Exhibit 1



                   HEMATOCRIT DEVELOPMENT AND OPTION AGREEMENT

     An  Agreement  made as of the  29th  day of  August,  1997  by and  between
InMedica Development Corporation,  a Utah corporation doing business at 60 South
600 East, Suite 150, Salt Lake City, Utah 84102 (hereinafter  called "InMedica")
and Medical Physics,  Inc., a Utah  corporation  doing business at 825 North 300
West, Salt Lake City, Utah 84103 (hereinafter called "Medical Physics").

                                    RECITALS

     Whereas InMedica has previously  engaged Medical Physics to conduct certain
work on its non-invasive hematocrit project; and

     Whereas the parties now desire to formalize their  relationship for further
work and to grant certain stock options to Medical Physics;

     Now  therefore,  for good  and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby acknowledged, the parties agree as follows:

     1. Options.  InMedica  hereby grants to Medical Physics options to purchase
54,000 shares of the common stock of InMedica.  The options are  exercisable for
Seventy Three Cents ($.73) per share  effective  August 29, 1997 for a period of
three years.  Further,  InMedica  hereby  grants to Medical  Physics  options to
purchase  54,000  additional  shares of common  stock of  InMedica at the option
price of $.73 per share which  shall  become  exercisable  for a period of three
years  from the date (not  later  than May 30,  1998) on which  Medical  Physics
demonstrates  a hematocrit  measuring  device to InMedica  which  measures human
hematocrit  with an accuracy of plus or minus 3.5 hematocrit  points through all
ranges from 20 to 60. Medical Physics shall have the right to assign its options
to Dr. Justin Clark and Dr. Ke-shieng Yang, as it may determine.

     2.  Consulting  Agreement.  Medical  Physics agrees to render the following
services to InMedica within nine months from the date hereof:

1- prepare and submit an application  for a $100,000  Small Business  Innovative
Research grant (the "Phase I Grant")  (within 30 days from the date hereof or as
soon thereafter as possible).  Research pursuant to the grant must be assignable
to InMedica and shall be assigned to InMedica by Medical Physics,  upon request.
If a Phase I Grant is approved,  InMedica agrees to match the SBIR funds with up


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to $100,000 to be used as  additional  funds for the  research  and  development
project

2- conduct  research and use its best efforts to develop a prototype  hematocrit
measuring  device capable of measuring human hematocrit with an accuracy of plus
or minus 3.5  hematocrit  points through all ranges from 20 to 60 during the six
months  following  execution of this  agreement.  During such time  period,  Dr.
Justin  Clark  shall  devote  at least  50% of his time to the  project  and Dr.
Ke-shieng Yang shall devote at least 80% of his time to the project.

3- conduct clinical trials on the device,  if warranted,  during the final three
months of this agreement

4- cooperate with the Company's  patent attorneys in filing for patent rights on
the technology developed including execution of assignments required to document
the  Company's   ownership  of  inventions   resulting  from  the  research  and
development;  copies of assignments as to certain  technology  developed to date
and  which are being  executed  concurrently  herewith  are  attached  hereto as
Exhibit A

5- The parties agree that  InMedica is authorized to use existing  technology of
Medical  Physics  where such  technology  is  incorporated  into the  hematocrit
device.  However the rights to such technology is to be restricted to the domain
of InMedica's hematocrit device

6- make  presentations  regarding the technology to persons or entities approved
by InMedica

7- all  technology  developed  under this  agreement  shall be the  property  of
InMedica

In  consideration  of the  services  rendered,  InMedica  agrees to pay  Medical
Research  $100,000 in nine equal payments of $11,111.11  beginning in September,
1997 and to reimburse Medical Research for its reasonable out of pocket research
and development  expenses (excluding overhead) and, where approved in advance by
InMedica, its travel expenses.

     4.  Confidentiality.   Medical  Physics  and  its  owners  consultants  and
employees agree to be bound by the Confidentiality and Non-competition agreement
a copy of which is attached hereto as Exhibit B

     5.  Term.   This  agreement  shall continue for a period of nine months and
may be renewed thereafter by mutual agreement of the parties.

     6.  General.  (a) This agreement  contains the entire agreement between the
parties on the subject matter (including those agreements expressly incorporated
herein by  reference)  and can only be changed or modified by written  agreement
between the parties.

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(b)Any notices or other communications under this agreement shall be in writing,
shall be deemed to have been legally  given and  delivered  when sent  certified
mail, return receipt requested to the addresses set forth above.

(c)In the event any  provision or any part of any  provision  of this  agreement
shall be held invalid,  illegal or unenforceable,  such holding shall not affect
any other  provision or any part of the same provision which can be given effect
without the invalid provision or any part thereof.

(d)This  agreement  may be  executed in one or more  counterparts  each of which
shall  be  deemed  to be an  original  and all of  which  taken  together  shall
constitute one and the same agreement.

(e)Any party hereto found by a court of competent  jurisdiction to have breached
this agreement  shall be liable to the prevailing  party for costs and attorneys
fees.

IN WITNESS WHEREOF the parties have executed this agreement as of the date first
above written.

                                             INMEDICA DEVELOPMENT CORPORATION

                                             /s/ Larry E. Clark
                                             -----------------------------------
                                             By Larry E. Clark, President



                                             MEDICAL PHYSICS, INC.

                                             /s/ Justin S. Clark
                                             -----------------------------------
                                             Justin S. Clark, President

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