MED EMERG INTERNATIONAL INC, F-1, 1997-02-14

MED EMERG INTERNATIONAL INC
F-1, 1997-02-14

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 14,1997

REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
------------------------

MED-EMERG INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
CANADA 3842 NA
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of Classification Code) Identification
incorporation or organization) No.)
</TABLE>

2550 ARGENTIA ROAD
SUITE 205
MISSISSAUGA, ONTARIO L5N 5R1
CANADA
(905) 858-1368
(Address, including zip code and telephone number, including area code,
of Registrant's principal executive offices)
------------------------

CARL PAHAPILL
PRESIDENT, CHIEF OPERATING OFFICER AND DIRECTOR
MED-EMERG INTERNATIONAL INC.
2550 ARGENTIA ROAD
SUITE 205
MISSISSAUGA, ONTARIO L5N 5R1
CANADA
(905) 858-1368
(Name, address, including zip code and telephone number,
including area code, of agent for service)
------------------------

COPIES OF COMMUNICATIONS TO:

JAY M. KAPLOWITZ, ESQ. JACK BECKER, ESQ.
ARTHUR S. MARCUS, ESQ. SNOW BECKER KRAUSS P.C.
GERSTEN, SAVAGE, KAPLOWITZ, 605 THIRD AVENUE
FREDERICKS & CURTIN, LLP NEW YORK, NEW YORK 10158-0125
101 EAST 52ND STREET (212) 687-3860
NEW YORK, NEW YORK 10022
(212) 752-9700

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier, effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box / /

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<PAGE>
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT BEING OFFERING PRICE PER AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED SECURITY(1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, no par value....................... 1,437,500(2) $3.90 $ 5,606,250 $ 1,698.86
Class A Warrants................................. 1,437,500(3) $0.10 $ 143,750 $ 43.56
Common Stock issuable upon exercise of
Warrants....................................... 1,437,500(4) $5.00 $ 7,187,500 $ 2,178.03
Underwriter's Warrant to Purchase Common Stock... 125,000 $4.68 $ 585,000 $ 177.27
Underwriter's Warrant to purchase
Warrants....................................... 125,000 $0.12 $ 15,000 $ 4.55
Common Stock issuable upon exercise of Warrants
issuable upon exercise of Underwriter's
Warrants....................................... 125,000(4) $5.00 $ 625,000 $ 189.39
Common Stock being Registered for Selling
Stockholders................................... 125,000 $4.00 $ 500,000 $ 151.52
Total Registration Fee........................... $ 4,443.18
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933.

(2) Includes 187,500 shares of Common Stock subject to an over-allotment option
granted to the Underwriter, including 140,625 shares to be offered by
certain stockholders of the Company.

(3) Includes 187,500 Warrants subject to an over-allotment option granted to the
Underwriter.

(4) Pursuant to Rule 416, this Registration Statement also covers an
indeterminable number of additional Common Stock issuable as a result of any
future anti-dilution adjustments in accordance with the terms of the Class A
Common Stock Purchase Warrants.
------------------------

EXPLANATORY NOTE

The Registration Statement contains two forms of prospectus: (i) one to be
used in connection with an offering by the Company of shares of Common Stock and
Redeemable Common Stock Purchase Warrants (the "Prospectus"); and (ii) one to be
used in connection with the sale of Common Stock by certain selling
securityholders (the "Selling Securityholder Prospectus"). The Prospectus and
the Selling Securityholder Prospectus will be identical in all respects except
for the alternate pages for the Selling Securityholder Prospectus included
herein which are labeled "Alternate Page for Selling Securityholders
Prospectus."

ii
<PAGE>
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED , 1997

PROSPECTUS

MED-EMERG INTERNATIONAL INC.
1,250,000 SHARES OF COMMON STOCK AND
1,250,000 CLASS A REDEEMABLE COMMON STOCK PURCHASE WARRANTS

MED-EMERG INTERNATIONAL INC. (the "Company") is hereby offering (the
"Offering") 1,250,000 shares of the Company's common stock, no par value (the
"Common Stock"), and 1,250,000 Class A Redeemable Common Stock Purchase Warrants
(the "Warrants"), through Network 1 Financial Securities, Inc. (the
"Underwriter"). Each of the Warrants entitles the registered holder thereof to
purchase one share of Common Stock at a price of $5.00 per share, subject to
adjustment in certain circumstances, at any time commencing one year from the
effective date of the registration statement of which this Prospectus is a part
(the "Effective Date") and thereafter to , 2002, the fifth
anniversary of the Effective Date. The Warrants are subject to redemption by the
Company at $.10 per Warrant at any time commencing , 1999 [two years
after the Effective Date] on not less than 30 days prior written notice to the
holders of the Warrants, provided the closing bid price of the Common Stock has
been at least $8.00 for 20 consecutive trading days ending on the third day
prior to the date on which the Company gives notice of redemption. The Warrants
will be exercisable until the close of business on the day immediately preceding
the date fixed for redemption.

Prior to the Offering, there has been no public market for the Common Stock
and Warrants and no assurance can be given that any such market will develop
upon completion of the Offering. Application has been made to have the Common
Stock and Warrants included for quotation on The Nasdaq SmallCap Market under
the symbols "MEDE" and "MEDEW," respectively, and for listing on the Boston
Stock Exchange under the symbols "MED" and "MEDW," respectively. The initial
public offering price of the Common Stock and the Warrants and the exercise
price and other terms of the Warrants have been determined by negotiation
between the Company and the Underwriter and do not necessarily bear any relation
to the Company's earnings, assets, book value, net worth or any other recognized
criteria of value. See "Underwriting."

AN INVESTMENT IN THE SHARES OF COMMON STOCK AND WARRANTS OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK AND IMMEDIATE AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
COMMENCING ON AND DILUTION ON PAGE .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY (2)
<S> <C> <C> <C>
Per Share.............................. U.S. $3.90 U.S. $0.39 U.S. $3.51
Per Warrant............................ U.S. $0.10 U.S. $0.01 U.S. $0.09
Total.................................. U.S. $5,000,000 U.S. $500,000 U.S. $4,500,000
</TABLE>

(1) Does not include additional consideration to be received by the Underwriter
in the form of (i) a non-accountable expense allowance equal to 3% of the
gross offering proceeds, of which U.S. $50,000 has been paid, (ii) warrants
(the "Underwriter's Warrants") entitling the Underwriter to purchase up to
125,000 shares of Common Stock and 125,000 Warrants at a price per share of
Common Stock or Warrant equal to 120% of the initial public offering price,
(iii) US $5,000 per month for 24 months pursuant to a financial consulting
agreement which is payable in full upon the closing of the Offering; and
(iv) a three year right of first refusal with respect to certain public or
private sales of securities by the Company and any of its subsidiaries or
affiliates. The Company has also agreed to indemnify the Underwriter against
certain liabilities under the Securities Act of 1933, as amended, and to pay
the Underwriter, under certain circumstances, a warrant solicitation fee of
5% of the exercise price of each Warrant exercised. See "Underwriting."

(2) Before deducting expenses of this Offering estimated at US $500,000 payable
by the Company, including the non-accountable expense allowance of US
$150,000 (US $172,500 if the Underwriter's over-allotment option is
exercised in full).

(3) The Company and certain of its securityholders have granted the Underwriter
an option, exercisable within 45 days after the date of this Prospectus, to
purchase up to 187,500 shares of Common Stock (140,625 of which are being
granted by certain securityholders) and 187,500 Warrants (the
"Over-Allotment Option") upon the same terms as set forth above, solely to
cover over-allotments, if any. If the Over-Allotment Option is exercised in
its entirety, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company and the Selling Securityholders will be
US $5,750,000, US $575,000 and US $4,626,562.50 and US$548,437.50,
respectively. See "Underwriting."

The Common Stock and Warrants are being offered by the Underwriter subject
to prior sale, when, as and if delivered to the Underwriter and subject to their
right to reject orders in whole or in part and to certain other conditions. It
is expected that delivery of certificates will be made against payment therefor
at the offices of Network 1 Financial Securities, Inc., Galleria, Building 2, 2
Bridge Avenue, Redbank, New Jersey 07701, on or about , 1997.

NETWORK 1 FINANCIAL SECURITIES, INC.
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OR
THE WARRANTS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR
SALE UNDER THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA.
THE SECURITIES ARE NOT BEING OFFERED FOR SALE AND MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN CANADA, OR TO ANY RESIDENT THEREOF, IN VIOLATION OF
THE SECURITIES LAWS OF CANADA OR ANY PROVIDENCE OR TERRITORY OF CANADA.

Dollar amounts stated herein are stated in Canadian dollars unless noted
otherwise. On January 7, 1997, the Bank of Canada accounted rate for conversion
of United States dollars into Canadian dollars was U.S. $1.00 = CDN $1.36, or
CDN $1.00 = U.S. $.74.

CIVIL LIABILITIES

The Company is a corporation continued under the Canada Business
Corporations Act (the "CBCA") and most of the directors, controlling persons and
officers of the Company, as well as experts named herein, are residents of
Canada. Moreover, substantial portions of the Company's assets and the assets of
such persons are located in Canada. As a result, it may be difficult to effect
service of process within the United States upon the Company or such persons or
to enforce, in United States federal or state courts, judgments against them
obtained in such courts and predicated on the civil liability provisions of the
Unted States federal or state securities laws. The Company has been advised by
its Canadian counsel, Borden & Elliot, that there is doubt as to whether
Canadian courts would enforce (i) judgments of United States federal or state
courts obtained in actions against the Company or such persons predicated on the
civil liability provisions of the United States federal or state securities
laws; or (ii) in original actions, liabilities against the Company or such
persons predicated solely on the United States federal or state securities laws.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, FINANCIAL STATEMENTS AND THE NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS OTHERWISE INDICATED OR THE CONTEXT OTHERWISE REQUIRES,
ALL INFORMATION CONTAINED IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE
WARRANTS, THE OVER-ALLOTMENT OPTION OR THE UNDERWRITER'S WARRANTS. AS USED
HEREIN, UNLESS OTHERWISE INDICATED OR THE CONTEXT OTHERWISE REQUIRES, THE
"COMPANY" REFERS TO MED-EMERG INTERNATIONAL INC. ("MEI"), ITS WHOLLY-OWNED
SUBSIDIARIES, 927563 ONTARIO INC. AND 927564 ONTARIO INC., THEIR WHOLLY-OWNED
SUBSIDIARIES, MED-EMERG, INC. ("MED"), CANADIAN MEDICAL CENTRE PRAGUE ("CMC")
AND MED-PLUS HEALTH CENTERS LTD. ("MPHC") AND MED-EMERG INTERNATIONAL INC.'S
33.33% OWNED PARTNERSHIP GLENDERRY WALK-IN CLINIC ("GWIC").

THE COMPANY

The Company specializes in the coordination and delivery of emergency
related healthcare services in the Province of Ontario, Canada. The broad range
of services offered by the Company include operational consulting and healthcare
management services, physician and nurse staffing, and healthcare educational
services.

Due to increasing government fiscal restraint, Ontario's health care system
is currently undergoing a significant restructuring by the provincial
government. Based on a determination that the Ontario public healthcare system
was not fiscally efficient, the Province of Ontario recently enacted legislation
which gives its provincial government the ability to implement a health care
system restructuring plan. The new legislation established the Health Services
Restructuring Commission which has decision making authority over every aspect
of a public hospital's operations, from how much public funding a given hospital
will receive to whether a hospital should cease its operations. As a result, the
Company believes that the Ontario health care system, which provides health care
services to Ontario's population of approximately 11 million (or approximately
37% of Canada's population), is open to the formation of partnerships between
the public and private sector, whereby the private sector could become the
provider of much of the efficient health care services the government seeks to
have available.

The Company has strategically divided its business operations into two
divisions, the Emergency Medical Service division (the "EMS Division") and the
Clinical Operations division.

THE EMS DIVISION

The EMS Division of the Company provides physician staffing and
administrative support to emergency departments and physician recruitment
services to Canadian hospitals and emergency physician groups. In connection
therewith, the Company contracts with a wide range of physicians and other
healthcare professionals. Under the direction of the Company's management, the
Company's physician pool of approximately 140 emergency physicians provides
emergency medical services to 14 emergency rooms located in Ontario, Canada.

Competitive pressures have focused the attention of many hospital
administrators on the need for better management of their professional medical
staff. Hospitals have increasingly turned to contract management firms with
specialized skills to help solve physician contract and scheduling problems, to
strengthen the management of their professional medical staff and specific
clinical departments, to better control costs, and to assist in meeting their
healthcare coverage needs and obligations. Using its management skills and
experience, and the economies of scale which the size and specialization of its
operations permit, the Company provides a management alternative to hospitals
while offering a flexible practice and lifestyle alternative to physicians. The
EMS Division also offers management consulting services to healthcare facilities
and the Ministry of Health, Province of Ontario. The Company prepares business
plans and feasibility studies to improve efficiency at such facilities.

3
<PAGE>
The marketing strategy for the Company's EMS Division is to manage entire
emergency departments for hospitals. In Canada, there is significant pressure to
increase cost effectiveness and efficiency of services within the public
hospital sectors. Accordingly, public sector/private sector partnerships and
joint ventures, such as the outsourcing of entire emergency department services
including physician support, nursing support and administrative services may be
an attractive, effective cost reduction alternative for hospitals.

THE CLINICAL OPERATIONS DIVISION

The Company operates four clinics in Canada, including two in Toronto's
International Airport. In addition, the Company operates the Glenderry clinic in
which it owns a 33.33% interest. Generally, the clinics offer a variety of
services, including family practice, walk-in services for patients, and
chiropractic and massage therapy. In addition, the airport clinics provide
walk-in services to the employees of the airport and emergency services to the
approximately eight million travelers who use the airport each year. The staff
is comprised of highly qualified critical care nurses who are on-site and
emergency physicians who are on-call.

URGENT CARE CENTRES

The Company intends to develop a chain of Urgent Care Centres beginning in
the Province of Ontario and then expanding to other provinces in Canada.
Management expects that these centres will offer on-site, emergency medical care
services comparable to the services provided in a traditional emergency
department. The Urgent Care Centre concept consists of a group of emergency
trained physicians, a medical laboratory, a diagnostic radiology service and a
pharmacy. Each emergency-trained physician working at an Urgent Care Centre will
have critical care expertise to treat most clinical problems. Unlike most
walk-in clinics and family physician offices, the Company's management believes
its Urgent Care Centres will be able to treat 90% of the cases seen in a typical
Ontario emergency department. The Company plans to open its first centre in the
second quarter of 1997 with up to nine additional centres scheduled over the
following eighteen months. The Company estimates that it will cost approximately
$200,000 to open each Urgent Care Centre. See "Use of Proceeds."

These Urgent Care Centres will be "community based" and offer less
restricted access to non-hospital based health care. Management believes that
the centres will offer high quality service not only in clinical practice but
also in consumer defined quality attributes such as waiting times, quality of
environment, quality of personal interaction and courtesy. The Company intends
to design the Urgent Care Centres to be less costly to the publicly funded
health care system than traditional emergency departments.

The Company believes that there is a need for an alternative provider of
emergency medical services and expects this need to grow due to the cost
efficiency of the alternative provider and the funding problems facing the
Canadian health care system. The vast majority of emergency services are
delivered by qualified family or general practitioners in local communities. In
Ontario, although there are 20,084 physicians active in the practice of
medicine, only 323 are certified in emergency medicine. Notwithstanding this
small proportion of physicians focusing on emergency medicine, the demand for
emergency care has grown significantly over the past ten years.

Med-Emerg International Inc. was incorporated in the Province of Ontario on
December 28, 1995 (under its former name 1162209 Ontario Inc.). 927563 Ontario
Inc. and 927564 Ontario Inc. were incorporated in the Province of Ontario on
March 22, 1991, Med-Emerg Inc. was incorporated in the Province of Ontario in
July 1983 and Med Plus Health Centers Ltd. was incorporated in the Province of
Ontario in March 1985. The Company's offices are located at 2550 Argentia Road,
Suite 205, Mississauga, Ontario L5N 5R1 Canada and its telephone number is (905)
858-1368.

4
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered........... 1,250,000 shares of Common Stock and 1,250,000 Warrants.
Each Warrant entitles the holder to purchase one share of
Common Stock. See "Description of Securities."

Offering Price............... $3.90 per share of Common Stock and $0.10 per Warrant.

Common Stock Outstanding

Prior to the Offering(1)... 1,940,000

After the Offering(1)...... 3,190,000

Terms of Warrants:

Exercise Price............. The exercise price is $5.00 per share, subject to adjustment
in certain circumstances.

Exercise Period............ The Warrants are exercisable for a period of four years
commencing on , 1998 (one year after the Effective
Date) and expiring on , 2002 (five years after the
Effective Date).

Redemption................. The Warrants are redeemable by the Company, commencing
, 1999, two years from the Effective Date (or sooner
with the consent of the Underwriter), at a redemption price
of $0.10 per Warrant on not less than 30 days written
notice, provided that the closing bid price per share of
Common Stock, for 20 consecutive trading days ending on the
third business day prior to the date of the redemption
notice, is at least $8.00, subject to adjustment for certain
events. See "Description of Securities--Class A Warrants."

Risk Factors............... The securities offered hereby involve a high degree of risk
and immediate substantial dilution to public investors. See
"Risk Factors" and "Dilution".

Use of Proceeds............ The net proceeds of the Offering will be used primarily for
the development of a chain of Urgent Care Centres, expansion
of the Emergency Services Division, the repayment of certain
indebtedness and for working capital and general corporate
purposes. See "Use of Proceeds".
</TABLE>

<TABLE>
<S> <C> <C>
Proposed NASDAQ
Symbols(2)............... Common Stock: MEDE
Class A Warrants MEDEW

Proposed BSE Symbols(2).... Common Stock: MED
Class A MEDW
Warrants:
</TABLE>

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(1) Does not include 700,000 shares of Common Stock issuable upon exercise of
outstanding options and 500,000 shares of Common Stock issuable upon
conversion of 500,000 shares of Preferred Stock outstanding. See "Principal
Stockholders," "Management" and "Description of Securities."

(2) The proposed Nasdaq and Boston Stock Exchange trading symbols do not imply
that a liquid and active market will be developed or sustained for the
Shares and/or Warrants upon completion of the Offering.

5
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary consolidated financial information set forth below is derived
from and should be read in conjunction with the financial statements of the
Company, including the notes thereto, appearing elsewhere in this Prospectus.

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
EIGHT MONTHS ENDED YEAR ENDED
AUGUST 31 DECEMBER 31
-------------------------- ------------------------------------------
1996 1995 1995 1994 1993
------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue.................................. $ 7,172,858 $ 7,626,016 $ 10,983,553 $ 10,474,754 $ 8,939,848
Physician Fees........................... 5,622,672 5,781,849 8,385,712 7,950,712 6,786,187
Gross Profit............................. 1,550,186 1,844,167 2,597,841 2,524,042 2,153,661
Operating Expenses....................... 1,615,796 1,513,712 2,169,021 2,199,374 2,172,523
Other Items.............................. (628,250) (69,155) (657,860) (97,892) (124,965)
Income (loss) Before Taxes............... (693,860) 261,300 (229,040) 226,776 (143,827)
Provision for Income Taxes (recovery).... (102,349) 59,000 71,447 52,245 (36,311)
Net Income (Loss)........................ (591,511) 202,300 (300,487) 174,531 (107,516)
Net income per common share(1)........... $ (0.18) $ 0.09 $ (0.13) $ 0.07 $ (0.05)

BALANCE SHEET DATA:
</TABLE>

<TABLE>
<CAPTION>
AUGUST 31, 1996
---------------------------
<S> <C> <C> <C>
AS FURTHER
ACTUAL AS ADJUSTED(2) ADJUSTED(3)
----------- -------------- ---------------------
Working Capital............................................... $ (747,104) $ 4,577,296
Total Assets.................................................. 3,393,556 8,139,956
Accumulated Deficit........................................... (757,953) (1,492,953) (7,612,953)
Shareholders' Equity.......................................... 161,812 5,601,812
</TABLE>

- ------------------------

(1) Net income per share reflects 3,408,333 shares of Common Stock outstanding
on August 31, 1996 and 2,333,333 shares of Common Stock outstanding prior to
that date.

(2) Adjusted to reflect the issuance of 125,000 shares of Common Stock and an
aggregate of $500,000 of Bridge Notes, issued pursuant to the bridge
financing completed in January 1997 (the "Bridge Financing"), the issuance
of 1,250,000 shares of Common Stock and 1,250,000 Warrants offered in the
Offering and the application of the net proceeds therefrom, including the
payment of the 8% promissory note issued in connection with the Bridge
Financing (the "Bridge Notes").

(3) Reflects the issuance of 500,000 shares of the Company's Preferred Stock,
resulting in a one-time charge to retained earnings of $6,120,000
(US$4,500,000).

6
<PAGE>
RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND SHOULD BE PURCHASED
ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT IN THE COMPANY.
EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS,
AS WELL AS OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS.

OPERATING LOSSES; ACCUMULATED DEFICIT; WORKING CAPITAL DEFICIT. The Company
incurred a net loss of approximately $591,000 for the eight months ended August
31, 1996 and a net loss of approximately $300,000 for its year ended December
31, 1995, as compared to net income of $202,300 and $174,531, respectively, for
the eight months ended August 31, 1995 and its year ended December 31, 1994. The
losses in the eight months ended August 31, 1996 and year ended December 31,
1995 were primarily the result of write-downs of $466,462 and $663,448,
respectively, for an investment in a clinic in Prague, The Czech-Republic, which
was closed in January 1997. As of August 31, 1996, the Company had an
accumulated deficit of approximately $758,000 and a working capital deficit of
approximately $747,000. There can be no assurance as to the future profitability
of the Company. See "Selected Consolidated Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DEPENDENCE ON CONTRACTS WITH HOSPITALS. The Company derives the majority of
its revenues from contracts with hospitals. The standard hospital contract
provides for an initial one or two-year term, one year renewable terms and
termination on 60 days notice. The loss of several hospital contracts would have
a material adverse affect on the Company.

UNCERTAINTY OF MARKET ACCEPTANCE OF URGENT CARE CENTRES. Upon completion of
the Offering, the Company intends to develop a chain of Urgent Care Centres
which will provide on-site emergency medical services. The success of these
centres depends on several factors, including the ability of the Company to
attract qualified physicians and other health care providers and the public's
willingness to seek emergency medical care at such centres. There can be no
assurance that the Company will be able to obtain the necessary qualified
personnel or that the Urgent Care Centre concept will be accepted by the market.

CLASSIFICATION OF PHYSICIANS AS INDEPENDENT CONTRACTORS; POTENTIAL TAX
LIABILITY. The Company contracts with physicians as independent contractors,
rather than employees, to fulfill its contractual obligations to hospitals.
Therefore, the Company did not historically, and the Company does not currently,
withhold income taxes, make Unemployment Insurance and Canada Pension Plan
payments, or provide worker's compensation insurance with respect to such
independent contractors. The payment of applicable taxes is regarded as the
responsibility of such independent contractors. Management believes that
classification of physicians as independent contractors is standard industry
practice and proper for tax purposes. A contrary determination by taxing
authorities or a change in existing law could materially adversely affect the
Company and its operations. Most taxing authorities have not challenged or have
accepted the classification of contract physicians as independent contractors.

ADVERSE EFFECT OF PROVINCIAL LAWS REGARDING THE CORPORATE PRACTICE OF
MEDICINE. Business corporations are legally prohibited in many provinces from
providing or holding themselves out as providers of medical care. While the
Company has structured its operations to comply with the corporate practice of
medicine laws of Ontario and will seek to structure its operations in the future
to comply with the laws of any province in which it seeks to operate, there can
be no assurance that, given varying and uncertain interpretations of such laws,
the Company would be found to be in compliance with restrictions on the
corporate practice of medicine in such province. A determination that the
Company is in violation of applicable restrictions on the practice of medicine
in any province in which it operates could have a materially adverse effect on
the Company if the Company were unable to restructure its operations to comply
with the requirements of such province. Such regulations may limit the provinces
in which the Company can operate, thereby inhibiting future expansion of the
Company into potential markets in other jurisdictions or states.

7
<PAGE>
CORPORATE EXPOSURE TO PROFESSIONAL LIABILITIES. Due to the nature of its
business, the Company and certain physicians who provided services on its behalf
may be the subject of medical malpractice claims, with the attendant risk of
substantial damage awards. The most significant source of potential liability in
this regard is the alleged negligence of physicians placed by the Company at
contract hospitals. Physicians staffed by the Company maintain their own
malpractice insurance. To the extent such physicians were regarded as agents of
the Company in the practice of medicine, a patient could sue the Company for any
medical negligence of such physicians. The Company does not believe it could be
held liable for an act of a physician staffed by it unless it could be shown
that the Company was negligent in assessing the qualifications of such
physician.

GOVERNMENT REGULATION. The Company's operations are subject to extensive
government regulation. All physicians working for the Company are independent
contractors and are not employees of the Company. All physicians must meet the
credentialling requirements of all hospitals for which they are scheduled by the
Company to work. All physicians must be properly licensed to practice medicine
in Ontario and must have a valid billing authorization from OHIP (Ontario Health
Insurance Plan). The application and approval of privileges is governed by the
Public Hospitals Act of Ontario. Substantially all of the Company's operating
revenue is derived from government funded and administered programs. In Canada,
the health care system is publicly administered and is largely considered not
for profit. A large for profit health care sector nevertheless co-exists within
the non-profit section. OHIP fee for service over the past three years has been
"clawed back" to ensure a total spending freeze of $3.8 billion per year in
Ontario. In fiscal year 1996-97, the government announced a lowering of billing
thresholds for all physicians in the province. The thresholds were lowered to
levels which are estimated to affect as many as 30% of physicians. Once billings
exceed these thresholds, further billings are discounted by 33%, 66% and 75%.

The government is currently in conflict with the medical profession over
these caps and clawbacks to their income. The Ontario Medical Association has
warned the government of large scale service withdrawal unless substantive
progress is achieved in negotiating a settlement. This conflict has created
greater uncertainty in the province and may result in a substantial threat to
the Company's existing core staffing business or it may create opportunities for
the Company. There can be no assurance as to what new regulations will be
imposed and what effect they will have on the Company.

ABILITY TO MANAGE GROWTH; ACQUISITION STRATEGY. As part of its business
strategy, the Company intends to pursue rapid growth, including possible
acquisitions of related and complementary businesses. The Company's growth
strategy will require expanded client services and support, increased personnel
throughout the Company, expanded operational and financial systems and the
implementation of new control procedures. There can be no assurance that the
Company will be able to achieve rapid growth or be able to manage expanded
operations effectively. Moreover, failure to implement financial and other
systems and to add resources could have a material adverse impact on the
Company's results of operations and financial condition. The Company has no
present commitments, understandings or agreements for any acquisitions. The
Company's acquisitions could involve a number of risks including the diversion
of management's attention to the assimilation of the companies to be acquired,
unforeseen difficulties in the acquired operations, adverse effects on the
Company's operating results, amortization of acquired intangible assets and
dilution in the ownership interest of stockholders as a result of the issuance
of additional Common Stock or Preferred Stock. The Company is prohibited from
issuing any Common Stock or Preferred Stock for a period of 24 months from the
date of this Prospectus without the prior written consent of the Underwriter.
There is no assurance the Company will be successful in consummating any
acquisition transactions.

DEPENDENCE ON KEY PERSONNEL. The success of the Company is largely
dependent upon the efforts and abilities of certain members of its management,
including but not limited to, Ramesh Zacharias, M.D., its Chief Executive
Officer and Carl Pahapill, its President and Chief Operating Officer. The loss
of the services of any of the Company's management or key employees would likely
have a material adverse

8
<PAGE>

effect on the business of the Company. The Company intends to procure key-man
life insurance in the amount of $1,000,000 on Mr. Pahapill prior to the
Effective Date, although there can be no assurance that it can be obtained. See
"Business--Personnel" and "Officers and Directors."

CONTROL BY MANAGEMENT AND/OR EXISTING STOCKHOLDERS. Following completion of
the Offering, the Company's officers and directors will own or have rights to
acquire an aggregate of approximately 64% of the voting power of the Company's
capital stock. See "Principal Stockholders" and "Description of Securities."
There are no cumulative voting rights under the Company's Certificate of
Incorporation and therefore, such stockholders will possess the ability to elect
all of the directors of the Company, to increase its authorized capital, to
dissolve or merge the Company, or to sell its assets, if they so choose and to
generally exert substantial control over the business and operations of the
Company.

NEED FOR ADDITIONAL FINANCING. The Company believes that the net proceeds
of the Offering will be sufficient to finance the Company's working capital
requirements for a period of at least 12 months following the completion of the
Offering. In addition, although the Company has not entered into any formal
commitments, the Company's strategy is to acquire companies with related and
complementary businesses. The continued expansion and operation of the Company's
business beyond such 12 month period and its ability to make acquisitions may be
dependent upon its ability to obtain additional financing. There can be no
assurance that additional financing will be available on terms acceptable to the
Company, or at all. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

LIMITED PUBLIC MARKET FOR THE COMPANY'S SECURITIES; NO ASSURANCE OF PUBLIC
TRADING MARKET; PENNY STOCK REGULATION. Prior to the Offering, there has been
no market for the Common Stock or Warrants. No assurance can be given that a
public market for such securities will develop or that a public trading market,
if developed, will be sustained. The Company intends to apply for listing of the
Common Stock and Warrants on The Nasdaq Stock Market, Inc. ("Nasdaq") SmallCap
Market. If a trading market does in fact develop for the Common Stock and
Warrants, there can be no assurance that it will be maintained. If for any
reason the Company's securities are not listed on Nasdaq or a public trading
market does not develop, purchasers of the Company's securities may have
difficulty in selling their securities should they desire to do so. In any
event, because certain restrictions may be placed upon the sale of the
securities, unless such securities qualify for an exemption from the "penny
stock" rules, such as listing on the Nasdaq Small Cap Market, some brokerage
firms will not effect transactions in the Company's securities and it is
unlikely that any bank or financial institution will accept such securities as
collateral, which could have a materially adverse effect in developing or
sustaining any market for the securities.

