UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549  FORM 10-K/A (Amendment No. 1) (Mark One)  xANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended December 31,
2007  or  oTRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  Commission file number 000-33187  instaCare Corp. ____________________________________________________________ (Exact name of registrant as specified in
its charter)  Nevada

91-2105842(State or other jurisdiction of
incorporation or
organization)

(I.R.S. Employer Identification
No.)  2660 Townsgate Road, Suite
300
Westlake Village,
California

91361(Address of principal executive offices)

(Zip Code)  Registrants telephone number, including
area code (805) 466-1973  Securities registered pursuant to Section
12(b) of the Exchange Act: None  Securities registered pursuant to Section
12(g) of the Exchange Act: Common Stock, $0.001 par value  Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. oYesxNo  Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Act. oYesxNo  Indicate by checkmark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. x Yes o   No   Indicate by
checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (§229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrants, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.   o  Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.  Large accelerated filer o
Accelerated filer oNon-accelerated filer o
Smaller reporting company x(Do not check if a smaller reporting
company)  Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x  State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference
to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the
registrants most recently completed fiscal year. $911,883 based on a share
value of $0.03.  Indicate the number of shares outstanding
of each of the registrants classes of common stock, as of the latest
practicable date. 34,700,688 shares of common stock, $0.001 par value,
outstanding on March 31, 2008.  DOCUMENTS INCORPORATED BY REFERENCE  List hereunder the following documents if
incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) Any annual report to security
holders; (2) Any proxy or information statement; and (3) Any prospectus filed
pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1980).  EXPLANATORY NOTE  InstaCare Corp is filing this Amendment No.
1 to Form 10-K (the "Amendment") to amend its annual report for fiscal year
ended December 31, 2007, as filed with the Securities and Exchange Commission on
April 3, 2008. The purpose of this Amendment is to amend Item 8A of Part II to
clarify management's evaluation of the effectiveness of the Company's disclosure
controls and procedures. Except for the cover page and this explanatory note,
this Amendment continues to speak as of the original filing date and does not
update the disclosures contained therein to reflect any events or results which
occurred subsequent to the filing date of the original Form 10-K.  2    INSTACARE CORP FORM 10-K TABLE OF CONTENTS  PagePART I
5Item 1. Business
5Item 1A. Risk Factors
17Item B. Unresolved Staff Comments
21Item 2. Properties
21Item 3. Legal Proceedings
22Item 4. Submission of Matters to a Vote of Security
Holders
22PART II
23Item 5. Market for Registrants Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity
Securities
23Item 6. Selected Financial Data
30Item 7. Managements Discussion and Analysis of
financial Condition and Results of Operations
30Item 7A. Quantitative and Qualitative Disclosures
about Market Risk
37Item 8. Financial Statements and Supplementary
Data
37Item 9. Changes and Disagreements with Accountants
on Accounting and Financial Disclosure
38Item 9A. Controls and Procedures
38Item 9B. Other Information
39Part III
39Item 10. Directors, Executive Officers and
Corporate Governance
39Item 11. Executive Compensation
40Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
42Item 13. Certain Relationships and Related
Transactions, and Director Independence
43Item 14. Principal Accountant Fees and
Services
44Part IV
4415. Exhibits, Financial Statement Schedules
44   3   FORWARD-LOOKING STATEMENTS  This document contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact are forward-looking statements for purposes of federal and
state securities laws, including, but not limited to, any projections of
earnings, revenue or other financial items; any statements of the plans,
strategies and objections of management for future operations; any statements
concerning proposed new services or developments; any statements regarding
future economic conditions or performance; any statements or belief; and any
statements of assumptions underlying any of the foregoing.  Forward-looking
statements may include the words may, could, estimate, intend,
continue, believe, expect or anticipate or other similar words. These
forward-looking statements present our estimates and assumptions only as of the
date of this report. Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the dates on
which they are made. We do not undertake to update forward-looking statements to
reflect the impact of circumstances or events that arise after the dates they
are made. You should, however, consult further disclosures we make in future
filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.  Although we believe that
the expectations reflected in any of our forward-looking statements are
reasonable, actual results could differ materially from those projected or
assumed in any of our forward-looking statements. Our future financial condition
and results of operations, as well as any forward-looking statements, are
subject to change and inherent risks and uncertainties. The factors impacting
these risks and uncertainties include, but are not limited to:  ·
increased competitive pressures from
existing competitors and new entrants;  ·
deterioration in general or regional
economic conditions;  ·
adverse state or federal legislation
or regulation that increases the costs of compliance, or adverse findings
by a regulator with respect to existing
operations;  ·
loss of customers or sales
weakness;  ·
inability to achieve future sales
levels or other operating results;  ·
the unavailability of funds for
capital expenditures and/or general working capital;
and  ·
operational inefficiencies in
distribution or other systems.  ·
our ability to recruit and hire key
employees;  ·
the inability of management to
effectively implement our strategies and business plans;
and  ·
the other risks and uncertainties
detailed in this report.  ___________________________________________________________________________________  In this form 10-K
references to instaCare, the Company, we, us, and our refer to
INSTACARE CORP. and its wholly owned Nevada corporation operating subsidiaries,
Medicius, Inc., Pharma Tech Solutions, Inc., Pharmtech Direct Corp., and PDA
Services, Inc.  4   AVAILABLE
INFORMATION  We file annual,
quarterly and special reports and other information with the SEC. You can read
these SEC filings and reports over the Internet at the SECs website at
www.sec.gov or on our website at www.instacare.net. You can also obtain copies
of the documents at prescribed rates by writing to the Public Reference Section
of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days
between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330
for further information on the operations of the public reference facilities. We
will provide a copy of our annual report to security holders, including audited
financial statements, at no charge upon receipt of written request to us at
instaCare Corp, 2660 Townsgate Road, Suite 300, Westlake Village, California
91361.  PART I  Item 1. Business.  Overview  InstaCare Corp. (ISCR)
is a nationwide prescription drug, prescription diagnostics and home testing
products distributor. Our subsidiaries, Medicius, Inc., Pharma Tech Solutions,
Inc., Pharmtech Direct Corp. and PDA Services, Inc. operate in several
healthcare products distribution channels. We distribute brand name prescription
drug and prescription diagnostics products as well as several lines of ostomy,
wound care and post-surgery medical products. The company directs its marketing
efforts to ambulatory and semi-ambulatory older Americans afflicted with
diabetes and complications caused by diabetes and old age. The company, formerly
a medical IT company with proprietary IT product lines, acquired its medical
products distribution business in late 2004 through a merger with Phoenix, AZ
based CareGeneration, Inc. We have grown the original CareGeneration business
through subsequent acquisitions of private businesses and strategic partnerships
with larger private pharmacies. We intend to acquire additional private
companies in this industry to achieve our goal of becoming a full service value
added DME provider of products and services.  We also offer
information technology solutions in several medical care market channels by
providing physicians with information at the point of care. Our products, unlike
many other medical information, use palm-sized computers (PDA's), which operate
on any Microsoft Mobiles "Pocket PC" based handheld device, either in a wireless
or "wired" mode, which allow physicians to carry, access and update their
patients' histories, medication data, and best care guidelines - all at the
point of care.  During the last fiscal
year we have executed definitive agreements with New York based R&R Drugs
and Phoenix Arizona based Genrich United Pharmacy. We believe that we will be
able to provide value added services to our customers by cost reductions brought
about by increased efficiencies and cross marketing opportunities.  We currently employ 3
full-time staff at our executive office located at 2660 Townsgate Road, Suite
300, Westlake Village, California 91361. We also employ one full time and six
part time personnel. These people are located in Florida, California and New
Jersey and act as sales and customer service representatives. Our telephone
number is (805) 446-1973 and our website address is
www.instacare.net.  Business Development  We were originally
incorporated in the State of Nevada on March 2, 2001 as ATR Search Corporation
(ATR). In June of 2002, ATR merged with Medicius, Inc. whereby Medicius
remained as a wholly owned subsidiary of ATR. Following the merger the
operations of Medicius were conducted through ATR and the former operations of
ATR were conducted through CareTechnologies, LLC, a wholly owned subsidiary of
ATR. Under the terms of the merger agreement, the stockholders of Medicius
received 412,110 shares of ATRs common stock and 103,028 warrants in exchange
for 100% of the outstanding shares of Medicius common stock. On August 2, 2002,
we amended our Articles of Incorporation to change our name from ATR to
CareDecision Corporation. CareTechnologies, LLC was dissolved on May 20, 2003,
but CareDecision continued conducting all operations of CareTechnologies. On
November 19, 2004, we incorporated two Nevada subsidiary companies, Pharma Tech
Solutions, Inc. and PDA Services, Inc. In March 2006 we incorporated an
additional Nevada corporation subsidiary, Pharmtech Direct corp.  5   On April 1, 2005, we amended our Articles of Incorporation to
change our name from CareDecision Corporation to instaCare Corp. Our common
stock trades on the over-the-counter securities market through the Financial
Industry Regulatory Authority Automated Quotation Bulletin Board System, under
the trading symbol ISCR.  Throughout this filing
all references to shares have been restated to reflect an 80:1 reverse stock
split enacted on February 3, 2006.  OUR BUSINESS  We have recently focused
our business attention towards providing prescription drugs, prescription
diagnostics, at-home testing and medical/surgical products through several
medical distribution channels. Our secondary business objective has been to
provide medical information technology (IT) for use with Internet-based
communication, and network software systems and applications, that reside on and
function through a Windows CE-Based PDA- available from most major computer
brands such as Sony, Dell, IBM and Palm -to the medical fields and the lodging
and time-share real estate industries.  We are distributing
prescription drugs, prescription diagnostics, at-home testing, post-surgical
products and developing medical IT products that offer solutions in medical care
and management by providing physicians with information at the point of care.
Unlike other medical information systems using standard computer terminals, we
use palm-sized computers (PDA's), which operate on any Microsoft Windows CE
"Pocket PC" based handheld device, either in a wireless or "wired" mode, and
allows physicians to carry, access and update their patients' histories,
medication data, and best care guidelines - all at the point of care.  The local host for our
PDA devices is a Windows (9X, NT, XP, 2003 or later) based PC, which, in turn,
permits one to eight of the aforementioned PDA's to be linked to either a
medical network or hotel/motel wide area network, or help-desk network, and
allows each PDA to become a uniquely identified mobile node on that network,
independent of PC linkage, thereby, assisting the professional, whether he be a
doctor, hotel owner, hotel guest or satellite broadcast technician.  We have established a
core management team experienced in all phases of health care, data management
and the Web.  Through December 31,
2007, our operations have been conducted through instaCare Corp. and our
subsidiaries PDA Services, Inc., Pharma Tech Solutions, Inc., Pharmtech Direct
Corp. and Medicius, Inc. On June 30, 2007 we ceased operating through our
subsidiary Medicius, Inc.  Our business objectives
include:  1.
Providing medical communication
devices based on networks of personal digital assistants (PDA). These
products are believed to provide benefits of on demand medical information
to private practice physicians, licensed medical service providers such as
diagnostic testing laboratories, and medical insurers. We have created
PDA-centric products and a suite of Internet enhanced software
applications that include those features that specifically respond to the
requirements of the practicing physician.2.
Provide, as an emerging Internet
pharmacy, retail drug prescriptions fulfillment with the goal of
delivering affordable, discounted prescriptions to the millions of
uninsured and underinsured consumers in the United States.  3.
Combining our newly acquired
wholesale and retail drug distribution with our PDA technologies, creating
wholesale and retail ePharmacies similar in function to existing Internet
pharmacies but directed to serving the large base of underinsured and
uninsured Americans; and4.
The practice of specializing in the
distribution of medical diagnostic and medical disposable products
associated with the on-going care of diabetes inflicted patients now that
our new prescription drug distribution business is coming on-line.  We also have adapted our
medical communications technologies to service the real estate management and
hotel/motel/convenience industries. Our real estate and hotel/motel objectives
include building electronic commerce networks based on personal digital
assistants (PDA) to the hotels, motels and single building, multi-unit apartment
buildings with a desire to offer local advertising and electronic services to
their tenants/guests.  6   Prescription
Drug Distribution  On January 4, 2006, we
transacted our first commerce by distributing at home diabetic test strips to
the patient base then serviced by CareGeneration, Inc., the companys
acquisition target. This commerce was initiated under a work-through agreement
by and between us, our subsidiaries Pharma Tech Solutions, Inc. and Medicius,
Inc., CareGeneration, Inc., Ronald Kelly and his Kelly Company World Group, Inc.
private corporation. Subsequently, we accepted additional orders for future
business and fulfilled these orders thereby building the foundation for our
current business. Later, because of the issues that arose between the Company
and Mr. Kelly and his controlled entities, inclusive of Mr. Kellys failure to
transfer a certain drug distribution license and Mr. Kellys on-going
competition with the Company and our subsidiary, Pharma Tech Solutions, Inc., we
concluded that it would be best if the company transacted all commerce through
instaCare and our wholly owned subsidiary, Medicius, Inc. The company then
initiated litigation against Mr. Kelly, his daughter and others. Ultimately we
reached a settlement with Mr. Kelly whereby he stipulated to pay the company
$200,000 and further agreed not to compete. This then allowed us to apply for
additional drug distribution licenses in the states of New Jersey, New York,
North Dakota and Arizona, in an effort to allow us to increase our operational
efficiency. Also,some prescription drug distribution operations are currently
being conducted through PDA Services, Inc., which is in the process of
establishing a facility in Hope, North Dakota. In addition, we have established,
through Pharma Tech Solutions, Inc., direct to patient prescription and
prescription diagnostics fulfillment programs which are maintained in New
Jersey, New York and Arizona.  Our new prescription
drug distribution business came on-line during the third and fourth quarters
2006 and throughout 2007. This has in turn allowed Instacare to specialize in
the distribution of medical diagnostic and medical disposable products
associated with the on-going care of diabetes inflicted patients. This decision
was made because the treatment and care of diabetes patients is an on-going
lifetime process. Included in our current business plan is the distribution of
wound care, ostomy and post-surgical products to diabetes inflicted patients and
other parallel markets.  In the first quarter of
2006, we announced the execution of contracts with two large multinational
pharmaceutical companies for the distribution of their lines of diabetic
monitoring and testing products. We originally forecast revenues of
approximately $12 million for fiscal 2006 based upon these contracts alone. We
exceeded these forecasts. We continue to purchase products for resale from these
manufacturers. Our management also believes that there is potential for
collateral business through these companies and is in the process of expanding
its product lines accordingly. Subsequently, we entered into agreements with
additional pharmaceutical companies and group medical buying organizations to
add more of these diagnostic products as we further specialize into this medical
niche. Further, we have recently expanded our offerings to include asthma
control, coagulation testing, ostomy, post-surgical and wound care products.  Specializing in rapid
delivery of prescription drugs and diagnostic products, we are in the final
stages of augmenting our prescription drug and prescription diagnostics
distribution business by creating a nationwide network. Through a proprietary
use of the Internet, we have completed a pharma distribution management system
that allows our mail order pharmacy to begin the servicing of the 40+ million
Americans who are either uninsured or underinsured.  We have also created a
fully integrated Prescription Fulfillment Program through which physicians can
directly submit prescriptions to our mail order pharmacy through the use of our
proprietary hand-held device, tablet PC, or PDA that is enabled with a Wi-Fi
link to the Internet  instead of issuing a standard prescription for the
patient to fill at a local drugstore.  Using our technology,
prescriptions for medication or diabetic supplies are submitted instantaneously
and securely. We fill the prescription immediately and the customer receives
his/her medications at his/her home within 24 hours, usually by the next morning
24/7. We then bill Medicare, Medicaid, or the patient's insurance company
directly.  This concept is directed
towards practitioners who treat long term care patients, the uninsured and
underinsured. This concept already has enlisted organizations that manage or
finance the indigent practices of more than 2,500 doctors. We are establishing
our first fulfillment center to service these uninsured and underinsured
patients in Phoenix, Arizona. We have also secured, through a strategic
partnership the use of a retail prescription license to transact prescription
fulfillment in Arizona.  By using wireless
technology to link our centrally located drug distribution center with an
established wholesale prescription distributor, we are positioned to bring
economic and administrative efficiencies to the projected $8 billion marketplace
for delivering prescriptions to the uninsured and underinsured.  7   The retail prescription business - often subsidized or funded by
government benefits -- is a development stage enterprise moving to take
advantage of the tremendous opportunity in retail pharmacy business via direct
mail order distribution of prescriptions and related products and supplies. As
part of our acquisition of CareGeneration, Inc., we also acquired from
CareGeneration a proprietary, retail mail order methodology for the distribution
of pharmaceutical and healthcare supplies which includes:  1.
Discounted pharmaceutical and
healthcare supplies marketed by mail order to minority and citizen
organizations (religious groups, unions, etc.)  2.
A proprietary "biometric" secured
bankcard primarily targeted to the under-insured. The bankcard is honored
by any FDIC bank within the United States.  3.
Discounted pharmaceutical and
healthcare supplies marketed by mail order to state Medicaid and the
Federal Medicare plans.  We subsequently learned
that CareGeneration did not own or have exclusive rights to the biometric
technology and as a result we undertook a conversion of some of our own medical
information technology to replace this needed and secure device through our own
efforts.  Retail Prescription  The retail prescription
business is often subsidized or funded by government benefits which seems to be
aggressively moving to take advantage of the tremendous opportunity in retail
pharmacy business via direct mail order distribution of prescriptions and
related products/supplies. We acquired a retail mail order business concept for
the distribution of pharmaceutical and healthcare supplies. We are focusing our
distribution activities to patients who lack prescription drug
coverage and patients who qualify for government or institutional programs such
as Medicare, Medicaid, children's health insurance programs and long term care
institutions and organizations.  Our retail prescription
business maintains three operating units:  1.
Licensed wholesale prescription drug
distribution business, where we deliver bulk prescription drugs on a
wholesale basis to clients;  2.
Licensed distribution of diabetes
diagnostics and supplies, where we deliver diabetic testing strips and
associated diagnostic products under several business models; and  3.
Internet pharmacy/prescription
fulfillment, which we are methodically, but cautiously, entering.  Our plan is to combine
the wholesale and retail drug distribution businesses and couple these
businesses with the capabilities to connect physicians, using our PDA
technologies, creating wide-ranging ePharmacies similar in function to existing
Internet pharmacies but directed to serving the large base of institutionalized,
underinsured and uninsured Americans.  Retail prescription distribution
methods  On December 27, 2004,
pursuant to the agreement and plan of merger with CareGeneration, Ronald Kelly,
a former director, agreed to transfer to Pharma Tech a Wholesale Drug
Distribution License (license no. 004-001681, expiring 12/31/2007 issued to
Kelly Company world Group, Inc, Ronald R. Kelly, 96 S. Madison St., Carthage,
IL. 82321, by the State of Illinois and jointly governed by regulators from the
State of Illinois, the U. S. Drug Enforcement Agency and the U.S. Food and Drug
Administration). Additionally, Mr. Kelly agreed to seek transfer of a reciprocal
drug distribution license issued by the State of Indiana, a client list and
know-how in the form of written (published) drug distribution policies and
procedures applicable to independent prescription drug and diagnostic
distributors. After learning that these licenses had not been transferred and
were not in the process of transfer, we filed suit against Mr. Kelly, his wife,
daughter and several of his controlled entities. The complaint expressed the
impact of Mr. Kellys deceit. In December 2007, we settled this lawsuit in
return for a $200,000 judgment against Mr. Kellys major entity. We are in the
process of enforcing this judgment.  8   To augment our drug distribution efforts, our subsidiary, PDA
Services, Inc., applied for and was granted a prescription drug distribution
license in the state of North Dakota (License No. 463, Wholesale Drug (Device)
Manufacturing (Reverse) Distributor/Warehouse License, expiring on June 30,
2008). In addition, our subsidiary Pharma Tech Solutions, Inc. has applied for
and been granted a retail prescription drug fulfillment license in the state of
Arizona (Permit No. 4374). The company allowed this license to lapse when we
entered into a strategic partnership with Genrich United Pharmacy (Genrich) in
Phoenix, AZ, saving the company the need to build what would have amounted to
duplicate pharma distribution facilities. The company is pleased with the
initial business it has transacted through the partnership with Genrich.  PDA Services, Inc.  On June 7, 2006, we and
our subsidiary PDA Services, Inc. entered into an Intangible Property, License
