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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

         [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year ended December 31, 2003

                                       OR

           [ ] 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: 333-64430

                             EMERGENSYS CORPORATION
             (Exact name of Registrant as specified in its charter)

            Delaware                                   33-0820923
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

                        400 Jean Lesage Blvd., Suite 045
                             Quebec, Quebec G1K 8W1
          (Address of principal executive offices, including zip code)

                                 (418) 380-8911
              (Registrant's telephone number, including area code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

Check  whether  the  registrant  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements  for the past 90 days.
Yes |X| No |_|

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. |X|

State registrant's revenues for its most recent fiscal year:  $0.

As of April 2, 2004,  there were 30,124,005  shares of the  registrant's  common
stock  issued  and  outstanding.   Of  these,   9,940,146  shares  are  held  by
non-affiliates  of the  registrant.  The  market  value  of  securities  held by
non-affiliates  is  $3,081,445  based on the  closing  price  of  $0.31  for the
registrant's common stock on April 2, 2004.

Transitional Small Business Disclosure Format (check one):   Yes |_|;  No |X|

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None.

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<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                                                                                                       Page

<S>                                                                                                                       <C>
Forward-Looking Information..........................................................................................     3

PART I

  Item 1.        Business............................................................................................     3

  Item 2.        Property............................................................................................     8

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

  Item 4.        Submission of Matters to a Vote of Security Holders.................................................     9

PART II

  Item 5.        Market for Common Equity and Related Stockholder Matters............................................     9

  Item 6.        Plan of Operation...................................................................................     11

  Item 7.        Financial Statements................................................................................     12

  Item 8.        Changes In and Disagreements With Accountants on Accounting
                 and Financial Disclosure............................................................................     12

  Item 8A.       Controls and Procedures.............................................................................     12

PART III

  Item 9.        Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
                 Exchange Act........................................................................................     15

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

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

  Item 12.       Certain Relationships and Related Transactions......................................................     22

  Item 13.       Exhibits and Reports on Form 8-K....................................................................     23

  Item 14.       Principal Accountant Fees and Services..............................................................     25

</TABLE>


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<PAGE>

                           FORWARD-LOOKING INFORMATION

This report includes "forward-looking statements" as that term is defined in the
Private Securities  Litigation Reform Act. The words "anticipates,"  "believes,"
"estimates,"  "expects," "plans," "might," "intends" and similar expressions are
meant to identify these statements as forward-looking  statements,  but they are
not the exclusive  means of identifying  such  statements.  The  forward-looking
statements in this document and in documents we incorporate by reference reflect
the current views of our management;  however, various risks,  uncertainties and
contingencies  could cause our actual  results,  performance or  achievements to
differ materially from those expressed or implied by these statements.


                                     PART I

ITEM 1.    BUSINESS

OVERVIEW OF BUSINESS AND SIGNIFICANT RECENT DEVELOPMENTS

We were incorporated in the state of Delaware on July 20, 1998 under the name of
Cortez Development, Ltd. ("Cortez"). Our name was changed to MoliChem Medicines,
Inc. on February 21, 2001,  following a reverse  merger  effected on January 18,
2001.  On January 18, 2001,  Molichem  R&D, Inc.  ("MRD")  acquired  Cortez in a
reverse merger in which MRD was the accounting acquirer and Cortez was the legal
acquirer.  MRD was  incorporated  in the state of North Carolina on December 21,
1995 under the name of MoliChem Medicines, Inc. Its name was changed to MoliChem
R&D, Inc. on April 6, 2001. Subsequent to the reverse merger, MRD, the operating
company,  acted as a wholly owned subsidiary of MoliChem Medicines,  Inc. In May
2003,  MoliChem Medicines,  Inc. sold MRD to Lantibio,  Inc., a company owned by
certain  former  officers,  directors  and  shareholders  of ours. In June 2003,
MoliChem  Medicines,  Inc. changed its name to Medical  Licensing  International
Corp.  ("MLSI").   In  December  2003,  MLSI  changed  its  name  to  EmergenSys
Corporation.

From our inception  until May 2003 we operated as an early stage  pharmaceutical
company. From September 2003 through the present we are operating as a developer
of public safety and security management systems.  Since our inception,  we have
had no operating revenues. As of December 31, 2003 we had an accumulated deficit
of $2,507,776.  We were unable to adequately fund or complete the development of
any of our  proposed  pharmaceutical  products  and  anticipated  that we  would
continue to incur operating  losses until such time, if ever, that our compounds
were fully developed,  approved and successfully marketed.  Consequently, in May
2003,  we  entered  into a  series  of  transactions  involving  changes  in our
management  and the  sale  of our  operating  subsidiary,  Molichem  R&D,  Inc.,
including all of our assets and  liabilities,  to a corporation  owned by former
officers,  directors and shareholders of ours. Effective May 5, 2003, we entered
into a Stock Purchase  Agreement (the "Stock  Purchase  Agreement")  with Gilles
Cloutier,  ("GC") Jean Guy Lambert  ("JGL") Group  Intercapital,  Inc.,  ("GIC")
Gestion CM 2000,  Inc.,  ("Gestion")  David Lambert,  ("DL") and Chantal Lambert
("CL"). In consideration of the Stock Purchase Agreement,  JGL, GIC, Gestion, DL
and CL (singly and collectively the  "Purchasers")  placed $100,000 in escrow to
fund  expenses  related to our  reorganization  including,  but not  limited to,
payments to our former auditors, former corporate securities counsel, patent and
trademark counsel,  new auditors,  and new corporate and securities counsel. The
Stock Purchase  Agreement  further  provided for the issuance of an aggregate of
5,500,000  restricted shares of our common stock to the Purchasers (the "Funding
Shares"),  the  resignation  of Luis Molina as our president and CEO and Richard
Martin as our CFO, and the  appointment of Gilles Cloutier as our sole executive
officer and as director. The Funding Shares were given anti-dilution rights with
respect to any reverse stock splits or  recapitalizations  effected by us before
May 5, 2004.  In the event any reverse  stock splits or  recapitalizations  were
effected by us before May 5, 2004,  the Funding  Shares  would not be reduced in
number by more than 50%,  such that as of May 5,  2004,  the  number of  Funding
Shares outstanding would not have been reduced to less than 2,750,000. Effective
March 31, 2004, the holders of the Funding  Shares agreed to the  termination of
the anti-dilution provision and waived all rights granted to them thereunder.


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Effective  May 6, 2003 we entered into a Stock  Exchange  Agreement  (the "Stock
Exchange  Agreement")  with Molichem R&D,  Inc.  ("MRD"),  our then wholly owned
operating subsidiary and Lantibio, Inc., a corporation owned by former officers,
directors  and  principal  shareholder  of ours.  The Stock  Exchange  Agreement
provided for our sale of MRD to Lantibio in exchange for the  13,379,282  shares
of our common stock owned by Lantibio (the "Lantibio Shares") and the grant of a
non-exclusive,  10 year US License  from MRD to us relating to  products,  to be
used in the field of treating septic shock in non-human mammals,  containing the
iron  containing  compounds  Moli56A  (commonly  known as DTPA iron  (III))  and
Moli56B (commonly known as Ferrioxamine B).

Immediately  prior to the sale of MRD,  all of our assets and  liabilities  were
assigned to and assumed by MRD.  Pursuant to the Stock  Exchange  Agreement  the
Lantibio Shares were delivered to us for cancellation, the License Agreement was
executed,  and an aggregate of 1,637,114 of our then outstanding 1,767,860 stock
options were  cancelled.  The  cancelled  stock  options  represented  all stock
options owned by Luis Molina,  Terry Williams,  Richard Franco,  Richard Martin,
Ronald Keeney,  Jacques Gagne,  Vatche  Tchakmakian,  Gilles Cloutier,  Jean Guy
Lambert and Claude Gendron. In furtherance of the Stock Exchange  Agreement,  in
June 2003 we changed our name to Medical Licensing International Corp.

The License  Agreement  made as of May 6, 2003 between MRD as Licensor and us as
Licensee  provided  for the grant of a 10 year  non-exclusive  license  to us to
develop, market and sell products incorporating Moli56A and Moli56B with respect
to the treatment of septic shock in non-human  mammals.  In consideration of the
grant of the license,  we are obligated to pay MRD (i) a licensing fee of $1 per
year (the  "Licensing  Fee); (ii) an annual royalty equal to 6% of our net sales
related to the licensed technology  (Royalties");  (iii) a one time continuation
payment of $500,000  payable on the first  anniversary of the License  Agreement
(the  "Continuation  Payment");  and  (iv)  a  one  time  milestone  payment  of
$2,000,000  payable  within  60 days of a  product  incorporating  the  licensed
technology being approved in the field of use covered by the license,  but in no
event prior to the first  anniversary of the License  Agreement (the  "Milestone
Payment").  The License  Agreement  is subject to  cancellation  in the event we
become insolvent,  our assets are placed in the hands of a receiver,  our assets
are assigned for the benefit of  creditors,  we become the subject of bankruptcy
proceedings,  we take  actions  that  publicly  damage or reflect  adversely  on
Licensor,  or we  fail  to  make  payment  of  Licensing  Fees,  Royalties,  the
Continuation  Payment or the Milestone Payment when due.  Licensor's sole remedy
for our failure to make the Continuation  Payment or the Milestone Payment shall
be to cancel the License Agreement.  To date, we have been unable to exploit the
license or,  achieve  revenues  from the License  Agreement  with MRD. We do not
expect to make the  Continuation  Payment when due. This will result in the loss
of the License.

Prior  to  the  Stock  Exchange  Agreement,   we  operated  as  an  early  stage
pharmaceutical  company  focused on the discovery,  development and marketing of
pharmaceutical  products for the  treatment of serious  respiratory  and related
conditions.  Our research  and  development  efforts were focused on  developing
several compounds as described below.

Our lead product candidate, Moli1901 (commonly known as Duramycin), was intended
for the  treatment of mucus  plugging in airways.  This  condition is present in
many diseases in which the respiratory system airways are obstructed, frequently
referred  to as  obstructive  respiratory  diseases.  Among the  causes of these
diseases is the inability of the tissues in the airways, including the lungs, to
maintain proper  liquidity of the mucus so that it can be cleared through normal
respiratory  system functions.  Moli1901 might correct the cause of the creation
of mucus plugs by  activating  an  alternative  pathway for  chloride  and water
transport through the cells lining the airways to facilitate proper hydration of
the mucus. The chronic  formation of mucus plugs caused by abnormal chloride and
water  transport  causes the lung disease  cystic  fibrosis.  Moli1901 has shown
significant  mobilization  of chloride in the cells  lining the nasal  passages,
referred  to as the  nasal  epithelium,  and  has  been  well  tolerated  by the
patients.  During  2002 we  completed  certain  Phase I  clinical  studies,  and
initiated Phase II clinical development activities.

Our secondary product candidates were the iron-containing  compounds Moli56A and
Moli56B.  These product candidates were also covered under our patents, and were
indicated  for use in  conditions  that are  caused  by  overproduction  of free
radicals.  Treatment  opportunities  may include  organ damage  caused by septic
shock,  and the  reversal  of nitric  oxide  over-production  associated  with a
variety of additional human disorders.


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<PAGE>

Our third area of focus was the  creation of a library of  compounds  similar to
Moli1901 with diverse therapeutic potential in treating respiratory malfunctions
with antibiotics.  We believe the structure of Moli1901 offers potential for the
creation of chemical  diversity as a member of the family of compounds  known as
lantibiotics.  Lantibiotics  are compounds  similar,  at the molecular level, to
Moli1901 that also have antibiotic  properties and contain an unusual amino acid
known as  lantionine.  During  2002 we began to create a library of  lantibiotic
compounds with diverse therapeutic  potential in treating respiratory  infection
with antibiotics.

In the second quarter of 2001 we entered into an agreement with InterMune,  Inc.
for the joint development and  commercialization  of Moli1901 (the "Agreement").
Under the terms of the Agreement,  we and InterMune,  Inc.  shared the rights to
the Moli1901  technology,  and each party contributed 50 percent of the research
and  development  costs  related to Moli1901.  The  Agreement  also provided for
payments to us by InterMune,  Inc. upon the attainment of certain milestones. In
December 2002 the Agreement was terminated and we obtained  exclusive  rights to
the Moli1901  technology in exchange for the release of  InterMune,  Inc. of all
obligations under the Agreement.  We also assumed certain financial  obligations
that would have been shared under the Agreement.

Effective  September 16, 2003 we entered into a Software License  Agreement (the
"License  Agreement") with 3720161 Canada  Corporation,  a Canadian  corporation
doing business under the name of Mobilair Integration ("Mobilair").  Mobilair is
a leading  developer of  technological  solutions  (hardware and software)  that
integrate new concepts for public safety and security  management  systems.  The
License  Agreement  provides  us with  an  exclusive,  worldwide,  royalty-free,
perpetual  license to use, offer and distribute  Mobilair's  software for public
safety and security management systems and all modifications,  enhancements, and
replacements thereof and additions thereto related to public safety and security
market.  The public safety and security  market is the market  covering  police,
fire,  ambulance  and  environmental   services  provided  by  federal,   state,
provincial, municipal or local public authorities. In consideration of the grant
of the  License,  in March  2004 we issued to  Mobilair  and LBJ  Partners  Inc.
9,030,000 shares and 3,870,000  shares,  respectively,  of our restricted common
stock. Pending approval of the Quebec Securities Commission we are also required
to issue an  aggregate  of 1,000,000  shares of our  restricted  common stock to
certain Mobilair employees.  The License Agreement further provided for Mobilair
to assign to us its existing contracts related to the licensed  technology.  Not
having  heard of  EmergenSys  Corporation  or having  any  familiarity  with our
background,  Mobilair's contract partners were not receptive to such assignments
and refused to effect them. Over time, these contract partners have been briefed
regarding  our  operations  and  our  role in the  public  safety  and  security
management system market.  We expect all or most of them to execute  assignments
to us on or before August 2004. Further,  Mobilair has agreed to provide us with
50% of the gross revenues due to Mobilair  under these  contracts for the period
January 1, 2004 through the date of the respective assignments.

Effective  September 24, 2003 our board of directors  was increased  from one to
five members and Gilles Cloutier resigned as our sole executive officer.  Daniel
Veilleux,  Louis Lessard,  Jean Guy Lambert,  and Stuart Gauld were appointed as
directors  to fill the  vacancies  created  by the  increase  in the size of the
board.  Daniel  Veilleux was  appointed  as our  president  and chief  executive
officer,  Bruno Lemay as our  treasurer  and chief  financial  officer and Mario
Jacob  as our  secretary  to  fill  the  vacancies  created  by  Mr.  Cloutier's
resignation  as a corporate  officer.  Mr.  Veilleux is the  founder,  principal
shareholder and president of Mobilair.

Effective  September  16, 2003 we entered into a Service  Contract with Mobilair
Integration.  This  agreement  enabled us to commence  the  exploitation  of the
exclusive  software license related to public safety management  systems granted
to us by Mobilair Integration. The services covered by this agreement included:

      o     website design, development, maintenance and hosting;

      o     packaging of public safety applications;

      o     worldwide marketing services;


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      o     translation of software into multiple languages;

      o     design   and   conception   of  product   briefs   and   multi-media
            presentations;

      o     product localization for 30 countries; and

      o     document translations, including system documentation, user manuals,
            and training manuals into multiple languages.

In  consideration  for these services all of which have been  provided,  we paid
$1,000,000 to Mobilair  Integration.  Pursuant to the Service Contract,  for the
six month period that  commenced  October 1, 2003 and ended March 31,  2004,  we
also paid  Mobilair  Integration  $100,000  per month for  providing us with the
services of 10 persons with the  expertise,  capacity and  experience to support
our activities during such period. Among other things, these persons assisted us
with making certain of the software  modifications required to enable us to sell
the licensed product worldwide.

