SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-K-A

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(MARK
ONE)

|  |  |                                                                                     
|- |  | ------------------------------------------------------------------------------------
|ý |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

| |  |                                            
| |  | -------------------------------------------
| |  | For the fiscal year ended December 31, 2003

or

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|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(State or Other Jurisdiction of Incorporation or Organization)             |  |                  
|6711 Mississauga Road, Suite 404
Mississauga, Ontario, Canada(Address of Principal Executive Offices) |  | L5N 2W3(Zip Code)

Registrant's
telephone number, including area code:(905) 858-1368

Securities
registered or to be registered pursuant to Section 12(b) of the Act.

|(Title of each class)                                                           |  | (Name of each exchange on which registered)
|------------------------------------------------------------------------------- |  | -------------------------------------------
|COMMON STOCK, NO PAR VALUE                                                      |  | OTC Bulletin Board                         
|REDEEMABLE COMMON STOCK                                                         |  |                                            
|PURCHASE WARRANTS                                                               |  | OTC Bulletin Board                         
|Securities registered or to be registered pursuant to Section 12(g) of the Act.
|COMMON STOCK, NO PAR VALUE                                                      |  | OTC Bulletin Board                         
|REDEEMABLE COMMON STOCK                                                         |  |                                            
|PURCHASE WARRANTS                                                               |  | OTC Bulletin Board                         

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

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 ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ý

Indicate by check mark whether registrant is an accelerated filer (as defined in Exchange Act Rule 126-2).
Yes     No ý.

The aggregate market value of the shares of common stock (based upon the closing sales price of the Company's common stock as reported on the OTC Bulletin Board
on March 26, 2004) of the registrant held by non-affiliates on December 31, 2003 was approximately US$3,349,298.

As
of March 26, 2004, 9,569,424 shares of the registrant's common stock were outstanding.

(All figures in US dollars unless otherwise noted.)



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PART I

ITEM 1: BUSINESS

BACKGROUND

Med-Emerg
International Inc. ("MEII" or the "Company") was founded in 1983 by Dr. Ramesh Zacharias to provide emergency room ("ER") physician coverage to rural hospitals
during nights and weekends. The Company has grown into Canada's largest provider of ER physician coverage. Since inception, MEII has provided staffing solutions to over 60 hospitals across the
country.

Today,
the Company is Canada's premier physician management provider, supplying more than 75,000 hours of ER physician coverage to hospitals in Ontario, Newfoundland and Nova Scotia annually.
In 2003, MEII was contracted by the Ministry of Health, Ontario to provide health care providers to help confront the Severe Acute Respiratory Syndrome ("SARS") epidemic that occurred in Toronto,
Ontario. In 2001, the Company was awarded the contract to provide more than 800 physicians, dentists, nurses, pharmacists and other regulated health professions for all 39 of Canada's Department of
National Defence ("DND") bases. In December of 2002, the Company was awarded a contract to supply healthcare providers to Canadian Forces overseas. MEII is now a supplier of healthcare professionals
to Canada's military whether in Canada or deployed anywhere in the world. In 2001, the Company leveraged its clinic network and was awarded a contract to provide infusion services for Remicade to
patients in Ontario suffering from rheumatoid arthritis and crohn's disease. MEII now provides more than 5,000 infusions per year of this remarkable new medication. Recently, MEII signed another
contract to supply Zometa via MEII's integrated infusion services for treating cancer patients that suffer with bone metastases. Taking advantage of its ability to provide creative healthcare
solutions, the Company was awarded two contracts to provide integrated physician  nurse practitioner primary care services to two of Canada's larger mental
health institutions at Whitby Mental Health and the Centre for Addiction and Mental Health in Toronto.

In
its twenty-year history, the Company has also conducted several international consulting assignments for healthcare clients in Saipan, the Cayman Islands, Malaysia and India, including
feasibility studies, identification of medical service needs, planning of healthcare delivery systems and developing marketing strategies. In 1997, the Company
completed a consulting assignment to provide an integrated strategic plan for the delivery of health and social services in the Northwest Territories in Canada, the costs of which were funded by the
Northwest Territory government. In June 2003, MEII was retained by the Primary Health Care Services Branch of Saskatchewan Health. Under this contract the Company is providing the process
facilitation and training programs required for the development and implementation of a "Team Based Culture" within the Saskatchewan Regional Health Authorities. The resulting interdisciplinary
provider teams are anticipated to improve the quality of primary health services within Saskatchewan. Another consulting project that MEII is currently carrying out is with the Department of Health
and Community Services, Office of Primary Health Care, in Newfoundland and Labrador. The Company's role is to evaluate the effectiveness of the primary health care reform initiatives across the
province. This experience has given MEII a leading understanding of the issues in implementing primary health reform in Canada.

MEII
has demonstrated industry leadership in Canada by providing integrated professional management services in the delivery of healthcare to the Canadian healthcare consumer. In 2004, the Company
intends to broaden its recruiting and management services over a wider geographic base and pursue opportunities for its expertise in the pharmaceutical industry.

MEII
believes that it is well positioned to benefit from the aging of the baby boomer population, to capitalize on recent developments within the North American healthcare environment and the current
restructuring initiatives within the healthcare industry in Canada. Specifically, the Company's strategy is to leverage its 20 years of physician recruitment experience to become a dominant
player in healthcare management services. Now with more than 1,000 physicians, nurses, dentists, pharmacists, physiotherapists and other regulated healthcare professionals employed by the company,
MEII is poised to play a dominant role in the delivery and management of Canada's healthcare system.

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THE COMPANY

The
"Company" includes: (i) Med-Emerg International Inc.;(ii) its' wholly-owned subsidiaries, Med-Emerg Health Centres Inc., Med-Emerg Elmvale
Clinic Inc., YFMC Healthcare Inc., 927563 Ontario Inc.,927564 Ontario Inc., and Doctors on Call Ltd.; (iii) its indirect wholly-owned subsidiaries
Med-Emerg Inc. which is wholly-owned by 927563 Ontario, and YFMC Healthcare (Alberta) Inc., a subsidiary of YFMC Healthcare Inc.

The
Company's operations were divided into five units during the 2003 fiscal year. Subsequent to 2003 the Company is no longer involved in the Medical Clinics business. The four remaining units that
MEII is engaged in are: Hospital Staffing, Government Healthcare Services (including Department of National Defence), Pharmaceutical Support and Long-Term Care. The following represents a
brief description of these units:

1.     HOSPITAL STAFFING

The
Company provides ER physicians and Intensive Care Unit ("ICU") nurse staffing services to approximately 25 hospitals in Ontario, a mix of rural and urban facilities including tertiary care
centers. In 1991, the Company introduced registered nurses into its staffing mix, when it developed a cost-effective model for the Lester B. Pearson International Airport utilizing
"expanded role" registered nurses. The Company went on to launch a business devoted entirely to the provision of emergency trained registered nurses to hospitals in 1997. In 2003, the hospital
staffing unit provided approximately 75,000 hours of physician and 55,000 hours of nursing coverage respectively. This represents an 85% increase over 2002, driven largely by MEII's
involvement during the SARS crisis. The Company pays its physicians on an hourly or sessional basis, and receives a fixed monthly administrative management fee from each hospital.

Hospital Staffing Operations

The
principal operating activities of the Hospital Staffing Division include the following:

Recruitment And Credentialing.MEII has developed into one of the larger providers of physician and nurse recruitment and placement
services to many communities and hospitals across Canada. Services include the complete assessment of a community's needs, practice opportunities, the development of a recruitment strategy and
implementation process.

The
recruitment and certifying of credentials of qualified independent contract physicians and nurses are a central aspect of the Company's operations. Full-time employees of the Company
are dedicated to recruiting and verifying credentials of the independent contract physicians for the Company. The Company recruits physicians from three groups. The first group is recruited directly
from postgraduate training programs. Seminars are held in most of the teaching hospitals in Ontario, with plans to provide seminars across Canada to educate all the residents in family medicine and
other specialties about career opportunities in the Company. The second and third groups recruited are established family physicians with an interest in emergency medicine and full-time
emergentologists.

Nurses
are recruited through advertising, word-of-mouth and trade shows. Nurses must have two years of experience in critical care nursing and possess Basic Life Support
("BLS") training and preferably Advanced Cardiac Life Support ("ACLS") training.

Quality Assurance.The Company maintains a Quality Assurance program designed to ensure consistency in clinical practice performance. These
systems are subject to review and examination by independent hospital credential and regulatory agencies. The efficiency of these systems, and the performance of the Company's contract physicians are
critical to maintaining a good relationship with the hospitals, as well as minimizing the exposure of the Company to liability claims.

Time Scheduling.The scheduling of physician and nurse hours is performed daily, weekly or monthly. For physician services, hospitals are
provided a monthly physician coverage schedule prior to the first of each month. Under some of the hospital contracts, multiple physician coverage is required during certain periods. For nursing
services, hospitals contact the Company with their shift requirements. Because of varying other demands on the contract nurses and physicians, the scheduling process is complex and requires
significant management attention.

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Billing And Collection Services.Fees generated by emergency department coverage of physicians are comprised of two elements:
(i) hospital administrative fees which are on a fixed fee or a fee-for-service basis; and (ii) physician services. Under each hospital contract, the Company has
the responsibility for the billing and collection of physician fees. The Company's bad debt experience in collection of physician fees has historically been less than 1% of allowable billings.

Personnel Administration.The Company assists the contracted physicians in personnel administration, which includes the administration of
physician fee reimbursement. In addition, the Company provides for the administration of fringe benefit programs, which may include but are not limited to life insurance, health insurance,
professional dues and disability insurance.

