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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 20549

FORM 20-F

** ̈******REGISTRATION
  STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
  1934

or

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

For the fiscal year ended: May 31, 2004

or

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

Commission file number: 0-31092

MEDICURE INC.
  (Exact name of registrant as specified in its charter)

Canada
  (Jurisdiction of incorporation or organization)

4 - 1200 Waverley Street, Winnipeg, Manitoba, Canada
  R3T 0P4
  (Address of principal executive offices)

Securities registered or to be registered pursuant to Section
  12(b) of the Act:None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Shares, without par value
  (Title of Class)

Securities for which there is a reporting obligation pursuant
  to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer's
  classes of capital or common stock as of 
  the close of the period covered by the annual report:

At May 31, 2004, the registrant had 66,646,660 common shares
  issued and outstanding

Indicate by check mark whether the registrant (1) has filed
  all reports required to be filed by Section 13 or 
  15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
  (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 ** ̈******

Indicate by check mark which financial statement item the registrant
  has elected to follow:Item 17 xItem 18** ̈******

As of August 31, 2004, the rate for Canadian dollars was US
  $0.7616 for Cdn $1.00.

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2

TABLE OF CONTENTS

|GLOSSARY                                                                   | 4                                                            
|-------------------------------------------------------------------------- | -------------------------------------------------------------
|FORWARD LOOKING STATEMENTS                                                 | 5                                                            
|PART I                                                                     | 5                                                            
|ITEM 1 - IDENTITY OF DIRECTORS,
      SENIOR MANAGEMENT AND ADVISERS       | 5                                                            
|A.                                                                         | Directors and Senior Management                              
|B.                                                                         | Advisers                                                     
|C.                                                                         | Auditors                                                     
|ITEM 2 - OFFER STATISTICS AND
      EXPECTED TIMETABLE                     | 5                                                            
|ITEM 3 - KEY INFORMATION                                                   | 5                                                            
|A.                                                                         | Selected Financial Data                                      
|B.                                                                         | Capitalization and Indebtedness                              
|C.                                                                         | Reasons for the Offer and Use of Proceeds                    
|D.                                                                         | Risk Factors                                                 
|ITEM 4 - INFORMATION ON THE
      COMPANY                                  | 15                                                           
|A.                                                                         | History and Development of the Company                       
|B.                                                                         | Business Overview                                            
|C.                                                                         | Organizational Structure                                     
|D.                                                                         | Property, Plants and Equipment                               
|ITEM 5 - OPERATING AND FINANCIAL
      REVIEW AND PROSPECTS                | 24                                                           
|A.                                                                         | Critical Accounting Policy Disclosure                        
|B.                                                                         | Operating Results                                            
|C.                                                                         | Liquidity and Capital Resources                              
|D.                                                                         | Research and Development, Patents and Licenses,
      etc    
|E.                                                                         | Trend Information                                            
|F.                                                                         | Off-balance Sheet Arrangements                               
|ITEM 6 - DIRECTORS, SENIOR
      MANAGEMENT AND EMPLOYEES                  | 35                                                           
|A.                                                                         | Directors and Senior Management                              
|B.                                                                         | Compensation                                                 
|C.                                                                         | Board Practises                                              
|D.                                                                         | Employees                                                    
|E.                                                                         | Share Ownership                                              
|ITEM 7 - MAJOR SHAREHOLDERS
      AND RELATED PARTY TRANSACTIONS           | 44                                                           
|A.                                                                         | Major Shareholders                                           
|B.                                                                         | Related Party Transactions                                   
|C.                                                                         | Interests of Experts and Counsel                             
|ITEM 8 - FINANCIAL INFORMATION                                             | 46                                                           
|A.                                                                         | Consolidated Statements and Other Financial
      Information
|B.                                                                         | Significant Changes                                          
|ITEM 9 - THE OFFERING AND LISTING                                          | 47                                                           
|A.                                                                         | Offer and Listing Details                                    
|B.                                                                         | Markets                                                      
|ITEM 10 - ADDITIONAL INFORMATION                                           | 48                                                           
|A.                                                                         | Share Capital                                                
|B.                                                                         | Memorandum and Articles of Association                       
|C.                                                                         | Material Contracts                                           
|D.                                                                         | Exchange Controls                                            
|E.                                                                         | Taxation                                                     
|F.                                                                         | Dividends and Paying Agents                                  
|G.                                                                         | Statement by Experts                                         
|H.                                                                         | Documents on Display                                         
|ITEM 11 - QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 59                                                           
|ITEM 12 - DESCRIPTION OF SECURITIES
      OTHER THAN EQUITY SECURITIES     | 59                                                           

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|PART II                                                                                     | 59
|------------------------------------------------------------------------------------------- | --
|ITEM 13 - DEFAULTS, DIVIDEND
      ARREARAGES AND DELINQUENCIES                             | 59
|ITEM 14 - MATERIAL MODIFICATIONS
      TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEED | 59
|ITEM 15 - CONTROLS AND PROCEDURES                                                           | 60
|ITEM 16 - RESERVED                                                                          | 60
|ITEM 16A. AUDIT COMMITTEE
      FINANCIAL EXPERT                                            | 60
|ITEM 16B. CODE OF ETHICS                                                                    | 60
|ITEM 16C. PRINCIPAL ACCOUNTANT
      FEES AND SERVICES                                      | 60
|PART III                                                                                    |   
|ITEM 17 - FINANCIAL STATEMENTS                                                              | 61
|ITEM 18 - FINANCIAL STATEMENTS                                                              | 83
|ITEM 19 - EXHIBITS                                                                          | 83

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4

GLOSSARY OF TERMS

The following words and phrases shall have the meanings set
  forth below:

"angina"means chest pain;

"angioplasty"means the surgical repair of a blood vessel;

"anti-hypertensive"means blood pressure reducing;

"arrhythmia" means irregular heart rhythm;

"bioavailability"means the degree to which a drug
  or other substance becomes available to the target in the body after administration;

"Computer Aided Drug Design" means a method for design
  of new therapeutic molecules using computer generated models of the drug and
  its molecular target;

"FDA"means the United States Food and Drug Administration;

"GCP"means Good Clinical Practices;

"GLP"means Good Laboratory Practice;

"GMP" means Good Manufacturing Practice;

"IND" means Investigative New Drug application to a
  regulatory authority for first human testing of a new drug;

"in-vitro" means test tube;

"in-vivo" means live animal;

"ischemia" means the lack of blood flow;

"myocardial infarction" means scarring and death to
  portions of the heart wall;

"myocardial ischemia" means blockages to parts of the
  heart muscle;

"NDS" means New Drug Submission, which is a request
  made to the HPB for commencement of product sales and marketing;

"NSAID" means non-steroidal anti-inflammatory drugs;

"pharmacodynamics" means the fundamental processes
  through which a drug(s) exerts its effects on living organisms;

"pharmacokinetics" means the uptake, biotransformation,
  distribution, metabolism and elimination of a drug(s) by the body, including
  both total amounts and tissue and organ concentrations.;

"reperfusion" means the resumption of blood flow;

"TPD" means the Canadian Therapeutic Products Directorate,
  formerly the Canadian Health Protection Branch;

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5

FORWARD LOOKING STATEMENTS

Medicure Inc. cautions readers that certain important factors
  (including without limitation those set forth in this Form 20-F) may affect
  the Corporation's actual results and could cause such results to differ materially
  from any forward-looking statements that may be deemed to have been made in
  this Form 20-F annual report, or that are otherwise made by or on behalf of
  the Corporation. For this purpose, any statements contained in the annual report
  that are not statements of historical fact may be deemed to be forward-looking
  statements. Without limiting the generality of the foregoing, words such as
  "may," "except," "believe," "anticipate," "intend," "could," "estimate," or
  "continue," or the negative or other variations of comparable terminology, are
  intended to identify forward-looking statements.

As used in this annual report, the "Corporation" refers to
  "Medicure Inc.", the company resulting from the amalgamation of Medicure Inc.
  and Lariat Capital Inc., "Medicure" refers to "Medicure Inc." prior to its amalgamation
  with Lariat Capital Inc. and "Lariat" refers to Lariat Capital Inc. prior to
  its amalgamation with Medicure Inc. Unless otherwise indicated, all references
  to dollar amounts in this annual report are to Canadian dollars.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
  ADVISERS

A. Directors and Senior Management

Not applicable

B. Advisers

Not applicable

C. Auditors

Not applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The selected financial data of the Corporation as at May 31,
  2004 and 2003 and for the fiscal years ended May 31, 2004, and 2003 and 2002
  was extracted from the audited consolidated financial statements of the Corporation
  included in this annual report on Form 20-F. The information contained in the
  selected financial data is qualified in its entirety by reference to the more
  detailed consolidated financial statements and related notes included in Item
  17 - Financial Statements, and should be read in conjunction with such financial
  statements and with the information appearing in Item 5 - Operating and Financial

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6

Review and Prospects. The attached financial data as at May
  31, 2002, 2001 and 2000 and for the fiscal year ended May 31, 2001 and for the
  nine-month period ended May 31, 2000 was extracted from the audited financial
  statements of the Corporation not included in this annual report. Reference
  is made to Note 9 of the consolidated financial statements of the Corporation
  included herein for a discussion of the material measurement differences between
  Canadian GAAP and U.S. GAAP, and their effect on the Corporation's financial
  statements. Except where otherwise indicated, all amounts are presented in accordance
  with Canadian GAAP.

To date, the Corporation has not generated sufficient cash
  flow from operations to fund ongoing operational requirements and cash commitments.
  The Corporation has financed its operations principally through the sale of
  its equity securities. While the Corporation believes it has sufficient capital
  and liquidity to finance current operations, nevertheless, its ability to continue
  operations is dependent on the ability of the Corporation to obtain additional
  financing. See "Item 3 - Key Information - D. Risk Factors." Based on the Corporation's
  current plans, the Corporation's available working capital will be sufficient
  into the second quarter of fiscal 2006.

Under Canadian Generally Accepted Accounting Principles
  (in Canadian dollars):

|                                      |  | May 31,     |   | May 31,     |   | May 31,    |   | May 31,    |   | May 31,    |  
|------------------------------------- |  | ----------- | - | ----------- | - | ---------- | - | ---------- | - | ---------- | -
|Balance Sheet  Data                   |  | 2004        |   | 2003        |   | 2002       |   | 2001       |   | 2000(1)    |  
|(as at period  end)                   |  | $           |   | $           |   | $          |   | $          |   | $          |  
|                                      |  |             |   |             |   |            |   |            |   |            |  
|Current Assets                        |  | 21,342,820  |   | 4,465,048   |   | 8,783,318  |   | 4,045,011  |   | 4,149,722  |  
|Capital Assets                        |  | 66,202      |   | 67,497      |   | 84,571     |   | 63,941     |   | 74,385     |  
|Patent Costs                          |  | 976,690     |   | 763,464     |   | 508,902    |   | 313,088    |   | 185,836    |  
|Total Assets                          |  | 22,385,712  |   | 5,296,009   |   | 9,376,791  |   | 4,422,040  |   | 4,409,943  |  
|Total Liabilities                     |  | 817,575     |   | 353,908     |   | 389,663    |   | 570,077    |   | 191,830    |  
|Net Assets                            |  | 21,568,137  |   | 4,942,101   |   | 8,987,128  |   | 3,851,963  |   | 4,218,113  |  
|Capital Stock and contributed surplus |  | 40,222,719  |   | 17,607,597  |   | 17,458,936 |   | 8,448,684  |   | 5,582,824  |  
|                                      |  |             |   |             |   |            |   |            |   |            |  
|Deficit Accumulated During the        |  | (18,654,582 | ) | (12,665,496 | ) | (8,471,808 | ) | (4,596,721 | ) | (1,364,711 | )
|Development Stage                     |  |             |   |             |   |            |   |            |   |            |  
|                                      |  |             |   |             |   |            |   |            |   |            |  
|Statement of Operations               |  |             |   |             |   |            |   |            |   |            |  
|(for the fiscal year ended on)        |  |             |   |             |   |            |   |            |   |            |  
|                                      |  |             |   |             |   |            |   |            |   |            |  
|Gross Revenue                         |  | 445,461     |   | 241,281     |   | 183,912    |   | 135,868    |   | 54,943     |  
|Loss from Continuing Operations       |  | (5,989,086  | ) | (4,193,688  | ) | (3,875,087 | ) | (3,232,010 | ) | (871,593   | )
|Net Loss for the Period               |  | (5,989,086  | ) | (4,193,688  | ) | (3,875,087 | ) | (3,232,010 | ) | (871,593   | )
|Basic and Diluted Loss per Share      |  | (0.11       | ) | (0.11       | ) | (0.14      | ) | (0.20      | ) | (0.11      | )
|Weighted-Average                      |  |             |   |             |   |            |   |            |   |            |  
|Number of Common Shares Outstanding   |  | 55,738,716  |   | 37,118,889  |   | 27,900,412 |   | 15,928,521 |   | 8,224,389  |  
|                                      |  |             |   |             |   | (2         | ) | (2         | ) | (2         | )

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7

Under U.S. Generally Accepted Accounting Principles (in Canadian dollars):

|                                      |  | May 31,     |   | May 31,     |   | May 31,     |   | May 31,     |     | May 31,    |  
|------------------------------------- |  | ----------- | - | ----------- | - | ----------- | - | ----------- | --- | ---------- | -
|Balance Sheet Data                    |  | 2004        |   | 2003        |   | 2002        |   | 2001        |     | 2000(1)    |  
|(as at Period end)                    |  | $           |   | $           |   | $           |   | $           |     | $          |  
|Current Assets                        |  | 21,342,820  |   | 4,465,048   |   | 8,783,318   |   | 4,045,011   |     | 4,149,722  |  
|Capital Assets                        |  | 41,472      |   | 37,050      |   | 47,087      |   | 17,793      |     | 16,700     |  
|Patent Costs                          |  | -           |   | -           |   | -           |   | -           |     | -          |  
|Total Assets                          |  | 21,384,292  |   | 4,502,098   |   | 8,830,405   |   | 4,062,804   |     | 4,166,422  |  
|Total Liabilities                     |  | 817,575     |   | 353,908     |   | 389,663     |   | 570,077     |     | 191,830    |  
|Net Assets                            |  | 20,566,717  |   | 4,148,190   |   | 8,440,742   |   | 3,492,727   |     | 3,974,592  |  
|Capital Stock and Contributed Surplus |  | 56,459,161  |   | 33,818,449  |   | 32,855,388  |   | 23,588,136  |     | 13,860,276 |  
|Deficit Accumulated                   |  |             |   |             |   |             |   |             |     |            |  
|During the Development Stage          |  | (35,892,444 | ) | (29,670,259 | ) | (24,414,646 | ) | (20,095,409 | )   | (9,885,684 | )
|                                      |  |             |   |             |   |             |   |             |     |            |  
|Statement of Operations               |  |             |   |             |   |             |   |             |     |            |  
|                                      |  |             |   |             |   |             |   |             |     |            |  
|Gross Revenue                         |  | 445,461     |   | 241,281     |   | 183,912     |   | 135,868     |     | 54,943     |  
|Loss from Continuing Operations       |  | (6,222,185  | ) | (5,255,613  | ) | (4,319,237  | ) | (10,209,725 | )   | (9,303,204 | )
|Net Loss for the Period               |  | (6,222,185  | ) | (5,255,613  | ) | (4,319,237  | ) | (10,209,725 | )   | (9,303,204 | )
|Basic and Diluted Loss per Share      |  | (0.11       | ) | (0.14       | ) | (0.15       | ) | (0.64       | )   | (1.13      | )
|Weighted-Average Number of            |  |             |   |             |   |             |   |             |     |            |  
|Common Shares Outstanding             |  | 55,738,716  |   | 37,118,889  |   | 27,900,412  |   | 15,928,521  | (2) | 8,224,389  |  
|                                      |  |             |   |             |   | (2          | ) |             |     | (2)        |  

Note 1: Information for the fiscal year ended May 31, 2000
  is for a nine-month period.

Note 2: Includes 1,280,000 Class A common shares outstanding.
  On March 1, 2003 all of the issued and outstanding Class A common shares 
  totalling 1,280,000 shares  were converted into common shares of the Corporation
  on the basis of one common share for each Class A common shares in accordance
  with the Corporation's Articles of Continuance. Prior to the conversion, the
  Class A common shares were identical in all respects to the common shares, except
  that the holders were eligible for the Manitoba Equity Tax Credit until February
  28, 2003.

Comparability of Data


On November 22, 1999, Lariat acquired all of the issued and
  outstanding common shares of Medicure in consideration for the issuance of 9,500,000
  common shares of Lariat. As control of Lariat passed to the former shareholders
  of Medicure resulting in a reverse acquisition, Medicure is deemed to be the
  acquirer for accounting purposes. Accordingly, the net assets of Medicure are
  included in the balance sheet at their book values and the deemed acquisition
  of Lariat is accounted for by the purchase method with the net assets of Lariat
  recorded at their fair value at the date of acquisition.

The selected financial data for the fiscal years ended May
  31, 2004, 2003, 2002 and 2001 includes the operations of Medicure International
  Inc. ("Medicure International") commencing June 1, 2000. The selected financial
  data for the nine months ended May 31, 2000 includes the operations of Medicure
  commencing September 1, 1999 combined with the activities of Lariat beginning
  on November 22, 1999, the effective date of the reverse takeover.

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8

Dividends

No cash dividends have been declared nor are any intended
  to be declared. The Corporation is not subject to legal restrictions respecting
  the payment of dividends except that they may not be paid to render the Corporation
  insolvent. Dividend policy will be based on the Corporation 's cash resources
  and needs and it is anticipated that all available cash will be required to
  further the Corporation's research and development activities for the foreseeable
  future.

Exchange Rates


Unless otherwise indicated, all reference to dollar amounts
  are to Canadian dollars. The following table sets out the exchange rates for
  one Canadian dollar expressed in terms of one U.S. dollar for the periods indicated.
  Rates of exchange are obtained from the Bank of Canada and believed by the Registrant
  to approximate closely the noon buying rates in New York City for cable transfers
  as certified for customs purposes by the Federal Reserve Bank in New York.

|           |  | May 31 |  | May 31 |  | May 31 |  | May
      31, |  | May
      31,
|---------- |  | ------ |  | ------ |  | ------ |  | ------------- |  | -------------
|           |  | 2004   |  | 2003   |  | 2002   |  | 2001          |  | 2000         
|           |  |        |  |        |  |        |  |               |  |              
|Period End |  | 0.7335 |  | 0.7307 |  | 0.6545 |  | 0.6470        |  | 0.6682       
|Average    |  | 0.7453 |  | 0.6569 |  | 0.6380 |  | 0.6600        |  | 0.6808       
|           |  |        |  |        |  |        |  |               |  |              

|                                                          |  | August |  | July   |  | June   |  | May    |  | April  |  | March 
|--------------------------------------------------------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ------
|                                                          |  | 2004   |  | 2004   |  | 2004   |  | 2004   |  | 2004   |  | 2004  
|                                                          |  |        |  |        |  |        |  |        |  |        |  |       
|High for                                                  |  |        |  |        |  |        |  |        |  |        |  |       
|Month(1)                                                  |  | 0.7705 |  | 0.7651 |  | 0.7497 |  | 0.7363 |  | 0.7670 |  | 0.7659
|Low for                                                   |  |        |  |        |  |        |  |        |  |        |  |       
|Month (1)                                                 |  | 0.7519 |  | 0.7505 |  | 0.7275 |  | 0.7179 |  | 0.7249 |  | 0.7369
|Notes:                                                    |  |        |  |        |  |        |  |        |  |        |  |       
|(1) Figures are extracted from daily
      exchange rates |  |        |  |        |  |        |  |       

As of August 31, 2004, the exchange rate to convert one Canadian
  dollar into the U.S. dollar was 0.7616.

B. Capitalization and Indebtedness

Not applicable

C. Reasons for the Offer and Use of Proceeds

Not applicable

D. Risk Factors

The Corporation is subject to a number of risks due to the
  nature of its business and the present stage of development of business. The
  following factors should be considered:

THE CORPORATION'S PROSPECTS MUST BE CONSIDERED IN LIGHT
  OF THEDIFFICULTIES FREQUENTLY ENCOUNTERED BY COMPANIES IN THE RESEARCH
  AND DEVELOPMENT STAGE. MOREOVER, THE CORPORATION IS A RECENTLY PUBLIC CORPORATION
  WITH A LIMITED HISTORY OF OPERATIONS WHICH MAKESEVALUATION OF ITS PROSPECTS
  DIFFICULT.

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9

The Corporation began operations in 1997 and its common shares
  were listed on the Canadian Venture Exchange from November 23, 1999 to March
  14, 2002. The Corporation commenced trading on the Toronto Stock Exchange (TSX)
  on March 15, 2002 and on the American Stock Exchange (Amex) on February 17,
  2004.

The Corporation has concentrated on research and development
  and has a limited operating history. The Corporation's prospects must be considered
  in light of the risks, expenses and difficulties frequently encountered with
  the establishment of a development stage company in a highly competitive industry,
  characterized by frequent new product introductions. The Corporation has had
  no earnings to date, and may never have earnings or positive cash flow in the
  future. As a result of these factors, it is difficult to evaluate the Corporation's
  business and prospects for future profitability, and its success is more uncertain
  than if it had a longer or more proven history of operations.

THE CORPORATION EXPECTS TO CONTINUE TO INCUR SUBSTANTIAL
  LOSSES AND MAY NEVER ACHIEVE PROFITABILITY, WHICH IN TURN MAY HARM THE FUTURE
  OPERATING PERFORMANCE AND MAY CAUSE THE MARKET PRICE OF THE CORPORATION'S STOCK
  TO DECLINE.

The Corporation has incurred net losses every year since inception
  in 1997 and as of May 31, 2004, had an accumulated deficit of $18,654,582. The
  Corporation incurred net losses of $5,989,086 for the year ended May 31, 2004,
  $4,193,688 for the year ended May 31, 2003, $3,875,087 for the year ended May
  31, 2002, $3,232,010 for the year ended May 31, 2001 and $871,593 for the nine
  months ended May 31, 2000.

The Corporation anticipates that its losses will not only
  continue for the foreseeable future but will increase significantly principally
  from expenditures relating to its research and development efforts and clinical
  trials. The long-term profitability of the Corporation's operations is uncertain,
  and may never occur, and will be directly related to the success of its research
  and development activities which depend on numerous factors, including the following:

|a) | the success of the Corporation's clinical development programs;                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b) | obtaining Canadian and United States regulatory approvals to market MC-1,
      the Corporation's current lead product;                                                
|  
|c) | the ability to manufacture the Corporation's products according to schedule
      and within budget, given it has no experience in large scale manufacturing;
      and
|  
|d) | the ability to successfully market the Corporation's products, given
      it has no experience in marketing;                                                          

If the Corporation does achieve profitability, it may not
  be able to sustain or increase profitability in the future.

THE CORPORATION MAY NEVER RECEIVE REGULATORY APPROVAL IN
  CANADA OR ABROAD FOR ANY OF ITS PRODUCTS DEVELOPED. THEREFORE, THE CORPORATION
  MAY NOT BE ABLE TO SELL ANY THERAPEUTIC PRODUCTS DEVELOPED.

The Corporation's failure to obtain necessary regulatory approvals
  to fully market its current and future therapeutic products in one or more significant
  markets may adversely affect the Corporation's business, financial condition
  and results of operations. The procedure involved in obtaining regulatory approval
  from the competent authorities to market therapeutic products is long and costly
  and may delay product development. The approval to market a product may be applicable
  to a limited extent only or it may be refused entirely.

The Corporation's products and technologies are currently
  in the preliminary research and development stages. The Corporation does not
  and may never have a commercially viable drug formulation approved for marketing.
  To obtain regulatory approvals for the Corporation's products and to achieve
  commercial success, human clinical trials must demonstrate that the products
  are safe for human use and that they

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10

show efficacy. Unsatisfactory results obtained from a particular
  study relating to one or more of the Corporation's products may cause the Corporation
  to reduce or abandon its commitment to that program.

The Corporation would not obtain approval from the Canadian
  Therapeutic Products Directorate, formerly the Canadian Health Protection Branch
  (TPD) or the United States Food and Drug Administration (FDA) to market its
  lead product, MC-1 or its second clinical candidate MC-4232 if it failed to
  successfully complete its Phase II or Phase III clinical studies. Regulatory
  approvals may also be subject to conditions that could limit the market for
  MC-1 or MC-4232 or make it more difficult or expensive to sell than anticipated.
  Also, regulatory approvals may be revoked for a variety of reasons at any time,
  including the Corporation's failure to comply with regulatory requirements or
  poor performance of MC-1or MC-4232 in terms of safety and effectiveness.

The Corporation's business, financial condition and results
  of operations may be adversely affected if it failed to obtain regulatory approvals
  in Canada, the United States or abroad to market MC-1 or MC-4232 or any future
  therapeutic products, including any limitations imposed to market such products.

THE CORPORATION MAY NOT BE ABLE TO HIRE OR RETAIN THE QUALIFIED
  SCIENTIFIC, TECHNICAL AND MANAGEMENT PERSONNEL IT REQUIRES.

The Corporation is under contract with CanAm Bioresearch Inc.
  ("CanAm") for a significant amount of its research and development activities.
  Because of the specialized scientific nature of the Corporation's business,
  the loss of services of CanAm may require the Corporation to attract and retain
  qualified scientific, technical and management personnel. Competition in the
  biotechnology industry for such personnel is intense and the Corporation may
  not be able to hire or retain a sufficient number of qualified personnel, which
  may compromise the pace and success of its research and development activities.

Also, certain management personnel of the Corporation are
  officers and/or directors of other publicly- traded companies and will only
  devote part of their time to the Corporation. The Corporation does not have
  key man insurance in effect in the event of a loss of any management personnel.

THE CORPORATION FACES SUBSTANTIAL TECHNOLOGICAL COMPETITION
  FROM MANY BIOTECHNOLOGY COMPANIES WITH MUCH GREATER RESOURCES, AND IT MAY NOT
  BE ABLE TO EFFECTIVELY COMPETE.

Technological competition in the pharmaceutical industry is
  intense. The Corporation competes with other companies in Canada, the United
  States and abroad to develop products designed to treat similar conditions.
  Many of these other companies have substantially greater financial, technical
  research and development resources and production and marketing capabilities
  than the Corporation. Smaller companies may also prove to be significant competitors,
  particularly through collaborative arrangements with large pharmaceutical and
  biotechnology companies. Developments by other companies may adversely affect
  the competitiveness of the Corporation's products or technologies or the commitment
  of the Corporation's research collaborators to its programs or even render the
  Corporation's products obsolete.

The pharmaceutical industry is also characterized by extensive
  research efforts and rapid technological change. Competition can be expected
  to increase as technological advances are made and commercial applications for
  biopharmaceutical products increase. Competitors of the Corporation may use
  different technologies or approaches to develop products similar to products
  which the Corporation is seeking to develop, or may develop new or enhanced
  products for processes that may be more effective, less expensive, safer or
  more readily available before the Corporation obtains approval of its products.
  The Corporation may not be able to successfully compete with its competitors
  and, if it is unable to do so, the Corporation's business, financial condition
  and results of operations may suffer.

THE CORPORATION MAY BE UNABLE TO ESTABLISH COLLABORATIVE
  AND COMMERCIAL RELATIONSHIPS WITH THIRD PARTIES.

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11

The success of the Corporation will depend partly on its ability
  to enter into and to maintain various arrangements with corporate partners,
  licensors, licensees and others for the research, development, manufacturing,
  marketing and commercialization of its products. To date, the Corporation has
  not entered into any such arrangements and may never be able to establish such
  arrangements on favourable terms. The failure to establish successful collaborative
  arrangements with respect to certain products may negatively impact the Corporation's
  ability to commercialize those products and adversely affect the Corporation's
  business, financial condition and results of operations.

The Corporation has licensed certain technologies relating
  to products under development and may enter into future licensing agreements.
  The Corporation's current licensing agreements contain provisions allowing the
  licensors to terminate such agreements if the Corporation becomes insolvent
  or breaches the terms and conditions of the licensing agreement, without rectifying
  same upon notice.

THE CORPORATION DOES NOT HAVE MANUFACTURING OR MARKETING
  EXPERIENCE AND MAY NEVER BE ABLE TO SUCCESSFULLY MANUFACTURE OR MARKET ITS PRODUCTS.

The Corporation has no experience in large-scale manufacturing
  and in marketing its products and may never be able to successfully manufacture
  and market its products. If the TPD or FDA approves MC-1 or any future products,
  the Corporation intends to rely on third parties to manufacture or market its
  products. Accordingly, the quality, timing and ultimately the commercial success
  of such products may be outside the Corporation's control. Failure of or delay
  by a manufacturer of the Corporation's products to comply with Good Manufacturing
  Practices or similar quality control regulations or satisfy regulatory inspections
  may have a material adverse effect on the future prospects of the Corporation.
  Also, providers, payers or patients may not accept the Corporation's products,
  even if they prove to be safe and effective and are approved for marketing by
  the TPD, the FDA and other regulatory authorities. The Corporation estimates
  that it may take up to 4 years or longer before the Corporation's initial products
  may be sold commercially. Other competitors may be in a position to bring competing
  products to market within a shorter time frame.

THE CORPORATION DOES NOT HAVE PRODUCT LIABILITY INSURANCE
  AND MAY NOT BE ABLE TO OBTAIN ADEQUATE PRODUCT LIABILITY INSURANCE IN THE FUTURE.

