UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 Form
10-K
 (Mark
One)
 √  ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For the
fiscal year ended  December 31, 2007
 
 TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For the
transition period from _______ to_________
 
 Commission
file number 0-12968
 
 INMEDICA
DEVELOPMENT CORPORATION
 (Name of
small business issuer in its charter)
 
 Utah
              87-0397815(State
      of Incorporation)
              (I.R.S.
      Employer Identification No.)
 
 825 North
300 West, Suite N132
 Salt Lake
City, Utah 84103
 (801)
521-9300
 
 Securities
      Registered Pursuant to Section 12(g) of the Act:Title of Each Class
              Name of Each Exchange on which
      RegisteredCommon
      Stock, $.001 par value
              None
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.     [  ]
Yes     [√] No
 
 Indicate
by check mark if the registrant is required to file reports pursuant to Section
13 or Section 15(d) of the Act     [  ]
Yes     [√] No
 
 Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.     [√]
Yes     No
  1
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and no disclosure will be contained, to
the best of registrant’s knowledge, 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.     [√]
 
 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 definitioins of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 
 Large
      accelerated filer [  ]
              Accelerated
      filer  [  ]Non-accelerated
      filer [  ]
              Smaller
      reporting company [√](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     No √ 1
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates:  $1,043,208 based on 8,693,402 non affiliate shares
outstanding at $.12 per share, which is the average bid and asked price of the
common shares as of the last business day of the registrant’s most recently
completed second fiscal quarter.
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 18,629,493 shares of common stock,
$.001 par value as of March 5, 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) of the Securities Act of 1933 (“Securities Act”). The listed documents
should be clearly described for identification purposes (e.g., annual report to
security holders for fiscal year ended December 24,
1980).         None
 
 
 1
-  See discussion under “Government Regulation”
  2
  PART   I
 
 Item
1. Business.
 
 General.InMedica
Development Corporation ("InMedica" or the “Company”) was incorporated as a Utah
corporation on June 16, 1983.  In 1985 the Company acquired MicroCor,
Inc., a Utah corporation (“MicroCor”) engaged in the development of certain
medical technology products. During the last fiscal year, MicroCor, a 57% owned
subsidiary of the Company, continued to engage in research and development on
MicroCor’s hematocrit technology (see “Product Development”) pursuant to the
Joint Development Agreement (the “Agreement”) with Wescor, Inc.
(“Wescor”).   Wescor assumed day to day management of MicroCor as
of September 7, 2004, however InMedica has the right to appoint three of five
directors of MicroCor.    InMedica and MircoCor received no
revenues from operations during the last fiscal year.  (See "Results
of Operations").
 
 Principal Products. During
the years 1986 and 1987, MicroCor developed, manufactured and marketed a
portable electrocardiograph ("ECG") monitor. About 450 units were manufactured
and sold. In July 1989, MicroCor signed a research and development contract with
Critikon (a predecessor to Johnson & Johnson Medical, Inc.) to develop a
medical instrument which would incorporate and enhance the technologies already
developed in the MicroCor portable ECG monitor and combine them with
technologies developed by Critikon. The research and development portion of the
contract was completed in July 1990, and resulted in the design of a new product
line. The product line was successfully marketed by Johnson & Johnson
Medical, Inc. during the 1990's, providing royalty income to
InMedica.  The product line has now been phased out and the royalty
income has ceased.
 
 Product Development. For the
past 18 years, the Company has conducted research or engaged in fund raising to
support research and development of a method for measuring hematocrit
non-invasively (without drawing blood) and has applied for patents covering this
technology. Hematocrit is the percentage of blood volume made up by red blood
cells and is a common laboratory test performed invasively by drawing a blood
sample from the patient.   During May 1997, the Company employed
Dr. Gail Billings, a bio-medical researcher and, effective August 29, 1997, the
Company engaged Medical Physics, Inc., a biomedical research company located in
Salt Lake City, Utah to conduct further research and development on the project.
The researchers engaged in additional research through 1998. During 1999, the
researchers completed production of a transportable prototype device for use in
demonstrating the technology.  During 2001, the Company entered into a
Development, Licensing and Manufacturing Agreement with Chi Lin Technologies Co.
Ltd. for further development of the technology, which has now been superseded by
the Agreement with Wescor.   To date the research and development
of MicroCor, its various engineers, affiliates and contractors has not completed
a prototype suitable for commercialization.    The Company
believes the Wescor prototype has been designed and constructed to meet the
regulatory requirements for clinical trials which may be required to obtain
regulatory approval for marketing, however, the
  3
  Company’s
view is that while the design and construction may meet regulatory requirements,
there is no certainty that the device would perform with the accuracy needed for
approval.  As a result, Wescor continues development work to improve
the performance of MicroCor’s device to within parameters likely to result in
regulatory approval for marketing.
 
 Government
Regulation.   Medical products may be subject to
regulation by the Food and Drug Administration (the "FDA") pursuant to the
Federal Food, Drug and Cosmetic Act and other federal and state laws regarding
the regulation, manufacture and marketing of products in which InMedica may be
involved. The laws of foreign nations may also apply to any international
marketing of such products. To the extent InMedica has acquired or developed an
interest in medical products or the companies manufacturing such products,
InMedica's business may be indirectly affected by such regulation. Testing of
MicroCor’s non-invasive hematocrit technology is subject to prior approval and
supervision of an Internal Review Board of a medical facility overseeing the
testing. Marketing of any new product line that might be developed based on the
Company's non-invasive hematocrit device would be subject to prior approval by
the FDA.
 
 The
disclosure on the facing sheet of this Form 10-K that the Company is not a
“shell company” as defined in Rule 12b-2 of the Rules of the Securities Exchange
Act of 1934, is based on the Company’s conclusion that it has more than “nominal
operations” as described in Rule 12b-2.   The Company’s
operations consist of ongoing operating expenses reported in its statement of
operations, paid employees, a stated business purpose of development of the
hematocrit technology, a history of pursuing this purpose, a past history of
revenues from operations and ongoing research and development conducted by its
majority-owned subsidiary, MicroCor, Inc.    In the event
the Company were determined to be a “shell company,” it would be precluded from
using Form S-8 to register securities issued to employees and would be required
to make certain disclosures on Form 8-K regarding any transaction that causes it
to cease being a shell company.  Such disclosures consist of filings
with the Securities and Exchange Commission of the same type of information that
would be required to be filed in registering a class of securities under the
Exchange Act.   Examples of transactions that could cause a
company to cease to be a shell company include a “reverse acquisition” or “back
door registration” of a “shell company” with an operating
company.  The effect of such disclosure requirement is to increase the
disclosure requirements for the non-reporting or non-registered company in a
“reverse acquisition” or “back door registration” as more fully described in SEC
Release Nos. 33–8587 and 34–52038.  The Company has no present plans
or commitments to engage in a “reverse acquisition,” “back door registration” or
similar transaction or to register stock on Form S-8.
 
 Patents. As of December 12,
1995, the Company's application for a patent entitled "Method and Apparatus for
Non-Invasively Determining Hematocrit," was allowed by the U.S. Patent Office
and the Patent issued on June 18, 1996 with a term of 17 years. The Company was
also issued an additional patent that claims priority from October 4, 1990, the
date of filing of the Company's "Method and Apparatus for Non-Invasively
Determining Hematocrit".  The patent term runs from October 4, 1990
for a period of 17 years and expired on October 4, 2007.   As
of
  4
  October
3, 2000, the Company was issued a third patent called “System and Method for
In-Vivo Hematocrit Measurement Using Impedance and Pressure
Plethysmography."   In December, 2003, the Company received a
Notice of Allowance of Claim from the U.S. Patent and Trademark
office.   On July 20, 2004 MicroCor was issued a fourth patent:
Patent 6,766,191 "System And Method For In-Vivo Hematocrit Measurement Using
Impedance And Pressure Plethysmography."   All of the Company’s
patents are now owned by MicroCor, pursuant to the Agreement with
Wescor.
 
 Raw Materials. Materials and
electronic components used in the production and development of a hematocrit
measuring device and like products are components readily available through
various suppliers.
 
 Competition.  InMedica
is not presently a significant competitive factor in the medical products
industry. The medical products industry is dominated by large and well
established corporations with vastly greater financial and personnel resources
than those of InMedica. There can be no assurance that the product in which
InMedica has an interest will be successfully developed and able to compete
profitably in the marketplace. Further, there is no assurance that MicroCor and
Wescor will be able to complete research, development and marketing of
MicroCor’s  hematocrit technology in advance of any competitors that
may be developing competing technologies.
 
 Research and Development
Costs. Research and development costs for the two years ended December
31, 2007 and 2006 and , were $ 0 and $0 respectively.   The
absence of research and development costs of the Company in 2007 and 2006 was
the result of the assumption of research and development by Wescor pursuant to
the Joint Development Agreement.  None of the expenses were incurred
on customer-sponsored research activities relating to the development of new
products.
 
 Employees. InMedica had two
part time employees as of December 31, 2007.
 
