UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON,  D.  C.  20549

                                  FORM  10-KSB
                              Amendment Number 1
(  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,  2005

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

           For the Transition Period From  ___________ to ____________

                        COMMISSION FILE NUMBER:   0-30018


                             MERIDIAN HOLDINGS,INC.

             (Exact Name of Registrant as Specified in its Charter)

              COLORADO                                   52-2133742

        (State of Other Jurisdiction of             (I.R.S.  Employer
     Incorporation  or  Organization)               Identification  Number)

            6201 Bristol Parkway, Culver City California, 90230

                    (Address of Principal Executive Offices)

                                 (213) 627-8878

              (Registrant's telephone number, including area code)

                                       N/A

    (Former name, former address and 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, 2005 were $1,770,090

As  of  December  31, 2005, the Registrant had 18,120,649  shares  of its $0.001
par value common stock outstanding with a market capitalization of $1,812,065








                                        Page 1 of 28 sequentially numbered pages
                                                                   Form 10-KSB
                       Annual Report For The Fiscal Year Ended December 31, 2005

                                            1


                                TABLE OF CONTENTS

                                                                    Page Number
                                    PART  I

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

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

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . .  8

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  . . . . . . . . . .  . . . . . . . . . . . . . .14

Item 8. Changes In and Disagreements With Accountants on Accounting and .. . .14
Financial Disclosure

                                  PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons . . . . .15

Item 10. Executive Compensation  . . . . . . . . . . . . . . . . . . . . . . .18

Item 11. Security Ownership of Certain Beneficial Owners and Management . . . 19

Item 12. Certain Relationships and Related Transaction . . . . . . . . . . .. 20

Item 13. Exhibits and Reports on Form 8-k  . . . . . . . . . . . . . . . . . .20





























                                            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.

Current Products and Services

Vasocor Vascular Diagnostic Centers

The  Company  recently  initiated  the commercialization of Vasocor Vascular
Diagnostic Centers (VVDC), after  an extensive  patient, provider and health
insurance plan acceptance test.

It   is  a  freestanding  diagnostic  device,  that  employs  a  revolutionary
non-invasive inexpensive,  easy  to  use  procedure  that  has been clinically
proven to detect coronary artery  disease  (CAD)  earlier  and more accurately
than existing Techniques. CAD. The Vasocor Device has FDA pre-market approval,
validated  clinical  trial  data,  Medicare/Medicaid  and  Indemnity insurance
re-imbursement  eligibility.  In  addition  to  coronary arterial disease, the
device  can  also be used in the non-invasive diagnosis of peripheral vascular
disease and estimating endothelial function

InterCare Clinical Explorer (ICE(tm))

This is an Electronic Health Record System, with Tele-Medicine and Telehealth
Components. 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  6201 Bristol Parkway, Culver City,
California  90230.  Its  telephone  number  is (213) 627-8878.

                                            4

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
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 Systems, (VIP Concierge Medical Services Company) is a  division
of  Meridian  Holdings,  Inc, focused in provision of tertiary medical specialty
care for the  international clientele  in  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 the patients, families, physicians, allied health, hospitals and vendors.

We  also  offer  optional  Flexible  Medical Care Services through our preferred
participating healthcare provider network in both United States and Abroad under
our Healthcare membership discount services program, as well  as  facilitate the
setting up of a Health Savings Account (HSA) program through a partner
Commercial Bank, and/or  High  Deductible  Health  Insurance plan  through a
partner health insurance company.

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
                                            5

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.

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
                                            6

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
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, 2005, the  Company had  approximately 14 full-time employees.
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 6201 Bristol Parkway, Culver
City, California 90230. The Company is required to pay $13,975 per
month rental for both Culver City and Lawndale clinic facilities. The telephone
number is (213) 627-8878.

                                            7

ITEM 3. LEGAL PROCEEDINGS

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 February 25, 2006 the shareholders voted to re-appoint Madsen Associates CPA,
Inc., as  the  Company's  independent  accountant  for  the  fiscal  year  ended
December 31, 2005. Also,  the  shareholders  re-approved  the  Registrants' 2001
stock  option  plan  for  2006,  as  well  as  the  election  of  the  following
directors for another one year term:

     Mr.  James  Truher
     Dr.  Ludlow Creary
     Mr.  Andrew Smith
     Mrs  Marcelina  Offoha
     Dr.  Anthony C. Dike

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 2005
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

                                    High                  Low
Calendar 2004
Quarter ended March 31              0.031                 0.031
Quarter ended June  30              0.06                  0.06
Quarter ended September 30          0.10                  0.10
Year ended December 31, 2004        0.15                  0.13


At  December 31, 2005, the company had approximately 543 shareholders of record
for  its  common stock.  Our  preferred  shares  have never been offered to the
public, therefore  have  never  been  publicly  traded.


                                            8

SELECTED  FINANCIAL  DATA

The Company had  net  working capital of $1,576,876  as  at   December 31  2005
compared  to $1,187,221  at December 31, 2004. This  represents  a 33% increase
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, 2005 AS  COMPARED  TO  THE
TWELVE  MONTHS  ENDED  DECEMBER 31, 2004.