The sale and use of products under development by the Corporation,
  and the conduct of clinical studies involving human subjects, may entail product
  and professional liability risks, which are inherent in the testing, production,
  marketing and sale of new drugs to humans. The Corporation does not currently
  have product liability insurance in place for its products but expects that,
  as it expands, the Corporation will acquire such insurance. However, the Corporation
  may not be able to obtain appropriate levels of product liability insurance
  prior to the sale of its products. An inability to obtain insurance on economically
  feasible terms or to otherwise protect against potential product liability claims
  could inhibit or prevent the commercialization of products developed by the
  Corporation. The obligation to pay any product liability claim or recall a product
  may have a material adverse effect on the business, financial condition and
  future prospects of the Corporation. In addition, even if a product liability
  claim is not successful, adverse publicity and time and expense of defending
  such a claim may significantly interfere with the Corporation's business.

IF THE CORPORATION IS UNABLE TO SUCCESSFULLY PROTECT ITS
  PROPRIETARY RIGHTS, THE CORPORATION'S COMPETITIVE POSITION WILL BE ADVERSELY
  AFFECTED.

The success of the Corporation will depend partly on its ability
  to obtain and protect its patents and protect its proprietary rights in unpatented
  trade secrets.

The Corporation owns or jointly owns eleven United States
  patents and has received a Notice of Allowance for two other patents from the
  United States Patent Office. The Corporation has an additional

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12

twelve pending United States patent applications. The Corporation's
  pending and any future patent applications may not be accepted by the United
  States Patent and Trademark Office or any other jurisdiction in which applications
  may be filed. Also, processes or products that may be developed by the Corporation
  in the future may not be patentable.

The patent protection afforded to biotechnology and pharmaceutical
  companies is uncertain and involves many complex legal, scientific and factual
  questions. There is no clear law or policy involving the degree of protection
  afforded under patents. As a result, the scope of patents issued to the Corporation
  may not successfully prevent third parties from developing similar or competitive
  products. Competitors may develop similar or competitive products that do not
  conflict with the Corporation's patents. Litigation may be commenced by the
  Corporation to prevent infringement of its patents. Litigation may also commence
  against the Corporation to challenge the Corporation's patents that, if successful,
  may result in the narrowing or invalidating of such patents. It is not possible
  to predict how any patent litigation will affect the Corporation's efforts to
  develop, manufacture or market its products. However, the cost of litigation
  to prevent infringement or uphold the validity of any patents issued to the
  Corporation may be significant in which case the Corporation's business, financial
  condition and results of operations may suffer.

Disclosure and use of the Corporation 's proprietary rights
  in unpatented trade secrets not otherwise protected by patents are generally
  controlled by written agreements. However, such agreements will not provide
  the Corporation with adequate protection if they are not honoured, others independently
  develop equivalent technology, disputes arise concerning the ownership of intellectual
  property or the Corporation's trade secrets are disclosed improperly. To the
  extent that consultants or other research collaborators use intellectual property
  owned by others in their work with the Corporation, disputes may also arise
  as to the rights to related or resulting know-how or inventions.

OTHERS COULD CLAIM THAT THE CORPORATION INFRINGES ON THEIRPROPRIETARY RIGHTS, WHICH MAY RESULT IN COSTLY AND TIME CONSUMING LITIGATION.

The success of the Corporation will depend partly on its ability
  to operate without infringing upon the patents and other proprietary rights
  of third parties. To the best of its knowledge, the Corporation is not currently
  aware that any of its products or processes infringe the proprietary rights
  of third parties. However, despite the best efforts of the Corporation, it may
  be sued for infringing on the patent or other proprietary rights of third parties
  at any time in the future.

Such litigation, with or without merit, is time-consuming
  and costly and may significantly impact the Corporation's financial condition
  and results of operations, even if the Corporation prevails. If it does not
  prevail, the Corporation, in addition to any damages it may have to pay, may
  be required to stop the infringing activity or enter into a royalty or licensing
  agreement. The Corporation may not be able to obtain such a license or the terms
  of the royalty or license may be burdensome for the Corporation, which may significantly
  impair its ability to market its products and adversely affect the business,
  financial condition and results of operations of the Corporation.

THE CORPORATION IS, AND IN THE FUTURE MAY BECOME, SUBJECT
  TOADDITIONAL GOVERNMENTAL REGULATIONS AND IF IT IS UNABLE TO COMPLY
  WITH THEM, THE CORPORATION'S BUSINESS MAY BE MATERIALLY HARMED.

The Corporation is or may become subject to various federal,
  provincial, state and local laws, regulations and recommendations. The Corporation
  is subject to various laws and regulations in Canada, relating to product emissions,
  use and disposal of hazardous or toxic chemicals or potentially hazardous substances,
  infectious disease agents and other materials, and laboratory and manufacturing
  practices used in connection with its research and development activities. If
  the Corporation fails to comply with these regulations, the Corporation may
  be fined or suffer other consequences that could materially affect its business,
  financial condition or results of operations.

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13

The Corporation is unable to predict the extent of future
  government regulations or industry standards. However, it should be assumed
  that government regulations or standards will increase in the future. New regulations
  or standards may result in increased costs, including costs for obtaining permits,
  delays or fines resulting from loss of permits or failure to comply with regulations.

THE CORPORATION WILL NEED TO RAISE ADDITIONAL CAPITAL THOUGH
  THE SALE OF ITS SECURITIES, RESULTING IN DILUTION TO THE EXISTING SHAREHOLDERS,
  AND WHICH MAY NOT BE AVAILABLE, ADVERSELY AFFECTING ITS OPERATIONS.

The Corporation has not to date generated any revenues from
  sales. The timing of generation of any sales is uncertain. Based on the Corporation's
  current plans, the Corporation's available working capital will be sufficient
  into the second quarter of fiscal 2006

The Corporation has limited financial resources and has financed
  its operations through the sale of securities, primarily common shares. The
  Corporation will need to continue its reliance on the sale of such securities
  for future financing, resulting in dilution to the Corporation's existing shareholders.
  The Corporation's long-term capital requirements will depend on many factors,
  including continued scientific progress in its product discovery and development
  program, progress in its pre-clinical and clinical evaluation of products and
  product candidates, time and expense associated with filing, prosecuting and
  enforcing its patent claims and costs associated with obtaining regulatory approvals.
  In order to meet such capital requirements, the Corporation will consider contract
  fees, collaborative research and development arrangements, public financing
  or additional private financing (including the issuance of additional equity
  securities) to fund all or a part of particular programs.

The Corporation's business, financial condition and results
  of operations will depend on its ability to obtain additional financing which
  may not be available under favorable terms, if at all. The ability of the Corporation
  to arrange such financing in the future will depend in part upon the prevailing
  capital market conditions as well as the business performance of the Corporation.
  If the Corporation's capital resources are exhausted and adequate funds are
  not available, it may have to reduce substantially or eliminate expenditures
  for research and development, testing, production and marketing of its proposed
  products, or obtain funds through arrangements with corporate partners that
  require the Corporation to relinquish rights to certain of its technologies
  or products.

FUTURE ISSUANCE OF THE CORPORATION'S COMMON SHARES WILL
  RESULT IN DILUTION TO THE EXISTING SHAREHOLDERS. ADDITIONALLY, FUTURE SALES
  OF THE CORPORATION'S COMMON SHARES INTO THE PUBLIC MARKET MAY LOWER THE MARKET
  PRICE WHICH MAY RESULT IN LOSSES TO THE CORPORATION'S SHAREHOLDERS.

As of May 31, 2004, the Corporation had 66,646,660 common
  shares issued and outstanding. A further 2,307,033 common shares are issuable
  upon exercise of outstanding stock options and another 502,403 common shares
  are issuable upon exercise of share purchase warrants, all of which may be exercised
  in the future resulting in dilution to the Corporation's shareholders. The Corporation's
  stock option plan allows for the issuance of stock options to purchase up to
  a maximum of 4,700,000 of the common shares issued and outstanding as of May
  31, 2004. Under the plan the Corporation is able to grant an additional 1,591,967
  share options as at May 31, 2004. With the exception of 4,010,446 common shares
  held in escrow at August 31, 2004, these common shares, including the common
  shares to be issued upon exercise of the outstanding options and warrants, are
  freely tradable. It should be noted that the 4,010,446 shares still held in
  escrow are performance based escrow shares. The Corporation has met the required
  performance conditions for all of these shares and they are currently eligible
  for release upon application being made, by the Corporation, to the Toronto
  Stock Exchange.

Sales of substantial amounts of the Corporation's common shares
  into the public market, or even the perception by the market that such sales
  may occur, may lower the market price of its common shares.

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14

THE CORPORATION'S COMMON SHARES MAY EXPERIENCE EXTREME
  PRICE AND VOLUME VOLATILITY WHICH MAY RESULT IN LOSSES TO THE SHAREHOLDERS OF
  THE CORPORATION.

On May 31, 2004, the Corporation's common shares closed at
  a price of $1.85 (US$1.39 on the Amex). For the period from June 1, 2003 to
  May 31, 2004, the high and low trading prices of the Corporation's common shares
  on the TSX were $2.85 and $0.73, respectively, with a total trading volume of
  56,993,400 shares. For the period from February 17, 2004 to May 31, 2004, the
  high and low trading prices of the Corporation's common shares on the Amex were
  US$2.14 and US$1.10, respectively, with a total trading volume of 4,951,200.

Daily trading volume on the TSX in the Corporation's common
  stock for the period from June 1, 2003 to May 31, 2004 has fluctuated, with
  a high of 1,770,200 shares and a low of 4,500 shares, averaging approximately
  225,270 shares. Daily trading volume on the Amex in the Corporation's common
  stock for the period from February 17, 2004 to May 31, 2004 has fluctuated with
  a high of 290,200 and a low of 200, averaging approximately 70,731. Accordingly,
  the trading price of the Corporation's common stock may be subject to wide fluctuations
  in response to a variety of factors including announcement of material events
  by the Corporation such as the status of required regulatory approvals for the
  Corporation's products, competition by new products or new innovations, fluctuations
  in the operating results of the Corporation, general and industry-specific economic
  conditions and developments pertaining to patent and proprietary rights.

The securities markets in the United States and Canada have
  recently experienced a high level of price and volume volatility, and the market
  price of securities of biotechnology companies have experienced wide fluctuations
  in price which have not necessarily been related to the operating performance,
  underlying asset values or prospects of such companies. In addition, because
  of the limited public float, there may be limited liquidity for the Common Shares.
  It is expected that such fluctuations in price and limited liquidity will continue
  in the foreseeable future which may make it difficult for a shareholder to sell
  shares at a price equal to or above the price at which the shares were purchased.

THE CORPORATION'S COMMON SHARES ARE CONSIDERED "PENNY STOCK"
  WHICH MAY HAVE THE EFFECT OF REDUCING THE LEVEL OF TRADING ACTIVITY AND MAKE
  IT MORE DIFFICULT TO SELL SUCH SHARES.

The Corporation's shares are "penny stock" as defined by the
  Securities and Exchange Commission, which might affect the trading market for
  the shares. Penny stocks are generally equity securities with a price of less
  than U.S.$5.00 other than securities registered on certain national securities
  exchanges or quoted on the NASDAQ National Market. The Securities and Exchange
  Commission has adopted rules that regulate broker-dealer practices in connection
  with transactions in penny stocks. The penny stock rules require a broker-dealer,
  prior to a transaction in a penny stock not otherwise exempt from the rules,
  to deliver a standardized risk disclosure document prepared by the Securities
  and Exchange Commission that provides information about penny stocks and the
  nature and level of risks in the penny stock market. The broker-dealer also
  must provide the customer with current bid and offer quotations for the penny
  stock, the compensation of the broker-dealer and its salesperson in the transaction
  and monthly account statements showing the market value of each penny stock
  held in the customer's account. The bid and compensation information must be
  given to the customer orally or in writing before or with the customer's confirmation.
  In addition, the penny stock rules require that prior to a transaction in a
  penny stock not otherwise exempt from such rules, the broker-dealer must make
  a special written determination that the penny stock is a suitable investment
  for the purchaser and receive the purchaser's written agreement to the transaction.
  These disclosure requirements may have the effect of reducing the level of trading
  activity in the secondary market for a stock that is subject to the penny stock
  rules, such as the Corporation's shares which are considered "penny stock",
  and therefore make it more difficult to sell those shares.

The Corporation commenced trading on the Toronto Stock Exchange
  on March 15, 2002 and on the American Stock Exchange on February 17, 2004.

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THE CORPORATION HAS NO HISTORY OF PAYING DIVIDENDS, DOES
  NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE AND MAY NEVER PAY DIVIDENDS.

Since incorporation, the Corporation has not paid any cash
  or other dividends on its common stock and does not expect to pay such dividends
  in the foreseeable future as all available funds will be invested to finance
  the growth of its business. The Corporation will need to achieve profitability
  prior to any dividends being declared, which may never happen.

INVESTORS MAY NOT BE ABLE TO SECURE FOREIGN ENFORCEMENT
  OF CIVIL LIABILITIES AGAINST OUR MANAGEMENT

The enforcement by investors of civil liabilities under the
  federal securities laws of the United States may be adversely affected by the
  fact that the Corporation is organized under the laws of Canada, that all of
  its officers and directors are residents of a foreign country and that all or
  a substantial portion of its assets and such person's assets are located outside
  of the United States. As a result, it may be difficult for holders of the Common
  Shares to effect service of process on such persons within the United States
  or to realize in the United States upon judgments rendered against them.

ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company


Lariat Capital Inc. ("Lariat") was incorporated by Certificate
  of Incorporation issued pursuant to the provisions of the Business Corporations
  Act (Alberta) on June 3, 1997. On February 11, 1999, by Certificate of Amendment
  and Registration of Restated Articles, the Articles of Lariat were amended to
  remove the private company restriction. Lariat was formed as a Junior Capital
  Pool company, as defined by, and under the rules of the Alberta Stock Exchange
  with the expressed intent of acquiring a project or company through a reverse
  take over. With the exception of this intent and the associated search for potential
  acquisitions, Lariat had no substantial prior business activities.

Medicure Inc. ("Medicure") was incorporated by Certificate
  of Incorporation issued pursuant to the provisions of The Corporations Act
  (Manitoba) on September 15, 1997. Medicure was continued from Manitoba to Alberta
  by Certificate of Continuance issued pursuant to the provisions of the Business
  Corporations Act (Alberta) on December 3, 1999. On December 22, 1999, Medicure
  and Lariat were amalgamated by Certificate of Amalgamation issued pursuant to
  the provisions of the Business Corporations Act (Alberta) as Medicure
  Inc. The Corporation was continued from Alberta to the federal jurisdiction
  by Certificate of Continuance issued pursuant to the provisions of the Canada
  Business Corporations Acton February 23, 2000.

Medicure was formed as a private Manitoba company to advance
  the discoveries of Dr. Naranjan Dhalla of the University of Manitoba. Dr. Dhalla
  and Dr. Albert Friesen were the principal owners of the corporation as first
  formed, together with certain other individuals who contributed to the project.
  The first order of business was the completion of a licensing agreement to acquire
  the technology rights from the University of Manitoba, which owned the technology
  by virtue of the fact that it was invented by employees of the University. From
  that date until the merger with Lariat, the Corporation's primary focus was
  on the preclinical testing and development of the lead product, identified as
  MC-1. In 1998 other research involving synthesis and testing of other potential
  therapeutics was commenced through a research contract with the University of
  Manitoba. Various business activities were conducted in support of these primary
  research projects including but not limited to; (1) the application for and
  approval of government sponsored research awards, (2) the search for alternative
  sources of investment capital to fund operations, and (3) the ongoing search
  for other potential therapeutics. Business and administrative functions were
  handled by Genesys Venture Inc., a consulting corporation, that at the time,
  was owned entirely by Dr. Friesen. Operations and research, until the merger,
  were primarily funded by Dr. Friesen, with assistance from government grants.
  On November 22, 1999 Medicure was acquired by Lariat by way of a reverse takeover
  as Lariat's "Major Transaction" as a Junior Capital Pool company within the

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meaning of the Alberta Securities Commission Rule 46-501,
  the Alberta Securities Commission Companion Policy 46-501CP and The Alberta
  Stock Exchange Circular 7. Pursuant to the terms of the Major Transaction, Lariat
  acquired all of the issued and outstanding shares of Medicure in exchange for
  9,500,000 shares of Lariat, at a deemed price for securities regulatory purposes
  only of $0.20 per share for aggregate deemed value of $1,900,000. The Major
  Transaction was negotiated entirely at arm's length. As a result of the share
  exchange, control of Lariat passed to the former shareholders of Medicure. This
  type of transaction is commonly referred to as a "reverse takeover". Under reverse
  takeover accounting, for financial reporting purposes, the Corporation is considered
  to be a continuation of the operations formerly carried on by Medicure.

The Corporation's current registered office is 30th
  Floor, 360 Main Street, Winnipeg, Manitoba, Canada, R3C 4G1. The Corporation's
  head office is located at 4-1200 Waverley Street, Winnipeg, Manitoba, Canada,
  R3T 0P4.

The MC-1 technology was originally licensed to Genesys Pharma
  Inc. by the University of Manitoba, on August 18, 1997. Genesys Pharma Inc.,
  which had made a small investment on some preliminary research, transferred
  the technology without cost, except for costs designated in the license, to
  Medicure Inc. on September 26, 1997. On August 30, 1999 Medicure Inc. completed
  a new license agreement with the University of Manitoba in order to slightly
  modify the terms of the original license agreement transferred from Genesys
  Pharma Inc., and to have the documentation properly prepared in the Corporation's
  own name.

On June 1, 2000 the Corporation licensed the world-wide development
  and marketing rights (except for Canada) for MC-1, the Corporation's lead product,
  to the Corporation's wholly owned subsidiary, Medicure International. Medicure
  International then entered into a Development Agreement with CanAm to perform
  research and development on MC-1 and other compounds at cost, plus a reasonable
  mark-up not to exceed ten percent of any amount invoiced. The parties to the
  Development Agreement agreed that the aggregate amount of all invoiced expenditures
  shall not exceed $15,000,000 over the term of the agreement. CanAm is a private
  Canadian company owned by Marcus Enns, a former employee of the Corporation
  and Peter de Visser, a former director of the Corporation. Peter de Visser resigned
  as a director of the Corporation in December 2001.

Since its amalgamation, the Corporation, directly and through
  certain research contracts, has been engaged in the research and development
  of human therapeutic drugs for cardiovascular disease. In certain instances,
  therapeutics developed by the Corporation may also provide benefit for other
  diseases. The Corporation's lead product, MC-1, is based upon scientific discoveries
  led by Dr. Naranjan S. Dhalla of The Institute of Cardiovascular Sciences and
  the Department of Physiology, of the Faculty of Medicine, the University of
  Manitoba in Winnipeg, Manitoba, Canada. The Corporation's focus is on the clinical
  development and commercialization of MC-1 for treatment of cardiovascular disease
  and on the discovery and development of other cardiovascular therapeutics. There
  are currently 23 full time scientific researchers and support staff who are
  retained as consultants or employees by CanAm and who are performing the Corporation's
  scientific research pursuant to the Development Agreement.

B. Business Overview Plan of Operation


It is the Corporation's intention to focus on the discovery
  and development of pharmaceuticals. The Corporation intends to license the sale
  and distribution of commercialized products to larger, international companies.
  As such, the Corporation intends to derive its revenue primarily through milestone
  payments and product royalties. As of the date hereof, other than the Medicure
  International Licensing Agreement and the University of Manitoba License Agreement,
  the Corporation has not entered into any license agreements or other arrangements
  regarding the sale or distribution of any of its products.

The Corporation's focus is on the discovery and development
  of therapeutics for various large-market, unmet cardiovascular needs. The Corporation's
  research and development program is designed to address

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17

these market needs with the clinical development of the Corporation's
  lead product, MC-1, and with the potential discovery and development of other
  drug candidates. MC-1 is a natural compound that has demonstrated effectiveness
  in safely treating various forms of cardiovascular disease in initial research.

MC-1 is being developed as a treatment to reduce injury from
  blockages of blood to the heart (i.e. myocardial ischemia, associated with heart
  attacks, angina and arrhythmia) and prevent injury from ischemic reperfusion
  injury. Ischemic reperfusion injury occurs when blood flow to an organ is suddenly
  resumed following a stoppage, as occurs during medical procedures such as angioplasty
  and heart surgery. MC-1 may also be developed for other cardiovascular disorders
  for which it has shown potential benefit, including certain forms of hypertension
  that are difficult to treat (i.e. high blood pressure).

A Phase I human clinical trial for MC-1, the Corporation's
  lead product, was commenced by the Corporation on October 20, 2000 after receiving
  approval of its Investigational New Drug (IND) application by the TPD. On April
  19, 2001, the Phase I trial was completed.

In March, 2002 the Corporation commenced a Phase II multi-centre
  "Proof of Principle" clinical trial called MEND-1 of 60 high-risk cardiovascular
  patients undergoing elective angioplasty with our lead product, MC-1 after obtaining
  approval from the TPD and the FDA. In January 2003, the Corporation announced
  positive results from the MEND-1 clinical study, which was managed by the Duke
  Clinical Research Institute (DCRI) in Durham, North Carolina. The primary endpoint
  and certain important secondary endpoints of the Phase II MEND-1 study were
  met. The primary endpoint of the trial was infarct size (area of the heart that
  is damaged) during the procedure as determined by the release of the amount
  of the cardiac marker enzyme, CK-MB, over 24 hours following percutaneous coronary
  intervention (PCI). Improvement was also shown in certain secondary endpoints,
  including myocardial ischemia measured by continuous ST-segment electrocardiographic
  monitoring, peak periprocedural CK-MB through 24 hours and clinical tolerability
  and safety.

In April 2004, the Corporation commenced enrollment in a larger
  Phase II/III clinical trial, MEND-CABG. The study is evaluating the cardioprotective
  and neuroprotective effects of MC-1 in patients undergoing high-risk Coronary
  Artery Bypass Graft (CABG) surgery and to provide further safety data on its
  use in cardiac surgery.

Montréal Heart Institute, in collaboration with Duke
  Clinical Research Institute (DCRI), Durham, North Carolina, will undertake the
  North American, multi-centre, double-blind study at approximately 40 clinical
  sites. The Corporation plans to enrol up to 900 patients undergoing the CABG
  procedure in the Phase II portion of the dose response study, which will be
  carried out under the direction of Dr. Jean-Claude Tardif, MD, FRCP, Director
  of Clinical Research and Associate Professor of Medicine at the Montreal Heart
  Institute, and Dr. Robert Harrington, Professor of Medicine and Director of
  Cardiovascular Clinical Trials, Duke University Medical Centre. CABG is a medical
  procedure that reroutes blood around clogged arteries to improve the blood and
  oxygen supply to the heart. Surgeons take a blood vessel from another part of
  the body (i.e. leg) and make a detour around the blocked part of the coronary
  artery. Over 500,000 CABG procedures are performed on an annual basis in the
  US. Approximately 8-12% of such grafts are less than optimal, leading to a 10%
  mortality rate for CABGs that are re-performed.

In June 2003, the Corporation announced it was initiating
  the development of a second clinical candidate, MC-4232, for use in treatment
  of hypertensive patients. MC-4232 is a combination of MC-1, and an existing
  FDA approved angiotensin converting enzyme (ACE) inhibitor. Hypertension is
  a common disorder in which blood pressure remains abnormally high. Approximately
  50 million adult Americans have high blood pressure. Of those, 73% are not adequately
  controlled and therefore have an increased risk of heart attack, stroke, kidney
  failure, damage to the eyes, heart failure, and atherosclerosis. Control of
  hypertension for certain subsets of this population has remained inadequate
  despite the availability of several key classes of compounds including ACE inhibitors,
  beta blockers, calcium channel blockers, angiotensin II receptor inhibitors
  and diuretics.

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18

In a pre-IND meeting held to consider Medicure's proposed
  advancement of MC-4232 in diabetic hypertensive patients, the FDA advised the
  Company its proposed product development plan was adequate and confirmed to
  the Corporation that the information presented was sufficient to support an
  IND application, subject to review.

The initial 15-patient Phase II trial relating to MC-4232
  tested MC-1 alone in diabetic hypertensive patients and is designed to establish
  complementary therapeutic effects of MC-1 and dosing regimens. In April 2004,
  the Corporation announced preliminary results from this trial for the initial
  11 patients which indicates that there is a positive trend towards the reduction
  in glycated hemoglobin (HbA1c), the primary measure of blood glucose control
  used by the FDA to determine the efficacy of drug candidates in diabetics. HbA1c
  is a commonly used clinical measure that reflects glycemic control (average
  blood glucose fluctuations) over a 60- to 90-day period.

In August 2004, the Corporation announced the enrollment of
  a second Phase II trial to evaluate the effects of MC-4232 in the treatment
  of diabetic patients with hypertension. The MATCHED study (MC-1 and ACE
  Therapeutic Combination for Hypertensive Diabetics),
  part of the expanded Phase II/III clinical development program for MC-4232,
  will evaluate MC-1 alone and in combination with an ACE inhibitor. The study
  is a randomized, double-blinded, placebo controlled, double-crossover trial
  encompassing 120 patients with co-existing diabetes and hypertension. MC-1 at
  total doses of 100, 300 or 1000 mg or placebo will be given alone and in combination
  with an ACE Inhibitor, at a dose of 20 mg. This study will assess the effect
  on a variety of important parameters in this patient population including blood
  pressure and metabolic functions. The study, projected for completion in the
  spring of 2005, will also provide information on product safety and tolerability.

This study is a key part of Medicure's plans for a Phase III
  registration study of MC-4232 under the United States FDA's 505 B2 regulations
  for combination products.

In parallel to the development of MC-1 and MC-4232, the Corporation
  has a drug discovery program the objective of which is to discover and in-license
  new drug candidates for advancement into clinical development and commercialization
  for unmet cardiovascular market needs. One element of the program involves the
  synthesis and evaluation of compounds that are structurally related to MC-1.
  The Corporation has already produced several groups of candidate compounds using
  this approach and plans to build a pipeline of additional preclinical products
  over the next several years. Certain of the Corporation's new compounds have
  shown positive effects inin vitro and in vivo efficacy studies
  and are currently being studied further to evaluate their commercial potential.
  Patent applications have been, and are expected to be filed for all novel candidate
  compounds, to the extent commercially and reasonably possible, protecting their
  composition of matter and use in a treatment of targeted cardiovascular and
  related diseases.

The Corporation is also evaluating other cardiovascular drug
  candidates for potential license with the objective of further broadening its
  product and patent portfolio.

The Corporation anticipates that no substantial material acquisition
  of equipment or facilities will take place in the coming year.

In summary, it is the Corporation's intention over the next
  year to continue its focus on being a drug discovery and development company
  and to begin to actively search for a partnership with a large pharmaceutical
  company. Such a partnership would conceivably provide funding for Phase III
  clinical trials, add experience to the product development process and bring
  in overall marketing expertise. While the Corporation has had informal discussions
  with potential partners, no formal agreement, or letter of intent, has been
  entered into by the Corporation as of the date hereof.

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19

Potential Products in Development Stage

As previously stated, one of the Corporation's primary focuses
  is the clinical development and commercialization of its lead product, MC-1,
  a natural small molecule that has shown potential for safely and effectively
  treating various forms of cardiovascular disease and stroke.

A Phase I human clinical trial for MC-1, the Corporation's
  lead product, was commenced by the Corporation on October 20, 2000 after receiving
  approval of its Investigational New Drug (IND) application by the TPD. On April
  19, 2001, the Phase I trial was completed.

In March, 2002 the Corporation commenced a Phase II multi-centre
  "Proof of Principle" clinical trial called MEND-1 of 60 high-risk cardiovascular
  patients undergoing elective angioplasty with our lead product, MC-1 after obtaining
  approval from the TPD and the FDA. In January 2003, the Corporation announced
  positive results from the MEND-1 clinical study, which was managed by the Duke
  Clinical Research Institute (DCRI) in Durham, North Carolina. The primary endpoint
  and certain important secondary endpoints of the Phase II MEND-1 study were
  met. The primary endpoint of the trial was infarct size (area of the heart that
  is damaged) during the procedure as determined by the release of the amount
  of the cardiac marker enzyme, CK-MB, over 24 hours following percutaneous coronary
  intervention (PCI). Improvement was also shown in certain secondary endpoints,
  including myocardial ischemia measured by continuous ST-segment electrocardiographic
  monitoring, peak periprocedural CK-MB through 24 hours and clinical tolerability
  and safety.

In April 2004, the Corporation commenced enrolment in a larger
  Phase II/III clinical trial, MEND-CABG. The study is evaluating the cardioprotective
  and neuroprotective effects of MC-1 in patients undergoing high-risk Coronary
  Artery Bypass Graft (CABG) surgery and to provide further safety data on its
  use in cardiac surgery.

Montréal Heart Institute, in collaboration with Duke
  Clinical Research Institute (DCRI), Durham, North Carolina, will undertake the
  North American, multi-centre, double-blind study at approximately 40 clinical
  sites. The Corporation plans to enrol up to 900 patients undergoing the CABG
  procedure in the Phase II portion of the dose response study, which will be
  carried out under the direction of Dr. Jean-Claude Tardif, MD, FRCP, Director
  of Clinical Research and Associate Professor of Medicine at the Montreal Heart
  Institute, and Dr. Robert Harrington, Professor of Medicine and Director of
  Cardiovascular Clinical Trials, Duke University Medical Centre. CABG is a medical
  procedure that reroutes blood around clogged arteries to improve the blood and
  oxygen supply to the heart. Surgeons take a blood vessel from another part of
  the body (i.e. leg) and make a detour around the blocked part of the coronary
  artery. Over 500,000 CABG procedures are performed on an annual basis in the
  US. Approximately 8-12% of such grafts are less than optimal, leading to a 10%
  mortality rate for CABGs that are re-performed.