The
Company expects to continue its growth through staffing additional hospital contracts. In particular, the Company intends to both strategically target hospitals and physician groups. Management
actively seeks opportunities to competitively bid for hospital contracts.

Recruitment of ER Physicians

The
Company identifies, recruits and screens potential candidates to serve as emergency room physicians in hospitals for the Company's contract staffing services. The Company then enters into
contracts with physicians who meet its qualifications and provides these physicians as candidates for admission to the hospital's medical staff. As mentioned above, the Company requires all physicians
to be properly credentialed.

The
terms and conditions of the Company's contracts with physicians generally provides that the Company place the physician in a functioning facility and the Company collects all fees due to the
physician for rendering services. MEII pays the physician for the medical services provided based on terms agreed to between the Company and the physician. Each physician full-time
contract has a term of twelve months and, unless cancelled, renews automatically for additional one-year terms.

Contracts With Hospitals for Physician Staffing.

MEII
generally provides contract physician staffing services to hospitals on either fee-for-service contracts, or fixed fee per shift contracts. Physicians under contract to
the Company authorize the Company to bill and collect fees. Pursuant to such contracts, MEII assumes responsibility for billing and collection and assumes risks of administrative error and subsequent
non-payment. All of these factors are taken into consideration by the Company in arriving at appropriate contractual arrangements with healthcare institutions and professionals. The
hospital contracts are generally for one year and automatically renew if not terminated.

Contracts With Hospitals for Nurse Staffing.

The
Company provides nursing coverage to hospital emergency departments on a shift-by-shift basis. The Company charges a fixed hourly rate for every hour of nursing coverage
provided. The hospital contracts are generally for one year and automatically renew if not terminated.

Recruitment of ER Nurses.

The
Company recruits and screens potential candidates to serve as emergency room nurses in hospitals that have contracted for the Company's staffing services. The Company requires all nurses to meet
its qualification criteria.

2.     MEDICAL CLINICS

The
Company began expanding its healthcare services in the early 1990's, in response to the changing needs of patient care. The Company opened three immediate care clinics in London and Mississauga,
well before the concept became popular in Ontario. During the third quarter of 2003 MEII sold 15 medical clinics to another health care company in Ontario leaving the Company with five family practice
clinics to own and operate in Western Canada; Winnipeg (1), Edmonton (2) and Calgary (2). During the fourth quarter the Company sold the assets and operations of the five remaining medical
clinics.

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3.     GOVERNMENT HEALTHCARE SERVICES

Department of National Defence ("DND")

In
March of 2001, the Company was awarded the administrative management services contract, the largest of its kind, to provide medical personnel to the Canadian Armed Forces ("CF") bases across
Canada. The contract has an initial period of three years ending on March 31, 2004, but recently the contract was amended and extended until March 31, 2005. As the service administrator,
the Company recruits, credentials, schedules and pays physicians, nurses, dentists, physiotherapists and other regulated healthcare professionals as required by the local health authority resident on
each base. The Company is paid a monthly administrative management fee by the DND that is linked to the number of providers being managed.

The
primary benefit to DND from this contract is the creation of a "one stop shopping" arrangement for the military base. As part of a national organization, the Company's recruiters source health
service providers from all regions of Canada. By developing a long-term relationship with their employees and sub-contractors, and being able to react quickly to changing local
conditions, the Company provides some stability in the workforce and enhances continuity in the delivery of patient care for the DND.

4.     PHARMACEUTICAL SUPPORT

MEII
continues to develop the Integrated Infusion Service ("IIS") which provides clients/patients with a safe, comfortable and convenient infusion care setting to ensure the optimal administration of
special drug therapies. In addition to providing infusions of Remicade (Schering Plough) to patients with crohn's disease and rheumatoid arthritis, MEII has recently signed an agreement to supply
Zometa (Novartis) for treating cancer patients with bone metastases. It is expected that the IIS team will provide over 12,000 infusions in 2004.

The
IIS team of dedicated health care providers and coordinators develop individualized plans for each client/patient ensuring compliance to prescribed therapies for optimal health outcomes. MEII has
alliances with many key healthcare groups forming a unique team focused on a "continuum of care" delivering the best service to patients and the prescribing physicians. Each infusion clinic follows
rigorous standard operating procedures ensuring a consistent, highly professional infusion service. The number of infusion clinics is expected to increase for both Schering and Novartis from 16 to 25
by year-end 2004. The IIS team is dedicated to ensure "Patient Compliance with Care".

5.     LONG-TERM CARE

The
problem of physician shortages is evident not only in hospitals but also in long-term care facilities. The Company has received requests from long-term care facilities for
physicians to provide admission physical assessments and regular primary care to residents. Residents of these facilities are typically not cared for by their family physicians once they are
transferred to long-term care facilities, thus they lack routine primary healthcare. As at December 31, 2003 the Company provided physicians and nurse practitioners to 10
long-term care facilities in Ontario (six in Ottawa and four in the Greater Toronto Area ("GTA")). Subsequent to December 31, 2003, MEII stopped providing services to six of these
facilities.

FACTORS AFFECTING MEII'S BUSINESS

REGULATION OF HEALTHCARE IN CANADA

The
provision of medical services in Canada is, for the most part, under provincial jurisdiction. Under the Health Insurance Act, the government of Ontario is responsible for paying physicians for the
provision of insured services to residents of Ontario. Individual physicians' billings under the Ontario Health Insurance Plan ("OHIP") are subject to threshold amounts, or soft caps. Once a physician
reaches a prescribed level in the 12-month period beginning April 1 of each year, the government reduces payments to the physician by a prescribed fraction. Any changes in
reimbursement regulations, policies, practices, interpretations or statutes that place material limitations on reimbursement amounts or practices could adversely affect the operations of the Company,
absent, or prior to, satisfactory renegotiations of contracts with clients and arrangements with contracted physicians.

Under
a combination of statutory provisions, both federal and provincial, physicians are prohibited from billing their patients for fees in excess of those payable for services listed in the
Provincial Schedule of Benefits. The

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Canada
Health Act allows for cash contributions by the federal government in respect of insured health services provided under provincial healthcare insurance plans. In order for a province to qualify
for a full cash contribution, there is a requirement that the provincial healthcare insurance plan satisfy the criteria set out in the Canada Health Act. In addition, the provincial plan must ensure
that no payments are permitted in respect of insured health services that have been subject to extra billing.

Continuing
budgetary constraints at both the federal and provincial level and the rapidly escalating costs of healthcare and reimbursement programs have led, and may continue to lead, to significant
reductions in government and other third party reimbursements for certain medical charges. The Company's independent contracted physicians as well as the Company are subject to periodic audits by
government reimbursement programs to determine the adequacy of coding procedures and reasonableness of charges.

Business
corporations are legally prohibited from providing, or holding themselves out as providers of, medical care in many provinces. While the Company will seek to structure its operations to
comply with the provincial laws relating to the corporate practice, given varying and uncertain interpretations of such laws, the Company could be found in non-compliance with restrictions
on the corporate practice of medicine in all provinces. A determination that the Company is in violation of applicable restrictions on the practice of medicine in any province in which it operates or
could operate could have a material adverse effect on the Company if the Company were unable to restructure its operations to comply with the requirements of such province.

COMPETITION

The
Company competes with a variety of healthcare service providers. These include the following by MEII business unit:



EMPLOYEES

As
of March 2004, the Company had 515 active full-time employees, 60 were employed in administration, 55 nurses were employed to work at various hospitals, and 400 were employed to
carry out the contract with the DND. The Company believes its relations with its employees to be good. The Company's employees do not belong to a union and there is no collective bargaining agreement
covering the employees. The Company also has approximately 300 contractors engaged on a full-time basis.

ITEM 2: PROPERTIES

The
Company's principal executive office is located at 2550 Argentia Road, Suite 205, Mississauga, Ontario. The principal office occupies approximately 8,000 square feet of space under a lease
that expires May 30, 2004 at an average annual rental rate of approximately $105,000. The Company has an intention of entering into a lease agreement to move the principal executive office to
6711 Mississauga Road, Suite 404, Mississauga, Ontario with effect from June 1, 2004. The new lease has not yet been signed. The new lease is expected to be for a term of
43 months, and would expire in December 2007. The new office is approximately the same size as the current location, and the Company believes that the new space will be adequate for its
future needs.

ITEM 3: LEGAL PROCEEDINGS

YMFC
HealthCare Inc. ("YFMC"), a wholly owned subsidiary of the Company, is in receipt of a letter from Canada Customs and Revenue Agency ("CCRA") dated April 30, 2001, adjusting YFMC's
Goods and Services Tax returns for the period from December 31, 1992, to December 31, 1996. The total amount claimed by CCRA for this period is $249,000. In the event that YFMC becomes
liable to pay any such amount to CCRA, the Company will claim an indemnity for such amount against the directors and certain named principals of YFMC pursuant to

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the
Company's rights under the Business Combination Agreement executed on August 10, 1999. The Company's legal counsel has advised that CCRA does not intend to pursue YFMC for these amounts.

Other
than the above, the Company is not a party in any material legal proceedings.

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

There
were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended, December 31, 2003.

PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The
common shares and redeemable common stock purchase warrants are listed for trading under the symbols "MDER" and "MDERW", respectively, on the OTC Bulletin Board. From February 12, 1998 to
April 16, 2001 the Company's common shares and redeemable common stock purchase warrants were listed on the NASDAQ Small Cap Market. Since April 16, 2001, the Company's common shares
have been listed on the OTC Bulletin Board.