REVENUE

Medical services revenues decreased by 70%  from $887,926 for three months ended
December 31,  2004 to  $269,010  for  three  months ended December 31, 2005. For
Twelve months ended December  2005, Medical  services  decreased  by  9.8%  from
$2,365,048    for  the  twelve months   ended December  31,  2004 to  $1,770,090
for the twelve  months ended December 31, 2005. The decrease in medical services
revenue is attributed to decrease in membership in the Capnet IPA due to
dis-enrollment of membership, as well as termination of certain managed care
contract with Los Angeles Community Health Plan and Tenet Health Systems.

Capitation  revenues  from our  CHP contract decreased  by  93% from $331,514
for three months ended December 31, 2004 to $22,451 for three months ended
December 31, 2005.

                                            9

For twelve months ended December 31, 2005, Capitation revenue decreased
from $1,322,830 for the twelve months  ended December 31,  2004 to $ 406,577
for  the  twelve months  ended  December 31,  2005. The  decrease  in capitation
revenue  was  due  in  part  to  the  termination  of  some  of our Managed care
contracts with CHP, delay  in  procuring  a  replacement  contracts  for the new
hospital owners,  dis-enrollment  of  members,  and increased withholding of our
capitation fees by CHP. Management  is  pursuing  all  its  available options to
mitigate further losses, including but not  limited to procuring new manage care
contracts, expansion of  our  primary  care  physician  network  into  adjoining
counties   in  Southern   California.  There  can  be  no  guarantee that  these
efforts will be successful in reversing these losses.

Fee  for  Service  Revenue,  decreased by 55%  from $549,140 for  three  months
ended December 31, 2004  to $246,559 for comparable period in 2005

For twelve months  ended  December 31, 2005, fee for service revenue  increased
by 31% to $1,361,715, as compared to $1,035,171, during the  comparable  period
in 2004. This receivable relates  principally, to medical services provided on
a fee-for-service basis, and are  reduced   by   amounts   estimated  to  be
uncollectible. These   receivables   are   typically uncollateralized  customer
obligations due under  normal trade  terms  requiring payment within 30-90 days
from the invoice date. The  Company  does  not charge late  fees  or  penalties
on  delinquent  invoices,  however  it  continually  evaluates the need  for  a
valuation allowance. Management's estimate of uncollectible amounts  is   based
upon   its   analysis   of   historical collections and other qualitative
factors.

With regard to revenues,  expenses  and  receivables  arising from global risk
agreements with CHP and TENET, the Company estimates amounts it  believes will
ultimately be realizable based in part upon estimates of claims  incurred  but
not  reported  (IBNR)  and  estimates  of retroactive adjustments or unsettled
costs to be applied by CHP and/or  Cap Management Systems.  The IBNR estimates
are made  by  CAP-Management Systems,  utilizing  actuarial  methods  and  are
continually  evaluated  by  management  of the Company based upon its specific
claims  experience.  It  is  reasonably  possible  that  some  or all of these
estimates  could  change  in  the  near  term  by  an  amount  that  could  be
material  to  the  financial  statements.

Cost of Revenues

The cost  of revenue for  twelve months  ended  December 31, 2005 is $630,372,
compared  to  $1,288,208, for  twelve  months  ended  December  31,  2004. The
decrease  in cost  of  revenue is due to decrease in volume medical claims
paid in 2005 fiscal year, low membership enrolment and termination of certain
managed care contracts..

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, 2005, these cost represents  35% of total
revenue compared to 56% for the year ended December 31, 2004.  This is referred
to as Medical Loss Ratio (MLR). 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 $816,838 or 46 %  of  total  revenues
for  the twelve  months ended December 31, 2005,  compared to $1,549,824 or 66%
of  total  revenues for  twelve months ended December 31, 2004. The decrease in
general and administrative expense is  due decrease in fees paid to consultants
                                            10

as well as  other corporate expenses.

Of  the  $816,836  General  and  administrative  expense for the period ended
December 31, 2005, $756,235  was  for  employee salaries and wages, $17,492 was
For depreciated assets, $10,588 was for Taxes and Permits, and the rest was for
General corporate purposes.

INCOME/LOSS FROM OPERATIONS

The  registrant  recorded a net income from  operations  for the  twelve months
ended December 31, 2005 of  $323,356,  compared to a  net  loss  of  $472,984,
during  comparable period in 2004. The increase in Net operating income for the
period ended the increase in fee for service revenue and decrease in general
and administrative expense for the period then ended.


NET INCOME/EXPENSE

On December 31, 2005 the company recorded Net loss of $1,362,973 as compared
To $522,227 for the period ended December 31, 2004. The increase in Net Loss
is due to a write down of investment in subsidiary in the
amount of $1,416,019 and the write off of related party receivable in the
amount of $240,522 during the period ended December 31, 2005. Management is
aggressively seeking for new contracts and other avenues to generate revenue.
There can be no assurance that these efforts will yield dividends in the next
near future.