In June 2003, the Corporation announced it was initiating
  the development of a second clinical candidate, MC-4232, for use in treatment
  of hypertensive patients. MC-4232 is a combination of MC-1, and an existing
  FDA approved angiotensin converting enzyme (ACE) inhibitor. Hypertension is
  a common disorder in which blood pressure remains abnormally high. Approximately
  50 million adult Americans have high blood pressure. Of those, 73% are not adequately
  controlled and therefore have an increased risk of heart attack, stroke, kidney
  failure, damage to the eyes, heart failure, and atherosclerosis. Control of
  hypertension for certain subsets of this population has remained inadequate
  despite the availability of several key classes of compounds including ACE inhibitors,
  beta blockers, calcium channel blockers, angiotensin II receptor inhibitors
  and diuretics.

In a pre-IND meeting held to consider Medicure's proposed
  advancement of MC-4232 in diabetic hypertensive patients, the FDA advised the
  Company its proposed product development plan was adequate and confirmed to
  the Corporation that the information presented was sufficient to support an
  IND application, subject to review.

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20

The initial 15-patient Phase II trial relating to MC-4232
  tested MC-1 alone in diabetic hypertensive patients and is designed to establish
  complementary therapeutic effects of MC-1 and dosing regimens. In April 2004,
  the Corporation announced preliminary results from this trial for the initial
  11 patients which indicates that there is a positive trend towards the reduction
  in glycated hemoglobin (HbA1c), the primary measure of blood glucose control
  used by the FDA to determine the efficacy of drug candidates in diabetics. HbA1c
  is a commonly used clinical measure that reflects glycemic control (average
  blood glucose fluctuations) over a 60- to 90-day period.

In August 2004, the Corporation announced the enrollment of
  a second Phase II trial to evaluate the effects of MC-4232 in the treatment
  of diabetic patients with hypertension. The MATCHED study (MC-1 and ACE
  Therapeutic Combination for Hypertensive Diabetics),
  part of the expanded Phase II/III clinical development program for MC-4232,
  will evaluate MC-1 alone and in combination with an ACE inhibitor. The study
  is a randomized, double-blinded, placebo controlled, double-crossover trial
  encompassing 120 patients with co-existing diabetes and hypertension. MC-1 at
  total doses of 100, 300 or 1000 mg or placebo will be given alone and in combination
  with an ACE Inhibitor, at a dose of 20 mg. This study will assess the effect
  on a variety of important parameters in this patient population including blood
  pressure and metabolic functions. The study, projected for completion in the
  spring of 2005, will also provide information on product safety and tolerability.

This study is a key part of Medicure's plans for a Phase III
  registration study of MC-4232 under the United States FDA's 505 B2 regulations
  for combination products.

MC-1's effectiveness in preventing ischemic reperfusion injury
  has been demonstrated in in vitro and in vivo models that are
  routinely used throughout the industry. A selection of benefits seen in these
  studies include improved contractile force and reduced infarct size.

Although the precise mechanism by which MC-1 acts, is not
  fully understood, research indicates that it exerts cardioprotective effects
  through its inhibition of purinergic receptors. This mechanism of action protects
  the cell by preventing excess calcium influx that is brought on by extracellular
  ATP that is elevated in a situation of ischemia. This cardiovascular mechanism
  has not previously been used clinically, and thereby, as a first to market new
  class of drug would offer potential to further extend the benefits beyond current
  therapeutic alternatives.

Additional preclinical studies with MC-1 also suggest its
  potential value in treatment of stroke. During 2002, promising preclinical studies
  were carried out under the direction of Dr. Ashfaq Shuaib, Director of the Division
  of Neurology at the WC Mackenzie Health Sciences Centre of the University of
  Alberta. MC-1 reduced infarct size (damaged region) in the brain and preserved
  neurological function in an animal model. Preliminary studies also indicate
  that beneficial effects may even be obtained with treatment several hours after
  the onset of ischemia. A combination of MC-1 and TPA was also shown to be an
  effective treatment. There was no indication that MC-1 alone increased the incidence
  of hemorrhage, suggesting it would be a safe treatment for stroke patients.
  Medicure plans further research on stroke, hypertension and other potential
  uses.

While MC-1 and MC-4232 development proceeds, the Corporation
  is seeking to develop or acquire additional cardiovascular therapeutics with
  commercial potential to meet a market need. The Corporation's objective is to
  establish a pipeline of novel cardiovascular therapeutics to ensure the Corporation's
  long-term growth and security. The Corporation is taking a two-pronged approach
  to this effort, combining the efforts of a drug discovery program with strategic
  licensing of promising new compounds from other research groups.

The Corporation's drug discovery program has produced several
  families of new compounds that have shown promising effects in in vitro
  and/or in vivo studies. From these compounds, the Corporation has thus
  far identified certain candidates, as having potential for further development.
  These compounds, the chemical identities of which are being held confidential
  while patents are pending, will undergo further in vitro analysis and
  in vivo animal testing on disease models and for bioavailability.

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21

According to the American Heart Association, cardiovascular
  disease is the most prevalent serious disease in the United States, affecting
  approximately 58.8 million people.1According to the American
  Heart Association, one in five Americans have some form of cardiovascular
  disease. In 1996, cardiovascular disease was a primary contributing cause of
  mortality on 60% of death certificates in the United States. The rates in Canada
  are similar, with the subset of ischemic heart disease accounting for the greatest
  percentage of deaths at 21%.2

The Corporation is focusing its initial drug discovery and
  development efforts on meeting unmet needs in the cardiovascular and stroke
  market. The Corporation is advancing its lead product, MC-1, into clinical testing
  with the intention of commercializing it for treatment of (1) ischemic reperfusion
  injury (associated with common procedures such as angioplasty and coronary bypass
  surgery and stroke); and (2) myocardial ischemia, including heart attacks, angina
  and other related disorders. The Corporation intends to subsequently develop
  MC-1 for other cardiovascular disorders such as difficult to treat forms of
  hypertension.

The Corporation has various compounds currently in early stage
  research screening. Compounds developed by the chemistry group will be advanced
  through the following steps based on their successful advancement through early
  stage screening; (1) in vitro (cell based) screening, (2) in vivo screening
  in appropriate disease model, (3) in vivo toxicity screening, (4) dose response
  confirmation of efficacy testing in vivo, (5) preclinical, GLP toxicity and
  pharmacokinetics testing, (6) Phase I human testing, (7) Phase II human, (8)
  Phase III human, and (9) Filing of NDA in United States and NDS in Canada to
  request the right to commercialize. At the present time the most advanced product
  is in stage 4 of this testing continuum, but no estimate can be made as to when
  a certain product may advance to the human clinical testing stage.

The Corporation currently has eleven issued patents. United
  States Patent No. 6,051,587, United States Patent No. 6,043,259, United States
  Patent No. 6,339,085, United States Patent No. 6,417,204, United States Patent
  No. 6,489,345, United States Patent No. 6,548,519, United States Patent No.
  6,586,414, United States Patent No. 6,605,612, United States Patent No. 6,677,356,
  United States Patent No. 6,667,315 and United States Patent No. 6,780,997.

Competitors' Current Products

There are numerous products on the market for treatment of
  cardiovascular disorders, most of which are marketed by large pharmaceutical
  companies.

It is recognized that cardiovascular treatments have been
  of great benefit in reducing mortality and morbidity from a range of conditions.
  The existing cardiovascular drugs can be categorized into several main drug
  classes, as distinguished by their mechanism of action. Some of the primary
  drug classes include ACE Inhibitors (2001 global sales estimated at US$10 billion),
  Angiotensin II Inhibitors (2001 global sales estimated US$5.6 billion, Thrombolytics
  (1999 global sales estimated US$8.9 billion), Beta-Blockers (2001 global sales
  estimated at US$3.8 billion), and Calcium Channel Blockers (2001 global sales
  estimated at US$9.9 billion), each class has particular benefits as well as
  an array of alternative products.3Cross-use of drugs between different
  types of cardiovascular disease categories makes it difficult to differentiate
  sales by the more specific market segment (such as for myocardial infarction,
  ischemic reperfusion injury, etc.).4

_____________________________________________

1American Heart Association,1999 Heart
  and Stroke Statistical Update. 2Health Canada, Heart Disease and Stroke in Canada, 1997,
  Chapter 2.1.3Sales estimates provided by Datamonitor, 2002 4Supra, note 9.

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22

Despite the development of various effective products, pharmaceutical
  companies carefully monitor developments in the field and continually attempt
  to bring in new major products. This is in part driven by the rise of generic
  products that substantially reduce profit margins for products as they come
  off patent. Competition is most intense in cardiovascular markets like hypertension
  where there are many treatment options. Large pharmaceutical companies are most
  interested in finding new treatment options for inadequately treated conditions
  such as those targeted by the Corporation.

Despite the number of cardiovascular products, the Corporation
  has identified certain remaining unmet therapy needs for certain forms of cardiovascular
  disease. For example, physicians recognize the current lack of effective products
  for reducing ischemic reperfusion injury. This is a very real clinical problem
  and a significant market is available for a product that would effectively protect
  against this injury that results from a variety of surgical procedures. Similarly,
  although current treatments are in many cases able to restore blood flow to
  the heart muscle following a heart attack (myocardial ischemia), there remains
  a need for products that reduce the amount of damage and scarring that results
  from the blockage. Other large cardiovascular markets targeted by the Corporation
  that require improved therapeutics are stroke and certain forms of hypertension.

Ischemic stroke is damage to the brain caused by a sudden
  reduction in blood supply, most often due to blood clots lodging in major arteries
  of the brain. Stroke ranks as the third leading cause of death in North America,
  behind diseases of the heart and cancer. Stroke affects approximately 5.1 million
  North Americans annually, with one in four strokes being fatal. It is also a
  leading cause, of long term disability in the U.S.

To date, the only FDA approved stroke therapeutic is tissue
  plasminogen activator (TPA), a treatment that helps dissolve arterial obstructions.
  Unfortunately, TPA is typically available to less than 10% of stroke patients
  due to the increased risk of hemorrhage and the narrow therapeutic time frame
  during which the drug can be applied.

Competitors' Products in Development

As there remain unmet needs for treatment of certain forms
  of cardiovascular disease and stroke, management of the Corporation believes
  there is room for an increased number of novel research products.

The Pharmaceutical Researchers and Manufacturers of America
  estimated that in 2001, approximately US $3.9 billion was invested by research
  companies in the United States on research and development of cardiovascular
  therapeutics in 2001. In its 2001 report, R & D Directions identified
  approximately 270 separate products in development for heart disease and stroke.
  A large proportion of products in development are modifications of existing
  therapeutic classes.

The Corporation's clinical trials for MC-1 focus on ischemia
  and ischemic reperfusion injury for cardiovascular diseases and will also focus
  on stroke. The following tables provides an overview of competitors' products
  in development pertaining to ischemia and ischemic reperfusion injury of cardiovascular
  diseases and stroke:

ISCHEMIA AND ISCHEMIC REPERFUSION INJURY

|Product               | Company (s)                | Development Stage        
|--------------------- | -------------------------- | -------------------------
|Pexelizumab           | Alexion                    | Phase III                
|Ranexa (Ranolazine)   | CV Therapeutics            | NDA Submitted
      (SPA)
|Plavix (Clopidogrel)  | Sanofi-Synthelabo SA       | Market                   
|Integrilin            | Millennium Pharmaceuticals | Market                   
|Tirofiban (Aggrastat) | Guilford (Merck)           | Market                   
|TNKase                | Boehringer Ingelheim       | Market                   

Some of the products set forth above have the advantage of
  being further along in development than the Corporation's products. However,
  market share for new products depends primarily upon the relative strengths
  of a product in areas such as safety, effectiveness, cost, and dose form.

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23

It is noted that cardiovascular drugs are often prescribed
  together and therefore products do not necessarily compete for use on an individual
  patient. MC-1's use in many indications is expected to be as adjunct therapy,
  that is, it will be given together with other therapeutics. Historically, the
  challenge of competing with earlier products has not acted as a significant
  barrier to entry for new products, provided that the new product has some advantage
  relative to earlier products.

The Corporation's second clinical candidate, MC-4232, is being
  developed for the treatment of diabetic hypertensive patients. The market for
  management of high blood pressure is one of the largest in the pharmaceutical
  industry but is also one of the most competitive. Approximately 50 million Americans
  are affected by hypertension (American Heart Association). Decision
  Resources expects hypertension drug global sales to reach US $22 billion
  by 2008. The following table presents a list of competitors' products on the
  market pertaining to hypertension.

HYPERTENSION

|Product                                      | Company                              | Type
      of Drug                                 
|-------------------------------------------- | ------------------------------------ | ---------------------------------------------------
|Accupril (quanapril)                         | Pfizer                               | ACE inhibitor                                      
|Aceon (perindopril)                          | Solvay Pharmaceuticals (Servier)     | ACE Inhibitor                                      
|Aldactone (spironolactone)                   | Pfizer                               | Diuretic; antihypertensive                         
|Aldomet (methyldopa)                         | Merck & Co.                          | CNS antihypertensive                               
|Altace (ramipril)                            | Monarch (King)                       | ACE Inhibitor                                      
|Apresoline (hydralazine)                     | Novartis                             | Direct vasodilator                                 
|Atacand (candesartan)                        | AstraZeneca                          | AIIRA (Type A1)                                    
|Avapro (irbesartan)                          | Bristol-Myers Squibb                 | AIIRA (Type A1)                                    
|Benicar (olmesartan)                         | Forest                               | AIIRA (Type A1)                                    
|Blocadren (timolol)                          | Merck & Co.                          | Beta blocker                                       
|Capoten (captopril)                          | Par Pharmaceuticals                  | ACE inhibitor                                      
|Catapres (clonidine)                         | Boehringer Ingelheim Pharmaceuticals | CNS antihypertensive                               
|Corgard (nadolol)                            | King Pharmaceuticals                 | Beta blocker                                       
|Cozaar (losartan)                            | Merck & Co.                          | AIIRA (Type A1)                                    
|Diovan (valsartan)                           | Novartis                             | AIIRA (Type A1)                                    
|Hydrodiuril (hydrochlorothiazide)            | Merck & Co.                          | Diuretic                                           
|Hytrin (terazosin)                           | Abbott Laboratories                  | Alpha-1-selective adrenoceptor
      blocking agent
|Inderal LA (propranolol)                     | Wyeth                                | Beta blocker                                       
|Ismelin (guanethidine)                       | Alliance Pharmaceuticals             | Neuron blocker                                     
|Lexxel (enalapril maleate/felodipine)        | AstraZeneca                          | Combo ACE inhibitor and calcium
      blocker      
|Loniten (minoxidil)                          | Par Pharmaceutical                   | Direct vasodilator                                 
|Lopressor (metoprolol)                       | Novartis                             | Beta blocker                                       
|Lotensin (benazepril)                        | Novartis                             | ACE inhibitor                                      
|Lotrel (amlodipine/benazepril)               | Novartis                             | CCB /ACE inhibitor                                 
|Mavik (trandolopril)                         | Abbott                               | ACE inhibitor                                      
|Monopril (fosinopril)                        | Bristol-Myers Squibb                 | ACE inhibitor                                      
|Nif-Ten (nifedipine/ atenolol)               | AstraZeneca                          | Combo calcium blocker and beta
      blocker       
|Normodyne (labetalol)                        | Watson Pharmaceuticals Inc.          | Combined alpha/beta blocker                        
|Norvasc (amlodipine besylate)                | Pfizer                               | Calcium channel blocker                            
|Plendil (felodipine)                         | AstraZeneca                          | Calcium channel blocker                            
|Procardia XL (nifedipine)                    | Pfizer                               | Calcium channel blocker                            
|Sectral (acebutolol)                         | Wyeth-Ayerst Laboratories            | Beta blocker                                       
|Sular (nisoldipine)                          | First Horizon                        | Calcium blocker                                    
|Tarka (trandolopril/verapamil)               | Abbott                               | CCB / ACE inhibitor                                
|Tenoretic (atenolol; chlorthalidone)         | AstraZeneca                          | Combo beta blocker and diuretic                    
|Teveten (eprosartan mesylate)                | Biovail                              | AIIRA (Type A1)                                    
|Thalitone (chlorthalidone)                   | King Pharmaceuticals                 | Diuretic                                           
|Toprol-XL (metoprolol)                       | AstraZeneca                          | Beta blocker                                       
|Vasotec (enalapril)                          | Biovail (Merck)                      | ACE inhibitor                                      
|Verelan (verapamil)                          | Elan Pharmaceuticals                 | Calcium blocker                                    
|Zebeta (bisoprolol fumarate)                 | Wyeth-Ayerst Laboratories            | Beta blocker                                       
|Zestoretic (lisinipril; hydrochlorothiazide) | AstraZeneca                          | Combo ACE inhibitor and diuretic                   
|Zestril (lisinopril)                         | AstraZeneca                          | ACE inhibitor                                      

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24

Competitive Strategy and Position

As stated, the Corporation is primarily focusing on developing
  MC-1 for myocardial ischemia and reperfusion injury. The Corporation is focusing
  initially on these markets because of preclinical and clinical evidence supporting
  the product's efficacy in these applications and, therefore, these applications
  have high potential for showing MC-1's clinical benefit. The clinical need for
  a product with this activity will also be considered by regulatory authorities
  (principally the FDA and also the TPD). Although MC-1 shows potential for treatment
  of other cardiovascular diseases, these uses are not being addressed as a first
  priority due to factors including the cost of clinical trials and the more intense
  competitive nature of these markets.

It is the Corporation's intention to secure a partnership
  with a large pharmaceutical company. Such a partnership would provide funding
  for clinical development, add experience to the product development process
  and provide market positioning expertise. While the Corporation has had informal
  discussions with potential partners in this regard, no formal agreement or letter
  of intent has been entered into by the Corporation as of the date hereof.

C. Organizational Structure


Medicure International, the Corporation's wholly owned subsidiary,
  was incorporated pursuant to the laws of Barbados, West Indies, on May 23, 2000.
  Medicure International's registered office is located at Whitepark House, White
  Park Road, Bridgetown, Barbados. Medicure International's head office is located
  at 2nd Street, Holetown, St. James, Barbados.

The following diagram illustrates the relationship between
  the Corporation and Medicure International:

| | Medicure Inc.               |     
| | --------------------------- | ----
| |                            
| |                             | 100%
| | Medicure International Inc. |     
| |                            

D. Property, Plants and Equipment

Office Space

The Corporation has use of about 2,100 square feet of office
  space provided by Waverly Business and Science Centre Inc. as part of its business
  services contract. The office is located in Winnipeg, Manitoba.

Research Facilities


CanAm, on behalf of the Corporation, leases 7,500 square feet
  of office and laboratory space at a facility in Winnipeg, Manitoba. Biological,
  chemistry, and analytical research take place under one roof.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This section contains forward-looking statements involving
  risks and uncertainties. The Corporation 's actual results could differ materially
  from those anticipated in these forward-looking statements as a result of certain
  factors, including those set forth under part Item 3 - Key Information - D.
  Risk Factors. The following discussion of the financial condition, changes in
  financial conditions and results of operations of the Corporation for the years
  ended May 31, 2004, May 31, 2003, May 31, 2002, May 31, 2001 and the period
  ended May 31, 2000, should be read in conjunction with the consolidated financial
  statements of the Corporation. The Corporation's consolidated financial statements
  are presented in Canadian dollars and have been prepared in accordance with
  Canadian generally accepted accounting principles ("GAAP") included under Item
  17 to this annual report. Material differences between Canadian and U.S. GAAP,
  as

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25

applicable to the Corporation, are set forth in Note 9 to the
  consolidated financial statements of the Corporation included herein.

A. Critical Accounting Estimates


The Corporation's consolidated financial statements are prepared
  in accordance with Canadian generally accepted accounting principles ("Canadian
  GAAP"). A reconciliation of amounts to present in accordance with United States
  generally accepted accounting principles ("US GAAP") is described in note 9
  to the audited consolidated financial statements for the year ended May 31,
  2004. These accounting principles require us to make certain estimates and assumptions.
  Management believes that the estimates and assumptions upon which the Corporation
  relies are reasonable based upon information available at the time these estimates
  and assumptions are made. Actual results could differ from these estimates.
  Areas of significant estimates include research and development, the assessment
  of net recoverable value of patents, and stock-based compensation.

Research and development costsAll costs of research activities are expensed in the period in which they
  are incurred. Development costs are charged as an expense in the period incurred
  unless a development project meets stringent criteria for cost deferral and
  amortization. The Corporation assesses whether these costs have met the relevant
  criteria for deferral and amortization at each reporting date. No development
  costs have been deferred to date.

PatentsOn a regular basis, management reviews the valuation of patents taking into
  consideration any events and circumstances which may impair their recoverable
  value. The new Section 3063 of the CICA Handbook, Impairment of Long Lived
  Assets, calls for the recognition, measurement and disclosure of the impairment
  of long-lived assets for fiscal years beginning on or after April 1, 2003. With
  consideration given to this new section management reviewed the carrying value
  of its patents and no adjustment was made to the capitalized patent costs.

Stock-based compensationThe Corporation adopted the fair value method of accounting for all employee
  stock-based compensation in the fourth quarter of fiscal 2004 pursuant to the
  amended recommendations of the Canadian Institute of Chartered Accountants ("CICA")
  Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments.The Corporation had previously adopted the recommendations, as required,
  for awards granted under its stock option plan to non-employees effective June
  1, 2002. The stock-based compensation recorded by the Corporation is a critical
  accounting estimate because of the value of compensation recorded, the volume
  of the Corporation's stock option activity, and the many assumptions that are
  required to be made to calculate the fair value of the compensation expense.
  The amended recommendations of CICA Handbook Section 3870 provide that a company
  may apply the rules on a prospective basis or a retroactive basis and that a
  company may choose to voluntarily adopt the amended recommendations in fiscal
  2004 rather than on the required adoption date for the Corporation of June 1,
  2004.

As permitted, the Corporation has applied a fair value based
  method to expense employee, management or directors stock options awarded since
  June 1, 2003. The Corporation accounts for stock options granted to non-employees
  on or after June 1, 2002 using the fair value method.

Compensation expense is recorded for stock options issued
  to employees and non employees using the fair value method. The Corporation
  must calculate the fair value of stock options issued and amortize the fair
  value to stock compensation expense over the vesting period, and adjust the
  amortization for stock option forfeitures and cancellations. The Corporation
  uses the Black-Scholes model to calculate the fair value of stock options issued
  which requires that certain assumptions including the expected life of the option
  and expected volatility of the stock be estimated at the time that the options
  are issued. The Corporation amortizes the fair value using the accelerated method
  over the vesting period of the options, generally a period of three years. This
  accounting estimate is reasonably likely to change from period to

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26

period as further stock options are issued and adjustments
  are made for stock option forfeitures and cancellations.

The Black-Scholes model is not the only permitted model to
  calculate the fair value of stock options issued pursuant to Handbook Section
  3870. A different model, such as the binomial model, as well as any changes
  to the assumptions made may result in a different stock compensation expense
  calculation. The Corporation recorded stock compensation expense in fiscal 2004
  of $386,048.

New Accounting Policy Expected to be Adopted in the Subsequent
  Year

GAAP HierarchyThe new CICA Handbook Section 1100, Generally Accepted Accounting Principles
  has been issued, effective for fiscal years beginning on or after October 1,
  2003. The new section established standards for financial reporting in accordance
  with Canadian GAAP. It clarifies the relative authority of various accounting
  pronouncements and other sources of guidance within Canadian GAAP. The new standard
  eliminates industry practice as a possible source to consult. The Corporation
  does not expect that the implementation of this new standard will have a significant
  impact on its consolidated financial statements.

B. Operating Results General


The Corporation has concentrated primarily on research and
  development and has yet to and may never derive any revenues from its general
  operations. The Corporation has a limited operating history and its prospects
  must be considered in light of the risks, expenses and difficulties frequently
  encountered with the establishment of a development stage company in a highly
  competitive industry, characterized by frequent new product introductions. The
  Corporation has historically incurred net losses and anticipates that such losses
  will increase as it continues its development and clinical trials and eventually
  seeks regulatory approval for the sale of its products.

The Corporation believes it has sufficient funds on hand to
  complete several Phase II clinical trials involving MC-1, its lead product and
  MC-4232, its second clinical candidate. As discussed in Note 1 of the consolidated
  financial statements of the Corporation, however, the Corporation's ability
  to continue as a going concern is dependent on its ability to obtain sufficient
  funds to conduct the remainder of its clinical trials and to successfully commercialize
  its products. Failure to obtain further financing may require the Corporation
  to reduce substantially or eliminate expenditures for research and development,
  testing including further clinical trials, and production and marketing of its
  proposed products. Based on the Corporation's current plans, the Corporation's
  available working capital will be sufficient into the second quarter of fiscal
  2006.

Year Ended May 31, 2004 Compared to the Year Ended May
  31, 2003

Interest and other income for fiscal 2004 totaled $445,000
  as compared to $241,000 for fiscal 2003. Interest income was higher in fiscal
  2004 primarily due to a larger average cash and cash equivalents balance, which
  resulted primarily from an equity offering and warrant conversion in fiscal
  2004 that raised net proceeds of $21,617,000. Throughout fiscal 2004 and fiscal
  2003, management invested excess funds in short-term investments.

Research and Development expenditures increased to $4,279,000
  as compared to $3,118,000 for fiscal 2003 and represent 67% of the Corporation's
  total expenditures in fiscal 2004. Research and development expenditures for
  fiscal 2004 were higher due to the ongoing Phase II/III Coronary Artery Bypass
  Graft (CABG) trial attributed to MC-1, called MEND-CABG and the clinical development
  program of MC-4232. The Corporation initiated patient enrollment of the MEND-CABG
  study in April 2004. The Phase II portion of the study will enroll up to 900
  patients. The study will evaluate the ischemic reperfusion and neuro-protective
  effects of MC-1 in patients undergoing high-risk CABG

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27

surgery. The trial is being conducted at approximately 40
  cardiac centres throughout Canada and the US and is managed by Montreal Heart
  Institute and Duke Clinical Research Institute (DCRI).

The initiation of the MEND-CABG trial was based on our Phase
  II trial, MEND-1, managed by DCRI, which showed that the Corporation's lead
  product, MC-1, reduces ischemic heart damage following angioplasty as determined
  by the release of the amount of the marker cardiac enzyme, CK-MB. The trial
  enrolled a total of 60 high-risk patients undergoing percutaneous coronary intervention
  (PCI), and was conducted at four medical centres in Canada and the USA.

The increase in expenditures was also due to the clinical
  development program of MC-4232, which commenced in early fiscal 2004. In a pre-IND
  meeting to consider the Corporation's proposed development of MC-4232, the United
  States Food and Drug Administration (FDA) advised the Corporation its proposed
  Phase II/III clinical development program was adequate. Based on the plan presented
  to the FDA, the Corporation initiated an exploratory Phase II study in early
  fiscal 2004. The initial Phase II trial tested MC-1 alone to establish complementary
  therapeutic effects of MC-1 and dosing regimens. In the fourth quarter of fiscal
  2004, the Corporation announced preliminary results from the Phase II trial.
  These results support the Corporation proceeding with the expansion of its MC-4232
  clinical development program.

The Corporation expects the research and development expenditures
  for fiscal 2005 to be significantly higher than fiscal 2004. A significant portion
  of the increase in expenditures during fiscal 2005 will be incurred in the Phase
  II/III MEND-CABG trial attributed to MC-1 and the clinical development program
  of MC-4232.

General and administrative expenses include salaries and related
  costs for those employees not directly involved in research and development,
  but are required to support ongoing business development and corporate stewardship
  activities. The balance also includes professional fees such as legal, audit,
  investor and public relations and business development activities. General and
  administration expenses totaled $2,115,000 for the year ended May 31, 2004,
  as compared to $1,284,000 for the year ended May 31, 2003. The increased spending
  in fiscal 2004 as compared to fiscal 2003 was primarily attributable to the
  internal growth that is required to support the Corporation's increasing business
  development and investor relations activities, regulatory costs and professional
  fees. This includes costs associated with listing on the American Stock Exchange
  during the third quarter of fiscal 2004. The Corporation expects slightly higher
  levels of general and administrative activities for fiscal 2005 to support increased
  business development activities.

For the year ended May 31, 2004, the Corporation recorded
  a net loss of $5,989,000 or $0.11 per share compared to a net loss of $4,194,000
  or $0.11 per share for the year ended May 31, 2003. As stated above, these results
  of operations were mainly attributable to the Corporation's clinical development
  program and the increased business development activity required to support
  the program. The Corporation expects to incur a loss next year as it continues
  to invest in product research and development.

The weighted average number of common shares outstanding used
  to calculate basic and diluted loss per share increased to 55,738,716 for the
  year ended May 31, 2004 from 37,118,889 for the year ended May 31, 2003.

Year Ended May 31, 2003 Compared to the Year Ended May
  31, 2002

Interest and other income for fiscal 2003 totaled $241,000
  as compared to $184,000 for fiscal 2002. Interest income was higher in fiscal
  2003 primarily due to a larger average cash and cash equivalents balance, which
  resulted from equity offerings in fiscal 2002 that raised net proceeds of $9,004,000.
  Throughout fiscal 2003 and fiscal 2002, management invested excess funds in
  short-term investments.

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28

Research and development expenditures include costs associated
  with the Corporation's clinical development and preclinical programs including
  salaries, research centre costs and monitoring costs. The Corporation is a development
  stage enterprise that focuses a majority of its cash resources on research and
  development activities.

