**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 March 31,
                  2007****OR**o
              
              **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 
o




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 o
            Accelerated
                Filer o
            Non-Accelerated
                Filer o








Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act). Yes oNo
x




As
        of
        May 14, 2007, 58,277,696 of the registrant’s common shares were outstanding. The
        aggregate market value of the shares of the issuer's common stock held by
        non-affiliates was approximately $3,455,000 based on the last reported sale
        price of $0.13 per share on May 14, 2007 as quoted on the OTC Bulletin
        Board.

























**MED-EMERG
      INTERNATIONAL INC.**





**TABLE
      OF CONTENTS**















PART
                I: FINANCIAL INFORMATION
            1ITEM
              1.
              CONDENSED FINANCIAL STATEMENTS
            1Consolidated
              Balance Sheets as at March 31, 2007 and December 31, 2006
              (Unaudited)
            2Consolidated
                Statements of Deficit for the three months ended March 31, 2007 and
                March
                31, 2006(Unaudited)
            3Consolidated
                Statements of Operations for the three months ended March 31, 2007
                andMarch
                31, 2006 (Unaudited)
            4Consolidated
                Statements of Cash Flows for the three months ended March 31, 2007
                and
                March 31,2006
                (Unaudited)
            5Notes
                to the Unaudited Consolidated Financial Statements for the three
                months
                ended March 31,2007
                and March 31, 2006
            6ITEM
              2:
              MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
              OPERATIONS
            17ITEM
                3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK
            26ITEM
                4:
                CONTROLS AND PROCEDURES
            26PART II: OTHER INFORMATION
            27ITEM
              1A.
              RISK FACTORS
            27ITEM
                6.
                EXHIBITS
            27SIGNATURES
            28












**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.
 
 
 **PART
        I: FINANCIAL INFORMATION**
 
 ITEM
        1. CONDENSED FINANCIAL STATEMENTS








1




**Med-Emerg
      International Inc.**


**Consolidated
      Balance Sheets**


**As
      at March 31, 2007 and December 31, 2006**


**(in
      US$)**





**March**
            
            **December****2007**
            
            **2006****Assets**
            
            
            **(Unaudited**)******Current
                assets**Cash
            
            $
            3,193,157
            
            $
            4,028,128Accounts
                receivable
            
            
            2,854,862
            
            
            2,497,610Prepaid
                expenses and other
            
            
            312,417
            
            
            76,045Discontinued
                operations (Note 4)
            
            
            466,785
            
            
            463,8706,827,221
            
            
            7,065,653Property,
                plant and equipment
            
            
            851,272
            
            
            597,543Goodwill
            
            
            237,596
            
            $
            237,596$
            7,916,089
            
            $
            7,900,792**LIABILITIES
                AND SHAREHOLDERS' EQUITY****Current
                liabilities**Accounts
                payable and accrued liabilities
            
            $
            2,566,646
            
            $
            2,273,061Discontinued
                operations (Note 4)
            
            
            888,608
            
            
            880,3733,455,254
            
            
            3,153,434**Long-term
                liabilities**Discontinued
                operations (Note 4)
            
            
            205,551
            
            
            280,873Long-term
                debt
            
            
            457,611
            
            
            453,369Redeemable,
                convertible Series I Special shares (Note 6a)
            
            
            2,636,945
            
            
            2,589,1593,300,107
            
            
            3,323,4016,755,361
            
            
            6,476,835Contingent
                liabilities (Note 10)**SHAREHOLDERS'
                EQUITY**Capital
                stock (Note 6)
            
            
            16,420,668
            
            
            16,420,668Contributed
                surplus (Note 7)
            
            
            3,106,792
            
            
            3,106,792Deficit
            
            
            (17,524,205
            )
            
            (17,253,951
            )Cumulative
                translation adjustment
            
            
            (842,527
            )
            
            (849,552
            )1,160,728
            
            
            1,423,957$
            7,916,089
            
            $
            7,900,792





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








2


**Med-Emerg
      International Inc.**


**Consolidated
      Statements of Deficit**


**For
      the three months ended March 31, 2007 and March 31,2006
      (Unaudited)**


**(in
      US$)**





**March**
            
            **March****2007**
            
            **2006**Balance,
                beginning of period, as previously reported
            
            
            ($17,253,951
            )
            
            ($18,077,662
            )Financial
                instruments - recognition and measurement (Note 3a)
            
            
            16,972
            
            
            -Balance,
                beginning of period
            
            
            (17,236,979
            )
            
            (18,077,662
            )Income
                (loss) attributable to common shareholders
            
            
            (287,226
            )
            
            68,840Balance,
                end of period
            
            
            ($17,524,205
            )
            
            ($18,008,822
            )





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








3


**Med-Emerg
      International Inc.**


**Consolidated
      Statements of Operations**


**For
      the Three months Ended March 31, 2007 and 2006 (Unaudited)**


**(in
      US$)**





**March**
            
            **March****2007**
            
            **2006****Revenue**
            
            $
            5,071,151
            
            $
            4,283,470**Direct
                costs**
            
            
            3,682,081
            
            
            3,108,7201,389,070
            
            
            1,174,750**Expenses**Salaries
                and
                benefits
            
            
            858,843
            
            
            673,067General
                and administration
            
            
            477,159
            
            
            230,586Occupancy
                costs
                and supplies
            
            
            146,980
            
            
            119,467Travel
                & marketing
            
            
            56,194
            
            
            45,8561,539,176
            
            
            1,068,976**Income
                (loss) before undernoted items**
            
            
            (150,106
            )
            
            105,774Interest
                (income), net of bank charges
            
            
            (7,333
            )
            
            6,813Interest
                on
                long-term debt
            
            
            29,097
            
            
            -Interest
                expense on financial liability carried at amortized cost
            
            
            4,757
            
            
            -Amortization
                of
                property, plant and equipment
            
            
            53,699
            
            
            40,306Stock
                based compensation expenses
            
            
            -
            
            
            78,40380,220
            
            
            125,522**Net
                loss before discontinued operations**
            
            
            (230,326
            )
            
            (19,748
            )**Discontinued
                operations**Net
                income (loss) on discontinued operations (Note 4)
            
            
            (56,900
            )
            
            88,588**Net
                income (loss) attributable to common shareholders**
            
            $
            (287,226
            )
            $
            68,840**Net
                income (loss) per common share (basic and diluted)***Continuing
                operations*
            
            $
            (0.00
            )
            $
            (0.00
            )*Discontinued
                operations*
            
            $
            (0.00
            )
            $
            0.00**Weighted
                average number of common shares outstanding**
            
            
            58,277,696
            
            
            58,277,696





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





4





**Med-Emerg
      International Inc.**


**Consolidated
      Statements of Cash Flows**


**For
      the Three months Ended March 31, 2007 and 2006 (Unaudited)**


**(in
      US$)**





**March**
            
            **March****2007**
            
            **2006**Restated**Cash
                Flows from Operating Activities**Net
                loss before discontinued operations
            