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
                                           11

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  continues to  aggressively  expand  its  provider network, as well
as seek for other managed care and PPO contracts for its contracted  providers.
We plan to expand  our provider network to Riverside,  San  Bernardino,  Orange
and greater Los Angeles, County, with  the hope of  increasing  our  membership
enrollment. Also, the company  is aggressively seeking for  more  managed  care
contracts in the four counties  targeted  for proposed network expansion. There
can be no assurance that this plan of network expansion will yield immediate
dividend.

The Company has initiated a community outreach program targeting Medicare
eligible members about the Medicare Prescription Drug Program.

Passed by Congress and signed into law by  President  Bush on December 8, 2003,
the Medicare  Prescription  Drug,  Improvement  and  Modernization  Act of 2003
(MMA), made sweeping changes to the Medicare program including the  creation of
Part D, the prescription drug coverage program that will be available beginning
January  1,  2006.  CMS  noted in its September 23, 2005 press release, "People
with Medicare  will  be  able  to  get  prescription  drug coverage in January,
through their choice of either a newly approved  stand-alone prescription  drug
plan that works with traditional  Medicare,  or  a Medicare Advantage plan that
offers drug coverage and other benefits. We hope that by promoting this program
to the communities  we serve,  we  will  be able  to enroll patients into our
provider network, while  proving  our  patient  population  timely  information
regarding their healthcare needs.

On March 5, 2005, the following individuals  were elected to serve as directors
of the company until the 2006 annual meeting: Jerry Aguolu, James Truher, Randy
Simpson  and  Marcellina  Offoha.

Additionally, shareholders ratified the reappointment of Madsen Associates CPAs,
as  the  independent  auditor  for  the fiscal year ending December 31, 2004 and
reapproved  the  Company's  2001  Joint Incentive and Non-Qualified Stock Option
Plan  for  fiscal  year  2005.

On July 18, 2005 the company issued a press release announcing that its'
subsidiary CGI Communications Services, Inc., (CGI) Common Stock is now trading
Over The Counter (OTC) under the symbol "CGIC".

Also,  CGI  Communications  Services,  Inc.,  an  applications services provider
specializing  in  Telemedicine  and  Telehealth  services  to  the  healthcare
community,  has  entered into a memorandum of understanding (MOU) with ITeMAX, a
technology Company based in Riverside California , that specialized in providing
ITenabled  services  to  the  global  marketplace

Also, during the second quarter of 2005, the registrant re-stated  it financials
for the June 30 2004 and December 31, 2004 year end to  reflect the loss in its'
investment in CGI Communication services, Inc. (Subsidiary)  and  the removal of
judgment receivable  which  is  a gain contingency  from the account and instead
placing it in  the  note  to  the financial statements, in accordance with GAAP,
so as not to recognize revenue prior to realization. Every  effort is being made
by  the management to collect on this judgment.

On  August  8,  2005,  the  board directors authorized the issuance of 3,750,000
shares  of  common stock of the registrant  at a fair-market value of 0.08 cents
                                           12

per  share  (based  on  closing Asking price of our common stock as of August 5,
2005)   to   Anthony  C.  Dike, MD,  our  Chairman  and  CEO,  in  exchange  for
extinguishing  $300,000  debts  owed to him by the registrant as at December 31,
2004.

On Septmber 2, 2005, the  registrant  announced  that  pursuant  to  the written
consent of the board of directors  of  both  Meridian  Holdings,  Inc,  and  CGI
Communications Services, Inc., (Pinksheet: CGIC) dated August 24, 2005, in which
it was  approved that Meridian Holdings, Inc.,  declare a dividend of  shares of
CGI  Communications Services, Inc.,  Common  Stock  it  owns,  to  each  of  its
shareholders with the exception of all current  and past officers, directors and
affiliates, by transferring or causing to be  issued one  (1) share of  the  CGI
Stock for every ten  (10) shares of  Meridian  Holdings, Inc., common Stock held
by  each  of such shareholder ("Dividends") of record as of September 26, 2005.

On  October 4, 2005, Tenet HealthSystem Hospitals, Inc,  (Tenet)  announced that
it has entered  into  an  agreement  to  sell  Community & Mission  Hospitals of
Huntington Park in Huntington Park, California., to Karykeion, Inc., a privately
held Corporation. These are two  of the  hospitals contracted   with  CAPNET IPA
and County of Los Angeles Community Health Plan . This  transaction is  expected
to  closed on December 31, 2005. Subsequently,  Capnet  IPA  has initiated a new
contract negotiation with the new owners of the hospital.

On December 23, 2005 the registrant announced that  CAPNET  IPA has entered into
a Management Services and Virtual pool  Agreement  with  Regal Medical Group

Under the terms of the agreement which becomes effective immediately, Regal will
evaluate contracts and represent CAPNET in negotiations with payors,  hospitals,
ancillary  vendors  and physicians who provide medical services to  enrollees on
behalf of  CAPNET. Simultaneous to this agreement, the  parties  have executed a
virtual  pool  agreement  that  allows  CAPNET  access  to over  17 managed care
contracts with various HMO/Payors within Southern California.