The
following table sets forth the range of high and low sales prices from First Quarter of 2002:

|                     |  | COMMON SHARES
|-------------------- |  | -------------
|
|First Quarter, 2003  |  | $            
|Second Quarter, 2003 |  | $            
|Third Quarter, 2003  |  | $            
|Fourth Quarter, 2003 |  | $            
|First Quarter, 2002  |  | $            
|Second Quarter, 2002 |  | $            
|Third Quarter, 2002  |  | $            
|Fourth Quarter, 2002 |  | $            

The
Company has never paid or declared cash or stock dividends on its common stock. The payment of cash dividends, if any, is at the discretion of the Board of Directors and will depend upon the
Company's earnings, capital requirements, financial condition and other relevant factors. The Company intends, for the foreseeable future, to retain any future earnings for use in its business.

On
May 23, 2002 the Company issued 216,000 shares to Wellington Capital Corporation as consideration payable under a re-financing arrangement.

The
Company did not issue or redeem any shares during the 2003 fiscal year.

In
early 2004, 5,092 shares of common stock were issued to an investor pursuant to the acquisition of YMFC Healthcare Inc. ("YFMC") on November 4, 1999 by MEII.

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ITEM 6: SELECTED FINANCIAL DATA

The
following selected consolidated financial data of the Company is qualified by reference to and should be read in conjunction with the consolidated financial statements, related notes thereto,
other financial data, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere herein.

|                              |                                             | YEAR ENDED DECEMBER 31, 2003 |  
|----------------------------- | ------------------------------------------- | ---------------------------- | -
|
|
|Statement of Operations Data: |                                             |                              |  
|                              | Revenue                                     |                              |  
|                              | Physician fees and other direct costs       |                              |  
|                              |                                             |                              |  
|                              | Gross profit                                |                              |  
|                              | Operating expenses before under noted items |                              |  
|                              | Depreciation and amortization               |                              |  
|                              | HealthyConnect.com development expenses     |                              |  
|                              | Other expense (income)                      |                              |  
|                              |                                             |                              |  
|                              |                                             |                              |  
|                              | Loss before income taxes                    |                              |  
|                              | Provision for income taxes (recovery)       |                              |  
|                              | Minority interest                           |                              |  
|                              | Preferred share dividends                   |                              |  
|                              | Net loss from continuing operations         |                              |  
|                              | Discontinued operations                     |                              |  
|                              | Net loss for the year                       |                              |  
|                              | Basic loss per common share(1)              |                              |  
|                              | Continuing operations                       |                              |  
|                              | Discontinued operations                     |                              |  
|Balance Sheet Data:           |                                             |                              |  
|                              | Working capital deficit                     |                              | $
|                              | Total assets                                |                              |  
|                              | Shareholders' deficit                       |                              |  

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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

MEII,
based in Ontario, Canada, is a provider of a broad range of quality healthcare management services. Established in 1983, the Company specializes in the coordination and contract staffing of
emergency physicians, nurses and related healthcare professionals for hospitals, government agencies, and corporate clients in Canada. Though emergency-related services are still an important
component of the Company's business, MEII's recent growth has been largely attributable to the recruitment of various healthcare professionals to fulfill a contract with the Department of National
Defense, and a contract with Schering Plough Canada Inc. a leading pharmaceutical company, to provide infusion services to patients.

The
Company is positioned to build on its industry leadership in providing integrated professional healthcare services to consumers. The Company's operations were divided into five units during the
2003 fiscal year, but subsequent to 2003 MEII no longer has a Medical Clinics division. The four remaining business units that MEII is now focused in are Hospital Staffing, Government Healthcare
Services, Pharmaceutical Support, and Long-Term Care.

In
early 2004, MEII was selected by the Atlantic Health Human Resources Association ("AHHRA") to conduct a major health human resource planning study in the four Atlantic Provinces. This study will be
complementary to the primary care renewal projects that MEII has underway in Saskatchewan and Newfoundland/Labrador. The AHHRA is expecting a comprehensive study of the requirements for health
professionals and available educational resources in and outside Atlantic Canada. The deliverables in this study call for two distinct but related modeling exercises. The first is a projection on
future health human resource supply and demand with gap analysis. The second is an education/training planning tool or tools. The latter could be a simulation which models, for example, the
implications of the size and duration of training programs under different demand, productivity and scope of practice scenarios.

In
the summer of 2003, MEII signed a contract with Novartis Pharmaceuticals Canada Inc. to provide infusion services for a drug called Zometa, for treating cancer patients with bone metastases.
This agreement will help the Company grow its infusion business that began in 2001 with its contract with Schering Plough Canada Inc. As at December 31, 2003 MEII did not have any
patients registered with the Company surrounding the contract with Novartis, but by the end of 2004 it is expected that there will be 1,000 patients.

In
late March of 2003, the Company was approached by the Ontario Provincial Government to help the public sector battle the SARS outbreak that occurred in the GTA. With a mortality rate of 15%, the
Ministry of Health for Ontario recognized the magnitude of the challenge and contacted MEII. MEII mobilized its network of healthcare providers and recruited approximately 250 doctors, nurses and
respiratory technologists from across Canada, the United States and the United Kingdom to combat the SARS outbreak. The SARS experience is an excellent example of the Company's network
in action. The ability to draw on multi-disciplinary experts to address specific issues is the core of the MEII service offering.

In
2001, the Company was awarded the contract for civilian in-garrison healthcare services for the Department of National Defence. The contract, the largest of its kind in Canada has seen
the Company recruit and staff an annual complement of in excess of 800 full time healthcare providers in all Canadian Forces Bases. The Company receives an administrative fee to recruit and manage
required personnel. Annual revenue for services provided under this contract is expected to exceed $43.7 million for fiscal 2004, of which approximately $41.2 million will be paid to the
healthcare providers supporting this contract. This contract and its supporting infrastructure create a horizontal platform to allow the Company to secure of other major government staffing contracts.

In
March 2001, the Company and Schering Plough Canada Inc., a leading Canadian pharmaceutical supplier, entered into an agreement whereby the Company would recruit, credential and
install new infusion sites across Canada to deliver Remicade infusion services to patients suffering from crohn's disease and rheumatoid arthritis. Remicade reduces
inflammation in patients with crohn's disease and rheumatoid arthritis. It is estimated that 40,000 patients in Canada suffer from the debilitating effects of these two diseases. Under this agreement,
the Company coordinates and manages infusion services for patients referred to it by physicians. By December 2003, there were approximately 1,100 patients registered with the Company for this
program, receiving regular infusions. It is anticipated that the number of patients participating in this program will reach 1,500 by the end of 2004.

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Forward-looking
statements of MEII, included herein or incorporated by reference including, but not limited to, those regarding future business prospects, the adequacy of capital resources and other
statements regarding trends relating to various revenue and expense items, could be affected by a number of uncertainties and other factors beyond management's control.

FINANCIAL OVERVIEW

The Company reported a net loss of $1,825,802 for the year ended December 31, 2003 compared to a net loss of $738,647 for the year ended
December 31, 2002. The loss amounted to $ 0.17 per share for continuing operations and a $0.02 loss for discontinued operations for the year ended December 31, 2003 compared with a loss
of $ 0.08 per share for continuing operations for the previous year. The main reason for the increase in the net loss during 2003 is the result of the non-cash stock compensation expenses
that the Company had to record as a result of re-pricing the outstanding warrants and the issuance of stock options. Furthermore, as the Company implemented their strategic plan of
realigning the business units and the consolidation and closure of non-performing medical clinics, the direct results had an impact on the operating results in 2003. MEII continues to
pursue profitable contracts that are consistent with the current operating strategy.

REVENUE

The
Company's revenue for the year ended December 31, 2003 increased to $54.0 million, compared to $ 37.0 million for the year ended December 31, 2002, an increase of
approximately 46%. This revenue growth was largely attributable to the Department of National Defence management service contract whereby MEII staffed an increased number of health providers in fiscal
2003 compared to the prior year. The Department of National Defence accounted for 74% of the Company's revenues during the year ended December 31, 2003. The Hospital staffing division had
increased revenues for the year ended 2003 compared to the prior year as MEII was involved in staffing to help support existing healthcare providers during the recent SARS outbreak. The
Long-term care and Pharmaceutical Support business units have also been responsible for increased revenues for the year ended 2003.

Revenue
from the DND contract amounted to $40.3 million during the year ended December 31, 2003 compared to $ 31.3 million for the prior year, an increase of 29%. MEII supplied
more health providers to the DND bases throughout the 12 month of period of 2003 compared to the prior year.

Revenues
from the hospital staffing unit increased to $12.7 million during the year ended December 31, 2003 compared to $5.6 million for the prior year, an increase of 127%. The
increase in revenues is the result of the Company providing extensive support to the existing healthcare infrastructure during the SARS outbreak in the GTA. As described above, MEII provided
approximately 250 healthcare professionals and over 46,000 hours to assist the Ministry of Health for Ontario in combating the SARS epidemic.

Revenues
from the pharmaceutical support division amounted to $0.9 million for the 2003 fiscal year compared to $0.4 million for 2003. The 125% increase in revenues is the result of MEII
growing this new business line by supplying infusion services to more patients in the 2003 year.

GROSS MARGIN

Gross
Margin (revenue less physician and other direct costs) increased to $5.1 million for the year ended December 31, 2003 compared to $3.0 million for the prior year, an
increase of 70%. This increase in gross margin was due to the DND management service contract and the Hospital Staffing, Long-term care, and Pharmaceutical support business units all
experiencing higher volumes.

Physician
fees and direct costs, primarily fees paid to contract physicians as a percentage of total revenues remained comparable to the prior year at approximately 91%.

OPERATING EXPENSES

Operating
expenses totaled $4.7 million for the year ended December 31, 2003 compared to $2.7 million in the prior year, an increase of 74%. The increase results mainly from a
provision for estimated adjustments from the DND audit of the terms of the Government Healthcare Services contract. MEII is currently remedying these issues. It is Management's opinion that such
expenses will be substantially eliminated beyond Q1 of 2004. Also,

---



with
the growing pharmaceutical support division and new business development MEII has had to incur increased costs during the year ended December 2003.