On  February  10,  2004 we entered  into a  licensing  agreement  with  SeaQuest
Technologies  MKG Inc.  ("Seaquest")  of Rimouski  Quebec whereby we acquired an
exclusive,  worldwide,  perpetual license respecting  SeaQuest's Coastal Network
Management  System  technology.  This  system is a real  time  data  acquisition
management infrastructure system specialized for the needs of coastal monitoring
of environmental  conditions that affect  navigation and operations in a port or
seaway, such as water levels, currents, waves and weather. Pending approval from
the Quebec Securities  Commission,  we are required to issue 2,000,000 shares of
our common  stock to Seaquest,  including  certain  assignees  of  Seaquest,  in
exchange  for the license.  Seaquest  has the further  right to receive up to an
additional 700,000 shares under the agreement based on contract revenues that we
may receive  related to the  licensed  technology.  Seaquest  is a developer  of
integrated  technological  solutions for improving the  effectiveness  of marine
operations related to public safety and support systems. We believe the Seaquest
technology is highly compatible with our own and anticipate that it will further
our goal of becoming a global provider of integrated public safety systems.  The
technology  which is the subject of the license  agreement  requires  additional
development  with respect to the final version that we expect to  commercialize.
Effective December 31, 2003 we loaned $128,003 to Seaquest.  The loan is payable
on demand and was  utilized by Seaquest to support its  operations  prior to the
licensing agreement.

We are presently  negotiating  a software  development  agreement  with Seaquest
which is  intended  to  enable  us to  further  the  development  of  Seaquest's
products. Such an agreement would be expected to involve:

      o     the integration of all Seaquest software;
      o     the integration of technologies  presently used for maritime control
            operations   (such  as  Vessel  Traffic   System  (VTS),   Automatic
            Identifier  System  (AIS),  Environmental  Monitoring  System (EMS),
            Global  Positioning  System (GPS) and Electronic  Display Integrated
            Systems);
      o     the integration of Emergency Crisis Management; and
      o     the dispatch of Emergency units.

No  assurance  can be given  at this  time  that we will  enter  into a  service
agreement  with Seaquest or that, if entered into,  the desired  results will be
achieved.

On February  19th 2004,  we acquired  SCAN-R  Urgence Inc.  ("Scan R"), a Magog,
Quebec  corporation which had been a competitor of ours in Quebec province.  The
acquisition  involved our purchase of all of the  outstanding  capital of Scan R
from its two shareholders in exchange for:


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      o     a cash payment of $15,000; and;
      o     the  issuance of an aggregate  of 400,000  shares of our  restricted
            common stock to the two shareholders and a key employee of Scan R.

Scan R  employs  4  persons  and  has  had  minimal  revenues,  estimated  to be
approximately $82,000, during the past 12 months. During this period, Scan R has
devoted  most of its human  and  financial  resources  to  software  development
related to 311 solutions  for Quebec  municipalities  involving a  non-emergency
dispatch system.

SALES AND MARKETING

Our sales and marketing strategy involves the following:

      o     Direct sales in Canada;
      o     VAR sales in the US; and
      o     Joint venture and partnership arrangements.

      We have  spent the past six  months  promoting  our name and  products  to
Canadian markets and explaining our relationship to Mobilair. We anticipate that
by August 2004 we will be able to effect the  assignment of most of the Mobilair
contracts  referred to in the  September 16, 2003  Software  License  Agreement.
Canadian sales of our products are expected to involve  direct  selling  efforts
between our sales representatives and the end users of our products. Our initial
Canadian sales are expected to take place in Quebec province.

Our US  operations  commenced in January 2004 with the  introduction  of our VAR
program in Forest Park, Illinois. To date, we have one VAR representative in the
US and are negotiating with several others. The reception of our VAR program has
been very  positive.  We have engaged two full-time  managers to develop our VAR
program.

Our  international  sales force  presently  consists of three  consultants.  Our
international  sales and  marketing  strategy will rely on  feasibility  studies
which will help us  identify  potential  partners  and joint  ventures,  such as
system  integrators.  Upon completion of these feasibility  studies we intend to
commence international sales of our public safety management systems.

SEASONAL ASPECTS

We do not expect to experience seasonal variation in our operating results.

RESEARCH AND DEVELOPMENT

During 2003 we made no expenditures on research and development.

CUSTOMERS

We do not expect any single customer to account for a significant portion of our
revenues.

COMPETITION

Presently, we have systems in place in Forest Park, Illinois.  Further, upon the
assignment of contracts  from Mobilair which is expected to take place by August
2004, we will have systems in place in Quebec. In Quebec, Mobilair's systems are
being utilized by approximately 600 municipalities  representing control of more
than 50% of the market.  The Forest Park system which was introduced by Mobilair
in  October  2002 is  serving  as our  prototype  system  for US  sales.  We are
presently  engaging in software  translation and product  localization that will
permit sales of our products in South America,  Asia and eventually,  throughout
the world.  Our  principal  competitors  are software  manufacturers  and system
integrators  that  provide  system  alternatives.  Most of our  competitors  are
considerably  larger then we are in terms of total  assets and  resources.  This
will enable them to bring their own products to advanced  stages of  development
and marketing with greater speed and  efficiency  than we can. We compete on the
basis of price and product quality.  There can be no assurance that our products
will compete  successfully  or that we will obtain our expected  level of market
share.


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GOVERNMENT REGULATION

In  general,  our  products  are  not  subject  to  governmental   approvals  or
regulations.  However,  in order to market certain models, such as those related
to firefighter  systems,  we need to be compliant with certain local or national
standards.  In the process of localizing our products for specific countries, we
modify our products to meet such standards.  In the United States,  for example,
we have implemented the NFRIS standards into our products.

COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS

There are no special  or unusual  environmental  laws or  regulations  that will
require us to make material  expenditures  or that can be expected to materially
impact on the operation of our business.

EMPLOYEES

As of April 2, 2004 we had 15 employees including three executive officers,  two
US  sales  representatives,   two  international  sales  representatives,   four
development technicians,  three administrative persons and one graphic designer.
We plan to add  additional  employees as required for the expanded  operation of
our  business  including  those  required  for project  management  and business
development.

PATENTS, TRADEMARKS AND LICENSES

      As more fully  described  in "Item 1  Business-Overview  of  Business  and
Significant  Recent  Developments" we are the licensee under license  agreements
with each of Molichem R&D, Inc. ("MRD"),  Mobilair Integration  ("Mobilair") and
Seaquest Technologies MKG Inc. ("Seaquest").  The Mobilair and Seaquest licenses
are the foundation for our business as a developer and provider of public safety
and security management  systems.  The MRD license relates to our prior business
as an early stage pharmaceutical company. We do not expect to be able to exploit
or benefit from the MRD license.

      The software which is the subject of the Mobilair and Seaquest licenses is
not  patentable.  We make  every  effort to  protect  the  licensed  technology,
however, by protecting the source codes related to the software. We also rely on
password  protection and encrypted source codes. No assurances can be given that
our competitors will not develop technologies similar to ours.

      Through  the  present  we have  not  sought  any  trademark  or  tradename
protection.  We do intend,  however,  to seek  tradename  protection in both the
United States and Canada for our "EmergenSys"  name during the fourth quarter of
2004.

                                ITEM 2. PROPERTY

      We utilize  approximately  3,700  square feet of office  space at 400 Jean
Lesage Blvd., Suite 045, Quebec,  Quebec G1K 8W1 at the rate of $3,000 per month
pursuant to a sublease  with Mobilair  Integration  which runs through March 24,
2005. The overlying lease under which Mobilair  Integration is the tenant covers
approximately  11,000  square feet of space and expires  February 28,  2010.  We
consider this space to be adequate for our current and anticipated future needs.
If needed additional space is available in the same building.

                            ITEM 3. LEGAL PROCEEDINGS

No material legal  proceedings are pending to which we or any of our property is
subject, nor to our knowledge are any such proceedings threatened.


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           ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security  holders during the fourth
quarter of the fiscal year covered by this report.

                                     PART II

        ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

Our common stock began trading on the Over-the-Counter Bulletin Board in January
2002  under the symbol  "MLCM",  in June,  2003  under the symbol  "MLSI" and in
December,  2003 under the symbol "EMGS".  Prior to Bulletin  Board trading,  our
stock was traded on the Pink  Sheets.  Prior to our trading on the Pink  Sheets,
there was no public market for our stock.

As of April 7, 2004 there were  approximately  35  stockholders of record of our
common  stock.  We have never  declared any cash  dividends  with respect to our
common stock.  Future payment of dividends is within the discretion of our board
of directors and will depend on our earnings,  capital  requirements,  financial
condition  and  other   relevant   factors.   Although  there  are  no  material
restrictions limiting, or that are likely to limit, our ability to pay dividends
on our common stock, we presently intend to retain future earnings,  if any, for
use in our business  and have no  intention to pay cash  dividends on our common
stock.

The following  table presents the high and low closing bid prices for our common
stock for the periods  indicated.  The quotations were obtained from Pink Sheets
LLC and reflect  inter-dealer  prices,  without  retail  mark-up,  mark-down  or
commissions and may not represent actual transactions.


                                                             HIGH       LOW
         2003
         Fourth Quarter   ...............................    $.87       $.51
         Third Quarter   ................................    $.66       $.20
         Second Quarter..................................    $.15       $.02
         First Quarter...................................    $.20       $.02

         2002
         Fourth Quarter..................................    $ .30      $ .04
         Third Quarter...................................    $1.30      $ .25
         Second Quarter..................................    $2.05      $1.30
         First Quarter...................................    $2.95      $2.00

         2001
         Fourth Quarter..................................    $2.85      $1.40
         Third Quarter...................................    $3.40      $1.90
         Second Quarter..................................    $4.75      $2.60
         First Quarter...................................    $3.25      $ .87

ISSUANCE OF UNREGISTERED SECURITIES

During  the  period  December  3, 2003  through  February  7,  2004 we  received
aggregate loans in the amount of $364,001 from certain related parties (See Item
12.  Certain  Relationships  and  Related  Transactions).  The  loans  which are
represented  by promissory  notes bear interest at the rate of 12% per annum and
are payable on demand.  In the event that while any of the loans are outstanding
we engage in a private or public  offering  of our common  stock in the  minimum
amount of  $500,000  each  lender  will have the  right to  convert  any and all
principal  and interest  then due on their  respective  loans into shares of our
common  stock at the  lesser of $.50 per share or the sale  price for the common
stock in the offering.


                                       9
<PAGE>

In February  2004,  we received  aggregate  loans in the amount of $141,100 from
three persons. The loans which are represented by promissory notes bear interest
at the rate of 12% per annum and are payable on demand  commencing June 1, 2004.
Prior to  repayment  by us, each of the lenders has the right to convert any and
all  principal  and  interest due on their  respective  loans into shares of our
common stock at a price of $.40 per share.  The issuances of the notes were made
in reliance on Section 4(2) of the Securities Act of 1933, as amended.

Effective  September 16, 2003 we entered into a Software License  Agreement with
3720161 Canada Corporation, a Canadian corporation doing business under the name
of Mobilair Integration.  In consideration of the License Agreement, as amended,
in March 2004 we issued an  aggregate of  12,900,000  shares of our common stock
including  9,030,000  shares  to  Mobilair  Integration  and its  assignees  and
3,870,000  shares  to LBJ  Partners,  Inc.  Pending  approval  from  the  Quebec
Securities  Commission,  we will also issue an aggregate of 1,000,000  shares to
certain employees of Mobilair. The issuance of the 12,900,000 shares was made in
reliance on Regulation S under the Securities Act of 1933, as amended.

Effective  September  26, 2003 we completed a private  offering  whereby we sold
6,400,000  units at $.25  per unit or  $1,600,000  on an  aggregate  basis to 16
persons.  Each unit  consisted  of one share of common stock and one half common
stock purchase  warrant.  Each full warrant  entitles the holder to purchase one
share of our  common  stock at a price of $.375  per  share  for a period of two
years from the date of  issuance.  Sales to 14 of the  subscribers  were made to
non-US  persons in reliance on Regulation S under the Securities Act of 1933, as
amended.  Sales to 2 of the subscribers  were made to accredited US investors in
reliance on Section 4(2) of the Securities Act of 1933, as amended.

In May 2003, we issued an aggregate of 5,500,000 shares to 5 persons pursuant to
our May 5, 2003 Stock  Purchase  Agreement.  These  issuances  were  exempt from
registration under Section 4(2) of the Securities Act.

During 2001 we granted to seven  employees and  directors  options to purchase a
total of  1,760,000  shares of common  stock at a price of $1.50 per share,  and
granted to six non-employees  options to purchase 268,000 shares of common stock
at prices  ranging  from $1.50 per share to $3.50 per share.  The  issuance  was
exempt from registration under Section 4(2) of the Securities Act.

On May 14, 2001 a former  advisor to us  exercised  options to  purchase  10,000
shares of common stock at a price of $.0013 per share,  providing total proceeds
of $13.  Those options were granted prior to 2001.  The issuance was exempt from
registration under Section 4(2) of the Securities Act.

In January 2001, we issued 1,000,000 units, each unit consisting of one share of
common stock and one common stock  purchase  warrant in a private  placement for
$1,500,000.  Each  warrant  entitled  the holder to purchase one share of common
stock at an exercise price of $1.50.  The issuance was exempt from  registration
under  Section 4(2) of the  Securities  Act and Rule 506  promulgated  under the
Securities  Act.  Neither we nor any person acting on our behalf offered or sold
the  securities  by  means  of any  form  of  general  solicitation  or  general
advertising.  All  purchasers  represented  in writing  that they  acquired  the
securities for their own accounts.  A legend was placed on the stock and warrant
certificates  stating that the  securities  have not been  registered  under the
Securities Act and cannot be sold or otherwise  transferred without an effective
registration or an exemption therefrom.  All 1,000,000 of the unit warrants were
exercised in January 2002.

In connection with our acquisition of MRD in 2001, we issued  13,369,282  shares
of common  stock to the  stockholders  of MRD.  The  issuance  was  exempt  from
registration under Section 4(2) of the Securities Act. Neither we nor any person
acting on our  behalf  offered  or sold the  securities  by means of any form of
general  solicitation  or general  advertising.  All  purchasers  represented in
writing that they acquired the securities  for their own accounts.  A legend was
placed  on the  stock  certificates  stating  that the  securities  had not been
registered  under  the  Securities  Act  and  could  not be  sold  or  otherwise
transferred unless registered or pursuant to exemption therefrom.


                                       10
<PAGE>

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

We have granted options to purchase shares of our common stock to our employees,
officers,  directors and consultants. The following table summarizes information
regarding our stock option plan as of April 7, 2004.

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------------
Plan category                     Number of securities to be      Weighted-average exercise       Number of securities
                                  issued upon exercise of         price of outstanding options,   remaining available for
                                  outstanding options, warrants   warrants and rights             future issuance under equity
                                  and rights                                                      compensation plans (excluding
                                                                                                  securities reflected in
                                                                                                  column (a))
                                  (a)                                      (b)                         (c)
---------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                              <C>                               <C>
Equity     compensation    plans          Not Applicable                       N/A                             N/A
approved by security holders                 ("N/A")
---------------------------------------------------------------------------------------------------------------------------------
Equity  compensation  plans  not             130,746                           $.30                         2,559,254
approved by security holders
---------------------------------------------------------------------------------------------------------------------------------
Total                                        130,746                           $.30                         2,559,254
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

In  connection  with the sale of MRD in May 2003,  1,637,114 of the  outstanding
options were cancelled, leaving 130,746 outstanding at that date.