 RISK
FACTORS
 
 Ownership
of stock in the Company involves very high risk, as a result of the
following
 risk
factors:
 
 1.
Substantial Operating Losses.  Since InMedica commenced operations in
1983, it has incurred substantial operating losses and it has an accumulated
deficit of $(8,768,227) as of December 31, 2007.  There is no
assurance that profitable operations will be achieved in the
future.
 
 2.
Financing Necessary. To date the Company's cash flow from operations has not
been  sufficient  to
provide  required  working  capital and the
Company has relied upon  borrowing
and  contractual  arrangements  (including the
sale of an increasing  percentage of MicroCor
  5
  which
holds the rights to
the  hematocrit  technology)  to develop the
hematocrit  device.  The Company's limited revenues have
been used to finance operations and research and development.  The
future success of the Company may depend entirely upon the additional fund
raising from third party sources (as to which there is no
commitment).
 
 3.
Competition and Technological Change. The medical technology markets in which
the Company competes or proposes to compete are extremely competitive and
characterized by major companies which are dominant in the various
markets.  The Company is not a competitive factor in those
markets.  Further, the Company's proposed product areas are
characterized by rapid technological change.  There can be no
assurance that research and development of products by others will not render
the Company's products or processes obsolete or at a serious competitive
disadvantage.
 
 4.
Dependence on Key Personnel.  The Company's prospects to develop
products and successfully compete in the marketing of such products will be
substantially dependent upon the experience, abilities and services of the
present  officers, employees and directors of the Company, MicroCor
and Wescor.   The loss of the services of one or more of these
persons could have an adverse effect on the business of the
Company.  There is no assurance that the Company,
MicroCor  and  Wescor  will be successful in
retaining existing officers, directors and employees or attracting additional
qualified personnel as needs arise.
 
 5.
Contractual Limitations. Wescor has the contractual right to discontinue the
hematocrit project, in its sole discretion, at any time.
 
 6.
Government Regulation.  The Company's products are subject to
regulation by the Food and Drug Administration (the "FDA") both with respect to
marketing and the manner in which
products  are  manufactured.  There is no
assurance of future success in meeting
regulatory  requirements  for
FDA  approval  of the hematocrit device.
 
 7.
Possible Additional Development.  Clinical trials or further
evaluation may result in the need to do additional development work with respect
to the hematocrit device.  Such development may be expensive and time
consuming and there is no assurance of success.
 
 8. No
Dividends.  The Company has paid no dividends on its common stock and
does not intend to pay any dividends in the foreseeable future.
 
 9.
Risks  Inherent  in
Common  Stock  Ownership.  The  common  stock
of the Company is subject to fluctuations in market price due to market
conditions, 144 sales and results of operations; in the event of liquidation of
the Company, the common  shareholders  would have last
priority for  distribution  of any assets, after creditors
and preferred shareholders;  the market for the Company's common stock
is thinly  traded and there is no  assurance  that
a market for the common stock  will  exist  at a
time  when
a  shareholder  wishes  to  liquidate  stock
ownership.
  6
  Item
2. Properties
 
 The
Company presently leases office space on a month to month basis located at 825
North 300 West, Suite N132, in Salt Lake City, Utah.
 
 Item
3. Legal Proceedings
 
 There are
no pending legal proceedings.
 
 Item
4. Submission of Matters to a Vote of Security Holders
 
 None
 
 
 PART II
 
 Item
5. Market for the Registrant's Common Stock and Related Security Holder
Matters.
 
 (a) Price
Range of Common Stock.
 
 The
Common Stock of InMedica is traded in the over-the-counter market and is quoted
on the "FINRA OTC Bulletin Board". The table below sets forth, for the calendar
quarters indicated, the high and low closing bid prices for the InMedica Common
Stock as reported by the FINRA OTC Bulletin Board. These quotations represent
prices between dealers without adjustment for retail markups, markdowns or
commissions and may not represent actual transactions.
 
 Bid PriceQuarter Ended
              
              High
              
              
              LowMarch
      31, 2007
              
              $
              .23
              
              
              $
              .15June
      30, 2007
              
              
              .17
              
              
              
              .10September
      30, 2007
              
              
              .17
              
              
              
              .10December
      31, 2007
              
              
              .13
              
              
              
              .06March
      31, 2006
              
              
              .26
              
              
              
              .25June
      30, 2006
              
              
              .25
              
              
              
              .22September
      30, 2006
              
              
              .25
              
              
              
              .15December
      31, 2006
              
              
              .21
              
              
              
              .15
 
 
  7
  On March
5, 2008 there were approximately 519 record holders of the InMedica Common
Stock. Such record holders do not include individual participants in securities
position listings.   InMedica has not paid cash dividends on its
Common Stock since organization.  For the foreseeable future, InMedica
expects that earnings, if any, will be retained for use in the business or be
used to retire obligations of the Company.
 
 Four
stockholders own an aggregate of 21,016 shares of the Company’s Series A
Preferred Stock, which is 8% convertible preferred.  There is no
public market for the Series A Preferred Stock.   Aggregate
accumulated annual dividends payable on the preferred stock as of December 31,
2007 were $49,177.
 
 
 Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.
 
 Plan of
Operation.    During the 12 months beginning January,
2008, the Company’s plan of operation is to continue to work cooperatively with
MicroCor and Wescor in the development of the Company’s portable hematocrit
device.  However, Wescor recently advised the
Company and Chi Lin that its parent corporation is interested in shifting
Wescor’s resources presently dedicated to the research and development of the
Hematocrit Technology to other projects.  As a result, Wescor may be
interested in bringing on a new partnerto conduct research and
development or perhaps in selling its interest in the Technology, although
Wescor continues to fund research and development at this time under the terms
of the Joint Development Agreement.  The Company is presently
discussing the matter with Wescor.   No present plans or
commitments for other alternatives have been made.  During 2007, the
Company funded administrative operations with the proceeds of minimum royalty
payments from MicroCor.Wescor has loaned
MicroCor sufficient funds to enable MicroCor to pay one half of the minimum
royalty.  Payment of the balance of the minimum royalty was deferred
by the Company.  The Company has in the past borrowed from affiliates,
however, such borrowing is not expected to be available in the future to meet
obligations or to fund research and development. In past years, salaries of
employees and consulting fees have been accrued and later settled by the
issuance of restricted stock. If necessary, InMedica will also look for other
funding sources.
 
 Liquidity and Capital
Resources.  The minimum royalty payments in 2006 and 2007
provided,  minimum operating capital to the
Company.  However, the Company is currently in discussions with Wescor
regarding Wescor’s continued participation in the Joint Development
Agrement.  Effective January, 2008, the Company’s CEO and CFO are each
deferring payment of $2,000 per month in salary .
 
 During
the years 2007 and 2006, liquidity was generated by borrowings from Wescor and
from the payment of minimum royalties to InMedica by
MicroCor.   The Company may need to engage in fund raising during
2008 in order to meet future cash needs.
  8
  Results of
Operations.   The Company had an accumulated deficit of
$8,768,227 as of December 31, 2007.  No revenues from operations were
received in 2007 and 2006.  No revenues from operations are expected
during 2008.    The Company had a net loss from operations
of $194,699 for the year ended December 31, 2007 which remained relatively
constant compared to a net loss from operations of $199,955 for the year ended
December 31, 2006.
 
 (Intentionally
blank)
 
  9
  Item
8.  Financial Statements
  PageIndependent
      Registered Public Accountants’ Report (Robison, Hill &
      Company)
                F-1Consolidated
      Balance Sheet as of December 31, 2007 and 2006
                F-3Consolidated
      Statements of Operations for theYears
      Ended December 31, 2007 and 2006
                F-4Consolidated
      Statements of Stockholders’ Equity for theYears
      Ended December 31, 2007 and 2006
                F-5Consolidated
      Statements of Cash Flows for theYears
      Ended December 31, 2007 and 2006
                F-6Notes
      to Consolidated Financial Statements
                F-7
  10
  Item
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures.
 
 During
the registrant’s two most recent fiscal years and any subsequent interim period,
there were no disagreements with accountants on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreement(s) if not resolved to the satisfaction of the
former accountants would have caused them to make reference to the subject
matter of the disagreement(s) in connection with their reports.  The
former accountants’ reports for the period of their engagement did not contain
an adverse opinion or disclaimer of opinion.  However the former
accountants’ reports were each modified for uncertainty whether the registrant
would continue as a going concern.  There was no qualification or
modification as to audit scope or accounting principles.
 
  Item
9A.  Controls and Procedures.
  Management
is responsible for establishing and maintaining adequate internal control over
financial reporting for the small business issuer.  The Company's
Chief Executive Officer and Chief Financial Officer have concluded, based on an
evaluation required by paragraph (b) of Section 240.13a-15 or 240.15d-15 of the
Rules of the Securities Exchange Act of 1934, conducted as of the end of the
period covered by this Annual Report on Form 10-K, that the Company's disclosure
controls and procedures (as defined in Exchange Act Rules 13a – 15(e) or
240.15d-15(e)) have functioned effectively.   For
purposes of this Item, the term disclosure controls and
procedures means controls and other procedures of the Company that are
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Securities Exchange Act (15
U.S.C. 78a et seq.) is
recorded, processed, summarized and reported, within the time periods specified
in the Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Act is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.   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
permit the Company to provide only management's report in this annual
report.
 