For continued listing on The Nasdaq SmallCap Market, a company, among other
things, must have $2,000,000 in total assets, $1,000,000 in total capital and
surplus, $1,000,000 in market value of public float, a minimum bid price of
$1.00 per share and have a minimum of two (2) market makers. If the Company is
listed on Nasdaq, and the Company is unable to satisfy the requirements for
continued listing, trading, if any, in the Common Stock would be conducted in
the "pink sheets" or on the NASD OTC Electronic Bulletin Board. Recently, a
proposal has been made to increase the criteria for continued listing on the
Nasdaq SmallCap Market. If implemented as proposed, stricter criteria for
continued listing on The Nasdaq SmallCap Market would be imposed, including the
implementation of a $2,000,000 net tangible assets test, higher public float and
market value of public float criteria and the implementation of new corporate
governance rules. No assurance can be given that such proposal will be adopted
or if adopted, that it will be adopted in its current form.

NO DIVIDENDS. The Company does not intend to pay any dividends on its
Common Stock in the foreseeable future. The Company currently intends to retain
any earnings to finance the operations of the Company. In addition, the
Company's Preferred Stock prohibits the payment of any dividends on the Common
Stock until all accrued dividends have been paid on the Preferred Stock. See
"Dividend Policy" and "Description of Securities."

IMMEDIATE AND SUBSTANTIAL DILUTION. This Offering involves an immediate and
substantial dilution to investors. Purchasers of Common Stock in the Offering
will incur an immediate dilution of US$4.12 per share (assuming no value is
ascribed to the Warrants) in the net tangible book value of their investment

9
<PAGE>

from the initial public offering price, which dilution amounts to approximately
106% of the initial public offering price per share of Common Stock. Investors
in the Offering will pay US$3.90 per share, as compared with an average cash
price of US$.63 per share of Common Stock paid by existing stockholders. See
"Dilution."

BROAD DISCRETION IN APPLICATION OF PROCEEDS. Approximately 29.75% of the
net proceeds of the Offering will be applied to working capital and general
corporate purposes. Accordingly, management of the Company will have broad
discretion over the use of proceeds. See "Use of Proceeds."

SHARES ELIGIBLE FOR FUTURE SALE. All of the 1,940,000 shares of Common
Stock of the Company outstanding as of the date of this Prospectus are
"restricted securities," of which 840,000 are owned by "affiliates" of the
Company, as those terms are defined in Rule 144 promulgated under the Securities
Act. Absent registration under the Securities Act, the sale of such shares is
subject to Rule 144, as promulgated under the Securities Act. In general, under
Rule 144, subject to the satisfaction of certain other conditions, a person,
including an affiliate of the Company, who has beneficially owned restricted
shares of Common Stock for at least two years is entitled to sell in brokerage
transactions, within any three-month period, a number of shares that does not
exceed the greater of 1% of the total number of outstanding shares of the same
class, or if the Common Stock is quoted on NASDAQ or a stock exchange, the
average weekly trading volume during the four calendar weeks preceding the sale.
Rule 144 also permits a person who presently is not and who has not been an
affiliate of the Company for at least three months immediately preceding the
sale and who has beneficially owned the shares of Common Stock for at least
three years to sell such shares without regard to any of the volume limitations
described above. An aggregate of 125,000 shares of Common Stock are being
registered concurrently with this Offering. Robert Rubin, a Director, holds
options to purchase an aggregate of 700,000 shares of Common Stock. In the event
Mr. Rubin exercises such options, the shares will be eligible for resale under
Rule 144 commencing two years from the exercise of the options. All of the
Company's existing securityholders have agreed not to sell or otherwise dispose
of any of their shares of Common stock for a period of two years from the date
of this Prospectus, without the prior written consent of the Underwriter. There
can be no assurance that the Company will not issue additional options currently
available for issuance. No prediction can be made as to the effect, if any, that
sales of shares of Common Stock or the availability of such shares for sale will
have on the market prices of the Company's securities prevailing from time to
time. The possibility that substantial amounts of Common Stock may be sold under
Rule 144 into the public market may adversely affect prevailing market prices
for the Common Stock and could impair the Company's ability to raise capital in
the future through the sale of equity securities. See "Shares Eligible for
Future Sale."

POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS. The Warrants offered
hereby are redeemable, in whole or in part, at a price of $.10 per Warrant,
commencing two years after the Effective Date (or earlier with the consent of
the Underwriter) and prior to their expiration; provided that (i) prior notice
of not less than 30 days is given to the Warrantholders; (ii) the closing bid
price of the Common Stock on each of the 20 consecutive trading days ending on
the third business day prior to the date on which the Company gives notice of
redemption has been at least $8.00; and (iii) Warrantholders shall have exercise
rights until the close of the business day preceding the date fixed for
redemption. Notice of redemption of the Warrants could force the holders to
exercise the Warrants and pay the Exercise Price at a time when it may be
disadvantageous for them to do so, or to sell the Warrants at the current market
price when they might otherwise wish to hold them, or to accept the redemption
price, which may be substantially less than the market value of the Warrants at
the time of redemption. See "Description of Securities--Warrants."

REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN
CONNECTION WITH THE EXERCISE OF THE WARRANTS. The Warrants offered hereby are
not exercisable unless, at the time of exercise, (i) there is a current
prospectus relating to the Common Stock issuable upon the exercise of the
Warrants under an effective registration statement filed with the Securities and
Exchange Commission, and (ii) such Common Stock is then qualified for sale or
exempt therefrom under applicable state securities laws in the jurisdictions in
which the various holders of Warrants reside. There can be no assurance,
however, that the

10
<PAGE>
Company will be successful in maintaining a current registration statement.
After a registration statement becomes effective, it may require updating by the
filing of a post-effective amendment. A post-effective amendment is required (i)
any time after nine months subsequent to the effective date when any information
contained in the prospectus is over sixteen months old, (ii) when facts or
events have occurred which represent a fundamental change in the information
contained in the registration statement, or (iii) when any material change
occurs in the information relating to the plan of distribution of the securities
registered by such registration statement. The Company anticipates that this
Registration Statement will remain effective for at least nine months following
the date of this Prospectus or until , 1997, assuming a
post-effective amendment is not filed by the Company. The Warrants will be
separately tradeable and separately transferable from the Common Stock offered
hereby immediately commencing on the date of this Prospectus. The Company
intends to qualify the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants in a limited number of states, although certain
exemptions under state securities ("blue sky") laws may permit the Warrants to
be transferred to purchasers in states other than those in which the Warrants
were initially qualified. The Company will be prevented, however, from issuing
shares of Common Stock upon exercise of the Warrants in those states where
exemptions are unavailable and the Company has failed to qualify the Common
Stock issuable upon exercise of the Warrants. The Company may decide not to
seek, or may not be able to obtain qualification of the issuance of such Common
Stock in all of the states in which the holders of the Warrants reside. In such
a case, the Warrants of those holders will expire and have a no value if such
Warrants cannot be exercised or sold. See "Description of Securities."

AUTHORIZATION AND DISCRETIONARY ISSUANCE OF PREFERRED STOCK AND COMMON
STOCK. The Company's Certificate of Incorporation authorizes the issuance of an
unlimited number of shares of Common Stock and "blank check" preferred stock
with such designations, rights and preferences as may be determined from time to
time by the Board of Directors Accordingly, the Board of Directors is empowered,
without stockholder approval, to issue an unlimited number of shares of Common
Stock for any purpose without stockholder approval or issue preferred stock with
dividend, liquidation, conversion, voting or other rights which could decrease
the amount of earnings and assets available for distribution to holders of
Common Stock and adversely affect the relative voting power or other rights of
the holders of the Company's Common Stock. In the event of issuance, the
preferred stock could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company. Except
for 500,000 shares of Preferred Stock currently held by Ramesh and Victoria
Zacharias, the Company has no present intention to issue any shares of its
preferred stock. However, there can be no assurance that the Company will not
issue shares of preferred stock or common stock in the future. The Company has
agreed with the Underwriter that, except for issuances disclosed in or
contemplated by this Prospectus, it will not issue any securities, including but
not limited to any shares of preferred stock, for a period of 24 months
following the Effective Date, without the prior written consent of the
Underwriter. See "Certain Transactions" and "Description of
Securities--Preferred Stock."

NON-REGISTRATION IN CERTAIN JURISDICTIONS OF SHARES UNDERLYING THE
WARRANTS. Although the Common Stock and the Warrants will not knowingly be sold
to purchasers in jurisdictions in which they are not registered or otherwise
qualified for sale, purchasers may buy the Common Stock or Warrants in the
aftermarket or may move to jurisdictions in which the shares of Common Stock
issuable upon exercise of the Warrants are not so registered or qualified during
the period that the Warrants are exercisable. In such event, the Company could
be unable to issue shares to those persons desiring to exercise their Warrants
unless and until the shares could be registered or qualified for sale in the
jurisdiction in which such purchasers reside, or an exemption to such
qualification exists or is granted in such jurisdiction. If the Company was
unable to register or qualify the shares in a particular state and no exemption
to such registration or qualification was available in such jurisdiction, in
order to realize any economic benefit from the purchase of the Warrants, a
holder might have to sell the Warrants rather than exercising them.

11
<PAGE>
No assurance can be given, however, as to the ability of the Company to effect
any required registration or qualification of the Common Stock or Warrants in
any jurisdiction in which registration or qualification has not already been
completed. See "Description of Securities--Warrants."

12
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock and
Warrants offered hereby, after deducting underwriting discounts and commissions
and other expenses of the Offering, are estimated to be U.S. $4,000,000 (U.S.
$4,172,500 if the Over-allotment Option is exercised in full). The Company
intends to use the net proceeds of the Offering as follows:

<TABLE>
<CAPTION>
AMOUNT PERCENTAGE
------------- -----------
<S> <C> <C>
(U.S.
DOLLARS)
Urgent Care Centres (1)............................................ $ 1,000,000 25.00%
Emergency Service Contracts (2).................................... 1,150,000 28.75%
Repayment of Bridge Notes (3)...................................... 510,000 12.75%
Computer Equipment(4).............................................. 150,000 3.75%
Working Capital and General Corporate Purposes..................... 1,190,000 29.75%
------------- -----------
$ 4,000,000 100.00%
------------- -----------
------------- -----------
</TABLE>

- ------------------------

(1) Represents the estimated capital and working capital costs related to
establish the first 10 Urgent Care Centres. See "Management Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."

(2) Represents the cost of financing accounts receivable for emergency service
contracts that the Company anticipates receiving over the next 24 months,
although there can be no assurance of the receipt thereof. Until required,
these funds will be invested in short-term instruments to remain available
to finance the new emergency service contracts. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

(3) Represents repayment of the principal and accrual interest on the Bridge
Notes in January 1997 in connection with the Bridge Financing. These Bridge
Notes are due June 1998, or earlier upon receipt of gross proceeds of at
least US$4,000,000 (debt or equity) from an underwritten public offering.
See "Certain Relationships and Related Transactions--8% promissory notes."

(4) Represents the estimated cost of upgrading the Company's management
information systems, particularly its accounting and billing systems. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

The foregoing represents the Company's estimate of the allocation of the net
proceeds of the Offering, based upon the current status of its operations. In
the event that the Company's plans change or its assumptions change or prove to
be inaccurate or the net proceeds of the Offering prove to be insufficient, the
Company may find it necessary or desirable to reallocate a portion of the net
proceeds within the above described categories, use proceeds for other purposes,
seek additional financing or curtail its operations. Any reallocation of the net
proceeds will be consistent with management's current objectives and at the
discretion of the Board of Directors of the Company.

The Company anticipates that the net proceeds from the Offering, together
with cash flow from operations, will be sufficient to meet the Company's
anticipated cash requirements for a period of 12 months from the completion of
the Offering. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."

Pending application, the net proceeds will be invested in short-term money
market instruments and direct or indirect Canadian or U.S. Government
obligations. Any proceeds received upon exercise of the Warrants and the
Over-allotment Option, as well as income from investments, if any, will be added
to working capital.

13
<PAGE>
DILUTION

At August 31, 1996, the Company had a net tangible book value (deficit) of
(US $4,716,069) or (US$2.43) per share of outstanding capital stock. Net
tangible book value represents the Company's total tangible assets less total
liabilities, divided by the number of shares of capital stock outstanding. After
giving effect to the sale of the Common Stock and the Warrants offered hereby
(assuming no value is ascribed to the Warrants), the adjusted pro forma net
tangible book value (deficit) of the Company would have been approximately (US
$716,070) or approximately (US $.22) per share of outstanding capital stock at
August 31, 1996. This represents immediate dilution of US $4.12 per share, or
106% to purchasers of the Common Stock and Warrants in the Offering. The
following table illustrates the per share dilution to be incurred by the public
investors in the Offering:

<TABLE>
<S> <C> <C>
Assumed initial offering price per share............ US $3.90
Net tangible book value at August 31, 1996.......... (US $2.43)
Increase per share attributable to the sale of the
Common Stock offered hereby....................... US $2.21
----------
Pro forma net tangible book value after the
Offering.......................................... (US $.22)
----------
Dilution per share to new investors................. US $4.12
----------
----------
</TABLE>

The following table summarizes the number and percentages of shares of
Common Stock purchased from the Company through the date of this Prospectus, the
amount and percentage of cash consideration paid and the average price per share
paid to the Company by existing stockholders and by new investors pursuant to
the Offering:

<TABLE>
<CAPTION>
TOTAL CONSIDERATION PAID AVERAGE
SHARES PURCHASED ---------------------------- PRICE
NUMBER/PERCENTAGE AMOUNT PERCENT PER SHARE
----------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Existing Stockholders................... 1,940,000/60.8% US$ 1,216,739 19.6% US$0.63
New Investors........................... 1,250,000/39.2% US 4,875,000 80.4% US$3.90
----------------- --------------- -----
3,190,000/100% US$ 6,091,739 100.0%
----------------- --------------- -----
----------------- --------------- -----
</TABLE>

- ------------------------

In calculating dilution, the presentation gives effect to the potential
conversion of an aggregate of $4,500,000 of Convertible Preferred Stock which is
convertible into shares of Common Stock at $9.00 per share in ten years. While
giving effect to the conversion resulted in a charge to retained earnings of
$6,120,000 (US$4,500,000), the value of the Convertible Preferred Stock does not
form part of the net tangible book value available to the common shareholders as
adjusted August 31, 1996.

14
<PAGE>
CAPITALIZATION

The following table sets forth, as of August 31, 1996, (i) the actual
capitalization, (ii) the capitalization of the Company as adjusted to give
effect to the Bridge Financing and the Recapitalization, as defined in Certain
Relationships and Related Transactions, and (iii) the capitalization of the
Company as adjusted to give effect to the sale by the Company of 1,250,000
shares of Common Stock and 1,250,000 Warrants offered hereby and the application
of the estimated net proceeds thereof. This information should be read in
conjunction with the consolidated financial statements and related notes thereto
appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AUGUST 31, 1996
---------------------------
<S> <C> <C> <C>
AS FURTHER
ACTUAL AS ADJUSTED (1) ADJUSTED (2)
---------- --------------- ------------
Short Term Debt
Current Portion of Long Term Debt....................................... $ -- $ 110,162 $ --
8% Bridge Notes......................................................... -- 680,000 --
---------- --------------- ------------
-- 780,162 --
---------- --------------- ------------
---------- --------------- ------------
Long Term Debt............................................................ 45,830 45,830 45,830
---------- --------------- ------------
Stockholders' Equity:

Convertible Redeemable Preferred Stock no par value; authorized unlimited
shares none issued (actual), 500,000 shares issued and outstanding (as
adjusted) and (as further adjusted)..................................... -- 6,120,000 6,120,000

Common Stock--no par value authorized unlimited, Shares issued and
outstanding 3,408,333 (actual), 1,940,000 (as adjusted) and 3,190,000
(as further adjusted)................................................... 919,765 1,654,765(3) 7,094,765

Accumulated Deficit....................................................... (757,953) (7,612,953)(3) (7,612,953)
---------- --------------- ------------
---------- --------------- ------------

Total Shareholders Equity................................................. 161,812 161,812 5,601,812

Total Capitalization...................................................... $ 207,642 $ 887,642 $ 5,647,642
---------- --------------- ------------
---------- --------------- ------------
</TABLE>

- --------------------------

(1) Adjusted to reflect the issuance of the Bridge Notes and 125,000 shares of
Common Stock pursuant to the Bridge Financing, the issuance of 500,000
shares of convertible preferred stock prior to the Offering which resulted
in a charge to retained earnings of $6,120,000, and the issuance of 610,000
shares of Common Stock to Hampton House in connection with the
recapitalization. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Certain Transaction."

(2) Gives effect to the sale of 1,250,000 shares of Common Stock and 1,250,000
Warrants and the application of the net proceeds thereof. See "Use of
Proceeds."

(3) Reflects (i) a charge to retained earnings of $610,000 in connection with
the issuance of 610,000 shares of Common Stock to Hampton House
International in connection with the recapitalization, and (ii) the charge
to retained earnings of $6,120,000 in connection with the recapitalization
resulting from the issuance of 125,000 shares of Common Stock and
U.S.$500,000 in promissory notes issued in connection with the Company's
January 1997 Bridge Financing, and the issuance of 500,000 shares of
convertible preferred stock prior to the Offering.

(4) Reflects a credit to common stock resulting from the issuance of 610,000
shares of Common Stock in connection with the Recapitalization.

15
<PAGE>
DIVIDENDS

To date, the Company has paid $145,383 in cash dividends. The Company has no
present intention of paying any additional dividends on its Common Stock in the
foreseeable future, as it intends to use its earnings, if any, to generate
increased growth. The payment by the Company of cash dividends, if any, in the
future, rests solely within the discretion of its Board of Directors and will
depend upon, among other things, the Company's earnings, capital requirements
and financial condition, as well as other factors deemed relevant by the
Company's Board of Directors. The terms of the outstanding Preferred Stock
prohibit the payment of any dividends on Common Stock until dividends have been
paid on the Preferred Stock. See "Description of Securities--Preferred Stock."

16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company believes that emergency departments, which are often the first
point of contact with patients, play an important role in providing the
individual with continuous access to the healthcare system. The Company's
history dates back to 1983 when its founder identified the need for a private
sector company that could provide emergency physician contract staffing and
recruitment. A tenet of the Company's strategy has been that third party
providers of specialized emergency care medicine can play an important role in
reducing the costs of publicly funded healthcare systems while ensuring the
highest quality of care.

Socialized medicine has been in place in the Province of Ontario for a
quarter of a century. As the Canadian government's healthcare program is the
most expensive government program, it is therefore an obvious and unavoidable
target for restraints. It was built with a recognition that the transfer from
private health care to state-funded care would be a complex transition. Since
the transition, there has been a reluctance to address major reforms.
Consequently, the system has grown rapidly in both cost and complexity.

Demand for emergency care has grown significantly over the past ten years,
notwithstanding the small proportion of physicians focusing on emergency
medicine. Moreover, recruitment of experienced emergency medicine practitioners
by hospitals in other countries is intense and such demand is expected to
continue for some time. Given the uncertainties associated with patient volumes
in several Ontario hospital emergency departments, the pool of available
physicians willing to practice emergency medicine has been declining.

In the last five to ten years, major changes have been occurring in the way
services are delivered within hospitals in Canada. The length of time patients
stay in hospitals has been dropping substantially. Overall, the average length
of stay in acute care hospitals has decreased 20% in the last five years.
Patients who five years ago would generally have spent up to ten days in
hospital are now often being operated on using minimally invasive surgery which
results in their being discharged within a day or two of being admitted.

Day surgery as a percentage of all surgery has increased from 53% to 70% in
five years. As a result, in many hospitals the majority of surgery is now done
on an outpatient basis. Many other services previously provided mainly on an
inpatient basis are shifting to outpatient programs (e.g., dialysis,
chemotherapy and diagnostic testing).

Thus, governments have been studying alternatives to the existing
fee-for-service funding of physicians in order to reduce health care costs.
Since 1988, close to 3,500 acute care hospital beds have been closed in the
Toronto Metropolitan area alone, a 30% decrease. Although the number of acute
care beds has decreased by 30% and similar bed decreases have occurred in other
areas, the number of hospitals remains unchanged. Scarce public health dollars
continue to be spent on the overhead and infrastructure of independent
facilities even though the amount of time patients spend in these facilities has
decreased. Among hospitals, 25% to 30% of funds are spent on administrative,
overhead and infrastructure costs.

Funding constraints for health care in Ontario have resulted in billing
caps, with a sliding scale claw-back. This claw-back reduces the amount a
physician can bill after total annual billing exceeds $275,000. Other solutions
under consideration include rostered patient care. Rostering is a reimbursement
plan based on a fixed fee per patient as opposed to Fee-For-Service. The patient
would assume financial responsibility for non-emergency care when such care is
obtained outside the rostered family practice but within a defined geographic
proximity if it is accessed merely for convenience. However, proponents of
various roster-based models have not offered any concrete proven solutions to
decrease emergency department utilization.

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Fees charged by the Company for emergency department staffing services are
comprised of two elements: (i) hospital services; and (ii) physician services.
Under each hospital contract, the Company has the responsibility for the billing
and collection of physician fees. The Company charges each hospital a fee for
its recruiting and staffing services either on a fixed fee or fee-for-service
basis.

The Company's contracts are designed to transfer to the hospital the
financial risks arising from changes in patient volume, payor mix and third
party reimbursement rates. Because the majority of such contracts are reimbursed
from government healthcare insurance plans, the Company's bad debt experience in
collection of physician fees has been less than 1% of allowable billings,
primarily due to administrative errors. Fee-for-service contractual arrangements
involve a credit risk related to services provided to uninsured individuals. The
Company's working capital needs are generally a function of the acquisition of
new hospital contracts or the conversion of fixed fee contracts to
fee-for-service contracts.

The Company's management believes that the Company is positioned as a viable
solution to some of the existing problems in the healthcare system and therefore
has expanded its original offering of physician staffing and recruitment to
provide a broader range of services to fit needs in the emergency and related
health services marketplace.

RESULTS OF OPERATIONS

EIGHT MONTHS ENDED AUGUST 31, 1996 COMPARED TO EIGHT MONTHS ENDED AUGUST 31,
1995

NET SERVICE REVENUES. Revenues decreased by $453,158 or 5.9% from
$7,626,016 in 1995 to $7,172,858 in 1996. The decrease in revenue can be
attributed to the reduction in the number of hospital staffing contracts and the
closure of an unprofitable medical clinic in October 1995. The Company expects
to increase its number of hospital contracts in the next four months by
expanding its focus on securing new contracts, although there can be no
assurance that such contracts will be secured.

PHYSICIAN FEES. Physician Fees, which represent fees to contract
physicians, represent the largest single variable expense. These fees are earned
primarily through the Company's emergency medical services to hospital emergency
department contracts. Physician fees have declined by $159,177, or 2.7%, from
$5,781,849 in 1995 to $5,622,672 in 1996 due to the reduction in the number of
hospital staffing contracts. Physician fees represented 78.3% of net revenues
for 1996 and 75.8% of net revenues in 1995.

OPERATING EXPENSES. Operating expenses increased by $102,084, or 6.7%, from
$1,513,712 in 1995 to $1,615,796 in 1996. In anticipation of the Company's
growth, the Company had increased its administrative, management and marketing
support. More recently, the Company has restructured its operating overhead in
an effort to better position itself as a competitive deliverer of emergency
related health services. These expenses represent 19.8% and 22.5% of net
revenues in 1995 and 1996 respectively.

OTHER EXPENSES. Other expenses have increased by $559,095 from $69,155 in
1995 to $628,250 in 1996. This increase was due primarily to a write-down of
$466,462 for an investment in a clinic in Prague, Czech Republic. The write-down
was due to an unanticipated difficulty in penetrating the market and generating
a sufficient return on capital invested from that clinic. The Prague clinic was
closed on January 31, 1997. Given the domestic opportunities available, the
Company has decided to focus its efforts on domestic operations. This increase
in other expenses was also affected with start-up project costs for a healthcare
consulting project in Budapest, Hungary which represented $52,265 of the
increase. Amortization of capital assets also increased due to the Company's
expansion. Interest expense decreased $16,131, or 37.7% in the first eight
months of 1996 as compared to the same period in 1995 due primarily to reduced
bank borrowings.

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NET INCOME. As a result of the above items, the Company had a net loss of
$591,511 in the eight months ended August 31, 1996 as compared to a net income
of $202,300 in the eight months ended August 31, 1995.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

NET SERVICE REVENUES. Revenues increased by $508,799, or 5%, from
$10,474,754 to $10,983,553. This increase was primarily attributable to the
increase in hospital staffing contracts from 13 to 15 contracts in 1995.

PHYSICIAN FEES. Physician Fees, which represent fees to contract
physicians, represent the largest single variable expense. These fees are earned
primarily through the Company's emergency medical services to hospital emergency
department contracts. Contract physician fees increased $435,000, or 5.5% from
$7,950,712 to $8,385,712 and represent 76.3% of net revenues for 1995 compared
with 75.9% of net revenues for 1994. The increase in physician fees is
consistent with the increase in the number of hospital staffing contracts in
1995.

OPERATING EXPENSES. Operating expenses decreased $30,353, or 1.3% from
$2,199,374 in 1994 to $2,169,021 in 1995. These expenses represent 21.0% of
revenues and 19.7% of revenues in 1994 and 1995, respectively. The decline as a
percentage of revenues is the result of better productivity in 1995 compared to
1994 and specific cost reductions in occupancy costs and supplies relating to
the closure of an unprofitable clinic.

INTEREST EXPENSE. Interest expense increased $16,800, or 32.4% during 1995,
as compared with 1994. The increase is attributable to an increase in borrowings
to finance accounts receivable due to the 5% growth in net revenues, largely
derived from billings to government healthcare insurance plans for services
rendered by the Company's physicians.

NET INCOME. As a result of the above items, the Company had a net loss of
$300,487 in 1995 as compared to a net income of $174,531 in 1994.

YEAR ENDING DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

NET SERVICE REVENUES. Net revenues increased by $1,534,906, or 17.1%, from
$8,939,848 in 1993 to $10,474,754 in 1994. The increase in revenue can be
attributed primarily to the increase in hospital staffing contracts.

PHYSICIAN FEES. Physician fees increased by $1,164,525, or 17.1%, from
$6,786,187 in 1993 to $7,950,712 in 1994. As a result of the increase in
hospital staffing contracts, the physician fees remained constant, representing
75.9% of net revenues for both 1993 and 1994.

OPERATING EXPENSE. Operating expenses increased by $26,851, or 1.2%, from
$2,172,523 in 1993 to $2,199,374 in 1994. These expenses represented 24.3% and
20.9% of the Company's net revenues in 1993 and 1994, respectively.

NET INCOME. As a result of the above items, the Company had a net income of
$174,531 as compared to a net loss of $107,516 in 1993.

LIQUIDITY AND CAPITAL RESOURCES

The capital requirements of the Company arise in four major areas. These are
(i) the need for additional capital to increase business through new service
contracts for hospital emergency departments, (ii) the commencement of new
specialty healthcare clinics, (ii) marketing expenses associated with

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consulting services both in Canada and international markets, and (iv) the need
for capital to increase administrative capabilities, including centralized
billing and collection services and management information systems.

Marketing expenses associated with consulting services both in Canada and
international markets are not expected to be material in the next 24 months as
the Company's resources will be focused on developing new hospital contracts in
Canada and the development of Urgent Care Centres.

The Company is planning to develop a chain of Urgent Care Centres, initially
in Ontario and then in other provinces, that it believes will gain public
recognition and government support as a quality deliverer of emergency health
care. The first Urgent Care Centre is planned to open in the second quarter of
1997 with up to nine additional centres scheduled over the following eighteen
months. Any decision to expand this base of 10 centres will be based on realized
profitability and capital resources. The Company anticipates that the funding
required to support this plan will amount to about $2.0 million. The Company
estimates that bank financing and third party lease financing of at least
$500,000 can be secured, thus approximately $1.5 million of the net proceeds
from the Offering will be used to support the long-term capital and working
capital requirements of the Urgent Care Centres. As of the date of this
Prospectus, the Company has not secured any bank financing or third party
financing, and there can be no assurance that such additional funding will be
obtained on terms favorable to the Company, or at all. See "Use of Proceeds."

In January 1996, the Company issued 1,000,000 shares of Common Stock for net
proceeds of approximately $845,000 together with warrants to purchase 1,000,000
shares at an exercise price of $2.00 per share. As part of the Company's
November 1996 capital restructuring, all holders of the warrants surrendered
their outstanding warrants.

In September 1996, the Company acquired all of the assets and physician
contracts of the St. Georges Health Services Organization (HSO) for a $155,992
promissory note, 75,000 shares of the Company's Common Stock, and the assumption
of $216,717 of liabilities . This HSO was a contractual agreement with the
Ministry of Health to provide primary care at a clinic for a specified number of
registered patients.

