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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

                                      (MARK ONE)

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

For the Quarterly Period Ended September 30, 2004

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

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.

Indicate by check mark whether registrant is an accelerated filer (as defined in Exchange Act Rule 12(b)-2).

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 September 30, 2004) of the registrant held by non-affiliates was approximately US$32,052,000.

As of September 30, 2004, 58,277,696 shares of the registrant's Common Stock were outstanding.

(All figures in US dollars unless otherwise indicated.)

MED-EMERG INTERNATIONAL INC.

SEPTEMBER 30, 2004 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

PART I: FINANCIAL INFORMATION

ITEM 1.    CONDENSED FINANCIAL STATEMENTS

Consolidated Balance Sheets as at September 30, 2004 (unaudited) and December 31, 2003 (audited)

Consolidated Statements of Operations and Deficit for the three and nine months ended September 30, 2004 and 2003 (unaudited)

Consolidated Statement of Cash Flows for the three and nine months ended September 30, 2004 and 2003 (unaudited)

Notes to Unaudited Consolidated Financial Statements

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MED-EMERG INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEET

As at September 30, 2004 (unaudited) and December 31, 2003 (audited)
(in US$)

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

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MED-EMERG INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

Three and nine months ended September 30, 2004 and 2003 (unaudited)
(in US$)

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

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MED-EMERG INTERNATIONAL INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Three and nine months ended September 30, 2004 and 2003 (unaudited)
(in US$)

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

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MED-EMERG INTERNATIONAL INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Nine months ended September 30, 2004 and 2003

1.    ORGANIZATION AND DESCRIPTION OF BUSINESS

        Med-Emerg International Inc. ("MEII" or the "Company") is a private sector provider of quality healthcare management services to the Canadian healthcare industry.

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

        The Company's operations were divided into five units during the 2003 fiscal year. Subsequent to 2003 the Company is no longer actively involved in the Medical Clinics business. MEII's four remaining business units are: Institutional Staffing, Government Healthcare Services (including Department of National Defence), Infusion Services and Healthcare Consulting.

        For Institutional Staffing, the Company provides emergency department physician and nurse recruitment, staffing and administrative support services to hospitals and federal corrections facilities, on a contractual basis, and physician and nurse practitioners to select long-term facilities in Ontario, British Columbia and Nova Scotia. At September 30, 2004, the Company had 28 contracts for physician staffing and 8 contracts for nurse staffing.

        The Company provides in-garrison medical personnel to the Canadian Forces ("CF") at bases across Canada. Through this contract the Company recruits, schedules and manages physicians, nurses, dentists, physiotherapists and other healthcare professionals to provide services as required by the CF health authority resident at each base.

        The Company provides special access Remicade™ infusion services to patients suffering from Crohn's disease and rheumatoid arthritis at clinic locations across Canada. The Company recently signed an agreement with Novartis Pharmaceuticals Canada Inc. and has begun to supply Zometa™ for treating cancer patients with bone metastases.

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

2.    BASIS OF PRESENTATION

        These unaudited consolidated financial statements consolidate, with minority interest, the accounts of MEII and all wholly — and partially-owned subsidiaries of MEII. The unaudited consolidated financial statements are expressed in US dollars and are prepared in accordance with Canadian generally accepted accounting principles. Differences between Canadian and United States accounting principles are described in note 10.

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

        Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2004.

        These unaudited consolidated financial statements are condensed, and do not include all disclosures required for annual financial statements, which are contained in the notes to the Company's audited consolidated financial statements filed as part of the Company's December 31, 2003 Form 10K. These unaudited consolidated financial statements, footnote disclosures and other information should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003.

        All intercompany accounts and transactions have been eliminated on consolidation.

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3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)   Use of estimates

        The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities during the reporting period. Significant areas requiring the use of estimates relate to: 1) the reported amounts of revenues and expenses, 2) the disclosure of contingent liabilities, 3) the carrying value of property, plant, and equipment and the rate of amortization related thereto. Actual results could differ from those estimates.

(b)   Long-term investments

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

(c)   Impairment charges

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

(d)   Revenue recognition

        The company has adopted the provisions of Emerging Issues Committee ("EIC") — 123, issued by the Canadian Institute of Chartered Accountants (CICA) which became effective on January 1, 2002. EIC –123 addresses the reporting of revenue on a gross basis as a principal versus on a net basis as an agent.

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

(1)

Institutional Staffing:

        Revenue is reported on a gross basis.

        MEII acts as a principal in providing these services. MEII contracts with emergency room physician and nursing personnel to provide services to hospitals and correctional facilities in Ontario, British Columbia and Nova Scotia, a mix of rural and urban facilities including tertiary care centres.

        In 2002, MEII commenced a new line of business, which involves contracting with physicians and nurse practitioners to provide services to long-term care facilities in Ontario.

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(2)

Government Healthcare Services (Includes Department of National Defence ("DND")):

        Revenue is reported on a gross basis.

        MEII has an administrative management contract with Public Works and Government Services Canada ("PWGSC") to provide personnel to Canadian armed forces across Canada on behalf of the Minister of National Defence.