 There
have been no changes in the Company’s internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of
Section 240.13a-15 or 240.15d-15 of the Rules of the Securities Exchange Act of
1934, that occurred during the Company’s last fiscal quarter (the Company’s
fourth fiscal quarter in the case of an annual report) that have materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
 
 Item 9B.   Other
Information.    None
  11
  PART III
 
 Item
10.   Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
 
 Directors and Executive Officers of
InMedica. The following table furnishes information concerning the
executive officers and directors of InMedica and their business backgrounds for
at least the last five years.
 
 Name
              Age
              Director SinceLarry
      E. Clark, Chairman
              86
              1995Ralph
      Henson, Director and CEO
              63
              1999Richard
      Bruggeman, Director and CFO
              53
              1995Sheng
      Jung Chiang, Director
              62
              2001Mao-Song
      Lee, Director
              60
              2002
 
 Certain
additional information follows regarding the executive officers and directors of
InMedica and their business backgrounds for at least the last five
years.
 
 LARRY E.
CLARK - Chairman of the Board since April 1995. Mr. Clark was president of
Clark-Knoll & Associates, Inc., a Denver, Colorado management consulting
firm specializing in mergers and acquisitions from 1963 to 1969. He served as
president of Petro-Silver, Inc., a small public company based in Salt Lake City,
Utah, which engaged in the oil and gas business from 1970 to 1975. Beginning in
1975 and continuing to December, 2003, Mr. Clark was president of Larry Clark
& Associates, a private company which engaged in a corporate mergers and
acquisitions business or business consulting. In 1981, Mr. Clark formed
Hingeline-Overthrust Oil & Gas, Inc., a Utah public company, which merged
with Whiting Petroleum Corporation of Denver, Colorado in December 1983. Mr.
Clark served as a director of Whiting Petroleum from 1983 until 1992 when
Whiting Petroleum merged with IES Industries and Mr. Clark returned to full time
employment as president of Larry Clark & Associates. Mr. Clark was President
of InMedica from April 1995 until December, 1999.   Mr. Clark
graduated from the U.S. Merchant Marine Academy with a BS degree in Naval
Science in 1943 and received a degree in Business Administration from the
University of Wyoming in 1948.
 
 RALPH
HENSON - Director, President and Chief Executive Officer of the Company since
December 1999.  Prior to his employment with InMedica, Mr. Henson
worked from 1996 until 1999 as Director of Sales and acting Director of Clinical
Programs of In-line Diagnostics of Farmington, Utah. He was also employed from
1987 to 1994 with Mallinckrodt Medical, in sales and marketing, including
service as Export Sales and Marketing Manager for Mallinckrodt Sensor Systems of
Hannef, Germany.  From 1994 to 1995 he was national sales manager with
HemoCue, Inc. of Mission Viejo, California.
 
  12
  RICHARD
BRUGGEMAN - Director and Secretary/Treasurer and Chief Financial Officer of the
Company since April, 1995 and full time employee of the Company during
2002.  Since 2003, Mr. Bruggeman has been employed with Kitchen
Resource, Inc., a Utah based firm distributing kitchen appliances.  He
was employed part time or full time as Controller of Kitchen Specialties, Inc.
from 1993 to December, 2001, a Salt Lake City firm distributing kitchen
appliances in the United States and Canada.  From 1986 until 1993 he
was employed by the Company's subsidiary, MicroCor, Inc. as financial
manager.   During the period 1983-1985, he was a sole
practitioner in accounting and from 1981-1983 he was employed by the Salt Lake
City public accounting firm of Robison Hill & Co.  He has since
had no affiliation with that accounting firm.  He graduated from the
University of Utah in 1981 with a B.S. degree in accounting.
 
 SHENG
JUNG (ROBERT S.) CHIANG B Director of
the Company since May, 2001.   Mr. Chiang was vice president and
secretary general of Onking Chain Store Co. Ltd., a company organized in the
Republic of China (hereinafter ATaiwan@) from
November, 1988 through June, 2000 when he became the Vice President of Chi Lin
Technology Co. Ltd, a Taiwanese company.  He has been employed with
Chi Lin Technology since June, 2000.   Mr. Chiang has a BA from
the National Chen Chi University and an MBA from the National Taiwan
University.
 
 MAO-SONG
LEE – Director of the Company since December, 2002.   Since
February, 2001 he has been employed full time by Chi Lin Technology Co. Ltd. as
Technical Vice President.  From August, 1998 until January, 2001 he
was General Manager, Pilot Plants for Union Chemical Laboratories, Industrial
Technology Research Institute of the Republic of China
(Taiwan).   During the period 1994-1997 he was Director of the
Engineering Plastics Division for Union Chemical Laboratories, Industrial
Technology Research Institute.  From 1983 until 1991 he was Director
of the Polymer Division, Union Chemical Laboratories, Industrial Technology
Research Institute.  He received a B.S. and M.S. from the National
Cheng Kung University of Taiwan in 1970 and 1972, respectively.  He
also received a Ph.D. and an M.B.A. from the National Tsing Hua University of
Taiwan in 1987 and from the National Cheng Chi University in 1994,
respectively.
 
 Each
director serves until the next annual meeting of shareholders or until a
successor is elected and qualified.  Officers serve at the pleasure of
the board of directors.  No arrangement or understanding exists
between any officer or director and any other person pursuant to which he was
nominated or elected as director or selected as an officer, except the Stock
Purchase Agreement with Chi Lin Technologies Co. Ltd. which allowed Chi Lin to
fill two vacancies on the board of directors.
 
 Section 16(a) Beneficial Ownership
Reporting Compliance.   Section 16(a) of the Securities
Exchange Act of 1934 requires the Company's directors and executive officers,
and persons who own more than ten percent of a registered class of the Company's
equity securities to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of equity securities of
the Company. Officers, directors and shareholders holding greater than ten
percent are required to furnish the Company with copies of all Section 16(a)
forms they file. To the Company's knowledge, based solely on review of the
copies of any such
  13
  reports
furnished to the Company, during the fiscal year ended December 31, 2007, and
thereafter, all Section 16(a) filing requirements applicable to officers,
directors and shareholders holding greater than ten percent were timely
met.
 
 Code of
Ethics.  The Company has adopted a code of ethics for its
principal executive officer, principal financial officer, principal accounting
officer or controller, and persons performing similar functions.  A
copy of the Code of Ethics will be furnished upon request without
charge.
 
 BOARD OF
DIRECTORS MEETINGS
 AND
ATTENDANCE AT SHAREHOLDER MEETINGS
 
 The
Company does not have nominating or audit committees of the
Board.  The full board conducts the function of an audit
committee.  There were no formal meetings of the Board of Directors
held during the fiscal year ended December 31, 2007.   All
directors, except Messrs. Chiang and Lee attended the last annual shareholder
meeting of the Company, held January 25, 2005.   The Company
expects all directors to be in attendance at shareholder meetings and attempts
to schedule meetings at a time when all directors will be able to attend,
however conflicting schedules, particularly with the two directors from Taiwan
may preclude their attendance at shareholder meetings which are held in the
United States.
 
 AUDIT
COMMITTEE FINANCIAL EXPERT
 
 The
Company's board of directors does not have an "audit committee financial
expert,"
 within
the meaning of such phrase under applicable regulations of the Securities and
Exchange Commission, serving on its audit committee. The board of directors
believes that all members of its board are financially literate and experienced
in business matters, and that one or more members of the board are capable of
(i) understanding generally accepted accounting principles ("GAAP") and
financial statements, (ii) assessing the general application of GAAP principles
in connection with our accounting for estimates, accruals and reserves, (iii)
analyzing and evaluating our financial statements, (iv) understanding the
Company’s internal controls and procedures for financial reporting; and (v)
understanding audit committee functions, all of which are attributes of an audit
committee financial expert. However, the board of directors believes that there
is not any audit committee member who has obtained these attributes through the
experience specified in the SEC's definition of "audit committee financial
expert." Further, like many small companies, it is difficult for the Company to
attract and retain board members who qualify as "audit committee financial
experts," and competition for these individuals is significant. The board
believes that its current board is able to fulfill its role under SEC
regulations despite not having a designated "audit committee financial
expert."
  14
  
 NOMINATING
COMMITTEE
 
 The full
board of directors of the Company functions as a nominating committee to select
potential additional directors of the Company.   The board has
not specifically designated a separate nominating committee because all five
members of the board of directors desire to be involved in the selection of any
new director.  The board does not have a specific charter to govern
its actions as a nominating committee, nor are any members of the board
“independent”.   Due to the relatively small size of the Company,
the risks associated with service on the board of a public company and the
limited or negligible compensation available to such directors, the Company
considers it unlikely that a qualified person would serve on the board that was
truly independent.   However, the board’s unwritten policy for
consideration of potential members of the board nominated by shareholders is to
seriously consider any potential board member that has personal relationships
and/or expertise that might be beneficial to the Company’s business. The Company
has in the past and expects to continue in the future to be interested in
discussions with persons interested in the Company’s business and able to make a
significant contribution to the success of the Company’s
technology.   Shareholders that desire to introduce persons to
the Company’s board of directors should contact Larry E. Clark, Chairman of the
Board or Ralph Henson, Chief Executive Officer of the Company with any
suggestions or recommendations for director.   These persons may
be reached through the Company’s office telephone 801-521-9300 during regular
business hours.   A copy of the resume of any candidates should
be submitted with the inquiry.
 