Acquisition Agreement with Colonia Natural Pharmacy, Inc., a New Jersey
corporation (Colonia), also known as CN Pharmacy, and individuals Mr. Svetislav
Milic and Mr. Nathan Kaplan. There are no material relationships between us or
our affiliates and any of the parties, other than in respect of the material
definitive agreement.  Under the terms of the
Intangible Property License Acquisition Agreement, Mr. Milic, will transfer,
register and convey, and we shall receive, free and clear of all liens,
encumbrances and liabilities, the wholesale drug distribution license (License
Number 5003178) granted to Mr. Milic by the State of New Jersey, and all rights
and benefits thereto, plus the goodwill and know-how of Mr. Milic, and other
related rights granted the Licensee by virtue of this conveyance. Unless
otherwise agreed to, Mr. Milic shall remain the control party of the transferred
license for a period of three years after transfer, registration and conveyance.  In tandem with the
Intangible Property License Acquisition Agreement, the parties entered into an
Exclusive Agreement Regarding Wholesale Drug Distribution License and Wholesale
Drug Distribution Operations wherein the conveyance included the rights to the
use of Colonia Natural Pharmacy Inc.s office and warehouse facility approved
for the storage and delivery of pharmaceuticals, and Colonia will have no role,
and thus, no responsibility or liability, in the conduct of the d/b/a
business, including ordering, distribution, or business management of the
wholesale business conducted by us or our subsidiaries.  The company has
subsequently cloned this series of agreements with Colonia into similar
agreements with R&R Drugs in Brooklyn, NY and Genrich United Pharmacy in
Phoenix, AZ. We have begn transacting commerce in New York and in Arizona as
result of our agreements.  Medical Field Applications  Our medical technologies
are grounded in the central need/desire to furnish the practicing physician with
crucial point-of-care patient information rapidly and reliably via a PDA. The
technologies utilize the power of the Internet to move large amounts of data to
and from a variety of platforms securely via a powerful Windows CE based PDA
designed for portability and upgradeability. Compliant with the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA") and the regulations that
have since been promulgated, this PDA technology offers real-time point of care
applications.  Our software is designed
to integrate point of service applications. The medical appliance, the longest
available product, monitors treatment protocols and up to the moment patient
histories coupled with real-time on-line medical insurance claims submission.
Our ultimate key to success resides in providing the private practice physician
with the capability to, sequentially, learn about the history of the patient
during, or prior to, entering the examining room, treat the patient and update
the insurer of the episode of care. Accomplishing these objectives resolves a
major dilemma for the health care provider; instantaneous communication of vital
patient related information at or before the patient encounter.  Medical field distribution
methods  Since inception, we have
and will continue to focus our marketing efforts towards general medical and
pharmaceutical medical applications through our E-Health handheld information
appliance (PDA) software application package, and a permanently affixed handheld
information appliance and Wi-Fi (wireless) network. Specifically we have
marketed our line of MD@Hand PDA-based medical communication network products to
the medical insurance and pharmacy benefits management segments of the
healthcare markets.  9   We have implemented a targeted marketing campaign to educate
healthcare providers about our medical technology solutions; targeting the
physician providers who specialize in care for the indigent through the
provision of technology, products and services that specifically respond to the
needs and requirements of that market. We market our suite of medical software
products by emphasizing their simplicity, portability, convenience and ease of
use. We have chosen this focus due in part that State Medicaid and state and
local welfare service providers are agencies who do not typically participate in
electronic services networks. This is primarily because care for the poor and
indigent is logistically and financially burdensome due to a lack of resources
at administrative levels. Put another way, there is usually no shortage of
volunteer physicians but there is a shortage of program administrators, clinics,
medical supplies and patient access. Additionally, we believe that a company
that enters this loop to complete the link by providing utility and value to
participants will be embraced. It is incumbent on us to therefore extend our
marketing strategy to facilitate this reality.  Implicit to our medical
marketing strategy is the contracting of state Medicaid and welfare programs,
pharmacy benefit management entities, and medical case management entities
within a targeted region that provides for system integration to our products
and services. Once the network has been established our IT driven mail order
pharmacy services will be distributed to those physicians included within the
Medicaid or welfare agency Provider Network. We will rely on those contracted
agencies to support and assist in the distribution of the product to the
physicians  Medical field competition  The medical industry is
highly competitive in the attraction and retention of physician customers,
insurers, government agency payors/sponsors and other medical providers. The
number of competing companies and the size of such companies vary in different
geographic areas. Generally, we are in competition with other PDA technology
companies that offer medically related software suites, with the most effective
competition coming from companies that possess greater capital resources, have
longer operating histories, larger customer bases, greater name recognition and
significantly greater financial, marketing and other resources than do we.  There are a number of
small and large companies that provide some type of IT services at the point of
care tying physicians to the healthcare systems. There is substantial turnover
and business failure in this industry as well as substantial consolidation:  1.
Large publicly traded
companies:  a.
WebMD, formerly known as Healtheon
(HLTH);  b.
The former MedicaLogic/Medscape
(merged into HLTH);  c.
Cerner/Citation
(CERN);  d.
IDX Corporation (IDXC); and  e.
The former Shared Medical Corp.
(acquired by Siemens).  These companies, and
others, are involved in healthcare based services including consumer services,
E-commerce and connectivity.  2.
PDA-based
companies:  a.
PatientKeeper Corps. (formerly
Virtmed) product allows physicians to capture billing information for
hospital-based accounts and purports to manage receivable transactions (a
mix of 1st generation features on a 3rdgeneration tech
platform);  b.
ePhysician, which four years ago was
acquired in an asset sale by Ramp Corp. (RCO). Ramp filed for bankruptcy
protection in 2006 leaving a promising technology in flux;   10    c.
iScribe, which four years ago was
reorganized and then merged into AdvacePCS, has announced products that
reside on 3-Com's Palm PC. 3-Com no longer manufactures the Palm leaving
another promising technology with business model
issues;  d.
AllScripts (MDRX) employs a
"pull-through" business model whereby their technology is employed at the
physician's point of care in an effort to provide medical utility and
medical content to that physician, but with the greater goal of selling
that physician bulk pharmaceuticals. MDRX appears to be positioned to
advance to a market leadership position with a product distribution
channel of approximately 5,500 physicians' office sites (3% of the total
market); and  e.
PocketScripts ("PS") is another
market entrant that specializes in the electronic prescriptions. Zixcorp
(ZIXI) acquired PS in 2003 and is currently creating a market for the
product and technology.  These companies, and
others, offer products and services similar to ours: delivering PDA based data
management to physicians.  There can be no
assurance that we will be able to compete successfully against current and
future competitors, and competitive pressures faced by us may have a material
adverse effect on our business, prospects, financial condition and results of
operations. Further, as a strategic response to changes in the competitive
environment, management may from time to time make certain pricing, service or
marketing decisions or acquisitions that could have a material adverse effect on
our business, prospects, financial condition and results of operations.  Advancing the Practice of Medicine at
the Point of Care  We are also a developer
of products that offer unique solutions in medical care and management by
providing physicians with essential information instantaneously as they meet
with their patients.  Unlike other medical information systems using
standard computer terminals, we use palm-sized computers (PDA's) that allow
physicians to carry, access and update their patients' histories, medication
data, and best care guidelines  all at the point of care
streamlining and revolutionizing the practice of medicine.  In
addition,we market our MD@Hand software application, which
also leverages the connectivity of handheld devices via the Internet. This
first-in-class PDA software application offers the user access to job specific
information (I.E. patient histories or databases), instant messaging, and
prescription fulfillment for pharmacists. Our versatile, PDA-based software
application is also used in other, information-intensive industries.  Our
proprietary ResidenceWare is a similar collection of Internet-enhanced
communication, integration, and networking tools developed for the real estate
marketplace in cooperation with prominent commercial and residential real estate
management companies.  Numerous sales professionals, lodging managers and
hoteliers currently use the software to access such information as tenant
histories and property databases, as well as for instant messaging directly with
occupying tenants.  MD@Hand  Information supplied to
and from the physician via the handheld device includes:  Case/Episode diagnosis and Treatment
Information:  ·
Episode by episode multiple diagnosis
and physician chosen treatment pathways  ·
Patient cumulative treatment
(electronic medical record) histories, including hospitalizations and
histories from patient encounters with other
physicians  ·
Eight levels best care medical
protocols  ·
Tentacle links to the physician
desktop reference (PDR) and prescription drug
databases   11   Medical Order
Entry and Fulfillment:  ·
Full Pharmacy Benefits Management
programs with electronic script writing with drug formulary and drug to
drug interaction checks prior to script transmission  ·
Lab Order Entry with complete
reporting including results, pending, ticklers, out of limits, historical,
summary, etc.  ·
Accident/Worker's Compensation
intervention modules. In addition, instaCare software applications provide
both on-line and off-line (fax) order entry.  Payor-Related Applications  ·
Plan and Procedure Eligibility  ·
Procedure/Drug Authorization  ·
Patient Referral  ·
Hospitalization Admit Decision Tree
and schema.  Benefit for Physicians  ·
All access to medication and drug
data, interaction databases and formulary information is provided free of
charge to all participating physicians via the PDA through instaCare's
network  ·
Lowers office costs by centralizing
all formulary and prescription m  ·
Medical data on one or multiple PDAs
and by reducing paperwork and phone time  ·
Improves quality of care by providing
timely information including Best Care Guidelinesto help assure an
excellent standard of care  ·
Improves office workflow by providing
a compendium of prescription, lab results, referable physicians  ·
Reduces time pulling and refilling
charts reduces errors by offering immediate access to drug data, current
formulary tables, lab results and Best Care
Guidelines  Benefit For Health
Plans  ·
High degree of formulary compliance  ·
Expedites claims and Improves
outcomes  ·
Helps in creating excellent standard
for quality healthcare for all patients  ·
Reduces cost of operations in many
ways (i.e.: cutting down paperwork and phone support)  ·
Reduces errors  ·
Assures correct utilization of
resources   12   How Does it
Work  The
following diagram shows how the PDA's communicate with remote host
systems:  [instacare10ka123107001.jpg]  Source of Principal Suppliers  Our suite of
software-both medical and real estate and hotel/motel related- is proprietary
code and does not require raw materials or principal suppliers. Our software is
utilized through over-the-counter PDA's and computer products, as previously
discussed. However, our ResidenceWare product is manufactured by third parities.
Of the units placed, approximately one half (1/2) are units manufactured and/or
distributed by companies such as ASUS, Casio and Viewsonic. The remaining units
were manufactured by Dell Computer, Inc. (Dell). Since October 1, 2004, all
units placed have been Dell units. However, since we are now in the process of
installing units at hotels that were referrals from existing customers we have
recently placed an order for additional ASUS units. We do not foresee any
additional change or additions of in PDA manufacturers in the near future.  13   Dependence on
a Few Major Customers  Beginning with the first
quarter 2007 and throughout the remainder of the year we generated revenues
primarily through our medical and retail pharmaceutical distributions from five
companies. We maintain strategic relationships with these companies whereby
these companies place orders and then we service these orders and supply product
directly to the patients and/or those entities where the patients reside. We
then accept assignment for the billing and future servicing of these patients.
We maintain relationships with these original five resellers but have also added
fourteen additional customers and books of business with institutional care
clients whereby we sell product and then receive revenues form the direct filing
of reimbursement claims with medical insurance companies. In the future we
expect the majority of the growth in our business to come as a direct result of
our direct to patient distribution.  Government Approval and Effect on Us  Medical applications  Recent government and
industry legislation and rulemaking, especially the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA"), and industry groups such as the Joint
Commission on Accreditation of Healthcare Organizations ("JCAHO"), require the
use of standard transactions, standard identifiers, security and other standards
and requirements for the transmission of certain electronic health information.
New national standards and procedures under HIPAA include the "Standards for
Electronic Transactions and Code Sets" (the "Transaction Standards"); the
"Security Standards" (the "Security Standards"); and "Standards for Privacy of
Individually Identifiable Health Information" (the "Privacy Standards"). The
Transaction Standards require the use of specified data coding, formatting and
content in all specified "Health Care Transactions" conducted
electronically.  However, because all HIPAA Standards are subject to change
or interpretation and because certain other HIPAA Standards, not discussed
above, are not yet published, we cannot predict the future impact of HIPAA on
our business and operations. Additionally, certain state laws are not pre-empted
by the HIPAA Standards and may impose independent obligations upon our customers
or us.  Failure to comply with
HIPAA, as well as other government organizations, may have a material adverse
effect on our business. Government regulation of healthcare and healthcare
information technology, are in a period of ongoing change and uncertainty and
creates risks and challenges with respect to our compliance efforts and our
business strategies. The healthcare industry is highly regulated and is subject
to changing political, regulatory and other influences. Federal and state
legislatures and agencies periodically consider programs to reform or revise the
United States healthcare system. These programs may contain proposals to
increase governmental involvement in healthcare or otherwise change the
environment in which healthcare industry participants operate. Particularly,
compliance with HIPAA and related regulations are causing the healthcare
industry to incur substantial cost to change its procedures. Healthcare industry
participants may respond by reducing their investments or postponing investment
decisions, including investments in our products and services. Although we
expect these regulations to have the beneficial effect of spurring adoption of
our software products, we cannot predict with any certainty what impact, if any,
these and future healthcare reforms might have on our business. Existing laws
and regulations also could create liability, cause us to incur additional cost
or restrict our operations.  Specific risks include,
but are not limited to, risks relating to:  Electronic
Prescribing:The use of our software by physicians to perform a variety
of functions, including electronic prescribing, electronic routing of
prescriptions to pharmacies and dispensing, is governed by state and federal
law. States have differing prescription format requirements, which we have
programmed into our software. Many existing laws and regulations, when enacted,
did not anticipate methods of e-commerce now being developed. While federal law
and the laws of many states permit the electronic transmission of prescription
orders, the laws of several states neither specifically permit nor specifically
prohibit the practice. Given the rapid growth of electronic transactions in
healthcare, and particularly the growth of the Internet, we expect the remaining
states to directly address these areas with regulation in the near future. It is
possible that aspects of our MD@Hand software tools could become subject to
government regulation. Compliance with these regulations could be burdensome,
time-consuming and expensive. We also could become subject to future legislation
and regulations concerning the development and marketing of healthcare software
systems. These could increase the cost and time necessary to market new services
and could affect us in other respects not presently foreseeable. We cannot
predict the effect of possible future legislation and regulation; and,  14   Medical Devices:The United States Food and
Drug Administration (the "FDA") has promulgated a draft policy for the
regulation of computer software products as medical devices under the 1976
Medical Device Amendments to the Federal Food, Drug and Cosmetic Act. To the
extent that computer software is a medical device under the policy, we, as a
manufacturer of such products, could be required, depending on the product,
to:  ·
register and list our products with
the FDA;  ·
notify the FDA and demonstrate
substantial equivalence to other products on the market before marketing
such products; or  ·
obtain FDA approval by demonstrating
safety and effectiveness before marketing a product.  Depending on the
intended use of a device, the FDA could require us to obtain extensive data from
clinical studies to demonstrate safety or effectiveness, or substantial
equivalence. If the FDA requires this data, we would be required to obtain
approval of an investigational device exemption before undertaking clinical
trials. Clinical trials can take extended periods of time to complete. We cannot
provide assurances that the FDA will approve or clear a device after the
completion of such trials. In addition, these products would be subject to the
Federal Food, Drug and Cosmetic Act's general controls, including those relating
to good manufacturing practices and adverse experience reporting. Although it is
not possible to anticipate the final form of the FDA's policy with regard to
computer software, we expect that the FDA is likely to become increasingly
active in regulating computer software intended for use in healthcare settings.  Anti-Kickback
Regulation:As a distributor of prescription drugs along the
distribution chain that ultimately supply physicians, we are subject to the
federal anti-kickback statute, which applies to Medicare, Medicaid and other
state and federal programs. The statute prohibits the solicitation, offer,
payment or receipt of remuneration in return for referrals or the purchase, or
in return for recommending or arranging for the referral or purchase, of goods,
including drugs, covered by the programs.  Licensure and
Prescription Drug Distribution:As a distributor of drugs, we are
subject to regulation by and licensure with the Food and Drug Administration
(FDA), the Drug Enforcement Agency (DEA) and various state agencies that
regulate wholesalers or distributors. We are subject to periodic inspections of
our facilities by regulatory authorities, and adherence to policies and
procedures for compliance with applicable legal requirements.  Currently, we do not
bear any costs or any effects regarding compliance with environmental laws
(federal, state, and local).  Personnel  We currently employ 10
employees, of which 4 are full-time employees, and 6 sales/service
representatives. No full-time employees are covered by labor agreements or
employment contracts.  Consultants  Chris Knapp. On
July 15, 2006, we entered into a consulting agreement with Chris Knapp, wherein
Mr. Knapp agreed to assist us in increasing corporate awareness within the
healthcare industry. The term of the agreement commenced on July 15, 2006 and
will continue until the agreement is terminated pursuant to written notification
by either party. We agreed to compensate Mr. Knapp with 100,000 shares of our
common stock (issued on September 7, 2006) and 100,000 options to purchase
shares of our common stock at $0.32 per share through December 31, 2006. No
options have been granted thus far, although Mr. Knapp continues to assist the
Company.  Waypoint Capital
Partners. On August 22, 2006, we entered into a consulting agreement with
Waypoint Capital Partners, wherein Waypoint agreed to assist us in obtaining
equity and/or debt financing. Pursuant to the agreement we issued 197,370 shares
of our common stock to Waypoint on September 7, 2006 as compensation for its
services. The term of the agreement was for six months, however, by mutual
agreement the parties terminated the agreement on December 10, 2006. The parties
continue to work on an arms length basis.  15   Barbara Asbell. On August 24, 2006, we entered into a
consulting agreement with Barbara Asbell, wherein Ms. Asbell agreed to provide
the Company with general business, recruiting, personnel relations and medical
IT consulting. The term of the agreement began on August 24, 2006 and terminated
on October 31, 2006. We continue to engage Ms. Asbell from time to time and did
so on February 12, 2007 for 90 days, May 17, 2007 for 90 days, September 13,
2007 for 60 days, and November 20, 2007 for 90 days.  Leslie Abraham
Wolf. On August 24, 2006, we entered into a consulting agreement with Leslie
Abraham Wolf, wherein Ms. Wolf agreed to provide the Company with general
business, pharmaceutical and diagnostics sales, workers compensation and
medical claims consulting. The term of the agreement began on August 24, 2006
and terminated on October 31, 2006. We continue to engage Ms. Wolf from time to
time and did so on February 12, 2007 for 90 days, May 17, 2007 for 90 days, and
September 13, 2007 for 60 days.  Joseph Wolf. On
August 24, 2006, we entered into a consulting agreement with Dr. Joseph Wolf,
wherein Dr. Wolfl agreed to provide the Company with general business,
recruiting, personnel relations and medical IT consulting. The term of the
agreement began on August 24, 2006 and terminated on October 31, 2006. We
continue to engage Dr. Wolf from time to time and did so on February 12, 2007
for 90 days, May 17, 2007 for 90 days, and September 13, 2007 for 60 days.  Michelle Thais
Abraham. On August 24, 2006, we entered into a consulting agreement with
Michelle Thais Abraham, wherein Ms. Abraham agreed to provide the Company with
general business, pharmaceutical and diagnostics sales, workers compensation
and medical claims consulting. The term of the agreement began on August 24,
2006 and terminated on October 31, 2006. We continue to engage Ms. Abraham from
time to time and did so on February 12, 2007 for 90 days, May 17, 2007 for 90
days, and September 13, 2007 for 60 days.  Patents, Proprietary Rights and
Licenses  In February 2001, a
broad based patent application was filed covering the methods and apparatus of
our software technology and the integration of our software technology into
commercial computer networks and commercial personal digital assistant (PDA)
devices. In May 2001, the inventors of the technology, methods and apparatus
covered by the patent application sold the technology and assigned the
intellectual property rights to Medicius, Inc. In July 2002, we prepared an
additional derivative patent application that added additional patent claims to
our claim portfolio. It was our intent to file derivative patent applications as
needed covering the processes, use and functionality of our technologies and
products as we further developed our methods and processes.  Through our merger with
Medicius, Inc. in 2002 we gained assignment of proprietary systems covered by a
