<PAGE>

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

                                   FORM 10-QSB

[X]-Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

                       For Period Ended September 30, 2003

                        Commission File Number 333-76427

                             MDI Technologies, Inc.
                             ----------------------
             (Exact name of registrant as specified in its charter)

       Delaware                                            84-1165714
       --------                                            -----------
(State of Incorporation)                            (IRS Employer ID Number)

940 West Port Plaza, #100                               St.Louis, MO. 63146
-------------------------                               -------------------
(Address of Principle Executive Offices)                (city) (state) (zip)

                                 (314) 439-6400
                                 --------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 [XX] No [ ]

Transitional Small Business Disclosure format (check one): Yes [ ] No [XX]

The number of shares outstanding of the Registrant's $.001 par value common
stock on November 14,2003 was 11,586,957 shares.

                                       1
<PAGE>

                             MDI TECHNOLOGIES, INC.
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              PAGE
                                                                              ----
<S>                                                                           <C>
PART I. FINANCIAL INFORMATION

        Item 1. Financial Statements                                            3-9

        Item 2. Management's Discussion and Analysis of Financial Condition
                and Results of Operations                                     10-13

        Item 3. Controls and Procedures                                          13

PART II. OTHER INFORMATION                                                    14-19
</TABLE>

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

                      MDI Technologies, Inc. and Subsidiary
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                     (Unaudited)
                                                                  September 30, 2003      Dec.31, 2002
<S>                                                               <C>                     <C>
ASSETS

CURRENT ASSETS

Cash                                                                   1,659,896              454,848
Accounts receivable, net                                               1,055,537              583,092
Prepaid expenses                                                         100,103               40,878
Deferred tax asset                                                       140,603                    0
                                                                      ----------           ----------
     Total Current Assets                                              2,956,139            1,078,818

PROPERTY AND EQUIPMENT, at cost                                        1,211,069            1,103,123
    Less Accumulated depreciation                                       (721,405)            (585,718)
                                                                      ----------           ----------
     Total Equipment, net                                                489,664              517,405

OTHER ASSETS
Rent deposit                                                              21,539               21,539
Deferred tax asset                                                       285,000                    0
Software development costs                                               138,969                    0
                                                                      ----------           ----------
                                                                         445,508               21,539

     TOTAL ASSETS                                                      3,891,311            1,617,762
                                                                      ==========           ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current portion of long-term debt                                         91,354               11,357
Accounts payable and accrued expenses                                    611,868              648,714
                                                                      ----------           ----------
         Total Current Liabilities                                       703,222              660,071


NON-CURRENT LIABILITIES
Long-term debt                                                            23,560                    0

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, par value of $.001 per share, 50,000,000
shares authorized, 11,673,957 shares at September
30,2003 and 11,931,868 at December 31,2002 issued
and outstanding                                                           11,674               11,931

Additional paid-in capital                                             4,504,612            4,611,007
Accumulated deficit                                                   (1,351,757)          (3,665,247)
                                                                      ----------           ----------
                                                                       3,164,529              957,691

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             3,891,311            1,617,762
                                                                      ==========           ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements

                                       3
<PAGE>

                      MDI TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                      FOR THE THREE MONTHS ENDED    FOR THE NINE MONTHS ENDED
                                            SEPTEMBER 30,                  SEPTEMBER 30,
                                         2003           2002           2003           2002
                                     ------------   ------------   ------------   ------------
<S>                                  <C>            <C>            <C>            <C>
REVENUES
  ASP and Support Revenues              1,309,353      1,075,868      3,811,089      3,068,486
  Shrink Wrap Sales                       806,778        608,451      2,153,742      1,564,140
  Training Fees                            65,564         70,342        232,612        225,165
                                       ----------     ----------      ---------      ---------
     Total Revenue                      2,181,695      1,754,661      6,197,443      4,857,791

OPERATING EXPENSES
  Operations and technical support        436,502        371,663      1,340,928      1,117,410
  Sales and marketing                     349,205        359,417      1,206,462      1,058,751
  Engineering                             150,275        136,941        429,919        397,686
  General and administrative              495,741        563,818      1,331,036      1,447,056
                                       ----------     ----------      ---------      ---------

     Total Operating Expenses           1,431,723      1,431,839      4,308,345      4,020,903
                                       ----------     ----------      ---------      ---------

