UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



(MARK ONE)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

OR

[  ]

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



COMMISSION FILE NUMBER:  1-13861



MED-EMERG INTERNATIONAL INC.

(Exact Name of Registrant as Specified in Its Charter)



PROVINCE OF ONTARIO, CANADA                                                                    N/A

(State or Other Jurisdiction of Incorporation or Organization)                                                (IRS Employment Identification No.)



6711 Mississauga Road, Suite 404

Mississauga, Ontario, Canada

L5N 2W3

(Address of Principal Executive Offices)

(Zip Code)



(905) 858-1368

(Registrants telephone number, including area code)



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 whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one)



|                        |       |                   |       |                       |    
|----------------------- | ----- | ----------------- | ----- | --------------------- | ---
|Large Accelerated Filer | [   ] | Accelerated Filer | [   ] | Non-Accelerated Filer | [X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]





As of August 14, 2006, the registrant had 58,277,696 common shares, no par value outstanding.















---















MED-EMERG INTERNATIONAL INC.



TABLE OF CONTENTS









Page



PART I -  FINANCIAL INFORMATION:



Item 1.   Financial Statements



Consolidated Balance Sheets at June 30, 2006 (unaudited)

and December 31, 2005

1



Consolidated Statements of Operations and Deficit for the three

and six months ended June 30, 2006 and 2005 (unaudited)

2



Consolidated Statements of Cash Flows for the three and

six months ended June 30, 2006 and 2005

3



Notes to Consolidated Financial Statements

4



Item 2.  Management's discussion and analysis of Financial Condition and

Result of Operation

12



Item 3.  Quantitative and Qualitative Disclosures about Market Risk

25



Item 4.  Controls and Procedures

25



PART II. OTHER INFORMATION

26



Item 1A.  Risk Factors

26



Item 6.  Exhibits

26



Signatures

27









- i -



---











SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS



This Quarterly Report on Form 10-Q contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in this document and in other reports filed from time to time with the Securities and Exchange Commission. All such forward-looking statements are expressly qualified by these cautionary statements and any other cautionary statements that may accompany the forward-looking statements. In addition, Med Emerg International Inc. disclaims any obligations to update any forward-looking statements to reflect events or circumstances after the date hereof.



































- ii -



---



|**Med-Emerg
                International Inc.**                                                                   
|-------------------------------------------------------------------------------------------------------------------
|**Consolidated
                Balance Sheet**                                                                     
|**As
                at
                June 30, 2006 (Unaudited) and December 31, 2005
                (Audited)**
|**(in
                US$)**                                                                                       
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|**Assets**                                                                                                         
|                                                                                                                   
|**Current
                assets**                                                                                 
|Cash                                                                                                               
|Accounts
                receivable                                                                                
|Prepaid
                expenses and other                                                                         
|Future
                Income
                tax                                                                  
|Discontinued
                operations (note 4 )                                                                  
|                                                                                                                   
|                                                                                                                   
|Long-term
                investment                                                                               
|                                                                                                                   
|Property,
                plant and equipment                                                                      
|Goodwill                                                                                                           
|                                                                                                                   
|                                                                                                                   
|**Liabilities
                and Shareholders' Equity**                                                           
|                                                                                                                   
|**Current
                liabilities**                                                                            
|Accounts
                payable and accrued liabilities                                                           
|Notes
                Payable                                                                                      
|Discontinued
                operations (note 4 )                                                                  
|                                                                                                                   
|                                                                                                                   
|**Long-term
                liabilities**                                                                          
|Long-term
                debt                                                                                     
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Contingent
                liabilities (note 9)                                                                    
|                                                                                                                   
|**Shareholders'
                Equity**                                                                           
|Capital
                stock
                (note 5)                                                             
|Contributed
                surplus (note 6)                                                                       
|Deficit                                                                                                            
|Cumulative
                translation adjustment                                                                  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   



The
                accompanying notes are an integral part of these consolidated financial
                statements.



- 1 -



---



|**Med-Emerg
                  International Inc.**                                                           
|-------------------------------------------------------------------------------------------------------------
|**Consolidated
                  Statement of Operations and Deficit**                                       
|**For
                  the three and six
                  months ended June 30, 2006 and 2005 (Unaudited)**
|**(in
                  US$)**                                                                               
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|**Revenue**                                                                                                  
|**Physician
                  fees and other direct costs**                                                  
|                                                                                                             
|**Expenses**                                                                                                 
|Salaries
                  and
                  benefits                                                    
|General
                  and
                  administration                                               
|Occupancy
                  costs and supplies                                                               
|Travel
                  and
                  marketing                                                     
|                                                                                                             
|                                                                                                             
|**Income/(loss)
                  before undernoted items**                                                  
|                                                                                                             
|Interest
                  income                                                                            
|Interest
                  and
                  financing expenses                                          
|Amortization
                  of property, plant, and equipment                                             
|Stock
                  compensation expense                                                                 
|                                                                                                             
|**Income/(loss)
                  from operations**                                                          
|Income
                  tax
                  recovery                                                      
|**Net
                  Income/(loss) before discontinued operations**                                       
|                                                                                                             
|**Discontinued
                  operations**                                                                
|Income/(Loss)
                  discontinued operations (note 4 )                                            
|**Net
                  Income/(loss) attributable to common shareholders**                                  
|                                                                                                             
|**Deficit,
                  beginning of the period**                                                       
|                                                                                                             
|**Deficit,
                  end of the period**                                                             
|                                                                                                             
|**Net
                  income (loss) per common share**                                                     
|Continuing
                  operations                                                                      
|Discontinued
                  operations                                                                    
|                                                                                                             
|**Weighted
                  average common shares outstanding**                                             
|                                                                                                             
|**Net
                  income (loss) per diluted common share**                                             
|Continuing
                  operations                                                                      
|Discontinued
                  operations                                                                    
|                                                                                                             
|**Weighted
                  average common shares and share equivalents**                                   



The
                accompanying notes are an integral part of these consolidated financial
                statements.

- 2 -



---



|**Med-Emerg
                  International Inc.**                                                           
|-------------------------------------------------------------------------------------------------------------
|**Consolidated
                  Statement of Cash Flows**                                                   
|**For
                  the three and six
                  months ended June 30, 2006 and 2005 (Unaudited)**
|**(in
                  US$)**                                                                               
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|**Cash
                  Flows from Operating Activities**                                                   
|Net
                  income/(loss) before discontinued operations                                           
|Adjustments
                  for:                                                                           
|Amortization
                  of property, plant and equipment                                              
|Stock
                  compensation expense                                                                 
|                                                                                                             
|                                                                                                             
|Decrease
                  in
                  non-cash working capital components                          
|Recovery
                  of
                  income taxes                                                 
|Discontinued
                  operations (note 4)                                                           
|                                                                                                             
|**Cash
                  Flows from Investing Activities**                                                   
|Additions
                  to
                  property, plant, and equipment                              
|Discontinued
                  operations (note 4)                                                           
|                                                                                                             
|                                                                                                             
|Effect
                  of
                  foreign currency exchange rate changes                         
|                                                                                                             
|**Decrease
                  in cash**                                                                       
|Cash,
                  beginning of the period                                                              
|**Cash,
                  end of the period**                                                                



The
                accompanying notes are an integral part of these consolidated financial
                statements.

- 3 -



---











MED-EMERG INTERNATIONAL INC

Notes to Unaudited Consolidated Financial Statements

Three and Six Months ended June 30, 2006 and 2005



1. ORGANIZATION AND DESCRIPTION OF BUSINESS



Med-Emerg International Inc. (MEII or the Company) provides quality healthcare management services to the Canadian healthcare industry.



The Companys common shares, no par value (Common Shares) and common share purchase warrants are quoted on the OTC Bulletin Board. The Company completed its initial public offering in February 1998.



The Companys operations are divided into three units: staffing solutions (Staffing Solutions), medical services (Medical Services) and healthcare consulting (Healthcare Consulting).  From March 2001 through March 2005, the Companys operations included a Government Healthcare Services unit. The operations of this unit were discontinued upon the expiration of the Companys contract with the Canadian Department of National Defence (DND) on March 31, 2005. See Note 4  Discontinued Operations.



The Companys Staffing Solutions unit provides emergency department physician and nurse recruitment, staffing and administrative support services to hospitals and federal corrections facilities, on a contractual basis, and physician and nurse practitioners to select long-term facilities in Ontario. At June 30, 2006, the Company had 52 physician and nurse staffing contracts.