AMORTIZATION AND INTEREST

Amortization
increased nominally in fiscal 2003 compared to the prior year.

Interest
and financing costs decreased by approximately $ 308,000 during the year ended December 31, 2003 compared to the prior year, as the Company negotiated lower borrowing rates on its loan
facilities and MEII realized a foreign exchange gain on the settlement of a financial instrument denominated in US dollars, due to the strengthening Canadian dollar during 2003.

INCOME TAXES

The
Company has loss carry forwards of approximately $4.0 million to be applied against future corporate income taxes. This benefit has not been reflected in these statements.

LIQUIDITY AND CAPITAL RESOURCES

As
at December 31, 2003, the Company's working capital deficit totaled $ 3.1 million compared to $2.3 million for the prior year.

On
May 24, 2002 the Company issued a $720,000 discounted secured debenture, with net proceeds of $600,000 and repaid bank loans from the net proceeds.

The
terms of the secured debenture include:

A
principal shareholder of the Company guaranteed the debenture, providing as security, unrestricted free trading common shares of the Company equivalent to 150% of the face value of the debenture. In
exchange for the guarantee, the Company issued to the guarantor shareholder common share purchase options to purchase 100,000 common shares at $1.00 per share. In the event that the market value of
the common shares provided as security falls below 200% of the face amount of the debenture, the Company was required to pledge additional securities to return the market value to 200% of the face
amount.

On
June 28, 2002, Morrison Financial Services Ltd. ("MFSL") paid Hong Kong Bank of Canada ("HSBC") $475,406 on MEII's behalf. This had the effect of reducing the Company's
total debt by $228,459 since the obligation to the HSBC was eliminated at a discounted value. MFSL provided the Company with a full-recourse invoice discounted facility in an amount not to
exceed $475,406 based on purchasing and advancing up to 75% of the face amount of a qualifying invoice with the balance held on reserve until the invoice is collected in full. The facility had a term
of one year, with an annualized interest rate of 34.22% that matured on June 28, 2003 at which time the Company renegotiated the loan agreement with MFSL. The following clauses of the agreement
were amended as follows:

In
addition to the specific Standard Form Assignments (General), all amounts due to MFSL are secured by a general security agreement on all assets and undertakings of MEII, an assignment of all risk
insurance policies and an assignment of key man life insurance of a director.

---



OFF BALANCE SHEET ARRANGEMENTS

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

Contractual
Obligations and Commercial Commitments

The
Company is committed to payments under operating leases of its premises and equipment totaling 160,032. The Company has not engaged in off-balance sheet financing, commodity contract
trading or significant related party transactions. Annual payments under the operating leases are as follows:

|2004                |  | $ | 57,882 
|------------------- |  | - | -------
|2005                |  |   | 24,035 
|2006                |  |   | 24,035 
|2007                |  |   | 24,035 
|2008                |  |   | 24,035 
|2009 and thereafter |  |   | 6,010  
|                    |  |  
|                    |  | $ | 160,032
|                    |  |  

ITEM 7A: 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 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The
Company's consolidated financial statements and the related notes, together with the report of Schwartz Levitsky Feldman LLP thereon, are set forth in Item 15.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There
have not been disagreements with the auditors on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not
resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement.

ITEM 9A: 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.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
applicable SEC rules and forms.

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 III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The
following table sets forth certain information concerning the directors, executive officers and key employees of the Company.

|Name                                               |  | Age |  | Position                         
|-------------------------------------------------- |  | --- |  | ---------------------------------
|William Thomson, C.A.                              |  | 62  |  | Chairman of the Board            
|Dr. Frank Baillie, M.D., Ch.B., FRCSC              |  | 52  |  | Director                         
|Major General Lewis MacKenzie, Oont, MSC, OstJ, CD |  | 63  |  | Director                         
|John Yarnell                                       |  | 75  |  | Director                         
|Ramesh Zacharias, M.D., FRCSC                      |  | 52  |  | Chief Executive Officer, Director
|Donald Ross, D.M.D., M.Sc.                         |  | 52  |  | V.P. Operations                  
|William J. Danis, C.A.                             |  | 48  |  | Chief Financial Officer          

|Name                    |  | Position |  | Principal Occupation and Positions Held                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------------------- |  | -------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|William E. Thomson(2)   |  | Chairman |  | Mr. Thomson has been President of Thomson Associates Inc., a provider of solutions to businesses encountering change, since 1978. Thomson Associates has operated companies in many industries and participated in creating and executing
remedial programs in virtually all sectors. They also act as investment bankers.
Mr. Thomson's current directorships are:Nasdaq Med-Emerg International Inc. chm. (Healthcare), Acto Digital Video (USA) Inc. (Consumer Electronics), China Automotive
Systems Inc. (Auto Parts), Maxus Technology Inc. (Technology Waste Recycling);TSX Asia Media Group Ltd. chm. (Media), Imperial Plastech Inc. (Plastics);Crown Corp. Aurora Fund (Venture Capital);Private Delfour Corporation (Software), Electrical Contacts Ltd. (Electrical Contacts),
Redpearl Funding Corporation (IT Financing), Wright Environmental Management Inc. (Waste Management Solutions);Charitable Opera Mississauga, World Education Services.
|Dr. Frank Baillie(1)(2) |  | Director |  | Dr. Frank Baillie has been a Director of the Company since January 1, 2002. Dr. Frank Baillie has over twenty years of clinical and managerial experience as an Emergency Physician and General Surgeon in an
academic setting. Dr. Baillie has maintained a surgical practice at McMaster University Medical Centre in Hamilton, Ontario since 1979. He also introduced emergency physician staffing and postgraduate training in Emergency Medicine at McMaster's
Faculty of Health Sciences. He has managed a number of medical programs, including Hamilton General Hospital, Chedoke                                                                                                                                                                                                                                                                                                                                                                             

---



|                   |  |                                                    |  | McMaster Hospital and St. Peter's Hospital. Dr. Baillie has provided consultative services regarding the delivery of emergency care for the Ontario government as well as internationally in Thailand, Malaysia, Kerala
Province in India, Beijing and Abu Dhabi. Currently, Dr. Baillie is Associate Professor of Surgery and Postgraduate Surgical Program Director at McMaster University Faculty of Health Sciences, he is the International Medical Liaison Officer for
the Hamilton Health Sciences Corporation, and the Medical Director for Ontario CritiCall Service.                                                                                                                                                                                                                                                                                                                            
|------------------ |  | -------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Lewis MacKenzie(1) |  | Director                                           |  | During his thirty-six years of military service in the Infantry he served nine years in Germany with NATO forces and managed nine peacekeeping tours of duty in six different mission areas  The Gaza strip,
Cyprus, Vietnam, Cairo, Central America and Sarajevo. He retired from the forces in 1993 and in that same year received the prestigious Vimy Award for his outstanding contribution to the preservation of democratic values. Since his retirement from
the military, Lew MacKenzie has regularly appeared on many of the international TV and radio networks as a commentator. Following the attacks of September 11, 2001, General MacKenzie was appointed one of two advisors to the Government of Ontario
on counter-terrorism and emergency measures. He is a graduate of the Xavier Junior College of Sydney, Cape Breton and The University of Manitoba.                             
|John Yarnell(1)(2) |  | Director                                           |  | John Yarnell is the President Of Yarnell Companies Inc. Yarnell Companies Inc. is an investment and management services company formed in 1978 to invest and manage venture capital initiatives. Mr. Yarnell
is the founder and retired Chairman of the Quorum Group of companies and a former director and chairman of Poco Petroleums Ltd., Guard Inc., and Aluma Systems Inc. He is a graduate of The University of Manitoba and Harvard Business
School                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Ramesh Zacharias   |  | President and Chief Executive Officer and Director |  | Dr. Ramesh Zacharias is the founder of Med-Emerg International Inc. and serves as the President and Chief Executive Officer, and Executive Medical Director, of Med-Emerg Inc. He has practiced medicine in
Canada since 1981 and has extensive experience in the delivery of emergency and primary, medical care. He has provided consulting services regarding the delivery of emergency care internationally in the Caribbean, Saipan and Malaysia and provided
management-consulting services regarding the operation of medical clinics in Canada, the United States and Russia. In this continued role in providing medical insight and with his extensive business experience, he provides the strategic guidance
and leadership to the Company's management team. Under his leadership, MEII has grown to become the leading Canadian medical clinic management and medical staffing organization.
|Donald Ross        |  | Vice President Operations                          |  | Dr. Ross has been Vice-President of Med-Emerg International Inc. since November 1, 2000 and is responsible for the operations of the Company. He is an experienced healthcare executive, responsible for
hands-on day-to-day operations. In addition to his professional                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---



|                 |  |                         |  | experience, Don holds a Masters degree in Clinical Epidemiology, is a Doctor of Dental Medicine, and has an honours Bachelors degree in neurophysiology from the University of British Columbia. Prior to working with the
Company, Don was the Executive Vice President (Health Care) of Aetna Canada for five years and has extensive experience in managing clinical business units in the public and private sectors.                                                                                                         
|---------------- |  | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|William J. Danis |  | Chief Financial Officer |  | Mr. Danis is an experienced financial professional, bringing 25 years of operational and investment experience to his role at MEII. Prior to joining the company Bill was a founding partner of Greybrook
Corporation, a private equity investment company. Previously Bill held senior investment roles with Working Ventures Canadian Fund Inc. and Royal Trust Enterprise Capital. Bill left public accounting in 1985 to accept the position of Managing
Director of an offshore subsidiary of Brascan Corporation (TSX:BNNA).