OPERATING INCOME                          749,972        322,822      1,889,098        836,888

OTHER INCOME (EXPENSE)
  Interest expense                         (1,621)       (12,855)        (5,683)       (40,215)
  Interest income                           2,097          1,174          4,472          1,565
                                       ----------     ----------      ---------      ---------
                                              476        (11,681)        (1,211)       (38,650)
                                       ----------     ----------      ---------      ---------

INCOME TAX BENEFIT (EXPENSE)             (265,397)             0        425,603              0
                                       ----------     ----------      ---------      ---------
NET INCOME                                485,051        311,141      2,313,490        798,238
                                       ==========     ==========      =========      =========

NET INCOME PER SHARE-BASIC                   0.04           0.03           0.20           0.07
NET INCOME PER SHARE-DILUTED                 0.04           0.03           0.19           0.06
WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES ISSUED AND OUTSTANDING-
  BASIC                                11,608,304     12,192,584     11,619,808     12,128,972
  DILUTED                              12,022,160     12,344,976     11,942,546     12,194,490
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       4
<PAGE>

                      MDI TECHNOLOGIES, INC. AND SUBSIDIARY
             CONSOLIDATED STATEMENT OF STOCKHOLDERS'EQUITY (DEFICIT)
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                    COMMON STOCK            ADDITIONAL
                                                              PAID-IN      ACCUMULATED   STOCKHOLDERS'
                                Shares         Amount         CAPITAL       DEFICIT     EQUITY(DEFICIT)
                             ------------   ------------   ------------   ------------  ---------------
<S>                            <C>          <C>            <C>            <C>           <C>
Balance, December 31, 2002     11,931,868         11,931      4,611,007     (3,665,247)       957,691

Exercise of Stock Warrants
 and Stock Options                388,089            388        220,443                       220,831

Purchase and Retirement of
  Treasury Stock                 (646,000)          (645)      (326,838)                     (327,483)

Net Income                                                                   2,313,490      2,313,490
                               ----------     ----------     ----------     ----------     ----------

Balance, Sept. 30, 2003        11,673,957         11,674      4,504,612     (1,351,757)     3,164,529
                               ==========     ==========     ==========     ==========     ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       5
<PAGE>

                      MDI Technologies Inc. and Subsidiary
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        FOR NINE MONTHS ENDED SEPT. 30,
                                                                               2003         2002
                                                                            ----------   ----------
<S>                                                                         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                   2,313,490      798,238
Adjustments to reconcile net income to net cash provided by operating
  activities:

    Depreciation and amortization                                              135,687       96,688
    Deferred taxes                                                            (425,603)           -
    Change in assets and liabilities:
       Increase in accounts receivable                                        (472,445)     (55,644)
       Increase in prepaid expenses and other assets                           (59,225)     (49,079)
       Decrease(Increase)in accounts payable and
        accrued liabilities                                                    (36,845)      17,866
                                                                            ----------   ----------
Net cash provided by operating activities                                    1,455,059      808,069

CASH FLOWS USED IN INVESTING ACTIVITIES
   Purchase of equipment                                                      (107,946)    (123,944)
   Software development costs                                                 (138,969)           0
                                                                            ----------   ----------
                                                                              (246,915)    (123,944)
CASH FLOWS FROM FINANCING ACTIVITIES
   Payments on long-term debt and capital leases                               (76,943)     (92,583)
   Loan To Repurchase treasury stock                                           180,500            -
   Purchase of treasury stock                                                 (327,483)     (87,442)
   Exercise of stock options                                                   220,830            -
                                                                            ----------   ----------
Net cash used in financing activities                                           (3,096)    (180,025)

NET INCREASE IN CASH                                                         1,205,048      504,100

CASH - BEGINNING OF PERIOD                                                     454,848       71,403
                                                                            ----------   ----------

CASH - END OF PERIOD                                                         1,659,896      575,503
                                                                            ==========   ==========

Non-Cash Investing and Financing:
 Purchase of equipment from capital lease financing                                  -       38,787
                                                                            ==========   ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       6
<PAGE>

                      MDI Technologies, Inc. and Subsidiary
                   Notes To Consolidated Financial Statements

1. INTERIM FINANCIAL INFORMATION-BASIS OF PRESENTATION

These statements reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management are necessary for fair
presentation of the information contained therein. The Company follows the same
accounting policies in preparation of interim reports.

