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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q



(MARK ONE)
    
 x
  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
   
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
L5N 2W3
(Address of Principal Executive Offices)
(Zip Code)

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

Securities registered or to be registered pursuant to Section 12(g) 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 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 [X] No [ ]

Indicate by check mark whether registrant is an accelerated filer (as defined in Exchange Act Rule 12(b)-2). Yes [ ] No [X]

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 31, 2005) of the registrant held by non-affiliates was approximately US$ 23,311,000.

As of March 31, 2005, 58,277,696 shares of the registrant’s Common Stock were outstanding.

(All figures in US dollars unless otherwise indicated.)


1
 
MED-EMERG INTERNATIONAL INC.

MARCH 31, 2005 QUARTERLY REPORT ON FORM 10-Q
 
 
TABLE OF CONTENTS


PART I:  FINANCIAL INFORMATION
 
Item 1.
Financial Statements
   
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
   
Item 4.
Controls and Procedures
 
PART II:  OTHER INFORMATION

Item 5.
Exhibits and Reports on Form 8-K
 
(a) Exhibits
 
(b) Reports on Form 8-K
 
Signatures


2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks 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 March 31, 2005 (unaudited) and December 31, 2004 (audited)

Consolidated Statement of Operations and Deficit for the three months ended March 31, 2005 and 2004 (unaudited)

Consolidated Statement of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited)

Notes to Unaudited Consolidated Financial Statements

3

Med-Emerg International Inc.
Consolidated Balance Sheet
As at March 31, 2005 (Unaudited) and December 31, 2004 (Audited)
(in US$)
           
   
March 31
 
December 31
 
     
2005
 
 
2004
 
Assets
              
     
   
 
Current assets
              
Cash
 
$
1,470,116
  
$
2,312,156
  
Accounts receivable
   
1,808,251
   
1,452,586
 
Prepaid expenses and other
   
137,008
   
72,557
 
Discontinued operations (note 4 )
    
2,818,528
   
2,655,098
 
     
6,233,903
   
6,492,397
 
               
Long-term investment
   
83,195
   
83,195
 
               
Property, plant and equipment
   
446,751
   
470,243
 
Goodwill
   
237,596
   
237,596
 
Discontinued operations (note 4 )
    
33,853
   
38,596
 
   
$
7,035,298
  
$
7,322,027
  
               
Liabilities and Shareholders' Equity
             
               
Current liabilities
              
Accounts payable and accrued liabilities
  
$
1,726,673
  
$
1,661,794
  
Discontinued operations (note 4 )
    
3,386,025
   
3,606,476
 
     
5,112,698
   
5,268,270
 
               
Long-term liabilities
              
Notes payable
   
599,991
   
599,991
 
Discontinued operations (note 4 )
    
815,074
   
894,517
 
     
6,527,763
   
6,762,778
 
               
               
Contingent liabilities (note 11)
              
               
Shareholders' Equity
             
Capital stock (note 5)
    
1,361,280
   
1,361,280
 
Contributed surplus (note 6)
    
318,197
   
67,080
 
Deficit
   
(365,223
)
  
(68,320
)
(Accumulated deficit of $17,152,785 has been eliminated
              
by applying it against contributed surplus and capital stock)
              
Cumulative translation adjustment
    
(806,719
)
  
(800,791
)
     
507,535
   
559,249
 
   
$
7,035,298
  
$
7,322,027
  
               
               
The accompanying notes are an integral part of these consolidated financial statements.
              

4

Med-Emerg International Inc.
Consolidated Statement of Operations and Deficit
Three months ended March 31, 2005 and 2004 (Unaudited)
(in US$)
   
March 31
  
March 31
  
     
2005
 
 
2004
 
               
Revenue
  
$
3,079,432
  
$
2,445,213
  
Physician fees and other direct costs
    
2,271,559
   
1,901,824
 
     
807,873
   
543,389
 
Expenses
              
Salaries and benefits
  
$
665,107
  
$
416,427
  
General and administration
    
227,968
   
191,556
 
Occupancy costs and supplies
    
120,297
   
91,166
 
Travel and marketing
    
73,884
   
67,196
 
     
1,087,256
   
766,345
 
               
Income (loss) before under noted items
    
(279,383
)
  
(222,956
)
               
Interest income
    
(5,390
)
  
-
 
Interest and financing expenses
    
-
   
45,571
 
Amortization of property, plant, and equipment
    
42,657
   
8,171
 
Stock compensation expense
    
251,117
   
40,370
 
     
288,384
   
94,112
 
Net loss before discontinued operations
   
(567,767
)
  
(317,068
)
               
Discontinued operations
             
Income from discontinued operations (note 4 )
    
270,864
   
203,252
 
Net loss
   
(296,903
)
  
(113,816
)
Preferred share dividends
    
-
   
(33,750
)
Net loss attributable to common shareholders
    
(296,903
)
  
(147,566
)
               
Deficit, beginning of the period
    
(68,320
)
  
(16,425,309
)
               
Deficit, end of the period
  
$
(365,223
)
$
(16,572,875
)
               
Basic loss per common share
             
Continuing operations
  
$
(0.01
)
$
(0.04
)
Discontinued operations
  
$
0.00
  
$
0.02
  
               
Weighted average common shares outstanding
    
58,277,696
   
9,569,424
 
               
The accompanying notes are an integral part of these consolidated financial statements.
              

5

Med-Emerg International Inc.
Consolidated Statement of Cash Flows
Three months ended March 31, 2005 and 2004 (Unaudited)
(in US$)
 
  
March 31
 
March 31
 
 
 
 
2005
 
 
2004
  
               
Cash Flows from Operating Activities
    
       
Net loss before discontinued operations
 
$
(567,767