portfolio of pending utility patent applications that make claim to methods and
systems for managing medical patient-specific information and concurrently
implementing fulfillment of this information by multiple health-services related
providers for medically-related services for use over a computer network. The
proprietary systems allow for patient information to be gathered from multiple
authorized sources and then this information is provided at the point-of-care,
and coordinated and compared with prescription formulary compliance, medical
services providers and their payors, and multiple-rules based treatment plans
provided by various sources (content). Patient case and episode information and
care management, in coordination with the implementation of substantially
paperless ordering and fulfillment of lab tests, prescriptions and referrals, is
made available to attending health care professionals and support personnel via
networked computer systems and PDA systems running our proprietary software
methods. The inventive system includes, in seamless essentially real-time
communication over the Internet, a network of fully secure private sub-networks
among the participants in the system, anchored by a PC as the client-server link
to the Internet, with each of a plurality of PDAs either docked to it or
connected by commercially available wireless communications protocols. A suite
of software applications, including medical, communications and database
applications are resident on each PDA, and communications modules resident in
the system automatically link to the PC via an available ISP to update those
databases by a novel packet transmission method to maintain confidentiality of
the transmitted information. Data is transferred by wireless link, such as radio
frequency links among and between servers and PDAs used in connection with the
system.  The original patent
application, Patent Application 09776544, Information Management and
Communications System and Method, Attorney Docket 0444.002, consisting of
forty-eight separate claims was filed on February 2, 2001. This application
encompassed the method, system and apparatus of the invention described above.
In July 2002, we completed a derivative application that added seventeen
additional claims to the application. These claims specifically augmented the
original methods and apparatus to include methods surrounding a proprietary use
of what is commonly known as Wi-Fi to transmit the packet data and databases
described above.  16   During a follow-up with the USPTO, our CFO and the Inventor of the
above described methods and processes was informed by a representative of the
USPTO that Patent Application 09776544 had been abandoned due to a non-timely
filing of a fee and response by patent counsel. Unable to discuss these issues
with counsel due to his lingering illness, the Inventor has subsequently
petitioned the USPTO to re-activate the application. We intend to engage new
patent counsel to prosecute the applications.  Item 1A. Risk Factors.  Risks Relating To Our Business and
Marketplace  Our limited operating history could
delay our growth and result in the loss of your investment.  We were incorporated on
March 2, 2001 and have previously been in the development stage and thus have
had a limited operating history on which to base an evaluation of our business
and prospects. Beginning in 2005, we have commenced operations and are no longer
considered to be in the development stage. However, our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development. Such risks
include, but are not limited to, dependence on the growth of use of electronic
medical information and services, the adoption of PDA based Internet appliances
for the transmission and display of medical information, the need to establish
our brand name, the ability to establish a sufficient client base, the level of
use of medical providers and the management of growth. To address these risks,
we must maintain and increase our customer base, implement and successfully
execute our business and marketing strategy, continue to develop and improve our
point of care software and patient processing system, provide superior customer
service, respond to competitive developments and attract, retain, and motivate
qualified personnel. There can be no assurance that we will be successful in
addressing such risks, and the failure to do so could lead to an inability to
meet our financial obligations and therefore result in bankruptcy and the loss
of your entire investment in our common shares.  If we fail to remain current on our
reporting requirements, we could be removed from the OTC Bulletin Board, which
would limit the ability of broker-dealers to sell our securities and the ability
of stockholders to sell their securities in the secondary market.  Companies trading on the
OTC Bulletin Board, such as us, generally must be reporting issuers under
Section 12 of the Securities Exchange Act of 1934, as amended, and must be
current in their reports under Section 13, in order to maintain price quotation
privileges on the OTC Bulletin Board. More specifically, NASD has enacted Rule
6530, which determines eligibility of issuers quoted on the OTC Bulletin Board
by requiring an issuer to be current in its filings with the Commission.
Pursuant to Rule 6530(e), if we file our reports late with the Commission three
times in a two-year period or our securities are removed from the OTC Bulletin
Board for failure to timely file twice in a two-year period then we will be
ineligible for quotation on the OTC Bulletin Board. We filed our Form 10-QSB for
the periods ended June 30, 2006 and September 30, 2006 late, therefore, one more
late filing will result in de-quotation from the OTC Bulletin Board. As a
result, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary
market.  We have historically lost money and
losses are expected to continue in the near future, which means that we may not
be able to continue operations unless we obtain additional funding.  We have historically
lost money. We had an accumulated deficit as of December 31, 2007, and 2006 of
$19,525,307 and $18,058,490, respectively. In addition, our development
activities since inception have been financially sustained by capital
contributions. Future losses are likely to occur. Accordingly, we may experience
significant liquidity and cash flow problems if we are not able to raise
additional capital as needed and on acceptable terms. We received a substantial
number of sales orders and refill orders beginning in mid-September 2006.
However, at this time we have depleted our cash resources and as a result we
were unable to pre-pay certain diabetic test suppliers for approximately
$5,400,000 in product to fill these orders, causing our customers to wait
additional time to receive product from us. Thus, from time to time we might
need to turn to the capital markets to obtain additional financing to fund
payment of obligations and to provide working capital for operations. No
assurances can be given that we will be successful in reaching or maintaining
profitable operations.  17   We have
been dependent on a small number of major customers to support our prescription
drug distribution plan and to refer direct to patient business.  In 2007 our four largest
customers accounted for approximately 98% of our net sales through the referral
of direct to patient and direct to medical service entity businesses. We expect
that a small but growing number of customers will continue to account for a
substantial majority of our sales and that the relative dollar amount and mix of
products sold can change significantly from year to year and how we are paid for
business generated, assigned and referred by these customers can change as well.
There can be no assurance that our major customers will continue to purchase
products or refer the direct to patient and direct to medical entity business to
us at current levels, or that the mix of products purchased will be in the same
ratio. The loss of our largest customers, who not only buy product directly, but
also refer substantial direct to patient business upon which we accept
assignment or may provide direct billing and collection services or accept
medical assignment for direct to patient business, or a decrease in product
sales would have a material adverse effect on our business and financial
condition.  Our internal controls may be
inadequate, which could cause our financial reporting to be unreliable and lead
to misinformation being disseminated to the public.  Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control
over financial reporting is a process designed by, or under the supervision of,
the principal executive and principal financial officer and effected by the
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the Company are being made only in accordance with authorizations of management
and directors of the Company, and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Companys assets that could have a material effect on the financial
statements.  We have one individual
performing the functions of all officers and directors. This individual is
responsible for monitoring and ensuring compliance with our internal control
procedures. As a result, our internal controls may be inadequate or ineffective,
which could cause our financial reporting to be unreliable and lead to
misinformation being disseminated to the public. Investors relying upon this
misinformation may make an uninformed investment decision.  We may not be able to retain our key
personnel or attract additional personnel, which could affect our ability to
generate revenue sufficient to continue as a going concern diminishing your
return on investment.  Our performance is
substantially dependent on the services and on the performance of our
Management. instaCare is, and will be, heavily dependent on the skill, acumen
and services of our CFO, Secretary and Treasurer, Keith Berman and our Chairman
Robert Jagunich. Our performance also depends on our ability to attract, hire,
retain and motivate our officers and key employees. The loss of the services of
our executives could result in lost revenue depending on the length of time and
effort required to find a qualified replacement. We have not entered into
long-term employment agreements with our key personnel and currently have no
"Key Employee" life insurance policies.  Our future success may
also depend on our ability to identify, attract, hire, train, retain and
motivate other highly skilled technical, managerial, marketing and customer
service personnel. Competition for such personnel is intense, and there can be
no assurance that we will be able to successfully attract, assimilate or retain
sufficiently qualified personnel. If we are unable to attract, retain, and train
the necessary technical, managerial, marketing and customer service personnel,
our expectations of increasing our clientele could be hindered, and the
profitability of instaCare reduced.  18   Recent and
possible future issuances of common stock will have a dilutive affect on
existing shareholders.  instaCare is authorized
to issue up to 1,250,000,000 Shares of common stock. As of March 28, 2008, there
were 34,700,688shares of common stock issued and outstanding.
Additional issuances of common stock may be required to raise capital, to
acquire stock or assets of other companies, to compensate employees or to
undertake other activities without stockholder approval. These additional
issuances of common stock will increase outstanding shares and further dilute
stockholders' interests. Because our common stock is subject to the existing
rules on penny stocks and thinly traded, a large sale of stock, such as the
shares we seek to have registered via this registration statement, may result in
a large drop in the market price of our securities and substantially reduce the
value of your investment.  Our common stock has been relatively
thinly traded, may experience high price volatility and we cannot predict the
extent to which a trading market will develop.  Our common stock has
traded on the Over-the-Counter Bulletin Board. Our common stock is thinly traded
compared to larger more widely known companies in our industry. Thinly traded
common stock can be more volatile than common stock trading in an active public
market. We cannot predict the extent to which an active public market for the
common stock will develop or be sustained after this offering.  Achieving market acceptance of new or
newly integrated products and services is likely to require significant efforts
and expenditures.  Achieving market
acceptance for new or newly integrated products and services is likely to
require substantial marketing efforts and expenditure of significant funds to
create awareness and demand by participants in the healthcare industry. In
addition, deployment of new or newly integrated products and services may
require the use of additional resources for training our existing sales and
customer service personnel and for hiring and training additional salespersons
and customer service personnel. There can be no assurance that the revenue
opportunities from new or newly integrated products and services will justify
amounts spent for their development, marketing and rollout.  We could be subject to breach of
warranty claims if our software products, information technology systems or
transmission systems contain errors, experience failures or do not meet customer
expectations.  We could face breach of
warranty or other claims or additional development costs if the software and
systems we sell or license to customers or use to provide services contain
undetected errors, experience failures, do not perform in accordance with their
documentation, or do not meet the expectations that our customers have for them.
Undetected errors in the software and systems we provide or those we use to
provide services could cause serious problems for which our customers may seek
compensation from us. We attempt to limit, by contract, our liability for
damages arising from negligence, errors or mistakes. However, contractual
limitations on liability may not be enforceable in certain circumstances or may
otherwise not provide sufficient protection to us from liability for damages.  If our systems or the Internet
experience security breaches or are otherwise perceived to be insecure, we could
lose existing clients and limit our ability to attract new clients.  A security breach could
damage our reputation or result in liability. We retain and transmit
confidential information, including patient health information. Despite the
implementation of security measures, our infrastructure or other systems that we
interface with, including the Internet, may be vulnerable to physical break-ins,
hackers, improper employee or contractor access, computer viruses, programming
errors, attacks by third parties or similar disruptive problems. Any compromise
of our security, whether as a result of our own systems or systems that they
interface with, could reduce demand for our services.  19   We do not
have the financial resources to litigate actions involving our copyrights or
patent applications.  We have applied to
receive patent rights, and trademarks relating to our software. However, patent
and intellectual property legal issues for software programs, such as our
products, are complex and currently evolving. Patent applications are secret
until patents are issued in the United States, or published in other countries,
therefore, we cannot be sure that we are first to file any patent application
for our technologies, primarily the technology that allows for the safe, secure
and near seamless transmission of sensitive medical information from the point
of care, directly to our mail order pharmacy. Should any of our patent claims be
compromised or if, for example, one of our competitors has filed or obtained a
patent before our claims have been prosecuted, or should a competitor with more
resources desire to litigate and force us to defend or prosecute any patent
rights, our ability to develop the market for our mail order pharmacy could be
severely compromised, for we do not have the financial resources to litigate
actions involving our patents and copyrights.  Our auditors have expressed
substantial doubt as to our ability to continue as a going concern.  Due to our increasing
deficit and our lack of revenue sufficient to support existing operations, there
is substantial doubt about our ability to continue as a going concern. We may
need to obtain additional financing in the event that we are unable to realize
sufficient revenue. We may incur additional indebtedness from time to time to
finance acquisitions, provide for working capital or capital expenditures or for
other purposes There can be no assurance that we will have funds sufficient to
continue operations, and the failure to do so could lead to an inability to meet
our financial obligations and therefore result in bankruptcy and the loss of
your entire investment in instaCare's common shares.  Risks Relating To Our Common
Stock  Because our common stock is deemed a
low-priced Penny stock, an investment in our common stock should be considered
high risk and subject to marketability restrictions.  Since our common stock
is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act,
it will be more difficult for investors to liquidate their investment even if
and when a market develops for the common stock. Until the trading price of the
common stock rises above $5.00 per share, if ever, trading in the common stock
is subject to the penny stock rules of the Securities Exchange Act specified in
rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting
transactions in any penny stock, to:  ·
Deliver to the customer, and obtain a
written receipt for, a disclosure document;  ·
Disclose certain price information
about the stock;  ·
Disclose the amount of compensation
received by the broker-dealer or any associated person of the
broker-dealer;  ·
Send monthly statements to customers
with market and price information about the penny stock;
and  ·
In some circumstances, approve the
purchasers account under certain standards and deliver written statements
to the customer with information specified in the
rules.  Consequently, the penny
stock rules may restrict the ability or willingness of broker-dealers to sell
the common stock and may affect the ability of holders to sell their common
stock in the secondary market and the price at which such holders can sell any
such securities. These additional procedures could also limit our ability to
raise additional capital in the future.  20   If we fail
to remain current on our reporting requirements, we could be removed from the
OTC Bulletin Board, which would limit the ability of broker-dealers to sell our
securities and the ability of stockholders to sell their securities in the
secondary market.  Companies trading on the
OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of
the Securities Exchange Act of 1934, as amended, and must be current in their
reports under Section 13, in order to maintain price quotation privileges on the
OTC Bulletin Board.  More specifically, FINRA has enacted Rule 6530, which
determines eligibility of issuers quoted on the OTC Bulletin Board by requiring
an issuer to be current in its filings with the Commission.  Pursuant to
Rule 6530(e), if we file our reports late with the Commission three times in a
two-year period or our securities are removed from the OTC Bulletin Board for
failure to timely file twice in a two-year period then we will be ineligible for
quotation on the OTC Bulletin Board. As a result, the market liquidity for our
securities could be severely adversely affected by limiting the ability of
broker-dealers to sell our securities and the ability of stockholders to sell
their securities in the secondary market.  We have the ability to issue
additional shares of our common stock and shares of preferred stock without
asking for stockholder approval, which could cause your investment to be
diluted.  Our Certificate of
Incorporation authorizes the Board of Directors to issue up to 1,250,000,000
shares of common stock and 5,000,000 shares of preferred stock. The power of the
Board of Directors to issue shares of common stock, preferred stock or warrants
or options to purchase shares of common stock or preferred stock is generally
not subject to shareholder approval. Accordingly, any additional issuance of our
common stock, or preferred stock that may be convertible into common stock, may
have the effect of diluting ones investment.  FINRA sales practice requirements may
also limit a stockholder's ability to buy and sell our stock.  In addition to the
penny stock rules described above, FINRA has adopted rules that require that
in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, the
FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. The FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.  Item 1B. Unresolved Staff
Comments.  Not applicable.  Item 2. Properties.  We currently maintain an
executive office at 2660 Townsgate Road, Suite 300, Westlake Village, CA 91361.
The space consists of approximately 2,300 square feet. The monthly rental for
the space is $4,000 per month on a month to month basis until March 31, 2009.  On June 7, 2005, we
entered into an agreement for the right to use offices, warehouses and shipping
facilities for the storage and shipping of pharmaceuticals located at 515 Inman
Avenue, Colonia, NJ 07067 and 25 Minna Street, Rahway, NJ 07065 for a monthly
rental fee of $3,500. These buildings total 4,000 square feet but our right to
use is not exclusive.  We are currently
completing leasehold improvements on a 4,000 square foot facility in Hope, ND to
use as our fulfillment center. When this leasehold is completed, we will pay
$1,000 per month on a month to month basis.  21   Item 3. Legal
Proceedings.  We transact commerce in
several medical products market channels. We also transact commerce moving
confidential medical dats through our proprietary medical information technology
devices and networks. Healthcare is a very litigious industry. The industry is
also very intertwined. From time to time, we may become involved in claims and
litigation that arise out of the normal course of business or the normal course
of the business of our suppliers, payors and customers. Other than as noted
below there are no pending matters at the current time that in managements
judgment may be considered potentially material to us  instaCare Corp. vs. Ronald Kelly, et.
al. (Kelly)  In July of 2005, the
Company filed a complaint in the United States District Court, for the Central
District of California (Case Number CV 05-4932-RSWL), against Ronald Kelly,
Linda R. Kelly, Kimberly Kelly, and Kelly Company World Group, Inc., seeking
damages for:  1.
Fraud;  2.
Declaratory
Relief;  3.
Breach of Fiduciary Duty;4.
RICO
violations;  5.
Injunctive Relief;6.
Conversion;  7.
Breach of Contract/Breach of
Corporate Merger Agreement; and8.
Accounting and Ancillary
Relief.  On December 18, 2006,
the United States District Court, for the Central District of California
ordered, adjudged and decreed that the Company shall have judgment against Kelly
in the amount of $200,000, pursuant to the stipulation of the parties.  In addition, pursuant to
a mutual release agreement executed by both parties, Kelly waived any right,
claim or ownership interest in any shares of common stock of the Company. Kelly
returned 31,958,000 (pre-reverse split) shares of common stock to the Company,
which will be placed in one of the Companys majority owned subsidiaries.  instaCare Corp. vs. Investor Relations
Services Inc. (IRS), Summit Trading, Ltd. (STL)  In August of 2005, the
Company filed suit in the Superior Court for the State of California (Case
Number BC337976) against IRS and STL, seeking Declaratory Relief and rescission
of the alleged December 2004 agreements between the Company and IRS/STL. The
complaint also sought damages for Intentional Interference with an Advantageous
Business Relationship as a result of actions taken by IRS/STL.  On January 17, 2007, the
Superior Court for the State of California in Los Angeles County rendered its
tentative decision against Investors Relations Services and Summit Trading,
Ltd., finding that the December 2004 agreements were never submitted to the
Board of Directors, were never approved or authorized by the Board of Directors,
and that the Company has no obligations to either IRS or STL. In March 2007, the
Company filed a motion with the Superior Court for the State of California for
reimbursement of attorneys fees and costs.  Item 4. Submission of Matters to a Vote
of Security Holders.  We did not submit any
matters to a vote of our security holders during the fourth quarter of 2007.  22   PART
II  Item 5. Market for Registrants Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.  (a) Market Information  Our Common Stock was
approved for trading on the National Association of Security Dealers
over-the-counter bulletin board market (OTC:BB) under the symbol ISCR on
February 4,2002. Our common stock has traded infrequently on the OTC:BB, which
limits our ability to locate accurate high and low bid prices for each quarter
within the last two fiscal years. Therefore, the following table lists the
quotations for the high and low bid prices as reported by a Quarterly Trade and
Quote Summary Report of the OTC Bulletin Board for the fiscal years 2007 and
2006. The quotations from the OTC Bulletin Board reflect inter-dealer prices
without retail mark-up, markdown, or commissions and may not represent actual
transactions.  2007