The accompanying consolidated interim financial statements include the accounts
of MDI Technologies, Inc. and its wholly owned subsidiary, Management Data,
Inc., d/b/a MDI Technologies, (collectively the "Company") and have been
prepared by the Company, without audit, in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions for Form 10-QSB and article 10 of
Regulation S-X. The consolidated balance sheets as of September 30,2003 and the
consolidated statements of operations for the three and nine months ended
September 30,2003 and 2002 and the consolidated statements of cash flows for the
three and nine months ended September 30,2003 and 2002, are unaudited but
include all adjustments (consisting of normal recurring adjustments) which the
Company considers necessary for a fair presentation of the financial position at
such date and the operating results and cash flows for those periods. Although
the Company believes that the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
normally included in financial statements and related footnotes prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to the rules and regulations of
the Securities and Exchange Commission. Results for any interim period are not
necessarily indicative of results for any other interim period or for the entire
year. In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the consolidated
financial position as of September 30,2003 and the consolidated results of
operations and consolidated statement of cash flows for the periods presented.
The results of operations for the three and nine months ended September 30, 2003
and 2002 are not necessarily indicative of results to be expected for the full
year.

It is suggested that these consolidated financial statements be read in
conjunction with the financial statements and related notes thereto included in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2002.

2. REVENUE RECOGNITION

The Company's revenue is derived from the licensing of computer software and
from service revenues consisting of ASP (Application Service Provider) data
hosting, maintenance and support of systems, training and consulting. License
fees are recognized when the license agreement has been signed, the software has
been shipped, the fees are fixed and determinable and collection is probable.
Revenue from the ASP, software maintenance and support is recognized ratably
over the contract period, these items are billed monthly at the time the
service/support is due from the customer for the current month's service and is
due 30 days from billing. The Company establishes a reserve for collectability
of that maintenance and support receivable. All costs associated with licensing,
ASP services, support and update services, training and consulting services are
expensed as incurred.

There are no customers that make up 10% or more of our revenues; however, there
is one (1) individual customer whose account receivable is 10% or more of the
gross accounts receivable balance at September 30, 2003. The customer has a
payment agreement that is being complied with.

                                       7
<PAGE>

3. NEW BORROWINGS

In January 2003 the Company purchased 475,000 shares of its common stock from a
former Director of the Company for $180,500. Payment was in the form of a
promissory note payable in 24 monthly payments of $7,919 at an interest rate of
5%. Payments commenced January 2003.

4. INCOME TAX BENEFIT

The Company has net operating loss carryforwards of approximately $3,300,000 at
December 31, 2002. During the Company's second quarter 2003 review of its
deferred income tax assets and liabilities, management determined that it was
more likely than not, that the Company will fully realize the benefits of its
deferred tax asset and therefore eliminated the valuation allowance against the
deferred tax asset at June 30, 2003.

5. NET INCOME PER SHARE

Basic earnings per share are calculated by dividing the net income by the
weighted average common shares outstanding during the period. For purposes of
computing diluted earnings per share, dilutive securities are not included when
the effect is anti-dilutive.

Options to employees, directors and consultants to purchase 1,014,392 shares of
common stock and warrants to purchase 492,020 shares of common stock were
outstanding as of September 30, 2003. Options and warrants for 413,856 and
322,738 shares were included in the calculation of diluted earnings per share
for the three and nine months ended September 30,2003.

Options to employees, directors and consultants to purchase 751,583 shares of
common stock and warrants to purchase 1,239,540 shares of common stock were
outstanding as of September 30, 2002. Options to employees, directors and
consultants for 152,392 and 165,518 shares were included in the calculation of
diluted earnings per share for the three and nine months ended September 30,
2002.