---

Notes:

Board Committees:

The
Board has a standing Compensation Committee and Audit Committee.

The
Compensation Committee is primarily responsible for reviewing the compensation arrangements for the Company's executive officers, including the Chief Executive Officer, and for administering the
Company's stock option plans. Members of the Compensation Committee are Dr. Baillie, Mr. Mackenzie and Mr. Yarnell.

The
Audit Committee is primarily responsible for overseeing the services performed by the Company's independent auditors and internal audit department evaluating the Company's accounting policies and
its system of internal controls and reviewing significant financial transactions. The Audit Committee is comprised of three members: Dr. Baillie, Mr. Thomson and Mr. Yarnell.

Mr. Yarnell
has been designated as the Financial Expert on the Audit Committee. The Company has adopted a code of conduct for all employees, which has been reviewed by the Board of Directors
and management.

---



ITEM 11: EXECUTIVE COMPENSATION

The
following table sets forth the cash compensation, as well as certain other compensation paid or accrued to the Company's Chief Executive Officer for the fiscal years ended December 31,
2003, 2002 and December 31, 2001. No other executive officer has a total annual salary and bonus of more than $100,000 during the reporting periods.

|                                           |  | Annual Compensation (US$)
|------------------------------------------ |  | -------------------------
|
|Ramesh Zacharias (Chief Executive Officer) |  | 2003
2002
2001           
|William J Danis (Chief Financial Officer)  |  | 2003                     

---

Stock Option Plan

In
November 1999, the Board of Directors and shareholders adopted and approved the Company's Stock Option Plan (the "Plan"). The Plan provides for grants to both employees and directors of the
Company. The Plan is to be administered by the Board of Directors or a committee appointed by the Board. The Plan was amended to authorize the Company to issue options to acquire an aggregate of
1,912,866 shares of Common Stock (20% of issued and outstanding common shares), 1,725,000 of which have been granted as of December 31, 2003. As at December 31, 2003, 187,866 options
were still available to be granted under the Stock Option Plan.

During
the fiscal 2003, 785,000 options were issued and 730,000 options were cancelled or expired. No options were granted to eligible physicians during the fiscal year ended December 31, 2003.

As
at December 31, 2003 total options outstanding of 2,325,000 are comprised of 1,725,000 granted under the Plan and 600,000 granted outside the Plan.

Director
Compensation:

During
the fiscal year 2003, the Chairman of the Company, Mr. Bill Thomson was paid director fees amounting to $42,827 ($60,000 CDN). Dr. Frank Baillie, Mr. Lewis Mackenzie and
Mr. John Yarnell were paid director fees amounting to $14,276 each ($20,000 CDN each).

Compensation
Committee Interlocks and Insider Participation:

The
current members of the Compensation Committee are Dr. Frank Baillie, Mr. Lewis Mackenzie and Mr. John Yarnell, none of whom are employees and each of whom are considered
independent directors. No executive officer of the Company (i) served as a member of the of the compensation committee (or other board committee performing similar functions or in the absence
of any such committee, the board of directors) of another entity, one of whose executive officers served on the Company's Compensation Committee, (ii) served as a director of another entity one
of whose executive officers served on the Company's Compensation Committee or (iii) served as a member of the compensation committee (or other board committee performing similar functions or in
the absence of any such committee, the board of directors) of another entity, one of whose executive officers served as a director of the company.

---



ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL SHAREHOLDERS

The
following table sets forth, as of December 31, 2003 certain information with respect to stock ownership of (i) all Officers and Directors; (ii) persons known by the Company to
be beneficial owners of 5% or more of its outstanding shares of Common Stock; (iii) all directors and officers as a group.

|Name of Beneficial Owner(2)                                |  | Shares of Common Stock(1) |  | Percentage Ownership
|---------------------------------------------------------- |  | ------------------------- |  | --------------------
|1245841 Ontario Inc and Ramesh Zacharias M.D., FRCSC(3)(4) |  | 1,587,476                 |  | 8.9%                
|William Thomson, C.A.(5)                                   |  | 375,000                   |  | 2.1%                
|Lewis Mackenzie(6)                                         |  | 150,000                   |  | 0.8%                
|Donald Ross, D.M.D., M.Sc.(7)                              |  | 200,000                   |  | 1.1%                
|Frank Baillie(8)                                           |  | 150,000                   |  | 0.8%                
|John Yarnell(9)                                            |  | 150,000                   |  | 0.8%                
|All Officers and Directors as a group(10)                  |  | 2,612,476                 |  | 14.6%               
|H.T. Ardinger(11)                                          |  | 1,745,000                 |  | 9.8%                

---

---





Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a)
of the Securities Exchange Act of 1934 as amended requires the Company's officers and directors and persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of securities ownership and changes in such ownership with the Securities and Exchange Commission ('SEC"). Officers, directors and greater than ten percent
shareholders are also required by rules promulgated by the SEC to furnish the Company with copies of all section 16(a) forms they file.

Based
solely upon a review of the copies of such forms furnished to the Company or written representations that no Forms 5 were required, the Company believes that all section 16(a)
filing requirements were met during fiscal year 2003.

Equity Compensation Plan Information

|                                                           |  | (a)       |  | (b)  |  |        
|---------------------------------------------------------- |  | --------- |  | ---- |  | -------
|
|Equity compensation plans approved by security holders     |  | 1,725,000 |  | 0.50 |  | 187,866
|Equity compensation plans not approved by security holders |  | 600,000   |  | 0.58 |  | 0      

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There
were no transactions between the Company and any of its officers, directors or 5% or greater shareholders required to be reported hereunder, except for an amount of $21,413 ($30,000 CDN) paid to
Mr. John Yarnell for Consultancy services rendered.

The
Company believes all previous transactions between the Company and its officers, directors or 5% stockholders, and their affiliates were made on terms no less favorable to the Company than those
available from unaffiliated parties. The Company presents all proposed transactions with affiliated parties to the Board of Directors for its consideration and approval. Any such transaction is
approved by a majority of the disinterested directors.

---



ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

The
following table sets forth the fees paid to the Company's independent auditor, Schwartz Levitsky Feldman llp, during fiscal years 2003 and 2002

AUDIT
AND NON-AUDIT FEES:

|                   |  | 2003                 |  | 2002                
|------------------ |  | -------------------- |  | --------------------
|Audit fees         |  | $49,964 (CDN$70,000) |  | $44,575 (CDN$70,000)
|Audit related fees |  | $3,212 (CDN$4,500)   |  | $1,592 (CDN$2,500)  
|Tax fees           |  | $NIL                 |  | $NIL                
|All other fees     |  | $NIL                 |  | $NIL                
|TOTAL              |  | $53,176 (CDN$74,500) |  | $46,167 (CDN$72,500)

---



Policy on Audit Committees Pre-approval of Audit and Non-Audit Services Performed by the Independent Auditors.

The
audit Committee has pre-approved the audit engagement in accordance with Regulation S-X Rule 201(c)(7)(i) of the Sarbanes Oxley Act.

---



PART IV

ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A)    EXHIBITS

|14.1 |  | Code of Ethics of the Company                                            
|---- |  | -------------------------------------------------------------------------
|21   |  | Subsidiaries of Med-Emerg International Inc.                             
|23.1 |  | Independent Auditors' Consent                                            
|31.1 |  | Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer      
|31.2 |  | Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer      
|32.1 |  | Section 1350 Certification of Chief Executive and Chief Financial Officer
|32.2 |  | Section 1350 Certification of Chief Executive and Chief Financial Officer

(B)    FINANCIAL
STATEMENTS

Auditors'
Report

Revised
Consolidated Balance Sheet

Revised
Consolidated Statement of Operations and Deficit

Revised
Consolidated Statement of Changes in Financial Position

Notes
to Revised Consolidated Financial Statements

(C)    REPORTS
ON FORM 8-K

There
were no reports filed on Form 8-K during the fourth quarter of fiscal 2003.

---



SIGNATURES

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

| | MED-EMERG INTERNATIONAL INC.                                                             
| | -----------------------------------------------------------------------------------------
| | /s/RAMESH ZACHARIASRamesh Zacharias Director, Chief Executive OfficerDATE: March 30, 2004

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.

| | /s/WILLIAM THOMSONWilliam Thomson Chairman of the BoardDATE:
March 30, 2004              
| | -----------------------------------------------------------------------------------------
| | /s/RAMESH ZACHARIASRamesh Zacharias Director, Chief Executive OfficerDATE: March 30, 2004
| | /s/DR. FRANK BAILLIEDr. Frank Baillie DirectorDATE:
March 30, 2004                       
| | /s/LEWIS MACKENZIELewis MacKenzie DirectorDATE: March 30,
2004                           
| | /s/JOHN YARNELLJohn Yarnell DirectorDATE: March 30, 2004                                 
| | /s/WILLIAM J DANISWilliam J Danis Chief Financial OfficerDATE:
March 30, 2004            

---



(A) Exhibits

Exhibit 14.1

Code of Ethics of the Company

MEII
expects a reasonable level of responsible and appropriate conduct by individuals in the course of employment and while engaged in Company business. We expect that employees will conduct
themselves in a mature and responsible manner while engaged in Company business on or off Company premises.

Specifically
we expect that each person will:



Adhere
to all Company policies.

Exhibit 21

Subsidiaries of Med-Emerg International Inc.

927563
Ontario Inc.
927564 Ontario Inc.
Med-Emerg Inc.
Med-Emerg Health Centres Inc.
Med-Emerg Elmvale Clinic Inc.
YFMC Heathcare Inc.
YFMC Healthcare (Alberta) Inc.
Doctors on Call Ltd.