2006High

Low

High

Low1st Quarter
$

0.37
$

0.27
$

0.75
$

0.0072nd Quarter
$

0.45
$

0.17
$

0.50
$

0.213rd Quarter
$

0.17
$

0.04
$

0.65
$

0.244th Quarter
$

0.05
$

0.03
$

0.42
$

0.23  (b) Holders of Common Stock  As of March 29, 2008,
there were approximately 542 holders of record of our Common Stock and
34,700,688shares outstanding. As of March 28, 2008, the closing
price of our shares of common stock on the OTC:BB was $0.03 per share.  (c) Dividends  During the fiscal years
ended December 31, 2007, we accrued Dividends to Mercator Momentum Fund, LP and
Monarch Pointe Fund, Ltd. and Mercator Advisory Group, LLC (MAG) totaling
$241,478. As of December 31, 2006, we paid $206,086 and accrued $50,914 pursuant
to the rights of the Series C convertible preferred. We had no earnings and a
stockholders deficit and therefore no basis for issuance of a dividend. In
order to prevent potential litigation with the purchaser, the Company elected to
pay the mandatory dividend. As of December 31, 2007, the Company had accrued
dividends payable in the amount of $292,392.  On June 9, 2006, we
declared an 8 1/3% special stock dividend payable to our stockholders of record
as of June 9, 2006. Pursuant to the terms of the dividend declaration, each
stockholder of record received 8.334 shares for each 100 shares of our common
stock they own.  We intend to follow a
policy of retaining earnings, if any, to finance the growth of the business and
do not anticipate paying any cash dividends in the foreseeable future. The
declaration and payment of future dividends on the Common Stock will be the sole
discretion of the Board of Directors and will depend on our profitability and
financial condition, capital requirements, statutory and contractual
restrictions, future prospects and other factors deemed relevant.  (d) Securities Authorized for Issuance
under Equity Compensation Plans  2003 Stock Option Plan  Effective January 1,
2003, we adopted the 2003 Stock Option Plan. The maximum number of shares that
may be issued pursuant to the plan is 312,500 shares. As of December 31, 2007,
203,125 shares have been granted and subsequently, 166,250 expired and 36,875
have been exercised under this plan.  23   2004 Stock
Option Plan  Effective April 21,
2004, we adopted the 2004 Stock Option Plan, as amended, with a maximum number
of 6,312,500 shares that may be issued. As of December 31, 2007, 2,978,297
options have been granted under this plan. As of December 31, 2007 all option
granted have been exercised.  2005 Merger Consolidated Stock Option
Plan  Effective February 5,
2005, we adopted the 2005 Merger Consolidated Stock Option Plan. The maximum
number of shares that may be issued pursuant to the plan is 1,125,000 shares. As
of December 31, 2007, 825,000 shares have been granted under this plan.  2006 Business Development Stock
Option Plan  Effective December 8,
2006, we adopted our 2006 Employee Stock Option Plan as amended with a
maximum number of 5,500,000 shares that may be issued. As of December 31, 2007,
4,140,867 options have been granted under this plan.  All of our Stock Option
Plans are intended to encourage directors, officers, employees and consultants
to acquire ownership of common stock. The opportunity so provided is intended to
foster in participants a strong incentive to put forth maximum effort for our
continued success and growth, to aid in retaining individuals who put forth such
efforts, and to assist in attracting the best available individuals to the
Company in the future. As of December 31, 2007, 5,102,711 options remain
available for issuance.  Officers (including
officers who are members of the board of directors), directors (other than
members of the stock option committee to be established to administer the stock
option plans) and other employees and consultants and its subsidiaries (if
established) will be eligible to receive options under the stock option plans.
The committee will administer the stock option plans and will determine those
persons to whom options will be granted, the number of options to be granted,
the provisions applicable to each grant and the time periods during which the
options may be exercised. No options may be granted more than ten years after
the date of the adoption of the stock option plans.  Non-qualified stock
options will be granted by the committee with an option price equal to the fair
market value of the shares of common stock to which the non-qualified stock
option relates on the date of grant. The committee may, in its discretion,
determine to price the non-qualified option at a different price. In no event
may the option price with respect to an incentive stock option granted under the
stock option plans be less than the fair market value of such common stock to
which the incentive stock option relates on the date the incentive stock option
is granted.  Each option granted
under the stock option plans will be exercisable for a term of not more than ten
years after the date of grant. Certain other restrictions will apply in
connection with the plans when some awards may be exercised. In the event of a
change of control (as defined in the stock option plans), the date on which all
options outstanding under the stock option plans may first be exercised will be
accelerated. Generally, all options terminate 90 days after a change of
control.  The following table sets
forth information as of December 31, 2007 regarding outstanding options granted
under the plans, warrants issued to consultants and options reserved for future
grant under the plan.  24    Plan Category

Number
of shares to be
issued upon
exercise of
outstanding options,
warrants and rights
(a)

Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)

Number of shares
remaining available for
future issuance under
equity compensation
plans (excluding shares
reflected in column (a))
(c)Equity compensation plans approved by
stockholders



$




Equity compensation plans not approved by
stockholders


825,000
$

1.73


5,102,711Total


825,000
$

1.73


5,102,711  (1)
Includes 109,375 options remaining
for issuance under the 2003 Option Plan, 3,334,203 options remaining for
issuance under the 2004 Option Plan, 300,000 options remaining for
issuance under the 2005 Option Plan, and 1,359,133 options remaining under
the 2006 Option Plan.  Recent Sales of
Unregistered Securities  On January 4, 2007, we
issued a total of 227,200 shares of our common stock for services rendered to
the Company to the following service providers:  Name
Number
of SharesBMI Consulting, Inc.DCF, Inc.

56,800Lima Capital, Inc.

56,800Desert Southwest Capital, Inc.

56,800  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on December 8,
2006.  On January 4, 2007, we
issued 150,000 shares of our restricted common stock to Crescent Fund, LLC for
services provided to the Company. We believe that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The recipient of the
shares was afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make its
investment decision, including the Companys financial statements and 34 Act
reports. We reasonably believe that the recipient, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that it was capable of evaluating the merits and risks of its
investment. The recipient had the opportunity to speak with our president and
directors on several occasions prior to its investment decision.  On February 7, 2007,
Mercator Momentum Fund, LP. and Monarch Pointe Fund, LP. Converted 500 Series C
Preferred Stock into 232,666 shares of our common stock. The 232,666 shares of
common stock were issued on February 28, 2007.  On February 12, 2007, we
issued a total of 250,000 shares of our common stock for services rendered to
the Company to the following service providers:  25    Name
Number
of SharesJeff Stone

50,000Barbara Asbell

70,000Leslie Wolf

65,000Dr. Joseph Wolf

65,000  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on December 8,
2006.  On February 15, 2007, we
issued a total of 242,000 shares of our common stock for services rendered to
the Company to the following service providers:  Name
Number
of SharesJohn Heilshorn

33,500Keith Lippert

33,500Jeff Stone

50,000Michael Belcher

125,000  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on September 8,
2006.  On March 14, 2007, we
issued a total of 130,000 shares of our common stock for services rendered to
the Company to the following service providers:  Name
Number
of SharesThais Abraham

65,000Wendy Block

65,000  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on December 8,
2006.  On March 14, 2007,
Mercator Momentum Fund, LP. and Monarch Pointe Fund, LP. Converted 500 Series C
Preferred Stock into 238,095 shares of our common stock.  On March 31, 2007, we
issued 50,000 shares of our common stock for services rendered to the Company to
the following service provider:  Name
Number
of SharesChris Knapp

50,000  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on December 8,
2006.  On April 5, 2007, we
issued 50,000 shares of our restricted common stock to Nathan Kaplan and Svet
Milic for license fees. We believe that the issuance of the shares was exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933 by virtue of Section 4(2). The recipient of the shares was
afforded an opportunity for effective access to files and records of the Company
that contained the relevant information needed to make its investment decision,
including the Companys financial statements and 34 Act reports. We reasonably
believe that the recipient, immediately prior to issuing the shares, had such
knowledge and experience in our financial and business matters that it was
capable of evaluating the merits and risks of its investment. The recipient had
the opportunity to speak with our president and directors on several occasions
prior to its investment decision.  26   On May 7, 2007, Mercator Momentum Fund, LP. and Monarch Pointe
Fund, LP. Converted 840 shares of Series C Preferred Stock into 400,000 shares
of our common stock.  On May 17, 2007, we
issued a total of 625,000 shares of our common stock for services rendered to
the Company to the following service providers:  Name
Number
of SharesThais Abraham

158,000Barbara Asbell

175,500Leslie Wolf

145,000Dr. Joseph Wolf

146,500  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on December 8,
2006.  On July 23, 2007, we
issued 184,700 shares of our restricted common stock to three individuals for
services rendered to the Company. We believe that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The recipient of the
shares was afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make its
investment decision, including the Companys financial statements and 34 Act
reports. We reasonably believe that the recipient, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that it was capable of evaluating the merits and risks of its
investment. The recipient had the opportunity to speak with our president and
directors on several occasions prior to its investment decision.  On August 27, 2007,
Mercator Momentum Fund, LP. and Monarch Pointe Fund, LP. Converted 300 shares of
Series C Preferred Stock into 500,000 shares of our common stock.  On September 11, 2007,
we issued a total of 1,000,000 shares of our common stock for services rendered
to the Company to the following service providers:  Name
Number
of SharesThais Abraham

250,000Barbara Asbell

250,000Leslie Wolf

250,000Dr. Joseph Wolf

250,000  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on August 31,
2007.  On September 19, 2007,
we issued 200,000 shares of our restricted common stock to an individual for
cash. We believe that the issuance of the shares was exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2). The recipient of the shares was afforded an
opportunity for effective access to files and records of the Company that
contained the relevant information needed to make its investment decision,
including the Companys financial statements and 34 Act reports. We reasonably
believe that the recipient, immediately prior to issuing the shares, had such
knowledge and experience in our financial and business matters that it was
capable of evaluating the merits and risks of its investment. The recipient had
the opportunity to speak with our president and directors on several occasions
prior to its investment decision.  27   On October 3, 2007, we issued a total of 5,250,000 shares of our
restricted common stock to our officers and directors as a bonus for services to
the Company. We believe that the issuance of the shares was exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2). The recipient of the shares was afforded an
opportunity for effective access to files and records of the Company that
contained the relevant information needed to make its investment decision,
including the Companys financial statements and 34 Act reports. We reasonably
believe that the recipient, immediately prior to issuing the shares, had such
knowledge and experience in our financial and business matters that it was
capable of evaluating the merits and risks of its investment. The recipient had
the opportunity to speak with our president and directors on several occasions
prior to its investment decision.  On October 3, 2007, we
issued 7,500,000 shares of our restricted common stock to our CFO for the
conversion of $150,000 of debt. We believe that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The recipient of the
shares was afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make its
investment decision, including the Companys financial statements and 34 Act
reports. We reasonably believe that the recipient, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that it was capable of evaluating the merits and risks of its
investment. The recipient had the opportunity to speak with our president and
directors on several occasions prior to its investment decision.  On November 20, 2007, we
issued 833,334 shares of our common stock for services rendered to the Company
to the following service provider:  Name
Number
of SharesBarbara Asbell

833,334  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on August 31,
2007.  On November 26, 2007, we
issued 10,500 shares of our common stock for services rendered to the Company to
the following service provider:  Name
Number
of SharesJ. Barry Johnson

10,500  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on August 31,
2007.  On November 27, 2007, we
issued 400,000 shares of our restricted common stock to two individuals for
services provided to the Company. We believe that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The recipient of the
shares was afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make its
investment decision, including the Companys financial statements and 34 Act
reports. We reasonably believe that the recipient, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that it was capable of evaluating the merits and risks of its
investment. The recipient had the opportunity to speak with our president and
directors on several occasions prior to its investment decision.  On December 5, 2007, we
issued 231,559 shares of our restricted common stock to Centurion Credit
Resources as financing fees in connection with our line of credit. We believe
that the issuance of the shares was exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933 by virtue of Section
4(2). The recipient of the shares was afforded an opportunity for
effective access to files and records of the Company that contained the relevant
information needed to make its investment decision, including the Companys
financial statements and 34 Act reports. We reasonably believe that the
recipient, immediately prior to issuing the shares, had such knowledge and
experience in our financial and business matters that it was capable of
evaluating the merits and risks of its investment. The recipient had the
opportunity to speak with our president and directors on several occasions prior
to its investment decision.  28   On December 5, 2007, we issued 200,000 shares of our restricted
common stock to Parallel Marketing Resources for services rendered to the
Company. We believe that the issuance of the shares was exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2). The recipient of the shares was afforded an
opportunity for effective access to files and records of the Company that
contained the relevant information needed to make its investment decision,
including the Companys financial statements and 34 Act reports. We reasonably
believe that the recipient, immediately prior to issuing the shares, had such
knowledge and experience in our financial and business matters that it was
capable of evaluating the merits and risks of its investment. The recipient had
the opportunity to speak with our president and directors on several occasions
prior to its investment decision.  On December 5, 2007, we
issued 833,333 shares of our common stock for services rendered to the Company
to the following service provider:  Name
Number
of SharesBarbars Asbel in the name of Yoel Grun

833,333  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on August 31,
2007.  Subsequent Issuances After
Year-End.  On January 2, 2008, we
issued 446,071 shares of our restricted common stock to Centurion Credit
Resources as financing fees in connection with our line of credit. We believe
that the issuance of the shares was exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933 by virtue of Section
4(2). The recipient of the shares was afforded an opportunity for
effective access to files and records of the Company that contained the relevant
information needed to make its investment decision, including the Companys
financial statements and 34 Act reports. We reasonably believe that the
recipient, immediately prior to issuing the shares, had such knowledge and
experience in our financial and business matters that it was capable of
evaluating the merits and risks of its investment. The recipient had the
opportunity to speak with our president and directors on several occasions prior
to its investment decision.  On January 2, 2008, we
issued 750,000 shares of our common stock to employees for services rendered to
the Company to the following service provider:  Name
Number
of SharesAlan Binder

250,000Dale Richter

250,000Shabnam Shahrabi

100,000Frank Schwenden

150,000  The above shares issued
were registered in a Registration Statement on Form S-8POS filed on August 31,
2007.  On January 4, 2008, we
issued 4,223 shares of our restricted common stock to Centurion Credit Resources
as financing fees in connection with our line of credit. We believe that the
issuance of the shares was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 by virtue of Section 4(2). The
recipient of the shares was afforded an opportunity for effective access to
files and records of the Company that contained the relevant information needed
to make its investment decision, including the Companys financial statements
and 34 Act reports. We reasonably believe that the recipient, immediately prior
to issuing the shares, had such knowledge and experience in our financial and
business matters that it was capable of evaluating the merits and risks of its
investment. The recipient had the opportunity to speak with our president and
directors on several occasions prior to its investment decision.  29   On January 4, 2008, we issued 1,250,000 shares of our restricted
common stock to our CFO for services provided to the Company. We believe that
the issuance of the shares was exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933 by virtue of Section
4(2). The recipient of the shares was afforded an opportunity for
effective access to files and records of the Company that contained the relevant
information needed to make its investment decision, including the Companys
financial statements and 34 Act reports. We reasonably believe that the
recipient, immediately prior to issuing the shares, had such knowledge and
experience in our financial and business matters that it was capable of
evaluating the merits and risks of its investment. The recipient had the
opportunity to speak with our president and directors on several occasions prior
to its investment decision.  On January 4, 2008, we
issued 1,250,000 shares of our restricted common stock to Michael Petras for
services provided to the Company. We believe that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The recipient of the
shares was afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make its
investment decision, including the Companys financial statements and 34 Act
reports. We reasonably believe that the recipient, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that it was capable of evaluating the merits and risks of its
investment. The recipient had the opportunity to speak with our president and
directors on several occasions prior to its investment decision.  On January 14, 2008, we
issued 400,000 shares of our restricted common stock to two individuals for
services provided to the Company. We believe that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The recipient of the
shares was afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make its
investment decision, including the Companys financial statements and 34 Act
reports. We reasonably believe that the recipient, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that it was capable of evaluating the merits and risks of its
investment. The recipient had the opportunity to speak with our president and
directors on several occasions prior to its investment decision.  On January 31, 2008, we
issued 648,630 shares of our restricted common stock to Centurion Credit
Resources as financing fees in connection with our line of credit. We believe
that the issuance of the shares was exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933 by virtue of Section
4(2). The recipient of the shares was afforded an opportunity for
effective access to files and records of the Company that contained the relevant
information needed to make its investment decision, including the Companys
financial statements and 34 Act reports. We reasonably believe that the
recipient, immediately prior to issuing the shares, had such knowledge and
experience in our financial and business matters that it was capable of
evaluating the merits and risks of its investment. The recipient had the
opportunity to speak with our president and directors on several occasions prior
to its investment decision.  Issuer Purchases of Equity
Securities  We did not repurchase
any of our equity securities during the years ended December 31, 2007 or
2006.  Item 6. Selected Financial
Data.  Not applicable.  Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations.  Overview of Current Operations  We are a publicly-traded
distributor of life-saving prescription drugs and diagnostics to several
channels in the healthcare industry, a Wi-Fi PDA technology provider to the
lodging and satellite media industries, and a developer of patent-pending
technologies for e-health and EMR applications that we employ to leverage and
add value to our prescription drug and diagnostics business. Our proprietary
ResidenceWare, MD@Hand and Satelink technologies manage critical data, enhance
productivity and e-commerce, and facilitate communication with applications in
the healthcare, apartment, hotel/motel and satellite rebroadcast industries. We
have recently focused our business attention towards providing prescription
drugs and medical diagnostics through several medical distribution channels.  30   During the next 12 months we plan to continue to focus our efforts
on the following primary businesses:  ·
Providing medical communication
devices based on networks of personal digital assistants (PDA). These
products are believed to provide benefits of on demand medical information
to private practice physicians, licensed medical service providers such as
diagnostic testing laboratories, and medical insurers;·
The distribution of medical
diagnostic products primarily aimed at institutions that service patients
with diabetic and asthma related diseases and ailments. Our current market
focus for these products is the long term care sector of the larger
healthcare market, however we plan to expand into additional sectors where
we can service certain chronic ambulatory disease
states;  ·
The distribution and fulfillment of
prescriptions for ethical pharmaceuticals primarily aimed at the indigent
and uninsured sectors of the greater medical service markets. Our first
market focus for these products will be those state Medicaid and Federally
chartered clinics (and initiatives) where funding for pharmaceutical
fulfillment enterprises exists;·
Building electronic commerce networks
based on personal digital assistants (PDA) to the hotels, motels and
single building, multi-unit apartment buildings with a desire to offer
local advertising and electronic services to their tenants/guests;
and  ·
Enter the cable and wireless
communication industries and media enterprises with networks of personal
digital assistant (PDA) technologies that link field-based installation
and repair personnel with central offices for the exchange of customer
order and subscription information.  Seasonality  We have completed the
second full year of operation of our prescription drug and diabetes diagnostics.
Our experiences point to a business that displays certain seasonal trends. In
each of the last two operating years our order intake was concentrated in the
first five months of the calendar year and then again in the last two months of
the calendar year. One explanation is that these months correspond with the
beginning of a prescription drug plan year where new prescription drug cards are
distributed by insurers to their insured in January along with new plan
formularies (price schedules). This in turn trends to influence stocking up
buying/ordering behavior on the part of the insured.  Results of Operations for the fiscal
years ended December 31, 2007 and 2006.  The following table
summarizes selected items from the statement of operations at December 31, 2007
compared to December 31, 2006.  INCOME:  For the Year Ended
December 31,