The Medical Services division is comprised of (a) infusion services, (b) pain management services, and (c) two family medical clinics.  The infusion business provides special access Remicadeä infusion services to patients suffering from a variety of inflammatory disorders including Crohns disease and rheumatoid arthritis, at clinic locations across Ontario. In November 2004, the Company acquired a pain management clinic and commenced offering services to Toronto-area residents who experience chronic pain.  Subsequently,
four additional clinics were opened.  In January 2005, the Company resumed operation of a family medical clinic previously sold in 2003, after it failed to achieve certain earnings targets.  In November 2005, the Company resumed operation of a second clinic, when the buyer defaulted on certain payment obligations.  The Company is exploring opportunities to enhance clinic profitability by utilizing them for infusion and/or pain management services.



MEII provides Healthcare Consulting services to select Canadian private and public institutions on issues related to a variety of healthcare topics.



2. BASIS OF PRESENTATION



The accompanying unaudited consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). These consolidated financial statements consolidate the accounts of MEII and all of its wholly-owned subsidiaries:  927563 Ontario Inc.; 927564 Ontario Inc.; Med-Emerg Inc.; Med-Emerg Health Centres Inc.; YFMC Healthcare Inc.; YFMC Healthcare (Alberta) Inc.; Doctors on Call Ltd; CPM Health Centres Inc. and OPA Locum Direct Inc.



Significant intercompany accounts and transactions have been eliminated on consolidation.



The consolidated financial statements are expressed in U.S. dollars. Differences between Canadian and United States accounting principles are described in note 8.



In the opinion of management, the unaudited interim consolidated financial statements follow the same accounting policies and methods of application as the most recent audited annual financial statements.



Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2006.



- 4 -



---











These unaudited consolidated financial statements are condensed, and do not include all disclosures required for annual financial statements, which are contained in the notes to the Companys audited consolidated financial statements filed as part of the Companys Annual Report on Form 10-K for the year ended December 31, 2005 (the 2005 Annual Report). These unaudited consolidated financial statements, footnote disclosures and other information should be read in conjunction with the consolidated financial statements and the notes thereto included in the 2005 Annual Report.





3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



(a)

Use of estimates



The preparation of consolidated financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities during the reporting period.  Significant areas requiring the use of estimates relate to:  (i) the reported amounts of revenues and expenses, (ii) the disclosure of contingent liabilities, (iii) the carrying value of property, plant, and equipment and the rate of amortization related thereto, and (iv) accounting for income taxes.
Actual results could differ from those estimates. When adjustments become necessary, those adjustments are reported in earnings in the period in which they become known.



(b)

Long-term investments



Investments are accounted for at cost when the conditions for equity accounting are not present and on the equity basis when significant influence exists.  Declines in market values of investments are expensed when such declines are considered to be other than temporary.



(c)

Property, plant, and equipment



Property, plant, and equipment are recorded at cost and are amortized over their estimated useful lives at the following rates and methods:



Furniture and fixtures

20%

Declining balance

Computer software

100%

Declining balance

Computer hardware

30%

Declining balance

Leasehold improvements

3-5 years

Straight-line



(d)

Goodwill



Goodwill is the excess of the purchase price of assets over the fair value of the underlying net identifiable assets. The Company has adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Section 3062 Goodwill and Other Intangible Assets, which states that goodwill and indefinite life intangible assets should no longer be amortized, but should be tested for impairment at least on an annual basis.



(e)

Impairment charges



At least annually and when events and circumstances warrant a review, the Company evaluates the carrying value of its assets for potential impairment. An impairment loss is recognized when the estimated net realizable value of any asset is less than its carrying value. Any impairment in assets is charged to earnings in the year.



(f)

Revenue recognition



The Company has adopted the provisions of CICA Emerging Issues Committee (EIC) Abstract 123 "Reporting Revenues Gross as Principal Versus Net as an Agent" (EIC 123) and Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue 99-19 Recording Revenue Gross as a Principal versus Net as an Agent (EITF 99-19).  Both EIC 123 and EITF 99-19 address the reporting of revenue on a gross basis as a principal versus on a net basis as an agent.  The pronouncements generally state that revenue should be reported on a gross basis if:



- 5 -



---













§

The enterprise is the primary obligor in the relationship;

§

The enterprise has latitude in establishing price;

§

The enterprise performs part of the service;

§

The enterprise has discretion in supplier selection;

§

The enterprise is involved in the determination of service specifications; and

§

The enterprise has credit risk.



With the exception of determining how the specific service is delivered, MEII meets the six tests identified for each of its service offerings.  Accordingly, revenue is reported on a gross basis for all business units.



The following is a description of MEIIs revenue recognition policies for each of our significant business units.



(1) Staffing Solutions:



Revenue is reported on a gross basis.



MEII acts as a principal in providing these services. MEII (a) negotiates the price of these services with its customers; and (b) contracts with emergency room physician and nursing personnel to provide these services to healthcare facilities.  MEII recruits, schedules and bills the customer for the services provided and bears the risk of non-payment.



Contracts are both fee-for-service and fixed monthly contracts.  Contracts are negotiated annually and are cancelable by either party on 60 days notice.



Revenue is recognized on an accrual basis, as services are delivered, and when there is reasonable assurance of collection.



(2) Medical Services:



Revenue is reported on a gross basis.



Under contract with Schering Canada Inc., MEII acts as the coordinator for the community-based infusion of certain medications for the treatment of patients with rheumatoid arthritis, Crohns disease and certain other inflammatory diseases.  MEII recruits, schedules and bills the customer for the services provided and encounters credit risk in the event of non-payment.



The Company acts as the principal in providing pain management treatments to patients in its Toronto-area clinics.  MEII recruits, schedules and bills the customer for the services provided and encounters credit risk in the event of non-payment.



Revenue is recognized on a current basis, as services are delivered, and when there is reasonable assurance of collection.



(3) Healthcare Consulting:



Revenue is reported on a gross basis.



MEII has been retained by several provincial governments to advise on a variety of issues related to primary care staffing, training and integrated service delivery models. MEII also advises several aboriginal communities with regards to healthcare service issues.



Revenue is recognized over the life of each contract, based on the achievement of milestones specified in the contract, and when there is reasonable assurance of collection.





- 6 -



---











(g)

Future income taxes



The Company accounts for income taxes using the asset and liability method.  Future tax assets and liabilities are recognized for the future taxes attributable to the temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax carrying values.  Future tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  A valuation allowance against future tax assets is provided to the extent that these future tax assets are not more likely than not, going to be realized.



(h)

Cash



Cash consists of cash on hand and balances with banks.



(i)

Foreign currency translation



The Company maintains its books and records in Canadian dollars.  The consolidated financial statements are converted to U.S. dollars because the Company is a reporting issuer in the United States of America.  The translation method used is the current rate method.  Under the current rate method all assets and liabilities are translated at the current rate prevailing at the balance sheet date, shareholders equity (deficit) is translated at historical rates and all income and expense items are translated at average rates for the year.  Due to the fact that items in the consolidated financial statements are being translated at different rates according to their nature, a translation adjustment is created.  This translation adjustment has been included in the cumulative translation adjustment.



(j)

Stock compensation expenses



The Company has adopted CICA Handbook Section 3870 Stock-based Compensation and Other Stock-based Payments.  This section requires that a fair value based method of accounting be applied to all stock based payments to non-employees and to direct awards of stock to employees. The standard requires the recognition of a compensation expense for grants of stock, stock options, and other equity instruments to employees based on the estimated fair value of the instruments at the grant date.



(k)

Earnings / loss per share attributable to common shareholders



Basic earnings (loss) per share attributable to common shareholders is computed by dividing the net income (loss) attributable to common shareholders before discontinued operations over the weighted average number of common shares outstanding, including contingently issuable shares where the contingency has been resolved.



4. DISCONTINUED OPERATIONS



The Companys contract with DND to provide personnel to Canadian armed forces across Canada expired on March 31, 2005. This was a significant contract generating separate identifiable cash flows, and hence it has been classified as a discontinued operation, and accounted for accordingly.



- 7 -



---

The summarized statements of income for the Discontinued Operations for the six months ended June 30, 2006 and 2005 are as follows:

|                                        |          |            
|--------------------------------------- | -------- | -----------
|                                        | 2006     | 2005       
|                                        |          |            
|Revenue                                 | $293,045 | $11,094,253
|                                        |          |            
|Gross margin                            | 293,045  | 749,261    
|                                        |          |            
|Operating, general and administrative   |          |            
|Expenses                                | 148,890  | 489,700    
|Amortization                            | -        | 6,832      
|Interest and financing                  | 35,901   | 65,390     
|Income from discontinued operations     | $108,254 | $187,339   
|Income tax                              | $38,971  | 0          
|Net Income from discontinued operations | $69,283  | $187,339   



The summarized balance sheets for the Discontinued Operations as at June 30, 2006 and December 31, 2005

are as follows:



|                                         | June-06    | Dec-05    
|---------------------------------------- | ---------- | ----------
|                                         |            |           
|Current assets                           |            |           
|Cash                                     | $10,572    | $68,003   
|Accounts receivable                      | 545,000    | 967,957   
|                                         | 555,572    | 1,035,960 
|                                         |            |           
|Current liabilities                      |            |           
|Accounts payable and accrued liabilities | $904,859   | $1,194,427
|                                         |            |           
|Net assets (liabilities)                 | $(349,287) | $(158,467)



5. CAPITAL STOCK



On June 15, 2004, the Company issued to certain investors (the Investors) 39,360,272 common shares for $4,500,000 in cash.  As a condition of the transaction, preferred shares, of which Dr. Zacharias, the Chief Executive Officer of MEII, may have been deemed to be a beneficial owner, were converted into 9,348,000 common shares; and unpaid preferred share dividends, in the amount of $579,582, were forgiven.



