   -------    ------        -----------
Balance December 31, 2004   14,370,649   14,370    5,526,760     $ (981,035)
                           ==========   =========  ===========   ============ 

See accompanying notes to consolidated financial statements.

























                                     F-5

                             Meridian Holdings, Inc.
                      Consolidated Statements of Cash Flows




                                                           Years Ended December 31,
                                                            ======================== 
                                                              2004            2003      
                                                            (Restated)
                                                              ========         =========
                                                                        
Cash flows from operating activities
    Net income (loss)                                    $   (522,227)          $ 138,281
    Adjustments to reconcile net income (loss) to net
       cash provided by operating expenses:
       Depreciation and amortization                           18,232             33,030
       Common stock issued for services                       500,000                  -
       Equity in loss of subsidiary                            33,568             45,316

Changes to operating assets & liabilities
 (Increase) decrease in
       Restricted cash                                         63,727            119,983
       Accounts receivable                                   (147,857)          (343,511)
       Other current assets                                    (3,118)                  -
       Increase(Decrease) in:
       Accounts payable                                       (59,171)           (49,425)
       Accrued payroll and other                              299,504           (391,697)
       Incurred but not reported reserve                      (26,509)           (38,138)
                                                               --------            -------
Net cash used in operating activities                         156,149           (486,161)

Cash flow from investing activities
      Purchase of fixed assets                                (8,918)            (30,595)
      Disposition of fixed assets                                  -             315,002
      Investment in CGI                                      (10,001)            417,331
                                                               ---------         ---------
Net cash used in investing activities                        (18,919)            701,738

Cash flow from financing activities
     Borrowing from majority stockholder/officer               37,839                   -
     Advances from line of  credit                              1,351            (146,050)
     Repayment of long term debt                               (4,010)            (91,348)
                                                              ----------        -----------
Net cash provided by financing activities                      35,180            (237,398)
                                                              ----------        -----------

   Increase (decrease)in cash and cash equivalents           172,410             (21,821)
Cash and cash equivalents, beginning of period                 1,218              23,039
                                                             ----------         ----------
Cash and cash equivalents, end of period                   $ 173,628            $  1,218
                                                             ==========         ==========
Cash Paid for interest                                       $ 4,750           $   6,118


Supplemental Disclosure of non-cash
investing and financing activities Stock Issued               500,000

Reclassification of accounts payable as long term debt         63,205



          See accompanying notes to consolidated financial statements.


                                     F-6

                             MERIDIAN HOLDINGS, INC.

                   Notes to Consolidated Financial Statements

1.     Summary  of  Significant  Accounting  Policies

                              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  opportunities.

Cash And Cash Equivalents

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents ( e.g. restricted cash).  From time
to time, the Company  maintains cash balances  with financial  institutions  in
excess of federally insured limits.

                                  Equity Method

Investments  in  certain  companies  whereby the Company owns 20 percent or more
interest  are carried at cost, adjusted for the Company's proportionate share of
their  undistributed   earnings   or   losses,  because  the  Company  exercises
significant  influence  over  their  operating  and  financial activities.
Such investee entity includes CGI Communications Services, Inc.

                                Use of Estimates

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

                                   Fiscal Year

The Company operates on a December 31  year end.

                               Revenue Recognition

The Company  prepares  its  financial statements and federal income taxes on the
accrual basis of  accounting. The  Company  recognizes  capitation  revenue on a
monthly basis from managed care plans  that  contract with the  Company  for the
delivery   of  health  care  services.  This  capitation   revenue   is  at  the
contractually   agreed-upon per-member, per-month  rates.  For  the  year  ended
December 31, 2004, approximately 99% of capitation  revenues  are  derived  from
one Los Angeles  county  managed  care plans. 
                                Costs of Revenues

The  Company  recognizes costs of revenues paid to physicians on a monthly basis
who  contract  with the Company for the delivery of health care services.  These
costs  are   at  the  contractually  agreed-upon  per-member,  per-month  rates.

                                   F-7

Fair  Value  of  Financial  Instruments  and  Concentration  of  Credit  Risk

The  carrying  amounts  of  cash,  receivables,  accounts  payables  and accrued
liabilities  approximate  fair  value  because  of  the  immediate or short-term
maturity  of  these  financial  statements.

Fixed  Assets  and  Depreciation

Property and equipment are stated at cost.  Acquisitions having a useful life in
excess of one year are capitalized and depreciated  over their estimated useful,
1    Summary  of  Significant  Accounting  Policies  (continued)

life  using  the  straight  line  method   (normally  5-7  years).  Repairs  and
maintenance are expensed in the year  incurred.  