            
            ($230,326
            )
            
            ($19,748
            )Adjustments
                for:Amortization
                of
                property, plant and equipment
            
            
            53,699
            
            
            40,306Accretion
                of discount on Series I Shares
            
            
            24,102
            
            
            -Interest
                expense on financial liability carried at amortized cost
            
            
            4,757
            
            
            -Stock
                based compensation expenses
            
            
            -
            
            
            78,403(147,768
            )
            
            98,961Decrease
                in
                non-cash working capital components
            
            
            (283,582
            )
            
            (60,819
            )Discontinued
                operations
            
            
            (126,900
            )
            
            (182,072
            )(558,250
            )
            
            (143,930
            )**Cash
                Flows from Investing Activities**Additions
                to
                property, plant and equipment
            
            
            (307,429
            )
            
            (30,533
            )(307,429
            )
            
            (30,533
            )Effect
                of foreign currency translation
            
            
            30,708
            
            
            (3,245
            )**Decrease
                in cash**
            
            
            (834,971
            )
            
            (177,708
            )Cash,
                beginning of period
            
            
            4,028,128
            
            
            660,947Cash,
                end of period
            
            $
            3,193,157
            
            $
            483,239







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








5





**MED-EMERG
      INTERNATIONAL INC**


**Notes
      to Unaudited Interim Consolidated Financial Statements**


**For
      the Three months ended March 31, 2007 and 2006**





**1.
      ORGANIZATION AND DESCRIPTION OF BUSINESS**





Med-Emerg
      International Inc. (“MEII”, Med-Emerg or the “Company”) provides quality
      healthcare solutions to the Canadian healthcare industry.





The
      Company is publicly traded and listed on the OTC Bulletin Board. The Company
      completed its initial public offering in February 1998.





The
      Company’s operations are carried out in three units: Staffing Solutions, Medical
      Services and Healthcare Consulting. Prior to 2005 the Company was also involved
      in the Government Healthcare Services (including Department of National Defence
      “DND”). See Discontinued Operations - Note 4.





For
      Staffing Solutions, the Company 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 March 31, 2007,
      the
      Company had about 40 physician and nurse staffing contracts in approximately
      30
      facilities across Ontario.





The
      Medical Services division is comprised of (a) infusion services and (b) pain
      management services. The infusion business provides special access
      Remicade ’ 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. Since then, eight additional clinics have opened.





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





The
      Company sold all of its medical clinics during the 2003 fiscal year (see Note
      4). 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. During November 2006 the Company
      established a plan to dispose of the remaining family medical clinics and the
      results of this operation are now included as Discontinued Operations - Note
      4.




**2.
      BASIS OF PRESENTATION**





The
      accompanying 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 and CPM Health Centres
      Inc.





Significant
      intercompany accounts and transactions have been eliminated on
      consolidation.





The
      consolidated financial statements are expressed in U.S. dollars for the benefit
      of U.S. readers. Differences between Canadian and United States GAAP are
      described in Note 9.





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.




6




Operating
      results for the interim periods are not necessarily indicative of the results
      that may be expected for the year ended December 31, 2007.





These
      unaudited interim 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, 2006 (the “2006 Annual Report”). These unaudited interim
      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 2006 Annual Report.





**3.
      SUMMARY OF SIGNIFICANT CHANGES IN ACCOUNTING POLICIES**





**(a)**
            **Financial
                instruments - recognition and
                measurement**





On
      January 1, 2007, the Company adopted Section 3855 of the Canadian Institute
      of
      Chartered Accountants’ (“CICA”) Handbook, “Financial Instruments - Recognition
      and Measurement”. It exposes the standards for recognizing and measuring
      financial instruments in the balance sheet and the standards for reporting
      gains
      and losses in the financial statements. Financial assets available for sale,
      assets and liabilities held for trading and derivative financial instruments,
      part of a hedging relationship or not, have to be measured at fair value.





The
      Company has made the following classifications:





•
            Cash
                and temporary investments are classified as financial assets held
                for
                trading and are measured at fair value. Gains and losses related
                to
                periodical revaluation are recorded in net
                income.


•
            Accounts
                receivable are classified as loans and receivables and are initially
                measured at fair value and subsequent periodical revaluations are
                recorded
                at amortized cost using the effective interest rate
                method.


•
            Accounts
                payable and accrued liabilities and long-term debt are classified
                as other
                liabilities and are initially measured at fair value and subsequent
                periodical revaluations are recorded at amortized cost using the
                effective
                interest rate method.





The
      adoption of this Section is done retroactively without restatement of the
      consolidated financial statements of prior periods. As at January 1, 2007,
      the
      impact on the consolidated balance sheet of measuring the financial assets
      and
      liabilities using the effective interest rate method was a decrease in accounts
      payable and opening deficit of $16,972.





The
      Company determined that there were no hedging derivatives as at January 1,
      2007.





**(b)** **Comprehensive
      income**





On
      January 1, 2007, the Company adopted Section 1530 of the CICA Handbook,
“Comprehensive Income”. It describes reporting and disclosure recommendations
      with respect to comprehensive income and its components. Comprehensive income
      is
      the change in shareholders’ equity, which results from transactions and events
      from sources other than the Company’s shareholders.





The
      Company determined that there was no impact to its financial statements from
      the
      adoption of Section 1530 of the CICA Handbook.





**(c)** **Equity**





On
      January 1, 2007, the Company adopted Section 3251 of the CICA Handbook,
“Equity”, replacing Section 3250, “Surplus”. It describes standards for the
      presentation of equity and changes in equity for reporting period as a result
      of
      the application of Section 1530, “Comprehensive Income”.









7


The
      Company determined that there was no impact to its financial statements from
      the
      adoption of Section 3250 of the CICA Handbook.





**(d)** **Hedges**





On January
      1, 2007, the Company adopted
      Section 3865 of the CICA Handbook, “Hedges”. The recommendations of this Section
      expand the guidelines required by Accounting Guideline 13 (AcG-13), Hedging
      Relationships. This Section describes when and how hedge accounting can be
      applied as well as the disclosure requirements. Hedge accounting enables the
      recording of gains, losses, revenues and expenses from the derivative financial
      instruments in the same period as for those related to the hedged
      item.





The
      Company determined that there was no impact to its financial statements from
      the
      adoption of Section 3865 of the CICA Handbook.





**4.
      DISCONTINUED OPERATIONS**





**Family
      Medical Clinics Sale**





On
      September 5, 2003 the Company entered into a transaction with AIM Health Group
      Ltd. (“AIM”) to dispose of MEII’s Ontario-based clinic operations.





**Alberta
      Medical Clinics Sale**


On
      December 31, 2003, MEII’s indirect wholly-owned subsidiary YFMC Healthcare
      (Alberta) Inc. sold certain assets of the following four medical clinics located
      in the province of Alberta: Martindale Medical Centre, McKnight Village Medical
      Clinic, Jasper Avenue Medical Clinic, West Edmonton Mall Medical Centre.