Recent Events

On February 8, 2006, the registrant issued a press release announcing that
Meridian  Health  Systems, a  healthcare services division of Meridian Holdings,
Inc,  has  entered  into  an  Exclusive  Healthcare Services and Project Teaming
Agreement  with  Los  Angeles  Hispanic  Health  Network,  (LHHN), a Los Angeles
Metropolitan Hispanic Chambers  of  Commerce  initiative.

Under  the  terms of this three-year automatically renewable agreement, Meridian
will  arrange  for the provision of healthcare services on an exclusive basis to
enrolled  employees  and  relatives  of  small to medium sized Hispanic employer
groups  and  self employed individual members of LHHN, in a culturally sensitive
manner, through Meridian's network of affiliated physicians, hospitals and other
ancillary  services providers initially  within Greater Los Angeles County, with
later  expansion  to  other  areas  of  United  States  and  abroad.

The  company projects that this agreement with LHHN which initially is estimated
to  provide  increased  health  insurance  purchasing power to over 500 employer
groups mainly in Los Angeles metropolitan area, will provide revenue to Meridian
based  on  member  enrollments  and  network  access  fees.

At the annual meeting of the shareholders, held on Saturday, February 25, 2006,
the  following  individuals  were  elected to serve as directors of the company
until the next  annual  meeting:  Andrew Smith, Ludlow Creary, James Truher and
Marcellina Offoha. Anthony C. Dike, was re-elected for another three year term.

Additionally, shareholders ratified the reappointment of Madsen Associates
CPA, Inc., as the independent auditor for the fiscal year ending December 31,
2005 and re-approved the Company's  2001  Joint  Incentive  and Non-Qualified
Stock Option Plan for fiscal year 2006.


                                           13

Subsequent Events.

On May 19, 2006, the company accepted the offer by InterCare DX, Inc., and
CGI Communications Services, Inc, both an affiliated entities 5,000,000
of Common stock at fair market value of 0.023 cents and warrant to
purchase additional 5,541,503 shares at 25 cents per share, with
expiration date of May 19, 2008, in exchange for forgiveness of debt owed
to Meridian, in the Amount of $1,500,375.84. by InterCare. Also, the
registrant  accepted  the Offer to be issued by CGI Communications Services,
6,013,043  Shares  of this CGI Common Stock at 0.04 cents per share, to
Meridian Holdings, Inc, in exchange for forgiveness debt in the amount of
$240,521.71

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.

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,
                                           14

the Company's management was required  to  apply  its reasonable judgment. Based
upon the required evaluation, the Management concluded  that  as of December 31,
2004,  the   Company's   disclosure   controls  and  procedures  were  effective
(at  the  "reasonable  assurance"  level  mentioned  above)   to   ensure   that
information  required to be  disclosed  by the Company in  the  reports it files
or submits  under  the Exchange  Act  is  recorded,  processed,  summarized  and
reported  within  the  time  periods  specified  in  the Securities and Exchange
Commission's rules and forms.

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
time  to  time  directly or  indirectly affect the Company's disclosure controls
and  procedures,  as  well  as  the  Company's  internal  control over financial
reporting.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company's internal controls or in other
factors that could  significantly  affect internal controls as of
December 31, 2005

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, 2005

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
                                           15

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 2004/2005 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.

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  February 25,  2006.

James  W.  Truher
-----------------
Mr.  Truher, aged 70, 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.




                                            15

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

Ms. Offoha, age 51, 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.

Ludlow Creary, MD
-----------------

      Professor  Ludlow Creary, MD. age  75 is a  family  physician  in private
practice in Los Angeles, California. He  is currently  a Professor  of Clinical
Family Medicine at UCLA School of Medicine. He  was  formerly the  Chairman and
Professor of Family Medicine Department  at LAC-King/Drew Medical  Center,  Los
Angeles  California  from 1981-2000. He is a member of the Board  of  Directors
of  California  Academy  of  Family Physicians Foundation. He is  a  member and
Chairman of Physician Advisory Counsel of Imperial Partners LLC.

Andrew M. Smith, CPA
-------------------

      Mr.   Andrew  M.  Smith, age 57,  a  Certified  Public  Accountant  is  a
Principal  Accountant  at  Williams  and  Tucker  APAC,  with  overall
                                            16

responsibilities for audit, write-up,  management  consulting, tax engagements,
and  personal  computers  applications  for the  firm and client. Since 1975 he
has been involved in management of a  Forbes 500  company, having served as the
Finance  Manager  of  The Walt Disney  Company  from 1975-1988. He is currently
a member of board of directors and  treasurer  of Partners Federal Credit Union
a  $100,000,000   credit  union  servicing   Orange  County,  California  based
employees of the  Walt Disney Company. He also  served as  the  Past  President
and Treasurer of  Toastmaster International. He  was  formerly  an  independent
auditor of Meridian Holdings, Inc.

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
                                            16

         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. Smith, Truher, Creary 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,  2005, the Company's  Board of
Directors  acted  six 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,  Madsen Associates
CPA, Inc. 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  non-audit 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
                                            17

       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, 2005 and 2004,
for  filing  with  the  Securities and Exchange Commission.