In January 1997, the Company completed a private placement of its
securities, in which it sold 8% promissory notes in the aggregate principle
amount of US$500,000 and 125,000 shares of its Common Stock and raised aggregate
gross proceeds of US $500,000. The net proceeds of US $425,000 were initially
applied to reduce the Company's bank borrowings. The principal and accrued
interest on the notes are due and payable upon the earlier of 18 months from the
date of issuance or receipt by the Company of at least US $4,000,000 from the
sale of its debt and\or equity securities in a public or private financing.

Robert Rubin, a director of the Company, has extended the Company a $500,000
line of credit which bears interest at 2% above the prime rate. As of the date
hereof, there is no outstanding balance under such line of credit.

The Company believes, although there can be no assurance, that net proceeds
of the Offering and operating revenues will provide sufficient capital to
finance the Company's capital requirements during the 12 months following
completion of the Offering. If the Company encounters unexpected expenses during
such period, or if after such period, revenues from operations are not
sufficient to fund operations or growth, the Company may require additional
financing. There can be no assurance that the Company will be able to obtain
additional financing on acceptable terms, or at all.

Inflation has not had, nor is it expected to have, a material impact on the
operations and financial condition of the Company.

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BUSINESS

BACKGROUND

THE COMPANY

The Company specializes in the coordination and delivery of emergency
related healthcare services. The broad range of services currently offered by
the Company include operational consulting and healthcare management services,
management of special purpose health clinics, physician and nurse staffing, and
health educational services.

In connection with the services it provides, the Company contracts with a
wide range of physicians and other healthcare professionals. The Company has
strategically divided its business operations into two divisions, the Emergency
Medical Services Division (the "EMS Division") and the Clinical Operations
Division (the "CO Division").

THE EMS DIVISION

Competitive pressures have focused the attention of many healthcare
administrators, in both the private and public sectors, on the need for better
staffing of their medical professionals. Hospitals have increasingly turned to
contract staffing firms with specialized skills to help solve physician contract
and scheduling problems.

The EMS Division was established in 1983 as a medical staffing and
recruitment business. The Company provides physician staffing and administrative
support to emergency departments and physician recruitment services to Canadian
hospitals and emergency physician groups. The administrative services include
billing, maintenance of records and coordinating with third party payors. Under
its contracts with hospitals, the Company is obligated to provide emergency
department physician coverage. The Company also coordinates the scheduling of
staff physicians which provides emergency department coverage and assists the
hospital's administrative and medical staff in such areas as quality assurance,
risk management, departmental accreditation and marketing. Under the direction
of the Company's management, the Company's physician pool of approximately 140
emergency physicians undergo a rigorous accreditation program in order to ensure
the quality of doctors who provide services on behalf of the Company.

The Company's services are reimbursed either based on a monthly fee payable
by the hospital or alternately on a per shift basis. As of August 31, 1996, the
Company had 14 hospital contracts, of which 11 were contracted to pay monthly
administration fees and three were contracted to pay based on per shift
billings.

CONTRACTUAL ARRANGEMENTS

MANAGEMENT CONTRACTS WITH PHYSICIANS. The Company identifies, recruits and
screens potential candidates to serve as emergency room physicians in hospitals
which have contracted for the Company's

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contract staffing services. The Company then enters into contracts with
physicians who meet its qualifications and provides those physicians as
candidates for admission to the hospital's medical staff. While each hospital
with which the Company contracts, ultimately determines whether a physician must
be board certified in emergency medicine to provide medical services in its
emergency room, in general, the hospitals do not require physicians to be so
certified. The Company requires all physicians to be currently licensed to
practice medicine in the Province of Ontario and to be Advanced Cardiac Life
Support ("ACLS") or Advanced Training Life Support ("ATLS") certified before
entering into a contract for the physician's services.

The Company bills and collects the professional fees for the medical
services provided. Professional fees payable to the physician are disbursed by
the Company pursuant to each physician's contract. Physicians are generally paid
on the basis of the greater of a fixed hourly rate or fee for service patient
billings. As independent contractors, the physicians are responsible for their
own income taxes and statutory remittances to the respective federal and
provincial governments, as well as professional liability insurance. See "Risk
Factors--Classification of Physicians as Independent Contractors; Potential Tax
Liability."

The terms and conditions of the Company's contracts with physicians
generally provide that the Company, on a best efforts basis, bears the primary
responsibility to provide physician coverage to various facilities under
contract. Each physician is not an employee of the Company but is instead an
independent contractor of services to various medical facilities under contract
with the Company. Each physician must remain in good standing with the College
of Physicians & Surgeons of the Province of Ontario and be licensed to practice
medicine in the Province of Ontario. Each physician must remain in good standing
with the Canadian Medical Protective Association ("CMPA") and have appropriate
CMPA coverage to provide physician services to patients while working with the
Company. Each physician is expected to maintain an acceptable level of
Continuing Medical Education ("CME") in order to qualify for reimbursement.
Physicians are bound by a non-competition restriction not to provide services at
any hospital where the Company has a contract for one year following the
contract term.

CONTRACTS WITH HOSPITALS. The Company coordinates the scheduling of staff
physicians to provide coverage on a negotiated basis to a hospital's emergency
department.

The Company generally provides contract physician staffing services to
hospitals on the following arrangements: fee-for-service contracts and
physicians per shift that the Company provides to the hospital. In addition,
physicians under contract to the Company authorize the Company to bill and
collect fees. Depending upon the hospital patient volume, the Company may
receive a subsidy from the hospital. Pursuant to such contracts, the Company
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 Company currently has in place contracts for the provision in Ontario of
emergency care services by its contracted physicians with 14 hospitals.

THE EMS DIVISION'S OPERATIONS

The principal operating activities of the Emergency Medical Services
Division include the following:

RECRUITMENT AND CREDENTIALS The recruitment and certifying of credentials
of qualified independent contract physicians is a central aspect of the
Company's operations. Three full-time employees of the Company are dedicated to
recruiting and certifying credentials of the independent contact physicians for
the Company. The Company recruits physicians from three groups. The first group
is recruited directly from post graduate programs. Seminars are held in most of
the teaching hospitals in Ontario to inform all the residents of family medicine
and specialty training about career opportunities in the Company. The

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second and third groups recruited are family physicians with an interest in
emergency medicine and full-time emergentologists. As part of its recruiting
strategy, the Company intends to allow its contracted physicians to participate
in the Company's 1997 Stock Option Plan. The Company believes that this will
encourage physicians to make long-term commitments.

QUALITY ASSURANCE. Quality assurance systems are designed to ensure
consistency in clinical practice performance. These systems are subject to
review and examination by independent hospital credential and regulatory
agencies. As part of the Company's quality assurance program, all physicians are
required to have ACLS and ATLS certification, provide a Certificate of
Professional Conduct from the College of Physicians and Surgeons of Ontario, be
approved by the credentialing committee in their respective hospitals that are
governed by the Public Hospital Act, maintain adequate malpractice coverage, and
maintain continuing medical education credits. Principally, quality assurance is
the responsibility of Dr. Nimigan, the Company's Executive Medical Director, as
well as the Medical Director assigned to such hospital. There are currently four
Medical Directors responsible for quality assurance activities, including Dr.
Zacharias. The efficacy of these systems, and the performance of its 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 hours is performed monthly.
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. Because of varying other demands on the
contract physicians, the scheduling process is complex and requires significant
management attention. The Company has two full-time employees dedicated to
scheduling issues.

BILLING AND COLLECTION OF SERVICES. Fees generated by emergency department
coverage are comprised of two elements: (i) hospital administrative fees; 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 been less than 1% of
allowable billings. In addition, the Company charges each hospital a fee for its
recruiting and staffing services either on a fixed fee or fee-for-service basis.

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.

CONSULTING AND HEALTHCARE MANAGEMENT SERVICES. Hospitals have increasingly
turned to consulting specialists with specialized skills to strengthen the
management of their professional medical staff and specific clinical
departments, to better control costs, and to assist hospitals in meeting their
healthcare coverage needs and obligations to patients who are indigent,
uninsured or unassigned to a referring physician. In the past three years,
consulting contracts have been conducted with Hotel-Dieu Grace Hospital and The
Wellesley Hospital.

The Company has also conducted several international consulting assignments
for healthcare clients in Saipan, the Cayman Islands, Malaysia and Russia,
including feasibility studies, identification of medical service needs, planning
of healthcare delivery systems and developing marketing strategies. The Company
is currently engaged in two consulting assignments, the first of which is to
provide an accident and emergency consulting study for the State of Kerala in
India, the costs of which are funded in part by the Canadian government and in
part by the Ministry of Health in Kerala, and the second of which is to provide
an integrated strategic plan for the delivery of health and social services in
the Northwest Territories in Canada, the costs of which are being funded by the
Northwest Territory Provincial government.

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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.

In addition, the Company intends to take advantage of the government's plans
to restructure the delivery of Canadian medical care through fewer but more
efficient hospitals and hospital groups. It is expected that hospitals will
increasingly look to outsourcing from third party providers. Specifically, the
Company expects that hospitals will seek opportunities for emergency care
specialists not only to staff the emergency departments but also to administer
and operate all aspects of those departments.

Hospital restructuring has become a political focus in Ontario. The
provincial government is reducing expenditures in the hospital sector as part of
the restructuring. Historically, restructuring has been generally related to
downsizing within a single organization. In Ontario, realizing additional
savings in hospital medical services will be increasingly difficult without
significant program reductions. There is a need, therefore, for new solutions
which reduce the excess physical capacity in the healthcare system (e.g., number
of facilities), reduce administrative overhead and rationalize medical services.

In order to achieve this magnitude of change, the Company believes it will
be necessary for hospitals to go outside their organization and consider means
by which they can cooperate with other organizations. Management believes that
the new wave of hospital restructuring will result in many hospital mergers and
some hospitals will close. The government of Ontario recently enacted the
Savings and Restructuring Act (Bill 26), a Bill that enables the Government to
proceed with its restructuring plans.

The Company believes that its experience in the provision of emergency
medicine as well as its consulting expertise in reducing hospital costs can
demonstratively convince hospitals to out-source emergency department services
to the Company.

THE CO DIVISION

The Company owns and operates four clinics in Canada, including two clinics
in Toronto's Lester B. Pearson International Airport. In addition, the Company
operates the Glenderry clinic in which it owns a 33.33% interest. The locations
of and services provided at the Company's clinics are as follows:

AIRPORT. The Company has contracted with the Ministry of Transportation to
provide emergency services for both Terminal 1 and 2 Medical Clinics Toronto's
Lester B. Pearson International Airport. The airport clinics provide emergency
services throughout the airport to approximately eight million travelers who use
the airport each year and walk-in services to the employees. The staff consists
of highly qualified critical care nurses who are on-site and emergency
physicians who are on call. Other services provided in the clinic are
chiropractic, massage therapy and audio testing which services are generally
provided to employees of the airport.

GLENDERRY, POND MILLS, CENTRAL. The Company operates three clinics which
offer both family practice and walk-in services for patients. Other services
provided at the clinics are travel medicine, chiropractic, massage therapy,
weight loss program, acupuncture, Chinese medicine and professional family
counseling. The Glenderry clinic is a partnership, of which the Company owns a
33.33% interest.

The Company recently acquired the assets and physician contracts of a Health
Services Organization (HSO). The funding mechanism is a contractual agreement
with the Ministry of Health to provide primary care at a clinic for a specified
number of registered patients. The Ministry allocates a specific payment for
each patient on a monthly basis, whether the services are used or not. The
services provided at the HSO consist of a variety of general medical services.
The Company has transferred the physician contracts to its Central Clinic.

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URGENT CARE CENTRES.

The Company plans to develop a chain of Urgent Care Centres, initially in
Ontario and then in other Canadian provinces, that will gain public recognition
and government support as a quality deliverer of urgent health care. There can
be no assurance that they will gain such recognition or support.

Due to government funding constraints, many primary care physicians in
Canada have moved to other countries to practice medicine, retired from the
practice of medicine, or have closed their practices to become a member of a
group of physicians that provide only limited access to health care.
Consequently, approximately 1 in 4 residents of Ontario is without a primary
care physician.

The Company's plan is to develop Urgent Care Centres which offer on-site,
one-stop medical care comparable to the services provided in a traditional
emergency department. The Urgent Care Centre concept consists of a group of
emergency trained physicians, a medical laboratory, a diagnostic radiology
service, and a pharmacy. Each emergency-trained physician working at an Urgent
Care Centre will have critical care expertise to treat most clinical problems.
Unlike most walk-in clinics and family physician offices, the Company's
management believes its Urgent Care Centres will generally be able to treat 90%
of the cases seen in a typical Ontario emergency department. In certain cases
requiring hospitalization, the Urgent Care Centre will stabilize the patient and
then transfer them to hospitals.

The Company plans to open its first centre in the second quarter of 1997
with up to nine additional centres scheduled over the following eighteen months.
The Company estimates that it will cost approximately $200,000 to open each
Urgent Care Centre. See "Use of Proceeds" and "Managements Discussion and
Analysis of Financial Condition and Results of Operations, Liquidity and Capital
Resources."

These Urgent Care Centres will be "community based" and offer less
restricted access to non-hospital based health care. Management believes that
the centres will offer high quality service not only in clinical practice but
also in consumer defined quality attributes such as waiting times, quality of
environment, quality of personal interaction and courtesy. These Urgent Care
Centres will be designed to be less costly to the publicly funded health care
system than traditional emergency departments.

The vast majority of emergency services in Ontario are delivered by
qualified family or general practitioners in local communities. In Ontario,
there are 20,084 physicians active in the practice of medicine although only 323
physicians are certified in emergency medicine. Notwithstanding this small
proportion of physicians focusing on emergency medicine, the demand for
emergency care has grown significantly over the past ten years. The Company
believes, although there can be no assurance, that there is a need for an
alternate provider of emergency medical services and expects this need to grow
due to their anticipated cost efficiency and the funding problems facing the
healthcare system.

The success of the Urgent Care Centre concept will depend on the Company
realizing several strategic objectives. The Company desires to offer
comprehensive medical care at a level comparable to traditional hospital based
emergency departments. In order to accomplish this objective, it must recruit
sufficient physicians and nurses with appropriate critical care expertise to
ensure quality care for all clinical problems, recruit experienced providers of
diagnostic imaging, medical laboratory services, and pharmacy services to be
co-participants in each centre, manage day-to-day operations with an experienced
Medical Director for quality assurance and an experienced Clinical Director for
operational efficiency, and operate in a cost effective manner to maximize
profitability.

The Company believes that customer service is essential to its success. The
Company believes that the following steps will increase patient satisfaction:
Overlap physician staffing to suit volume so that the average waiting time from
the moment the patient enters the Centre is 30 minutes or less; On-site location
of diagnostic imaging, laboratory services and a pharmacy to reduce patient
delays; Periodic patient satisfaction surveys to identify problems at an early
stage and prevent reoccurrence of the same type of complaints; Customer access
to waiting rooms with televisions and radios, air conditioning, current
magazines, and coloring books and toys for children; and Clean sanitary
facilities, particularly washrooms.

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The Company plans to establish Urgent Care Centres in locations having the
following attributes: Residential populations of at least 150,000 within a 5 km
(approximately 3 miles) to 8 km (5 miles) radius, preferably with a 25,000
day-time working population, largely families with children or teenagers, with
lower to middle average household incomes; Locations near high density retail
locations which offer convenience and visibility; Locations with accessibility
for both ambulances and patients.

GOVERNMENT REGULATION

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. In 1993, the government placed an overall hard
cap of approximately $3.8 billion on the amount physicians could collectively
bill the Ontario Health Insurance Plan (OHIP) for insured services. As
physicians' billings exceeded this hard cap in successive years, the government
reduced the fees received under OHIP by prescribed percentages. This utilization
adjustment or clawback is subject to constant revision and review. In addition
to the hard cap, individual physicians' billings under 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 change in reimbursement
regulations, policies, practices, interpretations or statutes that places
material limitations on reimbursement amounts or practices could adversely
affect the operations of the Company, absent, or prior to, satisfactory
renegotiation 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 insured services by OHIP. The 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 province must ensure that no payments are
permitted in respect of insured health services that have been subject to extra
billing. Physicians who bill patients directly for the balance of their bill
which has been reduced due to clawback may be guilty of an offense, and on
conviction, liable to significant financial penalties and possibly subject to
proceedings for professional misconduct.

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 relatively 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 corporate
practice of medicine laws of each province in which it operates, there can be no
assurance that, given varying and uncertain interpretations of such laws, the
Company would be found in 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.

PROPOSED HEALTHCARE LEGISLATION

The Health Services Restructuring Commission (HSRC), established under Bill
26, will have the mandate and authority to facilitate and accelerate hospital
restructuring in Ontario. This legislation

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contains measures intended to control public and private spending on healthcare
as well as to provide universal public access to the healthcare system. The
Company cannot predict the ultimate effect of this and what other healthcare
legislation, if any, will be enacted. Significant changes in Canada's healthcare
system are likely to have a gradual but substantial impact on the manner in
which the Company conducts its business and could have a material effect on the
results of the Company.

Despite pronouncements by the Ontario Minister of Health that managed care
options, such as in the United States, are being considered, it is not evident
that U.S. styled managed care will play a significant role in the
fee-for-service sector of the publicly funded healthcare system. Government
actions have to date indicated a strategy to let the healthcare system proceed
without intervening directly in the management of patient care as long as
budgetary targets can be met. Should the current strategy fail, a greater
emphasis may be placed on such managed care tools as utilization review,
guidelines, and fee schedule-tightening. The current move away from traditional
fee-for-service mechanisms may have a similar effect as physicians attempt to
minimize the risk they face and as the government strives for accountability and
value-for-dollar assurances.

COMPETITION

Competition in the industry is based on the scope, quality and cost of
services provided. Certain of the Company's actual or potential competitors have
substantially greater financial resources available to them. While management
believes that it competes on the basis of the quality of its services, the
larger resources of its competitors may give them certain cost advantages over
the Company (e.g., in the areas of malpractice insurance, cost, savings from
internal billing and collection and a broader scope of services). Management
believes that there exists barriers to entry that would require a new competitor
to invest significant time and resources to overcome. While various local
physician groups provide hospitals with emergency staffing alternatives, to
date, the Company is the largest province wide provider of emergency staffing
services to hospitals. The clinics operated by the CO Division competes with
hospital and other private physicians. The Urgent Care Centres would compete
with hospital emergency rooms. The Company believes that the varied physician
practice alternatives coupled with competitive remuneration plans create a
significant incentive for physicians to provide patient services through
Med-Emerg.

LEGAL PROCEEDINGS

The Company is not presently a party to any material legal proceedings.
However, in the future it could be subject to claims arising from its contracts
with hospitals or other institutions or professional associations to which it
provides services.

EMPLOYEES

On December 31, 1996, the Company had 29 full-time employees, of whom three
were in general executive positions and 25 were in administration. In addition,
as of such date approximately 140 physicians were under contract with the
Company. None of the Company's employees is represented by a collective
bargaining agreement, and the Company considers its employee relations to be
satisfactory.

PROPERTY

The Company's offices are located at 2550 Argentia Road, Suite 205,
Mississauga, Ontario, L5N 5R1. The Company occupies approximately 5,000 square
feet of space under a lease which expires in February 2001 at an average annual
rental rate of approximately $88,675.

27
<PAGE>
MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

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

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>

Ramesh Zacharias, M.D., FRCSC........................ 44 Chief Executive Officer, Director

Carl W. Pahapill, CA................................. 38 Chief Operating Officer, President and Director

Wayne Nimigan, M.D., FRCP............................ 49 Executive Medical Director

Kathryn Gamble, CA................................... 29 Vice President of Finance, Chief Financial Officer,
Secretary

Keith Burk, M.D...................................... 38 Director of Urgent Care Operations

William Thomson, CA.................................. 55 Chairman of the Board

Larry Grossman....................................... 53 Director

Peter Deeb........................................... 29 Director

Victoria Zacharias................................... 47 Director

Robert M. Rubin...................................... 56 Director
</TABLE>

RAMESH ZACHARIAS, M.D., FRCSC. Dr. Ramesh Zacharias is the founder and
Chief Executive Officer of Med-Emerg Inc. He has acted as Chief Executive
Officer and a director of the Company since its inception. He has practiced
medicine in Canada since 1981 and has extensive experience in the delivery of
emergency medical care. He functions as the Medical Director and on-call
physician for the Terminal 1 and 2 Medical Clinics at Toronto's Lester B.
Pearson International Airport. He also provided consulting services regarding
the delivery of emergency care in the Caribbean, Saipan and Malaysia and
provided management consulting services regarding the operation of medical
clinics in Canada, the United States and Russia. Mr. Zacharias is the husband of
Victoria Zacharias, a director of the Company.

CARL W. PAHAPILL, CA. Mr. Pahapill, joined the Company as Chief Operating
Officer in January 1996 and became a director of the Company in October 1996.
From 1994 to 1995, Mr. Pahapill was the Chief Operating Officer of Signature
Brands Limited, a publicly traded food processing Company (TSE). From 1984 to
1993, Mr. Pahapill was a Partner at BDO Dunwoody Chartered Accountants. Prior to
that, Mr. Pahapill was a supervisor at Ernst & Young Chartered Accountants.

WAYNE NIMIGAN, M.D., FRCP. Dr. Nimigan has been the Executive Medical
Director since October 1993. Since 1978, Dr. Nimigan has been a clinical
lecturer at the University of Ottawa, Department of Family Medicine. Dr. Nimigan
is also a physician and principal shareholder of the Orleans Urgent Care Centre,
a private emergency facility in Ottawa, Ontario. Dr. Nimigan was formerly the
Director of the Emergency Department in the Commonwealth Health Centre in
Saipan, an American commonwealth territory in the western Pacific. Dr. Nimigan
has international experience in clinical practice in the former Soviet Union,
Zaire, India, Malaysia and the Czech Republic.

KATHRYN GAMBLE, CA. Ms. Gamble joined the Company in January 1996 serving
as the Company's Vice President of Finance and became the Company's Chief
Financial Officer in October 1996. From February 1995 to December 1995, Ms.
Gamble was the Corporate Controller for Signature Brands Limited, a publicly
traded ("TSE") food processing company. From February 1993 to February 1995,

28
<PAGE>
Ms. Gamble was an Audit Analyst with Abitibi Price Inc., a publicly traded
company (TSE, NYSE). From 1989 to February 1993, Ms. Gamble was a senior
accountant at Iscove, Gold & Glatt Chartered Accountants.

WILLIAM THOMSON, CA. Mr. Thomson has been a director of the Company since
January 1996. Mr. Thomson has been an advisor of Med-Emerg Inc. since January
1991. From 1978 to the present, Mr. Thomson has served as the President of
William E. Thomson Associates Inc., a management consulting firm specializing in
crisis management and turn around operations. From 1992 to the present he has
served as Chairman of Cyphertech Systems, Inc., a company he founded. From 1993
to 1995, he served as Chairman of Votek Systems, Inc., a software development
company. In addition, from 1991 to 1994, he served as Chairman of Accomodex
Franchise Management Inc. Mr. Thomson serves as a director of numerous
companies, including Asia Media Group, Inc., a public company.

PETER DEEB. Mr. Deeb has been a director of the Company since January 1996.
Mr. Deeb founded the North American engineering and construction firm,
Deeb-Wallaus Corporation where he served as Chairman and Chief Executive Officer
from 1987 to 1993. Mr. Deeb is currently a Principal and Director of the Toronto
investment banking firm of Thomson Kernaghan & Co. Ltd., one of Canada's oldest
and most prestigious investment houses, where he has been since 1993.

In addition, Mr. Deeb holds the position of Chairman and CEO of the New York
based merchant banking firm, Hampton House International Corp., and as Chief
Executive of its Canadian subsidiary, Carlton International Brands Limited. Mr.
Deeb also serves on the board of Lynx Investment Advisory, Inc. (Washington DC)
and Capital Investment Circle Plc. (Dublin, Ireland).

LARRY GROSSMAN. Mr. Grossman has been a director of the Company since
January 1996. He has been an advisor of Med-Emerg Inc. since January 1993. Since
1990, Mr. Grossman has been a partner at the law firm of Blaney, McMurtry,
Stapells, Friedman and its predecessor. He has also served as Head of Investment
Banking for Richardson Greenshields and as President and CEO of Canada's 9th
largest Trust Company. Mr. Grossman also serves on the board of directors of
numerous companies. In addition, Mr. Grossman has served in a variety of
political positions in the Province of Ontario, including but not limited to,
the Parliamentary Assistance to Attorney General in 1976, Minister of Health in
1982, Treasurer and Minister of Economics in 1983, Minister of Education and
Colleges and Universities in 1985; and as the Elected Leader of the Progressive
Conservative Party of Ontario and Leader of the Official Opposition in 1985.

KEITH BURK, M.D.. Dr. Burk is the President of the Urgent Care Clinic
Association of Ontario and is also the founder of two urgent care clinic in the
Kitchener-Waterloo region. Since 1991, Dr. Burk has been a working physician at
the Kitchener-Waterloo Urgent Care Clinics as well as the Medical Director at
those two sites.

ROBERT M. RUBIN. Mr. Rubin has served as a director of the Company since
October 1996. Since June 1992, Mr. Rubin has served as a director of Diplomat
Corporation, a publicly traded company involved in the sale of infantwear and
babycare products. Since December 5, 1995, Mr. Rubin has been a director of Help
at Home, Inc., a public company engaged in the business of providing homemaker
and general housekeeping services to elderly and disabled persons at home. Since
June 1994, Mr. Rubin has been a Director of Kaye Kotts Associates, Inc., a
public company that provides representation for delinquent taxpayers before tax
authorities.

Since November 20, 1992, Mr. Rubin has served as the Chairman of the Board
of Directors of Western Power & Equipment Corp. ("WPEC"), a construction
equipment distributor. Between November 20, 1992 and March 7, 1993, Mr. Rubin
served as Chief Executive Officer of WPEC. Between October, 1990 and January 1,
1994, Mr. Rubin served as the Chairman of the Board and Chief Executive Officer
of American United Global Inc., a technology and communication company and
majority owner of WPEC ("AUGI") and since January 1, 1994, solely as Chairman of
the Board of AUGI. Mr. Rubin was the

29
<PAGE>
founder, President, Chief Executive Officer and a Director of Superior Care,
Inc. ("SCI") from its inception in 1976 until May 1986 and continued as a
Director of SCI (now known as Olsten Corporation ("Olsten")) until the latter
part of 1987. Olsten, a New York Stock Exchange listed company, is engaged in
providing home care and institutional staffing services and health care
management services. Mr. Rubin was formerly a Director and Vice Chairman, and is
a minority stockholder, of American Complex Care, Incorporated ("ACCI"), a
public company which provided on-site health care services, including
intradermal infusion therapies. In April 1995, the principal operating
subsidiaries of ACCI petitioned in the Circuit Court of Broward County, Florida
for an assignment for the benefit of creditors. Mr. Rubin is also a Director,
Chairman and minority stockholder of Response USA, Inc., a public company
engaged in the sale and distribution of personal emergency response systems. Mr.
Rubin is also Chairman and Chief Executive Officer and a principal stockholder
of ERD Waste Corp., a public company specializing in the management and disposal
of municipal solid waste, industrial and commercial nonhazardous solid waste and
hazardous waste.

VICTORIA ZACHARIAS. Ms. Zacharias has been a director of Med-Emerg Inc. and
the Company since their inceptions July 1983 and December 1995, respectively. In
1972, Ms. Zacharias received her nursing degree from The Wellesley School of
Nursing in Toronto, Canada. Ms. Zacharias has approximately 25 years of nursing
experience in a variety of hospitals located in Ontario, Canada. Ms. Zacharias
is the wife of Ramesh Zacharias, the Company's Chief Executive Officer.

All directors shall serve for a term of one year or until their respective
successors have been duly elected. With the exception of Robert M. Rubin,
outside directors of the Company will receive approximately $10,000 per year for
acting in such capacities and will be reimbursed for all reasonable expenses
incurred in connection with activities on behalf of the Company. The Company has
entered into an agreement with Mr. Rubin which provides that Mr. Rubin will
receive 50,000 shares of Common Stock in 1997 for acting as a director of the
Company. In accordance with Canadian law, Mr. Rubin will receive such shares
quarterly in proportional increments. In addition, the Company granted Mr.Rubin
an option to purchase up to 700,000 shares of Common Stock at US $.75 per share
which option is immediately exercisable.

EXECUTIVE COMPENSATION

The following table sets forth the cash compensation, as well as certain
other compensation paid or accrued to the Company's Chairman, Chief Executive
Officer and Chief Operating Officer for the fiscal years ended December 31, 1994
and 1995. No other executive officer has a total annual salary and bonus of more
than $100,000 (U.S.) during the reporting periods.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------- OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------------------------------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C>

Ramesh Zacharias................................... 1995 $ 73,000 $ 0 $ 104,857(1)
Chief Executive Officer 1994 $ 73,000 $ 0 $ 69,506

Carl Pahapill......................................
Chief Operating Officer, President 1995 $ 31,000(2) $ 0 $ 0
</TABLE>

- ------------------------

(1) Represents fees paid to Dr. Zacharias for services rendered as a physician.

(2) Represents fees paid to Mr. Pahapill for acting as a consultant to the
Company from September 1995 through December 1995.

30
<PAGE>
EMPLOYMENT AGREEMENTS

All of the Company's executive officers intend to devote their full business
time to the affairs of the Company. Prior to the Effective Date, the Company
intends to enter into employment agreements with each of Dr. Zacharias and Mr.
Pahapill.