Research and Development expenditures increased to $3,118,000
  as compared to $3,104,000 for fiscal 2002 and represent 70% of the Corporation's
  total expenditures in fiscal 2003. Substantially all research and development
  expenditures in each year were paid to CanAm Bioresearch Inc. pursuant to the
  Development Agreement. A significant portion of the expenditures in fiscal 2003
  were attributed to the Phase II trial, MEND-1, managed by Duke Clinical Research
  Institute, which showed that the Corporation's lead product, MC-1, reduces ischemic
  heart damage following angioplasty. The trial enrolled a total of 60 high-risk
  patients undergoing percutaneous coronary intervention (PCI), and was conducted
  at four medical centres in Canada and the USA. In addition, the Corporation
  enhanced its research and development capabilities with the expansion of its
  research team, and a rise in screening and preclinical testing of compounds
  brought forward by the Corporation's drug discovery program. The Corporation's
  scientific developments led to the announcement in June 2003 of a second clinical
  candidate, MC-4232 for use in the treatment of hypertension.

The Corporation expects the research and development expenditures
  for the fiscal 2004 to be higher than fiscal 2003. A significant portion of
  the increase in expenditures during fiscal 2004 will be incurred in the Phase
  II Coronary Artery Bypass Graft (CABG) trial attributed to MC-1 and the Phase
  II Hypertension trial involving MC-4232. In a pre-IND meeting held to consider
  Medicure's proposed advancement of MC-4232 in diabetic hypertensive patients,
  the FDA advised the Company its proposed product development plan was adequate
  and confirmed to the Corporation that the information presented was sufficient
  to support an IND application, subject to review. Based on the plan presented
  to the FDA, the Corporation expects to commence the initial study in the first
  quarter of fiscal 2004. The Corporation is in the process of developing a strategy
  for its Phase II/III clinical trial for the oral dose of MC-1 which may involve
  third party collaboration. The Corporation continues to pursue strategic alliances
  with a suitable partner to help further develop this product.

General and administrative expenses include salaries and related
  costs for those employees not directly involved in research and development,
  but are required to support ongoing business development and corporate stewardship
  activities. The balance also includes professional fees such as legal, audit,
  investor and public relations and business development activities. General and
  administration expenses totaled $1,284,000 for the year ended May 31, 2003,
  as compared to $950,000 for the year ended May 31, 2002. The increased spending
  in fiscal 2003 as compared to fiscal 2002 was primarily attributable to the
  internal growth that is required to support the Corporation's increasing business
  development and investor relations activities. These activities were primarily
  associated with increasing the awareness of the Corporation's clinical trial
  results in both the medical and investment communities in North America and
  Europe. The Corporation also incurred stock-based compensation expenses of $105,000
  in fiscal 2003 as compared to nil in fiscal 2002 as a result of adopting new
  accounting standards in fiscal 2003 related to measurement of compensation associated
  with stock options granted by the Corporation to non-employees. The Corporation
  expects slightly higher levels of general and administrative activities for
  fiscal 2004 to support increased business development activities.

For the year ended May 31, 2003, the Corporation recorded
  a net loss of $4,194,000 or $0.11 per share compared to a net loss of $3,875,000
  or $0.14 per share for the year ended May 31, 2002. As stated above, these results
  of operations were mainly attributable to the Corporation's clinical development
  program and the increased business development activity required to support
  the program. The Corporation expects to incur a loss next year as it continues
  to invest in product research and development.

The weighted average number of common shares outstanding used
  to calculate basic and diluted loss per share increased to 37,118,889 for the
  year ended May 31, 2003 from 27,900,412 for the year ended May 31, 2002.

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29

Year Ended May 31, 2002 Compared to the Year Ended May
  31, 2001

Interest and other income for fiscal 2002 totaled $183,912
  as compared to $135,868 for fiscal 2001. Interest income was higher in fiscal
  2002 primarily due to a larger cash and cash equivalents and short-term investments
  balance, which resulted from the net cash proceeds of $9.0 million raised during
  the year from a public offering.

Research and Development expenditures increased to $3,103,707
  as compared to $2,472,951 for fiscal 2001. Substantially all research and development
  expenditures in each year were paid to CanAm Bioresearch Inc. pursuant to the
  Development Agreement. The increase in spending is primarily due to the Corporation's
  continuing clinical development of MC-1, including the commencement of the "Proof
  of Principle" Phase II clinical trial (MEND-1) for treatment of angioplasty
  patients. In addition, the Corporation enhanced its research and development
  capabilities with the expansion in our research team, and a rise in screening
  and preclinical testing of compounds brought forward by the Corporation's drug
  discovery program. The Corporation's scientific developments led to the filing
  of numerous patents during the year.

Medicure expects the research and development expenditures
  for the fiscal year ended May 31, 2003 to be higher than fiscal 2002. The main
  source of the increase will result from the completion of the current Phase
  II clinical trial in angioplasty patients and the commencement of clinical trials
  in other indications.

General and administration expenses totaled $949,569 for the
  year ended May 31, 2002, as compared to $879,914 for the year ended May 31,
  2001. This increase in spending is the result of the addition of personnel and
  professional services that were required to support increased business development
  activities, as well as increased regulatory fees resulting from the Corporation's
  listing on the TSX.

Medicure expects general and administrative expenditures for
  fiscal 2003 to be slightly higher than those incurred in fiscal 2002.

For the fiscal year ended May 31, 2002 ("fiscal 2002"), Medicure
  recorded a net loss of $3,875,087 or $0.14 per share compared to a net loss
  of $3,232,010 or $0.20 per share for the year ended May 31, 2001 ("fiscal 2001").
  These results of operations were in line with management's expectations. The
  Corporation expects losses to continue for the next several years due to expenditures
  relating to its research and development efforts and clinical trials.

The weighted average number of common shares and class A shares
  outstanding used to calculate basic and diluted loss per share increased to
  27,900,412 for the year ended May 31, 2002 from 15,928,521 for the year ended
  May 31, 2001.

Year Ended May 31, 2001 Compared to Nine Months Ended May
  31, 2000

In reviewing financial results for fiscal 2001 and 2000 it
  is noted that the length of the periods differed which materially impacts the
  comparative analysis.

Revenues of the Corporation increased to $135,868 for the
  year ended May 31, 2001 consisting entirely of interest income earned on cash
  deposits as compared to $54,943 for the nine months ended May 31, 2000. The
  increase in interest income is due primarily to the increase in cash and cash
  equivalent balance during the year to $3,775,472 as at May 31, 2001 as compared
  to $1,613,865 as at May 31, 2000 as a result of $2,865,860 in net cash proceeds
  received from equity financings and exercise of stock options and shares purchase
  warrants.

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30

Research and development expenses for the year ended May 31,
  2001 increased significantly to $2,472,951 from $547,461 for the nine months
  ended May 31, 2000 due to a number of factors. Clinical trial expenses (including
  drug formulation) increased by $628,938, pre-clinical research expenses increased
  by $672,709 and payroll expenses increased by $214,560. The increase in clinical
  trial costs was primarily due to the Phase I trial of the Corporation's lead
  product, MC-1, and increased formulation work to develop an MC-1 pill for future
  clinical trial studies. The increase in pre-clinical research costs was primarily
  due to increased animal testing and toxicity studies of both MC-1 and other
  pre-clinical compounds. The increase in payroll costs was primarily the result
  of hiring additional scientists to help with preclinical research.

Research and development investment tax credit amounts were
  Nil for the year ended May 31, 2001 and for the nine months ended May 31, 2000.
  The Corporation received $2,436 of government assistance towards its research
  and development expenditures during the year ended May 31, 2001 as compared
  to $64,482 during the nine months ended May 31, 2000 due primarily to the timing
  and duration of the IRAP program grant.

General and administrative expenses for the year ended May
  31, 2001 increased significantly to $879,914 from $435,692 for the nine months
  ended May 31, 2000. A significant part of this increase in expenses is a result
  of costs of $271,683 related to a financing that did not close. In addition,
  travel costs increased by $48,634, promotional material costs increased by $45,045
  and printing costs increased by $29,847. The increase in travel costs was primarily
  a result of travel related to promoting the Corporation during a financing period.
  The increase in promotional material costs and printing costs was primarily
  the result of increased printing of shareholder materials and other promotional
  materials such as the Corporation's annual report.

Net loss for the year ended May 31, 2001 increased significantly
  to $3,232,010 from $871,593 for the nine months ended May 31, 2000, resulting
  in basic and diluted loss per share of $0.20 compared to $0.11, respectively.
  The significant increase in net loss is primarily the result of an increase
  of $444,222 in general and administration expenses, an increase of $1,925,490
  in research and development expenses and a decrease of $62,046 in government
  assistance for research and development expenditures received offset by an increase
  in interest income of $80,925. These increases are in part, due to the additional
  three months in the 2001 as compared to the 2000 period.

The weighted average number of common shares outstanding used
  to calculate basic and diluted loss per share increased to 15,928,521 for the
  year ended May 31, 2001 from 8,224,389 for the nine months ended May 31, 2000.

C. Liquidity and Capital Resources

Since inception, the Corporation has financed its operations
  from public and private sales of equity, the exercise of warrants and stock
  options, interest income on funds available for investment and government grants
  and tax credits.

As at May 31, 2004, the Corporation had cash and cash equivalents
  totaling $19,954,000 compared with $4,131,000 at the previous year-end. On June
  26, 2003, the Corporation strengthened its cash position by raising gross proceeds
  of $7,648,000 (before share issuance costs of $609,000) through a private placement
  of 8,997,632 common shares of the Corporation at $0.85 per share.

In addition, Corporation received proceeds of $14,578,000
  from the exercise of warrants and agents' compensation units that expired on
  December 20, 2003. The warrants were part of a public offering in December 2001.
  These funds are committed to short-term investments and as a result management
  does not believe that the fair value of these investments would be adversely
  impacted to any significant degree by a fluctuation in market interest rates.
  The total number of common shares issued and outstanding at May 31, 2004 was
  66,646,660 as compared to 38,509,864 at May 31, 2003.

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31

The Corporation expects to continue to incur operating losses
  as it expands its clinical and drug discovery programs. The Corporation expects
  higher clinical expenses as a result of the Phase II/III clinical trial with
  its lead product, MC-1 in Coronary Artery Bypass Graft surgery (CABG) and the
  commencement of the Phase II/III development program for its second product
  MC-4232 for treatment in hypertension in fiscal 2004. Based on current plans,
  it is anticipated that total expenses will significantly increase during fiscal
  2005 as a result of these clinical trials. The Corporation believes it has sufficient
  resources to fund operations into the second quarter of fiscal 2006. However,
  funding requirements may vary depending on a number of factors including the
  progress of the Corporation's research and development programs, the results
  of preclinical studies and clinical trials and changes in the focus and direction
  of the Corporation's product development projects.

Based on the positive results from the MEND-1 trial, the Corporation
  has proceeded with further clinical trials of MC-1 with a larger number of patients.
  The first of a number of Phase II/III studies the Corporation intends to undertake,
  MEND-CABG, commenced in fiscal 2004. The Corporation anticipates that the phase
  II portion of the study will cost between $10,000,000 to $15,000,000 to complete
  and will hope to confirm the results from the earlier trial and provide more
  data regarding the pharmacological effects of the drug as well as the optimal
  drug dosage levels. The Corporation will require additional funding to meet
  the costs of such studies that may not be available if and when it is required.

Successful completion of the Phase II portion of the Phase
  II/III MEND-CABG trial will ultimately lead to a Phase III trial. This is a
  large-scale study of patients with the targeted disease and will probably cost
  in the range of $30,000,000 to $50,000,000 or more. It could potentially start
  in calendar 2005 and finish in calendar 2007 provided the Corporation is able
  to secure a partnership with a large pharmaceutical company. The main purpose
  of this trial is to obtain definitive statistical evidence of the efficacy and
  safety of the drug so that an application can be made to the TPD and FDA for
  commercial approval.

The Corporation is also developing MC-4232 of the treatment
  of Hypertension. Assuming satisfactory completion of Phase II studies, the Corporation
  expects to enrol between 1,500-2,000 patients in both the Phase II and III clinical
  trials to support an NDA for the product.

If either MC-1 or MC-4232 is approved for marketing by the
  TPD and FDA, there will then potentially be follow-up studies (called Phase
  IV trials) that may need to be completed while the drug is being marketed, in
  order to adjust or extend product claims. It is not possible to estimate the
  scope and size of any such studies that may be required.

It continues to be the Corporation's intention to secure a
  partnership with a large pharmaceutical company. Such a partnership would provide
  funding for clinical development (most specifically Phase III) and could ultimately
  lead to a license agreement for the sale and distribution of the Corporation's
  lead product in return for milestone payments and product royalties. In this
  way, the Corporation would rely on the marketing expertise of its partner, instead
  of developing its own marketing department.

While MC-1 and MC-4232 progresses through clinical trials,
  the Corporation will continue the drug development process. This process begins
  with initial product screening which should produce preliminary candidates for
  preclinical research. MC 5422 and MC 45228 are such candidates that have moved
  into the preclinical research stage. Once a drug candidate reaches this stage,
  it can cost in excess of $1,000,000 to advance it to the clinical trial stage.
  Ongoing research and development to find preliminary candidates currently costs
  the Corporation between $1,000,000 to $1,500,000 per year.

Besides public or private financings, the other major financings
  are planned to be through up front and milestone payments from a large pharmaceutical
  company that has partnered with the Corporation for clinical development and
  or marketing of the lead compound.

When additional funds are required, potential sources of financing
  include strategic relationships and public or private sales of the Corporation's
  common shares. The Corporation does not have any committed sources of financing
  at this time and it is uncertain whether additional funding will be

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32

available when the need arises on terms that will be acceptable
  to the Corporation. If funds are raised by selling additional common shares,
  or other securities convertible into common shares, the ownership interests
  of the Corporation's existing shareholders will be diluted. If the Corporation
  is unable to obtain financing when required, the Corporation would not be able
  to carry out its business plan, including further clinical trials of MC-1 and
  MC-4232. The Corporation would have to significantly limit its operations and
  business, and its financial condition and results of operations would be materially
  harmed.

At May 31, 2004, the Corporation had net working capital of
  $20,525,245 compared to net working capital of $4,111,440 at May 31, 2003. During
  the three months ended August 31, 2004, no additional stock options were exercised.

At May 31, 2003, the Corporation had net working capital of
  $4,111,440 compared to net working capital of $8,393,655 at May 31, 2002. During
  the three months ended August 31, 2003, the Corporation raised a total of $14,166
  in cash from exercised options.

At May 31, 2002, the Corporation had net working capital of
  $8,393,655 compared to net working capital of $3,474,934 at May 31, 2001. During
  the three months ended August 31, 2002, the Corporation raised a total of $25,200
  in cash from exercised options.

At May 31, 2001, the Corporation had net working capital of
  $3,474,934 compared to net working capital of $3,957,892 at May 31, 2000. During
  the year ended May 31, 2001, the Corporation raised a total of $2,865,860 in
  cash through the issuance of shares from treasury. A private placement provided
  $2,446,753, net of share issuance costs of $153,247, and $419,107 was raised
  through the exercise of stock options and warrants.

The Corporation had no long-term debt as of May 31, 2004.

The Corporation's wholly-owned subsidiary, Medicure International
  Inc. has ongoing research and development agreements with third parties in the
  ordinary course of business. The agreements include the research and development
  of MC-1 and its related compounds. Medicure International Inc. may terminate
  these agreements at any time provided thirty (30) days notice is provided. During
  the year ended May 31, 2004, the Corporation incurred an aggregate of $3,953,118
  (2003 - $3,058,946) in expenditures under these agreements which is included
  in research and development expenses in the statement of operations. Expenditures
  incurred from inception of the agreements to May 31, 2004 total $12,397,619.
  As at May 31, 2004, the Corporation is committed to fund a further $7,826,587
  of research and development expenditures under these agreements. Subsequent
  to May 31, 2004, Medicure International Inc. entered into a similar development
  agreement with another third party up to a maximum of direct research and development
  expenditures of $5,000,000.

The Corporation periodically enters into research agreements
  with third parties that include indemnification provisions customary in the
  industry. These guarantees generally require the Corporation to compensate the
  other party for certain damages and costs incurred as a result of claims arising
  from research and development activities undertaken on behalf of the Corporation.
  In some cases, the maximum potential amount of future payments that could be
  required under these indemnification provisions could be unlimited. These indemnification
  provisions generally survive termination of the underlying agreement. The nature
  of the indemnification obligations prevents the Corporation from making a reasonable
  estimate of the maximum potential amount it could be required to pay. Historically,
  the Corporation has not made any indemnification payments under such agreements
  and no amount has been accrued in the accompanying financial statements with
  respect to these indemnification obligations.

No dividends have been declared or paid on any shares of the
  Corporation since its incorporation. There can be no assurance that the Corporation
  will ever declare any dividends on any of its shares, or if declared, what the
  dividend amounts will be or whether such dividends, once declared, will continue
  for any future period.

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33

D. Research and Development, Patents and Licenses, Etc.

Research and Development


Drug development and design begins with an idea, or theoretical
  concept for treating a given disorder. The idea is advanced through the drug
  design process, resulting in preliminary candidates that have theoretical potential.
  Candidates are improved to achieve the optimal effectiveness with limited toxicity.
  Following preclinical testing, products with the greatest potential become lead
  candidates and are advanced into clinical trials (human testing) with the intent
  of having them receive regulatory approval for marketing.

The Corporation has demonstrated the effectiveness of MC-1
  in preclinical in vivo models of cardiovascular disease and a Phase I
  and Phase II clinical trial. Additional preclinical studies may also be performed
  in order to evaluate other potential uses of MC-1 and to gather other data as
  may be necessary to support future clinical objectives.

In vitro and in vivo laboratory experiments
  to date have been used to study MC-1 therapeutic activity in myocardial ischemia,
  ischemic reperfusion injury, and hypertension. These experiments involved internationally
  recognized models (including coronary artery ligation, Langendorff, reperfusion
  and hypertensive rat models), and analysis techniques (such as electrocardiogram
  and hemodynamic measurements, and electron microscopy). In vivo studies
  involve oral and/or intravenous administration of the drug dose.

While MC-1's development proceeds, novel chemical compounds
  will be synthesized or in-licensed and entered into further testing to evaluate
  their commercial potential. As previously set forth, the

Corporation's drug discovery program is pursuing medicinal
  chemistry strategies with the objective of maximizing the probability of commercial
  potential. Novel chemical compounds are screened for commercial viability prior
  to advancement into preclinical testing. These studies are to determine bioavailability/distribution,
  safety and efficacy (on both in vitro and in vivo models).

For the period from inception on September 15, 1997 to May
  31, 2004, a total of $13,827,000 was incurred for research and development.

Patents and Licenses


The Corporation has been issued eleven patents from the United
  States Patent Office providing protection for certain uses of MC-1 and related
  compounds in treatment of cardiovascular disease. The Corporation has obtained
  an additional two Notice of Allowances and has also filed twelve additional
  applications in the United States plus corresponding patent applications in
  other jurisdictions. The Corporation will continue to file patents to extend
  protection of MC-1 and for new compounds in development. The ten patents issued
  to the Corporation are as follows:

|Patent Number | Issue Date        | Description                                        
|------------- | ----------------- | ---------------------------------------------------
|6,043,259     | March 28, 2000    | Treatment of Cardiovascular and Related Pathologies
|6,051,587     | April 18, 2000    | Treatment of Age Related Hypertension              
|6,339,085     | January 15, 2002  | Prodrugs of MC1                                    
|6,417,204     | July 9, 2002      | 5-AZA Analogues                                    
|6,489,345     | December 2, 2003  | Treatment of Diabetes and Related Pathologies      
|6,548,519     | April 15, 2003    | 5-AZA Analogues                                    
|6,586,414     | July 1, 2003      | Methods of Treating Stroke                         
|6,605,612     | August 12, 2003   | Mimics of MC1                                      
|6,677,356     | January 13, 2004  | Combination                                        
|6,667,315     | December 23, 2003 | Mimics of MC1                                      
|6,780,997     | August 24, 2004   | Cardioprotective Phosphonates and Malonates        

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34

The first three patents are jointly owned by the Corporation
  and the University of Manitoba. Pursuant to a Licence Agreement dated August
  18, 1997, an Assignment Agreement dated September 26, 1997, and an ensuing new
  License Agreement dated August 30, 1999 (the Licence Agreement'')
  the University of Manitoba licensed the exclusive worldwide use of the patents
  and the MC-1 technology to the Corporation. Pursuant to the License Agreement,
  the Corporation has agreed to pay the University of Manitoba a royalty payment
  of 3% of net sales from any cardiovascular product derived from the MC-1 technology.
  The License Agreement commenced on August 30, 1999 and shall terminate:

| | (i)  | if a patent or patents are obtained prior to commercialization
        of a Licensed Product (as defined therein), on the expiration date of
        the last to expire of any patents covered by the Patent Rights (as defined
        therein); and
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                      
| | (ii) | if a patent is not obtained prior to commercialization
        of a Licensed Product (as defined therein), on August 30, 2009.                                                                                                                       

The MC-1 technology is derived from work done by Dr. Rajat
  Sethi as an employee of the Corporation and by two employees of the University
  of Manitoba, Dr. Naranjan Dhalla and Dr. Krishnamurti Dakshinamurti, Professor
  Emeritus, Department of Biochemistry.

The two Notice of Allowances and twelve pending United States
  patent applications, including those filed with the United States Patent Office
  as either regular or provisional applications, are owned by the Corporation
  by virtue of their inventorship by employees of the Corporation and, subsequent
  to June 1, 2000, by CanAm Bioresearch Inc.

Much of the work, including some of the research methods,
  that is important to the success of the Corporation's business is germane to
  the industry and may not be patentable. For this reason all employees, contracted
  researchers and consultants are bound by non-disclosure agreements.

Given that the patent applications for these technologies
  involve complex legal, scientific and factual questions, there can be no assurance
  that patent applications relating to the technology used by the Corporation
  will result in patents being issued, or that, if issued, the patents will provide
  a competitive advantage or will afford protection against competitors with similar
  technology, or will not be challenged successfully or circumvented by competitors.

The Corporation has filed patents in accordance with the Patent
  Cooperation Treaty (the PCT''). The PCT is a multilateral treaty
  that was concluded in Washington in 1970 and entered into force in 1978. It
  is administered by the International Bureau of the World Intellectual Property
  Organization (the WIPO''), headquartered in Geneva, Switzerland.
  The PCT facilitates the obtaining of protection for inventions where such protection
  is sought in any or all of the PCT contracting states (total of 104 at July
  1999). It provides for the filing of one patent application (the international
  application''), with effect in several contracting states, instead of filing
  several separate national and/or regional patent applications. At the present
  time, an international application may include designation for regional patents
  in respect of contracting states party to any of the following regional patent
  treaties: The Protocol on Patents and Industrial Designs within the framework
  of the African Regional Industrial Property Organization, the Eurasian Patent
  Convention, the European Patent Convention, and the Agreement Establishing the
  African Intellectual Property Organization. The PCT does not eliminate the necessity
  of prosecuting the international application in the national phase of processing
  before the national or regional offices, but it does facilitate such prosecution
  in several important respects by virtue of the procedures carried out first
  on all international applications during the international phase of processing
  under the PCT. The formalities check, the international search and (optionally)
  the international preliminary examination carried out during the international
  phase, as well as the automatic deferral of national processing which is entailed,
  give the applicant more time and a better basis for deciding whether and in
  what countries to further pursue the application. Further information may be
  obtained from the official WIPO internet website (http://www.wipo.int).

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35

On June 1, 2000 the Corporation entered into the Medicure
  International Licensing Agreement whereby it licensed the world-wide development
  and marketing rights for MC-1, except for Canada, to its wholly owned subsidiary,
  Medicure International. As consideration for the grant of the license, Medicure
  International agreed to pay the Corporation a fee of $1.00 upon the completion
  of specified milestones in the development process, together with a variable
  royalty of 7% to 9% of net sales of MC-1 (if any sales are ever in fact made).
  The term of the Medicure International Licensing Agreement will expire on the
  date of expiration of the last to expire patent on MC-1, or in the absence of
  any such patent, on the 10th anniversary of the date of the first commercial
  sale of MC-1 in the country where it was last introduced (if it is ever so introduced).
  The Medicure International Licensing Agreement may be terminated under a number
  of circumstances and, in any event, by either party at any time by providing
  the other with at least 90 days prior written notice of its intention to terminate
  the Medicure International Licensing Agreement.

Medicure International subsequently entered into the Development
  Agreement with CanAm on June 1, 2000 to perform research and development of
  MC-1 and other compounds at cost, plus a reasonable mark-up not to exceed ten
  percent of any amount invoiced. The parties to the Development Agreement agreed
  that the aggregate amount of all invoiced expenditures shall not exceed $15,000,000
  over the term of the agreement. The term of the Development Agreement is to
  expire on the completion of all research and development activities by CanAm,
  and the written acknowledgment by CanAm and Medicure International that no further
  research projects will be undertaken (see Item 6 - Directors, Senior Management
  and Employees - A. Directors and Senior Management)

The Development Agreement may be terminated under a number
  of circumstances and, in any event, by Medicure International at any time by
  providing CanAm with at least 30 days prior written notice of its intention
  to terminate, or by CanAm at any time by providing Medicure International with
  at least 90 days prior written notice of its intention to terminate the Development
  Agreement.

The agreements provide that all confidential information developed
  or made known during the course of the relationship with the Corporation is
  to be kept confidential except in specific circumstances.

E. Trend Information


The Corporation is not aware of any trends, uncertainties,
  demands, commitments or events which are reasonably likely to have a material
  effect upon the Corporation's net sales or revenues, income from continuing
  operations, profitability, liquidity or capital resources, or that would cause
  reported financial information not necessarily to be indicative of future operating
  results or financial condition.

F. Off-balance Sheet Arrangements


As part of the Corporation's ongoing business, it does not
  participate in transactions that generate relationships with unconsolidated
  entities or financial partnerships, such as entities often referred to as structured
  finance or special purpose entities or SPE, which would have been established
  for the purpose of facilitating off-balance sheet arrangements or other contractually
  narrow or limited purposes. As of May 31, 2004, the Corporation was not involved
  in any unconsolidated SPE transactions.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Directors and Senior Management

The members of the board of directors and senior officers
  of the Corporation including a brief biography of each are as follows:

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36

Dr. Albert D. Friesen - Director, President, Chairman and
  Chief Executive Officer

The founder of Medicure Inc., Dr. Friesen holds a Ph.D. in
  protein chemistry from the University of Manitoba. Dr. Friesen played a key
  role in founding several health industry companies including Rh Pharmaceuticals
  (acquired by Cangene Inc.), ABI Biotechnology (acquired by Apotex Inc.), Viventia
  Biotech Inc., Genesys Pharma Inc. and KAM Scientific Inc. Dr. Friesen has experience
  in the establishment of pharmaceutical production facilities and has also managed
  and initiated the research and clinical development of several pharmaceutical
  candidates. Dr. Friesen is a founder of the Industrial Biotechnology Association
  of Canada (IBAC) and past Chairman of its board of directors and former member
  of the Industrial Advisory Committee to the Biotechnology Research Institute
  in Montreal. Dr. Friesen previously served as a senior executive of other publicly-traded
  companies, including a position as President of Viventia Biotech Inc. (formerly
  Novopharm Biotech Inc.) Dr. Friesen provides his services to the Corporation
  through A.D. Friesen Enterprises Ltd., his private consulting corporation. Dr.
  Friesen devotes substantially all of his time to the Corporation.

Dr. Arnold Naimark - Director


Arnold Naimark, M.D., F.R.C.P. (C), F.R.S.C. has had a distinguished
  career within medicine and higher education. Dr. Naimark served as Head of the
  Department of Physiology and later as Dean of the Faculty of Medicine at the
  University of Manitoba, following which he served as the University's President
  and Vice-Chancellor (15 years). Dr. Naimark is currently Director of the University
  of Manitoba Centre for the Advancement of Medicine, founding Chair of the Canadian
  Health Services Research Foundation and of the Canadian Biotechnology Advisory
  Committee, a Director of Inspiraplex and of the Robarts Research Institute and
  is a member of the Research Council of the Canadian Institute for Advanced Research.
  Dr. Naimark has served on many committees and boards, in such positions as a
  Director of the Canadian Imperial Bank of Commerce, Chair of the International
  Review Panel for the Medical Research Council of Canada and President of the
  Association of Universities and Colleges of Canada. Dr. Naimark has also received
  several honourary degrees and awards, including the Order of Canada.

Dr. William A. Cochrane - Director


Dr. Cochrane is an internationally recognized biotechnology
  executive and entrepreneur. In addition to other distinctions and senior appointments,
  Dr. Cochrane has previously served as Chairman and CEO of Connaught Laboratories
  Inc. and as President and Vice-Chancellor of the University of Calgary. Dr.
  Cochrane currently works as a health product investment consultant and serves
  on the board of Oncolytics. Dr. Cochrane has also been the President, CEO, and
  a Director of Nucleus BioScience Inc. since January 2000.

Mr. Umlah is Chief Investment Officer of the Crocus Investment
  Fund (a labour sponsored fund) and the President of Crocus Capital (the Crocus
  Investment Fund's sales subsidiary). In his capacity with the Crocus Investment
  Fund, which has current assets of approximately $170 million, Mr. Umlah has
  been responsible for investing in over 50 Manitoba businesses and has provided
  corporate finance advice to many of those businesses. In addition, Mr. Umlah
  has fifteen years experience in the investment industry in Manitoba. He is a
  former director of a major Canadian securities dealer. Mr. Umlah has an Honours
  Economics degree from the University of Manitoba. His areas of expertise include
  retail and institutional securities, corporate planning, and financial restructuring
  of businesses. Mr. Umlah is responsible for chairing and overseeing the operation
  of the Crocus Investment Fund's staff investment committee, which evaluates
  proposed investments and recommends investments to the board of directors. In
  addition, Mr. Umlah is responsible for coordinating the functions of the Investment
  Advisory Committee and sits on the boards of several investee companies. As
  President of Crocus Capital, Mr. Umlah is responsible for managing the investments
  of the fund and for securities compliance matters related thereto. Mr. Umlah
  is also responsible for managing the business and investments of the Manitoba
  Science & Technology Fund.