6. STOCK OPTIONS

The Company has adopted the disclosure requirement of Statement of Financial
Accounting Standards No. 148 (SFAS 148), "Accounting for Stock-Based
Compensation-Transition and Disclosure" effective December 15, 2002. SFAS 148
amends Statement of Financial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based compensation and also amends the disclosure requirements of SFAS
123 to require prominent disclosures in both annual and interim financial
statements about the methods of accounting for stock-based employee compensation
and the effect of the method used on report results. As permitted by SFAS 148
and SFAS 123, the Company continues to apply the accounting provisions of APB
25,"Accounting for Stock Issued to Employees", and related interpretations, with
regard to the measurement of compensation cost for options granted under the
Company's equity compensation plan. No employee compensation expense has been
recorded as all options granted had an exercise price equal to the market value
of the underlying common stock on the date of grant. The pro forma effect on our
results of operations, had expense been recognized using the fair value method
described in SFAS 123, using the Black-Scholes option-pricing model, is shown
below. Due to the valuation allowance against the deferred tax asset at the
time, the pro forma deduction does not include the effect of a tax deduction in
2002.

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                          Three Months Ended Sept. 30,     Nine Months Ended Sept. 30,
                                                          -----------------------------   -----------------------------
                                                               2003            2002            2003            2002
                                                          -------------   -------------   -------------   -------------
<S>                                                       <C>             <C>             <C>             <C>
Net income, as reported                                         485,051         311,141       2,313,490         798,238
Deduct: Total stock based employee compensation
        expense determined under fair value
        based method for all awards, net of taxes               (54,318)        (41,247)       (154,429)       (123,741)
                                                          -------------   -------------   -------------   -------------
Pro forma net income                                            430,733         269,894       2,159,061         674,497
                                                          =============   =============   =============   =============

Earnings per share:
Basic - as reported                                       $        0.04   $        0.03   $        0.20   $        0.07
Basic - pro forma                                         $        0.04   $        0.02   $        0.19   $        0.06
Diluted - as reported                                     $        0.04   $        0.03   $        0.19   $        0.06
Diluted - pro forma                                       $        0.04   $        0.02   $        0.18   $        0.06
</TABLE>

                                       9
<PAGE>

                           FORWARD-LOOKING STATEMENTS

Statements made in this Form 10-QSB that are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 ("The Act") and Section 21E of the
Securities Act of 1934. These statements often can be identified by the use of
terms such as "may","will"."expect","believes","anticipate",
"estimate","approximate", or "continue", or the negative thereof. The Company
intends that such forward-looking statements be subject to the safe harbors for
such statements. The Company wishes to caution readers not to place undue
reliance on any such forward looking statements, which speak only as of the date
made. Any forward looking statements represent management's best judgment as to
what may occur in the future. However, forward looking statements are subject to
risks, uncertainties, and important factors beyond the control of the Company
that could cause actual results and events to differ materially from historical
results of operations and events and those presently anticipated or projected.
These factors include adverse economic conditions, entry of new and stronger
competitors, inadequate capital, unexpected costs and failure to capitalize upon
access to new markets. You should understand that various factors, in addition
to those discussed elsewhere in this document, could affect the future results
of the Company and could cause results to differ materially from those expressed
in such forward-looking statements. The Company disclaims any obligation
subsequently to revise any forward-looking statements to reflect events or
circumstances after the date of such statement or to reflect the occurrence of
anticipated or unanticipated events.

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The Company is continuing to expand its market share of long term care
facilities customers and the transition to an Application Service Provider (ASP)
model for delivering the accounting and clinical software used by these
customers. The facilities under contract currently exceed 1,150 in number, of
which 236 are using the ASP services.

Our limited operating history in the development and delivery of software over
the Internet makes it difficult to predict revenues and operating results. Our
prospects should be considered in light of the risks and difficulties
encountered by the transitioning its revenue to that of a recurring revenue
model through the delivery of its applications over the Internet. The Company is
dependent on the continued rollout of broadband telecommunication services to
rural and metropolitan areas in order to successfully implement this strategy.

The Company has positioned itself as a primary resource in the long-term care
industry in complying with regulatory legislation. The current legislation being
addressed is the Health Insurance Portability and Accountability Act of 1996
(HIPAA), compliance as such is required in October 2003. The Company has planned
and changed its software to ensure programs accommodate the laws requirements.

Subsequent to September 30, 2003 the Company purchased certain assets including
software and intangible assets and assumed deferred revenue obligations of
Horizon Healthcare Technologies (HHT), in an all cash deal. The purchase price
equates to $3,000 per conversion and is contingent upon conversion of former HHT
clients to the MDI software product. Under the conversion plan, HHT clients will
pay conversion fees to MDI for the software. The potential result to MDI is over
US$700,000 in conversion fees, as well as additional recurring revenues of
US$4,500,000 over the life of the agreements that HHT clients will enter into
with MDI upon conversion.