The  Company  provides for depreciation over estimated useful lives ranging from
three  to  five years, using the straight-line method.  Leaseholds are amortized
over the life of the related, noncancelable lease, or the related asset's useful
life,  whichever  is  shorter.  Repair  and maintenance expenditures that do not
significantly add to the value of the property, or prolong its life, are charged
to  expense,  as  incurred.  Gains  and  losses  on dispositions of property and
equipment  are  included  in  the  related  period's  statement  of  operations.

Research and Development Costs

Costs  incurred  in  the  Software research  and  development are  expensed  as
incurred 

Long-Lived  Assets

The   Company  reviews   the  carrying  amount  of  its  long-lived  assets  and
identifiable  intangible  assets  for  possible  impairment  whenever  events or
changes in circumstances indicate that the carrying amount of the assets may not
be  recoverable.  Recoverability  of assets to be held and used is measured by a
comparison  of the carrying amount of an asset to future net cash flows expected
to  be  generated  by  the  asset.  If  such assets are considered impaired, the
impairment  to  be  recognized  is  measured by the amount by which the carrying
amount  of  the  assets  exceeds  the  fair  value  of the assets.  Assets to be
disposed of are reported at the lower of the carrying amount or fair value, less
costs to sell.  

Earnings  Per  Share

Earnings  per  share is calculated pursuant to Statement of Financial Accounting
Standards  No.  128,  "Earnings  per  Share."  Basic  earnings per share ("EPS")
includes  no  dilution  and  is  computed by dividing income available to common
shareholders  by  the  weighted  average number of shares outstanding during the
period.  Diluted  earnings  per  share  reflects  the  potential  dilution  of
securities  that  could share in the earnings of the Company. 

Accounting  for  Stock-based  Compensation

The  Company  adopted  SFAS  No. 123, "Accounting for Stock-based Compensation,"
which  establishes  financial accounting and reporting standards for stock-based
compensation.  SFAS  No.  123  generally  suggests,  but  does  not  require,
stock-based  employee  compensation  transactions  be accounted for based on the
fair  value  of  the  consideration  received,  or  the fair value of the equity
instruments  issued,  whichever  is more reliably measurable.  Companies that do
not  elect  to change their accounting for employee stock-based compensation are
required  to  disclose the effect on net income as if the provisions of SFAS No.
123  were  followed.  The  Company  has  decided to retain the provisions of APB
Opinion No. 25, and related interpretations thereof, for recognizing stock-based
compensation  expense  for  employees,  which  includes  members of the board of
directors.  Non-employee  stock  compensation  is  recorded  at  fair  value  in
accordance  with  SFAS  No. 123.  
                                   F-8


During  the second quarter of 2004, the company issued 5,000,000 shares of  its
common stock to its',  employees  and  directors for a non cash consideration. 

Income  Taxes

The  Company  utilizes  the  liability  method of accounting for income taxes in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for  Income  Taxes."  Deferred  income  taxes  are  recognized  based  on  the
differences  between  financial  statement  and  income  tax bases of assets and
liabilities  using  the  enacted statutory rates in effect for the year in which
the  differences are expected to reverse.  Valuation allowances are established,
when  necessary,  to  reduce  deferred  tax  assets to the amount expected to be
realized.  The  provision  for  income  taxes represents the tax payable for the
period  and the change during the period in deferred tax assets and liabilities.

2.  Capitalization

The  Company  has  established one class of preferred stock, one class of common
stock  and  has  established  two  classes  of  warrants.  1,000,000  Class  "A"
Redeemable Common Stock Purchase Warrants have been established, exercising into
Common  Shares  at  an  exercise  price  of $3.00 per share. 1,000,000 Class "B"
Redeemable Common Stock Purchase Warrants have been established, exercising into
Common  Shares  at  an  exercise  price  of $4.50 per share.  There were no such
warrants  outstanding  as  of  December  31,  2004  and  2003.

In  April  2000, the board of directors approved the authorization of 20,000,000
shares  of  $0.001 par value preferred stock.  The preferred stock may be issued
from  time  to  time  in one or more series, and the board of directors, without
further  approval  of  the stockholders, is authorized to fix the dividend rates
and  terms,  conversion  rights,  voting  rights,  redemption  rights and terms,
liquidation  preferences,  and  any  other  rights, preferences, privileges, and
restriction  applicable  to each series of preferred stock.  There are no shares
of preferred stock outstanding, and no series of shares have yet been designated
as  of  December  31,  2004.