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37

Gerald P. McDole, MBA  Director

Mr. McDole was named President and CEO of AstraZeneca Canada
  Inc.'s pharmaceutical operations in 1999 and immediately led the merger of Astra
  Pharma and Zeneca Pharma Inc. Prior to this, Mr. McDole was president and CEO
  of Astra Pharma Inc., a position he assumed in 1985 after having served as Executive
  Vice-President. Mr. McDole is a member of the Canadian Healthcare Marketing
  Hall of Fame, and has been recognized by Canadian Healthcare Manager Magazine
  with the Who's Who in Healthcare Award in the pharmaceutical category. In recognition
  of Mr. McDole's outstanding contributions to the biotech and pharmaceutical
  industries, the University of Manitoba recently established The Gerry McDole
  Fellowship in Health Policy and Economic Growth.

Moray W. Merchant, MBA - Vice-President, Market Development

Moray Merchant received his MBA in Pharmaceutical Marketing
  from Saint Joseph's University in Philadelphia and holds a Bachelor's Degree
  in Business Administration from the University of New Brunswick. Mr. Merchant
  has over 20 years of industry experience leading the strategic planning, sales
  and marketing of pharmaceutical products. For 18 years he held several positions
  with DuPont Pharma in Canada managing the sales and marketing of their cardiovascular
  products, directing business development activities and establishing and leading
  their generics business. Beginning in 2001, he held the positions of Vice President,
  Sales and Vice President of Marketing for aaiPharma Inc., a U.S. based specialty
  pharmaceutical company. In these roles he was responsible for building the sales
  and marketing organizations and leading the promotion of their acquired portfolio
  of pharmaceutical products. Mr. Merchant holds the responsibility for identifying
  partnering opportunities, leading the strategic planning process and overseeing
  the commercialization of the Corporation's cardiovascular products.

Dawson Reimer proceeded from a Master's Degree in Economic
  Development, University of Waterloo to be employed as a full-time consultant
  to the Federal Department of Western Diversification. In this capacity, he conducted
  entrepreneurship training and developed a business start-up training program.
  Beginning in 1996, he served as Business Development/Investor Relations with
  Genesys Pharma Inc. He was also project coordinator for the establishment of
  the company's new research and pharmaceutical production facility. In 1997,
  he began conducting business activities for Genesys Venture Inc., a biotech
  business incubator, where he has assisted numerous biotechnology ventures in
  developing business plans, obtaining financing, and developing intellectual
  property protection. In this capacity, Mr. Reimer became actively involved in
  the Corporation at its inception and has been directly employed by the Corporation
  since 2001.

Derek G. Reimer, C.A. - Chief Financial Officer and Secretary

Derek Reimer came to the Corporation from Deloitte & Touche
  LLP where he most recently served as a Senior Manager in the Assurance and Advisory
  Services group. In this role, Mr. Reimer dealt mainly with major corporate clients,
  including several TSX 100 companies, providing advice regarding complex accounting,
  regulatory, and compliance issues. His previous experience includes several
  years providing international accounting services to clients exclusively in
  the financial services industry. Mr. Reimer is a Chartered Accountant who also
  holds a Bachelor of Commerce (Hons.) degree in accounting from the University
  of Manitoba. Mr. Reimer is responsible for managing financial systems, programs
  and processes to ensure the successful accomplishment of the Corporation's business
  objectives.

Business Management

Dr. Albert D. Friesen - Chairman, President, Chief Executive
  Officer and Director: Dr. Friesen directs the overall business management
  of the Corporation (see Directors and Senior Management under this item).

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38

Moray W. Merchant, MBA - Vice-President, Market Development:
  Mr. Merchant holds the responsibility for identifying partnering opportunities,
  leading the strategic planning process and overseeing the commercialization
  of the Corporation's cardiovascular products. (see Directors and Senior Management
  under this item).

Derek G. Reimer, CA - Chief Financial Officer and Secretary:
  Mr. Reimer participates in the Corporation's financial management and accounting
  practices (see Directors and Senior Management under this item).

Dawson Reimer - Vice-President, Operations: Mr. Reimer
  holds the responsibility of managing the internal operations and functional
  areas which include project management and strategic planning. (See Directors
  and Senior Management under this item)

Don Bain  Director of Investor Relations: Don
  Bain's background includes nearly four years as Director of Communications and
  Investor Relations at CanWest Global Communications Corp. (TSX: CGS.A and NYSE:
  CWG), operating his own Investor Relations and Communications firm, and the
  position of Vice-President, Investor Relations and Corporate Communications
  at a Toronto-based IR consulting firm. He has provided IR counsel to numerous
  companies encompassing a variety of industry sectors including, biotech, oil
  and gas, retail, manufacturing, real estate and high tech.

Scientific Management Dr. Naranjan S. Dhalla - Chief Scientific Officer


Dr. Dhalla participates in the scientific management of the
  Corporation under the title Chief Scientific Officer. The principal inventor
  of MC-1, Dr. Dhalla presently serves as Distinguished Professor and Director,
  Institute of Cardiovascular Sciences, St. Boniface General Hospital Research
  Centre, Faculty of Medicine, University of Manitoba. Dr. Dhalla is an internationally
  recognized cardiovascular researcher who has received 59 honours and awards
  including the Research Achievement Award of the Canadian Cardiovascular Society,
  The Upjohn Award of the Pharmacological Society of Canada, Honorary Professorship
  at several universities, the Order of the Buffalo Hunt from the Province of
  Manitoba, and the Order of Canada. Professionally, Dr. Dhalla has been actively
  promoting the scientific basis of cardiology for over 25 years.

Dr. Dhalla has served in senior positions such as Secretary
  General (17 years) and President (3 years) of the International Society for
  Heart Research, Editor-in-Chief (11 years) of the international journal Molecular
  and Cellular Biochemistry'' and is currently serving on the editorial boards
  of 11 other international journals. Since 1996, Dr. Dhalla has served as Executive
  Director of the International Academy of Cardiovascular Sciences. Dr. Dhalla
  has published 500 papers and 350 abstracts as well as edited or authored 31
  books in the area of heart research. Dr. Dhalla has provided his services to
  the Corporation's research and development activities through a consulting contract
  with CanAm Bioresearch Inc.

Dr. Karl-Gunnar Hidinger - Vice-President, Clinical Development

Dr. Karl-Gunnar Hidinger received his Ph.D. in Clinical Pharmacology
  from University of Gothenburg, Sweden. Dr. Hidinger's drug development experience
  spans 30 years and includes basic pharmacology research and preclinical research
  through clinical Phase I, II, III and market approval of new chemical entities.
  Dr. Hidinger's career has included clinical research positions in Europe and
  North America with recognized companies such as Astra Pharma Inc., Glaxo Inc.
  and Ortho-McNeil Inc. Dr. Hidinger's experience in clinical drug development
  complying with international regulatory standards covers a wide variety of therapeutic
  areas. Most recently, Dr. Hidinger established the corporate infrastructure
  for the Scientific Affairs Department of the newly established Byk Canada Inc.,
  a subsidiary of Byk Gulden AG, Germany. Dr. Hidinger will be responsible for
  the design and management of clinical studies for Medicure's lead compound,
  MC-1, and for the clinical aspects of other business development and

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39

research projects. Since February 1, 2001, Dr. Hidinger has
  provided his services to the Corporation's research and development activities
  through a consulting contract with CanAm Bioresearch Inc.

Dr. Ahmad Khalil  Director of Scientific Affairs


Dr. Khalil received his MD from the Medical Academy IP in
  Plovdiv, Bulgaria in 1986, and his M.Sc degree (1993) and PhD (1997) from The
  University of Montreal. He has excellent basic research experience in the areas
  of in vivo antithrombotic treatment and ischemia reperfusion, as well as therapeutic
  approaches to coronary artery bypass graft surgery, much of which was done during
  his tenure as researcher and lecturer at the renowned Montreal Heart Institute.
  In addition, Dr. Khalil has experience as a practicing surgeon in Europe and
  has presented at numerous cardiovascular conventions and published extensively.

Dr. Wasimul Haque - Director of Chemistry


Dr. Haque received a Ph.D. in Chemistry from the University
  of Manitoba. Dr. Haque has over fifteen years of experience in industrial biotechnology
  research and development where he has managed a variety of drug discovery projects.
  Senior positions held prior to joining Medicure include Project Manager at Alberta
  Research Council and Senior Scientist at Biomira Inc. Dr. Haque has been issued
  four patents and is author of several peer-reviewed publications. Dr. Haque
  began employment with Medicure in July 1998. Since June 1, 2000 Dr. Haque has
  been employed by CanAm Bioresearch Inc. and works on the Corporation's research
  and development pursuant to the Development Agreement.

Dr. Jim Diakur - Associate Director of Chemistry


Dr. Diakur is an experienced medicinal chemist who was previously
  employed as Research Assistant Professor at the Noujaim Institute for Pharmaceutical
  Research in the Faculty of Pharmacy, University of Alberta. At the institute,
  Dr. Diakur's group was focused on the development of carbohydrate-based pharmaceuticals
  for diabetes, cancer and inflammation and on carbohydrate-based drug carriers
  for targeted drug delivery. He also has over 10 years of industrial research
  and management experience in the field of chemistry with Chembiomed Inc. and
  Biomira Inc. Among other achievements, Dr. Diakur managed a team of scientists
  responsible for the preclinical development of injectable carbohydrate-based
  immunotherapeutic agents. Dr. Diakur is employed by CanAm Bioresearch Inc. and
  works on the Corporation's research and development pursuant to the Development
  Agreement.

Dr. Deborah Douglas, Ph.D.  Director of Physiology

Dr. Douglas received her Ph.D. in Animal Science from McGill
  University, focusing on molecular biology related research. Her post-doctoral
  experience involved cell biology research at the Institute of Cell Biology,
  University of Manitoba, and the Jack Bell Research Centre, Vancouver General
  Hospital, University of British Columbia. Dr. Douglas developed in vitroand in vivo models to screen for human diseases as Chief of Compound
  Screening for Alviva Biopharmaceutical Inc. Dr. Douglas provides her
  services to Medicure through an employment agreement with CanAm Bioresearch
  Inc.

Dr. Paul Armstrong - Clinical Consultant


Dr. Armstrong, Chair of the Advisory Board, is Professor
  in the Department of Medicine, University of Alberta in Edmonton. Dr. Armstrong
  is an internationally recognized cardiologist and clinical investigator with
  extensive expertise in the design and conduct of clinical trials focused on
  acute ischemic syndromes and congestive heart failure. Dr. Armstrong has published
  widely and served as a senior advisor to major organizations and industry. Since
  June 1, 2000, Dr. Armstrong provides services to the Corporation's research
  and development activities through a consulting contract with CanAm Bioresearch
  Inc.

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40

Dr. Stephen Hanessian - Chemistry Consultant

Dr. Hanessian received his Ph.D. from Ohio State University
  in 1960 and has served at the University of Montreal since 1968. He is internationally
  recognized for his contributions in the field of medicinal chemistry and has
  been named as principal inventor on over 25 patents. Dr. Hanessian has published
  400 papers, trained 250 scientists, and received the 1996 Canada Gold Medal
  for Science and Engineering, Canada's highest award for scientific achievement.
  He has also been made an Officer of the Order of Canada. His special interest
  in cardiovascular medicinal chemistry is directly aligned with Medicure's objective
  of establishing a pipeline of products to address cardiovascular diseases that
  remain inadequately treated by existing therapeutics. Dr. Hanessian provides
  services to the Corporation's research and development activities through a
  consulting contract with CanAm Bioresearch Inc.

Scientific Advisory Board

The Corporation has established a Scientific Advisory Board
  to ensure continued and proper review of research activities and work plans.
  The members of the Scientific Advisory Board and a brief biography of each are
  as follows:

Dr. Armstrong, Chair of the Scientific Advisory Board, is
  Professor in the Department of Medicine, University of Alberta in Edmonton.
  Dr. Armstrong is an internationally recognized cardiologist and clinical investigator
  with extensive expertise in the design and conduct of clinical trials focused
  on acute ischemic syndromes and congestive heart failure. Dr. Armstrong has
  published widely and served as a senior advisor to major organizations and industry.

Dr. Gibbons is a Professor of Medicine at the Mayo Medical
  School in Rochester, Minnesota. Dr. Gibbons has extensive experience with scar
  size measurement and myocardial infarction.

Dr. Stephen Hanessian


Dr. Hanessian is Professor, Department of Chemistry, University
  of Montreal. Dr. Hanessian is one of North America's most renowned medicinal
  chemists with considerable experience in industry collaboration for the discovery
  of new pharmaceuticals.

Dr. Morris Karmazyn

Dr. Karmazyn is a Professor in the Department of Pharmacology
  and Toxicology at the University of Western Ontario in London, Ontario. Dr.
  Karmazyn is internationally recognized and has received numerous distinctions
  for his research in the field of myocardial ischemia and ischemic reperfusion
  injury.

Dr. John McNeill

Dr. McNeill is Professor and Dean Emeritus, Division of Pharmacology
  and Toxicology, Faculty of Pharmaceutical Sciences at the University of British
  Columbia in Vancouver. The recipient of numerous awards and distinctions, Dr.
  McNeill's research is centered on the biochemical mechanism action of drugs
  on the heart.

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41

Dr. Eldon Smith

Dr. Smith is a Professor at the University of Calgary Medical
  School in Alberta, where his past positions include Dean of the Faculty of Medicine,
  Head of the Department of Medicine and Head of the Division of Cardiology. A
  distinguished clinician and research scientist, Dr. Smith has considerable industry
  experience having served on the boards of several well-recognized companies.

Dr. Pierre Theroux


Dr. Theroux is Professor of Medicine at the University of
  Montreal and Chief of the Coronary Care Unit at the Montreal Heart Institute.
  Dr. Theroux's innovative work is widely recognized and he has contributed extensively
  to the development of new treatments for acute ischemic heart disease.

Dr. Jeffrey Weitz

Dr. Weitz is Professor of Medicine and Haematology at McMaster
  University in Hamilton where he has contributed extensively to understanding
  the role of thrombosis and its treatment in cardiovascular disease. Dr. Weitz
  also brings a wealth of expertise in academic-industrial collaboration and development
  of new products.

Dr. Trevor Hassell

Dr. Hassell is Adjunct Professor of Medicine at the University
  of the West Indies, Barbados, and Consultant Physician and Cardiologist at the
  Queen Elizabeth Hospital, also in Barbados. He is Preseident-Elect of the Inter-American
  Heart Foundation, former President of the Caribbean Cardiac Society and founder,
  President and member of the Board of Directors of the Heart Foundation of Barbados.

B. Compensation

No compensation of any kind was paid to the directors and
  officers of the Corporation during the year ended May 31, 2004, except as follows:

On October 1, 2001 a compensation agreement was entered into
  between the Corporation and A.D. Friesen Enterprises Ltd., a corporation owned
  by Dr. Friesen. For the year ended June 1, 2002 to May 31, 2003, the Corporation
  paid A.D. Friesen Enterprises Ltd., $150,000 in consulting compensation. As
  of October 1, 2003 the compensation agreement was amended and increased to $175,000.
  For the year ended May 31, 2004, the Corporation paid A.D. Friesen Enterprises
  Ltd., $166,667 in consulting compensation. Dr. Friesen is also eligible for
  an annual bonus, if certain objectives of the Company are met, as determined
  by the Board of Directors.

Moray Merchant serves the Corporation as Vice President, Market
  and Business Development in consideration for an annual salary of $135,000 payable
  in equal semi-monthly instalments.

Dawson Reimer serves the Corporation as Vice President, Operations
  in consideration for an annual salary of $76,500 payable in equal semi-monthly
  instalments.

Derek G. Reimer serves the Corporation as Chief Financial
  Officer and Secretary in consideration for an annual salary of $95,000 payable
  in equal semi-monthly installments.

During the year ended May 31, 2004, the Corporation paid directors
  a total of Nil (Year ended May 31, 2003: Nil; Year ended May 31, 2002: Nil;
  Year ended May 31, 2001: $35,000; Nine months ended May 31, 2000: $22,500) for
  consulting fees.

Additionally, the Corporation provides its directors $1,500
  for each quarterly board meeting they personally attend ($750 via telephone),
  and $750 for each quarterly executive compensation and corporate governance
  committee meeting or audit and finance committee meeting they attend. The Corporation
  does not provide

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42

any cash compensation for its directors who are also officers
  of the Corporation for their services as directors.

No pension, retirement fund and other similar benefits have
  been set aside for the officers and directors of the Corporation.

C. Board Practices


The Board of Directors presently consists of five directors.
  Each director, with the exception of Gerald P. McDole was re-elected at the
  Corporation's annual general meeting of the shareholders held on October 15,
  2003. Mr. McDole was appointed subsequent to the annual general meeting in January
  2004. Each director holds office until the next annual general meeting of the
  Corporation or until his successor is elected or appointed, unless his office
  is earlier vacated in accordance with the Articles of the Corporation, or with
  the provisions of the Canada Business Corporations Act. Dr. Albert D.
  Friesen has served as a director of the Corporation since September 1997. Dr.
  Arnold Naimark has served as a director of the Corporation since March 2000,
  Dr. William A. Cochrane has served as a director of the Corporation since October
  2000 and James Umlah was appointed to the Board on September 17, 2001.

Pursuant to Section 171 of the Canada Business Corporations
  Act (the Act), the Corporation is required to have an Audit Committee.
  As at the date hereof, the members of the Audit and Finance Committee are Dr.
  William Cochrane (Chair), Dr. Arnold Naimark, James Umlah and Gerald McDole.
  The relevant experience of each member is described above. (See ITEM 6. DIRECTORS,
  SENIOR MANAGEMENT AND EMPLOYEES) Section 171(1) of the Act requires the directors
  of a reporting corporation to elect from among their number a committee composed
  of not fewer than three directors, of whom a majority must not be officers or
  employees of the corporation or an affiliate of the corporation. Section 171(3)
  provides that, before financial statements are approved by the directors, they
  must be submitted to the audit committee for review. Section 171(4) provides
  that the auditor must be given notice of, and has the right to appear before
  and to be heard at, every meeting of the audit committee, and must appear before
  the audit committee when requested to do so by the committee. Finally, section
  171(5) provides that on the request of the auditor, the audit committee must
  convene a meeting of the audit committee to consider any matters the auditor
  believes should be brought to the attention of the directors or members.

The Executive Compensation and Corporate Governance Committee
  is responsible for determining the compensation of executive officers of the
  Corporation. The current members of the Committee are Dr. Arnold Naimark (Chair),
  Dr. William Cochrane, James Umlah and Gerald McDole none of whom is a current
  or former executive officer of the Corporation. The Committee meets at least
  once a year.

The Committee has developed a policy to govern the Corporation's
  approach to corporate governance issues and provides a forum for concerns of
  individual directors about matters not easily or readily discussed in a full
  board meeting, e.g., the performance of management. The Committee ensures there
  is a clear definition and separation of the responsibilities of the Board, the
  Committees of the Board, the Chief Executive Officer and other management employees.
  It also ensures there is a process in place for the orientation and education
  of new directors and for continuing education of the Board. The Committee also
  assesses the effectiveness of the Board and its committees on an ongoing ad
  hoc basis. It also reviews at least annually the Corporation's responsiveness
  to environmental impact, health and safety and other regulatory standards.

The Committee reviews the objectives, performance and compensation
  of the Chief Executive Officer at least annually and makes recommendations to
  the Board for change. The Committee makes recommendations based upon the Chief
  Executive Officers' suggestions regarding the salaries and incentive compensation
  for senior officers of the Corporation. The Committee also reviews significant
  changes to compensation, benefits and human resources policies and compliance
  with current human resource management practices, such as pay equity, performance
  review and staff development. The Committee is responsible for reviewing and
  recommending changes to the compensation of directors as necessary.

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43

D. Employees

In addition to the individuals disclosed in Section A. Directors
  and Senior Management of this item, CanAm has a staff of twenty three research
  scientists, technicians and staff dedicated solely to the Corporation's research
  and development activities.

E. Share Ownership

With respect to the persons referred to above in Section B.
  Compensation, no individual holds greater than 10% of shares outstanding. The
  following table discloses the stock options held as of August 31, 2004.

Incentive Stock Options


The following table discloses the stock options beneficially
  held by the aforementioned persons, as of August 31, 2004. The stock options
  are for shares of Common Stock of the Corporation.

|Name of Person        | Number of Shares Subject to Issuance | Exercise Price per Share          | Expiry Date                                                
|--------------------- | ------------------------------------ | --------------------------------- | -----------------------------------------------------------
|Dr. Albert D. Friesen | 30,000
      100,000                 | $2.15  
      $1.63               | February 22, 2005
      January 5, 2009                    
|Dr. William Cochrane  | 125,000 
      25,000                | $0.75  
      $1.10               | January 5, 2005
      August 12, 2008                      
|Dr. Arnold Naimark    | 100,000  
      50,000               | $0.75  
      $1.10               | January 5, 2005
      August 12, 2008                      
|Gerald P. McDole      | 100,000                              | $1.63                             | January 16, 2009                                           
|Derek G. Reimer       | 90,000
      30,000                  | $0.80  
      $1.63               | February 4, 2007
      January 5, 2009                     
|Moray Merchant        | 100,000 
      100,000               | $1.65  
      $1.12               | September 22, 2008
      August 23, 2009                   
|Dawson Reimer         | 20,000
      20,000
      30,000     | $0.75  
      $1.10  
      $1.63 | January 5, 2005
      August 12, 2008
      January 5, 2009

The Corporation has established an Incentive Stock Option
  Plan (the Plan'') for its directors, key officers, employees and
  consultants. Options granted pursuant to the Plan will not exceed a term of
  five years and are granted at an option price and on other terms which the directors
  determine is necessary to achieve the goal of the Plan and in accordance with
  regulatory requirements, including those of the TSX. Each option entitles the
  holder thereof to purchase one (1) Common Share of the Corporation on the terms
  set forth in the Plan and in such purchaser's specific stock option agreement.
  The option price may be at a discount to market price, which discount will not,
  in any event, exceed that permitted by any stock exchange on which the Corporation's
  Common Shares are listed for trading.

The number of Common Shares allocated to the Plan, the exercise
  period for the options (not to exceed five years), and the vesting provisions
  for the options will be determined by the board of directors of the Corporation
  from time to time. The aggregate number of shares reserved for issuance under
  the Plan, together with any other employee stock option plans, options for services
  and employee stock purchase plans, will not exceed 4,700,000 of the issued and
  outstanding Common Shares. In addition, the aggregate number of shares reserved
  for issuance to any one person shall not exceed five percent (5%) of the issued
  and outstanding Common Shares.

The Common Shares issued pursuant to the exercise of options,
  when fully paid for by a participant, are not included in the calculation of
  Common Shares allocated to or within the Plan. Should a participant

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44

cease to be eligible due to the loss of corporate office (being
  that of an officer or director) or employment, the option shall cease for varying
  periods not exceeding 90 days. Loss of eligibility for consultants is regulated
  by specific rules imposed by the directors when the option is granted to the
  appropriate consultant. The Plan also provides that estates of deceased participants
  can exercise their options for a period not exceeding one year following death.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders


As of August 31, 2004, the following table sets forth the
  beneficial ownership of the Corporation's common shares by each person known
  by the Corporation to own beneficially more than 5% of the issued and outstanding
  common shares of the Corporation. Information as to shares beneficially owned,
  directly or indirectly, by each nominee or over which each nominee exercises
  control or direction, not being within the knowledge of the Corporation, has
  been furnished by the respective nominees individually. CDS & Company, Toronto,
  Ontario is a brokerage clearing house that owns 58,281,379 (87.5%) of common
  shares of the Corporation on behalf of beneficial owners. The Corporation does
  not know the majority of the ultimate beneficial owners of these common shares.

|Title of Class | Identity of Person or Group | Amount Owned  | Percentage of Class
|-------------- | --------------------------- | ------------- | -------------------
|               |                             |               |                    
|Common shares  | Dr. Albert D. Friesen(2)    | 6,015,815(1)  | 9.0%               
|               | Winnipeg, Manitoba          |               |                    
|               |                             |               |                    
|Common shares  | Leeward Hedge Fund(3),      | 10,893,800(1) | 16.3%              
|               | Toronto, Ontario            |               |                    

|Notes:
|------
|(1)   
|(2)   
|(3)   

As of August 31, 2004, there were 227 shareholders of record
  in the United States holding a total of 5,419,965 common shares of the Corporation.

To the best of the Corporation's knowledge, it is not owned
  or controlled, directly or indirectly, by another company, by any foreign government
  or by any other natural or legal person severally or jointly.

As of August 31, 2004, the total number of issued and outstanding
  common shares of the Corporation beneficially owned by the directors and executive
  officers of the Corporation as a group was 6,260,050 (or 9.4% of common shares).

To the best of the Corporation's knowledge, there are no arrangements,
  the operation of which at a subsequent date will result in a change in control
  of the Corporation.

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45

B. Related Party Transactions

Other than as set forth below, management of the Corporation
  is not aware of any material interest, direct or indirect, of any director or
  officer of the Corporation, any person beneficially owning, directly or indirectly,
  more than 10% of the Corporation's voting securities, or any associate or affiliate
  of any such person in any transaction within the last three years or in any
  proposed transaction which in either case has materially affected or will materially
  affect the Corporation or its subsidiaries.

On November 22, 1999 Medicure was acquired by Lariat by way
  of a reverse takeover as Lariat's "Major Transaction" as a Junior Capital Pool
  company within the meaning of the Alberta Securities Commission Rule 46-501,
  the Alberta Securities Commission Companion Policy 46-501CP and The Alberta
  Stock Exchange Circular 7. Pursuant to the terms of the Major Transaction, Lariat
  acquired all of the issued and outstanding shares of Medicure in exchange for
  9,500,000 shares of Lariat, at a deemed price for securities regulatory purposes
  of $0.20 per share for aggregate consideration of $1,900,000. The Major Transaction
  was negotiated entirely at arm's length. As a result of the share exchange,
  control of Lariat passed to the former shareholders of Medicure. This type of
  transaction is commonly referred to as a "reverse takeover". Under reverse takeover
  accounting, for financial reporting purposes, the Corporation is considered
  to be a continuation of the operations formerly carried on by Medicure.

During the period beginning June 1, 2001 to September 30,
  2001, the Corporation paid Genesys Venture Inc., a biotech incubator company
  co-owned by Dr. Albert D. Friesen, $84,000 to provide the Corporation with overall
  management services including those of Dr. Friesen as President and Chief Executive
  Officer of the Corporation. Genesys Venture Inc, in turn, paid Dr. Friesen $32,000
  of the $84,000 total, in salary compensation. On October 1, 2001, the agreement
  with Genesys Venture Inc. was modified such that Dr, Friesen no longer received
  a salary as part of the overall management services agreement. During the eight
  month period from June 1, 2001 to January 31, 2002, the Corporation paid Genesys
  Venture Inc. a total of $120,000 (Year ended May 31, 2001: $242,000; Nine months
  ended May 31, 2000: $155,640) for consulting fees and office rent and supplies.
  As of February 1, 2002 the agreement with Genesys Venture Inc. was terminated.

On October 1, 2001, a two-year consulting contract was entered
  into with A.D. Friesen Enterprises Ltd., a corporation owned by Dr. Friesen.
  This agreement, which was subsequently amended on February 1, 2002, paid A.D.
  Friesen Enterprises Ltd. an annual salary of $150,000 payable in monthly installments.
  Upon expiration of this agreement on September 30, 2003 a new consulting contract
  was entered into with A.D. Friesen Enterprises Ltd. for an annual salary of
  $175,000. This salary is reviewed annually by the Board. Dr. Friesen is also
  eligible for grants of incentive stock options and bonuses, if certain objectives
  between the Board and Dr. Friesen are met, as determined by the Board. During
  the year ended May 31, 2004, the Corporation paid a total of $166,667 to A.D.
  Friesen Enterprises Ltd. For the year ended May 31, 2003, the Corporation paid
  a total of $150,000 to A.D. Friesen Enterprises Ltd. For the period commencing
  October 1, 2001 to May 31, 2002, the Corporation paid A.D. Friesen Enterprises
  Ltd., $82,000 in consulting compensation.

Dr. Friesen, a director, the Chairman, the President and the
  Chief Executive Officer of the Corporation also owns a leasing company, Waverley
  Business and Science Centre Inc. which entered into a lease with the Corporation
  as of March 1, 2002. Pursuant to this agreement, the Corporation leases approximately
  2,100 square feet of office space from Waverley Business and Science Centre
  Inc. for minimum annual rental payments of $23,507. The agreement is for a five
  year term.

Dr. Naranjan Dhalla, the Chief Scientific Officer of the Corporation,
  is the principal scientist responsible for discovering the cardiovascular benefits
  of MC-1. He is also a significant shareholder of the Corporation. As an employee
  of the University of Manitoba he will receive 25% of any royalties the university
  may receive in respect to the License Agreement. In addition, Dr. Dhalla entered
  into a consulting agreement with the Corporation effective January 18, 1998
  wherein Dr. Dhalla agreed to perform certain consulting services to the Corporation
  and which contract remains in effect as at the date hereof. The Corporation
  is currently paying Dr. Dhalla $40,000 per annum for these services through
  a contract with CanAm Bioresearch Inc.

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46

C. Interests of Experts and Counsel

Not applicable

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements or Other Financial Information

Financial Statements


Attached hereto are the consolidated financial statements
  of the Corporation for the years ended May 31, 2004, 2003 and 2002 audited by
  KPMG LLP, Chartered Accountants. The consolidated financial statements including
  related notes are accompanied by the auditors' report.