                   Members of the Audit and Ethics Committee:

James Truher                                                Creary
Andrew Smith                                                Marcellina Offoha

                               Management Team

                       Capnet IPA Physician Network

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
Anibal Fallah, MBA  Director of Business Development (interim)
Henry Garcia, Director of Marketing and Media Communications.

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)  2005    $144,000          0        150,000        0

Wesley Bradford   (2)  2005    $ 35,000          0        100,000        0

1.  As  of  December  31, 2005, 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
                                            18

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, 2005.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table sets forth, as of December 31, 2005 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     9,065,255         Active           50%

Jerry Aguolu             (2,4)   Director       100,000         Active            0.5%

James  W.  Truher        (2)     Director       265,900         Active            1.4%

Randy Simpson            (2,4)   Director       200,000         Active            1.0%

Marcellina  Offoha, Ph.D (2)     Director       257,190         Active            1.4%

Wesley G. Bradford, MD   (2)     Medical        200,000         Active            1.0%
                                 Director
All  directors  and  Officers  as
a  group  (five  persons)                    10,088,345                           55%

Other  Beneficial  Owners

CGI  Communications  Services,  Inc.           611,501                             3%

MMG Investments, Inc. (3)                    2,767,000                            14%

Other public shareholders                    5,253,354                            28%

Total  Number  of  Shares  Outstanding      18,720,200                           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.
                                            19

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,  2005  and the underlying options and warrants representing
shares person has the right or will have the right to acquire based on  the 2005
stock option plan.

3.  Anthony C. Dike, is the  sole  Director  of  MMG Investments, Inc,  and  an
Indirect  beneficial  owner  of  2,767,000  shares  of  Common  stock  held  by
MMG Investments, Inc.

4. Directors whose term expired as of December 31, 2005.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On  August  8,  2005,  the  board directors authorized the issuance of 3,750,000
shares  of  common stock of the registrant  at a fair-market value of 0.08 cents
per  share  (based  on  closing Asking price of our common stock as of August 5,
2005)   to   Anthony  C.  Dike, MD,  our  Chairman  and  CEO,  in  exchange  for
extinguishing  $300,000  debts  owed to him by the registrant as at December 31,
2005.

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

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

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:  May 22, 2006,              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,  2005  AND  2004
























































                                            i

                             MERIDIAN HOLDINGS, INC.




                                TABLE OF CONTENTS
     Item                                                   Page Number
                                                      

INDEPENDENT   AUDITORS' REPORTS                                F-1

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, 2005 and 2004 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.

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, 2005,  and 2004 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
May 22, 2006































                                     F-3

                             Meridian Holdings, Inc.
                                 Balance Sheets



ASSETS
                                                                 As of December 31,
                                                                ----------------------
                                                                    2005           2004

                                                                 =======          ========
                                                                           
Current assets
Cash and cash equivalents                                       $   22,525        $  173,628
     Restricted cash (Note 8)                                       11,525           217,283
Accounts receivable, net of allowance for doubtful accounts
of $282,454 and $179,813, respectively                            2,245,848        1,645,838
Other current assets                                                  7,802           11,420
                                                                -----------        ----------
            Total current assets                                  2,287,701        2,048,170

Fixed assets, (net of accumulated depreciation                       16,451           33,944
Intellectual property, net of accumulated amortization of
$34,998 as of (Note 3)                                                   -                  -
Investments (Notes 3 and 12)                                     2,000,000          3,424,997
                                                                ----------        -----------
       Total assets                                           $  4,304,152        $ 5,507,111
                                                               ============       ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable                                             $      309,156            110,925
Accrued payroll and other Expenses                                  307,021          $ 299,504
Reserve for incurred but not reported claims (Note 8)                39,480            201,311
Line of Credit facilities (Note 5)                                   50,348             50,263
Current portion of long-term debt (Note 7)                            4,460              4,112
                                                                  ---------           --------
               Total current liabilities                            710,825            860,949

Long Term Liabilities
Loan from Majority Stockholder/Office (Note 11)                      60,607             40,946
Long-term debt, net of current portion (Note 7)                      35,598             45,121
                                                                   -------             -------
               Total Long Term Liabilities                           96,205            280,896
                                                                   -------             -------
                   Total liabilities                                807,030            947,016
                                                                  ========             =======
Commitments and contingencies (Notes 10)

Stockholders' equity (Notes 2, 3, 10 and 14)
Common stock (100,000,000 shares authorized, par value
  $0.001; 18,120,650 and 14,370,649 shares issued and
  outstanding at December 31, 2005 and 2004, respectively)          18,121             14,370
Paid-in capital                                            $     5,823,010        $ 5,526,760
Accumulated deficit                                               (551,589)          (981,035)
                                                             --------------       ------------
             Total stockholders' equity                     $    3,497,122        $ 4,560,095
                                                             --------------       ------------
        Total liabilities and stockholders' equity          $    4,304,152        $ 5,507,111
                                                             ==============       ============





See accompanying notes to consolidated financial statements.
                                     F-3


                                   Meridian Holdings, Inc.
                             Consolidated Statements of Operations