Ownership
      of two of the family medical clinics sold in 2003 reverted to the Company in
      2005. During the fourth quarter of 2006 the decision was taken to dispose of
      these assets.





**Government
      Healthcare Services (including Department of National
      Defence)**





In
      March of 2001, the Company was awarded an administrative management services
      contract (“the Contract”), the largest of its kind, to provide medical staffing
      for military bases of the Department of National Defence (“DND”) across Canada.
      The Contract had an initial period of three years ending on March 31, 2004,
      but
      it was amended and extended until March 31, 2005.





In
      May
      2004, Public Works and Government Services Canada (“PWGSC”) re-tendered the
      Contract. Med-Emerg responded to the tender proposal and its bid was one of
      three considered by PWGSC (“the New Contract”). In December 2004 Med-Emerg
      learned that it was not successful in its bid to win the New Contract with
      DND.
      Its contractual relationship with the Canadian government for DND medical
      staffing services ended on March 31, 2005.





The
      loss from discontinued operations is comprised of a loss from the DND Contract
      of $4,858 (2006 - income of $121,634) and a loss from Family Medical Clinics
      of
      $52,042 (2006 - $33,046).




8





Three
                Months Ended March 312007
            
            2006Revenue
            
            $
            160,138
            
            $
            539,802Physician
                fees and other direct costs
            
            
            76,837
            
            
            154,842Gross
                margin
            
            
            83,301
            
            
            384,960Operating,
                general and administrativeexpenses
            
            
            138,797
            
            
            261,555Interest
            
            
            1,404
            
            
            34,817Income
                (loss) from discontinued operations
            
            $
            (56,900
            )
            $
            88,588




Results
      of discontinued operations for 2006 have been restated to reflect the impact
      of
      the decision taken in November 2006 to discontinue the Family Medical Business.
      The restatement had the following impact on the 2006 results:





March
                31, 2006(as
                previously
              reported)
            
            March
                31, 2006Revenue
            
            $
            286,708
            
            $
            539,802Physician
                fees and other direct costs
            
            
            -
            
            
            154,842Gross
                margin
            
            
            286,708
            
            
            384,960Operating,
                general and administrativeexpenses
            
            
            130,257
            
            
            261,555Interest
            
            
            34,817
            
            
            34,817Income
                from discontinued operations
            
            $
            121,634
            
            $
            88,588





March
                31,
            
            December
                31,2007
            
            2006AssetsCurrentCash
            
            $
            347
            
            $
            1,755Accounts
                receivable
            
            
            466,438
            
            
            462,115$
            466,785
            
            $
            463,870LiabilitiesCurrentAccounts
                payable and accrued liabilities
            
            
            888,608
            
            $
            880,373Long-term
                debt
            
            
            205,551
            
            
            280,8731,094,159
            
            
            1,161,246Net
                liabilities
            
            $
            627,374
            
            $
            697,376







9





The
      long-term debt of $205,551 ($280,873 at December 31, 2006) pertains to the
      long-term portion of the Goods and Services Tax (“GST”) which is payable over a
      period of five years, as per an agreement between the Company and the Canada
      Revenue Agency (“CRA”). The GST obligation arose on revenues associated with the
      DND contract. An amount of $25,983 (CDN$30,000) is payable monthly and is
      reviewable every six months. The current portion of this debt $295,976 (December
      31, 2006 - $296,904) has been classified under current portion of Discontinued
      Operations. The CRA has the right to register a Lien under the Personal Property
      Security Act with the Province of Ontario to secure its position.





**5.**  **INCOME
      TAXES**





The
      Company adopted the provisions of FIN 48 on January 1, 2007. The implementation
      of FIN 48 did not result in any adjustment to the Company’s beginning tax
      positions. The Company continues to fully recognize its tax benefits which
      are
      offset by a valuation allowance to the extent that it is more likely than not
      that the deferred tax assets will not be realized. As at January 1, 2007 and
      March 31, 2007, the Company had unrecognized tax benefits of $2.5 million
      associated with non-capital loss carryforwards and tax pools of $7.5
      million.





The
      Company files federal and provincial income tax returns in Canada. The Company
      is generally no longer subject to provincial income tax examinations by
      provincial tax authorities for years before 2005 and to federal income tax
      examinations for years before 2003. The Canada Revenue Agency (“CRA”) commenced
      an examination of the Company’s Canadian income tax returns for 2003 and 2004 in
      the third quarter of 2006 that is anticipated to be completed by the end of
      2007. As of March 31, 2007, the CRA has not made any proposed adjustments to
      the
      Company’s tax positions. Management does not anticipate that adjustments, if
      any, which may be proposed by the CRA would result in a material change to
      its
      financial position.





The
      Company recognizes any interest accrued related to unrecognized tax benefits
      in
      interest expense and penalties in operating expenses. During the three months
      ended March 31, 2007 and 2006, there was no such interest or
      penalty.





**6.
      CAPITAL STOCK**





**(a)** **Share
      Capital**





On
      July
      11, 2006, the Company executed definitive agreements with Calian Technologies
      Ltd. for the private placement 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 ($3.1 million). On July 12, 2006,
      the
      Company received CDN$1.75 million ($1.57 million). The remainder of the funds
      consisting of CDN$ 1.75 million ($1.57 million) were received by the Company
      as
      follows: (i) the amount of CDN$0.875 million ($0.785 million) was received
      on
      August 30, 2006, 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 was received on September 21, 2006, when
      the
      registration statement was 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





10


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. If not converted into Common Shares prior to
      the
      fifth anniversary of issuance, the Series I Shares are automatically redeemable
      at the sole discretion of the Company in either (a) cash at a rate of $0.45
      per
      share or (b) in Common Shares of the Company based on the VWAP of the Common
      Shares of the Company during the sixty (60) consecutive calendar day period
      immediately preceding the fifth anniversary. In the event of a change in
      control, the Series I Shares are also required to be redeemed in cash at a
      rate
      of $0.45 per share. The mandatory redemption and conversion features of the
      Series I Shares result in the classification of separate liability and equity
      components of the Series I Shares.





The
      Series I Shares have been accounted for as a compound financial instrument
      consisting of both a financial liability and equity component. The proceeds
      of
      the Series I Shares were allocated to the two components based on the present
      value of the future redemption value of the Series I Shares, discounted at
      a
      reasonable rate of return, considering the terms of the investment that could
      be
      earned by the holder of the Series I Shares.





**(b)** **Common
      stock purchase warrants**





During
      the third quarter of 2006, the terms of the 1,437,500 Common Share purchase
      warrants were amended, extending the expiry of these warrants from August 11,
      2006 to September 11, 2006. The incremental fair value determined by Black
      Scholes was $4,648 and the fair value assumptions were a risk-free rate of
      2.6%
      an expected life of 30 days, expected volatility of 98% and expected dividends
      of nil. This amount was charged to income as stock based compensation expense
      and credited to contributed surplus. These warrants expired September 11,
      2006.