The  material  features  of our stock plan are  described  in Note 8 our audited
financial statements included herein.


                            ITEM 6. PLAN OF OPERATION

Since  September 16, 2003,  the date of our Software  License  Agreement and our
Service Agreement with Mobilair  Integration,  we have devoted our financial and
human  resources to the  development and marketing of public safety and security
management systems including related software  development.  Through our service
agreement  with Mobilair  Integration,  we have modified the software to make it
adaptable  for use in North  America,  South  America  and  other  markets.  The
software  developed by Mobilair  Integration had been developed in French solely
for use in Quebec Province. To complete the development of our proposed software
products related to the software license, engage in related marketing activities
and  conduct  general  business  operations,  we will be  required  to  raise an
estimated  $3,000,000 to $4,000,000 over the next twelve months.  These proceeds
will be used for:

      o     The recruitment  and training of a network of  Value-Added-Resellers
            in the United States;

      o     The formation of a small direct marketing team and a training team;

      o     The hiring of several administrative personnel and support staff;

      o     The  completion  of our  software  products  for sale in the  United
            States and internationally.

      o     The opening of one or two satellite offices; and

      o     General and administrative expenses.


                                       11
<PAGE>

Pursuant to our February 10, 2004 licensing  agreement  with  Seaquest,  we will
also be devoting  resources  to the  development  and  marketing  of our Coastal
Network Management System technology.

We intend to achieve our required  financing through sales of our equity or debt
securities.  No assurance can be given that we will be successful in this regard
or that if  achieved,  we will do so on  favorable  terms.  Our failure to raise
funds as and when  needed  will  delay  our  ability  to  complete  our  product
development and marketing plans and achieve operating revenues.

We expect to add 5 to 10 employees over the next twelve  months.  No significant
research and  development  expenses are planned for the next twelve months,  nor
are any major purchases of plant and equipment contemplated.

We believe that  $3,000,000 of  additional  capital will allow us to operate for
the next twelve months and engage in our planned activities. Most of the product
development related to the technology license from Mobilair Integration has been
completed.  We intend to enter into  sub-contracting  arrangements with Mobilair
Integration  and others with respect to our additional  technical  requirements.
After we complete  our initial  products we will look to  complement  and expand
these product  offerings.  Further licensing or acquisition of technologies will
require additional funds.  Moreover, if significant orders are received over the
next twelve  months,  additional  funds could be required for  accelerating  our
business plan as well as providing funds for bonding arrangements that are often
a condition or larger contracts.

                          ITEM 7. FINANCIAL STATEMENTS

The financial statements and reports of independent auditors are included herein
immediately  following the signature page to this report. See Item 13 for a list
of the financial statements included.

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

Singer  Lewak  Greenbaum & Goldstein  LLP was  appointed  to be our  independent
certifying  accountant for the fiscal year ending  December 31, 2003 on November
18,  2003.  On February  10,  2004,  they were  dismissed by us as we decided to
engage  an  accounting  firm  with an  office  in  Quebec  that was close to our
principal  executive  office. On February 10, 2004 we engaged Ernst & Young LLP,
Chartered Accountants,  150 Rene-Levesques Blvd East, Suite 1200, Quebec, Quebec
G1R 6C6 as our  certifying  accountant  for the fiscal year ended  December  31,
2003. The dismissal of Singer Lewak Greenbaum & Goldstein LLP and appointment of
Ernst & Young LLP was approved by our board of directors.

During the period of their  engagement,  November 18, 2003 through  February 10,
2004,  Singer Lewak Greenbaum & Goldstein LLP did not conduct any audits for us.
During the period  November  18, 2003  through  February  10, 2004 there were no
disagreements  between us and Singer  Lewak  Greenbaum  &  Goldstein  LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope or  procedures,  which  disagreements,  if not resolved to their
satisfaction,  would have caused Singer Lewak  Greenbaum & Goldstein LLP to make
reference to the subject matter of the  disagreement in connection with an audit
report or otherwise.

During the period  November  18, 2003 through  February  10, 2004,  Singer Lewak
Greenbaum & Goldstein LLP did not advise us that:


                                       12
<PAGE>

      o     internal  controls  necessary for us to develop  reliable  financial
            statements did not exist;

      o     information  had come to their  attention that led them to no longer
            be able to rely on our  management's  representations  or made  them
            unwilling to be associated with the financial statements prepared by
            our management; or

      o     information  had come to their  attention  during such time  periods
            that if further investigated might materially impact the fairness or
            reliability  of  either a  previously  issued  audit  report  or the
            underlying financial  statement;  or the financial statements issued
            or to be issued  covering the fiscal periods  subsequent to the date
            of the most recent financial statements covered by an audit report.

Rogoff & Company, P.C. was our independent  certifying accountant for the fiscal
year ended  December 31, 2002. On November 18, 2003,  they were  dismissed by us
and we  subsequently  engaged  Singer  Lewak  Greenbaum & Goldstein  LLP,  10960
Wilshire  Boulevard,  Suite  1100,  Los  Angeles,  CA 90024,  as our  certifying
accountant for the fiscal year ending December 31, 2003. The dismissal of Rogoff
& Company,  P.C. and  appointment of Singer Lewak  Greenbaum & Goldstein LLP was
approved  by our board of  directors.  The  switch in  auditors  was  related to
changes in our management.

The report of Rogoff & Company,  P.C. on our financial  statements  for the year
ended December 31, 2002  contained no adverse  opinion or disclaimer of opinion,
nor was it qualified or modified as to  uncertainty,  audit scope or  accounting
principle  except  that such  report was  modified  to  include  an  explanatory
paragraph with respect to our ability to continue as a going concern.

In  connection  with the audit of the fiscal  year ended  December  31, 2002 and
during the subsequent  interim  period  through  November 18, 2003 there were no
disagreements  between us and Rogoff & Company, P.C. on any matter of accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedures,  which disagreements,  if not resolved to their satisfaction,  would
have caused Rogoff & Company,  P.C. to make  reference to the subject  matter of
the disagreement in connection with their reports.

In  connection  with the audit of the fiscal  year ended  December  31, 2002 and
during the  subsequent  interim  period  through  November  18,  2003,  Rogoff &
Company, P.C. did not advise us that:

      o     internal  controls  necessary for us to develop  reliable  financial
            statements did not exist;

      o     information  had come to their  attention that led them to no longer
            be able to rely on our  management's  representations  or made  them
            unwilling to be associated with the financial statements prepared by
            our management;

      o     there was a need to expand  significantly  the scope of their audit,
            or that  information  had come to their  attention  during such time
            periods that if further  investigated  might  materially  impact the
            fairness or reliability  of either a previously  issued audit report
            or the underlying financial  statement;  or the financial statements
            issued or to be issued covering the fiscal periods subsequent to the
            date of the most  recent  financial  statements  covered by an audit
            report;

      o     information  had come to their  attention  that  they had  concluded
            materially  impacted  the  fairness or  reliability  of either (i) a
            previously   issued  audit  report  or  the   underlying   financial
            statements,  or (ii) the financial statements issued or to be issued
            covering  the  fiscal  periods  subsequent  to the  date of the most
            recent financial statements covered by an audit report.

Deloitte & Touche, LLP was our independent  certifying accountant for the fiscal
year ended December 31, 2001. On April 4, 2003, they were dismissed by us and we
subsequently  engaged Rogoff & Company,  275 Madison Avenue,  New York, New York
10017,  as our  certifying  accountant  for the fiscal year ending  December 31,
2002. Rogoff & Company had served as our independent  certifying  accountant for
the fiscal year ended December 31, 2000. The dismissal of Deloitte & Touche, LLP
and  appointment  of  Rogoff  &  Company,  P.C.  was  approved  by our  board of
directors.   The  change  in  auditors   was  made  in   conjunction   with  our
reorganization.


                                       13
<PAGE>

The report of Deloitte & Touche,  LLP on our financial  statements  for the year
ended December 31, 2001  contained no adverse  opinion or disclaimer of opinion,
nor was it qualified or modified as to  uncertainty,  audit scope or  accounting
principle  except  that such  report was  modified  to  include  an  explanatory
paragraph with respect to our ability to complete our development  programs and,
ultimately,  the  attainment of profitable  operations  which is dependent  upon
future events, including obtaining adequate financing to fulfill our development
activities,  obtaining  regulatory  approval,  and  achieving a level of revenue
adequate to support our cost structure.

In  connection  with the audit of the fiscal  year ended  December  31, 2001 and
during the  subsequent  interim  period  through  April 4,  2003,  there were no
disagreements  between us and Deloitte & Touche, LLP on any matter of accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedures,  which disagreements,  if not resolved to their satisfaction,  would
have caused  Deloitte & Touche,  LLP to make  reference to the subject matter of
disagreement in connection with their reports.

In  connection  with the audit of the fiscal  year ended  December  31, 2001 and
during the subsequent  interim period through April 4, 2003,  Deloitte & Touche,
LLP did not advise us that:

      o     Internal  controls  necessary for us to develop  reliable  financial
            statements did not exist;

      o     Information  had come to their  attention that led them to no longer
            be able to rely on our  management's  representations  or made  them
            unwilling to be associated with the financial statements prepared by
            our management;

      o     There was a need to expand  significantly  the scope of their audit,
            or that  information  had come to their  attention  during such time
            periods that if further  investigated  might  materially  impact the
            fairness or reliability  of either a previously  issued audit report
            or the underlying financial  statement;  or the financial statements
            issued or to be issued covering the fiscal periods subsequent to the
            date of the most  recent  financial  statements  covered by an audit
            report;

      o     Information  had come to their  attention  that  they had  concluded
            materially  impacted  the  fairness or  reliability  of either (i) a
            previously   issued  audit  report  or  the   underlying   financial
            statements,  or (ii) the financial statements issued or to be issued
            covering  the  fiscal  periods  subsequent  to the  date of the most
            recent financial statements covered by an audit report.

On February 6, 2002,  we dismissed  our  auditor,  Rogoff & Company,  P.C.,  275
Madison Avenue, New York, New York 10016, and appointed Deloitte & Touche,  LLP,
Raleigh,  North Carolina,  as our new auditor. The principal reports prepared by
Rogoff & Company,  P.C.  on our  financial  statements  for the two years  ended
December 31, 2000 did not contain any adverse  opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles.

The  Audit  Committee  of our  Board of  Directors  recommended  the  change  in
auditors.  The  chief  criterion  for the  change in  auditors  was to engage an
auditor with offices in North Carolina, where we were located, and such decision
was not based upon any disagreements with Rogoff & Company, regarding accounting
principles, financial statement disclosure, or auditing scope or procedures.

There were no  disagreements  between  us, our  management  and Rogoff & Company
during the two fiscal years ended December 31, 2000 and any  subsequent  interim
period  preceding  the  engagement  of  Deloitte & Touche,  LLP on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedure of a nature  which,  if not resolved to the  satisfaction  of
Rogoff &  Company,  would have  caused  Rogoff & Company  to make  reference  in
connection with its report to the subject matter of the disagreements.


                                       14
<PAGE>

During the two fiscal  years ended  December  31,  2000 and the  interim  period
through February 6, 2002, neither we, our management, any member of our Board of
Directors,  nor any other party acting on our behalf  consulted  with Deloitte &
Touche  regarding  the  application  of  accounting  principles  to a  specified
transaction,  either completed or proposed; the type of audit opinion that might
be  rendered  on our  financial  statements;  or any other  matter  that was the
subject of a disagreement  with Rogoff & Company,  or any  reportable  event (as
defined in Item  304(a) (1) (v) of  Regulation  S-K)  reported to us by Rogoff &
Company.

                        ITEM 8A. CONTROLS AND PROCEDURES

Our principal executive and financial officer evaluated the effectiveness of our
disclosure  controls  and  procedures  as of a date  within 90 days prior to the
filing of this report.  Based on this  evaluation,  our principal  executive and
financial  officer  concluded  that our controls and procedures are effective in
providing  reasonable assurance that the information required to be disclosed in
this  report  is  accurate  and  complete  and  has  been  recorded,  processed,
summarized and reported  within the time period  required for the filing of this
report.  Subsequent  to the  date of this  evaluation,  there  have not been any
significant  changes in our  internal  controls or, to our  knowledge,  in other
factors that could significantly affect our internal controls.

                                    PART III

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

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

Directors serve until the next annual meeting of the  stockholders;  until their
successors  are  elected  or  appointed  and  qualified,  or until  their  prior
resignation or removal. Officers serve for such terms as determined by our board
of  directors.  Each  officer  holds office  until such  officer's  successor is
elected or appointed and qualified or until such officer's  earlier  resignation
or removal.  No family  relationships exist between any of our present directors
and officers.

The  following  table sets forth certain  information,  as of April 2, 2004 with
respect to our directors and executive officers.


                                       15
<PAGE>

<TABLE>
<CAPTION>
                                                                                              Date of Election
                                                                                               or Appointment
Name                         Positions Held                                        Age          as Director

<S>                                                                                 <C>                <C> <C>
Daniel Veilleux              President, Chief Executive Officer, and Director       45       September 24, 2003
Bruno Lemay                  Treasurer, Chief Financial Officer                     39       September 24, 2003
Mario Jacob                  Secretary                                              32       September 24, 2003
Louis Lessard                Director                                               42       September 24, 2003
Jean Guy Lambert             Director                                               62       September 24, 2003
Stuart Gauld                 Director                                               60       September 24, 2003
Gilles Cloutier              Director                                               59            May 2003

</TABLE>

The  following  is a brief  account of the  business  experience  of each of our
directors and executive officers during the past five years or more.

Daniel Veilleux has served as our president and chief executive officer and as a
director since September 24, 2003. He is the founder, and has been the president
and  principal  shareholder  of  Mobilair  Integration  since its  inception  in
February 2000. Following studies in computer  telecommunications in the Canadian
Army,  he spent more than 20 years in system  design,  project  management,  and
business operations in high-tech  industries.  He has been a business consultant
to many organizations including Systemhouse Ltd, IST, Gespro and Systematix.  He
has  extensive  experience  in  managing  telecommunication,  public  safety and
information technology projects and companies.

Bruno  Lemay has  served as our  treasurer  and chief  financial  officer  since
September  24,  2003.  Mr. Lemay has more than fifteen  years of  experience  in
positions  of  financial  management,  and  previously  occupied the position of
Finance Director in different high technology companies including Omegachem Inc.
and Limtech Co. (LTL,  TSC). Mr. Lemay is a member of the Canadian  Institute of
Accredited  Accountants  and has been a member of the Quebec Order of Accredited
Accountants since 1990. He has worked for four years in the  international  firm
of accredited  accountants  KPMG.  Mr. Lemay  obtained his  bachelors  degree in
Business Administration in 1988 at the University of Laval in Quebec.

Mario Jacob has served as our secretary  and as a legal advisor since  September
24, 2003.  Graduating  with a degree in Law from the University  Laval and later
becoming a member of the Quebec Bar in 1995,  he began his career  working for a
Superior  Court  with five  renowned  Judges.  He than moved on to work with the
Flynn Rivard law firm where he practiced  commercial  and securities law and has
been involved in various IPOs and reverse  takeovers.  He is a Director and Vice
President of LBJ Partners,  Inc. a Quebec based private investment firm which he
owns jointly with Louis Lessard.  He is also Corporate Secretary and Director of
Rasa  Investments  Inc.  (TSX:  RAS) SLC  Capital  Inc.  (TSX:SLC)  and  Plexmar
Resources Inc. (TSX: PLE). He was also Corporate Secretary of Lyrtech Inc. (TSX:
LYT) from August 2000 to June 2001.