                              YEARS  ENDED  DECEMBER  31,
                                ---------------------------

                                   2005             2004
                                  =======           =====
                                           

Revenues
Healthcare Services                $ 1,363,987     $ 1,042,218
Capitated Services                     406,577       1,322,830
                                     ---------       ----------
                                     1,770,566       2,365,048

Cost of revenues                     630,372         1,288,208
                                     -------          --------
     Gross Profit                  1,140,196         1,076,840


Operating expenses

 General and administrative         816,838          1,549,824
                                  ---------           --------
                                  1,334,824          1,549,824

  Income (loss) from operations     323,356           (472,984)

Other income and (expense)
 Write down of investment in
 Subsidiary                     (1,416,019)       $          -
 Write of related party
 Receivable                      ( 240,522)       $          -
   Equity interest in earnings
   of investment                    (8,978)            (33,568)

      Other net                    (20,810)            (15,675)
                                    -------            --------
                                (1,686,329)            (49,243)

      Provision for income tax         -                      -
                                   -------            ---------
      Net income (loss)        $ 1,362,973)        $ (522,227)
                                  =========           ==========
Net income (loss) per share:

  Weighted Average Shares
  Common Stock Outstanding       15,620,649          13,120,649
                                 ==========          =========

Net Income(Loss) per Common Share
       (Basic and Fully diluted)    $  0.00           $  (0.04)
                                  =========          ==========



See accompanying notes to consolidated financial statements.



                                     F-4


                                  Meridian  Holdings,  Inc.
                            Statements  of  Stockholders'  Equity
                             For  the  Years  Ended  December  31,
                                       2005  and  2004






                                                                 Accumulated
                              Common Stock          Paid-in       Earnings
                               Shares     Amount      Capital     (Deficit)
                             =========   ======      ========    ==========
                                                    
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)

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   14,371    5,526,760    $ (981,035)

Issuance of stock for
services at $.08 per share   3,750,000    3,750      296,250            -

Net income for period               -         -          -      (1,362,973)

Balance December 31, 2005   18,120,649   18,121    5,823,010  $ (2,344,008)
                           ==========   =========  ===========   ==========





See accompanying notes to consolidated financial statements.




















                                     F-5

                             Meridian Holdings, Inc.
                      Consolidated Statements of Cash Flows

                             Meridian Holdings, Inc.
                      Consolidated Statements of Cash Flows



                                 Twelve Months Ended December 31,
                                                 2005          2004
                                                             (restated)
                                                 ======      ======
                                                    
Cash flows from operating activities
  Net income/(loss)                              $ (1,362,973)  (522,227)
  Adjustments to reconcile net Loss/income
  to net cash used in operating activities:
  Depreciation and amortization                     17,493       18,232
  Common Stock issued for services                       -      500,000
  Equity in loss of subsidiary                       8,978       33,568
  Write down investment in subsidiary            1,416,019            -
  (Increase) decrease in:
         Restricted Cash                           205,758       63,727
         Accounts receivable                      (600,012)    (146,356)
         Other current assets                        3,618       (3,118)
         Accounts payable                            3,397       72,458
         Accrued payroll and other                 307,517      299,504
         Incurred but not reported reserve         (161,831)     (26,509)
                                                    ---------   ---------
Net cash used in operating activities              (161,676)     289,279

Cash flow from investing activities
        Purchase of fixed assets                         -        (8,918)
        Investments in CGI                               -       (10,001)
                                                    ----------     --------
Net cash used in investing activities                     -      (18,919)
                                                     ----------     -------
Cash flow from financing activities
   Borrowings from majority stockholder/officer      20,011       40,946
   Advances on line of credit                            85        1,351
   Repayment on long-term debt                       (9,523)    (140,010)
   Other Payments                                         -
                                                    --------   ---------
Net cash (used in) provided by financing activities  10,573      (97,949)
                                                    ---------    ---------
Increase/(Decrease) in cash and cash equivalents   (151,103)     172,411

Cash and cash equivalents, beginning of period      173,629        1,218
                                                   ---------     -------
Cash and cash equivalents, end of period           $ 22,526      173,629
                                                    =========   ========
Cash Paid for Interest                             $  4,536     $ 4,750
                                                   =========    =======
Supplemental Disclosure of non-cash
financing activities:
Shares issued for payment of long term debt       $300,000     $    -
                                                =========    ==========








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 at 6201 Bristol
Parkway Culver City, California, U.S.A. and contracts with physicians to provide
Health care  services  primarily  within  Southern California.

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.

                                   Fiscal Year

The Company operates on a December 31  year end.

                                  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.