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. The incremental fair value determined by Black Scholes was $69,876
      and
      the fair value assumptions were a risk-free rate of 2.5% an expected life of
      one
      year, expected volatility of 119% and expected dividends of NIL. This amount
      was
      charged to income as stock based compensation expense and credited to
      contributed surplus.





**7.
      CONTRIBUTED SURPLUS**





During
      the third quarter of 2006 Common Share purchase warrants expired. When the
      Common Share purchase warrants were issued in 1998, $106,111 of value was
      attributed to the Common Share purchase warrants. With expiration of the Common
      Share purchase warrants the value attributed to them was written-off. This
      amount was credited to contributed surplus.





During
      the third quarter of 2006, an amount of $4,648 was recorded as stock
      compensation expense for the extension of 1,437,500 Common Share purchase
      warrants from August 11, 2006 to September 11, 2006. This amount was credited
      to
      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. This amount was 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 2006. These amounts have been credited
      to
      contributed surplus.





11


**8.
      RELATED PARTY TRANSACTIONS**





During
      the first quarter of 2007, included in general and administration expenses
      are
      administrative fees of $nil in regards to payments to a related company ($31,182
      in the first quarter of 2006). There are no related party balances outstanding
      at March 31, 2007 or December 31, 2006. These transactions have been recorded
      at
      their exchange amount which is the amount agreed to by the related
      parties.





**9.
      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)** **Redeemable,
      convertible Series 1 Special Shares**





The
      Series I Shares are accounted for as a compound financial instrument comprising
      both a financial liability and equity under Canadian GAAP, because of their
      underlying terms and conditions, which include a mandatory redemption feature.
      Under U.S. GAAP, EITF Abstract Topic D-98 *Classification
      and Measurement of Redeemable Securities* recommends
      that shares that are redeemable for cash based on an occurrence of events
      outside of the control of the company should be classified outside of
      shareholders’ equity. The Series I Shares, which are redeemable for cash in the
      event of a change in control,
      are presented outside of shareholders’ equity for U.S. GAAP purposes. At this time it is
      management’s intention to redeem the Series I Shares through the issuance of
      common shares.





As
      a
      result of accounting for the Series 1 Shares as a compound financial instrument
      under Canadian GAAP, the liability component is accreted to the face value
      of
      the shares over the five year period to maturity. As the Series 1 Shares are
      not
      a liability for U.S. GAAP purposes the accretion expense charged to net income
      for the period under Canadian GAAP is reversed for U.S. GAAP purposes.
      Furthermore, since under U.S. GAAP the Series 1 Shares are “quasi-equity” the
      face value is adjusted to the initial U.S. dollar value on issuance and the
      foreign currency translation adjustment recorded under Canadian GAAP relating
      to
      the liability component is reversed for U.S. GAAP purposes.





The
      reconciliation of Canadian to U.S. GAAP for the Series 1 Shares is as
      follows:




March
                  31,
              
              December
                  31,2007
              
              2006Liability
                  portion of redeemable, convertible Series I Shares - Canadian
                  GAAP
              
              $
              2,636,945
              
              $
              2,589,159Impact
                  of accretion expense
              
              
              (72,226
              )
              
              (48,124
              )Equity
                  portion of redeemable, convertible Series I Shares - Canadian
                  GAAP
              
              
              482,043
              
              
              482,043Translation
                  adjustment attributable to Series I Shares
              
              
              59,792
              
              
              83,476Series
                  I Shares - U.S. GAAP
              
              $
              3,106,554
              
              $
              3,106,554







12


**(b)** **Share
      capital, goodwill and correction of prior period error**





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
      in
      1999 under Canadian GAAP was $1.25. The share price used for the YFMC Healthcare
      Inc. acquisition under U.S. GAAP was $1.859. The difference was allocated to
      goodwill at that time and, subsequently, the goodwill was impaired and
      written-off.





**(c)** **Stock
      purchase warrants**





Under
      U.S. GAAP, detachable stock 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 stock purchase warrants issued
      in conjunction with the private stock offering on January 22, 1996 and
      subsequently surrendered, have been given no recognition in the consolidated
      financial statements. Under U.S. GAAP, based on an ascribed fair value of $0.364
      for each of the 1,000,000 share purchase 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.





**(d)** **Comprehensive
      loss**





Statement
      of Financial Accounting Standards No. 130, “Reporting Comprehensive Income”
(SFAS 130), establishes standards for the reporting and display of comprehensive
      income and its components in the consolidated financial statements. Under U.S.
      GAAP the foreign currency translation adjustment recorded for the period and
      included in the cumulative translation adjustment in shareholders’ equity is
      included in comprehensive income (loss). The foreign currency translation
      adjustments are not currently adjusted for income taxes. The company is situated
      in Canada, and the foreign currency translation adjustments relate to the
      translation of the consolidated financial statements from Canadian dollars
      into
      United States dollars, solely for the convenience of the readers.





The
      effect of these accounting differences on capital stock, contributed surplus,
      deficit, cumulative translation adjustment, net income (loss) and net income
      (loss) per share are as follows:





**(e)** **Start-up
      costs**





Under
      Canadian GAAP as described in EIC 27 “Revenues and Expenditures During the
      Pre-operating Period”, certain pre-operating costs may be deferred and amortized
      over the tem associated with which they were incurred. Under U.S. GAAP such
      start-up costs are expensed in the period in which they occur.





**(f)** **Accounting
      for Income Taxes**





On
      January 1, 2007, the Company adopted the provisions of Financial Accounting
      Standards Board


(“FASB”)
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”),
      an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN
      48 prescribes a recognition threshold and measurement attribute for the
      financial statement recognition and measurement of a tax position taken or
      expected to be taken in a tax return. The interpretation requires that the
      Company recognize the impact of a tax position in the financial statements
      if
      that position is more likely than not of being sustained on audit, based on
      the
      technical merits of the position. FIN 48 also provides guidance on
      de-recognition, classification, interest and penalties, accounting in interim
      periods and disclosure. In accordance with the provisions of FIN 48, any
      cumulative effect resulting from the change in accounting principle is to be
      recorded as an adjustment to the opening balance of deficit. The adoption of
      FIN
      48 did not result in a material impact on the Company’s financial position or
      results of operations.





13





March
                31,
            
            December
                31,2007
            
            2006Capital
                stock - Canadian GAAP
            
            $
            16,420,668
            
            $
            16,420,668Capital
                stock issued on purchase of YFMC Healthcare Inc.
            