The investment resulted from the previously announced letter of intent signed by MEII and Global Healthcare Workforce Limited (GHW) of London, UK.



In addition to the shares purchased from the Company, the Investors purchased 4,348,000 common shares from the former preferred shareholder for $500,000.  Closing costs (including legal, travel and due diligence costs) for the equity financing amounted to $609,214, and were expensed during the second quarter of 2004.



In addition to issuing the common shares, MEII also issued 13,518,750 anti-dilution warrants (the New Warrants) to the Investors and the former preferred shareholder, to purchase common shares of MEII at prices of either $0.50 per common share or $1.00 per common share.  The exercise of the New Warrants is conditional upon the exercise of previously issued options and warrants to purchase common shares exercisable at $0.50 per common share and $1.00 per common share.  The exercise of the New Warrants is intended to allow the Investors and former Preferred Shareholder to maintain their pro rata equity position.





- 8 -



---











In December 2005, the Company reduced from $0.50 to $0.20 the exercise price of the common share purchase warrants upon which exercise of the New Warrants is conditional. Accordingly, the exercise price of 5,031,250 of the New Warrants was also reduced from $0.50 to $0.20. See also Note 10 (Subsequent Events)



6. CONTRIBUTED SURPLUS



During the second quarter of 2006, an
amount of $10,456 was recorded as stock compensation expense for options granted
to an employee in 2004 for the portion that vested in the second quarter of
2006.  These amounts were credited to contributed surplus.



During the first quarter of 2006, the terms of the Common Share purchase warrants were amended, extending the expiry of these warrants from February 11, 2006 to August 11, 2006. As a result of this, stock compensation expense of $69,876 was recorded. In addition, an amount of $8,527 has been recorded as stock compensation expense for options granted to an employee in 2004 for the portion that vested in the first quarter of 2005. These amounts have been credited to contributed surplus.



During the first quarter of 2005, the terms of the Common Share purchase warrants were amended, extending the expiry of these warrants from February 11, 2005 to February 11, 2006. As a result of this, stock compensation expense of $228,347 was determined and was credited to contributed surplus.  In addition, an amount of $26,006 has been recorded as stock compensation expense for options granted to an employee in 2004 for the portion that vested in the first quarter of 2005. These amounts were credited to contributed surplus.



During the second quarter of 2005, an amount of $20,367 was recorded as stock compensation expense for options granted to an employee in 2004 for the portion that vested in the second quarter of 2005. These amounts were credited to contributed surplus.



During the third quarter of 2005, an amount of $16,921 was recorded as stock compensation expense for 100,000 options granted as per section 3870 of the CICA handbook. In addition, an amount of $8,619 was recorded as stock compensation expense for options granted to an employee in 2004 for the portion that vested in the third quarter of 2005. These amounts were credited to contributed surplus.



During the fourth quarter of 2005, an amount of $62,092 was recorded as stock compensation expense for re-pricing of warrants and this amount was credited to contributed surplus.  In addition, an amount of $8,529 was recorded as stock compensation expense for options granted to an employee in 2004 for the portion that vested in the fourth quarter of 2005. These amounts were credited to contributed surplus.



7. RELATED PARTY TRANSACTIONS



During the first six months of 2006, administrative fees of approximately $31,872 (Cdn$36,000) were paid to a related company ($NIL in the first quarter of 2005).



8. CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES



These consolidated financial statements have been prepared in accordance with Canadian GAAP, which conform in all material respects with accounting principles generally accepted in the United States (U.S. GAAP) during the periods presented, except with respect to the following:



(a) Shareholders equity



Under Canadian GAAP, the purchase price of an acquisition is determined based on the share price on the date the transaction is consummated. Under U.S. GAAP, the purchase price of an acquisition where shares are issued is determined based on the share price for the period surrounding the announcement date of the acquisition. The share price used for the YFMC Healthcare Inc. acquisition under Canadian GAAP was $1.25. The share price used for the YFMC Healthcare Inc. acquisition under U.S. GAAP was $1.859.



- 9 -



---















Under U.S. GAAP, detachable share purchase warrants are given separate recognition from the primary security issued.  Upon initial recognition, the carrying amount of the two securities is allocated based on the relative fair values at the date of issuance.  Under Canadian GAAP, the detachable share purchase warrants issued in conjunction with the private stock offering on January 22, 1996 and subsequently surrendered, have been given no recognition in the financial statements. Under U.S. GAAP, based on an ascribed fair value of $ 0.364 for each of the 1,000,000 share warrants issued, share capital would be lower by $ 36,406 and, given that the share purchase warrants were cancelled, the carrying amount of contributed surplus would be increased by $ 36,406.



Under U.S. GAAP the effect on shareholders equity would be adjusted as follows:



|                                                         |                         |                       
|-------------------------------------------------------- | ----------------------- | ----------------------
|                                                         | June 2006               | December 2005         
|                                                         |                         |                       
|Capital stock (as previously shown)                      | $16,044,736             | $16,044,736           
|Capital stock issued on purchase of YFMC Healthcare Inc. | 1,087,872               | 1,087,872             
|Ascribed fair value of share purchase warrants issued    | (36,406)                | (36,406)              
|Capital stock - U.S. GAAP                                | 17,096,202              | 17,096,202            
|Contributed surplus (as previously shown)                | 2,996,149               | 2,907,290             
|Share purchase warrants                                  | 36,406                  | 36,406                
|Paid-in-capital - U.S. GAAP                              | 3,032,555               | 2,943,696             
|Deficit (as previously shown)                            | (17,316,257))
(767,662) | (18,077,662)
(792,887)
|Cumulative translation adjustment                       
|Shareholders equity - U.S. GAAP                         | $2,044,838              | $ 1,169,349           



(b) Comprehensive loss



Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS 130), establishes standards for reporting and display of comprehensive loss and its components in the financial statements.  Under U.S. GAAP, the comprehensive income (loss) for the three months ended March 31, 2006 and 2005 would be adjusted as follows:



|                                                                  |  | **June** |         | **June** | 
|----------------------------------------------------------------- |  | -------- | ------- | -------- | 
|                                                                  |  | **2006** |         | **2005** | 
|                                                                  |  |          |         |          | 
|Net
                  income
                  (loss) - U.S. GAAP |  | $        | 761,405 |          | 
|Foreign
                  currency translation adjustment         |  |          | 25,225  |          | 
|                                                                  |  |          |         |          | 
|Comprehensive
                  income (loss)                     |  | $        | 786,630 |          | 





9. CONTINGENT LIABILITIES



(i)

There is uncertainty with respect to the Companys liability for Goods and Services tax pertaining to certain services that it provides.  The measurement of this uncertainty is not determinable and accordingly no provision has been made in respect thereof in these consolidated financial statements.



(ii)

There is uncertainty with respect to the Companys liability arising from a contractual dispute with a customer.  Based on the advice of counsel, the Company is of the view that it is unlikely that the Company will be found liable for these costs. The costs associated with this contingent liability range from $500,000 to $1.5 million.





- 10 -



---











(iii)

Claims have been made against the Company for general damages for breach of contract and in tort.   Claims for approximately $482,000 have been made against the company for wrongful termination of a person working on a third party contract. Another claim for unspecified damages has been made against the company for wrongful dismissal and breach of contract. The Companys lawyers are of the view that liability, if any, would be the responsibility of the third party contractor. The Companys lawyers are of the opinion that the amount claimed grossly exceeds what a court would award in light of the current law.  Since the Companys lawyers are of the opinion that these claims are unlikely to succeed, no provision has been made in respect thereof in these consolidated financial statements.



(iv)

The Company sub-leased certain premises to third parties when it disposed of its clinic operations. In case of payment defaults by the third parties, the Company could be held liable for rent on these premises. Rent for these premises over the next seven years, during the respective lease terms, totals $1.2 million.



Any liability resulting from the above will be reflected as a charge to income in the year incurred.