STOCK OPTION PLAN

Prior to the Effective Date, the Board of Directors intends to adopt and
approve the 1997 Stock Option Plan (the "Plan" or the "1997 Stock Option Plan"),
and to seek stockholder approval for the Plan. The Plan is to be administered by
the Board of Directors or by a committee appointed by the Board (the "Plan
Administrator"). Pursuant to the Plan, options to acquire an aggregate of
250,000 shares of Common Stock may be granted, none of which have been granted.
The Plan is to provide for grants to employees, consultants and directors of the
Company.

31
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 1995, the Company purchased a 33.33% partnership interest in the
Glenderry Medical Clinic from Dr. Zacharias for $27,208. Dr. Zacharias used the
proceeds of such sale to repay the Company the amount outstanding on a
non-interest bearing loan from the Company to Dr. Zacharias.

The Company has loaned an aggregate of $140,085 to Dr. Zacharias and
Victoria Zacharias and two of their affiliated companies. Of such loans, $48,224
were used to acquire a residence. This loan is non-interest bearing with no
specific repayment terms. The remainder of such loans were advances which are
non-interest bearing and are due on demand. The Company has agreed to
repurchase, prior to the completion of the Offering, 37,456 shares of its common
stock from Ramesh and Victoria Zacharias at a purchase price of US $2.75 per
share. The aggregate consideration payable by the Company of $140,085 will be
used to repay outstanding amounts owed by Dr. Zacharias and Victoria Zacharias
and their affiliated companies.

In January 1996, Dr. Zacharias and his wife Victoria Zacharias exchanged all
of the capital stock of 927563 Ontario Inc. and 927564 Ontario Inc. for
2,333,333 shares of the Company's common stock.

In January 1996, the Company sold an aggregate of 1,000,000 shares of its
Common Stock and 1,000,000 warrants for gross proceeds of $1,000,000. Hampton
House International Corp. ("Hampton House"), a company of which Peter Deeb is
the CEO and a shareholder, purchased 60,000 shares. The 1,000,000 Warrants were
subsequently returned to the Company as part of the Recapitalization (as such
term is defined herein).

In June 1996, the Company loaned $60,000 to Carl Pahapill, the Company's
President, to purchase 100,000 shares of Common Stock in the Company. The loan
is non-interest bearing, unsecured and repayable over a five year period with
principal payments commencing in December 1998.

On November 1, 1996, the Company effected a recapitalization (the
"Recapitalization") whereby Dr. Zacharias, the Company's Chief Executive Officer
and Director, and Victoria Zacharias, a Director of the Company, converted an
aggregate of 2,202,333 shares of Common Stock into an aggregate of 500,000
shares of preferred stock. As part of the Recapitalization, the Company issued
Hampton House an aggregate of 350,000 shares of Common Stock for past services
rendered. See "Description of Securities-- Preferred Stock" for a description of
the terms of the preferred stock.

On November 1, 1996, the Company granted Robert Rubin, a director, an option
to purchase 700,000 shares of Common Stock at US$.75 per share. Mr. Rubin
extended the Company a $500,000 line of credit which bears interest at 2% above
the prime rate. As of the date hereof, there is no outstanding balance under
such line of credit.

In connection with the Bridge Financing, the Company issued 8% promissory
notes in the principal amount of $500,000 and an aggregate of 125,000 shares of
Common Stock to four investors for gross proceeds of $500,000. Robert Rubin, a
director of the Company, purchased a promissory note in the principal amount of
$150,000 and 37,500 shares of Common Stock.

32
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth, as at the date of this Prospectus, certain
information with respect to stock ownership of (i) all persons known by the
Company to be beneficial owners of 5% or more of its outstanding shares of
Common Stock; (ii) each director; and (iii) all directors and officers as a
group, together with their respective percentage ownership of such shares before
the Offering and as adjusted to reflect the sale of the 1,250,000 shares of
Common Stock offered hereby. Unless otherwise indicated, the beneficial owners
have sole voting and investment power over the shares of Common Stock listed
below:

<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OWNERSHIP OWNERSHIP
SHARES OF BEFORE AFTER
NAME(1) COMMON STOCK OFFERING OFFERING
- --------------------------------------------------------------------- -------------- ----------- -----------------
<S> <C> <C> <C>
Ramesh Zacharias,(2)................................................. 330,000 17.01% 10.34%
M.D., FRCSC
Victoria Zacharias(3)................................................ 330,000 17.01% 10.34%
Carl W. Pahapill,.................................................... 100,000 5.15% 3.13%
CA
Robert Rubin(4)...................................................... 737,500 26.51% 17.99%
Hampton House........................................................ 410,000 21.13% 12.85%
International(5)
Peter Deeb(5)........................................................ 410,000 21.13% 12.85%
Ambrose Group........................................................ 170,000 8.76% 5.33%
John H. Sununu....................................................... 130,000 6.70% 4.07%
All Officers and Directors as a group(2)(3)(4)(5).................... 1,577,500 58.33% 39.58%
</TABLE>

- ------------------------

(1) Unless otherwise indicated, the address is c/o Med-Emerg International,
Inc., 2550 Argentia Road, Suite 205, Mississauga, Ontario L5N 5R1, Canada.

(2) Includes 165,000 shares owned by Dr. Zacharias' wife, Victoria Zacharias who
is a director of the Company. Does not include 500,000 shares of Common
stock issuable upon conversion of up to 500,000 shares of Convertible
Redeemable Preferred Stock, 50% of which is owned by Dr. Zacharias and 50%
of which is owned by Mrs. Zacharias. These shares of preferred stock are
convertible into Common Stock at $9.00 per share and are automatically
redeemable in ten years. See "Description of Securities." Dr. Zacharias
disclaims beneficial ownership of the shares owned by his wife.

(3) Includes 165,000 shares owned by Dr. Zacharias. Does not include 500,000
shares of Common stock issuable upon conversion of up to 500,000 shares of
Convertible Redeemable Preferred Stock 50% of which is owned by Dr.
Zacharias and 50% of which is owned by Mrs. Zacharias. The Preferred Shares
are convertible into Common Stock at $9.00 per share and are automatically
redeemable in ten years. Mrs. Zacharias disclaims beneficial ownership of
the Shares owned by her husband.

(4) Includes 700,000 shares of Common Stock currently issuable upon exercise of
options. See "Management."

(5) These shares may be deemed to be owned by Peter Deeb, a director of the
Company. Mr. Deeb owns 75% of Hampton House and is its Chairman and Chief
Executive Officer.

33
<PAGE>
DESCRIPTION OF SECURITIES

The total authorized capital stock of the Company consists of an unlimited
number of shares of Common Stock, with no par value, and unlimited number of
Preferred Stock, with no par value per share. The following descriptions of the
capital stock are qualified in all respects by reference to the Certificate of
Incorporation and Bylaws of the Company, copies of which are filed as Exhibits
to the Registration Statement of which this Prospectus is a part.

As of the date of this Prospectus, shares of Common Stock which were
beneficially held by 25 people and 500,000 shares of Convertible Redeemable
Preferred Stock held by Dr. Zacharias and Vicki Zacharias were issued and
outstanding.

COMMON STOCK

The holders of outstanding shares of Common Stock are entitled to share
ratably on a share-for-share basis with respect to any dividends when, as an if
declared by the Board of Directors out of funds legally available therefor. Each
holder of Common Stock is entitled to one vote for each share held of record and
are not entitled to cumulative voting rights. The Common Stock is not entitled
to conversion or preemptive rights and is not subject to redemption. Upon
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in the net assets legally available for
distribution to stockholders after payment of all obligations of the Company and
after provision has been made with respect to each class of stock,if any, having
preference over the Common Stock. Holders of shares of Common Stock do not have
cumulative voting rights or preemptive, subscription or conversion rights. The
shares of Common Stock presently outstanding are, and the shares of Common Stock
offered hereby will be, upon issuance and payment therefor, validly issued,
fully paid and non-assessable. All outstanding shares of Common Stock are, and
the shares of Common Stock offered hereby will upon issuance be, fully paid and
non-assessable.

CLASS A WARRANTS

Each Warrant entitles its holder to purchase one share of Common Stock at an
exercise price of price of $5.00, subject to adjustment in certain
circumstances, for a period of four years commencing on , 1998 (one year
after the Effective Date). The Common Stock and Warrants may only be purchased
as Units in the Offering, but are separately tradeable immediately upon
issuance.

The Warrants will be issued pursuant to a warrant agreement (the "Warrant
Agreement") among the Company, the Underwriter and Continental Stock Transfer &
Trust Company, the warrant agent, and will be evidenced by warrant certificates
in registered form.

The exercise price of the Warrants and the number and kind of Common Stock
or other securities and property issuable upon the exercise of the Warrants are
subject to adjustment in certain circumstances, including a stock split of,
stock dividend on, or a subdivision, combination or capitalization of the Common
Stock. Additionally, an adjustment will be made upon the sale of all or
substantially all of the assets of the Company in order to enable holders of
Warrants to purchase the kind and number of shares or other securities or
property (including cash) receivable in such event by a holder of the number of
shares of Common Stock that might otherwise have been purchased upon exercise of
the Warrants.

The Warrants do not confer upon the holder any voting or other rights of a
stockholder of the Company. Upon notice to the holders of the Warrants, the
Company has the right to reduce the exercise price or extend the expiration date
of the Warrants.

Warrants may be exercised upon surrender of the warrant certificate
evidencing those Warrants on or prior to the respective expiration date (or
earlier redemption date) of the Warrants at the offices of the warrant agent,
with the form of "Election to Purchase" on the reverse side of the warrant
certificate

34
<PAGE>
completed and executed as indicated, accompanied by payment of the full exercise
price (by certified check payable to the order of the warrant agent) for the
number of the Warrants being exercised.

No Warrant will be exercisable unless at the time of exercise the Company
has filed with the Commission a current prospectus covering the issuance of
Common Stock issuable upon the exercise of the Warrant and the issuance of
shares has been registered or qualified or is deemed to be exempt from
registration or qualification under the securities laws of the state of
residence of the holder of the Warrant. The Company has undertaken to use its
best efforts to maintain a current prospectus relating to the issuance of shares
of Common Stock upon the exercise of the Warrants until the expiration of the
Warrants, subject to the terms of the Warrant Agreement. While it is the
Company's intention to maintain a current prospectus, there is no assurance that
it will be able to do so. See "Risk Factors--Current Prospectus and State Blue
Sky Registration Required to Exercise Warrants."

No fractional shares will be issued upon exercise of the Warrants. However,
if a holder of a Warrant exercises all Warrants then owned of record, the
Company will pay to that holder, in lieu of the issuance of any fractional share
which would be otherwise issuable, an amount in cash equal to such fractional
interest based on the market value of the Common Stock on the last trading day
prior to the exercise date.

The Warrants are redeemable by the Company commencing , 1999, two
years from the Effective Date (or sooner with the consent of the Underwriter) at
a redemption price of $0.10 per Warrant on not less that 30 days written notice,
provided that the closing high bid price per share of Common Stock, if traded on
NASDAQ, or the last sale price, if listed on a national exchange, for 20
consecutive trading days ending on the third business day prior to the date of
redemption notice, equals or exceeds $8.00 (subject to adjustment for certain
events). The Warrants shall be exercisable until the close of the business day
preceding the date fixed for redemption. In addition, subject to the rules of
the NASD, the Company has agreed to engage the Underwriter as its exclusive
warrant solicitation agent, in connection with which it would be entitled to a
5% fee upon exercise of the Warrants. See "Underwriting."

PREFERRED STOCK

The Company has 500,000 shares of Preferred Stock outstanding, 250,000 of
which are owned by each of Dr. Zacharias and his wife, Victoria Zacharias. Each
share of Preferred Stock entitles the holder to two votes per share until the
Company engages in a public offering of its securities at which time each share
of Preferred Stock shall entitle the holder to one vote per share. Each share of
Preferred Stock entitles the holder to an annual cumulative dividend of $.27 per
share commencing on the date the Company consummates an initial public offering,
payable quarterly at the Board of Directors discretion, in cash or Common Stock
at the Board's discretion, subject to an annual net income profitability test of
at least $135,000. Commencing November 1, 2006, the Company has an option to
redeem the Preferred Stock for an aggregate of US $4,500,000 or an amount of
shares of Common stock derived by dividing $4,500,000 by the current market
price of the Company's Common Stock. In addition, the holders of the Preferred
Stock have the immediate right to convert the Preferred Stock into Common Stock
on a basis of one share of Preferred Stock for one share of Common Stock. The
Preferred Stock contains a provision which prohibits the payment of any Common
Stock dividends until all cumulative dividends on the Preferred Stock have been
paid.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Certificate of Incorporation and Bylaws of the Company provide for
indemnification of each director and officer or former director or officer or
any other person who may have served at the request of the Company as a director
or officer of another corporation in which the Company owns shares of capital
stock or is a creditor. The Company will indemnify against reasonable costs and
expenses incurred in connection with any action, suit or proceeding to which any
of the individuals described above were made a party by reason of his or her
being or having been such a director or officer, unless such director

35
<PAGE>
has been adjudicated to have been liable for negligence or misconduct in his or
her corporate duties. As of the date of this Prospectus, the Company is not
aware of any existing or pending litigation involving a former or current
director that will require the indemnification of the Company.

Notwithstanding the foregoing indemnification provisions of the Company's
Certificate of Incorporation and Bylaws, the Company has been informed that, in
the opinion of the Commission, indemnification for liabilities arising under the
Securities Act is against public policy and is therefore unenforceable.

TRANSFER AGENT, REGISTRAR AND REDEEMABLE WARRANT AGENT

The transfer agent, registrar and warrant agent for the Common Stock and
Warrants is Continental Stock Transfer & Trust Company, 2 Broadway, New York,
New York 10005.

TAX ASPECTS OF THE OFFERING

INVESTORS CONSIDERING THE PURCHASE OF SHARES OR WARRANTS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX CODE AS WELL AS TAX CONSEQUENCES ARISING UNDER THE
LAWS OF ANY STATE, LOCAL OR FOREIGN TAX JURISDICTION.

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS--PERSONS RESIDENT IN CANADA

NO DISCLOSURE IS OR IS DEEMED TO BE MADE IN THE PROSPECTUS AS TO INCOME TAX
CONSEQUENCES APPLICABLE TO A RESIDENT OF CANADA AS THE ACQUISITION, HOLDING,
CONVERSION OR DISPOSITION OF SHARES OR WARRANTS. CANADIAN RESIDENTS CONSIDERING
THE ACQUISITION OF SECURITIES PURSUANT TO THIS PROSPECTUS ARE URGED TO CONSULT
WITH THE RESIDENT TAX ADVISORS WITH RESPECT TO CANADIAN FEDERAL AND PROVINCIAL
INCOME TAX CONSEQUENCES APPLICABLE TO SUCH AN INVESTMENT.

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS--PERSONS NOT RESIDENT IN CANADA

The following summarizes the principal Canadian federal income tax
considerations under the Income Tax Act (Canada) and the regulations thereunder
(collectively, the "Canadian Act") applicable to the acquisition, holding and
disposition of Shares and Warrants. It is assumed that at all material times the
Units, Shares and Warrants will be listed on NASDAQ, or some other Canadian or
foreign stock exchange prescribed for the purposes of Section115 of the Canadian
Act. Comment is restricted to prospective investors (each an "Investor") who for
the purposes of the Canadian Act are not resident in Canada, hold all such
Shares and Warrants, and will hold all Common Stock acquired on exercise
thereof, solely as capital property, and whose Shares, Warrants and Common Stock
will not at any material time constitute "taxable Canadian property" for the
purposes of the Canadian Act. Generally, neither a share of Common Stock, nor a
Warrant will constitute taxable Canadian property of an Investor provided either
that the Investor did not hold such security as capital property used in
carrying on a business in Canada, or that neither the Investor nor persons with
whom the Investor did not deal at arm's length alone or together owned 25% or
more of the issued shares of any class of the Company at any time in the five
years immediately preceding a disposition of the Shares or Warrants. For these
purposes, a right or option to acquire a share, including on exercise of a
Warrant, is considered to be equivalent to a share.

This summary is based on the current provisions of the Canadian Act, the
regulations thereunder, all amendments thereto publicly proposed by the
government of Canada to the date hereof, and the published administrative
practices of Revenue Canada, Customers, Excise and Taxation. It has been assumed
that all currently proposed amendments will be enacted substantially as proposed
and there will be no other relevant change to any applicable law or practice,
although no assurance can be given in these respects. This summary does not take
into account any provincial or foreign taxation or treaty.

36
<PAGE>
This summary is of a general nature and is not, and should not be construed
as, advice to any particular Investor as to Canadian Tax consequences applicable
to the Investor. Each Investor is urged to consult with the Investor's legal
professional advisors regarding tax and other legal consequences applicable to
the Investor's particular circumstances.

EXERCISE OF WARRANT

An Investor will not incur liability for Canadian tax upon exercise of a
Warrant. The cost of the Investor of Common Stock acquired on exercise of a
Warrant will equal the adjusted cost base of the Warrant so exercised, plus any
amount payable by the Investor to exercise the Warrant.

DIVIDENDS ON COMMON STOCK

An Investor will be liable to pay Canadian withholding tax equal to 25% (or
such lesser rate as may be provided under an applicable tax treaty) of the gross
amount of any dividend actually or deemed to have been paid or credited to the
Investor on the Investor's Common Stock. The Company will be required to
withhold the tax from the gross amount of the dividend, and to remit the tax to
the Receiver General of Canada for the account of the Investor.

DISPOSITION OF SHARES OF CAPITAL STOCK

Investors will not be subject of Canadian capital gains tax on any capital
gain, nor be entitled for Canadian Tax purposes to deduct any capital loss,
realized on a disposition of one or more shares of Common Stock.

37
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

All of the 1,940,000 shares of Common Stock of the Company outstanding as of
the date of this Prospectus are "restricted securities." Of this amount, 840,000
are owned by "affiliates" of the Company, as those terms are defined in Rule 144
promulgated under the Securities Act. Absent registration under the Securities
Act, the sale of such shares is subject to Rule 144, as promulgated under the
Securities Act. In general, under Rule 144, subject to the satisfaction of
certain other conditions, a person, including an affiliate of the Company, who
has beneficially owned restricted shares of Common Stock for at least two years
is entitled to sell in brokerage transactions, within any three-month period, a
number of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class, or if the Common Stock is quoted on NASDAQ
or a stock exchange, the average weekly trading volume during the four calendar
weeks preceding the sale. Rule 144 also permits a person who presently is not
and who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock for at least three years to sell such shares without regard to any
of the volume limitations as described above. An aggregate of 125,000 shares of
Common Stock are being registered concurrently with this Offering. Robert Rubin,
a Director, owns, holds options to purchase an aggregate of 700,000 shares of
Common Stock. In the event Mr. Rubin exercises such options, the shares will be
eligible for resale under Rule 144 commencing two years after he exercises the
option. All of the Company's existing securityholders, have agreed not to sell
or otherwise dispose of any of their shares of Common stock now owned or
issuable upon the exercise of currently exercisable warrants for a period of two
years from the date of this Prospectus, without the prior written consent of the
Underwriter, except for holders of an aggregate of 500,000 shares of Common
Stock who have agreed to an identical restriction for a period of one year. No
prediction can be made as to the effect, if any, that sales of shares of Common
Stock or the availability of such shares for sale will have on the market prices
of the Company's securities prevailing from time to time. The possibility that
substantial amounts of Common Stock may be sold under Rule 144 into the public
market may adversely affect prevailing market prices for the Common Stock and
could impair the Company's ability to raise capital in the future through the
sale of equity securities. See "Shares Eligible for Future Sale."

RESTRICTIONS ON SALE IN CANADA

None of the securities including the Common Stock, the Warrants, or the
Common Stock issuable upon or exercise of the Warrants (together, the
"Securities") has been qualified for sale in any of the provinces of Canada or
to any person who is a resident in any of the provinces of Canada.

38
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell, and the Underwriter has agreed to purchase from the
Company, 1,250,000 shares of Common Stock and 1,250,000 Class A Redeemable
Common Stock Purchase Warrants. The Underwriter is committed to purchase all of
the shares of Common Stock and Warrants offered hereby on a "firm commitment"
basis, if any are purchased.

The Underwriter has advised the Company that they propose initially to offer
the Common Stock and Warrants to the public at the prices set forth on the cover
page of this Prospectus and to certain dealers at such prices less concessions
not in excess of $ per share of Common Stock and $[ ] per Warrant.

The Company and certain of its stockholders have granted to the Underwriter
an option, exercisable during the 45 calendar day period after the closing of
the Offering, to purchase from the Company and such stockholders at the initial
public offering price less underwriting discounts and the non-accountable
expense allowance, up to an aggregate of 187,500 shares of Common Stock and
187,500 Warrants for the sole purpose of covering over-allotments, if any.

The Company has agreed to pay to the Underwriter a non-accountable expense
allowance of 3% of the gross proceeds of this Offering (US $50,000 of which has
been paid). Further, the Company has agreed to reimburse the Underwriter for
certain accountable expenses relating to this Offering.

All of the Company's stockholders (other than holders of 500,000 shares as
described in the next sentence) have agreed not to sell or otherwise dispose of
any of their shares of Common Stock for a period of twenty-four (24) months from
the date of this Prospectus without the prior written consent of the
Underwriter, which consent may be granted prior to the expiration of the lock-up
period but not prior to the exercise or expiration of the Underwriter's
Over-allotment Option. Holders of an aggregate of 500,000 shares of Common Stock
have agreed to identical lock-ups except that it shall be for a period of twelve
12 months. Notwithstanding these lock-up agreements, all such persons may make
private transfers, provided that the transferees agree to be bound by the same
restrictions. An appropriate legend will be marked on the face of certificates
representing all such securities.

The Company has agreed, if requested by the Underwriter at any time within
three years after the Effective Date, to designate an individual to serve, as a
non-voting advisor to the Company's Board of Directors. The Underwriter has not
advised the Company whether it will exercise such right or, if it does so, whom
it will designate. The Underwriter's designee will receive the same
compensation, if any, for such service as other outside directors of the Board.

The Company has also agreed to retain the Underwriter, pursuant to a
consulting agreement (the "Consulting Agreement"), as the Company's financial
consultants at an aggregate monthly rate of US $5,000 for two year period
commencing on the Effective Date, all of which (US $120,000) is payable at the
closing of this Offering. Pursuant to the Consulting Agreement, the Underwriter
will render certain financial advisory and investment banking services to the
Company, including advice as to the Company's financial public relations,
internal operations, corporate finance matters, and other related matters.

In connection with the Offering, the Company has agreed to sell to the
Underwriter, for nominal consideration, a warrant to purchase from the Company
125,000 shares of Common Stock and 125,000 Warrants, each at 120% of the
offering price (the "Underwriter's Warrants"). The Shares of Common Stock and
Warrants issuable upon exercise of the Underwriter's Warrant will be identical
to the Shares of Common Stock and Warrants being offered hereby. The
Underwriter's Warrant contains anti-dilution provisions providing for adjustment
of the exercise price upon the occurrence of certain events.

The Underwriter's Warrant will be nontransferable for a period of one year
from the date of this Prospectus except to officers of the Underwriter, other
underwriters, selected dealers, or their respective officers or partners. The
holder(s) of the Underwriter's Warrant will have no voting, dividend or other

39
<PAGE>
rights of shareholders of the Company until such time as the Underwriter's
Warrant is exercised. Any gain from the sale of the Underwriter's Warrant or the
securities issuable upon exercise thereof may be deemed to be additional
underwriting compensation.

At the request of a majority of the holders of the Underwriter's Warrants
and/or underlying securities during the four-year period commencing one year
after the date of this Prospectus, the Company has agreed to file, at its
expense and on one occasion, and to use its best efforts to cause to become
effective, a new registration statement or prospectus required to permit the
public sale of the securities underlying the Underwriter's Warrant. In addition,
if at any time during the four-year period commencing one year after the date of
this Prospectus, the Company registers any of its securities or exempts such
securities from registration under the provisions of Regulation A or any
equivalent thereto, the holders of the Underwriter's Warrants will have the
right, subject to certain conditions, to include in such registration statement
at the Company's expense, all or any part of the securities underlying the
Underwriter's Warrants.

A new registration statement will be required to be filed and declared
effective before distribution to the public of the securities underlying the
Underwriter's Warrants. The Company will be responsible for the cost of
preparing such a registration statement.

During the term of the Underwriter's Warrants, the holders of the
Underwriter's Warrants are given the opportunity to profit from a rise in the
market price of the Common Stock and Warrants. To the extent that the
Underwriter's Warrants are exercised, dilution of the interests of the Company's
stockholders will occur. The Underwriter and its transferee(s) may be deemed to
be "underwriters" under the Securities Act with respect to the sale of the
Common Stock and Warrants to be received upon exercise of the Underwriter's
Warrants, and any profit realized upon such sale may be deemed to be additional
underwriting compensation. Further, the terms upon which the Company will be
able to obtain additional equity capital may be adversely affected since the
holder of the Underwriter's Warrants can be expected to exercise them at a time
when the Company would, in all likelihood, be able to obtain any needed capital
on terms more favorable to the Company than those provided in the Underwriter's
Warrants.

In addition, subject to the rules of the NASD, the Company has agreed to
engage the Underwriter as warrant solicitation agent, in connection with which
it would be entitled to a 5% fee upon exercise of the Warrants. In accordance
with NASD Notice to Members 81-38, no fee shall be paid: (i) upon the exercise
where the market price of the underlying Common Stock is lower than the exercise
price; (ii) for the exercise of Warrants held in any discretionary account;
(iii) upon the exercise of Warrants where disclosure of compensation
arrangements has not been made and documents provided to customers both as part
of the original Offering and at the time of exercise; (iv) upon the exercise of
Warrants in unsolicited transactions; or (v) unless the soliciting NASD member
is designated in writing. Notwithstanding the foregoing, no fees will be paid to
the Underwriter or any other NASD members upon exercise of the Warrants within
the first twelve months after the Effective Date. The certificates representing
the Warrants provide a space where a holder must affirmatively identify the NASD
member who solicited the exercise of such Warrant. Pursuant to the Warrant
Agreement, the Warrant Agent is responsible for determining when the fee is
owed. The Company has agreed not to engage any other firm as a warrant
solicitation agent.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
the Registration Statement of which this Prospectus forms a part, including
liabilities under the Securities Act. To the extent this section may purport to
provide exculpation from possible liabilities arising under the Federal
securities laws, it is the opinion of the Commission that such indemnification
is against public policy and is therefore unenforceable.

The foregoing is a summary of the principal terms of the Underwriting
Agreement, the Underwriter's Warrant, and the Consulting Agreement and does not
purport to be complete. Reference is made to the copies of the Underwriting
Agreement, the Underwriter's Warrant Agreement, the Warrant Agreement

40
<PAGE>
and the Consulting Agreement which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part.

Prior to the Offering, there has been no public market for the Common Stock
and the Warrants offered hereby. Consequently, the initial public offering price
of the Common Stock and the Warrants and the exercise prices and other terms of
the Warrants have been determined by the Company and the Underwriter and is not
related to the Company's asset value, earnings, book value or other such
criteria of value. Factors considered in determining the initial public offering
price of the Common Stock and the Warrants and the exercise price of the
Warrants include primarily the prospects for the industry in which the Company
operates, the Company's management, the general condition of the securities
markets and the demand for securities in similar industries.

SERVICE AND ENFORCEMENT OF LEGAL PROCESS

Service of process upon the Company, its directors and the experts named
herein, most of whom reside outside the United States, may be difficult to
obtain within the United States. Furthermore, since substantially all of the
Company's and such persons' assets are outside the United States, any judgment
obtained in the United States against the Company or such person may not be
collectible within the United States. The Company has appointed Montreal Trust
Company of Canada as its agent to receive service of process in any action
against the Company in any federal court or court in the State of New York
arising out of the offering make hereby or any purchase or sale of securities in
connection therewith.

LEGAL MATTERS

The validity of the securities which are being offered hereby will be passed
upon for the Company by Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP,
101 East 52nd Street, New York, New York 10022. Gersten Savage has in the past
represented the Underwriter and may continue to do so in the future. Certain
legal matters will be passed upon for the Underwriter by Snow Becker Krauss
P.C., 605 Third Avenue, New York 10158-0125.

EXPERTS

The financial statements of the Company as of December 31, 1995 and 1994 and
for each of the years in the three-year period ended December 31, 1995, have
been included herein and in the registration statement in reliance upon reports
of KPMG and Zaritsky Penny & Associates, independent chartered accountants,
appearing elsewhere herein, and upon the authority of said firms as experts in
accounting and auditing.

41
<PAGE>

INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of KPMG, Independent Certified Public Accountant............................... F-2
Report of Zaritsky, Penny and Associates, Independent Chartered Accoutant............. F-3
Consolidated Balance Sheet............................................................ F-4
Consolidated Statement of Operations and Retained Earnings............................ F-5
Consolidated Statement of Changes in Financial Position............................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS

We have audited the consolidated balance sheet of Med-Emerg International,
Inc. as at December 31, 1995 and the consolidated statements of operations and
retained earnings (deficit) and changes in financial position for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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, the consolidated financial statements present fairly, in all
material respects, the financial position of Med-Emerg International, Inc. as at
December 31, 1995 and the results of its operations and the changes in its
financial position for the year then ended in accordance with accounting
principles generally accepted in Canada.

Accounting principles generally accepted in Canada vary in certain
significant respects from accounting principles generally accepted in the United
States. Application of accounting principles generally accepted in the United
States would have affected results of operations for each of the years in the
two-year period ended December 31, 1995 and the shareholders' equity as of
December 31, 1995 and 1994, to the extent summarized in note 17 to the
consolidated financial statements.