            
            1,087,872
            
            
            1,087,872Ascribed
                fair value of share purchase warrants issued
            
            
            (36,406
            )
            
            (36,406
            )Equity
                portion of redeemable Series I Shares
            
            
            (482,043
            )
            
            (482,043
            )Capital
                stock - U.S. GAAP
            
            $
            16,990,091
            
            $
            16,990,091Contributed
                surplus - Canadian GAAP
            
            $
            3,106,792
            
            $
            3,106,792Share
                purchase warrants
            
            
            36,406
            
            
            36,406Paid-in
                capital U.S. GAAP
            
            $
            3,143,198
            
            $
            3,143,198Deficit
                - Canadian GAAP
            
            $
            (17,524,205
            )
            $
            (17,253,951
            )Write-off
                of goodwill on purchase of YFMC Healthcare Inc.
            
            $
            (1,087,872
            )
            $
            (1,087,872
            )Impact
                of accretion expense
            
            
            72,226
            
            
            48,124Financial
                instruments - recognition and measurement (Note 2)
            
            
            (16,972
            )
            
            -Interest
                expense on financial liability carried at amortized cost
            
            
            4,757
            
            
            -Impact
                of start-up costs
            
            
            (36,702
            )Deficit
                - U.S. GAAP
            
            $
            (18,588,768
            )
            $
            (18,293,699
            )Cumulative
                translation adjustment - Canadian GAAP
            
            $
            (842,527
            )
            $
            (849,552
            )Translation
                adjustment attributable to Series I Shares
            
            
            (59,792
            )
            
            (83,476
            )Cumulative
                translation adjustment - U.S. GAAP
            
            $
            (902,319
            )
            $
            (933,028
            )Shareholders'
                equity - U.S. GAAP
            
            $
            642,202
            
            $
            906,562







Three
                  Months Ended March 312007
              
              2006Net
                  income (loss) - Canadian GAAP
              
              $
              (287,226
              )
              $
              68,840Impact
                  of accretion expense
              
              
              24,102
              
              
              -Interest
                  expense on financial liability carried at amortized cost
              
              
              4,757
              
              
              -Impact
                  of start-up costs
              
              
              (36,702
              )
              
              -Net
                  income (loss) - U.S. GAAP
              
              
              (295,069
              )
              
              68,840Foreign
                  currency translation adjustment
              
              
              30,708
              
              
              (3,245
              )Comprehensive
                  income (loss)
              
              $
              (264,361
              )
              $
              65,595Net
                  income (loss) per share, basic and diluted - Canadian GAAPContinuing
                  operations
              
              $
              (0.00
              )
              $
              (0.00
              )Discontinued
                  operations
              
              $
              (0.00
              )
              $
              0.00Net
                  income (loss) per share, basic and diluted - U.S. GAAPContinuing
                  operations
              
              $
              (0.00
              )
              $
              (0.00
              )Discontinued
                  operations
              
              $
              (0.00
              )
              $
              0.00






14





**Recently
      Issued Accounting Pronouncements**





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" which
      is
      effective for fiscal years beginning after November 15, 2007 and for interim
      periods within those years. This statement defines fair value, establishes
      a
      framework for measuring fair value and expands the related disclosure
      requirements. The Company is currently evaluating the potential impact of this
      statement on its consolidated financial statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” This standard provides companies
      with an option to report selected financial assets and liabilities at fair
      value. The Standard’s objective is to reduce both complexity in accounting for
      financial instruments and the volatility in earnings caused by measuring related
      assets and liabilities differently. This standard also establishes presentation
      and disclosure requirements designed to facilitate comparisons between companies
      that choose different measurement attributes for similar types of assets and
      liabilities. This Statement is effective as of the beginning of an entity’s
      first fiscal year beginning after November 15, 2007. The Company is currently
      evaluating the potential impact of this statement on our consolidated financial
      statements.





**10.
      CONTINGENT LIABILITIES**





(i) There
      is uncertainty with respect to the Company’s liability for Goods and Services
      Tax pertaining to certain services that it previously provided. The measurement
      of this uncertainty is not determinable and management is of the view that
      it is
      not probable a liability will be confirmed. No amount has been provided in
      these
      consolidated financial statements.





(ii) There
      is uncertainty with respect to the Company’s liability arising from a
      contractual dispute with a third party. The potential costs to the Company
      associated with this dispute range from $nil to $1.6 million. The Company is
      of
      the view that it is not probable that the Company will be found liable for
      these
      costs. No amount has been provided in these consolidated financial
      statements.





(iii) Claims
      have been made against the Company for unspecified damages in regards to a
      claim
      for wrongful dismissal and breach of contract. The Company is of the view that
      liability, if any, would be the responsibility of a third party contractor
      and
      if damages were found, they would not be material in light of the current law.
      Since management is of the opinion that the claim is unlikely to succeed, no
      provision has been made in respect thereof in these consolidated financial
      statements. No amount has been provided 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 $926,000.





(v) We
      are
      party to various claims and legal proceedings arising in the normal course
      of business. While claims and litigation are subject to inherent
      uncertainties, management currently believes that the ultimate outcome
      of claims and proceedings, individually and in the aggregate, will not have
      a material adverse effect on our consolidated financial condition, results
      of
      operation or cash flows.





Any
      liability resulting from the above will be reflected as a charge to income
      in
      the year the liability, if any, is confirmed.








15





**11.
      SEGMENTED INFORMATION**





The
      Company operates under three business units: Staffing Solutions, Medical
      Services, and Healthcare Consulting Services.





The
      segmented information for the business units are as follows:








Three
                Months Ended March 312007
            
            2006RevenueStaffing
                solutions
            
            $
            2,737,272
            
            $
            2,660,557Medical
                services
            
            
            2,085,202
            
            
            1,188,394Healthcare
                consulting
            
            
            248,677
            
            
            434,5195,071,151
            
            
            4,283,470Divisional
                income (loss)Staffing
                solutions
            
            
            (26,665
            )
            
            139,616Medical
                services
            
            
            (78,977
            )
            
            (77,826
            )Healthcare
                consulting
            
            
            (44,464
            )
            
            43,984(150,106
            )
            
            105,774Interest
                income, net of bank charges
            
            
            (7,333
            )
            
            6,813Interest
                on long-term debt
            
            
            29,097
            
            
            -Amortization
                of property, plant and equipment
            
            
            53,699
            
            
            40,306Interest
                expense on financial liability carried at amortized cost
            
            
            4,757
            
            
            -Stock
                based compensation expenses
            
            
            -
            
            
            78,40380,220
            
            
            125,522Net
                loss from continuing operations
            
            
            ($230,326
            )
            
            ($19,748
            )





**12.
      ECONOMIC DEPENDENCE**




The
      Company derived approximately 18% of its revenue for the three month period
      ended March 31, 2007 (13% - 2006) from services provided under its contract
      with
      Schering, and as such is subject to concentration risk associated with the
      continuation of its contract with Schering.





**13.
      COMPARATIVE FIGURES**





Certain
      figures in the 2006 consolidated financial statements have been reclassified
      to
      conform with the basis of presentation in 2007. The results for Family Medical
      Clinics, which were reported as part of Medical Services in 2006, have been
      reclassified as discontinued operations (Note 4).