 At the
present time, the Company is not actively searching for additional members of
the board, however members of the board are interested in meeting qualified
persons.   Qualified persons normally would be persons that have
at least a college education and professional or technical experience in the
medical products industry.   The Company is especially interested
in persons with fund raising contacts or technology development
contacts.   Generally, shareholder nominees would be evaluated in
the same manner as any other nominee.  The current directors were each
originally nominated by the Company’s chief executive officer or by Chi Lin
Technologies, Co. Ltd, which had the contractual right to nominate two
directors.  Specifically, Larry E. Clark became a director upon the
nomination of Alan Kaminsky who was then CEO and a 5% plus
shareholder.  Messrs Henson and Bruggeman were each nominated by Mr.
Clark while Mr. Clark was serving as CEO and while Mr. Clark was a 10% plus
shareholder.  Messrs. Chiang and Lee were nominated by Chi Lin, a
principal shareholder and control person of the Company, owning approximately 33
1/3% of the stock of the Company.
 
  15
  Item 11. Executive
Compensation.
 
 The table
below discloses the compensation of the chief executive officer of the Company
during the three fiscal years ended December 31, 2007:
 
 Name
              Year
              
              Salary
              
              
              Bonus
              
              
              Other2Ralph
      Henson (CEO)
              2007
              
              $
              84,000
              3
              
              $
              -
              
              
              $
              -Ralph
      Henson (CEO)
              2006
              
              $
              33,000
              
              
              $
              -
              
              
              $
              65,000Ralph
      Henson (CEO)
              2005
              
              $
              24,000
              
              
              $
              -
              
              
              $
              60,000
 
 Since the
beginning of the last fiscal year, there have been no stock options or stock
appreciation rights granted to or exercised by officers named in the executive
compensation table.  The Company presently has no plan for the payment
of any annuity or pension retirement benefits to any of its officers or
directors, and no other remuneration payments, contingent or otherwise, are
proposed to be paid in the future to any officer or director, directly or
indirectly.   Directors have not been compensated for services
and there are no plans for any director compensation.
 
 The
Company entered into a consulting contract with Larry E. Clark, its Chairman,
effective April 1, 2001, pursuant to which the Company compensates the Chairman
$2,000 per month in consulting fees.    Fees under the
contract have historically been accrued until the Company was able to pay the
Chairman or issued restricted stock in satisfaction of its obligations to the
Chairman.
 
 COMPENSATION
COMMITTEE,
 INTERLOCKS
AND INSIDER PARTICIPATION
 
 The full
board of directors of the Company functions as a compensation
committee.  The board has not specifically designated a separate
compensation committee due to the relatively small size of the
Company.   The board does not have a specific charter to govern
its actions as a compensation committee, nor are any members of the board
“independent”.  Consultant Larry E. Clark, and officers, Ralph Henson
and Richard Bruggeman are members of the board of
directors.   Due to the size of the Company, the risks associated
with service on the board of a public company and the limited or negligible
compensation available to such directors, the Company considers it unlikely that
a qualified person would serve on the board that was truly
independent.
 
 
 2 - paid
or reimbursed by Wescor
 3 -
includes $60,000 reimbursed by Wescor
  16
  Item 12. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters.   The following table furnishes information
concerning the common stock ownership of directors, officers, and principal
shareholders as of March 5, 2008:
 
 Nature
      of
                Number
      ofName and Position
                Ownership
                Shares Owned
                PercentChi
      Lin Technologies
                Direct
                6,043,704
                32.6%717
      No. 71, Te Lun RDJen
      Te Hsian, TaiwanPrincipal
      ShareholderLarry
      E. Clark
                Direct
                78,000
                .4%Chairman
                Indirect
                2,959,0254
                16.0%Total
                3,037,025
                16.4%Ralph
      Henson
                Direct
                315,000
                1.7%President,
      Director, Chief
      Executive OfficerRichard
      Bruggeman
                Direct
                4,6205
                0.0%Director,
      Chief Financial
      Officer
                Indirect
                535,7426
                2.9%Total
                540,362
                2.9%Sheng
      Jung Chiang
                Indirect
                *
      7DirectorMao-Song
      Lee
                Indirect
                *
      8DirectorAll
      Executive Officers
                Direct
                6,441,324
                34.8%and
      Directors as a group
      (5 persons)
                Indirect
                3,494,767
                18.9%Total
                9,936,091
                53.6%
 Shares
shown in the forgoing table as directly owned are owned beneficially and of
record, and such record shareholder has sole voting, investment, and dispositive
power. Calculations of the percentage of ownership of shares outstanding in the
foregoing table are based on 18,629,493 shares outstanding and assume the
exercise of options, to which the percentage relates.  Rounding causes
differences in totals from percentage ownership shown.
 
 4 Shares
held by Larry Clark and Jacquelyn Clark as Trustees of the Larry and Jacquelyn
Clark Family Trust.
 5
Represents 4,620 shares held in a family trust of which Mr. Bruggeman is
Trustee.
 6 Shares
held by Mr. Bruggeman’s wife.
 7 Mr.
Chiang is vice president of Chi Lin Technologies Co. Ltd. which holds 6,043,704
shares.
 8 Dr. Lee
is director of biomedical research of Chi Lin Technologies Co. Ltd. which holds
6,043,704 shares.
  17
  Item 13. Certain Relationships and
Related Transactions and Director Independence.
 
 No
officer, director, nominee for director, or associate of any such officer,
director or nominee has been, since the beginning of the last fiscal year, or is
presently indebted to the Company. There have been no transactions since the
beginning of the Company's last fiscal year, nor are there any proposed
transactions, in which any officer, director, nominee or principal security
holder has a direct or indirect material interest.   None of the
directors of the Company are independent.
 
  Item
14. Principal Accountant Fees and Services
  
 The
following is a summary of the fees billed to us by Robison, Hill & Company
for  professional services rendered for the years ended December 31,
2007 and 2006:
 
 Service
              
              2007
              
              
              2006Audit
      Fees
              
              $
              17,500
              
              
              $
              14,350Audit-Related
      Fees
              
              
              -Tax
      Fees
              
              
              725
              
              
              
              596All
      Other Fees
              
              
              -Total
              
              $
              18,225
              
              
              $
              14,946
 
 Audit Fees. Consists of fees
billed for professional services rendered for the audits of our consolidated
financial statements, reviews of our interim consolidated financial statements
included in quarterly reports, services performed in connection with filings
with the Securities & Exchange Commission and related comfort letters and
other services that are normally provided by Robison, Hill & Company in
connection with statutory and regulatory filings or engagements.
 
 Tax Fees. Consists of fees
billed for professional services for tax compliance, tax advice and tax
planning. These services include assistance regarding federal, state and local
tax compliance and consultation in connection with various
transactions.
 
 Audit Committee Pre-Approval of
Audit and Permissible Non-Audit Services of Independent
Auditors.   The board is to pre-approve all audit and
non-audit services provided by the independent auditors. These services may
include audit services, audit-related services, tax services and other services
as allowed by law or regulation. Pre-approval is generally provided for up to
one year and any pre-approval is as to the particular service or category of
services and is generally subject to a specific amount. The independent auditors
and management are required to periodically report to the board regarding the
extent of services of the independent auditors in accordance with this
pre-approval and the fees incurred to date. The board may also pre-approve
particular services on a case-by-case basis. The board pre-approved 100% of the
Company’s 2006 and 2007 audit fees, audit-related fees, tax fees, and all other
fees.
  18
  PART IV
 
 Item
15. Exhibits
 
 (1)  Financial
Statements
  PageIndependent
      Registered Public Accountants’ Report (Robison, Hill &
      Company)
                  F-1Consolidated
      Balance Sheet as of December 31, 2007 and 2006
                  F-3Consolidated
      Statements of Operations for theYears
      Ended December 31, 2007 and 2006
                  F-4Consolidated
      Statements of Stockholders’ Equity for theYears
      Ended December 31, 2007 and 2006
                  F-5Consolidated
      Statements of Cash Flows for theYears
      Ended December 31, 2007 and 2006
                  F-6Notes
      to Consolidated Financial Statements
                  F-7
 
 (3)  Exhibits
required by Item 601:
  S-K
      No.
                Description(31.1)
                Sarbanes-Oxley
      Section 302 Certification – Ralph Henson(31.1)
                Sarbanes-
      Oxley Section 302 Certification- Richard Bruggeman(32.1)
                Sarbanes-Oxley
      Section 906 Certification
 
 19

























INMEDICA
DEVELOPMENT CORPORATION








-:-





INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS’ REPORT








DECEMBER
31, 2007AND 2006




















20





CONTENTS











PageIndependent
      Registered Public Accountants’ Report
            F-1Consolidated
      Balance Sheet as of December 31, 2007 and 2006
            F-3Consolidated
      Statements of Operations for theYears
      Ended December 31, 2007 and 2006
            F-4Consolidated
      Statements of Stockholders’ Equity for theYears
      Ended December 31, 2007 and 2006
            F-5Consolidated
      Statements of Cash Flows for theYears
      Ended December 31, 2007 and 2006
            F-6Notes
      to Consolidated Financial Statements
            F-7








21







Robison,
      Hill & Co.
            