3.     Investments  and Business Port-Folio:

                                     Capnet

The  Company  completed  the  acquisition  of  the  Capnet  Group  of  Companies
("Capnet")  on  May 25, 1999 through the issuance of 25,000,000 pre-split shares
of  common stock to the Company's majority stockholder/officer with an estimated
fair  value  of  approximately  $527,000.  During  1999,  the Company incurred a
write-off  of  approximately  $518,000  due  to the impairment of certain assets
acquired.  Capnet  currently  operates  as  a  division  of  the  Company.

                                       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  $3,911,511 and $3,880,000 as  of  December  31,  2002
and 2001  respectively.  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
expired  on  December  30,  2004.
                                   F-9


4.    Fixed Assets

Property  plant  and  equipment are stated at cost. Acquisitions having a useful
life  in  excess  of  one  (1)  year  are capitalized. Repairs  and  maintenance
are  expensed  in  the  year  incurred. Capital  assets  are  depreciated by the
straight-line   method   over   estimated  useful  lives  of the related assets,
normally five (5) to seven (7)years. 

Property  and  equipment  consists  of the following as of December 31, 2004 and
2003 respectively and is summarized as follows:



                                                           2004             2003 
                                                           ======           ====== 
                                                                   
Computer equipment                                      $ 111,155          $ 102,237
Leasehold improvements                                      6,500             6,500
Office furniture and fixtures                              36,603            36,603
Office equipment                                           25,313            25,313
Software                                                   25,803            25,803
Medical equipment                                           6,654             6,654
                                                           -------         --------
                                                          212,028           203,110
Less accumulated depreciation                            (178,084)         (159,852)
                                                         $ 33,944          $ 43,258

5.   Line of Credit

During  2004 and 2003, the Company had a $50,000 line of credit with a financial
institution.  Approximately $50,263   and  $48,912  was  outstanding under  this
facility as of December  31,  2004 and 2003, respectively. Related advances bear
interest  at 11%, and interest is payable  monthly. The  line  of credit expired
March 21, 2005,  and  has  been subsequently renewed through March 21, 2006.

6.   Lease Obligations

The Company's corporate offices are located at 900 Wilshire Boulevard, Suite 500
Los  Angeles, California 90017. The  lease expires  in May 2005 and provides the
option to  renew  for  one three-year term.  Monthly  rents range from $4,761 to
$5,786 per month.

In   addition,  the  Company  leases office space on a month-to-month basis. The
Company  also  entered  into  a  five-year vehicle lease agreement in September
2002. Monthly rents  on  these  leases  are  $1,560  and  $1,050,  respectively.

7.   Long-term  Debt

The Company  has  various loans with financial institutions with interest rates
ranging  from  4% to  15%  and  maturity  dates  ranging  from  2015  to  2024.

8.   Income  Taxes

The Company utilizes the liability method of accounting  for income taxes. Under
The liability method deferred tax assets and  liabilities are  determined  based
on the differences between financial reporting and the tax  bases  of the assets
and liabilities and are measured using the enacted tax  rates and laws that will
be in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recorded, when it is more likely than not,  that such tax
benefit will not be realized.

On December 31, 2004 and 2003, the Company had a net operating losses  available
For carry forward  of $981,035 and  $458,808 respectively. The  tax  benefit  of
This loss carryforward  has been fully offset by a valuation reserve because the
                                       F-10

use to the tax benefit  is undetermined since there is  no  reasonable method to
determine the usage of  this carryforward in the  future. The  loss carryforward
will start to expire in 2018.

9.    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  periods  ended
December 31,  2004  and  2003 respectively..

The Company has also reflected the monies in the escrow account as of December
31, 2004  and   December   31, 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.

10.   Stock Option Plan

In  January  2001,  the stockholders of the Company approved a stock option plan
for  the  directors of the Company (the "Plan").  The Plan provides for issuance
of up to 5,000,000 shares of its common stock.  Options to directors are granted
based  on  attendance at board meetings.

During  the second quarter of 2004, the company  issued 5,000,000 shares of  its
common stock to its',  employees   and  directors for a non cash consideration. 

As at December 31, 2004, no shares were available for  grant  under  the  terms
of  this  plan.