16





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 FORM 10-Q.**





The
      Company’s operations are comprised of three business units: Staffing Solutions,
      Medical Services and Healthcare Consulting Services. During the three month
      period ended March 31, 2007, 54% of the Company’s revenue was generated by the
      Staffing Solutions unit; 41% by the Medical Services unit; and 5% by the
      Healthcare Consulting unit. From a Gross Margin perspective, the contribution
      was 29%, 59% and 12%, 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 to access chronic
      pain
      specialists, and the growing cost of public medicine, play directly into the
      Company’s strengths.




The
      Company’s Staffing Solutions provide physician and nurse practitioner staffing
      services to more than 30 healthcare facilities across Ontario, including rural
      and urban hospitals as well as tertiary care centers and corrections
      facilities.





MEII’s
      Medical Services include chronic pain management and intravenous infusion
      services for pharmaceutical companies in conveniently located community-based
      clinics.





The
      Company’s Healthcare Consulting Services provide 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.





MEII
      was founded in 1983 and is incorporated under the Business Corporation Act
      (Ontario).





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.







17


Growth
      of the Company’s Medical Services business is dependent on several factors. The
      Infusion business is reliant upon our ability to introduce new drug therapies
      through our 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 our ability to recruit additional doctors to provide pain
      therapies. With the long wait-times for patients to obtain adequate pain
      management treatment, patient demand is less of a concern for the Company.





The
      growth of Healthcare Consulting Services is dependent on market developments
      in
      Canadian healthcare. At this time, it is perceived that growth opportunities
      abound because of on-going demand for health human resource planning, primary
      healthcare reform initiatives and pandemic planning. For the Company to be
      successful it must improve its business development tools to ensure that it
      is
      in front of the right business opportunities at the right time.





*STAFFING
      SOLUTIONS*




MEII
      is
      the leading provider of ER doctors to Ontario hospitals. The Company provides
      physician-staffing services to more than 30 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 trialed in 1996 to recruit primary care
      practitioners into mental health facilities. 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
      tenth year of operation, has received high satisfaction ratings from both staff
      and patients, resulting in one of the Company’s clients 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.




In
      September 2006 the Company recruited Dr. Jim Ducharme to lead the clinical
      aspect of Staffing Solutions. Dr. Ducharme is a nationally recognized emergency
      medicine specialist and is the past president of the Canadian Association of
      Emergency Physicians. Dr. Ducharme brings a very broad perspective of the
      challenges facing emergency departments today and he is an important asset
      in
      the Company’s future growth of the Staffing Solutions business. Dr Ducharme was
      instrumental in the Company’s development of a training program designed for
      Ontario’s family physicians. In concert with the College of Family Physicians,
      MEII developed and hosted training sessions designed to re-introduce family
      physicians to the ER. The program was well received and it is anticipated that
      future training sessions will ensue in 2007. Concurrent with the addition of
      Dr.
      Ducharme, the division was realigned to expand its business development
      capabilities in anticipation of increased staffing opportunities.





*MEDICAL
      SERVICES*




MEII
      provides innovative medical services directly to healthcare consumers.









18


*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 various inflammatory disorders, including
      rheumatoid arthritis and Crohn's disease. The Company delivered more than 10,100
      infusions in 2006. During the first quarter of 2007, The Company provided
      approximately 3,500 infusions.





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





As
      of
      March 31, 2007, the Company operated 22 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.





RemicadeTM
      is currently approved by Health Canada for six indications in Ontario:
      rheumatoid arthritis, Crohn’s disease, ankylosing spondylitis ulcerative
      colitis, psoriatic arthritis and psoriasis. Once an indication is approved
      by
      Health Canada, it is more likely that doctors will prescribe the medicine and
      that insurance companies will insure the medicine. Historically, more than
      85%
      of infusions have related to Crohn’s disease and rheumatoid arthritis. Total
      infusions grew by 61% in the first quarter of 2007. The Company expects growth
      related to RemicadeTM to level off in the near term, unless additional
      indications are approved by Health Canada.





The
      Company continues to look for additional products to offer through its infusion
      clinics and the opportunity to open clinics in new locations.





*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 one in Oakville,
      Ontario opened in 2006. During the first quarter or 2007, clinics were opened
      in
      Ottawa, London, Oshawa and St. Catharines 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 15 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 patient visits from
      approximately 300 patients per month to more than 700 patients per month during
      2006. Year-over-year, CPM more than doubled its patient visits from
      approximately 3,330 patient visits during the first three months of 2006 to
      approximately 7,180 patient visits in the first quarter of 2007.





19


Plans
      are underway to further increase capacity in 2007 by training more doctors
      and
      by opening additional clinics.





*HEALTHCARE
      CONSULTING*





Over
      the years, MEII 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.





The
      Company is currently in negotiations with several provincial bodies to provide
      services. During 2006 the Company provided services to the Ministry of Health
      and Long-Term Care, Ontario, in regards to pandemic planning and the use of
      nurse practitioners and physicians’ assistants in an ER setting; developed and
      designed nine business plans with respect to Family Health Teams across Ontario;
      and assisted the Ministry of Health, Nova Scotia in researching the use of
      international medical graduates.





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. On a recent contract, the Company worked with two
      internationally recognized subject-matter experts, a former senior public-health
      officer and surgeon, two professors at leading Canadian universities, a lawyer,
      and a chief health human resource officer for a provincial government. In tandem
      with MEII’s own project manager, the contract was won in a competition against
      bids from several multi-national consulting firms.





*RESULTS
      OF OPERATIONS* **





**REVENUE**





The
      Company's revenue from continuing operations for the three months ended March
      31, 2007 was $5,071,151 compared to $4,283,470 for the three months ended March
      31, 2006.





The
      increase in revenue during the 2007 period over the comparable 2006 period
      of
      approximately 18% was attributable to increases in the Staffing Solutions and
      Medical Services divisions, slightly offset by a decrease in the Consulting
      division. Divisional revenues were:





Quarter
                Ended March 31,Division
            
            
            2007
            
            
            2006Staffing
                Solutions
            
            $
            2,737,272
            
            $
            2,660,557Medical
                Services
            
            
            2,085,202
            
            
            1,188,394Consulting
            
            
            248,677
            
            
            434,519Total
            
            $
            5,071,151
            
            $
            4,283,470





Staffing
      Solutions revenues increased 3% in the first quarter of 2007 over 2006. In
      the
      third quarter of 2006, the Company lost two significant contracts. It has taken
      several months to regain the business lost at that time.





Revenue
      from the Medical Services division increased 76% to $2,085,202 from $1,188,394
      in 2006. The increase was largely driven by:


1.
            The
                Pain Management business continues to grow. Centers opened during
                2006 and
                the first quarter of 2007 generated approximately $535,000 of new
                revenue
                while revenues from the existing clinics were comparable to those
                in 2006.