The balance sheet of Med-Emerg, Inc. (a wholly owned subsidiary of Med-Emerg
International, Inc.) as at December 31, 1994 and the statements of earnings and
changes in financial position for the two-year period ended December 31, 1994,
were audited and reported on separately by other auditors who expressed an
opinion without reservation on those statements in their report dated March 15,
1995. We have audited the balance sheet of Med-Plus Health Centres Ltd. (a
wholly owned subsidiary of Med-Emerg International, Inc.) as at December 31,
1994 and the statements of earnings and changes in financial position for the
two-year period ended December 31, 1994. The contribution of Med-Plus Health
Centres Ltd. to revenues and net income of Med-Emerg International, Inc. for the
years ended December 31, 1994 and 1993 represented [14%] [10%] [17%] and [nil%}
of the respective restated totals. We also audited the combination of the
accompanying consolidated balance sheet of Med-Emerg International, Inc. as at
December 31, 1994 and the consolidated statements of operations and retained
earnings (deficit) and changes in financial position for the two-year period
ended December 31, 1994. In our opinion, such consolidated statements have been
properly combined on the basis described in note 1(a) of the notes to the
consolidated financial statements.

Chartered Accountants

Toronto, Canada
April 22, 1996 (except for note 14
which is as of January 27, 1997)

F-2
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS

We have audited the consolidated balance sheets of Med-Emerg Inc. as at
December 31, 1994 and 1993 and the consolidated statements of operations and
retained earnings and changes in financial position for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
1994 and 1993 and the results of its operations and the changes in its financial
position for the years then ended in accordance with generally accepted
accounting principles.

Chartered Accountants

London, Ontario
March 15, 1995

F-3
<PAGE>
MED-EMERG INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
------------ ------------ ------------ ------------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................................................... $ 4,703 $ 6,460 $ 5,035 $ 4,961
Accounts receivable.................................... 2,334,290 2,060,613 2,223,808 1,340,334
Prepaid and other...................................... 99,817 73,183 158,348 84,417
------------ ------------ ------------ ------------
2,438,810 2,140,256 2,387,191 1,429,712
Loans receivable (note 4)................................ 202,351 71,615 90,566 48,695
Investments (note 5)..................................... 25,030 50,000 30,000 45,000
Capital assets (note 7).................................. 219,084 139,296 154,357 140,408
Due from affiliates (note 8)............................. 52,614 -- 37,255 --
Deferred taxes........................................... 102,349 -- -- --
Goodwill (note 9)........................................ 353,318 -- -- --
------------ ------------ ------------ ------------
$ 3,393,556 $ 2,401,167 $ 2,699,369 $ 1,663,815
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness (note 10)............................ $ 1,196,362 $ 890,996 $ 1,225,295 $ 486,115
Accounts payable and accrued liabilities............... 1,879,390 918,368 1,613,008 819,160
Income taxes payable................................... -- 51,246 27,319 20,283
Current portion of long-term debt...................... 110,162 -- -- --
------------ ------------ ------------ ------------
3,185,914 1,860,610 2,865,622 1,325,558
Long-term debt (note 11)................................. 45,830 -- -- --
Shareholders' equity:
Capital stock (note 12)................................ 919,765 206 189 206
Retained earnings (deficit)............................ (757,953) 540,351 (166,442) 338,051
------------ ------------ ------------ ------------
161,812 540,557 (166,253) 338,257
Commitments (note 13)
------------ ------------ ------------ ------------
$ 3,393,556 $ 2,401,167 $ 2,699,369 $ 1,663,815
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
MED-EMERG INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)

(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED AUGUST
31 YEARS ENDED DECEMBER 31
-------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993
------------ ------------ ------------- ------------- ------------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue......................................... $ 7,172,858 $ 7,626,016 $ 10,983,553 $ 10,474,754 $ 8,939,848
Physician fees.................................. 5,622,672 5,781,849 8,385,712 7,950,712 6,786,187
------------ ------------ ------------- ------------- ------------
1,550,186 1,844,167 2,597,841 2,524,042 2,153,661
Expenses:
Salaries and benefits......................... 948,176 902,990 1,327,912 1,394,181 1,321,337
Occupancy costs and supplies.................. 234,355 256,673 375,071 340,289 329,948
General and administration.................... 305,039 277,836 345,824 343,424 340,386
Travel and marketing.......................... 128,226 76,213 120,214 121,480 180,852
------------ ------------ ------------- ------------- ------------
1,615,796 1,513,712 2,169,021 2,199,374 2,172,523
------------ ------------ ------------- ------------- ------------
Income (loss) before the undernoted items....... (65,610) 330,455 428,820 324,668 (18,862)
Other income (expense):
Depreciation.................................. (40,039) (26,415) (49,342) (46,013) (69,534)
Interest and dividends, net................... (26,609) (42,740) 54,930 (51,879) (55,431)
Budapest and Malaysia project costs........... (52,265) -- -- -- --
Writeoff of deferred start-up costs (note
3).......................................... (509,337) -- (663,448) -- --
------------ ------------ ------------- ------------- ------------
(628,250) (69,155) (657,860) (97,892) (124,965)
------------ ------------ ------------- ------------- ------------
Income (loss) before income taxes............... (693,860) 261,300 (229,040) 226,776 (143,827)
Income taxes (recovery)......................... (102,349) 59,000 71,447 52,245 (36,311)
------------ ------------ ------------- ------------- ------------
Net income (loss)............................... (591,511) 202,300 (300,487) 174,531 (107,516)
Retained earnings (deficit), beginning of
period........................................ (166,442) 338,051 338,051 163,520 336,036
Dividends....................................... -- -- (80,383) -- (65,000)
Excess of redemption price over issuance price
of common shares (note 12).................... -- -- (123,623) -- --
------------ ------------ ------------- ------------- ------------
Retained earnings (deficit), end of period...... $ (757,953) $ 540,351 $ (166,442) $ 338,051 $ 163,520
------------ ------------ ------------- ------------- ------------
------------ ------------ ------------- ------------- ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
MED-EMERG INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION

(IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
EIGHT MONTHS ENDED AUGUST
31 YEARS ENDED DECEMBER 31
-------------------------- ---------------------------------------
1996 1995 1995 1994 1993
------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash provided by (used for):

Operations:
Net income (loss)......................... $ (591,511) $ 202,300 $ (300,487) $ 174,531 $ (107,516)
Items not involving cash:
Depreciation............................ 40,039 26,415 49,342 46,013 69,534
Deferred income taxes................... (102,349) -- -- -- --
Changes in non-cash operating working
capital:
Accounts receivable..................... (10,096) (720,279) (883,474) (440,753) (208,928)
Prepaid and other....................... 69,077 9,102 (73,931) (62,299) 64,903
Accounts payable and accrued
liabilities........................... 13,011 99,208 793,848 174,710 152,716
Income taxes payable.................... (27,319) 30,963 7,036 93,418 (55,089)
------------- ----------- ------------- ----------- -----------
(609,148) (352,291) (407,666) (14,380) (84,380)

Investing:
Acquisitions.............................. (271,598) -- -- -- --
Investments............................... 4,970 (5,000) (15,000) -- (15,000)
Additions to capital assets............... (44,047) (23,171) (63,291) (34,979) (50,769)
Loans receivable.......................... (127,144) (22,920) (41,871) (1,650) --
Other..................................... -- -- -- 3,512 --
------------- ----------- ------------- ----------- -----------
(437,819) (51,091) (90,162) (33,117) (65,769)

Financing:
Issuance of common shares................. 919,576 -- -- 2 --
Issuance of long-term debt................ 155,992 -- -- -- --
Dividends................................. -- -- (80,383) -- (65,000)
Due from affiliates....................... -- -- (37,255) 46,532 81,065
Redemption of shares...................... -- -- (123,640) -- --
------------- ----------- ------------- ----------- -----------
1,075,568 -- (241,278) 46,534 16,065
------------- ----------- ------------- ----------- -----------
Increase (decrease) in cash position........ 28,601 (403,382) (739,106) (963) (134,084)
Cash position, beginning of period.......... (1,220,260) (481,154) (481,154) (480,191) (346,107)
------------- ----------- ------------- ----------- -----------
Cash position, end of period................ $ (1,191,659) $ (884,536) $ (1,220,260) $ (481,154) $ (480,191)
------------- ----------- ------------- ----------- -----------
------------- ----------- ------------- ----------- -----------

Cash position is defined as:
Cash...................................... $ 4,703 $ 6,460 $ 5,035 $ 4,961 $ 11,200
Bank indebtedness......................... (1,196,362) (890,996) (1,225,295) (486,115) (491,391)
------------- ----------- ------------- ----------- -----------
$ (1,191,659) $ (884,536) $ (1,220,260) $ (481,154) $ (480,191)
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

Med-Emerg International, Inc. and its wholly owned subsidiaries, 927563
Ontario Limited, 927564 Ontario Limited, Med-Emerg Inc., Canadian Medical Centre
s.r.o. and Med-Plus Health Centres Ltd., are incorporated under the Ontario
Business Corporations Act. The Companies operate in one industry segment under
the trade name Med-Emerg International and specialize in the coordination and
delivering of emergency-related health care services, in both the Canadian and
International workplace.

1. SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of consolidation:

On January 22, 1996, the newly incorporated Med-Emerg International, Inc.
(the "Company") acquired all of the shares of two related companies,
927563 Ontario Inc. and 927564 Ontario Inc., in exchange for 2,333,333
shares of the Company. The acquisition was made under the tax free
rollover provisions of the Income Tax Act and has been recorded at the
acquired companies aggregate net book values of $(166,253).

These acquisitions have been recorded in a manner similar to a pooling of
interests and the consolidated financial statements reflect the
operations of the Company and the predecessor entities for all years
presented. In addition, the assets and liabilities acquired have been
recorded at their historic book values, in the predecessor entities.

(b) Principles of consolidation:

The consolidated statements include the accounts of Med-Emerg
International, Inc. and its subsidiaries (collectively called the
"Company").

Investments in jointly controlled partnerships are accounted for using
the proportionate consolidation method whereby the Company's
proportionate share of revenues, expenses, assets and liabilities is
recorded in the accounts.

Significant intercompany accounts and transactions have been eliminated.

Inventory consists of medical materials which are valued at the lower of
cost and net realizable value. Cost is determined on a first-in,
first-out basis.

(d) Investments:

Investments consisting primarily of venture capital investments are
carried at the lower of cost and estimated realizable value.

(e) Development and start-up costs:

Direct costs incurred, net of any revenue, during the development and
start-up period for a new clinic are deferred until the clinic reaches a
commercial level of activity, and amortized on a straight-line basis over
three years. If a subsequent decision is made to discontinue the clinic,
or if there is no longer reasonable assurance that the amounts deferred
are recoverable from operations of the clinic, the remaining balance is
written off.

F-7
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(f) Use of estimates:

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements
in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.

(g) Capital assets:

Capital assets are stated at cost. Depreciation is provided on the
carrying values of the assets using the following methods and annual
rates:

<TABLE>
<CAPTION>
ASSET BASIS RATE
- ----------------------------------------- ----------------------------------------- ---------
<S> <C> <C>
Furniture and fixtures................... Declining balance........................ 20%
Computer software........................ Declining balance........................ 100%
Computer hardware........................ Declining balance........................ 30%
Leasehold improvements................... Straight line............................ 5 years
</TABLE>

(h) Goodwill:

Goodwill is recorded at cost and is being amortized over a period of 10
years. The company assesses the recoverability of goodwill by determining
whether the amortization of the goodwill balance over its remaining life
can be recovered through projected discounted future operating results.
Impairment, if any, is measured based upon an estimate of the fair value
of the goodwill.

(i) Revenue recognition:

The Company's operations are subject to extensive government regulation.
Substantially all of the Company's operating revenue is derived from
government funded and administered programs. In Canada, the health care
system is publicly administered and is largely considered not for profit.
A large for profit health care sector nevertheless co-exists within the
non-profit section. Ontario Health Insurance Plan fee for service over
the past three years has been "clawed back" to ensure a total spending
freeze of $3.8 billion per year in Ontario. In fiscal year 1996-97, the
government announced a lowering of billing thresholds for all physicians
in the province. The thresholds were lowered to levels which are
estimated to affect as many as 30% of physicians. Once billings exceed
these thresholds, further billings are discounted by 33%, 66% and 75%.

Clawback adjustments for prior periods or estimates for the current year
have been reflected in the results of operations to the extent they are
not recoverable from physicians and hospitals.

2. ACQUISITIONS:

Effective August 1, 1996, the Company purchased certain assets and assumed
certain liabilities of the St. George Medical Clinic for a note payable of
$155,992 (see note 11) and 75,000 common shares of the Company valued at $75,000

F-8
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

2. ACQUISITIONS: (CONTINUED)
Effective January 1, 1996, the Company purchased a 33 1/3% interest in
Glenderry Medical Clinic, Partnership for consideration of $27,208.

Effective September 18, 1995, the Company purchased 60% of the outstanding
shares of Canadian Medical Centres s.r.o., a medical clinic in Prague, Czech
Republic by agreeing to fund development and start-up costs. The remaining 40%
of the shares were acquired by December 31, 1995 as part of the continued
funding.

The following is a summary of assets purchased and liabilities assumed:

<TABLE>
<CAPTION>
AUGUST 31,
1996
ST. GEORGE GLENDERRY TOTAL
----------- -------------- -----------
<S> <C> <C> <C>
Total assets....................................... $ 113,677 $ 55,189 $ 168,866
Goodwill........................................... 334,032 22,069 356,101
Less liabilities assumed........................... (216,717) (36,652) (253,369)
----------- -------------- -----------
230,992 40,606 271,598
Cash............................................... -- (13,398) (13,398)
----------- -------------- -----------
$ 230,992 $ 27,208 $ 258,200
----------- -------------- -----------
----------- -------------- -----------
</TABLE>

Summarized unaudited balance sheet information of the Company's 33 1/3%
interest in Glenderry Medical Clinic partnership at August 31, 1996 is as
follows:

<TABLE>
<S> <C>
Current assets.................................................... $ 53,737
Capital assets, net............................................... 3,231
Current liabilities............................................... (44,776)
---------
Equity............................................................ $ 12,192
---------
---------
</TABLE>

Summarized unaudited results of operations of the Company's partnership for
the eight months ended August 31, 1996 are as follows:

<TABLE>
<S> <C>
Revenue........................................................... $ 180,153
Expenses.......................................................... 173,099
---------
Net income........................................................ $ 7,054
---------
---------
</TABLE>

The proportionate taxable income or loss of the partnership is included in
the taxable income of the respective partners. Accordingly, no provisions for
income taxes on this entity is included in the above amounts.

F-9
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

3. WRITEOFF OF DEFERRED START-UP COSTS:
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
--------------------- ---------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
---------- --------- ---------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Writeoff of deferred start-up project costs............................... $ 466,462 $ -- $ 663,448 $ --
Writeoff of advances relating to Malaysia project......................... 42,875 -- -- --
---------- --------- ---------- ---------
$ 509,337 $ -- $ 663,448 $ --
---------- --------- ---------- ---------
---------- --------- ---------- ---------
</TABLE>

At December 31, 1995, the Company owned 100% of the shares of Canadian
Medical Centres s.r.o., a medical clinic in Prague, Czech Republic. Subsequent
to the acquisition, the Company determined that there was no reasonable
assurance that the deferred development and start-up costs would be recovered
from future operations. Deferred development and start-up costs totalling
$663,448 have been written off at December 31, 1995. Additional costs incurred
subsequent to the acquisition totalling $466,462 have been written off for the
eight month period ended August 31, 1996. The Company is no longer providing
funding for the clinic in Prague.

4. LOANS RECEIVABLE:
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
--------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
---------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Loan to Preventative Health Innovations Inc., unsecured non-interest
bearing, with no specific repayment terms.......................... $ 54,880 $ -- $ 42,342 $ --
Housing loan to directors, non-interest bearing, no specific terms of
repayment (i)...................................................... 48,224 48,224 48,224 48,695
Loan to officer, non-interest bear-ing, repayable over a five-year
period with principal repayments commencing December 1998.......... 60,000 -- -- --
Shareholders advance, non-interest bearing with no specific terms of
repayment (i)...................................................... 39,247 23,391 -- --
---------- --------- --------- ---------
$ 202,351 $ 71,615 $ 90,566 $ 48,695
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>

- ------------------------

(i) These loans are to be repaid as described in note 6.

F-10
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

5. INVESTMENTS:
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
-------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
--------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Inter Health Canada Limited........................................... $ 5,000 $ 5,000 $ 5,000 $ --
Glenderry Medical Clinic, Partnership................................. -- -- 25,000 --
Oxford Medical Group Ltd.............................................. -- 30,000 -- 30,000
Registron and Rugs Limited............................................ -- 15,000 -- 15,000
Urgent Care Centre.................................................... 20,030 -- -- --
--------- --------- --------- ---------
$ 25,030 $ 50,000 $ 30,000 $ 45,000
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

6. RELATED PARTY TRANSACTIONS:

The purchase of the 33 1/3% partnership interest in Glenderry Medical
Clinic, as described in note 2, was purchased from the Chief Executive Officer
of the Company. The proceeds of the sale were used to repay a loan from the
Company to the Chief Executive Officer.

Concurrent with the initial public offering disclosed in note 14, the
Company will repurchase 37,456 common shares held by directors, for
consideration of $2.75 U.S. per share for aggregate proceeds of $140,085. The
proceeds will be used to repay the loans to directors and shareholders totalling
$87,471, as described in note 4, as well as amounts due from affiliates
totalling $52,614.

7. CAPITAL ASSETS:
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
ACCUMULATED 1996 1995 1995 1994
COST DEPRECIATION NET NET NET NET
---------- ------------ ---------- ---------- ---------- ----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Furniture and fixtures.......................... $199,554 $ 105,876 $ 93,678 $ 63,469 $ 58,133 $ 68,714
Computer software............................... 71,123 70,076 1,047 5,602 1,834 311
Computer hardware............................... 266,189 150,063 116,126 62,569 88,210 60,943
Leasehold improvements.......................... 83,372 75,139 8,233 7,656 6,180 10,440
---------- ------------ ---------- ---------- ---------- ----------
$620,238 $ 401,154 $ 219,084 $ 139,296 $ 154,357 $ 140,408
---------- ------------ ---------- ---------- ---------- ----------
---------- ------------ ---------- ---------- ---------- ----------
</TABLE>

8. DUE FROM AFFILIATES:

The amounts due from affiliates are non-interest bearing and due on demand.
Repayment of these amounts is described in note 6 above.

F-11
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

9. GOODWILL:
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
--------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
---------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Goodwill............................................ $ 356,101 $ -- $ -- $ --
Accumulated amortization............................ (2,783) -- -- --
---------- --------- --------- ---------
$ 353,318 $ -- $ -- $ --
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>

10. BANK INDEBTEDNESS:

<TABLE>
<CAPTION>
DECEMBER 31
AUGUST 31 ------------------------
------------------------
1996 1995 1995 1994
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Bank indebtedness........................ $ 1,183,340 $ 855,081 $ 1,198,272 $ 423,855
Bank loan and overdraft.................. 13,022 35,915 27,023 62,260
------------ ---------- ------------ ----------
$ 1,196,362 $ 890,996 $ 1,225,295 $ 486,115
------------ ---------- ------------ ----------
------------ ---------- ------------ ----------
</TABLE>

The bank indebtedness forms part of the Companies' bank credit facilities
totalling $1,200,000 which may be drawn on by demand loans at the bank's prime
rate plus 1 1/2%. Both the bank indebtedness and the bank loan are secured by a
general security agreement over all of the Companies' assets.

The terms of the banking agreement contain, among other provisions,
requirements for maintaining defined levels of net worth and financial ratios.
At August 31, 1996, the Company did not comply with the net worth covenant and
one of its financial ratio covenants. As a result of these defaults, the bank is
in a position to demand repayment of its loan; however, the private offering and
sale of promissory notes described in note 14(d) that the Company completed in
December 1996 for net proceeds of $425,000 U.S. were initially applied to reduce
the Company's bank borrowings.

11. LONG-TERM DEBT:
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
--------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
---------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Promissory note, non-interest bearing, repayable in 15 equal installments
commencing November 10, 1996............................................ $ 155,992 $ -- $ -- $ --
Less current portion...................................................... (110,162) -- -- --
---------- --------- --------- ---------
$ 45,830 $ -- $ -- $ --
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>

F-12
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

12. CAPITAL STOCK:
<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
---------------------- ----------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
---------- ---------- ---------- ----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Authorized:
Unlimited number of Class "A", redeemable,
retractable, non-cumulative preferred
shares, $10 par value....................
Unlimited number of Class "B", redeemable,
retractable, non-cumulative preferred
shares, $10 par value....................
Unlimited number of common shares..........
Issued:
3,408,333 common shares.................... $ 919,765 $ 206 $ 189 $ 206
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

<TABLE>
<CAPTION>
COMMON SHARES
----------------------
<S> <C> <C>
NUMBER AMOUNT
---------- ----------
Balance, December 31, 1993, December 31, 1994 and August 31, 1995.... 200 $ 206
Shares redeemed on reorganization.................................... (17) (17)
---------- ----------
Balance, December 31, 1995........................................... 183 189
Shares redeemed on reorganization.................................... (183) (189)
Issuance of shares upon reorganization............................... 2,333,333 189
Shares issued on private placement................................... 1,000,000 844,576
Shares issued on purchase of St. George Medical Clinic............... 75,000 75,000
---------- ----------
Balance, August 31, 1996............................................. 3,408,333 $ 919,765
---------- ----------
---------- ----------
</TABLE>

In connection with the acquisition of all of the common shares of 927563
Ontario Inc. and 927564 Ontario Inc. as described in note 1(a), the Company
issued as consideration 2,333,333 common shares.

On January 22, 1996, the Company completed a private stock offering, issuing
1,000,000 common shares for net proceeds of $844,576 after deducting issue costs
of $155,424, and 1,000,000 warrants to acquire common shares at $2.00 per share,
expiring in January 1999. The 1,000,000 Warrants were subsequently returned to
the Company for cancellation in connection with the November 1996 restructuring.

In connection with the acquisition described in note 2, on August 1, 1996,
the Company issued 75,000 common shares at a price of $1.00 per share.

F-13
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

13. COMMITMENTS:

The Company is committed to payments under operating leases for certain of
its premises and equipment totalling $537,000. Annual payments for the next five
years are as follows:

<TABLE>
<S> <C>
1997.............................................................. $ 188,000
1998.............................................................. 146,000
1999.............................................................. 151,000
2000.............................................................. 120,000
2001 and thereafter............................................... 112,000
---------
$ 717,000
---------
---------
</TABLE>

14. SUBSEQUENT EVENT:

On September 5, 1996, the Company entered into an agreement to complete an
initial public offering of 1,250,000 shares of Common Stock and 1,250,000
Warrants at initial public offering prices of $3.90 U.S. and $0.10 U.S.,
respectively for an aggregate public offering of $5,000,000 U.S. Each unit
consists of one (1) share of common stock and one (1) Class A warrant entitling
the holder to one share of common stock at a price of $5.00 U.S. for a five year
period from the date of the offering. Upon successful completion of the
offering, the Company's stock would be listed on NASDAQ.

On November 1, 1996, the Board of Directors authorized the following capital
restructuring:

(a) Under the tax free rollover provisions of the Income Tax Act, the
controlling shareholders will exchange 2,203,333 common shares for
500,000 voting preferred shares, having an ascribed value of $4,500,000
U.S. at date of issuance. Each share entitles the holder to eight votes
per share until the Company engages in a public offering of its
securities and at which time each share will be entitled to one vote per
share having a redemption price of $9.00 U.S. per share or $4,500,000
U.S. Each share is convertible into common stock of the Company at the
option of the holder at a price equal to $9.00 U.S. per common share for
a ten year period from the date of issuance. At the end of the ten year
period, the Company has the unrestricted right to redeem the preferred
shares for their redemption amount or issue the equivalent number of
common shares based upon their then market value.

The preferred shares are entitled to receive a cumulative dividend of
27 CENTS U.S. per share payable in cash or equivalent common shares based on
their ascribed value.

The issuance of the preferred shares will result in a charge to retained
earnings based on their ascribed value at time of issuance.

In the event that the initial public offering contemplated by the letter
of intent dated September 5, 1996 has not closed by September 5, 1997,
the holders of any preferred shares of the Company, shall have the right,
at any time up to November 30, 1997, to convert such preferred shares
into common shares in the capital of the Company as will result in such
holders owning

F-14
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

14. SUBSEQUENT EVENT: (CONTINUED)
common shares of the Company in the same percentage as the original
holders of preferred shares owned at September 5, 1996.

(b) The Company will issue of 610,000 common shares to Hampton House
International Corp. in consideration of past services. The issuance of
common shares will be recorded at an ascribed value determined at $1.00
per share or $610,000 as a charge to compensation.

(c) All of the common share purchase warrants issued by the Company on
January 22, 1996 were surrendered. No consideration was paid.

In the event that the initial public offering contemplated by the letter
of intent dated September 5, 1996 has not closed by September 5, 1997,
the Company will reissue as soon as reasonably practicable, common share
purchase warrants in substantially the same terms to holders of the
surrendered warrants.

(d) In January 1997, the Company completed a private offering and sale of
promissory notes with a principal amount of $500,000 U.S. and the
issuance of 125,000 common shares. The issuance of common shares will
result in a charge to income based on the $1.00 ascribed value of the
shares issued.

(e) In addition, the Company will issue an aggregate of 50,000 common shares
over the next twelve month period to Mr. Robert Rubin for services
rendered in his capacity as a director of the Company.

Under a stock option plan, Mr. Robert Rubin will be granted an option to
purchase 700,000 common shares of the Company at an exercise price of
$1.00 per share.

(f) The Board of Directors intends to adopt a Stock Option Plan (the "Plan")
and to seek stockholder approval for the Plan. Pursuant to the Plan,
options to acquire an aggregate of 250,000 shares of common stock may be
granted. The Plan is to provide for grants to employees, consultants and
directors of the Company to enable them to purchase shares.

15. EARNINGS (LOSS) PER SHARE:

The earnings (loss) per share immediately prior to the initial public
offering described in note 14 is as follows:
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED
AUGUST 31 YEARS ENDED DECEMBER 31
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Basic................................................. $ (0.18) $ 0.09 $ (0.13) $ 0.07 $ (0.05)
Pro forma............................................. $ (0.29) $ 0.09 $ (0.13) $ 0.07 $ (0.05)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

Earnings per share are calculated using the weighted daily average number of
shares outstanding for the periods presented after giving retroactive effect to
the share exchange that occurred January 22, 1996.

F-15
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

15. EARNINGS (LOSS) PER SHARE: (CONTINUED)
Pro forma earnings per share reflect the dilutive effect, if any, which would
result under the reorganization described in note 14(a).

16. INCOME TAXES:
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED
AUGUST 31 YEARS ENDED DECEMBER 31
---------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993
----------- --------- --------- --------- ----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current................................................. $ -- $ 59,000 $ 71,447 $ 52,245 $ (36,311)
Deferred................................................ (102,349) -- -- -- --
----------- --------- --------- --------- ----------
$ (102,349) $ 59,000 $ 71,447 $ 52,245 $ (36,311)
----------- --------- --------- --------- ----------
----------- --------- --------- --------- ----------
</TABLE>

The effective rate of income taxes provided in the statements of operations
vary from the combined federal and provincial statutory income rates as follows:
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED
% OF PRETAX INCOME
AUGUST 31 YEARS ENDED DECEMBER 31
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income tax computed at statutory income tax rate.......... (44.6) 44.6 (44.6) 44.3 (44.3)
Reduction for small business deduction.................... 22.0 (22.0) 22.0 (21.3) 21.3
Writeoff of non-deductible start-up costs................. 7.8 -- 66.0 -- --
Other..................................................... -- -- (12.3) -- (2.2)
--------- --------- --------- --------- ---------
(14.8) 22.6 31.1 23.0 (25.2)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

At August 31, 1996, the Company has available non-capital loss carryforwards
of $65,000 to utilize against future taxable income. These losses expire in
2003. In addition, the Company has capital loss carryforwards of approximately
$766,000, which may be applied against future taxable capital gains. No
accounting recognition has been given to these capital loss carryforwards.

17. CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES:

These financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") in Canada. In certain respects, GAAP in
the United States differ from those in Canada. Following is a summary of the
effect of significant differences in GAAP on the Company's consolidated
financial statements.