                                       10
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO
                    THE THREE MONTHS ENDED SEPTEMBER 30,2002

Total revenues for the three months ended September 30,2003 increased to
$2,182,000 from $1,755,000 for the three months ended September 30, 2002. This
increase of $427,000 (24%) was primarily comprised of increased recurring
revenues of $234,000 (21%) from support and ASP services which is a result of
having more software sites installed from the previous period. There was also an
increase in "shrink wrap" sales of $198,000 (32%) from the previous period,
resulting from increased market penetration by our sales staff. Training fee
revenue decreased $5,000 during the period due to decreased off-site training
given.

Operations and Technical Support expense for the three months ended September
30, 2003 increased to $436,000 from $404,000 for the three months ended
September 30, 2002. This increase of $32,000 (8%) is comprised of $30,000 of
increased payroll related costs due to payroll increases and additional two
staff persons, $14,000 increased customer support costs for Company initiated
client training and input visits, $15,000 increase in depreciation costs due to
an increase in fixed assets owned and a $27,000 decrease in travel and ASP
costs.

Sales and Marketing expense for the three months ended September 30, 2003
decreased to $349,000 from $359,000 for the three months ended September 30,
2002. This decrease of $10,000 (2%) is due to payroll related and commission
decreases of $29,000 for marketing and sales personnel due to decreases in
commissionable sales activity, decreased sales travel of $10,000 and a $29,000
increase in advertising and marketing due to increased advertising placements
and convention activity.

Engineering expense for the three months ended September 30, 2003 increased to
$150,000 from $137,000 for the three months ended September 30, 2002. This
increase of $13,000 (9%) was primarily due to increased consulting costs
relating to program application enhancements.

General and administrative costs for the three months ended September 30,2003
decreased to $496,000 from $532,000 for the three months ended September 30,
2002. This decrease of $36,000 (6%)is due to a decrease in various liability
reserves deemed not required amounting to $66,000, increased legal, accounting
and consulting services of $20,000 and insurance costs increases of $10,000 due
to liability insurance and benefit increases.

Interest expense decreased $11,000 due to elimination of capital lease
borrowings and bank debt between the three-month period ended September 30, 2003
and 2002.

The income tax expense of $265,397 recognized in the third quarter of 2003
represents the Company's current realization of its deferred tax asset which
related primarily to the carryforward of net operation losses from prior years.
The Company expects its available net operating loss carryforwards will be
sufficient to offset any obligation to pay federal income taxes through 2003.
The Company did not report a provision for income taxes in 2002 as its
utilization of the prior years' net operating losses in those periods was offset
by a reduction in the deferred tax asset valuation allowance.

The net income of $485,000 for the three months ended September 30,2003 compared
to $311,000 for the three months ended September 30,2002, an increase of
$174,000, is the result of increased revenues of $427,000, increased Support
costs of $32,000, decreased Sales and Marketing expense of $10,000, increased
Engineering costs of $13,000,decreased General and Administrative costs of
$36,000 and decreased interest expense of $11,000 and an increased income tax
expense of $265,000.

 RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO
                    THE SIX MONTHS ENDED SEPTEMBER 30, 2003

Net revenues for the nine months ended September 30, 2003 increased to
$6,197,000 from $4,858,000 at September 30,2002. This increase of $1,339,000
(27%) was primarily

                                       11
<PAGE>

comprised of increased recurring revenues of $743,000 (24%) from support and ASP
services, an increase in "shrink wrap" revenue of $590,000 (37%) and increased
training fees of $6,000 (2%).

Operations and Technical Support expense increased to $1,341,000 from $1,214,000
for the nine months ended September 30, 2003. This increase of $127,000 (10%) is
due to payroll increases and staffing increases of $98,000, customer support and
training increases of $18,000, decreases in hardware and software supplies of
$27,000 and depreciation expense increase of $38,000.

Sales and Marketing expense increased to $1,206,000 from $1,059,000 for the nine
months ended September 30, 2003. This increase of $147,000 (13%) is due to
salary and commission increases of $29,000 from sales increases, advertising and
marketing increases of $25,000 and reseller fee increases of $93,000 due to
increased reseller activity.