Increase (Decrease)2007

2006

$

%Revenue
$

6,254,278
$

19,220,265
$

(12,965,987)


(67)%Cost of Sales


5,845,782


19,186,237


(13,340,455)


(70)%Gross Profit


408,496


34,028


374,468


1,100%Gross Profit Percentage of Sales


6%


0.18





5.82%   31   Revenue  Our revenue for the
fiscal year ended December 31, 2007 was $6,254,278 compared to revenue of
$19,220,265 in the fiscal year ended December 31, 2006. This resulted in a
decrease in revenue of $12,965,987, or 67%, from the same period a year ago. The
decrease in revenue over the fiscal year ended December 31, 2006 was a result of
our market focus towards the direct sale of diabetic test strips into several
prescription drug channels and our efforts to increase our gross profit
margin.  Cost of sales / Gross profit percentage
of sales  Our cost of sales for
the fiscal year ended December 31, 2007 was $5,845,782, a decrease of
$13,340,455, or 70% from $19,186,237 for the fiscal year ended December 31,
2006. The decrease in the cost of sales in the current period was a direct
result of our decreased sales during the year and an increase in retail market
sales. In addition, pursuant to supplier agreements, we were to receive volume
rebates on bulk purchases totaling $564,107. At December 31, 2006 we had not
received payment on the accrued rebates and had doubt as to future
collectibility therefore we wrote down the amount due at December 31, 2006.  Gross profit as a
percentage of sales increased from 0.18% for the fiscal year ended December 31,
2006 to 0.18% for the fiscal year ended December 31, 2006. The increase in gross
profit margin was caused by a change in our product mix whereby we increased our
sales levels in the retail verses wholesale markets, which historically have a
lower profit margin.  EXPENSES:  For the Year Ended
December 31,2007

2006

Increase / (Decrease)Amount

Amount

$

%Expenses:General & administrative expenses
$
270,317
$
637,463
$
(367,146)

(58)%Consulting services

728,438

569,743

158,695

28%Payroll expense

342,777

485,627

(143,150)

(29)%Professional fees

148,079

592,968

(444,889)

(75)%Depreciation

46,726

48,027

(1,301)

(3)%Total expenses

1,536,337

2,334,128

(797,791)

(34)%Net operating (loss)

(1,127,841

(2,300,100)

1,172,259

(51)%Other income (expense):Financing costs

(45,429

(249,408)

203,979

(82)%Interest (expense)

(236,509

(205,302)

(31,207)

(15)%Net (loss)
$
(1,409,779
$
(2,754,810)
$
1,345,031

(49)%  General and Administrative
Expenses  General and
administrative expenses for the fiscal year ended December 31, 2007 were
$270,317, a decrease of $367,146, or 58%, from $637,463 for the fiscal year
ended December 31, 2006. The decrease in general and administrative expenses was
due over all overhead decrease from the decline in sales revenue.  Consulting Services  Consulting services for
the fiscal year ended December 31, 2007 were $728,438, an increase of $158,695,
or 28%, from $569,743 for the fiscal year ended December 31, 2006. The increase
in consulting services was due to our decreased sales limiting our ability to
maintain internal staff.  32   Payroll
expense  Payroll expenses for the
fiscal year ended December 31, 2007 were $342,777, a decrease of $143,150, or
29%, from $485,627 for the fiscal year ended December 31, 2006. The decrease was
due to the elimination full time employees who were replaced be regional
part-time and at-will specialists.  Professional Fees  Professional fees for
the fiscal year ended December 31, 2007 were $148,079, a decrease of $444,889,
or 78%, from $592,968 for the fiscal year ended December 31, 2006. The decrease
in professional fees was due to the elimination of previous legal fees required
in connection with litigation surrounding the Ronald Kelly, etal and Investor
Relations Services, Inc. matters.  Depreciation  Depreciation for the
fiscal year ended December 31, 2007 was $46,726, a decrease of $1,301 from
$48,027 for the fiscal year ended December 31, 2006. The decrease in
depreciation is the expected result of asset reaching there expected useful
lives.  Total Expenses  Total expenses for the
fiscal year ended December 31, 2007 were $1,536,337, a decrease of $797,791, or
34%, from $2,334,128 for the fiscal year ended December 31, 2006. The decrease
in total expenses was primarily due to a reduction in general and administrative
expenses and professional fees.  Net Operating Loss  Net operating loss for
the fiscal year ended December 31, 2007 was $1,127,841, versus a net operating
loss of $2,300,100 for the fiscal year ended December 31, 2006, a change of net
operating loss of $1,172,259. The decrease in net operating loss for the year
ended December 31, 2007 was primarily attributable to the decrease in overall
expenses due to our limited sales activity during the year ended December 31,
2007.  Financing Costs  Financing costs for the
fiscal year ended December 31, 2007 were $45,429, a decrease of $203,979, or
82%, from $249,408 for the fiscal year ended December 31, 2006. During the year
ended December 31, 2006, we paid various penalties related to our financing
activities. In 2007 we did not experience the same penalties and were able to
minimize our financing costs.  Interest Expense  Interest expense for the
fiscal year ended December 31, 2007 was $236,509, an increase of $31,207, or
15%, from $205,302 for the fiscal year ended December 31, 2006. The increase in
interest expense was the result of changes in interest rates during the
year.  Net Loss  Net loss for the fiscal
year ended December 31, 2007 was $1,409,779, a decrease of $1,345,031, or 49%,
from $2,754,810 for the fiscal year ended December 31, 2006. The decrease in net
loss was the result of our overall decrease in professional fees and general and
administrative expenses during the year.  33   Liquidity and
Capital Resources  A critical component of
our operating plan impacting our continued existence is the ability to obtain
additional capital through additional equity and/or debt financing. We do not
anticipate generating sufficient positive internal operating cash flow until
such time as we can deliver our product to market, complete additional financial
service company acquisitions and generate substantial revenues, which may take
the next few years to fully realize. In the event we cannot obtain the necessary
capital to pursue our strategic plan, we may have to cease or significantly
curtail our operations. This would materially impact our ability to continue
operations.  The following table
summarizes our current assets, liabilities and working capital at December 31,
2007 compared to December 31, 2006.  December 31,

December 31,

Increase / (Decrease)2007

2006

$

%Current Assets
$
773,660
$
286,667
$
486,993

170%Current Liabilities
$
2,758,243
$
2,604,610
$
153,633

6%Working Capital (deficit)
$
(1,984,583)
$
(2,317,943)
$
(333,360)

(14)%  Internal and External Sources of
Liquidity  MAG Entities Agreement  On February 7, 2005, we
entered into agreements with Mercator Momentum Fund, LP and Monarch Pointe Fund,
Ltd. (collectively, the Purchasers) and Mercator Advisory Group, LLC (MAG).
Under the terms of the agreement, we agreed to issue and sell to the Purchasers,
and the Purchasers agreed to purchase from the Company, 20,000 shares of Series
C Convertible Preferred Stock at $100.00 per share. During the year ended
December 31, 2007 MAG converted 2,140 shares of their Series C preferred into
1,370,761 shares of our restricted common stock.  Additionally, we issued
the following warrants: 103,125 warrants to purchase share of our common stock
at $1.60 per share and 103,125 warrants to purchase shares of our common stock
at $2.40 to Mercator Momentum Fund, LP; 209,375 warrants to purchase shares of
our common stock at $1.60 per share and 209,375 warrants to purchase shares of
our common stock at $2.40 per share to Monarch Pointe Fund, Ltd.; and 312,500
warrants to purchase shares of our common stock at $1.60 per share and 312,500
warrants to purchase shares of our common stock at $2.40 per share to MAG. All
of the warrants expire on February 7, 2008.  Pinnacle Investment Partners, LP
Promissory Note  On March 24, 2004, we
entered into a Secured Convertible Promissory Note with Pinnacle Investment
Partners, LP for the principal amount of $700,000 with an interest rate of 12%
per annum. The note was secured by 212,500 shares of our common stock. Pinnacle
may, at its option, at any time from time to time, elect to convert some or all
of the then-outstanding principal of the Note into shares of our common stock at
a conversion price of $0.08 per share, unless such conversion would result in
Pinnacle being deemed the beneficial owner of 4.99% or more of the
then-outstanding common shares within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended. In the event we fail to pay any
installment or principal or interest when due, the interest rate will then
accrue at a rate of 24% per annum on the unpaid balance until the payment
default is cured.  On February 10, 2005, we
entered into a Note Extension Agreement with Pinnacle Investment Partners, LP.
Subject to the terms of the new agreement; on March 24, 2005, Pinnacle agreed to
pay us $340,000 and (2) pay to Pinnacle's designee, CJR Capital, LLC, $60,000
towards Pinnacle's due diligence and legal expenses related to this new
agreement. This new agreement has the following consequences: (1) the principal
amount due under the Note automatically increases by $400,000 to $1,100,000; (2)
the Maturity Date of the newly revised Note was extended to April 24, 2006; and
(3) the conversion price for those shares that underlie the Note was changed to
$2.00.  34   On July 1, 2006, we entered into a fourth Note Extension Agreement
with Pinnacle Investment Partners, LP. Subject to the terms of the new agreement
Pinnacle agreed to pay us $35,000 and pay to Pinnacle's designee, CJR Capital,
LLC, $35,000 towards Pinnacle's due diligence and legal expenses related to the
new agreement. The new agreement has the following consequences: (1) the
principal amount due under the Note automatically increases from $1,010,309 to
$1,100,000; (2) the Maturity Date of the newly revised Note was extended to
December 24, 2006; and (3) the conversion price for those shares that underlie
the Note was changed to $0.30.  In addition to the
above, we agreed: (1) to deliver to Pinnacle's counsel an additional 2,000,000
shares of our common stock (over and above current escrow holdings) as
additional escrow security, (2) issue 150,000 shares of our common stock to
Pinnacle in consideration for their willingness to enter into the extension
agreement; and (3) upon receipt of any properly crafted Seller's Representation
Letter, deliver to Pinnacle an opinion of counsel to the effect that commencing
July 1, 2006 , Pinnacle may sell under Rule 144 promulgated under the Securities
Act of 1933, as amended, shares surrendered to Pinnacle in accordance with this
agreement, on condition that (1) Pinnacle uses the proceeds to pay down the
indebtedness under the Note as of immediately prior to effectiveness of this
agreement and (2) ceases to sell any of those Shares once that indebtedness has
been paid off in full. On August 3, 2006, we were informed through media outlets
and the printed press that the principals of Pinnacle Investment Partners, LP
had been charged with several financial crimes and that the fund had been frozen
and its officers remanded. Since August 3, 2006, the Company has not had contact
with any of the Pinnacle fund management or attorney in fact. We have not
delivered the shares called for under the July 1, 2006 extension after being
advised by the fund management to stand still.  Promissory Notes with Dennis Cantor and
Novex International  On May 23, 2006, we
entered into a promissory note with Dennis Cantor and Novex International for
the principal amount of $255,000. Pursuant to the note we promised to pay Dennis
Cantor and Novex International the sum of $255,000 together with interest at a
rate of one half of one percent (0.5%) every ten days beginning on May 23, 2006
and running through the maturity date of June 30, 2006. In the case of a default
in payment of principal, all overdue amounts under the note shall bear a penalty
obligation at a rate of twelve percent (12%) per annum accruing from the
maturity date. On July 1, 2006, we extended the note to July 31, 2006. We have
made principal payments of $125,000 through the year ended December 31, 2007. As
of December 31, 2007, the remaining principal balance was $130,000 and we are
currently negotiating a revised payment schedule.  Convertible Loan Payment
Agreement  On July 17, 2006, we
entered into a convertible loan payment agreement with Wayne G. Knapp wherein
Mr. Knapp agreed to loan the Company the sum of $200,000. The loan is for 120
days. On October 17, 2006, we renewed the note. On January 17, 2007, the parties
verbally agreed to a renewal that expires on May 16, 2007. The note accrues
monthly interest at a rate of 1.50% and the interest is payable quarterly in
cash. The total amount owing pursuant to the agreement, was convertible at the
option of Mr. Knapp at any time from July 17, 2006 until November 30, 2006, at
the strike price equal to $0.32 per share or 90% of the final bid price of our
common stock on the day prior to conversion with a floor price of $0.10 per
share. We renewed Mr. Knapps conversion option on January 17, 2007. We also
issued Mr. Knapp a warrant to purchase 50,000 shares of our common stock at
$0.32 per share through December 31, 2008. Mr. Knapp exercised his option on
March 30, 2007.  Centurion Credit Resources  On November 17, 2007, we
entered into an agreement with Centurion Credit Resources, LLC to secure a
$1,000,000 revolving credit facility that is geared specifically to our
business. This facility, offered to us at market credit rates. Terms of the
credit facility allow us to increase the available credit in increments of
$250,000 as our business grows. We drew down on this credit line for the first
time on November 30, 2007 and have subsequently accomplished seventeen
additional draw downs through December 31, 2008 and twenty two additional draw
downs through March 28, 2008. We believe that this facility will adequately
finance our at home diabetes diagnostics business through revenues rates of $7.5
million per quarter, and with the added credit increments offered, through $12.5
million per quarter. We are also entertaining additional proposed credit
facilities.  35   Cash Flow.Since inception, we have primarily financed our
cash flow requirements through the issuance of common stock, the issuance of
notes and sales generated income. With the growth of our current business in
2006 we may, during our normal course of business, experience net negative cash
flows from operations, pending receipt of revenue which often are delayed as a
result of the nature of the healthcare industry. Further, we may be required to
obtain financing to fund operations through additional common stock offerings
and bank or other debt borrowings, to the extent available, or to obtain
additional financing to the extent necessary to augment our available working
capital.  Satisfaction of our cash obligations
for the next 12 months.  As of December 31, 2007,
our cash balance was $4,353. Our plan for satisfying our cash requirements for
the next twelve months is through additional equity, third party financing,
and/or debt financing. We anticipate sales-generated income during that same
period of time, but do not anticipate generating sufficient amounts of positive
cash flow to meet our working capital requirements. Consequently, we intend to
make appropriate plans to insure sources of additional capital in the future to
fund growth and expansion through additional equity or debt financing or credit
facilities.  As we expand operational
activities, we may continue to experience net negative cash flows from
operations, pending receipt of sales or development fees, and will be required
to obtain additional financing to fund operations through common stock offerings
and debt borrowings to the extent necessary to provide working capital. We
received a substantial number of sales orders and refill orders beginning in
mid-September 2006 which we could not fill. It was not until the company entered
into the agreement with Centurion Credit Resources, LLC that the company could
fill orders for patients and customers on a continuous basis. Until the
Centurion credit line was put in place we managed to keep a small portion of our
distribution activities going when our limited resources allowed us.  Although we recorded an
operating profit in the period ending March 31, 2006, we have incurred
additional operating losses for the remainder of 2006 and in each quarter in
2007. Given our recent operating history, predictions of future operating
results difficult to ascertain. The recent addition of a credit line has helped
but we have found it increasingly difficult to transact commerce in the very
cash intensive prescription drug industry. Thus, our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stages of commercial viability,
particularly companies in new and rapidly evolving technology markets. Such
risks include, but are not limited to, an evolving and unpredictable business
model and the management of growth. To address these risks we must, among other
things, implement and successfully execute our business and marketing strategy,
continue to develop and upgrade technology and products, respond to competitive
developments, and continue to attract, retain and motivate qualified personnel.
There can be no assurance that we will be successful in addressing such risks,
and the failure to do so can have a material adverse effect on our business
prospects, financial condition and results of operations.  Expected purchase or sale of plant
and significant equipment.  We do not anticipate the
purchase or sale of any plant or significant equipment; as such items are not
required by us at this time.  Going Concern  The financial statements
included in this filing have been prepared in conformity with generally accepted
accounting principles that contemplate the continuance of the Company as a going
concern. The Company's cash position is currently inadequate to pay all of the
costs associated with testing, production and marketing of products. Management
intends to use borrowings and security sales to mitigate the effects of its cash
position, however no assurance can be given that debt or equity financing, if
and when required will be available. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets
and classification of liabilities that might be necessary should the Company be
unable to continue existence.  Off-Balance Sheet Arrangements  We do not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results or operations, liquidity, capital
expenditures or capital resources that is material to investors.  36   Critical
Accounting Policies and Estimates  Revenue
Recognition: The Company recognizes revenue on multi-deliverables in
compliance with the requirements of EITF 00-21. As previously disclosed, the
Company recognizes revenue based on contractual milestones achieved pursuant to
terms outlined in each individual contract. Typical milestones would include
completion of installation and functionality testing of hardware and/or software
in the prescribed environment. Upon effective use, the client is invoiced, and
the Company recognizes revenue. In addition, the companys business model
assumes several types of follow-on sales, such as paid advertising and
additional hardware/software sales. Paid advertising consists of commercial use
of the Companys Residence Ware message management system whereby each company
advertising on the Residence Ware pay a fee to the Company based on each sale
generated through the advertisements. All revenue generated through the on-line
adverting is recognized upon receipt of payment per SOP 97-2. Aftermarket sales
and services are recognized upon shipment of product or completion of
services  Stock-based
Compensation:In December 2004, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standard No. 123 (revised 2004)
Share-Based Payment (SFAS 123R), which is a revision of FASB Statement No.
123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB
Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB
Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement
123R is similar to the approach described in Statement 123.  However,
Statement 123R requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the income statement based on
their fair values. Pro forma disclosure is no longer an alternative.  Recent Accounting Developments  In February 2007, the
FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS No. 159). SFAS No. 159 allows the
company to choose to measure many financial assets and financial liabilities at
fair value. Unrealized gains and losses on items for which the fair value option
has been elected are reported in earnings. SFAS 159 is effective for fiscal
years beginning after November 15, 2007. The adoption of SFAS 159 is not
expected to have a material impact on our financial position, results of
operation or cash flows.  In December 2007, the
FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial
Statements. This statement amends ARB 51 to establish accounting and reporting
standards for the non-controlling (minority) interest in a subsidiary and for
the de-consolidation of a subsidiary. It clarifies that a non-controlling
interest in a subsidiary is equity in the consolidated financial statements.
SFAS No. 160 is effective for fiscal years and interim periods beginning after
December 15, 2008. The adoption of SFAS 160 is not expected to have a material
impact on our financial position, results of operation or cash flows.  In December 2007, the
FASB issued SFAS No. 141 (Revised), Business Combinations. SFAS 141 (Revised)
establishes principals and requirements for how an acquirer of a business
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree. This statement also provides guidance for recognizing and measuring
the goodwill acquired in the business combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. The guidance will
become effective for the fiscal year beginning after December 15, 2008. The
adoption of SFAS 141(Revised) is not expected to have a material impact on our
financial position, results of operation or cash flows.  Item 7A. Quantitative and Qualitative
Disclosures about Market Risk.  Not applicable.  Item 8. Financial Statements and
Supplementary Data.  Management Responsibility for Financial
Information  We are responsible for
the preparation, integrity and fair presentation of our financial statements and
the other information that appears in this annual report on Form 10-K. The
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States and include estimates based on our best
judgment.  37   We maintain a comprehensive system of internal controls and
procedures designed to provide reasonable assurance, with an appropriate
cost-benefit relationship, that our financial information is accurate and
reliable, our assets are safeguarded, and our transactions are executed in
accordance with established procedures.  We retained Weaver &
Martin, LLC, an independent registered public accounting firm, to audit our
consolidated financial statements. Its accompanying report is based on audits
conducted in accordance with the standards of the Public Company Accounting
Oversight Board (United States).  Item 9. Changes in and Disagreements
With Accountants On Accounting and Financial Disclosure.  None.  Item 9A. Controls and
Procedures.  Evaluation of Disclosure Controls and
Procedures  Our Chief Financial
Officer, Keith Berman, evaluated the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) as of the end of the period covered by this annual report on Form 10-K.
Based on this evaluation, our Chief Financial Officer concluded that, as of
December 31, 2007, our disclosure controls and procedures are ineffective in
ensuring that the information we are required to disclose in reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.  Management's Report on Internal Control
over Financial Reporting.  Our Management is
responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(c) and (d) of the Exchange Act.
Our internal controls are designed to provide reasonable assurance that the
reported financial information is presented fairly, financial disclosures are
adequate and that the judgments inherent in the preparation of financial
statements are reasonable and in accordance with generally accepted accounting
principles of the United States of America (GAAP).  Because of its inherent
limitations, a system of internal control over financial reporting can provide
only reasonable assurance and may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Further, because of changes in conditions, effectiveness of
internal control over financial reporting may vary over time.  A significant deficiency
is a control deficiency, or combination of control deficiencies, that adversely
affects the companys ability to initiate, authorize, record, process, or report
external financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a
misstatement of the companys annual or interim financial statements that is
more than inconsequential will not be prevented or detected. An internal control
material weakness is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.  As part of our
compliance efforts relative to Section 404 of the Sarbanes-Oxley Act of 2002,
our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2007. In making this assessment, management used
the criteria set forth in the Internal Control - Integrated Framework by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO").We evaluated control deficiencies identified through our test of the design
and operating effectiveness of controls over financial reporting to determine
whether the deficiencies, individually or in combination, are significant
deficiencies or material weaknesses. In performing the assessment, our
management has identified one material weakness in internal control over
financial reporting existing as of December 31, 2007. Our evaluation of the
significance of each deficiency included both quantitative and qualitative
factors. Based on that evaluation, the Companys management concluded that as of
December 31, 2007, and as of the date that the evaluation of the effectiveness
of our internal controls and procedures was completed, the Companys internal
controls are not effective, for the reason discussed below:  38   Segregation
of Duties  As a result of the loss
of an employee within the accounting department in September 2007, we were
unable to meet certain segregation of duties criteria and did not have existing
resources for creating a compensating control mechanism. In November of 2007,
during our evaluation of our internal controls our Chief Financial Officer
identified the inability to include proper segregation of transaction
authorization, transaction processing and custody within our accounting
department, resulting in a material weakness in our internal controls over
financial reporting.. Despite our material weakness regarding our segregation of
duties, we believe that our financial statements included in this report fairly
present in all material respects the Company's financial condition, results of
operations and cash flows for the periods presented and that this report does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report.  Remediation Initiative  We have rectified the
segregation of duties weakness through a change in our internal control
procedures during the first quarter of 2008. We have implemented certain
processes whereby we are utilizing our entire staff to provide appropriate
checks and balances over all functions that could potentially have a material
impact on our financial statements. Further, we have engaged an outside
consulting firm to assist us in implementing additional controls to improve our
overall control processes. In addition, it is our intention to hire a minimum of
one qualified accounting individual as soon as the necessary financial resources
become available.  Other than the weakness
identified above and our remediation of the weakness, there were no other
changes in our internal control over financial reporting that occurred during
our most recent fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.  This annual report does
not include an attestation report of the companys registered public accounting
firm regarding internal control over financial reporting. Managements report
was not subject to attestation by the companys registered public accounting
firm pursuant to temporary rules of the Securities and Exchange Commission that
permits the company to provide only managements report in this annual
report.  /s/ Keith Berman Keith Berman Chief Financial Officer  Item 9B. Other Information.  None.  PART III  ITEM 10. Directors and Executive
Officers  Our executive officers,
directors, and key employees are:  Name