Jean Guy Lambert has served as a director of ours since  September  24, 2003. He
has more then thirty-five years of business experience in the areas of corporate
management,  investment banking and financial  consulting.  From October 1996 to
the present he has served as the chief  executive  officer and as a director for
Dacha Capital  Inc., a Montreal  based  investment  banking  firm.  Mr.  Lambert
obtained an MBA degree from the University of Sherbrooke in 1968.

Louis Lessard has served as a director of ours since  September 24, 2003. He has
more than fifteen years of experience in corporate management.  From 1989 to the
present he has served as the  president  of Louis  Lessard  Inc., a Quebec based
life insurance  broker which he owns.  From September 14, 2000 to the present he
has served as the president  and as a director of LBJ  Partners,  Inc., a Quebec
based private investment firm which he owns jointly with Mario Jacob.


                                       16
<PAGE>

Stuart Gauld has served as a director of ours since  September  24, 2003. He has
more than  twenty-five  years of experience  in the  investment  management  and
security analysis  industries.  From 1996 to 2002, he served as Vice-President -
Investments  for Fidelity  National Title Insurance  Company.  Prior to 1996, he
worked for several  investment  and brokerage  firms as an analyst and portfolio
manager.  Mr. Gauld is a Chartered  Financial  Analyst  (CFA),  and holds an MBA
degree from Harvard University.

Gilles  Cloutier,  Ph.D.  Dr.  Cloutier  served as our Chief  Business  Officer,
Chairman of the Board and a director of MoliChem  Medicines and MRD from January
2001 until December 2002. From May 5, 2003 until September 24, 2003 he served as
our sole  officer and  director.  From  September  24, 2003 to the present he is
serving  as a  director.  He  was  the  Executive  Vice  President  of  Business
Development  of United  Therapeutics  Corporation,  and one of its founders from
1997  to  2001.  Dr.  Cloutier  has  over  thirty  years  of  experience  in the
pharmaceutical  industry and contract research organizations providing strategic
support to the biotechnology and pharmaceutical industries. As Vice President of
Cato Research  (1992-1997),  Dr. Cloutier founded Cato Pharma Canada and led his
team  to the  successful  preparation  of  numerous  orphan  drug  applications,
investigational  new drug applications,  new drug  applications,  and a new drug
study. At Quintiles,  Inc. (1990-1992),  he served as Vice President of Clinical
Operations.  During his 13 years at  Burroughs  Wellcome  Co.  (1976-1990),  Dr.
Cloutier  headed  the  Department  of  Medical   Services,   after  leading  the
Neurology/Anesthesiology  Section.  He has  served  as  Professor  at  both  the
University of Montreal,  the University of North Carolina, and the University of
Colorado Medical Center. Dr. Cloutier has served as President and Trustee of the
Associates  of Clinical  Pharmacology  and is on the Board of  Directors  of the
Epilepsy  Foundation of America.  Dr. Cloutier  graduated from the University of
Montreal with a Ph.D. in Pharmacology  and has made numerous  presentations  and
has 33 publications.

BOARD OF DIRECTORS

Our directors  receive no cash  remuneration  for acting as such.  Directors may
however be reimbursed their expenses,  if any, for attendance at meetings of the
Board of Directors.  Our Board of Directors may designate from among its members
an executive committee and one or more other committees. No such committees have
been appointed to date.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Our common stock is not registered pursuant to Section 12 of the Exchange Act of
1934, as amended (the "Exchange Act"). Accordingly,  our officers, directors and
principal  shareholders  are not subject to the beneficial  ownership  reporting
requirements of Section 16(a) of the Exchange Act.

                         ITEM 10. EXECUTIVE COMPENSATION

The following  table sets forth  information  concerning the total  compensation
paid or accrued by us during the three fiscal  years ended  December 31, 2003 to
(i) all  individuals  that served as our chief  executive  officer or acted in a
similar  capacity  for us at any time during the fiscal year ended  December 31,
2003 and (ii) all individuals  that served as executive  officers of ours at any
time  during the fiscal  year  ended  December  31,  2003 that  received  annual
compensation  during  the  fiscal  year  ended  December  31,  2003 in excess of
$100,000.


                                       17
<PAGE>

<TABLE>
<CAPTION>

SUMMARY COMPENSATION TABLE
                                            ANNUAL COMPENSATION                         AWARDS                      PAYOUTS
                                                                                       LONG TERM
                                                                                      COMPENSATION
                                                                                RESTRICTED     SECURITIES
                                                                   OTHER ANNUAL   STOCK        UNDERLYING     LTIP        ALL OTHER
NAME AND                                                           COMPENSATION  AWARDS         OPTIONS/     PAYOUTS       COMPEN-
PRINCIPAL POSITIONS           YEAR      SALARY ($)      BONUS ($)      ($)          ($)          SARS (#)       ($)       SATION ($)
<S>                             <C>     <C>                 <C>        <C>          <C>            <C>          <C>           <C>
Luis Molina, President and      2003     31,077              0          0            0              0            0             0
Chief Executive Officer         2002    151,864              0          0            0              0            0             0
                                2001    146,125          7,306          0            0           350,000         0             0

Gilles Cloutier, President      2003          0              0          0            0              0            0             0
and Chief Executive Officer     2002    142,632              0          0            0              0            0             0
                                2001     80,625          4,031          0            0           550,000         0             0

Daniel Veilleux, President      2003     17,539              0          0            0              0            0             0
and Chief Executive Officer     2002          0              0          0            0              0            0             0
                                2001          0              0          0            0              0            0             0

</TABLE>

OPTION/SAR GRANTS IN LAST FISCAL YEAR

No stock options or stock  appreciation  rights were granted to any of the named
executives during the fiscal year ended December 31, 2003.

AGGREGATED  OPTION/SAR  EXERCISES  IN LAST  FISCAL  YEAR  AND  FISCAL  YEAR  END
OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                        Number of Securities
                                                       Underlying Unexercised        Value of Unexercised
                               Shares                       Options/SARs           In-the-Money Options/SARs
                             Acquired On      Value     at Fiscal Year End (#)       at Fiscal Year End ($)
                              Exercise      Realized        Exercisable/                 Exercisable/
Name                             (#)          ($)          Unexercisable                Unexercisable

<S>                          <C>               <C>                  <C>                           <C>
Luis Molina                 Not Applicable      N/A                   N/A                          N/A
                               ("N/A")
Gilles Cloutier                  N/A            N/A                   N/A                          N/A
Daniel Veilluex                  N/A            N/A                   N/A                          N/A

</TABLE>

LONG TERM INCENTIVE PLAN AWARDS

We made no  long-term  incentive  plan  awards to the named  executive  officers
during the fiscal year ended December 31, 2003.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT,
AND CHANGE-IN-CONTROL ARRANGEMENTS

On January 30, 2001  MoliChem  Medicines,  Inc.  and MRD,  Inc.  entered into an
employment  agreement  with Luis Molina  employing him as MRD's Chief  Executive
Officer and President for three years. This agreement provided for (a) an annual
base salary of $150,000  (which was increased to $156,000 in January 2002),  and
(b) incentive compensation at our Board of Director's  discretion,  including an
annual bonus of 20% of his annual base salary.  This agreement also provided for
the grant of a stock  option to Mr.  Molina to  purchase  350,000  shares of our
common stock at $1.50 per share.  Effective  December 20, 2002,  the  employment
agreement was  terminated.  Effective May 6, 2003, the 220,000 then  exercisable
options issued under the employment  agreement were  terminated  pursuant to the
May 6, 2003 Stock Exchange Agreement.


                                       18
<PAGE>

On April 15, 2001, MRD entered into an employment agreement with Gilles Cloutier
employing  him as MRD's  Chief  Business  Officer on a  part-time  basis for two
years.  This agreement  provided Dr.  Cloutier with (a) an annual base salary of
$90,000  (which was increased to $147,780 in February  2002),  and (b) incentive
compensation at our Board of Director's discretion, including an annual bonus of
20% of Dr. Cloutier's  annual base salary.  This agreement also provided for the
grant of a stock option to Dr. Cloutier to purchase 350,000 shares of our common
stock at $1.50 per share.  All 350,000  shares  became  exercisable  on June 22,
2001.  Effective  December 20, 2002,  the employment  agreement was  terminated.
Effective  May 6, 2003 the 350,000  then  exercisable  options  issued under the
employment  agreement were terminated pursuant to the May 6, 2003 Stock Exchange
Agreement.

Effective  January 2004 we have been paying Daniel  Veilleux an annual salary of
$75,000 pursuant to a verbal employment agreement.

DIRECTORS' COMPENSATION

We have  not  paid  and do not  presently  propose  to pay  compensation  to any
director  for  acting in such  capacity,  except  for the grant of  options  and
reimbursement  for  reasonable  out-of-pocket  expenses in  attending  meetings.
During  2001 we  granted  options  to  purchase  shares of  common  stock to two
directors that were not employees.  Vatche  Tchakmakian  was granted  options to
purchase 150,000 shares at $1.50 per share,  those options being fully vested at
the date of grant.  Jacques Gagne was granted options to purchase 100,000 shares
of common stock at $1.50 per share, those options being fully vested at the date
of grant.  The options owned by Messrs.  Tchakmakian  and Gagne were  terminated
effective May 6, 2003 pursuant to the Stock Exchange Agreement of the same date.
No option grants were made to directors during 2002 or 2003.

REPORT ON REPRICING OF OPTIONS/SARS

During the fiscal  year ended  December  31, 2003 we did not adjust or amend the
exercise price of any stock options or SARs.

CODE OF ETHICS

We have yet to  adopt a code of  ethics  for our  principal  executive  officer,
principal  financial officer,  principal  accounting  officer or controller,  or
persons  performing  similar  functions as we have not reached  final  agreement
respecting the terms of the written  standards that will constitute the code. We
expect to adopt a code of ethics during the second quarter of 2004.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of
our common stock as of April 7, 2004. The information in this table provides the
ownership information for:

o     each person known by us to be the beneficial owner of more than 5% of our
      common stock;

o     each of our directors;

o     each of our executive officers; and

o     our executive officers, directors and director nominees as a group.

      The percentages in the table have been calculated on the basis of treating
as outstanding for a particular person, all shares of our common stock
outstanding on such date and all shares of our common stock issuable to such
holder in the event of exercise of outstanding options, warrants, rights or
conversion privileges owned by such person at said date which are exercisable
within 60 days of such date. Except as otherwise indicated, the persons listed
below have sole voting and investment power with respect to all shares of our
common stock owned by them, except to the extent such power may be shared with a
spouse.


                                       19
<PAGE>

<TABLE>
<CAPTION>

        Name and Address                                                    Number of Shares           Percentage
       of Beneficial Owner              Title of Class                     Beneficially Owned        Outstanding(1)
---------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                           <C>                                  <C>
Claude Gendron                    Common Stock, $.001 par value               2,108,359(2)                         7%
300 St. Sacrement Street
Suite 414
Montreal, Quebec, H241X4
---------------------------------------------------------------------------------------------------------------------
Jean-Guy Lambert                  Common Stock, $.001 par value               1,500,000(3)                      4.98%
1801 McGill College Avenue
Suite 1325
Montreal, Quebec H3A2N4
---------------------------------------------------------------------------------------------------------------------
Group Intercapital, Inc. (2)      Common Stock, $.001 par value                  2,108,359                         7%
300 St. Sacrement Street
Suite 414
Montreal, Quebec, H241X4
---------------------------------------------------------------------------------------------------------------------
LBJ Partners, Inc.(4)             Common Stock, $.001 par value               3,870,000(4)                     12.85%
2600 Laurier Blvd.
Suite 855
Sainte-Foy, Quebec G1V 4W2
---------------------------------------------------------------------------------------------------------------------
C.R.E. Inc.(5)                    Common Stock, $.001 par value               2,300,250(6)                      7.64%
7792 de l'Exploratoire
Lac-Kenogami, Quebec C7X 0H9
---------------------------------------------------------------------------------------------------------------------
3860833 Canada Inc.(7)            Common Stock, $.001 par value               4,515,000                        14.99%
400 Jean Lesage Blvd.
Suite 045
Quebec, Quebec
G1K 8W1
---------------------------------------------------------------------------------------------------------------------
Guy Gravel                        Common Stock, $.001 par value               6,815,250(8)                    22.62%
c/o C.R.E.
7792 de l'Exploratoire
Lac-Kenogami, Quebec C7X 0H9
---------------------------------------------------------------------------------------------------------------------
Gilles Cloutier                   Common Stock, $.001 par value                 120,000(9)                      .39%
100 Chestnut Road
Chapel Hill, North
Carolina 27514
---------------------------------------------------------------------------------------------------------------------
Daniel Veilleux                   Common Stock, $.001 par value               8,529,750(10)                    28.31%
400 Jean Lesage Blvd.
Suite 045
Quebec, Quebec G1K 8W1
---------------------------------------------------------------------------------------------------------------------
Stuart Gauld                      Common Stock, $.001 par value                 650,000(13)                     2.15%
400 Jean Lesage Blvd.
Suite 045
Quebec, Quebec G1K 8W1
---------------------------------------------------------------------------------------------------------------------
Bruno Lemay                       Common Stock, $.001 par value                        0                           0%
400 Jean Lesage Blvd.
Suite 045
Quebec, Quebec G1K 8W1
---------------------------------------------------------------------------------------------------------------------
Mario Jacob                       Common Stock, $.001 par value               3,870,000(11)                    12.85%
2600 Launer Blvd.
Suite 855
Sainte-Foy, Quebec G1V 4W2
---------------------------------------------------------------------------------------------------------------------
Louis Lessard                     Common Stock, $.001 par value               5,975,500(11)(12)                19.84%
2600 Launer Blvd.
Suite 855
Sainte-Foy, Quebec G1V 4W2
---------------------------------------------------------------------------------------------------------------------
All Executive Officers            Common Stock, $.001 par value              16,775,250                        54.32%
and Directors as a
Group (7 persons)
---------------------------------------------------------------------------------------------------------------------

</TABLE>


                                       20
<PAGE>

(1)   The percentages computed in this column of the table are based upon
      30,124,005 shares of common stock issued and outstanding on April 7, 2004.

(2)   Claude Gendron is the beneficial owner of Group Intercapital Inc. which
      owns 2,108,359 shares of our common stock.

(3)   Jean-Guy Lambert is the president and a director of Dacha Capital, Inc.,
      which owns 1,000,000 shares of our common stock and has the investment
      power over the securities held by Dacha Capital.

(4)   Mario Jacob and Louis Lessard are the beneficial owners of LBJ Partners,
      Inc.

(5)   The beneficial owner of C.R.E. Inc. is Guy Gravel.

(6)   Includes 240,000 shares underlying outstanding warrants.

(7)   The beneficial owners of 3860833 Canada Inc. are Daniel Veilleux and
      C.R.E. Inc.

(8)   Guy Gravel is the beneficial owner of C.R.E. Inc. which owns 2,060,250
      shares of our common stock and 240,000 outstanding warrants. Through
      C.R.E. Inc. he is also a beneficial owner of 3860833 Canada Inc. which
      owns 4,515,000 shares of our common stock.

(9)   Includes 100,000 shares held by COPD which is controlled by the spouse and
      children of Gilles Cloutier.

(10)  Includes (i) 720,000 shares and (ii) 360,000 shares underlying outstanding
      warrants owned by Catherine Ouellet, the wife of Mr. Veilleux and (iii)
      4,515,000 shares owned by 3860833 Canada Inc., a corporation owned by Mr.
      Veilleux and C.R.E. Inc.