Engineering expense increased to $430,000 from $398,000 for the nine months
ended September 30, 2003. This increase of $32,000 (8%) is due to payroll
related increases of $12,000; increase in outside consultants of $17,000 and
other departmental increases of $3,000.

General and Administrative expense decreased to $1,331,000 from $1,350,000 for
the nine months ended September 30, 2003. This decrease of $19,000 (1%) is due
to $75,000 increase in payroll related items; equipment rental costs decreased
by $17,000, insurance costs increased by $36,000 for liability and benefit
coverage's, a $146,000 decrease in liability reserves and other expenses was
recognized during this period and the bad debt reserves were increased by
$33,000.

The "Other" net expense decreased by $37,000 due to interest expense decreasing
by $34,000 due to less outstanding debt and interest income increased $3,000 due
to additional invested funds.

The income tax benefit of $425,603 recognized for the nine months ended
September 30, 2003 consists of a benefit of $1,143,000, recognized in April 2003
as the result of management's elimination of the Company's deferred tax asset
valuation allowance due to its determination at that date that it was more
likely than not that the Company would fully realize the benefits of its
deferred tax asset, less second and third quarter income tax expenses of
$717,397 relating to the Company's current realization of its net deferred tax
asset in those quarters. The Company did not report a provision for income taxes
in 2002 as its utilization of the prior years' net operating losses in those
periods was offset by a reduction in the deferred tax asset valuation allowance.

The net income for the nine months ended September 30, 2003 increased to
$2,313,000 from $798,000 for the nine months ended September 30, 2002. This
increase of $1,515,000 is due to increased revenues of $1,339,000, the income
tax benefit of $426,000 less increased Operations and Support expense of
$127,000, increased Sales and Marketing expense of $147,000, increased
Engineering expenses of $32,000 and decreased General and Administrative
expenses of $19,000 and net interest expense/income decrease of $37,000.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 2003 the Company repurchased 646,000
shares of its common stock for approximately $327,000. During the nine-month
period ended September 30, 2003 another 89,000 shares were in the process of
being purchased for approximately $119,000 but the transaction was not completed
until October 2003.

During the nine months ended September 30, 2002 the Company repurchased 259,000
shares of its common stock for approximately $89,000. There were another 50,000
shares in

                                       12

<PAGE>

process of being purchased for approximately $16,000 but the transaction was not
completed until after September 30, 2002.

The details of these "buy backs" are included in Part II, Item 5, Other
Information, in this report.

During the nine months ended September 30, 2003 there were warrants exercised
for 85,520 shares, which had been previously paid for, an additional 174,480
warrants exercised for which the Company received $184,000 and 128,089 options
exercised for which the Company received $37,244.

The Company currently has 1,014,392 stock options and 492,020 warrants
outstanding. The options and warrants are exercisable at prices from $.21 -
$4.25 per share. If all vested options and warrants were exercised the company
would receive approximately $1,600,000, which would be available to the Company
as working capital.

CASH FLOW

During the nine months ended September 30, 2003,cash increased by $1,205,048.
Net cash provided by operating activities for the nine months ended September
30, 2003 was $1,455,000 compared to $808,000 for the nine months ended September
30,2002. This increase of $647,000 was due to an increase in the net income for
the period offset by increases in accounts receivable balances and decreases in
the accounts payable balances and deferred tax increase.

Net cash used in investing activities for the nine months ended September 30,
2003 was $247,000 compared to $124,000 for the nine months ended September 30,
2002. The funds used for the nine months ended September 30, 2003 and 2002 were
for office and ASP equipment amounted to $108,000 and 124,000 respectively. For
the nine months ended September 30, 2003 the Company has capitalized $139,000 of
software development costs relating to its new .Net architecture of our product.
These costs are net of $16,000 that was expensed as incurred costs to establish
the feasibility of the product and were expensed as Research and Development
costs in the Company's Engineering category.

Net cash used in financing activities was $3,096 for the nine months ended
September 30, 2003 compared to $180,025 for the nine months ended September 30,
2002. During the nine months ended September 30, 2003 funds were used for: debt
payments of $76,943, the purchase of 646,000 shares of MDI's common stock for
$327,483 under the company's "Normal Course Issuer Bid", plus the purchase of
475,000 shares of MDI's common stock from a former MDI director for $180,500 for
which a two year, 5% promissory note was given. There was also $220,830 received
from the exercise of stock options and warrants. During the nine months ended
September 30, 2002 funds were used for: debt payments of $92,583 and the
purchase of 259,000 shares of the Company's common stock for $87,000 under the
Company's "Normal Course Issuer Bid".