Legal Proceedings


There are no legal or arbitration proceedings, including those
  relating to bankruptcy, receivership or similar proceedings and those involving
  any third party, which may have, or have had in the recent past, significant
  effects on the Corporation's financial position or profitability. There are
  no legal proceedings to which the Corporation is a party, nor to the best of
  the knowledge of the Corporation's management are any legal proceedings contemplated.

Dividend Policy


The Corporation has not paid dividends in the past and it
  has no present intention of paying dividends on its shares as it anticipates
  that all available funds will be invested to finance the growth of its business.
  The directors of the Corporation will determine if and when dividends should
  be declared and paid in the future based upon the Corporation's financial position
  at the relevant time. All of the Corporation's Shares are entitled to an equal
  share of any dividends declared and paid.

B. Significant Changes

|a) | Since May 31, 2004, the date of the most recent
        financial statements, no significant changes have occurred.
|-- | -------------------------------------------------------------------------------------------------------------------

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47

ITEM 9. THE OFFERING AND LISTING

A. Offer and Listing Details

The Corporation's common shares are listed and traded on The
  Toronto Stock Exchange under the symbol "MPH" and The American Stock Exchange
  under the symbol "MCU". The historical trading data for the common shares of
  the Corporation on the above-mentioned exchanges is set out below.

| |                          | TSX      | TSX     | Amex(1) | Amex(1)
| | ------------------------ | -------- | ------- | ------- | -------
| | Fiscal Period/Year Ended | High ($) | Low ($) | High    | Low    
| |                          |          |         | ($US)   | ($US)  
| | May 31, 2004             | 2.85     | 0.73    | 2.14    | 1.10   
| | May 31, 2003             | 1.13     | 0.20    | N/A     | N/A    
| | May 31, 2002             | 1.24     | 0.40    | N/A     | N/A    
| | May 31, 2001             | 3.45     | 0.95    | N/A     | N/A    
| | May 31, 2000             | 8.00     | 0.48    | N/A     | N/A    
| |                          |          |         |         |        
| | Fiscal Quarter Ended     |          |         |         |        
| | August 31, 2004          | 1.87     | 1.10    | 1.38    | 0.85   
| | May, 31, 2004            | 2.73     | 1.42    | 2.06    | 1.10   
| | February 29, 2004        | 2.85     | 1.19    | 2.14    | 1.60   
| | November 30, 2003        | 1.84     | 1.20    | N/A     | N/A    
| | August 31, 2003          | 1.39     | 0.73    | N/A     | N/A    
| | May 31, 2003             | 0.99     | 0.64    | N/A     | N/A    
| | February 28, 2003        | 1.13     | 0.23    | N/A     | N/A    
| | November 30, 2002        | 0.30     | 0.20    | N/A     | N/A    
| | August 31, 2002          | 0.52     | 0.215   | N/A     | N/A    
| |                          |          |         |         |        
| | Month                    |          |         |         |        
| | August 2004              | 1.45     | 1.10    | 1.09    | 0.85   
| | July 2004                | 1.63     | 1.21    | 1.21    | 0.93   
| | June 2004                | 1.87     | 1.42    | 1.38    | 1.04   
| | May 2004                 | 1.92     | 1.42    | 1.42    | 1.10   
| | April 2004               | 2.35     | 1.62    | 1.78    | 1.22   
| | March 2004               | 2.73     | 1.85    | 2.06    | 1.44   

Note: 
  (1) The Corporation commenced trading on the American Stock Exchange on February
  17, 2004.

The Corporation's common shares were listed on The Canadian
  Venture Exchange under the symbol "MPH", from November 29, 1999 to March 14,
  2002. The common shares and Class A common shares commenced trading on the Toronto
  Stock Exchange on March 15, 2002 and on the American Stock Exchange on February
  17, 2004. On March 1, 2003 all of the issued and outstanding Class A common
  shares  totalling 1,280,000 shares  were converted into common shares
  of the Corporation on the basis of one common share for each Class A common
  shares in accordance with the Corporation's Articles of Continuance. The Class
  A common shares were identical in all respects to the common shares, except
  that the holders were eligible for the Manitoba Equity Tax Credit until February
  28, 2003.

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48

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable

B. Memorandum and Articles of Association

1. Objects and Purposes of the Corporation

The Memorandum of the Corporation places no restrictions upon
  the Corporation's objects and purposes.



Under applicable Canadian law, the directors and officers
  of the Corporation, in exercising their powers and discharging their duties,
  must act honestly and in good faith with a view to the best interests of the
  Corporation. The directors and officers must also exercise the care, diligence
  and skill that a reasonably prudent person would exercise in comparable circumstances.

Section 4.14 of By-Law No.1 of the Corporation (the "By-Law")
  provides that a director shall not be disqualified by reason of his office from
  contracting with the Corporation or a subsidiary thereof. Subject to the provisions
  of the Canada Business Corporations Act(the "Act"), a director shall
  not by reason only of his office be accountable to the Corporation or its shareholders
  for any profit or gain realized from a contract or transaction in which he has
  an interest. Such contract or transaction shall not be voidable by reason only
  of such interest, or by reason only of the presence of a director so interested
  at a meeting, or by reason only of his presence being counted in determining
  a quorum at a meeting of the directors at which such a contract or transaction
  is approved, provided that a declaration and disclosure of such interest shall
  have been made at the time and in the manner prescribed by section 120 of the
  Act, and the director so interested shall have refrained from voting as a director
  on the resolution approving the contract or transaction (except as permitted
  by the Act) and such contract shall have been reasonable and fair to the Corporation
  and shall have been approved by the directors or shareholders of the Corporation
  as required by section 120 of the Act.

Section 4.01 of the By-Law states that the exact number of
  directors to form the board shall be determined from time to time by the directors
  of the Corporation entitled to vote at regular meetings. A quorum of the board
  shall be a majority of the board. No business shall be transacted at a meeting
  unless a quorum is present.

Section 3.01 of the By-Law states that the board may, without
  the authorization of the shareholders:

|i)   | borrow money upon the credit of the Corporation;                                                                                                                                                             
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|ii)  | issue, reissue, sell or pledge debt obligations
        of the Corporation, including bonds, debentures, notes or other evidences
        of indebtedness or guarantees, whether secured or unsecured;       
|    
|iii) | subject to section 44 of the Act, give a guarantee
        on behalf of the Corporation to secure performance of an obligation of
        any person; and                                                    
|    
|iv)  | mortgage, hypothecate, pledge or otherwise create
        a security interest in all or any property of the Corporation, owned or
        subsequently acquired, to secure any obligation of the Corporation.

The borrowing powers of the directors can be varied by amending
  the By-Law of the Corporation.

There is no provision in the By-Law imposing a requirement
  for retirement or non-retirement of directors under an age limit requirement.

Section 4.02 states that a director need not be a shareholder
  to be qualified as a director.

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49

3. Shares

The Articles of the Corporation provide that the Corporation
  is authorized to issue an unlimited number of shares designated as Common Shares,
  Class A Common Shares and Preferred Shares. Except for meetings at which only
  holders of another specified class or series of shares of the Corporation are
  entitled to vote separately as a class or series, each holder of the Common
  and Class A shares is entitled to receive notice of, to attend and to vote at
  all meetings of the shareholders of the Corporation. Subject to the rights,
  privileges, restrictions and conditions attached to any other class of shares
  of the Corporation, the holders of the Common and Class A shares are also entitled
  to receive dividends if, as and when declared by the directors of the Corporation
  and are entitled to share equally in the remaining property of the Corporation
  upon liquidation, dissolution or winding-up of the Corporation.

The Preferred Shares may from time to time be issued in one
  or more series and, subject to the following provisions, and subject to the
  sending of articles of amendment in respect thereof, the directors may fix from
  time to time and before issue a series of Preferred Shares, the number of shares
  which are to comprise that series and the designation, rights, privileges, restrictions
  and conditions to be attached to that series of Preferred Shares including,
  without limiting the generality of the foregoing, the rate or amount of dividends
  or the method of calculating dividends, the dates of payment of dividends, the
  redemption, purchase and/or conversion, and any sinking fund or other provisions.

The Preferred Shares of each series shall, with respect to
  the payment of dividends and the distribution of assets or return of capital
  in the event of liquidation, dissolution or winding-up of the Corporation, whether
  voluntary or involuntary, or any other return of capital or distribution of
  the assets of the Corporation among its shareholders for the purpose of winding-up
  its affairs, rank on a parity with the Preferred Shares of every other series
  and be entitled to preference over the Common and Class A Common Shares and
  over any other shares of the Corporation ranking junior to the Preferred Shares.
  The Preferred Shares of any series may also be given other preferences, not
  inconsistent with these articles, over the Common Shares and Class A Common
  Shares and any other shares of the Corporation ranking junior to the Preferred
  Shares of a series as may be fixed in accordance with terms outlined above.

If any cumulative dividends or amounts payable on the return
  of capital in respect of a series of Preferred Shares are not paid in full,
  all series of Preferred Shares shall participate rateably in respect of accumulated
  dividends and return of capital.

Unless the directors otherwise determine in the articles of
  amendment designating a series of Preferred Shares, the holder of each share
  or a series of Preferred Shares shall not, as such, be entitled to receive notice
  of or vote at any meeting of shareholders, except as otherwise specifically
  provided in the Act.

4. Rights of Shareholders

Under the Act, shareholders of the Corporation are entitled
  to examine, during its usual business hours, the Corporation's articles and
  by-laws, notices of directors and change of directors, any unanimous shareholder
  agreements, the minutes of meetings and resolutions of shareholders and the
  list of shareholders.

Shareholders of the Corporation may obtain a list of shareholders
  upon payment of a reasonable fee and sending an affidavit to the Corporation
  or its transfer agent stating, among other things, that the list of shareholders
  will not be used by any person except in connection with an effort to influence
  the voting of shareholders of the Corporation, an offer to acquire shares of
  the Corporation or any other matter relating to the affairs of the Corporation.

Under the Act, shareholders of the Corporation may apply to
  a court having jurisdiction directing an investigation to be made of the Corporation.
  If it appears to the court that the formation, business or affairs of the Corporation
  were conducted for fraudulent or unlawful purposes, or that the powers of the
  directors were exercised in a manner that is oppressive or unfairly disregards
  the interests of the shareholders, the court may order an investigation to be
  made of the Corporation.

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50

To change the rights of holders of stock, where such rights
  are attached to an issued class or series of shares, requires the consent by
  a separate resolution of the holders of the class or series of shares, as the
  case may be, requiring a majority of 75% of the votes cast.

The Corporation is organized under the laws of Canada. The
  Corporation's directors, officers, and affiliates of the Corporation, as well
  as the experts named in this registration statement, are residents of Canada
  and, to the best of the Corporation's knowledge, all or a substantial portion
  of their assets and all of the Corporation's assets are located outside of the
  United States. As a result, it may be difficult for shareholders of the Corporation
  in the United States to effect service of process on the Corporation or these
  persons above within the United States, or to realize in the United States upon
  judgments rendered against the Corporation or such persons. Additionally, a
  shareholder of the Corporation should not assume that the courts of Canada (i)
  would enforce judgments of U.S. courts obtained in actions against the Corporation
  or such persons predicated upon the civil liability provisions of the U.S. federal
  securities laws or other laws of the United States, or (ii) would enforce, in
  original actions, liabilities against the Corporation or such persons predicated
  upon the U.S. federal securities laws or other laws of the United States.

Laws in the United States and judgments of U.S. courts would
  generally be enforced by a court of Canada unless such laws or judgments are
  contrary to public policy in Canada, are or arise from foreign penal laws or
  laws that deal with taxation or the taking of property by a foreign government
  and are not in compliance with applicable laws in Canada regarding the limitation
  of actions. Further, a judgment obtained in a U.S. court would generally be
  recognized by a court of Canada, except under the following examples:

|i)   | the judgment was rendered in a U.S. court that had
        no jurisdiction according to applicable laws in Canada;                                                                                                                                                                                                            
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|ii)  | the judgment was subject to ordinary remedy (appeal,
        judicial review and any other judicial proceeding which renders the judgment
        not final, conclusive or enforceable under the laws of the applicable
        state) or not final, conclusive or enforceable under the laws of the applicable
        state;
|    
|iii) | the judgment was obtained by fraud or in any manner
        contrary to natural justice or rendered in contravention of fundamental
        principles of procedure; and                                                                                                                                                      
|    
|iv)  | a dispute between the same parties, based on the
        same subject matter has given rise to a judgment rendered in a court of
        Canada or has been decided in a third country and the judgment meets the
        necessary conditions for recognition in a court of Canada.                                          

5. Meetings

Subject to the provisions of the Act, the annual general meeting
  of the shareholders shall be on such date in each year as the board of directors
  may determine, and a special meeting of the shareholders may be convened at
  any time by order of the President or by the board on their own motion or on
  the requisition of shareholders as provided for in the Act. Notice of the time
  and place of each meeting of shareholders shall be given not less than 21 days
  nor more than 50 days before the date of the meeting to each director and shareholder.
  A meeting of shareholders may be held without notice at any time and at any
  place provided a waiver of notice is obtained in accordance with section 136
  of the Act. The quorum for the transaction of business at meetings of the shareholders
  shall consist of not less than one (1) shareholder present or represented by
  proxy and holding in all not less than five (5%) percent of the issued capital
  of the Corporation carrying voting rights. At any meeting of shareholders, every
  person shall be entitled to vote who, at the time of the taking of a vote (or,
  if there is a record date for voting, at the close of business on such record
  date) is entered in the register of shareholders as the holder of one or more
  shares carrying the right to vote at such meeting, subject to the provisions
  of the Act.

6. Ownership of Securities

There are no limitations on the right to own securities, imposed
  by foreign law or by the By-Law or other constituent document of the Corporation.

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51

7. Change in Control of Corporation

No provision of the Corporation's articles of association,
  charter or By-Law would have the effect of delaying, deferring, or preventing
  a change in control of the Corporation, and operate only with respect to a merger,
  acquisition or corporate restructuring of the Corporation or any of its subsidiaries.

8. Ownership Threshold

The Manitoba and Ontario Securities Acts provide that
  a person that has direct or indirect beneficial ownership of, control or direction
  over, or a combination of direct or indirect beneficial ownership of, and control
  or direction over, securities of the issuer carrying more than 10% of the voting
  rights attached to all the issuer's outstanding voting securities must, within
  10 days of becoming an "insider", file an insider report in the required form
  effective the date on which the person became an insider, disclosing any direct
  or indirect beneficial ownership of, or control or direction over, securities
  of the reporting issuer. The Manitoba and Ontario Securities Acts also
  provide for the filing of a report by an "insider" of a reporting issuer who
  acquires or transfers securities of the issuer. This insider report must be
  filed within 10 days after the change takes place.

The U.S. rules governing the ownership threshold above which
  shareholder ownership must be disclosed are more stringent than those discussed
  above. Section 13 of the Exchange Act imposes reporting requirements on persons
  who acquire beneficial ownership (as such term is defined in the Rule 13d-3
  under the Exchange Act) of more than 5 per cent of a class of an equity security
  registered under Section 12 of the Exchange Act. In general, such persons must
  file, within 10 days after such acquisition, a report of beneficial ownership
  with the Securities and Exchange Commission containing the information prescribed
  by the regulations under Section 13 of the Exchange Act. This information is
  also required to be sent to the issuer of the securities and to each exchange
  where the securities are traded.

C. Material Contracts

The following are the material contracts of the Corporation,
  other than those mentioned elsewhere in this Form, to which the Corporation
  or any member of the group is a party, for the two years immediately preceding
  publication of this registration statement.

| | a) | Employment Agreement dated September 22, 2003 between
        Moray Merchant and the Corporation.                                                                                                                                                          
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | Development Agreement between Medicure International
        Inc. and Clinical Development Research Institute Inc.(CDRI) dated July
        5, 2004, wherein CDRI agreed to conduct research and development activities
        for Medicure International.

D. Exchange Controls

There is no law or government decree of regulation in Canada
  that restricts the export or import of capital, or that affects the remittance
  of dividends, interest or other payments to a non-resident holder of Common
  Shares, other than withholding tax requirements. See "Item 7 Taxation."

There is no limitation imposed by Canadian law or by the articles
  or other charter documents of the Corporation on the right of a non-resident
  to hold or vote the Common Shares or the Class A common shares of the Corporation,
  other than as provided in the Investment Canada Act, as amended (the "Investment
  Act").

The Investment Act generally prohibits implementation of a
  reviewable investment by an individual, government or agency thereof, corporation,
  partnership, trust or joint venture that is a "non-Canadian" as defined in the
  Investment Act (a "non-Canadian"), unless, after review the Minister responsible
  for the Investment Act is satisfied that the investment is likely to be of net
  benefit to Canada. If an investment by

---

52

a non-Canadian is not a reviewable investment, it nevertheless
  requires the filing of a short notice which may be given at any time up to 30
  days after the implementation of the investment.

An investment in Common Shares of the Corporation by a non-Canadian
  that is a "WTO investor" (an individual or other entity that is a national of,
  or has the right of permanent residence in, a member of the World Trade Organization,
  current members of which include the European Community, Germany, Japan, Mexico,
  the United Kingdom and the United States, or a WTO investor-controlled entity,
  as defined in the Investment Act) would be reviewable under the Investment Act
  if it were an investment to acquire direct control, through a purchase of assets
  or voting interests, of the Corporation and the value of the assets of the Corporation
  equalled or exceeded $184 million, the threshold established for 1999, as indicated
  on the financial statements of the Corporation for its fiscal year immediately
  preceding the implementation of the investment. In subsequent years, such threshold
  amount may be increased or decreased in accordance with the provisions of the
  Investment Act.

An investment in Common Shares of the Corporation by a non-Canadian,
  other than a WTO investor, would be reviewable under the Investment Act if it
  were an investment to acquire direct control of the Corporation and the value
  of the assets were $5.0 million or more, as indicated on the financial statements
  of the Corporation for its fiscal year immediately preceding the implementation
  of the investment.

A non-Canadian, whether a WTO investor or otherwise, would
  acquire control of the Corporation for the purposes of the Investment Act if
  he, she or it acquired a majority of the Common Shares of the Corporation or
  acquired all or substantially all of the assets used in conjunction with the
  Corporation 's business. The acquisition of less than a majority, but one-third
  or more of the Common Shares of the Corporation, would be presumed to be an
  acquisition of control of the Corporation unless it could be established that
  the Corporation was not controlled in fact by the acquirer through the ownership
  of the Common Shares.

The Investment Act would not apply to certain transactions
  in relation to Common Shares of the Corporation, including:

| | (a) | an acquisition of Common Shares of the Corporation
        by any person if the acquisition were made in the ordinary course of that
        person's business as a trader or dealer in securities;                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | an acquisition of control of the Corporation in
        connection with the realization of security granted for a loan or other
        financial assistance and not for any purpose related to the provisions
        of the Investment Act; and                                                     
|
| | (c) | an acquisition of control of the Corporation by
        reason of an amalgamation, merger, consolidation or corporate reorganization
        following which the ultimate direct or indirect control in fact of the
        Corporation, through the ownership of voting interests, remains unchanged.

E. Taxation

Considerations for Canadian Holders

The following is a summary of the principal Canadian federal
  income tax considerations, as of the date hereof, generally applicable to Security
  holders who deal at arm's length with the Corporation, who, for purposes of
  the Income Tax Act (Canada) (the "Canadian Tax Act") and any applicable tax
  treaty or convention, have not been and will not be resident or deemed to be
  resident in Canada at any time while they have held shares of the Corporation,
  to whom such shares are capital property, and to whom such shares are not "taxable
  Canadian property" (as defined in the Canadian Tax Act). This summary does not
  apply to a non-resident insurer.

Generally, shares of the Corporation will be considered to
  be capital property to a holder thereof provided that the holder does not use
  such shares in the course of carrying on a business or has not acquired them

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53

in one or more transactions considered to be an adventure
  in the nature of trade. All security holders should consult their own tax advisors
  as to whether, as a matter of fact, they hold shares of the Corporation as capital
  property for the purposes of the Canadian Tax Act.

Under the current provisions of the Canadian Tax Act, as modified
  by the Proposed Amendments (see below), one-half of capital gains (taxable
  capital gains'') must be included in computing the income of a holder in the
  year of disposition. One-half of capital losses (allowable capital
  losses'') may generally be deducted against taxable capital gains for the year
  of disposition subject to and in accordance with the provisions of the Canadian
  Tax Act.

Allowable capital losses in excess of a holder's taxable capital
  gains of a taxation year may generally be carried back three years and carried
  forward indefinitely for deduction against taxable capital gains realized in
  those years, to the extent and under circumstances permitted under the Canadian
  Tax Act.

This discussion takes into account specific proposals to amend
  the Canadian Tax Act and the regulations thereunder publicly announced by or
  on behalf of the Minister of Finance (Canada) prior to the date hereof (the
  "Proposed Amendments") and assumes that all such Proposed Amendments will be
  enacted in their present form. No assurances can be given that the Proposed
  Amendments will be enacted in the form proposed, if at all; however the Canadian
  federal income tax considerations generally applicable to security holders described
  herein will not be different in a material adverse way if the Proposed Amendments
  are not enacted.

Except for the foregoing, this discussion does not take into
  account or anticipate any changes in law, whether by legislative, administrative
  or judicial decision or action, nor does it take into account provincial, territorial
  or foreign income tax legislation or considerations, which may differ from the
  Canadian federal income tax considerations described herein.

Generally, shares of the Corporation will not be taxable Canadian
  property at a particular time provided that such shares are listed on a prescribed
  stock exchange (which exchanges currently include the Toronto Stock Exchange),
  the holder does not use or hold, and is not deemed to use or hold, the shares
  of the Corporation in connection with carrying on a business in Canada and the
  holder, persons with whom such holder does not deal at arm's length, or the
  holder and such persons, have not owned (or had under option) 25% or more of
  the issued shares of any class or series of the capital stock of the Corporation
  at any time within five years preceding the particular time.

A holder of shares of the Corporation that are not taxable
  Canadian property will not be subject to tax under the Canadian Tax Act on the
  sale or other disposition of shares.

WHILE INTENDED TO ADDRESS ALL MATERIAL CANADIAN FEDERAL INCOME
  TAX CONSIDERATIONS, THIS SUMMARY IS FOR GENERAL INFORMATION PURPOSES ONLY, AND
  IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE
  TO ANY HOLDER OR PROSPECTIVE HOLDER OF COMMON SHARES. NO OPINION WAS REQUESTED
  BY THE CORPORATION, OR IS PROVIDED BY ITS LEGAL COUNSEL AND/OR AUDITORS. ADDITIONALLY,
  THIS SUMMARY DOES NOT CONSIDER THE EFFECTS OF UNITED STATES FEDERAL, STATE,
  LOCAL OR FOREIGN INCOME TAX CONSEQUENCES.

ACCORDINGLY, HOLDERS AND PROSPECTIVE HOLDERS OF COMMON SHARES
  SHOULD CONSULT THEIR OWN TAX ADVISORS ABOUT THE CONSEQUENCES OF PURCHASING,
  OWNING, AND DISPOSING OF COMMON SHARES OF THE CORPORATION.

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54

Considerations for U.S. holders

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following summarizes the principal Canadian federal income
  tax considerations applicable to the holding and disposition of Common Shares
  of the Corporation by a holder of one or more Common Shares (the "U.S. Holder")
  who is a resident in the United States and holds common shares solely as capital
  property. This summary is based on the Canadian Tax Act, and on the current
  provisions of the Canada - U.S. Income Tax Convention, 1980 (the "Treaty").
  It has been assumed that all currently proposed amendments to the Canadian Tax
  Act will be enacted as proposed and that there is no other relevant change in
  any governing law.

Every U.S. Holder is liable to pay a Canadian withholding
  tax on every dividend that is or is deemed to be paid or credited to the U.S.
  Holder on the U.S. Holder's Common Shares. Under the Treaty, the rate of withholding
  tax is, if the U.S. Holder is a company that owns at least 10% of the voting
  stock of the Corporation and beneficially owns the dividend, 6% in 1996 and
  5% thereafter, and in any other case 15%, of the gross amount of the dividend.

Pursuant to the Canadian Tax Act, a U.S. Holder will not be
  subject to Canadian capital gains tax on any capital gain realized on an actual
  or deemed disposition of a Common Share, including a deemed disposition on death,
  provided either that the U.S. Holder did not hold the Common Share as capital
  property used in carrying on a business in Canada, or that neither the U.S.
  Holder nor persons with whom the U.S. Holder did not deal at arm's length alone
  or together owned 25% or more of the issued shares of any class of the Corporation
  at any time in the five years immediately preceding the disposition.

Subject to certain limited exceptions, a U.S. Holder who otherwise
  would be liable for Canadian capital gains tax in consequence of an actual or
  deemed disposition of a Common Share will generally be exempted for Canadian
  tax under the Treaty. Any holder who is a former resident of Canada may have
  different Canadian tax considerations and should obtain specific tax advice.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following summary is a general discussion of the material
  United States Federal income tax considerations to U.S. holders of shares of
  the Corporation under current law. It does not discuss all the tax consequences
  that may be relevant to particular holders in light of their circumstances or
  to holders subject to special rules, such as tax-exempt organizations, qualified
  retirement plans, financial institutions, insurance companies, real estate investment
  trusts, regulated investment companies, broker-dealers, non-resident alien individuals
  or foreign corporations whose ownership of shares of the Corporation is not
  effectively connected with the conduct of a trade or business in the United
  States, shareholders who acquired their stock through the exercise of employee
  stock options or otherwise as compensation, shareholders who hold their stock
  as ordinary assets and not capital assets and any other non-U.S. holders.

The following discussion is based upon the sections of the
  Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
  published Internal Revenue Service ("IRS") rulings, published administrative
  positions of the IRS and court decisions that are currently applicable, any
  or all of which could be materially and adversely changed, possibly on a retroactive
  basis, at any time. This discussion does not consider the potential effects,
  both adverse and beneficial, of any recently proposed legislation that, if enacted,
  could be applied, possibly on a retroactive basis, at any time. The following
  discussion is not intended to be, nor should it be construed to be, legal or
  tax advice to any holder or prospective holder of shares of the Corporation
  and no opinion or representation with respect to the United States Federal income
  tax consequences to any such holder or prospective holder is made. Accordingly,
  holders and prospective holders of shares of the Corporation should consult
  their own tax advisors about the Federal, state, local, estate and foreign tax
  consequences of purchasing, owning and disposing of shares of the Corporation.

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55

U.S. Holders

As used herein, a "U.S. Holder" includes a holder of shares
  of the Corporation who is a citizen or resident of the United States, a corporation
  created or organized in or under the laws of the United States or of any political
  subdivision thereof, any entity that is taxable as a corporation for U.S. tax
  purposes and any other person or entity whose ownership of shares of the Corporation
  is effectively connected with the conduct of a trade or business in the United
  States. A U.S. Holder does not include persons subject to special provisions
  of Federal income tax law, such as tax exempt organizations, qualified retirement
  plans, financial institutions, insurance companies, real estate investment trusts,
  regulated investment companies, broker-dealers, nonresident alien individuals
  or foreign corporations whose ownership of shares of the Corporation is not
  effectively connected with conduct or trade or business in the United States,
  shareholders who acquired their stock through the exercise of employee stock
  options or otherwise as compensation and shareholders who hold their stock as
  ordinary assets and not as capital assets.

Distributions on Shares of the Corporation

U.S. Holders receiving dividend distributions (including constructive
  dividends) with respect to shares of the Corporation are required to include
  in gross income for United States Federal income tax purposes the gross amount
  of such distributions to the extent that the Corporation has current or accumulated
  earnings and profits as defined under U.S. Federal tax law, without reduction
  for any Canadian income tax withheld from such distributions. Such Canadian
  tax withheld may be credited, subject to certain limitations, against the U.S.
  Holder's United States Federal income tax liability or, alternatively, may be
  deducted in computing the U.S. Holder's United States Federal taxable income
  by those who itemize deductions. (See more detailed discussion at "Foreign Tax
  Credit" below). To the extent that distributions exceed current or accumulated
  earnings and profits of the Corporation, they will be treated first as a return
  of capital up to the U.S. Holder's adjusted basis in the shares and thereafter
  as gain from the sale or exchange of the shares. Preferential tax rates for
  net capital gains are applicable to a U.S. Holder that is an individual, estate
  or trust. There are currently no preferential tax rates for long term capital
  gains for a U.S. Holder that is a corporation.

Dividends paid on the shares of the Corporation will not generally
  be eligible for the dividends received deduction provided to corporations receiving
  dividends from certain United States corporations. A U.S. Holder that is a corporation
  may, under certain circumstances, be entitled to a 70% deduction of the United
  States source portion of dividends received from the Corporation (unless the
  Corporation qualifies as a "foreign personal holding company" or a "passive
  foreign investment company", as defined below) if such U.S. Holder owns shares
  representing at least 10% of the voting power and value of the Corporation.
  The availability of this deduction is subject to several complex limitations
  that are beyond the scope of this discussion.

In the case of foreign currency received as a dividend that
  is not converted by the recipient into U.S. dollars on the date of receipt,
  a U.S. Holder will have a tax basis in the foreign currency equal to its U.S.
  dollar value on the date of receipt. Generally, any gain or loss recognized
  upon a subsequent sale or other disposition of the foreign currency, including
  the exchange for U.S. dollars, will be ordinary income or loss. However, for
  tax years after 1997, an individual whose realized foreign exchange gain does
  not exceed U.S. $200 will not recognize that gain, to the extent that there
  are not expenses associated with the transaction that meet the requirement for
  deductibility as a trade or business expense (other than travel expenses in
  connection with a business trip or as an expense for the production of income).