10. SUBSEQUENT EVENTS



(i) On July 11, 2006, the Company settled outstanding litigation regarding the loss of the DND contract.  Pursuant to the settlement, Calian Technologies Ltd. (Calian) paid $CDN2.0 million ($1.8 million) to the Company and the parties exchanged full and final releases.  Proceeds of the settlement, net of expenses, will be treated as taxable income by the company. Accordingly, it is more likely than not that the company will have taxable income for the year. Concurrently, the Company and Calian executed definitive agreements for the private placement by the Company to Calian of 8,750,000 shares of the Companys newly designated Series I Special Shares (the Series I Shares) for aggregate gross proceeds to the Company of CDN$3.5 million ($3.15 million).  At closing, the Company received CDN$1.75 million ($1.57 million). Under the terms of a subscription agreement dated July 11, 2006 between the Company and Calian, the remainder of the consideration consisting of CDN$ 1.75 million ($1.57 million) has been deposited into escrow and will be paid to the Company as follows: (i) the amount of CDN$0.875 million ($0.785 million) will be paid to the Company upon the filing by the Company of a registration statement covering the resale of the Common Shares underlying the Series I Shares and the (ii) remainder of the consideration will be paid at such time as such registration statement is declared effective by the Securities and Exchange Commission.  The Series I Shares have a term of five years. The Series I Shares are, at the option of the holder, convertible at any time into the Companys Common Shares, at an initial conversion rate of one Common Share for each Series I Share, subject to adjustment in the event of certain capital adjustments or similar transactions, such as a stock split or merger. Commencing on the second anniversary of issuance, the Company is entitled to require the conversion of outstanding Series I Shares at the applicable conversion rate, provided that the following conditions are satisfied: (i) the volume weighted average trading price (VWAP) of the Companys Common Share on the principal exchange or market (including the OTC Bulletin Board) on which the Common Shares are traded or quoted is greater than or equal to $0.46 (as may be adjusted in respect of any stock split) during any 60 consecutive calendar day period, (ii) the total volume of Common Shares traded over such period exceeds 600,000 shares (as adjusted to reflect any stock splits), and (iii) the Company delivers written notice of such conversion to the holders of the Series I Shares within 10 days of the satisfaction of the above conditions. The Company's right to require such conversion is further subject to there being an effective registration statement at the time covering the resale of the Common Shares underlying the Series I Shares.



(ii) On August 10, 2006, the Company extended the exercise period of the redeemable Common Share purchase warrants, which are quoted on the Over-the-Counter Bulletin Board under the symbol MDERW.BB to September 10, 2006. These warrants have a per share exercise price of $0.20



- 11 -



---













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



THE FOLLOWING COMMENTARY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES CONTAINED ELSEWHERE IN THIS FORM 10-Q. THE DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. IN SOME CASES, YOU CAN IDENTIFY THESE FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD," "EXPECT," "PLAN," "ANTICIPATE," "BELIEVE," "ESTIMATE," "PREDICT," "POTENTIAL," "INTEND," OR "CONTINUE," AND SIMILAR EXPRESSIONS. THESE STATEMENTS ARE ONLY PREDICTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A VARIETY OF FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER PART II, ITEM 1.A "RISK FACTORS" AND ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q.



The Companys operations are comprised of three business units: Staffing Solutions, Medical Services and Healthcare Consulting Services.  During the first half of 2006, 60% of the Companys revenue was generated by the Staffing Solutions unit; 33% by the Medical Services unit; and 7% by the Healthcare Consulting unit.  From a Gross Margin perspective, the gross margin generated from the three business units was 38%, 47% and 15%, respectively.



The Company is well positioned to deal with the continuous challenges that confront the Canadian healthcare system.  Some of these challenges, including the growing shortage of ER doctors, longer waiting times by patients, and the growing cost of public medicine, play directly into the Companys strengths.



The Companys Staffing Solutions provide physician-staffing services to more than 50 healthcare facilities across Ontario, including rural and urban hospitals as well as tertiary care centers and corrections facilities.



MEIIs Medical Services, which are delivered through wholly owned subsidiaries, include chronic pain management and intravenous infusion services for pharmaceutical companies in conveniently located community-based clinics and family medical clinics



The Companys Healthcare Consulting Services provides custom solutions for governments and national and provincial bodies on a variety of matters including primary care renewal, project evaluation, and healthcare human resource planning.



The Company tracks its operations by monitoring certain key performance indicators.  For Staffing Solutions, the Company monitors the number of contracts under administration, monthly shifts booked, and gross margin per contract.  For Medical Services, the Company tracks the number of infusions for Infusion Services and the number of patient referrals, average billing per patient and the number of patient visits for the pain management practice.  For Healthcare Consulting Services, the Company tracks the gross margin per contract and our win / loss ratio on contract bids.   We also measure certain key balance sheet ratios such as working capital, to monitor our cash flow situation.



The Staffing Solutions business is driven by the Companys ability to recruit and retain physicians and nurse practitioners.  With the chronic shortage of healthcare providers, the Company dedicates considerable resources to attracting new providers to the Company.  Because of the limited supply of healthcare providers, the inability to attract additional personnel could limit the Companys ability to fill open shifts and to continue its revenue growth.





- 12 -



---











Growth of the Companys Medical Services business is dependent on several factors.  The Infusion business is reliant upon the Companys ability to introduce new drug therapies through its infusion clinics and by expanding the number of clinic locations. Failure to succeed with either of these initiatives will limit the Companys ability to drive its revenue growth.  For Pain Management Services, growth is dependent on the Companys ability to recruit additional doctors to provide pain therapies.



The growth of Healthcare Consulting Services is dependent on market developments in Canadian healthcare.  At this time, management believes that there exist growth opportunities because of on-going demand for health human resource planning, primary healthcare reform initiatives and pandemic planning.



STAFFING SOLUTIONS



MEII is the leading provider of ER doctors to Ontario hospitals. The Company provides physician-staffing services to more than 50 healthcare facilities across Ontario, including rural and urban hospitals as well as tertiary care centers and corrections facilities. The Company believes that on-going physician shortages and continuing demand for improved levels of care will continue to drive its Staffing Solutions business.



In addition to its conventional ER staffing, MEII has developed a unique integrated staffing solution, which was used extensively, to recruit primary care physicians.  Based on patient population, the nature of the cases being treated, and the total cost of the current system, MEII introduced a healthcare model combining Primary Care Physicians with Primary Care Nurse Practitioners. This was the first time a nurse practitioner function was introduced into a mental health setting. The program, now in its ninth year of operation, has received high satisfaction ratings from both staff and patients, resulting in the Whitby Mental Health Centre receiving the ACE award from the Ministry of Health for Innovation in Health Care Delivery Design. In June 2002, the Centre for Addiction and Mental Health in Toronto, Canada, awarded MEII a similar contract for primary care services. In 2004, the company introduced Primary Health Care Nurse Practitioners to its mix of healthcare providers in community-based hospitals.



MEDICAL SERVICES



MEII provides innovative medical services directly to healthcare consumers.



Infusion Services



In March 2001, MEII entered into an agreement with Schering Canada Inc. to become a coordinator for the community-based infusion of the medication known as RemicadeTM.  This contract capitalizes on the Company's access to clinics for the treatment of patients with disabling rheumatoid arthritis and Crohn's disease, among other diseases. The Company delivered more than 7,500 infusions in 2005 and more than 4,700 infusions during the first half of 2006.



MEII expects continued growth for this service, as infusion services move from institutional settings into community-based settings.



As of June 30, 2006, the Company operated 16 virtual clinics across Ontario.  On an as-required basis, the Company rents space in community-based medical clinics.  MEIIs team of infusion coordinators arrange for patients to arrive at the clinic at a prescribed time and for a physician and nurse to be available to attend to their needs.  The RemicadeTM is supplied by a local pharmacy.



The Company continues to look for additional products to offer through its infusion clinics.











- 13 -



---











Pain Management Services



MEII’s chronic pain management service, CPM Health Centres Inc. (“CPM”), was launched in November 2004 with the acquisition of the Scarborough Pain Clinic. A second location, in downtown Toronto, was opened in December 2004, two more locations were opened in 2005, in Hamilton and Mississauga and a fifth clinic was recently opened in Oakville, a suburb of Toronto, Ontario.



CPM has developed a standardized approach to the treatment of chronic pain, using an integrated multi-disciplinary approach including anesthetists and ER physicians, amongst others.



In August of 2005, Dr. Roman Jovey, the President of the Canadian Pain Society, joined CPM as its Medical Director.  Over the last 16 years, Dr. Jovey has developed an international reputation in the field of chronic, non-cancer pain, using pharmacotherapy.  In addition to maintaining a private practice, Dr. Jovey also consults with the pharmaceutical industry and educational institutions on medical educational programs related to pain.  He is also a medico-legal expert for the Canadian Medical Protective Association on cases related to opioids, pain and addiction.In his capacity as Medical Director, Dr. Jovey oversees the clinical aspects of CPM and assists in the training of new physicians.