ITEM 3. CONTROLS AND PROCEDURES

The Company's management, including its Chief Executive Officer and Chief
Financial Officer, have evaluated the effectiveness of the Company's disclosure
controls and procedures (as such term is defined in Rules 13a-14 and 15d-14
under Securities Exchange Act of 1934 (The Exchange Act) as of September 30,2003
(The Evaluation Date). Based on such evaluation, the Company's management has
concluded that, as of the Evaluation date, the Company's disclosure controls and
procedures are effective for gathering, analyzing and disclosing the information
required to be disclosed in the Company's periodic reports under the Exchange
Act. No significant changes were made i the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
Evaluation Date.

                                       13

<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 2. Changes in Securities

Not applicable

Item 3. Defaults Upon Senior Securities

Not applicable

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

Not Applicable

Item 5. Other Information

In March 2003 the Company filed a "Notice of Intention" to make a "Normal Course
Issuer Bid". The Company obtained approval of the TSX Venture Exchange, to
undertake a normal course issuer bid to purchase up to 572,545 shares of it's
then 11,450,888 issued and outstanding common shares being 5% of the Company's
issued and outstanding common shares. Purchases will be made on the open market
through facilities of the TSX Venture Exchange. The price paid will be the
prevailing market price of such common shares at the time of purchase. Any
shares purchased pursuant to the bid will be cancelled and returned to treasury.
The bid commenced on March 18, 2003 and will terminate on March 18,2004, or at
such earlier time as the bid has been completed. The Company reserves the right
to terminate the bid earlier if it feels that it is appropriate to do so. From
March 30, 2003 through October 30,2003, 255,000 shares have been acquired at a
cost of $355,000. As noted in Liquidity and Capital Resources notes not all
shares have been cancelled as of September 30, 2003.

Item 6. Exhibits and Reports on Form 8-K

(a)Exhibits: Exhibits required as part of this report are listed in the index
appearing on page 15.

(b) Reports on Form 8-K
On July 22, 2003, the Company filed a current report on Form 8-K, reporting
under items 7 and 9, announcing the Company's preliminary estimated results for
the quarter ended June 30, 2003.

On October 2, 2003, the Company filed a current report on Form 8-K, reporting
under item 9, announcing the Company's acquisition of the assets of Horizon
Healthcare Technologies, Inc.

                                       14
<PAGE>

The Company's management, including its Chief Executive Officer and Chief
Financial Officer, have evaluated the effectiveness of the Company's disclosure
controls and procedures (as such term is defined in Rules 13a-14 and 15d-14
under Securities Exchange Act of 1934 (The Exchange Act) as of September 30,2003
(The Evaluation Date). Based on such evaluation, the Company's management has
concluded that, as of the Evaluation date, the Company's disclosure controls and
procedures are effective for gathering, analyzing and disclosing the information
required to be disclosed in the Company's periodic reports under the Exchange
Act. No significant changes were made i the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
Evaluation Date.

                                   SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorizes.

MDI Technologies, Inc.

/s/ Todd A. Spence                                             November 14, 2003
---------------------                                          -----------------
Todd A. Spence                                                    Date
Chairman of the Board, President and
Chief Executive Officer

/s/Thomas K. Andrew                                            November 14, 2003
--------------------                                           -----------------
Thomas K. Andrew                                                  Date
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of the registrant and on the capacities and on the
dates indicated have signed this report.

<TABLE>
<CAPTION>
SIGNATURES                  Title                               DATE
<S>                         <C>                            <C>
/s/ Di Anne Kerrigan        Vice President, Director       November 14, 2003
--------------------
Di Anne Kerrigan

/S/ Byron Flateland         Director                       November 14, 2003
--------------------
Byron Flateland

/S/ Thomas Kerrigan         Director                       November 14, 2003
--------------------
Thomas Kerrigan
</TABLE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
-------
<S>         <C>
31.         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
            Section 302 of the Sarbanes-Oxley Act of 2002.

32.         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
            Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

                                       15