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions)
  Canadian income tax with respect to the ownership of shares of the Corporation
  may be entitled, at-the option of the U.S. Holder, to either a deduction or
  a tax credit for such foreign tax paid or withheld. Generally, it will be more
  advantageous to claim a credit because a credit reduces United States Federal
  income taxes on a dollar-for-dollar basis, while a deduction merely reduces
  the taxpayer's income subject to tax. This election is made on a year-by-year
  basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder
  during that year.

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56

There are significant and complex limitations that apply to
  the credit, among which is the general limitation that the credit cannot exceed
  the proportionate share of the U.S. Holder's United States Federal income tax
  liability that the U.S. Holder's foreign source income bears to his or its worldwide
  taxable income. In the determination of the application of this limitation,
  the various items of income and deduction must be classified into foreign and
  domestic sources. Complex rules govern this classification process. There are
  further limitations on the foreign tax credit for certain types of income such
  as "passive income", "high withholding tax interest", "financial services income",
  "shipping income", and certain other classifications of income. The availability
  of the foreign tax credit and the application of the limitations on the credit
  are fact specific and holders and prospective holders of shares of the Corporation
  should consult their own tax advisors regarding their individual circumstances.

Disposition of Shares of the Corporation

A U.S. Holder will recognize a gain or loss upon the sale
  of shares of the Corporation equal to the difference, if any, between (i) the
  amount of cash plus the fair market value of any property received, and (ii)
  the shareholder's tax basis in the shares of the Corporation. This gain or loss
  will be a capital gain or loss if the shares are a capital asset in the hands
  of the U.S. Holder, and will be a short-term or long-term capital gain or loss
  depending upon the holding period of the U.S. Holder. Gains and losses are netted
  and combined according to special rules in arriving at the overall capital gain
  or loss for a particular tax year. Deductions for net capital losses are subject
  to significant limitations. Corporate capital losses (other than losses of corporations
  electing under Subchapter S or the Code) are deductible to the extent of capital
  gains. Non-corporate taxpayers may deduct net capital losses, whether short-term
  or long-term, up to U.S. $3,000 a year (U.S. $1,500 in the case of a married
  individual filing separately). For U.S. Holders which are individuals, any unused
  portion of such net capital loss may be carried over to be used in later tax
  years until such net capital loss is thereby exhausted. For U.S. Holders which
  are corporations (other than corporations subject to Subchapter S of the Code),
  an unused net capital loss may be carried back three years from the loss year
  and carried forward five years from the loss year to be offset against capital
  gains until such net capital loss is thereby exhausted.

Other Considerations

In the following circumstances, the above sections of this
  discussion may not describe the United States Federal income tax consequences
  resulting from the holding and disposition of shares of the Corporation:

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the
  total combined voting power or the total value of the Corporation's outstanding
  shares is owned, directly or indirectly, by five or fewer individuals who are
  citizens or residents of the United States and 60% (50% in subsequent years)
  or more of the Corporation's gross income for such year was derived from certain
  passive sources, the Corporation would be treated as a "foreign personal holding
  company". In that event, U.S. Holders that hold shares of the Corporation (on
  the earlier of the last day of the Corporation's tax year or the last date on
  which the Corporation was a foreign personal holding company) would be required
  to include in gross income for such year their allowable portions of such passive
  income to the extent the Corporation does not actually distribute such income.

Foreign Investment Company

If 50% or more of the combined voting power or total value
  of the Corporation's outstanding shares are held, directly or indirectly, by
  citizens or residents of the United States, United States domestic partnerships
  or corporations, or estates or trusts other than foreign estates or trusts (as
  defined by the Code Section 7701 (a)(31)), and the Corporation is found to be
  engaged primarily in the business of investing, reinvesting, or trading in securities,
  commodities, or any interest therein, it is possible that the Corporation might
  be treated as a "foreign investment company" as defined in Section 1246 of the
  Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging
  shares of the Corporation to be treated as ordinary income rather than capital
  gain.

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57

Passive Foreign Investment Company

As a foreign corporation with U.S. Holders, the Corporation
  could potentially be treated as a passive foreign investment company ("PFIC"),
  as defined in Section 1296 of the Code, if 75% or more of its gross income in
  a taxable year is passive income, or the average percentage of the Corporation's
  assets (by value) during the taxable year which produce passive income or which
  are held for production of same is at least 50%. Passive income is generally
  defined to include gross income in the nature of dividends, interest, royalties,
  rents and annuities; excess of gains over losses from certain transactions in
  any commodities not arising inter alia from a PFIC whose business is
  actively involved in such commodities; certain foreign currency gains; and other
  similar types of income. U.S. Holders owning shares of a PFIC are subject to
  an additional tax and to an interest charge based on the value of deferral of
  tax for the period during which the shares of the PFIC are owned, in addition
  to treatment of any gain realized on the disposition of shares of the PFIC as
  ordinary income rather than as a capital gain. However, if the U.S. Holder makes
  a timely election to treat a PFIC as a qualified electing fund ("QEF") with
  respect to such shareholder's interest therein, the above-described rules generally
  will not apply. Instead, the electing U.S. Holder would include annually in
  his gross income his pro rata share of the PFIC's ordinary earnings and any
  net capital gain regardless of whether such income or gain was actually distributed.
  A U.S. Holder of a QEF can, however, elect to defer the payment of United States
  Federal income tax on such income inclusions. Special rules apply to U.S. Holders
  who own their interests in a PFIC through intermediate entities or persons.

Effective for tax years of U.S. Holders beginning after December
  31, 1997, U.S. Holders who hold, actually or constructively, marketable stock
  of a foreign corporation that qualifies as a PFIC may elect to mark such stock
  to the market (a "mark-to-market election"). If such an election is made, such
  U.S. Holder will not be subject to the special taxation rules of PFIC described
  above for the taxable years for which the mark-to-market election is made. A
  U.S. Holder who makes such an election will include in income for the taxable
  year an amount equal to the excess, if any, of the fair market value of the
  shares of the Corporation as of the close of such tax year over such U.S. Holder's
  adjusted basis in such shares. In addition, the U.S. Holder is allowed a deduction
  for the lesser of (i) the excess, if any, of such U.S. Holder's adjusted tax
  basis in the shares over the fair market value of such shares as of the close
  of the tax year, or (ii) the excess, if any of (A) the mark-to-market gains
  for the shares in the Corporation included by such U.S. Holder for prior tax
  years, including any amount which would have been included for any prior year
  but for Section 1291 interest on tax deferral rules discussed above with respect
  to a U.S. Holder, who has not made a timely QEF election during the year in
  which he holds (or is deemed to have held) shares in the Corporation and the
  Corporation is a PFIC ("Non-Electing U.S. Holder"), over (B) the mark-to-market
  losses for shares that were allowed as deductions for prior tax years. A U.S.
  Holder's adjusted tax basis in the shares of the Corporation will be increased
  or decreased to reflect the amount included or deducted as a result of mark-to-market
  election. A mark-to-market election will apply to the tax year for which the
  election is made and to all later tax years, unless the PFIC stock ceases to
  be marketable or the IRS consents to the revocation of the election.

The IRS has issued proposed regulations that, subject to certain
  exceptions, would treat as taxable certain transfers of PFIC stock by a Non-Electing
  U.S. Holder that are generally not otherwise taxed, such as gifts, exchanges
  pursuant to corporate reorganizations, and transfers at death. Generally, in
  such cases, the basis of the Corporation's shares in the hands of the transferee
  and the basis of any property received in the exchange for those shares would
  be increased by the amount of gain recognized. A U.S. Holder who has made a
  timely QEF election (as discussed below) will not be taxed on certain transfers
  of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations,
  and transfers at death. The transferee's basis in this case will depend on the
  manner of the transfer. The specific tax effect to the U.S. Holder and the transferee
  may vary based on the manner in which the shares of the Corporation are transferred.
  Each U.S. Holder should consult a tax advisor with respect to how the PFIC rules
  affect their tax situation.

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58

Shareholder Election

These adverse tax consequences may be avoided, if the U.S.
  Holder has elected to treat the PFIC as a qualified electing fund (a "QEF")
  with respect to that U.S. Holder effective for each of the PFIC's taxable years
  beginning on or after January 1, 1987, which include any portion of the U.S.
  Holder's holding period.

The procedure a U.S. Holder must comply with in making an
  effective QEF election will depend on whether the year of election is the first
  year in the U.S. Holder's holding period in which the Corporation is a PFIC.
  If the U.S. Holder makes a QEF election in such first year (i.e. a timely QEF
  election), then the U.S. Holder may make the QEF election by simply filing the
  appropriate documents at the time the U.S. Holder files his tax return for such
  first year. If, however, the Corporation qualified as a PFIC in a prior year,
  then in addition to filing documents, the U.S. Holder must generally recognize
  gain as if it had sold the QEF stock on the first day of the taxable year in
  which the QEF election is made, if (i) the U.S. Holder holds stock in the PFIC
  on that day, and (ii) the U.S. Holder can establish the fair market value of
  the PFIC stock on that day. The U.S. Holder will treat that deemed sale transaction
  as a disposition of PFIC stock and will, thereafter, be subject to the rules
  described below applicable to U.S. shareholders of a QEF.

In general, U.S. shareholders of a QEF are taxable currently
  on their pro rata share of the QEF's ordinary income and net capital gain regardless
  of whether such income or gain was actually distributed. A U.S. Holder of a
  QEF can, however, elect to defer the payment of United States Federal income
  tax on such income inclusions.

Mark to Market Election

Effective for tax years of U.S. Holders beginning after December
  31, 1997, U.S. Holders who hold, actually or constructively, marketable stock
  of a foreign corporation that qualifies as a PFIC may elect to mark such stock
  to the market (a "mark-to-market election"). If such an election is made, such
  U.S. Holder will not be subject to the special taxation rules of PFIC described
  above for the taxable years for which the mark-to-market election is made. A
  U.S. Holder who makes such an election will include in income for the taxable
  year an amount equal to the excess, if any, of the fair market value of the
  shares of the Corporation as of the close of such tax year over such U.S. Holder's
  adjusted basis in such shares. In addition, the U.S. Holder is allowed a deduction
  for the lesser of (i) the excess, if any, of such U.S. Holder's adjusted tax
  basis in the shares over the fair market value of such shares as of the close
  of the tax year, or (ii) the excess, if any of (A) the mark-to-market gains
  for the shares in the Corporation included by such U.S. Holder for prior tax
  years, including any amount which would have been included for any prior year
  but for Section 1291 interest on tax deferral rules discussed above with respect
  to a U.S. Holder, who has not made a timely QEF election during the year in
  which he holds (or is deemed to have held) shares in the Corporation and the
  Corporation is a PFIC ("Non-Electing U.S. Holder"), over (B) the mark-to-market
  losses for shares that were allowed as deductions for prior tax years. A U.S.
  Holder's adjusted tax basis in the shares of the Corporation will be increased
  or decreased to reflect the amount included or deducted as a result of mark-to-market
  election. A mark-to-market election will apply to the tax year for which the
  election is made and to all later tax years, unless the PFIC stock ceases to
  be marketable or the IRS consents to the revocation of the election.

The PFIC and QEF election rules are complex. U.S. Holders
  should consult a tax advisor regarding the availability and procedure for making
  the QEF election as well as the applicable method for recognizing gains or earnings
  and profits under the foregoing rules.

Controlled Foreign Corporation

If more than 50% of the voting power of all classes of stock
  or the total value of the stock of the Corporation is owned, directly or indirectly,
  by citizens or residents of the United States, United States domestic partnerships
  and corporations or estates or trusts other than foreign estates or trusts,
  each of whom own 10% or more of the total combined voting power of all classes
  of stock of the Corporation

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59

("United States shareholder"), the Corporation could be treated
  as a "controlled foreign corporation" under Subpart F of the Code. This classification
  would effect many complex results including the required inclusion by such United
  States shareholders in income of their pro rata share of "Subpart F income"
  (as specially defined by the Code) of the Corporation. If the Corporation is
  both a PFIC and controlled foreign corporation. The Corporation will generally
  not be treated as a PFIC with respect to United States shareholders of the controlled
  foreign corporation. This rule generally will be effective for taxable years
  of the Corporation ending with or within such taxable years of United States
  shareholders. In addition, under Section 1248 of the Code, a gain from the sale
  or exchange of shares by a U.S. Holder who is or was a United States shareholder
  at any time during the five year period ending with the sale or exchange is
  treated as ordinary dividend income to the extent of earnings and profits of
  the Corporation attributable to the stock sold or exchanged. Because of the
  complexity of Subpart F, and because it is not clear that Subpart F would apply
  to the U.S. Holders of shares of the Corporation, a more detailed review of
  these rules is outside of the scope of this discussion.

F. Dividends and Paying Agents

Not applicable

G. Statement by Experts

Not applicable

H. Documents on Display

The documents described herein may be inspected at the head
  office of Corporation at 4  1200 Waverley Street, Winnipeg, Manitoba,
  Canada R3T 0P4, during normal business hours.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
  MARKET RISK

INTEREST RATE RISK

The primary objective of the Corporation's investment activities
  is to preserve principal by maximizing the income the Corporation receives from
  such activities without significantly increasing risk. Securities that the Corporation
  invests in are generally highly liquid short-term investments such as term deposits
  with terms to maturity of less than one year.

Due to the short-term nature of these investments, the Corporation
  believes there is no material exposure to interest rate risk arising from such
  investments and accordingly, no quantitative tabular disclosure is required.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS ANDUSE OF PROCEEDS

Not applicable

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60

ITEM 15. CONTROLS AND PROCEDURES

The Corporation carried out an evaluation, under the supervision
  and with the participation of the Corporation's management, including the Corporation's
  chief executive officer and its chief financial officer, of the effectiveness
  of the design and operation of the Corporation's disclosure controls and procedures
  pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Corporation's
  chief executive officer and its chief financial officer concluded that the Corporation's
  disclosure controls and procedures as of a date that is within 90 days of the
  date of filing of this Form 20-F are effective in alerting, on a timely basis,
  material information relating to the Corporation that is to be publicly disclosed.

There have been no significant changes in the Corporation's
  internal controls or in other factors, which could significantly affect internal
  controls subsequent to the date the Corporation carried out its evaluation,
  other than those being undertaken to increase the effectiveness of controls
  as discussed above.

ITEM 16. RESERVED

Not applicable

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

As of May 31, 2004, Dr. William A. Cochrane, a non-employee
  director, was a member of the audit committee of the Corporation. The board
  of directors of the Corporation has determined that Dr. Cochrane (i) qualifies
  as an audit committee financial expert pursuant to Items 16A(b) and (c) of Form
  20-F and (ii) is independent as defined by Rule 121A of the Amex Company Guide
  and Rule 10A-3 of the Exchange Act.

ITEM 16B. CODE OF ETHICS

On August 23, 2004, the Corporation adopted a written Code
  of Business Conduct and Ethics ("Code of Ethics") that applies to the Corporation's
  principal executive officer, principal financial officer and to all its other
  employees. These standards are a guide to help ensure that all of the Corporation's
  employees live up to high ethical standards. A copy of the Code of Ethics is
  maintained on the Corporation's website at www.medicureinc.com.

The Corporation intends to disclose any amendment to or waiver
  from any provision in the Code of Ethics, that has occurred during the past
  fiscal year and that applies to the principal executive officer, principal financial
  officer, principal accounting officer or controller, or persons performing similar
  functions, either in its Exchange Act annual report or on the Corporation's
  Internet website.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

In accordance with the requirements of the Sarbanes-Oxley
  Act of 2002 and the Audit Committee's charter, all audit and audit-related work
  and all non-audit work performed by the chartered accountants, KPMG LLP, is
  approved in advance by the Audit Committee, including the proposed fees for
  such work. The Audit Committee is informed of each service actually rendered
  that was approved through its pre-approval process.

|(a)     Audit fees         | 2004    | 2003    | 
|-------------------------- | ------- | ------- | 
|                           | $31,545 | $23,155 | 
|                           |         |         | 
|(b)     Audit-related fees | 2004    | 2003    | 
|                           | $ -     | $ -     | 

(c)     Tax fees -No compensation was paid to
  KPMG for tax compliance, tax advice and tax planning in fiscal 2004 or 2003.

---

61

|(d)All other fees | 2004   | 2003 | 
|----------------- | ------ | ---- | 
|                  | $1,000 | $ -  | 

PART III

ITEM 17. FINANCIAL STATEMENTS

The consolidated financial statements were prepared in accordance
  with Canadian GAAP and are presented in Canadian dollars. There are material
  measurement differences between United States and Canadian GAAP. A reconciliation
  of the consolidated financial statements to United States GAAP is set forth
  in Note 9 of the notes to the consolidated financial statements.

The consolidated financial statements are in the following
  order:

| | 1. | Auditors' Reports;                                      
| | -- | --------------------------------------------------------
| | 2. | Consolidated Balance Sheets;                            
| | 3. | Consolidated Statements of Operations
      and Deficit;
| | 4. | Consolidated Statements of Cash Flows; and              
| | 5. | Notes to Consolidated Financial
      Statements.       

---

62







Consolidated Financial Statements of

MEDICURE INC.
  (A Development Stage Enterprise)

Years ended May 31, 2004, 2003 and 2002





---

63

AUDITORS' REPORT

To the Directors of Medicure Inc.

We have audited the consolidated balance sheets of Medicure
  Inc. (a Development Stage Enterprise) as at May 31, 2004 and 2003 and the consolidated
  statements of operations and deficit and cash flows for each of the years in
  the three year period ended May 31, 2004 and for the cumulative period from
  inception on September 15, 1997 to May 31, 2004. 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 audits. The cumulative
  statements of operations and deficit and cash flows for the period from September
  15, 1997 to May 31, 2004 include amounts for the period from September 15, 1997
  to August 31, 1999, which were audited by another auditor whose report has been
  furnished to us, and our opinion on the cumulative amounts, insofar as it relates
  to amounts included for the period from September 15, 1997 to August 31, 1999,
  is based solely on the report of the other auditor.

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

In our opinion, based on our audit, these consolidated financial
  statements present fairly, in all material respects, the financial position
  of the company as at May 31, 2004 and 2003 and the results of its operations
  and its cash flows for each of the years in the three year period ended May
  31, 2004 and for the cumulative period from inception on September 15, 1997
  to May 31, 2004 in accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in
  certain significant respects from accounting principles generally accepted in
  the United States of America. Information relating to the nature and effect
  of such differences is presented in note 9 to the consolidated financial statements.

Chartered Accountants 
  Winnipeg, Canada 
  July 22, 2004

COMMENTS BY AUDITORS ON CANADA-U.S. REPORTING
  DIFFERENCE

In the United States, reporting standards for auditors require
  the addition of an explanatory paragraph (following the opinion paragraph) when
  there is a change in accounting principles that has a material effect on the
  comparability of the company's financial statements, such as the change described
  in note 2(f) to the consolidated financial statements. Our report to the directors
  dated July 22, 2004 is expressed in accordance with Canadian reporting standards
  which do not require a reference to such changes in accounting principles in
  the auditors' report when the changes are properly accounted for and adequately
  disclosed in the financial statements.



Chartered Accountants 
  Winnipeg, Canada 
  July 22, 2004

---

64

MEDICURE INC.
  (A Development Stage Enterprise)

Consolidated Balance Sheets 
  (Expressed in Canadian dollars)

|                                                       |   | May 31,     |   |   | May 31,     |  
|------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                       |   | 2004        |   |   | 2003        |  
|                                                       |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Assets                                                 |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Current assets:                                        |   |             |   |   |             |  
|Cash
      and cash equivalents                        | $ | 19,954,386  |   | $ | 4,130,456   |  
|Accounts
      receivable                              |   | 278,097     |   |   | 79,544      |  
|Research
      advance (note 6)                        |   | 200,000     |   |   | 200,000     |  
|Prepaid expenses                                       |   | 910,337     |   |   | 55,048      |  
|                                                       |   | 21,342,820  |   |   | 4,465,048   |  
|                                                       |   |             |   |   |             |  
|Property and equipment (note 3)                        |   | 66,202      |   |   | 67,497      |  
|                                                       |   |             |   |   |             |  
|Patent costs, net of accumulated amortization of       |   |             |   |   |             |  
|$71,981 (2003
      - $54,002)                         |   | 976,690     |   |   | 763,464     |  
|                                                       |   |             |   |   |             |  
|                                                       | $ | 22,385,712  |   | $ | 5,296,009   |  
|                                                       |   |             |   |   |             |  
|Liabilities and Shareholders' Equity                   |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Current liabilities:                                   |   |             |   |   |             |  
|Accounts
      payable and accrued liabilities         | $ | 817,575     |   | $ | 353,908     |  
|                                                       |   |             |   |   |             |  
|Shareholders' equity:                                  |   |             |   |   |             |  
|Capital
      stock (note 4):                          |   |             |   |   |             |  
|Authorized:                                            |   |             |   |   |             |  
|Unlimited
      number of common voting shares         |   |             |   |   |             |  
|Unlimited
      number of class A common voting shares |   |             |   |   |             |  
|Unlimited
      number of preferred shares             |   |             |   |   |             |  
|Issued:                                                |   |             |   |   |             |  
|66,646,660
      common voting shares                  |   |             |   |   |             |  
|(2003
      - 38,509,864)                              |   | 39,731,296  |   |   | 17,502,222  |  
|Contributed
      surplus [note 4(c)]                  |   | 491,423     |   |   | 105,375     |  
|Deficit accumulated
      during the development stage |   | (18,654,582 | ) |   | (12,665,496 | )
|                                                       |   | 21,568,137  |   |   | 4,942,101   |  
|                                                       |   |             |   |   |             |  
|Nature of operations (note 1)                          |   |             |   |   |             |  
|Commitments (note 6)                                   |   |             |   |   |             |  
|                                                       | $ | 22,385,712  |   | $ | 5,296,009   |  

See accompanying notes to consolidated financial statements.

---

65

MEDICURE INC.
  (A Development Stage Enterprise)

Consolidated Statements of Operations and Deficit
  (Expressed in Canadian dollars)

|                                                         |   |             |   |   |             |   |   |            |   |  |   | Cumulative from |  
|-------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | - |  | - | --------------- | -
|                                                         |   |             |   |   |             |   |   |            |   |  |   | inception on    |  
|                                                         |   | Year ended  |   |   | Year ended  |   |   | Year ended |   |  |   | September 15,   |  
|                                                         |   | May 31,     |   |   | May 31,     |   |   | May 31,    |   |  |   | 1997 to         |  
|                                                         |   | 2004        |   |   | 2003        |   |   | 2002       |   |  |   | May 31, 2004    |  
|                                                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Revenue:                                                 |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Interest
      and other income                          | $ | 445,461     |   | $ | 241,281     |   | $ | 183,912    |   |  | $ | 1,088,020       |  
|                                                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Expenses:                                                |   |             |   |   |             |   |   |            |   |  |   |                 |  
|General
      and administrative                         |   | 2,114,875   |   |   | 1,284,225   |   |   | 949,569    |   |  |   | 5,752,472       |  
|Research
      and                                       |   |             |   |   |             |   |   |            |   |  |   |                 |  
|development
      (note 6)                               |   | 4,278,667   |   |   | 3,117,619   |   |   | 3,103,707  |   |  |   | 14,277,551      |  
|Research
      and development -                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|government
      assistance                              |   |            |   |   |            |   |   | (54,782    | ) |  |   | (261,741        | )
|Research
      and development -                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|investment
      tax credit                              |   |            |   |   |            |   |   |           |   |  |   | (188,312        | )
|Amortization                                             |   | 41,005      |   |   | 33,125      |   |   | 60,505     |   |  |   | 162,632         |  
|                                                         |   | 6,434,547   |   |   | 4,434,969   |   |   | 4,058,999  |   |  |   | 19,742,602      |  
|                                                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Loss for the period                                      |   | (5,989,086  | ) |   | (4,193,688  | ) |   | (3,875,087 | ) |  |   | (18,654,582     | )
|                                                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Deficit accumulated during the                           |   |             |   |   |             |   |   |            |   |  |   |                 |  
|development
      stage,                                 |   |             |   |   |             |   |   |            |   |  |   |                 |  
|beginning of
      period                                |   | (12,665,496 | ) |   | (8,471,808  | ) |   | (4,596,721 | ) |  |   |                |  
|                                                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Deficit accumulated during                               |   |             |   |   |             |   |   |            |   |  |   |                 |  
|the
      development stage,                             |   |             |   |   |             |   |   |            |   |  |   |                 |  
|end of period                                            | $ | (18,654,582 | ) | $ | (12,665,496 | ) | $ | (8,471,808 | ) |  | $ | (18,654,582     | )
|                                                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Basic and diluted loss per                               |   |             |   |   |             |   |   |            |   |  |   |                 |  
|share                                                    | $ | (0.11       | ) | $ | (0.11       | ) | $ | (0.14      | ) |  |   |                 |  
|                                                         |   |             |   |   |             |   |   |            |   |  |   |                 |  
|Weighted average number of common shares                 |   |             |   |   |             |   |   |            |   |  |   |                 |  
|used in computing
      basic and diluted loss per share |   | 55,738,716  |   |   | 37,118,889  |   |   | 27,900,412 |   |  |   |                 |  

See accompanying notes to consolidated financial statements.

---

66

MEDICURE INC.
  (A Development Stage Enterprise)

Consolidated Statements of Cash Flows
  (Expressed in Canadian dollars)

|                                                     |   |            |   |   |            |   |   |            |   |  |   | Cumulative from |  
|---------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | - |  | - | --------------- | -
|                                                     |   |            |   |   |            |   |   |            |   |  |   | inception on    |  
|                                                     |   | Year ended |   |   | Year ended |   |   | Year ended |   |  |   | September 15,   |  
|                                                     |   | May 31,    |   |   | May 31,    |   |   | May 31,    |   |  |   | 1997 to         |  
|                                                     |   | 2004       |   |   | 2003       |   |   | 2002       |   |  |   | May 31, 2004    |  
|                                                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Cash provided by (used in):                          |   |            |   |   |            |   |   |            |   |  |   |                 |  
|                                                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Operating activities:                                |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Loss
      for the period                            | $ | (5,989,086 | ) | $ | (4,193,688 | ) | $ | (3,875,087 | ) |  | $ | (18,654,582     | )
|Adjustments
      for:                               |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Amortization
      of property and                   |   |            |   |   |            |   |   |            |   |  |   |                 |  
|equipment                                            |   | 23,026     |   |   | 22,270     |   |   | 17,358     |   |  |   | 90,651          |  
|Amortization
      of patent costs                   |   | 17,979     |   |   | 10,855     |   |   | 43,147     |   |  |   | 71,981          |  
|Stock-based
      compensation                       |   | 386,048    |   |   | 105,375    |   |   |           |   |  |   | 491,423         |  
|Change
      in the following:                       |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Accounts
      receivable                            |   | (198,553   | ) |   | 72,881     |   |   | (82,886    | ) |  |   | (253,451        | )
|Prepaid
      expenses                               |   | (855,289   | ) |   | 34,827     |   |   | (89,875    | ) |  |   | (910,337        | )
|Research
      advance                               |   |           |   |   |           |   |   |           |   |  |   | (200,000        | )
|Investment
      tax credit receivable               |   |           |   |   |           |   |   |           |   |  |   | 35,770          |  
|Accounts
      payable and                           |   |            |   |   |            |   |   |            |   |  |   |                 |  
|accrued
      liabilities                            |   | 463,667    |   |   | (35,755    | ) |   | (180,414   | ) |  |   | 793,266         |  
|                                                     |   | (6,152,208 | ) |   | (3,983,235 | ) |   | (4,167,757 | ) |  |   | (18,535,279     | )
|                                                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Investing activities:                                |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Acquisition
      of property and equipment (21,731) |   |            |   |   | (5,196     | ) |   | (37,988    | ) |  |   | (156,853        | )
|Cash
      of acquired business at                   |   |            |   |   |            |   |   |            |   |  |   |                 |  
|acquisition                                          |   |           |   |   |           |   |   |           |   |  |   | 727,005         |  
|Patent costs                                         |   | (231,205   | ) |   | (265,417   | ) |   | (238,961   | ) |  |   | (1,028,063      | )
|                                                     |   | (252,936   | ) |   | (270,613   | ) |   | (276,949   | ) |  |   | (457,911        | )
|Financing activities:                                |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Issuance
      of common shares,                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|net
      of share issue costs                       |   | 22,229,074 |   |   | 43,286     |   |   | 9,010,252  |   |  |   | 38,248,912      |  
|Change in due
      to related parties               |   |           |   |   |           |   |   |           |   |  |   | 698,664         |  
|                                                     |   | 22,229,074 |   |   | 43,286     |   |   | 9,010,252  |   |  |   | 38,947,576      |  
|                                                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Increase (decrease) in cash and cash                 |   |            |   |   |            |   |   |            |   |  |   |                 |  
|equivalents                                          |   | 15,823,930 |   |   | (4,210,562 | ) |   | 4,565,546  |   |  |   | 19,954,386      |  
|                                                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Cash and cash equivalents, beginning                 |   |            |   |   |            |   |   |            |   |  |   |                 |  
|of period                                            |   | 4,130,456  |   |   | 8,341,018  |   |   | 3,775,472  |   |  |   |                |  
|                                                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Cash and cash equivalents, end of                    |   |            |   |   |            |   |   |            |   |  |   |                 |  
|period                                               | $ | 19,954,386 |   | $ | 4,130,456  |   | $ | 8,341,018  |   |  | $ | 19,954,386      |  
|                                                     |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Non-cash transactions:                               |   |            |   |   |            |   |   |            |   |  |   |                 |  
|Interest
      paid during the period                | $ |           |   | $ |           |   | $ |           |   |  | $ | 10,306          |  
|Value
      assigned to shares issued                |   |            |   |   |            |   |   |            |   |  |   |                 |  
|as
      consideration for acquisition               |   |            |   |   |            |   |   |            |   |  |   |                 |  
|of
      Medicure, net of cash acquired              |   |            |   |   |            |   |   |            |   |  |   |                 |  
|of
      $727,005                                    |   |           |   |   |           |   |   |           |   |  |   | 755,379         |  

See accompanying notes to consolidated financial statements.