(11)  Includes 3,870,000 shares owned by LBJ Partners, Inc., a corporation owned
      by Mario Jacob and Louis Lessard

(12)  Includes 300,000 shares underlying outstanding warrants.

(13)  Includes 100,000 shares underlying outstanding warrants.


                                       21
<PAGE>

CHANGES IN CONTROL

Not Applicable.

             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In May 2003 we exchanged all of the stock of our then  operating  subsidiary MRD
for  13,379,282  shares of our common stock owned by  Lantibio,  Inc., a company
owned by our former  president and certain former  shareholders of ours. We also
received a non-exclusive  license to develop,  market, and sell certain products
incorporating  compounds  Moli56a and Moli56b.  Luis Molina,  former  president,
chief executive officer, and chairman of ours owns 57.7% of Lantibio.  Alfred G.
Childers and W. Lowry Caudill each own 15.7% of Lantibio.  Robert J. Harvey owns
9.8% of Lantibio.

In May 2003 we  issued  2,750,000  and  1,250,000  shares of our  common  stock,
respectively,  to group Intercapital Inc., a corporation owned by Claude Gendron
and to Jean Guy  Lambert  in  connection  with our May 5,  2003  stock  purchase
agreement.

Effective  September  26, 2003 we completed a private  offering  whereby we sold
6,400,000  units at $.25  per unit or  $1,600,000  on an  aggregate  basis to 16
persons. 2,000,000 of the units were sold to affiliates of the Company including
720,000 units sold to Catherine  Ouellet,  the wife of Daniel Veilleux,  480,000
units sold to C.R.E. Inc. a corporation owned by Guy Gravel,  600,000 units sold
to Louis Lessard and 200,000 units sold to Stuart Gauld.  Each unit consisted of
one share of common stock and one half common stock purchase warrant.  Each full
warrant entitles the holder to purchase one share of our common stock at a price
of $.375 per share for a period of two years from the date of issuance.

In March 2004, we issued  12,900,000  shares of our common stock pursuant to our
Software License  Agreement with Mobilair  including  2,934,750 shares issued to
Daniel Veilleux;  1,580,000 shares issued to C.R.E. Inc., a corporation owned by
Guy Gravel,  a principal  shareholder  of Mobilair;  4,515,000  shares issued to
3860833 Canada Inc. a corporation  owned by Guy Gravel and Daniel Veilleux;  and
3,870,000  shares  issued to LBJ Partners,  Inc., a  corporation  owned by Mario
Jacob and Louis Lessard which was the assignee of Dominion Investments Ltd.

During the period  December 3, 2003 through  February 7, 2004 we received  loans
from  affiliated  persons in the aggregate  amount of $364,001.  Each loan bears
interest  at the rate of 12% and is payable  on demand.  In the event that while
any of the loans are  outstanding  we engage in a private or public  offering of
our common stock in the minimum  amount of  $500,000,  each lender will have the
right to convert any and all principal and interest then due on their respective
loans  into  shares of our  common  stock at the lesser of $.50 per share or the
sale  price for the  common  stock in the  offering.  The loans were made by the
following persons in the amounts and on the date indicated:


                                       22
<PAGE>

      o     Jean Guy Lambert - December 3, 2003 - $115,696

      o     Louis Lessard Inc., a corporation owned by Louis Lessard - December
            12, 2003 - $38,565 and February 2, 2004 - $38,135

      o     Group Intercapital Inc., a corporation owned by Claude Gendron -
            January 21, 2004 - $95,340

      o     Catherine Ouellet, the wife of Daniel Veilleux - January 23, 2004
            $38,135

      o     C.R.E. Inc., a corporation owned by Guy Gravel, a principal
            shareholder of Mobilair Integration - January 23, 2004 - $12,965 and
            February 7, 2004 - $25,165

Effective  January  2004 we have been paying  Daniel  Veilleux,  Bruno Lemay and
Mario  Jacob  salaries  at the  annual  rate of  $75,000,  $56,000  and  $56,000
respectively.

                 ITEM 13. EXHIBITS LIST, AND REPORTS ON FORM 8-K

(a)    Exhibits

Financial Statements
<TABLE>
<CAPTION>
                                                                                                   Page

<S>                                                                                                   <C>
Independent Auditors' Report - Ernst & Young LLP................................................... F-1

Independent Auditors Report - Rogoff & Company, P.C................................................ F-3

Consolidated Balance Sheets as of December 31, 2003 and December 31, 2002.......................... F-4

Consolidated Statements of Operations and Comprehensive Loss for the years ended
December  31, 2003 and  December  31, 2002 and for the period from  December 22,
1995 (date of inception) to December 31, 2003...................................................... F-5

Consolidated Statement of Stockholders' Equity (Deficiency) for the
Period from December 22, 1995 (date of inception) to December 31, 2003............................. F-6

Consolidated  Statements of Cash Flows for the years ended December 31, 2003 and
December 31, 2002 and for the period from  December 22, 1995
(date of inception) to December 31, 2003........................................................... F-8

Notes to Consolidated Financial Statements......................................................... F-9
</TABLE>


                                       23
<PAGE>

Financial Statement Schedules

All financial statement schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.

           The following  exhibits  filed as a part of this Form 10-KSB  include
           both exhibits  submitted with this Report and those  incorporated  by
           reference to other filings:

EXHIBIT
  NO.      DESCRIPTION

3.1   Certificate of Incorporation of the Registrant(1)

3.2   Amended and Restated Certificate of Incorporation of Registrant as filed
      with the Delaware Secretary of State on November 21, 2003(5)

3.3   Amended and Restated By-Laws of the Registrant(1)

4     Form of common stock Certificate of MoliChem Medicines, Inc.(1)

9     Stockholders Voting Agreement and Irrevocable Proxy dated January 18, 2001
      among Alfred G. Childers, Robert J. Harvey, Luis Molina, W. Lowry Caudill,
      John E. & Cynthia M. Shackles, and Dacha Capital, Inc.(1)

10.1  Employment Agreement dated January 30, 2001 between MoliChem Medicines and
      Luis Molina(1)

10.2  Employment Agreement date January 30, 2001 between MoliChem Medicines and
      Terry Williams(1)

10.3  Technology Transfer and Custom Services Agreement dated March 23, 2001
      between Apotex Fermentation Inc. and MoliChem R&D, Inc.(1)

10.4  Exclusive Development and Commercialization Agreement dated May 11, 2001
      among InterMune, Inc. and MoliChem R&D, Inc.(1)

10.5  Form of Option Agreement(1)

10.6  Employment Agreement dated as of April 1, 2001 between MoliChem R&D, Inc.
      and Gilles Cloutier(1)

10.7  Employment Agreement dated as of September 17, 2001 between MoliChem R&D,
      Inc. and Ronald Keeney(1)

10.8  Europa Center Office Lease dated July 2, 2001 between Europa Center, LLC
      and MoliChem R&D, Inc.(1)

10.9  MoliChem Medicines, Inc. 2001 Stock Award Plan(1)

10.10 Amendment No. 1 to the Exclusive Development and Commercialization
      Agreement with Intermune, Inc. dated as of May 11, 2001(2)

10.11 Stock Purchase Agreement dated as of May 5, 2003 among Registrant, Gilles
      Cloutier and certain Purchasers(3)

10.12 Stock Exchange Agreement dated as of May 6, 2003 among Registrant,
      Molichem R&D, Inc. and Lantibio, Inc.(3)

10.13. License Agreement dated as of May 6, 2003 between Registrant and Molichem
       R&D,  Inc.(3)

10.14 Software License Agreement dated as of September 16, 2003 between
      Registrant and 3720161 Canada Corporation(4)


                                       24
<PAGE>

10.15 Amendment dated as of September 16, 2003 to Software License Agreement
      between Registrant and 3720161 Canada Corporation(5)

10.16 Service  Agreement  dated as of September 16, 2003 between  Registrant and
3720161 Canada  Corporation(5)

10.17 License  Agreement dated February 10, 2004
between  Registrant and Seaquest  Technologies  MKG Inc.(6)

10.18 Share Purchase
Agreement  dated February 19, 2004 between  Registrant and the  Shareholders  of
SCAN-R Urgence Inc.

10.19 Waiver Agreement dated March 31, 2004 among Registrant, Jean Guy Lambert,
      Group Intercapital Inc., Gestion CM 2000 Inc., David Lambert and Chantal
      Lambert

21    List of Subsidiaries of Registrant(6)

31.1  Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive
      Officer(6)

31.2  Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial
      Officer(6)

32.1  Rule 1350 Certification of Chief Executive Officer(6)

32.2  Rule 1350 Certification of Chief Financial Officer(6)

(1)   Incorporated by reference to Registration Statement on Form SB-2, No.
      333-64430.
(2)   Incorporated by reference to Quarterly Report on Form 10QSB for the
      quarterly period ended June 30, 2002.
(3)   Incorporated by reference to Annual Report on Form 10KSB for the year
      ended December 31, 2002.
(4)   Incorporated by reference to Current Report on Form 8K dated September 16,
      2003.
(5)   Incorporated by reference to Quarterly Report on Form 10QSB for the
      quarterly period ended September 30, 2003.
(6)   Filed herewith.

(b) Reports on Form 8-K.

On November 20, 2003 we filed a Form 8K dated November 18, 2003.  Item 4 thereof
referred to a change in our independent certifying accountant.


                ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Consistent  with Section  10A(i)(2) of the  Securities  Exchange Act of 1934, as
added by Section 202 of the  Sarbanes-Oxley  Act of 2002, we are responsible for
listing  the  non-audit  services  approved  by our  Board  of  Directors  to be
performed  by Ernst & Young LLP, our external  auditor.  Non-audit  services are
defined as services other than those  provided in connection  with an audit or a
review  of our  financial  statements.  Our  Board of  Directors  currently  has
approved Ernst & Young LLP to perform services regarding tax matters.

Our present and former principal  accountants,  Deloitte & Touche, LLP, Rogoff &
Company  P.C.,  Singer  Lewak  Greenbaum & Goldstein  LLP, and Ernst & Young LLP
billed us for aggregate fees in the aggregate  amount of  approximately  $51,331
and  $129,404   for  the  fiscal  years  ended   December  31,  2003  and  2002,
respectively,  approximately  $51,331 and $129,404 of which was  attributable to
audit fees.


                                       25
<PAGE>

The amount of and  percentage  of the total fees we were billed by our principal
accountants for audit,  audit-related,  tax and other services for 2003 and 2002
were as set forth in the following table:

             Amount of and Percentage of Total Fees Paid
------------------------------------------------------------------------
                        Fiscal Year 2003         Fiscal Year 2002
------------------------------------------------------------------------
Audit fees                $51,331 100%            $129,404 100%
------------------------------------------------------------------------
Audit-related fees           $0 0%                    $0 0%
------------------------------------------------------------------------
Tax fees                     $0 0%                    $0 0%
------------------------------------------------------------------------
All other fees               $0 0%                    $0 0%
------------------------------------------------------------------------


                                       26
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.

Dated: April 14, 2004                   EmergenSys Corporation

                                   By:  /s/ Daniel Veilleux
                                        -------------------------------------
                                        Daniel Veilleux
                                        President and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 14th day of April 2004.

SIGNATURE AND TITLE

/s/ Daniel Veilleux
----------------------------
Daniel Veilleux - President, Chief Executive Officer, Director

/s/ Bruno Lemay
----------------------------
Bruno Lemay - Treasurer, Chief Financial and Accounting Officer

/s/ Louis Lesard
----------------------------
Louis Lesard - Director

/s/ Jean Guy Lambert
----------------------------
Jean Guy Lambert - Director

/s/ Stuart Gauld
----------------------------
Stuart Gauld - Director

/s/ Gilles Cloutier
----------------------------
Gilles Cloutier - Director


                                       27
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

The Board of Directors and Stockholders

EMERGENSYS CORPORATION:

We have  audited  the  accompanying  consolidated  balance  sheet of  EmergenSys
Corporation  [formerly  known as Molichem  Medicines,  Inc.] as of December  31,
2003, and the related  consolidated  statements of operations and  comprehensive
loss,  stockholders' equity (deficiency) 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 auditing standards  generally accepted
in the 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  statements
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements refer to above present fairly, in all
material respects,  the financial position of EmergenSys Corporation at December
31, 2003 and the results of its  operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States.


                                     F-1
<PAGE>

The Company is in the development stage. As discussed in Note 1 to the financial
statements,  commercialization  of the Company's  software licence rights,  and,
ultimately,  the  attainment of profitable  operations is dependent  upon future
events,  including obtaining adequate financing and achieving a level of revenue
adequate to support the Company's basic  infrastructure  and future  operations.
The accompanying  financial  statements have been prepared  assuming the Company
will continue as a going  concern.  The Company has incurred  losses of $862,541
for the year ended December 31, 2003,  has an accumulated  deficit of $5,327,800
and negative  working capital of $80,711 as of December 31, 2003.  These factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  Management's  plans regarding these matters are also described in note
1. The 2003  financial  statements  do not  include any  adjustments  that might
result for the outcome of this uncertainty.


Quebec City, Canada
March 5, 2004.
[Except for note 14, as to which the date is March 31, 2004].

                                                          /s/ Ernst & Young LLP
                                                          ----------------------
                                                          Chartered Accountants

                                     F-2
<PAGE>

                          Independent Auditors' Report

The Board of Directors and Stockholders
EmergenSys Corporation (formerly known as Molichem Medicines, Inc.)
Quebec, Quebec

Gentlemen:

      We have audited the accompanying  balance sheet of EmergenSys  Corporation
(formerly known as Molichem  Medicines,  Inc.) and subsidiary as of December 31,
2002,  and the related  consolidated  statements  of  operations,  stockholders'
equity  (deficiency)  and cash flows for the year then ended, and for the period
from December 22, 1995 (date of  inception)  to December 31, 2000,  and the year
ended December 31, 2002. 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. The Company's  consolidated  financial
statements as of and for the year ended  December 31, 2001 were audited by other
auditors whose report, dated March 26, 2002, expressed an unqualified opinion on
those statements.

      We conducted our audit in accordance  with  auditing  standards  generally
accepted in the United States of America.  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  statements  presentation.  We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

      In our opinion, based on our audit and the report of other auditors,  such
financial  statements  present fairly, in all material  respects,  the financial
position of EmergenSys Corporation (formerly known as Molichem Medicines,  Inc.)
as of December 31, 2002,  and the results of its  operations  and its cash flows
for the year  then  ended,  for the  period  from  December  22,  1995  (date of
inception)  to December 31,  2000,  and the year ended  December  31,  2002,  in
conformity with accounting principles generally accepted in the United States of
America.

      The  Company is in the  development  stage as of  December  31,  2002.  As
discussed in Note 4 to the financial  statements,  successful  completion of the
Company's  development programs,  and, ultimately,  the attainment of profitable
operations  is  dependent  upon  future  events,  including  obtaining  adequate
financing to fulfill its development activities,  obtaining regulatory approval,
and  achieving  a level of  revenue  adequate  to  support  the  Company's  cost
structure.

      The  accompanying  financial  statements  have been prepared  assuming the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements, the Company has incurred losses of $2,239,636 for the year
ended  December  31,  2002 and has an  accumulated  deficit  of  $4,465,259  and
negative  working  capital of $465,683 as of December  31, 2002.  These  factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern. Management's plans regarding these matters are discussed in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this matter.