            
            
            Certified
      Public AccountantsA
      PROFESSIONAL CORPORATIONBrent
      M. Davies, CPADavid
      O. Seal, CPAW.
      Dale Westenskow, CPABarry
      D. Loveless, CPAStephen
      M. Halley, CPA














INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS’ REPORT











To the
Board of Directors and Stockholders of


InMedica
Development Corporation




We have
audited the accompanying consolidated balance sheet of InMedica Development
Corporation and subsidiary (the “Company”) as of December 31, 2007 and 2006, and
the related consolidated statements of operations, stockholders’ equity, and
cash flows for the two years then ended (all expressed in U.S.
dollars).  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audit.




We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  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 also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides a reasonable basis
for our opinion.




In our
opinion, such financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2007 and 2006, and the
results of its operations and its cash flows for the two years then ended in
conformity with accounting principles generally accepted in the United States of
America.


F -
1












The
accompanying consolidated financial statements for the years ended December 31,
2007 and 2006 have been prepared assuming that the Company will
continue  as a going concern.  As discussed in Note 1 to the
consolidated financial statements, the Company’s recurring losses from
operations raise substantial doubt about its ability to continue as a going
concern.  Management’s plans concerning these matters are also
described in Note 1.  The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.










/s/ Robison, Hill &
Co.


Certified
Public Accountants





Salt Lake
City, Utah


March 25,
2008








F -
2





INMEDICA DEVELOPMENT CORPORATION AND
      SUBSIDIARYCONSOLIDATED BALANCE SHEETDecember
      31,
            
            
            December
      31,2007
            
            
            2006ASSETSCurrent
      AssetsCash
      & Cash Equivalents
            
            $
            2,706
            
            
            $
            34,079Prepaid
      Expenses & Other
            
            
            200
            
            
            
            200Notes
      Receivable Current, net of unamortized discount of $0 and
    $335
            
            
            -
            
            
            
            -Total
      Current Assets
            
            
            2,906
            
            
            
            34,279Equipment
      & Furniture, at Cost,Less
      Accumulated Depreciation of $254,856and
      $254,363, respectively
            
            
            365
            
            
            
            858TOTAL
      ASSETS
            
            $
            3,271
            
            
            $
            35,137LIABILITIES
      & STOCKHOLDER'S EQUITYCurrent
      LiabilitiesRelated
      Party Consulting Fees Payable
            
            $
            78,000
            
            
            $
            54,000Accounts
      Payable
            
            
            5,503
            
            
            
            -Accrued
      Interest
            
            
            16,495
            
            
            
            2,910Related
      Party Royalty Payable
            
            
            73,333
            
            
            
            33,333Preferred
      Stock Dividends Payable
            
            
            49,177
            
            
            
            41,612Short-Term
      Notes Payable
            
            
            -
            
            
            
            -Current
      Portion of Long-Term Debt
            
            
            60,617
            
            
            
            -Total
      Current Liabilities
            
            
            283,125
            
            
            
            131,855Long-
      Term Convertible Promissory Note
            
            
            140,000
            
            
            
            107,286Total
      Liabilities
            
            
            423,125
            
            
            
            239,141Minority
      Interest
            
            
            (191,668
            )
            
            
            (93,362
            )Stockholders'
      EquityPreferred
      Stock, 10,000,000 shares authorized; Series A cumulativeconvertible
      preferred stock, 8% cumulative, $4.50 par value,1,000,000
      shares designated, 21,016 shares outstanding (aggregateliquidation
      preference of $143,750)
            
            
            94,573
            
            
            
            94,573Common
      Stock, $.001 par value: 40,000,000 shares authorized,18,629,493
      and 18,629,493.share outstanding
            
            
            18,629
            
            
            
            18,629Additional
      Paid-in Capital
            
            
            8,426,839
            
            
            
            8,426,839Accumulated
      Deficit
            
            
            (8,768,227
            )
            
            
            (8,650,683
            )Total
      Stockholders' Equity
            
            
            (228,186
            )
            
            
            (110,642
            )TOTAL
      LIABILITIES &  STOCKHOLDERS' EQUITY
            
            $
            3,271
            
            
            $
            35,137The
      accompanying notes are an integral part of these financial
      statements.


F -
3





INMEDICA DEVELOPMENT CORPORATION AND
      SUBSIDIARYCONSOLIDATED STATEMENTS OF
      OPERATIONSFor
      the Years EndedDecember
      31,2007
            
            
            2006ROYALTY
      REVENUES
            
            $
            -
            
            
            $
            -OPERATING
      EXPENSESGeneral
      & Administrative
            
            
            194,699
            
            
            
            199,955Research
      & Development
            
            
            -
            
            
            
            -Total
      Operating Expense
            
            
            194,699
            
            
            
            199,955LOSS
      FROM OPERATIONS
            
            
            (194,699
            )
            
            
            (199,955
            )OTHER
      INCOME (EXPENSE)Interest
      Income
            
            
            -
            
            
            
            335Interest
      Expense
            
            
            (13,586
            )
            
            
            (2,478
            )Other
      Income
            
            
            -
            
            
            
            -Total
      Other Income (Expenses), Net
            
            
            (13,586
            )
            
            
            (2,143
            )INCOME
      (LOSS) BEFORE MINORITY INTEREST
            
            
            (208,285
            )
            
            
            (202,098
            )MINORITY
      INTEREST
            
            
            98,307
            
            
            
            85,694NET
      INCOME (LOSS)
            
            
            (109,978
            )
            
            
            (116,404
            )PREFERRED
      STOCK DIVIDENDS
            
            
            (7,566
            )
            
            
            (7,566
            )NET
      INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS
            
            $
            (117,544
            )
            
            $
            (123,970
            )NET
      INCOME (LOSS) PER COMMON SHARE (BASIC & DILUTED)
            
            $
            (0.01
            )
            
            $
            (0.01
            )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDINGBASIC
            
            
            18,629,493
            
            
            
            18,278,808DILUTED
            
            
            18,661,017
            
            
            
            18,310,332The
      accompanying notes are an integral part of these financial
      statements.





F -
4





INMEDICA
      DEVELOPMENT CORPORATION AND SUBSIDIARYCONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006AdditionalPreferred
      Stock
            
            
            
            
            
            Common
      Stock
            
            
            
            
            
            Paid-in
            
            
            AccumulatedShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            DeficitBalance,
      January 1, 2006
            
            
            21,016
            
            
            $
            94,573
            
            
            
            18,129,493
            
            
            $
            18,129
            
            
            $
            8,377,339
            
            
            $
            (8,526,713
            )Common
      stock issued for
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Convertible
      promissory notes
            
            
            -
            
            
            
            -
            
            
            
            500,000
            
            
            
            500
            
            
            
            49,500
            
            
            
            -Preferred
      stock dividends
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (7,566
            )Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (116,404
            )Balance,
      December 31, 2006
            
            
            21,016
            
            
            
            94,573
            
            
            
            18,629,493
            
            
            
            18,629
            
            
            
            8,426,839
            
            
            
            (8,650,683
            )Preferred
      stock dividends
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (7,566
            )Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (109,978
            )Balance,
      December 31, 2007
            
            
            21,016
            
            
            $
            94,573
            
            
            
            18,629,493
            
            
            $
            18,629
            
            
            $
            8,426,839
            
            
            $
            (8,768,227
            )





The
accompanying notes are an integral part of these financial
statements.