F-16
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

17. CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES: (CONTINUED)
Consolidated statements of operations:

If United States GAAP were employed, net income (loss) for the period would
be adjusted as follows:
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED
AUGUST 31 YEARS ENDED DECEMBER 31
----------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993
----------- ---------- ----------- ---------- -----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net income (loss) based on Canadian GAAP.......... $ (591,511) $ 202,300 $ (300,487) $ 174,531 $ (107,516)
Current effect of (SFAS No. 109).................. 7,000 -- -- -- --
----------- ---------- ----------- ---------- -----------
Net income (loss) based on United States GAAP..... $ (584,511) $ 202,300 $ (300,487) $ 174,531 $ (107,516)
----------- ---------- ----------- ---------- -----------
----------- ---------- ----------- ---------- -----------
Earnings (loss) per share......................... $ (0.18) $ 0.09 $ (0.13) $ 0.07 $ (0.05)
----------- ---------- ----------- ---------- -----------
----------- ---------- ----------- ---------- -----------
</TABLE>

The United States Statement of Financial Accounting Standards (SFAS No. 109)
"Accounting for Income Taxes", requires a change from the deferred method of
accounting for income taxes to the asset and liability method of accounting for
income taxes.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as follows:

<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
--------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
---------- --------- --------- ---------
Deferred tax assets:
Net operating loss carryforwards........................................ $ 196,000 $ -- $ -- $ --
Property, plant and equipment, principally due to differences in
depreciation............................................................ 7,000 -- -- --
---------- --------- --------- ---------
203,000 -- -- --
Less:
Valuation allowance..................................................... 93,000 -- -- --
---------- --------- --------- ---------
110,000 -- -- --
Deferred tax liabilities:
Goodwill................................................................ 46,000 -- -- --
---------- --------- --------- ---------
Net deferred tax.......................................................... $ 64,000 $ -- $ -- $ --
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>

F-17
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

17. CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES: (CONTINUED)
The balance sheet effect of applying SFAS No. 109 would be as follows:

<TABLE>
<CAPTION>
AUGUST 31 DECEMBER 31
--------------------- --------------------
<S> <C> <C> <C> <C>
1996 1995 1995 1994
---------- --------- --------- ---------
Deferred tax asset (as previously shown)................................... $ 102,349 $ -- $ -- $ --
Adjustments to deferred taxes as a result of additional goodwill arising on
acquisition.............................................................. (46,000) -- -- --
Property, plant and equipment.............................................. 7,000 -- -- --
Other...................................................................... 651 -- -- --
---------- --------- --------- ---------
Deferred taxes--U.S. GAAP.................................................. $ 64,000 $ -- $ -- $ --
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>

Consolidated balance sheets

Deferred taxes:

As a result of adopting Statement 109, at August 31, 1996, net deferred
income tax liabilities would have increased by $39,000 with an offsetting
credit to retained earnings of $7,000 and a debit to goodwill of $46,000.

Deferred start-up costs:

Under Canadian GAAP, development and start-up costs, which meet certain
criteria, are deferred and amortized. Under United States GAAP,
development and start-up costs are expensed as incurred. As a result of
the write-off at August 31, 1996 and December 31, 1995, of deferred
development and start-up costs, this difference has no effect on net
income under United States accounting principles.

Fair value of financial instruments:

Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments, requires disclosure of the fair
value and the methods and significant assumptions used to estimate fair
value for all financial instruments. The fair value of trade accounts and
other receivables and trade accounts payable approximates their book
value. The fair value of the Company's note payable is not significantly
different from its carrying value due to the relatively short term of the
note.

Consolidated statement of changes in financial position:

Under United States GAAP, bank indebtedness would not be included as a
component of cash position in the consolidated statement of changes in financial
position. Accordingly, the $28,933 decrease at August 31, 1996 (August 31,
1995--$404,881 increase; December 31, 1995--$739,180 increase; December 31,
1994--$5,276 increase; December 31, 1993 -$143,484 increase) would be presented
as a financing activity for each year.

In addition, under United States GAAP, the acquisition would be reported on
a cash basis in the consolidated statement of changes in financial position.
Accordingly, under investing activities, acquisitions

F-18
<PAGE>
MED-EMERG INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS) (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(INFORMATION RELATING TO THE EIGHT MONTHS ENDED AUGUST 31, 1996 AND 1995 IS
UNAUDITED)

17. CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES: (CONTINUED)
of $271,598, reported as of August 31, 1996 would be reduced by $230,992, with
reductions under financing activities to Issuance of Promissory Notes of
$155,992 and issuance of common shares of $75,000.

18. CONTINGENCIES:

Partnership interest:

The Company is contingently liable for some or all of the obligations of the
partnership in which it has a direct interest. However, against this contingent
liability, the Company would have a claim upon the assets of the partnership
and, in certain limited cases, their partners.

Contracts with physicians:

The Company contracts with physicians as independent contractors, rather
than employees, to fulfill its contractual obligations to hospitals. Therefore,
the Company did not historically, and the Company does not currently, withhold
income taxes, make unemployment insurance and Canada pension plan payments, or
provide worker's compensation insurance with respect to such independent
contractors. The payment of applicable taxes is regarded as the responsibility
of such independent contractors. Management believes that classification of
physicians as independent contractors although subject to challenge by taxation
authorities is standard industry practice and proper for tax purposes.

Due to the nature of its business, the Company and certain physicians who
provided services on its behalf may be the subject of medical malpractice
claims, with the attendant risk of substantial damage awards. The most
significant source of potential liability in this regard is the alleged
negligence of physicians placed by the Company at contract hospitals. Physicians
staffed by the Company maintain their own malpractice insurance. To the extent
such physicians were regarded as agents of the Company in the practice of
medicine, a patient could sue the Company for any medical negligence of such
physicians. The Company does not believe it could be held liable for an act of a
physician staffed by it unless it could be shown that the Company was negligent
in assessing the qualifications of such physician. In addition, the Company
could be found in certain instances to have been negligent in performing its
contract management services for the hospitals even if no agency relationship
between the Company and/or such physician exists.

Financing:

The Company believes, although there can be no assurance, that the proceeds
of the public offering discussed in note 14 and operating revenues will provide
sufficient capital to finance the Company's anticipated growth and
administrative charges during the 12 months following completion of the
offering. If the Company encounters unexpected expenses during such period, or
if after such period, revenues from operations are not sufficient to fund
operations or growth, the Company may require additional financing. There can be
no assurance that the Company will be able to obtain the requisite additional
financing on acceptable terms, that the Company will be able to sell any
securities or obtain bank borrowings or other debt financing, or what the terms
of the equity transactions or borrowings might be.

F-19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO UNDERWRITER, DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE AND REPRESENTATIONS OTHER THAN THOSE CON-TAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICA-TION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary..............................
Risk Factors....................................
Use of Proceeds.................................
Dilution........................................
Capitalization..................................
Dividends.......................................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations....................................
Business........................................
Management......................................
Certain Transactions............................
Principal Stockholders..........................
Description of Securities.......................
Shares Eligible for Future Sale.................
Underwriting....................................
Legal Matters...................................
Experts.........................................
Financial Statements............................ F-1
</TABLE>

------------------------

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. IN
ADDITION, DEALERS ARE OBLIGATED TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTION.

MED-EMERG, INC.
1,250,000 SHARES OF COMMON STOCK
1,250,000 CLASS A REDEEMABLE COMMON
STOCK PURCHASE WARRANTS.

NETWORK 1
FINANCIAL SECURITIES, INC.

, 1997

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED , 1997

PROSPECTUS

MED-EMERG INTERNATIONAL INC.
125,000 SHARES OF COMMON STOCK

This Prospectus relates to 125,000 shares of common stock, no par value (the
"Common Stock") of MED-EMERG INTERNATIONAL INC. (the "Company") that may be sold
by the selling securityholders named herein (the "Selling Securityholders"). See
"Selling Securityholders." The 125,000 shares of Common Stock being offered
hereby were issued in connection with a bridge financing completed by the
Company in January 1997. The Company will not receive any proceeds from the sale
of the Common Stock. The expenses in connection with the preparation of this
Prospectus and the registration of the Common Stock will be paid by the Company.
The Selling Securityholders have agreed not to sell or otherwise dispose of the
Common Stock for two years from the date of this Prospectus without the prior
written consent of Network 1 Financial Securities, Inc., the underwriter for a
concurrent public offering of units of the Company's securities.

The Selling Securityholders may sell the shares of Common Stock from time to
time directly to purchasers, or through broker-dealers who may receive
compensation in the form of discounts or commissions from the Selling
Securityholders or purchasers. Sales of the shares of Common Stock may be
effected by broker-dealers in ordinary brokerage transactions or block
transactions on the Nasdaq SmallCap Market, through sales to one or more dealers
who may resell as principals, in privately negotiated transactions or otherwise,
at the market price prevailing at the time of sale, a price related to such
prevailing market price or at a negotiated price. Usual and customary or
specifically negotiated brokerage fees may be paid by the Selling
Securityholders in connection therewith. To the Company's knowledge, none of the
Selling Securityholders has entered into any underwriting agreements. The
Company has offered, by separate Prospectus dated the date hereof, 1,250,000
shares of Common Stock and 1,250,000 Redeemable Common Stock Purchase Warrants
(the "IPO"). Each of the Selling Securityholders has agreed not to sell or
otherwise dispose of the Common Stock for two years from the date of this
Prospectus without the prior written consent of Network 1 Financial Securities,
Inc., the underwriter of the IPO.

Prior to the Offering, there has been no public market for the Common Stock
and Warrants and no assurance can be given that any such market will develop
upon completion of the Offering. Application has been made to have the Common
Stock and Warrants included for quotation on the NASDAQ SmallCap Market under
the symbols "MEDE" and "MEDEW," respectively and for listing on the Boston Stock
Exchange under the symbols "MED" and "MEDW," respectively. The initial public
offering price of the Common Stock and the Warrants and the exercise price and
other terms of the Warrants have been determined by negotiation between the
Company and the Underwriter and do not necessarily bear any relation to the
Company's earnings, assets, book value, net worth or any other recognized
criteria of value. See "Underwriting."

AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK AND IMMEDIATE AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
COMMENCING ON AND DILUTION ON PAGE .

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is , 1997
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

The Selling Securityholders may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Act") and any profits
realized by them may be deemed to be underwriting commissions. Any
broker-dealers that participate in the distribution of the shares of Common
Stock also may be deemed to be "underwriters," as defined in the Act, and any
commissions or discounts paid to them, or any profits realized by them upon the
resale of any securities purchased by them as principals, may be deemed to be
underwriting commissions or discounts under the Act. The sale of the Common
Stock by the Selling Securityholders is subject to the prospectus delivery
requirements of the Act.

The shares of Common Stock offered hereby have been registered pursuant to
registration rights granted to the Selling Securityholders. The Selling
Securityholders are responsible for payment of brokerage commissions and
discounts incurred in connection with the sale of the Common Stock. The Company
has agreed to indemnify the Selling Securityholders against certain liabilities,
including liabilities under the Act.

2
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

THE SELLING SECURITYHOLDERS' OFFERING

<TABLE>
<S> <C>
Securities Offered........................... 125,000 shares of Common Stock, no par value.
See "Description of Securities."

Common Stock Outstanding(1).................. 3,190,000

Risk Factors................................. The securities offered hereby involve a high
degree of risk and immediate substantial
dilution to public investors. See "Risk
Factors" and "Dilution".

NASDAQ Symbol(2)............................. Common Stock: MEDE

BSE Symbols(2)............................... Common Stock: MED
</TABLE>

- ------------------------

(2) The proposed Nasdaq and Boston Stock Exchange trading symbols do not imply
that a liquid and active market will be developed or sustained for the
Common Stock upon completion of this Offering.

6
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

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7
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

that such proposal will be adopted or if adopted, will be adopted in its current
form.

NO DIVIDENDS. The Company does not intend to pay any dividends on its
common stock in the foreseeable future. The Company currently intends to retain
any earnings to finance the operations of the Company. In addition, the
Company's Preferred Stock prohibits the payment of any dividends on the Common
Stock until all accrued dividends have been paid on the Preferred Stock. See
"Dividend Policy" and "Description of Securities."

SHARES ELIGIBLE FOR FUTURE SALE. All of the 1,940,000 shares of Common
Stock of the Company outstanding as of the date of this Prospectus are
"restricted securities," of which 840,000 are owned by "affiliates" of the
Company, as those terms are defined in Rule 144 promulgated under the Securities
Act. Absent registration under the Securities Act, the sale of such shares is
subject to Rule 144, as promulgated under the Securities Act. In general, under
Rule 144, subject to the satisfaction of certain other conditions, a person,
including an affiliate of the Company, who has beneficially owned restricted
shares of Common Stock for at least two years is entitled to sell in brokerage
transactions, within any three-month period, a number of shares that does not
exceed the greater of 1% of the total number of outstanding shares of the same
class, or if the Common Stock is quoted on NASDAQ or a stock exchange, the
average weekly trading volume during the four calendar weeks preceding the sale.
Rule 144 also permits a person who presently is not and who has not been an
affiliate of the Company for at least three months immediately preceding the
sale and who has beneficially owned the shares of Common Stock for at least
three years to sell such shares without regard to any of the volume limitations
as described above. An aggregate of 125,000 shares of Common Stock are being
registered herein. Robert Rubin, a Director, holds options to purchase an
aggregate of 700,000 shares of Common Stock. In the event Mr. Rubin exercises
such options, the shares will be eligible for resale under Rule 144 commencing
two years from the exercise of the options. All of the Company's existing
securityholders have agreed not to sell or otherwise dispose of any of their
shares of Common stock for a period of two years from the date of this
Prospectus, without the prior written consent of the Underwriter, except for
holders of an aggregate of 500,000 shares of Common Stock who have agreed to an
identical restriction for a period of one year. There can be no assurance that
the Company will not issue additional options currently available for issuance.
No prediction can be made as to the effect, if any, that sales of shares of
Common Stock or the availability of such shares for sale will have on the market
prices of the Company's securities prevailing from time to time. The possibility
that substantial amounts of Common Stock may be sold under Rule 144 into the
public market may adversely affect prevailing market prices for the Common Stock
and could impair the Company's ability to raise capital in the future through
the sale of equity securities. See "Shares Eligible for Future Sale."

12
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

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13
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sale of the shares
of Common Stock.

14
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

This page intentionally left blank

15
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

This page intentionally left blank

16
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

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17
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

SHARES ELIGIBLE FOR FUTURE SALE

Of the 3,190,00 shares of Common Stock outstanding upon completion of the
IPO, 1,940,000 shares are "restricted securities." Of such amount, 840,000 are
owned by "affiliates" of the Company, as those terms are defined in Rule 144
promulgated under the Securities Act. Absent registration under the Securities
Act, the sale of such shares is subject to Rule 144, as promulgated under the
Securities Act. In general, under Rule 144, subject to the satisfaction of
certain other conditions, a person, including an affiliate of the Company, who
has beneficially owned restricted shares of Common Stock for at least two years
is entitled to sell in brokerage transactions, within any three-month period, a
number of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class, or if the Common Stock is quoted on NASDAQ
or a stock exchange, the average weekly trading volume during the four calendar
weeks preceding the sale. Rule 144 also permits a person who presently is not
and who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock for at least three years to sell such shares without regard to any
of the volume limitations as described above. An aggregate of 125,000 shares of
Common Stock are being registered herein. Robert Rubin, a Director, owns, holds
options to purchase an aggregate of 700,000 shares of Common Stock. In the event
Mr. Rubin exercises such options, the shares will be eligible for resale under
Rule 144 commencing two years after he exercises the option. All of the
Company's existing securityholders have agreed not to sell or otherwise dispose
of any of their shares of Common stock now owned or issuable upon the exercise
of currently exercisable warrants for a period of two years from the date of
this Prospectus, without the prior written consent of the Underwriter, except
for holders of an aggregate of 500,000 shares of Common Stock who have agreed to
an identical restriction for a period of one year. No prediction can be made as
to the effect, if any, that sales of shares of Common Stock or the availability
of such shares for sale will have on the market prices of the Company's
securities prevailing from time to time. The possibility that substantial
amounts of Common Stock may be sold under Rule 144 into the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital in the future through the sale of equity
securities.

RESTRICTIONS ON SALE IN CANADA

The Common Stock has not been qualified for sale in any of the provinces of
Canada or to any person who is a resident in any of the provinces of Canada.

42
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

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43
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

This page intentionally left blank

44
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

CONCURRENT OFFERING

Concurrently with this Offering, 1,250,000 shares of Common Stock and
1,250,000 Redeemable Common Stock Purchase Warrant (not including the
underwriter's over-allotment option) have been registered by the Company under
the Act, pursuant to the Company Prospectus included within the Registration
Statement of which this Prospectus forms a part. The Common Stock offered hereby
may not be sold prior to twenty-four months from the date of this prospectus
without the consent of the underwriter of the IPO.

SERVICE AND ENFORCEMENT OF LEGAL PROCESS

LEGAL MATTERS

The validity of the securities which are being offered hereby will be passed
upon for the Company by Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP,
101 East 52nd Street, New York, New York 10022. Gersten Savage has in the past
represented the Underwriter of the IPO and may continue to do so in the future.
Certain legal matters will be passed upon for the Underwriter by Snow Becker
Krauss P.C., 605 Third Avenue, New York 10158-0125.

EXPERTS

45
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]

SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION

The table below sets forth with respect to each Selling Securityholder the
number of shares of Common Stock beneficially owned by each Selling
Securityholder and the number of such securities included for sale in this
Prospectus. Although there can be no assurance that the Selling Securityholders
will sell any or all of the shares of Common Stock offered hereby, the following
table assumes that each of the Selling Securityholders will sell all shares of
Common Stock offered by this Selling Securityholder Prospectus.

<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP OF COMMON SHARES OF OWNERSHIP OF COMMON
STOCK COMMON STOCK STOCK
PRIOR TO SALE TO BE SOLD AFTER SALE
------------------- --------------- -------------------
<S> <C> <C> <C>
SELLING SECURITYHOLDER
- ----------------------------------------------
Aleph Mad Family
Limited Partnership....................... 12,500 12,500 0
Robert M. Rubin(2)............................ 737,500 37,500 700,000
Whatechapel Management
Limited..................................... 50,000 50,000 0
Fred Kassner.................................. 25,000 25,000 0
</TABLE>

- ------------------------

(1) Each of these shares of Common Stock were acquired in connection with the
Company's January 1997 private placement, except for 700,000 shares
beneficially owned by Mr. Rubin.

(2) Represents 700,000 shares of common stock issuable upon exercise of
currently exercisable options. See "Management."

The shares of Common Stock may be sold by one or more of the following
methods: (a) a block trade in which a broker or dealer so engaged will attempt
to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction; (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus; and (c) face-to-face transactions between sellers and
purchasers without a broker-dealer. In effecting sales, brokers or dealers
engaged by the Selling Securityholders may arrange for other brokers or dealers
to participate. Such brokers or dealers may receive commissioner discounts from
Selling Securityholders in amounts to be negotiated. Such brokers and dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Act in connection with such sales.
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO UNDERWRITER, DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE AND REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary..............................
Risk Factors....................................
Use of Proceeds.................................
Dividend........................................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations....................................
Business........................................
Management......................................
Certain Relationships and Related
Transactions..................................
Principal Stockholders..........................
Description of Securities.......................
Shares Eligible for Future Sale.................
Legal Matters...................................
Experts.........................................
Selling Securityholders and Plan of
Distribution..................................
Financial Statements............................ F-1
</TABLE>

------------------------

MED-EMERG, INC.

125,000 SHARES OF COMMON STOCK

NETWORK 1 FINANCIAL SECURITIES, INC.

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 124(1) of the Canada Business Corporations Act (the "CBCA") provides
that, except in respect of an action by or on behalf of a corporation or body
corporate to procure a judgment in its favor, a corporation may indemnify a
director or officer of the corporation, a former director or officer of the
corporation or a person who acts or acted at the corporation's request as
director or officer of a body corporate of which the corporation is or was a
shareholder or creditor, and heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of the corporation or body corporate,
if:

(a) he acted honestly and in good faith with a view to the best
interests of the corporations; and

(b) in the case of a criminal or administrative proceeding that is
enforced by a monetary penalty; he had reasonable grounds for believing that
his conduct was lawful.

Section 124(2) of the CBCA provides that a corporation may with the approval
of a court indemnify a person referred to in subsection (1) in respect of an
action by or on behalf of the corporation or body corporate to procure a
judgment in its favor, to which he is made a party by reason of being or having
been a director or officer of the corporation or body corporate, against all
costs, charges and expenses reasonably incurred by him in connection with such
action if he fulfills the conditions set out in paragraphs (1)(a) and (b) above.

Part VII, Section 7.02 of the Registrant's by-laws provides that, subject to
Section 119 of the CBCA, the Registrant shall indemnify a director or officer of
the Registrant, a former director or officer of the Registrant or a person who
acts or acted at the Registrant's requests as a director or officer of a body
corporate of which the Registrant is or was a shareholder or creditor, and his
heirs and legal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment reasonably
incurred by him in respect of any civil, criminal or administrative action or
proceeding to which he is made a party by reason of being or having been a
director or officer of the Registrant or body corporate, if:

(a) he acted honestly and in good faith with a view to the best
interests of the Registrant; and

(b) in the case of a criminal or administrative proceeding that is
enforced by a monetary penalty; he had reasonable grounds for believing that
his conduct was lawful.

The Registrant shall also indemnify such persons in such other circumstances
as the CBCA permits or requires. Nothing contained in said Section 7:02 shall
limit the right of any person entitled to indemnity to claim indemnity apart
from the provisions of said Section.

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following tab sets forth the various statement of the estimated expenses
(other than underwriting discounts and commissions) to be paid by the Company in
connection with the issuance and distribution of

II-1
<PAGE>

the securities being registered. With the exception of the SEC Registration Fee
and the NASD Filing Fee, all amounts shown are estimates (all stated in US
dollars):

<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 4,433.18
NASD Filing Fee................................................ 1,916.25
Nasdaq Listing Fees and Expenses............................... *10,000.00
BSE Listing Fee................................................ *15,000.00
Printing Expenses.............................................. *75,000.00
Legal Fees and Expenses (other than Blue Sky).................. *100,000.00
Accounting Fees and Expenses................................... *75,000.00
Blue Sky Fees and Expenses (including legal and filing fees)... *30,000.00
Transfer Agent and Registrar Fees and Expenses................. *3,500.00
Non-Accountable Expenses....................................... 150,000.00
Miscellaneous Expenses......................................... 35,150.57
----------
Total.................................................... $500,000.00
----------
----------
</TABLE>

- ------------------------

* Estimated

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In the past three years, the Company has issued securities to a limited
number of persons, as described below. Except as indicated, there were no
underwriters involved in the transactions and there were no underwriting
discounts or commissions paid in connection therewith.

In January 1996, the Company issued an aggregate of 2,3333,333 shares of
Common Stock to Ramesh and Victoria Zacharias in exchange for all of the
outstanding capital stock of 927563 Ontario Inc. and 927564 Ontario Inc.

In January 1996, the Company sold to 15 investors an aggregate of 1,000,000
shares of Common Stock and 1,000,000 common stock purchase warrants for an
aggregate consideration of $1,000,000. The warrants are exercisable to purchase
1,000,000 shares of Common Stock at $2.00 per share. The warrants were
subsequently surrendered for cancellation.

In June 1996, the Company issued 100,000 shares of Common Stock to Carl
Pahapill, the Company's President, for an aggregate consideration of $60,000, or
$.60 per share.

In November 1996, the Company granted Robert Rubin, a Director of the
Company, an option to purchase 700,000 shares of Common Stock at US $.75 per
share.

In November 1996, the Company issued an aggregate of 500,000 shares of its
Preferred Stock to Ramesh and Victoria Zacharias in exchange for 2,202,333
shares of Common Stock owned by the Zacharias'.

In November 1996, the Company issued 350,000 shares of Common Stock to
Hampton House in consideration for services rendered.

In January 1997, in an underwritten bridge financing, the Company issued
Notes in the principal amount of $500,000 and an aggregate of 125,000 shares of
Common Stock to four investors for an aggregate consideration of $500,000.

II-2
<PAGE>
ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>

1.1 Form of Underwriting Agreement*

1.2 Form of Advisory and Investment Banking Agreement Between the Company and Network 1 Financial
Securities, Inc.*

1.3 The Selling Shareholder Irrevocable Power of Attorney Custody Agreement and Lock-up Agreement

3.1 Certificate of Incorporation and Amendments thereto of the Company

3.2 By-laws of the Company

4.1 Form of Underwriter's Warrant*

4.2 Form of Warrant Agreement*

4.3* Specimen Common Stock Certificate

4.4* Specimen Warrant Certificate

5.1* Opinion of Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP, counsel to the Company.

10.1* Employment Agreement between the Company and Ramesh Zacharias

10.2* Employment agreement between the Company and Carl Pahapill

10.3* Operating lease covering the Company's facilities

10.4* 1997 Stock Option Plan

10.5 Consulting Agreement with the Northwest Territories

21.1* List of Subsidiaries

23.1* Consent of Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP (to be included in Exhibit 5.1 to this
Registration Statement)

23.2 Consent of KPMG, independent certified public accountants

23.3 Consent of Zaitsky, Penny & Associates, Independent Chartered Accountnat

24.1 Power of Attorney (included on the signature page of this Registration Statement)
</TABLE>

- ------------------------

* To be filed by amendment

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to any charter provision, by-law contract
arrangements statute, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such

II-3
<PAGE>
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned small business issuer hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to suit information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(4) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1), or (4) or
497(h), under the Securities Act as part of this registration statement as of
the time the Commission declared it effective.

(5) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement at that time as the initial bona fide offering of those
securities.

(6) To provide to the Underwriter at the closing specified in the
underwriting agreements, certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Act, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirement for
filing on Form F-1 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York on February , 1997.

MED-EMERG INTERNATIONAL, INC.

BY:
-----------------------------------------
Carl Pahapill, President

By:
-----------------------------------------
Kathryn Gamble
Chief Financial Officer

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Carl Pahapill, President, his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same and all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

Chief Executive Officer,
- ------------------------------ Director February , 1997
Ramesh Zacharias, M.D., Frcsc

Chief Operating Officer,
- ------------------------------ President and Director February , 1997
Carl W. Pahapill

Vice President of Finance,
- ------------------------------ Chief Financial Officer, February , 1997
Kathryn Gamble, CA Secretary

Chairman of the Board
- ------------------------------ February , 1997
William Thomson, CA

Director
- ------------------------------ February , 1997
Larry Grossman

Director
- ------------------------------ February , 1997
Peter Deeb

Director
- ------------------------------ February , 1997
Victoria Zacharias

Director
- ------------------------------ February , 1997
Robert M. Rubin

II-5

<PAGE>

EXHIBIT 3.1

For Ministry Use Only Ontario Corporation Number
A l'usage excuart du ministere Numero de la societe en Ontario
1162209
--------------------------------
[LOGO] Ministry of Ministere de
Consumer and la Consommation
Commercial et du Commerce
Ontario Designs
CERTIFICATE CERTIFICAT
This is to certify that those Ceci certifieque due les presents
articles are effective on statuts entrent an vigueur le

DECEMBER 28 DECEMBRE, 1995
------------------------------ | A | | C | | D | | A | | 3 |

| S | | N | |ONTARIO |

/s/
Director/ Directeur
Business Corporations Act
- ----------------------------------------------------------------------------
ARTICLES OF INCORPORATION
STATUTS CONSTITUTIFS

1. The name of the corporations is: Denomination societe
actuelle de la societe:
-----------------------------------------------------------
1 1 6 2 2 0 9 O N T A R I O I N C .
-----------------------------------------------------------

-----------------------------------------------------------

2. The address of the registered Denomination sociale de
office is: la societe:

2550 Argentina Road
-----------------------------------------------------------
Steet and Number

Mississargs, Ontario LSM4RI
-----------------------------------------------------------
Municipality Postal Code

Regional Municipality of Peel In the N/A
-------------------------------- ------------------
Township County

3. Number (or minimum and maximum Nombre (ou nombres
number) of directors is: minimalet maximal) of
administratures:

A minimum of one (1) and a maximum of ten (10).

4. The first director(s) Premier(s)
is/are administrateur(s):

First name, initial Residence address Resident Canadian
and surname Yes or No
-------------------------------------------------------------
James D. Skippen 36 Bracken Avenue Yes
Toronto, Ontario
M4E IN5

<PAGE>

5. Restrictions, if any, on
business the corporation may
carry on or on power's the
corporation may exercise.

Form 1
Business None.
Corporations
Act

Formuie 1
Loi sur les
societes par
actions

6. The classes and any maximum
number of shares that the
corporation is authorized to
issue.

The corporation is authorized to issue an unlimited number
of common shares.

<PAGE>

7. Rights, privileges,
restrictions and conditions (if
Form 1 any) pertaining to each class
Business of shares and directors
Corporations authority with respect to any
Act classes of shares which may be
issued in series.
Formuie 1
Loi sur les None.
societes par
actions

<PAGE>

8. The issue, transfer or
ownership of shares is/is not
restricted and the restrictions
(if any) are as follows:
Form 1
Business No share or shares of the corporation shall at any time be
Corporations transferred to any person without either (a) the consent of
Act a majority of the directors to be signified by a resolution
passed by the board or by an instrument or instruments in
Formuie 1 writing signed by a majority of the directors, or (b) the
Loi sur les consent of the holders of not less than 51% of the
societes par outstanding common shares of the corporation signified
actions either by a resolution passed at a meeting of such
shareholders or by an instrument or instruments in writing
signed by such shareholders.

<PAGE>

9. Other, restrictions, if any,
are:
Form 1
Business
Corporations A. The number of shareholders of the corporation,
Act exclusive of persons who are in its employment and
exclusive of persons who, having been formerly in the
Formuie 1 employment of the corporation, were, while in that
Loi sur les employment, and have continued after the termination of
societes par that employment to be, shareholders of the corporation,
actions is limited to not more than fifty, two or more persons
who are the joint registered owners of one or more
shares being counted as one shareholder.

B. Any invitation to the public to subscribe for
securities of the corporation is prohibited.

C. Subject to the provisions of the Business Corporations
Act, the corporation shall have a lien on the shares
registered in the name of a shareholder or his legal
representative for a debt of that shareholder to the
corporation.

D. The board of directors may from time to time, in such
amounts and on such terms as it deems expedient charge,
mortgage, hypothecate or pledge all or any of the
currently owned or subsequently acquired real or
personal, movable or immovable, property of the
corporation, including book debts, rights, powers,
franchises and undertaking, to secure any debt
obligations or any money borrowed, or other debt or
liability of the corporation.

The board of directors may from time to time delegate
in such one or more of the directors and officers of
the corporation as may be designated by the board all
or any of the powers conferred on the board above to
such extent and in such manner as the board shall
determine at the time of such delegation.