---

67

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|1. | Nature of operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The company is engaged in the discovery
        and development of cardiovascular therapeutics and is currently in the
        research and development phase of its lead product, MC-1. To date, the
        company has no products currently in commercial production or use. Accordingly,
        the company is considered to be a development stage enterprise for accounting
        purposes. Since September 15, 1997, the date of inception of the company
        through to May 31, 2004, the company has expended approximately $13,827,000,
        net of government assistance and investment tax credits, which aggregate
        approximately $450,000, on the research and development of MC-1 and other
        compounds.
|  
|   | To date, the company has financed its
        cash requirements primarily through share issuances, investment tax credits,
        government grants and interest income. The success of the company is dependent
        on its ability to obtain sufficient funds to conduct its clinical trials
        and to successfully commercialize its products.                                                                                                                                                                                                                                                                                                                                                                                     
|  
|2. | Significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

---

68

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|  
|   | (c)                                         
|  
|   |                                             

| |  | Asset                  | Basis               | Rate
| |  | ---------------------- | ------------------- | ----
| |  |                        |                     |     
| |  | Computer equipment     | Straight-line       | 25% 
| |  | Office equipment       | Diminishing balance | 20% 
| |  | Scientific equipment   | Diminishing balance | 20% 
| |  | Leasehold improvements | Straight-line       | 20% 



| | (d) | Patents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     | Costs incurred in obtaining patents are capitalized
        and amortized upon issuance on a straight- line basis over the remaining
        legal life of the respective patents, being approximately twenty years,
        or their economic life, if shorter. The cost of servicing the company's
        patents is expensed as incurred.                                                                                                                                                                                                                                                                                                                                       
|
| | (e) | Impairment of long-lived assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     | On a regular basis, management reviews the valuation
        of long-lived assets, which includes property and equipment and patent
        costs, taking into consideration any events and circumstances which may
        impact recoverable value. Section 3063 of the CICA Handbook, Impairment
        of Long-Lived Assets, effective for fiscal 2004, prescribes revised
        and more rigorous principles for the recognition, measurement and disclosure
        of any impairment of long- lived assets. Management has reviewed the carrying
        value of the long-lived assets using this amended guidance and determined
        no impairment currently exists.
|
| | (f) | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     | The company has a stock option plan [note 4(c)]
        for its directors, management, consultants and employees. During fiscal
        2004, the company adopted the new recommendations of the CICA Handbook
        Section 3870, Stock-based Compensation and Other Stock-based Paymentsfor awards granted under its stock option plan to directors, management
        and employees, effective June 1, 2003. The company had previously adopted
        the recommendations, as required, for awards granted under its stock option
        plan to non-employees effective June 1, 2002.                                                                                     

---

69

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|2. | Significant accounting policies (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | This standard and the amendments require
        that the fair value method of accounting for stock- based compensation
        is used to account for all awards of stock or stock options and compensation
        cost is recognized over the vesting period of the options. The fair value
        of direct awards is determined based on the quoted market price of the
        company's common shares and the fair value of stock options and other
        stock-based payments is determined using the Black- Scholes option pricing
        model. For stock options granted to June 1, 2003, no compensation expense
        was recognized for the stock option plan when stock or stock options were
        issued to employees, management and directors. There were no stock options
        issued to employees, management and directors during fiscal 2003. As permitted,
        the company has applied this change prospectively, accordingly, results
        from prior years have not been restated.
|  
|   | For the year ended May 31, 2004, the adoption
        of this new recommendation resulted in an increase in the loss for the
        year of $181,603 and an offsetting increase to contributed surplus due
        to the recognition of the fair value of options granted to employees,
        from that which would have been otherwise recognized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | (h)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

70

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|  
|   | (i)                                         
|  
|   |                                             
|  
|   | (j)                                         
|  
|   |                                             
|  
|   | (k)                                         
|  
|   |                                             

---

71

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|2. | Significant accounting policies (continued):
|-- | --------------------------------------------
|  
|   | (l)                                         
|  
|   |                                             
|  
|3. | Property and equipment:                     

| |                        |   |         |  |   | Accumulated  |  |   | Net book | 
| | ---------------------- | - | ------- |  | - | ------------ |  | - | -------- | 
| | May 31, 2004           |   | Cost    |  |   | amortization |  |   | value    | 
| |                        |   |         |  |   |              |  |   |          | 
| | Computer equipment     | $ | 60,924  |  | $ | 40,045       |  | $ | 20,879   | 
| | Office equipment       |   | 13,415  |  |   | 4,664        |  |   | 8,751    | 
| | Scientific equipment   |   | 63,822  |  |   | 39,092       |  |   | 24,730   | 
| | Leasehold improvements |   | 18,693  |  |   | 6,851        |  |   | 11,842   | 
| |                        | $ | 156,854 |  | $ | 90,652       |  | $ | 66,202   | 
| |                        |   |         |  |   |              |  |   |          | 
| |                        |   |         |  |   |              |  |   |          | 
| |                        |   |         |  |   |              |  |   |          | 
| |                        |   |         |  |   | Accumulated  |  |   | Net book | 
| | May 31, 2003           |   | Cost    |  |   | amortization |  |   | value    | 
| |                        |   |         |  |   |              |  |   |          | 
| | Computer equipment     | $ | 45,767  |  | $ | 27,465       |  | $ | 18,302   | 
| | Office equipment       |   | 9,817   |  |   | 3,265        |  |   | 6,552    | 
| | Scientific equipment   |   | 63,822  |  |   | 33,375       |  |   | 30,447   | 
| | Leasehold improvements |   | 15,718  |  |   | 3,522        |  |   | 12,196   | 
| |                        | $ | 135,124 |  | $ | 67,627       |  | $ | 67,497   | 

|4. | Capital stock:
|-- | --------------
|  
|   | (a)           
|  
|   |               

---

72

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|4. | Capital stock (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | As of March 1, 2003, all of the issued
        and outstanding class A common shares - totaling 1,280,000 shares - were
        converted into common shares of the company on the basis of one common
        share for each class A common share in accordance with the company's Articles
        of Continuance. The class A common voting shares were identical in all
        respects to the common voting shares, except that the holders were eligible
        for the Manitoba Equity Tax Credit until February 28, 2003.
|  
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |  |                                                   | Number of shares |   |   | Amount     | 
| |  | ------------------------------------------------- | ---------------- | - | - | ---------- | 
| |  |                                                   |                  |   |   |            | 
| |  | Common shares:                                    |                  |   |   |            | 
| |  |                                                   |                  |   |   |            | 
| |  | Balance at May 31, 2001                           | 21,717,641       |   | $ | 7,069,057  | 
| |  | Private placement for cash on June 14, 2001, at   |                  |   |   |            | 
| |  | $1.00 per share                                   | 200,000          |   |   | 200,000    | 
| |  | Exercise of options for cash                      | 8,333            |   |   | 6,250      | 
| |  | Shares returned to treasury                       | (221,725         | ) |   |           | 
| |  | Public offering for cash on December 20, 2001 and |                  |   |   |            | 
| |  | January 31, 2002 at $0.65 per share, net of share |                  |   |   |            | 
| |  | issue costs of $1,195,998                         | 15,384,615       |   |   | 8,804,002  | 
| |  | Balance at May 31, 2002                           | 37,088,864       |   |   | 16,079,309 | 
| |  |                                                   |                  |   |   |            | 
| |  | Exercise of options for cash                      | 126,000          |   |   | 25,200     | 
| |  | Refund of portion of share issue costs            |                 |   |   | 5,936      | 
| |  | Exercise of warrants for cash                     | 15,000           |   |   | 12,150     | 
| |  | Conversion of class A common shares               | 1,280,000        |   |   | 1,379,627  | 
| |  | Balance at May 31, 2003                           | 38,509,864       |   |   | 17,502,222 | 
| |  |                                                   |                  |   |   |            | 
| |  | Private placement for cash on June 26, 2003       |                  |   |   |            | 
| |  | net of
      share issue costs of $608,960        | 8,997,632        |   |   | 7,039,408  | 
| |  | Exercise of warrants for cash                     | 18,464,164       |   |   | 14,692,251 | 
| |  | Exercise of options for cash                      | 675,000          |   |   | 497,415    | 
| |  | Balance at May 31, 2004                           | 66,646,660       |   |   | 39,731,296 | 

---

73

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|4. | Capital stock (continued):
|-- | --------------------------
|  
|   | (c)                       
|  
|   |                           
|  
|   |                           

| |  |                                  | 2004      |   | 2003 |                     
| |  | -------------------------------- | --------- | - | ---- | --------------------
| |  |                                  |           |   |      | Weighted            
| |  |                                  |           |   |      | average             
| |  |                                  | Shares    |   |      | exercise
      price
| |  |                                  |           |   |      |                     
| |  | Balance, beginning of   year     | 2,137,033 |   | $    | 0.85                
| |  | Granted                          | 935,000   |   |      | 1.44                
| |  | Exercised                        | (675,000  | ) |      | 0.74                
| |  | Cancelled or expired             | (90,000   | ) |      | 1.18                
| |  | Balance, end of year             | 2,307,033 |   | $    | 1.11                
| |  |                                  |           |   |      |                     
| |  | Options exercisable, end of year |           |   |      | 1,327,032           

| |  | Options outstanding at May 31, 2004 consist of the following:
| |  | -------------------------------------------------------------

| |  | Range of |             |           | Weighted
      average |           |  | Options outstanding |      |             |          
| |  | -------- | ----------- | --------- | ---------------------- | --------- |  | ------------------- | ---- | ----------- | ---------
| |  | exercise | Number      |           | remaining              |           |  | weighted average    |      | Number      |          
| |  | prices   | outstanding |           | contractual
      life |           |  | exercise price      |      | exercisable |          
| |  |          |             |           |                        |           |  |                     |      |             |          
| |  | $        | 0.65 - 1.65 | 2,097,033 |                        | 2.7 years |  | $                   | 1.01 |             | 1,117,032
| |  |          | 1.96 - 2.45 | 210,000   |                        | 2.7 years |  |                     | 2.10 |             | 210,000  
| |  |          |             |           |                        |           |  |                     |      |             |          
| |  |          |             | 2,307,033 |                        | 2.7 years |  | $                   | 1.11 |             | 1,327,032

---

74

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|4. | Capital stock (continued):
|-- | --------------------------
|  
|   |                           

| |  |                         | 2004    |  | 2003    | 
| |  | ----------------------- | ------- |  | ------- | 
| |  |                         |         |  |         | 
| |  | Expected option life    | 5 years |  | 5 years | 
| |  | Risk-free interest rate | 3.89%   |  | 4.81%   | 
| |  | Dividend yield          |        |  |        | 
| |  | Expected volatility     | 77.30%  |  | 81.18%  | 
| |  |                         |         |  |         | 



| |     | The cost of stock-based payments that are fully vested and non-forfeitable
      at the grant date is measured and recognized at that date. For awards that
      vest at the end of the vesting period, compensation cost is recognized on
      a straight-line basis over the vesting period. For awards that vest on a
      graded basis, compensation cost is recognized on a pro rata basis over the
      vesting period.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (d) | Warrants:                                                                                                                                                                                                                                                                                                                                                                                                                        

| |  |                            |  |            |  | Exercise     |  |            |  | Granted      |  |            |  | Granted      |  |        
| |  | -------------------------- |  | ---------- |  | ------------ |  | ---------- |  | ------------ |  | ---------- |  | ------------ |  | -------
| |  | Issuee                     |  | Original   |  | price        |  | May 31,    |  | (Exercised)  |  | May 31,    |  | (Exercised)  |  | May 31,
| |  | (Expiry date)              |  | granted    |  | per share    |  | 2002       |  | (Cancelled)* |  | 2003       |  | (Cancelled)* |  | 2004   
| |  |                            |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  |                            |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | 18,461,537 warrants        |  | 18,461,537 |  | $0.65 - 0.81 |  | 18,461,537 |  | (15,000)     |  | 18,446,537 |  | (18,336,733) |  |       
| |  | (December 20, 2003)        |  |            |  |              |  |            |  |              |  |            |  | (109,804)*   |  |        
| |  |                            |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | Private placements:        |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | 1,360,000 units            |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | (August 31, 2002)          |  | 1,360,000  |  | 1.05 - 1.15  |  | 1,360,000  |  | (1,360,000)* |  |           |  |             |  |       
| |  |                            |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | 120,000 units              |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | (September 14,
      2002) |  | 120,000    |  | 1.00 - 1.15  |  | 120,000    |  | (120,000)*   |  |           |  |             |  |       
| |  |                            |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | 629,834 units              |  |            |  |              |  |            |  |              |  |            |  |              |  |        
| |  | (June 26, 2005)            |  | 629,834    |  | 1.00         |  |           |  |             |  |           |  | 629,834      |  | 502,403
| |  |                            |  |            |  |              |  |            |  |              |  |            |  | (127,431)    |  |        
| |  |                            |  |            |  |              |  |            |  |              |  |            |  |              |  |        

| |  | The warrants were all issued together with common
        shares either under prospectus offerings or private placements with the
        fair value of the consideration received under the offerings allocated
        to the common shares issued.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

75

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|4. | Capital stock (continued):                                                                     
|-- | -----------------------------------------------------------------------------------------------
|  
|   | (e)                                                                                            
|  
|   |                                                                                                
|  
|5. | Income taxes:                                                                                  
|  
|   | Significant components of the company's future tax assets and
      liabilities are as follows:

| |                                                    |   | 2004       |   |   | 2003       |  
| | -------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                    |   |            |   |   |            |  
| | Future tax assets:                                 |   |            |   |   |            |  
| | Research and development
      expenses deductible |   |            |   |   |            |  
| | in future periods for income tax purposes          | $ | 197,000    |   | $ | 226,000    |  
| | Investment tax credits                             |   | 76,000     |   |   | 76,000     |  
| | Share
      issue costs                            |   | 394,000    |   |   | 370,000    |  
| | Operating losses carried
      forward             |   | 2,240,000  |   |   | 1,773,000  |  
| | Other                                              |   | 93,000     |   |   | 102,000    |  
| |                                                    |   | 3,000,000  |   |   | 2,547,000  |  
| |                                                    |   |            |   |   |            |  
| | Less valuation allowance                           |   | (3,000,000 | ) |   | (2,547,000 | )
| |                                                    |   |            |   |   |            |  
| |                                                    | $ |           |   | $ |           |  

---

76

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|5. | Income taxes (continued):                                                                           
|-- | ----------------------------------------------------------------------------------------------------
|  
|   | The reconciliation of the Canadian statutory rate
        to the income tax provision is as follows:

| |                                               |   | Year ended |   |   | Year ended |   |   | Year ended |  
| | --------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                               |   | May 31,    |   |   | May 31,    |   |   | May 31,    |  
| |                                               |   | 2004       |   |   | 2003       |   |   | 2002       |  
| |                                               |   |            |   |   |            |   |   |            |  
| | Loss for the year:                            |   |            |   |   |            |   |   |            |  
| | Canadian                                      | $ | 1,633,921  |   | $ | 991,657    |   | $ | 805,270    |  
| | Foreign                                       |   | 4,355,165  |   |   | 3,202,031  |   |   | 3,069,817  |  
| |                                               | $ | 5,989,086  |   | $ | 4,193,688  |   | $ | 3,875,087  |  
| |                                               |   |            |   |   |            |   |   |            |  
| |                                               |   |            |   |   |            |   |   |            |  
| |                                               |   | Year ended |   |   | Year ended |   |   | Year ended |  
| |                                               |   | May 31,    |   |   | May 31,    |   |   | May 31,    |  
| |                                               |   | 2004       |   |   | 2003       |   |   | 2002       |  
| |                                               |   |            |   |   |            |   |   |            |  
| | Canadian federal and provincial income taxes  |   |            |   |   |            |   |   |            |  
| | recovery at 37.1%
      (2003 - 42.6%; 2002 - |   |            |   |   |            |   |   |            |  
| | 44.1%)                                        | $ | 2,223,000  |   | $ | 1,787,000  |   | $ | 1,708,000  |  
| | Foreign tax rate differential                 |   | (1,508,000 | ) |   | (1,285,000 | ) |   | (1,276,000 | )
| | Permanent differences                         |   | (150,000   | ) |   | (47,000    | ) |   |           |  
| | Change in statutory rates                     |   | (284,000   | ) |   | (40,000    | ) |   | (27,000    | )
| | Valuation allowance                           |   | (281,000   | ) |   | (415,000   | ) |   | (405,000   | )
| |                                               | $ |           |   | $ |           |   | $ |           |  

| | At May 31, 2004, the company has Canadian and Foreign
        unutilized operating losses carried forward for income tax purposes of
        $5,158,000 and $13,022,000 respectively. These losses are available to
        be applied against taxable income of future years up to fiscal 2013.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

77

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|6. | Commitments and contingency:
|-- | ----------------------------
|  
|   | (a)                         
|  
|   |                             
|  
|   |                             
|  
|   | (b)                         

| |  |      |   |        | 
| |  | ---- | - | ------ | 
| |  | 2005 | $ | 23,507 | 
| |  | 2006 |   | 23,507 | 
| |  | 2007 |   | 17,630 | 
| |  |      | $ | 64,644 | 

---

78

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|6. | Commitments and contingency (continued):                                                                                                                                                                                                           
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The annual lease payments are exclusive
        of maintenance, property taxes, insurance and other operating costs.                                                                                                                               
|  
|7. | Related party transactions:                                                                                                                                                                                                                        
|  
|   | During the year ended May 31, 2004, the
        company paid companies controlled by a director, a total of $228,794 (2003
        - $193,485; 2002 - $215,000) for office rent and supplies and consulting
        fees.                          
|  
|   | These transactions are measured at the
        exchange amount which is the amount of consideration established and agreed
        to by the related parties.                                                                                      
|  
|8. | Financial instruments:                                                                                                                                                                                                                             
|  
|   | The fair values of cash and cash equivalents,
        accounts receivable, research advance and accounts payable and accrued
        liabilities approximate their carrying values due to their short term
        to maturity.                    
|  
|9. | Reconciliation of generally accepted
        accounting principles:                                                                                                                                                                                
|  
|   | The company prepares its consolidated
        financial statements in accordance with Canadian GAAP which, as applied
        in these consolidated financial statements, conform in all material respects
        to U.S. GAAP, except as follows:
|  
|   | (a)                                                                                                                                                                                                                                                
|  
|   |                                                                                                                                                                                                                                                    

---

79

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|9. | Reconciliation of generally accepted
        accounting principles (continued):
|-- | -------------------------------------------------------------------------------
|  
|   | (b)                                                                            
|  
|   |                                                                                
|  
|   | (c)                                                                            
|  
|   |                                                                                
|  
|   |                                                                                

---

80

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|9. | Reconciliation of generally accepted
        accounting principles (continued):
|-- | -------------------------------------------------------------------------------
|  
|   | (d)                                                                            
|  
|   |                                                                                
|  
|   | (e)                                                                            
|  
|   |                                                                                
|  
|   |                                                                                
|  
|   |                                                                                
|  
|   |                                                                                

---

81

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|9. | Reconciliation of generally accepted accounting
      principles (continued):
|-- | -----------------------------------------------------------------------------
|   |                                                                              
|   |                                                                              
|   |                                                                              
|   |                                                                              
|   |                                                                              
|   |                                                                              
|   |                                                                              
|   |                                                                              

| |                                    |   |            |   |   |            |   |   |            |   |  |   | Cumulative from    |  
| | ---------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | - |  | - | ------------------ | -
| |                                    |   | Year ended |   |   | Year ended |   |   | Year ended |   |  |   | inception on       |  
| |                                    |   | May 31,    |   |   | May 31,    |   |   | May 31,    |   |  |   | September 15, 1997 |  
| |                                    |   | 2004       |   |   | 2003       |   |   | 2002       |   |  |   | to May 31, 2004    |  
| |                                    |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | Loss for the period, Canadian      |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | GAAP                               | $ | (5,989,086 | ) | $ | (4,193,688 | ) | $ | (3,875,087 | ) |  | $ | (18,654,582        | )
| | Adjustments for the following:     |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | Stock-based compensation
      (c) |   | (25,588    | ) |   | (129,900   | ) |   | (257,000   | ) |  |   | (1,195,488         | )
| | Patent
      costs (a)             |   | (231,205   | ) |   | (265,417   | ) |   | (238,961   | ) |  |   | (1,028,123         | )
| | Amortization of patent costs (a)   |   | 17,979     |   |   | 10,855     |   |   | 43,147     |   |  |   | 71,981             |  
| | Scientific
      equipment (b)     |   |           |   |   |           |   |   |           |   |  |   | (63,822            | )
| | Amortization of scientific         |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | equipment (b)                      |   | 5,715      |   |   | 7,037      |   |   | 8,664      |   |  |   | 39,090             |  
| | Escrowed common share              |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | compensation
      (d)             |   |           |   |   | (684,500   | ) |   |           |   |  |   | (15,061,500        | )
| | Loss for the period, U.S. GAAP     | $ | (6,222,185 | ) | $ | (5,255,613 | ) | $ | (4,319,237 | ) |  | $ | (35,892,444        | )
| |                                    |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | Basic and diluted loss per share,  |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | U.S. GAAP                          | $ | (0.11      | ) | $ | (0.14      | ) | $ | (0.15      | ) |  |   |                    |  

---

82

|MEDICURE INC.
        (A Development Stage Enterprise)
      Notes to Consolidated Financial Statements
        (Expressed in Canadian dollars)
      Years ended May 31, 2004, 2003 and 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                             

|9. | Reconciliation of generally accepted accounting principles (continued):                                             
|-- | --------------------------------------------------------------------------------------------------------------------
|  
|   | The impact of significant variations to U.S. GAAP on the consolidated
      statements of cash flows are as follows:
|  

| |                      |   |            |   |   |            |   |   |            |   |  |   | Cumulative from    |  
| | -------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | - |  | - | ------------------ | -
| |                      |   | Year ended |   |   | Year ended |   |   | Year ended |   |  |   | inception on       |  
| |                      |   | May 31,    |   |   | May 31,    |   |   | May 31,    |   |  |   | September 15, 1997 |  
| |                      |   | 2004       |   |   | 2003       |   |   | 2002       |   |  |   | to May 31, 2004    |  
| |                      |   |            |   |   |            |   |   |            |   |  |   |                    |  
| | Operating activities | $ | (6,383,413 | ) | $ | (4,248,652 | ) | $ | (4,406,718 | ) |  | $ | (19,627,224        | )
| | Investing activities |   | (21,731    | ) |   | (5,196     | ) |   | 37,988     |   |  |   | 634,034            |  
| |                      |   |            |   |   |            |   |   |            |   |  |   |                    |  

| | The impact of significant variations to U.S. GAAP on the consolidated
      balance sheet items are as follows:
| | ---------------------------------------------------------------------------------------------------------------

| |                                                        |   | 2004        |   |   | 2003        |  
| | ------------------------------------------------------ | - | ----------- | - | - | ----------- | -
| |                                                        |   |             |   |   |             |  
| | Capital assets                                         | $ | 41,472      |   | $ | 37,050      |  
| | Capital stock and contributed surplus                  |   | 56,459,161  |   |   | 33,818,449  |  
| | Deficit accumulated during the development
      stage |   | (35,892,444 | ) |   | (29,670,259 | )
| |                                                        |   |             |   |   |             |  

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83

ITEM 18. FINANCIAL STATEMENTS

Not applicable.

ITEM 19. EXHIBITS

The exhibits are in the following order:

| | 1. | Articles of
        Incorporation and Bylaws:                            
| | -- | -------------------------------------------------------------------------
| |    |                                                                          
| |    | Medicure's Articles
        of Incorporation dated September 15, 1997 [1]
| |    |                                                                          
| |    | (a)                                                                      
| |    | (b)                                                                      
| |    | (c)                                                                      
| |    | (d)                                                                      
| |    | (e)                                                                      
| |    |                                                                          
| | 4. | Material Contracts
        and Agreements:                               
| |    |                                                                          
| |    | a)                                                                       
| |    |                                                                          
| |    | b)                                                                       
| |    |                                                                          
| |    | c)                                                                       
| |    |                                                                          
| |    | d)                                                                       
| |    |                                                                          
| |    | e)                                                                       
| |    |                                                                          
| |    | f)                                                                       
| |    |                                                                          
| |    | g)                                                                       



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84

| |     | h)                | Transfer Agency Agreement
        between Montreal Trust Company of Canada and the Corporation dated as
        of January 26, 2000, whereby Montreal Trust Company of Canada agreed to
        act as transfer agent and registrar with respect to the Shares [1];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ----------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | i)                | Medicure International Licensing
        Agreement between the Corporation and Medicure International Inc. dated
        June 1, 2000, wherein the Corporation granted Medicure International Inc
        a license with regard to certain intellectual property [1];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | j)                | Development Agreement between
        Medicure International Inc. and CanAm Bioresearch Inc. dated June 1, 2000,
        wherein CanAm Bioresearch Inc. agreed to conduct research and development
        activities for Medicure International [1];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | k)                | Three option agreements
        between the Corporation and George Washington University ("GWU") dated
        October 25, 2000, wherein GWU grants to the Corporation the option to
        evaluate three patented therapeutics for their potential in treatment
        of cardiovascular and other diseases and the option to thereafter obtain
        the worldwide right to and license the three products (the "GWU Option
        Agreements"). Under terms specified in the agreements, the Corporation
        could acquire exclusive worldwide commercial development rights to the
        technologies in exchange for sales royalties and other payments based
        on the successful commercialization of resulting products [1];
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | l)                | Investor Relations Contract
        dated March 28, 2002 between Boxe Studio Intl. and the Corporation whereby
        investor relations services will be provided to the Corporation including
        identifying possible sources of capital, providing analysis and advice
        with respect to capital structure, advising and assisting the Corporation
        with respect to its relationship with existing shareholders and assisting
        in the preparation of public information materials [2];                                                                                                                                                                                                                                  
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | m)                | Amendment to the Consulting
        Services Agreement dated February 1, 2002 between A.D. Friesen Enterprises
        Ltd. and the Corporation whereby consulting services will be provided
        to the Corporation by Dr. Albert D. Friesen [2];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | n)                | Stock Option Plan approved
        February 4, 2002 [3];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | o)                | Employment Agreement with
        Derek G. Reimer dated February 4, 2002 [3];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | p)                | Employment Agreement with
        Moray Merchant dated September 22, 2003 [3];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | q)                | Investor Relations Contract
        dated December 15, 2002 between Noble House Capital Corp. and the Corporation
        whereby investor relations services will be provided [3];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | r)                | Amendment dated April 28,
        2003 to the Investor Relations contract between Boxe Studio Int'l and
        the Corporation [3];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | s)                | Amendment dated August 7,
        2003 to the Development Agreement between Medicure International Inc.
        and CanAm Bioresearch Inc [3];                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | t)                | Amendment
        to the Consulting Services Agreement dated October 1, 2003 between A.D.
        Friesen Enterprises Ltd. and the Corporation whereby consulting services
        will be provided to the Corporation by Dr. Albert D. Friesen **.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | u)                | Employment
        Agreement with Dawson Reimer dated October 1, 2001 **;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 11. | Code of Ethics**.

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85

|. | 12. | a)                                                                                                                                                                                                                                                                     | Certification
        of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**.                                                                
|- | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|  |     |                                                                                                                                                                                                                                                                        |                                                                                                                                                          
|  |     | b)                                                                                                                                                                                                                                                                     | Certification
        of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**.                                                                
|  |     |                                                                                                                                                                                                                                                                        |                                                                                                                                                          
|  | 13. | a)                                                                                                                                                                                                                                                                     | Certification
        of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002 **.
|  |     |                                                                                                                                                                                                                                                                        |                                                                                                                                                          
|  | 14. | Development
        Agreement between Medicure International Inc. and Clinical Development
        Research Institute Inc.(CDRI) dated July 5, 2004, wherein CDRI agreed
        to conduct research and development activities for Medicure International
        **;
|  |     |                                                                                                                                                                                                                                                                        |                                                                                                                                                          
|  | [1] | Herein incorporated
        by reference as previously included in the Corporation's Form 20-F registration
        statement filed on January 30, 2001.                                                                                                              
|  |     |                                                                                                                                                                                                                                                                        |                                                                                                                                                          
|  | [2] | Herein incorporated
        by reference as previously included in the Corporation's Form 20-F annual
        report filed on December 31, 2002.                                                                                                                      
|  |     |                                                                                                                                                                                                                                                                        |                                                                                                                                                          
|  | [3] | Herein incorporated
        by reference as previously included in the Corporation's Form 20-F annual
        report filed on October 20, 2003.                                                                                                                       
|  |     |                                                                                                                                                                                                                                                                        |                                                                                                                                                          
|  | **  | Filed Herewith                                                                                                                                                                                                                                                        

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86

SIGNATURE PAGE

Pursuant to the requirements of Section 12 of the Securities
  Exchange Act of 1934, the Corporation certifies that it meets all of the
  requirements for filing on Form 20-F and has duly caused this annual report
  to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: September 10, 2004

|ON BEHALF OF THE CORPORATION, 
      MEDICURE INC.        | 
|--------------------------------------------------------- | 
|                                                          | 
|per:                                                      | 
|                                                          | 
|Albert D. Friesen, Ph.D. 
      Chairman, President & CEO | 

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