F -
5





INMEDICA DEVELOPMENT CORPORATION AND
      SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH
      FLOWSFor
      the Years EndedDecember
      31,2007
            
            
            2006CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income (Loss)
            
            $
            (109,978
            )
            
            $
            (116,404
            )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
      and amortization
            
            
            493
            
            
            
            635Subsidiary
      Shares issued in exchange for Research & Development
    Costs
            
            
            -
            
            
            
            -Interest
      income from amortization or discount on notes receivable
            
            
            -
            
            
            
            (335
            )Minority
      interest in losses
            
            
            (98,307
            )
            
            
            (85,694
            )Changes
      in assets and liabilities:Related
      party consulting fees payable
            
            
            24,000
            
            
            
            24,000Accounts
      payable
            
            
            5,503
            
            
            
            (477
            )Accrued
      Interest
            
            
            13,585
            
            
            
            2,313Related
      Party Royalty Payable
            
            
            40,000
            
            
            
            33,333Accrued
      payroll and related taxes
            
            
            -
            
            
            
            (5,553
            )Net
      cash used in operating activities
            
            
            (124,704
            )
            
            
            (148,182
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of Equipment
            
            
            -
            
            
            
            -Proceeds
      from note receivable
            
            
            -
            
            
            
            45,000Net
      cash provided by (used in) investing activities
            
            
            -
            
            
            
            45,000CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from notes payable
            
            
            93,331
            
            
            
            94,286Payments
      on notes payable
            
            
            -
            
            
            
            (8,910
            )Proceeds
      from sale of common stock
            
            
            -
            
            
            
            -Net
      cash provided by (used in) financing activities
            
            
            93,331
            
            
            
            85,376NET
      INCREASE IN CASH
            
            
            (31,373
            )
            
            
            (17,806
            )CASH
      AT BEGINNING OF THE YEAR
            
            
            34,079
            
            
            
            51,885CASH
      AT END OF THE YEAR
            
            $
            2,706
            
            
            $
            34,079SUPPLEMENTAL
      DISCLOSURE OF CASH FLOWCash
      paid during the year for interest
            
            $
            -
            
            
            $
            1,720Cash
      paid during the year for income taxes
            
            $
            200
            
            
            $
            200SUPPLEMENTAL
      SCHEDULE OF NONCASH INVESTING & FINANCING ACTIVITIESConvertible
      promissory notes exchanged for 500,000 shares of common
    stock
            
            $
            -
            
            
            $
            50,000Sale
      of Subsidiary stock for notes receivable
            
            $
            -
            
            
            $
            -The
      accompanying notes are an integral part of these financial
      statements.


F -
6


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES





Nature of
Operations





InMedica Development Corporation
("InMedica") and its majority-owned subsidiary, MicroCor, Inc. ("MicroCor")
(collectively referred to as the "Company"), historically have engaged in the
research, development and sale of medical technology and fund raising to support
such activities.  During the years 1986 and 1987, MicroCor developed
and marketed a portable electrocardiograph ("ECG") monitor and manufactured and
sold about 450 units.  In July 1989, MicroCor signed a research and
development contract with Johnson and Johnson Medical, Inc.  ("Johnson
and Johnson") for further development of the ECG technology.  As a
result of the agreement, Johnson and Johnson manufactured and marketed a product
line under the name of Dinamap PlusTM which
incorporated the Company's ECG technology.  Royalties received from
Johnson and Johnson were the Company's sole source of revenue through the year
2000.  In 2001, Johnson and Johnson stopped manufacturing and
marketing the Dinamap PlusTM product
line; therefore, MicroCor no longer receives royalties from Johnson and
Johnson.





Since 1989, the Company has engaged in
research and development of a device to measure hematocrit non-invasively (the
"Non-Invasive Hematocrit Technology" and/or the
“Technology”).  Hematocrit is the percentage of red blood cells in a
given volume of blood.  At the present time, the test for hematocrit
is performed invasively by drawing blood from the patient and testing the blood
sample in the laboratory.    The Hematocrit Technology is
owned by MicroCor, Inc., which is a 57% owned subsidiary of the
Company.   Other owners of the subsidiary are Wescor, Inc. (29%)
and   Chi Lin Technologies Company, Ltd. (14%).  The
Company has the right to appoint three of five directors of MicorCor and each of
the other owners has the right to appoint one director of
MicroCor.   To date the research and development of MicroCor, its
various engineers, affiliates and contractors, including Wescor, has not
completed a prototype suitable for
commercialization.  Commercialization of the Non-Invasive Hematocrit
Technology is dependent upon favorable testing, Food and Drug Administration
(“FDA”) approval, financing of further research and development and, if
warranted, financing of manufacturing and marketing activities.





Basis of
Presentation





The Company’s consolidated financial
statements have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business.  The consolidated financial statements do not include any
adjustment relating to recoverability and classification of recorded amounts of
assets and liabilities that might be necessary should the Company be unable to
continue as a going concern.  The Company generated negative cash
flows from operations of $124,704 and $148,182 in 2007 and
2006,


F -
7


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES





Basis of Presentation
(Continued)





respectively, and
net losses from operations of $109,978 and $116,404 in 2007 and 2006,
respectively.   As of December 31, 2007 the Company had an
accumulated deficit of $8,768,227 and a stockholders’ deficit of $228,186. These
conditions raise substantial doubt as to the Company's ability to continue
as a going concern.  The Company's continued existence is dependent
upon its ability to execute its operating plan and to obtain additional debt or
equity financing.  There can be no assurance the necessary debt or
equity financing will be available, or will be available on terms acceptable to
the Company.  Management's operating plan includes pursuing additional
fund raising as well as research and development.





Patents





The Company has four patents covering
various aspects of its Technology which expire from 2007 to 2013.





Principles of
Consolidation





The consolidated financial statements
include the accounts of InMedica and MicroCor.  All material
inter-company accounts and transactions have been eliminated.





Revenue
Recognition





The Company accounts for income taxes
using the asset and liability method. Deferred income taxes are determined based
on the estimated future tax effects of differences between the financial
reporting and tax reporting bases of assets and liabilities given the provisions
of currently enacted tax laws.  A valuation allowance is provided when
it is more likely than not that all or some portion of the deferred income tax
assets will not be realized.





Equipment and
Furniture





Equipment and furniture are recorded at
cost and depreciated using the straight-line method over the estimated useful
lives of the assets which range from three to five years.





Equipment
      and Furniture consist of the following:
            
            December
      31,2007
            
            
            2006Equipment
            
            $
            244,033
            
            
            $
            244,033Furniture
            
            
            11,188
            
            
            
            11,188255,221
            
            
            
            255,221Less
      accumulated depreciation
            
            
            (254,856
            )
            
            
            (254,363
            )Total
            
            $
            365
            
            
            $
            858





F -
8


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)





Equipment and Furniture
(Continued)





Depreciation expense for the years
ended December 31, 2007 and 2006 was $493 and $635, respectively.





Research and
Development





Research and development costs are
expensed as incurred.





Net Loss Per Common
Share





Basic net loss per common share is
computed by dividing net loss by the weighted average number of common shares
outstanding during the year.  Diluted net loss per common share
("Diluted EPS") reflects the potential dilution that could occur if stock
options or other common stock equivalents were exercised or converted into
common stock.  At December 31, 2007and 2006, respectively, there were
31,524 and 31,524 potentially dilutive common stock equivalents.  The
computation of Diluted EPS does not assume exercise or conversion of securities
that would have an anti-dilutive effect on net loss per common
share.





Use of
Estimates





The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America 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 revenues and expenses during the reporting period.  Actual results
could differ from those estimates.





Comprehensive
Income





There are no components of
comprehensive income other than the net loss.





Cash
Equivalents





For the purpose of reporting cash
flows, the Company considers all highly liquid debt instruments purchased with
maturity of three months or less to be cash equivalents to the extent the funds
are not being held for investment purposes.


F -
9


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)





Concentration of Credit
Risk





The Company has no significant
off-balance-sheet concentrations of credit risk such as foreign exchange
contracts, options contracts or other foreign hedging
arrangements.  The Company maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.





Fair Value of Financial
Instruments





The carrying value of the Company's
financial instruments, including receivables, accounts payable, accrued
liabilities, and notes payable at December 31, 2007 and 2006 approximates their
fair values due to the short-term nature of these financial
instruments.





Recent Accounting
Standards





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 provides
companies with an option to report selected financial assets and liabilities at
fair value. The objective of SFAS 159 is to reduce both complexity in accounting
for financial instruments and the volatility in earnings caused by measuring
related assets and liabilities differently. Generally accepted accounting
principles have required different measurement attributes for different assets
and liabilities that can create artificial volatility in earnings. The FASB has
indicated it believes that SFAS 159 helps to mitigate this type of
accounting-induced volatility by enabling companies to report related assets and
liabilities at fair value, which would likely reduce the need for companies to
comply with detailed rules for hedge accounting. SFAS 159 also establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities.  SFAS 159 does not eliminate disclosure
requirements included in other accounting standards, including requirements for
disclosures about fair value measurements included in SFAS 157 and SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." SFAS 159 is effective
for the Company as of the beginning of fiscal year 2008. The adoption of this
pronouncement is not expected to have an impact on the Company's financial
position, results of operations or cash flows.





F -
10


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)





Recent Accounting Standards
(Continued)





In
December 2007, the FASB issued No. 160, “Noncontrolling Interests in Financial
Statements, an amendment of ARB No. 51" (“SFAS 160").  SFAS 160 amends
ARB 51 to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a
subsidiary.  It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  This
Statement is effective for fiscal years beginning on or after December 15,
2008.  Early adoption is not permitted. Management is currently
evaluating the effects of this statement, but it is not expected to have any
impact on the Company’s financial statements.





In
December 2007, the FASB issued No. 141(R), “Business Combinations” (“SFAS
141(R)”.  SFAS 141(R) provides companies with principles and
requirements on how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, and any
noncontrolling interest in the acquiree as well as the recognition and
measurement of goodwill acquired in a business combination. SFAS 141(R) also
requires certain disclosures to enable users of the financial statements to
evaluate the nature and financial effects of the business combination.
Acquisition costs associated with the business combination will generally be
expensed as incurred. SFAS 141(R) is effective for business combinations
occurring in fiscal years beginning after December 15, 2008, which will require
the Company to adopt these provisions for business combinations occurring in
fiscal 2009 and thereafter. Early adoption of SFAS 141(R) is not
permitted.  Management is currently evaluating the effects of this
statement, but it is not expected to have any impact on the Company’s financial
statements.