2.
            During
                the first quarter of 2007, the Company increased its base of intravenous
                infusion clinics from 16 to 22. Infusion revenues increased about
                $343,000
                to $904,660 from $561,122 in 2006. The 61% increase in the Infusion
                business was driven by a corresponding 61% increase in infusions
                from
                2,175 in the first quarter of 2006 to 3,497 in the first quarter
                of 2007.
                Of this, 38% of the increase was from additional infusions at existing
                clinics and the remaining growth came from infusions at clinics that
                were
                opened during the first quarter of
                2007.






20




Revenue
      from
      Healthcare Consulting was $248,677 for the first quarter of 2007 compared to
      $434,519 for the quarter ended March 31, 2006, a decrease of 43%. Contracts
      that
      the Company expected to sign, have been delayed and accordingly revenues
      decreased during the first quarter of the year.




**GROSS
      MARGIN**





Gross
      Margin (revenue less physician and other direct costs) increased to $1,398,070
      (18%) for the first quarter of 2007, from $1,174,750 for the same period in
      2006.




Quarter
                Ended March 31,Division
            
            2007
            
            2006Staffing
                Solutions
            
            $
            402,992
            
            $
            474,118Medical
                Services
            
            
            816,668
            
            
            448,753Consulting
            
            
            169,410
            
            
            251,879Total
            
            $
            1,389,070
            
            $
            1,174,750




The
      Gross Margin from the Staffing Solutions business decreased from $474,118 during
      the first quarter of 2006 to $402,992 in first quarter of 2007. The decrease
      of
      15% was caused by the loss of certain high gross margin business during the
      second half of 2006. Gross margin as a percentage of revenue declined from
      17.8%
      during the first quarter of 2006 to 14.7% in the first quarter of 2007.





The
      Gross Margin from Medical Services increased 82%, or about $368,000 in the
      first
      quarter of 2007 compared to the same period in 2006. As discussed above
      concerning revenue, this is attributable to (a) the continued growth of the
      Pain
      management business ($164,000); and (b) increased Infusion volumes
      ($204,000).





The
      Gross Margin from Consulting Services decreased 33% for the first three months
      of 2007 from $251,879 in 2006 to $169,410 in 2007. The decrease is Gross Margin
      is attributable to a decreased level of activity in 2007, corresponding to
      the
      delay in several contracts that the Company expects to win.





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





Quarter
                Ended March 31,Division
            
            2007
            
            2006Staffing
                Solutions
            
            $
            429,657
            
            $
            334,502Medical
                Services
            
            
            895,645
            
            
            526,580Consulting
            
            
            213,874
            
            
            207,894Total
            
            $
            1,539,176
            
            $
            1,068,976





On
      an
      overall basis, operating expenses increased 44%, or approximately $470,000,
      to
      $1,539,176 for the first quarter of 2007 from $1,068,976 for the quarter ended
      March 31, 2006. The increase was attributable to increased costs associated
      with
      the business units: Staffing Solutions ($95,000); Pain Management ($250,000);
      and Infusion Services ($120,000). The increase in Staffing Solutions is related
      to increased costs associated with the evolution of the department to meet
      the
      current market requirements. The increase in costs associated with the Pain
      Management and Infusions Services business is related to the increase in
      business volumes with each business unit.







21


**AMORTIZATION
      AND INTEREST**





Amortization
      increased from $40,306 for the three months ended March 31, 2006 to $53,699
      for
      the first quarter of 2007. During the fourth quarter of 2006, the Company
      increased its capital spending on leasehold improvements and equipment
      associated with its Pain Management centers. Consequently amortization costs
      increased in the first quarter of 2007 compared to the first quarter of the
      previous year.





For
      the
      three months ended March 31, 2007, the Company earned interest net of bank
      charges of $7,333, compared to an expense of $6,813 in the same period in 2006.
      When the Company completed its financing in July 2006, the cash on hand
      increased so that interest earned exceeded the bank charges
      incurred.





Interest
      on long-term debt in the first quarter of 2007 increased from $nil in the first
      quarter of 2006 to $29,097. The increase is associated with the interest charges
      attributed to the Series I Special Shares. This is a non-cash expense.





**OTHER
      EXPENSES**





Stock
      based compensation expenses were $nil in the first quarter of 2007 compared
      to
      $78,403 in the first three month of 2006. Stock based compensation expenses
      arise when options or warrants, issued to employees or others, vest. In the
      first quarter of 2006 the Company extended the expiry date of 1,437,500 stock
      purchase warrants from February 2006 to August 2006, resulting in stock based
      compensation expense of $69,876. Also during the first quarter of 2006, 31,250
      stock options awarded to an employee in 2004, vested, resulting in additional
      stock based compensation expense of $8,527.





Interest
      expense on the financial liability carried at amortized cost of $4,757 arises
      as
      a result of the Company adopting Handbook Section 3855, “Financial Instruments -
      Recognition and Measurement”. The charge to earnings represents the amortization
      of an unrealized gain on certain liabilities. This is a non cash
      expense.





**INCOME
      TAXES**





For
      the
      three months ended March 31, 2007 and 2006, there was no provision for income
      taxes payable due to the large tax loss carry-forwards available from previous
      loss years. The Company pays income taxes in accordance with Canadian federal
      and provincial income tax legislation. We do not expect to pay significant
      corporate income tax in Canada in the foreseeable future because we have
      significant net operating loss carry forwards for Canadian income tax
      purposes.




**DISCONTINUED
      OPERATIONS (GOVERNMENT HEALTHCARE SERVICES)**




**Family
      Medical Clinics**


For
      the
      three month period ended March 31, 2007 the Company reported a loss from its
      Family Medical Clinics of $52,042 compared to a loss of $33,047 in the same
      period in 2006. The Company is in the process of disposing of all Family Medical
      Clinics. The losses increased in the current fiscal year when one of the
      physicians at the Calgary clinic resigned, reducing the billings at the clinic.
      Late in the first quarter of 2007, a physician was recruited to replace the
      departed physician.





**Government
      Health Services**


During
      the three month period ended March 31, 2007, the Company had a loss from
      Government Health Services (the “DND Contract”) of $4,858 compared to income of
      $121,635 in the first quarter of 2006. During the first quarter of 2006, the
      Company reached agreement with Public Works and Government Services Canada
      (“PWGSC”) and DND regarding certain disputed amounts. Included in the
      calculation of income in 2006 was approximately $130,000 of expenses related
      to
      legal and consulting services incurred while attempting to recover amounts
      owing. The costs incurred in the first quarter of 2007, similarly relate to
      expenses incurred in attempting to recover amounts from PWGSC.







22


**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      at
      March 31, 2007, the Company's cash position was $3,193,157 compared to
      $4,028,128 at December 31, 2006.





The
      Company’s principal source of liquidity is its cash on hand and its cash flow
      from operations. Historically we have incurred operating losses; however, in
      2006 the Company reported cash flow from operations of approximately $736,000.
      This arose on the settlement of an outstanding lawsuit. The Company’s working
      capital position (current assets minus current liabilities) decreased by
      approximately $527,000 in the first quarter. During the first quarter of 2007,
      the Company continued its expansion of its Pain Management business, by opening
      four new Pain Management centers. Capital expenditures in the first quarter
      increased to approximately $307,000 from $30,000 in the first quarter of
      2006.