New York, New York
Date:  April 8, 2003
                                                     /S/ Rogoff & Company, P.C.
                                                     --------------------------


                                      F-3
<PAGE>

<TABLE>
<CAPTION>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]
                           CONSOLIDATED BALANCE SHEETS
           AS AT DECEMBER 31                                              [IN U.S. DOLLARS]

                                                                         2003              2002
                                                                           $                 $
------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
<S>                                                                    <C>              <C>
Cash and cash equivalents                                              21,085           304,178
Accounts receivable                                                        --               300
Prepaid expenses and other current assets                                  --            69,231
Advances to related company [note 11]                                 149,842                --
Other advance [note 14b)]                                             128,003                --
------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                  298,930           373,709
------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET [note 5]                                       --            38,020
------------------------------------------------------------------------------------------------
SOFTWARE PRODUCTION COSTS [note 6]                                  1,090,000                --
------------------------------------------------------------------------------------------------
SOFTWARE LICENSE RIGHTS [notes 2 and 13]                            2,849,500             7,515
------------------------------------------------------------------------------------------------
                                                                    4,238,430           419,244
------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities
   Related company [note 11]                                          155,252                --
   Other                                                               70,128           819,270
Accrued compensation and benefits                                          --            20,122
Notes payable to stockholders [note 7]                                154,261                --
------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                             379,641           839,392
------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock - $0.0001 par value,  20,000,000 shares authorized,
   non voting, none issued and outstanding at December 31, 2003
   and 2002
Common stock - $0.0001 par value,  80,000,000 shares authorized,
   10,824,005 and 18,679,287 shares issued and outstanding at
   December 31, 2003 and 2002, respectively                             1,082             1,868
Common stock committed, 20,300,000 shares [note 13]                 4,161,500                --
Warrants - 3,200,000 warrants, exercisable at $0.375
   until September 11, 2005                                           288,000                --
Additional paid-in capital                                          4,736,007         4,043,243
Accumulated deficit                                                (5,327,800)       (4,465,259)
------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                          3,858,789           420,148
------------------------------------------------------------------------------------------------
                                                                    4,238,430           419,244
------------------------------------------------------------------------------------------------
See accompanying notes
</TABLE>


                                      F-4
<PAGE>

<TABLE>
<CAPTION>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                               COMPREHENSIVE LOSS

        YEARS ENDED DECEMBER 2003 AND 2002, AND PERIOD FROM DECEMBER 22,
      1995 [DATE OF INCEPTION] THROUGH DECEMBER 31, 2003                         [IN U..S. DOLLARS]

                                                                                   PERIOD FROM
                                                                                    DECEMBER 22,
                                                                                       1995
                                                                                     [DATE OF
                                                                                     INCEPTION]
                                                                                      THROUGH
                                                                                     DECEMBER 31,
                                                       2003            2002             2003
                                                        $               $                $
-------------------------------------------------------------------------------------------------
REVENUE
<S>                                                  <C>            <C>              <C>
Grant revenue                                             --               --         1,716,697
Revenue from joint development agreement                  --        2,624,385         3,299,885
-------------------------------------------------------------------------------------------------
                                                          --        2,624,385         5,016,582
-------------------------------------------------------------------------------------------------
OPERATING EXPENSES

Research and development                             266,189        3,984,196         6,953,167
General and administration                           601,671          911,541         3,846,486
Depreciation and amortization                             --           10,070            23,555
Foreign exchange gain                                 (5,319)              --            (5,319)
-------------------------------------------------------------------------------------------------
                                                     862,541        4,905,807        10,817,889
-------------------------------------------------------------------------------------------------
Loss from operations                                (862,541)      (2,281,422)       (5,801,307)
Interest income                                           --           15,286            45,763
-------------------------------------------------------------------------------------------------
Loss before income taxes                            (862,541)      (2,266,136)       (5,755,544)
Income taxes                                              --          (26,500)           13,000
-------------------------------------------------------------------------------------------------
NET AND COMPREHENSIVE LOSS                          (862,541)      (2,239,636)       (5,768,544)
-------------------------------------------------------------------------------------------------

NET LOSS PER SHARE - BASIC AND DILUTED                  0.04             0.12

BASIC WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                             19,574,322       18,635,446

See accompanying notes
</TABLE>


                                      F-5
<PAGE>

<TABLE>
<CAPTION>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
     PERIOD FROM DECEMBER 22, 1995 [DATE OF INCEPTION] TO DECEMBER 31, 2003
                               [IN U.S. DOLLARS]

                                                                                                                         TOTAL
                                          CAPITAL     CAPITAL     ADDITIONAL                                          STOCKHOLDERS'
                           COMMON          STOCK       STOCK       PAID-IN                   DEFERRED    ACCUMULATED     EQUITY
                           SHARES         ISSUED      COMMITTED    CAPITAL       WARRANTS   COMPENSATION   DEFICIT    (DEFICIENCY)
                              $             $             $           $             $             $            $              $
-----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>           <C>          <C>           <C>           <C>            <C>       <C>
BALANCE, DECEMBER 2,
   1995 [date of in
   inception]
   Founder's stocks        7,716,000          771           --            229          --            --             --        1,000
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   1995                    7,716,000          771           --            229          --            --             --        1,000
January 1, 1996 -
   Stock issued for        1,157,400          116           --         19,884          --            --             --       20,000
   cash
May 24, 1996 - Stock
   issued for cash
   [$40,000] and           4,187,242          420           --         71,936          --            --             --       72,356
   services [$32,356]
Net loss                          --           --           --             --          --            --        (55,987)     (55,987)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   1996                   13,060,042        1,307           --         92,049          --            --        (55,987)      37,369
April 9 and 30, 1997 -
   Stock issued for          308,640           30           --         39,970          --            --             --       40,000
   cash
September 10, 1997 -
   Options issued in
   exchange for                   --           --           --         85,050          --            --             --       85,050
   services
Net loss                          --           --           --             --          --            --       (141,012)    (141,012)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   1997                   13,369,282        1,337           --        217,069          --            --       (196,999)      21,407
Net loss                          --           --           --             --          --            --        (65,923)     (65,923)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER
   31,1998                13,369,282        1,337           --        217,069          --            --       (262,922)     (44,516)
Net loss                          --           --           --             --          --            --       (129,778)    (129,778)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   1999                   13,369,282        1,337           --        217,069          --            --       (392,700)    (174,294)
Net loss                          --           --           --             --          --            --        (48,044)     (48,044)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   2000                   13,369,282        1,337           --        217,069          --            --       (440,744)    (222,338)
January 18, 2001 -
   Issuance of common
   stock in reverse        3,300,005          330           --           (330)         --            --             --           --
   merger
January 18, 2001 -
   Stock issued for        1,000,000          100           --      1,494,389          --            --             --    1,494,489
   cash
S Corporation
   accumulated deficit
   prior to reverse
   merger charged to
   paid-in capital                --           --           --       (440,744)         --            --        440,744           --
   upon revocation of
   S Corporation
   election
Deferred stock
   compensation                   --           --           --      1,603,313           --    (1,603,313)            --          --
-----------------------------------------------------------------------------------------------------------------------------------
Carry forward             17,668,287        1,767           --      2,873,697           --    (1,603,313)            --    1,272,151

</TABLE>


                                      F-6
<PAGE>

<TABLE>
<CAPTION>

EMERGENSYS CORPORATION AND SUBSIDIARY
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) [CONTINUED]
     PERIOD FROM DECEMBER 22, 1995 [DATE OF INCEPTION] TO DECEMBER 31, 2003               [IN U.S. DOLLARS]


                                                                                                                         TOTAL
                                          CAPITAL     CAPITAL     ADDITIONAL                                          STOCKHOLDERS'
                           COMMON          STOCK       STOCK       PAID-IN                   DEFERRED    ACCUMULATED     EQUITY
                           SHARES         ISSUED      COMMITTED    CAPITAL       WARRANTS   COMPENSATION   DEFICIT    (DEFICIENCY)
                              $             $             $           $             $             $            $              $
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>           <C>          <C>           <C>           <C>            <C>       <C>
Carried forward           17,668,287        1,767           --       2,873,697         --    (1,603,313)           --    1,272,151
Amortization of
   deferred stock
   compensation                   --           --           --             --          --     1,234,114            --    1,234,114
May 14, 2001 - Stock
   options exercised          10,000            1           --             12          --            --            --           13
Net loss                          --           --           --             --          --            --    (2,225,623)  (1,225,623)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   2001                   17,679,287        1,768           --      2,873,709          --      (369,199)   (2,225,623)     280,655
January 23, 2002
   -Stock issued for       1,000,000          100           --      1,499,000          --            --            --    1,500,000
   cash
Amortization of
   deferred stock
   compensation                   --           --           --             --          --        38,833            --       38,833
Remeasurement of
   unvested stock
   options                        --           --           --       (272,033)         --       272,033            --           --
Reversal of deferred
   stock compensation
   resulting from
   employee
   terminations                   --           --           --        (58,333)         --        58,333            --           --
Net loss                          --           --           --             --          --            --    (2,239,636)  (2,239,636)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   2002                   18,679,287        1,868           --      4,043,243          --            --    (4,465,259)    (420,148)
May 6, 2003 -
   Cancellation of
   common stock due to
   subsidiary spin-off
   [note 2]              (13,355,282)      (1,336)          --        593,314          --            --            --      591,978
May 7, 2003 - Stock
   issued for cash
   [note 14e]              5,500,000          550           --         99,450          --            --            --      100,000
September 11, 2003 -
   Stock committed for
   cash                    6,400,000           --    1,312,000             --     288,000            --            --    1,600,000
September 16, 2003 -
   Stock committed as
   consideration of
   software license
   rights                 13,900,000           --    2,849,500             --          --            --            --    2,849,500
Net loss                          --           --           --             --          --            --      (862,541)    (862,541)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
   2003                   31,124,005        1,082    4,161,500      4,736,007     288,000            --    (5,327,800)   3,858,789
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes


                                      F-7
<PAGE>

<TABLE>
<CAPTION>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
             YEARS ENDED DECEMBER 31, 2003 AND 2002, AND PERIOD FROM
           DECEMBER 22, 1995 [DATE OF INCEPTION] TO DECEMBER 31, 2003
                                                                                 [IN U.S. DOLLARS]

                                                                                       PERIOD
                                                                                    DECEMBER 22,
                                                                                        1995
                                                                                      [DATE OF
                                                                                     INCEPTION]
                                                                                       THROUGH
                                                                                    DECEMBER 31,
                                                       2003              2002           2003
                                                          $                $             $
-------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S>                                                 <C>            <C>               <C>
Net loss                                            (862,541)      (2,239,636)       (5,768,544)
Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation and amortization                          --           10,070            23,555
   Amortization of differed stock compensation            --           38,833         1,272,947
   Stock and options issued for consulting services       --               --           117,406
Net changes in non-cash working capital items         93,032         (471,312)          862,891
-------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES               (769,509)      (2,662,045)       (3,491,745)
-------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Advances to companies                             (1,412,472)              --        (1,412,472)
Decrease in advances to companies                     44,627               --            44,627
Purchases of property and equipment                       --          (15,658)          (58,982)
Investment in other assets                                --               --           (10,106)
-------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES             (1,367,845)         (15,658)       (1,436,933)
-------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Notes payable to stockholders                        154,261               --           154,261
Proceeds of loan payable                                  --               --           120,000
Repayment on loan payable                                 --               --          (120,000)
Stock issued in private placement                         --               --         1,494,489
Issuance of stock                                  1,700,000        1,500,000         3,301,013
-------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES          1,854,261        1,500,000         4,949,763
-------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                      (283,093)      (1,177,703)           21,085
Cash and cash equivalents, beginning of period       304,178        1,481,881                --
-------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS END OF PERIOD               21,085          304,178            21,085
-------------------------------------------------------------------------------------------------

SUPPLEMENTARY INFORMATIONS
Cash paid for income taxes                                --           13,000            13,000
Cash paid for interest                                    --            2,088            39,963
-------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes


                                      F-8
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

1.    BASIS OF FINANCIAL STATEMENT PRESENTATION AND GOING CONCERN ASSUMPTION

The Company's  financial  statements  are prepared using  accounting  principles
generally  accepted  in the  United  States  of  America  applicable  to a going
concern,  which  contemplates  the  realization  of assets  and  liquidation  of
liabilities in the normal course of business. The Company has incurred losses of
$862,541  and  $2,239,636  for the  years  ended  December  31,  2003 and  2002,
respectively,  has an  accumulated  deficit of $5,327,800  and negative  working
capital of $80,711 as of December  31, 2003.  These  factors  raise  substantial
doubt about the Company's  ability to continue as a going  concern.  The Company
plans to pursue additional equity financing to fund the commercialization of its
software licence rights, its basic infrastructure and future operations.  In the
event the  Company is unable to obtain  additional  financing,  it will not have
sufficient  funds to permit  the  Company  to  continue  to  operate  for a year
following  December 31, 2003.  Management  is  currently  negociating  to obtain
additional financing. However, management cannot provide any assurances that the
Company will be  successful  in finalizing  such  financing.  The ability of the
Company  to  continue  as a going  concern  is  dependent  upon its  ability  to
successfully  complete the financing,  commercialize its software license rights
and  ultimately  attain  profitable   operations.   The  accompanying  financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.

2.    NATURE OF BUSINESS AND CORPORATE HISTORY

Effective  September  16,  2003,  the Company  entered  into a Software  License
Agreement   ["License   Agreement"],   with  3720161  Canada  Inc.,  a  Canadian
corporation doing business under the name of Mobilair Integration. ["Mobilair"].
Mobilair  is a  principal  stockholder  of the  Company.  Mobilair  is a leading
developer of technological solutions [hardware and software] that integrates new
concepts  for  public  safety  and  security  management  systems.  The  License
Agreement  provides  the Company  with an  exclusive,  worldwide,  royalty-free,
perpetual  license to use, offer and distribute  Mobilair's  software for public
safety and security management systems and all modifications,  enhancements, and
replacements  thereof and  additions  thereto  related to the public  safety and
security market [see note 11].

The public  safety and  security  market is the market  covering  police,  fire,
ambulance and  environmental  services provided by federal,  state,  provincial,
municipal  or local public  authorities.  In  consideration  of the grant of the
License,  the  Company  committed  to  issue  to  Mobilair  and  certain  of its
employees,   12,900,000  shares  and  1,000,000  shares,  respectively,  of  its
restricted common stock. The shares have been valued at $0.205 or $2,849,500.


                                      F-9
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

2.    NATURE OF BUSINESS AND CORPORATE HISTORY [CONTINUED]

Molichem R&D acquired  Molichem  Medicines,  Inc.  [formerly Cortez  Development
Company,  Ltd.] in a reverse  merger [the  "Merger"] on January 18, 2001, and on
that date the Board of Directors of Molichem Medicines, Inc. declared a 6.959314
for-one  common  share stock split  effected in the form of a stock  dividend to
stockholders of record.

Following the stock split,  8,469,491 shares of Molichem Medicines,  Inc. $.0001
par value common stock were outstanding.  In connection with the Merger, holders
of 5,219,486 shares of Molichem  Medicines,  Inc. common stock contributed these
shares to Molichem  Medicines,  Inc., and those shares were cancelled.  Molichem
Medicines,  Inc. also issued 50,000 shares of common stock in exchange for legal
services.  These  transactions  resulted  in  Molichem  Medicines,  Inc.  having
3,300,005 common shares outstanding immediately prior to the Merger.