In March
2008, the FASB issued No. 161, “Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133.  (“SFAS
161").  SFAS 161 requires enhanced disclosures about an entity's
derivative and hedging activities and thereby improves the transparency of
financial reporting.  This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. This Statement encourages, but does
not require, comparative disclosures for earlier periods at initial
adoption.  Management is currently evaluating the effects of this
statement, but it is not expected to have any impact on the Company’s financial
statements.




F -
11


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 2 - NOTES
PAYABLE





Notes payable consisted of the
following:


December
      31,
            
            
            December
      31,2007
            
            
            2006WesCor,
      Inc. Overhead Note,Due
      December 12, 2010 including interestat
      prime (7.50% at December 31, 2007)Unsecured
      convertible at $.10 per share
            
            $
            140,000
            
            
            $
            47,284WesCor,
      Inc. Secured Convertible Promissory Note,Due
      March 6, 2008 including interestat
      prime plus 2 9.50% at December 31, 2007)Unsecured
      convertible at $.10 per share
            
            
            60,617
            
            
            
            60,002Less
      Current Portion
            
            
            (60,617
            )
            
            
            -Total
      Long-Term Convertible Promissory Notes
            
            $
            140,000
            
            
            $
            107,286





NOTE 3 - INCOME
TAXES





Deferred income tax assets consisted of
the following:


December
      31,
              
              
              December
      31,2007
              
              
              2006Net
      operating loss carryforwards
              
              $
              760,884
              
              
              $
              999,438Future
      deductions temporary differences relatedto
      compensation, reserves, and accruals
              
              
              6,995
              
              
              
              8,169Less
      valuation allowance
              
              
              (767,879
              )
              
              
              (1,007,607
              )Deferred
      income tax assets
              
              $
              -
              
              
              $
              -




The
valuation allowance decreased $239,728 in 2007.  At December 31, 2007,
the Company has consolidated net operating loss carryforwards for federal income
tax purposes of $2,355,678.  These net operating loss carryforwards
expire at various dates beginning in 2008 through 2027.  Due to the
uncertainty with respect to ultimate realization, the Company has established a
valuation allowance for all deferred income tax assets.





F -
12


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007AND 2006





NOTE 4 - COMMON STOCK
TRANSACTIONS





During the last three years the Company
made the following sales of unregistered common stock in reliance upon Section
4(2) of the Securities Act of 1933:




Date
              Shares
              Shareholder
              PriceOctober
      6, 2006
              150,000
              Dean
      A. Clark, Trustee
              $
              15,000October
      6, 2006
              150,000
              David
      P. Martin
              $
              15,000October
      6, 2006
              95,000
              Julie
      P. Cheney
              $
              9,500October
      6, 2006
              95,000
              Lloyd
      A. Hardcastle
              $
              9,500October
      6, 2006
              10,000
              Michael
      L. Schwab
              $
              1,000May
      2, 2005
              715,500
              Chi
      Lin Technology Company, Ltd
              $
              71,550January
      24, 2005
              440,000
              Larry
      E. Clark
              $
              44,000January
      19, 2005
              101,000
              Richard
      Bruggeman
              $
              10,100January
      11, 2005
              125,000
              Dean
      Clark
              $
              12,500January
      4, 2005
              125,000
              Dave
      Martin
              $
              12,500






NOTE 5 - STOCK
OPTIONS





Other Stock
Options





During 1995 through 2000, non-qualified
options were issued to employees and consultants for services.  All
options are exercisable upon granting.  A summary of this stock option
activity for 2007 was as follows:




WeightedAverageOption
            
            
            ExerciseShares
            
            
            PriceOutstanding
      at January 1, 2006
            
            $
            37,500
            
            
            $
            1.22Granted
            
            
            -
            
            
            
            -Forfeited
      or expired
            
            
            (37,500
            )
            
            
            1.22Outstanding
      at December 31, 2006
            
            
            -
            
            
            
            -Granted
            
            
            -
            
            
            
            -Forfeited
      or expired
            
            
            -
            
            
            
            -Outstanding
      at December 31, 2007
            
            $
            -
            
            
            $
            -





F -
13


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 5 - STOCK OPTIONS
(continued)





Other Stock Options
(continued)





The
following table summarizes information about stock options issued to employees
outstanding at December 31, 2007:





Options
      Outstanding
            
            Options
      ExercisableWeightedAverage
            
            Weighted
            
            
            
            WeightedRange
      of
            
            
            
            Contractual
            
            Average
            
            
            
            AverageExercise
            
            Number
            
            Life
            
            Exercise
            
            Number
            
            ExercisePrices
            
            Outstanding
            
            (in
      years)
            
            Price
            
            Exercisable
            
            Price$                     -
            
            -
            
            -
            
            $                     -
            
            -
            
            -





The
following table summarizes information about stock options issued to
non-employees outstanding at December 31, 2007:





Options
      Outstanding
            
            Options
      ExercisableWeightedAverage
            
            Weighted
            
            
            
            WeightedRange
      of
            
            
            
            Contractual
            
            Average
            
            
            
            AverageExercise
            
            Number
            
            Life
            
            Exercise
            
            Number
            
            ExercisePrices
            
            Outstanding
            
            (in
      years)
            
            Price
            
            Exercisable
            
            Price$                     -
            
            -
            
            -
            
            $                     -
            
            -
            
            -





NOTE 6 - PREFERRED
STOCK





The Company is authorized to issue
10,000,000 shares of preferred stock.  The Company's board of
directors designated 1,000,000 shares of this preferred stock as Series A
Cumulative Convertible Preferred Stock ("Series A Preferred") with a par value
of $4.50 per share.  Holders of the Series A Preferred receive annual
cumulative dividends of eight percent, payable quarterly, which dividends are
required to be fully paid or set aside before any other dividend on any class or
series of stock of the Company is paid.  As of December 31, 2007,
cumulative preferred stock dividends payable in the amount of $49,177, or $2.34
per share are due and payable.  Holders of the Series A Preferred
receive no voting rights but do receive a liquidation preference of $4.50 per
share, plus accrued and unpaid dividends.  Series A Preferred
stockholders have the right to convert each share of Series A Preferred to the
Company's common stock at a rate of 1.5 common shares to 1 preferred
share.





F -
14


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 7 – EARNINGS PER
SHARE





The following data show the amounts
used in computing earnings per share and the effect on income and the weighted
average number of shares of dilutive potential common stock


For
      the Years EndedDecember
      31,2007
            
            
            2006Net
      Income (Loss)
            
            $
            (109,978
            )
            
            $
            (116,404
            )Less:
      preferred dividends
            
            
            (7,566
            )
            
            
            (7,566
            )Income
      (Loss) available to common stockholders used in basic EPS
            
            $
            (117,544
            )
            
            $
            (123,970
            )Convertible
      preferred stock
            
            
            7,566
            
            
            
            7,566Convertible
      notes payable
            
            
            -
            
            
            
            -Income
      (Loss) available to common stockholders after assumedConversion
      of dilutive securities
            
            $
            (109,978
            )
            
            $
            (116,404
            )Weighted
      average number of common shares used in basic EPS
            
            
            18,629,493
            
            
            
            18,278,808Effect
      of dilutive securities:Convertible
      preferred stock
            
            
            31,524
            
            
            
            31,524Convertible
      notes payable
            
            
            -
            
            
            
            -Options
            
            
            -
            
            
            
            -Weighted
      average number of common shares and dilutive potentialcommon
      stock used in diluted EPS
            
            
            18,661,017
            
            
            
            18,310,332








NOTE8- RELATED PARTY
TRANSACTIONS





The Company has a consulting
arrangement with an entity owned by the Company's chairman whereby the Company
agreed to pay $2,000 per month.  Either party can terminate the
arrangement at any time upon 30 days prior notice.  Accrued but unpaid
consulting fees do not bear interest.  During 2006, $44,000 in accrued
consulting was paid under this agreement.  As of December 31, 2007,
$78,000, was owed under the arrangement.





Wescor has loaned to MicroCor
sufficient funds to enable Microcor to pay one half of the minimum royalty owing
to InMedica under the Joint Development Agreement.  Funds from the
minimum royalty are used by InMedica to fund administrative expenses of the
Company.  Repayment of the loan to Wescor by MicroCor is secured by a
20% security interest in any future revenues from the sale of the hematocrit
technology by MicroCor, until the loan is repaid in full.