On September 2, 2005, Meridian  Holdings,  Inc, announced that pursuant to the
written consent of the board of directors of both Meridian  Holdings, Inc,  and
CGI Communications  Services, Inc., (OTC: CGIC) dated August 24, 2005, in which
it was approved that Meridian Holdings, Inc., declare a  dividend  of shares of
CGI  Communications  Services, Inc.,  Common  Stock  it  owns,  to  each of its
shareholders with the exception of all current and past officers, directors and
affiliates, by transferring or causing to  be  issued  one (1) share of the CGI
Stock for every ten (10) shares of Meridian Holdings, Inc., common  Stock  held
by  each  of such shareholder ("Dividends") of record as of September 26, 2005.
Since  this  event occurred close to the end of third  quarter, 2005,  and  the
delivery  of  shares  to the shareholders of the registrant  continued into the
forth  quarter  of  2005. The fair market value of the shares  issued  based on
the closing bid price of the CGI Communications Services Common Stock of
0.01 cents per share was $39,000. In addition, at December 31, 2005, management
reviewed the carrying amount of the Investment in CGI. The investment amount
was written down to $2,000,000 which is the fair market value of the shares of
CGI that are owned by the Company.

                               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.

The fee for service receivable relates  principally, to medical services
                                     F-8

provided on a fee-for-service basis, and are  reduced   by   amounts   estimated
to  be   uncollectible.  These   receivables   are   typically  uncollateralized
customer obligations  due  under  normal trade  terms  requiring  payment within
30-90 days from the invoice date. The  Company  does  not  charge late  fees  or
Penalties on  delinquent  invoices, however  it  continually  evaluates the need
for  a valuation allowance. Management's estimate of  uncollectible  amounts  is
based upon  its  analysis  of  historical collections  and  other  qualitative
factors.

                                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.

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.

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.

                                   F-9

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.

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,  2005  and  2004.

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,  2005.

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
                                   F-8

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.

During  2005,  the Company recorded non-cash dividends of $39,000, representing
distributions of  a  portion  of its holdings of CGI Communications  Services,
Inc.  to the Company's stockholders. In addition, at December 31, 2005,
management reviewed the carrying amount of the Investment in CGI. The investment
amount was written down to $2,000,000 which is the fair market value of the
shares of CGI that are owned by the Company.

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, 2005 and
2004 respectively and is summarized as follows:



                                                           2005             2004
                                                           ======           ======
                                                                   
Computer equipment                                      $ 111,155         $ 111,155
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           212,028
Less accumulated depreciation                            (195,577)         (178,084)
                                                         $ 16,451          $ 33,944

5.   Line of Credit

During  2005 and 2004, the Company had a $50,000 line of credit with a financial
institution.  Approximately $50,348   and  $50,263  was  outstanding under  this
facility as of December  31,  2005 and 2004, respectively. Related advances bear
interest  at 11%, and interest is payable  monthly. The  line  of credit expired
March 21, 2006.

6.   Lease Obligations

The Company's corporate offices are located at 6201 Bristol Parkway,
Culver City, California 90230. The monthly obligation is $7,596 not including
common area Maintenance. In   addition,  the  Company  leases office space at
15306 South Hawthorne Blvd. The monthly obligation  for this clinic facility
is $4,754, not including  Common area maintenance.  These leases are under
renegotiation with the landlord, and the Company will update the lease
amount, retro-active to June 30,2005, upon completion of the new lease
agreement with the land-lord. In addition, the  Company has entered into a
                                   F-8

sub-ordinated agreement with the landlord to pay back leases and fees for
the period beginning April 1, 2006, when the new lease and review is
completed. The estimated amount due is approximately $150,000. This amount
and other fees have been reflected in the balance sheet under current
liabilities.

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.

7. 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, 2005 and 2004, the Company had a net operating losses  available
For carry forward  of $1,362,973 and  $981,035 respectively. The  tax benefit of
this loss carryforward  has been fully offset by a valuation reserve because the
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 2019.

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,  2005  and  2004 respectively..

The Company has also reflected the monies in the escrow account as of December
31, 2005  and   December   31, 2004 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. On December 2004 and 2005, Tenet sold the five hospitals under
this risk pool agreement to third parties. The company has entered into
a new risk pool agreement with one of the new owners of three of the TENET
hospitals under this risk pool agreement as at January 31, 2005.
Negotiations are in progress with the other owners of two of the TENET
Hospitals to renew the contract with Los Angeles Count Community Health plan.
As at May 19, 2006, this contract has not been renewed, and will subsequently
terminate retroactively to December 31, 2005.

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.
                                   F-8

As at December 31, 2005, 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
                                       F-10

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.

A  summary of the status of the Plan and changes during the years ended December
31 2005 and 2004 is  as  follows:



                                                 2005                   2004
                                                 =====                  =====
                                    Fixed Options                  Fixed Options
                                      Shares           Weighted        Shares     Weighted
                                                       Average                    Average
                                                        Price                      Price
                                      ========         ========       =======     ========
                                                                  
Outstanding at beginning of Year                0         $0.00       1,094,000    $ 0.57
          Granted                               0          0.00       3,906,000    $ 0.20
          Exercised                             0          0.00      (5,000,000)     0.10
          Forfeitures/Cancelled                 -             -               -         -
                                         ----------       ------      ---------   ------
Outstanding at  end of the year                 0        $ 0.00               0     $ 0.00
                                         ==========       ======       =========    =======
Exercisable at end of year                      0        $ 0.00               0     $ 0.00
                                         ==========      ======       =========    =======
Weighted average fair value per Options
         Granted during the year                        $ 0.00.                    $ 0.29

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  August  8,  2005, the board directors authorized the issuance of 3,750,000
shares  of common stock of the registrant at a fair-market value of 0.08 cents
                                   F-9

per  share (based  on closing Asking price of our common stock as of August 5,
2005)   to  Anthony  C. Dike, MD,  our  Chairman  and  CEO,  in  exchange  for
extinguishing  $300,000 debts owed to him by the registrant as at December 31,
2005.