To effect the Merger,  each of the 1,732,670  outstanding shares of Molichem R&D
common stock was exchanged for 7.716 shares of Molichem Medicines,  Inc., common
stock.  Prior to the Merger,  Molichem  Medicines,  Inc. was a shell corporation
with no  significant  operations.  The  merger  was  accounted  for as a reverse
acquisition of Molichem Medicines,  Inc. through issuance of 3,300,005 shares of
stock by Molichem  R&D,  accompanied  by a  recapitalization.  Accordingly,  the
financial  statements  prior to the date of  acquisition  reflect the historical
results of operations of Molichem R&D.  References to the number of  outstanding
shares,  par  value,  additional  paid-in-capital,  and per  share  amounts  for
Molichem  R&D for all  periods  have been  restated  to reflect the ratio of the
exchange of shares in the merger.

In connection  with the merger,  Molichem  Medicines,  Inc. sold 1,000,000 stock
units [each unit  consisting  of one share of common stock and a warrant for the
purchase of one share of common stock] in a private  placement for cash proceeds
of $1,494,489,  net of issuance costs of $5,511.  The warrants were exercised on
January, 23, 2002 at $1.50 per share, resulting in net proceeds of $1,500,000 to
the Company.

Since its inception and until the spin-off of its operating subsidiary on May 6,
2003,  EmergenSys  Corporation  [the  "Company"],  operated  as an  early  stage
pharmaceutical  company  focused on the discovery,  development and marketing of
pharmaceutical  products for the  treatment of serious  respiratory  and related
conditions.


                                      F-10
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

2.    NATURE OF BUSINESS AND CORPORATE HISTORY [CONTINUED]

The Company conducted these development and commercialization activities through
its wholly owned subsidiary  Molichem R&D Inc. ["Molichem R&D"]. On May 6, 2003,
100 percent of the stock of Molichem R&D was  transferred  to Lantibio,  Inc. in
exchange for  13,355,282  shares of common stock of the Company held by Lantibio
Inc. which were subsequently  cancelled by the Company,  and a license agreement
providing  certain rights to the intellectual  property held by Molichem R&D. In
connection  with this  transaction  all of the Company's  assets and liabilities
were transferred to Molichem R&D, after which the Company's operations consisted
solely of holding a license from  Molichem R&D and  maintaining  its status as a
public reporting entity. This transaction between companies under common control
resulted in a credit to additional paid in capital of $593,314.

Molichem  R&D,  was  incorporated  on December  22, 1995 in North  Carolina.  On
January 18, 2001, Molichem R&D acquired Cortez Development, Ltd. ["Cortez"] in a
reverse merger in which Molichem R&D was the accounting  acquirer and Cortez was
the legal acquirer.  Cortez was  incorporated on July 20, 1998 under the laws of
the State of Delaware and had no operations prior to the reverse merger.  Cortez
changed its name to Molichem  Medicines,  Inc.  after  completion of the merger.
Subsequent to the reverse merger,  Molichem R&D became a wholly-owned subsidiary
of Molichem  Medicines,  Inc. Medical licensing  International Corp. changed its
name to EmergenSys Corporation on November 21, 2003.

3.       FORMER OPERATIONS

A)       GENERAL

On May 6, 2003 the  Company  exchanged  100  percent  of the stock of its wholly
owned  subsidiary,  Molichem  R&D, Inc. for  13,355,282  shares of the Company's
stock owned by  Lantibio,  Inc.,  a company  owned by the former  President  and
certain  former  shareholders  of the  Company.  The  Company  also  received  a
non-exclusive license ["License Agreement"] to develop, market, and sell certain
products  incorporating  Molichem R&D, Inc.'s compounds Moli56A and Moli56B,  on
which the Company attributes no value.

In  addition,  options to purchase a total of  1,637,114  shares of common stock
were cancelled in connection with the transaction.


                                      F-11
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

3.    FORMER OPERATIONS [CONTINUED]

A)    GENERAL [CONTINUED]

The License Agreement has a ten year term, provides for annual licensing fees of
$1.00 payable by the Company on each anniversary of the License Agreement, a one
time  continuation  payment of $500,000 payable on the first  anniversary of the
License  Agreement,  a one time milestone  payment of $2,000,000  payable by the
Company within 60 days of the approval of a product incorporating the technology
encompassed by the License  Agreement,  and annual  royalty  payments equal to 6
percent  of net sales  related  to the  technology  encompassed  by the  License
Agreement.

B)    GRANTS

The  Company  has  received  grants form the Cystic  Fibrosis  Foundation  ["the
Foundation"]  to develop  its  compound  Moli1901  for the  treatment  of cystic
fibrosis.  The Company is contingently  liable to repay these grants if the Food
and Drug  Administration  ["FDA"] approves Moli1901 for marketing to the public.
As of December 31, 2001,  the Company had received a total of $786,560 in grants
from the  Foundation.  As a result of the Spin-off of Molichem  R&D,  Inc.,  the
Company is no longer contingently liable to repay these grants.

C) CONTRACT DEPOSIT AND COMMERCIALIZATION AGREEMENT

On May 11, 2001, the Company  entered into a Development  and  Commercialization
Agreement [the  "Agreement"]  with InterMune,  Inc.  ["InterMune"] for the joint
development  and  commercialization  of  its  compound,   Moli1901.   Under  the
Agreement,  InterMune was granted a co-exclusive worldwide license for Moli19101
and was required to share equally the costs of development and commercialization
of  Moli1901  for  the  treatment  of  cystic  fibrosis  and  other  therapeutic
applications.  Upon  commercialization  of Moli1901,  InterMune  and the Company
would share  equally in the net profits or losses from the sale of the  products
that have  been  jointly  developed.  The  Agreement  was  terminated  effective
December 16, 2002  resulting in the Company  obtaining  exclusive  rights to the
Moli1901   technology  in  exchange  for  the  release  of  InterMune  from  all
obligations under the agreement.

Upon  execution  of the  Agreement,  InterMune  made a  non-refundable  up-front
payment to the Company of $1,450,000.


                                      F-12
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

3.    FORMER OPERATIONS [CONTINUED]

C)    CONTRACT DEPOSIT AND COMMERCIALIZATION AGREEMENT [CONTINUED]

InterMune was obligated to make an  additional  non-refundable  payment of up to
$5,000,000  upon  the  achievement  of  specified  milestones  related  to  each
therapeutic   application  developed  from  Moli1901.   None  of  the  specified
milestones were achieved prior to the termination of the Agreement.

In November 2000,  InterMune paid the Company $50,000 as a refundable  exclusive
dealing binder [the "Binder  Payment"]  under which the Company agreed to pursue
the execution of the  Agreement.  Upon  execution of the  Agreement,  the Binder
Payment became non-refundable.

The up-front payments described above totaling  $1,500,000 were being recognized
as revenue over the estimated initial product  development period for the cystic
fibrosis indication for Moli1901 prior to the termination of the agreement. Upon
termination  of the  Agreement  in  2002  all  remaining  deferred  revenue  was
recognized as income.

D)    401(K) SAVINGS PLAN

Effective  January 1, 2001, the Company's  subsidiary  provided a 401(k) Savings
Plan [the "Plan"] to all employees.  Under the terms of the Plan, the subsidiary
contributed 3% of employees'  annual salary.  This  subsidiary was spun off [see
note 2].

4.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying  financial  statements  include the accounts of the Company and
its  wholly  owned  subsidiary  up to the  date  of  spin-off.  All  significant
intercompany  balances and transactions  have been eliminated on  consolidation.


                                      F-13
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

4.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

DEVELOPMENT STAGE ENTERPRISE

The Company is a development  stage company as defined in Statement of Financial
Accounting  Standards  ["SFAS"] No. 7,  "Accounting and Reporting by Development
Stage  Enterprises".  The  Company is  devoting  all of its  present  efforts to
establishing  its new business  and to  fundraising,  and its planned  principal
operations have not yet commenced.  All losses  accumulated since inception have
been considered as part of the Company's development stage activities.

REPORTING CURRENCY

The Company has retained the US dollar as its reporting currency.  The financial
statements  are  translated  into the reporting  currency using the current rate
method.  Under this method,  the financial  statements are  translated  into the
reporting  currency as follows:  assets and  liabilities  are  translated at the
exchange  rate in effect at the date of the balance  sheet,  while  revenues and
expenses are translated at the monthly average exchange rate.

Exchange gains and losses arising from the translation of foreign currency items
are included in the determination of net loss.

USE OF ESTIMATES

In  preparing  financial  statements  that conform  with  accounting  principles
generally  accepted  in the  United  States  of  America,  management  must  use
estimates  and  assumptions  that  effect  the  reported  amounts  of assets and
liabilities,  the disclosure of contingent assets and liabilities at the date of
the financial  statements,  and amounts of revenue and expenses reflected during
the reporting period.  Actual results could differ from those estimates and such
differences may be material.


                                      F-14
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

4.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid  investments  purchased with an original
maturity of three months or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Property  and  equipment  are  recorded  at  cost  and  depreciated   using  the
straight-line method over their estimated useful lives of five to seven years.

SOFTWARE PRODUCTION COSTS

Pursuant to the provisions of SFAS No. 86, "Accounting for the Costs of Computer
Software  to Be  Sold,  Leased  or  Otherwise  Marketed",  internally  developed
software  and  software  purchased  from third  parties are  capitalized  if the
related software product under development has reached technological feasibility
or if there are alternative future uses for the purchased software.  These costs
will be amortized when the software will be available for general release.

At each  balance  sheet  date,  the  unamortized  capitalized  cost of  computer
software  is  evaluated  by  comparing  it to the net  realizable  value of that
product.  The amount by which the  unamortized  capitalized  costs of a computer
software product exceed its net realizable value is written off.

SOFTWARE LICENSE RIGHTS

Software license rights are recorded at cost. These software license rights have
not yet been commercialized and therefore are not amortized.


                                      F-15
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                             [in U.S. dollars]


4.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

IMPAIRMENT OF LONG-LIVED ASSETS

The  Company  assesses  its  long-lived  assets for  impairment  as  required by
Statement of Financial  Accounting Standards ["SFAS"] No 144, Accounting for the
Impairment or Disposal of Long-Lived Assets.  When  circumstances  indicate that
the carrying amount of an asset may not be recoverable,  the Company performs an
evaluation  impairment  based on  undiscounted  projected cash flows through the
remaining  amortization  period.  If  impairment  exists,  the  amount  of  such
impairment is calculated  based on the  estimated  fair value of the assets,  as
determined  based  on  the  anticipated   cash  flows,   discounted  at  a  rate
commensurate  with the risk  involved.  As of December 31, 2003  management  has
determined that there is no impairment.

INCOME TAXES

Prior to January 18, 2001,  Molichem R&D was  organized  for income tax purposes
under  Subchapter S of the Internal Revenue Code.  Accordingly,  no income taxes
were  provided as the  Company's  income or loss was included in the federal and
state income tax returns of its  stockholders.  In  connection  with the reverse
Merger [see note 2], the  Subchapter  S election  was revoked and  Molichem  R&D
became a Subchapter C  corporation  for income tax  purposes.  Accordingly,  the
accumulated  deficit of Molichem R&D of $440,744 prior to the reverse merger was
eliminated  by a charge  to  additional  paid-in  in  capital.  The  results  of
operations  of  Molichem  R&D  during  2001  prior to the  reverse  merger  were
immaterial.  Subsequent to January 18, 2001,  the Company  records  income taxes
under the provisions of SFAS No. 109,  Accounting for Income Taxes.  The Company
provides for deferred income taxes under the asset and liability method, whereby
deferred income taxes result from temporary differences between the tax bases of
assets and liabilities and their reported  amounts in the financial  statements.
The  Company  has  elected to file its federal and state tax returns on the cash
basis.

GRANT REVENUE

The Company has received  government and private grants to fund the research and
development  of its drug for the  treatment  of cystic  fibrosis.  Revenue  from
grants is recognized as cost  qualifying for  reimbursement  under the grant are
incurred and a request for reimbursement is made to the grantor.


                                      F-16
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

4.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

RESEARCH AND DEVELOPMENT

The  Company  charges  the costs of  research  and  development  to  expense  as
incurred.

STOCK-BASED COMPENSATION

The Company  accounts for stock options issued to employees  using the intrinsic
value method in accordance with Accounting Principles Board Opinion No. 25 ["APB
25"]. Accounting for Stock Issued to Employees and related interpretations.  APB
25 provides that compensation  expense for stock options be valued at the quoted
market price of the Company's  stock less any amount the employee is required to
pay to  acquire  the  stock  covered  by the  option.  Stock  options  issued to
non-employees  are valued at fair  value,  determined  by using  either the fair
value of the goods or  services  provided by those  non-employees,  or an option
valuation  model in  accordance  with SFAS No. 123,  Accounting  for Stock Based
Compensation,  whichever  is more  readily  determinable  and  yields  the  most
accurate measure of fair value.

The following table illustrates the effect of net loss and net loss per share if
the Company had applied the fair value recognition  provision of SFAS No 123, to
stock-based employee compensation:

                                                  2003            2002
                                                    $              $
--------------------------------------------------------------------------
Net loss as reported                            (862,541)       (2,239,636)
Add:  Stock-based employee compensation
   expense included in reported net loss              --            38,833
Deduct:  Total stock-based employee
   compensation expense determined under
   fair value based method for all awards             --          (184,559)
--------------------------------------------------------------------------
PRO FORMA NET LOSS                              (862,541)       (2,385,362)
--------------------------------------------------------------------------
NET LOSS PER SHARE
As reported - basic and diluted                    (0.04)            (0.12)
Pro forma - basic and diluted                      (0.04)            (0.13)


                                      F-17
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

4.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

SEGMENT REPORTING

SFAS No 131, Disclosure about Segments of an Enterprise and Related Information,
establishes  standards for reporting  information about the Company's  operating
segments.  The Company  operated in one operating  segment,  the development and
commercialization  of  medications  for the  treatment  of chronic  and  serious
illnesses,  up to May 5, 2003. As of September 16, 2003 the Company  operates in
one operating segment,  the  commercialization of software for public safety and
security management systems.

COMPREHENSIVE INCOME (LOSS)

SFAS No. 130,  Reporting  Comprehensive  Income,  established  standards for the
reporting and display of  comprehensive  income and its components in a full set
of  basic  financial  statements.   Comprehensive  income  (loss)  includes  all
non-owner  changes in equity  during a period and  includes  revenue,  expenses,
gains and losses that are excluded from  earnings  under  accounting  principles
generally  accepted in the United States of America.  For the period  presented,
net loss and comprehensive loss are the same.

RECENTLY ADOPTED ACCOUNTING STANDARDS

In January 2003, FASB issued  Interpretation  No. 46,  Consolidation of variable
interest  entities,  an  interpretation  of accounting  research bulletin no. 51
["FIN 46"].  FIN 46 requires the  consolidation  of variable  interest  entities
["VIE"] in which an  enterprise  absorbs a  majority  of the  entity's  expected
losses,  receives a majority of the entity's expected residual returns, or both,
as a result  of  ownership,  contractual  or other  financial  interests  in the
entity. Currently, entities are generally consolidated by an enterprise that has
a controlling financial interest through ownership of a majority voting interest
in the entity.  The provisions of FIN 46 are applicable to variable interests in
VIE's created  after January 31, 2003.  For variable  interest  acquired  before
February 1, 2003 the  provisions  of FIN 46 are  applicable in the first interim
period after December 15, 2003.  The  application of FIN 46 did not have, and is
not expected to have, a significant effect on our financial position and results
of operations.