The Company intends to increase the number of physicians available to treat those suffering from chronic pain and thereby improve service availability to a healthcare sector that is plagued by long wait times.  The Company has developed and launched a training program specifically designed to educate emergency room physicians in chronic pain management.



The clinic that CPM acquired in November 2004 increased monthly treatments from approximately 300 patients in November 2004 to more than 750 patients in June 2006.  Further, CPM as a whole more than quadrupled its volumes by seeing more than 1,450 patients in the month of June 2006, compared to the 289 patient visits in November of 2004.



Plans are underway to further increase capacity in 2006 by training more physicians and by opening additional clinic locations.



Family Medical Clinics

In January 2005, the Company resumed operation of a family medical clinic in Wallaceburg, Ontario that it had sold in 2003, after the purchaser failed to achieve certain earnings targets.  In November 2005, the Company resumed operation of a second clinic in Calgary Alberta, when the buyer defaulted on certain payment obligations.  The Company is exploring ways to enhance the performance of the Family Medical Clinics by utilizing them for infusion and/or pain management services.



HEALTHCARE CONSULTING



Over the years, the Company has developed significant experience in international and domestic healthcare consulting.  Currently the Company is providing consulting services under several contracts, advising on a range of issues related to primary care staffing, health human resource planning, and integrated service delivery models.



In 2005, the Company developed an innovative health human resource planning tool for the four Atlantic Provinces (New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador). The tool focused on a needs-based model as opposed to the traditional supply-based design. This project received wide recognition in the marketplace and the Company expects that new business opportunities will arise as a consequence.



The Company was recently awarded a contract by a national association to provide consulting services in connection with planning for an influenza pandemic.  The Company believes that this contract, like the one with the Atlantic Provinces, has the potential to generate additional consulting opportunities.



- 14 -



---













In 2005, the Company also completed projects for the Royal College of Physicians and Surgeons and the Canadian Nurses Association.  Additionally, MEII also started five projects associated with the design and development of Family Health Teams (FHTs) across Ontario.  The Company completed three more FHT contracts in the first half of 2006 and is working on four more like contracts, at this time.



MEII has used a virtual model to build its healthcare consulting practice.  Under the guidance of MEIIs Director of Health Services Consulting, the Company responds to contract tenders for projects that meet pre-defined criteria.  Project-specific teams are assembled, based on the needs of the contract.  The Company calls on the expertise of leading academics and industry leaders to work on specific projects.



DISCONTINUED OPERATIONS- GOVERNMENT HEALTHCARE SERVICES



In March 2001, the Company was awarded an administrative management services contract (the DND Contract), the largest of its kind, to provide medical staffing for military bases of the Department of National Defence (DND) across Canada. The DND Contract had an initial period of three years ending on March 31, 2004, but it was amended and extended until March 31, 2005. In December 2004 MEII learned that it was not successful in its bid to win a replacement contract with DND and its contractual relationship for DND medical staffing services ended on March 31, 2005.



In January 2005 the Company filed a Cdn$100,000,000 lawsuit against the winning bidder and a former employee of the Company.  This action was settled on July 11, 2006.  (See - Post Quarter Events below).



On January 31, 2005, the Company filed a complaint with the Canadian International Trade Tribunal (CITT) wherein the Company questioned the manner in which the Government of Canadas procurement for the DND medical staffing contract was conducted. On April 26, 2006, the Federal Court of Appeal dismissed the Companys application.



POST QUARTER EVENTS



On July 11, 2006, the Company and Calian Technologies Ltd. (Calian) entered into an agreement settling the litigation between them that was initiated by the Company before the Ontario Superior Court of Justice pursuant to which Calian paid to the Company CDN $2 million (equal to approximately $1.8million at the time of payment) and the parties exchanged full and final releases.



In connection with the settlement of the outstanding litigation, on July 11, 2006, the Company and Calian executed agreements for the private placement by the Company to Calian of 8,750,000 shares of the Companys newly designated Series I Special Shares (the Series I Shares) for aggregate gross proceeds to the Company of approximately CDN $3.5 million (equal to approximately $3.1million at the time of agreement). At the closing of the purchase of the Series I Shares, the Company received CDN $1.75 million (equal to approximately $1.57 million at the time of payment). The remainder of the purchase price of CDN $1.75 million (equal to approximately $1.57 million) has been deposited into escrow and will be paid to the Company as follows: (i) the amount of CDN $0.875 million (equal to approximately $0.785 million) will be paid to the Company upon the filing by the Company of a registration Statement covering the resale of the Common Stock underlying the Series I Shares (the Registration Statement) and the (ii) remainder of the consideration will be paid at such time as the Registration Statement has been declared effective.



The rights and privileges that are attached to the Series I Shares are specified in an amendment to the Companys Articles (the Series I Shares Amendment).  The Series I Shares, which were issued on July 11, 2006, have a term of five years, subject to earlier conversion or redemption under certain conditions. By their terms, the Series I Shares are, at the option of the holder thereof, convertible at any time into the Companys Common Shares at an initial conversion rate of one Common Share for each Series I Share, subject to adjustment in the event of certain capital adjustments or similar transactions, such as a stock



- 15 -



---











split or merger. Commencing July 12, 2008, the Company is entitled to require the conversion of outstanding Series I Shares at the applicable conversion rate, at any time and from time to time, provided that the following conditions are satisfied: (i) the volume weighted average trading price (VWAP) of the Companys common shares on the principal exchange or market (including the OTC Bulletin Board) on which the common shares are traded or quoted is greater than or equal to $0.46 (as may be appropriately adjusted in respect of any stock split) during any 60 consecutive calendar day period, (ii) the total volume of common shares traded over such period exceeds 600,000 shares (as adjusted to reflect any stock splits), and (iii) the Company delivers written notice of such conversion to the holders of the Series I Shares within 10 days of the satisfaction of the above conditions. The Company's right to require such conversion is further subject to there being an effective registration statement at the time covering the resale of the Common Stock underlying the Series I Shares and certain other conditions being satisfied. In addition, dividends on the Series I Shares are payable if and when declared by the Companys board of directors. Upon the liquidation, dissolution or winding up of the Company, the holders of the Series I Shares are entitled to be paid out of Company assets legally available therefore in preference to the holder of common stock or the holders of any class of securities junior to the Series I Shares an amount  in cash equal to $0.40 (as may be appropriately adjusted in respect of any stock split) for each Series I Share, together with all declared and unpaid dividends on the Series I Shares.



Additionally, on August 10, 2006, the Company further extended the exercise period of the redeemable Common Share purchase warrants, which are quoted on the Over-the-Counter Bulletin Board under the symbol MDERW.BB to September 10, 2006. These warrants have a per share exercise price of $0.20.



RESULTS OF OPERATIONS



Three months ended June 30, 2006 compared to three months ended June 30, 2005



REVENUE



The Company's revenue from continuing operations for the three months ended June 30, 2006 was $4,913,077 compared to $3,010,613 for the three months ended June 30, 2005.



The increase in revenue during the 2006 period over the corresponding period in 2005 of approximately 63% was attributable to an increase in all operating divisions.  Divisional revenues were:



Quarter Ended June 30,Division20062005Staffing Solutions$3,004,838$1,960,684Medical Services1,690,890881,387Healthcare Consulting Services217,349168,542Total$4,913,077$3,010,613




Staffing revenues increased 53% during the three months ended June 30, 2006 over the corresponding period in 2005.  This increase in the 2006 period relative to the 2005 period was primarily attributable to increased revenue per contract and the signing of two large contracts in the latter part of 2005, which collectively accounted for about 25% of the Staffing revenues in the second quarter of 2006.





- 16 -



---











s

Revenue from the Medical Services division increased 92% to $1,690,890 from $881,387 in 2005.  The increase was driven primarily by three factors.

1.

In late 2004, the Company launched its Pain Management business.  In the second quarter of 2006, the Pain Management business generated $819,768 in revenue compared to $353,455 in 2005 as the Company grew from one to five clinics.  The Company believes that the Pain Management business is an opportunity for the Company to generate considerable growth.  It is a field of healthcare that is vastly under
serviced in Canada.  The Company has recently opened its fifth clinic location and more sites are scheduled for 2006.  The Company believes that strong revenue growth will continue in the current fiscal year, though no assurance can be given that such growth will in fact be achieved.

2.

The Infusion business increased to $693,602 from $397,694 in 2005.  The 74% increase in the Infusion business was driven by a 42% increase in infusions from 1,786 in the second quarter of 2005 to 2,544 in the same quarter of 2006 and higher average revenue per infusion.

3.