<PAGE>

10. The names and addresses of the Nom et adresee des
incorporation are: lendateurs:

First name, initials and Full residence
surname or corporate name addresses or address of
registered office or of
principal place of
business giving Street
& No. or R.R. No.,
Municipality and Postal
Code.

-----------------------------------------------------------------
James D. Skippen 36 Bracken Avenue
Toronto, Ontario
M4E 1N5

These articles are signed in
duplicate.
-----------------------------------------------------------------
(Signature of incorporators)

/s/ James D. Skippen
--------------------------
James D. Skippen

<PAGE>

JANUARY 30 JANVIER, 1996
------------------------------

/s/ Trans
Director/ Directeur Code
Business Corporations Act/Loi | C |
de sur les compagnies 18
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION

Form 3 1. The present name of the Denomination sociale
Business corporations is: actuelle de la societe:
Corporations -----------------------------------------------------------
Act 1 1 6 2 2 0 9 O N T A R I O I N C .
Formule 3 -----------------------------------------------------------
Loi sur les
societes par -----------------------------------------------------------
actions
-----------------------------------------------------------

2. The name of the corporation Nouvelie denomination
is changed to (if applicable): sociale de la societe
(s'il y a lieu):
-----------------------------------------------------------
M E D - E M E R G I N T E R N A T I O N A L I N C .
-----------------------------------------------------------

-----------------------------------------------------------

3. Date of incorporation/amalgamation: Date de la constitution
ou del la fusion:

28th December, 1995
-----------------------------------------------------------------
(Day, Month, Year)
(jour, mont, annee)

4. The articles of the corporation Les statuts de la
are amended as follows: societe sont modifies
de la facon sulvante:

(i) The articles of the corporation are hereby amended to
change the name of the corporation to:

MED-EMERG INTERNATIONAL, INC.

<PAGE>

Form 3
Business
Corporations
Act
Formule 3
Loi sur les
societes par
actions

5. The amendment has been duly La modification a ete
authorized as required by dument autorisee
sections 168 and 170 (as conformament aux
applicable) of the Business articles 168 et 170
Corporations Act. (selon le cas) de la
Loi sur les societes
par actions.

6. The resolution authorizing the Les actionnairee ou les
amendment was approved by the administrateurs (selon
shareholders/directors (as le cas) de la societe
applicable) of the corporation ont approuve la
on resolution autorisant
la modification le

29th January, 1996
-----------------------------------------------------------------
(Day, Month, Year)
(jour, mont, annee)

These articles are signed in duplicate. Les presents statuts
sont signes en double
exemplaire.

1162209 ONTARIO INC.
------------------------------------
(Name of Corporation)
(Denomination socialte de la societe)

By/Par:/s/ Carl Pahapill COO
----------------------------------
(Signature) (Description of Office)
(Signature) (Foncition)
Carl Pahapill, Chief Operating Officer,
Secretary & Treasurer

<PAGE>

BY-LAW NO. 1

A by-law relating generally to the transaction
of the business and affairs of

1162209 ONTARIO INC.

CONTENTS

Part Description

I - Interpretation
II - Business of the Corporation
III - Borrowing and Securities
IV - Directors
V - Committees
VI - Officers
VII - Protection of Directors, Officers and Others
VIII - Shares
IX - Dividends and Rights
X - Meetings of Shareholders
XI - Notices
XII - Effective Dates

BE IT ENACTED as a by-law of 1162209 ONTARIO INC. (hereinafter referred to
as the "Corporation") as follows:

PART I

INTERPRETATION

1.01 Definitions. In the by-laws of the Corporation, unless the context
otherwise requires:

"Act" means the Business Corporations Act (Ontario) and any statute that may be
substituted therefor, as from time to time amended;

"appoint" includes "elect" and vice versa;

"articles" means the original or restated articles of incorporation, articles of
amalgamation, articles of continuance, articles of reorganization, letters
patent or other instrument of incorporation of the Corporation, as from time to
time amended;

<PAGE>
-2-

"board" means the board of directors of the Corporation;

"by-laws" means this by-law and all other by-laws of the Corporation from time
to time in force and effect;

"meeting of shareholders" includes an annual meeting of shareholders and a
special meeting of shareholders;

"special meeting of shareholders" includes a meeting of any class or classes of
shareholders and a special meeting of all shareholders entitled to vote at an
annual meeting of shareholders;

"non-business day" means Saturday, Sunday and any other day that is a holiday as
defined in the Interpretation Act (Ontario);

"recorded address" means, in the case of a shareholder, his address as recorded
in the securities register; and in the case of joint shareholders the address
appearing in the securities register in respect of such joint holding or the
first address so appearing if there are more than one; and, in the case of a
director, officer, auditor or member of a committee of the board, his latest
address as recorded in the records of the Corporation;

"signing officer" means, in relation to any instrument, any person authorized to
sign the same on behalf of the Corporation by section 2.03 or by a resolution
passed pursuant thereto;

"unanimous shareholder agreement" means a written agreement among all the
shareholders of the Corporation, or among all such shareholders and a person who
is not a shareholder, or a written declaration of the beneficial owner of all of
the issued shares of the Corporation, that restricts, in whole or in part, the
powers of the directors to manage the business and affairs of the Corporation,
as from time to time amended;

save as aforesaid, words and expressions defined in the Act have the same
meanings when used herein; and

words importing the singular number include the plural and vice versa; words
importing the masculine gender include the feminine and neuter genders; and
words importing persons include individuals, bodies corporate, partnerships,
trusts and unincorporated organizations.

PART II

BUSINESS OF THE CORPORATION

2.01 Corporate Seal. The Corporation may have one or more different corporate
seals which may be adopted or changed from time to time by the board, on which
the

<PAGE>
-3-

name of the Corporation appears in the language or one or more of the
languages set out in the articles.

2.02 Financial Year. Until changed by the board, the financial year of the
Corporation shall and on the 31st day of December in each year.

2.03 Execution of Instruments. Deeds, transfers, assignments, contracts,
obligations, certificates and other instruments may be signed on behalf of the
Corporation by any one of the directors or officers. In addition, the board may
from time to time direct the manner in which and the person or persons by whom
any particular instrument or class of instruments may or shall be signed. Any
signing officer may affix the corporate seal (if any) to any instrument. Any
signing officer may certify a copy of any instrument, resolution, by-law or
other document of the Corporation to be a true copy thereof.

2.04 Execution in Counterpart. Any articles, notice, resolution, requisition,
statement or other document required or permitted to be executed by more than
one person may be executed in several documents of like form each of which is
executed by one or more of such persons, and such documents, when duly executed
by all persons required or permitted, as the case may be, to do so, shall be
deemed to constitute one document and to bear date as of the date of execution
thereof by the last such person.

2.05 Banking Arrangements. The banking business of the Corporation including,
without limitation, the borrowing of money and the giving of security therefor,
shall be transacted with such banks, trust companies or other bodies corporate
or organizations as may from time to time be designated by or under the
authority of the board. Such banking business or any part thereof shall be
transacted under such agreements, instructions and delegations of powers as
the board may from time to time prescribe or authorize.

2.06 Voting Rights in Other Bodies Corporate. The signing officers of the
Corporation may execute and deliver proxies and arrange for the issuance of
voting certificates or other evidence of the right to exercise the voting rights
attaching to any securities held by the Corporation. Such proxies, certificates
or other evidence shall be in favour of such person or persons as may be
determined by the officers signing or arranging for them. In addition, the board
may from time to time direct the manner in which and the person or persons by
whom any particular voting rights or class of voting rights may or shall be
exercised.

2.07 Withholding Information from Shareholders. No shareholder shall be entitled
to discovery of any information respecting any details or conduct of the
Corporation's business which, in the opinion of the board, it would be
inexpedient in the interests of the shareholders or the Corporation to
communicate to the public. The board may from time to time determine whether and
to what extent and at what time and place and under what conditions or
regulations the accounts, records and documents of the Corporation or any of
them shall be open to the inspection of shareholders and no shareholder shall
have any right of inspecting any account, record or document of the Corporation
except

<PAGE>
-4-

as conferred by the Act or authorized by the board or by resolution passed at a
meeting of shareholders.

2.08 Creation and Consolidation of Divisions. The board may cause the business
and operations of the Corporation or any part hereof to be divided or to be
segregated into one or more divisions upon such basis, including without
limitation, character or type of operation, geographical territory, product
manufactured or service rendered, as the board may consider appropriate in each
case. The board may also cause the business and operations of any such division
to be further divided into sub-units and the business and operations of any such
divisions or sub-units to be consolidated upon such basis as the board may
consider appropriate in each case.

2.09 Name of Division. Subject to compliance with law, and division or its
sub-units may be designated by such name as the board may from time to time
determine and may transact business under such name, provided that the
Corporation shall set out its corporate name in legible characters in all
contracts, invoices, negotiable instruments and orders for goods or services
issued or made by or on behalf of the Corporation.

2.10 Officers of Division. From time to time the board or, if authorized by the
board, the chief executive officer, may appoint one or more officers for any
division, prescribe their powers and duties and settle their terms of employment
and remuneration. The board or, if authorized by the board, the chief executive
officer, may remove at its or his pleasure any officer so appointed, without
prejudice to such officer's rights under any employment contract. Officers of
divisions or their sub-units shall not, as such, be officers of the Corporation.

PART III

BORROWING AND SECURITIES

3.01 Borrowing Power. Without limiting the borrowing powers of the Corporation
as set forth in the Act, but subject to the articles and any unanimous
shareholder agreement, the board may from time to time on behalf of the
Corporation, without authorization of the shareholders:

(a) borrow money on the credit of the Corporation;

(b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences
of indebtedness or guarantee of the Corporation, whether secured or
unsecured;

(c) to the extent permitted by the Act, give a guarantee on behalf of the
Corporation to secure performance of any present or future indebtedness,
liability or obligation of any person; and

(d) mortgage, hypothecate, pledge or otherwise create a security interest in
all or any currently owned or subsequently acquired real or personal,
movable or

<PAGE>
-5-

immovable, property of the Corporation including book debts, rights,
powers, franchises and undertakings, to secure any such bonds,
debentures, notes or other evidences of indebtedness or guarantee or
any other present or future indebtedness, liability or obligation of
the Corporation.

Nothing in this section limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.

3.02 Delegation. The board may from time to time delegate to a committee of the
board, a director or an officer of the Corporation or any other person as may be
designated by the board all or any of the powers conferred on the board by
section 3.01 or by the Act to such extent and in such manner as the board may
determine at the time of each such delegation.

PART IV

DIRECTORS

4.01 Number of Directors and Quorum. Subject to the articles, the board shall
consist of the number of directors specified in the articles (or such number as
has most recently been specified by a special by-law under the predecessor of
the Act); if the articles provide for a minimum and maximum number of directors,
the board shall consist of the number of directors determined from time to time
by a special resolution (or, if the directors are empowered by a special
resolution to determine the number, by a resolution of the board) within such
minimum and maximum. Subject to section 4.08, a majority of the number of
directors so specified or determined shall constitute a quorum at any meeting of
the board.

4.02 Qualification. Unless otherwise provided by the Act, a majority of the
directors shall be resident Canadians; if the Corporation has only one or two
directors, that director or one of the two directors, as the case may be, shall
be a resident Canadian. No person shall be qualified for election as a director
if he is less than 18 years of age; if he is of unsound mind and has been so
found by a court in Canada or elsewhere; if he is not an individual; or if he
has the status of a bankrupt. A director need not be a shareholder.

4.03 Election and Term. The election of directors shall take place at the first
meeting of shareholders and at each annual meeting of shareholders and all the
directors then in office shall retire but, if qualified, shall be eligible for
re-election. The election shall be by resolution. If an election of directors is
not held at the proper time, the directors shall continue in office until their
successors are elected.

4.04 Removal of Directors. Subject to the provisions of the Act, the
shareholders may be resolution passed at an annual or special meeting remove any
director from office

<PAGE>
-6-

and the vacancy created by such removal may be filled at the same meeting
failing which it may be filed by the board.

4.05 Vacation of Office. A director ceases to hold office when he dies, is
removed from office by the shareholders acting pursuant to the Act, or ceases to
be qualified for election as a director, or earlier if he shall have submitted
his written resignation to the Corporation; in which last-mentioned event he
shall cease to hold office at the later of (i) the time when such written
resignation is sent or delivered to the Corporation and (ii) the time, if any,
specified in such written resignation as the effective time of such resignation.

4.06 Vacancies. Subject to the Act, a quorum of the board may fill a vacancy in
the board, except a vacancy resulting from an increase in the number of
directors or in the maximum number of directors or from a failure of the
shareholders to elect the number of directors required to be elected at any
meeting of shareholders. Notwithstanding the foregoing exception, a quorum of
the board may fill a vacancy resulting from an increase in the number of
directors where the directors are authorized by special resolution to determine
the number of directors, but only if the appointment of an additional director
would not result in a total number of directors greater than one and one-third
times the number of directors required to have been elected at the last annual
meeting of shareholders. In the absence of a quorum of the board, or if the
vacancy has arisen from a failure of the shareholders to elect the number of
directors required to be elected at any meeting of shareholders, the board shall
forthwith call a special meeting of shareholders to fill the vacancy. If the
board fails to call such meeting or if there are not such directors then in
office, any shareholder may call the meeting.

4.07 Action by the Board. Subject to any unanimous shareholder agreement, the
board shall manage or supervise the management of the business and affairs of
the Corporation. Subject to sections 4.08 and 4.09, the powers of the board may
be exercised by a meeting at which the quorum is present or by resolution in
writing signed by all the directors entitled to vote on that resolution at a
meeting of the board. Where there is a vacancy in the board, the remaining
directors may exercise all the powers of the board so long as a quorum remains
in office. Where the Corporation has only one director, that director may
constitute a meeting.

4.08 Canadian Majority. Unless otherwise provided by the Act, the board shall
not transact business at a meeting, other than filling a vacancy in the board,
unless a majority of the directors present are resident Canadians, except where

(a) a resident Canadian director who is unable to be present approves in
writing or by telephone or other communications facilities the business
transacted at the meeting; and

(b) a majority of resident Canadians would have been present had that director
been present at the meeting.

<PAGE>
-7-

4.09 Meeting by Communications Facilities. If all the directors present at or
participating in the meeting consent, a meeting of the board or of a committee
of the board may be held by means of such telephone, electronic or other
communications facilities as permit all persons participating in the meeting to
communicate with each other simultaneously and instantaneously, and a director
participating in such a meeting by such means shall be deemed to be present at
the meeting. Any such consent shall be effective whether given before or after
the meeting to which it relates and may be given with respect to all meetings of
the board and of committees of the board. If a majority of the directors
participating in a meeting held under this section are then in Canada, the
meeting shall be deemed to have been held in Canada.

4.10 Place of Meetings. Meetings of the board may be held at any place in or
outside Ontario. In any financial year of the Corporation a majority of the
meetings of the board need not be held in Canada.

4.11 Calling of Meetings. Meetings of the board shall be held from time to time
at such time and at such place as the board, the chairman of the board, the
managing director, the president or any two directors may determine.

4.12 Notice of Meeting. Notice of the time and place of each meeting of the
board shall be given in the manner provided in section 11.01 to each director
not less than 48 hours before the time when the meeting is to beheld. A notice
of a meeting of directors need not specify the purpose of or the business to be
transacted at the meeting except where the Act requires such purpose or business
to be specified.

4.13 First Meeting of New Board. Provided a quorum of directors is present, each
newly elected board may without notice hold its first meeting immediately
following the meeting of shareholders at which such board is elected.

4.14 Adjourned Meeting. Notice of an adjourned meeting of the board is not
required if the time and place of the adjourned meeting is announced at the
original meeting.

4.15 Regular Meetings. The board may appoint a day or days in any month or
months for regular meetings of the board at a place and hour to be named. A copy
of any resolution of the board fixing the place and time of such regular
meetings shall be sent to each director forthwith after being passed, but no
other notice shall be required for any such regular meeting except where the Act
requires the purposes thereof or the business to be transacted thereat to be
specified.

4.16 Meetings Without Notice. A meeting of the board may be held at any time and
place permitted by the Act or the articles or the by-laws without notice or on
shorter notice than that provided for herein, and proceedings thereat shall not
be invalidated if all the directors are present in person (other than expressly
to object that the meeting is not lawfully called) or if not so present have
received notice, or before or after the meeting or the time prescribed for the
notice thereof, in writing waive notice of or accept short notice of such
meeting.

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4.17 Chairman. The chairman of any meeting of the board shall be the first
mentioned of such of the following officers as have been appointed and who is a
director and is present at the meeting: chairman of the board, managing
director, president, or a vice-president. If no such officer is present, the
directors present shall choose one of their number to be chairman.

4.18 Votes To Govern. At all meetings of the board every question shall be
decided by a majority of the votes cast on the question. In case of an equality
of votes the chairman of the meeting shall not be entitled to a second or
casting vote.

4.19 Declaration of Interest. A director or officer who is a party to, or who is
a director or officer of or has a material interest in any person who is a party
to, a material contract or proposed material contract with the Corporation shall
disclose the nature and extent of his interest at the time and in the manner
provided by the Act.

4.20 Remuneration and Expenses. Subject to any unanimous shareholder agreement,
the directors shall be paid such remuneration for their services as the board
may from time to time determine. The directors also shall be entitled to be
reimbursed for traveling and other expenses properly incurred by them in
attending meetings of the board or any committee thereof. Nothing herein
contained shall preclude any director from serving the Corporation in any other
capacity and receiving remuneration therefor.

PART V

COMMITTEES

5.01 Committee of Board. The board may appoint one or more committees of the
board, however designated, and delegate to any such committee any of the powers
of the board except those which, under the Act, a committee of directors has no
authority to exercise. A majority of the members of such committee shall be
resident Canadians unless the Act permits otherwise.

5.02 Transaction of Business. Subject to section 4.08, the powers of a committee
of the board may be exercised by a meeting at which a quorum is present or by
resolution in writing signed by all members of such committee who would have
been entitled to vote on that resolution at a meeting of the committee. Meetings
of such committee may be held at any place in or outside Ontario.

5.03 Advisory Bodies. The board may from time to time appoint advisory bodies.

5.04 Procedure. Unless otherwise determined by the board, each committee and
advisory board shall have power to fix its quorum at not less than a majority of
its members, to elect its chairman and to regulate its procedure.

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PART VI

OFFICERS

6.01 Appointment. Subject to any unanimous shareholder agreement, the board may
from time to time appoint a president, one or more vice-presidents (to which
title may be added words indicating seniority or function), a secretary, a
treasurer and such other officers as the board may determine, including one or
more assistants to any of the officers appointed. The board may specify the
duties of and, in accordance with this by-law and subject to the provisions of
the Act, delegate to such officers powers to manage the business and affairs of
the Corporation. Subject to section 6.02 and 6.03, an officer may but need not
be a director and one person may hold more than one office.

6.02 Chairman of the Board. The board may from time to time also appoint a
chairman of the board who shall be a director. If appointed, the board may
assign to him any of the powers and duties that are by any provisions of this
by-law assigned to the managing director or to the president; and he shall,
subject to the provisions of the Act, have such other powers and duties as the
board may specify. During the absence or disability of the chairman of the
board, his duties shall be performed and his powers exercised by the managing
director, if any, or by the president.

6.03 Managing Director. The board may from time to time also appoint a managing
director who shall be a resident Canadian and a director. If appointed, he shall
be the chief executive officer and, subject to the authority of the board, shall
have general supervision of the business and affairs of the Corporation; and he
shall, subject to the provisions of the Act, have such other powers and duties
as the board may specify. During the absence or disability of the president, or
if no president has been appointed, the managing director shall also have the
powers and duties of that office.

6.04 President. If appointed, the president shall be the chief operating officer
and, subject to the authority of the board, shall have general supervision of
the business of the Corporation; and he shall have such other powers and duties
as the board may specify. During the absence or disability of the managing
director, or if no managing director has been appointed, the president shall
also have the powers and duties of that office.

6.05 Vice-President. A vice-president shall have such powers and duties as the
board or the chief executive officer may specify.

6.06 Secretary. The secretary, as and when requested to do so, shall attend and
be the secretary of all meetings of the board, shareholders, and committees of
the board and shall enter or cause to be entered in records kept for that
purpose minutes of all proceedings thereat; he shall hive or cause to be given,
as and when instructed, all notices to directors, shareholders, officers,
auditors and members of committees of the board; he shall be the custodian of
the stamp or mechanical device generally used for affixing the corporate seal of
the Corporation (if any) and of all books, papers, records, documents and
instruments belonging to the Corporation, except when some other officer

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or agent has been appointed for that purpose; and he shall have such other
powers and duties as the board or the chief executive officer may specify.

6.07 Treasurer. The treasurer shall keep or cause to be kept proper accounting
records in compliance with the Act and shall be responsible for the deposit of
money, the safekeeping of securities and the disbursement of the funds of the
Corporation; he shall render to the board whenever required an account of all
his transactions as treasurer and of the financial position of the Corporation;
and he shall have such other powers and duties as the board or the chief
executive officer may specify.

6.08 Powers and Duties of Other Officers. The powers and duties of all other
officers shall be such as the terms of their engagement call for or as the board
or the chief executive officer may specify. Any of the powers and duties of an
officer to whom an assistant has been appointed may be exercised and performed
by such assistant, unless the board or the chief executive officer otherwise
directs.

6.09 Variation of Powers and Duties. The board may from time to time and subject
to the provisions of the Act, vary, add to or limit the powers and duties of any
officer.

6.10 Term of Officer. The board, in its discretion, may remove any officer of
the Corporation, without prejudice to such officer's rights under any employment
contract. Otherwise each officer appointed by the board shall hold office until
his successor is appointed, or until his earlier resignation.

6.11 Terms of Employment and Remuneration. The terms of employment and the
remuneration of an officer appointed by the board shall be settled by it from
time to time.

6.12 Declaration of Interest. An officer shall disclose his interest in any
material contract or proposed material contract with the Corporation in
accordance with section 4.19.

6.13 Agents and Attorneys. The board shall have power from time to time to
appoint agents or attorneys for the Corporation in or outside Canada with such
powers of management or otherwise (including the powers to subdelegate), as may
be thought fit.

6.14 Fidelity Bonds. The board may require such officers, employees and agents
of the Corporation as the board deems advisable to furnish bonds for the
faithful discharge of their powers and duties, in such form and with such surety
as the board may from time to time determine.

PART VII

PROTECTION OF DIRECTORS, OFFICERS AND OTHERS

7.01 Limitation of Liability. No director or officer shall be liable for the
acts, receipts, neglects or defaults of any other director or officer or
employee, or for joining

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in any receipt or other act for conformity, or for any loss, damage or expense
happening to the Corporation through the insufficiency or deficiency of title to
any property acquired for or on behalf of the Corporation, or for the
insufficiency or deficiency of any security in or upon which any of the moneys
of the Corporation shall be invested, or for any loss or damage arising from the
bankruptcy, insolvency or tortious acts of any person with whom any of the
moneys, securities or effects of the Corporation shall be deposited, or for any
loss occasioned by any error of judgment or oversight on his part, or for any
other loss, damage or misfortune whatever which shall happen in the execution of
the duties of his office or in relation thereto; provided that noting herein
shall relieve any director or officer from the duty to act in accordance with
the Act and the regulations thereunder or from liability for any breach thereof.

7.02 Indemnity. Subject to the limitations contained in the Act, the Corporation
shall indemnify a director or officer, a former director or officer, or a person
who acts or acted at the Corporation's request as a director or officer of a
body corporate of which the Corporation is or was a shareholder or creditor and
his heirs and legal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by him in respect of any civil, criminal or administrative action or
proceeding to which he is made a party by reason of being or having been a
director or officer of the Corporation or such body corporate, if

(a) he acted honestly and in good faith with a view to the best interests of
the Corporation; and

(b) in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, he had reasonable grounds for believing
that his conduct was lawful.

The Corporation shall also indemnify such person in such other circumstances as
the Act permits or requires. Nothing in this by-law shall limit the right of any
person entitled to indemnity apart from the provisions of this by-law.

7.03 Insurance. The Corporation may purchase and maintain insurance for the
benefit of any person referred to in section 7.02 against such liabilities and
in such amounts as the board may from time to time determine and are permitted
by the Act.

PART VIII

8.01 Allotment. Subject to the provisions of the Act and the articles and any
unanimous shareholder agreement, the board may from time to time allot or grant
options to purchase the whole or any part of the authorized and unissued shares
of the Corporation at such times and to such persons and for such consideration
as the board shall determine, provided that no share shall be issued until it is
fully paid as provided by the Act.

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8.02 Commissions. The board may from time to time authorize the Corporation to
pay a commission to any person in consideration of his purchasing or agreeing to
purchase shares of the Corporation, whether from the Corporation or from any
other person, or procuring or agreeing to procure purchasers for any such
shares.

8.03 Registration of Transfers. Subject to the provisions of the Act, no
transfer of shares shall be registered in a securities register except upon
presentation of the certificate representing such shares with an endorsement,
which complies with the Act, made thereon or delivered therewith duly executed
by an appropriate person as provided by the Act, together with such reasonable
assurance that the endorsement is genuine and effective as the board may from
time to tine prescribe, upon payment of all applicable taxes and any fees
prescribed by the board, upon compliance with such restrictions on transfer as
are authorized by the articles and upon satisfaction of any lien referred to in
section 8.05.

8.04 Transfer Agents and Registrars. The board may from time to time appoint one
or more agents to maintain, in respect of each class of securities of the
Corporation issued by it in registered form, a central securities register and
one or more branch securities registers. Such a person may be designated as
transfer agent or registrar according to his functions and one person may be
designated both registrar and transfer agent. The board may at any time
terminate such appointment.

8.05 Lien for Indebtedness. If the articles provide that the Corporation shall
have a lien on shares registered in the name of a shareholder indebted to the
Corporation, such lien may be enforced, subject to any other provision of the
articles and to any unanimous shareholder agreement, by the sale of the shares
thereby affected or by any other action, suit, remedy or proceeding authorized
or permitted by law or by equity and, pending such enforcement, the Corporation
may refuse to register a transfer of the whole or any part of such shares.

8.06 Non-recognition of Trusts. Subject to the provisions of the Act, the
Corporation may treat the person in whose name a share is registered in the
securities register as the person exclusively entitled to vote, to receive
notices, to receive any dividend or other payments in respect of the share and
otherwise to exercise all the rights and powers of an owner.

8.07 Share Certificates. Every holder of one or more shares of the Corporation
shall be entitled, at his option, to a share certificate, or to a
non-transferable written certificate of acknowledgment of his right to obtain a
share certificate, stating the number and class or series of shares held by him
as shown on the securities register. Such certificates shall be in such form as
the board shall from time to time approve. Any such certificate shall be signed
in accordance with section 2.03 and need not be under corporate seal; provided
that, unless the board otherwise determines, certificates in respect of which a
transfer agent and/or registrar has been appointed shall not be valid unless
countersigned by or on behalf of such transfer agent and/or registrar. The
signature of one of the signing officers or, in the case of certificates which
are not valid unless countersigned by or on behalf of a transfer agent and/or
registrar, the signatures of both signing officers, may

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be printed or mechanically reproduced in facsimile upon certificates and every
such facsimile signature shall for all purposes be deemed to be the signature of
the officer whose signature it reproduces and shall be binding upon the
Corporation. A certificate executed as aforesaid shall be valid notwithstanding
that one or both of the officers whose facsimile signature appears thereon no
longer holds office at the date of issue of the certificate.

8.08 Replacement of Share Certificates. The board or any officer or agent
designated by the board may in its or his discretion direct the issue of a new
share certificate or certificate of acknowledgment in lieu of and upon
cancellation of a certificate that has been mutilated or in substitution for a
certificate claimed to have been lost, destroyed or wrongfully taken on payment
of such fee, not exceeding $3, and on such terms as to indemnity, reimbursement
of expenses and evidence of loss and of title as the board may from time to time
prescribe, whether generally or in any particular case.

8.09 Joint Shareholders. If two or more persons are registered as joint holders
of any share, the Corporation shall not be bound to issue more than one
certificate in respect thereof, and delivery of such certificate to one of such
persons shall be sufficient delivery to all of them. Any one of such persons may
give effectual receipts for the certificate issued in respect thereof or for any
dividend, bonus, return of capital or other money payable or warrant issuable in
respect of such share.

8.10 Deceased Shareholders. In the event of the death of a holder, or of one of
the joint holders, of any share, the Corporation shall not be required to make
any entry in the securities register in respect thereof or to make payment of
any dividends thereon except upon production of all such document as may be
required by law and upon compliance with the reasonable requirements of the
Corporation and its transfer agent.

PART IX

DIVIDENDS AND RIGHTS

9.01 Dividends. Subject to the provisions of the Act and the articles, the board
may from time to time declare dividends payable to the shareholders according to
their respective rights and interest in the Corporation. Dividends may be paid
in money or property, or by issuing fully paid shares of the Corporation.

9.02 Dividend Cheques. A dividend payable in money shall be paid by cheque drawn
on the Corporation's bankers or one of them to the order of each registered
holder of shares of the class or series in respect of which it has been declared
and mailed by prepaid ordinary mail to such registered holder at his recorded
address, unless such holder otherwise directs. In the case of joint holders the
cheque shall, unless such joint holders otherwise direct, be made payable to the
order of all of such joint holders and mailed to them at their recorded address.
The mailing of such cheque as aforesaid, unless the same is not paid on due
presentation, shall satisfy and discharge the liability

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for the dividend to the extent of the sum represented thereby plus the amount of
any tax which the Corporation is required to and does withhold.