Age

PositionKeith Berman

53

Chief Financial Officer and DirectorRobert Jagunich

60

Director  Our shareholders elect
our directors annually and our board of directors appoints our officers
annually. Vacancies in our board are filled by the board itself. Set forth below
are brief descriptions of the recent employment and business experience of our
executive officers and directors.  39   Keith Bermanhas served as Chief
Financial Officer, Secretary, Treasurer and Director of the Company since
January of 2003. For over the past 15 years, Mr. Berman has been involved in the
development of healthcare software including Intranet and Internet systems. From
July 1999 to present, Mr. Berman has held the position of President, founder and
director of Caredecision.net, Inc. a private company engaged in e-health
technology development. From March 2001 through June 2002 Mr. Berman also held
the Position of President and Director or Medicius, Inc. From January 1996 to
June 1999 Mr. Berman was the President and founder of Cymedix, the operating
division of Medix Resources, Inc., now Ramp Corp. (RCO). Cymedix was a pioneer
company in what was then known as i-health (Internet healthcare) now the
e-health industry. Mr. Berman received a BA in 1975 and an MBA in 1977, from
Indiana University.  Robert
Jagunichhas served as aDirector of the Company
since January of 2003. Mr. Jagunich has 27 years of experience in the medical
systems and device industry. From August 1992 to present, he has held the
position of President at New Abilities Systems, a privately held manufacturer of
advanced electronic systems used in rehabilitation. He also provides consulting
services to companies such as Johnson and Johnson and has served as a senior
executive in such publicly held companies as Laserscope and Acuson. From April
1996 to December 1997 Mr. Jagunich acted as a director of Cymedix Corporation,
the operating entity of Medix Resources, Inc., now Ramp Corp. (AMEX:RCO). He
received his BS in 1969, and his MS and MBA in 1971, from the University of
Michigan.  Mr. Berman, officer and
director, devotes his complete business time to the Company. Mr. Jagunich
attends meetings of the board of directors when held and provides 33% of his
business time in a professional capacity to the Company.  Code of Ethics  We have not yet adopted
a code of ethics that applies to our principal executive officers or persons
performing similar functions, since we have been focusing our efforts on
obtaining financing for the company. We expect to adopt a code by the end of the
current fiscal year.  Audit Committee  The entire board of
directors acts as our audit committee. We do not have an audit committee
financial expert serving on our audit committee at this time. We propose to
expand our board of directors in the near future to include a financial
expert.  Section 16(a) Beneficial Ownership
Reporting Compliance  Section 16(a) of the
Securities Exchange Act of 1934 requires our officers, directors, and persons
who beneficially own more than 10% of our common stock to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission (SEC). Officers, directors and greater than 10% beneficial
owners are also required by rules promulgated by the SEC to furnish us with
copies of all Section 16(a) forms they file.  Based solely upon a
review of the copies of such forms furnished to us, or written representations
that no Form 5 filings were required, we believe that during the fiscal year
ended December 31, 2007, there was compliance with all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners.  ITEM 11.EXECUTIVE COMPENSATION  The following table sets
forth information the remuneration of our chief executive officers and our two
most highly compensated executive officers who served as executive officers at
the end of December 31, 2007 and earned in excess of $100,000 per annum during
any part of our last two fiscal years:  40   Summary
Compensation Table  Name and
Principal Position
Year

Salary ($)
Bonus ($)

Stock
Awards ($)
Option
Awards ($)
Non-
Equity Incentive
Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings ($)
All
Other Compensation
($)

Total ($)Robert
Cox,
2007

-0-
-0-

-0-
-0-
-0-
-0-
-0-

-0-Former CEO
(1)
2006
$
66,500
-0-

-0-
-0-
-0-
-0-
-0-
$
66,500Keith
Berman,
2007
$
18,340
-0-
$
91,125
-0-
-0-
-0-
-0-
$
109,465CFO (2)
2006
$
36,200
-0-

-0-
-0-
-0-
-0-
-0-
$
36,200Robert
Jagunich,
2007

-0-
-0-
$
86,250
-0-
-0-
-0-
-0-
$
86,250Director
(3)
2006

-0-
-0-

-0-
-0-
-0-
-0-
-0-

-0-  (1) On
August 15, 2006, Mr. Cox resigned as Chief Executive Officer and Chairman.  (2) Mr. Berman has served as Chief
Financial Officer since January 2003.  (3) Mr. Jagunich has served as a Director
since January 2003.  OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END  Name
(a)
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
(d)

Option
Exercise
Price(S) (e)
Option
Expiration
Date (f)
Number
ofSharesor Unitsof Stock
ThatHaveNotVested(#)
(g)
Market Value of Shares or Units of Stock That Have Not Vested ($) (h)
Equity
Incentive
Plan
Awards:
NumberofUnearned
Shares,
Units
or
Other
RightsThat Have Not
Vested(#) (i)
Equity Incentive
Plan Awards:
Market
or Payout
Value ofUnearned
Shares,
Units or
Other
Rights
That Have
Not Vested(j)Robert Cox,Former CEO (1)
337,500
-0-
-0-
$
1.76
2/15/10
-0-
-0-
-0-
-0-Keith
Berman,Secretary/Treasurer
337,500
-0-
-0-
$
1.76
2/15/10
-0-
-0-
-0-
-0-Robert
JagunichDirector
112,500
-0-
-0-
$
1.76
02/15/10
-0-
-0-
-0-
-0-  (1)On August 15, 2006, Mr. Cox resigned as
Chief Executive Officer and Chairman.  Compensation of Directors  All directors will be
reimbursed for expenses incurred in attending Board or committee, when
established, meetings. From time to time, certain directors who are not
employees may receive shares of our common stock.  41   Stock Option
Plans  2003 Stock Option Plan  Effective January 1,
2003, we adopted the 2003 Stock Option Plan. The maximum number of shares that
may be issued pursuant to the plan is 312,500 shares. As of December 31, 2007,
166,250 shares have been granted and subsequently expired under this plan.  2004 Stock Option Plan  Effective April 21,
2004, we adopted the 2004 Stock Option Plan, as amended, with a maximum number
of 6,312,500 shares that may be issued. As of December 31, 2007, 2,978,297
options have been granted, and exercised under this plan.  2005 Merger Consolidated Stock Option
Plan  On February 5, 2005, we
adopted our 2005 Merger Consolidated Stock Option Plan. The maximum number of
shares that may be issued pursuant to the plan is 1,125,000 shares. As of
December 31, 2007, 825,000 shares have been granted under this plan.  2006 Stock Option Plan  On December 8, 2006 we
adopted our 2006 Employee Stock Option Plan and granted incentive and
nonqualified stock options with rights to purchase 1,500,000 shares of our
$0.001 par value common stock. On August 24, 2006, we authorized an increase of
4,000,000 shares to the plan. As of December 31, 2007, 4,140,867 have been
granted and exercised under this plan.  ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.  The following table sets
forth certain information, as of March 28, 2007, concerning shares of our common
stock, the only class of our securities that are issued and outstanding, held by
(1) each stockholder known by us to own beneficially more than five percent
of the common stock, (2) each of our directors, (3) each of our
executive officers, and (4) all of our directors and executive officers as
a group:  Name and Address of Beneficial Owner
(1)
Amount and Nature of
Beneficial Ownership
Percent of Class (2)Keith Berman, CFO
1623 Elmsford
Westlake Village, CA 91361

11,939,299

34.4%Robert Jagunich, Director (3)
765 Christine Drive
Palo Alto, CA 94303

5,189,809

15.0%Officers and directors as a group (6
persons)

15,879,108

49.4%  (1)
To our knowledge, except as set forth in the
footnotes to this table and subject to applicable community property laws,
each person named in the table has sole voting and investment power with
respect to the shares set forth opposite such 34,700,688 shares of
Common Stock outstanding as of March 28, 2008.(2)
If a person listed on this table has the right to
obtain additional shares of Common Stock within 60 days from March 28,
2008 the additional shares are deemed to be outstanding for the purpose of
computing the percentage of class owned by such person, but are not deemed
to be outstanding for the purpose of computing the percentage of any other
person.  (3)
Includes 1,250,000 shares r/n/o Michael Petras, an
affiliate of Mr. Jagunich.   42   Equity
Compensation Plans  We did not have any
equity compensation plans outstanding as of December 31, 2007.  Changes in Control  None.  ITEM 13.CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE  Other than as disclosed
below; our present directors, officers or principal shareholders, nor any family
member of the foregoing, nor, to the best of our information and belief, any of
our former directors, senior officers or principal shareholders, nor any family
member of such former directors, officers or principal shareholders, has or had
any material interest, direct or indirect, in any transaction, or in any
proposed transaction which has materially affected or will materially affect us.  Keith Berman  We have received cash
advances from our chief executive officer for operational expenses. The advances
are due on demand and accrued interest at a rate of 9.5%. On September 28, 2007,
he elected to convert $150,000 of the principal balance into 7,500,000 shares of
our common stock or $0.02 per share. The market value of our shares on the date
of conversion was $0.04. As of December 31, 2007, the remaining principal
balance was $280. In addition, we have accrued interest totaling $9,883, which
is unpaid at December 31, 2007.  Future Transactions  All future affiliated
transactions will be made or entered into on terms that are no less favorable to
us than those that can be obtained from any unaffiliated third party. A majority
of the independent, disinterested members of our board of directors will approve
future affiliated transactions. We believe that of the transactions described
above have been on terms as favorable to us as could have been obtained from
unaffiliated third parties as a result of arms length negotiations.  Conflicts of Interest  In accordance with the
laws applicable to us, our directors are required to act honestly and in good
faith with a view to our best interests. In the event that a conflict of
interest arises at a meeting of the board of directors, a director who has such
a conflict will disclose the nature and extent of his interest to the meeting
and abstain from voting for or against the approval of the matter in which he
has a conflict.  Director Independence  Our common stock trades
in the OTC Bulletin Board. As such, we are not currently subject to corporate
governance standards of listed companies, which require, among other things,
that the majority of the board of directors be independent.  Since we are not
currently subject to corporate governance standards relating to the independence
of our directors, we choose to define an independent director in accordance
with the NASDAQ Global Markets requirements for independent directors (NASDAQ
Marketplace Rule 4200). The NASDAQ independence definition includes a series of
objective tests, such as that the director is not an employee of the company and
has not engaged in various types of business dealings with the company.  We do not have any
directors that may be considered an independent director under the above
definition. We do not list that definition on our Internet website.  We presently do not have
an audit committee, compensation committee, nominating committee, executive
committee of our Board of Directors, stock plan committee or any other
committees.  43   ITEM
14.PRINCIPAL ACCOUNTANT FEES
AND SERVICES  (1) AUDIT FEES  The aggregate fees
billed for professional services rendered by Weaver & Martin, LLC, for the
audit of our annual financial statements and review of the financial statements
included in our Form 10-QSB or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for fiscal years 2007 and 2006 were $42,550 and $, respectively.  (2) AUDIT-RELATED FEES  NONE.  (3) TAX FEES  NONE.  (4) ALL OTHER FEES  NONE.  (5) AUDIT COMMITTEE POLICIES AND
PROCEDURES  We do not have an audit
committee.  (6) If greater than 50 percent, disclose
the percentage of hours expended on the principal accountants engagement to
audit the registrants financial statements for the most recent fiscal year that
were attributed to work performed by persons other than the principal
accountants full-time, permanent employees.  Not applicable.  PART IV  Item 15. Exhibits, Financial Statement
Schedules.  The following
information required under this item is filed as part of this report:  (a) 1. Financial Statements  PageReport of Independent Registered Public Accounting
Firm
F-1Consolidated Balance Sheets
F-2Consolidated Statements of Operations
F-4Consolidated Statements of Stockholders
Equity
F-5Consolidated Statements of Cash Flows
F-6Footnotes to Consolidated Financial
Statements
F-8  (b) 2. Financial Statement Schedule  None.  44   (c) 3. Exhibit
Index  Incorporated by
referenceExhibit
number
Exhibit description
Filed
herewith
Form
Period
ending
Exhibit
No.
Filing
date3(i)(a)
Articles of Incorporation  Filed March 2,
2001

10-SB

3a
9/27/013(i)(b)
Articles of Amendments to Articles of Incorporation
 Filed May 9, 2001

10-SB

3b
9/27/013(i)(c)
Articles of Amendments to Articles of Incorporation
 Filed August 2, 2002

10-QSB
6/30/02
3.1c
8/22/023(ii)
Bylaws of CareDecision Corporation  March 16,
2001

10-SB

3c
9/27/0110.1
Business Consulting Agreement  Mark W. Lancaster 
February 17, 2002

S-8

4.11
3/1/0210.2
Consulting Agreement  Mark Chaim Drizin  February
26, 2002

S-8

4.12
3/1/0210.3
Consulting Agreement  Barbara Asbell  July 30,
2002

S-8

4.11
8/7/0210.4
Consulting Agreement  Barbara Asbell  August 13,
2002

S-8

4.11
9/4/0210.5
Service Agreement  Robert Jagunich  September 1,
2002

S-8

4.11
10/1/0210.6
Consulting Agreement  Glen E. Greenfelder Jr. 
October 1, 2002

S-8

4.11
12/17/0210.7
Consulting Agreement  Dr. Joseph Wolf  January 3,
2003

S-8

4.11
1/24/0310.8
Consulting Agreement  Thomas Chillemi  January
10, 2003

S-8

4.12
1/24/0310.9
Consulting Agreement  Dailyfinancial.com Inc. 
October 21, 2002

SB-2/A

10.1
4/29/0310.10
Agents Representation Agreement  CareDecision.net
 August 20, 2002

SB-2/A

10.2
4/29/0310.11
Service Agreement  Robert Jagunich  September 1,
2002

SB-2/A

10.3
4/29/0310.12
Secured Convertible Revolving Promissory Note 
M & E Equities, LLC  April 23, 2002

SB-2/A

10.4
4/29/0310.13
Service Agreement  Robert Jagunich  December 11,
2002

SB-2/A

10.5
4/29/0310.14
Consulting Agreement  Wizard Enterprises 
December 13, 2002

SB-2/A

10.6
4/29/03  45    Incorporated by
referenceExhibit
number
Exhibit description
Filed
herewith
Form
Period
ending
Exhibit
No.
Filing
date10.15
Consulting Agreement  Wizard Enterprises 
December 20, 2002

SB-2/A

10.7
4/29/0310.16
Consulting Agreement  Barbara Asbell 
December 13, 2002

SB-2/A

10.8
4/29/0210.17
Program Agreement between PharmaCare Management
Services, Inc. and CareDecision.net Incorporated 
May 4, 2001

SB-2/A

10.9
4/29/0210.18
Consulting Agreement  Paradigm Partners
September 15, 2002

SB-2/A

10.10
4/29/0210.19
Letter of Intent between ATR Search and
Medicius
April 3, 2002