During 2005, the Company re-assumed responsibility for two family medical clinics, one in January 2005 and the second in November 2005.  These clinics generated $177,520 in revenue in the second quarter of 2006 compared to $130,239 in 2005.  In the second quarter of 2005, the Company operated one clinic in Wallaceburg, Ontario.  During the second quarter of 2006, the Company operated two family medical clinics, the Wallaceburg location and a second clinic in Calgary Alberta.



Revenue from Healthcare Consulting Services was $217,349 for the second quarter of the year compared to $168,542 for the quarter ended June 30, 2005, an increase of 29%.  For the last two years the Company has increased its focus on its Healthcare Consulting Services practice.  Working with leading academics and industry experts, the Company has successfully bid on, and won, an increasing number of contracts.  Our early successes in health human resource planning and primary care renewal have led to increased opportunities.  Further, our experience with primary care led to our involvement, in 2005, with the Province of Ontarios Family Health Team initiative.  The Company has signed several contracts to assist community-based Family Health Teams to develop business plans for funding of their individual family health teams.



GROSS MARGIN



Gross margin (revenue less physician and other direct costs) increased to $1,473,908 (94%) for the second quarter of 2006, from $760,893 for the same period in 2005.





Quarter Ended June 30,Division20062005Staffing Solutions$560,317$370,424Medical Services763,341309,147Healthcare Consulting Services150,25081,322Total$1,473,908$760,893






The gross margin from the Staffing Solutions business increased to $560,317 from $370,424 in 2005.  The increase of 51% was largely driven by the increase in the number of contracts under management and to a lesser extent by the increased strength of the Canadian dollar relative to the U.S. dollar.  There was a decrease in the gross margin percentage, 18.6% in 2006 versus 18.9% in 2005, because the Company took on certain fixed fee contracts in 2005 which resulted in a lower gross margin per contract.



The gross margin from Medical Services business increased 147%, or about $454,000 in the second quarter of 2006 compared to the same period in 2005.  As discussed above concerning revenue, this is attributable to (a) the launch of the Pain management business ($214,000); (b) increased Infusion volumes ($77,000) and better margin per infusion ($115,000); and (c) the resumption of the family medical clinics ($48,000).





- 17 -



---











The gross margin from Healthcare Consulting Services increased 85% for the second three months of 2006 from $81,322 in 2005 to $150,250 in 2006.  The increase is gross margin is attributable to increased volume of activity in 2006.



OPERATING EXPENSES



Operating expenses are comprised of both direct and indirect operating expenses.  Indirect expenses include corporate overheads, which are allocated to the divisions, based on gross margin earned by the division.



On an overall basis, operating expenses increased
33% to $1,312,394 for the second quarter of 2006 from $988,070 for the quarter ended June 30, 2005.  The increase was largely attributable to increased costs associated with the Medical Services where costs increased $285,000, driven by increased business volumes and the Consulting business ($57,000), again, in line with increased business volumes.



On a divisional basis, after the allocation of corporate overheads, operating expenses were as follows:



Quarter Ended June 30,Division20062005Staffing Solutions$411,516$428,974Medical Services718,347433,732Healthcare Consulting Services182,531125,364Total$1,312,394$988,070








AMORTIZATION AND INTEREST



Amortization decreased from $57,305 for the three months ended June 30, 2005 to $46,628 for the same period in 2006.  During 2004 and 2005, the Company increased its capital spending on computer hardware and software and on office furniture and leaseholds.  The equipment upgrades were part of a planned upgrade, which occurred after the May 2004 equity financing.  The leasehold improvements arose after the Company moved its head office in June 2004.  With capital expenditures diminishing in 2006, amortization for the period was reduced.



For the three months ended June 30, 2006, the Company incurred interest and financing charges of $7,743, compared to interest earned of $1,725 for the same period in 2005.  When the Company completed its financing in 2004, it went from a net borrower to a net investor of cash.  In the second quarter of 2005 interest earned exceeded interest and other bank charges.



OTHER EXPENSES



Stock compensation expenses were $10,456 for the three month period ended June 30, 2006 compared to $18,241 for the second quarter of 2005.  Stock compensation expenses arise when options or warrants, issued to employees or others, vest.  In 2005 the costs associated with the vesting of certain management options were expensed in the period.





- 18 -



---











INCOME TAXES



The Company has loss carry forwards of approximately $10 million to be applied against future corporate income taxes.  Management assesses on a quarterly basis the likelihood of recovering these tax losses.  With the improvement in operating results and the benefit of the settlement with Calian, management determined that it was more likely than not that the benefit of the unrecognized income tax losses should be recorded.  Accordingly, the Company recorded a $648,230 income tax recovery net of a tax provision of $15,800 and a corresponding future tax asset, which represents the benefits of losses expected to be utilized to offset future taxable income.



Six months ended June 30, 2006 compared to six months ended June 30, 2005



REVENUE



The Company's revenue from continuing operations for the six months ended June 30, 2006 was $9,471,328 compared to $6,090,045 for the six months ended June 30, 2005.



The increase in revenue during the 2006 period over the comparable 2005 period of approximately 56% was attributable to an increase in all operating divisions.  Divisional revenues were:



Six Months Ended June 30,Division20062005Staffing Solutions$5,687,083$3,948,318Medical Services3,132,3781,665,467Healthcare Consulting Services651,867476,260Total$9,471,328$6,090,045




Revenues from the Staffing Solutions business increased 44% for the six months ended June 30, 2006 over 2005.  This increase was primarily attributable to the addition of two significant contracts which were signed in the second half of 2005.  Additionally, the Company generated increased revenue per contract compared to 2005.



Revenue from the Medical Services business in the first six months of 2006 increased 88% to $3,132,378 from $1,665,467 in 2005.  The increase was driven by three factors.

1.

In late 2004, the Company launched its Pain Management business.  For the first six months of 2006 the Pain Management business generated $1,447,040 in revenue compared to $584,733 in 2005 as the Company grew from two to five clinics.  The Company believes that the Pain Management business is an opportunity for the Company to generate considerable growth.  It is a field of healthcare that is vastly under serviced in Canada.  The Company has recently opened its fifth clinic location and more sites are scheduled for 2006.  It is anticipated that strong revenue growth will continue in the current fiscal year, though no assurance can be given that such growth will in fact be achieved.

2.

The Infusion business increased to $1,254,723 from $836,419 in 2005.  The 50% increase in the Infusion business was driven by a 37% increase in infusions from 3,441 in the first six months of 2005 to 4,719 in the same period of 2006 enhanced by a 9% increase in revenue per infusion.

3.

During 2005, the Company re-assumed responsibility for two family medical clinics, one in January 2005 and the second in November 2005.  These clinics generated $430,614 in revenue in the first six months of 2006 compared to $244,315 in 2005.  In the first half of 2005, the Company operated one clinic in Wallaceburg, Ontario.  During the first six months of 2006, the Company operated two family medical clinics, the Wallaceburg location and a second clinic in Calgary Alberta.



- 19 -



---













Revenue from Healthcare Consulting Services was $651,867 for the first six months of the year compared to $476,260 for the six months ended June 30, 2005, an increase of 37%.  For the last two years the Company has increased its focus on its Healthcare Consulting Services practice.  Working with leading academics and industry experts, the Company has successfully bid on, and won, an increasing number of contracts.  Our early successes in health human resource planning and primary care renewal have led to increased opportunities.  Further, our experience with primary care led to our involvement, in 2005, with the Province of Ontarios Family Health Team initiative.  The Company has signed several contracts to assist community-based Family Health Teams to develop business plans for funding of their individual family health teams.



GROSS MARGIN



Gross margin (revenue less physician and other direct costs) increased to $2,768,845 (76%) for six month period ended June 30, 2006, from $1,568,766 for the same period in 2005.





Six Months Ended June 30,Division20062005Staffing Solutions$1,056,122$729,052Medical Services1,310,594572,092Healthcare Consulting Services402,129267,622Total$2,768,845$1,568,766






The gross margin from the Staffing Solutions business increased to $1,056,122 from $729,052 in 2005.  The increase of 45% was in line with the increase in revenue.



The gross margin from Medical Services business increased 129%, or about $740,000 for the first half of 2006 compared to the same period in 2005.  As discussed above concerning revenue, this is attributable to (a) the launch of the Pain management business ($350,000); (b) increased Infusion volumes ($137,000) and better margin per infusion ($151,000); and (c) the resumption of the family medical clinics ($100,000).



The gross margin from Healthcare Consulting Services increased 50% for the first six months of 2006 from $267,622 in 2005 to $402,129 in 2006.  The increase is
gross margin is attributable to increased volume of activity in 2006.



OPERATING EXPENSES



Operating expenses are comprised of both direct and indirect operating expenses.  Indirect expenses include corporate overheads, which are allocated to the divisions, based on the gross margin earned by the division.