                                      F-18
<PAGE>



EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                             [in U.S. dollars]

5.    PROPERTY AND EQUIPMENT

Property  and  equipment  as of  December  31, 2003 and 2002,  consisted  of the
following:

                                                   2003              2002
                                                     $                 $
--------------------------------------------------------------------------

Office equipment                                     --            44,183
Furniture and fixtures                               --            14,289
Research and development equipment                   --               510
--------------------------------------------------------------------------
                                                     --            58,982
Less accumulated depreciation                        --           (20,962)
--------------------------------------------------------------------------
TOTAL                                                --            38,020
--------------------------------------------------------------------------

6.    SOFTWARE PRODUCTION COSTS

                                                   2003              2002
                                                     $                 $
--------------------------------------------------------------------------

Software production costs                     1,090,000                --
Accumulated depreciation                             --                --
--------------------------------------------------------------------------
                                              1,090,000                --
--------------------------------------------------------------------------

These costs were incurred  under the services  agreement with Mobilair [see note
11].

7.    NOTES PAYABLE TO STOCKHOLDERS

                                                             2003        2002
                                                              $           $
--------------------------------------------------------------------------------
Notes for C$200,000 [$153,510], bearing interest at 12%,
payable on demand as of January 30, 2004, convertible in
common stock at the option of the lender at the issuance
price or at a maximum of $0.50 per share upon closing of
a private or public financing of a minimum of $500,000      154,261      --
--------------------------------------------------------------------------------


                                      F-19
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                             [in U.S. dollars]

7.    NOTES PAYABLE TO STOCKHOLDERS [CONTINUED]

These notes  include a contingent  beneficial  conversion  feature which will be
accounted  for in the period in which there is a qualifying  financing.  At that
time,  there will be a minimum  expense of  $22,000  to reflect  the  difference
between the 50 cent  conversion  price and the fair value of the common stock at
the commitment date. As well,  additional  expense will result if the fair value
of the  common  stock on the  conversion  date is  above 53 cents  for a note of
C$150,000 [$115,130] and above 63 cents for a note of C$50,000 [$38,380].

These  notes are  issued to  directors  of the  Company  who are also  principal
stockholders.

8.    STOCK OPTIONS

STOCK OPTION PLAN

On August 10, 2001,  the  Company's  Board of  Directors  adopted the 2001 Stock
Award Plan [the  "Plan"].  In  connection  with the Plan,  a total of  2,700,000
shares of the Company's  common stock have been reserved for issuance  inclusive
of the shares under  nonqualified  option  grants  existing upon adoption of the
Plan. The Plan provides for the grant of incentive  stock options,  nonqualified
stock  options,  and  restricted  stock  to  employees.   Directors,   officers,
consultants  and certain  other  persons as set forth in the Plan.  The exercise
price,  vesting period, and other aspects of individual grants are determined by
a committee  of the Board of  Directors  appointed to  administer  the Plan.  No
options have been granted  subsequent  to the adoption of the Plan.  At December
31, 2003 and  December 31, 2002,  130,746 and 932,140  shares were  respectively
available for issuance under the Plan.

On May 5, 2003,  options to purchase a total of 1,637,114 shares of common stock
were cancelled in connection with the spin-off of the subsidiary Molichem R&D.

NON-PLAN OPTION GRANTS

On September  1, 1997,  fully vested  options to acquire  131,248  shares of the
Company's  common stock at $0.0013 per share were granted to certain advisors of
the  Company.  The fair value of the  services  rendered in  exchange  for those
options  of  $85,050  was  recognized  as an expense at the time of the grant of
those  options.  During 2001,  the Company  granted  options to acquire  268,000
shares of common stock to consultants,  and options to acquire  1,760,000 shares
of common stock to employees and directors.  The options  granted to consultants
had an estimated total fair value of $292,913, of which $269,781 was recorded as
compensation expense in 2001. The options


                                      F-20
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

8.    STOCK OPTIONS [CONTINUED]

granted to employees had a total intrinsic value of $1,310,000 of which $964,333
was recorded as  compensation  expense in 2001.  No options were granted  during
2002. At December 2002, options to purchase a total of $381,388 shares of common
stock,  representing  all unvested options were forfeited in connection with the
termination of employment agreements.

Transactions affecting stock options are summarized below:

<TABLE>
<CAPTION>
                                                                                      WEIGHTED-
                                                                                       AVERAGE
                                                                    NUMBER OF         EXERCISE
                                                                     SHARES             PRICE
                                                                                          $
------------------------------------------------------------------------------------------------

<S>                                 <C> <C>                           <C>                <C>
Stock options outstanding, December 31, 2000                          131,248            0.0013
Options granted                                                     2,028,000              1.53
Options exercised                                                     (10,000)           0.0013
------------------------------------------------------------------------------------------------
Stock options outstanding, December 31, 2001                        2,149,248              1.44
Options forfeited                                                    (381,388)             1.54
------------------------------------------------------------------------------------------------
Stock options outstanding, December 31, 2002                        1,767,860              1.42
Options cancelled                                                  (1,637,114)             1.49
------------------------------------------------------------------------------------------------
STOCK OPTIONS OUTSTANDING AND EXERCISABLE, DECEMBER 31, 2003          130,746              0.62
------------------------------------------------------------------------------------------------
</TABLE>

Following  table  summarizes  the status of the stock  options  outstanding  and
exercisable at December 31, 2003.

<TABLE>
<CAPTION>

                               NUMBER OUTSTANDING
                                                              AND EXERCISABLE         AVERAGE
                                                            AS OF DECEMBER 31,       REMAINING
 EXERCISE                                                          2003             CONTRACTUAL
  PRICES                                                                           LIFE (YEARS)
    $
------------------------------------------------------------------------------------------------
<S>                                                                <C>                  <C>
 0.0013                                                            80,246               2.3
   1.50                                                            48,000               1.6
   3.50                                                             2,500               0.1
------------------------------------------------------------------------------------------------
                                                                  130,746               4.0
------------------------------------------------------------------------------------------------
</TABLE>


                                      F-21
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                             [in U.S. dollars]

9.    INCOME TAXES

The differences between the amount of tax at the current federal income tax rate
and the provision for the year ended December 31, 2003 and 2002 are as follows:

                                                       2003              2002
                                                         $                 $
--------------------------------------------------------------------------------
Federal income tax benefit at statutory rate       (273,000)         (770,000)
State income taxes, net of federal benefit          (60,000)         (104,000)
Expense eligible for orphan drug credit                  --           393,000
Orphan drug credits                                      --        (1,157,000)
Other                                                    --            39,500
Increase in valuation allowance                     333,000         1,572,000
--------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES                               --           (26,500)
--------------------------------------------------------------------------------

The tax benefit for 2002 includes $13,500 of Federal tax benefit  resulting from
the carry back to 2001 of losses  incurred in 2002, and an adjustment of $13,000
of recorded liabilities for state income taxes.


                                      F-22
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

9.    INCOME TAXES [CONTINUED]

The tax effects of temporary  differences  that give rise to deferred tax assets
and liabilities as of December 31, 2003 and 2002 are presented below:

                                                        2003              2002
                                                          $                 $
--------------------------------------------------------------------------------

CURRENT DEFERRED TAX ASSETS (LIABILITIES)
Accrued expenses                                      15,000           314,000
Other                                                     --            (9,000)
--------------------------------------------------------------------------------
                                                      15,000           305,000
--------------------------------------------------------------------------------

NON-CURRENT DEFERRED TAX ASSETS
Net operating loss carry forwards                    282,000           537,000
Stock compensation                                        --           492,000
Orphan drug credits                                       --         1,356,000
Other                                                230,000            25,000
--------------------------------------------------------------------------------
                                                     512,000         2,410,000
--------------------------------------------------------------------------------
Less valuation allowance                            (527,000)       (2,715,000)
--------------------------------------------------------------------------------
NET DEFERRED TAX ASSET                                    --                --
--------------------------------------------------------------------------------

The Company has established a valuation  allowance of $527,000 and $2,715,000 at
December 31, 2003 and 2002,  respectively,  because management believes that net
deferred  income tax assets are not likely to be to be  realized  in the future.
The Company has federal net  operating  losses of $689,000  available  to offset
federal  income of future  periods  through 2023.  In addition,  the Company has
state net  operating  losses of $689,000  available  to offset  state  income of
future  periods  through 2018. In May and September,  2003, the Company  entered
into  several  transactions  effecting  its share  holdings  [see  note 2].  The
resulting  changes in the percentage of shares held by certain  stockholders may
have  resulted  in one or more  ownership  changes for U.S.  federal  income tax
purposes.  Pursuant  to section 382 of the  Internal  Revenue  Code of 1986,  as
amended, the Company's ability to offset income in tax years beginning after any
change of control transaction with any net operating losses, which were incurred
prior to and including  the date of the first change of control,  may be subject
to an  annual  limitation.  These  transactions  are  subject  to  audit  by tax
Authorities.


                                      F-23
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

10.   LOSS PER SHARE

The computation of basic and diluted loss per share for each year is as follows:

                                                         2003              2002
                                                           $                 $
--------------------------------------------------------------------------------
NUMERATOR
Net loss                                             (862,541)       (2,239,636)
--------------------------------------------------------------------------------

DENOMINATOR
Weighted-average common shares  outstanding        19,574,322        18,635,446
Basic and diluted loss per share                         0.04              0.12

The following  number of warrants and options to purchase shares of common stock
were outstanding during each period, but were not included in the computation of
diluted  earnings  per share  because  the  Company  realized a loss  during the
period, and therefore the effect would be antidilutive:

                                                         2003              2002
                                                           $                 $
--------------------------------------------------------------------------------

Number of options                                     130,746         1,767,860
Number of warrants                                  3,200,000                --
--------------------------------------------------------------------------------
TOTAL                                               3,330,746         1,767,860
--------------------------------------------------------------------------------

In additon loss per share  excludes the effect of the notes payable which may be
converted into common shares [see note 7].

11.   RELATED PARTY TRANSACTIONS

In  addition to the  related  party  transactions  describe  elsewhere  in these
financial statements,  general and administrative expenses include $210,000 paid
to Mobilair.


                                      F-24
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

11.   RELATED PARTY TRANSACTIONS [CONTINUED]

Advances to related  company  consist of advances to Mobilair  payable on demand
and non interest bearing. They include C$129,445 [$98,469].  Accounts payable to
related  company are due to Mobilair  and amount to C$201,285  [$155,252]  which
relate to costs paid by Mobilair on behalf of the Company.

On September 16, 2003, the Company entered into a service  agreement until March
31, 2004 with Mobilair.  Whereby,  Mobilair  provides  services  relating to the
development, deployment and maintenance the software license rights. The Company
is  committed  to pay $300,000 up to March 31,  2004.  In  connection  with this
services  agreement,  the Company advance  $1,300,000 to Mobilair from September
26, 2003 to November 12, 2003.  These advances were repaid through the provision
of services.

12.   FINANCIAL INSTRUMENTS

A)    FAIR VALUE OF FINANCIAL INSTRUMENTS

For the  Company's  short-term  financial  statements,  including  cash and cash
equivalents,  advances to related company,  other advance,  accounts payable and
notes payable to stockholders,  the carrying amounts  approximate the fair value
due to their short maturities.

B)    CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially expose the Company to concentrations of
credit  risk,  consist  principally  of cash on deposit  with a bank that exceed
insured limits.

13.   FOURTH QUARTER ADJUSTMENTS

During the fourth  quarter,  the Company  changed the  valuation of its software
license rights from $1,598,500 to $2,849,500,  the corresponding  change goes to
common stock committed.


                                      F-25
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

14.   SUBSEQUENT EVENTS

A)    BUSINESS COMBINATION

On February 19, 2004,  the Company  acquired all of the  outstanding  capital of
Scan-R  Urgence  Inc.  This  company  develops  solutions  software  for  use by
municipalities in non-emergency dispatch system. The principal asset acquired in
the transaction is intellectual property.

The consideration paid was as follows:


                                                                          $
--------------------------------------------------------------------------------

Payment in cash [C$20,000]                                             15,098
Issuance of 400,000 shares of common stock [C$230,000]                173,627
--------------------------------------------------------------------------------
                                                                      188,725
--------------------------------------------------------------------------------

B)    LICENSE AGREEMENT

Effective  February  10,  2004,  the  Company  entered  into a Software  License
Agreement   ["License   Agreement"],   with  Seaquest   Technologies   MKG  Inc.
["Seaquest"].  Seaquest is a developer of technological  solutions [hardware and
technology]  that integrates new concepts for marine safety and support systems.
The  License  Agreement  provides  the  Company  with  an  exclusive  worldwide,
royalty-free,   perpetual   license  to  use,  offer  and  distribute   Seaquest
technology.

In consideration of the grant of the License,  the Company committed to issue to
Seaquest,  2,000,000  shares of its restricted  common stock which is subject to
regulatory approval.

In addition,  if the Company signs contracts  meeting certain  criteria prior to
December 31, 2004,  additional  shares may be issued based on contract  revenues
that the Company may receive related to the licensed technology as follows:


                                                          NUMBER OF RESTRICTED
AMOUNTS OF CONTRACTS                                             SHARES
------------------------------------------------------------------------------

C$5,000,000 [$3,856,500]                                        500,000
An additional C$2,000,000 [$1,542,600]                          200,000
------------------------------------------------------------------------------


                                      F-26
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                              [in U.S. dollars]

14.   SUBSEQUENT EVENTS [CONTINUED]

B)    LICENSE AGREEMENT [CONTINUED]

The  technology  which is the  subject  of the  License  Agreement  may  require
additional development prior to commercialization.

The Company advanced $128,003 to Seaquest  Technologies MKG Inc. on December 31,
2003. The receivable is non-interest bearing.

C)    NOTES PAYABLE

During  January and February  2004,  the Company  issued eight notes  payable to
various  lenders,  some of whom are stockholders for a total amount of $C460,000
[$350,840]. The notes are convertible at the option of the holder.

These notes bear interest at a rate of 12% and accompanying  characteristics are
as follows:

                        PRICE OF
                       CONVERSION   NUMBER OF          RELATED      TOTAL
                         OPTION       NOTES            PARTY**     AMOUNT
                            $                                         $
------------------------------------------------------------------------------

Payable on demand         $0.40          1               --        C$60,000
                                                                   [$45,760]

Payable on demand as      $0.50*         2                2       C$100,000
   of January 30, 2004                                             [$76,270]

Payable on demand as                                              C$125,000
   of June 30, 2004       $0.40          2               --        [$95,340]

Payable on demand         $0.50*         2                2       C$175,000
                                                                  [$133,470]
------------------------------------------------------------------------------

*     These notes are  convertible in common stock at the issuance price or at a
      maximum of $0.50 per share upon  closing of a private on public  financing
      of a minimum of $500,000.

**    Three notes totalling C$225,000  [$171,605] are issued to stockholders and
      one note of  C$50,000  [$38,135]  is issued to a company  controlled  by a
      stockholder.


                                      F-27
<PAGE>

EMERGENSYS CORPORATION
[FORMERLY KNOWN AS MOLICHEM MEDICINES, INC.]
[A Company in the Development Stage]

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                             [in U.S. dollars]

14.   SUBSEQUENT EVENTS [CONTINUED]

D)    LEASE AGREEMENT

On March 24, 2004, the Company has entered into a one-year lease  agreement with
Mobilair.  Related to this  agreement,  the Company is  committed to pay C$4,000
[$3,000] per month until September 30, 2004.

E)       WAIVER AGREEMENT

On  March  31,  2004,  the  Company  has  concluded  a  waiver   agreement  with
stockholders  who had certain  anti-dilution  rights with respect to any reverse
stock splits or  recapitalizations  effected by the company,  within one year of
May 5, 2003. These anti-dilution  rights are related to stock purchase agreement
of 5,500,000 shares of the company's restricted common stock.

By  this  waiver  agreement,  these  stockholders  agree  to  renounced  to  the
anti-dilution rights granted under the stock purchase agreement.


                                      F-28