SB-2/A

10.11
4/29/0210.20
Consulting Agreement  Ely Mandell  August 5,
2003

SB-2/A

4.12
8/14/0310.21
Consulting Agreement  Dr. Joseph A. Wolf 
July 15, 2003

SB-2/A

4.13
8/14/0310.22
Consulting Agreement  Leslie  Michelle Abraham
-
July 15, 2003

SB-2/A

4.14
8/14/0310.23
Consulting Agreement  Thomas Chillemi 
July 10, 2003

SB-2/A

4.15
8/14/0310.24
Consulting Agreement  Anthony Quintiliana 
July 1, 2003

SB-2/A

4.16
8/14/0310.25
Consulting Agreement  Barbara Asbell 
July 1, 2003

SB-2/A

4.17
8/14/0310.26
Consulting Agreement  Thomas Chillemi 
March 28, 2003

SB-2/A

10.13
8/29/0310.27
Consulting Agreement  Dr. Joseph A. Wolfe 
December 1, 2003

S-8

4.13
12/16/0310.28
Consulting Agreement  Leslie  Michelle Abraham 
December 1, 2003

S-8

4.14
12/16/0310.29
Consulting Agreement  Thomas Chillemi 
December 1, 2003

S-8

4.15
12/16/0310.30
Consulting Agreement  Anthony Quintiliano 
December 1, 2003

S-8

4.16
12/16/0310.31
Subscription Agreement  Mercator Momentum Fund,
LP, Monarch Pointe Fund, LTD & Mercator Advisory Group, LLC  February
7, 2005

SB-2/A

10.1
2/11/05  46    Incorporated by
referenceExhibit
number
Exhibit description
Filed
herewith
Form
Period
ending
Exhibit
No.
Filing
date10.32
Certificate of Designation of Preferences and
Rights of Series C Convertible Preferred Stock  Mercator Momentum Fund,
LP, Monarch Pointe Fund, LTD & Mercator Advisory Group, LLC  February
2005

SB-2/A

10.2
2/11/0510.33
Registration Rights Agreement  Mercator Momentum
Fund, LP, Monarch Pointe Fund, LTD & Mercator Advisory Group, LLC 
February 2005

SB-2/A

10.3
2/11/0510.34
Warrant Agreement ($0.02)  Mercator Advisory
Group, LLC  February 7, 2005

SB-2/A

10.4
2/11/0510.35
Warrant Agreement ($0.02)  Mercator Momentum Fund,
LP  February 7, 2005

SB-2/A

10.5
2/11/0510.36
Warrant Agreement ($0.02) - Monarch Pointe
Fund, Ltd.  February 7, 2005

SB-2/A

10.6
2/11/0510.37
Warrant Agreement ($0.03) - Mercator Advisory
Group, LLC  February 7, 2005

SB-2/A

10.7
2/11/0510.38
Warrant Agreement ($0.03) - Mercator Momentum Fund,
LP  February 7, 2005

SB-2/A

10.8
2/11/0510.39
Warrant Agreement ($0.03)  Monarch Pointe Fund,
Ltd.  February 7, 2005

SB-2/A

10.9
2/11/0510.40
Secured Convertible Promissory Note  Pinnacle
Investment Partners, LP  March 24, 2004

SB-2/A

10.10
2/11/0510.41
Pledge and Security Agreement  Pinnacle Investment
Partners, LP  March 24, 2004

SB-2/A

10.11
2/11/0510.42
Securities Purchase Agreement  Pinnacle Investment
Partners, LP  March 24, 2004

SB-2/A

10.12
2/11/0510.43
Note Extension Agreement  Pinnacle Investment
Partners, LP  September 24, 2004

SB-2/A

10.13
2/11/0510.44
Note Extension  Pinnacle Investment Partners, LP 
February 10, 2005

SB-2/A

10.14
2/11/0510.45
The 2004 Stock Option Plan - Amended

S-8

99
9/8/0610.46
Intangible Property, License Acquisition Agreement
 CN Pharmacy, Svetislav Milic, & Nathan Kaplan  June 7, 2005

8-K

10.1
10/21/0510.47
Secured Promissory Note  Mercator Momentum Fund,
LP  August 25, 2005

8-K

10.2
10/21/05  47    Incorporated by
referenceExhibit
number
Exhibit description
Filed
herewith
Form
Period
ending
Exhibit
No.
Filing
date10.48
Secured Promissory Note  Monarch Pointe Fund,LTD 
August 25, 2005

8-K

10.3
10/21/0517
Resignation letter of Robert L. Cox, August 15,
2006

10-QSB
6/30/06
17
9/1/0631.1
Certification of Chief Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
X31.2
Certification of Chief Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
X32.1
Certification of Chief Executive Officer Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
X32.2
Certification of Chief Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
X   48   SIGNATURES  In accordance with
Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.  instaCare Corp.By:
/s/ Keith BermanKeith Berman, Chief Financial Officer and Principal
Executive Officer  Date: September 29, 2008  Pursuant to the
requirements of the Securities Exchange Act of 1934, the following persons on
behalf of the Registrant and in the capacities and on the dates indicated have
signed this report below.  Name
Title
Date/s/ Keith Berman
Chief Financial Officer and Principal
Executive Officer
09/29/08Keith Berman/s/ Robert Jagunich
Director
09/29/08Robert Jagunich   49


Report of
Independent Registered Public Accounting Firm  Stockholders and Directors Instacare Corp Westlake Village, California  We have audited the accompanying
consolidated balance sheet of Instacare Corp as of December 31, 2007 and 2006
and the related consolidated statements of operations, shareholders equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Companys management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.  We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion. 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.
We believe that our audits provide a reasonable basis for our opinion.  In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Instacare Corp as of December 31, 2007 and 2006 and the
consolidated results of its operations, shareholders equity, and cash flows for
the years then ended in conformity with U.S. generally accepted accounting
principles  The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company has suffered
recurring losses from operations. This factor raises substantial doubt about the
Companys ability to continue as a going concern. Managements plans with regard
to these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.  /s/ Weaver & Martin,
LLC Kansas City Missouri March 31, 2008  F-1   instaCare
Corp. Consolidated Balance Sheet December 31,Assets

2007

2006Current assets:Cash
$
4,353
$
19,501Accounts receivable

669,041

267,166Inventory

96,450

-Prepaid expenses

3,816

--Total current assets

773,660

286,667Fixed assets:Furniture and fixtures

2,530

2,530Computer equipment

232,365

232,365234,895

234,895Less accumulated depreciation

198,645

151,919Fixed assets, net

36,250

82,976Other assets:Deposits

3,412

3,412$
813,322
$
373,055Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
$
120,107
$
408,438Accrued liabilities

199,265

225,486Accrued interest

412,837

205,285Line of credit

467,044

-Demand note - related party

280

63,000Notes payable, current portion

181,021

-Convertible notes payable

1,377,689

1,702,401Total current liabilities

2,758,243

2,604,610Long-term debt, less current portion

85,109

-Stockholders Equity:Preferred
stock, $0.001 par value, 3,249,000 shares authorized 207,526 shares
authorized, no shares issued and outstanding

207

208Preferred
series A stock, $0.001 par value, 750,000 shares authorized, no
shares outstanding

-

-Preferred
series C stock, $0.001 par value, 1,000,000 shares authorized,
17,860 and 20,000 shares issued and outstanding

18

20Preferred
series D stock, $0.001 par value, 1,000 shares authorized, no
shares issued and outstanding

-

-Common
stock, $0.001 par value, 1,250,000,000 shares authorized 29,200,026
and 9,461,621 shares issued and outstanding

29,200

9,462Shares authorized and un-issued,
3,700,294

3,700

-Prepaid share-based compensation

(105,000

(29,934Additional paid-in capital

17,459,200

15,796,265Dividend payable

292,392

50,914Accumulated (deficit)

(19,709,747

(18,058,490(2,030,030

(2,231,555$
813,322
$
373,055  The accompanying notes are an integral part
of these consolidated financial statements.  F-2   instaCare
Corp. Consolidated Statements of
Operations For the Years EndedDecember 31,2007

2006Revenue
$
6,254,278
$
19,220,265Cost of sales

5,845,782

19,186,237Gross profit

408,496

34,028Expenses:General and administrative expenses

270,317

637,463Consulting services

728,438

569,743Payroll expense

342,777

485,627Professional fees

148,079

592,968Depreciation

46,726

48,027Total expenses

1,536,337

2,334,128Net operating (loss)

(1,127,841)

(2,300,100)Other income (expense):Financing costs

(45,429)

(249,408)Interest expense, net

(236,509)

(205,302)Total other income (expense)

(281,938)

(454,710)Provision for income taxes

-

-Net (loss)
$
(1,409,779)
$
(2,754,810)Weighted average number of Common shares
outstanding  basic and fully diluted

15,717,861

8,073,584Net (loss) per share  basic and fully
diluted
$
(0.09)
$
(0.34)  The accompanying notes are an integral part
of these consolidated financial statements.  F-3   instaCare,
Corp. Consolidated Statement of Changes of
Stockholders Deficit  Preferred Stock

Common Stock

Additional
Paid-in
Capital

Shares
Authorized and
Un-issued

Unamortized
Warrant & Options

Prepaid
Stock Comp

Dividend
Payable

Accumulated
(Deficit)

Total
Stockholders'
(Deficit)Shares

Amount

Shares

AmountBalance,
December 31, 2005


227,526

$
228


7,236,013

$
7,236

$
14,964,989

$
56

$
(13,517
)
$
(60,000
)
$
-

$
(15,046,680
)
$
(147,688
)Shares
previously authorized


-


-


68,355


68


(12
)

(56
)

-


-


-


--


243,491Shares
issued for services


-


-


1,448,610


1,449


609,820


-


-


(296,934
)

-


-


581,335Escrow
shares issued for debt repayment


-


-


-


-


162,311


-


-


-


-


-


162,311Shares
issued for license renewal


-


-


87,050


87


37,576


-


-


-


-


-


37,663Options
issued for services


-


-


-


-


7,359


-


-


-


-


-


7,359Warrants
issued for financing


-


-


-


-


14,844


-


-


-


-


-


14,844Shares
issued as dividend


-


-


621,593


622


(622
)

-


-


-


-


-


-Amortization
of prepaid compensation


-


-


-


-


-


-


-


60,000


-


-


60,000Amortization
of warrants and options


-


-


-


-


-


-


13,517


-


-


-


13,517Dividend
payable


-


-


-


-


-


-


-


-


50,914


(257,000
)

(206,086
)Net
(loss)


-


-


-


-


-


-


-


-


-


(2,754,810
)

(2,754,810
)Balance,
December 31, 2006


227,526


228


9,461,621


9,462


15,796,265


-


-


(29,934
)

50,914


(18,058,490
)

(2,231,555
)Shares
issued for cash


-


-


200,000


200


9,800


-


-


-


-


-


10,000Shares
issued for services


-


-


7,106,118


7,106


555,026


3,250


-


(105,000
)

-


-


460,385Shares
issued for license fees


-


-


139,100


139


37,572


-


-


-


-


-


37,711Options
and warrants issued for services


-


-


-


-


443,335


-


-


-


-


-


443,335Option
exercised for cash


-


-


2,357,534


2,357


253,314


-


-


-


-


-


255,670Options
exercised for services


-


-


833,333


833


21,667


-


-


-


-


-


22,500Shares
issued for debt conversion


-


-


7,500,000


7,500


322,500


-


-


-


-


-


330,000Shares
issued for conversion of preferred


(2,140
)

(1
)

1,370,761


1,371


(1,371
)

-


-





-


-


-Shares
issued for financing


-


-


231,559


232


21,085


450


-


-





-


21,767Amortization
of prepaid compensation


-


-


-


-


-


-


-


29,934


-


-


29,934Dividend
payable


-


-


-


-


-


-


-


-


241,478


(241,478
)

-Net
(loss)


-


-


-


-


-


-


-


-


-


(1,409,779
)

(1,409,779
)Balance,
December 31, 2007


225,386

$
227


29,200,026

$
29,200

$
17,459,200

$
3,700

$
-

$
(105,000
)
$
292,392

$
(19,709,747
)
$
(2,030,030
)  The accompanying notes are an integral part
of these consolidated financial statements.  F-4   instaCare,
Corp. Consolidated Statements of Cash
Flows For the year endedDecember
31,2007

2006Cash flows from operating activitiesNet (loss)
$
(1,409,779)
$
(2,754,810)Adjustments to reconcile net (loss) to net
cash (used) by operating activities:Shares issued for services

460,385

641,334Shares issued for license fees

37,711

37,663Shares issued for financing

21,767

-Options and warrants issued for services

465,835

-Amortization of options issued for services

29,934

20,876Amortization of warrants issued for
financing

-

147,181Depreciation

46,726

48,027Changes in operating assets and liabilities:Accounts receivable

(236,902)

(247,584)Inventory

(96,450)

127,373Prepaid expenses

(3,816)

55,956Accounts payable

(288,331)

364,588Accrued interest

213,254

190,984Accrued expenses

(26,221)

202,543Net cash (used) by operating activities

(785,887)

(991,710)Cash flows from financing activitiesProceeds from line of credit

1,007,967

-Payments on line of credit

(540,923)

-Proceeds from note payable - related party

155,580

96,000Payments on note payable - related party

(68,300)

(33,000)Payments on notes payable

(24,254)

-Proceeds from convertible note payable

-

545,000Payments on convertible note payable

(25,000)

(100,000)Dividend paid

-

(206,086)Issuance of common stock

265,670

-Net cash provided by financing activities

770,740

301,914Net increase in cash

(15,148)

(689,794)Cash  beginning

19,501

709,295Cash  ending
$
4,353
$
19,501Supplemental disclosures:Interest paid
$
29,256
$
321,283Income taxes paid
$
-
$
-Non-cash transactions:Number of shares issued for services

7,939,451

1,448,610Number of shares issued for debt conversion

7,500,000

-Number of shares issued for licensing

139,100

87,050Number of shares issued for financing

231,559

-Number of shares issued for dividend

-

621,593  The accompanying notes are an integral part
of these consolidated financial statements  F-5   instaCare
Corp. Notes to Consolidated Financial
Statements  Note 1  Significant accounting policies and
procedures  Organization  We were organized July 6, 2000 (Date of
Inception) under the laws of the State of Nevada as Promedicius, Inc. In May
2001, we changed our name to Medicius, Inc. On June 21, 2002, we merged with ATR
Search Corp., a development stage company, and a Nevada corporation. The merger
has been accounted for as a recapitalization and the historical financial
statements of Medicius Inc. are presented herein.  On June 21, 2002, we filed an amendment to
its articles of incorporation changing our name to CareDecision Corporation and
subsequently changed our name to InstaCare Corp. effective April 14, 2005.  On November 19, 2004, we incorporated two
Nevada subsidiary companies, Pharma Tech Solutions, Inc. and PDA Services, Inc.
On November 24, 2004, we entered into an Agreement and Plan of Merger, as
amended on December 27, 2004, between Pharma Tech Solutions, Inc. and
CareGeneration, Inc. (CareGen), a Nevada corporation. This agreement included
CareGens private acquisition of retail pharmaceutical license applications,
client lists, receivables, business contacts, relationships, goodwill and the
rights to use the wholesale pharmaceutical distribution license, trade names and
sales names of Kelly Company World Group, Inc., a Delaware corporation. On
February 25, 2005, the merger was completed whereby CareGen merged with Pharma
Tech wherein CareGen ceased to exist and Pharma Tech continued as a majority
owned subsidiary.  On January 4, 2005, we commenced
prescription drug distribution operations which are, currently being conducted
through PDA Services, Inc. and is in the process of establishing facility in
Hope, North Dakota. Specializing in rapid delivery of prescription drugs and
diagnostic products, we are in the final stages of augmenting its prescription
drug and prescription diagnostics distribution business by creating a nationwide
network over the internet. We have also created a fully integrated prescription
fulfillment program through which physicians can directly submit prescriptions
using a hand-held device, tablet PC, or PDA that is enabled through a Wi-Fi link
to the Internet.  We have established its first fulfillment
center to service uninsured and underinsured patients in Phoenix, AZ, while also
securing its retail prescription license in the state of Arizona.  Through the acquisition of CareGen, we
acquired a retail mail order business concept for the distribution of
pharmaceutical and healthcare supplies and is currently developing our
distribution platform.  Cash and cash equivalents  Cash and cash equivalents include all cash
balances in non-interest bearing accounts and money-market accounts. We places
our temporary cash investments with quality financial institutions. At times
such investments may be in excess of Federal Deposit Insurance Corporation
(FDIC) insurance limit. We do not believe it is exposed to any significant
credit risk on cash and cash equivalents. For the purpose of the statements of
cash flows, all highly liquid investments with an original maturity of three
months or less are considered to be cash equivalents. There are no cash
equivalents as of December 31, 2007 and 2006.  Accounts receivable  We have elected to record bad debts using
the direct write-off method. Generally accepted accounting principles require
that the allowance method be used to recognize bad debts; however, the effect
using the direct method is not materially different from the results that would
have been obtained under the allowance method.  Investments  Investments in companies over which we
exercise significant influence are accounted for by the equity method whereby we
includes our proportionate share of earnings and losses of such companies in
earnings. Other long-term investments are recorded at cost and are written down
to their estimated recoverable amount if there is evidence of a decline in
value, which is other than temporary.  F-6   Inventory  Inventories are stated at the lower of cost
or market. Cost is determined on a standard cost basis that approximates the
first-in, first-out (FIFO) method. Market is determined based on net realizable
value. Appropriate consideration is given to obsolescence, excessive levels,
deterioration, and other factors in evaluating net realizable value. As of
December 31, 2007 and 2006, inventory was $96,450 and $0, respectively.  Fixed assets  Fixed assets are stated at the lower of
cost or estimated net recoverable amount. The cost of property, plant and
equipment is depreciated using the straight-line method based on the lesser of
the estimated useful lives of the assets or the lease term based on the
following life expectancy:  Computer equipment
5 yearsSoftware
5 yearsOffice furniture and fixtures
7 years  Repairs and maintenance expenditures are
charged to operations as incurred. Major improvements and replacements, which
extend the useful life of an asset, are capitalized and depreciated over the
remaining estimated useful life of the asset. When assets are retired or sold,
the costs and related accumulated depreciation and amortization are eliminated
and any resulting gain or loss is reflected in operations.  Consolidation policy  The accompanying consolidated financial
statements include our accounts and the accounts of our wholly-owned subsidiary
corporations, after elimination of all material inter-company accounts,
transactions, and profits. Investments in unconsolidated subsidiaries
representing ownership of at least 20% but less than 50% are accounted for under
the equity method. Non-marketable investments in which the Company has less than
20% ownership and in which it does not have the ability to exercise significant
influence over the investee are initially recorded at cost and periodically
reviewed for impairment. As of December 31, 2007 and 2006, we did not have
non-marketable investments.  Revenue recognition  We recognize revenue from our sales of
pharmaceutical supplies upon delivery to its customer where the fee is fixed or
determinable, and collectibility is probable. Cash payments received in advance
are recorded as deferred revenue. We are not generally obligated to accept
returns, except for defective products.  Revenue from proprietary software sales
that does not require further commitment from the company is recognized upon
shipment. Consulting revenue is recognized when the services are rendered.
License revenue is recognized ratably over the term of the license.  The cost of services, consisting of staff
payroll, outside services, equipment rental, communication costs and supplies,
is expensed as incurred.  Advertising costs  We expense all costs of advertising as
incurred. There were no advertising costs included in general and administrative
expenses as of December 31, 2007 and 2006, respectively.  Use of estimates  The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.   F-7   Fair value of
financial instruments  Fair value estimates discussed herein are
based upon certain market assumptions and pertinent information available to
management as of December 31, 2007 and 2006. The respective carrying value of
certain on-balance-sheet financial instruments approximated their fair values.
These financial instruments include cash, accounts receivable, accounts payable
and notes payable. Fair values were assumed to approximate carrying values
because they are short term in nature and their carrying amounts approximate
fair values or they are payable on demand.  Impairment of long-lived assets  We reviews our long-lived assets and
intangibles periodically to determine potential impairment by comparing the
carrying value of the long-lived assets with the estimated future cash flows
expected to result from the use of the assets, including cash flows from
disposition. Should the sum of the expected future cash flows be less than the
carrying value, we would recognize an impairment loss. An impairment loss would
be measured by comparing the amount by which the carrying value exceeds the fair
value of the long-lived assets and intangibles. We recognized impairment losses
in the amount of $0 and $0 as of December 31, 2007 and 2006, respectively.  Loss per share  Net loss per share is provided in
accordance with Statement of Financial Accounting Standards No. 128 (SFAS #128)
Earnings Per Share. Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number of common shares
outstanding during the period. There were no securities considered to be
dilutive in the computation of earnings (loss) per share.  Income Taxes  We account for income taxes in accordance
with SFAS No. 109, "Accounting for Income Taxes. Deferred taxes are provided on
the liability method whereby deferred tax assets are recognized for deductible
temporary differences, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.  We adopted FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement
No. 109 (FIN 48) as of January 1, 2007. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in companies financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes. As a
result, we apply a more-likely-than-not recognition threshold for all tax
uncertainties. FIN 48 only allows the recognition of those tax benefits that
have a greater than fifty percent likelihood of being sustained upon examination
by the taxing authorities. As a result of implementing FIN 48, we have reviewed
our tax positions and determined there were no outstanding, or retroactive tax
positions with less than a 50% likelihood of being sustained upon examination by
the taxing authorities, therefore the implementation of this standard has not
had a material affect on the Company.  We classify tax-related penalties and net
interest as income tax expense. As of December 31, 2007 and 2006, no income tax
expense has been incurred. See Note 6.  Concentrations  In 2007, five customers of the Company
accounted for approximately 99% of our net sales compared to 96% of total sales
being attributable to four major customers in 2006. Since January 1, 2006 the
companys operations require maintaining strategic relationships with its
customers whereby the Company delivers product and services the patient base
that underlies these strategic relationships, accepting assignment of insurance
benefit through its Colonia Natural Pharmacy strategic partnership for the
billing and future servicing of these patients. The Company also maintains
relationships with the entities where the patients reside. As of December 31,
2007 and 2006, we obtained the majority of its pharmaceutical products from five
and three major suppliers, respectively. There can be no assurance that our
major customers will continue to purchase products. The loss of our largest
customers or a decrease in product sales would have a material adverse effect on
our business and financial condition.  Reclassifications  Certain reclassifications have been made to
prior periods to conform to current presentation.  F-8   Recent
pronouncements  In February 2007, the FASB issued SFAS
No.159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS No.159). SFAS No.159 allows the company to choose to measure many
financial assets and financial liabilities at fair value. Unrealized gains and
losses on items for which the fair value option has been elected are reported in
earnings. SFAS 159 is effective for fiscal years beginning after November 15,
2007. The adoption of SFAS 159 is not expected to have a material impact on our
financial position, results of operation or cash flows.  In December 2007, the FASB issued SFAS No.
160, Non-controlling Interests in Consolidated Financial Statements. This
statement amends ARB 51 to establish accounting and reporting standards for the
non-controlling (minority) interest in a subsidiary and for the de-consolidation
of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is
equity in the consolidated financial statements. SFAS No. 160 is effective for
fiscal years and interim periods beginning after December 15, 2008. The adoption
of SFAS 160 is not expected to have a material impact on our financial position,
results of operation or cash flows.  In December 2007, the FASB issued SFAS No.
141 (Revised), Business Combinations. SFAS 141 (Revised) establishes
principals and requirements for how an acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree. This
statement also provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what information to disclose
to enable users of the financial statements to evaluate the nature and financial
effects of the business combination. The guidance will become effective for the
fiscal year beginning after December 15, 2008.The adoption of SFAS 141(Revised)
is not expected to have a material impact on our financial position, results of
operation or cash flows.  Year end  The Company has adopted December 31 as its
fiscal year end.  Note 2  Going concern  The accompanying consolidated financial
statements have been prepared assuming that we will continue as a going concern.
Our ability to continue as a going concern is dependent upon attaining
profitable operations based on the development of distributions platforms
through which our products that can be sold. We intend to use borrowings and
security sales to mitigate the affects of our cash position, however, no
assurance can be given that debt or equity financing, if and when required, will
be available. The condensed consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets
and classification of liabilities that might be necessary should we be unable to
continue in existence.  Note 3  Inventory  Inventory consisted of diabetic test strips
valued at $96,450 and $0 at December 31, 2007 and 2006, respectively.  Note 4  Fixed assets  Fixed assets consisted of the following at
December 31:  2007