        Under the terms of the contract, MEII has the responsibility to hire medical personnel and support staff and where necessary provide appropriate training and supervision of the work performed at the respective bases across Canada. MEII bills DND for the work performed by these individuals and in turns pays the medical personnel and support staff based on the terms of the respective contracts signed with them.

(3)

Infusion Services:

        Revenue is reported on a gross basis.

        Under contracts with Schering-Plough Canada and Novartis Pharmaceuticals Canada Inc, MEII acts as the coordinator for the community-based infusion of certain medications for the treatment of patients with rheumatoid arthritis, Chron's disease and certain cancers.

(4)

Healthcare Consulting:

        Revenue is reported on a gross basis.

(e)   Foreign currency translation

        During 2002, the Company adopted the recommendation of the CICA handbook section 1650 Foreign Currency Translation. The amended standard eliminates the deferral and amortization approach to exchange gains and losses on long-term monetary items and requires the disclosure of the exchange gains and losses included in the calculation of net income. There is no material effect of this change in accounting policy on the financial statements of the Company.

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

(f)    Stock compensation

        The Company has adopted section 3870 issued by the CICA in respect of stock based compensation and other stock based payments. This section requires that a fair value based method of accounting be applied to all stock based payments to non-employees and to direct awards of stock to employees. The standard requires the recognition of a compensation expense for grants of stock, stock options, and other equity instruments to employees based on the estimated fair value of the instruments at the grant date.

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4.    LONG-TERM DEBT

        The amount of $922,341 pertains to the long term portion of the Goods and Services Tax which is payable over a period of five years, as per an agreement between the Company and the Canada Revenue Agency ("CRA"). An amount of $22,587 ($30,000 CDN) is payable monthly and is reviewable every six months. Accordingly, the current portion of this debt has been classified under Accounts payable and accrued liabilities. The CRA will register a Lien under the Personal Property Security Act with the Province of Ontario to secure its position.

5.    CAPITAL STOCK

        On June 15, 2004, the Company issued 39,360,272 common shares for US$4,500,000. As a condition of the transaction, Preference Shares, 50% of which are indirectly held by Dr. Zacharias, the CEO of MEII, were converted into 9,348,000 common shares; and unpaid preference share dividends, in the amount of US$ 563,477, were forgiven.

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

        The Investors received 43,708,272 common shares of MEII, of which 39,360,272 were purchased from the Company for US$4,500,000 and 4,348,000 were purchased directly from the Preference Shareholder for $500,000. Closing costs including legal, travel and due diligence costs for the equity financing amounted to $592,285, and have been expensed during the second quarter.

        In addition to issuing the common shares, MEII also issued to the Investors and the former Preference Shareholder, anti-dilution warrants (the "New Warrants") to purchase common shares of MEII at prices of either $0.50 per common share or $1.00 per common share. The exercise of the New Warrants is directly tied to the exercise of existing options and warrants at $0.50 per common share and $1.00 per common share that are currently outstanding. The exercise of the New Warrants is intended to allow the Investors' and former Preference Shareholder to maintain their pro rata share of their equity position.

6.    CONTRIBUTED SURPLUS

        During the first quarter of 2004, 100,000 options were granted with an exercise price of $0.50 per option. The options vested immediately and are available for a term of five years expiring on January 30, 2009. Due to the issuance of new options the fair value amounting to $39,740 has been determined using an option pricing model (Black Scholes) as per section 3870 of the CICA handbook. This amount has been credited to contributed surplus.

        During the second quarter of 2004, 250,000 options were granted to an employee with an exercise price of $0.115 per option. Options for 125,000 shares shall be exercisable on the first anniversary and options for the remaining 125,000 would be exercisable on the second anniversary of the employment agreement. Due to the issuance of new options, the fair value amounting to $5,706 has been determined for the second quarter, using an option pricing model (Black Scholes) as per section 3870 of the CICA handbook. The corresponding amount for the third quarter is $26,034. These amounts have been credited to contributed surplus.

        Management options amounting to 1,000,000 each were granted to two employees, and 150,000 each to two other employees, at an exercise price of $0.115 per option. The vesting of these options is subject to a future earnings hurdle test. Since the earnings test is in a future period, no expense is recognized in the current quarter.

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        During the first quarter of 2003, the terms of warrants were amended entitling each warrant holder to purchase one share of common stock at a price of $0.50 (previously $4.50). Due to this amendment, the fair value amounting to $733,627 had been determined, and was credited to contributed surplus.

7.    CONVERTIBLE DEBENTURES

        The convertible debentures were issued on September 30, 2001, are due on September 30, 2006 and bear interest at 7%. MEII may pay the principal amount and accrued interest at any time prior to maturity by way of cash or shares of MEII common stock or a combination of cash and MEII common stock at the discretion of the Company. Accordingly, these debentures have been reflected in the financial statements at its estimated present value and included in shareholder's equity (deficit).

        The above debentures will be accreted to their principal values at the rate of 45% per annum on the net present values shown. During the first nine months of 2004, an amount of $83,854 was accreted to principal with corresponding charge to retained earnings.