9.03 Non-receipt of Cheques. In the event of non-receipt of any dividend cheque
by the person to whom it is sent as aforesaid, the Corporation shall issue to
such person a replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of non-receipt and of title as
the board may from time to time prescribe, whether generally or in any
particular case.

9.04 Record Date for Dividends and Rights. The board may fix in advance a date,
preceding by not more than 50 days the date for the payment of any dividend or
the date for the issue of any warrant or other evidence of the right to
subscribe for securities of the Corporation, as a record date for the
determination of the persons entitled to receive payment of such dividend or to
exercise the right to subscribe for such securities, and notice of any such
record date shall be given not less than 7 days before such record date in the
manner provided by the Act. If no record date is so fixed, the record date for
the determination of the persons entitled to receive payment of any dividend or
to exercise the right to subscribe for securities of the Corporation shall be at
the close of business on the day on which the resolution relating to such
dividend or right to subscribe is passed by the board.

9.05 Unclaimed Dividends. Any dividend unclaimed after a period of 6 years from
the date on which the same has been declared to be payable shall be forfeited
and shall revert to the Corporation.

PART X

MEETINGS OF SHAREHOLDERS

10.01 Annual Meetings. The annual meeting of shareholders shall be held at such
time in each year and, subject to section 10.03, at such place as the board may
from time to time determine, for the purpose of considering the financial
statements and reports required by the Act to be placed before the annual
meeting, electing directors, appointing an auditor and transacting such other
business as may properly be brought before the meeting.

10.02 Special Meetings. The board, the chairman of the board, the managing
director or the president shall have power to call a special meeting of
shareholders at any time.

10.03 Place of Meetings. Meetings of shareholders shall be held at the
registered office of the Corporation or elsewhere in the municipality in which
the registered office is situate or, if the board shall so determine, at some
other place in Canada or, if all the shareholders entitled to vote at the
meeting so agree, at some place outside Canada.

10.04 Notice of Meetings. Notice of the time and place of each meeting of
shareholders shall be given in the manner provided in section 11.01 not less
than 10 nor

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more than 50 days before the date of the meeting to each director, to the
auditor and to each shareholder who at the close of business on the record date
for notice is entered in the securities register as the holder of one or more
shares carrying the right to vote at the meeting. Notice of a meeting of
shareholders called for any purpose other than consideration of the financial
statements and auditor's report, election of directors and reappointment of the
incumbent auditor shall state the nature of such business in sufficient detail
to permit the shareholder to form a reasoned judgment thereon and shall state
the text of any special resolution to be submitted to the meeting.

10.05 List of Shareholders Entitled to Notice. For every meeting of
shareholders, the Corporation shall prepare within the time specified by the Act
a list of shareholders entitled to receive notice of the meeting, arranged in
alphabetical order and showing the number of shares held by each shareholder
entitled to vote at the meeting. If a record date for the meeting is fixed
pursuant to section 10.06, the shareholders listed shall be those registered at
the close of business on such record date. If no record date is fixed, the
shareholders listed shall be those registered (a) at the close of business on
the day immediately preceding the day on which notice of the meeting is given,
or (b) on the day on which the meeting is held where no such notice is given.
The list shall be available for examination by any shareholder during usual
business hours at the registered office of the Corporation or at the place where
the central securities register is maintained and at the meeting for which the
list was prepared.

10.06 Record Date for Notice. The board may fix in advance a date, preceding the
date of any meeting of shareholders by not more than 50 days and not less than
21 days, as a record date for the determination of the shareholders entitled to
notice of the meeting, and notice of any such record date shall be given not
less than 7 days before such record date, by newspaper advertisement and written
notice in the manner provided in the Act. If no record date is so fixed, the
record date for the determination of the shareholders entitled to notice of the
meeting shall be (a) at the close of business on the day immediately preceding
the day on which the notice is given or (b) the day on which the meeting is held
where no such notice is given.

10.07 Meetings without Notice. A meeting of shareholders may be held at any time
and place permitted by the Act of the articles or the by-laws without notice or
on shorter notice than that provided for herein, and proceedings thereat shall
not be invalidated (a) if all the shareholders entitled to vote thereat are
present in person or represented (other than as expressly to object that the
meeting is not lawfully called) or if those not so present or represented have
received notice, or before or after the meeting or the time prescribed for the
notice thereof, in writing waive notice of or accept short notice of such
meeting, and (b) if the auditor and the directors are present (other than as
expressly to object that the meeting is not lawfully called) or if those not
present have received notice on, before, or after the meeting of the time
prescribed for notice thereof, in writing waive notice of or accept short notice
of such meeting. If the meeting is held at a place outside Canada, shareholders
not present or represented, but who have waived notice of or accepted short
notice of such meeting, shall also be deemed to have consented to the meeting
being held at such place.

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10.08 Chairman, Secretary and Scrutineers. The chairman of any meeting of
shareholders shall be the first mentioned of such of the following officers as
have been appointed who is present at the meeting: president, managing director,
chairman of the board, or a vice-president who is a director. If no such
officers present within 15 minutes from the time fixed for holding the meeting,
the persons present and entitled to vote shall choose one of their number to be
chairman. If the secretary of the Corporation is absent, the chairman shall
appoint some person, who need not be a shareholder, to act as secretary of the
meeting. If desired, one or more scrutineers, who need not be shareholders, may
be appointed by a resolution or by the chairman with the consent of the meeting.

10.09 Persons Entitled to Attend. The only persons entitled to attend a meeting
of shareholders shall be those entitled to vote thereat, the chairman of the
board (if any), the president, the directors and auditor of the Corporation and
others who, although not entitled to vote, are entitled or required under any
provision of the Act or the articles or by-laws to attend the meeting. Any other
person may be admitted only on the invitation of the chairman of the meeting or
with the consent of the meeting.

10.10 Quorum. Subject to the provisions of the Act, if the Corporation has 2 or
more shareholders (or 2 or more holders of any class or series of shares) a
quorum for the transaction of business at any meeting of shareholders (or of
such class or series) shall be 2 persons present in person, each being a
shareholder entitled to vote thereat or a duly appointed representative or
proxyholder for an absent shareholder so entitled, and holding or representing
in the aggregate not less than a majority of the outstanding shares of the
Corporation entitled to vote at the meeting. If a quorum is present at the
opening of any meeting of shareholders, the shareholders present or represented
may proceed with the business of the meeting notwithstanding that a quorum is
not present throughout the meeting. If a quorum is not present at the opening of
any meeting of the shareholders, the shareholders present or represented may
adjourn the meeting to a fixed time and place but may not transact any other
business. If the Corporation has only one shareholder (or only one holder of any
class or series of shares) then the sole shareholder (or such holder) present in
person or by proxy constitutes a meeting of shareholders (or of such class or
series).

10.11 Right to Vote. Subject to the provisions of the Act as to authorized
representatives of any other body corporate or association, at any meeting of
shareholders for which the Corporation must prepare the list referred to in
section 10.05, every person who is named in such list shall be entitled to vote
the shares shown opposite his name except to the extent that (a) where the
Corporation has fixed a record date in respect of such meeting, such person has
transferred any of his shares after such record date, or where the Corporation
has not fixed a record date in respect of such meeting, such person has
transferred any of his shares after the date on which such list is prepared, and
(b) the transferee, having produced properly endorsed certificates evidencing
such shares or having otherwise established that he owns such shares, has
demanded not later than 10 days before the meeting that his name be included in
such list. In any such excepted case the transferee shall be entitled to vote
the transferred shares at the meeting. At any meeting of the shareholders for
which the Corporation has not prepared the list referred to

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in section 10.05, every person shall be entitled to vote at the meeting who at
the time is entered in the securities register as the holder of one or more
shares carrying the right to vote at such meeting.

10.12 Proxyholders and Representatives. Every shareholder entitled to vote at a
meeting of the shareholder may appoint a proxyholder, or one or more alternate
proxyholders, who need not be shareholders, to attend and act at the meeting in
the manner and to the extent authorized and with the authority conferred by the
proxy. A proxy shall be in writing executed by the shareholder or his attorney
and shall conform with the requirements of the Act. Every such shareholder which
is a body corporate or association may by resolution of its directors or
governing body authorize an individual who need not be a shareholder to
represent it at a meeting of shareholders and such individual may exercise on
the shareholder's behalf all the powers it could exercise if it were an
individual shareholder. The authority of such an individual shall be established
by depositing with the Corporation a certified copy of such resolution, or in
such other manner as may be satisfactory to the secretary of the Corporation or
the chairman of the meeting.

10.13 Time for Deposit of Proxies. The board may specify in a notice calling a
meeting of shareholders a time, preceding the time of such meeting by not more
than 48 hours exclusive of non-business days, before which time proxies to be
used at such meeting must be deposited. A proxy shall be acted upon only if,
prior to the time so specified, it shall have been deposited with the
Corporation or an agent thereof specified in such notice or, if no such time is
specified in such notice, if it has been received by the secretary of the
Corporation or by the chairman of the meeting or any adjournment thereof prior
to the time of voting.

10.14 Joint Shareholders. If two or more persons hold shares jointly, any one of
them present in person or represented at a meeting of shareholders may, in the
absence of the other or others, vote the shares; but if two or more of those
persons are present in person or represented and vote, they shall vote as one
the shares jointly held by them.

10.15 Votes to Govern. At any meeting of shareholders every question shall,
unless otherwise required by the articles or by-laws or by law, be determined by
a majority of the votes cast on the question. In case of an equality of votes
either upon a show of hands or upon a ballot, the chairman of the meeting shall
not be entitled to a casting vote.

10.16 Show of Hands. Subject to the provisions of the Act any question at a
meeting of shareholders shall be decided by a show of hands unless a ballot
thereon is required or demanded as hereinafter provided. Upon a show of hands
every person who is present and entitled to vote shall have one vote. Whenever a
vote by show of hands shall have been taken upon a question, unless a ballot
thereon is so required or demanded, a declaration by the chairman of the meeting
that the vote upon the question has been carried or carried by a particular
majority or not carried and an entry to that effect in the minutes of the
meeting shall be prima facie evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against any resolution or

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other proceeding in respect of the said question, and the result of the vote so
taken shall be the decision of the shareholders upon the said question.

10.17 Ballots. On any question proposed for consideration at a meeting of
shareholders, and whether or not a show of hands has been taken thereon, the
chairman may require a ballot or any person present and entitled to vote on such
question at the meeting may demand a ballot. A ballot so required or demanded
shall be taken in such manner as the chairman shall direct. A requirement or
demand for a ballot may be withdrawn at any time prior to the taking of the
ballot. If a ballot is taken each person present shall be entitled, in respect
of the shares which he is entitled to vote at the meeting upon the question, to
that number of votes provided by the Act or the articles, and the result of the
ballot so taken shall be the decision of the shareholders upon the said
question.

10.18 Adjournment. If a meeting of shareholders is adjourned for less than 30
days, it shall not be necessary to give notice of the adjourned meeting, other
than by announcement at the earliest meeting that is adjourned. If a meeting of
shareholders is adjourned by one or more adjournments for an aggregate of 30
days or more, notice of the adjourned meeting shall be given as for an original
meeting.

10.19 Resolution in Writing. A resolution in writing signed by all the
shareholders entitled to vote on that resolution at a meeting of shareholders is
as valid as if it had been passed at a meeting of the shareholders unless a
written statement with respect to the subject matter of the resolution is
submitted by a director or auditor in accordance with the Act.

10.20 Only One Shareholder. If the Corporation has only one shareholder or
only one holder of any class or series of shares, the shareholder present in
person or by proxy constitutes a meeting.

PART XI

NOTICES

11.01. Method of Giving Notices. Any notice (which term includes any
communication or document) to be given (which term includes sent, delivered or
served), pursuant to the Act, the regulations thereunder, the articles, the by-
laws or otherwise to a shareholder, director, officer, auditor or member of a
committee of the board shall be sufficiently given if delivered personally to
the person to whom it is to be given or if delivered to his recorded address or
if mailed to him at his recorded address by prepaid ordinary or air mail, or if
sent to him at his recorded address by any means of prepaid transmitted or
recorded communication. A notice so delivered shall be deemed to have been
given when it is delivered personally or to the recorded address as aforesaid; a
notice so mailed shall be deemed to have been received by the addressee on the
fifth day after mailing; and a notice so sent by any means of transmitted or
recorded communication shall be deemed to have been given when dispatched or
delivered to the appropriate

<PAGE>

- 19 -

communication company or agency or its representative for dispatch. The
secretary may change or cause to be changed the recorded address of any
shareholder, director, officer, auditor or member of a committee of the board in
accordance with any information believed by him to be reliable.

11.02 Notice to Joint Shareholders. If two or more persons are registered as
joint holders of any share, any notice shall be addressed to all of such joint
holders but notice to one of such persons shall be sufficient notice to all of
them.

11.03 Computation of Time. In computing the date when notice must be given
under any provision requiring a specified number of days' notice of any meeting
or other event, the date of giving the notice and the date of the meeting or
other event shall both be excluded.

11.04 Undelivered Notices. If any notice given to a shareholder pursuant to
section 11.01 is returned on three consecutive occasions because he cannot be
found, the Corporation shall not be required to give any further notices to such
shareholder until he informs the Corporation in writing of his new address.

11.05 Omissions and Errors. The accidental omission to give any notice to any
shareholder, director, officer, auditor or member of a committee of the board or
the non-receipt of any notice by any such person or any error in any notice not
affecting the substance thereof shall not invalidate any action taken at any
meeting held pursuant to such notice or otherwise founded thereon.

11.06 Persons Entitled by Death or Operation of Law. Every person who, by
operation of law, transfer, death of a shareholder or any other means
whatsoever, shall become entitled to any share, shale be bound by every notice
in respect of such share which shall have been duly given to the shareholder
from whom he derives his title to such share prior to his name and address being
entered on the securities register (whether such notice was given before or
after the happening of the event upon which he became so entitled) and prior to
his furnishing to the Corporation the proof of authority or evidence of his
entitlement prescribed by the Act.

11.07 Waiver of Notice. Any shareholder, proxyholder, other person entitled to
attend a meeting of shareholders, director, officer, auditor or member of a
committee of the board may at any time waive any notice, or waive or abridge the
time for any notice, required to be given to him under any provision of the Act,
the regulations thereunder, the articles, the by-laws or otherwise and such
waiver or abridgement, whether given before or after the meeting or other event
of which notice is required to be given, shall cure any default in the giving or
in the time of such notice, as the case may be. Any such waiver or abridgement
shall be in writing except a waiver of notice of a meeting of shareholders or of
the board or of a committee of the board which may be given in any manner.

<PAGE>

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PART XII

EFFECTIVE DATE

12.01 Effective Date. This by-lay shall be effective when made by the board.

THE FOREGOING BY-LAW is hereby consented to by the sole director of the
Corporation pursuant to the Act, as evidenced by such director's signature
hereto.

DATED as of the 19th day of January, 1996.

/s/James D. Skippen
------------------------------
James D. Skippen

THE FOREGOING BY-LAW is hereby confirmed by the sole shareholder of the
Corporation pursuant to the Act, as evidenced by such shareholder's signature
hereto.

DATED as of the 19th day of January, 1996.

/s/Ramesh Zacharias
------------------------------
Ramesh Zacharias

<PAGE>

1162209 ONTARIO INC.

BY-LAW NO. 2

BE IT ENACTED as a by-law of 1162209 Ontario, Inc. (hereinafter called the
"Corporation") as follows:

1. Management of the Corporation

(a) Board of Directors: The Board of Directors of the Corporation shall
consist of six (6) directors. So long as Hampton House International
Corp. ("Hampton") owns any shares in the capital of the Corporation,
at least one-third of the members of the Board of Directors of the
Corporation shall at all times be nominees of Hampton. So long as
Ramesh and Victoria Zacharias, either individually or collectively,
own a majority of the issued and outstanding shares in the capital of
the Corporation, the remaining members of the Board of Directors of
the Corporation shall at all times be nominees of Ramesh Zacharias.

If any person shall cease to be a director of the Corporation the
shareholders of the Corporation shall elect or appoint a director to
fill such vacancy within thirty (30) days of the date that such person
ceases to be a director. Until such vacancy is filled, the directors
shall not transact any business or exercise any of their powers or
duties, except as may be necessary to elect or appoint a director to
fill such vacancy.

(b) Quorum: A quorum for a meeting of directors shall be three (3)
directors, at least one (1) of whom shall be a Hampton nominee, a
quorum for a meeting of shareholders shall be at least two (2) persons
present in person and holding or representing by valid proxy not less
then eighty-five percent (85%) of the total number of issued and
outstanding voting shares in the capital of the Corporation for the
time being entitled to vote at such meeting, and one (1) of such
persons shall be a representative of, or a proxyholder appointed by
Hampton.

(c) Decisions of Directors: Any resolutions adopted at any meeting of the
Board of Directors shall require the affirmative votes in favour of
such resolution of at least a majority of the directors present and
voting at such meeting in order to be effective.

(d) Casting Vote: The chairman of any meeting of directors or
shareholders shall not have a casting vote.

(e) Approval of Certain Matters: Without limiting the generality of the
foregoing, the Corporation shall not, without the prior unanimous
consent of all directors:

(i) issue, or enter into any agreement to issue, any additional
shares in its capital;

<PAGE>

- 2 -

(ii) amend its articles or enact, confirm, adopt, amend or repeal
any by-law or special resolution;

(iii) redeem, purchase for cancellation or otherwise retire or pay
off any of its outstanding shares;

(iv) declare or pay any dividends on any of its issued and
outstanding shares of any class;

(v) repay any principal outstanding on a loan made by a
Shareholder to the Corporation or pay interest on any such
loans except as otherwise provided in this agreement;

(vi) create, assume or become liable for any borrowing or
hypothecate, mortgage, pledge, charge or otherwise encumber
any or all of its assets, where such borrowing or the value of
such assets being encumbered exceeds $10,000, in the case of
any individual borrowing or encumbrance, or causes the
aggregate value of such borrowing or assets being encumbered
in any fiscal year to exceed $50,000;

(vii) give security for or guarantee any debt, liability or
obligation which exceeds $10,000 on an individual basis, or
which would cause the aggregate of such debts, liabilities or
obligations in any fiscal year, in respect of which the
Corporation has granted security or a guarantee, to exceed
$50,000;

(viii) change its auditors or its bankers;

(ix) change its fiscal year;

(x) enter into any contracts, agreements or commitments out of the
ordinary course of business;

(xi) acquire or establish any additional business or expand or make
any material changes in its existing business;

(xii) take, hold, subscribe for or agree to purchase or acquire
shares of a corporation;

(xiii) make any capital expenditures in excess of $50,000, in any
fiscal year of the Corporation;

(xiv) sell, or otherwise dispose of, by conveyance, transfer, lease
or otherwise, its undertaking as an entirety or substantially
as an entirety or amalgamate or merge with or into any other
corporation; or

(xv) take or institute any proceedings for the winding-up,
reorganization or dissolution of the Corporation.

<PAGE>

- 3 -

2. Fiscal Advisor

The Corporation has engaged Hampton for a period of twelve (12) months from
the date of this by-law as its sole and exclusive fiscal adviser in connection
with all capital formation and corporate finance activities to be carried on by
the Corporation and Hampton shall assist the Corporation in obtaining funds from
parties other than the Corporation's shareholders by way of private and/or
public equity and debt financings. So long as Hampton is the fiscal advisor to
the Corporation all such financing activities by the Corporation shall require
the prior approval of Hampton.

3. Endorsement on Share Certificates

All share certificates sold and purchased under the terms of the agreement
dated January 22, 1996 among Hampton, Ramesh Zacharias, Victoria Zacharias and
the Corporation shall have the following memorandum endorsed thereon:

"This certificate is subject to an agreement dated the 22nd day of January,
1996 between Hampton House International Corp., Ramesh Zacharias, Vicki
Zacharias and 1162209 Ontario Inc."

4. Repeal of Prior Inconsistent By-laws, etc.

Any and all terms and provisions of any prior by-laws, resolutions and
proceedings of the Corporation which may be in conflict or inconsistent with any
term or provision of this by-law are hereby repealed, revoked and rescinded in
order to give full force and effect to each and every provision of this by-law.

ENACTED this 22nd day of January, 1996.

WITNESS the corporate seal of the Corporation.

/s/Ramesh Zacharias /s/Ramesh Zacharias
- ----------------------------- -----------------------------
President Secretary

<PAGE>

- 4 -

The foregoing by-law is hereby passed by all the Directors of the
Corporation, pursuant to the provisions of the Business Corporations Act
(Ontario), by their signatures hereto, this 22nd day of January, 1996.

/s/Ramesh Zacharias
- -----------------------------

The foregoing by-law is hereby confirmed by all the Shareholders of the
Corporation, pursuant to the provisions of the Business Corporations Act
(Ontario), by their signatures hereto, this 22nd day of January, 1996.

/s/Ramesh Zacharias
- -----------------------------

<PAGE>

THIS CONTRACT IS MADE ON

BETWEEN:
THE GOVERNMENT OF THE NORTHWEST TERRITORIES
as represented by the Minister of Health and Social Services
(referred to in the contract as the "Department")

- and -

MED-EMERG INTERNATIONAL INC.

(referred to in the Contract as "the Contractor")

PURPOSE:

The Department requires the services of the Contractor to provide develop
an integrated strategic plan for the delivery of health and social
services in the Northwest Territories. The Contractor agrees to do this.
This document sets out the complete terms and conditions of the contract
between the Department and the Contractor, including the amount of money
to be paid by the Department to the Contractor.

SERVICES AND PAYMENT:

1. The Contractor shall provide to the Department those Services which are
described in Schedule "A" of this Contract. It is understood that Schedule
"A" was originally the Terms of Reference prepared by the Department to
obtain proposals to perform the services required by the Department. Those
terms of reference now form part of the Contract between the Department
and the Contractor. Schedule "B" which is attached and forms part of this
contract, contains the proposal that the Contractor prepared. It sets out
how the Contractor will carry out the services in Schedule "A". Schedule
"A" overrides Schedule "B" if there is a conflict.

2. The Department shall pay for the services under this Contract up to
$701,750.00 (seven hundred and one thousand seven hundred and fifty)
Dollars according to Schedule "C", unless the Contract is terminated
before that full amount is payable.

3. This contract is in effect from December 17, 1996 until May 31, 1997
unless it is terminated before then or renewed for a longer period.

-1-

<PAGE>

4. David Ramsden, Deputy Minister, shall be the person to contact for the
purpose of communicating with the Department. Warren St. Germaine,
Director, Financial and Management Services, shall be the person to
contact for invoices and contract payment.

RECORDS TO BE KEPT:

5. The Contractor shall keep current and proper accounts and records of the
services it provides under this Contract. It shall keep these records for
five years after the end of the Contract. The Department may ask the
Contractor to produce the accounts and records at any reasonable time
during the period of this contract and for five years afterward, and upon
such a request the Contractor shall produce the accounts and records. Upon
termination of this Contract the Contractor will deliver to the
Department all papers and property belonging to the Government of the
Northwest Territories.

INSPECTION:

6. The Contractor agrees to allow the Department the right to inspect the
premises, programs, books, records and accounts of the Contractor at any
reasonable time to ensure that the service are being provided according to
Schedules "A" and "B".

CONFIDENTIALITY

7. The Contractor agrees that the information it obtains while providing
services under this Contract are confidential. Unless the Department gives
written approval in advance, the Contractor shall not release, allow media
coverage or publish any information it obtains under this Contract. This
includes information on past or present clients of the program. This duty
shall survive any termination of this contract.

LEGAL RESPONSIBILITY AND PROTECTION AGAINST LOSS INJURY OR DAMAGE

8. The Contractor shall indemnify and hold harmless the G.N.W.T., its
officers, employees, servants and agents from and against all claims,
actions causes of action, demands, losses, costs, damages, expenses,
suits or other proceedings by whomsoever made, brought or prosecuted in
any manner based upon or related to the activities of the Contractor under
the contract.

-2-

<PAGE>

9. The Contractor shall be liable, to the G.N.W.T. for any loss or damage to
property or equipment that is supplied to or placed in the care, custody
or control of the Contractor for use in connection with the contract
whether or not such loss or damage is attributable to causes beyond the
Contractor's control.

10. In the event that the Contractor is, in the opinion of the Contracting
Authority in default in respect of any obligation of the Contractor
hereunder, the G.N.W.T may perform any act as it deems necessary to
rectify such default and the G.N.W.T may deduct or set off the cost of
such rectification due the Contractor.

INSURANCE

11. Without limiting the indemnity given to the Department by the Contractor,
the Contractor shall keep a policy of insurance according to Schedule "D".

AMENDMENT AND ASSIGNMENT

12. This Contract can only be amended by both the Department and the
Contractor agreeing to the change in writing.

13. (A) This Contract may assigned by the Department and the assignee shall
have all the rights and be subject to all the obligations of this
Contract in favour of or against the Department. Notice of the
assignment will be given in writing to the Contractor.

(B) The Contractor consents to any such assignment and acknowledges that
it shall continue to be bound by all the terms of this Contract
after the assignment.

14. The Contractor may not assign or delegate work to be done under this
contract without the Department agreeing to that in writing. If the
Contractor wishes to assign any money owing to it under this Contract, the
Contractor is aware that this can only happen if the Comptroller General
of the Northwest Territories agrees in writing.

-3-

<PAGE>

TERMINATION

15. (A) With 30 days notice:

This contract may be terminated by the Department giving the
Contractor 30 days written notice. The Department shall pay an
amount of money to the date of termination which covers the services
completed up to the time the Contract ends.

(B) Upon breach of conditions by the Contractor:

If the Contractor does not carry out any of its duties under the
Contract, the Department shall be entitled to choose any of the
following options:

1. Deliver written notice of the default. This Contractor shall
immediately correct the problem to the satisfaction of the
Department. If not corrected within 6 days then the
Department can either repair the default and withhold and
deduct the costs of repair, including all labour costs, from
monies owing to the Contractor, or terminate the Contract.

2. Terminate the Contract without notice. The Department shall
pay to the Contractor any amount owing to the Contractor for
services to the date of termination less expenses or costs
incurred by the Department as the result of the Contractor's
default.

3. Terminate the Contract on 30 days notice as set out above.

FINANCIAL PROVISIONS

16. The Contractor is aware of Section 46 of the Northwest Territories
Financial Administration Act which says:

An expenditure pursuant to a contract will be incurred only if there
is a sufficient uncommitted balance in the appropriate item for the
fiscal year in which the expenditure is required under the Contract.

-4-

<PAGE>

GENERAL MATTERS

17. THE term "Contractor" includes all officers, employees, servants and
agents of the Contractor as makes sense under the contract.

18. The Contractor is an independent contractor and is not an employee of the
Department or the Government of the Northwest Territories. The Contractor
is responsible for any deductions required by law, such as for pension
plans, unemployment insurance, worker's compensation or income tax.

19. The Department and the Government of the Northwest Territories is not
required to pay federal GST and the Contractor shall arrange with the
federal government to claim full input tax credits, if any.

20. If any part of this contract is broken or is not lived up to and carried
out by one side, the other side does not give up its right under the
contract unless it agrees in writing to give up a specific right. An
agreement in writing to give up a specific right only applies for that one
time and not for any future times when the contract is broken or not lived
up to and carried out.

21. This contract in writing is the whole contract between the Department and
the Contractor and nothing else in writing or said orally at any time in
the past adds to, takes away from or changes this contract.

22. No member of the Legislative Assembly shall be permitted to obtain any
share or part of this contract or be entitled to receive any financial
benefit arising from this contract.

23. The Contractor agrees to follow the Business Incentive Policy of the
Government of the Northwest Territories for the purpose of carrying out
this contract.

24. (1) The copyright in all work prepared or submitted in accordance with
this contract belongs to the GNWT.

-5-

<PAGE>

NOTICES AND ADDRESSES

25. The Contractor shall notify the Department right away of any claim or law
suit which is made or threatened by anyone which relates in any way to
this contract.

26. If any notice is required under this contract, it shall be in writing and
shall be considered received:

a) right away, if delivered in person;

b) one day after sending it, if sent by fax; or

c) ten days after mailing, if sent by registered mail;

if sent to the Department at:

David Ramsden
Deputy Minister
Department of Health and Social Services
P.O. Box 1320
Yellowknife, NT X1A 2L9

Phone: (403) 920-6173
Fax: (403) 873-0266

if sent to the Contractor at:

Med-Emerg International Inc.
2550 Argentia Road, Suite 205
Mississauga, ON L5N 5R1

Phone: (905) 858-1368
Fax: (905) 858-1399

-6-

<PAGE>

The Department and the Contractor have read, signed and sealed this contract in
front of witnesses on the date stated at the top of the first page.

GOVERNMENT OF THE
NORTHWEST TERRITORIES

_____________________________ _________________________________
Witness Deputy Minister

_____________________________ _________________________________
Witness Contractor

-7-

<PAGE>

[KPMG LETTERHEAD]

ACCOUNTANTS' CONSENT

The Board of Directors
Med-Emerg International Inc.

We consent to the use of our audit report dated April 22, 1996 (except for
note 14 which is as at January 27, 1997) on the consolidated balance sheets
of Med-Emerg International Inc. as at December 31, 1995 and 1994, and the
consolidated statements of income, retained earnings and changes in financial
position for each of the years in the three-year period ended December 31,
1995 included herein and to the reference to our firm under the heading
"Experts" in the prospectus.

KPMG

Mississauga, Ontario, Canada
February 14, 1997

<PAGE>

[ZARITSKY PENNY LOGO]

ACCOUNTANTS' CONSENT

The Board of Directors
Med-Emerg International Inc.

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

/s/ Zaritsky Penny
Chartered Accountants

London, Ontario
January 27, 1997