---



Exhibit 23.1

Schwartz Levitsky Feldman llpCHARTERED ACCOUNTANTS
TORONTO, MONTREAL, OTTAWA

CONSENT OF SCHWARTZ LEVITSKY FELDMAN LLP

The
undersigned, Schwartz Levitsky Feldman llp, hereby consents to the use of our name and the use of our opinion dated March 10, 2004 except for notes 22 and 28 which are as of
July 28, 2004 on the revised consolidated financial statements of Med-Emerg International, Inc. (the "Company") included in its Annual Report on
Form 10-K-A being filed by the Company, for the fiscal year ended December 31, 2003.

|Toronto, Ontario, Canada |  | /s/ Schwartz Levitsky Feldman llp
|------------------------ |  | ---------------------------------
|July 28, 2004            |  | Chartered Accountants            

1167 Caledonia Road
Toronto, Ontario M6A 2X1
Tel:    416 785 5353
Fax:    416 785 5663

---



Exhibit 31.1

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer

I,
Dr. Ramesh Zacharias, certify that:

|Date: March 30, 2004 |  |     |                                                                    
|-------------------- |  | --- | -------------------------------------------------------------------
|                     |  | By: | /s/DR. RAMESH ZACHARIASDr. Ramesh Zacharias
Chief Executive Officer

---



Exhibit 31.2

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer

I,
William Danis, certify that:

|Date: March 30, 2004 |  |     |                                                      
|-------------------- |  | --- | -----------------------------------------------------
|                     |  | By: | /s/WILLIAM DANISWilliam Danis
Chief Financial Officer

---



Exhibit 32.1

1350 Certification of Chief Executive and Chief Financial Officer

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

In
connection with the report of Med-Emerg International Inc. (the "Company") on Form 10-K for the period ended December 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Dr. Ramesh Zacharias Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350,
as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

|Dated: March 30, 2004 |  |     |                                                                    
|--------------------- |  | --- | -------------------------------------------------------------------
|                      |  | By: | /s/DR. RAMESH ZACHARIASDr. Ramesh Zacharias
Chief Executive Officer

Exhibit 32.2

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

In
connection with the report of Med-Emerg International Inc. (the "Company") on Form 10-K for the period ended December 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, William Danis Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

|Dated: March 30, 2004 |  |     |                                                      
|--------------------- |  | --- | -----------------------------------------------------
|                      |  | By: | /s/WILLIAM DANISWilliam Danis
Chief Financial Officer

---



AUDITORS' REPORT

To
the Shareholders of
Med-Emerg International Inc.

We
have audited the revised consolidated balance sheets of Med-Emerg International Inc. as at December 31, 2003 and 2002 and the related revised consolidated statements of
operations and deficit and cash flows for each of the years ended December 31, 2003, 2002 and 2001. These revised consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these revised consolidated financial statements based on our audits.

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

In
our opinion, these revised consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2003 and 2002 and the results
of its operations and its cash flows for each of the years ended December 31, 2003, 2002 and 2001 in accordance with Canadian generally accepted accounting principles which differ in certain
respects from generally accepted accounting principles in the United States (refer to note 23).

|Toronto, Ontario, Canada           |                                      |                                  
|---------------------------------- | ------------------------------------ | ---------------------------------
|March 10, 2004 except for notes 22 |                                      | /s/ Schwartz Levitsky Feldman llp
|                                   | and 28 which are as of July 28, 2004 |                                  

Comments by Auditors for U.S. readers on Canadian  U.S. Reporting Differences

In
the United States, reporting standards for auditors require the addition of an explanatory paragraph when the revised consolidated financial statements are affected by conditions and events
that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in note 3 to the revised consolidated financial statements. Our report to the
shareholders dated March 10, 2004 except for notes 22 and 28 which are as of July 28, 2004 is expressed in accordance with Canadian reporting standards, which do not permit
a reference to such events and conditions in the auditor's report when these are adequately disclosed in the revised financial statements.

|Toronto, Ontario, Canada           |                                      |                                  
|---------------------------------- | ------------------------------------ | ---------------------------------
|March 10, 2004 except for notes 22 |                                      | /s/ Schwartz Levitsky Feldman llp
|                                   | and 28 which are as of July 28, 2004 |                                  

---



Med-Emerg International Inc.
Revised Consolidated Balance Sheet
As at December 31, 2003 and 2002
(in US$)

|                                                        |                                          | 2003 |            | 2002        |  
|------------------------------------------------------- | ---------------------------------------- | ---- | ---------- | ----------- | -
|Assets                                                  |                                          |      |            |             |  
|Current assets                                          |                                          |      |            |             |  
|                                                        | Cash                                     |      | $          | 129,132     |  
|                                                        | Accounts receivable (note 5)             |      |            | 3,409,771   |  
|                                                        | Prepaid expenses and other               |      |            | 81,041      |  
|                                                        | Deferred financing costs (note 6)        |      |            |            |  
|                                                        | Discontinued operations (note 4)         |      |            | 102,740     |  
|                                                        |                                          |      |            |             |  
|                                                        |                                          |      | 3,722,684  |             |  
|                                                        |                                          |      |            |             |  
|Long term investment (note 8)                           |                                          |      | 134,979    |             |  
|Property, plant and equipment (note 9)                  |                                          |      | 186,562    |             |  
|Discontinued operations (note 4)                        |                                          |      |           |             |  
|                                                        |                                          |      |            |             |  
|                                                        |                                          | $    | 4,044,225  |             | $
|                                                        |                                          |      |            |             |  
|Liabilities and Shareholders' Deficit                   |                                          |      |            |             |  
|Current liabilities                                     |                                          |      |            |             |  
|                                                        | Demand loan (note 11)                    |      |            |            |  
|                                                        | Accounts payable and accrued liabilities |      |            | 6,717,406   |  
|                                                        | Other loans (note 12)                    |      |            |            |  
|                                                        | Discontinued operations (note 4)         |      |            | 60,703      |  
|                                                        |                                          |      |            |             |  
|                                                        |                                          |      | 6,778,109  |             |  
|Long-term liabilities                                   |                                          |      |            |             |  
|                                                        | Discontinued operations (note 4)         |      |            |            |  
|                                                        |                                          |      |            |             |  
|                                                        |                                          |      | 6,778,109  |             |  
|                                                        |                                          |      |            |             |  
|Minority interest                                       |                                          |      |           |             |  
|                                                        |                                          |      |            |             |  
|Commitments and contingent liabilities (note 19 and 20) |                                          |      |            |             |  
|Shareholders' Deficit                                   |                                          |      |            |             |  
|                                                        | Capital stock (note 14)                  |      |            | 11,544,736  |  
|                                                        | Contributed surplus (note 15)            |      |            | 2,397,849   |  
|                                                        | Convertible debentures (note 13)         |      |            | 414,434     |  
|                                                        | Deficit                                  |      |            | (16,265,370 | )
|                                                        | Cumulative translation adjustment        |      |            | (825,533    | )
|                                                        |                                          |      |            |             |  
|                                                        |                                          |      | (2,733,884 | )           |  
|                                                        |                                          |      |            |             |  
|                                                        |                                          | $    | 4,044,225  |             | $
|                                                        |                                          |      |            |             |  

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

---



Med-Emerg International Inc.
Revised Consolidated Statement of Operations and Deficit
For the years ended December 31, 2003, 2002 and 2001
(in US$)

|                                                                |                                                | 2003 |             | 2002      |   | 2001        |          
|--------------------------------------------------------------- | ---------------------------------------------- | ---- | ----------- | --------- | - | ----------- | ---------
|Revenue                                                         |                                                | $    | 54,335,558  |           | $ | 37,428,043  |          
|Physician fees and other direct costs                           |                                                |      | 49,217,416  |           |   | 34,382,752  |          
|                                                                |                                                |      |             |           |   |             |          
|                                                                |                                                |      | 5,118,142   |           |   | 3,045,291   |          
|                                                                |                                                |      |             |           |   |             |          
|Expenses                                                        |                                                |      |             |           |   |             |          
|                                                                | Salaries and benefits                          |      | $           | 2,249,647 |   | $           | 1,582,301
|                                                                | General and administration                     |      |             | 1,650,521 |   |             | 636,079  
|                                                                | Occupancy costs and supplies                   |      |             | 334,460   |   |             | 244,609  
|                                                                | Public company costs                           |      |             | 96,560    |   |             | 72,423   
|                                                                | Travel and marketing                           |      |             | 347,477   |   |             | 169,117  
|                                                                |                                                |      |             |           |   |             |          
|                                                                |                                                |      | 4,678,665   |           |   | 2,704,529   |          
|                                                                |                                                |      |             |           |   |             |          
|Income before undernoted items                                  |                                                |      | 439,477     |           |   | 340,762     |          
|                                                                |                                                |      |             |           |   |             |          
|                                                                | Interest and financing expenses                |      |             | 685,471   |   |             | 993,508  
|                                                                | Amortization of property, plant and equipment  |      |             | 120,924   |   |             | 102,345  
|                                                                | Amortization of goodwill                       |      |             |          |   |             |         
|                                                                | HealthyConnect.com development expenses        |      |             |          |   |             |         
|                                                                | Dilution Gain                                  |      |             |          |   |             |         
|                                                                | Stock compensation expenses                    |      |             | 1,161,262 |   |             | 62,287   
|                                                                | Restructuring and other expenses               |      |             |          |   |             |         
|                                                                | Forgiveness of loan (note 10)                  |      |             |          |   |             | (228,459 
|                                                                | Loss on disposition of assets                  |      |             |          |   |             |         
|                                                                |                                                |      |             |           |   |             |          
|                                                                |                                                |      | 1,967,657   |           |   | 929,681     |          
|                                                                |                                                |      |             |           |   |             |          
|Loss before income taxes                                        |                                                |      | (1,528,180  | )         |   | (588,919    | )        
|                                                                | Income taxes (recovery) (note 16)              |      |             | (2,458    | ) |             |         
|                                                                |                                                |      |             |           |   |             |          
|Net loss before minority interest and preferred share dividends |                                                |      | (1,525,722  | )         |   | (588,919    | )        
|                                                                | Minority interest                              |      |             | (2,095    | ) |             | (2,211   
|                                                                |                                                |      |             |           |   |             |          
|Net loss before preferred share dividends                       |                                                |      | (1,523,627  | )         |   | (586,708    | )        
|                                                                | Preferred share dividends                      |      |             | 135,006   |   |             | 134,983  
|                                                                |                                                |      |             |           |   |             |          
|Net loss before discontinued operations                         |                                                |      | (1,658,633  | )         |   | (721,691    | )        
|Discontinued operations (note 4)                                |                                                |      |             |           |   |             |          
|                                                                | Loss from operations of discontinued component |      |             | (200,702  | ) |             | (16,956  
|                                                                | Gain on disposal of discontinued component     |      |             | 33,533    |   |             |         
|                                                                |                                                |      |             |           |   |             |          
|                                                                | Loss on discontinued operations                |      |             | (167,169  | ) |             | (16,956  
|                                                                |                                                |      |             |           |   |             |          
|Net loss for the year                                           |                                                |      | (1,825,802  | )         |   | (738,647    | )        
|                                                                |                                                |      |             |           |   |             |          
|Deficit, beginning of the year                                  |                                                |      | (14,333,572 | )         |   | (13,510,845 | )        
|                                                                | Convertible debenture charges (note 13)        |      |             | 105,996   |   |             | 84,080   
|                                                                |                                                |      |             |           |   |             |          
|Deficit, end of the year                                        |                                                | $    | (16,265,370 | )         | $ | (14,333,572 | )        
|                                                                |                                                |      |             |           |   |             |          
|Basic loss per common share (note 17)                           |                                                |      |             |           |   |             |          
|                                                                | Continuing operations                          |      | $           | (0.17     | ) | $           | (0.08    
|                                                                | Discontinued operations                        |      | $           | (0.02     | ) | $           | (0.00    
|Weighted average basic common shares outstanding                |                                                |      | 9,564,332   |           |   | 9,444,332   |          
|                                                                |                                                |      |             |           |   |             |          