2006Furniture and fixtures
$

2,530
$

2,530Computers and equipment


232,365


232,365Subtotal


234,895


234,895Less accumulated depreciation


(198,645)


(151,919)Total fixed assets, net
$

36,250
$

82,976  Depreciation expense totaled $46,726 and
$48,027 for the years ended December 31, 2007 and 2006, respectively.  F-9   Note 4 
Notes payable and related parties  As of December 31, 2007 we have received
cash advances from our chief executive officer for operational expenses. The
advances are due on demand and accrued interest at a rate of 9.5%. On September
28, 2007, he elected to convert $150,000 of the principal balance into 7,500,000
shares of our common stock or $0.02 per share. The market value of our shares on
the date of conversion was $0.04. As of December 31, 2007, the remaining
principal balance was $280. In addition, we have accrued interest totaling
$9,883, which is unpaid at December 31, 2007.  Notes payable consisted of the following as
of December 31:  2007

2006Demand note from a related party, bearing interest
at 9.5%
$
280
$
63,000Promissory note, bearing interest at 9.5% per
annum, Matured August 25, 2006, currently in default.

87,309

87,309Convertible promissory note, bearing interest at
12% per annum, matured December 24, 2006, currently in default.

920,379

1,100,379Convertible promissory note, bearing interest at
1.25% per month, matured on October 31, 2007, currently in default.

170,000

159,713Promissory note, bearing interest at 12% per annum,
Matured July 31, 2006, currently in default.

130,000

155,000Convertible promissory note, bearing interest at
1.5% Monthly, matured December 31, 2007.

200,000

200,000Promissory note, bearing interest at 9% Per annum,
maturing June 20, 2010

136,131

Line of credit, with interest being paid in shares
equal to 5% of each advance.

467,044

Total notes payable

2,111,143

1,765,401Less: Current portion

2,026,034

1,765,401Total long term notes payable
$
85,109
$
  We have recorded interest expense totaling
$236,509 and $205,302 during the years ended December 31, 2007 and 2006,
respectively.  Note 5  Income taxes  For the year ended December 31, 2007, the
Company incurred net operating losses and accordingly, no provision for income
taxes has been recorded. In addition, no benefit for income taxes has been
recorded due to the uncertainty of the realization of any tax assets. At
December 31, 2007, the Company had approximately $19,525,307 of federal and
state net operating losses. The net operating loss carry forwards, if not
utilized will begin to expire in 2018-2021.  F-10   The components
of the Companys deferred tax asset are as follows:  As of December 31,2007

2006Deferred tax assets:Net operating loss carry forwards
$

6,833,857
$

6,320,500Total deferred tax assets


6,833,857


6,320,500Deferred tax liabilities:Depreciation


-0-


-0-Net deferred tax assets before valuation
allowance


6,833,857


6,320,500Less: Valuation allowance


(6,833,857)


(6,320,500)Net deferred tax assets
$

-0-
$

-0-  For financial reporting purposes, the
Company has incurred a loss since inception to December 31, 2007. Based on the
available objective evidence, including the Companys history of its loss,
management believes it is more likely than not that the net deferred tax assets
will not be fully realizable. Accordingly, the Company provided for a full
valuation allowance against its net deferred tax assets at December 31,
2007.  A reconciliation between the amount of
income tax benefit determined by applying the applicable U.S. and State
statutory income tax rate to pre-tax loss is as follows:  Year ended December 31,2007

2006Federal and state statutory rate

35%


35%Change in valuation allowance on deferred tax
assets

(35)


(35)-


-  Note 6  Stockholders equity  Common stock  We are authorized to issue up to
1,250,000,000 shares of $0.001 par value common stock.  Preferred stock  We are authorized to issue 5,000,000 shares
of $0.001 par value preferred stock; of which 750,000 shares are designated as
Series A, 1,000,000 shares are designated as Series C, and 1,000 shares are
designated as Series D.  Series A convertible preferred
stock  Holders of series A: convertible stock
shall not have the right to vote on matters that come before the shareholders.
Series A Convertible Preferred stock may be converted at a rate of .225 shares
of common stock for each share of Series A Convertible Preferred stock. Series
A Convertible Preferred stock shall rank senior to common stock in the event
of liquidation. Holders of Series A convertible stock shall be entitled to a
6% annual dividend payable in common stock, accrued and payable at the time of
conversion, subject to adjustments resulting from stock splits,
recapitalization, or share combination.  F-11   Series C
convertible preferred stock  Holders of series C: convertible stock
shall not have the right to vote on matters that come before the shareholders.
Series C convertible preferred stock may be converted, the number of shares
into which one share of Series C Preferred Stock shall be convertible shall be
determined by dividing the Series C Purchase price by the existing conversion
price which shall be equal to eighty percent of the market price rounded to the
nearest thousandth, not to exceed $1.60 per share. Series C convertible stock
shall rank senior to common stock in the event of liquidation. Holders of
Series C convertible stock shall be entitled to a mandatory monthly dividend
equal to the share price multiplied by the prime interest rate plus five tenths
percent. Series C convertible stock shall have a redemptions price of $100 per
share, subject to adjustments resulting from stock splits, recapitalization, or
share combination.  Series D convertible preferred
stock  Holders of series D: convertible stock
shall not have the right to vote on matters that come before the shareholders.
Series D convertible preferred stock may be converted, the number of shares
into which one share of Series D Preferred Stock shall be convertible shall be
determined by dividing the Series D Purchase price by the existing conversion
price which shall be equal to eighty percent of the market price rounded to the
nearest thousandth, not to exceed $1.60 per share. Series D convertible stock
shall rank senior to common stock in the event of liquidation. Holders of
Series D convertible stock shall be entitled to a mandatory monthly dividend
equal to the share price multiplied by the prime interest rate plus five-tenths
percent. Series D convertible stock shall have a redemptions price equal to
101% of the purchase price per share, subject to adjustments resulting from
stock splits, recapitalization, or share combination.  2006 Issuances  During January 2006, the Company issued
68,355 shares of common stock as previously authorized in December 2005.  During the fiscal year ended December 31,
2006, the Company issued 1,448,610 shares of its common stock for services
relating to various consulting agreements. The Company recorded consulting
expense in the amount of $581,335 and prepaid shares-based compensation of
$29,934 which was expensed during the year ended December 31, 2007.  On April 17 and May 22, 2006, the Company
issued 62,050 and 25,000 shares of common stock valued at $37,663 to Messers
Millic and Kaplan for licensing fees.  On June 16, 2006 the Company issued 621,593
shares of its common stock pursuant to the dividend grant dated June 9, 2006.
Pursuant to the grant, each share holder of record on the date of grant was
entitled to receive a stock dividend in the amount of 8.334% shares for each 100
shares of our common stock owned.  2007 Issuances  During the year ended December 31, 2007 we
issued 810,500 shares of our common stock for the exercise of options issued
pursuant to our 2004 stock option plan to various consultants for cash totaling
$11,100 and services valued at $23,081.  During the year ended December 31, 2007 we
issued 4,140,867 shares of our common stock for the exercise of options issued
pursuant to our 2006 stock option plan to various consultants for cash totaling
$244,614 and services valued at $99,500. As of December 31, 2007,750,000 of
these shares were un-issued.  On January 4, 2007, we issued 150,000
shares of restricted common stock for services valued at $49,500, the fair value
of the underlying shares.  During the year ended December 31, 2007, we
issued 1,370,761 shares of common stock for the conversion of 2,140 shares of
our preferred C stock to Mercator Momentum Fund and Monarch Pointe Fund
pursuant to the 2005 purchase agreement.  On April 5, 2007, we issued 50,000 shares
of common stock for license renewal fees to two individuals. We recorded
licensing fees in the amount of $19,000, the fair value of the shares.  On July 23, 2007, we issued of 184,700
shares of our restricted common stock for accrued expenses totaling $38,787.  On September 19, 2007, we issued 200,000
shares of restricted common stock for cash totaling $10,000.  F-12   On September 28,
2007, we authorized the issuance of 7,500,000 shares of our restricted common
stock at a price of $0.02 per share to our chief executive officer for the
conversion of $150,000 of the principal balance of his note. The market price
per share on the date of conversion was $0.04. The shares were subsequently
issued on October 3, 2007.  On September 28, 2007, we authorized the
issuance of 5,250,000 shares of our restricted common stock to its two directors
as compensation for services from July 1, 2007 through July 1, 2008. The fair
value of the shares on the date of grant was $210,000 and will be amortized over
the one-year service period. As of December 31, 2007, we have recorded
compensation expense in the amount of $105,000 and unamortized cost of shares
issued for services of $105,000. The shares were subsequently issued on October
3, 2007.  On November 26, 2007, we issued a total of
400,000 shares of our restricted common stock for services valued at $12,000,
the fair value of the underlying shares.  On December 5, 2007, we issued 200,000
shares of our restricted common stock for services valued at $6,000, the fair
value of the underlying shares.  On December 5, 2007, issued 231,559 shares
of our restricted common stock for financing expenses valued at $11,249, the
fair value of the underlying shares.  On December 21, 2007, we authorized the
issuance of 446,071 shares of our restricted common stock for financing expenses
valued at $13,382, the fair value of the underlying shares. As of December 31,
2007, the shares are un-issued.  On December 28, 2007, we authorized the
issuance of 2,500,000 shares of our restricted common stock to our two directors
for services valued at $75,000, the fair value of the underlying shares. As of
December 31, 2007, the shares are un-issued.  On December 28, 2007, we authorized the
issuance of 4,223 shares of our common stock for financing expenses valued at
$127, the fair value of the underlying shares. As of December 31, 2007, the
shares are un-issued.  Note 7  Options  2004 Stock Option Plan  Effective April 21, 2004, we adopted the
2004 Stock Option Plan, as amended, with a maximum number of 6,312,500 shares
that may be issued. As of December 31, 2007, 2,978,297 options have been
granted, and exercised under this plan.  During the year ended December 31, 2007, we
issued options to purchase up to 810,500 shares of par value common stock at a
weighted average exercise price of $0.05 per share for various consulting
services received. We recorded an expense in the amount of $22,766 the fair
value of the options using the Black-Scholes pricing model. As of December 31,
2007, all options were exercised in exchange for cash in the amount of $11,100
and services valued at $23,081.  F-13   The following is
a summary of activity of outstanding stock options under the 2004 Stock Option
Plan:  WeightedAverageNumber

ExerciseOf Shares

PriceBalance, January 1, 2006
-
$
-0-Options granted
1,141,610

0.46Options cancelled
-

-Options exercised
1,141,610
$
0.46Balance, December 31, 2006
-
$
-0-Balance, January 1, 2007
-

-0-Options granted
810,500

0.05Options cancelled
-

-Options exercised
810,500

0.05Balance, December 31, 2007
-
$
-0-Exercisable, December 31, 2007
-
$
-0-  2005 Merger Consolidated Stock Option
Plan  On February 5, 2005, we adopted our 2005
Merger Consolidated Stock Option Plan. The maximum number of shares that may be
issued pursuant to the plan is 1,125,000 shares. As of December 31, 2007,
825,000 shares have been granted under this plan.  F-14   The following is
a summary of activity of outstanding stock options under the 2004 Stock Option
Plan:  WeightedAverageNumber

ExerciseOf Shares

PriceBalance, January 1, 2006
825,000
$
1.73Options granted
-

-0-Options cancelled
-

-0-Options exercised
-

-0-Balance, December 31, 2006
825,000
$
.73Balance, January 1, 2007
825,000
$
1.73Options granted
-

-0-Options cancelled
-

-0-Options exercised
-

-0-Balance, December 31, 2007
825,000
$
1.73Exercisable, December 31, 2007
825,000
$
1.73  2006 Stock Option Plan  On December 8, 2006 we adopted our 2006
Employee Stock Option Plan and granted incentive and nonqualified stock options
with rights to purchase 1,500,000 shares of our $0.001 par value common stock.
On August 24, 2006, we authorized an increase of 4,000,000 shares to the
plan.  During the year ended December 31, 2007, we
issued options to purchase up to 4,140,867 shares of par value common stock at a
weighted average exercise price of $0.15 per share for various consulting
services received. We recorded an expense in the amount of $252,324 the fair
value of the options using the Black-Scholes pricing model. As of December 31,
2007, all options were exercised for cash totaling $244,614 and services valued
at $99,500.  F-15   The following is
a summary of activity of outstanding stock options under the 2006 Stock Option
Plan:  WeightedAverageNumber

ExerciseOf Shares

PriceBalance, January 1, 2006
-
$
-0-Options granted
-

-0-Options cancelled
-

-Options exercised
-

-0-Balance, December 31, 2006
-
$
-0-Balance, January 1, 2007
-
$
-0-Options granted
4,140,867

0.15Options cancelled
-

-Options exercised
4,140,867

0.15Balance, December 31, 2007
-
$
-0-Exercisable, December 31, 2007
-
$
-0-  Note 8  Warrants  During the year ended December 31, 2007, we
issued warrants to purchase up to 1,233,340 shares of par value common stock at
a weighted average exercise price of $.06 per share for various services. We
recorded an expense in the amount of $37,620 the fair value of the warrants
using the Black-Scholes pricing model.  F-16   The following is
a summary of activity of outstanding warrants as of December 31, 2007:  WeightedAverageNumber

ExerciseOf Shares

PriceBalance, January 1, 2006
1,378,750
$
1.92Warrants granted
50,000

0.32Warrants cancelled
-

-Warrants exercised
-

-Balance, December 31, 2006
1,428,750
$
1.86Balance, January 1, 2007
1,428,750
$
1.86Warrants granted
1,233,340

0.06Warrants cancelled
-

-Warrants exercised
-

-Balance, December 31, 2007
2,662,090
$
1.03Exercisable, December 31, 2007
2,662,090
$
1.03  Note 9  Commitments and
Contingencies  Leases  The following is a schedule by years of
future minimum rental payments required under operating leases that have
non-cancelable lease terms in excess of one year as of December 31, 2007:  2008
$
48,0002009

12,000Total
$
60,000  Rent expense amounted to $72,860 and
$101,024 for the years ended December 31, 2007 and 2006, respectively.  Note 10  Subsequent events  During January 2008, we issued 3,700,294
shares previously authorized as of December 31, 2007.  During January, 2008, we issued 616,775
shares of our restricted common stock to two consultants for services.  In 2008, we issued 1,183,593 shares of our
restricted common stock to Centurion Credit Resources pursuant to our financing
agreement dated November 19, 2007.    F-17