The
      reduction in the cash position of ($834,971) in the first quarter of 2007
      resulted from (a) a decrease of cash from operations of ($112,000); (b) and
      changes to non-cash working capital items of ($296,000); (c) a ($117,000) change
      from discontinued operations, comprised of a loss of ($57,000) from discontinued
      operations and a ($60,000) decrease in working capital from discontinued
      operations; and (d) ($307,000) used by the Company in investing activities
      with
      respect to the purchase of property, plant and equipment. The investing
      activities largely related to funds used for the acquisition of leasehold
      improvements at the Company’s Pain Management centers.





The
      Company believes that cash on hand is adequate to finance our
      working capital, capital expenditure, and other obligations.





**OFF
      BALANCE SHEET ARRANGEMENTS**





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





**ADOPTION
      OF ACCOUNTING POLICIES**





Effective
      January 1, 2007, the Fund has adopted the Canadian Institute of Chartered
      Accountants (“CICA”) Handbook; Section 3855 “Financial Instruments - Recognition
      and Measurement”; Section 3865 “Hedges”; and Section 1530 “Comprehensive
      Income”. These accounting standards introduce new requirements for the
      recognition and measurement of financial instruments, the application of hedge
      accounting and the reporting of comprehensive income that are designed to
      harmonize Canadian accounting standards with US and International Financial
      Reporting Standards.





For
      details of the specific accounting changes and related impacts, refer to Notes
      3
      and 9 in the unaudited interim consolidated financial statements.





On
      January 1, 2007, the Company adopted the provisions of Financial Accounting
      Standards Board


(“FASB”)
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”),
      an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN
      48 prescribes a recognition threshold and measurement attribute for the
      financial statement recognition and measurement of a tax position taken or
      expected to be taken in a tax return. The interpretation requires that the
      Company recognize the impact of a tax position in the financial statements
      if
      that position is more likely than not of being sustained on audit, based on
      the
      technical merits of the position. FIN 48 also provides guidance on
      de-recognition, classification, interest and penalties, accounting in interim
      periods and disclosure. In accordance with the provisions of FIN 48, any
      cumulative effect resulting from the change in accounting principle is to be
      recorded as an adjustment to the opening balance of deficit. The adoption of
      FIN
      48 did not result in a material impact on the Company’s financial position or
      results of operations.







23


Recently
      Issued Accounting Pronouncements





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" which
      is
      effective for fiscal years beginning after November 15, 2007 and for interim
      periods within those years. This statement defines fair value, establishes
      a
      framework for measuring fair value and expands the related disclosure
      requirements. The Company is currently evaluating the potential impact of this
      statement on its consolidated financial statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” This standard provides companies
      with an option to report selected financial assets and liabilities at fair
      value. The Standard’s objective is to reduce both complexity in accounting for
      financial instruments and the volatility in earnings caused by measuring related
      assets and liabilities differently. This standard also establishes presentation
      and disclosure requirements designed to facilitate comparisons between companies
      that choose different measurement attributes for similar types of assets and
      liabilities. This Statement is effective as of the beginning of an entity’s
      first fiscal year beginning after November 15, 2007. The Company is currently
      evaluating the potential impact of this statement on our consolidated financial
      statements.





**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)
      reporting 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, 2006. 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, 2006, our allowance for doubtful accounts was $23,203 (2005 -
                $17,836).


•
            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 clients relating to these matters. Material pending
                legal proceedings brought against the Company are described in Note
                10 of
                the financial statements included with this quarterly report on Form
                10-Q.
                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.










24




•
            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 in 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. The Company intends to maintain a valuation allowance against
                its
                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 $2.5
                million associated with non-capital loss carryforwards and tax pools
                of
                $7.5 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.


•
            The
                Company is required to make certain assumptions in determining the
                value
                of stock based compensation. Management has applied the Black Scholes
                model for determining the value of stock based compensation. Inherent
                in
                the application of the Black Scholes model are certain assumptions
                with
                respect to the future payment of dividends, the risk free rate of
                return
                and volatility of the stock. Based on these assumptions a charge
                to income
                is incurred when these instruments vest. Actual experience could
                vary
                materially from the assumptions made by management.





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





Evaluation
      of Disclosure Controls and Procedures :
      Our
      management with the participation of our principal executive officer and
      principal financial officer has evaluated the effectiveness of our disclosure
      controls and procedures (as such term is defined in Rules 13a-15(e) and
      15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”) pursuant to Rule 13a-15c under the Exchange Act as of the end of the
      period covered by this Annual Report on Form 10-K.






25




We
      have
      undertaken significant efforts to establish a framework to improve internal
      controls over financial reporting.  We committed considerable resources to
      design, implement and document our internal controls. In performing the
      assessment, our management believes that these efforts have improved our
      internal controls over financial reporting; however, management has identified
      one material weakness in internal control over financial reporting existing
      as
      of December 31, 2006.  Management determined that our access controls over
      our financial application system did not operate to segregate incompatible
      duties.  This lack of segregation was not compensated effectively with
      other compensating, detective controls. This deficiency was evaluated as
      representing a more than remote likelihood that a misstatement that is more
      than
      inconsequential, but less than material, could occur. The control deficiency
      could result in a misstatement to the financial statement accounts, resulting
      in
      a material misstatement to annual or interim consolidated financial statements
      that would not be prevented or detected by our internal control over financial
      reporting.  As a result, management concluded that a material weakness
      exists and thus we are not able to conclude that our internal control over
      financial reporting and disclosure controls were effective as of the end of
      the
      period covered by our Annual Report on Form 10-K.  However, this weakness
      in our internal control over financial reporting did not result in any
      adjustments nor did it result in any material misstatement of our 2006 annual
      or
      interim consolidated financial statements. Management has initiated steps to
      segregate the incompatible duties in question.





Changes
      in Internal Control over Financial Reporting :
      There
      was no change in our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during
      the
      period covered by this Annual Report on Form 10-K that has materially affected,
      or is reasonably likely to materially affect our internal control over financial
      reporting.








**PART
      II: OTHER INFORMATION**





ITEM
      1A. RISK FACTORS





There
      have been no material changes in our risk factors from those disclosed in our
      2006 Annual Report on Form 10-K.








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 Section 1350 Certification of Chief Executive Officer


Exhibit
      32.2 Section 1350 Certification of Chief Financial Officer.







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)Principal
                Executive OfficerBy:
            /s/
                Dr. Ramesh ZachariasDr.
                Ramesh ZachariasChief
                Executive OfficerDate:May
                15, 2007Principal
                Financial and Accounting Officer:By:
            /s/
                William DanisWilliam
                DanisChief
                Financial OfficerDate:May
                15, 2007








27