On an overall basis, operating expenses increased 22%
($459,278) to $2,534,604 for the first half of 2006 from $2,075,326 for the same period in 2005.  The increase in expenses is related to the increase volumes in each of the business units.  Specifically, the increases are largely attributable to increased costs associated with the Medical Services ($407,000) and Healthcare Consulting ($110,000)





- 20 -



---











On a divisional basis, after the allocation of corporate overheads, operating expenses were as follows:



Six Months Ended June 30,Division20062005Staffing Solutions$810,259$867,806Medical Services1,311,668904,216Healthcare Consulting Services412,677303,304Total$2,534,604$2,075,326






AMORTIZATION AND INTEREST



Amortization decreased from $99,962 for the six months ended June 30, 2005 to $86,934 for the same period in 2006.  During 2004 and 2005, the Company increased its capital spending on computer hardware and software and on office furniture and leaseholds.  The equipment upgrades were part of a planned upgrade, which occurred after the May 2004 equity financing.  The leasehold improvements arose after the Company moved its head office in June 2004.  With capital expenditures diminishing in 2006, amortization for the period was reduced.



For the six months ended June 30, 2006, the Company incurred interest and financing charges of $14,556, compared to interest earned of $7,115 for the same period in 2005.  When the Company completed its financing in 2004, it went from a net borrower to a net investor of cash.  In the second quarter of 2005 interest earned exceeded interest and other bank charges.



OTHER EXPENSES



Stock compensation expenses were $88,859 for the six month period ended June 30, 2006 compared to $269,358 for the same period in 2005.  Stock compensation expenses arise when options or warrants, issued to employees or others, vest.  In 2005, 1,437,500 share purchase warrants, that were set to expire, were extended by one year. In 2006, the same warrants were extended by six months.  The exercise price of the share purchase warrants was also reduced from $0.50 to $0.20 in December 2005.



INCOME TAXES



The Company has loss carry forwards of approximately $10 million to be applied against future corporate income taxes.  Management assesses on a quarterly basis the likelihood of recovering these tax losses.  With the improvement in operating results and the benefit of the settlement with Calian, management determined that it was more likely than not that the benefit of the unrecognized income tax losses should be recorded.  Accordingly, the Company recorded a $648,230 income tax recovery net of a provision for income taxes of $15,800 and a corresponding future tax asset, which represents the benefits of losses expected to be utilized to offset future taxable income.



DISCONTINUED OPERATIONS - GOVERNMENT HEALTHCARE SERVICES

During the six months ended June 30, 2006, the Company had a profit from discontinued operations of $69,283 net of tax
of $38,971, compared to $187,339 for the same period in 2005.  The profit in the period arose when the Company reached agreement with PWGSC and DND regarding certain disputed amounts. 
Included in this amount was about $130,000 of expenses related to legal and consulting services incurred while (a) protesting the loss of the contract and (b) in trying to collect certain amounts owing from the existing Contract.  The Company received approximately $385,000 from the settlement in the second quarter of 2006.





- 21 -



---











LIQUIDITY AND CAPITAL RESOURCES



As at June 30, 2006, the Company's cash position was $595,366 compared to $660,947 at December 31, 2005.



The Companys principal source of liquidity is its cash flow from operations.  Historically the Company has incurred operating losses. Losses were stabilized and reversed in the latter half of 2005 and this continued through the first six months of 2006.  The Companys working capital position (current assets minus current liabilities) improved by about $782,108 during the first half of 2006.  This was largely caused by the Company recording a future tax asset of $655,932.  Based on the result of recent business initiatives, management believes that this positive trend will continue for the foreseeable future although there can be no assurance that this will be the case.



The reduction in the cash position of ($65,581) in the first half of 2006 resulted from (a) an increase of cash from operations of $867,915; (b) changes to working capital items of ($1,038,508); (c) an increase of $175,679 from discontinued operations, comprised of a $69,283 profit from discontinued operations and a $106,396 increase in working capital from discontinued operations; (d) ($95,892) used by the Company in investing activities with respect to the purchase of property, plant and equipment; and (e) a foreign currency exchange gain of $25,225. The investing activities largely related to funds used for the acquisition of leasehold improvements at the Companys pain clinics.



The Company intends to expand its operations rapidly, as cash flow from operations permit.  As demand for the Companys services remain strong, management believes that cash flow from operations will satisfy its working capital and capital expenditure needs and other obligations as they arise, though no assurance can be provided that cash flow will in fact be sufficient to cover the Companys needs as they arise.  Notes Payable plus accrued interest of approximately $700,000 are due in November 2006.  The principal, along with interest at the rate of 7%, are payable in cash or shares, or any combination thereof, at the Companys option.



The Companys cash position improved significantly as a result of certain post-quarter events. On July 11, 2006, the Company settled its outstanding litigation regarding the loss of the DND Contract.  Pursuant to the settlement, Calian paid $CDN2.0 million (approximately $1.8 million at the time of payment) to the Company and the parties exchanged full and final releases.  Concurrently, the Company and Calian executed definitive agreements for the private placement by the Company to Calian of 8,750,000 shares of the Companys newly designated Series I Shares for aggregate gross proceeds to the Company of CDN$3.5 million (approximately $3.15 million at the time of agreement).  At the closing, the Company received CDN$1.75 million (approximately $1.57 million at the time of payment). The remainder of the consideration consisting of CDN$ 1.75 million ($1.57 million) has been deposited into escrow and will be paid to the Company as follows: (i) the amount of CDN$0.875 million ($0.785 million) will be paid to the Company upon the filing by the Company of a registration statement covering the resale and the (ii) remainder of the consideration will be paid at such time as the registration statement is declared effective.



There were no financing activities in 2005.  During 2004, financing activities generated $4.5 million of cash.  Effective June 15, 2004, the Company issued 39,360,272 common shares as part of an equity financing (the Financing).  As a condition of the Financing, Preferred Shares, 50% of which were indirectly held by Dr. Zacharias, the CEO of MEII, were converted into 9,348,000 common shares and preferred share dividends, in the amount of $0.58 million, were forgiven.  The preferred shares were redeemable in 2006, for common shares then valued at $4.5 million.  In addition to issuing the common shares, MEII also issued, anti-dilution warrants (the New Warrants) to purchase common shares of MEII at prices of either $0.50 per common share or $1.00 per common share.  The exercise of the New Warrants is directly tied to the exercise of existing options and warrants at $0.50 per common share and $1.00 per common share that are currently outstanding.  The exercise of the New Warrants is intended to allow the new investors and former preferred shareholder to maintain their pro rata share of their equity position.





- 22 -



---











During the first quarter of 2005 the terms of the 1,437,500 common share purchase warrants issued in February 1998 were amended, extending the expiry of these warrants from February 11, 2005 to February 11, 2006.  On February 10, 2006, the Company further extended the exercise period of the warrants to August 11, 2006. On August 10, 2006, the Company further extended the exercise period to September 10, 2006. The Company has also amended the terms of the warrants to (i) provide that if the closing price of common shares of MEII is $.70 or greater for thirty consecutive trading days, MEII has the right to redeem the Warrants at $.01 per Warrant upon ten days prior notice and (ii) to reduce the per share exercise price thereof to $0.20.



OFF BALANCE SHEET ARRANGEMENTS



The Company is not a party to any off-balance sheet arrangements.



CRITICAL ACCOUNTING POLICIES AND ASSUMPTIONS



The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities during the reporting period.  Significant areas requiring the use of estimates relate to:  1) the reported amounts of revenues and expenses, 2) the assessment of collection risk associated with accounts receivable, 3) the disclosure of contingent liabilities, and 4) accounting for income taxes.  We evaluate our estimates on an on-going basis. We state our accounting policies in the notes to the audited consolidated financial statements and related notes for the year ended December 31, 2005, contained herein. These estimates are based on information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances.  Actual results could vary from those estimates under different assumptions or conditions.  We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:



§

We maintain accruals for revenues, physician fees and other direct costs, salaries, benefits, and other costs.  Major accruals, revenues and expenses, relate to the accrual of revenue and expenses associated with staffing contracts.  These accruals are of a short duration; that is, revenues and expenses are generally known before financial statements are finalized.  Based on historical experience our accruals have proven accurate.  Should changes occur in the future, we may be required to revise our accrual assumptions.

§

We maintain an allowance for doubtful accounts for estimated losses resulting from fraudulent claims made by patients, the inability of our corporate customers to make required payments, or as a result of a dispute in the invoiced amount.  Fraudulent claims arise when patients seek medical care and provide an invalid health card for payment.  The introduction of electronic medical records services, which pre-screen patients prior to services being rendered, is rapidly diminishing our exposure to fraudulent claims by patients.  We determine the adequacy of our bad debt allowance by continually evaluating individual customer receivables, considering the customers financial condition, credit history and current economic and business conditions. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Historically losses on uncollectible accounts have not exceeded our allowances. As of December 31, 2005, our allowance for doubtful accounts was $18,000 (2004 - $16,000).