F -
15


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 9 - JOINT DEVELOPMENT
AGREEMENT





Effective September 7, 2004, InMedica
and MicroCor entered into the Joint Development Agreement pursuant to which
Wescor, a Utah medical technology company ("Wescor") assumed responsibility for
the day to day operation of MicroCor and the conduct of research and development
of the Hematocrit Technology.  The Agreement provides that in the
event Wescor is successful in producing a working prototype using the hematocrit
technology, capable of meeting FDA GMP requirements suitable for conducting
clinical trials (Phase1), MicroCor will issue 500,000 additional restricted
shares of MicroCor stock to Wescor. Thereafter if Wescor completes clinical
trials and obtains the FDA's clearance to market such products (Phase 2),
500,000 additional restricted shares of MicroCor stock will be issued to Wescor
by MicroCor. Then, upon manufacturing and initial introduction into the US
market of such products (Phase 3), MicroCor will issue to Wescor an additional
700,000 restricted shares of its stock, giving Wescor a total of 49% of the
issued and outstanding stock of MicroCor. These additional shares to be issued
to Wescor will be in consideration of each Phase of development work by Wescor.
The determination of Wescor's completion of the above three Phases will be made
by MicroCor's board which is controlled by InMedica. In the event of a
disagreement between the parties as to fulfillment of the above standards, the
parties intend to negotiate in good faith to resolve the matter.





The
number of shares to be issued by MicroCor to Wescor for services has been
determined during a process of arms length negotiation between InMedica and
Wescor. During such negotiations, the board of directors of InMedica considered
the need for funding to continue development of the hematocrit technology, the
Company's present financial condition (ie. lack of cash flow, limited capital
assets and limited borrowing capacity), the lack of interest expressed by the
larger companies contacted by the board of directors (in the absence of an FDA
cleared prototype), the lack of present capacity of the smaller companies
contacted by the board (other than Wescor) and the reputation and experience of
Wescor in development of medical technology. Based on these considerations, the
board concluded that, in its judgment, the Agreement should be
pursued.  The initial 500,000 restricted shares of MicroCor were
issued to Wescor during the third quarter of 2005.





F -
16


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 9 - JOINT DEVELOPMENT
AGREEMENT (Continued)





Upon
completion of Phase 2, and again upon completion of Phase 3, Wescor will have
the option to purchase all (but not less than all) the remaining stock of
MicroCor from InMedica and Chi Lin, for 90 days. The buyout price to Wescor for
the remaining MicroCor shares will be 90% of an appraised value or a value
suggested by Wescor.  Wescor will choose the appraiser subject to the
right of InMedica and Chi Lin to object to the selection. In the case of an
objection Wescor will make another selection until the parties are in agreement.
Following receipt of Wescor's notice of appraised value or suggested value,
InMedica and Chi Lin will have the right to obtain a fairness opinion at their
expense, before acting on Wescor's offer. The fairness opinion of the value of
the MircoCor stock will be obtained from a business valuation expert, chosen by
InMedica and Chi Lin, as to which Wescor has no reasonable objection. If the
fairness opinion reports that Wescor's appraised or suggested value is not
within a fair range, Wescor's option to purchase the balance of the MicroCor
stock from Chi Lin and InMedica will terminate. However, if Wescor's appraised
or suggested value is determined by the fairness opinion to be within a fair
range, InMedica and Chi Lin will still have the opportunity to acquire the
complete ownership of MicroCor through a "trump" option allowing them to offer
to purchase all of the shares of MicroCor owned by Wescor at 110% of Wescor's
appraised value or suggested value. In such
case, Wescor may chose to sell its ownership of MicroCor to InMedica and Chi Lin
or may revive its first option by a notice to InMedica and Chi Lin increasing
the purchase price so as to be based on at least 110% of the valuation used as
the trump option value by InMedica and Chi Lin. This option procedure,
essentially bidding for the right to purchase all of the MicroCor stock, may be
repeated as many times as is necessary until a purchaser has been determined. If
Wescor is ultimately the purchaser, the Agreement will terminate except for the
royalty rights of InMedica and Chi Lin. Wescor has also been granted a right of
first refusal in the event of a bona fide third party offer to acquire
MicroCor.





F -
17


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 10- ROYALTY
RIGHTS





In connection with the Joint
Development Agreement, MicroCor has granted certain revenue royalty rights to
InMedica and Chi Lin under the Agreement based on future annual revenues from
the hematocrit technology and calculated as follows: Annual royalties will equal
the sum of four percent (4%) of the first $5,000,000 in sales and licensing
revenues, three percent (3%) of sales and licensing revenues in amounts
exceeding $5,000,000 but not exceeding $20,000,000, and two percent (2%) of
sales and licensing revenues in amounts exceeding $20,000,000; plus (ii) twenty
five percent (25%) of all royalty revenues (revenues from licensing of the
hematocrit technology to others). The total royalties are split between InMedica
and Chi Lin with InMedica receiving a percentage of total royalties equal to a
fraction, the numerator of which is the total world revenues from sales of the
hematocrit technology, less the revenues from sales in Asia; and the denominator
of which is the total world revenues from sales. The Chi Lin royalty is a
percentage of total royalties equal to a fraction, the numerator of which is
revenue from sales in Asia; and the denominator of which is the total world
revenues from sales. Asia is defined to mean Australia, New Zealand and the
countries of Asia (including without limitation, Indonesia, Malaysia and the
island countries of the Western Pacific Rim; but excluding Russia, Turkey and
the countries of the Middle East from Iran and to the west). Further, a minimum
royalty of $200,000 per year begins 18 months after the effective date and is
payable by MicroCor to InMedica and Chi Lin on an 80%-20% basis without regard
to whether actual sales have been made. However in the event that any party
(including Wescor) or a third party acquires eighty percent control of MicroCor,
the new control party has the right to buy out the royalty rights from InMedica
and Chi Lin for $1,000,000 or 100% of five times the sum of the minimum royalty
payments for the immediately preceding 12 months, whichever is greater. The
buyout proceeds would be shared 80%-20% by InMedica and Chi Lin.  At
the present time, MicroCor is paying 50% of the minimum royalty to InMedica and
Chi Lin is deferring its minimum royalty amounts.





NOTE 11– UNCERTAIN TAX
POSITIONS





Effective January 1, 2007, the Company
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN
48”). FIN 48 prescribes a recognition threshold and a measurement attribute for
the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax
position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The adoption of the provisions of FIN 48 did not have a material
impact on the company’s condensed consolidated financial position and results of
operations. At January 1, 2007, the company had no liability for unrecognized
tax benefits and no accrual for the payment of related interest.





F -
18


INMEDICA DEVELOPMENT
CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE YEARS ENDING
DECEMBER 31, 2007 AND 2006





NOTE 11– UNCERTAIN TAX POSITIONS
(continued)





Interest
costs related to unrecognized tax benefits are classified as “Interest expense,
net” in the accompanying consolidated statements of operations. Penalties, if
any, would be recognized as a component of “Selling, general and administrative
expenses”. The Company recognized $0 of interest expense related to unrecognized
tax benefits for the year ended December 31, 2007.  In many cases the
company’s uncertain tax positions are related to tax years that remain subject
to examination by relevant tax authorities. With few exceptions, the company is
generally no longer subject to U.S. federal, state, local or non-U.S. income tax
examinations by tax authorities for years before 2004. The following describes
the open tax years, by major tax jurisdiction, as of January 1,
2007:





United
      States (a)
            
            2004
      – Present(a)
      Includes federal as well as state or similar local jurisdictions, as
      applicable.





NOTE 12–SUBSEQUENT
EVENT.





Wescor recently advised the Company and
Chi Lin that its parent corporation is interested in shifting Wescor’s resources
presently dedicated to the research and development of the Hematocrit Technology
to other projects.  As a result, Wescor may be interested in bringing
on a new partner to conduct research and development or perhaps selling its
interest in the Technology, although Wescor continues to fund research and
development at this time under the terms of the Joint Development
Agreement.  The Company is presently discussing the matter with
Wescor.   No present plans or commitments for other alternatives
have been made.





F -
19


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




INMEDICA
DEVELOPMENT CORPORATION
 
 Date:  March
      26,  2008
              By
              /s/
      Ralph HensonRALPH
      HENSON,President
      & Chief Executive OfficerBy
              /s/
      Richard BruggemanRICHARD
      BRUGGEMANChief
      Financial Officer
 
 
 In
accordance with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
 
 
 /s/ Larry E. Clark
              DATE:  March 28,
      2008LARRY
      E. CLARK, Director/s/ Richard Bruggeman
              DATE:  March
      26,  2008RICHARD
      BRUGGEMAN, Director/s/ Ralph Henson
              DATE:  March
      26, 2008RALPH
      HENSON, Director/s/ Sheng Jung Chiang
              DATE:  March
      31, 2008SHENG
      JUNG CHIANG, Director/s/ Mao-Song Lee
              DATEMarch 31, 2008Mao-Song
      Lee, Director











EXHIBIT
INDEX – INMEDICA DEVELOPMENT CORPORATION


FORM
10-K  – FOR THE YEAR ENDED DECEMBER 31, 2007





Exhibit
      31.1
            CERTIFICATION
      PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 – Ralph
      HensonExhibit
      31.2
            CERTIFICATION
      PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 – Richard
      BruggemanExhibit
      32.1
            CERTIFICATE
      PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF
      THE SARBANES-OXLEY ACT OF 2002