The  purchase price per share (the "Option Price") of the shares of Common Stock
underlying  each  Option  shall  be  not less than the fair market value of such
shares  on  the date of granting of the Option.  Such fair market value shall be
determined  by the Option Committee on the basis of reported closing sales price
on  such  date  or,  in the absence of reported sales price on such date, on the
basis  of the average of reported closing bid and asked prices on such date.  In
the absence of either reported sales price or reported bid and asked prices, the
Option  Committee  shall  determine  such  market value on the basis of the best
available  evidence.

Each  Option  shall be exercisable for the full number of shares of Common Stock
subject thereto, or any part thereof, in such installments and at such intervals
as the Option Committee may determine in granting such Option, provided that (i)
each  Option  shall  become  fully exercisable no later than five years from the
date the Option is granted, (ii) the number of shares of Common Stock subject to
each  Option  shall become exercisable at the rate of at least 20% per year each
year  until  the  Option  is  fully  exercisable,  and  (iii)  no  option may be
exercisable subsequent to its termination date.  Each Option shall terminate and
expire,  and shall no longer be subject to exercise, as the Option Committee May
determine  in  granting such Option, but in no event, later than ten years after
the  date  of  grant  thereof.




                                       F-10


 
                                                 2004                   2003
                                                 =====                  =====
                                    Fixed Options                  Fixed Options
                                      Shares           Weighted        Shares     Weighted
                                                       Average                    Average
                                                        Price                      Price
                                      ========         ========       =======     ========
                                                                         
Outstanding at beginning of Year        1,094,000         $0.57       1,500,000    $ 1.45
          Granted                       3,906,000          0.20       1,500,000    $ 0.46
          Exercised                    (5,000,000)         0.10        (406,000)     0.17
          Forfeitures/Cancelled                 -             -      (1,500,000)    (1.45)
                                         ----------       ------      ---------   ------
Outstanding at  end of the year                  0       $ 0.00       1,094,000     $ 0.57
                                         ==========       ======       =========    =======
Exercisable at end of year                       0       $ 0.00       1,094,000    $ 0.57
                                         ==========      ======       =========    =======
Weighted average fair value per Options
         Granted during the year                        $ 0.29.                    $ 1.95

Proforma disclosure  of  the  effect  of  accounting  for  stock options under
Statement of Financial Accounting Standard  (FAS 123) is required. The Company
accounts for its stock options in  accordance  with  APB 25  " Accounting  for
Stock Issued to Employees". Under APB 25, no compensation is  recognized  when
the exercise price of employee options is equal to the fair  market  value  of
the underlying stock on the date of the grant. For each of the Company's stock
options the exercise price was equal to the estimated fair market value of the
shares at the date of grant.

11.   Related  Party  Transactions

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 for non cash consideration,
under  the  2003 qualified and non-qualified   stock  option plan,  following
an  S8  registration  statement filing with the SEC.

12.  Equity  Method  Investments
Summary financial information for CGI as of and for the two years ended December
31,  2004 and 2003 respectively is  presented  in  the  following  table.



                              2004                      2003
                            (unaudited)             (unaudited)
                                         
Long-term assets             $ 5,273,128           $  5,273,128
Total assets                   5,273,128              5,273,128
Current liabilities            1,588,932              1,857,097
Total liabilities              1,588,923              1,857,097
Revenues                               -                      -
Gross margin                           -                      -
Net income (loss)              (250,792)              (462,647)

The  differences  in the underlying net equity of the above-described investees
and the investment balances recorded at December 31, 2004 and 2003 respectively
are  a result of the initial acquisition accounting of the Company's percentage
interests.


                                          F-12

13     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 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. 


14. Restatement of financials statements

The Company  has restated  its financial statements as of and for the year ended
December  31, 2004. The Company originally had  recorded  a  judgment receivable
and Income from judgment award in the amount  of  $350,000  (See  Note  13-Legal
Proceedings). Although management  is actively pursuing this judgment, according
to accounting pronouncement FASB No. 5,  this judgment award has been treated as
a  gain  contingency  and the income  will not be recognized until the amount is
collected.




                    Originally Reported        Restatement              Restated on
                      June 25, 2005             Adjustment           Septemebr 1, 2005
                                                         
Total Assets               $ 5,857,111           $ 350,000            $ 5,507,111
Net Loss                       172,227             350,000                522,227


Weighted Average
Shares-Common
Stock Outstanding        13,120,649            13,120,649              13,120,649

Net Loss Per Share       $ (0.01)                $(0.03)                 $().04)


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  closed  sometime  in  November 2004.
Subsequently, Capnet IPA has signed a release  and  assignment  of  the contract
with Tenet to Centinela Freeman HealthSystem.


















                                          F-13