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

---



Med-Emerg International Inc.

Revised Consolidated Statement of Cash Flows

As at December 31, 2003, 2002 and 2001

(in US$)

|                                                 |                                                                          | 2003                                                                 |          | 2002       |           | 2001     |         
|------------------------------------------------ | ------------------------------------------------------------------------ | -------------------------------------------------------------------- | -------- | ---------- | --------- | -------- | --------
|Cash Flows from Operating Activities             |                                                                          |                                                                      |          |            |           |          |         
|                                                 | Net loss for the year before discontinued operations                     |                                                                      | $        | (1,658,633 | )         | $        | (721,691
|                                                 | Adjustments for:                                                         |                                                                      |          |            |           |          |         
|                                                 |                                                                          | Amortization of property, plant and equipment (note 9)               |          |            | 120,924   |          |         
|                                                 |                                                                          | Minority interest                                                    |          |            | (2,170    | )        |         
|                                                 |                                                                          | Stock compensation expenses (note 15)                                |          |            | 1,161,262 |          |         
|                                                 |                                                                          | Convertible debentures (note 13)                                     |          |            | 46,998    |          |         
|                                                 |                                                                          | Forgiveness of loan (note 10)                                        |          |            |          |          |         
|                                                 |                                                                          | Amortization of Goodwill                                             |          |            |           |          |         
|                                                 |                                                                          | HealthyConnect.com development expenses                              |          |            |           |          |         
|                                                 |                                                                          | Dilution gain                                                        |          |            |           |          |         
|                                                 |                                                                          | Loss on disposition of assets                                        |          |            |           |          |         
|                                                 |                                                                          | Future income taxes                                                  |          |            |           |          |         
|                                                 |                                                                          | Non cash compensation                                                |          |            |           |          |         
|                                                 |                                                                          | Common shares issued for financing                                   |          |            |          |          |         
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|                                                 |                                                                          |                                                                      | (331,619 | )          |           | (540,293 | )       
|                                                 |                                                                          | Increase (decrease) in non-cash working capital components (note 18) |          |            | 1,158,052 |          |         
|                                                 |                                                                          | Discontinued operations (note 4)                                     |          |            | 22,244    |          |         
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|                                                 |                                                                          |                                                                      | 848,677  |            |           | 998,300  |         
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|Cash Flows from Investing Activities             |                                                                          |                                                                      |          |            |           |          |         
|                                                 | Additions to property, plant, and equipment                              |                                                                      |          | (136,559   | )         |          | (65,866 
|                                                 | Proceeds from sale of investment in clinics (note 4)                     |                                                                      |          | 469,340    |           |          |        
|                                                 | Sale of investment in Next Generation Technology Holdings, Inc. (note 7) |                                                                      |          |           |           |          | 102,051 
|                                                 | Discontinued operations (note 4)                                         |                                                                      |          | (210,127   | )         |          | (333,634
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|                                                 |                                                                          |                                                                      | 122,654  |            |           | (297,449 | )       
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|Cash Flows from Financing Activities             |                                                                          |                                                                      |          |            |           |          |         
|                                                 | Repayment of bank indebtedness                                           |                                                                      |          |           |           |          | (969,026
|                                                 | Demand loan (note 11)                                                    |                                                                      |          | (11,462    | )         |          | 11,462  
|                                                 | Deferred financing costs incurred (note 6)                               |                                                                      |          | 42,883     |           |          | (42,883 
|                                                 | Issuance/(repayment) of other loans (note 12)                            |                                                                      |          | (535,000   | )         |          | 466,710 
|                                                 |                                                                          | Reserve for restructuring                                            |          |            |           |          |         
|                                                 |                                                                          | Payment due to shareholder                                           |          |            |           |          |         
|                                                 |                                                                          | Payment of long term debt                                            |          |            |           |          |         
|                                                 | Discontinued operations (note 4)                                         |                                                                      |          | (10,235    | )         |          | (71,144 
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|                                                 |                                                                          |                                                                      | (513,814 | )          |           | (604,881 | )       
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|Effect of foreign currency exchange rate changes |                                                                          |                                                                      | (418,002 | )          |           | (15,550  | )       
|Increase in cash                                 |                                                                          |                                                                      | 39,515   |            |           | 80,420   |         
|Cash, beginning of year                          |                                                                          |                                                                      | 89,617   |            |           | 9,197    |         
|                                                 |                                                                          |                                                                      |          |            |           |          |         
|Cash, end of year                                |                                                                          | $                                                                    | 129,132  |            | $         | 89,617   |         
|                                                 |                                                                          |                                                                      |          |            |           |          |         

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

---



MED-EMERG INTERNATIONAL INC.        Notes to Revised Consolidated Financial Statements        December 31, 2003, 2002 and 2001

1.     ORGANIZATION AND DESCRIPTION OF BUSINESS



2.     BASIS OF PRESENTATION



---



3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES











---





Furniture and fixtures

20%

Declining balanceComputer software

100%

Declining balanceComputer hardware

30%

Declining balanceLeasehold improvements

5-10 years

Straight-line










---













4.     DISCONTINUED OPERATIONS



---









---



The summarized statements of income (loss) for the Discontinued Business are as follows:

|                                               |  | 2003
$ |           | 2002
$ |   | 2001
$    |  
|---------------------------------------------- |  | ------ | --------- | ------ | - | --------- | -
|Revenue                                        |  | $      | 6,489,747 |        | $ | 7,616,267 |  
|Physician fees and other direct costs          |  |        | 3,593,429 |        |   | 3,998,789 |  
|                                               |  |        |           |        |   |           |  
|Gross margin                                   |  |        | 2,896,318 |        |   | 3,617,478 |  
|                                               |  |        |           |        |   |           |  
|Operating, general and administrative expenses |  |        | 2,955,990 |        |   | 3,413,537 |  
|Depreciation                                   |  |        | 128,475   |        |   | 195,029   |  
|Other expense                                  |  |        | 13,255    |        |   | 27,446    |  
|                                               |  |        |           |        |   |           |  
|Loss before income taxes                       |  |        | (201,402  | )      |   | (18,534   | )
|                                               |  |        |           |        |   |           |  
|Income taxes (recovery)                        |  |        | (1,321    | )      |   | (13,570   | )
|Minority interest                              |  |        | 621       |        |   | 11,992    |  
|                                               |  |        |           |        |   |           |  
|Loss for the period                            |  |        | (200,702  | )      |   | (16,956   | )
|                                               |  |        |           |        |   |           |  
|Gain on sale of discontinued operations        |  |        | (33,533   | )      |   |          |  
|                                               |  |        |           |        |   |           |  
|Loss from discontinued operations              |  |        | (167,169  | )      |   | (16,956   | )
|                                               |  |        |           |        |   |           |  