§

We are subject to various claims and legal actions in the ordinary course of our business. These matters include breach of contract or similar matters arising from contractual disputes. Our hospital and healthcare facility clients may also become subject to claims, governmental inquiries and investigations and legal actions to which we may become a party relating to services provided by our professionals. From time to time, and depending upon the particular facts and circumstances, we may be subject to indemnification obligations under our contracts with our hospital and healthcare facility



- 23 -



---











clients relating to these matters.  As mentioned, we are unable to determine our potential exposure regarding these lawsuits at this time.  Similarly, we have other contingent liabilities that pertain to amounts potentially owing to government authorities.  We continue to evaluate the probability of an adverse outcome and will provide accruals for such contingencies as required. We are currently not aware of any other such pending or threatened litigation or similar contingency that we believe is reasonably likely to have a material adverse effect on us. If we become aware of such claims against us, we will evaluate the probability of an adverse outcome and provide accruals, as required, at that time.

§

The Company is required to estimate the amount of tax payable for the current year and the future income tax assets and liabilities recorded in the financial statements accounts for future tax consequences of events that have been reflected in its financial statements.  Significant management judgment is required to assess the timing and probability of the ultimate tax impact.  The Company records valuation allowances on future tax assets to reflect the expected realizable future tax benefits.  Actual income taxes could vary from these estimates due to future changes n income tax law, changes in the jurisdictions in which the Company operates, the inability to generate sufficient future taxable income or unpredicted results from potential examinations or determinations of each years liability by the taxing authorities.



Valuation allowances primarily relate to potential future tax assets arising from accounting amortization claimed in excess of tax depreciation and tax losses carried forward.  Management must assess both positive and negative evidence when determining whether it is more likely than not that future tax assets will be recoverable in future periods.  Based on this assessment, a valuation allowance must be established where management has determined, based on current facts and reasonable assumptions, that such future tax assets will not likely be realized by the Company.  Realization is based on the Companys ability to generate sufficient future taxable income.  With improved operating results and the benefit of the lawsuit settlement with Calian, the Company recognized a future tax asset related to tax losses carried forward.  A change in material assumptions occurred as related to the Calian settlement and the Company reported an income tax recovery of $895,897 which represents the benefit of the tax losses which the Company expects to utilize in fiscal 2006.  The Company intends to maintain a valuation allowance for the balance of the future tax assets until sufficient positive evidence exists to support its reversal.  Changes in material assumptions can occur from period to period due to the aging of prior years losses, the cumulative effect of current period taxable income and other sources of positive and negative evidence.  If these changes in material assumptions were to provide sufficient positive evidence, The Company could record the net benefit of $10 million, or a portion thereof, as a recovery of income taxes in the period when realization becomes more likely than not and a corresponding increase in net future income tax assets.



Recently Issued Accounting Pronouncements



In February 2006, the United States Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 155, Accounting for Certain Hybrid Financial Instruments  an amendment to FASB Statements No. 133 and 140 (SFAS 155).  SFAS 155 simplifies the accounting for certain hybrid financial instruments containing embedded derivatives.  SFAS 155 allows fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133).  In addition, it amends SFAS No. 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS 140), to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.  SFAS 155 is effective for all financial instruments acquired, issued, or subject to a re-measurement event occurring after the beginning of an entitys first fiscal year that begins after September 15, 2006.  The Company will adopt



- 24 -



---











the provisions of SFAS 155 on January 1, 2007. The implementation of SFAS 155 is not expected to have a material impact on the Companys results of operations and financial condition.



In March 2006, the FASB issued SFAS No. 156 Accounting for Servicing of Financial Assets  an amendment of FASB Statement No. 140 (SFAS 156).  SFAS 156 simplifies the accounting for loan servicing rights and the financial instruments used to hedge risks associated with those rights. SFAS 156 requires that servicing rights be valued initially at fair value, and subsequently accounted for at either fair value, or amortized over the economic life of the related lease.  SFAS 156 is effective for fiscal years beginning after September 15, 2006. We will adopt the provisions of SFAS 156 on January 1, 2007.  The implementation of SFAS 156 is not expected to have a material impact on our results of operations and financial condition.



In July 2006, FASB issued two related standards that address accounting for income taxes: FASB Interpretation No. (FIN) 48,  Accounting for Uncertainty in Income Taxes, and FASB Staff Position (FSP) FAS 13-2, Accounting for a Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction.  Among other things, FIN 48 requires applying a more likely than not threshold to the recognition and de-recognition of tax positions, while FSP FAS 13-2 requires a recalculation of returns on leveraged leases if there is a change or projected change in the timing of cash flows relating to income taxes generated by the leveraged lease. The new guidance will be effective for us on January 1, 2007.   The implementation of FIN 48 and FAS 13-2 are not expected to have a material impact on our results of operations and financial condition.



The Company believes that the above standards would not have a material impact on its financial position, results of operations or cash flows as it relates to the reconciliation of Canadian and United States accounting policy differences.



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



There are no financial instruments that are sensitive to changes in interest rates or exposed to foreign currency exchange gains/losses.



ITEM 4: CONTROLS AND PROCEDURES



The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Companys Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-14(c).



As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with participation of management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based on the foregoing, the Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective.



During the quarter ended June 30, 2006, there have been no changes in the Companys internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, these controls.





- 25 -



---











PART II:  OTHER INFORMATION



ITEM 1A.  RISK FACTORS The Risk Factors included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 have not materially changed other than as set forth below.



The agreements with Calian pursuant to which it purchased 8,750,000 of our newly designated Series I Shares grant to Calian rights that could enable Calian to control or influence our actions in a manner that conflicts with the Companys interests and the interests of other stockholders.



Calian currently holds 8,750,000 shares of our Series I Shares which are currently convertible into an equal number of common shares. Under the agreements with Calian so long as Calian continues to hold 4,375,000 Series I Shares certain specified business actions cannot be taken with out its reasonable consent. In addition, so long as Calian continues to hold 6,562,500 Series I Shares it is entitled to appoint one member to the Companys Board of Directors or, in lieu thereof, an observer. While the Companys Board of Directors is entitled to exclude Calians board designee or observer from participating in board meetings under specified conditions, with regard to Calians status as a competitor of the Company, Calians ability to designate a board member or appoint an observer, together with its rights to veto certain Company actions may accord it considerable influence over matters affecting the Company. In addition as a major stockholder, Calian currently is able to exercise influence over matters requiring the approval of our stockholders, including the election of directors and the sale of our Company. Such a concentration of ownership may also have the effect of delaying or preventing a change in control of our Company, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices. Any of these facts could decrease the market price of our Common Shares.



ITEM 6. EXHIBITS



Exhibit 31.1   Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of the Company.



Exhibit 31.2   Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of the Company.



Exhibit 32.1   Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



Exhibit 32.2   Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.































- 26 -



---











SIGNATURES



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





MED-EMERG INTERNATIONAL INC.

(Registrant)



Authorized Officer:

By: /s/ Dr. Ramesh
Zacharias

Ramesh Zacharias

Chief Executive
Officer

Date:

August 14, 2006





Principal Financial and Accounting
Officer:

By: /s/ William Danis

William Danis

Chief Financial Officer

Date:

August 14, 2006







- 27 -



---











Exhibit 31.1



Certifications



I, Dr. Ramesh Zacharias, certify that:



1. I have reviewed this quarterly report on Form 10-Q of Med-Emerg International Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



b)  evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



c)  disclosed in this quarterly report any change in the registrants internal control over financial reporting that occurred during the registrants third fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.



5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):



a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and



b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.





Date:

August 14, 2006



/s/ Dr. Ramesh Zacharias

Dr. Ramesh Zacharias

Chief Executive Officer







---











Exhibit 31.2



Certifications



I, William Danis, certify that:



1. I have reviewed this quarterly report on Form 10-Q of Med-Emerg International Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



b)  evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



c)  disclosed in this quarterly report any change in the registrants internal control over financial reporting that occurred during the registrants third fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.



5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):



a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and



b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:

August 14, 2006





/s/ William Danis

William
Danis

Chief Financial Officer











---











Exhibit 32.1

CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Med-Emerg International Inc. (the "Company") on Form 10-Q for the period ending June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dr. Ramesh Zacharias Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:





1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



Date:

August 14, 2006



By:        /s/  Ramesh Zacharias

Name: Dr. Ramesh Zacharias

Title: Chief Executive Officer































---











Exhibit 32.2

CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Med-Emerg International Inc. (the "Company") on Form 10-Q for the period ending June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William Danis Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:





1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



Date:

August 14, 2006



By:       /s/ William Danis

Name: William Danis

Title: Chief Financial Officer