TecKnowledge Healthcare Systems Inc., formed in 1993, won the province's contract in 1995 to build the digital system linking patients and rural hospitals to doctors in larger centres.

Linda Weaver, company co-founder, said her company is working with receivers PriceWaterhouseCoopers to restructure the company.

"There is certainly no intention for it (the company) to be totally gone at the end of the day," she said, although 10 of its 30 staff members have been laid off.

The company is working to ensure the provincial telehealth network continues to operate, and to preserve as many jobs as possible, Weaver said.

Health Department spokeswoman Sue McKeage said the system - the only one in Canada - will continue to operate "for the immediate future."

"Right now, we're looking at the network and its role in the overall health-care system to see how it can continue to be enhanced," McKeage said.

There are now 41 telemedicine sites around the province. Between April and September, 6,300 radiology cases were transmitted over the network, McKeage said.

Weaver said the company had been doing well, selling technology to Alberta last summer, and signing a partnership deal with a Massachusetts-based Internet image-management company in October.

But the telehealth market was "very slow" over the past 18 months, she said. Also, a search for capital funds in fall 2000 wasn't successful.

InNovaCorp, a provincial government agency, bought a $500,000 minority equity interest in the company last year.

"We believed in the company the day that we invested; we continue to believe in it today," said director of investments Pat Ryan. "There's nothing wrong with the technology. It takes capital to fund growth and the markets have been pretty difficult."

Ryan is "cautiously optimistic" the investment won't be lost.