12.  Equity  Method  Investments

APB  Opinion  No. 18,  The Equity  Method  of  Accounting  for  Investments in
Common  Stock,  states  that  use  of  the  equity  method  of  accounting for
investments  is   required  if  the  investor  has  the  ability  to  exercise
significant  influence  over operating and financial policies of the investee.

Paragraph  17  of the Opinion 18  establishes standards for use of the  equity
method  to  account for investments in common stock  other  than  subsidiaries
and corporate joint ventures. It states that:

"The (Accounting Principles)  Board  concludes   that   the  equity  method of
Accounting for an investment in common stock should also  be  followed  by  an
investor whose investments in voting stock  gives it  the ability to  exercise
significant influence over operating and financial  policies  of  an  investee
even though the investor holds 50%  or less of the voting  stock.  Ability  to
exercise   that   influence   may  be  indicated  in  several  ways,  such  as
representation  on  the  board  of directors,  participation  in policy making
process,   material  intercompany   transactions,  interchange  of  managerial
personnel, or technological dependency"

" ... In order to achieve reasonable degree of uniformity in application,
the (Accounting Principle) Board concludes that an investment
(direct or indirect) of 20% or more of the voting stock of an investee
Should lead to a presumption in absence of evidence
to the contrary that an investor has the ability to exercise significant
influence over investee. "

Summary  financial  information  for  CGI  as of and for the two years ended
December 31,  2005 and 2004 respectively is  presented  in  the  following
Table:



                              2005                      2004
                            (unaudited)             (unaudited)
                                         
Long-term assets             $ 5,262,450           $  5,262,450
Total assets                   5,262,929              5,262,929
Current liabilities            1,647,795              1,647,795
Total liabilities              1,647,795              1,647,795
Revenues                               -                      -
Other Revenue                          -                      -
Gross margin                          -                       -
Net income (loss)                (44,890)              (44,890)

The Company continues to assess  for  impairment  of  its  investment  in  CGI
Communications  Services,  Inc., by evaluating whether an event  or  change in
circumstances  has  occurred  in  the  current  reporting period that may have
significant  adverse  effect  on the fair value of the investment.

The impairment indicators  utilized by the company includes but not limited to
the following:

1. A significant deterioration  in the  earnings  performance,  credit  rating
asset quality, or business prospects of the investee
2. A significant adverse change in the regulatory,  economic, or technological
environment of the investee
3. A significant adverse change in the general market  condition of either the
geographic area or the industry in which the investee operates
                                          F-12

4. A bona fide offer to purchase (whether solicited or unsolicited), an  offer
by the investee to  sell, or  a  completed  auction  process  for  the same or
similar Security  for  an  amount  less  than  the  cost  of  the  investment.

5. Factors  that  raise  significant  concerns about the investee's ability to
continue as a going concern, such as a  negative  cashflows  from  operations,
working  capital  deficiencies,  or  non-compliance   with  statutory  capital
requirements or debt covenants.

Based on managements most recent assessment, the fiar value of its investment
Was less than the carrying value of the investment at December 31, 2005.
Management therefore elected to  write  down  the investment to the amount of
$2,000,000 which  represents  the  fair market (trading)  value of the CGI at
December 31, 2005.

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 not been reflected in the  balance  sheet
and the  income  statement as a  judgment  receivable. The current value of  the
judgment at at January 8, 2006 is $39,894,303. Management  is  pursuing all
collections  options regarding this judgment.

Other Events

On  October 4, 2005, Tenet HealthSystem Hospitals, Inc,  (Tenet)  announced that
it has entered  into  an  agreement  to  sell  Community & Mission  Hospitals of
Huntington Park in Huntington Park, California., to Karykeion, Inc., a privately
held Corporation. These are two  of the  hospitals contracted   with  CAPNET IPA
and County of Los Angeles Community Health Plan . This  transaction is  expected
to  closed on December 31, 2005

Subsequent Events
On May 19, 2006, the company accepted the offer by InterCare DX, Inc., and
CGI Communications Services, Inc, both an affiliated entities 5,000,000
of Common stock at fair market value of 0.023 cents and warrant to purchase
additional 5,541,503 shares at 25 cents per share, with expiration date of
May 19, 2008, in exchange for forgiveness of debt owed to Meridian, in the
amount of $1,500,375.84. by InterCare. Also, the registrant accepted the offer
to be issued by CGI Communications Services,  6,013,043 Shares of this CGI
Common Stock at 0.04 cents per share, to Meridian Holdings, Inc, in exchange
for forgiveness debt in the amount of $240,521.71








                                          F-13