The
summarized balance sheets for the Discontinued Business are as follows:

|                              |                                          | 2003
$ |         | 2002
$ |  |          
|----------------------------- | ---------------------------------------- | ------ | ------- | ------ |  | ---------
|Current assets                |                                          |        |         |        |  |          
|                              | Cash                                     |        | $       | 43,134 |  | $        
|                              | Accounts receivable                      |        |         | 59,606 |  |          
|                              | Prepaid expenses and other               |        |         |       |  |          
|                              |                                          |        |         |        |  |          
|                              |                                          |        | 102,740 |        |  | 959,730  
|                              |                                          |        |         |        |  |          
|Property, plant and equipment |                                          |        |        |        |  | 594,185  
|                              |                                          |        |         |        |  |          
|                              |                                          |        | 102,740 |        |  | 1,553,915
|                              |                                          |        |         |        |  |          
|Current liabilities           |                                          |        |         |        |  |          
|                              | Accounts payable and accrued liabilities |        | $       | 60,703 |  | $        
|                              | Current portion of deferred revenue      |        |         |       |  |          
|                              | Other loans                              |        |         |       |  |          
|                              |                                          |        |         |        |  |          
|                              |                                          |        | 60,703  |        |  |          
|                              |                                          |        |         |        |  |          
|Long-term liabilities         |                                          |        |         |        |  |          
|                              | Deferred revenue                         |        |         |       |  |          
|                              |                                          |        |         |        |  |          
|                              |                                          |        | 60,703  |        |  |          
|                              |                                          |        |         |        |  |          
|Net assets                    |                                          |        | 42,037  |        |  | 615,406  
|                              |                                          |        |         |        |  |          

---



5.     ACCOUNTS RECEIVABLE

|                                |  | 2003 |           | 2002 |  
|------------------------------- |  | ---- | --------- | ---- | -
|Trade receivable                |  | $    | 3,455,886 |      | $
|Allowance for doubtful accounts |  |      | (46,115   | )    |  
|                                |  |      |           |      |  
|                                |  | $    | 3,409,771 |      | $
|                                |  |      |           |      |  



6.     DEFERRED FINANCING COSTS



7.     SHORT-TERM INVESTMENTS



8.     LONG-TERM INVESTMENTS

|                                    |  | 2003 |         | 2002
|----------------------------------- |  | ---- | ------- | ----
|Investment in AIM Health Group Ltd. |  | $    | 134,979 |     
|                                    |  |      |         |     



---



9.     PROPERTY, PLANT AND EQUIPMENT

|                       |  | 2003 |           | 2002
|---------------------- |  | ---- | --------- | ----
|
|Furniture and fixtures |  | $    | 189,848   |     
|Computer software      |  |      | 329,144   |     
|Computer hardware      |  |      | 509,224   |     
|Leasehold improvements |  |      | 67,946    |     
|                       |  |      |           |     
|                       |  | $    | 1,096,162 |     
|                       |  |      |           |     



10.   REFINANCING ACTIVITIES





---



11.     DEMAND LOAN



12.     OTHER LOANS

2003

2002Secured debenture, effective interest at 23.4%, due June 2003

Nil

$
535,000


13.     CONVERTIBLE DEBENTURES



Convertible debentures

Undiscounted Total

Present ValuePrincipal due on September 30, 2006

$
590,536

$
92,130Interest due on September 30, 2006


206,688


32,245$
797,224

$
124,375




Convertible debentures at December 31, 2001

$
124,375Interest costs in 2002


52,985Convertible debenture charges in 2002


84,080Convertible debentures at December 31, 2002


261,440Interest costs in 2003


46,998Convertible debenture charges in 2003


105,996Convertible debentures at December 31, 2003

$
414,434


---



14.     CAPITAL STOCK

AuthorizedUnlimited number of the following classes of shares and warrants:Preference shares, voting, non-redeemable, non-retractable, having a cumulative dividend of US$0.27 per share, convertible to common shares;Class "A", redeemable, retractable, non-cumulative preference shares;Class "B", redeemable, retractable, non-cumulative preference shares;Special shares, issuable in series, with rights, privileges and restricitions to be fixed by the directors;Common sharesCommon shares purchase warrants, redeemable, entitling holder to purchase one share of common stock at a price of US$0.50 per share to February 11, 2005.


2003

2002Issued500,000 Preference shares

$
445,717

$
445,7179,564,332 Common shares (2002  9,564,332)


10,992,908


10,992,9081,437,500 Common stock purchase warrants


106,111


106,111$
11,544,736

$
11,544,736


Common SharesNumber

AmountBalance, December 31, 2001

9,348,332

$
10,798,508Shares issued in connection with re-financing in 2002 (note 10)

216,000


194,400Balance, December 31, 2003 and 2002

9,564,332

$
10,992,908


WarrantsNumber

AmountBalance, December 31, 2003, 2002 and 2001

1,437,500

$
106,111






---







STOCK OPTIONS

Number of sharesExpiry Date

Option price
per share2003

2002

2001Apr-02

$
2.50





157,600Apr-02

$
4.25





16,200Between September 2000 and September 2003

$
1.75



0

12,500Jan-04

$
1.25



230,000

242,500Jul-04

$
1.50



400,000

400,000Aug-04

$
1.85





12,500Apr-06

$
0.50

1,440,000

1,540,000

1,590,000May-06

$
0.50





10,000Jun-07

$
1.00

100,000

100,000

May-08

$
0.50

785,000



2,325,000

2,270,000

2,441,300


Number of shares2003

2002

2001Outstanding, beginning of year

2,270,000

2,441,300

$
853,800Granted

785,000

100,000


1,600,000Cancelled/expired

(730,000
)
(271,300
)

(12,500
)Outstanding, end of year

2,325,000

2,270,000


2,441,300






---



15.   CONTRIBUTED SURPLUS

2003

2002Stock compensation expense

$
2,309,782

$
1,148,520Share repurchase  difference between cost per share and assigned value


46,292


46,292Fair value of warrants and stock options issued in connection with the acquisition of YFMC Healthcare Inc.


41,775


41,775$
2,397,849

$
1,236,587




16.   FUTURE INCOME TAXES



17.   BASIC LOSS PER COMMON SHARE



2003

2002

2001Basic loss per common share:Continuing operations

$
(0.17
)
$
(0.08
)
$
(0.41
)Discontinued operations

$
(0.02
)
$
(0.0
)
$
(0.42
)


18.   NOTES TO THE STATEMENT OF CASH FLOWS



2003

2002

2001Accounts receivable

$
(1,693,984
)
$
(120,870
)
(700,798
)Prepaid expenses and other


(12,963
)

(1,350
)
49,235Accounts payable and accrued liabilities


2,864,999


1,345,247

528,490$
1,158,052

$
1,223,027

(123,073
)


---



18.   NOTES TO THE STATEMENT OF CASH FLOWS (cont'd)





19.   COMMITMENTS



2004

$
57,8822005


24,0352006


24,0352007


24,0352008


24,0352009 and thereafter


6,010$
160,032


20.   CONTINGENT LIABILITIES



---







21.   FAIR VALUE OF FINANCIAL INSTRUMENTS



22.   SUBSEQUENT EVENTS



---





23.   CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES





2003

2002Deficit based on Canadian GAAP

$
(16,265,370
)
$
(14,333,572
)Convertible debentures (note 13)


(289,453
)

(395,449
)Deficit based on U.S. GAAP

$
(16,554,823
)
$
(14,729,021
)






---





2003

2002Capital stock (as previously shown)

$
11,544,736

$
11,544,736Capital 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
)Capital stock  U.S. GAAP


12,596,202


12,596,202Contributed surplus (as previously shown)


2,397,849


1,236,587Share purchase warrants


36,406


36,406Paid-in-capital  U.S. GAAP


2,434,255


1,272,993Deficit  U.S. GAAP


(16,554,823
)

(14,729,021
)Cumulative translation adjustment


(825,533
)

(407,531
)Shareholders' deficit  U.S. GAAP


(2,349,899
)
$
(1,267,357
)






2003

2002

2001Net loss (U.S. GAAP)

$
(1,825,802
)
$
(738,647
)
$
(6,876,437
)Foreign currency translation adjustment


(418,002
)

(15,550
)

(87,658
)Comprehensive loss

$
(2,243,804
)
$
(754,197
)
$
(6,964,095
)






---





24.   ECONOMIC DEPENDENCE



---



25.   SEGMENTED INFORMATION



---





2003Hospital Staffing

Pharmaceutical Support

Government Healthcare Services

Long Term Care

ConsolidatedRevenue

$
12,716,827

$
883,287

$
40,278,718

$
456,726

$
54,335,558Gross margin

$
2,180,900

$
422,878

$
2,371,478

$
142,886

$
5,118,142Net income (loss)

$
436,234

$
(276,713
)
$
(1,370,727
)
$
(447,427
)
$
(1,658,633
)Assets employed at end of period

$
35,121

$
17,560

$
116,321

$
17,560

$
186,562Amortization

$
15,855

$
7,928

$
89,213

$
7,928

$
120,924


2002Hospital Staffing

Pharmaceutical Support

Government Healthcare Services

Long Term Care

ConsolidatedRevenue

$
5,598,171

$
392,587

$
31,335,843

$
101,442

$
37,428,043Gross margin

$
992,006

$
139,344

$
1,882,229

$
31,712

$
3,045,291Net income (loss)

$
(114,980
)
$
(164,180
)
$
(200,114
)
$
(242,417
)
$
(721,691
)Assets employed at end of period

$
37,045

$
18,523

$
96,836

$
18,523

$
170,927Amortization

$
15,727

$
7,863

$
70,892

$
7,863

$
102,345


2001Hospital Staffing

Pharmaceutical Support

Government Healthcare Services

Long Term Care

ConsolidatedRevenue

$
6,724,122

$
121,705

$
8,967,423

$
NIL

$
15,813,250Gross margin

$
1,151,236

$
51,243

$
1,387,489

$
NIL

$
2,589,968Net income (loss)

$
(2,543,335
)
$
5,015

$
(867,225
)
$
NIL

$
(3,405,545
)Assets employed at end of period

$
158,040

$
NIL

$
49,367

$
NIL

$
207,407Amortization

$
64,702

$
NIL

$
17,594

$
NIL

$
82,296


26.   RELATED PARTY TRANSACTIONS



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27.   COMPARATIVE FIGURES



28.   REVISED CONSOLIDATED FINANCIAL STATEMENTS



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